SPARTAN(REGISTERED TRADEMARK)
MICHIGAN MUNICIPAL INCOME
FUND
AND
FIDELITY
MICHIGAN MUNICIPAL MONEY
MARKET FUND
SEMIANNUAL REPORT
JUNE 30, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN MICHIGAN MUNICIPAL
INCOME FUND
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 7 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 10 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 11 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 20 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
FIDELITY MICHIGAN MUNICIPAL
MONEY MARKET FUND
PERFORMANCE 24 How the fund has done over
time.
FUND TALK 26 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 28 A summary of major shifts in
the fund's investments over
the past six months and one
year.
INVESTMENTS 29 A complete list of the fund's
investments.
FINANCIAL STATEMENTS 36 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 40 Notes to the financial
statements.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
After much speculation about the U.S. Federal Reserve Board's
near-term monetary policy, stock and bond investors breathed a sigh of
relief when the Fed shifted to a neutral position on rates following
its widely anticipated quarter-point increase in short-term rates on
June 30. This switch in bias helped the S&P 500(registered trademark)
and NASDAQ soar to record-closing highs, and sent yields on the
bellwether 30-year Treasury back below 6%.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
SPARTAN MICHIGAN MUNICIPAL INCOME FUND
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the past one year, past five
year, and past 10 year total returns and dividends would have been
lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN MI MUNICIPAL INCOME -1.48% 1.69% 32.38% 89.08%
LB Michigan Municipal Bond -1.09% 2.49% 41.58% n/a
Michigan Municipal Debt Funds -1.57% 1.35% 34.42% 93.77%
Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Lehman Brothers Michigan Municipal Bond Index - a market
value-weighted index of Michigan investment-grade municipal bonds with
maturities of one year or more. To measure how the fund's performance
stacked up against its peers, you can compare it to the Michigan
municipal debt funds average, which reflects the performance of mutual
funds with similar objectives tracked by Lipper Inc. The past six
months average represents a peer group of 49 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN MI MUNICIPAL INCOME 1.69% 5.77% 6.58%
LB Michigan Municipal Bond 2.49% 7.20% n/a
Michigan Municipal Debt Funds 1.35% 6.08% 6.84%
Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking an
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER 10 YEARS
Spartan MI Muni Income LB Municipal Bond
00081 LB015
1989/06/30 10000.00 10000.00
1989/07/31 10092.04 10136.10
1989/08/31 10013.00 10036.87
1989/09/30 9989.78 10006.96
1989/10/31 10090.64 10129.34
1989/11/30 10230.50 10306.61
1989/12/31 10272.59 10390.91
1990/01/31 10209.23 10341.77
1990/02/28 10296.24 10433.81
1990/03/31 10292.04 10436.94
1990/04/30 10114.42 10361.37
1990/05/31 10354.32 10587.56
1990/06/30 10442.96 10680.63
1990/07/31 10589.54 10837.63
1990/08/31 10429.32 10680.27
1990/09/30 10481.29 10686.36
1990/10/31 10580.60 10880.21
1990/11/30 10787.78 11099.01
1990/12/31 10801.48 11147.29
1991/01/31 10904.11 11296.89
1991/02/28 10985.63 11395.17
1991/03/31 11007.40 11399.27
1991/04/30 11190.17 11550.88
1991/05/31 11241.59 11653.57
1991/06/30 11224.99 11642.03
1991/07/31 11402.08 11783.83
1991/08/31 11539.09 11939.03
1991/09/30 11665.76 12094.47
1991/10/31 11792.72 12203.32
1991/11/30 11836.12 12237.37
1991/12/31 12101.67 12499.98
1992/01/31 12145.48 12528.48
1992/02/29 12165.76 12532.49
1992/03/31 12179.57 12537.13
1992/04/30 12287.52 12648.71
1992/05/31 12420.65 12797.58
1992/06/30 12638.71 13012.33
1992/07/31 13100.15 13402.44
1992/08/31 12915.18 13271.76
1992/09/30 13002.87 13358.56
1992/10/31 12783.15 13227.25
1992/11/30 13095.83 13464.15
1992/12/31 13255.72 13601.62
1993/01/31 13450.00 13759.80
1993/02/28 13990.62 14257.49
1993/03/31 13830.94 14106.79
1993/04/30 13978.59 14249.13
1993/05/31 14071.74 14329.21
1993/06/30 14313.36 14568.37
1993/07/31 14302.80 14587.45
1993/08/31 14641.82 14891.16
1993/09/30 14827.06 15060.77
1993/10/31 14849.60 15089.84
1993/11/30 14752.72 14956.90
1993/12/31 15089.13 15272.64
1994/01/31 15294.07 15447.05
1994/02/28 14852.41 15046.97
1994/03/31 14181.01 14434.26
1994/04/30 14251.45 14556.66
1994/05/31 14324.40 14682.87
1994/06/30 14282.32 14593.16
1994/07/31 14534.02 14860.65
1994/08/31 14570.02 14912.07
1994/09/30 14373.21 14693.16
1994/10/31 14075.12 14432.21
1994/11/30 13632.02 14171.27
1994/12/31 13956.72 14483.18
1995/01/31 14376.58 14897.11
1995/02/28 14790.94 15330.32
1995/03/31 14667.88 15506.46
1995/04/30 14696.29 15524.76
1995/05/31 15170.10 16020.16
1995/06/30 14993.97 15880.78
1995/07/31 15089.72 16031.33
1995/08/31 15293.76 16234.61
1995/09/30 15412.10 16337.37
1995/10/31 15642.63 16574.92
1995/11/30 15941.97 16849.90
1995/12/31 16107.89 17011.82
1996/01/31 16219.92 17140.26
1996/02/29 16089.38 17024.57
1996/03/31 15850.53 16806.99
1996/04/30 15791.66 16759.43
1996/05/31 15776.67 16752.73
1996/06/30 15958.87 16935.16
1996/07/31 16100.15 17089.27
1996/08/31 16069.37 17085.17
1996/09/30 16252.41 17324.36
1996/10/31 16423.98 17520.30
1996/11/30 16725.13 17840.92
1996/12/31 16651.99 17765.99
1997/01/31 16664.11 17799.57
1997/02/28 16831.17 17962.97
1997/03/31 16590.34 17723.52
1997/04/30 16719.33 17871.87
1997/05/31 16955.79 18140.66
1997/06/30 17144.55 18333.86
1997/07/31 17622.41 18841.71
1997/08/31 17435.11 18665.16
1997/09/30 17671.49 18886.72
1997/10/31 17773.66 19008.16
1997/11/30 17889.62 19119.93
1997/12/31 18154.07 19398.89
1998/01/31 18322.58 19599.08
1998/02/28 18326.58 19604.96
1998/03/31 18339.12 19622.21
1998/04/30 18270.09 19533.72
1998/05/31 18520.23 19842.94
1998/06/30 18593.04 19921.12
1998/07/31 18636.55 19971.12
1998/08/31 18920.85 20279.67
1998/09/30 19155.04 20532.36
1998/10/31 19101.41 20531.95
1998/11/30 19175.23 20604.02
1998/12/31 19191.17 20655.94
1999/01/31 19398.16 20901.54
1999/02/28 19269.35 20810.20
1999/03/31 19280.41 20839.12
1999/04/30 19321.27 20891.01
1999/05/31 19199.36 20770.05
1999/06/30 18907.63 20470.96
IMATRL PRASUN SHR__CHT 19990630 19990712 115247 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Spartan Michigan Municipal Income Fund on June 30, 1989.
As the chart shows, by June 30, 1999, the value of the investment
would have grown to $18,908 - an 89.08% increase on the initial
investment. For comparison, look at how the Lehman Brothers Municipal
Bond Index - a market value-weighted index of investment-grade
municipal bonds with maturities of one year or more - did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 would have grown to $20,471 - a 104.71% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return and yield
of a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995 1994
Dividend returns 2.27% 4.91% 5.27% 5.63% 6.15% 5.40%
Capital returns -3.75% 0.80% 3.75% -2.25% 9.26% -12.90%
Total returns -1.48% 5.71% 9.02% 3.38% 15.41% -7.50%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 4.53(cents) 27.14(cents) 55.01(cents)
Annualized dividend rate 4.86% 4.72% 4.72%
30-day annualized yield 4.49% - -
30-day annualized 7.34% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the fund for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average share price of $11.34 over the past one
month, $11.60 over the past six months and $11.66 over the past one
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all bond funds based
on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. The tax-equivalent yield
shows what you would have to earn on a taxable investment to equal the
fund's tax-free yield, if you're in the 38.82% combined effective 1999
federal and state income tax bracket, but does not reflect the payment
of the federal alternative minimum tax, if applicable.
SPARTAN MICHIGAN MUNICIPAL INCOME FUND
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite a surge in municipal bond
prices on the last day of the period
following the Federal Reserve Board's
widely anticipated quarter point
increase - from 4.75% to 5.00% -
in the federal funds rate, or overnight
bank-lending level, the municipal bond
market was hard-hit by a continuous
sell-off during the six-month period that
ended June 30, 1999. Although
retail investors provided support in
the municipal bond market with
periods of active buying and
new-issue supply was down from last
year, institutional investors remained on
the sidelines, putting pressure on
prices, which move inversely to bond
yields. While municipal bonds
outperformed taxable bonds over the
six-month period, the Lehman Brothers
Municipal Bond Index - an index
of approximately 50,000
investment-grade, fixed-rate tax-exempt
bonds - declined 0.90%. In
comparison, the Lehman Brothers
Aggregate Bond Index - a widely
followed measure of taxable-bond
performance - fell 1.37%. In
general, the period was characterized
by uncertainty as investors adopted a
wait-and-see approach regarding
the Fed's next move and the release of
major economic reports that could
provide some clues about the future
direction of interest rates. Nevertheless,
municipal bond prices received a lift
on the last day of the period, as the Fed
shifted its monetary policy stance
from a tightening bias to a neutral
stance, meaning its next move is as
likely to keep interest rates unchanged
as it is to increase them.
(photograph of Norm Lind)
An interview with Norm Lind, Portfolio Manager of Spartan Michigan
Municipal Income Fund
Q. HOW DID THE FUND PERFORM, NORM?
A. Although rising interest rates curtailed the municipal bond
market's returns during the past six months, the fund slightly
outperformed its peers. For the six-month period that ended June 30,
1999, the fund had a total return of -1.48%. To get a sense of how the
fund did relative to its competitors, the Michigan municipal debt
funds average returned -1.57% for the same six-month period, according
to Lipper Inc. Additionally, the Lehman Brothers Michigan Municipal
Bond Index - which tracks the types of securities in which the fund
invests - returned -1.09% for the same six-month period. For the
12-month period that ended June 30, 1999, the fund had a total return
of 1.69%. That return compared to the Michigan municipal debt funds
average's 1.35% return and the Lehman Brothers index's 2.49% return
for the same 12-month period.
Q. WHAT FACTORS LED TO THE FUND'S OUTPERFORMANCE COMPARED TO ITS PEERS
DURING THE PAST SIX MONTHS?
A. The fund benefited from its relatively large position in premium
coupon bonds, which pay interest rates above prevailing market rates
and trade at prices that are above its face (par) value. The primary
reason why I favored them is because their premium gives the bonds DE
MINIMIS protection. This protects the bonds' gains from unfavorable
tax treatment that can occur during particular market environments. In
addition, individual investors tend to shy away from premiums, so I'm
often able to buy them at attractive prices compared to comparably
rated, comparable maturity bonds with coupons at or below prevailing
rates.
Q. WHICH HOLDINGS DETRACTED FROM THE FUND'S PERFORMANCE DURING THE
PAST SIX MONTHS?
A. The fund was hurt by its relatively large stake in health care
bonds, which made up about 25% of the investments at the end of the
period. Last year's federally mandated cutbacks in Medicare
reimbursements and increasingly competitive conditions were evident in
many hospitals' bottom lines this year. In addition, one of the larger
municipal bond insurance agencies decided to stop insuring lower-rated
hospital securities. In response, I sold some of the weaker hospital
holdings but continued to concentrate on those that I felt would
benefit from industry consolidation.
Q. WHERE DID YOU FOCUS THE FUND IN TERMS OF VARIOUS BOND MATURITIES?
A. As I have for some time now, I continued to focus on
intermediate-term bonds - those with maturities between five and 15
years. In the last several months in particular, rising interest rates
prompted significant selling of intermediate-maturity bonds from
"crossover" buyers - such as pension funds and insurance companies -
who move among various types of bonds in search of value. Despite
their recent disappointing performance, I continued to emphasize
intermediate-maturity bonds because I felt they offered an attractive
combination of reward - or income - for their given risk. For bonds
with maturities up to about 15 years, I felt investors were paid an
appropriate amount of added income for each additional year of
maturity. But beyond 15 years, I didn't think bonds offered enough
extra income for each successive year given the level of risk.
Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET AND THE FUND?
A. Supply and demand conditions - which can have a dramatic effect on
the municipal market's performance - appear favorable. In contrast to
last year, there has been a relatively light supply of municipal bonds
issued so far in 1999. In 1998, falling interest rates prompted a wave
of municipal bond refundings as issuers looked to refinance their debt
at lower interest rates. Those refundings made up more than one-third
of the total supply of municipal bonds issued last year. So far this
year, however, refunding issuance has slowed dramatically as interest
rates rose. Meanwhile, demand has been firm. However, the direction of
interest rates will be the primary factor determining municipal bond
performance. Rather than spending time trying to predict the direction
of interest rates, I'll continue to look for attractively priced bonds
that I believe can perform well in relation to other bonds, no matter
where interest rates end up.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: high current income for
Michigan residents by normally
investing in investment-grade
municipal securities whose
interest is free from federal
income tax and Michigan
personal income tax
FUND NUMBER: 081
TRADING SYMBOL: FMHTX
START DATE: November 12,
1985
SIZE: as of June 30, 1999,
more than $464 million
MANAGER: Norm Lind, since
1998; manager, various
Fidelity and Spartan
municipal income funds;
joined Fidelity in 1986
NORM LIND ON DEVELOPMENTS
IN TECHNOLOGY AND THEIR EFFECT
ON MUNICIPAL-BOND ISSUERS:
"Among the many factors I
consider in security selection, I'm
currently keeping an eye on two
technology-related developments
and their potential effect on
municipal-bond issuers. How
individual issuers meet these
challenges could have an impact on
their fiscal health and, ultimately,
their creditworthiness. The first is
potential problems stemming
from the so-called Year 2000
glitch, or `Y2K.' The issue is
whether problems that arise from
Y2K will compromise the
operations of a municipal issuer. I'll
also be looking at the extent to
which municipal issuers
adequately budget for Y2K fixes.
"The second technology-related
issue I'm watching is the rise of the
Internet. As more and more
people shop for goods and services
online, it's uncertain to what extent
states and municipalities will lose
out on sales tax revenue. Many
government entities across the
nation are wrestling with whether
they will be able to tax
Internet-based sales that emanate
from their states or municipalities.
As yet, there's no definitive estimate
of the magnitude of potential
problems stemming from this
issue. Nonetheless, I'm factoring
it in when I evaluate the
attractiveness of issuers, especially
those that are heavily reliant on
sales tax revenues."
SPARTAN MICHIGAN MUNICIPAL INCOME FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE SECTORS AS OF JUNE
30, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE SECTORS 6 MONTHS AGO
Health Care 25.3 29.5
General Obligations 19.8 15.8
Electric Utilities 10.2 10.1
Special Tax 8.8 8.8
Escrowed/Pre-Refunded 8.6 7.8
AVERAGE YEARS TO MATURITY AS
OF JUNE 30, 1999
6 MONTHS AGO
Years 13.4 13.8
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF JUNE 30, 1999
6 MONTHS AGO
Years 6.7 6.8
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION
AS OF JUNE 30, 1999
Aaa 48.2%
Aa, A 39.1%
Baa 7.5%
Not Rated 1.5%
Short-term
Investments 3.7%
Row: 1, Col: 1, Value: 48.2
Row: 1, Col: 2, Value: 39.1
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 1.5
Row: 1, Col: 5, Value: 3.7
AS OF DECEMBER 31, 1998
Aaa 43.2%
Aa, A 44.0%
Baa 7.5%
Not Rated 1.5%
Short-term
Investments 3.8%
Row: 1, Col: 1, Value: 43.2
Row: 1, Col: 2, Value: 44.0
Row: 1, Col: 3, Value: 7.5
Row: 1, Col: 4, Value: 1.5
Row: 1, Col: 5, Value: 3.8
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P (registered
trademark) RATINGS. AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S
INVESTMENTS.
SPARTAN MICHIGAN MUNICIPAL INCOME FUND
INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 96.3%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - 95.7%
Anchor Bay School District:
Rfdg. 4.75% 5/1/26 (FGIC Aaa $ 2,250,000 $ 1,994,535
Insured)
5.5% 5/1/18 (MBIA Insured) Aaa 2,720,000 2,842,726
(Pre-Refunded to 5/1/07 @
100) (f)
Central Michigan Univ. Rev. Aaa 1,750,000 1,834,595
5.5% 10/1/17 (FGIC Insured)
(Pre-Refunded to 4/1/07 @
101) (f)
Clarkston Cmnty. Schools Aaa 2,600,000 2,744,638
5.55% 5/1/10 (FGIC Insured)
(Pre-Refunded to 5/1/05 @
101) (f)
Clintondale Cmnty. Schools Aa2 2,205,000 2,241,294
Rfdg. 5.5% 5/1/15
Comstock Pub. Schools (Cap. Aaa 1,300,000 989,300
Appreciation) 0% 5/1/05
(FSA Insured)
Davison Cmnty. School Aaa 1,000,000 1,000,880
District 5.375% 5/1/16 (FGIC
Insured)
Dearborn Swr. Disp. Sys. Rev. Aaa 1,625,000 1,616,810
Series A, 5.1% 4/1/12 (MBIA
Insured)
Detroit Convention Facilities A 12,700,000 12,422,245
Rev. Rfdg. (Cobo Hall
Expansion Proj.) 5.25%
9/30/12
Detroit Gen. Oblig.:
Rfdg. (Distributable State
Aid):
5.2% 5/1/07 (AMBAC Insured) Aaa 4,000,000 4,074,480
5.25% 5/1/09 (AMBAC Insured) Aaa 4,500,000 4,566,510
Series A, 5% 4/1/05 (MBIA Aaa 1,765,000 1,789,904
Insured)
Detroit Local Dev. Fin. Auth. A2 3,000,000 2,938,590
Rfdg. Sr. Series A, 5.375%
5/1/18
Detroit Swr. Disp. Rev.:
(Wtr. Supply Sys. Proj.) Aaa 1,885,000 2,016,309
Series A, 6% 7/1/05 (MBIA
Insured)
Rfdg. Series B, 6.25% 7/1/07 Aaa 1,130,000 1,237,779
(MBIA Insured)
Detroit Wtr. Supply Sys. Rev.
Rfdg.:
6.2% 7/1/04 (FGIC Insured) Aaa 3,795,000 4,056,324
6.5% 7/1/15 (FGIC Insured) Aaa 6,000,000 6,811,140
Eastern Michigan Univ. Rev. Aaa 1,000,000 1,044,290
Rfdg. 5.9% 6/1/02 (AMBAC
Insured)
Ferndale School District Aaa 1,300,000 1,404,468
Rfdg. 6% 5/1/09 (FGIC
Insured)
Flint Hosp. Bldg. Auth. Rev. Baa1 5,570,000 5,725,069
(Hurley Med. Ctr.) 6.5%
7/1/20 (Pre-Refunded to
7/1/00 @ 100) (f)
Fowlerville Cmnty. School Aaa 2,500,000 2,216,150
District Rfdg. 4.75% 5/1/26
(FSA Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Grand Rapids San. Swr. Sys.
Rev. Rfdg. & Impt. Series A:
5.375% 1/1/09 (FGIC Insured) Aaa $ 1,000,000 $ 1,033,670
5.375% 1/1/10 (FGIC Insured) Aaa 1,000,000 1,034,010
Greater Detroit Resource
Recovery Auth. Rev. Rfdg.:
Series A, 6.25% 12/13/05 Aaa 4,000,000 4,328,840
(AMBAC Insured)
Series B, 6.25% 12/13/05 Aaa 2,000,000 2,164,420
(AMBAC Insured)
Hastings School District Aaa 1,000,000 1,059,420
5.625% 5/1/18 (FGIC Insured)
Holly Area School District:
6.625% 5/1/03 (FGIC Insured) Aaa 1,225,000 1,317,990
6.625% 5/1/06 (FGIC Insured) Aaa 1,150,000 1,277,064
Howell Pub. Schools Rfdg. Aaa 1,130,000 649,761
(Cap. Appreciation) 0%
5/1/10 (AMBAC Insured)
Huron Valley School District Aaa 5,830,000 3,156,129
Rfdg. (Cap. Appreciation) 0%
5/1/11 (FGIC Insured)
Imlay City Cmnty. School Aaa 1,375,000 991,953
District Rfdg. (Cap.
Appreciation) (School Bldg.
& Site Proj.) 0% 5/1/06
(FGIC Insured)
Kent County Rfdg. (Refuse Aa2 2,000,000 1,990,520
Disp. Sys.) Series A, 5%
11/1/10
Kent Hosp. Fin. Auth. Hosp. Aa3 3,685,000 4,352,132
Facilities Rev. Rfdg.:
(Butterworth Hosp.) Series
A, 7.25% 1/15/13
(Spectrum Health Proj.)
Series A:
5.375% 1/15/10 Aa3 2,200,000 2,224,552
5.375% 1/15/11 Aa3 2,420,000 2,427,938
5.375% 1/15/12 Aa3 2,505,000 2,491,673
Lakeshore Pub. Schools Aaa 1,000,000 1,120,600
(Berrien County) 6.8%
5/1/06 (MBIA Insured)
Lansing Bldg. Auth. Rev. Aaa 3,000,000 1,535,370
(Cap. Appreciation) 0%
6/1/12 (AMBAC Insured)
Lowell Area Schools (Cap. Aaa 11,375,000 4,249,018
Appreciation) 0% 5/1/15
(FGIC Insured) (Pre-Refunded
to 5/1/05 @ 49.0888) (c)(f)
Marquette City Hosp. Fin. Aaa 2,750,000 2,891,103
Auth. Rev. Rfdg. (Marquette
Gen. Hosp.) Series D, 5.875%
4/1/11 (FSA Insured)
Michigan Bldg. Auth. Rev.:
(Cap. Appreciation) (Detroit
Reg'l.) Series I:
0% 10/1/01 (Escrowed to Aaa 1,000,000 910,250
Maturity) (f)
0% 10/1/02 (Escrowed to Aaa 2,000,000 1,736,140
Maturity) (f)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Michigan Bldg. Auth. Rev.: -
continued
(Cap. Appreciation) (Detroit
Reg'l.):
Series I, 0% 10/1/04 Aaa $ 6,820,000 $ 5,361,066
(Escrowed to Maturity) (f)
(Facilities Prog.):
Series I, 5.3% 10/1/10 (AMBAC Aaa 1,300,000 1,330,264
Insured)
Series II, 5.5% 10/15/09 Aa2 5,000,000 5,221,950
Rfdg.:
(Facilities Prog.) Series 1, Aa2 5,000,000 5,044,800
5.25% 10/15/11
Series I:
6% 10/1/00 Aa2 1,375,000 1,411,438
6.25% 10/1/20 Aa2 1,500,000 1,578,330
Series II, 6.75% 10/1/11 Aa2 1,000,000 1,064,930
Michigan Comprehensive Trans. Aa3 1,275,000 1,340,025
Rev. Rfdg. Series B, 5.75%
5/15/04
Michigan Gen. Oblig. (College Aa1 1,045,000 958,098
Savings) 0% 8/1/01
Michigan Hosp. Fin. Auth. Rev.:
(Daughters of Charity Health Aa2 1,000,000 1,080,510
Sys.) 7% 11/1/01
(Pre-Refunded to 11/1/01 @
102) (f)
(Mercy Health Svcs., Inc.):
Series Q:
5.375% 8/15/26 (AMBAC Insured) Aaa 2,000,000 1,951,340
6% 8/15/08 (AMBAC Insured) Aaa 1,130,000 1,208,976
6% 8/15/10 (AMBAC Insured) Aaa 1,265,000 1,347,921
Series R, 5.25% 8/15/10 Aaa 2,195,000 2,225,467
(AMBAC Insured)
(Presbyterian Villages):
6.4% 1/1/15 - 1,000,000 1,040,660
6.5% 1/1/25 - 1,225,000 1,274,588
(Saint John Hosp. & Med.
Ctr.) Series A:
6% 5/15/08 (AMBAC Insured) Aaa 1,615,000 1,736,884
6% 5/15/09 (AMBAC Insured) Aaa 1,710,000 1,845,090
Rfdg.:
(Bay Med. Ctr.) Series A, A3 3,000,000 3,175,530
8.25% 7/1/12
(Botsford Hosp.) Series A, 5% Aaa 2,410,000 2,450,464
2/15/05 (MBIA Insured)
(Crittenton Hosp.) Series A, A1 6,520,000 6,304,253
5.25% 3/1/14
(Daughters of Charity Health Aa2 3,125,000 3,268,375
Sys.) 5.5% 11/1/05
(Detroit Med. Ctr. Oblig. Baa2 6,000,000 6,053,640
Group) Series A, 6.5%
8/15/18
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Michigan Hosp. Fin. Auth.
Rev.: - continued
Rfdg.:
(Genesys Reg'l. Hosp.) Series
A:
5.5% 10/1/18 Baa2 $ 3,000,000 $ 2,829,390
5.5% 10/1/27 Baa2 12,550,000 11,620,045
(McLaren Health Care Corp.) A1 5,000,000 4,541,300
Series A, 5% 6/1/19
(McLaren Oblig. Group) Series A1 9,250,000 9,106,348
A, 5.375% 10/15/13
(Mercy Health Svcs., Inc.) Aa3 1,250,000 1,332,375
Series T, 6% 8/15/06
(Pontiac Osteopathic Hosp.) Baa2 3,000,000 2,880,600
Series A, 6% 2/1/24
(Saint John Health Sys.) Aaa 3,000,000 2,739,900
Series A, 5% 5/15/28 (AMBAC
Insured)
(Sisters of Mercy Health Aaa 9,950,000 10,170,094
Corp.) Series P, 5.375%
8/15/14 (MBIA Insured)
Michigan Hsg. Dev. Auth.:
Rental Hsg. Rev. Series B:
5.8% 4/1/19 AA- 4,650,000 4,710,357
7.55% 4/1/23 AA- 4,750,000 4,959,570
Single Family Mtg. Rev.:
Series A:
5.15% 12/1/26 (AMBAC Insured) Aaa 2,240,000 2,257,987
(e)
6.8% 12/1/16 AA+ 4,115,000 4,200,098
Series C:
5.95% 12/1/14 AA+ 2,500,000 2,546,575
6% 12/1/16 AA+ 2,500,000 2,549,800
Michigan Job Dev. Auth. Poll. A3 8,825,000 8,937,695
Cont. Rev. (Gen. Motors
Corp.) 5.55% 4/1/09
Michigan Muni. Bond Auth.:
(Drinking Wtr. Revolving Aa1 1,790,000 1,624,819
Fund) 4.75% 10/1/20
(Local Gov't. Ln. Prog.) 7.5% Aaa 65,000 66,637
11/1/09 (AMBAC Insured)
(State Revolving Fund) 5.1% Aa1 4,000,000 3,987,480
10/1/11
Rfdg.:
(Cap. Appreciation) (Gov't.
Ln. Proj.) Series A:
0% 12/1/04 (FGIC Insured) Aaa 2,000,000 1,565,940
0% 12/1/05 (FGIC Insured) Aaa 1,855,000 1,377,133
0% 12/1/06 (FGIC Insured) Aaa 5,000,000 3,518,300
0% 12/1/07 (FGIC Insured) Aaa 1,000,000 665,640
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Michigan Muni. Bond Auth.: -
continued
Rfdg.:
(Local Govt. Ln. Prog.) Aaa $ 6,000,000 $ 5,914,740
Series A, 4.75% 12/1/09
(FGIC Insured)
(State Revolving Fund) Series Aa1 2,490,000 2,645,077
A, 6% 10/1/03
Michigan Pub. Pwr. Agcy. Rev.
Rfdg. (Belle River Proj.)
Series A:
5.25% 1/1/18 A1 10,000,000 9,677,000
5.7% 1/1/03 A1 2,000,000 2,085,140
Michigan South Central Pwr.
Agcy. Supply Sys. Rev. Rfdg.:
5% 11/1/09 (AMBAC Insured) Aaa 1,675,000 1,675,771
5.9% 11/1/06 (MBIA Insured) Aaa 4,510,000 4,841,711
Michigan Strategic Fund Ltd.
Oblig. Rev. Rfdg. (Detroit
Edison Co. Proj.):
Series A, 5.55% 9/1/29 (MBIA Aaa 3,000,000 2,893,890
Insured) (b)(e)
Series AA, 6.4% 9/1/25 (MBIA Aaa 5,000,000 5,459,050
Insured)
Michigan Strategic Fund Rev.
Rfdg.:
(Detroit Edison Co. Proj.)
Series BB:
6.5% 2/15/16 (FGIC Insured) Aaa 1,250,000 1,324,475
7% 7/15/08 (MBIA Insured) Aaa 2,000,000 2,302,440
7% 5/1/21 (AMBAC Insured) Aaa 8,500,000 10,219,550
(Envir. Research Institute):
6.25% 8/15/06 (Pre-Refunded - 2,660,000 2,826,995
to 8/15/02 @ 101) (f)
6.375% 8/15/12 (Pre-Refunded - 1,770,000 1,887,475
to 8/15/02 @ 101) (f)
(Ford Motor Co. Proj.) Series A1 8,250,000 9,332,400
A, 7.1% 2/1/06
Michigan Trunk Line Fund:
Rfdg. Series A, 5.5% 11/1/16 Aa3 7,000,000 7,092,470
Series A:
5.5% 10/1/21 Aa3 9,750,000 10,030,995
5.75% 10/1/04 Aa3 4,145,000 4,372,146
Michigan Underground Storage Aaa 5,000,000 5,374,900
Tank Fin. Assurance Auth.
Rev. Rfdg. Series I, 6%
5/1/06 (AMBAC Insured)
Mona Shores School District Aaa 2,220,000 2,542,633
(School Bldg. & Site Proj.)
6.75% 5/1/10 (FGIC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Monroe County Poll. Cont. Aaa $ 5,000,000 $ 5,210,600
Rev. (Detroit Edison Proj.)
Series CC, 7.5% 12/1/19
(AMBAC Insured) (e)
Northern Michigan Univ. Revs. Aaa 5,500,000 5,261,905
Rfdg. 5.125% 12/1/20 (MBIA
Insured)
Okemos Pub. School District
Rfdg.:
0% 5/1/12 (MBIA Insured) Aaa 2,500,000 1,272,200
0% 5/1/13 (MBIA Insured) Aaa 1,700,000 815,218
Pinckney Cmnty. Schools
Livingston & Washtenaw
Counties:
5.5% 5/1/10 (FGIC Insured) Aaa 2,175,000 2,237,531
5.5% 5/1/11 (FGIC Insured) Aaa 2,350,000 2,405,343
5.5% 5/1/14 (FGIC Insured) Aaa 3,075,000 3,147,416
Plymouth-Canton Cmnty. School Aaa 2,000,000 1,756,900
District 4.625% 5/1/23
(FGIC Insured)
Port Huron Area School Aa2 1,975,000 1,267,496
District (Cap. Appreciation)
(School Bldg. & Site Proj.)
0% 5/1/08
Rochester Cmnty. School Aaa 1,000,000 1,048,470
District Rfdg. 5.625%
5/1/11 (FGIC Insured)
Romulus Cmnty. Schools (Cap. Aaa 3,610,000 2,604,326
Appreciation) Series 1, 0%
5/1/06 (FSA Insured)
Royal Oak City School Aaa 3,000,000 2,283,000
District (Cap. Appreciation)
(School Bldg. & Site) 0%
5/1/05 (AMBAC Insured)
Royal Oak Hosp. Fin. Auth.
Rev.:
(William Beaumont Hosp.) Aa3 5,910,000 4,317,964
Series K, 0% 11/15/05
Rfdg. (William Beaumont Aa3 4,000,000 4,049,080
Hosp.) 5.5% 1/1/14
Saint Clair Shores Econ. Dev. A2 1,700,000 1,769,241
Corp. Rev. (Bon Secours
Health Sys.) Series B, 7.5%
9/1/15
Saint John's Pub. Schools Aaa 1,400,000 1,552,740
6.5% 5/1/07 (FGIC Insured)
Standish Sterling Cmnty. Aaa 8,900,000 8,415,840
Schools 5.15% 5/1/28 (FGIC
Insured)
Univ. of Michigan Rev.:
Rfdg. (Univ. Hosp. Proj.)
Series A:
5.25% 12/1/10 Aa2 1,685,000 1,693,931
5.75% 12/1/12 Aa2 9,000,000 9,304,380
Series A, 6.25% 8/15/15 Aa2 3,145,000 3,347,161
(Pre-Refunded to 8/15/02 @
101) (f)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Walled Lake Consolidated Aaa $ 3,550,000 $ 3,622,740
School District Rfdg. 5.3%
5/1/09 (MBIA Insured)
Wayne Charter County Arpt.
Rev.:
(Detroit Metro Arpt.):
Series A, 5% 12/1/28 (MBIA Aaa 8,400,000 7,689,024
Insured) (e)
Series B, 6.875% 12/1/11 Aaa 1,500,000 1,596,165
(MBIA Insured) (e)
5.25% 12/1/12 (MBIA Insured) Aaa 2,500,000 2,498,875
(e)
Rfdg. (Detroit Metro Arpt.) Aaa 2,000,000 2,008,180
Series C, 5.25% 12/1/13
(MBIA Insured)
Wayne County Bldg. Auth. Baa2 2,250,000 2,495,408
Series A, 8% 3/1/17
(Pre-Refunded to 3/1/02 @
102) (f)
West Ottawa Pub. School
District:
(Cap. Appreciation) (School Aaa 4,110,000 2,999,848
Bldg. & Site) 0% 5/1/06
(MBIA Insured) (Pre-Refunded
to 5/1/05 @ 95.9187) (f)
Rfdg. 5.25% 5/1/10 (FGIC Aaa 3,875,000 3,919,408
Insured)
Western Michigan Univ. Rev.:
Rfdg. 5.125% 11/15/22 (FGIC Aaa 2,365,000 2,252,000
Insured)
5.6% 7/15/17 (FGIC Insured) Aaa 2,500,000 2,517,150
442,831,669
PUERTO RICO - 0.6%
Puerto Rico Commonwealth Baa 2,800,000 2,877,140
Urban Renewal & Hsg. Corp.
Rfdg. 7.875% 10/1/04
TOTAL MUNICIPAL BONDS 445,708,809
(Cost $433,434,868)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MUNICIPAL NOTES - 3.7%
MICHIGAN - 3.7%
Michigan Strategic Fund Ltd. 1,300,000 1,300,000
Oblig. Rev. (Detroit Edison
Proj.) Series CC, 3.45%,
VRDN (d)
Michigan Strategic Fund Rev. 1,000,000 1,000,000
(Dow Chemical Co. Proj.)
Series CC, 3.6%, VRDN (d)(e)
Midland County Econ. Dev.
Rev. (Dow Chemical Co. Proj.):
Series 1993 A, 3.8%, VRDN 9,300,000 9,300,000
(d)(e)
Series 1993 B, 3.75%, VRDN (d) 3,400,000 3,400,000
MUNICIPAL NOTES - CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Univ. of Michigan Rev.:
(Univ. Hosp. Proj.) Series A, $ 1,600,000 $ 1,600,000
3.45%, VRDN (d)
Rfdg. (Univ. Hosp. Proj.) 400,000 400,000
Series A, 3.45%, VRDN (d)
TOTAL MUNICIPAL NOTES 17,000,000
(Cost $17,000,000)
TOTAL INVESTMENT IN $ 462,708,809
SECURITIES - 100%
(Cost $450,434,868)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUTURES CONTRACTS
EXPIRATION DATE UNDERLYING FACE AMOUNT UNREALIZED GAIN/(LOSS)
PURCHASED
23 Bond Buyer Municipal Bond Sept. 1999 $ 2,731,969 $ (5,169)
Index Contracts
The face value of futures purchased as a percentage of investment in
securities - 0.6%
</TABLE>
SECURITY TYPE ABBREVIATION
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) Standard & Poor's(registered trademark) credit ratings are used in
the absence of a rating by Moody's Investors Service, Inc.
(b) Security purchased on a delayed delivery or when-issued basis.
(c) Security or a portion of the security was pledged to cover margin
requirements for futures contracts. At the period end, the value of
securities pledged amounted to $293,229.
(d) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(e) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(f) Security collateralized by an amount sufficient to pay interest
and principal.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 80.6% AAA, AA, A 83.5%
Baa 7.5% BBB 6.2%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 1.5%.
The distribution of municipal securities by revenue source, as a
percentage of total value of investments in securities, is as follows:
Health Care 25.3%
General Obligations 19.8
Electric Utilities 10.2
Special Tax 8.8
Escrowed/Pre-Refunded 8.6
Industrial Development 7.4
Others (individually less 19.9
than 5%)
100.0%
INCOME TAX INFORMATION
At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $450,434,868. Net unrealized appreciation
aggregated $12,273,941, of which $17,197,958 related to appreciated
investment securities and $4,924,017 related to depreciated investment
securities.
At December 31, 1998, the fund had a capital loss carryforward of
approximately $12,527,000 all of which will expire on December 31,
2006.
At December 31, 1998 the fund was required to defer approximately
$1,880,000 of losses on futures contracts and options.
SPARTAN MICHIGAN MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 462,708,809
value (cost $450,434,868) -
See accompanying schedule
Receivable for fund shares 109,275
sold
Interest receivable 5,815,531
Receivable for daily 16,531
variation on futures
contracts
TOTAL ASSETS 468,650,146
LIABILITIES
Payable to custodian bank $ 136,073
Payable for investments 3,000,000
purchased on a delayed
delivery basis
Payable for fund shares 485,637
redeemed
Distributions payable 506,325
Accrued management fee 148,409
Other payables and accrued 73,349
expenses
TOTAL LIABILITIES 4,349,793
NET ASSETS $ 464,300,353
Net Assets consist of:
Paid in capital $ 466,784,399
Accumulated undistributed net (14,752,818)
realized gain (loss) on
investments
Net unrealized appreciation 12,268,772
(depreciation) on investments
NET ASSETS, for 41,177,762 $ 464,300,353
shares outstanding
NET ASSET VALUE, offering $11.28
price and redemption price
per share ($464,300,353
(divided by) 41,177,762
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999 (UNAUDITED)
INTEREST INCOME $ 12,469,306
EXPENSES
Management fee $ 913,959
Transfer agent fees 203,537
Accounting fees and expenses 71,899
Non-interested trustees' 775
compensation
Custodian fees and expenses 14,742
Registration fees 17,280
Audit 15,497
Legal 4,958
Reports to shareholders 11,191
Total expenses before 1,253,838
reductions
Expense reductions (2,852) 1,250,986
NET INTEREST INCOME 11,218,320
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 33,236
Futures contracts (316,010) (282,774)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (18,318,018)
Futures contracts 48,659 (18,269,359)
NET GAIN (LOSS) (18,552,133)
NET INCREASE (DECREASE) IN $ (7,333,813)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 11,218,320 $ 22,193,833
Net realized gain (loss) (282,774) 4,612,882
Change in net unrealized (18,269,359) (1,033,385)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (7,333,813) 25,773,330
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (11,218,320) (22,193,833)
From net interest income
In excess of net interest - (122,449)
income
TOTAL DISTRIBUTIONS (11,218,320) (22,316,282)
Share transactions Net 50,206,347 79,777,925
proceeds from sales of shares
Reinvestment of distributions 8,144,836 16,665,701
Cost of shares redeemed (55,434,145) (77,897,152)
NET INCREASE (DECREASE) IN 2,917,038 18,546,474
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) (15,635,095) 22,003,522
IN NET ASSETS
NET ASSETS
Beginning of period 479,935,448 457,931,926
End of period $ 464,300,353 $ 479,935,448
OTHER INFORMATION
Shares
Sold 4,324,975 6,827,560
Issued in reinvestment of 703,106 1,427,061
distributions
Redeemed (4,789,209) (6,674,899)
Net increase (decrease) 238,872 1,579,722
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 11.720 $ 11.630 $ 11.300 $ 11.560 $ 10.580
period
Income from Investment .271 .557 .571 .630 E .611
Operations Net interest
income
Net realized and unrealized (.440) .093 .420 (.258) .980
gain (loss)
Total from investment (.169) .650 .991 .372 1.591
operations
Less Distributions
From net interest income (.271) (.557) (.571) (.630) (.611)
In excess of net interest - (.003) - (.002) -
income
From net realized gain - - - - -
In excess of net realized gain - - (.090) - -
Total distributions (.271) (.560) (.661) (.632) (.611)
Net asset value, end of period $ 11.280 $ 11.720 $ 11.630 $ 11.300 $ 11.560
TOTAL RETURN B, C (1.48)% 5.71% 9.02% 3.38% 15.41%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 464,300 $ 479,935 $ 457,932 $ 455,729 $ 491,874
(000 omitted)
Ratio of expenses to average .53% A .55% D .56% D .59% .59%
net assets
Ratio of net interest income 4.71% A 4.77% 5.08% 5.52% 5.49%
to average net assets
Portfolio turnover rate 15% A 24% 16% 29% 29%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31,
1994
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.340
period
Income from Investment .687
Operations Net interest
income
Net realized and unrealized (1.590)
gain (loss)
Total from investment (.903)
operations
Less Distributions
From net interest income (.687)
In excess of net interest -
income
From net realized gain (.080)
In excess of net realized gain (.090)
Total distributions (.857)
Net asset value, end of period $ 10.580
TOTAL RETURN B, C (7.50)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 433,694
(000 omitted)
Ratio of expenses to average .57%
net assets
Ratio of net interest income 6.04%
to average net assets
Portfolio turnover rate 18%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E NET INTEREST INCOME PER SHARE REFLECTS A PAYMENT OF APPROXIMATELY
$0.049 RECEIVED FROM AN ISSUER THAT WAS IN BANKRUPTCY.
PERFORMANCE: THE BOTTOM LINE
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
To evaluate a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the value of an investment, assuming reinvestment of the fund's
dividend income. Yield measures the income paid by a fund. Since a
money market fund tries to maintain a $1 share price, yield is an
important measure of performance. If Fidelity had not reimbursed
certain fund expenses, the life of fund total returns would have been
lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY MI MUNICIPAL MONEY 1.30% 2.77% 16.23% 35.70%
MARKET
All Tax-Free Money Market 1.27% 2.71% 16.06% n/a
Funds Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on January 12, 1990. For example, if
you had invested $1,000 in a fund that had a 5% return over the past
year, the value of your investment would be $1,050. To measure how the
fund's performance stacked up against its peers, you can compare it to
the all tax-free money market funds average, which reflects the
performance of tax-free money market funds with similar objectives
tracked by IBC Financial Data, Inc. The past six months average
represents a peer group of 456 money market funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY MI MUNICIPAL MONEY 2.77% 3.05% 3.28%
MARKET
All Tax-Free Money Market 2.71% 3.03% n/a
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
6/28/99 3/29/99 12/28/98 9/28/98 6/29/98
Fidelity Michigan Municipal 2.90% 2.55% 3.11% 3.29% 3.05%
Money Market Fund
All Tax-Free Money Market 2.93% 2.47% 2.98% 3.23% 3.05%
Funds Average
Fidelity Michigan Municipal 4.74% 4.17% 5.07% 5.38% 4.99%
Money Market Fund
Tax-Equivalent
Portion of fund's income 1.04% 0.64% 4.01% 0.00% 0.00%
subject to state taxes
YIELD refers to the income paid by the fund over a given period.
Yields for money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income
earned is reinvested or compounded is called an effective yield. The
table above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the all
tax-free money market funds average as tracked by IBC Financial Data,
Inc. Or you can look at the fund's tax-equivalent yield, which is
based on a combined effective 1999 federal and state income tax rate
of 38.82% and reflects that a portion of the fund's income was subject
to state taxes. A portion of the fund's income may be subject to the
federal alternative minimum tax.
(checkmark)COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the tax-free
yield - makes the comparison
more meaningful. Keep in mind
that the U.S. government
neither insures nor guarantees
a money market fund. In fact,
there is no assurance that a
money fund will maintain a $1
share price.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Diane McLaughlin)
An interview with Diane McLaughlin, Portfolio Manager of Fidelity
Michigan Municipal Money Market Fund
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE FIRST HALF OF
1999, DIANE?
A. Market observers confronted many issues that have characterized the
U.S. economy for some time: strong economic growth, tight labor
markets and continued expectations of inflationary pressures. Consumer
confidence was at an all-time high, prompting strong consumer
spending. Growth in real GDP - gross domestic product adjusted for
inflation - was 4.3% in the first quarter of 1999. In addition,
unemployment stayed at historically low levels. Low unemployment
usually causes employers to raise wages to attract or retain workers,
passing on the additional costs in the form of price increases.
However, we have yet to see significant evidence that American
consumers are paying higher prices. The consumer price index (CPI)
increased only about 2% over the past year. Wages have started to
creep up, but have been largely offset by increases in productivity.
The backdrop at the end of last year was similar, but the Federal
Reserve Board cut short-term interest rates three times because of
global economic instability. As these risks lessened, the markets
began to expect the Fed to change course, which it did by raising the
rate banks charge each other for overnight loans - known as the fed
funds target rate - by 0.25 percentage points on June 30.
Q. WHAT PROMPTED THE FED TO REVERSE COURSE?
A. Last fall, the Fed rate cuts were a response to global financial
instability and aversion to risk, the latter sparked by the
near-collapse of a highly leveraged hedge fund. During the first six
months of 1999, it became apparent that these negative influences had
dissipated. In addition, global economic growth started to trend
upward and U.S. exports were expected to improve. These changes
prompted the Fed to shift in May to a "tightening bias" - an
inclination toward raising rates to slow growth and head off
inflation. With growth increasing the potential for inflation, the Fed
felt the need to act pre-emptively by implementing its rate hike in
June.
Q. WHAT WAS YOUR STRATEGY WITH THE FUND?
A. The fund started the period with an average maturity of 30 days -
shorter than the average of its peers. Financial markets were showing
signs of stability, and I wanted to position the fund to take
advantage of the higher interest rates I expected in the future. In
addition, the supply of one-year fixed-rate paper was slim, so yields
on these securities were not attractive. I turned my focus to
short-term variable rate securities that were abundant, and thus
offered relatively appealing values. By the end of the period, a
combination of technical factors - issues of supply and demand - in
the one-year note market and the anticipation of higher rates made
yields on fixed-rate paper more attractive. The fund participated in
these note deals, extending its maturity to 38 days at the end of
June.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on June 30, 1999, was 2.95%, compared to
3.19% six months ago. The latest yield was the equivalent of a 4.82%
taxable yield for Michigan investors in the 38.82% combined federal
and state income tax bracket. Through June 30, 1999, the fund's
six-month total return was 1.30%, compared to 1.27% for the all
tax-free money market funds average, according to IBC Financial Data,
Inc.
Q. WHAT IS YOUR OUTLOOK?
A. The market had expected the Fed to maintain a tightening bias after
its June move. In fact, prices reflected at least a second and
possibly a third rate hike. However, the Fed surprised the market by
switching back to a neutral bias. This suggests that its next move is
as likely to be an "easing" - a rate cut, as it is a rate hike. In
response, yields fell as the market became comfortable with the notion
that the Fed might raise rates just once. It now appears that the Fed
will look for signs of inflation before raising rates again. As a
result, going forward investors will be especially attentive to
emerging economic data for an indication of Fed policy. For my part,
I'll seek to maintain a neutral, flexible positioning with the fund
because of this continuing uncertainty, although it may be difficult
to maneuver the fund's maturity during periods of light issuance.
Another consideration that might influence municipal securities is the
Year 2000 issue. As one of many factors we look at, we'll be paying
close attention to this issue in the months ahead.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: high current
tax-free income while
maintaining a stable $1
share price by investing in
high-quality, short-term
municipal money market
securities
FUND NUMBER: 420
TRADING SYMBOL: FMIXX
START DATE: January 12,
1990
SIZE: as of June 30, 1999,
more than $396 million
MANAGER: Diane McLaughlin,
since 1997; manager,
various Fidelity and Spartan
municipal money market
funds; joined Fidelity in
1992
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MATURITY DIVERSIFICATION
DAYS % OF FUND'S INVESTMENTS 6/30/99 % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
12/31/98 6/30/98
0 - 30 74 82 78
31 - 90 20 2 13
91 - 180 0 10 6
181 - 397 6 6 3
WEIGHTED AVERAGE MATURITY
6/30/99 12/31/98 6/30/98
Fidelity Michigan Municipal 38 DAYS 30 Days 27 Days
Money Market Fund
All Tax-Free Money Market 44 DAYS 46 Days 41 Days
Funds Average *
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JUNE 30, 1999 AS OF DECEMBER 31, 1998
Variable Rate Demand Notes Variable Rate Demand Notes
(VRDNs) 71.1% (VRDNs) 81.0%
Commercial Paper (including Commercial Paper (including
CP Mode) 16.6% CP Mode) 9.2%
Municipal Notes 10.8% Municipal Notes 8.9%
Other Investments 1.5% Other Investments 0.9%
Row: 1, Col: 1, Value: 71.09999999999999 Row: 1, Col: 1, Value: 81.0
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 16.6 Row: 1, Col: 3, Value: 9.199999999999999
Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 10.8 Row: 1, Col: 5, Value: 8.9
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 1.5 Row: 1, Col: 8, Value: 0.9
</TABLE>
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MUNICIPAL SECURITIES - 100.0%
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - 99.8%
Bay City School District Rev. $ 3,600,000 $ 3,601,882
RAN 3.5% 8/25/99
Clinton Economic Dev. Corp. 3,700,000 3,700,000
Rev. (Clinton Area Care Ctr.
Prj.) 3.72%, LOC Northern
Trust Co., Chicago, VRDN (b)
Cornell Economic Dev. Corp. 1,300,000 1,300,000
Ind. Dev. Rev. Bonds
(Mead-Escanaba Paper Co.
Proj.) Series 90, 3.15%
tender 7/19/99, LOC Cr.
Swiss First Boston, Inc., CP
mode
Detroit Economic Dev. Corp.
Rev.:
(Michigan Opera Theatre 5,000,000 5,000,000
Proj.) 3.65%, LOC NBD Bank
NA, Detroit, VRDN (b)
(Waterfront Reclamation &
Casino Dev. Proj.):
Series 1999 B, 3.8%, MGM 3,800,000 3,800,000
Grand Detroit LLC, LOC Bank
of America Nat'l. Trust &
Savings Assoc., VRDN (b)
Series 1999 C, 3.85%, 2,000,000 2,000,000
Greektown Casino LLC, LOC
LaSalle Nat'l. Bank,
Chicago, VRDN (b)
Detroit School District RAN 4,000,000 4,028,448
4% 6/1/00
Detroit Swr. Disp. Rev. 9,355,000 9,355,000
Series 1998 B, 3.3% (MBIA
Insured) (BPA Morgan
Guaranty Trust Co., NY),
VRDN (b)
Detroit Wtr. Supply Sys. Rev.
Participating VRDN:
Series SG 64, 3.77% 3,500,000 3,500,000
(Liquidity Facility Societe
Generale, France) (b)(f)
Series SGB 6, 3.72% 7,570,000 7,570,000
(Liquidity Facility Societe
Generale, France) (b)(f)
Flint Economic Dev. Corp. 700,000 700,000
Ltd. Oblig. Rev. (Genessee
County Real Estate Proj.)
Series 1990, 3.65%, LOC NBD
Bank NA, Detroit, VRDN (b)(e)
Genesee County Economic Dev. 3,000,000 3,000,000
Corp. (Creative Foam Corp.
Proj.) Series 1994, 3.65%,
LOC NBD Bank NA, Detroit,
VRDN (b)(e)
Georgetown Charter Township 1,000,000 1,000,000
Ind. Dev. Rev. (J&F Steel
Corp. Proj.) Series 1989,
3.5%, LOC Societe Generale,
France, VRDN (b)(e)
Jackson Pub. Schools State
Aid RAN:
Series 1999 B, 4% 7/6/00, LOC 4,750,000 4,770,615
Comerica Bank, Detroit
Series A, 3.3% 8/25/99, LOC 1,750,000 1,750,784
Comerica Bank, Detroit
Kalamazoo City School 3,250,000 3,252,317
District State Aid RAN
Series C, 3.75% 9/16/99,
LOC First of America Bank NA
Kalamazoo Hosp. Fin. Auth. 4,000,000 4,000,000
Participating VRDN Series
138, 3.72% (Liquidity
Facility Morgan Stanley,
Dean Witter & Co.) (b)(f)
Kent County Michigan Arpt. 6,245,000 6,245,000
Facilities Rev.
Participating VRDN Series
MSDW 98-118, 3.69%
(Liquidity Facility Morgan
Stanley, Dean Witter & Co.)
(b)(f)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Livonia Economic Dev. Corp. $ 1,600,000 $ 1,600,000
(Ajluni Proj.) Series 1993,
3.65%, LOC NBD Bank NA,
Detroit, VRDN (b)(e)
Macomb County Cmnty. College 3,400,000 3,413,235
District Rev. Bonds 3.75%
5/1/00
Michigan Bldg. Auth. Rev.
Series 2:
3.15% 8/5/99, LOC Canadian 4,800,000 4,800,000
Imperial Bank of Commerce,
CP
3.15% 8/5/99, LOC Canadian 6,000,000 6,000,000
Imperial Bank of Commerce,
CP
Michigan Higher Ed. Rev. 835,000 835,000
(Davenport College of Bus.)
Series 1997, 3.6%, LOC Old
Kent Bank, Michigan, VRDN (b)
Michigan Higher Ed. Student
Ln. Auth. Rev.:
Rfdg.:
Series XII B, 3.4% (AMBAC 5,500,000 5,500,000
Insured) (BPA Kredietbank
NV), VRDN (b)(e)
Series XII F, 3.4% (AMBAC 6,700,000 6,700,000
Insured) (BPA Kredietbank
NV), VRDN (b)(e)
Series XII D, 3.4% (AMBAC 1,300,000 1,300,000
Insured) (BPA Kredietbank
NV), VRDN (b)(e)
Michigan Hosp. Fin. Auth. Rev.:
Participating VRDN Series 3,700,000 3,700,000
1997 X, 3.6% (Liquidity
Facility First Union Nat'l.
Bank of North Carolina)
(b)(f)
(Hosp. Equip. Ln. Prog.):
Series 1995 A, 3.35%, LOC 1,090,000 1,090,000
First of America Bank NA,
VRDN (b)
Series A:
3.35%, LOC First of America 9,915,000 9,915,000
Bank NA, VRDN (b)
3.35%, LOC First of America 1,200,000 1,200,000
Bank NA, VRDN (b)
3.35%, LOC First of America 2,600,000 2,600,000
Bank NA, VRDN (b)
Michigan Hsg. Dev. Auth.:
Participating VRDN:
Series 1997 N, 3.82% 3,200,000 3,200,000
(Liquidity Facility Caisse
des Depots et
Consignations) (b)(e)(f)
Series PT 19, 3.82% 885,000 885,000
(Liquidity Facility Cr.
Swiss First Boston, Inc.)
(b)(e)(f)
Series PT 38, 3.82% 4,710,000 4,710,000
(Liquidity Facility
Commerzbank AG) (b)(e)(f)
Series PT 58, 3.82% 6,600,000 6,600,000
(Liquidity Facility Cr.
Swiss First Boston, Inc.)
(b)(e)(f)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Michigan Hsg. Dev. Auth.: -
continued
Multi-family Hsg. Rev.:
(Canton Club East Apts.) $ 4,000,000 $ 4,000,000
Series 1998 A, 3.65%, LOC
Key Bank, NA, VRDN (b)(e)
Bonds Series 1988 A:
3.15% tender 9/9/99, LOC 2,500,000 2,500,000
Landesbank Hessen-Thuringen,
CP mode (e)
3.2% tender 8/12/99, LOC 2,050,000 2,050,000
Landesbank Hessen-Thuringen,
CP mode (e)
3.2% tender 8/19/99, LOC 1,500,000 1,500,000
Landesbank Hessen-Thuringen,
CP mode (e)
3.25% tender 8/11/99, LOC 3,800,000 3,800,000
Landesbank Hessen-Thuringen,
CP mode (e)
Michigan Muni. Bond Auth. RAN:
Series 1998 D1, 4.25% 8/27/99 16,700,000 16,719,678
Series 1999 A1, 4% 6/30/00 (a) 6,000,000 6,032,940
Michigan Strategic Fund Ind.
Dev. Rev.:
(Althaus Family Investors II) 2,300,000 2,300,000
Series 1997, 3.82%, LOC
Huntington Nat'l. Bank,
Columbus, VRDN (b)
(C-TEC, Inc. Proj.) 3.8%, LOC 1,500,000 1,500,000
SunTrust Bank of Atlanta,
VRDN (b)(e)
Michigan Strategic Fund Ltd.
Oblig. Rev.:
Participating VRDN Series 2,495,000 2,495,000
PT-244, 3.77% (Liquidity
Facility Banque Nationale de
Paris) (b)(f)
(BC & C Proj.) 3.85%, LOC 1,750,000 1,750,000
Comerica Bank, Detroit, VRDN
(b)(e)
(Biewer of Lansing Proj.) 2,900,000 2,900,000
Series 1999, 3.8%, LOC
Michigan Nat'l. Bank,
Detroit, VRDN (b)(e)
(Bosal Ind. Proj.) Series 3,000,000 3,000,000
1998, 3.55%, LOC Bank of
New York NA, VRDN (b)(e)
(Conti Properties LLC Proj.) 3,800,000 3,800,000
Series 1997, 3.85%, LOC
Comerica Bank, Detroit, VRDN
(b)(e)
(Cyberplast Inds. Ltd.) 3,875,000 3,875,000
3.65%, LOC NBD Bank NA,
Detroit, VRDN (b)(e)
(Doss Ind. Dev. Co.) 3.65%, 3,500,000 3,500,000
LOC NBD Bank NA, Detroit,
VRDN (b)(e)
(Envir. Quality Co. Proj.) 1,900,000 1,900,000
Series 1995, 3.6%, LOC
Comerica Bank, Detroit, VRDN
(b)(e)
(Future Fence Co. Proj.) 3,500,000 3,500,000
3.85%, LOC Comerica Bank,
Detroit, VRDN (b)(e)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Michigan Strategic Fund Ltd.
Oblig. Rev.: - continued
(Grandview Plaza Riverview $ 3,200,000 $ 3,200,000
Assoc. One Ltd. Partnership)
3.8%, LOC First of America
Bank NA, VRDN (b)(e)
(John H. Decker & Sons Proj.) 2,500,000 2,500,000
Series 1998, 3.7%, LOC
Michigan Nat'l. Bank,
Detroit, VRDN (b)(e)
(Majestic Ind., Inc.) 3.85%, 3,600,000 3,600,000
LOC Comerica Bank, Detroit,
VRDN (b)(e)
(MANS Proj.) Series 1998, 3,200,000 3,200,000
3.85%, LOC Comerica Bank,
Detroit, VRDN (b)(e)
(Nat'l. Rubber Michigan, 2,400,000 2,400,000
Inc.) Series 1995, 3.75%,
LOC Nat'l. Bank of Canada,
VRDN (b)(e)
(NFS Int'l. Proj.) Series 1,000,000 1,000,000
1997 B, 3.9%, LOC First of
America Bank NA, VRDN (b)
(PBL Enterprises, Inc. Proj.) 3,500,000 3,500,000
Series 1997, 3.85%, LOC
Comerica Bank, Detroit, VRDN
(b)(e)
(TEI Investments, LLC Proj.) 1,000,000 1,000,000
3.85%, LOC Comerica Bank,
Detroit, VRDN (b)(e)
(The Spiratex Co. Proj.) 2,200,000 2,200,000
Series 1994, 3.65%, LOC NBD
Bank NA, Detroit, VRDN (b)(e)
(Trilan LLC Proj.) 3.85%, LOC 5,000,000 5,000,000
NBD Bank NA, Detroit, VRDN
(b)(e)
(Vent-Rite Valve Corp. Proj.) 1,845,000 1,845,000
3.75%, Skidmore Realty LLC,
LOC Fleet Nat'l. Bank, VRDN
(b)(e)
Michigan Strategic Fund Poll.
Cont. Rev.:
Bonds (Dow Chemical Co. Proj.):
Series 1986:
3.05% tender 9/9/99, CP mode 4,400,000 4,400,000
3.1% tender 7/20/99, CP mode 1,500,000 1,500,000
3.15% tender 7/21/99, CP mode 3,100,000 3,100,000
Series 1987:
3.15% tender 9/1/99, CP mode 4,200,000 4,200,000
3.15% tender 9/8/99, CP mode 1,000,000 1,000,000
3.2% tender 8/12/99, CP mode 2,000,000 2,000,000
Series 1988:
3.05% tender 9/8/99, CP mode 2,600,000 2,600,000
(e)
3.05% tender 9/9/99, CP mode 4,000,000 4,000,000
(e)
3.05% tender 9/10/99, CP mode 1,000,000 1,000,000
(e)
3.1% tender 9/15/99, CP mode 6,450,000 6,450,000
(e)
3.1% tender 9/16/99, CP mode 6,450,000 6,450,000
(e)
3.15% tender 7/20/99, CP mode 3,250,000 3,250,000
(e)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Michigan Strategic Fund Poll.
Cont. Rev.: - continued
(Gen. Motors Corp. Proj.):
Series 1988 A, 3.5%, VRDN (b) $ 18,430,000 $ 18,430,000
3.6%, VRDN (b) 4,540,000 4,540,000
Michigan Strategic Fund Rev.:
(B & G Realty Proj.) 3.6%, 2,000,000 2,000,000
LOC Bank One, Wisconsin,
VRDN (b)(e)
(Consumers Energy) Series 2,000,000 2,000,000
1993A, 3.45%, LOC Canadian
Imperial Bank of Commerce,
VRDN (b)
(Hi-Tech. Mold & Engineering) 700,000 700,000
3.65%, LOC NBD Bank NA,
Detroit, VRDN (b)(e)
(Ultimate Hydroforming, Inc. 400,000 400,000
Proj.) 3.65%, LOC NBD Bank
NA, Detroit, VRDN (b)(e)
(Unified-Boring Co., Inc. 1,500,000 1,500,000
Proj.) Series 1992, 3.65%,
LOC NBD Bank NA, Detroit,
VRDN (b)(e)
Michigan Strategic Fund Solid
Waste Disp. Rev.:
(Grayling Gen. Station Proj.) 12,700,000 12,700,000
Series 1990, 3.5%, LOC
Barclays Bank PLC, VRDN
(b)(e)
(Great Lakes Recovery) 3.75%, 2,400,000 2,400,000
LOC NBD Bank NA, Detroit,
VRDN (b)(e)
Michigan Trunk Line Fund 6,415,000 6,415,000
Participating VRDN Series SG
87, 3.77% (Liquidity
Facility Societe Generale,
France) (b)(f)
Mona Shores School District 8,175,000 8,175,000
Participating VRDN Series SG
26, 3.77% (Liquidity
Facility Societe Generale,
France) (b)(f)
Monroe County Economic Dev. 2,400,000 2,400,000
Corp. Rev. Rfdg. (Detroit
Edison Proj.) Series 92CC,
3.45%, LOC Barclays Bank
PLC, VRDN (b)
Monroe County Poll. Cont. 4,000,000 4,000,000
Rev. Participating VRDN
Series PT 143, 3.82%
(Liquidity Facility Merrill
Lynch & Co., Inc.) (b)(e)(f)
Royal Oak Hosp. Fin. Auth. 1,400,000 1,400,000
Rev. (William Beaumont
Hosp.) Series 1996 J, 3.45%
(BPA NBD Bank NA, Detroit),
VRDN (b)
Sterling Heights Economic 5,000,000 5,000,000
Dev. Corp. Rev. (Cherrywood
Ctr. Assoc. Proj.) 3.65%,
LOC Comerica Bank, Detroit,
VRDN (b)(e)
Tolfree Memorial Hosp. Corp.
Rev.:
Series 1996 B, 3.6%, LOC 4,400,000 4,400,000
First of America Bank NA,
VRDN (b)
Series 1997 D, 3.6%, LOC 3,050,000 3,050,000
First of America Bank NA,
VRDN (b)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Univ. of Michigan Rev.:
(Med. Services Proj.) Series $ 700,000 $ 700,000
1995 A, 3.45%, VRDN (b)
Rfdg. (Univ. Hosp. Proj.) 300,000 300,000
Series A, 3.45%, VRDN (b)
Series B:
3.1% 8/12/99, CP 3,500,000 3,500,000
3.15% 7/22/99, CP 1,600,000 1,600,000
Utica Cmnty. Schools District 2,145,000 2,158,586
3.9% 5/1/00
Waterford School District RAN 3,500,000 3,504,555
3.8% 5/25/00
Wayne Charter County Arpt.
Rev.:
Participating VRDN:
Series 108, 3.8% (Liquidity 4,500,000 4,500,000
Facility Morgan Stanley,
Dean Witter & Co.) (b)(e)(f)
Series 1998-68, 3.8% 7,800,000 7,800,000
(Liquidity Facility Morgan
Stanley, Dean Witter & Co.)
(b)(e)(f)
Series SG 122, 3.77% 8,100,000 8,100,000
(Liquidity Facility Societe
Generale, France) (b)(f)
Rfdg. (Detroit Metropolitan
Wayne County Arpt.):
Series A, 3.5%, LOC Bayersche 8,875,000 8,875,000
Landesbank Girozentrale,
VRDN (b)(e)
Series B, 3.4%, LOC Bayersche 2,995,000 2,995,000
Landesbank Girozentrale,
VRDN (b)(e)
Wayne-Westland Cmnty. Schools
Participating VRDN:
Series 56, 3.75% (Liquidity 3,680,000 3,680,000
Facility Morgan Stanley,
Dean Witter & Co.) (b)(f)
Series 67, 3.75% (Liquidity 7,100,000 7,100,000
Facility Morgan Stanley,
Dean Witter & Co.) (b)(f)
403,463,040
SHARES
OTHER - 0.2%
Municipal Central Cash Fund 845,846 845,846
(c)(d)
TOTAL INVESTMENT IN $ 404,308,886
SECURITIES - 100%
Total Cost for Income Tax Purposes $ 404,308,886
</TABLE>
SECURITY TYPE ABBREVIATIONS
CP - COMMERCIAL PAPER
RAN - REVENUE ANTICIPATION NOTE
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) Security purchased on a delayed delivery or when-issued basis.
(b) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(c) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(d) At the period end, the seven-day yield of the Municipal Central
Cash Fund was 3.43%. The yield refers to the income earned by
investing in the fund over the seven-day period, expressed as an
annual percentage.
(e) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(f) Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At December 31, 1998, the fund had a capital loss carryforward of
approximately $112,000 of which $2,000, $10,000, $39,000, $5,000,
$39,000, $11,000 and $6,000 will expire on December 31, 1999, 2001,
2002, 2003, 2004, 2005 and 2006, respectively.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 404,308,886
value - See accompanying
schedule
Cash 17,102
Receivable for investments 6,000,000
sold
Receivable for fund shares 2,736,899
sold
Interest receivable 2,681,908
Prepaid expenses 7,537
TOTAL ASSETS 415,752,332
LIABILITIES
Payable for investments $ 7,317,318
purchased Regular delivery
Delayed delivery 6,032,940
Payable for fund shares 6,066,336
redeemed
Distributions payable 32,626
Accrued management fee 127,178
Other payables and accrued 87,282
expenses
TOTAL LIABILITIES 19,663,680
NET ASSETS $ 396,088,652
Net Assets consist of:
Paid in capital $ 396,153,381
Accumulated net realized gain (64,729)
(loss) on investments
NET ASSETS, for 396,154,936 $ 396,088,652
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($396,088,652
(divided by) 396,154,936
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999 (UNAUDITED)
INTEREST INCOME $ 6,038,827
EXPENSES
Management fee $ 723,638
Transfer agent fees 285,790
Accounting fees and expenses 35,548
Non-interested trustees' 581
compensation
Custodian fees and expenses 12,871
Registration fees 33,836
Audit 11,192
Legal 1,057
Miscellaneous 7,890
Total expenses before 1,112,403
reductions
Expense reductions (2,612) 1,109,791
NET INTEREST INCOME 4,929,036
NET REALIZED GAIN (LOSS) ON 46,904
INVESTMENTS
NET INCREASE IN NET ASSETS $ 4,975,940
RESULTING FROM OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 4,929,036 $ 9,359,441
Net realized gain (loss) 46,904 (5,424)
NET INCREASE (DECREASE) IN 4,975,940 9,354,017
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (4,929,036) (9,359,441)
from net interest income
Share transactions at net 611,282,604 853,454,247
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 4,768,307 9,020,140
distributions from net
interest income
Cost of shares redeemed (577,362,863) (793,055,319)
NET INCREASE (DECREASE) IN 38,688,048 69,419,068
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 38,734,952 69,413,644
IN NET ASSETS
NET ASSETS
Beginning of period 357,353,700 287,940,056
End of period $ 396,088,652 $ 357,353,700
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .013 .030 .031 .030 .033
Operations Net interest
income
Less Distributions
From net interest income (.013) (.030) (.031) (.030) (.033)
Net asset value, end of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
TOTAL RETURN B, C 1.30% 3.00% 3.18% 3.00% 3.38%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 396,089 $ 357,354 $ 287,940 $ 260,592 $ 231,259
(000 omitted)
Ratio of expenses to average .59% A .60% .61% .62% .63%
net assets
Ratio of expenses to average .59% A .59% D .61% .61% D .63%
net assets after expense
reductions
Ratio of net interest income 2.61% A 2.97% 3.14% 2.96% 3.32%
to average net assets
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31,
1994
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000
period
Income from Investment .024
Operations Net interest
income
Less Distributions
From net interest income (.024)
Net asset value, end of $ 1.000
period
TOTAL RETURN B, C 2.44%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 221,735
(000 omitted)
Ratio of expenses to average .61%
net assets
Ratio of expenses to average .61%
net assets after expense
reductions
Ratio of net interest income 2.45%
to average net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Michigan Municipal Income Fund (the income fund) is a fund of
Fidelity Municipal Trust. Fidelity Michigan Municipal Money Market
Fund (the money market fund) is a fund of Fidelity Municipal Trust II.
Each trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company.
Fidelity Municipal Trust and Fidelity Municipal Trust II (the trusts)
are organized as a Massachusetts business trust and a Delaware
business trust, respectively. Each fund is authorized to issue an
unlimited number of shares. The financial statements have been
prepared in conformity with generally accepted accounting principles
which require management to make certain estimates and assumptions at
the date of the financial statements. Each fund may be affected by
economic and political developments in the state of Michigan. The
following summarizes the significant accounting policies of the income
fund and the money market fund:
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Securities for
which quotations are not readily available are valued at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which quotations are not readily available are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, each fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for the fiscal year. The schedules of investments
include information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned. For the money market fund, accretion of discount represents
unrealized gain until realized at the time of a security disposition
or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for
futures transactions, market discount, capital loss carryforwards and
losses deferred due to futures and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission (the SEC), the funds may invest
in the Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc. (FIMM), an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the funds are recorded as interest income in the
accompanying financial statements.
WHEN-ISSUED SECURITIES. Each fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying
securities is fixed at the time the transaction is negotiated. The
market values of the securities purchased on a when-issued or forward
commitment basis are identified as such in each applicable fund's
schedule of investments. Each fund may receive compensation for
interest forgone in the purchase of a when-issued security. With
respect to purchase commitments, each fund identifies securities as
segregated in its records with a value at least equal to the amount of
the commitment. Losses may arise due to changes in the market value of
the underlying securities, if the counterparty does not perform under
the contract, or if the issuer does not issue the securities due to
political, economic, or other factors.
FUTURES CONTRACTS. The income fund may use futures contracts to manage
its exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to
2. OPERATING POLICIES -
CONTINUED
FUTURES CONTRACTS - CONTINUED
increase the fund's exposure to the underlying instrument, while
selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Futures
contracts involve, to varying degrees, risk of loss in excess of the
futures variation margin reflected in the Statement of Assets and
Liabilities. The underlying face amount at value of any open futures
contracts at period end is shown in the schedule of investments under
the caption "Futures Contracts." This amount reflects each contract's
exposure to the underlying instrument at period end. Losses may arise
from changes in the value of the underlying instruments or if the
counterparties do not perform under the contracts' terms. Gains
(losses) are realized upon the expiration or closing of the futures
contracts. Futures contracts are valued at the settlement price
established each day by the board of trade or exchange on which they
are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $36,289,386 and $33,021,725, respectively.
The market value of futures contracts opened and closed during the
period amounted to $21,527,081 and $26,652,761, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
each fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .1100% to .3700% for the
period. The annual individual fund fee rate is .25%. In the event that
these rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fees were equivalent to annualized rates of .38% of average net assets
for the income fund and money market fund.
SUB-ADVISER FEE. As the income fund's (effective January 1, 1999) and
the money market funds' investment sub-adviser, FIMM, a wholly owned
subsidiary of FMR, receives a fee from FMR of 50% of the management
fee payable to FMR. The fee is paid prior to any voluntary expense
reimbursements which may be in effect.
TRANSFER AGENT AND ACCOUNTING FEES. Effective June 14, 1999 for the
income fund and June 21, 1999 for the money market fund, Citibank,
N.A.(Citibank) replaced UMB Bank, n.a. as the custodian, transfer
agent and shareholder servicing agent for the funds. Citibank has
entered into a sub-contract with
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
Fidelity Service Company, Inc. (FSC), an affiliate of FMR, under which
FSC performs the activities associated with the funds' transfer and
shareholder servicing agent and accounting functions. The funds pay
account fees and asset-based fees that vary according to account size
and type of account. FSC pays for typesetting, printing and mailing of
all shareholder reports, except proxy statements. The accounting fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
For the period, the transfer agent fees were equivalent to an
annualized rate of .09% and .15% of average net assets for the income
fund and the money market fund, respectively.
MONEY MARKET INSURANCE. Pursuant to an Exemptive Order issued by the
SEC, the money market fund, along with other money market funds
advised by FMR or its affiliates, has entered into insurance
agreements with FIDFUNDS Mutual Limited (FIDFUNDS), an affiliated
mutual insurance company, effective January 1, 1999. FIDFUNDS provides
limited coverage for certain loss events including issuer default as
to payment of principal or interest and bankruptcy or insolvency of a
credit enhancement provider. The insurance does not cover losses
resulting from changes in interest rates, ratings downgrades or other
market conditions. The money market fund may be subject to a special
assessment of up to approximately 2.5 times the fund's annual gross
premium if covered losses exceed certain levels. During the period,
the money market fund paid premiums of $15,074 to FIDFUNDS, which are
being amortized over one year.
5. EXPENSE REDUCTIONS.
Each fund has entered into arrangements with its custodian and
transfer agent whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of the fund's expenses. During
the period, the custodian and transfer agent fees were reduced by
$2,153 and $699, respectively for the income fund, and $2,133 and
$479, respectively for the money market fund, under these
arrangements.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)FIDELITY AUTOMATED
SERVICE TELEPHONE
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER,
MONEY MARKET FUND
Fidelity Investment Money
Management, Inc. (FIMM)
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President,
INCOME FUND
Boyce I. Greer, Vice President,
MONEY MARKET FUND
Norman U. Lind, Vice President,
INCOME FUND
Diane M. McLaughlin, Vice President,
MONEY MARKET FUND
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
* INDEPENDENT TRUSTEES
MIR-SANN-0899 81990
1.705606.101
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Citibank, N.A.
New York, NY
and
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Citibank, N.A.
New York, NY
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated
Service Telephone 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
SPARTAN(REGISTERED TRADEMARK)
MINNESOTA MUNICIPAL INCOME
FUND
SEMIANNUAL REPORT
JUNE 30, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 7 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 10 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 11 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 19 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 23 Notes to the financial
statements.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
After much speculation about the U.S. Federal Reserve Board's
near-term monetary policy, stock and bond investors breathed a sigh of
relief when the Fed shifted to a neutral position on rates following
its widely anticipated quarter-point increase in short-term rates on
June 30. This switch in bias helped the S&P 500(registered trademark)
and NASDAQ soar to record-closing highs, and sent yields on the
bellwether 30-year Treasury back below 6%.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the past one year, past five
years and past 10 years total returns and dividends would have been
lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN MN MUNICIPAL INCOME -1.33% 1.89% 34.84% 86.10%
LB Minnesota Enhanced -0.74% 2.66% 38.11% n/a
Municipal Bond
Minnesota Municipal Debt -1.31% 1.76% 33.31% 88.96%
Funds Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Lehman Brothers Minnesota Enhanced Municipal Bond Index - a
market value-weighted index of Minnesota investment-grade municipal
bonds with maturities of one year or more. To measure how the fund's
performance stacked up against its peers, you can compare it to the
Minnesota municipal debt funds average, which reflects the performance
of mutual funds with similar objectives tracked by Lipper Inc. The
past six months average represents a peer group of 47 mutual funds.
These benchmarks include reinvested dividends and capital gains, if
any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN MN MUNICIPAL INCOME 1.89% 6.16% 6.41%
LB Minnesota Enhanced 2.66% 6.67% n/a
Municipal Bond
Minnesota Municipal Debt 1.76% 5.91% 6.57%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Lipper calculates average annual total
returns by annualizing each fund's total return, then taking the
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER 10 YEARS
Spartan MN Muni Income LB Municipal Bond
00082 LB015
1989/06/30 10000.00 10000.00
1989/07/31 10074.82 10136.10
1989/08/31 10006.25 10036.87
1989/09/30 9958.40 10006.96
1989/10/31 10099.03 10129.34
1989/11/30 10242.35 10306.61
1989/12/31 10310.90 10390.91
1990/01/31 10239.63 10341.77
1990/02/28 10355.80 10433.81
1990/03/31 10366.32 10436.94
1990/04/30 10233.40 10361.37
1990/05/31 10441.73 10587.56
1990/06/30 10540.57 10680.63
1990/07/31 10720.94 10837.63
1990/08/31 10545.98 10680.27
1990/09/30 10637.16 10686.36
1990/10/31 10768.81 10880.21
1990/11/30 11004.84 11099.01
1990/12/31 11055.30 11147.29
1991/01/31 11148.46 11296.89
1991/02/28 11221.40 11395.17
1991/03/31 11240.48 11399.27
1991/04/30 11376.39 11550.88
1991/05/31 11490.56 11653.57
1991/06/30 11444.59 11642.03
1991/07/31 11593.26 11783.83
1991/08/31 11709.64 11939.03
1991/09/30 11793.86 12094.47
1991/10/31 11834.23 12203.32
1991/11/30 11808.74 12237.37
1991/12/31 11994.84 12499.98
1992/01/31 12047.29 12528.48
1992/02/29 12097.61 12532.49
1992/03/31 12116.81 12537.13
1992/04/30 12202.46 12648.71
1992/05/31 12336.50 12797.58
1992/06/30 12502.94 13012.33
1992/07/31 12810.56 13402.44
1992/08/31 12679.42 13271.76
1992/09/30 12709.43 13358.56
1992/10/31 12472.08 13227.25
1992/11/30 12760.50 13464.15
1992/12/31 12909.69 13601.62
1993/01/31 13106.57 13759.80
1993/02/28 13511.15 14257.49
1993/03/31 13385.06 14106.79
1993/04/30 13510.57 14249.13
1993/05/31 13602.59 14329.21
1993/06/30 13825.09 14568.37
1993/07/31 13842.49 14587.45
1993/08/31 14132.06 14891.16
1993/09/30 14334.18 15060.77
1993/10/31 14352.40 15089.84
1993/11/30 14231.96 14956.90
1993/12/31 14513.33 15272.64
1994/01/31 14681.84 15447.05
1994/02/28 14298.22 15046.97
1994/03/31 13677.54 14434.26
1994/04/30 13756.36 14556.66
1994/05/31 13851.35 14682.87
1994/06/30 13801.50 14593.16
1994/07/31 14054.35 14860.65
1994/08/31 14085.30 14912.07
1994/09/30 13902.77 14693.16
1994/10/31 13601.37 14432.21
1994/11/30 13299.57 14171.27
1994/12/31 13641.16 14483.18
1995/01/31 14038.34 14897.11
1995/02/28 14441.43 15330.32
1995/03/31 14595.85 15506.46
1995/04/30 14609.91 15524.76
1995/05/31 15011.84 16020.16
1995/06/30 14889.01 15880.78
1995/07/31 14947.41 16031.33
1995/08/31 15116.83 16234.61
1995/09/30 15228.67 16337.37
1995/10/31 15440.93 16574.92
1995/11/30 15679.01 16849.90
1995/12/31 15823.46 17011.82
1996/01/31 15922.92 17140.26
1996/02/29 15845.24 17024.57
1996/03/31 15642.11 16806.99
1996/04/30 15579.48 16759.43
1996/05/31 15576.47 16752.73
1996/06/30 15716.57 16935.16
1996/07/31 15858.31 17089.27
1996/08/31 15838.05 17085.17
1996/09/30 16008.48 17324.36
1996/10/31 16210.85 17520.30
1996/11/30 16501.13 17840.92
1996/12/31 16421.36 17765.99
1997/01/31 16446.51 17799.57
1997/02/28 16585.81 17962.97
1997/03/31 16385.38 17723.52
1997/04/30 16501.53 17871.87
1997/05/31 16726.64 18140.66
1997/06/30 16919.20 18333.86
1997/07/31 17376.42 18841.71
1997/08/31 17216.48 18665.16
1997/09/30 17410.47 18886.72
1997/10/31 17513.75 19008.16
1997/11/30 17630.43 19119.93
1997/12/31 17874.47 19398.89
1998/01/31 18024.16 19599.08
1998/02/28 18009.81 19604.96
1998/03/31 18034.51 19622.21
1998/04/30 17961.45 19533.72
1998/05/31 18210.53 19842.94
1998/06/30 18265.09 19921.12
1998/07/31 18289.64 19971.12
1998/08/31 18574.42 20279.67
1998/09/30 18776.41 20532.36
1998/10/31 18766.95 20531.95
1998/11/30 18820.51 20604.02
1998/12/31 18860.05 20655.94
1999/01/31 19047.69 20901.54
1999/02/28 18944.56 20810.20
1999/03/31 18950.36 20839.12
1999/04/30 19003.89 20891.01
1999/05/31 18893.06 20770.05
1999/06/30 18610.03 20470.96
IMATRL PRASUN SHR__CHT 19990630 19990714 111552 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Spartan Minnesota Municipal Income Fund on June 30, 1989.
As the chart shows, by June 30, 1999, the value of the investment
would have grown to $18,610 - an 86.10% increase on the initial
investment. For comparison, look at how the Lehman Brothers Municipal
Bond Index - a market value-weighted index of investment-grade
municipal bonds with maturities of one year or more - did over the
same period. With dividends and capital gains, if any, reinvested, the
same $10,000 would have grown to $20,471 - a 104.71% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday
is no guarantee of how it
will do tomorrow. Bond prices,
for example, generally move in
the opposite direction of interest
rates. In turn, the share price,
return and yield of a fund that
invests in bonds will vary. That
means if you sell your shares
during a market downturn, you
might lose money. But if you
can ride out the market's ups
and downs, you may have a
gain.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995 1994
Dividend returns 2.18% 4.80% 5.29% 5.22% 6.40% 5.42%
Capital returns -3.51% 0.71% 3.56% -1.44% 9.60% -11.43%
Total returns -1.33% 5.51% 8.85% 3.78% 16.00% -6.01%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 4.19(cents) 25.27(cents) 51.85(cents)
Annualized dividend rate 4.60% 4.51% 4.57%
30-day annualized yield 4.38% - -
30-day annualized 7.44% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the fund for a set period
and do not reflect any tax reclassifications. If you annualize this
number, based on an average share price of $11.08 over the past one
month, $11.31 over the past six months and $11.35 over the past one
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all bond funds based
on the yields of the bonds in the fund, averaged over the past 30
days. This figure shows you the yield characteristics of the fund's
investments at the end of the period. It also helps you compare funds
from different companies on an equal basis. The tax-equivalent yield
shows what you would have to earn on a taxable investment to equal the
fund's tax-free yield, if you're in the 41.12% combined effective 1999
federal and state income tax bracket, but does not reflect the payment
of the alternative minimum tax, if applicable.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite a surge in municipal bond
prices on the last day of the period
following the Federal Reserve Board's
widely anticipated quarter point
increase - from 4.75% to 5.00% -
in the federal funds rate, or overnight
bank-lending level, the municipal bond
market was hard-hit by a continuous
sell-off during the six-month period that
ended June 30, 1999. Although
retail investors provided support in
the municipal bond market with
periods of active buying and
new-issue supply was down from last
year, institutional investors remained on
the sidelines, putting pressure on
prices, which move inversely to bond
yields. While municipal bonds
outperformed taxable bonds over the
six-month period, the Lehman Brothers
Municipal Bond Index - an index
of approximately 50,000
investment-grade, fixed-rate tax-exempt
bonds - declined 0.90%. In
comparison, the Lehman Brothers
Aggregate Bond Index - a widely
followed measure of taxable-bond
performance - fell 1.37%. In
general, the period was characterized
by uncertainty as investors adopted a
wait-and-see approach regarding
the Fed's next move and the release of
major economic reports that could
provide some clues about the future
direction of interest rates. Nevertheless,
municipal bond prices received a lift
on the last day of the period, as the Fed
shifted its monetary policy stance
from a tightening bias to a neutral
stance, meaning its next move is as
likely to keep interest rates unchanged
as it is to increase them.
(photograph of Christine Thompson)
An interview with Christine Thompson, Portfolio Manager of Spartan
Minnesota Municipal Income Fund
Q. HOW DID THE FUND PERFORM, CHRISTINE?
A. In response to rising interest rates, municipal bonds struggled
during the past six months. For the six-month period ending June 30,
1999, the fund had a total return of -1.33%. To get a sense of how the
fund did relative to its competitors, the Minnesota municipal debt
funds average returned -1.31% during the same six-month period,
according to Lipper Inc. Additionally, the Lehman Brothers Minnesota
Enhanced Municipal Bond Index - which tracks the types of securities
in which the fund invests - returned -0.74% for the same period. For
the 12 months ended June 30, 1999, the fund returned 1.89%. That
compared to the Minnesota municipal debt funds average's 1.76% return
and the Lehman Brothers index's 2.66% return for the same 12-month
period.
Q. HOW DID YOU MANAGE THE FUND DURING THE PAST SIX MONTHS?
A. I kept the fund's duration - which measures its sensitivity to
interest-rate changes - in line with the Minnesota municipal market,
as reflected by the Lehman Brothers Minnesota Enhanced Municipal Bond
Index. As a rule, I don't lengthen or shorten duration based on where
I think interest rates will be at some point down the road. I don't
believe that anyone can do so with any accuracy over time. Entering
1999, some funds in the peer group had extended to relatively long
durations - meaning they were more sensitive to interest-rate changes.
When rates moved higher in response to stronger-than-expected economic
growth and growing inflationary fears, increased interest-rate
sensitivity worked against longer-duration funds.
Q. WHERE WERE THE BIGGEST DISAPPOINTMENTS?
A. Intermediate-term bonds, those with maturities of between five and
15 years, were the main disappointment during the period. They
suffered from a lack of demand from so-called "crossover" buyers -
such as pension funds, hedge funds and insurance companies - that move
among various types of fixed-income securities in search of value.
Rather than seeking out municipals as they had last fall, crossover
buyers increasingly flocked to Treasury securities during the past six
months. Despite their disappointing recent performance, I continued to
emphasize intermediate-maturity bonds because, based on Fidelity's
quantitative models, they offered the most attractive value for their
given interest-rate sensitivity.
Q. THE FUND HAS LARGE HOLDINGS - RELATIVE TO THE MINNESOTA MUNICIPAL
MARKET AS A WHOLE - IN HEALTH CARE AND EDUCATION BONDS. WHAT MADE
THESE SECTORS ATTRACTIVE?
A. The competitive shake-out that's rocking most of the nation is
already behind Minnesota health care organizations. As a result,
select Minnesota health care bonds were attractive because they
offered relatively high yields. I favored education bonds, which are
backed by colleges and universities, because they offered
diversification from the economically sensitive areas of the market -
such as general obligation bonds. In addition, demographic trends
support a growing number of students attending colleges and
universities over the next several years, which will likely be
beneficial for the financial performance of the institutions.
Q. CHRISTINE, WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET?
A. Recently, the direction of interest rates has been the main factor
that determined the relative performance of municipal bonds by
influencing supply and demand in the market. Municipals have lagged
Treasuries when interest rates declined and have outperformed
Treasuries when interest rates have risen. The supply of municipals
has been reduced so far in 1999 compared to the first six months of
1998 as higher rates prompted issuers to cut back their refinancing
and new issue activity. Although the Federal Reserve may continue to
raise interest rates, demand for municipals should be solid as
investors seek attractive yields on a tax-equivalent basis.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: high current tax-free
income for Minnesota
residents by normally
investing in investment-grade
municipal debt securities
whose interest is free from
federal income tax and
Minnesota personal income
tax
FUND NUMBER: 082
TRADING SYMBOL: FIMIX
START DATE: November 21,
1985
SIZE: as of June 30, 1999,
more than $310 million
MANAGER: Christine
Thompson, since 1998;
manager, various Fidelity and
Spartan municipal income
funds; joined Fidelity in
1985
CHRISTINE THOMPSON ON Y2K
AND ITS POTENTIAL EFFECTS ON
MUNICIPAL BOND ISSUERS:
"Y2K may pose a number of
challenges for municipal bond
issuers. My primary focus with
regard to Y2K-related issues is
how they will impact the credit
quality of various issuers.
Fidelity's research team asks
issuers a number of things,
including how vulnerable they
believe they are to potential
problems, what their short-term
contingency plans are in the event
of any problems and what
long-term solutions they've
developed. What we've found so
far is that there are varying degrees
of sophistication among issuers,
with some much more poised to
deal with potential problems than
others. That's why we carefully
consider Y2K-related issues as one of
the many factors in our routine
security selection process."
(solid bullet) As of June 30, 1999, the fund
had 2.3% of investments in bonds
issued by Puerto Rico. As a territory
of the United States, Puerto Rico
issues bonds that are free from
federal taxes and state taxes in
all 50 states.
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE SECTORS AS OF JUNE
30, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE SECTORS 6 MONTHS AGO
General Obligations 32.5 33.2
Electric Utilities 17.2 15.1
Health Care 16.5 21.1
Education 12.4 11.6
Housing 5.0 5.3
AVERAGE YEARS TO MATURITY AS
OF JUNE 30, 1999
6 MONTHS AGO
Years 12.4 13.0
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF JUNE 30, 1999
6 MONTHS AGO
Years 6.3 6.4
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION
AS OF JUNE 30, 1999
Aaa 56.4%
Aa, A 40.5%
Baa 2.9%
Short-term
investments 0.2%
Row: 1, Col: 1, Value: 56.4
Row: 1, Col: 2, Value: 40.5
Row: 1, Col: 3, Value: 2.9
Row: 1, Col: 4, Value: 0.2
AS OF DECEMBER 31, 1998
Aaa 50.6%
Aa, A 42.7%
Baa 5.4%
Short-term
investments 1.3%
Row: 1, Col: 1, Value: 50.6
Row: 1, Col: 2, Value: 42.7
Row: 1, Col: 3, Value: 5.4
Row: 1, Col: 4, Value: 1.3
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P (registered
trademark) RATINGS. AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S
INVESTMENTS.
SPARTAN MINNESOTA MUNICIPAL INCOME
INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 99.8%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - 97.5%
Albany Independent School Aa1 $ 1,000,000 $ 1,054,130
District #745 Series A, 6%
2/1/16
Chanhassen Gen. Oblig. Impt.
(Cap. Appreciation) Series D:
0% 2/1/03 (AMBAC Insured) Aaa 1,730,000 1,476,434
0% 2/1/04 (AMBAC Insured) Aaa 1,700,000 1,381,352
Chisago Lakes Independent Aaa 2,000,000 1,904,280
School District #2144
(School Bldg.) 5% 2/1/23
(MBIA Insured)
Cloquet Poll. Cont. Rev. BBB+ 4,345,000 4,410,218
Rfdg. (Potlach Corp. Proj.)
5.9% 10/1/26
Dakota County Hsg. & Redev. AAA 115,000 117,440
Auth. Interest For South
Saint Paul Rev. Rfdg.
(Single Family) Series A,
8.1% 9/1/12, LOC Govt.
Nat'l. Mortgage Assoc.
Elk River Independent School Aa1 1,600,000 1,606,896
District # 728 Series A,
5.15% 2/1/11
Golden Valley Gen. Oblig. A- 2,500,000 2,373,050
Rev. (Covenant Retirement
Cmnty.) Series A, 5.5%
12/1/29
Hastings Independent School Aa1 5,000,000 4,734,450
District #200 Series A, 5%
2/1/22
Hennepin County Lease Rev. AA 5,000,000 5,294,400
Ctfs. of Prtn. Series A,
6.8% 5/15/17 (Pre-Refunded
to 11/15/01 @ 100) (d)
Lakeville Independent School
District #194:
(Cap. Appreciation) Series B, Aaa 1,330,000 825,890
0% 2/1/09 (FSA Insured)
Rfdg. (Cap. Appreciation):
0% 2/1/04 Aa1 3,040,000 2,474,621
0% 2/1/05 Aa1 2,810,000 2,180,110
Maple Grove Gen. Oblig. Impt. Aa2 1,120,000 1,100,826
Series A, 5.2% 2/1/17
Minneapolis & Saint Paul Hsg.
& Redev. Auth. Health Care
Sys. Rev.:
(Health One Oblig. Group) Aaa 2,750,000 2,882,853
Series A, 7.4% 8/15/11 (MBIA
Insured) (Pre-Refunded to
8/15/00 @ 102)
Rfdg. (Healthspan Corp.) Aaa 4,500,000 4,145,490
Series A, 4.75% 11/15/18
(AMBAC Insured)
Minneapolis & Saint Paul Hsg. AAA 1,710,000 1,785,839
Fin. Board Rev. (Single
Family Mtg. Phase IX) 7.25%
8/1/21 (c)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - CONTINUED
Minneapolis & Saint Paul
Metro. Arpt. Commission
Arpt. Rev.:
Series A, 5% 1/1/19 (AMBAC Aaa $ 4,700,000 $ 4,507,488
Insured)
Series B, 5.25% 1/1/11 (AMBAC Aaa 3,475,000 3,490,116
Insured) (c)
Minneapolis Cmnty. Dev. Agcy.
Tax Increment Rev. (Cap.
Appreciation):
0% 9/1/07 (MBIA Insured) Aaa 2,860,000 1,920,719
0% 9/1/08 (MBIA Insured) Aaa 4,600,000 2,916,216
Minneapolis Gen. Oblig.:
(Cap. Appreciation):
Series A:
0% 12/1/11 Aaa 2,830,000 1,506,352
0% 12/1/12 Aaa 2,000,000 1,005,260
Series B:
0% 12/1/02 Aaa 790,000 684,440
0% 12/1/03 Aaa 1,000,000 825,440
0% 12/1/06 Aaa 3,355,000 2,379,668
0% 12/1/07 Aaa 1,000,000 671,680
0% 12/1/08 Aaa 2,685,000 1,707,660
Rfdg.:
(Sales Tax):
5.6% 10/1/00 Aaa 1,000,000 1,023,050
6.15% 10/1/05 Aaa 2,000,000 2,120,920
6.25% 4/1/07 Aaa 2,000,000 2,123,340
(Sports Arena Proj.):
5.125% 10/1/20 Aaa 2,565,000 2,488,871
6% 4/1/06 Aaa 1,055,000 1,138,946
6% 10/1/06 Aaa 1,000,000 1,084,650
Series B, 5.1% 9/1/08 Aaa 2,000,000 2,034,340
Minneapolis Health Care
Facilities Rev. (Children's
Hosp. & Clinics) Series A:
4.5% 8/15/01 (FSA Insured) Aaa 1,275,000 1,283,364
4.5% 8/15/02 (FSA Insured) Aaa 1,360,000 1,366,202
Minneapolis Hosp. Rev. Rfdg. Aaa 3,000,000 3,175,110
(Fairview Hosp. &
Healthcare) Series A, 6.5%
1/1/11 (MBIA Insured)
Minneapolis Spl. School
District #1 Ctfs. of Prtn.:
Series A, 5.8% 2/1/10 (MBIA Aaa 2,000,000 2,098,640
Insured)
Series B, 5% 2/1/13 Aa1 2,575,000 2,521,981
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - CONTINUED
Minnesota Gen. Oblig.:
(Duluth Arpt.) Series B, Aaa $ 1,000,000 $ 1,059,160
6.25% 8/1/14 (c)
Rfdg.:
4.875% 8/1/01 Aaa 2,250,000 2,287,778
5.3% 8/1/10 Aaa 1,450,000 1,469,300
4.625% 8/1/02 Aaa 6,905,000 6,992,486
5.2% 5/1/07 Aaa 5,000,000 5,146,650
5.6% 10/1/04 (Escrowed to Aaa 1,000,000 1,053,110
Maturity) (d)
5.75% 8/1/05 Aaa 2,875,000 3,065,038
5.8% 8/1/03 Aaa 1,000,000 1,055,700
6% 8/1/05 Aaa 10,255,000 11,039,610
6% 5/1/06 Aaa 2,000,000 2,157,220
6% 11/1/06 Aaa 1,500,000 1,625,325
Minnesota Higher Ed.
Facilities Auth. Rev.:
(Carleton College):
Series 3 L1, 5.75% 11/1/12 Aa3 2,000,000 2,076,100
Series 4 N:
5% 11/1/18 Aa3 2,000,000 1,906,740
5.25% 11/1/04 Aa3 870,000 899,832
5.25% 11/1/05 Aa3 945,000 975,013
(MacAlester College) Series 4
C:
5.2% 3/1/08 Aa3 1,070,000 1,086,382
5.5% 3/1/12 Aa3 815,000 833,370
(Saint Thomas Univ.):
Series 3 C, 6.25% 9/1/16 A2 2,310,000 2,369,598
Series 4 M, 5.35% 4/1/17 A2 1,000,000 977,370
Rfdg.:
(Hamline Univ.) Series 4 I, Baa1 1,000,000 1,027,570
6% 10/1/12
(MacAlester College) Series 3 Aa3 2,175,000 2,287,100
J, 6.4% 3/1/22
(Pre-Refunded to 3/1/02 @
100) (d)
(Saint Johns Univ.) Series 4 A3 3,500,000 3,391,675
L, 5.4% 10/1/22
(Saint Thomas Univ.):
Series 3 R1:
5% 10/1/01 A2 1,000,000 1,014,070
5.6% 10/1/15 A2 1,000,000 1,012,820
Series 3 R2:
5.45% 9/1/07 A2 650,000 666,549
5.6% 9/1/14 A2 4,275,000 4,349,385
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - CONTINUED
Minnesota Hsg. Fin. Agcy.:
(Single Family Mtg.):
Series A, 6.95% 7/1/16 Aa2 $ 705,000 $ 736,358
Series B, 5.8% 7/1/25 (c) Aa2 7,000,000 7,028,070
Series E, 6.85% 1/1/24 (c) Aa2 1,000,000 1,044,450
Series H, 6.5% 1/1/26 (c) Aa2 1,685,000 1,739,510
Hsg. Dev. Rev. Series A:
6.95% 2/1/14 Aa2 1,000,000 1,046,770
6.95% 8/1/17 Aa2 1,000,000 1,052,260
7.05% 8/1/27 Aa2 1,250,000 1,314,288
Minnesota Pub. Facilities
Auth. Wtr. Poll. Cont. Rev.:
Rfdg.:
Series A:
5% 3/1/06 Aaa 1,000,000 1,020,820
5% 3/1/09 Aaa 1,610,000 1,622,526
5% 3/1/16 Aaa 1,000,000 970,070
6% 3/1/07 Aaa 3,000,000 3,242,280
Series A:
6.1% 3/1/02 Aaa 1,855,000 1,942,018
6.35% 3/1/01 Aaa 1,000,000 1,036,350
7% 3/1/04 Aaa 1,495,000 1,654,292
Northern Muni. Pwr. Agcy.
Elec. Sys. Rev. Rfdg.:
Series B:
4.75% 1/1/20 (AMBAC Insured) Aaa 3,500,000 3,236,170
5.5% 1/1/18 (AMBAC Insured) Aaa 4,500,000 4,534,560
5.25% 1/1/13 (FSA Insured) Aaa 1,500,000 1,507,110
5.375% 1/1/14 (FSA Insured) Aaa 8,500,000 8,580,070
Northfield College Facilities
Rev. Rfdg. (Saint Olaf
College Proj.):
6.3% 10/1/12 A3 1,455,000 1,536,873
6.4% 10/1/21 A3 1,690,000 1,792,701
Rochester Health Care
Facilities Rev.:
(Mayo Foundation):
Series A:
5.375% 11/15/18 AA+ 2,500,000 2,503,825
5.5% 11/15/27 AA+ 5,750,000 5,770,413
Series H, 6.026% 11/15/15 AA+ 13,000,000 13,693,155
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - CONTINUED
Rochester Health Care
Facilities Rev.: - continued
Rfdg. (Mayo Foundation/Mayo
Med. Ctr.) Series I:
5.875% 11/15/08 AA+ $ 1,000,000 $ 1,073,500
5.9% 11/15/09 AA+ 1,000,000 1,073,270
5.9% 11/15/10 AA+ 2,250,000 2,414,835
Rosemont Independent School Aaa 2,000,000 961,360
District #196 (Cap.
Appreciation) (School
District Cr. Enhance Prog.)
Series B, 0% 6/1/13 (FSA
Insured)
Saint Cloud Gen. Oblig. Rfdg. Aaa 2,165,000 2,121,505
(Wtr. & Swr. Proj.) Series
B, 5% 8/1/13 (FGIC Insured)
Saint Cloud Hosp. Facilities
Rev. Rfdg. (Saint Cloud
Hosp.):
Series A, 5.5% 7/1/05 (AMBAC Aaa 995,000 1,039,088
Insured)
Series B, 5% 7/1/20 (AMBAC Aaa 1,000,000 956,140
Insured)
Saint Cloud Independent Aaa 1,000,000 1,037,160
School District #742 Rfdg.
Series A, 6.1% 2/1/10 (FGIC
Insured)
Saint Louis Park Health Care
Facilities Rev.:
Rfdg. (Healthsystem Aaa 2,750,000 2,665,850
Obligated) Series A, 5.2%
7/1/23 (AMBAC Insured)
Series B, 5.1% 7/1/13 (AMBAC Aaa 3,600,000 3,544,776
Insured)
Saint Paul Gen. Oblig. (Block Aa2 2,000,000 1,795,340
39 Proj.) 4.75% 2/1/25
Saint Paul Hsg. & Redev. BBB+ 2,600,000 2,361,502
Healthcare Facilities Rev.
(Regions Hosp. Proj.) 5.3%
5/15/28
Saint Paul Independent School
District #625:
Series A, 4.75% 2/1/16 Aa1 1,000,000 930,200
Series B, 5.8% 2/1/12 Aa1 1,200,000 1,252,920
Series C:
6.125% 2/1/03 Aa3 1,225,000 1,296,540
6.125% 2/1/04 Aa3 1,300,000 1,394,133
6.125% 2/1/05 Aa3 1,350,000 1,455,962
Saint Paul Port Auth. Energy Aaa 2,500,000 2,501,975
Park Tax Increment Rev.
Rfdg. 5% 2/1/08 (FSA Insured)
Seaway Port Auth. Duluth Ind. Aa3 2,750,000 2,954,903
Dev. Dock & Wharf Rev. Rfdg.
(Cargill, Inc. Proj.) Series
B, 6.8% 5/1/12 (e)
Southern Minnesota Muni. Pwr.
Agcy. Pwr. Supply Sys. Rev.:
(Cap. Appreciation) Series B, Aaa 2,500,000 2,348,875
0% 1/1/01 (MBIA Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - CONTINUED
Southern Minnesota Muni. Pwr.
Agcy. Pwr. Supply Sys. Rev.:
- - continued
Rfdg. Series A, 5% 1/1/12 A2 $ 6,500,000 $ 6,338,540
Series A, 5% 1/1/08 (AMBAC Aaa 4,000,000 4,030,760
Insured)
Stillwater Independent School Aa1 2,110,000 2,053,832
District #834 Rfdg. 5% 2/1/15
Univ. of Minnesota Gen. Aa3 12,000,000 12,217,320
Oblig. Rfdg. 4.8% 8/15/03
West Saint Paul Independent
School District #197 (Cap.
Appreciation):
0% 2/1/02 (MBIA Insured) Aaa 1,550,000 1,391,947
0% 2/1/03 (MBIA Insured) Aaa 1,180,000 1,007,047
Western Minnesota Muni. Pwr.
Agcy. Pwr. Supply Rev.:
Rfdg. Series A:
5.375% 1/1/08 (AMBAC Insured) Aaa 4,000,000 4,134,000
5.4% 1/1/09 (AMBAC Insured) Aaa 6,825,000 7,046,267
5.5% 1/1/12 (AMBAC Insured) Aaa 1,750,000 1,801,608
6.25% 1/1/04 (AMBAC Insured) Aaa 2,600,000 2,782,988
6.25% 1/1/05 (AMBAC Insured) Aaa 3,000,000 3,238,350
Series A, 6.375% 1/1/16 Aaa 1,875,000 2,046,844
(Escrowed to Maturity) (d)
Series B, 6% 1/1/04 (AMBAC Aaa 1,000,000 1,060,320
Insured)
298,582,279
PUERTO RICO - 2.3%
Puerto Rico Commonwealth Baa1 1,000,000 1,049,730
Rfdg. Series A, 6% 7/1/14
Puerto Rico Commonwealth Aaa 3,000,000 3,100,080
Infrastructure Fing. Auth.
Rfdg. Series A, 5.25% 7/1/10
(AMBAC Insured)
Puerto Rico Elec. Pwr. Auth. Aaa 1,500,000 1,515,600
Pwr. Rev. Rfdg. Series EE,
5.25% 7/1/14 (MBIA Insured)
Puerto Rico Ind. Med. & Aa3 1,250,000 1,350,563
Envir. Poll. Cont.
Facilities Fing. Auth. Rev.
(Motorola, Inc. Proj.)
Series A, 6.75% 1/1/14
7,015,973
TOTAL MUNICIPAL BONDS 305,598,252
(Cost $299,545,336)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MUNICIPAL NOTES - 0.2%
PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - 0.2%
City of Cohasset Rev. $ 150,000 $ 150,000
(Minnesota Pwr. & Lt. Co.
Proj.) Series A, 3.6%, LOC
ABN-AMRO Bank NV, VRDN (b)
Minneapolis & Saint Paul Hsg. 600,000 600,000
& Redev. Auth. Health Care
Sys. Rev. Rfdg. (Children's
Health Care) Series B,
3.65% (FSA Insured) (BPA
Norwest Bank NA Minnesota),
VRDN (b)
TOTAL MUNICIPAL NOTES 750,000
(Cost $750,000)
TOTAL INVESTMENT IN $ 306,348,252
SECURITIES - 100%
(Cost $300,295,336)
</TABLE>
SECURITY TYPE ABBREVIATION
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) Standard & Poor's (registered trademark) credit ratings are used
in the absence of a rating by Moody's Investors Service, Inc.
(b) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(c) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(d) Security collateralized by an amount sufficient to pay interest
and principal.
(e) Restricted securities - Investment in securities not registered
under the Securities Act of 1933.
SECURITY ACQUISITION DATE ACQUISITION COST
Seaway Port Auth. Duluth Ind. 5/20/92 $ 2,750,000
Dev. Dock & Wharf Rev. Rfdg.
(Cargill, Inc. Proj.) Series
B, 6.8% 5/1/12
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 85.1% AAA, AA, A 81.5%
Baa 0.7% BBB 2.2%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
OTHER INFORMATION
The distribution of municipal securities by revenue source, as a
percentage of total value of investments in securities, is as follows:
General Obligations 32.5%
Electric Utilities 17.2
Health Care 16.5
Education 12.4
Housing 5.0
Others (individually less 16.4
than 5%)
100.0%
INCOME TAX INFORMATION
At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $300,295,336. Net unrealized appreciation
aggregated $6,052,916, of which $8,903,043 related to appreciated
investment securities and $2,850,127 related to depreciated investment
securities.
At December 31, 1998, the fund had a capital loss carryforward of
approximately $2,863,000 all of which will expire on December 31,
2003.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 306,348,252
value (cost $300,295,336) -
See accompanying schedule
Receivable for fund shares 60,946
sold
Interest receivable 5,074,504
TOTAL ASSETS 311,483,702
LIABILITIES
Payable to custodian bank $ 44,270
Payable for fund shares 561,635
redeemed
Distributions payable 305,865
Accrued management fee 99,109
Other payables and accrued 47,215
expenses
TOTAL LIABILITIES 1,058,094
NET ASSETS $ 310,425,608
Net Assets consist of:
Paid in capital $ 307,416,690
Accumulated undistributed net (3,043,998)
realized gain (loss) on
investments
Net unrealized appreciation 6,052,916
(depreciation) on investments
NET ASSETS, for 28,183,865 $ 310,425,608
shares outstanding
NET ASSET VALUE, offering $11.01
price and redemption price
per share ($310,425,608
(divided by) 28,183,865
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999 (UNAUDITED)
INTEREST INCOME $ 7,884,951
Expenses
Management fee $ 603,081
Transfer agent fees 136,437
Accounting fees and expenses 48,471
Non-interested trustees' 530
compensation
Custodian fees and expenses 7,734
Registration fees 17,402
Audit 14,724
Legal 6,489
Reports to shareholders 6,678
Miscellaneous 400
Total expenses before 841,946
reductions
Expense reductions (32,743) 809,203
NET INTEREST INCOME 7,075,748
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 449,302
Futures contracts (81,958) 367,344
Change in net unrealized (11,652,707)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (11,285,363)
NET INCREASE (DECREASE) IN $ (4,209,615)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 7,075,748 $ 14,177,286
Net realized gain (loss) 367,344 2,675,247
Change in net unrealized (11,652,707) (347,464)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (4,209,615) 16,505,069
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (7,075,748) (14,177,286)
from net interest income
Share transactions Net 39,583,814 53,743,312
proceeds from sales of shares
Reinvestment of 5,286,838 10,626,668
distributions from net
interest income
Cost of shares redeemed (35,195,734) (51,269,062)
NET INCREASE (DECREASE) IN 9,674,918 13,100,918
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) (1,610,445) 15,428,701
IN NET ASSETS
NET ASSETS
Beginning of period 312,036,053 296,607,352
End of period $ 310,425,608 $ 312,036,053
OTHER INFORMATION
Shares
Sold 3,487,783 4,731,591
Issued in reinvestment of 468,296 935,606
distributions
Redeemed (3,111,133) (4,515,295)
Net increase (decrease) 844,946 1,151,902
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 11.410 $ 11.330 $ 10.940 $ 11.100 $ 10.130
period
Income from Investment .253 .531 .551 .562 .613
Operations Net interest
income
Net realized and unrealized (.400) .080 .390 (.160) .972
gain (loss)
Total from investment (.147) .611 .941 .402 1.585
operations
Less Distributions
From net interest income (.253) (.531) (.551) (.562) (.613)
From net realized gain - - - - -
In excess of net realized - - - - (.002)
gain
Total distributions (.253) (.531) (.551) (.562) (.615)
Net asset value, end of $ 11.010 $ 11.410 $ 11.330 $ 10.940 $ 11.100
period
TOTAL RETURN B, C (1.33)% 5.51% 8.85% 3.78% 16.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 310,426 $ 312,036 $ 296,607 $ 294,432 $ 315,167
(000 omitted)
Ratio of expenses to average .54% A .55% D .56% D .60% .57%
net assets
Ratio of expenses to average .51% A, E .55% .56% .60% .57%
net assets after expense
reductions
Ratio of net interest income 4.50% A 4.68% 5.00% 5.15% 5.69%
to average net assets
Portfolio turnover rate 16% A 17% 18% 17% 49%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31,
1994
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 11.520
period
Income from Investment .633
Operations Net interest
income
Net realized and unrealized (1.310)
gain (loss)
Total from investment (.677)
operations
Less Distributions
From net interest income (.633)
From net realized gain (.060)
In excess of net realized (.020)
gain
Total distributions (.713)
Net asset value, end of $ 10.130
period
TOTAL RETURN B, C (6.01)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 276,934
(000 omitted)
Ratio of expenses to average .59%
net assets
Ratio of expenses to average .59%
net assets after expense
reductions
Ratio of net interest income 5.97%
to average net assets
Portfolio turnover rate 26%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Minnesota Municipal Income Fund (the fund) is a fund of
Fidelity Municipal Trust (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company organized as a Massachusetts business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The fund may be affected by economic and political
developments in the state of Minnesota. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities (including restricted securities) for which quotations are
not readily available are valued at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations are
not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and
paid monthly from net interest income. Distributions from realized
gains, if any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for market discount, capital loss carryforwards and losses
deferred due to wash sales and futures. The fund also utilized
earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax
purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS -
CONTINUED
and tax basis differences that will reverse in a subsequent period.
Any taxable gain remaining at fiscal year end is distributed in the
following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
FUTURES CONTRACTS. The fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Losses may arise from changes in the value of the underlying
instruments or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $2,954,903 or 1.0% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $36,802,513 and $24,040,634, respectively.
The market value of futures contracts opened and closed during the
period amounted to $10,713,167 and $10,631,209, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management
& Research Company (FMR) receives a monthly fee that is calculated on
the basis of a group fee rate plus a fixed individual fund fee rate
applied to the average net assets of the fund. The group fee rate is
the weighted average of a series of rates and is based on the monthly
average net assets of all the mutual funds advised by FMR. The rates
ranged from .1100% to .3700% for the period. The annual individual
fund fee rate is .25%. In the event that these rates were lower than
the contractual rates in effect during the period, FMR voluntarily
implemented the above rates, as they resulted in the same or a lower
management fee. For the period, the management fee was equivalent to
an annualized rate of .38% of average net assets.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity
Investments Money Management, Inc., a wholly owned subsidiary of FMR,
receives a fee from FMR of 50% of the management fee payable to FMR.
The fee is paid prior to any voluntary expense reimbursements which
may be in effect.
TRANSFER AGENT AND ACCOUNTING FEES. Effective June 14, 1999 Citibank,
N.A. (Citibank) replaced UMB Bank, n.a. as the custodian, transfer
agent and shareholder servicing agent for the fund. Citibank has
entered into a sub-contract with Fidelity Service Company, Inc. (FSC),
an affiliate of FMR, under which FSC performs the activities
associated with the fund's transfer and shareholder servicing agent
and accounting functions. The fund pays account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses.
For the period, the transfer agent fees were equivalent to an
annualized rate of .09% of average net assets.
5. EXPENSE REDUCTIONS.
The fund has entered into arrangements with its custodian and transfer
agent whereby credits realized as a result of uninvested cash balances
were used to reduce a portion of the fund's expenses. During the
period, the fund's custodian and transfer agent fees were reduced by
$5,989 and $26,754, respectively, under these arrangements.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)FIDELITY AUTOMATED
SERVICE TELEPHONE
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments Money
Management Inc., (FIMM)
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President
Christine J. Thompson, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
MNF-SANN-0899 81913
1.705580.101
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Citibank, N.A.
New York, NY
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Citibank, N.A.
New York, NY
FIDELITY'S MUNICIPAL BOND FUNDS
Spartan(registered trademark) Arizona Municipal Income
Spartan California Municipal Income
Spartan Connecticut Municipal Income
Spartan Florida Municipal Income
Spartan Intermediate Municipal Income
Spartan Maryland Municipal Income
Spartan Massachusetts Municipal Income
Spartan Michigan Municipal Income
Spartan Minnesota Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal Income
Spartan New York Municipal Income
Spartan Ohio Municipal Income
Spartan Pennsylvania Municipal Income
Spartan Short-Intermediate
Municipal Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated
Service Telephone 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
SPARTAN(REGISTERED TRADEMARK)
OHIO MUNICIPAL INCOME
FUND
AND
FIDELITY
OHIO MUNICIPAL MONEY MARKET
FUND
SEMIANNUAL REPORT
JUNE 30, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN OHIO MUNICIPAL INCOME
FUND
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 7 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 10 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 11 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 21 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
FIDELITY OHIO MUNICIPAL MONEY
MARKET FUND
PERFORMANCE 25 How the fund has done over
time.
FUND TALK 27 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 29 A summary of major shifts in
the fund's investments over
the past six months and one
year.
INVESTMENTS 30 A complete list of the fund's
investments.
FINANCIAL STATEMENTS 39 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 43 Notes to the financial
statements.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
After much speculation about the U.S. Federal Reserve Board's
near-term monetary policy, stock and bond investors breathed a sigh of
relief when the Fed shifted to a neutral position on rates following
its widely anticipated quarter-point increase in short-term rates on
June 30. This switch in bias helped the S&P 500(registered trademark)
and NASDAQ soar to record-closing highs, and sent yields on the
bellwether 30-year Treasury back below 6%.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
SPARTAN OHIO MUNICIPAL INCOME FUND
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in its yield, to measure performance. If Fidelity had not
reimbursed certain fund expenses, the past one year, past five years,
and past 10 years total returns and dividends would have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN OH MUNICIPAL INCOME -1.45% 2.20% 35.91% 95.78%
LB Ohio 4 Plus Year Enhanced -1.08% 2.52% 39.43% n/a
Municipal Bond
Ohio Municipal Debt Funds -1.44% 1.61% 34.23% 91.08%
Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Lehman Brothers Ohio 4 Plus Year Enhanced Municipal Bond Index
- - a market value-weighted index of Ohio investment-grade municipal
bonds with maturities of four years or more. To measure how the fund's
performance stacked up against its peers, you can compare it to the
Ohio municipal debt funds average, which reflects the performance of
mutual funds with similar objectives tracked by Lipper Inc. The past
six months average represents a peer group of 52 mutual funds. These
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN OH MUNICIPAL INCOME 2.20% 6.33% 6.95%
LB Ohio 4 Plus Year Enhanced 2.52% 6.87% n/a
Municipal Bond
Ohio Municipal Debt Funds 1.61% 6.06% 6.68%
Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking the
arithmetic average. This may produce a different figure than that
obtained by averaging cumulative total returns and annualizing the
result.)
$10,000 OVER 10 YEARS
Spartan OH Muni Income LB Municipal Bond
00088 LB015
1989/06/30 10000.00 10000.00
1989/07/31 10082.66 10136.10
1989/08/31 9978.79 10036.87
1989/09/30 9931.57 10006.96
1989/10/31 10059.72 10129.34
1989/11/30 10204.85 10306.61
1989/12/31 10285.33 10390.91
1990/01/31 10188.82 10341.77
1990/02/28 10304.07 10433.81
1990/03/31 10315.79 10436.94
1990/04/30 10158.98 10361.37
1990/05/31 10422.16 10587.56
1990/06/30 10529.74 10680.63
1990/07/31 10688.04 10837.63
1990/08/31 10519.93 10680.27
1990/09/30 10600.29 10686.36
1990/10/31 10751.44 10880.21
1990/11/30 11003.94 11099.01
1990/12/31 11056.64 11147.29
1991/01/31 11179.24 11296.89
1991/02/28 11249.69 11395.17
1991/03/31 11270.31 11399.27
1991/04/30 11446.12 11550.88
1991/05/31 11539.79 11653.57
1991/06/30 11498.26 11642.03
1991/07/31 11656.62 11783.83
1991/08/31 11773.21 11939.03
1991/09/30 11912.49 12094.47
1991/10/31 12019.80 12203.32
1991/11/30 12040.70 12237.37
1991/12/31 12322.18 12499.98
1992/01/31 12344.08 12528.48
1992/02/29 12352.07 12532.49
1992/03/31 12342.96 12537.13
1992/04/30 12442.28 12648.71
1992/05/31 12610.75 12797.58
1992/06/30 12833.20 13012.33
1992/07/31 13203.81 13402.44
1992/08/31 13056.50 13271.76
1992/09/30 13134.05 13358.56
1992/10/31 12895.01 13227.25
1992/11/30 13238.61 13464.15
1992/12/31 13389.70 13601.62
1993/01/31 13564.64 13759.80
1993/02/28 14047.85 14257.49
1993/03/31 13883.76 14106.79
1993/04/30 14011.14 14249.13
1993/05/31 14081.67 14329.21
1993/06/30 14315.88 14568.37
1993/07/31 14337.13 14587.45
1993/08/31 14670.86 14891.16
1993/09/30 14846.38 15060.77
1993/10/31 14856.14 15089.84
1993/11/30 14729.81 14956.90
1993/12/31 15071.27 15272.64
1994/01/31 15254.46 15447.05
1994/02/28 14849.50 15046.97
1994/03/31 14221.19 14434.26
1994/04/30 14329.61 14556.66
1994/05/31 14426.93 14682.87
1994/06/30 14404.90 14593.16
1994/07/31 14632.60 14860.65
1994/08/31 14679.01 14912.07
1994/09/30 14500.19 14693.16
1994/10/31 14218.15 14432.21
1994/11/30 13905.89 14171.27
1994/12/31 14235.32 14483.18
1995/01/31 14662.48 14897.11
1995/02/28 15069.50 15330.32
1995/03/31 15225.28 15506.46
1995/04/30 15256.87 15524.76
1995/05/31 15705.25 16020.16
1995/06/30 15569.30 15880.78
1995/07/31 15655.25 16031.33
1995/08/31 15838.21 16234.61
1995/09/30 15963.10 16337.37
1995/10/31 16175.52 16574.92
1995/11/30 16427.31 16849.90
1995/12/31 16568.98 17011.82
1996/01/31 16695.25 17140.26
1996/02/29 16585.84 17024.57
1996/03/31 16350.50 16806.99
1996/04/30 16286.65 16759.43
1996/05/31 16267.90 16752.73
1996/06/30 16435.92 16935.16
1996/07/31 16577.86 17089.27
1996/08/31 16575.17 17085.17
1996/09/30 16836.48 17324.36
1996/10/31 17040.98 17520.30
1996/11/30 17362.68 17840.92
1996/12/31 17269.69 17765.99
1997/01/31 17311.14 17799.57
1997/02/28 17451.80 17962.97
1997/03/31 17204.16 17723.52
1997/04/30 17321.09 17871.87
1997/05/31 17563.22 18140.66
1997/06/30 17757.43 18333.86
1997/07/31 18250.31 18841.71
1997/08/31 18058.71 18665.16
1997/09/30 18271.13 18886.72
1997/10/31 18391.21 19008.16
1997/11/30 18477.97 19119.93
1997/12/31 18778.46 19398.89
1998/01/31 18964.13 19599.08
1998/02/28 18926.26 19604.96
1998/03/31 18935.88 19622.21
1998/04/30 18829.70 19533.72
1998/05/31 19116.08 19842.94
1998/06/30 19156.22 19921.12
1998/07/31 19198.60 19971.12
1998/08/31 19520.07 20279.67
1998/09/30 19791.44 20532.36
1998/10/31 19750.22 20531.95
1998/11/30 19823.14 20604.02
1998/12/31 19865.58 20655.94
1999/01/31 20128.36 20901.54
1999/02/28 19994.01 20810.20
1999/03/31 20020.77 20839.12
1999/04/30 20044.65 20891.01
1999/05/31 19916.64 20770.05
1999/06/30 19577.84 20470.96
IMATRL PRASUN SHR__CHT 19990630 19990712 115516 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Spartan Ohio Municipal Income Fund on June 30, 1989. As
the chart shows, by June 30, 1999, the value of the investment would
have grown to $19,578 a 95.78% increase on the initial investment. For
comparison, look at how the Lehman Brothers Municipal Bond Index - a
market value-weighted index of investment-grade municipal bonds with
maturities of one year or more - did over the same period. With
dividends reinvested, the same $10,000 would have grown to $20,471 - a
104.71% increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday
is no guarantee of how it
will do tomorrow. Bond
prices, for example,
generally move in the
opposite direction of interest
rates. In turn, the share price,
return and yield of a fund that
invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995 1994
Dividend returns 2.22% 4.69% 5.08% 4.98% 6.22% 5.37%
Capital returns -3.67% 1.10% 3.66% -0.75% 10.17% -10.92%
Total returns -1.45% 5.79% 8.74% 4.23% 16.39% -5.55%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains if
any, paid by the fund, are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 4.39(cents) 26.53(cents) 53.49(cents)
Annualized dividend rate 4.70% 4.60% 4.56%
30-day annualized yield 4.42% - -
30-day annualized 7.47% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of
$11.36 over the past one month, $11.63 over the past six months and
$11.72 over the past one year, you can compare the fund's income over
these three periods. The 30-day annualized YIELD is a standard formula
for all bond funds based on the yields of the bonds in the fund,
averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It
also helps you compare funds from different companies on an equal
basis. The tax-equivalent yield shows what you would have to earn on a
taxable investment to equal the fund's tax-free yield, if you're in
the 40.80% combined effective 1999 federal and state tax bracket and
reflects that a portion of the fund's income was subject to state
taxes, but does not reflect payment of the federal alternative minimum
tax, if applicable.
SPARTAN OHIO MUNICIPAL INCOME FUND
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite a surge in municipal bond
prices on the last day of the period
following the Federal Reserve Board's
widely anticipated quarter point
increase - from 4.75% to 5.00% -
in the federal funds rate, or overnight
bank-lending level, the municipal bond
market was hard-hit by a continuous
sell-off during the six-month period that
ended June 30, 1999. Although
retail investors provided support in
the municipal bond market with
periods of active buying and
new-issue supply was down from last
year, institutional investors remained on
the sidelines, putting pressure on
prices, which move inversely to bond
yields. While municipal bonds
outperformed taxable bonds over the
six-month period, the Lehman Brothers
Municipal Bond Index - an index
of approximately 50,000
investment-grade, fixed-rate tax-exempt
bonds - declined 0.90%. In
comparison, the Lehman Brothers
Aggregate Bond Index - a widely
followed measure of taxable-bond
performance - fell 1.37%. In
general, the period was characterized
by uncertainty as investors adopted a
wait-and-see approach regarding
the Fed's next move and the release of
major economic reports that could
provide some clues about the future
direction of interest rates. Nevertheless,
municipal bond prices received a lift
on the last day of the period, as the Fed
shifted its monetary policy stance
from a tightening bias to a neutral
stance, meaning its next move is as
likely to keep interest rates unchanged
as it is to increase them.
(photograph of George Fischer)
An interview with George Fischer, Portfolio Manager of Spartan Ohio
Municipal Income Fund
Q. HOW DID THE FUND PERFORM, GEORGE?
A. For the six-month period that ended June 30, 1999, the fund had a
total return of -1.45%. To get a sense of how the fund did relative to
its competitors, the Ohio municipal debt funds average returned -1.44%
for the same six-month period, according to Lipper Inc. Additionally,
the Lehman Brothers Ohio 4 Plus Year Enhanced Municipal Bond Index -
which tracks the types of securities in which the fund invests -
returned -1.08% for the same six-month period. For the 12-month period
that ended June 30, 1999, the fund had a total return of 2.20%. That
compared to the Ohio municipal debt funds average's 1.61% return and
the Lehman Brothers index's 2.52% return for the same 12-month period.
Q. ALTHOUGH NEARLY ALL MUNICIPAL BONDS CAME UNDER PRESSURE WHEN RATES
ROSE FROM DECEMBER THROUGH THE END OF JUNE, WERE THERE ANY BONDS THAT
WERE PARTICULARLY DISAPPOINTING DURING THAT PERIOD?
A. Intermediate-term bonds - with maturities of between five and 15
years - didn't perform as well as I had hoped. They suffered at the
hands of weaker demand and increased supply. Despite their recent
disappointing performance, I continued to emphasize intermediate bonds
because I felt they offered the best combination of reward - or income
- - for the risk. For bonds with maturities of 15 years or longer, the
extra income for each successive year was not, in my opinion,
attractive given the level of risk inherent in longer-term bonds.
Q. WHAT SECURITIES HELPED PERFORMANCE DURING THE PAST SIX MONTHS?
A. The fund's performance benefited from the advance refunding of
bonds issued by Hamilton County for Franciscan Hospital as well as the
advance refunding of some of the fund's holdings in Franklin County
General Obligation bonds. Advance-refunded bonds assume a higher
credit rating and, generally speaking, higher prices, through a
somewhat complex process that involves issuing new debt at lower
interest rates to retire older, more expensive debt.
Q. WHAT OTHER TYPES OF BONDS DID YOU CHOOSE TO EMPHASIZE?
A. I continued to favor premium coupon bonds, which carry interest
rates higher than prevailing carry coupons. Premiums, as they're
known, are attractive for several reasons. First, they're more likely
than discount bonds - which carry interest rates below prevailing
rates - to be advance refunded, a process that generally is positive
for their prices. Second, premium bonds are somewhat protected from
the unfavorable price performance that can hurt discount bonds when
interest rates are rising. Finally, individual investors - who account
for a significant portion of municipal bond demand - tend to shy away
from premium coupon bonds in favor of par bonds - those that carry
coupons at prevailing rates. As a result, I'm often able to buy
premium coupons at attractive prices compared to comparably rated,
comparable-maturity par and discount bonds.
Q. GEORGE, WHAT FACTORS WILL SHAPE THE MUNICIPAL MARKET'S PERFORMANCE
OVER THE NEXT SIX MONTHS?
A. Obviously, the direction of interest rates will be the primary
determinant of municipal bond performance. It's not clear at this
point whether the Federal Reserve Board is finished raising rates
after doing so on June 30, or whether that hike was the first in what
will ultimately be a series of rate increases. But other factors -
namely supply and demand - will play a role. If interest rates remain
stable or move higher, I would expect the supply of municipals to
taper off as issuers slow down their refinancing and new issuance
activity. A bigger unknown is demand. Even after gaining some ground
on them, municipals remain relatively cheap alternatives to U.S.
Treasuries. To the extent that investors seek out that value, the more
municipals will benefit.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: high current income for
Ohio residents by normally
investing in investment-grade
municipal securities whose
interest is free from federal
income tax and Ohio
personal income tax
FUND NUMBER: 088
TRADING SYMBOL: FOHFX
START DATE: November 15,
1985
SIZE: as of June 30, 1999,
more than $385 million
MANAGER: George Fischer,
since 1997; manager,
various Fidelity and Spartan
municipal income funds;
joined Fidelity in 1989
GEORGE FISCHER ON Y2K
AND ITS POTENTIAL EFFECTS ON
MUNICIPAL BOND ISSUERS:
"The Y2K bug may pose problems
for some municipal issuers. At this
point, however, it's unclear how
many or to what magnitude
issuers will be affected, if at all.
That's why Fidelity's research
team - in its routine security
selection process - is looking at
municipal issuers' Y2K
preparedness. We're attempting to
ascertain how vulnerable a given
issuer thinks it is and what
potential fixes it has planned in
the event of problems. How
successful issuers are in
preparing for and dealing with
problems ultimately may affect
their creditworthiness. Y2K is only
one of the many factors I must
consider when determining
whether to buy or sell securities
for the fund."
(solid bullet) At the end of the period, bonds
issued by Puerto Rico made up
3.9% of the fund's investments.
As a territory of the United States,
Puerto Rico can issue municipal
debt that is free from federal taxes
in all 50 states and state income
taxes in those states that levy
them. Because municipal supply
in Ohio has been somewhat
limited for the past couple of
years, the manager bought
higher-yielding Puerto Rico bonds.
SPARTAN OHIO MUNICIPAL INCOME FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE SECTORS AS OF JUNE
30, 1999
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS IN
THESE SECTORS 6 MONTHS AGO
General Obligations 30.4 33.7
Water & Sewer 13.8 14.0
Escrowed/Pre-Refunded 12.0 9.6
Electric Utilities 9.3 9.1
Health Care 7.8 7.2
AVERAGE YEARS TO MATURITY AS
OF JUNE 30, 1999
6 MONTHS AGO
Years 12.8 12.6
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF JUNE 30, 1999
6 MONTHS AGO
Years 6.8 7.0
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION
AS OF JUNE 30, 1999
Aaa 63.3%
Aa, A 25.6%
Baa 6.4%
Not Rated 2.4%
Short-term
investments 2.3%
Row: 1, Col: 1, Value: 63.3
Row: 1, Col: 2, Value: 25.6
Row: 1, Col: 3, Value: 6.4
Row: 1, Col: 4, Value: 2.4
Row: 1, Col: 5, Value: 2.3
AS OF DECEMBER 31, 1998
Aaa 61.6%
Aa, A 27.4%
Baa 6.8%
Not Rated 2.4%
Short-term
investments 1.8%
Row: 1, Col: 1, Value: 61.6
Row: 1, Col: 2, Value: 27.4
Row: 1, Col: 3, Value: 6.8
Row: 1, Col: 4, Value: 2.4
Row: 1, Col: 5, Value: 1.8
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P (registered
trademark) RATINGS. AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S
INVESTMENTS.
SPARTAN OHIO MUNICIPAL INCOME FUND
INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 97.7%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - 93.8%
Adams County Valley Local
School District Impt.:
6.65% 12/1/03 (MBIA Insured) Aaa $ 1,000,000 $ 1,088,280
6.65% 12/1/04 (MBIA Insured) Aaa 1,000,000 1,101,810
6.65% 12/1/05 (MBIA Insured) Aaa 1,000,000 1,111,860
Akron Gen. Oblig. (Parking A2 160,000 186,960
Facilities) 8.75% 11/1/03
Akron Summit County Pub. Aaa 5,000,000 4,830,500
Library Series A, 5%
12/1/15 (FGIC Insured)
Akron Wtrwks. Rev. Rfdg. Aaa 2,000,000 1,935,860
4.875% 3/1/12 (MBIA Insured)
Alliance Wtrwks. Rev. (Cap. Aaa 765,000 537,910
Appreciation) 0% 10/15/06
(FGIC Insured) (Escrowed to
Maturity) (d)
Bedford Hosp. Impt. Rev. - 650,000 689,182
Rfdg. (Bedford Cmnty. Hosp.)
8.5% 5/15/09 (Pre-Refunded
to 5/15/00 @ 102) (d)
Buckeye Local School District
Jefferson County Rfdg. (Cap.
Appreciation):
0% 12/1/06 (AMBAC Insured) Aaa 375,000 263,108
0% 12/1/07 (AMBAC Insured) Aaa 760,000 504,222
Buckeye Valley Local School Aaa 2,500,000 2,942,100
District Delaware County
Series A, 6.85% 12/1/15
(MBIA Insured)
Butler County Sales Tax 5% Aaa 2,000,000 1,903,900
12/15/19 (AMBAC Insured)
Butler County Trans. Impt. Aaa 1,000,000 1,015,830
District Series A, 5%
4/1/06 (FSA Insured)
Cincinnati Student Ln. Fdg.
Corp. Student Ln. Rev.:
Rfdg. Series A, 7.25% 2/1/08 A 4,000,000 4,101,960
(c)
Series A, 5.5% 12/1/01 (c) A1 5,270,000 5,334,610
Cleveland Arpt. Sys. Rev.
Series A:
5.5% 1/1/08 (FSA Insured) (c) Aaa 1,500,000 1,547,370
6% 1/1/10 (FGIC Insured) (c) Aaa 2,620,000 2,761,794
Cleveland Gen. Oblig. Rfdg.:
5.375% 9/1/11 (AMBAC Insured) Aaa 1,960,000 1,995,006
5.5% 9/1/16 (AMBAC Insured) Aaa 2,000,000 2,034,780
Cleveland Pub. Pwr. Sys.
Rev.: (Cap. Appreciation)
Series A:
0% 11/15/08 (MBIA Insured) Aaa 5,480,000 3,441,933
0% 11/15/10 (MBIA Insured) Aaa 2,685,000 1,501,989
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Cleveland Pub. Pwr. Sys.
Rev.: (Cap. Appreciation)
Series A: - continued
0% 11/15/11 (MBIA Insured) Aaa $ 2,685,000 $ 1,411,800
Rfdg. Series 1:
5% 11/15/20 (MBIA Insured) Aaa 1,145,000 1,087,246
5.125% 11/15/18 (MBIA Insured) Aaa 2,000,000 1,938,820
5.25% 11/15/14 (MBIA Insured) Aaa 1,000,000 1,005,490
Cleveland Wtrwks. Rev.:
Rfdg. Series F 92B:
6.125% 1/1/03 (AMBAC Insured) Aaa 1,000,000 1,052,870
6.25% 1/1/05 (AMBAC Insured) Aaa 1,000,000 1,057,900
Rfdg. & Impt. Series I: 5% Aaa 9,520,000 8,980,398
1/1/23 (FSA Insured)
5% 1/1/28 (FSA Insured) Aaa 4,100,000 3,823,865
Series F 92A:
6.25% 1/1/15 (AMBAC Insured) Aaa 125,000 132,025
6.25% 1/1/15 (AMBAC Insured) Aaa 2,875,000 3,059,661
(Pre-Refunded to 1/1/02 @
102) (d)
Series H:
5.75% 1/1/16 (MBIA Insured) Aaa 45,000 47,191
5.75% 1/1/16 (MBIA Insured) Aaa 2,455,000 2,633,994
(Pre-Refunded to 1/1/06 @
102) (d)
Columbus Gen. Oblig.:
(Swr. Impt. #26) Series E, Aaa 2,000,000 2,102,060
6.5% 9/15/01
(Various Purp.) Series 1, 6% Aaa 1,000,000 1,080,850
5/15/10 (Pre-Refunded to
5/15/04 @ 102) (d)
(Wtrwks. Enlargement #44) 6% Aaa 1,250,000 1,340,688
5/1/12 (Pre-Refunded to
5/1/03 @ 102) (d)
Series 1, 5.25% 9/15/11 Aaa 2,000,000 2,021,560
Cuyahoga County Gen. Oblig.:
Rfdg. (Cap. Appreciation)
Series A:
0% 10/1/08 (MBIA Insured) Aaa 4,000,000 2,525,360
0% 10/1/09 (MBIA Insured) Aaa 4,200,000 2,510,550
0% 10/1/11 (MBIA Insured) Aaa 2,400,000 1,271,496
0% 10/1/12 (MBIA Insured) Aaa 1,505,000 749,264
0% 10/1/13 (MBIA Insured) Aaa 1,500,000 703,560
5.5% 11/15/05 Aa2 2,400,000 2,520,168
Cuyahoga County Hosp. Rev. Aaa 2,000,000 1,976,060
(Univ. Hosp. Health Sys.,
Inc.) 5.4% 1/15/19 (AMBAC
Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Delaware City School District:
(Cap. Appreciation) 0% Aaa $ 1,000,000 $ 592,770
12/1/09 (FGIC Insured)
5.5% 12/1/08 (FGIC Insured) Aaa 1,400,000 1,450,694
Delaware County Swr. District Aaa 4,000,000 3,607,040
Impt. 4.75% 12/1/24 (MBIA
Insured)
Dublin City School District:
(Various Purp.) 6.2% 12/1/19 Aaa 1,400,000 1,508,920
(AMBAC Insured)
(Pre-Refunded to 12/1/02 @
102) (d)
Rfdg. (Cap. Appreciation) 0% Aaa 1,930,000 1,506,326
12/1/04 (AMBAC Insured)
Fairfield City School District:
7.1% 12/1/07 (FGIC Insured) Aaa 1,120,000 1,284,562
7.45% 12/1/14 (FGIC Insured) Aaa 1,000,000 1,233,920
Franklin County Convention Aaa 2,000,000 1,859,940
Facilities Auth. Tax &
Lease Rev. 5% 12/1/27 (MBIA
Insured)
Franklin County Gen. Oblig.:
5.5% 12/1/15 Aaa 1,225,000 1,244,821
5.5% 12/1/16 Aaa 1,290,000 1,308,254
Franklin County Gen. Oblig.
Rev. (Online Computer
Library Ctr., Inc. Proj.):
6% 4/15/13 - 3,500,000 3,563,350
7.2% 7/15/06 (Pre-Refunded to - 1,000,000 1,057,640
7/15/01 @ 100) (d)
Franklin County Hosp. Rev. Baa3 5,000,000 4,583,600
(Ohio Health Corp.) Series
A, 5.6% 12/1/28
Gallia County Hosp. Aaa 3,000,000 2,958,720
Facilities Rev. (Holzer Med.
Ctr. Proj.) 5.125% 10/1/13
(AMBAC Insured)
Gateway Economic Dev. Corp. - 3,000,000 3,095,400
Greater Cleveland Stadium
Rev. 6.5% 9/15/14 (c)
Greater Cleveland Reg'l. Aaa 1,800,000 1,918,548
Trans. Auth. 5.65% 12/1/16
(FGIC Insured) (Pre-Refunded
to 12/1/06 @ 101) (d)
Greene County Gen. Oblig. Aaa 2,490,000 2,474,711
Rev. Rfdg. (Fairview
Extended) Series B, 4.5%
1/1/11 (MBIA Insured), LOC
BankBoston NA
Greene County Swr. Sys. Rev. Aaa 775,000 459,397
(Cap. Appreciation) 0%
12/1/09 (AMBAC Insured)
Greene County Wtr. Sys. Rev. Aaa 2,500,000 2,651,725
Series A, 6% 12/1/16 (FGIC
Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Hamilton County Health Care
Sys. Rev. (Sisters of
Charity Health Care) Series A:
6.25% 5/15/08 (AMBAC Insured) Aaa $ 4,220,000 $ 4,529,664
(Pre-Refunded to 5/15/03 @
101) (d)
6.25% 5/15/14 (AMBAC Insured) Aaa 1,000,000 1,073,380
(Pre-Refunded to 5/15/03 @
101) (d)
Hamilton County Health Sys. Baa2 5,000,000 5,442,300
Rev. Rfdg. (Providence
Hosp./Franciscan Sisters
Poor Health Sys.) 6.875%
7/1/15 (Pre-Refunded to
7/1/02 @ 102) (d)
Hamilton County Gen. Oblig.:
5.25% 12/1/15 Aa2 1,795,000 1,784,858
5.25% 12/1/16 Aa2 1,900,000 1,882,539
5.25% 12/1/17 Aa2 2,005,000 1,981,401
Hamilton County Sales Tax Aaa 2,250,000 2,098,553
(Hamilton County Football
Proj.) Series B, 5% 12/1/27
(MBIA Insured)
Hamilton County Swr. Sys.
Rev. Rfdg. & Impt.:
(Metro. Swr. District) Series Aaa 1,000,000 1,037,320
A, 5.45% 12/1/09 (FGIC
Insured)
Series A, 6% 12/1/05 (FGIC Aaa 4,500,000 4,834,980
Insured)
Hamilton Elec. Sys. Mtg. Rev.
Rfdg. Series A:
6% 10/15/09 (FGIC Insured) Aaa 2,920,000 3,082,994
6% 10/15/12 (FGIC Insured) Aaa 2,000,000 2,118,520
Hilliard School District
Series A:
5% 12/1/09 (FGIC Insured) Aaa 1,000,000 1,002,790
6% 12/1/05 (FGIC Insured) Aaa 1,415,000 1,522,766
Lakewood Gen. Oblig. Series A:
6.6% 12/1/08 Aa3 1,525,000 1,730,006
6.6% 12/1/11 Aa3 1,630,000 1,865,128
Lakota Local School District
Rfdg. (Cap. Appreciation):
0% 12/1/99 A1 445,000 438,868
0% 12/1/00 A1 625,000 593,181
0% 12/1/01 A1 590,000 532,540
0% 12/1/02 A1 555,000 477,650
0% 12/1/03 A1 260,000 212,586
0% 12/1/04 A1 730,000 567,349
0% 12/1/05 A1 690,000 508,730
0% 12/1/06 A1 650,000 453,746
0% 12/1/07 A1 610,000 404,040
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Lima Swr. Sys. Rev. Rfdg. & Aaa $ 5,000,000 $ 5,358,500
Impt. 6.3% 12/1/12 (AMBAC
Insured)
Lowellville San. Swr. Sys. A- 900,000 933,327
Rev. (Browning-Ferris
Industries, Inc.) 7.25%
6/1/06 (c)
Lucas County Hosp. Rev.:
Rfdg. (Promedica Healthcare Aaa 4,000,000 4,281,520
Oblig. Group) 6% 11/15/04
(MBIA Insured)
5.375% 11/15/23 (AMBAC Aaa 5,000,000 4,877,050
Insured)
5.625% 11/15/12 (AMBAC Aaa 2,000,000 2,054,380
Insured)
5.625% 11/15/13 (AMBAC Aaa 1,200,000 1,227,180
Insured)
Marion County Hosp. Impt.
Rev. Rfdg. (Cmnty. Hosp.):
5.7% 5/15/02 BBB+ 1,500,000 1,526,745
5.8% 5/15/03 BBB+ 1,825,000 1,867,815
6.1% 5/15/06 BBB+ 1,000,000 1,034,290
Mason City School District:
6.05% 12/1/09 (FGIC Insured) Aaa 1,225,000 1,332,972
6.15% 12/1/10 (FGIC Insured) Aaa 1,420,000 1,561,361
Mentor Exempted Village
School District Rfdg. (Cap.
Appreciation):
0% 12/1/00 (MBIA Insured) Aaa 755,000 715,672
0% 12/1/01 (MBIA Insured) Aaa 795,000 720,453
0% 12/1/03 (MBIA Insured) Aaa 840,000 688,892
Middleburg Heights Hosp. Rev. A2 2,000,000 2,160,600
(Southwest Gen. Hosp.) 7.2%
8/15/19 (Pre-Refunded to
8/15/01 @ 102) (d)
Montgomery County Solid Waste Aaa 1,940,000 2,080,514
Rev. Rfdg. 6% 11/1/05 (MBIA
Insured)
Newark Gen. Oblig. (Wtr. Sys. Aaa 455,000 301,870
Impt.) 0% 12/1/07 (AMBAC
Insured)
North Canton School District Aaa 2,000,000 2,164,320
Impt. 5.9% 12/1/14 (AMBAC
Insured) (Pre-Refunded to
12/1/04 @ 102) (d)
Northeast Reg'l. Swr. Aaa 1,000,000 1,084,650
District Wastewtr. Rev.
Rfdg. 6.25% 11/15/04 (AMBAC
Insured)
Ohio Air Quality Dev. Auth.
Rev.:
(Columbus & Southern Pwr. Co. Aaa 3,000,000 3,209,340
Proj.) Series A, 6.375%
12/1/20 (FGIC Insured)
Rfdg.:
(Dayton Pwr. & Lt. Co. Proj.) A1 4,000,000 4,190,800
6.1% 9/1/30
(Ohio Pwr. Co. Proj.) Series Baa1 3,250,000 3,323,743
B, 7.4% 8/1/09
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Ohio Bldg. Auth. Facilities:
(Administration Bldg. Fund) Aa2 $ 1,000,000 $ 987,180
Series A, 4.875% 10/1/10
(Adult Correctional Aaa 1,930,000 2,068,555
Facilities) Series A, 6%
4/1/06 (AMBAC Insured)
(Ohio Ctr. Arts) Series A, Aa2 2,000,000 2,083,540
5.45% 10/1/07
(Workers Compensation-W. A2 4,620,000 4,347,189
Green Bldg.) Series A, 4.75%
4/1/14
Rfdg. (State Correctional
Facilities) Series A:
5.25% 10/1/09 Aa2 3,000,000 3,067,620
5.7% 10/1/04 Aa2 1,125,000 1,186,931
5.75% 10/1/05 Aa2 3,080,000 3,264,338
6.5% 10/1/03 Aa2 2,750,000 2,928,063
5.5% 10/1/10 Aa2 1,500,000 1,553,220
Ohio Cap. Corp. for Hsg. AAA 1,000,000 1,036,600
Multi-family Rev. Rfdg.
Series A, 7.5% 1/1/24, LOC
Fannie Mae
Ohio Expositions Commission - 920,000 960,029
Ctfs. of Prtn. (Agricenter
Facilities) 8.25% 10/1/06
(Pre-Refunded to 4/1/00 @
101) (d)
Ohio Higher Edl. Facilities
Rev.:
(Case Western Reserve Univ.
Proj.):
Series B, 6.5% 10/1/20 Aa2 2,250,000 2,551,275
Series C, 5.125% 10/1/17 Aa2 2,985,000 2,879,809
6% 10/1/22 Aa2 650,000 679,055
(Denison Univ. Proj.) 5.3% A1 3,775,000 3,650,048
11/1/21
(Oberlin College) 5% 10/1/29 AA 3,000,000 2,772,000
Rfdg. (Case Western Reserve
Univ. Proj.):
6% 10/1/14 Aa2 1,500,000 1,621,545
6.125% 10/1/15 Aa2 2,000,000 2,180,040
6.25% 10/1/16 Aa2 2,500,000 2,777,900
Series IIB, 5.9% 12/1/06 Aaa 1,000,000 1,051,110
(AMBAC Insured)
Ohio Hsg. Fin. Agcy. Mtg.
Rev. (Residential Proj.):
Series A 1, 5.3% 9/1/26 (c) AAA 1,350,000 1,367,213
Series B 2, 5.375% 9/1/19 (c) AAA 3,680,000 3,715,181
Series C, 4.9% 9/1/26, LOC AAA 1,460,000 1,460,453
Govt. Nat'l. Mortgage Assoc.
(c)
Ohio Hwy. Cap. Impt.
(Infrastructure Impt.):
0% 8/1/09 Aa1 2,290,000 1,392,618
0% 8/1/10 Aa1 2,000,000 1,146,540
0% 8/1/14 Aa1 1,375,000 625,226
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Ohio Hwy. Cap. Imp.
(Infrastructure Impt.): -
continued
5.75% 8/1/04 Aa1 $ 1,000,000 $ 1,058,990
6.15% 8/1/10 (Pre-Refunded to Aa1 3,530,000 3,860,479
8/1/05 @ 102) (d)
6.5% 9/1/01 Aa1 1,000,000 1,049,540
6.65% 8/1/05 Aa1 3,000,000 3,332,010
6.65% 9/1/09 Aa1 1,000,000 1,127,090
Ohio Poll. Cont. Rev. Aa2 3,100,000 3,599,348
(Standard Oil Co./ British
Petroleum Co., Inc.) 6.75%
12/1/15
Ohio Pub. Facilities
Commission Higher Ed. Cap.
Facilities:
(Mental Health Cap.) Series Aaa 2,600,000 2,590,874
II B, 5.125% 6/1/11 (FSA
Insured)
Series II A, 6.3% 5/1/03 Aaa 2,000,000 2,114,480
(AMBAC Insured)
(Pre-Refunded to 5/1/01 @
102) (d)
Ohio Tpk. Commission Tpk. Rev.:
Rfdg. Series A, 5.5% 2/15/21 Aaa 5,000,000 5,140,750
(FGIC Insured)
Series A:
5.5% 2/15/26 (MBIA Insured) Aaa 5,000,000 5,298,250
(Pre-Refunded to 2/15/06 @
102) (d)
5.6% 2/15/12 (MBIA Insured) Aaa 2,840,000 2,938,236
5.7% 2/15/13 (MBIA Insured) Aaa 2,660,000 2,777,918
5.7% 2/15/17 (MBIA Insured) Aaa 2,000,000 2,141,800
(Pre-Refunded to 2/15/06 @
102) (d)
6% 2/15/04 (FSA Insured) Aaa 5,140,000 5,466,339
6% 2/15/05 (FSA Insured) Aaa 2,000,000 2,132,380
6% 2/15/06 (FSA Insured) Aaa 2,200,000 2,355,408
6% 2/15/07 (FSA Insured) Aaa 3,100,000 3,324,595
Ohio Wtr. Dev. Auth. Poll.
Cont. Faclilties Rev. (Wtr.
Cont. Ln. Fund):
State Match Series:
6.5% 12/1/04 (MBIA Insured) Aaa 1,000,000 1,097,190
6.5% 12/1/05 (MBIA Insured) Aaa 2,735,000 3,013,614
Wtr. Quality Series:
5.125% 6/1/19 (MBIA Insured) Aaa 4,000,000 3,875,840
5.25% 6/1/05 (MBIA Insured) Aaa 2,325,000 2,399,330
Ohio Wtr. Dev. Auth. Rev.:
(Fresh Wtr. Proj.):
6.25% 12/1/02 (AMBAC Insured) Aaa 1,915,000 2,031,317
6.25% 12/1/03 (AMBAC Insured) Aaa 2,025,000 2,176,713
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Ohio Wtr. Dev. Auth. Rev.: -
continued
(Pure Wtr.) Series I, 6% Aaa $ 1,685,000 $ 1,793,969
12/1/16 (AMBAC Insured)
(Escrowed to Maturity) (d)
Rfdg. (Safe Wtr.) 6% 6/1/07 Aaa 2,000,000 2,153,700
(AMBAC Insured)
Rfdg. & Impt. (Pure Wtr.) Aaa 2,500,000 2,523,475
5.5% 12/1/18 (AMBAC Insured)
Ohio Wtr. Dev. Auth. Solid A1 6,350,000 6,705,854
Waste Disp. Rev. (North Star
BHP Steel / Cargill) 6.3%
9/1/20 (c)
Ottawa County Gen. Oblig. Aaa 500,000 514,765
(San. Swr.) 7.5% 10/1/14
(AMBAC Insured)
(Pre-Refunded to 10/1/99 @
102) (d)
Ottawa County San. Swr. Sys. Aaa 1,445,000 1,021,933
Rev. Rfdg. (Cap.
Appreciation)(Danbury Proj.)
0% 10/1/06 (AMBAC Insured)
Pickerington Local School Aaa 1,000,000 1,068,000
District Construction &
Impt. 5.8% 12/1/09 (FGIC
Insured)
Portage County Hosp. Rev. Aaa 1,080,000 1,168,528
(Robinson Memorial Hosp.
Proj.) 6.5% 11/15/03 (MBIA
Insured)
Scioto County Marine Term. Baa1 3,000,000 2,914,770
Facilities Rev. Rfdg.
(Norfolk Southern Corp.
Proj.) 5.3% 8/15/13
South-Western City School Aaa 1,000,000 1,064,010
District Rfdg. (Franklin &
Pickway Counties) Series A,
6.2% 12/1/06 (AMBAC Insured)
Springboro Cmnty. City School Aaa 915,000 641,982
District Rfdg. (Cap.
Appreciation) 0% 12/1/06
(AMBAC Insured)
Stark County Rfdg. 5.6% Aaa 1,150,000 1,195,828
11/15/08 (AMBAC Insured)
Toledo Gen. Oblig.:
5.5% 12/1/08 (FGIC Insured) Aaa 1,000,000 1,044,240
5.5% 12/1/09 (FGIC Insured) Aaa 1,000,000 1,042,170
6.1% 12/1/14 (AMBAC Insured) Aaa 1,750,000 1,885,433
7.625% 12/1/04 (AMBAC Insured) Aaa 1,000,000 1,145,550
Warren County Gen. Oblig.:
Swr. Impt. (P&G Co./Lower Aa2 1,455,000 1,468,953
Miami) 5.5% 12/1/16
6.1% 12/1/12 Aa2 500,000 548,210
6.65% 12/1/11 Aa2 500,000 570,685
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Westlake City School District Aa3 $ 1,060,000 $ 1,149,464
Series A, 6.15% 12/1/05
Wyoming City School District Aaa 1,680,000 1,563,593
Series B, 5% 12/1/23 (FGIC
Insured)
362,536,942
PUERTO RICO - 3.9%
Puerto Rico Commonwealth Aaa 7,810,000 7,334,215
Infrastructure Fing. Auth.
Series A, 5% 7/1/28 (AMBAC
Insured)
Puerto Rico Commonwealth Pub. Baa1 4,000,000 4,114,040
Impt. 5.25% 7/1/09
Puerto Rico Elec. Pwr. Auth. Aaa 4,000,000 3,761,920
Pwr. Rev. 5% 7/1/28 (MBIA
Insured)
15,210,175
TOTAL MUNICIPAL BONDS 377,747,117
(Cost $370,968,992)
</TABLE>
MUNICIPAL NOTES - 2.3%
OHIO - 2.3%
Ohio Air Quality Dev. Auth.
Rev.:
(Cinncinnati Gas & Elec. 300,000 300,000
Proj.) Series 1985-A, 3.5%,
LOC UBS AG, VRDN (b)
Rfdg. Bonds (Ohio Edison 5,000,000 4,969,150
Proj.) Series B, 4.25%,
tender 6/1/01
Ohio Solid Waste Rev. 3,500,000 3,500,000
(British Petroleum
Exploration & Oil Proj.)
3.5%, VRDN (b)(c)
TOTAL MUNICIPAL NOTES 8,769,150
(Cost $8,800,000)
TOTAL INVESTMENT IN $ 386,516,267
SECURITIES - 100%
(Cost $379,768,992)
SECURITY TYPE ABBREVIATION
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) Standard & Poor's(registered trademark) credit ratings are used in
the absence of a rating by Moody's Investors Service, Inc.
(b) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(c) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(d) Security collateralized by an amount sufficient to pay interest
and principal.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 86.0% AAA, AA, A 79.8%
Baa 5.3% BBB 3.3%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 2.4%.
The distribution of municipal securities by revenue source, as a
percentage of total value of investments in securities, is as follows:
General Obligations 30.4%
Water & Sewer 13.8
Escrowed/Pre-Refunded 12.0
Electric Utilities 9.3
Health Care 7.8
Education 7.4
Transportation 7.3
Others (individually less 12.0
than 5%)
100.0%
INCOME TAX INFORMATION
At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $379,768,992. Net unrealized appreciation
aggregated $6,747,275, of which $10,313,113 related to appreciated
investment securities and $3,565,838 related to depreciated investment
securities.
SPARTAN OHIO MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 386,516,267
value (cost $379,768,992) -
See accompanying schedule
Receivable for investments 7,877,274
sold
Receivable for fund shares 270,167
sold
Interest receivable 4,738,891
Receivable for daily 34,267
variation on futures
contracts
TOTAL ASSETS 399,436,866
LIABILITIES
Payable to custodian bank $ 3,140
Payable for investments 11,726,512
purchased
Payable for fund shares 1,277,319
redeemed
Distributions payable 441,854
Accrued management fee 123,765
Other payables and accrued 57,692
expenses
TOTAL LIABILITIES 13,630,282
NET ASSETS $ 385,806,584
Net Assets consist of:
Paid in capital $ 379,462,845
Accumulated undistributed net (403,536)
realized gain (loss) on
investments
Net unrealized appreciation 6,747,275
(depreciation) on investments
NET ASSETS, for 34,167,133 $ 385,806,584
shares outstanding
NET ASSET VALUE, offering $11.29
price and redemption price
per share ($385,806,584
(divided by) 34,167,133
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999 (UNAUDITED)
INTEREST INCOME $ 10,052,726
EXPENSES
Management fee $ 753,321
Transfer agent fees 165,837
Accounting fees and expenses 60,971
Non-interested trustees' 656
compensation
Custodian fees and expenses 10,379
Registration fees 16,180
Audit 16,006
Legal 2,484
Reports to shareholders 8,129
Miscellaneous 520
Total expenses before 1,034,483
reductions
Expense reductions (9,287) 1,025,196
NET INTEREST INCOME 9,027,530
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 483,681
Futures contracts (188,141) 295,540
Change in net unrealized (14,848,318)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (14,552,778)
NET INCREASE (DECREASE) IN $ (5,525,248)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION
Expense reductions
Custodian credits $ 3,630
Transfer agent credits 5,657
$ 9,287
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 9,027,530 $ 17,882,883
Net realized gain (loss) 295,540 4,885,546
Change in net unrealized (14,848,318) (906,060)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (5,525,248) 21,862,369
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (9,027,530) (17,882,883)
From net interest income
From net realized gain (295,540) (3,506,383)
In excess of net realized (382,451) -
gain
TOTAL DISTRIBUTIONS (9,705,521) (21,389,266)
Share transactions Net 44,426,839 66,919,917
proceeds from sales of shares
Reinvestment of distributions 6,852,341 15,535,211
Cost of shares redeemed (46,407,564) (75,669,488)
NET INCREASE (DECREASE) IN 4,871,616 6,785,640
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) (10,359,153) 7,258,743
IN NET ASSETS
NET ASSETS
Beginning of period 396,165,737 388,906,994
End of period $ 385,806,584 $ 396,165,737
OTHER INFORMATION
Shares
Sold 3,820,964 5,687,666
Issued in reinvestment of 589,368 1,322,589
distributions
Redeemed (4,000,747) (6,432,601)
Net increase (decrease) 409,585 577,654
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 11.740 $ 11.720 $ 11.430 $ 11.590 $ 10.520
period
Income from Invest- ment .265 .538 .554 .560 .618
Operations Net interest
income
Net realized and unrealized (.430) .125 .413 (.090) 1.070
gain (loss)
Total from investment (.165) .663 .967 .470 1.688
operations
Less Distributions
From net interest income (.265) (.538) (.554) (.560) (.618)
From net realized gain (.009) (.105) (.105) (.070) -
In excess of net realized gain (.011) - (.018) - -
Total distributions (.285) (.643) (.677) (.630) (.618)
Net asset value, end of period $ 11.290 $ 11.740 $ 11.720 $ 11.430 $ 11.590
TOTAL RETURN B, C (1.45)% 5.79% 8.74% 4.23% 16.39%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 385,807 $ 396,166 $ 388,907 $ 381,626 $ 404,443
(000 omitted)
Ratio of expenses to average .53% A .55% D .56% D .59% .58%
net assets
Ratio of expenses to average .52% A, E .55% .56% .59% .58%
net assets after expense
reductions
Ratio of net interest income 4.60% A 4.58% 4.83% 4.93% 5.52%
to average net assets
Portfolio turnover rate 10% A 19% 15% 43% 48%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31,
1994
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 12.020
period
Income from Invest- ment .657
Operations Net interest
income
Net realized and unrealized (1.310)
gain (loss)
Total from investment (.653)
operations
Less Distributions
From net interest income (.657)
From net realized gain (.190)
In excess of net realized gain -
Total distributions (.847)
Net asset value, end of period $ 10.520
TOTAL RETURN B, C (5.55)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 350,267
(000 omitted)
Ratio of expenses to average .57%
net assets
Ratio of expenses to average .57%
net assets after expense
reductions
Ratio of net interest income 5.88%
to average net assets
Portfolio turnover rate 22%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
PERFORMANCE: THE BOTTOM LINE
To evaluate a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the value of an investment, assuming reinvestment of the fund's
dividend income and capital gains (the profits earned upon the sale of
securities that have grown in value). Yield measures the income paid
by a fund. Since a money market fund tries to maintain a $1 share
price, yield is an important measure of performance. If Fidelity had
not reimbursed certain fund expenses, the life of fund total returns
would have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY OH MUNICIPAL MONEY 1.33% 2.85% 16.74% 39.97%
MARKET
Ohio Tax-Free Money Market 1.28% 2.74% 16.40% n/a
Funds Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or since the fund started on August 29, 1989. For example, if
you had invested $1,000 in a fund that had a 5% return over the past
year, the value of your investment would be $1,050. To measure how the
fund's performance stacked up against its peers, you can compare it to
the Ohio tax-free money market funds average, which reflects the
performance of Ohio tax-free money market funds with similar
objectives tracked by IBC Financial Data, Inc. The past six month
average represents a peer group of 13 mutual funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
FIDELITY OH MUNICIPAL MONEY 2.85% 3.14% 3.48%
MARKET
Ohio Tax-Free Money Market 2.74% 3.07% n/a
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
6/28/99 3/29/99 12/28/98 9/28/98 6/29/98
Fidelity Ohio Municipal 2.95% 2.64% 3.18% 3.37% 3.08%
Money Market Fund
Ohio Tax-Free Money Market 2.90% 2.49% 3.02% 3.26% 3.05%
Funds Average
Ohio Municipal Money Market 4.98% 4.45% 5.37% 5.69% 5.20%
Tax-equivalent
Portion of fund's income 0.96% 3.58% 0.00% 0.00% 0.00%
subject to state taxes
Ohio Municipal
Money Market
Fund
Ohio Tax-Free
Money Market
Funds Average
5% -
4% -
3% -
2% -
1% -
0%
Row: 1, Col: 1, Value: 2.95
Row: 1, Col: 2, Value: 2.9
Row: 2, Col: 1, Value: 2.64
Row: 2, Col: 2, Value: 2.49
Row: 3, Col: 1, Value: 3.18
Row: 3, Col: 2, Value: 3.02
Row: 4, Col: 1, Value: 3.37
Row: 4, Col: 2, Value: 3.26
Row: 5, Col: 1, Value: 3.08
Row: 5, Col: 2, Value: 3.05
YIELD refers to the income paid by the fund over a given period.
Yields for money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income
earned is reinvested or compounded is called an effective yield. The
table above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the Ohio
tax-free money market funds average as tracked by IBC Financial Data,
Inc. Or you can look at the fund's tax-equivalent yield, which is
based on a combined effective 1999 federal and state income tax rate
of 40.80%, and reflects that a portion of the fund's income was
subject to states taxes. A portion of the fund's income may be subject
to the federal alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
(checkmark)COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the tax-free
yield - makes the comparison
more meaningful. Keep in
mind that the U.S. government
neither insures nor guarantees
a money market fund. And
there is no assurance that a
money fund will maintain a $1
share price.
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Scott Orr)
An interview with Scott Orr, Portfolio Manager of Fidelity Ohio
Municipal Money Market Fund
Q. SCOTT, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE OVER THE SIX MONTHS
THAT ENDED JUNE 30, 1999?
A. As the period began, the market remained under the shadow of the
global turmoil that plagued it in the third and early fourth quarters
of 1998. There were a lot of questions about the pace of U.S. economic
growth and the direction of interest rates. However, fairly early in
the period we began to see signs that economic growth would continue
to be strong, spurred by healthy consumer demand and solid job growth.
As time passed, it became more and more clear that the Federal Reserve
Board would discontinue the rapid-fire interest-rate cuts it had
employed to boost the markets from September through November 1998.
Short-term rates crept up from that point through the end of the
period, as market observers tried to weigh what influence Fed action
and emerging economic data might have on the future course of interest
rates.
Q. WHAT HAPPENED MORE RECENTLY?
A. In March and April, data indicated that inflation might not be as
well behaved as it had been in the recent past. Sentiment shifted from
the expectation that Fed policy was going to be unchanged to one
expecting a Fed rate increase. Such a hike would be employed by the
Fed to curb economic growth and diminish inflationary pressures. By
the end of May, the consensus viewpoint in the market was not "if" the
Fed would raise short-term interest rates, but "when." At its May Open
Market Committee meeting, the Fed added fuel to that fire when it
announced a bias toward raising rates. Finally, on June 30, the last
day of the period, the Fed followed through by raising the rate banks
charge each other for overnight loans - known as the fed funds target
rate - by 0.25 percentage points to 5.00%.
Q. WHAT WAS THE FUND'S STRATEGY DURING THE PERIOD?
A. The fund started the period with an average maturity of 66 days, a
fairly neutral posture given the market's changing interest-rate
expectations. As the period progressed, I increased the fund's
holdings in short-term, variable-rate securities, which caused the
fund's average maturity to roll down to the 50-day range. I felt that
short-term rates would rise and that variable-rate securities offered
more value than fixed-rate securities, whose yields at the time didn't
reflect my expectations for higher rates. In April, the market began
to feel more strongly that rates would rise, pushing yields higher on
one-year, fixed-rate securities. From that point, I invested more
heavily in these fixed-rate securities to lock in yields that would
perform well even as rates rose in the future. As a result, the fund's
maturity moved out to 61 days by the end of the period, somewhat
longer than its peer group.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on June 30, 1999, was 2.99%, compared to
3.22% six months ago. The more recent seven-day yield was the
equivalent of a 5.05% taxable rate of return for Ohio investors in the
40.80% combined state and federal income tax bracket. Through June 30,
1999, the fund's six-month total return was 1.33%, compared to 1.28%
for the Ohio tax-free money market funds average, according to IBC
Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. The economy remains strong, labor markets are tight and inflation
looks like it might not be as subdued as it has been. In addition, the
Fed raised the fed funds target rate by 0.25 percentage points at the
end of the period. Even though the Fed surprised market observers by
switching at that time to a neutral bias regarding future
interest-rate moves, I don't believe this means the Fed has ruled out
another move to raise rates. It's likely the Fed will be vigilant,
looking to act pre-emptively if it sees any signs of inflation spurred
by rapid economic growth and a tight labor market. It's conceivable
the Fed would look to erase the effects of its rate cuts in late 1998,
which were implemented largely to provide liquidity to the markets,
not to supply fuel to the economy. In addition, the Fed may want to
implement its policy well in advance of the new year, in an attempt to
avoid changing interest-rate policy during a time when potential Year
2000 computer problems may occur. Indeed, a concern as we move toward
the end of the year is the Year 2000 issue and its possible impact on
municipal securities. As one of many factors we look at, we'll be
paying close attention to this issue in the months ahead.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: high current tax-free
income while maintaining a
stable $1 share price by
investing in high-quality,
short-term municipal money
market securities whose
interest is free from federal
income tax and Ohio
individual income tax
FUND NUMBER: 419
TRADING SYMBOL: FOMXX
START DATE: August 29, 1989
SIZE: as of June 30, 1999,
more than $432 million
MANAGER: Scott Orr, since
1996; manager, various
Fidelity and Spartan
municipal money market
funds; joined Fidelity in
1989
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MATURITY DIVERSIFICATION
DAYS % OF FUND'S INVESTMENTS 6/30/99 % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6/30/98
12/31/98
0 - 30 68 69 80
31 - 90 10 7 10
91 - 180 9 8 6
181 - 397 13 16 4
WEIGHTED AVERAGE MATURITY
6/30/99 12/31/98 6/30/98
Fidelity Ohio Municipal Money 61 DAYS 66 Days 33 Days
Market Fund
Ohio Tax-Free Money Market 48 DAYS 59 Days 50 Days
Funds Average *
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JUNE 30, 1999 AS OF DECEMBER 31, 1998
Variable Rate Demand Notes Variable Rate Demand Notes
(VRDNs) 61.0% (VRDNs) 63.2%
Commercial Paper (including Commercial Paper (including
CP Mode) 7.7% CP Mode) 7.8%
Tender Bonds 2.0% Tender Bonds 2.2%
Municipal Notes 26.8% Municipal Notes 25.0%
Other Investments 2.5% Other Investments 1.8%
Row: 1, Col: 1, Value: 61.0 Row: 1, Col: 1, Value: 63.2
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 7.7 Row: 1, Col: 3, Value: 7.8
Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 2.0 Row: 1, Col: 5, Value: 2.2
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 26.8 Row: 1, Col: 7, Value: 25.0
Row: 1, Col: 8, Value: 2.3 Row: 1, Col: 8, Value: 1.8
</TABLE>
*SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MUNICIPAL SECURITIES - 100.0%
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - 99.8%
Akron Spl. Assessment TAN $ 1,915,000 $ 1,915,000
(Street Impt.) Series 1998,
3.12% 12/17/99
Allen County Gen. Oblig. BAN:
3.5% 11/23/99 4,720,000 4,724,538
3.5% 1/5/00 3,865,000 3,871,746
American Muni. Pwr. Auth. BAN 3,800,000 3,800,000
(Cleveland Pub. Pwr. Proj.)
Series 1998, 3.85% 9/3/99
Ashland County Gen. Oblig. 2,400,000 2,402,367
BAN (Jail Construction)
Series 1998 B, 3.32% 12/17/99
Ashland Gen. Oblig. BAN:
(Muni. Court & Jail 4,000,000 4,009,600
Facilities) 3.8% 7/13/00 (f)
3.95% 7/15/99 1,750,000 1,750,162
Ashtabula County Ind. Dev. 2,295,000 2,295,000
Rev. (Plasticolors, Inc.
Proj.) Series 1996 A,
3.75%, LOC Key Bank, NA,
VRDN (a)(d)
Athens Gen. Oblig. BAN:
3.25% 12/21/99 3,900,000 3,903,032
3.5% 2/4/00 2,600,000 2,606,320
Bedford Heights Ind. Dev. 1,000,000 1,000,000
(Olympic Steel) Series 1989,
3.7%, LOC Nat'l. City Bank,
VRDN (a)(d)
Bowling Green Gen. Oblig. BAN:
Series 1995, 3.9% 9/9/99 2,310,000 2,311,111
3.6% 6/15/00 4,045,000 4,056,979
Brecksville Gen. Oblig. BAN 3,000,000 3,004,353
3.4% 6/8/00
Brooklyn Gen. Oblig. BAN 4% 4,025,000 4,027,543
9/2/99
Butler County Health 3,265,000 3,265,000
Facilities Rev. (Knolls of
Oxford Proj.) Series 99,
3.8%, LOC Star Bank NA, VRDN
(a)
Butler County Trans. Impt. 4,615,000 4,660,518
District Bonds 4.75% 4/1/00
(FSA Insured)
Cambridge Hosp. Facilities 7,560,000 7,560,000
Rev. Bonds (Southeastern
Reg'l. Med. Ctr.) 3.4%,
tender 7/1/99
Canfield Local School
District BAN:
Series 99 A, 3.5% 9/30/99 9,900,000 9,908,473
3.5% 9/30/99 2,650,000 2,652,067
Canton Gen. Oblig.:
BAN Series 1998, 3.5% 7/15/99 1,400,000 1,400,000
Various Purp. BAN Series 2,625,000 2,639,520
1999, 3.91% 6/8/00
Cincinnati Student Ln. Fdg.
Corp. Student Ln. Rev.:
Series 1998 A1, 3.45% (BPA 12,400,000 12,400,000
Bank of America Nat'l.
Trust & Savings Assoc.),
VRDN (a)(d)
Series 1998 A2, 3.45% (BPA 10,000,000 10,000,000
Bank of America Nat'l.
Trust & Savings Assoc.),
VRDN (a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Clermont County Ind. Dev. Rev.:
(American Micro Products $ 4,535,000 $ 4,535,000
Proj.) 3.85%, LOC Star Bank
NA, VRDN (a)(d)
(Mane-Seafla, Inc. Proj.) 4,650,000 4,650,000
3.67%, LOC Bank One, NA,
VRDN (a)(d)
Cleveland Wtrwks. 8,800,000 8,800,000
Participating VRDN Series
58, 3.69% (Liquidity
Facility Morgan Stanley,
Dean Witter & Co.) (a)(e)
Clinton County Jail Rev. BAN 2,250,000 2,254,107
3.56% 12/15/99
Cuyahoga County Hosp. Rev. 400,000 400,000
(Cleveland Clinic
Foundation) Series 1997 D,
3.5% (Liquidity Facility
Bank of America Nat'l. Trust
& Savings Assoc.), VRDN (a)
Cuyahoga County Ind. Dev. 5,480,000 5,480,000
Rev. (The Great Lakes
Brewing Co.) 3.82%, LOC
Huntington Nat'l. Bank,
Columbus, VRDN (a)(d)
Dayton Gen. Oblig. BAN (Arpt. 5,000,000 5,004,893
Impt. Proj.) Series 99,
3.4% 3/3/00
Delaware County Health Care 4,170,000 4,170,000
Facilities (Willow Brook
Christian Cmnty. Proj.)
3.72%, LOC Huntington Nat'l.
Bank, Columbus, VRDN (a)
Erie County BAN 3.5% 10/1/99 4,300,000 4,303,178
Erie County Ind. Dev. Rev. 5,000,000 5,000,000
Rfdg. (US Tsubaki Proj.)
Series 99, 3.75%, LOC
LaSalle Nat'l. Bank,
Chicago, VRDN (a)(d)
Euclid Gen. Oblig. BAN Series 2,115,000 2,116,730
1998, 3.22% 12/30/99
Fairfield County Gen. Oblig.
BAN:
3.8% 8/27/99 1,000,000 1,000,271
4.45% 7/27/99 1,175,000 1,175,605
Franklin County Ind. Dev. 700,000 700,000
Rev. (Inland Products, Inc.)
3.75%, LOC PNC Bank NA, VRDN
(a)(d)
Franklin County Multi-family 2,500,000 2,500,000
Rev. (Colonial Courts) 3.8%,
LOC Fed. Home Ln. Bank,
Indianapolis, VRDN (a)(d)
Geauga County Gen. Oblig. BAN:
Series 99, 3.35% 3/9/00 2,000,000 2,002,658
3.375% 12/16/99 3,200,000 3,203,205
Greene County Gen. Oblig. BAN 3,800,000 3,802,178
3.9% 9/9/99
Hamilton County Gen. Oblig. 2,175,000 2,178,062
BAN (Court Mgmt. Systems)
3.3% 4/6/00
Hamilton County Ind. Dev. 1,800,000 1,800,000
Rev. (Metro Containers, Inc.
Proj.) 3.72%, LOC Bank One,
NA, VRDN (a)(d)
Hancock County BAN Series 99, 2,112,182 2,119,053
3.9% 11/30/99
Holmes County Ind. Dev. Rev. 900,000 900,000
(Poultry Processing, Inc.)
Series 1990, 3.6%, LOC
RaboBank Nederland Coop.
Central, VRDN (a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Lake County Ind. Dev. Rev.:
(American Bus. Co.) 3.82%, $ 1,295,000 $ 1,295,000
LOC Huntington Nat'l. Bank,
Columbus, VRDN (a)(d)
(Norshar Co. Proj.) 3.72%, 3,430,000 3,430,000
LOC Bank One, NA, VRDN (a)(d)
Lebanon Ind. Park BAN:
(Telecommunications Sys.) 1,200,000 1,200,519
3.91% 9/2/99
3.3% 5/25/00 2,000,000 2,000,000
Lucas County Multi-family Rev.:
(Beacon Place/Cubbon Proj.) 3,285,000 3,285,000
3.72%, LOC Star Bank NA,
VRDN (a)
(Lakewoods Proj.) 3.75%, LOC 4,000,000 4,000,000
Key Bank, NA, VRDN (a)(d)
Medina County Ind. Dev. Rev.:
(Fire-Dex, Inc.) Series 1997, 1,070,000 1,070,000
3.75%, LOC Key Bank, NA,
VRDN (a)(d)
(North American Roto 180,000 180,000
Engravers, Inc. Proj.)
Series 1988, 3.67%, LOC Bank
One, NA, VRDN (a)(d)
(Rembond Proj.) Series 1996, 2,855,000 2,855,000
3.72%, LOC Bank One, NA,
VRDN (a)(d)
Mentor Gen. Oblig. BAN 4% 2,225,000 2,225,370
7/22/99
Middletown Ind. Dev. Rev. 1,500,000 1,500,000
(Pilot Chemical Proj.)
3.72%, LOC Bank One, NA,
VRDN (a)(d)
Montgomery County Health Care 3,275,000 3,275,000
Rev. (Eastway Corp. &
Property Resource) 3.82%,
LOC Huntington Nat'l. Bank,
Columbus, VRDN (a)(d)
Montgomery County
Multi-family Hsg. Dev. Rev.:
(Pedcor Investments - Lyons 3,000,000 3,000,000
Gate) 3.65%, LOC Fed. Home
Ln. Bank, Cincinnati, VRDN
(a)(d)
(Timber Creek Village Apts.) 3,700,000 3,700,000
Series 1998, 3.72%, LOC Key
Bank, NA, VRDN (a)(d)
Oakwood Gen. Oblig. BAN 3.5% 3,000,000 3,006,835
5/4/00
Ohio Air Quality Dev. Auth.
Rev.:
Bonds (Duquesne Lt. Co.
Proj.) Series 88:
3.2% tender 9/7/99, LOC 4,400,000 4,400,000
Toronto Dominion Bank, CP
mode (d)
3.2% tender 9/10/99, LOC 1,000,000 1,000,000
Toronto Dominion Bank, CP
mode (d)
3.45% tender 9/8/99, LOC 1,000,000 1,000,000
Toronto Dominion Bank, CP
mode (d)
4.45% tender 7/8/99, LOC 7,500,000 7,500,000
Toronto Dominion Bank, CP
mode (d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Ohio Air Quality Dev. Auth.
Rev.: - continued
(Cincinnati Gas & Elec.) $ 400,000 $ 400,000
Series 1985 B, 3.5%, LOC
Morgan Guaranty Trust Co.,
NY, VRDN (a)
Ohio Higher Edl. Facilities
Rev.:
Participating VRDN Series 4,100,000 4,100,000
MSDW 98 116, 3.69%
(Liquidity Facility Morgan
Stanley, Dean Witter & Co.)
(a)(e)
(Pooled Fing. Prog.):
Series 1997, 3.62%, LOC Fifth 18,000,000 18,000,001
Third Bank, Cincinnati,
VRDN (a)
Series 1998, 3.62%, LOC Fifth 5,000,000 5,000,000
Third Bank, Cincinnati,
VRDN (a)
Ohio Hsg. Fin. Agcy.
Participating VRDN:
Series 14, 3.55% (Liquidity 6,600,000 6,600,000
Facility Bank of New York
NA) (a)(d)(e)
Series 1998 B, 3.77% 14,695,000 14,695,000
(Liquidity Facility Bank of
America Nat'l. Trust &
Savings Assoc.) (a)(d)(e)
Series 96 5, 3.55% (Liquidity 3,700,000 3,700,000
Facility Bank of New York
NA) (a)(d)(e)
Series FR/RI 15, 3.55% 11,000,000 11,000,000
(Liquidity Facility Bank of
New York NA) (a)(d)(e)
Series PA 93, 3.82% 3,495,000 3,495,000
(Liquidity Facility Merrill
Lynch & Co., Inc.) (a)(d)(e)
Series PT 122, 3.82% 3,180,000 3,180,000
(Liquidity Facility Banco
Santander SA) (a)(d)(e)
Series PT 228, 3.82% 6,400,000 6,400,000
(Liquidity Facility Cr.
Swiss First Boston, Inc.)
(a)(d)(e)
Series PT 241, 3.82% 8,340,000 8,340,000
(Liquidity Facility
Bayerische Hypo-und
Vereinsbank AG) (a)(d)(e)
Ohio Hsg. Fin. Agcy.
Multi-family Hsg. Rev.:
(Hunter's Glen Apt. Proj.) 1,900,000 1,900,000
Series 1996, 3.7%, LOC PNC
Bank NA, VRDN (a)(d)
(Pedcor Invt. Willowlake
Apts.):
Series A, 3.72%, LOC Bank 3,200,000 3,200,000
One, NA, VRDN (a)(d)
3.82%, LOC Fed. Home Ln. Bank 625,000 625,000
Indianapolis, VRDN (a)(d)
3.82%, LOC Fed. Home Ln. Bank 625,000 625,000
Indianapolis, VRDN (a)(d)
3.82%, LOC Fed. Home Ln. Bank 500,000 500,000
Indianapolis, VRDN (a)(d)
Ohio Hwy. Cap. Impt. Bonds:
Series 1998 B, 4.5% 2/1/00 2,390,000 2,408,276
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Ohio Hwy. Cap. Impt. Bonds: -
continued
Series C, 4% 5/1/00 $ 1,000,000 $ 1,006,323
Ohio Ind. Dev. Rev.:
(Aerolite Extrusion) Series 165,000 165,000
1991 IA, 3.6%, LOC Nat'l.
City Bank, VRDN (a)(d)
(Anomatic Corp.) Series 1989 140,000 140,000
I, 3.6%, LOC Nat'l. City
Bank, VRDN (a)(d)
(Arthur Corp.) Series 1989 105,000 105,000
III A, 3.6%, LOC Nat'l.
City Bank, VRDN (a)(d)
(Carpenter/ Clapp & Haney 200,000 200,000
Tool Co.) Series 1987 P,
3.6%, LOC Bank One, NA, VRDN
(a)(d)
(CCE, Inc.) Series 1989 I, 650,000 650,000
3.6%, LOC Nat'l. City Bank,
VRDN (a)(d)
(Die Matic, Inc.) Series 1987 60,000 60,000
O, 3.6%, LOC Bank One, NA,
VRDN (a)(d)
(Dramex Int'l., Inc.):
Series 1988 I, 3.6%, LOC Bank 750,000 750,000
One, NA, VRDN (a)(d)
Series 1988 II, 3.6%, LOC PNC 200,000 200,000
Bank, Ohio, VRDN (a)(d)
(Gary W. James) Series 1986 190,000 190,000
B, 3.6%, LOC Nat'l. City
Bank, VRDN (a)(d)
(Hydro Tube Corp.) 3.6%, LOC 75,000 75,000
Nat'l. City Bank, VRDN (a)(d)
(K&S Realty) Series 1989 I, 205,000 205,000
3.6%, LOC Nat'l. City Bank,
VRDN (a)(d)
(K&S Realty/Starr 205,000 205,000
Fabricating, Inc.) Series
1989 III, 3.6%, LOC Nat'l.
City Bank, VRDN (a)(d)
(Kaufmans Bakery) Series 1987 400,000 400,000
K, 3.6%, LOC Bank One, NA,
VRDN (a)(d)
(Midwest Acoust-A-Fiber, 320,000 320,000
Inc.) Series 1989 I, 3.6%,
LOC Nat'l. City Bank, VRDN
(a)(d)
(Morrow Macke Realty) Series 400,000 400,000
1988 C, 3.6%, LOC Bank One,
NA, VRDN (a)(d)
(Plasticos Co.) Series 1989 395,000 395,000
III A, 3.6%, LOC Nat'l.
City Bank, VRDN (a)(d)
(Prentke Romich) Series 1989 50,000 50,000
III, 3.6%, LOC Nat'l. City
Bank, VRDN (a)(d)
(Samuel and Annie Shuman) 100,000 100,000
Series 1989 III A, 3.6%,
LOC Nat'l. City Bank, VRDN
(a)(d)
(SBD Properties Co.) Series 155,000 155,000
1986 L, 3.6%, LOC Nat'l.
City Bank, VRDN (a)(d)
(Southwest Fin. Svcs.) Series 60,000 60,000
1986 J, 3.6%, LOC Nat'l.
City Bank, VRDN (a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Ohio Ind. Dev. Rev.: -
continued
(Standby Screw) Series 1991 $ 550,000 $ 550,000
IA, 3.6%, LOC Nat'l. City
Bank, VRDN (a)(d)
(Steubenville Area) Series 285,000 285,000
1988 II, 3.6%, LOC PNC Bank
NA, VRDN (a)(d)
(United Steel Svc.) Series 405,000 405,000
1988 J, 3.6%, LOC Bank One,
NA, VRDN (a)(d)
(VRE, Inc.) Series 1988 F, 130,000 130,000
3.6%, LOC Bank One, NA, VRDN
(a)(d)
(Walker-Williams Lumber Co.) 770,000 770,000
Series 1989 III A, 3.6%,
LOC Nat'l. City Bank, VRDN
(a)(d)
(Wooster Iron Metal Co.) 145,000 145,000
Series 1988 R, 3.6%, LOC
Bank One, NA, VRDN (a)(d)
Ohio Poll. Cont. Rev. (Sohio 2,300,000 2,300,000
Air Proj./ British Petroleum
Co., Inc.) Series 1995,
3.5%, VRDN (a)
Ohio School District Cash 4,173,000 4,202,753
Flow Borrowing Prog. Ctfs.
of Prtn. TAN 4.14% 6/30/00
(BPA Ohio Hwy. Cap. Impt.)
(f)
Ohio Solid Waste Rev. 1,500,000 1,500,000
(British Petroleum
Exploration & Oil, Inc.
Proj.) 3.5%, VRDN (a)(d)
Ohio Spl. Oblig. Bonds 1,000,000 1,005,939
(Elementary & Secondary Ed.
Cap. Facilities) Series B,
4.55% 12/1/99
Ohio State Univ. Rev.:
3.1% 9/16/99, CP 3,000,000 3,000,000
3.2% 7/22/99, CP 5,500,000 5,500,000
3.2% 9/16/99, CP 3,500,000 3,500,000
3.3% 8/26/99, CP 4,000,000 4,000,000
4.45% 7/7/99, CP 3,700,000 3,700,000
Ohio Tpk. Commission 3,800,000 3,800,000
Participating VRDN 3.63%
(Liquidity Facility Societe
Generale, France) (a)(e)
Ohio Wtr. Dev. Auth. Solid 3,900,000 3,900,000
Waste Disp. Rev. (American
Steel & Wire Corp.) 3.95%,
LOC Bank of America Nat'l.
Trust & Savings Assoc., VRDN
(a)(d)
Orange City School District 2,000,000 2,000,875
BAN 3.46% 8/18/99
Oregon City Gen. Oblig. BAN 4,400,000 4,410,034
Series 1999 I, 3.5% 5/4/00
Port Auth. for Columbiana 5,000,000 5,000,000
County (Polar Minerals, Inc.
Proj.) 3.8%, LOC Nat'l. City
Bank, VRDN (a)(d)
Portage Ind. Dev. Rev. 3,000,000 3,000,000
(Mantaline Corp. Proj.)
3.75%, LOC Nat'l. City
Bank, VRDN (a)(d)
Richland County Ind. Dev. Rev.:
(Carton Svc., Inc. Proj.) 1,210,000 1,210,000
Series 1996, 3.8%, LOC
Nat'l. City Bank, VRDN
(a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Richland County Ind. Dev.
Rev.: - continued
(Sabin Robbins Paper Co.) $ 2,800,000 $ 2,800,000
Series 1997, 3.7%, LOC Fifth
Third Bank, Cincinnati, VRDN
(a)(d)
Sandusky Gen. Oblig. BAN 2,100,000 2,101,816
3.875% 9/16/99
Springdale Gen. Oblig. BAN 2,000,000 2,000,904
(Street Impt.) 3.75% 9/17/99
Stark County Ind. Dev. Rev.:
(H-P Products, Inc. Proj.) 3,170,000 3,170,000
3.75%, LOC Key Bank, NA,
VRDN (a)(d)
(Kidd Dev. Proj.) 3.72%, LOC 3,700,000 3,700,000
Bank One, NA, VRDN (a)(d)
(Liquid Cont. Corp. Proj.) 280,000 280,000
Series 1987, 3.67%, LOC Bank
One, NA, VRDN (a)(d)
Summit County Civic 3,880,000 3,880,000
Facilities Rev. (YMCA of
Akron) 3.6%, LOC Key Bank,
NA, VRDN (a)
Summit County Ind. Dev. Rev.:
Bonds:
(Kuchar Proj.) 3.85%, tender 380,000 380,000
10/1/99, LOC Bank One, NA
(d)
(SGS Tool Co. Proj.) 3.7%, 650,000 650,000
tender 10/1/99, LOC Bank
One, NA (d)
(Commercial Alloys Corp.) 4,125,000 4,125,000
3.72%, LOC Star Bank NA,
VRDN (a)(d)
(Hampshire Properties) 3.67%, 920,000 920,000
LOC Key Bank, NA, VRDN (a)(d)
(Kaiser Dev. Proj.) 3.72%, 800,000 800,000
LOC Bank One, NA, VRDN (a)(d)
(Keltec, Inc. Proj.) Series 290,000 290,000
1987, 3.67%, LOC Bank One,
NA, VRDN (a)(d)
(Kuchar Proj.) Series 1987, 785,000 785,000
3.67%, LOC Bank One, NA,
VRDN (a)(d)
(Mannix County Proj.) Series 1,600,000 1,600,000
1987, 3.67%, LOC Bank One,
NA, VRDN (a)(d)
(SGS Tool Co. Proj.) 3.8%, 4,000,000 4,000,000
LOC Nat'l. City Bank, VRDN
(a)(d)
(Summit Plastic Co. Proj.) 2,720,000 2,720,000
3.8%, LOC Nat'l. City Bank,
VRDN (a)(d)
(Triumph Hldgs. Proj.) 3.8%, 1,750,000 1,750,000
LOC Nat'l. City Bank, VRDN
(a)(d)
Toledo Wtrwks. Rev. Rfdg. & 1,000,000 1,000,000
Impt. Bonds 3.2% 11/15/99
(FGIC Insured)
Toledo-Lucas County Port 3,500,000 3,500,000
Auth. Rev. (P & G Industries
Proj.) 3.8%, LOC Nat'l. City
Bank, VRDN (a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Trumbull County Health Care $ 3,200,000 $ 3,200,000
Facilities Rev. (Shepard of
the Valley Retire Howland
Proj.) Series 1998, 3.65%,
LOC Nat'l. City Bank, VRDN
(a)
Trumbull County Ind. Dev. 1,400,000 1,400,000
Rev. (McDonald Steel Corp.)
Series 1990, 3.75%, LOC PNC
Bank NA, VRDN (a)(d)
Union County Gen. Oblig. BAN 1,850,000 1,854,447
3.61% 6/15/00
Van Wert County Ind. Dev. 2,190,000 2,190,000
Rev. (Toledo Molding & Die,
Inc.) Series 1994, 3.72%,
LOC Bank One, NA, VRDN (a)(d)
Village of Indian Hill 5,000,000 5,000,000
Economic Dev. Rev. Series
1999, 3.67%, LOC Fifth
Third Bank, Cincinnati, VRDN
(a)
Wadsworth Central School 2,500,000 2,501,276
District BAN 3.47% 8/10/99
Walnut Hills High School 3,000,000 3,000,000
Alumni Foundation Series
1998, 3.67%, LOC Fifth Third
Bank, Cincinnati, VRDN (a)
Wood County Ind. Dev. Rev. 1,225,000 1,225,000
(TL Industries & AMPP, Inc.
Proj.) 3.8%, LOC Nat'l. City
Bank, VRDN (a)(d)
433,318,637
SHARES
OTHER - 0.2%
Municipal Central Cash Fund 764,240 764,240
(b)(c)
TOTAL INVESTMENT IN $ 434,082,877
SECURITIES - 100%
Total Cost for Income Tax Purposes $ 434,082,877
</TABLE>
SECURITY TYPE ABBREVIATIONS
BAN - BOND ANTICIPATION NOTE
TAN - TAX ANTICIPATION NOTE
CP - COMMERCIAL PAPER
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(c) At the period end, the seven-day yield of the Municipal Central
Cash Fund was 3.43%. The yield refers to the income earned by
investing in the fund over the seven-day period, expressed as an
annual percentage.
(d) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(e) Provides evidence of ownership in one or more underlying municipal
bonds.
(f) Security purchased on a delayed delivery or when-issued basis.
INCOME TAX INFORMATION
At December 31, 1998, the fund had a capital loss carryforward of
approximately $57,000 of which $1,000, $50,000 and $6,000 will expire
on December 31, 2003, 2004 and 2005, respectively.
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 434,082,877
value - See accompanying
schedule
Receivable for investments 5,016,883
sold
Receivable for fund shares 3,373,016
sold
Interest receivable 3,484,570
Prepaid expenses 8,664
TOTAL ASSETS 445,966,010
LIABILITIES
Payable to custodian bank $ 68,378
Payable for investments 3,000,000
purchased Regular delivery
Delayed delivery 8,212,354
Payable for fund shares 2,138,048
redeemed
Distributions payable 10,806
Accrued management fee 138,486
Other payables and accrued 89,316
expenses
TOTAL LIABILITIES 13,657,388
NET ASSETS $ 432,308,622
Net Assets consist of:
Paid in capital $ 432,378,575
Accumulated undistributed net (69,953)
realized gain (loss) on
investments
NET ASSETS, for 432,378,575 $ 432,308,622
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($432,308,622
(divided by) 432,378,575
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999 (UNAUDITED)
INTEREST INCOME $ 6,823,316
EXPENSES
Management fee $ 807,163
Transfer agent fees 296,662
Accounting fees and expenses 40,042
Non-interested trustees' 656
compensation
Custodian fees and expenses 11,973
Registration fees 29,747
Audit 14,132
Legal 1,205
Miscellaneous 8,663
Total expenses before 1,210,243
reductions
Expense reductions (9,021) 1,201,222
NET INTEREST INCOME 5,622,094
REALIZED AND UNREALIZED GAIN (13,279)
(LOSS)
Net realized gain (loss) on
investment securities
Increase (decrease) in net (1,113)
unrealized gain from
accretion of discount
NET GAIN (LOSS) (14,392)
NET INCREASE (DECREASE) IN $ 5,607,702
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION
Expense reductions Custodian $ 2,436
credits
Transfer agent credits 6,585
$ 9,021
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 5,622,094 $ 11,431,339
Net realized gain (loss) (13,279) 28,157
Increase (decrease) in net (1,113) 1,113
unrealized gain from
accretion of discount
NET INCREASE (DECREASE) IN 5,607,702 11,460,609
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (5,622,094) (11,431,339)
from net interest income
Share transactions at net 589,869,468 810,566,785
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 5,454,514 11,050,236
distributions from net
interest income
Cost of shares redeemed (563,737,559) (785,381,253)
NET INCREASE (DECREASE) IN 31,586,423 36,235,768
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 31,572,031 36,265,038
IN NET ASSETS
NET ASSETS
Beginning of period 400,736,591 364,471,553
End of period $ 432,308,622 $ 400,736,591
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Invest- ment .013 .030 .032 .030 .034
Operations Net interest
income
Less Distributions
From net interest income (.013) (.030) (.032) (.030) (.034)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN B, C 1.33% 3.09% 3.29% 3.08% 3.48%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 432,309 $ 400,737 $ 364,472 $ 327,593 $ 296,220
(000 omitted)
Ratio of expenses to average .58% A .58% .59% .60% .61%
net assets
Ratio of expenses to average .57% A, D .57% D .59% .59% D .61%
net assets after expense
reductions
Ratio of net interest income 2.67% A 3.05% 3.24% 3.03% 3.42%
to average net assets
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31,
1994
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000
period
Income from Invest- ment .025
Operations Net interest
income
Less Distributions
From net interest income (.025)
Net asset value, end of period $ 1.000
TOTAL RETURN B, C 2.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 301,691
(000 omitted)
Ratio of expenses to average .57%
net assets
Ratio of expenses to average .57%
net assets after expense
reductions
Ratio of net interest income 2.48%
to average net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Ohio Municipal Income Fund (the income fund) is a fund of
Fidelity Municipal Trust. Fidelity Ohio Municipal Money Market Fund
(the money market fund) is a fund of Fidelity Municipal Trust II. Each
trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company.
Fidelity Municipal Trust and Fidelity Municipal Trust II (the trusts)
are organized as a Massachusetts business trust and a Delaware
business trust, respectively. Each fund is authorized to issue an
unlimited number of shares. The financial statements have been
prepared in conformity with generally accepted accounting principles
which require management to make certain estimates and assumptions at
the date of the financial statements. Each fund may be affected by
economic and political developments in the state of Ohio. The
following summarizes the significant accounting policies of the income
fund and the money market fund:
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Securities for
which quotations are not readily available are valued at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which quotations are not readily available are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, each fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for the fiscal year. The schedules of investments
include information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned. For the money market fund, accretion of discount represents
unrealized gain until realized at the time of a security disposition
or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions and losses deferred due to
futures. The income fund also utilized earnings and profits
distributed to shareholders on redemption of shares as a part of the
dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission ( the SEC), the funds may
invest in the Municipal Central Cash Fund (the Cash Fund) managed by
Fidelity Investments Money Management, Inc. (FIMM), an affiliate of
Fidelity Management & Research Company (FMR). The Cash Fund is an
open-end money market fund available only to investment companies and
other accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the funds are recorded as interest income in the
accompanying financial statements.
WHEN-ISSUED SECURITIES. Each fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying
securities is fixed at the time the transaction is negotiated. The
market values of the securities purchased on a when-issued or forward
commitment basis are identified as such in each applicable fund's
schedule of investments. Each fund may receive compensation for
interest forgone in the purchase of a when-issued security. With
respect to purchase commitments, each fund identifies securities as
segregated in its records with a value at least equal to the amount of
the commitment. When-issued securities that have been
2. OPERATING POLICIES -
CONTINUED
WHEN-ISSUED SECURITIES -
CONTINUED
purchased from and sold to different brokers are reflected as both
payables and receivables in the applicable statements of assets and
liabilities under the caption "Delayed delivery." Losses may arise due
to changes in the market value of the underlying securities, if the
counterparty does not perform under the contract, or if the issuer
does not issue the securities due to political, economic, or other
factors.
FUTURES CONTRACTS. The income fund may use futures contracts to manage
its exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Losses may arise from changes in the value of the underlying
instruments or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $20,787,195 and $19,908,572, respectively.
The market value of futures contracts opened and closed during the
period amounted to $18,822,368 and $18,634,227, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a
monthly fee that is calculated on the basis of a group fee rate plus a
fixed individual fund fee rate applied to the average net assets of
each fund. The group fee rate is the weighted average of a series of
rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The rates ranged from .1100% to .3700% for the
period. The annual individual fund fee rate for each fund is 0.25%. In
the event that these rates were lower than the contractual rates in
effect during the period, FMR voluntarily implemented the above rates,
as they resulted in the same or a lower management fee. For the
period, the management fees for each fund were equivalent to
annualized rates of 0.38% of average net assets.
SUB-ADVISER FEE. As the income (effective January 1, 1999) and the
money market funds' investment sub-adviser, FIMM, a wholly owned
subsidiary of FMR, receives a fee from FMR of 50% of the management
fee payable to FMR. The fee is paid prior to any voluntary expense
reimbursements which may be in effect.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES. Effective June 14, 1999 for the
income fund and June 21, 1999 for the money market fund Citibank,
N.A.(Citibank) replaced UMB Bank, n.a. as the custodian, transfer
agent and shareholder servicing agent for the funds. Citibank has
entered into a sub-contract with Fidelity Service Company, Inc. (FSC),
an affiliate of FMR, under which FSC performs the activities
associated with the funds' transfer and shareholder servicing agent
and accounting functions. The funds pay account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses.
For the period, the transfer agent fees were equivalent to an
annualized rate of 0.08% and 0.14% of average net assets for the
income fund and the money market fund, respectively.
MONEY MARKET INSURANCE. Pursuant to an Exemptive Order issued by the
SEC, the money market fund, along with other money market funds
advised by FMR or its affiliates, has entered into insurance
agreements with FIDFUNDS Mutual Limited (FIDFUNDS), an affiliated
mutual insurance company, effective January 1, 1999. FIDFUNDS provides
limited coverage for certain loss events including issuer default as
to payment of principal or interest and bankruptcy or insolvency of a
credit enhancement provider. The insurance does not cover losses
resulting from changes in interest rates, ratings downgrades or other
market conditions. The money market fund may be subject to a special
assessment of up to approximately 2.5 times the fund's annual gross
premium if covered losses exceed certain levels. During the period,
the money market fund paid premiums of $17,327 to FIDFUNDS, which are
being amortized over one year.
5. EXPENSE REDUCTIONS.
Each fund has entered into arrangements with its custodian and
transfer agent whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of the funds' expenses.
For the period, the reductions under these arrangements are shown
under the caption "Other Information" on each fund's Statement of
Operations.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)FIDELITY AUTOMATED
SERVICE TELEPHONE
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments Money
Management, Inc., (FIMM)
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Dwight D. Churchill, Vice President -
INCOME FUND
George A. Fischer, Vice President -
INCOME FUND
Boyce I. Greer, Vice President -
MONEY MARKET FUND
Scott A. Orr, Vice President -
MONEY MARKET FUND
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
* INDEPENDENT TRUSTEES
OFF-SANN-0899 82016
1.705575.101
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Citibank, N.A.
New York, NY
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Citibank, N.A.
New York, NY
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated
Service Telephone 1-800-544-5555
AUTOMATED LINES FOR QUICKEST SERVICE
(2_FIDLIETY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
SPARTAN(REGISTERED TRADEMARK)
PENNSYLVANIA
MUNICIPAL
FUNDS
SEMIANNUAL REPORT
JUNE 30, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN PENNSYLVANIA
MUNICIPAL INCOME FUND
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 7 The managers' review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 10 A summary of major shifts in
the fund's investments over
the past six months.
INVESTMENTS 11 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 18 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
SPARTAN PENNSYLVANIA
MUNICIPAL MONEY MARKET FUND
PERFORMANCE 22 How the fund has done over
time.
FUND TALK 24 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 26 A summary of major shifts in
the fund's investments over
the past six months and one
year.
INVESTMENTS 27 A complete list of the fund's
investments.
FINANCIAL STATEMENTS 33 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 37 Notes to the financial
statements.
Standard & Poor's, S&P and S&P 500 are registered service marks of The
McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity
Distributors Corporation.
Other third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
After much speculation about the U.S. Federal Reserve Board's
near-term monetary policy, stock and bond investors breathed a sigh of
relief when the Fed shifted to a neutral position on rates following
its widely anticipated quarter-point increase in short-term rates on
June 30. This switch in bias helped the S&P 500(registered trademark)
and NASDAQ soar to record-closing highs, and sent yields on the
bellwether 30-year Treasury back below 6%.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
The longer your investment time frame, the less likely it is that you
will be affected by short-term market volatility. A 10-year investment
horizon appropriate for saving for a college education, for example,
enables you to weather market cycles in a long-term fund, which may
have a higher risk potential, but also has a higher potential rate of
return.
An intermediate-length fund could make sense if your investment
horizon is two to four years, while a short-term bond fund could be
the right choice if you need your money in one or two years.
If your time horizon is less than a year, you might want to consider
moving some of your bond investment into a money market fund. These
funds seek income and a stable share price by investing in
high-quality, short-term investments. Of course, it's important to
remember that an investment in a money market fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in these types of funds.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
measured by the fund's yield, to measure performance. If Fidelity had
not reimbursed certain fund expenses, the past 10 years total returns
would have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN PA MUNICIPAL INCOME -1.21% 1.99% 36.93% 101.38%
LB Pennsylvania Municipal Bond -0.61% 2.74% 39.24% n/a
Pennsylvania Municipal Debt -1.34% 1.25% 34.94% 94.83%
Funds Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Lehman Brothers Pennsylvania Municipal Bond Index - a market
value-weighted index of Pennsylvania investment-grade municipal bonds
with maturities of one year or more. To measure how the fund's
performance stacked up against its peers, you can compare it to the
Pennsylvania municipal debt funds average, which reflects the
performance of mutual funds with similar objectives tracked by Lipper
Inc. The past six months average represents a peer group of 62 mutual
funds. These benchmarks include reinvested dividends and capital
gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN PA MUNICIPAL INCOME 1.99% 6.49% 7.25%
LB Pennsylvania Municipal Bond 2.74% 6.85% n/a
Pennsylvania Municipal Debt 1.25% 6.17% 6.89%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year. (Note: Lipper calculates average annual total
returns by annualizing each fund's total return, then taking the
arithmetic average. This may produce a different figure than that
obtained by averaging the cumulative total returns and annualizing the
result.)
$10,000 OVER 10 YEARS
Spartan PA Muni Income LB Municipal Bond
00402 LB015
1989/06/30 10000.00 10000.00
1989/07/31 10096.32 10136.10
1989/08/31 10001.14 10036.87
1989/09/30 9968.39 10006.96
1989/10/31 10105.89 10129.34
1989/11/30 10225.36 10306.61
1989/12/31 10297.72 10390.91
1990/01/31 10240.84 10341.77
1990/02/28 10331.55 10433.81
1990/03/31 10333.24 10436.94
1990/04/30 10181.47 10361.37
1990/05/31 10435.63 10587.56
1990/06/30 10530.53 10680.63
1990/07/31 10668.05 10837.63
1990/08/31 10513.52 10680.27
1990/09/30 10566.64 10686.36
1990/10/31 10719.15 10880.21
1990/11/30 10949.16 11099.01
1990/12/31 11039.02 11147.29
1991/01/31 11182.61 11296.89
1991/02/28 11247.17 11395.17
1991/03/31 11271.82 11399.27
1991/04/30 11448.81 11550.88
1991/05/31 11585.35 11653.57
1991/06/30 11527.74 11642.03
1991/07/31 11699.80 11783.83
1991/08/31 11860.46 11939.03
1991/09/30 11998.33 12094.47
1991/10/31 12101.98 12203.32
1991/11/30 12134.52 12237.37
1991/12/31 12418.13 12499.98
1992/01/31 12451.63 12528.48
1992/02/29 12458.33 12532.49
1992/03/31 12457.40 12537.13
1992/04/30 12588.01 12648.71
1992/05/31 12745.16 12797.58
1992/06/30 12950.71 13012.33
1992/07/31 13358.13 13402.44
1992/08/31 13218.93 13271.76
1992/09/30 13289.70 13358.56
1992/10/31 13085.43 13227.25
1992/11/30 13397.32 13464.15
1992/12/31 13549.90 13601.62
1993/01/31 13728.40 13759.80
1993/02/28 14266.68 14257.49
1993/03/31 14104.13 14106.79
1993/04/30 14241.48 14249.13
1993/05/31 14328.58 14329.21
1993/06/30 14571.19 14568.37
1993/07/31 14553.34 14587.45
1993/08/31 14918.55 14891.16
1993/09/30 15137.88 15060.77
1993/10/31 15145.47 15089.84
1993/11/30 15016.11 14956.90
1993/12/31 15335.79 15272.64
1994/01/31 15535.68 15447.05
1994/02/28 15158.46 15046.97
1994/03/31 14491.47 14434.26
1994/04/30 14566.91 14556.66
1994/05/31 14730.89 14682.87
1994/06/30 14706.61 14593.16
1994/07/31 14943.68 14860.65
1994/08/31 14994.77 14912.07
1994/09/30 14782.14 14693.16
1994/10/31 14527.76 14432.21
1994/11/30 14182.22 14171.27
1994/12/31 14563.52 14483.18
1995/01/31 15009.69 14897.11
1995/02/28 15463.78 15330.32
1995/03/31 15682.30 15506.46
1995/04/30 15728.90 15524.76
1995/05/31 16149.11 16020.16
1995/06/30 15991.19 15880.78
1995/07/31 16131.22 16031.33
1995/08/31 16301.79 16234.61
1995/09/30 16485.17 16337.37
1995/10/31 16686.86 16574.92
1995/11/30 16948.93 16849.90
1995/12/31 17102.84 17011.82
1996/01/31 17271.50 17140.26
1996/02/29 17145.91 17024.57
1996/03/31 16910.31 16806.99
1996/04/30 16833.56 16759.43
1996/05/31 16807.65 16752.73
1996/06/30 16975.25 16935.16
1996/07/31 17129.15 17089.27
1996/08/31 17135.63 17085.17
1996/09/30 17338.76 17324.36
1996/10/31 17527.62 17520.30
1996/11/30 17849.48 17840.92
1996/12/31 17789.70 17765.99
1997/01/31 17813.37 17799.57
1997/02/28 17965.03 17962.97
1997/03/31 17730.43 17723.52
1997/04/30 17853.41 17871.87
1997/05/31 18082.44 18140.66
1997/06/30 18257.41 18333.86
1997/07/31 18764.87 18841.71
1997/08/31 18576.39 18665.16
1997/09/30 18787.79 18886.72
1997/10/31 18879.32 19008.16
1997/11/30 18968.74 19119.93
1997/12/31 19273.15 19398.89
1998/01/31 19471.99 19599.08
1998/02/28 19452.52 19604.96
1998/03/31 19435.57 19622.21
1998/04/30 19345.07 19533.72
1998/05/31 19619.11 19842.94
1998/06/30 19745.91 19921.12
1998/07/31 19747.72 19971.12
1998/08/31 20060.44 20279.67
1998/09/30 20335.55 20532.36
1998/10/31 20318.55 20531.95
1998/11/30 20354.88 20604.02
1998/12/31 20384.32 20655.94
1999/01/31 20668.06 20901.54
1999/02/28 20520.65 20810.20
1999/03/31 20541.83 20839.12
1999/04/30 20597.30 20891.01
1999/05/31 20446.78 20770.05
1999/06/30 20137.97 20470.96
IMATRL PRASUN SHR__CHT 19990630 19990712 115908 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Spartan Pennsylvania Municipal Income Fund on June 30,
1989. As the chart shows, by June 30, 1999, the value of the
investment would have grown to $20,138 - a 101.38% increase on the
initial investment. For comparison, look at how the Lehman Brothers
Municipal Bond Index - a market value-weighted index of
investment-grade municipal bonds with maturities of one year or more -
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 would have grown to $20,471 - a 104.71%
increase.
(checkmark)UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will
do tomorrow. Bond prices,
for example, generally
move in the opposite
direction of interest rates. In
turn, the share price, return
and yield of a fund that
invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995 1994
Dividend returns 2.16% 4.55% 4.99% 5.01% 6.52% 5.73%
Capital returns -3.37% 1.22% 3.35% -0.99% 10.92% -10.77%
Total returns -1.21% 5.77% 8.34% 4.02% 17.44% -5.04%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED JUNE 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 3.92(cents) 23.74(cents) 48.00(cents)
Annualized dividend rate 4.54% 4.45% 4.43%
30-day annualized yield 4.41% - -
30-day annualized 7.09% - -
tax-equivalent yield
DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of
$10.51 over the past one month, $10.75 over the past six months and
$10.83 over the past one year, you can compare the fund's income over
these three periods. The 30-day annualized YIELD is a standard formula
for all bond funds based on the yields of the bonds in the fund,
averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It
also helps you compare funds from different companies on an equal
basis. The tax-equivalent yield shows what you would have to earn on a
taxable investment to equal the fund's tax-free yield, if you're in
the 37.79% combined effective 1999 federal and state tax bracket, but
does not reflect the payment of the federal alternative minimum tax,
if applicable.
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Despite a surge in municipal bond
prices on the last day of the period
following the Federal Reserve Board's
widely anticipated quarter point
increase - from 4.75% to 5.00% -
in the federal funds rate, or overnight
bank-lending level, the municipal bond
market was hard-hit by a continuous
sell-off during the six-month period that
ended June 30, 1999. Although
retail investors provided support in
the municipal bond market with
periods of active buying, and
new-issue supply was down from last
year, institutional investors remained on
the sidelines, putting pressure on
prices, which move inversely to bond
yields. While municipal bonds
outperformed taxable bonds over the
six-month period, the Lehman Brothers
Municipal Bond Index - an index
of approximately 50,000
investment-grade, fixed-rate tax-exempt
bonds - declined 0.90%. In
comparison, the Lehman Brothers
Aggregate Bond Index - a widely
followed measure of taxable-bond
performance - fell 1.37%. In
general, the period was characterized
by uncertainty as investors adopted a
wait-and-see approach regarding
the Fed's next move and the release of
major economic reports that could
provide some clues about the future
direction of interest rates. Nevertheless,
municipal bond prices received a lift
on the last day of the period, as the Fed
shifted its monetary policy stance
from a tightening bias to a neutral
stance, meaning its next move is as
likely to keep interest rates unchanged
as it is to increase them.
(photograph of Christine Thompson)
An interview with Christine Thompson, Portfolio Manager of Spartan
Pennsylvania Municipal Income Fund
Q. HOW DID THE FUND PERFORM, CHRISTINE?
A. During the past six months, rising interest rates caused the fund
to post a negative return, although it outpaced its peers. For the
six-month period ending June 30, 1999, the fund had a total return of
- -1.21%. To get a sense of how the fund did relative to its
competitors, the Pennsylvania municipal debt funds average returned
- -1.34% during the same six-month period, according to Lipper Inc.
Additionally, the Lehman Brothers Pennsylvania Municipal Bond Index -
which tracks the types of securities in which the fund invests -
returned -0.61% for the same six-month period. For the 12-month period
that ended June 30, 1999, the fund had a total return of 1.99%. That
return compared to the Pennsylvania municipal debt funds average's
1.25% return and the Lehman Brothers index's 2.74% return for the same
12-month period.
Q. WHAT HELPED THE FUND'S PERFORMANCE OUTPACE ITS PEERS?
A. In keeping with Fidelity's investment approach, I kept the fund's
duration - which measures its sensitivity to interest-rate changes -
in line with the Pennsylvania municipal market as a whole, as
reflected by the Lehman Brothers Pennsylvania Municipal Bond Index. As
a rule, I don't lengthen or shorten duration based on where I think
interest rates will be at some point down the road because I don't
believe that anyone can do so with any accuracy over time. Entering
1999, some funds in the peer group had extended to relatively long
durations - meaning they were more sensitive to interest-rate changes.
When rates moved higher in response to stronger-than-expected economic
growth and growing inflationary fears, increased interest-rate
sensitivity worked against longer-duration funds.
Q. WERE THERE OTHER POSITIVES FOR THE FUND'S PERFORMANCE COMPARED TO
ITS PEERS?
A. The fund had a relatively small weighting in hospital bonds, which
were poor performers during the past six months. Cutbacks in federally
funded health care programs and increased competitive forces put
pressure on hospitals across the state - particularly in Philadelphia
- - which is marked by too many unfilled hospital beds. My approach in
selecting health care organizations is to concentrate on hospitals
that have a more advantageous competitive position.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Intermediate-term bonds, those with maturities of between five and
15 years, were the main disappointment during the period, suffering
from reduced demand. Despite their disappointing recent performance, I
continued to emphasize intermediate-maturity bonds because, based on
Fidelity's quantitative models, they offered the most attractive value
for their given interest-rate sensitivity, and I believed they would
post strong performance over the longer term.
Q. HOW DID YOU POSITION THE FUND IN TERMS OF CREDIT QUALITY?
A. Over two-thirds of the fund's investments were in high-quality
insured bonds at the end of the period. Municipal bond insurance,
which is underwritten by private insurers, guarantees the timely
payment of interest and principal and, as a result, garners AAA
quality ratings for the insured sector. Insured bonds have been
attractive largely because the market has been priced so that I don't
have to give up much yield for buying insured bonds rather than
lower-quality bonds. Shareholders should remember that insured bonds
rise and fall in value in response to changes in interest rates,
supply, demand and other factors.
Q. CHRISTINE, WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET?
A. Recently, the direction of interest rates has been the main factor
that determined the relative performance of municipal bonds by
influencing supply and demand in the market. Municipals have lagged
Treasuries when interest rates declined and have outperformed
Treasuries when interest rates have risen. The supply of municipals
has been reduced so far in 1999 compared to the first six months of
1998 as higher rates prompted issuers to cut back their refinancing
and new-issue activity. Although the Federal Reserve Board may
continue to raise interest rates, demand for municipals should be
solid as investors seek attractive yields on a tax-equivalent basis.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: to provide high current
income exempt from federal
and Pennsylvania personal
income tax by investing
normally in investment-grade
municipal securities
FUND NUMBER: 402
TRADING SYMBOL: FPXTX
START DATE: August 6, 1986
SIZE: as of June 30, 1999,
more than $263 million
MANAGER: Christine Thompson,
since 1998; manager,
various Fidelity and Spartan
municipal income funds;
joined Fidelity in 1985
CHRISTINE THOMPSON ON Y2K
AND ITS POTENTIAL EFFECTS ON
MUNICIPAL BOND ISSUERS:
"Y2K may pose a number of
challenges for municipal bond
issuers. My primary focus with
regard to Y2K-related issues is how
they will impact the credit quality
of various issuers. Fidelity's
research team asks issuers a
number of things, including how
vulnerable they believe they are to
potential problems, what their
short-term contingency plans are
in the event of any problems and
what long-term solutions they've
developed. What we've found so far
is that there are varying degrees of
sophistication among issuers,
with some much more poised to
deal with potential problems than
others. That's why we carefully
consider Y2K-related issues as
one of the many factors in our
routine security selection
process."
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE SECTORS AS OF JUNE
30, 1999
% OF FUND'S INVESTMENTS JUNE % OF FUND'S INVESTMENTS IN
30, 1999 THESE SECTORS 6 MONTHS AGO
General Obligations 32.0 34.9
Water & Sewer 12.3 12.1
Health Care 11.9 16.2
Escrowed/Pre-Refunded 10.4 7.8
Transportation 9.1 5.2
AVERAGE YEARS TO MATURITY AS
OF JUNE 30, 1999
6 MONTHS AGO
Years 11.2 11.1
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY
DOLLAR AMOUNT.
DURATION AS OF JUNE 30, 1999
6 MONTHS AGO
Years 6.3 6.5
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH
A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER
FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE.
ACCORDINGLY, A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS
EXAMPLE.
QUALITY DIVERSIFICATION
(MOODY'S RATINGS)
AS OF JUNE 30, 1999
Aaa 68.9%
Aa, A 19.8%
Baa 7.8%
Not Rated 0.9%
Short-term
investments 2.6%
Row: 1, Col: 1, Value: 68.90000000000001
Row: 1, Col: 2, Value: 19.8
Row: 1, Col: 3, Value: 7.8
Row: 1, Col: 4, Value: 0.9
Row: 1, Col: 5, Value: 2.6
AS OF DECEMBER 31, 1998
Aaa 66.0%
Aa, A 21.3%
Baa 8.4%
Not Rated 0.9%
Short-term
investments 3.4%
Row: 1, Col: 1, Value: 66.0
Row: 1, Col: 2, Value: 21.3
Row: 1, Col: 3, Value: 8.4
Row: 1, Col: 4, Value: 0.9
Row: 1, Col: 5, Value: 3.4
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P (registered
trademark) RATINGS. AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S
INVESTMENTS.
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 97.4%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - 96.6%
Abington School District Aaa $ 4,000,000 $ 3,790,880
Rfdg. 5.125% 5/15/26 (FGIC
Insured)
Allegheny County Arpt. Rev.
Rfdg.:
(Pittsburgh Int'l. Arpt.)
Series A:
5.75% 1/1/08 (MBIA Insured) Aaa 1,000,000 1,046,570
(c)
5.75% 1/1/11 (MBIA Insured) Aaa 2,450,000 2,545,134
(c)
5.75% 1/1/12 (MBIA Insured) Aaa 4,000,000 4,195,160
(c)
5.75% 1/1/14 (MBIA Insured) Aaa 3,000,000 3,125,370
(c)
Allegheny County Higher Ed. Aaa 400,000 449,968
Bldg. Auth. Univ. Rev.
(Duquesne Univ. Proj.) 6.5%
3/1/10 (AMBAC Insured)
Allegheny County Hosp. Dev.
Auth. Rfdg.:
(Univ. of Pittsburgh Health Aaa 2,845,000 2,923,095
Ctr.) Series A, 5.55% 4/1/12
(MBIA Insured)
(UPMC Health Sys.) Series A:
4.625% 8/1/13 (MBIA Insured) Aaa 3,885,000 3,625,909
4.625% 8/1/14 (MBIA Insured) Aaa 4,060,000 3,756,840
Allegheny County Ind. Dev. - 2,205,000 2,337,697
Auth. Rev. (YMCA Pittsburgh
Proj.) Series A, 8.75% 3/1/10
Allegheny County Residential Aaa 885,000 916,471
Fin. Auth. Mtg. Rev. (Single
Family) Series M, 7.95%
6/1/23, LOC Govt. Nat'l.
Mortgage Assoc. (c)
Allegheny County San. Auth. Aaa 2,260,000 1,124,101
Swr. Rev. 0% 12/1/12 (FGIC
Insured) (Escrowed to
Maturity) (d)
Bethlehem Area School Aaa 3,500,000 3,400,880
District Rfdg. 5% 9/1/15
(FGIC Insured)
Central Bucks School District Aa3 1,215,000 1,259,250
5.25% 5/15/05
Chester County Health & Ed. Aaa 600,000 601,344
Facilities Auth. Health Sys.
Rev. (Jefferson Health Sys.)
Series B, 5% 5/15/08 (AMBAC
Insured)
Delaware County Auth. Hosp.
Rev. (Crozer-Chester Med.
Ctr.):
6% 12/15/09 Baa2 1,500,000 1,528,515
6% 12/15/20 Baa2 2,700,000 2,715,120
Delaware County Gen. Oblig. Aa3 2,200,000 2,261,138
Rfdg. 5.3% 11/15/01
Harrisburg Auth. Rev. (Pooled Aaa 3,000,000 3,065,550
Bond Prog.) Series I,
5.625% 4/1/15 (MBIA Insured)
Keystone Oaks School District Aaa 5,900,000 6,273,352
Series C, 5.829% 9/1/16
(AMBAC Insured)
(Pre-Refunded to 9/4/02 @
102) (d)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Lehigh County Gen. Purp. Aaa $ 1,000,000 $ 944,790
Auth. (Lehigh Valley Health
Network) Series A, 5% 7/1/18
(MBIA Insured)
Meadville Gen. Oblig. Rfdg. Aaa 3,210,000 3,370,596
Series B, 6% 10/1/05 (AMBAC
Insured) (Escrowed to
Maturity) (d)
Montgomery County Higher Ed.
& Health Auth. Rev. Rfdg.
(Healthcare-Holy Redeemer
Health) Series A:
5.5% 10/1/05 (AMBAC Insured) Aaa 2,240,000 2,337,843
5.5% 10/1/08 (AMBAC Insured) Aaa 1,000,000 1,036,790
Northampton County Gen. Aa3 4,575,000 4,432,214
Oblig. 5.125% 8/15/19
Northumberland County Auth. Aaa 1,000,000 563,660
Commonwealth Lease Rev.
(Cap. Appreciation)
(Correctional Fac.) 0%
10/15/10 (MBIA Insured)
(Escrowed to Maturity) (d)
Pennsbury School District:
Rfdg. 6% 8/15/05 (FGIC Aaa 1,605,000 1,722,261
Insured)
6.8% 8/15/14 (FGIC Insured) Aaa 1,025,000 1,131,457
(Pre-Refunded to 8/15/04 @
100) (d)
Pennsylvania Convention Ctr.
Auth. Rev. Rfdg. Series A:
6.6% 9/1/09 (MBIA Insured) Aaa 9,150,000 10,003,146
6.7% 9/1/14 (MBIA Insured) Aaa 3,965,000 4,390,960
6.75% 9/1/19 (MBIA Insured) Aaa 2,670,000 2,960,282
Pennsylvania Gen. Oblig.:
(Cap. Appreciation) 2nd Aaa 1,770,000 1,198,379
Series, 0% 7/1/07 (AMBAC
Insured)
1st Series, 6.125% 9/15/03 Aa3 5,000,000 5,292,200
2nd Series:
5.6% 7/1/02 Aa3 1,000,000 1,038,050
6.25% 7/1/11 Aa3 1,200,000 1,322,244
Pennsylvania Higher Edl.
Facilities Auth. College &
Univ. Rev. Rfdg.:
(RIDC Reg'l. AA- 1,000,000 1,069,600
Growth/Carnegie-Mellon
Univ.) 6% 11/1/05
(Univ. of Pennsylvania):
Series A:
5.9% 9/1/15 Aa2 1,200,000 1,253,064
6.5% 9/1/02 Aa2 2,750,000 2,925,588
6.5% 9/1/04 Aa2 2,650,000 2,892,926
7% 9/1/01 Aa2 2,000,000 2,115,660
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Higher Edl.
Facilities Auth. College &
Univ. Rev. Rfdg.: - continued
(Univ. of Pennsylvania): -
continued
Series B:
6.5% 9/1/02 Aa2 $ 1,950,000 $ 2,074,508
6.5% 9/1/04 Aa2 2,100,000 2,292,507
7% 9/1/05 Aa2 2,000,000 2,256,600
Pennsylvania Hsg. Fin. Agcy.:
(Single Family Mtg.):
Series 51, 5.65% 4/1/20 (c) Aa2 2,185,000 2,212,116
Series 52 B, 5.55% 10/1/12 (c) Aa 1,570,000 1,595,057
Series 53 A, 5.4% 10/1/27 (c) Aa 1,000,000 1,013,920
Rfdg. (Single Family Mtg.) Aa2 1,735,000 1,757,173
Series 54 A, 5.375% 10/1/28
(c)
6.1% 10/1/13 (c) Aa 5,000,000 5,159,550
Pennsylvania Ind. Dev. Auth.
Rev. (Econ. Dev.):
5.8% 1/1/08 (AMBAC Insured) Aaa 2,000,000 2,114,120
5.8% 7/1/09 (AMBAC Insured) Aaa 1,295,000 1,368,815
7% 7/1/06 (AMBAC Insured) Aaa 1,000,000 1,127,390
7% 1/1/07 (AMBAC Insured) Aaa 1,500,000 1,692,525
7% 7/1/07 (AMBAC Insured) Aaa 2,650,000 3,008,943
Pennsylvania
Intergovernmental Coop.
Auth. Spl. Tax Rev. Rfdg.
(Philadelphia Fdg. Prog.):
5% 6/15/01 (FGIC Insured) Aaa 1,000,000 1,015,300
5.25% 6/15/17 (FGIC Insured) Aaa 2,500,000 2,456,850
Pennsylvania Tpk. Commission
Tpk. Rev.:
Series J, 7.15% 12/1/11 (FGIC Aaa 1,000,000 1,087,200
Insured) (Pre-Refunded to
12/1/01 @ 102) (d)
Series L, 6.25% 6/1/11 (AMBAC Aaa 3,000,000 3,151,380
Insured)
Philadelphia Arpt. Rev. Rfdg.
(Philadelphia Arpt. Sys.)
Series A:
5.375% 6/15/11 (FGIC Insured) Aaa 3,770,000 3,797,747
(c)
6% 6/15/08 (FGIC Insured) (c) Aaa 3,000,000 3,199,170
Philadelphia Gas Works Rev.
Rfdg. 14th Series A:
6.375% 7/1/26 Baa2 4,000,000 4,274,200
6.375% 7/1/26 (Pre-Refunded Baa2 1,905,000 2,069,554
to 7/1/03 @ 102) (d)
Philadelphia Gen. Oblig. Aaa 8,000,000 8,191,920
Rfdg. Series A, 5.125%
5/15/03 (FGIC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Philadelphia Hosp. & Higher
Ed. Facilities Auth. Hosp.
Rev. Rfdg. (Philadelphia
Hosp.):
6.05% 7/1/04 (Escrowed to Baa3 $ 2,500,000 $ 2,665,600
Maturity) (d)
6.15% 7/1/05 (Escrowed to Baa3 2,100,000 2,262,939
Maturity) (d)
6.25% 7/1/06 (Escrowed to Baa3 2,600,000 2,829,554
Maturity) (d)
Philadelphia Hosp. & Higher
Ed. Facilities Auth. Health
Sys. Rev. (Jefferson Health
Sys.) Series A:
5% 5/15/09 A1 1,500,000 1,468,320
5.5% 5/15/08 A1 1,000,000 1,029,060
Philadelphia Ind. Dev. Auth. Aaa 3,000,000 2,841,120
Arpt. Rev. (Philadelphia
Arpt. Sys. Proj.) Series A,
5% 7/1/15 (FGIC Insured) (c)
Philadelphia Muni. Auth. Rev. Aaa 1,000,000 545,580
(Cap. Appreciation) (Muni.
Svcs. Bldg. Lease) 0%
3/15/11 (FSA Insured)
Philadelphia School District:
Rfdg. Series A, 5% 4/1/06 Aaa 5,505,000 5,595,337
(AMBAC Insured)
Series A 2, 4.5% 4/1/23 (MBIA Aaa 2,000,000 1,724,520
Insured)
Series B, 5.375% 4/1/27 Aaa 5,000,000 4,947,050
(AMBAC Insured)
Philadelphia Wtr. & Swr. Rev. Aaa 5,300,000 3,352,144
(Cap. Appreciation) 14th
Series, 0% 10/1/08 (MBIA
Insured)
Philadelphia Wtr. & Wastewtr.
Rev.:
Rfdg.:
5.5% 6/15/03 (FGIC Insured) Aaa 1,500,000 1,556,865
5.5% 6/15/15 (FSA Insured) Aaa 3,000,000 3,027,900
5.75% 6/15/13 (MBIA Insured) Aaa 4,400,000 4,564,472
6.75% 8/1/04 (MBIA Insured) Aaa 2,085,000 2,292,833
6.75% 8/1/05 (MBIA Insured) Aaa 3,110,000 3,454,868
Pittsburgh Gen. Oblig.:
Rfdg. Series D, 5% 9/1/10 Aaa 2,000,000 1,992,300
(FGIC Insured)
Series B, 5.5% 9/1/12 (AMBAC Aaa 3,965,000 4,040,613
Insured)
Pittsburgh School District
(Cap. Appreciation) Series C:
0% 8/1/07 (AMBAC Insured) Aaa 2,610,000 1,759,949
0% 8/1/08 (AMBAC Insured) Aaa 2,000,000 1,273,180
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Pittsburgh Wtr. & Swr. Auth.
Wtr. & Swr. Sys. Rev. Rfdg.:
(Cap. Appreciation) Series A, Aaa $ 3,300,000 $ 2,604,030
0% 9/1/04 (FGIC Insured)
(Escrowed to Maturity) (d)
Series A:
4.75% 9/1/16 (FGIC Insured) Aaa 3,000,000 2,754,510
6.5% 9/1/13 (FGIC Insured) Aaa 10,000,000 11,353,198
6.5% 9/1/14 (FGIC Insured) Aaa 1,000,000 1,067,230
(Pre-Refunded to 9/1/01 @
102) (d)
Scranton-Lackawanna Health & Aaa 3,375,000 3,471,761
Welfare Auth. Rev. Rfdg.
(Cmnty. Med. Ctr. Proj.)
5.5% 7/1/12 (MBIA Insured)
Southeastern Pennsylvania
Trans. Auth. Spl. Rev.:
Series A:
5.25% 3/1/18 (FGIC Insured) Aaa 1,000,000 980,030
6.5% 3/1/03 (FGIC Insured) Aaa 145,000 155,162
(Escrowed to Maturity) (d)
6.5% 3/1/04 (FGIC Insured) Aaa 1,400,000 1,514,520
6.5% 3/1/04 (FGIC Insured) Aaa 85,000 92,059
(Escrowed to Maturity) (d)
5.35% 3/1/09 (FGIC Insured) Aaa 4,000,000 4,100,880
Wilkens Area Ind. Dev. Auth. Aaa 1,500,000 1,492,875
Rev. Rfdg. (Fairview
Extended Care) Series B,
4.55% 1/1/21 (MBIA
Insured), LOC BankBoston NA
Wyoming Ind. Dev. Auth. Poll. Aa2 5,000,000 5,199,800
Cont. Rev. Rfdg. (Proctor &
Gamble Paper Proj.) 5.55%
5/1/10
York County Solid Waste & Aaa 5,000,000 5,169,200
Refuse Auth. Solid Waste
Sys. Rev. Rfdg. 5.25%
12/1/05 (FGIC Insured)
253,040,058
PUERTO RICO - 0.8%
Puerto Rico Commonwealth Pub. Baa1 1,000,000 989,750
Impt. Rfdg. 5.375% 7/1/25
Puerto Rico Commonwealth Baa 1,000,000 1,027,550
Urban Renewal & Hsg. Corp.
Rfdg. 7.875% 10/1/04
2,017,300
TOTAL MUNICIPAL BONDS 255,057,358
(Cost $250,672,751)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MUNICIPAL NOTES - 2.6%
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - 2.6%
Philadelphia Ind. Dev. Rev. $ 1,300,000 $ 1,300,000
(Institute for Cancer
Research Fox Chase Proj.)
Series A, 3.45%, LOC Morgan
Guaranty Trust Co., NY,
VRDN (b)
Pittsburgh Gen. Oblig. 1,500,000 1,500,000
Participating VRDN Series SG
71, 3.77% (Liquidity
Facility Societe Generale,
France) (b)(e)
Schuylkill County Ind. Dev. 600,000 600,000
Auth. Resource Recovery Rev.
Rfdg. (Northeastern Pwr. Co.
Proj.) Series 1997 B, 3.5%,
LOC Cr. Local de France,
VRDN (b)(c)
South Fork Muni. Auth. Hosp. 700,000 700,000
Rev. (Conemaugh Health Ctr.)
Series A, 3.85% (MBIA
Insured), LOC Cr. Swiss
First Boston, Inc., LOC CS
First Boston Corp., VRDN (b)
Westmoreland County Ind. Dev. 2,700,000 2,639,331
Auth. Rev. Bonds (Nat'l.
Waste & Energy Corp.- Valley
Landfill Expansion Proj.)
Series 1993, 5.1%, tender
5/1/09, LOC Fleet Bank NA (c)
York Gen. Auth. Pooled Fing. 200,000 200,000
Rev. Series 1996, 3.8%, LOC
First Union Nat'l. Bank of
North Carolina, VRDN (b)
TOTAL MUNICIPAL NOTES 6,939,331
(Cost $7,000,000)
TOTAL INVESTMENT IN $ 261,996,689
SECURITIES - 100%
(Cost $257,672,751)
</TABLE>
SECURITY TYPE ABBREVIATION
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) Standard & Poor's(registered trademark) credit ratings are used in
the absence of a rating by Moody's Investors Service, Inc.
(b) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(c) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(d) Security collateralized by an amount sufficient to pay interest
and principal.
(e) Provides evidence of ownership in one or more underlying municipal
bonds.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total
value of investments in securities, is as follows (ratings are
unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 88.3% AAA, AA, A 86.5%
Baa 7.8% BBB 7.4%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by Moody's or S&P amounted to 0.9%.
OTHER INFORMATION
The distribution of municipal securities by revenue source, as a
percentage of total value of investments in securities, is as follows:
General Obligations 32.0%
Water & Sewer 12.3
Health Care 11.9
Escrowed/Pre-Refunded 10.4
Transportation 9.1
Education 6.7
Others (individually less 17.6
than 5%)
100.0%
INCOME TAX INFORMATION
At June 30, 1999, the aggregate cost of investment securities for
income tax purposes was $257,672,751. Net unrealized appreciation
aggregated $4,323,938, of which $6,729,306 related to appreciated
investment securities and $2,405,368 related to depreciated investment
securities.
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 261,996,689
value (cost $257,672,751) -
See accompanying schedule
Cash 54,883
Receivable for fund shares 185,000
sold
Interest receivable 4,030,871
TOTAL ASSETS 266,267,443
LIABILITIES
Payable for investments $ 1,752,460
purchased
Payable for fund shares 357,294
redeemed
Distributions payable 258,918
Accrued management fee 82,457
Other payables and accrued 40,005
expenses
TOTAL LIABILITIES 2,491,134
NET ASSETS $ 263,776,309
Net Assets consist of:
Paid in capital $ 258,874,965
Accumulated undistributed net 577,406
realized gain (loss) on
investments
Net unrealized appreciation 4,323,938
(depreciation) on investments
NET ASSETS, for 25,234,956 $ 263,776,309
shares outstanding
NET ASSET VALUE, offering $10.45
price and redemption price
per share ($263,776,309
(divided by) 25,234,956
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999 (UNAUDITED)
INTEREST INCOME $ 6,632,639
Expenses
Management fee $ 507,798
Transfer agent fees 104,988
Accounting fees and expenses 40,540
Non-interested trustees' 420
compensation
Custodian fees and expenses 7,271
Registration fees 20,480
Audit 15,377
Legal 1,315
Miscellaneous 430
Total expenses before 698,619
reductions
Expense reductions (5,479) 693,140
NET INTEREST INCOME 5,939,499
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,570,125
Futures contracts (205,311) 1,364,814
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (10,553,802)
Futures contracts 61,490 (10,492,312)
NET GAIN (LOSS) (9,127,498)
NET INCREASE (DECREASE) IN $ (3,187,999)
NET ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 5,939,499 $ 11,822,764
Net realized gain (loss) 1,364,814 2,824,146
Change in net unrealized (10,492,312) 153,657
appreciation (depreciation)
NET INCREASE (DECREASE) IN (3,187,999) 14,800,567
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (5,939,499) (11,822,764)
From net interest income
From net realized gain (399,641) (2,636,886)
TOTAL DISTRIBUTIONS (6,339,140) (14,459,650)
Share transactions Net 18,076,923 28,187,316
proceeds from sales of shares
Reinvestment of distributions 4,670,104 10,944,008
Cost of shares redeemed (18,933,595) (34,694,043)
NET INCREASE (DECREASE) IN 3,813,432 4,437,281
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 6,356 12,418
TOTAL INCREASE (DECREASE) (5,707,351) 4,790,616
IN NET ASSETS
NET ASSETS
Beginning of period 269,483,660 264,693,044
End of period $ 263,776,309 $ 269,483,660
OTHER INFORMATION
Shares
Sold 1,684,256 2,596,010
Issued in reinvestment of 434,784 1,009,039
distributions
Redeemed (1,763,437) (3,205,514)
Net increase (decrease) 355,603 399,535
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 10.830 $ 10.810 $ 10.490 $ 10.670 $ 9.620
period
Income from Investment .237 .483 .501 .520 .590
Operations Net interest
income
Net realized and unrealized (.364) .126 .350 (.109) 1.049
gain (loss)
Total from investment (.127) .609 .851 .411 1.639
operations
Less Distributions
From net interest income (.237) (.483) (.501) (.520) (.590)
From net realized gain (.016) (.107) (.030) (.071) -
Total distributions (.253) (.590) (.531) (.591) (.590)
Redemption fees added to paid .000 .001 .000 .000 .001
in capital
Net asset value, end of $ 10.450 $ 10.830 $ 10.810 $ 10.490 $ 10.670
period
TOTAL RETURN B, C (1.21)% 5.77% 8.34% 4.02% 17.44%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 263,776 $ 269,484 $ 264,693 $ 270,977 $ 288,425
(000 omitted)
Ratio of expenses to average .52% A .55% .55% .55% .55%
net assets
Ratio of expenses to average .52% A .55% .55% .53% D .55%
net assets after expense
reductions
Ratio of net interest income 4.45% A 4.45% 4.74% 4.98% 5.73%
to average net assets
Portfolio turnover rate 27% A 25% 26% 53% 49%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31,
1994
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 11.130
period
Income from Investment .652
Operations Net interest
income
Net realized and unrealized (1.201)
gain (loss)
Total from investment (.549)
operations
Less Distributions
From net interest income (.652)
From net realized gain (.310)
Total distributions (.962)
Redemption fees added to paid .001
in capital
Net asset value, end of $ 9.620
period
TOTAL RETURN B, C (5.04)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 241,729
(000 omitted)
Ratio of expenses to average .55%
net assets
Ratio of expenses to average .55%
net assets after expense
reductions
Ratio of net interest income 6.33%
to average net assets
Portfolio turnover rate 26%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either
total return or yield. Total return reflects the change in the value
of an investment, assuming reinvestment of the fund's dividend income,
but does not include the $5 account closeout fee on an average-sized
account. Yield measures the income paid by a fund. Since a money
market fund tries to maintain a $1 share price, yield is an important
measure of performance. If Fidelity had not reimbursed certain fund
expenses, the past 10 years total returns would have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN PA MUNICIPAL MONEY 1.36% 2.89% 17.24% 42.36%
MARKET
All Tax-Free Money Market 1.27% 2.71% 16.06% 38.43%
Funds Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. To measure how the fund's performance stacked up
against its peers, you can compare it to the all tax-free money market
funds average, which reflects the performance of tax-free money market
funds with similar objectives tracked by IBC Financial Data, Inc. The
past six months average represents a peer group of 456 mutual funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN PA MUNICIPAL MONEY 2.89% 3.23% 3.59%
MARKET
All Tax-Free Money Market 2.71% 3.03% 3.33%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YIELDS
6/28/99 3/29/99 12/28/98 9/28/98 6/29/98
Spartan PA Muni Money Market 3.07% 2.65% 3.19% 3.45% 3.23%
All Tax-Free Money Market 2.93% 2.48% 2.98% 3.23% 3.05%
Funds Average
Spartan Pennsylvania 4.93% 4.26% 5.13% 5.55% 5.19%
Municipal Money Market -
Tax-equivalent
Portion of fund's income 0.25% 0.14% 2.51% 1.62% 2.44%
subject to state taxes
</TABLE>
Spartan Pennsylvania
Municipal Money
Market
All Tax-Free Money
Market Funds Average
5% -
4% -
3% -
2% -
1% -
0%
Row: 1, Col: 1, Value: 3.07
Row: 1, Col: 2, Value: 2.93
Row: 2, Col: 1, Value: 2.65
Row: 2, Col: 2, Value: 2.48
Row: 3, Col: 1, Value: 3.19
Row: 3, Col: 2, Value: 2.98
Row: 4, Col: 1, Value: 3.45
Row: 4, Col: 2, Value: 3.23
Row: 5, Col: 1, Value: 3.23
Row: 5, Col: 2, Value: 3.05
YIELD refers to the income paid by the fund over a given period.
Yields for money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income
earned is reinvested or compounded is called an effective yield. The
table above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the all
tax-free money market funds average as tracked by IBC Financial Data,
Inc. Or you can look at the fund's tax-equivalent yield, which is
based on a combined effective 1999 federal and state income tax rate
of 37.79% and reflects that a portion of the fund's income was subject
to state taxes. A portion of the fund's income may be subject to the
federal alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
(checkmark)COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the tax-free
yield - makes the comparison
more meaningful. Keep in
mind that the U.S. government
neither insures nor guarantees
a money market fund. In fact,
there is no assurance that a
money fund will maintain a $1
share price.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Diane McLaughlin)
An interview with Diane McLaughlin, Portfolio Manager of Spartan
Pennsylvania Municipal Money Market Fund
Q. WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE FIRST HALF OF
1999, DIANE?
A. Market observers confronted many issues that have characterized the
U.S. economy for some time: strong economic growth, tight labor
markets and continued expectations of inflationary pressures. Consumer
confidence was at an all-time high, prompting strong consumer
spending. Growth in real GDP - gross domestic product adjusted for
inflation - was 4.3% in the first quarter of 1999. In addition,
unemployment stayed at historically low levels. Low unemployment
usually causes employers to raise wages to attract or retain workers,
passing on the additional costs in the form of price increases.
However, we have yet to see significant evidence that American
consumers are paying higher prices. The consumer price index (CPI)
increased only about 2% over the past year. Wages have started to
creep up, but have been largely offset by increases in productivity.
The backdrop at the end of last year was similar, but the Federal
Reserve Board cut short-term interest rates three times because of
global economic instability. As these risks lessened, the markets
began to expect the Fed to change course, which it did by raising the
rate banks charge each other for overnight loans - known as the fed
funds target rate - by 0.25 percentage points on June 30.
Q. WHAT PROMPTED THE FED TO REVERSE COURSE?
A. Last fall, the Fed rate cuts were a response to global financial
instability and aversion to risk, the latter sparked by the
near-collapse of a highly leveraged hedge fund. During the first six
months of 1999, it became apparent that these negative influences had
dissipated. In addition, global economic growth started to trend
upward and U.S. exports were expected to improve. These changes
prompted the Fed to shift in May to a "tightening bias" - an
inclination toward raising rates to slow growth and head off
inflation. With growth increasing the potential for inflation, the Fed
felt the need to act pre-emptively by implementing its rate hike in
June.
Q. WHAT WAS YOUR STRATEGY WITH THE FUND?
A. The fund started the period with an average maturity of 38 days.
Financial markets were showing signs of stability, and I wanted to
position the fund to take advantage of the higher interest rates I
expected in the future. In addition, the supply of one-year fixed-rate
paper was slim, so yields on these securities were not attractive. I
turned my focus to short-term variable rate securities that were
abundant, and thus offered relatively appealing values. By the end of
the period, a combination of technical factors - issues of supply and
demand - in the one-year note market and the anticipation of higher
rates made yields on fixed-rate paper more attractive. The fund
participated in these note deals, extending its maturity to 46 days at
the end of June.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on June 30, 1999, was 3.10%, compared to
3.26% six months ago. The latest yield was the equivalent of a 4.98%
taxable yield for Pennsylvania investors in the 37.79% combined
federal and state income tax bracket. Through June 30, 1999, the
fund's six-month total return was 1.36%, compared to 1.27% for the all
tax-free money market funds average, according to IBC Financial Data,
Inc.
Q. WHAT IS YOUR OUTLOOK?
A. The market had expected the Fed to maintain a tightening bias after
its June move. In fact, prices reflected at least a second and
possibly a third rate hike. However, the Fed surprised the market by
switching back to a neutral bias. This suggests that its next move is
as likely to be an "easing" - a rate cut - as it is a rate hike. In
response, yields fell as the market became comfortable with the notion
that the Fed might raise rates just once. It now appears that the Fed
will look for signs of inflation before raising rates again. As a
result, going forward investors will be especially attentive to
emerging economic data for an indication of Fed policy. For my part,
I'll seek to maintain a neutral, flexible positioning with the fund
because of this continuing uncertainty, although it may be difficult
to maneuver the fund's maturity during periods of light issuance.
Another consideration that might influence municipal securities is the
Year 2000 issue. As one of many factors we look at, we'll be paying
close attention to this issue in the months ahead.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: to seek high current
income exempt from federal
and Pennsylvania state income
tax by investing in high-quality,
short-term municipal money
market securities, while
maintaining a $1.00 share
price
FUND NUMBER: 401
TRADING SYMBOL: FPTXX
START DATE: August 6, 1986
SIZE: as of June 30, 1999,
more than $193 million
MANAGER: Diane McLaughlin,
since 1997; manager,
various Fidelity and Spartan
municipal money market
funds; joined Fidelity in
1992
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DAYS % OF FUND'S INVESTMENTS 6/30/99 % OF FUND INVESTMENTS 12/31/98 % OF FUND INVESTMENTS 6/30/98
0 - 30 74 79 78
31 - 90 13 6 15
91 - 180 5 6 4
181 - 397 8 9 3
WEIGHTED AVERAGE MATURITY
6/30/99 12/31/98 6/30/98
Spartan Pennsylvania 46 Days 38 Days 30 Days
Municipal Money Market
fund
All Tax-Free Money
Market 44 Days 46 Days 41 Days
Funds Average*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF JUNE 30, 1999 AS OF DECEMBER 31, 1998
Variable Rate Demand Notes Variable Rate Demand Notes
(VRDNs) 69.8% (VRDNs) 71.2%
Commercial Paper (including Commercial Paper (including
CP Mode) 14.2% CP Mode) 16.1%
Tender Bonds 3.9% Tender Bonds 2.7%
Municipal Notes 6.7% Municipal Notes 3.2%
Other 5.4% Other 6.8%
Row: 1, Col: 1, Value: 69.8 Row: 1, Col: 1, Value: 71.2
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 14.2 Row: 1, Col: 3, Value: 16.1
Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 3.9 Row: 1, Col: 5, Value: 2.7
Row: 1, Col: 6, Value: nil Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 6.7 Row: 1, Col: 7, Value: 3.2
Row: 1, Col: 8, Value: 5.4 Row: 1, Col: 8, Value: 6.8
</TABLE>
*SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
INVESTMENTS JUNE 30, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MUNICIPAL SECURITIES - 100.0%
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - 97.9%
Allegheny County Ind. Dev.
Auth. Rev.:
(American Bridge Co.) Series $ 2,650,000 $ 2,650,000
1999 A, 3.8%, LOC Nat'l.
City Bank, VRDN (b)(e)
(Doren, Inc. Proj.) Series 2,300,000 2,300,000
1997 C, 3.8%, LOC Nat'l.
City Bank, PA, VRDN (b)(e)
(R.I. Lampus Co. Proj.) 2,560,000 2,560,000
Series 1997 A, 3.8%, LOC
Nat'l. City Bank, PA, VRDN
(b)(e)
(Union Elec. Steel Co. Proj.) 3,120,000 3,120,000
Series 1996 A, 3.75%, LOC
PNC Bank NA, VRDN (b)(e)
Rfdg. (North Versailles 3,065,000 3,065,000
Shopping Ctr.) Series 1992,
3.62%, Town Dev., LOC Bank
One, NA, VRDN (b)
Berks County Ind. Dev. Auth.
Ind. Dev. Rev.:
Bonds (Citizens Util.) Series 4,200,000 4,200,000
1996, 3.45% tender 7/8/99,
CP mode (e)
(Continental Assurance Co. 2,300,000 2,300,000
Proj.) Series 82, 3.3%
(Continental Casualty Co.
Guaranteed), VRDN (b)
Berks County Ind. Dev. Auth.
Manufacturing Facilities Rev.:
(Construction Fastener Proj.) 870,000 870,000
Series 1996 B, 3.65%, LOC
First Union Nat'l. Bank of
North Carolina, VRDN (b)(e)
(Grafika Commercial Printing, 1,410,000 1,410,000
Inc.) Series 1995, 3.6%,
LOC First Union Nat'l. Bank
of North Carolina, VRDN
(b)(e)
(RAM Industries, Inc.) Series 3,250,000 3,250,000
1996, 3.6%, LOC First Union
Nat'l. Bank of North
Carolina, VRDN (b)(e)
(The Bachman Co. Proj.) 2,225,000 2,225,000
Series 1994, 3.65%, LOC
First Union Nat'l. Bank of
North Carolina, VRDN (b)(e)
Bucks County Ind. Dev. Auth.
Rev.:
(Associates Proj.) Series 1,840,000 1,840,000
1993, 3.65%, LOC First Union
Nat'l. Bank of North
Carolina, VRDN (b)(e)
(Double H Plastics, Inc. 1,950,000 1,950,000
Proj.) Series 1993, 3.65%,
LOC First Union Nat'l. Bank
of North Carolina, VRDN
(b)(e)
Butler County Ind. Dev. Auth. 1,200,000 1,200,000
Rev. (Armco, Inc. Proj.)
Series 1996 A, 3.75%, LOC
Chase Manhattan Bank, VRDN
(b)(e)
Cambria County Ind. Dev. 3,800,000 3,800,000
Auth. Resource Recovery Rev.
(Cambria Cogen Co. Proj.)
Sereies 1998 A1, 3.55%, LOC
Bayerische Hypo-und
Vereinsbank AG, VRDN (b)(e)
Carbon County Ind. Dev. Auth.
Resource Recovery Rev. Bonds
(Panther Creek Partners
Proj.):
Series 1990 B:
3.05% tender 9/10/99, LOC 2,200,000 2,200,000
Nat'l. Westminster Bank PLC,
CP mode (e)
3.1% tender 9/16/99, LOC 2,200,000 2,200,000
Nat'l. Westminster Bank PLC,
CP mode (e)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Carbon County Ind. Dev. Auth.
Resource Recovery Rev. Bonds
(Panther Creek Partners
Proj.): - continued
Series 1991A:
3.05% tender 9/9/99, LOC $ 3,300,000 $ 3,300,000
Nat'l. Westminster Bank
PLC, CP mode (e)
3.1% tender 9/16/99, LOC 2,000,000 2,000,000
Nat'l. Westminster Bank
PLC, CP mode (e)
Series 1992A, 3.1% tender 5,000,000 5,000,000
8/12/99, LOC Nat'l.
Westminster Bank PLC, CP
mode (e)
Cumberland County Ind. Dev. 2,100,000 2,100,000
Auth. Rev. (Lane
Enterprises, Inc. Proj.)
Series 1994, 3.6%, LOC First
Union Nat'l. Bank of North
Carolina, VRDN (b)(e)
Dauphin County Gen. Auth. 3,600,000 3,600,000
Rev. (School District Pooled
Fing. Prog.) 3.65% (AMBAC
Insured) (BPA Commerzbank
AG) (BPA Bank of Nova
Scotia), VRDN (b)
Delaware County Gen. Oblig. 2,080,000 2,082,290
Bonds Series 1999, 3.5%
10/1/99
Delaware County Ind. Dev. 1,300,000 1,300,000
Auth. Arpt. Facilities Rev.
(United Parcel Svc. Proj.)
Series 1985, 3.8%, VRDN (b)
Delaware County Ind. Dev. 1,000,000 1,000,000
Auth. Bonds (Elec. Util.)
Series 1988 A, 3.15% tender
9/10/99 (FGIC Insured), CP
mode
Downingtown Area School 3,000,000 3,007,200
District TRAN 3.75% 6/30/00
(a)
Doylestown Hosp. Auth. 10,098,000 10,098,000
Participating VRDN Series
BTP 63, 3.95% (Liquidity
Facility Automatic Data
Processing, Inc.) (b)(f)
Erie County Ind. Dev. Auth. 1,000,000 1,000,000
Rev. (Carlisle Corp. Proj.)
Series 1993, 3.8%, LOC
SunTrust Bank of Atlanta,
VRDN (b)(e)
Lancaster Higher Ed. Auth. 1,435,000 1,435,000
College Rev. (Franklin &
Marshall College) 3.72% (BPA
Chase Manhattan Bank), VRDN
(b)
Lehigh County Ind. Dev. Auth.
Poll. Cont. Rev. (Allegheny
Elec. Coop., Inc. Proj.):
Series 1984 A, 3.3%, LOC 500,000 500,000
RaboBank Nederland Coop.
Central, VRDN (b)
Series 1984 B, 3.3%, LOC 900,000 900,000
RaboBank Nederland Coop.
Central, VRDN (b)
Montgomery County Ind. Dev.
Auth. Poll. Cont. Rev.:
(H.P. Cadwallader, Inc. 820,000 820,000
Proj.) Series 1995, 3.65%,
K&R Leasing, LOC First Union
Nat'l. Bank of North
Carolina, VRDN (b)(e)
(RJI Ltd. Partnership Proj.) 1,305,000 1,305,000
Series 1992, 3.6%, ABJ
Assoc., LOC First Union
Nat'l. Bank of North
Carolina, VRDN (b)(e)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Montgomery County Ind. Dev.
Auth. Poll. Cont. Rev.: -
continued
(Sirius Dev. Assoc. Proj.) $ 1,600,000 $ 1,600,000
3.75%, LOC PNC Bank NA, VRDN
(b)(e)
Rfdg. Bonds (Peco Energy) 1,800,000 1,800,000
Series 1994 A, 3.05% tender
8/23/99, LOC Deutsche Bank
AG, CP mode
North Pennsylvania Wtr. Auth. 12,000,000 12,000,001
Participating VRDN Series
SGA 30, 3.63% (Liquidity
Facility Societe Generale,
France) (b)(f)
Northampton County Ind. Dev.
Auth. Rev.:
Bonds (Citizens Utils. Co. 1,100,000 1,100,000
Proj.) Series 1991, 3.5%
tender 9/17/99, CP mode (e)
(Bedford Park Proj.) Series 1,765,000 1,765,000
1996 A, 3.8%, Heller
Seasonings & Ingredient,
Inc., LOC Harris Trust &
Savings Bank, Chicago, VRDN
(b)(e)
(Binney & Smith, Inc. Proj.) 2,350,000 2,350,000
Series 1997 A, 3.6%, LOC
First Nat'l. Bank of
Chicago, VRDN (b)(e)
(Ultra-Poly Corp./Portland 2,000,000 2,000,000
Ind. Park Proj.) 3.6%, LOC
PNC Bank NA, VRDN (b)(e)
(Victoria Vogue Proj.) 3.6%, 2,035,000 2,035,000
LOC PNC Bank NA, VRDN (b)(e)
Northumberland County Ind. 3,990,000 3,990,000
Dev. Auth. Rev. (Foster
Wheeler Mount Carmel, Inc.)
Series 1987 B, 3.55%, LOC
UBS AG, VRDN (b)(e)
Pennsylvania Econ. Dev. Fing.
Auth. Ind. Dev. Rev.:
(ASK Foods, Inc.) Series A 1, 285,000 285,000
3.75%, LOC PNC Bank NA,
VRDN (b)(e)
(Babcock & Wilcox Co. Proj.) 4,775,000 4,775,000
Series 1989 A 2, 3.75%, LOC
PNC Bank NA, VRDN (b)(e)
(Dodge-Regupol, Inc. Proj.) 1,200,000 1,200,000
Series D 4, 3.75%, LOC PNC
Bank NA, VRDN (b)(e)
(Esschem, Inc.) Series 1991 D 500,000 500,000
10, 3.75%, LOC PNC Bank NA,
VRDN (b)(e)
(McDowell Manufacturing Co.) 1,000,000 1,000,000
Series 1996 F 4, 3.75%, LOC
PNC Bank NA, VRDN (b)(e)
(Pappafava Proj. ) Series 150,000 150,000
1989 D 7, 3.75%, LOC PNC
Bank NA, VRDN (b)(e)
(Port Erie Plastics) Series 450,000 450,000
1989 D 9, 3.75%, LOC PNC
Bank NA, VRDN (b)(e)
(Respironics, Inc. Proj.) 600,000 600,000
Series 1989 F, 3.75%, LOC
PNC Bank NA, VRDN (b)(e)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Econ. Dev. Fing.
Auth. Ind. Dev. Rev.: -
continued
(Sun Star, Inc. Proj.) Series $ 800,000 $ 800,000
1994 A 5, 3.75%, LOC PNC
Bank NA, VRDN (b)(e)
(Suntory Wtr. Group, Inc.) 4,900,000 4,900,000
Series 1992 D, 3.75%, LOC
Wachovia Bank NA, VRDN (b)(e)
Series 1996 A 1, 3.75%, 2277 525,000 525,000
NY Assoc., LOC PNC Bank NA,
VRDN (b)(e)
Series 1996 A 2, 3.75%, 1,700,000 1,700,000
Benzels Bretzel, LOC PNC
Bank NA, VRDN (b)(e)
Series 1996 A 3, 3.75%, 800,000 800,000
Champion Rd., LOC PNC Bank
NA, VRDN (b)(e)
Series 1996 A 7, 3.75%, 675,000 675,000
Harding, LOC PNC Bank NA,
VRDN (b)(e)
Series 1996 A 8, 3.75%, 500,000 500,000
Limco, Inc., LOC PNC Bank
NA, VRDN (b)(e)
Pennsylvania Gen. Oblig.:
Bonds Second Series, 5% 2,100,000 2,114,968
11/15/99 (AMBAC Insured)
Participating VRDN Series 7,100,000 7,100,000
1995 A, 3.69% (Liquidity
Facility Citibank, New York
NA) (b)(f)
Series 1997 A, 3.05% 8/23/99 1,000,000 1,000,000
(Liquidity Facility
Bayersche Landesbank
Girozentrale), CP
Pennsylvania Higher Ed.
Assistance Agcy. Student Ln.
Rev.:
Series 1988 A, 3.6%, LOC 2,200,000 2,200,000
Student Ln. Marketing
Assoc., VRDN (b)(e)
Series 1988 B, 3.6%, LOC 3,900,000 3,900,000
Student Ln. Marketing
Assoc., VRDN (b)(e)
Series 1988 C, 3.6%, LOC 1,000,000 1,000,000
Student Ln. Marketing
Assoc., VRDN (b)(e)
Series 1988 E, 3.6%, LOC 2,700,000 2,700,000
Student Ln. Marketing
Assoc., VRDN (b)(e)
Series 1994 A, 3.6%, LOC 2,200,000 2,200,000
Student Ln. Marketing
Assoc., VRDN (b)(e)
3.6%, LOC Student Ln. 1,500,000 1,500,000
Marketing Assoc., VRDN (b)(e)
Pennsylvania Higher Edl.
Facilities Auth. Council of
Independent Colleges & Univ.
Fin. Prog. Rev. Bonds:
(Kings College) Series 1997 3,000,000 3,000,000
B4, 2.95%, tender 11/1/99,
LOC PNC Bank NA
(Rosemont College) Series B6, 2,800,000 2,800,000
2.95%, tender 11/1/99, LOC
PNC Bank NA
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Philadelphia Arpt. Rev. $ 2,000,000 $ 2,000,000
Participating VRDN Series
SG 118, 3.82% (Liquidity
Facility Societe Generale,
France) (b)(e)(f)
Philadelphia Gen. Oblig. TRAN 2,000,000 2,014,480
Series A 1999-2000, 4.25%
6/30/00
Philadelphia Hosp. & Higher
Ed. Facilities Auth. Hosp.
Rev. (Children's Hosp. Proj.):
Series 1996 A, 3.45% (BPA 1,200,000 1,200,000
Morgan Guaranty Trust Co.,
NY), VRDN (b)
3.45% (BPA Morgan Guaranty 2,400,000 2,400,000
Trust Co., NY), VRDN (b)
Philadelphia Hosp. & Higher 2,000,000 2,000,000
Ed. Facilities Health Sys.
Rev. Bonds (Jefferson Health
Sys. Proj.) Series 1999 B,
3.25%, tender 3/31/00
Philadelphia Ind. Dev. Auth. 2,100,000 2,100,000
Arpt. Rev. Participating
VRDN Series PT 221, 3.82%
(Liquidity Facility
Bayerische Hypo-und
Vereinsbank AG) (b)(e)(f)
Philadelphia Ind. Dev. Rev.:
(30th Street Station Proj.) 2,100,000 2,100,000
3.25% (MBIA Insured), VRDN
(b)(e)
(Fox Chase Cancer Ctr. Proj.) 2,400,000 2,400,000
Series 1997, 3.45%,
Institute for Cancer
Research, LOC Morgan
Guaranty Trust Co., NY, VRDN
(b)
Philadelphia Parking Auth. 2,545,000 2,552,245
Arpt. Parking. Rev. Bonds
Series 1997, 5% 9/1/99
(AMBAC Insured)
Philadelphia School District 3,000,000 3,015,900
TRAN Series B, 4% 6/30/00,
LOC Mellon Bank NA,
Pittsburgh
Red Lion Area School District 2,500,000 2,507,225
TRAN 3.75% 6/30/00 (a)
Schuylkill County Ind. Dev. 2,500,000 2,500,000
Auth. Resource Recovery Rev.
Rfdg. (Northeastern Pwr.
Co. Proj.) Series 1997 B,
3.5%, LOC Cr. Local de
France, VRDN (b)(e)
Schuylkill County Ind. Dev.
Auth. Rev.:
(Craftex Mills, Inc. Proj.) 3,800,000 3,800,000
Series 1996, 3.6%, LOC First
Union Nat'l. Bank of North
Carolina, VRDN (b)(e)
(Metal Sales Manufacturing 900,000 900,000
Corp.) Series 1995, 3.72%,
LOC Star Bank NA, VRDN (b)(e)
(Prime Packaging, Inc. Proj.) 1,610,000 1,610,000
Series 1995, 3.6%, LOC First
Union Nat'l. Bank of North
Carolina, VRDN (b)(e)
Temple Univ. Commonwealth 3,000,000 3,000,000
Higher Ed. BAN 3.15% 5/12/00
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Venango Ind. Dev. Auth.
Resouce Recovery Rev. Bonds
(Scrubgrass Proj.):
Series 1990 B:
3.05% tender 9/8/99, LOC $ 1,400,000 $ 1,400,000
Nat'l. Westminster Bank PLC,
CP mode (e)
3.2% tender 9/15/99, LOC 1,500,000 1,500,000
Nat'l. Westminster Bank
PLC, CP mode (e)
Series 1993, 3.05% tender 2,000,000 2,000,000
9/8/99, LOC Nat'l.
Westminster Bank PLC, CP
mode (e)
198,602,309
SHARES
OTHER - 2.1%
Municipal Central Cash Fund $ 4,241,000 $ 4,241,000
(c)(d)
TOTAL INVESTMENT IN $ 202,843,309
SECURITIES - 100%
Total Cost for Income Tax Purposes $ 202,843,340
</TABLE>
SECURITY TYPE ABBREVIATIONS
BAN - BOND ANTICIPATION NOTE
CP - COMMERCIAL PAPER
TRAN - TAX AND REVENUE
ANTICIPATION NOTE
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) Security purchased on a delayed delivery or when-issued basis.
(b) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(c) Information in this report regarding holdings by state and
security types does not reflect the holdings of the Municipal Central
Cash Fund. A listing of the Municipal Central Cash Fund's holdings as
of its most recent fiscal period end is available upon request.
(d) At the period end, the seven-day yield of the Municipal Central
Cash Fund was 3.43%. The yield refers to the income earned by
investing in the fund over the seven-day period, expressed as an
annual percentage.
(e) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(f) Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At December 31, 1998, the fund had a capital loss carryforward of
approximately $53,000 of which $17,000, $10,000 and $26,000 will
expire on December 31, 2002, 2003 and 2004, respectively.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 202,843,309
value - See accompanying
schedule
Receivable for fund shares 457,805
sold
Interest receivable 1,002,100
TOTAL ASSETS 204,303,214
LIABILITIES
Payable to custodian bank $ 10,366
Payable for investments 5,030,380
purchased Regular delivery
Delayed delivery 5,514,425
Payable for fund shares 269,672
redeemed
Distributions payable 13,831
Accrued management fee 78,489
Other payables and accrued 2,914
expenses
TOTAL LIABILITIES 10,920,077
NET ASSETS $ 193,383,137
Net Assets consist of:
Paid in capital $ 193,435,417
Accumulated net realized gain (52,280)
(loss) on investments
NET ASSETS, for 193,433,270 $ 193,383,137
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($193,383,137
(divided by) 193,433,270
shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1999 (UNAUDITED)
INTEREST INCOME $ 3,184,524
EXPENSES
Management fee $ 496,316
Non-interested trustees' 345
compensation
Total expenses before 496,661
reductions
Expense reductions (3,563) 493,098
NET INTEREST INCOME 2,691,426
NET REALIZED GAIN (LOSS) ON 1,737
INVESTMENTS
NET INCREASE IN NET ASSETS $ 2,693,163
RESULTING FROM OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, 1998
1999 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 2,691,426 $ 6,753,371
Net realized gain (loss) 1,737 6,043
NET INCREASE (DECREASE) IN 2,693,163 6,759,414
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (2,691,426) (6,753,371)
from net interest income
Share transactions at net 64,405,263 150,634,446
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 2,554,248 6,502,673
distributions from net
interest income
Cost of shares redeemed (90,064,700) (170,125,710)
NET INCREASE (DECREASE) IN (23,105,189) (12,988,591)
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) (23,103,452) (12,982,548)
IN NET ASSETS
NET ASSETS
Beginning of period 216,486,589 229,469,137
End of period $ 193,383,137 $ 216,486,589
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED JUNE 30, 1999 YEARS ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .013 .031 .033 .032 .035
Operations Net interest
income
Less Distributions
From net interest income (.013) (.031) (.033) (.032) (.035)
Net asset value, end of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
TOTAL RETURN B, C 1.36% 3.15% 3.36% 3.21% 3.56%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 193,383 $ 216,487 $ 229,469 $ 242,386 $ 241,643
(000 omitted)
Ratio of expenses to average .50% A .50% .50% .50% .50%
net assets
Ratio of expenses to average .50% A .50% .50% .48% D .50%
net assets after expense
reductions
Ratio of net interest income 2.71% A 3.10% 3.31% 3.17% 3.50%
to average net assets
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED DECEMBER 31,
1994
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000
period
Income from Investment .026
Operations Net interest
income
Less Distributions
From net interest income (.026)
Net asset value, end of $ 1.000
period
TOTAL RETURN B, C 2.61%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 257,608
(000 omitted)
Ratio of expenses to average .50%
net assets
Ratio of expenses to average .50%
net assets after expense
reductions
Ratio of net interest income 2.58%
to average net assets
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1999 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Pennsylvania Municipal Income Fund (the income fund) is a fund
of Fidelity Municipal Trust. Spartan Pennsylvania Municipal Money
Market Fund (the money market fund) is a fund of Fidelity Municipal
Trust II. Each trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company. Fidelity Municipal Trust and Fidelity Municipal Trust II
(the trusts) are organized as a Massachusetts business trust and a
Delaware business trust, respectively. Each fund is authorized to
issue an unlimited number of shares. The financial statements have
been prepared in conformity with generally accepted accounting
principles which require management to make certain estimates and
assumptions at the date of the financial statements. Each fund may be
affected by economic and political developments in the state of
Pennsylvania. The following summarizes the significant accounting
policies of the income fund and the money market fund:
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Securities for
which quotations are not readily available are valued at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities with remaining maturities of sixty days or less
for which quotations are not readily available are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, each fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for the fiscal year. The schedules of investments
include information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of original issue discount, is accrued as
earned. For the money market fund, accretion of market discount
represents unrealized gain until realized at the time of a security
disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for futures transactions, market discount and losses
deferred due to futures. The income fund also utilized earnings and
profits distributed to shareholders on redemption of shares as a part
of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and
may affect the per-share allocation between net interest income and
realized and unrealized gain (loss). Accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences that will reverse in a subsequent period. Any
taxable gain remaining at fiscal year end is distributed in the
following year.
SHORT-TERM TRADING (REDEMPTION) FEES. Shares held in the income fund
less than 180 days are subject to a short-term trading fee equal to
..50% of the proceeds of the redeemed shares. The fee, which is
retained by the fund, is accounted for as an addition to paid in
capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission (SEC), the funds may invest in
the Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc. (FIMM), an affiliate of Fidelity
Management & Research Company (FMR). The Cash Fund is an open-end
money market fund available only to investment companies and other
accounts managed by FMR and its affiliates. The Cash Fund seeks
preservation of capital, liquidity, and current income by investing in
high-quality, short-term municipal securities of various states and
municipalities. Income distributions from the Cash Fund are declared
daily and paid monthly from net interest income. Income distributions
earned by the funds are recorded as interest income in the
accompanying financial statements.
WHEN-ISSUED SECURITIES. Each fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying
securities is fixed at the time the transaction is negotiated. The
market values of the securities purchased on a when-issued or forward
commitment basis are identified as such in each applicable fund's
schedule of investments. Each fund may receive compensation for
interest
2. OPERATING POLICIES -
CONTINUED
WHEN-ISSUED SECURITIES - CONTINUED
forgone in the purchase of a when-issued security. With respect to
purchase commitments, each fund identifies securities as segregated in
its records with a value at least equal to the amount of the
commitment. Losses may arise due to changes in the market value of the
underlying securities, if the counterparty does not perform under the
contract, or if the issuer does not issue the securities due to
political, economic, or other factors.
FUTURES CONTRACTS. The income fund may use futures contracts to manage
its exposure to the bond market and to fluctuations in interest rates.
Buying futures tends to increase the fund's exposure to the underlying
instrument, while selling futures tends to decrease the fund's
exposure to the underlying instrument or hedge other fund investments.
Losses may arise from changes in the value of the underlying
instruments or if the counterparties do not perform under the
contracts' terms. Gains (losses) are realized upon the expiration or
closing of the futures contracts. Futures contracts are valued at the
settlement price established each day by the board of trade or
exchange on which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $43,519,684 and $35,474,244, respectively.
The market value of futures contracts opened and closed during the
period amounted to $2,939,213 and $7,906,641, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE.
INCOME FUND. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the
fund. The group fee rate is the weighted average of a series of rates
and is based on the monthly average net assets of all the mutual funds
advised by FMR. The rates ranged from .1100% to .3700% for the period.
The annual individual fund fee rate is 0.25%. In the event that these
rates were lower than the contractual rates in effect during the
period, FMR voluntarily implemented the above rates, as they resulted
in the same or a lower management fee. For the period, the management
fee was equivalent to an annualized rate of .38% of average net assets
MONEY MARKET FUND. As the fund's investment adviser, FMR pays all
expenses, except the compensation of the non-interested Trustees and
certain exceptions such as interest, taxes, brokerage commissions and
extraordinary expenses. FMR receives a fee that is computed daily at
an annual rate of .50% of the fund's average net assets.
FMR also bears the cost of providing shareholder services to the money
market
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MONEY MARKET FUND - CONTINUED
fund. To offset the cost of providing these services, FMR or its
affiliates collected certain transaction fees from the money market
fund's shareholders which amounted to $2,106 for the period.
SUB-ADVISER FEE. As the money market and the income (effective January
1, 1999) funds' investment sub-adviser, FIMM, a wholly owned
subsidiary of FMR, receives a fee from FMR of 50% of the management
fee payable to FMR. The fee is paid prior to any voluntary expense
reimbursements which may be in effect.
TRANSFER AGENT AND ACCOUNTING FEES. Effective June 14, 1999 for the
income fund Citibank, N.A.(Citibank) replaced UMB Bank, n.a. as the
custodian, transfer agent and shareholder servicing agent for the
income fund. Citibank has entered into a sub-contract with Fidelity
Service Company, Inc. (FSC), an affiliate of FMR, under which FSC
performs the activities associated with the fund's transfer and
shareholder servicing agent and accounting functions. The income fund
pays account fees and asset-based fees that vary according to account
size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. The
accounting fee is based on the level of average net assets for the
month plus out-of-pocket expenses.
For the period, the transfer agent fees were equivalent to an
annualized rate of .08% of average net assets for the income fund.
MONEY MARKET INSURANCE. Pursuant to an Exemptive Order issued by the
SEC, the money market fund, along with other money market funds
advised by FMR or its affiliates, has entered into insurance
agreements with FIDFUNDS Mutual Limited (FIDFUNDS), an affiliated
mutual insurance company, effective January 1, 1999. FIDFUNDS provides
limited coverage for certain loss events including issuer default as
to payment of principal or interest and bankruptcy or insolvency of a
credit enhancement provider. The insurance does not cover losses
resulting from changes in interest rates, ratings downgrades or other
market conditions. The money market fund may be subject to a special
assessment of up to approximately 2.5 times the fund's annual gross
premium if covered losses exceed certain levels. During the period,
FMR has borne the cost of the fund's premium payable to FIDFUNDS.
5. EXPENSE REDUCTIONS.
The income fund and FMR, on behalf of the money market fund, has
entered into arrangements with its custodian and transfer agent
whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of each applicable fund's expenses. During
the period, the income fund's custodian and transfer agent fees were
reduced by $4,823 and $656, respectively, and the money market fund's
expenses were reduced by $3,563 under these arrangements.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity Automated Service Telephone provides a single toll-free
number to access account balances, positions, quotes and trading. It's
easy to navigate the service, and on your first call, the system will
help you create a personal identification number (PIN) for security.
(PHONE_GRAPHIC)FIDELITY AUTOMATED
SERVICE TELEPHONE
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
SUB-ADVISER, MONEY MARKET FUND
Fidelity Investments Money
Management, Inc. (FIMM),
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning Jr., Vice President
Dwight D. Churchill, Vice President - INCOME FUND
Boyce I. Greer, Vice President -
MONEY MARKET FUND
Christine J. Thompson, Vice President -
INCOME FUND
Diane M. McLaughlin, Vice President - MONEY MARKET FUND
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
* INDEPENDENT TRUSTEES
PFR-SANN-0899 82085
1.705577.101
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Citibank, N.A.
New York, NY
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Citibank, N.A.
New York, NY
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
Fidelity Automated
Service Telephone 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02108
www.fidelity.com
