SPARTAN(REGISTERED TRADEMARK)
MICHIGAN MUNICIPAL INCOME
FUND
AND
FIDELITY (REGISTERED TRADEMARK)
MICHIGAN MUNICIPAL MONEY
MARKET FUND
ANNUAL REPORT
DECEMBER 31, 1999
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 19 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
FIDELITY MICHIGAN MUNICIPAL
MONEY MARKET FUND
PERFORMANCE 23 How the fund has done over
time.
FUND TALK 25 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 27 A summary of major shifts in
the fund's investments over
the past six months and one
year.
INVESTMENTS 28 A complete list of the fund's
investments.
FINANCIAL STATEMENTS 35 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 39 Notes to the financial
statements.
REPORT OF INDEPENDENT 43 The auditors' opinion.
ACCOUNTANTS
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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 1-800-544-6666
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
The NASDAQ, S&P 500(Registered trademark) and Dow Jones Industrial
Average all closed 1999 at record highs. Investors should note,
however, that much of the year's returns were driven by a single
sector: technology. Most other stocks were flat or down in 1999.
Likewise, bond investors had little cause to celebrate at year's end.
Steadily rising interest rates left the benchmark 30-year Treasury at
its highest yield level in two years.
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 1-800-544-6666, 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 total returns would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SPARTAN MI MUNICIPAL INCOME -2.63% 33.89% 81.91%
LB Michigan Municipal Bond -2.28% 40.90% n/a
Michigan Municipal Debt Funds -4.05% 32.26% 83.22%
Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 one year
average represents a peer group of 48 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 DECEMBER 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SPARTAN MI MUNICIPAL INCOME -2.63% 6.01% 6.17%
LB Michigan Municipal Bond -2.28% 7.10% n/a
Michigan Municipal Debt Funds -4.05% 5.74% 6.24%
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
1989/12/31 10000.00 10000.00
1990/01/31 9938.32 9952.70
1990/02/28 10023.03 10041.28
1990/03/31 10018.94 10044.29
1990/04/30 9846.03 9971.57
1990/05/31 10079.56 10189.25
1990/06/30 10165.85 10278.81
1990/07/31 10308.54 10429.91
1990/08/31 10152.57 10278.47
1990/09/30 10203.17 10284.33
1990/10/31 10299.84 10470.89
1990/11/30 10501.52 10681.46
1990/12/31 10514.86 10727.92
1991/01/31 10614.77 10871.89
1991/02/28 10694.13 10966.47
1991/03/31 10715.32 10970.42
1991/04/30 10893.24 11116.33
1991/05/31 10943.30 11215.15
1991/06/30 10927.13 11204.05
1991/07/31 11099.52 11340.52
1991/08/31 11232.90 11489.87
1991/09/30 11356.20 11639.47
1991/10/31 11479.79 11744.22
1991/11/30 11522.05 11776.99
1991/12/31 11780.54 12029.72
1992/01/31 11823.20 12057.15
1992/02/29 11842.94 12061.01
1992/03/31 11856.38 12065.47
1992/04/30 11961.46 12172.86
1992/05/31 12091.07 12316.13
1992/06/30 12303.33 12522.79
1992/07/31 12752.53 12898.23
1992/08/31 12572.47 12772.47
1992/09/30 12657.83 12856.00
1992/10/31 12443.94 12729.63
1992/11/30 12748.33 12957.62
1992/12/31 12903.97 13089.91
1993/01/31 13093.10 13242.15
1993/02/28 13619.38 13721.12
1993/03/31 13463.93 13576.08
1993/04/30 13607.66 13713.07
1993/05/31 13698.34 13790.13
1993/06/30 13933.55 14020.29
1993/07/31 13923.28 14038.66
1993/08/31 14253.29 14330.94
1993/09/30 14433.62 14494.17
1993/10/31 14455.57 14522.15
1993/11/30 14361.25 14394.21
1993/12/31 14688.74 14698.07
1994/01/31 14888.24 14865.92
1994/02/28 14458.30 14480.89
1994/03/31 13804.72 13891.23
1994/04/30 13873.29 14009.03
1994/05/31 13944.29 14130.49
1994/06/30 13903.34 14044.15
1994/07/31 14148.36 14301.58
1994/08/31 14183.40 14351.06
1994/09/30 13991.81 14140.39
1994/10/31 13701.63 13889.26
1994/11/30 13270.30 13638.14
1994/12/31 13586.38 13938.31
1995/01/31 13995.10 14336.67
1995/02/28 14398.46 14753.58
1995/03/31 14278.66 14923.10
1995/04/30 14306.32 14940.71
1995/05/31 14767.56 15417.47
1995/06/30 14596.10 15283.33
1995/07/31 14689.31 15428.22
1995/08/31 14887.93 15623.85
1995/09/30 15003.13 15722.75
1995/10/31 15227.55 15951.36
1995/11/30 15518.95 16215.99
1995/12/31 15680.46 16371.83
1996/01/31 15789.52 16495.43
1996/02/29 15662.45 16384.09
1996/03/31 15429.94 16174.70
1996/04/30 15372.63 16128.93
1996/05/31 15358.03 16122.47
1996/06/30 15535.40 16298.05
1996/07/31 15672.92 16446.36
1996/08/31 15642.96 16442.41
1996/09/30 15821.15 16672.61
1996/10/31 15988.17 16861.17
1996/11/30 16281.33 17169.73
1996/12/31 16210.12 17097.62
1997/01/31 16221.92 17129.94
1997/02/28 16384.55 17287.19
1997/03/31 16150.11 17056.75
1997/04/30 16275.68 17199.52
1997/05/31 16505.86 17458.20
1997/06/30 16689.62 17644.13
1997/07/31 17154.80 18132.87
1997/08/31 16972.47 17962.96
1997/09/30 17202.57 18176.18
1997/10/31 17302.03 18293.06
1997/11/30 17414.91 18400.62
1997/12/31 17672.34 18669.08
1998/01/31 17836.39 18861.75
1998/02/28 17840.28 18867.41
1998/03/31 17852.49 18884.01
1998/04/30 17785.29 18798.84
1998/05/31 18028.79 19096.43
1998/06/30 18099.66 19171.67
1998/07/31 18142.03 19219.79
1998/08/31 18418.78 19516.74
1998/09/30 18646.75 19759.92
1998/10/31 18594.55 19759.52
1998/11/30 18666.41 19828.88
1998/12/31 18681.93 19878.84
1999/01/31 18883.42 20115.20
1999/02/28 18758.03 20027.30
1999/03/31 18768.80 20055.14
1999/04/30 18808.58 20105.08
1999/05/31 18689.90 19988.67
1999/06/30 18405.91 19700.83
1999/07/31 18465.61 19772.54
1999/08/31 18296.73 19614.36
1999/09/30 18338.41 19622.40
1999/10/31 18168.04 19409.70
1999/11/30 18344.27 19616.22
1999/12/31 18190.89 19470.07
IMATRL PRASUN SHR__CHT 19991231 20000111 113310 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Spartan Michigan Municipal Income Fund on December 31,
1989. As the chart shows, by December 31, 1999, the value of the
investment would have grown to $18,191 - an 81.91% 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 $19,470 - a 94.70%
increase.
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.
TOTAL RETURN COMPONENTS
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
Dividend returns 4.62% 4.91% 5.27% 5.63% 6.15%
Capital returns -7.25% 0.80% 3.75% -2.25% 9.26%
Total returns -2.63% 5.71% 9.02% 3.38% 15.41%
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 DECEMBER 31, PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
1999
Dividends per share 4.79(cents) 27.99(cents) 55.13(cents)
Annualized dividend rate 5.16% 5.01% 4.86%
30-day annualized yield 5.08% - -
30-day annualized 8.30% - -
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 $10.94 over the past one
month, $11.08 over the past six months and $11.34 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
A combination of three interest-rate
hikes by the Federal Reserve board,
near-constant inflation
expectations, the continuation of a
strong U.S. equity market and weak
institutional demand all contributed
to a decline in the municipal bond
market in 1999. For the 12-month
period ending December 31, 1999,
the Lehman Brothers Municipal
Bond Index - an index of over
35,000 investment-grade, fixed-rate,
tax-exempt bonds - fell 2.06%.
Retail investors dominated demand,
in contrast to the more typical
institutional buying of recent years.
In comparison to other fixed-income
investments, municipal bonds had
mixed results. Relative to long-term
government bonds, muni
performance was stellar, as the total
return on 30-year Treasuries was the
lowest - according to Morningstar
- - since the U.S. Treasury started
regular long bond auctions in 1977.
For the one-year period ending
December 31, 1999, the Lehman
Brothers Long-Term Government
Bond Index fell 8.73%. Spread
sectors fared somewhat better than
their municipal counterparts. The
Lehman Brothers Corporate Bond
Index was down 1.96% for the
period, but mortgage securities
were one of the better domestic debt
offerings of 1999, with a one-year
return of 1.86% according to the
Lehman Brothers Mortgage-Backed
Securities Index. Meanwhile, the
Lehman Brothers Aggregate Bond
Index - a broad measure of the
taxable bond market - posted a
marginally negative return of -0.82%.
(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. For the 12-month period that ended December 31, 1999, the fund had
a total return of -2.63%. To get a sense of how the fund did relative
to its competitors, the Michigan municipal debt funds average returned
- -4.05% for the same 12-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 -2.28% for the same 12-month period.
Q. RISING INTEREST RATES MADE 1999 PRETTY DIFFICULT FOR ALL BONDS,
INCLUDING MUNICIPAL SECURITIES. WERE THERE ANY TYPES OF MUNICIPALS
THAT HELD UP WELL AGAINST THE UNFAVORABLE BACKDROP?
A. Yes, there were. 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 their face
- - or par - value. The primary reason why I favored them is because
their premium gives them DE MINIMIS protection. This protects certain
premium 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
purchase them at attractive prices compared to similarly rated,
comparable maturity bonds with coupons at or below prevailing rates.
Separately, the fund was helped by its emphasis on intermediate bonds,
with maturities ranging from five to 15 years. Although they went in
and out of favor, they ended the year posting better returns than
longer-maturity bonds. Finally, bonds issued by the Michigan Hospital
Finance Authority for Genesys Regional Hospital performed extremely
well when that hospital was acquired by the higher-rated Ascension
Health Systems.
Q. WERE THERE ANY BONDS OR STRATEGIES THAT PROVED PARTICULARLY
DISAPPOINTING DURING THE PERIOD?
A. With the exception of Genesys Regional Hospital bonds, the fund's
health care holdings performed poorly and detracted from performance.
A number of factors weighed on hospital bonds nationwide, including
cutbacks in Medicare reimbursements, declining managed care payments
and the municipal bond insurance industry's reluctance to insure
lower-quality hospital bonds. In addition to those problems, Michigan
hospitals faced other challenges, including a more competitive
operating environment, particularly in Detroit, than the nation as a
whole.
Q. HOW DID YOU MANAGE THE FUND'S DURATION - WHICH MEASURES ITS
INTEREST-RATE SENSITIVITY?
A. I kept the fund's duration in line with the intermediate municipal
market as a whole, as measured by the Lehman Brothers Michigan
Municipal Bond Index. At the end of the period, the fund's duration
was 7.1 years, which remained in line with the Lehman Brothers index.
Q. WHAT CHANGES DID YOU MAKE TO THE FUND'S HOLDINGS SINCE THE LAST
REPORT TO SHAREHOLDERS SIX MONTHS AGO?
A. One change had to do with the improvement in the fund's overall
credit quality. I added higher-rated bonds from issuers that are less
economically sensitive because they provide essential services, such
as water, sewer and transportation. Given that more economically
sensitive bonds - such as general obligation bonds - offered only a
small amount of additional yield, there was really no penalty for
getting some measure of protection against a potential economic
slowdown.
Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET?
A. The main factor affecting the future of municipals probably will
continue to be - as it has been over the past year - the direction of
interest rates. But since I don't spend time on interest-rate
forecasting, I'll look for attractively priced bonds that I believe
can perform well in relation to other bonds, no matter what the
interest-rate backdrop. From a technical standpoint, the municipal
market is in reasonably good shape. Rising interest rates have
curtailed the supply of new issuance, and refundings - or refinancings
- - of existing debt have slowed. Given that municipal bonds currently
offer attractive values relative to U.S. Treasury securities, I think
we could see better demand in the months to come. From a more local
standpoint, the Michigan economy continues to enjoy steady growth,
which bodes well for the credit quality of bonds issued in the state.
That said, I think that conditions now provide attractive
opportunities to buy bonds that will provide some measure of
protection against a slowing economy, if that were to occur.
NORM LIND ON SUPPLY AND
DEMAND CHARACTERISTICS OF
THE MUNICIPAL MARKET:
"After the direction of interest
rates, supply and demand is
probably the most important
factor determining municipal
bond performance. As a portfolio
manager, I try to take advantage of
seasonal shifts, selling bonds when
supply is light and prices are fairly
advantageous, and buying when
supply is heavy and prices are
relatively cheap. For example,
municipal supply generally slows
down during the summer when
market participants - such as
investment bankers, dealers,
investors and others - go on
vacation, although supply
generally picks up again in the
remaining months of the year.
What's more interesting, in my view,
are demand patterns. With the
help of Fidelity's research team, I
look for opportunities to exploit
changes in investor activity,
buying after certain types of
investors have unloaded
municipal bonds and prices are
attractive, and selling when there
is strong demand."
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 December 31,
1999, more than $425
million
MANAGER: Norm Lind, since
1998; manager, various
Fidelity and Spartan municipal
income funds; joined Fidelity
in 1986
(checkmark)
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.
SPARTAN MICHIGAN MUNICIPAL INCOME FUND
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF
DECEMBER 31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
Health Care 25.1 25.3
General Obligations 18.5 19.6
Escrowed/Pre-Refunded 10.9 8.5
Special Tax 9.2 8.8
Electric Utilities 8.1 10.2
AVERAGE YEARS TO MATURITY AS
OF DECEMBER 31, 1999
6 MONTHS AGO
Years 13.7 13.4
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF DECEMBER 31,
1999
6 MONTHS AGO
Years 7.1 6.7
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 DECEMBER 31, 1999 AS OF JUNE 30, 1999
Row: 1, Col: 1, Value: 58.4
Row: 1, Col: 2, Value: 35.2
Row: 1, Col: 3, Value: 4.6
Row: 1, Col: 4, Value: 1.6
Row: 1, Col: 5, Value: 0.2
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
Aaa 58.4%
Aa, A 35.2%
Baa 4.6%
Not Rated 1.6%
Short-term
Investments 0.2%
Aaa 48.2%
Aa, A 39.1%
Baa 7.5%
Not Rated 1.5%
Short-term
Investments 3.7%
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.
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
SPARTAN MICHIGAN MUNICIPAL INCOME FUND
INVESTMENTS DECEMBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 98.9%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - 98.2%
Anchor Bay School District:
Rfdg. 4.75% 5/1/26 (FGIC Aaa $ 2,250,000 $ 1,775,025
Insured)
5.5% 5/1/18 (MBIA Insured) Aaa 2,720,000 2,795,616
(Pre-Refunded to 5/1/07 @
100) (d)
Brighton Area School District Aaa 10,000,000 4,011,600
Rfdg. (Cap. Appreciation)
Series II, 0% 5/1/15 (AMBAC
Insured)
Central Michigan Univ. Rev. Aaa 1,750,000 1,805,003
5.5% 10/1/17 (FGIC Insured)
(Pre-Refunded to 4/1/07 @
101) (d)
Clarkston Cmnty. Schools Aaa 2,600,000 2,699,476
5.55% 5/1/10 (FGIC Insured)
(Pre-Refunded to 5/1/05 @
101) (d)
Clintondale Cmnty. Schools Aa2 2,205,000 2,157,372
Rfdg. 5.5% 5/1/15
Comstock Pub. Schools (Cap. Aaa 1,300,000 988,611
Appreciation) 0% 5/1/05 (FSA
Insured)
Davison Cmnty. School Aaa 1,000,000 951,170
District 5.375% 5/1/16 (FGIC
Insured)
Dearborn Swr. Disp. Sys. Rev. Aaa 1,625,000 1,565,476
Series A, 5.1% 4/1/12 (MBIA
Insured)
Detroit Convention Facilities A 12,700,000 11,994,388
Rev. Rfdg. (Cobo Hall
Expansion Proj.) 5.25%
9/30/12
Detroit Gen. Oblig. Rfdg.
(Distributable State Aid
Proj.):
5.2% 5/1/07 (AMBAC Insured) Aaa 4,000,000 4,028,600
5.25% 5/1/09 (AMBAC Insured) Aaa 4,500,000 4,503,870
Detroit Local Dev. Fin. Auth. A2 3,000,000 2,761,110
Rfdg. Sr. Series A, 5.375%
5/1/18
Detroit Swr. Disp. Rev.:
(Wtr. Supply Sys. Proj.) Aaa 1,885,000 1,974,915
Series A, 6% 7/1/05 (MBIA
Insured)
Rfdg. Series B, 6.25% 7/1/07 Aaa 1,130,000 1,205,733
(MBIA Insured)
Series A, 5.75% 7/1/26 (FGIC Aaa 10,000,000 9,505,300
Insured)
Detroit Wtr. Supply Sys. Rev.:
Rfdg.:
6.2% 7/1/04 (FGIC Insured) Aaa 3,795,000 4,002,169
6.5% 7/1/15 (FGIC Insured) Aaa 6,000,000 6,462,600
Sr. Lien Series A:
5.75% 7/1/26 (FGIC Insured) Aaa 2,000,000 1,898,540
5.875% 7/1/29 (FGIC Insured) Aaa 3,000,000 2,888,490
Eastern Michigan Univ. Rev. Aaa 1,000,000 1,030,150
Rfdg. 5.9% 6/1/02 (AMBAC
Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Ferndale School District Aaa $ 1,300,000 $ 1,372,358
Rfdg. 6% 5/1/09 (FGIC
Insured)
Flint Hosp. Bldg. Auth. Rev. Baa1 5,570,000 5,632,663
(Hurley Med. Ctr. Proj.)
6.5% 7/1/20 (Pre-Refunded to
7/1/00 @ 100) (d)
Fowlerville Cmnty. School Aaa 2,500,000 1,972,250
District Rfdg. 4.75% 5/1/26
(FSA Insured)
Grand Rapids San. Swr. Sys.
Rev.:
Rfdg. Series A, 5.375% 1/1/10 Aaa 1,000,000 1,006,040
(FGIC Insured)
Rfdg. & Impt. Series A, Aaa 1,000,000 1,007,610
5.375% 1/1/09 (FGIC Insured)
Greater Detroit Resource
Recovery Auth. Rev. Rfdg.:
Series A, 6.25% 12/13/05 Aaa 4,000,000 4,234,280
(AMBAC Insured)
Series B, 6.25% 12/13/05 Aaa 2,000,000 2,117,140
(AMBAC Insured)
Hastings School District:
5.625% 5/1/18 (FGIC Insured) Aaa 1,000,000 1,041,730
(Pre-Refunded to 5/1/05 @
101) (d)
Howell Pub. Schools Rfdg. Aaa 1,130,000 640,789
(Cap. Appreciation) 0%
5/1/10 (AMBAC Insured)
Huron Valley School District Aaa 5,830,000 3,098,528
Rfdg. (Cap. Appreciation) 0%
5/1/11 (FGIC Insured)
Imlay City Cmnty. School Aaa 1,375,000 988,529
District Rfdg. (Cap.
Appreciation) (School Bldg.
& Site Proj.) 0% 5/1/06
(FGIC Insured)
Kent County Rfdg. (Refuse Aa2 2,000,000 1,948,420
Disp. Sys. Proj.) Series A,
5% 11/1/10
Kent Hosp. Fin. Auth. Hosp.
Facilities Rev. Rfdg.:
(Butterworth Hosp. Proj.) Aa3 3,685,000 4,149,715
Series A, 7.25% 1/15/13
(Spectrum Health Proj.)
Series A:
5.375% 1/15/10 Aa3 2,200,000 2,156,308
5.375% 1/15/11 Aa3 2,420,000 2,349,336
5.375% 1/15/12 Aa3 2,505,000 2,406,353
Lakeshore Pub. Schools Aaa 1,000,000 1,095,770
(Berrien County Proj.) 6.8%
5/1/06 (MBIA Insured)
Lansing Bldg. Auth. Rev. 0% Aaa 3,000,000 1,493,760
6/1/12 (AMBAC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Lowell Area Schools (Cap. Aaa $ 11,375,000 $ 4,251,065
Appreciation) 0% 5/1/15
(FGIC Insured) (Pre-Refunded
to 5/1/05 @ 49.0888) (d)
Manistee Area Pub. Schools:
5.875% 5/1/24 (FGIC Insured) Aaa 1,700,000 1,653,743
5.9% 5/1/29 (FGIC Insured) Aaa 1,250,000 1,214,363
Marquette City Hosp. Fin. Aaa 2,750,000 2,806,568
Auth. Rev. Rfdg. (Marquette
Gen. Hosp. Proj.) Series D,
5.875% 4/1/11 (FSA Insured)
Michigan Bldg. Auth. Rev.:
(Cap. Appreciation) Series I:
0% 10/1/01 (Escrowed to Aaa 1,000,000 921,300
Maturity) (d)
0% 10/1/02 (Escrowed to Aaa 2,000,000 1,750,720
Maturity) (d)
0% 10/1/04 (Escrowed to Aaa 6,820,000 5,374,501
Maturity) (d)
Rfdg. Series I, 6.25% 10/1/20 Aa2 1,500,000 1,536,885
Series II, 6.75% 10/1/11 Aa2 1,000,000 1,050,650
Michigan Comprehensive Trans. Aa3 1,275,000 1,320,479
Rev. Rfdg. Series B, 5.75%
5/15/04
Michigan Gen. Oblig. (College Aa1 1,045,000 970,648
Savings Prog.) 0% 8/1/01
Michigan Hosp. Fin. Auth. Rev.:
(Ascension Health Cr. Proj.)
Series A:
5.75% 11/15/18 (MBIA Insured) Aaa 5,000,000 4,842,350
6% 11/15/19 (MBIA Insured) Aaa 17,000,000 16,840,871
(Daughters of Charity Health Aa2 1,000,000 1,061,260
Sys. Proj.) 7% 11/1/21
(Pre-Refunded to 11/1/01 @
102) (d)
(Mercy Health Svcs. Proj.):
Series Q:
5.375% 8/15/26 (AMBAC Insured) Aaa 2,000,000 1,788,420
6% 8/15/08 (AMBAC Insured) Aaa 1,130,000 1,179,494
6% 8/15/10 (AMBAC Insured) Aaa 1,265,000 1,311,818
Series R:
5.25% 8/15/10 (AMBAC Insured) Aaa 2,195,000 2,164,051
5.375% 8/15/16 (AMBAC Insured) Aaa 1,000,000 936,530
(Presbyterian Villages Proj.):
6.4% 1/1/15 - 1,000,000 948,560
6.5% 1/1/25 - 1,225,000 1,125,812
(Saint John Hosp. & Med. Ctr.
Proj.) Series A:
6% 5/15/08 (AMBAC Insured) Aaa 1,615,000 1,712,821
6% 5/15/09 (AMBAC Insured) Aaa 1,710,000 1,814,156
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Michigan Hosp. Fin. Auth.
Rev.: - continued
Rfdg.:
(Bay Med. Ctr. Proj.) Series A3 $ 2,880,000 $ 2,986,675
A, 8.25% 7/1/12
(Botsford Hosp. Proj.) Series Aaa 2,410,000 2,404,698
A, 5% 2/15/05 (MBIA Insured)
(Crittenton Hosp. Proj.) A1 6,520,000 5,876,215
Series A, 5.25% 3/1/14
(Daughters of Charity Health Aa2 2,750,000 2,797,548
Sys. Proj.) 5.5% 11/1/05
(Escrowed to Maturity) (d)
(Detroit Med. Ctr. Oblig. Baa2 6,000,000 5,460,300
Group Proj.) Series A, 6.5%
8/15/18
(Genesys Reg'l. Med. Hosp. Baa2 3,000,000 2,867,520
Proj.) Series A, 5.5%
10/1/18 (Escrowed to
Maturity) (d)
(McLaren Oblig. Group Proj.) A1 9,250,000 8,553,475
Series A, 5.375% 10/15/13
(Mercy Health Svcs. Proj.) Aa3 1,250,000 1,295,213
Series T, 6% 8/15/06
(Pontiac Osteopathic Hosp. Baa2 3,000,000 2,553,150
Proj.) Series A, 6% 2/1/24
(Sisters of Mercy Health Aaa 9,950,000 9,696,176
Corp. Proj.) 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 4,517,057
7.55% 4/1/23 AA- 4,750,000 4,903,520
Michigan Hsg. Dev. Auth.
Single Family Mtg. Rev.:
Series A:
5.15% 12/1/26 (AMBAC Insured) Aaa 2,050,000 2,049,529
(c)
6.8% 12/1/16 AA+ 2,870,000 2,877,462
Series C:
5.95% 12/1/14 AA+ 2,500,000 2,486,250
6% 12/1/16 AA+ 2,500,000 2,488,325
Michigan Job Dev. Auth. Poll. A3 8,825,000 8,840,091
Cont. Rev. (Gen. Motors
Corp. Proj.) 5.55% 4/1/09
Michigan Muni. Bond Auth. Rev.:
(Local Govt. Ln. Prog.):
Series CA, 0% 6/15/13 (FSA Aaa 2,000,000 921,120
Insured)
7.5% 11/1/09 (AMBAC Insured) Aaa 65,000 66,570
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Michigan Muni. Bond Auth.
Rev.: - continued
Rfdg. (Local Govt. Ln. Prog.) Aaa $ 6,000,000 $ 5,762,760
Series A, 4.75% 12/1/09
(FGIC Insured)
Rfdg. (Cap. Appreciation)
(Local Govt. Ln. Prog.)
Series A:
0% 12/1/04 (FGIC Insured) Aaa 2,000,000 1,569,460
0% 12/1/05 (FGIC Insured) Aaa 1,855,000 1,373,090
0% 12/1/06 (FGIC Insured) Aaa 5,000,000 3,499,000
0% 12/1/07 (FGIC Insured) Aaa 1,000,000 661,080
Michigan Pub. Pwr. Agcy. Rev. A1 10,000,000 9,087,100
Rfdg. (Belle River Proj.)
Series A, 5.25% 1/1/18
Michigan South Central Pwr.
Agcy. Supply Sys. Rev. Rfdg.:
5% 11/1/09 (AMBAC Insured) Aaa 1,675,000 1,653,610
5.9% 11/1/06 (MBIA Insured) Aaa 4,510,000 4,730,855
Michigan Strategic Fund Ltd.
Oblig. Rev. Rfdg.:
(Detroit Edison Co. Proj.):
Series A, 5.55% 9/1/29 (MBIA Aaa 1,500,000 1,351,485
Insured) (c)
Series AA, 6.4% 9/1/25 (MBIA Aaa 5,000,000 5,111,500
Insured)
Series BB:
6.5% 2/15/16 (FGIC Insured) Aaa 1,250,000 1,304,950
7% 7/15/08 (MBIA Insured) Aaa 2,000,000 2,238,500
7% 5/1/21 (AMBAC Insured) Aaa 8,500,000 9,525,440
(Envir. Research Institute
Proj.):
6.25% 8/15/06 (Pre-Refunded - 2,660,000 2,782,280
to 8/15/02 @ 101) (d)
6.375% 8/15/12 (Pre-Refunded - 1,770,000 1,856,730
to 8/15/02 @ 101) (d)
(Ford Motor Co. Proj.) Series A1 8,250,000 9,046,538
A, 7.1% 2/1/06
Michigan Trunk Line:
Rfdg. Series A, 5.5% 11/1/16 Aa3 7,000,000 6,716,080
Series A:
5.5% 10/1/21 Aa3 9,750,000 9,627,248
5.75% 10/1/04 Aa3 4,145,000 4,299,277
Michigan Underground Storage Aaa 5,000,000 5,256,000
Tank Fin. Assurance Auth.
Rev. Rfdg. Series I, 6%
5/1/06 (AMBAC Insured)
Michigan Univ. Rev. Rfdg.:
(Univ. Hosp. Proj.) Series A, Aa2 9,000,000 9,095,400
5.75% 12/1/12
Series A, 6.25% 8/15/15 Aa2 3,145,000 3,293,507
(Pre-Refunded to 8/15/02 @
101) (d)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Mona Shores School District Aaa $ 2,220,000 $ 2,466,664
School Bldg. & Site 6.75%
5/1/10 (FGIC Insured)
Northern Michigan Univ. Revs. Aaa 5,500,000 4,846,270
Rfdg. 5.125% 12/1/20 (MBIA
Insured)
Okemos Pub. School District
Rfdg. (Cap. Appreciation):
0% 5/1/12 (MBIA Insured) Aaa 2,500,000 1,243,150
0% 5/1/13 (MBIA Insured) Aaa 1,700,000 788,477
Pinckney Cmnty. Schools
Livingston & Washtenaw
Counties:
5.5% 5/1/10 (FGIC Insured) Aaa 2,175,000 2,194,271
5.5% 5/1/11 (FGIC Insured) Aaa 2,350,000 2,356,698
5.5% 5/1/14 (FGIC Insured) Aaa 3,075,000 3,028,967
Plymouth-Canton Cmnty. School Aaa 2,000,000 1,572,300
District Rfdg. 4.625% 5/1/23
(FGIC Insured)
Port Huron Area School Aa2 1,975,000 1,265,126
District (Cap. Appreciation)
(School Bldg. Site Proj.) 0%
5/1/08 (Liquidity Facility
Michigan School Bond Ln.
Fund)
Rochester Cmnty. School Aaa 1,000,000 1,015,840
District Rfdg. 5.625% 5/1/11
(FGIC Insured)
Romulus Cmnty. Schools:
(Cap. Appreciation) Series I, Aaa 3,610,000 2,595,337
0% 5/1/06 (FSA Insured)
6% 5/1/11 (FGIC Insured) Aaa 1,170,000 1,210,658
Royal Oak City School Aaa 3,000,000 2,281,410
District (Cap. Appreciation)
(School Bldg. & Site Proj.)
0% 5/1/05 (AMBAC Insured)
Royal Oak Hosp. Fin. Auth.
Rev.:
(William Beaumont Hosp. Aa3 5,910,000 4,349,524
Proj.) Series K, 0% 11/15/05
Rfdg. (William Beaumont Hosp. Aa3 4,000,000 3,800,160
Proj.) 5.5% 1/1/14
Saint Clair Shores Econ. Dev. A2 1,600,000 1,644,016
Corp. Rev. (Bon Secours
Health Sys. Proj.) Series B,
7.5% 9/1/15
Saint John's Pub. Schools Aaa 1,400,000 1,520,204
6.5% 5/1/07 (FGIC Insured)
Standish Sterling Cmnty. Aaa 8,900,000 7,648,215
Schools 5.15% 5/1/28 (FGIC
Insured)
Walled Lake Consolidated Aaa 3,550,000 3,555,964
School District Rfdg. 5.3%
5/1/09 (MBIA Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Wayne Charter County Arpt.
Rev.:
(Detroit Metro. Arpt. Proj.):
Series A, 5% 12/1/28 (MBIA Aaa $ 8,400,000 $ 6,886,824
Insured) (c)
Series B, 6.875% 12/1/11 Aaa 1,500,000 1,572,690
(MBIA Insured) (c)
(Detroit Metro. Wayne County Aaa 2,500,000 2,394,925
Proj.) Series A, 5.25%
12/1/12 (MBIA Insured) (c)
Rfdg. (Detroit Metro. Proj.) Aaa 2,000,000 1,932,260
Sub Lien Series C, 5.25%
12/1/13 (MBIA Insured)
Wayne County Bldg. Auth. A3 2,250,000 2,442,488
Series A, 8% 3/1/17
(Pre-Refunded to 3/1/02 @
102) (d)
West Ottawa Pub. School
District:
(Cap. Appreciation) (School Aaa 4,110,000 3,001,328
Bldg. & Site Proj.) 0%
5/1/06 (MBIA Insured)
(Pre-Refunded to 5/1/05 @
95.9187) (d)
Rfdg. 5.25% 5/1/10 (FGIC Aaa 3,875,000 3,839,428
Insured)
Western Michigan Univ. Rev.:
Rfdg. 5.125% 11/15/22 (FGIC Aaa 2,365,000 2,069,020
Insured)
5.6% 7/15/17 (FGIC Insured) Aaa 2,500,000 2,402,375
417,701,231
PUERTO RICO - 0.7%
Puerto Rico Commonwealth Baa 2,800,000 2,860,480
Urban Renewal & Hsg. Corp.
Rfdg. 7.875% 10/1/04
TOTAL MUNICIPAL BONDS 420,561,711
(Cost $422,730,930)
</TABLE>
MUNICIPAL NOTES - 0.2%
MICHIGAN - 0.2%
Midland County Economic Dev. 900,000 900,000
Rev. (Dow Chemical Co.
Proj.) Series 1993 A, 5.15%,
VRDN (b)(c) (Cost $900,000)
TOTAL INVESTMENT PORTFOLIO - 421,461,711
99.1% (Cost $423,630,930)
NET OTHER ASSETS - 0.9% 3,668,056
NET ASSETS - 100% $ 425,129,767
SECURITY TYPE ABBREVIATIONS
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) S&P 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 86.7% AAA, AA, A 90.6%
Baa 4.6% 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 1.6%.
The distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
Health Care 25.1%
General Obligations 18.5
Escrowed/Pre-Refunded 10.9
Special Tax 9.2
Electric Utilities 8.1
Water & Sewer 7.3
Industrial Development 5.0
Others* (individually less 15.9
than 5%)
100.0%
* Includes short-term investments and net other assets.
INCOME TAX INFORMATION
At December 31, 1999, the aggregate cost of investment securities for
income tax purposes was $423,630,930. Net unrealized depreciation
aggregated $2,169,219, of which $9,575,641 related to appreciated
investment securities and $11,744,860 related to depreciated
investment securities.
At December 31, 1999, the fund had a capital loss carryforward of
approximately $14,483,000 of which $12,527,000 and $1,956,000 will
expire on December 31, 2006 and 2007, respectively.
During the fiscal year ended December 31, 1999, 100% of the fund's
income dividends was free from federal income tax, and 5.45% of the
fund's income dividends was subject to the federal alternative minimum
tax (unaudited).
SPARTAN MICHIGAN MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
Investment in securities, at $ 421,461,711
value (cost $423,630,930) -
See accompanying schedule
Receivable for fund shares 63,747
sold
Interest receivable 5,507,729
TOTAL ASSETS 427,033,187
LIABILITIES
Payable to custodian bank $ 24,571
Payable for fund shares 1,115,410
redeemed
Distributions payable 546,811
Accrued management fee 137,771
Other payables and accrued 78,857
expenses
TOTAL LIABILITIES 1,903,420
NET ASSETS $ 425,129,767
Net Assets consist of:
Paid in capital $ 443,946,115
Accumulated undistributed net (16,647,129)
realized gain (loss) on
investments
Net unrealized appreciation (2,169,219)
(depreciation) on investments
NET ASSETS, for 39,098,425 $ 425,129,767
shares outstanding
NET ASSET VALUE, offering $10.87
price and redemption price
per share ($425,129,767
(divided by) 39,098,425
shares)
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
INTEREST INCOME $ 25,012,433
EXPENSES
Management fee $ 1,766,626
Transfer agent fees 401,472
Accounting fees and expenses 138,711
Non-interested trustees' 1,318
compensation
Custodian fees and expenses 18,274
Registration fees 23,080
Audit 34,732
Legal 13,618
Miscellaneous 12,191
Total expenses before 2,410,022
reductions
Expense reductions (4,120) 2,405,902
NET INTEREST INCOME 22,606,531
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities (1,417,150)
Futures contracts (747,610) (2,164,760)
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (32,761,178)
Futures contracts 53,828 (32,707,350)
NET GAIN (LOSS) (34,872,110)
NET INCREASE (DECREASE) IN $ (12,265,579)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION
Expense reductions
Custodian credits $ 3,547
Transfer agent credits 573
$ 4,120
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 22,606,531 $ 22,193,833
Net realized gain (loss) (2,164,760) 4,612,882
Change in net unrealized (32,707,350) (1,033,385)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (12,265,579) 25,773,330
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (22,606,531) (22,193,833)
From net interest income
In excess of net interest - (122,449)
income
TOTAL DISTRIBUTIONS (22,606,531) (22,316,282)
Share transactions Net 78,784,741 79,777,925
proceeds from sales of shares
Reinvestment of distributions 16,300,743 16,665,701
Cost of shares redeemed (115,019,055) (77,897,152)
NET INCREASE (DECREASE) IN (19,933,571) 18,546,474
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) (54,805,681) 22,003,522
IN NET ASSETS
NET ASSETS
Beginning of period 479,935,448 457,931,926
End of period $ 425,129,767 $ 479,935,448
OTHER INFORMATION
Shares
Sold 6,900,335 6,827,560
Issued in reinvestment of 1,441,001 1,427,061
distributions
Redeemed (10,181,801) (6,674,899)
Net increase (decrease) (1,840,465) 1,579,722
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 11.720 $ 11.630 $ 11.300 $ 11.560 $ 10.580
of period
Income from Investment .551 .557 .571 .630 C .611
Operations Net interest
income
Net realized and unrealized (.850) .093 .420 (.258) .980
gain (loss)
Total from investment (.299) .650 .991 .372 1.591
operations
Less Distributions
From net interest income (.551) (.557) (.571) (.630) (.611)
In excess of net interest - (.003) - (.002) -
income
In excess of net realized gain - - (.090) - -
Total distributions (.551) (.560) (.661) (.632) (.611)
Net asset value, end of period $ 10.870 $ 11.720 $ 11.630 $ 11.300 $ 11.560
TOTAL RETURN A (2.63)% 5.71% 9.02% 3.38% 15.41%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 425,130 $ 479,935 $ 457,932 $ 455,729 $ 491,874
(000 omitted)
Ratio of expenses to average .52% B .55% B .56% B .59% .59%
net assets
Ratio of net interest income 4.86% 4.77% 5.08% 5.52% 5.49%
to average net assets
Portfolio turnover rate 19% 24% 16% 29% 29%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B 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.
C 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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY MI MUNICIPAL MONEY 2.82% 16.35% 37.74%
MARKET
All Tax-Free Money Market 2.73% 16.17% n/a
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 one year average represents a peer group of 463
money market funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
1999
FIDELITY MI MUNICIPAL MONEY 2.82% 3.07% 3.26%
MARKET
All Tax-Free Money Market 2.73% 3.04% 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
1/03/00 9/27/99 6/28/99 3/29/99 12/28/98
Fidelity Michigan Municipal 4.24% 3.16% 2.90% 2.55% 3.10%
Money Market Fund
All Tax-Free Money Market 3.98% 3.02% 2.93% 2.47% 2.98%
Funds Average
Fidelity Michigan Municipal 6.94% 5.16% 4.74% 4.17% 5.07%
Money Market Fund
Tax-Equivalent
Portion of fund's income 2.50% 2.51% 1.04% 0.64% 4.01%
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%. The fund's yields mentioned above reflect 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.
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.
(checkmark)
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 1999, DIANE?
A. Economic growth was solid throughout the year. The "wealth effect"
created by appreciating equity and real estate markets fueled consumer
spending, a significant component of the gross domestic product.
Growth in real GDP - gross domestic product adjusted for inflation -
averaged a 3.8% annual rate in the first three quarters of 1999, and
preliminary estimates for the fourth quarter suggested growth in
excess of 5%. At the same time, unemployment hit record lows; it ended
1998 at 4.4% and trended downward throughout 1999, ending the fourth
quarter at 4.1%, a 29-year low. With employment this tight, wage
pressures are expected to carry through to the consumer in the form of
higher prices. Employers would be forced to raise wages in order to
attract or retain workers, passing on additional costs in the form of
price increases. Throughout the year, market participants feared the
combination of strong growth and low unemployment would lead to
inflation. However, only a few hints of higher prices emerged, as
increased productivity seemed to offset inflationary tendencies.
Nevertheless, the Federal Reserve Board felt that strong growth and
low employment warranted action on its part. Striking against
inflation before it emerged, the Fed raised the rate banks charge each
other for overnight loans - known as the fed funds target rate - three
times, in June, August and November. These rate hikes brought the fed
funds target rate back to 5.50%, where it stood in mid-1998 before the
Fed cut it three times in order to help alleviate a building global
credit crunch. After its November interest-rate increase, the Fed
chose to stand pat through the rest of 1999, to maintain stability in
the markets through the changeover into the year 2000.
Q. WHAT WAS YOUR STRATEGY WITH THE FUND?
A. The fund's average maturity was shorter than its competitors until
the middle of the year, when, from June through August, purchases of
longer-term securities lengthened it. These investments were made when
yields offered by long-term notes provided adequate compensation for
expected increases in future interest rates. During the summer months
several Michigan municipalities issued fixed-rate securities, creating
a surplus. These notes were sold at attractive yields in order to
attract buyers. The fund's investments in this area increased its
average maturity. Through the rest of the period, the fund's maturity
rolled down to a neutral level in anticipation of higher rates. I also
increased the fund's investment in variable-rate demand notes -
very-short-term securities whose yields are reset at regular intervals
- - when I anticipated outflows from the fund, namely tax time and the
end of the year. At the end of 1999, I maximized the fund's liquidity
in preparation for potential volatility and shareholder flows due to
possible problems related to Y2K. Holding a significant stake in
demand notes at the end of the year benefited the fund; they captured
higher yields as they emerged. In fact, at the end of 1999 tax-exempt
rates outpaced yields on taxable securities with comparable
maturities, an unusual phenomenon.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on December 31, 1999, was 4.05%,
compared to 3.19% 12 months ago. The latest yield was the equivalent
of a 6.63% taxable yield for Michigan investors in the 38.82% combined
federal and state income tax bracket. The fund's yields reflect that a
portion of the fund's income was subject to state taxes. Through
December 31, 1999, the fund's 12-month total return was 2.82%,
compared to 2.73% for the all tax-free money market funds average,
according to IBC Financial Data, Inc.
Q. WHAT IS YOUR OUTLOOK?
A. Given the continued strength of the U.S. economy, it's likely that
additional Fed rate hikes will follow. The market has priced in at
least two more 0.25 percentage point Fed rate increases, and the Fed
may be even more aggressive if data continues to indicate significant
strength in the economy. I expect to keep the fund's average maturity
neutral to its competitors, given the likelihood of higher rates, so
that I can take advantage of investing in securities offering higher
rates in the future. I will, however, continue to seek opportunities
in longer-term securities that accurately reflect my fundamental
outlook or are attractive due to a demand/supply imbalance.
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 December 31,
1999, more than $444 million
MANAGER: Diane McLaughlin,
since 1997; manager,
various Fidelity and Spartan
municipal money market
funds; joined Fidelity in 1992
(checkmark)
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.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MATURITY DIVERSIFICATION
DAYS % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6/30/99 % OF FUND'S INVESTMENTS
12/31/99 12/31/98
0 - 30 83.2 73.9 83.3
31 - 90 2.3 20.2 1.3
91 - 180 7.1 0.0 9.8
181 - 397 7.4 5.9 5.6
WEIGHTED AVERAGE MATURITY
12/31/99 6/30/99 12/31/98
Fidelity Michigan Municipal 37 DAYS 38 Days 30 Days
Money Market Fund
All Tax-Free Money Market 47 DAYS 44 Days 46 Days
Funds Average*
</TABLE>
<TABLE>
<CAPTION>
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ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF DECEMBER 31, 1999 AS OF JUNE 30, 1999
Variable Rate Demand Notes Variable Rate Demand Notes
(VRDNs) 68.4% (VRDNs) 72.8%
Commercial Paper (including Commercial Paper (including
CP Mode) 15.2% CP Mode) 16.8%
Tender Bonds 1.8% Tender Bonds 0.0%
Municipal Notes 10.6% Municipal Notes 10.9%
Municipal Money Market Funds Municipal Money Market Funds
0.4% 0.2%
Other Investments and Net Other Investments and Net
Other Assets 3.6% Other Assets (0.7)%**
</TABLE>
Row: 1, Col: 1, Value: 68.40000000000001
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 15.2
Row: 1, Col: 4, Value: 1.8
Row: 1, Col: 5, Value: 10.6
Row: 1, Col: 6, Value: 0.4
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 3.6
Row: 1, Col: 1, Value: 72.8
Row: 1, Col: 2, Value: nil
Row: 1, Col: 3, Value: 16.8
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 10.9
Row: 1, Col: 6, Value: 0.2
Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 0.0
** OTHER INVESTMENTS AND NET OTHER ASSETS ARE NOT INCLUDED IN THE PIE
CHART.
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
INVESTMENTS DECEMBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MUNICIPAL SECURITIES - 99.4%
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - 99.0%
Chelsea Economic Dev. Corp. $ 2,500,000 $ 2,500,000
Ltd. Oblig. Rev. (Silver
Maples of Chelsea Proj.)
Series 1996, 5.5%, LOC
Comerica Bank, Detroit, VRDN
(a)
Clinton Economic Dev. Corp. 3,700,000 3,700,000
Rev. (Clinton Area Care Ctr.
Proj.) 5.56%, LOC Northern
Trust Co., Chicago, VRDN (a)
Detriot Economic Dev. Corp.
Rev. (Waterfront Reclamation
& Casino Dev. Proj.):
Series 1999 B, 5.4%, (MGM 4,530,000 4,530,000
Grand Detroit LLC) LOC Bank
of America NA, VRDN (a)
Series 1999 C, 5.45%, 2,000,000 2,000,000
(Greektown Casino LLC) LOC
LaSalle Nat'l. Bank,
Chicago, VRDN (a)
Detroit School District RAN 16,000,000 16,018,916
4% 6/1/00
Detroit Swr. Disp. Rev.
Participating VRDN:
Series FRRI A75, 5.75% 5,000,000 5,000,000
(Liquidity Facility
Bayerische Hypo-und
Vereinsbank AG) (a)(f)
Series SG 133, 5.56% 4,200,000 4,200,000
(Liquidity Facility Societe
Generale, France) (a)(f)
Detroit Swr. Rev. 4,000,000 4,000,000
Participating VRDN Series
9981, 5.85% (Liquidity
Facility The Bear Stearns
Companies, Inc.) (a)(f)
Detroit Wtr. Supply Sys. Rev.
Participating VRDN:
Series SG 64, 5.56% 3,500,000 3,500,000
(Liquidity Facility Societe
Generale, France) (a)(f)
Series SGB 6, 5.56% 7,570,000 7,570,000
(Liquidity Facility Societe
Generale, France) (a)(f)
Detroit Wtr. Sys. Rev.
Participating VRDN:
Series 992201, 5.56% 4,000,000 4,000,000
(Liquidity Facility
Citibank, New York NA)
(a)(f)
Series 992202, 5.61% 4,200,000 4,200,000
(Liquidity Facility
Citibank, New York NA)
(a)(f)
Genesee County Economic Dev. 3,000,000 3,000,000
Corp. (Creative Foam Corp.
Proj.) Series 1994, 5.6%,
LOC Bank One NA, Michigan,
VRDN (a)(d)
Georgetown Charter Township 1,000,000 1,000,000
Ind. Dev. Rev. (J&F Steel
Corp. Proj.) Series 1989,
5.3%, LOC Societe Generale,
France, VRDN (a)(d)
Grand Rapids Economic Dev. 2,190,000 2,190,000
Corp. Econ. Dev. Rev. Rfdg.
(Amway Hotel Corp. Proj.)
Series 1991 A, 5.25%, LOC
Michigan Nat'l. Bank,
Detroit, VRDN (a)
Jackson Pub. Schools State 4,750,000 4,760,533
Aid RAN Series 1999 B, 4%
7/6/00, LOC Comerica Bank,
Detroit
Kalamazoo Hosp. Fin. Auth. 4,000,000 4,000,000
Participating VRDN Series
138, 5.56% (Liquidity
Facility Morgan Stanley
Dean Witter & Co.) (a)(f)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Kent County Michigan Arpt. $ 6,245,000 $ 6,245,000
Facilities Rev.
Participating VRDN Series
MSDW 98118, 5.56% (Liquidity
Facility Morgan Stanley Dean
Witter & Co.) (a)(f)
Livonia Economic Dev. Corp. 1,400,000 1,400,000
(Ajluni Proj.) 5.6%, LOC
Bank One NA, Michigan, VRDN
(a)(d)
Macomb County Cmnty. College 3,400,000 3,405,251
District Bonds 3.75% 5/1/00
Michigan Bldg. Auth. Rev. 16,500,000 16,499,999
Series 2, 3.9% 1/12/00, LOC
Canadian Imperial Bank of
Commerce, CP
Michigan Gen. Oblig. 12,990,000 12,990,000
Participating VRDN Series
125, 5.6% (Liquidity
Facility J. P. Morgan & Co.,
Inc.) (a)(f)
Michigan Higher Ed. Student
Ln. Auth. Rev.:
Rfdg.:
Series XII B, 5.25% (AMBAC 5,500,000 5,500,000
Insured) (BPA Kredietbank
NV), VRDN (a)(d)
Series XII F, 5.25% (AMBAC 6,700,000 6,700,000
Insured) (BPA Kredietbank
NV), VRDN (a)(d)
Series XII D, 5.25% (AMBAC 1,300,000 1,300,000
Insured), LOC Kredietbank
NV, VRDN (a)(d)
Michigan Hosp. Fin. Auth. Rev.:
Bonds (Henry Ford Health Sys. 3,000,000 3,109,489
Proj.) Series A, 7% 7/1/10
(Pre-Refunded to 7/1/00 @
102) (e)
Participating VRDN Series 3,700,000 3,700,000
1997 X, 5.45% (Liquidity
Facility First Union Nat'l.
Bank, North Carolina) (a)(f)
(Hosp. Equip. Ln. Prog.):
Series 1995 A, 5.65%, LOC 790,000 790,000
Nat'l. City Bank Michigan,
Illinois, VRDN (a)
Series A:
5.65%, LOC Nat'l. City Bank 8,815,000 8,815,000
Michigan, Illinois, VRDN (a)
5.65%, LOC Nat'l. City Bank 600,000 600,000
Michigan, Illinois, VRDN (a)
5.65%, LOC Nat'l. City Bank 7,000,000 7,000,000
Michigan, Illinois, VRDN (a)
(United Memorial Hosp. Assoc. 4,000,000 4,000,000
Proj.) Series 1999, 5.66%,
LOC Huntington Nat'l. Bank,
Columbus, VRDN (a)(d)
5.65%, LOC Nat'l. City Bank 1,400,000 1,400,000
Michigan, Illinois, VRDN (a)
Michigan Hsg. Dev. Auth.
Multi-family Hsg. Rev.:
Bonds Series 1988 A:
3.6% tender 1/27/00, LOC 3,800,000 3,800,000
Landesbank Hessen-Thuringen,
CP mode (d)
3.6% tender 1/31/00, LOC 2,050,000 2,050,000
Landesbank Hessen-Thuringen,
CP mode (d)
3.6% tender 1/31/00, LOC 1,500,000 1,500,000
Landesbank Hessen-Thuringen,
CP mode (d)
3.8% tender 1/26/00, LOC 2,500,000 2,500,000
Landesbank Hessen-Thuringen,
CP mode (d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Michigan Hsg. Dev. Auth.
Multi-family Hsg. Rev.: -
continued
(Canton Club East Apts. $ 4,000,000 $ 4,000,000
Proj.) Series 1998 A, 5.6%,
LOC Key Bank NA, VRDN (a)(d)
(Lexington Place Aprts. 7,520,000 7,520,000
Proj.) Series 1999 A, 6.44%,
LOC Bank of America NA, VRDN
(a)(d)
(Oakbrook Villas Townhomes 4,250,000 4,250,000
Proj.) Series 1999 A, 5.7%,
LOC Key Bank NA, VRDN (a)(d)
Michigan Hsg. Dev. Auth.
Rental Hsg. Rev.
Participating VRDN:
Series 1997 N, 5.61% 3,180,000 3,180,000
(Liquidity Facility Caisse
des Depots et Consignations)
(a)(d)(f)
Series PT 38, 5.61% 4,710,000 4,710,000
(Liquidity Facility
Commerzbank AG) (a)(d)(f)
Michigan Hsg. Dev. Auth.
Single Family Mtg. Rev.:
Bonds Series 1999 B, 3.95%, 4,000,000 4,000,000
(Trinity Funding Guaranteed)
tender 12/1/00 (d)
Participating VRDN Series PT 5,975,000 5,975,000
58, 5.61% (Liquidity
Facility Merrill Lynch &
Co., Inc.) (a)(d)(f)
Michigan Muni. Bond Auth. Rev.:
Bonds (JPM Putter 136 Proj.) 4,100,000 4,100,000
4%, tender 1/27/00
(Liquidity Facility Morgan
Guaranty Trust Co., NY) (f)
RAN:
Series 1999 A1, 4% 6/30/00 6,000,000 6,016,335
(East Detroit Michigan Pub.
Schools) (Grand Haven
Michigan Area Pub. Schools)
Series B1, 4.25% 8/25/00 4,100,000 4,116,639
Series B2, 4.25% 8/25/00, LOC 4,100,000 4,117,411
Morgan Guaranty Trust Co.,
NY
Michigan Strategic Fund Ind.
Dev. Rev.:
(Althaus Family Investors II 2,300,000 2,300,000
Proj.) Series 1997, 5.66%,
LOC Huntington Nat'l. Bank,
Columbus, VRDN (a)
(C-Tec, Inc. Proj.) 5.65%, 1,500,000 1,500,000
LOC SunTrust Bank of
Atlanta, VRDN (a)(d)
Michigan Strategic Fund Ltd.
Oblig. Rev.:
Participating VRDN Series PT 2,495,000 2,495,000
244, 5.56% (Liquidity
Facility Banque Nationale de
Paris) (a)(f)
(Hi-Tech Mold & Engineering 500,000 500,000
Proj.) 5.6%, (Amtech
Properties Inc.,) LOC Bank
One NA, Michigan, VRDN (a)(d)
(B&C Leasing Proj.) 5.55%, 1,350,000 1,350,000
LOC Bank of America NA, VRDN
(a)
(B&G Realty Proj.) 5%, LOC 2,000,000 2,000,000
Bank One, Wisconsin, VRDN
(a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Michigan Strategic Fund Ltd.
Oblig. Rev.: - continued
(BC&C Proj.) 5.65%, LOC $ 1,680,000 $ 1,680,000
Comerica Bank, Detroit, VRDN
(a)(d)
(Bico Michigan, Inc. Proj.) 4,000,000 4,000,000
Series 1999, 5.6%, LOC Bank
One, NA, VRDN (a)(d)
(Bosal Ind. Proj.) Series 3,000,000 3,000,000
1998, 5.55%, LOC Bank of New
York NA, VRDN (a)(d)
(Conti Properties LLC Proj.) 3,580,000 3,580,000
Series 1997, 5.65%, LOC
Comerica Bank, Detroit, VRDN
(a)(d)
(Cyberplast Inds. Ltd. Proj.) 3,675,000 3,675,000
5.6%, LOC Bank One NA,
Michigan, VRDN (a)(d)
(Doss Ind. Dev. Co. Proj.) 3,500,000 3,500,000
5.6%, LOC Bank One NA,
Michigan, VRDN (a)(d)
(Envir. Quality Co. Proj.) 1,600,000 1,600,000
Series 1995, 5.6%, LOC
Comerica Bank, Detroit, VRDN
(a)(d)
(Future Fence Co. Proj.) 3,500,000 3,500,000
5.65%, (Town Development
Inc.,) LOC Comerica Bank,
Detroit, VRDN (a)(d)
(Grandview Plaza Riverview 3,025,000 3,025,000
Assoc. One Ltd. Partnership
Proj.) 5.7%, LOC Nat'l. City
Bank, VRDN (a)(d)
(John H. Decker & Sons Proj.) 2,500,000 2,500,000
Series 1998, 5.7%, LOC
Michigan Nat'l. Bank,
Detroit, VRDN (a)(d)
(Majestic Ind., Inc. Proj.) 3,600,000 3,600,000
5.65%, LOC Comerica Bank,
Detroit, VRDN (a)(d)
(Mans Proj.) Series 1998, 3,115,000 3,115,000
5.65%, LOC Comerica Bank,
Detroit, VRDN (a)(d)
(Nat'l. Rubber Michigan, Inc. 2,400,000 2,400,000
Proj.) Series 1995, 5.5%,
LOC Nat'l. Bank of Canada,
VRDN (a)(d)
(Numaco LLC Proj.) 5.65%, (A 5,000,000 5,000,000
Holdings Corp.) (Ddb LLC)
LOC Comerica Bank, Detroit,
VRDN (a)(d)
(PBL Enterprises, Inc. Proj.) 3,500,000 3,500,000
Series 1997, 5.65%, LOC
Comerica Bank, Detroit, VRDN
(a)(d)
(Rochester Gear, Inc. Proj.) 3,950,000 3,950,000
Series 1995, 5.5%, LOC
Comerica Bank, Detroit, VRDN
(a)(d)
(TEI Investments LLC Proj.) 1,000,000 1,000,000
Series 1997, 5.65%, LOC
Comerica Bank, Detroit, VRDN
(a)(d)
(The Spiratex Co. Proj.) 2,000,000 2,000,000
Series 1994, 5.6%, LOC Bank
One NA, Michigan, VRDN (a)(d)
(Trilan LLC Proj.) 5.6%, LOC 4,000,000 4,000,000
Bank One NA, Michigan, VRDN
(a)(d)
(Ultimate Hydroforming, Inc. 200,000 200,000
Proj.) 5.6%, (Klyn Matheus &
Shirley) LOC Bank One NA,
Michigan, VRDN (a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Michigan Strategic Fund Ltd.
Oblig. Rev.: - continued
(Unified-Boring Co., Inc. $ 1,500,000 $ 1,500,000
Proj.) Series 1992, 5.6%,
(UBI Leasing Inc.,) LOC Bank
One NA, Michigan, VRDN (a)(d)
(Vent-Rite Valve Corp. Proj.) 1,680,000 1,680,000
5.75%, (Skidmore Realty LLC)
LOC Fleet Nat'l. Bank, VRDN
(a)(d)
(Wayland Enterprises Proj.) 3,000,000 3,000,000
Series 1999, 5.6%, LOC Bank
One NA, Michigan, VRDN (a)(d)
(Windcrest Properties LLC 5,300,000 5,300,000
Proj.) 5.5%, (Mantex Corp.)
LOC Bank One NA, Michigan,
VRDN (a)(d)
Series 1999, 5.7%, LOC 2,700,000 2,700,000
Michigan Nat'l. Bank,
Detroit, VRDN (a)(d)
5.66%, LOC Huntington Nat'l. 3,500,000 3,500,000
Bank, Columbus, VRDN (a)(d)
Michigan Strategic Fund Poll.
Cont. Rev.:
Bonds (Dow Chemical Co. Proj.):
Series 1986:
3.45% tender 1/20/00, CP mode 3,100,000 3,100,000
3.45% tender 1/21/00, CP mode 1,500,000 1,500,000
3.6% tender 1/24/00, CP mode 4,400,000 4,400,000
3.9% tender 1/21/00, CP mode 3,000,000 3,000,000
Series 1987:
3.6% tender 1/26/00, CP mode 3,200,000 3,200,000
3.9% tender 1/27/00, CP mode 2,000,000 2,000,000
Series 1988:
3.5% tender 1/21/00, CP mode 3,250,000 3,250,000
(d)
3.65% tender 1/25/00, CP mode 4,000,000 4,000,000
(d)
3.65% tender 1/28/00, CP mode 2,600,000 2,600,000
(d)
3.7% tender 1/26/00, CP mode 6,450,000 6,450,000
(d)
3.7% tender 1/28/00, CP mode 1,000,000 1,000,000
(d)
3.7% tender 1/31/00, CP mode 6,450,000 6,450,000
(d)
(Gen. Motors Corp. Proj.) 13,430,000 13,430,000
Series 1988 A, 5.55%, VRDN
(a)
Rfdg. (Consumers Pwr. Co. 4,100,000 4,100,000
Proj.) Series 1988 A, 4.9%,
LOC UBS AG, VRDN (a)
Michigan Strategic Fund Solid 2,100,000 2,100,000
Waste Disp. Rev. (Great
Lakes Recovery Proj.) 5.5%,
LOC Bank One NA, Michigan,
VRDN (a)(d)
Midland County Economic Dev.
Rev. (Dow Chemical Co. Proj.):
Series 1993 A, 5.15%, VRDN 2,700,000 2,700,000
(a)(d)
Series 1993 B, 5.05%, VRDN (a) 1,200,000 1,200,000
Muskegon Pub. Schools RAN 4,400,000 4,406,673
4.25% 5/22/00
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
MICHIGAN - CONTINUED
Royal Oak Hosp. Fin. Auth. $ 6,385,000 $ 6,671,745
Rev. Bonds (William Beaumont
Hosp. Proj.) Series D, 6.75%
1/1/01 (Pre-Refunded to
1/1/01 @ 102) (e)
Sterling Heights Econ. Dev. 4,500,000 4,500,000
Corp. Ltd. Oblig. Rev.
(Cherrywood Ctr. Assoc.
Proj.) 5.6%, LOC Comerica
Bank, Detroit, VRDN (a)(d)
Waterford School District RAN 3,500,000 3,502,007
3.8% 5/25/00
Wayne Charter County Arpt.
Rev.:
Participating VRDN:
Series 108, 5.61% (Liquidity 4,500,000 4,500,000
Facility Morgan Stanley Dean
Witter & Co.) (a)(d)(f)
Series 1998 68, 5.61% 5,590,000 5,590,000
(Liquidity Facility Morgan
Stanley Dean Witter & Co.)
(a)(d)(f)
Series SG 122, 5.28% 8,100,000 8,100,000
(Liquidity Facility Societe
Generale, France) (a)(f)
Rfdg (Detroit Metro. Wayne 2,895,000 2,895,000
Co. Proj.) Series B, 5.25%,
LOC Landesbank
Hessen-Thuringen, VRDN (a)(d)
Wayne County Cmnty. College 4,000,000 4,004,004
RAN (Cmnty. College Proj.)
Series 1999, 4.4% 4/3/00
Wayne-Westland Cmnty. Schools
Participating VRDN:
Series 56, 5.56% (Liquidity 11,575,000 11,575,000
Facility Morgan Stanley Dean
Witter & Co.) (a)(f)
Series 67, 5.56% (Liquidity 7,100,000 7,100,000
Facility Morgan Stanley Dean
Witter & Co.) (a)(f)
Zeeland Hosp. Fin. Auth. Rev. 5,000,000 5,000,000
Rfdg. (Zeeland Cmnty. Hosp.
Proj.) 5.56%, LOC Huntington
Nat'l. Bank, Columbus, VRDN
(a)
440,434,002
SHARES
OTHER - 0.4%
Municipal Central Cash Fund, 1,726,493 1,726,493
4.81% (b)(c)
TOTAL INVESTMENT PORTFOLIO - 442,160,495
99.4%
NET OTHER ASSETS - 0.6% 2,518,719
NET ASSETS - 100% $ 444,679,214
</TABLE>
Total Cost for Income Tax Purposes $ 442,160,495
SECURITY TYPE ABBREVIATIONS
CP - COMMERCIAL PAPER
RAN - REVENUE ANTICIPATION NOTE
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) The rate quoted is the annualized seven-day yield of the fund at
period end.
(d) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(e) Security collateralized by an amount sufficient to pay interest
and principal.
(f) Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
During the fiscal year ended December 31, 1999, 100% of the fund's
income dividends was free from federal income tax, and 47.64% of the
fund's income dividends was subject to the federal alternative minimum
tax (unaudited).
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
Investment in securities, at $ 442,160,495
value - See accompanying
schedule
Receivable for fund shares 9,169,834
sold
Interest receivable 3,541,078
Other receivables 330
Prepaid expenses 17,090
TOTAL ASSETS 454,888,827
LIABILITIES
Payable for investments $ 4,530,839
purchased
Payable for fund shares 5,410,018
redeemed
Distributions payable 27,899
Accrued management fee 133,520
Other payables and accrued 107,337
expenses
TOTAL LIABILITIES 10,209,613
NET ASSETS $ 444,679,214
Net Assets consist of:
Paid in capital $ 444,685,297
Accumulated net realized gain (6,083)
(loss) on investments
NET ASSETS, for 444,686,852 $ 444,679,214
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($444,679,214
(divided by) 444,686,852
shares)
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
INTEREST INCOME $ 13,286,655
EXPENSES
Management fee $ 1,492,726
Transfer agent fees 601,946
Accounting fees and expenses 72,509
Non-interested trustees' 1,161
compensation
Custodian fees and expenses 17,068
Registration fees 51,634
Audit 24,120
Legal 4,014
Miscellaneous 16,238
Total expenses before 2,281,416
reductions
Expense reductions (2,897) 2,278,519
NET INTEREST INCOME 11,008,136
NET REALIZED GAIN (LOSS) ON 105,550
INVESTMENTS
NET INCREASE IN NET ASSETS $ 11,113,686
RESULTING FROM OPERATIONS
OTHER INFORMATION
Expense reductions Custodian $ 2,146
credits
Transfer agent credits 751
$ 2,897
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31,
1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 11,008,136 $ 9,359,441
Net realized gain (loss) 105,550 (5,424)
NET INCREASE (DECREASE) IN 11,113,686 9,354,017
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (11,008,136) (9,359,441)
from net interest income
Share transactions at net 1,226,615,907 853,454,247
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 10,660,639 9,020,140
distributions from net
interest income
Cost of shares redeemed (1,150,056,582) (793,055,319)
NET INCREASE (DECREASE) IN 87,219,964 69,419,068
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 87,325,514 69,413,644
IN NET ASSETS
NET ASSETS
Beginning of period 357,353,700 287,940,056
End of period $ 444,679,214 $ 357,353,700
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
Income from Investment .028 .030 .031 .030 .033
Operations Net interest
income
Less Distributions
From net interest income (.028) (.030) (.031) (.030) (.033)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN A 2.82% 3.00% 3.18% 3.00% 3.38%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 444,679 $ 357,354 $ 287,940 $ 260,592 $ 231,259
(000 omitted)
Ratio of expenses to average .58% .60% .61% .62% .63%
net assets
Ratio of expenses to average .58% .59% B .61% .61% B .63%
net assets after expense
reductions
Ratio of net interest income 2.80% 2.97% 3.14% 2.96% 3.32%
to average net assets
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B 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 December 31, 1999
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 regulations which may differ from generally accepted
accounting principles. These
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS -
CONTINUED
differences, which may result in distribution reclassifications, are
primarily due to differing treatments for futures transactions,
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 after the
customary settlement period for that security. The price of the
underlying securities is fixed at the time the transaction is
negotiated. 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 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
2. OPERATING POLICIES -
CONTINUED
FUTURES CONTRACTS - CONTINUED
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 $82,800,105 and $89,892,106, respectively.
The market value of futures contracts opened and closed during the
period amounted to $43,337,477 and $50,768,695, 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 0.0920% 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 annual rates of .38% of average net assets for
the income fund and the money market fund.
SUB-ADVISER FEE. As the income 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 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 annual
rate of 0.09% and 0.15% of average net assets for the income fund and
the money market fund, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
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.
Through arrangements with the funds' custodian and transfer agent,
credits realized as a result of uninvested cash balances were used to
reduce a portion of each applicable fund's expenses. For the period,
the reductions under these arrangements are shown under the caption
"Other Information" on each applicable fund's Statement of Operations.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Municipal Trust and Fidelity Municipal
Trust II and the Shareholders of Spartan Michigan Municipal Income
Fund and Fidelity Michigan Municipal Money Market Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Spartan Michigan Municipal Income Fund (a fund of Fidelity Municipal
Trust) and Fidelity Michigan Municipal Money Market Fund (a fund of
Fidelity Municipal Trust II) at December 31, 1999, and the results of
their operations, the changes in their net assets and the financial
highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the funds'
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with auditing standards
generally accepted in the United States which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at December
31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 10, 2000
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 (FAST SM)
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 1-800-544-0240 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 75039-5587
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 75039-5587
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
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INVESTMENT ADVISER
Fidelity Management & Research Company
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INVESTMENT SUB-ADVISER,
MONEY MARKET FUND
Fidelity Investment Money
Management, Inc. (FIMM)
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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
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
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
Ned C. Lautenbach
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and
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(2_FIDELITY_LOGOS)
SPARTAN(REGISTERED TRADEMARK)
OHIO MUNICIPAL INCOME
FUND
AND
FIDELITY (REGISTERED TRADEMARK)
OHIO MUNICIPAL MONEY MARKET
FUND
ANNUAL REPORT
DECEMBER 31, 1999
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.
REPORT OF INDEPENDENT 47 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 48
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 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
The NASDAQ, S&P 500(Registered trademark) and Dow Jones Industrial
Average all closed 1999 at record highs. Investors should note,
however, that much of the year's returns were driven by a single
sector: technology. Most other stocks were flat or down in 1999.
Likewise, bond investors had little cause to celebrate at year's end.
Steadily rising interest rates left the benchmark 30-year Treasury at
its highest yield level in two years.
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 1-800-544-6666, 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 five years, and past 10
years total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SPARTAN OH MUNICIPAL INCOME -2.83% 35.60% 87.68%
LB Ohio 4 Plus Year Enhanced -2.45% 38.66% n/a
Municipal Bond
Ohio Municipal Debt Funds -4.02% 32.33% 82.27%
Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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
one year average represents a peer group of 51 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 DECEMBER 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SPARTAN OH MUNICIPAL INCOME -2.83% 6.28% 6.50%
LB Ohio 4 Plus Year Enhanced -2.45% 6.76% n/a
Municipal Bond
Ohio Municipal Debt Funds -4.02% 5.75% 6.18%
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
1989/12/31 10000.00 10000.00
1990/01/31 9906.17 9952.70
1990/02/28 10018.22 10041.28
1990/03/31 10029.61 10044.29
1990/04/30 9877.15 9971.57
1990/05/31 10133.03 10189.25
1990/06/30 10237.63 10278.81
1990/07/31 10391.53 10429.91
1990/08/31 10228.09 10278.47
1990/09/30 10306.22 10284.33
1990/10/31 10453.18 10470.89
1990/11/30 10698.67 10681.46
1990/12/31 10749.91 10727.92
1991/01/31 10869.11 10871.89
1991/02/28 10937.60 10966.47
1991/03/31 10957.65 10970.42
1991/04/30 11128.58 11116.33
1991/05/31 11219.66 11215.15
1991/06/30 11179.28 11204.05
1991/07/31 11333.25 11340.52
1991/08/31 11446.60 11489.87
1991/09/30 11582.02 11639.47
1991/10/31 11686.36 11744.22
1991/11/30 11706.68 11776.99
1991/12/31 11980.34 12029.72
1992/01/31 12001.64 12057.15
1992/02/29 12009.41 12061.01
1992/03/31 12000.54 12065.47
1992/04/30 12097.11 12172.86
1992/05/31 12260.91 12316.13
1992/06/30 12477.19 12522.79
1992/07/31 12837.51 12898.23
1992/08/31 12694.29 12772.47
1992/09/30 12769.69 12856.00
1992/10/31 12537.29 12729.63
1992/11/30 12871.35 12957.62
1992/12/31 13018.25 13089.91
1993/01/31 13188.34 13242.15
1993/02/28 13658.14 13721.12
1993/03/31 13498.60 13576.08
1993/04/30 13622.44 13713.07
1993/05/31 13691.02 13790.13
1993/06/30 13918.74 14020.29
1993/07/31 13939.39 14038.66
1993/08/31 14263.86 14330.94
1993/09/30 14434.52 14494.17
1993/10/31 14444.01 14522.15
1993/11/30 14321.18 14394.21
1993/12/31 14653.17 14698.07
1994/01/31 14831.28 14865.92
1994/02/28 14437.55 14480.89
1994/03/31 13826.67 13891.23
1994/04/30 13932.08 14009.03
1994/05/31 14026.71 14130.49
1994/06/30 14005.29 14044.15
1994/07/31 14226.67 14301.58
1994/08/31 14271.79 14351.06
1994/09/30 14097.93 14140.39
1994/10/31 13823.72 13889.26
1994/11/30 13520.12 13638.14
1994/12/31 13840.41 13938.31
1995/01/31 14255.72 14336.67
1995/02/28 14651.45 14753.58
1995/03/31 14802.91 14923.10
1995/04/30 14833.62 14940.71
1995/05/31 15269.56 15417.47
1995/06/30 15137.38 15283.33
1995/07/31 15220.95 15428.22
1995/08/31 15398.84 15623.85
1995/09/30 15520.26 15722.75
1995/10/31 15726.79 15951.36
1995/11/30 15971.59 16215.99
1995/12/31 16109.33 16371.83
1996/01/31 16232.10 16495.43
1996/02/29 16125.73 16384.09
1996/03/31 15896.91 16174.70
1996/04/30 15834.84 16128.93
1996/05/31 15816.60 16122.47
1996/06/30 15979.97 16298.05
1996/07/31 16117.97 16446.36
1996/08/31 16115.35 16442.41
1996/09/30 16369.41 16672.61
1996/10/31 16568.23 16861.17
1996/11/30 16881.01 17169.73
1996/12/31 16790.60 17097.62
1997/01/31 16830.90 17129.94
1997/02/28 16967.65 17287.19
1997/03/31 16726.89 17056.75
1997/04/30 16840.57 17199.52
1997/05/31 17075.98 17458.20
1997/06/30 17264.81 17644.13
1997/07/31 17744.02 18132.87
1997/08/31 17557.73 17962.96
1997/09/30 17764.26 18176.18
1997/10/31 17881.01 18293.06
1997/11/30 17965.36 18400.62
1997/12/31 18257.51 18669.08
1998/01/31 18438.03 18861.75
1998/02/28 18401.21 18867.41
1998/03/31 18410.56 18884.01
1998/04/30 18307.33 18798.84
1998/05/31 18585.77 19096.43
1998/06/30 18624.79 19171.67
1998/07/31 18666.00 19219.79
1998/08/31 18978.55 19516.74
1998/09/30 19242.39 19759.92
1998/10/31 19202.31 19759.52
1998/11/30 19273.22 19828.88
1998/12/31 19314.48 19878.84
1999/01/31 19569.97 20115.20
1999/02/28 19439.35 20027.30
1999/03/31 19465.36 20055.14
1999/04/30 19488.58 20105.08
1999/05/31 19364.12 19988.67
1999/06/30 19034.72 19700.83
1999/07/31 19111.20 19772.54
1999/08/31 18934.25 19614.36
1999/09/30 18957.98 19622.40
1999/10/31 18746.42 19409.70
1999/11/30 18907.60 19616.22
1999/12/31 18767.92 19470.07
IMATRL PRASUN SHR__CHT 19991231 20000111 113517 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Spartan Ohio Municipal Income Fund on December 31, 1989.
As the chart shows, by December 31, 1999, the value of the investment
would have grown to $18,768 a 87.68% 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 $19,470 - a 94.70% increase.
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.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
Dividend returns 4.48% 4.69% 5.08% 4.98% 6.22%
Capital returns -7.31% 1.10% 3.66% -0.75% 10.17%
Total returns -2.83% 5.79% 8.74% 4.23% 16.39%
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 DECEMBER 31, PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
1999
Dividends per share 4.58(cents) 27.07(cents) 53.60(cents)
Annualized dividend rate 4.94% 4.85% 4.72%
30-day annualized yield 4.95% - -
30-day annualized 8.36% - -
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
$10.92 over the past one month, $11.08 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 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
A combination of three interest-rate
hikes by the Federal Reserve board,
near-constant inflation
expectations, the continuation of
a strong U.S. equity market and
weak institutional demand all
contributed to a decline in the
municipal bond market in 1999.
For the 12-month period ending
December 31, 1999, the Lehman
Brothers Municipal Bond Index -
an index of over 35,000
investment-grade, fixed-rate,
tax-exempt bonds - fell 2.06%.
Retail investors dominated demand,
in contrast to the more typical
institutional buying of recent years.
In comparison to other fixed-income
investments, municipal bonds had
mixed results. Relative to long-term
government bonds, muni
performance was stellar, as the total
return on 30-year Treasuries was the
lowest - according to Morningstar
- - since the U.S. Treasury started
regular long bond auctions in
1977. For the one-year period
ending December 31, 1999, the
Lehman Brothers Long-Term
Government Bond Index fell 8.73%.
Spread sectors fared somewhat
better than their municipal
counterparts. The Lehman Brothers
Corporate Bond Index was down
1.96% for the period, but mortgage
securities were one of the better
domestic debt offerings of 1999, with
a one- year return of 1.86%
according to the Lehman Brothers
Mortgage-Backed Securities Index.
Meanwhile, the Lehman Brothers
Aggregate Bond Index - a broad
measure of the taxable bond market
- - posted a marginally negative
return of -0.82%.
(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. Although rising interest rates and persistent inflation worries put
pressure on bond prices, the fund performed significantly better than
its peers over the past year. For the 12-month period that ended
December 31, 1999, the fund had a total return of -2.83%. To get a
sense of how the fund did relative to its competitors, the Ohio
municipal debt funds average returned -4.02% for the same 12-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 -2.45%.
Q. WHAT STRATEGIES HELPED THE FUND OUTPACE ITS PEERS?
A. I positioned the fund to be fairly defensive, which was the main
reason why it outperformed its peers. By defensive, I'm referring to
its stake in bonds that tended to hold their value better under
adverse market conditions. Some of the fund's best performers over the
past year were premium coupon bonds with interest rates of 5.5% to
6.0%. Premiums, as they are known, carry coupons higher than
prevailing interest rates and 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
refinancing-like process that generally is positive for their prices.
Second, premium bonds are somewhat protected from the unfavorable tax
treatment and price performance that can hurt discount bonds when
interest rates rise. 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 premiums at
attractive prices relative to comparably rated par bonds with similar
maturities.
Q. WHAT OTHER TYPES OF BONDS PROVED DEFENSIVE AGAINST THE MARKET'S
DOWNDRAFT?
A. The fund's focus on high-quality securities - roughly two-thirds of
the fund's net assets were in bonds rated Aaa - also helped. Problems
with scattered lower-rated Baa securities prompted investors to demand
higher yields, causing many Baa-rated securities to underperform
higher-rated securities. The fund's emphasis on intermediate-maturity
bonds also was a plus. Because intermediates are less interest-rate
sensitive than longer-term bonds, they outperformed their longer-term
counterparts as interest rates rose.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Aside from the market's overall downturn, I'd say the biggest
disappointments were the fund's limited holdings in longer-maturity
discount bonds. Their heightened interest-rate sensitivity, coupled
with the fact that they were discount bonds and, therefore, subject to
the unfavorable tax treatment I mentioned earlier, really hurt these
bonds.
Q. CUTBACKS IN FEDERALLY FUNDED HEALTH CARE PAYMENTS AND OTHER
NEGATIVE DEVELOPMENTS HURT THE HEALTH CARE SECTOR AS A WHOLE DURING
THE PAST YEAR. WHAT INFLUENCE DID THAT DEVELOPMENT HAVE ON THE FUND?
A. While the fund wasn't immune from those troubles, it did have a
smaller stake in health care bonds than many of its peers. It's also
important to note that the vast majority of the health care bonds the
fund owned were insured. While insurance doesn't protect the bonds
against price declines, it does provide insulation from adverse
developments at the issuer level.
Q. GEORGE, WHAT'S YOUR OUTLOOK?
A. As it always is, the direction of interest rates will be the
primary factor that determines the municipal market's performance.
It's not clear at this point whether the Federal Reserve Board is
finished raising interest rates as it did in June, August and
November, or whether those rate hikes were just a preview of things to
come. But other factors - namely supply and demand - also will play a
role. If interest rates remain stable or move higher, I would expect
the supply of municipals to continue to taper off as issuers slow down
their refinancing and new issuance activity. We've also seen an
increase in the demand for municipal bonds as individual investors
look to lock in higher yields. To the extent that investors continue
on that course, the more municipals will likely benefit. While
longer-maturity and lower-quality bonds have performed poorly over the
past several months, there may be opportunities to pick up
attractively priced, higher-yielding securities. But I plan to be very
selective, keeping the bulk of the fund's investments in high-quality,
intermediate-maturity bonds that I feel offer the best combination of
reward and risk.
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.
GEORGE FISCHER ON CHOOSING
INVESTMENTS FOR THE FUND:
"When selecting individual bonds
for inclusion in the fund, credit
research is always the starting point.
Using a very rigorous research
process, and with the help of
Fidelity's credit research team, I look
for investment-grade bonds from
issuers that have exhibited fiscal
prudence and are well-managed.
After completing careful credit
research, I then consider
structural characteristics, such as
maturity, call features, coupons
and others. Because so much of
the municipal market is insured,
it's often challenging to add value
through credit research. So I look
for opportunities to take
advantage of pricing anomalies
that creep up due to a fund's
structural characteristics."
(solid bullet) General obligation bonds
(GOs) were the fund's largest
sector concentration throughout
the past year, making up 32.4% of
the fund's net assets at the end of
the period. A GO is backed by the
full faith and credit - which
includes the taxing power - of a
city, county, state or other issuer.
GOs are repaid through general
revenues - including individual
and corporate taxes -
collected by the issuer.
FUND FACTS
GOAL: high-current tax-free
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 December 31,
1999, more than $352
million
MANAGER: George Fischer,
since 1997; manager,
various Fidelity and Spartan
municipal income funds;
joined Fidelity in 1989
(checkmark)
SPARTAN OHIO MUNICIPAL INCOME FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE SECTORS AS OF
DECEMBER 31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Obligations 32.4 30.5
Escrowed/Pre-Refunded 12.5 12.0
Water & Sewer 12.2 13.9
Electric Utilities 9.0 9.3
Education 8.6 7.4
AVERAGE YEARS TO MATURITY AS
OF DECEMBER 31, 1999
6 MONTHS AGO
Years 13.3 12.8
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF DECEMBER 31,
1999
6 MONTHS AGO
Years 7.3 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
(MOODY'S RATINGS)
AS OF DECEMBER 31, 1999
Row: 1, Col: 1, Value: 64.09999999999999
Row: 1, Col: 2, Value: 26.1
Row: 1, Col: 3, Value: 6.1
Row: 1, Col: 4, Value: 0.3
Row: 1, Col: 5, Value: 2.6
Row: 1, Col: 6, Value: 0.8
AS OF JUNE 30, 1999
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: 0.0
Row: 1, Col: 5, Value: 2.4
Row: 1, Col: 6, Value: 2.3
Aaa 64.1%
Aa, A 26.1%
Baa 6.1%
Ba and Below 0.3%
Not Rated 2.6%
Short-term
Investments 0.8%
Aaa 63.3%
Aa, A 25.6%
Baa 6.4%
Ba and Below 0.0%
Not Rated 2.4%
Short-term
Investments 2.3%
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.
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
SPARTAN OHIO MUNICIPAL INCOME FUND
INVESTMENTS DECEMBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 98.3%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - 94.8%
Adams County Valley Local
School District Impt.:
6.65% 12/1/03 (MBIA Insured) Aaa $ 1,000,000 $ 1,070,260
6.65% 12/1/04 (MBIA Insured) Aaa 1,000,000 1,083,700
6.65% 12/1/05 (MBIA Insured) Aaa 1,000,000 1,089,630
Akron Gen. Oblig. (Parking A1 160,000 182,053
Facilities) 8.75% 11/1/03
Akron Wtrwks. Rev. Rfdg. Aaa 2,000,000 1,882,520
4.875% 3/1/12 (MBIA Insured)
Akron-Summit County Pub. Aaa 5,000,000 4,485,550
Library Series A, 5% 12/1/15
(FGIC Insured) (b)
Alliance Wtrwks. Rev. (Cap. Aaa 765,000 535,936
Appreciation) 0% 10/15/06
(FGIC Insured) (Escrowed to
Maturity) (e)
Avon Lake City School Aaa 7,830,000 7,231,553
District 5.5% 12/1/26 (FGIC
Insured)
Bedford Hosp. Impt. Rev. - 650,000 672,874
Rfdg. (Bedford Cmnty. Hosp.
Proj.) 8.5% 5/15/09
(Pre-Refunded to 5/15/00 @
102) (e)
Buckeye Local School District
Rfdg. (Cap. Appreciation)
(Jefferson County):
0% 12/1/06 (AMBAC Insured) Aaa 375,000 263,314
0% 12/1/07 (AMBAC Insured) Aaa 760,000 504,359
Buckeye Valley Local School Aaa 2,500,000 2,811,600
District Delaware County
Series A, 6.85% 12/1/15
(MBIA Insured)
Butler County Sales Tax 5% Aaa 2,000,000 1,751,840
12/15/19 (AMBAC Insured)
Cincinnati Student Ln. Fdg.
Corp. Student Ln. Rev.:
Rfdg. Series A, 7.25% 2/1/08 A 4,000,000 4,059,360
(d)
Series A, 5.5% 12/1/01 (d) A1 5,270,000 5,291,396
Cleveland Arpt. Sys. Rev.
Series A:
5.5% 1/1/08 (FSA Insured) (d) Aaa 1,500,000 1,524,285
6% 1/1/10 (FGIC Insured) (d) Aaa 2,620,000 2,696,242
Cleveland Gen. Oblig.:
Rfdg.:
5.375% 9/1/11 (AMBAC Insured) Aaa 1,960,000 1,954,884
5.5% 9/1/16 (AMBAC Insured) Aaa 2,000,000 1,942,120
5.375% 11/15/11 (FGIC Insured) Aaa 1,050,000 1,047,249
5.5% 11/15/12 (FGIC Insured) Aaa 1,350,000 1,351,499
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Cleveland Pub. Pwr. Sys. Rev.:
(Cap. Appreciation) (First
Mtg.) Series A:
0% 11/15/08 (MBIA Insured) Aaa $ 5,480,000 $ 3,440,399
0% 11/15/10 (MBIA Insured) Aaa 2,685,000 1,478,200
0% 11/15/11 (MBIA Insured) Aaa 2,685,000 1,384,789
Rfdg. (First Mtg.) Series 1:
5% 11/15/20 (MBIA Insured) Aaa 1,145,000 1,000,845
5.125% 11/15/18 (MBIA Insured) Aaa 2,000,000 1,801,320
5.25% 11/15/14 (MBIA Insured) Aaa 1,000,000 952,050
Cleveland Wtrwks. Rev.:
(First Mtg.):
Series F92 A, 6.25% 1/1/15 Aaa 125,000 128,948
(AMBAC Insured)
Series H:
5.75% 1/1/16 (MBIA Insured) Aaa 45,000 45,000
5.75% 1/1/16 (MBIA Insured) Aaa 2,455,000 2,589,730
(Pre-Refunded to 1/1/06 @
102) (e)
Rfdg.:
(First Mtg.) Series F92 B, Aaa 1,000,000 1,045,000
6.25% 1/1/05 (AMBAC Insured)
Rfdg. & Impt. Series I:
5% 1/1/23 (FSA Insured) Aaa 9,520,000 8,212,043
5% 1/1/28 (FSA Insured) Aaa 4,100,000 3,468,887
Columbus Gen. Oblig.:
(Various Purp. Proj.) Series Aaa 1,000,000 1,063,320
1, 6% 5/15/10 (Pre-Refunded
to 5/15/04 @ 102) (e)
(Wtrwks. Enlargement #44 Aaa 1,250,000 1,319,975
Proj.) 6% 5/1/12
(Pre-Refunded to 5/1/03 @
102) (e)
Rfdg. Series D, 5.25% 9/15/11 Aaa 2,000,000 1,985,260
Series 1, 5.25% 9/15/11 Aaa 2,000,000 1,985,260
Cuyahoga County Gen. Oblig.:
Rfdg. (Cap. Appreciation)
Series A:
0% 10/1/08 (MBIA Insured) Aaa 4,000,000 2,527,400
0% 10/1/09 (MBIA Insured) Aaa 4,200,000 2,501,562
0% 10/1/11 (MBIA Insured) Aaa 2,400,000 1,260,624
0% 10/1/12 (MBIA Insured) Aaa 1,505,000 740,054
0% 10/1/13 (MBIA Insured) Aaa 1,500,000 688,365
5.5% 11/15/05 Aa1 2,400,000 2,470,680
Cuyahoga County Hosp. Rev. Aaa 2,000,000 1,851,700
(Univ. Hosp. Health Sys.,
Inc. Proj.) 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 $ 590,360
12/1/09 (FGIC Insured)
5.5% 12/1/08 (FGIC Insured) Aaa 1,400,000 1,423,100
Delaware County Swr. District Aaa 4,000,000 3,195,120
Impt. 4.75% 12/1/24 (MBIA
Insured)
Dublin City School District:
(Various Purp. Proj.) 6.2% Aaa 1,400,000 1,483,944
12/1/19 (AMBAC Insured)
(Pre-Refunded to 12/1/02 @
102) (e)
Rfdg. (Cap. Appreciation) 0% Aaa 1,930,000 1,514,529
12/1/04 (AMBAC Insured)
Fairfield City School District:
7.1% 12/1/07 (FGIC Insured) Aaa 1,120,000 1,257,704
7.45% 12/1/14 (FGIC Insured) Aaa 1,000,000 1,182,880
Franklin County Convention Aaa 2,000,000 1,685,380
Facilities Auth. Tax & Lease
Rev. 5% 12/1/27 (MBIA
Insured)
Franklin County Gen. Oblig.:
Rfdg. 5.375% 12/1/20 Aaa 2,000,000 1,856,320
5.5% 12/1/15 Aaa 1,225,000 1,201,762
5.5% 12/1/16 Aaa 1,290,000 1,256,460
Franklin County Gen. Oblig.
Rev. (Online Computer
Library Ctr., Inc. Proj.):
6% 4/15/13 - 3,500,000 3,517,150
7.2% 7/15/06 (Pre-Refunded to - 1,000,000 1,038,370
7/15/01 @ 100) (e)
Franklin County Hosp. Rev. Baa3 5,000,000 3,990,600
(Ohio Doctors Health Corp.
Proj.) Series A, 5.6% 12/1/28
Gallia County Hosp. Aaa 3,000,000 2,833,170
Facilities Rev. (Holzer
Med. Ctr. Proj.) 5.125%
10/1/13 (AMBAC Insured)
Gateway Economic Dev. Corp. - 3,000,000 2,969,730
Greater Cleveland Stadium
Rev. Series 1990, 6.5%
9/15/14 (d)
Greater Cleveland Reg'l. Aaa 1,800,000 1,883,538
Trans. Auth. 5.65% 12/1/16
(FGIC Insured) (Pre-Refunded
to 12/1/06 @ 101) (e)
Greene County Gen. Oblig. Aaa 2,490,000 2,453,248
Rev. Rfdg. (Fairview
Extended Proj.) Series B,
4.5% 1/1/11 (MBIA Insured)
Greene County Swr. Sys. Rev. Aaa 775,000 457,529
(Cap. Appreciation) 0%
12/1/09 (AMBAC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Greene County Wtr. Sys. Rev. Aaa $ 2,500,000 $ 2,522,725
Series A, 6% 12/1/16 (FGIC
Insured)
Hamilton County Health Care
Sys. Rev. (Sisters of
Charity Health Care Proj.)
Series A:
6.25% 5/15/08 (AMBAC Insured) Aaa 4,220,000 4,454,294
(Pre-Refunded to 5/15/03 @
101) (e)
6.25% 5/15/14 (AMBAC Insured) Aaa 1,000,000 1,055,520
(Pre-Refunded to 5/15/03 @
101) (e)
Hamilton County Gen. Oblig.:
5.25% 12/1/15 Aa2 1,795,000 1,696,347
5.25% 12/1/16 Aa2 1,900,000 1,780,034
5.25% 12/1/17 Aa2 2,005,000 1,861,562
Hamilton County Health Sys. Baa2 5,000,000 5,345,350
Rev. Rfdg. (Providence
Hosp./Franciscan Sisters
Poor Health Sys. Proj.)
6.875% 7/1/15 (Pre-Refunded
to 7/1/02 @ 102) (e)
Hamilton County Sales Tax Aaa 2,250,000 1,901,295
(Football Stadium Proj.)
Series B, 5% 12/1/27 (MBIA
Insured)
Hamilton County Swr. Sys.
Rev. Rfdg. & Impt.:
(Metro. Swr. District Proj.) Aaa 3,200,000 3,269,600
Series A, 5.45% 12/1/09
(FGIC Insured)
Series A, 6% 12/1/05 (FGIC Aaa 4,500,000 4,766,580
Insured)
Hamilton Elec. Sys. Mtg. Rev.
Rfdg. Series A:
6% 10/15/09 (FGIC Insured) Aaa 2,920,000 3,038,815
6% 10/15/12 (FGIC Insured) Aaa 2,000,000 2,072,800
Hilliard School District Aaa 1,415,000 1,495,103
Series A, 6% 12/1/05 (FGIC
Insured)
Lakewood Gen. Oblig. Series A:
6.6% 12/1/08 Aa3 1,525,000 1,661,167
6.6% 12/1/11 Aa3 1,630,000 1,774,043
Lakota Local School District
Rfdg. (Cap. Appreciation):
0% 12/1/00 Aa3 625,000 601,913
0% 12/1/01 Aa3 590,000 540,517
0% 12/1/02 Aa3 555,000 482,178
0% 12/1/03 Aa3 260,000 214,474
0% 12/1/04 Aa3 730,000 570,115
0% 12/1/05 Aa3 690,000 509,275
0% 12/1/06 Aa3 650,000 453,343
0% 12/1/07 Aa3 610,000 401,703
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Lima Swr. Sys. Rev. Rfdg. &
Impt.:
6.3% 12/1/12 (AMBAC Insured) Aaa $ 2,500,000 $ 2,633,525
6.3% 12/1/12 (AMBAC Insured) Aaa 2,500,000 2,656,625
(Pre-Refunded to 12/1/02 @
102) (e)
Lowellville San. Swr. Sys. BB- 900,000 908,793
Rev. (Browning-Ferris
Industries, Inc. Proj.)
7.25% 6/1/06 (d)
Lucas County Hosp. Rev.
(Promedia Healthcare Oblig.
Group):
5.375% 11/15/23 (AMBAC Aaa 5,000,000 4,517,550
Insured)
5.625% 11/15/12 (AMBAC Aaa 2,000,000 1,989,200
Insured)
5.625% 11/15/13 (AMBAC Aaa 1,200,000 1,177,464
Insured)
Marion County Hosp. Impt.
Rev. Rfdg. (Cmnty. Hosp.
Proj.):
5.7% 5/15/02 BBB+ 1,500,000 1,491,720
5.8% 5/15/03 BBB+ 1,825,000 1,811,148
6.1% 5/15/06 BBB+ 1,000,000 981,930
Mason City School District:
6.05% 12/1/09 (FGIC Insured) Aaa 1,225,000 1,303,216
6.15% 12/1/10 (FGIC Insured) Aaa 1,420,000 1,520,792
Mentor Exempted Village
School District Rfdg. (Cap.
Appreciation):
0% 12/1/00 (MBIA Insured) Aaa 755,000 726,914
0% 12/1/01 (MBIA Insured) Aaa 795,000 728,323
0% 12/1/03 (MBIA Insured) Aaa 840,000 695,562
Middleburg Heights Hosp. Rev. A2 2,000,000 2,121,080
Impt. (Southwest Gen. Hosp.
Proj.) 7.2% 8/15/19
(Pre-Refunded to 8/15/01 @
102) (e)
Montgomery County Solid Waste Aaa 1,940,000 2,053,451
Rev. Rfdg. 6% 11/1/05 (MBIA
Insured)
Newark Gen. Oblig. (Cap. Aaa 455,000 301,952
Appreciation) (Wtr. Sys.
Impt. Proj.) 0% 12/1/07
(AMBAC Insured)
North Canton School District Aaa 2,000,000 2,127,640
Impt. 5.9% 12/1/14 (AMBAC
Insured) (Pre-Refunded to
12/1/04 @ 102) (e)
Northeast Ohio Reg'l. Swr. Aaa 1,000,000 1,064,450
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 3,110,190
Proj.) Series A, 6.375%
12/1/20 (FGIC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Ohio Air Quality Dev. Auth.
Rev.: - continued
Rfdg.:
(Dayton Pwr. & Lt. Co. Proj.) A1 $ 4,000,000 $ 3,870,760
6.1% 9/1/30
Bonds (Ohio Edison Proj.) Baa3 5,000,000 4,884,200
Series A, 4.25%, tender
6/1/01
Ohio Bldg. Auth.:
(Administration Bldg. Fund
Proj.) Series A:
4.875% 10/1/10 Aa2 1,000,000 955,520
5.25% 10/1/10 Aa2 2,550,000 2,536,256
(Ohio Ctr. Arts Proj.) Series Aa2 2,000,000 2,045,480
A, 5.45% 10/1/07
(State Correctional Adult Aa2 1,000,000 919,500
Facilities Proj.) Series A,
5.25% 10/1/17
(W. Green Bldg. Proj.) Series A2 4,620,000 4,127,323
A, 4.75% 4/1/14
Rfdg. (State Correctional
Adult Facilities Proj.)
Series A:
5.25% 10/1/09 Aa2 1,350,000 1,347,179
5.7% 10/1/04 Aa2 1,125,000 1,168,380
Ohio Cap. Corp. for Hsg. AAA 1,000,000 1,028,750
Multi-family Rev. Rfdg.
Series A, 7.5% 1/1/24
Ohio Expositions Commission - 885,000 902,488
Ctfs. of Prtn. (Agricenter
Facilities Proj.) 8.25%
10/1/06 (Pre-Refunded to
4/1/00 @ 101) (e)
Ohio Higher Edl. Facilities
Rev.:
(Case Western Reserve Univ.
Proj.):
Series B, 6.5% 10/1/20 Aa2 2,250,000 2,404,418
Series C, 5.125% 10/1/17 Aa2 2,985,000 2,695,186
6% 10/1/22 Aa2 650,000 661,707
(Denison Univ. Proj.) 5.3% A1 3,775,000 3,433,665
11/1/21
(Oberlin College Proj.) 5% AA 3,000,000 2,506,260
10/1/29
Rfdg. (Case Western Reserve
Univ. Proj.):
6% 10/1/14 Aa2 1,500,000 1,537,905
6.125% 10/1/15 Aa2 2,000,000 2,067,960
6.25% 10/1/16 Aa2 2,500,000 2,610,600
Series II B, 5.9% 12/1/06 Aaa 1,000,000 1,038,390
(AMBAC Insured)
Ohio Hsg. Fin. Agcy. Mtg.
Rev. (Residential Proj.):
Series A1, 5.3% 9/1/26 (d) AAA 1,290,000 1,294,334
Series B2, 5.375% 9/1/19 (d) AAA 3,425,000 3,428,528
Series C, 4.9% 9/1/26 (d) AAA 1,390,000 1,375,933
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Ohio Hwy. Cap. Impt.
(Infrastructure Impt. Proj.):
0% 8/1/09 Aa1 $ 2,290,000 $ 1,376,061
0% 8/1/10 Aa1 2,000,000 1,130,280
0% 8/1/14 Aa1 1,375,000 594,261
5.75% 8/1/04 Aa1 1,000,000 1,039,380
6.15% 8/1/10 (Pre-Refunded to Aa1 3,530,000 3,789,490
8/1/05 @ 102) (e)
6.5% 9/1/01 Aa1 1,000,000 1,032,940
6.65% 8/1/05 Aa1 3,000,000 3,257,040
6.65% 9/1/09 Aa1 1,000,000 1,083,200
Ohio Poll. Cont. Rev. Aa2 3,100,000 3,412,790
(Standard Oil Co. Proj.)
6.75% 12/1/15
Ohio Pub. Facilities
Commission Rev.:
(Higher Ed. Facilities Proj.) Aaa 2,000,000 2,085,380
Series II A, 6.3% 5/1/03
(AMBAC Insured)
(Pre-Refunded to 5/1/01 @
102) (e)
(Mental Health Cap. Aaa 2,600,000 2,529,852
Facilities Proj.) Series II
B, 5.125% 6/1/11 (FSA
Insured)
Ohio Tpk. Commission Rev.:
Rfdg. Series A, 5.5% 2/15/21 Aaa 5,000,000 4,730,650
(FGIC Insured)
Series A:
5.5% 2/15/26 (MBIA Insured) Aaa 5,000,000 5,212,000
(Pre-Refunded to 2/15/06 @
102) (e)
5.6% 2/15/12 (MBIA Insured) Aaa 2,840,000 2,863,884
5.7% 2/15/13 (MBIA Insured) Aaa 2,660,000 2,683,993
5.7% 2/15/17 (MBIA Insured) Aaa 2,000,000 2,105,660
(Pre-Refunded to 2/15/06 @
102) (e)
6% 2/15/05 (FSA Insured) Aaa 2,000,000 2,104,100
6% 2/15/06 (FSA Insured) Aaa 2,200,000 2,325,972
Ohio Univ. Gen. Receipts Aa2 3,300,000 3,195,522
Series A, 5.8% 12/1/29
Ohio Wtr. Dev. Auth. Poll.
Cont. Facilities Rev. (Wtr.
Cont. Ln. Fund Prog.):
State Match Series, 6.5% Aaa 2,735,000 2,966,600
12/1/05 (MBIA Insured)
Wtr. Quality Series, 5.125% Aaa 4,000,000 3,575,560
6/1/19 (MBIA Insured)
Ohio Wtr. Dev. Auth. Rev.:
(Fresh Wtr. Proj.) 6.25% Aaa 1,915,000 2,001,520
12/1/02 (AMBAC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Ohio Wtr. Dev. Auth. Rev.: -
continued
(Pure Wtr. Proj.) Series I, Aaa $ 1,685,000 $ 1,711,505
6% 12/1/16 (AMBAC Insured)
(Escrowed to Maturity) (e)
Rfdg. (Safe Wtr. Proj.) 6% Aaa 2,000,000 2,122,460
6/1/07 (AMBAC Insured)
Rfdg. & Impt. (Pure Wtr. Aaa 2,500,000 2,383,700
Proj.) 5.5% 12/1/18 (AMBAC
Insured)
Ohio Wtr. Dev. Auth. Solid A1 6,350,000 6,326,886
Waste Disp. Rev. (North Star
BHP Steel/Cargill Proj.)
6.3% 9/1/20 (d)
Ottawa County San. Swr. Sys. Aaa 1,445,000 1,023,291
Rev. Rfdg. (Cap.
Appreciation) (Danbury
Proj.) 0% 10/1/06 (AMBAC
Insured)
Pickerington Local School Aaa 1,000,000 1,044,690
District Construction &
Impt. 5.8% 12/1/09 (FGIC
Insured)
Portage County Hosp. Rev. Aaa 1,080,000 1,147,835
(Robinson Memorial Hosp.
Proj.) 6.5% 11/15/03 (MBIA
Insured)
Scioto County Marine Term. Baa1 3,000,000 2,747,670
Facilities Rev. Rfdg.
(Norfolk Southern Corp.
Proj.) 5.3% 8/15/13
Southwestern City School Aaa 1,000,000 1,050,460
District Franklin & Pickway
County Rfdg. Series A, 6.2%
12/1/06 (AMBAC Insured)
Springboro Cmnty. City School Aaa 915,000 642,486
District Rfdg. (Cap.
Appreciation) 0% 12/1/06
(AMBAC Insured)
Stark County Gen. Oblig. Aaa 1,150,000 1,174,967
Rfdg. 5.6% 11/15/08 (AMBAC
Insured)
Toledo Gen. Oblig.:
5.5% 12/1/08 (FGIC Insured) Aaa 1,000,000 1,020,580
5.5% 12/1/09 (FGIC Insured) Aaa 1,000,000 1,017,040
6.1% 12/1/14 (AMBAC Insured) Aaa 1,750,000 1,793,225
7.625% 12/1/04 (AMBAC Insured) Aaa 1,000,000 1,123,650
Warren County Gen. Oblig.:
Swr. Impt. (P&G Co./Lower Aa2 1,455,000 1,407,989
Miami Proj.) 5.5% 12/1/16
6.1% 12/1/12 Aa2 500,000 524,410
6.65% 12/1/11 Aa2 500,000 549,115
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Westlake City School District Aa3 $ 1,060,000 $ 1,124,734
Series A, 6.15% 12/1/05
Wyoming City School District Aaa 1,680,000 1,431,898
Series B, 5% 12/1/23 (FGIC
Insured)
334,860,255
PUERTO RICO - 3.5%
Puerto Rico Commonwealth Hwy. Aaa 1,600,000 1,327,872
& Trans. Auth. Trans. Rev.
Series A, 5% 7/1/38 (MBIA
Insured)
Puerto Rico Commonwealth Aaa 7,810,000 6,646,076
Infrastructure Fing. Auth.
Spl. Tax Rev. Series A, 5%
7/1/28 (AMBAC Insured)
Puerto Rico Elec. Pwr. Auth. Aaa 4,000,000 3,403,880
Pwr. Rev. 5% 7/1/28 (MBIA
Insured)
Puerto Rico Muni. Fin. Agcy. Aaa 1,000,000 948,120
Series A, 5.5% 8/1/23 (FSA
Insured)
12,325,948
TOTAL MUNICIPAL BONDS 347,186,203
(Cost $355,019,668)
</TABLE>
MUNICIPAL NOTES - 0.8%
OHIO - 0.8%
Cuyahoga County Hosp. Rev. 600,000 600,000
(Cleveland Clinic Foundation
Proj.) Series 1997 D, 4.8%
(Liquidity Facility Bank of
America Nat'l. Trust &
Savings Assoc.), VRDN (c)
Ohio Air Quality Dev. Auth. 1,200,000 1,200,000
Rev. (Cinncinnati Gas &
Elec. Co. Proj.) Series 1985
A, 4.5%, LOC UBS AG, VRDN (c)
Ohio Solid Waste Rev. 900,000 900,000
(British Petroleum
Exploration & Oil, Inc.
Proj.) Series 1998, 5.35%,
VRDN (c)(d)
TOTAL MUNICIPAL NOTES 2,700,000
(Cost $2,700,000)
TOTAL INVESTMENT PORTFOLIO - 349,886,203
99.1%
(Cost $357,719,668)
NET OTHER ASSETS - 0.9% 3,087,082
NET ASSETS - 100% $ 352,973,285
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FUTURES CONTRACTS
EXPIRATION DATE UNDERLYING FACE AMOUNT AT VALUE UNREALIZED GAIN/LOSS
PURCHASED
42 Bond Buyer Municipal Bond March 2000 $ 3,883,687 $ (54,065)
Index Contracts
</TABLE>
The face value of futures purchased as a percentage of net assets -
1.1%
SECURITY TYPE ABBREVIATIONS
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) S&P credit ratings are used in the absence of a rating by Moody's
Investors Service, Inc.
(b) 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 $219,790.
(c) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(d) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(e) 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 87.5% AAA, AA, A 80.4%
Baa 4.9% BBB 4.9%
Ba 0.0% BB 0.3%
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 2.6%.
The distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
General Obligations 32.4%
Escrowed/Pre-Refunded 12.5
Water & Sewer 12.2
Electric Utilities 9.0
Education 8.6
Health Care 7.0
Transportation 5.8
Others* (individually less 12.5
than 5%)
100.0%
* Includes short-term investments and net other assets.
INCOME TAX INFORMATION
At December 31, 1999, the aggregate cost of investment securities for
income tax purposes was $357,719,668. Net unrealized depreciation
aggregated $7,833,465, of which $4,351,351 related to appreciated
investment securities and $12,184,816 related to depreciated
investment securities.
The fund hereby designates approximately $779,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
SPARTAN OHIO MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
Investment in securities, at $ 349,886,203
value (cost $357,719,668) -
See accompanying schedule
Cash 47,384
Receivable for fund shares 97,116
sold
Interest receivable 4,244,825
TOTAL ASSETS 354,275,528
LIABILITIES
Payable for fund shares $ 695,387
redeemed
Distributions payable 426,888
Accrued management fee 113,703
Payable for daily variation 1,313
on futures contracts
Other payables and accrued 64,952
expenses
TOTAL LIABILITIES 1,302,243
NET ASSETS $ 352,973,285
Net Assets consist of:
Paid in capital $ 361,274,739
Accumulated undistributed net (413,924)
realized gain (loss) on
investments
Net unrealized appreciation (7,887,530)
(depreciation) on investments
NET ASSETS, for 32,510,794 $ 352,973,285
shares outstanding
NET ASSET VALUE, offering $10.86
price and redemption price
per share ($352,973,285
(divided by) 32,510,794
shares)
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
INTEREST INCOME $ 20,099,036
EXPENSES
Management fee $ 1,461,190
Transfer agent fees 327,640
Accounting fees and expenses 118,286
Non-interested trustees' 1,098
compensation
Custodian fees and expenses 15,376
Registration fees 24,330
Audit 34,130
Legal 5,111
Miscellaneous 9,526
Total expenses before 1,996,687
reductions
Expense reductions (15,446) 1,981,241
NET INTEREST INCOME 18,117,795
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 844,966
Futures contracts (461,438) 383,528
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (29,429,058)
Futures contracts (54,065) (29,483,123)
NET GAIN (LOSS) (29,099,595)
NET INCREASE (DECREASE) IN $ (10,981,800)
NET ASSETS RESULTING FROM
OPERATIONS
OTHER INFORMATION
Expense reductions
Custodian credits $ 4,251
Transfer agent credits 11,195
$ 15,446
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 18,117,795 $ 17,882,883
Net realized gain (loss) 383,528 4,885,546
Change in net unrealized (29,483,123) (906,060)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (10,981,800) 21,862,369
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (18,117,795) (17,882,883)
From net interest income
From net realized gain (383,528) (3,506,383)
In excess of net realized (392,840) -
gain
TOTAL DISTRIBUTIONS (18,894,163) (21,389,266)
Share transactions Net 69,846,503 66,919,917
proceeds from sales of shares
Reinvestment of distributions 13,297,374 15,535,211
Cost of shares redeemed (96,460,366) (75,669,488)
NET INCREASE (DECREASE) IN (13,316,489) 6,785,640
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) (43,192,452) 7,258,743
IN NET ASSETS
NET ASSETS
Beginning of period 396,165,737 388,906,994
End of period $ 352,973,285 $ 396,165,737
OTHER INFORMATION
Shares
Sold 6,106,427 5,687,666
Issued in reinvestment of 1,172,502 1,322,589
distributions
Redeemed (8,525,683) (6,432,601)
Net increase (decrease) (1,246,754) 577,654
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 11.740 $ 11.720 $ 11.430 $ 11.590 $ 10.520
of period
Income from Investment .536 .538 .554 .560 .618
Operations Net interest
income
Net realized and unrealized (.857) .125 .413 (.090) 1.070
gain (loss)
Total from investment (.321) .663 .967 .470 1.688
operations
Less Distributions
From net interest income (.536) (.538) (.554) (.560) (.618)
From net realized gain (.011) (.105) (.105) (.070) -
In excess of net realized gain (.012) - (.018) - -
Total distributions (.559) (.643) (.677) (.630) (.618)
Net asset value, end of period $ 10.860 $ 11.740 $ 11.720 $ 11.430 $ 11.590
TOTAL RETURN A (2.83)% 5.79% 8.74% 4.23% 16.39%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 352,973 $ 396,166 $ 388,907 $ 381,626 $ 404,443
(000 omitted)
Ratio of expenses to average .52% .55% B .56% B .59% .58%
net assets
Ratio of expenses to average .51% C .55% .56% .59% .58%
net assets after expense
reductions
Ratio of net interest income 4.71% 4.58% 4.83% 4.93% 5.52%
to average net assets
Portfolio turnover rate 14% 19% 15% 43% 48%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B 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.
C 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 past 10 years total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY OH MUNICIPAL MONEY 2.86% 16.83% 39.08%
MARKET
Ohio Tax-Free Money Market 2.73% 16.47% 37.49%
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 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 one year average represents a peer group of 13 mutual funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY OH MUNICIPAL MONEY 2.86% 3.16% 3.35%
MARKET
Ohio Tax-Free Money Market 2.73% 3.09% 3.23%
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
1/3/00 9/27/99 6/28/99 3/29/99 12/28/98
Fidelity Ohio Municipal 4.16% 3.09% 2.95% 2.63% 3.18%
Money Market Fund
Ohio Tax-Free Money Market 4.04% 3.01% 2.90% 2.49% 3.02%
Funds Average
Ohio Municipal Money Market 7.03% 5.22% 4.98% 4.45% 5.37%
Tax-equivalent
Portion of fund's income 0.00% 0.00% 0.96% 3.58% 0.00%
subject to state taxes
Row: 1, Col: 1, Value: 4.159999999999999
Row: 1, Col: 2, Value: 4.04
Row: 2, Col: 1, Value: 3.09
Row: 2, Col: 2, Value: 3.01
Row: 3, Col: 1, Value: 2.95
Row: 3, Col: 2, Value: 2.9
Row: 4, Col: 1, Value: 2.63
Row: 4, Col: 2, Value: 2.49
Row: 5, Col: 1, Value: 3.18
Row: 5, Col: 2, Value: 3.02
Ohio Municipal
Money Market
Fund
Ohio Tax-Free
Money Market
Funds Average
5% -
4% -
3% -
2% -
1% -
0%
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%. The fund's yields mentioned above reflect 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.
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.
(checkmark)
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
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 DURING 1999?
A. At the beginning of the period, the global economic crisis from the
fall of 1998 continued to cast a shadow over the market. There were
many questions about the pace of U.S. economic growth and the
direction of interest rates. Early in 1999, however, any doubts were
put to rest, as both growth and employment strengthened. In addition,
data began to indicate that inflation might not be as well-behaved as
it had been in the recent past. Faced with that backdrop, market
observers began to feel that the Federal Reserve Board would raise
short-term interest rates to slow growth and head off inflation.
Through the rest of the period, economic growth remained solid and
unemployment stayed at historically low levels. Such a tight labor
market often leads to inflation, as employers are forced to raise
salaries in order to attract or retain workers, passing on the
additional cost to the consumer. The Fed indicated that improvements
in worker productivity had helped keep inflation at bay. Nevertheless,
with constant, broad-based economic strength and continually tight
labor markets, the Fed felt compelled to take back all three of the
rate cuts it had implemented in the fall of 1998. It did so with a
series of three 0.25 percentage point rate hikes in June, August and
November, raising the rate banks charge each other for overnight loans
- - known as the fed funds rate - from 4.75% at the beginning of the
period to 5.50% by the end of 1999.
Q. WHAT WAS YOUR STRATEGY WITH THE FUND?
A. In many states, municipalities issue longer-term, fixed-rate money
market securities only at certain parts of the year, particularly in
the summer. In Ohio, by contrast, fixed-rate note supply comes to
market at a regular pace throughout the year. Because of this ample,
steady supply, I tend to "ladder" the portfolio, purchasing
longer-term, fixed-rate notes at regular intervals. During any given
month the fund replaces maturing notes with new longer-term issues,
with the fund's investments allocated evenly across the maturity
spectrum. If I didn't pursue this strategy, the fund would become
overweighted in very-short-term, variable-rate securities which,
because of strong demand in Ohio, tend to offer yields that are
significantly lower than fixed-rate alternatives. This strategy leads
me to maintain a good portion of the fund in the longer end of the
market, resulting in an average maturity that can be longer than might
otherwise be dictated by my interest-rate outlook. For example, during
the rising interest-rate environment in 1999, a more typical response
would have been to keep the fund's maturity short in order to take
advantage of rising yields as they emerged. There were some periods in
the middle of the year when certain fixed-rate securities
underperformed because their yields were lower than more recent
prevailing market rates. Nevertheless, because of the laddering
strategy, I was able to reinvest fairly quickly the assets from
securities coming to maturity in fixed-rate notes offering more
attractive yields. And for most of the year, this approach worked
quite well. Beyond this strategy, there were times when I temporarily
avoided certain maturities because I felt they didn't incorporate my
expectations for higher rates.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on December 31, 1999, was 3.99%,
compared to 3.22% 12 months ago. The more recent seven-day yield was
the equivalent of a 6.74% taxable rate of return for Ohio investors in
the 40.80% combined state and federal income tax bracket. The fund's
yields reflect that a portion of the fund's income was subject to
state taxes. Through December 31, 1999, the fund's 12-month total
return was 2.86%, compared to 2.73% for the Ohio tax-free money market
funds average, according to IBC Financial Data, Inc.
Q. WHAT IS YOUR OUTLOOK?
A. Before the Fed's most recent rate hike, market sentiment reflected
the belief that the Fed would sit back and wait to see what happens
after bringing rates back to their 1998 levels. However, judging by
its reaction to the latest Fed move, the market doesn't feel the Fed
is done implementing rate increases. If the trends of tight employment
and economic strength continue, I believe it is likely the Fed will
raise rates again in early 2000 to slow growth and prevent inflation
from cropping up. The timing and scope of any Fed rate hikes would
most probably be dictated by the pace of the economy and the tightness
of the labor market.
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 December 31,
1999, more than $489
million
MANAGER: Scott Orr, since
1996; manager, various Fidelity
and Spartan municipal
money market funds; joined
Fidelity in 1989
(checkmark)
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.
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MATURITY DIVERSIFICATION
DAYS % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6/30/99 % OF FUND'S INVESTMENTS
12/31/99 12/31/98
0 - 30 67.9 68.4 69.4
31 - 90 2.8 9.6 7.2
91 - 180 10.2 9.3 8.0
181 - 397 19.1 12.7 15.4
WEIGHTED AVERAGE MATURITY
12/31/99 6/30/99 12/31/98
Fidelity Ohio Municipal Money 72 DAYS 61 Days 66 Days
Market Fund
Ohio Tax-Free Money Market 61 DAYS 48 Days 59 Days
Funds Average *
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF DECEMBER 31, 1999 AS OF JUNE 30, 1999
Variable Rate Demand Notes Variable Rate Demand Notes
(VRDNs) 59.8% (VRDNs) 61.3%
Commercial Paper (including Commercial Paper (including
CP Mode) 3.7% CP Mode) 7.7%
Tender Bonds 7.2% Tender Bonds 2.1%
Municipal Notes 22.7% Municipal Notes 26.8%
Other Investments and Net Other Investments and Net
Other Assets 6.6% Other Assets 2.1%
</TABLE>
Row: 1, Col: 1, Value: 59.8
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 3.7
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 7.2
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 22.7
Row: 1, Col: 8, Value: 6.6
Row: 1, Col: 1, Value: 61.3
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 7.7
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 2.1
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 26.8
Row: 1, Col: 8, Value: 2.1
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
INVESTMENTS DECEMBER 31, 1999
Showing Percentage of Net Assets
MUNICIPAL SECURITIES - 96.4%
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - 96.4%
Allen County Gen. Oblig. BAN $ 3,865,000 $ 3,865,144
3.5% 1/5/00
American Muni. Pwr. BAN 3,800,000 3,800,000
(Cleveland Pub. Pwr. Proj.)
3.9% 9/1/00
Ashland Gen. Oblig. BAN 4,000,000 4,005,116
(Muni. Court & Jail
Facilities Proj.) 3.8%
7/13/00
Ashtabula County Ind. Dev.
Rev.:
(Plasticolors, Inc. Proj.) 2,260,000 2,260,000
Series 1996 A, 5.7%,
(Cotswold Ltd.) LOC Key Bank
NA, VRDN (a)(d)
(Zehro Plastics, Inc. Proj.) 5,000,000 5,000,000
Series 1999, 5.5%, LOC Bank
One NA, Michigan, VRDN (a)(d)
Athens Gen. Oblig. BAN 3.5% 2,600,000 2,600,986
2/4/00
Bedford Heights Indl. Dev. 850,000 850,000
Rev. (Olympic Steel Proj.)
Series 1989, 5.65%, LOC
Nat'l. City Bank, VRDN (a)(d)
Bowling Green Gen. Oblig. BAN 4,045,000 4,050,682
3.6% 6/15/00
Brecksville Gen. Oblig. BAN 3,000,000 3,002,018
3.4% 6/8/00
Butler County Gen. Oblig. BAN 3,000,000 3,006,804
3.85% 8/3/00
Butler County Trans. Impt. 4,615,000 4,630,062
District Bonds Series A,
4.75% 4/1/00 (FSA Insured)
Cambridge Hosp. Facilities 7,100,000 7,100,000
Rev. Bonds (Southeastern
Reg'l. Med. Ctr. Proj.)
4.6%, tender 1/3/00, LOC
Nat'l. City Bank
Canfield Local School 4,400,000 4,418,803
District BAN 4.5% 9/28/00
Cincinnati Student Ln. Fdg.
Corp. Student Ln. Rev.:
Series 1998 A1, 5.25% (BPA 700,000 700,000
Bank of America NA), VRDN
(a)(d)
Series 1998 A2, 5.25% (BPA 3,300,000 3,300,000
Bank of America NA), VRDN
(a)(d)
Clark County Multi-family 4,885,000 4,885,000
Rev. (Masonic Home Proj.)
Series 1999, 5.56% (AMBAC
Insured), VRDN (a)
Clermont County Ind. Dev. Rev.:
(American Micro Products 4,200,000 4,200,000
Proj.) 5.75%, LOC Firstar
Bank NA, VRDN (a)(d)
(Mane-Seafla, Inc. Proj.) 4,650,000 4,650,000
5.6%, LOC Bank One, NA,
VRDN (a)(d)
Clinton County Hosp. Rev. 15,000,000 15,000,000
(Ohio Hosp. Cap., Inc.
Proj.) 5.6%, LOC Fifth
Third Bank, Cincinnati, VRDN
(a)
Cuyahoga County Health Care 4,700,000 4,700,000
Facilities Rev. (Althenheim
Proj.) 5.56%, LOC Firstar
Bank NA, VRDN (a)
Cuyahoga County Hosp. Rev.:
(Cleveland Clinic Foundation
Proj.):
Series 1996 A, 5.65%, LOC 1,150,000 1,150,000
Morgan Guaranty Trust Co.,
NY, VRDN (a)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Cuyahoga County Hosp. Rev.: -
continued
(Cleveland Clinic Foundation
Proj.):
Series 1997 A, 5.65% (AMBAC $ 1,300,000 $ 1,300,000
Insured), VRDN (a)
(Univ. Hospitals Health Sys., 2,320,000 2,320,000
Inc. Proj.) Series 1999 D,
5.65% (AMBAC Insured), VRDN
(a)
Cuyahoga County Ind. Dev. Rev.:
(Progressive Plastics, Inc. 2,115,000 2,115,000
Proj.) 5.6%, LOC Bank One,
NA, VRDN (a)(d)
(The Great Lakes Brewing Co. 5,480,000 5,480,000
Proj.) 5.66%, LOC Huntington
Nat'l. Bank, Columbus, VRDN
(a)(d)
Dayton Gen. Oblig. BAN (Arpt. 5,000,000 5,001,233
Impt. Proj.) Series 1999,
3.4% 3/3/00
Delaware County Health Care 4,170,000 4,170,000
Facilities (Willow Brook
Christian Cmnty. Proj.)
5.56%, LOC Huntington Nat'l.
Bank, Columbus, VRDN (a)
Elyria Gen. Oblig. BAN 4.35% 3,000,000 3,006,943
12/19/00
Erie County Health Care 3,600,000 3,600,000
Facilities Rev. (Commons of
Providence Proj.) Series
1999 B, 5.92%, LOC Bank One,
NA, VRDN (a)
Erie County Ind. Dev. Rev. 5,000,000 5,000,000
Rfdg. (U.S. Tsubaki Proj.)
Series 1999, 5.67%, LOC
LaSalle Nat'l. Bank,
Chicago, VRDN (a)(d)
Erie County Multi-family Hsg. 10,600,000 10,600,000
Rev. (Providence Residential
Comnty. Corp. Proj.) Series
1999 A, 5.92%, LOC Bank
One, NA, VRDN (a)
Fairborn City School District 3,300,000 3,308,974
BAN 4.4% 9/14/00
Fairborn Gen. Oblig. BAN 1,500,000 1,500,660
(Wtr. Meters Acquisition
Proj.) 3.87% 9/7/00
Fairfield County Gen. Oblig. 2,950,000 2,958,824
BAN (Various Util. Impt.
Proj.) 4% 7/25/00
Franklin County Ind. Dev. Rev.:
(Berwick Steel Co. Proj.) 6%, 4,600,000 4,600,000
(260 E. Naghten LP) LOC
Sanwa Bank Ltd., VRDN (a)
(Inland Products, Inc. Proj.) 600,000 600,000
5.65%, LOC PNC Bank NA,
VRDN (a)(d)
Franklin County Multi-family
Rev.:
Bonds (BlackLick Station 2,500,000 2,500,000
Aprts. Proj.) Series 1999,
4.05%, tender 10/1/00, LOC
Fifth Third Bank, Cincinnati
(d)
(Colonial Courts Proj.) 2,500,000 2,500,000
5.65%, LOC Firstar Bank,
Milwaukee NA, VRDN (a)(d)
Franklin Multi-family Rev. 4,600,000 4,600,000
Bonds (260 East Naghten
Street Proj.) 3.85%, tender
8/1/00, LOC Fifth Third
Bank, Cincinnati (d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Geauga County Gen. Oblig. BAN $ 2,000,000 $ 2,000,717
Series 1999, 3.35% 3/9/00
Greene County Gen. Oblig. BAN 2,672,600 2,680,809
Series 1999 F, 4.25%
11/21/00
Grove City Gen. Oblig. BAN 3,350,000 3,360,232
Series 1999, 4.25% 11/10/00
Hamilton County Gen. Oblig. 2,175,000 2,176,050
BAN (Court Mgmt. Systems
Proj.) 3.3% 4/6/00
Hamilton County Health Sys. 5,900,000 5,900,000
Rev. (Franciscan Sisters
Poor Health Proj.) Series
1987 A, 5.1%, LOC Sumitomo
Bank Ltd. Japan, VRDN (a)
Hamilton County Ind. Dev. 1,620,000 1,620,000
Rev. (Metro Containers, Inc.
Proj.) 5.6%, LOC Bank One,
NA, VRDN (a)(d)
Hamilton Gen. Oblig. BAN 2,672,000 2,680,647
4.25% 10/20/00
Hilliard Gen. Oblig. BAN 1,600,000 1,602,984
3.85% 7/21/00
Hilliard School District BAN 6,000,000 6,007,457
4.25% 5/25/00
Holmes County Ind. Dev. Rev. 900,000 900,000
(Poultry Processing, Inc.
Proj.) Series 1990, 5.6%,
LOC RaboBank Nederland Coop.
Central, VRDN (a)(d)
Lake County Ind. Dev. Rev.:
(American Bus. Co. Proj.) 1,295,000 1,295,000
5.66%, LOC Huntington Nat'l.
Bank, Columbus, VRDN (a)(d)
(Norshar Co. Proj.) 5.6%, 3,355,000 3,355,000
(Mid-West Materials Inc.)
LOC Bank One, NA, VRDN (a)(d)
Lebanon Gen. Oblig. BAN:
3.3% 5/25/00 2,000,000 2,000,000
4.21% 3/31/00 1,000,000 1,000,756
Logan County Gen. Oblig. BAN 4,000,000 4,008,385
4.25% 11/15/00
Lorain County Independent 4,735,000 4,735,000
Living Facilities (Elyria
United Methodist Village
Proj.) 5.47%, LOC Bank One,
NA, VRDN (a)
Lucas County Multi-family Rev.:
(Beacon Place/Cubbon Proj.) 3,205,000 3,205,000
5.62%, (Nat'l. Foundation
Retirement & Hsg.
Preservation) LOC Firstar
Bank NA, VRDN (a)
(Lakewoods Proj.) 5.7%, LOC 4,000,000 4,000,000
Key Bank NA, VRDN (a)(d)
Marion County Gen. Oblig. BAN 4,055,000 4,065,229
4.25% 11/16/00
Medina County Hsg. Rev. (The 2,700,000 2,700,000
Oaks at Medina Proj.) Series
B, 5.47%, LOC Bank One, NA,
VRDN (a)
Medina County Ind. Dev. Rev.:
(Firdex, Inc. Proj.) Series 1,060,000 1,060,000
1997, 5.7%, LOC Key Bank NA,
VRDN (a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Medina County Ind. Dev. Rev.:
- - continued
(Rembond Proj.) Series 1996, $ 2,705,000 $ 2,705,000
5.6%, LOC Firstar Bank NA,
VRDN (a)(d)
Mentor Gen. Oblig. BAN 4% 4,025,000 4,035,891
7/20/00
Middletown Ind. Dev. Rev. 1,500,000 1,500,000
(Pilot Chemical Proj.) 5.6%,
LOC Bank One, NA, VRDN
(a)(d)
Montgomery County Health Care 3,275,000 3,275,000
Rev. (Eastway Corp. &
Property Resource Proj.)
5.66%, LOC Huntington Nat'l.
Bank, Columbus, VRDN (a)(d)
Montgomery County
Multi-family Hsg. Dev. Rev.:
(Pedcor Investments-Lyons 4,500,000 4,500,000
Gate Proj.) 5.6%, LOC Fed.
Home Ln. Bank, Cincinnati,
VRDN (a)(d)
(Timber Creek Village Apts. 3,700,000 3,700,000
Proj.) Series 1998, 5.62%,
LOC Key Bank NA, VRDN (a)(d)
Oakwood Gen. Oblig. BAN 3.5% 3,000,000 3,002,752
5/4/00
Ohio Air Quality Dev. Auth.
Rev. Bonds:
(Duquesne Lt. Co. Proj.):
Series B, 3.9% tender 1/19/00 5,000,000 5,000,000
(AMBAC Insured) (Liquidity
Facility Bank of New York,
NA), CP mode
3.95% tender 1/19/00 (AMBAC 4,500,000 4,500,000
Insured) (Liquidity Facility
Bank of New York, NA), CP
mode (d)
(Ohio Edison Co. Proj.):
Series 1988 B, 4.2%, tender 1,100,000 1,100,068
5/1/00, LOC UBS AG (d)
Series 1988 C, 3.75%, tender 8,000,000 8,000,000
9/1/00, LOC Barclays Bank
PLC (d)
Ohio Envir. Impt. Rev. 4,600,000 4,600,000
(Newark Group Industries,
Inc. Proj.) Series 1996,
5.6%, LOC Chase Manhattan
Bank, VRDN (a)(d)
Ohio Higher Edl. Facilities
Rev. (Pooled Fing. Prog.):
Series 1997, 5.5%, (Ashland 3,055,000 3,055,000
Univ.) LOC Fifth Third Bank,
Cincinnati, VRDN (a)
Series 1998, 5.5%, (Univ. of 4,830,000 4,830,000
Findlay) LOC Fifth Third
Bank, Cincinnati, VRDN (a)
Ohio Hsg. Fin. Agcy. Mtg. Rev.:
Bonds Series PA 93, 3.75%, 1,634,000 1,634,000
tender 2/24/00 (Liquidity
Facility Merrill Lynch &
Co., Inc.) (d)(e)(f)
Participating VRDN:
Series 1998 B, 5.055% 14,695,000 14,695,000
(Liquidity Facility Bank of
America NA) (a)(d)(e)
Series 1999 Q, 5.055% 9,400,000 9,400,000
(Liquidity Facility Bank of
America NA) (a)(e)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Ohio Hsg. Fin. Agcy. Mtg.
Rev.: - continued
Participating VRDN:
Series FRRI 15, 5.9% $ 3,000,000 $ 3,000,000
(Liquidity Facility Bank of
New York NA) (a)(d)(e)
Series PT 122, 5.61% 3,120,000 3,120,000
(Liquidity Facility Banco
Santander SA) (a)(d)(e)
Series PT 228, 5.61% 6,400,000 6,400,000
(Liquidity Facility Merrill
Lynch & Co., Inc.) (a)(d)(e)
Series PT 241, 4.74% 7,145,000 7,145,000
(Liquidity Facility
Bayerische Hypo-und
Vereinsbank AG) (a)(d)(e)
Series PT 282, 5.61% 4,500,000 4,500,000
(Liquidity Facility
Landesbank Hessen-Thuringen)
(a)(d)(e)
Ohio Hsg. Fin. Agcy.
Multi-family Hsg. Rev.:
(Pedcor Invt. Willowlake
Apts. Proj.):
Series A, 5.57%, LOC Bank 3,200,000 3,200,000
One, NA, VRDN (a)(d)
Series B, 5.67%, LOC Fed. 500,000 500,000
Home Ln. Bank, Indianapolis,
VRDN (a)(d)
Series C, 5.67%, LOC Fed. 625,000 625,000
Home Ln. Bank, Indianapolis,
VRDN (a)(d)
Series D, 5.67%, LOC Fed. 625,000 625,000
Home Ln. Bank, Indianapolis,
VRDN (a)(d)
Ohio Hsg. Fin. Agcy. Single
Family Mtg. Participating
VRDN:
Series 14, 5.9% (Liquidity 7,700,000 7,700,000
Facility Bank of New York
NA) (a)(d)(e)
Series FRRI A25, 5.9% 7,070,000 7,070,000
(Liquidity Facility
Commerzbank AG) (a)(d)(e)
Series MLPT 239, 5.61% 5,700,000 5,700,000
(Liquidity Facility Merrill
Lynch & Co., Inc.) (a)(d)(e)
Ohio Ind. Dev. Rev.:
(Carpenter/Clapp & Haney Tool 200,000 200,000
Co. Proj.) Series 1987 P,
5.6%, LOC Bank One, NA, VRDN
(a)(d)
(Dramex Int'l., Inc. Proj.):
Series 1988 I, 5.6%, LOC Bank 750,000 750,000
One, NA, VRDN (a)(d)
Series 1988 II, 5.6%, LOC PNC 200,000 200,000
Bank NA, VRDN (a)(d)
(K&S Realty Proj.) Series 205,000 205,000
1989 I, 5.6%, LOC Nat'l.
City Bank, VRDN (a)(d)
(K&S Realty/Starr 180,000 180,000
Fabricating, Inc. Proj.)
Series 1989 III, 5.6%, LOC
Nat'l. City Bank, VRDN (a)(d)
(Kaufmans Bakery Proj.) 400,000 400,000
Series 1987 K, 5.6%, LOC
Bank One, NA, VRDN (a)(d)
(Midwest Acoust-A-Fiber, Inc. 320,000 320,000
Proj.) Series 1989 I, 5.6%,
LOC Nat'l. City Bank, VRDN
(a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Ohio Ind. Dev. Rev.: -
continued
(Morrow Macke Realty Proj.) $ 320,000 $ 320,000
Series 1988 C, 5.6%, LOC
Bank One, NA, VRDN (a)(d)
(Plasticos Co. Proj.) Series 320,000 320,000
1989 III A, 5.6%, LOC
Nat'l. City Bank, VRDN (a)(d)
(Southwest Fin. Services 50,000 50,000
Proj.) Series 1986 J, 5.6%,
LOC Nat'l. City Bank, VRDN
(a)(d)
(Standby Screw & Machine 550,000 550,000
Proj.) Series 1991 IA,
5.6%, LOC Nat'l. City Bank,
VRDN (a)(d)
(Walker-Williams Lumber Co. 650,000 650,000
Proj.) Series 1989 III A,
5.6%, LOC Nat'l. City Bank,
VRDN (a)(d)
Ohio Pub. Facilities
Commission Rev. Bonds:
(Higher Ed. Cap. Facilities 3,000,000 3,005,255
Proj.) Series II A, 4.25%
12/1/00 (AMBAC Insured)
(Higher Ed. Facilities Proj.) 2,005,000 2,013,747
Series II B, 4.625% 12/1/00
(Mental Health Cap. 5,000,000 5,018,724
Facilities Proj.) Series II
A, 4.5% 6/1/00
Ohio School District Cash 4,173,000 4,187,754
Flow Borrowing Prog. Ctfs.
of Prtn. TAN 4.14% 6/30/00
Ohio Univ. Gen. Receipts 2,000,000 2,001,980
Athens BAN 5.05% 2/1/00
Ohio Wtr. Dev. Auth. Poll.
Cont. Facilities Rev.:
Bonds (Ohio Edison Co. Proj.):
Series 1988 B, 3.75%, tender 6,200,000 6,200,000
9/1/00, LOC Barclays Bank
PLC (d)
4.2%, tender 5/1/00, LOC UBS 4,400,000 4,403,657
AG (d)
(Philip Morris Co., Inc. 5,000,000 5,000,000
Proj.) 5.65%, VRDN (a)
Rfdg. Bonds:
Series 1999 A, 3.95% tender 4,500,000 4,500,000
1/19/00 (AMBAC Insured)
(Liquidity Facility Bank of
New York, NA) CP mode (d)
Series 1999 B, 3.95% tender 4,500,000 4,500,000
1/12/00 (AMBAC Insured)
(Liquidity Facility Bank of
New York, NA) CP mode (d)
Ohio Wtr. Dev. Auth. Solid 3,900,000 3,900,000
Waste Disp. Rev. (American
Steel & Wire Corp. Proj.)
5.55%, LOC Bank of America
NA, VRDN (a)(d)
Oregon City Gen. Oblig. BAN 4,400,000 4,404,040
Series 1999 I, 3.5% 5/4/00
Perrysburg Gen. Oblig. BAN 2,755,000 2,766,576
4.45% 11/16/00
Port Auth. for Columbiana 5,000,000 5,000,000
County (Polar Minerals, Inc.
Proj.) 5.7%, LOC Nat'l. City
Bank, VRDN (a)(d)
Portage County Gen. Oblig. BAN:
(Nursing Home Impt. Proj.) 4,500,000 4,518,562
4.4% 11/30/00
4.4% 11/30/00 1,129,000 1,133,657
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Portage County Ind. Dev. Rev. $ 3,000,000 $ 3,000,000
(Mantaline Corp. Proj.)
5.7%, LOC Nat'l. City Bank,
VRDN (a)(d)
Richland County Ind. Dev. Rev.:
(Carton Svc., Inc. Proj.) 990,000 990,000
Series 1996, 5.7%, LOC
Nat'l. City Bank, VRDN (a)(d)
(Sabin Robbins Paper Co. 2,800,000 2,800,000
Proj.) Series 1997, 5.6%,
LOC Fifth Third Bank,
Cincinnati, VRDN (a)(d)
Solon Indl. Dev. Rev. (Custom 4,000,000 4,000,000
Graphic, Inc. Proj.) Series
1999, 5.6%, LOC Bank One,
NA, VRDN (a)
Southwestern City School 3,000,000 3,004,238
District Franklin & Pickway
County BAN Series 1999,
4.125% 6/13/00
Springdale Gen. Oblig. BAN 3,000,000 3,005,227
4.05% 9/22/00
Stark County Ind. Dev. Rev.:
(HP Products, Inc. Proj.) 3,125,000 3,125,000
5.7%, LOC Key Bank NA, VRDN
(a)(d)
(Kidd Dev. Proj.) 5.6%, LOC 3,700,000 3,700,000
Bank One, NA, VRDN (a)(d)
(Liquid Cont. Corp. Proj.) 280,000 280,000
Series 1987, 5.6%, (Schlitz
William & Barbara) LOC Bank
One, NA, VRDN (a)(d)
Summit County Civic 4,660,000 4,660,000
Facilities Rev. (YMCA of
Akron Proj.) 5.6%, LOC Key
Bank NA, VRDN (a)
Summit County Gen. Oblig. BAN 2,408,000 2,415,843
Series B, 4.6% 6/1/00
Summit County Ind. Dev. Rev.:
(Commercial Alloys Corp. 3,995,000 3,995,000
Proj.) 5.6%, LOC Firstar
Bank NA, VRDN (a)(d)
(Hampshire Properties Proj.) 920,000 920,000
5.6%, LOC Key Bank NA, VRDN
(a)(d)
(Kaiser Dev. Proj.) 5.6%, LOC 800,000 800,000
Bank One, NA, VRDN (a)(d)
(Keltec, Inc. Proj.) Series 290,000 290,000
1987, 5.6%, LOC Bank One,
NA, VRDN (a)(d)
(Mannix Co. Proj.) Series 1,600,000 1,600,000
1987, 5.6%, LOC Bank One,
NA, VRDN (a)(d)
(Summit Plastic Co. Proj.) 2,545,000 2,545,000
5.7%, LOC Nat'l. City Bank,
VRDN (a)(d)
(Triumph Hldgs. Proj.) 5.7%, 1,725,000 1,725,000
LOC Nat'l. City Bank, VRDN
(a)(d)
Toledo-Lucas County Port 3,465,000 3,465,000
Auth. Rev. (P&G Industries
Proj.) 5.7%, LOC Nat'l. City
Bank, VRDN (a)(d)
Trumbull Co. Health Care 5,000,000 5,000,000
Facilities Rev. (Shepard of
the Valley Retire Howland
Proj.) Series 98, 5.55%, LOC
Nat'l. City Bank, VRDN (a)
Trumbull County Ind. Dev. 1,400,000 1,400,000
Rev. (McDonald Steel Corp.
Proj.) Series 1990, 5.65%,
LOC PNC Bank NA, VRDN (a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
OHIO - CONTINUED
Union County Gen. Oblig. BAN $ 1,850,000 $ 1,852,109
3.61% 6/15/00
Van Wert County Ind. Dev. 2,190,000 2,190,000
Rev. (Toledo Molding & Die,
Inc. Proj.) Series 1994,
5.6%, LOC Bank One, NA, VRDN
(a)(d)
Village of Indian Hill 1,000,000 1,000,000
Economic Dev. Rev.
(Cincinnati Country Day
School Proj.) Series 1999,
5.4%, LOC Fifth Third Bank,
Cincinnati, VRDN (a)
Walnut Hills High School 1,000,000 1,000,000
Alumni Foundation Series
1998, 5.4%, LOC Fifth Third
Bank, Cincinnati, VRDN (a)
Wood County Ind. Dev. Rev.:
(Dowa THT America, Inc. 3,800,000 3,800,000
Proj.) 5.5%, LOC Comerica
Bank, Detroit, VRDN (a)(d)
(TL Industries & AMPP, Inc. 1,060,000 1,060,000
Proj.) 5.7%, LOC Nat'l. City
Bank, VRDN (a)(d)
472,128,595
SHARES
OTHER - 0.0%
Municipal Central Cash Fund, 31 31
4.81% (b)(c)
TOTAL INVESTMENT PORTFOLIO - 472,128,626
96.4%
NET OTHER ASSETS - 3.6% 17,842,170
NET ASSETS - 100% $ 489,970,796
Total Cost for Income Tax Purposes $ 472,128,626
SECURITY TYPE ABBREVIATIONS
BAN - BOND ANTICIPATION NOTE
TAN - TAX ANTICIPATION NOTE
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) The rate quoted is the annualized seven-day yield of the fund at
period end.
(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) Restricted securities - Investment in securities not registered
under the Securities Act of 1933.
Additional information on each holding is as follows:
SECURITY ACQUISITION DATE COST
Ohio Hsg. Fin. Agcy. Mtg. 8/24/99 $ 1,634,000
Rev. Bonds Series PA 93,
3.75%, tender 2/24/00
(Liquidity Facility Merrill
Lynch & Co., Inc.)
OTHER INFORMATION
The fund invested in securities that are not registered under the
Securities Act of 1933. These securities are subject to legal or
contractual restrictions on resale. At the end of the period,
restricted securities (excluding Rule 144A issues) amounted
to$1,634,000 and 0.3% of net assets.
INCOME TAX INFORMATION
At December 31, 1999, the fund had a capital loss carryforward of
approximately $77,000 of which $1,000, $50,000, $6,000 and $20,000
will expire on December 31, 2003, 2004, 2005 and 2007, respectively.
During the fiscal year ended December 31, 1999, 100% of the fund's
income dividends was free from federal income tax, and 53.20% of the
fund's income dividends was subject to the federal alternative minimum
tax (unaudited).
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
Investment in securities, at $ 472,128,626
value - See accompanying
schedule
Receivable for fund shares 15,137,099
sold
Interest receivable 3,666,344
Prepaid expenses 18,444
TOTAL ASSETS 490,950,513
LIABILITIES
Payable to custodian bank $ 24,222
Payable for fund shares 664,784
redeemed
Distributions payable 32,053
Accrued management fee 148,584
Other payables and accrued 110,074
expenses
TOTAL LIABILITIES 979,717
NET ASSETS $ 489,970,796
Net Assets consist of:
Paid in capital $ 490,047,467
Accumulated net realized gain (76,671)
(loss) on investments
NET ASSETS, for 490,047,554 $ 489,970,796
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($489,970,796
(divided by) 490,047,554
shares)
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
INTEREST INCOME $ 14,797,605
EXPENSES
Management fee $ 1,654,961
Transfer agent fees 617,110
Accounting fees and expenses 84,685
Non-interested trustees' 1,286
compensation
Custodian fees and expenses 15,535
Registration fees 54,005
Audit 25,707
Legal 4,970
Miscellaneous 16,881
Total expenses before 2,475,140
reductions
Expense reductions (24,391) 2,450,749
NET INTEREST INCOME 12,346,856
REALIZED AND UNREALIZED GAIN (20,084)
(LOSS)
Net realized gain (loss) on
investment securities
Increase (decrease) in net (1,113)
unrealized gain from
accretion of market discount
NET GAIN (LOSS) (21,197)
NET INCREASE IN NET ASSETS $ 12,325,659
RESULTING FROM OPERATIONS
OTHER INFORMATION
Expense reductions Custodian $ 4,451
credits
Transfer Agent credits 19,940
$ 24,391
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 12,346,856 $ 11,431,339
Net realized gain (loss) (20,084) 28,157
Increase (decrease) in net (1,113) 1,113
unrealized gain from
accretion of market discount
NET INCREASE (DECREASE) IN 12,325,659 11,460,609
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (12,346,856) (11,431,339)
from net interest income
Share transactions at net 1,212,520,087 810,566,785
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 11,964,134 11,050,236
distributions from net
interest income
Cost of shares redeemed (1,135,228,819) (785,381,253)
NET INCREASE (DECREASE) IN 89,255,402 36,235,768
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 89,234,205 36,265,038
IN NET ASSETS
NET ASSETS
Beginning of period 400,736,591 364,471,553
End of period $ 489,970,796 $ 400,736,591
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
Income from Investment .028 .030 .032 .030 .034
Operations Net interest
income
Less Distributions
From net interest income (.028) (.030) (.032) (.030) (.034)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN A 2.86% 3.09% 3.29% 3.08% 3.48%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 489,971 $ 400,737 $ 364,472 $ 327,593 $ 296,220
(000 omitted)
Ratio of expenses to average .57% .58% .59% .60% .61%
net assets
Ratio of expenses to average .56% B .57% B .59% .59% B .61%
net assets after expense
reductions
Ratio of net interest income 2.83% 3.05% 3.24% 3.03% 3.42%
to average net assets
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B 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 December 31, 1999
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, market discount and losses
deferred due to futures transactions and excise tax regulations. 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 fund 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 fund 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 after the
customary settlement period for that security. The price of the
underlying securities is fixed at the time the transaction is
negotiated. 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.
2. OPERATING POLICIES -
CONTINUED
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.
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.
RESTRICTED SECURITIES. Certain funds are 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. Information regarding restricted securities is included
under the caption "Other Information" at the end of each applicable
fund's schedule of investments.
3. PURCHASES AND SALES OF INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $53,543,854 and $74,438,428, respectively.
The market value of futures contracts opened and closed during the
period amounted to $48,175,601 and $43,771,027, 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 .0920% 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 fees were equivalent to annual rates of 0.38% of
average net assets for the income fund and money market fund.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE. As the income 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 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 annual
rate of 0.09% 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 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 were amortized
over one year.
5. EXPENSE REDUCTIONS.
Through arrangements with the funds' custodian and transfer agent,
credits realized as a result of uninvested cash balances were used to
reduce a portion of each applicable fund's expenses. For the period,
the reductions under these arrangements are shown under the caption
"Other Information" on each applicable fund's Statement of Operations.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Municipal Trust and Fidelity Municipal
Trust II and the Shareholders of Spartan Ohio Municipal Income Fund
and Fidelity Ohio Municipal Money Market Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Spartan Ohio Municipal Income Fund (a fund of Fidelity Municipal
Trust) and Fidelity Ohio Municipal Money Market Fund (a fund of
Fidelity Municipal Trust II) at December 31, 1999, and the results of
their operations, the changes in their net assets and the financial
highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with auditing standards
generally accepted in the United States which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at December
31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 10, 2000
DISTRIBUTIONS
The Board of Trustees of Spartan Ohio Municipal Income Fund voted to
pay on December 23, 1999, to shareholders of record at the opening of
business on December 22, 1999, a distribution of $.003 per share
derived from capital gains realized from sales of portfolio
securities.
The fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
During fiscal year ended 1999, 100% of the fund's income dividends was
free from federal income tax, and 9.10% of the fund's income dividends
was subject to the federal alternative minimum tax.
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
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 (FAST SM)
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 1-800-544-0240 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
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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 75039-5587
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 75039-5587
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
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
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
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
Ned C. Lautenbach
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
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
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 (FAST SM) 1-800-544-5555
AUTOMATED LINES FOR QUICKEST SERVICE
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
(2_FIDELITY_LOGOS)SPARTAN(REGISTERED TRADEMARK)
PENNSYLVANIA
MUNICIPAL
FUNDS
ANNUAL REPORT
DECEMBER 31, 1999
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 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 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.
REPORT OF INDEPENDENT 41 The auditors' opinion.
ACCOUNTANTS
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 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
The NASDAQ, S&P 500(Registered trademark) and Dow Jones Industrial
Average all closed 1999 at record highs. Investors should note,
however, that much of the year's returns were driven by a single
sector: technology. Most other stocks were flat or down in 1999.
Likewise, bond investors had little cause to celebrate at year's end.
Steadily rising interest rates left the benchmark 30-year Treasury at
its highest yield level in two years.
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 1-800-544-6666, 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 year total returns
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SPARTAN PA MUNICIPAL INCOME -2.16% 36.95% 93.68%
LB Pennsylvania Municipal Bond -2.03% 38.17% n/a
Pennsylvania Municipal Debt -4.73% 32.10% 82.67%
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 one year average represents a peer group of 60 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 DECEMBER 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SPARTAN PA MUNICIPAL INCOME -2.16% 6.49% 6.83%
LB Pennsylvania Municipal Bond -2.03% 6.68% n/a
Pennsylvania Municipal Debt -4.73% 5.71% 6.20%
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
1989/12/31 10000.00 10000.00
1990/01/31 9944.77 9952.70
1990/02/28 10032.86 10041.28
1990/03/31 10034.49 10044.29
1990/04/30 9887.11 9971.57
1990/05/31 10133.93 10189.25
1990/06/30 10226.08 10278.81
1990/07/31 10359.62 10429.91
1990/08/31 10209.56 10278.47
1990/09/30 10261.15 10284.33
1990/10/31 10409.25 10470.89
1990/11/30 10632.61 10681.46
1990/12/31 10719.87 10727.92
1991/01/31 10859.31 10871.89
1991/02/28 10922.00 10966.47
1991/03/31 10945.94 10970.42
1991/04/30 11117.81 11116.33
1991/05/31 11250.40 11215.15
1991/06/30 11194.46 11204.05
1991/07/31 11361.55 11340.52
1991/08/31 11517.56 11489.87
1991/09/30 11651.45 11639.47
1991/10/31 11752.10 11744.22
1991/11/30 11783.70 11776.99
1991/12/31 12059.11 12029.72
1992/01/31 12091.64 12057.15
1992/02/29 12098.15 12061.01
1992/03/31 12097.24 12065.47
1992/04/30 12224.08 12172.86
1992/05/31 12376.68 12316.13
1992/06/30 12576.29 12522.79
1992/07/31 12971.93 12898.23
1992/08/31 12836.75 12772.47
1992/09/30 12905.48 12856.00
1992/10/31 12707.12 12729.63
1992/11/30 13009.99 12957.62
1992/12/31 13158.15 13089.91
1993/01/31 13331.50 13242.15
1993/02/28 13854.21 13721.12
1993/03/31 13696.36 13576.08
1993/04/30 13829.74 13713.07
1993/05/31 13914.33 13790.13
1993/06/30 14149.92 14020.29
1993/07/31 14132.58 14038.66
1993/08/31 14487.24 14330.94
1993/09/30 14700.23 14494.17
1993/10/31 14707.60 14522.15
1993/11/30 14581.98 14394.21
1993/12/31 14892.42 14698.07
1994/01/31 15086.53 14865.92
1994/02/28 14720.21 14480.89
1994/03/31 14072.51 13891.23
1994/04/30 14145.77 14009.03
1994/05/31 14305.00 14130.49
1994/06/30 14281.42 14044.15
1994/07/31 14511.65 14301.58
1994/08/31 14561.26 14351.06
1994/09/30 14354.78 14140.39
1994/10/31 14107.75 13889.26
1994/11/30 13772.20 13638.14
1994/12/31 14142.48 13938.31
1995/01/31 14575.75 14336.67
1995/02/28 15016.70 14753.58
1995/03/31 15228.91 14923.10
1995/04/30 15274.16 14940.71
1995/05/31 15682.22 15417.47
1995/06/30 15528.87 15283.33
1995/07/31 15664.85 15428.22
1995/08/31 15830.49 15623.85
1995/09/30 16008.57 15722.75
1995/10/31 16204.42 15951.36
1995/11/30 16458.92 16215.99
1995/12/31 16608.38 16371.83
1996/01/31 16772.16 16495.43
1996/02/29 16650.20 16384.09
1996/03/31 16421.41 16174.70
1996/04/30 16346.89 16128.93
1996/05/31 16321.72 16122.47
1996/06/30 16484.48 16298.05
1996/07/31 16633.93 16446.36
1996/08/31 16640.22 16442.41
1996/09/30 16837.48 16672.61
1996/10/31 17020.88 16861.17
1996/11/30 17333.43 17169.73
1996/12/31 17275.38 17097.62
1997/01/31 17298.37 17129.94
1997/02/28 17445.64 17287.19
1997/03/31 17217.82 17056.75
1997/04/30 17337.25 17199.52
1997/05/31 17559.66 17458.20
1997/06/30 17729.57 17644.13
1997/07/31 18222.36 18132.87
1997/08/31 18039.33 17962.96
1997/09/30 18244.62 18176.18
1997/10/31 18333.50 18293.06
1997/11/30 18420.33 18400.62
1997/12/31 18715.94 18669.08
1998/01/31 18909.03 18861.75
1998/02/28 18890.13 18867.41
1998/03/31 18873.66 18884.01
1998/04/30 18785.79 18798.84
1998/05/31 19051.90 19096.43
1998/06/30 19175.04 19171.67
1998/07/31 19176.80 19219.79
1998/08/31 19480.47 19516.74
1998/09/30 19747.63 19759.92
1998/10/31 19731.12 19759.52
1998/11/30 19766.40 19828.88
1998/12/31 19794.99 19878.84
1999/01/31 20070.52 20115.20
1999/02/28 19927.37 20027.30
1999/03/31 19947.95 20055.14
1999/04/30 20001.81 20105.08
1999/05/31 19855.64 19988.67
1999/06/30 19555.76 19700.83
1999/07/31 19650.45 19772.54
1999/08/31 19482.93 19614.36
1999/09/30 19482.97 19622.40
1999/10/31 19296.94 19409.70
1999/11/30 19505.63 19616.22
1999/12/31 19368.02 19470.07
IMATRL PRASUN SHR__CHT 19991231 20000111 113525 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Spartan Pennsylvania Municipal Income Fund on December 31,
1989. As the chart shows, by December 31, 1999, the value of the
investment would have grown to $19,368 - a 93.68% 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 $19,470 - a 94.70%
increase.
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.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
Dividend returns 4.37% 4.55% 4.99% 5.01% 6.52%
Capital returns -6.53% 1.22% 3.35% -0.99% 10.92%
Total returns -2.16% 5.77% 8.34% 4.02% 17.44%
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 DECEMBER 31, PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
1999
Dividends per share 4.18(cents) 24.48(cents) 48.22(cents)
Annualized dividend rate 4.85% 4.72% 4.59%
30-day annualized yield 4.97% - -
30-day annualized 7.99% - -
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
$10.15 over the past one month, $10.28 over the past six months and
$10.51 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
A combination of three interest-rate
hikes by the Federal Reserve board,
near-constant inflation
expectations, the continuation of
a strong U.S. equity market and
weak institutional demand all
contributed to a decline in the
municipal bond market in 1999.
For the 12-month period ending
December 31, 1999, the Lehman
Brothers Municipal Bond Index -
an index of over 35,000
investment-grade, fixed-rate,
tax-exempt bonds - fell 2.06%.
Retail investors dominated demand,
in contrast to the more typical
institutional buying of recent years.
In comparison to other fixed-income
investments, municipal bonds had
mixed results. Relative to long-term
government bonds, muni
performance was stellar, as the total
return on 30-year Treasuries was the
lowest - according to Morningstar
- - since the U.S. Treasury started
regular long bond auctions in
1977. For the one-year period
ending December 31, 1999, the
Lehman Brothers Long-Term
Government Bond Index fell 8.73%.
Spread sectors fared somewhat
better than their municipal
counterparts. The Lehman Brothers
Corporate Bond Index was down
1.96% for the period, but mortgage
securities were one of the better
domestic debt offerings of 1999, with
a one- year return of 1.86%
according to the Lehman Brothers
Mortgage-Backed Securities Index.
Meanwhile, the Lehman Brothers
Aggregate Bond Index - a broad
measure of the taxable bond market
- - posted a marginally negative
return of -0.82%.
(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 12 months, rising interest rates caused the fund to
post a negative return, although it outpaced its peers. For the
12-month period that ended December 31, 1999, the fund had a total
return of -2.16%. To get a sense of how the fund did relative to its
competitors, the Pennsylvania municipal debt funds average returned
- -4.73% for the same 12-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, fell
- -2.03%.
Q. WHAT HELPED THE FUND OUTPACE ITS PEERS DURING 1999?
A. The fund's focus on intermediate-maturity bonds - those set to
mature within five to 15 years - was a plus for the fund's performance
for the year, although they had their ups and downs. For a short time
in 1999, intermediates suffered from reduced demand because of
relatively heavy selling by institutional investors. In contrast,
shorter- and longer-term bonds enjoyed fairly constant demand, and
they held up fairly well in response. Despite their short-term
underperformance, I continued to invest in intermediate-maturity
bonds. Based on Fidelity's quantitative research models, I felt that
they offered the most attractive value for their given interest-rate
sensitivity and for their total return potential. That patience was
rewarded when institutional investors came back into the market with
purchases of intermediate securities, and the fund's focus on them was
a plus for performance.
Q. WHAT OTHER TYPES OF BONDS HELPED THE FUND OUTPERFORM ITS PEERS?
A. The fund's focus on premium coupon bonds, which pay interest rates
above face - or par - value, was another plus. One appealing aspect of
premiums was that they were somewhat insulated from unfavorable tax
treatment that negatively affected the prices of lower coupon bonds,
or "discounts," as rates rose. In addition, the fund's emphasis on
non-callable bonds - which can't be redeemed by their issuers before
maturity - was a plus for performance. Rising interest rates decreased
the likelihood that many callable bonds would be redeemed by their
issuers before maturity, which heightened their interest-rate
sensitivity. As a result, non-callable bonds generally outperformed
callable securities.
Q. ASIDE FROM LONG-MATURITY DISCOUNT BONDS, WERE THERE OTHER
DISAPPOINTMENTS?
A. Health care bonds continued their disappointing run throughout
1999, coming under pressure from a variety of challenges, including
cutbacks in Medicare payments, reduced managed care payments and an
oversupply of hospital beds, particularly in Philadelphia.
Furthermore, the ongoing, high-profile problems of specific hospital
systems in and around Philadelphia acted as a drag on hospital bonds
across the state. My approach to investments in the health care sector
is to be very selective, emphasizing high-quality, insured hospital
bonds with proven track records that I believe can manage well
through the evolving, more competitive operating environment.
Q. WHERE DID YOU FIND OPPORTUNITIES OVER THE PAST YEAR?
A. I found some attractive opportunities among bonds backed by
Pennsylvania colleges and universities. I liked them because they
helped the fund diversify away from economically sensitive bonds such
as general obligation securities, which depend on sales, property,
income and other tax revenue collections. Projections call for an
increasing number of students to seek advanced degrees over the next
several years. Some of the fund's largest holdings in the education
sector at the end of the period were bonds issued on behalf of Drexel
University and the University of Pennsylvania.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET?
A. At the end of the period, municipals were priced cheaply compared
to their Treasury counterparts. To the extent that investors realize
and act on that relative cheapness, municipals could gain ground on
Treasuries. Of course, the major determinant of the bond market's
performance will, as always, be the direction of interest rates. But
instead of spending time trying to forecast interest-rate movements,
I'll look for attractively priced bonds that I believe will
outperform, no matter where interest rates end up.
CHRISTINE THOMPSON ON
MUNICIPAL BOND DEMAND:
"The demand for municipals can
vary a great deal in response to the
behavior of various market
participants. Corporations,
individual investors and trust
accounts tend to favor short-term
securities, which are less
interest-rate sensitive and,
therefore, tend to be less volatile
than the overall municipal
market. Individual investors,
along with mutual funds and
insurance companies - which
invest the insurance premiums
they collect - are the primary
purchasers of
intermediate-maturity bonds.
Higher-yielding, longer-term
securities, which tend to be the
most volatile, generally are the
domain of long-maturity mutual
funds, hedge funds and other
investors known as `arbitrageurs,'
who seek to exploit small
differences between various
fixed-income investments. At a
given point in time, a particular
municipal bond maturity range
may look cheap or expensive as
different categories of investors
embrace them or step aside. With
the help of Fidelity's research team,
I try to take advantage of the
anomalies that can occur by
investing in bond maturities that
look cheap due to weak demand
and selling those that have
performed well in response to
strong demand."
FUND FACTS
GOAL: to provide high current
income exempt from federal
and Pennsylvania personal
income tax
FUND NUMBER: 402
TRADING SYMBOL: FPXTX
START DATE: August 6, 1986
SIZE: as of December 31,
1999, more than $242
million
MANAGER: Christine Thompson,
since 1998; manager,
various Fidelity and Spartan
municipal income funds;
joined Fidelity in 1985
(checkmark)
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.
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF
DECEMBER 31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Obligations 29.1 31.6
Water & Sewer 12.1 12.2
Health Care 11.4 11.9
Transportation 10.9 9.1
Escrowed/Pre-Refunded 9.6 10.4
AVERAGE YEARS TO MATURITY AS
OF DECEMBER 31, 1999
6 MONTHS AGO
Years 12.4 11.2
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF DECEMBER 31,
1999
6 MONTHS AGO
Years 6.6 6.3
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 DECEMBER 31, 1999
Row: 1, Col: 1, Value: 66.90000000000001
Row: 1, Col: 2, Value: 21.6
Row: 1, Col: 3, Value: 10.3
Row: 1, Col: 4, Value: 1.0
Row: 1, Col: 5, Value: 0.2
AS OF JUNE 30, 1999
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
Aaa 66.9%
Aa, A 21.6%
Baa 10.3%
Not Rated 1.0%
Short-term
Investments 0.2%
Aaa 68.9%
Aa, A 19.8%
Baa 7.8%
Not Rated 0.9%
Short-term
Investments 2.6%
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
AMOUNTS SHOWN ARE AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
INVESTMENTS DECEMBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 98.5%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - 96.5%
Abington School District Aaa $ 4,000,000 $ 3,416,840
Rfdg. 5.125% 5/15/26 (FGIC
Insured)
Allegheny County Arpt. Rev.
Rfdg. (Pittsburgh Int'l.
Arpt. Proj.) Series A:
5.75% 1/1/07 (MBIA Insured) Aaa 1,500,000 1,541,520
(c)
5.75% 1/1/08 (MBIA Insured) Aaa 1,000,000 1,024,470
(c)
5.75% 1/1/11 (MBIA Insured) Aaa 2,450,000 2,484,815
(c)
5.75% 1/1/12 (MBIA Insured) Aaa 4,000,000 4,036,400
(c)
5.75% 1/1/14 (MBIA Insured) Aaa 3,000,000 2,993,370
(c)
Allegheny County Higher Ed. Aaa 400,000 436,132
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 2,826,195
Ctr. Proj.) Series A, 5.55%
4/1/12 (MBIA Insured)
(UPMC Health Sys. Proj.)
Series A:
4.625% 8/1/13 (MBIA Insured) Aaa 3,885,000 3,408,505
4.625% 8/1/14 (MBIA Insured) Aaa 4,060,000 3,503,252
Allegheny County Ind. Dev. - 2,205,000 2,293,002
Auth. Rev. (YMCA Pittsburgh
Proj.) Series A, 8.75% 3/1/10
Allegheny County Port Auth. Aaa 2,000,000 1,987,880
Spl. Rev. 6.125% 3/1/29
(MBIA Insured)
Allegheny County Residential Aaa 775,000 797,491
Fin. Auth. Mtg. Rev. (GNMA
Mtg. Backed Securities
Proj.) Series M, 7.95%
6/1/23 (c)
Allegheny County San. Auth. Aaa 2,260,000 1,096,891
Swr. Rev. 0% 12/1/12 (FGIC
Insured) (Escrowed to
Maturity) (d)
Central Bucks School District Aa3 1,215,000 1,236,105
5.25% 5/15/05
Chester County Health & Ed. Aaa 600,000 587,178
Facilities Auth. Health Sys.
Rev. (Jefferson Health Sys.
Proj.) Series B, 5% 5/15/08
(AMBAC Insured)
Delaware County Auth. Hosp.
Rev. (Crozer-Chester Med.
Ctr. Proj.):
6% 12/15/09 Baa2 1,500,000 1,460,865
6% 12/15/20 Baa2 2,700,000 2,418,390
Delaware County Gen. Oblig. Aa3 2,200,000 2,232,912
Rfdg. 5.3% 11/15/01
Delaware County Ind. Dev. Aaa 2,500,000 2,419,600
Auth. Rev. 6% 6/1/29 (FGIC
Insured) (c)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Harrisburg Auth. Rev. (Pooled Aaa $ 445,000 $ 437,030
Bond Prog.) Series I,
5.625% 4/1/15 (MBIA Insured)
Keystone Oaks School District Aaa 5,900,000 6,169,866
5.829% 9/1/16 (AMBAC
Insured) (Pre-Refunded to
9/4/02 @ 102) (d)
Lehigh County Gen. Purp. Aaa 1,000,000 858,920
Auth. (Lehigh Valley Health
Network Proj.) Series A, 5%
7/1/18 (MBIA Insured)
Meadville Gen. Oblig. Rfdg. Aaa 3,210,000 3,304,406
Series B, 6% 10/1/05 (AMBAC
Insured) (Escrowed to
Maturity) (d)
Montgomery County Higher Ed.
& Health Auth. Rev. Rfdg.
(Health Care-Holy Redeemer
Health Proj.) Series A:
5.5% 10/1/05 (AMBAC Insured) Aaa 2,240,000 2,290,042
5.5% 10/1/08 (AMBAC Insured) Aaa 1,000,000 1,012,510
Northampton County Gen. Aa3 4,575,000 4,057,979
Oblig. 5.125% 8/15/19
Northumberland County Auth. Aaa 1,000,000 554,320
Commonwealth Lease Rev.
(Cap. Appreciation)
(Correctional Fac. Proj.) 0%
10/15/10 (MBIA Insured)
(Escrowed to Maturity) (d)
Pennsbury School District Aaa 1,605,000 1,686,983
Rfdg. 6% 8/15/05 (FGIC
Insured)
Pennsylvania Convention Ctr.
Auth. Rev. Rfdg. Series A:
6.6% 9/1/09 (MBIA Insured) Aaa 9,150,000 9,900,483
6.7% 9/1/14 (MBIA Insured) Aaa 3,965,000 4,301,311
6.75% 9/1/19 (MBIA Insured) Aaa 2,670,000 2,885,736
Pennsylvania Gen. Oblig.:
(Cap. Appreciation) Second Aaa 1,770,000 1,195,830
Series, 0% 7/1/07 (AMBAC
Insured)
First Series, 6.125% 9/15/03 Aa3 5,000,000 5,214,250
Pennsylvania Higher Edl.
Facilities Auth. College &
Univ. Rev. Rfdg.:
(RIDC Reg'l. AA- 1,000,000 1,052,250
Growth/Carnegie-Mellon Univ.
Proj.) 6% 11/1/05
(Univ. of Pennsylvania Proj.):
Series A:
5.9% 9/1/15 Aa2 1,200,000 1,211,592
6.5% 9/1/02 Aa2 2,750,000 2,880,405
6.5% 9/1/04 Aa2 2,650,000 2,842,708
7% 9/1/01 Aa2 2,000,000 2,083,300
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 Proj.):
Series B:
6.5% 9/1/02 Aa2 $ 1,950,000 $ 2,042,469
6.5% 9/1/04 Aa2 2,100,000 2,252,712
7% 9/1/05 Aa2 2,000,000 2,213,000
Pennsylvania Higher Edl. A- 3,470,000 3,313,503
Facilities Auth. Rev.
(Drexel Univ. Proj.) 6%
5/1/29
Pennsylvania Hsg. Fin. Agcy.:
(Single Family Mtg. Prog.):
Series 51, 5.65% 4/1/20 (c) Aa2 1,920,000 1,914,605
Series 52 B, 5.55% 10/1/12 (c) Aa 1,520,000 1,526,825
Series 53 A, 5.4% 10/1/27 (c) Aa 1,945,000 1,939,535
Rfdg. (Single Family Mtg. Aa2 1,590,000 1,593,578
Prog.) Series 54 A, 5.375%
10/1/28 (c)
6.1% 10/1/13 (c) Aa 5,000,000 5,049,600
Pennsylvania Ind. Dev. Auth.
Rev.:
5.8% 1/1/08 (AMBAC Insured) Aaa 2,000,000 2,068,520
5.8% 7/1/09 (AMBAC Insured) Aaa 1,295,000 1,340,196
7% 7/1/06 (AMBAC Insured) Aaa 1,000,000 1,102,590
7% 1/1/07 (AMBAC Insured) Aaa 1,500,000 1,654,650
7% 7/1/07 (AMBAC Insured) Aaa 2,650,000 2,939,433
Pennsylvania
Intergovernmental Coop.
Auth. Spl. Tax Rev. Rfdg.
(Philadelphia Fdg. Prog.):
5% 6/15/01 (FGIC Insured) Aaa 1,000,000 1,007,860
5.25% 6/15/17 (FGIC Insured) Aaa 2,000,000 1,834,540
Pennsylvania Tpk. Commission Aaa 3,000,000 3,116,490
Tpk. Rev. Series L, 6.25%
6/1/11 (AMBAC Insured)
Philadelphia Arpt. Rev. Rfdg.
(Philadelphia Arpt. Sys.
Proj.) Series A:
5.375% 6/15/11 (FGIC Insured) Aaa 3,770,000 3,706,664
(c)
6% 6/15/08 (FGIC Insured) (c) Aaa 3,000,000 3,127,230
Philadelphia Gas Works Rev.
Rfdg. 14th Series A:
6.375% 7/1/26 Baa2 4,000,000 3,887,880
6.375% 7/1/26 (Pre-Refunded Baa2 1,905,000 2,034,521
to 7/1/03 @ 102) (d)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Philadelphia Hosp. & Higher
Ed. Facilities Auth. Health
Sys. Rev. (Jefferson Health
Sys. Proj.) Series A:
5% 5/15/09 A1 $ 1,000,000 $ 948,440
5.5% 5/15/08 A1 1,000,000 998,010
Philadelphia Hosp. & Higher
Ed. Facilities Auth. Hosp.
Rev. Rfdg. (Philadelphia
Hosp. Proj.):
6.05% 7/1/04 (Escrowed to Baa3 2,500,000 2,620,725
Maturity) (d)
6.15% 7/1/05 (Escrowed to Baa3 2,100,000 2,220,855
Maturity) (d)
6.25% 7/1/06 (Escrowed to Baa3 2,600,000 2,775,240
Maturity) (d)
Philadelphia Ind. Dev. Arpt. Aaa 3,000,000 2,643,840
Rev. (Philadelphia Arpt.
Sys. Proj.) Series A, 5%
7/1/15 (FGIC Insured) (c)
Philadelphia Muni. Auth. Rev. Aaa 1,000,000 538,210
(Cap. Appreciation) (Muni.
Svcs. Bldg. Lease Prog.) 0%
3/15/11 (FSA Insured)
Philadelphia School District:
Rfdg. Series A, 5% 4/1/06 Aaa 3,255,000 3,250,671
(AMBAC Insured)
Series A2, 4.5% 4/1/23 (MBIA Aaa 3,000,000 2,347,740
Insured)
Series B:
5.25% 4/1/17 (AMBAC Insured) Aaa 2,690,000 2,468,774
5.375% 4/1/27 (AMBAC Insured) Aaa 5,000,000 4,478,100
Series C, 5.75% 3/1/29 (MBIA Aaa 4,000,000 3,799,720
Insured)
Philadelphia Wtr. & Swr. Rev. Aaa 5,300,000 3,334,548
(Cap. Appreciation) 14th
Series, 0% 10/1/08 (MBIA
Insured)
Philadelphia Wtr. & Wastewtr.
Rev.:
Rfdg.:
5.5% 6/15/15 (FSA Insured) Aaa 1,805,000 1,749,713
5.75% 6/15/13 (MBIA Insured) Aaa 2,650,000 2,666,245
6.75% 8/1/04 (MBIA Insured) Aaa 2,085,000 2,252,759
6.75% 8/1/05 (MBIA Insured) Aaa 3,110,000 3,380,415
Pittsburgh Gen. Oblig. 5.5% Aaa 3,965,000 3,956,158
9/1/12 (AMBAC Insured)
Pittsburgh School District
(Cap. Appreciation) Series C:
0% 8/1/07 (AMBAC Insured) Aaa 2,610,000 1,755,695
0% 8/1/08 (AMBAC Insured) Aaa 2,000,000 1,269,460
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Pittsburgh Wtr. & Swr. Auth.
Wtr. & Swr. Sys. Rev.:
Rfdg. Series A:
4.75% 9/1/16 (FGIC Insured) Aaa $ 3,000,000 $ 2,578,950
6.5% 9/1/13 (FGIC Insured) Aaa 10,000,000 10,891,695
Rfdg. (Cap. Appreciation) Aaa 3,300,000 2,611,488
Series A, 0% 9/1/04 (FGIC
Insured) (Escrowed to
Maturity) (d)
Scranton-Lackawanna Health & Aaa 3,375,000 3,337,740
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 1,000,000 910,220
6.5% 3/1/04 (FGIC Insured) Aaa 85,000 90,411
(Escrowed to Maturity) (d)
5.35% 3/1/09 (FGIC Insured) Aaa 4,000,000 4,020,600
Westmoreland County Ind. Dev. BBB 2,700,000 2,302,857
Auth. Rev. Bonds (Nat'l.
Waste & Energy Corp./Valley
Landfill Expansion Proj.)
5.1%, tender 5/1/09 (c)
Wilkens Area Ind. Dev. Auth. Aaa 1,500,000 1,479,615
Rev. Rfdg. (Fairview
Extended Care Proj.) Series
B, 4.55% 1/1/21 (MBIA
Insured), LOC BankBoston NA
Wyoming Ind. Dev. Auth. Poll. Aa2 5,000,000 5,036,350
Cont. Rev. Rfdg. (Proctor &
Gamble Paper Proj.) 5.55%
5/1/10
York County Solid Waste & Aaa 5,000,000 5,077,200
Refuse Auth. Solid Waste
Sys. Rev. Rfdg. 5.25%
12/1/05 (FGIC Insured)
233,600,579
PUERTO RICO - 2.0%
Puerto Rico Commonwealth Gen. Baa1 1,000,000 903,200
Oblig. 5.375% 7/1/25
Puerto Rico Commonwealth Hwy.
& Trans. Auth. Hwy. Rev.
Series Y:
5% 7/1/36 Baa1 3,100,000 2,560,755
5.5% 7/1/36 Baa1 400,000 362,392
Puerto Rico Commonwealth Baa 1,000,000 1,021,600
Urban Renewal & Hsg. Corp.
Rfdg. 7.875% 10/1/04
4,847,947
TOTAL MUNICIPAL BONDS 238,448,526
(Cost $242,263,449)
</TABLE>
MUNICIPAL NOTES - 0.2%
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - 0.2%
Philadelphia Hosp. & Higher $ 500,000 $ 500,000
Ed. Facilities Auth. Hosp.
Rev. (Childrens Hosp. Proj.)
Series A, 4.8% (BPA Morgan
Guaranty Trust Co., NY),
VRDN (b) (Cost $500,000)
TOTAL INVESTMENT PORTFOLIO - 238,948,526
98.7%
(Cost $242,763,449)
NET OTHER ASSETS - 1.3% 3,052,258
NET ASSETS - 100% $ 242,000,784
SECURITY TYPE ABBREVIATION
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) S&P 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 86.7% AAA, AA, A 87.5%
Baa 9.3% BBB 8.7%
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 1.0%.
The distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
General Obligations 29.1%
Water & Sewer 12.1
Health Care 11.4
Transportation 10.9
Escrowed/Pre-Refunded 9.6
Education 8.4
Housing 5.3
Others* (individually less 13.2
than 5%)
100.0%
* Includes short term investments and net other assets.
INCOME TAX INFORMATION
At December 31, 1999, the aggregate cost of investment securities for
income tax purposes was $242,763,449. Net unrealized depreciation
aggregated $3,814,923, of which $3,336,308 related to appreciated
investment securities and $7,151,231 related to depreciated investment
securities.
The fund hereby designates approximately $1,455,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
During the fiscal year ended 1999, 100% of the fund's income dividends
was free from federal income tax, and 13.56% of the fund's income
dividends was subject to the federal alternative minimum tax.
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
Investment in securities, at $ 238,948,526
value (cost $242,763,449) -
See accompanying schedule
Cash 61,071
Receivable for fund shares 1,000
sold
Interest receivable 3,952,033
TOTAL ASSETS 242,962,630
LIABILITIES
Payable for fund shares $ 570,660
redeemed
Distributions payable 263,109
Accrued management fee 78,896
Other payables and accrued 49,181
expenses
TOTAL LIABILITIES 961,846
NET ASSETS $ 242,000,784
Net Assets consist of:
Paid in capital $ 246,688,019
Accumulated undistributed net (872,312)
realized gain (loss) on
investments
Net unrealized appreciation (3,814,923)
(depreciation) on investments
NET ASSETS, for 24,044,111 $ 242,000,784
shares outstanding
NET ASSET VALUE, offering $10.06
price and redemption price
per share ($242,000,784
(divided by) 24,044,111
shares)
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
INTEREST INCOME $ 13,340,991
EXPENSES
Management fee $ 994,734
Transfer agent fees 207,076
Accounting fees and expenses 79,026
Non-interested trustees' 731
compensation
Custodian fees and expenses 10,335
Registration fees 22,355
Audit 32,151
Legal 2,624
Miscellaneous 656
Total expenses before 1,349,688
reductions
Expense reductions (5,965) 1,343,723
NET INTEREST INCOME 11,997,268
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 1,232,926
Futures contracts (205,311) 1,027,615
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (18,692,663)
Futures contracts 61,490 (18,631,173)
NET GAIN (LOSS) (17,603,558)
NET INCREASE (DECREASE) IN $ (5,606,290)
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 11,997,268 $ 11,822,764
Net realized gain (loss) 1,027,615 2,824,146
Change in net unrealized (18,631,173) 153,657
appreciation (depreciation)
NET INCREASE (DECREASE) IN (5,606,290) 14,800,567
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (11,997,268) (11,822,764)
From net interest income
From net realized gain (1,027,615) (2,636,886)
In excess of net realized (479,531) -
gain
TOTAL DISTRIBUTIONS (13,504,414) (14,459,650)
Share transactions Net 29,309,371 28,187,316
proceeds from sales of shares
Reinvestment of distributions 9,949,965 10,944,008
Cost of shares redeemed (47,648,462) (34,694,043)
NET INCREASE (DECREASE) IN (8,389,126) 4,437,281
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
Redemption fees 16,954 12,418
TOTAL INCREASE (DECREASE) (27,482,876) 4,790,616
IN NET ASSETS
NET ASSETS
Beginning of period 269,483,660 264,693,044
End of period $ 242,000,784 $ 269,483,660
OTHER INFORMATION
Shares
Sold 2,776,170 2,596,010
Issued in reinvestment of 951,358 1,009,039
distributions
Redeemed (4,562,770) (3,205,514)
Net increase (decrease) (835,242) 399,535
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 10.830 $ 10.810 $ 10.490 $ 10.670 $ 9.620
of period
Income from Investment .482 .483 .501 .520 .590
Operations Net interest
income
Net realized and unrealized (.709) .126 .350 (.109) 1.049
gain (loss)
Total from investment (.227) .609 .851 .411 1.639
operations
Less Distributions
From net interest income (.482) (.483) (.501) (.520) (.590)
From net realized gain (.042) (.107) (.030) (.071) -
In excess of net realized gain (.020) - - - -
Total distributions (.544) (.590) (.531) (.591) (.590)
Redemption fees added to paid .001 .001 .000 .000 .001
in capital
Net asset value, end of period $ 10.060 $ 10.830 $ 10.810 $ 10.490 $ 10.670
TOTAL RETURN A (2.16)% 5.77% 8.34% 4.02% 17.44%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 242,001 $ 269,484 $ 264,693 $ 270,977 $ 288,425
(000 omitted)
Ratio of expenses to average .51% .55% .55% .55% .55%
net assets
Ratio of expenses to average .51% .55% .55% .53% B .55%
net assets after expense
reductions
Ratio of net interest income 4.58% 4.45% 4.74% 4.98% 5.73%
to average net assets
Portfolio turnover rate 28% 25% 26% 53% 49%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B 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 year total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SPARTAN PA MUNICIPAL MONEY 2.91% 17.28% 40.35%
MARKET
Pennsylvania Tax-Free Money 2.71% 16.35% 40.74%
Market Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 Pennsylvania 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 one year average represents a peer group of 13 mutual funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SPARTAN PA MUNICIPAL MONEY 2.91% 3.24% 3.45%
MARKET
Pennsylvania Tax-Free Money 2.71% 3.07% 3.47%
Market 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
1/3/00 9/27/99 6/28/99 3/29/99 12/28/98
Spartan PA Muni Money Market 4.37% 3.20% 3.07% 2.65% 3.19%
Pennsylvania Tax-Free Money 4.02% 2.98% 2.90% 2.44% 2.97%
Market Funds Average
Spartan Pennsylvania 7.02% 5.15% 4.93% 4.26% 5.13%
Municipal Money Market -
Tax-equivalent
Portion of fund's income 0.90% 7.69% 0.25% 0.14% 2.51%
subject to state taxes
Row: 1, Col: 1, Value: 4.37
Row: 1, Col: 2, Value: 4.02
Row: 2, Col: 1, Value: 3.2
Row: 2, Col: 2, Value: 2.98
Row: 3, Col: 1, Value: 3.07
Row: 3, Col: 2, Value: 2.9
Row: 4, Col: 1, Value: 2.65
Row: 4, Col: 2, Value: 2.44
Row: 5, Col: 1, Value: 3.19
Row: 5, Col: 2, Value: 2.97
5% -
4% -
3% -
2% -
1% -
0%
Spartan Pennsylvania
Municipal Money
Market
Pennsylvania Tax-Free
Money Market
Funds Average
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
Pennsylvania 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%. The fund's yields mentioned above reflect
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.
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.
(checkmark)
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 1999, DIANE?
A. Economic growth was solid throughout the year. The wealth effect
created by appreciating equity and real estate markets fueled consumer
spending, a significant component of gross domestic product. Growth in
real GDP - gross domestic product adjusted for inflation - averaged a
3.8% annual rate in the first three quarters of 1999; preliminary
estimates for the fourth quarter suggested growth in excess of 5%.
Meanwhile, unemployment hit record lows; it ended 1998 at 4.4% and
trended downward throughout 1999, ending the fourth quarter at 4.1%, a
29-year low. With employment this tight, wage pressures are expected
to carry through to the consumer in the form of higher prices.
Throughout the year, market participants feared the combination of
strong growth and low unemployment would lead to inflation. However,
very few hints of higher prices emerged, as increased productivity
offset inflationary tendencies. Nevertheless, the Federal Reserve
Board felt that action on its part was warranted. Striking against
inflation before it emerged, the Fed raised the rate banks charge each
other for overnight loans - known as the fed funds target rate - three
times, in June, August and November. These rate hikes brought the fed
funds target rate back to 5.50%, where it stood in mid-1998 before the
Fed cut it three times in order to help alleviate a building global
credit crunch. After its November interest-rate increase, the Fed
chose to stand pat through the rest of 1999, to maintain stability in
the markets through the changeover into the year 2000.
Q. WHAT WAS YOUR STRATEGY WITH THE FUND?
A. For most of the period, the fund's average maturity was shorter
than its competitors because I expected interest rates to rise. I did
make selective purchases of one-year, fixed-rate securities, however.
In the summer, many Pennsylvania municipalities issue long-term,
fixed-rate notes to help sustain cash flow. Because of this added
supply, fixed-rate notes usually become cheaper. However, this year
municipalities had less of a need to come to market because of the
strength of the economy. Diminished supply meant that longer-term
notes were not attractively priced. This factor, combined with my
expectation for higher rates, led me to keep the fund's average
maturity shorter than its competitors through the second half of the
year. My focus in the fixed-rate area was in three-month commercial
paper. Overall, yields on the three-month securities were the same as
those offered by one-year securities, so there was little advantage to
invest in the longer-term notes given my outlook for rising interest
rates. As interest rates rose and the three-month securities matured,
I was able to roll over the assets into securities bearing higher
yields. I also increased the fund's investments in variable-rate
demand notes - very-short-term securities whose yields are reset at
regular intervals - when I anticipated outflows from the fund, namely
tax time and the end of the year. At the end of 1999, I maximized the
fund's liquidity in preparation for potential volatility and
shareholder flows due to possible problems related to Y2K. Holding a
significant stake in demand notes at the end of the year benefited the
fund; they captured higher yields as they emerged. In fact, at the end
of 1999, tax-exempt rates outpaced yields on taxable securities with
comparable maturities, an unusual phenomenon.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on December 31, 1999, was 4.13%,
compared to 3.26% 12 months ago. The latest yield was the equivalent
of a 6.65% taxable yield for Pennsylvania investors in the 37.79%
combined federal and state income tax bracket. The fund's yields
reflect that a portion of the fund's income was subject to state
taxes. Through December 31, 1999, the fund's 12-month total return was
2.91%, compared to 2.71% for the Pennsylvania tax-free money market
funds average, according to IBC Financial Data, Inc.
Q. WHAT IS YOUR OUTLOOK?
A. Given the continued strength of the U.S. economy, it's likely that
additional Fed rate hikes will follow. The market has priced in at
least two more 0.25 percentage point Fed rate increases, and the Fed
may be even more aggressive if data continues to indicate significant
strength in the economy. I expect to keep the fund's average maturity
shorter than its competitors, given the likelihood of higher rates and
limited issuance in the Pennsylvania market. I will, however, continue
to seek opportunities in longer-term securities that accurately
reflect my fundamental outlook or if they become attractive due to a
demand/supply imbalance.
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.
FUND FACTS
GOAL: to seek high current
income exempt from federal
and Pennsylvania state income
tax
FUND NUMBER: 401
TRADING SYMBOL: FPTXX
START DATE: August 6, 1986
SIZE: as of December 31,
1999, more than $201
million
MANAGER: Diane McLaughlin,
since 1997; manager,
various Fidelity and Spartan
municipal money market
funds; joined Fidelity in 1992
(checkmark)
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MATURITY DIVERSIFICATION
DAYS % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 6/30/99 % OF FUND'S INVESTMENTS
12/31/99 12/31/98
0 - 30 85.2 74.1 78.8
31 - 90 3.3 13.3 6.1
91 - 180 2.5 4.9 6.4
181 - 397 9.0 7.7 8.7
WEIGHTED AVERAGE MATURITY
12/31/99 6/30/99 12/31/98
Spartan Pennsylvania 32 DAYS 46 Days 38 Days
Municipal Money Market Fund
Pennsylvania Tax-Free Money 45 DAYS 35 Days 39 Days
Market Funds Average *
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
NET ASSETS)
AS OF DECEMBER 31, 1999 AS OF JUNE 30, 1999
Variable Rate Demand Notes Variable Rate Demand Notes
(VRDNs) 67.2% (VRDNs) 73.4%
Commercial Paper (including Commercial Paper (including
CP Mode) 19.0% CP Mode) 14.7%
Tender Bonds 2.0% Tender Bonds 4.0%
Municipal Notes 8.5% Municipal Notes 7.1%
Other Investments and Net Other Investments and Net
Other Assets 3.3% Other Assets 0.8%
</TABLE>
Row: 1, Col: 1, Value: 67.2
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 19.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 2.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 8.5
Row: 1, Col: 8, Value: 3.3
Row: 1, Col: 1, Value: 73.40000000000001
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 14.7
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 4.0
Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 7.1
Row: 1, Col: 8, Value: 0.8
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
INVESTMENTS DECEMBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MUNICIPAL SECURITIES - 99.6%
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - 98.7%
Allegheny County Arpt. Rev. $ 2,000,000 $ 2,000,000
Participating VRDN Series
ML PA 567, 5.61% (Liquidity
Facility Merrill Lynch &
Co., Inc.) (a)(d)(e)
Allegheny County Ind. Dev.
Auth. Rev.:
(American Bridge Co. Proj.) 2,650,000 2,650,000
Series 1999 A, 5.7%, LOC
Nat'l. City Bank, VRDN (a)(d)
(Doren, Inc. Proj.) Series 2,300,000 2,300,000
1997 C, 5.7%, LOC Nat'l.
City Bank, PA, VRDN (a)(d)
(R. I. Lampus Co. Proj.) 2,560,000 2,560,000
Series 1997 A, 5.7%, LOC
Nat'l. City Bank, PA, VRDN
(a)(d)
(Union Elec. Steel Co. Proj.) 3,120,000 3,120,000
Series 1996 A, 5.65%, LOC
PNC Bank NA, VRDN (a)(d)
Rfdg. (North Versailles 2,790,000 2,790,000
Shopping Ctr. Proj.) Series
1992, 5.5%, LOC Bank One,
NA, VRDN (a)
Beaver County Ind. Dev. Auth.
Poll. Cont. Rev.:
Participating VRDN Series 7,100,000 7,100,000
953503, 5.56% (Liquidity
Facility Citibank, New York
NA) (a)(e)
Rfdg. Bonds (Duquense Lt. Co.
Proj.):
Series 1999 A, 3.95% tender 2,000,000 2,000,000
1/12/00 (AMBAC Insured)
(Liquidity Facility Bank of
New York NA), CP mode (d)
Series 1999 E, 3.9% tender 6,000,000 6,000,000
1/26/00 (AMBAC Insured)
(Liquidity Facility Bank of
New York NA), CP mode
Berks County Ind. Dev. Auth. 2,000,000 2,000,000
Ind. Dev. Rev. Bonds
(Citizens Utils. Proj.)
Series 1996, 4% tender
1/18/00, CP mode (d)
Berks County Ind. Dev. Auth.
Rev.:
(Construction Fastener Proj.) 870,000 870,000
Series 1996 B, 5.6%, LOC
First Union Nat'l. Bank,
North Carolina, VRDN (a)(d)
(Grafika Commercial Printing, 1,285,000 1,285,000
Inc. Proj.) Series 1995,
5.5%, LOC First Union Nat'l.
Bank, North Carolina, VRDN
(a)(d)
(RAM Industries, Inc. Proj.) 3,060,000 3,060,000
Series 1996, 5.5%, LOC First
Union Nat'l. Bank, North
Carolina, VRDN (a)(d)
(The Bachman Co. Proj.) 2,075,000 2,075,000
Series 1994, 5.55%, LOC
First Union Nat'l. Bank,
North Carolina, VRDN (a)(d)
Bucks County Ind. Dev. Auth.
Rev.:
(Associates Proj.) Series 1,225,000 1,225,000
1993, 5.55%, LOC First Union
Nat'l. Bank, North Carolina,
VRDN (a)(d)
(Double H Plastics, Inc. 1,950,000 1,950,000
Proj.) Series 1993, 5.55%,
LOC First Union Nat'l. Bank,
North Carolina, VRDN (a)(d)
Butler County Ind. Dev. Auth. 1,200,000 1,200,000
Rev. (Armco, Inc. Proj.)
Series 1996 A, 5.65%, LOC
Chase Manhattan Bank, VRDN
(a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Carbon County Ind. Dev. Auth.
Resource Recovery Rev. Bonds
(Panther Creek Partners
Proj.):
Series 1990 A, 3.9% tender $ 3,500,000 $ 3,500,000
1/21/00, LOC Nat'l.
Westminster Bank PLC, CP
mode (d)
Series 1990 B, 3.9% tender 6,955,000 6,955,000
1/20/00, LOC Nat'l.
Westminster Bank PLC, CP
mode (d)
Series 1991 A:
3.9% tender 1/21/00, LOC 3,300,000 3,300,000
Nat'l. Westminster Bank PLC,
CP mode (d)
4% tender 1/20/00, LOC Nat'l. 2,000,000 2,000,000
Westminster Bank PLC, CP
mode (d)
Cumberland County Ind. Dev. 1,800,000 1,800,000
Auth. Ind. Dev. Rev. (Lane
Enterprises, Inc. Proj.)
Series 1994, 5.5%, LOC First
Union Nat'l. Bank, North
Carolina, VRDN (a)(d)
Dauphin County Gen. Auth. 3,600,000 3,600,000
Rev. (School District Pooled
Fing. Prog.) 5.85% (AMBAC
Insured) (BPA Commerzbank
AG) (BPA Bank of Nova
Scotia), VRDN (a)
Downingtown Area School 3,000,000 3,003,570
District TRAN 3.75% 6/30/00
Erie County Ind. Dev. Auth. 1,000,000 1,000,000
Rev. (Carlisle Corp. Proj.)
Series 1993, 5.65%, LOC
SunTrust Bank of Atlanta,
VRDN (a)(d)
Harrisburg Auth. Wtr. Rev. 2,000,000 2,000,000
Participating VRDN Series
SGA 80, 5.85% (Liquidity
Facility Societe Generale,
France) (a)(e)
Lancaster Higher Ed. Auth. 1,435,000 1,435,000
College Rev. (Franklin &
Marshall College Proj.)
5.75% (BPA Chase Manhattan
Bank), VRDN (a)
Lawrence County Ind. Dev. 2,400,000 2,400,000
Auth. Ind. Dev. Rev.
(Atlantic States Materials
Proj.) Series 1999, 5.6%,
LOC Wachovia Bank NA, VRDN
(a)(d)
Lehigh County Ind. Dev. Auth.
Poll. Cont. Rev. (Allegheny
Elec. Coop., Inc. Proj.):
Series 1984 A, 3.85%, LOC 500,000 500,000
RaboBank Nederland Coop.
Central, VRDN (a)
Series 1984 B, 3.85%, LOC 900,000 900,000
RaboBank Nederland Coop.
Central, VRDN (a)
Montgomery County Ind. Dev.
Auth. Rev.:
(H. P. Cadwallader, Inc. 820,000 820,000
Proj.) Series 1995, 5.6%,
(K&R Leasing) LOC First
Union Nat'l Bank, North
Carolina, VRDN (a)(d)
(RJI Ltd. Partnership Proj.) 1,305,000 1,305,000
Series 1992, 5.5%, (ABJ
Assoc.) LOC First Union
Nat'l. Bank, North
Carolina, VRDN (a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Montgomery County Ind. Dev.
Auth. Rev.: - continued
Rfdg. Bonds (Peco Energy Co.
Proj.) Series 1994 A:
3.55% tender 1/27/00, LOC $ 1,800,000 $ 1,800,000
Deutsche Bank AG, CP mode
3.8% tender 1/24/00, LOC 3,000,000 3,000,000
Deutsche Bank AG, CP mode
New Garden Gen. Auth. Muni. 1,600,000 1,600,000
Rev. (Muni. Pooled Fin.
Prog.) Series 1999, 5.85%
(AMBAC Insured), VRDN (a)
North Pennsylvania Wtr. Auth. 12,000,000 12,000,000
Wtr. Rev. Participating VRDN
Series SGA 30, 5.85%
(Liquidity Facility Societe
Generale, France) (a)(e)
Northampton County Ind. Dev.
Auth. Rev.:
Bonds (Citizens Utils. Co. 1,100,000 1,100,000
Proj.) Series 1991, 4.15%
tender 2/1/00, CP mode (d)
(Bedford Park Proj.) Series 1,595,000 1,595,000
1996 A, 5.55%, LOC Harris
Trust & Savings Bank,
Chicago, VRDN (a)(d)
(Binney & Smith, Inc. Proj.) 2,350,000 2,350,000
Series 1997 A, 5.5%, LOC
Bank One NA, Chicago, VRDN
(a)(d)
(Victoria Vogue Proj.) 5.65%, 2,035,000 2,035,000
LOC PNC Bank NA, VRDN (a)(d)
Northhampton Ind. Dev. Auth. 2,000,000 2,000,000
Rev. (Ultra-Poly
Corp./Portland Ind. Park
Proj.) 5.65%, LOC PNC Bank
NA, VRDN (a)(d)
Northumberland County Ind. 5,990,000 5,990,000
Dev. Auth. Rev. (Foster
Wheeler Mount Carmel, Inc.
Proj.) Series 1987 B, 5.65%,
LOC UBS AG, VRDN (a)(d)
Pennsylvania Convention Ctr. 2,000,000 2,000,000
Auth. Rev. Bonds Series PT
316, 4.05%, tender 1/27/00
(Liquidity Facility
Landesbank Hessen-Thuringen)
(e)
Pennsylvania Econ. Dev. Fing. 2,000,000 2,000,000
Auth. Exempt Facilities Rev.
Bonds (Approved Solid Waste
Proj.) Series 1999, 4.1%
12/15/00 (Bayerische
Landesbank Girozentrale
Guaranteed) (d)
Pennsylvania Econ. Dev. Fing.
Auth. Ind. Dev. Rev.:
(Dodge-Regupol, Inc. Proj.) 1,100,000 1,100,000
Series D4, 5.65%, LOC PNC
Bank NA, VRDN (a)(d)
(Esschem, Inc. Proj.) Series 1,625,000 1,625,000
1991 D10, 5.65%, LOC PNC
Bank NA, VRDN (a)(d)
(McDowell Manufacturing Co. 1,000,000 1,000,000
Proj.) Series 1996 F4,
5.65%, LOC PNC Bank NA, VRDN
(a)(d)
(Pappafava Proj. ) Series 125,000 125,000
1989 D7, 5.65%, LOC PNC Bank
NA, VRDN (a)(d)
(Port Erie Plastics Proj.) 300,000 300,000
Series 1989 D9, 5.65%, LOC
PNC Bank NA, VRDN (a)(d)
(Respironics, Inc. Proj.) 500,000 500,000
Series 1989 F, 5.65%, LOC
PNC Bank NA, VRDN (a)(d)
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Econ. Dev. Fing.
Auth. Ind. Dev. Rev.: -
continued
(Sun Star, Inc. Proj.) Series $ 600,000 $ 600,000
1994 A5, 5.65%, LOC PNC Bank
NA, VRDN (a)(d)
Series 1996 A1, 5.65%, LOC 525,000 525,000
PNC Bank NA, VRDN (a)(d)
Series 1996 A2, 5.65%, LOC 1,700,000 1,700,000
PNC Bank NA, VRDN (a)(d)
Series 1996 A3, 5.65%, LOC 800,000 800,000
PNC Bank NA, VRDN (a)(d)
Series 1996 A7, 5.65%, LOC 675,000 675,000
PNC Bank NA, VRDN (a)(d)
Series 1996 A8, 5.65%, LOC 500,000 500,000
PNC Bank NA, VRDN (a)(d)
Pennsylvania Econ. Dev. Fing.
Auth. Rev.:
(ASK Foods, Inc. Proj.) 285,000 285,000
Series A1, 5.65%, LOC PNC
Bank NA, VRDN (a)(d)
(Babcock & Wilcox Co. Proj.) 4,775,000 4,775,000
Series 1989 A2, 5.65%, LOC
PNC Bank NA, VRDN (a)(d)
(Suntory Wtr. Group, Inc. 4,900,000 4,900,000
Proj.) Series 1992 D, 5.6%,
LOC Wachovia Bank NA, VRDN
(a)(d)
Pennsylvania Gen. Oblig. 1,000,000 1,000,000
Series 1997 A, 3.75% 1/26/00
(Liquidity Facility
Bayerische Landesbank
Girozentrale), CP
Pennsylvania Higher Ed.
Assistance Agcy. Student Ln.
Rev.:
Series 1988 A, 5.9%, LOC 2,200,000 2,200,000
Student Ln. Marketing
Assoc., VRDN (a)(d)
Series 1988 B, 5.9%, LOC 3,900,000 3,900,000
Student Ln. Marketing
Assoc., VRDN (a)(d)
Series 1988 C, 5.9%, LOC 5,000,000 5,000,000
Student Ln. Marketing
Assoc., VRDN (a)(d)
Series 1988 E, 5.9%, LOC 2,700,000 2,700,000
Student Ln. Marketing
Assoc., VRDN (a)(d)
Series 1997 A, 6.05%, LOC 5,000,000 5,000,000
Student Ln. Marketing
Assoc., VRDN (a)(d)
Pennsylvania Higher Edl. 1,595,000 1,603,731
Facilities Auth. Rev. RAN
(Lafayette College Proj.)
4.5% 11/29/00
Philadelphia Arpt. Rev. 2,000,000 2,000,000
Participating VRDN Series SG
118, 5.61% (Liquidity
Facility Societe Generale,
France) (a)(d)(e)
Philadelphia Gen. Oblig. TRAN 4,000,000 4,010,059
Series 1999 2000 A, 4.25%
6/30/00
Philadelphia Hosp. & Higher 2,000,000 2,000,000
Ed. Facilities Auth. Health
Sys. Rev. Bonds (Jefferson
Health Sys. Proj.) Series
1999 B, 3.25%, tender 3/31/00
MUNICIPAL SECURITIES -
CONTINUED
PRINCIPAL AMOUNT VALUE (NOTE 1)
PENNSYLVANIA - CONTINUED
Philadelphia Ind. Dev. Rev.:
(30th Street Station Proj.) $ 2,100,000 $ 2,100,000
4% (MBIA Insured), VRDN
(a)(d)
(Fox Chase Cancer Ctr. Proj.) 1,200,000 1,200,000
Series 1997, 4.8%, LOC
Morgan Guaranty Trust Co.,
NY, VRDN (a)
(Institute for Cancer 1,200,000 1,200,000
Research Fox Chase Proj.)
Series 1990 A, 4.8%, LOC
Morgan Guaranty Trust Co.,
NY, VRDN (a)
Philadelphia Redev. Auth. 2,000,000 2,000,000
Rev. (Southwork Plaza Proj.)
Series 1997 A, 5.55%, LOC
PNC Bank NA, VRDN (a)(d)
Philadelphia School District 3,000,000 3,007,906
TRAN Series B, 4% 6/30/00,
LOC Mellon Bank NA,
Pittsburgh
Philadelphia Wtr. & Wastewtr. 1,230,000 1,230,000
Rev. Participating VRDN
Series 1997 Q, 5.18%
(Liquidity Facility Caisse
des Depots et Consignations)
(a)(e)
Pittsburgh Gen. Oblig. 2,000,000 2,000,000
Participating VRDN Series SG
71, 5.56% (Liquidity
Facility Societe Generale,
France) (a)(e)
Pittsburgh Urban Redev. Auth. 2,000,000 2,000,000
Mtg. Rev. Bonds Series 1999
E, 3.65% 8/15/00 (d)
Red Lion Area School District 2,500,000 2,503,583
TRAN 3.75% 6/30/00
Schuylkill County Ind. Dev.
Auth. Resource Recovery Rev.
Rfdg. (Northeastern Pwr. Co.
Proj.):
Series 1997 A, 4.75%, LOC Cr. 1,600,000 1,600,000
Local de France, VRDN (a)
Series 1997 B, 4.85%, LOC Cr. 2,900,000 2,900,000
Local de France, VRDN (a)(d)
Schuylkill County Ind. Dev. 900,000 900,000
Auth. Rev. (Metal Sales
Manufacturing Corp. Proj.)
Series 1995, 5.6%, LOC
Firstar Bank NA, VRDN (a)(d)
Temple Univ. Commonwealth 3,000,000 3,000,000
Higher Ed. BAN 3.15% 5/12/00
Venango Ind. Dev. Auth.
Resource Recovery Rev. Bonds
(Scrubgrass Pwr. Corp.
Proj.) Series 1990 B:
3.7% tender 1/31/00, LOC 5,585,000 5,585,000
Nat'l. Westminster Bank PLC,
CP mode (d)
York Gen. Auth. Pooled Fing. 2,500,000 2,500,000
Rev. Series 1996, 5.4%, LOC
First Union Nat'l. Bank,
North Carolina, VRDN (a)
198,723,849
MUNICIPAL SECURITIES -
CONTINUED
SHARES VALUE (NOTE 1)
OTHER - 0.9%
Municipal Central Cash Fund, 1,763,975 $ 1,763,975
4.81% (b)(c)
TOTAL INVESTMENT PORTFOLIO - 200,487,824
99.6%
NET OTHER ASSETS - 0.4% 803,281
NET ASSETS - 100% $ 201,291,105
</TABLE>
Total Cost for Income Tax Purposes $ 200,487,824
SECURITY TYPE ABBREVIATIONS
BAN - BOND ANTICIPATION NOTE
CP - COMMERCIAL PAPER
RAN - REVENUE ANTICIPATION NOTE
TRAN - TAX AND REVENUE
ANTICIPATION NOTE
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) The rate quoted is the annualized seven-day yield of the fund at
period end.
(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.
INCOME TAX INFORMATION
At December 31, 1999, the fund had a capital loss carryforward of
approximately $54,000 of which $17,000, $10,000 and $27,000 will
expire on December 31, 2002, 2003 and 2004, respectively.
During the fiscal year ended 1999, 100% of the fund's income dividends
was free from federal income tax, and 61.56% of the fund's income
dividends was subject to the federal alternative minimum tax.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
Investment in securities, at $ 200,487,824
value - See accompanying
schedule
Cash 1,066
Receivable for fund shares 450,484
sold
Interest receivable 1,307,706
TOTAL ASSETS 202,247,080
LIABILITIES
Payable for fund shares $ 846,994
redeemed
Distributions payable 21,462
Accrued management fee 84,665
Other payables and accrued 2,854
expenses
TOTAL LIABILITIES 955,975
NET ASSETS $ 201,291,105
Net Assets consist of:
Paid in capital $ 201,344,622
Accumulated net realized gain (53,517)
(loss) on investments
NET ASSETS, for 201,342,475 $ 201,291,105
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($201,291,105
(divided by) 201,342,475
shares)
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
INTEREST INCOME $ 6,690,401
EXPENSES
Management fee $ 992,745
Non-interested trustees' 652
compensation
Total expenses before 993,397
reductions
Expense reductions (6,708) 986,689
NET INTEREST INCOME 5,703,712
NET REALIZED GAIN (LOSS) ON 500
INVESTMENTS
NET INCREASE IN NET ASSETS $ 5,704,212
RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 5,703,712 $ 6,753,371
Net realized gain (loss) 500 6,043
NET INCREASE (DECREASE) IN 5,704,212 6,759,414
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (5,703,712) (6,753,371)
from net interest income
Share transactions at net 133,662,294 150,634,446
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 5,407,005 6,502,673
distributions from net
interest income
Cost of shares redeemed (154,265,283) (170,125,710)
NET INCREASE (DECREASE) IN (15,195,984) (12,988,591)
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) (15,195,484) (12,982,548)
IN NET ASSETS
NET ASSETS
Beginning of period 216,486,589 229,469,137
End of period $ 201,291,105 $ 216,486,589
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
Income from Investment .029 .031 .033 .032 .035
Operations Net interest
income
Less Distributions
From net interest income (.029) (.031) (.033) (.032) (.035)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN A, B 2.91% 3.15% 3.36% 3.21% 3.56%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 201,291 $ 216,487 $ 229,469 $ 242,386 $ 241,643
(000 omitted)
Ratio of expenses to average .50% .50% .50% .50% .50%
net assets
Ratio of expenses to average .50% .50% .50% .48% C .50%
net assets after expense
reductions
Ratio of net interest income 2.87% 3.10% 3.31% 3.17% 3.50%
to average net assets
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE.
C 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 December 31, 1999
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 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 and excise tax regulations. 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 (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 after the
customary settlement period for that security. The price of the
underlying securities is fixed at the time the transaction is
negotiated. 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
2. OPERATING POLICIES -
CONTINUED
WHEN-ISSUED SECURITIES - CONTINUED
in the 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 $70,898,497 and $74,955,363, 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 .0920% 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 annual rate of .38% of average net assets.
MONEY MARKET FUND. As the fund's investment adviser, FMR receives a
fee that is computed daily at an annual rate of .50% of the fund's
average net assets. FMR pays all other expenses, except the
compensation of the non-interested Trustees and certain exceptions
such as interest, taxes, brokerage commissions and extraordinary
expenses. The management fee paid to FMR by the fund is reduced by an
amount equal to the fees and expenses paid by the fund to the
non-interested Trustees.
FMR also bears the cost of providing shareholder services to the money
market fund. To offset the cost of
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
providing these services, FMR or its affiliates collected certain
transaction fees from shareholders which amounted to $3,877 for the
period.
SUB-ADVISER FEE. As the income 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 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 income 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 income fund's transfer agent fees were equivalent
to an annual rate of .08% of average net assets.
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.
Through arrangements with the funds' custodian and transfer agent,
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 expenses were
reduced by $5,495 and $470, respectively, and the money market fund's
expenses were reduced by $6,708 under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Municipal Trust and Fidelity Municipal
Trust II and the Shareholders of Spartan Pennsylvania Municipal Income
Fund and Spartan Pennsylvania Municipal Money Market Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Spartan Pennsylvania Municipal Income Fund (a fund of Fidelity
Municipal Trust) and Spartan Pennsylvania Municipal Money Market Fund
(a fund of Fidelity Municipal Trust II) at December 31, 1999, and the
results of their operations, the changes in their net assets and the
financial highlights for the periods indicated, in conformity with
accounting principles generally accepted in the United States. These
financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the funds'
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at December
31, 1999 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 10, 2000
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 (FAST SM)
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 1-800-544-0240 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 75039-5587
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 75039-5587
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
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
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
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
Ned C. Lautenbach
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
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
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 (FAST SM) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
SPARTAN(REGISTERED TRADEMARK)
MUNICIPAL INCOME
FUND
ANNUAL REPORT
NOVEMBER 30, 1999(2_FIDELITY_LOGOS)
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 57 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 61 Notes to the financial
statements.
REPORT OF INDEPENDENT 66 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 67
PROXY VOTING RESULTS 68
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 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
U.S. equity indexes once again dominated the financial headlines, led
by the NASDAQ's 15 record highs in 21 November sessions. Meanwhile,
the Standard & Poor's 500 SM posted two record closings and the Dow
Jones Industrial Average crept above the 11,000 mark for the first
time since mid-September. However, another Federal Reserve Board
interest rate hike and continued inflation concerns drove down the
price of the benchmark 30-year Treasury.
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 1-800-544-6666, 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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN MUNICIPAL INCOME -1.44% 42.34% 89.86%
LB Municipal Bond -1.07% 43.83% 97.77%
LB 3 Plus Year Municipal Bond -1.59% 44.68% n/a
General Municipal Debt Funds -3.51% 37.09% 85.59%
Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 Municipal Bond Index - a market value-weighted index
of investment-grade municipal bonds with maturities of one year or
more. Beginning with this report, the fund will compare itself to the
Lehman Brothers 3 Plus Year Municipal Bond Index, a market
value-weighted index for investment-grade municipal bonds with
maturities of three years or more. To measure how the fund's
performance stacked up against its peers, you can compare it to the
general municipal debt funds average, which reflects the performance
of mutual funds with similar objectives tracked by Lipper Inc. The
past one year average represents a peer group of 264 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 NOVEMBER 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN MUNICIPAL INCOME -1.44% 7.32% 6.62%
LB Municipal Bond -1.07% 7.54% 7.06%
LB 3 Plus Year Municipal Bond -1.59% 7.67% n/a
General Municipal Debt Funds -3.51% 6.50% 6.37%
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 Municipal Income LB Municipal Bond
00037 LB015
1989/11/30 10000.00 10000.00
1989/12/31 10083.15 10081.80
1990/01/31 9976.90 10034.11
1990/02/28 10107.53 10123.42
1990/03/31 10118.97 10126.45
1990/04/30 9936.95 10053.14
1990/05/31 10211.13 10272.60
1990/06/30 10320.18 10362.89
1990/07/31 10479.94 10515.23
1990/08/31 10370.93 10362.55
1990/09/30 10449.17 10368.45
1990/10/31 10588.05 10556.54
1990/11/30 10890.75 10768.83
1990/12/31 10937.60 10815.67
1991/01/31 11080.06 10960.82
1991/02/28 11149.41 11056.18
1991/03/31 11185.28 11060.16
1991/04/30 11338.31 11207.26
1991/05/31 11438.17 11306.89
1991/06/30 11438.78 11295.70
1991/07/31 11604.95 11433.28
1991/08/31 11707.47 11583.86
1991/09/30 11801.05 11734.68
1991/10/31 11912.00 11840.29
1991/11/30 11938.00 11873.33
1991/12/31 12050.68 12128.13
1992/01/31 12174.38 12155.78
1992/02/29 12199.29 12159.67
1992/03/31 12211.25 12164.17
1992/04/30 12328.01 12272.43
1992/05/31 12446.33 12416.88
1992/06/30 12618.91 12625.23
1992/07/31 12942.66 13003.74
1992/08/31 12770.40 12876.95
1992/09/30 12804.68 12961.16
1992/10/31 12591.48 12833.76
1992/11/30 12918.24 13063.61
1992/12/31 13058.12 13196.99
1993/01/31 13240.87 13350.47
1993/02/28 13728.17 13833.36
1993/03/31 13628.72 13687.14
1993/04/30 13758.36 13825.24
1993/05/31 13838.21 13902.94
1993/06/30 14041.84 14134.98
1993/07/31 14046.72 14153.49
1993/08/31 14351.95 14448.17
1993/09/30 14559.51 14612.73
1993/10/31 14574.85 14640.94
1993/11/30 14457.52 14511.95
1993/12/31 14770.08 14818.30
1994/01/31 14932.52 14987.52
1994/02/28 14552.14 14599.35
1994/03/31 13878.83 14004.86
1994/04/30 13950.94 14123.62
1994/05/31 14037.88 14246.07
1994/06/30 13958.44 14159.03
1994/07/31 14221.86 14418.57
1994/08/31 14273.52 14468.45
1994/09/30 14061.47 14256.06
1994/10/31 13767.76 14002.87
1994/11/30 13338.21 13749.70
1994/12/31 13669.82 14052.33
1995/01/31 14135.82 14453.94
1995/02/28 14544.91 14874.26
1995/03/31 14583.02 15045.17
1995/04/30 14590.32 15062.92
1995/05/31 15045.38 15543.58
1995/06/30 14813.84 15408.35
1995/07/31 14921.07 15554.42
1995/08/31 15103.78 15751.65
1995/09/30 15220.32 15851.36
1995/10/31 15439.19 16081.84
1995/11/30 15731.78 16348.64
1995/12/31 15881.47 16505.75
1996/01/31 16012.98 16630.37
1996/02/29 15946.56 16518.11
1996/03/31 15742.29 16307.01
1996/04/30 15678.22 16260.86
1996/05/31 15682.37 16254.36
1996/06/30 15867.88 16431.37
1996/07/31 16017.27 16580.89
1996/08/31 16021.35 16576.91
1996/09/30 16209.32 16808.99
1996/10/31 16400.38 16999.10
1996/11/30 16736.70 17310.18
1996/12/31 16666.75 17237.48
1997/01/31 16682.99 17270.06
1997/02/28 16827.58 17428.60
1997/03/31 16609.60 17196.27
1997/04/30 16747.15 17340.21
1997/05/31 16984.12 17601.00
1997/06/30 17192.19 17788.45
1997/07/31 17681.41 18281.19
1997/08/31 17501.69 18109.90
1997/09/30 17711.93 18324.86
1997/10/31 17812.96 18442.69
1997/11/30 17911.43 18551.14
1997/12/31 18204.36 18821.80
1998/01/31 18407.86 19016.04
1998/02/28 18387.68 19021.74
1998/03/31 18389.89 19038.48
1998/04/30 18287.84 18952.62
1998/05/31 18567.48 19252.64
1998/06/30 18639.86 19328.49
1998/07/31 18685.24 19377.01
1998/08/31 18967.37 19676.38
1998/09/30 19218.95 19921.55
1998/10/31 19204.88 19921.15
1998/11/30 19262.73 19991.08
1998/12/31 19304.17 20041.45
1999/01/31 19531.67 20279.75
1999/02/28 19405.00 20191.12
1999/03/31 19437.52 20219.19
1999/04/30 19481.30 20269.54
1999/05/31 19359.42 20152.18
1999/06/30 19050.03 19861.98
1999/07/31 19127.86 19934.28
1999/08/31 18989.22 19774.81
1999/09/30 18986.51 19782.91
1999/10/31 18799.76 19568.47
1999/11/30 18986.09 19776.68
IMATRL PRASUN SHR__CHT 19991130 19991213 143826 R00000000000123
$10,000 OVER 10 YEARS: Let's say, hypothetically, that $10,000 was
invested in Spartan Municipal Income Fund on November 30, 1989. As the
chart shows, by November 30, 1999, the value of the investment would
have grown to $18,986 - an 89.86% increase on the initial investment.
For comparison, look at how the Lehman Brothers Municipal Bond Index
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 would have grown to $19,777 - a 97.77%
increase.
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.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED NOVEMBER 30,
1999 1998 1997 1996 1995
Dividend returns 4.58% 5.00% 5.32% 5.30% 6.54%
Capital returns -6.02% 2.54% 1.70% 1.09% 11.41%
Total returns -1.44% 7.54% 7.02% 6.39% 17.95%
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 NOVEMBER 30, 1999 PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
Dividends per share 4.89(cents) 29.69(cents) 59.53(cents)
Annualized dividend rate 4.92% 4.84% 4.76%
30-day annualized yield 4.91% - -
30-day annualized 7.67% - -
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
$12.09 over the past one month, $12.23 over the past six months and
$12.51 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 36% federal tax bracket, but does not reflect payment of the
federal alternative minimum tax, if applicable.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Although November saw the Federal
Reserve Board levy its third 0.25%
interest-rate hike of 1999, the
municipal bond market responded
with its best single-month
performance since January. This
improvement in investor sentiment -
perhaps anticipating that the Fed's
latest rate hike would be its last for
a while - was a key contributor to
the market's improved outlook.
However, for the 12-month period
ending November 30, 1999, munis
overall dwelled in negative territory,
as the Lehman Brothers Municipal
Bond Index - an index of
approximately 50,000
investment-grade, fixed-rate,
tax-exempt bonds - declined
1.07%. A big story throughout the
year was supply, or lack thereof.
Municipal issuance fell 16.9%
through the first three quarters of
1999 compared to the same period
in 1998. Unfortunately, demand
also was tepid as the strong U.S.
economy continued to sway
investors toward higher-yielding -
and higher-risk - alternatives. Late in
the period, though, as the Fed
sought to cool down the economy
and municipal yields became more
attractive, demand showed signs of
improving. In comparison to other
bonds, munis had mixed results.
Municipal performance soundly
trounced Treasuries, as the Lehman
Brothers Long-Term Government
Bond Index fell 7.52% during the
period. Meanwhile, the Lehman
Brothers Aggregate Bond Index - a
broad measure of the taxable
bond market - posted a
marginally negative return of
- -0.04%.
(photograph of George Fischer)
An interview with George Fischer, Portfolio Manager of Spartan
Municipal Income Fund
Q. HOW DID THE FUND PERFORM, GEORGE?
A. Rising interest rates put significant pressure on bond prices,
although the fund performed better than its peers. For the 12-month
period that ended November 30, 1999, the fund had a total return of
- -1.44%. To get a sense of how the fund did relative to its
competitors, the general municipal debt funds average returned -3.51%
for the same 12-month period, according to Lipper Inc. Additionally,
the Lehman Brothers Municipal Bond Index returned -1.07%. An
additional benchmark, the Lehman Brothers 3 Plus Year Municipal Bond
Index, returned -1.59%. The fund is managed to have similar overall
interest-rate risk to the new benchmark index, which excludes
securities with maturities of less than three years and is more
representative of the fund's investment universe.
Q. WHY DID THE FUND OUTPACE ITS PEERS?
A. The main reason was the fund's defensive posture. By defensive, I'm
referring to its stake in bonds that tended to hold their value better
under adverse market conditions. First, the fund's focus on high
quality securities - over half of the fund's net assets were in bonds
rated Aaa - was a big plus. Problems with scattered lower-rated Baa
securities prompted investors to demand higher yields, causing many
Baa-rated securities to underperform higher-rated securities. The
fund's emphasis on intermediate-maturity bonds also was a plus.
Because intermediates are less interest-rate sensitive than
longer-term bonds, they outperformed their longer-term counterparts as
interest rates rose.
Q. WHAT OTHER "DEFENSIVE" TYPE OF BONDS HELD UP RELATIVELY WELL?
A. The fund had a relatively large stake in premium coupon bonds with
interest rates of 5.5% to 6.0%, which generally held up better than
lower coupon bonds. Premiums, as they are known, carry coupons higher
than prevailing interest rates and 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
refinancing-like process that generally is positive for their prices.
Second, premium bonds are somewhat protected from the unfavorable tax
treatment and price performance that can hurt discount bonds when
interest rates rise. 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 premiums at
attractive prices relative to comparably rated par bonds with similar
maturities.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Yes, there were. Longer-maturity discount bonds proved to be some
of the market's worst performers early in the period, although the
fund had only small holdings in them. I focused on premium coupon
bonds, emphasizing intermediate-maturity bonds set to mature within
seven to 15 years. 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. In
addition, the fund's stake in health care bonds detracted from
performance. Cutbacks in federally funded health care payments hurt
the health care sector as a whole. While the fund was not immune from
those troubles, it did have a smaller stake in health care bonds than
many of its peers.
Q. GEORGE, WHAT'S YOUR OUTLOOK?
A. As it usually is, the direction of interest rates will be the
primary factor that determines the municipal market's performance.
It's not clear at this point whether the Federal Reserve Board is
finished raising interest rates as it did in June, August and
November, or whether those rate hikes were just a preview of things to
come. But other factors - namely supply and demand - also will play a
role. If interest rates remain stable or move higher, I would expect
the supply of municipals to continue to taper off as issuers slow down
their refinancing and new issuance activity. We've also seen an
increase in the demand for municipal bonds as individual investors
look to lock in higher yields. To the extent that investors continue
on that course, the more municipals likely will benefit. Since
longer-maturity and lower-quality bonds have performed poorly over the
past several months, there may be opportunities to pick up
attractively priced, higher-yielding securities. But I plan to be very
selective, keeping the bulk of the fund's investments in high-quality,
intermediate-maturity bonds that I feel offer the best combination of
reward and risk.
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.
GEORGE FISCHER ON CHOOSING
INVESTMENTS FOR THE FUND:
"When selecting individual bonds
for inclusion in the fund, credit
research is always the starting
point. Using a very rigorous research
process - and with the help of
Fidelity's credit research team - I
look for investment-grade bonds
from issuers that have strong
underlying economics and are
well-managed. After completing
careful credit research, I then
consider structural
characteristics, such as maturity,
call features, coupons and others.
Because so much of the municipal
market is insured, it's often
challenging to add value through
credit research. So I look for
opportunities to take advantage of
pricing anomalies that creep up
due to a bond's structural
characteristics."
(solid bullet) General obligation bonds
(GOs) were the fund's largest sector
concentration throughout the
past year, making up 26.8% of net
assets at the end of the period. A
GO is backed by the full faith and
credit - which includes the taxing
power - of a city, county, state or
other issuer. GOs are repaid through
general revenues - including
individual and corporate taxes
- - collected by the issuer.
FUND FACTS
GOAL: a high level of income
free from federal income tax
FUND NUMBER: 037
TRADING SYMBOL: FHIGX
START DATE: December 1, 1977
SIZE: as of November 30,
1999, more than $4.2
billion
MANAGER: George Fischer,
since 1998; manager,
various Fidelity and Spartan
municipal income funds;
joined Fidelity in 1989
(checkmark)
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C>
TOP FIVE STATES AS OF
NOVEMBER 30, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
New York 16.2 15.5
Texas 9.8 10.8
Massachusetts 7.9 7.4
Illinois 7.1 6.7
California 5.9 7.3
TOP FIVE SECTORS AS OF
NOVEMBER 30, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Obligations 26.8 26.8
Electric Utilities 13.7 14.2
Transportation 10.9 11.3
Health Care 10.4 7.9
Water & Sewer 9.6 7.6
AVERAGE YEARS TO MATURITY AS
OF NOVEMBER 30, 1999
6 MONTHS AGO
Years 14.2 12.9
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF NOVEMBER 30,
1999
6 MONTHS AGO
Years 7.2 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 NOVEMBER 30, 1999
Row: 1, Col: 1, Value: 57.3
Row: 1, Col: 2, Value: 30.2
Row: 1, Col: 3, Value: 8.800000000000001
Row: 1, Col: 4, Value: 1.1
Row: 1, Col: 5, Value: 1.7
Row: 1, Col: 6, Value: 0.9
Aaa 57.3%
Aa, A 30.2%
Baa 8.8%
Ba and Below 1.1%
Not Rated 1.7%
Short-term
investments 0.9%
AS OF MAY 31, 1999
Row: 1, Col: 1, Value: 57.1
Row: 1, Col: 2, Value: 31.3
Row: 1, Col: 3, Value: 9.300000000000001
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 2.0
Row: 1, Col: 6, Value: 0.3
Aaa 57.1%
Aa, A 31.3%
Baa 9.3%
Ba and Below 0.0%
Not Rated 2.0%
Short-term
investments 0.3%
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 MUNICIPAL INCOME FUND
INVESTMENTS NOVEMBER 30, 1999
Showing Percentage of Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 98.1%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
ALABAMA - 0.3%
Cullman Med. Park South Med. Baa2 $ 4,000 $ 3,938
Clinic Board Rev. Rfdg.
(Cullman Reg'l. Med. Ctr.
Proj.) Series A, 6.5% 2/15/23
Huntsville Gen. Oblig. Rfdg. Aa2 2,200 2,302
Series D, 6% 8/1/08
Mobile Wtr. & Swr. A 5,100 5,337
Commissioners Wtr. & Swr.
Rev. Rfdg. 6.5% 1/1/09
11,577
ALASKA - 1.4%
Alaska Student Ln. Corp.
Student Ln. Rev.:
(State Assisted Proj.) Series
A:
5.9% 7/1/03 (AMBAC Insured) Aaa 2,070 2,128
(g)
6% 7/1/04 (AMBAC Insured) (g) Aaa 2,500 2,566
Series A:
5.15% 7/1/05 (AMBAC Insured) Aaa 1,500 1,517
(g)
5.55% 7/1/03 (AMBAC Insured) Aaa 1,300 1,336
(g)
5.65% 7/1/04 (AMBAC Insured) Aaa 1,300 1,336
(g)
7.3% 7/1/00 (AMBAC Insured) Aaa 4,600 4,680
(g)
North Slope Borough (Cap.
Appreciation):
Series A:
0% 6/30/01 (MBIA Insured) Aaa 5,000 4,667
0% 6/30/01 (MBIA Insured) Aaa 1,400 1,307
Series B:
0% 1/1/03 (MBIA Insured) Aaa 6,000 5,202
0% 6/30/05 (FSA Insured) Aaa 4,500 3,426
Valdez Marine Term. Rev. Rfdg.:
(BP Pipeline, Inc. Proj.) Aa2 28,205 25,565
Series B, 5.5% 10/1/28
(Mobil Oil Co./Alaska Aa2 7,000 6,579
Pipeline Proj.) 5.75% 11/1/28
60,309
ARIZONA - 1.5%
Arizona Health Facilities A2 10,000 9,808
Auth. Hosp. Sys. Rev.
(Phoenix Children's Hosp.
Proj.) Series A, 6.25%
11/15/29
Arizona Student Ln. Aaa 2,000 1,962
Acquisition Auth. Student
Ln. Rev. Rfdg. Series A1,
5.9% 5/1/24 (g)
Arizona Trans. Board Hwy. Aa2 2,000 2,090
Rev. Sub-Series A, 6.25%
7/1/04 (Pre-Refunded to
7/1/00 @ 10/1/05
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
ARIZONA - CONTINUED
Chandler Gen. Oblig. Rfdg.:
(Cap. Appreciation):
0% 7/1/05 (FGIC Insured) Aaa $ 5,700 $ 4,342
0% 7/1/08 (FGIC Insured) Aaa 1,700 1,092
7.375% 7/1/09 (FGIC Insured) Aaa 1,000 1,167
Maricopa County Cmnty. Aa1 19,000 19,153
College District Series B,
5.25% 7/1/10
Maricopa County Hosp. Rev.
Rfdg. (Sun Health Corp.
Proj.):
5.4% 4/1/05 Baa1 2,935 2,934
5.65% 4/1/06 Baa1 3,625 3,653
Maricopa County Ind. Dev. Baa1 3,345 3,217
Auth. Health Facilities Rev.
(Catholic Health Care West
Proj.) Series A, 4% 7/1/02
Maricopa County Ind. Dev. Aaa 2,000 2,302
Auth. Hosp. Facilities Rev.
Rfdg. (Samaritan Health
Svcs. Proj.) Series A, 7%
12/1/16 (MBIA Insured)
Maricopa County School Aaa 2,660 2,026
District #1 Rfdg. (Cap.
Appreciation) (Phoenix
Elementary Proj.) Second
Series, 0% 7/1/05 (MBIA
Insured)
Maricopa County Unified Aaa 3,050 2,080
School District #69 Rfdg.
(Cap. Appreciation)
(Paradise Valley Proj.)
Second Series, 0% 7/1/07
(AMBAC Insured)
Pima County Ctfs. of Prtn.:
4.75% 1/1/04 (MBIA Insured) Aaa 2,060 2,071
4.9% 1/1/06 (MBIA Insured) Aaa 2,000 2,008
Pima County Unified School Aaa 2,000 2,273
District #1 Tucson (Tucson
Proj.) Series 1989 G, 8%
7/1/04 (MBIA Insured)
62,178
ARKANSAS - 0.5%
Arkansas Dev. Fin. Auth. Rev. A 4,500 4,700
(Cap. Asset Proj.) Series B,
7.1% 3/1/08 (Pre-Refunded to
3/1/01 @ 102)
Arkansas Gen. Oblig. (Cap.
Appreciation) (College
Savings Proj.):
Series A:
0% 6/1/03 Aa3 1,280 1,093
0% 6/1/04 Aa3 1,110 900
Series C, 0% 6/1/05 Aa3 2,130 1,640
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
ARKANSAS - CONTINUED
Little Rock Arpt. Passenger Aaa $ 1,220 $ 1,221
Facilities Charge Rev. 5.65%
5/1/16 (AMBAC Insured) (g)
North Little Rock Elec. Rev.
Rfdg. Series A:
6.15% 7/1/03 (MBIA Insured) Aaa 3,245 3,419
6.5% 7/1/10 (MBIA Insured) Aaa 3,840 4,234
Pulaski County Health Aaa 1,750 1,882
Facilities Board Rev. Rfdg.
(Sisters Charity
Nazareth-Saint Vincents
Infirmary Proj.) 6.05%
11/1/09 (MBIA Insured)
(Escrowed to Maturity) (h)
Rogers Sales & Use Tax Rev. A1 1,305 1,300
5% 11/1/15
20,389
CALIFORNIA - 5.9%
California Dept. of Wtr. Aa2 4,000 3,545
Resources Wtr. Sys. Rev.
(Wtr. Sys. Proj.) Series O,
5% 12/1/22
California Ed. Facilities
Auth. Rev.:
(Stanford Univ. Proj.) Series Aaa 10,525 9,535
N, 5.2% 12/1/27
Rfdg.:
(Stanford Univ. Proj.) Series Aaa 9,000 7,988
O, 5.125% 1/1/31
(Univ. of Southern California Aa2 4,410 3,917
Proj.) Series C, 5.125%
10/1/28
California Gen. Oblig.:
5.25% 10/1/13 Aa3 5,000 4,964
5.25% 10/1/17 Aa3 1,500 1,431
6.3% 9/1/10 Aa3 4,000 4,412
7% 10/1/09 Aa3 1,000 1,158
California Health Facilities A2 27,600 26,874
Fin. Auth. Rev.
(Cedars-Sinai Med. Ctr.
Proj.) Series A, 6.125%
12/1/30
California Hsg. Fin. Agcy.
Rev.:
(Cap. Appreciation) (Home Aa2 187 46
Mtg. Single Family Proj.)
Series 1983 A, 0% 2/1/15
(Home Mtg. Proj.):
Series B, 5.2% 8/1/26 (MBIA Aaa 3,295 3,303
Insured) (g)
Series G:
5.9% 2/1/09 (MBIA Insured) (g) Aaa 1,000 1,023
5.9% 8/1/09 (MBIA Insured) (g) Aaa 2,000 2,044
Series R, 6.15% 8/1/27 (MBIA Aaa 4,500 4,498
Insured) (g)
Rfdg. (Home Mtg. Proj.) Aaa 2,015 2,012
Series A, 5.3% 8/1/14 (MBIA
Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
CALIFORNIA - CONTINUED
California Poll. Cont. Fing. Ba1 $ 5,235 $ 5,281
Auth. Resource Recovery Rev.
(Waste Mgmt., Inc. Proj.)
Series A, 7.15% 2/1/11 (g)
California Pub. Works Board
Lease Rev.:
(Dept. of Corrections State A1 1,500 1,423
Prison, Susanville Proj.)
Series D 5.375% 6/1/18
(Dept. of Corrections, Madera A1 2,500 2,492
State Prison Proj.) Series
E, 5.5% 6/1/15
(Substance Abuse Treatment Aaa 3,750 3,767
Facilities, Corcoran II
Proj.) Series A, 5.5% 1/1/14
(AMBAC Insured)
(Various California State A1 7,500 7,374
Univ. Proj.) Series A, 5.25%
12/1/13
Rfdg.:
(California Cmnty. Colleges
Proj.) Series D:
5.375% 3/1/11 A 3,000 3,009
5.375% 3/1/12 A 1,500 1,493
(California State Univ. A1 5,755 5,783
Proj.) Series A, 5.5% 10/1/13
(Dept. of Corrections State A1 2,500 2,488
Prison, Monterey County
Proj.) Series D, 5.375%
11/1/13
(State Archives Bldg. Complex A1 5,000 5,081
Proj.) Series A, 5.375%
12/1/10
California Statewide Cmnty. Aaa 3,695 3,276
Dev. Corp. Ctfs. of Prtn.
(J. Paul Getty Trust Co.
Proj.) 5% 10/1/23
California Univ. Rev. 5.875% Aaa 9,775 9,630
11/1/30 (FGIC Insured)
Castaic Lake Wtr. Agcy. Ctfs.
of Prtn. Rfdg. (Wtr. Sys.
Impt. Proj.) Series A:
7% 8/1/11 (MBIA Insured) Aaa 1,475 1,710
7.25% 8/1/09 (MBIA Insured) Aaa 1,800 2,106
Chino Basin Reg'l. Fing. Aaa 2,245 2,585
Auth. Rev. Rfdg. (Muni.
Wtr. District Swr. Sys.
Proj.) 7% 8/1/09 (AMBAC
Insured)
Compton Cmnty. Redev. Agcy. Aaa 4,000 4,346
Rfdg. (Tax
Allocation-Compton Redev.
Proj.) Series A, 6.5%
8/1/13 (FSA Insured)
Foothill/Eastern Trans. Baa3 8,000 6,410
Corridor Agcy. Toll Road
Rev. (Cap. Appreciation) Sr.
Lein Series A, 0% 1/1/08
(Escrowed to Maturity) (b)(h)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
CALIFORNIA - CONTINUED
La Quinta Redev. Agcy. Tax. Aaa $ 470 $ 561
Allocation Rfdg. (Area
#1Redev. Proj.) 7.3% 9/1/12
(MBIA Insured)
Long Beach Hbr. Rev.:
Rfdg. Series A, 6% 5/15/13 Aaa 6,700 7,053
(FGIC Insured) (g)
5.125% 5/15/18 (g) Aa3 5,000 4,535
Los Angeles County Metro. Aaa 4,355 4,345
Trans. Auth. Rev. Rfdg.
(Gen. Union Station Proj.)
Series A, 5.2% 7/1/12 (FSA
Insured)
Los Angeles County Pub. Works Aaa 5,145 5,010
Fing. Auth. Lease Rev.
(Multiple Cap. Facilities #4
Proj.) 4.75% 12/1/10 (MBIA
Insured)
Los Angeles Dept. Wtr. & Pwr. Aaa 23,000 23,338
Wtrwks. Rev. 6.1% 10/15/39
(FGIC Insured)
Los Angeles Wastewtr. Sys. Aaa 4,735 4,115
Rev. 5% 6/1/28 (FGIC Insured)
M-S-R Pub. Pwr. Agcy. San Aaa 1,685 1,771
Juan Proj. Rev. Series E,
6.5% 7/1/05 (MBIA Insured)
Modesto Irrigation District Aaa 4,390 5,584
Elec. Rev. Series A, 9.625%
1/1/11 (Escrowed to
Maturity) (h)
Placer County Wtr. Agcy. Rev.
(Middle Fork Proj.) Series A:
3.75% 7/1/12 A+ 7,820 7,064
3.75% 1/1/13 A+ 1,500 1,296
Sacramento Cogeneration Auth. BBB- 700 735
Cogeneration Proj. Rev.
(Procter & Gamble Proj.)
6.375% 7/1/10
Sacramento Pwr. Auth.
Cogeneration Proj. Rev.:
6.5% 7/1/07 BBB- 1,000 1,077
6.5% 7/1/09 BBB- 2,200 2,355
San Francisco Bldg. Auth. A1 5,500 5,301
Lease Rev. (Dept. Gen. Svcs.
Lease Proj.) Series A, 5%
10/1/13
San Francisco City & County
Arpt. Commission Int'l.
Arpt. Rev. Second Series
Issue 10 A:
5.5% 5/1/13 (MBIA Insured) (g) Aaa 5,955 5,947
5.55% 5/1/14 (MBIA Insured) Aaa 5,875 5,839
(g)
Santa Clara Redev. Agcy. Tax Aaa 4,000 4,582
Allocation Rfdg. (Bayshore
North Proj.) 7% 7/1/10
(AMBAC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
CALIFORNIA - CONTINUED
Santa Margarita/Dana Point Aaa $ 1,045 $ 1,224
Auth. Rev. (Impt. Dists.
1&2-2A&8 Proj.) Series A,
7.25% 8/1/10 (MBIA Insured)
Santa Rosa Wastewtr. Rev. Aaa 3,900 3,518
(Rfdg. & SubReg'l. Wastewtr.
Proj.) Series A, 4.75%
9/1/16 (FGIC Insured)
South Orange County Pub.
Fing. Auth. Spl. Tax Rev.:
(Foothill Area Proj.) Series Aaa 2,500 3,046
C, 8% 8/15/08 (FGIC Insured)
Sr. Lien Series A, 7% 9/1/11 Aaa 3,490 4,049
(MBIA Insured)
247,349
COLORADO - 3.8%
Adams County School District Aaa 1,000 1,039
#12 Rfdg. 6.2% 12/15/10
(FGIC Insured)
Arapaho County Cap. Impt.
Trust Fund Hwy. Rev. (Cap.
Appreciation):
Series C:
0% 8/31/15 (Pre-Refunded to Aaa 16,000 5,851
8/31/05 @ 48.6181) (h)
0% 8/31/26 (Pre-Refunded to Aaa 314,505 49,352
8/31/05 @ 20.8626) (h)
Series E 470, 0% 8/31/10 Aaa 15,000 8,061
(Pre-Refunded to 8/31/05 @
71.4501) (h)
Colorado Health Facilities
Auth. Rev. Rfdg. (Rocky
Mountain Adventist Proj.):
6.25% 2/1/04 Ba1 2,100 2,024
6.625% 2/1/13 Ba1 28,100 26,405
6.625% 2/1/22 Ba1 11,600 10,595
Colorado Springs Arpt. Rev.
(Cap. Appreciation) Series C:
0% 1/1/02 (MBIA Insured) Aaa 1,550 1,414
0% 1/1/04 (MBIA Insured) Aaa 1,530 1,261
0% 1/1/06 (MBIA Insured) Aaa 250 186
0% 1/1/09 (MBIA Insured) Aaa 1,655 1,036
0% 1/1/10 (MBIA Insured) Aaa 1,500 886
Colorado Univ. Rev. A2 5,725 6,077
(Biomedical Research Bldg.
Proj.) 7% 6/1/09
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
COLORADO - CONTINUED
Denver City & County Arpt.
Rev.:
(Cap. Appreciation):
Series A:
0% 11/15/02 (MBIA Insured) (g) Aaa $ 4,900 $ 4,295
0% 11/15/05 (MBIA Insured) (g) Aaa 4,480 3,342
Series D:
0% 11/15/03 (MBIA Insured) (g) Aaa 5,000 4,149
0% 11/15/04 (MBIA Insured) (g) Aaa 7,500 5,904
0% 11/15/05 (MBIA Insured) (g) Aaa 3,000 2,238
Series B, 7.25% 11/15/23 (g) Baa1 1,870 1,998
Series C:
6.5% 11/15/06 (g) Baa1 4,075 4,263
6.55% 11/15/02 (g) Baa1 4,000 4,142
Series D:
7% 11/15/25 (g) Baa1 6,980 7,197
7.4% 11/15/01 (g) Baa1 3,000 3,130
El Paso County School Aaa 2,600 1,673
District #20 Rfdg. (Cap.
Appreciation) Series A, 0%
6/15/08 (AMBAC Insured)
Highlands Ranch Metro.
District #2 Rfdg.:
6.5% 6/15/10 (FSA Insured) Aaa 1,000 1,104
6.5% 6/15/12 (FSA Insured) Aaa 1,000 1,103
Jefferson County Ctfs. of Aaa 3,000 3,196
Prtn. Rfdg. 6.65% 12/1/08
(MBIA Insured)
161,921
CONNECTICUT - 0.3%
Connecticut Health & Edl.
Facilities Auth. Rev.:
(New Britain Memorial Hosp. AAA 3,600 3,847
Proj.) Series A, 7.5% 7/1/06
(Pre-Refunded to 7/1/02 @
102) (h)
(Saint Raphael Hosp. Proj.) Aaa 3,035 3,012
Series H, 5.25% 7/1/12
(AMBAC Insured)
Rfdg. (Quinnipiac College
Proj.) Series D:
6% 7/1/13 BBB- 550 546
6% 7/1/13 (Pre-Refunded to BBB- 700 744
7/1/03 @ 102) (h)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
CONNECTICUT - CONTINUED
Connecticut Resources Aaa $ 2,100 $ 2,125
Recovery Auth. Rfdg.
(Mid-Connecticut Sys. Proj.)
Series A, 5.375% 11/15/10
(MBIA Insured)
Eastern Connecticut Resources BBB 900 854
Recovery Auth. Solid Waste
Rev. (Wheelabrator Lisbon
Proj.) Series A, 5% 1/1/04
(g)
11,128
DISTRICT OF COLUMBIA - 2.5%
District of Columbia Gen.
Oblig.:
Rfdg.:
Series A:
5.625% 6/1/02 (MBIA Insured) Aaa 760 779
5.625% 6/1/02 (MBIA Insured) Aaa 740 760
(Escrowed to Maturity) (h)
5.875% 6/1/05 (AMBAC Insured) Aaa 1,770 1,852
5.875% 6/1/05 (AMBAC Insured) Aaa 1,915 2,016
(Escrowed to Maturity) (h)
5.875% 6/1/05 (MBIA Insured) Aaa 1,530 1,601
5.875% 6/1/05 (MBIA Insured) Aaa 1,470 1,548
(Escrowed to Maturity) (h)
6% 6/1/05 (AMBAC Insured) Aaa 3,695 3,912
(Escrowed to Maturity) (h)
Series A1, 6% 6/1/11 (MBIA Aaa 2,850 3,004
Insured)
Series A3:
5.3% 6/1/04 (AMBAC Insured) Aaa 1,605 1,636
5.3% 6/1/04 (AMBAC Insured) Aaa 1,505 1,543
(Escrowed to Maturity) (h)
5.4% 6/1/05 (AMBAC Insured) Aaa 1,510 1,546
5.4% 6/1/05 (AMBAC Insured) Aaa 1,400 1,442
(Escrowed to Maturity) (h)
Series B, 5.25% 6/1/07 (MBIA Aaa 15,000 15,138
Insured)
Series B3, 5.3% 6/1/05 (MBIA Aaa 5,000 5,094
Insured)
Series C:
5.25% 12/1/03 (FGIC Insured) Aaa 205 209
5.25% 12/1/03 (FGIC Insured) Aaa 1,965 2,013
(Escrowed to Maturity) (h)
Series A:
5% 6/1/06 (MBIA Insured) Aaa 4,855 4,854
5% 6/1/06 (MBIA Insured) Aaa 2,545 2,563
(Escrowed to Maturity) (h)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
DISTRICT OF COLUMBIA -
CONTINUED
District of Columbia Gen.
Oblig.: - continued
Series B:
5% 6/1/06 (MBIA Insured) Aaa $ 8,015 $ 8,014
5% 6/1/06 (MBIA Insured) Aaa 4,210 4,240
(Escrowed to Maturity) (h)
Series E:
5% 6/1/04 (FGIC Insured) Aaa 965 972
5% 6/1/04 (FGIC Insured) Aaa 35 36
(Pre-Refunded to 6/1/03 @
102) (h)
District of Columbia Hosp. - 11,640 12,125
Rev. (Hosp. for Sick
Children Proj.) Series A,
8.875% 1/1/21
District of Columbia Redev.
Land Agcy. Washington D.C.
Sports Arena Spl. Tax Rev.:
5.4% 11/1/00 Baa 1,000 1,007
5.625% 11/1/10 Baa 7,165 7,248
District of Columbia Rev.
Rfdg. (Georgetown Univ.
Proj.) Series A:
5.95% 4/1/14 (MBIA Insured) Aaa 2,000 2,044
6% 4/1/18 (MBIA Insured) Aaa 13,835 13,965
Metro. Washington Arpt. Auth. Aaa 3,000 3,117
Gen. Arpt. Rev. Series A,
7.25% 10/1/10 (FGIC Insured)
(g)
104,278
FLORIDA - 2.9%
Broward County Resource A3 14,440 14,909
Recovery Rev. (SES Broward
Co. LP South Proj.) 7.95%
12/1/08
Dade County Aviation Rev. Aaa 3,750 3,764
(Miami Int'l Arpt. Proj.)
Series B, 6% 10/1/24 (MBIA
Insured) (g)
Florida Board of Ed. Cap. Aa2 21,300 20,646
Outlay Rfdg. (Pub. Ed.
Proj.) Series D, 5.75%
6/1/22 (c)
Florida Muni. Pwr. Agcy. Rev. Aaa 3,000 2,566
Rfdg. (Stanton II Proj.)
4.5% 10/1/16 (AMBAC Insured)
Greater Orlando Aviation Aaa 4,000 3,991
Auth. Orlando Arpt.
Facilities Rev. Series A,
5.25% 10/1/10 (FGIC
Insured) (g)
Jacksonville Elec. Auth. Rev.:
(First Installment Proj.) 6% Aaa 2,130 2,147
7/1/01 (Escrowed to
Maturity) (h)
(Third Installment Proj.) Aaa 3,000 3,267
Series 73, 6.8% 7/1/12
(Escrowed to Maturity) (h)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
FLORIDA - CONTINUED
Jacksonville Elec. Auth.
Rev.: - continued
Rfdg. (Saint Johns River Pwr. Aa2 $ 4,535 $ 4,371
Park Sys. Proj.) Issue 2 13,
5.375% 10/1/16
Jacksonville Health Baa1 2,000 2,097
Facilities Auth. Ind. Dev.
Rev. Rfdg. (Cypress Village
Proj./Nat'l. Benevolent
Assoc. Proj.) 7% 12/1/22
Jacksonville Port Auth. Rev.
Rfdg.:
5.5% 11/1/06 (MBIA Insured) Aaa 8,630 8,909
(g)
5.75% 11/1/09 (MBIA Insured) Aaa 1,000 1,040
(g)
Miami Beach Health Facilities BBB 7,540 6,058
Auth. Hosp. Rev. (Mount
Sinai Med. Ctr. of Florida
Proj.) 5.375% 11/15/28
Miami-Dade County Edl. Aaa 10,000 9,779
Facilities Auth. Rev. Series
A, 5.75% 4/1/29 (AMBAC
Insured)
Orlando Util. Commission Wtr. Aa2 5,465 4,980
& Elec. Rev. Series B, 5.25%
10/1/23
Pasco County Solid Waste
Disp. & Resource Recovery
Sys. Rev. Rfdg.:
6% 4/1/08 (AMBAC Insured) (g) Aaa 5,000 5,292
6% 4/1/09 (AMBAC Insured) (g) Aaa 8,090 8,541
Pinellas County Resource Aaa 4,010 4,091
Recovery Rev. 5.25% 10/1/05
(MBIA Insured) (g)
Tampa Bay Wtr. Util. Sys. Aaa 6,000 6,114
Rev. 6% 10/1/24 (FGIC
Insured)
Tampa Wtr. & Swr. Rev. 5.5% Aa3 10,000 9,388
10/1/29
121,950
GEORGIA - 2.6%
Atlanta & Fulton County Aaa 6,000 5,621
Resource Auth. Rev. Rfdg.
(Downtown Area Pub. Impt.
Proj.) Series A, 5.375%
12/1/21 (MBIA Insured)
Atlanta Arpt. Facilities Rev. Aaa 16,820 17,956
Rfdg. 6.25% 1/1/05 (AMBAC
Insured)
Atlanta Downtown Dev. Auth.
Rev. Rfdg. (Underground
Atlanta Proj.):
6.25% 10/1/12 Aa3 3,750 3,934
6.25% 10/1/16 Aa3 3,000 3,106
Atlanta Wtr. & Swr. Rev.:
Second Lien 5.375% 1/1/20 Aaa 4,750 4,911
(FGIC Insured) (Pre-Refunded
to 1/1/07 @ 101) (h)
5.25% 1/1/27 (FGIC Insured) Aaa 33,050 33,928
(Pre-Refunded to 1/1/07 @
101) (h)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
GEORGIA - CONTINUED
Atlanta Wtr. & Wastewtr. Rev. Aaa $ 7,200 $ 7,381
Rfdg. Series A, 5.5% 11/1/10
(FGIC Insured)
Dalton Util. Rev.:
6% 1/1/11 (FSA Insured) Aaa 3,000 3,196
6% 1/1/12 (FSA Insured) Aaa 1,700 1,803
Fulton County School District Aa2 4,500 4,887
Rfdg. 6.375% 5/1/14
Fulton County Wtr. & Swr. Aaa 140 151
Rev. Rfdg. 6.375% 1/1/14
(FGIC Insured)
Georgia Gen. Oblig.:
Series B, 5.75% 8/1/10 Aaa 8,740 9,213
Series C, 5.75% 9/1/10 Aaa 5,000 5,272
Georgia Muni. Elec. Auth.
Pwr. Rev.:
Rfdg. Series Z, 5.5% 1/1/12 A 2,000 2,008
Series B, 6.2% 1/1/10 (AMBAC Aaa 5,000 5,423
Insured)
108,790
HAWAII - 0.4%
Hawaii Arpt. Sys. Rev. Second
Series:
7.5% 7/1/05 (FGIC Insured) (g) Aaa 1,000 1,039
7.5% 7/1/20 (FGIC Insured) (g) Aaa 1,500 1,554
Hawaii Gen. Oblig. Series CN, Aaa 7,000 6,848
5.25% 3/1/12 (FGIC Insured)
Hawaii Hsg. Fin. & Dev. Corp. Aa1 6,730 6,549
Series A, 4.9% 7/1/28 (g)
15,990
IDAHO - 0.3%
Boise City Urban Renewal Aaa 10,000 9,808
Agcy. Lease Rev. 5.9%
8/15/29 (AMBAC Insured) (c)
Idaho Falls Gen. Oblig. Rfdg.:
0% 4/1/06 (FGIC Insured) Aaa 2,000 1,461
0% 4/1/07 (FGIC Insured) Aaa 2,500 1,725
12,994
ILLINOIS - 7.1%
Chicago Board of Ed. (Chicago
School Reform Proj.):
5.75% 12/1/20 (AMBAC Insured) Aaa 3,480 3,393
5.75% 12/1/27 (AMBAC Insured) Aaa 47,000 45,234
6.25% 12/1/11 (MBIA Insured) Aaa 1,000 1,080
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
ILLINOIS - CONTINUED
Chicago Gen. Oblig.:
Rfdg.:
Series A2:
6.125% 1/1/12 (AMBAC Insured) Aaa $ 10,000 $ 10,661
6.25% 1/1/15 (AMBAC Insured) Aaa 4,885 5,214
Series B, 5% 1/1/11 (AMBAC Aaa 2,200 2,141
Insured)
Series 1993, 5.25% 1/1/18 Aaa 7,200 6,637
(FGIC Insured)
Chicago Midway Arpt. Rev.:
Series A, 5.5% 1/1/29 (MBIA Aaa 24,775 22,952
Insured)
Series B:
5.25% 1/1/13 (MBIA Insured) Aaa 2,910 2,784
(g)
5.25% 1/1/14 (MBIA Insured) Aaa 3,060 2,910
(g)
6% 1/1/05 (MBIA Insured) (g) Aaa 1,360 1,425
6% 1/1/08 (MBIA Insured) (g) Aaa 2,170 2,276
6% 1/1/10 (MBIA Insured) (g) Aaa 2,435 2,532
6.125% 1/1/11 (MBIA Insured) Aaa 2,580 2,680
(g)
Chicago Motor Fuel Tax Rfdg. Aaa 4,600 4,525
Series A, 5.375% 1/1/14
(AMBAC Insured)
Chicago O'Hare Int'l. Arpt.
Rev.:
(Passenger Facility Charge Aaa 4,500 4,579
Proj.) Series A, 5.6% 1/1/10
(AMBAC Insured)
Rfdg. (Gen. Arpt. Proj.)
Second Lien Series A:
5.5% 1/1/16 (AMBAC Insured) Aaa 10,000 9,595
(g)
6.25% 1/1/09 (AMBAC Insured) Aaa 6,730 7,167
(g)
6.375% 1/1/12 (MBIA Insured) Aaa 4,000 4,275
6.375% 1/1/15 (MBIA Insured) Aaa 14,900 15,548
Chicago O'Hare Int'l. Arpt. A 4,500 4,601
Spl. Facilities Rev. (Int'l.
Term. Proj.) Series A, 7.5%
1/1/17 (MBIA Insured)
(Pre-Refunded to 1/1/00 @
102) (g)(h)
Chicago Residential Mtg. Rev. Aaa 4,215 2,133
Rfdg. (Cap. Appreciation)
Series B, 0% 10/1/09 (MBIA
Insured)
Chicago Sales Tax Rev. 5.375% Aaa 18,000 16,280
1/1/30 (FGIC Insured)
Chicago Wastewtr. Aaa 4,500 4,467
Transmission Rev. Rfdg.
5.375% 1/1/13 (FGIC Insured)
Chicago Wtr. Rev. Rfdg. (Cap. Aaa 1,960 1,802
Appreciation) 0% 11/1/01
(FGIC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
ILLINOIS - CONTINUED
Cook & Will Counties Township Aaa $ 2,350 $ 1,946
High School District #206
(Cap. Appreciation) Series
A, 0% 12/1/03 (AMBAC
Insured) (Escrowed to
Maturity) (h)
De Kalb Single Family Mtg. Aaa 835 866
Rev. Series A, 7.45% 12/1/09
(g)
Illinois Dedicated Tax Rev. Aaa 695 730
(Civic Ctr. Proj.) Series
A, 7% 12/15/13 (AMBAC
Insured) (Pre-Refunded to
12/15/00 @ 102) (h)
Illinois Dev. Fin. Auth. Aaa 7,000 7,550
Poll. Cont. Rev. Rfdg.
(Commerce Edison Co. Proj.)
Series D, 6.75% 3/1/15
(AMBAC Insured)
Illinois Health Facilities
Auth. Rev.:
(Franciscan Proj.) Series A, Aaa 15,200 9,448
0% 9/1/05 (MBIA Insured)
(Pre-Refunded to 9/1/00 @
64.513) (h)
(GlenOaks Med. Ctr. Proj.) Baa 3,105 3,297
Series D, 9.5% 11/15/15
(Escrowed to Maturity) (h)
(Memorial Hosp. Proj.):
6.875% 5/1/00 (Escrowed to - 300 301
Maturity) (h)
7.125% 5/1/10 (Pre-Refunded - 4,000 4,313
to 5/1/02 @ 102) (h)
(Methodist Health Svcs. Co. Aaa 7,000 7,354
Proj.) 6.903% 5/18/21 (AMBAC
Insured) (Pre-Refunded to
5/8/01 @ 102) (h)
Rfdg.:
(Lutheran Gen. Health Care
Sys. Proj.) Series C:
6% 4/1/18 A1 3,000 2,973
7% 4/1/14 A1 1,500 1,659
(OSF Health Care Sys. Proj.) A2 7,000 6,855
6% 11/15/13
(Swedish American Hosp. Aaa 3,000 2,929
Proj.) 5.375% 11/15/13
(AMBAC Insured)
Illinois Reg'l. Trans. Auth.:
Series A, 8% 6/1/17 (AMBAC Aaa 4,500 5,591
Insured)
Series C, 7.75% 6/1/13 (FGIC Aaa 2,045 2,486
Insured)
Series D, 7.75% 6/1/04 (FGIC Aaa 1,115 1,250
Insured)
Lake County Forest
Preservation District (Cap.
Appreciation):
0% 12/1/07 Aa1 10,440 6,907
0% 12/1/08 Aa1 12,505 7,803
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
ILLINOIS - CONTINUED
Metro. Pier & Exposition
Auth. Dedicated Tax Rev.:
(Cap. Appreciation):
(McCormick Place Expansion Aaa $ 250 $ 223
Proj.) Series A, 0% 6/15/12
(FGIC Insured) (b)
Series A:
0% 6/15/08 (MBIA Insured) Aaa 3,335 2,140
(Escrowed to Maturity) (h)
0% 6/15/09 (FGIC Insured) Aaa 14,850 8,933
0% 6/15/09 (FGIC Insured) Aaa 2,325 1,409
(Escrowed to Maturity) (h)
(McCormick Place Expansion
Proj.) Series A:
0% 6/15/10 (FGIC Insured) Aaa 17,000 9,588
5.25% 12/15/10 (AMBAC Insured) Aaa 14,450 14,441
Rfdg. (McCormick Place Aaa 3,820 2,442
Expansion Proj.) Series A,
0% 6/15/08 (MBIA Insured)
Northern Illinois Univ. Revs. Aaa 1,000 1,035
(Auxiliary Facilities Sys.
Proj.) 6% 4/1/02 (FGIC
Insured)
301,360
INDIANA - 0.2%
Indiana Bond Bank Rev. (State AAA 2,000 2,204
Revolving Fund Prog. Proj.)
Series A, 7% 2/1/05
Indiana Health Facilities Aaa 2,500 2,839
Fing. Auth. Hosp. Rev. Rfdg.
(Columbus Reg'l. Hosp.
Proj.) 7% 8/15/15 (FSA
Insured)
Indianapolis Arpt. Auth. Rev. Aaa 1,000 1,001
Rfdg. Series A, 5.6% 7/1/15
(FGIC Insured)
Indianapolis Econ. Dev. Rev. Baa2 3,000 3,171
Rfdg. & Impt. (Nat'l.
Benevolent Assoc. Proj.)
7.625% 10/1/22
9,215
KANSAS - 0.5%
Johnson County Unified School
District #512 (Shawnee
Mission Proj.):
8% 10/1/03 Aa1 1,015 1,137
8% 10/1/04 Aa1 1,225 1,401
8% 10/1/05 Aa1 1,250 1,456
Kansas City Util. Sys. Rev.
(Cap. Appreciation):
0% 3/1/09 (AMBAC Insured) Aaa 3,975 2,446
(Escrowed to Maturity) (h)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
KANSAS - CONTINUED
Kansas City Util. Sys. Rev.
(Cap. Appreciation): -
continued
0% 9/1/10 (AMBAC Insured) Aaa $ 2,865 $ 1,642
0% 9/1/10 (AMBAC Insured) Aaa 3,825 2,164
(Escrowed to Maturity) (h)
Kansas Dept. Trans. Hwy. Rev. Aa 4,750 5,308
7.25% 3/1/05
Wichita Hosp. Rev. Series Aaa 6,000 6,297
III-A, 6.465% 10/20/17 (MBIA
Insured)
21,851
KENTUCKY - 0.6%
Jefferson County Cap. Projs. A1 5,250 2,779
Corp. Rev. (Cap.
Appreciation) Series A, 0%
8/15/11
Jefferson County Hosp. Rev.
(Alliant Health Sys. Proj.):
6.367% 10/9/08 (MBIA Insured) Aaa 1,800 1,904
6.367% 10/9/08 (MBIA Insured) Aaa 2,200 2,355
(Pre-Refunded to 10/29/02 @
102) (h)
Kenton County Arpt. Board
Arpt. Rev.:
Rfdg. (Cincinnati/Northern Aaa 1,480 1,527
Kentucky Int'l. Arpt. Proj.)
5.65% 3/1/04 (MBIA Insured)
(g)
Spl. Facilities (Delta Air Baa3 5,100 5,371
Lines, Inc. Proj.) Series
A, 7.5% 2/1/20 (g)
Owensboro Elec. Lt. & Pwr.
Rev. Series B:
0% 1/1/07 (AMBAC Insured) Aaa 10,000 7,008
0% 1/1/08 (AMBAC Insured) Aaa 600 398
0% 1/1/09 (AMBAC Insured) Aaa 2,000 1,247
0% 1/1/10 (AMBAC Insured) Aaa 8,440 4,981
27,570
LOUISIANA - 0.4%
Louisiana Gen. Oblig. Series Aaa 2,000 2,164
A, 6.75% 5/15/04 (MBIA
Insured)
Louisiana Offshore Term. Baa1 1,205 1,259
Auth. Deep Wtr. Port Rev.
Series E, 7.6% 9/1/10
(Pre-Refunded to 9/1/00 @
102) (h)
Monroe-West Monroe Pub. Trust AA- 9,000 3,818
Fing. Auth. Mtg. Rev. Rfdg.
(Cap. Appreciation) Series
C, 0% 8/20/14
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
LOUISIANA - CONTINUED
New Orleans Gen. Oblig. Rfdg.
(Cap. Appreciation):
0% 9/1/08 (AMBAC Insured) Aaa $ 10,000 $ 6,365
0% 9/1/09 (AMBAC Insured) Aaa 3,000 1,805
Saint John Baptist Parish Baa 2,700 2,781
Sales Tax District Rfdg.
Series 1989, 7.8% 12/1/14
(Pre-Refunded to 12/1/99 @
103) (h)
18,192
MARYLAND - 0.6%
Baltimore Gen. Oblig. Rfdg. Aaa 5,100 5,748
(Cons. Pub. Impt.) Series A,
7.25% 10/15/05 (FGIC Insured)
Howard County Mtg. Rev. Aaa 250 259
(Heartland Elderly Apts.
Proj.) 8.875% 12/1/10 (MBIA
Insured)
Marshall County Poll. Cont. Aa2 3,000 2,868
Rev. Rfdg. (John Hopkins
Univ. Proj.) 5.25% 7/1/16
Maryland Cmnty. Dev. Aa2 2,450 2,433
Administration Dept. Rfdg.
(Residential Proj.) Series
B, 5.05% 9/1/19 (g)
Maryland Health & Higher Edl.
Facilities Auth. Rev.:
(Good Samaritan Hosp. Proj.):
5.75% 7/1/13 (AMBAC Insured) Aaa 995 1,016
(Escrowed to Maturity) (h)
5.75% 7/1/13 (Escrowed to A1 1,605 1,653
Maturity) (h)
Rfdg. (John Hopkins Univ. Aa2 2,500 2,373
Proj.) 5.25% 7/1/17
Montgomery County Gen. Oblig. Aaa 2,250 2,268
(Consolidated Pub. Impt.
Proj.) Series A, 5.375%
5/1/12
Prince Georges County Solid Aaa 1,500 1,470
Waste Mgmt. Sys. Rev. 5.25%
6/15/13 (FSA Insured)
Washington D.C. Metro. Area Aaa 5,500 5,783
Trans. Auth. Gross Rev.
Rfdg. 6% 7/1/09 (FGIC
Insured)
25,871
MASSACHUSETTS - 7.9%
Boston Metro. District Gen. Aaa 1,260 1,415
Oblig. Rfdg. 8% 12/1/03
(MBIA Insured)
Massachusetts Bay Trans. Auth.:
(Massachusetts Trans. Sys. Aa3 15,000 14,097
Proj.) Series A, 5.375%
3/1/19
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
MASSACHUSETTS - CONTINUED
Massachusetts Bay Trans.
Auth.: - continued
Rfdg. (Gen. Trans. Sys. Proj.):
Series A:
5.5% 3/1/12 Aa3 $ 5,000 $ 5,079
6.25% 3/1/12 Aa3 2,000 2,169
Series B, 6.2% 3/1/16 Aa3 3,800 3,992
5.25% 3/1/26 (FSA Insured) Aaa 14,750 13,241
Massachusetts Ed. Ln. Auth.
Ed. Ln. Rev. Series B Issue E:
5.75% 7/1/05 (AMBAC Insured) Aaa 2,375 2,462
(g)
5.85% 7/1/06 (AMBAC Insured) Aaa 2,825 2,945
(g)
5.95% 7/1/07 (AMBAC Insured) Aaa 3,060 3,189
(g)
6.05% 7/1/08 (AMBAC Insured) Aaa 3,165 3,298
(g)
6.15% 7/1/10 (AMBAC Insured) Aaa 1,270 1,321
(g)
6.25% 7/1/11 (AMBAC Insured) Aaa 765 798
(g)
6.3% 7/1/12 (AMBAC Insured) Aaa 770 801
(g)
Massachusetts Edl. Fing. AAA 6,535 6,131
Auth. Ed. Ln. Rev. 4.9%
7/1/13 (AMBAC Insured) (g)
Massachusetts Gen. Oblig.:
(Consolidated Ln. Proj.):
Series A, 7.5% 6/1/04 Aa3 3,270 3,567
Series B, 4.875% 10/1/13 Aa3 2,500 2,331
Rfdg. Series A, 5.5% 2/1/11 Aaa 19,845 20,148
(MBIA Insured)
Rfdg. (Cap. Appreciation) Aaa 5,000 4,428
Series B, 0% 8/1/02 (AMBAC
Insured)
Massachusetts Health & Edl.
Facilities Auth. Rev.:
(Blood Research Institute - 4,625 4,778
Proj.) Series A, 6.5% 2/1/22
(MIT Proj.) Series I 2, 4.75% Aaa 6,000 4,945
1/1/28
(New England Med. Ctr. Hosp. Aaa 3,800 3,483
Proj.) Series G, 5.375%
7/1/24 (MBIA Insured)
(South Shore Hosp. Proj.) A2 11,930 11,130
Series F, 5.75% 7/1/29
Rfdg.:
(Baystate Med. Ctr. Proj.) Aaa 3,000 2,888
Series D, 5% 7/1/12 (FGIC
Insured)
(Fairview Extended Care Aaa 4,900 4,877
Proj.) Series B, 4.55%
1/1/21 (MBIA Insured)
(Harvard Univ. Proj.) Series Aaa 1,100 1,180
P, 6.5% 11/1/03
(Mass. Gen. Hosp. Proj.) Aaa 2,000 2,174
Series F, 6.25% 7/1/12
(AMBAC Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
MASSACHUSETTS - CONTINUED
Massachusetts Hsg. Fin. Agcy.
Rfdg. (Rental Proj.) Series
A:
6.6% 7/1/14 (AMBAC Insured) Aaa $ 2,385 $ 2,489
(g)
6.65% 7/1/19 (AMBAC Insured) Aaa 1,910 2,009
(g)
Massachusetts Ind. Fin. Agcy. AAA 3,950 4,386
Ind. Dev. Rev. (Union
Mission Proj.) 9.55% 9/1/26
Massachusetts Ind. Fin. Agcy.
Resource Recovery Rev.:
(Ogden Haverhill Proj.) BBB 5,430 5,325
Series 1992 A, 4.6% 12/1/02
Rfdg. Series A, 4.7% 12/1/03 BBB 1,975 1,918
Massachusetts Ind. Fin. Agcy.
Rev. (Cap. Appreciation)
(Massachusetts Biomedical
Research Corp. Proj.) Series
A2:
0% 8/1/03 A1 29,600 24,935
0% 8/1/04 A1 5,000 3,984
0% 8/1/06 A1 30,800 21,927
0% 8/1/08 A+ 5,000 3,183
0% 8/1/09 - 21,800 12,843
0% 8/1/10 - 2,000 1,113
Massachusetts Muni. Wholesale
Elec. Co. Pwr. Supply Sys.
Rev.:
Rfdg.:
Series A, 6.75% 7/1/08 (MBIA Aaa 2,500 2,660
Insured)
Series B, 5% 7/1/12 (MBIA Aaa 2,715 2,620
Insured)
5% 7/1/10 (AMBAC Insured) Aaa 4,610 4,537
Series B, 6.75% 7/1/08 (MBIA Aaa 5,995 6,378
Insured)
Series C, 6.625% 7/1/06 Baa2 2,220 2,335
Series D, 6% 7/1/06 Baa2 1,300 1,344
Massachusetts Port Auth. Rev. Aa3 15,845 15,364
5.75% 7/1/29
Massachusetts Tpk. Auth.
Metro. Hwy. Sys. Rev. Series
A:
5% 1/1/27 (MBIA Insured) Aaa 11,000 9,444
5% 1/1/37 (MBIA Insured) Aaa 15,000 12,605
5.125% 1/1/23 (MBIA Insured) Aaa 8,500 7,605
Massachusetts Tpk. Auth. Aaa 28,330 28,362
Western Tpk. Rev. Series A,
5.55% 1/1/17 (MBIA Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
MASSACHUSETTS - CONTINUED
Massachusetts Wtr. Poll.
Abatement Trust Rev.:
(MWRA Ln. Prog.) Series A, Aa1 $ 800 $ 784
5.25% 8/1/13
5.25% 8/1/14 Aa1 3,000 2,889
New England Ed. Ln. Marketing A3 18,500 19,009
Corp. Massachusetts Rfdg.
(Student Ln. Proj.) Series
A, 5.7% 7/1/05 (g)
New England Ed. Ln. Marketing
Corp. Massachusetts Student
Ln. Rev.:
Rfdg. Series G:
5% 8/1/00 A3 2,500 2,517
5.2% 8/1/02 Aa2 3,200 3,256
Series B, 5.4% 6/1/00 Aa2 2,500 2,513
335,201
MICHIGAN - 3.6%
Detroit Convention Facilities A 4,000 3,836
Rev. Rfdg. (Cobo Hall
Expansion Proj.) 5.25%
9/30/12
Detroit Wtr. Supply Sys. Rev.
Sr. Lien Series A:
5.75% 7/1/26 (FGIC Insured) Aaa 14,750 14,263
5.875% 7/1/22 (FGIC Insured) Aaa 16,905 16,726
5.875% 7/1/29 (FGIC Insured) Aaa 10,900 10,698
Lowell Area Schools (Cap. Aaa 19,185 4,949
Appreciation) 0% 5/1/20
(FGIC Insured) (Pre-Refunded
to 5/1/05 @ 33.6439) (h)
Michigan Bldg. Auth. Rev. Aaa 1,100 1,136
Series II, 6.25% 10/1/20
(MBIA Insured)
Michigan Hosp. Fin. Auth. Rev.:
(Mercy Health Svcs. Proj.):
Series Q, 5.375% 8/15/26 Aaa 4,750 4,333
(AMBAC Insured)
Series W, 5.25% 8/15/27 (FSA Aaa 4,000 3,572
Insured)
Series X, 6% 8/15/34 (MBIA Aaa 11,000 10,827
Insured)
Rfdg.:
(Bay Med. Ctr. Proj.) Series A3 960 1,000
A, 8.25% 7/1/12
(Sisters of Mercy Health Aaa 7,340 7,260
Corp. Proj.) 5.375% 8/15/14
(MBIA Insured)
Michigan Hsg. Dev. Auth.
Rental Hsg. Rev.:
Rfdg. Series B, 5.7% 4/1/12 AA- 3,750 3,766
Series B, 7.5% 4/1/10 AA- 6,000 6,221
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
MICHIGAN - CONTINUED
Michigan Hsg. Dev. Auth. AA+ $ 300 $ 308
Single Family Mtg. Rev.
Series A, 7.5% 6/1/15
Michigan Muni. Bond Auth. Rev.:
Rfdg. (Local Govt. Ln. Prog.
Proj.) Series G:
7% 11/1/02 (AMBAC Insured) Aaa 1,465 1,568
7% 5/1/03 (AMBAC Insured) Aaa 2,700 2,905
5.125% 10/1/20 Aa1 26,800 24,026
Michigan Trunk Line (Cap. Aaa 8,010 4,817
Appreciation) Series A, 0%
10/1/09 (AMBAC Insured)
Michigan Underground Storage Aaa 3,500 3,711
Tank Fin. Assurance Auth.
Rev. Rfdg. Series I, 6%
5/1/06 (AMBAC Insured)
Michigan Univ. Rev. Rfdg. Aa2 7,750 7,878
(Univ. Hosp. Proj.) Series
A, 5.75% 12/1/12
Pinckney Cmnty. Schools Aaa 4,000 3,732
Livingston & Washtenaw
Counties 5.5% 5/1/27 (FGIC
Insured)
Romulus Cmnty. Schools 6% Aaa 7,500 7,496
5/1/29 (FGIC Insured)
Royal Oak Hosp. Fin. Auth.
Rev.:
(William Beaumont Hosp. Aa3 3,695 3,560
Proj.) 5.5% 1/1/14
Rfdg. (William Beaumont Hosp. Aa3 400 424
Proj.) 6.25% 1/1/09
Western Townships Util. Auth. Aaa 2,810 2,192
Swr. Disp. Sys. Rfdg. (Cap.
Appreciation) 0% 1/1/05
(FSA Insured)
151,204
MINNESOTA - 1.0%
Centennial Independent School Aaa 2,610 2,461
District #12 Rfdg. Series B,
4.875% 2/1/12 (FGIC Insured)
Minneapolis & Saint Paul Hsg. Aaa 9,700 8,355
& Redev. Auth. Health Care
Sys. Rev. Rfdg. (Healthspan
Corp. Proj.) Series A, 4.75%
11/15/18 (AMBAC Insured)
Minnesota Hsg. Fin. Agcy.
(Single Family Mtg. Proj.):
Series B, 5.8% 7/1/25 (g) Aa2 5,750 5,485
Series I, 6.25% 1/1/15 Aa2 1,820 1,845
Series K, 6.4% 1/1/15 Aa2 2,510 2,569
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
MINNESOTA - CONTINUED
Saint Cloud Hosp. Facilities Aaa $ 2,000 $ 1,968
Rev. Rfdg. (Saint Cloud
Hosp. Proj.) Series C, 5.25%
10/1/13 (AMBAC Insured)
Univ. of Minnesota Gen. Aa3 15,000 15,054
Oblig. Rfdg. 4.8% 8/15/03
Western Minnesota Muni. Pwr.
Agcy. Pwr. Supply Rev.:
Rfdg. Series A, 5.5% 1/1/11 Aaa 3,525 3,587
(AMBAC Insured)
Series B, 6% 1/1/04 (AMBAC Aaa 1,390 1,460
Insured)
42,784
MISSISSIPPI - 0.1%
Hinds County Rev. Rfdg. Aaa 4,000 4,088
(Mississipi Methodist Hosp.
& Rehabilitation Proj.) 5.6%
5/1/12 (AMBAC Insured)
Mississippi Home Corp. Single Aaa 381 396
Family Rev. Rfdg. Series A,
9.25% 3/1/12 (FGIC Insured)
4,484
MISSOURI - 0.3%
Boone County Ind. Dev. Auth. - 1,995 2,172
1st Mtg. (Fairview Extended
Care Proj.) Series A,
10.125% 1/1/11 (Pre-Refunded
to 1/1/01 @ 103) (h)
Kirkwood Ind. Dev. Auth. - 2,000 2,158
Health Care Corp. Rev.
(Saint Joseph Hosp. Proj.)
7% 7/1/22 (Pre-Refunded to
7/1/02 @ 102) (h)
Missouri Higher Ed. Ln. Auth. Aa 8,000 8,100
Student Ln. Rev. (Sr. Lien)
Series A, 5.625% 2/15/01
Missouri Hsg. Dev. Commission AAA 1,505 1,511
Mtg. Rev. Series C, 5.5%
3/1/16 (g)
13,941
MONTANA - 0.3%
Montana Board of Invt.
(Payroll Tax Workers
Compensation Proj.):
Series 1991, 6.875% 6/1/11 Aaa 6,200 6,536
(MBIA Insured) (Escrowed to
Maturity) (h)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
MONTANA - CONTINUED
Montana Board of Invt.
(Payroll Tax Workers
Compensation Proj.): -
continued
Series 1996:
6.875% 6/1/20 (MBIA Insured) Aaa $ 1,255 $ 1,311
(Escrowed to Maturity) (h)
6.875% 6/1/20 (MBIA Insured) Aaa 3,870 4,043
(Escrowed to Maturity) (h)
6.875% 6/1/20 (MBIA Insured) Aaa 2,005 2,095
(Escrowed to Maturity) (h)
13,985
NEBRASKA - 0.1%
Nebraska Pub. Pwr. District Aaa 5,000 4,963
Rev. Series A, 5.25% 1/1/12
(MBIA Insured)
Scotts Bluff County Hosp. A3 1,110 1,192
Auth. #1 Hosp. Rev. 6.45%
12/15/04 (Pre-Refunded to
12/15/02 @ 102) (h)
6,155
NEVADA - 0.0%
Las Vegas Downtown Redev. BBB+ 500 503
Agcy. Tax Increment Rev.
(Fremont Street Proj.)
Series A, 6.1% 6/15/14
NEW HAMPSHIRE - 0.1%
New Hampshire Higher Edl. & - 3,480 3,620
Health Facilities Auth. Rev.
(Littleton Hosp. Assoc.,
Inc. Proj.) Series A, 9.5%
5/1/20 (Pre-Refunded to
5/1/00 @ 102) (h)
NEW JERSEY - 2.3%
Middlesex County Poll. Cont. - 7,750 8,495
Auth. Rev. Rfdg. (Amerada
Hess Corp. Proj.) 7.875%
6/1/22
New Jersey Gen. Oblig. 5.25% Aa1 6,000 6,130
3/1/07
New Jersey Health Care AAA 1,635 1,822
Facilities Fing. Auth. Rev.
(Christ Hosp. Group Issue
Proj.) 7% 7/1/06 (AMBAC
Insured)
New Jersey Tpk. Auth. Tpk. Aaa 1,000 1,102
Rev. Rfdg. Series C, 6.5%
1/1/09 (AMBAC Insured)
New Jersey Trans. Corp.
Series A:
5.25% 9/1/01 (FSA Insured) Aaa 4,000 4,047
5.4% 9/1/02 (FSA Insured) Aaa 3,535 3,610
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NEW JERSEY - CONTINUED
New Jersey Trans. Trust Fund
Auth.:
(Trans. Sys. Proj.):
Series A, 5.25% 6/15/11 Aa2 $ 15,345 $ 15,346
Series B, 5.25% 6/15/12 Aa2 10,000 9,915
Rfdg. (Trans. Sys. Proj.):
Series A, 5.5% 6/15/11 (MBIA Aaa 7,650 7,839
Insured)
Series B, 6.5% 6/15/10 (MBIA Aaa 5,000 5,554
Insured)
Series B, 5% 6/15/13 (AMBAC Aaa 26,055 24,982
Insured)
New Jersey Wastewtr. Aaa 3,225 3,433
Treatment Trust Ln. Rev.
Rfdg. Series C, 6.25%
5/15/04 (MBIA Insured)
Passaic County Util. Auth. Aaa 3,580 3,393
Solid Waste Disp. Rev.
Rfdg. (Cap. Appreciation) 0%
3/1/01 (MBIA Insured)
Warren County Poll. Cont. Aaa 1,000 1,053
Fing. Auth. Resource
Recovery Rev. 6.55% 12/1/06
(MBIA Insured)
96,721
NEW MEXICO - 0.8%
Albuquerque Arpt. Rev.:
Rfdg.:
6.5% 7/1/08 (AMBAC Insured) Aaa 1,500 1,637
(g)
6.7% 7/1/18 (AMBAC Insured) Aaa 2,500 2,672
(g)
6.75% 7/1/09 (AMBAC Insured) Aaa 1,150 1,283
(g)
6.75% 7/1/10 (AMBAC Insured) Aaa 1,700 1,904
(g)
6.75% 7/1/12 (AMBAC Insured) Aaa 1,935 2,176
(g)
Series A, 6.6% 7/1/16 (AMBAC Aaa 4,750 5,021
Insured) (g)
Bernalillo County Gross Aa3 7,090 6,464
Receipt Tax Rev. 5.25%
10/1/26
New Mexico Edl. Assistance
Foundation Student Ln. Rev.:
Series B, 5.25% 4/1/05 (AMBAC Aaa 3,500 3,517
Insured) (g)
Series II A, 5% 12/1/02 (g) Aaa 2,435 2,456
Rio Rancho Wtr. & Wastewtr. Aaa 1,600 1,695
Sys. Rev. Series A, 5.9%
5/15/15 (FSA Insured)
(Pre-Refunded to 5/15/06 @
100) (h)
Univ. of New Mexico Univ. A1 5,340 5,397
Rev. Rfdg. Series A, 6%
6/1/21
34,222
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NEW YORK - 16.2%
Metro. Trans. Auth. Dedicated Aaa $ 12,500 $ 11,281
Tax Fund Series A, 5.25%
4/1/26 (MBIA Insured)
Metro. Trans. Auth. New York
Commuter Facilities Rev.:
Rfdg.:
(Svc. Contract Proj.) Series Baa1 2,000 1,840
8, 5.25% 7/1/17
Series D, 5.125% 7/1/22 (MBIA Aaa 5,450 4,864
Insured)
Series A:
5.625% 7/1/27 (MBIA Insured) Aaa 6,525 6,197
6.125% 7/1/29 Baa1 25,000 24,994
Series C1, 5.125% 7/1/12 Aaa 7,570 7,365
(FGIC Insured)
6% 7/1/16 (FGIC Insured) Aaa 2,000 2,034
Metro. Trans. Auth. New York
Svc. Contract Rev.:
(Commuter Facilities Proj.)
Series O:
5.75% 7/1/08 Baa1 1,000 1,038
5.75% 7/1/13 Baa1 14,250 14,555
(Trans. Facilities Proj.):
Series 7, 5.4% 7/1/06 Baa1 1,000 1,022
Series O, 5.625% 7/1/05 Baa1 7,595 7,859
Series P, 5.75% 7/1/15 Baa1 9,500 9,439
Rfdg. (Trans. Facilities Baa1 1,000 1,052
Proj.) Series 5, 6.9% 7/1/05
Metro. Trans. Auth. New York
Trans. Facilities Rev.:
(Svc. Contract Proj.) Series Aaa 13,000 12,497
Q, 5.125% 7/1/13 (AMBAC
Insured)
Rfdg.:
(Svc. Contract Proj.):
Series 8:
5.25% 7/1/17 Baa1 2,150 1,978
5.375% 7/1/21 (FSA Insured) Aaa 6,400 5,962
Series R:
5% 7/1/02 Baa1 4,255 4,303
5% 7/1/03 Baa1 3,450 3,486
5.4% 7/1/10 Baa1 2,680 2,696
Series K, 6.3% 7/1/06 (MBIA Aaa 3,500 3,791
Insured)
Series A, 5.75% 7/1/21 (MBIA Aaa 11,430 11,166
Insured)
Nassau County Gen. Oblig.
Gen. Impt. Rfdg. Series A:
6.5% 5/1/04 (FGIC Insured) Aaa 2,825 3,024
6.5% 5/1/05 (FGIC Insured) Aaa 4,490 4,846
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NEW YORK - CONTINUED
Nassau County Gen. Oblig.
Gen. Impt. Rfdg. Series A: -
continued
6.5% 5/1/06 (FGIC Insured) Aaa $ 4,000 $ 4,343
New York City Gen. Oblig.:
Rfdg.:
Series A, 7% 8/1/04 A3 4,375 4,757
Series B:
5.7% 8/15/02 A3 5,805 5,975
5.7% 8/15/02 (Escrowed to A3 195 201
Maturity) (h)
Series D, 8% 2/1/05 A3 2,550 2,893
Series A:
6% 8/1/18 (FSA Insured) Aaa 4,900 4,911
(Escrowed to Maturity) (h)
6.375% 8/1/05 A3 3,410 3,585
7.75% 8/15/07 A3 40 43
7.75% 8/15/07 (Pre-Refunded Aaa 210 225
to 8/15/01 @ 10/1/05) (h)
Series B:
5.5% 8/15/01 A3 310 316
5.5% 8/15/01 (Escrowed to Aaa 90 92
Maturity) (h)
7.5% 2/1/03 A3 19,000 20,439
7.5% 2/1/04 A3 1,500 1,613
Series C:
6.4% 8/1/03 A3 4,120 4,348
6.5% 8/1/07 A3 2,435 2,561
6.5% 8/1/07 (Pre-Refunded to A3 565 602
8/1/02 @ 10/1/05) (h)
Series D:
6.5% 2/15/05 A3 500 535
6.6% 2/1/03 A3 975 1,027
6.6% 2/1/03 (Escrowed to A3 25 27
Maturity) (h)
Series H:
6.9% 2/1/01 A3 165 170
6.9% 2/1/01 (Escrowed to Aaa 80 82
Maturity) (h)
Series H, Sub-Series H 1, A3 100 102
5.5% 8/1/01 (Escrowed to
Maturity) (h)
Series J, 6% 2/15/04 A3 3,000 3,128
New York City Ind. Dev. Agcy. Aaa 1,885 1,980
Ind. Dev. Rev. (Japan
Airlines Co. Ltd. Proj.)
Series 1991, 6% 11/1/15
(FSA Insured) (g)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NEW YORK - CONTINUED
New York City Ind. Dev. Agcy. A3 $ 500 $ 516
Spl. Facilities Rev. (Term.
One Group Assoc. Proj.) 6%
1/1/08 (g)
New York City Muni. Wtr. Fin.
Auth. Wtr. & Swr. Sys. Rev.:
Series A, 7% 6/15/09 (FGIC Aaa 2,500 2,587
Insured)
Series B:
5.5% 6/15/27 (MBIA Insured) Aaa 31,185 29,296
5.75% 6/15/26 A1 10,000 9,581
5.75% 6/15/26 (AMBAC Insured) Aaa 10,000 9,748
5.75% 6/15/29 A1 51,500 49,116
5.75% 6/15/29 (MBIA Insured) Aaa 15,950 15,510
5.875% 6/15/26 A1 1,325 1,291
New York City Transitional
Fin. Auth. Rev.:
(Future Tax Proj.):
Second Series A, 5% 8/15/15 Aa3 5,000 4,570
Second Series B, 4.75% Aa3 7,300 6,399
11/15/16
Series A:
5.125% 11/15/14 Aa3 5,000 4,693
5.25% 11/15/13 Aa3 3,000 2,915
6% 8/15/29 Aa3 8,430 8,407
New York City Trust Cultural Aaa 6,500 6,238
Resources Rev. (American
Museum of Natural History
Proj.) 5.65% 4/1/27 (MBIA
Insured)
New York State Dorm. Auth. Aa1 3,025 2,816
Lease Rev. (Court
Facilities - Westchester
County) 5.25% 8/1/18
New York State Dorm. Auth.
Rev.:
(City Univ. Sys.
Consolidation Proj.):
Series A, 5.75% 7/1/09 Baa1 4,370 4,527
Series D:
7% 7/1/09 Baa1 2,000 2,183
7% 7/1/09 (FGIC Insured) Aaa 3,780 4,203
(State Univ. Edl. Facilities
Proj.):
Series A:
5.5% 5/15/08 A3 3,500 3,576
5.5% 5/15/13 (FGIC Insured) Aaa 24,350 24,666
5.875% 5/15/11 A3 7,000 7,321
5.875% 5/15/17 (FGIC Insured) Aaa 6,865 7,065
Series B, 5.25% 5/15/11 A3 8,000 7,929
5.75% 5/15/09 A3 2,465 2,548
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NEW YORK - CONTINUED
New York State Dorm. Auth.
Rev.: - continued
(Suffolk County Judicial Baa1 $ 690 $ 789
Facilities Proj.) Series A,
9.5% 4/15/14
Rfdg. (State Univ. Edl. A3 3,000 3,203
Facilities Proj.) Series A,
6.5% 5/15/04
Series C, 7.5% 7/1/10 (FGIC Aaa 24,650 28,304
Insured)
New York State Envir.
Facilities Corp. Clean Wtr.
& Drinking Wtr. Rev.
(Revolving Funds Proj.)
Series F:
4.875% 6/15/18 Aa1 7,280 6,399
4.875% 6/15/20 Aa1 13,900 11,918
5% 6/15/15 Aa1 7,000 6,436
New York State Envir.
Facilities Corp. Poll. Cont.
Rev.:
(State Wtr. Revolving Aa1 4,930 4,458
Fund-New York City Muni.
Wtr. Proj.) Series D, 5.125%
6/15/19
Rfdg.:
(State Wtr. Revolving
Fund-New York City Muni.
Wtr. Proj.):
Series A, 5.75% 6/15/12 Aa1 2,000 2,074
5.75% 6/15/11 Aa1 12,500 12,987
Series A, 5.75% 6/15/10 Aa1 5,000 5,215
New York State Local Govt.
Assistance Corp.:
(Cap. Appreciation):
Series A, 0% 4/1/08 A3 2,000 1,305
Series B, 0% 4/1/08 A3 5,000 3,262
Rfdg.:
Series C, 5.5% 4/1/17 A3 21,850 21,310
Series E, 6% 4/1/14 A3 18,085 18,818
Rfdg. (Cap. Appreciation) A3 10,000 4,777
Series C, 0% 4/1/13
Series A, 5.375% 4/1/16 A3 11,000 10,519
New York State Med. Care Aa2 1,500 1,537
Facilities (Mtg. Proj.)
Series E, 6.2% 2/15/15
New York State Thruway Auth.
Gen. Rev.:
(Spl. Oblig. Cross Proj.) BBB 8,500 6,526
Series A, 0% 1/1/05
Rfdg. Series E, 5.25% 1/1/11 Aa3 9,120 9,085
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NEW YORK - CONTINUED
New York State Thruway Auth.
Svc. Contract Rev.:
(Local Hwy. & Bridge Proj.):
Series A, 6% 1/1/05 (MBIA Aaa $ 2,500 $ 2,643
Insured)
6% 4/1/03 Baa1 2,500 2,600
Rfdg. (Local Hwy. & Bridge Aaa 17,055 17,296
Proj.) Series B, 5.375%
4/1/11 (MBIA Insured)
5.25% 4/1/07 (MBIA Insured) Aaa 6,050 6,171
New York State Urban Dev.
Corp. Rev. Rfdg.:
(Correctional Cap. Facilities Baa1 6,000 6,275
Proj.) Series A, 6.3% 1/1/03
(Correctional Facilities Aaa 1,000 1,001
Proj.) Series A, 5.1% 1/1/09
(AMBAC Insured)
(State Facilities Proj.) Baa1 2,300 2,366
5.75% 4/1/11
Niagara Falls Gen. Oblig. Aaa 500 603
(Pub. Impt. Proj.) 7.5%
3/1/18 (MBIA Insured)
Triborough Bridge & Tunnel
Auth. Rev.:
(Convention Ctr. Proj.) Baa1 9,650 10,746
Series E, 7.25% 1/1/10
(Gen. Purp. Proj.) Series A, Aa3 3,155 2,681
4.75% 1/1/19
Rfdg. (Gen. Purp. Proj.) Aa3 16,100 15,838
Series Y, 5.5% 1/1/17
Series A:
5.125% 1/1/22 Aa3 5,550 4,903
5.25% 1/1/28 Aa3 13,315 11,818
Triborough Bridge & Tunnel
Auth. Spl. Oblig.:
Rfdg. Series A, 5.25% 1/1/11 Aaa 3,320 3,313
(FGIC Insured)
5.5% 1/1/07 (FGIC Insured) Aaa 7,500 7,757
683,878
NORTH CAROLINA - 2.5%
Harnett County Ctfs. of Prtn.:
7.5% 12/1/03 (AMBAC Insured) Aaa 2,640 2,917
7.5% 12/1/04 (AMBAC Insured) Aaa 2,865 3,223
North Carolina Eastern Muni.
Pwr. Agcy. Pwr. Sys. Rev.:
Rfdg.:
Series A:
5.2% 1/1/01 Baa1 10,000 10,003
5.5% 1/1/05 (MBIA Insured) Aaa 1,000 1,030
6.1% 1/1/01 Baa3 1,350 1,363
6.25% 1/1/03 Baa1 2,600 2,666
7.875% 1/1/02 Baa1 4,000 4,205
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
NORTH CAROLINA - CONTINUED
North Carolina Eastern Muni.
Pwr. Agcy. Pwr. Sys. Rev.: -
continued
Rfdg.:
Series B:
6% 1/1/14 Baa3 $ 4,000 $ 3,880
7.25% 1/1/07 Baa3 7,375 8,028
Series C:
5.125% 1/1/03 Baa1 7,720 7,673
5.25% 1/1/04 Baa1 1,000 994
5.5% 1/1/07 Baa1 5,950 5,877
7% 1/1/07 Baa1 15,715 16,880
Series A, 5.1% 1/1/00 Baa1 7,000 7,004
Series B, 6% 1/1/05 Baa3 11,500 11,742
Series D:
6.7% 1/1/19 Baa3 3,000 3,022
6.75% 1/1/26 Baa3 7,000 7,045
North Carolina Muni. Pwr.
Agcy. #1 Catawba Elec. Rev.:
6.25% 1/1/17 (AMBAC Insured) Aaa 2,050 2,127
7.25% 1/1/07 Baa1 5,200 5,645
105,324
NORTH DAKOTA - 0.5%
Mercer County Poll. Cont.
Rev. Rfdg.:
(Antelope Valley Aaa 16,000 18,424
Station/Basin Elec. Pwr.
Coop. Proj.) 7.2% 6/30/13
(AMBAC Insured)
(Montana-Dakota Utils. Co. Aaa 3,750 3,956
Proj.) 6.65% 6/1/22 (FGIC
Insured)
22,380
OHIO - 2.4%
Bedford Hosp. Impt. Rev. - 835 868
Rfdg. (Bedford Cmnty. Hosp.
Proj.) 8.5% 5/15/09
(Pre-Refunded to 5/15/00 @
102) (h)
Cleveland Wtrwks. Rev.:
Rfdg. (1st Mtg. Proj.) Series Aaa 6,665 6,743
G, 5.5% 1/1/13 (MBIA Insured)
Rfdg. & Impt. Series I, 5% Aaa 10,000 8,837
1/1/23 (FSA Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
OHIO - CONTINUED
Euclid City School District
(Cap. Appreciation):
0% 12/1/02 (AMBAC Insured) Aaa $ 1,265 $ 1,106
0% 12/1/03 (AMBAC Insured) Aaa 1,265 1,053
Franklin County Hosp. Rev. Baa3 33,000 27,433
(Ohio Health Corp. Proj.)
Series A, 5.6% 12/1/28
Marion County Hosp. Impt. BBB+ 380 381
Rev. Rfdg. (Comnty. Hosp.
Proj.) 5.6% 5/15/01
Ohio Bldg. Auth.:
(Adult Correctional Proj.) Aaa 4,000 4,127
Series A, 5.95% 10/1/14
(MBIA Insured)
(W. Green Bldg. A Proj.) A2 15,000 13,611
4.75% 4/1/14
Ohio Hsg. Fin. Agcy. Mtg. Rev.:
(Oakleaf-Toledo Apts. Proj.) AA- 1,550 1,704
10.25% 12/20/25
(Residential Proj.):
Series A1, 5.3% 9/1/26 (g) AAA 3,070 3,086
Series B3, 4.95% 9/1/20 (g) AAA 12,830 12,762
Series C1, 5% 3/1/19 (g) AAA 3,965 3,926
Ohio Tpk. Commission Rev.
Series A:
5.6% 2/15/12 (MBIA Insured) Aaa 1,250 1,268
5.7% 2/15/13 (MBIA Insured) Aaa 2,750 2,802
Ohio Wtr. Dev. Auth. Poll.
Cont. Facilities Rev.:
(Wtr. Cont. Ln. Fund Proj.)
State Match Series:
6.5% 6/1/03 (MBIA Insured) Aaa 2,940 3,128
6.5% 12/1/03 (MBIA Insured) Aaa 2,925 3,137
Rfdg. (Buckeye Pwr., Inc. Aaa 2,620 2,960
Proj.) 7.8% 11/1/14 (AMBAC
Insured)
Ohio Wtr. Dev. Auth. Rev. Aaa 1,975 2,086
(Fresh Wtr. Proj.) 6.25%
6/1/03 (AMBAC Insured)
101,018
OKLAHOMA - 1.0%
Oklahoma Dev. Fin. Auth. Rev. Aa3 15,000 14,716
Rfdg. (Saint John Health
Sys. Proj.) 6% 2/15/29
Oklahoma Inds. Auth. Rev. Aaa 15,250 14,481
Rfdg. (Health Sys. Oblig.
Grp. Proj.) Series A, 5.75%
8/15/29 (MBIA Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
OKLAHOMA - CONTINUED
Sapulpa Muni. Auth. Util. Aaa $ 8,600 $ 8,426
Rev. Rfdg. 5.75% 4/1/23
(FGIC Insured)
Tulsa Muni. Arpt. Trust Rev. Baa2 3,600 3,838
(American Airlines Corp.
Proj.) 7.35% 12/1/11
41,461
OREGON - 0.4%
Multonomah County School
District #3 (Park Rose
Proj.):
7% 12/1/03 (FGIC Insured) Aaa 2,000 2,176
7% 12/1/04 (FGIC Insured) Aaa 2,540 2,806
Oregon Health Hsg. Edl. &
Cultural Facilities Auth.
(Lewis & Clark College
Proj.) Series A:
6% 10/1/13 (MBIA Insured) Aaa 1,750 1,818
6.125% 10/1/24 (MBIA Insured) Aaa 1,000 1,016
Port Morrow Poll. Cont. Rev.
Rfdg. (Pacific Northwest
Proj.) Series A:
8% 7/15/06 AA- 385 415
8% 7/15/07 AA- 430 463
8% 7/15/08 AA- 480 517
8% 7/15/09 AA- 540 582
8% 7/15/10 AA- 605 652
8% 7/15/11 AA- 385 412
Portland Swr. Sys. Series A, A1 4,000 4,286
6.25% 6/1/15 (Pre-Refunded
to 6/1/04 @ 101) (h)
15,143
PENNSYLVANIA - 3.4%
Allegheny County Arpt. Rev. Aaa 6,500 6,717
Rfdg. (Pittsburgh Intl.
Arpt. Proj.) Series A, 5.75%
1/1/07 (MBIA Insured) (g)
Allegheny County Hosp. Dev. Aaa 19,140 16,951
Auth. (Univ. of Pittsburgh
Med. Ctr. Proj.) Series B,
5.125% 7/1/22 (MBIA Insured)
Butler County Hosp. Auth. Aaa 5,000 5,280
Hosp. Rev. (North Hills
Passavant Hosp. Proj.)
Series A, 6.8% 6/1/06 (FSA
Insured) (Pre-Refunded to
6/1/01 @ 102) (h)
Cambria County Hosp. Dev. A2 1,500 1,594
Auth. Hosp. Rev. Rfdg. &
Impt. (Conemaugh Valley
Hosp. Proj.) Series B,
6.375% 7/1/18 (AMBAC
Insured) (Pre-Refunded to
7/1/02 @ 102) (h)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PENNSYLVANIA - CONTINUED
Chester County Health & Ed. Aaa $ 5,000 $ 4,534
Facilities Auth. Health Sys.
Rev. (Jefferson Health Sys.
Proj.) Series B, 5.25%
5/15/22 (AMBAC Insured)
Cumberland County Muni. Auth. Baa3 8,400 8,443
Rev. Rfdg. (Carlisle Hosp. &
Health Proj.) 6.8% 11/15/23
Delaware County Auth. Hosp. Baa2 3,500 3,225
Rev. (Crozer-Chester Med.
Ctr. Proj.) 6% 12/15/20
Delaware County Auth. Rev.
(1st Mtg. Riddle Village
Proj.):
8.25% 6/1/22 (Escrowed to Aaa 4,500 5,212
Maturity) (h)
8.75% 6/1/10 (Pre-Refunded to Aaa 2,000 2,239
6/1/02 @ 102) (h)
9.25% 6/1/22 (Pre-Refunded to Aaa 3,075 3,474
6/1/02 @ 102) (h)
Northumberland County Auth. Aaa 11,830 5,545
Commonwealth Lease Rev.
(Correctional Facilities
Proj.) 0% 10/15/13 (MBIA
Insured) (Escrowed to
Maturity) (h)
Pennsylvania Convention Ctr.
Auth. Rev.:
Rfdg. Series A:
6.6% 9/1/09 (MBIA Insured) Aaa 3,000 3,268
6.7% 9/1/14 (MBIA Insured) Aaa 1,500 1,637
6.75% 9/1/19 Baa 4,500 4,681
Series A, 6.7% 9/1/16 (FGIC Aaa 2,000 2,232
Insured) (Escrowed to
Maturity) (h)
Pennsylvania Hsg. Fin. Agcy.:
Rfdg.:
(Multi-Family Proj.) 8.1% Aa 2,000 2,115
7/1/13
(Single Family Mtg. Proj.) Aa2 1,575 1,582
Series 54 A, 5.375% 10/1/28
(g)
Series 44 C, 6.65% 10/1/21 (g) Aa 10,000 10,213
Philadelphia Hosp. & Higher
Ed. Facilities Auth. Hosp.
Rev. Rfdg. (Pennsylvania
Hosp. Proj.):
5.7% 7/1/01 (Escrowed to Baa3 4,405 4,497
Maturity) (h)
5.95% 7/1/03 (Escrowed to Baa3 4,000 4,179
Maturity) (h)
Philadelphia Muni. Auth. Rev.
Rfdg. Series D:
6% 7/15/03 Baa2 220 223
6.125% 7/15/08 Baa2 4,000 4,038
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PENNSYLVANIA - CONTINUED
Philadelphia Wtr. & Swr. Rev. Aaa $ 3,000 $ 2,255
(Cap. Appreciation)
Fourteenth Series, 0%
10/1/05 (MBIA Insured)
Philadelphia Wtr. & Wastewtr.
Rev.:
5% 6/15/12 (FGIC Insured) Aaa 3,000 2,877
6.25% 8/1/09 (MBIA Insured) Aaa 3,230 3,501
6.25% 8/1/10 (MBIA Insured) Aaa 2,000 2,169
6.75% 8/1/04 (MBIA Insured) Aaa 3,000 3,264
6.75% 8/1/05 (MBIA Insured) Aaa 2,500 2,738
Pittsburgh Gen. Oblig. Series Aaa 3,000 3,152
B, 6.25% 9/1/16 (MBIA
Insured) (Pre-Refunded to
9/1/01 @ 102) (h)
Pittsburgh Wtr. & Swr. Auth.
Wtr. & Swr. Sys. Rev.:
Rfdg. Series A, 4.75% 9/1/16 Aaa 15,335 13,395
(FGIC Insured)
Rfdg. (Cap. Appreciation) Aaa 3,000 2,140
Series A, 0% 9/1/06 (FGIC
Insured) (Escrowed to
Maturity) (h)
Wyoming Ind. Dev. Auth. Poll. Aa2 4,300 4,345
Cont. Rev. Rfdg. (Proctor &
Gamble Paper Proj.) 5.55%
5/1/10
141,715
RHODE ISLAND - 0.1%
Rhode Island Depositor Econ. Aaa 2,645 2,723
Protection Corp. Spl. Oblig.
Rfdg. Series A, 5.75% 8/1/12
(MBIA Insured)
SOUTH CAROLINA - 1.4%
Charleston County Gen. Oblig. Aa3 2,500 2,663
6% 6/1/13 (Pre-Refunded to
6/1/06 @ 100) (h)
Charleston County Health
Facilities Rev. Rfdg. (1st.
Mtg. Episcopal Proj.):
Series A, 9.75% 4/1/16 - 2,820 3,024
(Pre-Refunded to 4/1/01 @
102) (h)
Series B, 9.75% 4/1/16 - 1,985 2,128
(Pre-Refunded to 4/1/01 @
102) (h)
Lexington County Health Svcs. Aaa 3,000 3,198
District Hosp. Rev. 7%
10/1/08 (FSA Insured)
(Pre-Refunded to 10/1/01 @
102) (h)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
SOUTH CAROLINA - CONTINUED
Piedmont Muni. Pwr. Agcy.
Elec. Rev.:
Rfdg. Series B, 5.25% 1/1/11 Aaa $ 9,125 $ 9,075
(MBIA Insured)
5.5% 1/1/10 (MBIA Insured) Aaa 1,455 1,489
5.5% 1/1/10 (MBIA Insured) Aaa 1,135 1,169
(Escrowed to Maturity) (h)
5.6% 1/1/09 (MBIA Insured) Aaa 2,945 3,041
5.6% 1/1/09 (MBIA Insured) Aaa 2,295 2,383
(Escrowed to Maturity) (h)
Richland County Hosp. Aaa 1,500 1,711
Facilities Rev. (Comnty.
Provider Pooled Ln. Prog.)
Series A, 7.125% 7/1/17 (FSA
Insured) (Escrowed to
Maturity) (h)
South Carolina Ed. Assistance
Auth. Rev. (Insured Student
Ln. Proj.):
6.4% 9/1/02 (g) - 1,500 1,556
6.625% 9/1/06 (g) AA 10,775 11,386
South Carolina Pub. Svc.
Auth. Rev. Rfdg. Series A:
5.75% 1/1/10 (MBIA Insured) Aaa 4,705 4,874
6.25% 1/1/03 (AMBAC Insured) Aaa 2,500 2,619
6.25% 1/1/04 (MBIA Insured) Aaa 2,565 2,715
6.375% 7/1/21 (AMBAC Insured) Aaa 3,750 3,867
6.5% 1/1/08 (MBIA Insured) Aaa 3,530 3,837
60,735
SOUTH DAKOTA - 0.0%
South Dakota Lease Rev. Rfdg. Aaa 1,000 1,118
Series A, 6.625% 9/1/12 (FSA
Insured)
TENNESSEE - 1.5%
Johnson City Elec. Rev. 5.15% Aaa 5,000 4,562
5/1/23 (MBIA Insured)
Knox County Health Edl. &
Hsg. Facilities Board Hosp.
Facilities Rev.:
(Fort Sanders Alliance Proj.) Aaa 2,000 2,036
Series C, 5.75% 1/1/14 (MBIA
Insured)
Rfdg. (Fort Sanders Alliance Aaa 2,660 3,062
Proj.) Series C, 7.25%
1/1/10 (MBIA Insured)
Memphis Gen. Oblig. 5.25% Aa2 8,730 8,301
7/1/16
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
TENNESSEE - CONTINUED
Memphis-Shelby County Arpt.
Auth. Arpt. Rev.:
Rfdg.:
Series A:
6% 2/15/05 (MBIA Insured) (g) Aaa $ 1,000 $ 1,047
6.25% 2/15/09 (MBIA Insured) Aaa 1,500 1,603
(g)
6.25% 2/15/10 (MBIA Insured) Aaa 1,000 1,065
(g)
6.25% 2/15/11 (MBIA Insured) Aaa 1,415 1,505
(g)
Series B, 6.5% 2/15/09 (MBIA Aaa 500 543
Insured) (g)
Series D, 6% 3/1/24 (AMBAC Aaa 10,000 9,886
Insured) (g)
Metro. Gov't. of Nashville & Aaa 6,455 6,427
Davidson County Sports Auth.
Rev. (Stadium Proj.) 5.875%
7/1/21 (AMBAC Insured)
Metro. Gov't. of Nashville & Aaa 5,600 6,786
Davidson County Wtr. & Swr.
Rev. Rfdg. (Cap.
Appreciation) 7.7% 1/1/12
(FGIC Insured)
Shelby County Gen. Oblig.
Rfdg.:
Series A, 6.75% 4/1/04 Aa3 3,000 3,242
Series B, 5.5% 8/1/08 Aa2 10,000 10,363
Tennessee Gen. Oblig. Rfdg. Aaa 4,000 4,273
Series A, 6% 5/1/07
64,701
TEXAS - 9.8%
Allen Independent School
District Rfdg. (Cap.
Appreciation):
0% 2/15/04 Aaa 2,120 1,735
0% 2/15/05 Aaa 2,120 1,644
Alliance Arpt. Auth. Spl. Baa1 5,860 6,105
Facilities Rev. (American
Airlines, Inc. Proj.) 7.5%
12/1/29 (g)
Arlington Independent School
District Rfdg.:
5% 2/15/11 Aaa 2,720 2,648
5% 2/15/12 Aaa 5,770 5,548
Austin Combined Util. Sys.
Rev. Rfdg.:
(Cap. Appreciation):
Series A, 0% 11/15/01 (MBIA Aaa 4,000 3,675
Insured)
0% 11/15/09 (AMBAC Insured) Aaa 4,000 2,377
0% 11/15/10 (AMBAC Insured) Aaa 2,400 1,342
Series A, 0% 11/15/08 (MBIA Aaa 3,895 2,468
Insured)
Austin Independent School
District:
Rfdg. (Cap. Appreciation) 0% Aaa 6,000 5,324
8/1/02
8.125% 8/1/01 (Escrowed to Aaa 500 531
Maturity) (h)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
TEXAS - CONTINUED
Birdville Independent School Aaa $ 8,665 $ 4,739
District Rfdg. (Cap.
Appreciation) 0% 2/15/11
Cedar Hill Independent School Aaa 1,575 937
District Rfdg. (Cap.
Appreciation) 0% 8/15/09
Conroe Independent School
District Rfdg. (Cap.
Appreciation) Series B:
0% 2/15/07 Aaa 2,360 1,638
0% 2/15/08 Aaa 3,000 1,962
0% 2/15/09 Aaa 1,100 678
0% 2/15/10 Aaa 2,805 1,632
0% 2/15/11 Aaa 1,500 820
Corpus Christi Independant
School District Rfdg. (Cap.
Appreciation):
0% 8/15/01 Aaa 1,535 1,424
0% 8/15/02 Aaa 2,165 1,918
Cypress-Fairbanks Independent
School District Rfdg. (Cap.
Appreciation):
Series A, 0% 2/15/12 Aaa 7,100 3,619
0% 2/1/04 Aaa 4,250 3,485
Dallas Fort Worth Reg'l.
Arpt. Rev. Rfdg. (Joint
Dallas/Fort Worth Int'l.
Arpt. Proj.):
Series A, 7.375% 11/1/12 Aaa 1,000 1,116
(FGIC Insured)
6.5% 11/1/05 (FGIC Insured) Aaa 2,295 2,493
Dallas Gen. Oblig.:
(Cap. Appreciation) 0% 2/15/03 Aaa 5,115 4,421
Rfdg. 4.5% 2/15/14 Aaa 4,900 4,335
Dallas Hsg. Corp. Cap. Prog.
Rev. Rfdg. (Section 8
Assorted Projs.):
7.7% 8/1/05 Baa2 1,100 1,126
7.85% 8/1/13 Baa2 1,000 1,026
Dallas Independent School Aaa 10,925 7,394
District Rfdg. (Cap.
Appreciation) 0% 8/15/07
El Paso Arpt. Rev. (El Paso Aaa 1,000 1,009
Int'l. Arpt. Proj.) 5.125%
8/15/04 (FGIC Insured) (g)
El Paso Independent School
District Rfdg.:
5% 2/15/11 Aaa 2,630 2,560
5% 2/15/12 Aaa 3,000 2,885
El Paso Property Fin. Auth. Aaa 1,195 1,259
Single Family Mtg. Rev.
(GNMA Mtg.-Backed Securities
Proj.) Series A, 8.7%
12/1/18 (g)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
TEXAS - CONTINUED
El Paso Wtr. & Swr. Rev.
Rfdg. (Cap. Appreciation):
0% 3/1/05 (MBIA Insured) Aaa $ 2,650 $ 2,054
0% 3/1/06 (MBIA Insured) Aaa 3,700 2,715
Fort Bend Independent School Aaa 2,500 2,759
District 7% 2/15/05
Garland Independent School Aaa 5,000 3,994
District Series A, 4% 2/15/17
Grapevine-Colleyville Aaa 2,580 1,848
Independent School District
Rfdg. (Cap. Appreciation) 0%
8/15/06
Harris County Gen. Oblig.:
(Toll Road Proj.) Sub Lien Aa1 2,000 2,284
Series A, 7% 8/15/09
Rfdg. (Cap. Appreciation)
(Toll Road Proj.) Sub Lien:
0% 8/1/06 Aa1 4,245 3,050
0% 8/1/08 Aa1 8,005 5,126
Harris County Hosp. District Aaa 3,000 3,327
Mtg. Rev. Rfdg. 7.4% 2/15/10
(AMBAC Insured)
Houston Independent School Aaa 6,400 3,407
District Rfdg. Series A, 0%
8/15/11
Houston Wtr. & Swr. Sys. Rev. Aaa 6,735 4,763
Rfdg. Jr. Lien Series C, 0%
12/1/06 (AMBAC Insured)
Humble Independent School Aaa 3,280 2,277
District Rfdg. (Cap.
Appreciation) 0% 2/15/07
Hurst Euless Bedford
Independent School District
Rfdg. (Cap. Appreciation):
0% 8/15/11 Aaa 3,620 1,927
0% 8/15/12 Aaa 5,105 2,531
0% 8/15/13 Aaa 3,610 1,676
Katy Independent School
District:
Rfdg. Sereis A, 5% 2/15/10 Aaa 3,355 3,293
Rfdg. (Cap. Appreciation):
Series A, 0% 2/15/07 Aaa 2,450 1,701
0% 8/15/11 Aaa 4,170 2,220
Keller Independent School Aaa 4,000 3,520
District Rfdg. Series A,
5.125% 8/15/25
Leander Independent School Aaa 300 352
District 7.5% 8/15/08
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
TEXAS - CONTINUED
Lower Colorado River Auth.
Rev.:
Rfdg. (Junior Lien-4th Aaa $ 6,000 $ 5,858
Supplement) 5.25% 1/1/15
(Escrowed to Maturity) (h)
Rfdg. (Cap. Appreciation) 0% Aaa 3,000 1,863
1/1/09 (MBIA Insured)
(Escrowed to Maturity) (h)
Lower Neches Valley Auth. Aa2 9,500 9,678
Ind. Dev. Corp. Envir. Rev.
(Mobil Oil Refining Corp.
Proj.) 6.35% 4/1/26 (g)
Lower Neches Valley Auth. Aa2 36,455 37,166
Ind. Dev. Corp. Swr.
Facilities Rev. (Mobil Oil
Refining Corp. Proj.) 6.4%
3/1/30 (g)
Mesquite Independent School
District:
Rfdg.:
5.25% 8/15/08 Aaa 3,085 3,137
5.25% 8/15/09 Aaa 1,080 1,089
5.375% 8/15/10 Aaa 3,380 3,431
5.375% 8/15/11 Aaa 1,385 1,398
Midlothian Independent School
District Rfdg. (Cap.
Appreciation):
0% 2/15/07 Aaa 1,935 1,343
0% 2/15/09 Aaa 1,970 1,215
0% 2/15/10 Aaa 1,525 887
Northwest Texas Independent Aaa 3,825 3,227
School District (Cap.
Appreciation) 0% 8/15/03
Port Dev. Corp. Ind. Dev. - 1,000 1,016
Rev. Rfdg. (Cargill, Inc.
Proj.) 7.7% 3/1/07
Round Rock Independent School
District:
Rfdg & School Bldg. (Cap. Aaa 7,430 4,464
Appreciation) 0% 8/15/09
(MBIA Insured)
Rfdg. (Cap. Appreciation):
0% 2/15/01 Aaa 2,000 1,897
0% 2/15/08 Aaa 9,800 6,410
0% 8/15/10 (MBIA Insured) Aaa 5,000 2,833
Series A, 7.5% 8/1/03 Aaa 1,300 1,432
4.5% 8/1/17 Aaa 5,575 4,729
Sabine River Auth. Poll. Baa1 1,250 1,303
Cont. Rev. (Texas Utils.
Elec. Co. Proj.) 8.25%
10/1/20 (g)
San Antonio Elec. & Gas Rev.:
Rfdg. (Cap. Appreciation):
Series 1991 B, 0% 2/1/05 Aaa 12,285 9,535
(FGIC Insured) (Escrowed to
Maturity) (h)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
TEXAS - CONTINUED
San Antonio Elec. & Gas Rev.:
- - continued
Rfdg. (Cap. Appreciation):
Series A, 0% 2/1/05 (AMBAC Aaa $ 5,850 $ 4,552
Insured)
Series B:
0% 2/1/07 (FGIC Insured) Aaa 10,000 6,938
(Escrowed to Maturity) (h)
0% 2/1/08 (FGIC Insured) Aaa 6,340 4,147
(Escrowed to Maturity) (h)
0% 2/1/09 (FGIC Insured) Aaa 2,000 1,236
(Escrowed to Maturity) (h)
0% 2/1/10 (FGIC Insured) Aaa 14,000 8,154
(Escrowed to Maturity) (h)
5.25% 2/1/10 AAA 10,455 10,486
5.25% 2/1/10 (Pre-Refunded to Aa1 545 558
2/1/07 @ 101) (h)
San Antonio Gen. Oblig.:
Rfdg. (Cap. Appreciation) Aaa 1,920 1,378
Series C, 0% 8/1/06 (MBIA
Insured)
Series 2000, 5% 2/1/20 (c) Aa2 5,000 4,350
San Antonio Independent Aaa 23,010 20,553
School District 5.125%
8/15/22
San Antonio Wtr. Rev.:
6.5% 5/15/10 (MBIA Insured) Aaa 1,690 1,786
6.5% 5/15/10 (MBIA Insured) Aaa 440 467
(Escrowed to Maturity) (h)
6.5% 5/15/10 (MBIA Insured) Aaa 500 533
(Pre-Refunded to 5/15/02 @
102) (h)
Spring Branch Independent
School District Rfdg. (Cap.
Appreciation):
0% 2/1/05 Aaa 5,725 4,448
0% 2/1/06 Aaa 5,710 4,200
Spring Independent School
District:
Rfdg. (Cap. Appreciation) 0% Aaa 3,000 2,718
2/15/02
4.875% 8/15/10 Aaa 4,000 3,867
Texarkana Health Facilities Aaa 1,750 1,817
Dev. Corp. Hosp. Rev.
(Wadley Reg'l. Med. Ctr.
Proj.) 7% 10/1/05 (MBIA
Insured)
Texas A & M Univ. Permanent Aaa 3,000 3,133
Univ. Fund Rfdg. 5.6% 7/1/05
Texas A & M Univ. Rev. Rfdg. Aa2 1,610 1,652
(Fing. Sys. Proj.) 5.5%
5/15/02
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
TEXAS - CONTINUED
Texas Gen. Oblig.:
(College Student Ln. Proj.) Aa1 $ 5,350 $ 5,480
5.8% 8/1/05 (g)
(Pub. Fin. Auth. Proj.) Aa1 5,000 4,689
Series A, 5% 10/1/14
(Wtr. Finl. Assistance Proj.) Aa1 4,000 4,066
5.375% 8/1/10
Rfdg.:
(Pub. Fing. Auth. Proj.) Aa1 5,000 5,057
5.25% 10/1/09
(Pub. Fing. Auth. Proj.) Aa1 7,150 7,160
5.25% 10/1/11
(Veterans Land Proj.) 7.4% Aa1 2,500 2,607
12/1/20
Texas Muni. Pwr. Agcy. Rev.:
Rfdg. 0% 9/1/05 (AMBAC Aaa 13,000 9,833
Insured)
Rfdg. (Cap. Appreciation) 0% Aaa 5,900 4,712
9/1/04 (AMBAC Insured)
Texas Pub. Fin. Auth. Bldg.
Rev. Rfdg. (Cap.
Appreciation):
Series 1990, 0% 2/1/12 (MBIA Aaa 4,400 2,237
Insured)
0% 2/1/09 (MBIA Insured) Aaa 2,000 1,238
Travis County Health
Facilities Dev. Corp. Rev.
(Ascension Health Cr. Prog.)
Series A:
6.25% 11/15/18 (MBIA Insured) Aaa 15,550 15,939
6.25% 11/15/19 (MBIA Insured) Aaa 5,565 5,682
Univ. of Texas Permanent
Univ. Fund:
5% 7/1/10 Aaa 4,000 3,962
5.25% 7/1/11 Aaa 7,080 7,100
Univ. of Texas Univ. Rev.
Rfdg. (Fing. Sys. Proj.)
Series A:
6% 8/15/04 Aa1 1,170 1,238
6% 8/15/05 Aa1 1,000 1,064
413,645
UTAH - 2.8%
Intermountain Pwr. Agcy. Pwr.
Supply Rev.:
Rfdg.:
Series A:
6% 7/1/16 (AMBAC Insured) Aaa 15,345 15,582
6.5% 7/1/10 (AMBAC Insured) Aaa 1,635 1,799
Series B, 5.75% 7/1/16 (MBIA Aaa 30,260 30,093
Insured)
Series D, 5% 7/1/21 (MBIA Aaa 12,100 10,578
Insured)
Series G, 0% 7/1/12 Aaa 1,660 1,910
(Pre-Refunded to 1/1/03 @
101) (b)(h)
Spl. Oblig. Sixth Series B, Aaa 29,500 29,915
6% 7/1/16 (MBIA Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
UTAH - CONTINUED
Intermountain Pwr. Agcy. Pwr.
Supply Rev.: - continued
Spl. Oblig. Sixth Series B:
6.5% 7/1/05 (MBIA Insured) Aaa $ 2,000 $ 2,173
6.5% 7/1/10 (MBIA Insured) Aaa 3,800 4,180
Jordan School District 7.625% Aa3 2,000 2,273
6/15/05
North Salt Lake Muni. Blg Aaa 6,020 6,883
Auth. Lease Rev. 8.625%
12/1/17 (Pre-Refunded to
12/1/02 @ 103) (h)
Salt Lake City Hosp. Rev. AAA 2,975 3,575
Rfdg. (Intermountain Health
Care Hosp., Inc. Proj.)
Series A, 8.125% 5/15/15
(Escrowed to Maturity) (h)
South Salt Lake City Ind. - 3,650 3,862
Rev. (Price Savers Wholesale
Club Proj.) 9% 11/15/13
Utah Board of Regents Student Aaa 5,000 4,848
Ln. Rev. Series H, 4.65%
5/1/06 (g)
Utah Hsg. Fin. Agcy. Single AAA 125 127
Family Mtg. Rev. Series G,
9.25% 7/1/19 (g)
117,798
VERMONT - 0.1%
Vermont Ind. Dev. Auth. Ind. - 4,350 4,578
Dev. Rev. (Radisson Hotel
Proj.) Series B1, 7.75%
11/15/15
VIRGINIA - 1.5%
Hampton Museum Rev. Rfdg.:
5.25% 1/1/09 A 3,825 3,766
5.25% 1/1/14 A 4,500 4,229
Henrico County Ind. Dev.
Auth. Pub. Facilities Lease
Rev. (Henrico County Reg'l.
Jail Proj.):
7.5% 8/1/04 (Escrowed to Aa2 2,455 2,748
Maturity) (h)
7.5% 8/1/05 (Escrowed to Aa2 2,590 2,944
Maturity) (h)
Loudoun County Ind. Dev.
Auth. Residential Care
Facilities Rev. (Falcons
Landing Proj.) Series A:
8.75% 11/1/24 (Pre-Refunded AAA 14,955 17,999
to 11/1/04 @ 103) (h)
9.25% 11/1/04 (Escrowed to - 965 1,089
Maturity) (h)
Peninsula Ports Auth. Hosp. Aa 1,500 1,654
Facilities Rev. Rfdg.
(Whittaker Memorial Hosp.
Proj.) 8.7% 8/1/23
Southeastern Pub. Svc. Auth. Aaa 4,000 4,030
Rev. Rfdg. Sr. Series A,
5.25% 7/1/10 (MBIA Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
VIRGINIA - CONTINUED
Virginia Beach Dev. Auth.
Hosp. Facilities Rev.
(Virginia Beach Gen. Hosp.
Proj.):
5.125% 2/15/18 (AMBAC Insured) Aaa $ 3,100 $ 2,869
6% 2/15/12 (AMBAC Insured) Aaa 2,150 2,273
6% 2/15/13 (AMBAC Insured) Aaa 1,460 1,536
Virginia Commonwealth Trans.
Board Trans. Rev.:
(US Route 58 Corridor Dev. Aa2 10,000 9,830
Prog.) Series B, 5.75%
5/15/21
Rfdg. (US Route 58 Corridor Aa2 5,000 4,522
Dev. Prog.) Series C,
5.125% 5/15/19
Virginia Hsg. Dev. Auth. Aa1 1,890 1,928
Multi-family Hsg. Rev.
Series I, 5.95% 5/1/09 (g)
61,417
WASHINGTON - 5.4%
Benton County Pub. Util. Aaa 1,740 1,845
District #1 Elec. Rev. Rfdg.
6% 11/1/04 (AMBAC Insured)
Clark County School District
#117 Camas:
5.25% 12/1/11 (FSA Insured) Aaa 3,245 3,215
5.375% 12/1/12 (FSA Insured) Aaa 3,415 3,390
Douglas County Pub. Util. Aa3 2,790 3,345
District #1 Wells
Hydroelectric Rev. Rfdg.
Series A, 8.75% 9/1/18
King County Gen. Oblig. Aa1 3,300 3,428
Series D, 5.75% 12/1/11
Port Seattle Gen. Oblig.:
Series B:
5.5% 9/1/09 (FGIC Insured) (g) Aaa 4,010 4,053
5.6% 9/1/10 (FGIC Insured) (g) Aaa 4,230 4,280
5.8% 5/1/09 (g) Aa1 4,000 4,135
Port Seattle Passenger Aaa 7,930 7,925
Facilities Charge Rev.
Series B, 5% 12/1/06 (AMBAC
Insured) (g)
Washington Ctfs. Prtn. Aaa 5,745 5,627
(Convention & Trade Ctr.
Proj.) 5% 7/1/10 (MBIA
Insured)
Washington Gen. Oblig.:
(Motor Vehicle Fuel Tax Aa1 3,105 3,439
Proj.) Series B, 7% 9/1/05
Rfdg.:
Series R 93A, 5.75% 9/1/07 Aa1 9,500 9,953
Series R 96C, 6% 7/1/04 Aa1 2,000 2,108
Series A, 6.5% 7/1/03 Aa1 1,000 1,063
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
WASHINGTON - CONTINUED
Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #1 Rev.:
Rfdg.:
(Bonneville Pwr. Aa1 $ 1,000 $ 1,121
Administration Proj.)
Series B, 7% 7/1/08
Series A, 7% 7/1/08 Aa1 500 560
Series B, 5.125% 7/1/13 Aa1 10,000 9,440
5.75% 7/1/10 (MBIA Insured) Aaa 5,000 5,133
Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #2 Rev.:
Rfdg.:
(Bonneville Pwr. Aaa 6,500 6,527
Administration Proj.)
Series B, 5.625% 7/1/12
(MBIA Insured)
Series A:
0% 7/1/11 (MBIA Insured) Aaa 1,350 717
5.125% 7/1/11 (FSA Insured) Aaa 10,420 10,119
5.5% 7/1/02 Aa1 9,050 9,248
5.9% 7/1/04 Aa1 2,850 2,975
6% 7/1/07 Aa1 2,500 2,634
Series B, 5.5% 7/1/03 Aa1 3,000 3,072
Series C, 0% 7/1/05 Aa1 16,080 12,175
Series A, 6% 7/1/05 (AMBAC Aaa 3,565 3,762
Insured)
Series C, 0% 7/1/05 (MBIA Aaa 11,000 8,342
Insured)
5.4% 7/1/12 Aa1 56,550 54,671
5.55% 7/1/10 (FGIC Insured) Aaa 31,000 31,063
Washington Pub. Pwr. Supply
Sys. Nuclear Proj. #3 Rev.:
Rfdg. Series B:
0% 7/1/06 (MBIA Insured) Aaa 5,000 3,579
7.375% 7/1/04 Aa1 3,750 3,887
Rfdg. (Cap. Appreciation) 0% Aaa 3,000 1,907
7/1/08 (MBIA Insured)
228,738
WEST VIRGINIA - 0.5%
Marshall County Poll. Cont. Aaa 22,650 22,330
Rev. (Ohio Pwr. Co.-Kammer
Proj.) Series B, 5.45%
7/1/14 (MBIA Insured)
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
WISCONSIN - 0.1%
Menomonee Falls Wtr. Sys. Aaa $ 3,375 $ 3,428
Mtg. Rev. 5.875% 12/1/16
(FSA Insured)
Wisconsin Hsg. & Econ. Dev. Aa2 1,980 1,975
Auth. Home Ownership Rev.
Series F, 5.2% 9/1/26 (g)
5,403
WYOMING - 0.2%
Natrona County Hosp. Rev. A3 4,500 4,729
(Wyoming Med. Ctr. Proj.)
8.125% 9/15/10 (Pre-Refunded
to 9/15/00 @ 102) (h)
Wyoming Farm Ln. Board Cap. AA- 3,995 2,992
Facs. Rev. 0% 10/1/05
(Escrowed to Maturity) (h)
7,721
TOTAL MUNICIPAL BONDS 4,147,558
(Cost $4,135,067)
</TABLE>
MUNICIPAL NOTES - 0.0%
TEXAS - 0.0%
Sabine River Auth. Poll. 1,000 1,000
Cont. Rev. (Texas Utils.
Elec. Co. Proj.) Series 1995
A, 3.75%, LOC Morgan
Guaranty Trust Co., NY, VRDN
(d)(g) (Cost $1,000)
CASH EQUIVALENTS - 0.9%
SHARES
Municipal Central Cash Fund, 36,679,290 36,679
3.90% (e)(f) (Cost $36,679)
TOTAL INVESTMENT PORTFOLIO - 4,185,237
99.0% (Cost 4,172,746)
NET OTHER ASSETS - 1.0% 40,205
NET ASSETS - 100% $ 4,225,442
SECURITY TYPE ABBREVIATIONS
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) S&P credit ratings are used in the absence of a rating by Moody's
Investors Service, Inc.
(b) Debt obligation initially issued in zero coupon form which
converts to coupon form at a specified rate and date. The rate shown
is the rate at period end.
(c) Security purchased on a delayed delivery or when-issued basis.
(d) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(e) 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.
(f) The rate quoted is the annualized seven-day yield of the fund at
period end.
(g) Private activity obligations whose interest is subject to the
federal alternative minimum tax for individuals.
(h) 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 84.6% AAA, AA, A 84.8%
Baa 8.1% BBB 6.7%
Ba 1.1% 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 1.7%.
The distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
General Obligations 26.8%
Electric Utilities 13.7
Transportation 10.9
Health Care 10.4
Water & Sewer 9.6
Escrowed/Pre-Refunded 8.6
Special Tax 5.6
Education 5.0
Others* (individually less 9.4
than 5%)
100.0%
* Includes short-term investments and net other assets.
INCOME TAX INFORMATION
At November 30, 1999, the aggregate cost of investment securities for
income tax purposes was $4,172,764,000. Net unrealized appreciation
aggregated $12,473,000, of which $98,919,000 related to appreciated
investment securities and $86,446,000 related to depreciated
investment securities.
The fund hereby designates approximately $1,306,000 as a capital gain
dividend for the purpose of the dividend paid deduction.
At November 30, 1999, the fund had a capital loss carryforward of
approximately $30,652,000 of which $138,000, $533,000, $12,432,000,
$7,601,000 and $9,948,000 will expire on November 30, 2000, 2001,
2002, 2003 and 2005, respectively. All of the loss carryforwards were
acquired in the mergers and are available to offset future capital
gains of the fund to the extent provided by regulations.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) NOVEMBER
30, 1999
ASSETS
Investment in securities, at $ 4,185,237
value (cost $4,172,746) -
See accompanying schedule
Receivable for investments 57,010
sold
Receivable for fund shares 1,958
sold
Interest receivable 66,580
Other receivables 10
TOTAL ASSETS 4,310,795
LIABILITIES
Payable to custodian bank $ 6
Payable for investments 35,366
purchased Regular delivery
Delayed delivery 35,458
Payable for fund shares 6,742
redeemed
Distributions payable 5,972
Accrued management fee 1,349
Other payables and accrued 460
expenses
TOTAL LIABILITIES 85,353
NET ASSETS $ 4,225,442
Net Assets consist of:
Paid in capital $ 4,254,098
Accumulated undistributed net (41,147)
realized gain (loss) on
investments
Net unrealized appreciation 12,491
(depreciation) on investments
NET ASSETS, for 350,054 $ 4,225,442
shares outstanding
NET ASSET VALUE, offering $12.07
price and redemption price
per share ($4,225,442
(divided by) 350,054 shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR
ENDED NOVEMBER 30, 1999
INTEREST INCOME $ 239,500
EXPENSES
Management fee $ 17,303
Transfer agent fees 3,723
Accounting fees and expenses 677
Non-interested trustees' 19
compensation
Custodian fees and expenses 164
Registration fees 91
Audit 97
Legal 22
Reports to shareholders 85
Miscellaneous 16
Total expenses before 22,197
reductions
Expense reductions (62) 22,135
NET INTEREST INCOME 217,365
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 17,579
Futures contracts 584 18,163
Change in net unrealized
appreciation (depreciation)
on:
Investment securities (298,241)
Futures contracts (302) (298,543)
NET GAIN (LOSS) (280,380)
NET INCREASE (DECREASE) IN $ (63,015)
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1999 YEAR ENDED NOVEMBER 30, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 217,365 $ 139,545
Net realized gain (loss) 18,163 1,019
Change in net unrealized (298,543) 69,434
appreciation (depreciation)
NET INCREASE (DECREASE) IN (63,015) 209,998
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (217,365) (139,545)
From net interest income
From net realized gain (2,533) (14,749)
TOTAL DISTRIBUTIONS (219,898) (154,294)
Share transactions Net 726,957 542,258
proceeds from sales of shares
Net asset value of shares - 2,152,869
issued in exchange for the
net assets of Spartan
Aggressive Municipal Fund,
Spartan Insured Municipal
Income Fund and Fidelity
Advisor Municipal Bond Fund
Reinvestment of distributions 150,248 115,173
Cost of shares redeemed (1,003,023) (551,658)
NET INCREASE (DECREASE) IN (125,818) 2,258,642
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) (408,731) 2,314,346
IN NET ASSETS
NET ASSETS
Beginning of period 4,634,173 2,319,827
End of period $ 4,225,442 $ 4,634,173
OTHER INFORMATION
Shares
Sold 57,712 42,521
Issued in exchange for - 168,501
shares of Spartan Aggressive
Municipal Fund, Spartan
Insured Municipal Income
Fund and Fidelity Advisor
Municipal Bond Fund
Issued in reinvestment of 12,035 9,036
distributions
Redeemed (80,429) (43,262)
Net increase (decrease) (10,682) 176,796
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED NOVEMBER 30, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 12.850 $ 12.610 $ 12.430 $ 12.300 $ 11.040
of period
Income from Investment .595 .607 .607 .648 A .677
Operations Net interest
income
Net realized and unrealized (.773) .320 .235 .109 1.260
gain (loss)
Total from investment (.178) .927 .842 .757 1.937
operations
Less Distributions
From net interest income (.595) (.607) (.632) A (.623) (.677)
From net realized gain (.007) (.080) (.030) (.004) -
Total distributions (.602) (.687) (.662) (.627) (.677)
Net asset value, end of period $ 12.070 $ 12.850 $ 12.610 $ 12.430 $ 12.300
TOTAL RETURN (1.44)% 7.54% 7.02% 6.39% 17.95%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 4,225 $ 4,634 $ 2,320 $ 1,837 $ 1,801
(in millions)
Ratio of expenses to average .49% .53% .55% .56% .57%
net assets
Ratio of net interest income 4.77% 4.75% 4.92% 5.32% 5.69%
to average net assets
Portfolio turnover rate 28% 25% B 31% 53% 50%
</TABLE>
A NET INTEREST INCOME PER SHARE IN 1996 REFLECTS A PAYMENT FROM AN
ISSUER IN BANKRUPTCY WHICH WAS DISTRIBUTED IN 1997.
B THE PORTFOLIO TURNOVER RATE DOES NOT INCLUDE THE ASSETS ACQUIRED IN
THE MERGERS.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Municipal Income Fund (the fund) is a fund of Fidelity Court
Street 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 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 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 futures transactions, market discount, capital loss
carryforwards and losses deferred due to wash sales and futures
transactions. 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.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the fund 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 fund are recorded as interest income in the accompanying
financial statements.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place after the
customary settlement period for that security. 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 the
fund's schedule of investments. The fund may receive compensation for
interest forgone in the purchase of a when-issued security. With
respect to purchase commitments, the 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 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.
Purchases and sales of securities, other than short-term securities,
aggregated $1,269,227,000 and $1,422,028,000, respectively.
The market value of futures contracts opened and closed during the
period amounted to $95,944,000 and $134,466,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. 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 .0920% 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 annual rate of .38% of average net assets.
SUB-ADVISER FEE. FMR, on behalf of the fund, has entered into a
sub-advisory agreement with FIMM, a wholly owned subsidiary of FMR.
For its services, FIMM 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 annual
rate of .08% of average net assets.
5. EXPENSE REDUCTIONS.
Through arrangements with the fund's custodian and transfer agent,
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 $12,000 and $50,000,
respectively, under these arrangements.
6. SHARE TRANSACTIONS.
Share transactions in connection with mergers for the period ended
November 30 1998 were as follows:
AMOUNTS IN THOUSANDS SHARES DOLLARS
Spartan Aggressive Municipal 72,669 $923,620
Fund
Spartan Insured Municipal 24,866 318,041
Income Fund
Fidelity Advisor Municipal 22 286
Bond Fund Class A
Class T 33 426
Class B 41 524
Institutional Class 11 135
Fidelity Municipal Bond Fund 70,859 909,837
(Initial Class of Fidelity
Advisor Municipal Bond Fund)
70,966 911,208
Total 168,501 $ 2,152,869
7. MERGER INFORMATION.
On September 17, 1998, the fund acquired all of the assets and assumed
all of the liabilities of Fidelity Advisor Municipal Bond Fund: Class
A, Class T, Class B, Institutional Class and Fidelity Advisor
Municipal Bond Fund (Initial Class of Fidelity Advisor Municipal Bond
Fund). The acquisition was approved by the shareholders of Class A,
Class T, Class B, Institutional Class and Initial Class of Fidelity
Advisor Municipal Bond Fund on August 3, 1998.
The fund's acquisition of Fidelity Advisor Municipal Bond Fund Class A
was accomplished by an exchange of 22,000 shares of the fund (each
valued at $12.84) for the 33,000 shares then outstanding (each valued
at $8.61) of Fidelity Advisor Municipal Bond Fund Class A. The fund's
acquisition of Fidelity Advisor Municipal Bond Fund Class T was
accomplished by an exchange of 33,000 shares of the fund (each valued
at $12.84) for the 49,000 shares then outstanding (each valued at
$8.62) of Fidelity Advisor Municipal Bond Fund Class T. The fund's
acquisition of Fidelity Advisor Municipal Bond Fund Class B was
accomplished by an exchange of 41,000 shares of the fund (each valued
at $12.84) for the 61,000 shares then outstanding (each valued at
$8.62) of Fidelity Advisor Municipal Bond Fund Class B.
The fund's acquisition of Fidelity Advisor Municipal Bond Fund
Institutional Class was accomplished by an exchange of 11,000 shares
of the fund (each valued at $12.84) for the 16,000 shares then
outstanding (each valued at $8.61) of Fidelity Advisor Municipal Bond
Fund Institutional Class. The fund's acquisition of Fidelity Municipal
Bond Fund (Initial Class of Fidelity
7. MERGER INFORMATION -
CONTINUED
Advisor Municipal Bond Fund) was accomplished by an exchange of
70,859,000 shares of the fund (each valued at $12.84) for the
105,672,000 shares then outstanding (each valued at $8.61) of Fidelity
Municipal Bond Fund (Initial Class of Fidelity Advisor Municipal Bond
Fund). Based on the opinion of fund counsel, the reorganization
qualified as a tax-free reorganization for federal income tax purposes
with no gain or loss recognized to the funds or their shareholders.
Fidelity Advisor Municipal Bond Fund's net assets, including
$65,723,000 of unrealized appreciation, were combined with the fund
for total net assets after the acquisition of $4,371,670,000.
On August 27, 1998, the fund acquired all of the assets and assumed
all of the liabilities of Spartan Insured Municipal Income Fund. The
acquisition, which was approved by the shareholders of Spartan Insured
Municipal Income Fund on July 15, 1998, was accomplished by an
exchange of 24,866,000 shares of the fund (each valued at $12.79) for
the 25,649,000 shares then outstanding (each valued at $12.40) of
Spartan Insured Municipal Income Fund. Based on the opinion of fund
counsel, the reorganization qualified as a tax-free reorganization for
federal income tax purposes with no gain or loss recognized to the
funds or their shareholders. Spartan Insured Municipal Income Fund's
net assets, including $22,083,000 of unrealized appreciation, were
combined with the fund for total net assets after the acquisition of
$3,454,350,000.
On August 20, 1998, the fund acquired all of the assets and assumed
all of the liabilities of Spartan Aggressive Municipal Fund. The
acquisition, which was approved by the shareholders of Spartan
Aggressive Municipal Fund on July 15, 1998, was accomplished by an
exchange of 72,669,000 shares of the fund (each valued at $12.71) for
the 77,680,000 shares then outstanding (each valued at $11.89) of
Spartan Aggressive Municipal Fund. Based on the opinion of fund
counsel, the reorganization qualified as a tax-free reorganization for
federal income tax purposes with no gain or loss recognized to the
funds or their shareholders. Spartan Aggressive Municipal Fund's net
assets, including $55,780,000 of unrealized appreciation, were
combined with the fund for total net assets after the acquisition of
$4,081,148,000.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Court Street Trust and the Shareholders of
Spartan Municipal Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Spartan Municipal Income Fund (a fund of Fidelity Court Street Trust)
at November 30, 1999, and the results of its operations, the changes
in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Spartan Municipal Income Fund's management; our
responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation
of securities at November 30, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion
expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 6, 2000
DISTRIBUTIONS
The Board of Trustees of Spartan Municipal Income Fund voted to pay on
December 23. 1999, to shareholders of record at the opening of
business on December 22, 1999, a distribution of $.006 per share
derived from capital gains realized from sales of portfolio
securities.
The fund hereby designates 100% of the long-term capital gain
dividends distributed during the fiscal year as 20%-rate capital gain
dividends.
During fiscal year ended 1999, 100% of the fund's income dividends was
free from federal income tax, and 10.79% of the fund's income
dividends was subject to the federal alternative minimum tax.
The fund will notify shareholders in January 2000 of amounts for use
in preparing 1999 income tax returns.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on December 15,
1999. The results of votes taken among shareholders on proposals
before them are reported below. Each vote reported represents one
dollar of net asset value held on the record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.*
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
Affirmative 3,135,419,311.04 97.006
Withheld 96,777,025.22 2.994
TOTAL 3,232,196,336.26 100.000
PHYLLIS BURKE DAVIS
Affirmative 3,132,582,110.71 96.918
Withheld 99,614,225.55 3.082
TOTAL 3,232,196,336.26 100.000
ROBERT M. GATES
Affirmative 3,135,664,806.55 97.013
Withheld 96,531,529.71 2.987
TOTAL 3,232,196,336.26 100.000
EDWARD C. JOHNSON 3D
Affirmative 3,134,639,545.56 96.982
Withheld 97,556,790.70 3.018
TOTAL 3,232,196,336.26 100.000
DONALD J. KIRK
Affirmative 3,136,284,719.58 97.033
Withheld 95,911,616.68 2.967
TOTAL 3,232,196,336.26 100.000
NED C. LAUTENBACH
Affirmative 3,137,914,510.94 97.083
Withheld 94,281,825.32 2.917
TOTAL 3,232,196,336.26 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
Affirmative 3,138,556,508.13 97.103
Withheld 93,639,828.13 2.897
TOTAL 3,232,196,336.26 100.000
WILLIAM O. MCCOY
Affirmative 3,136,319,971.15 97.034
Withheld 95,876,365.11 2.966
TOTAL 3,232,196,336.26 100.000
GERALD C. MCDONOUGH
Affirmative 3,128,315,051.03 96.786
Withheld 103,881,285.23 3.214
TOTAL 3,232,196,336.26 100.000
MARVIN L. MANN
Affirmative 3,136,894,405.50 97.051
Withheld 95,301,930.76 2.949
TOTAL 3,232,196,336.26 100.000
ROBERT C. POZEN
Affirmative 3,137,057,584.79 97.057
Withheld 95,138,751.47 2.943
TOTAL 3,232,196,336.26 100.000
THOMAS R. WILLIAMS
Affirmative 3,128,882,711.68 96.804
Withheld 103,313,624.58 3.196
TOTAL 3,232,196,336.26 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the fund.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,421,217,797.94 95.624
Against 34,020,972.41 1.343
Abstain 76,792,755.49 3.033
TOTAL 2,532,031,525.84 100.000
PROPOSAL 3
To adopt an Amended and Restated Declaration of Trust.*
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,887,949,756.03 90.562
Against 150,461,756.38 4.718
Abstain 150,503,417.13 4.720
TOTAL 3,188,914,929.54 100.000
Broker Non-Votes 43,281,406.72
PROPOSAL 4
To approve an amended management contract, including a management fee
structure change for the fund and allow future modifications of the
contract without a shareholder vote if permitted by the 1940 Act.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,299,822,586,62 90.829
Against 105,137,160.25 4.152
Abstain 127,071,778.97 5.019
TOTAL 2,532,031,525.84 100.000
PROPOSAL 5
To approve a plan providing for the reorganization of the fund from a
series of one Massachusetts Business Trust to another.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,247,568,880.20 90.093
Against 106,423,990.09 4.266
Abstain 140,714,554.03 5.641
TOTAL 2,494,707,424.32 100.000
Broker Non-Votes 37,324,101.52
PROPOSAL 6
To eliminate the fundamental 80% investment policy and adopt a
comparable non-fundamental policy.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,167,706,209.27 86.892
Against 182,090,352.74 7.299
Abstain 144,910,862.31 5.809
TOTAL 2,494,707,424.32 100.000
Broker Non-Votes 37,324,101.52
PROPOSAL 7
To amend the fund's fundamental investment limitation concerning
diversification to exclude securities of other investment companies
from the limitation for the fund.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 2,169,996,974.35 86.984
Against 173,239,479.87 6.944
Abstain 151,470,970.10 6.072
TOTAL 2,494,707,424.32 100.000
Broker Non-Votes 37,324,101.52
*DENOTES TRUST-WIDE PROPOSALS AND VOTING RESULTS.
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
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(PHONE_GRAPHIC)
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research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-0240 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.
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MAKING CHANGES
TO YOUR ACCOUNT
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SELLING SHARES
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OVERNIGHT EXPRESS
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GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
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
George A. Fischer, 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
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
Ned C. Lautenbach
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Citibank N.A.
New York NY
and
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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
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(8 a.m. - 9 p.m.)
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for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
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(registered trademark)
Corporate Headquarters
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www.fidelity.com
(2_FIDELITY_LOGOS)
SPARTAN(REGISTERED TRADEMARK)
MINNESOTA MUNICIPAL INCOME
FUND
ANNUAL REPORT
DECEMBER 31, 1999
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.
REPORT OF INDEPENDENT 26 The auditors' opinion.
ACCOUNTANTS
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 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)
DEAR SHAREHOLDER:
The NASDAQ, S&P 500(Registered trademark) and Dow Jones Industrial
Average all closed 1999 at record highs. Investors should note,
however, that much of the year's returns were driven by a single
sector: technology. Most other stocks were flat or down in 1999.
Likewise, bond investors had little cause to celebrate at year's end.
Steadily rising interest rates left the benchmark 30-year Treasury at
its highest yield level in two years.
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 1-800-544-6666, 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 five year and past 10
year total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SPARTAN MN MUNICIPAL INCOME -2.43% 34.89% 78.46%
LB Minnesota Enhanced -1.84% 38.22% n/a
Municipal Bond
Minnesota Municipal Debt -4.11% 30.54% 78.34%
Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 one year average represents a peer group of 47 mutual funds.
These benchmarks include reinvested dividends and capital gains, if
any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
1999
SPARTAN MN MUNICIPAL INCOME -2.43% 6.17% 5.96%
LB Minnesota Enhanced -1.84% 6.69% n/a
Municipal Bond
Minnesota Municipal Debt -4.11% 5.47% 5.95%
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
1989/12/31 10000.00 10000.00
1990/01/31 9930.88 9952.70
1990/02/28 10043.55 10041.28
1990/03/31 10053.75 10044.29
1990/04/30 9924.84 9971.57
1990/05/31 10126.89 10189.25
1990/06/30 10222.74 10278.81
1990/07/31 10397.67 10429.91
1990/08/31 10227.99 10278.47
1990/09/30 10316.42 10284.33
1990/10/31 10444.10 10470.89
1990/11/30 10673.01 10681.46
1990/12/31 10721.95 10727.92
1991/01/31 10812.30 10871.89
1991/02/28 10883.05 10966.47
1991/03/31 10901.55 10970.42
1991/04/30 11033.36 11116.33
1991/05/31 11144.09 11215.15
1991/06/30 11099.50 11204.05
1991/07/31 11243.69 11340.52
1991/08/31 11356.56 11489.87
1991/09/30 11438.25 11639.47
1991/10/31 11477.40 11744.22
1991/11/30 11452.68 11776.99
1991/12/31 11633.16 12029.72
1992/01/31 11684.03 12057.15
1992/02/29 11732.83 12061.01
1992/03/31 11751.45 12065.47
1992/04/30 11834.52 12172.86
1992/05/31 11964.52 12316.13
1992/06/30 12125.94 12522.79
1992/07/31 12424.29 12898.23
1992/08/31 12297.10 12772.47
1992/09/30 12326.20 12856.00
1992/10/31 12096.01 12729.63
1992/11/30 12375.73 12957.62
1992/12/31 12520.43 13089.91
1993/01/31 12711.37 13242.15
1993/02/28 13103.75 13721.12
1993/03/31 12981.46 13576.08
1993/04/30 13103.18 13713.07
1993/05/31 13192.43 13790.13
1993/06/30 13408.22 14020.29
1993/07/31 13425.10 14038.66
1993/08/31 13705.94 14330.94
1993/09/30 13901.97 14494.17
1993/10/31 13919.64 14522.15
1993/11/30 13802.82 14394.21
1993/12/31 14075.71 14698.07
1994/01/31 14239.14 14865.92
1994/02/28 13867.09 14480.89
1994/03/31 13265.13 13891.23
1994/04/30 13341.57 14009.03
1994/05/31 13433.69 14130.49
1994/06/30 13385.35 14044.15
1994/07/31 13630.58 14301.58
1994/08/31 13660.59 14351.06
1994/09/30 13483.57 14140.39
1994/10/31 13191.25 13889.26
1994/11/30 12898.55 13638.14
1994/12/31 13229.84 13938.31
1995/01/31 13615.05 14336.67
1995/02/28 14005.98 14753.58
1995/03/31 14155.75 14923.10
1995/04/30 14169.38 14940.71
1995/05/31 14559.19 15417.47
1995/06/30 14440.06 15283.33
1995/07/31 14496.71 15428.22
1995/08/31 14661.02 15623.85
1995/09/30 14769.49 15722.75
1995/10/31 14975.35 15951.36
1995/11/30 15206.25 16215.99
1995/12/31 15346.34 16371.83
1996/01/31 15442.80 16495.43
1996/02/29 15367.46 16384.09
1996/03/31 15170.46 16174.70
1996/04/30 15109.72 16128.93
1996/05/31 15106.80 16122.47
1996/06/30 15242.67 16298.05
1996/07/31 15380.13 16446.36
1996/08/31 15360.49 16442.41
1996/09/30 15525.78 16672.61
1996/10/31 15722.04 16861.17
1996/11/30 16003.58 17169.73
1996/12/31 15926.21 17097.62
1997/01/31 15950.61 17129.94
1997/02/28 16085.70 17287.19
1997/03/31 15891.32 17056.75
1997/04/30 16003.97 17199.52
1997/05/31 16222.29 17458.20
1997/06/30 16409.04 17644.13
1997/07/31 16852.47 18132.87
1997/08/31 16697.35 17962.96
1997/09/30 16885.50 18176.18
1997/10/31 16985.67 18293.06
1997/11/30 17098.83 18400.62
1997/12/31 17335.51 18669.08
1998/01/31 17480.68 18861.75
1998/02/28 17466.77 18867.41
1998/03/31 17490.72 18884.01
1998/04/30 17419.86 18798.84
1998/05/31 17661.44 19096.43
1998/06/30 17714.35 19171.67
1998/07/31 17738.16 19219.79
1998/08/31 18014.35 19516.74
1998/09/30 18210.25 19759.92
1998/10/31 18201.07 19759.52
1998/11/30 18253.02 19828.88
1998/12/31 18291.36 19878.84
1999/01/31 18473.35 20115.20
1999/02/28 18373.33 20027.30
1999/03/31 18378.95 20055.14
1999/04/30 18430.87 20105.08
1999/05/31 18323.38 19988.67
1999/06/30 18048.89 19700.83
1999/07/31 18120.06 19772.54
1999/08/31 17977.89 19614.36
1999/09/30 17981.75 19622.40
1999/10/31 17821.40 19409.70
1999/11/30 17974.14 19616.22
1999/12/31 17846.18 19470.07
IMATRL PRASUN SHR__CHT 19991231 20000111 113321 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in Spartan Minnesota Municipal Income Fund on December 31,
1989. As the chart shows, by December 31, 1999, the value of the
investment would have grown to $17,846 - a 78.46% 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 $19,470 - a 94.70%
increase.
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.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED DECEMBER 31,
1999 1998 1997 1996 1995
Dividend returns 4.41% 4.80% 5.29% 5.22% 6.40%
Capital returns -6.84% 0.71% 3.56% -1.44% 9.60%
Total returns -2.43% 5.51% 8.85% 3.78% 16.00%
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 DECEMBER 31, PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
1999
Dividends per share 4.35(cents) 25.79(cents) 51.06(cents)
Annualized dividend rate 4.79% 4.72% 4.61%
30-day annualized yield 4.90% - -
30-day annualized 8.32% - -
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 $10.69 over the past one
month, $10.83 over the past six months and $11.07 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
A combination of three interest-rate
hikes by the Federal Reserve board,
near-constant inflation
expectations, the continuation of a
strong U.S. equity market and weak
institutional demand all contributed
to a decline in the municipal bond
market in 1999. For the 12-month
period ending December 31, 1999,
the Lehman Brothers Municipal
Bond Index - an index of over
35,000 investment-grade, fixed-rate,
tax-exempt bonds - fell 2.06%.
Retail investors dominated demand,
in contrast to the more typical
institutional buying of recent years.
In comparison to other fixed-income
investments, municipal bonds had
mixed results. Relative to long-term
government bonds, muni
performance was stellar, as the total
return on 30-year Treasuries was the
lowest - according to Morningstar
- - since the U.S. Treasury started
regular long bond auctions in 1977.
For the one-year period ending
December 31, 1999, the Lehman
Brothers Long-Term Government
Bond Index fell 8.73%. Spread
sectors fared somewhat better than
their municipal counterparts. The
Lehman Brothers Corporate Bond
Index was down 1.96% for the
period, but mortgage securities
were one of the better domestic debt
offerings of 1999, with a one-year
return of 1.86% according to the
Lehman Brothers Mortgage-Backed
Securities Index. Meanwhile, the
Lehman Brothers Aggregate Bond
Index - a broad measure of the
taxable bond market - posted a
marginally negative return of -0.82%.
(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. During the past 12 months, rising interest rates caused the fund to
post a negative return, although it outpaced its peers. For the
12-month period that ended December 31, 1999, the fund had a total
return of -2.43%. To get a sense of how the fund did relative to its
competitors, the Minnesota municipal debt funds average returned
- -4.11% for the same 12-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,
fell 1.84%
Q. WHAT HELPED THE FUND BEAT ITS PEERS?
A. The fund's focus on intermediate-maturity bonds was one factor.
Throughout the year I emphasized intermediate-maturity bonds - those
set to mature within five to 15 years - a strategy that ultimately
worked in the fund's favor. For a short time in 1999, intermediates
suffered due to reduced demand and increased supply due to relatively
heavy selling by institutional investors. In contrast, shorter- and
longer-term bonds held up fairly well thanks to more or less constant
demand for them. However, based on Fidelity's quantitative research
models, I felt that intermediates continued to offer the most
attractive value for their given interest-rate sensitivity and their
total return potential. That patience was rewarded: The fund's focus
on this maturity range worked in its favor when institutional
investors came back into the market with purchases of intermediate
securities.
Q. WHAT OTHER STRUCTURAL CHARACTERISTICS AIDED PERFORMANCE?
A. The fund was helped by its focus on premium coupon bonds, which pay
interest rates above face - or par - value. One appealing aspect of
premiums was that they were somewhat insulated from unfavorable tax
treatment that negatively affected the prices of lower coupon bonds,
or "discounts," as rates rose. Also, the fund's emphasis of
non-callable bonds - which can't be redeemed by their issuers before
maturity - was a plus for performance. Rising interest rates decreased
the likelihood that many callable bonds would be redeemed by their
issuers before maturity, heightening their interest-rate sensitivity.
As a result, non-callable bonds generally outperformed callable
securities.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Health care bonds continued their disappointing run throughout
1999, coming under pressure from a variety of challenges. Chief among
them were cutbacks in Medicare managed care payments. Even
high-quality health care organizations such as the Mayo Clinic were
caught up in the hospital sector's malaise, despite the fact that the
financial results of Mayo and other holdings were good. My approach to
investments in the health care sector is to be very selective,
emphasizing hospitals with a proven track record that I believe can be
managed well through the evolving, more competitive operating
environment.
Q. WHERE DID YOU FIND OPPORTUNITIES OVER THE PAST YEAR?
A. I continued to find some attractive opportunities among bonds
backed by Minnesota colleges and universities. I liked them because
they helped the fund diversify away from economically sensitive
securities such as general obligation bonds, which depend on sales,
property, income and other tax revenue collections. Projections call
for an increasing number of students to seek advanced degrees over the
next several years. Some of the fund's largest holdings in the
education sector at the end of the period were bonds issued by the
University of Minnesota and bonds issued by the Minnesota Higher
Education Facilities Authority on behalf of Macalester College and
Saint Thomas University.
Q. WHAT'S YOUR OUTLOOK FOR THE MUNICIPAL MARKET?
A. At the end of the period, municipals were priced cheaply compared
to their Treasury counterparts. To the extent that investors realize
and act on that relative cheapness, municipals could gain ground on
Treasuries. Of course, the major determinant of the bond market's
performance will, as always, be the direction of interest rates. But
instead of spending time trying to forecast interest-rate movements,
I'll look for attractively priced bonds that I believe will
outperform, no matter where interest rates end up. From a credit
quality perspective, Minnesota has benefited from strong economic
growth and fiscal balance, both of which should continue to be
positives for the state's municipal bond issuers.
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.
CHRISTINE THOMPSON ON
MUNICIPAL BOND DEMAND:
"The demand for municipals can
vary a great deal in response to the
behavior of various market
participants. Corporations,
individual investors and trust
accounts tend to favor short-term
securities, which are less
interest-rate sensitive and,
therefore, tend to be less volatile
than the overall municipal
market. Individual investors,
along with mutual funds and
insurance companies - which
invest the insurance premiums
they collect - are the primary
purchasers of
intermediate-maturity bonds.
Higher-yielding, longer-term
securities, which tend to be the
most volatile, generally are the
domain of long-maturity mutual
funds, hedge funds and other
investors known as
`arbitrageurs,' who seek to exploit
small differences between various
fixed-income investments. At a
given point in time, a specific
municipal bond maturity range
may look cheap or expensive as
different categories of investors
embrace them or step aside. With
the help of Fidelity's research
team, I try to take advantage of the
anomalies that can occur by
investing in bond maturities that
look cheap due to weak demand
and selling those that have
performed well in response to
strong demand."
FUND FACTS
GOAL: high level of current
tax-free income for Minnesota
residents by normally investing
in investment-grade municipal
debt securities whose interest is
free from federal and Minnesota
personal income tax
FUND NUMBER: 082
TRADING SYMBOL: FIMIX
START DATE: November 21,
1985
SIZE: as of December 31,
1999, more than $285 million
MANAGER: Christine Thompson,
since 1998; manager, various
Fidelity and Spartan municipal
income funds; joined Fidelity
in 1985
(checkmark)
INVESTMENT CHANGES
<TABLE>
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TOP FIVE SECTORS AS OF
DECEMBER 31, 1999
% OF FUND'S NET ASSETS % OF FUND'S NET ASSETS 6
MONTHS AGO
General Obligations 28.9 32.2
Electric Utilities 17.3 16.8
Health Care 16.3 16.2
Education 13.1 12.3
Housing 5.3 5.0
AVERAGE YEARS TO MATURITY AS
OF DECEMBER 31, 1999
6 MONTHS AGO
Years 12.6 12.4
</TABLE>
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME REMAINING UNTIL
PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS,
WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF DECEMBER 31,
1999
6 MONTHS AGO
Years 6.5 6.3
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 DECEMBER 31, 1999
Row: 1, Col: 1, Value: 51.3
Row: 1, Col: 2, Value: 38.5
Row: 1, Col: 3, Value: 44.3
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 4.3
Row: 1, Col: 6, Value: 0.1
Aaa 51.3%
Aa, A 44.3%
Baa 4.3%
Short-term
Investments 0.1%
AS OF JUNE 30, 1999
Row: 1, Col: 1, Value: 56.4
Row: 1, Col: 2, Value: 39.4
Row: 1, Col: 3, Value: 40.5
Row: 1, Col: 4, Value: 0.6000000000000001
Row: 1, Col: 5, Value: 2.9
Row: 1, Col: 6, Value: 0.2
Aaa 56.4%
Aa, A 40.5%
Baa 2.9%
Short-term
Investments 0.2%
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.
PRIOR TO THIS REPORT, CERTAIN INFORMATION RELATED TO PORTFOLIO
HOLDINGS WAS STATED AS A PERCENTAGE OF THE FUND'S INVESTMENTS.
INVESTMENTS DECEMBER 31, 1999
Showing Percentage of Net Assets
<TABLE>
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MUNICIPAL BONDS - 98.7%
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - 96.6%
Albany Independent School Aa1 $ 1,000,000 $ 1,031,790
District #745 Series A, 6%
2/1/16
Bloomington Independent
School District #271 Series B:
5.25% 2/1/10 Aa1 1,000,000 1,002,590
5.25% 2/1/11 Aa1 1,820,000 1,808,589
Chanhassen Gen. Oblig. Impt.
(Cap. Appreciation) Series D:
0% 2/1/03 (AMBAC Insured) Aaa 1,730,000 1,491,381
0% 2/1/04 (AMBAC Insured) Aaa 1,700,000 1,389,835
Cloquet Poll. Cont. Rev. BBB+ 4,345,000 3,954,341
Rfdg. (Potlach Corp. Proj.)
5.9% 10/1/26
Dakota County Hsg. & Redev. AAA 100,000 101,326
Auth. Interest For South
Saint Paul Rev. Rfdg.
(Single Family - GNMA Prog.)
Series A, 8.1% 9/1/12
Elk River Independent School Aa1 1,600,000 1,576,704
District #728 Series A,
5.15% 2/1/11
Golden Valley Gen. Oblig. A- 2,500,000 2,122,650
Rev. (Covenant Retirement
Cmnty. Proj.) Series A, 5.5%
12/1/29
Hastings Independent School Aa1 5,000,000 4,320,350
District #200 Series A, 5%
2/1/22
Hennepin County Lease Rev. AA 5,000,000 5,205,450
Ctfs. of Prtn. Series A,
6.8% 5/15/17 (Pre-Refunded
to 11/15/01 @ 100) (d)
Lakeville Independent School
District #194 Rfdg. (Cap.
Appreciation):
0% 2/1/04 Aa1 3,040,000 2,485,352
0% 2/1/05 Aa1 2,810,000 2,175,193
Maple Grove Gen. Oblig. Impt. Aa2 1,120,000 1,034,914
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 2,856,838
Proj.) Series A, 7.4%
8/15/11 (MBIA Insured)
(Pre-Refunded to 8/15/00 @
102) (d)
Rfdg. (Healthspan Corp. Aaa 4,500,000 3,805,380
Proj.) Series A, 4.75%
11/15/18 (AMBAC Insured)
Minneapolis & Saint Paul Hsg. AAA 1,575,000 1,626,660
Fin. Board Rev. (Single
Family Mtg. Phase IX Proj.)
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 1999 A, 5.125% 1/1/31 Aaa $ 3,375,000 $ 2,881,980
(FGIC Insured)
Series A, 5% 1/1/19 (AMBAC Aaa 4,000,000 3,512,280
Insured)
Series B:
5.25% 1/1/11 (AMBAC Insured) Aaa 3,475,000 3,366,267
(c)
5.625% 1/1/13 (FGIC Insured) Aaa 1,000,000 992,830
(c)
Minneapolis & Saint Paul Aaa 2,840,000 2,767,040
Metro. Arpts. Commission
Rfdg. Series 13, 5.25%
1/1/11 (c)
Minneapolis Cmnty. Dev. Agcy.
Tax Increment Rev. (Cap.
Appreciation):
0% 9/1/07 (MBIA Insured) Aaa 2,860,000 1,922,692
0% 9/1/08 (MBIA Insured) Aaa 4,600,000 2,919,206
Minneapolis Gen. Oblig.:
(Cap. Appreciation) Series B:
0% 12/1/02 Aaa 790,000 688,295
0% 12/1/03 Aaa 1,000,000 828,050
0% 12/1/06 Aaa 3,355,000 2,355,780
0% 12/1/07 Aaa 1,000,000 663,630
Rfdg.:
(Sales Tax Proj.):
6.15% 10/1/05 Aaa 2,000,000 2,093,340
6.25% 4/1/07 Aaa 2,000,000 2,095,340
(Sports Arena Proj.):
5.125% 10/1/20 Aaa 2,565,000 2,294,469
6% 4/1/06 Aaa 1,055,000 1,116,485
6% 10/1/06 Aaa 1,000,000 1,062,330
Series B, 5.1% 9/1/08 Aaa 2,000,000 2,004,180
Minneapolis Health Care
Facilities Rev. (Children's
Hosp. & Clinics Proj.)
Series A:
4.5% 8/15/01 (FSA Insured) Aaa 1,275,000 1,274,363
4.5% 8/15/02 (FSA Insured) Aaa 1,360,000 1,353,662
Minneapolis Hosp. Rev. Rfdg. Aaa 3,000,000 3,138,570
(Fairview Hosp. & Health
Care Proj.) 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 2,064,460
Insured)
Series B, 5% 2/1/13 Aa1 2,575,000 2,418,440
5.75% 2/1/20 Aa1 4,210,000 4,073,091
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - CONTINUED
Minnesota Gen. Oblig.:
(Duluth Arpt. Proj.) Series Aaa $ 1,000,000 $ 1,028,480
B, 6.25% 8/1/14 (c)
Rfdg.:
4.875% 8/1/01 Aaa 2,250,000 2,265,998
5.3% 8/1/10 Aaa 1,450,000 1,454,611
4.875% 8/1/07 Aaa 1,000,000 994,650
5.2% 5/1/07 Aaa 5,000,000 5,063,250
5.8% 8/1/03 Aaa 1,000,000 1,037,740
6% 8/1/05 Aaa 8,255,000 8,715,381
6% 5/1/06 Aaa 2,000,000 2,117,940
Minnesota Higher Ed.
Facilities Auth. Rev.:
(Carleton College Proj.):
Series 3 L1, 5.75% 11/1/12 Aa3 2,000,000 2,024,780
Series 4 N:
5% 11/1/18 Aa3 2,000,000 1,759,180
5.25% 11/1/04 Aa3 870,000 887,026
5.25% 11/1/05 Aa3 945,000 960,328
(Hamline Univ. Proj.) Series Baa1 600,000 580,908
5 B, 5.95% 10/1/19
(Macalester College Proj.)
Series 4 C:
5.2% 3/1/08 Aa3 1,070,000 1,069,069
5.5% 3/1/12 Aa3 815,000 816,451
(Saint Thomas Univ. Proj.):
Series 3 C, 6.25% 9/1/16 A2 2,310,000 2,336,842
Series 4 M, 5.35% 4/1/17 A2 1,000,000 929,420
Rfdg.:
(Hamline Univ. Proj.) Series Baa1 2,000,000 2,002,760
4 I, 6% 10/1/12
(Macalester College Proj.) Aa3 2,175,000 2,248,885
Series 3 J, 6.4% 3/1/22
(Pre-Refunded to 3/1/02 @
100) (d)
(Saint Johns Univ. Proj.) A3 3,500,000 3,144,540
Series 4 L, 5.4% 10/1/22
(Saint Thomas Univ. Proj.):
Series 3 R1, 5.6% 10/1/15 A2 1,000,000 973,160
Series 3 R2:
5.45% 9/1/07 A2 650,000 654,797
5.6% 9/1/14 A2 4,275,000 4,206,344
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - CONTINUED
Minnesota Hsg. Fin. Agcy.
Hsg. Dev. Rev.:
(Single Family Mtg. Prog.):
Series A, 6.95% 7/1/16 Aa2 $ 595,000 $ 613,088
Series B, 5.8% 7/1/25 (c) Aa2 7,000,000 6,600,440
Series E, 6.85% 1/1/24 (c) Aa2 960,000 980,966
Series H, 6.5% 1/1/26 (c) Aa2 1,620,000 1,634,450
Series A:
6.95% 2/1/14 Aa2 1,000,000 1,033,710
6.95% 8/1/17 Aa2 1,000,000 1,037,830
7.05% 8/1/27 Aa2 1,250,000 1,295,813
Minnesota Pub. Facilities
Auth. Wtr. Poll. Cont. Rev.:
Rfdg. Series A:
5% 3/1/06 Aaa 1,000,000 1,003,420
5% 3/1/16 Aaa 1,000,000 904,790
6% 3/1/07 Aaa 3,000,000 3,176,490
Series A:
6.1% 3/1/02 Aaa 1,855,000 1,913,655
6.35% 3/1/01 Aaa 1,000,000 1,021,660
Northern Minnesota Muni. Pwr.
Agcy. Elec. Sys. Rev. Rfdg.:
Series B:
4.75% 1/1/20 (AMBAC Insured) Aaa 3,500,000 2,939,790
5.5% 1/1/18 (AMBAC Insured) Aaa 4,500,000 4,296,420
5.25% 1/1/13 (FSA Insured) Aaa 1,500,000 1,454,160
5.375% 1/1/14 (FSA Insured) Aaa 8,500,000 8,289,455
Northfield College Facilities
Rev. Rfdg. (Saint Olaf
College Proj.):
6.3% 10/1/12 A3 1,455,000 1,511,454
6.4% 10/1/21 A3 1,690,000 1,717,310
Rochester Health Care
Facilities Rev.:
(Mayo Foundation/Mayo Med.
Ctr. Proj.):
Series A:
5.375% 11/15/18 AA+ 2,250,000 2,089,485
5.5% 11/15/27 AA+ 5,750,000 5,290,000
Series H, 6.026% 11/15/15 AA+ 13,000,000 13,160,419
Series I, 5.9% 11/15/10 AA+ 2,250,000 2,332,935
Rfdg. (Mayo Foundation/Mayo
Med. Ctr. Proj.) Series I:
5.875% 11/15/08 AA+ 1,000,000 1,041,790
5.9% 11/15/09 AA+ 1,000,000 1,039,620
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - CONTINUED
Saint Cloud Gen. Oblig. Rfdg. Aaa $ 2,165,000 $ 2,016,438
(Wtr. & Swr. Proj.) Series
B, 5% 8/1/13 (FGIC Insured)
Saint Cloud Hosp. Facilities
Rev. Rfdg. (Saint Cloud
Hosp. Proj.):
Series A, 5.5% 7/1/05 (AMBAC Aaa 995,000 1,022,183
Insured)
Series B, 5% 7/1/20 (AMBAC Aaa 1,000,000 870,010
Insured)
Saint Cloud Independent Aaa 1,000,000 1,023,780
School District #742 Rfdg.
Series A, 6.1% 2/1/10 (FGIC
Insured)
Saint Louis Park Health Care
Facilities Rev.:
(Healthsystem Obligated Aaa 2,750,000 2,390,355
Proj.) Series A, 5.2% 7/1/23
(AMBAC Insured)
Series B, 5.1% 7/1/13 (AMBAC Aaa 3,600,000 3,401,496
Insured)
Saint Paul Gen. Oblig. (Block Aa2 2,000,000 1,628,680
39 Proj.) 4.75% 2/1/25
Saint Paul Hsg. & Redev. BBB+ 2,600,000 2,065,492
Auth. Health Care Facilities
Rev. (Regions Hosp. Proj.)
5.3% 5/15/28
Saint Paul Independent School
District #625:
Series A, 4.75% 2/1/16 Aa1 1,000,000 868,130
Series B, 5.8% 2/1/12 Aa1 1,200,000 1,223,760
Series C:
6.125% 2/1/03 Aa3 1,225,000 1,277,908
6.125% 2/1/04 Aa3 1,300,000 1,369,706
6.125% 2/1/05 Aa3 1,350,000 1,425,452
Saint Paul Port Auth. Energy Aaa 2,500,000 2,464,150
Park Tax Increment Rev.
Rfdg. 1st Lien, 5% 2/1/08
(FSA Insured)
Seaway Port Auth. Duluth Ind. A1 2,750,000 2,896,740
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 2,394,000
0% 1/1/01 (MBIA Insured)
Rfdg. Series A, 5% 1/1/12 A2 6,500,000 6,122,025
Series A, 5% 1/1/08 (AMBAC Aaa 3,075,000 3,051,169
Insured)
Stillwater Independent School Aa1 2,110,000 1,933,203
District #834 Rfdg. 5% 2/1/15
Univ. of Minnesota Gen. Aa3 12,200,000 12,215,372
Oblig. Rfdg. 4.8% 8/15/03
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS (UNAUDITED) (A) PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - CONTINUED
West Saint Paul Independent
School District #197 (Cap.
Appreciation):
0% 2/1/02 (MBIA Insured) Aaa $ 1,550,000 $ 1,404,889
0% 2/1/03 (MBIA Insured) Aaa 1,180,000 1,017,243
Western Minnesota Muni. Pwr.
Agcy. Pwr. Supply Rev.:
Rfdg. Series A:
5.375% 1/1/08 (AMBAC Insured) Aaa 4,000,000 4,066,400
5.4% 1/1/09 (AMBAC Insured) Aaa 6,825,000 6,918,093
5.5% 1/1/12 (AMBAC Insured) Aaa 1,750,000 1,760,168
6.25% 1/1/04 (AMBAC Insured) Aaa 2,600,000 2,735,382
6.25% 1/1/05 (AMBAC Insured) Aaa 3,000,000 3,180,360
Series A, 6.375% 1/1/16 Aaa 1,875,000 1,974,169
(Escrowed to Maturity) (d)
Series B, 6% 1/1/04 (AMBAC Aaa 1,000,000 1,043,090
Insured)
275,287,656
PUERTO RICO - 2.1%
Puerto Rico Commonwealth Baa1 1,000,000 1,032,830
Rfdg. Series A, 6% 7/1/14
Puerto Rico Commonwealth Hwy. Baa1 2,680,000 2,428,026
& Trans. Auth. Hwy. Rev.
Series Y, 5.5% 7/1/36
Puerto Rico Elec. Pwr. Auth. Aaa 1,500,000 1,447,920
Pwr. Rev. Rfdg. Series EE,
5.25% 7/1/14 (MBIA Insured)
Puerto Rico Ind. Med. & Aa3 1,250,000 1,250,000
Envir. Poll. Cont.
Facilities Fing. Auth. Rev.
(Motorola, Inc. Proj.)
Series A, 6.75% 1/1/14
6,158,776
TOTAL MUNICIPAL BONDS 281,446,432
(Cost $285,749,245)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MUNICIPAL NOTES - 0.1%
PRINCIPAL AMOUNT VALUE (NOTE 1)
MINNESOTA - 0.1%
Minneapolis & Saint Paul Hsg. $ 200,000 $ 200,000
& Redev. Auth. Health Care
Sys. Rev. (Children's Health
Care Proj.) Series B, 4.75%
(FSA Insured) (BPA Norwest
Bank NA Minnesota), VRDN (b)
Saint Paul Hsg. & Redev. 100,000 100,000
Auth. Rev. (Minnesota
Science Museum Proj.) Series
B, 5.45%, LOC U.S. Bank NA,
Minnesota, VRDN (b)
TOTAL MUNICIPAL NOTES 300,000
(Cost $300,000)
TOTAL INVESTMENT PORTFOLIO - 281,746,432
98.8% (Cost $286,049,245)
NET OTHER ASSETS - 1.2% 3,282,242
NET ASSETS - 100% $ 285,028,674
</TABLE>
SECURITY TYPE ABBREVIATION
VRDN - VARIABLE RATE DEMAND NOTE
LEGEND
(a) S&P 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.
Additional information on each holding is as follows:
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 83.5% AAA, AA, A 80.7%
Baa 2.1% BBB 2.1%
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 distribution of municipal securities by revenue source, as a
percentage of net assets, is as follows:
General Obligations 28.9%
Electric Utilities 17.3
Health Care 16.3
Education 13.1
Housing 5.3
Others* (individually less 19.1
than 5%)
100.0%
* Includes short-term investments and net other assets.
INCOME TAX INFORMATION
At December 31, 1999, the aggregate cost of investment securities for
income tax purposes was $286,049,245. Net unrealized depreciation
aggregated $4,302,813, of which $4,203,128 related to appreciated
investment securities and $8,505,941 related to depreciated investment
securities.
At December 31, 1999, the fund had a capital loss carryforward of
approximately $2,562,000 all of which will expire on December 31,
2003.
During the fiscal year ended December 31, 1999, 100% of the fund's
income dividends was free from federal income tax, and 6.20% of the
fund's income dividends was subject to the federal alternative minimum
tax (unaudited).
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
Investment in securities, at $ 281,746,432
value (cost $286,049,245) -
See accompanying schedule
Receivable for investments 194,673
sold
Receivable for fund shares 41,300
sold
Interest receivable 4,924,071
TOTAL ASSETS 286,906,476
LIABILITIES
Payable to custodian bank $ 17,586
Payable for investments 1,015,213
purchased
Payable for fund shares 357,924
redeemed
Distributions payable 342,107
Accrued management fee 91,564
Other payables and accrued 53,408
expenses
TOTAL LIABILITIES 1,877,802
NET ASSETS $ 285,028,674
Net Assets consist of:
Paid in capital $ 292,626,351
Accumulated undistributed net (3,294,864)
realized gain (loss) on
investments
Net unrealized appreciation (4,302,813)
(depreciation) on investments
NET ASSETS, for 26,812,209 $ 285,028,674
shares outstanding
NET ASSET VALUE, offering $10.63
price and redemption price
per share ($285,028,674
(divided by) 26,812,209
shares)
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
INTEREST INCOME $ 15,822,115
EXPENSES
Management fee $ 1,170,258
Transfer agent fees 268,796
Accounting fees and expenses 93,879
Non-interested trustees' 886
compensation
Custodian fees and expenses 11,510
Registration fees 25,702
Audit 33,731
Legal 14,527
Reports to shareholders 6,862
Miscellaneous 1,002
Total expenses before 1,627,153
reductions
Expense reductions (41,261) 1,585,892
NET INTEREST INCOME 14,236,223
REALIZED AND UNREALIZED GAIN
(LOSS)
Net realized gain (loss) on:
Investment securities 207,805
Futures contracts (81,958) 125,847
Change in net unrealized (22,008,436)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (21,882,589)
NET INCREASE (DECREASE) IN $ (7,646,366)
NET ASSETS RESULTING FROM
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 14,236,223 $ 14,177,286
Net realized gain (loss) 125,847 2,675,247
Change in net unrealized (22,008,436) (347,464)
appreciation (depreciation)
NET INCREASE (DECREASE) IN (7,646,366) 16,505,069
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (14,236,223) (14,177,286)
from net interest income
Share transactions Net 62,235,219 53,743,312
proceeds from sales of shares
Reinvestment of 10,605,135 10,626,668
distributions from net
interest income
Cost of shares redeemed (77,965,144) (51,269,062)
NET INCREASE (DECREASE) IN (5,124,790) 13,100,918
NET ASSETS RESULTING FROM
SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) (27,007,379) 15,428,701
IN NET ASSETS
NET ASSETS
Beginning of period 312,036,053 296,607,352
End of period $ 285,028,674 $ 312,036,053
OTHER INFORMATION
Shares
Sold 5,579,462 4,731,591
Issued in reinvestment of 960,629 935,606
distributions
Redeemed (7,066,801) (4,515,295)
Net increase (decrease) (526,710) 1,151,902
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 11.410 $ 11.330 $ 10.940 $ 11.100 $ 10.130
of period
Income from Investment .511 .531 .551 .562 .613
Operations Net interest
income
Net realized and unrealized (.780) .080 .390 (.160) .972
gain (loss)
Total from investment (.269) .611 .941 .402 1.585
operations
Less Distributions
From net interest income (.511) (.531) (.551) (.562) (.613)
In excess of net realized gain - - - - (.002)
Total distributions (.511) (.531) (.551) (.562) (.615)
Net asset value, end of period $ 10.630 $ 11.410 $ 11.330 $ 10.940 $ 11.100
TOTAL RETURN A (2.43)% 5.51% 8.85% 3.78% 16.00%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 285,029 $ 312,036 $ 296,607 $ 294,432 $ 315,167
(000 omitted)
Ratio of expenses to average .53% .55% B .56% B .60% .57%
net assets
Ratio of expenses to average .51% C .55% .56% .60% .57%
net assets after expense
reductions
Ratio of net interest income 4.62% 4.68% 5.00% 5.15% 5.69%
to average net assets
Portfolio turnover rate 21% 17% 18% 17% 49%
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B 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.
C 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 December 31, 1999
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 futures, 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
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 $2,896,740 or 1.0% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $62,810,356 and $64,002,366, respectively.
The market value of futures contracts opened and closed during the
period amounted to $10,713,166 and $10,631,208, 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 .0920% 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 annual rate of .38% of average net assets.
SUB-ADVISER FEE. FMR, on behalf of the fund, has entered into a
sub-advisory agreement with Fidelity Investments Money Management,
Inc. (FIMM), a wholly owned subsidiary of FMR. For its services, FIMM
receives a fee from FMR
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE - CONTINUED
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 annual
rate of .09% of average net assets.
5. EXPENSE REDUCTIONS.
Through arrangements with the fund's custodian and transfer agent,
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 $10,908 and $30,353,
respectively, under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Municipal Trust and the Shareholders of
Spartan Minnesota Municipal Income Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Spartan Minnesota Municipal Income Fund (a fund of Fidelity Municipal
Trust) at December 31, 1999, and the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with accounting principles generally accepted
in the United States. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Spartan Minnesota Municipal Income Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at December
31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 10, 2000
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 (FAST SM)
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 1-800-544-0240 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.
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If more than one address is listed, please locate the address that is
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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
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GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
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INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
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Management Inc., (FIMM)
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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
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
Ned C. Lautenbach
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
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CUSTODIAN
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FIDELITY'S MUNICIPAL BOND FUNDS
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