SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO 2-75537)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 26 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Amendment No.
Fidelity Massachusetts Municipal Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address of Principal Executive Offices)
Registrant's Telephone Number (617) 570-7000
Arthur S. Loring, Secretary
82 Devonshire Street,
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) Immediately upon filing pursuant to paragraph (b)
(x) On March 19, 1994 pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a) of Rule 485
( ) On pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the Notice required by
such Rule on or before March 31, 1994.
FIDELITY MASSACHUSETTS TAX-FREE MONEY MARKET PORTFOLIO
FIDELITY MASSACHUSETTS TAX-FREE HIGH YIELD PORTFOLIO
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C>
1............................................... Cover Page
2 a............................................ Expenses
b,c.......................................... Contents; The Fund at a Glance; Who May Want To Invest
3 *
a,b............................................
c........................................... Performance
d........................................... *
</TABLE>
4 a(i)......................................... Charter
<TABLE>
<CAPTION>
<S> <C>
a(ii)....................................... The Funds at a Glance; Investment Principles; Securities
and Investment Practices
b............................................ Securities and Investment Practices
c............................................. Who May Want to Invest; Investment Principles; Securities
and Investment Practices
5 a............................................ Charter
b(i)........................................ Cover Page; Doing Business with Fidelity; Charter
b(ii)....................................... Charter; Breakdown of Expenses
b(iii)...................................... Expenses; Breakdown of Expenses
c,d........................................ Charter; Breakdown of Expenses; Cover Page; FMR and Its
Affiliates
e............................................ FMR and Its Affiliates
f............................................. Expenses
g............................................ *
5A............................................ Annual Report
6 a(i)........................................ Charter
a(ii)....................................... How to Buy Shares; How to Sell Shares; Transaction
Details; Exchange Restrictions
a(iii)..................................... *
b............................................ *
c........................................... Exchange Restrictions
d........................................... *
e........................................... Doing Business with Fidelity; How to Buy Shares; How to
Sell Shares; Investor Services
f,g......................................... Dividends, Capital Gains, and Taxes
7 a........................................... Charter; Cover Page
b........................................... How to Buy Shares; Transaction Details
c........................................... *
d........................................... How to Buy Shares
e........................................... *
f............................................ Breakdown of Expenses
8 .............................................. How to Sell Shares; Investor Services; Transaction Details;
Exchange Restrictions
9 .............................................. *
* Not Applicable
</TABLE>
FIDELITY MASSACHUSETTS TAX-FREE MONEY MARKET PORTFOLIO
FIDELITY MASSACHUSETTS TAX-FREE HIGH YIELD PORTFOLIO
CROSS REFERENCE SHEET
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
Form N-1A Item Number SAI Caption
10,11......................................... Cover Page
12.............................................. *
13 a,b,c.................................... Investment Policies and Limitations
d........................................... *
14 a,b........................................ Trustees and Officers
c........................................... *
15 a,b..................................... *
c........................................... Trustees and Officers
16 a(i)....................................... FMR
a(ii)....................................... Trustees and Officers
a(iii),b................................... Management Contract; Interest of FMR Affiliates
c,d,e...................................... *
f............................................ Distribution and Service Plan
g........................................... *
h........................................... Description of the Trust
i............................................ Interest of FMR Affiliates
17 a........................................ Portfolio Transactions
b........................................... *
c........................................... Portfolio Transactions
d,e..................................... *
18 a........................................ Description of the Trust
b........................................... *
19 a....................................... Additional Purchase and Redemption Information
b........................................... Valuation of Portfolio Securities; Additional Purchase and
Redemption Information
c........................................... *
20.............................................. Distributions and Taxes
21 a(i),(ii)................................. Interest of FMR Affiliates
a(iii),b,c................................ *
22.............................................. Performance
23.............................................. *
</TABLE>
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated March 19, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Investments in the money market fund are neither insured nor guaranteed by
the U.S. government, and there can be no assurance that the fund will
maintain a stable $1.00 share price.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, savings association, insured depositary
institution, or government agency, nor are they federally insured or
otherwise protected by the FDIC, the Federal Reserve Board, or any other
agency. Investments in the funds involve investment risk, including
possible loss of principal. The value of the investment and its return will
fluctuate and are not guaranteed. When sold, the value of the investment
may be higher or lower than the amount originally invested.
The funds seek a high level of current income free from federal income tax
and Massachusetts personal income tax. Massachusetts Tax-Free Money Market
invests in high-quality, short-term instruments and is designed to maintain
a stable $1.00 share price. Massachusetts Tax-Free High Yield invests in a
broader range of securities.
FIDELITY
MASSACHUSETTS
TAX-FREE
MONEY MARKET
PORTFOLIO
and
FIDELITY
MASSACHUSETTS
TAX-FREE
HIGH YIELD
PORTFOLIO
PROSPECTUS
MARCH 19, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
MFR-pro-394
CONTENTS
KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES Each fund's yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.
PERFORMANCE How each fund has
done over time.
THE FUNDS IN DETAIL CHARTER How each fund is
organized.
INVESTMENT PRINCIPLES AND RISKS
Each fund's overall approach to
investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different
ways to set up your account.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money
out and closing your account.
INVESTOR SERVICES Services to
help you manage your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND
ACCOUNT POLICIES TAXES
TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
<r>KEY FACTS</r>
THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. FMR Texas Inc. (FTX), a
subsidiary of FMR, chooses investments for Massachusetts Tax-Free Money
Market.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
MA TAX-FREE MONEY MARKET
GOAL: High current tax-free income for Massachusetts residents while
maintaining a stable share price.
STRATEGY: Invests in high-quality, short-term securities whose interest is
free from federal income tax and Massachusetts personal income tax.
SIZE: As of January 31, 1994, the fund had over $ 610 million
in assets.
MA TAX-FREE HIGH YIELD
GOAL: High current tax-free income for Massachusetts residents.
STRATEGY: Invests mainly in long-term, investment-grade securities whose
interest is free from federal income tax and Massachusetts personal income
tax.
SIZE: As of January 31 , 1994, the fund had over $1.3
billion in assets.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors in higher tax
brackets who seek high current income that is free from federal and
Massachusetts personal income taxes. Each fund's level of risk, and
potential reward, depend on the quality and maturity of its investments.
Massachusetts Tax-Free Money Market is managed to keep its share price
stable at $1.00. Massachusetts Tax-Free High Yield, with its broader range
of investments, has the potential for higher yields, but also carries a
higher degree of risk.
By themselves, t hese funds do not constitute a balanced investment
plan. The value of the funds' investments and the income they generate will
vary from day to day, generally reflecting changes in interest rates,
market conditions, and other federal and state political and economic news.
When you sell your shares of Massachusetts Tax-Free High Yield, they may be
worth more or less than what you paid for them.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. It also incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and fund reports. A fund's expenses are factored into its share
price or dividends and are not charged directly to shareholder accounts
(see page ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
MA TAX-FREE MONEY MARKET
Management fee .41%
12b-1 fee None
Other expenses .25%
Total fund operating expenses .66%
MA TAX-FREE HIGH YIELD
Management fee .41%
12b-1 fee None
Other expenses .13%
Total fund operating expenses .54%
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
MA TAX-FREE MONEY MARKET
After 1 year $7
After 3 years $21
After 5 years $37
After 10 years $82
MA TAX-FREE HIGH YIELD
After 1 year $6
After 3 years $17
After 5 years $30
After 10 years $68
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FINANCIAL HIGHLIGHTS
The tables that follow have been audited by Price Waterhouse, independent
accountants. Their unqualified reports are included in the funds' Annual
Report. The Annual Report is incorporated by reference into (is legally a
part of) the Statement of Additional Information.
MASSACHUSETTS TAX-FREE MONEY MARKET
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.Selected Per-Share
Data and Ratios
2.Year ended
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
January 31
C D D D D D D D D E
3.Net asset
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
value,
0 0 0 0 0 0 0 0 0 0 0
beginning of
period
4.Income from
.035 .049 .045 .037 .042 .055 .053 .046 .029 .010 .017
Investment
Operations
Net interest
income
5. Dividends
(.035 (.049 (.045 (.037 (.042 (.055 (.053 (.046 (.029 (.010 (.017
from net
) ) ) ) ) ) ) ) ) ) )
interest
income
6.Net asset
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
value,
0 0 0 0 0 0 0 0 0 0 0
end of period
7.Total returnB
3.53 5.05 4.64 3.72 4.30 5.61 5.42 4.70 2.94 .99% 1.71
% % % % % % % % % %
8.Net assets,
$ 65 $ 125 $ 349 $ 562 $ 620 $ 651 $ 751 $ 715 $ 601 $ 585 $ 610
end of
period (in
millions)
9.Ratio of
.76% .67% .63% .60% .62% .60% .57% .60% .65% .64% .66%
expenses to
A A
average net
assetsF
10.Ratio of
.88% .67% .63% .60% .62% .60% .57% .60% .65% .64% .66%
expenses to
A A
average net
assets before
expense
reductionsF
11.Ratio of net
4.83 4.88 4.42 3.70 4.19 5.50 5.33 4.60 2.93 1.96 1.69
interest income
%A % % % % % % % % %A %
to average net
assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
C FROM NOVEMBER 11, 1983 (COMMENCEMENT OF OPERATIONS) TO JULY 31,
1984
D YEARS ENDED JULY 31
E AUGUST 1, 1992 TO JANUARY 31, 1993
F DURING THE PERIODS SHOWN, FMR VOLUNTARILY REIMBURSED THE FUND FOR
CERTAIN EXPENSES.
MASSACHUSETTS TAX-FREE HIGH YIELD
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12.Selected Per-Share
Data and Ratios
13.Year ended
1984C 1985D 1986D 1987D 1988D 1989D 1990D 1991D 1992D 1993E 1994
January 31
14.Net asset
$ 10.0 $ 9.64 $ 10.5 $ 11.1 $ 11.1 $ 10.8 $ 11.2 $ 11.1 $ 11.3 $ 11.8 $ 11.7
value,
00 0 40 80 20 20 50 60 20 60 50
beginning of
period
15.Income
.715 .924 .868 .785 .812 .804 .799 .783 .735 .364 .714
from
Investment
Operations
Net interest
income
16. Net
(.360) .900 .640 (.060) (.270) .430 (.090) .270 .620 (.040) .720
realized and
unrealized
gain
(loss) on
investments
17.Total from
.355 1.824 1.508 .725 .542 1.234 .709 1.053 1.355 .324 1.434
investment
operations
18.Less
(.715) (.924) (.868) (.785) (.812) (.804) (.799) (.783) (.735) (.364) (.714)
Distributions
From net
interest
income
19. From net
- -- -- -- -- (.030) -- -- (.110) (.080) (.070) (.230)
realized
gain on
investments
20. In
- -- -- -- -- -- -- -- -- -- -- (.030)
excess of net
realized gain
on
investments
21. Total
(.715) (.924) (.868) (.785) (.842) (.804) (.799) (.893) (.815) (.434) (.974)
distributions
22.Net asset
$ 9.64 $ 10.5 $ 11.1 $ 11.1 $ 10.8 $ 11.2 $ 11.1 $ 11.3 $ 11.8 $ 11.7 $ 12.2
value,
0 40 80 20 20 50 60 20 60 50 10
end of period
23.Total
3.76 19.88 14.82 6.50 5.20 11.82 6.60 9.90 12.48 2.83 12.57
returnB
% % % % % % % % % % %
24.Net
$ 56 $ 203 $ 500 $ 642 $ 508 $ 663 $ 737 $ 842 $ 1,23 $ 1,26 $ 1,38
assets, end of
5 3 7
period (in
millions)
25.Ratio of
.89% .76% .64% .64% .61% .56% .57% .56% .57% .55% .54%
expenses to
A A
average net
assets
26.Ratio of
10.02 9.01 7.82 6.85 7.56 7.33 7.20 7.05 6.43 6.19 5.93
net interest
%A % % % % % % % % %A %
income to
average
net assets
27.Portfolio
102% 12% 13% 36% 25% 26% 31% 29% 18% 42%A 40%
turnover rate
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C FROM NOVEMBER 10, 1983 (COMMENCEMENT OF OPERATIONS) TO JULY 31,
1984
D YEARS ENDED JULY 31
E AUGUST 1, 1992 TO JANUARY 31, 1993
PERFORMANCE
Mutual fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results.
Each fund's fiscal year runs from February 1 through January 31. The
tables below show each fund's performance over past fiscal years compared
to a measure of inflation. The charts on page 8 help you compare the yields
of these funds to those of their competitors.
MA TAX-FREE MONEY MARKET
Fiscal periods ended Past 1 Past 5 Past 10
January 31 , 1994 year years years
Average annual
total return 1.71% 3.75% 4.15%
Cumulative
total return 1.71% 20.20% 50.17%
Consumer Price
Index 2.52% 20.73% 43.47%
MA TAX-FREE HIGH YIELD
Fiscal periods ended Past 1 Past 5 Past 10
January 31 , 1994 year years years
Average annual
total return 12.57% 9.95% 10.22%
Cumulative
total return 12.57% 60.71% 164.67%
Consumer Price
Index 2.52% 20.73% 43.47%
EXPLANATION OF TERMS
UNDERSTANDING
PERFORMANCE
YIELD illustrates the income
earned by a fund over a
recent period. Seven-day
yields are the most common
illustration of money market
performance. 30-day yields
are usually used for bond
funds. Yields change daily,
reflecting changes in interest
rates.
TOTAL RETURN reflects both the
reinvestment of income and
capital gain distributions, and
any change in a fund's share
price.
(checkmark)
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a money
market fund yield assumes that income earned is reinvested, it is called an
EFFECTIVE YIELD. A TAX-EQUIVALENT YIELD shows what an investor would have
to earn before taxes to equal a tax-free yield. Yields for the bond fund
are calculated according to a standard that is required for all stock and
bond funds. Because this differs from other accounting methods, the quoted
yield may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES for Massachusetts Tax-Free Money Market are
calculated based on the IBC/Donoghue's MONEY FUND
AVERAGES(trademark)/All Tax-Free, which currently reflect s the
performance of over 140 mutual funds with similar objectives. These
averages are published in the MONEY FUND REPORT(Registered trademark) by
IBC USA (Publications), Inc. The competitive funds averages for
Massachusetts Tax-Free High Yield are published by Lipper Analytical
Services, Inc. The fund compares its performance to the Massachusetts
Municipal Debt Funds category, which currently reflects the performance
of over 32 mutual funds with similar objectives. Both of these averages
assume reinvestment of distributions.
MASSACHUSETTS TAX-FREE MONEY MARKET
7-day yields
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: nil
Row: 9, Col: 1, Value: nil
Row: 9, Col: 2, Value: nil
Row: 10, Col: 1, Value: nil
Row: 10, Col: 2, Value: nil
Row: 11, Col: 1, Value: nil
Row: 11, Col: 2, Value: nil
Row: 12, Col: 1, Value: nil
Row: 12, Col: 2, Value: nil
Row: 13, Col: 1, Value: 2.16
Row: 13, Col: 2, Value: 2.69
Row: 14, Col: 1, Value: 2.13
Row: 14, Col: 2, Value: 2.62
Row: 15, Col: 1, Value: 2.61
Row: 15, Col: 2, Value: 2.97
Row: 16, Col: 1, Value: 2.82
Row: 16, Col: 2, Value: 3.07
Row: 17, Col: 1, Value: 2.69
Row: 17, Col: 2, Value: 3.0
Row: 18, Col: 1, Value: 1.92
Row: 18, Col: 2, Value: 2.46
Row: 19, Col: 1, Value: 1.72
Row: 19, Col: 2, Value: 2.14
Row: 20, Col: 1, Value: 1.88
Row: 20, Col: 2, Value: 2.15
Row: 21, Col: 1, Value: 2.38
Row: 21, Col: 2, Value: 2.67
Row: 22, Col: 1, Value: 1.77
Row: 22, Col: 2, Value: 2.13
Row: 23, Col: 1, Value: 1.92
Row: 23, Col: 2, Value: 2.16
Row: 24, Col: 1, Value: 2.53
Row: 24, Col: 2, Value: 2.69
Row: 25, Col: 1, Value: 1.45
Row: 25, Col: 2, Value: 1.81
Row: 26, Col: 1, Value: 1.53
Row: 26, Col: 2, Value: 1.87
Row: 27, Col: 1, Value: 1.71
Row: 27, Col: 2, Value: 1.96
Row: 28, Col: 1, Value: 1.8
Row: 28, Col: 2, Value: 1.98
Row: 29, Col: 1, Value: 1.98
Row: 29, Col: 2, Value: 2.13
Row: 30, Col: 1, Value: 1.41
Row: 30, Col: 2, Value: 1.79
Row: 31, Col: 1, Value: 1.68
Row: 31, Col: 2, Value: 1.86
Row: 32, Col: 1, Value: 1.77
Row: 32, Col: 2, Value: 1.97
Row: 33, Col: 1, Value: 2.02
Row: 33, Col: 2, Value: 2.16
Row: 34, Col: 1, Value: 1.85
Row: 34, Col: 2, Value: 1.95
Row: 35, Col: 1, Value: 1.77
Row: 35, Col: 2, Value: 1.91
Row: 36, Col: 1, Value: 1.98
Row: 36, Col: 2, Value: 2.13
Massachusett
s Tax-Free
Money Market
Competitive
funds average
1992
1993
MASSACHUSETTS TAX-FREE HIGH YIELD
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: 5.87
Row: 1, Col: 2, Value: 5.8
Row: 2, Col: 1, Value: 5.859999999999999
Row: 2, Col: 2, Value: 5.85
Row: 3, Col: 1, Value: 6.119999999999999
Row: 3, Col: 2, Value: 5.85
Row: 4, Col: 1, Value: 6.27
Row: 4, Col: 2, Value: 5.88
Row: 5, Col: 1, Value: 6.39
Row: 5, Col: 2, Value: 5.9
Row: 6, Col: 1, Value: 6.14
Row: 6, Col: 2, Value: 5.68
Row: 7, Col: 1, Value: 5.73
Row: 7, Col: 2, Value: 5.319999999999999
Row: 8, Col: 1, Value: 5.79
Row: 8, Col: 2, Value: 5.26
Row: 9, Col: 1, Value: 5.9
Row: 9, Col: 2, Value: 5.4
Row: 10, Col: 1, Value: 6.26
Row: 10, Col: 2, Value: 5.57
Row: 11, Col: 1, Value: 6.05
Row: 11, Col: 2, Value: 5.45
Row: 12, Col: 1, Value: 5.98
Row: 12, Col: 2, Value: 5.319999999999999
Row: 13, Col: 1, Value: 5.859999999999999
Row: 13, Col: 2, Value: 5.18
Row: 14, Col: 1, Value: 5.48
Row: 14, Col: 2, Value: 4.92
Row: 15, Col: 1, Value: 5.619999999999999
Row: 15, Col: 2, Value: 4.89
Row: 16, Col: 1, Value: 5.71
Row: 16, Col: 2, Value: 4.78
Row: 17, Col: 1, Value: 5.7
Row: 17, Col: 2, Value: 4.77
Row: 18, Col: 1, Value: 5.53
Row: 18, Col: 2, Value: 4.67
Row: 19, Col: 1, Value: 5.6
Row: 19, Col: 2, Value: 4.68
Row: 20, Col: 1, Value: 4.59
Row: 20, Col: 2, Value: 5.44
Row: 21, Col: 1, Value: 5.24
Row: 21, Col: 2, Value: 4.54
Row: 22, Col: 1, Value: 5.159999999999999
Row: 22, Col: 2, Value: 4.44
Row: 23, Col: 1, Value: 5.39
Row: 23, Col: 2, Value: 4.57
Row: 24, Col: 1, Value: 5.25
Row: 24, Col: 2, Value: 4.52
Massachusett
s Tax-Free
High Yield
Competitive
funds average
1992
1993
THE TOP CHART SHOWS THE 7-DAY EFFECTIVE YIELD FOR THE FUND AND ITS
COMPETITIVE FUNDS AVERAGE AS OF THE LAST TUESDAY OF EACH MONTH FROM
JANUARY 1992 THROUGH DECEMBER 1993. THE BOTTOM CHART SHOWS THE
30-DAY ANNUALIZED NET YIELDS FOR THE FUND AND ITS COMPETITIVE FUNDS
AVERAGE AS OF THE LAST DAY OF EACH MONTH DURING THE SAME PERIOD.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
<r>THE FUNDS IN DETAIL</r>
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, each fund is
currently a non-diversified fund of Fidelity Massachusetts
Municipal Trust, an open-end management investment company organized as a
Massachusetts business trust on December 14, 1981.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. The number of votes you are
entitled to is based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which chooses their investments and handles
their business affairs. FTX has primary responsibility for providing
investment management services for Massachusetts Tax-Free Money Market.
Guy Wickwire is manager and Vice President of Massachusetts Tax-Free High
Yield, which he has managed since November 1983. Mr. Wickwire also manages
Insured Tax-Free. Previously, he managed Advisor High Income Municipal and
High Yield Tax-Free. He joined Fidelity in 1981.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $225 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trust), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
United Missouri Bank, N.A., is each fund's transfer agent, although it
employs FSC to perform these functions for the funds. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
MASSACHUSETTS TAX-FREE MONEY MARKET seeks high current income that
is exempt from federal income tax and Massachusetts personal income tax
while maintaining a stable $1.00 share price by investing in high-quality,
short-term municipal securities of all types. As a result, when you sell
your shares, they should be worth the same amount as when you bought them.
Of course, there is no guarantee that the fund will maintain a stable $1.00
share price. FMR normally invests at least 65% of the fund's total assets
in state tax-free securities, and normally invests so that at least 80% of
the fund's income distributions are free from federal income tax.
If you are subject to the federal alternative minimum tax, you should note
that the fund may invest so that up to 20% of its income is derived from
municipal securities issued to finance private activities. The interest
from these investments is a tax-preference item for purposes of the tax.
The fund follows industry-standard guidelines on the quality and maturity
of its investments, which are designed to help maintain a stable $1.00
share price. The fund will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities it buys. It is possible that a major change in
interest rates or a default on the fund's investments could cause its share
price (and the value of your investment) to change .
MASSACHUSETTS TAX-FREE HIGH YIELD seeks high current income that is exempt
from federal income tax and Massachusetts personal income tax by
investing primarily in municipal securities judged by FMR to be of
investment-grade quality, although it can also invest in some lower-quality
securities. The fund normally invests in long-term bonds, generally
maintaining a dollar-weighted average maturity of 15 years or longer,
although it may invest in obligations of any maturity. FMR invests so that
at least 80% of the fund's income distributions are free from federal and
Massachusetts personal income taxes .
EACH FUND'S yield and the bond fund's share price change daily based on
interest rate changes and on the quality and maturity of its investments.
In general, bond prices rise when interest rates fall, and vice versa. This
effect is usually more pronounced for longer-term securities. Lower-quality
securities offer higher yields, but also carry more risk.
Each fund's performance is closely tied to economic and political
conditions within the state of Massachusetts. The Commonwealth has
recently experienced fiscal difficulties, and although the past two
years ended with operating surpluses, the current year is expected to end
with a loss. Also, the unemployment rate in Massachusetts is
higher than the national average.
FMR normally invests each fund's assets according to its investment
strategy. The funds do not expect to invest in federally taxable
obligations, and Massachusetts Tax-Free High Yield also does not expect to
invest in state taxable obligations. When FMR considers it appropriate for
defensive purposes, however, it temporarily may invest substantially in
short-term instruments, may hold a substantial amount of uninvested cash,
or may invest more than normally permitted in taxable obligations.
Massachusetts Tax-Free High Yield may only invest up to 20% of its assets
in obligations whose interest payments are only federally tax-exempt.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, and strategies FMR may
employ in pursuit of a fund's investment objective . A summary
of risks and restrictions associated with these instrument types and
investment practices is included as well. Policies and limitations are
considered at the time of purchase; the sale of instruments is not required
in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities may have speculative characteristics, and
involve greater risk of default or price changes due to changes in the
issuer's creditworthiness. The market prices of these securities may
fluctuate more than higher-quality securities and may decline significantly
in periods of general or regional economic difficulty.
The table on page 12 provides a summary of ratings assigned to debt
holdings (not including money market instruments) in Massachusetts Tax-Free
High Yield's portfolio. These figures are dollar-weighted averages of
month-end portfolio holdings during fiscal 1994, and are presented as a
percentage of total investments. These percentages are historical and do
not necessarily indicate the fund's current or future debt holdings.
FISCAL 1994, DEBT HOLDINGS, BY RATING
MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 55.1% AA 57.8%
Upper-medium grade A A
Medium grade Baa 16.2% BBB 13.9%
LOWER QUALITY
Moderately speculative Ba 1.8% BB 1.4%
Speculative B 0.8% B 0.8%
Highly speculative Caa 0.0% CCC 0.0%
Poor quality Ca 0.0% CC 0.0%
Lowest quality, no interest C C
In default, in arrears -- D 0.0%
73.9% 73.9%
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S
OR
S&P AMOUNTED TO 17.2%. THIS MAY INCLUDE SECURITIES RATED BY OTHER
NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES.
FMR
HAS DETERMINED THAT UNRATED SECURITIES THAT ARE LOWER QUALITY ACCOUNT
FOR
9.4% OF THE FUND'S TOTAL INVESTMENTS. REFER TO THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION FOR A MORE COMPLETE DISCUSSION OF THESE
RATINGS.
RESTRICTIONS: Massachusetts Tax-Free High Yield does not currently
intend to invest more than one-third of its assets in bonds judged by FMR
to be of equivalent quality to those rated Ba or lower by Moody's and BB or
lower by S&P, and does not currently intend to invest in bonds of
equivalent quality to bonds rated lower than B. The fund does not currently
intend to invest in bonds rated below Caa by Moody's or CCC by S&P.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. Municipal securities
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. A security's credit may be
enhanced by a bank, insurance company, or other financial institution. A
fund may own a municipal security directly or through a
participation interest.
STATE TAX-FREE SECURITIES include municipal obligations issued by the
Commonwealth of Massachusetts or its counties, municipalities, authorities,
and other subdivisions. The ability of issuers to repay their debt can be
affected by many factors that impact the economic vitality of either the
state or a region within the state.
Other state tax-free securities include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations. The economy
of Puerto Rico is closely linked to the U.S. economy, and will depend on
the strength of the U.S. dollar, interest rates, the price stability of oil
imports, and the continued existence of favorable tax incentives. Recent
legislation reduced these incentives, but it is impossible to predict what
impact the changes will have.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ASSET-BACKED SECURITIES may include pools of purchase contracts, financing
leases, or sales agreements entered into by municipalities. These
securities usually rely on continued payments by a municipality, and may
also be subject to prepayment risk.
VARIABLE- AND FLOATING-RATE INSTRUMENTS may have interest rates that move
in tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, a fund
may pay periodic fees or accept a lower interest rate. Demand features,
standby commitments, and tender options are types of put features.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and
futures contracts, and purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield or the market value of its assets.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to a
fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type. A fund that is not diversified may be more sensitive to
these changes, and also to changes in the market value of a single issuer
or industry.
RESTRICTIONS. The funds are considered non-diversified. Generally, to
meet federal tax requirements at the close of each quarter, a fund does not
invest more than 25% of its total assets in any one issuer, and with
respect to 50% of total assets, does not invest more than 5% of its total
assets in any one issuer. These limitations do not apply to U.S. government
securities. A fund may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a bond fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT
POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
MASSACHUSETTS TAX-FREE MONEY MARKET seeks as high a level of current
income, exempt from federal income tax and Massachusetts personal income
tax, as is consistent with preservation of capital. The fund will normally
invest so that at least 80% of its income distributions are exempt from
federal income tax.
MASSACHUSETTS TAX-FREE HIGH YIELD seeks as high a level of current income,
exempt from federal income tax and Massachusetts personal income tax, as is
consistent with its standards of quality and maturity. The fund will invest
so that at least 80% of its income distributions are exempt from federal
and Massachusetts personal income taxes. The fund invests primarily in
municipal bonds judged by FMR to be of investment-grade quality. The fund
may invest up to one-third of its assets in lower-quality bonds, but may
not purchase bonds that are judged by FMR to be equivalent quality to those
rated lower than B. During periods when FMR believes that state tax-free
obligations that meet the fund's standards are not available, the fund may
invest up to 20% of its assets in obligations whose interest payments are
only federally tax-exempt.
EACH FUND may borrow money only for temporary or emergency purposes, but
not in an amount exceeding 33% of its total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services for Massachusetts Tax-Free Money Market.
Each fund also pays OTHER EXPENSES, which are explained on page .
FMR may, from time to time, agree to reimburse the funds for management
fees above a specified limit. FMR retains the ability to be repaid by a
fund if expenses fall below the specified limit prior to the end of the
fiscal year. Reimbursement arrangements, which may be terminated at any
time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For January 1994, the group fee rate was .1609%. The individual fund fee
rate for each fund is .25 %. Each fund's total management fee for
fiscal 1994 was .41%.
FMR HAS A SUB-ADVISORY AGREEMENT with FTX, which has primary responsibility
for providing investment management for Massachusetts Tax-Free Money
Market, while FMR retains responsibility for providing other management
services. FMR pays FTX 50% of its management fee (before expense
reimbursements) for these services.
UNDERSTANDING THE
MANAGEMENT FEE
The management fee FMR
receives is designed to be
responsive to changes in
FMR's total assets under
management. Building this
variable into the fee
calculation assures
shareholders that they will
pay a lower rate as FMR's
assets under management
increase.
(checkmark)
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
FSC performs many transaction and accounting functions. These services
include processing shareholder transactions, valuing each fund's
in vestments, and handling securities loans. In fiscal 1994, FSC received
fees equal to .22% and .11%, respectively, of Massachusetts Tax-Free
Money Market 's and Massachusetts Tax-Free High Yield 's average
net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1994, the portfolio turnover rate for Massachusetts
Tax-Free High Yield was 40%. This rate varies from year to year.
<r>YOUR ACCOUNT</r>
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account. You can
choose Massachusetts Tax-Free Money Market as your core account for your
Fidelity Ultra Service Account or FidelityPlussm brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed below.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Massachusetts Tax-Free Money Market is managed to keep its
share price stable at $1.00. Each fund's shares are sold without a sales
charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time, and also at 10:00 a.m. for Massachusetts Tax-Free
Money Market.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
MA Tax-Free Money Market $5,000
TO ADD TO AN ACCOUNT $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund.
complete name of the Indicate your fund
fund of your choice . account number on
Mail to the address your check and mail it
indicated on the to the address printed
application. on your account
statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
In Person (hand_graphic) (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) Call 1-800-544-7777 to (bullet) Wire to:
set up your account Bankers Trust
and to arrange a wire Company,
transaction. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time, and also at
10:00 a.m. for Massachusetts Tax-Free Money Market.
TO SELL SHARES THROUGH YOUR FIDELITY ULTRA SERVICE OR FIDELITYPLUS ACCOUNT,
call 1-800-544-6262 to receive a handbook with instructions.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. Do not, however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
$100,000.
(bullet) For Money Line transfers to
your bank account; minimum:
$10; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Trust names appear on the
account.
(bullet) The trustee must sign the
letter indicating capacity as
Business or trustee. If the trustee's name
Organization is not in the account
registration, provide a copy of
the trust document certified
within the last 60 days.
(bullet) At least one person
Executor, authorized by corporate
Administrator, resolution to act on the
Conservator, account must sign the letter.
Guardian (bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.
Wire (wire_graphic) All account types (bullet) You must sign up for the wire
feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Check (check_graphic) All account types (bullet) Minimum check: $500.
(bullet) All account owners must sign
a signature card to receive a
checkbook.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year
(except for Massachusetts Tax-Free Money Market), and that they may have
tax consequences for you. For details on policies and restrictions
governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions
from your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for a
home, educational expenses, and other long-term financial goals.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.
<TABLE>
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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA
</TABLE>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.
<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.
</TABLE>
A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THAT FUND MAY NOT BE AN
APPROPRIATE CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains,if any, to shareholders each year. Income dividends are
declared daily and paid monthly. Capital gains earned by the bond fund are
normally distributed in September and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options (three for Massachusetts Tax-Free Money Market):
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned this
option.
2. INCOME-EARNED OPTION. Your capital gain distributions, if any, will be
automatically reinvested, but you will be sent a check for each dividend
distribution. This option is not available for Massachusetts Tax-Free Money
Market.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions, if any, will be automatically invested in
another identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the NAV as
of the date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS. Money
market funds usually don't
make capital gain
distributions.
(checkmark)
TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. Interest income that a fund earns is distributed to
shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends. Long-term capital gain
distributions are taxed as long-term capital gains. These distributions are
taxable when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31. Fidelity will send you and the IRS a
statement showing the tax status of the distributions paid to you in the
previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Massachusetts Tax-Free Money Market may
invest so that up to 20% of its income is derived from these
securities. Massachusetts Tax-Free High Yield does not
currently intend to purchase these securities. Individuals who are
subject to the tax must report this interest on their tax returns.
To the extent a fund's income dividends are derived from state tax-free
investments, they will be free from the Massachusetts personal income tax.
During fiscal 1994, 100% of each fund's income dividends was free from
federal income tax and 99.8% and 100% were free from Massachusetts personal
income tax for Massachusetts Tax-Free Money Market and
Massachusetts Tax-Free High Yield , respectively. 7.4% of
Massachusetts Tax-Free Money Market 's income dividends were subject
to the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your bond fund redemptions - including exchanges to
other Fidelity funds - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price you
receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before the high yield fund
deducts a capital gain distribution from its NAV, you will pay the full
price for the shares and then receive a portion of the price back in the
form of a taxable distribution.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates Massachusetts Tax-Free High Yield's
net asset value as of the close of business of the NYSE, normally 4 p.m.
Eastern time. Massachusetts Tax-Free Money Market's net asset value is
normally calculated at 10:00 a.m. and 4:00 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The money market fund values the securities it owns on the basis of
amortized cost. This method minimizes the effect of changes in a security's
market value and helps the fund to maintain a stable $1.00 share price. For
the bond fund, assets are valued primarily on the basis of market
quotations, if available. Since market quotations are often unavailable,
assets are usually valued by a method that the Board of Trustees believes
accurately reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they are of
a size that would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders
on behalf of customers by phone, with payment to follow no later than the
time when a fund is priced on the following business day. If payment is not
received by that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. Qualified recipients are securities dealers
who have sold fund shares or others, including banks and other financial
institutions, under special arrangements in connection with FDC's sales
activities. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, Massachusetts Tax-Free High Yield reserves the right to
temporarily or permanently terminate the exchange privilege of any investor
who makes more than four exchanges out of the fund per calendar year.
Accounts under common ownership or control, including accounts with the
same taxpayer identification number, will be counted together for purposes
of the four exchange limit.
(bullet) Each fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
This prospectus is printed on recycled paper using soy-based inks.
FIDELITY MASSACHUSETTS TAX-FREE MONEY MARKET PORTFOLIO
FIDELITY MASSACHUSETTS TAX-FREE HIGH YIELD PORTFOLIO
FUNDS OF FIDELITY MASSACHUSETTS MUNICIPAL TRUST
STATEMENT OF ADDITIONAL INFORMATION
MARCH 19 , 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated March 19 , 1994). Please retain
this document for future reference. The Annual Report for the fiscal year
ended January 31, 1994 is incorporated herein by reference. To obtain an
additional copy of the Prospectus or the Annual Report, please call
Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Factors Affecting Massachusetts
Special Factors Affecting Puerto Rico
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans
Interest of FMR Affiliates
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISER (Money Market Fund only)
FMR Texas Inc. (FTX)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENTS
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co. (FSC)
MFR-ptb-394
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in
values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the fund's investment
policies and limitations.
Each fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of a fund.
However, with respect to the money market fund, except for the fundamental
investment limitations set forth below, the investment policies and
limitations described in this Statement of Additional Information are not
fundamental and may be changed without shareholder approval.
INVESTMENT LIMITATIONS OF FIDELITY MASSACHUSETTS TAX-FREE MONEY MARKET
PORTFOLIO
(MONEY MARKET FUND)
THE FOLLOWING ARE THE MONEY MARKET FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) make short sales;
(3) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions;
(4) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(5) underwrite any issue of securities, except to the extent that the
purchase of municipal bonds in accordance with the fund's investment
objective, policies, and limitations, either directly from the issuer, or
from an underwriter for an issuer, may be deemed to be underwriting;
(6) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(8) purchase or sell commodities or commodities (futures) contracts;
(9) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this limit
does not apply to purchases of debt securities or to repurchase agreements;
(10) invest in oil, gas, or other mineral exploration or development
programs; or
(11) invest in companies for the purpose of exercising control or
management.
IN ADDITION, THE FUND MAY:
(12) notwithstanding any other fundamental investment policy or limitation,
invest all of its assets in the securities of a single open-end management
investment company with substantially the same fundamental investment
objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iii) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iv) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(v) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(vi) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(vii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitations (6) and (i), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
INVESTMENT LIMITATIONS OF FIDELITY MASSACHUSETTS TAX-FREE HIGH YIELD
PORTFOLIO
(HIGH YIELD FUND)
THE FOLLOWING ARE THE HIGH YIELD FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in companies for the purpose of exercising control or
management.
IN ADDITION, THE FUND MAY:
(9) notwithstanding any other fundamental investment policy or limitation,
invest all of its assets in the securities of a single open-end management
investment company with substantially the same fundamental investment
objective, policies, and limitations as the fund .
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures and
options are not deemed to constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
borrow from other funds advised by FMR or its affiliates if total
outstanding borrowings immediately after such borrowing would exceed 15% of
the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(vii) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitations (4) and (i), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
For the high yield fund's limitations on futures and options transactions,
see the section entitled "Limitations on Futures and Options Transactions"
beginning on page . For the money market fund's limitations on quality and
maturity, see the section entitled " Quality and Maturity" below.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the Investment Company Act of 1940.
These transactions may include repurchase agreements with custodian
banks; short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); municipal
securities; U.S. government securities with affiliated financial
institutions that are primary dealers in these securities; short-term
currency transactions; and short-term secured borrowings. In accordance
with exemptive orders issued by the Securities and Exchange Commission, the
Board of Trustees has established and periodically reviews procedures
applicable to transactions involving affiliated financial institutions.
QUALITY AND MATURITY (MONEY MARKET FUND ONLY). Pursuant to procedures
adopted by the Board of Trustees, the fund may purchase only high-quality
securities that FMR believes present minimal credit risk. To be considered
high-quality, a security must be rated in accordance with applicable rules
in one of the two highest categories for short-term securities by at least
two nationally recognized rating services (or by one, if only one rating
service has rated the security), or, if unrated, judged to be of equivalent
quality by FMR.
The fund must limit its investments to securities with remaining maturities
of 397 days or less and must maintain a dollar-weighted average maturity of
90 days or less.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. The high yield fund may receive fees for
entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a
delayed-delivery basis, the fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities,
the fund could miss a favorable price or yield opportunity, or could suffer
a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
REFUNDING CONTRACTS. The high yield fund may purchase securities on a
when-issued basis in connection with the refinancing of an issuer's
outstanding indebtedness. Refunding contracts require the issuer to sell
and the fund to buy refunded municipal obligations at a stated price and
yield on a settlement date that may be several months or several years in
the future. The fund generally will not be obligated to pay the full
purchase price if it fails to perform under a refunding contract. Instead,
refunding contracts generally provide for payment of liquidated damages to
the issuer (currently 15-20% of the purchase price). The fund may secure
its obligations under a refunding contract by depositing collateral or a
letter of credit equal to the liquidated damages provisions of the
refunding contract. When required by SEC guidelines, the fund will place
liquid assets in a segregated custodial account equal in amount to its
obligations under refunding contracts.
INVERSE FLOATERS. The high yield fund may invest in inverse floaters,
which are instruments whose interest rates bear an inverse relationship to
the interest rate on another security or the value of an index. Changes in
the interest rate on the other security or index inversely affect the
residual interest rate paid on the inverse floater, with the result that
the inverse floater's price will be considerably more volatile than that of
a fixed-rate bond. For example, a municipal issuer may decide to issue two
variable-rate instruments instead of a single long-term, fixed-rate bond.
The interest rate on one instrument reflects short-term interest rates,
while the interest rate on the other instrument (the inverse floater)
reflects the approximate rate the issuer would have paid on a fixed-rate
bond, multiplied by two, minus the interest rate paid on the short-term
instrument. Depending on market availability, the two portions may be
recombined to form a fixed-rate municipal bond. The market for inverse
floaters is relatively new.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
With respect to the money market fund, a demand instrument with a
conditional demand feature must have received both a short-term and a
long-term high-quality rating or, if unrated, have been determined to be of
comparable quality pursuant to procedures adopted by the Board of Trustees.
A demand instrument with an unconditional demand feature may be acquired
solely in reliance upon a short-term high-quality rating or, if unrated,
upon a finding of comparable short-term quality pursuant to procedures
adopted by the Board of Trustees.
The funds may invest in fixed-rate bonds that are subject to third party
puts and in participation interests in such bonds held in trust or
otherwise. These bonds and participation interests have tender options or
demand features that permit a fund to tender (or put) the bonds to an
institution at periodic intervals and to receive the principal amount
thereof. A fund considers variable rate instruments structured in this way
(Participating VRDOs) to be essentially equivalent to other VRDOs it
purchases. The IRS has not ruled whether the interest on Participating
VRDOs is tax-exempt and, accordingly, a fund intends to purchase these
instruments based on opinions of bond counsel.
The money market fund may invest in variable or floating rate instruments
that ultimately mature in more than 397 days, if the fund acquires a right
to sell the instruments that meets certain requirements set forth in Rule
2a-7. Variable rate instruments (including instruments subject to a demand
feature) that mature in 397 days or less may be deemed to have maturities
equal to the period remaining until the next readjustment of the interest
rate. Other variable rate instruments with demand features may be deemed to
have a maturity equal to the period remaining until the next adjustment of
the interest rate or the period remaining until the principal amount can be
recovered through demand. A floating rate instrument subject to a demand
feature may be deemed to have a maturity equal to the period remaining
until the principal amount can be recovered through demand.
TENDER OPTION BONDS are created by coupling an intermediate- or long-term,
fixed-rate, tax-exempt bond (generally held pursuant to a custodial
arrangement) with a tender agreement that gives the holder the option to
tender the bond at its face value. As consideration for providing the
tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, a fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. Subject to applicable regulatory requirements, the money market fund
may buy tender option bonds if the agreement gives the fund the right to
tender the bond to its sponsor no less frequently than once every 397 days.
In selecting tender option bonds for the funds, FMR will consider the
creditworthiness of the issuer of the underlying bond, the custodian, and
the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
ZERO COUPON BONDS do not make regular interest payments. Instead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
STANDBY COMMITMENTS are puts that entitle holders to same-day settlement at
an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. Each fund may
acquire standby commitments to enhance the liquidity of portfolio
securities, but, in the case of the money market fund, only when the
issuers of the commitments present minimal risk of default.
Ordinarily a fund will not transfer a standby commitment to a third party,
although it could sell the underlying municipal security to a third party
at any time. A fund may purchase standby commitments separate from or in
conjunction with the purchase of securities subject to such commitments.
In the latter case, the fund would pay a higher price for the securities
acquired, thus reducing their yield to maturity. Standby commitments will
not affect the dollar-weighted average maturity of the money market fund,
or the valuation of the securities underlying the commitments.
Issuers or financial intermediaries may obtain letters of credit or other
guarantees to support their ability to buy securities on demand. FMR may
rely upon its evaluation of a bank's credit in determining whether to
support an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
Standby commitments are subject to certain risks, including the ability of
issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by the funds; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. Each fund may invest a portion of its assets
in municipal leases and participation interests therein. These
obligations, which may take the form of a lease, an installment purchase,
or a conditional sale contract, are issued by state and local governments
and authorities to acquire land and a wide variety of equipment and
facilities. Generally, the funds will not hold such obligations directly
as a lessor of the property, but will purchase a participation interest in
a municipal obligation from a bank or other third party. A participation
interest gives a fund a specified, undivided interest in the obligation in
proportion to its purchased interest in the total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
FEDERALLY TAXABLE OBLIGATIONS. The funds do not intend to invest in
securities whose interest is federally taxable; however, from time to time,
each fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, each fund may invest in obligations whose interest is
federally taxable pending the investment or reinvestment in municipal
securities of proceeds from the sale of its shares or sales of portfolio
securities.
Should a fund invest in federally taxable obligations, it would purchase
securities that in FMR's judgment are of high quality. These would include
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities; obligations of domestic banks; and repurchase
agreements. The money market fund's standards for high-quality taxable
obligations are essentially the same as those described by Moody's
Investors Service, Inc. (Moody's) in rating corporate obligations within
its two highest ratings of Prime-1 and Prime-2, and those described by
Standard and Poor's Corporation (S&P) in rating corporate obligations
within its two highest ratings of A-1 and A-2. The high yield fund will
purchase taxable obligations only if they meet its quality requirements.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before the Massachusetts
legislature that would affect the state tax treatment of the funds'
distributions. If such proposals were enacted, the availability of
municipal obligations and the value of the funds' holdings would be
affected and the Trustees would reevaluate the funds' investment objectives
and policies.
Each fund anticipates being as fully invested as practicable in municipal
securities; however, there may be occasions when, as a result of maturities
of portfolio securities, sales of fund shares, or in order to meet
redemption requests, a fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions, a fund may be required to sell securities at a loss.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement is a taxable
obligation which involves the obligation of the seller to pay the
agreed-upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed-upon resale price and marked to
market daily) of the underlying security. Each fund may engage in
repurchase agreements with respect to any security in which it is
authorized to invest, even if the underlying security matures in more than
397 days. While it does not presently appear possible to eliminate all
risks from these transactions (particularly the possibility of a decline in
the market value of the underlying securities, as well as delays and costs
to the funds in connection with bankruptcy proceedings), it is each fund's
current policy to limit repurchase agreement transactions to those parties
whose creditworthiness has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The funds will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of a fund's
assets and may be viewed as a form of leverage.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the funds' investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the funds' investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset a fund's rights and
obligations relating to the investment). Investments currently considered
by the money market fund to be illiquid include restricted securities and
municipal lease obligations determined by FMR to be illiquid. Investments
currently considered by the high yield fund to be illiquid include
over-the-counter options. Also, FMR may determine some restricted
securities and municipal lease obligations to be illiquid. However, with
respect to over-the-counter options the high yield fund writes, all or a
portion of the value of the underlying instrument may be illiquid depending
on the assets held to cover the option and the nature and terms of any
agreement the fund may have to close out the option before expiration. In
the absence of market quotations, illiquid investments are valued for
purposes of monitoring amortized cost valuation (money market fund) and
priced (high yield fund) at fair value as determined in good faith by a
committee appointed by the Board of Trustees. If through a change in
values, net assets, or other circumstances, a fund were in a position where
more than 10% of its net assets were invested in illiquid securities, it
would seek to take appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time the fund may be permitted to
sell a security under an effective registration statement. If, during such
a period, adverse market conditions were to develop, the fund might obtain
a less favorable price than prevailed when it decided to seek registration
of the security. However, in general, the money market fund anticipates
holding restricted securities to maturity or selling them in an exempt
transaction.
INTERFUND BORROWING PROGRAM. Each fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates, but will participate in the interfund borrowing program only as
a borrower. Interfund loans normally will extend overnight, but can have a
maximum duration of seven days. A fund will borrow through the program
only when the costs are equal to or lower than the costs of bank loans.
Loans may be called on one day's notice, and the fund may have to borrow
from a bank at a higher interest rate if an interfund loan is not called or
renewed.
LOWER-RATED MUNICIPAL SECURITIES. The high yield fund may invest a portion
of its assets in lower-rated municipal securities as described in the
Prospectus.
While the market for Massachusetts municipals is considered to be
substantial, adverse publicity and changing investor perceptions may affect
the ability of outside pricing services used by the fund to value its
portfolio securities, and the fund's ability to dispose of lower-rated
bonds. The outside pricing services are consistently monitored to assure
that securities are valued by a method that the Board believes accurately
reflects fair value. The impact of changing investor perceptions may be
especially pronounced in markets where municipal securities are thinly
traded.
The high yield fund may choose, at its expense or in conjunction with
others, to pursue litigation or otherwise exercise its rights as a security
holder to seek to protect the interests of security holders if it
determines this to be in the best interest of the fund's shareholders.
INDEXED SECURITIES. The high yield fund may purchase securities whose
prices are indexed to the prices of other securities, securities indices,
or other financial indicators. Indexed securities typically, but not
always, are debt securities or deposits whose value at maturity or coupon
rate is determined by reference to a specific instrument or statistic.
Indexed securities may have principal payments as well as coupon payments
that depend on the performance of one or more interest rates. Their coupon
rates or principal payments may change by several percentage points for
every 1% interest rate change. One example of indexed securities is
inverse floaters.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed,
and may also be influenced by interest rate changes. At the same time,
indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS (HIGH YIELD FUND
ONLY ). The fund has filed a notice of eligibility for
exclusion from the definition of the term "commodity pool operator" with
the Commodity Futures Trading Commission (CFTC) and the National Futures
Association, which regulate trading in the futures markets. The fund
intends to comply with Section 4.5 of the regulations under the Commodity
Exchange Act, which limits the extent to which the fund can commit assets
to initial margin deposits and option premiums.
In addition, the fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the high yield fund's investments in futures
contracts and options, and the fund's policies regarding futures contracts
and options discussed elsewhere in this Statement of Additional
Information, are not fundamental policies and may be changed as regulatory
agencies permit.
FUTURES CONTRACTS. When the fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date.
When the fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Bond Buyer Municipal Bond Index. Futures
can be held until their delivery dates, or can be closed out before then if
a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the fund sells a
futures contract, by contrast, the value of its futures position will tend
to move in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the fund, the fund may
be entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract the fund will be required to make margin payments to an FCM as
described above for futures contracts. The fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates the fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. The fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, the fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult
to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the fund's current or
anticipated investments exactly. The fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests,
which involves a risk that the options or futures position will not track
the performance of the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. The fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in the fund's options or futures positions are poorly correlated
with its other investments, the positions may fail to produce anticipated
gains or result in losses that are not offset by gains in other
investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the fund's access to other assets held to cover its options or
futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows the
fund greater flexibility to tailor an option to its needs, OTC options
generally involve greater credit risk than exchange-traded options, which
are guaranteed by the clearing organization of the exchanges where they are
traded.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The fund will comply
with guidelines established by the SEC with respect to coverage of options
and futures strategies by mutual funds, and if the guidelines so require
will set aside appropriate liquid assets in a segregated custodial account
in the amount prescribed. Securities held in a segregated account cannot
be sold while the futures or option strategy is outstanding, unless they
are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of the fund's assets
could impede portfolio management or the fund's ability to meet redemption
requests or other current obligations.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
medical and technological advances which dramatically alter the need for
health services or the way in which such services are delivered; and
efforts by employers, insurers, and governmental agencies to reduce the
costs of health insurance and health care services.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public colleges and universities, and
those representing pooled interests in student loans. Bonds issued to
supply public educational institutions with funds are subject to the risk
of unanticipated revenue decline, primarily the result of decreasing
student enrollment. Among the factors that may affect enrollment are
restrictions on students' ability to pay tuition, availability of state and
federal funding, and general economic conditions.
Student loan revenue bonds are backed by pools of student loans and are
generally offered by state (or substate) authorities or commissions.
Student loans are guaranteed by state guarantee agencies and reinsured by
the Department of Education. The risks associated with these issues is
that default on the student loans may result in prepayment to bondholders
and an earlier-than-anticipated retirement of the bond.
SPECIAL FACTORS AFFECTING MASSACHUSETTS
SUMMARY. The Commonwealth of Massachusetts and certain of its cities and
towns and public bodies have experienced financial difficulties that
have adversely affected their credit standing. The prolonged effects of
such financial difficulties could adversely affect the market value of the
instruments held in the funds. The information summarized below describes
some of the more significant factors that could affect the funds or the
ability of the obligators to pay debt service. The sources of such
information are the official statements of issuers located in the
Commonwealth of Massachusetts, as well as other publicly available
documents, and statements of public information contained in such
statements and documents, but FMR is not aware of facts which would render
such information inaccurate.
FISCAL MATTERS - GENERAL. The Commonwealth's constitution requires, in
effect, that its budget, though not necessarily its operating expenditures
and revenues, be balanced each year. In addition, the Commonwealth has
certain budgetary procedures and fiscal controls in place that are designed
to ensure that sufficient cash is available to meet the Commonwealth's
obligations, that state expenditures are consistent with periodic
allotments of annual appropriations and that the funds are expended
consistent with statutory and public purposes. The General Fund, in
addition to being the Commonwealth's primary operating fund, ordinarily
functions as a residuary fund to receive otherwise unallocated revenues and
to provide monies to transfer to the funds as required. The condition of
the General Fund is generally regarded as the principal indicator of
whether the Commonwealth's operating revenues and expenses are in balance.
The other principal operating funds (the Local Aid Fund and the Highway
Fund) are customarily funded to at least a zero balance.
The Commonwealth of Massachusetts has recently experienced fiscal
difficulties. Commonwealth spending exceeded revenues in each of the three
fiscal years commencing fiscal 1989. Operating losses in fiscal 1989, 1990
and 1991 totalled $672 million, $1.251 billion and $21 million,
respectively. During the period, fund balances in the budgeted operating
funds increased from opening balances of negative $319.3 million in fiscal
1989 to ending balances of positive $237.1 million in fiscal 1991,
primarily due to deficit borrowings. The Commonwealth ended fiscal 1992 and
1993 with operating surpluses of $312.3 million and $13.1 million,
respectively, and statutory closing fund balances increased to $562.5 at
the end of fiscal 1993. Fiscal 1994 is estimated to end with a current
operating loss of $180.5 million and ending fund balances of $382.0
million.
On July 19, 1993, the Governor signed into law the fiscal 1994 budget. As
signed by the Governor, the budget authorizes approximately $15.463 billion
in fiscal 1994 expenditures. The Legislature had originally approved a
fiscal 1994 budget with appropriations totalling $15.545 billion. The
Governor exercised his authority to veto and reduce individual line-items
and reduced total expenditures by approximately $82.4 million in order to
bring the fiscal 1994 budget into balance and to fund fiscal 1993
appropriations continued into fiscal 1994 and certain other fiscal 1994
expenditures which the Governor believes will be necessary. Total budgeted
expenditures and other uses for fiscal 1994 (excluding any supplemental
appropriations) are currently estimated to be approximately $15.500
billion. Budgeted revenues and other sources to be collected in fiscal 1994
are currently estimated by the Executive Office for Administration and
Finance to be approximately $15.535 billion. On September 24, 199 3 ,
the Governor filed a supplemental appropriations bill recommending $75.4
million in fiscal 1994 appropriations. The Governor had previously filed on
June 28 and August 25, two other supplemental appropriation bills totalling
$34.0 million to fund certain collective bargaining agreements. On January
4, 1994, the legislature approved a supplemental appropriation bill
totalling approximately $158.1 million. The Governor is currently reviewing
the bill to determine what veto e s, if any, may be necessary.
The current economic slowdown in Massachusetts has led to increased
expenditures. Municipalities and agencies of the Commonwealth are
experiencing the same economic effects. Moreover, they are affected by the
financial condition of the Commonwealth, because they receive substantial
funding from the Commonwealth.
LIMITATIONS ON TAX REVENUES. In Massachusetts, efforts to limit and reduce
levels of taxation have been underway for several years. Limits were
established on state tax revenues by legislation enacted on October 25,
1986 and by an initiative petition approved by the voters on November 4,
1986. The two measures are inconsistent in several respects.
Chapter 62F, which was added to the General Laws by initiative petition in
November 1986, establishes a state tax revenue growth limit for each fiscal
year equal to the average positive rate of growth in total wages and
salaries in the Commonwealth, as reported by the federal government, during
the three calendar years immediately preceding the end of such fiscal year.
Chapter 62F also requires that allowable state tax revenues be reduced by
the aggregate amount received by local governmental units from any newly
authorized or increased local option taxes or excises. Any excess in
state tax revenue collections for a given fiscal year over the prescribed
limit, as determined by the State Auditor, is to be applied as a credit
against the then current personal income tax liability of all taxpayers in
the Commonwealth in proportion to the personal income tax liability of all
taxpayers in the Commonwealth for the immediately preceding tax year. The
legislation enacted in October 1986, which added Chapter 29B to the General
Laws, also establishes an allowable state revenue growth factor by
reference to total wages and salaries in the Commonwealth. However, rather
than utilizing a three-year average wage and salary growth rate, as used by
Chapter 62F, Chapter 29B's formula utilizes one-third of the positive
percentage gain in Massachusetts wages and salaries, as reported by the
federal government, during the three calendar years immediately preceding
the end of a given fiscal year. Additionally, unlike Chapter 62F, Chapter
29B excludes from its definition of state tax revenues income derived from
local option taxes and excises and from revenues needed to fund debt
service costs.
Tax revenues through fiscal 1993 were lower than the limit set by
either Chapter 62F or Chapter 29B. The Executive Office for Administration
and Finance currently estimates that state tax revenues in fiscal
1994 will not reach the limit imposed by either of these statutes.
In January 1992, the Governor announced his intention to seek an amendment
to the state constitution that would require any Commonwealth tax increase
to receive at least a two-thirds majority vote in each house of the
Legislature. No action has yet been taken on this proposal.
PROPOSITION 2 1/2. In November 1980, voters in the Commonwealth approved a
statewide tax limitation initiative petition, commonly known as Proposition
2 1/2, to constrain levels of property taxation and to limit the charges
and fees imposed on cities and towns by certain governmental entities,
including county governments. Proposition 2 1/2 is not a provision of the
state constitution and accordingly is subject to amendment or repeal by the
legislature. Proposition 2 1/2, as amended to date, limits the property
taxes that may be levied by any city or town in any fiscal year to the
lesser of (i) 2.5% of the full and fair cash valuation of the real estate
and personal property therein, and (ii) 2.5% over the previous year's levy
limit plus any growth in the tax base from certain new construction and
parcel subdivisions. Proposition 2 1/2 also limits any increase in the
charges and fees assessed by certain governmental entities, including
county governments, on cities and towns to the sum of (i) 2.5% of the total
charges and fees imposed in the preceding fiscal year, and (ii) any
increase in charges for services customarily provided locally or services
obtained by the city or town at its option.
Many communities have responded to the limitation imposed by Proposition
2 1/2 through statutorily permitted overrides and exclusions. Override
activity peaked in fiscal 1991, when 182 communities attempted votes on one
of the three types of referenda questions (override of levy limit,
exclusion of debt service, or exclusion of capital expenditures) and 100
passed at least one question, adding $58.5 million to their levy limits. In
fiscal 1992, 67 of 143 communities had successful votes totalling $31.0
million. In fiscal 1993, 83 communities attempted a vote; two-thirds of
them (56) passed questions aggregating $16.4 million. Proposition 2 1/2
will continue to constrain local property tax revenues. Cities and towns
may continue to present overrides for votes. Although Proposition 2 1/2
will continue to constrain local property tax revenues, significant
capacity exists for overrides in every community.
LOCAL AID. During the 1980s, the Commonwealth increased payments to its
cities, towns, and regional school districts ("Local Aid") to mitigate the
impact of Proposition 2 1/2 on local programs and services. In fiscal
1993 , approximately 28.7 % of the Commonwealth's budget was
allocated to Local Aid. Local Aid payments to cities, towns, and regional
school districts take the form of both direct and indirect assistance.
Direct Local Aid decreased from $2.961 billion in fiscal 1989 to $2.328
billion in fiscal 1992 and increased to $2.488 billion in fiscal 1993. It
is estimated that fiscal 1994 expenditures for direct Local Aid will be
$2.737 billion, which is an increase of approximately 10.0% above the
fiscal 1993 level. The additional amount of indirect Local Aid provided
over and above direct Local Aid was approximately $1.717 billion in fiscal
1993. It is estimated that in fiscal 1994 approximately $1.717 billion of
indirect Local Aid will also be paid.
A statute adopted by voter initiative petition to the November 1990
statewide election regulates the distribution of Local Aid to cities and
towns. This statute requires that, subject to annual
appropriation, no less than 40% of collections from personal income
taxes, sales and use taxes, corporate excise taxes, and lottery fund
proceeds be distributed to cities and towns . Under the law, the
Local Aid distribution to each city or town would equal no less than 100%
of the total Local Aid received for fiscal 1989. Distributions in excess
of fiscal 1989 levels would be based on new formulas that would replace the
current Local Aid distribution formulas. By its terms, the new formula
would have called for a substantial increase in direct Local Aid in fiscal
1992 and would call for such an increase in fiscal 1993 and in subsequent
years. However, Local Aid payments expressly remain subject to annual
appropriation, and fiscal 1992 and fiscal 1993 appropriations for
Local Aid did not meet, and fiscal 1994 appropriations for Local Aid
do not meet, the levels set forth in the initiative law.
COMMONWEALTH EXPENDITURES. From fiscal 1989 to fiscal 1990 budgeted
expenditures of the Commonwealth increased approximately 4.9% to $13.260
million. Fiscal 1991 budgeted expenditures were $13.655 billion, or a 3.0%
increase over fiscal 1990 budgeted expenditures. For fiscal 1992, budgeted
expenditures were $13.420 billion, representing a decline of 1.7% from the
level of budgeted expenditures in fiscal 1991. Fiscal 1993 budgeted
expenditures were $14.712 billion, an increase of 9.6% from fiscal 1992. It
is estimated that fiscal 1994 budgeted expenditures will be $15.500
billion, an increase of 5.5% over fiscal 1993 levels.
Commonwealth expenditures since fiscal 1989 largely reflect
significant growth in several programs and services provided by the
Commonwealth, principally Medicaid and group health insurance;
public assistance programs; debt service; pensions; and assistance to the
Massachusetts Bay Transportation Authority and regional transit
authorities.
The Commonwealth's pension systems were originally established on a
pay-as-you-go basis. The Commonwealth's unfunded actuarial pension
liability is significant - approximately $10.869 billion as of January 1,
1990, for state employees, teachers, and local retirement system
cost-of-living increases. The amount in the state's pension reserve,
established to address the unfunded liabilities of the two state systems,
has increased significantly in recent years due to substantial
appropriations and changes in law relating to investment of retirement
systems assets. As of June 30, 1993 , the reserve was approximately
$ 3.877 billion. Comprehensive pension legislation approved in
January 1988 requires the Commonwealth to fund future pension liabilities
currently and to amortize the Commonwealth's accumulated unfunded
liabilities over 40 years.
OTHER FACTORS. Many factors affect the financial condition of the
Commonwealth, including many social, environmental, and economic
conditions, which are beyond the control of the Commonwealth. As with most
urban states, the continuation of many of the Commonwealth's programs,
particularly its human service programs, is in significant part dependent
upon continuing federal reimbursements which have been declining.
SPECIAL FACTORS AFFECTING PUERTO RICO
The following only highlights some of the more significant financial trends
and problems affecting the Commonwealth of Puerto Rico (the "Commonwealth"
or "Puerto Rico"), and is based on information drawn from official
statements and prospectuses relating to the securities offerings of Puerto
Rico, its agencies and instrumentalities, as available on the date of this
Statement of Additional Information. FMR has not independently verified any
of the information contained in such official statements, prospectuses and
other publicly available documents, but is not aware of any fact which
would render such information materially inaccurate.
The economy of Puerto Rico is closely linked with that of the United
States, and in fiscal 1992 trade with the United States accounted for
approximately 88% of Puerto Rico's exports and approximately 68% of its
imports. In this regard, in fiscal 1992 Puerto Rico experienced a
$2,940,300,000 positive adjusted merchandise trade balance. Since fiscal
1987 personal income, both aggregate and per capita, have increased
consistently each fiscal year. In fiscal 1992 aggregate personal income was
$22.7 billion and personal per capita income was $6,360. Gross domestic
product in fiscal 1989, 1990, 1991 and 1992 was $19,954,000, $21,619,000,
$22,857,000, and $23,620,000 respectively. For fiscal 1993, an increase in
gross domestic product of 2.9% over fiscal 1992 is forecasted. However,
actual growth in the Puerto Rico economy will depend on several factors
including the condition of the U.S. economy, the exchange rate for the U.S.
dollar, the price stability of oil imports, and interest rates. Due to
these factors there is no assurance that the economy of Puerto Rico will
continue to grow.
Puerto Rico has made marked improvements in fighting unemployment.
Unemployment is at a low level compared to that of the late 1970s, but it
still remains significantly above the United States average. Despite long
term improvements the unemployment rate rose from 15.2% to 16.5% from
fiscal 1991 to fiscal 1992. At the end of the third quarter of fiscal 1993
the unemployment rate in Puerto Rico stood at 17.3%. There is a possibility
that the unemployment rate will continue to increase.
The economy of Puerto Rico has undergone a transformation in the later half
of this century from one centered around agriculture, to one dominated by
manufacturing and service industries. Manufacturing is the cornerstone of
Puerto Rico's economy, accounting for $13.2 billion or 38.7% of gross
domestic product in 1992. However, manufacturing has experienced a basic
change over the years as a result of the influx of higher wage, high
technology industries such as the pharmaceutical industry, electronics,
computers, micro-processors, scientific instruments and high technology
machinery. The service sector, which includes wholesale and retail trade,
finance and real estate, ranks second in its contribution to gross domestic
product and is the sector that employs the greatest number of people. In
fiscal 1992, the service sector generated $13.0 billion in gross domestic
product or 38.3% of the total and employed over 449,000 workers providing
46% of total employment. The government sector and tourism also contribute
to the island economy each accounting for $3.7 billion and $1.5 billion in
fiscal 1992, respectively.
Much of the development of the manufacturing sector of the economy of
Puerto Rico is attributable to federal and Commonwealth tax incentives,
most notably section 936 of the Internal Revenue Code of 1986, as amended
("Section 936") and the Commonwealth's Industrial Incentives Program.
Section 936 currently grants U.S. corporations that meet certain criteria
and elect its application a credit against their U.S. corporate income tax
on the portion of the tax attributable to (i) income derived from the
active conduct of a trade or business in Puerto Rico ("active income"), or
from the sale or exchange of substantially all the assets used in the
active conduct of such trade or business, and (ii) qualified possession
source investment income ("passive income"). The Industrial Incentives
Program, through the 1987 Industrial Incentives Act, grants corporations
engaged in certain qualified activities a fixed 90% exemption from
Commonwealth income and property taxes and a 60% exemption from municipal
license taxes.
On August 16, 1993, President Clinton signed a bill amending Section 936.
Under the amendments, U.S. corporations with operations in Puerto Rico can
elect to receive a federal income tax credit equal to: 40% of the credit
currently available, phased in over a five year period, starting at 60% of
the current credit, or a credit based on investment and wages. The
investment and wage credit would equal the sum of (i) 60% of qualified
compensation to employees, (ii) a specified percentage of depreciation
deductions with respect to tangible property located in Puerto Rico, and
(iii) a portion of income taxed paid to Puerto Rico, up to a 9% effective
tax rate, subject to certain requirements. It is not possible to determine
at this time whether the reductions in tax incentives for operations in
Puerto Rico will have a significant impact on the economy of Puerto Rico or
the time period in which such impact would arise.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by FMR (either directly or through affiliated
sub-advisers) pursuant to authority contained in each fund's management
contracts. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its affiliates
act as investment adviser. Securities purchased and sold by the money
market fund generally will be traded on a net basis (i.e., without
commission). In selecting broker-dealers, subject to applicable
limitations of the federal securities laws, FMR will consider various
relevant factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; and the reasonableness
of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of broker-dealers
who provide such services on a regular basis. However, as many
transactions on behalf of the money market fund are placed with
broker-dealers (including broker-dealers on the list) without regard to the
furnishing of such services, it is not possible to estimate the proportion
of such transactions directed to such broker-dealers solely because such
services were provided. The selection of such broker-dealers generally is
made by FMR (to the extent possible consistent with execution
considerations) based upon the quality of research and execution services
provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and, conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause a
fund to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities to the
funds and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation should
be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds, to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI), a subsidiary of FMR Corp., if the commissions are fair,
reasonable, and comparable to commissions charged by non-affiliated,
qualified brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except if certain
requirements are satisfied. Pursuant to such regulations, the Board of
Trustees has authorized FBSI to execute fund portfolio
transactions on national securities exchanges in accordance with
approved procedures and applicable SEC rules. For the fiscal year
ended January 31, 1994, the fiscal period August 1, 1992 through
January 31, 1993 and the fiscal year ended July 31, 1992, the funds did not
pay any brokerage commissions.
The Trustees periodically review performance of its responsibilities in
connection with the placement of portfolio transactions on behalf of each
fund and review the commissions paid by each fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to each fund.
For fiscal 1994 and 1993, the high yield fund's turnover rates were
40 % and 42% (annualized), respectively.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to
continue to review whether recapture opportunities are available and are
legally permissible and, if so, to determine in the exercise of their
business judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of the funds are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases, this system could have a
detrimental effect on the price or value of the security as far as the
funds are concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Board of Trustees
that the desirability of retaining FMR as investment adviser to the funds
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
HIGH YIELD FUND. Valuations of portfolio securities furnished by the
pricing service employed by the fund are based upon a computerized matrix
system or appraisals by the pricing service, in each case in reliance upon
information concerning market transactions and quotations from recognized
municipal securities dealers. The methods used by the pricing service and
the quality of valuations so established are reviewed by officers of the
fund and FSC under the general supervision of the Trustees. There are a
number of pricing services available, and the Trustees, or officers acting
on behalf of the Trustees, on the basis of on-going evaluation of these
services, may use other pricing services or discontinue the use of any
pricing service in whole or in part. Futures contracts and options are
valued on the basis of market quotations if available.
MONEY MARKET FUND. The fund values its investments on the basis of
amortized cost. This technique involves valuing an instrument at its cost
as adjusted for amortization of premium or accretion of discount rather
than its value based on current market quotations or appropriate
substitutes which reflect current market conditions. The amortized cost
value of an instrument may be higher or lower than the price the fund would
receive if it sold the instrument.
Valuing the fund's instruments on the basis of amortized cost and use of
the term "money market fund" are permitted by Rule 2a-7 under the
Investment Company Act of 1940. The fund must adhere to certain conditions
under Rule 2a-7.
The Board of Trustees of the trust oversees FMR's adherence to SEC rules
concerning money market funds, and has established procedures designed to
stabilize the fund's NAV at $1.00. At such intervals as they deem
appropriate, the Trustees consider the extent to which NAV calculated by
using market valuations would deviate from $1.00 per share. If the
Trustees believe that a deviation from the fund's amortized cost per share
may result in material dilution or other unfair results to shareholders,
the Trustees have agreed to take such corrective action, if any, as they
deem appropriate to eliminate or reduce, to the extent reasonably
practicable, the dilution or unfair results. Such corrective action could
include selling portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; withholding
dividends; redeeming shares in kind; establishing NAV by using available
market quotations; and such other measures as the Trustees may deem
appropriate.
During periods of declining interest rates, the fund's yield based on
amortized cost may be higher than the yield based on market valuations.
Under these circumstances, a shareholder in the fund would be able to
obtain a somewhat higher yield than would result if the fund utilized
market valuations to determine its NAV. The converse would apply in a
period of rising interest rates.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. The high yield fund's share price and
both funds' yields and total returns fluctuate in response to market
conditions and other factors. The value of the high yield fund's shares
when redeemed may be more or less than their original cost.
YIELD CALCULATIONS. To compute the MONEY MARKET FUND'S yield for a period,
the net change in value of a hypothetical account containing one share
(exclusive of capital gains) reflects the value of additional shares
purchased with dividends from the one original share and dividends declared
on both the original share and any additional shares. The net change is
then divided by the value of the account at the beginning of the period to
obtain a base period return. This base period return is annualized to
obtain a current annualized yield. The fund may also calculate a compound
effective yield by compounding the base period return over a one-year
period. In addition to the current yield, the fund may quote yields in
advertising based on any historical seven-day period.
For the HIGH YIELD FUND, yields used in advertising are computed by
dividing the fund's interest income for a given 30-day or one-month period,
net of expenses, by the average number of shares entitled to receive
dividends during the period, dividing this figure by the fund's net asset
value per share at the end of the period, and annualizing the result
(assuming compounding of income) in order to arrive at an annual percentage
rate. Income is calculated for purposes of the fund's yield quotations in
accordance with standardized methods applicable to all stock and bond
funds. In general, interest income is reduced with respect to bonds
trading at a premium over their par value by subtracting a portion of the
premium from income on a daily basis, and is increased with respect to
bonds trading at a discount by adding a portion of the discount to daily
income. Capital gains and losses generally are excluded from the
calculation.
Income calculated for the purposes of determining the high yield fund's
yield differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, the high yield fund's
yield may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
A fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment after taxes to equal the fund's tax-free
yield. Tax-equivalent yields are calculated by dividing a fund's yield by
the result of one minus a stated federal or combined federal and state tax
rate. (If only a portion of the fund's yield is tax-exempt, only that
portion is adjusted in the calculation.)
The tables below show the effect of a shareholder's tax status on effective
yield under federal and state income tax laws for 1994. They show the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 2.0% to 7.0%. Of course, no
assurance can be given that the funds will achieve any specific tax-exempt
yield. While the funds invest principally in obligations whose interest is
exempt from federal and state income tax, other income received by the
funds may be taxable.
1994 TAX RATES AND TAX-EQUIVALENT YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Combined
Federal Income Massachusetts Massachusetts and
Taxable Tax Tax Federal Effective
Income* Bracket** Bracket Tax Bracket
</TABLE>
Single Return Joint Return
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
$ 22,751 - $ 55,100 $ 38,001 - $ 91,850 28% 12.0% 36.64%
$ 55,101 - $ 115,000 $ 91,851 - $ 140,000 31% 12.0% 39.28%
$ 115,001 - $ 250,000 $ 140,001 - $ 250,000 36% 12.0% 43.68%
$ 250,001 & $ 250,001 & above 39.6% 12.0% 46.85%
above
</TABLE>
* Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only; does not include the effect of the
preferential rate on long-term capital gains.
** Excludes the impact of the phaseout of personal exemptions, limitations
on itemized deductions, and other credits, exclusions, and adjustments
which may increase a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
Having determined your effective tax bracket, use the table below to
determine the tax-equivalent yield for a given tax-free yield.
If your combined effective federal and state personal income tax rate in
1994 is:
To match these 36.64% 39.28% 43.68% 46.85%
<TABLE>
<CAPTION>
<S> <C>
tax-free yields: Your taxable investment would have to earn the following yield:
</TABLE>
2% 3.16% 3.29% 3.55% 3.76%
3% 4.73% 4.94% 5.33% 5.64%
4% 6.31% 6.59% 7.10% 7.53%
5% 7.89% 8.23% 8.88% 9.41%
6% 9.47% 9.88% 10.65% 11.29%
7% 11.05% 11.53% 12.43% 13.17%
Each fund may invest a portion of its assets in obligations that are
subject to state or federal income taxes. When a fund invests in these
obligations, its tax-equivalent yields will be lower. In the table above,
the tax-equivalent yields are calculated assuming investments are 100%
federally and state tax-free.
Yield information may be useful in reviewing the funds' performance and in
providing a basis for comparison with other investment alternatives.
However, each fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of the respective investment companies they have
chosen to consider.
Investors should recognize that in periods of declining interest rates the
funds' yields will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the funds' yields will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to the funds from the continuous sale of their shares will likely
be invested in instruments producing lower yields than the balance of the
funds' holdings, thereby reducing the funds' current yields. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Totals returns quoted in advertising reflect
all aspects of a fund's returns, including the effect of reinvesting
dividends and capital gain distributions (if any), and any change in the
fund's net asset value (NAV) over the period. Average annual total returns
are calculated by determining the growth or decline in value of a
hypothetical historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative total return of 100%
over ten years would produce an average annual total return of 7.18%, which
is the steady annual rate that would equal 100% growth on a compounded
basis in ten years. While average annual total returns are a convenient
means of comparing investment alternatives, investors should realize that a
fund's performance is not constant over time, but changes from year to
year, and that average annual total returns represent averaged figures as
opposed to the actual year-to-year performance of a fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price, if any) in order to illustrate the relationship of these
factors and their contributions to total return. An example of this type
of illustration is given below. Total returns, yields, and other
performance information may be quoted numerically or in a table, graph, or
similar illustration. Total returns may be quoted on a before-tax or
after-tax basis.
NET ASSET VALUE. Charts and graphs using the high yield fund's net asset
values, adjusted net asset values, and benchmark indices may be used to
exhibit performance. An adjusted NAV includes any distributions paid by
the fund and reflects all elements of its return. Unless otherwise
indicated, the fund's adjusted NAVs are not adjusted for sales charges, if
any.
HISTORICAL FUND RESULTS. The following table shows the funds' total
returns for the periods ended January 31, 1994:
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
One Five Ten One Five Ten
Year Years Years Year Years Years
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund 1.71% 3.75% 4.15% 1.71% 20.20% 50.17%
High Yield Fund 12.57% 9.95% 10.22% 12.57% 60.71% 164.67%
</TABLE>
The money market fund's 7-day yield as of January 31, 1994 was
1.62 %, with a corresponding tax-equivalent yield of 2.88 %.
The high yield fund's 30-day yield as of January 31, 1994 was 5.19 %,
with a corresponding tax-equivalent yield of 9.22 %. The
tax-equivalent yields are based on the highest 1994 combined federal and
state income tax bracket of 43.68 %. A portion of the money market
fund's income may be subject to the federal alternative minimum tax.
The table below shows the income and capital elements of each fund's total
returns. The table compares the funds' returns to the record of the
Standard & Poor's 500 Composite Stock Price Index (S&P 500), the
Dow Jones Industrial Average (DJIA), and the cost of living (measured by
the Consumer Price Index, or CPI) over the same period. The S&P 500
and DJIA comparisons are provided to show how each fund's total return
compared to the return of a broad average of common stocks and a narrower
set of stocks of major industrial companies, respectively, over the same
period. Of course, since the funds invest in money market and fixed-income
securities, common stocks represent a different type of investment from the
funds. Common stocks generally offer greater potential growth than the
funds, but generally experience greater price volatility which means a
greater potential for loss. In addition, common stocks generally provide
lower income than a money market or bond fund investment such as the funds.
The S&P 500 and DJIA are based on the prices of unmanaged groups of
stocks and, unlike the funds' returns, their returns do not include the
effect of paying brokerage commissions or other costs of investing.
During the periods quoted, interest rates and bond prices fluctuated
widely; thus the tables should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in the funds today.
MONEY MARKET FUND. During the period January 3 1, 1984 through
January 31, 1994, a hypothetical $10,000 investment in the fund would have
grown to $ 15,017 , assuming all distributions were reinvested.
Indices
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of
Period Initial Value of Value of
Ended $10,000 Reinvested Reinvested Total Cost of
January 31 Investment Dividends Capital Gains Value S&P DJIA Living
500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1994 $ 10,000 $ 5,017 $0 $ 15,017 $ 41,837 $ 46,796 $ 14,347
1993 10,000 4,764 0 14,764 37,065 37,856 13,994
1992 10,000 4,458 0 14,458 33,511 35,790 13,553
1991 10,000 3,924 0 13,924 27,310 29,414 13,209
1990 10,000 3,226 0 13,226 25,199 26,791 12,502
1989 10,000 2,493 0 12,493 22,013 23,336 11,884
1988 10,000 1,930 0 11,930 18,331 18,822 11,354
1987 10,000 1,468 0 11,468 18,962 20,108 10,913
1986 10,000 1,030 0 11,030 14,159 14,132 10,756
1985 10,000 524 0 10,524 11,520 11,077 10,353
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on
January 31 , 1984, the net amount invested in fund shares was
$10,000. The cost of the initial investment ($10,000), together with the
aggregate cost of reinvested dividends for the period covered (their cash
value at the time they were reinvested) amounted to $15,017. If
distributions had not been reinvested, the amount of distributions earned
from the fund over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $4,073 . There
were no capital gain distributions during this period. If FMR had not
reimbursed certain fund expenses during some of the periods shown, the
fund's returns would have been lower.
HIGH YIELD FUND. During the period January 31 , 1984 through January
31, 1994, a hypothetical $10,000 investment in the fund would have grown to
$26,467 , assuming all distributions were reinvested.
Indices
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of
Period Initial Value of Value of
Ended $10,000 Reinvested Reinvested Total Cost of
January 31 Investment Dividends Capital Gains Value S&P DJIA Living
500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1994 $ 12,113 $ 13,252 $ 1,102 $ 26,467 $ 41,837 $ 46,796 $ 14,347
1993 11,657 11,322 533 23,512 37,065 37,856 13,994
1992 11,359 9,643 383 21,386 33,511 35,790 13,553
1991 11,022 8,033 229 19,283 27,310 29,414 13,209
1990 10,952 6,658 41 17,651 25,199 26,791 12,502
1989 10,982 5,446 41 16,469 22,013 23,336 11,884
1988 10,863 4,229 41 15,133 18,331 18,822 11,354
1987 11,756 3,423 0 15,179 18,962 20,108 10,913
1986 11,101 2,255 0 13,356 14,159 14,132 10,756
1985 10,159 1,052 0 11,210 11,520 11,077 10,353
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on January
3 1, 1984, the net amount invested in fund shares was $10,000. The cost
of the initial investment ($10,000), together with the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(their cash value at the time they were reinvested) amounted to
$ 23,073 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $ 8,010 for
income dividends and $ 546 for capital gain distributions.
The funds' performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to
the mutual fund rankings, a fund's performance may be compared to mutual
fund performance indices prepared by Lipper.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
The fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES(trademark)/All
Tax-Free, which is reported in the MONEY FUND REPORT(registered trademark),
covers over 140 tax-free money market funds with similar
objectives . The Bond Fund Report AverageS(trademark)/All Tax-Free,
which is reported in the BOND FUND REPORT(trademark), covers over
371 tax-free bond funds. When evaluating comparisons to money
market funds, investors should consider the relevant differences in
investment objectives and policies. Specifically, money market funds
invest in short-term, high-quality instruments and seek to maintain a
stable $1.00 share price. The high yield fund, however, invests in
longer-term instruments and its share price changes daily in response to a
variety of factors.
The high yield fund may compare and contrast in advertising the relative
advantages of investing in a mutual fund versus an individual municipal
bond. Unlike tax-free mutual funds, individual municipal bonds offer a
stated rate of interest and, if held to maturity, repayment of principal.
Although some individual municipal bonds might offer a higher return, they
do not offer the reduced risk of a mutual fund that invests in many
different securities. The initial investment requirements and sales
charges of many tax-free mutual funds are lower than the purchase cost of
individual municipal bonds, which are generally issued in $5,000
denominations and are subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
The high yield fund may advertise examples of the effects of periodic
investment plans, including the principle of dollar cost averaging. In
such a program, an investor invests a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when prices are high
and more shares when prices are low. While such a strategy does not assure
a profit or guard against loss in a declining market, the investor's
average cost per share can be lower than if fixed numbers of shares are
purchased at the same intervals. In evaluating such a plan, investors
should consider their ability to continue purchasing shares during periods
of low price levels.
As of January 31, 1994, FMR advised over 45 tax-free funds or
portfolios with a total value of over $ 30 billion and managed over
$ 2.2 billion in Massachusetts tax-free assets. According to the
Investment Company Institute, over the past ten years, assets in tax-exempt
funds increased from $ 31.4 billion in 1983 to approximately
$ 357.7 billion at the end of 1993. The money market fund may
reference the growth and variety of money market mutual funds and the
adviser's innovation and participation in the industry.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day (observed), Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time. Also, the money market fund will
be closed for wire purchases and redemptions on days when the Federal
Reserve Wire System is closed.
FSC normally calculates the money market fund's NAV twice each business
day, once at 10:00 a.m. Eastern time and once as of the close of the NYSE
(normally 4:00 p.m. Eastern time). FSC normally determines the high yield
fund's NAV as of the close of the NYSE. However, NAV may be calculated
earlier if trading on the NYSE is restricted or as permitted by the SEC.
To the extent that portfolio securities are traded in other markets on days
when the NYSE is closed, a fund's NAV may be affected on days when
investors do not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), each fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that each fund's income is derived from federally
tax-exempt interest, the daily dividends declared by each fund are also
federally tax-exempt. The funds will send each shareholder a notice in
January describing the tax status of dividends and capital gain
distributions (if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as social security
benefits, may be subject to federal income tax on up to one half of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
Each fund purchases municipal obligations based on opinions of bond counsel
regarding the federal income tax status of the obligations. These opinions
generally will be based on covenants by the issuers regarding continuing
compliance with federal tax requirements. If the issuer of an obligation
fails to comply with its covenants at any time, interest on the obligation
could become federally taxable retroactive to the date the obligation was
issued.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) is subject to the federal alternative minimum tax (AMT),
although the interest continues to be excludable from gross income for
other purposes. Interest from private activity securities will be
considered tax-exempt for purposes of the funds' policies of investing so
that at least 80% of their income distributions are free from federal tax.
Interest from private activity securities is a tax preference item for the
purposes of determining whether a taxpayer is subject to the AMT and the
amount of AMT to be paid, if any. Private activity securities issued after
August 7, 1986 to benefit a private or industrial user or to finance a
private facility are affected by this rule.
It is the current position of the Securities and Exchange Commission Staff
that a fund which uses the word "tax-free" in its name may not derive more
than 20% of its income from municipal obligations that pay interest that is
a preference item for purposes of the AMT. Under this position, at least
80% of the funds' income distributions would have to be exempt from the AMT
and other federal taxes and at least 65% of the money market fund's and 80%
of the high yield fund's income distributions would have to be exempt from
Massachusetts income tax. Corporate investors should note that a tax
preference item for purposes of the corporate AMT is 75% of the amount by
which adjusted current earnings (which includes tax-exempt interest)
exceeds the alternative minimum taxable income of the corporation. If a
shareholder receives an exempt-interest dividend and sells shares at a loss
after holding them for a period of six months or less, the loss will be
disallowed to the extent of the amount of exempt-interest dividend.
The high yield fund does not currently intend to purchase private activity
municipal obligations whose interest is a tax preference item for purposes
of the AMT. Nevertheless, the fund reserves the right to purchase such
obligations in the future, subject to notice to shareholders, if the Board
of Trustees determines that it is in the best interest of shareholders to
do so.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the funds on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
A portion of the gain on bonds purchased at a discount after April 30, 1993
and short-term capital gains distributed by the funds are federally taxable
to shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction. Dividend distributions resulting from a recharacterization of
gain from the sale of bonds purchased at a discount after April 30, 1993
are not considered income for purposes of the funds' policy of investing so
that at least 80% of their income distributions are free from federal
income tax. The money market fund may distribute any net realized
short-term capital gains once a year or more often as necessary to maintain
its net asset value at $1.00 a share.
As of January 31, 1994, the money market fund had a capital loss carryover
of approximately $ 119,100 , $ 54,900 of which will expire on
January 31, 1997, and $ 64,200 of which will expire on January 31,
1998. To the extent that capital loss carryovers are used to offset any
future capital gains, it is unlikely that the gains so offset will be
distributed to shareholders since any such distributions may be taxable to
shareholders as ordinary income.
MASSACHUSETTS TAXES. To the extent a fund's income dividends are derived
from state tax-free securities, they will be free from the Massachusetts
personal income tax. Other distributions from a fund, including those
related to long- and short-term capital gains, generally will not be exempt
from Massachusetts personal income tax. Corporate taxpayers should note
that a fund's income dividends and other distributions are not exempt from
Massachusetts corporate excise tax.
TAX STATUS OF THE FUNDS. Each fund has qualified and intends to continue
to qualify each year as a "regulated investment company" for tax purposes
so that it will not be liable for federal tax on income and capital gains
distributed to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at the
fund level, each fund intends to distribute all of its net investment
income and net realized capital gains (if any) within each calendar year as
well as on a fiscal year basis. Each fund also intends to comply with
other tax rules applicable to regulated investment companies, including a
requirement that capital gains from the sale of securities held less than
three months constitute less the 30% of the fund's gross income for each
fiscal year. Gains from some futures contracts and options are included in
the 30% calculation, which may limit the high yield fund's investments in
such instruments. Each fund is treated as a separate entity from the other
funds of Massachusetts Municipal Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the funds and their shareholders,
and no attempt has been made to discuss individual tax consequences.
Investors should consult their tax advisers to determine whether the funds
are suitable to their particular tax situations.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. FMR U.K. and FMR Far East, both wholly owned
subsidiaries of FMR formed in 1986, supply investment research, and may
supply portfolio management services, to FMR in connection with certain
funds advised by FMR. Analysts employed by FMR, FMR U.K., and FMR Far East
research and visit thousands of domestic and foreign companies each year.
FTX, a wholly owned subsidiary of FMR formed in 1989, supplies portfolio
management and research services in connection with certain money market
funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. Unless
otherwise noted, the business address of each Trustee and officer is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. Those Trustees who are "interested persons" (as defined in the
Investment Company Act of 1940) by virtue of their affiliation with either
the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc., and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was President of Greenhill Petroleum Corporation (petroleum exploration
and production, 1990). Until March 1990, Mr. Cox was President and
Chief Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Bonneville Pacific Corporation
(independent power, 1989), Sanifill Corporation (non-hazardous waste,
1993), and CH2M Hill Companies (engineering). In addition, he served
on the Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton , NY, Trustee
(1992). Prior to her retirement in September 1991, Mrs. Davis was the
Senior Vice President of Corporate Affairs of Avon Products, Inc. She is
currently a Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores, 1990), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she serves as a Director
of the New York City Chapter of the National Multiple Sclerosis Society,
and is a member of the Advisory Council of the International Executive
Service Corps. and the President's Advisory Council of The University of
Vermont School of Business Administration .
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation , Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he
serves as a Trustee of First Union Real Estate Investments, Chairman of the
Board of Trustees and a member of the Executive Committee of the Cleveland
Clinic Foundation, a Trustee and a member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwhich Hospital Association .
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction ). In addition, he serves as a Trustee
of Boston College, Massachusetts Eye & Ear Infirmary, Historic
Deerfield (1989) and Society for the Preservation of New England
Antiquities, and as an Overseer of the Museum of Fine Arts of Boston
(1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee .
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate
Property Investors and a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee , is President of The Wales Group, Inc. (management and
financial advisory services). Prior to retiring in 1987, Mr. Williams
served as Chairman of the Board of First Wachovia Corporation (bank holding
company), and Chairman and Chief Executive Officer of The First National
Bank of Atlanta and First Atlanta Corporation (bank holding company). He
is currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software ), Georgia Power Company (electric utility),
Gerber Alley & Associates, Inc. (computer software), National Life
Insurance Company of Vermont, American Software, Inc. (1989), and
AppleSouth, Inc. (restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President - Legal of FMR Corp., and Vice President and Clerk
of FDC.
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas Inc. (1990).
GUY E. WICKWIRE, Vice President, is also a Vice President of other funds
advised by FMR and is an employee of FMR.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the funds based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham and David L. Yunich participate in the program.
As of January 31, 1994, the Trustees and officers of each fund
owned, in the aggregate, less than 1 % of the outstanding shares of
each fund.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides the funds with all necessary
office facilities and personnel for servicing the funds' investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of the funds. These services include providing
facilities for maintaining each fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with the funds; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state law; developing management and shareholder services for the funds;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
United Missouri, each fund pays all of its expenses, without limitation,
that are not assumed by those parties. Each fund pays for typesetting,
printing, and mailing proxy material to shareholders, legal expenses, and
the fees of the custodian, auditor, and non-interested Trustees. Although
each fund's management contract provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices, and reports to existing shareholders, United Missouri
has entered into a revised sub-transfer agent agreement with FSC, pursuant
to which FSC bears the cost of providing these services to existing
shareholders. Other expenses paid by each fund include interest, taxes,
brokerage commissions, each fund's proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal and state securities laws. Each fund is
also liable for such nonrecurring expenses as may arise, including costs of
any litigation to which a fund may be a party, and any obligation it may
have to indemnify the trust's officers and Trustees with respect to
litigation.
FMR is each fund's manager pursuant to management contracts approved by
shareholders on January 19, 1994 and dated February 1, 1994. For
the services of FMR under the contracts, each fund pays FMR a monthly
management fee composed of the sum of two elements: a group fee rate and
an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left of the chart below . On the right, the
effective fee rate schedule shows the results of cumulatively applying the
annualized rates at varying asset levels. For example, the effective
annual group fee rate at $ 244.8 billion of average
group net assets - their approximate level for January 1994 - was
. 1609 %, which is the weighted average of the respective fee rates
for each level of group net assets up to $ 244.8 billion.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES
AVERAGE GROUP EFFECTIVE
GROUP ANNUALIZED NET ANNUAL
ASSETS RATE ASSETS FEE RATE
0 - $ 3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1695
24 - 30 .1800 200 .1658
30 - 36 .1750 225 .1629
36 - 42 .1700 250 .1604
42 - 48 .1650 275 .1583
48 - 66 .1600 300 .1565
66 - 84 .1550 325 .1548
84 - 120 .1500 350 .1533
120 - 174 .1450
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
The individual fund fee rate for each fund is .25%. Based on the average
net assets of funds advised by FMR for January 1994, the annual management
fee rate for each fund would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
.1609 % + .25% = .4109 %
One-twelfth (1/12) of this annual management fee rate is then applied to
each fund's average net assets for the current month, giving a dollar
amount which is the fee for that month.
Management fees paid to FMR for the fiscal year ended January 31, 1994, the
fiscal period August 1, 1992 through January 31, 1993, and the fiscal year
ended July 31, 1992 are indicated in the table below.
1994 1993 1992
Money Market Fund $ 2,393,540 $ 1,243,891 $ 2,846,455
High Yield Fund $ 5,661,123 $ 2,553,807 $ 4,351,811
The money market fund's fees were equal to .41%, .42% (annualized) ,
and .42%, respectively, of the fund's average net assets for each of those
years. The high yield fund's fees were equal to .41 %, .42%
(annualized), and .42%, respectively, of the fund's average net assets for
each of those years.
The substantive difference between the current contracts and the contracts
prior to February 1, 1994 which were dated August 1, 1989 and September 1,
1992 (money market fund), and August 1, 1989 (high yield fund) is an
extension of the group fee rate schedule . The rates shown for average
group assets from $120 billion to $174 billion were voluntarily adopted by
FMR on January 1, 1992 and approved by shareholders of the money market
fund on August 5, 1992. The rates shown for average group assets in excess
of $174 billion were voluntarily adopted by FMR on November 1, 1993.
SUB-ADVISER. With respect to the money market fund, FMR has entered into a
sub-advisory agreement with FTX pursuant to which FTX has primary
responsibility for providing portfolio investment management services to
the fund. Under the sub-advisory agreement, FMR pays FTX a fee equal to
50% of the management fee payable to FMR under its current management
contract with the fund. The fees paid to FTX are not reduced by any
voluntary or mandatory expense reimbursements that may be in effect from
time to time. For fiscal 1994, 1993, and 1992, FMR paid FTX fees equal to
$1,183,453 , $616,144, and $1,404,192, respectively, under the
sub-advisory agreement.
DISTRIBUTION AND SERVICE PLANS
Each fund has adopted a distribution and service plan (the plans) under
Rule 12b-1 of the Investment Company Act of 1940 (the Rule). The Rule
provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is primarily intended to result
in the sale of shares of the fund except pursuant to a plan adopted by the
fund under the Rule. The Board of Trustees has adopted the plans to allow
the funds and FMR to incur certain expenses that might be considered to
constitute indirect payment by the funds of distribution expenses. Under
the plans, if payment by a fund to FMR of management fees should be deemed
to be indirect financing by the fund of the distribution of its shares,
such payment is authorized by the fund's plan.
The plans specifically recognize that FMR, either directly or through FDC,
may use its management fee revenue, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the funds. In addition,
the plans provide that FMR may use its resources, including its management
fee revenue, to make payments to third parties that provide assistance in
selling the funds' shares, or to third parties, including banks, that
render shareholder support services. For the fiscal year ended January 31,
1994, payments to third parties amounted to $26,634 (money market
fund) and $24,520 (high yield fund).
Each fund's plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
the implementation of the plans prior to their approval, and have
determined that there is a reasonable likelihood that the plans will
benefit the funds and their shareholders. In particular, the Trustees
noted that the plans do not authorize payments by the funds other than
those made to FMR under its management contracts with the funds. To the
extent that the plans give FMR and FDC greater flexibility in connection
with the distribution of shares of the funds, additional sales of the
funds' shares may result. Additionally, certain shareholder support
services may be provided more effectively under the plans by local entities
with whom shareholders have other relationships. The plans were approved
by the funds' shareholders on January 30, 1987 (money market fund) and
January 21, 1987 (high yield fund).
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services,
and servicing and recordkeeping functions. FDC intends to engage banks
only to perform such functions. However, changes in federal or state
statutes and regulations pertaining to the permissible activities of banks
and their affiliates or subsidiaries, as well as further judicial or
administrative decisions or interpretations, could prevent a bank from
continuing to perform all or a part of the contemplated services. If a
bank were prohibited from so acting, the Trustees would consider what
actions, if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the operation of
the funds might occur, including possible termination of any automatic
investment or redemption or other services then provided by the bank. It
is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences. The funds may
execute portfolio transactions with and purchase securities issued by
depository institutions that receive payments under the plans. No
preference will be shown in the selection of investments for the
instruments of such depository institutions. In addition, state securities
laws on this issue may differ from the interpretations of federal law
expressed herein, and banks and other financial institutions may be
required to register as dealers pursuant to state law.
INTEREST OF FMR AFFILIATES
United Missouri is each fund's custodian and transfer agent. United
Missouri has entered into sub-contracts with FSC, an affiliate of FMR,
under the terms of which FSC performs the processing activities associated
with providing transfer agent and shareholder servicing functions for each
fund. Under the sub-contracts, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional information,
and all other reports, notices, and statements to shareholders, except
proxy statements. FSC also pays all out-of-pocket expenses associated with
transfer agent services.
United Missouri pays FSC an annual fee of $14.04 (money market fund)
and $26.03 (high yield fund) per regular account with a balance of
$5,000 or more, $10.21 (money market fund) and $15.31 (high
yield fund) per regular account with a balance of less than $5,000, and a
supplemental activity charge of $2.25 for standing order transactions
and $6.11 for other monetary transactions. The account fee and
monetary transaction charge for money market fund accounts set up as Core
Accounts in the Fidelity Ultra Service Account program are $ 12.61 and
$.76 , respectively. These fees and charges are subject to annual cost
escalation based on postal rate changes and changes in wage and price
levels as measured by the National Consumer Price Index for Urban Areas.
With respect to institutional client master accounts, United Missouri pays
FSC a per account fee of $95 and monetary transactions charges of $20, or
$17.50, depending on the nature of services provided.
Prior to November 14, 1991 (money market fund) and November 7, 1991 (high
yield fund), Shawmut Bank, N.A. (Shawmut) served as each fund's custodian
and transfer agent and also sub-contracted with FSC to perform the
processing activities associated with providing transfer agent and
shareholder servicing functions for the funds. Beginning June 1, 1989, FSC
was compensated by Shawmut on the same basis as it is currently compensated
by United Missouri (although fee rates and charges were adjusted
periodically to reflect postal rate changes and changes in wage and price
levels as measured by the National Consumer Price Index for Urban Areas).
Transfer agent fees, including reimbursement for out-of-pocket expenses,
paid to FSC for the fiscal year ended January 1, 1993, the fiscal period
August 1, 1992 through January 31, 1993, and the fiscal year ended July 31,
1992 are indicated in the table below.
TRANSFER AGENT FEES
1994 1993 1992
Money Market Fund $ 1,151,924 $ 549,231 $ 1,155,030
High Yield Fund $ 1,144,379 $ 535,253 $ 846,872
United Missouri has an additional sub-contract with FSC, pursuant to which
FSC performs the calculations necessary to determine each fund's net asset
value per share and dividends and maintains each fund's accounting records.
The annual fee rates for these pricing and bookkeeping services are based
on the funds' average net assets, and are presented in the table below.
PRICING AND BOOKKEEPING ANNUAL FEE RATES
$0-$500 Greater than
Million $500 Million Minimum per Year Maximum per Year
Money Market Fund .0175% .0075% $ 20,000 $ 750,000
High Yield Fund .04% .02% $ 45,000 $ 750,000
Prior to November 14, 1991 (money market fund) and November 7, 1991 (high
yield fund), Shawmut sub-contracted with FSC for pricing and bookkeeping
services. Beginning July 1, 1991, FSC was compensated for these services
by Shawmut on the same basis as it is currently compensated by United
Missouri. Prior to July 1, 1991, the annual fee paid to FSC for pricing and
bookkeeping services was based on two schedules, one pertaining to the
funds' average net assets and one pertaining to the type and number of
transactions each fund made.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for fiscal 1994, 1993, and 1992 are indicated in the
table below.
PRICING AND BOOKKEEPING FEES
1994 1993 1992
Money Market Fund $ 109,375 $ 57,397 $ 137,366
High Yield Fund $ 424,275 $ 207,765 $ 389,823
The transfer agent fees and charges and pricing and bookkeeping fees
described above are paid to FSC by United Missouri, which is entitled to
reimbursement from the funds for these expenses.
FSC has entered into an agreement with Fidelity Brokerage Services, Inc.
(FBSI), a subsidiary of FMR Corp., pursuant to which FBSI performs certain
recordkeeping, communication, and other services for money market fund
shareholders participating in the Fidelity Ultra Service Account program.
FBSI directly charges each Ultra Service Account client that chooses the
enhanced features, an administrative fee at a rate of $5.00 per month for
these services, which is in addition to the transfer agency fee received by
FSC. Administrative fees paid to FBSI by money market fund shareholders
participating in the Fidelity Ultra Service Account program amounted to
approximately $128,815 for fiscal 1994.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreement calls
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Fidelity Massachusetts Tax-Free Money Market Portfolio
and Fidelity Massachusetts Tax-Free High Yield Portfolio are funds of
Fidelity Massachusetts Municipal Trust, an open-end management investment
company organized as a Massachusetts business trust on December 14, 1981.
On July 27, 1983, the Declaration of Trust was amended to change the name
of the trust from Cash Assets Fund to Fidelity Massachusetts Tax-Exempt
Money Market Trust. On September 15, 1983, the trust's name was changed to
Fidelity Massachusetts Tax-Free Fund. On February 28, 1991, the trust's
name was changed to Fidelity Massachusetts Municipal Trust. Currently,
there are three funds of the trust: Fidelity Massachusetts Tax-Free Money
Market Portfolio, Fidelity Massachusetts Tax-Free High Yield Portfolio, and
Spartan Massachusetts Municipal Money Market Portfolio. The Declaration of
Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying names
"Fidelity" and "Spartan" may be withdrawn. There is a remote possibility
that one fund might become liable for any misstatement in its prospectus or
statement of additional information about another fund.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to
be allocated in proportion to the asset value of the respective funds,
except where allocations of direct expense can otherwise be fairly made.
The officers of the trust, subject to the general supervision of the Board
of Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or the Trustees shall include a provision limiting the obligations
created thereby to the trust and its assets. The Declaration of Trust
provides for indemnification out of each fund's property of any
shareholders held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects
Trustee s against any liability to which they would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar of net
asset value per share you own. The shares have no preemptive or conversion
rights; the voting and dividend rights, the right of redemption, and the
privilege of exchange are described in the Prospectus. Shares are fully
paid and nonassessable, except as set forth under the heading "Shareholder
and Trustee Liability" above. Shareholders representing 10% or more of the
trust or a fund may, as set forth in the Declaration of Trust, call
meetings of the trust or a fund for any purpose related to the trust or
fund, as the case may be, including, in the case of a meeting of the entire
trust, the purpose of voting on removal of one or more Trustees. The trust
or any fund may be terminated upon the sale of its assets to another
open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a
majority of the trust or the fund, as determined by the current
value of each shareholder's investment in the fund or trust. If not so
terminated, the trust and the funds will continue indefinitely. The
trust may invest all of its assets in another investment company.
CUSTODIAN. United Missouri, 1010 Grand Avenue, Kansas City, Missouri
64106, is custodian of the assets of each fund. The custodian is
responsible for the safekeeping of the funds' assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the funds or in deciding which
securities are purchased or sold by the funds. The funds may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. Transactions that have occurred to date include mortgages and
personal and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. Price Waterhouse , 160 Federal Street, Boston,
Massachusetts, serves as the trust's independent accountant. The auditor
examines financial statements for the funds and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The funds' Annual Report for the fiscal year ended January 31, 1994 is a
separate report supplied with this Statement of Additional Information and
is incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days remaining to its maturity, adding
these calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a stated
final maturity basis, although there are some exceptions to this rule.
For example, it if is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such a s a call, refunding, or
redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
When a municipal bond issuer has committed to call an issuer of bonds and
has established an independent escrow account that is sufficient to, and is
pledged to, refund that issuer, the number of days to maturity for the
prerefunded bond is considered to be the number of days to the announced
call date of the bonds.
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating organizations when
determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF STATE AND
MUNICIPAL NOTES:
Moody's ratings for state and municipal and other short-term obligations
will be designated Moody's Investment Grade (MIG, or VMIG for variable rate
obligations). This distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important in the short
run. Symbols used will be as follows:
MIG-1/VMIG-1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2 - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
MIG-3/VMIG-3 - This designation denotes favorable quality, with all
security elements accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may
be narrow and market access for refinancing is likely to be less well
established.
MIG-4/VMIG-4 - This designation denotes adequate quality protection
commonly regarded as required of an investment security is present and,
although not distinctly or predominantly speculative, there is specific
risk.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S RATINGS OF STATE AND
MUNICIPAL NOTES:
SP-1 - Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2 - Satisfactory capacity to pay principal and interest.
SP-3 - Speculative capacity to pay principal and interest.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S MUNICIPAL BOND RATINGS:
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds rated Baa are considered medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times in the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments of or maintenance of other
terms of the contract over any long period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Those bonds in the Aa, A, Baa, Ba, and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1, Baa1, Ba1, and B1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S MUNICIPAL BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated debt issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
SPARTAN MASSACHUSETTS MUNICIPAL MONEY MARKET PORTFOLIO
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C>
1............................................... Cover Page
2 a............................................ Expenses
b,c.......................................... Contents; The Fund at a Glance; Who May Want To Invest
3 *
a,b............................................
c........................................... Performance
d........................................... *
</TABLE>
4 a(i)......................................... Charter
<TABLE>
<CAPTION>
<S> <C>
a(ii)....................................... The Fund at a Glance; Investment Principles; Securities
and Investment Practices
b............................................ Securities and Investment Practices
c............................................. Who May Want to Invest; Investment Principles; Securities
and Investment Practices
5 a............................................ Charter
b(i)........................................ Cover Page; Doing Business with Fidelity; Charter
b(ii)....................................... Charter; Breakdown of Expenses
b(iii)...................................... Expenses; Breakdown of Expenses
c,d........................................ Charter; Breakdown of Expenses; Cover Page; FMR and Its
Affiliates
e............................................ FMR and Its Affiliates
f............................................. Expenses
g............................................ *
5A............................................ *
6 a(i)........................................ Charter
a(ii)....................................... How to Buy Shares; How to Sell Shares; Transaction
Details; Exchange Restrictions
a(iii)..................................... *
b............................................ *
c........................................... Exchange Restrictions
d........................................... *
e........................................... Doing Business with Fidelity; How to Buy Shares; How to
Sell Shares; Investor Services
f,g......................................... Dividends, Capital Gains, and Taxes
7 a........................................... Charter; Cover Page
b........................................... How to Buy Shares; Transaction Details
c........................................... *
d........................................... How to Buy Shares
e........................................... *
f............................................ Breakdown of Expenses
8 .............................................. How to Sell Shares; Investor Services; Transaction Details;
Exchange Restrictions
9 .............................................. *
* Not Applicable
</TABLE>
SPARTAN MASSACHUSETTS MUNICIPAL MONEY MARKET PORTFOLIO
CROSS REFERENCE SHEET
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
Form N-1A Item Number SAI Caption
10,11......................................... Cover Page
12.............................................. *
13 a,b,c.................................... Investment Policies and Limitations
d........................................... *
14 a,b........................................ Trustees and Officers
c........................................... *
15 a,b..................................... *
c........................................... Trustees and Officers
16 a(i)....................................... FMR
a(ii)....................................... Trustees and Officers
a(iii),b................................... Management Contract; Interest of FMR Affiliates
c,d,e...................................... *
f............................................ Distribution and Service Plan
g........................................... *
h........................................... Description of the Trust
i............................................ Interest of FMR Affiliates
17 a........................................ Portfolio Transactions
b........................................... *
c........................................... Portfolio Transactions
d,e..................................... *
18 a........................................ Description of the Trust
b........................................... *
19 a....................................... Additional Purchase and Redemption Information
b........................................... Valuation of Portfolio Securities; Additional Purchase and
Redemption Information
c........................................... *
20.............................................. Distributions and Taxes
21 a(i),(ii)................................. Interest of FMR Affiliates
a(iii),b,c................................ *
22.............................................. Performance
23.............................................. *
</TABLE>
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how the fund
invests and the services available to shareholders.
A Statement of Additional Information dated March 19, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Investments in the fund are neither insured nor guaranteed by the U.S.
government, and there can be no assurance that the fund will maintain a
stable $1.00 share price.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, savings association, insured depositary
institution, or government agency, nor are they federally insured or
otherwise protected by the FDIC, the Federal Reserve Board, or any other
agency. Investments in the fund involve investment risk, including possible
loss of principal. The value of the investment and its return will
fluctuate and are not guaranteed. When sold, the value of the investment
may be higher or lower than the amount originally invested.
Spartan Massachusetts Municipal Money Market seeks a high level of
current income free from federal income tax and Massachusetts personal
income tax. It maintains a stable $1.00 share price by investing in
high-quality, short-term municipal obligations.
SPARTAN(Registered trademark)
MASSACHUSETTS
MUNICIPAL
MONEY MARKET
PORTFOLIO
PROSPECTUS
MARCH 19, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
MFR-pro-394
CONTENTS
KEY FACTS THE FUND AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES The fund's yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary
of the fund's financial data.
PERFORMANCE How the fund has
done over time.
THE FUND IN DETAIL CHARTER How the fund is
organized.
INVESTMENT PRINCIPLES AND RISKS
The fund's overall approach to
investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different
ways to set up your account.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money
out and closing your account.
INVESTOR SERVICES Services to
help you manage your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND
ACCOUNT POLICIES TAXES
TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
<r>KEY FACTS</r>
THE FUND AT A GLANCE
GOAL: High current tax-free income for Massachusetts residents while
maintaining a stable $1.00 share price. As with any mutual fund, there is
no assurance that the fund will achieve its goal.
STRATEGY: Invests in high-quality, short-term securities whose interest is
free from federal income tax and Massachusetts personal income tax.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. FMR Texas Inc. (FTX), a
subsidiary of FMR, chooses investments for the fund.
SIZE: As of January 31 , 1994, the fund had over $346 million in
assets.
WHO MAY WANT TO INVEST
This non-diversified fund may be appropriate for investors in higher tax
brackets who seek high current income that is free from federal and
Massachusetts personal income taxes. The rate of income will vary from day
to day, generally reflecting changes in interest rates. The fund is managed
to keep its share price stable at $1.00.
By itself, the fund does not constitute a balanced investment plan.
However,
because it emphasizes stability, it could be well-suited for a portion of
your savings.
The Spartan family of funds is designed for cost-conscious investors
looking for higher yields through lower costs. The Spartan
Approach(Registered trademark) requires investors to make high minimum
investments and, in some cases, to pay for individual transactions.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk.
Massachusetts Tax-Free
Money Marketis in the MONEY
MARKET category.
(arrow) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(bullet) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund. See page for more information.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Exchange and wire transaction fees $5.00
Checkwriting fee, per check written $2.00
Account closeout fee $5.00
THESE FEES ARE WAIVED if your account balance at the time of the
transaction is $50,000 or more.
ANNUAL FUND OPERATING EXPENSES are paid out of the fund's assets. The fund
pays a management fee to FMR. Expenses are factored into the fund's share
price or dividends and are not charged directly to shareholder accounts
(see page ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
Management fee .50%
12b-1 fee None
Other expenses .00%
Total fund operating expenses .50%
EXAMPLES: Let's say, hypothetically, that the fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses after
the number of years indicated, first assuming that you leave your account
open, and then assuming that you close your account at the end of the
period:
Account open Account closed
After 1 year $ 5 $ 10
After 3 years $ 16 $ 21
After 5 years $ 28 $ 33
After 10 years $ 63 $ 68
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)
FINANCIAL HIGHLIGHTS
The table that follows has been audited by Price Waterhouse, independent
accountants. Their unqualified report is included in the fund's Annual
Report. The Annual Report is incorporated by reference into (is legally a
part of) the Statement of Additional Information.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
28.Periods ended January 31 1991C 1992D 1993E 1994
29.Net asset value, beginning of period $ 1,000 $ 1.000 $ 1.000 $ 1.000
30.Income from Investment Operations
.017 .034 .012 .019
Net interest income
31. Dividends from net interest income (.017) (.034) (.012) (.019)
32.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000
33.Total returnB 1.71 3.45 1.23 1.95%
% % %
34.RATIOS AND SUPPLEMENTAL DATA
35.Net assets, end of period (000 omitted) $ 122,114 $ 278,36 $ 333,65 $ 346,880
9 5
36.Ratio of expenses to average net assetsF -- .05 .17 .40%
% %A
37.Ratio of expenses to average net assets .50 .50 .50 .50%
before expense reductionsF %A % %A
38.Ratio of net interest income to average net 4.17 3.29 2.44 1.93%
assets %A % %A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C FROM MARCH 4, 1991 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1991
D YEAR ENDED JULY 31
E AUGUST 1, 1992 TO JANUARY 31, 1993
F DURING THE PERIODS SHOWN, FMR VOLUNTARILY REIMBURSED THE FUND FOR
CERTAIN EXPENSES.
PERFORMANCE
Money market fund performance can be measured as TOTAL RETURN or YIELD. The
total returns and yields that follow are based on historical fund results
and do not reflect the effect of any transaction fees you may have paid.
The figures would be lower if fees were taken into account.
The fund's fiscal year runs from February 1 through January 31. The tables
below show the fund's performance over past fiscal years compared to a
measure of inflation. The chart on page 7 helps you compare the
yields of this fund to those of its competitors.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Life of
January 31, 1994 year fundA
Spartan MA Money Market 1.95% 2.87%
Consumer Price
Index 2.52% 2.81%
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Life of
January 31, 1994 year fundA
Spartan MA Money Market 1.95% 8.60 %
Consumer Price
Index 2.52% 8.46%
A FROM MARCH 4, 1991
EXPLANATION OF TERMS
UNDERSTANDING
PERFORMANCE
SEVEN-DAY YIELD illustrates
the income earned by a
money market fund over a
recent seven-day period. TOTAL
RETURN reflects both the
reinvestment of income and
the change in a fund's share
price. Since money market
funds maintain a stable $1.00
share price, current seven-day
yields are the most common
illustration of money market
fund performance.
(checkmark)
TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in the fund over a
given period of time, expressed as an annual percentage rate. When a yield
assumes that income earned is reinvested, it is called an EFFECTIVE YIELD.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn before
taxes to equal a tax-free yield.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES are the IBC/Donoghue's MONEY FUND
AVERAGE(trademark), which assume reinvestment of distributions. The fund
compares its performance to the IBC Donoghue's Money Fund Averages/All
Tax-Free category. These averages, which currently reflect the performance
of over 140 mutual funds with similar objectives, are published in
the MONEY FUND REPORT(Registered trademark) by IBC USA (Publications),
Inc.
7-DAY YIELDS
Percentage (%)
Row: 1, Col: 1, Value: 2.61
Row: 1, Col: 2, Value: 2.69
Row: 2, Col: 1, Value: 2.67
Row: 2, Col: 2, Value: 2.62
Row: 3, Col: 1, Value: 3.11
Row: 3, Col: 2, Value: 2.97
Row: 4, Col: 1, Value: 3.34
Row: 4, Col: 2, Value: 3.07
Row: 5, Col: 1, Value: 3.2
Row: 5, Col: 2, Value: 3.0
Row: 6, Col: 1, Value: 2.54
Row: 6, Col: 2, Value: 2.46
Row: 7, Col: 1, Value: 2.38
Row: 7, Col: 2, Value: 2.14
Row: 8, Col: 1, Value: 2.48
Row: 8, Col: 2, Value: 2.15
Row: 9, Col: 1, Value: 2.91
Row: 9, Col: 2, Value: 2.67
Row: 10, Col: 1, Value: 2.33
Row: 10, Col: 2, Value: 2.13
Row: 11, Col: 1, Value: 2.42
Row: 11, Col: 2, Value: 2.16
Row: 12, Col: 1, Value: 2.88
Row: 12, Col: 2, Value: 2.69
Row: 13, Col: 1, Value: 1.88
Row: 13, Col: 2, Value: 1.81
Row: 14, Col: 1, Value: 1.95
Row: 14, Col: 2, Value: 1.87
Row: 15, Col: 1, Value: 2.1
Row: 15, Col: 2, Value: 1.96
Row: 16, Col: 1, Value: 2.1
Row: 16, Col: 2, Value: 1.98
Row: 17, Col: 1, Value: 2.31
Row: 17, Col: 2, Value: 2.13
Row: 18, Col: 1, Value: 1.72
Row: 18, Col: 2, Value: 1.79
Row: 19, Col: 1, Value: 1.93
Row: 19, Col: 2, Value: 1.86
Row: 20, Col: 1, Value: 1.98
Row: 20, Col: 2, Value: 1.97
Row: 21, Col: 1, Value: 2.15
Row: 21, Col: 2, Value: 2.16
Row: 22, Col: 1, Value: 1.99
Row: 22, Col: 2, Value: 1.95
Row: 23, Col: 1, Value: 1.9
Row: 23, Col: 2, Value: 1.91
Row: 24, Col: 1, Value: 2.17
Row: 24, Col: 2, Value: 2.13
Massachusett
s Tax-Free
Money Market
Competitive
funds average
1992
1993
THE CHART SHOWS THE 7-DAY EFFECTIVE YIELDS FOR THE FUND AND ITS
COMPETITIVE FUNDS AVERAGE AS OF THE LAST TUESDAY OF EACH MONTH FROM
JANUARY 1992 THROUGH DECEMBER 1993. YIELDS FOR THE FUND WOULD HAVE
BEEN LOWER IF FIDELITY HAD NOT REIMBURSED CERTAIN FUND EXPENSES.
The fund's recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
<r>THE FUND IN DETAIL</r>
CHARTER
MASSACHUSETTS TAX-FREE MONEY MARKETIS A MUTUAL FUND: an investment that
pools shareholders' money and invests it toward a specified goal. In
technical terms, the fund is currently a non-diversified fund of Fidelity
Massachusetts Municipal Trust, an open-end management investment company
organized as a Massachusetts business trust on December 14, 1981.
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the fund's activities,
review contractual arrangements with companies that provide services to the
fund, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUND MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These meetings
may be called to elect or remove trustees, change fundamental policies,
approve a management contract, or for other purposes. Shareholders not
attending these meetings are encouraged to vote by proxy. Fidelity will
mail proxy materials in advance, including a voting card and information
about the proposals to be voted on. The number of votes you are entitled to
is based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 225 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
The fund is managed by FMR, which handles the fund's business affairs. FTX
has primary responsibility for providing investment management services.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the fund.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trust), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
United Missouri Bank, N.A., is the fund's transfer agent, although it
employs FSC to perform these functions for the fund. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the fund's transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that the fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
THE FUND SEEKS TO EARN A HIGH LEVEL OF CURRENT INCOME that is free from
federal income tax and from the Massachusetts personal income tax while
maintaining a stable $1.00 share price by investing in high-quality,
short-term municipal securities of all types. As a result, when you sell
your shares, they should be worth the same amount as when you bought them.
Of course, there is no guarantee that the fund will maintain a stable $1.00
share price.
FMR normally invests at least 65% of the fund's total assets in state
tax-free securities, and normally invests so that at least 80% of the
fund's income distributions are free from federal income tax.
If you are subject to the federal alternative minimum tax, you should note
that the fund may invest all of its assets in municipal securities issued
to finance private activities. The interest from these investments is a
tax-preference item for purposes of the tax.
The fund's performance is closely tied to economic and political conditions
within the state of Massachusetts. The Commonwealth has recently
experienced fiscal difficulties , and although the past two years ended
with operating surpluses, the current year is expected to end with a
loss . Also, the unemployment rate in Massachusetts is higher than the
national average.
The fund stresses tax-free income, preservation of capital, and liquidity.
It does not seek the higher yields or capital appreciation that more
aggressive investments may provide. The fund's yield will vary from day to
day, generally reflecting current short-term interest rates and other
market conditions.
The fund follows industry-standard guidelines on the quality and maturity
of its investments, which are designed to help maintain a stable $1.00
share price. The fund will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities it buys. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a
default on the fund's investments could cause its share price (and the
value of your investment) to change.
FMR normally invests the fund's assets according to its investment
strategy. The fund does not expect to invest in federally taxable
obligations, but may invest a portion of its assets in state taxable
obligations. When FMR considers it appropriate for defensive purposes,
however, it may temporarily hold a substantial amount of uninvested
cash, or may invest more than normally permitted in taxable
obligations.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, and strategies FMR may employ in
pursuit of the fund's investment objective. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
fund achieve its goal. As a shareholder, you will receive financial reports
every six months detailing fund holdings and describing recent investment
activities.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. Municipal securities
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. A security's credit may be
enhanced by a bank, insurance company, or other financial institution. The
securities may carry fixed, variable, or floating interest rates. The fund
may own a municipal security directly or through a participation interest.
STATE TAX-FREE SECURITIES include municipal obligations issued by the
Commonwealth of Massachusetts or its counties, municipalities, authorities,
or other subdivisions. The ability of issuers to repay their debt can be
affected by many factors that impact the economic vitality of either the
state or a region within the state.
Other state tax-free securities include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations . The
economy of Puerto Rico is closely linked to the U.S. economy, and will
depend on the strength of the U.S. dollar, interest rates, the price
stability of oil imports, and the continued existence of favorable tax
incentives. Recent legislation reduced these incentives, but it is
impossible to predict what impact the changes will have.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
OTHER MUNICIPAL SECURITIES may include zero coupon bonds and asset-backed
securities.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, the fund
may pay periodic fees or accept a lower interest rate. Demand features,
standby commitments, and tender options are types of put features.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect the market value of the fund's assets.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to
the fund.
RESTRICTIONS: The fund may not purchase a security if, as a result, more
than 10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type. A fund that is not diversified may be more sensitive to
these changes, and also to changes in the market value of a single issuer
or industry.
RESTRICTIONS: The fund is considered non-diversified. Generally, to meet
federal tax requirements at the close of each quarter, a fund does not
invest more than 25% of its total assets in any one issuer and, with
respect to 50% of total assets, does not invest more than 5% of its total
assets in any one issuer. These limitations do not apply to U.S.
government securities. The fund may invest more than 25% of its total
assets in tax-free securities that finance similar types of projects.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements, and may make additional
investments while borrowings are outstanding.
RESTRICTIONS: The fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraph, can be changed without shareholder approval.
The fund seeks as high a level of income, exempt from federal and
Massachusetts personal income tax, as is consistent with the preservation
of capital and liquidity. The fund will normally invest so that at least
80% of its income distributions will be exempt from federal income tax. The
fund may borrow only for temporary or emergency purposes, but not in an
amount exceeding 33% of its total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily operations.
Expenses paid out of the fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.
The fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services.
FMR may, from time to time, agree to reimburse the fund for management
fees above a specified limit. FMR retains the ability to be
repaid by the fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease the fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fund
pays the fee at the annual rate of .25 % of its average net assets.
The total management fee rate for fiscal 1994, after reimbursement, was
.40%.
FMR HAS A SUB-ADVISORY AGREEMENT with FTX, which has primary responsibility
for providing investment management, while FMR retains responsibility for
providing other management services. FMR pays FTX 50% of its management fee
(before expense reimbursements) for these services.
FSC performs many transaction and accounting functions for the fund. These
services include processing shareholder transactions and calculating the
fund's share price. FMR, and not the fund, pays for these services.
To offset shareholder service costs, FMR or its affiliates also collect
the fund's $5.00 exchange fee, $5.00 account closeout fee, $5.00 fee for
wire purchases and redemptions, and the $2.00 checkwriting charge. For
fiscal 1994, these fees amounted to $5,455, $890, $720, and $4,762,
respectively.
The fund has adopted a Distribution and Service Plan. This plan recognizes
that FMR may use its resources, including management fees, to pay expenses
associated with the sale of fund shares. This may include payments to third
parties, such as banks or broker-dealers, that provide shareholder support
services or engage in the sale of the fund's shares. It is important to
note, however, that the fund does not pay FMR any separate fees for this
service.
<r>YOUR ACCOUNT</r>
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in the fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in the fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed below.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
THE FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. The fund is managed to keep its share price stable at $1.00.
The fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $25,000
TO ADD TO AN ACCOUNT $1,000
Through automatic investment plans $500
MINIMUM BALANCE $10,000
UNDERSTANDING THE
SPARTAN APPROACH(Registered trademark)
Fidelity's Spartan Approach is
based on the principle that
lower fund expenses can
increase returns. The Spartan
funds keep expenses low in
two ways. First, higher
investment minimums reduce
the effect of a fund's fixed
costs, many of which are paid
on a per-account basis.
Second, unlike most mutual
funds that include transaction
costs as part of overall fund
expenses, Spartan
shareholders pay directly for
the transactions they make.
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to "Spartan
check payable to Massachusetts
"Spartan Municipal Money
Massachusetts Market Portfolio."
Municipal Money Indicate your fund
Market Portfolio." account number on
Mail to the address your check and
indicated on the mail to the address
application. printed on your account
statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
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<TABLE>
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<S> <C> <C>
In Person (hand_graphic) (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.
</TABLE>
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<S> <C> <C>
Wire (wire_graphic) (bullet) There may be a $5.00 (bullet) There may be a $5.00
fee for each wire fee for each wire
purchase. purchase.
(bullet) Call 1-800-544-7777 to (bullet) Wire to:
set up your account Bankers Trust
and to arrange a wire Company,
transaction. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify "Spartan
Bank Routing Massachusetts
#021001033, Municipal Money
Account #00163053. Market Portfolio" and
Specify "Spartan include your account
Massachusetts number and your
Municipal Money name.
Market Portfolio" and
include your new
account number and
your name.
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<CAPTION>
<S> <C> <C>
Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.
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<TABLE>
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<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $10,000
worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table on page 17.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. Do not, however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
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IF YOUR ACCOUNT BALANCE IS LESS THAN $50,000, THERE ARE FEES FOR INDIVIDUAL REDEMPTION
TRANSACTIONS: $2.00 FOR EACH CHECK YOU WRITE AND $5.00 FOR EACH EXCHANGE, BANK WIRE,
AND ACCOUNT CLOSEOUT.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
$100,000.
(bullet) For Money Line transfers to
your bank account; minimum:
$10; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Trust names appear on the
account.
(bullet) The trustee must sign the
letter indicating capacity as
Business or trustee. If the trustee's name
Organization is not in the account
registration, provide a copy of
the trust document certified
within the last 60 days.
(bullet) At least one person
Executor, authorized by corporate
Administrator, resolution to act on the
Conservator, account must sign the letter.
Guardian (bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.
Wire (wire_graphic) All account types (bullet) You must sign up for the wire
feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.
</TABLE>
<TABLE>
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<S> <C> <C>
Check (check_graphic) All account types (bullet) Minimum check: $1,000.
(bullet) All account owners must sign
a signature card to receive a
checkbook.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing. There may be a $5.00 fee for
each exchange out of the fund; unless you place your transaction on
Fidelity's automated exchange services.
Note that exchanges out of the fund are limited to four per calendar year,
and that they may have tax consequences for you. For complete policies and
restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers services that let you trans fer money into your fund
account, or be tween fund accounts, automatically.
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM $500
FREQUENCY Monthly or quarterly
SETTING UP Complete the
appropriate section on
the fund application.
For existing accounts,
call 1-800-544-6666
for an application.
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY
FUND
MINIMUM $500
FREQUENCY Every pay period
SETTING UP Check the
appropriate box on
the fund application,
or call
1-800-544-6666 for
an authorization form.
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
MINIMUM $500
FREQUENCY Monthly, bimonthly,
quarterly, or annually
SETTING UP To establish, call
1-800-544-6666 after
both accounts are
opened.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>
DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distributes substantially all of its net investment income and
capital gains, if any, to shareholders each year. Income dividends are
declared daily and paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. The fund offers three
options:
5. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned this
option.
6. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
7. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions, if any, will be automatically invested in
another identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the NAV as
of the record date of the distribution. The mailing of distribution checks
will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
The fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS. Money
market funds usually don't
make capital gain
distributions.
(checkmark)
TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the fund's tax implications.
Interest income that the fund earns is distributed to shareholders as
income dividends. Interest that is federally tax-free remains tax-free when
it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends. Long-term capital gain
distributions are taxed as long-term capital gains. These distributions are
taxable when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31. Fidelity will send you and the IRS a
statement showing the tax status of the distributions paid to you in the
previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. The fund may invest up to 100% of its assets in
these securities. Individuals who are subject to the tax must report this
interest on their tax returns.
To the extent the fund's income dividends are derived from state tax-free
investments, they will be free from the Massachusetts personal income tax.
During fiscal 1994, 100% of the fund's income dividends was free from
federal income tax and 90.5% was free from the Massachusetts personal
income tax. 4.9% of the fund's income dividends was subject to the federal
alternative minimum tax.
TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates the fund's net asset value as of the
close of business of the NYSE, normally 4 p.m. Eastern time.
THE FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Like most money market funds, the fund values the securities it owns on the
basis of amortized cost. This method minimizes the effect of changes in a
security's market value and helps the fund to maintain a stable $1.00 share
price.
THE FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they are of
a size that would disrupt management of the fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) The fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees the fund or its transfer agent
has incurred.
(bullet) The fund reserves the right to limit all accounts maintained or
controlled by any one person to a maximum total balance of $2 million.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUND THROUGH A BROKER, who may charge you
a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect the
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) The fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
THE FEES FOR INDIVIDUAL TRANSACTIONS are waived if your account balance at
the time of the transaction is $50,000 or more. Otherwise, you should note
the following:
(bullet) The $2.00 checkwriting charge will be deducted from your account.
(bullet) The $5.00 exchange fee will be deducted from the amount of your
exchange.
(bullet) The $5.00 wire fee will be deducted from the amount of your wire.
(bullet) The $5.00 account closeout fee does not apply to exchanges or
wires, but it will apply to checkwriting.
IF YOUR ACCOUNT BALANCE FALLS BELOW $10,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed and the $5.00 account closeout fee will be charged.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of the fund
for shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, the fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) The fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if the fund receives
or anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the fund.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves the right to terminate or modify the exchange privilege in
the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
This prospectus is printed on recycled paper using soy-based inks.
SPARTAN(registered trademark) MASSACHUSETTS MUNICIPAL MONEY MARKET
PORTFOLIO
A FUND OF FIDELITY MASSACHUSETTS MUNICIPAL TRUST
STATEMENT OF ADDITIONAL INFORMATION
MARCH 19, 1994
This Statement is not a prospectus but should be read in conjunction
with the fund's current Prospectus (dated March 19, 1994). Please retain
this document for future reference. The Annual Report for the fiscal year
ended January 31, 1994 is incorporated herein by reference. To obtain an
additional copy of the Prospectus or the Annual Report, please call
Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Factors Affecting Massachusetts
Special Factors Affecting Puerto Rico
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contract
Distribution and Service Plan
Interest of FMR Affiliates
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISER
FMR Texas Inc. (FTX)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENTS
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co. (FSC)
SMA-ptb-394
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of the fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with the fund's investment policies and
limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, except for the fundamental investment limitations set forth below,
the investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed without
shareholder approval. THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short;
(3) purchase securities on margin, except that the fund may obtain such
short-term credits as are necessary for the clearance of transactions;
(4) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(5) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(6) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(9) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties (for this purpose,
purchasing debt securities and engaging in repurchase agreements do not
constitute lending).
IN ADDITION, THE FUND MAY:
(10) notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental
investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (4)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest more than 25% of its total
assets in industrial revenue bonds related to a single industry.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitations (6) and (i), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
AFFILIATED BANK TRANSACTIONS. The fund may engage in transactions
with financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the Investment Company Act of 1940.
These transactions may include repurchase agreements with custodian
banks; short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); municipal
securities; U.S. government securities with affiliated financial
institutions that are primary dealers in these securities; short-term
currency transactions; and short-term secured borrowing s. In accordance
with exemptive orders issued by the Securities and Exchange Commission, the
Board of Trustees has established and periodically reviews procedures
applicable to transactions involving affiliated financial institutions.
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the fund may purchase only high-quality securities that FMR
believes present minimal credit risk. To be considered high-quality, a
security must be rated in accordance with applicable rules in one of the
two highest categories for short-term securities by at least two nationally
recognized rating services (or by one, if only one rating service has rated
the security), or, if unrated, judged to be of equivalent quality by FMR.
The fund must limit its investments to securities with remaining maturities
of 397 days or less and must maintain a dollar-weighted average maturity of
90 days or less.
DELAYED-DELIVERY TRANSACTIONS. The fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by the fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered.
When purchasing securities on a delayed-delivery basis, the fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because the fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If the fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When the fund has sold a security on a
delayed-delivery basis, the fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities,
the fund could miss a favorable price or yield opportunity, or could suffer
a loss.
The fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
A demand instrument with a conditional demand feature must have received
both a short-term and a long-term high-quality rating or, if unrated, have
been determined to be of comparable quality pursuant to procedures adopted
by the Board of Trustees. A demand instrument with an unconditional demand
feature may be acquired solely in reliance upon a short-term high-quality
rating or, if unrated, upon a finding of comparable short-term quality
pursuant to procedures adopted by the Board of Trustees.
The fund may invest in fixed-rate bonds that are subject to third party
puts and in participation interests in such bonds held in trust or
otherwise. These bonds and participation interests have tender options or
demand features that permit the fund to tender (or put) the bonds to an
institution at periodic intervals and to receive the principal amount
thereof. The fund considers variable rate instruments structured in this
way (Participating VRDOs) to be essentially equivalent to other VRDOs it
purchases. The IRS has not ruled whether the interest on Participating
VRDOs is tax-exempt and, accordingly, the fund intends to purchase these
instruments based on opinions of bond counsel.
The fund may invest in variable or floating rate instruments that
ultimately mature in more than 397 days, if the fund acquires a right to
sell the instruments that meets certain requirements set forth in Rule
2a-7. Variable rate instruments (including instruments subject to a demand
feature) that mature in 397 days or less may be deemed to have maturities
equal to the period remaining until the next readjustment of the interest
rate. Other variable rate instruments with demand features may be deemed to
have a maturity equal to the period remaining until the next adjustment of
the interest rate or the period remaining until the principal amount can be
recovered through demand. A floating rate instrument subject to a demand
feature may be deemed to have a maturity equal to the period remaining
until the principal amount can be recovered through demand.
TENDER OPTION BONDS are created by coupling an intermediate- or long-term,
fixed-rate, tax-exempt bond (generally held pursuant to a custodial
arrangement) with a tender agreement that gives the holder the option to
tender the bond at its face value. As consideration for providing the
tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, the fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. Subject to applicable regulatory requirements, the fund may buy
tender option bonds if the agreement gives the fund the right to tender the
bond to its sponsor no less frequently than once every 397 days. In
selecting tender option bonds for the fund, FMR will consider the
creditworthiness of the issuer of the underlying bond, the custodian, and
the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
ZERO COUPON BONDS do not make regular interest payments. Instead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, the fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
STANDBY COMMITMENTS are puts that entitle holders to same-day settlement at
an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. The fund may
acquire standby commitments to enhance the liquidity of portfolio
securities, but only when the issuers of the commitments present minimal
risk of default.
Ordinarily the fund may not transfer a standby commitment to a third party,
although it could sell the underlying municipal security to a third party
at any time. The fund may purchase standby commitments separate from or in
conjunction with the purchase of securities subject to such commitments.
In the latter case, the fund would pay a higher price for the securities
acquired, thus reducing their yield to maturity. Standby commitments will
not affect the dollar-weighted average maturity of the fund, or the
valuation of the securities underlying the commitments.
Issuers or financial intermediaries may obtain letters of credit or other
guarantees to support their ability to buy securities on demand. FMR may
rely upon its evaluation of a bank's credit in determining whether to
support an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
Standby commitments are subject to certain risks, including the ability of
issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by the fund; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. The fund may invest a portion of its assets
in municipal leases and participation interests therein. These
obligations, which may take the form of a lease, an installment purchase,
or a conditional sale contract, are issued by state and local governments
and authorities to acquire land and a wide variety of equipment and
facilities. Generally, the fund will not hold such obligations directly as
a lessor of the property, but will purchase a participation interest in a
municipal obligation from a bank or other third party. A participation
interest gives the fund a specified, undivided interest in the obligation
in proportion to its purchased interest in the total amount of the
obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
FEDERALLY TAXABLE OBLIGATIONS. The fund does not intend to invest in
securities whose interest is federally taxable; however, from time to time,
the fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, the fund may invest in obligations whose interest is federally
taxable pending the investment or reinvestment in municipal securities of
proceeds from the sale of its shares or sales of portfolio securities.
Should the fund invest in federally taxable obligations, it would purchase
securities that in FMR's judgment are of high quality. These would include
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities; obligations of domestic banks; and repurchase
agreements. The fund will purchase taxable obligations only if they meet
its quality requirements.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before the Massachusetts
legislature that would affect the state tax treatment of the fund's
distributions. If such proposals were enacted, the availability of
municipal obligations and the value of the fund's holdings would be
affected and the Trustees would reevaluate the fund's investment objective
and policies.
The fund anticipates being as fully invested as practicable in municipal
securities; however, there may be occasions when, as a result of maturities
of portfolio securities, sales of fund shares, or in order to meet
redemption requests, the fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions, the fund may be required to sell securities at a loss.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement is a taxable
obligation which involves the obligation of the seller to pay the
agreed-upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed-upon resale price and marked to
market daily) of the underlying security. The fund may engage in a
repurchase agreement with respect to any security in which it is authorized
to invest even if the underlying security matures in more than 397 days.
While it does not presently appear possible to eliminate all risks from
these transactions (particularly the possibility of a decline in the market
value of the underlying securities, as well as delays and costs to the fund
in connection with bankruptcy proceedings), it is the fund's current policy
to limit repurchase agreement transactions to those parties whose
creditworthiness has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The fund will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the fund's
assets and may be viewed as a form of leverage.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). Investments currently considered
by the fund to be illiquid include restricted securities and municipal
lease obligations determined by FMR to be illiquid. In the absence of
market quotations, illiquid investments are valued for purposes of
monitoring amortized cost valuation at fair value as determined in good
faith by a committee appointed by the Board of Trustees. If through a
change in values, net assets, or other circumstances, the fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security. However, in general, the fund anticipates
holding restricted securities to maturity or selling them in an exempt
transaction.
INTERFUND BORROWING PROGRAM. The fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates, but will participate in the interfund borrowing program only as
a borrower. Interfund loans normally will extend overnight, but can have a
maximum duration of seven days. A fund will borrow through the program
only when the costs are equal to or lower than the costs of bank loans.
Loans may be called on one day's notice, and the fund may have to borrow
from a bank at a higher interest rate if an interfund loan is not called or
renewed.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public colleges and universities, and
those representing pooled interests in student loans. Bonds issued to
supply public educational institutions with funds are subject to the risk
of unanticipated revenue decline, primarily the result of decreasing
student enrollment. Among the factors that may affect enrollment are
restrictions on students' ability to pay tuition, availability of state and
federal funding, and general economic conditions.
Student loan revenue bonds are backed by pools of student loans and are
generally offered by state (or substate) authorities or commissions.
Student loans are guaranteed by state guarantee agencies and reinsured by
the Department of Education. The risks associated with these issues is
that default on the student loans may result in prepayment to bondholders
and an earlier-than-anticipated retirement of the bond.
SPECIAL FACTORS AFFECTING MASSACHUSETTS
SUMMARY. The Commonwealth of Massachusetts and certain of its cities
and towns and public bodies have experienced financial difficulties that
have adversely affected their credit standing. The prolonged effects of
such financial difficulties could adversely affect the market value of the
instruments held in the fund. The information summarized below describes
some of the more significant factors that could affect the fund or the
ability of the obligors to pay debt service. The sources of such
information are the official statements of issuers located in the
Commonwealth of Massachusetts, as well as other publicly available
documents, and statements of public information contained in such
statements and documents, but FMR is not aware of facts which would render
such information inaccurate.
FISCAL MATTERS - GENERAL. The Commonwealth's constitution requires, in
effect, that its budget, though not necessarily its operating expenditures
and revenues, be balanced each year. In addition, the Commonwealth has
certain budgetary procedures and fiscal controls in place that are designed
to ensure that sufficient cash is available to meet the Commonwealth's
obligations, that state expenditures are consistent with periodic
allotments of annual appropriations and that the funds are expended
consistent with statutory and public purposes. The General Fund, in
addition to being the Commonwealth's primary operating fund, ordinarily
functions as a residuary fund to receive otherwise unallocated revenues and
to provide monies to transfer to the funds as required. The condition of
the General Fund is generally regarded as the principal indicator of
whether the Commonwealth's operating revenues and expenses are in balance.
The other principal operating funds (the Local Aid Fund and the Highway
Fund) are customarily funded to at least a zero balance.
The Commonwealth of Massachusetts has recently experienced fiscal
difficulties. Commonwealth spending exceeded revenues in each of the three
fiscal years commencing fiscal 1989. Operating losses in fiscal 1989, 1990
and 1991 totalled $672 million, $1.251 billion and $21 million,
respectively. During the period, fund balances in the budgeted operating
funds increased from opening balances of negative $319.3 million in fiscal
1989 to ending balances of positive $237.1 million in fiscal 1991,
primarily due to deficit borrowings. The Commonwealth ended fiscal 1992 and
1993 with operating surpluses of $312.3 million and $13.1 million,
respectively, and statutory closing fund balances increased to $562.5 at
the end of fiscal 1993. Fiscal 1994 is estimated to end with a current
operating loss of $180.5 million and ending fund balances of $382.0
million.
On July 19, 1993, the Governor signed into law the fiscal 1994 budget.
As signed by the Governor, the budget authorizes approximately $15.463
billion in fiscal 1994 expenditures. The Legislature had originally
approved a fiscal 1994 budget with appropriations totalling $15.545
billion. The Governor exercised his authority to veto and reduce individual
line-items and reduced total expenditures by approximately $82.4 million in
order to bring the fiscal 1994 budget into balance and to fund fiscal 1993
appropriations continued into fiscal 1994 and certain other fiscal 1994
expenditures which the Governor believes will be necessary. Total budgeted
expenditures and other uses for fiscal 1994 (excluding any supplemental
appropriations) are currently estimated to be approximately $15.500
billion. Budgeted revenues and other sources to be collected in fiscal 1994
are currently estimated by the Executive Office for Administration and
Finance to be approximately $15.535 billion. On September 24, 1993, the
Governor filed a supplemental appropriations bill recommending $75.4
million in fiscal 1994 appropriations. The Governor had previously filed on
June 28 and August 25, two other supplemental appropriation bills totalling
$34.0 million to fund certain collective bargaining agreements. On January
4, 1994, the legislature approved a supplemental appropriation bill
totalling approximately $158.1 million. The Governor is currently reviewing
the bill to determine what vetoes, if any, may be necessary.
The current economic slowdown in Massachusetts has led to increased
expenditures. Municipalities and agencies of the Commonwealth are
experiencing the same economic effects. Moreover, they are affected by the
financial condition of the Commonwealth, because they receive substantial
funding from the Commonwealth.
LIMITATIONS ON TAX REVENUES. In Massachusetts, efforts to limit and
reduce levels of taxation have been underway for several years. Limits
were established on state tax revenues by legislation enacted on October
25, 1986 and by an initiative petition approved by the voters on November
4, 1986. The two measures are inconsistent in several respects.
Chapter 62F, which was added to the General Laws by initiative petition
in November 1986, establishes a state tax revenue growth limit for each
fiscal year equal to the average positive rate of growth in total wages and
salaries in the Commonwealth, as reported by the federal government, during
the three calendar years immediately preceding the end of such fiscal year.
Chapter 62F also requires that allowable state tax revenues be reduced by
the aggregate amount received by local governmental units from any newly
authorized or increased local option taxes or excises. Any excess in
state tax revenue collections for a given fiscal year over the prescribed
limit, as determined by the State Auditor, is to be applied as a credit
against the then current personal income tax liability of all taxpayers in
the Commonwealth in proportion to the personal income tax liability of all
taxpayers in the Commonwealth for the immediately preceding tax year. The
legislation enacted in October 1986, which added Chapter 29B to the General
Laws, also establishes an allowable state revenue growth factor by
reference to total wages and salaries in the Commonwealth. However, rather
than utilizing a three-year average wage and salary growth rate, as used by
Chapter 62F, Chapter 29B's formula utilizes one-third of the positive
percentage gain in Massachusetts wages and salaries, as reported by the
federal government, during the three calendar years immediately preceding
the end of a given fiscal year. Additionally, unlike Chapter 62F, Chapter
29B excludes from its definition of state tax revenues income derived from
local option taxes and excises and from revenues needed to fund debt
service costs.
Tax revenues through fiscal 1989 were lower than the limit set by either
Chapter 62F or Chapter 29B. The Executive Office for Administration and
Finance currently estimates that state tax revenues in fiscal 1994 will not
reach the limit imposed by either of these statutes.
In January 1992, the Governor announced his intention to seek an
amendment to the state constitution that would require any Commonwealth tax
increase to receive at least a two-thirds majority vote in each house of
the Legislature. No action has yet been taken on this proposal.
PROPOSITION 2 1/2. In November 1980, voters in the Commonwealth
approved a statewide tax limitation initiative petition, commonly known as
Proposition 2 1/2, to constrain levels of property taxation and to limit
the charges and fees imposed on cities and towns by certain governmental
entities, including county governments. Proposition 2 1/2 is not a
provision of the state constitution and accordingly is subject to amendment
or repeal by the legislature. Proposition 2 1/2, as amended to date,
limits the property taxes that may be levied by any city or town in any
fiscal year to the lesser of (i) 2.5% of the full and fair cash valuation
of the real estate and personal property therein, and (ii) 2.5% over the
previous year's levy limit plus any growth in the tax base from certain new
construction and parcel subdivisions. Proposition 2 1/2 also limits any
increase in the charges and fees assessed by certain governmental entities,
including county governments, on cities and towns to the sum of (i) 2.5% of
the total charges and fees imposed in the preceding fiscal year, and (ii)
any increase in charges for services customarily provided locally or
services obtained by the city or town at its option.
Many communities have responded to the limitation imposed by Proposition
2 1/2 through statutorily permitted overrides and exclusions. Override
activity peaked in fiscal 1991, when 182 communities attempted votes on one
of the three types of referenda questions (override of levy limit,
exclusion of debt service, or exclusion of capital expenditures) and 100
passed at least one question, adding $58.5 million to their levy limits. In
fiscal 1992, 67 of 143 communities had successful votes totalling $31.0
million. In fiscal 1993, 83 communities attempted a vote; two-thirds of
them (56) passed questions aggregating $16.4 million. Proposition 2 1/2
will continue to constrain local property tax revenues. Cities and towns
may continue to present overrides for votes. Although Proposition 2 1/2
will continue to constrain local property tax revenues, significant
capacity exists for overrides in every community.
LOCAL AID. During the 1980s, the Commonwealth increased payments to its
cities, towns, and regional school districts ("Local Aid") to mitigate the
impact of Proposition 2 1/2 on local programs and services. In fiscal
1993, approximately 28.7% of the Commonwealth's budget was allocated to
Local Aid. Local Aid payments to cities, towns, and regional school
districts take the form of both direct and indirect assistance.
Direct Local Aid decreased from $2.961 billion in fiscal 1989 to $2.328
billion in fiscal 1992 and increased to $2.488 billion in fiscal 1993. It
is estimated that fiscal 1994 expenditures for direct Local Aid will be
$2.737 billion, which is an increase of approximately 10.0% above the
fiscal 1993 level. The additional amount of indirect Local Aid provided
over and above direct Local Aid was approximately $1.717 billion in fiscal
1993. It is estimated that in fiscal 1994 approximately $1.717 billion of
indirect Local Aid will also be paid.
A statute adopted by voter initiative petition to the November 1990
statewide election regulates the distribution of Local Aid to cities and
towns. This state requires that, subject to annual appropriation, no less
than 40% of collections from personal income taxes, sales and use taxes,
corporate excise taxes, and lottery fund proceeds be distributed to cities
and towns. Under the law, the Local Aid distribution to each city or town
would equal no less than 100% of the total Local Aid received for fiscal
1989. Distributions in excess of fiscal 1989 levels would be based on new
formulas that would replace the current Local Aid distribution formulas.
By its terms, the new formula would have called for a substantial increase
in direct Local Aid in fiscal 1992 and would call for such an increase in
fiscal 1993 and in subsequent years. However, Local Aid payments expressly
remain subject to annual appropriation, and fiscal 1992 and fiscal 1993
appropriations for Local Aid did not meet, and fiscal 1994 appropriations
for Local Aid do not meet, the levels set forth in the initiative law.
COMMONWEALTH EXPENDITURES. From fiscal 1989 to fiscal 1990 budgeted
expenditures of the Commonwealth increased approximately 4.9% of $13.260
million. Fiscal 1991 budgeted expenditures were $13.655 billion, or a 3.0%
increase over fiscal 1990 budgeted expenditures. For fiscal 1992, budgeted
expenditures were $13.420 billion, representing a decline of 1.7% from the
level of budgeted expenditures in fiscal 1991. Fiscal 1993 budgeted
expenditures were $14.712 billion, an increase of 9.7% from fiscal 1992. It
is estimated that fiscal 1994 budgeted expenditures will be $15.500
billion, an increase of 5.5% over fiscal 1993 levels.
Commonwealth expenditures since fiscal 1989 largely reflect significant
growth in several programs and services provided by the Commonwealth,
principally Medicaid and group health insurance; public assistance
programs; debt service; pensions; and assistance to the Massachusetts Bay
Transportation Authority and regional transit authorities.
The Commonwealth's pension systems were originally established on a
pay-as-you-go basis. The Commonwealth's unfunded actuarial pension
liability is significant - approximately $10.869 billion as of January 1,
1990, for state employees, teachers, and local retirement system
cost-of-living increases. The amount in the state's pension reserve,
established to address the unfunded liabilities of the two state systems,
has increased significantly in recent years due to substantial
appropriations and changes in law relating to investment of retirement
systems assets. As of June 30, 1993, the reserve was approximately $3.877
billion. Comprehensive pension legislation approved in January 1988
requires the Commonwealth to fund future pension liabilities currently and
to amortize the Commonwealth's accumulated unfunded liabilities over 40
years.
OTHER FACTORS. Many factors affect the financial condition of the
Commonwealth, including many social, environmental, and economic
conditions, which are beyond the control of the Commonwealth. As with most
urban states, the continuation of many of the Commonwealth's programs,
particularly its human service programs, is in significant part dependent
upon continuing federal reimbursements which have been declining.
SPECIAL FACTORS AFFECTING PUERTO RICO
The following only highlights some of the more significant financial trends
and problems affecting the Commonwealth of Puerto Rico (the "Commonwealth"
or "Puerto Rico"), and is based on information drawn from official
statements and prospectuses relating to the securities offerings of Puerto
Rico, its agencies and instrumentalities, as available on the date of this
Statement of Additional Information. FMR has not independently verified any
of the information contained in such official statements, prospectuses and
other publicly available documents, but is not aware of any fact which
would render such information materially inaccurate.
The economy of Puerto Rico is closely linked with that of the United
States, and in fiscal 1992 trade with the United States accounted for
approximately 88% of Puerto Rico's exports and approximately 68% of its
imports. In this regard, in fiscal 1992 Puerto Rico experienced a
$2,940,300,000 positive adjusted merchandise trade balance. Since fiscal
1987 personal income, both aggregate and per capita, have increased
consistently each fiscal year. In fiscal 1992 aggregate personal income was
$22.7 billion and personal per capita income was $6,360. Gross domestic
product in fiscal 1989, 1990, 1991 and 1992 was $19,954,000, $21,619,000,
$22,857,000, and $23,620,000 respectively. For fiscal 1993, an increase in
gross domestic product of 2.9% over fiscal 1992 is forecasted. However,
actual growth in the Puerto Rico economy will depend on several factors
including the condition of the U.S. economy, the exchange rate for the U.S.
dollar, the price stability of oil imports, and interest rates. Due to
these factors there is no assurance that the economy of Puerto Rico will
continue to grow.
Puerto Rico has made marked improvements in fighting unemployment.
Unemployment is at a low level compared to that of the late 1970s, but it
still remains significantly above the United States average. Despite long
term improvements the unemployment rate rose from 15.2% to 16.5% from
fiscal 1991 to fiscal 1992. At the end of the third quarter of fiscal 1993
the unemployment rate in Puerto Rico stood at 17.3%. There is a possibility
that the unemployment rate will continue to increase.
The economy of Puerto Rico has undergone a transformation in the later half
of this century from one centered around agriculture, to one dominated by
manufacturing and service industries. Manufacturing is the cornerstone of
Puerto Rico's economy, accounting for $13.2 billion or 38.7% of gross
domestic product in 1992. However, manufacturing has experienced a basic
change over the years as a result of the influx of higher wage, high
technology industries such as the pharmaceutical industry, electronics,
computers, micro-processors, scientific instruments and high technology
machinery. The service sector, which includes wholesale and retail trade,
finance and real estate, ranks second in its contribution to gross domestic
product and is the sector that employs the greatest number of people. In
fiscal 1992, the service sector generated $13.0 billion in gross domestic
product or 38.3% of the total and employed over 449,000 workers providing
46% of total employment. The government sector and tourism also contribute
to the island economy each accounting for $3.7 billion and $1.5 billion in
fiscal 1992, respectively.
Much of the development of the manufacturing sector of the economy of
Puerto Rico is attributable to federal and Commonwealth tax incentives,
most notably section 936 of the Internal Revenue Code of 1986, as amended
("Section 936") and the Commonwealth's Industrial Incentives Program.
Section 936 currently grants U.S. corporations that meet certain criteria
and elect its application a credit against their U.S. corporate income tax
on the portion of the tax attributable to (i) income derived from the
active conduct of a trade or business in Puerto Rico ("active income"), or
from the sale or exchange of substantially all the assets used in the
active conduct of such trade or business, and (ii) qualified possession
source investment income ("passive income"). The Industrial Incentives
Program, through the 1987 Industrial Incentives Act, grants corporations
engaged in certain qualified activities a fixed 90% exemption from
Commonwealth income and property taxes and a 60% exemption from municipal
license taxes.
On August 16, 1993, President Clinton signed a bill amending Section 936.
Under the amendments, U.S. corporations with operations in Puerto Rico can
elect to receive a federal income tax credit equal to: 40% of the credit
currently available, phased in over a five year period, starting at 60% of
the current credit, or a credit based on investment and wages. The
investment and wage credit would equal the sum of (i) 60% of qualified
compensation to employees, (ii) a specified percentage of depreciation
deductions with respect to tangible property located in Puerto Rico, and
(iii) a portion of income taxed paid to Puerto Rico, up to a 9% effective
tax rate, subject to certain requirements. It is not possible to determine
at this time whether the reductions in tax incentives for operations in
Puerto Rico will have a significant impact on the economy of Puerto Rico or
the time period in which such impact would arise.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund by FMR (either directly or through affiliated
sub-advisers) pursuant to authority contained in the management contract.
FMR is also responsible for the placement of transaction orders for other
investment companies and accounts for which it or its affiliates act as
investment adviser. Securities purchased and sold by the fund generally
will be traded on a net basis (i.e., without commission). In selecting
broker-dealers, subject to applicable limitations of the federal securities
laws, FMR will consider various relevant factors, including, but not
limited to, the size and type of the transaction; the nature and character
of the markets for the security to be purchased or sold; the execution
efficiency, settlement capability, and financial condition of the
broker-dealer firm; the broker-dealer's execution services rendered on a
continuing basis; and the reasonableness of any commissions.
The fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the fund or other accounts over which
FMR or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, fund strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of broker-dealers
who provide such services on a regular basis. However, as many
transactions on behalf of the fund are placed with broker-dealers
(including broker-dealers on the list) without regard to the furnishing of
such services, it is not possible to estimate the proportion of such
transactions directed to such broker-dealers solely because such services
were provided. The selection of such broker-dealers is generally made by
FMR (to the extent possible consistent with execution considerations) based
upon the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the fund may be useful to FMR in rendering investment management
services to the fund or its other clients, and, conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the fund. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the fund and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund or shares of other Fidelity funds
to the extent permitted by law. FMR may use research services provided by
and place agency transactions with Fidelity Brokerage Services, Inc.
(FBSI), a subsidiary of FMR Corp., if the commissions are fair, reasonable,
and comparable to commissions charged by non-affiliated, qualified
brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits
members of national securities exchanges from executing exchange
transactions for accounts which they or their affiliates manage, except
if certain requirements are satisfied . Pursuant to such
requirements , the Board of Trustees has authorized FBSI to
execute portfolio transactions on national securities exchanges in
accordance with approved procedures and applicable SEC rules . For the
fiscal year ended January 31, 1994, the fiscal period August 1, 1992
through January 31, 1993, and the fiscal year ended July 31, 1992, the fund
did not pay any brokerage commissions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
fund and review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
From time to time the Trustees will review whether the recapture for the
benefit of the fund of some portion of the brokerage commissions or similar
fees paid by the fund on portfolio transactions is legally permissible and
advisable. The fund seeks to recapture soliciting broker-dealer fees on
the tender of portfolio securities, but at present no other recapture
arrangements are in effect. The Trustees intend to continue to review
whether recapture opportunities are available and are legally permissible
and, if so, to determine in the exercise of their business judgment whether
it would be advisable for the fund to seek such recapture.
Although the Trustees and officers of the fund are substantially the same
as those of other funds managed by FMR, investment decisions for the fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the fund of more than one of these funds or accounts. Simultaneous
transactions are inevitable when several funds are managed by the same
investment adviser, particularly when the same security is suitable for the
investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases, this system could have a
detrimental effect on the price or value of the security as far as the fund
is concerned. In other cases, however, the ability of the fund to
participate in volume transactions will produce better executions and
prices for the fund. It is the current opinion of the Board of Trustees
that the desirability of retaining FMR as investment adviser to the fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
The fund values its investments on the basis of amortized cost. This
technique involves valuing an instrument at its cost as adjusted for
amortization of premium or accretion of discount rather than its value
based on current market quotations or appropriate substitutes which reflect
current market conditions. The amortized cost value of an instrument may
be higher or lower than the price the fund would receive if it sold the
instrument.
Valuing the fund's instruments on the basis of amortized cost and use of
the term "money market fund" are permitted by Rule 2a-7 under the
Investment Company Act of 1940. The fund must adhere to certain conditions
under Rule 2a-7.
The Board of Trustees of the trust oversees FMR's adherence to SEC rules
concerning money market funds, and has established procedures designed to
stabilize the fund's NAV at $1.00. At such intervals as they deem
appropriate, the Trustees consider the extent to which NAV calculated by
using market valuations would deviate from $1.00 per share. If the
Trustees believe that a deviation from the fund's amortized cost per share
may result in material dilution or other unfair results to shareholders,
the Trustees have agreed to take such corrective action, if any, as they
deem appropriate to eliminate or reduce, to the extent reasonably
practicable, the dilution or unfair results. Such corrective action could
include selling portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; withholding
dividends; redeeming shares in kind; establishing NAV by using available
market quotations; and such other measures as the Trustees may deem
appropriate.
During periods of declining interest rates, the fund's yield based on
amortized cost may be higher than the yield based on market valuations.
Under these circumstances, a shareholder in the fund would be able to
obtain a somewhat higher yield than would result if the fund utilized
market valuations to determine its NAV. The converse would apply in a
period of rising interest rates.
PERFORMANCE
The fund may quote performance in various ways. All performance
information supplied by the fund in advertising is historical and is not
intended to indicate future returns. The fund's yield and total return
fluctuate in response to market conditions and other factors.
YIELD CALCULATIONS. To compute the fund's yield for a period, the net
change in value of a hypothetical account containing one share reflects the
value of additional shares purchased with dividends from the original share
and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at the
beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current annualized yield. The fund also
may calculate a compound effective yield by compounding the base period
return over a one-year period. In addition to the current yield, the fund
may quote yields based on any historical seven-day period.
The fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment to equal the fund's tax-free yield.
Tax-equivalent yields are calculated by dividing the fund's yield by the
result of one minus a stated federal or combined federal and state tax
rate. (If only a portion of the fund's yield is tax-exempt, only that
portion is adjusted in the calculation.)
The tables below show the effect of a shareholder's tax status on effective
yield under the federal and state income tax laws for 1994. They show the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 2% to 7% . Of course, no
assurance can be given that the fund will achieve any specific tax-exempt
yield. While the fund invests principally in obligations whose interest is
exempt from federal and Massachusetts income tax, other income received by
the fund may be taxable. The table does not take into account local taxes,
if any, payable on fund distributions.
1994 TAX RATES AND TAX-EQUIVALENT YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Combined
Federal Income Massachusetts Massachusetts and
Taxable Tax Tax Federal Effective
Income* Bracket** Bracket Tax Bracket
</TABLE>
Single Return Joint Return
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
$ 22,751 - $ 55,100 $ 38,001 - $ 91,850 28% 12.0% 36.64%
$ 55,101 - $ 115,000 $ 91,851 - $ 140,000 31% 12.0% 39.28%
$ 115,001 - $ 250,000 $ 140,001 - $ 250,000 36% 12.0% 43.68%
$ 250,001 and above $ 250,001 and above 39.6% 12.0% 46.85%
</TABLE>
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only; does not include the effect of
the preferential rate on long-term capital gains.
** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An increase
in a shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
Having determined your effective tax bracket, use the table below to
determine the tax-equivalent yield for a given tax-free yield.
If your combined effective federal and state personal income tax rate in
1994 is:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
To match these 36.64% 39.28% 43.68% 46.85%
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
tax-free yields: Your taxable investment would have to earn the following
yields:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
2% 3.16% 3.29% 3.55% 3.76%
3% 4.73% 4.94% 5.33% 5.64%
4% 6.31% 6.59% 7.10% 7.53%
5% 7.89% 8.23% 8.88% 9.41%
6% 9.47% 9.88% 10.65% 11.29%
7% 11.05% 11.53% 12.43% 13.17%
</TABLE>
The fund may invest a portion of its assets in obligations that are subject
to state or federal income taxes. When the fund invests in these
obligations, its tax-equivalent yields will be lower. In the table above,
tax-equivalent yields are calculated assuming investments are 100%
federally and state tax-free.
Yield information may be useful in reviewing the fund's performance and in
providing a basis for comparison with other investment alternatives.
However, the fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. The fund's yields are
calculated on the same basis as other money market funds as required by
applicable regulations. When comparing investment alternatives, investors
should also note the quality and maturity of the portfolio securities of
the respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates the
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to the fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of the fund's returns, including the effect of reinvesting
dividends and capital gain distributions (if any), and any change in the
fund's net asset value (NAV) per share over the period. Average annual
total returns are calculated by determining the growth or decline in value
of a hypothetical historical investment in the fund over a stated period,
and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had
been constant over the entire period. For example, a cumulative total
return of 100% over ten years would produce an average annual return of
7.18%, which is the steady annual rate of return that would equal 100%
growth on a compounded basis in ten years. While average annual total
returns are a convenient means of comparing investment alternatives,
investors should realize that the fund's performance is not constant over
time, but changes from year to year, and that average annual total returns
represent averaged figures as opposed to the actual year-to-year
performance of the fund.
In addition to average annual total returns, the fund may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price, if any) in order to illustrate the relationship of these
factors and their contributions to total return. An example of this type
of illustration is given below. Total returns, yields, and other
performance information may be quoted numerically or in a table, graph, or
similar illustration, and may omit or include the effect of the $5.00
account closeout fee.
HISTORICAL RESULTS. The following table shows the fund's yield,
tax-equivalent yield, and total returns for the periods ended January 31,
1994:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Seven-Day Tax-Equivalent Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Yield Yield One Year Life of Fund* One Year Life of Fund*
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1.83% 3.24% 1.95% 2.87% 1.95% 8.59%
</TABLE>
* From March 4, 1991 (commencement of operations).
Note: Total return figures include the effect of the fund's $5.00
account closeout fee based on an average size account. If FMR had not
reimbursed the fund for certain expenses during these periods, the fund's
total returns would have been lower. The tax-equivalent yield is based on
the highest 1994 combined federal and state income tax bracket of 43.68%,
and reflects that on January 31, 1994, an estimated 1.0% of the fund's
income was subject to state taxes. A portion of the fund's income will be
subject to the federal alternative minimum tax.
The following table shows the income and capital elements of the fund's
total return from March 4, 1991 (commencement of operations) through
January 31, 1994. The table compares the fund's return to the record of
the Standard & Poor's 500 Composite Stock Price Index (S&P 500),
the Dow Jones Industrial Average (DJIA), and the cost of living (measured
by the Consumer Price Index, or CPI) over the same period. The S&P 500
and DJIA comparisons are provided to show how the fund's total return
compared to the return of a broad average of common stocks and a narrower
set of stocks of major industrial companies, respectively, over the same
period. Of course, since the fund invests in money market instruments,
common stocks represent a different type of investment from the fund.
Common stocks generally offer greater potential growth than the fund, but
generally experience greater price volatility which means a greater
potential for loss. In addition, common stocks generally provide lower
income than a money market investment such as the fund. The S&P 500
and DJIA are based on the prices of unmanaged groups of stocks and, unlike
the fund's returns, their returns do not include the effect of paying
brokerage commissions or other costs of investing.
During the period March 4, 1991 (commencement of operations) through
January 31, 1994, a hypothetical $10,000 investment in the fund would have
grown to $ 10,860 , assuming all dividends were reinvested. This was
a period of widely fluctuating interest rates and should not be considered
representative of the dividend income or capital gain or loss that could be
realized from an investment in the fund today.
Indices
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
Value of
Period
Initial Value of Value of
Ended
$10,000 Reinvested Reinvested Total Cost of
January 31
Investment Dividends Capital Gains Value S&P DJIA Living**
500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1994 $ 10,000 $ 860 $ 0 $ 10,860 $ 14,163 $ 14,912 $ 10,846
1993 10,000 652 0 10,652 12,548 $ 12,064 10,579
1992* 10,000 378 0 10,378 11,345 11,405 10,245
</TABLE>
* From March 4, 1991 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on March
4, 1991, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested), amounted to $10,860. If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments (dividends) for the period would
have amounted to $826. The fund did not distribute any capital gains
during the period. If FMR had not reimbursed certain fund expenses, the
fund's returns would have been lower. The figures in the table do not
include the effect of the fund's $5.00 account closeout fee.
The fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to the
mutual fund rankings, the fund's performance may be compared to mutual fund
performance indices prepared by Lipper.
From time to time, the fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
The fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES(double dagger)/All
Tax-Free, which is reported in the MONEY FUND REPORT(trademark), covers
over 340 tax-exempt money market funds.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
The fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
As of January 31, 1994, FMR managed over 45 tax-free funds with a
total value of more than $30 billion, and 31 Spartan funds,
with approximately $ 20 billion in assets. According to the
Investment Company Institute, over the past ten years, assets in tax-exempt
funds increased from $ 31.4 billion in 1983 to approximately
$357.7 billion at the end of 1993. The fund may reference the
growth and variety of money market mutual funds and the adviser's
innovation and participation in the industry.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day (observed), Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time.
FSC normally determines the fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the fund's NAV may be affected on days when investors
do not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), the fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, the fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that the fund's income is derived from federally
tax-exempt interest, the daily dividends declared by the fund are also
federally tax-exempt. The fund will send each shareholder a notice in
January describing the tax status of dividends and capital gain
distributions (if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as social security
benefits, may be subject to federal income tax on up to one half of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
The fund purchases municipal obligations based on opinions of bond counsel
regarding the federal income tax status of the obligations. These opinions
generally will be based on covenants by the issuers regarding continuing
compliance with federal tax requirements. If the issuer of an obligation
fails to comply with its covenants at any time, interest on the obligation
could become federally taxable retroactive to the date the obligation was
issued.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) is subject to the federal alternative minimum tax (AMT),
although the interest continues to be excludable from gross income for
other tax purposes. Interest from private activity securities will be
considered tax-exempt for purposes of the fund's policies of investing so
that at least 80% of its income distributions are free from federal income
tax. Interest from private activity securities is a tax preference item for
purposes of determining whether a taxpayer is subject to the AMT and the
amount of AMT to be paid, if any. Private activity securities issued after
August 7, 1986 to benefit a private or industrial user or to finance a
private facility are affected by this rule.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the fund on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of the fund and such shares are held
six months or less and are sold at a loss, the portion of the loss equal to
the amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
A portion of the gain on bonds purchased at a discount after April 30, 1993
and short-term capital gains distributed by the fund are federally taxable
to shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction. Dividend distributions resulting from a recharacterization of
gain from the sale of bonds purchased at a discount after April 30, 1993
are not considered income for purposes of the fund's policy of investing
so that at least 80% of its income distributions are free from federal
income tax. The fund may distribute any net realized short-term capital
gains once a year or more often as necessary to maintain its net asset
value at $1.00 a share.
TAX STATUS OF THE FUND. The fund has qualified and intends to continue to
qualify each year as a "regulated investment company" for tax purposes so
that it will not be liable for federal tax on income and capital gains
distributed to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at the
fund level, the fund intends to distribute substantially all of its net
investment income and net realized capital gains (if any) within each
calendar year as well as on a fiscal year basis. The fund is treated as a
separate entity from the other funds of Fidelity Massachusetts Municipal
Trust for tax purposes.
MASSACHUSETTS TAXES. To the extent the fund's income dividends are
derived from state tax-free securities, they will be free from the
Massachusetts personal income tax. Other distributions from the fund,
including those related to long- and short-term capital gains, generally
will not be exempt from Massachusetts personal income tax. Corporate
taxpayers should note that the fund's income dividends and other
distributions are not exempt from Massachusetts corporate excise tax.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. Investors
should consult their tax advisers to determine whether the fund is suitable
to their particular tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas, a wholly owned subsidiary of FMR
formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. Unless
otherwise noted, the business address of each Trustee and officer is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. Those Trustees who are "interested persons" (as defined in the
Investment Company Act of 1940) by virtue of their affiliation with either
the trust or FMR, are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Bonneville Pacific Corporation
(independent power, 1989), Sanifill Corporation (non-hazardous waste,
1993), and CH2M Hill Companies (engineering). In addition, he served on
the Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale Materials Handling, Inc. (1989), and RPM,
Inc. (manufacturer of chemical products, 1990). In addition, he serves as
a Trustee of First Union Real Estate Investments, Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwhich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior
to his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989),
is Chairman of G.M. Management Group (strategic advisory services). Prior
to his retirement in July 1988, he was Chairman and Chief Executive Officer
of Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee.
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate
Property Investors and a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President - Legal of FMR Corp., and Vice President and Clerk
of FDC.
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas, Inc. (1990).
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund, based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of January 31, 1994, the Trustees and officers of the fund owned, in the
aggregate, less than 1 % of the outstanding shares of the
fund .
MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of the trust or FMR
performing services relating to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of the fund. These services include providing facilities
for maintaining the fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
law; developing management and shareholder services for the fund; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
FMR is responsible for the payment of all expenses of the fund with certain
exceptions. Specific expenses payable by FMR include, without limitation,
the fees and expenses of registering and qualifying the fund and its shares
for distribution under federal and state securities laws; expenses of
typesetting for printing the Prospectus and Statement of Additional
Information; custodian charges; audit and legal expenses; insurance
expense; association membership dues; and the expenses of mailing reports
to shareholders, shareholder meetings, and proxy solicitations. FMR also
provides for transfer agent and dividend disbursing services and portfolio
and general accounting record maintenance through FSC.
FMR pays all other expenses of the fund with the following exceptions: fees
and expenses of the Trustees who are not "interested persons" of the trust
or of FMR (the non-interested Trustees); interest on borrowings; taxes;
brokerage commissions (if any); and such nonrecurring expenses as may
arise, including costs of any litigation to which the fund may be a party,
and any obligation it may have to indemnify the officers and Trustees with
respect to litigation.
FMR is the fund's manager pursuant to a management contract dated February
14, 1991, which was approved by the fund's shareholders on June 15, 1992.
For the services of FMR under the management contract, the fund pays FMR a
monthly management fee at the annual rate of .50% of the fund's average net
assets throughout the month. FMR reduces its fee by an amount equal to the
fees and expenses of the non-interested Trustees.
FMR may, from time to time, voluntarily reimburse all or a portion of the
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). The tables below outline expense
limitations (as a percentage of the fund's average net assets) from
commencement of operations to the date of this Statement of Additional
Information. If FMR had not reimbursed these expenses, the fund's total
operating expenses would have been .50% of its average net assets.
Fro m To Expense Limitation
September 1, 1993 - .50%
August 1, 1993 August 31, 1993 .45%
July 1, 1993 July 31, 1993 .40%
June 1, 1993 June 30, 1993 .35%
April 1, 1993 May 31, 1993 .30%
February 1, 1993 March 20, 1993 .25%
November 1, 1992 January 31, 1993 .20%
September 1, 1992 October 31, 1992 .15%
June 1, 1992 August 31, 1992 .10%
March 4, 1991 May 31, 1992 .00%
Fiscal Period Management Fees Amount of
<TABLE>
<CAPTION>
<S> <C> <C>
Ended January 31 Before Reimbursement Reimbursement
</TABLE>
1994 $ 1,695,083 $ 330,923
1993* $ 795,321 $ 526,994
Fiscal Period Management Fees Amount of
Ended July 31** Before Reimbursement Reimbursement
1992 $ 1,182,575 $ 1,072,043
* From August 1, 1992 through January 31, 1993.
** On November 19, 1992, the fund's Trustees approved a change in
the fund's fiscal year end from July 31 to January 31.
To defray shareholder service costs, FMR or its affiliates also collect the
fund's $5.00 exchange fee, $5.00 account closeout fee, $5.00 fee for wire
purchases and redemptions, and $2.00 checkwriting charge. Shareholder
transaction fees and charges collected for fiscal 1994, 1993, and 1992 are
indicated in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exchange Fees Account Closeout Fees Wire Fees Checkwriting Charges
</TABLE>
1994 $5,455 $890 $720 $4,76
2
1993* 5,065 403 885 4,571
1992** 9,775 601 1,775
7,654
* From August 1, 1992 through January 31, 1993.
** From August 1, 1991 through July 31, 1992
SUB-ADVISER. FMR has entered into a sub-advisory agreement with FMR Texas
pursuant to which FMR Texas has primary responsibility for providing
portfolio investment management services to the fund. Under the
sub-advisory agreement, FMR pays FMR Texas a fee equal to 50% of the
management fee payable to FMR under its current management contract with
the fund. The fees paid to FMR Texas are not reduced by any voluntary
or mandatory expense reimbursements that may be in effect from time to
time. For fiscal 1994, 1993, and 1992, FMR paid FMR Texas fees equal to
$847,542, $397,661, and $591,288, respectively, under the sub-advisory
agreement.
DISTRIBUTION AND SERVICE PLAN
The fund has adopted a distribution and service plan (the plan) under Rule
12b-1 of the Investment Company Act of 1940 (the Rule). The Rule provides
in substance that a mutual fund may not engage directly or indirectly in
financing any activity that is primarily intended to result in the sale of
shares of the fund except pursuant to a plan adopted by the fund under the
Rule. The Board of Trustees has adopted the plan to allow the fund and FMR
to incur certain expenses that might be considered to constitute indirect
payment by the fund of distribution expenses. Under the plan, if the
payment by the fund to FMR of management fees should be deemed to be
indirect financing by the fund of the distribution of its shares, such
payment is authorized by the plan.
The plan specifically recognizes that FMR, either directly or through FDC,
may use its management fee revenue, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the fund. In addition, the
plan provides that FMR may use its resources, including its management fee
revenue, to make payments to third parties that provide assistance in
selling the fund's shares, or to third parties, including banks, that
render shareholder support services. The Trustees have not authorized
third party payments to date.
The fund's plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
the implementation of the plan prior to its approval, and have determined
that there is a reasonable likelihood that the plan will benefit the fund
and its shareholders. In particular, the Trustees noted that the plan does
not authorize payments by the fund other than those made to FMR under its
management contract with the fund. To the extent that the plan gives FMR
and FDC greater flexibility in connection with the distribution of shares
of the fund, additional sales of the fund's shares may result.
Additionally, certain shareholder support services may be provided more
effectively under the plan by local entities with whom shareholders have
other relationships. The plan was approved by the fund's shareholders on
June 15, 1992.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services and
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the fund
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. The fund may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the plan. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers
pursuant to state law.
INTEREST OF FMR AFFILIATES
United Missouri is the fund's custodian and transfer agent. United
Missouri has entered into a sub-contract with FSC, an affiliate of FMR,
under the terms of which FSC performs the processing activities associated
with providing transfer agent and shareholder servicing functions for the
fund. United Missouri has an additional sub-contract with FSC, pursuant to
which FSC performs the calculations necessary to determine the fund's net
asset value per share and dividends and maintains the fund's accounting
records. United Missouri is entitled to reimbursement for fees paid to FSC
from FMR, which must bear these costs pursuant to its management contract
with the fund.
The fund has a distribution agreement with FDC, a Massachusetts corporation
organized on July 18, 1960. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. The distribution agreement calls for FDC to
use all reasonable efforts, consistent with its other business, to secure
purchasers for shares of the fund, which are continuously offered at net
asset value. Promotional and administrative expenses in connection with
the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Spartan Massachusetts Municipal Money Market Portfolio
is a fund of Fidelity Massachusetts Municipal Trust, an open-end management
investment company organized as a Massachusetts business trust on December
14, 1981. On July 27, 1983, the Declaration of Trust was amended to change
the name of the trust from Cash Assets Fund to Fidelity Massachusetts
Tax-Exempt Money Market Trust. On September 15, 1983, the trust's name was
changed to Fidelity Massachusetts Tax-Free Fund. On February 28, 1991, the
trust's name was changed to Fidelity Massachusetts Municipal Trust.
Currently, there are three funds of the trust: Fidelity Massachusetts
Tax-Free Money Market Portfolio, Fidelity Massachusetts Tax-Free High Yield
Portfolio, and Spartan Massachusetts Municipal Money Market Portfolio. The
Declaration of Trust permits the Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying names
"Fidelity" and "Spartan" may be withdrawn.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to
be allocated in proportion to the asset value of the respective funds,
except where allocations of direct expense can otherwise be fairly made.
The officers of the trust, subject to the general supervision of the Board
of Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or the Trustees include a provision limiting the obligations created
thereby to the trust and its assets. The Declaration of Trust provides for
indemnification out of each fund's property of any shareholder held
personally liable for the obligations of the fund. The Declaration of
Trust also provides that each fund shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
fund and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which a fund itself would be unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects
Trustees against any liability to which they would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each dollar of net
asset value per share you own. The shares have no preemptive or conversion
rights; the voting and dividend rights, the right of redemption, and the
privilege of exchange are described in the Prospectus. Shares are fully
paid and nonassessable, except as set forth under the heading "Shareholder
and Trustee Liability" above. Shareholders representing 10% or more of the
trust or a fund may, as set forth in the Declaration of Trust, call
meetings of the trust or a fund for any purpose related to the trust or
fund, as the case may be, including, in the case of a meeting of the entire
trust, the purpose of voting on removal of one or more Trustees. The trust
or any fund may be terminated upon the sale of its assets to another
open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a
majority of the fund or trust, as determined by the current value of each
shareholder's investment in the fund or trust. If not so terminated, the
trust and its funds will continue indefinitely. The fund may invest all
of its assets in another investment company.
CUSTODIAN. United Missouri, 1010 Grand Avenue, Kansas City, Missouri
64106, is custodian of the assets of the fund. The custodian is
responsible for the safekeeping of the fund's assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the fund or in deciding which
securities are purchased or sold by the fund. The fund may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. Transactions that have occurred to date include mortgages and
personal and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITOR. Price Waterhouse, 1700 Pacific Avenue, Dallas, Texas serves as
the trust's independent accountant. The auditor examines financial
statements for the fund and provides other audit, tax, and related
services.
FINANCIAL STATEMENTS
The fund's Annual Report for the fiscal year ended January 31, 1994 is a
separate report supplied with this Statement of Additional Information and
is incorporated herein by reference.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF STATE AND
MUNICIPAL NOTES:
Moody's ratings for state and municipal and other short-term obligations
will be designated Moody's Investment Grade (MIG, or VMIG for variable rate
obligations). This distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important in the short
run. Symbols used will be as follows:
MIG-1/VMIG-1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2 - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S RATINGS OF STATE AND
MUNICIPAL NOTES:
SP-1 - Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2 - Satisfactory capacity to pay principal and interest.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S MUNICIPAL BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
Those bonds in the Aa group which Moody's believes possess the strongest
investment attributed are designated by the symbol Aa1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S MUNICIPAL BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated debt issues only in small
degree.
The AA ratings may be modified by the addition of a plus or minus to show
relative standing within the rating category.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (1) Financial Statements for Fidelity Massachusetts Tax-Free
Portfolios: Fidelity Massachusetts Tax-Free Money Market Portfolio and
Fidelity Massachusetts Tax-Free High Yield Portfolio for the fiscal period
ended January 31, 1994 are incorporated by reference into the Statement of
Additional Information and are filed herein as Exhibit 24 (a)(1).
(2) Financial Statements for Spartan Massachusetts Municipal Money Market
Portfolio for the fiscal period ended January 31, 1994 are incorporated by
reference into the Statement of Additional Information and are filed herein
as Exhibit 24 (a)(2).
(b) Exhibits:
(1) (a) Declaration of Trust dated as of December 14, 1981, is
incorporated herein by reference to Exhibit 1 to the initial Registration
Statement, File No. 2-75537.
(b) Supplement to Declaration of Trust dated July 27, 1983, is
incorporated herein by reference to Exhibit 24(b) 1(b) to Post-Effective
Amendment No. 6.
(c) Supplement to Declaration of Trust dated September 15, 1983, is
incorporated herein by reference to Exhibit 24(b) 1(c) to Post-Effective
Amendment No. 6.
(d) Supplement to Declaration of Trust dated December 31, 1984, is
incorporated herein by reference to Exhibit 1(d) to Post-Effective
Amendment No. 7.
(e) Supplement to Declaration of Trust dated February 1, 1987, is
incorporated herein by reference to Exhibit 24(b) 1(e) to Post-Effective
Amendment No. 10.
(f) Restatement of Declaration of Trust dated August 1, 1989, is
incorporated herein by reference to Exhibit 1(f) to Post-Effective
Amendment No. 15.
(g) Supplement to Declaration of Trust dated February 28, 1991, is
incorporated by reference to Exhibit 1(g) to Post-Effective Amendment No.
18.
(h) Form of Amended and Restated Declaration of Trust is filed herein as
Exhibit 1(h).
(2) (a) By-Laws of the Trust, as amended January 31, 1984, are filed
herein by reference to Exhibit 2 to Post-Effective Amendment No. 7.
(3) Not applicable.
(4) Not applicable.
(5) (a) Management Contract, dated February 1, 1994, between Fidelity
Massachusetts Tax-Free Money Market Portfolio and Fidelity Management &
Research Company is filed herein as Exhibit 5(a).
(b) Management Contract, dated February 1, 1994, between Fidelity
Massachusetts Tax-Free High Yield Portfolio and Fidelity Management &
Research Company is filed herein as Exhibit 5(b).
(c) Management Contract, dated February 14, 1991, between Spartan
Massachusetts Municipal Money Market Portfolio and Fidelity Management
& Research Company is incorporated herein by reference to Exhibit 5(c)
to Post-Effective Amendment No. 18.
(f) Sub-Advisory Agreement, dated August 1, 1989, between FMR Texas Inc.
and FMR on behalf of Fidelity Massachusetts Tax-Free Money Market Portfolio
is incorporated herein by reference to Exhibit 5(f) to Post-Effective
Amendment No. 15.
(g) Sub-Advisory Agreement dated, February 14, 1991, between FMR Texas
Inc. and FMR on behalf of Spartan Massachusetts Municipal Money Market
Portfolio is incorporated by reference to Exhibit 5(f) to Post-Effective
Amendment No. 18.
(6) (a) General Distribution Agreement, dated April 1, 1987, between
Fidelity Massachusetts Tax-Free Money Market Portfolio and Fidelity
Distributors Corporation is incorporated herein by reference to Exhibit
6(a) to Post-Effective Amendment No. 8.
(b) General Distribution Agreement, dated April 1, 1987, between
Fidelity Massachusetts Tax-Free High Yield Portfolio and Fidelity
Distributors Corporation is incorporated herein by reference to Exhibit
6(b) to Post-Effective Amendment No. 8.
(c) Amendment to General Distribution Agreement, dated January 1, 1988,
between Fidelity Massachusetts Tax-Free Money Market Portfolio and Fidelity
Distributors Corporation, is incorporated herein by reference to Exhibit
6(c) to Post-Effective Amendment No. 11.
(d) Amendment to General Distribution Agreement, dated January 1, 1988,
between Fidelity Massachusetts Tax-Free High Yield Portfolio and Fidelity
Distributors Corporation, is incorporated herein by reference to Exhibit
6(d) to Post-Effective Amendment No. 11.
(e) General Distribution Agreement, dated February 14, 1991, between
Spartan Massachusetts Municipal Money Market Portfolio and Fidelity
Distributors Corporation is incorporated by reference to Exhibit 6(c) to
Post-Effective Amendment No. 18.
(7) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners effective November 1, 1989, is incorporated herein by
reference to Exhibit 7 to Post-Effective Amendment No. 21.
(8) Custodian Agreement, dated July 18, 1991, between Fidelity
Massachusetts Municipal Trust and United Missouri Bank, N.A., is
incorporated herein by reference to Exhibit 8 to Post-Effective Amendment
No. 21.
(9) (a) Transfer Agent Agreement, dated November 7, 1991, between
Fidelity Massachusetts Municipal Trust and United Missouri Bank, N.A. is
incorporated herein by reference to Exhibit 9(a) to Post-Effective
Amendment No. 21.
(b) Appointment of Sub-Transfer Agent and Schedule A, dated November 7,
1991, for Fidelity Massachusetts Municipal Trust: Fidelity Massachusetts
Tax-Free High Yield Portfolio is incorporated herein by reference to
Exhibit 9(b) to Post-Effective Amendment No. 21.
(c) Appointment of Sub-Transfer Agent and Schedule A, dated November 14,
1991, for Fidelity Massachusetts Municipal Trust: Fidelity Massachusetts
Tax-Free Money Market Portfolio is incorporated herein by reference to
Exhibit 9(c) to Post-Effective Amendment No. 21.
(d) Service Agreement, dated November 7, 1991, between Fidelity
Massachusetts Municipal Trust and United Missouri Bank, N.A. is
incorporated herein by reference to Exhibit 9(d) to Post-Effective
Amendment No. 21.
(e) Appointment of Sub-Servicing Agent and Schedules B and C, dated
November 7, 1991, for Fidelity Massachusetts Tax-Free High Yield Portfolio
are incorporated herein by reference to Exhibit 9(e) to Post-Effective
Amendment No. 21.
(f) Appointment of Sub-Servicing Agent and Schedules B and C, dated
November 14, 1991, for Fidelity Massachusetts Tax-Free Money Market
Portfolio are incorporated herein by reference to Exhibit 9(f) to
Post-Effective Amendment No. 21.
(10) Not applicable.
(11) Consent of Price Waterhouse is filed herein as Exhibit 11.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) (a) Distribution and Service Plan of Fidelity Massachusetts Tax-Free
Money Market Portfolio is incorporated by reference to Exhibit 15(a) to
Post-Effective Amendment No. 9.
(b) Distribution and Service Plan of Fidelity Massachusetts Tax-Free
High Yield Portfolio is incorporated by reference to Exhibit 15(b) to
Post-Effective Amendment No. 9.
(c) Distribution and Service Plan for Spartan Massachusetts Municipal
Money Market Portfolio is incorporated by reference to Exhibit 15(c) to
Post-Effective Amendment No. 18.
(16) (a) A schedule for computation of performance quotations for
Fidelity Massachusetts Tax-Free Money Market and Fidelity Massachusetts
Tax-Free High Yield Portfolios is incorporated herein by reference to
Exhibit 16 to Post-Effective Amendment No. 12.
(b) A schedule for computation of performance calculations for Fidelity
Massachusetts Tax-Free High Yield Portfolio is incorporated by reference to
Post-Effective Amendment No. 23.
Item 25. Persons Controlled by or under Common Control with Registrant
The Registrant's Board of Trustees is the same as the boards of other
funds advised by FMR, each of which has Fidelity Management & Research
Company as its investment adviser. In addition, the officers of these
funds are substantially identical. Nonetheless, Registrant takes the
position that it is not under common control with these other funds since
the power residing in the respective boards and officers arises as the
result of an official position with the respective funds.
Item 26. Number of Holders of Securities
February 28, 1994
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Fidelity Massachusetts Tax-Free Money Market Portfolio 22,905
Fidelity Massachusetts Tax-Free High Yield Portfolio 29,034
Spartan Massachusetts Municipal Money Market Portfolio 3,229
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc., Fidelity Management & Research (U.K.) Inc. and
Fidelity Management & Research (Far East) Inc.;
President and Trustee of funds advised by FMR;
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Charles F. Dornbush Senior Vice President of FMR; Chief Financial Officer of
the Fidelity funds; Treasurer of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR and Treasurer of the funds advised
by FMR. Prior to assuming the position as Treasurer he
was Senior Vice President, Fund Accounting - Fidelity
Accounting & Custody Services Co.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Income/Growth Group
Leader and International Group Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR; and Director of Technical
Research.
Stephan Jonas Vice President of FMR (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Jacques Perold Vice President of FMR.
Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Richard A. Spillane Vice President of FMR and of funds advised by FMR; and
Director of Equity Research.
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader.
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
(2) FMR TEXAS INC. (FMR Texas)
FMR Texas provides investment advisory services to Fidelity Management
& Research Company. The directors and officers of the Sub-Adviser have
held the following positions of a substantial nature during the past two
fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Texas; Chairman of the
Executive Committee of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of the Board
and a Director Exutive of FMR, FMR Corp.,
Fidelity Management & Research (Far East) Inc.
and Fidelity Management & Research (U.K.) Inc.;
President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Texas; President of FMR;
Managing Director of FMR Corp.; President and a
Director of Fidelity Management & Research (Far
East) Inc. and Fidelity Management & Research
(U.K.) Inc.; Senior Vice President and Trustee of funds
advised by FMR.
Fred L. Henning Jr. Senior Vice President of FMR Texas; Money Market
Group Leader.
Leland Barron Vice President of FMR Texas and of funds advised by
FMR.
Thomas D. Maher Vice President of FMR Texas.
Burnell R. Stehman Vice President of FMR Texas and of funds advised by
FMR.
John J. Todd Vice President of FMR Texas and of funds advised by
FMR.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Sarah H. Zenoble Vice President of FMR Texas and of funds advised by
FMR.
Charles F. Dornbush Treasurer of FMR Texas; Treasurer of Fidelity
Management & Research (U.K.) Inc.; Treasurer of
Fidelity Management & Research (Far East) Inc.;
Senior Vice President and Chief Financial Officer of the
Fidelity funds.
David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity Management
& Research (U.K.) Inc.; Clerk of Fidelity
Management & Research (Far East) Inc.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the funds'
custodian United Missouri Bank, N.A., 1010 Grand Avenue, Kansas City, MO.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant on behalf of Fidelity Massachusetts Tax-Free High Yield
Portfolio undertakes, provided the information required by Item 5A is
contained in the annual report, to furnish each person to whom a prospectus
has been delivered, upon their request and without charge, a copy of the
Registrant's latest annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 26 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Massachusetts, on the 14th day of March 1994.
FIDELITY MASSACHUSETTS MUNICIPAL TRUST
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee March 14, 1994
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer March 14, 1994
Gary L. French
/s/J. Gary Burkhead Trustee March 14, 1994
J. Gary Burkhead
/s/Ralph F. Cox * Trustee March 14, 1994
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee March 14, 1994
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee March 14, 1994
Richard J. Flynn
/s/E. Bradley Jones * Trustee March 14, 1994
E. Bradley Jones
/s/Donald J. Kirk * Trustee March 14, 1994
Donald J. Kirk
/s/Peter S. Lynch * Trustee March 14, 1994
Peter S. Lynch
/s/Edward H. Malone * Trustee March 14, 1994
Edward H. Malone
/s/Marvin L. Mann_____* Trustee March 14, 1994
Marvin L. Mann
/s/Gerald C. McDonough* Trustee March 14, 1994
Gerald C. McDonough
/s/Thomas R. Williams * Trustee March 14, 1994
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Peter S. Lynch
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead /s/Edward H. Malone
J. Gary Burkhead Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity, all
Pre-Effective Amendments to any Registration Statements of the Funds, any
and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993
Edward C. Johnson 3d
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment cmpanies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities
Fidelity Financial Trust Fund, L.P.
Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Government Securities Fund Spartan U.S. Treasury Money Market
Fidelity Hastings Street Trust Fund
Fidelity Income Fund Variable Insurance Products Fund
Fidelity Institutional Trust Variable Insurance Products Fund II
Fidelity Investment Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Ralph F. Cox October 20, 1993
Ralph F. Cox
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment cmpanies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Special Situations Fund
Fidelity Advisor Series IV Fidelity Sterling Performance Portfolio, L.P.
Fidelity Advisor Series VI Fidelity Trend Fund
Fidelity Advisor Series VII Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Advisor Series VIII Fidelity U.S. Investments-Government Securities
Fidelity Contrafund Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Yen Performance Portfolio, L.P.
Portfolio, L.P. Spartan U.S. Treasury Money Market
Fidelity Fixed-Income Trust Fund
Fidelity Government Securities Fund Variable Insurance Products Fund
Fidelity Hastings Street Trust Variable Insurance Products Fund II
Fidelity Institutional Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Marvin L. Mann October 20, 1993
Marvin L. Mann
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series IV Fidelity School Street Trust
Fidelity Advisor Series VI Fidelity Select Portfolios
Fidelity Advisor Series VIII Fidelity Sterling Performance Portfolio, L.P.
Fidelity Beacon Street Trust Fidelity Trend Fund
Fidelity Capital Trust Fidelity Union Street Trust
Fidelity Commonwealth Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Contrafund Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Institutional Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for me and in my name in the appropriate capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
my name and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Phyllis Burke Davis October 20, 1993
Phyllis Burke Davis
EXHIBIT 24(A)(1)
FIDELITY
(Registered trademark)
MASSACHUSETTS
TAX-FREE
PORTFOLIOS
ANNUAL REPORT
JANUARY 31, 1994
CONTENTS
CHECK PAGE NUMBERS !!!
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
FIDELITY MASSACHUSETTS
TAX-FREE HIGH YIELD PORTFOLIO
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 last six
months
and one year.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 27 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
FIDELITY MASSACHUSETTS
TAX-FREE MONEY MARKET PORTFOLIO
PERFORMANCE 31 How the fund has done over time.
FUND TALK 33 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 35 A summary of major shifts in the
fund's investments over the last six
months
and one year.
INVESTMENTS 36 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 41 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 45 Footnotes to the financial
statements.
REPORT OF INDEPENDENT
ACCOUNTANTS 49 The auditor's opinion.
</TABLE>
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. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUNDS SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments-either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888
or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
FIDELITY MASSACHUSETTS TAX-FREE HIGH YIELD PORTFOLIO
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. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value). You can also look at the fund's income. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the total returns, dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Massachusetts Tax-Free High Yield 12.57% 60.71% 164.67%
Lehman Brothers Municipal Bond Index 12.26% 61.39% 181.37%
Average Massachusetts Tax-Exempt
Municipal Bond Fund 12.43% 57.70% 164.63%
Consumer Price Index 2.52% 20.73% 43.47%
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years, or ten years. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, you would end up
with $1,050. You can compare these figures to the performance of the Lehman
Brothers Municipal Bond index - a broad gauge of the municipal bond market.
To measure how the fund stacked up against its peers, you can look at the
average Massachusetts tax-exempt municipal bond fund, which reflects the
performance of 31 Massachusetts tax-exempt municipal bond funds tracked by
Lipper Analytical Services. Both benchmarks include reinvested dividends
and capital gains, if any. Comparing the fund's performance to the consumer
price index helps show how your fund did compared to inflation.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Massachusetts Tax-Free High Yield 12.57% 9.95% 10.22%
Lehman Brothers Municipal Bond Index 12.26% 10.05% 10.90%
Average Massachusetts Tax-Exempt
Municipal Bond Fund 12.43% 9.54% 10.22%
Consumer Price Index 2.52% 3.84% 3.68%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
Mass Free High Yield (070) Lehman Bros Muni Bond Index
01/31/84 10000.00 10000.00
02/29/84 10111.11 9899.30
03/31/84 10143.00 9911.87
04/30/84 9694.97 9927.14
05/31/84 9097.81 9337.66
06/30/84 9514.83 9540.38
07/31/84 10062.00 10034.48
08/31/84 10196.69 10259.55
09/30/84 10130.88 10190.61
10/31/84 10254.36 10318.50
11/30/84 10390.93 10470.39
12/31/84 10625.54 10666.60
01/31/85 11210.47 11282.39
02/28/85 10990.06 11001.01
03/31/85 11120.72 11095.94
04/30/85 11382.84 11502.06
05/31/85 11781.04 11901.29
06/30/85 11966.89 12026.14
07/31/85 12062.38 12049.71
08/31/85 11990.16 11965.60
09/30/85 11834.55 11845.59
10/31/85 12177.75 12251.42
11/30/85 12520.11 12690.87
12/31/85 12711.74 12802.43
01/31/86 13356.19 13556.49
02/28/86 13847.01 14094.00
03/31/86 13929.97 14098.51
04/30/86 13856.32 14109.23
05/31/86 13627.99 13879.53
06/30/86 13727.43 14011.94
07/31/86 13849.72 14096.99
08/31/86 14368.36 14728.12
09/30/86 14403.93 14765.08
10/31/86 14636.84 15020.08
11/30/86 14842.27 15317.62
12/31/86 14858.45 15275.35
01/31/87 15179.29 15735.29
02/28/87 15295.21 15812.71
03/31/87 15246.16 15645.09
04/30/87 14478.73 14860.02
05/31/87 14294.13 14786.32
06/30/87 14539.98 15220.44
07/31/87 14749.85 15375.69
08/31/87 14801.93 15410.29
09/30/87 14201.07 14842.11
10/31/87 14011.66 14894.65
11/30/87 14374.57 15283.55
12/31/87 14671.30 15505.31
01/31/88 15133.35 16057.61
02/29/88 15307.28 16227.34
03/31/88 15040.13 16038.29
04/30/88 15162.67 16160.18
05/31/88 15243.76 16113.48
06/30/88 15408.50 16349.22
07/31/88 15517.51 16455.82
08/31/88 15570.83 16470.30
09/30/88 15797.50 16768.41
10/31/88 16082.87 17064.37
11/30/88 15990.12 16908.06
12/31/88 16236.87 17081.03
01/31/89 16469.28 17434.27
02/28/89 16361.39 17235.34
03/31/89 16373.24 17194.15
04/30/89 16775.50 17602.34
05/31/89 17074.05 17967.94
06/30/89 17219.73 18211.95
07/31/89 17351.83 18459.81
08/31/89 17284.52 18279.09
09/30/89 17218.41 18224.25
10/31/89 17381.53 18446.59
11/30/89 17627.72 18769.40
12/31/89 17738.23 18923.31
01/31/90 17651.30 18834.37
02/28/90 17869.86 19002.00
03/31/90 17900.52 19007.70
04/30/90 17665.49 18870.84
05/31/90 18049.80 19282.23
06/30/90 18238.93 19451.91
07/31/90 18496.72 19737.86
08/31/90 18274.84 19451.66
09/30/90 18336.04 19463.33
10/31/90 18398.63 19815.61
11/30/90 18967.21 20213.91
12/31/90 19048.07 20302.85
01/31/91 19283.44 20574.91
02/28/91 19431.36 20753.91
03/31/91 19528.15 20762.21
04/30/91 19798.82 21038.35
05/31/91 19998.28 21225.59
06/30/91 20037.76 21204.36
07/31/91 20328.12 21463.06
08/31/91 20513.31 21746.37
09/30/91 20701.87 22029.07
10/31/91 20886.40 22227.33
11/30/91 20941.72 22289.57
12/31/91 21201.56 22768.80
01/31/92 21386.00 22821.16
02/29/92 21454.14 22828.01
03/31/92 21475.30 22837.14
04/30/92 21666.02 23040.39
05/31/92 21902.49 23312.27
06/30/92 22266.73 23703.91
07/31/92 22865.42 24415.03
08/31/92 22577.75 24175.76
09/30/92 22769.97 24332.91
10/31/92 22385.30 24094.44
11/30/92 22951.88 24525.73
12/31/92 23170.86 24775.90
01/31/93 23511.54 25063.30
02/28/93 24320.43 25970.59
03/31/93 24100.43 25695.30
04/30/93 24321.88 25954.82
05/31/93 24486.86 26100.17
06/30/93 24872.63 26536.04
07/31/93 24855.28 26570.54
08/31/93 25373.93 27123.21
09/30/93 25807.33 27432.41
10/31/93 25870.76 27484.53
11/30/93 25658.21 27242.67
12/31/93 26164.75 27817.49
01/31/94 26467.12 28137.00
$28,137
$26,467
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity
Massachusetts Tax-Free High Yield Portfolio ten years ago on January 31,
1984. As the chart shows, by January 31, 1994, the value of your investment
would have grown to $26,467 - a 164.67% increase on your initial
investment. For comparison, look at how the Lehman Brothers Municipal Bond
index did over the same period. With dividends reinvested, the same $10,000
would have grown to $28,137- a 181.37% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, 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)
INCOME
YEARS ENDED JANUARY 31, 1994 1993 1992 1991 1990
Income return 6.32% 6.67% 7.08% 7.55% 7.45%
Capital gain return 2.33% 0.65% 0.76% 1.06% 0.00%
Change in share price 3.92% 2.62% 3.06% 0.64% (0.27)%
Total return 12.57% 9.94% 10.90% 9.25% 7.18%
INCOME returns, capital gains returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund.
DIVIDENDS AND YIELD
PERIODS ENDED JANUARY 31, 1994 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR
Dividends per share n/a 35.83(cents) 71.39(cents)
Annualized dividend rate n/a 5.81% 5.90%
Annualized yield 5.19% n/a n/a
Tax-equivalent yield 9.22% n/a n/a
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 $12.23 over
the past six months and $12.11 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized YIELD is a
standard formula for all 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 43.68%
combined federal and state tax bracket.
FIDELITY MASSACHUSETTS TAX-FREE HIGH YIELD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Bond investments - including
tax-free issues - provided
historically attractive returns for the
12 months ended January 31, 1994.
Falling interest rates pushed up bond
prices steadily through mid-October,
when the yield on the benchmark
30-year Treasury bond reached a
historic low of 5.79%. By year-end, a
strengthening economy had fueled
mild inflation fears, which helped
push up the yield on the 30-year
bond to 6.35% by December 31.
Inflation jitters eased in January, and
the yield on the long Treasury
dropped to 6.23% by month end.
Two factors affected municipal
bonds specifically: on the positive
side, higher federal taxes -
approved in August and discussed
all year - boosted demand. But
record new issuance kept supplies
high, which somewhat dampened
prices. The Lehman Brothers
Municipal Bonds Index - a broad
measure of the tax-free market -
rose 12.26% during the 12 months
then ended January 31. By
comparison, the Lehman Brothers
Aggregate Bond Index - which
tracks investment-grade taxable
bonds - rose 9.14%, due in part to
poor performance by
mortgage-backed securities.
Globally, falling interest rates and low
inflation drove strong returns in
Europe, Japan, and many of the
emerging markets. The Salomon
Brothers World Government Bond
Index - which includes U.S. issues
- - rose 12.22%, while the J.P.
Morgan Emerging Markets Bond
Index was up 43.06%.
An interview with Guy Wickwire, Portfolio Manager of Fidelity
Massachusetts Tax-Free High Yield Portfolio
Q. GUY, HOW HAS THE FUND PERFORMED?
A. It's been a good year. For the 12 months ended January 31, 1994, the
fund posted a return of 12.57%. That compares to 12.43% for the average
Massachusetts tax-exempt municipal bond fund, according to Lipper
Analytical Services.
Q. WHAT HELPED THE FUND COME OUT AHEAD DURING THE PERIOD?
A. Falling interest rates helped boost the prices of municipal bonds in
general. The fund had the added advantage of being well-positioned for the
decline in rates. During February 1993, Massachusetts issuers brought out
an unusually high number of new bonds, and many of them were attractively
priced. I bought some of those bonds, reducing the fund's position in
short-term notes from 8% to about 2%. During most of the year, the shift
from cash increased the fund's duration - a measure of how sensitive its
price is to interest rates. The higher duration helped the fund post bigger
gains as rates declined. In January, however, I was concerned that the
Federal Reserve might raise rates slightly, so I temporarily shortened the
duration to 6.2 years.
Q. WHY DID YOU REDUCE THE FUND'S STAKE IN GENERAL OBLIGATION BONDS, WHICH
ARE BACKED BY ISSUERS' TAXING POWER?
A. At the end of last July, I had about 15% of the fund's investments in
GO's which I pared back to 12% by the end of January. The reason I
lightened up on state general obligation bonds was that the market's
perception of those bonds' credit quality - that is, the state's ability to
meet interest and principal payments on the bonds - had improved. Once
investors decided that the bonds were once again high-quality issues, their
prices rose. So I took some profits and used the proceeds to buy more
attractively-priced, higher yielding bonds backed by financially strong
issuers.
Q. WHAT SECTORS DID YOU INVEST IN?
A. Health-care bonds continued to be the fund's largest investment, at 30%
of the total. Issues of small hospitals like Emerson Hospital in Concord
offer relatively high yields because they aren't backed by the broad taxing
power that stands behind general obligation bonds. But they are still
relatively safe from the risk that the issuers will default on principal or
interest payments. They were strong performers during the past year.
Investors seemed to be saying that health-care reform won't have an
enormous impact on most sound health-care institutions.
Q. WHAT ABOUT TRANSPORTATION?
A. Although it's not one of the fund's top five sectors, transportation has
moved up - from 6.7% of the fund six months ago to about 7.3% at the end of
January. What I bought were mainly bonds issued by the Massachusetts
Turnpike Authority and the Massachusetts Port Authority. The Turnpike
hadn't sold bonds for many years, so the fund had never had an opportunity
to buy them before. The Turnpike is well-traveled and generates excellent
revenues, and the yield on the issue is attractive. The Port Authority is
primarily backed by revenues from Logan Airport, which is one of only two
AA-rated airports in America.
Q. WHAT'S THE OUTLOOK FOR THE MASSACHUSETTS ECONOMY?
A. During the past year, the state's economy continued to show slow but
steady improvement as housing, retail and financial services offset a
modest contraction in defense. I expect Massachusetts to match the growth
of the national economy over the coming year.
Q. WHAT ABOUT THE OVERALL MUNICIPAL MARKET?
A. Even though the Federal Reserve raised the federal funds rate - the rate
banks charge each other for overnight loans - from 3.00% to 3.25% in early
February, I still believe interest rates will be mostly stable for the
foreseeable future. I don't see yields rising by much, because inflationary
pressures are mild. And rates aren't likely to decline sharply either,
since the economy is growing. However, the supply of new municipal issues
will be much lower in 1994 than it was last year, especially in
Massachusetts. Much of that supply was caused by municipalities refunding
their old bonds - in fact, such refundings accounted for two-thirds of new
issues across the country and 85% in Massachusetts - and you can only
refund a bond once. The reduction in supply could help municipal bond
prices, which would in turn benefit the fund.
FUND FACTS
GOAL: to provide high current
income exempt from federal
and Massachusetts state
income taxes
START DATE: November 10,
1983
SIZE: as of January 31, 1994,
over $1.3 billion
MANAGER: Guy Wickwire,
since November 1983;
manager,
Fidelity Insured Tax-Free,
since October 1993; Fidelity
High Yield Tax-Free,
September 1981 - September
1993;
Fidelity Advisor High Income
Municipal, September 1987 -
January 1992
(checkmark)
GUY WICKWIRE ON HIS
INVESTMENT STRATEGY:
" About 17% of the fund's
investments are in bonds that
are not rated by agencies such
as Moody's or Standard &
Poor's, which may seem like a
risky strategy. But Fidelity's
credit analysts come up with
ratings for all of the non-rated
bonds in the portfolio. Taking
those ratings into account,
about 10% of the fund's
investments are in issues that
are below investment grade. In
other words, more than 85% of
the bonds the fund owns are
investment-grade quality. The
fund can invest up to 33% of its
assets in issues that are below
investment grade, but I haven't
found many that I'm
comfortable with. In fact, the
overall quality of the fund is a
bit higher than it was a year
ago. One reason is that its
largest holding, Massachusetts
Municipal Electric Corp., was
upgraded by Moody's from
Baa1 to single-A."
(bullet) As of January 31, 1994,
30% of the fund's investments
were in the health-care
sector, 11% in water and gas
utilities and 7% in
transportation issues.
(bullet) The fund's duration, a
measure of its price sensitivity
to changes in interest rates,
was about 6.2% at the end of
January. That means that a
one percentage point increase
in interest rates could cause a
fund's share price to decline
about 6.2%, while a one
percentage point decline could
cause the price to rise 6.2%.
FIDELITY MASSACHUSETTS TAX-FREE HIGH YIELD PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF JANUARY 31, 1994
% OF FUND'S INVESTMENT % OF FUND'S INVESTMENT
S S
IN THESE SECTORS
6 MONTHS AGO
Health Care 30.2 29.9
General Obligation 12.4 15.1
Education 12.0 10.0
Water & Sewer 11.0 9.9
Electric Revenue 8.0 8.0
AVERAGE YEARS TO MATURITY AS OF JANUARY 31, 1994
6 MONTHS AGO
Years 19.9 20.4
AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF JANUARY 31, 1994
6 MONTHS AGO
Years 6.2 7.6
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF JANUARY 31, 1994
(MOODY'S RATINGS)
Row: 1, Col: 1, Value: 20.5
Row: 1, Col: 2, Value: 44.1
Row: 1, Col: 3, Value: 15.5
Row: 1, Col: 4, Value: 2.2
Row: 1, Col: 5, Value: 17.7
Aaa 20.5%
Aa, A 44.1%
Baa 15.5%
Ba, B 2.2%
Non-rated 17.7%
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS. NON-RATED SECURITIES CONSIDERED TO
BE BAA OR BETTER BY FIDELITY ARE 7.5% OF THE FUND'S LONG-TERM INVESTMENTS.
FIDELITY MASSACHUSETTS TAX-FREE HIGH YIELD PORTFOLIO
INVESTMENTS/JANUARY 31, 1994
(Showing Percentage of Total Value of Investments)
MUNICIPAL BONDS - 97.4%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - 95.9%
Amherst Gen. Oblig.:
6.50% 1/15/08 Aa $ 795,000 $ 896,362 031231MJ
6.50% 1/15/09 Aa 770,000 859,512 031231MK
6.50% 1/15/10 Aa 750,000 837,187 031231ML
6.50% 1/15/11 Aa 695,000 775,793 031231MM
Andover Gen. Oblig. Ltd. Tax 6.60% 8/1/06 Aa 225,000 257,062 034285NX
Ashburnham & Westminster Reg'l. School Dist.
6% 12/15/13, (MBIA Insured) Aaa 1,000,000 1,057,500 043771CK
Barnstable Ind. Dev. Fing. Auth.
Ind. Dev. Rev. (Whitehall Pavilion Health Proj.)
10.125% 2/15/26,
(FHA Guaranteed) A 3,150,000 3,339,000 068181AA
Bellingham Gen. Oblig.:
7.50% 7/1/06 A 310,000 370,062 079491JL
7.50% 7/1/07 A 310,000 370,062 079491JM
7.50% 7/1/08 A 310,000 370,062 079491JN
7.50% 7/1/09 A 310,000 367,737 079491JP
7.50% 7/1/10 A 310,000 367,737 079491JQ
7.50% 7/1/11 A 300,000 355,874 079491JR
Boston Econ. Dev. & Ind. Corp.
(Boston Army Base 1983 Proj.) 6.25%
8/1/03 AA 5,350,000 5,891,687 100866AB
Boston Gen. Oblig. Unltd. Tax
Series A, 6.75% 7/1/11, (MBIA Insured) Aaa 6,375,000 7,211,718 100852YG
Boston Hsg. Dev. Corp. II Section 8,
(Diendasla Victoria) (FHA Guaranteed):
Series A, 9.23% 9/1/22 AA 2,849,247 2,991,709 100865AA
Series B, 9.23% 9/1/22 AA 143,390 150,559 100865AB
Boston Hsg. Dev. Corp. Mtg. Rev.
Rfdg. Section 8, Series A,
5.15% 7/1/08,
(FHA Guaranteed) (MBIA Insured) Aaa 3,550,000 3,563,312 100874AA
Boston Ind. Dev. Fing. Auth. Rev.
(Massachusetts College of Pharmacy Proj. A):
5.25% 10/1/14 AAA 1,000,000 986,250 100881AU
5.25% 10/1/26 AAA 1,000,000 961,250 100881AV
Boston Ind. Dev. Rev.
(North End Commty. Nursing Home)
11.45% 3/15/25,
(FHA Guaranteed) AA 4,905,000 5,953,443 100883AB
Boston Rev. Rfdg. (Boston City Hosp.)
Series B, 5.75% 2/15/23,
(FHA Guaranteed) Aa 1,000,000 1,015,000 101026BX
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Boston Wtr. & Swr. Commission Rev.
Gen. Series 1984 A, 7% 1/1/11 A $ 500,000 $ 529,374 101029BA
Boston Wtr. & Swr. Commission Gen. Sr.
Series A:
6.10% 11/1/06 A 3,950,000 4,305,500 101029FA
6.10% 11/1/07 A 2,000,000 2,172,500 101029FB
5.75% 11/1/13 A 7,025,000 7,534,312 101029FC
5.25% 11/1/19 A 26,500,000 26,533,124 101029GW
Bourne Gen. Oblig. Unltd. Tax
(Land Acquisition Loan):
8% 12/15/04 Baa 290,000 345,462 102061CV
8% 12/15/05 Baa 290,000 347,637 102061CW
8% 12/15/06 Baa 290,000 348,000 102061CX
8% 12/15/07 Baa 290,000 350,900 102061CY
Brockton Gen. Oblig.:
7.75% 12/15/96 Baa 4,500,000 4,792,500 111745U4
6.125% 6/15/18 Baa 1,000,000 1,042,500 111745Z9
Brockton Hsg. & Dev Corp. Rev. Rfdg.
Multi-Family Hsg. (Douglas House Proj.)
Series 1992 A, 7.375% 9/1/24,
(FNMA Coll.) AAA 8,390,000 9,386,312 111751AB
Dedham-Westwood Wtr. Dist. Rfdg. 5.10%
(MBIA Insured):
5.10% 10/15/12 Aaa 1,000,000 983,749 243671DR
5.15% 10/15/16 Aaa 1,250,000 1,226,562 243671DS
Dighton & Rehoboth Reg'l. School Dist.
(AMBAC Insured):
5.40% 5/15/10 Aaa 385,000 390,294 253795CK
5.40% 5/15/11 Aaa 185,000 187,543 253795CL
5.40% 5/15/12 Aaa 225,000 228,093 253795CM
Framingham Hsg. Dev. Corp. Mtg. Rev.
(Claffin House) Series A,
6.95% 1/1/24, (FHA Guaranteed) AAA 1,820,000 1,997,449 351700AD
Granville Gen. Oblig. (MBIA Insured):
7.30% 7/15/05 Aaa 145,000 176,899 388517AQ
7.30% 7/15/06 Aaa 145,000 177,443 388517AR
7.30% 7/15/07 Aaa 140,000 172,374 388517AS
7.30% 7/15/08 Aaa 140,000 173,074 388517AT
Groton Gen. Oblig. (MBIA Insured):
7.40% 11/15/06 Aaa 150,000 178,874 399316DE
7.40% 11/15/07 Aaa 150,000 178,874 399316DF
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Haverhill Rfdg. Series A, (AMBAC Insured):
6.40% 9/1/03 Aaa $ 1,600,000 $ 1,806,000 419506VU
6.50% 9/1/04 Aaa 1,595,000 1,800,356 419506VV
6.70% 9/1/10 Aaa 5,000,000 5,668,750 419506VW
Haverhill Unltd. Tax Series A, 7% 6/15/12,
(FGIC Insured) Aaa 2,750,000 3,169,375 419506XE
Holyoke Gen. Oblig. 7% 11/1/08 Baa 1,000,000 1,120,000 436704K7
Holyoke School Proj. Loan Act:
7.35% 8/1/02 Baa 2,270,000 2,582,125 436704H2
7.65% 8/1/09 Baa 2,205,000 2,519,213 436704H3
Hudson Ltd. Tax:
7.50% 8/15/01 Baa1 215,000 245,638 443852KX
7.50% 8/15/02 Baa1 215,000 246,713 443852KY
7.50% 8/15/03 Baa1 215,000 247,788 443852KZ
Lawrence Gen. Oblig.:
5.125% 9/15/03 Baa 500,000 505,625 520228WF
5.25% 9/15/04 Baa 500,000 506,875 520228WG
Lawrence School Construction 9.75% 3/15/04,
(AMBAC Insured) Aaa 1,420,000 1,986,225 520228UB
Leominster Gen. Oblig.
7.50% 4/1/09, (MBIA Insured) Aaa 2,300,000 2,682,375 526408XB
Lowell Gen. Oblig.:
Lowell Rfdg.:
Series A, 5.50% 1/15/10 (FSA Insured) Aaa 800,000 822,000 547643K4
Series B 5.60% 11/1/12 (FSA Insured) Aaa 2,500,000 2,568,750 547643M2
Lot B:
8% 1/15/00 Baa1 1,495,000 1,722,988 547643B3
7.20% 2/15/00 Baa1 1,035,000 1,155,319 547643C4
7.40% 11/15/00 Baa 205,000 233,700 547643YL
7.50% 11/15/01 Baa 200,000 229,000 547643YM
7.50% 11/15/02 Baa 200,000 229,000 547643YN
7.60% 11/15/03 Baa 200,000 230,000 547643YP
7.60% 11/15/04 Baa 200,000 230,000 547643YQ
8.40% 1/15/09 Baa1 1,250,000 1,512,500 547643B4
Lowell Hsg. Dev. Corp. Multi-Family Rev.:
Rfdg. Series A, (FNMA Coll.):
7.875% 11/1/00 AAA 870,000 979,838 547655AC
7.875% 11/1/24 AAA 5,440,000 6,181,200 547655AB
Lynn Gen. Oblig. 7.85% 1/15/11 Baa1 3,170,000 4,010,050 551562YJ
Lynn Rfdg. 5.25% 1/15/11 (FSA Insured) Aaa 5,570,000 5,549,113 551562ZP
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Lynn Wtr. & Swr. Commission:
Rfdg. (FGIC Insured):
6.125% 6/1/05 Aaa $ 1,000,000 $ 1,110,000 551592AT
5.35% 12/1/07 Aaa 760,000 790,400 551587BL
5.40% 12/1/08 Aaa 805,000 833,175 551587BM
5.45% 12/1/09 Aaa 850,000 873,375 551587BN
5.50% 12/1/10 Aaa 500,000 513,750 551587BF
Series A, 7.25% 12/1/10 Aaa 2,700,000 3,233,250 551592AK
Massachusetts Bay Trans. Auth. (Gen. Trans. Sys.):
Series A:
Rfdg. 5.50% 3/1/12 A 4,350,000 4,589,250 575566R9
5.50% 3/1/09 A 4,000,000 4,220,000 575566R8
7% 3/1/21 A 1,500,000 1,869,375 575566B7
Series B, 6.20% 3/1/16 A 5,000,000 5,737,500 575566L3
Massachusetts Gen. Oblig.:
(Cap. Appreciation Consolidated Loan)
Rfdg. Series B, 6.50% 8/1/08 A 4,000,000 4,630,000 575823Y5
Series C, 0% 12/1/05 A 46,000,000 26,047,500 575823J3
Consolidated Loan Series B, 0% 7/1/02 A 20,000,000 13,625,000 575823D6
Consolidated Loan Unltd. Tax,
Series A, 5% 1/1/14 A 3,000,000 2,932,500 575826EV
Massachusetts Health & Edl. Facs. Auth. Rev.:
Rfdg. (Massachusetts Gen. Hosp.) Series F,
6.25% 7/1/12, (AMBAC Insured) Aaa 3,500,000 3,941,875 575851PX
Rfdg. (Worcester Polytechnic Institute)
Series E, 6.75% 9/1/11 A 6,765,000 7,593,713 5758505Q
(1st Mtg.) (Fairview Extended Care)
Series A, 10.25% 1/1/21 - 10,000,000 11,075,000 575850M4
(Anna Jaques Hosp.) Series B:
5.90% 10/1/99 Baa 930,000 967,200 575851NG
6% 10/1/00 Baa 985,000 1,030,556 575851NH
6.875% 10/1/12 Baa 3,250,000 3,497,813 575851NJ
(Baystate Medical Center) Series D 5%
7/1/12 Aaa 5,000,000 4,900,000 575851Q8
(Bentley College) Series H, 6.90% 7/1/21,
(MBIA Insured) Aaa 6,720,000 7,702,800 575850W2
(Beth Israel Hosp.) 9.384% 7/1/25,
(AMBAC Insured)(c) Aaa 10,000,000 11,325,000 575851JP
(Blood Institute) Series A, 6.50%
2/1/22 - 16,300,000 17,746,625 575851KH
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Health & Edl. Facs. Auth. Rev.: - continued
(Boston College) Series K:
Rfdg. 5758512E
5.25% 6/1/09 A1 $ 1,500,000 $ 1,524,375 5758512F
5.25% 6/1/10 A1 1,400,000 1,415,750 5758512G
5.375% 6/1/14 A1 6,700,000 6,808,875 5758512D
5.25% 6/1/23 A1 9,500,000 9,310,000 5758512E
(Cape Cod Health Sys.) Series A,
(Connie Lee Insured):
5.25% 11/15/13 AAA 3,500,000 3,473,750 575851L4
5.25% 11/15/21 AAA 7,500,000 7,275,000 575851L5
(Cardinal Cushing Gen. Hosp.) Series A,
8.50% 7/1/00 - 1,000,000 1,050,000 57585HBV
(Central Med. Ctr.) Series B,
10.42% 6/23/22, (AMBAC Insured)(c) Aaa 10,000,000 13,312,500 575851PD
(Commty. Colleges)
6.50% 10/1/09 AAA 1,500,000 1,646,250 5758506V
6.60% 10/1/22 AAA 3,710,000 4,071,725 5758506W
(Dana Farber Cancer Institute):
6.15% 12/1/04 A1 545,000 593,369 5758506K
6.25% 12/1/05 A1 575,000 626,031 5758506L
6.35% 12/1/06 A1 615,000 668,813 5758506M
6.65% 12/1/15 A1 4,000,000 4,395,000 5758506N
(Daughters Charity-Carney Hosp.)
Series C, 7.50% 7/1/05 Aa 5,000,000 5,687,500 575850J2
(Emerson Hosp.) Series C, 8% 7/1/18 Baa1 23,470,000 26,961,163
575850B8
(Falmouth Hosp.) Series C, (MBIA Insured):
5.50% 7/1/08 Aaa 1,000,000 1,042,500 575851UM
5.625% 7/1/11 Aaa 1,500,000 1,539,375 575851UT
5.25% 7/1/13 Aaa 1,060,000 1,062,650 575851UW
(Faulkner Hosp.) Series C, 6% 7/1/13 Baa1 3,200,000 3,272,000 575851H7
(Hampden Nursing Home Proj.)
Series A, 9.75% 10/1/17 - 12,050,000 12,923,625 575909AE
(Hebrew Rehabilitation Ctr. For Aged)
Series B:
7% 7/1/97 A- 1,375,000 1,486,719 575849G4
7.375% 7/1/17 A- 14,000,000 15,382,500 575850QG
(Lahey Clinic Med. Ctr.) Series B,
(MBIA Insured):
5.625% 7/1/15 Aaa 3,050,000 3,103,375 575851XR
5.375% 7/1/23 Aaa 1,750,000 1,747,813 575851XS
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Health & Edl. Facs. Auth. Rev.: - continued
(Lowell Gen. Hosp.):
8.25% 6/1/00 Baa1 $ 3,840,000 $ 4,368,000 57585HNW
8.40% 6/1/11 Baa1 2,565,000 3,045,938 575850S3
(McLean Hosp.) Issue Series C,
6.45% 7/1/06, (FGIC Insured) Aaa 1,000,000 1,133,750 575851AY
(Melrose-Wakefield Hosp.)
Series B, 6.25% 7/1/12 A- 1,000,000 1,042,500 575851HV
(Milford Whitinsville Reg'l. Hosp.)
Series B:
7.125% 7/15/02 Ba1 3,100,000 3,239,500 575851QX
7.75% 7/15/17 Ba1 14,400,000 15,768,000 575851QY
(Morton Hosp. & Med. Ctr.) Series B
(Connie Lee Insured):
5.25% 7/1/08 AAA 1,200,000 1,209,000 575851W2
5.25% 7/1/14 AAA 2,150,000 2,120,438 575851V3
(Northeastern Univ.):
Series B, 7.60% 10/1/10,
(AMBAC Insured) Aaa 1,000,000 1,153,750 575850WU
Series E, 6.55% 10/1/22, (MBIA Insured) Aaa 8,000,000 8,970,000
575851DN
(Norwood Hosp. Proj.):
Series C, 7% 7/1/14 Baa 1,520,000 1,683,400 575850DH
Series E:
7.40% 7/1/99 Baa 200,000 213,250 5758495G
8% 7/1/05 Baa 2,970,000 3,233,588 575850VP
8% 7/1/12 Baa 11,200,000 12,194,000 575850VR
(Notre Dame Health Care Ctr.) Series A:
7.25% 10/1/01 - 865,000 962,313 5758505P
7.875% 10/1/22 - 5,000,000 5,737,500 5758505S
(Salem Hosp.):
6.75% 7/1/00, (MBIA Insured) Aaa 720,000 781,200 575849M7
Series B, 8.15% 7/1/14 - 8,000,000 9,210,000 575850XD
(Simmons College) Series B, 7.50%
10/1/20 Baa1 6,190,000 7,242,300 575850E5
(Sisters of Providence Health Sys.)
Issue A, 6.625% 11/15/22 Baa1 2,685,000 2,876,306 575851GB
(South Shore Hosp.) Series E,
5.50% 7/1/13, (MBIA Insured) Aaa 3,000,000 3,056,250 575851F8
(St. Anne's Hosp.) Series A:
9.25% 7/1/05 B1 1,270,000 1,306,513 575850MF
9.375% 7/1/14 B1 9,170,000 9,445,100 575850MG
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Health & Edl. Facs. Auth. Rev.: - continued
(St. Luke's Hosp. New Medford)
8.55% 8/15/23, (MBIA Insured)(c) Aaa $ 10,000,000 $ 10,750,000 575851C7
(Suffolk Univ.) Series B,
6.25% 7/1/12, (Connie Lee Insured) AAA 2,590,000 2,771,300 575851KG
(Tufts Univ.):
Series C, 7.40% 8/1/08 A1 1,000,000 1,145,000 575850VY
9.31% 8/15/18, (FGIC Insured) (c) Aaa 7,400,000 7,927,250 575851RW
(Valley Regional Health Sys.)
Series B, 8% 7/1/18 Baa 1,000,000 1,143,750 575850M2
(Wellesley College) Series D:
5.30% 7/1/14 Aa1 4,150,000 4,207,063 575851Y3
5.375% 7/1/19 Aa1 5,720,000 5,812,950 575851Y4
(Wentworth Institute of Technology):
Series A, 7.40% 4/1/10,
(AMBAC Insured) Aaa 4,500,000 5,371,875 575850G5
Series B:
5.625% 10/1/13 AAA 2,000,000 2,040,000 5758512Z
5.50% 10/1/23 (Connie Lee Insured) AAA 3,000,000 2,981,250 5758513A
(Wheaton College) Series B
(Cap. Guaranty Insured):
7.20% 7/1/08 Aaa 460,000 527,850 575850ZC
7.20% 7/1/09 Aaa 590,000 672,600 575850ZD
7.25% 7/1/19 Aaa 5,620,000 6,420,850 575850ZE
(Whidden Mem. Hosp.) Series B:
7.375% 7/1/98 - 1,105,000 1,180,969 575849J9
7.875% 7/1/12 - 6,530,000 7,044,238 575850RC
(Williams College) Series D, 5.50%
7/1/17 Aa1 2,000,000 2,060,000 575851WZ
Massachusetts Hsg. Fin. Agcy. Hsg. Rev.:
(Hsg. Projs.) Series A, 6.375% 4/1/21 A1 15,000,000 15,881,250
575852VP
(Multi-Family) Series 1985 A,
9.25% 12/1/14, (MBIA Insured) Aaa 1,950,000 2,093,813 575910DT
(Single Family):
Series 1985 A:
9.375% 12/1/09 Aa 550,000 569,938 575910BQ
9.50% 12/1/16 Aa 3,425,000 3,574,844 575910CU
Series 3, 7.30% 6/1/14 Aa 6,000,000 6,457,500 575910KS
Series 4, 7.375% 6/1/14 Aa 6,765,000 7,044,056 575910ML
Series 8, 7.70% 6/1/17 Aa 500,000 526,875 575910VF
Series 10, 7.70% 12/1/17 Aa 990,000 1,049,400 575910YH
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Hsg. Fin. Agcy. Hsg. Rev.: - continued
(Single Family): - continued
Series 16:
7.80% 12/1/05 Aa $ 1,000,000 $ 1,052,500 575910E4
7.90% 6/1/14 Aa 1,000,000 1,053,750 575910E5
Series 22, 6.95% 6/1/16 Aa 3,430,000 3,768,713 575910S6
Series A, 6.30% 10/1/13 A1 27,000,000 28,417,500 575852VR
(Village Plaza Ltd. Brookline)
9% 5/1/95, LOC Shawmut National
Corp. - 3,375,000 3,400,313 575911BM
5.35% 9/15/05 Baa1 930,000 933,488 575914A9
5.625% 9/15/10 Baa1 1,000,000 1,001,250 575914B2
Massachusetts Hsg. Fin. Agcy. Residential Dev.
Series H 6.75% 11/15/12 (FNMA Coll.) Aaa 5,000,000 5,425,000 575854L3
Massachusetts Hsg. Fin. Agcy. Single Family
Mtg. Purchase Series 1984 A:
11.375% 12/1/08 (Escrowed to Maturity)(d) Aa 300,000 310,125 575853FX
10.625% 12/1/09 Aa 15,000 15,563 575853HE
Massachusetts Ind. Fin. Agcy. Ind. Rev.:
Rfdg. (Chelsea Jewish Nursing Home)
Series A, 11.15% 2/15/25,
(FHA Guaranteed) BBB- 3,660,000 4,634,475 575855DQ
Rfdg. (Framingham Union Hosp.) Series A:
8.25% 7/1/00 A 3,830,000 4,318,325 575914BE
8.625% 7/1/12 A 14,645,000 16,896,669 575914BF
Rfdg. (Milton Academy) Series B,
5.25% 9/1/19, (MBIA Insured) Aaa 3,000,000 2,996,250 575914ZL
Rfdg. (Philips Academy) 5.375% 9/1/23 Aa1 4,200,000 4,278,750 575914ZN
(1st Mortgage Reeds Landing) 7.75%
10/1/20 - 2,500,000 2,503,125 575914ZS
(Atlanticare Med. Ctr.) Series A:
Rfdg.10.125% 11/1/14 - 8,800,000 10,241,000 575914GY
10.125% 11/1/14 - 1,900,000 2,211,125 575914GZ
(Beverly Enterprises, Inc.):
Rfdg. 8% 5/1/02 - 575,000 633,938 575855G5
8.375% 5/1/09 - 1,875,000 2,074,219 575855G6
(Boston Architectural Ctr. Proj.)
8.50% 9/1/19 - 3,685,000 4,090,350 575914FD
(Cap. Appreciation) (Massachusetts Biomedical): 575914DT
Series A-1: 575914DT
0% 8/1/02 A1 3,650,000 2,395,313 575914DY
0% 8/1/03 - 1,000,000 617,500 575914DT
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Ind. Rev.: - continued
(Cap. Appreciation) (Massachusetts Biomedical): - continued 575914DT
Series A-2:
0% 8/1/05(e) - $ 24,600,000 $ 13,407,000 575914EB
0% 8/1/07 - 25,000,000 11,937,500 575914ED
0% 8/1/08 - 20,000,000 9,000,000 575914EE
0% 8/1/10 - 10,000,000 3,962,500 575914EG
(Concord Academy) 6.90% 9/1/21,
(FSA Insured) Aaa 1,370,000 1,572,075 575914PQ
(Eagle Pond Health Care) (FHA Guaranteed);
10.125% 5/15/04 A+ 385,000 415,319 575855CN
10.125% 5/15/26 - 4,270,000 4,472,825 575855CP
(Emerson College):
Series 1992 8.25% 1/1/17 - 3,000,000 3,401,250 575914UV
8.50% 1/1/03 - 6,000,000 6,937,500 575914MB
8.90% 1/1/18 - 11,250,000 13,260,938 575914MA
(Evergreen Ctr., Inc.) 9.25% 11/1/11 - 4,700,000 5,316,875 575914PT
(Holy Cross College):
Rfdg. Series II, 6.375% 11/1/15 A1 2,000,000 2,175,000 575914TP
6.45% 1/1/12 A1 4,300,000 4,687,000 575914SG
7% 7/1/19 A1 9,000,000 9,900,000 575914DL
(Inner Belt Realty Trust Proj.) Series 1985,
9.50% 12/1/98 - 1,913,354 2,092,732 999949ET
(Institute Dev. Disabilities) 9.25%
6/1/09 - 4,460,000 4,365,225 575914DN
(Jacobs Pillow Dance Festival) 9%
12/1/11 - 4,800,000 5,076,000 575914PR
(Leominster Hosp.) Series A, 8.375%
8/1/99 - 3,300,000 3,712,500 575914FE
(Meadow Green Nursing) 9.60% 8/1/27,
(FHA Guaranteed) AA 3,880,000 4,335,900 575855DZ
(Museum of Science Proj.)
(Cap. Guaranty Insured):
4.90% 11/1/06 Aaa 480,000 477,715 575914D7
5% 11/1/07 Aaa 515,000 512,430 575914D8
5% 11/1/08 Aaa 1,590,000 1,573,544 575914D9
5.10% 11/1/09 Aaa 830,000 825,493 575914E2
(New England Ctr. for Autism):
9% 11/1/05 - 3,050,000 3,377,875 575914GV
9.50% 11/1/15 - 8,610,000 9,761,588 575914GW
7% 11/1/19 - 1,100,000 1,079,375 575914GX
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Ind. Rev.: - continued
(Orchard Cove, Inc.)
8% 5/1/99 - $ 10,000,000 $ 10,375,000 575914SH
9% 5/1/22 - 15,200,000 16,891,000 575914SJ
(Springfield College):
5.25% 9/15/03 Baa1 755,000 763,494 575914A7
5.25% 9/15/04 Baa1 885,000 888,319 575914A8
(Whitehead Institute Biomedical Research)
8.625% 10/1/23 7,500,000 7,528,125 575914ZU
5.125% 7/1/26 Aa 5,500,000 5,341,875 575914B5
Massachusetts Ind. Fin. Agcy. Poll.
Cont. Rev. Rfdg. (Eastern Edison Co. Proj.)
5.875% 8/1/08 Baa2 3,750,000 3,876,563 575856BD
Massachusetts Ind. Fin. Agcy. Resource
Recovery Rev. (Southeast Mass. Proj.)
Series A, 9% 7/1/15 - 1,000,000 1,168,750 575912AV
Massachusetts Muni. Wholesale Elec. Co. Pwr.
Supply Sys. Rev.:
Series A:
Rfdg. 5.10% 7/1/08, (AMBAC Insured) Aaa 1,000,000 1,006,250 575765MT
6.375% 7/1/15 A 14,865,000 15,218,044 575765BF
6% 7/1/18 Baa1 13,000,000 13,406,250 575765JG
8.02% 7/1/18 (c) Aaa 16,500,000 16,603,125 575765MV
Series B, 6.75% 7/1/17 Baa1 30,000,000 32,925,000 575765JF
Series C
6.40% 7/1/02 Baa1 1,225,000 1,353,625 575765JU
6.625% 7/1/18 Baa1 10,000,000 10,887,500 575765KB
Series D, 6.125% 7/1/19 Baa1 15,000,000 15,693,750 575765LZ
Series E, 6.125% 7/1/19 Baa1 750,000 784,688 575765MA
5% 7/1/10, (AMBAC Insured) Aaa 1,000,000 986,250 575765MU
Massachusetts Port Auth. Rev.:
Rfdg. Series A:
5.50% 7/1/08 Aa 2,995,000 3,118,544 575895NS
5.50% 7/1/09 Aa 3,160,000 3,282,450 575895NU
5% 7/1/13 Aa 9,835,000 9,773,531 575895NX
5% 7/1/15 Aa 5,600,000 5,551,000 575895NZ
Series B:
Rfdg. 7.125% 7/1/12 Aa 2,990,000 3,064,750 575895EE
5.625% 7/1/12 (Escrowed to Maturity)(d) Aaa 1,900,000 2,028,250
575895DH
6% 7/1/13 Aa 1,825,000 1,957,313 575895MG
6% 7/1/23 Aa 16,000,000 17,020,000 575895MJ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Spl. Oblig. Rev. (Gas Tax) Series A:
6.25% 6/1/06 A $ 3,880,000 $ 4,311,650 576004AL
6.25% 6/1/07 A 2,480,000 2,755,900 576004AH
6% 6/1/13 A 35,915,000 38,473,944 576004AJ
Massachusetts Tpk. Auth. Tpk. Rev. Series A:
5% 1/1/13 A1 19,540,000 19,149,200 576029AR
5% 1/1/20 A1 15,900,000 15,403,125 576029AT
5.125% 1/1/23, (FGIC Insured) Aaa 14,500,000 14,191,875 576029AS
Massachusetts Wtr. Poll. Abatement Trust
(Wtr. Poll. Pooled Loan Prog.):
Series 1:
5.40% 2/1/06 Aa 2,175,000 2,275,594 576047CL
5.40% 8/1/06 Aa 2,230,000 2,333,138 576047CM
5.45% 2/1/07 Aa 2,000,000 2,092,500 576047CN
5.45% 8/1/07 Aa 2,355,000 2,463,919 576047CP
5.50% 2/1/08 Aa 1,000,000 1,045,000 576047CQ
5.50% 8/1/08 Aa 2,000,000 2,090,000 576047CR
5.60% 8/1/13 Aa 14,300,000 14,782,625 576047CS
Series A 5.20% 8/1/11 Aa 5,520,000 5,595,900 576047DM
Series B 5.25% 8/1/14 Aa 6,605,000 6,704,075 576047DL
Massachusetts Wtr. Poll. Abatement Trust Rev.
(Massachusetts Wtr. Resources Auth. Loan Prog.):
Series A:
5.20% 2/1/06 Aa 3,600,000 3,699,000 576047BB
5.20% 8/1/06 Aa 3,800,000 3,904,500 576047BC
5.30% 2/1/07 Aa 3,965,000 4,088,906 576047BD
5.30% 8/1/07 Aa 4,080,000 4,207,500 576047BE
5.35% 2/1/08 Aa 2,685,000 2,768,906 576047BF
5.35% 8/1/08 Aa 4,320,000 4,455,000 576047BG
5.45% 2/1/13 Aa 32,390,000 33,037,800 576047BK
Massachusetts Wtr. Resources Auth.
Series A, 0% 4/1/06 A 10,000,000 5,475,000 576049AZ
Methuen Wtr. Ltd. Tax Lot A:
9.40% 12/15/97 A1 260,000 311,350 591537GL
9.50% 12/15/98 A1 260,000 318,825 591537GM
9.50% 12/15/99 A1 260,000 326,625 591537GN
9.50% 12/15/00 A1 260,000 332,800 591537GP
Monson Gen. Oblig. Rfdg. (MBIA Insured):
Rfdg. 5.40% 10/15/07 Aaa 1,005,000 1,056,506 611730CM
5.50% 10/15/10 Aaa 1,080,000 1,129,950 611730CN
Nantucket Gen. Oblig. 6.80% 12/1/11 A 1,425,000 1,596,000 630191JJ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Nantucket Island Bank Rfdg. Series E:
7% 7/1/05 A $ 1,505,000 $ 1,717,581 630187BW
7.25% 7/1/19 A 6,175,000 7,124,406 630187BY
North Attleborough Gen. Oblig. Ltd. Tax:
7% 5/15/06 A 425,000 493,000 657339JS
7% 5/15/07 A 425,000 493,000 657339JT
Orleans Unltd. Tax:
6.70% 6/15/08 A1 180,000 201,150 686628GK
6.70% 6/15/09 A1 120,000 132,150 686628GL
Palmer Rfdg. 5.50% 10/1/10 Baa1 2,250,000 2,320,313 696837EC
Pittsfield Gen. Oblig. 7.25% 8/1/06 A 600,000 673,500 725463QB
Plainville Gen. Oblig. Ltd.:
7% 9/1/06 A 175,000 196,438 726838DH
7% 9/1/07 A 175,000 195,781 726838DJ
7% 9/1/09 A 175,000 196,438 726838DG
Plymouth County Ctfs. of Prtn. Series A, 7%
4/1/22 BBB 10,995,000 12,451,838 729505BB
Quabbin Reg'l. School Dist. 6.80% 6/15/05 A 510,000 566,100 747283BJ
Quincy Hosp. Rev. Rfdg. (FSA Insured):
5.50% 1/15/13 Aaa 1,975,000 1,989,813 748524BV
5.25% 1/15/16 Aaa 1,000,000 980,000 748524BY
Rowley Gen. Oblig. Ltd. Tax, (AMBAC Insured):
7.35% 5/15/06 Aaa 250,000 289,375 779749BN
7.40% 5/15/07 Aaa 250,000 289,375 779749BP
7.40% 5/15/08 Aaa 250,000 288,750 779749BQ
Southern Berkshire Reg'l. School Dist.
7% 4/15/11, (MBIA Insured)(e) Aaa 4,000,000 4,635,000 842366CT
South Essex Swr. Dist. Gen. Oblig. Unltd. Tax:
8.75% 12/1/01 A 425,000 534,438 837718HY
8.75% 12/1/02 A 425,000 531,250 837718HZ
8.75% 12/1/03 A 400,000 497,500 837718JA
8.75% 12/1/04 A 400,000 497,500 837718JB
8.75% 12/1/05 A 400,000 496,000 837718JC
Springfield Gen. Oblig. Series B,
6% 1/15/13, (MBIA Insured) Aaa 2,000,000 2,135,000 8507487F
Springfield Hsg. Auth. Multi-Family Mtg. Rev.
(Citywide Apts.) (FHA Guarantied):
9.50% 11/1/05 - 485,000 528,044 850757AA
9.625% 11/1/17 - 1,500,000 1,665,000 850757AB
9.625% 11/1/26 - 3,250,000 3,619,688 850757AC
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Taunton Gen. Oblig.:
8% 2/1/00 A $ 1,000,000 $ 1,168,750 876672PG
8% 2/1/02 A 1,465,000 1,765,325 876672PJ
8% 2/1/03 A 1,005,000 1,223,588 876672PK
8% 2/1/05 A 1,000,000 1,240,000 876672PM
Taunton Ind. Dev. Fing. Rev.
(Pepsi Cola Metro Bottle Co.) 5.65%
8/1/12 A1 2,400,000 2,430,000 876680BR
Tewksbury Gen. Oblig. Various Purp. Unltd. Tax:
9.60% 12/15/98 Baa1 595,000 717,719 881626FY
9.60% 12/15/99 Baa1 595,000 738,544 881626FZ
9.60% 12/15/00 Baa1 210,000 265,913 881626GA
9.60% 12/15/01 Baa1 210,000 271,950 881626GB
9.60% 12/15/02 Baa1 210,000 277,200 881626GC
Tewksbury Wtr. Gen. Oblig.:
7.20% 6/1/05 Baa1 350,000 412,125 881626JT
7.20% 6/1/06 Baa1 150,000 177,563 881626JV
Westfield Muni. Purp. Loan (FSA Insured):
5% 9/1/10 Aaa 745,000 742,206 960096QD
5% 9/1/11 Aaa 490,000 485,713 960096QE
5% 9/1/12 Aaa 745,000 737,550 960096QF
5% 9/1/13 Aaa 500,000 491,875 960096QG
Westford Gen. Oblig. Unltd. Tax
7.60% 10/15/10, (FGIC Insured) Aaa 2,100,000 2,478,000 960266HC
Winchedon Gen. Oblig. (AMBAC Insured):
6.05% 3/15/11 Aaa 1,285,000 1,382,981 972669DP
6.05% 3/15/12 Aaa 1,275,000 1,372,218 972669DQ
1,320,755,882
PUERTO RICO - 1.2%
Puerto Rico Elec. Pwr. Auth. Elec. Rev.
Series A, 5.875% 7/1/05 Baa1 3,115,000 3,153,938 745264NN
Puerto Rico Ports Auth. Rev.
Series B, 5.70% 7/1/03 A 2,460,000 2,493,825 745290BR
Puerto Rico Tel. Auth. Rev.
8.283% 1/16/15 (MBIA Insured)(c) Aaa 10,000,000 10,887,500 745297JT
16,535,263
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (B) AMOUNT (NOTE 1)
U.S. VIRGIN ISLANDS - 0.1%
Virgin Island Pub. Fin. Auth. Rev. Series A,
7% 10/1/02 - $ 1,000,000 $ 1,118,750 927676CC
GUAM - 0.2%
Guam Arpt. Auth. Rev.:
Series A, 6.375% 10/1/10 BBB 1,510,000 1,640,238 400648BJ
6.50% 10/1/23 BBB 1,500,000 1,636,875 400648BL
3,277,113
TOTAL MUNICIPAL BONDS
(Cost $1,216,196,936) 1,341,687,008
MUNICIPAL NOTES (A) - 2.6%
MASSACHUSETTS - 2.6%
Massachusetts Health & Edl. Facs. Auth. Rev.:
(Cap. Asset Prog.):
Series B, 2.30%, (MBIA Insured)
BPA Sanwa Bank, VRDN VMIG 1 3,800,000 3,800,000 575850JQ
Series C, 2.30%,
(MBIA Insured) BPA Sanwa Bank, VRDN VMIG 1 3,000,000 3,000,000
575850JR
(Cap. Asset Prog.) Series 1985 D,
2.20%, (MBIA Insured) BPA Sanwa Bank,
VRDN VMIG 1 10,700,000 10,700,000 575850MP
(Harvard Univ.) VRDN:
Issue I, 2.05%, VRDN VMIG 1 8,000,000 8,000,000 575850HW
Series I, 2.05%, VRDN VMIG 1 10,600,000 10,600,000 575850HX
TOTAL MUNICIPAL NOTES
(Cost $36,100,000) 36,100,000
TOTAL INVESTMENTS - 100%
(Cost $1,252,296,936) $ 1,377,787,008
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
1,100 U.S. Treasury Bond Futures Contracts March 1994 $128,871,875
$(1,378,782)
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 9.3%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(c) Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
(d) Security collateralized by an amount sufficient to pay interest and
principal.
(e) Security was pledged to cover margin requirements for futures
contracts. At the period end, the value of securities pledged amounted to
$7,360,000.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 56.5% AAA, AA, A 58.2%
Baa 13.6% BBB 12.7%
Ba 1.4% BB 1.4%
B 0.8% B 0.7%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 17.2%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 30.2%
General Obligation 12.4
Education 12.0
Water & Sewer 11.0
Others
(individually less
than 10%) 34.4
TOTAL 100.0%
INCOME TAX INFORMATION
At January 31, 1994 the aggregate cost of investment securities for income
tax purposes was $1,252,296,936. Net unrealized appreciation aggregated
$125,490,072, of which $125,750,445 related to appreciated investment
securities and $260,373 related to depreciated investment securities.
The fund hereby designates $800,818 as a capital gain dividend for the
purpose of the dividend paid deduction.
At January 31, 1994 the fund was required to defer $20,706,000 of losses on
futures contracts and options.
FIDELITY MASSACHUSETTS TAX-FREE HIGH YIELD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 31, 1994
39.ASSETS 40. 41.
42.Investment in securities, at value (cost $1,252,296,9 43. $ 1,377,787,008
36)
(Notes 1 and 2) - See accompanying schedule
44.Cash 45. 2,518,826
46.Receivable for investments sold 47. 7,628,174
48.Interest receivable 49. 17,794,727
50.Receivable for daily variation on futures contracts 51. 339,713
52. 53.TOTAL ASSETS 54. 1,406,068,448
55.LIABILITIES 56. 57.
58.Payable for investments purchased $ 16,243,851 59.
60.Dividends payable 1,812,517 61.
62.Accrued management fee 470,420 63.
64.Other payables and accrued expenses 131,845 65.
66. 67.TOTAL LIABILITIES 68. 18,658,633
69.70.NET ASSETS 71. $ 1,387,409,815
72.Net Assets consist of (Note 1): 73. 74.
75.Paid in capital 76. $ 1,268,181,575
77.Accumulated undistributed net realized gain (loss) 78.
on investments (4,883,050)
79.Net unrealized appreciation (depreciation) on: 80. 81.
82. Investment securities 83. 125,490,072
84. Futures contracts 85. (1,378,782)
86.87.NET ASSETS, for 113,618,125 shares outstanding 88. $ 1,387,409,815
89.90.NET ASSET VALUE, offering price and redemption p 91. $12.21
rice per
share ($1,387,409,815 (divided by) 113,618,125 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JANUARY 31, 1994
92.93.INTEREST INCOME 94. $ 88,334,969
95.EXPENSES 96. 97.
98.Management fee (Note 4) $ 5,661,123 99.
100.Transfer agent, accounting and custodian fees and 1,618,252 101.
expenses (Note 4)
102.Non-interested trustees' compensation 4,233 103.
104.Registration fees 1,988 105.
106.Audit 39,623 107.
108.Legal 19,737 109.
110.Interest (Note 5) 2,066 111.
112.Reports to shareholders 26,910 113.
114.Miscellaneous 7,411 115.
116. 117.TOTAL EXPENSES 118. 7,381,343
119.120.NET INTEREST INCOME 121. 80,953,626
122.REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTM 124. 125.
ENTS
(NOTES 1 AND 3)
123.Net realized gain (loss) on:
126. Investment securities 45,756,155 127.
128. Futures contracts (5,778,520) 39,977,635
129.Change in net unrealized appreciation (depreciation 130. 131.
) on:
132. Investment securities 40,599,386 133.
134. Futures contracts (683,117) 39,916,269
135.136.NET GAIN (LOSS) 137. 79,893,904
138.139.NET INCREASE (DECREASE) IN NET ASSETS RESULT 140. $ 160,847,530
ING
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR SIX MONTHS YEAR
ENDED ENDED ENDED
JANUARY 31, 1994 JANUARY 31, 1993 JULY 31, 1992
(NOTE 1)
141.INCREASE (DECREASE) IN NET ASS
ETS
142.Operations $ 80,953,626 $ 37,810,061 $ 65,864,151
Net interest income
143. Net realized gain (loss) on 39,977,635 1,316,254 (2,145,456)
investments
144. Change in net unrealized apprec 39,916,269 (6,218,082) 61,206,348
iation
(depreciation) on investments
145. 160,847,530 32,908,233 124,925,043
146.NET INCREASE (DECREASE) IN
NET ASSETS
RESULTING FROM OPERATIONS
147.Distributions to shareholders fro (80,953,626) (37,810,061) (65,864,151)
m:
Net interest income
148. Net realized gain (25,900,006) (7,243,604) (6,456,532)
149. In excess of net realized gain (3,133,619) - -
150. (109,987,251) (45,053,665) (72,320,683)
151.TOTAL DISTRIBUTIONS
152.Share transactions 471,434,518 286,075,883 547,705,624
Net proceeds from sales of shares
153. Reinvestment of distributions 86,120,603 35,355,054 56,099,281
154. Cost of shares redeemed (483,601,622) (282,096,519) (263,181,440)
155. 73,953,499 39,334,418 340,623,465
Net increase (decrease) in net ass
ets
resulting from share transactions
156. 124,813,778 27,188,986 393,227,825
157.TOTAL INCREASE (DECREASE) IN
NET ASSETS
158.NET ASSETS 159. 160. 161.
162. Beginning of period 1,262,596,037 1,235,407,051 842,179,226
163. End of period $ 1,387,409,815 $ 1,262,596,037 $ 1,235,407,051
164.OTHER INFORMATION 166. 167. 168.
165.Shares
169. Sold 39,016,000 24,566,680 47,852,663
170. Issued in reinvestment of distributio 7,102,485 3,039,654 4,898,684
ns
171. Redeemed (39,936,090) (24,293,893) (23,000,267)
172. Net increase (decrease) 6,182,395 3,312,441 29,751,080
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
173. YEAR SIX MONTHS YEARS ENDED JULY 31,
ENDED ENDED
JANUARY 31, JANUARY 31, 1993
174. 1994 (NOTE 1) 1992 1991 1990 1989
175.SELECTED PER-SHARE DATA
176.Net asset value, beginning of
period $ 11.750 $ 11.860 $ 11.320 $ 11.160 $ 11.250 $ 10.820
177.Income from Investment Operations .714 .364 .735 .783 .799 .804
Net interest income
178. Net realized and unrealized gain
(loss) on .720 (.040) .620 .270 (.090) .430
investments
179. Total from investment operations 1.434 .324 1.355 1.053 .709 1.234
180.Less Distributions (.714) (.364) (.735) (.783) (.799) (.804)
From net interest income
181. From net realized gain on
investments (.230) (.070) (.080) (.110) - -
182. In excess of net realized gain
on investments (.030) - - - - -
183. Total distributions (.974) (.434) (.815) (.893) (.799) (.804)
184.Net asset value, end of period $ 12.210 $ 11.750 $ 11.860 $ 11.320 $ 11.160 $ 11.250
185.TOTAL RETURN (dagger) 12.57 2.83% 12.48 9.90 6.60 11.82
% % % % %
186.RATIOS AND SUPPLEMENTAL DATA
187.Net assets, end of period
(000 omitted) $ 1,387,410 $ 1,262,596 $ 1,235,407 $ 842,179 $ 737,321 $ 662,861
188.Ratio of expenses to
average net assets .54 .55%* .57 .56 .57 .56
% % % % %
189.Ratio of net interest income
to average net assets 5.93 6.19%* 6.43 7.05 7.20 7.33
% % % % %
190.Portfolio turnover rate 40 42%* 18 29 31 26
% % % % %
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
FIDELITY MASSACHUSETTS TAX-FREE MONEY MARKET PORTFOLIO
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 a fund's share price
over a given period and reinvestment of its dividends (or 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 during the periods shown,
the total returns, dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Massachusetts Tax-Free Money Market 1.71% 20.20% 50.17%
Consumer Price Index 2.52% 20.73% 43.47%
Average Massachusetts
Tax-Free Money Market Fund 1.86% 21.18% n/a
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, one year, five years, or ten years. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, you would end up
with $1,050. Comparing the fund's performance to the consumer price index
(CPI) helps show how your investment did compared to inflation. To measure
how the fund stacked up against its peers, you can compare its return to
the average Massachusetts tax-free money market fund's total return. This
average currently reflects the performance of 10 Massachusetts tax-free
money market funds tracked by IBC/Donoghue.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Massachusetts Tax-Free Money Market 1.71% 3.75% 4.15%
Consumer Price Index 2.52% 3.84% 3.68%
Average Massachusetts
Tax-Free Money Market Fund 1.86% 3.92% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1/31/93 4/30/93 7/31/93 10/31/93 1/31/94
Massachusetts Tax-Free 1.74% 1.77% 1.85% 1.85% 1.62%
Money Market
Average Massachusetts 2.06% 1.94% 1.98% 1.92% 1.70%
Tax-Free Money Market
Fund
Massachusetts Municipal 3.09% 3.14% 3.28% 3.28% 2.88%
Money Market Tax-equivalen
t
Average All Taxable 2.74% 2.62% 2.65% 2.66% 2.68%
Money Market Fund
</TABLE>
Row: 1, Col: 1, Value: 1.74
Row: 1, Col: 2, Value: 2.06
Row: 2, Col: 1, Value: 1.77
Row: 2, Col: 2, Value: 1.94
Row: 3, Col: 1, Value: 1.86
Row: 3, Col: 2, Value: 1.98
Row: 4, Col: 1, Value: 1.85
Row: 4, Col: 2, Value: 1.92
Row: 5, Col: 1, Value: 1.62
Row: 5, Col: 2, Value: 1.7
3% -
2% -
1% -
0%
Massachusetts
Tax-Free Money Marke
t
Average Massachusett
s Tax-Free Money
Market Fund
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. The chart above shows the fund's seven-day yield at
quarterly intervals over the past year. You can compare these yields to the
average tax-free money market fund. Or you can look at the fund's
tax-equivalent yield, which is based on a combined effective federal and
state income tax rate of 43.68%. The tax-equivalent figures are useful in
seeing how the fund stacked up against the average taxable money market
fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS 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 MASSACHUSETTS TAX-FREE MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jan Bradburn, Portfolio Manager of Fidelity
Massachusetts Tax-Free Money Market Portfolio
Q. JAN, WHAT HAS THE SHORT-TERM SIDE OF THE MARKET BEEN LIKE OVER THE PAST
12 MONTHS?
A. Short-term interest rates have remained pretty stable. Both the federal
funds rate - what banks charge each other for overnight loans - and the
discount rate - what the Federal Reserve charges member banks - have been
at or near 3% since the fall of 1992. Inflation wasn't a big issue either,
despite brief scares last spring and again in November. Supply and demand
factors had a much bigger effect on how I managed the fund than movements
in interest rates.
Q. WHY?
A. Last fall, the short-term market experienced an unusually strong surge
in supply. This glut of new securities forced issuers to offer very
attractive yields, which provided enticing buying opportunities. For
example, the fund's investments usually have yields that are about 68 to
72% of Treasuries with similar maturities. But last fall, many of the
issues on the market had yields that were 80 to 85% of comparable
Treasuries. I stocked up, which lengthened the fund's average maturity from
33 days at the end of July to 81 days at the end of September. Then supply
began to dry up, and I began to worry about the Fed possibly triggering a
rise in interest rates. I let the average maturity roll back down to 57
days by the end of January.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on January 31, 1994 was 1.62%, down from
1.74% a year ago. That reflects the general drop in short-term interest
rates over the past year. The latest yield translates into a tax-equivalent
yield of 2.88% for investors in the 43.68% combined effective federal and
state tax bracket. The fund's total return - which assumes reinvestment of
monthly dividends - for the 12 months ended January 31 was 1.71%. The
average Massachusetts municipal money market fund had a total return of
1.86%.
Q. WHAT AFFECTED PERFORMANCE?
A. Mainly the fact that the credit quality of many issues in Massachusetts
is still not meeting the fund's high standards, although I am seeing
improvement as the economy strengthens. This has meant accepting lower
yields, on occasion, in return for investing in only the highest quality
debt.
Q. WHAT'S AHEAD FOR THE FUND?
A. Early in February, the Fed raised the federal funds rate to 3.25%,
effectively raising all short-term interest rates.
Although currently inflation doesn't look like an increasing concern, I
think there's a good chance the Fed could make more of these "preemptive
strikes" to curb inflation threats before they happen. I'll prepare the
fund for higher rates in two ways: First, I plan to keep the average
maturity in a neutral range, say 50 to 60 days, and second, I'll most
likely increase the fund's investment in variable rate instruments. The
coupons (stated interest rates) on these securities are reset at fixed
intervals - for example, weekly or monthly, so when rates rise, the fund
can benefit from higher coupons at these reset intervals.
FUND FACTS
GOAL: tax-free income with
share price stability by
investing in high-quality
short-term Massachusetts
municipal securities
START DATE: November 11,
1983
SIZE: as of January 31, 1994,
over $610 million
MANAGER: Janice Bradburn,
since January 1992; manager,
Fidelity Ohio Municipal Money
Market Portfolio, since October
1993; Spartan Massachusetts
Municipal Money Market
Portfolio, since January 1992;
Fidelity New York Tax-Free
Money Market Portfolio, since
September 1989; Spartan New
York Municipal Money Market
Portfolio, since February 1990
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
FIDELITY MASSACHUSETTS TAX-FREE MONEY MARKET PORTFOLIO
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
1/31/94 7/31/93 1/31/93
0 - 30 68.1 80.8 70.3
31 - 90 7.6 7.6 13.3
91 - 180 12.5 6.3 3.1
181 - 397 11.8 5.3 13.3
WEIGHTED AVERAGE MATURITY
1/31/94 7/31/93 1/31/93
Massachusetts Tax-Free
Money Market 57 days 33 days 40 days
Average Massachusetts
Tax-Free Money Market Fun 56 days 38 days 45 days
d*
ASSET ALLOCATION
AS OF 1/31/94 AS OF 7/31/93
Row: 1, Col: 1, Value: 59.1
Row: 1, Col: 2, Value: 9.1
Row: 1, Col: 3, Value: 9.699999999999999
Row: 1, Col: 4, Value: 16.5
Row: 1, Col: 5, Value: 5.6
Row: 1, Col: 1, Value: 67.40000000000001
Row: 1, Col: 2, Value: 10.3
Row: 1, Col: 3, Value: 4.7
Row: 1, Col: 4, Value: 8.300000000000001
Row: 1, Col: 5, Value: 9.300000000000001
Variable rate
demand notes
(VRDNs) 59.1%
Commercial
paper 9.1%
Tender bonds 9.7%
Municipal
notes 16.5%
Other 5.6%
Variable rate
demand notes
(VRDNs) 67.4%
Commercial
paper 10.3%
Tender bonds 4.7%
Municipal
notes 8.3%
Other 9.3%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
FIDELITY MASSACHUSETTS TAX-FREE MONEY MARKET PORTFOLIO
INVESTMENTS/JANUARY 31, 1994
(Showing Percentage of Total Value of Investments)
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MASSACHUSETTS - 90.2%
Beverly BAN 3.43% 12/2/94 LOC State Street
Bank & Trust Co. $ 2,000,000 $ 2,006,904 088095TV
Boston City Hosp. Puttable Floating Option Tax-Exempt
Receipts Series PT-2, 2.35%, (Liquidity
Enhancement Bank National De Paris), VRDN (c) 1,000,000 1,000,000
101026BZ
Boston Gen. Oblig. Bonds Series A:
7.10% 2/1/94 (FGIC Insured) 1,000,000 1,000,000 100852XS
4% 9/1/94 (FSA Insured) 1,000,000 1,007,962 100852A2
Boston Gen. Oblig. Tender Option Bonds,
(Liquidity Enhancement Morgan Guaranty Trust Co.),
VRDN (c):
Series 11A, 2.30% 2,000,000 2,000,00 100852ZW0
Series 11C, 2.30% 2,500,000 2,500,000 100852ZY
Boston Wtr. & Swr. Commission Gen. Rev.,
LOC Dai-Ichi Kangyo Bank, VRDN: 101029BD
Series 1985 A, 1.80% 10,690,000 10,690,000 101029BE
Series 1985 B, 1.80% 14,450,000 14,450,000 101029BD
Clipper Tax-Exempt Trust Series 93-2 Class A Ctfs. of
Prtn. 2.14% (Liquidity Enhancement State Street Bank &
Trust Co.), VRDN (c) 19,000,000 19,000,00 188854AA0
Framingham Ind. Rev. Board (Perini Corp. Proj.)
Series 1985, 3%, LOC Harris Trust, VRDN 400,000 400,000 351704AJ
Lowell Gen. Oblig. State Qualified Bonds,
Series B, 7% 11/1/94, (FSA Insured) 1,890,000 1,946,664 547643K6
Massachusetts Bay Trans. Auth. RAN:
Series 1993 A, 2.80% 3/1/94 7,300,000 7,300,180 575566M3
Series 1993 B:
3.25% 9/30/94 7,600,000 7,627,723 575566S8
3.50% 9/30/94 15,500,000 15,563,627 575566S9
Massachusetts Convention Ctr. Auth. (Hynes Proj. 1984)
Series A, 10% 9/01/94 1,000,000 1,060,890 575835BD
Massachusetts Gen. Oblig. Bonds: 575825MK
7.625% 6/1/94, (FGIC Insured) 3,665,000 3,721,375 575825WE
Massachusetts Gen. Oblig. Cons. Loan Rev.:
Series B, 3.50% 10/1/94 2,000,000 2,009,708 575825B6
Series C, 6.90% 6/1/94, (AMBAC Insured) 1,550,000 1,571,487 575825MK
Massachusetts Gen. Oblig. Custodial Receipts,
Series 1993, 2.42%, (Liquidity
Enhancement Citibank), VRDN (c) 3,000,000 3,000,000 5758236L
Massachusetts Gen. Oblig. Eagle Tax-Exempt Trust
Series 1993I, 2.42%, (Liquidity Enhancement
Citibank), VRDN (c) 13,000,000 13,000,00 269896AM0
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Gen. Oblig. Puttable Floating Option
Tax-Exempt Receipts, Series PA-13,
2.45%, (Liquidity Enhancement Merrill
Lynch & Co. Inc.), VRDN (c) $ 3,000,000 $ 3,000,00 575826BQ0
Massachusetts Health & Ed. Facs. Auth. Rev.:
(Boston Univ.) Series H, 2.45% 2/8/94,
(Liquidity Enhancement First Nat'l. Bank of
Chicago) MT 26,000,000 26,000,00 575850NF0
(Brigham & Women's Hosp.) Series A, 2%,
LOC Sanwa Bank, VRDN 15,800,000 15,800,00 575850PF0
(Capital Asset Prog.) VRDN:
Series 1985 D, 2.20%,
(MBIA Insured) BPA Sanwa Bank 7,600,000 7,600,000 575850MP
Series A, 2%, LOC First Nat'l. Bank of Chicago 25,400,000 25,400,00
575849LE0
Series E, 2.25%, LOC Sanwa Bank 25,400,000 25,400,000 575850NE
Series G1, 2.35%, (MBIA Insured)
BPA Credit Suisse 3,100,000 3,100,000 575850XE
(Harvard Univ.):
Issue I, 2.05% VRDN 32,540,000 32,540,000 575850HW
Series I, 2.05% VRDN 44,510,000 44,510,000 575850HW
2.15% 2/10/94 VT 1,000,000 1,000,000 57599ACX
2/8/94 VT 7,400,000 7,400,000 57599ACW
(MIT) Series G, 2.05%, VRDN 4,000,000 4,000,000 5758502J
(Mt. Ida College) 2.05%, LOC Chemical Bank,
Sakura Bank, VRDN 4,400,000 4,400,000 575850VD
(Univ. Hosp.) Series B, 10.625% 7/1/94, VT 8,700,000 9,147,747
575850GD
(Wellesley College) Series B, 2%, VRDN 10,700,000 10,700,000 575851NQ
Massachusetts Health & Ed. Facs. Auth. Rev. Bonds: 575849LE
(Falmouth Hosp.) Series B, 10.625% 7/1/94,
(MBIA Insured) 1,000,000 1,052,122 575850FC
(Milton Med. Ctr.) Series A, 11% 7/1/94 1,715,000 1,805,874 575850GB
Massachusetts Hsg. Fin. Agcy. Single Family Hsg. Rev.:
Series 23 2.75% 6/1/94 (FGIC Insured) MT 4,000,000 4,000,000 575910T7
Series 25, 2.95% 9/1/94, MT 24,500,000 24,500,20 5759105B7
Massachusetts Hsg. Fin. Agcy. Tender Option Bonds,
(Liquidity Enhancement Morgan Guaranty Trust Co.),
VRDN (c)
Series 12A, 2.30% 7,000,000 7,000,000 575852VT
Series 12C, 2.30% 6,200,000 6,200,00 575852VV0
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Adj. Rate Rev. Rfdg.
(WGBH Ed. Foundation Proj.) Series 1992, 2.20%,
LOC Nat'l. Westminster Bank $ 5,000,000 $ 5,000,000 575914VP
Massachusetts Ind. Fin. Agcy. Ind. Dev. Rev.:
Rfdg. (First Healthcare Corp.) Series 1993B 2.35%
LOC Wachovia Bank of Georgia 700,000 700,000 575855H9
Rfdg. (First Healthcare Corp. for Hillhaven Proj.) 2.35%,
LOC Wachovia Bank of Georgia 2,000,000 2,000,00 575855H70
Massachusetts Ind. Fin. Agcy. Ind. Dev. Rev. Rfdg.
(First Healthcare Corp. Proj.) Series 1992 A, 2.95%,
LOC Wachovia Bank of Georgia 2,025,000 2,025,00 575920AB0
Massachusetts Ind. Fin. Agcy. Ind. Rev. VRDN:
Rfdg. (Quamco Inc. Proj.) Series 1988 B, 2%
LOC Banca Commerciale Italiana 1,605,000 1,605,000 575855ZR
(General Signal Proj.) 2.75%, LOC Wachovia Bank of
Georgia 7,500,000 7,500,000 575855H3
(Interpolymer Corp.) Series 1992, 3.10%,
LOC Bank of Tokyo 4,000,000 4,000,000 575855G9
(Longview Fiber Co.) Series 1987, 2.80%,
LOC Algemene Bank 2,070,000 2,070,000 575855YW
(Tsubaki Inc.) 2.50% LOC Sakura Bank 3,000,000 3,000,000 575855A3
(United Medical Corp.) Series 1992, 2.20%
LOC Chemical Bank (b) 1,700,000 1,700,000 575855G7
Massachusetts Ind. Fin. Agcy. Multimodal Rev. VRDN:
(Hampshire College Proj.) 2.90%,
LOC Nat'l. Westminster Bank 1,000,000 1,000,000 575914DG
(Regional Family YMCA Proj.) 2.90%,
LOC Nat'l. Westminster Bank 180,000 180,000 575914DJ
Massachusetts Ind. Fin. Agcy. Poll. Cont. Rev.:
Rfdg. (New England Power Co. Proj.) Series 1992,VT:
2.15% 3/8/94 4,000,000 4,000,000 57599BBB
2.20% 3/8/94 9,000,000 9,000,000 57599BBC
2.30% 3/10/94 3,000,000 3,000,000 57599BAY
2.30% 4/11/94 3,600,000 3,600,000 57599BBE
2.30% 4/12/94 10,000,000 10,000,000 57599BBD
2.35% 3/29/94 1,500,000 1,500,000 57599BBF
(New England Power Co. Proj.) Series 1992B
2.45% 2/2/94 VT 3,500,000 3,500,000 57599BAT
(New England Power Co. Proj.) Series1992B
2.30% 3/7/94 VT 4,000,000 4,000,000 57599BAW
(New England Power Co. Proj.) Series1993B
2.25% 3/8/94 VT 8,000,000 8,000,000 57599BAU
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Poll. Cont. Rev.: - continued
(Holyoke Wtr. Power Co. Proj.):
Series 1990, 2.45%, LOC Swiss Bank,
VRDN (b) $ 8,700,000 $ 8,700,000 575856BA
Series 1992 A, 2%, LOC Canadian
Imperial Bank, VRDN 7,500,000 7,500,00 575856BC0
Massachusetts Ind. Fin. Agcy. Resource Recovery Rev.
(Ogden-Haverhill Proj.) LOC Union Bank of Switzerland:
Series 1986 B, 2.55%, (b) 13,525,000 13,525,000
Series 1992 A, 2.05%, 10,000,000 10,000,000
Massachusetts Ind. Fin. Agcy. Rev. VRDN:
(Combined Jewish Philanthropies of Greater
Boston, Inc.) Series 1989 A, 2.90%,
LOC Nat'l. Westminster Bank 2,500,000 2,500,00 575914GG0
(New England Deaconess Assoc.) Series 1993 B,
2.45%, LOC Banque Paribas 1,500,000 1,500,000 575914XY
(Wheelock College Issue) Series A, 2.85%,
LOC Nat'l. Westminster Bank 5,000,000 5,000,000 575914CD
Massachusetts Muni. Electric Wholesale Supply Sys. Rev.
Variable Rate Demand Ctfs. (Liquidity Enhancement
Hong Kong & Shanhai Bank), VRDN(c):
Series 1993 D, 2.35% 4,400,000 4,400,00 91828FAQ0
Series 1993 E, 2.35% 4,000,000 4,000,00 91828FAT0
Massachusetts Muni. Wholesale Elec. Auth. Elec. Rev. Bonds:
Series 1985 A, 13.625% 1/1/95 70,000 77,537 5757659D
Series B,13.625% 1/1/95 2,285,000 2,570,591 575765GM
Massachusetts Turnpike Auth. Puttable Floating Option
Tax-Exempt Receipts, Series PA-26, 2.40%,
SBPA Merrill Lynch, VRDN (c) 5,000,000 5,000,000 576029BD
Massachusetts Wtr. Resource Auth. Rev. Bonds
(Water Poll. Abatement) Series 1993 A,
2.40% 2/1/94 2,400,000 2,400,000 576047AB
Northborough Ind. Rev.:
(Newcorr Packaging) Series 1990 3.05 9/1/94, MT
LOC Barclays Bank PLC (b) 4,000,000 4,000,000 663776AA
(Tru Realty Corp. Proj. Toys "R" Us, Inc)
3.125%, LOC Bankers Trust, VRDN 2,900,000 2,900,000 663774AB
Salem BAN 2.75% 2/24/94 6,350,000 6,350,780 794199PD
Sandwich Rfdg. Bonds 3% 11/1/94 (AMBAC Insured) 850,000 850,927
800239FD
University of Massachusetts Bldg. Auth. Rev. Bonds,
9.875% 5/1/94, (AMBAC Insured) 2,325,000 2,434,262 914437KX
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Worcester Gen. Oblig. Bonds 6% 8/1/94
(FSA Insured) $ 1,375,000 $ 1,396,713 981305BF
Worcester County BAN 2.95% 8/24/84
LOC State Street Bank & Trust Co. 6,825,000 6,832,380 981305DD
544,730,660
PUERTO RICO - 9.8%
Puerto Rico Commonwealth TRAN Series A, 3% 7/29/94 54,000,000 54,070,27
745144VX8
Puerto Rico Elec. Power Auth. Variable Rate Trust Certificates
2.075%, (Liquidity Enhancement Bankers Trust), VRDN (c) 3,060,000
3,060,000 99299DAA
Puerto Rico Gov't. Dev. Bank Rev., 2.65%,
LOC Credit Suisse & Sumitomo Bank, VRDN 2,000,000 2,000,000
745177AH
59,130,278
TOTAL MUNICIPAL SECURITIES - 100% $ 603,860,938
Total Cost for Income Tax Purposes $ 603,862,224
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
FRDN - Floating Rate Demand Notes
MT - Mandatory Tender
OT - Optional Tender
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
VT - Variable Tender
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At January 31, 1994, the fund had a capital loss carryforward of
approximately $119,100 of which $54,900 and $64,200 will expire on January
31, 1997 and 1998, respectively.
FIDELITY MASSACHUSETTS TAX-FREE MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 31, 1994
191.ASSETS 192. 193.
194.Investment in securities, at value (Note 1) - See 195. $ 603,860,938
accompanying schedule
196.Cash 197. 3,442,899
198.Interest receivable 199. 3,251,245
200. 201.TOTAL ASSETS 202. 610,555,082
203.LIABILITIES 204. 205.
206.Dividends payable $ 28,550 207.
208.Accrued management fee 212,726 209.
210.Other payables and accrued expenses 159,629 211.
212. 213.TOTAL LIABILITIES 214. 400,905
215.216.NET ASSETS 217. $ 610,154,177
218.Net Assets consist of: 219. 220.
221.Paid in capital 222. $ 610,273,264
223.Accumulated net realized gain (loss) on investment 224. (119,087)
s
225.226.NET ASSETS, for 610,175,353 shares outstandi 227. $ 610,154,177
ng
228.229.NET ASSET VALUE, offering price and redemptio 230. $1.00
n price per
share ($610,154,177 (divided by) 610,175,353 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JANUARY 31, 1994
231.232.INTEREST INCOME 233. $ 13,553,759
234.EXPENSES 235. 236.
237.Management fee (Note 4) $ 2,393,540 238.
239.Transfer agent, accounting and custodian fees and 1,330,075 240.
expenses (Note 4)
241.Non-interested trustees' compensation 8,495 242.
243.Registration fees 1,198 244.
245.Audit 26,409 246.
247.Legal 4,660 248.
249.Reports to shareholders 17,823 250.
251.Miscellaneous 6,402 252.
253. 254.TOTAL EXPENSES 255. 3,788,602
256.257.NET INTEREST INCOME 258. 9,765,157
259.REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTM 261. 28,587
ENTS
(NOTE 1)
260.Net realized gain (loss) on investment securities
262.Increase (decrease) in net unrealized gain from acc 263. (7,088)
retion
of market discount
264.265.NET GAIN (LOSS) 266. 21,499
267.268.NET INCREASE IN NET ASSETS RESULTING FROM O 269. $ 9,786,656
PERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR SIX MONTHS YEAR
ENDED ENDED ENDED
JANUARY 31, JANUARY 31, 1993 JULY 31,
1994 (NOTE 1) 1992
270.INCREASE (DECREASE) IN NET ASS
ETS
271.Operations $ 9,765,157 $ 5,820,975 $ 19,617,763
Net interest income
272. Net realized gain (loss) on 28,587 5,969 9,366
investments
273. Increase (decrease) in net unre (7,088) 7,088 -
alized
gain from accretion of market
discount
274. 9,786,656 5,834,032 19,627,129
275.NET INCREASE (DECREASE) IN
NET ASSETS
RESULTING FROM OPERATIONS
276.Dividends to shareholders from n (9,765,157) (5,820,975) (19,617,763)
et
interest income
277.Share transactions at net asset v 1,344,601,052 583,609,144 1,109,313,789
alue
of $1.00 per share
Proceeds from sales of shares
278. Reinvestment of dividends from 9,363,840 5,462,458 18,258,456
net
interest income
279. Cost of shares redeemed (1,328,771,708) (605,090,161) (1,241,203,539)
280. 25,193,184 (16,018,559) (113,631,294)
Net increase (decrease) in net
assets and shares resulting from
share transactions
281. 25,214,683 (16,005,502) (113,621,928)
282.TOTAL INCREASE (DECREASE) IN
NET
ASSETS
283.NET ASSETS 284. 285. 286.
287. Beginning of period 584,939,494 600,944,996 714,566,924
288. End of period $ 610,154,177 $ 584,939,494 $ 600,944,996
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
289. YEAR SIX MONTHS YEARS ENDED JULY 31,
ENDED ENDED
JANUARY 31, JANUARY 31,1993
290. 1994 (NOTE 1) 1992 1991 1990 1989
291.SELECTED PER-SHARE DATA
292.Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
293.Income from Investment Operations .017 .010 .029 .046 .053 .055
Net interest income
294. Dividends from net interest income(.017) (.010) (.029) (.046) (.053) (.055)
295.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
296.TOTAL RETURN (dagger) 1.71 .99% 2.94 4.70 5.42 5.61
% % % % %
297.RATIOS AND SUPPLEMENTAL DATA
298.Net assets, end of period
(000 omitted) $ 610,154 $ 584,939 $ 600,945 $ 714,567 $ 750,877 $ 650,763
299.Ratio of expenses to average net
assets .66 .64%* .65 .60 .57 .60
% % % % %
300.Ratio of net interest income
to average net assets 1.69 1.96%* 2.93 4.60 5.33 5.50
% % % % %
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1994
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Massachusetts Tax-Free High Yield Portfolio and Fidelity
Massachusetts Tax-Free Money Market Portfolio (the funds) are funds of
Fidelity Massachusetts Municipal Trust (the trust). The trust is registered
under the Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. On November 19, 1992, the Trustees approved a change in the
fiscal year end of the trust to January 31.Each fund is authorized to issue
an unlimited number of shares. The following summarizes the significant
accounting policies of the funds:
SECURITY VALUATION.
HIGH YIELD 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. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
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 all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between 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 differences are primarily due to differing treatments for
losses deferred due to wash sales and futures and options transactions.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective February
1, 1993, the funds adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the funds changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of January 31, 1993 have been restated/reclassified
as follows:
HIGH YIELD FUND. Paid in capital and accumulated net realized loss on
investments decreased by $34,447.
MONEY MARKET FUND. Paid in capital and accumulated net realized loss on
investments increased by $97,911.
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 AND OPTIONS. The high yield fund may invest in futures
contracts and write options. These investments involve, to varying degrees,
elements of market risk and risks in excess of the amount recognized in the
Statement of Assets and Liabilities. The face or contract amounts reflect
the extent of the involvement the high yield fund has in the particular
classes of instruments. Risks may be caused by an imperfect correlation
between movements in the price of the instruments and the price of the
underlying securities and interest rates. Risks also may arise if there is
an illiquid secondary market for the instruments, or due to the inability
of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $574,180,480 and $528,500,892, respectively.
The market value of futures contracts opened and closed amounted to
$1,102,881,344 and $1,024,693,124, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management
& Research Company (FMR) receives a monthly basic 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
fund. The group fee rate is the weighted average of a series of rates
ranging from .15% to .37% and is based on the monthly average net assets of
all the mutual funds advised by FMR. The annual individual fund fee rate is
.25%. For the period, the management fees were equivalent to annual rates
of .41% of average net assets for the high yield and money market funds.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee (see Note 6).
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plans (the Plans), and in accordance with Rule 12b-1 of the 1940 Act, FMR
or the funds' distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of each fund's shares. Subject to
the approval of each Board of Trustees, the Plans also authorize payments
to third parties that assist in the sale of each fund's shares or render
shareholder support services. FMR or FDC has informed the funds that
payments made to third parties under the Plans amounted to $24,520 and
$26,634 for the high yield and money market funds, respectively, for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the
funds. The Bank has entered into a sub-contract with Fidelity Service Co.
(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 transfer agent fees based on the type,
size, number of accounts and number of transactions made by shareholders.
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, FSC received transfer agent and accounting fees amounting to
$1,144,379 and $424,275 for the high yield fund and $1,151,924 and $109,375
for the money market fund, respectively.
Shareholders participating in the Fidelity Ultra Service Account(Registered
trademark) Program (the Program) pay a $5.00 monthly fee to Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, for performing
services associated with the Program.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
For the period, fees paid to FBSI by shareholders participating in the
Program amounted to $128,815.
5. BANK BORROWINGS.
The funds are permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The funds have established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, the funds must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. For
the high yield fund, the maximum loan and the average daily loan balances
during the periods for which loans were outstanding amounted to $9,703,000
and $5,878,500, respectively, and the weighted average interest rate was
3.67%. Interest expense includes $2,066 paid under the bank borrowing
program.
6. SHAREHOLDER MEETING.
At a special meeting of shareholders of each fund held on January 19, 1994,
shareholders approved an amended management contract and amendments to
certain fundamental investment limitations of the funds.
The new management contract, which became effective on February 1, 1994
will reflect the new group fee rate schedule which FMR voluntarily
implemented on November 1, 1993.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Massachusetts Municipal Trust: and the
Shareholders of
Fidelity Massachusetts Tax-Free
High Yield Portfolio
Fidelity Massachusetts Tax-Free
Money Market Portfolio
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for Moody's and Standard
& Poor's ratings) and the related statements of operations and of
changes in net assets and financial highlights present fairly, in all
material respects, the financial position of Fidelity Massachusetts
Tax-Free High Yield Portfolio and Fidelity Massachusetts Tax-Free Money
Market Portfolio (each a fund of Fidelity Massachusetts Municipal Trust) at
January 31, 1994 and the results of their operations, the changes in their
net assets and their 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 trust'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 owned at January 31,
1994 by correspondence with the custodian and brokers and the application
of alternative procedures where confirmations from brokers were not
received provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Boston, Massachusetts
March 4, 1994
DISTRIBUTIONS
The Board of Trustees of Fidelity Massachusetts Municipal Trust: Fidelity
Massachusetts Tax-Free High Yield Portfolio voted to pay on March 7, 1994
to shareholders of record at the opening of business on March 4, 1994, a
distribution of $.13 derived from capital gains realized from sales of
portfolio securities.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(Registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* 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. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER, MONEY MARKET FUND
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Guy Wickwire, Vice President
HIGH YIELD FUND
Jan Bradburn, Vice President
MONEY MARKET FUND
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Marvin L. Mann*
Edward H. Malone*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
EXHIBIT 24(A)(2)
SPARTAN
(Registered trademark)
MASSACHUSETTS
MUNICIPAL
MONEY MARKET
PORTFOLIO
ANNUAL REPORT
JANUARY 31, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 8 A summary of major shifts in the
fund's investments over the last six
months
and one year.
INVESTMENTS 9 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 14 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 18 Footnotes to the financial
statements.
REPORT OF INDEPENDENT 20 The auditor's opinion.
ACCOUNTANTS
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. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments-either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
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 a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of the fund's $5 account closeout fee. 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 during the periods shown, the total
returns, dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 LIFE OF
YEAR FUND
Spartan Massachusetts
Municipal Money Market 1.95% 8.59%
Consumer Price Index 2.52% 8.46%
Average Massachusetts
Tax-Free Money Market Fund 1.86% 7.96%
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - one
year, or since the fund started on March 4, 1991. For example, if you
invested $1,000 in a fund that had a 5% return over the past year, you
would end up with $1,050. Comparing the fund's performance to the consumer
price index (CPI) helps show how your investment did compared to inflation.
To measure how the fund stacked up against its peers, you can compare its
return to the average Massachusetts tax-free money market fund's total
return. This average currently reflects the performance of just 10
Massachusetts tax-free money market funds tracked by IBC/Donoghue. (The
periods covered by the CPI and IBC/Donoghue numbers are the closest
available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1994 PAST 1 LIFE OF
YEAR FUND
Spartan Massachusetts
Municipal Money Market 1.95% 2.87%
Consumer Price Index 2.52% 2.81%
Average Massachusetts
Tax-Free Money Market Fund 1.86% 2.65%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
1/31/93 4/30/93 7/31/93 10/31/93 1/31/94
Spartan Massachusetts 2.11% 2.08% 2.05% 2.00% 1.83%
Municipal Money Market
Average Massachusetts 2.06% 1.94% 1.98% 1.92% 1.70%
Tax-Free Money
Market Fund
Spartan Massachusetts 3.75% 3.69% 3.62% 3.55% 3.24%
Money Market Fund -
Tax-equivalent
Average All Taxable 2.74% 2.62% 2.65% 2.66% 2.68%
Money Market Fund
Row: 1, Col: 1, Value: 2.11
Row: 1, Col: 2, Value: 2.06
Row: 2, Col: 1, Value: 2.08
Row: 2, Col: 2, Value: 1.94
Row: 3, Col: 1, Value: 2.05
Row: 3, Col: 2, Value: 1.98
Row: 4, Col: 1, Value: 2.0
Row: 4, Col: 2, Value: 1.92
Row: 5, Col: 1, Value: 1.83
Row: 5, Col: 2, Value: 1.7
Spartan
Massachusetts
Municipal Money
Market Fund
Average Massachuset
ts
Tax-Free Money
Market Fund
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. The chart above shows the fund's seven-day yield at
quarterly intervals over the past year. You can compare these yields to the
average tax-free money market fund. Or you can look at the fund's
tax-equivalent yield, which is based on a combined effective federal and
Massachusetts state income tax rate of 43.68%; the tax-equivalent yields
reflect the fact that a portion of the fund's yields for the periods shown
were subject to state taxes. The tax-equivalent figures are useful in
seeing how the fund stacked up against the average taxable money market
fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS 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)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jan Bradburn,
Portfolio Manager of Spartan
Massachusetts Municipal Money
Market Portfolio
Q. JAN, WHAT HAS THE SHORT-TERM SIDE OF THE MARKET BEEN LIKE OVER THE PAST
12 MONTHS?
A. Short-term interest rates have remained pretty stable. Both the federal
funds rate - what banks charge each other for overnight loans - and the
discount rate - what the Federal Reserve charges member banks - have been
at or near 3% since the fall of 1992. Inflation wasn't a big issue either,
despite brief scares last spring and again in November. Supply and demand
factors had a much bigger effect on how I managed the fund than movements
in interest rates.
Q. WHY?
A. Last fall, the short-term market experienced an unusually strong surge
in supply. This glut of new securities forced issuers to offer very
attractive yields, which provided enticing buying opportunities. I stocked
up, which lengthened the fund's average maturity from 33 days at the end of
July to 83 days at the end of September. Then supply began to dry up, and I
began to worry about the Fed possibly triggering a rise in interest rates.
I let the average maturity roll back down to 60 days by the end of January.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on January 31, 1994 was 1.83%, down from
2.11% a year ago. That reflects the general drop in short-term interest
rates over the past year. The latest yield translates into a tax-equivalent
yield of 3.24% for investors in the 43.68% combined effective 1994 federal
and state tax bracket. The fund's total return - which assumes reinvestment
of monthly dividends - for the 12 months ended January 31 was 1.95%. The
average Massachusetts tax-free money market fund had a total return of
1.86%.
Q. WHAT AFFECTED PERFORMANCE?
A. A 16% stake in simple derivatives helped the fund. These issues combine
a long-term municipal bond with a "put," or an option to sell to a third
party, typically a bank. The end product is an investment that pays a
short-term variable interest rate and can be put on short notice, usually
seven days. It acts much like any other variable rate demand note the fund
might own, with one key difference: the yield is slightly higher, a fact
that has more to do with the added complexity of these instruments than
added investment risk.
Q. WHAT'S AHEAD FOR THE FUND?
A. Early in February, the Fed raised the federal funds rate to 3.25%,
effectively raising all short-term interest rates. Although currently
inflation doesn't look like an increasing concern, I think there's a good
chance the Fed could make more of these "preemptive strikes" to curb
inflation threats before they happen. I'll prepare the fund for higher
rates in two ways: first, I plan to keep the average maturity in a neutral
range, say 50 to 60 days, and second, I'll most likely increase the fund's
investment in variable rate instruments. The coupons (stated interest
rates) on these securities are reset at fixed intervals - for example,
weekly or monthly. So when rates rise, the fund can benefit from higher
coupons at these reset intervals.
FUND FACTS
GOAL: tax-free income and
stability by investing in
high-quality short-term
Massachusetts municipal
securities
START DATE: March 4, 1991
SIZE: as of January 31, 1994,
over $346 million
MANAGER: Janice Bradburn,
since January 1992;
manager, Fidelity Ohio
Municipal Money Market
Portfolio, since October 1993;
Fidelity Massachusetts
Municipal Money Market
Portfolio, since 1992; Fidelity
New York Tax-Free Money
Market Portfolio, since
September 1989; Spartan
New York Municipal Money
Market Portfolio, since 1990
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
1/31/94 7/31/93 1/31/93
0 - 30 70.5 79.0 71.5
31 - 90 3.5 9.8 12.9
91 - 180 12.2 6.3 5.4
181 - 397 13.8 4.9 10.2
WEIGHTED AVERAGE MATURITY
1/31/94 7/31/93 1/31/93
Spartan Massachusetts
Money Market Fund 60 days 33 days 38 days
Average Massachusetts
Tax-Free Money 56 days 38 days 45 days
Market Fund*
ASSET ALLOCATION
AS OF 1/31/94 AS OF 7/31/93
Row: 1, Col: 1, Value: 62.0
Row: 1, Col: 2, Value: 4.0
Row: 1, Col: 3, Value: 12.6
Row: 1, Col: 4, Value: 15.1
Row: 1, Col: 5, Value: 6.3
Row: 1, Col: 1, Value: 60.1
Row: 1, Col: 2, Value: 12.5
Row: 1, Col: 3, Value: 9.9
Row: 1, Col: 4, Value: 8.0
Row: 1, Col: 5, Value: 9.5
Variable rate
demand notes
(VRDNs) 62.0%
Commercial
paper 4.0%
Tender bonds 12.6%
Municipal
notes 15.1%
Other 6.3%
Variable rate
demand notes
(VRDNs) 60.1%
Commercial
paper 12.5%
Tender bonds 9.9%
Municipal
notes 8.0%
Other 9.5%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
INVESTMENTS JANUARY 31, 1994
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MASSACHUSETTS - 87.7%
Beverly BAN 3.43% 12/2/94 LOC State Street
Bank & Trust Co. $ 1,774,000 $ 1,780,124 088095TV
Boston City Hosp. Rev. Puttable Floating Option Tax-Exempt
Receipts, Series PT-2, 2.35%, (Liquidity Enhancement
Bank National De Paris), VRDN (c) 500,000 500,000 101026BZ
Boston Gen. Oblig. Rfdg. Bonds, Series 1993 A,
3% 2/01/94 470,000 470,000 100852ZE
Boston Gen. Oblig. Tender Option Bond, (Liquidity
Enhancement Morgan Guaranty Trust Co.), VRDN (c):
Series 11A, 2.30% 2,000,000 2,000,000 100852ZW
Series 11C, 2.30% 1,500,000 1,500,000 100852ZW
Boston Wtr. & Swr. Commission Gen. Rev.
LOC Dai-Ichi Kangyo Bank, VRDN:
Series 1985 A, 1.80% 8,340,000 8,340,000 101029BE
Series 1985 B, 1.80% 5,400,000 5,400,000 101029BD
Clipper Tax-Exempt Trust Series 93-2 Class A Ctfs. of
Prtn. 2.14% (Liquidity Enhancement State Street
Bank & Trust Co.), VRDN (c) 15,630,200 15,630,20 188854AA0
Holyoke Poll. Cont. Rev. (Holyoke Pwr. & Light Proj.)
Series 1988, 2%, LOC Union Bank of
Switzerland, VRDN 3,400,000 3,400,000 436730AG
Lowell Gen. Oblig. State Qualified Bonds,
Series B, 7% 11/1/94, (FSA Insured) 1,000,000 1,029,981 547643K6
Massachusetts Bay Trans. Auth. RAN:
Series 1993 A, 2.80% 3/1/94 2,000,000 2,000,000 575566M3
Series 1993 B: 575566S9
3.25% 9/30/94 4,000,000 4,012,791 575566S8
3.50% 9/30/94 9,500,000 9,538,997 575566S9
Massachusetts Convention Ctr. Auth. (Hynes Proj. 1984)
Series A, 10% 9/01/94 2,000,000 2,121,781 575835BD
Massachusetts Gen. Oblig. Eagle Tax-Exempt Trust
Series 1993I 2.42, (Liquidity Enhancement Citibank),
VRDN (c) 7,800,000 7,800,000 269896AM
Massachusetts Gen. Oblig. Bonds:
Series A, 7.625% 6/1/94, (FGIC Insured) 500,000 507,753 575825WE
Series B, 10.75% 6/1/94 960,000 1,008,574 575823ND
Massachusetts Gen. Oblig. Cons. Loan Bonds,
Series B, 3.50% 10/1/94 1,500,000 1,507,281 575825B6
Series C, 6.90% 6/1/94, (AMBAC Insured) 1,300,000 1,316,530 575825MK
Massachusetts Gen. Oblig. Custodial Receipts,
Series 1993, 2.42%, (Liquidity Enhancement
Citibank) (c) 4,000,000 4,000,000 5758236L
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Gen. Oblig. Puttable Floating
Option Tax-Exempt Receipts Series PA-13,
2.45%, (Liquidity Enhancement
Merrill Lynch & Co. Inc.), VRDN (c) $ 2,000,000 $ 2,000,000 575826BQ
Massachusetts Hlth. & Ed. Facs. Auth. Rev.: 575849LE
(Berkshire Consolidated Realty) Series A, 2%,
LOC Banque Paribas, VRDN 6,700,000 6,700,000 575850P9
(Boston Univ.) Series H, 2.45% 2/8/94, (Liquidity
Enhancement First Nat'l. Bank of Chicago) MT 25,000,000 25,000,000
575850NF
(Brigham & Womens Hosp.) Series A, 2%,
LOC Sanwa Bank, VRDN 2,000,000 2,000,000 575850PF
(Capital Asset Prog.) VRDN:
Series 1985 D, 2.20%, (MBIA Insured)
BPA Sanwa Bank 15,300,000 15,300,000 575850MP
Series A, 2%, LOC First Nat'l. Bank of Chicago 7,100,000 7,100,000
575849LE
Series E, 2.25%, LOC Sanwa Bank 9,300,000 9,300,000 575850NE
Series G1, 2.35%, (MBIA Insured) BPA Credit Suisse 13,800,000
13,800,00 575850XE0
(Harvard Univ.):
2.15% 2/10/94, VT 2,000,000 2,000,000 57599ACX
Series I, 2.05%, VRDN 33,931,000 33,931,000 575850HW
(MIT) Series G, 2.05%, VRDN 8,000,000 8,000,000 5758502J
(Mt. Ida College) 2.05%, LOC Chemical Bank, VRDN 3,000,000 3,000,000
575850VD
(Wellesley College) Series B, 2%, VRDN 2,300,000 2,300,000 575851NQ
Massachusetts Hlth. & Ed. Facs. Auth. Rev. Bonds: 575849LE
(Brigham & Womens Hosp.):
Series E, 2.85% 7/1/94 1,560,000 1,560,000 575851S6
(Milton Med. Ctr.) Series A, 11% 7/1/94 1,000,000 1,052,988 575850GB
(Univ. Hosp.) Series B, 10.625% 7/1/94 5,490,000 5,772,543 575850GD
Massachusetts Hsg. Fin. Agcy. Single Family Hsg. Rev. MT:
Series 23, 2.75% 6/1/94 (FGIC Insured) 1,000,000 1,000,000 575910T7
Series 25, 2.95% 9/1/94 15,500,000 15,500,20 5759105B7
Massachusetts Hsg. Fin. Agcy. Tender Option Bonds, 2.30%,
(Liquidity Enhancement Morgan Guaranty Trust Co.),
VRDN (c):
Series 12A 2.30% 2,000,000 2,000,000
Series 12C 2.30% 3,800,000 3,800,000
Massachusetts Ind. Fin. Agcy. Ind. Rev. VRDN:
Rfdg. (First Healthcare Corp. Proj.) Series 1992 B, 2.35%,
LOC Wachovia Bank of Georgia 1,130,000 1,130,000 575920AC
Rfdg. (First Healthcare Corp. for Hillhaven Proj.) 2.35%,
LOC Wachovia Bank of Georgia 1,195,000 1,195,000 575855H7
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Ind. Rev. VRDN: - continued
Rfdg. (Quamco Inc. Proj.) LOC Banca Commerciale Italiana:
Series 1988 A, 2% $ 730,000 $ 730,000 575855ZQ
Series 1988 B, 2% 920,000 920,000 575855ZR
(General Signal Proj.) 2.20%, LOC Wachovia Bank
of Georgia 2,100,000 2,100,000 575855H4
(Manhasset Bay-Cambridge) Series 1985, 2.05%,
LOC Bank of Tokyo 3,900,000 3,900,000 575855EA
(Tsubaki Inc.) 2.50% LOC Sakura Bank 1,700,000 1,700,000 575855A3
(United Medical Corp.) Series 1992, 2.20%
LOC Chemical Bank (b) 1,500,000 1,500,000 575855G7
Massachusetts Ind. Fin. Agcy. Poll. Cont. Rev. VRDN:
Rfdg. (Holyoke Wtr. & Pwr. Co. Proj.) Series 1992 A, 2%,
LOC Canadian Imperial Bank of Commerce 800,000 800,000 575856BC
(Holyoke Wtr. Pwr. Co. Proj.) Series 1990, 2.45%,
LOC Swiss Bank (b) 2,600,000 2,600,000 575856BA
Massachusetts Ind. Fin. Agcy. Poll. Cont. Rev. Rfdg.
(New England Power Co. Proj.) Series 1992-B, VT:
2.30% 4/11/94 11,000,000 11,000,000 57599BBE
2.30% 4/12/94 1,000,000 1,000,000 57599BBD
Massachusetts Ind. Fin. Agcy. Resource Recovery Rev.
(Ogden-Haverhill Proj.) LOC Union Bank of Switzerland,
VRDN:
Series 1986 B, 2.55% (b) 7,750,000 7,750,000 575912AR
Series 1992 A, 2.05% 7,595,000 7,595,000 575912AX
Massachusetts Ind. Fin. Agcy. Rev.
(New England Deaconess Assoc.) Series 1993 B, 2.45%,
LOC Banque Paribas, VRDN 1,000,000 1,000,000 575914XY
Massachusetts Ind. Fin. Agcy. Rev. Rfdg.
(WGBH Ed. Foundation Proj.) Series 1992, 2.20%,
LOC Nat'l. Westminster Bank, VRDN 2,555,000 2,555,000 575914VP
Massachusetts Muni. Wholesale Elec. Auth. Elec. Rev. Bonds:
Series 1985 A, 13.625% 1/1/95 60,000 66,459 5757659D
Series B,13.625% 1/1/95 1,940,000 2,182,470 575765GM
Massachusetts Muni. Elec. Wholesale Supply Sys. Rev. Variable
Rate Demand Ctfs. (Liquidity Enhancement Hong Kong
& Shanghai Banking Corp.), VRDN (c) 91828FAQ:
Series 1993 D, 2.35% 2,800,000 2,800,000 91828FAQ
Series 1993 E, 2.35% 2,000,000 2,000,000 91828FAT
Massachusetts Turnpike Auth. Puttable Floating Option
Tax-Exempt Receipts Series PA-26, 2.40%,
SBPA Merrill Lynch, VRDN (c) 4,160,000 4,160,000 576029BD
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Northampton Gen. Oblig. Bonds 6.50% 9/1/94
(AMBAC Insured) $ 850,000 $ 868,386 663617KS
Northborough Ind. Rev. (Newcorr Packaging) Series 1990
3.05% 9/1/94, LOC Barclays Bank PLC, MT (b) 2,335,000 2,335,000
663776AA
Sandwich Rfdg. Bonds 3% 11/1/94
(AMBAC Insured) 800,000 800,872 800239FD
University of Massachusetts Bldg. Auth. Rev. Bonds,
9.875% 5/1/94, (AMBAC Insured) 400,000 418,880 914437KX
Westfield Gen. Oblig. Bonds 6.75% 9/1/94
(FSA Insured) 1,000,000 1,022,460 960096PM
Worcester County BAN 2.95% 8/24/94
LOC State Street Bank & Trust Co. 5,000,000 5,005,408 981305DD
304,115,685
MICHIGAN - 1.0%
Michigan Hosp. Fin. Auth. Rev. (Daughters of Charity
Health Sys. Providence Hosp.) Series 1984,
2.25%, FRDN 3,600,000 3,600,000 594648IA
PUERTO RICO - 11.3%
Puerto Rico Commonwealth TRAN Series A, 3%
7/29/94 30,000,000 30,038,93 745144VX2
Puerto Rico Elec. Power Auth. Variable Rate Trust
Ctfs. 2.075%,(Liquidity Enhancement
Bankers Trust), VRDN (c) 7,140,000 7,140,000 99299DAA
Puerto Rico Hwy. and Trans. Rev., Series 1993 X,
2.05%, LOC Union Bank of Switzerland, VRDN 1,000,000 1,000,000 745181LA
Puerto Rico Ind. Med. Higher Ed. & Envir. Cont. Facs. Fin.
Auth. Rev. (Mendez/Feagm Proj.) Series 1985, 1.95%,
LOC Bank of Tokyo, VRDN 1,000,000 1,000,000 745271DP
39,178,932
TOTAL INVESTMENTS - 100% $ 346,894,617
Total Cost for Income Tax Purposes $ 346,895,353
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
FRDN - Floating Rate Demand Notes
MT - Mandatory Tender
OT - Optional Tender
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
VT - Variable Tender
LEGEND
(d) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(e) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(f) Provides evidence of ownership in one or more underlying municipal
bonds.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JANUARY 31, 1994
7.ASSETS 8. 9.
10.Investment in securities, at value (Note 1) - See 11. $ 346,894,617
accompanying schedule
12.Interest receivable 13. 1,807,928
14. 15.TOTAL ASSETS 16. 348,702,545
17.LIABILITIES 18. 19.
20.Share transactions in process $ 151,261 21.
22.Dividends payable 15,995 23.
24.Accrued management fee 150,136 25.
26.Payable to custodian bank 1,505,268 27.
28. 29.TOTAL LIABILITIES 30. 1,822,660
31.32.NET ASSETS 33. $ 346,879,885
34.Net Assets consist of: 35. 36.
37.Paid in capital 38. $ 346,878,812
39.Accumulated net realized gain (loss) on investments 40. 1,073
41.42.NET ASSETS, for 346,877,387 shares outstanding 43. $ 346,879,885
44.45.NET ASSET VALUE, offering price and redemption 46. $1.00
price per share ($346,879,885 (divided by) 346,877,387 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED JANUARY 31, 1994
47.48.INTEREST INCOME 49. $ 7,934,833
50.EXPENSES 51. 52.
53.Management fee (Note 2)
$ 1,695,083
54.Non-interested trustees' compensation 2,296 55.
56. Total expenses before reductions 1,697,379 57.
58. Expense reductions (Note 3) (330,923) 1,366,456
59.60.NET INTEREST INCOME 61. 6,568,377
62.REALIZED AND UNREALIZED GAIN (LOSS) ON 64. 1,073
INVESTMENTS
(NOTE 1)
63.Net realized gain (loss) on investment securities
65.Increase (decrease) in net unrealized gain from 66. (3,817)
accretion
of market discount
67.68.NET GAIN (LOSS) 69. (2,744)
70.71.NET INCREASE IN NET ASSETS RESULTING FROM 72. $ 6,565,633
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR SIX MONTHS YEAR
ENDED ENDED ENDED
JANUARY 31, JANUARY 31, 1993 JULY 31,
1994 (NOTE 1) 1992
73.INCREASE (DECREASE) IN NET
ASSETS
74.Operations $ 6,568,377 $ 3,871,245 $ 7,781,101
Net interest income
75. Net realized gain (loss) on 1,073 1,496 1,169
investments
76. Increase (decrease) in net (3,817) 3,817 -
unrealized
gain from accretion of market
discount
77. 78.NET INCREASE (DECREASE) IN 6,565,633 3,876,558 7,782,270
NET ASSETS
RESULTING FROM OPERATIONS
79.Dividends to shareholders from (6,568,377) (3,871,245) (7,781,101)
net interest income
80.Share transactions at net asset 427,705,579 231,918,702 408,295,303
value
of $1.00 per share
Proceeds from sales of shares
81. Reinvestment of dividends from 6,265,299 3,670,571 7,467,589
net
interest income
82. Cost of shares redeemed (420,743,406) (180,308,760) (259,509,115)
83. Net increase (decrease) in net 13,227,472 55,280,513 156,253,777
assets and shares resulting from
share transactions
84. 85.TOTAL INCREASE (DECREASE) 13,224,728 55,285,826 156,254,946
IN
NET ASSETS
86.NET ASSETS 87. 88. 89.
90. Beginning of period 333,655,157 278,369,331 122,114,385
91. End of period $ 346,879,885 $ 333,655,157 $ 278,369,331
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
92. YEAR SIX MONTHS YEAR MARCH 4, 1991
ENDED ENDED ENDED (COMMENCEME
JANUARY 31, JANUARY 31, 1993 JULY 31, NT
OF OPERATIONS)
TO JULY 31,
93. 1994 (NOTE 1) 1992 1991
94.SELECTED PER-SHARE DATA
95.Net asset value, 1.000 1.000 1.000 1.000
beginning of period
96.Income from Investment .019 .012 .034 .017
Operations
Net interest income
97. Dividends from net (.019) (.012) (.034) (.017)
interest income
98.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
99.TOTAL RETURN (dagger) 1.95% 1.23% 3.45% 1.71%
100.RATIOS AND
SUPPLEMENTAL DATA
101.Net assets, end of period $ 346,880 $ 333,655 $ 278,369 $ 122,114
(000 omitted)
102.Ratio of expenses to .40% .17%* .05% -
average
net assets (dagger)(dagger)
103.Ratio of expenses to .50% .50%* .50% .50%
average *
net assets before expense
reductions (dagger)(dagger)
104.Ratio of net interest 1.93% 2.44%* 3.29% 4.17%
income to *
average net assets
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
(dagger)(dagger) SEE NOTE 3 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1994
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Massachusetts Municipal Money Market Portfolio (the fund) is a fund
of Fidelity Massachusetts 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 (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust.
On November 19, 1992, the Trustees approved a change in the fiscal year end
of the trust to January 31. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. 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, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year.
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. Accretion
of market discount represents unrealized gain until realized at the time of
a security's disposition or maturity.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective February
1, 1993, the fund adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of January 31, 1993 have been restated to reflect
an increase in paid in capital and a decrease in accumulated net realized
gain on investments of $1,425.
SECURITY TRANSACTIONS. Security trans-
actions are accounted for as of trade date. Gains and losses on securities
sold are determined on the basis of identified cost.
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) pays all expenses except the compensation of the
non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
expenses. FMR receives a fee that is computed daily at an annual rate of
.50% of the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund. For
the period, FMR or its affiliates collected certain transaction fees from
shareholders which aggregated $11,827.
SUB-ADVISER FEE. As the fund's investment sub-adviser, FMR Texas Inc., a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect, and after reducing the fee
for any payments by FMR pursuant to the fund's Distribution and Service
Plan.
3. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the fund's operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above a specified percentage of average net assets. During the
period, this expense limitation ranged from .25% to .50% of average net
assets and the reimbursement reduced expenses by $330,923.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
Fidelity Massachusetts Municipal Trust:
Spartan Massachusetts Municipal
Money Market Portfolio
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
Massachusetts Municipal Money Market Portfolio at January 31, 1994, the
results of its operations for the year then ended, the changes in its net
assets for the year then ended, the six-month period ended January 31,
1993, and the year ended July 31, 1992, respectively, and its 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 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 owned at January 31, 1994 by correspondence with
the custodian provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE
Dallas, Texas
February 28, 1994
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(Registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND
ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* 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. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
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
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8300 Boone Boulevard
Vienna, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Thomas D. Maher, Assistant
Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
FIDELITY'S TAX-FREE
MONEY MARKET FUNDS
California Tax-Free Money Market
Connecticut Municipal Money Market
Massachusetts Tax-Free Money Market
Michigan Municipal Money Market
New Jersey Tax-Free Money Market
New York Tax-Free Money Market
Ohio Municipal Money Market
Spartan California Municipal
Money Market
Spartan Connecticut Municipal
Money Market
Spartan Florida Municipal Money Market
Spartan Massachusetts Municipal
Money Market
Spartan Municipal Money Fund
Spartan New Jersey Municipal
Money Market
Spartan New York Municipal
Money Market
Spartan Pennsylvania Municipal
Money Market
Tax-Exempt Money Market
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
Exhibit 1(h)
FORM OF
AMENDED AND RESTATED DECLARATION OF TRUST
DATED MARCH 17, 1994
AMENDED AND RESTATED DECLARATION OF TRUST, made March 17, 1994 by each of
the Trustees whose signature is affixed hereto (the "Trustees")
WHEREAS, the Trustees desire to amend and restate this Declaration of
Trust for the sole purpose of supplementing the Declaration to incorporate
amendments duly adopted; and
WHEREAS, this Trust was initially made on December 14, 1981 by Edward C.
Johnson 3d, Caleb Loring and Frank Nesvet inorder to establish a trust fund
for the investment and reinvestment of funds contributed thereto; and
WHEREAS, this Declaration of Trust was Amended and Restated on August 1,
1989; and
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in Trust
under this Declaration of Trust as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
NAME
Section 1. This Trust shall be known as "Fidelity Massachusetts Municipal
Trust."
DEFINITIONS
Section 2. Wherever used hererin, unless otherwise required by the context
or specifically provided:
(a) The Terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "Majority Shareholder Vote" (the 67% or 50% requirement of the
third sentence of Section 2(a)(42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings given them
in the 1940 Act, as amended from time to time;
(b) The "Trust" refers to "Fidelity Massachusetts Municipal Trust" and
reference to the Trust, when applicable to one or more Series of the Trust,
shall refer to any such Series;
(c) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article X, Section 3;
(d) "Shareholder" means a record owner of Shares of the Trust;
(e) The "Trustees" refer to the individual trustees in their capacity as
trustees hereunder of the Trust and their successor or successors for the
time being in office as such trustee or trustees;
(f) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest of the Trust or each Series shall be
divided from time to time, including such class or classes of Shares as the
Trustees may from time to time create and establish and including fractions
of Shares as well as whole Shares consistent with the requirements of
Federal and/or state securities laws;
(g) The "1940 Act" refers to the Investment Company Act of 1940, as
amended from time to time; and
(h) "Series" refers to series of Shares of the Trust established in
accordance with the provisions of Article III.
ARTICLE II
PURPOSE OF TRUST
The Purpose of this Trust is to provide investors a continuous source of
managed investment in securities.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
Section 1. The beneficial interest in the Trust shall be divided into such
transferable Shares of one or more separate and distinct Series or classes
as the Trustees shall from time to time create and establish. The number of
Shares is unlimited and each Share shall be without par value and shall be
fully paid and nonassessable. The Trustees shall have full power and
authority, in their sole discretion and without obtaining any prior
authorization or vote of the Shareholders or of any Series or class of
Shareholders of the Trust, to create and establish (and to change in any
manner) Shares or any Series or classes thereof with such preferences,
voting powers, rights and privileges as the Trustees may from time to time
determine, to divide or combine the Shares or any Series or classes thereof
into a greater or lesser number to classify or reclassify any issued Shares
into one or more Series or classes of Shares, to abolish any one or more
Series or classes of Shares, and to take such other action with respect to
the Shares as the Trustees may deem desirable.
ESTABLISHMENT OF SERIES
Section 2. The establishment of any Series shall be effective upon the
adoption of a resolution by a majority of the then Trustees setting forth
such establishment and designation and the relative rights and preferences
of the Shares of such Series. At any time that there are no Shares
outstanding of any particular Series previously established and designated,
the Trustees may by a majority vote abolish that Series and the
establishment and designation thereof.
OWNERSHIP OF SHARES
Section 3. The ownership of Shares shall be recorded in the books of the
Trust. The Trustees may make such rules as they consider appropriate for
the transfer of Shares and similar matters. The record books of the Trust
shall be conclusive as to who are the holders of Shares and as to the
number of Shares held from time to time by each Shareholder.
INVESTMENT IN THE TRUST
Section 4. The Trustees shall accept investments in the Trust from such
persons and on such terms as they may from time to time authorize. Such
investments may be in the form of cash or securities in which the
appropriate Series is authorized to invest, valued as provided in Article
X, Section 3. After the date of the initial contribution of capital, the
number of Shares to represent the initial contribution may in the Trustees'
discretion be considered as outstanding and the amount received by the
Trustees on the account of the contribution shall be treated as an asset of
the Trust. Subsequent investments in the Trust shall be credited to each
Shareholder's account in the form of full Shares at the Net Asset Value per
Share next determined after the investment is received; provided, however,
that the Trustees may, in their sole discretion, (a) impose a sales charge
upon investments in the Trust and (b) issue fractional Shares.
ASSETS AND LIABILITIES OF SERIES
Section 5. All consideration received by the Trust for the issue or sale
of Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series. In addition any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in
such manner as they, in their sole discretion, deem fair and equitable.
Each such allocation shall be conclusive and binding upon the Shareholders
of all Series for all purposes, and shall be referred to as assets
belonging to that Series. The assets belonging to a particular Series shall
be so recorded upon the books of the Trust, and shall be held by the
Trustees in trust for the benefit of the holders of Shares of that Series.
The assets belonging to each particular Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series. Any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as
belonging to any particular Series shall be allocated and charged by the
Trustees between or among any one or more of the Series in such manner as
the Trustees in their sole discretion deem fair and equitable. Each such
allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes. Any creditor of any Series may look only to the
assets of that Series to satisfy such creditor's debt.
NO PREEMPTIVE RIGHTS
Section 6. The Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust
or the Trustees.
LIMITATION OF PERSONAL LIABILITY
Section 7. The Trustees shall have no power to bind any Shareholder
personally or to call upon any shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription for any Shares or
otherwise. Every note, bond, contract or other undertaking issued by or on
behalf of the Trust or the Trustees relating to the Trust shall include a
recitation limiting the obligation represented thereby to the Trust and its
assets (but the omission of such a recitation shall not operate to bind any
Shareholder).
ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
Section 1. The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to carry
out that responsibility.
ELECTION: INITIAL TRUSTEES
Section 2. On a date fixed by the Trustees, the Shareholders shall elect
not less than three Trustees. A Trustee shall not be required to be a
Shareholder of the Trust. The initial Trustees who shall serve until such
election and until their successors are elected and qualified shall be
Edward C. Johnson 3d, Caleb Loring, Jr. and Arthur S. Loring and such other
individuals as the Board of Trustees shall appoint pursuant to Section 4 of
the Article IV.
TERM OF OFFICE OF TRUSTEES
Section 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a) that
any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery
or upon such later date as is specified therein; (b) that any Trustee may
be removed at any time by written instrument, signed by at least two-thirds
of the number of Trustees prior to such removal, specifying the date when
such removal shall become effective; (c) that any Trustee who requests in
writing to be retired or who has become incapacitated by illness or injury
may be retired by written instrument signed by a majority of the other
Trustees, specifying the date of his retirement; and (d) a Trustee may be
removed at any Special Meeting of the Trust by a vote of two-thirds of the
outstanding Shares.
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. In case of the declination, death, resignation, retirement,
removal, incapacity, or inability of any of the Trustees, or in case a
vacancy shall, by reason of an increase in number, or for any other reason,
exist, the remaining Trustees shall fill such vacancy by appointing such
other person as they in their discretion shall see fit consistent with the
limitations under the 1940 Act. Such appointment shall be evidenced by a
written instrument signed by a majority of the Trustees in office or by
recording in the records of the Trust, whereupon the appointment shall take
effect. An appointment of a Trustee may be made by the Trustees then in
office in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later date,
provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted this
trust, the trust estate shall vest in the new Trustee or Trustees, together
with the continuing Trustees, without any further act or conveyance, and he
shall be deemed a Trustee hereunder. The power of appointment is subject to
the provisions of Section 16(a) of the 1940 Act.
TEMPORARY ABSENCE OF TRUSTEE
Section 5. Any Trustee may, by power of attorney, delegate his power for a
period not exceeding six months at any one time to any other Trustee or
Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
NUMBER OF TRUSTEES
Section 6. The number of Trustees, not less than three (3) nor more than
twelve (12), serving hereunder at any time shall be determined by the
Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee is absent from the Commonwealth of
Massachusetts or, if not a domiciliary of Massachusetts, is absent from his
state of domicile, or is physically or mentally incapacitated by reason of
disease or otherwise, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy,
absence or incapacity, shall be conclusive, provided, however, that no
vacancy shall remain unfilled for a period longer than six calendar months.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
Section 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall not
operate to annul the Trust or to revoke any existing agency created
pursuant to the terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
Section 8. The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity other than as Trustee
hereunder by the Trustees or any successor Trustees. All of the assets of
the Trust shall at all times be considered as vested in the Trustees. No
Shareholder shall be deemed to have a severable ownership in any individual
asset of the Trust or any right of partition or possession thereof, but
each Shareholder shall have a proportionate undivided beneficial interest
in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
Section 1. The Trustees in all instances shall act as principals, and are
and shall be free from the control of the Shareholders. The Trustees shall
have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust.
The Trustees shall not in any way be bound or limited by present or future
laws or customs in regard to trust investments, but shall have full
authority and power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the purpose of
this Trust. Subject to any applicable limitation in the Declaration of
Trust or the Bylaws of the Trust, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound by or limited
by any present or future law or custom in regard to investments by
Trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend and
repeal them to the extent that they do not reserve that right to the
Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate.
(d) To employ a bank or trust company as custodian of any assets of the
Trust subject to any conditions set forth in this Declaration of Trust or
in the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing agent, or both.
(f) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or
by the Trust itself, or both.
(g) To set record dates in the manner hereinafter provided for.
(h) To delegate such authority as they consider desirable to any officers
of the Trust and to any agent, custodian or underwriter.
(i) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XII, Section 4(b) hereof.
(j) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion
with relation to securities or property as the Trustees shall deem proper.
(k) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities.
(l) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form; or either in its
own name or in the name of a custodian or a nominee or nominees, subject in
either case to proper safeguards according to the usual practice of
Massachusetts trust companies or investment companies.
(m) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article III.
(n) To allocate assets, liabilities and expenses of the Trust to a
particular Series, or to apportion the same between or among two or more
Series, provided that any liabilities or expenses incurred by a particular
Series shall be payable solely out of the assets belonging to that Series
as provided for in Article III.
(o) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of
which is held in the Trust; to consent to any contract, lease, mortgage,
purchase, or sale of property by such corporation or concern, and to pay
calls or subscriptions with respect to any security held in the Trust.
(p) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited
to, claims for taxes.
(q) To make distributions of income and of capital gains to Shareholders
in the manner hereinafter provided for.
(r) To borrow money and to pledge, mortgage or hypothecate the assets of
the Trust, subject to the applicable requirements of the 1940 Act.
(s) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving notice
to such Shareholder.
(t) Notwithstanding any other provision hereof, to invest all of the
assets of any series in a single open-end investment company, including
investment by means of transfer of such assets in exchange for an interest
or interests in such investment company;
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or
upon their order.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
Section 2. Any Trustee, officer or other agent of the Trust may acquire,
own and dispose of Shares to the same extent as if he were not a Trustee,
officer or agent; and the Trustees may issue and sell or cause to be issued
and sold Shares to and buy such Shares from any such person or any firm or
company in which he is interested, subject only to the general limitations
herein contained as to the sale and purchase of such Shares; and all
subject to any restrictions which may be contained in the Bylaws, if any.
ACTION BY THE TRUSTEES
Section 3. The Trustees shall act by majority vote at a meeting duly
called or by unanimous written consent without a meeting or by telephone
consent provided a quorum of Trustees participate in any such telephonic
meeting, unless the 1940 Act requires that a particular action be taken
only at a meeting of the Trustees. At any meeting of the Trustees, a
majority of the Trustees shall constitute a quorum. Meetings of the
Trustees may be called orally or in writing by the Chairman of the Trustees
or by any two other Trustees. Notice of the time, date and place of all
meetings of the Trustees shall be given by the party calling the meeting to
each Trustee by telephone or telegram sent to his home or business address
at least twenty-four hours in advance of the meeting or by written notice
mailed to his home or business address at least seventy-two hours in
advance of the meeting. Notice need not be given to any Trustee who attends
the meeting without objecting to the lack of notice or who executes a
written waiver of notice with respect to the meeting. Subject to the
requirements of the 1940 Act, the Trustees by majority vote may delegate to
any one of their number their authority to approve particular matters or
take particular actions on behalf of the Trust.
CHAIRMAN OF THE TRUSTEES
Section 4. The Trustees may appoint one of their number to be Chairman of
the Board of Trustees. The Chairman shall preside at all meetings of the
Trustees, shall be responsible for the execution of policies established by
the Trustees and the administration of the Trust, and may be the chief
executive, financial and accounting officer of the Trust.
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
Section 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the trust estate or the assets belonging
to the appropriate Series for their expenses and disbursements, including,
without limitation, fees and expenses of Trustees who are not Interested
Persons of the Trust, interest expense, taxes, fees and commissions of
every kind, expenses of pricing Trust portfolio securities, expenses of
issue, repurchase and redemption of shares including expenses attributable
to a program of periodic repurchases or redemptions, expenses of
registering and qualifying the Trust and its Shares under Federal and State
laws and regulations, charges of custodians, transfer agents and
registrars, expenses of preparing and setting up in type prospectuses and
Statements of Additional Information, expenses of printing and distributing
prospectuses sent to existing Shareholders, auditing and legal expenses,
reports to Shareholders, expenses of meetings of Shareholders and proxy
solicitations therefor, insurance expense, association membership dues and
for such non-recurring items as may arise, including litigation to which
the Trust is a party, and for all losses and liabilities by them incurred
in administering the Trust, and for the payment of such expenses,
disbursements, losses and liabilities the Trustees shall have a lien on the
assets belonging to the appropriate Series prior to any rights or interests
of the Shareholders thereto. This section shall not preclude the Trust from
directly paying any of the aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL, UNDERWRITER AND TRANSFER AGENT
INVESTMENT ADVISER
Section 1. Subject to a Majority Shareholder Vote, the Trustees may in
their discretion from time to time enter into an investment advisory or
management contract(s) with respect to the Trust or any Series thereof
whereby the other party(ies) to such contract(s) shall undertake to furnish
the Trustees such management, investment advisory, statistical and research
facilities and services and such other facilities and services, if any, and
all upon such terms and conditions, as the Trustees may in their discretion
determine. Notwithstanding any provisions of this Declaration of Trust, the
Trustees may authorize the investment adviser(s) (subject to such general
or specific instructions as the Trustees may from time to time adopt) to
effect purchases, sales or exchanges of portfolio securities and other
investment instruments of the Trust on behalf of the Trustees or may
authorize any officer, agent, or Trustee to effect such purchases, sales or
exchanges pursuant to recommendations of the investment adviser (and all
without further action by the Trustees). Any such purchases, sales and
exchanges shall be deemed to have been authorized by all of the Trustees.
The Trustees may, subject to applicable requirements of the 1940 Act,
including those relating to Shareholder approval, authorize the investment
adviser to employ one or more sub-advisers from time to time to perform
such of the acts and services of the investment adviser, and upon such
terms and conditions, as may be agreed upon between the investment adviser
and sub-adviser.
PRINCIPAL UNDERWRITER
Section 2. The Trustees may in their discretion from time to time enter
into (a) contract(s) providing for the sale of the Shares, whereby the
Trust may either agree to sell the Shares to the other party to the
contract or appoint such other party its sales agent for such Shares. In
either case, the contract shall be on such terms and conditions as may be
prescribed in the Bylaws, if any, and such further terms and conditions as
the Trustees may in their discretion determine not inconsistent with the
provision of this Article VII, or of the Bylaws, if any; and such contract
may also provide for the repurchase or sale of Shares by such other party
as principal or as agent of the Trust.
TRANSFER AGENT
Section 3. The Trustees may in their discretion from time to time enter
into a transfer agency and Shareholder service contract whereby the other
party shall undertake to furnish the Trustees with transfer agency and
Shareholder services. The contract shall be on such terms and conditions as
the Trustees may in their discretion determine not inconsistent with the
provisions of this Declaration of Trust or of the Bylaws, if any. Such
services may be provided by one or more entities.
PARTIES TO CONTRACT
Section 4. Any contract of the character described in Sections 1, 2 and 3
of this Article VII or in Article IX hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more
of the Trustees or officers of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract, and no
such contract shall be invalidated or rendered voidable by reason of the
existence of any relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of said contract or accountable
for any profit realized directly or indirectly therefrom, provided that the
contract when entered into was reasonable and fair and not inconsistent
with the provisions of this Article VII or the Bylaws, if any. The same
person (including a firm, corporation, partnership, trust, or association)
may be the other party to contracts entered into pursuant to Sections 1, 2
and 3 above or Article IX, and any individual may be financially interested
or otherwise affiliated with persons who are parties to any or all of the
contracts mentioned in this Section 4.
PROVISIONS AND AMENDMENTS
Section 5. Any contract entered into pursuant to Sections 1 and 2 of this
Article VII shall be consistent with and subject to the requirements of
Section 15 of the 1940 Act (including any amendments thereof or other
applicable Act off Congress hereafter enacted) with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal thereof, and no amendment to any
contract, entered into pursuant to Section 1 shall be effective unless
assented to by a Majority Shareholder Vote.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
Section 1. The Shareholders shall have power to vote (i) for the election
of Trustees as provided in Article IV, Section 2, (ii) for the removal of
Trustees as provided in Article IV, Section 3(d), (iii) with respect to any
investment advisory or management contract as provided in Article VII,
Section 1 and 5, (iv) with respect to the amendment of this Declaration of
Trust as provided in Article XII, Section 7, (v) to the same extent as the
shareholders of a Massachusetts business corporation, as to whether or not
a court action, proceeding or claim should be brought or maintained
derivatively or as a class action on behalf of the Trust or the
Shareholders, provided, however, that a Shareholder of a particular Series
shall not be entitled to bring any derivative or class action on behalf of
any other Series of the Trust, and (vi) with respect to such additional
matters relating to the Trust as may be required or authorized by law, by
this Declaration of Trust, or the Bylaws of the Trust, if any, or any
registration of the Trust with the Securities and Exchange Commission (the
"Commission") or any State, as the Trustees may consider desirable. On any
matter submitted to a vote of the Shareholders, all Shares shall be voted
by individual Series, except (i) when required by the 1940 Act, Shares
shall be voted in the aggregate and not by individual Series; and (ii) when
the Trustees have determined that the matter affects only the interests of
one or more Series, then only the Shareholders of such Series shall be
entitled to vote thereon. A shareholder of each series shall be entitled
to one vote for each dollar of net asset value (number of shares owned
times net asset value per share) per share of such series, on any matter on
which such shareholder is entitled to vote and each fractional dollar
amount shall be entitled to a proportionate fractional vote. There shall
be no cumulative voting in the election of Trustees. Shares may be voted in
person or by proxy. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required or permitted by
law, this Declaration of Trust or any Bylaws of the Trust to be taken by
Shareholders.
MEETINGS
Section 2. The first Shareholders' meeting shall be held as specified in
Section 2 of Article IV at the principal office of the Trust or such other
place as the Trustees may designate. Special meetings of the Shareholders
of any Series may be called by the Trustees and shall be called by the
Trustees upon the written request of Shareholders owning at least one-tenth
of the outstanding Shares entitled to vote. Whenever ten or more
Shareholders meeting the qualifications set forth in Section 16(c) of the
1940 Act, as the same may be amended from time to time, seek the
opportunity of furnishing materials to the other Shareholders with a view
to obtaining signatures on such a request for a meeting, the Trustees shall
comply with the provisions of said Section 16(c) with respect to providing
such Shareholders access to the list of the Shareholders of record of the
Trust or the mailing of such materials to such Shareholders of record.
Shareholders shall be entitled to at least fifteen days' notice of any
meeting.
QUORUM AND REQUIRED VOTE
Section 3. A majority of Shares entitled to vote in person or by proxy
shall be a quorum for the transaction of business at a Shareholders'
meeting, except that where any provision of law or of this Declaration of
Trust permits or requires that holders of any Series shall vote as a Series
then a majority of the aggregate number of Shares of that Series entitled
to vote shall be necessary to constitute a quorum for the transaction of
business by that Series. Any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held, within a
reasonable time after the date set for the original meeting, without the
necessity of further notice. Except when a larger vote is required by any
provision of this Declaration of Trust or the Bylaws, if any, a majority of
the Shares voted in person or by proxy shall decide any questions and a
plurality shall elect a Trustee, provided that where any provision of law
or of this Declaration of Trust permits or requires that the holders of any
Series shall vote as a Series, then a majority of the Shares of that Series
voted on the matter shall decide that matter insofar as that Series is
concerned.
ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
Section 1. The Trustees shall at all times employ a bank or trust company
having capital, surplus and undivided profits of at least two million
dollars ($2,000,000) or such other amount or such other entity as shall be
allowed by the Commission by the 1940 Act, as custodian with authority as
its agent, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the Bylaws of the Trust:
(1) to hold the securities owned by the Trust and deliver the same upon
written order or oral order, if confirmed in writing, or by such
electro-mechanical or electronic devices as are agreed to by the Trust and
the custodian, if such procedures have been authorized in writing by the
Trust;
(2) to receive and receipt for any moneys due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustees may direct;
and
(3) to disburse such funds upon orders or vouchers; and the Trust may also
employ such custodian as its agent:
The Trust may also employ such custodian as its agent;
(1) to keep the books and accounts of the Trust and furnish clerical and
accounting services; and
(2) to compute, if authorized to do so by the Trustees, the Net Asset Value
of any Series in accordance with the provisions hereof;
all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian. If so directed by a Majority Shareholder Vote,
the custodian shall deliver and pay over all property of the Trust held by
it as specified in such vote.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services
of the custodian, and upon such terms and conditions, as may be agreed upon
between the custodian and such sub-custodian and approved by the Trustees,
provided that in every case such sub-custodian shall be a bank or trust
company organized under the laws of the United States or one of the states
thereof and having capital, surplus and undivided profits of at least two
million dollars ($2,000,000) or such other person as may be permitted by
the Commission, or otherwise in accordance with the 1940 Act as from time
to time amended.
CENTRAL CERTIFICATE SYSTEM
Section 2. Subject to such rules, regulations and orders as the Commission
may adopt, the Trustees may direct the custodian to deposit all or any part
of the securities owned by the Trust in a system for the central handling
of securities established by a national securities exchange or a national
securities association registered with the Commission under the Securities
Exchange Act of 1934, or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act as from time to
time amended, pursuant to which system all securities of any particular
class or series of any issuer deposited within the system are treated as
fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of such securities, provided that all such deposits shall
be subject to withdrawal only upon the order of the Trust.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
DISTRIBUTIONS
Section 1.
(a) The Trustees may from time to time declare and pay dividends. The
amount of such dividends and the payment of them shall be wholly in the
discretion of the Trustees.
(b) The Trustees shall have power, to the fullest extent permitted by the
laws of Massachusetts, at any time to declare and cause to be paid
dividends on Shares of a particular Series, from the assets belonging to
that Series, which dividends, at the election of the Trustees, may be paid
daily or otherwise pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may determine, and may be
payable in Shares of that Series at the election of each Shareholder of
that Series.
(c) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute pro rata among the
Shareholders of a particular Series as of the record date of that Series
fixed as provided in Article XII, Section 3 hereof a "stock dividend".
REDEMPTIONS
Section 2. In case any holder of record of Shares of a particular Series
desires to dispose of his Shares, he may deposit at the office of the
transfer agent or other authorized agent of that Series a written request
or such other form of request as the Trustees may from time to time
authorize, requesting that the Series purchase the Shares in accordance
with this Section 2; and the Shareholder so requesting shall be entitled to
require the Series to purchase, and the Series or the principal underwriter
of the Series shall purchase his said Shares, but only at the Net Asset
Value thereof (as described in Section 3 hereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series and payment for such Shares shall
be made by the Series or the principal underwriter of the Series to the
Shareholder of record within seven (7) days after the date upon which the
request is effective.
DETERMINATION OF NET ASSET VALUE
AND VALUATION OF PORTFOLIO ASSETS
Section 3. The term "Net Asset Value" of any Series shall mean that amount
by which the assets of that Series, exceed its liabilities, all as
determined by or under the direction of the Trustees. Such value per Share
shall be determined separately for each Series of Shares and shall be
determined on such days and at such times as the Trustees may determine.
Such determination shall be made with respect to securities for which
market quotations are readily available, at the market value of such
securities; and with respect to other securities and assets, at the fair
value as determined in good faith by the Trustees, provided, however, that
the Trustees, without Shareholder approval, may alter the method of
appraising portfolio securities insofar as permitted under the 1940 Act and
the rules, regulations and interpretations thereof promulgated or issued by
the Commission or insofar as permitted by any Order of the Commission
applicable to the Series. The Trustees may delegate any of their powers and
duties under this Section 3 with respect to appraisal of assets and
liabilities. At any time the Trustees may cause the value per Share last
determined to be determined again in similar manner and may fix the time
when such redetermined value shall become effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
Section 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940 Act.
Such suspension shall take effect at such time as the Trustees shall
specify but not later than the close of business on the business day next
following the declaration of suspension, and thereafter there shall be no
right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption or
receive payment based on the Net Asset Value per Share existing after the
termination of the suspension.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
Section 1. Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of
the Trust, the Trustees shall not be responsible for or liable in any event
for neglect or wrongdoing of them or any officer, agent, employee or
investment adviser of the Trust, but nothing contained herein shall protect
any Trustee against any liability to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
INDEMNIFICATION
Section 2.
(a) Subject to the exceptions and limitations contained in Section (b)
below:
(i) every person who is, or has been, a Trustee or officer of the Trust
(hereinafter referred to as "Covered Person", shall be indemnified by the
appropriate Series to the fullest extent permitted by law against liability
and against all expenses reasonably incurred or paid by him in connection
with any claim, action, suit or proceeding in which he becomes involved as
a party or otherwise by virtue of his being or having been a Trustee or
officer and against amounts paid or incurred by him in the settlement
thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and
the words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office or (B) not to
have acted in good faith in the reasonable belief that his action was in
the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a determination
that such Trustee or officer did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither interested
persons of the Trust nor are parties to the matter based upon a review of
readily available facts (as opposed to a full trial-type inquiry);
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees, or by
independent counsel.
(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now
or hereafter be entitled, shall continue as to a person who has ceased to
be such Trustee or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person. Nothing contained herein
shall affect any rights to indemnification to which Trust personnel, other
than Trustees and officers, and other persons may be entitled by contract
or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described
in paragraph (a) of this Section 2 may be paid by the applicable Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be
paid over by him to the applicable Series if it is ultimately determined
that he is not entitled to indemnification under this Section 2; provided,
however, that either (a) such Covered Person shall have provided
appropriate security for such undertaking, (b) the Trust is insured against
losses arising out of any such advance payments or (c) either a majority of
the Trustees who are neither interested persons of the Trust nor parties to
the matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to believe
that such Covered Person will be found entitled to indemnification under
this Section 2.
SHAREHOLDERS
Section 3. In case any Shareholder or former Shareholder of any Series of
the Trust shall be held to be personally liable solely by reason of his
being or having been a Shareholder and not because of his acts or omissions
or for some other reason, the Shareholder or former Shareholder (or his
heirs, executors, administrators or other legal representatives or in the
case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets belonging to the applicable
Series to be held harmless from and indemnified against all loss and
expense arising from such liability. The Series shall, upon request by the
Shareholder, assume the defense of any claim made against the Shareholder
for any act or obligation of the Series and satisfy any judgment thereon.
ARTICLE XII
MISCELLANEOUS
TRUST NOT A PARTNERSHIP
Section 1. It is hereby expressly declared that a trust and not a
partnership is created hereby. No Trustee hereunder shall have any power to
bind personally either the Trust's officers or any Shareholder. All persons
extending credit to, contracting with or having any claim against the Trust
or the Trustees shall look only to the assets of the appropriate Series for
payment under such credit, contract or claim; and neither the Shareholders
nor the Trustees, nor any of their agents, whether past, present or future,
shall be personally liable therefor. Nothing in this Declaration of Trust
shall protect a Trustee against any liability to which the Trustee would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
the office of Trustee hereunder.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
Section 2. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances
then prevailing, shall be binding upon everyone interested. Subject to the
provisions of Section I of this Article XII and to Article XI, the Trustees
shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice counsel or other experts with respect to the
meaning and operation this Declaration of Trust, and subject to the
provisions of Section 1 of this Article XII and to Article XI, shall be
under no liability for any act or omission in accordance with such advice
or for failing to follow such advice. The Trustees shall not be required to
give any bond as such, nor any surety if a bond is obtained.
ESTABLISHMENT OF RECORD DATES
Section 3. The Trustees may close the stock transfer books of the Trust
for a period not exceeding sixty (60) days preceding the date of any
meeting of Shareholders, or the date for the payment of any dividends, or
the date for the allotment of rights, or the date when any change or
conversion or exchange of Shares shall go into effect; or in lieu of
closing the stock transfer books as aforesaid, the Trustees may fix in
advance a date, not exceeding sixty (60) days preceding the date of any
meeting of Shareholders, or the date for payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion
or exchange of Shares shall go into effect, as a record date for the
determination of the Shareholders entitled to notice of, and to vote at,
any such meeting, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in respect of
any such change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of record
on the date so fixed shall be entitled to such notice of, and to vote at,
such meeting, or to receive payment of such dividend, or to receive such
allotment or rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any Shares on the books of the Trust after
any such record date fixed or aforesaid.
TERMINATION OF TRUST
Section 4.
(a) This Trust shall continue without limitation of time but subject to
the provisions of sub-section (b) of this Section 4.
(b) Subject to a Majority Shareholder Vote of each Series affected by the
matter or, if applicable, to a Majority Shareholder Vote of the Trust, the
Trustees may;
(i) sell and convey the assets of the Trust or any affected Series to
another trust, partnership, association or corporation organized under the
laws of any state which is an open-end management investment company as
defined in the 1940 Act, for adequate consideration which may include the
assumption of all outstanding obligations, taxes and other liabilities,
accrued or contingent, of the Trust or any affected Series, and which may
include shares of beneficial interest or stock of such trust, partnership,
association or corporation; or
(ii) at any time sell and convert into money all of the assets of the
Trust or any affected Series.
Upon making Provision for the payment of all such liabilities in either
(i) or (ii), by such assumption or otherwise, the Trustees shall distribute
the remaining proceeds or assets (as the case may be) ratably among the
holders of the Shares of the Trust or any affected Series then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in sub-section (b), the Trust or any affected
Series shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder and the right, title and interest
of all parties shall be cancelled and discharged.
FILING OF COPIES, REFERENCES, AND HEADINGS
Section 5. The original or a copy of this instrument and of each
declaration of trust supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each supplemental declaration of trust shall be filed by
the Trustees with the Secretary of the Commonwealth of Massachusetts and
the Boston City Clerk, as well as any other governmental office where such
filing may from time to time be required. Anyone dealing with the Trust may
rely on a certificate by an officer or Trustee of the Trust as to whether
or not any such supplemental declarations of trust have been made and as to
any matters in connection with the Trust hereunder, and with the same
effect as if it were the original, may rely on a copy certified by an
officer or Trustee of the Trust to be a copy of this instrument or of any
such supplemental declaration of trust. In this instrument or in any such
supplemental declaration of trust, references to this instrument, and all
expressions like "herein", "hereof" and "hereunder", shall be deemed to
refer to this instrument as amended or affected by any such supplemental
declaration of trust. Headings are placed herein for convenience of
reference only and in case of any conflict, the text of this instrument,
rather than the headings, shall control. This instrument may be executed in
any number of counterparts each of which shall be deemed an original.
APPLICABLE LAW
Section 6. The trust set forth in this instrument is made in the
Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof,
the Trust may exercise all powers which are ordinarily exercised by such a
trust.
AMENDMENTS
Section 7. If authorized by votes of the Trustees and a Majority
Shareholder Vote, or by any larger vote which may be required by applicable
law or this Declaration of Trust in any particular case, the Trustees shall
amend or otherwise supplement this instrument, by making a declaration of
trust supplemental hereto, which thereafter shall form a part hereof,
except that an amendment which shall affect the Shareholders of one or more
Series but not the Shareholders of all outstanding Series shall be
authorized by vote of the Shareholders holding a majority of the Shares
entitled to vote of each Series affected and no vote of Shareholders of a
Series not affected shall be required. Amendments having the purpose of
changing the name of the Trust or of supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or
inconsistent provision contained herein shall not require authorization by
Shareholder vote. Copies of the supplemental declaration of trust shall be
filed as specified in Section 5 of this Article XII.
FISCAL YEAR
Section 8. The fiscal year of the Trust shall end on a specified date as
set forth in the Bylaws, if any, provided, however, that the Trustees may,
without Shareholder approval, change the fiscal year of the Trust.
USE OF THE WORD "FIDELITY"
Section 9. Fidelity Management & Research Company ("FMR") has
consented to the use by any Series of the Trust of the identifying word
"Fidelity" in the name of any Series of the Trust at some future date. Such
consent is conditioned upon the employment of FMR as investment adviser of
each Series of the Trust. As between the Trust and itself, FMR controls the
use of the name of the Trust insofar as such name contains the identifying
word "Fidelity". FMR may from time to time use the identifying word
"Fidelity" in other connections and for other purposes, including, without
limitation, in the names of other investment companies, corporations or
businesses which it may manage, advise, sponsor or own or in which it may
have a financial interest. FMR may require the Trust or any Series thereof
to cease using the identifying word "Fidelity" in the name of the Trust or
any Series thereof if the Trust or any Series thereof ceases to employ FMR
or a subsidiary or affiliate thereof as investment adviser.
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument this 17th day of March, 1994.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Gerald C. McDonough
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Marvin L. Mann
Richard J. Flynn Marvin L. Mann
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
THE COMMONWEALTH OF MASSACHUSETTS
MICHAEL JOSEPH CONNOLLY
SECRETARY OF THE COMMONWEALTH
STATE HOUSE - BOSTON, MA
AMENDED AND RESTATED DECLARATION OF TRUST
We, J. Gary Burkhead, Senior Vice President and Arthur S. Loring,
Secretary of
FIDELITY MASSACHUSETTS MUNICIPAL TRUST
82 Devonshire Street
Boston, MA 02109
do certify that, in accordance with ARTICLE XII, SECTION 7 of the
Declaration of Trust of Fidelity Massachusetts Municipal Trust, the Amended
and Restated Declaration of Trust, which amends it in its entirety,
effective March 17, 1994, incorporates any and all previous amendments duly
adopted and amends the Declaration of Trust by incorporating all amendments
duly adopted by the Trustees or a majority vote of the shareholders of the
Trust at a Special Meeting of the Shareholders held January 19, 1994.
The attached Restatement will become effective provided that it is filed,
in accordance with Chapter 182, Section 2 of the General Laws.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto
signed our names this 17th day of March, 1994.
/s/J. Gary Burkhead /s/Arthur S. Loring
J. Gary Burkhead Arthur S. Loring
Senior Vice President Secretary
Exhibit 5(a)
MANAGEMENT CONTRACT:
BETWEEN
FIDELITY MASSACHUSETTS MUNICIPAL TRUST:
FIDELITY MASSACHUSETTS TAX-FREE MONEY MARKET PORTFOLIO
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 1st day of February, 1994, by and between Fidelity
Massachusetts Municipal Trust, a Massachusetts business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Fund"), on behalf of Fidelity Massachusetts Tax-Free Money
Market Portfolio (hereinafter called the "Portfolio") and Fidelity
Management & Research Company, a Massachusetts corporation (hereinafter
called the "Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract dated
September 1, 1992 to a modification of said Contract in the manner set
forth below. The Modified Management Contract shall when executed by duly
authorized officers of the Fund and the Adviser, take effect on the later
of February 1, 1994 or the first day of the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or the other accounts
over which the Adviser or its affiliates exercise investment discretion.
The Adviser is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Portfolio are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee Rate and an Individual Fund
Fee Rate.
(a) Group Fee Rate. The group fee rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
group fee rate shall be determined on a cumulative basis pursuant to the
following schedule.
Average Net Assets Annualized Fee Rate (for each level)
0 - $3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 174 .1450
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
(b) Individual Fund Fee Rate. The individual fund fee rate shall be .25%.
The sum of the group fee rate, calculated as described above to the
nearest millionth, and the individual fund fee rate shall constitute the
annual management fee rate. One-twelfth of the annual management fee shall
be applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Declaration of Trust of the Fund) determined as
of the close of business on each business day throughout the month.
In case of termination of this Contract during any month, the fee for that
month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's officers and Trustees with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust and
agrees that the obligations assumed by the Fund pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, all as
of the date written above.
FIDELITY MASSACHUSETTS MUNICIPAL TRUST
on behalf of Fidelity Massachusetts Tax-Free Money Market Portfolio
By /s/J. Gary Burkhead
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/J. Gary Burkhead
President
Exhibit 5(b)
MANAGEMENT CONTRACT
BETWEEN
FIDELITY MASSACHUSETTS MUNICIPAL TRUST:
FIDELITY MASSACHUSETTS TAX-FREE HIGH YIELD PORTFOLIO
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 1st day of February, 1994, by and between Fidelity
Massachusetts Municipal Trust, a Massachusetts business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Fund"), on behalf of Fidelity Massachusetts Tax-Free High Yield
Portfolio (hereinafter called the "Portfolio"), and Fidelity Management
& Research Company, a Massachusetts corporation (hereinafter called the
"Adviser").
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract dated
August 1, 1989 to a modification of said contract in the manner set forth
below. The Modified Management Contract shall when executed by duly
authorized officers of the Fund and the Adviser, take effect on the later
of February 1, 1994 or the first day of the month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Fund's shares under federal and
state law; and (vii) investigating the development of and developing and
implementing, if appropriate, management and shareholder services designed
to enhance the value or convenience of the Portfolio as an investment
vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with regard to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio's account with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to the Portfolio and/or the other accounts
over which the Adviser or its affiliates exercise investment discretion.
The Adviser is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may
be viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of
the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable monthly as soon as practicable after the
last day of each month, composed of a Group Fee Rate and an Individual Fund
Fee Rate.
(a) Group Fee Rate. The group fee rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
group fee rate shall be determined on a cumulative basis pursuant to the
following schedule.
Average Net Assets Annualized Fee Rate (for each level)
0 - $3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 174 .1450
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
(b) Individual Fund Fee Rate. The individual fund fee rate shall be .25%
of average daily net assets of the Portfolio.
The sum of the group fee rate, calculated as described above to the
nearest millionth, and the individual fund fee rate shall constitute the
annual management fee rate. One-twelfth of the annual management fee shall
be applied to the average of the net assets of the Portfolio (computed in
the manner set forth in the Declaration of Trust of the Fund) determined as
of the close of business on each business day throughout the month.
In case of termination of this Contract during any month, the fee for that
month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's officers and Trustees with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until May 31, 1994
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust and
agrees that the obligations assumed by the Fund pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust or other organizational document are separate and
distinct from those of any and all other Portfolios.
8. This Agreement shall be governed by and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY MASSACHUSETTS MUNICIPAL TRUST
on behalf of Fidelity Massachusetts Tax-Free High Yield Portfolio
By /s/J. Gary Burkhead
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/J. Gary Burkhead
President
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses and
Statements of Additional Information constituting part of this Post
Effective Amendment No. 26 to the registration statement on Form N-1A (the
"registration statement") of Fidelity Massachusetts Municipal Trust of our
reports dated February 28, 1994 and March 4, 1994, relating to the
financial statements and financial highlights appearing in the January 31,
1994 Annual Reports to Shareholders of Spartan Massachusetts Municipal
Money Market Portfolio and Fidelity Massachusetts Tax-Free Portfolios,
which are incorporated by reference in such Registration Statement. We
further consent to the references to us under the headings "Auditor" in the
Statements of Additional Information and "Financial Highlights" in the
Prospectuses.
/s/PRICE WATERHOUSE
PRICE WATERHOUSE
Boston, Massachusetts
March, 14, 1994
