SPARTAN(Registered trademark)
(registered trademark)
PENNSYLVANIA
MUNICIPAL
PORTFOLIOS
SEMIANNUAL REPORT
JUNE 30, 1994
CONTENTS
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PRESIDENT'S MESSAGE 3 Ned Johnson on bond market
strategies.
SPARTAN PENNSYLVANIA MUNICIPAL 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 past six
months
and one year.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 19 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE 23 How the fund has done over time.
FUND TALK 25 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 27 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 28 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 33 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 37 Notes to the financial statements.
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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 FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The past few months have been an
unsettling time for bond investors. The bond market declined after the
Federal Reserve Board raised short-term interest rates from February
through May. These rate hikes caused bond yields to rise and bond prices to
fall. While nobody knows whether rates will continue to go up, this may be
a good time to review the effect rising rates have on your bond fund
investment, and consider how well your current bond fund holdings match
your original investment goals.
Most investors choose bond funds to generate income and to help diversify
their investment portfolios. Despite the recent market downturn, bond
mutual funds still satisfy these needs. Where investors have felt the
negative effect of rising rates is in the market value of their investment,
which has eroded as bond prices have fallen. It's important
to remember, however, that this loss in principal is only "on paper" until
you choose to sell your shares. That's why your investing time horizon is
key.
If your time horizon is short - one year or less - you may want to consider
shifting all or part of your bond fund investment into short-term
investments.
If you don't need your money within the next year, staying in your bond
fund may be the appropriate strategy for you. The longer your investing
time frame, the better your chances of retaining your principal investment
through periods of rising AND falling rates. For example, if you plan to
use your money in one to two years, a short-term bond fund may be the right
choice. If your time frame is two to four years, a fund with an
intermediate length average maturity may be best. If you have a longer-term
goal - say a child's college education that's 10 years away - you may be
willing to ride out the bond market's peaks and valleys in exchange for the
higher potential returns of a longer-term fund.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up
a regular investment plan using the Fidelity Automatic Account BuilderSM.
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
SPARTAN PENNSYLVANIA MUNICIPAL 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), and the effect of the $5 account closeout fee.
You can also look at the fund's income. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns and
dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1994 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Spartan Pennsylvania
Municipal High Yield Portfolio -4.11% 0.92% 47.06% 79.36%
Lehman Brothers Municipal Bond Index -4.41% 0.20% 46.00% n/a
Average Pennsylvania Tax-Exempt
Municipal Bond Fund -5.35% -0.70% 43.73% n/a
Consumer Price Index 1.51% 2.49% 19.26% 35.16%
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, six months, one year, five years, or since the fund started on
August 6, 1986. 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 Pennsylvania
tax-exempt municipal bond fund, which reflects the performance of 48
Pennsylvania 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.(The periods covered by CPI numbers are
the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Pennsylvania
Municipal High Yield Portfolio 0.92% 8.02% 7.67%
Lehman Brothers Municipal Bond Index 0.20% 7.86% n/a
Average Pennsylvania Tax-Exempt
Municipal Bond Fund -0.70% 7.52% n/a
Consumer Price Index 2.49% 3.59% 3.88%
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 LIFE OF FUND
08/31/86 10000.01 10000.00
09/30/86 10054.67 10025.10
10/31/86 10247.94 10198.23
11/30/86 10389.98 10400.26
12/31/86 10329.58 10371.56
01/31/87 10619.06 10683.84
02/28/87 10726.54 10736.41
03/31/87 10633.81 10622.60
04/30/87 9635.80 10089.56
05/31/87 9511.25 10039.52
06/30/87 9731.51 10334.28
07/31/87 9912.36 10439.69
08/31/87 9930.00 10463.17
09/30/87 9312.07 10077.40
10/31/87 9290.87 10113.07
11/30/87 9561.05 10377.12
12/31/87 9737.58 10527.70
01/31/88 10226.62 10902.69
02/29/88 10395.52 11017.93
03/31/88 10077.29 10889.57
04/30/88 10138.64 10972.34
05/31/88 10210.17 10940.63
06/30/88 10412.66 11100.69
07/31/88 10481.85 11173.06
08/31/88 10499.01 11182.90
09/30/88 10728.60 11385.31
10/31/88 11039.46 11586.26
11/30/88 10943.15 11480.13
12/31/88 11121.72 11597.57
01/31/89 11278.34 11837.41
02/28/89 11181.44 11702.34
03/31/89 11178.65 11674.37
04/30/89 11467.63 11951.52
05/31/89 11675.62 12199.76
06/30/89 11859.07 12365.43
07/31/89 11973.29 12533.72
08/31/89 11860.42 12411.02
09/30/89 11821.57 12373.78
10/31/89 11984.64 12524.74
11/30/89 12126.31 12743.93
12/31/89 12212.13 12848.43
01/31/90 12144.67 12788.04
02/28/90 12252.25 12901.85
03/31/90 12254.25 12905.72
04/30/90 12074.26 12812.80
05/31/90 12375.67 13092.12
06/30/90 12488.21 13207.33
07/31/90 12651.30 13401.48
08/31/90 12468.04 13207.16
09/30/90 12531.04 13215.08
10/31/90 12711.90 13454.28
11/30/90 12984.66 13724.71
12/31/90 13091.24 13785.09
01/31/91 13261.52 13969.82
02/28/91 13338.07 14091.35
03/31/91 13367.31 14096.99
04/30/91 13577.20 14284.48
05/31/91 13739.13 14411.61
06/30/91 13670.81 14397.20
07/31/91 13874.86 14572.85
08/31/91 14065.38 14765.21
09/30/91 14228.89 14957.15
10/31/91 14351.80 15091.77
11/30/91 14390.39 15134.03
12/31/91 14726.72 15459.41
01/31/92 14766.44 15494.96
02/29/92 14774.39 15499.61
03/31/92 14773.29 15505.81
04/30/92 14928.17 15643.81
05/31/92 15114.54 15828.41
06/30/92 15358.30 16094.33
07/31/92 15841.46 16577.16
08/31/92 15676.38 16414.70
09/30/92 15760.31 16521.40
10/31/92 15518.08 16359.49
11/30/92 15887.95 16652.32
12/31/92 16068.88 16822.18
01/31/93 16280.58 17017.31
02/28/93 16918.93 17633.34
03/31/93 16726.16 17446.43
04/30/93 16889.04 17622.64
05/31/93 16992.34 17721.32
06/30/93 17280.04 18017.27
07/31/93 17258.87 18040.69
08/31/93 17691.98 18415.94
09/30/93 17952.08 18625.88
10/31/93 17961.08 18661.27
11/30/93 17807.68 18497.05
12/31/93 18186.79 18887.34
01/31/94 18423.83 19102.65
02/28/94 17976.47 18607.89
03/31/94 17185.50 17850.55
04/30/94 17274.97 18002.28
05/31/94 17469.43 18158.90
06/30/94 17440.63 18053.58
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Pennsylvania Municipal High Yield Portfolio on August 31, 1986, shortly
after the fund started. As the chart shows, by June 30, 1994, the value of
your investment would have grown to $17,441 - a 74.41% increase on your
initial investment. This assumes you still own the fund on June 30, and
therefore does not include the effect of the $5 account closeout fee. 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 $18,054 - a 80.54% 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)
TOTAL RETURN COMPONENTS
SIX MONT
HS
ENDED YEARS ENDED DECEMBER 31,
JUNE 30,
1994 1993 1992 1991 1990 1989
Dividend returns 2.88% 6.68% 7.00% 7.53% 7.40% 7.32%
Capital appreciation
returns -6.99% 6.49% 2.11% 4.95% -0.21% 2.47%
Total returns -4.11% 13.17% 9.11% 12.48% 7.19% 9.79%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested. Capital appreciation and total returns include the effect of
the $5 account closeout fee.
DIVIDENDS AND YIELD
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PERIODS ENDED JUNE 30, 1994 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.30(cents) 32.20(cents) 65.23(cents)
Annualized dividend rate 6.19% 6.13% 5.96%
30-day annualized yield 6.25% - -
30-day annualized tax-equivalent yield 10.05% - -
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DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $10.41 over
the past month, $10.59 over the past six months and $10.88 over the past
year, you can compare the fund's income over these three 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 37.79% combined federal and state tax bracket.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Steven Harvey,
Portfolio Manager of Spartan
Pennsylvania Municipal High Yield
Portfolio
Q. STEVE, HOW HAS THE FUND PERFORMED?
A. It's been a difficult period for both the fund and municipal bonds in
general. The fund's total return for the six months ended June 30, 1994,
was -4.11%. That was better than the average Pennsylvania tax-free bond
fund, which returned -5.35% for the same period, according to Lipper
Analytical Services. For the 12 months ended June 30, the fund had a total
return of 0.92%, compared to the average Pennsylvania fund's return of
- -0.70%, again according to Lipper.
Q. WHY DID THE MUNICIPAL BOND MARKET FALL DURING THE PAST SIX MONTHS?
A. The short answer is higher interest rates. The year started off on a
positive note, as fears of inflation started to subside and interest rates
stayed in a narrow range until the end of January. Throughout the fourth
quarter of 1993, the Federal Reserve Board seemed content to keep the
federal funds rate - the rate banks charge each other for overnight loans -
at 3.00%, where it had been since September 1992. On February 4, the Fed
reversed that policy, raising the fed funds rate to 3.25%. And through May,
the Fed moved three more times, raising fed funds to 4.25%. The Fed rate
hikes were a preemptive strike against inflation. The economy appeared to
be heating up and the Fed seemed determined to keep inflation in check.
However, the move still worried bond investors, who dislike any mention of
inflation because it erodes the value of their bonds' interest income,
which is paid at a fixed rate. As a result, bond prices fell from February
through early May, but began to stabilize in early June. However, municipal
bonds fell again in mid-June as investors focused on the U.S. dollar's
decline and became concerned that the Fed would raise rates again.
Q. TURNING TO THE FUND, WHAT HELPED IT DO BETTER THAN THE AVERAGE
PENNSYLVANIA TAX-FREE BOND FUND?
A. Its higher-than-average income. A bond's total return comes from both
its price appreciation, or depreciation, and its income. When bond prices
were falling, bonds with above-average income posted better total returns.
To achieve that level of income, I used a "coupon barbell" strategy. If you
think of a barbell, the ends are heavy and the middle is light. On one end
are insured bonds, which carry the highest credit rating of AAA. On the
other end, are lower-rated Ba- or B-rated bonds and non-rated bonds, which
offer as much as 2.00% to 2.50% more in income. That strategy helped make
the fund the highest income producer in its category.
Q. WHAT TYPES OF LOWER-RATED BONDS DID YOU CHOOSE?
A. I concentrated on three areas: nursing homes, life care facilities and
Philadelphia bonds. Through extensive research, our credit research
department - which is one of the largest in the industry - has identified
bonds in these sectors that we believe have good prospects for the future.
Unlike hospitals, there's actually a shortage of nursing home beds. As the
population ages, that shortage should continue. Nursing homes are primarily
non-rated because the rating agencies don't have a lot of experience in
this sector and the issues are generally small. Life care facilities, which
offer housing and medical care for retired people, should also benefit from
the aging population. I focused on facilities with strong sponsors like
Riddle Village, which is on the campus of Riddle Memorial Hospital outside
Philadelphia and is rated A- by Standard & Poor's. The facility exceeded
all its Phase One marketing targets, and has just embarked on Phase Two of
its expansion. Finally, I've recently been buying Philadelphia general
obligation bonds, or GOs, which are backed by the taxing power of the city.
The economy and the fiscal situation there are improving, and I expect the
credit rating of Philadelphia bonds to be upgraded to investment grade in
the next year or so. That, in turn, should help boost their prices.
Q. THERE'S BEEN A LOT OF TALK RECENTLY ABOUT DERIVATIVES. DO YOU USE THEM?
A. Throughout the period, I used futures, which are a type of derivative -
meaning their market value is derived from, among other things, an
underlying security or market index. For example, I used 30-year Treasury
futures in March, which generally helped reduce the volatility of the
Portfolio. We have used futures and options in our municipal funds for
years. More recently, I've also started using a derivative known as an
inverse floater - whose yield rises as short-term rates fall, and vice
versa. Inverse floaters act like very long-term bonds, effectively
increasing a fund's duration, which is good in a falling interest rate
environment, but can hurt the fund when interest rates rise. During the
past six months, inverse floaters made up less than 5% of the fund's total
investments. By using these various derivatives, I achieve increased
flexibility in managing the fund's overall sensitivity to changes in
interest rates and, hopefully, can achieve higher levels of income.
Q. IS THE WORST OVER FOR THE MUNICIPAL BOND MARKET?
A. I think that for the short-term, the market could remain volatile. The
price of oil is rising, and retail sales and job growth look strong, so the
Fed may find it appropriate to raise interest rates again. Whether another
interest rate hike would be a negative for the bond market is uncertain. On
the other hand, a stronger economy could actually boost the dollar, which
in turn, would probably help the bond market.
Q. WHAT'S YOUR LONGER-TERM OUTLOOK?
A. Over the long term, I'm more optimistic. In my view, some economic
statistics indicate that the U.S. economy will slow in the second half of
this year. One factor I'm watching is money supply, which has been in a
decline over the past three to four months and may mean that the economy is
at a peak. Usually when there's a recovery, the demand for credit - and
ultimately the money supply - increases. That increase in money supply then
helps keep the recovery going. For now, I'll continue to focus on producing
an above-average level of income. And for the very near-term, I'll keep the
fund hedged with futures to help cushion it against further declines in the
market. Once the market settles, the positive effects of a slow down in
supply of Pennsylvania municipals could lift prices.
FUND FACTS
GOAL: to provide high current
income exempt from federal
and Pennsylvania state
income taxes
START DATE: August 6, 1986
SIZE: as of June 30, 1994,
more than $272 million
MANAGER: Steven Harvey,
since October 1993; manager,
Fidelity Minnesota Tax-Free
Portfolio, since October 1993;
Spartan Maryland Municipal
Income Portfolio, since April
1993; joined Fidelity in1986
(checkmark)
STEVE HARVEY'S OUTLOOK
FOR THE MUNICIPAL MARKET:
"There could be some
additional short-term
volatility in the municipal
market over the next several
months. But eventually, the
municipal market should
start benefiting from a
reduced supply of bonds
available. Last year there
was a record supply of
municipal bonds issued, the
result of many municipalities
refinancing more expensive,
older debt at then lower
rates. But most of the issues
that could be refinanced
already had been by the start
of 1994; and higher interest
rates effectively eliminated
the incentive to finance any
remaining issues. In
Pennsylvania, the supply of
bonds has dropped about
25% from last year's level. A
lower supply and a constant
demand for municipals,
could help drive prices
higher."
(bullet) Health care bonds - at
20.3% of investments - are
the fund's largest industry
concentration. They're
attractive, in part, because
of their relatively high yields.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF JUNE 30, 1994
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO
Health Care 20.3 23.7
General Obligation 15.6 11.7
Water & Sewer 13.2 12.4
Other 10.0 9.0
Special Tax 9.1 8.1
AVERAGE YEARS TO MATURITY AS OF JUNE 30, 1994
6 MONTHS AGO
Years 19.0 19.6
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 JUNE 30, 1994
6 MONTHS AGO
Years 8.6 9.3
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 JUNE 30, 1994
(MOODY'S RATINGS) % OF FUND'S INVESTMENTS
Aaa 29.4%
Aa, A 8.2%
Baa 28.4%
Ba, B 10.1%
Non-rated 21.5%
Short-term investments 2.4%
Row: 1, Col: 1, Value: 29.4
Row: 1, Col: 2, Value: 8.199999999999999
Row: 1, Col: 3, Value: 28.4
Row: 1, Col: 4, Value: 10.1
Row: 1, Col: 5, Value: 21.5
Row: 1, Col: 6, Value: 2.4
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED
DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT JUNE 30, 1994
ACCOUNT FOR 20.0% OF THE FUND'S INVESTMENTS.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENTS JUNE 30, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 97.6%
MOODY'S PRINCIPAL VALUE
RATINGS(B) AMOUNT (NOTE 1)
PENNSYLVANIA - 90.4%
Aliquippa Unltd. Tax Gen. Oblig. 8.25%
9/15/01 - $ 1,440,000 $ 1,467,000
Allegheny County Gen. Oblig. 0% 4/1/11
(MBIA Insured) Aaa 2,560,000 886,400
Allegheny County Higher Ed. Bldg. Auth.
Rev. Rfdg. (La Roche College)
7.625% 12/1/06 - 1,000,000 1,028,750
Allegheny County Hosp. Dev. Auth. Health
Facs. Rev. (Allegheny Valley School)
8.50% 2/1/15 Baa 3,000,000 3,225,000
Allegheny County Hosp. Dev. Auth. Rev.
Rfdg. (South Side Hosp.) Series A,
8.75% 6/1/10 BBB 3,750,000 3,932,813
Allegheny County Ind. Dev. Auth. Rev.
(YMCA Pittsburgh Proj.) Series 1990,
8.75% 3/1/10 - 2,715,000 2,898,263
Allegheny County Residential Fin. Auth.
Mtg. Rev.:
Series H, 8% 6/1/17 (GNMA Coll.) Aaa 240,000 249,000
Series 1990, 7.95% 6/1/23,
(GNMA Coll.) (c) Aaa 1,740,000 1,816,125
Allegheny County San. Auth. Swr. Rev.:
Series B, 7.50% 12/1/16, (FGIC Insured) Aaa 750,000 826,875
0% 12/1/12, (FGIC Insured) Aaa 2,260,000 689,300
Beaver County Ind. Dev. Auth. Poll. Cont. Rev.
(Toledo Edison Co.) (Beaver Valley)
Series A, 13.25% 11/15/14 Ba3 1,000,000 1,046,250
Beaver County Ind. Dev. Auth. Rev. Rfdg.
(Washington Plaza Assoc. Proj.)
6% 2/15/07 Ba3 1,650,000 1,485,000
Berks County 2nd Series:
0% 5/15/11, (FGIC Insured) Aaa 3,310,000 1,137,813
0% 5/15/12, (FGIC Insured) Aaa 3,395,000 1,094,888
Bucks County Wtr. & Swr. Auth. Rev.
(Neshaminy Interceptor Swr. Sys.)
Series A, 0% 12/ 1/14, (FGIC Insured) Aaa 4,400,000 1,171,500
Butler County Ind. Dev. Auth. 1st Mtg. Rev.
Rfdg. (Sherwood Oaks Proj.)
(Lifetime Care Commty.)
Series A, 8.75% 6/1/16 A- 675,000 738,281
Chartiers Valley Ind. & Commercial Dev.
Auth. 1st Mtg. Rev. Rfdg.
(United Methodist Health Ctr.)
Series 1988 A, 9.50% 12/1/15 - 3,500,000 3,657,500
Clarion County Hosp. Auth. Hosp. Rev.:
(Clarion Hosp. Proj.):
Rfdg. 8.10% 7/1/12 BBB- 6,000,000 6,345,000
8.50% 7/1/13 BBB- 2,945,000 3,213,731
8.50% 7/1/21 BBB- 1,665,000 1,814,850
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(B) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Clearfield County Ind. Dev. Auth. Rev. Rfdg.
(Washington Plaza Assoc. Proj.)
7% 10/1/06 Ba2 $ 1,770,000 $ 1,741,238
Dauphin County Ind. Dev. Auth.Wtr. Dev. Rev.
(Dauphin Consolidated Wtr. Supply)
Series A, 6.90% 6/01/24 (c) A3 1,000,000 1,033,750
Delaware County Auth. Hosp. Rev.
(Crozer-Chester):
6% 12/15/09 Baa1 1,000,000 931,250
6% 12/15/20 Baa1 1,000,000 900,000
Delaware County Auth. Rev.
(First Mtg. Riddle Village Proj.):
Series 1992, 8.75% 6/1/10 - 2,870,000 3,035,025
7% 6/1/00 - 1,200,000 1,198,500
8.25% 6/1/22 - 2,800,000 2,800,000
9.25% 6/1/22 - 1,800,000 1,948,500
Delaware County Ind. Dev. Auth. Rev. Rfdg.
(Resource Recovery Proj.) Series A,
8.10% 12/1/13, LOC Swiss Bank Aa3 1,400,000 1,499,750
Doylestown Hosp. Auth. Hosp. Rev.
(Doylestown Pinerun Retirement Commty.)
7.20% 7/1/23 - 3,200,000 3,052,000
Erie County Hosp. Auth. Rev. Rfdg.
(Hamot Health Sys., Inc.) 7.10% 2/15/10,
(AMBAC Insured) Aaa 1,000,000 1,077,500
Erie County Ind. Dev. Auth. Rev. Rfdg.
(Beverly Enterprises Proj.) 6.875%
10/1/02 - 550,000 550,000
Harrisburg Auth. Lease Rev. 6.25%
6/1/10, (Cap. Guaranty Insured) Aaa 1,000,000 1,045,000
Harrisburg Auth. Wtr. Rev.
(Complimentary Auction Rate B-3)
8.42% 7/15/15, (FGIC Insured) (e) Aaa 3,000,000 2,688,750
Jenks Township Muni. Auth. Rev.
(Abraxas Group, Inc.) 8% 4/1/18 - 6,605,000 6,307,775
Keystone Oaks School Dist. Series D,
8.38% 9/01/16, (AMBAC Insured) (e) Aaa 2,950,000 2,618,125
Lancaster County Unltd. Tax Gen. Oblig.
(Cap. Appreciation) 0% 7/1/06,
(FGIC Insured) Aaa 2,645,000 1,296,050
Lancaster Ind. Dev. Auth. 1st Mtg. Rev.
(Lancaster Nursing Ctr.) Series A,
8.75% 12/1/12 (f) - 1,405,000 1,406,756
Lehigh County Gen. Purp. Auth. Rev.:
(Hosp. Healtheast, Inc.) Series B, 9%
7/1/15 A1 1,000,000 1,133,750
(St. Luke's Hosp. Bethlehem Proj.) 3%
11/15/94, (AMBAC Insured) Aaa 1,380,000 1,378,275
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(B) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Lehigh County Gen. Purp. Auth. Rev. - continued
(Wiley House):
8.75% 11/1/14 - $ 4,000,000 $ 4,095,000
9.50% 11/1/16 - 3,000,000 3,210,000
McCandless Kroger Ind. Dev. Auth. Rev.
(Kroger Co.) 7.375% 10/15/07 Ba2 2,160,000 2,195,100
McKeesport Area School Dist. Rfdg.
Series C, 5% 4/1/13 A 1,000,000 861,250
Mechanicsburg Area School Dist. Unltd. Tax
0% 9/1/04, (FGIC Insured) Aaa 910,000 505,050
Montgomery County Health Facs. Ind. Dev.
Auth. (Rev. Bonds 1993) 6.85% 6/1/13 - 2,165,000 2,086,519
Montgomery County Higher Ed. & Health
Auth. Hosp. Rev. (United Hosp. Inc.):
(St. Christopher) 8.50% 11/1/17 Ba1 1,000,000 1,040,000
(United Hosp. Proj.) Series A:
10% 11/1/05 Ba1 675,000 702,844
8.375% 11/1/11 Ba1 3,140,000 3,285,225
Northumberland County Auth. Commonwealth
Lease Rev. 0% 10/15/10,
(MBIA Insured) Aaa 1,000,000 366,250
Pennsylvania Convention Ctr. Auth. Rev.:
Rfdg. Series A:
6.60% 9/1/09 Ba 4,150,000 4,098,125
6.70% 9/1/14 Ba 3,965,000 3,880,744
6.75% 9/1/19 Ba 2,950,000 2,883,625
Series A:
6.70% 9/1/16, (FGIC Insured) Aaa 3,000,000 3,150,000
6% 9/1/19, (FGIC Insured) Aaa 9,225,000 8,902,125
Pennsylvania Higher Ed. Assistance Agcy.
Student Loan Rev. RIB (c) (e):
9.019% 3/1/22 (AMBAC Insured) Aaa 2,000,000 1,765,000
10.291% 9/03/26 (AMBAC Insured) Aaa 1,000,000 1,045,000
Pennsylvania Higher Edl. Facs. Auth.
College & Univ. Rev. (College Optometry)
9% 2/1/08 - 1,240,000 1,288,050
Pennsylvania Higher Edl. Facs. Auth. Rev.
(Pennsylvania Med. College Proj.)
Series A, 8.375% 3/1/11 Baa1 900,000 981,000
Pennsylvania Hsg. Fin. Agcy. Muni.
Forwards Rfdg. (Multi-Family Section 8)
Series C, 8.10% 7/1/13,
(FHA Guaranteed) Aa 2,000,000 2,247,500
Pennsylvania Hsg. Fin. Agcy. Rfdg.
(Residential Dev.) Section 8,
Series A, 7.60% 7/1/13 A1 1,000,000 1,067,500
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(B) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Hsg. Fin. Agcy. Single Family
Mtg. Rev.:
Series V, 7.80% 4/1/16 Aa $ 500,000 $ 527,500
Series X, 8.15% 4/1/24(c) Aa 2,925,000 3,126,094
Series 1990-27, 8.15% 10/1/21 (c) Aa 990,000 1,065,488
Series 28, 7.65% 10/1/23 (c) Aa 1,670,000 1,757,675
Pennsylvania Ind. Dev. Auth. Econ. Dev. Rev.
7% 7/1/07 (AMBAC Insured) Aaa 3,650,000 4,048,188
5.80% 1/1/08, (AMBAC Insured) Aaa 1,000,000 983,750
5.80% 7/1/09, (AMBAC Insured) Aaa 1,000,000 972,500
Pennsylvania Intergovernmental Coop.
Auth Spl. Tax Rev.:
Rfdg. Series A, 5% 6/15/15 Baa 7,500,000 6,375,000
(City of Philadelphia Funding Prog.):
9% 6/15/95 Baa 3,000,000 3,120,000
5.75% 6/15/15 Baa 15,000,000 13,931,250
Philadelphia Hosp. & Higher Ed. Facs. Auth. Rev.
(Graduate Health Sys.):
Series A, 6.25% 7/1/18 Baa1 4,400,000 3,965,500
Series B, 6.25% 7/1/13 Baa1 1,000,000 915,000
Philadelphia Ind. Dev. Auth. Rev.:
(Encore Nursing Ctr. Stenton Proj.)
7.50% 11/1/02 - 1,100,000 1,100,000
(Long Term Care, Maplewood)
8% 1/1/24 - 4,835,000 4,665,775
(Refrigerated Enterprises Proj.)
9.05% 12/1/19 (c) (d) - 7,000,000 7,157,500
Philadelphia Muni. Auth. Rev.:
(Muni. Svcs. Bldg. Lease):
0% 3/15/11, (Cap. Guaranty Insured) Aaa 1,000,000 342,500
0% 3/15/14, (Cap. Guaranty Insured) Aaa 7,360,000 2,042,400
Philadelphia Muni Auth. Rev. Lease Rev. Rfdg.
Series D, 6.25% 7/15/13 Ba 3,000,000 2,808,750
Philadelphia Redev. Auth. Hsg. Rev.
Sub-Series 3, 8.125% 8/1/26,
(GNMA Coll.) AAA 45,000 50,906
Philadelphia School Dist. Series A, 5.75%
7/1/07, (MBIA Insured) Aaa 2,000,000 1,962,500
Philadelphia Wtr. & Swr. Rev.
(Cap. Appreciation) 14th Series:
0% 10/1/05, (MBIA Insured) Aaa 3,300,000 1,740,750
0% 10/1/08, (MBIA Insured) Aaa 5,300,000 2,212,750
Philadelphia Wtr. & Wastewtr Rev.:
Rfdg:
Series 1993, 5.50% 6/15/07 Baa 7,000,000 6,545,000
5% 6/15/12, (FGIC Insured) Aaa 1,845,000 1,605,150
7.57% 6/15/12, (FGIC Insured) (e) Aaa 3,000,000 2,565,000
5.75% 6/15/13 Baa 2,000,000 1,807,500
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(B) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pittsburgh Gen. Oblig. Series A, 5.50%
9/1/14, (AMBAC Insured) Aaa $ 5,310,000 $ 4,905,113
Pittsburgh School Dist.:
Series B, 0% 8/1/07, (AMBAC Insured) Aaa 2,610,000 1,184,288
Series B, 0% 8/1/08, (AMBAC Insured) Aaa 2,000,000 847,500
Pittsburgh Urban Redev. Auth. Mtg. Rev.
Series A, 7.625% 10/1/17 A1 995,000 1,029,825
Pittsburgh Wtr. & Swr. Auth. Wtr. & Swr.
Sys. Rev. Rfdg. Series A:
6.50% 9/1/13 (FGIC Insured) Aaa 7,705,000 7,993,938
4.75% 9/1/16 (FGIC Insured) Aaa 3,000,000 2,445,000
Pottstown Borough Auth. Swr. Rev.:
0% 11/1/10, (FGIC Insured) Aaa 1,600,000 568,000
0% 11/01/14 (FGIC) insured Aaa 1,760,000 470,800
Schuylkill County Ind. Dev. Auth. Rev.
1st Mtg. (Valley Health Concerns)
Series A, 8.75% 3/1/12 - 1,500,000 1,522,500
Scranton Parking Auth. Parking Rev.
8.125% 9/15/14,
LOC Northeastern Bank A+ 500,000 548,750
Stroud Township Swr. Auth. Swr. Rev.:
0% 11/15/06, (Cap. Guaranty Insured) Aaa 510,000 246,713
0% 11/15/07, (Cap. Guaranty Insured) Aaa 510,000 229,500
0% 11/15/08, (Cap. Guaranty Insured) Aaa 510,000 212,925
0% 11/15/09, (Cap. Guaranty Insured) Aaa 510,000 193,800
Upper Gwyned Towamencin Muni. Auth.
Swr. Rev.:
0% 4/15/11, (MBIA Insured) Aaa 500,000 171,250
0% 10/15/11, (MBIA Insured) Aaa 490,000 162,313
Warren County Ind. Dev. Auth. Specialized
Dev. Rev. Rfdg. (Beverly Enterprise):
8.75% 11/1/06 - 125,000 139,688
9%, 11/1/12 - 535,000 605,888
Washington County Ind. Dev. Auth. Ind. Dev.
Rev. Rfdg. (Kroger Co.) 7.50% 5/1/99 Ba2 1,000,000 1,042,500
Westmoreland County Ind. Dev. Auth. Rev.
Rfdg. (Commonwealth Dev. 1st Mtg.)
(K mart Corp.) Series A, 6.80% 5/1/07 A 765,000 769,781
Westmoreland County Ind. Dev. Rev. Rfdg.
(Kroger Co.) 7.25% 9/01/99 Ba2 1,000,000 1,035,000
Westmoreland County Muni. Auth. Svc. Rev.
Series K, 0% 7/1/13, (FGIC Insured) Aaa 3,500,000 1,006,250
Westmoreland County Rfdg. Series G,
0% 12/1/09, (FGIC Insured) Aaa 2,490,000 958,650
Wilkins Area Ind. Dev. Auth. Rev.
(1st Mtg.) (Fairview Extended Care)
Series A, 10.25% 1/1/21 - 2,500,000 2,671,875
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(B) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Wilson Area School Dist. (Cap. Appreciation):
0% 5/15/09, (AMBAC Insured) Aaa $ 3,275,000 $ 1,285,438
0% 5/15/10, (AMBAC Insured) Aaa 3,280,000 1,201,300
0% 5/15/11, (AMBAC Insured) Aaa 3,500,000 1,203,125
Wyoming Ind. Dev. Auth. Poll. Cont. Rfdg.
(Proctor & Gamble Paper Proj.)
5.55% 5/1/10 Aa2 5,000,000 4,643,750
York City Swr. Auth. Swr. Rev. 0% 12/1/12,
(MBIA Insured) Aaa 3,235,000 986,668
243,698,794
PUERTO RICO - 6.9%
Puerto Rico Commonwealth Gen. Oblig.
Rfdg. Unltd. Tax 5% 7/1/21 Baa1 5,000,000 4,106,250
Puerto Rico Commonwealth Hwy. & Trans.
Auth. Rev. Series W:
5.50% 7/1/13 Baa1 9,000,000 8,167,500
5.50% 7/1/15 Baa1 2,500,000 2,243,750
Puerto Rico Commonwealth Urban Renewal &
Hsg. Corp. Rfdg. 7.875% 10/1/04 Baa1 1,000,000 1,110,000
Puerto Rico Elec. Pwr. Auth. Pwr. Rev.
Series O, 7.125% 7/1/14 Baa1 1,000,000 1,053,750
Puerto Rico Infrastructure Fing. Auth. Spl.
Tax Series 1988 A, 7.75% 7/1/08 Baa1 1,000,000 1,082,500
Puerto Rico Tel. Auth. Rev. 6.72% 1/1/04,
(AMBAC Insured) (e) Aaa 1,000,000 871,250
18,635,000
GUAM - 0.3%
Guam Pwr. Auth. Rev. Series A,
5.25% 10/1/13 BBB 1,000,000 856,250
TOTAL MUNICIPAL BONDS
(Cost $265,186,893) 263,190,044
MUNICIPAL NOTES (A) - 2.4%
MOODY'S PRINCIPAL VALUE
RATINGS(B) AMOUNT (NOTE 1)
PENNSYLVANIA - 2.4%
Pennsylvania Higher Ed. Assistance
Agcy. Student Loan Rev., 2.35%,
LOC Union Bank of Switzerland,
VRDN (c) VMIG 1 $ 4,800,000 $ 4,800,000
Schuylkill County Ind. Dev. Auth. Resources
Recovery Rev. (Westwood Energy Prop.)
Series 1985, 3%, LOC Fuji Bank,
VRDN P-1 1,800,000 1,800,000
TOTAL MUNICIPAL NOTES
(Cost $6,600,000) 6,600,000
TOTAL INVESTMENTS - 100%
(Cost $271,786,893) $ 269,790,044
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
190 U.S. Treasury Bond Future Contracts Sept. 94 $ 19,231,563 $ 262,990
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 7.1%
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) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(d) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $7,157,500 or 2.6% of net
assets.
(e) Coupon is inversely indexed to a floating interest rate. The price will
be more volatile than the price of a comparable fixed rate security. The
rate shown is the rate at period end.
(f) A portion of the Security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $1,106,381.
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 36.5% AAA, AA, A 50.9%
Baa 22.4% BBB 12.8%
Ba 10.1% BB 5.1%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 21.5%. FMR
has determined that unrated debt securities that are lower quality account
for 20.0% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 20.3%
General Obligation 15.6
Water & Sewer 13.2
Others (individually less than 10%) 50.9
TOTAL 100.0%
INCOME TAX INFORMATION
At June 30, 1994, the aggregate cost of investment securities for income
tax purposes was $271,786,893. Net unrealized depreciation aggregated
$1,996,849, of which $7,899,995 related to appreciated investment
securities and $9,896,844 related to depreciated investment securities.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1994 (UNAUDITED)
1.ASSETS 2. 3.
4.Investment in securities, at value (cost $271,786,893) 5. $ 269,790,044
(Notes 1 and 2) - See accompanying schedule
6.Cash 7. 74,582
8.Interest receivable 9. 3,940,942
10.Receivable for daily variation on futures contracts 11. 249,375
12. 13.TOTAL ASSETS 14. 274,054,943
15.LIABILITIES 16. 17.
18.Payable for investments purchased $ 984,286 19.
20.Dividends payable 325,446 21.
22.Accrued management fee 124,375 23.
24. 25.TOTAL LIABILITIES 26. 1,434,107
27.28.NET ASSETS 29. $ 272,620,836
30.Net Assets consist of: 31. 32.
33.Paid in capital 34. $ 270,843,870
35.Accumulated undistributed net realized gain (loss) on 36. 3,510,825
investments
37.Net unrealized appreciation (depreciation) on 38. (1,733,859)
investments
39.40.NET ASSETS, for 26,587,547 shares outstanding 41. $ 272,620,836
42.43.NET ASSET VALUE, offering price and redemption 44. $10.25
price per share ($272,620,836 (divided by) 26,587,547 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1994 (UNAUDITED)
45.46.INTEREST INCOME 47. $ 9,435,250
48.EXPENSES 49. 50.
51.Management fee (Note 4) $ 774,815 52.
53.Non-interested trustees' fees 881 54.
55. 56.TOTAL EXPENSES 57. 775,696
58.59.NET INTEREST INCOME 60. 8,659,554
61.REALIZED AND UNREALIZED GAIN (LOSS) ON 63. 64.
INVESTMENTS
(NOTES 1 AND 3)
62.Net realized gain (loss) on:
65. Investment securities 4,993,554 66.
67. Futures contracts 725,663 5,719,217
68.Change in net unrealized appreciation (depreciation) 69. 70.
on:
71. Investment securities (26,803,376) 72.
73. Futures contracts 262,990 (26,540,386)
74.75.NET GAIN (LOSS) 76. (20,821,169)
77.78.NET INCREASE (DECREASE) IN NET ASSETS 79. $ (12,161,615)
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1994 DECEMBER 31,
(UNAUDITED) 1993
80.INCREASE (DECREASE) IN NET ASSETS
81.Operations $ 8,659,554 $ 17,372,893
Net interest income
82. Net realized gain (loss) 5,719,217 8,063,006
83. Change in net unrealized appreciation (depreciation) (26,540,386) 8,951,844
84. 85.NET INCREASE (DECREASE) IN NET ASSETS (12,161,615) 34,387,743
RESULTING FROM OPERATIONS
86.Distributions to shareholders: (8,659,554) (17,372,893)
From net interest income
87. From net realized gain (3,039,485) (3,786,608)
88. 89.TOTAL DISTRIBUTIONS (11,699,039) (21,159,501)
90.Share transactions 28,498,585 84,285,725
Net proceeds from sales of shares
91. Reinvestment of distributions 9,036,229 16,674,835
92. Cost of shares redeemed (47,314,438) (50,344,647)
93. Redemption fees (Notes 1 and 3) 15,350 26,131
94. Net increase (decrease) in net assets resulting (9,764,274) 50,642,044
from
share transactions
95. 96.TOTAL INCREASE (DECREASE) IN NET ASSETS (33,624,928) 63,870,286
97.NET ASSETS 98. 99.
100. Beginning of period 306,245,764 242,375,478
101. End of period $ 272,620,836 $ 306,245,764
102.OTHER INFORMATION 104. 105.
103.Shares
106. Sold 2,689,356 7,686,940
107. Issued in reinvestment of distributions 848,056 1,511,871
108. Redeemed (4,469,410) (4,571,521)
109. Net increase (decrease) (931,998) 4,627,290
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
110. SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED
JUNE 30, 199
4
111. (UNAUDITED) 1993 1992 1991 1990 1989
112.SELECTED PER-SHARE DATA
113.Net asset val $ 11.130 $ 10.590 $ 10.370 $ 9.880 $ 9.900 $ 9.660
ue,
beginning of
period
114.Income from .322 .679 .693 .701 .701 .676
Investment
Operations
Net interest
income
115. Net realized (.771) .679 .219 .489 (.020) .240
and
unrealized gain
(loss)
116. Total from (.449) 1.358 .912 1.190 .681 .916
investment
operations
117.Less Distributi (.322) (.679) (.693) (.701) (.701) (.676)
ons
From net interest
income
118. From net re (.110) (.140) - - - -
alized
gain on
investments
119. Total (.432) (.819) (.693) (.701) (.701) (.676)
distributions
120.Redemption f .001 .001 .001 .001 - -
ees
added to paid in
capital
121.Net asset val $ 10.250 $ 11.130 $ 10.590 $ 10.370 $ 9.880 $ 9.900
ue,
end of period
122.TOTAL RETURN -4.10% 13.18 9.11 12.49 7.20 9.80
B % % % % %
123.RATIOS AND SUPPLEMENTAL
DATA
124.Net assets, e $ 272,621 $ 306,246 $ 242,375 $ 199,499 $ 142,906 $ 104,202
nd of
period (000
omitted)
125.Ratio of expe .55% .55 .55 .55 .60 .78
nses to A % % % % %
average net
assets
126.Ratio of expe .55% .55 .55 .55 .66 .82
nses to A % % % % %
average net asse
ts
before expense
reductions
127.Ratio of net in 6.14% 6.13 6.65 6.96 7.22 6.90
terest A % % % % %
income to averag
e
net assets
128.Portfolio turno 39% 38 8 6 8 23
ver A % % % % %
rate
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
SPARTAN PENNSYLVANIA MUNICIPAL 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, 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 would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1994 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Spartan Pennsylvania
Municipal Money Market 1.09% 2.21% 21.42% 39.40%
Consumer Price Index 1.51% 2.49% 19.26% 35.16%
Average All Tax-Free
Money Market Fund 0.99% 1.99% 19.30% n/a
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, six months, one year, five years or since the fund started on
August 6, 1986. For example, if you invested $1,000 in a fund that had a 5%
return over the past year, you would have $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 all tax-free
money market fund's total return. This average currently reflects the
performance of 357 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 JUNE 30, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Pennsylvania
Municipal Money Market 2.21% 3.96% 4.29%
Consumer Price Index 2.49% 3.59% 3.88%
Average All Tax-Free
Money Market Fund 1.99% 3.59% 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 achieved that return
by performing at a constant rate each year.
YIELDS
6/30/93 9/30/93 12/31/94 03/31/94 6/30/94
Spartan Pennsylvania 2.01% 2.52% 2.49% 2.00% 2.39%
Municipal Money Market
Average All Tax-Free 1.83% 2.20% 2.16% 1.77% 2.27%
Money Market Fund
Spartan Pennsylvania 3.23% 4.05% 4.00% 3.21% 3.84%
Municipal Money Market -
Tax-equivalent
Average All Taxable 2.63% 2.65% 2.27% 2.93% 3.64%
Money Market Fund
Row: 1, Col: 1, Value: 2.01
Row: 1, Col: 2, Value: 1.83
Row: 2, Col: 1, Value: 2.52
Row: 2, Col: 2, Value: 2.2
Row: 3, Col: 1, Value: 2.49
Row: 3, Col: 2, Value: 2.16
Row: 4, Col: 1, Value: 2.0
Row: 4, Col: 2, Value: 1.77
Row: 5, Col: 1, Value: 2.39
Row: 5, Col: 2, Value: 2.27
Spartan
Pennsylvania
Municipal Money
Market
Average All Tax-Fre
e
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. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the average all tax-free money market fund. Or you
can look at the fund's tax-equivalent yield, which is based on a combined
effective 1994 federal and Pennsylvania state income tax rate of 37.79%.
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 WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Deborah Watson,
Portfolio Manager of Spartan
Pennsylvania Municipal Money Market Portfolio
Q. DEBORAH, THERE HAS BEEN A GOOD DEAL OF ACTIVITY IN THE MONEY MARKETS
DURING THE PAST SIX MONTHS. CAN YOU TALK ABOUT WHAT HAS HAPPENED?
A. There has been a dramatic shift in the Federal Reserve's monetary policy
during this period. Between February and May, the Fed boosted the federal
funds rate four times, from 3% to 4.25%. The Fed's actions signaled a
determination to restrain inflation before it became a problem.
Q. HOW DID YOU RESPOND TO THE CHANGES IN THE MARKET?
A. While the timing of the Fed's rate increase surprised me, I had been
preparing the fund for an increase in rates for several months. The fund's
average maturity was 52 days at the end of December, but I let it roll down
gradually early this year. The fund's average maturity also fell because of
supply and demand factors in the municipal market. As the maturities on
fixed-rate notes already in the fund declined, there were not a lot of
long-term notes around to replace them. Also, beginning in June, local
governments come to market to issue their annual cash management notes, and
there will be good opportunities to extend the fund's maturity when that
occurs.
Q. DID YOU EXTEND THE FUND'S MATURITY IN JUNE?
A. Yes. As I expected, there was a plentiful supply of new issues, which
drove prices down and yields up on longer-term money market securities. I
increased the fund's average maturity from 17 days on May 31 to 24 days on
June 30 by purchasing new one-year notes.
Q. HOW DID THE FUND PERFORM DURING THE PERIOD?
A. On June 30, 1994, the fund's seven-day yield was 2.39%, compared to
2.49% six months ago. The latest yield is the equivalent of a 3.84% yield
for Pennsylvania investors in the 37.79% income tax bracket. The fund's
total return for the six months ended June 30 was 1.09%. That beat the .99%
average total return for all tax-free money market funds, according to
IBC/Donoghue.
Q. WHAT'S AHEAD FOR THE FUND?
A. I think the Federal Reserve believes inflation is under control for now.
My sense is, however, that we may see another increase late this summer. At
the same time, I expect that there will be a good supply of new securities
from Pennsylvania issuers during the next month or two, which will tend to
boost yields. This should provide some attractive opportunities to buy
longer-term securities. Accordingly, I may be willing to extend the average
maturity in spots, as conditions warrant.
FUND FACTS
GOAL: tax-free income and
stability by investing in
high-quality,
short-term Pennsylvania
municipal securities
START DATE: August 6, 1986
SIZE: as of June 30, 1994,
more than $225 million
MANAGER: Deborah Watson,
since 1989; manager, Spartan
Florida Municipal Money
Market Portfolio, since 1992;
Spartan California Municipal
Money Market Portfolios, since
1989; Fidelity California
Tax-Free Money Market Fund,
since 1988; joined Fidelity in
1982
(checkmark)
MONEY MARKETS AND
DERIVATIVES:
The word "derivatives" covers
a wide range of financial
agreements, of varying
degrees of complexity, that
have market values based on
security or market indices.
Among other things,
"derivative" securities in
Fidelity's money market funds
are designed to have the price
characteristics of typical
money market securities.
During the recent Federal
Reserve Board interest rate
increases, all Fidelity money
market holdings performed as
designed and the funds
maintained a stable share
price of $1.00.
The more complex of these
instruments, such as floating
rate notes with unusual and
complex floating rate
formulas, frequently have too
much price volatility to be
appropriate investments for
money market funds. Many of
them do not offer the degree
of price stability Fidelity
believes is required in order
for its funds to maintain a
stable $1.00 share price.
Therefore, despite their
frequent higher yields at the
time they are sold, Fidelity
money market funds have not
purchased these volatile
securities. While this may
sometimes have caused
Fidelity money market funds
to have lower gross yields
than certain other funds,
Fidelity believes its investors
value prudence as well as
performance.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
6/30/94 12/31/93 6/30/93
0 - 30 88 66 79
31 - 90 7 9 3
91 - 180 3 14 3
181 - 397 2 11 15
WEIGHTED AVERAGE MATURITY
6/30/94 12/31/93 6/30/93
Spartan Pennsylvania
Municipal Money Market 24 days 52 days 61days
Average All Tax-Free
Money Market Fund* 46 days 62 days 55 days
ASSET ALLOCATION
AS OF JUNE 30, 1994 AS OF DECEMBER 31, 1993
Row: 1, Col: 1, Value: 50.0
Row: 1, Col: 2, Value: 27.0
Row: 1, Col: 3, Value: 13.0
Row: 1, Col: 4, Value: 3.0
Row: 1, Col: 5, Value: 7.0
Row: 1, Col: 6, Value: 2.0
Row: 1, Col: 1, Value: 62.0
Row: 1, Col: 2, Value: 12.0
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 15.0
Row: 1, Col: 5, Value: 2.0
Variable rate
demand notes
(VRDNs) 77%
Commercial
paper 13%
Tender bonds 2%
Municipal
notes 7%
Other 1%
Variable rate
demand notes
(VRDNs) 62%
Commercial
paper 12%
Tender bonds 10%
Municipal
notes 15%
Other 1%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENTS JUNE 30, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - 100.0%
Allegheny County Hosp. Dev. Auth. Health Ctr. Rev.
(Presbyterian Univ. Health Sys.) VRDN:
Series 1990 A, 2.35%, LOC Cr. Suisse Bank,
(MBIA Insured) $ 1,600,000 $ 1,600,000
Series 1990 C, 2.35%, (MBIA Insured) 2,400,000 2,400,000
Series 1990 D, 2.35%, (MBIA Insured)
BPA Credit Suisse 800,000 800,000
Allegheny County Hosp. Dev. Auth. Rev.
(St. Margaret Mem. Hosp.) Series 1992 A,2.70%,
LOC Mellon Bank, VRDN 9,700,000 9,700,000
Allegheny County Ind. Dev. Auth. Commercial Dev. Rev.
Rfdg. (Parkway Center Mall Proj.) Series 1994 A, 2.70%,
LOC Mellon Bank, VRDN 1,900,000 1,900,000
Allegheny County Port. Auth. RAN 2.90% 8/1/94,
LOC Pittsburgh Nat'l. Bank 5,000,000 5,000,000
Bucks County Ind. Dev. Auth. (Associates Proj.)
Series 1993, 3%, LOC Meridian Bank, VRDN (b) 1,715,000 1,715,000
Berks County Ind. Dev. Auth. Mfg. Facs. Rev.
(The Bachman Co. Proj.) Series 1994, 3%,
LOC Meridian Bank, VRDN (b) 1,250,000 1,250,000
Cambria County Ind. Dev. Auth. Resource Recovery Rev.
(Cambria Cogen. Co. Proj.) Series 1989 V-1, 2.40%,
LOC Fuji Bank, VRDN (b) 1,500,000 1,500,000
Carbon County Ind. Dev. Auth. Resource Recovery Rev. Bonds,
(Panther Creek Ptnrs. Proj.) (b):
Series 1990 A, 2.95% tender 7/22/94,
LOC Nat'l. Westminster 2,800,000 2,800,000
Series 1991 A:
2.35% tender 7/8/94, LOC Nat'l. Westminster 2,000,000 2,000,000
2.80% tender 8/23/94, LOC Nat'l. Westminster 3,200,000 3,200,000
Carbon County Ind. Dev. Auth. Solid Waste Disposal
(Horsehead Resource Dev. Co.) RAN 3% 12/1/94,
LOC Chemical Bank (b) (d) 4,800,000 4,800,000
Coatesville School Dist. TRAN 3.85% 6/30/95 5,000,000 5,003,800
Dauphin County Gen. Auth. Hosp. Rev.
(Reading Hosp. & Med. Ctr.
Series 1994 A, 2.55%, VRDN 7,000,000 7,000,000
Delaware County Ind. Dev. Auth. Arpt. Facs. Rev.
(United Parcel Svc.) Series 1985, 3.10%, VRDN 4,600,000 4,600,000
Delaware Valley Reg'l. Fin. Auth. Local Gov't. Rev., VRDN:
Series 1985 A, 2.35%, LOC Marine Midland Bank 1,700,000 1,700,000
Series 1986 A, 2.35%, LOC Marine Midland Bank 7,350,000 7,350,000
Doylestown Hosp. Auth. Participating VRDN,
Series BT-63, 2.55%, (AMBAC Insured)
(Liquidity Facility ADP) (c) 10,098,000 10,098,000
Emmaus Gen. Auth. Local Govt. Rev. (Bond Pool Prog.)
Series 1989 C-6, 2.35%, LOC Marine Midland Bank,
Hong Kong & Shanghai Banking, VRDN 1,300,000 1,300,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Erie County Ind. Dev. Auth. Rev. (Carlisle Corp. Proj.)
Series 1993, 2.60%, LOC Trust Company of Georgia,
VRDN (b) $ 1,000,000 $ 1,000,000
Hazelton Area Ind. Dev. Auth. Energy Dev. Rev.
(Continental Energy Assoc. Proj.) Series 1986, 3.30%,
LOC Swiss Bank Corp., VRDN (b) 13,100,000 13,100,000
Lehigh County Ind. Dev. Auth. Poll. Cont. Rev.
(Allegheny Elec. Coop., Inc. Proj.), VRDN:
Series 1984 A, 2.75%, LOC Rabobank Nederland 600,000 600,000
Series 1984 B, 2.75%, LOC Rabobank Nederland 1,080,000 1,080,000
Lehigh County Swr. Rev. Series 1985 B, 2.20%,
(FGIC Insured) BPA Algemene Bank, VRDN 2,150,000 2,150,000
Mercer County Ind. Dev. Auth. Dev. Rev.
(Penntecq Inc. Proj.) Series 1990, 2.50%,
LOC Dai-Ichi Kangyo Bank, VRDN (b) 4,000,000 4,000,000
Montgomery County Higher Ed. & Health
(Pottstown Healthcare Corp. Proj.) Series 1992, 3%,
LOC Meridian Bank, VRDN 200,000 200,000
Montgomery County Ind. Dev. Auth. Rev., VRDN (b):
(RJI Limited Partnership Proj.) Series 1992, 3%,
LOC Meridian Bank 1,970,000 1,970,000
(Sirius Dev. Assoc. Proj.) 2.80%,
LOC Provident Nat'l. Bank 1,500,000 1,500,000
North Lebanon Township (Grace Commty. Inc. Proj.)
Series 1992 B, 3%, LOC Meridian Bank, VRDN 3,755,000 3,755,000
Northampton County Ind. Dev. Auth. Rev. Bonds
(Citizens Utilities Co. Proj.) Series 1991, 3.35%
tender 7/25/94 2,950,000 2,950,000
Northampton County Ind. Dev. Auth. Rev.
(Victoria Vogue Proj.), 3%, LOC Meridian Bank NA,
VRDN (b) 1,455,000 1,455,000
Northumberland County Ind. Dev. Auth Rev.
(Foster Wheeler Carmel Proj.) 2.75%,
LOC Union Bank of Switzerland, VRDN 15,050,000 15,050,000
Northumberland County Ind. Dev. Resource Recovery
(Foster Wheeler Mt. Carmel Inc.) Series 1987 B, 2.75%,
LOC Union Bank of Switzerland, VRDN (b) 2,340,000 2,340,000
Participating VRDN, Series 91A-16, 2.75%,
(FGIC & AMBAC Insured)
(Liquidity Facility Sakura Bank Ltd.) (c) 9,490,000 9,490,000
Pennsylvania Econ. Dev. Fin Auth., VRDN (b):
(Dodge-Regupol, Inc. Proj.) Series D-4, 2.80%,
LOC Pittsburgh Nat'l. Bank 2,000,000 2,000,000
(Henry Molded Prod. Inc.) Series 1992 A-4, 2.80%,
LOC Pittsburgh Nat'l. Bank 1,000,000 1,000,000
(Payne Printery Proj.) Series 1989 B-8, 2.80%,
LOC Pittsburgh Nat'l. Bank, 375,000 375,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Econ. Dev. Fin Auth., VRDN (b) - continued
(Port Erie Plastics Proj.) Series 1989 D-9, 2.80%,
LOC Pittsburgh Nat'l. Bank $ 1,110,000 $ 1,110,000
(Respironics Inc. Proj.), 2.80%,
LOC Pittsburgh Nat'l. Bank 900,000 900,000
(Suntory Water Group Proj.) Series 1992 D, 2.55%
8/1/12, LOC Wachovia Bank & Trust 4,900,000 4,900,000
(The Babcock & Wilcox Co. Proj.) Series 1989 A-2,
2.80%, LOC Pittsburgh Nat'l. Bank 4,900,000 4,900,000
Pennsylvania Econ. Dev. Fin. Auth. Econ. Dev. Rev.
(Lutheran Youth & Family Serv.) Series 1993 A, 2.65%,
LOC PNC Bank, VRDN 700,000 700,000
Pennsylvania Econ. Dev. Fin. Auth. Solid Waste Disposal
Rev. Bonds (Inter-Pwr./Ahlcon Prtn. Proj.) (b):
Series 1992 A:
3% tender 7/21/94, LOC Banque Paribas 3,000,000 3,000,000
3% tender 7/28/94, LOC Banque Paribas 3,000,000 3,000,000
Pennsylvania Energy Dev. Auth. Rev.
(Continental Energy Assoc. Proj.) Series 1986, 3.15%,
LOC Swiss Bank, VRDN 3,500,000 3,500,000
Pennsylvania Gen. Oblig. (c):
Participating VRDN, Series A-38, 2.75%,
(AMBAC Insured) (Liquidity Facility Sakura
Bank Ltd.) 4,330,000 4,330,000
Tender Option Ctfs.:
Series AA, 2.40%, (Liquidity Facility Landesbank
Hessen-Thuringen) 6,000,000 6,000,000
Series BT-84, 3.15% tender 8/15/94, (AMBAC Insured)
(Liquidity Facility Bankers Trust Co.) 4,125,000 4,125,000
Pennsylvania Higher Ed. Assistance Agcy. Student Loan Rev.,
VRDN (b):
Series 1988 A, 2.60%, LOC Fuji Bank 12,100,000 12,100,000
2.35%, LOC Union Bank of Switzerland 4,000,000 4,000,000
Pennsylvania Higher Ed. Fac. Auth.
Participating VRDN, Series A94, 2.40%
(Liquidity Facility Morgan Guaranty) (c) 4,750,000 4,750,000
Philadelphia Hosp. & Higher Ed. Auth.
(Frankford Hospital) Series 1993 B, 2.55%,
LOC Mellon Bank NA, VRDN 4,400,000 4,400,000
Philadelphia Hosp. & Higher Ed. Facs. Auth.
(Methodist Hosp.) Series B, 2.25% 7/1/94,
LOC National Australia, VRDN 1,800,000 1,800,000
Philadelphia Ind. Dev. Auth. Commercial Dev. Rev.
(Airport Hotel Proj.) Series 1990, 2.75%
LOC Citibank, VRDN (b) 3,100,000 3,100,000
Philadelphia Ind. Dev. Auth. Multi-Family Hsg. Rev. Rfdg.
(Harbor View Towers Proj.) Series 1993, 2.65%,
LOC Sumitomo Bank, VRDN 1,000,000 1,000,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Philadelphia School Dist. :
Gen.Oblig Bonds Series B,
5.75% 7/1/94, (MBIA Insured) $ 2,165,000 $ 2,165,000
Tender Option Bonds, Series A 1993 MGMT-26B, 2.40%
(MBIA Insured) (Liquidity Facility Morgan Guaranty
Trust Co.), VRDN (c) 2,000,000 2,000,000
Schuylkill County Ind. Dev. Auth., VRDN:
(Interlock Realty Co.) 2.80%, LOC Star Bank (b) 800,000 800,000
(Westwood Energy Prop.) Series 1985, 3%,
LOC Fuji Bank 1,000,000 1,000,000
Venango Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Scrubgrass Proj.):
Series 1990 A:
3.05% tender 7/19/94, LOC Nat'l. Westminister (b) 4,700,000 4,700,000
3% tender 7/26/94, LOC Nat'l. Westminster (b) 3,050,000 3,050,000
3.30% tender 8/17/94, LOC Nat'l. Westminster (b) 3,000,000 3,000,000
Series 1990 B, 3.15% tender 10/21/94,
LOC Nat'l. Westminister (b) 2,550,000 2,550,000
Washington County Ind. Dev. Auth. Ind. Dev. Rev.
(Mac Plastics, Inc. Proj.) Series 1990, 2.85%,
LOC Nat'l. City Bank, VRDN (b) 690,000 690,000
TOTAL INVESTMENTS - 100% $ 227,301,800
Total Cost for Income Tax Purposes $ 227,301,800
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
FRDN - Floating Rate Demand Notes
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
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) Provide evidence of ownership in an underlying pool of municipal bonds.
(d) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
SECURITY:
Carbon County Ind. Dev. Auth. Solid
Waste Disposal (Horsehead Resource Dev. Co.) RAN 3% 12/1/94
ACQUISITION DATE: 2/1/94
ACQUISITION COST: $4,800,000
INCOME TAX INFORMATION
At December 31, 1993, the fund had a capital loss carryforward of
approximately $9,500 of which $4,600, and $4,900 will expire on December
31, 1997 and 1998, respectively.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1994 (UNAUDITED)
129.ASSETS 130. 131.
132.Investment in securities, at value (Note 1) - See 133. $ 227,301,800
accompanying schedule
134.Cash 135. 2,237,187
136.Interest receivable 137. 1,018,952
138. 139.TOTAL ASSETS 140. 230,557,939
141.LIABILITIES 142. 143.
144.Payable for investments purchased $ 5,003,800 145.
146.Dividends payable 15,876 147.
148.Accrued management fee 93,195 149.
150. 151.TOTAL LIABILITIES 152. 5,112,871
153.154.NET ASSETS 155. $ 225,445,068
156.Net Assets consist of: 157. 158.
159.Paid in capital 160. $ 225,473,653
161.Accumulated net realized gain (loss) on 162. (28,585)
investments
163.164.NET ASSETS, for 225,471,702 shares 165. $ 225,445,068
outstanding
166.167.NET ASSET VALUE, offering price and 168. $1.00
redemption price per share ($225,445,068 (divided by)
225,471,702 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1994 (UNAUDITED)
169.170.INTEREST INCOME 171. $ 3,098,797
172.EXPENSES 173. 174.
175.Management fee (Note 4) $ 573,333 176.
177.Non-interested trustees' compensation 703 178.
179. 180.TOTAL EXPENSES 181. 574,036
182.183.NET INTEREST INCOME 184. 2,524,761
185.REALIZED AND UNREALIZED GAIN (LOSS) (NOTE 1) 187. (19,033)
186.Net realized gain (loss)
188.189.NET INCREASE IN NET ASSETS RESULTING FROM 190. $ 2,505,728
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1994 DECEMBER 31,
(UNAUDITED) 1993
191.INCREASE (DECREASE) IN NET ASSETS
192.Operations $ 2,524,761 $ 4,800,169
Net interest income
193. Net realized gain (loss) (19,033) 2,251
194. Increase (decrease) in net unrealized gain from - (4,269)
accretion
of market discount
195. 2,505,728 4,798,151
196.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
197.Dividends to shareholders from net interest income (2,524,761) (4,800,169)
198.Share transactions at net asset value of $1.00 per 96,070,757 176,936,625
share
Proceeds from sales of shares
199. Reinvestment of dividends from net interest 2,385,201 4,536,853
income
200. Cost of shares redeemed (113,975,213) (183,823,236)
201. (15,519,255) (2,349,758)
Net increase (decrease) in net assets and shares
resulting from share transactions
202. (15,538,288) (2,351,776)
203.TOTAL INCREASE (DECREASE) IN NET ASSETS
204.NET ASSETS 205. 206.
207. Beginning of period 240,983,356 243,335,132
208. End of period $ 225,445,068 $ 240,983,356
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
209. SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED
JUNE 30, 199
4
210. (UNAUDITED) 1993 1992 1991 1990 1989
211.SELECTED PER-SHARE DATA
212.Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value, beginning
of period
213.Income from .011 .022 .029 .045 .059 .062
Investment
Operations
Net interest
income
214.Less (.011) (.022) (.029) (.045) (.059) (.062)
Distributions
From net
interest
income
215.Net asset $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
value, end of
period
216.TOTAL RETURN 1.10% 2.21 2.90 4.55 6.05 6.35
B % % % % %
217.RATIOS AND SUPPLEMENTAL DATA
218.Net assets, $ 225,445 $ 240,983 $ 243,335 $ 289,826 $ 319,982 $ 176,998
end of period
(000 omitted)
219.Ratio of .50% .50 .47 .34 .13 .28
expenses to A % % % % %
average net
assets
220.Ratio of .50% .50 .50 .50 .57 .73
expenses to A % % % % %
average net
assets before
expense
reductions
221.Ratio of net 2.20% 2.19 2.88 4.47 5.92 6.17
interest income A % % % % %
to average net
assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Pennsylvania Municipal High Yield Portfolio (the high yield fund)
is a fund of Fidelity Municipal Trust. Spartan Pennsylvania Municipal Money
Market Portfolio (the money market fund) is a fund of Fidelity Municipal
Trust II. Each trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company. Fidelity Municipal Trust and Fidelity Municipal Trust II (the
trusts) are organized as a Massachusetts and a Delaware business trust,
respectively. Each fund is authorized to issue an unlimited number of
shares. The following summarizes the significant accounting policies of the
money market fund and the high yield fund:
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.
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned 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, for the high yield fund, futures and
options transactions. The high yield fund also utilized earnings and
profits distributed to shareholders on redemption of shares as part of the
dividends paid deduction for income tax purposes.
REDEMPTION FEES. Shares held in the high yield fund less than 180 days are
subject to a redemption fee equal to .50% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FUTURES CONTRACTS 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.
RESTRICTED SECURITIES. The funds are permitted to invest in privately
placed restricted securities. These securities may be resold in
transactions exempt from registration or to the public if the securities
are registered. Disposal of these securities may involve time-consuming
negotiations and expense, and prompt sale at an acceptable price may be
difficult. At the end of the period, the money market fund held restricted
securities (excluding 144A issues) amounting to $4,800,000 or 2.1% of net
assets.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $ 53,183,391 and $61,839,064, respectively. The
market value of futures contracts opened and closed amounted to
$120,401,884 and $100,181,668, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each 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 expenses. FMR receives a fee that
is computed daily at an annual rate of .55% and .50% of average net assets
for the high yield and money market funds, respectively.
FMR also bears the cost of providing shareholder services to each fund. For
the period, FMR or its affiliates collected certain transaction fees from
shareholders which aggregated $3,245 and $5,722 for the high yield and
money market funds, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES - CONTINUED
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.
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
Fred L. Henning Jr., Vice President -
MONEY MARKET FUND
Thomas J. Steffanci, Vice President -
HIGH YIELD FUND
Deborah F. Watson, Vice President -
MONEY MARKET FUND
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, 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
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 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
