FIDELITY
(registered trademark)
OHIO
MUNICIPAL
PORTFOLIOS
SEMIANNUAL REPORT
JUNE 30, 1994
CONTENTS
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PRESIDENT'S MESSAGE 3 Ned Johnson on bond market
strategies.
FIDELITY OHIO 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 21 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE 25 How the fund has done over time.
FUND TALK 27 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 29 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 30 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 36 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 40 Notes to the financial statements.
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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
FIDELITY OHIO 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). 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
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PERIODS ENDED JUNE 30, 1994 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Fidelity Ohio Municipal High Yield Portfolio -4.42% 0.62% 44.05% 102.01%
Lehman Brothers Municipal Bond Index -4.41% 0.20% 46.00% n/a
Average Ohio Tax-Exempt
Municipal Bond Fund -4.92% -0.48% 42.65% n/a
Consumer Price Index 1.51% 2.49% 19.26% 36.15%
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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
November 15, 1985. 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 Ohio tax-exempt
municipal bond fund, which reflects the performance of 41 Ohio 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 the CPI numbers are the
closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
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PERIODS ENDED JUNE 30, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity Ohio Municipal High Yield Portfolio 0.62% 7.57% 8.49%
Lehman Brothers Municipal Bond Index 0.20% 7.86% n/a
Average Ohio Tax-Exempt
Municipal Bond Fund -0.48% 7.36% n/a
Consumer Price Index 2.49% 3.59% 3.62%
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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
11/30/85 10000.00 10000.00
12/31/85 10135.31 10087.90
01/31/86 10595.82 10682.08
02/28/86 10969.26 11105.73
03/31/86 11078.08 11109.28
04/30/86 10981.04 11117.73
05/31/86 10810.83 10936.73
06/30/86 10880.08 11041.07
07/31/86 10965.67 11108.08
08/31/86 11428.87 11605.39
09/30/86 11433.00 11634.52
10/31/86 11734.15 11835.45
11/30/86 11893.81 12069.91
12/31/86 11862.07 12036.60
01/31/87 12110.24 12399.02
02/28/87 12273.22 12460.02
03/31/87 12164.46 12327.95
04/30/87 11162.90 11709.33
05/31/87 11041.26 11651.25
06/30/87 11273.78 11993.33
07/31/87 11449.74 12115.67
08/31/87 11505.32 12142.93
09/30/87 10803.01 11695.22
10/31/87 10927.92 11736.62
11/30/87 11190.18 12043.06
12/31/87 11407.87 12217.81
01/31/88 11893.94 12653.00
02/29/88 12053.86 12786.75
03/31/88 11758.56 12637.78
04/30/88 11828.78 12733.83
05/31/88 11934.90 12697.03
06/30/88 12112.46 12882.78
07/31/88 12171.11 12966.78
08/31/88 12193.84 12978.19
09/30/88 12412.08 13213.10
10/31/88 12695.60 13446.31
11/30/88 12610.15 13323.14
12/31/88 12846.45 13459.43
01/31/89 13021.61 13737.78
02/28/89 12934.78 13581.03
03/31/89 12948.76 13548.57
04/30/89 13279.03 13870.21
05/31/89 13457.37 14158.30
06/30/89 13609.87 14350.57
07/31/89 13711.70 14545.88
08/31/89 13618.38 14403.47
09/30/89 13553.26 14360.26
10/31/89 13744.65 14535.46
11/30/89 13939.72 14789.83
12/31/89 14033.02 14911.10
01/31/90 13936.01 14841.02
02/28/90 14094.12 14973.11
03/31/90 14108.44 14977.60
04/30/90 13927.54 14869.76
05/31/90 14211.07 15193.92
06/30/90 14345.59 15327.63
07/31/90 14591.07 15552.94
08/31/90 14352.96 15327.43
09/30/90 14477.05 15336.62
10/31/90 14656.23 15614.22
11/30/90 14977.46 15928.06
12/31/90 15046.14 15998.14
01/31/91 15172.93 16212.52
02/28/91 15272.21 16353.57
03/31/91 15298.18 16360.11
04/30/91 15483.15 16577.70
05/31/91 15638.53 16725.24
06/30/91 15575.96 16708.52
07/31/91 15778.31 16912.36
08/31/91 15936.69 17135.60
09/30/91 16051.32 17358.37
10/31/91 16106.26 17514.59
11/30/91 16071.58 17563.63
12/31/91 16324.85 17941.25
01/31/92 16396.23 17982.52
02/29/92 16464.72 17987.91
03/31/92 16490.85 17995.11
04/30/92 16607.42 18155.26
05/31/92 16789.84 18369.49
06/30/92 17016.36 18678.10
07/31/92 17435.03 19238.44
08/31/92 17256.55 19049.91
09/30/92 17297.40 19173.73
10/31/92 16974.36 18985.83
11/30/92 17366.89 19325.68
12/31/92 17569.95 19522.80
01/31/93 17837.90 19749.26
02/28/93 18388.52 20464.19
03/31/93 18216.91 20247.26
04/30/93 18387.73 20451.76
05/31/93 18512.97 20566.29
06/30/93 18815.79 20909.75
07/31/93 18839.48 20936.93
08/31/93 19233.58 21372.42
09/30/93 19508.67 21616.07
10/31/93 19533.46 21657.14
11/30/93 19369.54 21466.55
12/31/93 19752.48 21919.50
01/31/94 19981.81 22169.38
02/28/94 19459.72 21595.19
03/31/94 18614.98 20716.27
04/30/94 18722.25 20892.36
05/31/94 18851.53 21074.12
06/30/94 18801.36 20951.89
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity Ohio
Municipal High Yield Portfolio on November 30, 1985, shortly after the fund
started. As the chart shows, by June 30, 1994, the value of your investment
would have grown to $20,217 - a 102.17% 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 $20,952 - a 109.52% 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 2.70% 6.19% 6.63% 7.02% 7.04% 7.23%
Capital appreciation
returns -7.12% 6.37% 2.03% 4.43% 0.46% 2.76%
Total returns -4.42% 12.56% 8.66% 11.45% 7.50% 9.99%
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.
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) 32.63(cents) 66.88(cents)
Annualized dividend rate 5.73% 5.74% 5.67%
30-day annualized yield 5.65% - -
30-day annualized tax-equivalent yield 9.54% - -
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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 $11.25 over
the past month, $11.46 over the past six months and $11.80 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 40.80% combined 1994 federal and Ohio state tax bracket.
FIDELITY OHIO MUNICIPAL HIGH YIELD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Peter Allegrini,
Portfolio Manager of Fidelity
Ohio Tax-Free High Yield Portfolio
Q. PETER, HOW HAS THE FUND PERFORMED?
A. It has been a difficult period for both the municipal bond market and
the fund. For the six months ended June 30, 1994, the fund had a total
return of -4.42%. That was in line with the average Ohio municipal fund,
which returned -4.92% for the same period, according to Lipper Analytical
Services. For the 12 months ended June 30, 1994, the fund returned 0.62%,
compared to the average return of -0.48%, again according to Lipper.
Q. LET'S START WITH THE MUNICIPAL BOND MARKET - WHAT CAUSED IT TO FALL OVER
THE PAST SIX MONTHS?
A. Simply put, higher interest rates. Most municipal bond investors greeted
the start of 1994 with enthusiasm, based partly on expectations that strong
supply and demand factors would work in municipal bonds' favor. The supply
of new bonds issued was estimated to be half as much in 1994 as in 1993,
and higher federal income taxes were expected to ignite demand. Bond
investors entered the new year fully invested and the technical factors for
the municipal bond market were positive. But, in February, the Federal
Reserve made the first of several interest rate hikes, and long-term bond
investors to react negatively. The Federal Reserve raised the federal funds
rate - the rate banks charge each other for overnight loans - 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. IN 1993, YOU POSITIONED THE FUND TO TAKE ADVANTAGE OF LOW INTEREST
RATES. NOW THAT RATES HAVE RISEN, HAVE YOU CHANGED YOUR STRATEGY?
A. Not really, because I continue to believe that on a historical basis,
interest rates will stay relatively low. That's because the economy doesn't
appear to be growing that rapidly, and inflation is in check. Slow economic
growth and low inflation are generally good for bonds, especially bonds
with longer durations. Duration measures how sensitive a bond's price is to
changes in interest rates; the longer the duration, the more sensitive.
Since I believe that inflation isn't a real threat, having a longer
duration could help the fund once the market settles. Also, the supply of
Ohio bonds was expected to decline in 1994 - which is exactly what is
happening. So, I didn't want to shorten the fund's duration by selling
longer-term bonds when rates were rising, then try to buy them back later
when supply was limited, and prices potentially could have been higher. So
instead, I used futures, which generally helped reduce the volatility of
the portfolio.
Q. AREN'T FUTURES ONE OF THE FINANCIAL ARRANGEMENTS KNOWN AS DERIVATIVES,
AND DO YOU USE OTHERS?
A. Yes, a future is one type of derivative - meaning its market value is
derived from an underlying security or market index. 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 and have no current plans to increase
that percentage. By using these various derivatives, I can achieve
increased flexibility in managing the fund's overall sensitivity to changes
in interest rates and, hopefully, can achieve higher levels of income.
Q. WHAT OTHER STRATEGIC CHOICES HAVE YOU MADE?
A. One main focus for me has been producing a high level of tax-exempt
income. Health care is one sector that can offer a relatively attractive
level of income and currently makes up about 20.2% of the fund's assets.
The health care industry has been undergoing a dramatic change, so I
carefully select individual bonds that appear to be well-positioned to
prosper in the new health care environment. On a relative basis, the health
care sector has performed well, on a relative basis, during the past six
months. I may begin to lock in that performance advantage and reduce the
fund's health care exposure as other high income opportunities present
themselves.
Q. YOU MENTIONED THE SUPPLY AND DEMAND FACTORS THAT WERE EXPECTED TO BOOST
MUNICIPAL PRICES THIS YEAR. DID RISING INTEREST RATES DERAIL ANY POSITIVE
EFFECT OF THOSE FACTORS?
A. Higher rates actually reduced the supply of new bonds even more than
anticipated. That's because higher borrowing costs dampened the incentive
to issue refunding bonds, which are used to replace older, higher interest
rate bonds. However, higher rates also dampened the demand for municipal
bonds as investors became concerned about declining bond prices. If
interest rates decline - causing prices to rise - demand for municipal
bonds could increase. Given my forecast of continued low new issue supply,
a pick up in demand could result in municipal bonds outperforming other
fixed income securities. Whatever happens, it will be nearly impossible to
produce the same strong returns in 1994 that we enjoyed in 1993. So
investors would be wise to expect more modest returns.
FUND FACTS
GOAL: to provide a high level
of current income exempt from
Ohio state and federal income
taxes
START DATE: November 15,
1985
SIZE: as of June 30, 1994,
more than $395 million
MANAGER: Peter Allegrini since
November 1985; manager,
Fidelity Advisor High Income
Municipal Fund and Fidelity
Michigan Tax-Free Fund, since
November 1985; Spartan
Connecticut Municipal High
Yield Portfolio, since October
1987; Fidelity Minnesota
Tax-Free Fund, November
1985 - September 1993;
Spartan Pennsylvania
Municipal High Yield Portfolio,
August 1986 - September
1993;
joined Fidelity in 1982
(checkmark)
PETER ALLEGRINI ON THE OHIO
ECONOMY:
"Ohio has continued to shake
off many of the remnants of its
'rust belt' image by building a
more diversified economy
based not only on
manufacturing, but on
retailing, banking, insurance
and other service sectors.
That strategy has helped to
stabilize the state's economy.
Even the state's
manufacturing base emerged
from the recession with a
higher level of productivity."
(bullet) Health care bonds continue
to make up the fund's second
largest investment - 20.2%
as of June 30, 1994. These
bonds are also attractive, in
part, because of their high
yields.
(bullet) Effective July 18, 1994,
Steve Harvey became
portfolio manager of the fund.
Mr. Harvey joined Fidelity in
1986 and is also portfolio
manager of Fidelity
Minnesota Tax-Free Portfolio,
Spartan Maryland Municipal
Income Portfolio and Spartan
Pennsylvania Municipal High
Yield Portfolio.
FIDELITY OHIO MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF JUNE 30, 1994
% OF FUND'S INVESTMENT % OF FUND'S INVESTMENT
S S
IN THESE SECTORS
6 MONTHS AGO
General Obligation 23.8 24.4
Health Care 20.2 20.9
Water & Sewer 14.3 13.1
Industrial Development 10.8 9.5
Lease Revenue 7.6 8.8
AVERAGE YEARS TO MATURITY AS OF JUNE 30, 1994
6 MONTHS AGO
Years 17.7 18.1
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 8.9
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 24.8%
Aa, A 26.2%
Baa 21.6%
Ba or B 6.1%
Non-rated 18.1%
Short-term investments 3.2%
Row: 1, Col: 1, Value: 24.8
Row: 1, Col: 2, Value: 26.2
Row: 1, Col: 3, Value: 21.6
Row: 1, Col: 4, Value: 6.1
Row: 1, Col: 5, Value: 18.1
Row: 1, Col: 6, Value: 3.2
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 10.9% OF THE FUND'S INVESTMENTS.
FIDELITY OHIO MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENTS JUNE 30, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 96.8%
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
OHIO - 86.5%
Akron Parking Facs. Ltd. Tax:
8.75% 11/1/03 A $ 160,000 $ 193,800
8.75% 11/1/04 A 200,000 242,250
8.75% 11/1/05 A 160,000 195,200
Akron Str. Impt. Ltd. Tax Series 1985-1:
8.75% 11/1/03 A 200,000 244,000
8.75% 11/1/04 A 160,000 196,000
8.75% 11/1/05 A 200,000 245,000
Alliance Wtrwks. Rev. (Cap. Appreciation)
0% 10/15/06, (FGIC Insured) Aaa 765,000 369,113
Barberton Hosp. Facs. Rev. (Barberton Citizens
Hosp. Co. Proj.) 7.25% 1/1/12 A 3,000,000 3,127,500
Bedford Heights Unltd. Tax 5.65% 12/1/14
(AMBAC Insured) Aaa 1,000,000 935,000
Bedford Hosp. Impt. Rev. Rfdg. (Bedford Commty.
Hosp.) Series 1990, 8.50% 5/15/09 - 865,000 912,575
Berea Gen. Oblig. Ltd. Tax Rfdg.:
0% 12/1/04 Aa 535,000 286,894
5.125% 12/1/13 Aa 510,000 235,875
Berea Wtrwks. Rfdg. 0% 12/1/06 Aa 1,215,000 1,085,906
Berlin & Milan Local School Dist.
7.45% 12/1/11 A 675,000 749,250
Bexley City School Dist.:
0% 12/1/06 Aa 440,000 208,450
0% 12/1/07 Aa 540,000 237,600
0% 12/1/08 Aa 540,000 222,075
Blue Ash Ind. Dev. Rev. Rfdg. (1st. Mtg.)
(Kmart Corp.) Series A, 6.75% 11/1/06 BBB+ 515,000 538,819
Brunswick Gen. Oblig. Unltd. Tax
7.35% 12/1/10 A 1,000,000 1,080,000
Buckeye Local School Dist. Rfdg.
(Jefferson County):
(Cap. Appreciation) 0% 12/1/06,
(AMBAC Insured) Aaa 760,000 338,200
0% 12/1/07, (AMBAC Insured) Aaa 375,000 178,125
Butler County Hosp. Facs. Auth. Rev. Rfdg.
(Fort Hamilton-Hughes Hosp.)
7.50% 1/1/10 Baa1 1,500,000 1,550,625
Cambridge Hosp. Impt. Rev. Rfdg.
(Guernsey Mem. Hosp.) 8% 12/1/11 - 1,500,000 1,610,625
Canton Gen. Oblig. Ltd. Tax 7.875% 12/1/08
(Pre-refunded to 12/1/98 @ 103) (e) Baa 1,250,000 1,420,313
Clark County Hosp. Impt. Rev. Rfdg. (Commty.
Hosp.) Series A, 9.375% 4/1/2008 A 800,000 856,000
Cleveland Arpt. Sys. Rev. Series A,
7.25% 1/1/20, (MBIA Insured) Aaa 2,000,000 1,910,000
Cleveland Gen. Oblig. Rfdg. 5.30%
9/1/07, (AMBAC Insured) Aaa 800,000 861,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Cleveland Wtrwks. Rev. Rfdg. 1st Mtg. Series G:
5.50% 1/1/08, (MBIA Insured) Aaa $ 26,725,000 $ 24,286,344
5.50% 1/1/13, (MBIA Insured) Aaa 3,700,000 3,547,375
5.50% 1/1/21, (MBIA Insured) Aaa 8,375,000 7,809,688
Columbus Gen. Oblig.:
9.50% 4/15/04 Aa1 500,000 637,500
Swr. Sys. Impt. Unltd. Tax 9.375%
4/15/07 Aa1 590,000 761,838
Cuyahoga County Cap. Appreciation Unltd.
Tax Rfdg. Series A:
0% 10/1/08, (MBIA Insured) Aa 7,000,000 6,378,750
0% 10/1/09, (MBIA Insured) Aaa 4,200,000 1,653,750
0% 10/1/10, (MBIA Insured) Aaa 5,000,000 1,837,500
0% 10/1/11, (MBIA Insured) Aaa 4,000,000 1,705,000
0% 1/1/12, (MBIA Insured) Aaa 2,400,000 831,000
0% 1/1/13, (MBIA Insured) Aaa 1,505,000 485,363
Cuyahoga County Gen. Oblig. Jail Facs.
Unltd. Tax 7% 10/1/13 Aaa 4,000,000 1,210,000
Cuyahoga County Health Care Facs. Rev.
(Judson Retirement Commty.)
8.875% 11/15/19 Aa 2,685,000 2,530,613
Cuyahoga County Hosp. Rev.:
(Cleveland Clinic Foundation) Series A:
8% 12/1/08 Aa 2,295,000 2,148,694
8% 12/1/15 - 1,250,000 1,389,063
(Fairview Gen. Hosp.) 7.375% 8/1/19 - 2,500,000 2,706,250
Cuyahoga County Ltd. Tax:
Series B, 5.25% 10/1/12 Aaa 1,250,000 1,371,875
5.60% 5/15/13 Aa 1,000,000 1,091,250
5.65% 5/15/18 Aa 2,250,000 2,452,500
Defiance County Econ. Dev. Rev.
(Kroger Co. Proj.) 8% 10/15/15 - 2,325,000 2,490,656
Defiance Spl. Assessments 7% 12/1/11 A 365,000 387,813
Delaware City School Dist. Capital
Appreciation Construction & Impt.
Series B, 0% 12/1/08 (FGIC Insured) Aaa 1,100,000 451,000
Dublin City School Dist. Rfdg. (Cap. Appreciation):
0% 12/1/07, (FGIC Insured) Aaa 500,000 225,625
Unltd. Tax 0% 12/1/04
(AMBAC Insured) Aaa 1,930,000 1,073,563
Euclid County School Dist. Series 1991
7.10% 12/1/11 A 1,500,000 1,614,375
Fairfield Econ. Dev. Rev. Rfdg.
(Beverly Enterprises Proj.) 8.50% 1/1/03 - 1,060,000 1,131,550
Forest Park Ind. Dev. 1st Mtg. Rev. Rfdg.
(Kmart Corp.) Series A, 6.25% 4/1/08 A 700,000 663,250
Franklin City School Dist. Unltd. Tax
(Warren County Impt.) 7% 12/1/14 - 5,000,000 5,262,500
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Franklin County Rev.
(Online Computer Library Ctr.):
7.20% 7/15/06 - $ 1,000,000 $ 1,053,750
9.75% 7/15/09 - 3,500,000 3,294,375
6% 4/15/12 A 1,250,000 1,318,750
Gahanna Gen. Oblig. Series A, 7%
6/1/12 A1 1,000,000 1,107,500
Gateway Econ. Dev. Corp.
(Greater Cleveland Stadiums)
Series 1990, 6.50% 9/15/14 - 12,000,000 11,490,000
Granville Village School Dist. Rfdg.
(Cap. Appreciation):
0% 12/1/06, (AMBAC Insured) Aaa 625,000 300,781
0% 12/1/07, (AMBAC Insured) Aaa 665,000 297,588
0% 12/1/08, (AMBAC Insured) Aaa 650,000 270,563
0% 12/1/09, (AMBAC Insured) Aaa 645,000 246,713
Green County 1st Mtg. Rev. (Fairview Extended
Care) Series A, 10.125% 1/1/11 - 5,930,000 6,404,400
Green County Swr. Sys. Rev.
(Cap. Appreciation) 0% 12/1/09,
(AMBAC Insured) Aaa 775,000 297,406
Hamilton County Health Sys. Rev.:
Rfdg. (Providence Hosp.-Franciscan Sisters
Poor Health Sys.) 6.875% 7/1/15 Aaa 1,195,000 1,036,663
(St. Francis-St. George Franciscan)
9.375% 7/1/15 Baa 1,500,000 1,605,000
Hamilton County Hosp. Rev.
(Children's Hosp. Med. Ctr.)
Series D, 5% 5/15/13, (FGIC Insured) Baa 5,000,000 4,918,750
Hamilton County Swr. Sys. Rev. Rfdg. & Impt.
Metro. Swr. Dist. Series A, 5.45%
12/1/09, (FGIC Insured)] Aaa 3,715,000 3,519,963
Hamilton County Swr. Sys. Rev. Series A,
5.40% 12/1/08, (FGIC Insured) Aaa 1,000,000 940,000
Hamilton Gas Sys. Rev. Series A, 4.75%
10/15/23, (MBIA Insured) Aaa 1,000,000 793,750
Hilliard Ind. Dev. Rev. Rfdg. (Kroger Co.)
8.10% 7/1/12 Ba3 3,600,000 3,870,000
Hudson Local School Dist. Series A, 7.10%
12/15/13 A1 2,000,000 2,227,500
Lake County Ind. Dev. Rev. Rfdg. 1st Mtg.
(Kmart Corp.) Series A, 6.40% 8/1/06 A 1,000,000 977,500
Lakota Local School Dist. Rfdg.
(Cap. Appreciation):
0% 12/1/00 A1 260,000 150,800
0% 12/1/01 A1 730,000 396,025
0% 12/1/02 A1 690,000 349,313
0% 12/1/03 A1 650,000 306,313
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Lakota Local School Dist. Rfdg.
(Cap Appreciation) Impt.:
0% 12/1/04 A1 $ 445,000 $ 334,863
0% 12/1/05 A1 625,000 440,625
0% 12/1/06 A1 590,000 390,138
0% 12/1/07 A1 555,000 344,100
Lakota Local School Dist. Unltd. Tax Rfdg.
(Cap. Appreciation) 0% 12/1/99 A1 610,000 266,875
Logan Hocking Local School Dist. Rfdg. Series B:
0% 12/1/08, (AMBAC Insured) Aaa 1,065,000 439,313
0% 12/1/12, (AMBAC Insured) Aaa 840,000 263,550
Lorain County Rev. (1st mtg. Kendal at
Oberlin Proj.) Series A, 8.625% 2/1/22 - 4,250,000 4,627,188
Lorain Gen. Oblig. Ltd. Tax 7.875%
12/1/09 Baa 1,000,000 1,075,000
Lorain Swr. Sys. Mtg. Rev. Rfdg.
8.75% 4/1/11 BBB- 2,815,000 3,103,538
Lowellville San. Swr. Sys. Rev. (Browning-Ferris
Industries, Inc.) 7.25% 6/1/06 (b) A 1,600,000 1,650,000
Lucas County Convention Ctr. Site Acquisition
Bonds Ltd. Tax:
6.50% 12/1/09 Baa1 340,000 358,275
6.50% 12/1/10 Baa1 340,000 359,125
6.50% 12/1/11 Baa1 340,000 357,850
6.50% 12/1/12 Baa1 340,000 358,275
Lucas County Hosp. Rev. Rfdg.:
(Riverside Hosp. Proj.) 7.625% 6/1/15 (f) Baa1 7,485,000 7,746,975
(St. Vincent Med. Ctr.) Series 1993, 6.53411%
8/15/14, INFL (MBIA Insured)(d) Aaa 5,000,000 4,243,750
Lucas County Ind. Dev. Rev. Rfdg.
(Kroger Co.) 8.50% 7/1/11 Ba2 3,600,000 3,928,500
Madeira Econ. Dev. Rev. Rfdg.
(Kroger Co.) 6.20% 10/1/13 Ba2 1,910,000 1,716,613
Mahoning County Hosp. Facs. Rev.
(YHA, Inc. Proj.) Series A, 7% 10/15/14,
(MBIA Insured) Aaa 1,000,000 1,083,750
Mahoning County San. Swr. Sys. Rev.
7.50% 2/1/19, (BIG Insured) Aaa 1,000,000 1,098,750
Mahoning Valley San. Dist.:
7.85% 12/15/12 - 1,200,000 1,279,500
7.85% 12/15/13 - 1,275,000 1,359,469
Marion County Health Care Facs. Rev.
Rfdg. & Impt. (United Church Homes, Inc.
Proj.) 6.30% 11/15/15 BBB- 1,800,000 1,631,250
Marysville Exempt Village School Dist. Rfdg.
(Cap. Appreciation):
0% 12/1/05, (AMBAC Insured) A 500,000 541,250
0% 12/1/06, (AMBAC Insured) Aaa 795,000 405,450
0% 12/1/07, (AMBAC Insured) Aaa 750,000 356,250
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Marysville Swr. Sys. Ltd. Tax 7.15%
12/1/11 Aaa $ 690,000 $ 304,463
Marysville Wtr. Sys. Mtg. Rev. 7.05%
12/1/21, (MBIA Insured) Aaa 1,000,000 1,112,500
Mentor Exempt Village School Dist. Rdfg.
(Cap. Appreciation):
0% 12/1/00, (MBIA Insured) Aaa 755,000 533,219
0% 12/1/01, (MBIA Insured) Aaa 795,000 526,688
0% 12/1/02, (MBIA Insured) Aaa 845,000 524,956
0% 12/1/03, (MBIA Insured) A 500,000 536,250
Mentor Gen. Oblig. Ltd. Tax Series 1991,
7.15% 12/1/11 Aaa 840,000 489,300
Miami County Hosp. Facs. Rev.
(Upper Valley Med. Ctr.) Project B,
8.25% 5/1/04, (BIG Insured) Aaa 475,000 522,500
Miami Univ. Gen. Receipts (Cap. Appreciation)
0% 12/1/07, (FGIC Insured) Aaa 500,000 222,500
Middleburg Heights Gen. Oblig.
7.20% 12/1/11 Aa 500,000 546,875
Middleburg Heights Hosp. Impt. Rev.
(Southwest Gen. Hosp.) 7.20% 8/15/19 A 2,000,000 2,082,500
Mount Vernon Hosp. Rev.
(Knox Commty. Hosp.) 7.875% 6/1/12 - 7,000,000 7,437,500
Muskingum County Rev. (Franciscan Health
Advisory Svcs.) 7.50% 3/1/12 BBB+ 2,000,000 2,095,000
Newark Wtr. (Cap. Appreciation) 0%
12/1/07, (AMBAC Insured) Aaa 455,000 200,769
Ohio Air Quality Dev. Auth. Rev. Rfdg.
(Ohio Pwr. Co. Proj.) Series B,
7.40% 8/1/09 AAA 2,000,000 2,075,000
Ohio Bldg. Auth.:
(State Facs. Columbus State Bldg. Proj.)
Series A, 7.75% 10/1/08 Baa1 3,250,000 3,436,875
(Workers Comp.)
4.75% 4/1/14 Aaa 3,720,000 2,673,750
Ohio Bldg. Auth. Facs.:
(Administration Bldg. Fund Proj.) Series A:
5.60% 10/1/06 Aa 7,225,000 3,287,375
5.60% 10/1/07 Aa 2,290,000 890,238
(Ohio Ctr. Arts) Series A:
5.25% 10/1/05 Aa 3,260,000 2,367,575
5.35% 10/1/06 AAA 1,000,000 1,065,000
5.45% 10/1/07 Aa 2,000,000 730,000
Ohio Cap. Corp. Multi-Family Hsg. Rev. Rfdg.:
Series A, 7.50% 1/1/24, (FNMA Coll.) A1 2,410,000 2,283,475
Series C, 7.375% 7/1/23, (FNMA Coll.) A1 3,330,000 3,188,475
Ohio Econ. Dev. Rev. Rfdg. (Kroger Co. Proj.)
Series 1992, 7.50% 9/1/10 A 18,120,000 15,084,900
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Expositions Commission Ctfs. of Prtn.
(Agricenter Facs.):
8% 10/1/95 A1 $ 500,000 $ 560,000
8.25% 10/1/06 Ba2 2,000,000 2,050,000
Ohio Gen. Oblig. Infrastructure Impt:
Rfdg. Series R, 0% 9/1/00 A1 3,100,000 3,220,125
(Cap. Appreciation Infrastructure)
Series 1989, 0% 9/1/07 - 305,000 309,194
(College Savings Bonds):
0% 8/1/09 - 1,150,000 1,224,750
0% 8/1/10 A1 1,900,000 1,793,125
Ohio Higher Edl. Facs. Commission Rev.:
Rfdg. (Case Western Reserve Univ. Proj.)
6% 10/1/14 Aa 2,000,000 2,175,000
6.125% 10/1/15 Ba2 2,300,000 2,515,625
6.25% 10/1/16 Aa 1,750,000 1,813,438
(Case Western Reserve Proj.):
Series A, 7.70% 10/1/18 A1 3,060,000 2,876,400
Series B, 6.50% 10/1/20 A1 2,000,000 1,875,000
(Kenyon College Proj.) 5.30% 12/1/08 A 1,115,000 1,023,013
Ohio Ind. Dev. Rev. Rfdg. (Kroger Co.)
8.65% 6/1/11 Aa 1,500,000 1,479,375
Ohio Liquor Profits Rev. Rfdg. 0% 9/1/00,
(BIG Insured) Aa 2,000,000 1,990,000
Ohio Poll. Cont. Rev. (Standard Oil Co.)
6.75% 12/1/15 Aa 2,500,000 2,525,000
Ohio Student Loan Funding Corp. Cincinnati
Student Loan Rev.:
Rfdg. Series A, 7.25% 2/1/08 (b) A 2,000,000 2,045,000
Series B, 8.875% 8/1/08 (b) - 5,025,000 5,182,031
Ohio Wtr. Dev. Auth. Poll. Cont. Facs.
(Buckeye Pwr., Inc. Proj.) 10.875%
11/1/14 Aaa 1,000,000 986,250
Ohio Wtr. Dev. Auth. Poll. Cont. Rfdg.
(Toledo Edison Co.) Series A, 7.55%
6/1/23 A1 250,000 263,125
Ohio Wtr. Dev. Auth. Rev. (Pure Wtr.)
Series I, 6% 12/1/16, (AMBAC Insured)
(Escrowed to Maturity)(e) Baa3 7,550,000 7,748,188
Olentangy Local School Dist. Unltd. Tax:
7.75% 12/1/07, (BIG Insured) Aaa 190,000 221,825
7.75% 12/1/09, (BIG Insured) Aaa 500,000 581,875
7.75% 12/1/11, (BIG Insured) Aaa 100,000 116,750
Olmsted Falls Local School Dist. Unltd. Tax
7.05% 12/15/11, (FGIC Insured) Aaa 1,000,000 1,080,000
Ottawa County Gen. Oblig. Ltd. Tax
7.50% 10/1/14 A1 500,000 560,625
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Ottawa County San. Swr. Sys. Rev. Rfdg.:
(Cap. Appreciation) (Danbury Proj.) 0%
10/1/06 (AMBAC Insured) Aaa $ 250,000 $ 267,188
(Danbury Proj.) 7.375% 10/1/14,
(AMBAC Insured) Aaa 1,000,000 1,118,750
Ottawa County Spl. Assessment
(Portage Catawba Isle)
7% 9/1/11, (AMBAC Insured) Aaa 1,445,000 699,019
Pickerington Local School Dist. Constr. & Impt.
5.8% 12/1/09 (FGIC Insured) Aaa 2,180,000 678,525
Pickerington Local School Dist. Rfdg.
(Cap. Appreciation) 0% 12/1/12,
(AMBAC Insured) Aaa 1,000,000 978,750
Sandusky County Hosp. Facs. Rev. Rfdg.
(Mem. Hosp. Proj.) 7.75% 12/1/09 BB 5,250,000 5,263,125
Solon School Dist. Rfdg. (Cap. Appreciation):
0% 12/1/04, (AMBAC Insured) Aaa 1,020,000 568,650
0% 12/1/05, (AMBAC Insured) Aaa 1,440,000 750,600
0% 12/1/06, (AMBAC Insured) Aaa 1,370,000 666,163
0% 12/1/07, (AMBAC Insured) Aaa 1,200,000 544,500
0% 12/1/08, (AMBAC Insured) Aaa 1,100,000 463,375
Southwest Local School Dist. (Hamilton County):
0% 12/1/04, (AMBAC Insured) Aaa 500,000 280,625
0% 12/1/05, (AMBAC Insured) Aaa 525,000 275,625
0% 12/1/06, (AMBAC Insured) Aaa 525,000 257,250
0% 12/1/07, (AMBAC Insured) Aaa 520,000 237,250
Springboro Spl. Assessment 6.10% 6/1/23 - 1,350,000 1,262,250
Stark-Belden Hsg. Dev. Corp. 1st Lien Rev.
Section 8, 7.60% 12/1/09,
(FHA Guaranteed) Ba2 3,100,000 3,096,125
Stark County Health Care Facs. Rev.
(Rose Lane Hosp. Proj.) 9% 12/1/23 - 6,135,000 6,702,488
Stark County Hosp. Rev. (Doctors Hosp. of
Stark County) 6% 4/1/13 Baa 400,000 426,000
Stark County Ind. Dev. Rev. Rfdg.
(Kroger Co.) 7.20% 9/1/12 Baa 5,840,000 5,190,300
Stow City School Dist. School Impt. Unltd.
Tax 9.125% 12/1/06 A 590,000 741,925
Summit County Ind. Dev. Rev. Rfdg.
(Surnow Assoc. Proj.) 7.65% 10/1/06 Ba3 1,070,000 1,123,500
Sylvania Gen. Oblig. Muni. Office Bldg.
7.45% 12/1/10 Aa 875,000 966,875
Tiffin San. Swr. Impt. Gen. Oblig. Ltd.
Tax 7.10% 12/1/11 A 1,000,000 1,076,250
Toledo Univ. Gen. Receipts 7.125% 6/1/20,
(MBIA Insured)(Pre-refunded to 6/1/00
@ 102)(e) A1 680,000 734,400
Union County Gen. Oblig. (Mem. Hosp.)
7.40% 12/1/10 Aaa 700,000 777,875
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Warren County:
6.10% 12/1/12 Aa $ 500,000 $ 528,750
Ltd. Tax 6.65% 12/1/11 Aa 500,000 499,375
Warren Hosp. Rev. Rfdg. (Warren Gen.
Hosp. Proj.) Series B, 7.30% 11/15/14 BBB 4,105,000 4,110,131
Warren Hsg. Dev. Corp. Rev. (1st Mtg. Rev.)
Section 8:
7.25% 6/1/04 - 200,000 201,750
7.25% 6/1/05 - 200,000 201,750
7.25% 6/1/06 - 200,000 201,750
7.25% 6/1/07 - 200,000 201,750
7.25% 6/1/08 - 200,000 201,750
Washington County Ind. Dev. Rev. Rfdg.
(Kmart Corp. Proj.) 6.70% 3/15/07 A 1,080,000 1,078,650
Wauseon Exempt Village School Dist.
7.25% 12/1/10 A 1,000,000 1,083,750
Westerville Minerva Park & Blendon Joint
Township Hosp. Dist. Rev. Rfdg. Series B,
(St. Anns Hosp. Proj.) 7% 9/15/12,
(AMBAC Insured) Aaa 2,000,000 2,142,500
Willoughby Gen. Oblig. Road Impt. Ltd.
Tax 7.40% 12/1/11 A 1,200,000 1,371,000
Wright Univ. Gen. Receipts 5.15% 5/1/11,
(AMBAC Insured) Aaa 1,000,000 893,750
Xenia Hsg. Dev. Corp. Rev. 1st Lien (Xenia Tower
Proj.) Section 8, 7.75% 2/1/10 - 2,030,000 2,093,438
Youngstown Ltd. Tax 7.55% 12/1/11 Baa 1,500,000 1,591,857
337,081,236
PUERTO RICO - 9.9%
Puerto Rico Commonwealth Aqueduct & Swr.
Auth. Rev. Series A, 7.875% 7/1/17 Baa1 2,760,000 1,238,550
Puerto Rico Commonwealth Gen. Oblig.:
Rfdg.:
Series 1988, 0% 7/1/07 Baa1 3,150,000 1,413,563
Unltd. Tax 5% 7/1/21 Baa1 3,850,000 1,862,438
Unltd. Tax Series 1991:
0% 7/1/06 Baa1 5,000,000 4,106,250
0% 7/1/07 Baa 2,250,000 2,393,438
Puerto Rico Commonwealth Hwy. & Trans.
Auth. Rev. Series W, 5.50% 7/1/13 Baa1 15,250,000 13,839,375
Puerto Rico Commonwealth Urban Renewal &
Hsg. Corp. Rfdg. 7.875% 10/1/04 Baa1 2,500,000 2,706,250
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Rfdg.
Series S, 6.125% 7/1/09 Aaa 5,620,000 3,210,425
Puerto Rico Infrastructure Fing. Auth. Spl.
Tax Series 1988 A, 7.75% 7/1/08 Baa1 2,000,000 1,727,500
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
PUERTO RICO - CONTINUED
Puerto Rico Pub. Bldg. Auth. Rev. Rfdg.
Series L, 5.50% 7/1/21 Baa1 $ 2,000,000 $ 2,220,000
Puerto Rico Pub. Bldg. Auth. Gtd. Pub. Ed. &
Health Facs. Rfdg. Series I, 0% 7/1/04
(FGIC Insured) Baa1 2,000,000 2,005,000
Puerto Rico Tel. Auth. Rev. 6.72% 1/1/04,
(AMBAC Insured) INFL (d) Aaa 2,000,000 1,742,500
38,465,289
U.S. VIRGIN ISLANDS - 0.4%
Virgin Islands Pub. Fin. Auth. Rev. Rfdg.
Series A, 7.25% 10/1/18
(Escrowed to Maturity)(e) - 1,500,000 1,563,750
TOTAL MUNICIPAL BONDS
(Cost $378,852,814) 377,110,275
MUNICIPAL NOTES - 3.2%
OHIO - 3.2%
Ohio Air Quality Dev. Auth. Dev. Rev.
(JMG Funding Ltd. Partnership)
Series 1992 B, 2.30%,
LOC Societe Generale, VRDN A-1+ 5,000,000 5,000,000
Ohio State Univ. Rev. (Gen. Receipts):
Series 1985 B, 2.90%,
LOC Industrial Bank of Japan, VRDN VMIG 1 5,040,000 5,040,000
Series 1986 B, 2.90%,
BPA Fuji Bank, VRDN VMIG 1 2,290,000 2,290,000
TOTAL MUNICIPAL NOTES
(Cost $12,330,000) 12,330,000
TOTAL INVESTMENTS - 100%
(Cost $391,182,814) $ 389,440,275
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
U.S. Treasury Bond September 1994 $ 10,125,875 $ 192,840
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.6%
SECURITY TYPE ABBREVIATIONS
BAN - Bond 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) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(d) 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.
(e) Security collateralized by an amount sufficient to pay interest and
principal.
(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 $1,552,500.
INCOME TAX INFORMATION
At June 30, 1994 the aggregate cost of investment securities for income tax
purposes was $391,182,814. Net unrealized depreciation aggregated
$1,742,539, of which $13,157,718 related to appreciated investment
securities and $14,900,257 related to depreciated investment securities.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 49.1% AAA, AA, A 47.7%
Baa 18.3% BBB 10.0%
Ba 4.7% BB 4.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 18.1%.
FMR has determined that unrated debt securities that are lower quality
account for 10.9% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investments, is as follows:
General Obligation 23.8%
Health Care 20.2
Water & Sewer 14.3
Industrial Development 10.8
Others
(individually less than 10%) 30.9
TOTAL 100.0%
FIDELITY OHIO 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 $391,182,814) 5. $ 389,440,275
(Notes 1 and 2) - See accompanying schedule
6.Cash 7. 63,531
8.Interest receivable 9. 6,514,245
10.Receivable for daily variation on futures contracts 11. 131,250
12. 13.TOTAL ASSETS 14. 396,149,301
15.LIABILITIES 16. 17.
18.Dividends payable $ 434,175 19.
20.Accrued management fee 137,761 21.
22.Other payables and accrued expenses 77,100 23.
24. 25.TOTAL LIABILITIES 26. 649,036
27.28.NET ASSETS 29. $ 395,500,265
30.Net Assets consist of (Note 1): 31. 32.
33.Paid in capital 34. $ 393,725,183
35.Accumulated undistributed net realized gain (loss) on 36. 3,324,781
investments
37.Net unrealized appreciation (depreciation) on 38. (1,549,699)
investments
39.40.NET ASSETS, for 35,673,694 shares outstanding 41. $ 395,500,265
42.43.NET ASSET VALUE, offering price and redemption 44. $11.09
price per share ($395,500,265 (divided by) 35,673,694 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1994 (UNAUDITED)
45.46.INTEREST INCOME 47. $ 13,267,002
48.EXPENSES 49. 50.
51.Management fee (Note 4) $ 869,217 52.
53.Transfer agent, accounting and custodian fees and 310,837 54.
expenses (Note 4)
55.Non-interested trustees' compensation 1,285 56.
57.Registration fees 5,622 58.
59.Audit 15,218 60.
61.Legal 1,074
62.Reports to shareholders 12,983 63.
64. 65.TOTAL EXPENSES 66. 1,216,236
67.68.NET INTEREST INCOME 69. 12,050,766
70.REALIZED AND UNREALIZED GAIN (LOSS) (NOTES 1 AND 72. 73.
3)
71.Net realized gain (loss) on:
74. Investment securities 5,847,769 75.
76. Futures contracts 1,038,802 6,886,571
77.Change in net unrealized appreciation (depreciation) 78. 79.
on:
80. Investment securities (39,196,710) 81.
82. Futures contracts 192,840 (39,003,870)
83.84.NET GAIN (LOSS) 85. (32,117,299)
86.87.NET INCREASE (DECREASE) IN NET ASSETS 88. $ (20,066,533)
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
89.INCREASE (DECREASE) IN NET ASSETS
90.Operations $ 12,050,766 $ 25,073,052
Net interest income
91. Net realized gain (loss) 6,886,571 12,762,502
92. Change in net unrealized appreciation (depreciation) (39,003,870) 12,881,566
93. 94.NET INCREASE (DECREASE) IN NET ASSETS (20,066,533) 50,717,120
RESULTING FROM OPERATIONS
95.Distributions to shareholders: (12,050,766) (25,073,052)
From net interest income
96. From net realized gain (3,068,748) (9,306,252)
97. 98.TOTAL DISTRIBUTIONS (15,119,514) (34,379,304)
99.Share transactions 61,486,919 158,431,961
Net proceeds from sales of shares
100. Reinvestment of distributions 11,688,678 26,970,189
101. Cost of shares redeemed (100,361,339) (128,728,993)
102. (27,185,742) 56,673,157
Net increase (decrease) in net assets resulting from
share transactions
103. (62,371,789) 73,010,973
104.TOTAL INCREASE (DECREASE) IN NET ASSETS
105.NET ASSETS 106. 107.
108. Beginning of period 457,872,054 384,861,081
109. End of period $ 395,500,265 $ 457,872,054
110.OTHER INFORMATION 112. 113.
111.Shares
114. Sold 5,349,046 13,275,725
115. Issued in reinvestment of distributions 1,016,695 2,252,702
116. Redeemed (8,784,290) (10,764,781)
117. Net increase (decrease) (2,418,549) 4,763,646
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
118. SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED
JUNE 30, 1994
119. (UNAUDITED) 1993 1992 1991 1990 1989
120.SELECTED PER-SHARE DATA
121.Net asset value, beginning of period $ 12.020 $ 11.550 $ 11.320 $ 10.840 $ 10.790 $ 10.500
122.Income from Investment Operations .326 .693 .718 .719 .726 .725
Net interest income
123. Net realized and unrealized gain
(loss) (.850) .720 .230 .480 .050 .290
124. Total from investment operations (.524) 1.413 .948 1.199 .776 1.015
125.Less Distributions (.326) (.693) (.718) (.719) (.726) (.725)
From net interest income
126. From net realized gain on investments(.080) (.250) - - - -
127. Total distributions (.406) (.943) (.718) (.719) (.726) (.725)
128.Net asset value, end of period $ 11.090 $ 12.020 $ 11.550 $ 11.320 $ 10.840 $ 10.790
129.TOTAL RETURN B -4.42% 12.56 8.66 11.45 7.50 9.99
% % % % %
130.RATIOS AND SUPPLEMENTAL DATA
131.Net assets, end of period (000
omitted) $ 395,500 $ 457,872 $ 384,861 $ 327,767 $ 241,616 $ 200,941
132.Ratio of expenses to average net
assets .58% .57 .61 .64 .66 .71
A % % % % %
133.Ratio of net interest income to
average net assets 5.74% 5.67 6.31 6.53 6.82 6.79
A % % % % %
134.Portfolio turnover rate 18% 41 20 11 12 22
A % % % % %
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FINANCIAL HIGHLIGHTS
FIDELITY OHIO 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 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 would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1994 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Fidelity Ohio Municipal Money Market Portfoli 1.06% 2.11% 19.90%
o
Consumer Price Index 1.51% 2.49% 18.78%
Average Ohio Tax-Free
Money Market Fund 1.04% 2.10% n/a
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, six months, one year or since the fund started on August 29,
1989. 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 Ohio tax-free
money market fund's total return. This average currently reflects the
performance of 11 Ohio 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 LIFE OF
YEAR FUND
Fidelity Ohio Municipal Money Market Portfoli 2.11% 3.82%
o
Consumer Price Index 2.49% 3.63%
Average Ohio Tax-Free
Money Market Fund 2.10% 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>
6/30/93 9/30/93 12/31/93 3/31/94 6/30/94
Fidelity Ohio Municipal 1.88% 2.29% 2.44% 1.93% 2.30%
Money Market Portfolio
Average Ohio Tax-Free 1.90% 2.25% 2.20% 1.83% 2.34%
Money Market Fund
Ohio Municipal Money 3.18% 3.87% 4.12% 3.26% 3.89%
Market Tax-equivalent
Average All Taxable 2.63% 2.65% 2.27% 2.93% 3.64%
Money Market Fund
</TABLE>
Row: 1, Col: 1, Value: 1.88
Row: 1, Col: 2, Value: 1.9
Row: 2, Col: 1, Value: 2.29
Row: 2, Col: 2, Value: 2.25
Row: 3, Col: 1, Value: 2.44
Row: 3, Col: 2, Value: 2.2
Row: 4, Col: 1, Value: 1.93
Row: 4, Col: 2, Value: 1.83
Row: 5, Col: 1, Value: 2.3
Row: 5, Col: 2, Value: 2.34
3% -
2% -
1% -
0%
Ohio Tax-Free
Money Market
Average Ohio
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. 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 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 Ohio state income tax rate of 40.80%. 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. And there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Janice Bradburn, Portfolio Manager of Fidelity Ohio
Municipal Money Market Portfolio
Q. JANICE, THERE HAS BEEN A GOOD DEAL OF ACTIVITY IN THE MONEY MARKETS
RECENTLY. CAN YOU REVIEW THE MOST IMPORTANT EVENTS?
A. Sure. Interest rates were stable until February 4, when the Federal
Reserve raised the federal funds rate by one quarter of a percentage point.
That move reversed a three-year trend of declining interest rates, and came
earlier than most of us anticipated. Since then, the Fed has increased
rates in a series of moves. The most recent move was the biggest: a
half-point increase in the federal funds rate on May 17 that brought the
rate to 4.25%.
Q. WHAT DID ALL OF THAT MEAN FOR THE SHORT-TERM MUNICIPAL MARKET?
A. As often is the case, yields in this market are largely a function of
supply and demand, apart from whatever actions the Fed may take. At the
beginning of this year there was considerable demand in this market. But
since many municipalities wait until Spring to do their financing, there
wasn't much supply. That combination of high demand and low supply helped
support prices for municipal securities and depressed their yields even
when the Fed was boosting the federal funds rate. But as Ohio
municipalities began to issue more new securities in the Spring, the
increased supply caused the prices to decline and rates to move higher in
this market.
Q. HOW DID YOU RESPOND TO THOSE CHANGES?
A. The fund's average maturity was around 75 days at the beginning of the
period. But I thought that the next move in rates would be an increase, so
I reduced that maturity to around 64 days by February. The fund was
receiving a good deal of new cash from investors during the period, and I
put much of that money to work in variable rate instruments. Those
securities effectively reduce the average maturity of the fund and make it
less vulnerable to upward moves in interest rates. By March, the fund's
average maturity was down to 51 days. But I brought it back up to around 71
days in early April.
Q. WHY DID YOU INCREASE THE FUND'S AVERAGE MATURITY IN APRIL?
A. I seized an opportunity to invest in some six-month Ohio securities that
were very attractive. And the yields on these securities were high enough
to compensate for the risk that rates would suddenly move higher. The
fund's average maturity has declined to 49 days since then as the
securities have moved closer to their maturity.
Q. HOW DID THE FUND PERFORM?
A. On June 30, the fund's seven-day yield was 2.30%, compared to 2.44% six
months ago. The latest yield is the equivalent of a 3.89% yield on a
taxable investment for Ohio investors in the 40.80% combined federal and
state tax bracket. The fund's total return for the six months ended June 30
was 1.06%. The cumulative total return during the same period for all Ohio
tax-free money market funds was 1.04%, according to IBC/ Donoghue.
Q. WHAT HAPPENS NEXT?
A. The Fed likely will boost rates again. My strategy is to continue to
invest in variable-rate instruments that can reduce the fund's exposure to
the risk of higher interest rates. But I also will look for opportunities
to invest in longer securities at attractive yields. On balance, I'll
maintain a roughly neutral average maturity of around 50 to 60 days until I
see interest rates stabilize.
FUND FACTS
GOAL: tax-free income and
stability by investing in
high-quality short-term Ohio
municipal securities
START DATE: August 29, 1989
SIZE: as of June 30, 1994,
more than $286 million
MANAGER: Janice Bradburn,
since October 1993; manager,
Fidelity and Spartan
Massachusetts Municipal
Money Market funds, since
January 1992;
Fidelity New York Tax-Free
Money Market Portfolio, since
September 1989; and Spartan
New York Municipal Money
Market Portfolio, since
February 1990; joined Fidelity
in 1989
(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.
FIDELITY OHIO 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 61 50 62
31 - 90 17 12 10
91 - 180 15 22 18
181 - 397 7 16 10
WEIGHTED AVERAGE MATURITY
6/30/94 12/31/93 6/30/93
Ohio Municipal
Money Market 49 days 78 days 61 days
Average Ohio Tax-Free
Money Market Fund* 57 days 71 days 64 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: 14.0
Row: 1, Col: 3, Value: 13.0
Row: 1, Col: 4, Value: 20.0
Row: 1, Col: 5, Value: 3.0
Row: 1, Col: 1, Value: 49.0
Row: 1, Col: 2, Value: 8.0
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 27.0
Row: 1, Col: 5, Value: 6.0
Variable rate
demand notes
(VRDNs) 50%
Commercial
paper 14%
Tender bonds 13%
Municipal
notes 20%
Other 3%
Variable rate
demand notes
(VRDNs) 49%
Commercial
paper 8%
Tender bonds 10%
Municipal
notes 27%
Other 6%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
FIDELITY OHIO 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)
OHIO - 100.0%
Akron Gen. Oblig. Street Impt. Special Assessment
BAN 2.93% 12/15/94 $ 1,000,000 $ 1,000,801
Akron Swr. Sys. BAN 3.63% 10/13/94 2,500,000 2,503,008
Bedford Heights Ind. Dev. (Olympic Steel) Series 1989,
2.85%, LOC Nat'l. City Bank, Cleveland, VRDN 1,700,000 1,700,000
Brook Park BAN 4.19% 7/6/95 (a) 840,000 841,932
Brookville Ind. Dev. Rev. (Green Tokai Bank Proj.)
Series 1988, 3.15%, LOC Tokai Bank,VRDN (b) 4,000,000 4,000,000
Cleveland City School Dist. TRAN 4.50% 12/30/94,
LOC Canadian Imperial Bank 8,000,000 8,054,520
Cleveland-Cuyahoga County Port Auth. Rev.
(Rock'n Roll Hall of Fame & Museum Proj.), 2.65%,
LOC Credit Local De France, VRDN 5,400,000 5,400,000
Cleveland Public Pwr. Sys. Impt. Rev. BAN,
Series 93-B, 3.50% 8/1/94 9,000,000 9,003,118
Cuyahoga County Hosp. Participating VRDN,
Series PA-15, 2.55% (BPA Merrill Lynch & Co.)(c) 8,000,000 8,000,000
Dayton Special Facs. Rev. Rfdg.
(Emery Air Freight Corp.)(b):
Series 1988 D, 3.65%, LOC Mellon Bank, VRDN 1,000,000 1,000,000
Series 1993 E, 2.80%, LOC Mellon Bank, VRDN 6,000,000 6,000,000
Fairfax Ind. Dev. Rev. (Johnson & Hardin Co. Proj.)
Series 1990, 2.80%, LOC Central Co., VRDN(b) 3,400,000 3,400,000
Hamilton County Health Care Facs. Rev.
(West Park Retirement Commty.) Series 1989, 2.30%,
LOC Fifth Third Bank, Cincinnati, VRDN 1,000,000 1,000,000
Hamilton County Ind. Dev. Rev.
(Visual Management Group Proj.) Series 1989, 2.80%
LOC Nat'l. Bank of Detroit, VRDN (b) 1,020,000 1,020,000
Hamilton County Swr. Participating VRDN, Series PA-15,
2.55%, (BPA Merrill Lynch & Co.)(c) 5,660,000 5,660,000
Highland County Ind. Dev. Rev. Rfdg. Bonds
(Lancaster Colony Corp.)Series 1990,
2.80% tender 9/1/94, LOC PNC Bank 3,400,000 3,398,866
Holmes County Ind. Dev. Rev. (Poultry Processing, Inc.)
Series 1990, 2.80%,
LOC Rabobank Nederland, VRDN (b) 500,000 500,000
Lorain County Ind. Dev. (French Creek Partners)
Series A, 2.80%, LOC Bank One, VRDN(b) 1,100,000 1,100,000
Madison County BAN 2.79% 11/14/94 1,375,000 1,375,699
Marion County Hosp. Rev. Bonds (Pooled Lease Prog.):
Series 1991, 3.25% tender11/1/93, LOC Bank One 3,785,000 3,785,000
Series 1992, 3% tender 10/1/93, LOC Bank One 13,700,000 13,700,000
Medina County Ind. Dev. Rev.
(North American Roto Engravers, Inc. Proj.)
Series 1988 2.75%, LOC Bank One, VRDN (b) 975,000 975,000
Middletown Ind. Dev. Rev. (Pilot Chemical Proj.) 2.75%,
LOC Bank One, VRDN (b) 3,000,000 3,000,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Montgomery County Ind. Dev. Rev.
(Modern Industrial Plastics Inc.) Series 1988, 2.625%
LOC Industrial Bank of Japan, VRDN $ 2,000,000 $ 2,000,000
Montgomery County Miami Valley Hosp. Rev. Auth. Bonds,
Series B, 3.15% tender 7/14/94 LOC Fuji Bank Ltd 4,750,000 4,750,000
Muskingum County Ind. Dev. Rev. (Elder-Beerman Stores Inc.)
2.90%, LOC Pittsburgh Nat'l. Bank, VRDN 700,000 700,000
Ohio Air Quality Dev. Auth.:
(JMG Funding, LTD Prtn.) VRDN (b):
Series 1992 A, 2.60%, LOC Societe Generale 5,900,000 5,900,000
Series 1992 B, 2.30%, LOC Societe Generale 7,300,000 7,300,000
Series 1994 A, 2.60%, LOC Societe Generale 6,500,000 6,500,000
Series 1994 B, 2.30%, LOC Societe Generale 3,000,000 3,000,000
Ohio Air Quality Dev. Auth. Bonds (Cleveland Electric)
Series 1988 B:
2.85% tender 8/8/94 (FGIC Insured) 4,500,000 4,500,000
2.75% tender 8/9/94 (FGIC Insured) 7,300,000 7,300,000
Ohio Higher Ed. Cap. Facs. Participating VRDN,
Series BT-29, 2.40%, (Liquidity Facility Banker's Trust)(c) 4,940,000
4,940,000
Ohio Higher Ed. Participating VRDN, Series PA-13, 2.60%,
(BPA Merrill Lynch & Co.)(c) 2,400,000 2,400,000
Ohio Hsg. Fin. Agcy. Single Family Mtg. Rev. Bonds
Series 1992 A-2, 3.40% tender 12/1/94,
GIC Morgan Stanley, (b) 4,000,000 4,000,000
Ohio Ind. Dev. Rev., VRDN (b):
(Aerolite Extrusion) Series 1991 IA, 2.80%,
LOC Banc Ohio Nat'l. Bank 185,000 185,000
(All Tools, Inc.) Series 1989 IIIA, 2.80%,
LOC Nat'l. Bank of Columbus 105,000 105,000
(Anomatic Corp.) Series 1989 I, 2.80%,
LOC BancOhio Nat'l. Bank 265,000 265,000
(Arthur Corp.) Series 1989 IIIA, 2.80%,
LOC Nat'l. Bank of Columbus 340,000 340,000
(Burnham Corp. Proj.):
Series 1987 N, 2.80%, LOC Bank One 505,000 505,000
Series 1988 II, 2.80%, LOC Central Trust Co. 440,000 440,000
(CCE Inc.) Series 1989, 2.80%,
LOC BancOhio Nat'l. Bank 975,000 975,000
(Carpenter/ Clapp & Haney Tool Co.)
Series 1987 P, 2.80%, LOC Bank One 400,000 400,000
(Cole Tool & Die) Series 1988 H, 2.80%,
LOC Bank One 330,000 330,000
(Corpad Head Co.) Series 1988 II, 2.80%,
LOC Central Trust Co. 615,000 615,000
(Die Matic Inc.) Series O, 2.80%,
LOC Bank One, Columbus 405,000 405,000
(Dramex Int'l., Inc.):
Series 1988 I, 2.80%, LOC Bank One 1,000,000 1,000,000
Series 1988 II, 2.80%, LOC Central Trust Co. 200,000 200,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Ind. Dev. Rev., VRDN (b) - continued
(EF Realty) Series A, 2.80%,
LOC Nat'l. City Bank, Cleveland $ 215,000 $ 215,000
(EPIC Technologies Inc.) Series 1988 D, 2.80%,
LOC Bank One, Columbus 310,000 310,000
(Economy Machine & Tool North Inc. Proj.)
Series 1988 II, 2.80%, LOC Nat'l. City Bank 205,000 205,000
(Gary W. James) Series 1986 B, 2.80%,
LOC Nat'l. City Bank 315,000 315,000
(HGN Realty/Shalmet Ohio, Inc.)
Series 1989 III A, 2.80%,
LOC BancOhio Nat'l. Bank 1,840,000 1,840,000
(Hydro Tube Corp.) 2.80%,
LOC Nat'l. Bank of Columbus 90,000 90,000
(K&S Realty) Series 1989 I, 2.80%,
LOC BancOhio Nat'l. Bank 320,000 320,000
(K&S Realty/Starr Fabricating, Inc.)
Series 1989 III, 2.80%, LOC BancOhio Nat'l. Bank 255,000 255,000
(Kaufmans Bakery) Series K, 2.80% 1/2/03,
LOC Bank One, Columbus 895,000 895,000
(Masashi Nagai/Snair Co.) Series H, 2.80%,
LOC Bank One, Columbus 1,410,000 1,410,000
(Midwest Acoust-A-Fiber, Inc.) Series 1989 I, 2.80%,
LOC BancOhio 585,000 585,000
(Morrow Macke Realty) Series 1988 C, 2.80%,
LOC Bank One 800,000 800,000
(Oak Printing) Series 1991, 2.80%,
LOC BancOhio Nat'l. Bank 600,000 600,000
(Plasticos Co.) Series 1989 IIIA, 2.80%,
LOC Nat'l. Bank of Columbus 770,000 770,000
(Prentke Romich) Series 1989 III, 2.80%,
LOC Nat'l. City Bank 145,000 145,000
(P. Thompson Steel Co.) Series 1988, 2.80%,
LOC Bank One, Columbus 500,000 500,000
(Quick Tab) Series 1989 IIIA, 2.80%,
LOC BancOhio Nat'l. Bank 400,000 400,000
(SBD Properties Co.) Series 1986 L, 2.80%,
LOC Nat'l. City Bank 215,000 215,000
(Samuel and Annie Sherman) Series 1989 III A, 2.80%,
LOC Nat'l. Bank of Columbus 350,000 350,000
(Sheffield Steel) Series 1988 B, 2.80%,
LOC Bank One 85,000 85,000
(Southwest Fin. Svcs.) Series 1986, 2.80%,
LOC Nat'l. City Bank 85,000 85,000
(Standby Screw) Series 1991, 2.80%,
LOC BancOhio Nat'l. Bank 840,000 840,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Ind. Dev. Rev., VRDN (b) - continued
(Steubenville Area) Series 1988 II, 2.80%,
LOC Central Trust Co. $ 360,000 $ 360,000
(Thomas K. Issacs) Series 1990 IB, 2.80%,
LOC BancOhio Nat'l. Bank 250,000 250,000
(United Steel Svc.) Series 1988 J, 2.60%,
LOC Bank One 790,000 790,000
(VRE Inc.) Series F, 2.80%,
LOC Bank One, Columbus 225,000 225,000
(Walker-Williams Lumber Co.) Series 1989 IIIA, 2.80%,
LOC BancOhio Nat'l. Bank 1,370,000 1,370,000
(Wooster Iron Metal Co.) Series 1988 R, 2.80%,
LOC Bank One 620,000 620,000
Ohio Pub. Facs. Commission Higher Ed. Cap. Facs.
Participating VRDN, Series PA-76I, 2.60%
(Liquidity Facility Merrill Lynch & Co)(c) 4,740,000 4,740,000
Ohio Pub. Facs. Commission Higher Ed. Facs. Rev.
Series II-1993B, 4.625% 12/1/94 8,000,000 8,059,871
Ohio Student Loan Fdg. Corp. Student Loan Rev.:
Series 1990-A2, 2.30%, LOC Natwest, VRDN (b) 3,800,000 3,800,000
Series 1990-A3, 2.30%,
LOC Nat'l. Westminster, VRDN (b) 2,500,000 2,500,000
Ohio Wtr. Dev. Auth. Collateralized Poll. Cont. Rev. Rfdg.
Bonds (Cleveland Elec. Proj.) Series 1988 A, 2.75%
tender 8/9/94 (FGIC Insured) 3,000,000 3,000,000
Ohio Wtr. Dev. Auth. Participating VRDN:
Series PA-1016A, 2.55%, (SBPA Merrill Lynch & Co)(c) 2,620,000
2,620,000
Series PA-1016B, 2.55%, (SBPA Merrill Lynch & Co)(c) 3,300,000
3,300,000
Ohio Wtr. Dev. Auth. Poll. Cont. Facs. Rev. Bonds (b):
(Cleveland Elec. Co. Proj.):
Series 1988 A-1, 2.80% tender 7/7/94 LOC Citibank 8,500,000 8,500,000
Series 1988 A, 2.80% tender 7/7/94, LOC Citibank 4,000,000 4,000,000
(Duquesne Light Co. Proj.):
3.25% tender 8/8/94, LOC Toronto Dominion Bank 1,500,000 1,500,000
2.70% tender 7/18/94, LOC Toronto Dominion 1,000,000 1,000,000
3.35% tender 7/26/94, LOC Toronto Dominion Bank 3,500,000 3,500,000
(Ohio Edison Co. Proj.) Series 1988 B, 3.125% tender
9/3/91, LOC Barclays Bank 9,000,000 9,000,277
(Toledo Edison Co. Proj.) Series 1988 A, 2.80%
tender 7/7/94 LOC Citibank 1,000,000 1,000,000
Ohio Wtr. Dev. Auth. Rev. (Timken Company Proj.) 2.20%,
LOC Wachovia Bank of Georgia,VRDN 2,500,000 2,500,000
Scioto County Hosp. Facs. Rev.
(VHA Central Inc. Cap. Asset Fin. Prog.) VRDN:
Series 1985-B, 2.45%, (AMBAC Insured)
BPA First Chicago Corp. 750,000 750,000
Series 1985-F, 2.45% 12/1/25, (AMBAC Insured),
BPA First Chicago Corp. 800,000 800,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Scioto County Marine Term. Facs. Rev.
(Norfolk Southern Corp. Proj.) 2.40%, VRDN $ 2,700,000 $ 2,700,000
Sharonville Ind. Dev. Rev. (Xtec, Inc.) Series 1991, 2.75%,
LOC Fifth Third Bank, VRDN 2,000,000 2,000,000
Stark County BAN:
3.06% 7/13/94 11,375,000 11,375,840
3.02% 10/26/94 1,340,000 1,340,919
Stark County Ind. Dev. Rev. (Liquid Cont. Corp. Proj.)
Series 1987, 2.75%, LOC Bank One, VRDN (b) 390,000 390,000
Summit County BAN:
(Fairgrounds Impt.) 3.55% 12/12/94 1,445,000 1,446,253
Series C, 3.85% 3/9/95 1,250,000 1,252,092
3.55% 12/12/94 1,810,000 1,811,570
Summit County Ind. Dev. Rev.:
(Keltec Inc. Proj.) Series 1987, 2.75%,
LOC Bank One, VRDN (b) 400,000 400,000
(Kuchar Proj.) Series 1987, 2.75%,
LOC Bank One, VRDN (b) 760,000 760,000
(Mannix County Proj.) Series 1987, 2.75%,
LOC Bank One, Akron, VRDN (b) 1,840,000 1,840,000
Summit County Ind. Dev. Rev. Bonds Composite
Offering Adj. Rate:
(Kuchard Proj.) 3.15% tender 10/1/93,
LOC Bank One 580,000 580,000
(SGS Tool Co. Proj.) 3.15% tender 10/1/93,
LOC Bank One (b) 3,250,000 3,250,000
(Spark Tec Int'l. Proj.) Series 1989, 3.45%
tender 11/1/93, LOC Bank One, (b) 415,000 415,000
Summit County Ind. Dev. Rev. (American Laser Tech Inc.
Proj.) 2.80%, LOC Fuji Bank, VRDN, (b) 3,000,000 3,000,000
Toledo-Lucas County Convention & Visitors Bureau Rev.
Rfdg. (Toledo-Lucas County Convention Ctr. Proj.)
Series 1991, 2.65%, LOC Marine Midland Bank, 2,265,000 2,265,000
Toledo-Lucas County Port Auth. Bonds
(CSX Transportation Inc.) Series 1992, 3.25%
tender 8/10/94 LOC Bank of Nova Scotia 1,500,000 1,500,000
Trumbull County Ind. Dev. Rev. (McDonald Steel Corp.)
Series 1990, 2.80%, LOC Marine Bank
VRDN (b) 2,200,000 2,200,000
University of Cincinnati BAN:
Series K-1, 4% 3/23/95 9,000,000 9,047,439
Series Q, 4% 3/23/95 800,000 804,216
University of Cincinnati Gen. Receipt
BAN 3.02% 9/1/94 5,600,000 5,601,854
Van Wert County Ind. Dev. Auth. Rev.
(Toledo Molding & die Inc.) Series 1994, 2.75%
LOC Bank One, VRDn (b) 4,000,000 4,000,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Warren County Ind. Dev. Rev., VRDN:
(Amtex, Inc. Proj.) 2.70%,
LOC Nat'l. Bank of Detroit $ 1,000,000 $ 1,000,000
(Johnson & Hardin Enterprise) Series 1990 A, 2.80%,
LOC Central Trust (b) 3,100,000 3,100,000
Warren County Water Sys. Impt. TAN
(North Water Proj.) 3.35% 9/23/94 2,422,000 2,423,628
Washington County Ind. Dev. Rev.
(Forma Scientific, Inc. Proj.) 2.80%,
LOC Cent Trust Co., VRDN (b) 1,000,000 1,000,000
TOTAL INVESTMENTS - 100% $ 286,391,903
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) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
(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 December 31, 1993, the fund had a capital loss carryforward of
approximately $11,200 of which $5,100, and $6,100 will expire on December
31, 1998, and 2000, respectively.
FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1994 (UNAUDITED)
135.ASSETS 136. 137.
138.Investment in securities, at value (Note 1) - See 139. $ 286,391,903
accompanying schedule
140.Cash 141. 370,104
142.Interest receivable 143. 1,975,508
144. 145.TOTAL ASSETS 146. 288,737,515
147.LIABILITIES 148. 149.
150.Payable to custodian bank $ 1,220,847 151.
152.Payable for investments purchased 841,932 153.
154.Dividends payable 21,044 155.
156.Accrued management fee 100,145 157.
158.Other payables and accrued expenses 66,778 159.
160. 161.TOTAL LIABILITIES 162. 2,250,746
163.164.NET ASSETS 165. $ 286,486,769
166.Net Assets consist of : 167. 168.
169.Paid in capital 170. $ 286,509,974
171.Accumulated net realized gain (loss) on 172. (25,437)
investments
173.Unrealized gain from accretion of market discount 174. 2,232
(Note 1)
175.176.NET ASSETS, for 286,509,974 shares 177. $ 286,486,769
outstanding
178.179.NET ASSET VALUE, offering price and 180. $1.00
redemption price per share ($286,486,769 (divided by)
286,509,974 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1994 (UNAUDITED)
181.182.INTEREST INCOME 183. $ 3,786,067
184.EXPENSES 185. 186.
187.Management fee (Note 4) $ 575,434 188.
189.Transfer agent, accounting and custodian fees and 216,114 190.
expenses (Note 4)
191.Non-interested trustees' compensation 1,507 192.
193.Registration fees 4,169 194.
195.Audit 10,689 196.
197.Legal 2,323 198.
199.Miscellaneous 3,194 200.
201. 202.TOTAL EXPENSES 203. 813,430
204.205.NET INTEREST INCOME 206. 2,972,637
207.REALIZED AND UNREALIZED GAIN (LOSS) (NOTE 1) 209. (14,208)
208.Net realized gain (loss) on investment securities
210.Increase (decrease) in net unrealized gain from 211. 2,232
accretion
of market discount
212.213.NET GAIN (LOSS) 214. (11,976)
215.216.NET INCREASE IN NET ASSETS RESULTING FROM 217. $ 2,960,661
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
218.INCREASE (DECREASE) IN NET ASSETS
219.Operations $ 2,972,637 $ 5,050,161
Net interest income
220. Net realized gain (loss) on investments (14,208) 2,115
221. Increase (decrease) in net unrealized gain from 2,232 -
accretion
of market discount
222. 2,960,661 5,052,276
223.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
224.Dividends to shareholders from net interest income (2,972,637) (5,050,161)
225.Share transactions at net asset value of $1.00 per 276,345,800 376,255,537
share
Proceeds from sales of shares
226. Reinvestment of dividends from net interest 2,833,103 4,776,146
income
227. Cost of shares redeemed (255,051,499) (388,910,557)
228. 24,127,404 (7,878,874)
Net increase (decrease) in net assets and shares
resulting from share transactions
229. 24,115,428 (7,876,759)
230.TOTAL INCREASE (DECREASE) IN NET ASSETS
231.NET ASSETS 232. 233.
234. Beginning of period 262,371,341 270,248,100
235. End of period $ 286,486,769 $ 262,371,341
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
236. SIX MONTHS YEARS ENDED DECEMBER 31, AUGUST 29, 198
ENDED 9
JUNE 30, 1994 (COMMENCEME
NT
OF OPERATIONS) T
O
DECEMBER 31,
237. (UNAUDITED) 1993 1992 1991 1990 1989
238.SELECTED PER-SHARE DATA
239.Net asset value, beginning of
period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
240.Income from Investment
Operations $ .011 $ .021 .028 .044 .058 .021
Net interest income
241. Dividends from net interest
income (.011) (.021) (.028) (.044) (.058) (.021)
242.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
243.TOTAL RETURN B 1.06% 2.09 2.81 4.50 5.90 2.15%
% % % %
244.RATIOS AND SUPPLEMENTAL DATA
245.Net assets, end of period
(000 omitted) $ 286,487 $ 262,371 $ 270,248 $ 247,885 $ 213,658 $ 57,748
246.Ratio of expenses to average
net assets .58% .59 .58 .47 .23 -
A % % % %
247.Ratio of expenses to average
net assets before expense .58% .59 .59 .64 .69 1.14%A
reductions A % % % %
248.Ratio of net interest income
to average net assets 2.14% 2.07 2.78 4.41 5.77 6.37%A
A % % % %
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Ohio Tax-Free High Yield Portfolio (the high yield fund) is a fund
of Fidelity Municipal Trust. Fidelity Ohio 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 business trust 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
high yield fund and the money market 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.
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."
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 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 a part of
the dividends paid deduction for income tax purposes.
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. Purchases and sales of securities, other than short-term
securities, aggregated $36,111,467 and $76,178,661 respectively.
The market value of futures contracts opened and closed amounted to
$160,525,491 and $150,210,776 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 fund. The group fee rate
is the weighted average of a series of rates ranging from .1325% to .37%
and .15% to .37% for the high yield and money market funds, respectively,
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 money market fund, effective November 1, 1993, FMR voluntarily
agreed to implement a new group fee rate schedule with rates ranging from
.1325% to .37% as it resulted in the same or a lower management fee. This
group fee rate schedule remained in effect through July 31, 1994.
The Board of Trustees has approved a new group fee rate schedule with rates
ranging from .12% to .37%. Effective August 1, 1994, FMR has voluntarily
agreed to implement this new group fee.
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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
DISTRIBUTION AND SERVICE PLAN -
CONTINUED
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 $1,556 and $45,279 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
$216,328 and $92,438 for the high yield fund and $170,253 and $29,584 for
the money market fund, respectively.
Shareholders participating in the Fidelity Ultra Service Account 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. For the period, fees paid to FBSI by shareholders participating in
the Program amounted to approximately $3,850.
TO WRITE FIDELITY
Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0001
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
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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
1907 West State Road 434
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
8180 Greensboro Drive
McLean, 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
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.
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(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*
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PRESS
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1.
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2.
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3.
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4.
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5.
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6.
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ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
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PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
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2.
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4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
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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 GUARAN-
TEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE
CHANGES IN SHARE
PRICE, REIN-
VESTMENT 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.
Page 47 = BLANK
Do NOT strip-in this type
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
Janice S. Bradburn, 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
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 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(registered trademark)
MICHIGAN
MUNICIPAL
PORTFOLIOS
SEMIANNUAL REPORT
JUNE 30, 1994
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on bond market
strategies.
FIDELITY MICHIGAN 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 past six
months
and one year.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 21 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE 25 How the fund has done over time.
FUND TALK 27 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 29 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 30 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 34 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 38 Notes to the financial statements.
</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 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
FIDELITY MICHIGAN 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 and dividends would have been lower.
CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED JUNE 30, 1994 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Fidelity Michigan Tax-Free High Yield Portfoli -5.35% -0.22% 42.82% 107.67%
o
Lehman Brothers Municipal Bond Index -4.41% 0.20% 46.00% n/a
Average Michigan Tax-Exempt
Municipal Bond Fund -4.82% -0.33% 42.71% n/a
Consumer Price Index 1.51% 2.49% 19.26% 36.15%
</TABLE>
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
November 12, 1985. 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 Michigan
tax-exempt municipal bond fund, which reflects the performance of 32
Michigan 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 the CPI
numbers are the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED JUNE 30, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity Michigan Tax-Free High Yield Portfoli -0.22% 7.39% 8.83%
o
Lehman Brothers Municipal Bond Index 0.20% 7.86% n/a
Average Michigan Tax-Exempt
Municipal Bond Fund -0.33% 7.37% n/a
Consumer Price Index 2.49% 3.59% 3.62%
</TABLE>
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.
$10,000 OVER LIFE OF FUND
11/30/85 10000.00 10000.00
12/31/85 10228.04 10087.90
01/31/86 10687.19 10682.08
02/28/86 11127.76 11105.73
03/31/86 11215.73 11109.28
04/30/86 11211.16 11117.73
05/31/86 11014.05 10936.73
06/30/86 11104.96 11041.07
07/31/86 11192.51 11108.08
08/31/86 11728.63 11605.39
09/30/86 11744.86 11634.52
10/31/86 11980.10 11835.45
11/30/86 12202.92 12069.91
12/31/86 12174.63 12036.60
01/31/87 12524.17 12399.02
02/28/87 12647.80 12460.02
03/31/87 12511.95 12327.95
04/30/87 11594.89 11709.33
05/31/87 11456.19 11651.25
06/30/87 11689.71 11993.33
07/31/87 11879.96 12115.67
08/31/87 11906.65 12142.93
09/30/87 11314.43 11695.22
10/31/87 11388.40 11736.62
11/30/87 11631.88 12043.06
12/31/87 11832.70 12217.81
01/31/88 12356.20 12653.00
02/29/88 12509.85 12786.75
03/31/88 12221.63 12637.78
04/30/88 12272.39 12733.83
05/31/88 12347.33 12697.03
06/30/88 12576.27 12882.78
07/31/88 12686.04 12966.78
08/31/88 12749.39 12978.19
09/30/88 12970.04 13213.10
10/31/88 13241.11 13446.31
11/30/88 13134.04 13323.14
12/31/88 13372.66 13459.43
01/31/89 13563.89 13737.78
02/28/89 13481.08 13581.03
03/31/89 13486.10 13548.57
04/30/89 13881.01 13870.21
05/31/89 14164.98 14158.30
06/30/89 14347.57 14350.57
07/31/89 14479.62 14545.88
08/31/89 14366.23 14403.47
09/30/89 14332.92 14360.26
10/31/89 14477.63 14535.46
11/30/89 14678.29 14789.83
12/31/89 14738.67 14911.10
01/31/90 14647.76 14841.02
02/28/90 14772.60 14973.11
03/31/90 14766.57 14977.60
04/30/90 14511.72 14869.76
05/31/90 14855.92 15193.92
06/30/90 14983.11 15327.63
07/31/90 15193.41 15552.94
08/31/90 14963.53 15327.43
09/30/90 15038.11 15336.62
10/31/90 15180.59 15614.22
11/30/90 15477.85 15928.06
12/31/90 15497.50 15998.14
01/31/91 15644.75 16212.52
02/28/91 15761.71 16353.57
03/31/91 15792.95 16360.11
04/30/91 16055.17 16577.70
05/31/91 16128.95 16725.24
06/30/91 16105.12 16708.52
07/31/91 16359.20 16912.36
08/31/91 16555.78 17135.60
09/30/91 16737.51 17358.37
10/31/91 16919.67 17514.59
11/30/91 16981.94 17563.63
12/31/91 17362.94 17941.25
01/31/92 17425.81 17982.52
02/29/92 17454.90 17987.91
03/31/92 17474.70 17995.11
04/30/92 17629.58 18155.26
05/31/92 17820.61 18369.49
06/30/92 18133.46 18678.10
07/31/92 18795.51 19238.44
08/31/92 18530.13 19049.91
09/30/92 18655.94 19173.73
10/31/92 18340.70 18985.83
11/30/92 18789.33 19325.68
12/31/92 19018.73 19522.80
01/31/93 19297.47 19749.26
02/28/93 20073.13 20464.19
03/31/93 19844.03 20247.26
04/30/93 20055.87 20451.76
05/31/93 20189.52 20566.29
06/30/93 20536.19 20909.75
07/31/93 20521.04 20936.93
08/31/93 21007.44 21372.42
09/30/93 21273.22 21616.07
10/31/93 21305.56 21657.14
11/30/93 21166.56 21466.55
12/31/93 21649.22 21919.50
01/31/94 21943.25 22169.38
02/28/94 21309.59 21595.19
03/31/94 20346.30 20716.27
04/30/94 20447.35 20892.36
05/31/94 20552.01 21074.12
06/30/94 20491.65 20951.89
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Michigan Tax-Free High Yield Portfolio on November 30, 1985, shortly after
the fund started. As the chart shows, by June 30, 1994, the value of your
investment would have grown to $20,492 - a 104.92% 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 $20,952 - a 109.52% 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 2.72% 6.28% 6.72% 7.26% 7.04% 7.34%
Capital appreciation
returns -8.07% 7.55% 2.82% 4.78% -1.89% 2.87%
Total returns -5.35% 13.83% 9.54% 12.04% 5.15% 10.21%
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.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED JUNE 30, 1994 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.66(cents) 33.98(cents) 69.44(cents)
Annualized dividend rate 6.01% 5.85% 5.75%
30-day annualized yield 5.83% - -
30-day annualized tax-equivalent yield 9.55% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $11.46 over
the past month, $11.72 over the past six months and $12.07 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 38.86% combined effective 1994 federal and Michigan state tax
bracket.
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Peter Allegrini,
Portfolio Manager of Fidelity
Michigan Tax-Free High Yield Portfolio
Q. PETER, HOW HAS THE FUND PERFORMED?
A. It has been a difficult period for both the municipal bond market and
the fund. For the six months ended June 30, 1994, the fund had a total
return of -5.35%. That lagged the average Michigan municipal fund, which
returned -4.82% for the same period, according to Lipper Analytical
Services. For the 12 months ended June 30, 1994, the fund returned -0.22%,
compared to the average return of -0.33%, again according to Lipper.
Q. LET'S START WITH THE MUNICIPAL BOND MARKET - WHAT CAUSED IT TO FALL OVER
THE PAST SIX MONTHS?
A. Simply put, higher interest rates. Most municipal bond investors greeted
the start of 1994 with enthusiasm, based partly on expectations that strong
supply and demand factors would work in municipal bonds' favor. The supply
of new bonds issued was estimated to be much lower in 1994 as in 1993, and
higher federal income taxes were expected to ignite demand. Bond investors
entered the new year fully invested and the technical factors for the
municipal bond market were positive. But, in February, the Federal Reserve
made the first of several interest rate hikes, to which long-term bond
investors reacted negatively. The Federal Reserve raised the federal funds
rate - the rate banks charge each other for overnight loans - to 3.25% And
through May, the Fed moved three more times, raising the fed funds rate 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 were concerned that the Fed would
raise rates again.
Q. IN 1993, YOU POSITIONED THE FUND TO TAKE ADVANTAGE OF LOW INTEREST
RATES. NOW THAT RATES HAVE RISEN, HAVE YOU CHANGED YOUR STRATEGY?
A. There are some signs of increasing economic activity which could result
in higher inflation. But, as I mentioned, the Federal Reserve has been
acting aggressively against inflation by raising short-term interest rates.
I believe that we are approaching a near-term high in long-term interest
rates and that longer duration bonds could provide relatively attractive
returns going forward. Duration measures the sensitivity of a bond's price
to changes in interest rates, the longer the duration, the larger the price
move for a given change in interest rates. Longer duration bonds tend to
perform well when interest rates are falling. During the recent market
decline, I hedged the long duration bonds in the portfolio with futures,
which generally helped reduce the volatility of the portfolio. The
portfolio remains structured to benefit if long-term interest rates
stabilize.
Q. AREN'T FUTURES ONE OF THE FINANCIAL ARRANGEMENTS KNOWN AS DERIVATIVES,
AND DO YOU USE OTHERS?
A. Yes, a future is one type of derivative - meaning its market value is
derived from an underlying security or market index. 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 - which has a yield
that 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 and have no current plans to
increase that percentage. By using these various derivatives, I can achieve
increased flexibility in managing the fund's overall sensitivity to changes
in interest rates and, hopefully, can achieve higher levels of income.
Q. WHAT OTHER STRATEGIC CHOICES HAVE YOU MADE?
A. One main focus for me has been producing a high level of tax-exempt
income. Health care is one sector that can offer a relatively attractive
level of income and currently makes up about 27.9% of the fund's assets.
The health care industry has been undergoing a dramatic change, so I
carefully select individual bonds that appear to be well-positioned to
prosper in the new health care environment. On a relative basis, the health
care sector has performed well during the past six months. We may begin to
lock in that performance advantage and reduce the fund's health care
exposure as other high income opportunities present themselves.
Q. YOU MENTIONED THE SUPPLY AND DEMAND FACTORS THAT WERE EXPECTED TO BOOST
MUNICIPAL PRICES THIS YEAR. DID RISING INTEREST RATES DERAIL ANY POSITIVE
EFFECTS OF THOSE FACTORS?
A. Higher rates actually reduced the supply of new bonds even more than
anticipated. That's because higher borrowing costs dampened the incentive
to issue refunding bonds, which are used to replace older, higher interest
rate bonds. However, higher rates also dampened the demand for municipal
bonds as investors became concerned about declining bond prices. If
interest rates decline - causing prices to rise - demand for municipal
bonds could increase. Given my forecast of continued low new issue supply,
a pick up in demand could result in municipal bonds outperforming other
fixed income securities. Whatever happens, it will be nearly impossible to
produce the same strong returns in 1994 that we enjoyed in 1993, so
investors would be wise to expect more modest returns.
FUND FACTS
GOAL: to provide a high level
of current income exempt from
federal and Michigan state
income taxes
START DATE: November 12,
1985
SIZE: as of June 30, 1994,
more than $503 million
MANAGER: Peter Allegrini,
since November 1985;
manager,
Fidelity Advisor High Income
Municipal Fund, since
February 1992; Fidelity Ohio
Tax-Free High Yield Fund,
since November, 1985;
formerly, manager
Fidelity Minnesota Tax-Free
Fund from November 1985 to
September 1993 and Spartan
Pennsylvania Municipal High
Yield Fund, August 1986 to
September 1993; joined
Fidelity in 1982
(checkmark)
PETER ALLEGRINI ON THE
MICHIGAN ECONOMY:
"The Michigan economy is
presently quite strong. Many
homeowners from across the
country have used the
proceeds from refinancing
their mortgages to buy new
cars. That spurred auto sales
in 1993, which in turn, gave a
boost to the state's economy.
Now that interest rates have
risen, auto sales may drop,
and could translate into a
slower Michigan economy. On
the other hand, the falling
dollar has helped keep U.S.
auto prices low compared to
foreign models. What's more,
Michigan has diversified and
now includes more
service-oriented businesses
in the financial services,
technology and other sectors.
These should provide real
growth opportunities for the
state's economy."
(bullet) Health care bonds continue
to make up the fund's largest
investment - 27.9% as of
June 30, 1994. These bonds
are also attractive, in part,
because of their high yields.
(bullet) Effective July 18, 1994,
Maureen Newman became
portfolio manager of the fund.
She joined Fidelity in 1985 as
a bond analyst.
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF JUNE 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
Health Care 27.9 26.8
General Obligation 12.2 14.5
Electric Revenue 11.9 11.6
Escrowed/prerefunded 6.8 6.1
Transportation 6.5 6.6
AVERAGE YEARS TO MATURITY AS OF JUNE 30, 1994
6 MONTHS AGO
Years 18.5 20.0
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 9.5 8.9
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 31.3%
Aa, A 30.1%
Baa 18.5%
Ba, B 7.7%
Non-rated 11.0%
Short-term investments 1.4%
Row: 1, Col: 1, Value: 31.3
Row: 1, Col: 2, Value: 30.1
Row: 1, Col: 3, Value: 18.5
Row: 1, Col: 4, Value: 7.7
Row: 1, Col: 5, Value: 11.0
Row: 1, Col: 6, Value: 2.0
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 8.7% OF THE FUND'S INVESTMENT.
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO
INVESTMENTS JUNE 30, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 98.6%
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
MICHIGAN - 89.4%
Ann Arbor School Dist. Pub. Schools Unltd.
Tax (Cap. Appreciation) 0% 5/1/05 Aa $ 1,500,000 $ 780,000
Bay City Street Impt. Gen. Oblig.
(Cap. Appreciation) 0% 6/1/07,
(AMBAC Insured) Aaa 1,595,000 725,725
Brighton Livingston County Wtr. Supply Sys.
Ltd. Tax:
5.25% 11/1/08 A 200,000 182,500
5.25% 11/1/09 A 200,000 177,500
Brighton Area School Dist. Unltd. Tax:
Rfdg. Series II:
0% 5/1/13 (AMBAC Insured) (f) Aaa 10,050,000 3,027,563
0% 5/1/15 (AMBAC Insured) Aaa 12,950,000 3,399,375
Series I, 0% 5/1/05 (AMBAC Insured) Aaa 3,320,000 1,772,050
Comstock Pub. Schools (Cap. Appreciation)
0% 5/1/05, (Cap. Guaranty Insured) Aaa 1,300,000 693,875
Detroit City School Dist. 7.15% 5/1/11,
(AMBAC Insured) Aaa 2,000,000 2,237,500
Detroit Convention Facs. Rev. Rfdg.
(Cobo Hall Expansion Proj.):
5.25% 9/30/07 A 6,500,000 5,866,250
5.25% 9/30/12 A 13,500,000 11,896,875
Detroit Econ. Dev. Corp. Ltd. Oblig. Rev.
(Michigan Health Care Corp. Proj.)
9.10% 12/1/09 - 3,905,000 3,851,306
Detroit Gen. Oblig.:
(Distributable State Aid):
Rfdg. 5.25% 5/1/08, (AMBAC Insured) Aaa 2,500,000 2,293,750
Rfdg. 5.25% 5/1/09, (AMBAC Insured) Aaa 4,000,000 3,665,000
7.20% 5/1/09, (AMBAC Insured)
(Pre-refunded to 5/1/99 @ 102)(e) Aaa 2,500,000 2,759,375
6.35% 4/1/14 Ba1 3,500,000 3,338,125
Detroit Hosp. Fin. Auth. Facs. Rev.
(Michigan Healthcare Corp. Proj.)
10% 12/1/20 B 14,655,000 15,296,156
Detroit Swr. Disp. Rev. 8.145% 7/1/23,
(FGIC Insured)(d) Aaa 9,000,000 7,470,000
Detroit Wtr. Supply Sys. Rev. Rfdg.
6.50% 7/1/15, (FGIC Insured) Aaa 15,000,000 15,375,000
Flint Hosp. Bldg. Auth. Rev.:
Rfdg. (Hurley Med. Ctr.) 9.50% 7/1/06 Baa1 5,670,000 5,974,763
(Hurley Med. Ctr.) 6.50% 7/1/20 Baa1 5,570,000 5,312,388
Forest Hills Pub. Schools Gen. Oblig. Unltd.
Tax 7.375% 5/1/15
(Pre-refunded to 5/1/00 @ 101)(e) Aa 2,000,000 2,225,000
Fraser Bldg. Auth. Ltd. Tax 5% 11/1/18 A1 1,000,000 807,500
Grand Haven Elec. Rev. Rfdg.
5.25% 7/1/16, (MBIA Insured) Aaa 5,500,000 4,867,500
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Grand Rapids San. Swr. Sys. Rev. Impt. &
Rfdg. 7% 1/1/16 A1 $ 1,000,000 $ 1,065,000
Grand Rapids Wtr. Supply Sys. Rev.
7.25% 1/1/20, (FGIC Insured) Aaa 3,000,000 3,333,750
Grand Valley Univ. Rev. Gen. Oblig.:
Rfdg. 5.15% 101/09, (AMBAC Insured) Aaa 2,750,000 2,495,625
7.875% 10/1/08
(Pre-refunded to 11/1/00 @102 )(e) A 1,000,000 1,125,000
Greater Detroit Resource Recovery Auth. Rev.:
Series G, 9.25% 12/13/08 BBB- 3,000,000 3,195,000
Series H, 9.25% 12/13/08 BBB- 3,550,000 3,780,750
Gull Lake Commty. School Dist.
(Cap. Appreciation) 0% 5/1/13,
(FGIC Insured) Aaa 3,000,000 930,000
Harbor Springs Bldg. Auth. Pub. Schools
Unltd. Tax:
0% 5/1/11, (AMBAC Insured) Aaa 1,280,000 441,600
0% 5/1/12, (AMBAC Insured) Aaa 1,390,000 450,013
0% 5/1/13, (AMBAC Insured) Aaa 1,455,000 443,775
Haslett Pub. School Dist. Unltd. Tax
7.50% 5/1/20
(Pre-refunded to 5/1/00 @ 101)(e) A1 1,500,000 1,678,125
Howell Pub. Schools Unltd. Tax
Rfdg. (Cap. Appreciation):
0% 5/1/10, (AMBAC Insured) Aaa 1,130,000 413,863
0% 5/1/11, (AMBAC Insured) Aaa 1,800,000 618,750
0% 5/1/12, (AMBAC Insured) Aaa 1,255,000 396,894
0% 5/1/13, (AMBAC Insured) Aaa 1,000,000 300,000
0% 5/1/14, (AMBAC Insured) Aaa 1,600,000 422,000
0% 5/1/15, (AMBAC Insured) Aaa 1,000,000 281,250
(Cap. Appreciation) 0% 5/1/06,
(FGIC Insured)(escrowed to
maturity)(e) Aaa 985,000 493,731
Huron Valley School Dist. Gen. Oblig.
Unltd. Tax 7.10% 5/1/08
(Pre-refunded to 5/1/01 @ 102)(e) A1 2,500,000 2,781,250
Huron Valley School Dist. Unltd. Tax Rfdg.
(Cap. Appreciation) 0% 5/1/11,
(FGIC Insured) Aaa 5,830,000 2,055,075
Imlay City Commty. School Dist. Rfdg.
(Cap. Appreciation) 0% 5/1/06,
(FGIC Insured) Aaa 1,375,000 689,219
Kalamazoo City School Dist. Unltd. Tax
(School Bldg. & Site) 0% 5/1/07 Aa 1,195,000 542,231
Kalkaska Pub. Schools Gen. Oblig Unltd. Tax
0% 5/1/21, (AMBAC Insured) Aaa 980,000 173,950
Kent County Refuse Disp. Sys. Ltd. Tax
Rfdg. 8.40% 11/1/10 A1 2,000,000 2,187,500
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Kent Hosp. Fin. Auth. Rev. Rfdg.
(Butterworth Hosp. Facs.) Series A,
7.25% 1/15/13 A1 $ 5,685,000 $ 6,104,269
Lansing Bldg. Auth. Rev. (Deferred Interest);
0% 6/1/10, (AMBAC Insured) Aaa 2,500,000 909,375
0% 6/1/12, (FGIC Insured) Aaa 3,000,000 941,250
Lowell Area Schools Unltd. Tax:
Rfdg. 0% 5/1/15, (FGIC Insured) Aaa 6,380,000 1,674,750
Rfdg. 0% 5/1/16, (FGIC Insured) Aaa 2,000,000 492,500
Rfdg. 0% 5/1/17, (FGIC Insured) Aaa 7,435,000 1,719,344
Rfdg. 0% 5/1/15, (FGIC Insured)
(Pre-refunded to 5/1/05 @ 49)(e) Aaa 8,775,000 2,281,500
Marquette City Hosp. Fin. Auth. Rev. Rfdg.
(Marquette Gen. Hosp.) Series C:
7.50% 4/1/07 A 1,000,000 1,072,500
7.50% 4/1/19 A 1,190,000 1,262,888
Menominee Area Pub. School Dist.
(Cap. Appreciation) 0% 5/1/05 A1 640,000 335,200
Michigan Bldg. Auth. Rev.:
Series II, 6.75% 10/1/07,
(AMBAC Insured) Aaa 2,100,000 2,233,875
Series II, 6.75% 10/1/11 A 1,000,000 1,027,500
(Chippewa Correctional)
Series I, 0% 10/1/00 A 2,275,000 1,635,156
(Detroit Regional) Series I:
0% 10/1/99 A 1,000,000 1,530,000
0% 10/1/01 A 1,000,000 686,250
0% 10/1/02 A 2,000,000 1,272,500
0% 10/1/04 A 8,120,000 4,516,750
Michigan Comprehensive Trans. Rev. Rfdg.
Series II, 7.625% 5/1/11 A1 2,145,000 2,319,281
Michigan Hosp. Fin. Auth. Rev.:
Rfdg.
(Bay Med. Ctr.) Series A, 8.25%
7/1/12 Baa1 3,000,000 3,243,750
(Brighton Hosp.) Series A,
8.625% 10/1/18 - 1,550,000 1,579,063
(Crittenton Hosp.) 5.25% 3/1/14 A 4,620,000 3,880,800
(Detroit Macomb Hosp. Corp.) Series A,
7.40% 6/1/13 B 12,185,000 11,849,913
7% 6/1/15 B 1,345,000 1,250,850
(Detroit Med. Ctr.) Series B,
5.50% 8/15/23 A 5,000,000 4,181,250
(Gratiot Commty. Hosp.) Series A,
8.75% 10/1/07 B 4,400,000 4,427,500
(McLaren Obligated Group) Series A:
5.375% 10/15/13 A 4,280,000 3,659,400
4.50% 10/15/21 A 8,475,000 6,049,031
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Hosp. Fin. Auth. Rev. - continued
Rfdg. - continued
(Pontiac Osteopathic Hosp.) Series A:
6% 2/1/14 Baa1 $ 3,600,000 $ 3,195,000
6% 2/1/24 Baa1 2,000,000 1,727,500
(Port Huron Hosp.) Series A:
7.50% 7/1/05 Baa 1,000,000 1,023,750
7.625% 7/1/15 Baa 2,250,000 2,368,125
(Saratoga Commty. Hosp.)
8.75% 6/1/10 - 1,840,000 1,934,300
(Sisters of Mercy Health Corp.)
5.375% 8/15/14 (MBIA Insured) Aaa 9,950,000 8,942,563
(Daughters of Charity) 10% 11/1/15 Aa 1,090,000 1,179,925
(Daughters of Charity) (Providence Hosp.)
7% 11/1/21 Aa 1,000,000 1,061,250
(Garden City Hosp.) 8.50% 9/1/17 Ba 2,000,000 2,125,000
(Harper Grace & Huron Valley Hosp.)
Series A, 10% 10/1/16 A 10,000 10,750
(Sisters Mercy Health Corp.)
7.50% 2/15/18
(Pre-refunded to 2/15/01 @102)(e) A 1,000,000 1,132,500
Michigan Hsg. Dev. Auth. Ltd. Oblig. Rev.
(Parkway Meadows Proj.)
6.85% 10/15/18, (FSA Insured) Aaa 2,000,000 2,025,000
Michigan Hsg. Dev. Auth. Rental Hsg. Rev.:
Series A, 6.60% 4/1/12 A+ 2,000,000 2,005,000
Series B:
5.80% 4/1/19 A+ 4,650,000 4,132,688
7.55% 4/1/23 A+ 4,750,000 5,070,625
Michigan Hsg. Dev. Auth. Single Family Mtg.
Rev., Series A:
7.70% 12/1/16 AA 3,005,000 3,155,250
6.875% 6/1/23 AA 2,535,000 2,563,519
Michigan Muni. Bond Auth. Rev.:
(Local Gov't. Loan Prog.):
Rfdg. Series A:
0% 12/1/04, (FGIC Insured) Aaa 2,000,000 1,095,000
0% 12/1/05, (FGIC Insured) Aaa 1,855,000 948,369
0% 12/1/06, (FGIC Insured) Aaa 5,000,000 2,381,250
0% 12/1/07, (FGIC Insured) Aaa 1,000,000 442,500
4.75% 12/1/09, (FGIC Insured) Aaa 6,000,000 5,182,500
Group 9, 8.75% 11/1/17 A 500,000 551,875
Group 14, 7.70% 11/1/10,
(AMBAC Insured) Aaa 455,000 497,656
Group 19, 7.50% 11/1/09,
(AMBAC Insured) Aaa 1,000,000 1,095,000
Series C, 7.25% 5/1/20,
(MBIA Insured) Aaa 500,000 545,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Muni. Bond Auth. Rev. - continued
(Local Gov't. Loan Prog.) - continued
(Wayne County Proj.) Series A, 7%
12/1/09, (FGIC Insured) Aaa $ 5,750,000 $ 6,353,750
Michigan Pub. Pwr. Agcy. Rev. Rfdg.
(Belle River Proj.):
Series A, 5.25% 1/1/18 A1 9,500,000 8,181,875
Series B, 5% 1/1/19 A1 15,500,000 12,748,750
Michigan South Central Pwr. Agcy. Pwr.
Supply Sys. Rev. Rfdg.:
5.90% 11/1/06, (MBIA Insured) Aaa 3,000,000 3,041,250
5% 11/1/09, (AMBAC Insured) Aaa 1,675,000 1,490,750
6.75% 11/1/10 A 2,000,000 2,032,500
Michigan Strategic Fund Ltd. Oblig. Rev.:
Rfdg. (Detroit Edison Co.) Series BB:
7% 7/15/08, (MBIA Insured) Aaa 2,000,000 2,190,000
7% 5/1/21, (AMBAC Insured) Aaa 8,500,000 9,169,375
Rfdg. (Environmental Research Institute):
6.25% 8/15/06 A- 2,660,000 2,653,350
Rfdg. (Environmental Research Michigan
Proj.) 8.125% 10/1/14 - 9,000,000 9,607,500
Rfdg. (Ford Co. Proj.) Series A,
7.10% 2/1/06 A2 4,000,000 4,365,000
Rfdg. (K mart Corp. Proj.);
(Bad Axe) 6.70% 4/15/07 BBB+ 1,010,000 1,007,475
(Eaton Twp.) 6.25% 9/1/06 BBB+ 1,200,000 1,152,000
(Ironwood) 6.80% 6/15/07 BBB+ 555,000 557,775
(Roseville) 6.25% 10/1/06 BBB+ 2,100,000 2,016,000
(Gladwin Pines Nursing Home Proj.)
(Midland Hosp. Ctr.) 8.75% 1/1/08 A- 1,640,000 1,793,750
(Michigan Health Care Corp. Proj.)
9.10% 12/1/14 - 1,860,000 1,839,075
6.375% 8/15/12 A- 2,000,000 1,997,500
(Mercy Svcs. for Aging Proj.)
9.40% 5/15/20 - 8,900,000 9,523,000
Michigan Trunk Line Rev.:
Rfdg. Series B-1, 5.50% 10/1/21 A1 2,300,000 2,018,250
Series A, 5.50% 10/1/21 A1 2,500,000 2,193,750
Midland County Econ. Dev. Corp. Poll. Cont.
Rev. Rfdg. (Subordinated Ltd. Oblig.)
Series B, 9.50% 7/23/09 (b) - 13,200,000 14,586,000
Midland Wtr. Supply Sys. Rev. Rfdg.
7.20% 4/1/10 A 1,350,000 1,446,188
Monroe County Econ. Dev. Corp. Ltd.
Oblig. Rev. Rfdg. (Detroit Edison Co.)
Series AA, 6.95% 9/1/22,
(FGIC Insured) Aaa 1,000,000 1,071,250
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Okemos Pub. School Dist. Unltd.
Tax Rev. Rfdg.:
0% 5/1/12, (MBIA Insured) Aaa $ 2,500,000 $ 800,000
0% 5/1/13, (MBIA Insured) Aaa 1,700,000 505,750
0% 5/1/14, (MBIA Insured) Aaa 1,600,000 446,000
0% 5/1/15, (MBIA Insured) Aaa 2,600,000 679,250
0% 5/1/16, (MBIA Insured) Aaa 3,500,000 857,500
Pontiac Gen. Bldg. Auth. Rev. Rfdg.
6.875% 4/1/06, (AMBAC Insured) Aaa 2,000,000 2,137,500
Pontiac Hosp. Fin. Auth. Rev. (North Oakland
Med. Ctr. Obligated Group) 6% 8/1/18 Baa 6,000,000 5,212,500
Pontiac Stadium Bldg. Auth. Rev.
6.60% 3/1/03 Baa 1,145,000 1,142,138
Port Huron Area Schools Unltd. Tax
(Cap. Appreciation) (School Bldg. & Site)
0% 5/1/08 A1 1,975,000 834,438
Reed City Area Pub. Schools
(Cap. Appreciation) 0% 5/1/12,
(AMBAC Insured) Aaa 1,190,000 386,750
Rockford Pub. School Dist. Unltd. Tax Gen.
Oblig. Rfdg. 7.375% 5/1/19
(Pre-refunded to 5/1/00 @ 102)(e) A1 2,000,000 2,225,000
Romulus Township Schools Dist.
(Cap. Appreciation):
Series I, 0% 5/1/06, (FSA Insured) Aaa 3,610,000 1,809,513
0% 5/1/20, (FGIC Insured) Aaa 1,390,000 262,363
Royal Oak City School Dist. Unltd. Tax
(Bldg. & Site) 0% 5/1/05,
(AMBAC Insured) Aaa 3,000,000 1,608,750
Royal Oak Hosp. Fin. Auth. Hosp. Rev.
(William Beaumont Hosp):
Series C, 7.375% 1/1/20 Aa 4,070,000 4,502,438
Series D, 6.75% 1/1/20 Aa 2,750,000 2,829,063
Royal Oak Hosp. Fin. Rev.
(Beaumont Properties, Inc.)
Series E, 6.625% 1/1/19 Aa 2,000,000 2,022,500
Saginaw Hosp. Fin. Auth. Hosp. Rev.
(St. Lukes Hosp.) Series C, 6.75% 7/1/17,
(MBIA Insured) Aaa 2,000,000 2,085,000
Sault Ste Marie (Cap. Appreciation)
0% 9/1/05, (AMBAC Insured) Aaa 520,000 272,350
St. Clair Shores Econ. Dev. Corp. Ltd. Oblig.
Rev. (Bon Secours Health Sys.)
Series B, 7.50% 9/1/15 A1 2,200,000 2,351,250
Tawas City Hosp. Fin. Auth. Hosp. Rev.
(St. Joseph Hosp. Proj.)
Series A, 8.50% 3/15/12 - 2,460,000 2,610,675
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Three Rivers Area Hosp. Auth., Series A:
11% 11/1/08 - $ 300,000 $ 314,625
11% 11/1/09 - 300,000 314,625
Univ. of Michigan Hosp. Rev. Series 1990,
7% 12/1/21 Aa 1,000,000 1,108,750
University of Michigan Rev. Rfdg.
(Parking Sys.) Series A, 5% 6/1/15 Aa1 2,125,000 1,774,375
Vicksburg Commty. Schools 7% 5/1/07,
(MBIA Insured) (Pre-refunded to 5/1/01
@ 102)(e) Aaa 2,250,000 2,497,500
Waterford Township Econ. Dev. Corp. Rev.
Oblig. Ltd. Tax (Canterbury Health Care):
8% 7/1/08 - 550,000 549,313
8.375% 7/1/23 - 1,300,000 1,322,750
Wayne Charter County Arpt. Rev.
(Subordinated Lien
Detroit Metropolitan Arpt.):
Rfdg. Series C, 5.25% 12/1/13
(MBIA Insured) Aaa 2,000,000 1,770,000
Series A, 6.75% 12/1/19,
(MBIA Insured) Aaa 3,125,000 3,441,406
Series B (b):
6.875% 12/1/11, (MBIA Insured) Aaa 1,500,000 1,591,875
6.75% 12/1/21, (MBIA Insured) Aaa 3,300,000 3,473,250
Wayne Charter County Spl. Arpt. Facs. Rev.
(Republic Airlines, Inc. Proj.)
Series C, 10.375% 12/1/15 - 4,475,000 4,777,063
Wayne County Bldg. Auth. Ltd. Tax
Series A, 8% 3/1/17 Baa 2,250,000 2,629,688
West Ottawa Pub. School Dist. Unltd. Tax
(Bldg. & Site) (Cap. Appreciation) 0%
5/1/06, (MBIA Insured) Aaa 4,110,000 2,060,138
Western Michigan Univ. Rev.:
Series A, 5% 7/15/21, (FGIC Insured) Aaa 3,600,000 2,965,500
Series B, 6.75% 7/15/11,
(AMBAC Insured) Aaa 3,000,000 3,090,000
7.27% 7/15/17, INFL (FGIC Insured)(d) Aaa 2,500,000 1,959,375
Western Townships Utils. Auth. Swr. Disp.
Sys. Ltd. Tax 8.20% 1/1/18 BBB+ 2,500,000 2,712,500
Williamston Gen. Oblig. Rfdg.
6.90% 11/1/17, (AMBAC Insured) Aaa 1,000,000 1,063,750
Wyandotte Tax Increment Fin. Auth. Ltd. Tax
(Central Dev. Area Proj.):
7.75% 6/1/05
(Pre-refunded to 6/1/99 @101)(e) BBB 500,000 559,375
7.875% 6/1/08
(Pre-refunded to 6/1/99 @101)(e) BBB 500,000 561,875
441,972,341
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
PUERTO RICO - 8.3%
Puerto Rico Commonwealth Aqueduct & Swr.
Auth. Rev., Series A, 7.875% 7/1/17 Baa $ 2,800,000 $ 2,978,500
Puerto Rico Commonwealth Gen. Oblig.
Unltd. Tax Rfdg. 5% 7/1/21 Baa1 5,000,000 4,106,250
Puerto Rico Commonwealth Hsg. Banking
& Fin. Agcy. Single Family Rfdg.:
5.125% 12/1/04 Baa 1,000,000 927,500
5.125% 12/1/04 Baa 2,450,000 2,272,375
5.125% 12/1/05 Baa 2,890,000 2,644,350
Puerto Rico Commonwealth Hwy. & Trans.
Auth. Hwy. Rev.:
Rfdg. Series X, 5.50% 7/1/15 Baa1 4,000,000 3,590,000
Series W:
5.50% 7/1/13 Baa1 13,000,000 11,797,500
5.50% 7/1/15 Baa1 5,000,000 4,487,500
Puerto Rico Commonwealth Urban Renewal
& Hsg. Corp. Rfdg. 7.875% 10/1/04 Baa1 2,800,000 3,108,000
Puerto Rico Elec. Pwr. Auth. Pwr. Rev.:
Rfdg. Series M, 8% 7/1/08 Baa1 1,000,000 1,130,000
Rfdg. Series S, 6.125% 7/1/09 Baa1 2,000,000 2,005,000
Series P, 7% 7/1/21 Baa1 1,750,000 1,826,553
40,873,528
U.S. VIRGIN ISLANDS - 0.3%
Virgin Islands Pub. Fin. Auth. Rev. Rfdg.
Series A, 7.25% 10/1/18 - 1,500,000 1,563,750
GUAM - 0.6%
Guam Pwr. Auth. Rev., Series A,
5.25% 10/1/13 BBB 3,500,000 2,996,875
TOTAL MUNICIPAL BONDS
(Cost $486,328,364) 487,406,494
MUNICIPAL NOTES (A) - 1.4%
MOODY'S PRINCIPAL VALUE
RATINGS(C) AMOUNT (NOTE 1)
MICHIGAN - 1.4%
Flint Hosp. Bldg. Auth. Genesee County Rev.
(Hurley Med. Ctr.) Series 1985,
3%, LOC Comerica Bank, Detroit, VRDN VMIG 1 $ 700,000 $ 700,000
Grand Rapids Ind. Dev. Rev. (Rowe Int'l. Inc.)
2.75%, LOC Marine Midland Bank, VRDN A-2 2,300,000 2,300,000
Michigan Strategic Fund Poll. Cont. Rev. Rfdg.
(Consumers Pwr. Co. Proj.)
Series 1988 A, 3%,
LOC Union Bank of Switzerland, VRDN P-1 4,100,000 4,100,000
TOTAL MUNICIPAL NOTES
(Cost $7,100,000) 7,100,000
TOTAL INVESTMENTS
(Cost $493,428,364) $ 494,506,494
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
138 U.S. Treasury Contracts Sept. 1994 13,968,188 $ 266,119
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.8%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(1.) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(2.) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(3.) Standard & Poor's Corporation credit ratings are used in the
absence of a rating by Moody's Investors Service, Inc.
(4.) 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.
(5.) Security collateralized by an amount sufficient to pay interest and
principal.
(6.) 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 $3,027,563.
INCOME TAX INFORMATION
At June 30, 1994, the aggregate cost of investment securities for income
tax purposes was $493,428,364. Net unrealized appreciation aggregated
$1,078,130, of which $21,612,018 related to appreciated investment
securities and $20,533,888 related to depreciated investment securities.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 52.6% AAA, AA, A 62.4%
Baa 14.6% BBB 11.1%
Ba 1.1% BB 0.6%
B 4.0% B 5.7%
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 11.0%.
FMR has determined that unrated debt securities that are lower quality
account for 8.7% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investments, is as follows:
Health Care 27.9%
General Obligation 12.2
Electric Revenue 11.9
Others
(individually less than 10%) 48.0
TOTAL 100.0%
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1994 (UNAUDITED)
7.ASSETS 8. 9.
10.Investment in securities, at value (cost 11. $ 494,506,494
$493,428,364) (Notes 1 and 2) - See accompanying
schedule
12.Cash 13. 280,740
14.Receivable for investments sold 15. 886,667
16.Interest receivable 17. 8,913,800
18.Receivable for daily variation on futures contracts 19. 181,125
20. 21.TOTAL ASSETS 22. 504,768,826
23.LIABILITIES 24. 25.
26.Payable for investments purchased $ 904,750 27.
28.Dividends payable 572,292 29.
30.Accrued management fee 174,468 31.
32.Other payables and accrued expenses 94,697 33.
34. 35.TOTAL LIABILITIES 36. 1,746,207
37.38.NET ASSETS 39. $ 503,022,619
40.Net Assets consist of (Note 1): 41. 42.
43.Paid in capital 44. $ 502,670,445
45.Accumulated undistributed net realized gain (loss) on 46.
investments (992,075)
47.Net unrealized appreciation (depreciation) on 48. 1,344,249
investments
49.50.NET ASSETS, for 44,606,054 shares outstanding 51. $ 503,022,619
52.53.NET ASSET VALUE, offering price and redemption 54. $11.28
price per share ($503,022,619 (divided by) 44,606,054 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1994 (UNAUDITED)
55.56.INTEREST INCOME 57. $ 16,891,756
58.EXPENSES 59. 60.
61.Management fee (Note 4) $ 1,086,909 62.
63.Transfer agent, accounting and custodian fees and 401,224 64.
expenses (Note 4)
65.Non-interested trustees' compensation 1,599 66.
67.Registration fees 15,434 68.
69.Audit 14,843
70.Legal 6,418 71.
72. 73.TOTAL EXPENSES 74. 1,526,427
75.76.NET INTEREST INCOME 77. 15,365,329
78.REALIZED AND UNREALIZED GAIN (LOSS) ON 80. 81.
INVESTMENTS
(NOTES 1 AND 3)
79.Net realized gain (loss) on:
82. Investment securities 2,352,601 83.
84. Futures contracts 1,626,238 3,978,839
85.Change in net unrealized appreciation (depreciation) 86. 87.
on:
88. Investment securities (49,565,751) 89.
90. Futures contracts 266,119 (49,299,632)
91.92.NET GAIN (LOSS) 93. (45,320,793)
94.95.NET INCREASE (DECREASE) IN NET ASSETS 96. $ (29,955,464)
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
97.INCREASE (DECREASE) IN NET ASSETS
98.Operations $ 15,365,329 $ 30,604,558
Net interest income
99. Net realized gain (loss) 3,978,839 12,872,382
100. Change in net unrealized appreciation (49,299,632) 23,940,952
(depreciation)
101. (29,955,464) 67,417,892
102.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
103.Distributions to shareholders: (15,365,329) (30,604,558)
From net interest income
104. From net realized gain (3,244,932) (10,681,220)
105. 106.TOTAL DISTRIBUTIONS (18,610,261) (41,285,778)
107.Share transactions 83,970,410 223,810,116
Net proceeds from sales of shares
108. Reinvestment of distributions 14,490,582 32,353,664
109. Cost of shares redeemed (110,365,015) (182,619,793)
110. (11,904,023) 73,543,987
Net increase (decrease) in net assets resulting from
share transactions
111. (60,469,748) 99,676,101
112.TOTAL INCREASE (DECREASE) IN NET ASSETS
113.NET ASSETS 114. 115.
116. Beginning of period 563,492,367 463,816,266
117. End of period $ 503,022,619 $ 563,492,367
118.OTHER INFORMATION 120. 121.
119.Shares
122. Sold 6,229,296 18,029,885
123. Issued in reinvestment of distributions 1,234,246 2,639,716
124. Redeemed (8,530,374) (14,614,309)
125. Net increase (decrease) (1,066,832) 6,055,292
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
126. SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED
JUNE 30, 199
4
127. (UNAUDITED) 1993 1992 1991 1990 1989
128.SELECTED PER-SHARE DATA
129.Net asset $ 12.340 $ 11.710 $ 11.410 $ 10.890 $ 11.100 $ 10.790
value, beginning
of period
130.Income from .340 .709 .733 .745 .758 .759
Investment
Operations
Net interest
income
131. Net realized (.990) .870 .320 .520 (.210) .310
and unrealized
gain (loss)
132. Total from (.650) 1.579 1.053 1.265 .548 1.069
investment
operations
133.Less (.340) (.709) (.733) (.745) (.758) (.759)
Distributions
From net
interest income
134. From net (.070) (.240) (.020) - - -
realized gain on
investments
135. Total (.410) (.949) (.753) (.745) (.758) (.759)
distributions
136.Net asset $ 11.280 $ 12.340 $ 11.710 $ 11.410 $ 10.890 $ 11.100
value, end of
period
137.TOTAL -5.35% 13.83 9.54 12.04 5.15 10.21
RETURN B % % % % %
138.RATIOS AND SUPPLEMENTAL
DATA
139.Net assets, $ 503,023 $ 563,492 $ 463,816 $ 379,175 $ 279,429 $ 234,350
end of period
(000 omitted)
140.Ratio of .58% .59 .61 .62 .64 .69
expenses to A % % % % %
average net
assets
141.Ratio of net 5.85% 5.79 6.36 6.73 6.98 6.92
interest income A % % % % %
to average net
assets
142.Portfolio 18% 33 15 12 18 19
turnover rate A % % % % %
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FIDELITY MICHIGAN 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 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 would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1994 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Fidelity Michigan Municipal
Money Market Portfolio 1.03% 2.03% 16.75%
Consumer Price Index 1.51% 2.49% 17.37%
Average All Tax-Free Money Market Fund 0.99% 1.99% n/a
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, six months, one year or since the fund started on January 12,
1990. 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 all tax-free
money market fund's total return. This average currently reflects the
performance of 357 all 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 LIFE OF
YEAR FUND
Fidelity Michigan Municipal
Money Market Portfolio 2.03% 3.53%
Consumer Price Index 2.49% 3.62%
Average All Tax-Free Money Market Fund 1.99% 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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
6/30/93 9/30/93 12/31/93 3/31/94 6/30/94
Fidelity Michigan Municipal 1.74% 2.27% 2.31% 1.89% 2.22%
Money Market Portfolio
Average All Tax-Free 1.83% 2.20% 2.16% 1.77% 2.27%
Money Market Fund
Fidelity Michigan Municipal 2.85% 3.71% 3.79% 3.17% 3.63%
Money Market Portfolio
Tax-equivalent
Average All Taxable 2.63% 2.65% 2.27% 2.93% 3.64%
Money Market Fund
</TABLE>
Row: 1, Col: 1, Value: 1.74
Row: 1, Col: 2, Value: 1.83
Row: 2, Col: 1, Value: 2.27
Row: 2, Col: 2, Value: 2.2
Row: 3, Col: 1, Value: 2.31
Row: 3, Col: 2, Value: 2.16
Row: 4, Col: 1, Value: 1.89
Row: 4, Col: 2, Value: 1.77
Row: 5, Col: 1, Value: 2.22
Row: 5, Col: 2, Value: 2.27
Fidelity Michigan
Municipal Money
Market Portfolio
Average All
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. 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 Michigan state income tax rate of 38.86%. 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. And there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Scott Orr, Portfolio
Manager of Fidelity Michigan
Municipal Money Market Portfolio
Q. THE MONEY MARKETS HAVE BEEN PRETTY TURBULENT DURING THE PAST SIX MONTHS.
CAN YOU TALK ABOUT WHAT HAPPENED?
A. The federal funds rate was at 3% and fairly stable through the end of
January. But in February, the Federal Reserve raised that rate by a quarter
of a percent. I had expected the Fed to boost rates, but the increase came
a bit sooner than expected, catching the market by surprise. Most felt that
the Fed would wait to act until the economy was on a firmer footing or
until there were more obvious signs that inflation was becoming a problem.
After that first rate increase, the Fed boosted the federal funds rate
three more times, raising it to 4.25% by May.
Q. HOW DID YOU RESPOND TO CHANGING CONDITIONS IN THE MARKET?
A. Since I thought rates would eventually rise, I had begun to shorten the
fund's average maturity going into the period. It fell from an aggressive
75 days the previous November to around 57 days at the beginning of the
year, and I brought it down further to 50 days by the end of February. That
downward shift in the fund's average maturity helped its performance when
money market yields rose sharply after the Fed's first rate hike.
Q. WHAT DID YOU DO AFTER THE FEDERAL RESERVE'S FIRST RATE HIKE BOOSTED
YIELDS IN THE SHORT-TERM MARKET?
A. I let the average maturity of the fund fall a bit further, to as low as
45 days in late March. But as yields rose, I began to invest in some
longer-term securities that had become available at attractive rates. Those
opportunities existed in part because investors feared that the Fed would
continue to raise rates at a rapid pace, causing long-term money market
securities to lose value. Investors' reluctance to buy fixed-rate
securities caused their prices to decline to levels where they offered
excellent yields.
Q. HOW DID YOUR STRATEGY WORK?
A. On June 30, 1994, the fund's seven-day yield was 2.20%, down from 2.31%
six months ago. The latest yield is the equivalent of a 3.63% yield on a
taxable investment for Michigan investors in the 36% federal tax bracket.
The fund's total return for the six months ended June 30 was 1.03%. The
cumulative total return during the same period for all tax-free money
market funds was 0.99%, according to IBC/Donoghue.
Q. WHAT IS YOUR CURRENT STRATEGY AND YOUR OUTLOOK FOR THE FUND?
A. Since the Fed raised interest rates by a half percentage point in May,
rates in the money markets have been relatively stable. Moreover, inflation
is pretty well in check and I don't think the Fed wants to dampen the
economic recovery too much. I don't expect the Fed to increase rates again
at least for a couple of months unless there is a sudden inflationary surge
or the economy really takes off - and that doesn't seem likely to happen.
Given that outlook, I have extended the fund's average maturity just
slightly to lock in rates higher than those available on the shortest-term
securities.
FUND FACTS
GOAL: tax-free income and
stability by investing in
high-quality, short-term,
Michigan municipal securities
START DATE: January 12, 1990
SIZE: as of June 30, 1994,
more than $205 million
MANAGER: Scott Orr, since
January 1992; manager,
Fidelity Connecticut Municipal
Money Market and Spartan
Connecticut Money Market
funds, since October 1993;
Fidelity New Jersey Tax-Free
Money Market and Spartan
New Jersey Money Market
funds, since
January 1992; joined Fidelity
in 1989
(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.
FIDELITY MICHIGAN 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 62 59 68
31 - 90 8 9 8
91 - 180 21 20 9
181 - 397 9 12 15
WEIGHTED AVERAGE MATURITY
6/30/94 12/31/93 6/30/93
Michigan Municipal
Money Market Portfolio 58 days 57 days 62 days
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: 53.0
Row: 1, Col: 2, Value: 16.0
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 19.0
Row: 1, Col: 5, Value: 9.0
Row: 1, Col: 1, Value: 51.0
Row: 1, Col: 2, Value: 16.0
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 19.0
Row: 1, Col: 5, Value: 10.0
Variable rate
demand notes
(VRDNs) 53%
Commercial
paper 16%
Tender bonds 3%
Municipal
notes 19%
Other 9%
Variable rate
demand notes
(VRDNs) 51%
Commercial
paper 16%
Tender bonds 4%
Municipal
notes 19%
Other 10%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
FIDELITY MICHIGAN 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)
MICHIGAN - 100.0%
Bruce Township Hosp. Fin. Auth. Sisters of Charity
Health Care Sys. Rev. (St. Joseph Hosp. Ctr. Proj.)
3.10% tender 11/1/94, (MBIA Insured)
BPA Morgan Guaranty $ 2,100,000 $ 2,100,000
Comstock Park Pub. Schools Participating VRDN,
Series 94-B1, 2.95%
(Liquidity Facility Norwest Bank N.A.) (c) 3,145,000 3,145,000
Detroit Bldg. Auth. Participating VRDN,
Series 1991 A-26, 2.75%,
(Liquidity Facility Sakura Bank, Ltd.) (c) 1,750,000 1,750,000
Detroit Convention Facs. Bonds (Cobo Hall Expansion Proj.)
9% 9/30/94 6,885,000 7,194,054
9.50% 9/30/94 6,500,000 6,806,917
Detroit Downtown Dev. Auth. Rev. Rfdg.
(Millender Ctr. Proj.) Series 1988, 2.35%,
LOC Sumitomo Bank Ltd., VRDN 1,900,000 1,900,000
Detroit Gen. Oblig. Ltd. TAN Series 1993, 3% 7/1/94
LOC Comerica Bank 4,500,000 4,500,000
Detroit TAN, Series A, 4% 12/1/94
LOC Nat'l. Bank of Detroit 6,000,000 6,024,608
Detroit Tax Increment Fin. Auth. Rev. (Central Ind. Park Proj.)
Series A, 2.75%, LOC Citibank, VRDN 300,000 300,000
Detroit Wtr. Supply Sys. Participating VRDN,
Series PA-28, 2.60%,
(Liquidity Facility Merrill Lynch & Co.) (c) 4,600,000 4,600,000
Flint Econ. Dev. Corp. Ltd. Oblig. Rev.
(Genessee County Real Estate Proj.) 2.70%,
LOC Nat'l. Bank of Detroit, VRDN (b) 1,300,000 1,300,000
Flint Hosp. Bldg. Auth. Rev.
(Genessee County-Hurley Med. Ctr.) Series 1985,
3%, LOC Comerica Bank, Detroit, VRDN 1,000,000 1,000,000
Georgetown Charter Township Ltd. Oblig. Ind. Rev.
(J&F Steel Corp. Proj.) Series 1989, 2.35%,
LOC Societe Generale, VRDN (b) 1,000,000 1,000,000
Grand Rapids Econ. Dev. Corp. Econ. Dev. Rev. Rfdg.
(Amway Hotel Corp. Proj.) Series 1991 A, 2.45%,
LOC Sakura Bank, VRDN 5,100,000 5,100,000
Grand Rapids Econ. Dev. Corp. Ltd. Oblig. Rev.
(Holland Home Proj.) Series 1994 B, 2.40%,
LOC Old Kent Bank & Trust Co., VRDN 2,250,000 2,250,000
Grand Rapids Ind. Dev. Rev. (Rowe Int'l.) 2.75%,
LOC Marine Midland Bank, VRDN 3,000,000 3,000,000
Kalamazoo Econ. Dev. Corp. Rev. Rfdg.
(La Quinta Motor Inns) Series 1991, 2.70%,
LOC NationsBank, VRDN 2,340,000 2,340,000
Kent County Hosp. Fin. Auth. Hosp. Rev.
(Butterworth Hosp. Proj.) Series 1991 A,
2.50%, LOC Sanwa Bank, VRDN 1,000,000 1,000,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Kent County Hosp. Fin. Auth. Participating VRDN,
Series TR 94-C1, 2.95%
(Liquidity Facility Norwest Bank N.A.) (c) $ 4,000,000 $ 4,000,000
Livonia Econ. Dev. Corp. VRDN (b):
(Ajluni Proj.)
2.70%, LOC Nat'l. Bank of Detroit 2,400,000 2,400,000
(Foodland Distributors Corp.)
3%, LOC Comerica Bank, VRDN 2,100,000 2,100,000
Michigan Bldg. Auth. Participating VRDN,
Series PA-33, 2.60%,
(Liquidity Facility Merrill Lynch & Co.) (c) 8,860,000 8,860,000
Michigan Gen. Oblig. School Loan BAN,
Series 1994 A, 3.50% 10/28/94 15,000,000 15,023,020
Michigan Higher Ed. Student Loan Auth. Rev. (b):
Rfdg., Series XII-B, 2.30%, (AMBAC Insured)
BPA Krediet Bank, VRDN 5,500,000 5,500,000
Series XII-D, 2.30%, (AMBAC Insured)
BPA Fuji Bank, VRDN 1,000,000 1,000,000
Michigan Hosp. Fin. Auth. Rev.:
Rfdg. Bonds (Sisters of Mercy Health Corp.)
Series 1993 P, 2.95% 8/15/94 3,430,000 3,430,000
(Hospital Equip. Loan Prog.):
Series 1989, 2.25%,
LOC Comerica Bank, VRDN 1,100,000 1,100,000
2.60%, LOC First of America,VRDN 1,300,000 1,300,000
Michigan Hsg. Dev. Auth. Ltd. Oblig. Rev.
(Woodland Meadows Apt. Proj.) 2.20%,
LOC Swiss Bank Corp. (b) 4,000,000 4,000,000
Michigan Hsg. Dev. Auth. Multi-Family Hsg. Rev. Bonds:
Series 1988 A (b):
2.55% tender 7/12/94, LOC Sanwa Bank Ltd. 2,300,000 2,300,000
3.05% tender 7/19/94, LOC Sanwa Bank Ltd. 3,700,000 3,700,000
3.10% tender 8/12/94, LOC Sanwa Bank Ltd. 2,700,000 2,700,000
Michigan Hsg. Dev. Auth. Participating VRDN,
Series PT-19, 2.65%,
(Liquidity Facility Credit Suisse) (b) (c) 11,580,000 11,580,000
Michigan Hsg. Dev. Auth. Rental Hsg. Rev. Bonds
Series 1994 C, 3.10% tender 2/28/95
LOC Credit Suisse 5,000,000 5,000,000
Michigan Municipal Bond Auth. Rev.
(Local Govt. Loan Program)
Series F, 6.35% 10/1/94, (MBIA Insured) 2,000,000 2,017,337
Michigan Municipal Bond Auth. RAN
Series 1994 A, 4.25% 5/5/95 12,500,000 12,564,912
Michigan Strategic Fund Econ. Dev. Rev.
(Yamaha Musical Prod., Inc. Proj.) Series 1988, 2.75%,
LOC Dai-Ichi Kangyo Bank, VRDN (b) 5,900,000 5,900,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Strategic Fund Ltd. Oblig. Rev, VRDN (b):
(Alpha Tech Corp. Proj.) Series 1987, 2.65%,
LOC Bank of Tokyo $ 4,000,000 $ 4,000,000
(Donnelly Corp. Proj.) Series 1990 A,
2.80% LOC Bank of Tokyo 6,000,000 6,000,000
(Hi Tech Mold & Engineering) Series 1991,
2.70%, LOC Nat'l. Bank of Detroit 1,800,000 1,800,000
(Michigan Sugar Co. - Carrollton) 2.60%,
LOC Trust Co. of Georgia 3,500,000 3,500,000
(Ultimate Hydroforming Inc. Proj.) 2.70%,
LOC Nat'l. Bank of Detroit 1,400,000 1,400,000
Michigan Strategic Fund Rev. (Dow Chemical Co. Proj.)
Series 1992, 3.60%, VRDN (b) 2,100,000 2,100,000
Michigan Strategic Fund Rev. Bonds:
(Dow Chemical Proj.):
Series 1987, 3.10% tender 7/7/94 2,500,000 2,500,000
Series 1988 (b):
2.60% tender 7/18/94 2,000,000 2,000,000
3.30% tender 8/15/94 2,900,000 2,900,000
3.30% tender 8/17/94 2,490,000 2,490,000
3.15% tender 10/7/94 2,700,000 2,700,000
Michigan Strategic Fund Solid Wst. Disp. Rev.
(Grayling Gen. Station Proj.) Series 1990, 2.30%,
LOC Barclays Bank, VRDN (b) 1,200,000 1,200,000
Michigan Strategic Fund Solid Waste Disp. Rev. Bonds
(S. D. Warren Co. Proj.) (b):
Series 1987 A, 3.35% tender 7/25/94,
LOC Sumitomo Bank 1,500,000 1,500,000
Series 1987 B, 3.20% tender 8/22/94
LOC Sumitomo Bank 2,800,000 2,800,000
Series 1987 C:
3.35% tender 7/21/94, LOC Sumitomo Bank 3,050,000 3,050,000
3.35% tender 8/18/94, LOC Sumitomo Bank 2,900,000 2,900,000
Rochester Hills Econ. Dev. Corp. Ltd. Oblig. Rev.
(Cardell Corp.) 2.55%,
LOC Comerica Bank, VRDN (b) 300,000 300,000
Saline Econ. Dev. Corp. Rev. (Associated Springs Proj.)
Series 1988, 2.90%, LOC Fuji Bank, VRDN (b) 5,000,000 5,000,000
Sterling Heights Econ. Dev. Corp. Ltd. Oblig. Rev.
(Cherrywood Ctr. Assoc. Proj.) 2.80%,
LOC Comerica Bank, VRDN (b) 5,500,000 5,500,000
TOTAL INVESTMENTS - 100% $ 203,425,848
Total Cost for Income Tax Purposes $ 203,425,848
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
(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.
INCOME TAX INFORMATION
At December 31, 1993, the fund had a capital loss carryforward of
approximately $13,600 of which $1,600, $1,700 and $13,600 will expire on
December 31, 1998, 1999 and 2001, respectively.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1994 (UNAUDITED)
143.ASSETS 144. 145.
146.Investment in securities, at value (Note 1) - See 147. $ 203,425,848
accompanying schedule
148.Cash 149. 1,285,857
150.Interest receivable 151. 1,235,523
152. 153.TOTAL ASSETS 154. 205,947,228
155.LIABILITIES 156. 157.
158.Payable to custodian bank $ 28,578 159.
160.Dividends payable 11,635 161.
162.Accrued management fee 69,708 163.
164.Other payables and accrued expenses 47,754 165.
166. 167.TOTAL LIABILITIES 168. 157,675
169.170.NET ASSETS 171. $ 205,789,553
172.Net Assets consist of (Note 1): 173. 174.
175.Paid in capital 176. $ 205,836,902
177.Accumulated net realized gain (loss) on 178. (47,349)
investments
179.180.NET ASSETS, for 205,836,902 shares 181. $ 205,789,553
outstanding
182.183.NET ASSET VALUE, offering price and 184. $1.00
redemption price per share ($205,789,553 (divided by)
205,836,902 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1994 (UNAUDITED)
185.186.INTEREST INCOME 187. $ 2,526,955
188.EXPENSES 189. 190.
191.Management fee (Note 4) $ 388,111 192.
193.Transfer agent, accounting and custodian fees and 177,619 194.
expenses (Note 4)
195.Non-interested trustees' compensation 1,099 196.
197.Registration fees 66 198.
199.Audit 12,187 200.
201.Legal 2,493 202.
203.Miscellaneous 1,590 204.
205. 206.TOTAL EXPENSES 207. 583,165
208.209.NET INTEREST INCOME 210. 1,943,790
211.212.NET REALIZED GAIN (LOSS) ON INVESTMENTS 213. (33,778)
(NOTE 1)
214.215.NET INCREASE IN NET ASSETS RESULTING FROM 216. $ 1,910,012
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
217.INCREASE (DECREASE) IN NET ASSETS
218.Operations $ 1,943,790 $ 3,163,865
Net interest income
219. Net realized gain (loss) (33,778) (10,242)
220. 1,910,012 3,153,623
221.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
222.Dividends to shareholders from net interest income (1,943,790) (3,163,865)
223.Share transactions at net asset value of $1.00 per 241,924,686 305,331,423
share
Proceeds from sales of shares
224. Reinvestment of dividends from net interest 1,821,496 2,958,037
income
225. Cost of shares redeemed (213,112,902) (293,906,431)
226. 30,633,280 14,383,029
Net increase (decrease) in net assets and shares
resulting from share transactions
227. 30,599,502 14,372,787
228.TOTAL INCREASE (DECREASE) IN NET ASSETS
229.NET ASSETS 230. 231.
232. Beginning of period 175,190,051 160,817,264
233. End of period $ 205,789,553 $ 175,190,051
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
234. SIX MONTHS YEARS ENDED DECEMBER 31, JANUARY 12, 1990
ENDED (COMMENCEMEN
JUNE 30, 1994 T
OF OPERATIONS) TO
DECEMBER 31,
235. (UNAUDITED) 1993 1992 1991 1990
236.SELECTED
PER-SHARE DATA
237.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of
period
238.Income from .010 .020 .026 .044 .055
Investment Operations
Net interest income
239. Dividends from (.010) (.020) (.026) (.044) (.055)
net interest income
240.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
241.TOTAL RETURN B 1.03% 2.66% 4.46% 5.66%
1.98%
242.RATIOS AND SUPPLEMENTAL DATA
243.Net assets, end of $ 205,790 $ 175,190 $ 160,817 $ 175,150 $ 169,397
period (000 omitted)
244.Ratio of expenses .62%A .62% .49% .21% .22%A
to average net assets
245.Ratio of expenses .62%A .62% .61% .65% .77%A
to average net assets
before expense
reductions
246.Ratio of net interest 2.07%A 1.96% 2.64% 4.38% 5.78%A
income to average
net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS 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.
Fidelity Michigan Tax-Free High Yield Portfolio (the high yield fund) is a
fund of Fidelity Municipal Trust. Fidelity Michigan 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 business trust 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
high yield fund and the money market 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.
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 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.
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.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $45,519,133 and $56,714,186, respectively. The
market value of futures contracts opened and closed amounted to
$271,472,065 and $255,2294,598, 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 fund. The group fee rate
is the weighted average of a series of rates ranging from .1325% to .37%
and .15% to .37% for the high yield and money market funds, respectively,
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 money market fund, effective November 1, 1993, FMR voluntarily
agreed to implement a new group fee rate schedule with rates ranging from
.1325% to .37% as it resulted in the same or a lower management fee. This
group fee rate schedule remained in effect through July 31, 1994.
The Board of Trustees has approved a new group fee rate schedule with rates
ranging from .12% to .37%. Effective August 1, 1994, FMR has voluntarily
agreed to implement this new group fee rate schedule for both the high
yield and money market funds as it results in the same or a lower
management fee.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR,
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE - CONTINUED
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 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 $16,128 and $8,852 for the high
yield and the 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 sub-contracts 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
$285,724 and $111,001 for the high yield fund and $150,106 and $27,513 for
the money market fund, respectively.
Shareholders participating in the Fidelity Ultra Service Account 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. For the period, fees paid to FBSI by shareholders participating in
the Program amounted to $3,985.
TO WRITE FIDELITY
Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0001
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
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
1907 West State Road 434
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
8180 Greensboro Drive
McLean, 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
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 GUARAN-
TEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE
CHANGES IN SHARE
PRICE, REIN-
VESTMENT 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.
Page 45 = BLANK
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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
Peter J. Allegrini, Vice President -
HIGH YIELD FUND
Scott A. Orr, Assistant, 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
