FIDELITY
(registered trademark)
MICHIGAN
MUNICIPAL
PORTFOLIOS
SEMIANNUAL REPORT
JUNE 30, 1995
CONTENTS
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PRESIDENT'S MESSAGE 3 Ned Johnson on investing
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 20 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE 24 How the fund has done over time.
FUND TALK 26 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 28 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 29 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 32 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 36 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.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been positive market indications so far in 1995, no one
can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
Michigan Tax FreMunicipal Bond Ind
11/30/85 10000.00 10000.00
12/31/85 10228.04 10087.90
01/31/86 10687.19 10682.08
02/28/86 11127.75 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 11980.11 11835.45
11/30/86 12202.92 12069.91
12/31/86 12174.63 12036.60
01/31/87 12524.18 12399.02
02/28/87 12647.80 12460.02
03/31/87 12511.96 12327.95
04/30/87 11594.90 11709.33
05/31/87 11456.20 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 11314.44 11695.22
10/31/87 11388.40 11736.62
11/30/87 11631.88 12043.06
12/31/87 11832.71 12217.81
01/31/88 12356.20 12653.00
02/29/88 12509.85 12786.75
03/31/88 12221.64 12637.78
04/30/88 12272.39 12733.83
05/31/88 12347.33 12697.03
06/30/88 12576.26 12882.78
07/31/88 12686.04 12966.78
08/31/88 12749.38 12978.19
09/30/88 12970.03 13213.10
10/31/88 13241.11 13446.31
11/30/88 13134.02 13323.14
12/31/88 13372.65 13459.43
01/31/89 13563.88 13737.78
02/28/89 13481.07 13581.03
03/31/89 13486.08 13548.57
04/30/89 13881.00 13870.21
05/31/89 14164.97 14158.30
06/30/89 14347.56 14350.57
07/31/89 14479.62 14545.88
08/31/89 14366.21 14403.47
09/30/89 14332.90 14360.26
10/31/89 14477.61 14535.46
11/30/89 14678.28 14789.83
12/31/89 14738.66 14911.10
01/31/90 14647.75 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 14983.10 15327.63
07/31/90 15193.41 15552.94
08/31/90 14963.53 15327.43
09/30/90 15038.10 15336.62
10/31/90 15180.58 15614.22
11/30/90 15477.83 15928.06
12/31/90 15497.49 15998.14
01/31/91 15644.75 16212.52
02/28/91 15761.71 16353.57
03/31/91 15792.94 16360.11
04/30/91 16055.17 16577.70
05/31/91 16128.95 16725.24
06/30/91 16105.13 16708.52
07/31/91 16359.21 16912.36
08/31/91 16555.79 17135.60
09/30/91 16737.52 17358.37
10/31/91 16919.67 17514.59
11/30/91 16981.95 17563.63
12/31/91 17362.94 17941.25
01/31/92 17425.81 17982.52
02/29/92 17454.91 17987.91
03/31/92 17474.71 17995.11
04/30/92 17629.59 18155.26
05/31/92 17820.61 18369.49
06/30/92 18133.46 18678.10
07/31/92 18795.52 19238.44
08/31/92 18530.14 19049.91
09/30/92 18655.95 19173.73
10/31/92 18340.70 18985.83
11/30/92 18789.33 19325.68
12/31/92 19018.72 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 20536.18 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 21649.23 21919.50
01/31/94 21943.26 22169.38
02/28/94 21309.60 21595.19
03/31/94 20346.30 20716.27
04/30/94 20447.36 20892.36
05/31/94 20552.02 21074.12
06/30/94 20491.65 20951.89
07/31/94 20852.78 21335.31
08/31/94 20904.43 21409.98
09/30/94 20622.05 21095.26
10/31/94 20194.37 20719.76
11/30/94 19558.63 20344.73
12/31/94 20024.50 20792.32
01/31/95 20626.89 21386.98
02/28/95 21221.40 22009.34
03/31/95 21044.83 22262.45
04/30/95 21085.59 22289.16
05/31/95 21765.40 23000.19
06/30/95 21532.09 22800.08
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
securities that have grown in value). You can also look at the fund's
income. If Fidelity had not reimbursed certain fund expenses, the life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
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PERIODS ENDED JUNE 30, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Fidelity Michigan Tax-Free High Yield Portfoli 7.43% 4.98% 43.58% 118.01%
o
Lehman Brothers Municipal Bond Index 9.65% 8.82% 48.70% n/a
Average Michigan Municipal Bond Fund 8.85% 7.50% 45.23% n/a
Consumer Price Index 1.87% 3.04% 17.40% 40.29%
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CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on November 12, 1985. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Lehman Brothers Municipal Bond index - a broad gauge of
the municipal bond market. To measure how the fund's performance stacked up
against its peers, you can compare it to the average Michigan municipal
bond fund, which reflects the performance of 40 Michigan municipal bond
funds with similar objectives tracked by Lipper Analytical Services over
the past six months. Both benchmarks include reinvested dividends and
capital gains, if any. Comparing the fund's performance to the consumer
price index (CPI) helps show how your fund did compared to inflation. (The
CPI returns begin on the month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
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PERIODS ENDED JUNE 30, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity Michigan Tax-Free High Yield Portfoli 4.98% 7.50% 8.42%
o
Lehman Brothers Municipal Bond Index 8.82% 8.26% n/a
Average Michigan Municipal Bond Fund 7.50% 7.74% n/a
Consumer Price Index 3.04% 3.26% 3.56%
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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
$22,800
$21,513
'95
$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, 1995, the value of your
investment would have grown to $21,513 - a 115.13% 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 $22,800 - a 128.00% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX MONT
HS
ENDED YEARS ENDED DECEMBER 31,
JUNE 30,
1995 1994 1993 1992 1991 1990
Dividend returns 3.08% 5.40% 6.28% 6.72% 7.26% 7.04%
Capital appreciation
returns 4.35% -12.90% 7.55% 2.82% 4.78% -1.89%
Total returns 7.43% -7.50% 13.83% 9.54% 12.04% 5.15%
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, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.97(cents) 32.14(cents) 66.86(cents)
Annualized dividend rate 5.41% 5.89% 6.07%
30-day annualized yield 5.36% - -
30-day annualized tax-equivalent yield 8.76% - -
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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 $11.19 over
the past month, $11.01 over the past six months and $11.02 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 38.82% combined effective 1995 federal and state tax bracket. A
portion of the fund's income may be subject to the alternative minimum tax.
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Maureen Newman,
Portfolio Manager of Fidelity
Michigan Tax-Free High Yield
Q. MAUREEN, HOW HAS THE FUND PERFORMED?
A. For the six- and 12-month periods ended June 30, 1995, the fund returned
7.43% and 4.98%, respectively. For the same six- and 12-month periods, the
average Michigan municipal bond fund returned 8.85% and 7.50%,
respectively, as tracked by Lipper Analytical Services.
Q. WHAT FACTORS CONTRIBUTED TO THE MUNICIPAL BOND MARKET'S PERFORMANCE OVER
THE PAST SIX MONTHS?
A. First, let me set the stage by reviewing the months preceding the most
recent six month-period. Taxable and tax-free bond prices fell dramatically
during much of 1994, on the heels of rising interest rates and fears that
inflation would ignite. In the third quarter, tax-loss selling - which
occurs when investors try to offset gains in one investment by selling
another with losses, thereby reducing their tax liabilities - placed
additional downward pressure on the municipal bond market. However, the
bond market began to rebound in late November as investors worried less
that the Federal Reserve Board would further raise interest rates and
tax-loss selling abated. Bond prices have risen dramatically since
November, as evidence has mounted that the economy is growing at a slower
rate. When economic growth slows, the fear of inflation generally recedes
and bonds typically perform well, which they have during the past six
months.
Q. WHY WASN'T THE FUND ABLE TO KEEP PACE WITH THE AVERAGE FUND OF ITS TYPE?
A. Michigan Healthcare - which represented approximately 1.6% of the fund's
total investments at the end of the period - filed Chapter 11 bankruptcy
during the period. As a result, the holding detracted from the fund's
performance. An independent pricing service, in determining the current
price of these bonds, already has taken into account this credit
development. Fidelity is dedicating significant resources in an effort to
maximize shareholder value. Also, health care sector bonds, at 23.3% of the
fund's investments, generally tended to lag other types of municipal bonds
for reasons unrelated to Michigan Healthcare's problems. Investors were
worried, in part, that there could be reductions in government-sponsored
reimbursements. However, I will continue to hold a core stake in health
care bonds because they can offer relatively attractive yields.
Q. YOU'VE MADE SOME CHANGES IN THE WAY YOU DISTRIBUTE THE FUND'S
INVESTMENTS AMONG BONDS WITH VARIOUS MATURITIES. WHAT CAUSED YOU TO MAKE
THOSE CHANGES?
A. During the spring, the yield curve - which reflects the yields of
various maturities - flattened. When the yield curve is flat, there is
little difference between short-term and long-term interest rates. As a
result, municipal bond investors didn't have to give up much yield to own
bonds with relatively short maturities and didn't have to take on the added
interest rate risk of a longer-term bonds. As the flattening occurred, I
sold some longer-term bonds with maturities between 20 and 25 years, and
bought some intermediate bonds in the 10- to 15-year range. Going forward,
if the yield curve steepens, and longer-term bonds once again offer
substantially higher yields, I would most likely switch out of some
intermediate bonds and buy longer-term bonds in their place.
Q. LIKEWISE, YOU'VE IMPROVED THE OVERALL CREDIT QUALITY OF THE FUND...
A. That's true. There wasn't much of a difference in yield between lower-
and higher- quality bonds. So I used the market's strength as an
opportunity to sell some bonds rated Baa and Ba by Moody's Investors
Service and replaced them with the Aaa-rated bonds. As a result, I was able
to improve the fund's overall credit quality without sacrificing much
yield. By the end of the period, Aaa-rated bonds made up 39.1% of the
fund's investments, compared to 30.9% six months earlier.
Q. GENERAL OBLIGATION BONDS WERE THE FUND'S SECOND LARGEST SECTOR
CONCENTRATION AT THE END OF THE PERIOD AT 13.3% OF INVESTMENTS. WHAT MAKES
THESE BONDS ATTRACTIVE?
A. General obligation bonds, or GOs, are backed by the full faith and
credit - which includes the taxing and further borrowing power - of a state
or municipality. Many of the GOs in the fund are local school districts,
some of which are insured by a municipal bond insurance agency or are
backed by the general obligation of the State of Michigan. These bonds
performed well because high-quality bonds tended to be in high demand
during the market rally. What's more, the strength of Michigan's economy
also helped the overall creditworthiness of the state.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. In the spring there had been some discussion about how various federal
tax reform proposals - including a flat tax which would tax everyone at a
uniform rate and eliminate deductions - might affect the attractiveness of
municipal bonds. During that time, tax-exempt bonds underperformed taxable
bonds. In my view, it's unlikely that there will be any major tax reform
proposal passed until 1997 at the earliest. However, there could be some
volatility in municipal bond prices as discussions of tax reform heat up or
fade over the near term. The Michigan economy is, of course, somewhat
vulnerable to a slowdown in auto sales, although not nearly as much as it
was ten years ago. While I believe the national economy is beginning to
slow, I don't foresee a recession in the near future. Therefore, interest
rates could stay low while tax receipts and other revenues backing
municipal bonds should remain strong. Finally, the supply of municipal
bonds is expected to remain low. If demand for municipal bonds stays
constant or increases, a low supply would be a positive. I believe that
those factors combine to create an attractive outlook for the municipal
bond market.
FUND FACTS
GOAL: high current tax-free
income for Michigan residents
by investing in longer-term,
investment-grade municipal
securities whose interest is
free from federal income tax
and Michigan income tax
START DATE: November 12,
1985
SIZE: as of June 30, 1995,
more than $472 million
MANAGER: Maureen Newman,
since 1994; manager,
Connecticut Tax-Free High
Yield, Spartan Aggressive
Municipal, and Spartan
Arizona Municipal
Income portfolios since 1994;
joined Fidelity in 1985
(checkmark)
MAUREEN NEWMAN ON
ADDING VALUE TO THE
FUND:
"One way I try to add value in
managing the fund is to
identify sectors which I
believe have the potential to
outperform other sectors. I
start with a top down view,
and assess how broad
economic and other trends
might shape a particular
sector's prospects. I use
fundamental research -
checking investment options
issuer by issuer - to identify
individual bonds which I
believe present an adequate
reward to compensate for
potential risk. Once I
determine which sectors and
individual bonds within those
sectors look attractive, I
consider how I want the fund
to be distributed in terms of
maturity. "
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF JUNE 30, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
Health Care 23.3 28.1
General Obligation 13.3 12.5
Water & Sewer 9.8 6.2
Industrial Development 9.3 7.2
Escrowed/Prerefunded 8.6 8.5
AVERAGE YEARS TO MATURITY AS OF JUNE 30, 1995
6 MONTHS AGO
Years 16.5 17.3
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF JUNE 30, 1995
6 MONTHS AGO
Years 8.0 8.7
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF JUNE 30, 1995 AS OF DECEMBER 31, 1994
Aaa 39.1%
Aa, A 28.7%
Baa 18.2%
Ba, B 4.3%
Caa 1.1%
Non-rated 7.3%
Short-term investments 1.3%
Aaa 30.9%
Aa, A 24.3%
Baa 22.7%
Ba, B 7.9%
Caa 0.0%
Non-rated 11.0%
Short-term investments 3.2%
Row: 1, Col: 1, Value: 39.1
Row: 1, Col: 2, Value: 28.7
Row: 1, Col: 3, Value: 18.2
Row: 1, Col: 4, Value: 4.3
Row: 1, Col: 5, Value: 1.1
Row: 1, Col: 6, Value: 7.3
Row: 1, Col: 7, Value: 1.3
Row: 1, Col: 1, Value: 30.9
Row: 1, Col: 2, Value: 24.3
Row: 1, Col: 3, Value: 22.7
Row: 1, Col: 4, Value: 7.9
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 11.0
Row: 1, Col: 7, Value: 3.2
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW ACCOUNT FOR 5.2% AND 10.5% OF THE FUND'S
INVESTMENTS AT JUNE 30, 1995 AND DECEMBER 31, 1994, RESPECTIVELY.
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 98.7%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - 92.5%
Brighton Area School Dist. Rfdg.
(Livingston County) Series II, 0% 5/1/15
(AMBAC Insured) Aaa $ 12,950,000 $ 3,901,188
Brighton, Livingston County Wtr. Supply Sys.
Ltd. Tax:
5.25% 11/1/08 A 200,000 190,500
5.25% 11/1/09 A 200,000 182,500
Clinton Township Bldg. Auth. 4.75%
11/1/10 (AMBAC Insured) Aaa 2,810,000 2,500,900
Comstock Pub. Schools (Cap. Appreciation)
0% 5/1/05 (CGIC Insured) Aaa 1,300,000 762,125
Dearborn School Dist. Unltd. Tax 5% 5/1/10
(MBIA Insured) Aaa 1,415,000 1,291,188
Dearborn Swr. Disp. Sys. Rev.:
6.50% 4/1/03 (MBIA Insured) Aaa 1,030,000 1,121,413
6.50% 4/1/04 (MBIA Insured) Aaa 1,095,000 1,193,550
Detroit City School Dist.:
Rfdg. 5.125% 5/1/07 A1 1,000,000 955,000
7.15% 5/1/11 (AMBAC Insured)
(Pre-Refunded to 5/1/01 @102) (e) Aaa 2,000,000 2,277,500
Detroit Convention Facs. Rev. Rfdg.
(Cobo Hall Expansion Proj.):
5.25% 9/30/07 A 6,500,000 6,118,125
5.25% 9/30/12 A 13,500,000 12,082,500
Detroit Econ. Dev. Corp. Ltd. Oblig. Rev.
(Michigan Health Care Corp. Proj.)
0% 12/1/09 (f) - 3,790,000 1,402,953
Detroit Gen. Oblig.:
Rfdg. (Distributable State Aid):
5.20% 5/1/07 (AMBAC Insured) Aaa 4,000,000 3,855,000
5.25% 5/1/08 (AMBAC Insured) Aaa 7,000,000 6,737,500
5.25% 5/1/09 (AMBAC Insured) Aaa 4,000,000 3,810,000
6.35% 4/1/14 Ba1 1,705,000 1,645,325
Detroit Hosp. Fin. Auth. Facs. Rev.
(Michigan Healthcare Corp. Proj.)
0% 12/1/20 (f) Caa 14,590,000 5,357,772
Detroit Self-Insurance Series A, 5.40%
5/1/00 BBB- 2,550,000 2,511,750
Detroit Swr. Disp. Rev.:
7.161% 7/1/23 (FGIC Insured) INFL (d) Aaa 9,000,000 8,122,500
3.90% 7/1/23 (FGIC Insured) Aaa 9,000,000 9,000,000
Detroit Wtr. Supply Sys. Rev. Rfdg.:
6.25% 7/1/12 (FGIC Insured) Aaa 1,000,000 1,027,500
6.50% 7/1/15 (FGIC Insured) Aaa 15,000,000 16,275,000
Flint Hosp. Bldg. Auth. Rev.:
Rfdg. (Hurley Med. Ctr.) 9.50% 7/1/06 Baa 5,670,000 5,889,713
(Hurley Med. Ctr.) 6.50% 7/1/20 Baa1 5,570,000 5,340,238
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
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 $ 2,247,500
Fraser Bldg. Auth. Ltd. Tax 5% 11/1/18 Baa1 1,000,000 833,750
Grand Haven Elec. Rev. Rfdg. 5.25% 7/1/16
(MBIA Insured) Aaa 5,500,000 5,025,625
Grand Rapids Wtr. Supply Sys. Rev. Rfdg.
6.625% 1/1/08 (FGIC Insured) Aaa 4,000,000 4,240,000
Grand Valley Univ. Gen. Oblig. Rev.:
Rfdg. 5.15% 10/1/09
(AMBAC Insured) Aaa 2,750,000 2,602,188
7.875% 10/1/08 A 1,000,000 1,121,250
Greater Detroit Resource Recovery Auth. Rev.:
Series C, 9.25% 12/13/08 BBB- 6,490,000 6,765,825
Series G, 9.25% 12/13/08 BBB- 3,000,000 3,127,500
Series H, 9.25% 12/13/08 BBB- 3,550,000 3,700,875
Gull Lake Commty. School Dist.
(Cap. Appreciation) 0% 5/1/13
(FGIC Insured) Aaa 3,000,000 1,038,750
Harbor Springs Pub. School Unltd. Tax:
0% 5/1/11 (AMBAC Insured) Aaa 1,280,000 496,000
0% 5/1/12 (AMBAC Insured) Aaa 1,390,000 502,138
0% 5/1/13 (AMBAC Insured) Aaa 1,455,000 494,700
Haslett Pub. School Dist. Unltd. Tax
7.50% 5/1/20 (Pre-Refunded to
5/1/00 @ 101) (e) A1 1,500,000 1,695,000
Howell Pub. Schools Unltd. Tax Rfdg.
(Cap Appreciation):
0% 5/1/10 (AMBAC Insured) Aaa 1,130,000 468,950
0% 5/1/11 (AMBAC Insured) Aaa 1,800,000 697,500
0% 5/1/12 (AMBAC Insured) Aaa 1,255,000 454,938
0% 5/1/13 (AMBAC Insured) Aaa 1,000,000 341,250
0% 5/1/14 (AMBAC Insured) Aaa 1,000,000 321,250
0% 5/1/15 (AMBAC Insured) Aaa 1,600,000 484,000
Huron Valley School Dist. Gen. Oblig. Unltd.
Tax:
Rfdg. (Cap. Appreciation)
0% 5/1/11 (FGIC Insured) Aaa 5,830,000 2,280,988
7.10% 5/1/08
(Pre-Refunded to 5/1/01 @ 102) (e) A1 2,500,000 2,834,375
Imlay City Commty. School Dist. Rfdg.
(Cap. Appreciation) 0% 5/1/06
(FGIC Insured) Aaa 1,375,000 759,688
Kalamazoo City School Dist. Unltd. Tax
(School Bldg. & Site) 0% 5/1/07 Aa 1,195,000 613,931
Kent County Refuse Disp. Sys. Ltd. Tax
Rfdg. 8.40% 11/1/10 A1 2,000,000 2,155,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Kent Hosp. Fin. Auth. Hosp. Facs. Rev. Rfdg.
(Butterworth Hospital) Series A, 7.25%
1/15/13 A1 $ 3,685,000 $ 4,214,719
Lansing Bldg. Auth. Rev. (Deferred Interest):
0% 6/1/10 (AMBAC Insured) Aaa 2,500,000 1,031,250
0% 6/1/12 (AMBAC Insured) Aaa 3,000,000 1,080,000
Lowell Area School Unltd. Tax
(Cap. Appreciation) 0% 5/1/15
(FGIC Insured)
(Pre-Refunded to 5/1/15 @ 49) (e) Aaa 11,375,000 3,384,063
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 1,264,375
Michigan Bldg. Auth. Rev.:
Rfdg. Series I:
6% 10/1/00 A 1,375,000 1,454,063
6.25% 10/1/20 A 1,500,000 1,501,875
Rfdg. Series II, 6.75% 10/1/11 A 1,000,000 1,065,000
(Chippewa Correctional) Series I, 0%
10/1/00 (Escrowed to Maturity) (e) Aaa 2,275,000 1,757,438
(Detroit Regional) Series I: (e)
0% 10/1/99 (Escrowed to Maturity) Aaa 2,000,000 1,627,500
0% 10/1/01 (Escrowed to Maturity) Aaa 1,000,000 733,750
0% 10/1/02 (Escrowed to Maturity) Aaa 2,000,000 1,382,500
0% 10/1/04 (Escrowed to Maturity) A 8,120,000 5,024,250
Michigan Comprehensive Trans. Rev. Rfdg.:
Series II, 7.625% 5/1/11 A1 2,145,000 2,335,369
Series B, 5.75% 5/15/04 A1 1,275,000 1,314,844
Michigan Gen. Oblig. (Envir. Protection Prog.):
5.50% 11/1/05 A1 5,000,000 5,093,750
6.25% 11/1/08 A1 3,000,000 3,146,250
Michigan Hosp. Fin. Auth. Rev.:
Rfdg.:
(Bay Med. Ctr.) Series A, 8.25% 7/1/12 Baa1 3,000,000 3,251,250
(Brighton Hosp.) Series A, 8.625%
10/1/18 - 1,100,000 1,098,625
(Detroit-Macomb Hosp. Corp.) Series A:
7.30% 6/1/01 B 1,250,000 1,217,188
7.40% 6/1/13 (h) B 12,495,000 11,714,063
7% 6/1/15 B 1,345,000 1,203,775
(Detroit Med. Ctr.):
Series A, 6.50% 8/15/18 A 4,000,000 3,940,000
Series B, 5.50% 8/15/23 A 5,000,000 4,281,250
(Gratiot Commty. Hosp.) Series A,
8.75% 10/1/07 Ba 4,400,000 4,482,500
(McLaren Obligated Group) Series A,
5.375% 10/15/13 A1 4,280,000 3,809,200
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (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 $ 3,150,000
6% 2/1/24 Baa1 3,500,000 2,944,375
(Port Huron Hosp.) Series A:
7.50% 7/1/05 Baa 1,000,000 1,030,000
7.625% 7/1/15 Baa 3,780,000 3,798,900
(Saratoga Commty. Hosp.) 8.75%
6/1/10 - 1,840,000 1,961,900
(Sinai Hosp. of Detroit) 7% 1/1/03
(FGIC Insured) Aaa 1,000,000 1,046,250
(Sisters of Mercy Health Corp.) 5.375%
8/15/14 (MBIA Insured) Aaa 9,950,000 9,315,688
(Crittenton Hosp.) 5.25% 3/1/14 A 4,620,000 4,019,400
(Daughters of Charity) (Providence Hosp.)
7% 11/1/21 Aa 1,000,000 1,056,250
(Harper Grace & Huron Valley Hosp.)
Series A, 10% 10/1/16 A 10,000 10,313
Michigan Hsg. Dev. Auth. Rental Hsg. Rev.
Series B:
5.80% 4/1/19 A+ 4,650,000 4,382,625
7.55% 4/1/23 A+ 4,750,000 5,011,250
Michigan Hsg. Dev. Auth. Single Family Mtg.
Rev. Series A:
7.70% 12/1/16 AA+ 2,490,000 2,605,163
6.80% 12/1/16 AA+ 8,000,000 8,270,000
Michigan Muni. Bond Auth. Rev.
Rfdg. (Local Gov't. Loan Prog.) Series A:
(Cap. Appreciation)
0% 12/1/07 (FGIC Insured) Aaa 1,000,000 496,250
0% 12/1/04 (FGIC Insured) Aaa 2,000,000 1,215,000
0% 12/1/05 (FGIC Insured) Aaa 1,855,000 1,057,350
0% 12/1/06 (FGIC Insured) Aaa 5,000,000 2,675,000
4.75% 12/1/09 (FGIC Insured) Aaa 6,000,000 5,415,000
(Local Gov't. Loan Prog.):
Group 9, 8.75% 11/1/17 A 500,000 540,000
Group 19, 7.50% 11/1/09
(AMBAC Insured) Aaa 1,000,000 1,091,250
Series G, 6.20% 5/1/04
(AMBAC Insured) Aaa 1,000,000 1,068,750
(Wayne County Proj.) Series A,
7% 12/1/09 (FGIC Insured)
(Pre-Refunded to 6/1/00
@102) (e) Aaa 5,750,000 6,440,000
Michigan Pub. Pwr. Agcy. Rev. Rfdg.
(Belle River Proj.):
Series A, 5.25% 1/1/18 A1 7,500,000 6,693,750
Series B, 5% 1/1/19 A1 15,500,000 13,310,625
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan South Central Pwr. Agcy. Pwr. Supply
Sys. Rev. Rfdg.:
5.90% 11/1/06 (MBIA Insured) Aaa $ 3,000,000 $ 3,131,250
5% 11/1/09 (AMBAC Insured) Aaa 1,675,000 1,555,656
6.75% 11/1/10 Baa1 2,000,000 2,070,000
Michigan Strategic Fund Ltd. Oblig. Rev. Rfdg.:
Rfdg. (Detroit Edison Co. Proj.):
Series AA:
6.50% 2/15/16 (FGIC Insured) Aaa 1,250,000 1,310,938
6.40% 9/1/25 (MBIA Insured) (g) Aaa 5,000,000 5,106,250
Series BB:
7% 7/15/08 (MBIA Insured) Aaa 2,000,000 2,265,000
7% 5/1/21 (AMBAC Insured) Aaa 8,500,000 9,679,375
Rfdg. (Environmental Research Institute):
6.25% 8/15/06 A- 2,660,000 2,733,150
6.375% 8/15/12 A- 2,000,000 2,042,500
Rfdg. (Environmental Research Michigan Proj.)
8.125% 10/1/14 - 9,000,000 9,731,250
Rfdg. (Ford Co. Proj.) Series A, 7.10%
2/1/06 A1 4,000,000 4,510,000
Rfdg. (Kmart Corp. Proj.):
(Eaton Township) 6.25% 9/1/06 BBB 1,200,000 1,189,500
(Roseville) 6.25% 10/1/06 BBB+ 2,100,000 2,081,625
Rfdg. (Mercy Svcs. for Aging Proj.)
9.40% 5/15/20 - 8,900,000 9,500,750
Rfdg. (Michigan Health Care Corp. Proj.)
0% 12/1/14 (f) - 1,830,000 677,415
(Gladwin Pines Nursing Home Proj.)
(Midland Hosp. Ctr.) 8.75% 1/1/08 A- 1,640,000 1,771,200
Michigan Trunk Line Series A, 5.75% 10/1/04 A1 2,245,000 2,303,931
Mona Shores School Dist. School Bldg. & Site
Rev. 6.75% 5/1/10 (FGIC Insured) Aaa 2,220,000 2,400,375
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 1,125,000
Monroe County Poll. Cont. Rev. (Detroit Edison
Proj.) Series CC, 7.50% 12/1/19
(AMBAC Insured) Aaa 5,000,000 5,512,500
Okemos Pub. School Dist. Unltd. Tax Rfdg.:
(Cap. Appreciation) 0% 5/1/12
(MBIA Insured) Aaa 2,500,000 909,375
0% 5/1/13 (MBIA Insured) Aaa 1,700,000 575,875
0% 5/1/14 (MBIA Insured) Aaa 1,600,000 510,000
0% 5/1/15 (MBIA Insured) Aaa 2,600,000 780,000
0% 5/1/16 (MBIA Insured) Aaa 3,500,000 988,750
Pontiac Hosp. Fin. Auth. Rev. (North Oakland
Med. Ctr. Obligated Group) 6%
8/1/18 Baa 2,700,000 2,318,625
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Pontiac Stadium Bldg. Auth. Rev.
6.60% 3/1/03 Baa $ 1,145,000 $ 1,165,038
Port Huron Area School Dist. School Bldg. & Site
Unltd. Tax (Cap. Appreciation) 0%
5/1/08 A1 1,975,000 943,063
Rochester Community School Dist. Unltd. Tax
Rfdg. 5.625% 5/1/11 (FGIC Insured) Aaa 1,000,000 985,000
Romulus Commty. Schools (Cap. Appreciation)
Series I, 0% 5/1/06 (FSA Insured) Aaa 3,610,000 1,994,525
Romulus Township School Dist. (Cap.
Appreciation) 0% 5/1/20 (FGIC Insured) Aaa 1,390,000 302,325
Royal Oak City School Dist. School Bldg. & Site
Unltd. Tax 0% 5/1/05 (AMBAC Insured) Aaa 3,000,000 1,770,000
Royal Oak Hosp. Fin. Auth. Hosp. Rev.
(William Beaumont Hosp.) Series C,
7.375% 1/1/20
(Pre-Refunded to 1/1/99 @ 102) (e) Aaa 4,070,000 4,527,875
St. Clair Shores Econ. Dev. Corp. Ltd. Oblig.
Rev. (Bon Secours Health Sys.) Series B,
7.50% 9/1/15 A1 2,100,000 2,260,125
Tawas City Hosp. Fin. Auth. Hosp. Rev.
(St. Joseph Hosp. Proj.) Series A,
8.50% 3/15/12 - 2,400,000 2,523,000
Three Rivers Area Hosp. Auth. Series A:
11% 11/1/08 - 300,000 308,250
11% 11/1/09 - 300,000 308,250
Univ. of Michigan Hosp. Rev.
Series 1990, 7% 12/1/21
(Pre-Refunded to 12/1/00 @ 102) (e) Aa 1,000,000 1,126,250
Univ. of Michigan Rev. Rfdg. (Parking Sys.)
Series A, 5% 6/1/15 Aa1 2,125,000 1,885,938
Vicksburg Commty. Schools 7% 5/1/07
(MBIA Insured) (Pre-Refunded to 5/1/01
@ 102) (e) Aaa 2,250,000 2,545,313
Waterford Township Econ. Dev. Corp. Rev. Ltd.
Tax Oblig. (Canterbury Healthcare):
8% 7/1/08 - 550,000 558,250
8.375% 7/1/23 - 1,300,000 1,352,000
Wayne Charter County Arpt Rev.
(Subordinated Lien Detroit Metropolitan Arpt.):
Series B, 6.875% 12/1/11
(MBIA Insured) (b) Aaa 1,500,000 1,593,750
Series C, 5.25% 12/1/13
(MBIA Insured) Aaa 2,000,000 1,842,500
Wayne Charter County Spl. Arpt. Facs. Rev.
(Republic Airlines, Inc. Proj.) Series C,
10.375% 12/1/15 - 4,475,000 4,659,594
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Wayne County Bldg. Auth. Ltd. Tax Series A,
8% 3/1/17 (Pre-Refunded to 3/1/02
@ 102) (e) Baa $ 2,250,000 $ 2,683,125
West Ottawa Pub. School Dist. School Bldg. & Site
Unltd. Tax Gen. Oblig. (Cap. Appreciation)
0% 5/1/06 (MBIA Insured) Aaa 4,110,000 2,250,225
Western Michigan Univ. Rev.:
Rfdg. Series A, 5.50% 7/15/16
(FGIC Insured) Aaa 1,000,000 940,000
Series A, 5% 7/15/21 (FGIC Insured) Aaa 3,600,000 3,078,000
1.67% 7/15/17 (FGIC Insured) INFL (d) Aaa 2,500,000 2,106,250
Western Townships Util. Auth. Swr. Disp. Sys.
Ltd. Tax 8.20% 1/1/18 BBB+ 2,500,000 2,756,250
Williamston Gen. Oblig. Rfdg. 6.90% 11/1/17
(AMBAC Insured) Aaa 1,000,000 1,058,750
435,245,083
PUERTO RICO - 5.1%
Puerto Rico Commonwealth Aqueduct & Swr.
Auth. Rev. Series A, 7.875% 7/1/17 Baa 2,000,000 2,210,000
Puerto Rico Commonwealth Hsg. Banking & Fin.
Agcy. Single Family Rfdg.:
5.125% 12/1/04 Baa 2,450,000 2,339,750
5.125% 12/1/05 Baa 3,890,000 3,671,188
Puerto Rico Commonwealth Hwy. & Trans. Auth.
Hwy. Rev. Rfdg. Series W, 5.50% 7/1/13 Baa1 11,000,000 10,381,250
Puerto Rico Commonwealth Urban Renewal & Hsg.
Corp. Rfdg. 7.875% 10/1/04 Baa1 2,800,000 3,122,000
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Rfdg.
Series S, 6.125% 7/1/09 Baa1 2,000,000 2,047,500
23,771,688
GUAM - 1.1%
Guam Arpt. Auth. Rev. Series A, 6.60%
10/1/10 (b) BBB 2,000,000 2,002,500
Guam Pwr. Auth. Rev. Series A, 5.25%
10/1/13 BBB 3,500,000 3,040,613
5,043,113
TOTAL MUNICIPAL BONDS
(Cost $466,660,394) 464,059,884
MUNICIPAL NOTES (A) - 1.3%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - 1.3%
Cornell Township Econ. Dev. Corp. Envir. Impt.
Rev. Rfdg. (Mead Escanaba Paper Co.
Proj.) Series 1986, 4.25%,
LOC Swiss Bank, VRDN A-1+ $ 1,400,000 $ 1,400,000
Delta County Econ. Dev. Corp. Envir. Impt.
Rev. (Mead Escanaba Paper Co. Proj.)
Series 1992, 4.35%, LOC Union Bank of
Switzerland, VRDN (b) A-1+ 2,600,000 2,600,000
Grand Rapids Ind. Dev. Rev. (Rowe Int'l. Inc.)
4.30%, LOC Chemical Bank, VRDN A-1 2,300,000 2,300,000
TOTAL MUNICIPAL NOTES
(Cost $6,300,000) 6,300,000
TOTAL INVESTMENTS - 100%
(Cost $472,960,394) $ 470,359,884
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
INFL - Inverse Floating Rate Security
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.
(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) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(g) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
(h) A portion of the security was pledged to cover margin requirements for
delayed delivery purchases. At the period end, the value of securities
pledged amounted to $5,842,500.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 57.8% AAA, AA, A 68.7%
Baa 12.4% BBB 12.4%
Ba 1.3% BB 0.0%
B 0.0% B 3.0%
Caa 1.1% CCC 1.1%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 7.3%. FMR has
determined that unrated debt securities that are lower quality account for
5.2% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 23.3%
General Obligation 13.3%
Others
(individually less than 10%) 63.4%
TOTAL 100.0%
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $472,960,394. Net unrealized depreciation aggregated
$2,600,510, of which $20,502,765 related to appreciated investment
securities and $23,103,275 related to depreciated investment securities.
The fund elected to defer to its fiscal year ending December 31, 1995
$5,128,985 of losses recognized during the period November 1, 1994 to
December 31, 1994.
At December 31, 1994, the fund was required to defer $2,095,232 of losses
on futures contracts and options.
FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
1.ASSETS 2. 3.
4.Investment in securities, at value (cost $472,960,394) 5. $ 470,359,884
-
See accompanying schedule
6.Cash 7. 42,958
8.Receivable for investments sold 9. 943,279
10.Interest receivable 11. 7,549,154
12. 13.TOTAL ASSETS 14. 478,895,275
15.LIABILITIES 16. 17.
18.Payable for delayed delivery $ 5,005,333 19.
20.Payable for fund shares redeemed 195,173 21.
22.Distributions payable 645,860 23.
24.Accrued management fee 161,004 25.
26.Other payables and accrued expenses 11,305 27.
28. 29.TOTAL LIABILITIES 30. 6,018,675
31.32.NET ASSETS 33. $ 472,876,600
34.Net Assets consist of: 35. 36.
37.Paid in capital 38. $ 484,320,187
39.Accumulated undistributed net realized gain (loss) 40. (8,843,077)
on investments
41.Net unrealized appreciation (depreciation) 42. (2,600,510)
on investments
43.44.NET ASSETS, for 42,838,232 shares outstanding 45. $ 472,876,600
46.47.NET ASSET VALUE, offering price and redemption 48. $11.04
price per share ($472,876,600 (divided by) 42,838,232 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
49.50.INTEREST INCOME 51. $ 15,029,615
52.EXPENSES 53. 54.
55.Management fee $ 942,754 56.
57.Transfer agent, accounting and custodian fees 394,044 58.
and expenses
59.Non-interested trustees' compensation 1,091 60.
61.Registration fees 1,266 62.
63.Audit 15,442 64.
65.Legal 20,408 66.
67.Miscellaneous 2,640 68.
69. 70.TOTAL EXPENSES 71. 1,377,645
72.73.NET INTEREST INCOME 74. 13,651,970
75.REALIZED AND UNREALIZED GAIN (LOSS) 77. 78.
76.Net realized gain (loss) on:
79. Investment securities (876,624) 80.
81. Futures contracts (728,735) (1,605,359)
82.Change in net unrealized appreciation (depreciation) 83. 84.
on:
85. Investment securities 20,563,536 86.
87. Futures contracts 106,261 20,669,797
88.89.NET GAIN (LOSS) 90. 19,064,438
91.92.NET INCREASE (DECREASE) IN NET ASSETS 93. $ 32,716,408
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
94.INCREASE (DECREASE) IN NET ASSETS
95.Operations $ 13,651,970 $ 30,593,065
Net interest income
96. Net realized gain (loss) (1,605,359) 1,872,546
97. Change in net unrealized appreciation (depreciation) 20,669,797 (73,914,188)
98. 99.NET INCREASE (DECREASE) IN NET ASSETS 32,716,408 (41,448,577)
RESULTING FROM OPERATIONS
100.Distributions to shareholders (13,651,970) (30,593,065)
From net interest income
101. From net realized gain - (3,640,536)
102. In excess of net realized gain - (3,743,750)
103. 104.TOTAL DISTRIBUTIONS (13,651,970) (37,977,351)
105.Share transactions 72,129,135 123,015,698
Net proceeds from sales of shares
106. Reinvestment of distributions 10,314,819 29,488,133
107. Cost of shares redeemed (62,326,048) (202,876,014)
108.109. 20,117,906 (50,372,183)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
110. 39,182,344 (129,798,111)
111.TOTAL INCREASE (DECREASE) IN NET ASSETS
112.NET ASSETS 113. 114.
115. Beginning of period 433,694,256 563,492,367
116. End of period $ 472,876,600 $ 433,694,256
117.OTHER INFORMATION 119. 120.
118.Shares
121. Sold 6,556,257 10,688,197
122. Issued in reinvestment of distributions 937,130 2,612,382
123. Redeemed (5,656,441) (17,972,179)
124. Net increase (decrease) 1,836,946 (4,671,600)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
125. SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED
JUNE 30, 1995
126. (UNAUDITED) 1994 1993 C 1992 1991 1990
127.SELECTED PER-SHARE DATA
128.Net asset value, beginning of period $ 10.580 $ 12.340 $ 11.710 $ 11.410 $ 10.890 $ 11.100
129.Income from Investment Operations .321 .687 .709 .733 .745 .758
Net interest income
130. Net realized and unrealized gain
(loss) .460 (1.590) .870 .320 .520 (.210)
131. Total from investment operations .781 (.903) 1.579 1.053 1.265 .548
132.Less Distributions (.321) (.687) (.709) (.733) (.745) (.758)
From net interest income
133. From net realized gain on
investments - (.080) (.240) (.020) - -
134. In excess of net realized gain on
investments - (.090) - - - -
135. Total distributions (.321) (.857) (.949) (.753) (.745) (.758)
136.Net asset value, end of period $ 11.040 $ 10.580 $ 12.340 $ 11.710 $ 11.410 $ 10.890
137.TOTAL RETURN B 7.43% -7.50% 13.83% 9.54% 12.04% 5.15%
138.RATIOS AND SUPPLEMENTAL DATA
139.Net assets, end of period (000
omitted) $ 472,877 $ 433,694 $ 563,492 $ 463,816 $ 379,175 $ 279,429
140.Ratio of expenses to average net
assets .60% .57% .59% .61% .62% .64%
A
141.Ratio of net interest income to
average net assets 5.90% 6.04% 5.79% 6.36% 6.73% 6.98%
A
142.Portfolio turnover rate 26% 18% 33% 15% 12% 18%
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
FINANCIAL HIGHLIGHTS
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, the past five years and
life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Fidelity Michigan Municipal
Money Market Portfolio 1.69% 3.11% 17.25% 20.39%
Average All Tax-Free Money Market Fund 1.70% 3.10% 16.51% 18.91%
Consumer Price Index 1.87% 3.04% 17.40% 20.94%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on January 12, 1990. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. To measure how the fund's performance stacked
up against its peers, you can compare it to the average all tax-free money
market fund, which reflects performance of 389 all tax-free money market
funds tracked by IBC/Donoghue over the past six months. Comparing the
fund's performance to the consumer price index (CPI) helps show how your
fund did compared to inflation. (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, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity Michigan Municipal
Money Market Portfolio 3.11% 3.23% 3.45%
Average All Tax-Free Money Market Fund 3.10% 3.10% 3.19%
Consumer Price Index 3.04% 3.26% 3.52%
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>
6/27/94 9/26/94 12/26/94 3/27/95 6/26/95
Fidelity Michigan Municipal 2.20% 2.77% 3.90% 3.38% 3.56%
Money Market Portfolio
Average All Tax-Free 2.27% 2.81% 3.78% 3.45% 3.59%
Money Market Fund
Fidelity Michigan Municipal 3.60% 4.53% 6.37% 5.52% 5.82%
Money Market Portfolio
Tax-equivalent
</TABLE>
Row: 1, Col: 1, Value: 2.18
Row: 1, Col: 2, Value: 2.27
Row: 2, Col: 1, Value: 2.77
Row: 2, Col: 2, Value: 2.81
Row: 3, Col: 1, Value: 3.9
Row: 3, Col: 2, Value: 3.78
Row: 4, Col: 1, Value: 3.38
Row: 4, Col: 2, Value: 3.45
Row: 5, Col: 1, Value: 3.56
Row: 5, Col: 2, Value: 3.59
Fidelity Michigan
Municipal Money
Market Portfolio
Average All
Tax-Free Money
Market Fund
4% -
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The 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 1995 federal and state income tax rate of 38.82%. Figures for the
average all tax-free money market fund are from IBC/Donoghue. A portion of
the fund's income may be subject to the alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. And there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jeff Parker,
Portfolio Manager of Michigan
Municipal Money Market Portfolio
Q. JEFF, CAN YOU TELL US HOW THE INVESTMENT CLIMATE HAS CHANGED DURING THE
PAST SIX MONTHS?
A. Conditions have changed dramatically. When the period began, the Federal
Reserve was still in a credit-tightening mode. There had already been six
Fed rate increases in the cycle, and the seventh - a one-half percentage
point increase in the federal funds rate, the rate banks charge each other
for overnight loans - came in February. However, the February rate increase
was widely anticipated and the market absorbed it without a hitch.
Q. HAVE RATES PEAKED, THEN?
A. That's quite possible. The goal of Fed policy ever since it began
raising short-term interest rates in February 1994 has been to dampen the
economic growth rate and prevent an outbreak of inflation. Apparently, the
policy has worked. Early in 1995, we began seeing signs that the economy
was slowing down. Those signs were confirmed in April with the estimate of
the first-quarter growth rate, which came in at a surprisingly low 2.8%.
That marked a dramatic slowdown from the robust 5.1% growth rate during the
fourth quarter of 1994. The pattern of slower growth persisted throughout
the spring. By the end of the period, it seemed highly unlikely that the
Fed would see the need to raise rates again anytime soon. Instead,
speculation centered on when the Fed would lower interest rates.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. When the period began, the fund's average maturity was between 35 and 40
days. By the time of the February rate increase, it was closer to 30 days,
and by mid-March it was down in the mid-20s. In retrospect, that was
shorter than we might have liked to have been as rates were peaking. On the
other hand, market conditions were still uncertain; and more importantly, a
temporary shortage of appropriate issues in the Michigan market made
extending the fund problematic. As supplies increased later in the spring,
we were able to bring the fund back out around 40 days by mid-April, and 51
days by the end of June; still shorter than ideal, but appropriate given
the continued lack of adequate supply.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on June 30, 1995 was 3.57%, compared to 4.15%
six months ago. On an after-tax basis, that was the equivalent of a 5.84%
yield on a taxable investment for Michigan investors in the 38.82% combined
federal and state tax bracket. Through June 30, 1995, the fund's six-month
total return was 1.69%, compared to 1.70% for the average all tax-free
money market fund, according to IBC/Donoghue.
Q. WHAT'S THE OUTLOOK?
A. There's been a dramatic shift in market psychology in recent months.
Early this year, many economists were predicting that the Fed would go
right on raising interest rates through the summer. However, as the economy
slowed down, the consensus view shifted 180 degrees. By the end of June,
most market participants agreed it was only a matter of time before the Fed
would begin lowering rates. In fact, on July 6, 1995, days after the
reporting period ended, the Fed acted, shaving one-quarter percentage point
off the federal funds rate. Now the question becomes whether the rate cuts
will continue. I don't think it would be appropriate to extend the fund
aggressively. On the other hand, it seems reasonable to assume that lower
rates are coming - if not this summer, then perhaps later in the year. With
that in mind, I'll probably look for opportunities to gradually extend the
fund's average maturity in the months ahead.
FUND FACTS
GOAL: High current tax-free
income for Michigan residents
while maintaining a stable
$1.00 share price. Invests in
high-quality, short-term
municipal money market
securities whose interest is
free from federal income tax
and Michigan income tax.
START DATE: January 12, 1990
SIZE: as of June 30,1995,
more than $217 million
MANAGER: Jeff Parker, since
June 1995; manager, Fidelity
Connecticut Municipal Money
Market, Fidelity New Jersey
Municipal Money Market, and
Spartan New Jersey Municipal
Money Market portfolios, since
June 1995; joined Fidelity in
1991
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
Jeff Parker became manager
of the fund effective June 1,
1995
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
6/30/95 12/31/94 6/30/94
0 - 30 71 71 62
31 - 90 16 7 8
91 - 180 6 20 21
181 - 397 7 2 9
WEIGHTED AVERAGE MATURITY
6/30/95 12/31/94 6/30/94
Michigan Municipal
Money Market Portfolio 51 days 40 days 58 days
Average All Tax-Free
Money Market Fund* 45 days 47 days 46 days
ASSET ALLOCATION
AS OF JUNE 30, 1995 AS OF DECEMBER 31, 1994
Row: 1, Col: 1, Value: 60.0
Row: 1, Col: 2, Value: 15.0
Row: 1, Col: 3, Value: 7.0
Row: 1, Col: 4, Value: 18.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 1, Value: 60.0
Row: 1, Col: 2, Value: 16.0
Row: 1, Col: 3, Value: 6.0
Row: 1, Col: 4, Value: 17.0
Row: 1, Col: 5, Value: 2.0
Variable rate
demand notes
(VRDNs) 60%
Commercial
paper 15%
Tender bonds 7%
Municipal
notes 18%
Other 0%
Variable rate
demand notes
(VRDNs) 60%
Commercial
paper 16%
Tender bonds 6%
Municipal
notes 17%
Other 1%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENTS JUNE 30, 1995 (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. Bonds (St. Joseph Hosp. Ctr. Proj.)
4.10%, tender 11/1/95 (MBIA Insured)
(BPA Morgan Guaranty) $ 5,500,000 $ 5,500,000
Comstock Park Pub. Schools Participating VRDN, Series 94-B1,
4.30% (FGIC Insured) (Liquidity Facility Norwest Bank) (c) 3,145,000
3,145,000
Detroit Downtown Dev. Auth. Rev. Rfdg. (Millender Ctr. Proj.)
Series 1988, 4.10%, LOC Sumitomo Bank, VRDN 3,000,000 3,000,000
Detroit Wtr. Supply Sys. Participating VRDN,
Series PA-28, 4.25% (FGIC Insured)
(Liquidity Facility Merrill Lynch & Co.) (c) 4,440,000 4,440,000
Flint Econ. Dev. Corp. Ltd. Oblig. Rev. (Genesee County
Real Estate Proj.) 4.05%, LOC Nat'l. Bank of Detroit,
VRDN (b) 1,300,000 1,300,000
Genesee County Econ Dev. Corp. Ltd. Oblig. Econ. Dev.
Rev. (Creative Foam Corp. Proj.) Series 1994, 4.05%,
LOC Nat'l. Bank of Detroit, VRDN (b) 3,000,000 3,000,000
Georgetown Charter Township Ltd. Oblig. Ind. Rev.
(J&F Steel Corp. Proj.) Series 1989, 4.35%,
LOC Societe Generale, VRDN (b) 1,000,000 1,000,000
Grand Rapids Econ. Dev. Auth. Rev. (Calder Plaza Proj.)
Series 1992 A, 4.10%, LOC Old Kent Bank & Trust
Co., VRDN 1,200,000 1,200,000
Grand Rapids Econ. Dev. Corp. Econ. Dev. Rev. Rfdg.
(Amway Hotel Corp. Proj.) Series 1991 A, 4.35%,
LOC Sakura Bank, VRDN 4,500,000 4,500,000
Grand Rapids Econ. Dev. Corp. Ltd. Oblig. Rev.
(Holland Home Proj.) Series 1994 B, 4%,
LOC Old Kent Bank & Trust Co., VRDN 2,250,000 2,250,000
Grand Rapids Ind. Rev. (Rowe Int'l.) 4.30%,
LOC Chemical Bank, VRDN 3,000,000 3,000,000
Kalamazoo Econ. Dev. Corp. Rev. Rfdg.
(La Quinta Motor Inns) Series 1991, 4.25%,
LOC NationsBank, VRDN 2,190,000 2,190,000
Kent County Hosp. Fin. Auth. Participating VRDN,
Series 94-C1, 4.30% (MBIA Insured)
(Liquidity Facility Norwest Bank) (c) 4,000,000 4,000,000
Kent County Hosp. Fin. Auth. Rev. (Butterworth Hosp.
Proj.) Series 1991 A, 4.35%, LOC Sanwa Bank, VRDN 1,900,000 1,900,000
Livonia Econ. Dev. Corp., VRDN (b):
(Ajluni Proj.) 4.05%, LOC Nat'l. Bank of Detroit 2,300,000 2,300,000
(Foodland Distributors Corp.) 4.30%, LOC Comerica Bank 2,100,000
2,100,000
Michigan Higher Ed. Facs. Auth. Ltd. Oblig. Rev. 4.05%,
(MBIA Insured) (BPA Comerica Bank) VRDN 900,000 900,000
Michigan Higher Ed. Student Loan Auth. Rev. Rfdg.
Series XII-B, 4.30% (AMBAC Insured)
(BPA Krediet Bank) VRDN (b) 9,700,000 9,700,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Hosp. Fin. Auth. Rev., VRDN:
Rfdg. (Mt. Clemens Gen. Hosp.) Series 1994, 4.15%
LOC Comerica Bank $ 5,000,000 $ 5,000,000
(Equip. Loan Prog.):
Series 1991, 4.20%, LOC Comerica Bank 2,350,000 2,350,000
Series A, 4.10%, LOC First of America Bank 7,100,000 7,100,000
Michigan Hsg. Dev. Auth. Participating VRDN (b) (c):
Series PT-19, 4.30% (Liquidity Facility Credit Suisse) 11,580,000
11,580,000
Series PT-38, 4.30% (FSA Insured)
(Liquidity Facility Industrial Bank of Japan) 4,710,000 4,710,000
Series PT-58, 4.10% (Liquidity Facility Credit Suisse) 8,900,000
8,900,000
Michigan Hsg. Dev. Auth. Multi-Family Hsg. Rev. Bonds:
Series 1988 A: (b)
4.20%, tender 7/17/95, LOC Sanwa Bank 4,700,000 4,700,000
4.15%, tender 7/25/95, LOC Sanwa Bank 4,935,000 4,935,000
4.15%, tender 8/7/95, LOC Sanwa Bank 3,800,000 3,800,000
3.90%, tender 8/14/95, LOC Sanwa Bank 3,300,000 3,300,000
Michigan Muni. Bond Auth. RAN Series 1995 B, 4.50%
7/3/96 15,000,000 15,101,100
Michigan Muni. Bond Auth. RAN, Series 1994 B,
4.75% 7/20/95 5,000,000 5,001,876
Michigan School Loan BAN Series A, 4.50% 8/15/95 20,000,000 20,009,086
Michigan Strategic Fund Econ. Dev. Rev.
(Yamaha Musical Prod., Inc. Proj.) Series 1988, 4.30%,
LOC Dai-Ichi Kangyo Bank, VRDN (b) 6,800,000 6,800,000
Michigan Strategic Fund Ltd. Oblig. Rev., VRDN:
(Alpha Tech Corp. Proj.) Series 1987, 4.30%,
LOC Bank of Tokyo (b) 6,000,000 6,000,000
(Donnelly Corp. Proj.) Series 1990 A,
4.35%, LOC Bank of Tokyo (b) 3,500,000 3,500,000
(Doss Ind. Dev. Co.) 4.05%,
LOC Nat'l. Bank of Detroit (b) 3,900,000 3,900,000
(Environmental Quality Co. Proj.) Series 1995, 4.25%,
LOC Comerica Bank 1,000,000 1,000,000
(Hi Tech Mold & Engineering) 4.05%,
LOC Nat'l. Bank of Detroit (b) 1,600,000 1,600,000
(The Spiratex Co. Proj.) Series 1994, 4.05%
LOC Natl. Bank of Detroit (b) 3,000,000 3,000,000
(Uni Boring Co. Inc. Proj.) Series 1992, 4.05%
LOC Nat'l. Bank of Detroit 2,100,000 2,100,000
Michigan Strategic Fund Poll. Cont. Rev.
(Gen. Motors Corp. Proj.) 4.10%, VRDN 5,790,000 5,790,000
Michigan Strategic Fund Rev. Bonds (Dow Chemical Proj.):
Series 1986, 3.60%, tender 9/11/95 1,000,000 1,000,000
Series 1987, 4.20%, tender 7/20/95 2,720,000 2,720,000
Series 1988: (b)
4.25%, tender 7/12/95 2,700,000 2,700,000
4.20%, tender 7/25/95 3,700,000 3,700,000
4.20%, tender 8/10/95 2,000,000 2,000,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Strategic Fund Rev. Bonds (Dow Chemical Proj.): - continued
Series 1988: (b) - continued
3.75%, tender 8/21/95 $ 2,400,000 $ 2,400,000
3.75%, tender 9/11/95 2,000,000 2,000,000
Michigan Strategic Fund Solid Wst. Disp. Rev.
(Grayling Gen. Station Proj.) Series 1990, 4.25%,
LOC Barclays Bank, VRDN (b) 6,200,000 6,200,000
Midland County Econ. Dev. Corp. Rev. (Dow Chemical Co.
Proj.) Series 1993 A, 4.40%, VRDN 1,500,000 1,500,000
Rochester Hills Econ. Dev. Corp. Ltd. Oblig. Rev.
(Cardell Corp.) 4.30%, LOC Comerica Bank, VRDN (b) 300,000 300,000
Saline Econ. Dev. Corp. Rev. (Associated Springs Proj.)
Series 1988, 4.55%, LOC Fuji Bank, VRDN (b) 5,000,000 5,000,000
Sterling Heights Econ. Dev. Corp. Ltd. Oblig. Rev.
(Cherrywood Ctr. Assoc. Proj.) 4.25%,
LOC Comerica Bank, VRDN (b) 5,300,000 5,300,000
Western Gen. Oblig. School Dist. School Bldg. & Rfdg. Bonds
Series 1995, 3.70% 5/1/96 (MBIA Insured) 500,000 500,000
TOTAL INVESTMENTS - 100% $ 220,922,062
Total Cost for Income Tax Purposes $ 220,922,062
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
RAN - Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At December 31, 1994, the fund had a capital loss carryforward of
approximately $52,800 of which $1,600, $1,700, $10,300 and $39,200 will
expire on December 31, 1998, 1999, 2001 and 2002 , respectively.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
143.ASSETS 144. 145.
146.Investment in securities, at value - See 147. $ 220,922,062
accompanying schedule
148.Receivable for investments sold 149. 10,216,791
150.Interest receivable 151. 1,374,365
152. 153.TOTAL ASSETS 154. 232,513,218
155.LIABILITIES 156. 157.
158.Payable to custodian bank $ 222,653 159.
160.Payable for investments purchased 15,101,100 161.
162.Distributions payable 25,252 163.
164.Accrued management fee 72,601 165.
166.Other payables and accrued expenses 52,862 167.
168. 169.TOTAL LIABILITIES 170. 15,474,468
171.172.NET ASSETS 173. $ 217,038,750
174.Net Assets consist of: 175. 176.
177.Paid in capital 178. $ 217,098,056
179.Accumulated net realized gain (loss) on 180. (59,306)
investments
181.182.NET ASSETS, for 217,098,056 shares 183. $ 217,038,750
outstanding
184.185.NET ASSET VALUE, offering price and 186. $1.00
redemption price per share ($217,038,750 (divided by)
217,098,056 shares)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
187.188.INTEREST INCOME 189. $ 4,324,642
190.EXPENSES 191. 192.
193.Management fee $ 439,375 194.
195.Transfer agent, accounting and custodian fees 225,575 196.
and expenses
197.Non-interested trustees' compensation 860 198.
199.Registration fees 11,465 200.
201.Audit 12,064 202.
203.Legal 43 204.
205.Miscellaneous 869 206.
207. 208.TOTAL EXPENSES 209. 690,251
210.211.NET INTEREST INCOME 212. 3,634,391
213.214.NET REALIZED GAIN (LOSS) ON INVESTMENTS 215. (6,578)
216.217.NET INCREASE IN NET ASSETS RESULTING FROM 218. $ 3,627,813
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
219.INCREASE (DECREASE) IN NET ASSETS
220.Operations $ 3,634,391 $ 4,816,413
Net interest income
221. Net realized gain (loss) (6,578) (39,157)
222. 3,627,813 4,777,256
223.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
224.Distributions to shareholders from net interest (3,634,391) (4,816,413)
income
225.Share transactions at net asset value of $1.00 per 164,499,567 440,390,901
share
Proceeds from sales of shares
226. Reinvestment of distributions from net interest 3,459,399 4,529,069
income
227. Cost of shares redeemed (172,648,502) (398,336,000)
228.229. (4,689,536) 46,583,970
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES
RESULTING FROM SHARE TRANSACTIONS
230. (4,696,114) 46,544,813
231.TOTAL INCREASE (DECREASE) IN NET ASSETS
232.NET ASSETS 233. 234.
235. Beginning of period 221,734,864 175,190,051
236. End of period $ 217,038,750 $ 221,734,864
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
237. SIX MONTHS YEARS ENDED DECEMBER 31, JANUARY 12, 1990
ENDED (COMMENCEMENT
JUNE 30, 1995 OF OPERATIONS) TO
DECEMBER 31,
238. (UNAUDITED) 1994 1993 1992 1991 1990
239.SELECTED
PER-SHARE DATA
240.Net asset value,
beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
241.Income from
Investment Operations .017 .024 .020 .026 .044 .055
Net interest income
242.Less Distributions(.017) (.024) (.020) (.026) (.044) (.055)
From net interest income
243.Net asset value,
end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
244.TOTAL RETURN B 1.69% 2.44% 1.98% 2.66% 4.46% 5.66%
245.RATIOS AND
SUPPLEMENTAL DATA
246.Net assets, end
of period (000
omitted) $ 217,039 $ 221,735 $ 175,190 $ 160,817 $ 175,150 $ 169,397
247.Ratio of expenses
to average net
assets .64% .61% .62% .49% .21% .22%A
A
248.Ratio of expenses
to average net assets
before .64% .61% .62% .61% .65% .77%A
expense reductions A
249.Ratio of net
interest income to
average net assets 3.37% 2.45% 1.96% 2.64% 4.38% 5.78%A
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1995 (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 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 of their purchase date 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 substantially all of its taxable income for
the fiscal year. The schedules of investments include information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned 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 futures and options transactions and losses
deferred due to wash sales, futures and options and excise tax regulations.
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.
DELAYED DELIVERY TRANSACTIONS. Each fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. Each fund
may receive compensation for interest forgone in a delayed delivery
transaction. Each fund identifies securities as segregated in its custodial
records with a value at least equal to the amount of the purchase
commitment.
FUTURES CONTRACTS AND OPTIONS.
The high yield fund may use futures and options contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures, writing puts, and buying calls tend to increase the fund's
exposure to the underlying instrument. Selling futures, buying puts, and
writing calls tend to decrease the fund's exposure to the underlying
instrument, or hedge other fund investments. Losses may arise from changes
in the value of the underlying instruments, if there is an illiquid
secondary market for the contracts, or if the counterparties do not perform
under the contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options 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 $75,362,461 and $56,755,543, respectively. The
market value of futures contracts opened and closed during the period
amounted to $11,098,377 and $18,519,289, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee that is calculated on the
basis of a group fee rate plus a fixed individual fund fee rate applied to
the average net assets of the fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net assets
of all the mutual funds advised by FMR. The rates ranged from .1200% to
.3700% for the period. In the event that these rates were lower than the
contractual rates in effect during the period, FMR voluntarily implemented
the above rates, as they
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
resulted in the same or a lower management fee. The annual individual fund
fee rate is .25%. For the period, the management fee was equivalent to an
annualized rate of .41% of average net assets for the high yield and money
market funds.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plans (the Plans), and in accordance with Rule 12b-1 of the 1940 Act, FMR
or the funds' distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of each fund's shares. Subject to
the approval of each Board of Trustees, the Plans also authorize payments
to third parties that assist in the sale of each fund's shares or render
shareholder support services. FMR or FDC has informed the funds that
payments made to third parties under the Plans amounted to $14,106 and
$12,396 for the high yield and money market funds, respectively, for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian
and transfer and shareholder servicing agent for the funds. UMB 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. Effective January
1, 1995, the Board of Trustees approved a revised transfer agent contract
pursuant to which the funds pay account fees and asset-based fees that vary
according to account size and type of account. Under the prior transfer
agent contract, the funds paid fees based on the type, size, number of
accounts and the 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 $291,473 and $100,481 for
the high yield fund, and $195,738 and $22,834 for the money market fund
respectively.
Shareholders participating in the Fidelity Ultra Service Account(registered
trademark) Program (the Program) pay a $5.00 monthly fee to Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, for performing
services associated with the Program. For the period, fees paid to FBSI by
shareholders participating in the Program amounted to $4,470.
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)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)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER, MONEY MARKET FUND
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President -
MONEY MARKET FUND
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Michael D. Conway, Assistant Treasurer - MONEY MARKET FUND
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
UMB Bank, n.a.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
UMB 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
SPARTAN(registered trademark)
(registered trademark)
PENNSYLVANIA
MUNICIPAL
PORTFOLIOS
SEMIANNUAL REPORT
JUNE 30, 1995
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 17 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE 21 How the fund has done over time.
FUND TALK 23 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 25 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 26 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 31 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 35 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.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been positive market indications so far in 1995, no one
can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value), and the effect of the $5 account
closeout fee. You can also look at the fund's income. If Fidelity had not
reimbursed certain fund expenses, the past five years and life of fund
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Spartan Pennsylvania Municipal
High Yield Portfolio 9.80% 8.73% 51.85% 95.03%
Lehman Brothers Municipal Bond Index 9.65% 8.82% 48.70% n/a
Average Pennsylvania
Municipal Bond Fund 9.34% 7.74% 46.83% n/a
Consumer Price Index 1.87% 3.04% 17.40% 39.27%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on August 6, 1986. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Lehman Brothers Municipal Bond index - a broad gauge of
the municipal bond market. To measure how the fund's performance stacked up
against its peers, you can compare it to the average Pennsylvania municipal
bond fund, which reflects the performance of 58 Pennsylvania municipal bond
funds with similar objectives tracked by Lipper Analytical Services over
the past six months. Both benchmarks include reinvested dividends and
capital gains, if any. Comparing the fund's performance to the consumer
price index (CPI) helps show how your fund did compared to inflation. (The
CPI returns begin on the month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Pennsylvania Municipal
High Yield Portfolio 8.73% 8.71% 7.79%
Lehman Brothers Municipal Bond Index 8.82% 8.26% n/a
Average Pennsylvania
Municipal Bond Fund 7.74% 7.98% n/a
Consumer Price Index 3.04% 3.26% 3.78%
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
Spartan Penn: HMunicipal Bond Ind
08/31/86 10000.00 10000.00
09/30/86 10054.66 10025.10
10/31/86 10247.93 10198.23
11/30/86 10389.97 10400.26
12/31/86 10329.57 10371.56
01/31/87 10619.05 10683.84
02/28/87 10726.54 10736.41
03/31/87 10633.81 10622.60
04/30/87 9635.80 10089.56
05/31/87 9511.24 10039.52
06/30/87 9731.51 10334.28
07/31/87 9912.36 10439.69
08/31/87 9930.00 10463.17
09/30/87 9312.08 10077.40
10/31/87 9290.88 10113.07
11/30/87 9561.05 10377.12
12/31/87 9737.58 10527.70
01/31/88 10226.61 10902.69
02/29/88 10395.52 11017.93
03/31/88 10077.29 10889.57
04/30/88 10138.64 10972.34
05/31/88 10210.17 10940.63
06/30/88 10412.66 11100.69
07/31/88 10481.86 11173.06
08/31/88 10499.01 11182.90
09/30/88 10728.60 11385.31
10/31/88 11039.47 11586.26
11/30/88 10943.16 11480.13
12/31/88 11121.73 11597.57
01/31/89 11278.34 11837.41
02/28/89 11181.44 11702.34
03/31/89 11178.65 11674.37
04/30/89 11467.63 11951.52
05/31/89 11675.62 12199.76
06/30/89 11859.07 12365.43
07/31/89 11973.30 12533.72
08/31/89 11860.42 12411.02
09/30/89 11821.58 12373.78
10/31/89 11984.65 12524.74
11/30/89 12126.32 12743.93
12/31/89 12212.13 12848.43
01/31/90 12144.68 12788.04
02/28/90 12252.26 12901.85
03/31/90 12254.26 12905.72
04/30/90 12074.27 12812.80
05/31/90 12375.68 13092.12
06/30/90 12488.22 13207.33
07/31/90 12651.31 13401.48
08/31/90 12468.05 13207.16
09/30/90 12531.05 13215.08
10/31/90 12711.91 13454.28
11/30/90 12984.68 13724.71
12/31/90 13091.25 13785.09
01/31/91 13261.54 13969.82
02/28/91 13338.09 14091.35
03/31/91 13367.32 14096.99
04/30/91 13577.22 14284.48
05/31/91 13739.14 14411.61
06/30/91 13670.82 14397.20
07/31/91 13874.87 14572.85
08/31/91 14065.40 14765.21
09/30/91 14228.90 14957.15
10/31/91 14351.82 15091.77
11/30/91 14390.41 15134.03
12/31/91 14726.74 15459.41
01/31/92 14766.47 15494.96
02/29/92 14774.42 15499.61
03/31/92 14773.31 15505.81
04/30/92 14928.20 15643.81
05/31/92 15114.57 15828.41
06/30/92 15358.33 16094.33
07/31/92 15841.49 16577.16
08/31/92 15676.41 16414.70
09/30/92 15760.34 16521.40
10/31/92 15518.10 16359.49
11/30/92 15887.98 16652.32
12/31/92 16068.91 16822.18
01/31/93 16280.61 17017.31
02/28/93 16918.95 17633.34
03/31/93 16726.18 17446.43
04/30/93 16889.06 17622.64
05/31/93 16992.36 17721.32
06/30/93 17280.07 18017.27
07/31/93 17258.90 18040.69
08/31/93 17692.01 18415.94
09/30/93 17952.11 18625.88
10/31/93 17961.11 18661.27
11/30/93 17807.71 18497.05
12/31/93 18186.82 18887.34
01/31/94 18423.87 19102.65
02/28/94 17976.51 18607.89
03/31/94 17185.54 17850.55
04/30/94 17275.00 18002.28
05/31/94 17469.46 18158.90
06/30/94 17440.66 18053.58
07/31/94 17721.82 18383.96
08/31/94 17782.40 18448.30
09/30/94 17530.24 18177.11
10/31/94 17228.57 17853.56
11/30/94 16818.79 17530.41
12/31/94 17270.98 17916.08
01/31/95 17800.09 18428.48
02/28/95 18338.60 18964.75
03/31/95 18597.75 19182.85
04/30/95 18653.00 19205.86
05/31/95 19151.33 19818.53
06/30/95 18964.06 19646.11
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Pennsylvania Municipal High Yield Portfolio on August 31, 1986, shortly
after the fund started. As the chart shows, by June 30, 1995, the value of
your investment would have grown to $18,964 - a 89.64% increase on your
initial investment. This assumes you still own the fund on June 30, 1995,
and therefore does not include the effect of the $5 account closeout fee.
For comparison, look at how the Lehman Brothers Municipal Bond index did
over the same period. With dividends reinvested, the same $10,000 would
have grown to $19,646 - a 96.46% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX MONT
HS
ENDED YEARS ENDED DECEMBER 31,
JUNE 30,
1995 1994 1993 1992 1991 1990
Dividend returns 3.26% 5.73% 6.68% 7.00% 7.53% 7.40%
Capital appreciation
returns 6.54% -10.77% 6.49% 2.11% 4.95% -0.21%
Total returns 9.80% -5.04% 13.17% 9.11% 12.48% 7.19%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested. Capital appreciation and total returns include the effect of
the $5 account closeout fee.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED JUNE 30, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.83(cents) 30.65(cents) 63.63(cents)
Annualized dividend rate 5.67% 6.09% 6.31%
30-day annualized yield 5.68% - -
30-day annualized tax-equivalent yield 9.13% - -
</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 $10.37 over
the past month, $10.14 over the past six months and $10.08 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the fund's tax-free yield, if you're
in the 37.79% combined effective 1995 federal and state tax bracket. A
portion of the fund's income may be subject to the alternative minimum tax.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Steven Harvey, Portfolio Manager of Spartan
Pennsylvania Municipal High Yield
Portfolio
Q. STEVE, HOW DID THE FUND PERFORM DURING THE PAST SIX MONTHS?
A. For the six months ended June 30, 1995, the fund returned 9.80%,
compared to the average Pennsylvania municipal bond fund which returned
9.34%, as tracked by Lipper Analytical Services. For the year ended June
30, 1995, the fund returned 8.73%, while the average Pennsylvania municipal
bond fund returned 7.74%, again according to Lipper.
Q. MUNICIPAL BONDS GOT OFF TO A GOOD START IN 1995. WHAT WAS BEHIND THE
MARKET'S PERFORMANCE?
A. The primary fuel was that interest rates fell during the period and, as
a result, taxable and tax-free bond prices rose. For the first quarter of
1995, municipal bonds enjoyed an especially impressive rally, ending the
quarter as the best performing fixed-income category. Increased demand and
low supply were two of the factors helping municipals to outperform
Treasury bonds. But in the second quarter, the rally stalled. One reason
was because yields on long-term municipals fell below 6%, which was an
important barrier. That level of income became less attractive relative to
other investments, and demand for municipals declined. Then, in late April,
there were heightened concerns about how various tax-reform proposals -
including a flat-tax proposal - might impact the attractiveness of
municipal bonds. Finally, in late June, the residents of Orange County,
California, failed to pass a sales tax proposal designed to help dig the
county out of bankruptcy. While that event didn't directly impact the
fund's investments, it's important to understand that it cast a pall over
the entire municipal bond market by limiting demand for municipal bonds.
But despite some of those rough spots, municipals turned in strong
performance for the six-month period.
Q. WHAT HELPED THE FUND OUTPACE THE AVERAGE?
A. The fund's stake in bonds related to Philadelphia - including bonds
issued by the Pennsylvania Convention Center and the Philadelphia Municipal
Authority - were among its best performers during the period. They rose
after all three of the major rating agencies returned Philadelphia-related
bonds to investment-grade quality. The fund's duration was another factor
which helped performance. During most of the first quarter of 1995 - when
the rally was its strongest - the fund's duration was long relative to
other funds of its type. Generally speaking, the longer a fund's duration,
the more its share price will rise when interest rates fall, and,
conversely, fall when interest rates rise. As interest rates declined,
having a long duration helped performance.
Q. DID YOU CHANGE THE FUND'S DURATION IN THE SECOND QUARTER?
A. Yes, I shortened it, thereby making the fund's share price less
sensitive to interest rate changes. When municipal bonds hit some rough
spots in the spring, having a shorter duration was a plus. The primary
reason I shortened duration was because the yield curve, or the difference
in yields among bonds of various maturities, was relatively flat between
bonds with 10- and 30-year maturities. When the curve is flat, investors
may not be rewarded with much additional yield by investing in very
long-maturity bonds. So I sold some bonds that mature in more than 20
years, locked in profits, and used the proceeds to buy more bonds in the
six- to 12-year maturity range. By doing so, the fund's duration shortened.
Q. AT ABOUT THE SAME TIME, YOU REDUCED THE FUND'S STAKE IN LOWER-QUALITY
BONDS. ARE THE SHORTER DURATION AND YOUR MOVE TOWARD HIGHER-QUALITY BONDS
RELATED?
A. In a way. Many of the longer-term bonds I sold also happened to be
lower-quality bonds. Here's why: Recently there has been a very limited
supply of lower-quality bonds available. And, during the rally, these bonds
were in fairly high demand. Limited supply and heavy demand translated into
generally higher prices. So once again I was able to use the market's
strength to lock in profits by selling lower- quality bonds, and at the
same time, replacing them with higher-quality issues. The credit upgrade of
Philadelphia-related bonds, which I mentioned earlier, also helped to
account for the increased stake in higher-quality bonds.
Q. THE ENVIRONMENT FOR HEALTH CARE ORGANIZATIONS IS BECOMING INCREASINGLY
MORE DIFFICULT. WHAT FACTORS DO YOU CONSIDER WHEN CHOOSING HEALTH-CARE
BONDS - WHICH MADE UP 17.5% OF THE FUND'S INVESTMENTS AT THE END OF THE
PERIOD?
A. It's true that competitive pressures continue to build, and may
ultimately result in the closing of some hospitals. But because health care
bonds can offer relatively high yields, many are still attractive. What I
look for, with the help of Fidelity's research staff, are hospitals and
other health care organizations that have a strong market share, successful
alliances with health maintenance organizations (HMOs), and the ability to
provide a continuum of care at an attractive cost. In my view, one of the
best ways to identify the future winners is to ascertain the quality of
management. I look for management teams that are thinking now about what
the health care scene will be like in 10 years, and are making changes to
prepare for that environment. As always, we will continue to review and
update our opinions to reflect changes in the industry.
Q. AFTER HAVING SUCH A STRONG RUN IN THE FIRST HALF OF 1995, WHAT'S THE
OUTLOOK FOR MUNICIPAL BONDS?
A. There are a number of things to consider. First is the interest rate
environment. For the balance of the year, I don't think that interest rates
will fall as dramatically as they did in the first half. Rather, interest
rates will probably remain within a narrow band. Therefore, it's unlikely
that bond prices will rise as much either. With that in mind, the fund's
returns will probably derive largely from its level of income, rather than
bond price appreciation. Continued talk of tax reform could add some
volatility to municipal bond prices. But my view is that the chances that a
flat tax will be enacted are remote. On a more positive note, the supply of
municipal bonds should continue to remain low. Combined with flat or lower
interest rates, and at least constant demand, a limited supply could help
the municipal bond market for the remainder of the year.
FUND FACTS
GOAL: to seek high current
income exempt from federal
and Pennsylvania state
income taxes by investing
mainly in longer-term,
investment-grade municipal
securities
START DATE: August 6, 1986
SIZE: as of June 30, 1995,
more than $273 million
MANAGER: Steven Harvey,
since 1993; manager,
Fidelity Ohio Tax-Free High
Yield Portfolio since 1994;
Fidelity Minnesota Tax-Free
and Spartan Maryland
Municipal Income Portfolios
since 1993; joined Fidelity in
1986
(checkmark)
STEVE HARVEY ON
PENNSYLVANIA'S ECONOMY AND
FISCAL CONDITION:
"Pennsylvania's economy and
fiscal situation ultimately will
dictate the overall credit
quality of bonds issued in the
state. That said, both
elements were pretty strong
at the end of June. Over the
past 15 years, the
Pennsylvania economy has
gone through a period of
significant restructuring. In
1980, manufacturing jobs
accounted for roughly 30% of
the state's employment base.
Presently, manufacturing jobs
make up only about 18% of
the state's jobs, while the
number of health care and
technology jobs has risen.
The net result is that the
state's economy is much
more resilient than it was in
the 1980s, and will be less
sensitive to a recession.
Meanwhile, the state's fiscal
situation is quite positive. For
the past three years, the
budget has actually produced
a surplus."
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF JUNE 30, 1995
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO
General Obligation 19.0 16.1
Health Care 17.5 18.6
Water & Sewer 14.9 15.9
Industrial Development 8.0 8.8
Special Tax 7.4 9.2
AVERAGE YEARS TO MATURITY AS OF JUNE 30, 1995
6 MONTHS AGO
Years 16.2 18.7
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF JUNE 30, 1995
6 MONTHS AGO
Years 8.0 9.4
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF JUNE 30, 1995 AS OF DECEMBER 31, 1994
Aaa 37.2%
Aa, A 14.3%
Baa 20.3%
Ba, B 4.2%
Non-rated 16.3%
Short-term investments 7.7%
Aaa 31.3%
Aa, A 5.3%
Baa 28.7%
Ba, B 11.1%
Non-rated 22.3%
Short-term investments 1.3%
Row: 1, Col: 1, Value: 37.2
Row: 1, Col: 2, Value: 14.3
Row: 1, Col: 3, Value: 20.3
Row: 1, Col: 4, Value: 4.2
Row: 1, Col: 5, Value: 16.6
Row: 1, Col: 6, Value: 7.7
Row: 1, Col: 1, Value: 31.3
Row: 1, Col: 2, Value: 5.3
Row: 1, Col: 3, Value: 28.7
Row: 1, Col: 4, Value: 11.1
Row: 1, Col: 5, Value: 22.3
Row: 1, Col: 6, Value: 1.8
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW ACCOUNT FOR 15.3% AND 20.7% OF THE FUND'S
INVESTMENTS AT JUNE 30, 1995 AND DECEMBER 31, 1994, RESPECTIVELY.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 92.3%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
PENNSYLVANIA - 88.3%
Aliquippa Unltd. Tax Gen. Oblig. 8.25%
9/15/01 - $ 1,430,000 $ 1,471,113
Allegheny County Gen. Oblig. 0% 4/1/11
(MBIA Insured) Aaa 2,560,000 1,033,600
Allegheny County Hosp. Dev. Auth. Rev.:
Rfdg. (South Side Hosp.) Series A,
8.75% 6/1/10 BBB 3,750,000 3,918,750
(Allegheny Valley School) 8.50% 2/1/15 Ba1 3,000,000 3,078,750
Allegheny County Ind. Dev. Auth. Rev.
(YMCA Pittsburgh Proj.)
Series 1990, 8.75% 3/1/10 - 2,630,000 2,837,113
Allegheny County Residential Fin. Auth. Single
Family Mtg. Rev.:
Series H, 8% 6/1/17 (GNMA Coll.) Aaa 215,000 223,063
Series 1990, 7.95% 6/1/23
(GNMA Coll.) (b) Aaa 1,540,000 1,609,300
Allegheny County San. Auth. Swr. Rev.:
Series B, 7.50% 12/1/16 (FGIC Insured) Aaa 750,000 829,688
0% 12/1/12 (FGIC Insured) Aaa 2,260,000 791,000
Beaver County Ind. Dev. Auth. Rev. Rfdg.
(Washington Plaza Assoc. Proj.) 6% 2/15/07 Ba3 1,595,000 1,563,100
Butler County Ind. Dev. Auth. 1st Mtg. Rev. Rfdg.
(Sherwood Oaks Lifetime Care Commty. Proj.)
Series A, 8.75% 6/1/16 A- 675,000 716,344
Clarion County Hosp. Auth. Hosp. Rev.
(Clarion Hosp. Proj.):
Rfdg. 8.10% 7/1/12 BBB- 6,000,000 6,292,500
8.50% 7/1/13 BBB- 2,885,000 3,097,769
8.50% 7/1/21 BBB- 1,665,000 1,779,469
Clearfield County Ind. Dev. Auth. Ind. Dev. Rev.
Rfdg. (Washington Plaza Assoc. Proj.)
7% 12/1/06 Ba2 1,715,000 1,809,325
Dauphin County Ind. Dev. Auth. Wtr. Dev. Rev.
(Dauphin Consolidated Wtr. Supply)
Series A, 6.90% 6/01/24 A3 1,000,000 1,076,250
Delaware County Auth. Hosp. Rev. (Crozer-Chester):
6% 12/15/09 Baa1 1,000,000 965,000
6% 12/15/20 Baa1 1,000,000 908,750
Delaware County Auth. Rev.
(First Mtg. Riddle Village Proj.) :
Series 1992, 8.75% 6/1/10 - 2,870,000 3,038,613
7% 6/1/00 - 1,200,000 1,203,000
8.25% 6/1/22 - 2,800,000 2,817,500
9.25% 6/1/22 - 1,800,000 1,944,000
Delaware County Ind. Dev. Auth. Rev. Rfdg.
(Resources Recovery Proj.) Series A, 8.10%
12/1/13, LOC Swiss Bank Aa3 1,400,000 1,473,500
Erie County Ind. Dev. Auth. Rev. Rfdg.
(Beverly Enterprises Proj.) 6.875% 10/1/02 - 550,000 542,438
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Harrisburg Auth. Wtr. Rev. 5.875% 6/18/15
(FGIC Insured) Aaa $ 6,000,000 $ 5,850,000
Jenks Township Muni. Auth. Rev.
(Abraxas Group, Inc.) 8% 4/1/18 - 6,605,000 6,530,694
Keystone Oaks School Dist. 5.829% 9/1/16
(AMBAC Insured) Aaa 5,900,000 5,745,125
Lehigh County Gen. Purp. Auth. Rev.
(Hosp. Healtheast, Inc.) Series B, 9% 7/1/15
(Pre-Refunded 7/1/97 @ 102) (d) A1 1,000,000 1,108,750
McCandless Ind. Dev. Auth. Ind. Dev. Rev.
(Kroger Co.) 7.375% 10/15/07 Ba2 2,100,000 2,260,125
McKeesport Area School Dist. Rfdg.
Series C, 5% 4/1/13 A 1,000,000 888,750
Montgomery County Higher Ed. & Health
Auth. Hosp. Rev. (United Hosp. Proj.)
Series A, 10% 11/1/05 Ba1 675,000 695,250
Montgomery County Ind. Dev. Auth.
Health Facs. Rev. Bonds (Ecri Proj.)
Series 1993, 6.85% 6/1/13 - 2,165,000 2,143,350
Northumberland County Auth. Commonwealth
Lease Rev. 0% 10/15/10 (MBIA Insured) Aaa 1,000,000 422,500
Pennsylvania Convention Ctr. Auth. Rev. Rfdg.
Series A:
6.60% 9/1/09 Baa 9,150,000 9,230,062
6.70% 9/1/14 Baa 3,965,000 4,014,562
6.75% 9/1/19 Baa 3,420,000 3,462,750
Pennsylvania Convention Ctr. Rev.
Series A, 6% 9/1/19 (FGIC Insured)
(Escrowed to Maturity) (d) Aaa 9,225,000 9,570,937
Pennsylvania Gen. Oblig. Rev.:
Rfdg., Series 1-A, 6.75%, 1/1/11 A1 1,100,000 1,164,625
Series A, 6.75% 5/1/98 A1 1,000,000 1,057,500
Series 1, 6% 9/15/98 A1 2,000,000 2,082,500
Series 2, 0% 7/1/07 (AMBAC Insured) Aaa 1,770,000 893,850
Series 3, 6.10% 11/15/04
(FGIC Insured) Aaa 1,000,000 1,061,250
Pennsylvania Higher Ed. Assistance Agcy.
Student Loan Rev.: (b)
6.173% 3/1/22 (AMBAC Insured) Aaa 4,000,000 3,885,000
6.854% 9/1/26 (AMBAC Insured) Aaa 2,000,000 2,055,000
Pennsylvania Higher Edl. Facs. Auth.
College & Univ. Rev.:
(Univ. of Pennsylvania):
Rfdg. Series A, 6.50% 9/1/02 Aa 1,000,000 1,080,000
Series A, 7% 9/1/01 Aa 2,000,000 2,202,500
Series B, 7% 9/1/05 Aa 2,000,000 2,262,500
(Pennsylvania College of Optometry)
9% 2/1/08 - 1,240,000 1,284,950
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Higher Edl. Facs. Auth. Rev.
(Pennsylvania Med. College Proj.)
Series A, 8.375% 3/1/11 Baa $ 900,000 $ 974,250
Pennsylvania Hsg. Fin. Agcy. Single Family Mtg.:
Series V, 7.80% 4/1/16 Aa 500,000 516,250
Series 1990-27, 8.15% 10/1/21 (b) Aa 990,000 1,039,500
Pennsylvania Ind. Dev. Auth. Rev. Econ. Dev.:
7% 1/1/07 (AMBAC Insured) Aaa 1,500,000 1,696,875
7% 7/1/07 (AMBAC Insured) Aaa 3,650,000 4,146,062
5.80% 1/1/08 (AMBAC Insured) Aaa 3,000,000 3,007,500
5.80% 7/1/09 (AMBAC Insured) Aaa 1,000,000 1,013,750
Pennsylvania Intergovernmental Coop. Auth.
Spl. Tax Rev.:
Rfdg. Series A, 5% 6/15/13 A 7,500,000 6,693,750
(City of Philadelphia Funding Prog.)
5.75% 6/15/15 A 9,500,000 9,191,250
Pennsylvania Tpk. Commission Tpk. Rev.
Series J, 7.15% 12/1/11 (FGIC Insured)
(Pre-Refunded to 12/1/01 @ 102) (d) Aaa 3,000,000 3,446,250
Philadelphia Auth. Ind. Dev. Rev.:
(Long Term Care - Maplewood) 8% 1/1/24 - 4,835,000 4,720,169
(Refrigerated Enterprises Proj.)
9.05% 12/1/19 (b) - 7,000,000 7,516,250
Philadelphia Auth. Ind. Impt. Rev. Rfdg.
(Encore Nursing Ctr. Stenton Proj.)
7.50% 11/1/02 - 1,100,000 1,123,375
Philadelphia Gas Wks. Rev. Rfdg.
Series 14-A, 6.375% 7/1/14 Baa1 1,900,000 1,895,250
Philadelphia Hosp. & Higher Ed. Facs. Auth. Rev.
(Graduate Health Sys.):
Series A, 6.25% 7/1/18 Baa1 4,400,000 4,009,500
Series B, 6.25% 7/1/13 Baa1 1,000,000 925,000
Philadelphia Muni. Auth. Rev.
(Muni. Svcs. Bldg. Lease):
Rfdg. Series D, 6.25% 7/15/13 Baa 3,000,000 2,925,000
0% 3/15/11 (CGIC Insured) Aaa 1,000,000 396,250
0% 3/15/14 (CGIC Insured) Aaa 7,360,000 2,401,200
Philadelphia Redev. Auth. Hsg. Rev.
Sub-Series 3, 8.125% 8/1/26 (GNMA Coll.) AAA 45,000 50,119
Philadelphia Wtr. & Swr. Rev. (Cap. Appreciation)
14th Series, 0% 10/1/08 (MBIA Insured) Aaa 5,300,000 2,510,875
Philadelphia Wtr. & Wastewtr. Rev.:
Rfdg. 5.50% 6/15/07 (AMBAC Insured) Aaa 7,000,000 7,000,000
Rfdg. 5% 6/15/12 (FGIC Insured) Aaa 1,845,000 1,648,969
6.75% 8/1/04 (MBIA Insured) Aaa 2,085,000 2,324,775
6.75% 8/1/05 (MBIA Insured) Aaa 1,610,000 1,797,162
Pittsburgh Gen. Oblig. Rfdg., Series A,
5.50% 9/1/14 (AMBAC Insured) Aaa 5,310,000 5,104,237
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pittsburgh School Dist. Series B:
0% 8/1/07 (AMBAC Insured) Aaa $ 2,610,000 $ 1,340,887
0% 8/1/08 (AMBAC Insured) Aaa 2,000,000 965,000
Pittsburgh Urban Redev. Auth. Mtg. Rev.
Series A, 7.625% 10/1/17 A1 995,000 1,021,119
Pittsburgh Wtr. & Swr. Auth. Wtr. & Swr.
Sys. Rev., Series 1993, 6.50% 9/1/13
(FGIC Insured) Aaa 15,705,000 16,706,194
Schuylkill County Ind. Dev. Auth. 1st Mtg. Rev.
(Valley Health Concerns)
Series A, 8.75% 3/1/12 - 1,500,000 1,522,500
Scranton Parking Auth. Parking Rev. 8.125%
9/15/14, LOC Northeastern Bank A 500,000 543,750
Somerset County Hosp. Auth. 1st Mtg. Rev.
(Health Care GF):
8.40% 6/1/09 - 1,000,000 1,003,750
8.50% 6/1/24 - 2,005,000 2,020,037
Southeastern Pennsylvania Trans. Auth. Spl. Rev.
Series A:
6.50% 3/1/03 (FGIC Insured) Aaa 2,520,000 2,727,900
6.50% 3/1/04 (FGIC Insured) Aaa 1,485,000 1,614,937
Washington County Ind. Dev. Auth. Ind. Dev.
Rev. Rfdg. (Kroger Co.) 7.50%
5/1/99 Ba2 1,000,000 1,062,500
Westmoreland County Gen. Oblig. Rfdg.
Series G, 0% 12/1/09 (FGIC Insured) Aaa 2,490,000 1,080,037
Westmoreland County Ind. Dev. Auth. Rev.
Rfdg. (Kroger Co.) 7.25% 9/1/99 Ba2 1,000,000 1,058,750
Westmoreland County Muni. Auth. Muni.
Svc. Rev., Series K, 0% 7/1/13
(FGIC Insured) (Escrowed to Maturity) (d) Aaa 3,500,000 1,211,875
Wilkins Area Ind. Dev. Auth. 1st Mtg. Rev.
(Fairview Extended Care)
Series A, 10.25% 1/1/21 - 2,500,000 2,753,125
Wilson Area School Dist. (Cap. Appreciation):
0% 5/15/09 (AMBAC Insured) Aaa 3,275,000 1,469,656
0% 5/15/10 (AMBAC Insured) Aaa 3,280,000 1,381,700
0% 5/15/11 (AMBAC Insured) Aaa 3,500,000 1,391,250
Wyoming Ind. Dev. Auth. Poll. Cont. Rev.
Rfdg. (Proctor & Gamble Paper Proj.)
5.55% 5/1/10 Aa2 5,000,000 4,856,250
York City Unltd. Tax Gen. Oblig. Swr.
Auth. Swr. Rev., 0% 12/1/12
(MBIA Insured) Aaa 3,235,000 1,148,425
240,925,675
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
PUERTO RICO - 3.7%
Puerto Rico Commonwealth Hwy. & Trans.
Auth. Rev. Rfdg. Series W, 5.50% 7/1/13 Baa1 $ 9,000,000 $ 8,493,750
Puerto Rico Commonwealth Urban
Renewal & Hsg. Corp. Rfdg. 7.875%
10/1/04 Baa1 1,000,000 1,115,000
Puerto Rico Elec. Pwr. Auth. Pwr. Rev.
7.125% 7/1/14 Baa1 370,000 399,600
10,008,350
GUAM - 0.3%
Guam Pwr. Auth. Rev. Series A, 5.25%
10/1/13 BBB 1,000,000 868,750
TOTAL MUNICIPAL BONDS
(Cost $247,185,918) 251,802,775
MUNICIPAL NOTES (A) - 7.7%
PENNSYLVANIA - 7.7%
Pennsylvania Energy Dev. Auth. Energy Dev. Rev.
(B&W Edensburg Proj.) Series 1986, 4.35%,
LOC Swiss Bank Corp., VRDN (b) VMIG 1 5,300,000 5,300,000
Pennsylvania Higher Ed. Assistance Agcy.
Student Loan Rev. Series 1988 A, 4.10%,
LOC SLMA, VRDN (b) VMIG 1 5,700,000 5,700,000
Philadelphia TRAN 4.50% 6/27/96 MIG 1 3,000,000 3,015,870
Sayre Health Care Facs. Auth. Hosp. Rev.
(VHA of Pennsylvania) Series 1985 A, 3.95%
(AMBAC Insured) BPA First Nat'l. Bank of
Chicago, VRDN A-1 1,300,000 1,300,000
Schuylkill County Ind. Dev. Auth. Resources
Recovery Rev. (Westwood Energy Properties)
Series 1985, 4.45%, LOC Fuji Bank, VRDN P-1 5,700,000 5,700,000
TOTAL MUNICIPAL NOTES
(Cost $21,015,480) 21,015,870
TOTAL INVESTMENTS - 100%
(Cost $268,201,398) $ 272,818,645
SECURITY TYPE ABBREVIATIONS
TRAN - Tax and Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(i) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(j) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(k) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(l) Security collateralized by an amount sufficient to pay interest and
principal.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 50.7% AAA, AA, A 53.7%
Baa 14.4% BBB 17.0%
Ba 4.2% BB 0.0%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 16.3%. FMR
has determined that unrated debt securities that are lower quality account
for 15.3% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 19.0%
Health Care 17.5
Water & Sewer 14.9
Others
(individually less than 10%) 48.6
TOTAL 100.0%
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $268,201,398. Net unrealized appreciation aggregated
$4,617,247, of which $7,885,150 related to appreciated investment
securities and $3,267,903 related to depreciated investment securities.
At December 31, 1994, the fund elected to defer to its fiscal year ending
December 31, 1995, $963,729 of losses recognized during the period November
1, 1994 to December 31, 1994.
At December 31, 1994 the fund was required to defer $685,365 of losses on
futures contracts.
SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
5.ASSETS 6. 7.
8.Investment in securities, at value (cost $268,201,398) 9. $ 272,818,645
-
See accompanying schedule
10.Cash 11. 148,522
12.Interest receivable 13. 4,126,153
14. 15.TOTAL ASSETS 16. 277,093,320
17.LIABILITIES 18. 19.
20.Payable for investments purchased $ 3,015,480 21.
22.Distributions payable 324,604 23.
24.Accrued management fee 125,025 25.
26. 27.TOTAL LIABILITIES 28. 3,465,109
29.30.NET ASSETS 31. $ 273,628,211
32.Net Assets consist of: 33. 34.
35.Paid in capital 36. $ 272,803,054
37.Accumulated undistributed net realized gain (loss) 38. (3,792,090)
on investments
39.Net unrealized appreciation (depreciation) 40. 4,617,247
on investments
41.42.NET ASSETS, for 26,702,632 shares outstanding 43. $ 273,628,211
44.45.NET ASSET VALUE, offering price and redemption 46. $10.25
price per share ($273,628,211 (divided by) 26,702,632 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
47.48.INTEREST INCOME 49. $ 8,702,162
50.EXPENSES 51. 52.
53.Management fee $ 719,888 54.
55.Non-interested trustees' compensation 509 56.
57. 58.TOTAL EXPENSES 59. 720,397
60.61.NET INTEREST INCOME 62. 7,981,765
63.REALIZED AND UNREALIZED GAIN (LOSS) 65. 66.
64.Net realized gain (loss) on:
67. Investment securities (715,474) 68.
69. Futures contracts (1,800,392) (2,515,866)
70.Change in net unrealized appreciation (depreciation) 71. 18,567,210
on investment securities
72.73.NET GAIN (LOSS) 74. 16,051,344
75.76.NET INCREASE (DECREASE) IN NET ASSETS 77. $ 24,033,109
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
78.INCREASE (DECREASE) IN NET ASSETS
79.Operations $ 7,981,765 $ 17,378,326
Net interest income
80. Net realized gain (loss) (2,515,866) 5,948,777
81. Change in net unrealized appreciation (depreciation) 18,567,210 (38,756,490)
82. 83.NET INCREASE (DECREASE) IN NET ASSETS 24,033,109 (15,429,387)
RESULTING FROM OPERATIONS
84.Distributions to shareholders (7,981,765) (17,378,326)
From net interest income
85. From net realized gain - (8,056,094)
86. 87.TOTAL DISTRIBUTIONS (7,981,765) (25,434,420)
88.Share transactions 24,529,333 46,579,000
Net proceeds from sales of shares
89. Reinvestment of distributions 5,991,146 19,565,956
90. Cost of shares redeemed (14,680,413) (89,828,981)
91. Redemption fees 7,456 31,413
92.93. 15,847,522 (23,652,612)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
94. 95.TOTAL INCREASE (DECREASE) IN NET ASSETS 31,898,866 (64,516,419)
96.NET ASSETS 97. 98.
99. Beginning of period 241,729,345 306,245,764
100. End of period $ 273,628,211 $ 241,729,345
101.OTHER INFORMATION 103. 104.
102.Shares
105. Sold 2,430,749 4,493,816
106. Issued in reinvestment of distributions 589,473 1,920,098
107. Redeemed (1,448,619) (8,802,430)
108. Net increase (decrease) 1,571,603 (2,388,516)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
109. SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED
JUNE 30, 1995
110. (UNAUDITED) 1994 1993C 1992 1991 1990
111.SELECTED PER-SHARE DATA
112.Net asset value, beginning of period $ 9.620 $ 11.130 $ 10.590 $ 10.370 $ 9.880 $ 9.900
113.Income from Investment Operations .306 .652 .679 .693 .701 .701
Net interest income
114. Net realized and unrealized gain
(loss) .630 (1.201) .679 .219 .489 (.020)
115. Total from investment operations .936 (.549) 1.358 .912 1.190 .681
116.Less Distributions (.306) (.652) (.679) (.693) (.701) (.701)
From net interest income
117. From net realized gain on
investments - (.310) (.140) - - -
118. Total distributions (.306) (.962) (.819) (.693) (.701) (.701)
119.Redemption fees added to paid in
capital - .001 .001 .001 .001 -
120.Net asset value, end of period $ 10.250 $ 9.620 $ 11.130 $ 10.590 $ 10.370 $ 9.880
121.TOTAL RETURN B 9.80% -5.04% 13.18% 9.11% 12.49% 7.20%
122.RATIOS AND SUPPLEMENTAL DATA
123.Net assets, end of period (000
omitted) $ 273,628 $ 241,729 $ 306,246 $ 242,375 $ 199,499 $ 142,906
124.Ratio of expenses to average net
assets .55% .55% .55% .55% .55% .60%
A
125.Ratio of expenses to average net
assets before .55% .55% .55% .55% .55% .66%
expense reductions A
126.Ratio of net interest income to
average net assets 6.09% 6.33% 6.13% 6.65% 6.96% 7.22%
A
127.Portfolio turnover rate 42% 26% 38% 8% 6% 8%
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C EFFECTIVE JANNUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
FINANCIAL HIGHLIGHTS
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of the fund's $5 account closeout fee. Yield measures the income
paid by a fund. Since a money market fund tries to maintain a $1 share
price, yield is an important measure of performance. If Fidelity had not
reimbursed certain fund expenses, the past five years and life of fund
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Spartan Pennsylvania
Municipal Money Market 1.77% 3.30% 18.28% 44.01%
Average All Tax-Free
Money Market Fund 1.70% 3.10% 16.51% 39.54%
Consumer Price Index 1.87% 3.04% 17.40% 39.27%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years or since
the fund started on August 6, 1986. For example, if you invested $1,000 in
a fund that had a 5% return over the past year, the value of your
investment would be $1,050. To measure how the fund's performance stacked
up against its peers, you can compare it to the average all tax-free money
market fund, which reflects the performance of
389 all tax-free money market funds tracked by IBC/Donoghue over the past
six months. Comparing the fund's performance to the consumer price index
(CPI) helps show how your fund did compared to inflation. (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, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Pennsylvania
Municipal Money Market 3.30% 3.42% 4.18%
Average All Tax-Free
Money Market Fund 3.10% 3.10% 3.86%
Consumer Price Index 3.04% 3.26% 3.78%
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
6/27/94 9/26/94 12/26/94 3/27/95 6/26/95
Spartan Pennsylvania 2.39% 3.06% 4.13% 3.58% 3.74%
Municipal Money Market
Average All Tax-Free 2.27% 2.81% 3.78% 3.45% 3.59%
Money Market Fund
Spartan Pennsylvania 3.84% 4.92% 6.64% 5.75% 6.01%
Municipal Money Market -
Tax-equivalent
Row: 1, Col: 1, Value: 2.39
Row: 1, Col: 2, Value: 2.27
Row: 2, Col: 1, Value: 3.06
Row: 2, Col: 2, Value: 2.81
Row: 3, Col: 1, Value: 4.13
Row: 3, Col: 2, Value: 3.78
Row: 4, Col: 1, Value: 3.58
Row: 4, Col: 2, Value: 3.45
Row: 5, Col: 1, Value: 3.74
Row: 5, Col: 2, Value: 3.59
Spartan
Pennsylvania
Municipal Money
Market
Average All Tax-Fre
e
Money Market Fund
5% -
4% -
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The 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 1995 federal and state income tax rate of 37.79%. Figures for the
average all tax-free money market fund are from IBC/Donoghue. A portion of
the fund's income may be subject to the alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Deborah Watson,
Portfolio Manager of Spartan
Pennsylvania Municipal Money
Market Portfolio
Q. DEBORAH, HOW HAS THE RATE ENVIRONMENT CHANGED DURING THE PAST SIX
MONTHS?
A. Significantly. When the period began, the Fed was in a credit-tightening
cycle, periodically raising short-term interest rates to slow economic
growth and prevent an outbreak of inflation. In February 1995, the Fed
raised the federal funds rate - the rate banks charge each other for
overnight loans - one-half-percentage point; it was the seventh rate
increase in a little more than a year. Even at the time of that latest
increase, the economic indicators were beginning to suggest that the Fed
had already done its job, and the economy was slowing down. Those signs
were confirmed with the release of the first-quarter growth rate in the
gross domestic product, which came in at a relatively tame 2.8%, compared
to 5.1% in the fourth quarter of 1994. After the Fed's last move in
February, market participants foresaw a stable to declining rate
environment. And in fact, interest rates declined slowly but steadily
through the end of the period.
Q. HOW DID YOU RESPOND TO CHANGES IN THE INTEREST RATE ENVIRONMENT?
A. At the end of 1994, the fund's average maturity was neutral at around 45
days. Rates began to decline during the first quarter; at the same time,
supply was very thin. I allowed the fund's average maturity to roll down
gradually, reaching a low of 19 days in April. When the supply of new
issues increased by late Spring, I began locking in attractive rates by
adding longer-term securities with the expectation of rates continuing to
decline. By the end of June, the fund's average maturity was back around 45
days.
Q. HOW DID THE FUND PERFORM?
A. Better than its peers. On June 30, 1995, the fund's seven-day yield was
3.74%, compared to 4.34% six months ago. That latest yield was the
equivalent of a 6.01% taxable yield for Pennsylvania investors in the
37.79% combined federal and state income-tax bracket. The fund's total
return for the six months ended June 30, 1995 was 1.77%. That beat the
1.70% total return during the same period for the average all tax-free
money market funds, according to IBC/Donoghue.
Q. WHAT'S THE OUTLOOK FOR THE REST OF THE YEAR?
A. That was still unclear at the end of June. The only thing nearly
everyone agreed on was that the cycle of rate increases by the Fed was
over. Beyond that, economists were sharply divided in their opinions. Some
were predicting a continuing slowdown - even an eventual recession if the
Fed waited too long before lowering rates again. Others saw signs of
surprising economic strength in key indicators such as housing and
employment, and therefore assumed the Fed would be in no hurry to act. As
we all know by now, the Fed did act shortly after the period ended -
lowering the federal funds rate one-quarter-percentage point on July 6.
Q. HOW HAD YOU POSITIONED THE FUND AT THE END OF THE PERIOD?
A. At the time, I felt the Fed would lower rates sometime this summer -
probably sooner rather than later. Therefore, I began extending the fund's
average maturity. Moreover, an abundant supply of new issues in
Pennsylvania was creating an opportunity to extend even further. So the
Fed's rate cut, when it came, had little effect on my outlook, or on the
strategy I had chosen to pursue. Looking ahead, it's likely I'll continue
extending the fund's average maturity toward a target range of between 55
and 65 days.
FUND FACTS
GOAL: to seek high current
income exempt from Federal
and Pennsylvania state
income tax by investing in
high-quality, short-term
municipal money market
securities, while maintaining a
stable $1.00 share price
START DATE: August 6, 1986
SIZE: as of June 30, 1995,
more than $221 million
MANAGER: Deborah Watson,
since 1989; manager, Fidelity
Tax-Exempt Money Market
Portfolio, since 1995; Capital
Reserves Muni Money Market,
since 1995; Spartan California
Municipal Money Market
Portfolio, since 1989; Fidelity
California Tax-Free Money
Market Fund, since 1988;
joined Fidelity in 1982
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
6/30/95 12/31/94 6/30/94
0 - 30 81 70 88
31 - 90 8 11 7
91 - 180 3 13 3
181 - 397 8 6 2
WEIGHTED AVERAGE MATURITY
6/30/95 12/31/94 6/30/94
Spartan Pennsylvania
Municipal Money Market 43 days 46 days 24 days
Average All Tax-Free
Money Market Fund* 45 days 47 days 46 days
ASSET ALLOCATION
AS OF JUNE 30, 1995 AS OF DECEMBER 31, 1994
Row: 1, Col: 1, Value: 73.0
Row: 1, Col: 2, Value: 16.0
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 7.0
Row: 1, Col: 5, Value: 2.0
Row: 1, Col: 1, Value: 65.0
Row: 1, Col: 2, Value: 11.0
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 19.0
Row: 1, Col: 5, Value: 2.0
Variable rate
demand notes
(VRDNs) 73%
Commercial
paper 16%
Tender bonds 2%
Municipal
notes 7%
Other 2%
Variable rate
demand notes
(VRDNs) 65%
Commercial
paper 11%
Tender bonds 4%
Municipal
notes 19%
Other 1%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
NEW YORK - 1.0%
New York City Ind. Dev. Auth. Ind. Dev. Rev.
(Japan Airlines Co. Ltd. Proj.) Series 1991, 4.15%,
LOC Morgan Guaranty, VRDN (b) $ 2,200,000 $ 2,200,000
NEW YORK & NEW JERSEY - 1.7%
New York & New Jersey Port Auth. Spl. Oblig. Rev., Versatile
Structure 3, 4.15%, LOC Morgan Guaranty, VRDN 3,700,000 3,700,000
PENNSYLVANIA - 97.3%
Allegheny County Hosp. Dev. Auth. Health Ctr. Rev.
(Presbyterian Univ. Health Sys.) VRDN:
Series 1990 A, 4.05% (MBIA Insured),
BPA Credit Suisse 1,100,000 1,100,000
Series 1990 B, 4.05% (MBIA Insured),
BPA Credit Suisse 2,690,000 2,690,000
Allegheny County Hosp. Dev. Auth. Hosp. Rev.
(St. Margaret Mem. Hosp.) Series 1992 A, 4.40%,
LOC Mellon Bank, VRDN 9,465,000 9,465,000
Allegheny County Ind. Dev. Auth. Commercial Dev. Rev. Rfdg.
(Parkway Center Mall Proj.) Series 1994 A, 4.40%,
LOC Mellon Bank, VRDN 1,900,000 1,900,000
Allegheny County Ind. Dev. Auth. Rev. Rfdg.
(Chelsea Industries, Inc.) Series 1994, 4.25%,
LOC First Nat'l. Bank of Boston, VRDN 2,100,000 2,100,000
Berks County Ind. Dev. Auth. Manufacturing
Facs. Rev., VRDN: (b)
(Grafika Commercial Printing Inc.)
4.65%, LOC Meridian Bank 1,750,000 1,750,000
(The Bachman Co. Proj.) Series 1994, 4.65%,
LOC Meridian Bank 2,475,000 2,475,000
Bucks County Ind. Dev. Auth. Rev. (Associates Proj.) Series 1993,
4.65%, LOC Meridian Bank, VRDN (b) 1,615,000 1,615,000
Carbon County Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Panther Creek Partners Proj.):
Series 1990 A, 4.25% tender 7/24/95,
LOC Nat'l. Westminster Bank PLC (b) 2,800,000 2,800,000
Series 1991 A:
4.20% tender 8/7/95,
LOC Nat'l. Westminster Bank PLC 3,200,000 3,200,000
4.25% tender 8/8/95,
LOC Nat'l. Westminster Bank PLC 2,000,000 2,000,000
Carbon County Ind. Dev. Auth. Solid Waste Disp. Rev.
(Horsehead Resource Dev. Co.) BAN 4% 12/1/95,
LOC Chemical Bank (b) (d) 5,700,000 5,700,000
Cumberland County Ind. Dev. Auth. Rev. (Lane Enterprises, Inc.
Proj.) 4.65%, LOC Meridian Bank, VRDN (b) 3,200,000 3,200,000
Dauphin County Gen. Auth. Hosp. Rev. (Reading
Hosp. & Med. Ctr.) Series 1994 A, 4%, VRDN 5,800,000 5,800,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Delaware County Ind. Dev. Auth. Bonds (Philadelphia
Electric) Series C, 3.95% tender 7/14/95 (FGIC Insured) $ 6,020,000 $
6,020,000
Delaware Valley Regional Fin. Auth. Local Gov't. Rev., VRDN:
Series 1985 A, 4.35%, LOC Hong Kong & Shanghai
Banking Corp. 6,000,000 6,000,000
Series 1986, 4.35%, LOC Hong Kong & Shanghai
Banking Corp. 4,500,000 4,500,000
Doylestown Hosp. Auth. Participating VRDN
Series BTP-63, 4.30% (AMBAC Insured)
(Liquidity Facility Automatic Data
Processing & Bankers Trust) (c) 10,098,000 10,098,000
Erie County Ind. Dev. Auth. Rev. (Carlisle Corp. Proj.)
Series 1993, 4.25%, LOC Trust Co. Bank,
VRDN (b) 1,000,000 1,000,000
Lancaster Higher Ed. Auth. College Rev.
(Franklin & Marshall College Proj.)
Series 1995, 4.45%, VRDN 1,000,000 1,000,000
Lehigh County Ind. Dev. Auth. Poll. Cont. Rev.
(Allegheny Elec. Coop. Proj.) VRDN:
Series 1984 A, 4%, LOC Rabobank Nederland 500,000 500,000
Series 1984 B, 4%, LOC Rabobank Nederland 1,000,000 1,000,000
Lycoming County Ind. Dev. Auth. Rev. (Coastal Aluminum
Rolling Mills) Series 1995, 4.65%, LOC Meridian Bank,
VRDN (b) 1,910,000 1,910,000
Mercer County Ind. Dev. Auth. Ind. Dev. Rev.
(Penntecq Inc. Proj.) Series 1990, 4.10%,
LOC Dai-Ichi Kangyo Bank, VRDN (b) 4,000,000 4,000,000
Montgomery County Ind. Dev. Auth. Rev., VRDN: (b)
(H.P. Cadwallader Inc. Proj.) Series 1995, 4.65%,
LOC Meridian Bank 1,155,000 1,155,000
(RJI Ltd. Partnership Proj.) Series 1992, 4.65%,
LOC Meridian Bank 1,950,000 1,950,000
(Sirius Dev. Assoc. Proj.) 4.40%,
LOC Provident Nat'l. Bank 1,500,000 1,500,000
North Lebanon Township Muni. Auth. Rev. (Grace Commty. Inc.
Proj.) Series 1992 B, 4.625%, LOC Meridian Bank, VRDN 3,755,000
3,755,000
Northampton County Ind. Dev. Auth. Rev. Bonds
(Citizens Utilities Co. Proj.) Series 1991, 3.15%
tender 7/12/95 (b) 2,950,000 2,950,000
Northampton County Ind. Dev. Auth. Rev.
(Victoria Vogue Proj.) 4.65%, LOC Meridian Bank,
VRDN (b) 2,910,000 2,910,000
Northumberland County Ind. Dev. Board Rev.
(Foster Wheeler Mt. Carmel Inc.) VRDN: (b)
Series 1987 A, 4.40%,
LOC Union Bank of Switzerland 15,050,000 15,050,000
Series 1987 B, 4.40%,
LOC Union Bank of Switzerland 3,140,000 3,140,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Econ. Dev. Fin. Auth. Rev., VRDN:
(Henry Molded Prod. Inc.) Series 1992 A-4, 4.40%,
LOC Pittsburgh Nat'l. Bank (b) $ 900,000 $ 900,000
(Lutheran Youth & Family Svc.) Series 1993 A, 4.25%,
LOC PNC Bank 700,000 700,000
(Payne Printery Proj.) Series 1989 B-8, 4.40%,
LOC Pittsburgh Nat'l. Bank (b) 325,000 325,000
(Port Erie Plastics Proj.) Series 1989-D9, 4.40%,
LOC Pittsburgh Nat'l. Bank (b) 970,000 970,000
(Respironics Inc. Proj.) 4.40%,
LOC Pittsburgh Nat'l. Bank (b) 900,000 900,000
(Suntory Water Group Inc. Proj.) Series 1992 D, 4.25%,
LOC Wachovia Bank & Trust (b) 4,900,000 4,900,000
(The Babcock & Wilcox Co. Proj.) Series 1989 A-2,
4.40%, LOC Pittsburgh Nat'l. Bank (b) 4,875,000 4,875,000
Pennsylvania Energy Dev. Auth. Energy Dev. Rev.
(B & W Edensburg Proj.) Series 1986, 4.35%,
LOC Swiss Bank Corp., VRDN (b) 3,000,000 3,000,000
Pennsylvania Gen. Oblig. Bonds, Series 1995, 5% 5/1/96 4,910,000
4,941,605
Pennsylvania Higher Ed. Assistance Agcy.
Student Loan Rev., VRDN: (b)
Series 1988 A, 4.10%, LOC SLMA 9,200,000 9,200,000
Series 1994 A, 4.10%, LOC SLMA 8,000,000 8,000,000
Series B, 4.10%, LOC Union Bank of Switzerland 1,000,000 1,000,000
Pennsylvania Higher Ed. Facs. Auth.
Participating VRDN, Series MG 4-A, 4.40%
(Liquidity Facility Morgan Guaranty) (c) 4,750,000 4,750,000
Pennsylvania Higher Ed. Facs. Auth. Rev. Rfdg. Bonds
(Thomas Jefferson Univ.) Series 1992 C, 3.90%
tender 2/26/96, SBPA Credit Suisse 5,000,000 5,000,000
Pennsylvania Infrastructure Investment Auth. Rev.
(Pennvest Pooled Loan Prog.) Series 1994, 3.85%
(Liquidity Facility PNC Bank) VRDN 8,000,000 8,000,000
Pennsylvania System of Higher Education BAN
(Temple University) Series 1995, 5% 5/22/96 8,500,000 8,555,925
Pennsylvania Tender Option Ctfs., Series BTP-84, 4.15%
(AMBAC Insured) (Liquidity Facility Bankers Trust)
VRDN (c) 4,125,000 4,125,000
Philadelphia Gas Works Rev., Series B, 3.75% 9/20/95,
LOC Canadian Imperial Bank of Canada, CP 5,000,000 5,000,000
Philadelphia Ind. Dev. Auth. Commercial Dev. Rev.
(Philadelphia Airport Hotel Proj.) Series 1990, 4.15%,
LOC Citibank, VRDN (b) 3,100,000 3,100,000
Schuylkill County Ind. Dev. Auth. Resource
Recovery Rev., VRDN:
(Gilberton Pwr.) 4.30%, LOC Mellon Bank 2,800,000 2,800,000
(Westwood Energy Prop.) Series 1985, 4.45%,
LOC Fuji Bank 1,500,000 1,500,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Schuylkill County Ind. Dev. Auth. Rev., VRDN:
(Interlock Realty Co.) 4.40%, LOC Star Bank $ 550,000 $ 550,000
(Metal Sales Manufacturing Corp.) 4.40%,
LOC Star Bank (b) 1,500,000 1,500,000
Venango Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Scrubgrass Proj.): (b)
Series 1990 A:
4.05% tender 7/25/95,
LOC Nat'l. Westminster Bank PLC 3,050,000 3,050,000
4.10% tender 8/15/95,
LOC Nat'l. Westminster Bank PLC 3,000,000 3,000,000
3.85% tender 9/21/95,
LOC Nat'l. Westminster Bank PLC 4,700,000 4,700,000
Series 1990 B, 4.25% tender 7/21/95,
LOC Nat'l. Westminster Bank PLC 3,000,000 3,000,000
Washington County Ind. Dev. Auth. Rev.
(Mac Plastics, Inc. Proj.) Series 1990, 4.25%,
LOC Nat'l. City Bank, VRDN (b) 575,000 575,000
West Cornwall Muni. Auth. Rev. (Lebanon Valley
Brethren Home) 4.625%, LOC Meridian Bank,
VRDN 1,000,000 1,000,000
214,150,530
TOTAL INVESTMENTS - 100% $ 220,050,530
Total Cost for Income Tax Purposes $ 220,050,530
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
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.
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
(d) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Carbon County Ind. Dev.
Auth. Solid Waste Disp.
(Horsehead Res.
Dev. Co.)
BAN 4%
12/1/95 6/1/95 $ 5,700,000
INCOME TAX INFORMATION
At December 31, 1994, the fund had a capital loss carryforward of
approximately $28,200 of which $4,600, $4,900, and $18,700 will expire on
December 31, 1997, 1998, and 2002 respectively.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
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JUNE 30, 1995 (UNAUDITED)
128.ASSETS 129. 130.
131.Investment in securities, at value - See 132. $ 220,050,530
accompanying schedule
133.Cash 134. 485,227
135.Interest receivable 136. 1,034,581
137. 138.TOTAL ASSETS 139. 221,570,338
140.LIABILITIES 141. 142.
143.Distributions payable $ 21,196 144.
145.Accrued management fee 92,226 146.
147. 148.TOTAL LIABILITIES 149. 113,422
150.151.NET ASSETS 152. $ 221,456,916
153.Net Assets consist of: 154. 155.
156.Paid in capital 157. $ 221,494,506
158.Accumulated net realized gain (loss) on 159. (37,590)
investments
160.161.NET ASSETS, for 221,492,555 shares 162. $ 221,456,916
outstanding
163.164.NET ASSET VALUE, offering price and 165. $1.00
redemption price per share ($221,456,916 (divided by)
221,492,555 shares)
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STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
166.167.INTEREST INCOME 168. $ 4,614,123
169.EXPENSES 170. 171.
172.Management fee $ 570,181 173.
174.Non-interested trustees' compensation 676 175.
176. 177.TOTAL EXPENSES 178. 570,857
179.180.NET INTEREST INCOME 181. 4,043,266
182.183.NET REALIZED GAIN (LOSS) ON INVESTMENTS 184. (9,355)
185.186.NET INCREASE IN NET ASSETS RESULTING FROM 187. $ 4,033,911
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
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SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
188.INCREASE (DECREASE) IN NET ASSETS
189.Operations $ 4,043,266 $ 5,902,602
Net interest income
190. Net realized gain (loss) (9,355) (18,683)
191. 4,033,911 5,883,919
192.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
193.Distributions to shareholders from net interest income (4,043,266) (5,902,602)
194.Share transactions at net asset value of $1.00 per 74,631,151 212,681,193
share
Proceeds from sales of shares
195. Reinvestment of distributions from net interest 3,845,947 5,582,855
income
196. Cost of shares redeemed (114,619,050) (201,620,498)
197.198. (36,141,952) 16,643,550
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES
RESULTING FROM SHARE TRANSACTIONS
199. (36,151,307) 16,624,867
200.TOTAL INCREASE (DECREASE) IN NET ASSETS
201.NET ASSETS 202. 203.
204. Beginning of period 257,608,223 240,983,356
205. End of period $ 221,456,916 $ 257,608,223
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206. SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED
JUNE 30, 1995
207. (UNAUDITED) 1994 1993 1992 1991 1990
208.SELECTED PER-SHARE DATA
209.Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
210.Income from Investment Operations .018 .026 .022 .029 .045 .059
Net interest income
211.Less Distributions (.018) (.026) (.022) (.029) (.045) (.059)
From net interest income
212.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
213.TOTAL RETURN B 1.77% 2.61% 2.21% 2.90% 4.55% 6.05%
214.RATIOS AND SUPPLEMENTAL DATA
215.Net assets, end of period (000
omitted) $ 221,457 $ 257,608 $ 240,983 $ 243,335 $ 289,826 $ 319,982
216.Ratio of expenses to average net
assets .50% .50% .50% .47% .34% .13%
A
217.Ratio of expenses to average net
assets before .50% .50% .50% .50% .50% .57%
expense reductions A
218.Ratio of net interest income to
average net assets 3.54% 2.58% 2.19% 2.88% 4.47% 5.92%
A
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A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1995 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Pennsylvania Municipal High Yield Portfolio (the high yield fund)
is a fund of Fidelity Municipal Trust. Spartan Pennsylvania Municipal Money
Market Portfolio (the money market fund) is a fund of Fidelity Municipal
Trust II. Each trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company. Fidelity Municipal Trust and Fidelity Municipal Trust II (the
trusts) are organized as a Massachusetts 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 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 of their purchase date 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 substantially all of its taxable income for
the fiscal year. The schedules of investments include information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned 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, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions and losses deferred due to wash sales, futures and
options and excise tax regulations.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
REDEMPTION FEES. Shares held in the high yield fund less than 180 days are
subject to a redemption fee equal to .50% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
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 use futures and options contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures, writing puts, and buying calls tend to increase the fund's
exposure to the underlying instrument. Selling futures, buying puts, and
writing calls tend to decrease the fund's exposure to the underlying
instrument, or hedge other fund investments. Losses may arise from changes
in the value of the underlying instruments, if there is an illiquid
secondary market for the contracts, or if the counterparties do not perform
under the contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
RESTRICTED SECURITIES. Each fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the
end of the period, restricted securities (excluding 144A issues) amounted
to $5,700,000 or 2.6% of net assets for the money market fund.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $51,762,587 and $53,189,994, respectively. The
market value of futures contracts opened and closed during the period
amounted to $27,199,960 and $29,000,352, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management &
Research Company (FMR) pays all expenses, except the compensation of the
non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary expenses. FMR receives a fee that
is computed daily at an annual rate of .55% and .50% of average net assets
for the high yield and money market funds, respectively. FMR also bears the
cost of providing shareholder services to each fund. To offset the cost of
providing these services, FMR or its affiliates collected certain
transaction
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE. - CONTINUED
fees from shareholders which amounted to $1,450 and $4,458 for the high
yield and money market funds, respectively.
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.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East 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
6300 Canoga Avenue
Woodland Hills, 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
90 Alhambra Plaza
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
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
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
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, 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
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State 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
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER, MONEY MARKET FUND
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning Jr., Vice President - MONEY MARKET FUND
Deborah F. Watson, Vice President -
MONEY MARKET FUND
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Michael D. Conway, Assistant
Treasurer - MONEY MARKET FUND
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
UMB Bank, n.a.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
UMB 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)
OHIO
MUNICIPAL
PORTFOLIOS
SEMIANNUAL REPORT
JUNE 30, 1995
CONTENTS
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PRESIDENT'S MESSAGE 3 Ned Johnson on investing
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 19 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE 23 How the fund has done over time.
FUND TALK 25 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 27 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 28 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 33 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 37 Notes to the financial statements.
</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.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been positive market indications so far in 1995, no one
can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for 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 to
measure performance. If Fidelity had not reimbursed certain fund expenses
the life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
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<CAPTION>
<S> <C> <C> <C> <C>
PERIODS ENDED JUNE 30, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Fidelity Ohio Municipal High Yield Portfolio 9.37% 8.08% 47.86% 118.34%
Lehman Brothers Municipal Bond Index 9.65% 8.82% 48.70% n/a
Average Ohio Tax-Exempt
Municipal Bond Fund 8.94% 7.54% 45.53% n/a
Consumer Price Index 1.87% 3.04% 17.40% 40.29%
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on November 15, 1985. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Lehman Brothers Municipal Bond Index - a broad gauge of
the municipal bond market. To measure how the fund's performance stacked up
against its peers, you can compare it to the average Ohio tax-exempt
municipal bond fund, which reflects the performance of 49 Ohio municipal
bond funds with similar objectives tracked by Lipper Analytical Services
over the past six months. Both benchmarks include reinvested dividends and
capital gains, if any. Comparing the fund's performance to the consumer
price index (CPI) helps show how your fund did compared to inflation. (The
CPI returns begin on the month end closest to the fund's start date.)
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
<C> <C> <C> <C>
PERIODS ENDED JUNE 30, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity Ohio Municipal High Yield Portfolio 8.08% 8.14% 8.45%
Lehman Brothers Municipal Bond Index 8.82% 8.26% n/a
Average Ohio Tax-Exempt
Municipal Bond Fund 7.54% 7.79% n/a
Consumer Price Index 3.04% 3.26% 3.56%
</TABLE>
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
Ohio Tax Free (088)Municipal Bond In
11/30/85 10000.00 10000.00
12/31/85 10222.80 10087.90
01/31/86 10749.09 10682.08
02/28/86 11073.37 11105.73
03/31/86 11161.00 11109.28
04/30/86 11072.97 11117.73
05/31/86 10944.21 10936.73
06/30/86 11012.11 11041.07
07/31/86 11068.97 11108.08
08/31/86 11526.57 11605.39
09/30/86 11519.26 11634.52
10/31/86 11765.60 11835.45
11/30/86 11978.65 12069.91
12/31/86 11905.21 12036.60
01/31/87 12310.19 12399.02
02/28/87 12431.90 12460.02
03/31/87 12355.81 12327.95
04/30/87 11391.80 11709.33
05/31/87 11282.79 11651.25
06/30/87 11527.96 11993.33
07/31/87 11696.63 12115.67
08/31/87 11708.49 12142.93
09/30/87 11096.63 11695.22
10/31/87 11110.43 11736.62
11/30/87 11411.71 12043.06
12/31/87 11622.02 12217.81
01/31/88 12158.16 12653.00
02/29/88 12320.35 12786.75
03/31/88 12000.79 12637.78
04/30/88 12059.92 12733.83
05/31/88 12143.87 12697.03
06/30/88 12371.67 12882.78
07/31/88 12480.80 12966.78
08/31/88 12506.31 12978.19
09/30/88 12738.77 13213.10
10/31/88 13009.42 13446.31
11/30/88 12911.13 13323.14
12/31/88 13124.54 13459.43
01/31/89 13313.63 13737.78
02/28/89 13201.15 13581.03
03/31/89 13202.42 13548.57
04/30/89 13559.05 13870.21
05/31/89 13853.96 14158.30
06/30/89 14034.67 14350.57
07/31/89 14150.67 14545.88
08/31/89 14004.89 14403.47
09/30/89 13938.63 14360.26
10/31/89 14118.48 14535.46
11/30/89 14322.17 14789.83
12/31/89 14435.12 14911.10
01/31/90 14299.67 14841.02
02/28/90 14461.42 14973.11
03/31/90 14477.86 14977.60
04/30/90 14257.78 14869.76
05/31/90 14627.15 15193.92
06/30/90 14778.13 15327.63
07/31/90 15000.30 15552.94
08/31/90 14764.37 15327.43
09/30/90 14877.15 15336.62
10/31/90 15089.28 15614.22
11/30/90 15443.66 15928.06
12/31/90 15517.62 15998.14
01/31/91 15689.69 16212.52
02/28/91 15788.56 16353.57
03/31/91 15817.50 16360.11
04/30/91 16064.24 16577.70
05/31/91 16195.71 16725.24
06/30/91 16137.42 16708.52
07/31/91 16359.68 16912.36
08/31/91 16523.30 17135.60
09/30/91 16718.78 17358.37
10/31/91 16869.39 17514.59
11/30/91 16898.73 17563.63
12/31/91 17293.76 17941.25
01/31/92 17324.51 17982.52
02/29/92 17335.72 17987.91
03/31/92 17322.93 17995.11
04/30/92 17462.32 18155.26
05/31/92 17698.77 18369.49
06/30/92 18010.97 18678.10
07/31/92 18531.10 19238.44
08/31/92 18324.36 19049.91
09/30/92 18433.20 19173.73
10/31/92 18097.72 18985.83
11/30/92 18579.95 19325.68
12/31/92 18791.99 19522.80
01/31/93 19037.52 19749.26
02/28/93 19715.68 20464.19
03/31/93 19485.39 20247.26
04/30/93 19664.16 20451.76
05/31/93 19763.15 20566.29
06/30/93 20091.86 20909.75
07/31/93 20121.68 20936.93
08/31/93 20590.06 21372.42
09/30/93 20836.40 21616.07
10/31/93 20850.10 21657.14
11/30/93 20672.79 21466.55
12/31/93 21152.03 21919.50
01/31/94 21409.13 22169.38
02/28/94 20840.77 21595.19
03/31/94 19958.97 20716.27
04/30/94 20111.13 20892.36
05/31/94 20247.72 21074.12
06/30/94 20216.80 20951.89
07/31/94 20536.37 21335.31
08/31/94 20601.50 21409.98
09/30/94 20350.54 21095.26
10/31/94 19954.70 20719.76
11/30/94 19516.45 20344.73
12/31/94 19978.79 20792.32
01/31/95 20578.30 21386.98
02/28/95 21149.54 22009.34
03/31/95 21368.17 22262.45
04/30/95 21412.51 22289.16
05/31/95 22041.79 23000.19
06/30/95 21850.99 22800.08
$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, 1995, the value of your investment
would have grown to $21,851 - a 118.51% 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 $22,800 - a 128.00% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
6 MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991 1990
Dividend return 3.10% 5.37% 6.19% 6.63% 7.02% 7.04%
Capital appreciation
return 6.27% -10.92% 6.37% 2.03% 4.43% 0.46%
Total return 9.37% -5.55% 12.56% 8.66% 11.45% 7.50%
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, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.19(cents) 31.89(cents) 64.99(cents)
Annualized dividend rate 5.59% 5.82% 5.93%
30-day annualized yield 5.43% - -
30-day annualized tax-equivalent yield 9.17% - -
</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 $11.31 over
the past month, $11.05 over the past six months and $10.96 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 effective 1995 federal and state tax bracket.
FIDELITY OHIO MUNICIPAL HIGH YIELD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Steven Harvey,
Portfolio Manager of Fidelity Ohio
Tax-Free High Yield Portfolio
Q. STEVE, HOW DID THE FUND PERFORM DURING THE PAST SIX MONTHS?
A. For the six months ended June 30, 1995, the fund returned 9.37%,
compared to the average Ohio tax-free fund, which returned 8.94%, as
tracked by Lipper Analytical Services. For the year ended June 30, 1995,
the fund returned 8.08%, while the average fund returned 7.54%, again
according to Lipper.
Q. MUNICIPAL BONDS GOT OFF TO A GOOD START IN 1995. WHAT WAS BEHIND THE
MARKET'S PERFORMANCE?
A. The primary fuel was that interest rates fell during the period and, as
a result, taxable and tax-free bond prices rose. For the first quarter of
1995, municipal bonds enjoyed an especially impressive rally, ending the
quarter as the best performing fixed-income category. Increased demand and
low supply were two of the factors helping municipals to outperform
Treasury bonds. But by the second quarter, the rally stalled. One reason
was that yields on long-term municipals fell below 6%, which was an
important barrier. That level of income became less attractive, relative to
other investments, and demand for municipals declined. Then, in late April,
there were heightened concerns about how various tax-reform proposals -
including the flat-tax proposal which would tax everyone at a uniform rate
and eliminate deductions - might impact the attractiveness of municipal
bonds. Finally, in late June, the residents of Orange County, California,
failed to pass a sales tax proposal designed to help dig the county out of
bankruptcy. While these events didn't directly impact the fund's
investments, it's important to understand that they cast a pall over the
entire municipal bond market by limiting demand. But despite some of those
rough spots, municipals turned in strong performance for the six-month
period.
Q. WHAT HELPED THE FUND OUTPACE THE AVERAGE?
A. Duration - which measures how sensitive the fund's share price is to
changes in interest rates - was a primary factor. During most of the first
quarter of 1995 - when the rally was at its strongest - the fund's duration
was long relative to other funds of its type. Generally speaking, the
longer a fund's duration, the more its share price will rise when interest
rates fall, and, conversely, fall when interest rates rise. As interest
rates declined, having a long duration helped the fund's performance.
Q. DID YOU CHANGE THE FUND'S DURATION IN THE SECOND QUARTER?
A. Yes, I shortened it, thereby making the fund's share price less
sensitive to interest rate changes. When municipal bonds hit some rough
spots in the spring, having a shorter duration was a plus. The primary
reason I shortened duration was because the yield curve, or the difference
in yields among bonds of various maturities, was relatively flat between
bonds with 10- and 30-year maturities. When the curve is flat, investors
may not be rewarded with much additional yield by investing in very
long-maturity bonds. So I sold some bonds that mature in more than 20
years, locked in profits, and used the proceeds to buy more bonds in the
six- to 12-year maturity range. By doing so, the fund's duration shortened.
Q. AT ABOUT THE SAME TIME, YOU SOMEWHAT REDUCED THE FUND'S STAKE IN
LOWER-QUALITY BONDS. ARE A SHORTER DURATION AND YOUR MOVE TOWARD
HIGHER-QUALITY BONDS RELATED?
A. In a way. Many of the longer-term bonds I sold also happened to be
lower-quality bonds. Here's why: Recently there has been a very limited
supply of lower-quality bonds available. And, during the rally, these bonds
were in fairly high demand. Limited supply and heavy demand translated into
generally higher prices. So once again I was able to use the market's
strength to lock in profits by selling lower- quality bonds, and at the
same time, improving the overall credit quality of the fund by replacing
them with higher-quality issues.
Q. THE ENVIRONMENT FOR HEALTH CARE ORGANIZATIONS IS BECOMING INCREASINGLY
MORE DIFFICULT. WHAT FACTORS DO YOU CONSIDER WHEN CHOOSING HEALTH-CARE
BONDS - WHICH MADE UP 16.9% OF THE FUND'S INVESTMENTS AT THE END OF THE
PERIOD?
A. It's true that competitive pressures continue to build, which may
ultimately result in the closing of some hospitals. But because health care
bonds can offer relatively high yields, many are still attractive. What I
look for, with the help of Fidelity's research staff, are hospitals and
other health care organizations that have a strong market share, and
successful alliances with health maintenance organizations (HMOs) and that
have the ability to provide a continuum of care at an attractive cost. In
my view, a good way to identify the future winners is to ascertain the
quality of management. I look for management teams that are thinking now
about what the health care scene will be like in 10 years, and are making
changes to prepare for that environment. As always, we will continue to
constantly review and update our opinions to reflect changes in the
industry.
Q. AFTER HAVING SUCH A STRONG RUN IN THE FIRST HALF OF 1995, WHAT'S THE
OUTLOOK FOR MUNICIPAL BONDS?
A. There are a number of things to consider. First is the interest rate
environment. For the balance of the year, I don't think that interest rates
will fall as dramatically as they did in the first half. Rather, interest
rates will probably remain within a narrow band. Therefore, I don't think
that bond prices will rise as much either. With that in mind, the fund's
returns will probably derive largely from its level of income, rather than
bond price appreciation. Continued talk of tax reform could add some
volatility to municipal bond prices. But in my view, the prospects that a
flat tax will be enacted are remote. On a more positive note, the supply of
municipal bonds should continue to remain low. Combined with flat or lower
interest rates, and at least constant demand, a limited supply could help
the municipal bond market for the remainder of the year.
FUND FACTS
GOAL: high current tax-free
income for Ohio residents by
investing mainly in
longer-term,
investment-grade municipal
securities whose interest is
free from federal income tax
and Ohio individual income
tax
START DATE: November 15,
1985
SIZE: as of June 30, 1995,
more than $387 million
MANAGER: Steven Harvey,
since 1994; manager, Fidelity
Minnesota Tax-Free Portfolio,
Spartan Pennsylvania High
Yield, and Spartan Maryland
Municipal Income portfolios
since 1993; joined Fidelity in
1986
(checkmark)
STEVE HARVEY ON OHIO'S
ECONOMY AND FISCAL
CONDITION:
"Ohio's economy and fiscal
situation ultimately will dictate
the overall credit quality of
bonds issued in the state.
That said, both elements are
fairly strong right now. The
state recently posted its
lowest unemployment rate in
20 years. But keep in mind
that while there has been
some economic restructuring
away from automobile and
durable goods manufacturing,
these two segments dominate
the Ohio economy. That could
make the state vulnerable if
we slip back into a recession.
On the fiscal front, Ohio has
built back up the budgetary
reserves it drew down during
the previous recession. The
state is seeing very strong tax
receipts and has been
successful in keeping
spending in check."
FIDELITY OHIO MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF JUNE 30, 1995
% OF FUND'S INVESTMENT % OF FUND'S INVESTMENT
S S
IN THESE SECTORS
6 MONTHS AGO
General Obligation 21.6 23.3
Water & Sewer 21.1 18.4
Health Care 16.9 18.6
Industrial Development 10.3 9.7
Education 7.8 7.4
AVERAGE YEARS TO MATURITY AS OF JUNE 30, 1995
6 MONTHS AGO
Years 15.7 17.7
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF JUNE 30, 1995
6 MONTHS AGO
Years 8.4 8.8
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%,, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF JUNE 30, 1995 AS OF DECEMBER 31, 1994
Aaa 36.7%
Aa, A 20.8%
Baa 14.4%
Ba, B 7.1%
Non-rated 15.9%
Short-term investments 5.1%
Aaa 29.2%
Aa, A 20.1%
Baa 19.3%
Ba, B 7.2%
Non-rated 21.5%
Short-term and
other investments 2.7%
Row: 1, Col: 1, Value: 36.7
Row: 1, Col: 2, Value: 20.8
Row: 1, Col: 3, Value: 14.4
Row: 1, Col: 4, Value: 7.1
Row: 1, Col: 5, Value: 15.9
Row: 1, Col: 6, Value: 5.1
Row: 1, Col: 1, Value: 29.2
Row: 1, Col: 2, Value: 20.1
Row: 1, Col: 3, Value: 19.3
Row: 1, Col: 4, Value: 7.2
Row: 1, Col: 5, Value: 21.5
Row: 1, Col: 6, Value: 2.7
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW ACCOUNT FOR 10.5% AND 12.9% OF THE FUND'S
INVESTMENTS AT JUNE 30, 1995, AND DECEMBER 31, 1994, RESPECTIVELY.
FIDELITY OHIO MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 94.9%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
OHIO - 91.2%
Adams County Valley Local School Dist.:
Unltd. Tax 6.65% 12/1/03 (MBIA Insured) Aaa $ 1,000,000 $ 1,115,000
Unltd. Tax 6.65% 12/1/04 (MBIA Insured) Aaa 1,000,000 1,118,750
6.65% 12/1/05 (MBIA Insured) Aaa 1,000,000 1,123,870
Akron Parking Facs. Ltd. Tax:
8.75% 11/1/03 A 160,000 197,200
8.75% 11/1/04 A 160,000 200,000
8.75% 11/1/05 A 160,000 201,800
Akron Str. Impt. Ltd. Tax Series 1985-1:
8.75% 11/1/03 A 200,000 246,500
8.75% 11/1/04 A 200,000 250,000
8.75% 11/1/05 A 200,000 252,250
Alliance Wtrwks. Rev. (Cap. Appreciation) 0%
10/15/06 (FGIC Insured) Aaa 765,000 416,925
Bedford Hosp. Impt. Rev. Rfdg. (Bedford
Commty. Hosp.) Series 1990, 8.50%
5/15/09 (Escrowed to Maturity) (d) - 800,000 944,000
Berea Gen. Oblig. Ltd. Tax Rfdg.:
0% 12/1/04 Aa 535,000 319,663
5.125% 12/1/13 Aa 1,215,000 1,119,319
Berea Wtrwks. Rfdg. 0% 12/1/06 Aa 510,000 267,750
Berlin & Milan Local School Dist. Gen. Oblig.
7.45% 12/1/11 A 675,000 734,063
Bexley City School Dist. Gen. Oblig:
0% 12/1/06 Aa 440,000 232,100
0% 12/1/07 Aa 540,000 266,625
0% 12/1/08 Aa 540,000 249,075
Buckeye Local School Dist. Rfdg.
(Jefferson County):
0% 12/1/07 (AMBAC Insured) Aaa 760,000 382,850
(Cap. Appreciation) 0% 12/1/06
(AMBAC Insured) Aaa 375,000 202,031
Buckeye Valley Local School Dist. (Delaware County)
Series A, 6.85% 12/1/15 (MBIA Insured) Aaa 2,000,000 2,265,000
Butler County Hosp. Facs. Rev. Impt. Rfdg.
(Fort Hamilton-Hughes) 7.50% 1/1/10 Baa 1,500,000 1,541,250
Cambridge Hosp. Impt. Rev. Rfdg.
(Guernsey Mem. Hosp.) 8% 12/1/11 BBB 1,500,000 1,597,500
Canton Gen. Oblig. Ltd. Tax 7.875% 12/1/08
(Pre-Refunded to 12/1/98 @103)(d) Baa 1,250,000 1,418,750
Clark County Hosp. Impt. Rev. Rfdg. (Commty.
Hosp.) Series A, 9.375% 4/1/2008 A 800,000 821,000
Cleveland Ltd. Tax 6.875% 7/1/09
(MBIA Insured) (Escrowed to Maturity) (d) Aaa 1,000,000 1,102,500
Cleveland Rfdg. Series A, 6.75% 10/1/11
(AMBAC Insured) (Escrowed to Maturity) (d) Aaa 1,850,000 2,081,250
Cleveland Gen. Oblig. Rfdg.:
5.30% 9/1/07 (AMBAC Insured) Aaa 2,000,000 1,965,000
5.375% 9/1/10 (AMBAC Insured) Aaa 1,025,000 985,281
Cleveland Pub. Pwr. Sys. Rev. (Capital
Appreciation) (First Mtg.) Series A, 0%
11/15/08 (MBIA Insured) Aaa 5,480,000 2,527,650
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Cleveland Wtrwks. Rev. Rfdg. (First Mtg.)
Series G:
5.50% 1/1/08 (MBIA Insured) Aaa $ 3,700,000 $ 3,676,875
5.50% 1/1/13 (MBIA Insured) Aaa 11,475,000 11,102,063
5.50% 1/1/21 (MBIA Insured) Aaa 26,725,000 25,321,938
Columbus Gen. Oblig.:
Rfdg. Series B, 5.90% 1/1/01 Aaa 1,000,000 1,058,750
8.125% 5/1/01 Aaa 1,000,000 1,167,500
9.50% 4/15/04 Aaa 500,000 655,000
Ltd. Tax 9.375% 4/15/07 Aaa 590,000 794,288
Cuyahoga County (Cap. Appreciation) Unltd. Tax
Rdfg. Series A:
0% 10/1/08 (MBIA Insured) Aaa 4,000,000 1,915,000
0% 10/1/09 (MBIA Insured) Aaa 4,200,000 1,863,750
0% 10/1/10 (MBIA Insured) Aaa 5,000,000 2,081,250
0% 10/1/11 (MBIA Insured) Aaa 2,400,000 936,000
0% 1/1/12 (MBIA Insured) Aaa 1,505,000 549,325
0% 1/1/13 (MBIA Insured) Aaa 3,000,000 1,035,000
Cuyahoga County Ltd. Tax 5.65% 5/15/18 A1 1,295,000 1,215,681
Cuyahoga County Gen. Oblig.:
Rfdg. Series B, 5.25% 10/1/12 (MBIA Insured) Aaa 7,000,000 6,562,500
5.60% 5/15/13 (MBIA Insured) Aaa 3,435,000 3,327,656
Cuyahoga County Health Care Facs. Rev.
(Judson Retirement Commty.)
8.875% 11/15/19 - 2,500,000 2,690,625
Cuyahoga County Hosp. Rev. Rfdg.
(Cleveland Clinic Foundation) Series A:
8% 12/1/08 Aa 1,000,000 1,080,000
8% 12/1/15 Aa 2,250,000 2,415,938
Defiance County Econ. Dev. Rev.
(Kroger Co. Proj.) 8% 10/15/15 Ba2 2,325,000 2,563,313
Defiance Spl. Assessments 7% 12/1/11 A 365,000 387,813
Delaware County Swr. 6.50% 12/1/03 A1 1,750,000 1,914,063
Delaware School Dist. (Capital Appreciation)
Construction & Impt. Series B, 0% 12/1/08
(FGIC Insured) Aaa 1,100,000 518,375
Dublin School Dist. Unltd. Tax Rfdg. (Cap.
Appreciation) 0% 12/1/04 (AMBAC Insured) Aaa 1,930,000 1,186,950
Fairfield School Dist. 7.45% 12/1/14
(FGIC Insured) Aaa 1,000,000 1,172,500
Fairfield Econ. Dev. Rev. Rfdg.
(Beverly Enterprises Proj.) 8.50% 1/1/03 - 1,060,000 1,126,250
Franklin School Dist. Unltd. Tax
(Warren County Impt.) 7% 12/1/14 A 1,250,000 1,315,625
Franklin County Gen. Oblig. Rfdg. Ltd. Tax
5.375% 12/1/21 Aaa 4,000,000 3,705,000
Franklin County Rev.
(Online Computer Library Ctr. Prog.):
7.20% 7/15/06 _ 1,000,000 1,076,250
9.75% 7/15/09 - 5,000,000 5,106,250
6% 4/15/12 - 3,500,000 3,403,750
Gateway Econ. Dev. Corp. (Greater Cleveland
Stadiums) Series 1990, 6.50% 9/15/14 - 10,000,000 9,787,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Granville Village School Dist. Rfdg.
(Cap. Appreciation):
0% 12/1/06 (AMBAC Insured) Aaa $ 625,000 $ 336,719
0% 12/1/07 (AMBAC Insured) Aaa 665,000 334,994
0% 12/1/08 (AMBAC Insured) Aaa 650,000 306,313
0% 12/1/09 (AMBAC Insured) Aaa 645,000 280,575
Greene County 1st Mtg. Rev. (Fairview Extended
Care) Series A, 10.125% 1/1/11 - 5,790,000 6,405,188
Greene County Swr. Sys. Rev. (Cap.
Appreciation) 0% 12/1/09 (AMBAC Insured) Aaa 775,000 340,031
Hamilton County Hosp. Facs. Rev.:
Rfdg. (Children's Hosp. Med. Ctr.) Series E,
5.20% 5/15/09, (MBIA Insured) Aaa 2,465,000 2,366,400
(Children's Hosp. Med. Ctr.) Series D,
5% 5/15/13 (FGIC Insured) Aaa 1,195,000 1,078,488
Hamilton County Gen. Oblig. 5.10% 12/1/11 Aa 1,525,000 1,404,906
Hamilton County Health Sys. Rev.:
Rfdg. (Providence Hosp.-Franciscan Sisters
Poor Health Sys.) 6.875% 7/1/15 Baa1 5,000,000 5,025,000
Hamilton County Swr. Sys. Rev.:
(Rfdg. & Impt. ):
(Metropolitan Swr. Dist.) Series A,
5.45% 12/1/09 (FGIC Insured) Aaa 1,500,000 1,475,625
Series A, 6.70% 12/1/13 A1 1,100,000 1,229,250
Series A, 5.40% 12/1/08 (FGIC Insured) Aaa 3,715,000 3,677,850
Hamilton Elec. Sys. Mtg. Rev. Rfdg. Series 1992 A,
6% 10/15/08 (FGIC Insured) Aaa 2,000,000 2,030,000
Hamilton Gas Sys. Rev. Series A, 4.75%
10/15/23 (MBIA Insured) Aaa 1,000,000 837,500
Hamilton Ind. Dev. Rev. Rfdg. (Kroger Co. Proj.):
6.15% 6/1/01 Ba2 2,005,000 2,057,631
8.10% 7/1/12 Ba2 3,600,000 4,000,500
Lakewood Gen. Oblig. 6.60% 12/1/08 Aa 1,525,000 1,673,688
Lakota Local School Dist. Gen. Oblig. Rfdg.
(Cap. Appreciation):
Unltd. Tax 0% 12/1/99 A1 445,000 360,450
0% 12/1/00 A1 625,000 476,563
0% 12/1/01 A1 590,000 417,425
0% 12/1/02 A1 555,000 371,156
0% 12/1/03 A1 260,000 162,825
0% 12/1/04 A1 730,000 431,613
0% 12/1/05 A1 690,000 382,950
0% 12/1/06 A1 650,000 337,188
0% 12/1/07 A1 610,000 295,088
Logan Hocking Local School Dist. Rfdg.
Series B, 0% 12/1/08, (AMBAC Insured) Aaa 1,065,000 497,888
Lorain County Rev. (1st Mtg. Kendal at Oberlin
Proj.) Series A, 8.625% 2/1/22 - 4,250,000 4,558,125
Lorain Gen. Oblig. Ltd. Tax 7.875% 12/1/09 Baa 1,000,000 1,076,250
Lorain Swr. Sys. Mtg. Rev. Rfdg. 8.75%
4/1/11 BBB- 2,815,000 3,078,906
Lowellville San. Swr. Sys. Rev. (Browning-Ferris
Industries, Inc.) 7.25% 6/1/06 (b) A 1,400,000 1,443,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Lucas County Convention Ctr. Site Acquisition
Bonds Ltd. Tax:
6.50% 12/1/09 Baa1 $ 340,000 $ 351,900
6.50% 12/1/10 Baa1 340,000 351,050
6.50% 12/1/11 Baa1 340,000 349,350
6.50% 12/1/12 Baa1 340,000 349,775
Lucas County Hosp. Rev. Rfdg. (Riverside Hosp.
Proj.) 7.625% 6/1/15 (e) Baa1 7,485,000 7,681,481
Lucas County Ind. Dev. Rev. Rfdg. (Kroger Co.)
8.50% 7/1/11 Ba2 3,600,000 4,032,000
Mahoning County Hosp. Facs. Rev. (YHA, Inc. Proj.)
Series A, 7% 10/15/14, (MBIA Insured) Aaa 1,000,000 1,066,250
Mahoning County San. Swr. Sys. Rev. 7.50%
2/1/19 (BIG Insured) Aaa 1,000,000 1,076,250
Mahoning Valley San. Dist.
7.85% 12/15/12 - 1,200,000 1,264,500
7.85% 12/15/13 - 1,275,000 1,343,531
Mahoning Valley San. Dist. Wtr. Rev. 7.75%
5/15/14 - 3,250,000 3,408,438
Marion County Health Care Facs. Rev. Rfdg. & Impt.
(United Church Homes, Inc. Proj.) 6.30%
11/15/15 BBB- 1,800,000 1,707,750
Marysville Exempt Village School Dist. Gen.
Oblig. Rfdg. (Cap. Appreciation):
0% 12/1/05 (AMBAC Insured) Aaa 795,000 454,144
0% 12/1/06 (AMBAC Insured) Aaa 750,000 401,250
0% 12/1/07 (AMBAC Insured) Aaa 690,000 345,863
Marysville Swr. Sys. Ltd. Tax 7.15%
12/1/11 A 500,000 533,750
Mentor Exempt Village School Dist. Gen.
Oblig. Rfdg. (Cap. Appreciation):
0% 12/1/00 (MBIA Insured) Aaa 755,000 579,463
0% 12/1/01 (MBIA Insured) Aaa 795,000 575,381
0% 12/1/02 (MBIA Insured) Aaa 845,000 579,881
0% 12/1/03 (MBIA Insured) Aaa 840,000 546,000
Mentor Gen. Oblig. Ltd. Tax Series 1991,
7.15% 12/1/11 A 500,000 534,375
Miami County Hosp. Facs. Rev. (Upper Valley
Med. Ctr. Proj.) Series B, 8.25% 5/1/04
(BIG Insured) Aaa 445,000 475,594
Middleburg Heights Hosp. Rev. Impt.
(Southwest Gen. Hosp.) 7.20% 8/15/19 A 2,000,000 2,120,000
Muskingum County Rev. (Franciscan Health
Advisory Svcs.) 7.50% 3/1/12 BBB+ 2,000,000 2,062,500
Newark Wtr. (Cap. Appreciation) 0% 12/1/07
(AMBAC Insured) Aaa 455,000 228,069
Ohio Air Quality Dev. Auth. Rev.:
Rfdg. (Ohio Pwr. Co. Proj.) Series B, 7.40%
8/1/09 Baa1 3,250,000 3,436,875
(Columbus & Southern Pwr. Co.) Series A,
6.375% 12/1/20 (FGIC Insured) Aaa 3,000,000 3,093,750
Ohio Bldg. Auth. Facs.:
Rfdg. (State Correctional Facs.) Series A:
6.50% 10/1/03 A1 2,750,000 2,983,750
5.75% 10/1/05 A1 2,080,000 2,147,600
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Bldg. Auth. Facs. - continued
(Administration Bldg. Fund Proj.)
Series A, 5.60% 10/1/07 A1 $ 3,330,000 $ 3,334,163
(Ohio Center for the Arts) Series A:
5.35% 10/1/06 A1 3,060,000 3,048,525
5.45% 10/1/07 A1 2,000,000 1,995,000
(Workers Compensation Bldg. A)
4.75% 4/1/14 A 6,620,000 5,676,650
Ohio Cap. Corp. For Hsg. Multi-Family Hsg. Rev. Rfdg.:
Series A, 7.50% 1/1/24 (FNMA Coll.) AAA 1,000,000 1,063,750
Series C, 7.375% 7/1/23 (FNMA Coll.) AAA 2,000,000 2,072,500
Ohio Econ. Dev. Rev. Rfdg. (Kroger Co. Proj.)
Series 1992, 7.50% 9/1/10 Ba2 2,000,000 2,155,000
Ohio Expositions Commission Ctfs. of Prtn.
(Agricenter Facs.)
8% 10/1/95 (Escrowed to Maturity)(d) - 105,000 105,394
8.25% 10/1/06
(Pre-Refunded to 4/1/00 @ 101)(d) - 1,150,000 1,236,250
Ohio Gen. Oblig. Infrastructure Impt.:
Rfdg. Series R:
0% 9/1/00 Aa 3,260,000 2,555,025
5.45% 9/1/03 Aa 1,350,000 1,388,813
(Cap. Appreciation) Series 1989, 0% 9/1/07 Aa 7,225,000 3,711,844
(College Savings Bonds):
0% 8/1/09 Aa 2,290,000 1,030,500
0% 8/1/10 Aa 2,000,000 845,000
Ohio Higher Edl. Facs. Commission Rev.:
(Case Western Reserve Proj.):
Series A, 7.70% 10/1/18,
(Pre-Refunded to 10/1/97 @ 102) Aa 1,930,000 2,103,700
7.70% 10/1/18 Aa 70,000 74,900
(Kenyon College Proj.) 5.30% 12/1/08 A 1,115,000 1,063,431
(Oberlin College Proj.) 5.375% 10/1/15 AA 1,000,000 920,000
Ohio Higher Edl. Fac. Rev:
(Case Western Reserve Univ. Proj.):
Rfdg.:
6% 10/1/14 Aa 1,500,000 1,539,375
6.125% 10/1/15 Aa 2,000,000 2,072,500
6.25% 10/1/16 Aa 2,500,000 2,631,250
Series B, 6.50% 10/1/20 Aa 2,250,000 2,446,875
Ohio Ind. Dev. Rev. Rfdg. (Kroger Co.)
8.65% 6/1/11 Ba2 2,300,000 2,584,625
Ohio Liquor Profits Rev. Rfdg. 6.80% 9/1/98,
(MBIA Insured) Aaa 2,000,000 2,137,500
Ohio Poll. Cont. Rev. (Standard Oil Co.)
6.75% 12/1/15 A1 3,100,000 3,518,500
Ohio Solid Waste Rev. (Republic Engineered
Steels Proj.) 8.25% 10/1/14 (b) - 4,200,000 4,289,250
Ohio Wtr. Dev. Auth. Rev.:
Rfdg. & Impt. (Pure Wtr.):
5.50% 12/1/11 (AMBAC Insured) Aaa 1,500,000 1,456,875
5.50% 12/1/18 (AMBAC Insured) Aaa 2,500,000 2,365,625
(Fresh Wtr. Series):
6.25% 12/1/02 (AMBAC Insured) Aaa 1,915,000 2,068,200
6.25% 12/1/03 (AMBAC Insured) Aaa 2,025,000 2,189,531
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Wtr. Dev. Auth. Rev. - continued
(Pure Wtr.)
Series I, 6% 12/1/16 (AMBAC Insured) Aaa $ 1,685,000 $ 1,733,444
Ohio Wtr. Dev. Auth. Poll. Cont. Facs. Rev.
(Wtr. Cont. Fund) 6.50% 12/1/05
(MBIA Insured) Aaa 2,735,000 3,008,500
Olentangy Local School Dist. Unltd. Tax:
7.75% 12/1/07 (BIG Insured) Aaa 500,000 595,625
7.75% 12/1/09 (BIG Insured) Aaa 100,000 119,500
7.75% 12/1/11 (BIG Insured) Aaa 190,000 228,000
Ottawa County Gen. Oblig. Ltd. Tax
7.50% 10/1/14 A1 500,000 565,625
Ottawa County San. Swr. Sys. Rev. Rfdg.
(Cap. Appreciation) (Danbury Proj.)
0% 10/1/06 (AMBAC Insured) Aaa 1,445,000 787,525
Pickerington Local School Dist. (Constr. & Impt.)
5.8% 12/1/09 (FGIC Insured) Aaa 1,000,000 1,005,000
Pickerington Local School Dist. (School Bldg.
Construction) 7% 12/1/13, (AMBAC Insured) Aaa 1,000,000 1,128,750
Rural Lorian County Wtr. Auth. Wtr. Resource Rev.
Rfdg. & Impt. 5.45% 10/1/18, (AMBAC Insured) Aaa 3,500,000 3,303,125
Sandusky County Hosp. Facs. Rev. Rfdg.
(Mem. Hosp. Proj.) 7.75% 12/1/09 BB 5,250,000 5,250,000
Solon Gen. Oblig. (City Hall Impt.) 5.45%
12/1/13 Aa 1,000,000 942,500
Southwest Local School Dist. (Hamilton County):
0% 12/1/04 (AMBAC Insured) Aaa 500,000 306,875
0% 12/1/05 (AMBAC Insured) Aaa 525,000 303,188
0% 12/1/06 (AMBAC Insured) Aaa 525,000 284,156
0% 12/1/07 (AMBAC Insured) Aaa 520,000 263,900
Stark County Gen. Oblig. 5.60% 11/15/08
(AMBAC Insured) Aaa 1,150,000 1,139,938
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 5,840,000 5,117,300
Stark County Ind. Dev. Rev. Rfdg. (Kroger Co.)
7.20% 9/1/12 Ba2 3,100,000 3,282,125
Stow School Dist. School Impt. Unltd. Tax
9.125% 12/1/06 A 590,000 755,200
Student Loan Fund Corp. Student Loan Rev.:
Rfdg. Series A, 7.25% 2/1/08 (b) A 2,000,000 2,087,500
Series B, 8.875% 8/1/08(b) - 4,410,000 4,591,913
Series B-1, 4.50% 7/10/95 (AMBAC Insured) Aaa 5,000,000 5,000,000
Summit County Ind. Dev. Rev. Rfdg.
(Kroger Co. Proj.) 7.65% 10/1/06 Ba3 1,025,000 1,119,813
Tiffin San. Swr. Impt. Gen. Oblig. Ltd. Tax
7.10% 12/1/11 A 1,000,000 1,067,500
Union County Gen. Oblig. (Mem. Hosp.)
7.40% 12/1/10 A1 680,000 731,850
Warren County Gen. Oblig. 6.10% 12/1/12 Aa 500,000 517,500
Warren County Gen. Oblig. Ltd. Tax
6.65% 12/1/11 Aa 500,000 548,750
Warren Hosp. Rev. Rfdg. (Warren Gen. Hosp.
Proj.) Series B, 7.30% 11/15/14 BBB 4,105,000 4,125,525
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Warren Hsg. Dev. Corp. Rev. (1st Mtg. Rev.) Section 8:
7.25% 6/1/04 - $ 200,000 $ 202,750
7.25% 6/1/05 - 200,000 202,750
7.25% 6/1/06 - 200,000 202,750
7.25% 6/1/07 - 200,000 202,750
7.25% 6/1/08 - 200,000 202,750
Willoughby Gen. Oblig. Road Impt. Ltd. Tax
7.40% 12/1/11 A 1,200,000 1,392,000
Wright Univ. Gen. Receipts 5.15% 5/1/11
(AMBAC Insured) Aaa 1,000,000 933,750
Xenia Hsg. Dev. Corp. Rev. 1st Lien (Xenia Tower
Proj.) Section 8, 7.75% 2/1/10 - 1,965,000 2,006,744
Youngstown Gen. Oblig. Ltd. Tax 7.55% 12/1/11 Baa 1,500,000 1,605,000
348,933,995
PUERTO RICO - 3.7%
Puerto Rico Commonwealth Hwy. & Trans. Auth.
Rev. Rfdg. Series W, 5.50% 7/1/13 Baa1 10,000,000 9,437,500
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Rfdg.
Series S, 6.125% 7/1/09 Baa1 2,000,000 2,047,500
Puerto Rico Infrastructure Fing. Auth. Spl. Tax
Series 1988 A, 7.75% 7/1/08 Baa1 2,500,000 2,703,125
14,188,125
TOTAL MUNICIPAL BONDS
(Cost $354,669,956) 363,122,120
MUNICIPAL NOTES (A) - 5.1%
OHIO - 5.1%
Columbus Swr. Sys. Rev. Rfdg. Series 1994,
3.90%, VRDN VMIG 1 1,800,000 1,800,000
Dayton Spl. Facs. Rev. Rfdg. (Emery Air Freight
Corp. Proj.) Series 1988 D, 4.70%,
LOC Bank of America, VRDN(b) - 5,500,000 5,500,000
Ohio State Univ. Rev. (Gen. Receipts):
Series 1985 B, 4.40%,
LOC Nat'l. Westminster Bank PLC, VRDN VMIG 1 3,700,000 3,700,000
Series 1986 B, 4.40%, BPA Fuji Bank, VRDN VMIG 1 2,900,000 2,900,000
Ohio Wtr. Dev. Auth. Envir. Impt. Rev. Rfdg.
(The Mead Corp.) Series 1986 B, 4.25%,
LOC Swiss Bank, VRDN A-1+ 2,200,000 2,200,000
Scioto County Hosp. Facs. Rev. (VHA Central, Inc.) :
Series 85-E, 3.95% (AMBAC Insured)
(BPA First Nat'l. Bank Chicago), VRDN A-1 2,000,000 2,000,000
Series 1985 G, 3.95%, (AMBAC Insured)
BPA First Nat'l. Bank Chicago, VRDN A-1 1,500,000 1,500,000
TOTAL MUNICIPAL NOTES
(Cost $19,600,000) 19,600,000
TOTAL INVESTMENTS - 100%
(Cost $374,269,956) $ 382,722,120
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SOLD
140 U.S. Treasury Bond Contracts Sept. 1995 $ 15,894,375 $ 27,168
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 4.2%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(e) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(f) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(g) Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
(h) Security collateralized by an amount sufficient to pay interest and
principal.
(i) 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 $1,539,375.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 55.8% AAA, AA, A 54.7%
Baa 11.1% BBB 9.1%
Ba 5.7% BB 1.4%
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 16.0%. FMR
has determined that unrated debt securities that are lower quality account
for 10.5% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 21.6%
Water & Sewer 21.1
Health Care 16.9
Industrial Development 10.3
Others
(individually less than 10%) 30.1
TOTAL 100.0%
INCOME TAX INFORMATION
At June 30, 1995, the aggregate cost of investment securities for income
tax purposes was $374,269,956. Net unrealized appreciation aggregated
$8,452,164, of which $13,383,358 related to appreciated investment
securities and $4,931,194 related to depreciated investment securities.
At December 31, 1994, the fund elected to defer to its fiscal year ending
December 31, 1995, $1,923,373 of losses recognized during the period
November 1, 1994 to December 31, 1994.
At December 31, 1994, the fund was required to defer $431,887 of losses on
futures contracts.
FIDELITY OHIO MUNICIPAL HIGH YIELD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
5.ASSETS 6. 7.
8.Investment in securities, at value (cost $374,269,956) 9. $ 382,722,120
-
See accompanying schedule
10.Cash 11. 51,687
12.Receivable for investments sold 13. 1,236,900
14.Interest receivable 15. 5,888,296
16.Receivable for daily variation on futures contracts 17. 65,625
18. 19.TOTAL ASSETS 20. 389,964,628
21.LIABILITIES 22. 23.
24.Payable for investments purchased $ 2,374,361 25.
26.Distributions payable 365,700 27.
28.Accrued management fee 131,637 29.
30.Other payables and accrued expenses 79,457 31.
32. 33.TOTAL LIABILITIES 34. 2,951,155
35.36.NET ASSETS 37. $ 387,013,473
38.Net Assets consist of: 39. 40.
41.Paid in capital 42. $ 382,694,915
43.Accumulated undistributed net realized gain (loss) 44. (4,160,774)
on investments
45.Net unrealized appreciation (depreciation) 46. 8,479,332
on investments
47.48.NET ASSETS, for 34,609,107 shares outstanding 49. $ 387,013,473
50.51.NET ASSET VALUE, offering price and redemption 52. $11.18
price per share ($387,013,473 (divided by) 34,609,107 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
53.54.INTEREST INCOME 55. $ 11,965,925
56.EXPENSES 57. 58.
59.Management fee $ 764,415 60.
61.Transfer agent, accounting and custodian fees 283,584 62.
and expenses
63.Non-interested trustees' compensation 6,043 64.
65.Registration fees 6,136 66.
67.Audit 15,982 68.
69.Legal 1,014 70.
71.Miscellaneous 1,949 72.
73. 74.TOTAL EXPENSES 75. 1,079,123
76.77.NET INTEREST INCOME 78. 10,886,802
79.REALIZED AND UNREALIZED GAIN (LOSS) 81. 82.
80.Net realized gain (loss) on:
83. Investment securities (654,891) 84.
85. Futures contracts (1,161,827) (1,816,718)
86.Change in net unrealized appreciation (depreciation) 87. 88.
on:
89. Investment securities 24,198,355 90.
91. Futures contracts 27,168 24,225,523
92.93.NET GAIN (LOSS) 94. 22,408,805
95.96.NET INCREASE (DECREASE) IN NET ASSETS 97. $ 33,295,607
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
98.INCREASE (DECREASE) IN NET ASSETS
99.Operations $ 10,886,802 $ 23,627,156
Net interest income
100. Net realized gain (loss) (1,816,718) 4,739,999
101. Change in net unrealized appreciation 24,225,523 (53,200,362)
(depreciation)
102. 33,295,607 (24,833,207)
103.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
104.Distributions to shareholders (10,886,802) (23,627,156)
From net interest income
105. From net realized gain - (6,768,869)
106. 107.TOTAL DISTRIBUTIONS (10,886,802) (30,396,025)
108.Share transactions 66,225,418 98,297,570
Net proceeds from sales of shares
109. Reinvestment of distributions 8,348,043 23,452,964
110. Cost of shares redeemed (60,235,309) (174,126,840)
111.112. 14,338,152 (52,376,306)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
113. 36,746,957 (107,605,538)
114.TOTAL INCREASE (DECREASE) IN NET ASSETS
115.NET ASSETS 116. 117.
118. Beginning of period 350,266,516 457,872,054
119. End of period $ 387,013,473 $ 350,266,516
120.OTHER INFORMATION 122. 123.
121.Shares
124. Sold 6,001,291 8,731,920
125. Issued in reinvestment of distributions 753,624 2,111,339
126. Redeemed (5,440,079) (15,641,231)
127. Net increase (decrease) 1,314,836 (4,797,972)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
128. SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED
JUNE 30, 1995
129. (UNAUDITED) 1994 1993C 1992 1991 1990
130.SELECTED PER-SHARE DATA
131.Net asset value, beginning of period $ 10.520 $ 12.020 $ 11.550 $ 11.320 $ 10.840 $ 10.790
132.Income from Investment Operations .319 .657 .693 .718 .719 .726
Net interest income
133. Net realized and unrealized gain
(loss) .660 (1.310) .720 .230 .480 .050
134. Total from investment operations .979 (.653) 1.413 .948 1.199 .776
135.Less Distributions (.319) (.657) (.693) (.718) (.719) (.726)
From net interest income
136. From net realized gain on
investments - (.190) (.250) - - -
137. Total distributions (.319) (.847) (.943) (.718) (.719) (.726)
138.Net asset value, end of period $ 11.180 $ 10.520 $ 12.020 $ 11.550 $ 11.320 $ 10.840
139.TOTAL RETURN B 9.37% -5.55% 12.56% 8.66% 11.45% 7.50%
140.RATIOS AND SUPPLEMENTAL DATA
141.Net assets, end of period (000
omitted) $ 387,013 $ 350,267 $ 457,872 $ 384,861 $ 327,767 $ 241,616
142.Ratio of expenses to average net
assets .58% .57% .57% .61% .64% .66%
A
143.Ratio of net interest income to
average net assets 5.80% 5.88% 5.67% 6.31% 6.53% 6.82%
A
144.Portfolio turnover rate 28% 22% 41% 20% 11% 12%
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
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 past five years and life of fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Fidelity Ohio Municipal
Money Market Portfolio 1.73% 3.18% 17.69% 23.72%
Average Ohio Tax-Free
Money Market Fund 1.74% 3.17% 16.98% n/a
Consumer Price Index 1.87% 3.04% 17.40% 22.39%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years or since
the fund started on August 29, 1989. For example, if you invested $1,000 in
a fund that had a 5% return over the past year, the value of your
investment would be $1,050. To measure how the fund's performance stacked
up against its peers, you can compare it to the average Ohio tax-free money
market fund, which reflects the performance of 11 Ohio tax-free money
market funds with similar objectives tracked by IBC/Donoghue over the past
six months. Comparing the fund's performance to the consumer price index
(CPI) helps show how your investment did compared to inflation. (The
periods covered by the CPI and IBC/Donoghue numbers are those closest
available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity Ohio Municipal
Money Market Portfolio 3.18% 3.31% 3.71%
Average Ohio Tax-Free
Money Market Fund 3.17% 3.19% n/a
Consumer Price Index 3.04% 3.26% 3.52%
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
6/27/94 9/26/94 12/26/94 3/27/95 6/26/95
Fidelity Ohio Municipal 2.30% 2.82% 3.96% 3.53% 3.57%
Money Market Portfolio
Average Ohio Tax-Free 2.34% 2.84% 3.78% 3.51% 3.63%
Money Market Fund
Ohio Municipal Money 3.89% 4.76% 6.69% 5.94% 6.03%
Market Tax-equivalent
Portion of the fund's - 1.11% 0.74% 4.10% -
income subject to state
taxes
Row: 1, Col: 1, Value: 2.3
Row: 1, Col: 2, Value: 2.34
Row: 2, Col: 1, Value: 2.82
Row: 2, Col: 2, Value: 2.84
Row: 3, Col: 1, Value: 3.96
Row: 3, Col: 2, Value: 3.78
Row: 4, Col: 1, Value: 3.56
Row: 4, Col: 2, Value: 3.51
Row: 5, Col: 1, Value: 3.59
Row: 5, Col: 2, Value: 3.63
5% -
4% -
3% -
2% -
1% -
0%
Ohio Municipal
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 Ohio tax-free money market fund. Or you
can look at the fund's tax-equivalent yield, which is based on a combined
effective 1995 federal and state income tax rate of 40.80% and reflects
that a portion of the fund's income was subject to state taxes. A portion
of the fund's income may be subject to the alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. And there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jan Bradburn,
Portfolio Manager of Fidelity Ohio Tax-Free Money Market Portfolio
Q. JAN, CAN YOU TELL US HOW THE INVESTMENT CLIMATE HAS CHANGED DURING THE
PAST SIX MONTHS?
A. Sure. Conditions on the whole were calmer and more predictable than they
were during most of 1994. The Federal Reserve raised the federal funds rate
- the rate banks charge each other for overnight loans - one-half
percentage point in February. However, unlike most of the six other rate
increases that had come before, the February rate increase was widely
anticipated, and the market absorbed it without a hitch.
Q. HAVE RATES PEAKED, THEN?
A. It looks that way to me. The goal of Fed policy ever since it began
raising short-term interest rates in February 1994 has been to dampen the
economic growth rate and prevent an outbreak of inflation. Apparently, the
policy has worked. Early in 1995, we began seeing signs that the economy
was slowing down. Those signs were confirmed in April with the release of
the first-quarter growth rate, which came in at a surprisingly low 2.8%.
That marked a dramatic slowdown from the robust 5.1% growth rate during the
fourth quarter of 1994. The pattern of slower growth persisted throughout
the spring. By the end of the period, talk of further rate increases had
ceased, and speculation centered instead on when the Fed would see the need
to cut rates again.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. When the period began, the fund's average maturity was a neutral 55
days. I kept it within a range of between 50 and 60 days for much of the
spring. In May, when it became apparent that interest rates had stabilized,
I took the opportunity to make prudent purchases of longer-term securities,
extending the fund's average maturity to around 70 days. That's more
aggressive than the fund had been in quite some time, and reflected my view
that interest rates were likely to decline further before heading back up.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on June 30, 1995, was 3.55%, compared to
4.15% six months ago. On an after-tax basis, the fund's latest yield was
the equivalent of a 6.00% yield on a taxable investment for Ohio investors
in the 40.80% combined state and federal income tax bracket. Through June
30, 1995, the fund's six-month total return was 1.73%, compared to 1.74%
for the average Ohio tax-exempt money market fund, according to
IBC/Donoghue.
Q. WHAT'S THE OUTLOOK?
A. There's been a dramatic shift in market psychology in recent months.
Early this year, many economists were predicting that the Fed would go
right on raising interest rates through the summer. However, as the economy
slowed, the consensus view shifted 180 degrees. By the end of June, opinion
differed on when exactly the rate cut would come, but most market
participants were proceeding on the assumption that a rate cut was all but
inevitable. As it happened, the Fed did act on July 6, shortly after the
reporting period ended, lowering the federal funds rate one-quarter
percentage point. If the economy continues to show signs of weakness, a
further rate cut later this summer remains a possibility. However, that
doesn't mean that I'll be getting a lot more aggressive with the fund in
the months ahead. There's still enough uncertainty on the horizon that I
believe it makes sense to maintain some flexibility. I'll probably aim to
keep the fund's average maturity around 60 days.
FUND FACTS
GOAL: high current tax-free
income while maintaining a
stable $1.00 share price.
Invests in high-quality,
short-term municipal money
market securities whose interest
is free from federal income tax
and Ohio individual income tax
START DATE: August 29, 1989
SIZE: as of June 30,1995,
more than $280 million
MANAGER: Janice Bradburn,
since 1993; manager, Fidelity
Massachusetts Tax-Free
Money Market and Spartan
Massachusetts Municipal
Money Market Portfolio, since
1992; Fidelity New York
Tax-Free Money Market
Portfolio, since 1989; Spartan
New York Municipal Money
Market Portfolio, since 1990,
and Spartan Florida Money
Market Portfolio, since 1995;
joined Fidelity in 1989
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall. When
the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future tax
or other revenues and payable
from those specific sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face value
before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
6/30/95 12/31/94 6/30/94
0 - 30 60 61 61
31 - 90 10 16 17
91 - 180 13 15 15
181 - 397 17 8 7
WEIGHTED AVERAGE MATURITY
6/30/95 12/31/94 6/30/94
Ohio Municipal
Money Market 72 days 54 days 49 days
Average Ohio Tax-Free
Money Market Fund* 55 days 55 days 57 days
ASSET ALLOCATION
AS OF JUNE 30, 1995 AS OF DECEMBER 31, 1994
Row: 1, Col: 1, Value: 51.0
Row: 1, Col: 2, Value: 8.0
Row: 1, Col: 3, Value: 15.0
Row: 1, Col: 4, Value: 25.0
Row: 1, Col: 5, Value: 2.0
Row: 1, Col: 1, Value: 57.0
Row: 1, Col: 2, Value: 14.0
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 21.0
Row: 1, Col: 5, Value: 0.0
Variable rate
demand notes
(VRDNs) 51%
Commercial
paper 8%
Tender bonds 15%
Municipal
notes 25%
Other 1%
Variable rate
demand notes
(VRDNs) 57%
Commercial
paper 14%
Tender bonds 8%
Municipal
notes 21%
Other 0%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENTS JUNE 30, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - 99.6%
Bedford Heights Ind. Dev. Rev. (Olympic Steel) Series 1989,
4.25%, LOC Nat'l. City Bank Cleveland, VRDN (b) $ 1,550,000 $ 1,550,000
Brook Park BAN:
4.19% 7/6/95 840,000 840,027
4.25% 7/5/96 1,040,000 1,042,995
Brookville Ind. Dev. Rev. (Green Tokai Co. Ltd. Proj.)
Series 1988, 4.50%, LOC Tokai Bank,VRDN (b) 4,000,000 4,000,000
Butler County BAN:
Series B, 4.10% 4/19/96 1,200,000 1,203,726
Series C, 4.12% 3/15/96 900,000 902,592
4.73% 11/29/95 850,000 851,462
5.07% 3/15/96 2,250,000 2,257,121
4.74% 4/19/96 4,250,000 4,264,382
Centerville School Dist. BAN 4.40% 3/14/96 2,000,000 2,007,512
Chillicothe BAN 4.04% 7/5/96 1,000,000 1,001,340
Cleveland-Cuyahoga County Port Auth. Rev.
(Rock'n Roll Hall of Fame & Museum Proj.) 4.15%,
LOC Credit Local De France, VRDN 5,400,000 5,400,000
Cleveland Reg'l. Transit Auth. BAN 4.10% 4/10/96 4,000,000 4,010,516
Clinton County Arpt. Facs. Rev. (Wilmington Air Park Inc.)
Series 1991, 4.15%, LOC Wachovia Bank, VRDN 5,000,000 5,000,000
Columbus Elec. Sys. Rev. Series 1984, 3.65%,
LOC Dai-Ichi Kangyo Bank, VRDN 10,000,000 10,000,000
Columbus Sewerage Sys. Rev. Rfdg.
Series 1994, 3.90%, VRDN 5,000,000 5,000,000
Columbus Various Purp. Adj. Rate Unltd. Tax Rev. Series 1995-1,
3.80% SBPA Westdeutsche Landesbank, VRDN 7,500,000 7,500,000
Dayton Spl. Facs. Rev. Rfdg. (Emery Air Freight Corp. Proj.):
Series 1988 D, 4.70%, LOC Mellon Bank, VRDN (b) 3,600,000 3,600,000
Series 1993-E, 4.20%, LOC Mellon Bank, VRDN 6,000,000 6,000,000
Fairfax Ind. Dev. Rev. (Johnson & Hardin Co. Proj.)
Series 1990, 4.40%, LOC Central Co., VRDN (b) 3,000,000 3,000,000
Fairfield County Jail Impt. & San. Swr. Impt.
BAN 4.88% 10/26/95 3,085,000 3,089,542
Franklin County Ind. Dev. Rev.:
Rfdg. (Alco Standard Corp. Proj.) Series 1994, 4.40%,
LOC Nationsbank NC, VRDN 1,700,000 1,700,000
(Inland Products Inc.), 4.40%,
LOC PNC Bank, Ohio, VRDN (b) 1,000,000 1,000,000
Greene County BAN 4.32% 7/19/95 3,000,000 3,000,314
Hamilton County Health Care Facs. Rev.
(West Park Retirement Commty.) Series 1989, 3.90%,
LOC Fifth Third Bank, Cincinnati, VRDN 1,600,000 1,600,000
Hamilton County Ind. Dev. Rev. (Visual Management Group
Proj.) Series 1989, 4.40% LOC Nat'l. Bank of Detroit,
VRDN (b) 690,000 690,000
Hamilton County Swr. Participating VRDN, Series PA-15,
4.10% (Liquidity Facility Merrill Lynch & Co.) (c) 3,160,000 3,160,000
Holmes County Ind. Dev. Rev. (Poultry Processing, Inc.)
Series 1990, 4.30%, LOC Rabobank Nederland,
VRDN (b) 500,000 500,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Lake County BAN 4.75% 10/12/95 $ 2,890,000 $ 2,893,515
Lakewood BAN 4.75% 5/10/96 1,286,800 1,291,028
Mahoning County BAN 4.50% 7/14/95 4,660,000 4,661,118
Marion BAN 5% 4/25/96 3,200,000 3,209,989
Marion County Hosp. Rev. Bonds (Pooled Lease Prog.):
Series 1991, 4.25% tender 11/1/95,
LOC Bank One Columbus 3,500,000 3,500,000
Series 1992, 4.25% tender 10/1/95,
LOC Bank One Columbus 13,100,000 13,100,000
Medina County Ind. Dev. Rev. (North American Roto
Engravers, Inc. Proj.) Series 1988, 4.35%,
LOC Bank One Akron, VRDN (b) 830,000 830,000
Middletown Ind. Dev. Rev. (Pilot Chemical Proj.) 4.35%,
LOC Bank One Dayton, VRDN (b) 2,700,000 2,700,000
Montgomery County BAN:
5% 1/26/96 4,610,000 4,628,940
5% 4/26/96 1,595,000 1,603,673
Montgomery County Ctfs. of Indebtedness BAN 5%
4/26/96 5,615,000 5,645,588
Montgomery County Ind. Dev. Rev. (Modern Industrial
Plastics Inc.) Series 1988, 4.375%
LOC Industrial Bank of Japan, VRDN 2,000,000 2,000,000
Montgomery County - Miami Valley Hosp. Auth.
Series B, 3.50% tender 8/21/95, LOC Fuji Bank 4,750,000 4,750,000
Series C, 3.50% tender 8/17/95, LOC Fuji Bank 3,000,000 3,000,000
Muskingum County Ind. Dev. Rev. (Elder-Beerman Stores Inc.)
3.90%, LOC Mitsubishi Bank, VRDN 700,000 700,000
Ohio Air Dev. Auth. Air Quality Dev. Rev.
(JMG Funding), VRDN (b):
Series 1994-A, 4.05%, LOC Societe Generale 13,500,000 13,500,000
Series 1994-B, 4.25%, LOC Societe Generale 3,000,000 3,000,000
Ohio Air Quality Dev. Auth. Poll. Cont. Rev. Bonds
(Duquesne Light Co.) 3.70% tender 7/13/95,
LOC Toronto Dominion (b) 2,500,000 2,500,000
Ohio Cap. Facs. Bonds Series B, 4.20% 10/1/95 1,900,000 1,903,842
Ohio Hsg. Fin. Agcy. (Kenwood Congregate Retirement
Commty. Proj.) Series 1985, 3.90%,
LOC Morgan Guaranty Trust Co., VRDN 2,200,000 2,200,000
Ohio Hsg. Fin. Agcy. Participating VRDN, Series PA-93,
4.25% (Liquidity FacilityMerrill Lynch) (b)(c) 3,265,000 3,265,000
Ohio Hsg. Single Family Mtg. Rev. Bonds:
Series C-16, 4.60% tender 8/1/95
(Liquidity Facility Citibank)(c) 7,725,000 7,725,000
Series C-18, 4.50% tender 8/1/95
(Liquidity Facility Citibank)(b)(c) 4,810,000 4,809,583
Series C-19, 4.60% tender 8/1/95
(Liquidity Facility Citibank)(b)(c) 8,045,000 8,045,000
Ohio Ind. Dev. Rev., VRDN, (b):
(Aerolite Extrusion) Series 1991 IA, 4.30%,
LOC Nat'l. City Bank of Columbus 180,000 180,000
(Anomatic Corp.) Series 1989 I, 4.30%,
LOC Nat'l. City Bank of Columbus 240,000 240,000
(Arthur Corp.) Series 1989 IIIA, 4.30%,
LOC Nat'l. City Bank of Columbus 285,000 285,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Ind. Dev. Rev., VRDN, (b) - continued
(Burnham Corp. Proj.):
Series 1987 N, 4.30%, LOC Bank One Columbus $ 380,000 $ 380,000
Series 1988 II, 4.30%, LOC Central Trust Co. Cincinnati 355,000
355,000
(CCE Inc.) Series 1989I, 4.30%,
LOC Nat'l. City Bank Columbus 910,000 910,000
(Carpenter/Clapp & Haney Tool Co.) Series 1987 P,
4.30%, LOC Bank One Columbus 360,000 360,000
(Cole Tool & Die) Series 1988 H, 4.30%,
LOC Bank One Columbus 275,000 275,000
(Corpad Head Co.) Series 1988 II,4.30%,
LOC Central Trust Co. Cincinnati 555,000 555,000
(Die Matic Inc.) Series O, 4.30%,
LOC Bank One Columbus 335,000 335,000
(Dramex Int'l., Inc.):
Series 1988 I, 4.30%, LOC Bank One Columbus 1,000,000 1,000,000
Series 1988 II, 4.30%, LOC Central Trust Co. Cincinnati 200,000
200,000
(EF Realty) Series A, 4.30%,
LOC Nat'l. City Bank Cleveland 185,000 185,000
(EPIC Technologies Inc.) Series 1988 D, 4.30%,
LOC Bank One Columbus 280,000 280,000
(Economy Machine & Tool North Inc. Proj.) Series 1988 II,
4.30%, LOC Central Trust Co. 100,000 100,000
(Gary W. James) Series 1986 B, 4.30%,
LOC Nat'l City Bank Cleveland 290,000 290,000
(HGN Realty/Shalmet Ohio, Inc.) Series 1989 III A,
4.30%, LOC Nat'l. City Bank Columbus 1,780,000 1,780,000
(Hydro Tube Corp.) 4.30%,
LOC Nat'l. City Bank of Columbus 90,000 90,000
(K&S Realty) Series 1989 I, 4.30%,
LOC Nat'l. City Bank Columbus 300,000 300,000
(K&S Realty/Starr Fabricating, Inc.) Series 1989 III,
4.30%, LOC Nat'l. City Bank Columbus 255,000 255,000
(Kaufmans Bakery) Series K, 4.30%,
LOC Bank One Columbus 795,000 795,000
(Midwest Acoust-A-Fiber, Inc.) Series 1989 I, 4.30%,
LOC Nat'l. City Bank Columbus 535,000 535,000
(Morrow Macke Realty) Series 1988 C, 4.30%,
LOC Bank One Columbus 720,000 720,000
(Oak Printing) Series 1991 IA, 4.30%,
LOC Nat'l. City Bank Columbus 450,000 450,000
(Plasticos Co.) Series 1989 IIIA, 4.30%,
LOC Nat'l. City Bank of Columbus 695,000 695,000
(Prentke Romich) Series 1989 III, 4.30%,
LOC Nat'l. City Bank of Columbus 120,000 120,000
(SBD Properties Co.) Series 1986 L, 4.30%,
LOC Nat'l. City Bank Cleveland 205,000 205,000
(Samuel and Annie Sherman) Series 1989 III A, 4.30%,
LOC Nat'l City Bank of Columbus 300,000 300,000
(Sheffield Steel) Series 1988 B, 4.30%,
LOC Bank One Columbus 70,000 70,000
(Southwest Fin. Svcs.) Series 1986, 4.30%,
LOC Nat'l. City Bank Cleveland 80,000 80,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Ind. Dev. Rev., VRDN, (b) - continued
(Standby Screw & Machine) Series 1991, 4.30%,
LOC Nat'l City Bank of Columbus $ 745,000 $ 745,000
(Steubenville Area) Series 1988 II, 4.30%,
LOC Central Trust Co. Cincinnati 345,000 345,000
(Thomas K. Issacs) Series 1990 IB, 4.30%,
LOC Nat'l City Bank of Columbus 210,000 210,000
(United Steel Svc.) Series 1988 J, 4.30%,
LOC Bank One Columbus 715,000 715,000
(VRE Inc.) Series F, 4.30%, LOC Bank One Columbus 210,000 210,000
(Walker-Williams Lumber Co.) Series 1989 IIIA, 4.30%,
LOC Nat'l City Bank of Columbus 1,250,000 1,250,000
(Wooster Iron Metal Co.) Series 1988 R, 4.30%,
LOC Bank One LOC Bank One Columbus 525,000 525,000
Ohio Wtr. Dev. Auth. Participating VRDN, Series PA-1016B,
4.20%, (Liquidity Facility Merrill Lynch & Co.)(c) 3,080,000 3,080,000
Ohio Wtr. Dev. Auth. Poll Cont. Rev. Bonds:
Rfdg. (Cleveland Elec. Co. Proj.) Series 1988 A, 3.10%
tender 7/17/95 (FGIC Insured) 3,000,000 3,000,000
(Duquesne Light Co. Proj.):
4.20% tender 7/6/95, LOC Toronto Dominion (b) 3,500,000 3,500,000
3.70% tender 7/13/95, LOC Toronto Dominion (b) 1,500,000 1,500,000
Ross County Hosp. Facs. Rev. (Medical Center Hosp. Proj.)
Series 1995, 4.15% LOC Fifth Third Bank, VRDN 2,000,000 2,000,000
Scioto County Hosp. Facs. Rev. (VHA Capital Asset Fin. Prog.)
Series 1985 D, 3.95% (AMBAC Insured)
BPA First Chicago Corp., VRDN 500,000 500,000
Seven Hills BAN 5.50% 11/2/95 1,335,000 1,337,717
Sharonville Ind. Dev. Rev. (Xtec, Inc.) Series 1991, 4.35%,
LOC Fifth Third Bank, VRDN 1,600,000 1,600,000
Stark County Ind. Dev. Rev. (Liquid Control Corp. Proj.)
Series 1987, 4.35%, LOC Bank One Akron, VRDN (b) 370,000 370,000
Student Loan Funding Corp. Rev., VRDN:
Series 1983 A, 4.25%, LOC Fuji Bank 2,000,000 2,000,000
Series 1990-A1, 4.35%, LOC Nat'l. Westminster (b) 2,900,000 2,900,000
Series 1990-A2, 4.35%, LOC Nat'l. Westminster (b) 6,200,000 6,200,000
Series 1990-A3, 4.35%, LOC Nat'l. Westminster (b) 4,700,000 4,700,000
Summit County BAN:
5% 3/7/96 4,000,000 4,009,123
4.25% 6/6/96 4,000,000 4,008,944
Summit County Ind. Dev. Rev., VRDN (b):
(Keltec Inc. Proj.) Series 1987, 4.35%,
LOC Bank One Akron 380,000 380,000
(Kuchar Proj.) Series 1987, 4.35%,
LOC Bank One Akron 995,000 995,000
(Mannix Co. Proj.) Series 1987, 4.35%,
LOC Bank One Akron 1,750,000 1,750,000
Summit County Ind. Dev. Rev. Bonds (b):
(Kuchar Proj.) 4.55% tender 4/1/95,
LOC Bank One Akron 545,000 545,000
(SGS Tool Co. Proj.) 4.40% tender 4/1/95,
LOC Bank One Akron 2,800,000 2,800,000
(Spark Tec Int'l. Proj.) Series 1989, 4.50% tender 5/1/95,
LOC Bank One Akron 340,000 340,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Toledo City Services Spl. Assessment BAN 4.52% 12/1/95,
LOC Sumitomo Bank $ 1,800,000 $ 1,800,443
Toledo-Lucas County Convention & Visitors Bureau Rev.
Rfdg. (Toledo-Lucas County Convention Ctr. Proj.)
Series 1991, 4.35%, LOC Marine Midland Bank, VRDN 2,175,000 2,175,000
Toledo-Lucas County Port Auth. Rev. Bonds
(CSX Transportation Inc. Proj.) Series 1992, 3.10%
tender 7/17/95 LOC Nova Scotia 5,500,000 5,500,000
Trimble Township Wastewtr. Treatment Dist.
BAN 4.75% 10/2/95 1,000,000 1,000,000
Troy BAN 4.85% 11/21/95 3,500,000 3,503,277
Trumbull County Ind. Dev. Rev. (McDonald Steel Corp.)
Series 1990, 4.40%, LOC Pittsburgh Nat'l. Bank, VRDN (b) 2,200,000
2,200,000
Union County BAN 4.19% 6/28/96 1,000,000 1,002,765
University of Cincinnati BAN Series K-1, 5% 3/21/96 4,000,000 4,009,632
Van Wert County Ind. Dev. Auth. Rev. (Toledo Molding & Die Inc.)
Series 1994, 4.35% LOC Bank One Columbus VRDN (b) 3,665,000 3,665,000
Warren County Ind. Dev. Rev. (Johnson & Hardin Enterprise)
Series 1990 A, 4.40%, LOC Central Trust Co., VRDN (b) 3,000,000
3,000,000
Washington County Ind. Dev. Rev. (Forma Scientific, Inc. Proj.)
4.40%, LOC BankOne Akron, VRDN (b) 800,000 800,000
278,130,706
TEXAS - 0.4%
Gulf Coast Ind. Dev. Auth. Solid Waste Disp. Rev. (Citgo
Petroleum) 4.40%, LOC Wachovia Bank, VRDN (b) 1,000,000 1,000,000
TOTAL INVESTMENTS - 100% $ 279,130,706
Total Cost for Income Tax Purposes $ 279,128,718
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.
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At December 31, 1994, the fund had a capital loss carryforward of
approximately $22,200 of which $5,100, $6,100, and $11,000 will expire on
December 31, 1998, 2000, and 2002 respectively.
FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1995 (UNAUDITED)
145.ASSETS 146. 147.
148.Investment in securities, at value - See 149. $ 279,130,706
accompanying schedule
150.Cash 151. 3,031,233
152.Receivable for investments sold 153. 116,802
154.Interest receivable 155. 2,206,333
156. 157.TOTAL ASSETS 158. 284,485,074
159.LIABILITIES 160. 161.
162.Payable for investments purchased $ 4,044,335 163.
164.Distributions payable 25,372 165.
166.Accrued management fee 92,476 167.
168.Other payables and accrued expenses 76,298 169.
170. 171.TOTAL LIABILITIES 172. 4,238,481
173.174.NET ASSETS 175. $ 280,246,593
176.Net Assets consist of: 177. 178.
179.Paid in capital 180. $ 280,282,220
181.Accumulated net realized gain (loss) on 182. (37,616)
investments
183.Unrealized gain from accretion of market discount 184. 1,989
185.186.NET ASSETS, for 280,282,220 shares 187. $ 280,246,593
outstanding
188.189.NET ASSET VALUE, offering price and 190. $1.00
redemption price per share ($280,246,593 (divided by)
280,282,220 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
191.192.INTEREST INCOME 193. $ 5,796,855
194.EXPENSES 195. 196.
197.Management fee $ 578,708 198.
199.Transfer agent, accounting and custodian fees 274,172 200.
and expenses
201.Non-interested trustees' compensation 1,218 202.
203.Registration fees 8,000 204.
205.Audit 11,855 206.
207.Legal 2,401 208.
209.Miscellaneous 3,166 210.
211. 212.TOTAL EXPENSES 213. 879,520
214.215.NET INTEREST INCOME 216. 4,917,335
217.REALIZED AND UNREALIZED GAIN (LOSS) 219. (15,378)
218.Net realized gain (loss) on investment securities
220.Increase (decrease) in net unrealized gain from 221. 1,989
accretion of market discount
222.223.NET GAIN (LOSS) 224. (13,389)
225.226.NET INCREASE IN NET ASSETS RESULTING FROM 227. $ 4,903,946
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
228.INCREASE (DECREASE) IN NET ASSETS
229.Operations $ 4,917,335 $ 7,053,853
Net interest income
230. Net realized gain (loss) (15,378) (11,009)
231. Increase (decrease) in net unrealized gain from 1,989 -
accretion of market discount
232. 4,903,946 7,042,844
233.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
234.Distributions to shareholders from net interest (4,917,335) (7,053,853)
income
235.Share transactions at net asset value of $1.00 per 214,506,765 547,410,061
share
Proceeds from sales of shares
236. Reinvestment of distributions from net interest 4,694,987 6,760,085
income
237. Cost of shares redeemed (240,633,025) (514,839,223)
238.239. (21,431,273) 39,330,923
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES
RESULTING FROM SHARE TRANSACTIONS
240. (21,444,662) 39,319,914
241.TOTAL INCREASE (DECREASE) IN NET ASSETS
242.NET ASSETS 243. 244.
245. Beginning of period 301,691,255 262,371,341
246. End of period $ 280,246,593 $ 301,691,255
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
247. SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED
JUNE 30, 1995
248. (UNAUDITED) 1994 1993 1992 1991 1990
249.SELECTED PER-SHARE DATA
250.Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
251.Income from Investment Operations .017 .025 .021 .028 .044 .058
Net interest income
252.Less Distributions (.017) (.025) (.021) (.028) (.044) (.058)
From net interest income
253.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
254.TOTAL RETURN B 1.73% 2.50% 2.09% 2.81% 4.50% 5.90%
255.RATIOS AND SUPPLEMENTAL DATA
256.Net assets, end of period (000
omitted) $ 280,247 $ 301,691 $ 262,371 $ 270,248 $ 247,885 $ 213,658
257.Ratio of expenses to average net
assets .62% .57% .59% .58% .47% .23%
A
258.Ratio of expenses to average net
assets before .62% .57% .59% .59% .64% .69%
expense reductions A
259.Ratio of net interest income to
average net assets 3.46% 2.48% 2.07% 2.78% 4.41% 5.77%
A
</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.
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1995 (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
money market fund and the high yield fund:
SECURITY VALUATION.
HIGH YIELD FUND. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days of their purchase date 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 substantially all of its taxable income for
the fiscal year. The schedules of investments include information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned 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, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions and losses deferred due to wash sales, futures and
options, and excise tax regulations.
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 use futures and
options contracts to manage its exposure to the bond market and to
fluctuations in interest rates. Buying futures, writing puts, and buying
calls tend to increase the fund's exposure to the underlying instrument.
Selling futures, buying puts, and writing calls tend to decrease the fund's
exposure to the underlying instrument, or hedge other fund investments.
Futures contracts and written options involve, to varying degrees, risk of
loss in excess of the futures variation margin or the option value
reflected in the Statement of Assets and Liabilities. The underlying face
amount at value is shown in the schedule of investments under the caption
"Futures Contracts". This amount reflects each contract's exposure to the
underlying instrument at period end. Losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparties do not perform under the
contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options 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 $50,836,554 and $48,372,560, respectively.
The market value of futures contracts opened and closed during the period
amounted to $67,678,248 and $52,972,867 respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee that is calculated on the
basis of a group fee rate plus a fixed individual fund fee rate applied to
the average net assets of the fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net assets
of all the mutual funds advised by FMR. The rates ranged from.1200% to
.3700% for the period. In the event that these rates were lower than the
contractual rates in effect during the period, FMR voluntarily implemented
the above rates, as they resulted in the same or a lower management fee.
The annual individual fund fee rate is .25%. For the period, the management
fees were equivalent to .41% of average net assets for both the high yield
and money market funds.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plans (the Plans), and in accordance with Rule 12b-1 of the 1940 Act, FMR
or the funds' distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of each fund's shares. Subject to
the approval of each Board of Trustees, the Plans also authorize payments
to third parties that assist in the sale of each fund's shares or render
shareholder support services. FMR or FDC has informed the funds that
payments made to third parties under the Plans amounted to $1,537 and
$37,352 for the high yield and money market funds, respectively, for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian
and transfer and shareholder servicing agent for the funds. UMB 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. Effective January
1, 1995, the Board of Trustees approved a revised transfer agent contract
pursuant to which the funds pay account fees and asset-based fees that vary
according to account size and type of account. Under the prior transfer
agent contract, the funds paid fees based on the type, size, number of
accounts and the 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 $200,725 and $80,898 for
the high yield fund and $227,550 and $28,621 for the money market fund,
respectively.
Shareholders participating in the Fidelity Ultra Service Account(registered
trademark) Program (the Program) pay a $5.00 monthly fee to Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, for performing
services associated with the Program. For the period, fees paid to FBSI by
shareholders participating in the Program amounted to $4,265.
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER, MONEY MARKET FUND
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President -
MONEY MARKET FUND
Janice S. Bradburn, Vice President -
MONEY MARKET FUND
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
Michael D. Conway, Assistant Treasurer
- MONEY MARKET FUND
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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
UMB Bank, n.a.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
UMB 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
