FIDELITY
(registered trademark)
MICHIGAN
MUNICIPAL
FUNDS
ANNUAL REPORT
DECEMBER 31, 1995
CONTENTS
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PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
FIDELITY MICHIGAN MUNICIPAL INCOME FUND
(FORMERLY 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 19 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
(FORMERLY FIDELITY MICHIGAN 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 32 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 36 Notes to the financial statements.
REPORT OF INDEPENDENT
ACCOUNTANTS 39 The auditors' opinion.
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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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although the markets were fairly positive in 1995, no one can predict what
lies ahead for investors. The previous 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 MUNICIPAL INCOME FUND
(FORMERLY FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO)
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities 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 past ten years total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Michigan Municipal Income Fund 15.41% 49.13% 125.96%
Lehman Brothers Municipal Bond Index 17.45% 52.61% 142.03%
Average Michigan Municipal Bond Fund 16.89% 50.16% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or ten years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, 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 year. Both benchmarks include reinvested
dividends and capital gains, if any. Recent U.S. Consumer Price Index
information is not available from the U.S. Department of Labor. Therefore,
the CPI comparison has not been included in this report.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Michigan Municipal Income Fund 15.41% 8.32% 8.49%
Lehman Brothers Municipal Bond Index 17.45% 8.82% 9.24%
Average Michigan Municipal Bond Fund 16.89% 8.47% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
Michigan Tax FrLB Municipal Bon
12/31/85 10000.00 10000.00
01/31/86 10448.92 10589.00
02/28/86 10879.66 11008.96
03/31/86 10965.67 11012.48
04/30/86 10961.20 11020.85
05/31/86 10768.49 10841.43
06/30/86 10857.37 10944.86
07/31/86 10942.97 11011.30
08/31/86 11467.13 11504.27
09/30/86 11483.00 11533.15
10/31/86 11713.01 11732.32
11/30/86 11930.85 11964.74
12/31/86 11903.19 11931.72
01/31/87 12244.95 12290.98
02/28/87 12365.82 12351.45
03/31/87 12233.00 12220.53
04/30/87 11336.39 11607.30
05/31/87 11200.78 11549.73
06/30/87 11429.08 11888.83
07/31/87 11615.10 12010.10
08/31/87 11641.19 12037.12
09/30/87 11062.18 11593.31
10/31/87 11134.49 11634.35
11/30/87 11372.55 11938.12
12/31/87 11568.89 12111.35
01/31/88 12080.72 12542.75
02/29/88 12230.94 12675.33
03/31/88 11949.15 12527.66
04/30/88 11998.77 12622.87
05/31/88 12072.04 12586.39
06/30/88 12295.87 12770.53
07/31/88 12403.20 12853.79
08/31/88 12465.13 12865.11
09/30/88 12680.86 13097.96
10/31/88 12945.89 13329.14
11/30/88 12841.20 13207.05
12/31/88 13074.51 13342.16
01/31/89 13261.47 13618.07
02/28/89 13180.51 13462.69
03/31/89 13185.41 13430.51
04/30/89 13571.52 13749.35
05/31/89 13849.15 14034.93
06/30/89 14027.68 14225.52
07/31/89 14156.79 14419.13
08/31/89 14045.91 14277.97
09/30/89 14013.35 14235.42
10/31/89 14154.83 14409.52
11/30/89 14351.02 14661.69
12/31/89 14410.05 14781.62
01/31/90 14321.18 14711.70
02/28/90 14443.24 14843.37
03/31/90 14437.35 14847.83
04/30/90 14188.18 14740.33
05/31/90 14524.70 15062.11
06/30/90 14649.05 15194.50
07/31/90 14854.67 15418.62
08/31/90 14629.91 15194.74
09/30/90 14702.82 15203.41
10/31/90 14842.12 15479.20
11/30/90 15132.75 15790.48
12/31/90 15151.97 15859.17
01/31/91 15295.94 16072.00
02/28/91 15410.30 16211.83
03/31/91 15440.83 16217.66
04/30/91 15697.21 16434.17
05/31/91 15769.35 16580.27
06/30/91 15746.06 16563.85
07/31/91 15994.48 16765.60
08/31/91 16186.67 16986.41
09/30/91 16364.35 17207.57
10/31/91 16542.44 17362.44
11/30/91 16603.33 17410.88
12/31/91 16975.83 17784.51
01/31/92 17037.30 17825.06
02/29/92 17065.74 17830.77
03/31/92 17085.10 17837.36
04/30/92 17236.53 17996.12
05/31/92 17423.29 18207.93
06/30/92 17729.17 18513.46
07/31/92 18376.47 19068.49
08/31/92 18117.00 18882.58
09/30/92 18240.01 19006.07
10/31/92 17931.79 18819.24
11/30/92 18370.41 19156.29
12/31/92 18594.69 19351.88
01/31/93 18867.23 19576.94
02/28/93 19625.60 20285.04
03/31/93 19401.60 20070.62
04/30/93 19608.72 20273.14
05/31/93 19739.39 20387.07
06/30/93 20078.32 20727.33
07/31/93 20063.51 20754.49
08/31/93 20539.07 21186.59
09/30/93 20798.92 21427.91
10/31/93 20830.55 21469.26
11/30/93 20694.65 21280.12
12/31/93 21166.55 21729.34
01/31/94 21454.03 21977.49
02/28/94 20834.49 21408.28
03/31/94 19892.67 20536.53
04/30/94 19991.48 20710.68
05/31/94 20093.80 20890.24
06/30/94 20034.79 20762.60
07/31/94 20387.86 21143.18
08/31/94 20438.36 21216.34
09/30/94 20162.28 20904.88
10/31/94 19744.13 20533.61
11/30/94 19122.57 20162.36
12/31/94 19578.04 20606.14
01/31/95 20167.01 21195.06
02/28/95 20748.26 21811.41
03/31/95 20575.63 22062.03
04/30/95 20615.48 22088.06
05/31/95 21280.14 22792.89
06/30/95 21033.05 22593.45
07/31/95 21167.38 22807.64
08/31/95 21453.59 23096.84
09/30/95 21619.60 23243.04
10/31/95 21942.98 23580.99
11/30/95 22362.89 23972.20
12/31/95 22595.63 24202.58
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity Michigan
Municipal Income Fund on December 31, 1985. As the chart shows, by December
31, 1995, the value of your investment would have grown to $22,596 - a
125.96% 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 $24,203 - a
142.03% 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
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YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
Dividend return 6.15% 5.40% 6.28% 6.72% 7.26%
Capital appreciation return 9.26% -12.90% 7.55% 2.82% 4.78%
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Total return 15.41% -7.50% 13.83% 9.54% 12.04%
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 DECEMBER 31, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.96(cents) 29.01(cents) 61.15(cents)
Annualized dividend rate 5.07% 5.12% 5.49%
30-day annualized yield 4.79% - -
30-day annualized tax-equivalent yield 7.83% - -
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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 $11.51 over
the past month, $11.24 over the past six months and $11.13 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, but
does not reflect payment of the alternative minimum tax if applicable.
FIDELITY MICHIGAN MUNICIPAL INCOME FUND
(FORMERLY FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In sharp contrast to much of
1994, the municipal bond
market posted strong returns for
the 12 months ended December
31, 1995. For the period, the
Lehman Brothers Municipal
Bond Index - a broad measure
of the tax-free market - had a
total return of 17.45%. By
comparison, the Lehman
Brothers Aggregate Bond Index
- - a proxy for investment-grade
taxable bonds - had a total
return of 18.47%. Tax-free
bonds kicked off 1995 by
surging ahead of their taxable
counterparts in the first quarter
on signs of a slowing economy
and tamer inflation expectations.
By spring, however, the muni
bond market began to
underperform U.S. Treasury
securities when Congress
began consideration of tax-code
changes, some of which
threatened the tax-exempt
status of municipal securities.
This threat of tax reform
dampened enthusiasm in the
municipal bond market, stalling
the rally and helping shorter
maturity bonds to outperform
their longer counterparts
throughout the spring and
summer months. By the fourth
quarter, historically attractive
valuations relative to Treasuries,
continued low issuance, and
stronger demand from insurance
companies and retail buyers
helped longer-term tax-free
bonds rebound.
An interview with Maureen Newman, Portfolio Manager of Fidelity Michigan
Municipal Income Fund
Q. MAUREEN, HOW DID THE FUND PERFORM?
A. For the 12-month period ended December 31, 1995, the fund had a total
return of 15.41%. For the same period, the average Michigan municipal fund,
as tracked by Lipper Analytical Services, returned 16.89%.
Q. WHY DID THE FUND UNDERPERFORM THE AVERAGE?
A. Most of the fund's underperformance can be attributed to problems with
one Detroit hospital system. Michigan Healthcare - which represented
approximately 1.6% of the fund's total investments as of December 31, 1995
- - filed for bankruptcy in the spring. 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 current value.
Q. HOW DID THE FUND'S OTHER HEALTH CARE HOLDINGS FARE?
A. They were up, but not as much as other sectors. Health care bonds
generally lag other types of bonds when the maret rallies. Additionally,
proposed Medicare and Medicaid cutbacks caused some concern since many
Michigan hospitals are highly dependent on these government-sponsored
reimbursements. Given the uncertain climate, I sold some health care bonds
that I thought were more vulnerable to heightened competition and reduced
government payments. However, I kept some hospitals which I believe have
good management and good market positions.
Q. WHAT STRATEGIES WORKED WELL?
A. The demand for lower-quality, higher-yielding securities increased
throughout the year. The economic recovery helped to make many investors
less wary of lower-quality bonds. As municipal bond yields declined, many
investors sought out lower-quality securities as a way to boost their level
of income. The increase in demand caused by these factors caused credit
spreads to tighten, and the yield differential between lower- and
higher-quality securities narrowed, or diminished. I took advantage of this
opportunity by significantly upgrading the overall credit quality of the
fund by reducing the fund's exposure to health care bonds, many of which
carried lower credit quality ratings. I reinvested some of that money in
general obligation bonds and essential service revenue bonds. Because the
yield spread was tight, I wasn't forced to give up much extra income to
make the fund more focused on higher-quality issues.
Q. WHAT OTHER CHANGES HAVE YOU MADE?
A. During the year the yield curve flattened, meaning that yields on
longer-maturity bonds fell more than yields on shorter-maturity bonds. I
sold some longer-maturity bonds that had performed well during the
flattening process and bought intermediate, non-callable bonds. Since the
yield curve was flat, I didn't have to give up much yield to move into
intermediate maturities.
Q. WHAT WAS THE ATTRACTION TO SCHOOL DISTRICT BONDS, WHICH FALL UNDER THE
CATEGORY OF LOCAL GENERAL OBLIGATION (GO) BONDS?
A. State-wide school aid reform reduced local property taxes earmarked for
school operations. Because of these reduced tax rates, local taxpayers
appear more willing to approve property tax increases to fund school
construction projects. As school districts issued bonds recently to fund
those projects, I purchased these securities - many of which were issued
with non-callable intermediate maturities. The school district bonds I
bought are guaranteed by the State School Bond Loan Fund, which requires
the state to appropriate money to meet debt service payments if the school
district is unable to do so. In addition to this guarantee, most of the
school district bonds are insured by a municipal bond insurance company.
School district bonds offered attractive yields relative to other bonds of
comparable credit quality and provide good value to the fund.
Q. THERE WAS A CHANGE TO THE FUND'S INVESTMENT POLICY RECENTLY ...
A. Yes, the fund is now permitted to buy any amount of municipal securities
subject to the alternative minimum tax (AMT). The removal of the AMT
restriction allows me more latitude in selecting specific securities.
Instead of being constrained to specific sectors, I will be able to focus
on all marketplace opportunities - including areas dominated by AMT
securities, such as student loans and airports.
Q. WHAT'S YOUR OUTLOOK?
A. I expect tax-reform discussions may cause further volatility in the
market as we head into the presidential election year. I also expect the
supply of municipal bonds to continue to be light. The budget situation in
Washington is still a question mark and municipal bond yields are at
historically low levels. In light of that, it's difficult to determine what
type of returns the municipal bond market will enjoy in 1996.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
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 December 31,
1995, more than $491 million
MANAGER: Maureen Newman,
since 1994; manager, Spartan
Florida Municipal Income,
Spartan New Jersey Municipal
Income, since October 1995;
Spartan Connecticut Municipal
Income, since 1994, Spartan
Aggressive Municipal; and
Spartan Arizona Municipal
Income Funds from 1994 to
1995; joined Fidelity in 1985
(checkmark)
MAUREEN NEWMAN ON THE
MICHIGAN ECONOMY:
"Michigan's economy
experienced a strong
economic recovery so far in
this decade, and is still quite
strong. Job growth has been
concentrated in the service
sector, rather than the
manufacturing sector, which
has helped to make the state
less sensitive to economic
cycles. Even within the
manufacturing sector, some
of the job growth has been in
research and development,
rather than production. While
auto production is expected to
be lower in 1996 than 1995,
the state should be able to
withstand some slowdown.
"The State's fiscal situation is
very strong right now with
more than
$1 billion in the Rainy Day
Fund. Higher tax collections
at the state level, due to the
strength of the economy and
school aid reform, have
resulted in total revenues
running over constitutional
limits. As a result, the state is
refunding more than $100
million to taxpayers in early
1996, which could serve as a
further boon to the economy."
(solid bullet) The portfolio was
underweighted in state
general obligation bonds, but
overweighted in local general
obligation bonds, relative to
the overall Michigan bond
market as represented by the
Lehman Brothers Michigan
index. This reflected the
manager's belief that local
school district bonds, which
are categorized as local
general obligation bonds,
offered good value.
FIDELITY MICHIGAN MUNICIPAL INCOME FUND
(FORMERLY FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO)
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF DECEMBER 31, 1995
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
Health Care 17.3 23.3
General Obligation 17.0 13.3
Electric Revenue 14.2 11.7
Water & Sewer 9.4 9.8
Escrowed/Prerefunded 9.4 8.6
AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1995
6 MONTHS AGO
Years 16.2 16.5
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 DECEMBER 31, 1995
6 MONTHS AGO
Years 8.0 8.0
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF DECEMBER 31, 1995 AS OF JUNE 30, 1995
Aaa 46.7%
Aa, A 30.9%
Baa 14.1%
Ba, B 0.0%
Caa 1.1%
Non-rated 3.5%
Short-term investments 3.7%
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%
Row: 1, Col: 1, Value: 46.7
Row: 1, Col: 2, Value: 30.9
Row: 1, Col: 3, Value: 14.1
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 2.1
Row: 1, Col: 6, Value: 3.5
Row: 1, Col: 7, Value: 3.7
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
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 1.2% AND 5.2% OF THE FUND'S
INVESTMENTS AT DECEMBER 31, 1995, AND JUNE 30, 1995, RESPECTIVELY.
FIDELITY MICHIGAN MUNICIPAL INCOME FUND
(FORMERLY FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO)
INVESTMENTS DECEMBER 31, 1995
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 96.3%
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED)(C) AMOUNT (NOTE 1)
MICHIGAN - 91.2%
Brighton Area School Dist. Rfdg.
(Livingston County)
Series II, 0% 5/1/15 (AMBAC Insured) Aaa $ 12,950,000 $ 4,483,938
Brighton, Livingston County Wtr.
Supply Sys. Ltd. Tax:
5.25% 11/1/08 A 200,000 200,250
5.25% 11/1/09 A 200,000 198,500
Clinton Township Bldg. Auth.
4.75% 11/1/10
(AMBAC Insured) Aaa 2,810,000 2,641,400
Clintondale Commty. Schools 5.50%
5/1/15 Aa 2,205,000 2,199,488
Comstock Pub. Schools (Cap. Appreciation) 0%
5/1/05 (CGIC Insured) Aaa 1,300,000 822,250
Dearborn School Dist. Unltd. Tax 5% 5/1/10
(MBIA Insured) Aaa 1,415,000 1,379,625
Dearborn Swr. Disp. Sys. Rev.:
Series A, 5.10% 4/1/12 (MBIA Insured) Aaa 1,625,000 1,598,594
6.50% 4/1/03 (MBIA Insured) Aaa 1,030,000 1,143,300
6.50% 4/1/04 (MBIA Insured) Aaa 1,095,000 1,220,925
Detroit City School Dist. Rfdg. 5.125% 5/1/07 Aa 1,000,000 1,007,500
Detroit Convention Facs. Rev. Rfdg.
(Cobo Hall Expansion Proj.):
5.25% 9/30/07 A 6,500,000 6,435,000
5.25% 9/30/12 A 8,500,000 7,990,000
Detroit Econ. Dev. Corp. Ltd. Oblig. Rev.
(Michigan Health Care Corp. Proj.)
9.10% 12/1/09 (e) - 3,790,000 1,440,200
Detroit Gen. Oblig. Rfdg. (Distributable State Aid):
5.20% 5/1/07 (AMBAC Insured) Aaa 4,000,000 4,025,000
5.25% 5/1/08 (AMBAC Insured) Aaa 7,000,000 7,043,750
5.25% 5/1/09 (AMBAC Insured) Aaa 4,500,000 4,488,750
Detroit Hosp. Fin. Auth. Facs. Rev. (Michigan
Healthcare Corp. Proj.) 10% 12/1/20 (e) Caa 14,590,000 5,544,200
Detroit Swr. Disp. Rev.:
6% 7/1/05 (MBIA Insured) Aaa 1,885,000 2,075,856
5.70% 7/1/23 (FGIC Insured) Aaa 18,000,000 18,292,500
Detroit Wtr. Supply Sys. Rev. Rfdg.:
6.25% 7/1/12 (FGIC Insured) Aaa 1,000,000 1,082,500
6.50% 7/1/15 (FGIC Insured) Aaa 16,000,000 18,440,000
Ferndale School Dist. Rfdg.:
6% 5/1/07 (FGIC Insured) Aaa 1,250,000 1,357,813
6% 5/1/08 (FGIC Insured) Aaa 1,300,000 1,407,250
6% 5/1/09 (FGIC Insured) Aaa 1,300,000 1,400,750
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.) :
Rfdg. 9.50% 7/1/06 Baa 5,670,000 5,850,193
6.50% 7/1/20 Baa 5,570,000 5,611,775
Forest Hills Pub. Schools Gen. Oblig. Unltd. Tax
7.375% 5/1/15
(Pre-Refunded to 5/1/00 @ 101)(d) Aa 2,000,000 2,260,000
Fraser Bldg. Auth. Ltd. Tax 5% 11/1/18 Baa1 1,000,000 892,500
Grand Haven Elec. Rev. Rfdg. 5.25% 7/1/16
(MBIA Insured) Aaa 6,855,000 6,777,881
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Grand Valley Univ. Rev.:
Rfdg. 5.15% 101/09 (AMBAC Insured) Aaa $ 2,750,000 $ 2,722,500
7.875% 10/1/08 A 1,000,000 1,115,000
Greater Detroit Resources Recovery Auth. Rev.:
Series C, 9.25% 12/13/08 BBB- 6,490,000 6,700,925
Series G, 9.25% 12/13/08 BBB- 3,000,000 3,097,500
Series H, 9.25% 12/13/08 BBB- 3,550,000 3,665,375
Gull Lake Commty. School Dist.
(Cap. Appreciation) 0% 5/1/13,
(FGIC Insured) Aaa 3,000,000 1,181,250
Harbor Springs Pub. School Bldg. Unltd. Tax:
0% 5/1/11 (AMBAC Insured) Aaa 1,280,000 550,400
0% 5/1/12 (AMBAC Insured) Aaa 1,390,000 571,638
0% 5/1/13 (AMBAC Insured) Aaa 1,455,000 561,994
Holly Area School Dist.:
6.625% 5/1/03 (FGIC Insured) Aaa 1,225,000 1,378,125
6.625% 5/1/06 (FGIC Insured) Aaa 1,150,000 1,305,250
Howell Pub. Schools Unltd. Tax Rfdg.
(Cap. Appreciation):
0% 5/1/10 (AMBAC Insured) Aaa 1,130,000 519,800
0% 5/1/11 (AMBAC Insured) Aaa 1,800,000 778,500
0% 5/1/12 (AMBAC Insured) Aaa 1,255,000 514,550
0% 5/1/13 (AMBAC Insured) Aaa 1,000,000 387,500
0% 5/1/14 (AMBAC Insured) Aaa 1,000,000 366,250
0% 5/1/15 (AMBAC Insured) Aaa 1,600,000 550,000
Huron Valley School Dist. Gen. Oblig. Unltd. Tax
Rfdg. (Cap. Appreciation) 0% 5/1/11
(FGIC Insured) Aaa 5,830,000 2,536,050
7.10% 5/1/08
(Pre-Refunded to 5/1/01 @ 102)(d) A1 2,500,000 2,862,500
Imlay City Commty. School Dist. Rfdg.
(Cap. Appreciation) 0% 5/1/06
(FGIC Insured) Aaa 1,375,000 825,000
Kalamazoo City School Dist. Unltd. Tax
(School Bldg. & Site) 0% 5/1/07 Aa 1,195,000 672,188
Kent County Refuse Disp. Sys. Ltd. Tax Rfdg.
8.40% 11/1/10 A1 2,000,000 2,157,500
Kent Hosp. Fin. Auth. Rev. Rfdg. (Butterworth
Hospital) Series A, 7.25% 1/15/13 A1 3,685,000 4,495,700
Lansing Bldg. Auth. Rev. (Deferred Interest):
0% 6/1/10 (AMBAC Insured) Aaa 2,500,000 1,140,625
0% 6/1/12 (AMBAC Insured) Aaa 3,000,000 1,211,250
Lowell Area Schools Unltd. Tax
(Cap. Appreciation) 0% 5/1/15
(FGIC Insured)
(Pre-Refunded to 5/1/05 @ 49)(d) Aaa 11,375,000 3,554,688
Marquette City Hosp. Fin. Auth. Rev. Rfdg.
(Marquette Gen. Hosp.) Series C:
7.50% 4/1/07 A 1,000,000 1,085,000
7.50% 4/1/19 A 1,190,000 1,280,738
Mason Pub. Schools Dist. 6.50% 5/1/05
(FGIC Insured) Aaa 1,200,000 1,348,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Bldg. Auth. Rev.:
Rfdg. Series I:
6% 10/1/00 A1 $ 1,375,000 $ 1,478,125
6.25% 10/1/20 A1 1,500,000 1,573,125
(Cap. Appreciation) (Chippewa Correctional)
Series I, 0% 10/1/00
(Escrowed to Maturity)(d) Aaa 2,275,000 1,859,813
(Cap. Appreciation) (Detroit Regional) Series I (d):
0% 10/1/99 (Escrowed to Maturity) Aaa 2,000,000 1,712,500
0% 10/1/01 (Escrowed to Maturity) Aaa 1,000,000 780,000
0% 10/1/02 (Escrowed to Maturity) Aaa 2,000,000 1,475,000
0% 10/1/04 (Escrowed to Maturity) A 8,120,000 5,420,100
Series II, 6.75% 10/1/11 A1 1,000,000 1,100,000
Michigan Comprehensive Trans. Rev. Rfdg.:
Series II, 7.625% 5/1/11 A1 2,145,000 2,330,006
Series B, 5.75% 5/15/04 A1 1,275,000 1,365,844
Michigan Gen. Oblig.:
(College Savings) 0% 8/1/01 Aa 1,045,000 811,181
(Envir. Protection Prog.):
5.50% 11/1/05 Aa 5,000,000 5,362,500
6.25% 11/1/08 Aa 3,000,000 3,348,750
Michigan Hosp. Fin. Auth. Rev.:
Rfdg.:
(Bay Med. Ctr.) Series A, 8.25%
7/1/12 Baa1 3,000,000 3,315,000
(Detroit Medical Center Sys.):
Series A:
6.50% 8/15/18 A 4,000,000 4,150,000
6.375% 8/15/09 A 1,000,000 1,048,750
Series B, 5.50% 8/15/23 A 5,000,000 4,743,750
(McLaren Obligated Group)
Series A, 5.375% 10/15/13 A1 4,280,000 4,167,650
(Pontiac Osteopathic Hosp.) Series A:
6% 2/1/14 Baa1 3,600,000 3,402,000
6% 2/1/24 Baa1 3,500,000 3,224,375
(Port Huron Hosp.) Series A:
7.50% 7/1/05
(Pre-Refunded to 7/1/96 @ 102)(d) Baa 1,000,000 1,038,230
7.625% 7/1/15
(Pre-Refunded to 7/1/96 @ 102)(d) Baa 3,780,000 3,926,777
(Sinai Hosp. of Detroit)
7% 1/1/03 (FGIC Insured)
(Pre-Refunded to 1/1/97 @ 102)(d) Aaa 1,000,000 1,050,620
(Sisters of Mercy Health Corp.)
5.375% 8/15/14 (MBIA Insured) Aaa 9,950,000 10,111,688
(Crittenton Hosp.) 5.25% 3/1/14 A1 4,620,000 4,394,775
(Daughters of Charity Health Sys.)
5.50% 11/1/05 Aa 1,745,000 1,806,075
(Daughters of Charity) (Providence Hosp.)
7% 11/1/21 Aa 1,000,000 1,087,500
(Presbyterian Villages):
6.40% 1/1/15 - 1,000,000 985,000
6.50% 1/1/25 - 1,225,000 1,205,094
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Hsg. Dev. Auth. Rental Hsg. Rev.
Series B:
5.80% 4/1/19 A+ $ 4,650,000 $ 4,661,625
7.55% 4/1/23 A+ 4,750,000 5,076,563
Michigan Hsg. Dev. Auth. Single Family Mtg. Rev.:
Series A:
6.80% 12/1/16 AA+ 8,000,000 8,610,000
7.70% 12/1/16 AA+ 2,490,000 2,626,950
Series C:
5.95% 12/1/14 AA+ 2,500,000 2,578,125
6% 12/1/16 AA+ 2,500,000 2,578,125
Michigan Muni. Bond Auth. Rev. Rfdg.
(Local Gov't. Loan Prog.):
Rfdg. Series A:
0% 12/1/04 (FGIC Insured) Aaa 2,000,000 1,295,000
0% 12/1/05 (FGIC Insured) Aaa 1,855,000 1,131,550
0% 12/1/06 (FGIC Insured) Aaa 5,000,000 2,906,250
0% 12/1/07 (FGIC Insured) Aaa 1,000,000 543,750
4.75% 12/1/09 (FGIC Insured) Aaa 6,000,000 5,655,000
Group 9, 8.75% 11/1/17 A 500,000 536,875
Group 19, 7.50% 11/1/09 (AMBAC Insured) Aaa 1,000,000 1,093,750
Series G, 6.20% 5/1/04 (AMBAC Insured) Aaa 1,000,000 1,106,250
(Wayne County Proj.) Series A,
7% 12/1/09 (FGIC Insured)
(Pre-Refunded to 6/1/00 @ 102)(d) Aaa 5,750,000 6,490,313
Michigan Pub. Pwr. Agcy. Rev. Rfdg. (Belle River Proj.):
Series A, 5.25% 1/1/18 A1 7,500,000 7,275,000
Series B, 5% 1/1/19 A1 15,500,000 14,511,875
Michigan South Central Pwr. Agcy. Pwr.
Supply Sys. Rev. Rfdg.:
5.90% 11/1/06 (MBIA Insured) Aaa 3,000,000 3,262,500
5% 11/1/09 (AMBAC Insured) Aaa 1,675,000 1,628,938
6.75% 11/1/10 Baa1 2,000,000 2,135,000
Michigan Strategic Fund Ltd. Oblig. Rev.:
Rfdg.:
(Detroit Edison Co. Proj.):
Series AA, 6.40% 9/1/25 (MBIA Insured) Aaa 5,000,000 5,418,750
Series BB:
7% 7/15/08 (MBIA Insured) Aaa 2,000,000 2,367,500
6.50% 2/15/16 (FGIC Insured) Aaa 1,250,000 1,339,063
7% 5/1/21 (AMBAC Insured) Aaa 8,500,000 10,571,875
(Envir. Research Institute):
6.25% 8/15/06 A- 2,660,000 2,832,900
8.125% 10/1/14 - 8,805,000 10,026,694
(Ford Co. Proj.) Series A, 7.10%
2/1/06 A1 4,000,000 4,650,000
(General Motors Corp.) 6.20%
9/1/20 A3 1,500,000 1,560,000
(Envir. Research Institute) 6.375% 8/15/12 A- 2,000,000 2,117,500
(Gladwin Pines Nursing Home Proj.)
(Midland Hosp. Ctr.) 8.75% 1/1/08 A- 1,640,000 1,773,250
(Michigan Health Care Corp. Proj.)
9.10% 12/1/14 (e) - 1,830,000 695,400
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Trunk Line Series A:
5.75% 10/1/04 A1 $ 2,245,000 $ 2,393,731
5.80% 11/15/24 (FGIC Insured) Aaa 13,120,000 13,398,800
Mona Shores School Dist. School Bldg. & Site Rev.
6.75% 5/1/10 (FGIC Insured) Aaa 2,220,000 2,569,650
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 1,235,000
Monroe County Poll. Cont. Rev. (Detroit Edison
Proj.) Series CC, 7.50% 12/1/19
(AMBAC Insured) Aaa 5,000,000 5,593,750
Okemos Pub. School Dist. Rfdg.:
0% 5/1/12 (MBIA Insured) Aaa 2,500,000 1,043,750
0% 5/1/13 (MBIA Insured) Aaa 1,700,000 667,250
Pontiac Hosp. Fin. Auth. Rev. (North Oakland
Med. Ctr. Obligated Group) 6%
8/1/18 Baa 2,700,000 2,443,500
Pontiac Stadium Bldg. Auth. Rev. 6.60%
3/1/03 Baa 1,145,000 1,169,263
Port Huron Area School Dist. Unltd. Tax
(Cap. Appreciation) (School Bldg. & Site)
0% 5/1/08 A1 1,975,000 1,036,875
Rochester Community School Dist. Unltd.
Tax Rfdg. 5.625% 5/1/11 (FGIC Insured) Aaa 1,000,000 1,045,000
Romulus Commty. Schools (Cap. Appreciation)
Series I, 0% 5/1/06 (FSA Insured) Aaa 3,610,000 2,166,000
Romulus Township School Dist. (Cap. Appreciation)
0% 5/1/20 (FGIC Insured) Aaa 1,390,000 357,925
Royal Oak City School Dist. Unltd. Tax 0%
5/1/05 (AMBAC Insured) Aaa 3,000,000 1,908,750
Royal Oak Hosp. Fin. Auth. Hosp. Rev.
(William Beaumont Hosp.)
Series C, 7.375% 1/1/20
(Pre-Refunded to 1/1/99 @ 102)(d) Aaa 4,070,000 4,512,613
Saline Area Schools 6% 5/1/08
(FGIC Insured) Aaa 2,540,000 2,781,300
St. Clair Shores Econ. Dev. Corp. Ltd. Oblig. Rev.
(Bon Secours Health Sys.) Series B, 7.50%
9/1/15 A 2,000,000 2,195,000
St. John's Pub. Schools 6.50% 5/1/07
(FGIC Insured) Aaa 1,400,000 1,587,250
Tawas City Hosp. Fin. Auth. Hosp. Rev.
(St. Joseph Hosp. Proj.) Series A, 8.50%
3/15/12 - 2,400,000 2,501,616
Troy City School Dist.
7% 5/1/05 (AMBAC Insured)
(Pre-Refunded to 5/1/00 @ 102)(d) Aaa 2,100,000 2,365,125
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Univ. of Michigan Hosp. Rev.
Series 1990, 7% 12/1/21
(Pre-Refunded to 12/1/00 @ 102)(d) Aa $ 1,000,000 $ 1,137,500
Univ. of Michigan Rev. Rfdg. (Parking Sys.)
Series A, 5% 6/1/15 Aa1 2,125,000 2,098,438
Vicksburg Commty. Schools
7% 5/1/07 (MBIA Insured)
(Pre-Refunded to 5/1/01 @ 102)(d) Aaa 2,250,000 2,573,438
Wayne Charter County Arpt. Rev.
(Subordinated Lien Detroit Metropolitan Arpt.):
Rfdg. Series C, 5.25% 12/1/13
(MBIA Insured) Aaa 2,000,000 1,960,000
Series B, 6.875% 12/1/11
(MBIA Insured) (b) Aaa 1,500,000 1,635,000
Wayne County Bldg. Auth. Ltd. Tax
Series A, 8% 3/1/17
(Pre-Refunded to 3/1/02 @ 102)(d) A 2,250,000 2,702,813
West Ottawa Pub. School Dist. Unltd. Tax Gen.
Oblig. (Cap. Appreciation) 0% 5/1/06
(MBIA Insured) Aaa 4,110,000 2,440,313
Western Michigan Univ. Rev.:
Rfdg. Series A, 5.5% 7/15/16
(FGIC Insured) Aaa 1,000,000 1,010,000
Series A, 5% 7/15/21 (FGIC Insured) Aaa 3,600,000 3,402,000
1.67% 7/15/17 (FGIC Insured) (f) Aaa 2,500,000 2,356,250
Western Township Util. Auth. Swr. Disp. Sys. Ltd.
Tax 8.20% 1/1/18 BBB+ 2,500,000 2,775,000
Williamston Commty. School Dist. 6.25% 5/1/09
(MBIA Insured) Aaa 1,500,000 1,651,875
Williamston Gen. Oblig. Rfdg. 6.90% 11/1/17
(AMBAC Insured) Aaa 1,000,000 1,115,000
445,608,358
PUERTO RICO - 4.0%
Puerto Rico Commonwealth Hsg. Banking & Fin.
Agcy. Single Family Rfdg.:
5.125% 12/1/04 Baa 2,450,000 2,434,688
5.125% 12/1/05 Baa 3,890,000 3,860,815
Puerto Rico Commonwealth Hwy. & Trans. Auth.
Rev. Series W, 5.50% 7/1/13 Baa1 3,000,000 3,003,750
Puerto Rico Commonwealth Urban Renewal & Hsg.
Corp. Rfdg. 7.875% 10/1/04 Baa1 2,800,000 3,139,500
Puerto Rico Elec. Pwr. Auth. Pwr. Rev.:
Rfdg. Series S, 6.125% 7/1/09 Baa1 2,000,000 2,195,000
Rfdg. Series W,
6.50% 7/1/05 (MBIA Insured) Aaa 1,570,000 1,779,988
7% 7/1/07(MBIA Insured) Aaa 3,000,000 3,540,000
19,953,741
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
GUAM - 1.1%
Guam Arpt. Auth. Rev. Series A:
6.60% 10/1/10 (b) BBB $ 2,000,000 $ 2,047,500
5.25% 10/1/13 BBB 3,500,000 3,198,125
5,245,625
TOTAL MUNICIPAL BONDS
(Cost $454,900,796) 470,807,724
MUNICIPAL NOTES (A) - 3.7%
MICHIGAN - 3.7%
Bruce County Health Care Sys. Rev. (Sisters of
Charity) (St. Joseph Hosp.) Series 1988 A, 5%
(MBIA Insured)(Liquidity Facility
Morgan Guaranty Trust Co.) VRDN VMIG 1 1,000,000 1,000,000
Delta County Econ. Dev. Corp. Environ. Imp. Rev.
(Mead Escanaba Paper Co. Proj.) Series 1992,
6%, LOC Union Bank of Switzerland,
VRDN (b) A-1+ 300,000 300,000
Farmington Hills Hosp. Fin. Auth. Rev.
(Botsford Hosp.) 6%, (MBIA Insured)
(BPA Comerica Bank, Detroit) VRDN VMIG 1 2,845,000 2,845,000
Grand Rapids Ind. Dev. Rev. (Rowe Int'l. Inc.)
5.40%, LOC Chemical Bank, VRDN A-1 2,300,000 2,300,000
Grand Rapids Wtr. Supply Sys. Rfdg.
Series 1993, 5.90% (FGIC Insured)
LOC Societe Generale France, VRDN VMIG 1 1,000,000 1,000,000
Michigan Higher Ed. Student Loan Auth. Rev.
Rfdg. Series XII-B, 5.20% (AMBAC Insured)
(BPA Krediet Bank) VRDN (b) VMIG 1 1,500,000 1,500,000
Michigan Hsg. Dev. Auth. Ltd. Oblig. Rev.
(Shoal Creek Apt. Proj.) 5.10%
LOC Nat'l Westminster Bank, VRDN VMIG 1 1,700,000 1,700,000
Michigan Hsg. Dev. Auth. Rental Rev.
Series 1994-C, 5%,
LOC Credit Suisse, Zurich, VRDN A-1+ 3,200,000 3,200,000
Michigan Strategic Fund Poll. Cont. Rev. Rfdg.
(Consumers Pwr. Co. Proj.) Series 1988 A, 5.95%,
LOC Union Bank of Switzerland, VRDN P-1 2,100,000 2,100,000
University of Michigan Rev.
Series 1995 A, 5.90%, VRDN VMIG 1 2,000,000 2,000,000
TOTAL MUNICIPAL NOTES
(Cost $17,945,000) 17,945,000
TOTAL INVESTMENTS - 100%
(Cost $472,845,796) $ 488,752,724
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) 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) Security collateralized by an amount sufficient to pay interest and
principal.
(e) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(f) Debt obligation initially issued at one coupon which converts to a
higher coupon at a specified date.
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 67.5% AAA, AA, A 76.0%
Baa 9.8% BBB 10.5%
Ba 0.0% BB 0.0%
B 0.0% B 0.0%
Caa 1.1% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 1.1%
The percentage not rated by either S&P or Moody's amounted to 3.45%. FMR
has determined that unrated debt securities that are lower quality account
for 1.2% 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 17.3%
General Obligation 17.0
Electric Revenue 14.2
Others
(individually less than 10%) 51.5
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1995, the aggregate cost of investment securities for
income tax purposes was $472,845,796. Net unrealized appreciation
aggregated $15,906,928 of which $29,414,267 related to appreciated
investment securities and $13,507,339 related to depreciated investment
securities.
At December 31, 1995, the fund was required to defer $2,534,143 of losses
on futures contracts.
At December 31, 1995, the fund had a capital loss carryforward of
approximately $2,376,275 all of which will expire on December 31, 2003.
FIDELITY MICHIGAN MUNICIPAL INCOME FUND
(FORMERLY FIDELITY MICHIGAN TAX-FREE HIGH YIELD PORTFOLIO)
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1995
1.ASSETS 2. 3.
4.Investment in securities, at value (cost $472,845,796) 5. $ 488,752,724
- -
See accompanying schedule
6.Interest receivable 7. 6,707,770
8. 9.TOTAL ASSETS 10. 495,460,494
11.LIABILITIES 12. 13.
14.Payable to custodian bank $ 42,486 15.
16.Payable for investments purchased 1,644,313 17.
18.Payable for fund shares redeemed 1,118,894 19.
20.Distributions payable 505,301 21.
22.Accrued management fee 163,060 23.
24.Other payables and accrued expenses 112,317 25.
26. 27.TOTAL LIABILITIES 28. 3,586,371
29.30.NET ASSETS 31. $ 491,874,123
32.Net Assets consist of: 33. 34.
35.Paid in capital 36. $ 480,877,613
37.Accumulated undistributed net realized gain (loss) 38. (4,910,418)
on investments
39.Net unrealized appreciation (depreciation) 40. 15,906,928
on investments
41.42.NET ASSETS, for 42,548,120 shares outstanding 43. $ 491,874,123
44.45.NET ASSET VALUE, offering price and redemption 46. $11.56
price per share ($491,874,123 (divided by) 42,548,120 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1995
47.48.INTEREST INCOME 49. $ 28,793,120
50.EXPENSES 51. 52.
53.Management fee $ 1,902,956 54.
55.Transfer agent, accounting and custodian fees 814,632 56.
and expenses
57.Non-interested trustees' compensation 3,264 58.
59.Registration fees 2,787 60.
61.Audit 36,591 62.
63.Legal 22,503 64.
65.Miscellaneous 3,452 66.
67. 68.TOTAL EXPENSES 69. 2,786,185
70.71.NET INTEREST INCOME 72. 26,006,935
73.REALIZED AND UNREALIZED GAIN (LOSS) 75. 76.
74.Net realized gain (loss) on:
77. Investment securities 2,865,188 78.
79. Futures contracts (657,649) 2,207,539
80.Change in net unrealized appreciation (depreciation) 81. 82.
on:
83. Investment securities 39,070,974 84.
85. Futures contracts 106,261 39,177,235
86.87.NET GAIN (LOSS) 88. 41,384,774
89.90.NET INCREASE (DECREASE) IN NET ASSETS 91. $ 67,391,709
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED DECEMBER 31,
1995 1994
92.INCREASE (DECREASE) IN NET ASSETS
93.Operations $ 26,006,935 $ 30,593,065
Net interest income
94. Net realized gain (loss) 2,207,539 1,872,546
95. Change in net unrealized appreciation (depreciation) 39,177,235 (73,914,188)
96. 97.NET INCREASE (DECREASE) IN NET ASSETS 67,391,709 (41,448,577)
RESULTING FROM OPERATIONS
98.Distributions to shareholders (26,006,935) (30,593,065)
From net interest income
99. From net realized gain - (3,640,536)
100. In excess of net realized gain (3,890) (3,743,750)
101. 102.TOTAL DISTRIBUTIONS (26,010,825) (37,977,351)
103.Share transactions 110,232,268 123,015,698
Net proceeds from sales of shares
104. Reinvestment of distributions 19,680,585 29,488,133
105. Cost of shares redeemed (113,113,870) (202,876,014)
106.107. 16,798,983 (50,372,183)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
108. 58,179,867 (129,798,111)
109.TOTAL INCREASE (DECREASE) IN NET ASSETS
110.NET ASSETS 111. 112.
113. Beginning of period 433,694,256 563,492,367
114. End of period $ 491,874,123 $ 433,694,256
115.OTHER INFORMATION 117. 118.
116.Shares
119. Sold 9,948,827 10,688,197
120. Issued in reinvestment of distributions 1,766,407 2,612,382
121. Redeemed (10,168,400) (17,972,179)
122. Net increase (decrease) 1,546,834 (4,671,600)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
1995 1994 1993A 1992 1991
123.SELECTED PER-SHARE
DATA
124.Net asset value, $ 10.580 $ 12.340 $ 11.710 $ 11.410 $ 10.890
beginning of period
125.Income from .611 .687 .709 .733 .745
Investment Operations
Net interest income
126. Net realized and .980 (1.590) .870 .320 .520
unrealized gain (loss)
127. Total from 1.591 (.903) 1.579 1.053 1.265
investment operations
128.Less Distributions (.611) (.687) (.709) (.733) (.745)
From net interest
income
129. From net realized - (.080) (.240) (.020) -
gain
130. In excess of net - (.090) - - -
realized gain
131. Total distributions (.611) (.857) (.949) (.753) (.745)
132.Net asset value, end $ 11.560 $ 10.580 $ 12.340 $ 11.710 $ 11.410
of period
133.TOTAL RETURN 15.41 (7.50) 13.83 9.54 12.04
% % % % %
134.RATIOS AND SUPPLEMENTAL DATA
135.Net assets, end of $ 491,874 $ 433,694 $ 563,492 $ 463,816 $ 379,175
period (000 omitted)
136.Ratio of expenses to .59 .57% .59 .61 .62
average net assets % % % %
137.Ratio of net interest 5.49 6.04% 5.79 6.36 6.73
income to average net % % % %
assets
138.Portfolio turnover 29 18% 33 15 12
rate % % % %
</TABLE>
A 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.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
(FORMERLY 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 DECEMBER 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity Michigan Municipal
Money Market Fund 3.38% 15.82% 22.38%
Average All Tax-Free Money Market Fund 3.40% 15.27% 21.04%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on January 12, 1990. For example, if you 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 394 all tax-free money market funds tracked
by IBC/Donoghue over the past year. Recent U.S. Consumer Price Index
information is not available from the U.S. Department of Labor. Therefore,
the CPI comparison has not been included in this report. (The periods
covered by the IBC/Donoghue numbers are the closest available match to
those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity Michigan Municipal
Money Market Fund 3.38% 2.98% 3.44%
Average All Tax-Free Money Market Fund 3.40% 2.88% 3.28%
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YIELDS
12/26/94 3/27/95 6/26/95 10/2/95 1/1/96
Fidelity Michigan Municipal 3.90% 3.38% 3.56% 3.52% 4.00%
Money Market Fund
Average All Tax-Free 3.78% 3.45% 3.59% 3.55% 3.95%
Money Market Fund
Fidelity Michigan Municipal 6.37% 5.52% 5.82% 5.75% 6.54%
Money Market Portfolio
Tax-equivalent
</TABLE>
Row: 1, Col: 1, Value: 3.9
Row: 1, Col: 2, Value: 3.78
Row: 2, Col: 1, Value: 3.38
Row: 2, Col: 2, Value: 3.45
Row: 3, Col: 1, Value: 3.56
Row: 3, Col: 2, Value: 3.59
Row: 4, Col: 1, Value: 3.52
Row: 4, Col: 2, Value: 3.55
Row: 5, Col: 1, Value: 3.98
Row: 5, Col: 2, Value: 3.95
5% -
4% -
3% -
2% -
1% -
0%
Fidelity Michigan
Municipal Money
Market Fund
Average All
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 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 FUND
(FORMERLY FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jeff Parker,
Portfolio Manager of Michigan
Municipal Money Market Fund
Q. JEFF, CAN YOU TELL US HOW THE INVESTMENT CLIMATE HAS CHANGED DURING THE
PAST 12 MONTHS?
A. Overall, the investment climate in 1995 was extremely favorable,
characterized by moderate growth, low inflation and steadily falling
interest rates. But during the first quarter of 1995, the economy was still
expanding rapidly and the Federal Reserve was doing its best to temper
growth and stave off inflation. In February 1995, two months into the
period, the Fed raised the interest rate banks charge each other for
overnight loans - known as the federal funds rate - one-quarter percentage
point. That turned out to be the last of seven rate increases by the Fed
dating back to February 1994. When the growth rate slowed to 1.3% during
the second quarter of 1995, down from 2.7% during the first quarter, some
economists began warning of a possible recession. At that point, the Fed
shifted to an easing mode, twice lowering the fed funds rate one-quarter
percentage point - first on July 6, 1995 and again just before the period
ended on December 19, 1995.
Q. HOW DID YOU RESPOND TO CHANGING CONDITIONS?
A. When the period began, the fund's average maturity was between 35 and 40
days, reflecting the unstable conditions then prevailing. As supply entered
the market during the annual summer borrowing season, I lengthened the fund
to 52 days in time for the Fed rate cut in July. The fund's average
maturity was as long as 61 days at the end of August. Since then, supply
constraints have once again played a role in my decision to let the fund's
average maturity gradually roll back down. At the end of the period, the
fund's average maturity was 47 days.
Q. HOW DID THE FUND PERFORM?
A. Through December 31, 1995, the fund's one-year total return was 3.38%,
compared to 3.40% for the average all tax-free money market fund, according
to IBC/Donoghue. The fund's seven-day yield on December 31, 1995 was 3.98%,
compared to 4.15% a year ago. On an after-tax basis, the latest yield was
the equivalent of a 6.51% taxable rate for Michigan investors in the 38.82%
combined federal and state tax bracket.
Q. WHAT'S THE OUTLOOK?
A. While the timing of the Fed's rate cut in December caught some market
participants by surprise, it had been clear for some time that rates were
likely heading lower. Chances are, we haven't seen the last of the rate
cuts in the current cycle. A key variable I'll be watching is the budget
debate in Washington. Adoption of a balanced budget might precipitate a fed
funds rate cut. Moderate growth and the absence of inflationary pressures
give the Fed that much more room to maneuver, increasing the likelihood
that rates will head still lower in the months ahead. My aim lately has
been to maintain flexibility by keeping the fund's average maturity in a
neutral range. However, as we head into the first quarter of 1996, I'll
probably be looking for opportunities to capitalize on falling interest
rates by extending the fund slightly, as supplies allow.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
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 December 31,
1995, more than $231 million
MANAGER: Jeff Parker, since
June 1995; manager, Fidelity
Connecticut Municipal Money
Market, Fidelity New Jersey
Municipal Money Market,
Spartan Connecticut Municipal
Money Market and Spartan
New Jersey Municipal Money
Market, 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.
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,
usually 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 MICHIGAN MUNICIPAL MONEY MARKET FUND
(FORMERLY FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
12/31/95 6/30/95 12/31/94
0 - 30 68 71 71
31 - 90 10 16 7
91 - 180 13 6 20
181 - 397 9 7 2
WEIGHTED AVERAGE MATURITY
12/31/95 6/30/95 12/31/94
Michigan Municipal
Money Market Fund 47 days 51 days 40 days
Average All Tax-Free
Money Market Fund* 53 days 45 days 47 days
ASSET ALLOCATION
AS OF DECEMBER 31, 1995 AS OF JUNE 30, 1995
Row: 1, Col: 1, Value: 62.0
Row: 1, Col: 2, Value: 16.0
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 16.0
Row: 1, Col: 5, Value: 2.0
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
Variable rate
demand notes
(VRDNs) 62%
Commercial
paper 16%
Tender bonds 4%
Municipal
notes 16%
Other 2%
Variable rate
demand notes
(VRDNs) 60%
Commercial
paper 15%
Tender bonds 7%
Municipal
notes 18%
Other 0%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
(FORMERLY FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO)
INVESTMENTS DECEMBER 31, 1995
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MICHIGAN - 100%
Bruce Township Hosp. Fin. Auth. Sisters of Charity Health Care
Sys. Rev. (St. Joseph Hosp. Ctr. Proj.):
Bonds 3.70%, tender 5/1/96 (MBIA Insured)
(BPA Morgan Guaranty Trust Co.) $ 1,600,000 $ 1,600,000
Series 1988 A, 5% (MBIA Insured)
(Liquidity Facility Morgan Guaranty Trust Co.) VRDN 2,100,000
2,100,000
Cornell Econ. Dev. Corp. Ind. Dev. Rev. Rfdg. Bonds
(Mead-Escanaba Paper Co. Proj.) Series 1990, 3.55%,
tender 1/30/96, LOC Credit Suisse 2,100,000 2,100,000
Dearborn Econ. Dev. Corp. Ltd. Oblig. Rev. Bonds
(Oakbrook Common Proj.) Series 1991, 5.10%,
LOC Mellon Bank VRDN 2,800,000 2,800,000
Delta County Econ. Dev. Corp. Envir. Impt. Rev.
(Mead-Escanaba Paper Co.), VRDN:
Series 1985 F, 6.10%, LOC Bank of Nova Scotia 1,000,000 1,000,000
Series 1992, 6%, LOC Union Bank of Switzerland (b) 800,000 800,000
Delta County Poll. Cont. Rev. Bonds (Mead-Escanaba)
Series A, 3.70%, tender 2/13/96, LOC Swiss Bank Corp 1,200,000 1,200,000
Detroit School Dist. RAN (State School Aid Notes)
Series 1995, 4.50% 5/1/96 7,000,000 7,015,342
Detroit Wtr. Supply Sys. Participating VRDN,
Series PA-28, 5.25% (FGIC Insured)
(Liquidity Facility Merrill Lynch & Co.)(c) 4,440,000 4,440,000
Detroit Wtr. Supply Sys. Rev. Bonds
5% 7/1/96 (FGIC Insured) 1,000,000 1,007,803
Flint Econ. Dev. Corp. Ltd. Oblig. Rev. (Genessee County Real
Estate Proj.) 5.20%, LOC NBD Bank Corp., VRDN (b) 1,200,000 1,200,000
Genesee County Econ Dev. Corp. Ltd. Oblig. Econ. Dev. Rev.
(Creative Foam Corp. Proj.) Series 1994, 5.20%,
LOC NBD Bank NA, Michigan, VRDN (b) 3,000,000 3,000,000
Georgetown Charter Township Ltd. Oblig. Ind. Dev. Rev.
(J&F Steel Corp. Proj.) Series 1989, 5.30%,
LOC Societe Generale, VRDN (b) 1,000,000 1,000,000
Grand Rapids Econ. Dev. Auth. Rev. (Calder Plaza Proj.)
Series 1992 A, 5.05%,
LOC Old Kent Bank & Trust Co., VRDN 2,680,000 2,680,000
Grand Rapids Econ. Dev. Corp. Ltd. Oblig. Rev.
(Holland Home Proj.) Series 1994 B, 5.20%,
LOC Old Kent Bank & Trust Co., VRDN 2,250,000 2,250,000
Grand Rapids Ind. Dev. Rev. (Rowe Int'l.) 5.40%,
LOC Chemical Bank, VRDN 3,000,000 3,000,000
Grand Rapids Wtr. Supply Sys. Impt. Rev. Rfdg.
Series 1993, 5.90% (FGIC Insured)
(Liquidity Facility Societe Generale) VRDN 800,000 800,000
Grosse Pointe Pub. School Sys. TAN 3.75% 4/1/96 7,300,000 7,304,394
Kalamazoo Econ. Dev. Corp. Rev. Rfdg.
(La Quinta Motor Inns) Series 1991, 5.35%,
LOC Nations Bank, VRDN 2,040,000 2,040,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Kalamazoo Fin. Auth. Hosp. Rev. Bonds (Bronson Methodist
Hosp.) Series 1988 A, 3.50%, tender 3/8/96,
LOC Nat'l. Bank of Detroit $ 1,300,000 $ 1,300,000
Kent County Hosp. Fin. Auth. Participating VRDN,
Series 94-C1, 5.30% (MBIA Insured)
(Liquidity Facility Norwest Bank)(c) 4,000,000 4,000,000
Lapeer County Intermediate School Dist. Vocational Ed.
TAN 4% 4/4/96 1,000,000 1,000,489
Livonia Econ. Dev. Corp., VRDN:
(Ajluni Proj.) 5.20%, LOC Nat'l Bank of Detroit (b) 2,200,000 2,200,000
(Foodland Distributors Corp.) 5.20%, LOC Comerica 2,100,000 2,100,000
Michigan Bldg. Auth. CP, 4.10% 1/16/96,
LOC Canadian Imperial Bank 5,000,000 5,000,000
Michigan Higher Ed. Student Loan Auth. Rev. Rfdg.,
Series XII-B, 5.20%, (AMBAC Insured)
(BPA Krediet Bank) VRDN (b) 10,700,000 10,700,000
Michigan Hosp. Fin. Auth. Hosp. Equip. Rev. 5.20%,
LOC First of America, VRDN 6,500,000 6,500,000
Michigan Hosp. Fin. Auth. Rev. (Hosp. Equip. Loan Prog.),
VRDN:
Rfdg. (Mt. Clemens Gen. Hosp.) Series 1994, 5%
LOC Comerica Bank - Detroit 5,000,000 5,000,000
Series 1989, 5%, LOC Comerica Bank - Detroit 1,000,000 1,000,000
Series 1991, 5.10%, LOC Comerica Bank of Detroit 6,450,000 6,450,000
Series A, 5.20%, LOC First of America Bank, VRDN 5,700,000 5,700,000
Michigan Hsg. Dev. Auth. Ltd. Oblig. Rev. (Shoal Creek Apt.
Proj.) 5.10%, LOC Nat'l. Westminster Bank, VRDN 3,800,000 3,800,000
Michigan Hsg. Dev. Auth. Participating VRDN (b)(c):
Series PT-19, 5.30% (Liquidity Facility Credit Suisse) 10,370,000
10,370,000
Series PT-38, 5.30% (FSA Insured)
(Liquidity Facility Commerzbank) 4,710,000 4,710,000
Series PT-58, 3.65% (Liquidity Facility Credit Suisse) 8,900,000
8,900,000
Michigan Muni. Bond Auth. RAN:
Series 1995 A, 5% 5/3/96 3,000,000 3,011,261
Series 1995 B, 4.50% 7/3/96 15,000,000 15,050,826
Series C, 4.50% 9/6/96 3,100,000 3,111,145
Michigan Strategic Fund Rev. Bonds (Dow Chemical Proj.):
Series 1987:
3.80%, tender 1/23/96 2,720,000 2,720,000
3.40%, tender 1/25/96 2,000,000 2,000,000
Series 1988 (b):
4%, tender 1/11/96 3,000,000 3,000,000
3.90%, tender 1/29/96 3,000,000 3,000,000
3.95%, tender 2/6/96 1,000,000 1,000,040
3.85%, tender 2/7/96 4,000,000 4,000,000
3.90%, tender 2/7/96 2,000,000 2,000,000
3.75%, tender 2/21/96 3,700,000 3,700,000
3.65%, tender 3/7/96 4,700,000 4,700,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Strategic Fund Ltd. Oblig. Rev., VRDN (b):
(Doss Ind. Dev. Co.) 5.20%,
LOC National Bank of Detroit $ 3,900,000 $ 3,900,000
(Envir. Quality Co. Proj.) Series 1995, 5.30%,
LOC Comerica Bank 2,000,000 2,000,000
(Hi Tech Mold & Engineering) Series 1991, 5.20%,
LOC Nat'l. Bank of Detroit 1,300,000 1,300,000
(The Spiratex Co. Proj.) Series 1994, 5.20%,
LOC National Bank of Detroit 2,800,000 2,800,000
(Ultimate Hydroforming Inc. Proj.) 5.20%,
LOC Nat'l. Bank of Detroit 1,000,000 1,000,000
(Uni Boring Co. Inc. Proj.) Series 1992, 5.20%
LOC Nat'l. Bank of Detroit 2,100,000 2,100,000
Michigan Strategic Fund Poll. Cont. Rev., VRDN:
Rfdg. (Consumers Pwr. Co. Proj.) Series 1988 A, 5.95%,
LOC Union Bank of Switzerland 3,500,000 3,500,000
(Detroit Edison) 5.95%, LOC Barclays Bank 1,900,000 1,900,000
(General Motors Corp. Composite) 5.20% 5,790,000 5,790,000
Michigan Strategic Fund Solid Wst. Disp. Rev.
(Grayling Gen. Station Proj.) Series 1990, 5.10%,
LOC Barclays Bank, VRDN (b) 9,200,000 9,200,000
Michigan Underground Storage Fin. Auth. Rev. Series 1995 I,
5.15%, LOC Canadian Imperial Bank, VRDN 11,000,000 11,000,000
Muskegon Pub. School Bldg. & Site Bonds Series 1995,
7.25% 5/1/96 (FGIC Insured) 1,050,000 1,062,134
Rochester Hills Econ. Dev. Corp. Ltd. Oblig. Rev. (Cardell
Corp.) 5.15%, LOC Comerica Bank, VRDN (b) 250,000 250,000
Royal Oak Gen. Oblig. Rfdg. 3.95% 10/1/96
(AMBAC Insured) 1,435,000 1,435,000
Sterling Heights Econ. Dev. Corp. Ltd. Oblig. Rev.
(Cherrywood Ctr. Assoc. Proj.) 5.30%,
LOC Comerica Bank, VRDN (b) 5,000,000 5,000,000
University of Michigan Hosp. Rev., VRDN:
Series 1992 A, 5.90% 900,000 900,000
Series 1995 A, 5.90% 700,000 700,000
University of Michigan Intercollegiate Athletic Rev.
5.95%, VRDN 1,400,000 1,400,000
Western Michigan Gen. Oblig. School Bldg. & Rfdg.
Bonds Series 1995, 3.70% 5/1/96
(MBIA Insured) 500,000 500,000
TOTAL INVESTMENTS - 100% $ 229,098,434
Total Cost for Income Tax Purposes $ 229,098,434
SECURITY TYPE ABBREVIATIONS
CP - Commercial Paper
RAN - Revenue Anticipation Notes
TAN - Tax 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, 1995, the fund had a capital loss carryforward of
approximately $57,500 of which $1,600, $1,700, $10,300, $39,100 and $4,800
will expire on December 31, 1998, 1999, 2001, 2002 and 2003, respectively.
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
(FORMERLY FIDELITY MICHIGAN MUNICIPAL MONEY MARKET PORTFOLIO)
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
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DECEMBER 31, 1995
139.ASSETS 140. 141.
142.Investment in securities, at value - See 143. $ 229,098,434
accompanying schedule
144.Cash 145. 607,548
146.Interest receivable 147. 1,723,895
148. 149.TOTAL ASSETS 150. 231,429,877
151.LIABILITIES 152. 153.
154.Distributions payable $ 23,990 155.
156.Accrued management fee 75,793 157.
158.Other payables and accrued expenses 71,139 159.
160. 161.TOTAL LIABILITIES 162. 170,922
163.164.NET ASSETS 165. $ 231,258,955
166.Net Assets consist of: 167. 168.
169.Paid in capital 170. $ 231,316,474
171.Accumulated net realized gain (loss) on 172. (57,519)
investments
173.174.NET ASSETS, for 231,316,474 shares 175. $ 231,258,955
outstanding
176.177.NET ASSET VALUE, offering price and 178. $1.00
redemption price per share ($231,258,955 (divided by)
231,316,474 shares)
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STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
179.180.INTEREST INCOME 181. $ 8,660,340
182.EXPENSES 183. 184.
185.Management fee $ 881,070 186.
187.Transfer agent, accounting and custodian fees 453,705 188.
and expenses
189.Non-interested trustees' compensation 1,512 190.
191.Registration fees 17,036 192.
193.Audit 25,388 194.
195.Legal 1,613 196.
197.Miscellaneous 2,133 198.
199. 200.TOTAL EXPENSES 201. 1,382,457
202.203.NET INTEREST INCOME 204. 7,277,883
205.206.NET REALIZED GAIN (LOSS) ON INVESTMENTS 207. (4,791)
208.209.NET INCREASE IN NET ASSETS RESULTING FROM 210. $ 7,273,092
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
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YEARS ENDED DECEMBER 31,
1995 1994
211.INCREASE (DECREASE) IN NET ASSETS
212.Operations $ 7,277,883 $ 4,816,413
Net interest income
213. Net realized gain (loss) (4,791) (39,157)
214. 7,273,092 4,777,256
215.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
216.Distributions to shareholders from net interest (7,277,883) (4,816,413)
income
217.Share transactions at net asset value of $1.00 per 347,831,546 440,390,901
share
Proceeds from sales of shares
218. Reinvestment of distributions from net interest 6,942,228 4,529,069
income
219. Cost of shares redeemed (345,244,892) (398,336,000)
220.221. 9,528,882 46,583,970
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES
RESULTING FROM SHARE TRANSACTIONS
222. 9,524,091 46,544,813
223.TOTAL INCREASE (DECREASE) IN NET ASSETS
224.NET ASSETS 225. 226.
227. Beginning of period 221,734,864 175,190,051
228. End of period $ 231,258,955 $ 221,734,864
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FINANCIAL HIGHLIGHTS
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YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
229.SELECTED PER-SHARE DATA
230.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
231.Income from .033 .024 .020 .026 .044
Investment Operations
Net interest income
232.Less Distributions (.033) (.024) (.020) (.026) (.044)
From net interest
income
233.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
234.TOTAL RETURN A 3.38 2.44 1.98 2.66% 4.46%
% % %
235.RATIOS AND SUPPLEMENTAL DATA
236.Net assets, end of $ 231,259 $ 221,735 $ 175,190 $ 160,817 $ 175,150
period (000 omitted)
237.Ratio of expenses to .63 .61 .62 .49% .21%
average net assets % % % B B
238.Ratio of net interest 3.32 2.45 1.96 2.64% 4.38%
income to average % % %
net assets
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
B FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES.
On December 14, 1995, the Board of Trustees gave approval to change the
names of Fidelity Michigan Tax-Free High Yield Portfolio and Fidelity
Michigan Municipal Money Market Portfolio to Fidelity Michigan Municipal
Income Fund and Fidelity Michigan Municipal Money Market Fund,
respectively. The fund name changes are effective February 20, 1996.
Fidelity Michigan Municipal Income Fund (the income fund) is a fund of
Fidelity Municipal Trust. Fidelity Michigan Municipal Money Market Fund
(the money market fund) is a fund of Fidelity Municipal Trust II. Each
trust is registered under the Investment Company Act of 1940, as amended
(the 1940 Act), as an open-end management investment company. Fidelity
Municipal Trust and Fidelity Municipal Trust II (the trusts) are organized
as a Massachusetts business trust and a Delaware business trust,
respectively. Each fund is authorized to issue an unlimited number of
shares. The following summarizes the significant accounting policies of the
income fund and the money market fund:
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix system
and/or appraisals by a pricing service, both of which consider market
transactions and dealer-supplied valuations. 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for expiring
capital loss carryforwards and losses deferred due to wash sales, futures
and options and excise tax regulations.
Permanent book tax basis differences relating to shareholder distributions
will result in reclassifications to paid in capital. Any taxable gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The income 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.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $130,932,018 and $129,103,296, respectively.
The market value of futures contracts opened and closed during the period
amounted to $50,641,681 and $58,275,391, 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 each fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net assets
of all the mutual funds advised by FMR. The rates ranged from .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.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
The annual individual fund fee rate is .25%. For the period, the management
fees were equivalent to an annual rate of .40% for the income and money
market funds.
The Board of Trustees has approved a new group fee rate schedule with rates
ranging from .1100% to .3700%. Effective January 1, 1996, FMR voluntarily
agreed to implement this new group fee rate schedule as it results in the
same or a lower management fee.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, 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.
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 $28,504 and
$24,760 for the income 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. The funds pay
account fees and asset-based fees that vary according to account size and
type of account. FSC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements. The accounting fee is based
on the level of average net assets for the month plus out-of-pocket
expenses. For the period, FSC received transfer agent and accounting fees
amounting to $601,317 and $202,658 for the income fund and $393,845 and
$45,937 for the money market fund, respectively; the transfer agent fees
were equivalent to annual rates of .13% and .18% of average net assets for
the income and money market funds, 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 $8,890.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Municipal Trust
and Fidelity Municipal Trust II and the
Shareholders of Fidelity Michigan
Tax-Free High Yield Portfolio and
Fidelity Michigan Municipal Money
Market Portfolio:
We have audited the accompanying statements of assets and liabilities of
Fidelity Michigan Tax-Free High Yield Portfolio, a portfolio of Fidelity
Municipal Trust, and Fidelity Michigan Municipal Money Market Portfolio, a
portfolio of Fidelity Municipal Trust II, including the schedules of
portfolio investments, as of December 31, 1995, and the related statements
of operations for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Michigan Tax-Free High Yield Portfolio and Fidelity Michigan
Money Market Portfolio as of December 31, 1995, the results of their
operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 2, 1996
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
INVESTMENT 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
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Thomas D. Maher, Assistant
Vice President - 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
FUNDS
ANNUAL REPORT
DECEMBER 31, 1995
CONTENTS
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PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
FIDELITY OHIO MUNICIPAL INCOME FUND
(FORMERLY FIDELITY OHIO TAX-FREE HIGH YIELD PORTFOLIO)
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 21 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
(FORMERLY FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO)
PERFORMANCE 25 How the fund has done over time.
FUND TALK 27 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 29 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 30 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 35 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 39 Notes to the financial statements.
REPORT OF INDEPENDENT
ACCOUNTANTS 42 The auditors' opinion.
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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,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although the markets were fairly positive in 1995, no one can predict what
lies ahead for investors. The previous 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 INCOME FUND
(FORMERLY FIDELITY OHIO TAX-FREE HIGH YIELD PORTFOLIO)
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value). You can also look at the fund's income to
measure performance. If Fidelity had not reimbursed certain fund expenses
the past ten years total return would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Ohio Municipal Income Fund 16.39% 49.86% 127.47%
Lehman Brothers Municipal Bond Index 17.45% 52.61% 142.03%
Average Ohio Tax-Exempt
Municipal Bond Fund 16.81% 49.66% 122.84%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or 10 years. For
example, if you 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 year. Both benchmarks include reinvested
dividends and capital gains, if any. Recent U.S. Consumer Price Index
information is not available from the U.S. Department of Labor. Therefore,
the CPI comparison has not been included in this report.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Ohio Municipal Income Fund 16.39% 8.43% 8.57%
Lehman Brothers Municipal Bond Index 17.45% 8.82% 9.24%
Average Ohio Tax-Exempt
Municipal Bond Fund 16.81% 8.40% 8.34%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
Ohio Tax Free (08LB Municipal Bon
12/31/85 10000.00 10000.00
01/31/86 10514.82 10589.00
02/28/86 10832.03 11008.96
03/31/86 10917.76 11012.48
04/30/86 10831.64 11020.85
05/31/86 10705.68 10841.43
06/30/86 10772.11 10944.86
07/31/86 10827.73 11011.30
08/31/86 11275.36 11504.27
09/30/86 11268.21 11533.15
10/31/86 11509.18 11732.32
11/30/86 11717.59 11964.74
12/31/86 11645.74 11931.72
01/31/87 12041.90 12290.98
02/28/87 12160.96 12351.45
03/31/87 12086.52 12220.53
04/30/87 11143.52 11607.30
05/31/87 11036.89 11549.73
06/30/87 11276.71 11888.83
07/31/87 11441.71 12010.10
08/31/87 11453.31 12037.12
09/30/87 10854.78 11593.31
10/31/87 10868.29 11634.35
11/30/87 11163.00 11938.12
12/31/87 11368.72 12111.35
01/31/88 11893.18 12542.75
02/29/88 12051.83 12675.33
03/31/88 11739.24 12527.66
04/30/88 11797.08 12622.87
05/31/88 11879.20 12586.39
06/30/88 12102.04 12770.53
07/31/88 12208.78 12853.79
08/31/88 12233.74 12865.11
09/30/88 12461.13 13097.96
10/31/88 12725.88 13329.14
11/30/88 12629.74 13207.05
12/31/88 12838.49 13342.16
01/31/89 13023.47 13618.07
02/28/89 12913.44 13462.69
03/31/89 12914.68 13430.51
04/30/89 13263.54 13749.35
05/31/89 13552.02 14034.93
06/30/89 13728.79 14225.52
07/31/89 13842.27 14419.13
08/31/89 13699.66 14277.97
09/30/89 13634.85 14235.42
10/31/89 13810.78 14409.52
11/30/89 14010.02 14661.69
12/31/89 14120.51 14781.62
01/31/90 13988.02 14711.70
02/28/90 14146.24 14843.37
03/31/90 14162.33 14847.83
04/30/90 13947.04 14740.33
05/31/90 14308.36 15062.11
06/30/90 14456.05 15194.50
07/31/90 14673.38 15418.62
08/31/90 14442.59 15194.74
09/30/90 14552.91 15203.41
10/31/90 14760.42 15479.20
11/30/90 15107.08 15790.48
12/31/90 15179.42 15859.17
01/31/91 15347.74 16072.00
02/28/91 15444.46 16211.83
03/31/91 15472.77 16217.66
04/30/91 15714.13 16434.17
05/31/91 15842.73 16580.27
06/30/91 15785.72 16563.85
07/31/91 16003.13 16765.60
08/31/91 16163.19 16986.41
09/30/91 16354.40 17207.57
10/31/91 16501.73 17362.44
11/30/91 16530.43 17410.88
12/31/91 16916.85 17784.51
01/31/92 16946.93 17825.06
02/29/92 16957.90 17830.77
03/31/92 16945.38 17837.36
04/30/92 17081.74 17996.12
05/31/92 17313.03 18207.93
06/30/92 17618.43 18513.46
07/31/92 18127.23 19068.49
08/31/92 17924.99 18882.58
09/30/92 18031.46 19006.07
10/31/92 17703.29 18819.24
11/30/92 18175.01 19156.29
12/31/92 18382.43 19351.88
01/31/93 18622.61 19576.94
02/28/93 19285.99 20285.04
03/31/93 19060.72 20070.62
04/30/93 19235.59 20273.14
05/31/93 19332.42 20387.07
06/30/93 19653.97 20727.33
07/31/93 19683.14 20754.49
08/31/93 20141.31 21186.59
09/30/93 20382.28 21427.91
10/31/93 20395.68 21469.26
11/30/93 20222.24 21280.12
12/31/93 20691.03 21729.34
01/31/94 20942.53 21977.49
02/28/94 20386.56 21408.28
03/31/94 19523.97 20536.53
04/30/94 19672.82 20710.68
05/31/94 19806.43 20890.24
06/30/94 19776.18 20762.60
07/31/94 20088.79 21143.18
08/31/94 20152.50 21216.34
09/30/94 19907.01 20904.88
10/31/94 19519.80 20533.61
11/30/94 19091.10 20162.36
12/31/94 19543.36 20606.14
01/31/95 20129.81 21195.06
02/28/95 20688.59 21811.41
03/31/95 20902.46 22062.03
04/30/95 20945.83 22088.06
05/31/95 21561.40 22792.89
06/30/95 21374.76 22593.45
07/31/95 21492.76 22807.64
08/31/95 21743.95 23096.84
09/30/95 21915.41 23243.04
10/31/95 22207.03 23580.99
11/30/95 22552.71 23972.20
12/31/95 22747.19 24202.58
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity Ohio
Municipal Income Fund on December 31, 1985. As the chart shows, by December
31, 1995, the value of your investment would have grown to $22,747 - a
127.47% 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 $24,203 - a 142.03% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
Dividend return 6.22% 5.37% 6.19% 6.63% 7.02%
Capital appreciation
return 10.17% -10.92% 6.37% 2.03% 4.43%
Total return 16.39% -5.55% 12.56% 8.66% 11.45%
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 DECEMBER 31, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.95(cents) 29.90(cents) 61.79(cents)
Annualized dividend rate 5.05% 5.23% 5.52%
30-day annualized yield 4.74% - -
30-day annualized tax-equivalent yield 8.01% - -
</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 $11.55 over
the past month, $11.34 over the past six months and $11.19 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 but
does not reflect payment of the alternative minimum tax if applicable.
FIDELITY OHIO MUNICIPAL INCOME FUND
(FORMERLY FIDELITY OHIO TAX-FREE HIGH YIELD PORTFOLIO)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In sharp contrast to much of
1994, the municipal bond
market posted strong returns for
the 12 months ended December
31, 1995. For the period, the
Lehman Brothers Municipal
Bond Index - a broad measure
of the tax-free market - had a
total return of 17.45%. By
comparison, the Lehman
Brothers Aggregate Bond Index
- - a proxy for investment-grade
taxable bonds - had a total
return of 18.47%. Tax-free
bonds kicked off 1995 by
surging ahead of their taxable
counterparts in the first quarter
on signs of a slowing economy
and tamer inflation expectations.
By spring, however, the muni
bond market began to
underperform U.S. Treasury
securities when Congress
began consideration of tax-code
changes, some of which
threatened the tax-exempt
status of municipal securities.
This threat of tax reform
dampened enthusiasm in the
municipal bond market, stalling
the rally and helping shorter
maturity bonds to outperform
their longer counterparts
throughout the spring and
summer months. By the fourth
quarter, historically attractive
valuations relative to Treasuries,
continued low issuance, and
stronger demand from insurance
companies and retail buyers
helped longer-term tax-free
bonds rebound.
An interview with Steven Harvey, Portfolio Manager of Fidelity Ohio
Municipal Income Fund
Q. HOW DID THE FUND PERFORM, STEVE?
A. For the 12-months ended December 31, 1995, the fund returned 16.39%. For
comparison purposes, the average Ohio municipal bond fund, as tracked by
Lipper Analytical Services, returned 16.81% for the same period.
Additionally, the Lehman Brothers Municipal Bond Index returned 17.45%.
Q. WHAT WERE SOME OF THE MAJOR EVENTS OF 1995 IN THE MUNICIPAL BOND MARKET?
A. On the whole, municipal bonds had positive performance in 1995. Nineteen
ninety-five saw a continuation of the previous year's decrease in the
issuance of new municipal bonds. In the spring and summer months, the
tax-reform debate in Washington caused investors to favor short- and
intermediate-term municipal bonds over long-term bonds for fear municipal
bonds would loose their tax-exempt status. During the fourth quarter of
1995, however, long-term municipal bonds responded positively to fading
fears about the imminent implementation of a federal flat tax and an
overall drop in interest rates in the fixed-income market.
Q. HOW DID THESE EVENTS AFFECT THE WAY YOU MANAGED THE FUND?
A. In Ohio, the drop in municipal issuance was particularly evident in the
area of higher-yielding, lower-quality municipal bonds. With this drop in
the supply of non-investment grade munis in Ohio - and a stable demand -
the prices of these bonds rose throughout the year. Therefore, at the end
of June, I was able to sell at a profit the majority of the fund's stake in
these bonds in favor of higher-quality, investment-grade bonds.
Additionally, in the fourth quarter, I was able to sell some long-maturity
bonds at a profit in favor of intermediate - five- to 10-year maturity -
bonds, which offer less interest rate risk than those with longer
maturities.
Q. WERE CHANGES IN THE MUNICIPAL BOND MARKET THE ONLY REASON YOU BOUGHT
MORE HIGH-QUALITY BONDS?
A. No. Additionally, I've bought bonds that are historically less sensitive
to the vagaries of the economy, such as high-quality general obligation
bonds from Cuyahoga County (which includes Cleveland), Cincinnati and
Columbus. Additionally, I've bought more "recession-proof" issues like
water and sewer bonds and essential services.
Q. HEALTH CARE IS STILL A LARGE PART OF THE FUND. ARE YOU CONCERNED ABOUT
THE ABILITY OF OHIO HEALTH-CARE PROVIDERS TO COMPETE IN TODAY'S WORLD OF
HMOS AND MANAGED CARE?
A. Like any other investor, I've tried to invest in the leading providers
in each metropolitan area. In light of the rise of managed care in the
United States, I've taken advantage of Fidelity's strong research
capabilities to seek issuers that have a large market share in their
respective location. In general, I'm looking for facilities with a
management team that is preparing for the future, as opposed to one that
will circle the wagons and fight out local turf wars.
Q. WHAT WERE SOME OTHER STRATEGIES OF NOTE?
A. In positioning the fund, I think about the Ohio component of the Lehman
Brothers Municipal Bond Index as being representative of the Ohio municipal
market. I've focused on improving the convexity of the portfolio. Like
duration, convexity measures the sensitivity of a bond to interest rate
changes. Generally the more convexity a bond has, the slower its price will
fall and the faster it should rise when interest rates change. One way I've
improved convexity is buying non-callable bonds - or those that can not be
bought back by their issuer. Historically, non-callable bonds with good
convexity have offered good performance characteristics without sacrificing
yield.
Q. WERE THERE ANY CHANGES TO THE FUND'S INVESTMENT POLICY?
A. The fund is now permitted to buy any amount of municipal securities
subject to the alternative minimum tax (AMT). The removal of the AMT
restriction allows me more latitude in selecting specific securities.
Instead of being constrained to specific sectors, I will be able to focus
on all marketplace opportunities - including areas dominated by AMT
securities, such as student loans and airports.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. As discussed before, for the first nine months of the year, tax-reform
talk caused intermediate maturity bonds to outperform longer-term bonds.
Thus, had the fund been in intermediates much earlier in the year, the
performance of the fund would have been greater.
Q. WHAT'S YOUR OUTLOOK?
A. It has certainly been a tremendous year for all of the fixed-income
markets. Investors, however, should not assume the bond markets will be
able to maintain the torrid pace they set in 1995. Therefore, the greater
part of total return in 1996 may come from income rather than price
appreciation.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
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 December 31,
1995, more than $404 million
MANAGER: Steven Harvey,
since 1994; manager,
Spartan Pennsylvania
Municipal Income, Spartan
Maryland Municipal Income
funds since 1993; and
Massachusetts Municipal
Income Fund, since 1995;
joined Fidelity in 1986
(checkmark)
STEVEN HARVEY ON THE
GATEWAY PROJECT AND THE
ECONOMIC DEVELOPMENT OF
DOWNTOWN CLEVELAND:
"Gateway - which includes
Jacobs Field and the Gund
Arena, the homes of the
Indians and the Cavaliers, as
well as a movie theater and
an adjoining shopping mall -
is an important part of the
resurgence of downtown
Cleveland. Because the fund
no longer owns any Gateway
bonds, recent press reports
about the facility's
construction cost overruns do
not concern me. What is
important to me is that
Cleveland and Cuyahoga
County have pledged their
credit to partially support the
development of Gateway, the
Rock and Roll Hall of Fame
and - depending on the
outcome of the situation -
the refurbishing of Cleveland
Municipal Stadium for a
football team. Because these
projects will continue to play a
big part in the vibrancy of
downtown Cleveland, I will
continue to follow their
progress closely. Additionally,
I will monitor how much of the
city and county's credit is
pledged in the future to each
project."
FIDELITY OHIO MUNICIPAL INCOME FUND
(FORMERLY FIDELITY OHIO TAX-FREE HIGH YIELD PORTFOLIO)
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF DECEMBER 31, 1995
% OF FUND'S INVESTMENT % OF FUND'S INVESTMENT
S S
IN THESE SECTORS
6 MONTHS AGO
General Obligation 28.3 21.6
Water & Sewer 21.4 21.1
Health Care 11.3 16.9
Escrowed/Prerefunded 8.4 3.4
Lease Revenue 8.0 5.0
AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1995
6 MONTHS AGO
Years 13.2 15.7
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 DECEMBER 31, 1995
6 MONTHS AGO
Years 7.4 8.4
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 DECEMBER 31, 1995 AS OF JUNE 30, 1995
Aaa 45.8%
Aa, A 29.5%
Baa 12.6%
Ba, B 1.6%
Non-rated 4.8%
Short-term investments 5.7%
Aaa 36.7%
Aa, A 20.8%
Baa 14.4%
Ba, B 7.1%
Non-rated 15.9%
Short-term investments 5.1%
Row: 1, Col: 1, Value: 45.8
Row: 1, Col: 2, Value: 29.5
Row: 1, Col: 3, Value: 12.6
Row: 1, Col: 4, Value: 1.6
Row: 1, Col: 5, Value: 4.8
Row: 1, Col: 6, Value: 5.7
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
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 0.7% AND 10.5% OF THE FUND'S
INVESTMENTS AT DECEMBER 31, 1995, AND JUNE 30, 1995, RESPECTIVELY.
FIDELITY OHIO MUNICIPAL INCOME FUND
(FORMERLY FIDELITY OHIO TAX-FREE HIGH YIELD PORTFOLIO)
INVESTMENTS DECEMBER 31, 1995
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 94.3%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
OHIO - 88.6%
Adams County Valley Local School Dist.:
Unltd. Tax:
6.65% 12/1/03 (MBIA Insured) Aaa $ 1,000,000 $ 1,147,500
6.65% 12/1/04 (MBIA Insured) Aaa 1,000,000 1,155,000
6.65% 12/1/05 (MBIA Insured) Aaa 1,000,000 1,161,250
Akron Parking Facs. Ltd. Tax:
8.75% 11/1/03 A 160,000 201,400
8.75% 11/1/04 A 160,000 204,400
8.75% 11/1/05 A 160,000 207,000
Akron Str. Impt. Ltd. Tax Series 1985-1:
8.75% 11/1/03 A 200,000 251,750
8.75% 11/1/04 A 200,000 255,500
8.75% 11/1/05 A 200,000 258,750
Alliance Wtrwks. Rev. (Cap. Appreciation) 0%
10/15/06 (FGIC Insured) Aaa 765,000 452,306
Bedford Hosp. Impt. Rev. Rfdg. (Bedford Commty.
Hosp.) Series 1990, 8.50% 5/15/09
(Escrowed to Maturity) (d) - 800,000 929,000
Berea Gen. Oblig. Ltd. Tax Rfdg.:
0% 12/1/04 Aa 535,000 348,419
5.125% 12/1/13 Aa 1,215,000 1,199,813
Berea Wtrwks. Rfdg. 0% 12/1/06 Aa 510,000 297,075
Berlin & Milan Local School Dist. Gen. Oblig.
7.45% 12/1/11 A 675,000 759,375
Bexley City School Dist. Gen. Oblig.:
0% 12/1/06 Aa 440,000 256,300
0% 12/1/07 Aa 540,000 297,675
0% 12/1/08 Aa 540,000 280,125
Buckeye Local School Dist. Rfdg.:
(Jefferson County):
(Cap. Appreciation) 0% 12/1/06
(AMBAC Insured) Aaa 375,000 219,844
0% 12/1/07 (AMBAC Insured) Aaa 760,000 418,950
Buckeye Valley Local School Dist. (Delaware
County) Series A, 6.85% 12/1/15
(MBIA Insured) Aaa 2,000,000 2,417,500
Butler County Hosp. Facs. Rev. Impt. Rfdg.
(Fort Hamilton-Hughes) 7.50% 1/1/10 Baa 1,500,000 1,575,000
Cambridge Hosp. Impt. Rev. Rfdg.
(Guernsey Mem. Hosp.) 8% 12/1/11 BBB 1,500,000 1,623,750
Clark County Hosp. Impt. Rev. Rfdg.
(Commty. Hosp.) Series A, 9.375%
4/1/08 A 800,000 822,360
Cleveland 6.75% 7/1/04 (MBIA Insured)
(Pre-refunded to 7/1/99 @102)(d) Aaa 1,000,000 1,101,250
Cleveland Gen. Oblig. Rfdg.:
5.30% 9/1/07 (AMBAC Insured) Aaa 2,000,000 2,070,000
5.375% 9/1/10 (AMBAC Insured) Aaa 1,025,000 1,044,219
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Cleveland Pub. Pwr. Sys. Rev. (Capital
Appreciation) (First Mtg.) Series A, 0%
11/15/08 (MBIA Insured) Aaa $ 5,480,000 $ 2,856,450
Cleveland Rfdg. Series A, 6.75% 10/1/11
(AMBAC Insured)
(Pre-refunded to 10/1/01 @ 102) (d) Aaa 1,850,000 2,106,688
Cleveland Wtrwks. Rev. Rfdg. (1st Mtg.):
Series F-92 A:
6.25% 1/1/15 (AMBAC Insured) Aaa 3,000,000 3,187,500
6.50% 1/1/21 (AMBAC Insured)
(Pre-refunded to 1/1/02 @102) (d) Aaa 1,000,000 1,125,000
Series F-92 B, 6.25% 1/1/05
(AMBAC Insured) Aaa 1,000,000 1,093,750
Series G:
5.50% 1/1/08 (MBIA Insured) Aaa 3,700,000 3,880,375
5.50% 1/1/13 (MBIA Insured) Aaa 11,475,000 12,020,062
5.50% 1/1/21 (MBIA Insured) Aaa 13,725,000 14,342,625
Columbus Gen. Oblig.:
Series B:
Rfdg.:
5.80% 1/1/00 Aaa 1,000,000 1,058,750
5.90% 1/1/01 Aaa 1,000,000 1,071,250
9.50% 4/15/04 Aaa 500,000 669,375
8.125% 5/1/01 Aaa 1,000,000 1,176,250
Ltd. Tax 9.375% 4/15/07 Aaa 590,000 820,100
Columbus Gen. Oblig. Series 1, 6% 5/15/10 Aaa 1,000,000 1,075,000
Columbus Swr. Impt. #26-E 6.50% 9/15/01 Aaa 2,000,000 2,222,500
Columbus Wtrwks. Enlargement #44 6%,
5/1/12 Aaa 1,250,000 1,323,437
Cuyahoga County Gen. Oblig.:
5.50% 11/15/05 Aa 2,400,000 2,559,000
5.60% 5/15/13 (MBIA Insured) Aaa 3,435,000 3,550,931
Ltd. Tax 5.65% 5/15/18 Aa 1,295,000 1,309,569
Cuyahoga County Gen. Oblig. Cap.
Appreciation Unltd. Tax Rdfg. Series A:
0% 10/1/08 (MBIA Insured) Aaa 4,000,000 2,115,000
0% 10/1/09 (MBIA Insured) Aaa 4,200,000 2,084,250
0% 10/1/10 (MBIA Insured) Aaa 5,000,000 2,343,750
0% 10/1/11 (MBIA Insured) Aaa 2,400,000 1,068,000
0% 1/1/12 (MBIA Insured) Aaa 1,505,000 632,100
0% 1/1/13 (MBIA Insured) Aaa 3,000,000 1,196,250
Cuyahoga County Health Care Facs. Rev.
(Judson Retirement Commty.) 8.875%
11/15/19 - 2,500,000 2,687,500
Cuyahoga County Hosp. Rev. Rfdg.
(Cleveland Clinic Foundation) Series A:
8% 12/1/08 Aa 1,000,000 1,078,750
8% 12/1/15 Aa 2,250,000 2,415,937
Dayton Arpt. Rev. Rfdg. (James M. Cox
Dayton Intl. Arpt.) 5.15% 12/1/07
(AMBAC Insured) Aaa 1,300,000 1,324,375
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Defiance Gen. Oblig. Spl. Assessments
7% 12/1/11 A $ 365,000 $ 402,412
Delaware City School Dist. (Capital Appreciation)
(Construction & Impt.) Series B:
0% 12/1/08 (FGIC Insured) Aaa 1,100,000 569,250
5.50% 12/1/08 (FGIC Insured) Aaa 1,400,000 1,450,750
0% 12/1/09 (FGIC Insured) Aaa 1,000,000 481,250
Delaware County Wtr. & Swr. 6.50% 12/1/03 A1 1,750,000 1,968,750
Dublin School Dist. Unltd. Tax Rfdg. (Cap.
Appreciation) 0% 12/1/04 (AMBAC Insured) Aaa 1,930,000 1,276,212
Fairfield City School Dist. Gen. Oblig.:
7.10% 12/1/07 (FGIC Insured) Aaa 1,120,000 1,327,200
7.45% 12/1/14 (FGIC Insured) Aaa 1,000,000 1,253,750
Franklin City School Dist. Gen. Oblig. Unltd. Tax
(Warren County Impt.) 7% 12/1/14 A 1,250,000 1,339,062
Franklin County Ltd. Tax:
Rfdg. 5.375% 12/1/21 Aaa 4,000,000 4,010,000
(Courthouse) 6.375% 12/1/17
(Pre-Refunded to 12/1/01 @ 102) (d) AAA 2,500,000 2,800,000
Franklin County Rev. (Online Computer Library Ctr.):
7.20% 7/15/06 - 1,000,000 1,102,500
6% 4/15/12 - 3,500,000 3,565,625
Granville Village School Dist. Rfdg.
(Cap. Appreciation):
0% 12/1/06 (AMBAC Insured) Aaa 625,000 366,406
0% 12/1/07 (AMBAC Insured) Aaa 665,000 366,581
0% 12/1/08 (AMBAC Insured) Aaa 650,000 336,375
0% 12/1/09 (AMBAC Insured) Aaa 645,000 313,631
Greene County 1st Mtg. Rev. (Fairview Extended
Care) Series A, 10.125% 1/1/11 - 140,000 158,725
Greene County Swr. Sys. Rev. (Cap. Appreciation)
0% 12/1/09, (AMBAC Insured) Aaa 775,000 376,844
Hamilton County Gen. Oblig. 5.10% 12/1/11 Aa 1,525,000 1,498,312
Hamilton County Health Care Sys. Rev.:
Rfdg. (Providence Hosp.-Franciscan Sisters
PoorHealth Sys.) 6.875% 7/1/15 Baa1 5,000,000 5,125,000
(Sisters of Charity Health Care) Series A:
6.25% 15/08 (AMBAC Insured) Aaa 4,220,000 4,541,775
6.25% 5/15/14 (AMBAC Insured) Aaa 1,000,000 1,060,000
Hamilton County Hosp. Facs. Rev.
Rfdg. (Children's Hosp. Med. Ctr.)
Series E, 5.20% 5/15/09 (MBIA Insured) Aaa 2,465,000 2,449,594
(Children's Hosp. Med. Ctr.) Series D, 5%
5/15/13 (FGIC Insured) Aaa 1,195,000 1,156,162
Hamilton County Swr. Sys. Rev.:
Rfdg. & Impt. Series A:
6% 12/1/05 (FGIC Insured) Aaa 4,500,000 4,955,625
6.70% 12/1/13
(Pre-Refunded to 6/1/01 @ 102)(d) A1 3,100,000 3,503,000
Rfdg. & Impt. Metro. Swr. Dist. Series A,
5.45% 12/1/09 (FGIC Insured) Aaa 1,500,000 1,558,125
Series A, 5.40% 12/1/08 (FGIC Insured) Aaa 3,715,000 3,845,025
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Hamilton Elec. Sys. Mtg. Rev. Rfdg.
Series 1992 A, 6% 10/15/08 (FGIC Insured) Aaa $ 2,000,000 $ 2,112,500
Lakewood Gen. Oblig.:
6.60% 12/1/08 Aa 1,525,000 1,759,469
Series A, 6.60% 12/1/11 Aa 1,630,000 1,894,875
Lakota Local School Dist. Gen. Oblig. Rfdg.:
(Cap. Appreciation):
(Unltd. Tax) 0% 12/1/99 A1 445,000 376,025
0% 12/1/00 A1 625,000 503,125
0% 12/1/01 A1 590,000 449,875
0% 12/1/02 A1 555,000 403,069
0% 12/1/03 A1 260,000 177,450
0% 12/1/04 A1 730,000 470,850
0% 12/1/05 A1 690,000 420,037
0% 12/1/06 A1 650,000 372,125
0% 12/1/07 A1 610,000 330,162
Logan-Hocking Local School Dist. Rfdg. Series B,
0% 12/1/08 (AMBAC Insured) Aaa 1,065,000 559,125
Lorain Gen. Oblig. Ltd. Tax 7.875% 12/1/09 Baa 1,000,000 1,115,000
Lorain Swr. Sys. Mtg. Rev. Rfdg. 8.75%
4/1/11 (Pre-Refunded to 4/1/98 @ 102)(d) BBB- 2,815,000 3,142,244
Lowellville San. Swr. Sys. Rev. (Browning-Ferris
Industries, Inc.) 7.25% 6/1/06 (b) A 1,400,000 1,452,500
Lucas County Convention Ctr. Site Acquisition
Bonds Ltd. Tax:
6.50% 12/1/09 A 340,000 384,200
6.50% 12/1/10 A 340,000 384,625
6.50% 12/1/11 A 340,000 384,625
6.50% 12/1/12 A 340,000 383,775
Lucas County Hosp. Rev. Rfdg. (Riverside Hosp.
Proj.) 7.625% 6/1/15 Baa1 7,485,000 7,676,167
Mahoning County Hosp. Facs. Rev. (YHA, Inc.
Proj.) Series A, 7% 10/15/14 (MBIA Insured) Aaa 1,000,000 1,098,750
Mahoning County San. Swr. Sys. Rev. 7.50%
2/1/19 (BIG Insured) Aaa 1,000,000 1,093,750
Mahoning Valley San. Dist.:
7.85% 12/15/12 - 1,200,000 1,282,500
7.85% 12/15/13 - 1,275,000 1,362,656
7.75% 5/15/14 - 3,250,000 3,477,500
Marion County Health Care Facs. Rev.
Rfdg. & Impt. (United Church Homes, Inc. Proj.)
6.30% 11/15/15 BBB- 1,800,000 1,768,500
Marysville Village School Dist. Gen. Oblig. Rfdg.
(Cap. Appreciation):
0% 12/1/05 (AMBAC Insured) Aaa 795,000 498,862
0% 12/1/06 (AMBAC Insured) Aaa 750,000 444,375
0% 12/1/07 (AMBAC Insured) Aaa 690,000 384,675
Marysville Swr. Sys. Ltd. Tax 7.15% 12/1/11 A 500,000 551,250
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Mason City Sch. Dist.:
6.05% 12/1/09 (FGIC Insured) A1 $ 1,225,000 $ 1,345,969
6.15% 12/1/10 (FGIC Insured) A1 1,420,000 1,574,425
Mentor Village School Dist. Gen. Oblig. Rdfg.
(Cap. Appreciation):
0% 12/1/00 (MBIA Insured) Aaa 755,000 608,719
0% 12/1/01 (MBIA Insured) Aaa 795,000 609,169
0% 12/1/02 (MBIA Insured) Aaa 845,000 616,850
0% 12/1/03 (MBIA Insured) Aaa 840,000 583,800
Mentor Gen. Oblig. Ltd. Tax Series 1991,
7.15% 12/1/11 A 500,000 545,625
Miami County Hosp. Facs. Rev. (Upper Valley
Med. Ctr. Proj.) Series B, 8.25% 5/1/04
(BIG Insured) Aaa 445,000 472,256
Middleburg Heights Hosp. Impt. Rev. (Southwest
Gen. Hosp.) 7.20% 8/15/19
(Pre-Refunded to 8/15/01 @102)(d) A 2,000,000 2,317,500
Muskingum County Rev. (Franciscan Health
Advisory Svcs.) 7.50% 3/1/12 BBB+ 2,000,000 2,117,500
Newark Wtr. (Cap. Appreciation) 0% 12/1/07
(AMBAC Insured) Aaa 455,000 253,662
Northeast Ohio Reg'l. Swr. Dist. Wastewtr. Rev. Rfdg.:
6.25% 11/15/04 (AMBAC Insured) Aaa 1,000,000 1,118,750
5.50% 11/15/12 (AMBAC Insured) Aaa 3,000,000 3,078,750
5.60% 11/15/14 (AMBAC Insured) Aaa 1,000,000 1,026,250
5.60% 11/15/16 (AMBAC Insured) Aaa 2,500,000 2,553,125
Ohio Air Quality Dev. Auth. Rev.:
Rfdg. (Ohio Pwr. Co. Proj.)
Series B, 7.40% 8/1/09 Baa1 3,250,000 3,505,937
(Columbus & Southern Pwr. Co.) Series A,
6.375% 12/1/20 (FGIC Insured) Aaa 3,000,000 3,225,000
Ohio Bldg. Auth. (Workers Composition Bldg. A)
4.75% 4/1/14 A 6,620,000 6,082,125
Ohio Bldg. Auth. Facs.:
Rfdg. (State Correctional Facs.) Series A:
6.50% 10/1/03 A1 2,750,000 3,042,187
5.70% 10/1/04 A1 1,125,000 1,205,156
5.75% 10/1/05 A1 2,080,000 2,230,800
(Administration Bldg. Fund Proj.) Series A:
5.60% 10/1/07 A1 3,330,000 3,475,687
5% 10/1/08 A1 3,205,000 3,168,944
(Ohio Ctr. Arts) Series A, 5.45% 10/1/07 A1 2,000,000 2,082,500
(Spl. Redemption Provision)
7.30% 4/1/05 (MBIA Insured)
(Pre-refunded to 4/1/00 @102) (d) Aaa 1,200,000 1,363,500
Ohio Cap. Corp. for Hsg. Multi-Family Rev. Rfdg.:
Series A, 7.50% 1/1/24 (FNMA Coll.) AAA 1,000,000 1,072,500
Series C, 7.375% 7/1/23 (FNMA Coll.) AAA 2,000,000 2,095,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Econ. Dev. Rev. Rfdg. (Kroger Co. Proj.)
Series 1992, 7.50% 9/1/10 Ba2 $ 2,000,000 $ 2,125,000
Ohio Expositions Commission Ctfs. of Prtn.
(Agricenter Facs.) 8.25% 10/1/06
(Pre-Refunded to 4/1/00 @ 101)(d) - 1,150,000 1,334,000
Ohio Gen. Oblig.:
(Cap. Appreciation Infrastructure)
Series 1989, 0% 9/1/07 Aa 7,225,000 4,082,125
Rfdg. (Infrastructure Impt.)
Series R, 5.45% 9/1/03 Aa 2,350,000 2,505,688
(College Savings Bonds):
0% 8/1/09 Aa 2,290,000 1,165,037
0% 8/1/10 Aa 2,000,000 960,000
Ohio Higher Edl. Facs. Commission Rev.:
Rfdg. (Case Western Reserve Univ. Proj.):
Series B, 6.50% 10/1/20 Aa 2,250,000 2,652,188
6% 10/1/14 Aa 1,500,000 1,651,875
6.125% 10/1/15 Aa 2,000,000 2,240,000
6.25% 10/1/16 Aa 2,500,000 2,846,875
7.70% 10/1/18 Aa 70,000 75,513
(Kenyon College Proj.):
5.90% 12/1/06 (AMBAC Insured) Aaa 1,000,000 1,070,000
5.30% 12/1/08 A 1,115,000 1,128,938
(Oberlin Coll. Proj.) 5.375% 10/1/15 AA 1,000,000 995,000
Ohio Infrastructure Impt. Rfdg. Series R, 0%
9/1/00 Aa 3,260,000 2,656,900
Ohio Liquor Profits Rev. Rfdg. 6.80% 9/1/98
(MBIA Insured) Aaa 2,000,000 2,145,000
Ohio Poll. Cont. Rev. (Standard Oil Co.)
6.75% 12/1/15 Aa3 3,100,000 3,692,875
Ohio Pub. Facs. Commission Higher Ed. Cap. Facs.:
Rfdg. Series II-A, 5.20% 5/1/05
(AMBAC Insured) Aaa 1,025,000 1,058,313
Series II-A, 6.25% 5/1/99 (AMBAC Insured) Aaa 4,000,000 4,250,000
Series II-B, 5% 11/1/00 (MBIA Insured) Aaa 4,000,000 4,125,000
Ohio Wtr. Dev. Auth. Impt. Rev. Rfdg. (Pure Wtr.)
5.50% 12/1/18 (AMBAC Insured) Aaa 2,500,000 2,518,750
Ohio Wtr. Dev. Auth. Poll. Cont. Facs. Rev.:
(Wtr. Control Loan Fd.) State Matching Series:
6.50% 1/1/04 (MBIA Insured) Aaa 1,000,000 1,125,000
6.50% 12/1/05 (MBIA Insured) Aaa 2,735,000 3,087,131
Ohio Wtr. Dev. Auth. Rev.:
5.90% 12/1/21 (AMBAC Insured) Aaa 2,500,000 2,606,250
(Fresh Wtr.):
6.25% 12/1/02 (AMBAC Insured) Aaa 1,915,000 2,120,863
6.25% 12/1/03 (AMBAC Insured) Aaa 2,025,000 2,255,344
(Pure Wtr.) Series I, 6% 12/1/16
(AMBAC Insured)(Escrowed to Maturity)(d) Aaa 1,685,000 1,842,969
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Wtr. Dev. Auth. Solid Waste Disp. Rev.
(North Star BHP Steel - Cargill) 6.30% 9/1/20 Aa3 $ 3,500,000 $ 3,710,000
Ohio Gen. Oblig. (Infrastructure Impt.):
6% 8/1/00 Aa 5,000,000 5,362,500
5.75% 8/1/04 Aa 1,000,000 1,083,750
6.50% 8/1/04 Aa 5,670,000 6,449,625
6.65% 9/1/09 Aa 1,000,000 1,150,000
Olentangy Local School Dist. Gen. Oblig.:
Unltd. Tax 7.75% 12/1/07 (BIG Insured) Aaa 500,000 630,000
7.75% 12/1/09 (BIG Insured) Aaa 100,000 126,875
7.75% 12/1/11 (BIG Insured) Aaa 190,000 243,438
Ottawa County Gen. Oblig. Ltd. Tax 7.50%
10/1/14 A1 500,000 566,250
Ottawa County San. Swr. Sys. Rev. Rfdg.
(Cap. Appreciation) (Danbury Proj.) 0%
10/1/06 (AMBAC Insured) Aaa 1,445,000 854,356
Pickerington Local School Dist.
7% 12/1/13 (AMBAC Insured)
(Pre-Refunded to 12/1/00 @ 102) Aaa 1,000,000 1,138,750
Pickerington Local School Dist. Gen. Oblig.
Constr. & Impt. 5.8% 12/1/09 (FGIC Insured) Aaa 1,000,000 1,080,000
Solon Gen. Oblig. (City Hall Impt.) 5.45%
12/1/13 Aa 1,000,000 1,003,750
South-Western City Sch. Dist. Gen. Oblig. Rfdg.
(Franklin & Pickway Counties) Series A,
6.20% 12/1/06 (AMBAC Insured) Aaa 1,000,000 1,088,750
Southwest Local School Dist. Gen. Oblig.
(Hamilton County):
0% 12/1/04 (AMBAC Insured) Aaa 500,000 330,000
0% 12/1/05 (AMBAC Insured) Aaa 525,000 327,469
0% 12/1/06 (AMBAC Insured) Aaa 525,000 309,094
0% 12/1/07 (AMBAC Insured) Aaa 520,000 288,600
Stark County Gen. Oblig. 5.60% 11/15/08
(AMBAC Insured) Aaa 1,150,000 1,188,813
Stark County Hosp. Rev. (Doctors Hosp. of
Stark County) 6% 4/1/13 Baa 5,840,000 5,453,100
Stark County Ind. Dev. Rev. Rfdg. (Kroger Co.)
7.20% 9/1/12 Ba2 3,100,000 3,220,125
Stow School Dist. Gen. Oblig. School Impt
Unltd. Tax 9.125% 12/1/06 A 590,000 777,325
Student Loan Fund Corp. Student Loan Rev.:
Rfdg. Series A, 7.25% 2/1/08 (b) A 4,000,000 4,285,000
(Cincinnati Student Loan) Sr. Sub-Series A,
5.75% 8/1/03 A1 2,000,000 2,060,000
Summit County Ind. Dev. Rev. Rfdg.
(Surnow Assoc. Proj. - Kroger Co.)
7.65% 10/1/06 Ba3 970,000 1,053,663
Tiffin San. Swr. Impt. Gen. Oblig. Ltd. Tax
7.10% 12/1/11 A 1,000,000 1,100,000
Toledo Gen. Oblig.:
6.10% 12/1/04 (AMBAC Insured) Aaa 1,750,000 1,861,563
7.625% 12/1/04 (AMBAC Insured) Aaa 1,000,000 1,218,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Union County Gen. Oblig. (Mem. Hosp.)
7.40% 12/1/10 A1 $ 680,000 $ 746,300
Warren County Gen. Oblig.:
6.10% 12/1/12 Aa 500,000 551,250
Ltd. Tax 6.65% 12/1/11 Aa 500,000 581,875
Warren Hsg. Dev. Corp. Rev. (1st Mtg. Rev.)
Section 8:
7.25% 6/1/04 - 200,000 206,250
7.25% 6/1/05 - 200,000 206,250
7.25% 6/1/06 - 200,000 206,250
7.25% 6/1/07 - 200,000 206,250
7.25% 6/1/08 - 200,000 206,250
Willoughby Gen. Oblig. Road Impt. Ltd. Tax
7.40% 12/1/11 A 1,200,000 1,482,000
Wright Univ. Gen. Receipts 5.15% 5/1/11
(AMBAC Insured) Aaa 1,000,000 1,002,500
Xenia Hsg. Dev. Corp. Rev. 1st Lien (Xenia
Tower Proj.) Section 8, 7.75% 2/1/10 - 1,965,000 2,006,579
Youngstown Gen. Oblig. Ltd. Tax 7.55%
12/1/11 Baa 1,500,000 1,683,750
351,957,987
PUERTO RICO - 5.7%
Puerto Rico Commonwealth Hwy. & Trans.
Auth. Hwy. Rev. Series T, 6.50% 7/1/22 Baa1 6,250,000 7,093,750
Puerto Rico Commonwealth Infrastructure
Fing. Auth. Spl. Tax Series 1988 A,
7.75% 7/1/08 Baa1 2,500,000 2,737,500
Puerto Rico Commonwealth Pub. Impt. Gen.
Oblig. Series 1990, 7.70% 7/1/20 Baa1 1,000,000 1,162,500
Puerto Rico Elec. Pwr. Auth. Pwr. Rev.:
Rfdg. Series S, 6.125% 7/1/09 Baa1 2,000,000 2,195,000
Rfdg. Series W, 7% 7/1/07
(MBIA Insured) Aaa 6,000,000 7,080,000
Series P, 7% 7/1/21 Baa1 2,000,000 2,292,500
22,561,250
TOTAL MUNICIPAL BONDS
(Cost $355,330,051) 374,519,237
MUNICIPAL NOTES (A) - 5.7%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
OHIO - 5.7%
Columbus Gen. Oblig. Various Purpose Unltd. Tax
Series 1995-1, 4.90%,
BPA Westdeutsche Landesbank, VRDN VMIG 1 $ 1,000,000 $ 1,000,000
Dayton Spl. Facs. Rev. Rfdg.
(Emery Air Freight Corp. Proj.):
Series 1988 D, 6.10%,
LOC Mellon Bank, VRDN (b) - 4,500,000 4,500,000
Series 1988 C, 6%, LOC Mellon Bank,
VRDN - 2,900,000 2,900,000
Ohio Air Quality Dev. Auth. Dev. Rev., VRDN:
(JMG Funding) Series 1994 B, 5%,
LOC Societe Generale (b) VMIG 1 3,400,000 3,400,000
(Cincinnati Gas & Elec.) Series A, 5.90%,
LOC ABN-AMRO Bank VMIG 1 400,000 400,000
Ohio State Univ. Rev. (Gen. Receipts)
Series 1985 B, VRDN:
5.50%, LOC Nat'l. Westminster Bank PLC VMIG 1 1,100,000 1,100,000
5.50%, (BPA Nat'l Westminster Bank PLC) VMIG 1 3,600,000 3,600,000
Ohio Wtr. Dev. Auth. Envir. Impt. Rev. Rfdg.
(The Mead Corp.) Series 1986 B, 5.90%,
LOC Swiss Bank, VRDN A-1+ 2,200,000 2,200,000
Scioto County Hosp. Rev. (VHA Central Inc. Cap.
Asset Fin. Prog.) Series 1985 G, 5%,
(AMBAC Insured) (BPA First Nat'l. Bank),
VRDN A-1 1,600,000 1,600,000
Student Loan Funding Corp. Cincinnati
Series 1992-A2, 5.25%, LOC National
Westminster Bank PLC, VRDN VMIG 1 2,000,000 2,000,000
TOTAL MUNICIPAL NOTES
(Cost $22,700,000) 22,700,000
TOTAL INVESTMENTS - 100%
(Cost $378,030,051) $ 397,219,237
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) 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) 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 72.9% AAA, AA, A 71.0%
Baa 10.5% BBB 7.9%
Ba 1.6% 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 4.8%. FMR has
determined that unrated debt securities that are lower quality account for
0.7% 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 28.3%
Water & Sewer 21.4
Health Care 11.3
Others
(individually less than 10%) 39.0
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1995, the aggregate cost of investment securities for
income tax purposes was $378,030,051. Net unrealized appreciation
aggregated $19,189,186 of which $19,563,454 related to appreciated
investment securities and $374,268 related to depreciated investment
securities.
At December 31, 1995, the fund was required to defer $1,199,449 of losses
on futures contracts.
FIDELITY OHIO MUNICIPAL INCOME FUND
(FORMERLY FIDELITY OHIO TAX-FREE HIGH YIELD PORTFOLIO)
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1995
5.ASSETS 6. 7.
8.Investment in securities, at value (cost $378,030,051) 9. $ 397,219,237
- -
See accompanying schedule
10.Receivable for investments sold 11. 6,713,224
12.Interest receivable 13. 5,158,552
14. 15.TOTAL ASSETS 16. 409,091,013
17.LIABILITIES 18. 19.
20.Payable to custodian bank $ 137,994 21.
22.Payable for investments purchased 3,790,689 23.
24.Payable for fund shares redeemed 107,866 25.
26.Distributions payable 381,108 27.
28.Accrued management fee 133,193 29.
30.Other payables and accrued expenses 96,989 31.
32. 33.TOTAL LIABILITIES 34. 4,647,839
35.36.NET ASSETS 37. $ 404,443,174
38.Net Assets consist of: 39. 40.
41.Paid in capital 42. $ 386,152,638
43.Accumulated undistributed net realized gain (loss) 44. (898,650)
on investments
45.Net unrealized appreciation (depreciation) 46. 19,189,186
on investments
47.48.NET ASSETS, for 34,899,139 shares outstanding 49. $ 404,443,174
50.51.NET ASSET VALUE, offering price and redemption 52. $11.59
price per share ($404,443,174 (divided by) 34,899,139 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1995
53.54.INTEREST INCOME 55. $ 23,481,071
56.EXPENSES 57. 58.
59.Management fee $ 1,547,084 60.
61.Transfer agent, accounting and custodian fees 621,233 62.
and expenses
63.Non-interested trustees' compensation 2,614 64.
65.Registration fees 9,369 66.
67.Audit 37,368 68.
69.Legal 2,647 70.
71.Miscellaneous 2,668 72.
73. 74.TOTAL EXPENSES 75. 2,222,983
76.77.NET INTEREST INCOME 78. 21,258,088
79.REALIZED AND UNREALIZED GAIN (LOSS) 81. 82.
80.Net realized gain (loss) on:
83. Investment securities 2,748,462 84.
85. Futures contracts (1,255,651) 1,492,811
86.Change in net unrealized appreciation (depreciation) 87. 34,935,377
on investment securities
88.89.NET GAIN (LOSS) 90. 36,428,188
91.92.NET INCREASE (DECREASE) IN NET ASSETS 93. $ 57,686,276
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED DECEMBER 31,
1995 1994
94.INCREASE (DECREASE) IN NET ASSETS
95.Operations $ 21,258,088 $ 23,627,156
Net interest income
96. Net realized gain (loss) 1,492,811 4,739,999
97. Change in net unrealized appreciation (depreciation) 34,935,377 (53,200,362)
98. 99.NET INCREASE (DECREASE) IN NET ASSETS 57,686,276 (24,833,207)
RESULTING FROM OPERATIONS
100.Distributions to shareholders (21,258,088) (23,627,156)
From net interest income
101. From net realized gain - (6,768,869)
102. 103.TOTAL DISTRIBUTIONS (21,258,088) (30,396,025)
104.Share transactions 98,716,714 98,297,570
Net proceeds from sales of shares
105. Reinvestment of distributions 16,250,656 23,452,964
106. Cost of shares redeemed (97,218,900) (174,126,840)
107.108. 17,748,470 (52,376,306)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
109. 54,176,658 (107,605,538)
110.TOTAL INCREASE (DECREASE) IN NET ASSETS
111.NET ASSETS 112. 113.
114. Beginning of period 350,266,516 457,872,054
115. End of period $ 404,443,174 $ 350,266,516
116.OTHER INFORMATION 118. 119.
117.Shares
120. Sold 8,863,429 8,731,920
121. Issued in reinvestment of distributions 1,447,995 2,111,339
122. Redeemed (8,706,556) (15,641,231)
123. Net increase (decrease) 1,604,868 (4,797,972)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
1995 1994 1993A 1992 1991
124.SELECTED PER-SHARE
DATA
125.Net asset value, $ 10.520 $ 12.020 $ 11.550 $ 11.320 $ 10.840
beginning of period
126.Income from .618 .657 .693 .718 .719
Investment Operations
Net interest income
127. Net realized and 1.070 (1.310) .720 .230 .480
unrealized gain (loss)
128. Total from 1.688 (.653) 1.413 .948 1.199
investment operations
129.Less Distributions (.618) (.657) (.693) (.718) (.719)
From net interest
income
130. From net realized - (.190) (.250) - -
gain
131. Total distributions (.618) (.847) (.943) (.718) (.719)
132.Net asset value, end $ 11.590 $ 10.520 $ 12.020 $ 11.550 $ 11.320
of period
133.TOTAL RETURN 16.39 (5.55) 12.56 8.66 11.45
% % % % %
134.RATIOS AND SUPPLEMENTAL DATA
135.Net assets, end of $ 404,443 $ 350,267 $ 457,872 $ 384,861 $ 327,767
period (000 omitted)
136.Ratio of expenses to .58 .57% .57 .61 .64
average net assets % % % %
137.Ratio of net interest 5.52 5.88% 5.67 6.31 6.53
income to average net % % % %
assets
138.Portfolio turnover 48 22% 41 20 11
rate % % % %
</TABLE>
A 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.
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
(FORMERLY 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 DECEMBER 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity Ohio Municipal Money Market Fun 3.48% 16.33% 25.84%
d
Average Ohio Tax-Free Money Market Fun 3.48% 15.78% n/a
d
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years or since the fund
started on 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 year. Recent U.S.
Consumer Price Index information is not available from the U.S. Department
of Labor. Therefore, the CPI comparison has not been included in this
report. (The periods covered by the IBC/Donoghue numbers are the closest
available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Fidelity Ohio Municipal Money Market Fun 3.48% 3.07% 3.69%
d
Average Ohio Tax-Free Money Market Fun 3.48% 2.97% n/a
d
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
12/26/94 3/27/95 6/26/95 10/2/95 1/1/96
Fidelity Ohio Municipal 3.96% 3.53% 3.57% 3.66% 4.06%
Money Market Fund
Average Ohio Tax-Free 3.78% 3.51% 3.63% 3.65% 4.03%
Money Market Fund
Ohio Municipal Money 6.69% 5.94% 6.03% 6.17% 6.86%
Market Tax-equivalent
Portion of the fund's 0.74% 4.10% 0.0% 2.30% 0.0%
income subject to state
taxes
Row: 1, Col: 1, Value: 3.96
Row: 1, Col: 2, Value: 3.78
Row: 2, Col: 1, Value: 3.53
Row: 2, Col: 2, Value: 3.51
Row: 3, Col: 1, Value: 3.57
Row: 3, Col: 2, Value: 3.63
Row: 4, Col: 1, Value: 3.66
Row: 4, Col: 2, Value: 3.65
Row: 5, Col: 1, Value: 4.06
Row: 5, Col: 2, Value: 4.03
Ohio Municipal
Money Market
Fund
Average Ohio
Tax-Free 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 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 FUND
(FORMERLY FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jan Bradburn,
Portfolio Manager of Fidelity Ohio Municipal Money Market Fund
Q. JAN, WHAT KIND OF INVESTMENT CLIMATE DID YOU OPERATE IN DURING 1995?
A. The distinguishing features of the past year were slow to moderate
growth, declining interest rates and mild inflationary pressures. Together,
they made for a far more attractive set of conditions than what appeared to
be in store for us at the beginning of the year. Back then, the Federal
Reserve was still doing its best to put the brakes on a rapidly expanding
economy, in hopes of preventing an outbreak of inflation. Accordingly, the
Fed raised the interest rate banks charge each other for overnight loans -
known as the federal funds rate - one-quarter percentage point in February
1995. It was the seventh rate increase during the past 12 months and it
lifted the federal funds rate to 6.00%. But when growth slowed to an annual
rate of 1.3% during the second quarter of 1995, down from 2.7% during the
first quarter, we began to hear warnings that the economy might be headed
for another recession. At that point the Fed shifted to an easing mode,
twice lowering the federal funds rate one-quarter percentage point - first
on July 6, 1995 and again just before the period ended, on December 19,
1995.
Q. WHAT WAS YOUR STRATEGY DURING THE YEAR?
A. The fund's average maturity was 54 days when the period began. That's a
neutral posture, and was appropriate given the unstable conditions that
prevailed. Once supply entered the market in early summer, I extended the
fund's average maturity, reaching 72 days by the end of June and staying
close to that for the next several months. As of December 31, 1995, the
fund's average maturity stood at 59 days - back in the neutral range.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on December 31, 1995 was 4.04%, little
changed from 4.15% a year ago. For Ohio investors in the 40.80% combined
federal and state income-tax bracket, the latest yield was the equivalent
of a 6.82% yield on a taxable investment. Through December 31, 1995, the
fund's one-year total return was 3.48%, compared to 3.48% for the average
Ohio tax-free money market fund, according to IBC/Donoghue.
Q. WHAT'S THE OUTLOOK?
A. Given the prospects for continued slow growth and benign inflation, I
think it's unlikely that we've seen the last of the Fed rate cuts in the
current cycle. One variable I'll be watching closely in the coming months
is the status of the budget debate in Washington. A balanced budget
agreement between the White House and Congress would likely have a
restrictive effect on economic growth, which the Fed in turn might seek to
offset by lowering interest rates. So, in the months ahead, I'll look for
opportunities to lock in longer-term securities at attractive rates, but I
probably won't move the fund's average maturity much beyond 60 days. My
goal is to capture a portion of the higher yields available from
longer-term securities without giving up the flexibility to respond to
changing conditions.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
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 December
31,1995, more than $296
million
MANAGER: Janice Bradburn,
since 1993; manager, Fidelity
Massachusetts Municipal
Money Market and Spartan
Massachusetts Municipal
Money Market, since 1992;
Fidelity New York Municipal
Money Market, since 1989;
Spartan New York Municipal
Money Market, since 1990,
and Spartan Florida Money
Market, 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 FUND
(FORMERLY FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
12/31/95 6/30/95 12/31/94
0 - 30 62 60 61
31 - 90 15 10 16
91 - 180 12 13 15
181 - 397 11 17 8
WEIGHTED AVERAGE MATURITY
12/31/95 6/30/95 12/31/94
Ohio Municipal
Money Market Fund 59 days 72 days 54 days
Average Ohio Tax-Free
Money Market Fund* 60 days 55 days 55 days
ASSET ALLOCATION
AS OF DECEMBER 31, 1995 AS OF JUNE 30, 1995
Row: 1, Col: 1, Value: 60.0
Row: 1, Col: 2, Value: 5.0
Row: 1, Col: 3, Value: 8.0
Row: 1, Col: 4, Value: 26.0
Row: 1, Col: 5, Value: 2.0
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
Variable rate
demand notes
(VRDNs) 60%
Commercial
paper 5%
Tender bonds 8%
Municipal
notes 26%
Other 1%
Variable rate
demand notes
(VRDNs) 51%
Commercial
paper 8%
Tender bonds 15%
Municipal
notes 25%
Other 1%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
(FORMERLY FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO)
INVESTMENTS DECEMBER 31, 1995
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - 100.0%
Ashtabula County Hosp. Facs. Rev. (Ashtabula Medical Center
Proj.) 5.20%, LOC Bank One Cleveland, VRDN (b) $ 4,000,000 $ 4,000,000
Bedford Heights Ind. Dev. Rev. (Olympic Steel) Series 1989,
5.30%, LOC Nat'l. City Bank, Cleveland, VRDN (b) 1,400,000 1,400,000
Berea BAN 4.07% 10/24/96 1,500,000 1,501,984
Brook Park BAN 4.25% 7/5/96 1,040,000 1,041,522
Brooklyn BAN 4.15% 8/7/96 2,100,000 2,103,911
Butler County BAN:
Series B, 4.10% 4/19/96 1,200,000 1,201,386
Series C, 4.12% 3/15/96 900,000 900,743
5.07% 3/15/96 2,250,000 2,252,043
4.74% 4/19/96 4,250,000 4,255,351
Butler County Ind. Dev. Rev. (Trey Corrugated Inc.) Series 1995,
5.40%, LOC First of America Indiana, VRDN (b) 5,475,000 5,475,000
Centerville School Dist. BAN 4.40% 3/14/96 2,000,000 2,002,134
Chillicothe BAN 4.04% 7/5/96 1,000,000 1,000,683
Clermont County Ind. Dev. Rev. (American Micro Products
Proj.) 5.40%, LOC Star Bank,VRDN (b) 5,815,000 5,815,000
Cleveland-Cuyahoga County Port Auth. Rev.
(Rock'n Roll Hall of Fame & Museum Proj.), 5.15%,
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 4,003,703
Clinton County Arpt. Facs. Rev. (Wilmington Air Park Inc.)
Series 1991, 5.15%, LOC Wachovia Bank, VRDN 5,000,000 5,000,000
Columbus Sewerage Sys. Rev. Rfdg.
Series 1994, 4.95%, VRDN 4,500,000 4,500,000
Columbus Various Purp. Unltd. Tax Rev.
Series 1995-1, 4.90% SBPA Westdeutsche Landesbank,
VRDN 3,900,000 3,900,000
Cuyahoga County Gen. Oblig. Bonds 3.75% 11/15/96 775,000 775,000
Cuyahoga County Health Care Facs. Rev.
(Benjamin Rose Institute Proj.) Series 1995 B, 5.20%,
LOC Key Corp. VRDN 1,750,000 1,750,000
Dayton Airport Impt. Auth. BAN 4.05% 7/25/96 675,000 675,545
Dayton Spl. Facs. Rev. Rfdg. (Emery Air Freight Corp. Proj.), VRDN:
Series 1988 D, 6.10%, LOC Mellon Bank (b) 2,100,000 2,100,000
Series 1993-E, 5.40%, LOC Mellon Bank 6,000,000 6,000,000
Fairfax Ind. Dev. Rev. (Johnson & Hardin Co. Proj.)
Series 1990, 5.50%, LOC PNC Bank Ohio., VRDN (b) 3,000,000 3,000,000
Franklin County Ind. Dev. Rev.:
Rfdg. (Alco Standard Corp. Proj.) Series 1994, 5.35%,
LOC Nationsbank NC, VRDN 1,700,000 1,700,000
(Inland Products Inc.) 5.50%, LOC PNC Bank, Ohio,
VRDN (b) 900,000 900,000
Hamilton County Health Care Facs. Rev.
(West Park Retirement Commty.) Series 1989, 5.10%,
LOC Fifth Third Bank, Cincinnati, VRDN 7,850,000 7,850,000
Holmes County Ind. Dev. Rev. (Poultry Processing, Inc.)
Series 1990, 5.30%, LOC Rabobank Nederland,
VRDN (b) 500,000 500,000
Lake County BAN 4.07% 10/10/96 1,680,000 1,681,494
Lakewood City BAN 4.75% 5/10/96 1,286,800 1,288,551
Lucas County Water & Swr. BAN 4.25% 11/28/96 2,000,000 2,007,862
Marion City BAN 5% 4/25/96 3,200,000 3,203,842
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Marion County Hosp. Impt. Rev. (Pooled Lease Prog.), VRDN:
Series 1991, 5.20%, LOC Bank One, Columbus $ 2,605,000 $ 2,605,000
Series 1992, 5.20%, LOC Bank One, Akron 5,405,000 5,405,000
Medina County Ind. Dev. Rev. (North American Roto Engravers,
Inc. Proj.) Series 1988 5.35%,
LOC Bank One, Akron , VRDN (b) 755,000 755,000
Mentor City BAN 4.30% 8/8/96 4,980,000 4,994,835
Middletown Ind. Dev. Rev. (Pilot Chemical Proj.) 5.35%,
LOC Bank One, Dayton, VRDN (b) 2,700,000 2,700,000
Montgomery County BAN:
5% 1/26/96 4,610,000 4,612,266
5% 4/26/96 1,595,000 1,598,353
5% 4/26/96 5,615,000 5,626,827
Ohio Air Dev. Auth. Air Quality Dev. Rev., VRDN (b):
Series 1994-A, 5%, 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. Envir. Impt. Rev. Bonds (USX Corp.)
3.70% tender 5/1/96, LOC Wachovia Bank 1,730,000 1,730,000
Ohio Air Quality Dev. Auth. Poll. Cont. Rev. Bonds:
(Cleveland Electric Co.)
3.75%, tender 2/9/96 (FGIC Insured) 700,000 700,000
(Duquesne Light Co.) 3.70%, tender 2/8/96,
LOC Toronto Dominion Bank (b) 3,000,000 3,000,000
Ohio Air Quality Dev. Auth. Rev., VRDN (b):
(JMG Funding Ltd.):
Series B, 5%, LOC Societe Generale 8,000,000 8,000,000
5%, LOC Societe Generale 2,000,000 2,000,000
Ohio Bldg. Auth. Bonds Series 1995 A, 3.65% 10/1/96 1,000,000 1,000,000
Ohio Hsg. Fin. Agcy. Multifamily Hsg.
(Kenwood Congregate Retirement Commty. Proj.) 3.90%,
LOC Morgan Guaranty Trust Co., VRDN 2,100,000 2,100,000
Ohio Hsg. Fin. Auth. Participating VRDN, Series PA-93,
5.15% (Liquidity Facility Merrill Lynch)(b)(c) 3,265,000 3,265,000
Ohio Hsg. Single Family Mtg. Rev. Bonds:
Series C-16, 3.95% tender 2/1/96
(Liquidity Facility Citibank) 6,910,000 6,910,000
Series C-19, 3.95%, tender 8/1/96
(Liquidity Facility Citibank) 7,190,000 7,190,000
Ohio Ind. Dev. Rev., VRDN (b):
(Aerolite Extrusion) Series 1991 IA, 5.30%,
LOC Nat'l. City Bank of Columbus 180,000 180,000
(Anomatic Corp.) Series 1989 I, 5.30%,
LOC Nat'l. City Bank of Columbus 240,000 240,000
(Arthur Corp.) Series 1989 IIIA, 5.30%,
LOC Nat'l. City Bank of Columbus 255,000 255,000
(Burnham Corp.):
Series 1987 N, 5.30%, LOC Bank One, Columbus 380,000 380,000
Series 1988 II, 5.30%, LOC PNC Bank, Ohio 355,000 355,000
(CCE Inc.) Series 1989, 5.30%,
LOC Nat'l. City Bank of Columbus, VRDN 910,000 910,000
(Carpenter/Clapp & Haney Tool Co.) Series 1987 P,
5.30%, LOC Bank One, Columbus 360,000 360,000
(Cole Tool & Die) Series 1988 H, 5.30%,
LOC Bank One, Columbus 220,000 220,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Ind. Dev. Rev. - continued
(Corpad Head Co.) Series 1988 II, 5.30%,
LOC PNC Bank, Ohio $ 555,000 $ 555,000
(Die Matic Inc.) Series O, 5.30%, LOC Bank One, Columbus 335,000
335,000
(Dramex Int'l., Inc.):
Series 1988 I, 5.30%, LOC Bank One, Columbus 1,000,000 1,000,000
Series 1988 II, 5.30%, LOC PNC Bank, Ohio 200,000 200,000
(EF Realty) Series A, 5.30%,
LOC Nat'l. City Bank, Cleveland 160,000 160,000
(EPIC Technologies Inc.) Series 1988 D, 5.30%,
LOC Bank One, Columbus 250,000 250,000
(Economy Machine & Tool Inc. Proj.) Series 1988 II,
5.30%, LOC PNC Bank Ohio 100,000 100,000
(Gary W. James) Series 1986 B, 4.30%,
LOC Nat'l City Bank of Columbus 265,000 265,000
(HGN Realty/Shalmet Ohio, Inc.) Series 1989 III A,
5.30%, LOC Nat'l City Bank of Columbus 1,720,000 1,720,000
(Hydro Tube Corp.) 5.30%,
LOC Nat'l. City Bank Columbus 90,000 90,000
(K&S Realty) Series 1989 I, 5.30%, LOC Nat'l City Bank 300,000 300,000
(K&S Realty/Starr Fabricating, Inc.) Series 1989 III,
5.30%, LOC Nat'l. City Bank of Columbus 230,000 230,000
(Kaufmans Bakery) Series K, 5.30%,
LOC Bank One, Columbus 795,000 795,000
(Midwest Acoust-A-Fiber, Inc.) Series 1989 I, 5.30%,
LOC Nat'l City Bank of Columbus 535,000 535,000
(Morrow Macke Realty) Series 1988 C, 5.30%,
LOC Bank One, Columbus 640,000 640,000
(Oak Printing) Series 1991, 5.30%,
LOC Nat'l. City Bank of Columbus 450,000 450,000
(Plasticos Co.) Series 1989 IIIA, 5.30%,
LOC Nat'l. City Bank of Columbus 620,000 620,000
(Prentke Romich) Series 1989 III, 5.30%,
LOC Nat'l. City Bank of Columbus 95,000 95,000
(SBD Properties Co.) Series 1986 L, 5.30%,
LOC Nat'l. City Bank of Columbus 190,000 190,000
(Samuel and Annie Sherman) Series 1989 III A, 5.30%,
LOC Nat'l City Bank of Columbus 300,000 300,000
(Sheffield Steel) Series 1988 B, 5.30%,
LOC Bank One, Columbus 50,000 50,000
(Southwest Fin. Svcs.) Series 1986, 5.30%,
LOC Nat'l. City Bank of Columbus 75,000 75,000
(Standby Screw) Series 1991, 5.30%,
LOC Nat'l. City Bank of Columbus 745,000 745,000
(Steubenville Area) Series 1988 II, 5.30%,
LOC PNC Bank, Ohio 345,000 345,000
(Thomas K. Issacs) Series 1990 IB, 5.30%,
LOC Nat'l. City Bank of Columbus 210,000 210,000
(United Steel Svc.) Series 1988 J, 5.30%,
LOC Bank One, Coloumbus 640,000 640,000
(VRE Inc.) Series F, 5.30%, LOC Bank One, Columbus 190,000 190,000
(Walker-Williams Lumber Co.) Series 1989 IIIA, 5.30%,
LOC Nat'l. City Bank of Columbus 1,130,000 1,130,000
(Wooster Iron Metal Co.) Series 1988 R, 5.30%,
LOC Bank One, Columbus 430,000 430,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Infrastructure Impt. Bonds 7% 9/1/96 $ 1,000,000 $ 1,039,196
Ohio Poll. Cont. Rev. Bonds (Sohio Air Proj. British
Petroleum Co.) Series 1995, 6%,VRDN 1,400,000 1,400,000
Ohio Single Family Mtg. Bonds Series C-18, 3.95%,
tender 8/1/95 (Liquidity Facility Citibank)(b) 4,300,000 4,300,000
Ohio Water Dev. Auth. Poll. Cont. Facs. Bonds:
Rfdg. (Cleveland Elec. Proj.) Series 1988 A, 3.75%,
tender 2/9/96 (FGIC Insured) 5,000,000 5,000,000
(Duquesne Light Co. Proj.):
3.80%, tender 1/26/96,
LOC Toronto Dominion Bank (b) 2,000,000 2,000,000
3.75%, tender 2/16/96,
LOC Toronto Dominion Bank (b) 3,500,000 3,500,000
Ohio Water Dev. Auth. Solid Waste Disp. Rev.
(American Steel & Wire Corp.) 5.50%,
LOC Bank of America Illinois, VRDN (b) 3,900,000 3,900,000
Ohio Water Dev. Auth. Participating VRDN, Series PA-1016B,
5.15%, (Liquidity Facility Merrill Lynch)(c) 3,080,000 3,080,000
Oregon City Waste BAN 4% 12/19/96 4,900,000 4,920,511
Ross County Hosp. Facs. Rev. (Medical Center Hosp. Proj.)
Series 1995, 5.15%, LOC Fifth Third Bank, VRDN 2,000,000 2,000,000
Scioto County Hosp. Rev., VRDN:
(VHA Capital Asset Fin. Prog.):
Series 1985 D, 5%,(AMBAC Insured) 1,000,000 1,000,000
Series 1985 E, 5% (AMBAC Insured) VRDN 1,400,000 1,400,000
Scioto County Marine Term. Facs. Rev. (Norfolk Southern
Corp. Proj.) 5.10%, VRDN 1,300,000 1,300,000
Shaker Heights BAN 4.30% 10/18/96 3,860,000 3,873,294
Sharonville Ind. Dev. Rev. (Xtec, Inc.) Series 1991, 5.35%,
LOC Fifth Third Bank, VRDN (b) 1,200,000 1,200,000
Solon Ind. Dev. Rev. (Cleveland Twist Drill Co.) Series 1995,
5.50%, LOC NationsBank (b) 1,000,000 1,000,000
Stark County Ind. Dev. Rev. (Liquid Cont. Corp. Proj.)
Series 1987, 5.35%, LOC Bank One, VRDN (b) 370,000 370,000
Student Loan Funding Corp. Student Loan Rev., VRDN (b):
Series 1990-A1, 4.25%, LOC Nat'l. Westminster 4,700,000 4,700,000
Series 1990-A2, 5.25%, LOC Nat'l. Westminster 7,700,000 7,700,000
Series 1990-A3, 5.25%, LOC Nat'l. Westminster 6,400,000 6,400,000
Summit County BAN:
5% 3/7/96 4,000,000 4,002,409
4.25% 6/6/96 4,000,000 4,004,118
Summit County Ind. Dev. Rev. Bonds:
(Kuchard Proj.) 4.05%, tender 4/1/96,
LOC Bank One, Akron 510,000 510,000
(SGS Tool Co. Proj.) 3.90%, tender 4/1/96,
LOC Bank One, Akron 2,300,000 2,300,000
(Spark Tec Int'l. Proj.) Series 1989, 4%, tender 5/1/96,
LOC Bank One, Columbus (b) 340,000 340,000
Summit County Ind. Dev. Rev., VRDN (b):
Series 1995 A, 5.40%,
LOC Nat'l. City Bank of Columbus 2,200,000 2,200,000
(Kuchar Proj.) Series 1987, 5.35%,
LOC Bank One, Akron 995,000 995,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OHIO - CONTINUED
Summit County Ind. Dev. Rev., VRDN (b) - continued
(Keltec Inc. Proj.) Series 1987, 5.35%,
LOC Bank One, Akron $ 380,000 $ 380,000
(Mannix County Proj.) Series 1987, 5.35%,
LOC Bank One, Akron 2,100,000 2,100,000
(Triumph Holdings Proj.) 5.40%,
LOC Nat'l. City Bank of Columbus 1,850,000 1,850,000
Toledo-Lucas County Convention & Visitors Bureau Rev. Rfdg.
(Toledo-Lucas County Convention Ctr. Proj.) Series 1991,
5.35%, LOC Marine Midland Bank, VRDN 2,080,000 2,080,000
Trumbull County Ind. Dev. Rev. (McDonald Steel Corp.)
Series 1990, 5.50%, LOC Marine Midland Bank, VRDN (b) 2,200,000
2,200,000
Union City BAN 3.75% 12/12/96 1,000,000 1,001,361
Union County BAN 4.19% 6/28/96 1,000,000 1,001,363
Univ. of Cincinnati BAN Series K-1, 5% 3/21/96 4,000,000 4,002,919
Univ. of Cincinnati Gen. Oblig. BAN Series T,
4.25% 8/28/96 5,500,000 5,508,667
Upper Arlington School Dist. BAN 4.20% 4/11/96 4,000,000 4,005,986
Van Wert County Ind. Dev. Auth. Rev.
(Toledo Molding & Die Inc.) Series 1994, 5.35%,
LOC Bank One, Columbus, VRDN (b) 3,665,000 3,665,000
Warren County Ind. Dev. Rev. (Johnson & Hardin Enterprise)
Series 1990 A, 5.50%, LOC PNC Bank, Ohio, VRDN (b) 3,000,000 3,000,000
Washington County Ind. Dev. Rev. (Forma Scientific, Inc. Proj.)
5.50%, LOC BankOne, Akron, VRDN (b) 600,000 600,000
Wood County Ind. Dev. Rev. (TL Industries & AMPP Inc. Proj.)
5.40%, LOC Nat'l. CityBank, VRDN (b) 2,000,000 2,000,000
TOTAL INVESTMENTS - 100% $ 293,252,859
Total Cost for Income Tax Purposes $ 293,252,859
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 bonds.
INCOME TAX INFORMATION
At December 31, 1995, the fund had a capital loss carryforward of
approximately $29,500 of which $5,100, $6,100, $11,000 and $7,300 will
expire on December 31, 1998, 2000, 2002 and 2003, respectively.
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
(FORMERLY FIDELITY OHIO MUNICIPAL MONEY MARKET PORTFOLIO)
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1995
139.ASSETS 140. 141.
142.Investment in securities, at value - See 143. $ 293,252,859
accompanying schedule
144.Cash 145. 505,330
146.Interest receivable 147. 2,676,564
148. 149.TOTAL ASSETS 150. 296,434,753
151.LIABILITIES 152. 153.
154.Distributions payable $ 37,278 155.
156.Accrued management fee 98,110 157.
158.Other payables and accrued expenses 79,003 159.
160. 161.TOTAL LIABILITIES 162. 214,391
163.164.NET ASSETS 165. $ 296,220,362
166.Net Assets consist of: 167. 168.
169.Paid in capital 170. $ 296,249,869
171.Accumulated net realized gain (loss) on 172. (29,507)
investments
173.174.NET ASSETS, for 296,249,869 shares 175. $ 296,220,362
outstanding
176.177.NET ASSET VALUE, offering price and 178. $1.00
redemption price per share ($296,220,362 (divided by)
296,249,869 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1995
179.180.INTEREST INCOME 181. $ 11,566,594
182.EXPENSES 183. 184.
185.Management fee $ 1,153,092 186.
187.Transfer agent, accounting and custodian fees 552,269 188.
and expenses
189.Non-interested trustees' compensation 1,990 190.
191.Registration fees 6,686 192.
193.Audit 25,455 194.
195.Legal 3,749 196.
197. 198.TOTAL EXPENSES 199. 1,743,241
200.201.NET INTEREST INCOME 202. 9,823,353
203.204.NET REALIZED GAIN (LOSS) ON INVESTMENTS 205. (7,269)
206.207.NET INCREASE IN NET ASSETS RESULTING FROM 208. $ 9,816,084
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED DECEMBER 31,
1995 1994
209.INCREASE (DECREASE) IN NET ASSETS
210.Operations $ 9,823,353 $ 7,053,853
Net interest income
211. Net realized gain (loss) (7,269) (11,009)
212. 9,816,084 7,042,844
213.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
214.Distributions to shareholders from net interest (9,823,353) (7,053,853)
income
215.Share transactions at net asset value of $1.00 per 442,960,400 547,410,061
share
Proceeds from sales of shares
216. Reinvestment of distributions from net interest 9,431,453 6,760,085
income
217. Cost of shares redeemed (457,855,477) (514,839,223)
218.219. (5,463,624) 39,330,923
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES
RESULTING FROM SHARE TRANSACTIONS
220. (5,470,893) 39,319,914
221.TOTAL INCREASE (DECREASE) IN NET ASSETS
222.NET ASSETS 223. 224.
225. Beginning of period 301,691,255 262,371,341
226. End of period $ 296,220,362 $ 301,691,255
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
227.SELECTED PER-SHARE DATA
228.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
229.Income from .034 .025 .021 .028 .044
Investment Operations
Net interest income
230.Less Distributions (.034) (.025) (.021) (.028) (.044)
From net interest
income
231.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
232.TOTAL RETURN A 3.48 2.50 2.09 2.81% 4.50%
% % %
233.RATIOS AND SUPPLEMENTAL DATA
234.Net assets, end of $ 296,220 $ 301,691 $ 262,371 $ 270,248 $ 247,885
period (000 omitted)
235.Ratio of expenses to .61 .57 .59 .58% .47%
average net assets % % % B B
236.Ratio of net interest 3.42 2.48 2.07 2.78% 4.41%
income % % %
to average net assets
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
B FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES.
On December 14, 1995, the Board of Trustees gave approval to change the
names of Fidelity Ohio Tax-Free High Yield Portfolio and Fidelity Ohio
Municipal Money Market Portfolio to Fidelity Ohio Municipal Income Fund and
Fidelity Ohio Municipal Money Market Fund, respectively, effective February
20, 1996. Fidelity Ohio Municipal Income Fund (the income fund) is a fund
of Fidelity Municipal Trust. Fidelity Ohio Municipal Money Market Fund (the
money market fund) is a fund of Fidelity Municipal Trust II. Each trust is
registered under the Investment Company Act of 1940, as amended (the 1940
Act), as an open-end management investment company. Fidelity Municipal
Trust and Fidelity Municipal Trust II (the trusts) are organized as a
Massachusetts business trust and a Delaware business trust, respectively.
Each fund is authorized to issue an unlimited number of shares. The
following summarizes the significant accounting policies of the income fund
and the money market fund:
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix system
and/or appraisals by a pricing service, both of which consider market
transactions and dealer-supplied valuations. 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Accumulated undistributed net realized gain (loss) on investments may
include temporary book and tax basis differences that will reverse in a
subsequent period. Any taxable gain remaining at fiscal year end is
distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The income 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.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $172,519,985 and $173,410,746, respectively.
The market value of futures contracts opened and closed during the period
amounted to $90,206,372 and $91,346,753, 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 by
multiplying the two components, a group fee rate plus a fixed individual
fund fee rate, by the average net assets of each fund. The group fee rate
is the weighted average of a series of rates and is based on the monthly
average net assets of all the mutual funds advised by FMR. The rates ranged
from .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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
rate is .25%. For the period, the management fees were equivalent to an
annual rate of .40% of average net assets for the income and money market
funds.
The Board of Trustees has approved a new group fee rate schedule with rates
ranging from .1100% to .3700%. Effective January 1, 1996, FMR voluntarily
agreed to implement this new group fee rate schedule as it results in the
same or a lower management fee.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, 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.
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 $3,233 and
$67,010 for the income 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. The funds pay
account fees and asset-based fees that vary according to account size and
type of account. FSC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements. The accounting fee is based
on the level of average net assets for the month plus out-of-pocket
expenses. For the period, FSC received transfer agent and accounting fees
amounting to $446,652 and $164,613 for the income fund and $467,522 and
$58,019 for the money market fund, respectively; the transfer agent fees
were equivalent to annual rates of .12% and .16% of average net assets for
the income and money market funds, 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 $8,485.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Municipal Trust and Fidelity Municipal Trust II
and the Shareholders of Fidelity Ohio Tax-Free High Yield Portfolio and
Fidelity Ohio Municipal Money Market Portfolio:
We have audited the accompanying statements of assets and liabilities of
Fidelity Ohio Tax-Free High Yield Portfolio, a portfolio of Fidelity
Municipal Trust, and Fidelity Ohio Municipal Money Market Portfolio, a
portfolio of Fidelity Municipal Trust II, including the schedule of
portfolio investments, as of December 31, 1995, and the related statements
of operations for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Ohio Tax-Free High Yield Portfolio and Fidelity Ohio Municipal
Money Market Portfolio as of December 31, 1995, the results of their
operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 2, 1996
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
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
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
56 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
511 Pine Street
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Page 47 = BLANK
Do NOT strip-in this type
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
INVESTMENT 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
Janice S. Bradburn, Vice President -
MONEY MARKET FUND
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Thomas D. Maher, Assistant
Vice President - 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
SPARTAN(registered trademark)
(registered trademark)
PENNSYLVANIA
MUNICIPAL
FUNDS
ANNUAL REPORT
DECEMBER 31, 1995
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
(FORMERLY 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 FUND
(FORMERLY 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.
REPORT OF INDEPENDENT
ACCOUNTANTS 38 The auditors' opinion.
</TABLE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although the markets were fairly positive in 1995, no one can predict what
lies ahead for investors. The previous 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 INCOME FUND
(FORMERLY 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 on an average sized account. You can also look at the fund's
income to measure 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 DECEMBER 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Pennsylvania Municipal Income Fu 17.43% 54.92% 108.58%
nd
Lehman Brothers Municipal Bond Index 17.45% 52.61% n/a
Average Pennsylvania Municipal Bond Fun 17.15% 51.79% n/a
d
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on 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 for the past year.
Both benchmarks include reinvested dividends and capital gains, if any.
Recent U.S. Consumer Price Index information is not available from the U.S.
Department of Labor. Therefore, the CPI comparison has not been included in
this report.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Pennsylvania Municipal Income Fu 17.43% 9.15% 8.13%
nd
Lehman Brothers Municipal Bond Index 17.45% 8.82% n/a
Average Pennsylvania Municipal Bond Fun 17.15% 8.70% n/a
d
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 PenLB Munici
08/31/86 10000.00 10000
09/30/86 10054.66 10025.1
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 10622.6
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 10077.4
10/31/87 9290.88 10113.07
11/30/87 9561.05 10377.12
12/31/87 9737.58 10527.7
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 11182.9
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 12374.03
10/31/89 11984.65 12525.37
11/30/89 12126.32 12744.56
12/31/89 12212.13 12848.81
01/31/90 12144.68 12788.04
02/28/90 12252.26 12902.49
03/31/90 12254.26 12906.36
04/30/90 12074.27 12812.92
05/31/90 12375.68 13092.62
06/30/90 12488.22 13207.71
07/31/90 12651.31 13402.52
08/31/90 12468.05 13207.92
09/30/90 12531.05 13215.44
10/31/90 12711.91 13455.17
11/30/90 12984.68 13725.76
12/31/90 13091.25 13785.46
01/31/91 13261.54 13970.46
02/28/91 13338.09 14092.01
03/31/91 13367.32 14097.08
04/30/91 13577.22 14285.28
05/31/91 13739.14 14412.27
06/30/91 13670.82 14398
07/31/91 13874.87 14573.37
08/31/91 14065.40 14765.3
09/30/91 14228.90 14957.55
10/31/91 14351.82 15092.17
11/30/91 14390.41 15134.27
12/31/91 14726.74 15459.05
01/31/92 14766.47 15494.3
02/29/92 14774.42 15499.26
03/31/92 14773.31 15504.99
04/30/92 14928.20 15642.99
05/31/92 15114.57 15827.11
06/30/92 15358.33 16092.69
07/31/92 15841.49 16575.14
08/31/92 15676.41 16413.54
09/30/92 15760.34 16520.88
10/31/92 15518.10 16358.48
11/30/92 15887.98 16651.46
12/31/92 16068.91 16821.47
01/31/93 16280.61 17017.11
02/28/93 16918.95 17632.61
03/31/93 16726.18 17446.24
04/30/93 16889.06 17622.27
05/31/93 16992.36 17721.31
06/30/93 17280.07 18017.08
07/31/93 17258.90 18040.68
08/31/93 17692.01 18416.29
09/30/93 17952.11 18626.05
10/31/93 17961.11 18662
11/30/93 17807.71 18497.58
12/31/93 18186.82 18888.07
01/31/94 18423.87 19103.77
02/28/94 17976.51 18608.98
03/31/94 17185.54 17851.22
04/30/94 17275.00 18002.6
05/31/94 17469.46 18158.68
06/30/94 17440.66 18047.73
07/31/94 17721.82 18378.55
08/31/94 17782.40 18442.14
09/30/94 17530.24 18171.41
10/31/94 17228.57 17848.68
11/30/94 16818.79 17525.98
12/31/94 17270.98 17911.73
01/31/95 17800.09 18423.64
02/28/95 18338.60 18959.4
03/31/95 18597.75 19177.25
04/30/95 18653.00 19199.88
05/31/95 19151.33 19812.55
06/30/95 18964.06 19639.19
07/31/95 19130.12 19825.36
08/31/95 19332.40 20076.75
09/30/95 19549.88 20203.84
10/31/95 19789.06 20497.6
11/30/95 20099.85 20837.66
12/29/95 20282.37 21037.91
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Pennsylvania Municipal Income Fund on August 31, 1986, shortly after the
fund started. As the chart shows, by December 31, 1995, the value of your
investment would have grown to $20,282 - a 102.82% increase on your initial
investment. This assumes you still own the fund on December 31, 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 $21,038 - a 110.38% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
Dividend returns 6.52% 5.73% 6.68% 7.00% 7.53%
Capital appreciation
returns 10.91% -10.77% 6.49% 2.11% 4.95%
Total returns 17.43% -5.04% 13.17% 9.11% 12.48%
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 DECEMBER 31, 1995 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.64(cents) 28.38(cents) 59.03(cents)
Annualized dividend rate 5.13% 5.40% 5.74%
30-day annualized yield 4.94% - -
30-day annualized tax-equivalent yield 7.94% - -
</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 $10.64 over
the past month, $10.43 over the past six months and $10.29 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 INCOME FUND
(FORMERLY SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO)
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
In sharp contrast to much of
1994, the municipal bond
market posted strong returns for
the 12 months ended December
31, 1995. For the period, the
Lehman Brothers Municipal
Bond Index - a broad measure
of the tax-free market - had a
total return of 17.45%. By
comparison, the Lehman
Brothers Aggregate Bond Index
- - a proxy for investment-grade
taxable bonds - had a total
return of 18.47%. Tax-free
bonds kicked off 1995 by
surging ahead of their taxable
counterparts in the first quarter
on signs of a slowing economy
and tamer inflation expectations.
By spring, however, the muni
bond market began to
underperform U.S. Treasury
securities when Congress
began consideration of tax-code
changes, some of which
threatened the tax-exempt
status of municipal securities.
This threat of tax reform
dampened enthusiasm in the
municipal bond market, stalling
the rally and helping shorter
maturity bonds to outperform
their longer counterparts
throughout the spring and
summer months. By the fourth
quarter, historically attractive
valuations relative to Treasuries,
continued low issuance, and
stronger demand from insurance
companies and retail buyers
helped longer-term tax-free
bonds rebound.
An interview with Steven Harvey, Portfolio Manager of Spartan
Pennsylvania Municipal Income Fund
Q. HOW DID THE FUND PERFORM, STEVE?
A. For the 12-months ended December 31, 1995, the fund returned 17.43%. For
comparison purposes, the average Pennsylvania municipal bond fund, as
tracked by Lipper Analytical Services, returned 17.15% for the same period.
Additionally, the Lehman Brothers Municipal Bond Index returned 17.45%.
Q. WHAT WERE SOME OF THE MAJOR DEVELOPMENTS IN THE MUNICIPAL BOND MARKET
SINCE THE END OF THE FUND'S SEMIANNUAL PERIOD ON JUNE 30, 1995?
A. Over the last three or four months, there's been a dramatic flattening
of the municipal bond yield curve. The yield curve - or the graphical
representation of the yields of various bond maturities - flattened when
long-term yields fell more than short and intermediate yields. During the
fourth quarter of 1995, municipal bonds responded positively to fading
fears about the imminent implementation of a federal flat tax, which would
threaten the tax-exempt status of municipal bonds, as well as to a rally in
the U.S. Treasury market.
Q. SO HOW DID THIS AFFECT THE WAY YOU MANAGED THE FUND?
A. I was able to buy more high-quality Pennsylvania state and local general
obligation bonds in the intermediate - or five to 10 year maturity - range.
With a flattening yield curve, one has to give up very little yield to get
bonds with less interest rate risk than longer-maturity bonds.
Additionally, these bonds were cheaper than longer-maturity bonds when
their yields are compared with taxable U.S. Treasuries.
Q. PHILADELPHIA'S FINANCES HAVE CERTAINLY IMPROVED. WHAT HAS THE CITY'S
IMPROVEMENT MEANT FOR THE FUND?
A. The gradual improvement of Philadelphia's finances has been a big story
for the fund. In the summer of 1991, the municipal credit rating agencies
had downgraded the city to a speculative CCC rating as a result of its
financial dire straits. Since then, with a new mayor and a sound fiscal
program, the rating agencies returned the city to investment grade status
in 1995 - a positive reflection of the city's ability to pay their bonds'
principal and interest in a timely fashion. The fund benefited from the
resulting price appreciation of the bonds issued by the Pennsylvania
Convention Center Authority which are backed by Philadelphia's taxing
power.
Q. SO, HAVE YOU ADDED TO THE FUND'S POSITION IN PHILADELPHIA BONDS?
A. Actually, I began to reduce the position and take some profits. While
the city has shown improvement, I believe it still has a long way to go.
Now that the tight fiscal situation seems to be in the past, city workers
will probably demand raises after having gone years without them, the
public will most likely want higher quality services and there is a good
chance that the city will be forced to find ways to expand its revenue
base.
Q. YOU SIGNIFICANTLY REDUCED THE FUND'S POSITION IN HIGHER-YIELDING,
LOWER-QUALITY BONDS. DID THEY NOT PERFORM WELL?
A. A low supply of lower-quality bonds contributed to a tightening of
spreads - or difference in yield - between these bonds, resulting in price
appreciation among many of the fund's lower-quality holdings. Nevertheless,
some of the fund's lower-quality health care holdings did not perform well.
Both in Philadelphia and Pittsburgh, many hospital consolidations and
fierce competition have had a detrimental effect on the bonds of many
lower-rated health care providers. As a result, many of the non-investment
grade health care bonds performed poorly.
Q. WHAT ARE YOU LOOKING FOR NOW IN THE HEALTH CARE SECTOR?
A. I've utilized Fidelity's strong research capabilities to try to find
issuers that have a large market share in their respective location and a
forward- thinking management approach. A good example of this is the
Hospital of University of Pennsylvania. In a recent positive development,
UPENN Hospital announced an affiliation with Presbyterian Hospital and
several suburban hospitals as well.
Q. WHAT WERE SOME OTHER STRATEGIES OF NOTE?
A. In positioning the fund, I think about the Pennsylvania component of the
Lehman Brothers Municipal Bond Index as being representative of the
Pennsylvania municipal market. I've also focused on improving the convexity
of the portfolio. Like duration, convexity measures the sensitivity of a
bond to interest rate changes. Generally the more convexity a bond has, the
slower its price will fall and the faster it should rise when interest
rates change. One way I've improved convexity is buying non-callable bonds
- - or those that can not be bought back by their issuer. Historically,
non-callable bonds with good convexity have offered good performance
characteristics without sacrificing yield.
Q. WHAT'S YOUR OUTLOOK?
A. It certainly has been a tremendous year for all of the fixed-income
markets. Investors, however, should not assume the bond markets will be
able to maintain the torrid pace they set in 1995.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
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 December 31,
1995, more than $288 million
MANAGER: Steven Harvey,
since 1993; manager, Fidelity
Massachusetts Municipal
Income; Fidelity Ohio
Municipal Income, since 1994;
Spartan Maryland Municipal
Income, since 1993; joined
Fidelity in 1986
(checkmark)
STEVEN HARVEY ON
PENNSYLVANIA'S ABOVE-AVERAGE
UNEMPLOYMENT RATE:
"According to the latest
figures available from the
U.S. Labor Department,
Pennsylvania's
unemployment rate was 6.3%
at the end of November 1995
while the national average
stood at 5.6%. I think you
have to look at these numbers
in terms of the major
economic restructuring that
has gone on in the
Commonwealth. According to
state estimates, in 1970, 35%
of the population worked in
manufacturing and heavy
industry. In contrast, by 1994,
only 18% worked in "rust belt"
industries, while a full 30% of
the population worked in
service industries. This
restructuring will make the
state less vulnerable to a
manufacturing led recession.
"One of the priorities of
Governor Tom Ridge's
administration is to increase
economic development by
making the Commonwealth
more friendly to business
interests. The governor is
committed to rolling back the
state's recent prohibitive
business taxes. Additionally,
sound financial management
has given the state budget
surpluses for the last four
years."
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
(FORMERLY SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO)
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF DECEMBER 31, 1995
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO
General Obligation 31.2 19.0
Water & Sewer 14.4 14.9
Health Care 9.9 17.5
Education 9.2 7.1
Special Tax 8.2 7.4
AVERAGE YEARS TO MATURITY AS OF DECEMBER 31, 1995
6 MONTHS AGO
Years 14.1 16.2
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 DECEMBER 31, 1995
6 MONTHS AGO
Years 7.7 8.0
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF DECEMBER 31, 1995 AS OF JUNE 30, 1995
Aaa 47.3%
Aa, A 23.1%
Baa 17.1%
Ba, B 2.1%
Non-rated 4.4%
Short-term investments 6.0%
Aaa 37.2%
Aa, A 14.3%
Baa 20.3%
Ba, B 4.2%
Non-rated 16.3%
Short-term investments 7.7%
Row: 1, Col: 1, Value: 47.3
Row: 1, Col: 2, Value: 23.1
Row: 1, Col: 3, Value: 17.1
Row: 1, Col: 4, Value: 2.1
Row: 1, Col: 5, Value: 4.4
Row: 1, Col: 6, Value: 6.0
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
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 3.4% AND 15.3% OF THE FUND'S
INVESTMENTS AT DECEMBER 31, 1995, AND JUNE 30, 1995, RESPECTIVELY.
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
(FORMERLY SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO)
INVESTMENTS DECEMBER 31, 1995
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 94.0%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
NEW JERSEY - 0.8%
Delaware River Port. Auth. Pennsylvania & New
Jersey Rev. 5.45% 1/1/11 (FGIC Insured) Aaa $ 2,230,000 $ 2,257,875
PENNSYLVANIA - 92.4%
Allegheny County Gen. Oblig. 0% 4/1/11
(MBIA Insured) Aaa 2,560,000 1,145,600
Allegheny County Hosp. Dev. Auth. Rev. Rfdg.
(South Side Hosp.) Series A, 8.75% 6/1/10 BBB 3,750,000 3,890,625
Allegheny County Ind. Dev. Auth. Rev.
(YMCA Pittsburgh Proj.) Series 1990,
8.75% 3/1/10 - 2,630,000 2,860,125
Allegheny County Residential Fin. Auth. Mtg. Rev.:
Series H, 8% 6/1/17 (GNMA Coll.) Aaa 210,000 219,188
Series 1990, 7.95% 6/1/23
(GNMA Coll.) (b) Aaa 1,505,000 1,593,419
Allegheny County San. Auth. Swr. Rev.:
Series B, 7.50% 12/1/16 (FGIC Insured) Aaa 750,000 827,813
0% 12/1/12 (FGIC Insured) Aaa 2,260,000 898,350
Beaver County Ind. Dev. Auth. Rev. Rfdg.
(Washington Plaza Assoc.) 6% 2/15/07 Ba3 1,595,000 1,559,113
Bethlehem Wtr. Auth. Rev. 6.25% 11/15/21
(MBIA Insured)
(Pre-Refunded to 11/15/01 @100) (d) Aaa 1,000,000 1,097,500
Butler County Ind. Dev. Auth. 1st Mtg. Rev. Rfdg.
(Sherwood Oaks Proj.) (Lifetime Care Commty.)
Series A, 8.75% 6/1/16 A- 675,000 701,926
Clarion County Hosp. Auth. Hosp. Rev.
(Clarion Hosp. Proj.):
Rfdg. 8.10% 7/1/12 BBB- 6,000,000 6,367,500
8.50% 7/1/13 BBB- 2,820,000 3,084,375
8.50% 7/1/21 BBB- 1,665,000 1,812,769
Clearfield County Ind. Dev. Auth. Rev. Rfdg.
(Washington Plaza Assoc. Proj.) 7% 12/1/06 Ba2 1,650,000 1,744,875
Dauphin County Ind. Dev. Auth. Wtr. Dev. Rev.
(Dauphin Consolidated Wtr. Supply)
Series A, 6.90% 6/01/24 (b) A3 1,000,000 1,163,750
Delaware County Auth. Hosp. Rev. (Crozer-Chester):
6% 12/15/09 Baa1 1,000,000 1,013,750
6% 12/15/20 Baa1 1,000,000 983,750
Delaware County Ind. Dev. Auth. Rev. Rfdg.
(Resources Recovery Proj.) Series A, 8.10%
12/1/13, LOC Swiss Bank Aa3 1,400,000 1,465,772
Delaware County Unltd. Tax Rfdg. 5.30%
11/15/01 Aa 2,200,000 2,307,250
Erie County Series B, 6.75% 9/1/16
(FGIC Insured)
(Pre-Refunded 9/1/01@100) (d) Aaa 1,000,000 1,118,750
Harrisburg Auth. Wtr. Rev. 5.875% 6/18/15
(FGIC Insured) Aaa 6,000,000 6,187,500
Jenks Township Muni. Auth. Rev.
(Abraxas Group, Inc.) 8% 4/1/18 - 6,605,000 6,613,256
Lehigh County Gen. Purp. Auth. Rev.
(Hosp. Healtheast, Inc.) Series B, 9% 7/1/15
(Pre-Refunded to 7/1/97 @ 102) (d) A1 1,000,000 1,090,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
McCandless Ind. Dev. Auth. Ind. Dev. Rev.
(Kroger Co.) 7.375% 10/15/07 Ba2 $ 2,070,000 $ 2,217,488
McKeesport Area School Dist. Rfdg. Series C,
5% 4/1/13 A 1,000,000 957,500
Meadville Rfdg. Series B, 6% 10/1/05
(AMBAC Insured) Aaa 3,210,000 3,518,963
Montgomery County Higher Ed. & Health Auth.
Hosp. Rev. (United Hosp. Proj.) Series A,
10% 11/1/05 Ba1 650,000 664,021
Northumberland County Auth. Commonwealth
Lease Rev. 0% 10/15/10
(MBIA Insured) Aaa 1,000,000 470,000
Pennsbury School Dist. Rfdg. 6% 8/15/05
(FGIC Insured) Aaa 1,605,000 1,779,544
Pennsylvania Convention Ctr. Auth. Rev. Rfdg.
Series A:
6.60% 9/1/09 Baa 9,150,000 9,813,375
6.70% 9/1/14 Baa 3,965,000 4,237,594
6.75% 9/1/19 Baa 3,420,000 3,638,025
Pennsylvania Convention Ctr. Rev. Series A, 6%
9/1/19 (FGIC Insured)
(Escrowed to Maturity) (d) Aaa 9,225,000 10,274,344
Pennsylvania Gen. Oblig.:
Rfdg. & Proj. Series 1-A, 6.75% 1/1/11 A1 1,100,000 1,189,375
Series A:
6.75% 5/1/98 A1 1,000,000 1,057,500
6.10% 11/15/03 (AMBAC Insured) Aaa 10,310,000 11,212,125
Series 1:
6% 9/15/98 A1 2,000,000 2,092,500
6% 9/15/01 A1 1,100,000 1,185,250
5% 5/1/02 (FGIC Insured) Aaa 1,000,000 1,025,000
Series 2:
5.50% 7/1/01 A1 1,135,000 1,193,169
5.60% 7/1/02 A1 1,000,000 1,058,750
0% 7/1/07 (AMBAC Insured) Aaa 1,770,000 988,987
Series 3:
6.10% 11/15/04 (FGIC Insured) Aaa 1,000,000 1,105,000
5% 9/1/09 A1 1,245,000 1,223,212
5.10% 6/15/03 (MBIA Insured) Aaa 1,000,000 1,032,500
6.125% 9/15/03 A1 2,000,000 2,175,000
5.375% 5/1/11 A1 4,000,000 4,040,000
Pennsylvania Gen. Oblig. Unltd. Tax Rfdg.
Series 1, 5.30% 5/1/04 A1 3,500,000 3,657,500
Pennsylvania Higher Ed. Assistance Agcy.
Student Loan Rev.:
6.173% 3/1/22 (AMBAC Insured) (b) Aaa 4,000,000 4,100,000
6.854% 9/1/26 (AMBAC Insured) (b) Aaa 2,000,000 2,130,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Higher Edl. Facs. Auth. College & Univ. Rev.:
Rfdg. (Carnegie-Mellon Univ.) 6%
11/1/05 AA- $ 1,000,000 $ 1,112,500
(Pennsylvania Med. College Proj.)
Series A, 8.375% 3/1/11 Baa 900,000 994,500
(Univ. Of Pennsylvania):
Rfdg. Series A:
6.50% 9/1/02 Aa 1,750,000 1,957,813
6.50% 9/1/04 Aa 2,650,000 3,004,438
Rfdg Series B:
6.50% 9/1/02 Aa 1,950,000 2,181,563
6.50% 9/1/04 Aa 2,100,000 2,380,875
Series A, 7% 9/1/01 Aa 2,000,000 2,267,500
Series B, 7% 9/1/05 Aa 2,000,000 2,362,500
Pennsylvania Hsg. Fin. Agcy. Single Family Mtg.:
Series V, 7.80% 4/1/16 Aa 500,000 525,625
Series 1990-27, 8.15% 10/1/21 (b) Aa 320,000 337,600
Pennsylvania Ind. Dev. Auth. Econ. Dev. Rev:
7% 1/1/07 (AMBAC Insured) Aaa 1,500,000 1,760,625
7% 7/1/07 (AMBAC Insured) Aaa 3,650,000 4,309,875
5.80% 1/1/08 (AMBAC Insured) Aaa 3,000,000 3,198,750
5.80% 7/1/09 (AMBAC Insured) Aaa 1,000,000 1,066,250
Pennsylvania Intergovernmental Coop. Auth.
Spl. Tax Rev.:
Rfdg. Series A, 5% 6/15/13 A 7,500,000 7,181,250
(City of Philadelphia Funding Prog.):
6% 6/15/00 (FGIC Insured) Aaa 2,000,000 2,130,000
5.75% 6/15/15 A 9,500,000 9,690,000
Pennsylvania Turnpike Commission Rev. Series J,
7.20% 12/1/17 (FGIC Insured)
(Pre-Refunded to 12/1/01 @102) (d) Aaa 1,000,000 1,162,500
Philadelphia Airport System Rev. Series A,
6.10% 6/15/25 (AMBAC Insured) Aaa 5,000,000 5,187,500
Philadelphia Gas Wks. Rev. Rfdg.
Series A-14, 6.375% 7/1/14 Baa1 1,900,000 1,968,875
Philadelphia Gen. Oblig. 6.25% 5/15/10
(MBIA Insured) Aaa 3,200,000 3,480,000
Philadelphia Hosp. & Higher Ed. Facs. Auth Rev.
(Graduate Health Sys.):
Series A, 6.25% 7/1/18 Baa1 4,400,000 4,361,500
Series B, 6.25% 7/1/13 Baa1 1,000,000 1,001,250
Philadelphia Muni. Auth. Rev.:
(Justice Lease) 7.10% 11/15/11 (FGIC Insured)
(Pre-Refunded to 11/15/01 @102) (d) Aaa 2,500,000 2,890,625
(Muni. Svcs. Bldg. Lease):
0% 3/15/11 (CGIC Insured) Aaa 1,000,000 443,750
0% 3/15/14 (CGIC Insured) Aaa 7,360,000 2,750,800
Philadelphia Redev. Auth. Hsg. Rev. Sub-Series 3,
8.125% 8/1/26 (GNMA Coll.) AAA 45,000 50,175
Philadelphia Wtr & Swr. Rev.:
(Cap. Appreciation) 14th Series, 0%
10/1/08 (MBIA Insured) Aaa 5,300,000 2,729,500
7.50% 8/1/10
(Pre-Refunded to 8/1/01 @102) (d) Baa 3,000,000 3,510,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Philadelphia Wtr. & Wastewtr. Rev.:
Rfdg. 5.50% 6/15/07 (AMBAC Insured) Aaa $ 7,000,000 $ 7,315,000
6.75% 8/1/04 (MBIA Insured) Aaa 2,085,000 2,392,538
6.75% 8/1/05 (MBIA Insured) Aaa 1,610,000 1,857,538
Pittsburgh Gen. Oblig.:
Series A:
Rfdg. 5.50% 9/1/14 (AMBAC Insured) Aaa 5,310,000 5,456,025
5.875% 9/1/00 (MBIA Insured) Aaa 1,315,000 1,397,188
Pittsburgh School Dist. Series B:
0% 8/1/07 (AMBAC Insured) Aaa 2,610,000 1,448,550
0% 8/1/08 (AMBAC Insured) Aaa 2,000,000 1,047,500
Pittsburgh Urban Redev. Auth. Mtg. Rev.
Series A, 7.625% 10/1/17 A1 995,000 1,021,039
Pittsburgh Wtr. & Swr. Rev. Rfdg. Series A,
6.50% 9/1/13 (FGIC Insured) Aaa 15,705,000 18,001,856
Scranton Parking Auth. Parking Rev. 8.125%
9/15/14, LOC Northeastern Bank
(Pre-Refunded to 9/15/98 @100) (d) A 500,000 549,375
Somerset County Hosp. Auth. 1st Mortgage Rev.
(Health Care-GF):
8.40% 6/1/09 - 1,000,000 1,026,250
8.50% 6/1/24 Aaa 2,005,000 2,047,605
Southeastern Pennsylvania Trans. Auth. Special
Rev. Series A:
6.50% 3/1/03 (FGIC Insured) Aaa 2,520,000 2,806,650
6.50% 3/1/04 (FGIC Insured) Aaa 1,485,000 1,663,200
Westmoreland County Gen. Oblig. Rfdg.
Series G, 0% 12/1/09 (FGIC Insured) Aaa 2,490,000 1,192,087
Westmoreland County Muni. Auth. Svc. Rev.
Series K, 0% 7/1/13 (FGIC Insured)
(Escrowed to Maturity) (d) Aaa 3,500,000 1,356,250
Wilson Area School Dist. (Cap. Appreciation):
0% 5/15/09 (AMBAC Insured) Aaa 3,275,000 1,617,030
0% 5/15/10 (AMBAC Insured) Aaa 3,280,000 1,525,200
0% 5/15/11 (AMBAC Insured) Aaa 3,500,000 1,544,374
Wyoming Ind. Dev. Auth. Poll. Cont. Rev.
(Proctor & Gamble Paper Proj.)
5.55% 5/1/10 Aa2 5,000,000 5,243,749
York City Unltd. Tax Gen. Oblig. Swr. Auth. Swr.
Rev. 0% 12/1/12 (MBIA Insured) Aaa 3,235,000 1,306,130
265,596,951
PUERTO RICO - 0.5%
Puerto Rico Commonwealth Urban Renewal & Hsg.
Corp. Rfdg. 7.875% 10/1/04 Baa1 1,000,000 1,121,250
Puerto Rico Elect. Pwr. Auth. Pwr. Rev. 7.125%
7/1/14 Baa1 370,000 406,538
1,527,788
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED)(C) AMOUNT (NOTE 1)
GUAM - 0.3%
Guam Pwr. Auth. Rev. Series A, 5.25% 10/1/13 BBB $ 1,000,000 $ 913,750
TOTAL MUNICIPAL BONDS
(Cost $256,312,619) 270,296,364
MUNICIPAL NOTES (A) - 6.0%
PENNSYLVANIA - 6.0%
Allegheny County Hosp. Dev. Auth. Health Ctr.
Rev. (Presbyterian Univ. Health Sys.)
Series 1990 C, 5% (MBIA Insured)
(BPA Credit Suisse) VRDN VMIG 1 1,400,000 1,400,000
Allegheny County Ind. Dev. Auth. Rev. Rfdg.
(Chelsea Industries Inc.) Series 1994, 5.30%
12/1/08, LOC First National Bank of
Boston, VRDN (e) P-1 500,000 500,000
Commonwealth of Pennsylvania TAN
Series 1995-96, 4.50% 6/28/96 MIG 1 4,000,000 4,021,360
Delaware County Ind. Dev. Auth. Arpt. Fac. Rev.
(United Parcel Svc. Proj.) Series 1985,
5.90%, VRDN A-1+ 900,000 900,000
Pennsylvania Energy Dev. Auth. Rev.
(B & W Edensburg Proj.) Series 1986, 5.20%,
LOC Swiss Bank Corp., VRDN (b) VMIG 1 3,400,000 3,400,000
Pennsylvania Higher Ed. Assistance Agcy.
Student Loan Rev.,VRDN (b) :
Series 1988 A, 5.25%, LOC Student Loan
Marketing Assoc. VMIG 1 500,000 500,000
Series 1988 C, 5.25% , LOC Student Loan
Marketing Assoc. VMIG 1 3,400,000 3,400,000
Philadelphia TRAN 4.50% 6/27/96 MIG 1 3,000,000 3,015,000
Schuylkill County Ind. Dev. Auth. Rev.
(Pine Grove Landfill, Inc.) Series 1995,
6.10%, LOC Meridian Bank,
VRDN (b) P-1 200,000 200,000
TOTAL MUNICIPAL NOTES
(Cost $17,336,360) 17,336,360
TOTAL INVESTMENTS - 100%
(Cost $273,648,979) $ 287,632,724
SECURITY TYPE ABBREVIATIONS
TRAN - Tax and 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)Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(d)Security collateralized by an amount sufficient to pay interest and
principal.
(e)Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
ACQUISITION ACQUISITION
SECURITY DATE COST
Allegheny County
Ind. Dev. Auth. Rev. Rfdg.
(Chelsea Ind. Inc.) 12/20/95 $ 500,000
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 69.2% AAA, AA, A 70.7%
Baa 11.5% BBB 15.7%
Ba 2.2% 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 4.4%. FMR has
determined that unrated debt securities that are lower quality account for
3.4% 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 31.2%
Water and Sewer 14.4
Others
(individually less than 10%) 54.4
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1995, the aggregate cost of investment securities for
income tax purposes was $273,648,979. Net unrealized appreciation
aggregated $13,983,745, of which $14,102,091 related to appreciated
investment securities and $118,346 related to depreciated investment
securities.
At December 31, 1995, the fund had a capital loss carryforward of
approximately $176,917 which will expire on December 31, 2003.
At December 31, 1995, the fund was required to defer $1,901,550 of losses
on futures contracts.
SPARTAN PENNSYLVANIA MUNICIPAL INCOME FUND
(FORMERLY SPARTAN PENNSYLVANIA MUNICIPAL HIGH YIELD PORTFOLIO)
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1995
5.ASSETS 6. 7.
8.Investment in securities, at value (cost $273,648,979) 9. $ 287,632,724
- -
See accompanying schedule
10.Cash 11. 887,232
12.Receivable for investments sold 13. 1,000,227
14.Interest receivable 15. 3,960,740
16.Redemption fees receivable 17. 118
18. 19.TOTAL ASSETS 20. 293,481,041
21.LIABILITIES 22. 23.
24.Payable for investments purchased $ 4,408,815 25.
26.Payable for fund shares redeemed 199,781 27.
28.Distributions payable 313,115 29.
30.Accrued management fee 134,009 31.
32. 33.TOTAL LIABILITIES 34. 5,055,720
35.36.NET ASSETS 37. $ 288,425,321
38.Net Assets consist of: 39. 40.
41.Paid in capital 42. $ 276,520,043
43.Accumulated undistributed net realized gain (loss) 44. (2,078,467)
on investments
45.Net unrealized appreciation (depreciation) 46. 13,983,745
on investments
47.48.NET ASSETS, for 27,020,361 shares outstanding 49. $ 288,425,321
50.51.NET ASSET VALUE, offering price and redemption 52. $10.67
price per share ($288,425,321 (divided by) 27,020,361 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1995
53.54.INTEREST INCOME 55. $ 17,069,417
56.EXPENSES 57. 58.
59.Management fee $ 1,494,332 60.
61.Non-interested trustees' compensation 1,239 62.
63. 64.TOTAL EXPENSES 65. 1,495,571
66.67.NET INTEREST INCOME 68. 15,573,846
69.REALIZED AND UNREALIZED GAIN (LOSS) 71. 72.
70.Net realized gain (loss) on:
73. Investment securities 1,366,692 74.
75. Futures contracts (1,800,392) (433,700)
76.Change in net unrealized appreciation (depreciation) 77. 27,933,708
on investment securities
78.79.NET GAIN (LOSS) 80. 27,500,008
81.82.NET INCREASE (DECREASE) IN NET ASSETS 83. $ 43,073,854
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED DECEMBER 31,
1995 1994
84.INCREASE (DECREASE) IN NET ASSETS
85.Operations $ 15,573,846 $ 17,378,326
Net interest income
86. Net realized gain (loss) (433,700) 5,948,777
87. Change in net unrealized appreciation (depreciation) 27,933,708 (38,756,490)
88. 89.NET INCREASE (DECREASE) IN NET ASSETS 43,073,854 (15,429,387)
RESULTING FROM OPERATIONS
90.Distributions to shareholders (15,573,846) (17,378,326)
From net interest income
91. From net realized gain - (8,056,094)
92. 93.TOTAL DISTRIBUTIONS (15,573,846) (25,434,420)
94.Share transactions 39,446,593 46,579,000
Net proceeds from sales of shares
95. Reinvestment of distributions 11,652,492 19,565,956
96. Cost of shares redeemed (31,916,917) (89,828,981)
97. Redemption fees 13,800 31,413
98.99. 19,195,968 (23,652,612)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
100. 46,695,976 (64,516,419)
101.TOTAL INCREASE (DECREASE) IN NET ASSETS
102.NET ASSETS 103. 104.
105. Beginning of period 241,729,345 306,245,764
106. End of period $ 288,425,321 $ 241,729,345
107.OTHER INFORMATION 109. 110.
108.Shares
111. Sold 3,861,028 4,493,816
112. Issued in reinvestment of distributions 1,130,166 1,920,098
113. Redeemed (3,101,862) (8,802,430)
114. Net increase (decrease) 1,889,332 (2,388,516)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
1995 1994 1993B 1992 1991
115.SELECTED PER-SHARE
DATA
116.Net asset value, $ 9.620 $ 11.130 $ 10.590 $ 10.370 $ 9.880
beginning of period
117.Income from .590 .652 .679 .693 .701
Investment Operations
Net interest income
118. Net realized and 1.049 (1.201) .679 .219 .489
unrealized gain (loss)
119. Total from 1.639 (.549) 1.358 .912 1.190
investment operations
120.Less Distributions (.590) (.652) (.679) (.693) (.701)
From net interest
income
121. From net realized - (.310) (.140) - -
gain
122. Total distributions (.590) (.962) (.819) (.693) (.701)
123.Redemption fees .001 .001 .001 .001 .001
added to paid in capital
124.Net asset value, end $ 10.670 $ 9.620 $ 11.130 $ 10.590 $ 10.370
of period
125.TOTAL RETURN A 17.44 (5.04) 13.18 9.11 12.49
% % % % %
126.RATIOS AND SUPPLEMENTAL DATA
127.Net assets, end of $ 288,425 $ 241,729 $ 306,246 $ 242,375 $ 199,499
period (000 omitted)
128.Ratio of expenses to .55 .55% .55 .55 .55
average net assets % % % %
129.Ratio of net interest 5.73 6.33% 6.13 6.65 6.96
income to average net % % % %
assets
130.Portfolio turnover 49 26% 38 8 6
rate % % % %
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE.
B 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.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
(FORMERLY 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 DECEMBER 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Pennsylvania Municipal
Money Market 3.56% 16.86% 46.54%
Average All Tax-Free Money Market Fun 3.40% 15.27% 42.38%
d
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years or since the fund
started on 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 394 all tax-free money market funds
tracked by IBC/Donoghue for the past year. Recent U.S. Consumer Price Index
information is not available from the U.S. Department of Labor. Therefore,
the CPI comparison has not been included in this report. (The periods
covered by the IBC/Donoghue numbers are the closest available match to
those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Pennsylvania Municipal
Money Market 3.56% 3.17% 4.14%
Average All Tax-Free Money Market Fun 3.40% 2.88% 3.85%
d
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
12/26/94 3/27/95 6/26/95 10/2/95 1/1/96
Spartan Pennsylvania 4.13% 3.58% 3.74% 3.76% 4.18%
Municipal Money Market
Average All Tax-Free 3.78% 3.45% 3.59% 3.55% 3.95%
Money Market Fund
Spartan Pennsylvania 6.64% 5.75% 6.01% 6.04% 6.72%
Municipal Money Market -
Tax-equivalent
Row: 1, Col: 1, Value: 4.13
Row: 1, Col: 2, Value: 3.78
Row: 2, Col: 1, Value: 3.58
Row: 2, Col: 2, Value: 3.45
Row: 3, Col: 1, Value: 3.74
Row: 3, Col: 2, Value: 3.59
Row: 4, Col: 1, Value: 3.76
Row: 4, Col: 2, Value: 3.55
Row: 5, Col: 1, Value: 4.18
Row: 5, Col: 2, Value: 3.95
Spartan Pennsylvania
Municipal Money
Market
Average All Tax-Free
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 FUND
(FORMERLY SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Deb Watson,
Portfolio Manager of Spartan
Pennsylvania Municipal Money Market Fund
Q. DEB, WHAT KIND OF INVESTMENT CLIMATE HAVE YOU BEEN OPERATING IN FOR THE
PAST YEAR?
A. A year ago December, the Federal Reserve was still implementing a
restrictive monetary policy, raising interest rates as a means of slowing
down the pace of economic growth and preventing an outbreak of inflation.
It was the seventh rate increase of the preceding 12 months and turned out
to be the last one in the cycle. By early spring, the pace of economic
growth was showing definite signs of slowing down. After a strong fourth
quarter of 1994, the economy expanded at a more modest annual rate of 2.7%
during the first quarter of 1995. When it slowed still further to 1.3%
during the second quarter, some economists began to warn of a possible
recession. In July, the Fed responded to changing conditions with a
quarter-point rate cut. Growth accelerated slightly during the third
quarter but has since tailed off again. In December, shortly before the
period ended, the Fed announced another quarter-point rate cut, which
brought the federal funds rate down to 5.50%, exactly where it was when the
period started.
Q. IN LIGHT OF CHANGING CONDITIONS, WHAT WAS YOUR STRATEGY?
A. When the period began, the fund's average maturity was a neutral 46
days. From there, I let it roll down to a low of 19 days in April, as
supply remained thin. As the annual summer borrowing season approached and
my expectation was for interest rates to decline, I extended the fund's
average maturity to 63 days by the end of July. As rates have fallen during
the second half of the year, I've kept the fund at around 60 days. My aim
has been to capture higher yields from longer-term securities as
opportunities arise, while still preserving enough flexibility to respond
to changing conditions.
Q. HOW DID THE FUND PERFORM?
A. Better than most other competing funds. The fund's seven-day yield on
December 31, 1995 was 4.15%, compared to 4.34% a year ago. For Pennsylvania
investors in the 37.79% combined federal and state tax bracket, the latest
yield was the equivalent of a 6.67% taxable yield. Through December 31,
1995, the fund's one-year total return was 3.56%, compared to 3.40% for the
average all tax-free money market fund, according to IBC/Donoghue.
Q. WHAT'S THE OUTLOOK?
A. By year-end, the consensus among market participants was that short-term
interest rates were headed still lower, and I subscribe to that view. I
think the cuts will be gradual and sporadic. One variable I'll be watching
intently is the budget debate in Washington. If Congress and the White
House can agree on a balanced budget amendment, I think the Fed may signal
its approval with another reduction in the federal funds rate. Continued
moderate growth and low inflation give the Fed that much more room to
maneuver, and increase the likelihood of further rate cuts. But there's
also a technical factor to consider. As the supply of new issues diminishes
during the spring, I'll probably let the fund's average maturity roll back
down slightly, despite the outlook for lower rates.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
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 December 31,
1995, more than $241 million
MANAGER: Deborah Watson,
since 1989; manager, Fidelity
Tax-Exempt Money Market,
Capital Reserves; Municipal
Money Market, since 1995;
Spartan California Municipal
Money Market, since 1989;
Fidelity California Municipal
Money Market, 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 FUND
(FORMERLY SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
12/31/95 6/30/95 12/31/94
0 - 30 67 81 70
31 - 90 11 8 11
91 - 180 6 3 13
181 - 397 16 8 6
WEIGHTED AVERAGE MATURITY
12/31/95 6/30/95 12/31/94
Spartan Pennsylvania
Municipal Money Market 58 days 43 days 46 days
Average All Tax-Free
Money Market Fund* 53 days 45 days 47 days
ASSET ALLOCATION
AS OF DECEMBER 31, 1995 AS OF JUNE 30, 1995
Row: 1, Col: 1, Value: 64.0
Row: 1, Col: 2, Value: 13.0
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 18.0
Row: 1, Col: 5, Value: 2.0
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
Variable rate
demand notes
(VRDNs) 64%
Commercial
paper 13%
Tender bonds 3%
Municipal
notes 18%
Other 2%
Variable rate
demand notes
(VRDNs) 73%
Commercial
paper 16%
Tender bonds 2%
Municipal
notes 7%
Other 2%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
(FORMERLY SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO)
INVESTMENTS DECEMBER 31, 1995
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100.0%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - 100.0%
Allegheny County Hosp. Dev. Auth. Health Ctr. Rev., VRDN:
(Presbyterian-Univ. Health Sys.):
Series 1990 A, 5% (MBIA Insured) (BPA Credit Suisse) $ 700,000 $ 700,000
Series 1990 B, 5% (MBIA Insured) (BPA Credit Suisse) 1,900,000
1,900,000
Series 1990 C, 5% (MBIA Insured) (BPA Credit Suisse) 600,000 600,000
Series 1990 D, 5% (MBIA Insured) (BPA Credit Suisse) 4,900,000
4,900,000
Allegheny County Hosp. Dev. Auth. Hosp. Rev.
(St. Margaret Mem. Hosp.) Series 1992 A, 5.50%,
LOC Mellon Bank, VRDN 9,165,000 9,165,000
Allegheny County Hosp. Dev. Auth. Rev.
(Health Ed. Research Corp.) Series C, 5%,
LOC Pittsburgh Nat'l. Bank, VRDN 800,000 800,000
Allegheny County Ind. Dev. Auth. Commercial Dev. Rev. Rfdg.
(Parkway Ctr. Mall Proj.) Series 1994 A, 5.50%,
LOC Mellon Bank, VRDN 1,900,000 1,900,000
Allegheny County Ind. Dev. Auth. Rev. Rfdg.
(Chelsea Industries, Inc.) Series 1994, 5.30%,
LOC First Nat'l. Bank of Boston, VRDN 2,900,000 2,900,000
Berks County Ind. Dev. Auth. Manufacturing Facs. Rev.,
VRDN (b):
(Grafika Commercial Printing Inc.) 5.65%,
LOC Meridian Bank 1,750,000 1,750,000
(The Bachman Co. Proj.) Series 1994, 5.65%,
LOC Meridian Bank 2,345,000 2,345,000
Bucks County Ind. Dev. Auth. Envir. Impt. Rev. Bonds
(USX Corp. Proj.) Series 1995, 3.70%, tender 5/1/96,
LOC Wachovia Bank 1,360,000 1,360,000
Bucks County Ind. Dev. Auth. Rev. (Associates Proj.)
Series 1993, 5.65%, LOC Meridian Bank,
VRDN (b) 1,455,000 1,455,000
Carbon County Ind. Dev. Auth. Resource Recovery Rev.
Bonds (Panther Creek Partners Proj.) (b):
Series 1990 A, 3.80%, tender 2/13/96,
LOC Nat'l. Westminster Bank 2,800,000 2,800,000
Series 1991 A:
3.95%, tender 1/26/96,
LOC Nat'l. Westminster Bank 3,200,000 3,200,000
3.80%, tender 1/30/96,
LOC Nat'l. Westminster Bank 2,000,000 2,000,000
Commonwealth of Pennsylvania TAN Series 1995-1996,
4.50% 6/28/96 7,000,000 7,024,756
Cumberland County Ind. Dev. Auth. (Lane Enterprises, Inc.
Proj.) 5.65%, LOC Meridian Bank, VRDN (b) 2,900,000 2,900,000
Dauphin County Gen. Auth. Hosp. Rev.
(Reading Hosp. & Med. Ctr). Series 1994 A,
5.10%, VRDN 5,800,000 5,800,000
Delaware County Ind. Dev. Auth. Arpt. Facs. Rev.
(United Parcel Svc.) Series 1985, 5.90%, VRDN 2,800,000 2,800,000
Delaware County Ind. Dev. Auth. Bonds (Philadelphia Elec.):
Series B, 3.50%, tender 2/27/96 (FGIC Insured) 2,200,000 2,200,000
Series C, 3.85%, tender 2/8/96 (FGIC Insured) 3,820,000 3,820,000
MUNICIPAL SECURITIES - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Delaware Valley Regional Fin. Auth. Local Gov't. Rev., VRDN:
Series 1985 A, 5.20%,
LOC Hong Kong & Shanghai Banking Corp. $ 6,000,000 $ 6,000,000
Series 1986, 5.20%,
LOC Hong Kong & Shanghai Banking Corp. 2,000,000 2,000,000
Doylestown Hosp. Auth. Participating VRDN,
Series BT-63, 4.38% (AMBAC Insured)
(Liquidity Facility Bankers Trust Co./ADP) (c) 10,098,000 10,098,000
Emmaus Gen. Auth. Local Govt. Rev (Bond Pool Prog. )
Series 1989 H, 5.05%, VRDN 700,000 700,000
Erie County Ind. Dev. Auth. Rev. (Carlisle Corp. Proj.)
Series 1993, 5.35%, LOC SunTrust Bank, VRDN (b) 1,000,000 1,000,000
Lancaster Higher Ed. Auth. College Rev.
(Franklin & Marshall College Proj.) Series 1995,
5.05%, VRDN 1,000,000 1,000,000
Lehigh County Ind. Dev. Auth. Poll. Cont. Rev.
(Allegheny Elec. Co.) VRDN:
Series 1984 A, 3.75%, LOC Rabobank Nederland 500,000 500,000
Series 1984 B, 3.75%, LOC Rabobank Nederland 1,000,000 1,000,000
Lycoming County Ind. Dev. Auth. Rev. (Coastal Aluminum
Rolling Mills) Series 1995, 5.65%,
LOC Meridian Bank, VRDN (b) 1,910,000 1,910,000
Montgomery County Ind. Dev. Auth. Rev., VRDN (b):
(H.P. Cadwallader Inc. Proj.) Series 1995, 5.65%,
LOC Meridian Bank 1,155,000 1,155,000
(RJI Limited Partnership Proj.) Series 1992, 5.65%,
LOC Meridian Bank 1,950,000 1,950,000
(Sirius Dev. Assoc. Proj.) 5.50%, LOC PNC Bank 1,500,000 1,500,000
North Lebanon Township Muni. Auth. Rev.
(Grace Commty. Inc. Proj.) Series 1992 B, 5.225%,
LOC Meridian Bank, VRDN 3,755,000 3,755,000
Northampton County Ind. Dev. Auth. Rev. (Victoria Vogue Proj.)
5.65%, LOC Meridian Bank, VRDN (b) 2,910,000 2,910,000
Northumberland County Ind. Dev. Auth Rev.
(Foster Wheeler Mt. Carmel Inc.) VRDN (b):
Series 1987 A, 5.30%, LOC Union Bank of Switzerland 15,300,000
15,300,000
Series 1987 B, 5.30%, LOC Union Bank of Switzerland 1,140,000
1,140,000
Pennsylvania Econ. Dev. Fin. Auth., VRDN:
(Henry Molded Prod. Inc.) Series 1992 A4, 5.50%,
LOC Pittsburgh Nat'l. Bank (b) 900,000 900,000
(Payne Printery Proj.) Series 1989 B-8, 5.50%,
LOC Pittsburgh Nat'l. Bank (b) 300,000 300,000
(Port Erie Plastics Proj.) Series 1989 D-9, 5.50%,
LOC PNC Bank, VRDN (b) 845,000 845,000
(Respironics Inc. Proj.) 5.50%,
LOC Pittsburgh Nat'l. Bank (b) 900,000 900,000
(Suntory Water Group Proj.) Series 1992 D, 5.25%,
LOC Wachovia Bank & Trust (b) 4,900,000 4,900,000
(The Babcock & Wilcox Co. Proj.) Series 1989 A-2,
5.50%, LOC Pittsburgh Nat'l. Bank (b) 4,875,000 4,875,000
Series 1995 I-3, 5.50%, LOC PNC Bank 2,200,000 2,200,000
MUNICIPAL SECURITIES - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Pennsylvania Econ. Dev. Fin. Auth. Econ Dev. Rev.
(Lutheran Youth & Family Svc.) Series 1993 A, 5.25%,
LOC PNC Bank, VRDN $ 700,000 $ 700,000
Pennsylvania Energy Dev. Auth. Rev. (B & W Edensburg Proj.)
Series 1986, 5.20%, LOC Swiss Bank Corp.,
VRDN (b) 5,150,000 5,150,000
Pennsylvania Gen. Oblig. Bonds, Series 1995, 5% 5/1/96 4,910,000
4,922,538
Pennsylvania Gen. Oblig. Participating VRDN,
Series BT-84, 5.15% (AMBAC Insured)
(Liquidity Facility Bankers Trust Co.) (c) 4,125,000 4,125,000
Pennsylvania Higher Ed. Assistance Agcy. Student Loan Rev.,
VRDN (b):
Series 1988 A, 5.25%, LOC SLMA 7,800,000 7,800,000
Series 1988 B, 5.25%, LOC SLMA 3,200,000 3,200,000
Series 1994 A, 5.25%, LOC SLMA 7,500,000 7,500,000
Pennsylvania Higher Ed. Facs. Auth. Participating VRDN,
Series MGT-4A, 5.30%
(Liquidity Facility Morgan Guaranty Trust Co.) (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 (BPA Credit Suisse) 5,000,000 5,000,000
Pennsylvania Higher Ed. Facs. Auth. Rev. (Carnegie Mellon Univ.)
Series B, 6% (BPA Morgan Guaranty Trust Co. /
Union Bank of Switzerland) VRDN 700,000 700,000
Pennsylvania Infrastructure Investment Auth. Rev.
(Pennvest Pooled Loan Program) Series 1994, 5%
(Liquidity Facility PNC Bank) VRDN 3,000,000 3,000,000
Pennsylvania System of Higher Education BAN
(Temple University) Series 1995, 5% 5/22/96 8,500,000 8,524,360
Pennsylvania Turnpike Comm. Bonds 7.875% 12/1/96 2,915,000 3,087,372
Pennsylvania Univ. BAN Series A, 4% 12/18/96 10,000,000 10,060,467
Philadelphia Redev. Auth. Multi-Family Hsg. Rev. Rfdg.
(The Courts Proj.) Series 1995 A, 5.10%,
LOC First Fidelity Bank, VRDN 2,210,000 2,210,000
Philadelphia School Dist. TRAN, Series 1995-96,
4.50% 6/28/96 5,000,000 5,012,967
Philadelphia TRAN 4.50% 6/27/96 12,500,000 12,539,359
Quakertown Hosp. Auth. Hosp. Rev.
(HPS Group Pooled Fing. Prog.) Series 1985 A,
5.10%, PNC Bank, VRDN 500,000 500,000
Schuylkill County Ind. Dev. Auth., VRDN:
(Interlock Realty Co.) 5.45%, LOC Star Bank (b) 550,000 550,000
(Metal Sales Manufacturing Corp.) 5.35%,
LOC Star Bank (b) 1,500,000 1,500,000
(Pine Grove Landfill Inc.) Series 1995, 6.10%,
LOC Meridian Bank (b) 1,500,000 1,500,000
(Prime Packaging Inc. Proj.) Series 1995, 5.65%,
LOC Corestates Bank 2,000,000 2,000,000
MUNICIPAL SECURITIES - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Venango Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Scrubgrass Proj.) (b):
Series 1990 A:
3.85%, tender 1/24/96,
LOC National Westminster Bank $ 3,050,000 $ 3,050,000
3.80%, tender 2/12/96,
LOC National Westminister Bank 3,000,000 3,000,000
3.90%, tender 2/28/96,
LOC National Westminster Bank 4,700,000 4,700,000
Series 1990 B, 3.90%, tender 1/29/96,
LOC National Westminster Bank 3,000,000 3,000,000
Washington County Ind. Dev. Auth. Ind. Dev. Rev.
(Mac Plastics, Inc. Proj.) Series 1990, 5.30%,
LOC Nat'l. City Bank, VRDN (b) 575,000 575,000
West Cornwall Muni. Auth. Rev.
(Lebanon Valley Brethren Home) 5.225%,
LOC Meridian Bank, VRDN 1,000,000 1,000,000
York County Ind. Dev. Auth. Pub. Serv. Bonds
(G & E Peach Bottom Proj.) Series 1995 A, 3.70%,
tender 1/11/96 (MBIA Insured)
(BPA Swiss Bank Corp.) 2,500,000 2,500,000
TOTAL INVESTMENTS - 100% $ 241,314,819
Total Cost for Income Tax Purposes $ 241,314,819
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax and 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, 1995, the fund had a capital loss carryforward of
approximately $39,000 of which $5,000, $5,000, $19,000 and $10,000 will
expire on December 31,1997, 1998, 2002 and 2003, respectively.
SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
(FORMERLY SPARTAN PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO)
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1995
131.ASSETS 132. 133.
134.Investment in securities, at value - See 135. $ 241,314,819
accompanying schedule
136.Cash 137. 1,535,092
138.Interest receivable 139. 1,923,122
140. 141.TOTAL ASSETS 142. 244,773,033
143.LIABILITIES 144. 145.
146.Payable for investments purchased $ 3,010,034 147.
148.Distributions payable 22,951 149.
150.Accrued management fee 97,171 151.
152. 153.TOTAL LIABILITIES 154. 3,130,156
155.156.NET ASSETS 157. $ 241,642,877
158.Net Assets consist of: 159. 160.
161.Paid in capital 162. $ 241,681,117
163.Accumulated net realized gain (loss) on 164. (38,240)
investments
165.166.NET ASSETS, for 241,679,166 shares 167. $ 241,642,877
outstanding
168.169.NET ASSET VALUE, offering price and 170. $1.00
redemption price per share ($241,642,877 (divided by)
241,679,166 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1995
171.172.INTEREST INCOME 173. $ 9,080,183
174.EXPENSES 175. 176.
177.Management fee $ 1,133,238 178.
179.Non-interested trustees' compensation 1,137 180.
181. 182.TOTAL EXPENSES 183. 1,134,375
184.185.NET INTEREST INCOME 186. 7,945,808
187.188.NET REALIZED GAIN (LOSS) ON INVESTMENTS 189. (10,005)
190.191.NET INCREASE IN NET ASSETS RESULTING FROM 192. $ 7,935,803
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED DECEMBER 31,
1995 1994
193.INCREASE (DECREASE) IN NET ASSETS
194.Operations $ 7,945,808 $ 5,902,602
Net interest income
195. Net realized gain (loss) (10,005) (18,683)
196. 7,935,803 5,883,919
197.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
198.Distributions to shareholders from net interest (7,945,808) (5,902,602)
income
199.Share transactions at net asset value of $1.00 per 169,779,742 212,681,193
share
Proceeds from sales of shares
200. Reinvestment of distributions from net interest 7,567,810 5,582,855
income
201. Cost of shares redeemed (193,302,893) (201,620,498)
202.203. (15,955,341) 16,643,550
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES
RESULTING FROM SHARE TRANSACTIONS
204. (15,965,346) 16,624,867
205.TOTAL INCREASE (DECREASE) IN NET ASSETS
206.NET ASSETS 207. 208.
209. Beginning of period 257,608,223 240,983,356
210. End of period $ 241,642,877 $ 257,608,223
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
211.SELECTED PER-SHARE
DATA
212.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
213.Income from .035 .026 .022 .029 .045
Investment Operations
Net interest income
214.Less Distributions (.035) (.026) (.022) (.029) (.045)
From net interest
income
215.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
216.TOTAL RETURN A 3.56 2.61 2.21 2.90% 4.55%
% % %
217.RATIOS AND SUPPLEMENTAL DATA
218.Net assets, end of $ 241,643 $ 257,608 $ 240,983 $ 243,335 $ 289,826
period (000 omitted)
219.Ratio of expenses to .50 .50 .50 .47% .34%
% % % B B
average net assets
220.Ratio of net interest 3.50 2.58 2.19 2.88% 4.47%
income to average % % %
net assets
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
B FMR VOLUNTARILY AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES.
On December 14, 1995, the Board of Trustees gave approval to change the
names of Spartan Pennsylvania High Yield Portfolio and Spartan Pennsylvania
Municipal Money Market Portfolio to Spartan Pennsylvania Municipal Income
Fund and Spartan Pennsylvania Municipal Money Market Fund, respectively,
effective February 20, 1996. Spartan Pennsylvania Municipal Income Fund
(the income fund) is a fund of Fidelity Municipal Trust. Spartan
Pennsylvania Municipal Money Market Fund (the money market fund) is a fund
of Fidelity Municipal Trust II. Each trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company. Fidelity Municipal Trust and Fidelity
Municipal Trust II (the trusts) are organized as a Massachusetts business
trust and a Delaware business trust, respectively. Each fund is authorized
to issue an unlimited number of shares. The following summarizes the
significant accounting policies of the income fund and the money market
fund :
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix system
and/or appraisals by a pricing service, both of which consider market
transactions and dealer-supplied valuations. 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS -
CONTINUED
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 on futures and
options transactions, market discount,capital loss carryforwards, losses
deferred due to futures and options and excise tax regulations. Permanent
book and tax basis differences relating to shareholder distributions will
result in reclassifications to paid in capital. Any taxable gain remaining
at fiscal year end is distribution in the following year.
REDEMPTION FEES. Shares held in the income 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 income 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
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 securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period,
restricted securities (excluding 144A issues) amounted to $500,000 or 0.2%
of net assets for the income fund. The money market fund had no investments
in restricted securities.
3. PURCHASES AND SALES OF INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $131,832,779 and $126,479,769, 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 income 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 fees from shareholders which amounted to
$2,955 and $8,698 for the income 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.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Municipal Trust and Fidelity Municipal Trust II
and the Shareholders of Spartan Pennsylvania Municipal High Yield Portfolio
and Spartan Pennsylvania Municipal Money Market Portfolio:
We have audited the accompanying statements of assets and liabilities of
Spartan Pennsylvania Municipal High Yield Portfolio, a portfolio of
Fidelity Municipal Trust, and Spartan Pennsylvania Municipal Money Market
Portfolio, a portfolio of Fidelity Municipal Trust II, including the
schedules of portfolio investments, as of December 31, 1995, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the funds' management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Spartan Pennsylvania Municipal High Yield Portfolio and Spartan
Pennsylvania Municipal Money Market Portfolio as of December 31, 1995, the
results of their operations for the year then ended, the changes in their
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 2, 1996
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
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
Deborah F. Watson, Vice President -
MONEY MARKET FUND
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Thomas D. Maher, Assistant
Vice President - 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
