SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO 2-58774)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 50 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Amendment No.
Fidelity Court Street Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address of Principal Executive Offices)
Registrant's Telephone Number (617) 570-7000
Arthur S. Loring, Secretary
82 Devonshire Street,
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) Immediately upon filing pursuant to paragraph (b)
(x) On February 17, 1994 pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a) of Rule 485
( ) On , 1994 pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and filed the Notice required by such Rule
on January 19, 1994.
FIDELITY LIMITED TERM MUNICIPALS
FIDELITY HIGH YIELD TAX-FREE PORTFOLIO
FIDELITY AGGRESSIVE TAX-FREE PORTFOLIO
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b, c .............................. Contents; The Funds at a Glance; Who May Want
to Invest
3 a .............................. *
b .............................. *
c, d .............................. Performance
4 a i............................. Charter
ii........................... The Funds at a Glance; Investment Principles;
Securities and Investment Practices
b .............................. Securities and Investment Practices
c .............................. Who May Want to Invest; Investment Principles;
Securities and Investment Practices
5 a .............................. Charter
b i............................. Doing Business with Fidelity; Charter
ii........................... Charter; Breakdown of Expenses
iii.......................... Expenses; Breakdown of Expenses
c, d .............................. Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates
e .............................. FMR and its Affiliates
f .............................. Expenses
g .............................. *
5A .............................. Performance; Annual Reports
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions
iii.......................... *
b ............................. *
c .............................. Exchange Restrictions
d .............................. *
e .............................. Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services
f, g .............................. Dividends, Capital Gains, and Taxes
7 a .............................. Charter; Cover Page
b .............................. How to Buy Shares; Transaction Details
c .............................. *
d .............................. How to Buy Shares
e .............................. *
f .............................. Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
CROSS REFERENCE SHEET
(CONTINUED)
FIDELITY LIMITED TERM MUNICIPALS
FIDELITY HIGH YIELD TAX-FREE PORTFOLIO
FIDELITY AGGRESSIVE TAX-FREE PORTFOLIO
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page
12 ............................ *
13 a - c ............................ Investment Policies and Limitations
d ............................ *
14 a - c ............................ Trustees and Officers
15 a, b ............................ *
c ............................ Trustees and Officers
16 a i........................... FMR
ii.......................... Trustees and Officers
iii......................... Management Contracts
b ............................ Management Contracts
c, d ............................ Interest of FMR Affiliates
e ............................ *
f ............................ Distribution and Service Plans
g ............................ *
h ............................ Description of the Trusts
i ............................ Interest of FMR Affiliates
17 a ............................ Portfolio Transactions
b ............................ *
c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trusts
b ............................ *
19 a ............................ Additional Purchase and Redemption Information
b ............................ Additional Purchase and Redemption Information;
Valuation of Portfolio Securities
c ............................ *
20 ............................ Distributions and Taxes
21 a, b ............................ Interest of FMR Affiliates
c ............................ *
22 ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated February 17, 1994 has been
filed with the Securities and Exchange Commission, and is incorporated
herein by reference (is legally considered a part of this prospectus). The
Statement of Additional Information is available free upon request by
calling Fidelity at 1-800-544-8888.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, savings association, insured depository
institution or government agency, nor are they federally insured or
otherwise protected by the FDIC, the Federal Reserve Board, or any other
agency. Investments in the funds involve investment risk, including
possible loss of principal. The value of the investment and its return will
fluctuate and are not guaranteed. When sold, the value of the investment
may be higher or lower than the amount originally invested.
Each of these funds seeks a high level of current income exempt from
federal income tax.
FIDELITY'S
TAX-FREE BOND
FUNDS
FIDELITY LIMITED TERM
MUNICIPALS stresses preservation of capital by investing mainly in high-
and upper-medium-quality municipal obligations.
FIDELITY HIGH YIELD TAX-FREE PORTFOLIO focuses on long-term, medium-quality
bonds.
FIDELITY AGGRESSIVE TAX-FREE PORTFOLIO invests mainly in medium- and
lower-quality municipal bonds.
PROSPECTUS
FEBRUARY 17, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
MUB-pro-294
CONTENTS
KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES AND PERFORMANCE EXPENSES Each fund's yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary of
each fund's financial data.
PERFORMANCE How each fund has
done over time.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different ways to
set up your account.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money
out and closing your account.
INVESTOR SERVICES Services to help
you manage your account.
DIVIDENDS, CAPITAL GAINS, AND
TAXES
SHAREHOLDER AND TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
THE FUNDS IN DETAIL CHARTER How each fund is organized.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
INVESTMENT PRINCIPLES Each fund's
overall approach to investing.
SECURITIES AND INVESTMENT PRACTICES
<r>KEY FACTS</r>
THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
LIMITED TERM MUNICIPALS
GOAL: High current income free from federal income tax with preservation of
capital.
STRATEGY: Invests only in investment-grade quality municipal bonds while
maintaining an average maturity of 12 years or less.
HIGH YIELD TAX-FREE
GOAL: High current income free from federal income tax.
STRATEGY: Invests mainly in long-term, medium-quality municipal bonds.
AGGRESSIVE TAX-FREE
GOAL: High current income free from federal income tax.
STRATEGY: Invests mainly in medium- and lower-quality municipal bonds,
normally with maturities over 20 years.
WHO MAY WANT TO INVEST
Any of the funds may be appropriate for investors in higher tax brackets
who seek high current income that is free from federal income tax. Each
fund's level of risk, and potential reward, depend on the quality and
maturity of its investments; lower-quality, longer-term investments
typically carry the most risk and the highest yield potential. You should
consider your tolerance for risk when making an investment decision.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking to
maximize return must assume
greater risk. The funds in this
prospectus are in the INCOME
category.
(bullet) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(arrow) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME Seeks
long-term growth and income
by investing in stocks and
bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
By themselves, t hese funds do not constitute a balanced investment
plan. The value of the funds' investments and the income they generate will
vary from day to day, generally reflecting changes in interest rates,
market conditions, and other political and economic news. When you sell
your shares, they may be worth more or less than what you paid for them.
<r>EXPENSES AND PERFORMANCE</r>
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on
redemptions None
Redemption fee
for Limited Term Municipal s and High
Yield Tax-Free None
for Aggressive Tax-Free (on shares held less
than 180 days) 1%
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. It also incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and fund reports. A fund's expenses are factored into its share
price or dividends and are not charged directly to shareholder accounts
(see page 25 ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets. The projected
management fee for Limited Term Municipals is adjusted to reflect the
fund's current lower management fee.
LIMITED TERM MUNICIPALS
Management fee .41%
12b-1 fee None
Other expenses .16%
Total fund operating expenses .57%
HIGH YIELD TAX-FREE
Management fee .42%
12b-1 fee None
Other expenses .14%
Total fund operating expenses .56%
AGGRESSIVE TAX-FREE
Management fee .47%
12b-1 fee None
Other expenses .17%
Total fund operating expenses .64%
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 After 3 After 5 After 10
year years years years
Limited Term Muni $6 $18 $32 $71
High Yield Tax-Free $6 $18 $3 2 $7 1
Aggressive Tax-Free $7 $20 $36 $80
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FMR voluntarily agreed to temporarily limit Limited Term Municipals '
management fee to .10% of the fund's average net assets plus 5% of
the fund's gross income throughout the month during the reporting period.
If this agreement were not in effect, the management fee, other expenses,
and total operating expenses would have been .46%, .16%, and .62%,
respectively.
FINANCIAL HIGHLIGHTS
The tables that follow have been audited by Coopers & Lybrand,
independent accountants. Their unqualified reports are included in each
fund's Annual Report. Each fund's Annual Report is incorporated by
reference into (is legally a part of) the Statement of Additional
Information.
LIMITED TERM MUNICIPAL S
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.Selected Per-Share Data
and Ratios
2.Years Ended
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
December 31
3.Net asset value,
$ 8.03 $ 8.15 $ 8.88 $ 9.58 $ 9.10 $ 9.23 $ 9.31 $ 9.27 $ 9.52 $ 9.60
beginning of period
0 0 0 0 0 0 0 0 0 0
4.Income from
.641 .634 .615 .582 .600 .617 .615 .603 .573 .516
Investment
Operations
Net in teres t
income
5. Net realized and
.120 .730 .700 (.480) .130 .080 .010 .400 .180 .630
unrealized
gain (loss) on
investments
6. Total from
.761 1.364 1.315 .102 .730 .697 .625 1.003 .753 1.146
investment
operations
7.Less Distributions
(.641) (.634) (.615) (.582) (.600) (.617) (.615) (.603) (.573) (.516)
From net interest
income
8. From net
- -- -- -- -- -- -- (.050) (.150) (.100) (. 220 )
realized gain on
investments
9. In excess of net
-- -- -- -- -- -- -- -- -- (.020)
realized
gain on
investments
10. Total
(.641) (.634) (.615) (.582) (.600) (.617) (.665) (.753) (.673) (.756)
distributions
11.Net asset value,
$ 8.15 $ 8.88 $ 9.58 $ 9.10 $ 9.23 $ 9.31 $ 9.27 $ 9.52 $ 9.60 $ 9.99
end of period
0 0 0 0 0 0 0 0 0 0
12.Total Return
9.87% 17.31 15.19 1.14% 8.22% 7.83% 6.97% 11.19 8.17% 12.24
% % % %
13.Net assets, end
$ 214 $ 316 $ 580 $ 459 $ 441 $ 442 $ 468 $ 696 $ 976 $ 1,19
of period (In
9
millions
14.Ratio of
.79% .71% .68% .74% .67% .66% .67% .68% .64% .57%
expenses to
average net assets
15.Ratio of
.79% .71% .68% .74% .67% .68% .67% .68% .64% .57%
expenses to
average net assets
before expense
reductions
16.Ratio of net
7.93% 7.41% 6.55% 6.29% 6.51% 6.70% 6.63% 6.41% 5.94% 5.19%
interest income
to average net assets
17.Portfolio
152% 73% 30% 59% 30% 55% 72% 42% 50% 111%
turnover rate
</TABLE>
HIGH YIELD TAX-FREE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
18.Selected Per-Share
Data and Ratios
19.Y e ars Ended
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
November 30
20.Net asset $ 11.17 $ 11.00 $ 12.29 $ 13.77 $ 11.75 $ 12.21 $ 12.80 $ 12.61 $ 12.69 $ 12.72
value, beginning 0 0 0 0 0 0 0 0 0 0
of period
21.Income from 1.074 1.038 .999 .936 .901 .893 .857 .845 .811 .764
Investment
Operations
Net interest
income
22. Net realized (.170) 1.290 1.520 (1.500 .460 .600 .200 .310 .190 .700
and )
unrealized gain
(loss)
on investments
23. Total from .904 2.328 2.519 (.564) 1.361 1.493 1.057 1.155 1.001 1.464
investment
operations
24.Less (1.074 (1.038 (.999) (.936) (.901) (.893) (.857) (.845) (.811) (.764)
Distributions ) )
From net
interest
income
25. From net - - (.040) (.520) - (.010) (.390) (.230) (.160) (.190)
realized gain
on investments
26. Total (1.074 (1.038 (1.039 (1.456 (.901) (.903) (1.247 (1.075 (.971) (.954)
distributions ) ) ) ) ) )
27.Net asset $ 11.00 $ 12.29 $ 13.77 $ 11.75 $ 12.21 $ 12.80 $ 12.61 $ 12.69 $ 12.72 $ 13.23
value, 0 0 0 0 0 0 0 0 0 0
end of period
28.Total Return 8.57% 22.01 21.21 (4.45) 11.93 12.60 8.91% 9.62% 8.21% 11.92
% % % % % %
29.Net assets, $ 1,040 $ 1,661 $ 2,449 $ 1,610 $ 1,574 $ 1,738 $ 1,784 $ 1,99 7 $ 2,075 $ 2,128
end of
period (In
millions)
30.Ratio of .59% .56% .57% .71% .60% .58% .57% .56% .57% .56%
expenses to
average net
assets
31.Ratio of net 9.75% 8.83% 7.63% 7.38% 7.48% 7.10% 6.96% 6.72% 6.40% 5.85%
interest income
to average net
assets
32.Portfolio 73% 57% 49% 80% 47% 71% 58% 44% 47% 53%
turnover rate
</TABLE>
AGGRESSIVE TAX-FREE
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
33.Selected Per-Share Data
and Ratios
34.Years Ended
1985 C 1986 1987 1988 1989 1990 1991 1992 1993
December 31
35.Net asset value,
$ 10.00 $ 10.66 $ 11.56 $ 10.82 $ 11.33 $ 11.49 $ 11.43 $ 11.80 $ 11.88
beginning
0 0 0 0 0 0 0 0 0
of period
36.Income from
.310 .933 .902 .894 .881 .886 .863 .834 .783
Investment
Operations
Net interest
income
37. Net realized and
.660 .900 (.740) .510 .160 (.060) .429 .208 .788
unrealized
gain (loss) on
investments
38. Total from
.970 1.833 .162 1.404 1.041 .826 1.292 1.042 1.571
investment
operations
39.Less
(.310) (.933) (.902) (.894) (.881) (.886) (.863) (.834) (.783)
Distributions
From net interest
income
40. From net
- - - - - - - (.060) (.130) (.340)
realized gain on
investments
41. Total
(.310) (.933) (.902) (.894) (.881) (.886) (.923) (.964) (1.123)
distributions
42. Redemption fees
- - - - - - - .001 .002 .00
added
to paid in capital
43.Net asset value,
$ 10.66 $ 11.56 $ 10.82 $ 11.33 $ 11.49 $ 11.43 $ 11.80 $ 11.88 $12.33
end of period
0 0 0 0 0 0 0 0 0
44.Total ReturnB
9.84% 17.74 1.42% 13.40 9.50% 7.48% 11.77 9.17% 13.63
% % % %
45.Net assets, end
$ 101 $ 394 $ 353 $ 456 $ 546 $ 551 $ 654 $ 762 $952
of period
(In millions)
46.Ratio of
.60%A .65% .74% .73% .69% .66% .69% .64% .64%
expenses to
average net assets
47.Ratio of
1.21% .84% .78% .73% .69% .66% .69% .64% .64%
expenses to average
A
net assets before
expense reductions
48.Ratio of net
10.17 8.17% 8.06% 7.98% 7.68% 7.79% 7.46% 7.01% 6.37%
interest income
%A
to average net assets
49.Portfolio
4%A 17% 68% 46% 46% 46% 30% 43% 54%
turnover rate
</TABLE>
A ANNUALIZED.
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C FROM SEPTEMBER 13, 1985 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1985.
PERFORMANCE
Bond fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results.
High Yield Tax-Free's fiscal year runs from December 1 through November 30.
The fiscal year for Limited Term Municipals and Aggressive Tax-Free
runs from January 1 through December 31. The tables below show each fund's
performance over past fiscal years compared to a measure of inflation. The
charts on page 9 help you compare the yields of these funds to those
of their competitors.
LIMITED TERM MUNICIPALS
Fiscal periods ended Past 1 Past 5 Past 10
December 31, 1993 year years years
Average annual
total return 12.24% 9.26% 9.73%
Cumulative
total return 12.24% 55.69% 153.02%
Consumer Price
Index 2.75% 21.00% 43.93%
HIGH YIELD TAX-FREE
Fiscal periods ended Past 1 Past 5 Past 10
November 30, 1993 year years years
Average annual
total return 11.92% 10.24% 10.83%
Cumulative
total return 11.92% 62.80% 179.57%
Consumer Price
Index 2.68% 21.20% 44.07%
AGGRESSIVE TAX-FREE
Fiscal periods ended Past 1 Past 5 Life of
December 31, 1993 year years fund A
Average annual
total return 13. 63 % 10. 29 % 11.2 7 %
Cumulative
total return 13. 63 % 63. 20 % 142. 75 %
Consumer Price
Index 2.75% 21.00% 35.00%
A From September 13, 1985.
EXPLANATION OF TERMS
UNDERSTANDING
PERFORMANCE
YIELD illustrates the income
earned by a fund over a recent
period. 30-day yields are
usually used for bond funds.
Yields change daily, reflecting
changes in interest rates.
TOTAL RETURN reflects both the
reinvestment of income and
capital gain distributions and
any change in a fund's share
price.
(checkmark)
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. A
TAX-EQUIVALENT YIELD shows what an investor would have to earn before taxes
to equal a tax-free yield. Yields are calculated according to a standard
that is required for all stock and bond funds. Because this differs from
other accounting methods, the quoted yield may not equal the income
actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
LIMITED TERM MUNICIPALS
30-day yields
Percenta
ge %
Row: 1, Col: 1, Value: 6.1
Row: 1, Col: 2, Value: 6.0
Row: 2, Col: 1, Value: 5.8
Row: 2, Col: 2, Value: 5.7
Row: 3, Col: 1, Value: 6.4
Row: 3, Col: 2, Value: 6.0
Row: 4, Col: 1, Value: 6.3
Row: 4, Col: 2, Value: 5.9
Row: 5, Col: 1, Value: 6.2
Row: 5, Col: 2, Value: 5.7
Row: 6, Col: 1, Value: 6.4
Row: 6, Col: 2, Value: 5.8
Row: 7, Col: 1, Value: 6.4
Row: 7, Col: 2, Value: 5.7
Row: 8, Col: 1, Value: 6.4
Row: 8, Col: 2, Value: 5.6
Row: 9, Col: 1, Value: 6.3
Row: 9, Col: 2, Value: 5.6
Row: 10, Col: 1, Value: 6.1
Row: 10, Col: 2, Value: 5.5
Row: 11, Col: 1, Value: 6.1
Row: 11, Col: 2, Value: 5.5
Row: 12, Col: 1, Value: 6.0
Row: 12, Col: 2, Value: 5.4
Row: 13, Col: 1, Value: 5.4
Row: 13, Col: 2, Value: 5.0
Row: 14, Col: 1, Value: 5.6
Row: 14, Col: 2, Value: 5.0
Row: 15, Col: 1, Value: 5.9
Row: 15, Col: 2, Value: 5.2
Row: 16, Col: 1, Value: 5.9
Row: 16, Col: 2, Value: 5.2
Row: 17, Col: 1, Value: 5.8
Row: 17, Col: 2, Value: 5.2
Row: 18, Col: 1, Value: 5.7
Row: 18, Col: 2, Value: 5.0
Row: 19, Col: 1, Value: 5.3
Row: 19, Col: 2, Value: 4.6
Row: 20, Col: 1, Value: 5.4
Row: 20, Col: 2, Value: 4.6
Row: 21, Col: 1, Value: 5.5
Row: 21, Col: 2, Value: 4.7
Row: 22, Col: 1, Value: 5.6
Row: 22, Col: 2, Value: 4.7
Row: 23, Col: 1, Value: 5.4
Row: 23, Col: 2, Value: 4.7
Row: 24, Col: 1, Value: 5.4
Row: 24, Col: 2, Value: 4.7
Row: 25, Col: 1, Value: 5.3
Row: 25, Col: 2, Value: 4.6
Row: 26, Col: 1, Value: 4.7
Row: 26, Col: 2, Value: 4.3
Row: 27, Col: 1, Value: 4.9
Row: 27, Col: 2, Value: 4.2
Row: 28, Col: 1, Value: 4.9
Row: 28, Col: 2, Value: 4.3
Row: 29, Col: 1, Value: 4.9
Row: 29, Col: 2, Value: 4.3
Row: 30, Col: 1, Value: 4.8
Row: 30, Col: 2, Value: 4.3
Row: 31, Col: 1, Value: 4.8
Row: 31, Col: 2, Value: 4.2
Row: 32, Col: 1, Value: 4.8
Row: 32, Col: 2, Value: 4.1
Row: 33, Col: 1, Value: 4.6
Row: 33, Col: 2, Value: 4.0
Row: 34, Col: 1, Value: 4.6
Row: 34, Col: 2, Value: 3.9
Row: 35, Col: 1, Value: nil
Row: 35, Col: 2, Value: nil
Limited Term
Municipals
Competitive
funds average
1992
1991
1993
HIGH YIELD TAX-FREE
30-day yields
Percenta
ge %
Row: 1, Col: 1, Value: 6.8
Row: 1, Col: 2, Value: 7.1
Row: 2, Col: 1, Value: 6.4
Row: 2, Col: 2, Value: 6.9
Row: 3, Col: 1, Value: 6.7
Row: 3, Col: 2, Value: 7.0
Row: 4, Col: 1, Value: 6.6
Row: 4, Col: 2, Value: 6.9
Row: 5, Col: 1, Value: 6.6
Row: 5, Col: 2, Value: 6.8
Row: 6, Col: 1, Value: 6.7
Row: 6, Col: 2, Value: 6.9
Row: 7, Col: 1, Value: 6.7
Row: 7, Col: 2, Value: 6.8
Row: 8, Col: 1, Value: 6.7
Row: 8, Col: 2, Value: 6.7
Row: 9, Col: 1, Value: 6.6
Row: 9, Col: 2, Value: 6.7
Row: 10, Col: 1, Value: 6.3
Row: 10, Col: 2, Value: 6.7
Row: 11, Col: 1, Value: 6.2
Row: 11, Col: 2, Value: 6.7
Row: 12, Col: 1, Value: 6.3
Row: 12, Col: 2, Value: 6.6
Row: 13, Col: 1, Value: 6.1
Row: 13, Col: 2, Value: 6.5
Row: 14, Col: 1, Value: 6.2
Row: 14, Col: 2, Value: 6.5
Row: 15, Col: 1, Value: 6.5
Row: 15, Col: 2, Value: 6.5
Row: 16, Col: 1, Value: 6.5
Row: 16, Col: 2, Value: 6.5
Row: 17, Col: 1, Value: 6.3
Row: 17, Col: 2, Value: 6.4
Row: 18, Col: 1, Value: 6.6
Row: 18, Col: 2, Value: 6.2
Row: 19, Col: 1, Value: 5.6
Row: 19, Col: 2, Value: 6.0
Row: 20, Col: 1, Value: 5.7
Row: 20, Col: 2, Value: 6.0
Row: 21, Col: 1, Value: 5.7
Row: 21, Col: 2, Value: 6.1
Row: 22, Col: 1, Value: 6.1
Row: 22, Col: 2, Value: 6.2
Row: 23, Col: 1, Value: 5.9
Row: 23, Col: 2, Value: 6.1
Row: 24, Col: 1, Value: 6.0
Row: 24, Col: 2, Value: 6.0
Row: 25, Col: 1, Value: 5.8
Row: 25, Col: 2, Value: 5.9
Row: 26, Col: 1, Value: 5.3
Row: 26, Col: 2, Value: 5.6
Row: 27, Col: 1, Value: 5.4
Row: 27, Col: 2, Value: 5.5
Row: 28, Col: 1, Value: 5.4
Row: 28, Col: 2, Value: 5.5
Row: 29, Col: 1, Value: 5.5
Row: 29, Col: 2, Value: 5.2
Row: 30, Col: 1, Value: 5.3
Row: 30, Col: 2, Value: 5.0
Row: 31, Col: 1, Value: 5.4
Row: 31, Col: 2, Value: 5.4
Row: 32, Col: 1, Value: 5.3
Row: 32, Col: 2, Value: 5.3
Row: 33, Col: 1, Value: 5.1
Row: 33, Col: 2, Value: 5.2
Row: 34, Col: 1, Value: 5.1
Row: 34, Col: 2, Value: 5.1
Row: 35, Col: 1, Value: nil
Row: 35, Col: 2, Value: nil
High Yield
Tax-Free
Competitive
funds
average
1992
1991
1993
AGGRESSIVE TAX-FREE
30-day yields
Percenta
ge %
Row: 1, Col: 1, Value: 7.6
Row: 1, Col: 2, Value: 7.1
Row: 2, Col: 1, Value: 7.4
Row: 2, Col: 2, Value: 6.9
Row: 3, Col: 1, Value: 7.7
Row: 3, Col: 2, Value: 7.0
Row: 4, Col: 1, Value: 7.6
Row: 4, Col: 2, Value: 6.9
Row: 5, Col: 1, Value: 7.3
Row: 5, Col: 2, Value: 6.8
Row: 6, Col: 1, Value: 7.5
Row: 6, Col: 2, Value: 6.9
Row: 7, Col: 1, Value: 7.3
Row: 7, Col: 2, Value: 6.8
Row: 8, Col: 1, Value: 7.3
Row: 8, Col: 2, Value: 6.7
Row: 9, Col: 1, Value: 7.3
Row: 9, Col: 2, Value: 6.7
Row: 10, Col: 1, Value: 7.1
Row: 10, Col: 2, Value: 6.7
Row: 11, Col: 1, Value: 7.1
Row: 11, Col: 2, Value: 6.7
Row: 12, Col: 1, Value: 7.1
Row: 12, Col: 2, Value: 6.6
Row: 13, Col: 1, Value: 6.9
Row: 13, Col: 2, Value: 6.5
Row: 14, Col: 1, Value: 6.9
Row: 14, Col: 2, Value: 6.5
Row: 15, Col: 1, Value: 7.1
Row: 15, Col: 2, Value: 6.5
Row: 16, Col: 1, Value: 7.0
Row: 16, Col: 2, Value: 6.5
Row: 17, Col: 1, Value: 6.8
Row: 17, Col: 2, Value: 6.4
Row: 18, Col: 1, Value: 6.5
Row: 18, Col: 2, Value: 6.2
Row: 19, Col: 1, Value: 6.3
Row: 19, Col: 2, Value: 6.0
Row: 20, Col: 1, Value: 6.3
Row: 20, Col: 2, Value: 6.0
Row: 21, Col: 1, Value: 6.4
Row: 21, Col: 2, Value: 6.1
Row: 22, Col: 1, Value: 6.7
Row: 22, Col: 2, Value: 6.2
Row: 23, Col: 1, Value: 6.5
Row: 23, Col: 2, Value: 6.1
Row: 24, Col: 1, Value: 6.5
Row: 24, Col: 2, Value: 6.0
Row: 25, Col: 1, Value: 6.4
Row: 25, Col: 2, Value: 5.9
Row: 26, Col: 1, Value: 5.9
Row: 26, Col: 2, Value: 5.6
Row: 27, Col: 1, Value: 5.9
Row: 27, Col: 2, Value: 5.5
Row: 28, Col: 1, Value: 6.1
Row: 28, Col: 2, Value: 5.5
Row: 29, Col: 1, Value: 6.0
Row: 29, Col: 2, Value: 5.5
Row: 30, Col: 1, Value: 5.8
Row: 30, Col: 2, Value: 5.3
Row: 31, Col: 1, Value: 5.9
Row: 31, Col: 2, Value: 5.4
Row: 32, Col: 1, Value: 5.7
Row: 32, Col: 2, Value: 5.3
Row: 33, Col: 1, Value: 5.6
Row: 33, Col: 2, Value: 5.2
Row: 34, Col: 1, Value: 5.5
Row: 34, Col: 2, Value: 5.1
Row: 35, Col: 1, Value: nil
Row: 35, Col: 2, Value: nil
Aggressive
Tax-Free
Competitive
funds
average
1992
1991
1993
THE CHARTS SHOW THE 30-DAY ANNUALIZED NET YIELDS FOR THE FUNDS AND THEIR
COMPETITIVE FUNDS AVERAGES AS OF THE LAST DAY OF EACH MONTH FROM JANUARY
1991
THROUGH NOVEMBER 1993.
THE COMPETITIVE FUNDS AVERAGES, which assume reinvestment of distributions,
are published by Lipper Analytical Services, Inc. Limited Term Municipals
compares its performance to the Lipper Intermediate Municipal Debt Funds
Average , and High Yield Tax-Free and Aggressive Tax-Free compare
their performance to the Lipper High Yield Municipal Bond Funds Average.
These averages currently reflect the performance of over 60 and 25 mutual
funds with similar objectives, respectively.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
<r>YOUR ACCOUNT</r>
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country .
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed below.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENAN T
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
TO ADD TO AN ACCOUNT $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money Line
to transfer from your
bank account. Call before
your first use to verify
that this service is in
place on your account.
Maximum Money Line:
$50,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check payable
application. Make your to the complete name of
check payable to the the fund. Indicate your
complete name of the fund account number on
fund. Mail to the address your check and mail to
indicated on the the address printed on
application. your account statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
In Person (hand_graphic) (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) Call 1-800-544-7777 to (bullet) Wire to:
set up your account and Bankers Trust Company,
to arrange a wire Bank Routing
transaction. #021001033,
(bullet) Wire within 24 hours to: Account #00163053.
Bankers Trust Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your name.
Specify the complete
name of the fund and
include your new account
number and your name.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign up
for this service when
opening your account, or
call 1-800-544-6666 to
add it.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account in Limited Term Municipals or High
Yield Tax-Free, you may write an unlimited number of checks. Do not,
however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
IF YOU SELL SHARES OF AGGRESSIVE TAX-FREE AFTER HOLDING THEM LESS THAN 180 DAYS, THE FUND WILL
DEDUCT A REDEMPTION FEE EQUAL TO 1% OF THE VALUE OF THOSE SHARES.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
$100,000.
(bullet) For Money Line transfers to
your bank account; minimum:
$ 10 ; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both accounts
are registered with the same
name(s), address, and taxpayer
ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (bullet) The letter of instruction must be
Tenant, signed by all persons required
Sole Proprietorship, to sign for transactions, exactly
UGMA, UTMA as their names appear on the
Trust account.
(bullet) The trustee must sign the letter
indicating capacity as trustee. If
the trustee's name is not in the
Business or account registration, provide a
Organization copy of the trust document
certified within the last 60 days.
(bullet) At least one person authorized
by corporate resolution to act
on the account must sign the
Executor, letter.
Administrator, (bullet) Include a corporate resolution
Conservator, with corporate seal or a
Guardian signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.
Wire (wire_graphic) All account types (bullet) You must sign up for the wire
feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time for
money to be wired on the next
business day.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Check (check_graphic) All account types (bullet) Minimum check: $500.
(bullet) All account owners must sign a
signature card to receive a
checkbook.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in a fund.
Call 1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For complete policies and
restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions
from your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for a
home, educational expenses, and other long-term financial goals.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (bullet) For a new account, complete the appropriate
quarterly section on the fund application.
(bullet) For existing accounts, call 1-800-544-6666
for an application.
(bullet) To change the amount or frequency of your
investment, call 1-800-544-6666 at least
three business days prior to your next
scheduled investment date.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA
</TABLE>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization form.
<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call 1-800-544-6666 after both
bimonthly, accounts are opened.
quarterly, or (bullet) To change the amount or frequency of your
annually investment, call 1-800-544-6666.
</TABLE>
A BECAUSE THEIR SHARE PRICES FLUCTUATE, THE SE FUNDS MAY NOT BE
APPROPRIATE CHOICE S FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains to shareholders each year. Income dividends are declared
daily and paid monthly. Capital gains are normally distributed in February
and December for Limited Term Municipals and Aggressive Tax-Free and
in January and December for High Yield Tax-Free.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions will
be automatically reinvested in additional shares of the fund. If you do not
indicate a choice on your application, you will be assigned this option.
2. INCOME-EARNED OPTION. Your capital gain distributions will be
automatically reinvested, but you will be sent a check for each dividend
distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions will be automatically invested in another
identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions will be reinvested at the NAV as of the
date the fund deducts the distribution from its NAV . The mailing of
distribution checks will begin within seven days, or longer for a December
ex-dividend date.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you are
entitled to your share of the
fund's net income and gains on
its investments. The fund passes
its earnings along to its
investors as DISTRIBUTIONS.
Each fund earns interest from its
investments. These are passed
along as DIVIDEND
DISTRIBUTIONS. Each fund may
realize capital gains if it sells
securities for a higher price than
it paid for them. These are
passed along as CAPITAL GAIN
DISTRIBUTIONS.
(checkmark)
TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. Interest income that a fund earns is distributed to
shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends. Long-term capital gain
distributions are taxed as long-term capital gains. These distributions are
taxable when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31. Fidelity will send you and the IRS a
statement showing the tax status of the distributions paid to you in the
previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Limited Term Municipals and High Yield
Tax-Free do not currently intend to purchase these securities. Aggressive
Tax-Free may invest up to 20% of its assets in these securities.
Individuals who are subject to the tax must report this interest on their
tax returns.
A portion of a fund's dividends may be free from state or local taxes.
Income from investments in your state is often tax-free to you. Each year,
Fidelity will send you a breakdown of your fund's income from each state to
help you calculate your taxes.
During fiscal 1993, 100 % of each fund's income dividends w ere
free from federal income tax and 13.11 % of Aggressive Tax-Free's
income dividends were subject to the federal alternative minimum tax.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges to other
Fidelity funds - are subject to capital gains tax. A capital gain or loss
is the difference between the cost of your shares and the price you receive
when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution from its NAV, you will pay the full price for the shares
and then receive a portion of the price back in the form of a taxable
distribution.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's NAV as of the close of
business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Each fund's assets are valued primarily on the basis of market quotations,
if available. Since market quotations are often unavailable, assets are
usually valued by a method that the Board of Trustees believes accurately
reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they are of
a size that would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with
Fidelity Distributors Corporation (FDC) may enter confirmed purchase orders
on behalf of customers by phone, with payment to follow no later than the
time when a fund is priced on the following business day. If payment is not
received by that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
THE REDEMPTION FEE for Aggressive Tax-Free, if applicable, will be deducted
from the amount of your redemption. This fee is paid to the fund rather
than FMR, and it does not apply to shares that were acquired through
reinvestment of distributions. If shares you are redeeming were not all
held for the same length of time, those shares you held longest will be
redeemed first for purposes of determining whether the fee applies.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. Qualified recipients are securities dealers
who have sold fund shares or others, including banks and other financial
institutions, under special arrangements in connection with FDC's sales
activities. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, each fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) Each fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincides with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
<r>THE FUNDS IN DETAIL</r>
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, Limited Term
Municipals is currently a diversified fund of Fidelity School Street Trust,
High Yield Tax-Free is currently a diversified fund of Fidelity Court
Street Trust, and Aggressive Tax-Free is currently a diversified fund of
Fidelity Municipal Trust. Each trust is an open-end management investment
company. Fidelity School Street Trust was organized as a Massachusetts
business trust on September 10, 1976. Fidelity Court Street Trust was
organized as a Massachusetts business trust on April 21, 1977. Fidelity
Municipal Trust was organized as a Massachusetts business trust on June 22,
1984. There is a remote possibility that one fund might become liable for a
misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. Limited Term Municipals and
High Yield Tax-Free shareholders are entitled to one vote for each share
they own. The number of votes Aggressive Tax-Free shareholders are entitled
to is based upon the dollar value of their investment.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 225 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio managers:
over 200
(checkmark)
The funds are managed by FMR, which chooses their investments and handles
their business affairs.
David Murphy is manager and vice president of Limited Term Municipals,
which he has managed since November 1989. Mr. Murphy also manages Spartan
Short-Intermediate Municipal, New York Tax-Free Insured, Spartan
Intermediate Municipal and Spartan New Jersey Municipal High Yield. Before
joining Fidelity in 1989, he managed municipal bond funds at Scudder,
Stevens & Clark.
Anne Punzak is manager and vice president of High Yield Tax-Free and
Aggressive Tax-Free which she has managed , since October 1993 and
January 1986 , respectively. She also manages Spartan Aggressive
Municipal Income and Spartan Florida Municipal Income. She joined Fidelity
in 1984.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trusts), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
United Missouri Bank, N.A., is each fund's transfer agent, although it
employs FSC to perform these functions for the funds. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. Each fund also pays OTHER EXPENSES, which are explained
on page 26 .
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month.
LIMITED TERM MUNICIPALS' management fee consists of .15% of average net
assets plus 5% of gross income. The total management fee for fiscal 1993
was .41% .
On July 1, 1993, FMR voluntarily agreed to temporarily limit the fund's
management fee to .10% of the fund's average net assets plus 5% of the
fund's gross income throughout the month.
HIGH YIELD TAX-FREE'S and AGGRESSIVE TAX-FREE'S management fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For December 1993, the group fee rate was .1621 %. The individual
fund fee rate is .25% for High Yield Tax-Free, and .30% for Aggressive
Tax-Free. The total management fee rates for fiscal 1993 for High Yield
Tax-Free and Aggressive Tax-Free were .42% and .47%, respectively.
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
FSC performs many transaction and accounting functions. These services
include processing shareholder transactions, valuing each fund's
investments, and handling securities loans. In fiscal 1993, FSC received
fees equal to .14 % , .12 % and .13 %, respectively, of
Limited Term Municipals', High Yield Tax-Free's and Aggressive Tax-Free's
average net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1993, the portfolio turnover rates for Limited Term Municipals,
High Yield Tax-Free and Aggressive Tax-Free were 111 %, 53 %
and 54 %, respectively. These rates vary from year to year. High
turnover rates increase transaction costs and may increase taxable capital
gains. FMR considers these effects when evaluating the anticipated benefits
of short-term investing.
INVESTMENT PRINCIPLES
LIMITED TERM MUNICIPALS seeks high current income that is free from federal
income tax , and preservation of capital , by focusing on
municipal securities rated at least A by Moody's or S&P ,
or judged by FMR to be of equivalent quality. The fund's dollar-weighted
average maturity is limited to 12 years or less . FMR normally
invests at least 80% of the fund's assets in tax-free obligations with
maturities of 15 years or less.
HIGH YIELD TAX-FREE seeks high current income that is free from federal
income tax by investing at least 65% of its total assets in high yielding
municipal securities, focusing on municipal bonds rated A or Baa by
Moody's, A or BBB by S&P, or, if unrated, judged by FMR to be of
equivalent quality. The fund often invests in long-term bonds, but may
shorten the average maturity and improve quality as economic or
market conditions change. FMR normally invests so that at least 80% of the
fund's income is free from federal income tax.
AGGRESSIVE TAX-FREE seeks high current income that is free from federal
income tax by normally investing at least 65% of its total assets in
securities rated A or lower by Moody's or S&P or, if unrated, judged by
FMR to be of equivalent quality. Since the fund can emphasize lower-quality
securities, FMR's research and analysis are an integral part of choosing
the fund's investments. The fund typically purchases securities with
remaining maturities of 20 years or longer. FMR normally invests at least
80% of the fund's assets in federally tax-free municipal securities.
If you are subject to the federal alternative minimum tax, you should note
that the fund may invest up to 20% of its assets in municipal securities
issued to finance private activities. The interest from these investments
is a tax-preference item for purposes of the tax.
EACH FUND'S yield and share price change daily based on interest rate
changes and on the quality and maturity of its investments. In general,
bond prices rise when interest rates fall, and vice versa. This effect is
usually more pronounced for longer-term securities. Lower-quality
securities typically offer higher yields and carry more risk than
higher quality, lower yielding securities . When you sell your shares,
they may be worth more or less that what you paid for them.
FMR normally invests each fund's assets according to its investment
strategy and does not expect to invest in federally taxable
obligations . When FMR considers it appropriate for defensive
purposes , however, it may temporarily invest substantially in
short-term instruments, may hold a sustantial amount of uninvested cash,
or may invest more than normally permitted in federally taxable
obligations.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the funds may invest, and strategies FMR may employ in
pursuit of the funds' investment objectives. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities may have speculative characteristics, and
involve greater risk of default or price changes due to changes in the
issuer's creditworthiness. The market prices of these securities may
fluctuate more than higher-quality securities and may decline significantly
in periods of general or regional economic difficulty.
The tables on page 29 provide a summary of ratings assigned to debt
holdings (not including money market instruments) in High Yield Tax-Free's
and Aggressive Tax-Free's portfolios. These figures are dollar-weighted
averages of month-end portfolio holdings during fiscal 1993, and are
presented as a percentage of total investments. These percentages are
historical and do not necessarily indicate the funds' current or future
debt holdings.
RESTRICTIONS: Limited Term Municipals does not currently intend to invest
in bonds rated below Baa by Moody's or BBB by S&P. The fund does not
currently intend to invest more than 25% of its total assets in bonds whose
quality is judged by FMR to be equivalent to bonds rated Baa or BBB, and
does not currently intend to invest more than 20% of its total assets in
bonds that are not rated by Moody's or S&P. High Yield Tax-Free does
not currently intend to invest more than 25% of its total assets in bonds
rated below Baa or BBB, or unrated bonds judged by FMR to be of equivalent
quality. The fund does not currently intend to invest more than 10%
of its total assets in bonds rated B or below or, if unrated, judged by FMR
to be of equivalent quality. Aggressive Tax-Free does not currently intend
to invest more than 10% of its total assets in bonds that are in default.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. Municipal securities
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. A security's credit may be
enhanced by a bank, insurance company, or other financial institution. A
fund may own a municipal security directly or through a participation
interest.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
OTHER MUNICIPAL SECURITIES may include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations. The economy
of Puerto Rico is closely linked to the U.S. economy, and will depend on
the strength of the U.S. dollar, interest rates, the price stability of oil
imports, and the continued existence of favorable tax incentives. Recent
legislation reduced these incentives, but it is impossible to predict what
impact the changes will have.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
HIGH YIELD TAX-FREE
Fiscal 1993 Debt Holdings, by Rating MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 53.51 % AA 61.39%
Upper-medium grade A A
Medium grade Baa 13.06 % BBB 12.10 %
LOWER QUALITY
Moderately speculative Ba 3.98 % BB 2.24 %
Speculative B 1.47 % B 1.61 %
Highly speculative Caa 0.00 % CCC 0.00 %
Poor quality Ca 0.00 % CC 0.00 %
Lowest quality, no interest C C
In default, in arrears -- D 0.00 %
72.02% 77.34%
AGGRESSIVE TAX-FREE
Fiscal 1993 Debt Holdings, by Rating MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa 29.45 % AA 31.72 %
Upper-medium grade A A
Medium grade Baa 21.48 % BBB 15.76 %
LOWER QUALITY
Moderately speculative Ba 6.41 % BB 4.18 %
Speculative B 2.72 % B 2.34 %
Highly speculative Caa 0.44 % CCC 0.31 %
Poor quality Ca 0.00 % CC 0.00 %
Lowest quality, no interest C C
In default, in arrears -- D 0.00 %
60.50 % 54.31 %
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S OR
S&P AMOUNTED TO 12.2 % AND 29.3% FOR HIGH YIELD TAX-FREE AND
AGGRESSIVE
TAX-FREE, RESPECTIVELY . THIS MAY INCLUDE SECURITIES RATED BY OTHER
NATIONALLY
RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES. UNRATED
SECURITIES
CONSIDERED TO BE INVESTMENT-GRADE QUALITY BY FMR ARE 4.19% OF AGGRESSIVE
TAX-FREE'S ASSETS. REFER TO THE FUNDS ' STATEMENT OF
ADDITIONAL INFORMATION FOR A
MORE COMPLETE DISCUSSION OF THESE RATINGS.
ASSET-BACKED SECURITIES may include pools of purchase contracts, financing
leases, or sales agreements entered into by municipalities. These
securities usually rely on continued payments by a municipality, and may
also be subject to prepayment risk.
VARIABLE- AND FLOATING-RATE INSTRUMENTS may have interest rates that move
in tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, a fund
may pay periodic fees or accept a lower interest rate. Demand features and
standby commitments are types of put features.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and
futures contracts and purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with a
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to a
fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type.
RESTRICTIONS: A fund may not invest more than 5% of its total assets in any
one issuer. For High Yield Tax-Free and Aggressive Tax-Free, this
restriction only applies to 75% of their total assets. These limitations do
not apply to U.S. government securities. A fund may invest more than 25% of
its total assets in tax-free securities that finance similar types of
projects.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements. If a fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is
paid off. If the fund makes additional investments while borrowings are
outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
LIMITED TERM MUNICIPALS seeks to provide the highest level of income exempt
from federal income tax that can be obtained, consistent with the
preservation of capital, from a diversified portfolio of high-quality,
limited-term obligations. The fund will normally invest at least 80% of its
assets in tax-exempt obligations with maturities of 15 years or less, and
the fund's dollar-weighted average maturity will be at all times limited to
12 years or less. The maturity of the fund's portfolio will be adjusted
from time to time based on FMR's assessment of interest rate trends. The
municipal bonds in the fund's portfolio are primarily of high or upper
medium quality, although the fund may invest up to 25% of its total assets
in medium grade bonds. The fund's standards for high grade, upper medium
grade, and medium grade obligations are essentially the same as Moody's and
S&P's four highest categories of Baa or BBB and above. The fund will
not invest in municipals bonds rated lower than Baa by Moody's or BBB by
S&P. The fund may invest up to 20% of its total assets in bonds not
rated by either of these rating services if FMR determines that they are
comparable to securities rated Baa or above by Moody's or BBB or above by
S&P. Unrated bonds deemed to be comparable to bonds rated Baa by
Moody's or BBB by S&P will be included in the 25% limitation on medium
grade bonds set forth in this paragraph. The fund may not invest more than
5% of its total assets in any one issuer.
HIGH YIELD TAX-FREE seeks to provide a high current yield exempt from
federal income tax. The fund will normally invest so that at least 80% of
its income is exempt from federal income tax. With respect to 75% of its
total assets, the fund may not invest more than 5% of its total assets in
any one issuer.
AGGRESSIVE TAX-FREE seeks to provide a high current yield, exempt from
federal income tax, by investing primarily in medium and lower quality
municipal bonds. The fund will normally invest at least 80% of its assets
in municipal securities whose interest is exempt from federal tax. With
respect to 75% of its total assets, the fund may not invest more than 5% of
its total assets in any one issuer.
EACH FUND may borrow only for temporary or emergency purposes, but not in
an amount exceeding 33% of its total assets.
This prospectus is printed on recycled paper using soy-based inks.
1FIDELITY'S TAX-FREE BOND FUNDS
2FIDELITY AGGRESSIVE TAX-FREE PORTFOLIO
A FUND OF FIDELITY MUNICIPAL TRUST
3FIDELITY HIGH YIELD TAX-FREE PORTFOLIO
A FUND OF FIDELITY COURT STREET TRUST
4FIDELITY LIMITED TERM MUNICIPALS
A FUND OF FIDELITY SCHOOL STREET TRUST
5STATEMENT OF ADDITIONAL INFORMATION
6FEBRUARY 17, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated February 17, 1994). Please retain this
document for future reference. The Annual Report of Fidelity High Yield
Tax-Free Portfolio for the fiscal year ended November 30, 1993 and the
Annual Reports of Fidelity Aggressive Tax-Free Portfolio and Fidelity
Limited Term Municipals for the fiscal year ended December 31, 1993 are
incorporated herein by reference. To obtain additional copies of the
Prospectus or an Annual Report, please call Fidelity Distributors
Corporation at 1-800-544-8888.
7TABLE OF CONTENTS 8PAGE
9 10
11Investment Policies and Limitations 12
13Portfolio Transactions 14
15Valuation of Portfolio Securities 16
17Performance 18
19Additional Purchase and Redemption Information 20
21Distributions and Taxes 22
23FMR 24
25Trustees and Officers 26
27Management Contracts 28
29Distribution and Service Plans 30
31Interest of FMR Affiliates 32
33Description of the Trusts 34
35Financial Statements 36
37Appendix 38
7INVESTMENT ADVISER
8Fidelity Management & Research Company (FMR)
9DISTRIBUTOR
10Fidelity Distributors Corporation (FDC)
11TRANSFER AGENTS
12United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co.
(FSC)
13 MUB-ptB-294
14
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with a fund's investment policies
and limitations.
Each fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, with respect to Aggressive Tax-Free and High Yield, except for the
fundamental investment limitations set forth below, the investment policies
and limitations described in this Statement of Additional Information are
not fundamental and may be changed without shareholder approval.
INVESTMENT LIMITATIONS OF FIDELITY AGGRESSIVE TAX-FREE PORTFOLIO
15(AGGRESSIVE TAX-FREE)
16THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
17(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities) if, as a
result, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10% of
the outstanding voting securities of that issuer;
18(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
19(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
20(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
21(5) purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested the securities of companies whose
principal business activities are in the same industry;
22(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
23(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
24(8) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
25THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
26(i) The fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
27(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
28(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
29(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
30(v) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
31(vi) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
32(vii) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to purchases
of debt securities.
33(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
34(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
35(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
36(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
37For purposes of limitations (1) and (5), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
38For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions" on page
.
39INVESTMENT LIMITATIONS OF FIDELITY HIGH YIELD TAX-FREE PORTFOLIO
40(HIGH YIELD)
41THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
42(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities) if, as a
result, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10% of
the outstanding voting securities of that issuer;
43(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
44(3) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
45(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
46(5) purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested the securities of companies whose
principal business activities are in the same industry;
47(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
48(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities); or
49(8) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
50THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
51(i) The fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
52(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
53(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
54(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
55(v) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
56(vi) The fund does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the
New York Stock Exchange or the American Stock Exchange or traded on the
NASDAQ National Market System.
57(vii) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to purchases
of debt securities.
58(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
59(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
60(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
61(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
62For purposes of limitations (1) and (5), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
63For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions" on page
.
64INVESTMENT LIMITATIONS OF FIDELITY LIMITED TERM MUNICIPALS
65(LIMITED TERM)
66THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
67(1) purchase the securities of any issuer (except the U.S. government,
its agencies or its instrumentalities) if, as a result, more than 5% of its
total assets would be invested in the securities of such issuer. For
purposes of this restriction, the fund will regard the entity which has the
ultimate responsibility for the payment of interest and principal as the
issuer;
68(2) issue senior securities;
69(3) make short sales of securities provided, however, that the fund may
purchase or sell futures contracts;
70(4) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions; provided, however, that
the fund may make initial and variation margin payments in connection with
purchase or sales of futures contracts or of options on futures contracts;
71(5) borrow money, except that the fund may borrow money or engage in
reverse repurchase agreements for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 33 1/3% of the value
of the fund's total assets (including borrowings) less liabilities (other
than borrowings). Any borrowings that come to exceed 33 1/3% of its total
assets by reason of a decline in net assets will be reduced within three
days to the extent necessary to comply with the 33 1/3% limitation;
72(6) underwrite any issue of securities, except to the extent that the
purchase of municipal bonds directly from an issuer in accordance with the
fund's investment objective, policies, and restrictions may be deemed to be
underwriting;
73(7) purchase securities (other than municipal bonds and obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities) if, as a result, more than 10% of its total assets would
be invested in any one industry;
74(8) purchase or sell real estate, but this shall not prevent the fund
from investing in municipal bonds or other permitted investments secured by
real estate or interests therein;
75(9) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
76(10) make loans, except through the purchase of a portion of an issue of
debt securities in accordance with its investment objective, policies, and
restrictions;
77(11) invest in oil, gas, or other mineral exploration or development
programs; or
78(12) purchase or retain the securities of any issuer other than the
securities of the fund, if, to the fund's knowledge, those Trustees and
officers of the fund or those officers and directors of FMR, who
individually own beneficially more than 1/2 of 1% of the outstanding
securities of such issuer, together own beneficially more than 5% of such
outstanding securities.
79Investment limitation (5) is construed in conformity with the 1940 Act,
and, accordingly, "three days" means three days exclusive of Sundays and
holidays.
80THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
81(i) With respect to 75% of its total assets, the fund does not currently
intend to purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, the fund would own more than 10% of the
outstanding voting securities of such issuer.
82(ii) The fund does not currently intend to sell securities short.
83(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser, or (b) by engaging in reverse repurchase agreements
with any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (5)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
84(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
85(v) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
86(vi) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
87(vii) The fund does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by domestic or
foreign governments or political subdivisions thereof) if, as a result,
more than 5% of its total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of less
than three years of continuous operation.
88For purposes of limitations (1), (7), and (i) FMR identifies the issuer
of a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
89For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions" on page
.
90Limited Term will treat municipal obligations which have the option to
require the issuer to redeem within its portfolio maturity limitation of 15
years as having remaining maturities within said limitation, even if the
periods to the stated maturity dates of such obligations are greater than
the maturity limitation of the fund.
91INVESTMENT POLICIES SHARED BY THE FUNDS
92AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), a fund may engage in transactions
with banks that are, or may be considered to be, "affiliated persons" of
the fund under the Investment Company Act of 1940. Such transactions may be
entered into only pursuant to procedures established and periodically
reviewed by the Boards of Trustees. These transactions may include
repurchase agreements with custodian banks; purchases, as principal, of
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); transactions in municipal securities;
and transactions in U.S. government securities with affiliated banks that
are primary dealers in these securities.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. The funds may receive fees for entering
into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, a fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
93Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
94REFUNDING CONTRACTS. The funds may purchase securities on a when-issued
basis in connection with the refinancing of an issuer's outstanding
indebtedness. Refunding contracts require the issuer to sell and the fund
to buy refunded municipal obligations at a stated price and yield on a
settlement date that may be several months or several years in the future.
The funds generally will not be obligated to pay the full purchase price if
they fail to perform under a refunding contract. Instead, refunding
contracts generally provide for payment of liquidated damages to the issuer
(currently 15-20% of the purchase price). The funds may secure their
obligations under a refunding contract by depositing collateral or a letter
of credit equal to the liquidated damages provisions of the refunding
contract. When required by SEC guidelines, a fund will place liquid assets
in a segregated custodial account equal in amount to its obligations under
refunding contracts.
95INVERSE FLOATERS are instruments whose interest rates bear an inverse
relationship to the interest rate on another security or the value of an
index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable-rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
96VARIABLE OR FLOATING RATE OBLIGATIONS, including certain participation
interests in municipal instruments, have interest rate adjustment formulas
that help stabilize their market values. Many variable and floating rate
instruments also carry demand features that permit a fund to sell them at
par value plus accrued interest on short notice.
97In many instances bonds and participation interests have tender options
or demand features that permit a fund to tender (or put) the bonds to an
institution at periodic intervals and to receive the principal amount
thereof. A fund considers variable rate instruments structured in this way
(Participating VRDOs) to be essentially equivalent to other VRDOs it
purchases. The IRS has not ruled whether the interest on Participating
VRDOs is Tax-exempt and, accordingly, a fund intends to purchase these
instruments based on opinions of bond counsel. Each fund may invest in
fixed-rate bonds that are subject to third party puts and in participation
interests in such bonds held by a bank in trust or otherwise.
98TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, tax-exempt bond (generally held pursuant to a
custodial arrangement) with a tender agreement that gives the holder the
option to tender the bond at its face value. As consideration for providing
the tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, the fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. In selecting tender option bonds for the funds, FMR will consider the
creditworthiness of the issuer of the underlying bond, the custodian, and
the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
99ZERO COUPON BONDS do not make regular interest payments. Instead, they
are sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
100STANDBY COMMITMENTS are puts that entitle holders to same-day settlement
at an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. Each fund may
acquire standby commitments to enhance the liquidity of portfolio
securities.
101Ordinarily a fund will not transfer a standby commitment to a third
party, although it could sell the underlying municipal security to a third
party at any time. A fund may purchase standby commitments separate from or
in conjunction with the purchase of securities subject to such commitments.
In the latter case, the fund would pay a higher price for the securities
acquired, thus reducing their yield to maturity.
102Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand. FMR
may rely upon its evaluation of a bank's credit in determining whether to
support an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
103Standby commitments are subject to certain risks, including the ability
of issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by the funds; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
104MUNICIPAL LEASE OBLIGATIONS. Each fund may invest a portion of its
assets in municipal leases and participation interests therein. These
obligations, which may take the form of a lease, an installment purchase,
or a conditional sale contract, are issued by state and local governments
and authorities to acquire land and a wide variety of equipment and
facilities. Generally, the funds will not hold such obligations directly as
a lessor of the property, but will purchase a participation interest in a
municipal obligation from a bank or other third party. A participation
interest gives a fund a specified, undivided interest in the obligation in
proportion to its purchased interest in the total amount of the obligation.
105Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and statutes
set forth requirements that states or municipalities must meet to incur
debt. These may include voter referenda, interest rate limits, or public
sale requirements. Leases, installment purchases, or conditional sale
contracts (which normally provide for title to the leased asset to pass to
the governmental issuer) have evolved as a means for governmental issuers
to acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
106FEDERALLY TAXABLE OBLIGATIONS. The funds do not intend to invest in
securities whose interest is federally taxable; however, from time to time,
each fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, each fund may invest in obligations whose interest is
federally taxable pending the investment or reinvestment in municipal
securities of proceeds from the sale of its shares or sales of portfolio
securities.
107Should a fund invest in federally taxable obligations, it would purchase
securities that in FMR's judgment are of high quality. These would include
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities; obligations of domestic banks; and repurchase
agreements. The funds' standards for high-quality taxable obligations are
essentially the same as those described by Moody's Investors Service, Inc.
(Moody's) in rating corporate obligations within its two highest ratings of
Prime-1 and Prime-2, and those described by Standard & Poor's
Corporation (S&P) in rating corporate obligations within its two
highest ratings of A-1 and A-2.
108Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before state legislatures that
would affect the state tax treatment of the funds' distributions. If such
proposals were enacted, the availability of municipal obligations and the
value of the funds' holdings would be affected and the Trustees would
reevaluate the funds' investment objectives and policies.
109Each fund anticipates being as fully invested as practicable in
municipal securities; however, there may be occasions when, as a result of
maturities of portfolio securities, sales of fund shares, or in order to
meet redemption requests, a fund may hold cash that is not earning income.
In addition, there may be occasions when, in order to raise cash to meet
redemptions, a fund may be required to sell securities at a loss.
110REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement is a taxable
obligation which involves the obligation of the seller to pay the
agreed-upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed-upon resale price and marked to
market daily) of the underlying security. Each fund may engage in
repurchase agreements with respect to any security in which it is
authorized to invest. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
of a decline in the market value of the underlying securities, as well as
delays and costs to a fund in connection with bankruptcy proceedings), it
is each fund's policy to limit repurchase agreement transactions to parties
whose creditworthiness has been reviewed and found satisfactory by FMR.
111REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, a fund will maintain appropriate liquid assets in a segregated
custodial account to cover its obligation under the agreement. Each fund
will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of a fund's assets and may be
viewed as a form of leverage.
112ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of
in the ordinary course of business at approximately the prices at which
they are valued. Under the supervision of the Board of Trustees, FMR
determines the liquidity of a fund's investments and, through reports from
FMR, the Board monitors investments in illiquid instruments. In determining
the liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). Investments currently considered
by each fund to be illiquid include over-the-counter options. Also, FMR may
determine some restricted securities and municipal lease obligations to be
illiquid. However, with respect to over-the-counter options a fund writes,
all or a portion of the value of the underlying instrument may be illiquid
depending on the assets held to cover the option and the nature and terms
of any agreement the fund may have to close out the option before
expiration. In the absence of market quotations, illiquid investments are
priced at fair value as determined in good faith by a committee appointed
by the Board of Trustees. If through a change in values, net assets, or
other circumstances, a fund were in a position where more than 10% its net
assets were invested in illiquid securities it would seek to take
appropriate steps to protect liquidity.
113RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time the fund may be permitted to
sell a security under an effective registration statement. If, during such
a period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security.
114LOWER-RATED MUNICIPAL SECURITIES. Aggressive Tax-Free and High Yield may
each invest a portion of their assets in lower-rated municipal securities
as described in the Prospectus.
115While the market for municipal securities is considered to be adequate,
adverse publicity and changing investor perceptions may affect the ability
of outside pricing services used by the funds to value portfolio
securities, and the funds' ability to dispose of lower-rated bonds. The
outside pricing services are consistently monitored to assure that
securities are valued by a method that the Boards of Trustees believe
accurately reflects fair value. The impact of changing investor perceptions
may be especially pronounced in markets where municipal securities are
thinly traded.
116The funds may choose, at their expense, or in conjunction with others,
to pursue litigation or otherwise exercise their rights as a security
holder to protect the interests of security holders if they determine this
to be in the best interest of fund shareholders.
117INDEXED SECURITIES. Each fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, or other
financial indicators. Indexed securities typically, but not always, are
debt securities or deposits whose value at maturity or coupon rate is
determined by reference to a specific instrument or statistic. Indexed
securities may have principal payments as well as coupon payments that
depend on the performance of one or more interest rates. Their coupon rates
or principal payments may change by several percentage points for every 1%
interest rate change. One example of indexed securities is inverse
floaters.
118The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed,
and may also be influenced by interest rate changes. At the same time,
indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more
volatile than the underlying instruments.
119LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. Each fund has filed a
notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission
(CFTC) and the National Futures Association, which regulate trading in the
futures markets. The funds intend to comply with Section 4.5 of the
regulations under the Commodity Exchange Act which limits the extent to
which a fund can commit assets to initial margin deposits and option
premiums.
120In addition, a fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
121The above limitations on the funds' investments in futures contracts and
options, and the funds' policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
122FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date.
When a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Bond Buyer Municipal Bond Index. Futures can
be held until their delivery dates, or can be closed out before then if a
liquid secondary market is available.
123The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
124FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker,
known as a futures commission merchant (FCM), when the contract is entered
into. Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of a fund's investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of a fund, the fund may be
entitled to return of margin owed to it only in proportion to the amount
received by the FCM's other customers, potentially resulting in losses to
the fund.
125PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund pays
the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund may also terminate a put option position by closing it out in
the secondary market at its current price, if a liquid secondary market
exists.
126The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing the option, a
put buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
127The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
128WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In return
for receipt of the premium, the fund assumes the obligation to pay the
strike price for the option's underlying instrument if the other party to
the option chooses to exercise it. When writing an option on a futures
contract a fund will be required to make margin payments to an FCM as
described above for futures contracts. A fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option a fund has written, however, the fund
must continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
129If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
130Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
131COMBINED POSITIONS. A fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open
and close out.
132CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely that
the standardized contracts available will not match a fund's current or
anticipated investments exactly. A fund may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the fund's other investments.
133Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a fund's
investments well. Options and futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility
of the underlying instrument, and the time remaining until expiration of
the contract, which may not affect security prices the same way. Imperfect
correlation may also result from differing levels of demand in the options
and futures markets and the securities markets, from structural differences
in how options and futures and securities are traded, or from imposition of
daily price fluctuation limits or trading halts. A fund may purchase or
sell options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in volatility between the contract and the
securities, although this may not be successful in all cases. If price
changes in a fund's options or futures positions are poorly correlated with
its other investments, the positions may fail to produce anticipated gains
or result in losses that are not offset by gains in other investments.
134LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular option or futures
contract at any particular time. Options may have relatively low trading
volume and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions,
and potentially could require a fund to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result, the
fund's access to other assets held to cover its options or futures
positions could also be impaired.
135OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other
party to the option contract. While this type of arrangement allows a fund
greater flexibility to tailor an option to its needs, OTC options generally
involve greater credit risk than exchange-traded options, which are
guaranteed by the clearing organization of the exchanges where they are
traded.
136ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. Each fund will comply
with guidelines established by the SEC with respect to coverage of options
and futures strategies by mutual funds, and if the guidelines so require
will set aside appropriate liquid assets in a segregated custodial account
in the amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they are
replaced with other suitable assets. As a result, there is a possibility
that segregation of a large percentage of a fund's assets could impede
portfolio management or the fund's ability to meet redemption requests or
other current obligations.
137EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public colleges and universities, and
those representing pooled interests in student loans. Bonds issued to
supply public educational institutions with funds are subject to the risk
of unanticipated revenue decline, primarily the result of decreasing
student enrollment. Among the factors that may affect enrollment are
restrictions on students' ability to pay tuition, availability of state and
federal funding, and general economic conditions.
138Student loan revenue bonds are backed by pools of student loans and are
generally offered by state (or substate) authorities or commissions.
Student loans are guaranteed by state guarantee agencies and reinsured by
the Department of Education. The risks associated with these issues is that
default on the student loans may result in prepayment to bondholders and an
earlier-than-anticipated retirement of the bond.
139ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, or may experience in the future, problems, including (a) the
effects of inflation upon construction and operating costs, (b) the
availability and cost of fuel, (c) the availability and cost of capital,
(d) the effects of conservation on energy demand, (e) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (f) timely and sufficient rate
increases, (g) opposition to nuclear power, and (h) increased competition.
140HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
medical and technological advances which dramatically alter the need for
health services or the way in which such services are delivered; and
efforts by employers, insurers, and governmental agencies to reduce the
costs of health insurance and healthcare services.
141HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They are secured by
the revenues derived from mortgages purchased with the proceeds of the bond
issue. It is extremely difficult to predict the supply of available
mortgages to be purchased with the proceeds of an issue or the future cash
flow from the underlying mortgages. Consequently, there are risks that
proceeds will exceed supply, resulting in early retirement of bonds, or
that homeowner repayments will create an irregular cash flow.
142Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
143PORTFOLIO TRANSACTIONS
144All orders for the purchase or sale of portfolio securities are placed
on behalf of the funds by FMR pursuant to authority contained in each
fund's management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and accounts for which it
or its affiliates act as investment adviser. In selecting broker-dealers,
subject to applicable limitations of the federal securities laws, FMR will
consider various relevant factors, including, but not limited to, the size
and type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency, settlement
capability and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions.
145The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). The selection of such broker-dealers
generally is made by FMR (to the extent possible consistent with execution
considerations), based upon the quality of research and execution services
provided.
146The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and conversely, such
information provided by broker-dealers who have executed transaction orders
on behalf of other FMR clients may be useful to FMR in carrying out its
obligations to the funds. The receipt of such research has not reduced
FMR's normal independent research activities; however, it enables FMR to
avoid the additional expenses that could be incurred if FMR tried to
develop comparable information through its own efforts.
147Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
funds to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities to the
funds and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation should
be related to those services.
148FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds, to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI), a subsidiary of FMR Corp., if the commissions are fair and
reasonable and comparable to commissions charged by non-affiliated,
qualified broker-dealer firms for similar services.
149Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except if certain
requirements are satisfied . Pursuant to such re quirements , the
Board of Trustees has authorized FBSI to e xecute fund
portfolio transactions on national securities exchanges in
accordance with approved procedures and applicable SEC rules.
150The Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the funds and review the commissions paid by the funds over
representative periods of time to determine whether they are reasonable in
relation to the benefits to the funds.
151For the 1993 and 1992 fiscal years (ended November 30 for High Yield and
December 31 for Aggressive Tax-Free and Limited Term ), the funds'
annual portfolio turnover rates were as follows:
184 185 1993 186199
2
187Aggressive Tax-Free 188 54% 189 43%
190High Yield 191 53% 192 47%
193Limited Term 194 111% 195 50%
152From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. The funds seek to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for the funds to seek such
recapture.
153Although the Trustees and officers of the funds are substantially the
same as those of other funds managed by FMR, investment decisions for each
of the funds are made independently from those of other funds managed by
FMR or accounts managed by FMR affiliates. It sometimes happens that the
same security is held in the portfolio of more than one of these funds or
accounts. Simultaneous transactions are inevitable when several funds are
managed by the same investment adviser, particularly when the same security
is suitable for the investment objective of more than one fund.
154When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with a formula considered by the officers of the funds involved
to be equitable to each fund. In some cases this system could have a
detrimental effect on the price or value of the security as far as each of
the funds is concerned. In other cases, however, the ability of the funds
to participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that the
desirability of retaining FMR as investment adviser to the funds outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
155VALUATION OF PORTFOLIO SECURITIES
156Valuations of portfolio securities furnished by the pricing service
employed by the funds are based upon a computerized matrix system or
appraisals by the pricing service, in each case in reliance upon
information concerning market transactions and quotations from recognized
municipal securities dealers. The methods used by the pricing service and
the quality of valuations so established are reviewed by officers of the
funds and FSC under the general supervision of the Trustees. There are a
number of pricing services available and the Trustees, on the basis of
on-going evaluation of these services, may use other pricing services or
discontinue the use of any pricing service in whole or in part.
157PERFORMANCE
158The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's share price, yield, and
total returns fluctuate in response to market conditions and other factors,
and the value of each fund's shares when redeemed may be more or less than
their original cost.
159YIELD CALCULATIONS. The funds' yields used in advertising are computed
by dividing a fund's interest income for a given 30-day or one-month
period, net of expenses, by the average number of shares entitled to
receive dividends during the period, dividing this figure by the fund's net
asset value per share at the end of the period, and annualizing the result
(assuming compounding of income) in order to arrive at an annual percentage
rate. Yields for Aggressive Tax-Free do not reflect the fund's 1%
redemption fee. Income is calculated for purposes of yield quotations in
accordance with standardized methods applicable to all stock and bond
funds. In general, interest income is reduced with respect to bonds trading
at a premium over their par value by subtracting a portion of the premium
from income on a daily basis, and is increased with respect to bonds
trading at a discount by adding a portion of the discount to daily income.
Capital gains and losses generally are excluded from the calculation.
160Income calculated for the purposes of determining the funds' yields
differs from income as determined for other accounting purposes. Because of
the different accounting methods used, and because of the compounding of
income assumed in yield calculations, a fund's yield may not equal its
distribution rate, the income paid to your account, or the income reported
in the fund's financial statements.
161A fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment after taxes to equal the fund's tax-free
yield. Tax-equivalent yields are calculated by dividing a fund's yield by
the result of one minus a stated federal or combined federal and state tax
rate. (If only a portion of a fund's yield is tax-exempt, only that portion
is adjusted in the calculation.)
162The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 199 4 . It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 4% to 7%. Of course, no assurance can
be given that the funds will achieve any specific tax-exempt yield. While
the funds invest principally in obligations whose interest is exempt from
federal income tax, other income received by the funds may be taxable.
163199 4 TAX RATES AND TAX-EQUIVALENT YIELDS
164 Federal If individual tax-exempt yield is:
165 Single Return Joint Return Tax 4% 5% 6% 7%
166 Taxable Income:* Taxable Income:* Bracket** Then taxable-equivalent
yield is:
167 $ 22, 751 - $ 5 5,100 $ 38,001 - $
91,850 28 % 5.56% 6.94% 8.33% 9.72%
168 $ 55,101 - $115,000 $ 91,851 - $140,000 31 % 5.80
7.25 8.70 10.14
169 $115,001 - $250,000 $140,001 - $250,000 36 % 6.25 7.81 9.38
10.94
170 $250,001 - above $250,001 - above 39.6% 6.62 8.28 9.93 11.59
171* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only; does not include impact of
preferential rate on long-term capital gain income.
172** Excludes the impact of the phaseout of personal exemptions,
limitation on itemized deductions, and other credits, exclusions, and
adjustments which may raise a taxpayer's marginal tax rate. An increase in
a shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
173Each fund may invest a portion of its assets in obligations that are
subject to federal income tax. When a fund invests in these obligations,
its tax-equivalent yield will be lower. In the table above, tax-equivalent
yields are calculated assuming investments are 100% federally tax-free.
174Yield information may be useful in reviewing the funds' performance and
in providing a basis for comparison with other investment alternatives.
However, the funds' yields fluctuate, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of the respective investment companies they have
chosen to consider.
175Investors should recognize that in periods of declining interest rates
the funds' yields will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates the funds' yields will tend
to be somewhat lower. Also, when interest rates are falling, the inflow of
net new money to the funds from the continuous sale of its shares will
likely be invested in instruments producing lower yields than the balance
of the funds' holdings, thereby reducing the current yields of the funds.
In periods of rising interest rates, the opposite can be expected to occur.
176TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of a fund's returns, including the effect of reinvesting
dividends and capital gain distributions (if any), and any change in the
fund's net asset value per share (NAV) over the period. Average annual
total returns are calculated by determining the growth or decline in value
of a hypothetical historical investment in a fund over a stated period, and
then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative total return of 100%
over ten years would produce an average annual total return of 7.18%, which
is the steady annual rate of return that would equal 100% growth on a
compounded basis in ten years. While average annual returns are a
convenient means of comparing investment alternatives, investors should
realize that the funds' performance is not constant over time, but changes
from year to year, and that average annual returns represent averaged
figures as opposed to the actual year-to-year performance of the funds.
177In addition to average annual returns, the funds may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given below.
178Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration. Total returns
for Aggressive Tax-Free will generally not include the fund's 1% redemption
fee since this only affects shares held for less than 180 days. Excluding
the fund's redemption fee from a total return calculation produces a higher
total return figure.
179NET ASSET VALUES. Charts and graphs using a fund's net asset value,
adjusted net asset value, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by the fund
and reflects all elements of its return. Unless otherwise indicated, the
fund's adjusted NAVs are not adjusted for sales charges, if any.
180HISTORICAL FUND RESULTS. The following table shows the funds' 30-day
yields and tax-equivalent yields (assuming a 31% federal income tax rate)
as of November 30, 1993 (High Yield) and December 31, 1993 (Aggressive
Tax-Free and Limited Term). The table also shows each fund's average annual
and cumulative total returns for the fiscal years ended November 30, 1993
(High Yield) and December 31, 1993 (Aggressive Tax-Free and Limited Term).
225 226 Average Annual Total Returns 227Cumulative Total Returns
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
228 22930-Day 230Tax-Equiva 231One 232Five 233Ten 234One 235Five 236Ten
lent
237 238Yield 239Yield 240Year 241Year 242Years 243Year 244Years 245Year
s s
</TABLE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Tax-Free*
5.63% 8.80% 13.63% 10.29% 11.27% 13.63% 63.20% 142.75%
High Yield
5.34 8.34 11.92 10.24 10.83 11.92 62.80 179.57
Limited Term
4.70 7.34 12.24 9.26 9.73 12.24 55.69 153.02
</TABLE>
181* Ten-year figures are life of fund, September 13, 1985 (commencement of
operations) through December 31, 1993.
182Note: The yields and total return figures for Aggressive Tax-Free do not
include the effect of paying the fund's 1% redemption fee applied to shares
held for less than 180 days.
183The following tables show the income and capital elements of each fund's
total returns and compares them to the cost of living (as measured by the
Consumer Price Index, or CPI) over the same period. During the periods
quoted, interest rates and bond prices fluctuated widely; thus the tables
should not be considered representative of the dividend income or capital
gain or loss that could be realized from an investment in the funds today.
184AGGRESSIVE TAX-FREE. During the period from September 13, 1985
(commencement of operations) through December 31, 1993, a hypothetical
$10,000 investment in Aggressive Tax-Free would have grown to
$ 24,294 , assuming all distributions were reinvested.
250AGGRESSIVE TAX-FREE 251INDEX
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
252 253Value of 254Value of 255Value of 256 257
258 259Initial 260Reinvest 261Reinvested 262 263Cost
ed
264Period Ended 265$10,000 266Income 267Capital 268Total 269of
Gain
270December 31 271Investmen 272Dividend 273Distributio 274Value 275Living**
t s ns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2761993 $12,340 $10,960 $994 $24,294 277$ 13,
500
2781992 11,880 9,152 330 21,362 27913,1
39
2801991 11,800 7,669 99 19,568 28112,7
69
2821990 11,430 6,077 0 17,507 28312,3
89
2841989 11,490 4,798 0 16,288 28511,6
76
2861988 11,330 3,544 0 14,874 28711,1
57
2881987 10,820 2,296 0 13,116 28910,6
85
2901986 11,560 1,373 0 12,933 29110,2
31
2921985* 10,660 324 0 10,984 29310,1
20
</TABLE>
185 * From commencement of operations, September 13, 1985.
186** From month-end closest to initial investment date.
187Explanatory Notes: With an initial investment of $10,000 made on
September 13, 1985, the net amount invested in fund shares was $10,000. The
cost of the initial investment ($10,000), together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted to
$ 21,209 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $ 7,288 for
income dividends and $530 for capital gain distributions. If FMR had
not reimbursed certain fund expenses during the periods shown above, the
fund's total returns would have been lower. Tax consequences of different
investments have not been factored into the above figures. The total return
figures do not include the effect of paying the fund's 1% redemption fee
applied to shares held for less than 180 days.
188HIGH YIELD. During the period from November 30, 1983 through November
30, 1993, a hypothetical $10,000 investment in High Yield would have grown
to $27,957 , assuming all distributions were reinvested.
298HIGH YIELD 299INDEX
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
300 301Value of 302Value of 303Value of 304 305
306 307Initial 308Reinvest 309Reinvested 310 311Cost
ed
312Year Ended 313$10,000 314Income 315Capital 316Total 317of
Gain
318November 30 319Investmen 320Dividend 321Distributio 322Value 323Living
t s ns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
3241993 325$11,8 326$13,7 327$2,40 328$27,95 329$14,4
44 11 2 7 07
3301992 33111,38 33211,66 3331,931 33424,980 33514,03
8 2 2
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1991 11,361 10,092 1,632 23,085 13,617
1990 11,289 8,539 1,231 21,060 13,221
1989 11,459 7,234 644 19,337 12,441
1988 10,931 5,642 600 17,173 11,887
1987 10,519 4,245 578 15,342 11,403
1986 12,328 3,682 47 16,056 10,909
1985 11,003 2,244 0 13,247 10,771
1984 9,848 1,009 0 10,857 10,405
</TABLE>
189Explanatory Notes: With an initial investment of $10,000 made on
November 30, 1983, the net amount invested in fund shares was $10,000. The
cost of the initial investment ($10,000), together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted to
$ 25,138 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $ 8,163 for
income dividends and $1,379 for capital gain distributions. Tax
consequences of different investments have not been factored into the above
figures.
190LIMITED TERM. During the period from December 31, 1983 through December
31, 1993, a hypothetical $10,000 investment in Limited Term would have
grown to $25,302 , assuming all distributions were reinvested.
338LIMITED TERM 339INDEX
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
340 341Value of 342Value of 343Value of 344 345
346 347Initial 348Reinvest 349Reinvested 350 351Cost
ed
352Year Ended 353$10,000 354Income 355Capital 356Total 357of
Gain
358December 31 359Investmen 360Dividend 361Distributio 362Value 363Living
t s ns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
3641993 365$12,44 366$11,57 367$1,282 368$25,302 369$14,3
1 9 93
3701992 37111,955 3729,926 373 661 37422,543 37514,00
8
3761991 37711,856 3788,560 379 426 38020,841 38113,61
3
3821990 38311,544 3847,100 385 100 38618,744 38713,20
8
3881989 38911,594 3905,929 391 0 39217,523 39312,44
8
3941988 39511,494 3964,757 397 0 39816,252 39911,89
5
4001987 40111,333 4023,685 403 0 40415,018 40511,39
2
4061986 40711,930 4082,918 409 0 41014,848 41110,90
8
4121985 41311,059 4141,831 415 0 41612,890 41710,79
0
4181984 41910,149 420838 421 0 42210,987 42310,39
5
</TABLE>
191Explanatory Notes: With an initial investment of $10,000 made on
December 31, 1983, the net amount invested in fund shares was $10,000. The
cost of the initial investment ($10,000), together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted to
$ 21,927 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $7,468 for
income dividends and $ 672 for capital gain distributions. If FMR had
not reimbursed certain fund expenses during the periods shown above, the
fund's total returns would have been lower. Tax consequences of different
investments have not been factored into the above figures.
192A fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to the
mutual fund rankings, a fund's performance may be compared to mutual fund
performance indices prepared by Lipper.
193From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
194The funds may also quote the Lehman Brothers Muni bond Index , an
index of municipal bonds that have been issued within the last five years
as part of a deal of at least $50 million. The index includes issues with
maturities of at least two years and those rated at least Baa by Moody's or
BBB by S&P. The index excludes bonds subject to the federal alternative
minimum tax.
195Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and services.
196Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
197Fidelity funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
198The funds may compare their performance or the performance of securities
in which they may invest to averages published by IBC USA (Publications),
Inc. of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The Bond Fund Report AverageS(registered
trademark)/ Municipal , which is reported in the BOND FUND
REPORT(registered trademark), covers over 361 Tax-Free bond funds.
When evaluating comparisons to money market funds, investors should
consider the relevant differences in investment objectives and policies.
Specifically, money market funds invest in short-term, high-quality
instruments and seek to maintain a stable $1.00 share price. The
fund s , however, invest in longer-term instruments and
their share prices change daily in response to a variety of factors.
199A fund may compare and contrast in advertising the relative advantages
of investing in a mutual fund versus an individual municipal bond. Unlike
tax-free mutual funds, individual municipal bonds offer a stated rate of
interest and, if held to maturity, repayment of principal. Although some
individual municipal bonds might offer a higher return, they do not offer
the reduced risk of a mutual fund that invests in many different
securities. The initial investment requirements and sales charges of many
tax-free mutual funds are lower than the purchase cost of individual
municipal bonds, which are generally issued in $5,000 denominations and are
subject to direct brokerage costs.
200In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
201A fund may present its fund number, Quotron(registered trademark)
number, and CUSIP number, and discuss or quote its current portfolio
manager.
202A fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program,
an investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during periods of low price levels.
203According to the Investment Company Institute, over the past ten years,
assets in tax-exempt funds increased from $45 billion in 1984 to
approximately $291 billion at the end of 1992. As of December 31, 1993, FMR
advised 42 tax-free funds with a total value of over $ 25 billion in
assets.
204ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, a fund's NAV may be affected on days when investors do
not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), each fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
205DISTRIBUTIONS AND TAXES
206DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, Fidelity may reinvest your distributions at
the then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
207DIVIDENDS. To the extent that the funds' income is derived from
federally tax-exempt interest, the daily dividends declared by each fund
are also federally tax-exempt. The funds will send each shareholder a
notice in January describing the tax status of dividends and capital gain
distributions (if any) for the prior year.
208Shareholders are required to report tax-exempt income on their federal
tax returns. Shareholders who earn other income, such as Social Security
benefits, may be subject to federal income tax on up to one half of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
209The funds purchase municipal obligations based on opinions of bond
counsel regarding the federal income tax status of the obligations. These
opinions generally will be based upon covenants by the issuers regarding
continuing compliance with federal tax requirements. If the issuer of an
obligation fails to comply with its covenants at any time, interest on the
obligation could become federally taxable retroactive to the date the
obligation was issued.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) is subject to the federal alternative minimum tax (AMT),
although the interest continues to be excludable from gross income for
other tax purposes. Interest from private activity securities will be
considered tax-exempt for purposes of the funds' policies of investing so
that at least 80% of assets are invested in federally tax-exempt municipal
securities, or at least 80% of their income is free from federal income
tax, as the case may be. Interest from private activity securities is a
tax-preference item for the purposes of determining whether a taxpayer is
subject to the AMT and the amount of AMT to be paid, if any. Private
activity securities issued after August 7, 1986 to benefit a private or
industrial user or to finance a private facility are affected by this rule.
210It is the current position of the Staff of the SEC that a fund which
uses the word "tax-free" in its name may not derive more than 20% of its
income from municipal obligations whose interest is a preference item for
purposes of the AMT. Under this position, at least 80% of each fund's
income distributions would have to be exempt from the AMT as well as
federal taxes. Corporate investors should note that a tax preference item
for purposes of the corporate AMT is 75% of the amount by which adjusted
current earnings (which includes tax-exempt interest) exceed the
alternative minimum taxable income of the corporation. If a shareholder
receives an exempt-interest dividend and sells shares at a loss after
holding them for a period of six months or less, the loss will be
disallowed to the extent of the amount of exempt-interest dividend.
211The funds, except for Aggressive Tax-Free, do not currently intend to
purchase private activity securities whose interest is a tax preference
item for purposes of the AMT. Nevertheless, the funds reserve the right to
purchase such obligations in the future, subject to notice to shareholders,
if their respective Board of Trustees determines that it is in the best
interest of the shareholders to do so.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the funds on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
A portion of the gain on bonds purchase d at a discount after April
30, 1993 and short-term capital gains distributed by the funds are
federally taxable to shareholders as dividends, not as capital gains.
Distributions from short-term capital gains do not qualify for the
dividends-received deduction. Dividend distributions resulting from a
recharacterization of gain from the sale of bonds purchased at a discount
after April 30, 1993 are not considered income for purposes of the funds'
80% policies discussed above .
212TAX STATUS OF THE FUNDS. Each fund has qualified and intends to continue
to qualify each year as a "regulated investment company" for tax purposes,
so that it will not be liable for federal tax at the fund level on income
and capital gains distributed to shareholders. In order to qualify as a
regulated investment company and avoid being subject to federal income or
excise taxes, each fund intends to distribute substantially all of its net
investment income and net realized capital gains (if any) within each
calendar year as well as on a fiscal year basis. Each fund also intends to
comply with other tax rules applicable to regulated investment companies,
including a requirement that capital gains from the sale of securities held
less than three months constitute less than 30% of each fund's gross income
for each fiscal year. Gains from some futures contracts and options are
included in this 30% calculation, which may limit a fund's investment in
such instruments. Fidelity Municipal Trust treats each of its funds
(including Aggressive Tax-Free) as a separate entity for tax purposes.
Fidelity Court Street Trust (including High Yield) treats each of its funds
as a separate entity for tax purposes. Fidelity School Street Trust
(including Limited Term Municipals) treats each of its funds as a separate
entity for tax purposes.
213OTHER TAX INFORMATION. The information above is only a summary of some
of the tax considerations generally affecting the funds and their
shareholders; no attempt has been made to discuss individual tax
consequences. Distributions from the funds may be subject to state and
local taxes. Investors should consult their tax advisers to determine
whether the funds are suitable to their particular tax situation.
214FMR
215FMR is a wholly owned subsidiary of FMR Corp., a parent company
organized in 1972. At present, the principal operating activities of FMR
Corp. are those conducted by three of its divisions as follows: FSC, which
is the transfer and shareholder servicing agent for certain of the funds
advised by FMR; Fidelity Investments Institutional Operations Company,
which performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
216Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas, a wholly owned subsidiary of FMR
formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
217TRUSTEES AND OFFICERS
218The Trustees and executive officers of the trusts are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. All persons named as
Trustees and officers also serve in similar capacity for other funds
advised by FMR. Unless otherwise noted, the business address of each
Trustee and officer is 82 Devonshire Street, Boston, Massachusetts 02109,
which is also the address of FMR. Those Trustees who are "interested
persons" (as defined by the 1940 Act) by virtue of their affiliation with
either a trust of FMR, are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc., and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991)
(Fidelity Municipal Trust and Fidelity School Street Trust only), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton , NY, Trustee (1992)
(Fidelity Municipal Trust and Fidelity School Street Trust only) .
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he
serves as a Trustee of First Union Real Estate Investments, Chairman of the
Board of Trustees and a member of the Executive Committee of the Cleveland
Clinic Foundation, a Trustee and a member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee. Prior
to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate
Property Investors and a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993)
(Fidelity Municipal Trust only) is Chairman of the Board, President,
and Chief Executive Officer of Lexmark International, Inc. (office
machines, 1991). Prior to 1991, he held the positions of Vice President of
International Business Machines Corporation ("IBM") and President and
General Manager of various IBM divisions and subsidiaries. Mr. Mann is a
Director of M.A. Hanna Company (chemicals, 1993) and Infomart (marketing
services, 1991), a Trammell Crow Co. In addition, he serves as the
Campaign Vice Chairman of the Tri-State United Way (1993) and is a member
of the University of Alabama President's Cabinet (1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President - Legal of FMR Corp., and Vice President and Clerk
of FDC.
219ANNE PUNZAK, Vice President of Fidelity Aggressive Tax-Free Portfolio
(1988), and other funds advised by FMR (1990), is an employee of FMR.
220DAVID MURPHY, Vice President of Fidelity Limited Term Municipals and
other funds advised by FMR (1990), is an employee of FMR.
221 Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
222As of December 31, 1993, the Trustees and officers of the funds owned,
in the aggregate, less than 1% of each fund's total outstanding shares.
223MANAGEMENT CONTRACTS
224Each fund employs FMR to furnish investment advisory and other services.
Under FMR's management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Boards of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides the funds with all necessary
office facilities and personnel for servicing the funds' investments, and
compensates all officers of the trusts, all Trustees who are "interested
persons" of the trusts or of FMR, and all personnel of the trusts or FMR
performing services relating to research, statistical, and investment
activities.
225In addition, FMR or its affiliates, subject to the supervision of the
Boards of Trustees, provide the management and administrative services
necessary for the operation of the funds. These services include providing
facilities for maintaining the funds' organizations; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with the funds; preparing all general shareholder
communications and conducting shareholder relations; maintaining the funds'
records and the registration of the funds' shares under federal and state
law; developing management and shareholder services for the funds; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Boards of Trustees.
226In addition to the management fee payable to FMR and the fees payable to
United Missouri, each fund pays all of its expenses, without limitation,
that are not assumed by those parties. Each fund pays for typesetting,
printing, and mailing proxy material to shareholders, legal expenses, and
the fees of the custodian, auditor, and non-interested Trustees. Although
each fund's management contract provides that the fund will pay for
typesetting, printing, and mailing prospectuses, statements of additional
information, notices, and reports to existing shareholders, United Missouri
has entered into a revised sub-transfer agent agreement with FSC, pursuant
to which FSC bears the cost of providing these services to existing
shareholders. Other expenses paid by the funds include interest, taxes,
brokerage commissions, each fund's proportionate share of insurance
premiums and Investment Company Institute dues, and the costs of
registering shares under federal and state securities laws. Each fund is
also liable for such nonrecurring expenses as may arise, including costs of
any litigation to which a fund may be a party and any obligation it may
have to indemnify the trusts ' officers and Trustees with respect to
litigation.
227FMR is each fund's manager pursuant to a management contract
dated March 1, 1989 for Limited Term, which was approved by
shareholders on November 16, 1988, and contracts dated March 1, 1993 for
High Yield and Aggressive Tax-Free , which were approved by
shareholders on February 17, 1993 . For the services of FMR under its
management contract, Limited Term pays a monthly management fee to FMR at
the annual rate of .15% of the fund's average net assets throughout the
month plus 5% of the fund's gross income throughout the month. For this
purpose, gross income includes interest accrued on portfolio obligations,
adjusted for amortization of purchase premium, but excludes adjustments for
purchase discount on portfolio obligations. Effective July 1, 1993, FMR
voluntarily agreed to temporarily limit the management fee of Limited Term
to .10% of the fund's average net assets plus 5% of the fund's gross income
throughout the month.
228For the services of FMR under the contracts, Aggressive Tax-Free and
High Yield each pay FMR a monthly management fee composed of the sum of two
elements: a group fee rate and an individual fund fee rate.
229The group fee rate is based on the monthly average net assets of all of
the registered investment companies with which FMR has management contracts
and is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left. On the right, the effective fee rate schedule
shows the results of cummulatively applying the annualized rates at varying
asset levels. For example, the effective annual fee rate at $ 233
billion of group net assets - their approximate level for December 1993 -
was .1621% , which is the weighted average of the respective fee
rates for each level of group net assets up to $ 233 billion.
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets Rate
0 - $ 3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1695
24 - 30 .1800 200 .1658
30 - 36 .1750 225 .1629
36 - 42 .1700 250 .1604
42 - 48 .1650 275 .1583
48 - 66 .1600 300 .1565
66 - 84 .1550 325 .1548
84 - 120 .1500 350 .1533
120 - 174 .1450
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
230 * Prior to January 1, 1992, the group fee rate was based on a
schedule with breakpoints ending at .1500% for average group assets in
excess of $84 billion. The group fee breakpoints shown for average group
assets between $84 billion and $228 billion were voluntarily adopted by FMR
on January 1, 1992. Each fund's management contract dated March 1, 1993
includes these group fee rate breakpoints. Additional breakpoints for
average group assets in excess of $228 billion were voluntarily added to
the group fee rate schedule by FMR on November 1, 1993, pending shareholder
approval of a new management contract reflecting the extended schedule. The
extended schedule provides for lower management fees as FMR's total assets
under management increase.
231The individual fund fee rates for the funds are as follows: .30%
(Aggressive Tax-Free) and .25% ( High Yield ). Based on the average
net assets of funds advised by FMR for December 1993, the annual management
fee rates would be calculated as follows:
232 Group Fee Rate Individual Fund Fee Rate Management Fee Rate
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
466Aggressive Tax-Free 467. 1621 % 468+ 469.30% 470= 471. 4621
%
472High Yield 473. 1621 % 474+ 475.25% 476= 477. 4121
%
</TABLE>
233One twelfth of this annual management fee rate is then applied to each
fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
234Management fees paid to FMR for the fiscal years ended November 30 (High
Yield) and December 31 (Aggressive Tax-Free and Limited Term), 1993, 1992,
and 1991 for FMR's services as investment adviser are indicated in the
table below.
235MANAGEMENT FEES
4811993 4821992 4831991
484Aggressive Tax-Free 485$4,149,000 486$3,354,0 487$2,841,0
00 00
488High Yield 489 8,997,000 4908,600,00 491
0 8,059,000
492Limited Term 493 4,805,000 4943,921,00 495
0 2,780,000
236To comply with the California Code of Regulations, FMR will reimburse
each fund if and to the extent that a fund's aggregate operating expenses
exceed specified percentages of its average net assets. The applicable
percentages are 2 1/2% of the first $30 million, 2% of the next $70
million, and 1 1/2 % of average net assets in excess of $100 million. When
calculating a fund's expenses for purposes of this regulation, the fund may
exclude interest, taxes, brokerage commissions, and extraordinary expenses,
as well as a portion of its distribution plan expenses.
237DISTRIBUTION AND SERVICE PLANS
238Each fund have adopted a distribution and service plan (the plans) under
Rule 12b-1 under the Investment Company Act of 1940 (the Rule). The Rule
provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is primarily intended to result
in the sale of shares of the fund except pursuant to a plan adopted by the
fund under the Rule. The Boards of Trustees ha ve adopted the plans
to allow the funds and FMR to incur certain expenses that might be
considered to constitute indirect payment by the funds of distribution
expenses. Under the plans, if payment by a fund to FMR of management fees
should be deemed to be indirect financing by the fund of the distribution
of its shares, such payment is authorized by the fund's plan.
239The plans specifically recognize that FMR, either directly or through
FDC, may use its management fee revenue, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the funds. In addition, the
plans provide that FMR may use its resources, including its management fee
revenue, to make payments to third parties that provide assistance in
selling the funds' shares, or to third parties, including banks, that
render shareholder support services. During the fiscal years ended November
30, 1993 for High Yield and December 31, 1993 for Aggressive Tax-Free and
Limited Term, FMR made payments to third parties amounting to $13,000,
$3,000, and $49,000 , respectively.
240As required by the Rule, the Trustees carefully considered all pertinent
factors relating to the implementation of the plans prior to their
approval, and have determined that there is a reasonable likelihood that
the plans will benefit the funds and their shareholders. In particular, the
Trustees noted that the plans do not authorize payments by the funds other
than those made to FMR under its management contracts with the funds. To
the extent that the plans give FMR and FDC greater flexibility in
connection with the distribution of shares of the funds, additional sales
of the funds' shares may result. Additionally, certain shareholder support
services may be provided more effectively under the plans by local entities
with whom shareholders have other relationships. The plans were approved by
shareholders of each fund at shareholder meetings held December 31, 1986
for Aggressive Tax-Free, January 20, 1987 for High Yield, and February 24,
1987 for Limited Term.
241The Glass-Steagall Act generally prohibits federally and state chartered
or supervised banks from engaging in the business of underwriting, selling,
or distributing securities. Although the scope of this prohibition under
the Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. The funds may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the plans. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers
pursuant to state law.
242INTEREST OF FMR AFFILIATES
243United Missouri is each fund's custodian and transfer agent. United
Missouri has entered into sub-contracts with FSC, an affiliate of FMR,
under the terms of which FSC performs the processing activities associated
with the transfer agent and shareholder servicing functions for each fund.
Under the sub-contracts, FSC bears the expense of typesetting, printing,
and mailing prospectuses, statements of additional information, and all
other reports, notices, and statements to shareholders, except proxy
statements. FSC also pays out-of-pocket expenses associated with transfer
agent services.
244United Missouri pays FSC an annual fee of $25.50 per regular account
with a balance of $5,000 or more, $15 per regular account with a balance of
less than $5,000, and a supplemental activity charge of $5.61 for monetary
transactions. These fees and charges are subject to annual cost escalation
based on postal rate changes and changes in wage and price levels as
measured by the National Consumer Price Index for Urban Areas. With respect
to institutional client master accounts, the funds pay FSC a per-account
fee of $95 and monetary transaction charges of $20 or $17.50, depending on
the nature of services provided. With respect to certain institutional
broker-dealer accounts, the funds pay FSC a per-account fee of $30 and a
charge of $6 for monetary transactions. Fees for certain institutional
retirement plan accounts are based on the net assets of all such accounts
in the funds.
245Prior to March 26, 1992, State Street Bank and Trust Company (State
Street) served as each fund's custodian and transfer agent and also
sub-contracted with FSC to perform the processing activities associated
with providing transfer agent and shareholder servicing functions for the
funds. Beginning on June 1, 1989, FSC was compensated by State Street on
the same basis as it is currently compensated by United Missouri (although
fee rates and charges were adjusted periodically to reflect postal rate
changes and changes in wage and price levels as measured by the National
Consumer Price Index for Urban Areas).
246Transfer agent fees, including reimbursement for out-of-pocket expenses,
paid to FSC for the fiscal years ended November 30 (High Yield) and
December 31 (Aggressive Tax-Free and Limited Term), 1993, 1992, and 1991
are indicated in the table below .
247TRANSFER AGENT FEES
508 5091993 5101992 5111991
<TABLE>
<CAPTION>
<S> <C> <C> <C>
512Aggressive Tax-Free 513$ 892,000 514 $ 696,000 515$ 567,0
00
516High Yield 517 1,960,000 518 1,846,000 519 1,531,0
00
520Limited Term 521 1,289,000 522 831,000 523 490,0
00
</TABLE>
248United Missouri has an additional sub-contract with FSC, pursuant to
which FSC performs the calculations necessary to determine each fund's net
asset value per share and dividends and maintains each fund's accounting
records. The annual fee rates for these pricing and bookkeeping services
are based on each fund's average net assets. Specifically, .04% for the
first $500 million of average net assets and .02% for average net assets in
excess of $500 million. The fee is limited to a minimum of $45,000 and a
maximum of $750,000 per year.
249Prior to March 26, 1992, State Street subcontracted with FSC for pricing
and bookkeeping services. Beginning July 1, 1991, FSC was compensated for
these services by State Street on the same basis as it is currently
compensated by United Missouri. Prior to July 1, 1991, the annual fee paid
to FSC for pricing and bookkeeping services was based on two schedules, one
pertaining to e ach fund's average net assets and one pertaining to
the type and number of transactions each fund made.
250Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for fiscal 1993, 1992, and 1991 are indicated in the
table below.
251PRICING AND BOOKKEEPING FEES
528 529 1993 5301992 5311991
532Aggressive Tax-Free 533$ 282,0 534$303,000 535$223,00
00 0
536High Yield 537537,00 538 656,000 539
0 467,000
540Limited Term 541337,00 542 304,000 543
0 209,000
252The transfer agent fees and pricing and bookkeeping fees described above
are paid to FSC by United Missouri, which is entitled to reimbursement from
the funds for these expenses.
253Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of the funds, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
254 Effective October 12, 1990, Aggressive Tax-Free removed its
1% deferred sales charge and effective March 1, 1991, replaced it with
a 1% redemption fee for shares held less than 180 days. For Aggressive
Tax-Free, FDC collected redemption fees in the amounts of $ 161,000 ,
and $118,000 and $63,480 for 1993 , 1992 and 1991 ,
respectively. When redeemed, shares acquired through the reinvestment of
dividends and capital gains are exempt from the redemption fee.
255DESCRIPTION OF THE TRUSTS
256TRUSTS' ORGANIZATION. Aggressive Tax-Free is a fund of Fidelity
Municipal Trust , an open-end management investment company
originally organized as a Maryland corporation on November 22, 1976 and
reorganized as a Massachusetts business trust on June 22, 1984, at which
time its name changed from Fidelity Municipal Bond Fund, Inc. to Fidelity
Municipal Bond Fund. On March 1, 1986, the trust's name was changed to
Fidelity Municipal Trust. Currently, there are eight funds of Fidelity
Municipal Trust: Fidelity Municipal Bond Portfolio; Fidelity Aggressive
Tax-Free Portfolio; Spartan Short-Intermediate Municipal Fund; Fidelity
Insured Tax-Free Portfolio; Fidelity Ohio Tax-Free High Yield Fund;
Fidelity Michigan Tax-Free High Yield Fund; Fidelity Minnesota Tax-Free
Portfolio; and Spartan Pennsylvania Municipal High Yield Portfolio.
257 High Yield is a fund of Fidelity Court Street Trust, an open-end
management investment company organized as a Massachusetts business trust
on April 21, 1977. On August 1, 1987, the trust's name was changed from
Fidelity High Yield Municipals to Fidelity Court Street Trust. Currently,
there are four funds of the trust: Fidelity High Yield Tax-Free Portfolio,
Spartan Connecticut Municipal High Yield Portfolio, Spartan New Jersey
Municipal High Yield Portfolio, and Spartan Florida Municipal Income
Portfolio.
258 Limited Term is a fund of Fidelity School Street Trust, an open-end
management investment company organized as a Massachusetts business trust
on September 10, 1976 under the name Fidelity Municipal Bond Fund. On June
17, 1993 , the trust's name was changed from Fidelity Limited Term
Municipals to Fidelity School Street Trust. Currently, there are two funds
of the trust: Fidelity Limited Term Municipals and Spartan Bond Strategist.
Each trust's Declaration of Trust permits the Trustees to create additional
funds.
259In the event that FMR ceases to be the investment adviser to a trust or
a fund, the right of the trust or fund to use the identifying names
"Fidelity" or "Spartan" may be withdrawn. There is a remote possibility
that one fund might become liable for any misstatement in its prospectus or
statement of additional information about another fund.
260The assets of each trust received for the issue or sale of shares of
each of its funds and all income, earnings, profits, and proceeds thereof,
subject only to the rights of creditors, are especially allocated to such
fund, and constitute the underlying assets of such fund. The underlying
assets of each fund are segregated on the books of account, and are to be
charged with the liabilities with respect to such fund and with a share of
the general expenses of their respective trusts. Expenses with respect to
each trust are to be allocated in proportion to the asset value of
their respective funds, except where allocations of direct expense can
otherwise be fairly made. The officers of the trusts, subject to the
general supervision of the Boards of Trustees, have the power to determine
which expenses are allocable to a given fund, or which are general or
allocable to all of the funds of a certain trust. In the event of the
dissolution or liquidation of a trust, shareholders of each fund of that
trust are entitled to receive as a class the underlying assets of such fund
available for distribution.
261SHAREHOLDER AND TRUSTEE LIABILITY. Each trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts
law, shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. Each Declaration of
Trust provides that the trust shall not have any claim against shareholders
except for the payment of the purchase price of shares and requires that
each agreement, obligation, or instrument entered into or executed by the
trust or its Trustees shall include a provision limiting the obligations
created thereby to the trust and its assets. Each Declaration of Trust
provides for indemnification out of each fund's property of any
shareholder held personally liable for the obligations of the fund.
Each Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
262Each Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declarations of Trust protects Trustees
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
263VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder of Aggressive Tax-Free, you receive one vote for
each dollar value of net asset value per share you own. As a
shareholder of High Yield and Limited Term, you receive one vote for each
share of beneficial interest you own. The shares have no preemptive or
conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the Prospectus.
Shares are fully paid and nonassessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of a trust or fund may, as set forth in the
Declarations of Trust, call meetings of a trust or fund for any purpose
related to the trust or fund, as the case may be, including, in the case of
a meeting of an entire trust, the purpose of voting on removal of one or
more Trustees. Each trust or fund may be terminated upon the sale of
its assets to another open-end management investment company, or upon
liquidation and distribution of its assets , if approved by vote of
the holders of a majority of the outstanding shares of the trust or the
fund or, for Aggressive Tax-Free, as determined by the current value of
each shareholder's investment in the fund or trust. If not so
terminated, each trust or fund will continue indefinitely.
264CUSTODIAN. United Missouri, 1010 Grand Avenue, Kansas City, Missouri is
custodian of the assets of the funds. The custodian is responsible for the
safekeeping of the funds' assets and the appointment of subcustodian banks
and clearing agencies. The custodian takes no part in determining the
investment policies of the funds or in deciding which securities are
purchased or sold by a fund. A fund may, however, invest in obligations of
the custodian and may purchase securities from or sell securities to the
custodian.
265FMR, its officers and directors, its affiliated companies, and the
trusts' Trustees may from time to time have transactions with various
banks, including banks serving as custodian for certain of the funds
advised by FMR. Transactions that have occurred to date include mortgages
and personal and general business loans. In the judgment of FMR, the terms
and conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
266AUDITOR. Coopers & Lybrand, One Post Office Square, Boston,
Massachusetts, serves as the trusts' independent accountant. The auditor
examines financial statements for the funds and provides other audit, tax,
and related services.
267FINANCIAL STATEMENTS
268The Annual Reports for the fiscal years ended November 30, 1993 (High
Yield) and December 31, 1993 (Aggressive Tax-Free, and Limited Term) are
separate reports supplied with this Statement of Additional Information and
are incorporated herein by reference.
269APPENDIX
270DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days remaining to its maturity, adding
these calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a stated
final maturity basis, although there are some exceptions to this rule.
271For example, if it is probable that the issuer of an instrument will
take advantage of a maturity-shortening device, such as a call, refunding,
or redemption provision, the date on which the instrument will probably be
called, refunded, or redeemed may be considered to be its maturity date.
When a municipal bond issuer has committed to call an issue of bonds and
has established an independent escrow account that is sufficient to, and is
pledged to, refund that issue, the number of days to maturity for the
prerefunded bond is considered to be the number of days to the announced
call date of the bonds.
272DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S MUNICIPAL BOND RATINGS:
273AAA - Bonds rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
274AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long - term risks appear somewhat
larger than in Aaa securities.
275A - Bonds rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
276BAA - Bonds rated Baa are considered as medium - grade obligations,
i.e, they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
277BA - Bonds rated Ba are judged to have speculative elements. Their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
278B - Bonds rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments of or maintenance
of other terms of the contract over any long period of time may be small.
279CAA - Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
280CA - Bonds rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
281C - Bonds rated C are the lowest - rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
282Those bonds in the Aa, A, Baa, Ba, and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1, Baa1, Ba1, and B1.
283DESCRIPTION OF STANDARD & POOR'S CORPORATION'S MUNICIPAL BOND
RATINGS:
284AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
285AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated debt issues only in small
degree.
286A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions.
287BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
288BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
289B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BB or BB- rating.
290CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
291CC - Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
292C - The rating C is typically applied to debt subordinated to senior
debt which is assigned on actual or implied CCC- debt rating. The C
rating may be used to cover a situation where a bankruptcy petition has
been filed but debt service payments are continued.
293CI - The rating CI is reserved for income bonds on which no interest is
being paid.
294D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The D
rating will also be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
295The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
PART C - OTHER INFORMATION
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
1. Financial Statements for Fidelity High Yield Tax-Free Portfolio for the
fiscal year ended November 30, 1993 are incorporated by reference into the
fund's Statement of Additional Information and are filed herein as Exhibit
24(a)(1).
2. Financial Statements for Fidelity Limited Term Municipals for the
fiscal year ended December 31, 1993 are incorporated by reference into the
fund's Statement of Additional Information and are filed herein as Exhibit
24(a)(2).
3. Financial Statements for Fidelity Aggressive Tax-Free Portfolio for the
fiscal year ended December 31, 1993 are incorporated by reference into the
fund's Statement of Additional Information and are filed herein as Exhibit
24(a)(3).
(b) Exhibits
1 (a) Declaration of Trust, dated April 21, 1977, is incorporated herein
by reference to Exhibit 1(a) to Registration Statement No. 2-58774.
(b) Supplement to Declaration of Trust, dated October 14, 1977, is
incorporated herein by reference to Exhibit 1(b) to Post-Effective
Amendment No. 32.
(c) Supplement to Declaration of Trust, dated November 3, 1977, is
incorporated herein by reference to Exhibit 1(c) to Post-Effective
Amendment No. 32.
(d) Supplement to Declaration of Trust, dated November 18, 1977, is
incorporated herein by reference to Exhibit 1(d) to Post-Effective
Amendment No. 32.
(e) Amended and Restated Declaration of Trust, dated February 1, 1987,
is incorporated herein by reference to Exhibit 1(b) to Post-Effective
Amendment No. 18.
(f) Supplement to the Declaration of Trust, effective August 1, 1987,
is incorporated herein by reference to Exhibit 1(c) to Post-Effective
Amendment No. 20.
(g) Supplement to the Declaration of Trust, effective December 9,
1988, is incorporated herein by reference to Exhibit 1(d) to Post-Effective
Amendment No. 26.
2. Not applicable.
3. Not applicable.
4. Not applicable.
5. (a) Management Contract dated March 1, 1993 between Fidelity High Yield
Tax-Free Portfolio and Fidelity Management & Research Company is filed
herein as Exhibit 5(a).
(b) Management Contract between Spartan Florida Municipal Income
Portfolio and Fidelity Management & Research Company is incorporated
herein by reference to Exhibit 5(b) to Post-Effective Amendment No. 39.
(c) Management Contract between Spartan New Jersey Municipal High
Yield Portfolio and Fidelity Management & Research Company, dated
January 1, 1992, is incorporated herein by reference to Exhibit 5(c) to
Post-Effective Amendment No. 39.
(d) Management Contract between Spartan Connecticut Municipal High
Yield Portfolio and Fidelity Management & Research Company, dated
January 1,1992, is incorporated herein by reference to Exhibit 5(d) to
Post-Effective Amendment No. 39.
6. (a) General Distribution Agreement between Fidelity High Yield
Municipals and Fidelity Distributors Corporation, dated April 1, 1987, is
incorporated herein by reference to Exhibit 6(a) to Post-Effective
Amendment No. 21.
(b) General Distribution Agreement between Fidelity New Jersey
Tax-Free High Yield Portfolio (now known as Spartan New Jersey Municipal
High Yield Portfolio) and Fidelity Distributors Corporation, dated August
10, 1987, is incorporated herein by reference to Exhibit 6(b) to
Post-Effective Amendment No. 22.
(c) General Distribution Agreement between Fidelity Connecticut
Tax-Free High Yield Portfolio and Fidelity Distributors Corporation, dated
October 15, 1987, is incorporated herein by reference to Exhibit 6(d) to
Post-Effective Amendment No. 21.
(d) Amendment to the General Distribution Agreement between Fidelity
High Yield Municipals and Fidelity Distributors Corporation, dated January
1, 1988, is incorporated herein by reference to Exhibit 6(f) to
Post-Effective Amendment No. 26.
(e) Amendment to the General Distribution Agreement between Fidelity
New Jersey Tax-Free High Yield Portfolio and Fidelity Distributors
Corporation, dated January 1, 1988, is incorporated herein by reference to
Exhibit 6(g) to Post-Effective Amendment No. 26.
(f) Amendment to the General Distribution Agreement between Fidelity
Connecticut Tax-Free High Yield Portfolio (now known as Spartan Connecticut
Municipal High Yield Portfolio) and Fidelity Distributors Corporation,
dated January 1, 1988, is incorporated herein by reference to Exhibit 6(h)
to Post-Effective Amendment No. 26.
(g) Form of General Distribution Agreement between Spartan Florida
Municipal Income Portfolio and Fidelity Distributors Corporation was filed
as Exhibit 6(h) Post-Effective Amendment No. 37.
7. Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, effective November 1, 1989, is incorporated herein by
reference to Exhibit 7 to Post-Effective Amendment No. 36.
8. (a) Custodian Contract, dated July 18, 1991, between Fidelity Court
Street Trust and United Missouri Bank, N.A. is incorporated herein by
reference to Exhibit 8(b) to Post-Effective Amendment No. 36.
(b) Appendix A, dated March 2, 1992, to Custodian Contract, dated July
18, 1991, between Fidelity Court Street Trust and United Missouri Bank,
N.A. is incorporated herein by reference to Exhibit 8(b) to Post-Effective
Amendment No. 39.
9. (a) Amendment to Transfer Agency Agreement between the Registrant and
State Street Bank, dated October 1, 1984, is incorporated herein by
reference to Exhibit 9(b) to Post-Effective Amendment No. 16.
(b) Amended Transfer Agent Agreement between Fidelity Court Street
Trust and Shawmut Bank, N.A., dated June 1, 1989, is incorporated herein by
reference to Exhibit 9(b) to Post-Effective Amendment No. 32.
(c) Appointment of Sub-Transfer Agent and Schedule A for Fidelity New
Jersey Tax-Free High Yield Portfolio, dated June 1, 1989, is incorporated
herein by reference to Exhibit 9(c) to Post-Effective Amendment No. 32.
(d) Appointment of Sub-Transfer Agent and Schedule A for Fidelity
Connecticut Tax-Free Portfolio, dated June 1, 1989, is incorporated herein
by reference to Exhibit 9(e) to Post-Effective Amendment No. 32.
(e) Form of Appointment of Sub-Transfer Agent and Schedule A for
Spartan Florida Municipal Income Portfolio was filed as Exhibit 9(e) to
Post-Effective Amendment No. 37.
(f) Amended Service Agreement between Fidelity Court Street Trust and
Shawmut Bank, N.A., dated June 1, 1989, is incorporated herein by reference
to Exhibit 9(g) to Post-Effective Amendment No. 32.
(g) Appointment of Sub-Servicing Agent and Schedules B and C for
Fidelity New Jersey Tax-Free High Yield Portfolio, dated June 1, 1989, is
incorporated herein by reference to Exhibit 9(h) to Post-Effective
Amendment No. 32.
(h) Appointment of Sub-Servicing Agent and Schedules B and C for
Fidelity Connecticut Tax-Free Portfolio, dated June 1, 1989, is
incorporated herein by reference to Exhibit 9(j) to Post-Effective
Amendment No. 32.
(i) Form of Appointment of Sub-Servicing Agent and Schedule B and C
for Spartan Florida Municipal Income Portfolio was filed as Exhibit 9(i)
Post-Effective Amendment No. 37.
10. Not applicable.
11. Consent of Coopers & Lybrand is filed herein as Exhibit 11.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15. (a) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
High Yield Municipals is incorporated herein by reference to Exhibit 15(a)
to Post-Effective Amendment No. 18.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
New Jersey Tax-Free High Yield Portfolio is incorporated herein by
reference to Exhibit 15(b) to Post-Effective Amendment No. 22.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
Connecticut Tax-Free High Yield Portfolio is incorporated herein by
reference to Exhibit 15(c) to Post-Effective Amendment No. 21.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan
Florida Municipal Income Portfolio was filed as Exhibit 15(d)
Post-Effective Amendment No. 37.
16. (a) A schedule for the computation of performance quotations is
incorporated herein by reference to Exhibit 16(a) to Post-Effective
Amendment No. 27.
(b) A schedule for the computation of adjusted net asset value is
incorporated herein by reference to Exhibit 16(b) to Post-Effective
Amendment No. 43.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of the Registrant is substantially the same as the
boards of other funds advised by FMR, each of which has Fidelity Management
& Research Company as its investment adviser. In addition, the officers
of these funds are substantially identical. Nonetheless, Registrant takes
the position that it is not under common control with these other funds
since the power residing in the respective boards and officers arises as
the result of an official position with the respective funds.
Item 26. Number of Holders of Securities
As of December 31, 1993
Name of Class: Shares of Beneficial Interest
Title of Series: Number of Record Holders
Fidelity High Yield Tax-Free Portfolio 66,042
Spartan Connecticut Municipal High Yield Portfolio 9,409
Spartan New Jersey Municipal High Yield Portfolio 11,552
Spartan Florida Municipal Income Portfolio 9,392
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of the Investment Adviser
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc., Fidelity Management & Research (U.K.) Inc. and
Fidelity Management & Research (Far East) Inc.;
President and Trustee of funds advised by FMR;
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Charles F. Dornbush Senior Vice President of FMR; Chief Financial Officer of
the Fidelity funds; Treasurer of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR and Treasurer of the funds advised
by FMR. Prior to assuming the position as Treasurer he
was Senior Vice President, Fund Accounting - Fidelity
Accounting & Custody Services Co.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Income/Growth Group
Leader and International Group Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR; and Director of Technical
Research.
Stephan Jonas Vice President of FMR (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Jacques Perold Vice President of FMR.
Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Richard A. Spillane Vice President of FMR and of funds advised by FMR; and
Director of Equity Research.
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader.
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the funds'
custodian: United Missouri Bank, N.A., 1010 Grand Avenue, Kansas City, MO.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant, on behalf of Fidelity High Yield Tax-Free Portfolio,
Spartan Connecticut Municipal High Yield Portfolio, Spartan New Jersey
Municipal High Yield Portfolio, and Spartan Florida Municipal Income
Portfolio undertakes, provided the information required by Item 5A is
contained in the annual report, to furnish each person to whom a prospectus
has been delivered, upon their request and without charge, a copy of the
Registrant's latest annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 50 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Commonwealth of Massachusetts, on the 14th day
of February 1994.
FIDELITY COURT STREET TRUST
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee February 14, 1994
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer February 14, 1994
Gary L. French
/s/J. Gary Burkhead Trustee February 14, 1994
J. Gary Burkhead
/s/Richard J. Flynn * Trustee February 14, 1994
Richard J. Flynn
/s/E. Bradley Jones * Trustee February 14, 1994
E. Bradley Jones
/s/Donald J. Kirk * Trustee February 14, 1994
Donald J. Kirk
/s/Peter S. Lynch * Trustee February 14, 1994
Peter S. Lynch
/s/Edward H. Malone * Trustee February 14, 1994
Edward H. Malone
/s/Gerald C. McDonough* Trustee February 14, 1994
Gerald C. McDonough
/s/Thomas R. Williams * Trustee February 14, 1994
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, each of them singly, our true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to sign
for us and in our names in the appropriate capacities, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Peter S. Lynch
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead /s/Edward H. Malone
J. Gary Burkhead Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity, all
Pre-Effective Amendments to any Registration Statements of the Funds, any
and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993
Edward C. Johnson 3d
EXHIBIT 24(A)(1)
(2_FIDELITY_LOGOS)FIDELITY
HIGH YIELD TAX-FREE
PORTFOLIO
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the fund's
investments over the last six months.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 43 Statements of assets and liabilities,
operations, and changes in net assets, as
well as financial highlights.
NOTES TO FINANCIAL STATEMENTS 47 Footnotes to the financial statements.
REPORT OF INDEPENDENT 50 The auditor's opinion.
ACCOUNTANTS
</TABLE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK, AND FUND
SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments, either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
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, plus 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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
High Yield Tax-Free 11.92% 62.80% 179.57%
Lehman Brothers Municipal Bond Index 11.09% 61.12% 182.71%
Average High Yield Municipal Bond Fund 11.00% 56.08% 226.94%
Consumer Price Index 2.68% 21.20% 44.07%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - one, five, or ten years. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, you would end up
with $1,050. You can compare these figures to the performance of the Lehman
Brothers Municipal Bond Index - a broad gauge of the municipal bond market.
To measure how the fund stacked up against its peers, you can look at the
average high yield municipal bond fund, which reflects the perform-ance of
31 high yield municipal bond funds tracked by Lipper Analytical Services.
Both benchmarks include reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index helps show how
your fund did compared to inflation.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
High Yield Tax-Free 11.92% 10.24% 10.83%
Lehman Brothers Municipal Bond Index 11.09% 10.01% 10.95%
Average High Yield Municipal Bond Fund 11.00% 9.27% 11.37%
Consumer Price Index 2.68% 3.92% 3.72%
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
High Yield Muni Bond
11/30/83 10000.00 10000.00
12/31/83 10118.11 10012.50
01/31/84 10442.79 10377.46
02/29/84 10322.81 10272.95
03/31/84 10406.92 10286.00
04/30/84 10333.80 10301.84
05/31/84 9534.59 9690.12
06/30/84 9965.22 9900.49
07/31/84 10504.87 10413.24
08/31/84 10636.80 10646.81
09/30/84 10568.14 10575.26
10/31/84 10713.96 10707.98
11/30/84 10856.69 10865.60
12/31/84 11121.07 11069.22
01/31/85 11644.88 11708.25
02/28/85 11511.94 11416.24
03/31/85 11611.69 11514.77
04/30/85 11922.81 11936.21
05/31/85 12326.49 12350.51
06/30/85 12495.70 12480.07
07/31/85 12604.48 12504.53
08/31/85 12571.62 12417.25
09/30/85 12403.02 12292.70
10/31/85 12857.01 12713.85
11/30/85 13246.53 13169.90
12/31/85 13500.97 13285.66
01/31/86 14149.97 14068.19
02/28/86 14658.47 14625.99
03/31/86 14772.29 14630.67
04/30/86 14720.23 14641.79
05/31/86 14536.26 14403.42
06/30/86 14689.10 14540.83
07/31/86 14794.04 14629.09
08/31/86 15515.40 15284.04
09/30/86 15496.74 15322.40
10/31/86 15819.24 15587.02
11/30/86 16056.49 15895.80
12/31/86 16052.58 15851.92
01/31/87 16449.50 16329.23
02/28/87 16642.48 16409.57
03/31/87 16515.99 16235.62
04/30/87 15401.47 15420.92
05/31/87 15288.19 15344.43
06/30/87 15546.55 15794.95
07/31/87 15744.74 15956.05
08/31/87 15818.13 15991.96
09/30/87 15075.32 15402.33
10/31/87 15024.85 15456.86
11/30/87 15342.12 15860.43
12/31/87 15597.26 16090.57
01/31/88 16140.07 16663.72
02/29/88 16342.95 16839.85
03/31/88 15953.64 16643.67
04/30/88 16070.41 16770.16
05/31/88 16186.94 16721.69
06/30/88 16380.62 16966.33
07/31/88 16550.25 17076.95
08/31/88 16626.58 17091.98
09/30/88 16992.37 17401.34
10/31/88 17318.93 17708.48
11/30/88 17172.79 17546.27
12/31/88 17503.74 17725.77
01/31/89 17750.67 18092.34
02/28/89 17643.27 17885.90
03/31/89 17679.64 17843.15
04/30/89 18250.12 18266.75
05/31/89 18636.18 18646.15
06/30/89 18817.27 18899.37
07/31/89 18954.42 19156.59
08/31/89 18870.33 18969.04
09/30/89 18789.79 18912.14
10/31/89 18986.54 19142.86
11/30/89 19337.20 19477.87
12/31/89 19498.00 19637.58
01/31/90 19292.54 19545.29
02/28/90 19545.15 19719.24
03/31/90 19567.26 19725.16
04/30/90 19215.29 19583.13
05/31/90 19745.47 20010.05
06/30/90 19956.34 20186.14
07/31/90 20265.28 20482.87
08/31/90 20054.47 20185.87
09/30/90 20205.77 20197.98
10/31/90 20474.33 20563.56
11/30/90 21059.66 20976.89
12/31/90 21150.25 21069.19
01/31/91 21425.73 21351.52
02/28/91 21559.84 21537.28
03/31/91 21629.21 21545.89
04/30/91 21925.13 21832.45
05/31/91 22118.23 22026.76
06/30/91 22119.41 22004.73
07/31/91 22440.74 22273.19
08/31/91 22638.98 22567.20
09/30/91 22819.93 22860.57
10/31/91 23034.49 23066.32
11/30/91 23084.77 23130.90
12/31/91 23302.66 23628.22
01/31/92 23541.87 23682.56
02/29/92 23590.05 23689.67
03/31/92 23613.16 23699.14
04/30/92 23838.94 23910.06
05/31/92 24067.74 24192.20
06/30/92 24401.47 24598.63
07/31/92 25027.51 25336.59
08/31/92 24694.40 25088.29
09/30/92 24760.70 25251.37
10/31/92 24348.43 25003.90
11/30/92 24980.29 25451.47
12/31/92 25250.78 25711.08
01/31/93 25604.17 26009.33
02/28/93 26546.47 26950.86
03/31/93 26354.15 26665.18
04/30/93 26604.83 26934.50
05/31/93 26759.24 27085.34
06/30/93 27153.01 27537.66
07/31/93 27162.44 27573.46
08/31/93 27752.66 28146.99
09/30/93 28154.02 28467.86
10/31/93 28183.68 28521.95
11/30/93 27956.82 28270.96
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity High
Yield Tax-Free Portfolio on November 30, 1983. As the chart shows, by
November 30, 1993, the value of your investment would have grown to $27,957
- - a 179.57% increase on your initial investment. For comparison, look at
how the Lehman Brothers Municipal Bond index did over the same period. With
dividends reinvested, the same $10,000 would have grown to $28,271 - a
182.71% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, move in the opposite
direction of interest rates. In
turn, the share price, return, and
yield of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and downs,
you may have a gain.
(checkmark)
INCOME
YEARS ENDED NOVEMBER 30, 1993 1992 1991 1990 1989
Income return 6.33% 6.69% 7.11% 7.31% 7.69%
Capital gain returns 1.58% 1.28% 1.87% 3.09% 0.08%
Change in share price 4.01% 0.24% 0.64% -1.49% 4.83%
Total return 11.92% 8.21% 9.62% 8.91% 12.60%
Income returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund.
DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR
Dividends per share n/a 37.99(cents) 76.36(cents)
Annualized dividend rate n/a 2.86% 5.84%
Annualized yield 5.34% n/a n/a
Tax-equivalent yield 8.34% n/a n/a
Dividends per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $13.27 over
the past six months and $13.07 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36% federal
tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Generally, interest rates fell during
the year ended November 30, 1993.
As a result, bond prices rose and most
fixed-income investors - including
those in tax-free bonds - enjoyed
attractive returns. The period began
amid expectations of higher interest
rates to come. This was based on
signs that the economic recovery was
finally taking hold, as well as
uncertainty over the spending plans
of the president-elect. But as
President Clinton promised to tackle
the deficit and fight inflation, the
bond market signaled its approval.
The yield on the benchmark 30-year
Treasury bond declined steadily and
reached an historic low of 5.79% in
mid-October. By the end of the
period, as inflation fears returned, the
30-year bond was yielding 6.30%.
Two factors affected tax-free bonds
specifically: on the positive side,
higher federal taxes - discussed all
year and approved in August -
boosted demand. At the same time,
record new issuance kept supplies
high, which somewhat dampened
prices. Overall during the period,
tax-free bonds performed well
compared to other fixed-income
investments. The Lehman Brothers
Municipal Bond Index - a broad
measure of the tax-free bond market
- - rose 11.09%. By comparison, the
Lehman Brothers Aggregate Bond
Index - which tracks
investment-grade taxable bonds -
rose only 10.89%, due in part to
relatively poor performance by
mortgage-backed securities.
An interview with Anne Punzak,
Portfolio Manager of Fidelity
High Yield Tax-Free Portfolio
Q. ANNE, HOW DID THE FUND DO?
A. For the 12 months ended November 30, 1993, the fund had a total return
of 11.92%. That outpaced the average high yield municipal bond fund which
returned 11.00% over the same period, according to Lipper Analytical
Services.
Q. WHY DID THE FUND BEAT THE
AVERAGE?
A. It had a longer duration than many other funds of this type. That meant
its price could rise more as interest rates fell, which is what happened
over the past year. At the end of November the fund's duration was 8.1
years mainly due to its fairly large stake - nearly 45% on November 30 - in
bonds with maturities of 20 years or more. As interest rates fell, it paid
to invest in bonds with longer maturities since they appreciated more than
shorter-term bonds.
Q. SINCE TAKING OVER THE FUND IN OCTOBER, HAVE YOU MADE ANY CHANGES?
A. A few. I've begun to shift the focus in terms of particular state bonds
the fund owns. For example, recently I've started to increase the fund's
investments in California bonds because I think the state's economy may
have hit bottom. Also, I expect to gradually pare back to about half the
number of individual bonds the fund currently holds.
Q. MUNICIPAL RATING AGENCIES HAVE RECENTLY EXPRESSED CONCERN ABOUT
ELECTRIC UTILITY BONDS. ARE YOU WORRIED ABOUT HOW THE FUND'S 19% STAKE IN
THEM WILL BE AFFECTED?
A. No, because the rating agencies have singled out investor-owned electric
utilities as being at risk. Even though the fund has invested in some very
strong investor-owned utilities, I stick mainly to public electric
utilities. Investor-owned electric utilities are having to compete with one
another for large, industrial customers. But public electric utilities,
which serve primarily residential customers, tend to have their own
franchise and don't face much competition. I'm optimistic about public
electric utility bonds because they typically provide attractive yields and
should become scarce once refinancings are completed. That's because there
were major expansion programs during the '80s, which means there's little
need for future bond issues to help fund new plants. The scarcity could
help push prices up. I look for electric utilities with high ratings and
strong management teams.
Q. WHAT ABOUT THE FUND'S 27.9% STAKE IN HEALTH-CARE BONDS - WILL IT BE HURT
BY PRESIDENT CLINTON'S HEALTH-CARE REFORM PROPOSALS?
A. I don't believe so. In fact, I think that some hospitals could actually
benefit from health-care reform, especially those located in growing
suburban areas with strong HMO relationships that have done a good job
managing costs. Reform could also spur a number of consolidations within
the sector, which might offer some opportunities. For example, I'm most
interested in smaller, lower-rated hospitals that could benefit from being
taken over by a larger, higher-rated hospital. The acquired hospital's
bonds would assume the higher-rating of its acquirer. If the acquired
hospital's bonds were upgraded, the bonds could appreciate.
Q. HOW WOULD HIGH-YIELD BONDS WITHSTAND RISING INTEREST RATES?
A. I think they could do better than lower-yielding bonds for two reasons.
First, the return on a bond is based on its yield, or income return, and
its price return. When interest rates rise, bond prices tend to drop. But
because high-yield bonds offer high income return, they probably wouldn't
be as negatively affected as bonds that paid lower yields. Second, a period
of higher interest rates is often connected to bond holders' fears that the
economy is speeding up. Improvements in the economy, however, tend to
improve the credit quality of high yield bonds, which would be a positive
for prices. But I don't expect interest rates to rise, or for that matter,
fall much over the next six months.
Q. SO WHAT CAN INVESTORS EXPECT OVER THE NEXT 12 MONTHS?
A. Probably more modest returns. Over the past year bond investors have
enjoyed double digit returns. But going forward, I think they may see
returns more in line with historical averages. Even so, I expect tax-exempt
bonds to do better than taxable bonds, because the effects of higher taxes
could increase demand for municipals. Combine that with a dwindling supply
of tax-free bonds, and you have what's typically a positive environment for
municipals.
FUND FACTS
GOAL: to provide high current
income exempt from federal
income tax
START DATE: December 1, 1977
SIZE: as of November 30, 1993,
over $2.1 billion
MANAGER: Anne Punzak, since
October 1, 1993; manager,
Fidelity Aggressive Tax-Free
Portfolio, since January 1986;
Fidelity Insured Tax-Free
Portfolio, since October 1989;
Spartan Aggressive Municipal
Bond Fund, since April 1993;
Spartan Florida Tax-Free Fund,
since March 1992
(checkmark)
ANNE PUNZAK'S ECONOMIC
OUTLOOK:
"Although the U.S. economy is
still limping along, it's healthier
than it was a year ago. Inflation,
which when rising can cause
interest rates to rise, appears to
be in check. Two early
inflationary signs - commodity
prices and wages - haven't
shown any real evidence of
rebounding. To me, that signals
that inflation could hold steady
for some time. Even though
economic growth has picked up
a little in this country, inflation
hasn't risen. A low growth, low
inflation environment is usually
positive for bonds."
(bullet) Nearly half of the fund's
investments were concentrated in
two sectors with 28% in health
care bonds, and 19% in electric
utility bonds.
(bullet) Although the fund invests
primarily in long-term,
investment grade (Baa or above)
bonds, up to one-third of its
assets may be in lower quality
bonds. At the end of November,
about 7% of the fund's assets
were Ba-rated or below.
DISTRIBUTION
The Board of Trustees of Fidelity
High Yield Tax-Free Portfolio
voted to pay on December 20,
1993, to shareholders of record at
the opening of business on
December 17, 1993, and on
January 3, 1994 to shareholders of
record at the opening of business
on December 31, 1993, a
distribution of $.20 and $.30,
respectively, derived from capital
gains realized from sales of
portfolio securities.
INVESTMENT CHANGES
TOP FIVE STATES AS OF NOVEMBER 30, 1993
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO
Massachusetts 10.4 12.2
Colorado 9.8 9.6
Texas 5.2 4.5
Pennsylvania 4.9 3.2
Michigan 4.5 4.2
TOP FIVE SECTORS AS OF NOVEMBER 30, 1993
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO
Health Care 27.9 27.3
Electric Revenue 19.1 20.5
General Obligation 10.7 11.4
Industrial Development 7.1 6.2
Special Tax 6.9 4.1
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1993
6 MONTHS AGO
Years 19.3 19.5
AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF NOVEMBER 30, 1993
6 MONTHS AGO
Years 8.1 7.8
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1993
(MOODY'S RATINGS)
Aaa 26.2%
Aa, A 35.6%
Baa 16.4%
Ba or B 7.2%
Non-rated 11.9%
Row: 1, Col: 1, Value: 11.9
Row: 1, Col: 2, Value: 7.2
Row: 1, Col: 3, Value: 16.4
Row: 1, Col: 4, Value: 35.6
Row: 1, Col: 5, Value: 26.2
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
INVESTMENTS NOVEMBER 30, 1993
Showing Percentage of Total Value of Investments in Securities
MUNICIPAL BONDS - 97.2 %
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ALABAMA - 1.6%
Alabama Bldg. Renovation Fin. Auth. Rev.
7.45% 9/1/11 A $ 3,000 $ 3,424 010237AU
Alabama Mental Health Fin. Auth. Spl. Tax
7.375% 5/1/09 A 3,000 3,360 010316AV
Alabama Spl. Care Facs. Fing. Auth. Mobile
Hosp. Rev. (Daughters of Charity Providence)
10.125% 6/1/15 Aa 700 778 01040TAC
Birmingham Jefferson Civic Ctr. Auth. Spl. Tax
(Cap. Outlay) 7.25% 1/1/12 A 5,875 6,411 091156EY
Cullman Med. Park South Med. Clinic Board
Rev. (Cullman Reg'l. Med. Ctr.) Series A:
6.50% 2/15/13 Baa 4,000 4,040 230043AL
6.50% 2/15/23 Baa 7,000 7,044 230043AM
McIntosh Ind. Dev. Board Poll. Cont. Rev.
(Ciba-Geigy Corp.) 6% 8/1/07 - 2,665 2,655 581177AB
Shelby County Series S, 7.40% 8/1/07 - 5,000 5,393 821515EG
33,105
ALASKA - 0.5%
North Slope Borough Rfdg.:
Unltd. Tax Series G, 8.35% 6/30/98 Baa1 4,000 4,595 662523NR
Series B, 0% 1/1/03, (MBIA Insured) Aaa 9,000 5,715 662523RR
Series C, 10.20% 6/30/94 Baa1 475 492 662523LP
10,802
ARIZONA - 2.9%
Arizona Univ. Med. Ctr. Corp. Hosp. Rev. Rfdg.
5% 7/1/13, (MBIA Insured) Aaa 1,000 949
Chandler Cap. Appreciation Rfdg.:
0% 7/1/04, (FGIC Insured) Aaa 5,700 3,320 158843KK
0% 7/1/05, (FGIC Insured) Aaa 5,700 3,121 158843KL
0% 7/1/06, (FGIC Insured) Aaa 5,700 2,928 158843KM
0% 7/1/07, (FGIC Insured) Aaa 5,700 2,757 158843KN
0% 7/1/08, (FGIC Insured) Aaa 1,700 774 158843KP
0% 7/1/09, (FGIC Insured) Aaa 2,000 855 158843KQ
Maricopa County Ind. Dev. Auth. Hosp. Facs.
Rev. Rfdg. (Samaritan Health Svcs.) Series A,
7% 12/1/16, (MBIA Insured) Aaa 2,000 2,380 566820GU
Maricopa County Poll. Cont. Corp. Poll. Cont.
Rev. (Pub. Svc. Co. New Mexico - Palo Verde)
7.75% 11/1/09 Ba2 7,165 7,756 566854AG
Phoenix Rfdg. Series A, 5.25% 7/1/12 Aa 8,000 7,800 718814CZ
Phoenix Str. & Hwy. User Rev. Rfdg. (Jr. Lien)
Series A:
0% 7/1/12, (FGIC Insured) Aaa 5,000 1,719 718867MV
0% 7/1/13, (FGIC Insured) Aaa 4,850 1,558 718867MW
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ARIZONA - CONTINUED
Pima County Ind. Dev. Auth. Ind. Rev. Rfdg.
(Lease Oblig.) (Irvington Proj. Tucson Elec. Pwr.
Co.) Series A, 7.25% 7/15/10, (FSA Insured) Aaa $ 5,000 $ 5,581 721774DA
Pima County Metropolitan Domestic Wtr. Impt.
Dist. Spl. Assessment Wtr. Rev. 6.20% 1/1/09,
(FGIC Insured) Aaa 1,260 1,331 72178EAR
Salt River Proj. Agric. Impt. Pwr. & Dist. Elec. Sys.
Rev. Series A, 5.70% 1/1/12 Aa 8,775 8,775 795747CP
Tucson & Pima County Ind. Dev. Auth. Single
Family Mtg. Rev. (Verex Mtg. Assurance, Inc.)
9.375% 2/1/14 BB- 4,145 4,285 898700DH
Tucson Wtr. Rev. Rfdg.:
Series A, 5.75% 7/1/18 A1 2,400 2,436 898796YL
5.50% 7/1/14 A1 3,450 3,403 898796ZA
61,728
ARKANSAS - 1.4%
Arkansas Dev. Fin. Auth. Rev. (Cap. Asset)
Series B, 7.10% 3/1/08 A 4,500 4,995 04108REQ
Arkansas Dev. Fin. Auth. Health Care Facs. Rev.
Rfdg. (Sisters Mercy Health Sys.) Series A,
5% 6/1/13 Aa 3,000 2,835 04108VAS
Arkansas Dev. Fin. Auth. Wastewtr. Rev.
(Revolving Loan Fund) Series A, 7% 6/1/14,
(MBIA Insured) Aaa 2,900 3,357 041086BW
Arkansas Univ. Rev. (Trustee) 7.20% 12/1/10 A 1,250 1,422 914083BT
Baxter County Hosp. Rev. Rfdg. & Impt.
7.50% 9/1/21 Baa 4,000 4,385 071808EY
Conway Elec. Sys. Rev. 5.70% 8/1/09 A 3,000 3,071 212582BH
Fayetteville Pub. Facs. Board Rev. Rfdg.
(Butterfield Trail Village Proj.) Series A,
9.50% 9/1/14 - 2,200 2,393 312670AK
North Little Rock Elec. Rev. Rfdg. Series A:
6.50% 7/1/10, (MBIA Insured) Aaa 3,840 4,382 660546DV
6.50% 7/1/15, (MBIA Insured) Aaa 1,000 1,156 660546DX
Pulaski County Health Facs. Board Rev. Rfdg.
(Sisters Charity Nazareth Corp.)
6.05% 11/1/09, (MBIA Insured) Aaa 2,290 2,416 74539QBS
Pulaski County Hosp. Rev. Rfdg. (Arkansas
Children's Hosp. Proj.) 10.125% 3/1/15 A- 800 859 745392BJ
31,271
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
CALIFORNIA - 2.8%
California Gen. Oblig. 4.75%, 9/1/23 Aa $ 5,000 $ 4,394 130627BZ
California Pub. Wks. Board Lease Rev. (California
Univ. Proj.) Series A, 5.50% 6/1/10 A1 2,500 2,488 13068GRE
California Statewide Cmmty. Dev. Auth. Rev.
Ctfs. of Prtn. 5.80%, 5/1/13 A+ 5,000 4,994 130909GV
Culver City Redev. Fing. Auth. Rev. Rfdg. Tax
Allocation 4.60%, 11/1/20, (AMBAC Insured) Aaa 5,000 4,350 230341BM
Del Norte County Pub. Wks. Rev. Rfdg. (Dept.
of Corrections) 5.125%, 12/1/08 A1 3,500 3,399 13068GSY
Duarte Redev. Agcy. Tax Allocation (Huntington
Drive-PH 2 Redev. Proj.) 9.25% 11/1/10,
(Pre-Refunded to 11/1/95 @ 102) - 1,380 1,551 263590BQ
Industry Urban Ind. Dev. Agcy. Rfdg.
(Civic Recreational Proj. #1) Series A,
7.375% 5/1/12 - 1,000 1,083 456567MG
Los Angeles County Metropolitan Trans. Auth.
(Sales Tax Rev. Sr.) Series B, 4.75% 7/1/13,
(AMBAC Insured) Aaa 5,000 4,588 544712BP
Metropolitan Wtr. Dist. Southern California
Wtrwks. 5.50% 7/1/13 Aa 9,000 8,910 592663LH
Northern Pwr. Agcy. Pub. Pwr. Rev. Rfdg.
(Geothermal Proj. #3) Series A,
5.80% 7/1/09 A 1,000 1,025 664843RZ
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 6% 9/1/15 Baa1 2,800 2,779 684246CA
Oxnard Fing. Auth. Wastewtr. Rev. Rfdg.
5.50% 6/1/14, (FGIC Insured) Aaa 1,250 1,239 691874AS
Sacramento City Fing. Auth. (Cap. Appreciation
Tax Allocation Comb. Proj.) Series B,
0% 11/1/06, (MBIA Insured) Aaa 2,810 1,422 785849BG
San Joaquin Hills Trans. Corridor Agcy. Toll.
Road Rev. (Sr. Lien):
0% 1/1/17 - 3,500 700 798111AU
0% 1/1/19 - 20,000 3,475 798111AH
Sequoia Hosp. Dist. Rev. 5.375% 8/15/23 A 5,000 4,594 817393CA
University of California Rev. Rfdg. (Multiple Purp.
Projs.) Series C:
5.125% 9/1/13, (AMBAC Insured) Aaa 2,000 1,904 914113SM
5.25% 9/1/16, (AMBAC Insured) Aaa 6,500 6,272 914113SP
59,167
COLORADO - 9.8%
Adams County Poll. Cont. Rev. Rfdg. (Pub. Svc.
Co. Colorado Proj.) Series A, 5.875% 4/1/14,
(MBIA Insured) Aaa 2,750 2,857 005620AL
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
COLORADO - CONTINUED
Arvada Sales & Use Tax Rev. Rfdg. & Impt.
6.25% 12/1/12, (FGIC Insured) Aaa $ 4,000 $ 4,255 043229AV
Auraria Higher Ed. Ctr. Rev. (Student Fee)
Series B, 6.50% 11/1/16, (AMBAC Insured) Aaa 2,500 2,713 051533HX
Aurora Wtr. Rfdg. 4.75% 11/1/14 A1 3,540 3,266 051555T4
Avon Metropolitan Dist. Gen. Oblig. Rfdg. &
Impt. (Colorado Eagle Co.) Series 1990:
8% 11/1/00 - 1,295 1,429 054028EN
8.30% 11/1/10 - 2,505 2,809 054028EP
Boulder Larimer & St. Weld Counties Vrain Valley
School Dist. Rfdg. 6% 12/15/10,
(MBIA Insured) Aaa 1,500 1,581 101565RC
Colorado Board Agric. Rev. Rfdg. & Impt.
(Colorado Univ. Auxiliary Facs.)
6.40% 3/1/11, (MBIA Insured) Aaa 2,000 2,173 196695GW
Colorado Health Facs. Auth. Rev.:
(Commty. Provider Pooled Loan) Series A,
7.25% 7/15/17, (Cap. Guaranty Insured) Aaa 1,878 2,155 196473E8
(Hosp. North Colorado Med. Ctr.):
5.95% 5/15/12, (MBIA Insured) Aaa 1,400 1,482 196473Y8
6% 5/15/20, (MBIA Insured) Aaa 3,000 3,150 196473Y9
(Hosp. - Swedish Med. Ctr.) Series A:
7.25% 10/1/08 A 7,200 7,902 196473ZL
7.50% 10/1/20 A 10,000 11,100 196473ZM
6.80% 1/1/23 A 7,000 7,525 196473N3
(PSL Health Care Sys. Proj.) Series A:
6.75% 2/15/13 Baa 7,750 7,973 1964732C
7.25% 2/15/16, (FSA Insured) Aaa 8,000 9,180 196473C2
8.50% 2/15/21 Baa 6,250 7,148 196473C5
6.875% 2/15/23 Baa 500 518 1964732D
(Rocky Mountain Adventist) 6.625% 2/1/22 Baa 16,500 16,748 1964732M
(Sisters of Charity Health Care Sys.) Series A,
6.25% 5/15/12, (AMBAC Insured) Aaa 2,000 2,218 196473W3
Colorado Postsecondary Edl. Facs. Auth. Rev.
Rfdg. (Denver Univ.) 6.25% 3/1/12,
(Connie Lee Insured) AAA 2,700 2,842 196547DE
Colorado Springs Arpt. Rev. (Cap. Appreciation)
Series C:
0% 1/1/02 BBB 1,550 961 196612AZ
0% 1/1/04 BBB 1,530 826 196612BD
0% 1/1/09 BBB 1,655 627 196612BN
0% 1/1/10 BBB 1,500 529 196612BP
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
COLORADO - CONTINUED
Colorado Univ. Hosp. Auth. Hosp. Rev. Series A:
6.25% 11/15/12, (AMBAC Insured) Aaa $ 4,000 $ 4,314 914173AL
6.40% 11/15/22, (AMBAC Insured) Aaa 2,000 2,170 914173AM
Colorado Univ. Rev.:
(Biomedical Research Bldg. Proj.) 7% 6/1/09 A+ 5,725 6,440 914182E2
(Research Bldg. Revolving Fund)
6.125% 6/1/12, (MBIA Insured) Aaa 1,330 1,410 914182W4
Colorado Wtr. Resources Pwr. Dev. Auth. Clean
Wtr. Rev. Series A, 7% 9/1/12 Aa 2,500 2,822 196797BY
Denver City & County Arpt. Rev. Series A:
7.50% 11/15/06 Baa1 6,500 7,353 249181JQ
7.50% 11/15/12 Baa1 10,000 11,163 249181JR
7.25% 11/15/25 Baa1 11,300 12,374 249181JS
Denver City & County Ind. Dev. Rev. (Denver
Univ. Prog.) Series 1991, 7.50% 3/1/11 BBB 1,450 1,626 249188CZ
Fort Collins Storm Drain Rev. 6.625% 12/1/11 A1 1,000 1,081 347128BB
Fraser Ind. Dev. Rev. (Safeway Stores, Inc. Proj.)
10.25% 12/1/03 BB- 1,120 1,152 355472AG
Jefferson County Ctfs. of Prtn.:
6.65% 12/1/08, (MBIA Insured) Aaa 3,000 3,323 472723DQ
7.125% 12/1/10, (MBIA Insured) Aaa 250 286 472723CW
Jefferson County School Dist. #R-001,
6% 12/15/12, (AMBAC Insured) Aaa 8,490 8,968 472736XB
Jefferson County Single Family Mtg. Rev.
Series 1991 A, 8.875% 10/1/13,
(MBIA Insured) Aaa 710 771 472744BW
La Plata County School Dist. #9-R Durango:
6.55% 11/1/13, (FGIC Insured) Aaa 2,000 2,205 503768EW
6.60% 11/1/17, (FGIC Insured) Aaa 1,600 1,764 503768EX
Lafayette Wtr. Rfdg. & Impt. Series B,
6.25% 12/1/12, (AMBAC Insured) Aaa 2,000 2,155 506048GE
Larimer County School Dist. #R-1 Poudre Impt.
Unltd. Tax:
6.50% 12/15/11 A 5,000 5,438 517138PA
6.15% 12/15/16 A 2,500 2,625 517138PB
Logan County Health Care Facs. Rev. (Western
Health Network) 5.75% 1/1/08,
(MBIA Insured) Aaa 500 523 540627AX
Morgan County Co. Poll. Cont. Rev. Rfdg.
(1st Mtg. Pub. Svc. Co.) Series A,
5.50% 6/1/12, (MBIA Insured) Aaa 3,750 3,783 617100AH
Mountain Village Metropolitan Dist. San.
Miguel County Rfdg. 8.10% 12/1/11 - 2,000 2,200 624506CN
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
COLORADO - CONTINUED
Platte River Pwr. Auth. Pwr. Rev. Rfdg. Series BB,
6.125% 6/1/14 Aa $ 1,875 $ 1,969 727818BK
Poudre Valley Hosp. Dist. Hosp. Rev.
6.625% 12/1/11, (AMBAC Insured) Aaa 4,500 4,978 738581AT
Reg'l. Trans. Dist. Sales Tax Rev. Rfdg. & Impt.
6.25% 11/1/12, (FGIC Insured) Aaa 2,955 3,172 759136DL
South Suburban Park & Recreation Dist. Rfdg. &
Impt. Unltd. Tax 6.25% 2/15/13,
(AMBAC Insured) Aaa 2,000 2,142 840480CC
Thorton Sales & Use Tax Rev. Series A,
6.25% 9/1/12, (FGIC Insured) Aaa 3,000 3,228 885285DV
Vail Sales Tax Rev. Rfdg. & Impt. Series B,
6.125% 12/1/12, (MBIA Insured) Aaa 1,185 1,251 918789BU
206,653
CONNECTICUT - 0.7%
Connecticut Dev. Auth. Health Care Rfdg.
(Duncaster, Inc. Proj.) 6.75% 9/1/15 Aa3 1,225 1,323 207901BD
Connecticut Dev. Auth. Solid Waste & Elec. Rev.
(Ogden Martin Sys. Bristol, Inc.)
10% 7/1/14 BBB+ 6,000 6,660 207908AR
Connecticut Health & Edl. Facs. Auth. Rev.
(New Britain Mem. Hosp.) Series A,
7.50% 7/1/06 BBB- 5,000 5,400 207742PC
Norwalk Hsg. Auth. Mtg. Rev. (Monterey Village)
Series 1985 B, Section 8, 9% 11/1/99 BBB 2,195 2,299 668868BE
15,682
DELAWARE - 0.1%
Delaware Health Facs. Auth. Rev. Rfdg.
(Kent Gen. Hosp. Proj.) 5.25% 7/1/13,
(MBIA Insured) Aaa 3,000 2,850 246388GZ
DISTRICT OF COLUMBIA - 0.3%
District of Columbia Hosp. Rev. (Hosp. for
Sick Children) Series A, 8.875% 1/1/21 - 6,000 6,720 254764BS
FLORIDA - 2.9%
Dade County Health Facs. Auth. Hosp. Rev.
(South Shore Hosp. & Med. Ctr.) Series A,
7.60% 8/1/24, (FHA Guaranteed) AA+ 905 1,008 233904KP
Hillsborough County Port Dist. Port Rev.
Series 1984 A, 11% 6/1/94 785 797 432326CU
Jacksonville Health Facs. Auth. Hosp. Rev. Rfdg.
(Methodist Hosp. Proj.) Series A, 8% 10/1/06 - 2,250 2,199 469404HE
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
FLORIDA - CONTINUED
Jacksonville Health Facs. Ind. Dev. Rev. (Cypress
Village Proj.) (Nat'l. Benevolent Assoc.)
7% 12/1/22 Baa1 $ 2,000 $ 2,132 46940HBA
Tampa Cap. Impt. Prog. Rev.:
Series A, 8.25% 10/1/18 Aa 10,000 11,088 875148AL
Series B, 8.375% 10/1/18 A- 40,000 44,250 875148AV
61,474
GEORGIA - 0.8%
Atlanta Arpt. Facs. Rev. 6.30%, 1/1/07 A 2,500 2,525 047793AM
Atlanta Board of Ed. Ctfs. of Prtn. Rfdg.
2.85% 6/1/94, (FGIC Insured) Aaa 2,705 2,702 047801AT
Atlanta Wtr. & Swr. Auth. Rev. 4.50% 1/1/18 Aa 9,000 7,886 047861KH
Brunswick Wtr. & Swr. Rev. Rfdg. & Impt.
6.10% 10/1/19, (MBIA Insured) Aaa 1,500 1,622 117151FF
Savannah Port Auth. Poll. Cont. Rev. (Continental
Group, Inc. Proj.) 9.875% 3/1/00 Ba2 2,000 2,025 804863AW
16,760
GUAM - 0.1%
Guam Gov't. Ltd. Oblig. Hwy. Ltd. Tax Series A,
6.25% 5/1/07, (Cap. Guaranty Insured) Aaa 1,500 1,624 40065DBC
HAWAII - 0.4%
Hawaii Gen. Oblig. Rfdg. Series CI,
4.75% 11/1/09 Aa 7,000 6,554 419779NU
Honolulu City & County Rfdg. & Impt. Series B,
5.50% 10/1/11 Aa 3,000 3,030 438669PT
9,584
IDAHO - 0.9%
Boise City Independent School Dist. Rev.
5.40% 7/30/14 (AMBAC Insured) Aaa 3,590 3,577 097437KG
Boise Univ. Rev. Rfdg. & Impt. (Student Union &
Hsg. Sys.):
6.30% 4/1/15, (MBIA Insured) Aaa 800 860 097464JX
5.25% 4/1/17, (MBIA Insured) Aaa 1,000 970 097464KN
Boise Urban Renewal Parking Agcy. Rev. (Tax
Increment) Series A, B, C, 8.125% 9/1/15 A 2,600 2,863 097463CE
Idaho Falls Elec. Rfdg.:
0% 4/1/06, (FGIC Insured) Aaa 4,000 2,070 451182FC
0% 4/1/12, (FGIC Insured) Aaa 1,100 393 451182FJ
0% 4/1/13, (FGIC Insured) Aaa 7,150 2,422 451182FK
Idaho Health Facs. Auth. Rev. Rfdg. (Magic
Valley Reg'l. Med. Ctr.) 5.50% 12/1/07,
(AMBAC Insured) Aaa 3,525 3,622 451295LH
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
IDAHO - CONTINUED
Idaho Univ. Rev. (Student Facs. Fee)
6.30% 4/1/10 A $ 2,500 $ 2,659 451470HB
19,436
ILLINOIS - 3.8%
Chicago O'Hare Int'l. Arpt. Rev. Rfdg. (Sr. Lien)
Series A, 5% 1/1/12 A1 10,000 9,363 167592LP
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. Rfdg.:
(Delta Airlines, Inc.) 6.45% 5/1/18 Ba3 1,750 1,750 167590BX
(United Airlines, Inc.) Series 1984 B,
8.85% 5/1/18 Baa1 655 760 167590BN
Chicago Rfdg. Series B, 5% 1/1/11,
(AMBAC Insured) Aaa 2,000 1,895 1674833W
Chicago Single Family Mtg. Rev.
7.125% 7/1/09, (Escrowed to Maturity) (b) A1 2,755 2,765 167685AW
Cook County Series A, 5.375% 11/15/12,
(MBIA Insured) Aaa 2,500 2,419 213183WR
Grayslake Multi-Family Hsg. Rev. (Country Squire
Apts.) 9.50% 12/1/25, (FHA Guaranteed) AA- 2,430 2,503 389649BD
Illinois Health Facs. Auth. Rev:
Rfdg. (Lutheran Gen. Health Sys.) Series C:
7% 4/1/14 A 1,500 1,674 45200KXP
6% 4/1/18 A 3,000 3,000 45200KXT
Rfdg. (OSF Healthcare Sys.) 6% 11/15/13 A1 5,000 5,013 45200KA2
(Hinsdale Hosp.) Series C, 9.50% 11/15/19,
(Pre-Refunded to 11/15/00 @ 102) (b) Baa1 3,220 4,093 45200KSU
(Mem. Hosp.) :
6.875% 5/1/00 BBB 1,700 1,768 45200KNY
7.125% 5/1/10 BBB 4,000 4,210 45200KNZ
7.25% 5/1/22 BBB 4,000 4,215 45200KQD
Lake County Forest Preserve Dist. Unltd. Tax (Cap.
Appreciation):
0% 12/1/07 Aa 10,440 4,881 508354FR
0% 12/1/08 Aa 12,505 5,487 508354FS
Metropolitan Pier & Exposition Auth. Dedicated
Tax Rev. (McCormick Place Expansion Proj.):
Series A:
0% 6/15/07, (FGIC Insured) (c) Aaa 4,800 4,236
0% 6/15/09, (FGIC Insured) Aaa 18,175 7,520 592247CQ
0% 6/15/10, (FGIC Insured) Aaa 5,000 1,938 592247CR
0% 6/15/16, (FGIC Insured) (c) Aaa 11,820 7,445 592247CU
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ILLINOIS - CONTINUED
Northwest Suburban Muni. Joint Action Wtr.
Agcy. Wtr. Supply Sys. Rev. Series A,
5.90% 5/1/15, (MBIA Insured) Aaa $ 2,000 $ 2,060 667806FG
78,995
INDIANA - 1.1%
Fishers Econ. Dev. Rev. (1st Mtg. United Student
Funds, Inc.) 8.375% 9/1/14 - 1,250 1,330 338035BK
Indiana Univ. Rev. Rfdg. (Student Fee) Series H,
0% 8/1/09, (AMBAC Insured) Aaa 17,000 6,906 455167SB
Indianapolis Econ. Dev. Rev. Rfdg. & Impt.
(Nat'l. Benevolent Assoc.) 7.625% 10/1/22 Baa1 3,000 3,266 455261PQ
Indianapolis Local Pub. Impt. Bond Bank Rfdg.
Series D:
6.75% 2/1/14 A+ 4,000 4,440 455280QP
6.75% 2/1/20 A+ 6,000 6,398 455280QV
22,340
KANSAS - 0.4%
Kansas City Util. Sys. Rev. Rfdg. & Impt.
(Cap. Appreciation) 0% 9/1/10,
(AMBAC Insured) Aaa 6,690 2,576 484790FS
Kansas Dept. Trans. Hwy. Rev. Series A,
6% 9/1/12 Aa 3,000 3,128 485424BH
Wichita Hosp. Rev. Rfdg. & Impt. (St. Francis II
Reg'l. Med. Ctr.) Series A3, 6.25% 10/1/10,
(MBIA Insured) Aaa 2,500 2,712 967250NJ
8,416
KENTUCKY - 1.8%
Boone County Poll. Cont. Rev. Rfdg. (Dayton Pwr.
& Lt. Co.) Series A, 6.50% 11/15/22 A2 2,000 2,145 098792AG
Danville Multi-City Lease Rev. (Shelbyville)
Series H, 6.70% 7/1/11, (MBIA Insured) Aaa 2,430 2,712 236672GV
Henderson Elec. Lt. & Pwr. Rev. Rfdg.
5.70% 3/1/03 A 2,050 2,055 425092DF
Hopkins County Hosp. Rev. (Trover Clinic
Foundation, Inc.) 6.625% 11/15/11,
(MBIA Insured) Aaa 2,000 2,190 439748CK
Jefferson County Cap. Projs. Corp. Rev. (Muni.
Multiple Rfdg. Lease) Series A, 0% 8/15/11 A1 5,365 1,838 473020GW
Jefferson County Health Facs. Rev. (Jewish Hosp.
Healthcare Svcs., Inc.) 6.50% 5/1/15,
(AMBAC Insured) Aaa 6,500 7,085 472902DH
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
KENTUCKY - CONTINUED
Kentucky Econ. Dev. Fin. Auth. Med. Ctr. Rev.
Rfdg. & Impt. (Ashland Hosp. Corp.)
Series A, 6.125% 2/1/12,
(Cap. Guaranty Insured) Aaa $ 1,200 $ 1,248 491269AN
Kentucky Tpk. Auth. Econ. Dev. Road Rev. Rfdg.
(Revitalization Proj.) 5.50% 7/1/09,
(AMBAC Insured) Aaa 2,200 2,239 491552GN
Louisville & Jefferson County Metropolitan Swr.
Dist. Rev. Series A, 5.25% 5/15/12,
(MBIA Insured) Aaa 1,500 1,464 546587CH
Louisville Univ. Rev. Rfdg. (Consolidated Edl.
Bldgs.) Series I:
5.40% 5/1/08 A1 1,965 1,958 914391PU
5.40% 5/1/09 A1 2,360 2,328 914391PV
5.40% 5/1/10 A1 1,565 1,542 914391PW
Owensboro Elec. Lt. & Pwr. Rev. Series B,
0% 1/1/07, (AMBAC Insured) Aaa 10,000 4,988 691021GJ
Peery County Econ. Dev. Rev. Rfdg. (The Kroger
Co. Proj.) 6.60% 5/1/02 Ba3 2,435 2,499 714542AM
Winchester Ind. Bldg. Rev. Rfdg. (Kroger Co.)
7.75% 7/1/12 Ba3 1,000 1,100 972856DZ
37,391
LOUISIANA - 2.3%
Greater New Orleans Expressway Commission
Expressway Rev. Rfdg. 6% 11/1/16 A 5,000 5,125 392244BG
Lake Charles Hbr. & Term. Dist. Port Facs. Rev.
Rfdg. (Trunkline LNG Co. Proj.) Series 1992,
7.75% 8/15/22 Ba2 13,000 14,820 507729BM
Louisiana Offshore Term. Auth. Deepwtr. Port
Rev. Rfdg. (1st Stage) (Loop, Inc. Proj.)
Series E, 7.60% 9/1/10 A3 2,300 2,651 546510DA
Monroe-West Monroe Pub. Trust Fing. Auth.
Mtg. Rev. Rfdg. (Cap. Appreciation)
Series C, 0% 8/20/14 AA- 9,000 2,509 611382BU
New Orleans Audubon Park Commission
Aquarium Rev. Series 1992 A, 8% 4/1/12 5,000 5,388 647629AM
St. James Parish Poll. Cont. Rev. (B.F. Goodrich
Proj.) 14.50% 12/1/11 Baa1 500 631 790102AR
St. John Baptist Parish Sales Tax Dist. Rfdg.
Series 1989, 7.80% 12/1/14 Baa 2,700 3,146 790207BT
St. John Baptist Parish School Dist. #1 Unltd. Tax
5.20% 3/1/09 Baa 1,695 1,598 790229GB
St. Tammany Pub. Trust Fing. Auth. Rev. Rfdg.
(Cap. Appreciation) Series C, 0% 7/20/14 Aa 4,650 1,308 793499AE
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
LOUISIANA - CONTINUED
Shreveport Wtr. & Swr. Rev. 5.95% 12/1/14,
(FGIC Insured) Aaa $ 3,500 $ 3,666 825485LS
West Feliciana Parish Poll. Cont. Rev.
(Gulf States Util. Co.) Series C, 7% 11/1/15 Baa3 2,500 2,734 952789AW
Westside Habilitation Ctr. Cheneyville Rev. Rfdg.
(Intermediate Care Fac. Retirement)
8.50% 10/1/13 - 4,900 4,905 961500AJ
48,481
MAINE - 0.4%
State Str. Hsg. Preservation Corp. Hsg. Rev.
(Multi-Family Proj.) Series A:
7.20% 1/1/02 A 620 652 85748HAB
7.375% 1/1/12 A 3,505 3,698 85748HAC
7.50% 1/1/19 A 4,700 4,964 85748HAD
9,314
MARYLAND - 1.0%
Anne Arundel County Econ. Dev. Rev.
(Regency Club II Apts.) 9% 12/1/10,
(MBIA Insured) (FHA Guaranteed) Aaa 1,000 1,043 035902BR
Baltimore County Mtg. Rev.:
(Kingwood IV) 9.50% 8/1/10,
(FHA Guaranteed) AAA 1,000 1,041 059148TH
(Loch Raven Village) 10.10% 11/20/20,
(GNMA Coll.) AAA 1,390 1,447 059148RS
Howard County Mtg. Rev. (Heartlands Elderly
Apts. Proj.) 8.875% 12/1/10, (MBIA Insured)
(FHA Guaranteed) Aaa 250 266 442586JT
Maryland Commty. Dev. Administration Dept.
Hsg. & Commty. Dev. (Single Family Prog.)
4th Series, 7.40% 4/1/17 Aa 2,500 2,647 57419HPE
Maryland Health & Higher Edl. Facs. Auth. Rev.:
Rfdg.:
(Doctors Commty. Hosp.) 5.75% 7/1/13 Baa 2,500 2,406 574216FQ
(Francis Scott Key Medical Ctr.)
5% 7/1/13, (FGIC Insured) Aaa 2,500 2,375
574216CW (Holy Cross Hosp.) Issue A,
7.125% 7/1/10, (AMBAC Insured) Aaa 1,350 1,534 574215N9
Montgomery County Hsg. Opportunities
Commission Hsg. Rev. (Multi-Family)
Series B, 9.375% 7/1/15 Aa 985 1,033 613344CL
Prince Georges County Hosp. Rev.
(Greater Southeast Health Care Sys.)
6.375% 1/1/13 Baa 2,250 2,298 741710AW
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MARYLAND - CONTINUED
Prince George's County Rfdg. (Consolidated Pub.
Impt. Ltd. Tax) 5.10% 10/1/04 A $ 1,000 $ 1,020 741701BH
Prince George's County Solid Waste Mgmt. Sys.
Rev. 5.25% 6/15/13 A 1,500 1,431 74172MBK
Queen Anne's County Econ. Dev. Rev. (Safeway
Stores Proj.) 7.75% 12/15/09 BB- 2,515 2,518 748235AA
21,059
MASSACHUSETTS - 10.0%
Birmingham Baptist Med. Ctr. Spl. Care Facs.
Fing. Auth. Rev. (Baptist Med. Ctr.) Series A,
5.50% 8/15/13, (MBIA Insured) Aaa 3,500 3,448 091104DP
Massachusetts Gen. Oblig. Ltd. Tax
(Consolidated Loan) Series C, 0% 12/1/04 A 6,000 3,443 575823J2
Massachusetts Health & Edl. Facs. Auth. Rev.:
(Beth Israel Hosp.) 8.98% 7/1/25,
(AMBAC Insured) (a)(f) Aaa 5,000 5,456 575851JP
(Brigham & Women's Hosp.) Series C,
7.125% 6/1/09 AA 1,000 1,114 575850YL
(1st Mtg.) (Fairview Extended Care) Series A:
10.125% 1/1/11 - 3,070 3,358 575850M7
10.25% 1/1/21 - 6,400 7,040 575850M4
(Metro West Health, Inc.) Series C,
6.50% 11/15/18, (AMBAC Insured) A 4,000 4,230 575851LP
(New England Med. Ctr. Hosp.) Series F,
6.50% 7/1/12, (FGIC Insured) Aaa 1,300 1,412 575851AF
(St. Luke's Hosp. New Bedford)
8.55% 8/15/23, (MBIA Insured) (a)(f) Aaa 2,600 2,681 575851C7
(Salem Hosp.) Series A, 6.75% 7/1/00 - 5,905 6,097 575849K2
(Tufts Univ.) Series C, 7.40% 8/1/18 A1 2,815 3,156 575851YL
Massachusetts Hsg. Fin. Agcy.:
(Hsg. Projs.) Series A:
6.30% 10/1/13, (AMBAC Insured) Aaa 11,000 11,344 575852VR
6.15% 10/1/15, (AMBAC Insured) Aaa 5,250 5,342 575852VS
(Multi-Family) Series 1984 B, 10.375%
12/1/09, (MBIA Insured) Aaa 1,000 1,058 575910BG
(Residential Dev. Section 8) Issue V Series A,
10.60% 12/1/03 A+ 800 824 575854KM
(Single Family Mtg. Purchase):
Series 1983 C, 10.125% 12/1/07 Aa 255 263 575853EK
Series 1984 A, 11.375% 12/1/08,
(Escrowed to Maturity) (b) Aa 215 223 575853FX
Massachusetts Ind. Fin. Agcy. Health Care Facs.
Rev. (Hampden Nursing Home Proj.) Series A,
9.75% 10/1/17 - 4,815 5,134
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Rev.:
(Atlanticare Med. Ctr.) Series A,
10.125% 11/1/14 - $ 7,300 $ 8,450 575914GZ
(Cap. Appreciation) (Massachusetts Biomedical
Research):
Series A-1, 0% 8/1/03 - 23,300 13,776 575914DT
Series A-2:
0% 8/1/04 - 5,000 2,775 575914EA
0% 8/1/06 - 26,800 12,998 575914EC
0% 8/1/09 - 15,800 6,260 575914EF
0% 8/1/10 - 11,000 4,070 575914EG
(1st Mtg. Reeds Landing):
7.75% 10/1/00 - 1,300 1,294 575914ZS
575909AE 8.625% 10/1/23 - 3,000 2,976 575914ZU
Massachusetts Muni. Wholesale Elec. Co. Pwr.
Supply Sys. Rev.:
Rfdg. Series A:
5.10% 7/1/08, (AMBAC Insured) Aaa 8,775 8,523 575765MT
575765MA 5% 7/1/10, (AMBAC Insured) Aaa 3,680 3,533 575765MU
Series A:
8.75% 7/1/18, (Pre-Refunded to 1/1/04
@ 100) (b) Baa1 165 187 575765NG
8.75% 7/1/18, (Pre-Refunded to 1/1/94
@ 100) (b) Baa1 30 30 575765NJ
8.75% 7/1/18, (Pre-Refunded to 7/1/94
@ 100) (b) Baa1 30 31 575765NX
6.375% 7/1/15 Baa1 29,055 29,636 575765BF
6% 7/1/18 Baa1 11,690 11,763 575765JG
7.72% 7/1/18, (AMBAC Insured) (a) (f) Aaa 5,000 4,750 575765MV
Series B, 6.125% 7/1/17 Baa1 6,165 6,288 575765BV
Series C, 6.625% 7/1/10 Baa1 4,500 4,804 575765KA
Series D, 6.125% 7/1/19 Baa1 8,905 9,061 575765LZ
Series E, 6.125% 7/1/19 Baa1 8,665 8,817
Massachusetts Univ. Ctfs. of Prtn.
(Telecommunications Sys.) Series A:
7.45% 11/1/97 BBB- 810 872 914442BF
7.70% 5/1/99 BBB- 1,190 1,286 914442BJ
7.70% 11/1/99 BBB- 1,240 1,341 914442BK
7.80% 5/1/00 BBB- 1,285 1,391 914442BL
210,535
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MICHIGAN - 4.4%
Detroit Convention Facs. Rev. Rfdg. (Cobo Hall
Expansion Proj.) 5.25% 9/30/12 A $ 3,000 $ 2,831 251131BF
Detroit Hosp. Fin. Auth. Facs. Rev. (Michigan
Healthcare Corp. Proj.) 10% 12/1/20 B 29,310 32,534 251145AA
Dickinson County Econ. Dev. Corp. Poll. Cont.
Rev. Rfdg. (Champion Int'l. Corp. Proj.)
5.85% 10/1/18 Baa1 4,150 4,015 253195AA
Dickinson County Econ. Dev. Corp. Solid Waste
Disp. Rev. Rfdg. (Champion Int'l. Corp.)
6.55% 3/1/07 Baa1 5,000 5,219 253200AD
Grand Rapids San. Swr. Sys. Rev. Impt. & Rfdg.
7% 1/1/16 A1 2,195 2,415 386289BA
Michigan Hosp. Fin. Auth. Rev.:
Rfdg.:
(Bay Med. Ctr.) Series A, 8.25% 7/1/12 Baa1 1,000 1,133 59465CSP
(Brighton Hosp.) Series A,
8.625% 10/1/18 B 1,550 1,618 59465CHH
(Detroit Macomb Hosp. Corp.) Series A:
7.40% 6/1/13 B 1,160 1,156 59465CCV
7% 6/1/15 B 3,500 3,303
59465CCW (Daughters of Charity) 10% 11/1/15 Aa 2,900 3,273 5946483B
Michigan Hsg. Dev. Auth. Single Family Mtg.
Rev. Series A:
7.50% 6/1/15 Aa 470 503 594653HF
7.70% 12/1/16 Aa 1,775 1,888 594653EK
Michigan Pub. Pwr. Agcy. Rev. Rfdg. (Belle
River Proj.) Series A, 5.25% 1/1/18 A1 5,000 4,788 594570EH
Michigan South Central Pwr. Agcy. Pwr. Supply
Sys. Rev. Rfdg. Series 1991, 6.75% 11/1/10 A 2,000 2,175 594689BR
Michigan Strategic Fund Ltd. Oblig. Rev. (Mercy
Svcs. for Aging Proj.) 9.40% 5/15/20 - 9,295 10,178 594692XT
Pontiac Stadium Bldg. Auth. Rev. 6.60% 3/1/00 Baa 1,395 1,425 732616AY
Waterford Township Econ. Dev. Corp. Rev. Ltd.
Tax Oblig. (Canterbury Health Care):
8% 7/1/08 - 300 303 941458AT
8.375% 7/1/23 - 1,000 1,033 941458AU
Western Townships Util. Auth. Swr. Disp. Sys.:
Ltd. Tax 8.20% 1/1/18 BBB+ 2,000 2,244 959767AK
Rfdg.:
0% 1/1/05, (Cap. Guaranty Insured) Aaa 2,810 1,576 959767BC
6.50% 1/1/10, (Cap. Guaranty Insured) Aaa 7,720 8,251 959767BE
91,861
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MINNESOTA - 3.2%
Centennial Independent School Dist. #12 Rfdg.
Series B, 4.875% 2/1/12, (FGIC Insured) Aaa $ 2,610 $ 2,444 150908DE
Duluth Econ. Dev. Auth. Health Care Facs. Rev.
(The Duluth Clinic Ltd.) 6.20% 11/1/12,
(AMBAC Insured) Aaa 1,500 1,603 26444CAX
Minneapolis & St. Paul Hsg. & Redev. Auth.
Healthcare Sys. Rev. (Healthspan Health Sys.
Corp.) (Health One Sys.) Series A, 4.75%
11/15/18, (AMBAC Insured) Aaa 5,000 4,475 603695DF
Minneapolis Hosp. Rev. Rfdg. (Fairview Hosp. &
Healthcare) 6.50% 1/1/11, (MBIA Insured) Aaa 2,000 2,193 603745MK
Minneapolis Hsg. & Redev. Auth. Mtg. Single
Family Rev. 6.75% 5/1/09, (FHA Guaranteed) A1 1,100 1,123 603746AA
Northern Minnesota Muni. Pwr. Agcy. Elec. Sys.
Rev. Rfdg. Series B, 5.50% 1/1/18,
(AMBAC Insured) Aaa 3,250 3,258 665444DQ
Rochester Health Care Facs. Rev. (Mayo
Foundation/Mayo Med. Ctr.):
RIB Series H, 9.08% 11/15/15 (a)(f) AA+ 9,000 9,911 771902CS
Series I:
5.90% 11/15/09 AA+ 2,000 2,135 771902CL
5.90% 11/15/10 AA+ 2,250 2,399 771902CM
St. Louis Park Hosp. Facs. Auth. Rev. (Health Sys.
Oblig.) 5.20% 7/1/23, (AMBAC Insured) Aaa 2,000 1,893 791748CQ
St. Paul Hsg. & Redev. Auth. Hosp. Rev.:
(Healtheast Proj.) Series C, 9.75% 11/1/17 Baa 2,110 2,466 792888FN
(St. Paul-Ramsey Med. Ctr. Proj.)
5.50% 5/15/13, (AMBAC Insured) Aaa 1,180 1,190 792888HU
St. Paul Hsg. & Redev. Auth. Tax Increment Rev.
(Downtown & 7th Place Proj.) 2.75% 9/1/94,
(AMBAC Insured) Aaa 2,000 2,003 792904BQ
Western Minnesota Muni. Pwr. Agcy. Supply Rev.:
Rfdg. Series A, 7% 1/1/13 (e) A 20,000 21,650 958697DX
Series A, 6.125% 1/1/16 A 8,775 9,005 958697CX
67,748
MISSISSIPPI - 0.9%
Claiborne County Poll. Cont. Rev. (Middle South
Energy, Inc. Proj.) Series C, 9.875% 12/1/14 - 5,000 6,144 179423AC
Hinds County Ctfs. of Prtn. (Welfare Dept. Proj.)
7.75% 3/1/09 A 1,095 1,215 433114AC
Hinds County Mtg. Rev. Rfdg. (Methodist Hosp. &
Rehabilitation) 5.60% 5/1/12,
(AMBAC Insured) Aaa 4,000 4,055 433142AL
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MISSISSIPPI - CONTINUED
Mississippi Home Corp. Single Family Sr. Rev.
Rfdg. Series 1990 A, 9.25% 3/1/12,
(FGIC Insured) Aaa $ 735 $ 789 60535MAC
Mississippi Hosp. Equip. & Facs. Auth. Rev.
(Singing River Hosp. Sys. Proj.)
5.50% 3/1/13 Aaa 2,855 2,819 605360HB
Panola County Ind. Dev. Rev. Rfdg. (Kroger Co.)
7.125% 11/1/12 Ba3 3,250 3,449 698558AB
18,471
MISSOURI - 2.4%
Franklin County Reorganization School Dist. #R-XI
Rfdg.:
5.70% 3/1/08, (FGIC Insured) Aaa 700 718 353100CN
5.75% 3/1/13, (FGIC Insured) Aaa 1,000 1,023 353100CP
Grandview Ind. Dev. Auth. Ind. Dev. Rev. Rfdg.
(K mart Corp. Proj.) 6.50% 12/1/08 A 500 542 386778AA
Greene County Single Family Mtg. Rev.
9.375% 12/1/06, (AMBAC Insured) Aaa 105 111 394591DC
Kansas City Ind. Dev. Auth. Health Facs. Rev.
Rfdg. & Impt. (Menorah Med. Ctr. Proj.)
9.25% 6/1/16 - 3,500 3,763 484906AB
Mehlville School Dist. #09 Rfdg. 5.75% 2/15/09,
(MBIA Insured) Aaa 2,000 2,078 585191LJ
Missouri Health & Edl. Facs. Auth. Health Facs.
Rev. (Barnes Jewish-Christian Health)
5.25% 5/15/12 Aa 4,000 3,855 60635RJF
Missouri Health & Edl. Facs. Auth. Hosp. Facs.
Rev.:
(Heartland Health Sys. Proj.)
6.35% 11/15/17, (AMBAC Insured) Aaa 4,480 4,827
60635RCR (SSM Health Care) Series AA,
6.25% 6/1/07, (MBIA Insured) Aaa 1,000 1,095 60635RCM
Missouri Hsg. Dev. Commission Mtg. Purchase
(Single Family) 6.60% 11/15/10,
(FHA Guaranteed) Aa 1,500 1,536 606353MS
Missouri Reg'l. Convention & Sport Complex
Auth. Series A, 6.90% 8/15/21 A1 8,750 9,680 60636MAS
Missouri Univ. Rev. Rfdg. (Columbia Hosp. & Clinics)
Series A, 6.50% 11/1/11, (AMBAC Insured) Aaa 1,500 1,638 914488D8
New Madrid Pwr. Place Rev. 7.25% 6/1/03 Baa1 8,930 9,086 646819BD
St. Louis County Ind. Dev. Auth. Hosp. Rev.
(Daughters of Charity-DePaul Health)
10% 11/1/15 Aa 1,980 2,224 79130HAB
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MISSOURI - CONTINUED
St. Louis County Reg'l. Convention & Sports
Complex Auth. Series B:
7% 8/15/11 A $ 1,000 $ 1,104 791340AR
7% 8/15/21 A 3,150 3,465 791340AS
St. Louis Reg'l. Convention & Sports Complex
Auth. Series C, 7.90% 8/15/21 - 3,000 3,300 791687AB
50,045
MONTANA - 0.8%
Forsyth Poll. Cont. Rev. Rfdg. (Washington Wtr.
Pwr. Proj.) Series A, 7.125% 12/1/13,
(MBIA Insured) Aaa 2,250 2,531 346668BH
Great Falls Ind. Dev. Rev. Rfdg. (K mart Corp.
Proj.):
6.50% 11/15/01 A2 200 221 390435PT
6.90% 5/15/06 A2 905 993 390435PU
Great Falls Wtr. & Swr. Rev. Series 1992,
6.40% 8/1/12, (FGIC Insured) Aaa 1,200 1,310 390472BX
Montana Board of Investment Payroll Tax
(Workers Compensation) Series 1991,
6.875% 6/1/11, (MBIA Insured) Aaa 6,900 7,710 61213HDC
Montana Health Facs. Auth. Hosp. Facs. Rev.
(Holy Rosary Hosp.) 5.25% 7/1/20,
(MBIA Insured) Aaa 2,750 2,606 61213EHH
Silver Bow Wtr. Inc. Wtr. Sys. Rev. (Butte-Silver
Bow Proj.) 6.50% 11/1/14, (FGIC Insured) Aaa 1,000 1,098 827429AR
16,469
NEBRASKA - 1.7%
Buffalo County Hosp. Auth. #1 (Sisters of Charity
Health Care) Series A, 6.625% 5/15/09,
(MBIA Insured) Aaa 1,000 1,104 119447DC
Douglas County Hosp. Auth.:
#1 (Immanuel Med. Ctr., Inc.) 6.90% 9/1/11,
(AMBAC Insured) Aaa 3,250 3,673 259228DE
#2 (Catholic Health) (Archbishop Mercy)
7.25% 11/1/21 A1 1,500 1,674 259230DT
Hastings Elec. Sys. Rev. Rfdg.:
5.20% 1/1/13 A 3,000 2,846 418604CZ
6.30% 1/1/19 A 4,500 4,793 418604CH
Lancaster County Hosp. Auth. #1 Hosp. Rev.
(Bryan Mem. Hosp. Proj.):
6.60% 6/1/12, (MBIA Insured) Aaa 1,000 1,103 513886DQ
6.70% 6/1/22, (FGIC Insured) Aaa 2,500 2,772 513886DR
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NEBRASKA - CONTINUED
Nebraska Investment Fin. Auth. Hosp. Rev.
(Methodist Health Sys.):
6.65% 3/1/00, (MBIA Insured) Aaa $ 2,500 $ 2,784 639902BH
6.75% 3/1/01, (MBIA Insured) Aa 2,400 2,691 639902BJ
7% 3/1/06, (MBIA Insured) Aaa 1,000 1,128 639902BP
Nebraska Pub. Pwr. Dist. Rev. Rfdg. (Pwr. Supply
Sys.) 6.10% 1/1/10 A1 1,500 1,571 639683F3
Omaha Pub. Pwr. Dist. Elec. Rev. Rfdg. Series B,
6.15% 2/1/12 Aa 5,000 5,387 681793ZH
Scotts Bluff County Hosp. Auth. #1 Hosp. Rev.
(Reg'l. West Med. Ctr. Proj.)
6.45% 12/15/04 A 3,000 3,217 810143CG
34,743
NEW HAMPSHIRE - 0.6%
New Hampshire Business Fin. Auth. Poll. Cont.
Rev. Rfdg. (United Illuminating Co.) Series A,
5.875% 10/1/33 Baa3 2,500 2,391 64468CAE
New Hampshire Higher Edl. & Health Facs. Auth.
Rev. (Frisbie Mem. Hosp.) 9.50% 10/1/08 Baa 9,060 11,008 644618NQ
13,399
NEW JERSEY - 1.1%
New Jersey Econ. Dev. Auth. Econ. Dev. Rev.
(Statewide Realty-Vista Hotel Proj.)
11% 12/15/17 (d)(e) - 27,470 18,405 645775VZ
New Jersey Health Care Facs. Fing. Auth. Rev.
(Monmouth Med. Ctr.) 10.50% 7/1/14,
(HIB Insured) A 4,350 4,584 6457922Q
22,989
NEW MEXICO - 3.4%
Albuquerque Hosp. Rev. Rfdg. (Presbyterian
Health Care Sys.) 6.375% 8/1/07,
(FGIC Insured) Aa 500 544 013544HN
Albuquerque Rev. Rfdg. (The Evangelical
Lutheran) 5.90% 6/1/13, (Cap. Guaranty
Insured) Aaa 1,000 1,026 013638AP
Farmington Poll. Cont. Rev.:
Rfdg.:
(Pub. Svc. Co. of New Mexico) Series A,
6.375% 12/15/22, (MBIA Insured) Aaa 2,500 2,672 311450CR
(Pub. Svc. Co. of New Mexico San Juan Proj.):
Series A, 6.40% 8/15/23 Ba2 6,500 6,516 311450CU
Series X, 5.90% 4/1/07 Ba2 12,640 12,419 311450AF
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NEW MEXICO - CONTINUED
Farmington Poll. Cont. Rev. - continued
Rfdg. (Southern California Edison) Series A,
5.875% 6/1/23, (MBIA Insured) Aaa $ 4,000 $ 4,105 311450CS
(Pub. Svc. Co. of New Mexico San Juan Proj.)
Series A, 6% 3/1/08 Ba2 14,480 14,299 311450AJ
Gallup Poll. Cont. Rev. Rfdg. (Plains Elec.
Generation Unltd. Tax) 6.65% 8/15/17,
(MBIA Insured) Aaa 14,150 15,600 364070AT
Las Cruces Health Facs. Rev. Rfdg. (Evangelical
Lutheran Proj.) 6.45% 12/1/17,
(Cap. Guaranty Insured) Aaa 2,515 2,691 517481AQ
New Mexico Univ. Rev.:
Rfdg.:
Series A:
6.25% 6/1/12 A1 2,000 2,188 914692TE
6% 6/1/21 A1 4,050 4,313 914692TH
Series B:
5.75% 6/1/12 A1 2,500 2,550 914692TF
5.75% 6/1/22 A1 205 208
6.50% 6/1/21 A1 1,000 1,084 914692TJ
70,215
NEW YORK - 4.4%
New York City Rfdg. Series D:
5.75% 8/15/07 Baa1 3,500 3,461 649654PF
5.75% 8/15/09 Baa1 3,000 2,940 649655MP
New York State Dorm. Auth. Rev.:
Rfdg. (State Univ. Edl. Facs.) Series A:
5.50% 5/15/13 Baa1 5,000 4,838 649834AQ
5.25% 5/15/15 Baa1 10,000 9,350 649834AS
(City Univ.) Series F, 5% 7/1/14 Baa1 5,000 4,538 649834QR
(City Univ. Sys. Consolidated) Series A,
5.75% 7/1/13 Baa1 5,000 4,963 649834HV
New York State Local Govt. Assistance Corp.:
Rfdg. Series C, 5.50% 4/1/17 A 23,750 23,423 649876JN
RIB 7.50% 4/1/21 (a)(f) A 4,000 3,760 649876JQ
Series B, 0% 4/1/08 A 5,000 2,294 649876BY
New York State Thruway Auth. Svc. Contract Rev.
(Local Hwy. & Bridge) 5.25% 4/1/13 Baa1 3,000 2,828 650017BW
New York State Tollway Auth. Gen. Rev. (Spl.
Oblig.) Series A:
0% 1/1/02 BBB 3,775 2,425 650009CV
0% 1/1/05 BBB 8,500 4,558 650009CY
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NEW YORK - CONTINUED
New York & New Jersey Port (Delta Airlines, Inc.
Proj.) Series 1R, 6.95% 6/1/08 Ba1 $ 21,500 $ 22,978
Triborough Bridge & Tunnel Auth. Rev. Rfdg.
(Gen. Purp.) Series Y, 6% 1/1/12 AA 1,000 1,065 896029YS
93,421
NORTH CAROLINA - 2.1%
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys.
Rev. Rfdg. Series C, 5% 1/1/21 A 6,000 5,415 658196TH
North Carolina Med. Care Commission Hosp. Rev.:
Rfdg. (Mercy Hosp. Proj.) 6.50% 8/1/15 A- 2,000 2,105 658202Y8
(Duke Univ. Hosp. Proj.) Series 1985 A,
8.625% 6/1/10 AA 1,000 1,094 658202LL
(Wesley Long Commty. Hosp. Proj.) Series B,
7.75% 10/1/17 (AMBAC Insured) Aaa 1,000 1,093 658202SK
North Carolina Muni. Pwr. Agcy. #1 Catawba
Elec. Rev. Rfdg.:
0% 1/1/08 A 10,000 4,538 658203QH
0% 1/1/09 A 13,050 5,497 658203QK
0% 1/1/10 A 21,585 8,499 658203QL
6% 11/1/11, (MBIA Insured) Aaa 3,500 3,771 658203QS
5.75% 1/1/15 A 2,475 2,480 658203QT
6.25% 1/1/17 A 6,500 6,752 658203QU
Pitt County Rev. (Pitt County Mem. Hosp.)
6.75% 12/1/14, (MBIA Insured) Aaa 2,000 2,230 724506BD
43,474
NORTH DAKOTA - 0.3%
Mercer County Poll. Cont. Rev. Rfdg. (Montana
Dakota Utils. Co. Proj.) 6.65% 6/1/22,
(FGIC Insured) Aaa 5,500 6,057 587850CY
OHIO - 2.3%
Broadview Heights Ind. Dev. Rev. (Royalview
Manor Dev.) Series A, 10.625% 7/15/14,
(FHA Guaranteed) - 675 713 111336AA
Eaton Ind. Dev. Rev. Rfdg. (Baxter Int'l., Inc. Proj.)
6.50% 12/1/12 A3 2,605 2,804 278200AC
Hamilton County Swr. Sys. Rev. Rfdg. & Impt.
Metropolitan Swr. Dist. Series A,
5.35% 12/1/07, (FGIC Insured) Aaa 2,475 2,512 407288FU
Hamilton Elec. Sys. Mtg. Rev.:
Rfdg. Series 1992 A,
6% 10/15/08, (FGIC Insured) Aaa 1,000 1,046 40727FCX
Series B, 6.125% 10/15/08, (FGIC Insured) Aaa 1,000 1,071 40727FCQ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
OHIO - CONTINUED
Loveland City School Dist. Unltd. Tax
6.65% 12/1/15 A $ 3,500 $ 3,806 547252GN
Montgomery County Ind. Dev. Rev. Rfdg. (The
Kroger Co.) 7.45% 9/1/07 Ba3 4,700 5,082 613535FS
Mount Vernon Hosp. Rev. (Knox Commty. Hosp.)
7.875% 6/1/12 - 16,940 18,083 623646AM
Ohio Air Quality Dev. Auth. (Columbus & Southern
Pwr. Co.) Series A, 6.375% 12/1/20,
(FGIC Insured) Aaa 500 538 677525HA
Ohio Bldg. Auth. (Workers Complex W. Green
Bldg.) 4.75% 4/1/14 A 3,000 2,745 6775536N
Ohio Wtr. Dev. Auth. Rev. Rfdg. & Impt.
(Pure Wtr.) 6% 12/1/08, (AMBAC Insured) Aaa 3,000 3,172 6776582U
Warren County Hosp. Facs. Rev. Rfdg. & Impt.
(Otterbein Home Proj.) 7.20% 7/1/11,
LOC Fifth Third Bancorp Aa2 2,450 2,726 935158AV
Warren Hosp. Rev. Rfdg. (Warren Gen. Hosp.
Proj.) Series B, 7.20% 11/15/09 BBB 3,500 3,732 935482CM
48,030
OKLAHOMA - 0.7%
Grand River Auth. Rev. Rfdg. 5.50% 6/1/09 A 12,500 12,672 386442PJ
Oklahoma Tpk. Auth. Tpk. Rev. 1st Sr. Series A,
6.125% 1/1/20 A1 1,500 1,577 679111HT
Valley View Hosp. Auth. Rev. 10% 10/1/14,
(HIB Insured) A 1,140 1,174 920175BJ
15,423
OREGON - 1.0%
Astoria Hosp. Facs. Auth. Hosp. Rev.
(Columbia Mem. Hosp.) 7% 1/1/13 - 2,500 2,666 046279AR
Multnomah County School Dist. #40 Unltd. Tax
5.625% 6/1/12 AA- 1,200 1,221 625693DU
North Clackamas Parks & Recreational Dist. Rev.
(Recreational Facs.) 5.70% 4/1/13 A- 1,000 1,021 658624AP
Oregon Hsg. Edl. & Cultural Facs. Auth. Rev.:
(Lewis & Clark College Proj.) Series A,
7.125% 7/1/20, (MBIA Insured) Aaa 1,100 1,264 68608LAK
(Reed College Proj.) Series A, 6.75% 7/1/11 A+ 500 556 68608LAX
Portland Hosp. Facs. Auth. Hosp. Rev. (Legacy
Health Sys.):
Series A, 6.625% 5/1/11, (AMBAC Insured) Aaa 250 279 736698EA
Series B:
6.625% 5/1/11, (AMBAC Insured) Aaa 2,000 2,230 736698EB
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
OREGON - CONTINUED
Portland Hosp. Facs. Auth. Hosp. Rev. (Legacy
Health Sys.) - continued
6.70% 5/1/21, (AMBAC Insured) Aaa $ 11,000 $ 12,278 736698ED
21,515
PENNSYLVANIA - 4.7 %
Allegheny County Hosp. Dev. Auth. Health
Facs. Rev. (Allegheny Valley School):
8% 2/1/02 Baa 1,885 2,085 0172894R
8.50% 2/1/15 Baa 3,325 3,716 0172894S
Allegheny County Hosp. Dev. Auth. Rev.
(Allegheny Health Ed. & Research Corp.)
Series D, 10.625% 7/1/12, (Pre-Refunded
to 1/1/94 @ 102) (b) Aaa 500 513 017289RS
Allegheny County Ind. Dev. Auth. Rev. (K mart
Corp.) (Commercial Dev.) Series A,
11% 1/1/07 A2 2,630 3,800 017292DN
Butler County Hosp. Auth. Rev. (North Hills
Passavant Hosp.) Series A:
6.80% 6/1/06, (Cap. Guaranty Insured) Aaa 5,000 5,531 123592BC
6.90% 6/1/09, (Cap. Guaranty Insured) Aaa 5,000 5,556 123592BD
Delaware County Auth. Rev. (First Mtg.
Riddle Village Proj.) 9.25% 6/1/22 - 5,000 5,325 245913BF
Delaware County Ind. Dev. Auth. Envir. Impt.
Rev. (BP Oil Proj.) 5.875% 4/1/98 - 3,640 3,731 246014AD
Gettysburg Muni. Auth. College Rev.
(Gettysburg College Proj.) 6.60% 2/15/12 A 2,500 2,688 374311BH
Harrisburg Auth. Wtr. Rev. (Complimentary
Auction Rate B-3) 8.82% 7/15/15,
(FGIC Insured) (a)(f) Aaa 4,000 4,320 41473MCB
Lehigh County Gen. Purp. Auth. Rev.
(Wiley House) 9.50% 11/1/16 - 5,930 6,686 524805QM
Northumberland County Auth. Commonwealth
Lease Rev. 0% 10/15/13, (MBIA Insured) Aaa 11,830 3,845 667067AR
Pennsylvania Intergovernmental Coop. Auth. Spl.
Tax Rev.:
Rfdg. Series A:
5% 6/15/15 Baa 5,210 4,813 708840CH
5% 6/15/22, (MBIA Insured) Aaa 10,835 9,900 708840CJ
(City of Philadelphia Funding Prog.)
5.75% 6/15/15 Baa 7,000 7,000 708840BN
Philadelphia Auth. Ind. Dev. Rev. (Bakers Bay
Nursing Proj.) 10.25% 8/1/23,
(FHA Guaranteed) AAA 1,796 1,861 717818ER
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
PENNSYLVANIA - CONTINUED
Philadelphia Hosp. & Higher Ed. Facs. Auth.
Hosp. Rev. (Temple Univ. Hosp.) Series A,
6.50% 11/15/08 Baa1 $ 1,000 $ 1,068 717903RN
Philadelphia Muni. Auth. Rev. Rfdg. Lease
Series D:
6% 7/15/03 Ba 1,500 1,494 717904FX
6.125% 7/15/08 Ba 4,000 3,965 717904FY
Philadelphia Wtr. & Wastewtr. Rev.:
Rfdg. 5% 6/15/12, (FGIC Insured) Aaa 3,000 2,820 717893BG
8.27% 6/15/12, (FGIC Insured) (a)(f) Aaa 10,000 10,163 717893BF
Washington County Hosp. Auth. (Shadyside Hosp.
Proj.) 5.875% 12/15/09, (AMBAC Insured) Aaa 3,000 3,113 938592EK
Wyoming Ind. Dev. Auth. Poll. Rfdg. (Proctor &
Gamble Paper Proj.) 5.55% 5/1/10 Aa2 4,300 4,288 983283AD
98,281
PUERTO RICO - 0.3%
Puerto Rico Tel. Auth. Rev.:
RIB 8.03% 1/16/15, (MBIA Insured) (a)(f) Aaa 2,000 2,058 745297JT
6.95% 1/1/04, (AMBAC Insured) (a)(f) Aaa 4,000 4,075 745297HX
6,133
RHODE ISLAND - 0.6%
Newport Gen. Oblig. 6.80% 4/15/10 A1 605 665 652317SH
Rhode Island Depositors Econ. Protection Corp.
Spl. Oblig. Rfdg. Series A, 5.75% 8/1/12 Baa1 3,495 3,425 76218KEJ
Rhode Island Health & Edl. Bldg. Corp. Hosp.
Fing. Rev. (Roger Williams Hosp.)
7.75% 7/1/16 BBB 1,000 1,110 762241E5
Rhode Island Health & Edl. Bldg. Corp. Rev.
(Higher Ed. Facs. Johnson & Wales Univ.):
Rfdg. Series A, 5.25% 4/1/16,
(Connie Lee Insured) Aaa 4,000 3,775 762242FM
6.375% 4/1/12, (Connie Lee Insured) AAA 1,000 1,071 762242CB
6.25% 4/1/22, (Connie Lee Insured) AAA 1,000 1,058 762242CC
Rhode Island Hsg. & Mtg. Fin. Corp. (Home
Ownership Opportunity) Series 3-A,
7.80% 10/1/10 Aa 1,000 1,093 762211HP
12,197
SOUTH CAROLINA - 0.6%
Florence Ind. Rev. (Florence Business Technical
Assoc.):
11.25% 11/1/94 - 115 118 340322AJ
11.25% 11/1/14 - 6,500 6,663 340322AK
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
SOUTH CAROLINA - CONTINUED
Grand Strand Wtr. & Swr. Auth. Waterwks. &
Swr. Sys. Rev. Series 1991, 6.375% 6/1/12,
(MBIA Insured) Aaa $ 2,000 $ 2,245 386475BU
Rock Hill Ind. Rev. (Rock Hill Business Technical
Assoc. Proj.) 11% 10/1/14, LOC Canadian
Imperial Bank of Commerce - 3,000 3,011 772227AK
South Carolina Hsg. Auth. (Home Ownership
Mtg. Purchase) Series 1985 B,
9.375% 7/1/16 Aa 1,180 1,248 837117DG
13,285
SOUTH DAKOTA - 0.2%
Rapid City Civic Ctr. Facs. Rev. (Rushmore Plaza
Partners Ltd. Proj.) 11.50% 6/30/09 A 595 632 753354BC
South Dakota Lease Rev. (Trust Cfts.) Series A,
6.625% 9/1/12, (Cap. Guaranty Insured) Aaa 1,220 1,337 83756PCF
Spearfish School Dist. #40-2 Unltd. Tax
(Lawrence County) 7.30% 7/1/11 A 1,500 1,712 847328CE
3,681
TENNESSEE - 0.8%
Bradley County Ind. Dev. Board Ind. Dev. Rev.
Rfdg. (Kroger Co. - Peytons SE Proj.)
8.10% 5/1/12 Ba3 4,000 4,465 104565CK
Chattanooga-Hamilton County Hosp. Auth. Hosp.
Rev. (Erlanger Med. Ctr.) 5.50% 10/1/13,
(FSA Insured) Aaa 2,500 2,491 162362EP
Chattanooga Ind. Dev. Board Poll. Cont. Rev.
(Dupont E.I. de Nemours & Co.)
6.35% 7/1/22 Aa2 1,000 1,081 162420BL
Clarksville Wtr. Swr. & Gas Rev. Rfdg. & Impt.
(Cap. Appreciation):
0% 2/1/14, (MBIA Insured) Aaa 1,100 347 182618DY
0% 2/1/15, (MBIA Insured) Aaa 750 223 182618DZ
Knox County Health & Edl. Hsg. Facs. Board
Hosp. Facs. Rev. (Mercy Health Sys.) Series B,
5.875% 9/1/15, (AMBAC Insured) Aaa 1,500 1,538 499523LC
Memphis-Shelby County Aprt. Auth. Aprt. Rev.
Rfdg. 5.65% 9/1/15, (MBIA Insured) Aaa 1,500 1,509 586111CF
Tennessee Hsg. Dev. Auth. Mtg. Fin. Series A,
5.90% 7/1/18 A1 4,150 4,175 880460LG
15,829
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
TEXAS - 5.2%
Austin Util. Sys. Rev. Rfdg. 6% 11/15/13 A $ 3,750 $ 3,914 0524732P
Cass County Envir. Protection Rev.
(Int'l. Paper Co. Proj.) Series B,
5.70% 5/1/12 A3 1,925 1,925 148077AB
Corpus Christi Hsg. Fin. Corp. Single Family
Mtg. Rev. (Lomas & Nettleton Co.) Series A,
13.375% 6/1/13 AA- 65 68 220138BQ
Cypress-Fairbanks Independent School Dist. Rfdg.
Unltd. Tax Series A, 0% 2/15/12,
(PSF Guaranteed) Aaa 14,000 4,953 232760BG
Dallas Hsg. Corp. Cap. Proj. Rev. Rfdg.
(Section 8 Assorted Projs.):
7.70% 8/1/05 A 1,100 1,145 235292AM
7.85% 8/1/13 A 1,000 1,051 235292AN
East Texas Health Facs. Dev. Corp. Hosp. Rev.
(Mem. Foundation Hosp. - Palestine, Inc.):
7.25% 8/15/03 - 2,970 2,959 275573AA
7.80% 8/15/18 - 2,440 2,443 275573AB
Goose Creek Consolidated Independent School
Dist. Rfdg. (Cap. Appreciation):
0% 2/15/08, (PSF Guaranteed) Aaa 2,575 1,172 382604MA
0% 2/15/09, (PSF Guaranteed) Aaa 3,475 1,464 382604MB
0% 2/15/10, (PSF Guaranteed) Aaa 3,270 1,292 382604MC
Harris County Cultural & Ed. Facs. Fin. Corp. Rev.
(Space Ctr. Houston Proj.):
9% 8/15/00 - 6,000 6,878 414007AE
9.25% 8/15/15 - 18,920 22,397 414007AF
Harris County Rfdg. (Toll Road Sr. Lien) Series B,
6.625% 8/15/17, (AMBAC Insured) Aaa 1,000 1,074 414003YL
Houston Hsg. Auth. Rev. (Low Income Elderly Hsg.)
(1st Lien):
7.50% 7/1/16 - 420 428 442384OA
7.50% 7/1/18 - 405 413 442384OC
Houston Wtr. Conveyance Sys. Contract Ctfs. Prtn.
Series D, 6.375% 12/15/07, (AMBAC Insured) Aaa 1,500 1,658 442437EG
Port Arthur Hsg. Fin. Corp. Multi-Family Mtg. Rev.
(Port Arthur Udal Proj.) Series E,
9.625% 1/1/28, (FHA Guaranteed) AAA 485 509 73350MAB
Port Arthur Hsg. Fin. Corp. Single Family Mtg.
Rev. Rfdg. 8.70% 3/1/12 A 1,475 1,610 733500BV
Port Corpus Christi Ind. Dev. Corp. Rev. (Valero
Refining & Marketing Co.) Series A,
10.25% 6/1/17 Baa3 1,535 1,827 733906AB
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
TEXAS - CONTINUED
Port Dev. Corp. Ind. Dev. Rev. Rfdg. (Cargill, Inc.
Proj.) 7.70% 3/1/07 Aa2 $ 1,000 $ 1,134 733885AK
Tarrant County Hsg. Fin. Corp. Single Family Mtg.
Rev. Series A:
9% 11/15/95 Ba 170 169 876394DA
9.50% 5/15/03 Ba 1,075 1,074 876394DG
9.625% 5/15/14 Ba 255 255 876394DJ
Texarkana Health Facs. Dev. Corp. Hosp. Rev.
(Wadley Reg'l. Med. Ctr. Proj.)
7% 10/1/05, (MBIA Insured) Aaa 1,750 1,993 881834BC
Texas Gen. Oblig. Rfdg. (Veterans Land)
7.40% 12/1/20 Aa 2,500 2,781 882716LZ
Texas Hsg. Agcy. Mtg. Rev. Single Family:
(Verex Mtg. Assurance, Inc.) Series B,
11.25% 3/1/16 Aa 90 95 882482FM
Series 1983 A, 10.50% 9/1/09 Aa 90 92 882482DG
Texas Muni. Pwr. Agcy. Rev. Rfdg. (Cap.
Appreciation):
0% 9/1/05, (AMBAC Insured) Aaa 13,000 7,036 882555MX
0% 9/1/10, (AMBAC Insured) Aaa 4,000 1,560 882555NC
0% 9/1/12, (AMBAC Insured) Aaa 5,150 1,777 882555NE
Texas Nat'l. Research Lab. Commission Fing.
Corp. Lease Rev. (Superconducting Super
Collider) 7.10% 12/1/21 A 16,765 17,247 882585AP
Tomball Hosp. Auth. Rev. Rfdg. 6.125% 7/1/23 Baa 7,500 7,124 889854CV
Travis County Health Facs. Dev. Corp. Hosp. Rev.
(Daughters of Charity - Seton Med. Ctr. Proj.)
10.125% 11/1/15 Aa 1,000 1,128 89438HAE
Tyler Health Facs. Dev. Corp. Hosp. Rev. (East
Texas Med. Ctr. Reg'l. Health Sys.) Series B,
6.625% 11/1/11 Baa 7,045 7,194 902261CT
109,839
VERMONT - 2.0%
Burlington Elec. Rev. Series A, 6.25% 7/1/14,
(MBIA Insured) Aaa 3,000 3,195 122079EG
Vermont Colleges Rev.:
Rfdg. 5.125% 7/1/18 A 2,000 1,850
8% 7/1/18 AAA 2,250 2,675 924275AL
Vermont Edl. & Health Bldgs. Fing. Agcy. Rev.:
Rfdg. (Central Vermont Hosp. Proj.)
Series A, 8% 10/1/09 Baa1 2,500 2,700 924160NH
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
VERMONT - CONTINUED
Vermont Edl. & Health Bldgs. Fing. Agcy. Rev.: - continued
(Middlebury College Proj.):
6% 11/1/13 Aa $ 1,000 $ 1,039 924160TZ
6% 11/1/22 Aa 4,500 4,658 924160UA
(St. Michael's College Proj.) 6.50% 10/1/13 A- 3,000 3,199 924160SP
(Vermont Hosp. Med. Ctr.) 6% 9/1/22,
(FGIC Insured) Aa 1,000 1,020 924160UQ
Vermont Muni. Bond Bank:
Series 1:
5.375% 12/1/13 A 3,500 3,399 924211TV
6.25% 12/1/18 A 4,000 4,235 924211TB
Series 1991-1:
7% 12/1/11 A 1,360 1,533 924211RF
6.875% 12/1/22 A 2,385 2,671 924211RG
Series B, 7.20% 12/1/20 A 3,000 3,360 924211PT
Vermont Pub. Pwr. Supply. Auth. Rev. (McNeil
Proj.) Series C, 5% 7/1/15, (AMBAC Insured) Aaa 5,850 5,506 924275BC
41,040
VIRGINIA - 1.2%
Hopewell Ind. Dev. Auth. Resources Recovery Rev.
(Stone Container Corp.) 8.25% 6/1/16 - 4,350 4,307 439714AC
Lynchburg Ind. Dev. Auth. Facs. 1st Mtg. Rev.
Rfdg. (Central Health, Inc.) 8.125% 1/1/16 A1 3,000 3,386 551241CJ
Peninsula Ports Auth. Health Sys. Rev. (Riverside
Health Sys. Proj.) Series A, 6.625% 7/1/18 Aa 4,400 4,741 707164AZ
Peninsula Ports Auth. Hosp. Facs. Auth. Rev. Rfdg.
(Whittaker Mem. Proj.) 8.70% 8/1/23,
(FHA Guaranteed) Aa 1,500 1,738 707165DP
Portsmouth Pub. Impt. Rfdg. 5.45% 8/1/09 A1 1,000 1,006 737237M8
Richmond Redev. & Hsg. Auth. Mtg. Rev.
(Multi-Family Hsg. Pinebrook Proj.)
9.25% 10/1/20, (GNMA Coll.) AAA 750 828 765435CG
Virginia Beach Dev. Auth. Hosp. Facs. Rev.
(Virginia Beach Gen. Hosp.) Series A,
8.75% 12/1/17 A1 600 696 927739BW
Virginia Hsg. Dev. Auth. Commonwealth Mtg.
Series B, Sub-series B-2, 7.625% 7/1/17 Aa 2,000 2,108 928129H5
Virginia Pub. School Auth.:
(Henrico County) 5.10% 7/15/94 Aaa 1,600 1,624
Series C, 4.375% 1/1/95 Aa 4,400 4,444 92817FDC
Virginia Resources Auth. Wtr. & Swr. Sys. Rev.
Series A, 7.70% 11/1/10 Aa 180 209 928180MY
25,087
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
WASHINGTON - 4.5%
King County Pub. Hosp. Dist. #1 Hosp. Facs. Rev.
Rfdg. (Valley Med. Ctr.) 6.25% 9/1/09,
(AMBAC Insured) Aaa $ 1,730 $ 1,868 494787BE
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #1 Rev. Rfdg.:
Series A, 7.50% 7/1/15 Aa 3,430 3,846 939827SU
Series B, 7.25% 7/1/09 Aa 2,950 3,429 939827LV
7.65% 7/1/12 (a)(f) Aa 5,000 4,563 939827TR
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #2 Rev. Rfdg.:
Series A, 6.30% 7/1/12 Aa 7,000 7,473 939828PT
Series C:
0% 7/1/04 Aa 1,570 901 939828MG
0% 7/1/05 Aa 16,330 8,798 939828MQ
7.97% 7/1/10, (FGIC Insured) (a)(f) Aa 17,500 16,516 939828RS
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #3 Rev.:
Rfdg. Series A:
0% 7/1/09, (BIG Insured) Aaa 3,400 1,403 939830FZ
0% 7/1/10, (BIG Insured) Aaa 6,940 2,681 939830GJ
0% 7/1/11, (BIG Insured) Aaa 4,000 1,445 939830GK
0% 7/1/12, (BIG Insured) Aaa 4,000 1,365 939830GL
0% 7/1/13, (BIG Insured) Aaa 4,000 1,285 939830GA
0% 7/1/14, (BIG Insured) Aaa 3,350 1,018 939830GM
Rfdg. Series B, 7.125% 7/1/16 Aa 14,250 16,582 939830HJ
Rfdg. Series C, 0% 7/1/14 Aa 6,405 1,896 939830QC
7.65% 7/1/12 (a)(f) Aa 20,500 19,142 939830PR
94,211
WEST VIRGINIA - 0.6 %
West Virginia Parkway Econ. Dev. & Tourism
Auth. Series C, 9.20% 5/15/13,
(FGIC Insured) (a)(f) Aaa 10,000 10,550 956661BN
West Virginia School Bldg. Auth. Rev. (Cap. Impt.)
Series A, 6.75% 7/1/15 A 2,000 2,150 956540DM
12,700
WYOMING - 1.2 %
Natrona County Hosp. Rev. (Wyoming Med. Ctr.
Proj.) 8.125% 9/15/10 Baa1 4,500 5,113 638813AK
Wyoming Commty. Dev. Auth. Single Family Mtg.
Series B, 7.40% 6/1/31, (FHA Guaranteed) Aa 2,700 2,903 983219VA
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
WYOMING - CONTINUED
Wyoming Farm Loan Board Cap. Facs. Rev.:
Rfdg.:
6.20% 10/1/07 AA- $ 965 $ 1,038 983478CF
6.25% 10/1/08 AA- 1,015 1,090 983478CG
6.25% 10/1/12 AA- 2,000 2,112 983478CH
5.75% 10/1/20 AA- 7,000 7,228 983478CJ
0% 10/1/04 AA- 3,995 2,277 983478BL
0% 10/1/05 AA- 3,995 2,162 983478BM
0% 10/1/06 AA- 3,945 2,012 983478BN
25,935
TOTAL MUNICIPAL BONDS
(Cost $1,895,432) 2,045,465
MUNICIPAL NOTES (A) - 2.8 %
FLORIDA - 0.1 %
Dade County Health Facs. Auth. Hosp. Rev.
(Miami Childrens Hosp. Proj.) Series 1990,
2.35%, LOC Barnett Bank, VRDN VMIG1 2,100 2,100 233904KQ
GEORGIA - 0.1 %
Hapeville Dev. Auth. Ind. Dev. Rev. (Hapeville
Hotel Proj.) 2.35%, LOC Swiss Bank, VRDN P-1 1,200 1,200 411368AA
ILLINOIS - 0.2 %
Illinois Health Facs. Auth. Rev. (LaGrange Mem.
Health Sys.) Series 1990, 1.90%, LOC First
Nat'l. Bank of Chicago, VRDN VMIG1 4,300 4,300 45201HK2
INDIANA - 0.9 %
Indiana Health Facs. Fin. Auth. Rev. (Cap. Access
Designated Pooled) Series 1992, 2.20%,
LOC Comerica Bank, VRDN VMIG1 1,700 1,700 454798CR
Indiana Hosp. Equip. Fing. Auth. Rev.
Series 1985 A, 2.10%, (MBIA Insured)
BPA Bank of New York, VRDN VMIG1 17,500 17,500 454800AF
19,200
LOUISIANA - 0.1 %
Louisiana Pub. Facs. Auth. Dev. Rev. Ind. Dev.
(Kenner Hotel Ltd.) 2%, LOC Long-Term Cr.
Bank of Japan, VRDN - 2,850 2,850 546396WB
MUNICIPAL NOTES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MARYLAND - 0.0 %
Maryland Health & Higher Edl. Facs. Rev. (Pooled
Loan Prog.) Series A, 2.60% LOC Dai-Ichi
Kangyo Bank Ltd., VRDN VMIG 1 $ 800 $ 800 574215RC
MASSACHUSETTS - 0.4 %
Massachusetts Health & Edl. Facs. Auth. Rev.
(Cap. Asset Prog.) Series 1985 D, 2.15%,
(MBIA Insured) BPA Sanwa Bank, VRDN VMIG 1 9,000 9,000 575850MP
MICHIGAN - 0.1 %
Farmington Hills Hosp. Fin. Auth. Hosp. Rev.
(Botsford Hosp.) 1.90%, (MBIA Insured) BPA
Manufacturers Nat'l. Corp., Detroit, VRDN VMIG 1 2,200 2,200 311166AV
MINNESOTA - 0.3 %
Minnesota Higher Ed. Coordinating Board Rev.
(Supplemental Student Loan Prog.) Series 1984,
2.425%, LOC Mitsubishi Bank Ltd., VRDN - 2,410 2,410 604147BW
Minnesota Gen. Oblig. 2.35%, VRDN - 3,000 3,000
5,410
NEW JERSEY - 0.3 %
Hudson County Impt. Auth. Rev. (Essential Purp.
Pooled Gov't. Loan Prog.) Series 1986, 2.45%,
LOC Marine Midland Bank, VRDN A-1 3,645 3,645 443728AB
New Jersey Tpk. Auth. Tpk. Rev. Series 1991 D,
2.20%, (FGIC Insured) BPA Societe Generale,
VRDN VMIG 1 2,200 2,200 646139JR
5,845
OHIO - 0.1 %
Ohio State Univ. Rev. (Gen. Receipts)
Series 1986 B, 2.10%, BPA Fuji Bank, VRDN VMIG 1 1,000 1,000 677653QZ
PENNSYLVANIA - 0.2 %
Quakertown Hosp. Auth. Hosp. Rev. (HPS Group
Pooled Fing. Prog.) Series 1985 A, 2.35%,
LOC First Nat'l. Bank of Chicago, VRDN VMIG 1 2,000 2,000 747523AP
Schuylkill County Ind. Dev. Auth. Resources
Recovery Rev. (Westwood Energy Prop.)
Series 1985, 2.10%, LOC Fuji Bank, VRDN P-1 2,600 2,600 80839TAA
4,600
TOTAL MUNICIPAL NOTES
(Cost $58,505) 58,505
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,953,937) $ 2,103,970
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
(000S) (000S)
PURCHASED
215 Municipal Bond Index
Futures Contracts Dec. 1993 $ 21,876 $ (98)
THE VALUE OF FUTURES CONTRACTS PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 1.0%
SOLD
270 U.S. Treasury Note Futures Contracts Dec. 1993 $ 30,603 $ 251
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.5%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Security collateralized by an amount sufficient to pay interest and
principal.
3. Debt obligation initially issued in zero coupon form which converts to
coupon
form at a specified rate and date.
4. Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
5. A portion of the security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $17,779,000.
6. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate multiplied by a specified
factor. If the floating rate is high enough, the coupon rate may be zero or
be a negative amount that is carried forward to reduce future interest
and/or principal payments. The price may be considerably more volatile than
the price of a compara- ble fixed rate security.
7. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
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 S&P
RATINGS RATINGS
Aaa, Aa, A 53.2% AAA, AA, A 60.7%
Baa 14.1% BBB 12.5%
Ba 5.0% BB 3.0%
B 1.6% B 2.0%
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 11.9%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities is as follows:
Health Care 27.9%
Electric Revenue 19.1
General Obligation 10.7
Others (individually less
than 10%) 42.3
TOTAL 100.0%
INCOME TAX INFORMATION
At November 30, 1993, the aggregate cost of investment securities for
income tax purposes was $1,953,985,000. Net unrealized appreciation
aggregated $149,985,000, of which $167,588,000 related to appreciated
investment securities and $17,603,000 related to depreciated investment
securities.
At November 30, 1993, the fund was required to defer $37,933,000 of losses
on futures contracts.
The fund hereby designates $8,400,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) NOVEMBER 30, 1993
ASSETS 8. 9.
10.Investment in securities, at value (cost $1,953,937) 11. $ 2,103,970
(Note 1) - See accompanying schedule
12.Cash 13. 1,986
14.Receivable for investments sold 15. 18,863
16.Interest receivable 17. 35,194
18.Other receivables 19. 204
20. TOTAL ASSETS 21. 2,160,217
LIABILITIES 22. 23.
24.Payable for investments purchased $ 18,097 25.
26.Payable for fund shares redeemed 10,117 27.
28.Dividends payable 2,788 29.
30.Accrued management fee 737 31.
32.Other payables and accrued expenses 288 33.
34. TOTAL LIABILITIES 35. 32,027
36.NET ASSETS 37. $ 2,128,190
38.Net Assets consist of: 39. 40.
41.Paid in capital 42. $ 1,926,817
43.Accumulated undistributed net realized gain (loss) on 44. 51,187
investments
45.Net unrealized appreciation (depreciation) on: 46. 47.
48. Investment securities 49. 150,033
50. Futures contracts 51. 153
52.NET ASSETS, for 160,919 shares outstanding 53. $ 2,128,190
54.NET ASSET VALUE, offering price and redemption price per 55. $13.23
share ($2,128,190 (divided by) 160,919 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1993
INTEREST INCOME 56. $ 138,518
EXPENSES 57. 58.
59.Management fee (Note 4) $ 8,997 60.
61.Transfer agent, accounting and custodian fees and 2,662 62.
expenses (Note 4)
63.Non-interested trustees' compensation 5 64.
65.Registration fees 81 66.
67.Audit 57 68.
69.Legal 198 70.
71.Reports to shareholders 61 72.
73.Miscellaneous 34 74.
75. TOTAL EXPENSES 76. 12,095
77.NET INTEREST INCOME 78. 126,423
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 80. 81.
(NOTES 1 AND 3)
79.Net realized gain (loss) on:
82. Investment securities 93,406 83.
84. Futures contracts (17,281) 76,125
85.Change in net unrealized appreciation (depreciation) on: 86. 87.
88. Investment securities 39,130 89.
90. Futures contracts 941 40,071
91.NET GAIN (LOSS) 92. 116,196
93.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM 94. $ 242,619
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEARS ENDED NOVEMBER 30,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
95.Operations $ 126,423 $ 130,302
Net interest income
96. Net realized gain (loss) on investments 76,125 18,201
97. Change in net unrealized appreciation (depreciation) on 40,071 12,077
investments
98. NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM 242,619 160,580
OPERATIONS
99.Distributions to shareholders from: (126,423) (130,302)
Net interest income
100. Net realized gain (30,740) (25,098)
101.Share transactions 820,243 732,349
Net proceeds from sales of shares
102. Reinvestment of distributions from: 92,165 95,370
Net interest income
103. 24,493 20,035
Net realized gain
104. Cost of shares redeemed (969,090) (774,639)
105. (32,189) 73,115
Net increase (decrease) in net assets resulting from share
transactions
106. 53,267 78,295
TOTAL INCREASE (DECREASE) IN NET ASSETS
NET ASSETS 107. 108.
109. Beginning of period 2,074,923 1,996,628
110. End of period $ 2,128,190 $ 2,074,923
OTHER INFORMATION 112. 113.
111.Shares
114. Sold 62,985 57,784
115. Issued in reinvestment of distributions from: 7,044 7,529
Net interest income
116. 1,953 1,595
Net realized gain
117. Redeemed (74,180) (61,095)
118. Net increase (decrease) (2,198) 5,813
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
119. YEARS ENDED NOVEMBER 30,
120. 1993 1992 1991 1990 1989
121. 122. 123. 124. 125.
126.SELECTED PER-SHARE DATA
127.Net asset value, $ 12.720 $ 12.690 $ 12.610 $ 12.800 $ 12.210
beginning of period
128.Income from .764 .811 .845 .857 .893
Investment
Operations
Net interest income
129. Net realized and .700 .190 .310 .200 .600
unrealized gain
(loss) on
investments
130. Total from 1.464 1.001 1.155 1.057 1.493
investment
operations
131.Less Distributions (.764) (.811) (.845) (.857) (.893)
From net interest
income
132. From net realized (.190) (.160) (.230) (.390) (.010)
gain on investments
133. Total (.954) (.971) (1.075) (1.247) (.903)
distributions
134.Net asset value, $ 13.230 $ 12.720 $ 12.690 $ 12.610 $ 12.800
end of period
135.TOTAL RETURN 11.92% 8.21% 9.62% 8.91% 12.60%
136.RATIOS AND SUPPLEMENTAL DATA
137.Net assets, end of $ 2,128 $ 2,075 $ 1,997 $ 1,784 $ 1,738
period (in millions)
138.Ratio of expenses .56% .57% .56% .57% .58%
to average net assets
139.Ratio of net 5.85% 6.40% 6.72% 6.96% 7.10%
interest income to
average net assets
140.Portfolio turnover 53% 47% 44% 58% 71%
rate
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1993
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity High Yield Tax-Free Portfolio (the fund) is a fund of Fidelity
Court Street Trust(the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company Act
of 1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes 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.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
2. OPERATING POLICIES -
CONTINUED
FUTURES CONTRACTS AND OPTIONS - CONTINUED
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,094,544,000 and $1,141,054,000, respectively.
The market value of futures contracts opened and closed amounted to
$1,683,982,000 and $1,854,623,000 respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated on the basis of a group fee rate plus a fixed
individual fund fee rate applied to the average net assets of the fund. The
group fee rate is the weighted average of a series of rates ranging from
.15% to .37% and is based on the monthly average net assets of all the
mutual funds advised by FMR. The annual individual fund fee rate is .25%.
For the period, the management fee was equivalent to an annual rate of .42%
of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $13,000 for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-
contract with Fidelity Service Co. (FSC), an affiliate of FMR, under which
FSC performs the activities associated with the fund's transfer and
shareholder servicing agent and accounting functions. The fund pays
transfer agent fees based on the type, size, number of accounts and number
of transactions made by shareholders. FSC pays for
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT AND ACCOUNTING FEES - CONTINUED
typesetting, printing and mailing of all shareholder reports, except proxy
statements. The accounting fee is based on the level of average net assets
for the month plus out-of-pocket expenses. For the period, FSC received
transfer agent and accounting fees amounting to $1,960,000 and $537,000,
respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Court Street Trust and the Shareholders of
Fidelity High Yield Tax-Free Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Court Street Trust: Fidelity High Yield Tax-Free Portfolio,
including the schedule of portfolio investments, as of November 30, 1993,
and the related statement of operations for the year then ended, the
statement 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 fund's 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 November 30, 1993, 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 Court Street Trust: Fidelity High Yield Tax-Free Portfolio as
of November 30, 1993, the results of its operations for the year then
ended, the changes in its 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.
/s/COOPERS & LYBRAND
COOPERS & LYBRAND
Boston, Massachusetts
December 31, 1993
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)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)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL VARY
AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY
HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET
FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A
MONEY MARKET FUND
IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE
HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS, AND THE
EFFECTS OF ANY SALES CHARGES. FOR MORE INFORMATION ON ANY FIDELITY FUND
INCLUDING
MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS.
READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8300 Boone Boulevard
Vienna, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
TO WRITE FIDELITY
Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
FIDELITY TAX-FREE BOND FUNDS
Aggressive Tax-Free
California Tax-Free High Yield
California Tax-Free Insured
High Yield Tax-Free
Insured Tax-Free
Limited Term Municipals
Massachusetts Tax-Free High Yield
Michigan Tax-Free High Yield
Minnesota Tax-Free
Municipal Bond
New York Tax-Free High Yield
New York Tax-Free Insured
Ohio Tax-Free High Yield
Spartan Aggressive Municipal
Spartan California Municipal High Yield
Spartan Connecticut Municipal High Yield
Spartan Florida Municipal Income
Spartan Intermediate Municipal
Spartan Maryland Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal High Yield
Spartan New York Municipal High Yield
Spartan Pennsylvania Municipal High Yield
Spartan Short-Intermediate Municipal
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
EXHIBIT 24(A)(2)
(2_FIDELITY_LOGOS)FIDELITY
HIGH YIELD TAX-FREE
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the fund's
investments over the last six months.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 25 Statements of assets and liabilities,
operations, and changes in net assets, as
well as financial highlights.
NOTES 29 Footnotes to the financial statements.
REPORT OF INDEPENDENT 32 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK, AND FUND
SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments, either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
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, plus 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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Limited Term Municipals 12.24% 55.69% 153.02%
Lehman Brothers Municipal Bond Index 12.29% 62.86% 188.33%
Average Intermediate Municipal Bond Fund 10.36% 51.74% 133.35%
Consumer Price Index 2.75% 21.00% 43.93%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one, five, or 10 years. For example, if
you had invested $1,000 in a fund that had a 5% return over the past year,
you would have $1,050. You can compare these figures to the performance of
the Lehman Brothers Municipal Bond Index - a broad gauge of the municipal
bond market that includes short-, intermediate-, and long-term bonds. To
measure how the fund stacked up against its peers, you can look at the
average intermediate municipal bond fund, which reflects the performance of
77 intermediate municipal bond funds tracked by Lipper Analytical Services.
Both benchmarks include reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index helps show how
your fund did compared to inflation.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Limited Term Municipals 12.24% 9.26% 9.73%
Lehman Brothers Municipal Bond Index 12.29% 10.25% 11.17%
Average Intermediate Municipal Bond Fund 10.36% 8.69% 8.79%
Consumer Price Index 2.75% 3.89% 3.71%
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
Ltd. Term LB Muni Bond
12/31/83 10000.00 10000.00
01/31/84 10427.09 10364.50
02/29/84 10337.36 10260.13
03/31/84 10365.97 10273.16
04/30/84 10357.62 10288.98
05/31/84 9864.86 9678.02
06/30/84 10037.37 9888.13
07/31/84 10457.61 10400.24
08/31/84 10606.96 10633.51
09/30/84 10613.61 10562.06
10/31/84 10711.75 10694.61
11/30/84 10848.65 10852.04
12/31/84 10987.47 11055.40
01/31/85 11476.96 11693.63
02/28/85 11277.20 11401.99
03/31/85 11390.10 11500.39
04/30/85 11708.21 11921.31
05/31/85 11988.54 12335.09
06/30/85 12118.23 12464.49
07/31/85 12136.29 12488.92
08/31/85 12097.94 12401.75
09/30/85 12003.59 12277.36
10/31/85 12421.14 12697.98
11/30/85 12724.55 13153.46
12/31/85 12889.94 13269.07
01/31/86 13405.38 14050.62
02/28/86 13701.42 14607.73
03/31/86 13807.34 14612.41
04/30/86 13809.63 14623.51
05/31/86 13635.04 14385.44
06/30/86 13802.87 14522.68
07/31/86 13850.12 14610.83
08/31/86 14411.45 15264.96
09/30/86 14427.83 15303.27
10/31/86 14777.62 15567.56
11/30/86 14927.42 15875.95
12/31/86 14847.86 15832.13
01/31/87 15202.63 16308.84
02/28/87 15386.37 16389.08
03/31/87 15304.00 16215.36
04/30/87 14469.57 15401.67
05/31/87 14435.98 15325.28
06/30/87 14750.26 15775.23
07/31/87 14922.93 15936.13
08/31/87 14968.51 15971.99
09/30/87 14386.14 15383.10
10/31/87 14466.79 15437.56
11/30/87 14806.68 15840.63
12/31/87 15017.63 16070.48
01/31/88 15609.77 16642.91
02/29/88 15674.89 16818.83
03/31/88 15406.43 16622.89
04/30/88 15506.00 16749.22
05/31/88 15556.13 16700.82
06/30/88 15691.10 16945.15
07/31/88 15759.45 17055.63
08/31/88 15777.31 17070.64
09/30/88 15967.67 17379.62
10/31/88 16178.16 17686.37
11/30/88 16092.17 17524.36
12/31/88 16251.53 17703.64
01/31/89 16429.69 18069.75
02/28/89 16308.80 17863.57
03/31/89 16241.42 17820.88
04/30/89 16530.88 18243.95
05/31/89 16804.81 18622.87
06/30/89 16969.85 18875.77
07/31/89 17135.92 19132.67
08/31/89 17047.25 18945.36
09/30/89 17035.99 18888.53
10/31/89 17184.29 19118.97
11/30/89 17390.96 19453.55
12/31/89 17523.27 19613.07
01/31/90 17464.57 19520.89
02/28/90 17595.79 19694.62
03/31/90 17657.68 19700.53
04/30/90 17504.91 19558.69
05/31/90 17775.12 19985.07
06/30/90 17911.18 20160.93
07/31/90 18126.17 20457.30
08/31/90 18091.03 20160.67
09/30/90 18213.54 20172.77
10/31/90 18398.31 20537.89
11/30/90 18642.93 20950.70
12/31/90 18743.90 21042.89
01/31/91 18946.99 21324.86
02/28/91 19130.80 21510.39
03/31/91 19216.05 21518.99
04/30/91 19422.60 21805.20
05/31/91 19569.51 21999.26
06/30/91 19574.61 21977.26
07/31/91 19786.84 22245.38
08/31/91 19977.17 22539.02
09/30/91 20228.92 22832.03
10/31/91 20417.87 23037.52
11/30/91 20432.19 23102.02
12/31/91 20840.76 23598.72
01/31/92 20955.43 23652.99
02/29/92 21032.05 23660.09
03/31/92 20988.60 23669.55
04/30/92 21165.16 23880.21
05/31/92 21345.04 24162.00
06/30/92 21586.61 24567.92
07/31/92 22214.25 25304.96
08/31/92 22049.33 25056.97
09/30/92 22154.12 25219.84
10/31/92 21849.19 24972.69
11/30/92 22296.37 25419.70
12/31/92 22542.93 25678.98
01/31/93 22811.81 25976.86
02/28/93 23635.88 26917.22
03/31/93 23406.02 26631.89
04/30/93 23628.09 26900.88
05/31/93 23779.74 27051.52
06/30/93 24097.73 27503.28
07/31/93 24156.25 27539.04
08/31/93 24649.83 28111.85
09/30/93 24923.79 28432.32
10/31/93 24958.93 28486.34
11/30/93 24793.92 28235.67
12/31/93 25302.23 28831.44
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity Limited
Term Municipals on December 31, 1983. As the chart shows, by December 31,
1993, the value of your investment would have grown to $25,302 - a 153.02%
increase on your initial investment. For comparison, look at how the Lehman
Brothers Municipal Bond Index did over the same period. With dividends
reinvested, the same $10,000 would have grown to $28,833 - a 188.33%
increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, move in the opposite
direction of interest rates. In
turn, the share price, return, and
yield of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and downs,
you may have a gain.
(checkmark)
INCOME
YEARS ENDED DECEMBER 31, 1993 1992 1991 1990 1989
Income return 5.54% 6.21% 6.77% 6.83% 6.96%
Capital gain returns 2.64% 1.12% 1.72% 0.57% 0%
Change in share price 4.06% 0.84% 2.70% (0.43)% 0.87%
Total return 12.24% 8.17% 11.19% 6.97% 7.83%
Income returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund.
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR
Dividends per share n/a 26.14(cents) 51.65(cents)
Annualized dividend rate n/a 5.13% 5.18%
Annualized yield 4.70% n/a n/a
Tax-equivalent yield 7.34% n/a n/a
Dividends per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $10.10 over
the past six months and $9.97 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36% federal
tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Generally, interest rates fell during
the 12 months ended December 31,
1993. As a result, bond prices rose
and most fixed-income investors -
including those in tax-free bonds -
enjoyed attractive returns. The period
began with worries of rising interest
rates. The economic recovery was
finally taking hold, and the spending
plans of the president-elect were still
unclear. But the bond market
signaled its approval as President
Clinton promised to reduce the
deficit and fight inflation. The yield
on the benchmark 30-year Treasury
bond declined steadily and reached
an historic low of 5.79% in
mid-October. By year-end, mild
inflation fears, fueled by a
strengthening economy, had pushed
up the yield on the 30-year bond to
6.35%. Two factors affected tax-free
bonds specifically: on the positive
side, higher federal taxes -
discussed all year and approved in
August - boosted demand. At the
same time, record new issuance kept
supplies high, which somewhat
dampened prices. Overall during the
period, tax-free bonds performed
well compared to other fixed-income
investments. The Lehman Brothers
Municipal Bond Index - a broad
measure of the tax-free bond market
- - rose 12.29%. By comparison, the
Lehman Brothers Aggregate Bond
Index - which tracks
investment-grade taxable bonds -
rose only 9.75%, due in part to
relatively poor performance by
mortgage- backed securities.
An interview with David Murphy, Portfolio Manager of Fidelity
Limited Term Municipals
Q. DAVID, HOW DID THE FUND PERFORM?
A. Quite well. Total return for the 12 months ended December 31, 1993 was
12.24%. That beat the average intermediate municipal bond fund tracked by
Lipper Analytical Services, which returned 10.36%.
Q. WHAT BOOSTED PERFORMANCE OVER THE PAST YEAR?
A. 1993 provided a near ideal environment for investing in municipal bonds.
I think the year could represent a high water mark for munis when we look
back on it. Interest rates fell during most of the year, which helped push
bond prices up. The price run-up was somewhat held
in check, however, by the record level of volume in the muni market, which
forced issuers to sell bonds at lower prices. A lot of this issuance was
due to a process known as prerefunding, which is popular when rates fall.
Issuers sell new lower-interest bonds, invest the proceeds in short-term
government securities, and pay off the old bonds at the earliest call date.
Essentially this wipes old, higher interest debt off the balance sheet.
Q. WHICH SPECIFIC STRATEGIES HELPED THE FUND?
A. The fund aggressively reached for high income, which helped total
return. I did this in four ways. First, over the last six months I kept at
least 35% of the fund's investments in bonds with 10- to 15-year
maturities. I felt these bonds had the most attractive yields when weighed
against their risk, and indeed they were among the best performers. The
yield curve flattened this year, meaning the difference in yields between
long and short-term bonds narrowed. So bonds with the longest maturities -
20 years or more - didn't have high enough yields to offset their increased
risk.
Q. WHAT ELSE?
A. Second, I inched up the fund's stake in student loans from 5.5% of the
fund at the end of June, to 8.5% at the end of December. These bonds offer
higher yields because there is a slight risk that they will be repaid
early. But, by using our internal research, I selected those I felt were
safe from prepayments. Third, I kept up to 18.5% of the fund in BBB-rated
bonds over the last six months. Those are the lowest quality bonds in which
the fund can invest, but their reward is higher yields. Finally, I had
about 30% of the fund invested in zero-coupon bonds through most of the
year. I buy these bonds at a discount and they're non-callable, which makes
their prices particularly sensitive to changes in interest rates. When
rates fell this year, these bonds performed very well.
Q. HOW DID YOU REDUCE THE RISKS ASSOCIATED WITH ZEROS AND BBBS?
A. To offset the volatility of the zero-
coupons, I bought some premium coupon bonds. You pay more for these issues,
but they offer higher yields. That helps steady the fund's income stream
since zero-
coupon bonds don't pay interest until they mature. Plus, premium coupon
bonds are much less volatile than the zero-coupons.
Q. WHAT ABOUT BBBS?
A. I helped offset their increased risk by investing more heavily in bonds
with the highest quality rating: AAA. During most of 1993, AA-rated bonds
weren't offering enough of an increase in yield - compared to AAA-rated
bonds - to compensate for their higher risk. So, I increased the fund's
stake in the higher rated AAA bonds from 36% a year ago to 39% on December
31. And I decreased its stake in AA-rated issues from 24% a year ago to 12%
by year's end. That helped lessen the amount of overall risk assumed by the
fund.
Q. YOU MUST HAVE REGRETS. WHAT WERE THEY?
A. Two come to mind. I had a 21% stake in general obligation bonds at the
end of the year, and I probably should have owned more. These bonds
performed well in '93. Investors bid up their prices, anticipating
improvements in the budgets of municipalities, based on a strengthening
economy. Also, housing bonds performed poorly. I decreased the fund's stake
in housing during the year, from 5.0% to 1.9%, but I wish I'd cut back
faster. Many housing bonds were hurt by prepayments, which happened when
homeowners refinanced their mortgages.
Q. WHAT'S YOUR OUTLOOK FOR THE NEW YEAR?
A. I think interest rates will stabilize and move within a narrow range
over the next six months. If that happens, the supply of muni bonds should
shrink because prerefundings would slow dramatically. Demand should remain
constant or increase, as investors try to beat higher taxes. These dynamics
should push up prices of muni bonds, which would help the fund. But as the
supply goes down, issuers will be offering lower yields on new bonds. I
believe investors may try to buy medium quality bonds, like BBBs, to
compensate. I expect to add up to 5% more in BBB-rated bonds to the fund in
the coming months. An improving economy should boost the credit ratings of
some of these issuers, which would make their bonds more valuable.
FUND FACTS
GOAL: high current income
free from federal taxes while
preserving principal
START DATE: April 15, 1977
SIZE: as of December 31, 1993,
over $1.1 billion
MANAGER: David L. Murphy,
since December 1989;
manager, Spartan Intermediate
Municipal Fund, since April
1993; Fidelity New York
Insured Portfolio, since
October 1992; Spartan New
Jersey Municipal High Yield
Portfolio, since April 1991;
Spartan Short-Intermediate
Municipal Fund, since
December 1989
(checkmark)
DAVID MURPHY ON RISK VS. REWARD:
"When I buy municipal bonds,
my goal is always to find the
highest yields possible, while
keeping risk in check. Over the
past six months, I've found the
best values in municipal bonds
with 10- to 12-year maturities.
As interest rates have fallen,
yields on bonds with longer
maturities - 20 years or more
- - have dropped more than
yields on shorter bonds. So it
hasn't made sense to go after too
many of the longer bonds
because their yields weren't
high enough to offset their
additional risk. But as rates have
stabilized and even inched up a
bit, bonds with slightly longer
maturities are becoming more
attractive. So I've started to
move some of the fund's
investments out of 10-year
bonds and into those with 13- to
15-year maturities. "
(bullet) $290 billion dollars in
municipal bonds were issued in
the United States last year. That
broke the old volume record, $235
billion, set in 1992.
DISTRIBUTION
The Board of Trustees of
Fidelity School Street Trust
voted to pay on February 7,
1994, to the shareholders of
record at the opening of business
on February 4, 1994 a
distribution of $.02 derived from
captial gains realized from sales
of portfolio securities.
INVESTMENT CHANGES
TOP FIVE STATES AS OF NOVEMBER 30, 1993
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO
New York 11.1 6.8
Texas 10.3 10.3
Massachusetts 6.2 6.8
California 6.1 8.5
Washington 5.4 4.6
TOP FIVE SECTORS AS OF NOVEMBER 30, 1993
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO
General Obligation 21.4 22.9
Electric Revenue 17.0 16.9
Health Care 16.7 15.5
Escrowed/Pre-Refunded 10.1 9.5
Education 8.8 5.6
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1993
6 MONTHS AGO
Years 10.3 9.4
AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF NOVEMBER 30, 1993
6 MONTHS AGO
Years 8.0 7.2
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF DECEMBER 31, 1993
(MOODY'S RATINGS)
Aaa 43.9%
Aa, A 31.7%
Baa 21.3%
Non-rated 2.6%
Row: 1, Col: 1, Value: 2.6
Row: 1, Col: 2, Value: 21.3
Row: 1, Col: 3, Value: 31.7
Row: 1, Col: 4, Value: 43.9
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS.
INVESTMENTS DECEMBER 31, 1993
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 99.5%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ALABAMA - 2.2%
Alabama Docks Dept. Coal Rev. Rfdg. 10% 10/1/05,
(Pre-Refunded to 10/1/95 @ 103) (e) $ 7,355 $ 8,302 010515AM
Alabama Gen. Oblig. Rfdg. (Cap. Appreciation):
0% 3/1/01 11,000 7,961 010410ZP
0% 9/1/01 7,500 5,306 010410ZQ
Alabama Hsg. Fin. Auth. Single Family Mtg. Rev. Series B,
0% 10/1/14 37,650 4,407 010308HH
25,976
ALASKA - 3.7%
Anchorage Elec. Util. Rev. Rfdg. (Sr. Lien):
8% 12/1/06, (MBIA Insured) 1,775 2,252 033177SF
8% 12/1/07, (MBIA Insured) 1,310 1,665 033177SG
Anchorage Hosp. Rev. Rfdg. (Sisters of Providence Proj.)
Series 1991, 6.75% 10/1/02 2,575 2,907 033204CF
Hot Springs Ind. Dev. Rev. Rfdg. (Willamette Industries, Inc.)
6.65% 12/1/02 7,000 8,015 441089AA
North Slope Borough (Cap. Appreciation):
Series A:
0% 6/30/02, (MBIA Insured) 20,000 13,450 662523RD
0% 6/30/03, (MBIA Insured) 10,000 6,363 662523RF
Series B, 0% 1/1/02, (MBIA Insured) 13,500 9,298 662523RQ
43,950
ARIZONA - 0.6%
Gila County Ind. Dev. Auth. Poll. Cont. Rev.
(Inspiration Consolidated Copper Corp.) 11.25% 4/1/01,
(Pre-Refunded to 2/15/01 @ 100) (e) 2,230 2,612 375249AB
Phoenix Str. & Hwy. Rev. Rfdg. (Jr. Lien) 6.30% 7/1/03 3,720 4,185
718867LN
6,797
CALIFORNIA - 6.1%
ABAG Fin. Auth. for Nonprofit Corp. Cfts. of Prtn.
(Stanford Univ. Hosp.):
5% 11/1/04 3,400 3,447 00037EBA
5.125% 11/1/05 2,000 2,035 00037EBB
California Hsg. Fin. Agcy. Rev. (Home Mtg.) Series 1983 A,
0% 2/1/15 39,133 4,892 130329QE
California Pub. Wks. Board Lease Rev. (California Univ. Proj.)
Series A, 5.50% 6/1/14 4,000 4,040 13068GRB
California Statewide Commtys. Dev. Auth. Rev. Ctfs. of Prtn.
Rfdg. (Hosp. Triad Healthcare):
5.90% 8/1/01 3,300 3,498 130909CK
6% 8/1/02 4,145 4,420 130909CL
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
CALIFORNIA - CONTINUED
Fresno Swr. Rev. Series A-1, 5% 9/1/08, (AMBAC Insured) $ 5,000 $ 4,975
358229CD
Los Angeles County Ctfs. of Prtn. (Multiple Cap. Facs. Proj.)
7.76% 11/1/01 (a) 4,800 5,400 544663R9
Los Angeles Dept. Wtr. & Pwr. Wtrwks. Rev. 9% 4/15/04 1,610 2,087
544524GE
Los Angeles Unltd. Tax Series A, 5.25% 9/1/07 5,165 5,288 544350ZR
Northern California Pwr. Agcy.:
Multiple Cap. Facs. Rev. Series A:
6% 8/1/03, (MBIA Insured) 2,400 2,667 664842AH
6.10% 8/1/04, (MBIA Insured) 1,750 1,951 664842AJ
Pub. Pwr. Rev. Rfdg. (Geothermal Proj. #3) Series A:
5.60% 7/1/06 2,000 2,105 664843RT
5.80% 7/1/09 3,000 3,146 664843RZ
Port Oakland Port. Rev. Rfdg. Series F, 0% 11/1/05,
(MBIA Insured) 3,410 1,905 734897RP
Riverside County Trans. Commission Sales Tax Rev. Ltd. Tax
5.75% 6/1/07, (AMBAC Insured) 3,000 3,233 769125BG
San Francisco City & County Swr. Rev. Rfdg. 5.90% 10/1/08,
(AMBAC Insured) 2,000 2,150 797654HK
San Jose Redev. Agcy. Tax. Allocation (Merged Area
Redev. Proj.) 6% 8/1/07, (MBIA Insured) 2,500 2,722 798147KQ
Southern California Pub. Pwr. Auth. Pwr. Proj. Rev.:
0% 7/1/15, (Pre-Refunded to 7/1/00 @ 101) (b)(e) 2,000 2,127 842475DL
Series 11, 0% 7/1/15, (Pre-Prefunded to 7/1/00 @ 101) (e) 14,000
10,587 842475JW
72,675
COLORADO - 4.1%
Colorado Health Facs. Auth. Rev. Rfdg. (Rocky Mountain
Adventist) 6.25% 2/1/04 26,100 27,079 1964732L
Colorado Student Oblig. Bond Auth. Student Loan Rev.
Series A, 6.75% 9/1/99 4,150 4,534 196777GE
Denver City & County Arpt. Rev.:
Series A:
6.875% 11/15/00 1,950 2,106 249181JL
7.25% 11/15/03 1,000 1,120 249181JP
7.50% 11/15/06 4,000 4,530 249181JQ
9.75% 12/1/95 9,300 9,765 249181FA
49,134
CONNECTICUT - 0.2%
Connecticut Hsg. Fin. Auth. (Hsg. Mtg. Fin. Prog.) Series D,
8.50% 11/15/01 2,000 2,105 207745ZJ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
DISTRICT OF COLUMBIA - 3.8%
District of Columbia:
Rfdg.:
Series A, 5.625% 6/1/02, (AMBAC Insured) $ 5,250 $ 5,578 254760N5
Series B, 0% 6/1/02, (MBIA Insured) 2,880 1,908 254760SH
Series A, 6.75% 6/1/06, (AMBAC Insured) 5,000 5,769
Series E, 5% 6/1/01, (FGIC Insured) 3,850 3,941 254760K2
5.60% 6/1/07, (AMBAC Insured) 2,000 2,083 254760U3
Hosp. Rev. Rfdg. (Medlantic Healthcare Group - Washington
Hosp. Ctr.):
Series A:
6.50% 8/15/96 1,100 1,148 254764BT
6.75% 8/15/98 2,600 2,779 254764BV
6.80% 8/15/99 2,600 2,792 254764BW
7% 8/15/05 5,730 6,260 254764BY
Series B:
5.80% 8/15/97 4,035 4,126 254764CY
6% 8/15/98 4,265 4,404 254764CZ
6.25% 8/15/00 4,805 5,033 254764DB
45,821
FLORIDA - 0.5%
Florida Tpk. Auth. Rev. Rfdg. Series A, 5.25% 7/1/07,
(FGIC Insured) 4,500 4,601 343136EX
Orlando & Orange County Expwy. Auth. Rev. Rfdg. (Jr. Lien)
Series A, 5% 7/1/08, (FGIC Insured) 1,755 1,746 686543KM
6,347
GEORGIA - 0.3%
Floyd County Hosp. Auth. Rev. Anticipated Ctfs.
(Floyd Med. Ctr. Proj.) 5% 7/1/05, (FGIC Insured) 3,140 3,171 343575DU
IDAHO - 0.5%
Idaho Falls Rfdg.:
0% 4/1/04, (FGIC Insured) 4,040 2,449 451182FA
0% 4/1/05, (FGIC Insured) 7,000 3,999 451182FB
6,448
ILLINOIS - 1.6%
Cook County Commty. College Dist. Gen. Oblig. #508
Ctfs. of Prtn. 8.30% 1/1/00, (FGIC Insured) 1,515 1,801 216084AD
Illinois Health Facs. Auth. Rev. Rfdg. (Palos Commty. Hosp.)
Series A, 9.375% 11/1/99 690 766 452008RF
Illinois Univ. Rev. (Auxiliary Facs. Sys.) 0% 10/1/07,
(MBIA Insured) 7,505 3,630 914353EV
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ILLINOIS - CONTINUED
Metropolitan Pier & Exposition Auth. Dedicated
State Tax Rev. (McCormick Place Expansion Proj.)
Series A, 0% 6/15/07, (FGIC Insured) (b) $ 5,000 $ 4,538 592247CN
Rock Island County Ctfs. of Prtn.:
10% 12/1/97, (FGIC Insured) 965 1,166 772321AG
10% 12/1/98, (FGIC Insured) 940 1,166 772321AH
Rolling Meadows Multi-Family Mtg. Rev. Rfdg.
(Woodfield Gardens Apts. Proj.) 7.75% 2/1/04,
LOC Banque Paribas 5,000 5,206 775702BV
South Beloit Ind. Dev. Rev. Rfdg. (Beloit Corp. Proj.) 7.60%
12/1/11 1,000 1,150 836468AB
19,423
INDIANA - 1.9%
Hammond Poll. Cont. Rev. (Commonwealth Edison Co. Proj.)
9.125% 6/15/10 2,000 2,028 408405AB
Indiana Employment Dev. Poll. Cont. Rev. 5.70% 10/1/99 5,000 5,188
454901AB
Indianapolis Arpt. Fac. Rev. Economic Dev. Rfdg. (Federal
Express Corp. Proj.) 6.85% 4/1/17 (c) 7,000 7,175 455256AB
Marion County Hosp. Auth. Facs. Rev.:
Rfdg. (Univ. Heights Hosp.) 8.625% 10/1/99,
(AMBAC Insured) 3,950 4,780 569037JA
(Commty. Hosp. Indianapolis Proj.) 9.25% 5/1/98,
(Escrowed to Maturity) (e) 2,935 3,286 569037DB
22,457
IOWA - 0.5%
Iowa Student Loan Liquidity Corp. Student Loan Rev. Series A,
6.25% 3/1/00 5,080 5,493 462590BS
KANSAS - 0.5%
Kansas City Util. Sys. Rev. Rfdg. & Impt. 0% 3/1/04,
(AMBAC Insured) 8,750 5,327 484790FA
KENTUCKY - 0.3%
Kentucky Tpk. Auth. Resource Recovery Road Rev.
13.125% 7/1/09, (Pre-Refunded to 1/1/94 @ 102) (e) 5 5 491557EW
Owensboro Elec. Lt. & Pwr. Rev. Rfdg. Series B, 0% 1/1/02,
(AMBAC Insured) 5,825 3,997 691021HT
4,002
LOUISIANA - 3.8%
Bastrop Ind. Dev. Board Poll. Cont. Rev. Rfdg. (Int'l. Paper Co.
Proj.) 6.90% 3/1/07 21,800 24,525 070318AF
De Soto Parish Poll. Cont. Rev. (Int'l. Paper Co. Proj.)
Series A, 5.05% 12/1/02 7,500 7,688 241627AL
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
LOUISIANA - CONTINUED
Louisiana Pub. Facs. Auth. Rev. Student Loan Sr. Series A-1:
6.10% 3/1/00 $ 1,500 $ 1,601 54640AJU
6.10% 9/1/00 3,000 3,217 54640AJW
New Orleans Rfdg. (Cap. Appreciation)
0% 9/1/05, (AMBAC Insured) 16,000 8,860 647634XQ
45,891
MARYLAND - 0.3%
Prince George's County Med. Hosp. Rev.
(Dimensions Health Corp.):
7% 7/1/01 1,250 1,370 741710AJ
7.20% 7/1/06 1,750 1,936 741710AG
3,306
MASSACHUSETTS - 6.2%
Massachusetts Edl. Loan Auth. Loan Rev. Issue C,
7.40% 6/1/98, LOC Rabobank Nederland 4,470 4,599 575633BL
Massachusetts Gen. Oblig.:
Rfdg.:
Series A, 6.50% 8/1/04 5,500 6,236 575823X9
Ltd. Tax Series B, 5.20% 11/1/04 3,500 3,653 575826AM
0% 12/1/00 (b) 3,500 3,146 5758233Y
Massachusetts Health & Edl. Facs. Auth. Rev.:
Rfdg. (Children's Hosp. Corp.) Series B, 10% 1/1/95 220 234 575849LW
(Lawrence Gen. Hosp.) Series B, 7.25% 7/1/01 5,715 6,208 5758504G
(Waltham/Weston Hosp. & Med. Ctr.) Series B, 8% 7/1/02 3,900 4,495
575850L8
Massachusetts Hsg. Fin. Agcy. Single Family Mtg. Purchase
Series 1984 A, 11.375% 12/1/08 155 160 575853FX
Massachusetts Ind. Fin. Agcy. Ind. Rev. Rfdg. (Beloit Corp. Proj.):
Series A, 7.60% 12/1/11 1,000 1,150 575855F4
Series B, 6.50% 12/1/96 612 649 575855F5
Massachusetts Ind. Fin. Agcy. Rev. (Cap. Appreciation)
(Massachusetts Biomedical Research):
Series A-1:
0% 8/1/01 10,800 7,439 575914DW
0% 8/1/02 5,700 3,691 575914DY
Series A-2:
0% 8/1/04 10,800 6,170 575914EA
0% 8/1/05 5,100 2,735 575914EB
0% 8/1/07 5,800 2,719 575914ED
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MASSACHUSETTS - CONTINUED
Massachusetts Muni. Wholesale Elec. Co. Pwr. Supply Sys. Rev.:
Rfdg. Series A, 6.75% 7/1/05 $ 3,610 $ 4,025 575765HZ
Series B, 6.625% 7/1/03 5,665 6,309 575765HW
Series E:
5.875% 7/1/03, (AMBAC Insured) 2,250 2,433 575765PM
6% 7/1/04, (AMBAC Insured) 7,320 7,970 575765PQ
74,021
MICHIGAN - 2.8%
Detroit Convention Facs. Rev. Rfdg. (Cobo Hall Expansion Proj.):
5.10% 9/30/04 8,050 8,070 251131BB
5.25% 9/30/06 11,380 11,366 251131BD
Flint Hosp. Bldg. Auth. Rev.:
Rfdg. (Hurley Med. Ctr.) 9.50% 7/1/06 3,000 3,278 339511AQ
(Hurley Med. Ctr.) Series B, 8.125% 7/1/06 2,220 2,448 339511BL
Michigan Bldg. Auth. Rev. Rfdg. (State Bldg. Ottawa Lansing)
7.40% 4/1/99, (MBIA Insured) (Escrowed to Maturity) (e) 1,245 1,393
594613QZ
Michigan Comprehensive Trans. Rev. 8.50% 5/1/95,
(FGIC Insured) 150 161 594636EK
Michigan Strategic Fund:
Ltd. Oblig. Rev. Rfdg. (Eaton Twp. K-mart Corp. Proj.)
5.90% 9/1/01 1,230 1,315 5946924H
Poll. Cont. Rev. (Chrysler Corp. Proj.) 5.70% 10/1/99 5,000 5,193
594693AN
33,224
MINNESOTA - 0.5%
Breckenridge Hosp. Facs. Rev. (Franciscan Sisters Healthcare)
Series B-1, 8.25% 9/1/97 1,090 1,194 106502AK
Southern Minnesota Muni. Pwr. Agcy. Pwr. Supply Sys. Rev.
Rfdg. Series B, 5.80% 1/1/07 5,000 5,331 843375MJ
6,525
MISSISSIPPI - 0.2%
Grenada County Poll. Cont. Rev. (Georgia-Pacific Corp. Proj.)
5.875% 12/1/96 2,250 2,303 397662AB
MISSOURI - 1.4%
Missouri Health & Edl. Facs. Auth. Health Facs. Rev.:
Rfdg. (Barnes-Jewish Inc. Christian-A) 5.10% 5/15/09 2,330 2,295
60635RJA
(Barnes-Jewish Inc. Christian-A) 6% 5/15/08 11,525 12,476 60635RHZ
Missouri Hsg. Dev. Commission (Cap. Appreciation)
0% 9/1/25, (FHA Insured) 74,925 2,341 606353Q5
17,112
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MULTIPLE STATES - 6.3%
New England Ed. Loan Marketing Corp. Student Loan Rev.:
Rfdg.:
Sr. Issue:
Series A, 6.50% 9/1/02 $ 35,525 $ 39,610 643898AT
D, 6.20% 9/1/00 3,000 3,263 643898AX
D, 6.30% 9/1/02 7,815 8,606 643898AZ
Series G, 5.20% 8/1/02 8,250 8,507 643898BL
Issue A, 5.80% 3/1/02 1,500 1,613 643898BC
District of Columbia Metro Area Trans. Auth. Gross Rev. Rfdg.:
4.70% 7/1/03, (FGIC Insured) 5,000 5,031 938782AU
5% 1/1/06, (FGIC Insured) 3,400 3,426 938782AZ
6% 7/1/07, (FGIC Insured) 4,685 5,159 938782BC
75,215
NEBRASKA - 0.2%
Nebraska Investment Fin. Auth. Hosp. Rev. (Nebraska
Methodist Health Sys.) 6.85% 3/1/02, (MBIA Insured) 2,000 2,300
639902BK
NEVADA - 0.5%
Clark County School Dist. Ltd. Tax Series B, 0% 3/1/05,
(FGIC Insured) 6,570 3,754 181054UZ
Reno Hosp. Rev. (St. Mary's Regional Med. Ctr.) Series A,
5% 5/15/08, (MBIA Insured) 2,465 2,406 759836CS
6,160
NEW HAMPSHIRE - 0.1%
New Hampshire Higher Edl. & Health Facs. Auth. Rev.
(Androscoggin Valley Hosp.) Series A, 7.90% 11/1/98,
(GNMA Coll.) 825 847 644618HX
NEW JERSEY - 0.5%
New Jersey Health Care Facs. Fing. Auth. Rfdg.
(Atlantic City Med. Ctr.) Series C:
6.55% 7/1/03 2,200 2,420 64579CLB
6.80% 7/1/05 2,750 3,063 64579CLE
5,483
NEW YORK - 11.1%
Metropolitan Trans. Auth. Trans. Facs. Rev.:
Rfdg. Series 7:
0% 7/1/08 6,030 2,646 592597G9
0% 7/1/09 5,195 2,175 592597J6
0% 7/1/11 7,590 2,808 592597K2
Series B, 9.75% 7/1/95 3,825 3,997 592598AZ
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NEW YORK - CONTINUED
New York City:
Series B:
7.50% 2/1/04 $ 6,000 $ 6,915 649652JZ
5.60% 8/15/05 2,625 2,658 649653MM
6.75% 10/1/06 7,440 8,091 649653LJ
Series D, 5.70% 8/15/06 4,900 4,961 649653MT
Series H, 7% 2/1/06 3,000 3,326 649653LA
Short Rites Series C, 7.16027% 8/1/03 (a) 22,000 24,558 649652MT
Sub-Series A-1, 5.70% 8/1/06 2,000 2,025 649653ML
Unltd. Tax. Series B, 7.50% 2/1/05 2,620 3,036 649653JL
New York City Health & Hosp. Corp.:
Rev. Series A, 3.40% 2/15/94 8,490 8,490 649674AK
2.649% 1/13/94, (AMBAC Insured) 3,000 3,000 649674BN
New York State Dorm. Auth. Rev.:
Rfdg. (New York City Univ.):
Series A, 5% 7/1/08, (MBIA Insured) 4,900 4,888 649834SR
Series E, 5.60% 7/1/04, (FGIC Insured) 3,255 3,475 649834SC
(New York City Univ. Sys. Consolidated):
Series D, 8.75% 7/1/02 2,700 3,372 649832JC
2nd Series A, 5.60% 7/1/04, (FGIC Insured) 1,915 2,044 649834GQ
(New York City Univ.) 2nd Series B, 6% 7/1/04,
(FGIC Insured) 5,000 5,481 649834SE
Rfdg. (New York State Univ. Edl. Facs.):
Series A, 5.50% 5/15/07, (FGIC Insured) 1,700 1,770 649834SF
Series B:
5.25% 5/15/04, (FGIC Insured) 11,750 12,205 649834RG
5.25% 5/15/09 2,500 2,450 649834MZ
(New York State Univ. Edl. Facs.):
Series A, 5.20% 5/15/06 3,000 2,970 649834VQ
Series C:
5.10% 5/15/03 3,980 3,980 649834VM
5.20% 5/15/04 4,185 4,190 649834VN
New York State Local Gov't. Assistance Corp.:
Rfdg. (Cap. Appreciation) Series C, 0% 4/1/13 6,510 2,287 649876JL
Series D, 5.10% 4/1/07 2,150 2,145 649876KF
New York State Urban Dev. Corp. Rev. 5.30% 1/1/05 3,170 3,154 650033C3
133,097
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NORTH CAROLINA - 2.1%
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev. Rfdg.:
Series A, 7.875% 1/1/02 $ 8,000 $ 9,590 658196JZ
Series B, 7% 1/1/08 3,000 3,506 658196NW
Series C, 5.25% 1/1/04 6,885 7,083 658196SS
North Carolina Muni. Pwr. Agcy. #1 Catawba Elec. Rev. Rfdg.
6% 1/1/04 4,750 5,166 658203QD
25,345
OHIO - 1.2%
Franklin County Rev. (Online Computer Library Ctr. Proj.):
Series 1991:
6.50% 7/15/98 745 802 353202AT
6.60% 7/15/99 895 974 353202AU
6.70% 7/15/00 960 1,062 353202AV
6.80% 7/15/01 800 895 353202AW
5.65% 4/15/01 500 521 353202BH
5.75% 4/15/02 1,030 1,078 353202BJ
5.90% 4/15/04 500 523 353202BL
6% 4/15/09 3,000 3,064 353202BM
Lake County Hosp. Impt. Facs. Rev. (Lake Hosp. Sys. Inc.)
6.875% 8/15/11, (AMBAC Insured) (Escrowed
to Maturity) (e) 3,800 4,546 509438DM
Montgomery County Wtr. Rev. Rfdg. (Greater Moraine
Beavercreek) 5% 11/15/03, (AMBAC Insured) 1,050 1,090 613562FG
14,555
OKLAHOMA - 4.2%
Grand River Dam Auth. Rev. Rfdg.:
8% 6/1/02 2,890 3,566 386442PL
5.50% 6/1/03 11,925 12,775 386442PC
5.70% 6/1/05 12,000 12,975 386442PE
5.875% 6/1/07 5,000 5,443 386442PG
Tulsa Ind. Auth. Hosp. Rev. (Tulsa Reg'l. Med. Ctr.):
Series A, 7.625% 6/1/06 12,000 13,440 899652BH
7% 6/1/06 2,080 2,280 899652BV
50,479
OREGON - 0.1%
Tri City Svc. Dist. Swr. Rfdg. 5% 9/1/02 1,620 1,693 895428BR
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
PENNSYLVANIA - 5.0%
Allegheny County:
Series C-34, 0% 2/15/02 (b)(d) $ 26,000 $ 24,765 017285N9
Hosp. Dev. Auth. Rev. (Southside Hosp.) Series A,
8.50% 6/1/01 4,730 5,097 017289F8
Allentown Area Hosp. Auth. Rev. (Sacred Heart Hosp.)
7.25% 7/1/96 2,425 2,534 018347DM
Delaware County Unltd. Tax Rfdg. 0% 11/15/03 5,500 3,417 246001QP
Northampton County Hosp. Auth. Rev. (Easton Hosp.)
Series B, 6.90% 1/1/02 3,660 3,857 663542CH
Pennsylvania Gen. Oblig. Pub. School Bldg. Auth. Lease
Rev. Series BG, 8.10% 11/1/94 245 253 709205YX
Philadelphia Untld. Tax Rfdg. Series A, 5.10% 5/15/02,
(FGIC Insured) 8,330 8,590 717812GK
Philadelphia Gas Wks. Rev. Rfdg. Fourteenth Series A,
4.90% 7/1/96 3,415 3,479 717823LR
Philadelphia Hosp. & Higher Ed. Facs. Auth. Hosp. Rev.
(Temple Univ. Hosp.) Series A:
5.10% 11/15/96 2,245 2,301 717903QN
5.40% 11/15/97 2,290 2,367 717903QQ
5.75% 11/15/97 2,675 2,805 717903QU
59,465
RHODE ISLAND - 0.2%
Rhode Island Student Loan Auth Student Loan Rev. Rfdg.
Series A, 6.40% 12/1/99 2,340 2,513 762315AN
SOUTH CAROLINA - 0.1%
Aiken County Ind. Rev. Rfdg. (Beloit Corp. Proj.)
7.60% 12/1/11 1,500 1,725 008760AX
TENNESSEE - 4.6%
Knox County Health Edl. & Hsg. Facs. Auth. Rev. (Sanders
Alliance Hosp. Facs.) Series C, 7.25% 1/1/10,
(MBIA Insured) (a)(f) 2,500 3,041 499523MN
Knox County Ind. Dev. Board Ind. Rev. Rfdg. (Station 82-4-B)
0% 2/1/16, (Escrowed to Maturity) (e) 5,625 1,434 499530KR
Metropolitan Gov't. Nashville & Davidson County Wtr. & Swr.
Rev. Rfdg. 0% 1/1/12, (FGIC Insured) (b)(d) 54,645 51,025 592098VM
55,500
TEXAS - 10.3%
Austin Util. Sys. Rev.:
Rfdg. Series A:
0% 11/15/01, (MBIA Insured) 15,000 10,425 0524734S
0% 5/15/02, (MBIA Insured) 16,130 10,868 0524734U
(Prior Lien) 9.90% 5/1/98 1,040 1,273 052473LV
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
TEXAS - CONTINUED
Dallas County Rfdg. Unltd. Tax Series A:
0% 8/15/05 $ 7,125 $ 4,026 2346495B
0% 8/15/06 6,700 3,559 2346495D
0% 8/15/07 3,605 1,798 2346495F
Harris County Gen. Oblig.:
Cap. Appreciation Rev. Rfdg. (Toll Road Subordinated Lien):
Series 1991:
0% 8/1/02 8,485 5,621 414003TC
0% 8/1/03 12,570 7,856 414003TE
0% 8/1/05 16,275 9,012 414003TG
0% 8/1/06 13,000 6,760 414003TH
Flood Cont. Dist. Rfdg. 0% 10/1/07 7,000 3,421 414018S7
Houston Wtr. & Swr. Sys. Rev. Rfdg. (Jr. Lien) 0% 12/1/15,
(FGIC Insured) (Pre-Refunded to 12/1/00 @ 103) (b)(e) 36,000 35,775
442436CW
Katy Independent School Dist. Gen. Oblig. Rfdg. Ltd. Tax
Series A, 0% 2/15/07, (PSF Guaranteed) 4,600 2,306 486062PR
Lewisville Independent School Dist. Gen. Oblig. Rfdg.
0% 8/15/08, (PSF Guaranteed) 5,000 2,250 5288272D
Memorial Villages Wtr. Auth. 7% 9/1/00 2,285 2,385 586056BK
Northside Independent School Dist. Gen. Oblig. Rfdg.
0% 2/1/05, (PSF Guaranteed) 6,155 3,508 6670263N
Round Rock Independent School Dist. Rfdg. Unltd. Tax
0% 2/15/07, (PSF Guaranteed) 7,645 3,832 779239L5
San Antonio Elec. & Gas Rev. Rfdg. Series B, 0% 2/1/09,
(FGIC Insured) 10,000 4,450 7962528E
Spring Independent School Dist. Rfdg. Unltd. Tax
0% 2/15/07, (PSF Guaranteed) 7,420 3,719 850000MZ
Texas Hsg. Agcy. Single Family Mtg. Rev. Series A,
10.75% 9/1/96 55 57 882482EF
122,901
UTAH - 4.9%
Intermountain Pwr. Agcy. Pwr. Supply Rev.:
Rfdg. Series G, 0% 7/1/12, (Pre-Refunded to
1/1/03 @ 101) (b)(e) 17,000 14,896 458840LD
Series 1985 B, 0% 7/1/11, (Pre-Refunded to
7/1/00 @ 101) (b)(d)(e) 33,470 36,482 458840GU
Salt Lake County Wtr. Conservancy Dist. Rev. (Cap. Appreciation)
Series A, 0% 10/1/06, (AMBAC Insured) 3,500 1,816 795697CM
Utah Board of Regents Student Loan Series A,
7.60% 11/1/00, (AMBAC Insured) 4,900 5,598 917546BL
58,792
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
VIRGINIA - 0.0%
Louisa Ind. Dev. Auth. Poll. Cont. Rev. (Virginia Elec. & Pwr.
Co. Proj.) 6.75% 5/1/06 $ 245 $ 245 546068AD
Virginia Hsg. Dev. Auth. Residential Mtg. (Single Family Mtg.)
Series 1983 B, 0% 9/1/14 2,705 342 928136FA
587
WASHINGTON - 5.4%
Washington Health Care Facs. Auth. Rev.
(Empire Health Ctr. Group) 3.25% 11/1/94, (MBIA Insured) 2,000 2,010
939780Z6
Washington Pub. Pwr. Supply Sys.:
Nuclear Proj. #1 Rev.:
Rfdg. Series C, 7.75% 7/1/03 1,000 1,210 939827MP
Series A, 7% 7/1/08 3,000 3,514 939827QU
Nuclear Proj. #2 Rev.:
Rfdg.:
Series A, 0% 7/1/06, (MBIA Insured) 12,875 6,743 939828QV
Series C, 7.625% 7/1/10 10,000 11,763 939828MT
Series A, 14.375% 7/1/01 2,000 2,968 939828KC
Nuclear Proj. #3 Rev.:
Rfdg. Series B:
7.375% 7/1/04 7,100 8,201 939830JH
0% 7/1/05, (MBIA Insured) 10,000 5,574 939830MA
0% 7/1/07 11,000 5,376 939830GQ
0% 7/1/10 16,000 6,380 939830HM
0% 7/1/11 9,500 3,551 939830HN
Series B, 0% 7/1/04, (MBIA Insured) 5,700 3,377 939830LU
Series C, 7.50% 7/1/08, (MBIA Insured) 3,000 3,738 939830PV
64,405
WISCONSIN - 0.7%
Beloit Ind. Dev. Rev. Rfdg. (Beloit Corp. Proj.) 7% 12/1/01 1,000 1,144
080644AD
Milwaukee Met. Swr. Dist. Series A, 5.10% 9/1/94 3,500 3,557 602409AY
Wisconsin Hsg. & Econ. Dev. Auth. Homeownership Rev.
Series A, 7.40% 9/1/07 3,265 3,461 976900D5
8,162
TOTAL MUNICIPAL BONDS
(Cost $1,113,506) 1,190,732
MUNICIPAL NOTES (A) - 0.5%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
CONNECTICUT - 0.1%
Connecticut Spl. Assessment Unemployment Rev.
Series 1993 B, 2.95%, LOC Industrial Bank of Japan,
Mitsubishi Bank Ltd. Japan, VRDN $ 1,700 $ 1,700 207756AR
UTAH - 0.4%
Utah Board of Regents Student Loan Rev. Series 1988 B,
2.80%, (AMBAC Insured), BPA Swiss Bank, VRDN 4,500 4,500 917546BM
TOTAL MUNICIPAL NOTES
(Cost $6,200) 6,200
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,119,706) $ 1,196,932
FUTURES CONTRACTS
AMOUNT IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
70 U.S. Treasury 5-Year Note Contracts March 1994 $ 7,762 $ 18
THE VALUE OF FUTURES CONTRACTS SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - .7%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
3. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
4. A portion of the security was pledged to cover margin requirements for
futures contracts and delayed delivery purchases. At the period end, the
value of securities pledged amounted to $18,671,000.
5. Security collateralized by an amount sufficient to pay interest and
principal.
6. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
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 S&P
RATINGS RATINGS
Aaa, Aa, A 70.8% AAA, AA, A 73.9%
Baa 19.0% BBB 14.8%
Ba 0.0% 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 2.6%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 21.4%
Electric Revenue 17.0
Health Care 16.7
Escrowed/Pre-Refunded 10.1
Others (individually less than 10%) 34.8
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $1,119,706,000. Net unrealized appreciation
aggregated $77,226,000, of which $78,854,000 related to appreciated
investment securities and $1,628,000 related to depreciated investment
securities.
The fund hereby designates $5,145,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) DECEMBER 31, 1993
ASSETS 7. 8.
9.Investment in securities, at value (cost $1,119,706) (Notes 10. $ 1,196,932
1 and 2) - See accompanying schedule
11.Cash 12. 575
13.Receivable for investments sold 14. 14,839
Regular delivery
15. Delayed delivery (Note 2) 16. 8,155
17.Interest receivable 18. 14,126
19.Receivable for daily variation on futures contracts 20. 3
21. TOTAL ASSETS 22. 1,234,630
LIABILITIES 23. 24.
25.Payable for investments purchased $ 14,357 26.
Regular delivery
27. Delayed delivery (Note 2) 14,085 28.
29.Dividends payable 6,181 30.
31.Accrued management fee 393 32.
33.Other payables and accrued expenses 242 34.
35. TOTAL LIABILITIES 36. 35,258
37.NET ASSETS 38. $ 1,199,372
39.Net Assets consist of: 40. 41.
42.Paid in capital 43. $ 1,121,427
44.Accumulated undistributed net realized gain (loss) on 45. 701
investments
46.Net unrealized appreciation (depreciation) on: 47. 48.
49. Investment securities 50. 77,226
51. Futures contracts 52. 18
53.NET ASSETS, for 120,048 shares outstanding 54. $ 1,199,372
55.NET ASSET VALUE, offering price and redemption price per 56. $9.99
share ($1,199,372 (divided by) 120,048 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED DECEMBER 31, 1993
INVESTMENT INCOME 58. $ 67,654
57.Interest
EXPENSES 59. 60.
61.Management fee (Note 4) $ 4,805 62.
63.Transfer agent, accounting and custodian fees and expenses 1,695 64.
(Note 4)
65.Non-interested trustees' compensation 5 66.
67.Registration fees 123 68.
69.Audit 45 70.
71.Legal 14 72.
73.Miscellaneous 15 74.
75. TOTAL EXPENSES 76. 6,702
77.NET INVESTMENT INCOME 78. 60,952
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 80. 81.
(NOTE 1)
79.Net realized gain (loss) on:
82. Investment securities 33,719 83.
84. Futures contracts 1,526 35,245
85.Change in net unrealized appreciation (depreciation) on: 86. 87.
88. Investment securities 37,899 89.
90. Futures contracts (46) 37,853
91.NET GAIN (LOSS) 92. 73,098
93.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM 94. $ 134,050
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEARS ENDED DECEMBER 31,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
95.Operations $ 60,952 $ 49,164
Net investment income
96. Net realized gain (loss) on investments 35,245 7,126
97. Change in net unrealized appreciation (depreciation) on 37,853 8,581
investments
98. NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM 134,050 64,871
OPERATIONS
99.Distributions to shareholders from: (60,952) (49,164)
Net investment income
100. Net realized gain (26,367) (9,895)
101. In excess of net realized gain (1,842) -
102. (89,161) (59,059)
TOTAL DISTRIBUTIONS
103.Share transactions 760,870 697,485
Net proceeds from sales of shares
104. Reinvestment of distributions from: 46,666 37,147
Net investment income
105. 22,920 8,089
Net realized gain
106. Cost of shares redeemed (651,877) (468,495)
107. 178,579 274,226
Net increase (decrease) in net assets resulting from share
transactions
108. 223,468 280,038
TOTAL INCREASE (DECREASE) IN NET ASSETS
NET ASSETS 109. 110.
111. Beginning of period 975,904 695,866
112. End of period $ 1,199,372 $ 975,904
OTHER INFORMATION 114. 115.
113.Shares
116. Sold 76,683 72,686
117. Issued in reinvestment of distributions from: 4,678 3,879
Net investment income
118. 2,310 846
Net realized gain
119. Redeemed (65,305) (48,857)
120. Net increase (decrease) 18,366 28,554
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
121. YEARS ENDED DECEMBER 31,
122. 1993 1992 1991 1990 1989
123. 124. 125. 126. 127.
128.SELECTED PER-SHARE DATA
129.Net asset value, beginning of $ 9.600 $ 9.520 $ 9.270 $ 9.310 $ 9.230
period
130.Income from Investment .516 .573 .603 .615 .617
Operations
Net investment income
131. Net realized and unrealized .630 .180 .400 .010 .080
gain (loss) on investments
132. Total from investment 1.146 .753 1.003 .625 .697
operations
133.Less Distributions (.516) (.573) (.603) (.615) (.617)
From net investment income
134. From net realized gain on (.220) (.100) (.150) (.050) -
investments
135. In excess of net realized gain (.020) - - - -
on
investments
136. Total distributions (.756) (.673) (.753) (.665) (.617)
137.Net asset value, end of period $ 9.990 $ 9.600 $ 9.520 $ 9.270 $ 9.310
138.TOTAL RETURN 12.24% 8.17% 11.19% 6.97% 7.83%
139.RATIOS AND SUPPLEMENTAL
DATA
140.Net assets, end of period (in $ 1,199 $ 976 $ 696 $ 468 $ 442
millions)
141.Ratio of expenses to average .57% .64% .68% .67% .66%
net assets
142.Ratio of net investment 5.19% 5.94% 6.41% 6.63% 6.70%
income to average net assets
143.Portfolio turnover rate 111% 50% 42% 72% 55%
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Limited Term Municipals (the fund) is a fund of Fidelity School
Street Trust (the trust) (formerly Fidelity Limited Term Municipals) and is
authorized to issue an unlimited number of shares. The trust is registered
under the Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Massachusetts
business trust. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes 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.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS.
Dividends are declared daily and paid monthly from net interest income.
Distributions to shareholders from realized capital gains on investments,
if any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
futures and options transactions and losses deferred due to wash sales. The
fund also utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for income
tax purposes. Permanent book and tax basis differences relating to
shareholder distributions will result in reclassifications 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.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. 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,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been reclassified to
reflect a decrease in paid in capital of $5,335,000 and a decrease in
accumulated net realized loss on investments of $5,335,000.
2. OPERATING POLICIES.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $1,449,100,000 and $1,256,524,000, respectively.
The market value of futures contracts opened and closed amounted to
$347,894,000 and $349,749,000, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee computed daily and paid monthly, based on the fund's gross income at
the rate of 5% of the gross income and .15% of average net assets. Gross
income includes interest accrued less amortization of premium excluding
accretion of discount. For the period, the management fee was equivalent to
an annual rate of .41% of average net asset.
The Board of Trustees approved a reduction in the management fee from .15%
to .10% of average net assets which FMR voluntarily implemented on July 1,
1993.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $49,000 for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-contract with Fidelity Service Co. (FSC),
an affiliate of FMR, under which FSC performs the activities associated
with the fund's transfer and shareholder servicing agent and accounting
functions. The fund pays transfer agent fees based on the type, size,
number of accounts and number of transactions made by shareholders. FSC
pays for typesetting, printing and mailing of all shareholder reports,
except proxy statements. The accounting fee is based on the level of
average net assets for the month plus out-of-pocket expenses. For the
period, FSC received transfer agent and accounting fees amounting to
$1,289,000 and $380,000, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity School Street Trust (formerly Fidelity Limited
Term Municipals) and the Shareholders of Fidelity Limited Term Municipals:
We have audited the accompanying statement of assets and liabilities of
Fidelity School Street Trust: Fidelity Limited Term Municipals, including
the schedule of portfolio investments, as of December 31, 1993, and the
related statement of operations for the year then ended, the statement 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 fund's 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, 1993 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 School Street Trust: Fidelity Limited Term Municipals as of
December 31, 1993, the results of its operations for the year then ended,
the changes in its 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.
/s/COOPERS & LYBRAND
COOPERS & LYBRAND
Boston, Massachusetts
February 4, 1994
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL VARY
AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY
HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET
FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A
MONEY MARKET FUND
IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE
HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS, AND THE
EFFECTS OF ANY SALES CHARGES. FOR MORE INFORMATION ON ANY FIDELITY FUND
INCLUDING
MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS.
READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
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Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
David Murphy, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Gerald C. McDonough *
Thomas R. Williams *
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Kansas City, MO
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FIDELITY TAX-FREE BOND FUNDS
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Municipal Bond
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EXHIBIT 24(A)(3)
(2_FIDELITY_LOGOS)FIDELITY
HIGH YIELD TAX-FREE
PORTFOLIO
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the fund's
investments over the last six months.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 30 Statements of assets and liabilities,
operations, and changes in net assets, as
well as financial highlights.
NOTES TO FINANCIAL STATEMENTS 34 Footnotes to the financial statements.
REPORT OF INDEPENDENT 37 The auditor's opinion.
ACCOUNTANTS
</TABLE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK, AND FUND
SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Once the new year begins, many people start reviewing their finances and
calculating their tax bills. No one wants to pay more taxes than they have
to. But a recent survey of 500 U.S. households, conducted by Fidelity and
Yankelovich Partners, showed that few people have taken steps to reduce
their taxes under the new legislation. Many were not even aware that the
new tax laws were retroactive to January 1993.
Whether or not you're someone whose tax bill will increase as a result of
these changes, it may make sense to consider ways to keep more of what you
earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider adding to your tax-free investments, either municipal bonds
or municipal bond funds. Often these can provide higher after-tax yields
than comparable taxable investments. For example, if you're in the new 36%
federal income tax bracket and invest $10,000 in a taxable investment
yielding 7%, you'll pay $252 in federal taxes and receive $448 in income.
That same $10,000 invested in a tax-free bond fund yielding 5.5% would
allow you to keep $550 in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center.
Wishing you a prosperous new year,
Edward C. Johnson 3d, Chairman
PERFORMANCE: THE BOTTOM LINE
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, plus 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.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Aggressive Tax-Free 13.63% 63.20% 142.75%
Lehman Brothers Municipal Bond Index 12.29% 62.86% n/a
Average High Yield Municipal Bond Fund 11.59% 56.89% n/a
Consumer Price Index 2.75% 21.00% 35.00%
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
began on September 13, 1985. For example, if you had invested $1,000 in a
fund that had a 5% return over the past year, you would have $1,050. You
can compare these figures to the performance of the Lehman Brothers
Municipal Bond Index - a broad gauge of the municipal bond market. To
measure how the fund stacked up against its peers, you can look at the
average high yield municipal bond fund, which reflects the performance of
33 high yield municipal bond funds tracked by Lipper Analytical Services.
Both benchmarks include reinvested dividends and capital gains, if any.
Comparing the fund's performance to the consumer price index helps show how
your fund did compared to inflation. (The periods covered by the CPI
numbers are the closest available match to those of the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1993 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Aggressive Tax-Free 13.63% 10.29% 11.27%
Lehman Brothers Municipal Bond Index 12.29% 10.25% n/a
Average High Yield Municipal Bond Fund 11.59% 9.38% n/a
Consumer Price Index 2.75% 3.89% 3.66%
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
Aggressive Tax Free LB Muni Bond
09/30/85 10000.00 10000.00
10/31/85 10293.24 10342.60
11/30/85 10750.22 10713.59
12/31/85 11054.53 10807.76
01/31/86 11517.60 11444.34
02/28/86 11936.31 11898.11
03/31/86 12113.78 11901.91
04/30/86 12110.96 11910.96
05/31/86 11948.51 11717.05
06/30/86 12044.82 11828.83
07/31/86 12106.70 11900.63
08/31/86 12429.80 12433.42
09/30/86 12502.07 12464.63
10/31/86 12772.58 12679.89
11/30/86 13032.26 12931.08
12/31/86 13015.25 12895.39
01/31/87 13394.05 13283.67
02/28/87 13615.37 13349.03
03/31/87 13585.36 13207.53
04/30/87 12941.95 12544.78
05/31/87 12855.34 12482.55
06/30/87 13140.00 12849.04
07/31/87 13284.90 12980.10
08/31/87 13359.92 13009.31
09/30/87 12987.83 12529.65
10/31/87 12804.91 12574.01
11/30/87 13002.23 12902.32
12/31/87 13199.87 13089.53
01/31/88 13715.33 13555.78
02/29/88 13905.03 13699.06
03/31/88 13788.93 13539.47
04/30/88 13820.88 13642.37
05/31/88 13903.10 13602.94
06/30/88 14135.88 13801.95
07/31/88 14256.62 13891.94
08/31/88 14340.43 13904.17
09/30/88 14563.27 14155.83
10/31/88 14814.21 14405.68
11/30/88 14766.30 14273.73
12/31/88 14969.26 14419.75
01/31/89 15147.47 14717.95
02/28/89 15126.54 14550.01
03/31/89 15160.52 14515.24
04/30/89 15475.75 14859.83
05/31/89 15753.20 15168.47
06/30/89 15962.93 15374.46
07/31/89 16104.61 15583.70
08/31/89 16080.58 15431.14
09/30/89 16088.10 15384.85
10/31/89 16102.56 15572.54
11/30/89 16300.96 15845.06
12/31/89 16392.05 15974.99
01/31/90 16376.49 15899.91
02/28/90 16506.45 16041.42
03/31/90 16568.47 16046.23
04/30/90 16464.00 15930.70
05/31/90 16715.18 16277.99
06/30/90 16852.49 16421.23
07/31/90 17141.08 16662.62
08/31/90 16972.14 16421.02
09/30/90 17131.96 16430.87
10/31/90 17247.70 16728.27
11/30/90 17530.51 17064.51
12/31/90 17618.80 17139.59
01/31/91 17702.31 17369.26
02/28/91 17875.98 17520.37
03/31/91 17925.82 17527.38
04/30/91 18161.71 17760.50
05/31/91 18287.18 17918.56
06/30/91 18354.95 17900.65
07/31/91 18646.35 18119.03
08/31/91 18908.46 18358.20
09/30/91 19124.94 18596.86
10/31/91 19274.10 18764.23
11/30/91 19341.31 18816.77
12/31/91 19692.96 19221.33
01/31/92 19762.64 19265.54
02/29/92 19809.61 19271.32
03/31/92 19865.72 19279.03
04/30/92 20052.53 19450.61
05/31/92 20310.89 19680.13
06/30/92 20580.68 20010.76
07/31/92 21201.95 20611.08
08/31/92 20991.65 20409.09
09/30/92 21109.61 20541.75
10/31/92 20863.43 20340.44
11/30/92 21266.33 20704.54
12/31/92 21498.82 20915.72
01/31/93 21822.09 21158.34
02/28/93 22587.62 21924.28
03/31/93 22397.93 21691.88
04/30/93 22629.02 21910.97
05/31/93 22808.39 22033.67
06/30/93 23186.83 22401.63
07/31/93 23254.76 22430.75
08/31/93 23756.21 22897.31
09/30/93 24046.79 23158.34
10/31/93 24095.41 23202.34
11/30/93 23930.39 22998.16
12/31/93 24429.77 23483.42
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Fidelity
Aggressive Tax-Free Portfolio on September 30, 1985, shortly after the fund
started. As the chart shows, by December 31, 1993, the value of your
investment would have grown to $24,430 - a 144.30% 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 $23,483 - a 134.83% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, move in the opposite
direction of interest rates. In
turn, the share price, return, and
yield of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and downs,
you may have a gain.
(checkmark)
INCOME
YEARS ENDED DECEMBER 31, 1993 1992 1991 1990 1989
Income return 6.80% 7.31% 7.97% 8.00% 8.09%
Capital gain return 3.04% 1.18% 0.56% 0% 0%
Change in share price 3.79% 0.68% 3.24% -0.52% 1.41%
Total return 13.63% 9.17% 11.77% 7.48% 9.50%
Income returns, capital gain returns, and changes in share price are all
part of a bond fund's total return. An income return reflects the dividends
paid by the fund. A capital gain return reflects the amount paid by the
fund to shareholders based on the profits it has from selling bonds that
have grown in value. Both returns assume the dividends or gains are
reinvested. Changes in the fund's share price include changes in the prices
of the bonds owned by the fund.
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, 1993 PAST 30 PAST 6 PAST 1
DAYS MONTHS YEAR
Dividends per share n/a 39.24(cents) 78.30(cents)
Annualized dividend rate n/a 6.22% 6.34%
Annualized yield 5.63% n/a n/a
Tax-equivalent yield 8.80% n/a n/a
Dividends per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $12.52 over
the past six months and $12.35 over the past year, you can compare the
fund's income over these two periods. The 30-day annualized yield is a
standard formula for all funds based on the yields of the bonds in the
fund, averaged over the past 30 days. This figure shows you the yield
characteristics of the fund's investments at the end of the period. It also
helps you compare funds from different companies on an equal basis. The
tax-equivalent yield shows what you would have to earn on a taxable
investment to equal the fund's tax-free yield, if you're in the 36% federal
tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Generally, interest rates fell during the
12 months ended December 31, 1993.
As a result, bond prices rose and most
fixed-income investors - including
those in tax-free bonds - enjoyed
attractive returns. The period began
with worries of rising interest rates. The
economic recovery was finally taking
hold, and the spending plans of the
president-elect were still unclear. But
the bond market signaled its approval
as President Clinton promised to
reduce the deficit and fight inflation.
The yield on the benchmark 30-year
Treasury bond declined steadily and
reached an historic low of 5.79% in
mid-October. By year-end, mild
inflation fears, fueled by a
strengthening economy, had pushed up
the yield on the 30-year bond to
6.35%. Two factors affected tax-free
bonds specifically: on the positive side,
higher federal taxes - discussed all
year and approved in August -
boosted demand. At the same time,
record new issuance kept supplies high,
which somewhat dampened prices.
Overall during the period, tax-free
bonds performed well compared to
other fixed-income investments. The
Lehman Brothers Municipal Bond
Index - a broad measure of the
tax-free bond market - rose 12.29%.
By comparison, the Lehman Brothers
Aggregate Bond Index - which tracks
investment-grade taxable bonds -
rose only 9.75%, due in part to
relatively poor performance by
mortgage-backed securities.
An interview with Anne Punzak,
Portfolio Manager of Fidelity Aggressive Tax-Free Portfolio
Q. ANNE, HOW DID THE FUND DO?
A. For the 12 months ended December 31, 1993, the fund had a total return
of 13.63%. That beat the average high yield municipal bond fund, which
returned 11.59% over the same period, according to Lipper Analytical
Services.
Q. WHY DID THE FUND BEAT THE AVERAGE?
A. The fund had a duration - a measure of interest rate sensitivity - that
was longer than many other funds of this type. That meant its price could
rise more as interest rates fell, which is what happened over the past
year. At the end of December the fund's duration stood at eight years.
Mainly, that was due to a large stake - nearly 59.1% on December 31 - in
bonds with maturities of 20 years or more. As interest rates fell, it paid
to invest in bonds with longer maturities. That's because longer-term bonds
appreciated more than shorter-term bonds.
Q. AT THE END OF DECEMBER, THE FUND'S LARGEST SECTOR CONCENTRATION - AT
30.8% OF INVESTMENTS - WAS HEALTH CARE. ARE YOU CONCERNED THAT HEALTH-CARE
REFORM WILL HAVE A NEGATIVE IMPACT ON THESE BONDS?
A. Not particularly. In fact, some hospitals could actually benefit from
health-care reform, such as those in growing suburban areas with strong HMO
relationships and good cost controls. Reform also could spur consolidations
within the sector, which might offer some opportunities. I'm most
interested in smaller, lower-rated hospitals that could benefit from being
taken over by a larger, higher-rated hospital. The acquired hospital's
bonds would assume the higher rating of its acquirer. If the acquired
hospital's bonds were upgraded, they would most likely appreciate in price.
Q. WHAT'S ATTRACTIVE ABOUT ELECTRIC UTILITY BONDS - THE FUND'S SECOND
LARGEST SECTOR CONCENTRATION?
A. These bonds - at 15.9% of investments - typically provide attractive
yields. They also should become scarce once the utilities have refinanced
most of their older, more expensive debt at lower current interest rates.
That's because there were major expansion programs during the '80s, which
means there's little need for future bond issues to fund new plants. Once
the refinancings start to taper off, supply should dry up some and prices
could go higher. I favor electric utilities with high credit ratings and
strong management teams.
Q. YOU HAVE A BIG STAKE IN NON-RATED BONDS - ABOUT 28% OF THE FUND'S
INVESTMENTS. ARE THESE LOWER-QUALITY?
A. A non-rated bond isn't necessarily lower quality or riskier than a
rated one. For example, the issuer of the bond might be in a sector or
industry group that the rating agencies don't follow. Or if the issuer has
a substantial amount of debt outstanding in the taxable market, it may not
consider it necessary to get a rating when coming to market with a small
amount of tax-exempt debt. What makes non-rated bonds attractive is they
often offer higher yields than rated bonds. Their high yields mean they
could do better than lower yielding bonds if interest rates rise and the
recovery speeds up. Plus, if the economy improves it would tend to improve
the credit quality of higher yield bonds, which would be a positive for
prices. What's more, since these bonds offer a high income return, total
return probably wouldn't be as negatively affected as bonds that pay lower
yields. At year end, about 24% of the fund's investments were bonds judged
to be lower than
investment grade by Fidelity analysts.
Q. DO YOU EXPECT INTEREST RATES TO RISE?
A. No, the U.S. economy is healthier than it was a year ago, but inflation
- - which when rising can also cause interest rates to rise - appears to be
in check. Two early inflationary signs - commodity prices and wages -
haven't shown any real evidence of rebounding. To me, that signals that
inflation could hold steady for some time. If we do have a low growth, low
inflation environment it would most likely be positive for bonds.
Q. SO WHAT CAN INVESTORS EXPECT OVER THE NEXT 12 MONTHS?
A. Probably more modest returns than they've enjoyed in 1993. Even so,
tax-free bonds could beat taxable bonds, as higher taxes increase demand
for municipals and supply dwindles.
FUND FACTS
GOAL: to provide high current
income exempt from federal
income tax by investing mainly
in lower-quality municipal
bonds with maturities of 20 or
more years
START DATE: September 13, 1985
SIZE: as of December 31, 1993,
over $952 million
MANAGER: Anne Punzak, since
January 1986; manager,
Fidelity High Yield Tax-Free
Portfolio, since October 1993;
Spartan Aggressive Municipal
Bond Fund, since April 1993;
Spartan Florida Municipal
Income, since March 1992;
Fidelity Insured Tax-Free
Portfolio, October
1989-September 1993
(checkmark)
ANNE PUNZAK'S INVESTMENT
PHILOSOPHY:
"My strategy can best be
described as value oriented.
That means I look for bonds that
have prospects for
improvement, but their prices
don't yet reflect that potential.
In other words, they're a bargain
compared to their potential
value and to other similar bonds.
With the help of Fidelity's
research staff, I try to find bonds
that are currently out of favor
with investors. That way, I'm in
the position of already owning
the bond when investor
sentiment starts to improve."
(bullet) So far, the fund's 8.2% stake in
California bonds hasn't been
affected by the recent earthquake.
Since it's difficult to predict what
the impact will be a year from
now, the fund's California bonds
will be closely monitored for any
signs of problems .
(bullet) At year-end, over 60% of the
fund's investments were
concentrated in three sectors
with 30.8% in health-care
bonds, 15.9% in electric utility
bonds and 14.4% in industrial
revenue bonds.
DISTRIBUTIONS
The Board of Trustees of
Fidelity Aggressive Tax-Free
Portfolio voted to pay on
February 7, 1994, to
shareholders of record at the
opening of business on February
4, 1994, a distribution of $.05
derived from capital gains
realized from sales of portfolio
securities.
INVESTMENT CHANGES
TOP FIVE STATES AS OF NOVEMBER 30, 1993
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO
New York 10.8 6.8
California 8.2 5.3
Massachusetts 7.6 7.3
Michigan 7.0 8.0
Texas 5.8 6.7
TOP FIVE SECTORS AS OF NOVEMBER 30, 1993
% OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
6 MONTHS AGO
Health Care 30.8 30.6
Electric Revenue 15.9 18.9
Industrial Development 14.4 18.5
Transportation 7.9 8.0
Lease Revenue 6.8 3.5
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1993
6 MONTHS AGO
Years 20.7 20.6
AVERAGE YEARS TO MATURITY SHOWS THE AVERAGE TIME UNTIL THE PRINCIPAL OF THE
BONDS IN THE FUND IS EXPECTED TO BE REPAID, WEIGHTED BY DOLLAR AMOUNT.
DURATION AS OF NOVEMBER 30, 1993
6 MONTHS AGO
Years 8.0 7.3
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN INTEREST
RATES. IF RATES RISE 1%, FOR EXAMPLE, THE SHARE PRICE OF A FUND WITH A
FIVE-YEAR DURATION WILL FALL 5%.
QUALITY DIVERSIFICATION AS OF DECEMBER 31, 1993
(MOODY'S RATINGS)
Aaa 14.4
Aa, A 21.0
Baa 23.6
Ba or B 9.6
Caa 0.3
Non-rated 28.3
Row: 1, Col: 1, Value: 28.3
Row: 1, Col: 2, Value: 1.3
Row: 1, Col: 3, Value: 8.6
Row: 1, Col: 4, Value: 23.6
Row: 1, Col: 5, Value: 21.0
Row: 1, Col: 6, Value: 14.4
THIS CHART EXCLUDES SHORT-TERM INVESTMENTS. WHERE MOODY'S RATINGS ARE NOT
AVAILABLE, WE HAVE USED S&P RATINGS. NON-RATED SECURITIES CONSIDERED TO
BE BAA OR BETTER QUALITY BY FMR ARE 3.9% OF THE FUND'S TOTAL INVESTMENTS.
INVESTMENTS DECEMBER 31, 1993
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 97.7%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ALABAMA - 1.5%
Cullman Med. Ctr. (Cullman Reg'l. Med. Ctr.)
Series A, 6.50% 2/15/23 Baa $ 5,575,000 $ 5,714,375
Mobile Arpt. Auth. Arpt. Rev. 11.25%
10/1/14 Baa 1,600,000 1,728,000
Selma Spl. Care Facs. Fing. Auth. Hosp. Ref. Rfdg.
(Vaughan Reg'l. Med. Ctr. Proj.):
7.125% 6/1/14 - 4,570,000 4,570,000
9.50% 6/1/14 - 1,390,000 1,680,163
13,692,538
ALASKA - 0.5%
North Slope Borough Rfdg. Unltd. Tax Series G,
8.35% 6/30/98 Baa1 3,000,000 3,472,500
North Slope Borough Gen. Oblig. Rfdg.
Series C, 10.40% 6/30/95 Baa1 615,000 647,288
4,119,788
ARIZONA - 1.9%
Arizona Health Facs. Auth. Hosp. Sys. Rev.
(St. Luke's Hosp. Sys.) Series A,
10.125% 11/1/15 Ba 12,000,000 12,930,000
Sierra Vista Ind. Dev. Auth. Hosp. Rev. Rfdg.
(Sierra Vista Commty. Hosp. Proj.)
8.75% 12/1/16 - 4,000,000 4,450,000
17,380,000
ARKANSAS - 1.2%
Fayetteville Pub. Facs. Board Rev. Rfdg.
(Butterfield Trail Village Proj.) Series A,
9.50% 9/1/14 - 4,700,000 5,123,000
Pope County Poll. Cont. Rev. (Arkansas Pwr. &
Lt. Co. Proj.) 11% 12/1/15 Baa2 5,000,000 5,750,000
10,873,000
CALIFORNIA - 7.9%
California Gen. Oblig.:
4.75% 9/1/12 Aa 1,300,000 1,226,875
4.75% 9/1/23 Aa 9,500,000 8,692,500
California Dept. Wtr. Resources Rev.
(Central Valley Proj.) (Wtr. Sys.):
Series J-1, 7% 12/1/11 Aa 1,000,000 1,203,750
6% 12/1/21 Aa 1,000,000 1,045,000
California Pub. Wrks. Board Lease Rev. Rfdg.
(Dept. Corrections St. Prisons) Series A,
5% 12/1/19, (AMBAC Insured) Aaa 2,500,000 2,415,625
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
CALIFORNIA - CONTINUED
California Pub. Wks. Board Lease Rev.
(California University Proj.) Series A,
5.50% 6/1/14 A1 $ 2,250,000 $ 2,272,500
Del Norte County Rev. Rfdg.
(Department of Corrections)
5.20% 12/1/09 A1 5,750,000 5,735,625
California Statewide Commty. Dev. Corp.
Ctfs. of Prtn. 5.50% 10/1/23 A+ 5,000,000 4,825,000
Central Valley Fin. Auth. Cogeneration Proj.
Rev. (Carson Ice Generation Proj.)
6.10% 7/1/13 BBB- 2,100,000 2,139,375
Culver City Redev. Fing. Auth. Rev. Rfdg. Tax
Allocation 5.50% 11/1/14, (AMBAC Insured) Aaa 3,000,000 3,090,000
Los Angeles Ctr. 5.125% 8/15/13,
(MBIA Insured) Aaa 3,000,000 2,932,500
Los Angeles Regional Arpt. Impt. Corp. Lease Rev.
(Sub-Lease-Western Air Lines-Delta)
11.25% 11/1/25 Baa2 6,000,000 6,892,500
Los Angeles Bldg. Auth. Lease Rev. Rfdg.
(California St. Dept. Gen. Svcs.) Series A,
5.625% 5/1/11 A1 1,400,000 1,436,750
Metro Wtr. Dist. Southern CA Wtrwrks. Rev.
6% 7/1/21 Aa 780,000 808,275
Metropolitan Wtr. Dist. Southern California
Wtrwks.:
Rev. Rfdg. Series A, 5.75% 7/1/21 Aa 2,000,000 2,117,500
RIB 8.028% 10/30/20 (d)(g) Aa 2,000,000 2,027,500
Northern California Pwr. Agcy. Pub. Pwr. Rev. Rfdg.
(Geothermal Proj. #3) Series A,
5.85% 7/1/10 A 2,000,000 2,102,500
Port Oakland Port Rev.:
Rfdg. (Cap. Appreciation) Series F, 0%
11/1/08, (MBIA Insured) Aaa 3,045,000 1,404,506
(Cap. Appreciation) Series F, 0%
11/1/09, (MBIA Insured) Aaa 7,000,000 3,027,500
Rancho Wtr. Dist. Fin. Auth. 4.75% 8/15/21,
(AMBAC Insured) Aaa 2,000,000 1,835,000
Riverside County Ctfs. of Prtn. Rfdg.
(Air Force Village West, Inc.) Series A,
8.125% 6/15/20 A-1+ 4,000,000 4,225,000
Univ. of California Rev. Rfdg. Series C,
5% 9/1/23, (AMBAC Insured) Aaa 7,330,000 6,963,500
Univ. Rev. Rfdg. Multiple Purp. Projs. Series B,
4.75% 9/1/21, (MBIA Insured) Aaa 2,670,000 2,449,725
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
CALIFORNIA - CONTINUED
West & Ctrl . Basin Fin. Auth. Rev. West Basin
Ref. Proj., Series A, 5% 8/1/13,
(AMBAC Insured) Aaa $ 3,000,000 $ 2,913,750
73,782,756
COLORADO - 5.3%
Colorado Health Facs. Auth. Rev.:
(PSL Health Sys. Proj.):
Series A:
7.25% 2/15/16, (FSA Insured) Aaa 1,500,000 1,740,000
6.875% 2/15/23 Baa 4,150,000 4,424,938
Series B, 8.50% 2/15/21 Baa 2,400,000 2,775,000
(Rocky Mountain Adventist):
6.625% 2/1/13 Baa 9,000,000 9,495,000
6.625% 2/1/22 Baa 2,100,000 2,197,125
Denver City & County Arpt. Rev.:
Series 1991 A, 8.75% 11/15/23 (e) Baa1 6,500,000 7,743,125
Series A:
7.50% 11/15/12 Baa1 2,500,000 2,818,750
7.25% 11/15/25 Baa1 3,250,000 3,595,313
Series C, 6.50% 11/15/06 (e) Baa1 4,575,000 4,815,188
Series D:
7.40% 11/15/01 (e) Baa1 3,000,000 3,318,750
7.50% 11/15/02 (e) Baa1 3,090,000 3,460,800
Hyland Hills Metropolitan Park & Recreational
Dist. Spl. Rev. Rfdg. 10% 7/1/06 - 1,900,000 2,094,750
Mesa County Ind. Dev. Rev. (Joy Technologies, Inc.
Proj.) 8.50% 9/15/06 Ba3 1,250,000 1,379,688
49,858,427
CONNECTICUT - 0.2%
Connecticut Dev. Auth. Poll. Cont. Rev.
(United Illuminating Co. Proj.) 9.50% 6/1/16 BBB- 1,650,000 1,850,063
DELAWARE - 0.4%
Wilmington Hosp. Rev. (Osteopathic Hosp.
Assoc. Co.) Series A, 10.20% 10/1/18,
(Pre-Refunded to 10/1/98 @ 102) (f) - 2,900,000 3,693,875
DISTRICT OF COLUMBIA - 1.1%
District of Columbia Gen. Oblig. Rfdg.
Series A, 5.75% 6/1/03 Baa 1,000,000 1,037,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
DISTRICT OF COLUMBIA - CONTINUED
District of Columbia Hosp. Rev.:
(Hosp. for Sick Children) Series A,
8.875% 1/1/21 - $ 3,000,000 $ 3,371,250
Rfdg. (Medlantic Healthcare Group - Washington
Hosp. Ctr.) Series A, 7% 8/15/05 Baa1 2,500,000 2,731,250
Washington D.C. Metropolitan Area Trans. Auth.
6% 7/1/08, (FGIC Insured) Aaa 2,500,000 2,753,125
9,893,125
FLORIDA - 1.0%
Hillsborough County Aviation Auth. Rev.
(Spl. Purp. Facs. U.S. Air Proj.) 8.60%
1/15/22 (e) Ba2 800,000 905,000
Jacksonville Health Facs. Auth. Hosp. Rev. Rfdg.
(Methodist Hosp. Proj.):
Series A:
8% 10/1/06 - 2,000,000 1,970,000
8% 10/1/15 - 1,000,000 976,250
Series B
8% 10/1/15 - 210,000 205,013
Lee County Hosp. Board Directors Hosp. Rev. RIB
9.524% 3/26/20, (MBIA Insured) (d)(g) Aaa 1,000,000 1,146,250
West Volusia Hosp. Auth. Hosp. Rev. Series B:
9% 9/1/96 - 405,000 412,088
9.375% 9/1/16 - 3,200,000 3,344,000
8,958,601
GEORGIA - 2.3%
Georgia Muni. Elec. Auth. Pwr. Rev. Rfdg.
Series Z, 5.50% 1/1/20 A1 8,800,000 8,965,000
Georgia Muni. Elec. Auth. Spl. Oblig. Fifth
Crossover Series Proj. 1, 6.50% 1/1/17 A1 8,500,000 9,775,000
Savannah Hosp. Auth. Rev. Rfdg. & Impt.
(Candler Hosp.) 7% 1/1/11 Baa 2,600,000 2,791,750
21,531,750
ILLINOIS - 3.4%
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev.:
(American Airlines, Inc. Proj.) Series A,
7.875% 11/1/25 (e) Baa2 4,720,000 5,221,500
Rfdg. Series A:
5% 1/1/12 A1 4,000,000 3,880,000
5% 1/1/16 A1 2,500,000 2,368,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
ILLINOIS - CONTINUED
Cooke & Will Counties Township High School
Dist.#206 Series A, 0% 12/1/03,
(AMBAC Insured) Aaa $ 2,100,000 $ 1,283,625
Cook County Gen. Oblig. Unltd. Tax 0% 11/1/04,
(AMBAC Insured) Aaa 1,600,000 936,000
Illinois Health Facs. Auth. Rev.:
(GlenOaks Med. Ctr.) Series D:
9.50% 11/15/15, (Pre-Refunded to
11/15/00 @ 102) (f) AAA 2,870,000 3,791,988
9.50% 11/15/15 Baa1 3,880,000 4,738,450
(Hinsdale Hosp.) Series C, 9.50% 11/15/19,
(Pre-Refunded to 11/15/00 @ 102) (f) Baa1 1,270,000 1,625,600
(Rush Presbyterian-St. Luke's) 5.25% 11/15/20,
(MBIA Insured) Aaa 2,730,000 2,624,213
(Trinity Medical Ctr.) 7% 7/1/12 Baa1 2,700,000 2,882,250
Loves Park First Mtg. Rev. (Hoosier Care Proj.)
Series A, 9.75% 8/1/19 - 1,575,000 1,651,781
Metropolitan Pier & Expo Auth. Dedicated
St. Tax Rev. (McCormick Place Expansion Proj.)
Series A, 0% 6/15/08, (FGIC Insured) Aaa 2,000,000 920,000
31,924,157
INDIANA - 1.8%
East Chicago Poll. Cont. Rev. (Inland Steel Co.
Proj. #8) Series B, 10.75% 12/1/12 Ba3 3,000,000 3,303,750
Elkhart County Hosp. Auth. Rev.
(Oaklawn Psychiatric Ctr., Inc. Proj.)
12% 11/1/15 - 7,735,000 7,715,663
Indianapolis Arpt. Fac. Rev. Economic Dev. Rfdg.
(Federal Express Corp. Proj.) 6.85%
4/1/17 (b) Baa3 4,000,000 4,100,000
Wells County Hosp. Auth. Rev. Rfdg.
(Caylor Nickel Med. Ctr., Inc.) 11.75%
4/1/09 AAA 2,000,000 2,075,000
17,194,413
IOWA - 0.3%
Iowa Fin. Auth. Health Care Facs. Rev.
(Mercy Health Initiatives Proj.):
9.85% 7/1/09 - 1,500,000 1,584,375
9.70% 7/1/99 - 1,100,000 1,139,875
2,724,250
KANSAS - 0.2%
Olathe Hosp. Rev. (Olathe Hosp.
Foundation, Inc. Proj.) 10.25% 8/1/16,
(Pre-Refunded to 8/1/1995 @ 102) (f) AAA 1,500,000 1,689,375
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
KENTUCKY - 1.3%
Kenton County Arpt. Board Arpt. Rev.
(Spl. Facs. Delta) Series A, 7.50%
2/1/20 (e) Ba1 $ 4,500,000 $ 4,876,875
Owensboro Elec. Lt. & Pwr. Rev. Series B:
0% 1/1/04, (AMBAC Insured) Aaa 3,925,000 2,404,063
0% 1/1/05, (AMBAC Insured) Aaa 3,675,000 2,117,719
0% 1/1/09, (AMBAC Insured) Aaa 2,000,000 902,500
0% 1/1/10, (AMBAC Insured) Aaa 4,440,000 1,887,000
0% 1/1/13, (AMBAC Insured) Aaa 1,000,000 358,750
12,546,907
LOUISIANA - 4.4%
Lake Charles Hbr. & Term. Dist. Port Facs. Rev. Rfdg.
(Trunkline LNG Co. Proj.) Series 1992,
7.75% 8/15/22 Ba2 12,900,000 14,641,500
Louisiana Pub. Facs. Auth. Ind. Dev. Rev. Rfdg.
(Beverly Enterprises, Inc.) 8.25% 9/1/08 - 1,750,000 1,892,188
New Orleans Gen. Oblig. Rfdg.:
0% 9/1/08, (AMBAC Insured) Aaa 10,000,000 4,587,500
(Cap. Appreciation) 0% 9/1/12,
(AMBAC Insured) Aaa 6,250,000 2,257,813
Ltd. Tax Rfdg. 0% 9/1/15, (AMBAC Insured) Aaa 1,700,000 520,625
Ouachita Parish Hosp. Svc. Dist. #1 Rev.
(Glenwood Reg'l. Med. Ctr.) 7.50% 7/1/21 A- 1,500,000 1,689,375
Port New Orleans Ind. Dev. Rev. Rfdg.
(Continental Grain Co. Proj.) 7.50% 7/1/13 BB- 3,000,000 3,183,750
St. Charles Parish Environmental Impt. Rev.
(Louisiana Pwr & Lt. Proj.) Series B,
5.95% 12/1/23 Baa2 2,000,000 1,992,500
West Feliciana Parish Poll. Cont. Rev.
(Gulf State Util. Co. Proj.):
7.70% 12/1/14 - 6,750,000 7,787,813
9% 5/1/15 - 2,340,000 2,846,025
41,399,089
MARYLAND - 1.4%
Maryland Health & Higher Ed. Facs. Auth.
Rev. Rfdg.:
(Doctors Commty. Hosp.) 5.50% 7/1/24 Baa 5,900,000 5,582,875
(Francis Scott Key Med. Ctr.) 5% 7/1/23,
(FGIC Insured) Aaa 1,750,000 1,664,688
(Frederick Mem. Hosp.) 5.25% 7/1/13,
(FGIC Insured) Aaa 2,300,000 2,320,125
(Howard County Gen. Hosp.) 5.50% 7/1/21 Baa1 3,000,000 2,853,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MARYLAND - CONTINUED
Prince George's County Poll. Cont. Rev. Rfdg.
(Potomac Elec. Pwr. Proj.) 6% 9/1/22 A1 $ 1,000,000 $ 1,057,500
13,478,938
MASSACHUSETTS - 7.6%
Massachusetts Bay Trans. Auth. (Gen. Trans. Sys.):
Rfdg. Series A, 5.50% 3/1/09 A 4,000,000 4,140,000
Series A, 7% 3/1/21 A 1,500,000 1,828,125
Series B, 6.20% 3/1/16 A 3,800,000 4,237,000
Massachusetts Gen. Oblig. (Cap. Appreciation
Consolidated Loan) Series C, 0% 12/1/05 A 3,500,000 1,951,250
Massachusetts Health & Edl. Facs. Auth. Rev.
(1st Mtg.) (Fairview Extended Care)
Series A, 10.25% 1/1/21 - 4,000,000 4,420,000
Massachusetts Ind. Fin. Agcy. Ind. Rev.:
(Terra-Lt., Inc.) 13% 11/1/01 A3 3,500,000 4,256,875
(Union Mission Proj.) 9.55% 9/1/26,
(FHA Guaranteed) (c) Aaa 4,000,000 4,875,000
Massachusetts Ind. Fin. Agcy. Rev.:
Rfdg.:
(Emerson College) 8.90% 1/1/18 - 10,000,000 11,750,000
(Morton Hosp. & Med. Ctr.) Series A,
8.75% 7/1/11 - 4,180,000 5,130,950
(Atlanticare Med. Ctr.) Series A, 10.125%
11/1/14 - 3,600,000 4,180,500
(Cap. Appreciation) (Massachusetts Biomedical):
Series A-1, 0% 8/1/03 - 6,300,000 3,827,250
Series A-2:
0% 8/1/06 4,000,000 2,005,000
0% 8/1/09 - 6,000,000 2,475,000
(Institute Dev. Disabilities) 9.25% 6/1/09 4,560,000 4,463,100
(1st Mortgage Reeds Landing) 7.75% 10/1/00 1,000,000 997,500
8.625% 10/1/23 - 3,500,000 3,495,625
Massachusetts Muni. Wholesale Elec. Co. Pwr.
Supply Sys. Rev. (Reg. Inflos) Series A,
7.72% 7/1/18 (d)(g) Aaa 1,750,000 1,723,750
Massachusetts Wtr. Resources Auth. Gen. Rfdg.
Series C, 5.25% 12/1/15 A 5,000,000 4,875,000
70,631,925
MICHIGAN - 7.0%
Detroit Convention Facs. Rev. Rfdg. Ltd. Tax
(Cobo Hall Expansion Proj.) 5.25% 9/30/07 A 2,000,000 1,977,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MICHIGAN - CONTINUED
Detroit Convention Facs. Rev. Rfdg.
(Cobo Hall Expansion Proj.) 5.25% 9/30/12 A $ 4,000,000 $ 3,885,000
Detroit Hosp. Fin. Auth. Facs. Rev.
(Michigan Healthcare Corp. Proj.)
10% 12/1/20 B 5,985,000 6,673,275
Flint Hosp. Bldg. Auth. Rev. (Hurley Med. Ctr.)
7.80% 7/1/14 Baa1 4,750,000 5,236,875
Highland Park Hosp. Fin. Auth. Hosp. Facs. Rev.:
(Lakeside Commty. Hosp. Proj.) 10% 3/1/20 B 9,395,000 10,123,113
(Michigan Health Care Corp. Proj.) Series A,
9.875% 12/1/19 B 7,350,000 7,809,375
Michigan Hosp. Fin. Auth. Rev. Rfdg.
(Saratoga Commty. Hosp.) 8.75% 6/1/10 - 490,000 540,225
Michigan Muni. Bond Auth. Rev. (Local Gov't.
Loan) Series C-A, 0% 6/15/12,
(FSA Insured) Aaa 2,125,000 767,656
Michigan Strategic Fund Ltd. Oblig. Rev.
(Mercy Svcs. for Aging Proj.) 9.40% 5/15/20 - 11,900,000 13,060,233
Midland County Econ. Dev. Corp. Poll. Cont.
Rev. Rfdg. (Subordinated Ltd. Oblig.)
Series B, 9.50% 7/23/09 (e) - 7,000,000 7,980,000
Waterford Township Econ. Dev. Corp. Rev.:
(Canterbury Health Care) 8% 7/1/08 - 450,000 457,313
Ltd. Tax Oblig. (Canterbury Health Care)
8.375% 7/1/23 - 1,300,000 1,348,750
Wayne Charter County Spl. Arpt. Facs. Rev.
(Republic Airlines, Inc. Proj.) Series C,
10.375% 12/1/15 - 4,960,000 5,375,400
65,234,715
MINNESOTA - 1.5%
Minneapolis & St. Paul Hsg. & Redev. Auth.
Healthcare Sys. Rev. (Healthspan Health Sys. Corp.)
(Health One Sys.) Series A, 4.75% 11/15/18,
(AMBAC Insured) Aaa 4,000,000 3,695,000
Minnesota Energy & Econ. Dev. Auth. Rev.
(Small Bus Dev. Lot 1) Series A,
9.25% 8/1/06 - 695,000 761,025
St. Paul Hsg. & Redev. Auth. Hosp. Rev.
(Healtheast Proj.):
Series A, 9.75% 11/1/17 Baa 2,520,000 2,954,700
Series B, 9.75% 11/1/17 Baa 1,000,000 1,167,500
Series C, 9.75% 11/1/17 Baa 175,000 205,188
St. Paul Port Auth. Ind. Dev. Rev.:
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
MINNESOTA - CONTINUED
(Riverview II Proj.) Series 1983 A, 10% 1/1/13 CCC $ 1,305,000 $
1,239,750
Series 1981-M, 13.50% 11/1/11 CCC 950,000 950,000
Series 1982-G, 12.875% 5/1/12 CCC 875,000 866,250
Southern Minnesota Muni. Pwr. Agcy. Pwr.
Supply Sys. Rev. Series A, 4.75% 1/1/16 A1 2,000,000 1,877,500
13,716,913
MISSISSIPPI - 1.4%
Claiborne County Poll. Cont. Rev. (Middle South
Energy, Inc. Proj.):
Series A, 9.50% 12/1/13 - 1,550,000 1,894,875
Series C, 9.875% 12/1/14 - 6,195,000 7,674,056
Series E, 9.50% 4/1/16 Baa3 2,000,000 2,257,500
Lafayette County Hosp. Rev. (Oxford-Lafayette
County Hosp. Proj.) 11.75% 11/1/04 - 1,295,000 1,416,406
13,242,837
MISSOURI - 1.8%
Boone County Ind. Dev. Auth. Ind. Rev. 1st Mtg.
(Fairview Extended Care) Series A,
10.125% 1/1/11 - 2,410,000 2,641,963
Kansas City Ind. Dev. Auth. Health Facs. Rev.
Rfdg. & Impt. (Menorah Med. Ctr. Proj.)
9.25% 6/1/16 - 6,000,000 6,480,000
Kansas City Ind. Dev. Auth. (Kingswood United
Methodist Manor Proj.) Series 1993,
9% 1 1/15/13 - 3,000,000 2,996,250
St. Louis Land Clearance Redev. Auth. Hsg. Dev. Rev.
(Westminster Place Apts. Proj.) 11% 12/15/15 - 4,395,000 4,702,650
16,820,863
NEBRASKA - 0.4%
Omaha Pub. Pwr. Dist. Elec. Rev. Series C,
5.50% 2/1/14 Aa 4,000,000 4,120,000
NEVADA - 1.8%
Clark County Ind. Dev. Rev. (Southwest Gas Corp.):
Series A:
7.30% 9/1/27 Ba1 1,000,000 1,112,500
6.50% 12/1/33 Ba1 3,000,000 3,037,500
Series B, 7.50% 9/1/32 Ba1 8,050,000 8,955,625
Clark County School Dist. Ltd. Tax Series A,
7% 6/1/10, (MBIA Insured) (c) Aaa 3,300,000 3,960,000
17,065,625
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NEW HAMPSHIRE - 2.2%
New Hampshire Higher Edl. & Health Facs. Auth. Rev.:
(1st Mtg. River Woods at Exeter):
8% 3/1/00 - $ 3,230,000 $ 3,205,775
9% 3/1/23 - 3,170,000 3,150,188
(Frisbie Mem. Hosp.) 6.50% 10/1/08 Aaa 4,900,000 5,990,250
(Littleton Hosp. Assoc., Inc.):
Series A, 9.50% 5/1/20 - 3,735,000 4,038,469
Series B, 9% 5/1/95 - 500,000 508,750
(Valley Reg'l. Hosp.) 7.35% 4/1/23 - 4,000,000 4,055,000
20,948,432
NEW JERSEY - 3.0%
New Jersey Econ. Dev. Auth. Econ. Dev. Rev.:
Rfdg. (Stolt Term. Proj.) 10.50% 1/15/18 - 3,500,000 4,143,125
(Holt Hauling & Warehouse Sys., Inc.):
Series D, 10.25% 9/15/14 - 6,000,000 6,832,500
Series E, 9.75% 12/15/16 (e) 7,500,000 8,390,625
Series G, 8.40% 12/15/15 - 5,000,000 5,306,250
(Statewide Realty-Vista Hotel Proj.)
11% 12/15/17 - 2,960,000 1,983,200
Union County Utils. Auth. Solid Waste Rev.
7% 6/15/04 (e) A- 1,500,000 1,678,125
28,333,825
NEW MEXICO - 1.7%
Albuquerque Retirement Facs. Rev. Rfdg.
(La Vida Liena Proj.) Series A,
8.85% 2/1/23 - 2,050,000 2,050,000
Farmington Poll. Cont. Rev. Rfdg. (Southern
California Edison) 5.875% 6/1/23,
(MBIA Insured) Aaa 1,000,000 1,046,250
Farmington Poll. Cont. Rev. 6.40% 8/15/23 Ba2 4,000,000 4,100,000
Gallup Poll. Cont. Rev. Rfdg. (Plains Elec.
Generation Unltd. Tax) 6.65% 8/15/17,
(MBIA Insured) Aaa 1,000,000 1,120,000
Grant County Hosp. Facs. Rev. Rfdg.
(Gila Reg'l. Med. Ctr. Proj.) 10% 2/1/12 - 4,085,000 4,488,394
New Mexico Univ. Rev. Rfdg. Series A,
6% 6/1/21 A1 2,840,000 3,127,550
15,932,194
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NEW YORK - 10.8%
Babylon Ind. Dev. Agcy. Resources Recovery Rev.
(Odgen Martin Sys. Babylon, Inc. Co.)
Series B, 8.50% 1/1/19 Baa1 $ 995,000 $ 1,140,519
Metropolitan Trans. Auth. Svc. Contract
Series O, 5.75% 7/1/13 Baa1 5,000,000 5,118,750
Metropolitan Trans. Auth. Trans. Facs. Rev. Rfdg.
Series 7, 0% 7/1/08 Baa1 6,000,000 2,632,500
Metropolitan Transit Auth. Trans. Facs. Series 7,
0% 7/1/12 Baa1 1,490,000 521,500
New York City Rfdg. Series D, 5.75% 8/15/07 Baa1 3,000,000 3,022,500
New York City Gen. Oblig.:
Series C, 5.375% 10/1/19 Baa1 1,000,000 945,000
Series D, 8.50% 8/1/12 Baa1 195,000 217,425
Series E, 5.625% 8/1/12 Baa1 2,000,000 1,957,500
New York State Dorm. Auth. Rev.:
Rfdg. (State Univ. Edl. Facs.) Series A:
5.50% 5/15/09 Baa1 3,000,000 3,018,750
5.50% 5/15/13 Baa1 10,250,000 10,237,188
5.25% 5/15/15 Baa1 14,750,000 14,252,188
5.50% 5/15/19 Baa1 1,500,000 1,485,000
(City Univ. Sys. Consolidated) Series A,
5.75% 7/1/13 Baa1 6,000,000 6,127,500
(Court Facs. Lease) Series A, 5.25% 5/15/21 Baa1 5,000,000 4,743,750
New York State Local Govt. Assistance Corp. Rdfg.:
(Cap. Appreciation) Series C, 0% 4/1/13 A 5,000,000 1,756,250
Series C:
5.50% 4/1/17 A 4,400,000 4,515,500
5% 4/1/21 A 13,000,000 12,350,000
Series D, 5.10% 4/1/07 A 2,250,000 2,244,375
New York State Series H, 6.143% 6/1/07 (d)(g) Aa 8,000,000 7,910,000
New York State Urban Dev. Corp. Rev.
5.25% 1/1/21 Baa1 5,000,000 4,693,750
Niagara County Ind. Dev. Agcy. Rev.
(Wintergarden Inn Assoc. Proj.)
10% 6/1/06 - 4,210,000 2,357,600
Triborough Bridge & Tunnel Auth. Rev. Rfdg.
(Gen. Purp.) Series Y, 5.50% 1/1/17 Aa 8,735,000 9,117,156
West New York New Jersey Muni. Util. Auth.
Swr. Rev. Rfdg. (Cap. Appreciation)
0% 12/15/11, (FGIC Insured) Aaa 1,600,000 620,000
100,984,701
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
NEW YORK AND NEW JERSEY - 0.4%
New York & New Jersey Port Auth. Spl. Oblig.
Rev. (Continental Airlines Corp./Eastern
Airlines, Inc. Proj.) 9.125% 12/1/15 (e) Ba3 $ 3,000,000 $ 3,517,500
NORTH CAROLINA - 0.3%
North Carolina Eastern Muni. Pwr. Agcy.
Pwr. Sys. Rev. Rfdg. 6% 1/1/18,
(AMBAC Insured) Aaa 2,250,000 2,466,563
OHIO - 0.7%
Fairfield Econ. Dev. Rev. Rfdg.
(Beverly Enterprises Proj.) 8.50% 1/1/03 - 2,000,000 2,185,000
Montgomery County Health Care Facs. Rev.
1st Mtg. (Friendship Village Dayton)
11.75% 11/1/15, (Pre-Refunded to
11/1/95 @ 103) (f) - 1,600,000 1,884,000
Ohio State Bldg. Auth. (Worker's Comp.)
4.75% 4/1/14 A 2,500,000 2,356,250
6,425,250
OKLAHOMA - 1.6%
Grand River Dam Auth. Rev. Rfdg.
5.50% 6/1/10 A 1,000,000 1,030,000
Oklahoma County Ind. Auth. Rev. (Epworth
Village Proj.) Series A, 10.25% 4/1/19 - 3,000,000 3,247,500
Oklahoma Muni. Pwr. Auth. Pwr. Supply Sys.
Rev. Series B, 5.75% 1/1/24, (MBIA Insured) Aaa 4,000,000 4,340,000
Tulsa Muni. Arpt. Rev. (American Airlines Proj.)
4.90%, LOC Fuji Bank, Mitsubishi Bank Ltd.,
Societe Generale, Paris, Sumitomo Bank Ltd.,
Variable Rate Demand Notes Baa2 2,000,000 2,157,500
Tulsa Muni. Arpt. Trust Rev.
7.35% 12/1/11 Baa1 3,600,000 3,973,500
14,748,500
PENNSYLVANIA - 3.9%
Beaver County Ind. Dev. Auth. Poll. Cont. Rev.
(Toledo Edison Co. Beaver Valley):
Series B, 12.25% 9/15/15 Ba1 1,180,000 1,345,200
Series C, 10.75% 11/15/15 Ba1 1,000,000 1,126,250
Berks County Ind. Dev. Auth. Ind. Dev. Rev.
(Beverly Enterprises, Inc.) Series A,
11.50% 5/1/07 - 2,000,000 2,087,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
PENNSYLVANIA - CONTINUED
Bucks County Ind. Dev. Auth. Rev. (Best
Products Proj.) 7.375% 8/1/04 - $ 2,800,000 $ 560,000
Chartiers Valley Ind. & Commercial Dev. Auth.
1st Mtg. Rev. Rfdg. (United Methodist Health Ctr.)
Series 1988 A, 9.50% 12/1/15 - 5,000,000 5,337,500
Delaware County Auth. Rev. (First Mtg.
Riddle Village Proj.):
8% 6/1/99 - 3,525,000 3,626,344
9.25% 6/1/22 - 5,050,000 5,397,188
Keystone Oaks School Dist. Series D,
8.78% 9/01/16, (AMBAC Insured) (d) Aaa 2,000,000 2,187,500
Pennsylvania Intergovernmental Coop. Auth.
Spl. Tax Rev. Rfdg. Series A:
5% 6/15/13 Baa 5,400,000 5,136,750
5% 6/15/22, (MBIA Insured) Aaa 2,000,000 1,905,000
Philadelphia Ind. Dev. Auth. Rev. (Stapeley
Germantown Care Commty. Proj.)
9.75% 1/1/12 - 1,750,000 1,745,625
Philadelphia Wtr. & Swr. Rev. (Cap. Appreciation)
14th Series, 0% 10/1/05, (MBIA Insured) Aaa 3,000,000 1,650,000
Philadelphia Wtr. & Wastewtr. Rfdg.,
Series 1993, 5.50% 6/15/07 Baa 3,000,000 3,045,000
Pittsburgh Wtr. & Swr. Auth. 0% 9/1/06,
(FGIC Insured) Aaa 3,000,000 1,590,000
36,739,857
SOUTH CAROLINA - 2.0%
Charleston County Health Facs. Rev. Rfdg.
(1st Mtg. Episcopal Proj.):
Series A, 9.75% 4/1/16 - 3,000,000 3,375,000
Series B, 9.75% 4/1/16 - 2,110,000 2,373,750
(Foster Wheeler) Series A, 9.25% 1/1/10 (e) A 4,500,000 5,276,250
Greenville Hosp. Sys. Hosp. Facs. Rev.
6% 5/1/20 AA- 1,000,000 1,063,750
Richland County Hosp. Facs. Rev. Rfdg. (Baptist
Hosp.) Series B, 0% 8/1/09, (AMBAC Insured) Aaa 1,730,000 754,713
Rock Hill Ind. Rev. (Rock Hill Business Technical
Assoc. Proj.) 11% 10/1/14, LOC
Canadian Imperial Bank of Commerce - 3,000,000 3,007,500
South Carolina Educ. Dev. Auth (South Carolina
Baptist Hosp.) 7.97% 8/1/15,
(AMBAC Insured) Aaa 3,250,000 3,315,000
19,165,963
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
TENNESSEE - 0.8%
Knox County Health, Edl. & Hsg. Hosp. Facs. Rev.
Rfdg. (Sanders Alliance) Series C,
5.25% 1/1/15 Aaa $ 2,250,000 $ 2,224,688
Metropolitan Gov't. Nashville & Davidson County
Health & Ed. Facs. Board Rev. (Vanderbilt Univ.)
Series A, 6% 10/1/16 Aa 2,000,000 2,120,000
Sullivan County Health Edl. & Hsg. Facs. Board
Rev. (Hosp. Holston Valley Health)
5.75% 2/15/13, (MBIA Insured) Aaa 3,000,000 3,101,250
7,445,938
TEXAS - 5.8%
Alliance Arpt. Auth. Spl. Facs. Rev. (American
Airlines, Inc. Proj.):
7.50% 12/1/29 (e) Baa1 1,250,000 1,357,813
7% 12/1/11 (e) Baa1 7,000,000 7,743,750
Austin Util. Sys. Rfdg. 0% 11/15/11,
(AMBAC Insured) Aaa 3,000,000 1,136,250
Brazos River Auth. Poll. Cont. Rev. (Texas Util.
Elec. Co. Proj.) Series A, 8.25% 1/1/19 (e) Baa2 5,620,000 6,463,000
Dallas Fort Worth Int'l. Arpt. Facs. Impt. Corp.
Rev. (American Airlines, Inc.) 7.25%
11/1/30 (e) Baa2 1,000,000 1,080,000
East Texas Health Facs. Dev. Corp. Hosp.
Rev. (Palestine) 7.80% 8/15/18 - 4,150,000 4,181,125
Harris County Cultural & Ed. Facs. Fin. Corp.
(Space Ctr. Houston Proj.) 9.25% 8/15/15 - 4,765,000 5,616,744
Harris County Hsg. Fin. Corp. Single Family
Mtg. Rev. 11.25% 4/15/06 Baa1 315,000 324,844
Houston Hsg. Fin. Corp. Single Family Mtg.
Rev. (Verex Mtg. Assurance, Inc.)
Series 1984 A, 10.875% 2/15/16 Baa 1,580,000 1,635,300
Port Corpus Christi Ind. Dev. Corp. Rev.
(Valero Refining & Marketing Co.) Series A,
10.25% 6/1/17 Baa3 2,000,000 2,390,000
Round Rock Independent School Dist. Rfdg. &
School Bldg. Unltd. Tax 0% 8/15/09,
(MBIA Insured) Aaa 7,430,000 3,194,900
Sabine River Auth. Poll. Cont. Rev.
(Util. Elec. Proj.) Series B, 8.25%
10/1/20 (e) Baa2 1,250,000 1,464,063
Sam Rayburn Muni. Pwr. Agcy. Pwr. Supply Sys.
Rev. Rfdg. Series B, 5.50% 10/1/20 Baa 3,975,000 3,517,875
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
TEXAS - CONTINUED
San Antonio Elec. & Gas Rev. Rfdg. Series B,
0% 2/1/08, (FGIC Insured) Aaa $ 2,500,000 $ 1,184,375
Tarrant County Health Facs. Dev. Corp. Hosp.
Rev. Rfdg. & Impt. (Fort Worth Osteopathic
Hosp.) 6% 5/15/21, (MBIA Insured) Aaa 1,500,000 1,642,500
Tarrant County Health Facs. Dev. Corp. Rev.
(3927 Foundation, Inc. Proj.)
10.25% 9/1/19 - 4,000,000 4,310,000
Tarrant County Hsg. Fin. Corp. Single Family
Mtg. Rev. Series A, 9.50% 5/15/03 Ba 945,000 945,000
Texas Nat'l. Research Lab Commission Fing.
Corp. Lease Rev. (Superconducting
Supercollider Proj.) 6.95% 12/1/12 A 5,400,000 5,555,250
Texas Pub. Fin. Auth. Bldg. Rev. Rfdg.
(Cap. Appreciation) 0% 2/1/09,
(MBIA Insured) Aaa 2,000,000 890,000
54,632,789
UTAH - 0.9%
Intermountain Pwr. Agcy. Pwr. Supply
8.28% 7/1/21 Aa 2,500,000 2,600,000
South Salt Lake City Ind. Rev. (Price Savers
Wholesale Club Proj.) 9% 11/15/13 - 3,650,000 4,001,313
Utah Hsg. Fin. Agcy. (Residential Mtg.)
Series 1983 A, 0% 7/1/16 A+ 15,000,060 1,575,006
8,176,319
VERMONT - 0.2%
Vermont Ind. Dev. Auth. Ind. Dev. Rev.
(Radisson Hotel) Series B-1, 7.75%
11/15/15 - 2,000,000 2,102,500
VIRGINIA - 1.6%
Fairfax County Ind. Dev. Auth. Rev. Rfdg.
(Inova Health Sys. Hosp. Rev.) 5.25%
8/15/19 Aa 5,000,000 4,893,750
Galax Ind. Dev. Auth. 1st Mtg. Med. Facs. Rev.
Rfdg. (Waddell Nursing Home Proj.)
9.50% 8/1/05 - 2,300,000 2,486,875
Peninsula Port Auth. (Riverside Health Sys.)
Series B, 6.625% 7/1/19 Aa 1,000,000 1,093,750
Southeastern Pub. Svc. Auth. Rev. Rfdg. Sr.
Series A, 5.15% 7/1/09, (MBIA Insured) Aaa 4,000,000 4,045,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
VIRGINIA - CONTINUED
Virginia Beach Dev. Auth. Hosp. Facs. Rev.
(General Hosp. Proj.):
6% 2/15/09, (AMBAC Insured) Aaa $ 1,000,000 $ 1,083,750
6% 2/15/10, (AMBAC Insured) Aaa 1,220,000 1,319,125
Virginia Hsg. Dev. Auth. Residential Mtg.
(Single Family Mtg.) Series 1983 B,
0% 9/1/14 Aa 1,210,000 152,763
15,075,013
WASHINGTON - 3.8%
Douglas County Pub. Util Dist. #1 Wells Hydroelec.
Rev. Rfdg. 8.75% 9/1/18 A 1,395,000 1,905,919
Washington State Pub. Pwr. Supply Sys.
Nuclear Proj. #1 Rev.:
Series A, 7% 7/1/08 Aa 2,000,000 2,342,500
Series B:
5.60% 7/1/07 Aa 1,880,000 1,948,150
7% 7/1/08 Aa 1,000,000 1,171,250
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #2 Rev.:
Rfdg. Series C, 7.625% 7/1/10 Aa 2,350,000 2,764,188
Series A, 6.30% 7/1/12 Aa 1,000,000 1,097,500
7.97% 7/1/10, (FGIC Insured) (d)(g) Aa 2,650,000 2,676,500
7.375% 7/1/12 Aa 1,000,000 1,128,750
Washington Pub. Pwr. Supply Sys. Nuclear
Proj. #3 Rev.:
Rfdg. (Cap. Appreciation) Series B,
0% 7/1/08, (MBIA Insured) Aaa 3,000,000 1,376,250
Rfdg. Series C, 0% 7/1/13 Aa 5,035,000 1,667,844
Comp. Int. Rfdg. Series B, 0% 7/1/07,
(MBIA Insured) Aaa 5,000,000 2,456,250
2.95% 6/30/94 Aa 5,000,000 5,000,000
7.65% 7/1/12 (d)(g) Aa 10,000,000 9,637,500
35,172,601
WEST VIRGINIA - 0.4%
West Pkwy. Econ. Dev. & Tourism Auth. Auth. RIB
8.661% 5/16/19, (FGIC Insured) (d)(g) Aaa 3,600,000 3,874,500
TOTAL MUNICIPAL BONDS
(Cost $853,379,369) 913,166,375
MUNICIPAL NOTES (D) - 2.3%
MOODY'S RATINGS PRINCIPAL VALUE (NOTE 1)
(UNAUDITED) (G) AMOUNT (000S) (000S)
CALIFORNIA - 0.3%
Los Angeles County Ind. Dev. Auth. (Cataic & Jae
Proj.) 3.70%, LOC Union Banc Corp. VRDN (e) A-1 $ 800,000 $ 800,000
Santa Clara County Tax and Rev. Anticipation
Notes Series 1993-1994, 3.25% 7/29/94 MIG 1 2,300,000 2,314,053
3,114,053
FLORIDA - 0.5%
Dade County Ind. Dev. Auth. Ind. Dev. Rev.
(Dolphins Stadium Proj.) Series 1985 B, 3.15%,
LOC Citibank, Marine Midland Bank, VRDN VMIG 1 3,800,000 3,800,000
Martin Co. Ind. Dev. Auth. Rev. Series 1992A,
(Indiantown Cogeneration Proj.) 3.25%, LOC
Credit Suisse, VRDN (e) A-1+ 600,000 600,000
4,400,000
IDAHO - 0.7%
Idaho Tax Anticipation Notes Series 1993,
3% 6/30/94 MIG 1 6,000,000 6,024,300
KANSAS - 0.2%
Olathe Edl. Facs. Rev. (College Assoc. Pooled Ed.
Loan Prog.) Series 1989 A, 3.20%, LOC
Marine Midland Bank, VRDN VMIG 1 2,110,000 2,110,000
NEW JERSEY - 0.1%
New Jersey Econ. Dev. Auth. Rev. (Danic Urban
Renewal Co. Proj.) Series 1985, 3.20%,
LOC Marine Midland Bank, VRDN P-2 800,000 800,000
NEW YORK - 0.0%
Erie County Ind. Dev. Auth. Ind. Dev. Rev.
(The Holling Press, Inc.) Series 1989 F, 3.55%,
LOC Marine Midland Bank, VRDN - 400,000 400,000
WISCONSIN - 0.5%
Wisconsin Gen. Oblig. TRAN Series 1993,
3.25% 6/15/94 MIG 1 5,000,000 5,025,800
TOTAL MUNICIPAL NOTES
(Cost $21,836,678) 21,874,153
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $875,216,047) $ 935,040,528
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
120 U.S. Treasury Note Futures March 1994 $ 13,558,906 $ 40,156
100 U.S. Treasury Bond Futures March 1994 11,414,713 (35,287)
$ 4,869
THE VALUE OF FUTURES CONTRACTS PURCHASED AS A PERCENTAGE OF TOTAL
INVESTMENT IN SECURITIES - 2.7%
SECURITY TYPE ABBREVIATIONS
TRAN - Tax & Revenue Anticipation
Notes
VRDN - Variable Rate Demand Notes
LEGEND
1. Standard & Poor's Corporation credit ratings are used in the absence
of a rating by Moody's Investors Service, Inc.
2. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
3. A portion of the security was pledged to cover margin requirements for
futures contracts and delayed delivery purchases. At the period end, the
value of securities pledged amounted to $3,286,875.
4. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
5. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
6. Security collateralized by an amount sufficient to pay interest and
principal.
7. Inverse floating rate security is a security where the coupon is
inversely indexed to a floating interest rate. The price will be more
volatile than the price of a comparable fixed rate security.
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 32.8% AAA, AA, A 35.7%
Baa 23.2% BBB 18.9%
Ba 6.7% BB 3.7%
B 2.6% B 1.6%
Caa 0.0% CCC 0.3%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 28.3%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 30.8%
Electric Revenue 15.9
Industrial Development 14.4
Others (individually less than 10%) 38.9
TOTAL 100.0%
INCOME TAX INFORMATION
At December 31, 1993, the aggregate cost of investment securities for
income tax purposes was $875,339,897. Net unrealized appreciation
aggregated $59,700,631, of which $66,412,313 related to appreciated
investment securities and $6,711,682 related to depreciated investment
securities.
The fund hereby designates $2,372,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31, 1993
ASSETS 8. 9.
10.Investment in securities, at value (cost $875,216,047) 11. $ 935,040,528
(Note 1) - See accompanying schedule
12.Cash 13. 1,439,860
14.Receivable for investments sold 15. 17,590,278
16.Interest receivable 17. 15,885,781
18.Redemption fees receivable (Note 1) 19. 1,169
20.Receivable for daily variation on futures contracts 21. 24,375
22. TOTAL ASSETS 23. 969,981,991
LIABILITIES 24. 25.
26.Payable for investments purchased $ 11,468,419 27.
Regular delivery
28. Delayed delivery (Note 2) 4,000,000 29.
30.Dividends payable 1,684,511 31.
32.Accrued management fee 364,916 33.
34.Other payables and accrued expenses 239,064 35.
36. TOTAL LIABILITIES 37. 17,756,910
38.NET ASSETS 39. $ 952,225,081
40.Net Assets consist of (Note 1): 41. 42.
43.Paid in capital 44. $ 887,819,151
45.Accumulated undistributed net realized gain (loss) on 46. 4,576,580
investments
47.Net unrealized appreciation (depreciation) on: 48. 49.
50. Investment securities 51. 59,824,481
52. Futures contracts 53. 4,869
54.NET ASSETS, for 77,216,902 shares outstanding 55. $ 952,225,081
56.NET ASSET VALUE, offering price and redemption price per 57. $12.33
share ($952,225,081 (divided by) 77,216,902 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1993
INTEREST INCOME 58. $ 62,529,039
EXPENSES 59. 60.
61.Management fee (Note 4) $ 4,148,966 62.
63.Transfer agent, accounting and custodian fees and 1,237,493 64.
expenses (Note 4)
65.Non-interested trustees' compensation 3,000 66.
67.Registration fees 131,092 68.
69.Audit 40,965 70.
71.Legal 80,027 72.
73.Miscellaneous 37,130 74.
75. TOTAL EXPENSES 76. 5,678,673
77.NET INTEREST INCOME 78. 56,850,366
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 80. 81.
(NOTES 1 AND 3)
79.Net realized gain (loss) on:
82. Investment securities 29,001,704 83.
84. Futures contracts 1,468,965 30,470,669
85.Change in net unrealized appreciation (depreciation) on: 86. 87.
88. Investment securities 24,956,164 89.
90. Futures contracts (218,221) 24,737,943
91.NET GAIN (LOSS) 92. 55,208,612
93.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM 94. $ 112,058,978
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1993 1992
INCREASE (DECREASE) IN NET ASSETS
95.Operations $ 56,850,366 $ 49,873,926
Net interest income
96. Net realized gain (loss) on investments 30,470,669 10,120,146
97. Change in net unrealized appreciation (depreciation) on 24,737,943 2,856,683
investments
98. NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM 112,058,978 62,850,755
OPERATIONS
99.Distributions to shareholders from: (56,850,366) (49,873,926)
Net interest income
100. From net realized gain (25,449,884) (8,228,413)
101. (82,300,250) (58,102,339)
TOTAL DISTRIBUTIONS
102.Share transactions 269,831,566 203,288,884
Net proceeds from sales of shares
103. Reinvestment of distributions from: 40,791,446 35,645,399
Net interest income
104. 19,640,605 6,316,367
Net realized gain
105. Cost of shares redeemed (169,641,184) (142,251,773)
106. Redemption fees (Note 1) 161,376 117,685
107. 160,783,809 103,116,562
Net increase (decrease) in net assets resulting from share
transactions
108. 190,542,537 107,864,978
TOTAL INCREASE (DECREASE) IN NET ASSETS
NET ASSETS 109. 110.
111. Beginning of period 761,682,544 653,817,566
112. End of period $ 952,225,081 $ 761,682,544
OTHER INFORMATION 114. 115.
113.Shares
116. Sold 21,911,612 17,171,398
117. Issued in reinvestment of distributions from: 3,299,665 3,002,436
Net interest income
118. 1,602,438 533,479
Net realized gain
119. Redeemed (13,691,472) (12,040,039)
120. Net increase (decrease) 13,122,243 8,667,274
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
121. YEARS ENDED DECEMBER 31,
122. 1993 1992 1991 1990 1989
123. 124. 125. 126. 127.
128.SELECTED PER-SHARE DATA
129.Net asset value, beginning $ 11.880 $ 11.800 $ 11.430 $ 11.490 $ 11.330
of period
130.Income from Investment .783 .834 .863 .886 .881
Operations
Net interest income
131. Net realized and .788 .208 .429 (.060) .160
unrealized gain (loss) on
investments
132. Total from investment 1.571 1.042 1.292 .826 1.041
operations
133.Less Distributions (.783) (.834) (.863) (.886) (.881)
From net interest income
134. From net realized gain (.340) (.130) (.060) - -
on
investments
135. Total distributions (1.123) (.964) (.923) (.886) (.881)
136.Redemption fees added to .002 .002 .001 - -
paid in capital
137.Net asset value, end of $ 12.330 $ 11.880 $ 11.800 $ 11.430 $ 11.490
period
138.TOTAL RETURN 13.63% 9.17% 11.77% 7.48% 9.50%
139.RATIOS AND SUPPLEMENTAL DATA
140.Net assets, end of period $ 952,225 $ 761,683 $ 653,818 $ 550,848 $ 545,588
(000 omitted)
141.Ratio of expenses to .64% .64% .69% .66% .69%
average net assets
142.Ratio of net interest 6.37% 7.01% 7.46% 7.79% 7.68%
income to average net assets
143.Portfolio turnover rate 54% 43% 30% 46% 46%
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1993
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Aggressive Tax-Free Portfolio (the fund) is a fund of Fidelity
Municipal Trust (the trust) and is authorized to issue an unlimited number
of shares. The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Massachusetts business trust. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which quotations are not readily available through the
pricing service are valued at their fair value as determined in good faith
under consistently applied procedures under the general supervision of the
Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes 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.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
losses deferred due to wash sales and futures and options. The fund also
utilized earnings and profits distributed to shareholders on redemption of
shares as a part of the dividends paid deduction for income tax purposes.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
REDEMPTION FEES. Shares held in the fund less than 180 days are subject to
a redemption fee equal to 1% 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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. 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,
the fund changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, amounts as of December 31, 1992 have been reclassified to
reflect a decrease in paid in capital of $50,695 and an increase in
accumulated net realized gain on investments of $50,695.
2. OPERATING POLICIES.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures contracts and
write options. These investments involve, to varying degrees, elements of
market risk and risks in excess of the amount recognized in the Statement
of Assets and Liabilities. The face or contract amounts reflect the extent
of the involvement the fund has in the particular classes of instruments.
Risks may be caused by an imperfect correlation between movements in the
price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary
market for the instruments, or due to the inability of counterparties to
perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $594,538,747 and $453,066,125, respectively.
The face value of futures contracts opened and closed amounted to
$369,113,937 and $366,311,258, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly basic fee that is calculated on
the basis of a group fee
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
rate plus a fixed individual fund fee rate applied to the average net
assets of the fund. The group fee rate is the weighted average of a series
of rates ranging from .14% to .37% and is based on the monthly average net
assets of all the mutual funds advised by FMR. The annual individual fund
fee rate is .30%. For the period, the management fee was equivalent to an
annual rate of .47% of average net assets.
The Board of Trustees approved a new group fee rate schedule with rates
ranging from .1325% to .3700%. Effective November 1, 1993, FMR has
voluntarily agreed to implement this new group fee rate schedule as it
results in the same or a lower management fee.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments
to third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $3,107 for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-
contract with Fidelity Service Co. (FSC), an affiliate of FMR, under which
FSC performs the activities associated with the fund's transfer and
shareholder servicing agent and accounting functions. The fund pays
transfer agent fees based on the type, size, number of accounts and number
of transactions made by shareholders. FSC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. The
accounting fee is based on the level of average net assets for the month
plus out-of-pocket expenses. For the period, FSC received transfer agent
and accounting fees amounting to $891,729 and $281,712, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Municipal Trust and the Shareholders of
Fidelity Aggressive Tax-Free Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Municipal Trust: Fidelity Aggressive Tax-Free Portfolio, including
the schedule of portfolio investments, as of December 31, 1993, and the
related statement of operations for the year then ended, the statement 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 fund's 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, 1993 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 Municipal Trust: Fidelity Aggressive Tax-Free Portfolio as of
December 31, 1993, the results of its operations for the year then ended,
the changes in its 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.
/s/COOPERS & LYBRAND
COOPERS & LYBRAND
Boston, Massachusetts
January 28, 1994
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(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)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL VARY
AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY
HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET
FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A
MONEY MARKET FUND
IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE
HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS, AND THE
EFFECTS OF ANY SALES CHARGES. FOR MORE INFORMATION ON ANY FIDELITY FUND
INCLUDING
MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS.
READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
TO WRITE FIDELITY
Please locate the address that is closest to you. We'll give your
correspondence immediate attention and send you written confirmation upon
completion of your request. Please send ALL correspondence about retirement
accounts to Dallas.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 2269
Boston, MA 02107-2269
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30280
Salt Lake City, UT 84130-0280
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
Additional Payments
P.O. Box 2656
Boston, MA 02293-0656
Fidelity Investments
Additional Payments
P.O. Box 620024
Dallas, TX 75262-0024
Fidelity Investments
Additional Payments
P.O. Box 31455
Salt Lake City, UT 84131-0455
OVERNIGHT EXPRESS
Fidelity Investments
Additional Payments
World Trade Center
164 Northern Avenue
Boston, MA 02210
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02103-0878
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02101-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
(LETTER_GRAPHIC)(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 620024
Dallas, TX 75262-0024
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Anne Punzak, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
FIDELITY TAX-FREE BOND FUNDS
Aggressive Tax-Free
California Tax-Free High Yield
California Tax-Free Insured
High Yield Tax-Free
Insured Tax-Free
Limited Term Municipals
Massachusetts Tax-Free High Yield
Michigan Tax-Free High Yield
Minnesota Tax-Free
Municipal Bond
New York Tax-Free High Yield
New York Tax-Free Insured
Ohio Tax-Free High Yield
Spartan(Registered trademark) Aggressive Municipal
Spartan California Intermediate Municipal
Spartan California Municipal High Yield
Spartan Connecticut Municipal High Yield
Spartan Florida Municipal Income
Spartan Intermediate Municipal
Spartan Maryland Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal High Yield
Spartan New York Intermediate Municipal
Spartan New York Municipal High Yield
Spartan Pennsylvania Municipal High Yield
Spartan Short-Intermediate Municipal
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
Exhibit 5a
MANAGEMENT CONTRACT
between
FIDELITY COURT STREET TRUST:
FIDELITY HIGH YIELD TAX-FREE PORTFOLIO
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
MODIFICATION made this 1st day of March, 1993, by and between Fidelity
Court Street Trust, a Massachusetts business trust which may issue one or
more series of shares of beneficial interest (hereinafter called the Fund),
on behalf of Fidelity High Yield Tax-Free Portfolio (hereinafter called the
Portfolio), and Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the Adviser).
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio and Fidelity Management
& Research Company hereby consent, pursuant to Paragraph 6 of the
existing Management Contract dated March 1, 1989, to a modification of said
Contract in the manner set forth below. The Modified Managment Contract
shall, when executed by duly authorized officers of the Fund and the
Adviser, take effect on the later of March 1, 1993 or the first day of the
month following approval.
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Fund's Board of Trustees, direct the investments of the Portfolio in
accordance with the investment objective, policies and limitations as
provided in the Portfolio's Prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio
office space and all necessary office facilities, equipment and personnel
for servicing the investments of the Portfolio; and shall pay the salaries
and fees of all officers of the Fund, of all Trustees of the Fund who are
"interested persons" of the Fund or of the Adviser and of all personnel of
the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell,
lend and otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Portfolio. The investment policies
and all other actions of the Portfolio are and shall at all times be
subject to the control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative
services necessary for the operation of the Fund. The Adviser shall,
subject to the supervision of the Board of Trustees, perform various
services for the Portfolio, including but not limited to: (i) providing the
Portfolio with office space, equipment and facilities (which may be its
own) for maintaining its organization; (ii) on behalf of the Portfolio,
supervising relations with, and monitoring the performance of, custodians,
depositories, transfer and pricing agents, accountants, attorneys,
underwriters, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable; (iii) preparing all general
shareholder communications, including shareholder reports; (iv) conducting
shareholder relations; (v) maintaining the Fund's existence and its
records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal
and state law; and (vii) investigating the development of and developing
and implementing, if appropriate, management and shareholder services
designed to enhance the value or convenience of the Portfolio as an
investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time
to time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund
policies, and shall carry out such policies as are adopted by the Trustees.
The Adviser shall, subject to review by the Board of Trustees, furnish such
other services as the Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best
efforts to seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are reasonable
in relation to the benefits received. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) to the
Portfolio and/or the other accounts over which the Adviser or its
affiliates exercise investment discretion. The Adviser is authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Portfolio which is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in good
faith that such amount of commission is reasonable in relation to the value
of the brokerage and research services provided by such broker or dealer.
This determination may be viewed in terms of either that particular
transaction or the overall responsibilities which the Adviser and its
affiliates have with respect to accounts over which they exercise
investment discretion. The Trustees of the Fund shall periodically review
the commissions paid by the Portfolio to determine if the commissions paid
over representative periods of time were reasonable in relation to the
benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Fund, and that
the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a
monthly management fee, payable as soon as practicable after the last day
of each month, composed of a Group Fee rate and an Individual Fund fee
rate.
(a) Group Fee Rate. The Group fee rate shall be based upon the monthly
average of the net assets of the registered investment companies having
Advisory and Service or Management Contracts with the Adviser (computed in
the manner set forth in the charter of each investment company) determined
as of the close of business on each business day throughout the month. The
Group fee rate shall be determined on a cumulative basis pursuant to the
following schedule:
Average Net Assets Annualized Fee Rate (at each level)
0 - $3 Billion .370%
3 - 6 .340
6 - 9 .310
9 - 12 .280
12 - 15 .250
15 - 18 .220
18 - 21 .200
21 - 24 .190
24 - 30 .180
30 - 36 .175
36 - 42 .170
42 - 48 .165
48 - 66 .160
66 - 84 .155
84 - 120 .150
120 - 174 .145
Over 174 .140
(b) Individual Fund Fee Rate. The Individual Fund fee rate shall be
.25%.
The sum of the Group fee rate, calculated as described above to the
nearest millionth, and the Individual Fund fee rate shall constitute the
annual fee rate. One-twelfth of the annual fee rate shall be applied to
the average of the net assets of the Portfolio (computed in the manner set
forth in Paragraph 10 of the Declaration of Trust of the Fund) determined
as of the close of business on each business day throughout the month.
In case of termination of this Contract during any month, the fee for that
month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Fund's Trustees other than
those who are "interested persons" of the Fund or the Adviser; (iv) legal
and audit expenses; (v) custodian, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and
qualification of the Fund and the Portfolio's shares for distribution under
state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders of the Portfolio;
(viii) all other expenses incidental to holding meetings of the Portfolio's
shareholders, including proxy solicitations therefor; (ix) a pro rata
share, based on relative net assets of the Portfolio and other registered
investment companies having Advisory and Service or Management Contracts
with the Adviser, of 50% of insurance premiums for fidelity and other
coverage; (x) its proportionate share of association membership dues; (xi)
expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing
and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such
non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Fund's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until May 31, 1993
and indefinitely thereafter, but only so long as the continuance after such
date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust and
agrees that the obligations assumed by the Fund pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust are separate and distinct from those of any and all
other Portfolios.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized all as
of the date written above.
FIDELITY COURT STREET TRUST on behalf of
Fidelity High Yield Tax-Free Portfolio
By /s/ J. Gary Burkhead
Senior Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/J. Gary Burkhead
J. Gary Burkhead
President
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Fidelity Court Street Trust:
Fidelity High Yield Tax-Free Portfolio
We consent to the incorporation by reference in Post-Effective Amendment
No. 50 to the Trust's registration statement (File No. 2-58774) on Form
N-1A of our report dated December 31, 1993 accompanying the financial
statements and financial highlights of the above-referenced Portfolio.
We also consent to the incorporation by reference in this Post-Effective
Amendment of our report dated January 28, 1994 accompanying the financial
statements and financial highlights of Fidelity Aggressive Tax-Free
Portfolio (a Portfolio of Fidelity Municipal Trust, File No. 2-55725) and
our report dated February 4, 1994 accompanying the financial statements and
financial highlights of Fidelity Limited Term Municipals (a Portfolio of
Fidelity School Street Trust, File No. 2-57167).
All of the above financial statements and financial highlights are
incorporated by reference into the Statement of Additional Information
included in this Post-Effective Amendment.
We also consent to the references to our Firm under the captions "Auditor"
in the Statement of Additional Information and "Financial Highlights" in
the Prospectus included in this Post-Effective Amendment.
/s/COOPERS & LYBRAND
COOPERS & LYBRAND
Boston, Massachusetts
February 14, 1994
