SPARTAN(registered trademark)
(registered trademark)
NEW JERSEY
MUNICIPAL
HIGH YIELD
PORTFOLIO
ANNUAL REPORT
NOVEMBER 30, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 17 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 21 Notes to the financial statements.
REPORT OF INDEPENDENT
ACCOUNTANTS 23 The auditors' opinion.
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. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD OR
ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF
PRINCIPAL. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK. FOR MORE
INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL
1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The unsettling period that began for bond investors when the Federal
Reserve Board raised short-term interest rates in February has continued
into the fourth quarter of 1994. The Board raised the federal funds rate -
the rate banks charge each other for overnight loans - five times from
February through August, taking it from 3.00% to 4.75%. A sixth increase in
November lifted the rate to 5.50%. The Fed rate hikes were intended to
forestall inflation that could result from an improving U.S. economy, and
they led to negative returns for many bond investments and below-average
returns for many stocks.
The volatility we have witnessed this year follows a period in which there
was a nearly perfect investing environment. Although there was a
late-summer rally in stocks and, to a lesser extent in bond markets, it is
impossible to predict where interest rates might go or what might happen in
the markets in the months ahead. That's why it probably is a good time to
again review your investment portfolio and how well it matches your goals.
Keeping in mind that the negative effects of rising rates on your bond
investments will only be "paper" losses unless you sell your shares,
staying in your bond fund may be appropriate. The longer your investing
time frame, the more likely it is that you will retain your principal
investment through both up and down markets. For example, a 10-year time
frame, such as saving for a college education, enables you to weather these
ups and downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. As with any mutual fund, of course, there is no assurance that
a money market fund will achieve its goal, and money market funds are not
insured by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically, as we have discussed here. A periodic investment
plan will not, of course, assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns,
dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan New Jersey Municipal
High Yield Portfolio -5.86% 36.79% 66.64%
Lehman Brothers Municipal Bond Index -5.25% 37.52% 66.52%
Average New Jersey Tax-exempt
Municipal Bond Fund -7.37% 35.57% n/a
Consumer Price Index 2.81% 19.06% 29.90%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- - in this case, one year, five years, or since the fund started on January
1, 1988. 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 New Jersey municipal bond
fund, which currently reflects the performance of 32 New Jersey 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, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan New Jersey Municipal
High Yield Portfolio -5.86% 6.47% 7.66%
Lehman Brothers Municipal Bond Index -5.25% 6.58% 7.64%
Average New Jersey Tax-exempt
Municipal Bond Fund -7.37% 6.28% n/a
Consumer Price Index 2.81% 3.55% 3.85%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Spartan New JMunicipal Bon
01/01/88 10000.00 10000.00
01/31/88 10382.99 10356.20
02/29/88 10489.58 10465.67
03/31/88 10108.41 10343.74
04/30/88 10162.42 10422.35
05/31/88 10195.16 10392.23
06/30/88 10424.31 10544.27
07/31/88 10490.37 10613.02
08/31/88 10515.89 10622.36
09/30/88 10760.93 10814.62
10/31/88 11060.18 11005.50
11/30/88 10893.59 10904.69
12/31/88 11089.94 11016.25
01/31/89 11261.41 11244.06
02/28/89 11131.82 11115.77
03/31/89 11142.30 11089.20
04/30/89 11470.47 11352.46
05/31/89 11712.36 11588.25
06/30/89 11899.59 11745.62
07/31/89 12030.89 11905.47
08/31/89 11882.88 11788.92
09/30/89 11837.44 11753.55
10/31/89 12002.50 11896.95
11/30/89 12181.54 12105.14
12/31/89 12237.61 12204.41
01/31/90 12116.04 12147.04
02/28/90 12239.41 12255.15
03/31/90 12260.71 12258.83
04/30/90 12101.33 12170.57
05/31/90 12416.90 12435.88
06/30/90 12542.36 12545.32
07/31/90 12738.81 12729.74
08/31/90 12493.09 12545.16
09/30/90 12573.56 12552.68
10/31/90 12751.56 12779.89
11/30/90 13053.06 13036.76
12/31/90 13111.66 13094.12
01/31/91 13270.57 13269.58
02/28/91 13355.11 13385.03
03/31/91 13389.35 13390.38
04/30/91 13575.50 13568.48
05/31/91 13686.76 13689.24
06/30/91 13684.33 13675.55
07/31/91 13910.27 13842.39
08/31/91 14075.10 14025.11
09/30/91 14253.49 14207.43
10/31/91 14405.60 14335.30
11/30/91 14441.04 14375.44
12/31/91 14728.41 14684.51
01/31/92 14753.13 14718.29
02/29/92 14761.20 14722.70
03/31/92 14733.41 14728.59
04/30/92 14852.05 14859.68
05/31/92 15067.78 15035.02
06/30/92 15308.14 15287.61
07/31/92 15854.11 15746.24
08/31/92 15632.74 15591.92
09/30/92 15697.06 15693.27
10/31/92 15375.33 15539.48
11/30/92 15787.99 15817.63
12/31/92 16010.91 15978.97
01/31/93 16206.24 16164.33
02/28/93 16838.39 16749.48
03/31/93 16627.16 16571.93
04/30/93 16820.45 16739.31
05/31/93 16957.57 16833.05
06/30/93 17267.40 17114.16
07/31/93 17270.95 17136.41
08/31/93 17674.72 17492.85
09/30/93 17885.81 17692.27
10/31/93 17892.26 17725.88
11/30/93 17701.63 17569.89
12/31/93 18101.77 17940.62
01/31/94 18291.90 18145.14
02/28/94 17751.96 17675.18
03/31/94 16940.48 16955.80
04/30/94 17037.91 17099.93
05/31/94 17231.75 17248.70
06/30/94 17141.21 17148.65
07/31/94 17462.89 17462.47
08/31/94 17531.00 17523.59
09/30/94 17262.68 17266.00
10/31/94 16948.68 16958.66
11/30/94 16665.14 16651.71
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan New
Jersey Municipal High Yield Portfolio on January 1, 1988, when the fund
started. As the chart shows, by November 30, 1994, the value of your
investment would have grown to $16,665 - a 66.65% increase on your initial
investment. This assumes you still own the fund on November 30, 1994, and
therefore does not include the effect of the $5 account closeout fee. For
comparison, look at how the Lehman Brothers Municipal Bond Index did over
the same period. With dividends reinvested, the same $10,000 would have
grown to $16,652- a 66.52% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED NOVEMBER 30,
1994 1993 1992 1991 1990
Dividend return 5.28% 5.99% 6.59% 6.87% 6.68%
Capital appreciation returns -11.14% 6.12% 2.73% 3.75% 0.46%
Total return -5.86% 12.11% 9.32% 10.62% 7.14%
DIVIDEND returns, and capital appreciation returns are both 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. Change in share price and total return figures
include the effect of the $5 account closeout fee.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED NOVEMBER 30, 1994 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.35(cents) 31.78(cents) 63.69(cents)
Annualized dividend rate 6.35% 5.86% 5.74%
30-day annualized yield 6.47% - -
30-day annualized tax-equivalent yield 10.83% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $10.25 over
the past month , $10.81 over the past six months and $11.10 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the fund's tax-free yield, if you're
in the 40.26% combined effective 1994 federal and state tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Sharply rising interest rates and
ongoing inflation worries caused a
severe downturn in U.S. bond
markets in 1994. Yields rose
sharply - and prices fell - on
taxable and tax-free bonds alike.
For the 12 months ended November
30, 1994, the Lehman Brothers
Municipal Bond Index - a broad
measure of the tax-free market -
had a total return of -5.25%. By
comparison, the Lehman Brothers
Aggregate Bond Index - a proxy
of investment-grade taxable
bonds - returned -3.06%. After
interest rates remained low and
relatively steady in December
1993 and January 1994, the rate
environment changed
dramatically. The Federal Reserve
Board raised the federal funds rate
- - the rate banks charge each
other for overnight loans - from
3.00% to 5.50% from February
through November. The Fed was
hoping to head off future inflation
that might be triggered by an
improving U.S. economy.
However, investors heavily sold
bonds at the very threat of
inflation because inflation
diminishes the value of their
fixed-rate income payments. Two
other influences affected the
performance of tax-free bonds,
specifically. First, investor demand
fell due to inflation worries, which
dampened prices. Second,
although it didn't outweigh the
negative effects of lower demand,
the supply of tax-free bonds fell as
well. The ability of states, cities
and public agencies to refinance
outstanding debt at lower, more
attractive rates was limited amid a
rising rate environment.
An interview with David Murphy, Portfolio Manager of Spartan New Jersey
Municipal High Yield Portfolio
Q. DAVID, HOW HAS THE FUND PERFORMED?
A. Both the municipal bond market and the fund suffered losses on the heels
of rising interest rates during the past 12 months, but the fund held up
better than most of its competitors. The fund's total return for the year
ended November 30, 1994, was -5.86%. That beat the average New Jersey
tax-exempt municipal bond fund, which returned -7.37% for the same period,
according to Lipper Analytical Services.
Q. WHAT FACTORS CONTRIBUTED TO THE DECLINE IN BOND PRICES?
A. There's definitely a lot to the story. Until February 1994, short-term
interest rates had remained low for several years. That enticed many
investors to use leverage, or borrowed money, to make what essentially
amounted to a bet that short-term interest rates would continue to stay low
and long-term interest rates would fall. However, when the Federal Reserve
Board started raising short-term interest rates in February, those
investors found themselves on the wrong side of the bet and were forced to
liquidate their bond holdings to pay back borrowed money. The selling, or
unwinding, of those positions put additional downward pressure on bond
prices. Other factors - like the dollar's weakness - also contributed to
the market's decline.
Q. WHAT WAS YOUR STRATEGY DURING THIS VOLATILE PERIOD?
A. My long-term strategy is to keep the fund positioned to take advantage
of long-term trends. Inflation has stayed low over the past 12 months and
in my view, will continue to do so over the next several years. While we
have seen some rising industrial commodity prices, consumer prices haven't
really risen and wages have remained flat. Unfortunately, it seemed that
low inflation didn't determine the market's direction in 1994. Instead, all
the unwinding of the leveraged positions and other factors did.
Q. DESPITE THAT, THE FUND STILL BEAT MANY OF ITS COMPETITORS. WHAT WERE THE
REASONS FOR THAT?
A. The main factor was its stake in bonds with high coupons - or bonds with
interest payments that were higher than bonds paying current interest
rates. These bonds are known as "cushion" bonds because their prices are
cushioned from falling as much as current coupon bonds when interest rates
rise. I held a variety of cushion bonds including housing bonds,
lower-quality bonds and older bonds issued when interest rates were higher
than they are now. Another factor that helped the fund's performance was
its 33% stake in intermediate bonds with maturities between seven and 15
years. Those didn't decline as much as longer-term bonds. However, I've
recently started making a move back toward longer-term bonds since I
anticipate that long-term municipal interest rates will decline more than
intermediate rates over the next six months. That, in turn, could push the
prices of longer-term bonds up more than intermediate bonds.
Q. DID YOU CHANGE THE WAY YOU ALLOCATED THE FUND'S INVESTMENTS AMONG
SECTORS?
A. Not significantly. I kept the fund's sector concentrations fairly stable
throughout the past 12 months. Transportation bonds still made up the
largest sector at 19.2% of investments at the end of the period. Most were
bonds issued by the New Jersey Highway Authority and the New Jersey
Turnpike Authority. These were bought when there was a heavy supply, so
they had yields that were attractive. Health care bonds, which are
primarily hospital bonds, made up the fund's second largest sector
concentration at 15.5% of investments at the end of November. I've kept the
fund's stake in GO's, or general obligation bonds, limited to 14.8% of
investments because I was concerned how recent state income tax cuts would
affect the state's budget. Fortunately, improvements in New Jersey's
economy have helped boost other taxes like the sales tax, and so the state
has weathered the loss in income tax revenue fairly well. Even so, I think
there are better values elsewhere, and will most likely continue to avoid
GOs.
Q. DOES 1995 LOOK MORE POSITIVE FOR MUNICIPAL BOND INVESTORS?
A. I think so. In my view, most of the downturn in prices for long-term
bonds seems to be behind us and the market is starting to anticipate that
we're near the end of the Fed's actions to hike interest rates. What's
more, fixed-income investments are starting to look fairly attractive
compared to other asset categories, such as stocks. Real taxable yields -
stated yields minus inflation - were about 5% at the end of the period,
which is very attractive on a historical basis. I believe that these yields
could help attract investors, which ultimately might help the bond market.
In my opinion, the next big trend in interest rates will be down, which
would boost bond prices in 1995.
FUND FACTS
GOAL: to provide high current
income exempt from New
Jersey state and federal
income taxes
START DATE: January 1, 1988
SIZE: as of November 30,
1994, more then $327 million
MANAGER: David Murphy,
since April 1991; manager,
Fidelity Limited Term
Municipals, since December,
1989; Spartan California
Intermediate Municipal
Portfolio, since December
1993; Spartan Intermediate
Municipal Fund, since May
1993; Spartan New York
Intermediate Municipal
Portfolio, since December
1993; Spartan
Short-Intermediate Municipal
Fund, since December 1989;
joined Fidelity in 1989
(checkmark)
DAVID MURPHY'S STRATEGY:
"In my view, the next big trend
in interest rates is down. As a
result, I believe that long-term
bonds with maturities 20
years or longer are very
attractive right now. I
anticipate that long-term
municipal interest rates will
decline more than
intermediate bonds - those
with 5- to 15-year maturities
- - over the next six months.
Accordingly, longer-term bond
prices should rise more than
intermediate-term bond
prices."
(solid bullet) At the end of November
1994, the fund held one
derivative investment known
as an inverse floater which
made up 1.4% of the fund's
total investments. That was
down from a year ago, when
inverse floaters made up
about 3% of the fund's
investments. The coupon, or
interest payment, of inverse
floaters rises when short-term
rates fall and vice versa. By
using derivatives, the fund
can achieve higher levels of
tax-exempt income and
increased flexibility in
managing the overall
sensitivity to changes in
interest rates. However, these
strategies may involve
additional risk for the fund,
and don't always work as
intended.
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF NOVEMBER 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
Transportation 19.2 17.3
Health Care 15.5 15.6
General Obligation 14.8 15.4
Industrial Development 11.2 11.1
Escrowed/Prerefunded 10.5 9.4
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1994
6 MONTHS AGO
Years 17.7 17.6
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF NOVEMBER 30, 1994
6 MONTHS AGO
Years 8.7 8.3
DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE.
QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1994
(MOODY'S RATINGS)
Aaa 22.4%
Aa, A 50.8%
Baa 13.5%
Ba, B 0.2%
Non-rated 10.8%
Short-term and other
investments 2.3%
Row: 1, Col: 1, Value: 22.4
Row: 1, Col: 2, Value: 50.8
Row: 1, Col: 3, Value: 13.5
Row: 1, Col: 4, Value: 1.2
Row: 1, Col: 5, Value: 10.8
Row: 1, Col: 6, Value: 2.3
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED
DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT NOVEMBER 30, 1994
ACCOUNT FOR 6.8% OF THE FUND'S INVESTMENTS.
INVESTMENTS NOVEMBER 30, 1994
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 97.7%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW JERSEY - 86.1%
Atlantic County Ctfs. of Prtn.
Rfdg. (Pub. Facs. Lease Agreement):
7.40% 3/1/07, (FGIC Insured) Aaa $ 3,035,000 $ 3,300,563
7.40% 3/1/08, (FGIC Insured) Aaa 3,260,000 3,528,950
Atlantic County Impt. Auth. Luxury Tax Rev.
(Convention Ctr.):
7.375% 7/1/10, (MBIA Insured)
(Escrowed to Maturity)(e) Aaa 1,000,000 1,053,750
7.40% 7/1/16, (MBIA Insured)
(Escrowed to Maturity)(e) Aaa 3,510,000 3,742,538
Bergen County Util. Auth. Wtr. Poll. Cont.
Rev. Rfdg. Series B, 5.75% 12/15/05,
(FGIC Insured) Aaa 1,870,000 1,771,825
Burlington County Bridge Commission
Bridge Sys. Rev., 5.30% 10/1/13 Aa 1,500,000 1,271,250
Camden County Muni. Util. Auth. Swr. Rev.:
(Cap. Appreciation):
Series A:
0% 9/1/16, (FGIC Insured) Aaa 5,000,000 1,131,250
0% 9/1/17, (FGIC Insured) Aaa 9,930,000 2,097,713
0% 9/1/18, (FGIC Insured) Aaa 1,375,000 269,844
Series B, 0% 9/1/16, (FGIC Insured) Aaa 16,300,000 3,687,875
Camden Gen. Oblig. Fiscal Adjustment
0% 2/15/07, (FSA Insured) Aaa 4,000,000 1,820,000
Cape May County Ind. Poll. Cont. Fing.
Auth. Rev. Rfdg. (Atlantic City Elec. Co.)
Series A, 6.80% 3/1/21, (MBIA Insured) Aaa 1,350,000 1,338,188
Edison Township School Unltd. Tax
6.50% 6/1/11 A1 1,000,000 985,000
Essex County Impt. Auth. Rev.
(East Orange School Dist.) Series A:
5.60% 11/1/05 A 1,250,000 1,157,813
5.70% 11/1/06 A 1,600,000 1,474,000
5.80% 11/1/07 A 1,000,000 917,500
Gloucester County Impt. Auth. Solid Waste
Resource Recovery Rev. (SES Gloucester
Co. LP Proj.) Series A, 8.125% 7/1/10,
LOC Fuji Bank Aa3 1,175,000 1,229,344
Hudson County 5.125% 8/1/08 A+ 3,000,000 2,531,250
Hudson County Impt. Auth.
(Essential Purp. Pooled Gov't. Loan Prog.):
6.625% 8/1/25 A+ 4,000,000 3,885,000
7.60% 8/1/25 A 5,240,000 5,495,450
Jersey City Series B:
0% 5/15/07, (FSA Insured) Aaa 4,740,000 2,121,150
0% 5/15/11, (FSA Insured) Aaa 3,500,000 1,120,000
Jersey City Swr. Auth. Swr. Rev. Rfdg.
6% 1/1/09 (AMBAC Insured) Aaa 1,000,000 940,000
Keansburg Board of Ed. Ctfs. of Prtn.
8% 11/1/14 (Pre-Refunded to 11/1/99
@102)(e) BBB- 1,500,000 1,636,875
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW JERSEY - CONTINUED
Lenape Reg'l. High School Dist. Unltd. Tax:
7.625% 1/1/13, (MBIA Insured) Aaa $ 675,000 $ 736,594
7.625% 1/1/14, (MBIA Insured) Aaa 1,000,000 1,088,750
Mercer County Impt. Auth. Rev.:
Rfdg.(Cap. Appreciation Solid Waste
County Guaranteed):
0% 4/1/08 Aa1 6,000,000 2,437,500
0% 4/1/09 Aa1 6,500,000 2,470,000
0% 4/1/10 Aa1 3,000,000 1,057,500
0% 4/1/11 Aa1 3,500,000 1,155,000
0% 4/1/12 Aa1 7,000,000 2,135,000
0% 4/1/13 Aa1 7,000,000 1,995,000
Rfdg. (Site & Disposal Facs. Proj.) 0%
4/1/09 Aa1 5,155,000 1,946,013
(Reg'l. Sludge Proj.) 5.20% 12/15/09
(FGIC Insured) Aaa 1,540,000 1,322,475
Middlesex County Poll. Cont. Auth. Rev. Rfdg.
(Fing. Poll.) (Amerada Hess Corp.):
7.875% 6/1/22 - 7,750,000 7,934,063
6.875% 12/1/22 - 5,000,000 4,606,250
Monmouth County Impt. Auth. Rev. Wastewtr.
Treatment Facs. Rev. (Asbury Park Proj.)
7.375% 12/1/09 Baa 1,000,000 1,013,750
New Jersey Bldg. Auth. Bldg. Rev.
7.50% 6/15/09 Aa 1,700,000 1,842,375
New Jersey Econ. Dev. Auth.
1st Mtg. Gross Rev. (Franciscan Oaks Proj.)
Series A, 8.50% 10/1/23 - 4,250,000 4,143,750
New Jersey Econ. Dev. Auth. Econ. Dev. Rev.:
Rfdg. (777 Pattison Ave., Inc.) 8.95%
12/15/18 (b) ??? 6,140,000 6,124,650
Rfdg. (Holt Hauling & Warehouse)
8.60% 12/15/17 (b) - 9,000,000 8,898,750
Rfdg. (Stolt Term. Proj.) 10.50% 1/15/18 - 2,500,000 2,806,250
(Weyerhauser Co. Proj.) 9% 11/1/04 A2 2,000,000 2,310,000
New Jersey Econ. Dev. Auth. Poll. Cont. Rev.
(Central Pwr. & Lt.) 7.10% 7/1/15 A2 1,415,000 1,383,163
New Jersey Health Care Facs. Fing. Auth. Rev.:
Rfdg. (Atlantic City Med. Ctr.) Series C,
6.80% 7/1/11 A 4,200,000 4,037,250
(Bridgeton Hosp. & Millvile Hosp.) Series
1988 A, 7.875% 7/1/10, (MBIA Insured)
(Pre-Refunded to 7/1/98 @102)(e) Aaa 1,250,000 1,367,188
(Burdette Tomlin Mem. Hosp.) Series D:
6% 7/1/02, (FGIC Insured) Aaa 1,715,000 1,719,288
6.25% 7/1/06, (FGIC Insured) Aaa 1,710,000 1,703,588
(Cathedral Health) Series A, 7.25%
2/15/21, (FHA Guaranteed) Aa 3,130,000 3,130,000
(East Orange Gen. Hosp.)
Series B, 7.75% 7/1/20 BBB+ 2,450,000 2,397,938
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW JERSEY - CONTINUED
New Jersey Health Care Facs. Fing. Auth. Rev.: - continued
(Elizabeth Gen. Med. Ctr.) Series C:
7.10% 7/1/99 Baa1 $ 1,125,000 $ 1,122,188
7.25% 7/1/06 Baa1 1,975,000 1,920,688
(Helene Fuld Med. Ctr.) Series C,
8.125% 7/1/13 A 1,000,000 1,050,000
(Holy Name Hosp.) Series A,
6.875% 7/1/04 Aaa 1,960,000 2,006,550
(Jersey Shore Med. Ctr.) Series B, 8%
7/1/18, (AMBAC Insured)
(Pre-Refunded to 7/1/98 @ 102)(e) Aaa 1,905,000 2,090,738
(Kennedy Mem. Hosp.-Univ. Med. Ctr.)
Series D, 7.875% 7/1/09 A 3,000,000 3,097,500
(Kimball Med. Ctr.) Issue C, 8% 7/1/13 Baa 2,900,000 2,921,750
(Lady of Lourdes Med. Ctr.) Series B,
9.75% 2/1/15, (FHA Guaranteed)
(Pre-Refunded to 2/1/95 @102)(e) Aa 170,000 175,007
(Mountainside Hosp.) Series A,
9% 8/1/25, (FHA Guaranteed)
(Pre-Refunded to 8/1/95 @ 102)(e) Aa 3,165,000 3,315,338
(Muhlenberg Regional Med. Ctr.)
Series B, 8% 7/1/18, (AMBAC Insured) Aaa 2,000,000 2,125,000
(Newcombe Med. Ctr.)
Series A, 7.875% 7/1/03 Baa 3,950,000 4,073,438
(Pascack Valley Hosp.) Series 1991,
6.70% 7/1/11 A- 5,200,000 4,725,500
(St. Elizabeth Hosp.) Series B,
8.25% 7/1/20 Baa 8,500,000 8,670,000
(St. Peters Med. Ctr.) Series F,
4.70% 7/1/ 06 (MBIA Insured) Aaa 1,000,000 835,000
New Jersey Edl. Facs. Fing. Auth. Rev.
(Ramapo College) Series B,
7.70% 7/1/13 A 1,000,000 1,085,000
New Jersey Gen. Oblig. Rfdg.
Series D, 6% 2/15/11 Aa1 3,000,000 2,805,000
New Jersey Hwy. Auth. Garden Pkwy.
Gen. Rev. (Sr. Pkwy):
6.10% 1/1/06 A1 2,750,000 2,701,875
6.20% 1/1/10 A1 21,000,000 20,002,500
5.75% 1/1/19 A1 3,000,000 2,598,750
6% 1/1/19, (Escrowed to Maturity)(e) Aaa 4,485,000 3,958,013
New Jersey Hsg. Fin. Agcy.
(Gen. Resolution Section 8) Series A:
6.90% 11/1/07 AA+ 2,670,000 2,696,700
6.95% 11/1/08 AA+ 2,265,000 2,279,156
7% 11/1/09 AA+ 2,855,000 2,865,706
7.05% 11/1/10 AA+ 3,500,000 3,500,000
New Jersey Hsg. & Mtg. Fin. Agcy.
Customer Receipts Series 1,
8.491% 11/1/07, INFL (d) A+ 5,000,000 4,600,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW JERSEY - CONTINUED
New Jersey Hsg. & Mtg. Fin. Agcy. (Home Buyer)
Series B, 7.90% 10/1/22, (MBIA Insured)(b) Aaa $ 1,760,000 $ 1,801,800
New Jersey Turnpike Auth. Turnpike Rev. Rfdg.:
10.375% 1/1/03 (Escrowed to Maturity)(e) AAA 10,475,000 12,255,750
Series C:
6.50% 1/1/09 A 6,700,000 6,674,875
6.50% 1/1/16 A 4,000,000 3,870,000
6.50% 1/1/16 (MBIA Insured) Aaa 2,000,000 1,945,000
New Jersey Univ. (Medicine & Dentistry)
Series C, 7.20% 12/1/19 A 3,500,000 3,570,000
New Jersey Wastewtr. Treatment Trust Loan Rev.:
6.875% 6/15/06 Aa 1,320,000 1,371,150
6.875% 6/15/09 Aa 1,000,000 1,026,250
7% 6/15/10 Aa 1,750,000 1,802,500
Ocean County Utils. Auth. Wastewtr. Rev.
Rfdg. Series B, 5.75% 1/1/18 Aa 2,605,000 2,253,325
Passaic Valley Swr. Commission Rfdg.
(Swr. Sys.) Series D 5.75% 12/1/13
(AMBAC Insured) Aaa 1,000,000 873,750
Pennsauken Township Board of Ed.
Ctfs. of Prtn. 7.75% 7/15/09,
(MBIA Insured) Aaa 500,000 529,375
Rutgers State Univ. Rev. Rfdg.
Series R, 5.75% 5/1/18 A1 4,000,000 3,475,000
Sayreville Hsg. Dev. Corp. Mtg. Rev. Rfdg.
(Lakeview Section 8) 7.75% 8/1/24,
(FHA Guaranteed) AAA 2,490,000 2,552,250
Stony Brook Reg'l. Swr. Auth. Rev.
Series A, 7.40% 12/1/09
(Pre-Refunded to 12/1/99 @102)(e) Aa 1,000,000 1,086,250
Union County Unltd. Tax 5% 2/1/10 Aaa 2,000,000 1,682,500
Union County Util. Auth. Solid Waste Rev.
Series A: (b)
6.95% 6/15/03 A- 9,000,000 8,921,250
7% 6/15/04 A- 7,200,000 7,110,000
7.15% 6/15/09 A- 2,840,000 2,737,050
Wanaque Valley Reg'l. Swr. Auth. Rfdg.
Series B, 5.75% 9/1/18, (AMBAC Insured) Aaa 3,250,000 2,815,313
West New York Muni. Util. Auth. Swr. Rev.
Rfdg. (Cap. Appreciation) 0% 12/15/19,
(FGIC Insured) Aaa 2,395,000 431,100
276,275,098
NEW YORK & NEW JERSEY - 4.7%
New York & New Jersey Port Auth. Consolidated:
59th Series, 7.75% 1/15/23
(Pre-Refunded to 1/15/95 @ 102)(b)(e) A1 1,000,000 1,024,550
77th Series, 6.25% 1/15/27 (b) A1 5,000,000 4,468,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW YORK & NEW JERSEY - CONTINUED
New York & New Jersey Port Auth. Consolidated: - continued
85th Series, 5.375% 3/1/28 A1 $ 9,000,000 $ 7,087,500
87th Series, 5.25% 7/15/17(b) A1 2,000,000 1,600,000
New York & New Jersey Port Auth. Spl.
Oblig. Rev. (Continental Airlines Corp./
Eastern Airlines, Inc. Proj.) 9.125%
12/1/15 (b) B2 700,000 743,750
14,924,550
PUERTO RICO - 6.9%
Puerto Rico Commonwealth Hwy. Auth.
Hwy. Rev. Series Q, 6% 7/1/20 Baa1 4,000,000 3,460,000
Puerto Rico Commonwealth Urban Renewal & Hsg.
Corp. Rfdg. 7.875% 10/1/04 Baa1 5,235,000 5,627,625
Puerto Rico Hsg. Fin. Corp. Rev. (Multi-Family Mtg.
Portfolio A) Series I, 7.50% 4/1/22,
LOC Puerto Rico Gov't. Dev. Bank AA 2,705,000 2,742,184
Puerto Rico Infrastructure Fing. Auth. Spl.
Tax Series 1988 A, 7.75% 7/1/08 Baa1 2,255,000 2,379,025
Puerto Rico Pub. Bldgs. Auth. Rev. Rfdg.
Series L, 5.50% 7/1/21 Baa1 10,000,000 8,075,000
22,283,834
TOTAL MUNICIPAL BONDS
(Cost $323,649,682) 313,483,482
MUNICIPAL NOTES (A) - 2.3%
NEW JERSEY - 0.8%
New Jersey Econ. Dev. Auth. Ind. & Econ. Dev.
(Casa DiBertacchi Corp. Facs.) Series 1988,
4.05%, LOC Marine Midland Bank, VRDN (b) A-2 1,100,000 1,100,000
New Jersey Econ. Dev. Auth. Rev. (Danic Urban
Renewal Co. Proj.) Series 1985, 3.85%,
LOC Marine Midland Bank, VRDN P-2 1,400,000 1,400,000
2,500,000
NEW YORK & NEW JERSEY - 1.5%
New York & New Jersey Port Auth. Consolidated
Notes Series SS, 4.90% 9/1/97 (b) MIG 1 5,000,000 4,937,650
TOTAL MUNICIPAL NOTES
(Cost $7,500,000) 7,437,650
TOTAL INVESTMENTS
(Cost $331,149,682) $ 320,921,132
SECURITY TYPE ABBREVIATIONS
INFL - Inverse Floating Rate Security
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(c) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(d) Coupon is inversely indexed to a floating interest rate. The price will
be more volatile than the price of a comparable fixed rate security. The
rate shown is the rate at period end.
(e) Security collateralized by an amount sufficient to pay interest and
principal.
INCOME TAX INFORMATION
At November 30, 1994 the aggregate cost of investment securities for income
tax purposes was $331,149,682. Net unrealized depreciation aggregated
$10,228,550, of which $4,051,710 related to appreciated investment
securities and $14,280,260 related to depreciated investment securities.
At November 30, 1994, the fund had a capital loss carryforward of
approximately $1,661,400
which will expire on November 30, 2002.
At November 30, 1994 the fund was required to defer $17,735 of losses on
futures contracts.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 55.2% AAA, AA, A 72.1%
Baa 12.2% BBB 9.9%
Ba 0.0% BB 0.0%
B 0.2% 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 12.3%. FMR
has determined that unrated debt securities that are lower quality account
for 6.8% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investments, is as follows:
Transportation 19.2%
Health Care 15.5
General Obligation 14.8
Industrial Development 11.2
Escrowed/Pre-Refunded 10.5
Others
(individually less than 10%) 28.8
TOTAL 100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1994
1.ASSETS 2. 3.
4.Investment in securities, at value (cost $331,149,682) 5. $ 320,921,132
- -
See accompanying schedule
6.Interest receivable 7. 7,406,334
8.Redemption fees receivable 9. 72
10. 11.TOTAL ASSETS 12. 328,327,538
13.LIABILITIES 14. 15.
16.Payable to custodian bank $ 33,777 17.
18.Payable for fund shares redeemed 727,729 19.
20.Dividends payable 357,022 21.
22.Accrued management fee 148,651 23.
24. 25.TOTAL LIABILITIES 26. 1,267,179
27.28.NET ASSETS 29. $ 327,060,359
30.Net Assets consist of: 31. 32.
33.Paid in capital 34. $ 339,285,575
35.Accumulated undistributed net realized gain (loss) on 36.
investments (1,996,666)
37.Net unrealized appreciation (depreciation) 38. (10,228,550)
on investments
39.40.NET ASSETS, for 31,690,212 shares outstanding 41. $ 327,060,359
42.43.NET ASSET VALUE, offering price and redemption 44. $10.32
price per share ($327,060,359 (divided by) 31,690,212 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1994
45.46.INTEREST INCOME 47. $ 23,829,856
48.EXPENSES 49. 50.
51.Management fee $ 2,093,718 52.
53.Non-interested trustees' compensation 2,337 54.
55. 56.TOTAL EXPENSES 57. 2,096,055
58.59.NET INTEREST INCOME 60. 21,733,801
61.REALIZED AND UNREALIZED GAIN (LOSS) 63. 64.
62.Net realized gain (loss) on:
65. Investment securities (2,185,747) 66.
67. Futures contracts 313,735 (1,872,012)
68.Change in net unrealized appreciation (depreciation) 69. (42,678,448)
on investment securities
70.71.NET GAIN (LOSS) 72. (44,550,460)
73.74.NET INCREASE (DECREASE) IN NET ASSETS 75. $ (22,816,659)
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER 30,
1994 1993
76.INCREASE (DECREASE) IN NET ASSETS
77.Operations $ 21,733,801 $ 22,029,087
Net interest income
78. Net realized gain (loss) (1,872,012) 5,409,129
79. Change in net unrealized appreciation (depreciation) (42,678,448) 16,830,884
80. 81.NET INCREASE (DECREASE) IN NET ASSETS (22,816,659) 44,269,100
RESULTING FROM OPERATIONS
82.Distributions to shareholders: (21,733,801) (22,029,087)
From net interest income
83. From net realized gain (5,384,226) (4,879,335)
84. 85.TOTAL DISTRIBUTIONS (27,118,027) (26,908,422)
86.Share transactions 52,850,946 117,264,900
Net proceeds from sales of shares
87. Reinvestment of distributions 22,039,374 22,285,985
88. Cost of shares redeemed (120,455,997) (77,178,149)
89. Redemption fees 41,637 52,148
90. Net increase (decrease) in net assets resulting (45,524,040) 62,424,884
from
share transactions
91. 92.TOTAL INCREASE (DECREASE) IN NET ASSETS (95,458,726) 79,785,562
93.NET ASSETS 94. 95.
96. Beginning of period 422,519,085 342,733,523
97. End of period $ 327,060,359 $ 422,519,085
98.OTHER INFORMATION 100. 101.
99.Shares
102. Sold 4,712,112 10,139,177
103. Issued in reinvestment of distributions 1,969,361 1,932,128
104. Redeemed (10,919,165) (6,628,468)
105. Net increase (decrease) (4,237,692) 5,442,837
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED NOVEMBER 30,
1994 1993 1992 1991 1990
106.SELECTED PER-SHARE
DATA
107.Net asset value, $ 11.760 $ 11.240 $ 11.020 $ 10.620 $ 10.650
beginning of period
108.Income from .637 .640 .694 .694 .674
Investment Operations
Net investment income
109. Net realized and (1.291) .678 .298 .398 .050
unrealized gain (loss)
110. Total from investment (.654) 1.318 .992 1.092 .724
operations
111.Less Distributions (.637) (.640) (.694) (.694) (.674)
From net investment
income
112. From net realized gain (.150) (.160) (.080) - (.080)
on investments
113. Total distributions (.787) (.800) (.774) (.694) (.754)
114.Redemption fees added .001 .002 .002 .002 -
to paid in capital
115.Net asset value, $ 10.320 $ 11.760 $ 11.240 $ 11.020 $ 10.620
end of period
116.TOTAL RETURN A -5.86 12.12 9.33 10.63 7.15
% % % % %
117.RATIOS AND SUPPLEMENTAL DATA
118.Net assets, end of $ 327,060 $ 422,519 $ 342,734 $ 289,792 $ 209,658
period
(000 omitted)
119.Ratio of expenses to .55 .55 .51 .52 .65
average net assets % % % % %
120.Ratio of expenses to .55 .55 .56 .64 .68
average net assets before % % % % %
expense reductions
121.Ratio of net investment 5.70 5.52 6.22 6.44 6.47
income to average net % % % % %
assets
122.Portfolio turnover rate 8 25 33 42 82
% % % % %
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1994
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan New Jersey Municipal High Yield 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 of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. Securities for which quotations are not readily
available through the pricing service are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
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 investment income. Distributions from realized gains, 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. 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.
REDEMPTION FEES. Shares held in the fund less than 180 days are subject to
a redemption fee equal to .50% of the proceeds of the redeemed shares. The
fee, which is retained by the fund, is accounted for as an addition to paid
in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective December
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 the beginning of the fiscal year have been
reclassified to reflect an increase in paid in capital and a decrease in
accumulated net realized gain on investments of $510,154.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures and options
contracts, and may also 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, as reflected in the schedule of investments under the caption
"Futures Contracts," 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 $29,956,528 and $84,587,907, respectively. The face value of
futures contracts opened and closed amounted to $131,468,958 and
$131,268,076, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) pays all expenses, except the compensation of the
non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary expenses. FMR receives a fee that
is computed daily at an annual rate of .55% of the fund's average net
assets.
FMR also bears the cost of providing shareholder services to the fund. To
offset the cost of providing these services, FMR or its affiliates collect
certain transaction fees from the fund's shareholders which amounted to
$9,616 for the period.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Court Street Trust and the Shareholders of
Spartan
New Jersey Municipal High Yield
Portfolio:
We have audited the accompanying statement of assets and liabilities of
Fidelity Court Street Trust: Spartan New Jersey Municipal High Yield
Portfolio, including the schedule of portfolio investments, as of November
30, 1994, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years
in the period then ended. These financial statements and financial
highlights are the responsibility of the 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, 1994 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: Spartan New Jersey Municipal High Yield
Portfolio as of November 30, 1994, 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 L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 30, 1994
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Thomas J. Steffanci, Vice President
David Murphy, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
FIDELITY TAX-FREE BOND FUNDS
Aggressive Tax-Free
California Tax-Free High Yield
California Tax-Free Insured
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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 Tax-Free
Spartan Arizona Municipal Income
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
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(registered trademark)
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SPARTAN(registered trademark)
(registered trademark)
CONNECTICUT
MUNICIPAL
PORTFOLIOS
ANNUAL REPORT
NOVEMBER 30, 1994
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 19 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE 23 How the fund has done over time.
FUND TALK 25 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 27 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 28 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 32 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 36 Notes to the financial statements.
REPORT OF INDEPENDENT
ACCOUNTANTS 39 The auditors' opinion.
</TABLE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD OR
ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF
PRINCIPAL. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK. FOR MORE
INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL
1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The unsettling period that began for bond investors when the Federal
Reserve Board raised short-term interest rates in February has continued
into the fourth quarter of 1994. The Board raised the federal funds rate -
the rate banks charge each other for overnight loans - five times from
February through August, taking it from 3.00% to 4.75%. A sixth increase in
November lifted the rate to 5.50%. The Fed rate hikes were intended to
forestall inflation that could result from an improving U.S. economy, and
they led to negative returns for many bond investments and below-average
returns for many stocks.
The volatility we have witnessed this year follows a period in which there
was a nearly perfect investing environment. Although there was a
late-summer rally in stocks and, to a lesser extent in bond markets, it is
impossible to predict where interest rates might go or what might happen in
the markets in the months ahead. That's why it probably is a good time to
again review your investment portfolio and how well it matches your goals.
Keeping in mind that the negative effects of rising rates on your bond
investments will only be "paper" losses unless you sell your shares,
staying in your bond fund may be appropriate. The longer your investing
time frame, the more likely it is that you will retain your principal
investment through both up and down markets. For example, a 10-year time
frame, such as saving for a college education, enables you to weather these
ups and downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. As with any mutual fund, of course, there is no assurance that
a money market fund will achieve its goal, and money market funds are not
insured by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically, as we have discussed here. A periodic investment
plan will not, of course, assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns and
dividends would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Connecticut Municipal
High Yield Portfolio -7.62% 31.36% 62.16%
Lehman Brothers Municipal Bond Index -5.25% 37.52% n/a
Average Connecticut Tax-exempt
Municipal Bond Fund -7.65% 33.45% n/a
Consumer Price Index 2.81% 19.06% 30.01%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- - in this case, one year, five years, or since the fund started on October
29, 1987. 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 Connecticut
tax-exempt municipal bond fund, which currently reflects the performance of
13 Connecticut 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 (CPI) helps
show how your fund did compared to inflation. (The periods covered by the
CPI numbers are the closest available match to these covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1994 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Connecticut Municipal
High Yield Portfolio -7.62% 5.61% 7.05%
Lehman Brothers Municipal Bond Index -5.25% 6.58% n/a
Average Connecticut Tax-exempt
Municipal Bond Fund -7.65% 5.94% n/a
Consumer Price Index 2.81% 3.55% 3.77%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Spartan Connecticut TaxMunicipal Bond Ind
10/31/87 10000.00 10000.00
11/30/87 10121.14 10261.10
12/31/87 10253.38 10409.99
01/31/88 10621.32 10780.79
02/29/88 10727.51 10894.75
03/31/88 10415.77 10767.82
04/30/88 10463.24 10849.66
05/31/88 10515.59 10818.30
06/30/88 10713.45 10976.57
07/31/88 10766.94 11048.14
08/31/88 10821.12 11057.86
09/30/88 11033.66 11258.01
10/31/88 11228.48 11456.71
11/30/88 11123.75 11351.77
12/31/88 11289.83 11467.90
01/31/89 11442.62 11705.06
02/28/89 11333.30 11571.50
03/31/89 11345.51 11543.84
04/30/89 11654.63 11817.90
05/31/89 11899.34 12063.35
06/30/89 12098.25 12227.17
07/31/89 12229.61 12393.59
08/31/89 12100.69 12272.25
09/30/89 12064.54 12235.44
10/31/89 12207.62 12384.71
11/30/89 12387.76 12601.44
12/31/89 12467.79 12704.77
01/31/90 12357.27 12645.06
02/28/90 12469.60 12757.60
03/31/90 12491.35 12761.43
04/30/90 12296.36 12669.55
05/31/90 12602.21 12945.74
06/30/90 12730.25 13059.66
07/31/90 12919.65 13251.64
08/31/90 12687.36 13059.49
09/30/90 12769.38 13067.33
10/31/90 12962.06 13303.85
11/30/90 13241.66 13571.25
12/31/90 13302.08 13630.97
01/31/91 13449.70 13813.62
02/28/91 13534.39 13933.80
03/31/91 13556.04 13939.37
04/30/91 13728.33 14124.77
05/31/91 13850.06 14250.48
06/30/91 13743.00 14236.23
07/31/91 13906.13 14409.91
08/31/91 14057.21 14600.12
09/30/91 14183.28 14789.92
10/31/91 14323.10 14923.03
11/30/91 14357.59 14964.82
12/31/91 14709.44 15286.56
01/31/92 14731.79 15321.72
02/29/92 14739.08 15326.32
03/31/92 14671.72 15332.45
04/30/92 14749.26 15468.90
05/31/92 14951.26 15651.44
06/30/92 15245.81 15914.38
07/31/92 15720.88 16391.81
08/31/92 15498.37 16231.17
09/30/92 15604.48 16336.68
10/31/92 15338.53 16176.58
11/30/92 15752.70 16466.14
12/31/92 15918.26 16634.09
01/31/93 16155.62 16827.05
02/28/93 16812.50 17436.19
03/31/93 16583.73 17251.36
04/30/93 16736.58 17425.60
05/31/93 16834.45 17523.19
06/30/93 17132.67 17815.82
07/31/93 17158.03 17838.98
08/31/93 17547.21 18210.03
09/30/93 17760.00 18417.63
10/31/93 17769.50 18452.62
11/30/93 17613.40 18290.24
12/31/93 17984.07 18676.16
01/31/94 18192.19 18889.07
02/28/94 17691.70 18399.84
03/31/94 16886.78 17650.97
04/30/94 17031.86 17801.00
05/31/94 17133.34 17955.87
06/30/94 17026.94 17851.73
07/31/94 17368.69 18178.42
08/31/94 17407.77 18242.04
09/30/94 17121.73 17973.88
10/31/94 16740.36 17653.95
11/30/94 16273.36 17334.41
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Connecticut Municipal High Yield Portfolio on October 31, 1987, shortly
after the fund started. As the chart shows, by November 30, 1994, the value
of your investment would have grown to $16,273 - a 62.73% increase on your
initial investment. This assumes you still own the fund on November 30, and
therefore does not include the effect of the $5 account closeout fee. For
comparison, look at how the Lehman Brothers Municipal Bond index did over
the same period. With dividends reinvested, the same $10,000 would have
grown to $17,334 - a 73.34% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED NOVEMBER 30,
1994 1993 1992 1991 1990
Dividend return 5.27% 6.29% 6.59% 6.65% 6.71%
Capital appreciation returns -12.89% 5.52% 3.12% 1.77% 0.17%
Total return -7.62% 11.81% 9.71% 8.42% 6.88%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested. Capital appreciation and total returns include the effect of
the $5 account closeout fee.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED NOVEMBER 30, 1994 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.27(cents) 32.08(cents) 64.01(cents)
Annualized dividend rate 6.44% 6.04% 5.86%
30-day annualized yield 6.59% - -
30-day annualized tax-equivalent yield 10.78% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $9.96 over
the past month, $10.59 over the past six months and $10.93 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the fund's tax-free yield, if you're
in the 38.88% combined federal and state tax bracket.
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Sharply rising interest rates and
ongoing inflation worries caused a
severe downturn in U.S. bond
markets in 1994. Yields rose
sharply - and prices fell - on
taxable and tax-free bonds alike.
For the 12 months ended
November 30, 1994, the Lehman
Brothers Municipal Bond Index - a
broad measure of the tax-free
market - had a total return of
- -5.25%. By comparison, the
Lehman Brothers Aggregate Bond
Index - a proxy of
investment-grade taxable bonds -
returned -3.06%. After interest
rates remained low and relatively
steady in December 1993 and
January 1994, the rate
environment changed dramatically.
The Federal Reserve Board raised
the federal funds rate - the rate
banks charge each other for
overnight loans - from 3.00% to
5.50% from February through
November. The Fed was hoping to
head off future inflation that might
be triggered by an improving U.S.
economy. However, investors
heavily sold bonds at the very
threat of inflation because inflation
diminishes the value of their
fixed-rate income payments. Two
other influences affected the
performance of tax-free bonds,
specifically. First, investor demand
fell due to inflation worries, which
dampened prices. Second,
although it didn't outweigh the
negative effects of lower demand,
the supply of tax-free bonds fell as
well. The ability of states, cities and
public agencies to refinance
outstanding debt at lower, more
attractive rates was limited amid a
rising rate environment.
An interview with Maureen Newman,
Portfolio Manager of Spartan
Connecticut Municipal High Yield
Portfolio
Q. MAUREEN, HOW HAS THE FUND
PERFORMED?
A. For the year ended November 30, 1994, the fund had a total return of
- -7.62%. The average Connecticut municipal fund returned -7.65% for the same
period, according to Lipper Analytical Services.
Q. WHAT WERE SOME OF THE FACTORS THAT CREATED SUCH A NEGATIVE ENVIRONMENT?
A. The Federal Reserve Board increased the federal funds rate - the
interest banks charge each other for overnight loans - six times from
February through November 30. The outlook in February was that the economy
was improving, but that inflation - the usual result of rapid economic
growth and a negative for bond investors because it diminishes the value of
fixed-income payments - was not going to be a problem. Although some may
have applauded the Fed's vigilance at trying to check inflation, the Fed's
move kindled inflation fears, sparking a severe drop in price in all bond
markets.
Q. SO WHAT HAVE YOU DONE IN RESPONSE?
A. I have reduced the fund's duration, which lowers its sensitivity to
changes in comparable interest rates. I did so by using derivative
instruments called futures - which are widely employed for this purpose -
and by buying lower duration bonds. I don't like to increase the fund's
cash position to manage duration, because it reduces the income of the fund
and because the limited supply of Connecticut issues can make it difficult
to replace bonds later. The futures are held as a hedge against rising
interest rates, allowing me to manage duration without selling bonds.
Q. DOES THE FUND USE OTHER DERIVATIVE INVESTMENTS?
A. Yes, less than 3% of the fund is invested in inverse floaters - whose
yields rise as short-term rates fall, and vice versa. Using this type of
derivative can help me to achieve higher levels of tax-exempt income and
increased flexibility in managing the actual sensitivity to changes in
interest rates. These investments act like very long-term bonds,
effectively increasing a fund's duration, which is good in a falling
interest rate environment but can hurt the fund when interest rates rise.
That means that this year, with the Fed tightening, the fund's investment
in inverse floaters have hurt the fund's performance somewhat. Going
forward, I plan to link these investments to money market instruments
created at the same time by the same issuer. When linked together, they
perform like normal fixed-rate bonds with reduced interest rate
sensitivity.
Q. HEALTH CARE REMAINS THE FUND'S TOP SECTOR. WHAT'S YOUR OUTLOOK THERE?
A. Although I'm comfortable with the specific holdings in the health care
sector, in the long run I'll be working to reduce the fund's overall
exposure there, because of continuing changes in the health care
environment. I will accomplish this reduction in the fund's exposure to
health care only as other high income opportunities arise. Another top
sector in the fund is special tax bonds, securities linked to taxes such as
those levied on motor vehicles or liquor. This is an area where credit
remains strong.
Q. AFTER THE PERIOD ENDED, ORANGE COUNTY, CALIFORNIA DECLARED BANKRUPTCY
BECAUSE OF LOSSES IN ITS INVESTMENT FUND. ARE THERE CONNECTICUT
MUNICIPALITIES EXPERIENCING SIMILAR PROBLEMS?
A. None that we are aware of at this time. The State of Connecticut issued
an announcement stating that it on occasion purchases derivatives for
short-term investments, but that it has never used them for speculation.
The state added that it owned no such instruments at the time of the
announcement, and that it has not purchased derivatives using leverage, or
borrowed money, as Orange County did. From what we know now, Connecticut
municipalities have been even more conservative in their investments. As
far as the general muni market is concerned, Orange County caused a
temporary disruption, but the market bounced back as it sorted out the
issues. I don't expect the Orange County problem to have any significant
impact on the Connecticut market over the long term. With the help of
Fidelity's research staff, I'll continue to monitor the situation closely.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. In my view, interest rates probably will be more stable in 1995 than
they were in 1994. If I am correct, it's likely that bond prices will be
more stable as well. In that type of environment, the fund's total return
should be less dependent on bond price changes and more dependent on the
level of income the bonds pay. So to help boost the fund's total return,
I'll concentrate on pursuing a higher income for the fund. I'll do that
primarily by seeking opportunities in higher-yielding, lower-rated bonds.
Fidelity's research staff is one of the largest in the industry and has
expertise in finding high-yielding bonds that pay enough income to
compensate for the added risk that comes with a lower credit quality.
FUND FACTS
GOAL: to provide a high level
of current income exempt from
Connecticut state and federal
income taxes by investing
primarily in bonds rated Baa or
better
START DATE: October 29, 1987
SIZE: as of November 30,
1994, more than $315 million
MANAGER: Maureen Newman,
since July 1994; manager
Michigan Tax-Free High Yield
Fund since July 1994,
Spartan Aggressive Municipal
Fund, since October 1994
and Spartan Arizona
Municipal Income Fund since
October 1994; bond analyst
1985 to 1994; joined Fidelity
in 1985
(checkmark)
MAUREEN NEWMAN ON
INVESTMENT STRATEGY:
"I start with fundamental
research - checking
investment options issuer by
issuer - to come up with
investment ideas relating to
changes in credit quality. I try
to stay ahead of the market
and the rating agencies,
looking for quality trends
before they happen, in order
to buy into good situations on
their way up and to get out of
securities before the market
realizes potential problems.
Diversification is also a key,
as I try to keep a good mix of
coupons and maturities in the
fund which can reduce the
overall volatility of the fund."
(solid bullet) There has been a limited
supply of new bonds in
Connecticut, partially due to a
lack of activity in the state's
economy. The state still has
not recovered from cutbacks
in the defense and insurance
industries. There also has
been some credit
deterioration in the state in
general because of this
slow-down.
(solid bullet) As of July 1994, Maureen
Newman became the fund
manager.
Ms. Newman was previously
a research analyst.
DISTRIBUTIONS
The Board of Trustees of
Fidelity Court Street Trust:
Spartan Connecticut High
Yield Portfolio voted to pay on
December 19, 1994, to
shareholders of record at the
opening of business on
December 16, 1994, a
distribution of $.03 derived
from capital gains realized
from sales of portfolio
securities.
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF NOVEMBER 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
Health Care 28.5 28.7
General Obligation 25.0 23.7
Special Tax 11.6 12.0
Transportation 7.6 6.8
Education 7.1 6.9
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1994
6 MONTHS AGO
Years 18.5 19.8
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF NOVEMBER 30, 1994
6 MONTHS AGO
Years 8.2 8.5
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE.
QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1994
(MOODY'S RATINGS)
Aaa 17.1%
Aa, A 36.5%
Baa 29.5%
Ba or B 2.4%
Non-rated 10.2%
Short-term and other
investments 4.3%
Row: 1, Col: 1, Value: 17.1
Row: 1, Col: 2, Value: 36.5
Row: 1, Col: 3, Value: 29.5
Row: 1, Col: 4, Value: 2.4
Row: 1, Col: 5, Value: 10.2
Row: 1, Col: 6, Value: 4.3
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED
DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT AUGUST 31, 1994
ACCOUNT FOR 10.2% OF THE FUND'S INVESTMENTS.
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
INVESTMENTS NOVEMBER 30, 1994
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 95.7%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CONNECTICUT - 84.0%
Branford Gen. Oblig. Unltd. Tax:
7% 6/15/08, (FGIC Insured) Aaa $ 500,000 $ 517,500
7% 6/15/09, (FGIC Insured) Aaa 500,000 511,875
Bridgeport Gen. Oblig. Series B,
7.75% 11/15/10 Ba 3,235,000 3,263,306
Bridgeport Unltd. Tax Series A:
7.20% 3/1/98 Ba 930,000 946,275
7.40% 3/1/00 Ba 1,080,000 1,097,550
7.25% 6/1/02 Ba 565,000 564,294
7.625% 1/15/09 Ba 1,500,000 1,507,500
Brookfield Gen. Oblig.:
5.25% 7/15/10 Aa 200,000 173,000
5.25% 7/15/11 Aa 200,000 171,000
5.25% 7/15/12 Aa 200,000 169,250
5.25% 7/15/13 Aa 190,000 159,838
Canterbury Unltd. Tax:
7.20% 5/1/05 A 350,000 368,813
7.20% 5/1/06 A 195,000 204,750
Cheshire Unltd. Tax:
6.90% 2/15/06 Aa 100,000 104,875
6.90% 2/15/07 Aa 100,000 103,875
6.90% 2/15/08 Aa 100,000 103,125
Connecticut Clean Wtr. Fund Rev.:
5.875% 4/1/08 Aa 1,000,000 920,000
6% 10/1/12 (f) Aa 6,000,000 5,437,500
Series 1991, 7% 1/1/11 Aa 2,500,000 2,534,375
Connecticut College Savings Unltd. Tax
0% 12/1/11 Aa 1,540,000 492,800
Connecticut Dev. Auth. 1st. Mtg. Gross Rev.
(Health Care Proj.):
(Baptist Homes, Inc.):
8.75% 9/1/12 - 2,415,000 2,448,206
9% 9/1/22 - 4,240,000 4,367,200
(Inter-Church Residences, Inc.):
9.50% 5/1/13 - 1,200,000 1,288,500
9.625% 4/1/21 - 3,500,000 3,780,000
(Mary Wade Home, Inc. Proj.)
8.875%, 12/1/18 - 1,670,000 1,705,488
Connecticut Dev. Auth. Health Care Rfdg.
(Duncaster, Inc. Proj.) 6.75% 9/1/15 Aa3 3,000,000 2,797,500
Connecticut Dev. Auth. Health Care Rev.
(Jerome Home Proj.) 8% 11/1/19 - 1,975,000 1,970,063
Connecticut Dev. Auth. Poll. Cont. Rev.
(United Illuminating Co. Proj.)
9.50% 6/1/16 BBB- 2,625,000 2,782,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Dev. Auth. Rev. (Hartford Civic Ctr.)
Series A:
6% 11/15/07 A1 $ 1,525,000 $ 1,437,313
Series A, 6% 11/15/08 A1 1,525,000 1,420,156
Series A, 6% 11/15/08 A1 1,525,000 1,406,813
4.75% 11/15/13 A1 1,525,000 1,136,125
Connecticut Dev. Auth. Wtr. Facs. Rev. Rfdg.
(Bridgeport Hydraulic Co. Proj.)
7.25% 6/1/20 A 1,000,000 1,011,250
Connecticut Gen. Oblig.:
(Cap. Appreciation College Savings Plan):
Series A:
0% 12/1/07 Aa 4,000,000 1,695,000
0% 12/1/08 Aa 558,000 218,318
Series B:
0% 11/1/09 Aa 11,390,000 4,257,013
0% 11/15/10 Aa 4,460,000 1,544,275
(College Savings Plan):
Series 1991 A, 0% 5/15/10 Aa 1,025,000 366,438
Series A:
0% 11/1/06 Aa 2,800,000 1,291,500
0% 5/15/10 Aa 7,980,000 2,852,850
0% 5/15/11 Aa 3,350,000 1,113,875
Unltd. Tax:
Series A, 0% 6/15/10 Aa 2,188,000 779,475
Series B:
Rfdg.:
5.30% 3/15/07 Aa 1,500,000 1,333,125
5.50% 3/15/10 Aa 2,000,000 1,767,500
5.50% 3/15/10 Aa 1,000,000 880,000
0%, 12/15/10 Aa 2,428,000 837,660
0%, 12/15/11 Aa 1,496,000 478,720
Series A:
0% 7/1/98 Aa 780,000 642,525
0% 7/1/03 Aa 4,000,000 2,340,000
0% 7/1/04 Aa 4,514,000 2,465,773
0% 7/1/05 Aa 750,000 380,625
0% 5/15/07 Aa 2,250,000 990,000
0% 7/1/07 Aa 2,430,000 1,060,088
0% 7/1/08 Aa 1,690,000 676,000
Connecticut Health & Ed. Facs. Auth. Rev.:
Rfdg. (Lawrence & Memorial Hosp.)
Series D, 5% 7/1/13 (MBIA Insured) Aaa 2,000,000 1,582,500
(Bristol Hosp.) Issue A:
7% 7/1/09 (MBIA Insured) Aaa 1,750,000 1,769,688
7% 7/1/20 (MBIA Insured) Aaa 4,180,000 4,159,100
(Hartford Univ.) Series D, 6.80% 7/1/22 Baa 6,320,000 5,577,400
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Health & Ed. Facs. Auth. Rev. - continued
(Lutheran Gen. Health Care Sys.)
7.375% 7/1/19 Aaa $ 3,195,000 $ 3,406,669
(New Britain Mem. Hosp.) Series A,
7.75% 7/1/22 BBB- 16,900,000 16,139,500
(Norwalk Health Care, Inc.) Series A,
8.70% 7/1/22 - 6,600,000 6,740,250
(Quinnipiac Coll.):
Rfdg. Series D:
6%, 7/1/13 BBB- 3,750,000 3,060,938
6%, 7/1/23 BBB- 3,975,000 3,085,594
Series C, 7.75% 7/1/20 (Pre-Refunded
to 7/1/00 @ 102) (c) BBB- 1,000,000 1,101,250
(St. Joseph Living Ctr. Proj.) 4.75%
11/1/14 A1 3,250,000 2,331,875
(St. Mary's Hosp.) :
Issue B:
7.60% 7/1/03 Baa 900,000 920,250
7.80% 7/1/09 (AMBAC Insured) Baa 9,525,000 9,513,094
Series C, 7.375% 7/1/20 Baa 7,420,000 6,900,600
(St. Raphael Hosp.) Series H:
6.50% 7/1/11, (AMBAC Insured) Aaa 2,780,000 2,693,125
6.50% 7/1/13, (AMBAC Insured) Aaa 3,125,000 3,003,906
5.25% 7/1/14, (AMBAC Insured) Aaa 4,400,000 3,635,500
(Sacred Heart Univ.) Series A, 6.85%
7/1/22, LOC Fleet Nat'l. Bank A 1,000,000 936,250
(Sharon Healthcare, Inc.) Series A:
8.75% 7/1/06 (Pre-Refunded
to 7/1/01 @ 103) (c) AAA 450,000 524,813
9% 7/1/13 (Pre-Refunded
to 7/1/01 @ 103) (c) AAA 1,300,000 1,532,375
9.20% 7/1/21 (Pre-Refunded
to 7/1/01 @ 103) (c) AAA 1,500,000 1,785,000
(The Griffin Hosp.) Series A, 6% 7/1/13 Baa1 3,000,000 2,452,500
(Tolland County Health Care, Inc.) Series A:
8.75% 7/1/08 - 350,000 366,625
9% 7/1/13 - 1,000,000 1,063,750
9.20% 7/1/21 - 3,600,000 3,870,000
(Yale-New Haven Hosp.) Series F,
7.10% 7/1/25, (MBIA Insured) Aaa 5,000,000 5,012,500
(Yale Univ.) 7.57% 5/15/30 INFL (d) Aaa 7,000,000 4,952,500
Connecticut Higher Ed. Supplemental Loan
Auth. Rev. (b):
(Family Ed. Loan Prog.) Series A:
6.80% 11/15/02 A 460,000 458,850
7.20% 11/15/10 A 935,000 927,988
Series A:
7.375% 11/15/05 A1 565,000 567,119
7.50% 11/15/10 A1 1,950,000 1,959,750
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Hsg. Fin. Auth. (Mtg. Fin. Prog.):
Series B1, 7.55% 11/15/08 Aa $ 965,000 $ 972,238
Series C, 7.625% 11/15/17 Aa 540,000 540,000
Series E, 8.75% 11/15/18 Aa 4,455,000 4,700,025
Connecticut Muni. Elec. Energy Coop. Pwr.
Supply Sys. Rev. Series A, 5% 1/1/18,
(MBIA Insured) Aaa 5,555,000 4,346,788
Connecticut Resource Recovery Auth. Rev.
(American Refuse Fuel Co.) 8.10%
11/15/15 (b) A2 4,500,000 4,798,125
Connecticut Spl. Tax. Oblig. Rev.
(Trans. Infrastructure):
Series A:
Rfdg. 5.25% 9/1/07 A1 4,165,000 3,581,900
7.125% 6/1/10 A1 3,550,000 3,629,875
Series B:
0% 6/1/08 A1 3,500,000 1,378,125
6.15% 9/1/09 A1 1,500,000 1,406,250
6.50% 10/1/10 A1 3,250,000 3,132,188
6.125% 9/1/12 A1 5,000,000 4,543,750
6.50% 10/1/12 A1 3,500,000 3,329,375
Series 1993 A, 5.375% 9/1/08 A1 6,705,000 5,766,300
Connecticut Spl. Tax Rev. Rfdg. Rites
4.484% 10/1/03 INFL (d) A1 5,000,000 2,856,250
Eastern Connecticut Resource Recovery Auth.
Solid Waste Rev. (Wheelabrator Lisbon
Proj.) Series A (b):
5.50% 1/1/15 (f) A 8,000,000 6,180,000
5.50% 1/1/20 A 3,000,000 2,212,500
Franklin Unltd. Tax :
7.30% 3/15/04 A 225,000 238,500
7.30% 3/15/05 A 225,000 238,781
7.30% 3/15/06 A 225,000 239,625
Hartford County Metropolitan Dist.:
School Boards Unltd. Tax 9.50% 6/1/03 Aa1 100,000 121,750
6.20% 11/15/09 Aa1 250,000 239,375
Manchester Hsg. Dev. Agcy.
(Multi-Family Hsg.) 7.20% 12/1/18 - 1,565,000 1,406,544
Mansfield Gen. Oblig. Unltd. Tax:
6.80% 6/15/03 A1 300,000 309,000
6.80% 6/15/08 A1 150,000 149,625
Meriden Unltd. Tax 7% 10/1/07,
(MBIA Insured) Aaa 500,000 526,250
Milford Gen. Oblig.:
Unltd. Tax:
6.70% 2/1/05 Aa 400,000 413,500
6.70% 2/1/08 Aa 315,000 318,150
5.20% 1/15/11 Aa 550,000 467,500
5.20% 1/15/13 Aa 500,000 418,125
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Monteville Gen. Oblig.:
6.30% 3/1/10 Aa $ 405,000 $ 393,863
Unltd. Tax:
7% 3/15/13 Aa 220,000 228,525
7% 3/15/14 Aa 220,000 228,800
7% 3/15/15 Aa 210,000 218,400
Naugatuck Unltd. Tax:
7.25% 9/1/04, (MBIA Insured) Aaa 215,000 231,931
6.90% 6/15/07, (FGIC Insured) Aaa 485,000 503,794
7.40% 9/1/07, (MBIA Insured) Aaa 370,000 400,063
7.40% 9/1/08, (MBIA Insured) Aaa 370,000 398,213
New Britain Gen. Oblig.:
Unltd. Tax:
Rfdg. 6% 2/1/12 (MBIA Insured) Aaa 400,000 370,500
7% 4/1/07 (MBIA Insured) Aaa 580,000 604,650
7% 4/1/08 (MBIA Insured) Aaa 580,000 603,200
Series B, 6% 3/1/12, (MBIA Insured) Aaa 2,000,000 1,850,000
5% 2/1/12 (MBIA Insured) Aaa 885,000 722,381
5% 2/1/13 (MBIA Insured) Aaa 885,000 716,850
New Haven Facs. Rev. (Easter Seal
Goodwill Rehabilitation Proj.)
8.875% 4/1/16 - 1,600,000 1,570,000
New Haven Gen. Oblig.:
Series A, 7.40% 3/1/12 Baa 1,000,000 995,000
8.25% 8/15/01 Baa 3,280,000 3,538,300
Newington Unltd. Tax:
6.50% 2/1/06 A1 320,000 322,000
6.60% 2/1/07 A1 200,000 201,250
North Haven Unltd. Tax 7% 10/1/08 Aa 375,000 394,219
North Thompsonville Fire Dist.:
6.75% 6/1/07, (MBIA Insured) Aaa 180,000 185,400
6.75% 6/1/08, (MBIA Insured) Aaa 190,000 194,275
6.75% 6/1/09, (MBIA Insured) Aaa 200,000 204,500
6.75% 6/1/10, (MBIA Insured) Aaa 215,000 219,837
6.75% 6/1/11, (MBIA Insured) Aaa 230,000 235,462
Norwalk Hsg. Auth. Mtg. Rev. (Monterey
Village) Series 1985 B, Section 8,
9% 11/1/99 - 165,000 167,474
Plainville Gen. Oblig.:
Unltd. Tax:
6.60% 8/15/09 A1 250,000 250,938
6.60% 8/15/10 A1 250,000 249,687
6.60% 8/15/11 A1 250,000 250,000
6.60% 8/15/08 A1 250,000 248,437
Stamford Gen. Oblig. Unltd. Tax :
6.60% 1/15/07 Aaa 295,000 299,424
6.60% 1/15/08 Aaa 1,480,000 1,492,950
6.60% 1/15/09 Aaa 1,000,000 1,012,500
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Stratford Gen. Oblig. Unltd. Tax 7%
6/15/08, (FGIC Insured) Aaa $ 500,000 $ 517,500
Thomaston Unltd. Tax:
6.50% 8/1/08 A 210,000 205,800
6.50% 8/1/09 A 210,000 206,850
Vernon Unltd. Tax:
7.10% 10/15/07 A1 250,000 266,874
7.10% 10/15/08 A1 250,000 264,374
Voluntown Gen. Oblig. Unltd. Tax:
6.75% 10/1/03 A 210,000 216,562
6.75% 10/1/04 A 210,000 215,774
6.80% 10/1/06 A 210,000 216,562
6.80% 10/1/07 A 210,000 213,150
6.80% 10/1/08 A 210,000 215,250
6.80% 10/1/09 A 185,000 188,237
West Haven Impt. Unltd. Tax 6.70%
2/15/04, (MBIA Insured) Aaa 710,000 739,287
Winchester Gen. Oblig. Unltd. Tax:
7.10% 11/15/06 A1 125,000 130,312
7.10% 11/15/08 A1 110,000 113,300
Wolcott Gen. Oblig. Unltd. Tax:
7% 6/15/09 (FGIC Insured) Aaa 445,000 455,568
7% 6/15/10 (FGIC Insured) Aaa 440,000 448,250
Woodstock Spl. Oblig. Rev. (Woodstock
Academy) 7% 3/1/08, (AMBAC Insured) Aaa 725,000 759,437
260,240,958
PUERTO RICO - 11.4%
Puerto Rico Commonwealth Hwy. & Trns. Auth. Rev.:
Rfdg.:
Series M, 5.75% 7/1/15 Baa1 3,500,000 2,896,250
Series W, 5.50% 7/1/13 Baa1 14,250,000 11,898,750
Series X, 5.50% 7/1/13 Baa1 2,500,000 2,087,500
Series X, 5.50% 7/1/15 Baa1 8,000,000 6,620,000
Puerto Rico Elec. Pwr. Auth. Pwr. Rev.
Series T, 5.50% 7/1/20 Baa1 1,500,000 1,218,750
Puerto Rico Pub. Bldgs. Auth. Rev. Rfdg.
Series L, 5.50% 7/1/21 Baa1 12,000,000 9,690,000
Puerto Rico Pub. Ed. & Hlth. Facs. Rfdg.
Series M, 5.75% 7/1/15 Baa1 1,000,000 840,000
35,251,250
U.S. VIRGIN ISLANDS - 0.3%
Virgin Islands Wtr. & Pwr. Auth. Elec. Sys.
Series A, 7.40% 7/1/11 - 1,000,000 986,250
TOTAL MUNICIPAL BONDS
(Cost $317,705,309) 296,478,458
MUNICIPAL NOTES (A) - 4.3%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CONNECTICUT - 4.3%
Connecticut Special Assessment Unemployment
Rev. Series 1993 B, 3.45%, LOC Industrial
Bank of Japan, Mitsubishi Bank Ltd.
Japan, VRDN VMIG 1 $ 6,450,000 $ 6,450,000
Connecticut State Dev. Auth. (Light & Pwr.
Co. Proj. 1993) Series A, 2.75%
9/1/28, LOC Deutsche Bank, VRDN VMIG 1 7,000,000 7,000,000
TOTAL MUNICIPAL NOTES
(Cost $13,450,000) 13,450,000
TOTAL INVESTMENTS - 100%
(Cost $331,155,309) $ 309,928,458
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SELL
80 U.S. Treasury Bond Futures March, 1995 $ 7,845,000 $ (28,226)
10 Municipal Bond Futures March, 1995 837,188 (7,501)
$ (35,727)
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.8%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(f) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(g) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(h) Security collateralized by an amount sufficient to pay interest and
principal.
(i) Coupon is inversely indexed to a floating interest rate. The price will
be more volatile than the price of a comparable fixed rate security. The
rate shown is the rate at period end.
(j) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(k) 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 $9,152,500.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 49.0% AAA, AA, A 60.7%
Baa 21.0% BBB 11.7%
Ba 2.4% BB 2.4%
B 0.0% B 0.0%
Caa 0.0% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.0%
The percentage not rated by either S&P or Moody's amounted to 10.2%. FMR
has determined that unrated debt securities that are lower quality account
for 10.2% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 28.5%
General Obligation 25.0
Special Tax 11.6
Others
(individually less than 10%) 34.9
TOTAL 100.0%
INCOME TAX INFORMATION
At November 30, 1994, the aggregate cost of investment securities for
income tax purposes was $331,161,463. Net unrealized depreciation
aggregated $21,233,005, of which $5,306,594 related to appreciated
investment securities and $26,539,599 related to depreciated investment
securities.
The fund hereby designates $876,961 as a capital gain dividend for the
purpose of the dividend paid deduction.
The fund has elected to defer to its fiscal year ending November 30, 1995,
$1,497,452 of losses recognized during the period December 1, 1993 to
November 30, 1994.
SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1994
123.ASSETS 124. 125.
126.Investment in securities, at value (cost 127. $ 309,928,458
$331,155,309) -
See accompanying schedule
128.Receivable for investments sold 129. 591,856
130.Interest receivable 131. 6,262,930
132. 133.TOTAL ASSETS 134. 316,783,244
135.LIABILITIES 136. 137.
138.Payable to custodian bank $ 60,455 139.
140.Payable for fund shares redeemed 572,449 141.
142.Dividends payable 353,081 143.
144.Accrued management fee 144,876 145.
146.Payable for daily variation on futures contracts 70,072 147.
148. 149.TOTAL LIABILITIES 150. 1,200,933
151.152.NET ASSETS 153. $ 315,582,311
154.Net Assets consist of: 155. 156.
157.Paid in capital 158. $ 339,105,081
159.Accumulated undistributed net realized gain (loss) 160. (2,260,192)
on investments
161.Net unrealized appreciation (depreciation) 162. (21,262,578)
on investments
163.164.NET ASSETS, for 31,695,171 shares 165. $ 315,582,311
outstanding
166.167.NET ASSET VALUE, offering price and 168. $9.96
redemption price per share ($315,582,311 (divided by)
31,695,171 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1994
169.170.INTEREST INCOME 171. $ 25,246,509
172.EXPENSES 173. 174.
175.Management fee $ 2,172,808 176.
177.Non-interested trustees' compensation 2,451 178.
179. 180.TOTAL EXPENSES 181. 2,175,259
182.183.NET INTEREST INCOME 184. 23,071,250
185.REALIZED AND UNREALIZED GAIN (LOSS) 187. 188.
186.Net realized gain (loss) on:
189. Investment securities 172,704 190.
191. Futures contracts 1,323,154 1,495,858
192.Change in net unrealized appreciation 193. 194.
(depreciation) on:
195. Investment securities (54,162,510) 196.
197. Futures contracts (35,727) (54,198,237)
198.199.NET GAIN (LOSS) 200. (52,702,379)
201.202.NET INCREASE (DECREASE) IN NET ASSETS 203. $ (29,631,129)
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER 30,
1994 1993
204.INCREASE (DECREASE) IN NET ASSETS
205.Operations $ 23,071,250 $ 26,176,581
Net interest income
206. Net realized gain (loss) 1,495,858 14,894,691
207. Change in net unrealized appreciation (54,198,237) 8,978,171
(depreciation)
208. (29,631,129) 50,049,443
209.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
210.Distributions to shareholders: (23,071,250) (26,176,581)
From net interest income
211. From net realized gain (15,541,191) -
212. 213.TOTAL DISTRIBUTIONS (38,612,441) (26,176,581)
214.Share transactions 72,572,004 109,111,103
Net proceeds from sales of shares
215. Reinvestment of distributions 31,414,952 21,413,874
216. Cost of shares redeemed (170,335,951) (118,085,422)
217. Redemption fees 62,252 52,698
218. (66,286,743) 12,492,253
Net increase (decrease) in net assets resulting from
share transactions
219. (134,530,313) 36,365,115
220.TOTAL INCREASE (DECREASE) IN NET ASSETS
221.NET ASSETS 222. 223.
224. Beginning of period 450,112,624 413,747,509
225. End of period $ 315,582,311 $ 450,112,624
226.OTHER INFORMATION 228. 229.
227.Shares
230. Sold 6,627,548 9,381,355
231. Issued in reinvestment of distributions 2,812,853 1,827,287
232. Redeemed (15,753,663) (10,079,212)
233. Net increase (decrease) (6,313,262) 1,129,430
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED NOVEMBER 30,
1994 1993 1992 1991 1990
234.SELECTED PER-SHARE
DATA
235.Net asset value, $ 11.840 $ 11.220 $ 10.880 $ 10.730 $ 10.730
beginning of period
236.Income from .640 .680 .689 .684 .687
Investment Operations
Net interest income
237. Net realized and (1.472) .619 .338 .188 .020
unrealized gain (loss)
238. Total from investment (.832) 1.299 1.027 .872 .707
operations
239.Less Distributions (.640) (.680) (.689) (.684) (.687)
From net interest
income
240. From net realized gain (.410) - - (.040) (.020)
on investments
241. Total distributions (1.050) (.680) (.689) (.724) (.707)
242.Redemption fees added .002 .001 .002 .002 -
to paid in capital
243.Net asset value, $ 9.960 $ 11.840 $ 11.220 $ 10.880 $ 10.730
end of period
244.TOTAL RETURN A -7.61 11.81 9.72 8.43 6.89
% % % % %
245.RATIOS AND
SUPPLEMENTAL DATA
246.Net assets, end of $ 315,582 $ 450,113 $ 413,748 $ 346,781 $ 251,855
period
(000 omitted)
247.Ratio of expenses to .55 .55 .55 .55 .62
average net assets % % % % %
248.Ratio of expenses to .55 .55 .55 .60 .62
average net assets before % % % % %
expense reductions
249.Ratio of net interest 5.83 5.81 6.21 6.34 6.51
income to average net % % % % %
assets
250.Portfolio turnover rate 11 45 11 6 18
% % % % %
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of the fund's $5 account closeout fee. Yield measures the income
paid by a fund. Since a money market fund tries to maintain a $1 share
price, yield is an important measure of performance. If Fidelity had not
voluntarily reimbursed the fund for expenses during the periods shown, the
total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1994 PAST 1 LIFE OF
YEAR FUND
Spartan Connecticut Municipal
Money Market Portfolio 2.27% 10.95%
Consumer Price Index 2.81% 11.20%
Average Connecticut Tax-Free
Money Market Fund 2.08% 9.26%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- - in this case, one year, or since the fund started on March 4, 1991. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. Comparing the fund's performance
to the consumer price index (CPI) helps show how your investment did
compared to inflation. To measure how the fund stacked up against its
peers, you can compare its return to the average Connecticut tax-free money
market fund's total return. This average currently reflects the performance
of 12 Connecticut tax-free money market funds tracked by IBC/Donoghue. (The
periods covered by the CPI and IBC/Donoghue numbers are the closest
available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1994 PAST 1 LIFE OF
YEAR FUND
Spartan Connecticut Municipal
Money Market Portfolio 2.27% 2.81%
Consumer Price Index 2.81% 2.87%
Average Connecticut Tax-Free
Money Market Fund 2.08% 2.44%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
11/30/93 2/28/94 5/31/94 8/31/94 11/30/94
Spartan Connecticut Municip 1.96% 2.03% 2.32% 2.63% 3.24%
al
Money Market Fund
Average Connecticut Tax-Fr 1.81% 1.86% 2.19% 2.45% 3.01%
ee
Money Market Fund
Spartan Connecticut Municip 3.19% 3.31% 3.78% 4.28% 5.27%
al
Money Market Fund -
Tax-equivalent
Portion of fund's income 10.1% 9.4% 6.8% 13.9% 12.5%
subject to state taxes on last
day of period
Average All Taxable 2.69% 2.79% 3.51% 4.08% 4.84%
Money Market Fund
</TABLE>
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the average tax-free money market fund. Or you can
look at the fund's tax-equivalent yield, which is based on a combined
effective 1994 federal and state income tax rate of 38.88% and reflects
that a portion of the fund's income was subject to state taxes. The
tax-equivalent figures are useful in seeing how the fund stacked up against
the average taxable money market fund as tracked by IBC/Donoghue. A portion
of the fund's income may be subject to the alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free
investments are usually lower
than yields on taxable
investments. However, a
straight comparison between
the two may be misleading
because it ignores the way
taxes reduce taxable returns.
Tax-equivalent yield - the
yield you'd have to earn on a
similar taxable investment to
match the tax-free yield -
makes the comparison more
meaningful. Keep in mind that
the U.S. government neither
insures nor guarantees a
money market fund. In fact,
there is no assurance that a
money market fund will
maintain a $1 share price.
(checkmark)
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Scott Orr,
Portfolio Manager of Spartan
Connecticut Municipal Money
Market Portfolio
Q. SCOTT, RISING INTEREST RATES HAVE CHANGED THE INVESTMENT CLIMATE
DRAMATICALLY DURING THE PAST YEAR. CAN YOU SUMMARIZE THE MAJOR
DEVELOPMENTS?
A. Sure. The Federal Reserve Board has raised the federal funds rate - what
banks charge each other for overnight loans - six times since the last
annual report. The first three increases - in February, March and April -
were a quarter-point each. Then there were two half-point increases in May
and August, followed by a three-quarter-point jump in November. The trend
lately has been toward larger increases, more widely spaced. By the end of
November, the federal funds rate stood at 5.50%, up sharply from 3% a year
ago.
Q. WHAT STEPS HAVE YOU TAKEN TO MAXIMIZE RETURNS IN THE FACE OF RISING
INTEREST RATES?
A. The simple answer is that I've shortened the fund's average maturity.
When rates are rising, it usually doesn't make sense to emphasize
longer-term securities; it's better to buy shorter-term instruments and let
the fund's yield rise with current rates. That's why the fund's average
maturity was 68 days at the end of November, down from 72 days a year ago.
Q. THE FUND'S AVERAGE MATURITY BOTTOMED OUT IN THE 30S EARLIER IN THE YEAR.
IF RATES ARE STILL RISING, WHY IS THE FUND'S AVERAGE MATURITY LONGER NOW
THAN IT WAS THEN?
A. It's fair to say that in a rising-rate environment, normally I'd be
looking for ways to shorten the fund's average maturity by adding variable
rate demand notes (VRDNs) - short-term securities whose yields rise with
the market. But demand for VRDNs has risen lately to the point where
they've lost a lot of their appeal. Instead, I've been buying more
fixed-rate securities that have attractive yields which reflect the
likelihood of future rate increases. That strategy has lengthened the
fund's average maturity.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on November 30, 1994 was 3.24%, up from 1.96%
a year ago. The latest yield is equivalent to a 5.27% yield on a taxable
investment for investors in Connecticut's 38.88% combined federal and state
tax bracket. The fund's total return for the year ended November 30, 1994,
was 2.27%. That beat the average total return of 2.08% for all Connecticut
tax-free money market funds, according to IBC/Donoghue.
Q. WHAT'S AHEAD?
A. I found it reassuring that the last rate increase in November was higher
than expected. In my view, that may give us a little breathing room before
rates go up again. I think chances are excellent, however, that eventually
rates will resume climbing - possibly to as high as 7.5% as the Fed seeks
to meet its goal of 2.5% overall economic growth. Accordingly, I'll try to
preserve the fund's flexibility with an average maturity that will probably
vary between 45 and 60 days in the months ahead.
FUND FACTS
GOAL: tax-free income and
stability by investing in
high-quality, short-term,
Connecticut municipal securities
START DATE: March 4, 1991
SIZE: as of November 30,
1994, more than $167 million
MANAGER: Scott Orr, since
October 1993; manager,
Fidelity
Connecticut Municipal Money
Market Portfolio, since October
1993; Fidelity Michigan
Municipal Money Market
Portfolio,
Fidelity New Jersey Tax-Free
Money Market Portfolio and
Spartan New Jersey Money
Market Portfolios, since
January 1992; Spartan Arizona
Money Market, since
November 1994:
joined Fidelity in 1989
(checkmark)
MONEY MARKETS AND
DERIVATIVES:
The word "derivatives" covers
a wide range of financial
agreements, of varying
degrees of complexity, that
have market values based on
security or market indices. All
"derivative" securities in
Fidelity's money market funds
are designed to have the price
characteristics of typical
money market securities.
During the recent Federal
Reserve Board interest rate
increases, all Fidelity money
market holdings performed as
designed and the funds
maintained a stable share
price of $1.00.
The more complex of these
instruments, such as floating
rate notes with unusual and
complex floating rate
formulas, frequently have too
much price volatility to be
appropriate investments for
money market funds. Many of
them do not offer the degree
of price stability Fidelity
believes is required in order
for its funds to maintain a
stable $1.00 share price.
Therefore, despite their
frequent higher yields at the
time they are sold, Fidelity
has not purchased these
volatile securities. While this
may sometimes have caused
Fidelity money market funds
to have lower gross yields
than certain other funds,
Fidelity believes its investors
value prudence as well as
performance.
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
11/30/94 5/31/94 11/30/93
0 - 30 62 61 66
31 - 90 8 26 10
91 - 180 12 12 5
181 - 397 18 1 19
WEIGHTED AVERAGE MATURITY
11/30/94 5/31/94 11/30/93
Spartan Connecticut
Municipal Money Market
Portfolio 68 days 41 days 72 days
Average Connecticut
Tax-Free Money Market Fun 61 days 60 days 76 days
d*
ASSET ALLOCATION
AS OF NOVEMBER 30, 1994 AS OF MAY 31, 1994
Row: 1, Col: 1, Value: 53.0
Row: 1, Col: 2, Value: 20.0
Row: 1, Col: 3, Value: 18.0
Row: 1, Col: 4, Value: 3.0
Row: 1, Col: 5, Value: 6.0
Row: 1, Col: 1, Value: 47.0
Row: 1, Col: 2, Value: 20.0
Row: 1, Col: 3, Value: 21.0
Row: 1, Col: 4, Value: 11.0
Row: 1, Col: 5, Value: 1.0
Variable rate
demand notes
(VRDNs) 53%
Commercial
paper 20%
Tender bonds 18%
Municipal
notes 3%
Other 6%
Variable rate
demand notes
(VRDNs) 47%
Commercial
paper 20%
Tender bonds 21%
Municipal
notes 11%
Other 1%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENTS NOVEMBER 30, 1994
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - 0.2%
Orange County Apt. Dev. Rev. Rfdg. Bonds, Series 1990 A,
4.10%, tender 12/6/94, LOC Tokai Bank $ 341,000 $ 341,000
CONNECTICUT - 78.9%
Clipper Tax Exempt Trust Participating VRDN,
Series 1994-1, 3.92%, (Liquidity Facility State Street
Bank & Trust Co.) (c) 4,968,215 4,968,215
Connecticut Dev. Auth. (Shelton Inn Proj.) Series 1986,
3.70%, LOC Bank of Tokyo, VRDN (b) 200,000 200,000
Connecticut Dev. Auth. Arpt. Facs. Rev. (Arpt. Hotel
Bradley Assoc. Ltd., Proj.) 3.55%,
LOC Daiwa Bank, VRDN 6,500,000 6,500,000
Connecticut Dev. Auth. Health. Care Rev.
(Corp. for Independent Living Proj.), VRDN:
Series 1990, 3.50%, LOC Cr. Commercial de France 4,700,000 4,700,000
Series 1993, 3.50%, LOC Daiwa Bank 3,200,000 3,200,000
Connecticut Dev. Auth. Poll. Cont. Rev. (Light & Pwr. Co.
Proj.) Series B, 3.60%, LOC Union Bank of
Switzerland, VRDN (b) 7,200,000 7,200,000
Connecticut Dev. Auth. Solid Waste Disp. Facs. Rev., VRDN (b):
(Exeter Energy):
Series 1989 A, 3.60%, LOC Sanwa Bank 1,500,000 1,500,000
Series 1989 B, 3.60%, LOC Sanwa Bank 4,900,000 4,900,000
(Rand-Whitney Containerboard), 3.20%,
LOC Chase Manhattan Bank 3,300,000 3,300,000
Connecticut Econ. Recovery Gen. Oblig. Notes:
Bonds Series A, 5.25% 12/15/94 1,000,000 1,000,845
Series 1991 B, 3.65%, BPA Canadian Imperial
Bank, Industrial Bank of Japan, Nat'l.
Westminster Bank, VRDN 2,100,000 2,100,000
Connecticut Gen. Oblig. Bonds:
Series A, 5.20% 3/15/95 4,475,000 4,492,654
Series C, 3.90% 3/15/95 1,500,000 1,500,400
Connecticut Gen. Oblig. Participating VRDN (c):
Series BT-103, 3.825% (Liquidity Facility Bankers Trust) 1,600,000
1,600,000
Series MGT-27, 3.90% (Liquidity Facility Morgan
Guaranty Trust Co.) 2,325,000 2,325,000
Series PA-1, 3.90% (Liquidity Facility Merrill
Lynch & Co. Inc.) 2,000,000 2,000,000
Connecticut Health & Ed. Fac. Auth.:
(Charlotte Hungerford Hosp.) Series B, 3.65%,
LOC Mitsubishi Bank Ltd., VRDN 1,800,000 1,800,000
(Kent School) Series A, 3.10%, LOC Barclays
Bank PLC, VRDN 5,800,000 5,800,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Health & Ed. Fac. Auth.: - continued
Bonds:
(Windham Commty. Memorial Hosp.) Series B,
3.60%, tender 12/8/94, LOC Banque Paribas $ 4,000,000 $ 4,000,000
(Yale Univ.):
Series L, 3.40%, tender 1/13/95 1,550,000 1,550,000
Series M, 3.55%, tender 2/10/95 5,900,000 5,900,000
Series N, 3.55%, tender 2/10/95 1,350,000 1,350,000
Series N, 3.75%, tender 3/9/95 3,100,000 3,100,000
Series O, 3.55%, tender 2/10/95 3,200,000 3,200,000
Connecticut Hsg. Fin. Auth. (Hsg. Mtg. Fin. Prog.) Bonds:
Series 1989:
3.65%, tender 2/10/95 (b) 500,000 500,000
3.75%, tender 3/10/95 (b) 2,500,000 2,500,000
3.90%, tender 3/9/95 (b) 1,165,000 1,165,000
Series 1990 C:
3.70%, tender 2/10/95 (b) 1,000,000 1,000,000
3.90%, tender 3/10/95 (b) 400,000 400,000
Series 1992 D-2, 3.65%, tender 5/15/95 (b) 2,000,000 2,000,000
Series 1993 H-1, 4.30%, tender 9/1/95 8,000,000 8,000,000
Series 1993 H-2, 4.40%, tender 9/1/95 (b) 7,000,000 7,000,000
Connecticut Second Lien Special Tax Oblig.
(Transport Infrastructure) Series 1, 3.60%,
LOC Industrial Bank of Japan, VRDN 5,785,000 5,785,000
Connecticut Special Assessment Unemployment Rev.:
Series 1993 B, 3.55%, LOC Industrial Bank of
Japan, VRDN 1,400,000 1,400,000
Bonds Series 1993 C, 3.85% tender 7/1/95,
(FGIC Insured) 13,600,000 13,598,576
Connecticut Special Tax Oblig. Participating VRDN,
Series PA-69, 3.90%, (Liquidity Facility
Merrill Lynch & Co. Inc.) (c) 2,000,000 2,000,000
Glastonbury BAN 3.75% 12/8/94 500,000 500,066
New Britain Gen. Oblig. Bonds 8.50% 4/1/95 500,000 507,304
New Haven Air Freight Pkg. Fac. Rev. Bonds 5.30%
12/1/94 (MBIA Insured) 435,000 435,000
New Haven BAN 4.10% 3/1/95,
LOC Fleet Nat'L Bank (b) 1,700,000 1,702,489
South Central Connecticut Reg. Wtr. Auth. Participating
VRDN, Series MGT-6A, 3.80%, (Liquidity Facility
Morgan Guaranty) (c) 2,500,000 2,500,000
Stamford BAN 4.25% 3/22/95 2,000,000 2,004,458
Stratford BAN 4.50% 10/18/95 1,000,000 1,000,365
132,185,372
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - 2.5%
Indian Trace Commty. Dev. Dist. Bonds
(Broward County Basin I Wtr. Mgmt.):
4.10%, tender 12/7/94, LOC Tokai Bank $ 1,600,000 $ 1,600,000
4.15%, tender 12/6/94, LOC Tokai Bank 2,500,000 2,500,000
4,100,000
ILLINOIS - 1.3%
Illinois Health Facs. Auth. Rev. (Methodist Med. Ctr. Proj.)
Series 1985 B, 3.70%, LOC Sumitomo Bank, VRDN 2,100,000 2,100,000
NEVADA - 1.6%
Las Vegas Local Impt. Bonds (Dist #404 Summelin Area)
4.15%, tender 12/6/94, LOC Tokai Bank 2,725,000 2,725,000
NEW YORK - 2.1%
New York City Ind. Dev. Agcy. Ind. Dev. Rev.
(Nippon Cargo Airlines Co.) Series 1992, 4.05%,
LOC Industrial Bank of Japan, VRDN (b) 3,500,000 3,500,000
NORTH CAROLINA - 0.4%
Craven County Ind. Facs. Resource Recovery Rev., VRDN (b):
(Wood Energy Ltd. Partnership):
Series 1989 A, 3.80%, LOC Mitsubishi Bank Ltd. 400,000 400,000
Series 1989 C, 3.80%, LOC Mitsubishi Bank Ltd. 300,000 300,000
700,000
PUERTO RICO - 9.4%
Puerto Rico Commonwealth Participating VRDN, Series PW-6,
3.80% (Liquidity Facility Bank of Nova Scotia) (c) 2,000,000 2,000,000
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Bonds Series J,
9.125%, (Pre-Refunded to 7/1/95) (d) 1,200,000 1,269,706
Puerto Rico Elec. Pwr. Auth. Participating VRDN,
BT-105, 3.50%, (Liquidity Facility Bankers Trust Co.) (c) 3,978,000
3,978,000
Puerto Rico Ind. Med. Higher Ed. & Environmental Cont. Fac.
Fin. Auth. Bonds (AFICA) Series 1988, 3%, tender 12/1/94,
LOC Bank of Tokyo 1,500,000 1,500,000
Puerto Rico Hwy. And Trans. Rev. Series 1993 X, 3%,
LOC Bank of Switzerland, VRDN 7,000,000 7,000,000
15,747,706
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
VIRGINIA - 3.6%
Richmond Ind. Dev. Auth. (I) Rev.
(Cogentrix of Richmond Inc. Proj.) Series 1990 A, 3.80%,
LOC Banque Paribas, VRDN (b) $ 1,300,000 $ 1,300,000
Richmond Ind. Dev. Auth. (II) Rev.
(Cogentrix of Richmond Inc.) Series 1991 A, 3.80%,
LOC Banque Paribas, VRDN (b) 3,000,000 3,000,000
Richmond Ind. Dev. Auth. (III) Rev.
(Cogentrix of Richmond Inc. Proj.) Series 1991 B, 3.80%,
LOC Banque Paribas, VRDN (b) 1,800,000 1,800,000
6,100,000
TOTAL INVESTMENTS - 100% $ 167,499,078
Total Cost for Income Tax Purposes $ 167,498,662
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
(d) Security collateralized by an amount sufficient to pay interest and
principal.
INCOME TAX INFORMATION
At November 30, 1994 the fund had a capital loss carryforward of
approximately $17,500 of which $40, $2,090, $5,330 and $10,040 will expire
on November 30, 1999, 2000, 2001 and 2002, respectively.
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1994
251.ASSETS 252. 253.
254.Investment in securities, at value - See 255. $ 167,499,078
accompanying schedule
256.Interest receivable 257. 904,907
258. 259.TOTAL ASSETS 260. 168,403,985
261.LIABILITIES 262. 263.
264.Payable to custodian bank $ 75,893 265.
266.Payable for investments purchased 514,330 267.
268.Share transactions in process 680,285 269.
270.Dividends payable 9,462 271.
272.Accrued management fee 68,469 273.
274. 275.TOTAL LIABILITIES 276. 1,348,439
277.278.NET ASSETS 279. $ 167,055,546
280.Net Assets consist of: 281. 282.
283.Paid in capital 284. $ 167,072,626
285.Accumulated net realized gain (loss) on 286. (17,496)
investments
287.Unrealized gain from accretion of market discount 288. 416
289.290.NET ASSETS, for 167,072,626 shares 291. $ 167,055,546
outstanding
292.293.NET ASSET VALUE, offering price and 294. $1.00
redemption price per share ($167,055,546 (divided by)
167,072,626 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1994
295.296.INTEREST INCOME 297. $ 4,429,303
298.EXPENSES 299. 300.
301.Management fee $ 803,448 302.
303.Non-interested trustees' compensation 954 304.
305. 306.TOTAL EXPENSES 307. 804,402
308.309.NET INTEREST INCOME 310. 3,624,901
311.REALIZED AND UNREALIZED GAIN (LOSS) 313. (10,039)
312.Net realized gain (loss) on investment securities
314.Increase (decrease) in net unrealized gain from 315. 416
accretion of market discount
316.317.NET GAIN (LOSS) 318. (9,623)
319.320.NET INCREASE IN NET ASSETS RESULTING FROM 321. $ 3,615,278
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER 30,
1994 1993
322.INCREASE (DECREASE) IN NET ASSETS
323.Operations $ 3,624,901 $ 2,789,066
Net interest income
324. Net realized gain (loss) (10,039) (5,334)
325. Increase (decrease) in net unrealized gain from 416 -
accretion of market discount
326. 3,615,278 2,783,732
327.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
328.Dividends to shareholders from net interest income (3,624,901) (2,789,066)
329.Share transactions at net asset value of $1.00 per 225,193,655 224,246,405
share
Proceeds from sales of shares
330. Reinvestment of dividends from net interest 3,499,344 2,693,169
income
331. Cost of shares redeemed (224,729,453) (150,504,642)
332. 3,963,546 76,434,932
Net increase (decrease) in net assets and shares
resulting from share transactions
333. 3,953,923 76,429,598
334.TOTAL INCREASE (DECREASE) IN NET ASSETS
335.NET ASSETS 336. 337.
338. Beginning of period 163,101,623 86,672,025
339. End of period $ 167,055,546 $ 163,101,623
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
340. YEARS ENDED NOVEMBER 30, MARCH 4, 1991
(COMMENCEME
NT
OF OPERATIONS) T
O
NOVEMBER 30,
341. 1994 1993 1992 1991
342.SELECTED PER-SHARE DATA
343.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
344.Income from Investment .023 .022 .030 .029
Operations
Net interest income
345.Less Distributions (.023) (.022) (.030) (.029)
From net interest income
346.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000
347.TOTAL RETURN B 2.28 2.21 3.08 2.97%
% % %
348.RATIOS AND SUPPLEMENTAL DATA
349.Net assets, end of period $ 167,056 $ 163,102 $ 86,672 $ 22,247
(000 omitted)
350.Ratio of expenses to average .50 .24 .02 -
net assets % % %
351.Ratio of expenses to average net .50 .50 .50 .50%A
assets before expense reductions % % %
352.Ratio of net interest income to 2.25 2.17 2.90 4.05%A
average net assets % % %
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1994
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Connecticut Municipal High Yield Portfolio(the high yield fund) is
a fund of Fidelity Court Street Trust. Spartan Connecticut Municipal Money
Market Portfolio (the money market fund) is a fund of Fidelity Court Street
Trust II. Each trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company. Fidelity Court Street Trust and Fidelity Court Street Trust II
(the trusts) are organized as a Massachusetts business trust and a Delaware
business trust, respectively. Each fund is authorized to issue an
unlimited number of shares. The following summarizes the significant
accounting policies of the money market fund and the high yield fund:
SECURITY VALUATION.
HIGH YIELD FUND. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both of which
approximate current value. Securities for which quotations are not readily
available through the pricing service are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS -
CONTINUED
due to differing treatments for futures and options transactions 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.
REDEMPTION FEES. Shares held in the high yield fund less than 180 days
are subject to a redemption fee equal to .50% of the proceeds of the
redeemed shares. The fee, which is retained by the fund, is accounted for
as an addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective December
1, 1993, the funds 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 funds 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 November 30, 1993 have been restated to reflect
an increase in paid in capital and a decrease in accumulated net realized
gain on investments of $94,330 for the high yield fund. No adjustments were
necessary for the money market fund.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The high yield fund may invest in futures
and options contracts, and may also 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, as reflected in the schedule of investments under the
caption "Futures Contracts," reflect the extent of the involvement the high
yield fund has in the particular classes of instruments. Risks may be
caused by an imperfect correlation between movements in the price of the
instruments and the price of the underlying securities and interest rates.
Risks also may arise if there is an illiquid secondary market for the
instruments, or due to the inability of counterparties to perform.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Options traded
on an exchange are valued using the last sale price or, in the absence of a
sale, the last offering price. Options traded over-the-counter are valued
using dealer-supplied valuations.
3. PURCHASES AND SALES OF
INVESTMENTS.
HIGH YIELD FUND. Purchases and sales of securities, other than short-term
securities, aggregated $40,123,361 and
3. PURCHASES AND SALES OF
INVESTMENTS - CONTINUED
HIGH YIELD FUND - CONTINUED
$129,295,692, respectively. The market value of futures contracts opened
and closed during the period amounted to $235,896,944 and $225,739,146,
respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management &
Research Company (FMR) pays all expenses, including the cost of providing
shareholder services, except the compensation of the non-interested
Trustees and certain exceptions such as interest, taxes, brokerage
commissions and extraordinary expenses. FMR receives a fee that is computed
daily at an annual rate of .55% and .50% of average net assets for the high
yield and money market funds, respectively.
To offset the cost of providing shareholder services, FMR or its
affiliates collect certain transaction fees from the fund's shareholders.
For the period, fees collected from shareholders amounted to $7,842 and
$4,274 for the high yield and money market funds, respectively.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plans (the Plans), and in accordance with Rule 12b-1 of the Act, FMR or the
funds' distributor, Fidelity Distributors Corporation (FDC), an affiliate
of FMR, may use their resources to pay administrative and promotional
expenses related to the sale of each fund's shares. Subject to the approval
of each Board of Trustees, the Plans also authorize payments to third
parties that assist in the sale of each fund's shares or render shareholder
support services. FMR or FDC has informed the funds that payments made to
third parties under the Plans amounted to $2,939 for the high yield fund
and no payments were made for the money market fund for the period.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Court Street Trust and Fidelity Court Street
Trust II and the Shareholders of Spartan Connecticut Municipal High Yield
Portfolio and Spartan Connecticut Municipal Money
Market Portfolio:
We have audited the accompanying statements of assets and liabilities of
Spartan Connecticut Municipal High Yield Portfolio, a portfolio of Fidelity
Court Street Trust, and Spartan Connecticut Municipal Money Market
Portfolio, a portfolio of Fidelity Court Street Trust II including the
schedules of portfolio investments, as of November 30, 1994, the related
statements of operations for the year then ended, the statements of changes
in net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended
for the Spartan Connecticut Municipal High Yield Portfolio, and the
financial highlights for each of the three years in the period then ended
and for the period March 4, 1991 (commencement of operations) to November
30, 1991 for the Spartan Connecticut Municipal Money Market Portfolio.
These financial statements and financial highlights are the responsibility
of the Funds' management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, 1994 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Spartan Connecticut Municipal High Yield Portfolio and Spartan
Connecticut Municipal Money Market Portfolio as of November 30, 1994, the
results of their operations for the year then ended, the changes in their
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended
for the Spartan Connecticut Municipal High Yield Portfolio, and the
financial highlights for each of the three years in the period then ended
and for the period March 4, 1991 (commencement of operations) to November
30, 1991 for the Spartan Connecticut Municipal Money Market Portfolio, in
conformity with generally accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 30, 1994
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER (MONEY MARKET)
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President,
MONEY MARKET FUND
Thomas J. Steffanci, Vice President,
HIGH YIELD FUND
Scott Orr, Vice President,
MONEY MARKET FUND
Thomas D. Maher, Assistant
Vice President, MONEY MARKET FUND
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)FIDELITY
HIGH YIELD TAX-FREE
PORTFOLIO
ANNUAL REPORT
NOVEMBER 30, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 37 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 41 Notes to the financial statements.
REPORT OF INDEPENDENT 44 The auditors' opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMA-
TION 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. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO IN-
VESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND
NOR FIDELITY
DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY
FUND, INCLUDING
CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE
YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The unsettling period that began for bond investors when the Federal
Reserve Board raised short-term interest rates in February has continued
into the fourth quarter of 1994. The Board raised the federal funds rate -
the rate banks charge each other for overnight loans - five times from
February through August, taking it from 3.00% to 4.75%. A sixth increase in
November lifted the rate to 5.50%. The Fed rate hikes were intended to
forestall inflation that could result from an improving U.S. economy, and
they led to negative returns for many bond investments and below-average
returns for many stocks.
The volatility we have witnessed this year follows a period in which there
was a nearly perfect investing environment. Although there was a
late-summer rally in stocks and, to a lesser extent in bond markets, it is
impossible to predict where interest rates might go or what might happen in
the markets in the months ahead. That's why it probably is a good time to
again review your investment portfolio and how well it matches your goals.
Keeping in mind that the negative effects of rising rates on your bond
investments will only be "paper" losses unless you sell your shares,
staying in your bond fund may be appropriate. The longer your investing
time frame, the more likely it is that you will retain your principal
investment through both up and down markets. For example, a 10-year time
frame, such as saving for a college education, enables you to weather these
ups and downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. As with any mutual fund, of course, there is no assurance that
a money market fund will achieve its goal, and money market funds are not
insured by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically, as we have discussed here. A periodic investment
plan will not, of course, assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
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
performance 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 to measure performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
High Yield Tax-Free -7.74% 33.38% 137.57%
Lehman Brothers Municipal Bond Index -5.25% 37.52% 146.53%
Average High Yield Municipal Bond Fund -5.38% 33.27% 131.66%
Consumer Price Index 2.81% 19.06% 42.36%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, 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 the fund's returns to the
performance of the Lehman Brothers Municipal Bond Index - a broad gauge of
the municipal bond market. To measure how the fund stacked up against its
peers, you can look at the average high yield municipal bond fund, which
currently reflects the performance of 34 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 (CPI) helps show how your fund did compared to
inflation. (The CPI returns begin on the month end closest to the fund's
start date.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
High Yield Tax-Free -7.74% 5.93% 9.04%
Lehman Brothers Municipal Bond Index -5.25% 6.58% 9.44%
Average High Yield Municipal Bond Fund -5.38% 5.86% 8.74%
Consumer Price Index 2.81% 3.55% 3.59%
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 (037)Municipal Bond Ind
11/30/84 10000.00 10000.00
12/31/84 10243.52 10187.40
01/31/85 10726.00 10775.52
02/28/85 10603.55 10506.67
03/31/85 10695.44 10597.34
04/30/85 10982.00 10985.20
05/31/85 11353.82 11366.61
06/30/85 11509.68 11485.85
07/31/85 11609.88 11508.36
08/31/85 11579.61 11428.03
09/30/85 11424.31 11313.41
10/31/85 11842.47 11701.12
11/30/85 12201.27 12120.84
12/31/85 12435.62 12227.38
01/31/86 13033.41 12947.57
02/28/86 13501.78 13461.07
03/31/86 13606.61 13465.38
04/30/86 13558.66 13475.61
05/31/86 13389.21 13256.23
06/30/86 13530.00 13382.70
07/31/86 13626.67 13463.93
08/31/86 14291.10 14066.71
09/30/86 14273.91 14102.02
10/31/86 14570.96 14345.56
11/30/86 14789.49 14629.74
12/31/86 14785.88 14589.36
01/31/87 15151.48 15028.65
02/28/87 15329.24 15102.59
03/31/87 15212.72 14942.50
04/30/87 14186.15 14192.69
05/31/87 14081.81 14122.29
06/30/87 14319.78 14536.92
07/31/87 14502.33 14685.20
08/31/87 14569.93 14718.24
09/30/87 13885.74 14175.58
10/31/87 13839.25 14225.76
11/30/87 14131.48 14597.20
12/31/87 14366.49 14809.00
01/31/88 14866.46 15336.50
02/29/88 15053.32 15498.61
03/31/88 14694.74 15318.05
04/30/88 14802.29 15434.46
05/31/88 14909.62 15389.86
06/30/88 15088.02 15615.01
07/31/88 15244.26 15716.82
08/31/88 15314.55 15730.65
09/30/88 15651.49 16015.38
10/31/88 15952.27 16298.05
11/30/88 15817.66 16148.76
12/31/88 16122.51 16313.96
01/31/89 16349.95 16651.33
02/28/89 16251.03 16461.34
03/31/89 16284.53 16422.00
04/30/89 16809.99 16811.86
05/31/89 17165.57 17161.04
06/30/89 17332.37 17394.09
07/31/89 17458.69 17630.82
08/31/89 17381.23 17458.21
09/30/89 17307.04 17405.84
10/31/89 17488.26 17618.19
11/30/89 17811.25 17926.51
12/31/89 17959.34 18073.51
01/31/90 17770.09 17988.56
02/28/90 18002.76 18148.66
03/31/90 18023.13 18154.10
04/30/90 17698.93 18023.39
05/31/90 18187.28 18416.30
06/30/90 18381.51 18578.37
07/31/90 18666.07 18851.47
08/31/90 18471.90 18578.12
09/30/90 18611.25 18589.27
10/31/90 18858.62 18925.74
11/30/90 19397.76 19306.14
12/31/90 19481.21 19391.09
01/31/91 19734.96 19650.93
02/28/91 19858.47 19821.89
03/31/91 19922.37 19829.82
04/30/91 20194.94 20093.56
05/31/91 20372.80 20272.39
06/30/91 20373.89 20252.12
07/31/91 20669.86 20499.20
08/31/91 20852.45 20769.79
09/30/91 21019.12 21039.79
10/31/91 21216.75 21229.15
11/30/91 21263.06 21288.59
12/31/91 21463.74 21746.30
01/31/92 21684.07 21796.31
02/29/92 21728.45 21802.85
03/31/92 21749.74 21811.57
04/30/92 21957.70 22005.70
05/31/92 22168.44 22265.36
06/30/92 22475.83 22639.42
07/31/92 23052.46 23318.60
08/31/92 22745.63 23090.08
09/30/92 22806.70 23240.17
10/31/92 22426.97 23012.41
11/30/92 23008.97 23424.34
12/31/92 23258.11 23663.26
01/31/93 23583.61 23937.76
02/28/93 24451.55 24804.31
03/31/93 24274.40 24541.38
04/30/93 24505.31 24789.25
05/31/93 24647.53 24928.07
06/30/93 25010.24 25344.37
07/31/93 25018.93 25377.31
08/31/93 25562.57 25905.16
09/30/93 25932.26 26200.48
10/31/93 25959.58 26250.26
11/30/93 25750.61 26019.26
12/31/93 26307.30 26568.27
01/31/94 26596.63 26871.14
02/28/94 25919.12 26175.18
03/31/94 24719.87 25109.85
04/30/94 24848.29 25323.29
05/31/94 25003.15 25543.60
06/30/94 24861.64 25395.45
07/31/94 25330.84 25860.18
08/31/94 25422.85 25950.69
09/30/94 25045.17 25569.22
10/31/94 24522.03 25114.09
11/30/94 23756.94 24653.00
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity High
Yield Tax-Free Portfolio on November 30, 1984. As the chart shows, by
November 30, 1994, the value of your investment would have grown to $23,757
- - a 137.57% 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 $24,653 - a
146.53% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, move in the
opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund
that invests in bonds will vary.
That means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEARS ENDED NOVEMBER 30,
1994 1993 1992 1991 1990
Dividend return 5.60% 6.33% 6.70% 7.11% 7.31%
Capital appreciation return (13.34) 5.59% 1.51% 2.51% 1.60%
%
Total return (7.74)% 11.92% 8.21% 9.62% 8.91%
DIVIDEND returns and capital appreciation returns are both part of a bond
fund's total return. A dividend return reflects the actual dividends paid
by the fund. A capital appreciation return reflects both the amount paid by
the fund to shareholders as capital gain distributions and changes in the
fund's share price. Both returns assume the dividends or gains are
reinvested.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED NOVEMBER 30, 1994 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 6.25(cents) 37.80(cents) 75.46(cents)
Annualized dividend rate 6.88% 6.41% 6.21%
30-day annualized yield 6.94% - -
30-day annualized tax-equivalent yield 10.84% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $11.05 over
the past month, $11.76 over the past six months and $12.16 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the fund's tax-free yield, if you're
in the 36% federal tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Sharply rising interest rates and
ongoing inflation worries caused
a severe downturn in U.S. bond
markets in 1994. Yields rose
sharply - and prices fell - on
taxable and tax-free bonds alike.
For the 12 months ended
November 30, 1994, the Lehman
Brothers Municipal Bond Index -
a broad measure of the tax-free
market - had a total return of
- -5.25%. By comparison, the
Lehman Brothers Aggregate
Bond Index - a proxy of
investment-grade taxable bonds
- - returned -3.06%. After interest
rates remained low and relatively
steady in December 1993 and
January 1994, the rate
environment changed
dramatically. The Federal
Reserve Board raised the federal
funds rate - the rate banks
charge each other for overnight
loans - from 3.00% to 5.50%
from February through
November. The Fed was hoping
to head off future inflation that
might be triggered
by an improving U.S. economy.
However, investors heavily sold
bonds at the very threat of
inflation because inflation
diminishes the value of their
fixed-rate income payments. Two
other influences affected the
performance of tax-free bonds,
specifically. First, investor
demand fell due to inflation
worries, which dampened prices.
Second, although it didn't
outweigh the negative effects of
lower demand, the supply of
tax-free bonds fell as well. The
ability of states, cities and public
agencies to refinance
outstanding debt at lower, more
attractive rates was limited amid
a rising rate environment.
An interview with Anne Punzak, Portfolio Manager of Fidelity High Yield
Tax-Free Portfolio
Q. ANNE, HOW HAS THE FUND PERFORMED?
A. Rising interest rates made for a very volatile year for the municipal
bond market and the fund. In fact, 1994 has been one of the worst years for
municipal bonds since the late 1920s. Against that backdrop, the fund's
total return for the year ended November 30, 1994, was -7.74%. That lagged
the performance of the average high yield municipal bond fund, which
returned -5.38% for the same period, according to Lipper Analytical
Services.
Q. WHY DIDN'T THE FUND KEEP PACE WITH THE AVERAGE HIGH YIELD FUND?
A. Mainly because it had a smaller stake in below-investment grade bonds -
those rated Ba or below - than many of its competitors. The fund has a 25%
limit on the amount it can invest in these bonds, while many similar funds
can invest as much as half of their assets in them. Because of their
relatively high yields, these bonds held up better than higher-rated,
lower-yielding bonds when interest rates were rising. The fund's stake in
below-investment-grade bonds was 18.6% of investments at the end of the
period. I increased the fund's stake in AMT bonds, which are subject to the
alternative minimum tax and are also high-yielding bonds. AMT bonds are
also attractive because they're often from sectors which could benefit from
further improvements in the economy, such as housing and industrial
development projects.
Q. WHAT CHANGES DID YOU MAKE TO THE FUND'S DURATION, WHICH MEASURES ITS
SENSITIVITY TO CHANGES IN INTEREST RATES?
A. In general, when interest rates rise a bond's price declines and its
duration lengthens. When interest rates fall a bond's price rises and its
duration shortens. So as interest rates continued to rise over the past six
months, prices of the bonds in the fund declined and the duration naturally
lengthened. Therefore I wanted to temper the fund's lengthening duration.
One of the ways I did this was by using futures contracts. As the market
fell, the value of the futures position rose and helped the fund's
performance. I did remove most of the fund's futures position at the end of
the period, since I expected the bond market to improve in December, which
it did. That also contributed to lengthening the fund's duration. However,
until I'm confident that the Fed's interest rate hikes have slowed and the
market has stabilized, I may use futures contracts when I think market
conditions warrant.
Q. HAVE YOU CHANGED THE FUND'S ALLOCATION BY STATES?
A. Yes, primarily by raising the fund's stake in California bonds to 7.7%
of investments as of November 30, 1994. That made the state the
third-largest state concentration. California municipal bonds are
attractive because I believe the state's economy is on the mend. Some
economic indicators - such as housing starts and new home sales - have
shown recent strength, which to me signals that the economic outlook for
the state could be brighter next year.
Q. AFTER THE PERIOD ENDED, ORANGE COUNTY, CALIFORNIA DECLARED BANKRUPTCY
BECAUSE OF LOSSES FROM DERIVATIVES. DOES THAT AFFECT ANY OF THE FUND'S
CALIFORNIA BONDS?
A. At the end of the period, the fund held bonds from five issuers who were
participants in the Orange County investment pool. Of those bonds, about
half are insured and their principal and interest payments are guaranteed.
The remaining bonds do not carry insurance. The short-term financial
condition of these uninsured issuers has been negatively impacted but I
believe that they will ultimately be able to recover the majority of their
investments and meet their financial obligations. Although I don't
anticipate that any of these issuers will incur cash shortfalls, all of
these securities have a debt service reserve fund which could be used to
meet principal and interest payments if a cash shortfall were to arise. In
any case, these uninsured bonds represent only about 0.5% of the fund's
investments and should not have a significant impact on the fund's share
price. Our research department will continue to carefully monitor these
situations to determine the impact of further developments.
Q. WHAT'S YOUR OUTLOOK FOR MUNICIPAL BONDS?
A. For the short term, there probably will be some continued volatility. I
believe it's likely that the Federal Reserve Board will raise interest
rates one or two more times in an effort to stave off inflation that can
accompany a quickly growing economy. However, I think that current
municipal bond prices reflect most of the effects of at least one further
interest rate hike.
Q. SO WHAT'S AHEAD FOR INVESTORS?
A. A one percent rise in long-term interest rates is not likely to have as
negative consequences for bonds in 1995 as it did 1994. For example, if the
yield on a high quality 30-year municipal bond rose from 7% to 8%, that
bond's total return for the year could be about -4%. On the other hand, a
drop in yield from 7% to 6% could mean a total return of about 15% for the
year. Of course, other factors also can influence a bond's performance. But
in my view, the downside risk is limited and the upside potential is good.
FUND FACTS
GOAL: to provide high current
income exempt from federal
income tax
START DATE: December 1, 1977
SIZE: as of November 30,
1994, more than $1.6 billion
MANAGER: Anne Punzak, since
October 1993; manager, Fidelity
Aggressive Tax-Free Portfolio,
since January 1986; Spartan
Florida Tax-Free Fund, since
March 1992; Fidelity Insured
Tax-Free Fund, October 1989 to
September 1993; Spartan
Aggressive Municipal Fund,
from April 1993 to October
1993; joined Fidelity in 1985
(checkmark)
ANNE PUNZAK'S OUTLOOK FOR
MUNICIPAL BONDS:
"In my view, interest rates will
probably be more stable in
1995 than they were in 1994. If
I am correct, it's likely that bond
prices will be more stable as
well. In that type of
environment, the fund's total
return will be less dependent
on bond prices rising and more
dependent on the level of
income the bonds pay. So to
help boost the fund's total
return, I'll concentrate on
generating a higher income for
the fund. I'll do that primarily by
identifying opportunities in
higher-yielding, lower-rated
bonds. Fidelity's research staff
is one of the largest in the
industry and helps me identify
attractive high-yield bonds."
(solid bullet) Inverse floaters, one of the
financial arrangements known
as derivatives, made up about
4% of the fund's investments
at the end of the period. The
yield on inverse floaters rises
as short-term interest rates
fall and vice versa. By using
various derivatives, the
manager hopes to achieve
higher levels of tax-exempt
income and increased
flexibility in managing overall
sensitivity to changes in
interest rates. However, these
strategies can involve
additional risk to the fund and
don't always work as
intended.
INVESTMENT CHANGES
TOP FIVE STATES AS OF NOVEMBER 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
New York 9.7 8.2
Texas 8.1 6.4
California 7.7 6.3
Colorado 7.3 8.4
Illinois 7.1 6.4
TOP FIVE SECTORS AS OF NOVEMBER 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
6 MONTHS AGO
Health Care 24.6 27.5
General Obligations 12.4 13.1
Electric Revenue 11.4 12.9
Industrial Development 9.8 9.3
Special Tax 8.6 7.9
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1994
6 MONTHS AGO
Years 18.8 19.2
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF NOVEMBER 30, 1994
6 MONTHS AGO
Years 9.1 8.8
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF NOVEMBER 30, 1994 AS OF MAY 31, 1994
Row: 1, Col: 1, Value: 2.6
Row: 1, Col: 2, Value: 11.7
Row: 1, Col: 3, Value: 8.9
Row: 1, Col: 4, Value: 21.0
Row: 1, Col: 5, Value: 33.2
Row: 1, Col: 6, Value: 22.6
Aaa 22.6%
Aa, A 33.3%
Baa 21.0%
Ba 8.9%
Nonrated 11.6%
Short-term investments 2.6%
Aaa 23.4%
Aa, A 36.3%
Baa 17.2%%
Ba 9.8%%
Nonrated 10.9%
Short-term investments 2.4%
Row: 1, Col: 1, Value: 2.4
Row: 1, Col: 2, Value: 10.9
Row: 1, Col: 3, Value: 9.800000000000001
Row: 1, Col: 4, Value: 17.2
Row: 1, Col: 5, Value: 36.3
Row: 1, Col: 6, Value: 23.4
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS.
INVESTMENTS NOVEMBER 30, 1994
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 97.4%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
ALABAMA - 2.1%
Alabama Bldg. Renovation Fin. Auth. Rev.
7.45% 9/1/11 A $ 3,000 $ 3,146
Alabama Mental Health Fin. Auth. Spl. Tax
7.375% 5/1/09 A 3,000 3,097
Alabama Spl. Care Facs. Fing. Auth. Mobile
Hosp. Rev. (Daughters of Charity Providence)
10.125% 6/1/15 Aa 700 728
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 2,971
Birmingham Jefferson Civic Ctr. Auth. Spl. Tax
(Cap. Outlay) 7.25% 1/1/12 A 5,875 6,000
Cullman Med. Park South Med. Clinic Board
Rev. (Cullman Reg'l. Med. Ctr.) Series A:
6.50% 2/15/13 Baa 6,500 5,476
6.50% 2/15/23 Baa 7,000 5,653
McIntosh Ind. Dev. Board Poll. Cont. Rev.
(Ciba-Geigy Corp.) 6% 8/1/07 - 2,535 2,301
Shelby County Series S, 7.40% 8/1/07 - 5,000 5,050
34,422
ALASKA - 0.4%
North Slope Borough Series B,
0% 1/1/03, (MBIA Insured) Aaa 9,000 5,411
Valdez Marine Term. Rev. Rfdg. (Amerada Hess
Pipeline Corp.) 6.10% 2/1/24 - 2,000 1,710
7,121
ARIZONA - 1.7 %
Chandler Cap. Appreciation Rfdg.:
0% 7/1/04, (FGIC Insured) Aaa 5,700 3,099
0% 7/1/05, (FGIC Insured) Aaa 5,700 2,879
0% 7/1/06, (FGIC Insured) Aaa 5,700 2,672
0% 7/1/07, (FGIC Insured) Aaa 5,700 2,472
0% 7/1/08, (FGIC Insured) Aaa 1,700 680
0% 7/1/09, (FGIC Insured) Aaa 2,000 743
Maricopa County Ind. Dev. Auth. Hosp. Facs.
Rev. Rfdg. (Samaritan Health Svcs.) Series A,
7% 12/1/16, (MBIA Insured) Aaa 2,000 2,020
Maricopa County Poll. Cont. Corp. Poll. Cont.
Rev. (Pub. Svc. Co. New Mexico - Palo Verde)
7.75% 11/1/09 Ba2 7,165 7,183
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Phoenix Str. & Hwy. User Rev. Rfdg. (Jr. Lien)
Series A, 0% 7/1/13, (FGIC Insured) Aaa $ 4,500 $ 1,215
Tucson & Pima County Ind. Dev. Auth. Single
Family Mtg. Rev. (Verex Mtg. Assurance, Inc.)
9.375% 2/1/14 BB- 2,140 2,145
Tucson Wtr. Rev. Rfdg. 5.50% 7/1/14 A1 3,450 2,907
28,015
ARKANSAS - 1.2%
Arkansas Dev. Fin. Auth. Rev. (Cap. Asset)
Series B, 7.10% 3/1/08 A 4,500 4,579
Arkansas Univ. Rev. (Trustee) 7.20% 12/1/10 A 1,250 1,288
Baxter County Hosp. Rev. Rfdg. & Impt.
7.50% 9/1/21 Baa 4,000 3,800
Fayetteville Pub. Facs. Board Rev. Rfdg.
(Butterfield Trail Village Proj.) Series A,
9.50% 9/1/14 - 2,200 2,274
North Little Rock Elec. Rev. Rfdg. Series A:
6.50% 7/1/10, (MBIA Insured) Aaa 3,840 3,763
6.50% 7/1/15, (MBIA Insured) Aaa 1,000 971
Pulaski County Health Facs. Board Rev. Rfdg.
(Sisters Charity Nazareth Corp.)
6.05% 11/1/09, (MBIA Insured) Aaa 1,750 1,671
Pulaski County Hosp. Rev. Rfdg. (Arkansas
Children's Hosp. Proj.) 10.125% 3/1/15 A- 800 821
19,167
CALIFORNIA - 6.8%
Alameda County Ctfs. of Prtn. Rfdg. (Santa Rita
Jail Proj.) 5.375% 6/1/09, (MBIA Insured) Aaa 4,730 4,115
California Pub. Works Board Lease Rev.:
(California Univ. Proj.):
Rfdg. (Dept. of Corrections Del Norte)
Series C, 5.125%, 12/1/08 A 2,500 2,028
Series A:
5.50% 6/1/10 A 7,300 6,178
5.25% 12/1/13 A 3,750 2,967
5.625% 12/1/18 A 10,000 8,112
(Dept. Correction State Prison D - Susanville)
5.375% 6/1/18 A 1,500 1,177
California Statewide Commty. Dev. Auth. Rev.
Ctfs. of Prtn.:
(Eskaton Properties, Inc.) 5.80% 5/1/13 A 5,000 4,212
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
(Sisters of Charity Leavenworth)
5% 12/1/23 Aa $ 2,000 $ 1,425
California Univ. Rev. Rfdg. (Multiple Purp. Proj.)
Series C:
5.125% 9/1/13, (AMBAC Insured) Aaa 1,500 1,202
5% 9/1/14, (AMBAC Insured) Aaa 3,000 2,336
4.75% 9/1/15, (AMBAC Insured) Aaa 6,000 4,485
Castaic Lake Wtr. Agcy. Ctfs. of Prtn. Rfdg.
(Wtr. Sys. Impt. Proj.) Series A,
7.25% 8/1/09, (MBIA Insured) Aaa 1,800 1,910
East Bay Muni. Util. Dist. Unltd. Tax Rfdg.
(Spl. Dist. #1) Series E, 5% 4/1/15 Aa 3,000 2,363
East Bay Muni. Util. Wtr. Sys. Dist.
Rev. Rfdg. 5% 6/1/21, (MBIA Insured) Aaa 4,025 3,019
Fresno Swr. Rev. Series A-1, 4.75% 9/1/21,
(AMBAC Insured) Aaa 2,000 1,440
Industry Urban Ind. Dev. Agcy. Rfdg.
(Civic Recreational Proj. #1) Series A,
7.375% 5/1/12 - 1,000 1,039
Los Angeles County Metropolitan Trans. Auth.
Sales Tax Rev. Sr. (Property C Section) Series B,
4.75% 7/1/18, (AMBAC Insured) Aaa 3,500 2,564
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 6% 9/1/15 Baa1 2,800 2,394
Orange County Wtr. Dist. Ctfs. of Prtn.
Rfdg. Series A, 5.50% 8/15/14 Aa 3,430 2,903
Rancho Wtr. Dist. Fing. Auth. Rev. Rfdg.
5% 8/15/14, (AMBAC Insured) Aaa 5,000 3,913
Sacramento City Fing. Auth. Lease Rev. Rfdg.
Series A, 5.40% 11/1/20,
(AMBAC Insured) Aaa 7,000 5,600
Sacramento City Fing. Auth. (Cap.
Appreciation Tax Allocation Comb. Proj.)
Series B, 0% 11/1/06, (MBIA Insured) Aaa 2,810 1,293
San Bernardino County Ctfs. of Prtn.:
(Cap. Facs. Proj.) Series B, 7% 8/1/28 Baa1 3,000 3,221
(Med Ctr. Fing. Proj.) 5.50% 8/1/17 Baa1 3,800 2,859
San Francisco Bldg. Auth. Lease Rev. (Dept.
Gen. Svcs. Lease) Series A, 5% 10/1/13 A1 6,000 4,560
San Joaquin Hills Trans. Corridor Agcy.
Toll Road Rev. (Sr. Lien):
0% 1/1/17 - 3,500 617
0% 1/1/19 - 20,000 3,050
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
San Jose Redev. Agcy. Tax Allocation
(Merged Area Redev. Proj.):
5% 8/1/20, (MBIA Insured) Aaa $ 1,500 $ 1,131
4.75% 8/1/24, (MBIA Insured) Aaa 2,075 1,473
San Mateo County Trans. Dist. Sales Tax Rev.
Crossover Rfdg. Series A,
5% 6/1/09, (MBIA Insured) Aaa 2,635 2,187
Santa Margarita/Dana Point Auth. Rev.
(Impt. Dist. 3&3A,4&4A) Series B,
7.25% 8/1/08, (MBIA Insured) Aaa 1,770 1,887
Sequoia Hosp. Dist. Rev. Rfdg.
5.375% 8/15/23 Baa1 5,000 3,531
Signal Hill Redev. Agcy. Tax 5.25% 10/1/23,
(MBIA Insured) Aaa 6,375 4,904
South Orange County Pub. Fing. Auth.
Spl. Tax Rev.:
(Sr. Lien) Series A, 7% 9/1/11,
(MBIA Insured) Aaa 3,490 3,599
(Foothill Area) Series C, 8% 8/15/08,
(FGIC Insured) Aaa 2,500 2,834
Southern California Pub. Pwr. Auth. Pwr. Proj.
Rev. Rfdg. (Mead Adelanto Proj.) Series A,
4.75% 7/1/16, (AMBAC Insured) Aaa 3,000 2,228
Upland Ctfs. of Prtn. (San Antonio
Commty. Hosp.) 5% 1/1/18 A 3,000 2,096
Walnut Creek Ctfs. of Prtn. Rfdg. (John Muit
Med. Ctr.) 5% 2/15/16, (MBIA Insured) Aaa 6,250 4,813
111,665
COLORADO - 7.3%
Aurora Wtr. Rfdg. 4.75% 11/1/14 A1 3,540 2,659
Avon Metropolitan Dist. Gen. Oblig. Rfdg. &
Impt. (Colorado Eagle Co.) Series 1990:
8% 11/1/00 - 1,150 1,187
8.30% 11/1/10 - 2,505 2,605
Colorado Health Facs. Auth. Rev.:
(Commty. Provider Pooled Loan) Series A,
7.25% 7/15/17, (Cap. Guaranty Insured) Aaa 1,878 1,913
(Hosp. - Swedish Med. Ctr.) Series A:
7.25% 10/1/08 Baa1 7,200 7,137
7.50% 10/1/20 Baa1 10,000 9,650
6.80% 1/1/23 Baa1 10,500 9,187
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
COLORADO - CONTINUED
Colorado Health Facs. Auth. Rev. - continued
(PSL Health Care Sys. Proj.):
Series A:
6.75% 2/15/13 Baa1 $ 7,750 $ 6,927
7.25% 2/15/16 Aaa 8,000 8,160
Series B, 8.50% 2/15/21 Baa1 6,250 6,484
(Rocky Mountain Adventist):
6.625% 2/1/13 Baa 16,300 14,059
6.625% 2/1/22 Baa 4,700 3,913
(Sisters of Charity Health Care Sys.) Series A,
6.25% 5/15/12, (AMBAC Insured) Aaa 2,000 1,902
Colorado Springs Arpt. Rev.
(Cap. Appreciation) Series C:
0% 1/1/02 BBB 1,550 965
0% 1/1/04 BBB 1,530 819
0% 1/1/09 BBB 1,655 573
0% 1/1/10 BBB 1,500 478
Colorado Springs Util. Rev. Rfdg. & Impt.
Series A, 5.125% 11/15/23 Aa 5,000 3,838
Colorado Univ. Rev. (Biomedical Research
Bldg. Proj.) 7% 6/1/09 A+ 5,725 5,782
Denver City & County Arpt. Rev.:
Series A:
6.90% 11/15/98 (e) Baa 3,500 3,421
7% 11/15/99 (e) Baa 2,750 2,678
7.50% 11/15/06 Baa 6,500 6,151
7.50% 11/15/23 (e) Baa 4,800 4,398
Series B, 7.25% 11/15/23 (e) Baa 2,000 1,798
Denver City & County Ind. Dev. Rev.
(Denver Univ. Prog.) Series 1991,
7.50% 3/1/11 BBB 1,000 1,016
Jefferson County Ctfs. of Prtn.:
Rfdg. 6.65% 12/1/08, (MBIA Insured) Aaa 3,000 3,019
7.125% 12/1/10, (MBIA Insured) Aaa 250 258
Jefferson County Single Family Mtg. Rev.
Series 1991 A, 8.875% 10/1/13,
(MBIA Insured) Aaa 450 467
Lafayette Wtr. Rfdg. & Impt. Series B,
6.25% 12/1/12, (AMBAC Insured) Aaa 1,000 949
Larimer County School Dist. #R-1 Poudre
Impt. Unltd. Tax 6.50% 12/15/11 A 5,000 4,850
Mountain Village Metropolitan Dist.
San. Miguel County Rfdg. 8.10% 12/1/11 - 2,000 2,103
119,346
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
CONNECTICUT - 0.4%
Connecticut Health & Edl. Facs. Auth. Rev.
(New Britain Mem. Hosp.) Series A,
7.50% 7/1/06 BBB- $ 5,000 $ 4,813
Norwalk Hsg. Auth. Mtg. Rev. (Monterey Village)
Series 1985 B, Section 8, 9% 11/1/99 BBB 2,000 2,030
6,843
DISTRICT OF COLUMBIA - 0.7%
District of Columbia Hosp. Rev.
(Hosp. for Sick Children) Series A,
8.875% 1/1/21 - 5,950 6,166
Metropolitan Washington Arpt. Auth.
Gen. Arpt. Rev. Series A, 5.75% 10/1/20,
(MBIA Insured) (e) Aaa 6,000 4,980
11,146
FLORIDA - 4.5%
Brevard County Util. Rev. Rfdg.
5.25% 3/1/14, (AMBAC Insured) Aaa 2,500 2,034
Dade County Health Facs. Auth. Hosp. Rev.
(South Shore Hosp. & Med. Ctr.) Series A,
7.60% 8/1/24 - 875 888
Dade County Wtr. & Swr. Sys. Rev. Rfdg.
5% 10/1/13, (FGIC Insured) Aaa 2,000 1,580
Florida Tpk. Auth. Tpk. Rev. Rfdg. Series A:
5% 7/1/13, (FGIC Insured) Aaa 3,750 3,023
5% 7/1/19, (FGIC Insured) Aaa 3,000 2,314
Jacksonville Elec. Auth. Rev. Rfdg.
(St. Johns River Pwr. #2) Series 7,
5.50% 10/1/14 Aa1 10,000 8,563
Jacksonville Health Facs. Auth. Hosp. Rev. Rfdg.
(Methodist Hosp. Proj.) Series A, 8% 10/1/06 - 800 773
Jacksonville Health Facs. Auth. Ind. Dev.
Rev. Rfdg. (Cypress Village Proj.) (Nat'l.
Benevolent Assoc.) 7% 12/1/22 Baa1 2,000 1,745
Reedy Creek Impt. Dist. Util. Rev. Rfdg.
Series 1, 5% 10/1/19, (MBIA Insured) Aaa 1,500 1,149
Tampa Cap. Impt. Prog. Rev.:
Series A, 8.25% 10/1/18 AA 10,000 10,263
Series B, 8.375% 10/1/18 (c) BBB 40,000 41,200
73,532
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
GEORGIA - 0.1%
Savannah Port Auth. Poll. Cont. Rev.
(Continental Group, Inc. Proj.)
9.875% 3/1/00 Ba2 $ 2,000 $ 2,030
HAWAII - 1.0%
Hawaii Gen. Oblig. Rfdg.
Series CI, 4.75% 11/1/09 Aa 7,000 5,626
Honolulu City & County:
Rfdg. & Impt. Series B:
5.50% 10/1/11 Aa 3,000 2,618
5% 10/1/13 Aa 4,500 3,634
Series A, 5.75% 4/1/10 Aa 4,820 4,374
16,252
IDAHO - 0.6%
Boise City Independant School Dist. Rev.
5.40% 7/30/14, (AMBAC Insured) Aaa 3,000 2,550
Boise Urban Renewal Parking Agcy. Rev.
(Tax Increment) Series A, B, C,
8.125% 9/1/15 A 2,600 2,701
Idaho Falls Rfdg. Elec.:
0% 4/1/06, (FGIC Insured) Aaa 2,000 958
0% 4/1/13, (FGIC Insured) Aaa 7,150 2,002
Idaho Health Facs. Auth. Rev. 5.50% 12/1/07,
(AMBAC Insured) Aaa 2,000 1,807
10,018
ILLINOIS - 6.0%
Chicago Motor Fuel Tax Rev. Rfdg. Series A,
5.375% 1/1/14, (AMBAC Insured) Aaa 4,000 3,275
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. Rfdg.:
(Delta Airlines, Inc.) 6.45% 5/1/18 Ba3 1,750 1,444
Series A:
5% 1/1/12 A1 10,000 7,975
5% 1/1/16 A1 14,000 10,675
Chicago Rfdg Series B, 5% 1/1/11,
(AMBAC Insured) Aaa 7,200 5,769
Grayslake Multi-Family Hsg. Rev. (Country
Squire Apts.) 9.50% 12/1/25,
(FHA Guaranteed) AA- 2,430 2,451
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
ILLINOIS - CONTINUED
Illinois Dev. Fin. Auth. Solid Waste Disp. Rev.
(Ford Heights Waste Tire Proj.)
7.875% 4/1/11 (e) - $ 18,600 $ 17,647
Illinois Edl. Facs. Auth. Rev. (Lewis University)
6% 10/1/24 Baa 5,000 4,037
Illinois Health Facs. Auth. Rev. Rfdg.:
(Lutheran Gen. Health Sys.) Series C:
7% 4/1/14 A 1,500 1,427
6% 4/1/18 A 3,000 2,512
(Memorial Hosp.):
6.875% 5/1/00 BBB 1,700 1,647
7.125% 5/1/10 BBB 4,000 3,640
(OSF Healthcare Sys.) 6% 11/15/13 A1 5,000 4,269
Illinois Univ. Rev. 0% 4/1/12, (MBIA Insured) Aa 6,090 1,797
Lake County Forest Preserve Dist. Unltd. Tax
(Cap. Appreciation):
0% 12/1/07 Aa 10,440 4,320
0% 12/1/08 Aa 12,505 4,736
Metropolitan Pier & Exposition Auth. Dedicated
Tax Rev. (McCormick Place Expansion Proj.):
Series A:
0% 6/15/07, (FGIC Insured) (b) Aaa 4,800 3,924
0% 6/15/09, (FGIC Insured) Aaa 18,175 6,657
0% 6/15/16, (FGIC Insured) (b) Aaa 11,820 6,693
Round Lake Beach Tax Increment Rev. Rfdg.
7.50% 12/1/13 - 5,000 4,537
99,432
INDIANA - 0.2%
Indianapolis Econ. Dev. Rev. Rfdg. & Impt.
(Nat'l. Benevolent Assoc.) 7.625% 10/1/22 Baa1 3,000 2,805
KANSAS - 0.5%
Kansas City Util. Sys. Rev.:
0% 9/1/10, (AMBAC Insured)
(Escrowed to Maturity) (f) Aaa 3,825 1,320
0% 9/1/10, (AMBAC Insured) Aaa 2,865 960
Kansas Dept. Trans. Hwy. Rev. Series A,
5.375% 3/1/12 (c) Aa 4,100 3,490
Wichita Hosp. Rev. Rfdg. & Impt. (St. Francis II
Reg'l. Med. Ctr.) Series A-3, 6.25% 10/1/10,
(MBIA Insured) Aaa 2,500 2,412
8,182
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
KENTUCKY - 2.0%
Danville Multi-City Lease Rev. (Shelbyville)
Series H, 6.70% 7/1/11, (MBIA Insured) Aaa $ 2,330 $ 2,330
Jefferson County Cap. Projs. Corp. Rev.
(Muni. Multiple Rfdg. Lease) Series A,
0% 8/15/11 A1 5,365 1,589
Kenton County Arpt. Board Arpt. Rev.
(Spl. Facs Delta Airlines Proj. A):
7.125% 2/1/21 (e) Ba1 17,500 15,356
6.125% 2/1/22 (e) Ba1 2,000 1,527
Kentucky Tpk. Auth. Econ. Dev. Road Rev. Rfdg.
(Revitalization Proj.) 5.50% 7/1/09,
(AMBAC Insured) Aaa 2,200 1,972
Louisville Univ. Rev. Rfdg. (Consolidated Edl.
Bldgs.) Series I:
5.40% 5/1/09 A1 2,360 2,033
5.40% 5/1/10 A1 1,565 1,332
Owensboro Elec. Lt. & Pwr. Rev. Series B,
0% 1/1/07, (AMBAC Insured) Aaa 10,000 4,463
Peery County Econ. Dev. Rev. Rfdg.
(The Kroger Co. Proj.) 6.60% 5/1/02 Ba2 2,435 2,319
32,921
LOUISIANA - 2.6%
Lake Charles Hbr. & Term. Dist. Port Facs.
Rev. Rfdg. (Trunkline LNG Co. Proj.)
(Panhandle Eastern Corp.)
Series 1992, 7.75% 8/15/22 Baa3 23,500 23,324
Louisiana Offshore Term. Auth. Deepwtr. Port
Rev. Rfdg. (1st Stage) (Loop, Inc. Proj.)
Series E, 7.60% 9/1/10 A3 2,300 2,406
Monroe-West Monroe Pub. Trust Fing. Auth.
Mtg. Rev. Rfdg. (Cap. Appreciation) Series C,
0% 8/20/14 AA- 9,000 2,430
New Orleans Audubon Park Commission
Aquarium Rev. Series 1992 A, 8% 4/1/12 - 5,000 4,994
St. James Parish Poll. Cont. Rev. (B.F. Goodrich
Proj.) 14.50% 12/1/11 Baa1 500 579
St. John Baptist Parish Sales Tax Dist. Rfdg.
Series 1989, 7.80% 12/1/14 Baa 2,700 2,886
St. Tammany Pub. Trust Fing. Auth. Rev. Rfdg.
(Cap. Appreciation) Series C, 0% 7/20/14 Aa 4,650 1,261
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
LOUISIANA - CONTINUED
Westside Habilitation Ctr. Cheyenville Rev. Rfdg.
(Intermediate Care Fac. Mental Retardation)
8.50% 10/1/13 - $ 4,800 $ 4,416
42,296
MAINE - 0.6%
State Str. Hsg. Preservation Corp. Hsg. Rev.
(Multi-Family Proj.) (100 State Str.) Series A:
7.20% 1/1/02 A 620 627
7.375% 1/1/12 A 3,505 3,536
7.50% 1/1/19 A 4,700 4,747
8,910
MARYLAND - 1.2%
Baltimore County Mtg. Rev. (Loch Raven Village)
10.10% 11/20/20, (GNMA Coll.) AAA 1,390 1,409
Howard County Mtg. Rev. (Heartlands Elderly
Apts. Proj.) 8.875% 12/1/10,
(FHA Guaranteed) (MBIA Insured) Aaa 250 255
Maryland Commty. Dev. Administration Dept.
Hsg. & Commty. Dev. (Single Family Prog.)
4th Series, 7.40% 4/1/17 Aa 2,485 2,500
Maryland Energy Fing. Administration Ltd. Oblig.
Solid Waste Disp. Facs. Recycling Rev.
(Hagerstown Fiber LP) 9% 10/15/16 - 8,000 7,960
Maryland Health & Higher Ed. Facs. Auth. Rev.:
Rfdg. (Doctors Commty. Hosp.)
5.75% 7/1/03 Baa 2,500 1,916
(Holy Cross Hosp.) Issue A, 7.125% 7/1/10,
(AMBAC Insured) Aaa 1,350 1,387
Montgomery County Hsg. Opportunities
Commission Hsg. Rev. (Multi-Family) Series B,
9.375% 7/1/15 Aa 445 457
Prince George's County Hosp. Rev. (Greater
Southeast Health Care Sys.) 6.375% 1/1/13 Baa 2,250 1,882
Prince George's County Solid Waste Mgmt. Sys.
Rev. 5.25% 6/15/13 A 1,500 1,193
18,959
MASSACHUSETTS - 6.3%
Boston Wtr. & Swr. Commission
5.40% 11/1/08 A 2,000 1,720
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Gen. Oblig.:
(Consolidated Loan) Series A, 5% 1/1/12 A1 $ 4,000 $ 3,125
5% 8/1/06 A1 8,355 7,081
Massachusetts Health & Edl. Facs. Auth. Rev.:
(1st Mtg.) (Fairview Extended Care) Series A:
10.125% 1/1/11 - 3,010 3,217
10.25% 1/1/21 - 6,400 6,880
(St. Luke's Hosp. New Bedford)
7.70% 8/15/23 INFL, (MBIA Insured) (g) Aaa 2,600 1,765
Massachusetts Hsg. Fin. Agcy. (Hsg. Projs.)
Series A, 6.30% 10/1/13, (MBIA Insured) A1 10,000 9,050
Massachusetts Hsg. Fin. Agcy. Rev. (Multi-Family)
Series 1984 B,10.375% 12/1/09,
(MBIA Insured) Aaa 1,000 1,000
Massachusetts Ind. Fin. Agcy. Health Care Facs.
Rev. (Hampden Nursing Home Proj.) Series A,
9.75% 10/1/17 - 4,760 4,635
Massachusetts Ind. Fin. Agcy. Rev.:
(1st Mtg. Reeds Landing):
7.75% 10/1/20 - 1,300 1,255
8.625% 10/1/23 - 3,000 2,820
(Atlanticare Med. Ctr.) Series A,
10.125% 11/1/04 - 7,200 7,056
(Cap. Appreciation) (Massachusetts Biomedical
Research) Series A-2:
0% 8/1/03 A1 23,300 12,465
0% 8/1/04 A1 5,000 2,469
0% 8/1/06 A1 26,800 11,155
0% 8/1/09 A1 15,800 5,174
0% 8/1/10 A1 11,000 3,314
Massachusetts Muni. Wholesale Elec. Co. Pwr.
Supply Sys. Rev.:
Rfdg. Series A:
5.10% 7/1/08, (AMBAC Insured) Aaa 3,575 2,998
6% 7/1/18, (MBIA Insured) Aaa 3,000 2,617
Series A, 6.92% 7/1/18 INFL,
(AMBAC Insured) (g) Aaa 5,000 3,150
5% 7/1/10, (AMBAC Insured) Aaa 3,680 2,981
Massachusetts Port Auth. Rev. 5% 7/1/18 Aa 3,680 2,728
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MASSACHUSETTS - CONTINUED
Massachusetts Univ. Ctfs. of Prtn.
(Telecommunications Sys.) Series A:
7.45% 11/1/97 BBB- $ 810 $ 839
7.70% 5/1/99 BBB- 1,190 1,235
7.70% 11/1/99 BBB- 1,240 1,287
7.80% 5/1/00 BBB- 1,285 1,333
103,349
MICHIGAN - 4.0%
Detroit Convention Facs. Rev. Rfdg. (Cobo Hall
Expansion Proj.) 5.25% 9/30/12 A 3,000 2,385
Detroit Hosp. Fin. Auth. Facs. Rev. (Michigan
Healthcare Corp. Proj.) 10% 12/1/20 B1 37,080 31,518
Grand Rapids San. Swr. Sys. Rev. Impt. & Rfdg.
7% 1/1/16 A1 2,195 2,198
Michigan Hosp. Fin. Auth. Rev. Rfdg.:
(Bay Med. Ctr.) Series A, 8.25% 7/1/12 Baa1 1,000 1,026
(Detroit Macomb Hosp. Corp.) Series A:
7.40% 6/1/13 B 2,000 1,742
7% 6/1/15 B 3,500 2,901
(Pontiac Osteopathic Hosp.) 6% 2/1/24 Baa1 1,000 745
Michigan Hsg. Dev. Auth. Rental Hsg. Rev.
Series B, 5.70% 4/1/12 A+ 2,000 1,682
Michigan Hsg. Dev. Auth. Single Family Mtg.
Rev. Series A:
7.50% 6/1/15 AA+ 470 482
7.70% 12/1/16 AA+ 1,775 1,819
Michigan South Central Pwr. Agcy. Pwr.
Supply Sys. Rev. Rfdg. Series 1991,
6.75% 11/1/10 BBB+ 2,000 1,947
Michigan Strategic Fund Ltd. Oblig. Rev.
(Mercy Svcs. for Aging Proj.) 9.40% 5/15/20 - 9,200 9,557
Michigan Trunk Line Rfdg. Series B-1,
5.50% 10/1/21 A1 2,500 2,022
Pontiac Hosp. Fin. Auth. Rev. (North Oakland
Med. Ctr. Obligated Group) 6% 8/1/18 Baa 1,700 1,294
Waterford Township Econ. Dev. Corp. Rev.
Ltd Tax Oblig. (Canterbury Health Care):
8% 7/1/08 - 300 296
8.375% 7/1/23 - 1,000 1,005
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Western Townships Util. Auth. Swr. Disp. Sys.:
Ltd. Tax 8.20% 1/1/18 BBB+ $ 2,000 $ 2,108
Rfdg. 0% 1/1/05, (Cap. Guaranty Insured) Aaa 2,810 1,482
66,209
MINNESOTA - 1.3%
Centennial Independant School Dist. #12 Rfdg.
Series B, 4.875% 2/1/12, (FGIC Insured) Aaa 2,610 2,111
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 3,656
Minneapolis Hsg. & Redev. Auth. Mtg. Single
Family Rev. 6.75% 5/1/09, (FHA Guaranteed) A1 995 1,008
Northern Muni. Pwr. Agcy. Elec. Sys. Rev. Rfdg.
Series B, 5.50% 1/1/18, (AMBAC Insured) Aaa 2,000 1,687
Rochester Health Care Facs. Rev. (Mayo
Foundation/Mayo Med. Ctr.):
RIB Series H, 8.38% 11/15/15 INFL (g) AA+ 9,000 7,189
Series I:
5.90% 11/15/09 AA+ 2,000 1,755
5.90% 11/15/10 AA+ 2,250 1,955
St. Louis Park Health Care Facs. Auth. Rev.
(Health System Obligated A) 5.20% 7/1/23,
(AMBAC Insured) Aaa 2,000 1,550
St. Paul Hsg. & Redev. Auth. Hosp. Rev.
(St. Paul-Ramsey Med. Ctr. Proj.)
5.50% 5/15/13, (AMBAC Insured) Aaa 1,180 1,018
21,929
MISSISSIPPI - 0.6%
Hinds County Ctfs. of Prtn. (Welfare Dept. Proj.)
7.75% 3/1/09, (Pre-Refunded to 3/1/99
@ 102) (f) A 1,095 1,194
Hinds County Mtg. Rev. Rfdg. (Methodist
Hosp. & Rehabilitation) 5.60% 5/1/12,
(AMBAC Insured) Aaa 4,000 3,500
Mississippi Home Corp. Single Family Sr. Rev.
Rfdg. Series 1990 A, 9.25% 3/1/12,
(FGIC Insured) Aaa 530 555
Mississippi Hosp. Equip. & Facs. Auth. Rev.
(Singing River Hosp. Sys. Proj.)
5.50% 3/1/13 Aaa 1,605 1,378
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
MISSISSIPPI - CONTINUED
Panola County Ind. Dev. Rev. Rfdg. (Kroger Co.)
7.125% 11/1/12 Ba2 $ 3,250 $ 3,067
9,694
MISSOURI - 0.4%
Greene County Single Family Mtg. Rev.
9.375% 12/1/06, (AMBAC Insured) Aaa 10 10
Missouri Health & Edl. Fac. Auth. Health Facs.
Rev. (Barnes Jewish-Christian Health)
5.25% 5/15/12 Aa 4,000 3,235
St. Louis Reg'l. Convention & Sports Complex
Auth. Series C, 7.90% 8/15/21 - 3,000 3,049
6,294
MONTANA - 0.4%
Great Falls Ind. Dev. Rev. Rfdg. (K mart Corp.
Proj.) 6.50% 11/15/01 A2 200 196
Montana Board of Investment Payroll Tax
(Workers Compensation) Series 1991,
6.875% 6/1/11, (MBIA Insured) Aaa 6,700 6,767
6,963
NEBRASKA - 1.2%
Douglas County Hosp. Auth. #1 Rev. (Immanuel
Med. Ctr., Inc.) 6.90% 9/1/11,
(AMBAC Insured) Aaa 3,250 3,266
Lancaster County Hosp. Auth. #1 Hosp. Rev.
(Bryan Mem. Hosp. Proj.) 6.60% 6/1/12,
(MBIA Insured) Aaa 1,000 961
Nebraska Pub. Pwr. Dist. Rev. Rfdg.
(Pwr. Supply Sys.):
Series B, 5.25% 1/1/13, (MBIA Insured) Aaa 3,650 3,011
Series C, 5% 1/1/10, (MBIA Insured) Aaa 6,380 5,240
Nebraska Investment Fin. Auth. Hosp. Rev.
(Methodist Health. Sys.):
6.65% 3/1/00, (MBIA Insured) Aaa 2,500 2,600
6.75% 3/1/01, (MBIA Insured) Aaa 2,400 2,499
Scotts Bluff County Hosp. Auth. #1 Hosp. Rev.
(Reg'l. West Med. Ctr. Proj.) 6.45% 12/15/04 A 3,000 2,903
20,480
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEVADA - 0.1%
Clark County Ind. Dev. Rev. (Southwest Gas
Corp.) Series A, 6.50% 12/1/33 (e) Baa3 $ 3,000 $ 2,396
NEW HAMPSHIRE - 0.1%
New Hampshire Business Fin. Auth. Poll. Cont.
Rev. Rfdg. (United Illuminating Co.) Series A,
5.875% 10/1/33 Baa3 2,500 1,922
NEW JERSEY - 0.9%
New Jersey Econ Dev. Auth. Econ. Dev. Rev.:
Series A, 11% 12/15/17 - 14,445 14,445
Series B, 11% 12/15/17 (h) - 9,370 12
14,457
NEW MEXICO - 3.0%
Farmington Poll. Cont. Rev. (Pub. Svc. Co. of
New Mexico San Juan Proj.):
Rfdg.:
Series X, 5.90% 4/1/07 Ba2 12,640 11,060
6.40% 8/15/23 Ba2 9,000 7,346
Series A, 6% 3/1/08 Ba2 14,230 12,433
Gallup Poll. Cont. Rev. Rfdg. Unltd. Tax
(Plains Elec. Generation) 6.65% 8/15/17,
(MBIA Insured) Aaa 11,550 11,131
New Mexico Univ. Rev.:
Rfdg. Series A:
6.25% 6/1/12 A1 2,000 1,875
6% 6/1/21 A1 4,050 3,559
Series B, 5.75% 6/1/12 A1 1,700 1,500
6.50% 6/1/21 A1 1,000 933
49,837
NEW YORK - 9.7%
Metropolitan Trans. Auth. Svc. Contract:
(Commuter Facs.):
Series O, 5.75% 7/1/13 Baa1 9,150 7,663
Series P, 5.75% 7/1/13 Baa1 7,000 5,740
Series O, 5.75% 7/1/13 Baa1 11,495 9,627
New York City Ind. Dev. Agcy. Spl. Facs.
Rev. (Terminal One Group Assoc. Proj.)
6% 1/1/19 (e) A 8,000 6,800
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW YORK - CONTINUED
New York State Dorm. Auth. Rev.:
Rfdg. (State Univ. Edl. Facs.):
Series A:
5.50% 5/15/09 Baa1 $ 4,000 $ 3,330
5.50% 5/15/10, (FGIC Insured) Aaa 5,000 4,337
5.875% 5/15/11 Baa1 7,000 5,994
5.50% 5/15/13 Baa1 6,000 4,837
5.25% 5/15/15 Baa1 6,000 4,620
Series B:
5.25% 5/15/10 Baa1 5,100 4,080
5.25% 5/15/11 Baa1 5,000 3,963
(City Univ.) Series F, 5.50% 7/1/12 Baa1 4,600 3,709
(City Univ. Sys. Consolidated) Series A:
5.75% 7/1/13 Baa1 10,000 8,275
(2nd Generation) 5.75% 7/1/13 Baa1 3,600 2,979
(Court Facs. Lease) Series A:
5.625% 5/15/13 Baa1 5,510 4,484
5.375% 5/15/16 Baa1 4,000 3,100
5.25% 5/15/21 Baa1 10,375 7,652
5.50% 5/15/08 Baa1 2,000 1,687
New York State Environmental Facs. Corp.
Poll. Cont. Rev. Rfdg. (State Wtr. Revolving
Fund) (New York City Muni. Wtr.):
5.75% 6/15/10 Aa 10,000 8,913
5.75% 6/15/12 Aa 2,000 1,760
New York State Local Gov't. Assistance Corp.:
Rfdg.:
Series C, 5.50% 4/1/17 A 26,600 21,746
Series E:
6% 4/1/14 A 9,300 8,161
5.25% 4/1/16 A 11,500 8,984
RIBS 6.602% 4/1/21 INFL (g) A 4,000 2,435
Series A, 0% 4/1/08 A 2,000 803
Series B, 0% 4/1/08 A 5,000 2,006
Series D, 5.375% 4/1/14 A 5,000 4,038
New York State Tollway Auth. Gen. Rev.
(Spl. Oblig.) Series A, 0% 1/1/05 BBB 8,500 4,271
Suffolk County Wtr. Auth. Wtrwks. Rev. Rfdg.
(Sr. Lien) 5.10% 6/1/09, (MBIA Insured) Aaa 3,000 2,546
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW YORK - CONTINUED
Triborough Bridge & Tunnel Auth. Rev. Rfdg.
(Gen. Purp.) Series Y, 5.50% 1/1/17 Aa $ 1,000 $ 820
159,360
NEW YORK & NEW JERSEY - 1.2%
New York & New Jersey Port Auth. (Delta
Airlines, Inc. Proj.) Series 1R, 6.95% 6/1/08 Ba1 21,500 20,237
NORTH CAROLINA - 0.4%
North Carolina Muni. Pwr. Agcy. #1 Catawba
Elec. Rev. Rfdg. 0% 1/1/09 A 13,050 4,665
Pitt County Rev. (Pitt County Mem. Hosp.)
6.75% 12/1/14, (MBIA Insured) Aaa 2,000 2,013
6,678
NORTH DAKOTA - 0.3%
Mercer County Poll. Cont. Rev. Rfdg.
(Montana Dakota Utils. Co. Proj.)
6.65% 6/1/22, (FGIC Insured) Aaa 4,500 4,326
OHIO - 2.4%
Eaton Ind. Dev. Rev. Rfdg. (Baxter Int'l., Inc. Proj.)
6.50% 12/1/12 A3 2,605 2,410
Hamilton County Swr. Sys. Rev. Rfdg. & Impt.
Metropolitan Swr. Dist. Series A,
5.35% 12/1/07, (FGIC Insured) Aaa 2,475 2,237
Loveland City School Dist. Unltd. Tax
6.65% 12/1/15 A 3,500 3,421
Montgomery County Ind. Dev. Rev. Rfdg.
(The Kroger Co.) (Dixie & Needmore)
7.45% 9/1/07 Ba2 4,700 4,624
Mount Vernon Hosp. Rev. (Knox Commty. Hosp.)
7.875% 6/1/12 - 16,940 16,982
Ohio Muni. Elec. Generation Agcy. Joint
Venture 5, Ctfs. Benefit Interest
5.375% 2/15/24, (AMBAC Insured) Aaa 3,750 3,005
Ohio State Bldg. Auth. (Workers Comp.)
(W. Green Bldg. A) 4.75% 4/1/14 A 3,500 2,621
Warren County Hosp. Facs. Rev. Rfdg. & Impt.
(Otterbein Home Proj.) 7.20% 7/1/11 Aa2 2,000 1,997
Warren Hosp. Rev. Rfdg. (Warren General
Hosp. Proj.) Series B, 7.20% 11/15/09 BBB 2,750 2,564
39,861
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
OKLAHOMA - 0.6%
Grand River Dam Auth. Rev. Rfdg.
5.50% 6/1/09 (c) A $ 10,250 $ 9,225
Valley View Hosp. Auth. Rev.
10% 10/1/14, (HIB Insured) A 1,140 1,150
10,375
OREGON - 1.2%
Astoria Hosp. Facs. Auth. Hosp. Rev.
(Columbia Mem. Hosp.) 7% 1/1/13 - 2,500 2,172
Oregon Health Hsg. Edl. & Cultural Facs.
Auth. Rev. (Lewis & Clark College Proj.):
Series A, 6.125% 10/1/24, (MBIA Insured) Aaa 2,100 1,890
6% 10/1/24, (MBIA Insured) Aaa 1,750 1,608
Portland Hosp. Facs. Auth. Hosp. Rev.
(Legacy Health Sys.):
Series A, 6.625% 5/1/11,
(AMBAC Insured) Aaa 250 250
Series B:
6.625% 5/1/11, (AMBAC Insured) Aaa 2,000 2,000
6.70% 5/1/21, (AMBAC Insured) Aaa 11,000 10,917
Portland Swr. Sys. Rev. Rfdg. Series A,
5.25% 3/1/10 A1 2,000 1,695
20,532
PENNSYLVANIA - 5.1%
Allegheny County Hosp. Dev. Auth. Health
Facs. Rev. (Allegheny Valley School):
8% 2/1/02 Baa 1,735 1,772
8.50% 2/1/15 Baa 3,325 3,400
Allegheny County Ind. Dev. Auth. Rev.
(K mart Corp.) (Commercial Dev.) Series A,
11% 1/1/07 A2 2,535 2,893
Butler County Hosp. Auth. Rev. (North Hills
Passavant Hosp.) Series A, 6.80% 6/1/06,
(Cap. Guaranty Insured) Aaa 5,000 5,119
Cumberland County Muni. Auth. Rev.
(Carlisle Hosp.) 6.80% 11/15/23 Baa 4,600 3,858
Delaware County Auth. Rev. (1st. Mtg.)
(Riddle Village Proj.):
7% 6/1/00 - 1,500 1,461
8.25% 6/1/22 - 3,000 2,835
9.25% 6/1/22 - 5,000 5,219
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Harrisburg Auth. Wtr. Rev. (Complimentary
Auction Rate B-3) 7.87% 7/15/15 INFL,
(FGIC Insured)(g) Aaa $ 4,000 $ 2,990
Lehigh County Gen. Purp. Auth. Rev.
(Wiley House) 9.50% 11/1/16 - 5,930 6,004
Montgomery County Higher Ed. & Health Auth.
Hosp. Rev. (United Hosp. Inc. Proj.)
(St. Christopher) 8.25% 11/1/03 Ba1 2,305 2,322
Northumberland County Auth. Commonwealth
Lease Rev. 0% 10/15/13, (MBIA Insured) Aaa 11,830 3,135
Pennslyvania Convention Ctr. Auth. Rev. Rfdg.
Series A:
6.60% 9/1/09 Ba 3,000 2,696
6.70% 9/1/14 Ba 5,750 5,089
6.75% 9/1/19 Ba 3,000 2,629
Pennsylvania Intergovernmental Coop. Auth. Spl.
Tax Rev. Rfdg. Series A:
5% 6/15/15 Baa1 5,210 4,064
5% 6/15/22, (MBIA Insured) Aaa 2,835 2,122
Philadelphia Hosp. & Higher Ed. Facs. Auth.
Hosp. Rev. (Temple Univ. Hosp.) Series A,
6.50% 11/15/08 Baa1 1,000 899
Philadelphia Muni. Auth. Rev. Rfdg. Lease
Series D, 6.125% 7/15/08 Ba 4,000 3,470
Philadelphia Wtr. & Wastewtr. Rev.:
Rfdg.:
5% 6/15/12, (FGIC Insured) Aaa 3,000 2,389
5.75% 6/15/13 Baa 2,000 1,605
7.57% 6/15/12 INFL, (FGIC Insured) (g) Aaa 10,000 7,162
Pittsburgh Wtr. & Swr. Auth. Wtr. & Swr. Sys.
Rev. Rfdg. Series A, 4.75% 9/1/16,
(FGIC Insured) Aaa 10,000 7,375
Wyoming Ind. Dev. Auth. Poll. Rfdg. (Proctor &
Gamble Paper Proj.) 5.55% 5/1/10 Aa2 4,300 3,719
84,227
PUERTO RICO - 0.1%
Puerto Rico Pwr. Auth. Pwr. Rev. Resources Auth.
Pwr. Rev. Rfdg. Series N, 7.125% 7/1/14,
(Pre-Refunded to 7/1/99 @ 101.50) (f) Baa1 2,070 2,220
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
RHODE ISLAND - 0.6%
Rhode Island Depositors Econ. Protection Spl.
Oblig. Rfdg. Series A, 5.75% 8/1/12 Baa1 $ 3,495 $ 2,966
Rhode Island Hsg. & Mtg. Fin. Corp.
(Homeownership Opportunity) Series 3-A,
7.80% 10/1/10 Aa 1,000 1,026
Rhode Island Health & Edl. Bldg. Corp. Rev.:
Rfdg. (Higher Ed. Facs. Johnson &
Wales Univ.) Series A, 5.25% 4/1/16,
(Connie Lee Insured) Aaa 4,000 3,140
Hosp. Fing. (Westerly Hosp.) 6% 7/1/19 Baa 3,000 2,273
9,405
SOUTH CAROLINA - 0.4%
Piedmont Muni. Pwr. Agcy. Elec. Rev. Rfdg.:
5.60% 1/1/09, (MBIA Insured) Aaa 5,240 4,696
5.50% 1/1/10, (MBIA Insured) Aaa 2,590 2,276
6,972
SOUTH DAKOTA - 0.1%
Spearfish School Dist. #40-2 Unltd. Tax
(Lawrence County) 7.30% 7/1/11 A 1,500 1,547
TENNESSEE - 0.4%
Bradley County Ind. Dev. Board Ind. Dev.
Rev. Rfdg. (Kroger Co. - Peytons SE Proj.)
8.10% 5/1/12 Ba2 4,000 4,100
Tennessee Hsg. Dev. Auth. Mtg. Fing.
Mtg. Series A, 5.90% 7/1/18 A1 3,400 2,860
6,960
TEXAS - 8.1%
Austin Util. Sys. Rev. Rfdg. 0% 5/15/09,
(MBIA Insured) Aaa 3,770 1,409
Cass County Envir. Protection Rev. (Int'l.
Paper Co. Proj.) Series B, 5.70% 5/1/12 A3 1,850 1,556
Corpus Christi Hsg. Fin. Corp. Single Family
Mtg. Rev. (Lomas & Nettleton Co.) Series A,
13.375% 6/1/13 AA- 40 40
Cypress-Fairbanks Independent School Dist.
Rfdg. Unltd. Tax Series A, 0% 2/15/12,
(PSF Guaranteed) Aaa 14,000 4,183
Dallas Hsg. Corp. Cap. Proj. Rev. Rfdg.
(Section 8 Assisted Projs.):
7.70% 8/1/05 A 1,100 1,101
7.85% 8/1/13 A 1,000 1,010
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
TEXAS - CONTINUED
Dallas Wtrwks. & Swr. Sys. Rev. Rfdg.
5.40% 4/1/10 Aa $ 3,000 $ 2,580
East Texas Health Facs. Dev. Corp. Hosp. Rev.
(Mem. Foundation Hosp. - Palestine):
7.25% 8/15/03 - 2,970 2,758
7.80% 8/15/18 - 2,440 2,236
Goose Creek Consolidated Independent School
Dist. Rfdg. (Cap. Appreciation):
0% 2/15/08, (PSF Guaranteed) Aaa 2,575 1,065
0% 2/15/09, (PSF Guaranteed) Aaa 3,475 1,307
0% 2/15/10, (PSF Guaranteed) Aaa 3,270 1,140
Harris County Cultural & Ed. Facs. Fin. Corp. Rev.
(Space Ctr. Houston Proj.):
9% 8/15/00 - 6,200 5,952
9.25% 8/15/15 - 18,920 17,690
Harris County Toll Road Rfdg. (Sr. Lien)
5% 8/15/16, (FGIC Insured) Aaa 8,930 6,865
Houston Hsg. Auth. Rev. (Low Income Elderly Hsg.)
(1st Lien):
7.50% 7/1/16 420 401
7.50% 7/1/18 405 386
Port Arthur Hsg. Fin. Corp. Multi-Family Mtg.
Rev. (Port Arthur Udal Proj.) Series E,
9.625% 1/1/28, (FHA Guaranteed) AAA 485 495
Port Arthur Hsg. Fin. Corp. Single Family Mtg.
Rev. Rfdg. 8.70% 3/1/12 A 1,155 1,206
Port Corpus Christi Ind. Dev. Corp. Rev.
(Valero Refining & Marketing Co.) Series A,
10.25% 6/1/17 Baa3 1,535 1,681
Port Dev. Corp. Ind. Dev. Rev. (Cargill, Inc. Proj.)
7.70% 3/1/07 Aa2 1,000 1,055
San Antonio Gen. Oblig. Rfdg. 5.75% 8/1/13 Aa 9,990 8,741
Tarrant County. Hsg. Fin. Corp.
Single Family Mtg. Rev. Series A,
9% 11/15/95, (TICOR Insured) B 145 144
Texarkana Health Facs. Dev. Corp. Hosp. Rev.
(Wadley Regional Med. Ctr. Proj.)
7% 10/1/15, (MBIA Insured) Aaa 1,750 1,827
Texas City Ind. Dev. Corp. Marine Term.
Rev. Rfdg. (Arco Pipeline Co. Proj.)
7.375% 10/1/20 A2 6,000 6,038
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
TEXAS - CONTINUED
Texas Gen. Oblig. Rfdg. (Veterans Land)
7.40% 12/1/20 Aa $ 2,500 $ 2,578
Texas Muni. Pwr. Agcy. Rev. Rfdg. (Cap.
Appreciation):
0% 9/1/05, (AMBAC Insured) Aaa 13,000 6,451
0% 9/1/10, (AMBAC Insured) Aaa 6,650 2,261
Texas Nat'l. Research Lab. Commission Fing.
Corp. Lease Rev. (Superconducting Super
Collider) 7.10% 12/1/21 A 26,765 26,564
Texas Wtr. Dev. Board Rev. (Revolving Fund
Sr. Lien):
5.25% 7/15/11 Aa 8,075 6,783
5.25% 7/15/15 Aa 6,000 4,875
Tomball Hospital Auth. Rev. Rfdg.
6.125% 7/1/23 Baa 7,500 5,747
Tyler Health Facs. Dev. Corp. Hosp. Rev.
(East Texas Med. Ctr. Reg'l. Health) Series B,
6.625% 11/1/11 Baa 6,830 5,840
133,965
VERMONT - 0.8%
Vermont Edl. & Health Bldgs. Fin. Agcy. Rev:
Rfdg. (Central Vermont Hosp. Proj.) Series A,
8% 10/1/09 Baa1 2,500 2,566
(St. Michael's College Proj.) 6.50% 10/1/13 A- 3,000 2,659
Vermont Muni. Bond Bank:
Series B, 7.20% 12/1/20 A 3,000 3,045
Series 1991-1, 6.875% 12/1/22 A 2,385 2,364
Vermont Pub. Pwr. Supply. Auth. Rev.
(McNeil Proj.) Series C, 5% 7/1/15,
(AMBAC Insured) Aaa 2,000 1,562
Vermont Colleges Rev. Rfdg. 5.125% 7/1/18 A 2,000 1,548
13,744
VIRGINIA - 0.9%
Hopewell Ind. Dev. Auth. Resources Recovery Rev.
(Stone Container Corp.) 8.25% 6/1/16 - 4,350 4,355
Lynchburg Ind. Dev. Auth. Hosp. Facs. 1st Mtg.
Rev. Rfdg. (Central Health, Inc.)
8.125% 1/1/16 A1 3,000 3,173
Peninsula Ports Auth. Hosp. Facs. Auth. Rev. Rfdg.
(Whittaker Mem. Proj.) 8.70% 8/1/23,
(FHA Guaranteed) Aa 1,500 1,573
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
VIRGINIA - CONTINUED
Richmond Redev. & Hsg. Auth. Mtg. Rev.
(Multi-Family Hsg. Pinebrook Proj.)
9.25% 10/1/20, (GNMA Coll.) AAA $ 750 $ 785
Virginia Beach Dev. Auth. Hosp. Facs. Rev.
(Virginia Beach Gen. Hosp. Proj.)
5.125% 2/15/18, (AMBAC Insured) Aaa 2,800 2,209
Virginia Hsg. Dev. Auth. Commonwealth Mtg.
Series B, Sub-Series B-2, 7.625% 7/1/17,
(AMBAC Insured) Aa 2,000 1,992
Virginia Resources Auth. Wtr. & Swr. Sys. Rev.
Series A, 7.70% 11/1/10 AA 180 192
14,279
WASHINGTON - 4.8%
Washington Pub. Pwr. Supply Sys. Rev. Nuclear:
Proj. #1:
Rfdg. Series A, 7.50% 7/1/15 Aa 1,965 2,041
6.87% 7/1/12 INFL (g) Aa 5,000 3,112
Proj. #2:
Rfdg:
Series A, 6.30% 7/1/12 Aa 7,000 6,484
Series C:
0% 7/1/04 Aa 1,570 826
0% 7/1/05 Aa 16,330 8,124
5.375% 7/1/11 Aa 5,560 4,580
7.07% 7/1/10 INFL, (FGIC Insured) (g) Aaa 17,500 12,600
6.87% 7/1/12 INFL (g) Aa 10,000 6,338
Proj. #3:
Rfdg. Series A:
0% 7/1/09, (BIG Insured) Aaa 3,400 1,233
0% 7/1/13, (BIG Insured) Aaa 4,000 1,055
0% 7/1/10, (BIG Insured) Aaa 6,940 2,325
0% 7/1/11, (BIG Insured) Aaa 4,000 1,240
0% 7/1/12, (BIG Insured) Aaa 4,000 1,145
0% 7/1/14, (BIG Insured) Aaa 3,350 825
Rfdg. Series B, 7.125% 7/1/16 Aa 14,250 14,339
6.87% 7/1/12 INFL (g) Aa 20,500 12,761
79,028
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
WEST VIRGINIA - 0.6%
West Virginia Parkway Econ. Dev. &
Tourism Auth. Series C, 6.72% 5/15/13 INFL,
(FGIC Insured) (g) Aaa $ 10,000 $ 7,075
West Virginia School Bldg. Auth. Rev.
(Cap. Impt.) Series A, 6.75% 7/1/15 A 2,000 1,975
9,050
WISCONSIN - 0.4%
Wisconsin Trans. Rev. Series A, 5.50% 7/1/14 A1 7,840 6,586
WYOMING - 1.1%
Natrona County Hosp. Rev. (Wyoming Med.
Ctr. Proj.) 8.125% 9/15/10 Baa1 4,500 4,601
Wyoming Commty. Dev. Auth. Single Family
Mtg. Series B, 7.40% 6/1/31,
(FHA Guaranteed) Aaa 2,015 2,030
Wyoming Farm Loan Board Cap. Facs. Rev.:
Rfdg. 5.75% 10/1/20 AA- 7,000 5,932
0% 10/1/04 AA- 3,995 2,137
0% 10/1/05 AA- 3,995 1,973
0% 10/1/06 AA- 3,945 1,815
18,488
TOTAL MUNICIPAL BONDS
(Cost $1,741,644) 1,604,432
MUNICIPAL NOTES (D) - 2.6%
CALIFORNIA - 0.9%
San Bernardino County Multi. Family Housing Rev.
(Cedarbrook Terrace Apts.) Series 1990 A, 4.95%,
LOC Sumitomo Trust & Banking Ltd., VRDN A-2 4,600 4,600
San Bernadino County TRAN 4.50% 7/31/95 SP-1 10,000 9,985
14,585
ILLINOIS - 1.1%
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev.
(America`n Airlines, Inc.) VRDN:
Series 1984 B, 3.80%, LOC Long Term Cr.
Bank of Japan P-2 14,600 14,600
Series 1984 D, 3.80%, LOC Long Term Cr.
Bank of Japan P-2 3,600 3,600
18,200
MUNICIPAL NOTES (D) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW YORK - 0.0%
New York State Energy Research & Dev. Auth.
Poll. Cont. Rev. (Niagra Mohawk Proj.)
Series 1985 A, 3.75%, LOC
Toronto Dominion, VRDN A-1+ $ 1,000 $ 1,000
NORTH CAROLINA - 0.1%
Halifax County Ind. Facs. Poll. Cont. Facs. Auth.
(Westmoreland Hadson Proj.) (Roanoke Valley
Proj.) Series 1991, 3.70%, LOC Credit Suisse,
VRDN (e) - 1,600 1,600
PENNSYLVANIA - 0.4%
Schuylkill County Ind. Dev. Auth. Resources
Recovery Rev. (Westwood Energy Prop.)
Series 1985, 3.55%, LOC Fuji Bank, VRDN P-1 6,085 6,085
SOUTH CAROLINA - 0.1%
South Carolina Jobs Econ. Dev. Auth.
(Wellman, Inc. Proj.) Series 92, 3.75%,
LOC Wachovia Bank, VRDN (e) - 1,200 1,200
TOTAL MUNICIPAL NOTES
(Cost $42,731) 42,670
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,784,375) $ 1,647,102
FUTURES CONTRACTS
AMOUNTS IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SOLD
400 U.S. Treasury Bond
Futures Contracts March, 1995 $ 39,225 $ (141)
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 2.4%
SECURITY TYPE ABBREVIATIONS
INFL - Inverse Floating Rate Security
TRAN - Tax and Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(b) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(c) 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 $13,558,000.
(d) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(e) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(f) Security collateralized by an amount sufficient to pay interest and
principal.
(g) Coupon is inversely indexed to a floating interest rate. The price will
be more volatile than the price of a comparable fixed rate security. The
rate shown is the rate at
period end.
(h) Non-income producing.
The composition of long-term debt holdings, as a percentage of total value
of investment in securities, is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 50.8% AAA, AA, A 53.0%
Baa 16.7% BBB 14.7%
Ba 6.6% BB 6.7%
B 1.9% B 2.2%
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 11.6%. FMR
has determined that unrated debt securities that are lower quality account
for 9.7% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Health Care 24.6%
General Obligation 12.4
Electric Revenue 11.4
Others (individually less than 10%) 51.6
TOTAL 100.0%
INCOME TAX INFORMATION
At November 30, 1994, the aggregate cost of investment securities for
income tax purposes was $1,785,746,000. Net unrealized depreciation
aggregated $138,644,000, of which $16,339,000 related to appreciated
investment securities and $154,983,000 related to depreciated investment
securities.
At November 30, 1994, the fund was required to defer $12,394,000 of losses
on futures contracts and options.
At November 30, 1994, the fund had a capital loss carryforward of
approximately $5,114,000 which will expire on November 30, 2002.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
(EXCEPT PER-SHARE AMOUNTS) NOVEMBER 30, 1994
353.ASSETS 354. 355.
356.Investment in securities, at value (cost $1,784,375) 357. $ 1,647,102
- -
See accompanying schedule
358.Cash 359. 6,600
360.Receivable for investments sold 361. 46,024
362.Interest receivable 363. 33,098
364. 365.TOTAL ASSETS 366. 1,732,824
367.LIABILITIES 368. 369.
370.Payable for investments purchased $ 35,520 371.
372.Dividends payable 3,133 373.
374.Accrued management fee 577 375.
376.Payable for daily variation on futures contracts 282 377.
378.Other payables and accrued expenses 279 379.
380. 381.TOTAL LIABILITIES 382. 39,791
383.384.NET ASSETS 385. $ 1,693,033
386.Net Assets consist of: 387. 388.
389.Paid in capital 390. $ 1,849,187
391.Accumulated undistributed net realized gain (loss) 392. (18,740)
on investments
393.Net unrealized appreciation (depreciation) on 394. (137,414)
investments
395.396.NET ASSETS, for 153,357 shares outstanding 397. $ 1,693,033
398.399.NET ASSET VALUE, offering price and 400. $11.04
redemption price per share ($1,693,033 (divided by) 153,357
shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1994
401.402.INTEREST INCOME 403. $ 131,885
404.EXPENSES 405. 406.
407.Management fee $ 7,976 408.
409.Transfer agent, accounting and custodian fees and 2,451 410.
expenses
411.Non-interested trustees' compensation 46 412.
413.Registration fees 45 414.
415.Audit 70 416.
417.Legal 161 418.
419.Reports to shareholders 61 420.
421.Miscellaneous 11 422.
423. 424.TOTAL EXPENSES 425. 10,821
426.427.NET INTEREST INCOME 428. 121,064
429.REALIZED AND UNREALIZED GAIN (LOSS) 431. 432.
430.Net realized gain (loss) on:
433. Investment securities 12,604 434.
435. Futures contracts 6,792 19,396
436.Change in net unrealized appreciation 437. 438.
(depreciation) on:
439. Investment securities (287,306) 440.
441. Futures contracts (294) (287,600)
442.443.NET GAIN (LOSS) 444. (268,204)
445.446.NET INCREASE (DECREASE) IN NET ASSETS 447. $ (147,140)
RESULTING
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1994 1993
448.INCREASE (DECREASE) IN NET ASSETS
449.Operations $ 121,064 $ 126,423
Net interest income
450. Net realized gain (loss) 19,396 76,125
451. Change in net unrealized appreciation (287,600) 40,071
(depreciation)
452. (147,140) 242,619
453.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
454.Distributions to shareholders: (121,064) (126,423)
From net interest income
455. From net realized gain (80,779) (30,740)
456. 457.TOTAL DISTRIBUTIONS (201,843) (157,163)
458.Share transactions 820,839 820,243
Net proceeds from sales of shares
459. Reinvestment of distributions 150,837 116,658
460. Cost of shares redeemed (1,057,850) (969,090)
461. (86,174) (32,189)
Net increase (decrease) in net assets resulting from
share transactions
462. (435,157) 53,267
463.TOTAL INCREASE (DECREASE) IN NET ASSETS
464.NET ASSETS 465. 466.
467. Beginning of period 2,128,190 2,074,923
468. End of period $ 1,693,033 $ 2,128,190
469.OTHER INFORMATION 471. 472.
470.Shares
473. Sold 67,736 62,985
474. Issued in reinvestment of distributions 12,114 8,997
475. Redeemed (87,412) (74,180)
476. Net increase (decrease) (7,562) (2,198)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
477. YEARS ENDED NOVEMBER 30,
478. 1994 1993 1992 1991 1990
479.SELECTED PER-SHARE DATA
480.Net asset value, $ 13.230 $ 12.720 $ 12.690 $ 12.610 $ 12.800
beginning of period
481.Income from .755 .764 .811 .845 .857
Investment
Operations
Net interest income
482. Net realized and (1.690) .700 .190 .310 .200
unrealized gain
(loss)
483. Total from (.935) 1.464 1.001 1.155 1.057
investment
operations
484.Less Distributions (.755) (.764) (.811) (.845) (.857)
From net interest
income
485. From net realized (.500) (.190) (.160) (.230) (.390)
gain
on investments
486. Total distributions (1.255) (.954) (.971) (1.075) (1.247)
487.Net asset value, $ 11.040 $ 13.230 $ 12.720 $ 12.690 $ 12.610
end of period
488.TOTAL RETURN (7.74) 11.92% 8.21% 9.62% 8.91%
%
489.RATIOS AND SUPPLEMENTAL DATA
490.Net assets, end of $ 1,693 $ 2,128 $ 2,075 $ 1,997 $ 1,784
period (in millions)
491.Ratio of expenses .56% .56% .57% .56% .57%
to average net assets
492.Ratio of net 6.21% 5.85% 6.40% 6.72% 6.96%
interest income to
average net assets
493.Portfolio turnover 48% 53% 47% 44% 58%
rate
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1994
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 of their purchase date are valued either at
amortized cost or original cost plus accrued interest, both
of which approximate current value. Securities for which quotations are not
readily available through the pricing service are valued at their fair
value as determined in good faith under consistently applied procedures
under the general supervision of the Board of Trustees.
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 and may
affect net interest income per share. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective December
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 the beginning of the fiscal year have been
reclassified to reflect an increase in paid in capital of $6,969,000, and a
decrease in accumulated net realized gain on investments of $6,969,000.
OPERATING POLICIES.
The fund may invest in futures and options contracts, and may also 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, as reflected in the
schedule of investments under the caption "Futures Contracts," 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.
PURCHASES AND SALES
OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $906,743,000 and $1,081,432,000,
respectively.
The market value of futures contracts opened and closed during the period
amounted to $1,727,748,000 and $1,734,413,000, respectively.
FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) receives a monthly fee that is calculated on the
basis of a group fee rate plus a fixed individual fund fee rate applied to
the average net assets of the fund. The group fee rate is the weighted
average of a series of rates and is based on the monthly average net assets
of all the mutual funds advised by FMR. The rates ranged from .1325% to
.3700% for the period December 1, 1993 to July 31, 1994 and
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
.1200% to .3700% for the period August 1, 1994 to November 30, 1994. In the
event that these rates were lower than the contractual rates in effect
during those periods, FMR voluntarily implemented the above rates, as they
resulted in the same or a lower management fee. The annual individual fund
fee rate is .25%. For the period, the management fee was equivalent to an
annual rate of .41% of average net assets.
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 $16,000 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
$1,858,000 and $495,000, 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, 1994, 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,
1994 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, 1994, 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 L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 30, 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)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
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
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
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
4611 Sharon Road
Charlotte, 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
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Thomas J. Steffanci, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
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)
SPARTAN(registered trademark)
(registered trademark)
FLORIDA
MUNICIPAL
FUNDS
ANNUAL REPORT
NOVEMBER 30, 1994
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 19 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE 23 How the fund has done over time.
FUND TALK 25 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 27 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 28 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 32 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 36 Notes to the financial statements.
REPORT OF INDEPENDENT
ACCOUNTANTS 39 The auditors' opinion.
</TABLE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD OR
ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF
PRINCIPAL. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK. FOR MORE
INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL
1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The unsettling period that began for bond investors when the Federal
Reserve Board raised short-term interest rates in February has continued
into the fourth quarter of 1994. The Board raised the federal funds rate -
the rate banks charge each other for overnight loans - five times from
February through August, taking it from 3.00% to 4.75%. A sixth increase in
November lifted the rate to 5.50%. The Fed rate hikes were intended to
forestall inflation that could result from an improving U.S. economy, and
they led to negative returns for many bond investments and below-average
returns for many stocks.
The volatility we have witnessed this year follows a period in which there
was a nearly perfect investing environment. Although there was a
late-summer rally in stocks and, to a lesser extent in bond markets, it is
impossible to predict where interest rates might go or what might happen in
the markets in the months ahead. That's why it probably is a good time to
again review your investment portfolio and how well it matches your goals.
Keeping in mind that the negative effects of rising rates on your bond
investments will only be "paper" losses unless you sell your shares,
staying in your bond fund may be appropriate. The longer your investing
time frame, the more likely it is that you will retain your principal
investment through both up and down markets. For example, a 10-year time
frame, such as saving for a college education, enables you to weather these
ups and downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. As with any mutual fund, of course, there is no assurance that
a money market fund will achieve its goal, and money market funds are not
insured by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically, as we have discussed here. A periodic investment
plan will not, of course, assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns,
dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1994 PAST 1 LIFE OF
YEAR FUND
Spartan Florida Municipal Income Portfolio -7.20% 15.81%
Lehman Brothers Municipal Bond Index -5.25% n/a
Average Florida Tax-exempt
Municipal Bond Fund -8.45% n/a
Consumer Price Index 2.81% 7.61%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- - in this case, one year or since the fund started on March 16, 1992. 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 Florida municipal bond fund, which
currently reflects the performance of 48 Florida tax-exempt 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, 1994 PAST 1 LIFE OF
YEAR FUND
Spartan Florida Municipal Income Portfolio -7.20% 5.56%
Lehman Brothers Municipal Bond Index -5.25% n/a
Average Florida Tax-exempt
Municipal Bond Fund -8.45% n/a
Consumer Price Index 2.81% 2.79%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
Spartan FloriMunicipal Bon
03/31/92 10000.00 10000.00
04/30/92 10172.61 10089.00
05/31/92 10350.02 10208.05
06/30/92 10575.19 10379.55
07/31/92 11028.25 10690.93
08/31/92 10779.39 10586.16
09/30/92 10823.44 10654.97
10/31/92 10580.51 10550.55
11/30/92 10944.39 10739.41
12/31/92 11095.24 10848.95
01/31/93 11245.75 10974.80
02/28/93 11812.46 11372.08
03/31/93 11626.24 11251.54
04/30/93 11765.70 11365.18
05/31/93 11841.81 11428.83
06/30/93 12066.54 11619.69
07/31/93 12101.29 11634.79
08/31/93 12393.62 11876.80
09/30/93 12566.59 12012.19
10/31/93 12600.06 12035.02
11/30/93 12423.64 11929.11
12/31/93 12745.45 12180.81
01/31/94 12914.00 12319.67
02/28/94 12524.91 12000.59
03/31/94 11935.21 11512.17
04/30/94 12024.45 11610.02
05/31/94 12139.04 11711.03
06/30/94 12056.43 11643.11
07/31/94 12310.26 11856.17
08/31/94 12320.58 11897.67
09/30/94 12130.97 11722.78
10/31/94 11814.14 11514.11
11/30/94 11530.36 11305.70
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Florida Municipal Income Portfolio on March 31, 1992, shortly after the
fund started. As the chart shows, by November 30, 1994, the value of your
investment would have grown to $11,530 - a 15.30% increase on your initial
investment. This assumes you still own the fund on November 30, and
therefore does not include the effect of the $5 account closeout fee. For
comparison, look at how the Lehman Brothers Municipal Bond index did over
the same period. With dividends reinvested, the same $10,000 would have
grown to $11,306- a 13.06% 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)
RETURN COMPONENTS
MARCH 16, 1992
(COMMENCEME
NT
YEARS ENDED NOVEMBER 30, OF OPERATIONS) T
O
NOVEMBER 30,
1994 1993 1992
Dividend return 5.01% 6.10% 4.74%
Capital appreciation return -12.21% 7.41% 5.19%
Total return -7.20% 13.51% 9.93%
DIVIDEND returns, capital appreciation returns are both 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. Change in share price and total return figures
include the effect of the
$5 account closeout fee.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED NOVEMBER 30, 1994 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.91(cents) 29.29(cents) 58.71(cents)
Annualized dividend rate 6.16% 5.66% 5.52%
30-day annualized yield 6.38% - -
30-day annualized tax-equivalent yield 9.97% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $9.69 over
the past month, $10.33 over the past six months and $10.64 over the past
year, you can compare the fund's income over these three periods. The
30-day annualized YIELD is a standard formula for all funds based on the
yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the fund's tax-free yield, if you're
in the 36% combined federal tax bracket.
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
MARKET RECAP
Sharply rising interest rates and
ongoing inflation worries caused a
severe downturn in U.S. bond
markets in 1994. Yields rose
sharply - and prices fell - on
taxable and tax-free bonds alike.
For the 12 months ended
November 30, 1994, the Lehman
Brothers Municipal Bond Index - a
broad measure of the tax-free
market - had a total return of
- -5.25%. By comparison, the
Lehman Brothers Aggregate Bond
Index - a proxy of
investment-grade taxable bonds -
returned -3.06%. After interest
rates remained low and relatively
steady in December 1993 and
January 1994, the rate
environment changed dramatically.
The Federal Reserve Board raised
the federal funds rate - the rate
banks charge each other for
overnight loans - from 3.00% to
5.50% from February through
November. The Fed was hoping to
head off future inflation that might
be triggered by an improving U.S.
economy. However, investors
heavily sold bonds at the very
threat of inflation because inflation
diminishes the value of their
fixed-rate income payments. Two
other influences affected the
performance of tax-free bonds,
specifically. First, investor demand
fell due to inflation worries, which
dampened prices. Second,
although it didn't outweigh the
negative effects of lower demand,
the supply of tax-free bonds fell as
well. The ability of states, cities and
public agencies to refinance
outstanding debt at lower, more
attractive rates was limited amid a
rising rate environment.
An interview with Anne Punzak,
Portfolio Manager of Spartan Florida
Municipal Income Portfolio
Q. ANNE, HOW HAS THE FUND PERFORMED?
A. Rising interest rates made for a very volatile year for the municipal
bond market and for the fund, but the fund continued to hold up better than
many of its competitors. The fund's total return for the 12 months ending
November 30, 1994, was -7.20%. That was better than the average Florida
municipal fund which returned -8.45% for the year ended November 30, 1994,
according to Lipper Analytical Services.
Q. YOU MENTIONED THAT IT WAS AN UNSTABLE PERIOD. HOW DID YOU MODIFY YOUR
STRATEGY TO HELP PROTECT THE FUND FROM THAT VOLATILITY?
A. In the fall of 1993, I moved some of the fund's investments out of bonds
with longer-term maturities of 20 years or more, and into bonds with
intermediate maturities in the 10- to 20-year range. Longer-term bonds made
up 42% of investments at the end of November 1994, down from 52% a year
earlier. Intermediate bonds, on the other hand, rose to about 50% of
investments by the end of November, up from about 40% a year earlier.
Q. DID THAT STRATEGY ALSO HELP THE FUND DO BETTER THAN THE AVERAGE FLORIDA
FUND?
A. Yes. By making the switch from long-term to intermediate-term bonds, the
fund's duration - which is a measure of its sensitivity to changes in
interest rates - remained relatively short. The shorter the fund's
duration, the less sensitive its share price is to changing interest rates.
In hindsight, had the fund's duration been even shorter, its performance
would have been better. However, I didn't anticipate just how concerned the
Federal Reserve Board and investors would remain about the prospect of
inflation spiraling out of control, and underestimated the effects that
nervousness would have on interest rates and the municipal market. Until
I'm confident that the Federal Reserve's interest rate hikes have slowed
the pace of economic growth and kept inflation in check, I'll most likely
continue to keep the fund's duration at about the same level. Another
factor which helped the fund's performance was its stake in Baa-rated and
below investment-grade bonds. These bonds made up 43.2% of investments at
the end of the period. Because of their high yields, lower-rated bonds
generally held up better than higher-rated bonds during the market's
decline.
Q. DID ANY OF THE FUND'S OTHER INVESTMENTS HOLD UP RELATIVELY WELL DURING
THE DOWN DRAFT?
A. Yes, the fund's stake in Puerto Rico bonds, which stood at 12.9% of
investments as of November 30, 1994, held up fairly well. There was a
healthy demand for these bonds which helped firm their prices. The demand
was high because Puerto Rico bonds are exempt from state and federal taxes
in all 50 states. When shortages of municipal bonds crept up in high-tax
states, many investors used Puerto Rico bonds as a substitute for
state-issued bonds to generate income free from state and federal taxes.
Q. AFTER THE PERIOD ENDED, ORANGE COUNTY, CALIFORNIA, DECLARED BANKRUPTCY
BECAUSE OF LOSSES IN ITS INVESTMENT FUND. ARE THERE FLORIDA MUNICIPALITIES
EXPERIENCING SIMILAR PROBLEMS?
A. None of the same magnitude or the same type that we are aware of at this
time. The state of Florida recently revealed that some of its investments
had suffered price declines, and caused unrealized losses for one of the
state's treasury funds. But there are several important differences between
the Florida and California situations. First, the price declines were much
smaller on both an absolute and relative basis; about $200 million from the
$8 billion Florida treasury fund, compared to nearly $3 billion in Orange
County. Second, Orange County used leverage, or borrowed, money to buy many
of its investments. That leverage, in turn, exacerbated its losses. From
what we know now, most Florida municipalities have taken a more
conservative approach and haven't depended heavily on leverage. Finally,
Florida's unrealized losses aren't expected to cause the state to be
illiquid, like Orange County ultimately became. With the help of Fidelity's
research staff, I'll continue to closely monitor the situation.
Q. WHAT'S YOUR OUTLOOK FOR MUNICIPAL BONDS?
A. For the short term, there probably will be some continued volatility. I
believe it's likely that the Fed will raise interest rates one or two more
times in an effort to stave off inflation that would normally accompany a
quickly growing economy. For the long term, I'm more optimistic. By spring,
I think that economic growth will slow and inflation won't be a problem. If
that is the case, interest rates could start to fall and municipal bond
prices could begin to rise. A one percent rise in long-term interest rates
is not likely to have as negative consequences for bonds in 1995 as it did
in 1994. For example, if the yield on a high quality 30-year municipal bond
rose from 7% to 8%, that bond's total return for the year would be about
- -4%. On the other hand, a drop in yield from 7% to 6% would mean a total
return of about 15% for the year. So in my view, the downside risk for the
municipal bond market is limited and the upside potential is good.
FUND FACTS
GOAL: high current income
exempt from federal income
tax and the Florida intangible
personal property tax by
investing mainly in long-term,
investment- grade Florida
municipal bonds
START DATE: March 16, 1992
SIZE: as of November 30,
1994, more than $335 million
MANAGER: Anne Punzak,
since March 1992; manager,
Fidelity Aggressive Tax Free
Portfolio, since January,
1986; Fidelity High Yield
Tax-Free Portfolio, since
October 1993; Spartan
Aggressive Municipal
Portfolio, April 1993 to
October 1993; Fidelity
Insured Tax-free Fund,
October 1989 to September
1993; joined Fidelity in 1985
(checkmark)
ANNE PUNZAK'S OUTLOOK FOR
FLORIDA MUNICIPAL BONDS:
"Over the past 12 months,
higher interest rates have
been the dominant factor
affecting Florida municipal
bond prices. But if interest
rates start to stabilize, there
are some positives which
could work in favor of these
bonds. First, the state's fiscal
condition and economy are
strong. On the fiscal side, the
state has a relatively low level
of debt and the legislature
mandates a balanced budget.
On the economic front,
Florida has diversified its
economy and has started to
enjoy benefits from increased
trade with Latin and South
America. Second, supply and
demand factors also could be
a positive. The supply of
municipals could be rather
light next year. And demand
should remain strong. Lower
supply and constant demand
also could help boost prices."
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF NOVEMBER 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
Transportation 17.6 18.7
Health Care 15.7 17.8
General Obligation 13.2 10.1
Industrial Development 12.8 8.6
Electric Revenue 12.5 13.9
AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1994
6 MONTHS AGO
Years 19.0 18.6
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF NOVEMBER 30, 1994
6 MONTHS AGO
Years 9.0 8.9
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE.
QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1994
(MOODY'S RATINGS)
Row: 1, Col: 1, Value: 35.0
Row: 1, Col: 2, Value: 18.3
Row: 1, Col: 3, Value: 33.9
Row: 1, Col: 4, Value: 10.2
Row: 1, Col: 5, Value: 2.6
Aaa 35.0%
Aa, A 18.3%
Baa 33.9%
Non-rated 10.2%
Short-term investments 2.6%
WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED
DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT NOVEMBER 30, 1994,
ACCOUNT FOR 6.3% OF THE FUND'S INVESTMENTS.
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
INVESTMENTS NOVEMBER 30, 1994
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 97.4%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
FLORIDA - 79.6%
Alachua County Health Facs. Auth.
Health Facs. Rev.:
Rfdg. (Santa Fe Healthcare Facs. Proj.):
6% 11/15/09 Baa1 $ 1,950,000 $ 1,628,250
7.60% 11/15/13 Baa1 1,000,000 983,750
6.05% 11/15/16 Baa1 5,590,000 4,478,988
(Beverly Enterprises Proj.)
10.125% 4/1/10 - 860,000 937,400
Bay County Ind. Dev. Correctional Facs. Rev.
(Corrections Corp. America Proj.)
Series A, 8.875% 11/1/05 (b) - 2,620,000 2,724,800
Brevard County Health Facs. Auth. Rev.
Rfdg. (Wuesthoff Mem. Hosp.)
Series B, 7.20% 4/1/13 Baa1 750,000 703,125
Broward County Rfdg. Series C,
5.50% 1/1/12 Aa 3,500,000 3,010,000
Broward County Resource Recovery Rev.
(SES Broward Co. LP South Proj.)
7.95% 12/1/08 A 6,935,000 7,307,756
Broward County Wtr. & Swr. Util. Rev.
Rfdg. 5.125% 10/1/15,
(AMBAC Insured) Aaa 2,500,000 2,003,125
Collier County Ind. Dev. Auth. Retirement
Rent Hsg. Rev. Rfdg. (Beverly Enterprises
Proj.) 10.75% 3/1/03 (f) 1,345,000 1,534,981
Dade County Pub. Facs. Rev. Rfdg.
(Jackson Mem. Hosp.) Series A, 4.75%
6/1/10 (MBIA Insured) Aaa 3,540,000 2,783,325
Dade County Rev. 5.125% 4/1/09
(MBIA Insured) Aaa 1,475,000 1,240,844
Delray Beach Wtr. & Swr. Rev. Series B:
0% 10/1/12, (AMBAC Insured) Aaa 4,475,000 1,325,719
0% 10/1/14, (AMBAC Insured) Aaa 4,400,000 1,122,000
Dunedin Hosp. Rev. (Mease Health Care):
5.25% 11/15/06, (MBIA Insured) Aaa 1,400,000 1,246,000
6.75% 11/15/21, (MBIA Insured) Aaa 1,000,000 1,061,250
Dunedin Util. Sys. Rev. Rfdg. 6.25%
10/1/11 (FGIC Insured) Aaa 1,360,000 1,300,500
Dunes Commty. Dev. Dist. Rev. Rfdg.
(Wtr. & Swr. Proj.) 6.10% 10/1/18 A3 1,500,000 1,321,875
Duval County Hsg. Fin. Auth. Single Family
Mtg. Rev. Series C, 7.70% 9/1/24,
(FGIC Insured) (GNMA Coll.) Aaa 725,000 734,063
Escambia County Health Facs. Auth. Rev.:
Rfdg. (Baptist Hosp. Inc.) Series B,
6% 10/1/14 BBB+ 2,825,000 2,245,875
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Escambia County Health Facs. Auth. Rev. - continued
(Baptist Hosp. & Baptist Manor)
6.75% 10/1/14 (f) BBB+ $ 3,250,000 $ 2,839,688
Escambia County Poll. Cont. Rev.:
Rfdg. (Gulf Pwr. Co. Proj.) 6.75% 3/1/22 A2 2,000,000 1,895,000
(Champion Int'l. Corp. Proj.)
6.90% 8/1/22 (b) Baa1 7,000,000 6,378,750
Escambia County Util. Sys. Rev. Series B,
6.25% 1/1/15 (FGIC Insured) Aaa 1,500,000 1,404,375
Florida Board Ed. Admin. Cap. Outlay Rfdg.
(Pub. Ed.):
Series A, 5% 6/1/24 Aa 5,000,000 3,718,750
Series D, 5% 6/1/15 Aa 5,000,000 3,887,500
Florida Div. Board Fin. Dept. Gen. Svcs. Rev.:
(Dept. of Natural Resources Preservation)
Series 2000 A:
6.75% 7/1/08 (AMBAC Insured) Aaa 1,350,000 1,385,438
4.75% 7/1/09 (MBIA Insured) Aaa 2,000,000 1,612,500
4.90% 7/1/13 (MBIA Insured) Aaa 2,000,000 1,555,000
Florida Hsg. Fin. Agcy. (Single Family Mtg.):
Rfdg. Series A, 6.35% 7/1/14 Aa 1,500,000 1,383,750
Rfdg. Series B, 6.55% 7/1/17 (b) Aa 1,500,000 1,381,875
Series A, 7.90% 1/1/16 AA 255,000 256,275
Florida Mid-Bay Bridge Auth. Rev. Series A:
7.50% 10/1/17 (f) - 1,700,000 1,723,375
6.875% 10/1/22 - 3,000,000 2,932,500
Florida Muni. Pwr. Agcy. Rev. Rfdg.
(Stanton II Proj.) 4.50% 10/1/16
(AMBAC Insured) Aaa 3,000,000 2,156,250
Florida Tpk. Auth. Rev.:
Rfdg. Series A:
5.25% 7/1/06 (FGIC Insured) Aaa 1,500,000 1,340,625
5.25% 7/1/11 (FGIC Insured) Aaa 4,000,000 3,405,000
5% 7/1/14 (MBIA Insured) Aaa 4,000,000 3,190,000
5% 7/1/16 (FGIC Insured) Aaa 4,000,000 3,135,000
5% 7/1/19 (FGIC Insured) Aaa 6,400,000 4,936,000
Series A:
5.90% 7/1/06 (FGIC Insured) Aaa 3,000,000 2,895,000
7.20% 7/1/11 (AMBAC Insured) Aaa 1,500,000 1,625,625
Greater Orlando Aviation Auth. Arpt.
Facs. Rev.:
Rfdg. Series D, 6.20% 10/1/08
(AMBAC Insured) Aaa 500,000 490,000
Series A, 6.50% 10/1/05
(FGIC Insured) (b) Aaa 3,550,000 3,585,500
Hernando County Ind. Dev. Rev. Rfdg.
(Beverly Enterprises, Inc.) 10% 9/1/11 - 955,000 1,055,275
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Hillsborough County Aviation Auth. Rev. Rfdg.
(Tampa Int'l. Arpt.):
Series A, 6.90% 10/1/11
(FGIC Insured) Aaa $ 4,250,000 $ 4,308,438
Series B, 5.30% 10/10/06,
(FGIC Insured) Aaa 2,075,000 1,880,469
Hillsborough County Envir. Sensitive Land
Acquisition & Protection Ltd. Tax
6.375% 7/1/11 A 2,000,000 1,895,000
Hillsborough County Ind. Dev. Auth.
5.60% 8/15/07 (MBIA Insured) Aaa 1,000,000 916,250
Hillsborough County Ind. Dev. Auth. Ind. Dev. Rev.
5.75% 8/15/10 (MBIA Insured) Aaa 1,000,000 900,000
Hillsborough County Util. Rev. Rfdg.
(Cap. Appreciation) Series A:
0% 8/1/05 Aaa 17,445,000 8,853,338
0% 8/1/07 Aaa 9,250,000 4,035,313
7% 8/1/14 Baa1 1,245,000 1,220,100
0% 8/1/06 Aaa 13,000,000 6,126,250
Homestead Spl. Ins. Assessment Rev.
(Hurricane Andrew Covered Claims)
3.85% 3/1/95 (MBIA Insured) Aaa 1,750,000 1,747,813
Indian River County Wtr. & Swr. Rev. Rfdg.
Series A, 5.50% 9/1/11 (FGIC Insured) Aaa 2,000,000 1,735,000
Jacksonville Cap. Impt. Rev. Ctfs.
(Gator Bowl Proj.):
5.50% 10/1/14 (AMBAC Insured) Aaa 2,000,000 1,707,500
5.50% 10/1/19 (AMBAC Insured) Aaa 2,000,000 1,667,500
Jacksonville Elec. Auth. Rev. Rfdg.
(St. Johns River Pwr. Issue #2):
7% 10/1/09 Aa1 2,490,000 2,549,138
Rfdg. Series 7, 5.75% 10/1/12 Aa1 1,900,000 1,688,625
Rfdg. Series 8, 5.125% 10/1/07 Aa1 1,000,000 858,750
Rfdg. Series 8, 5.50% 10/1/13 Aa1 2,000,000 1,715,000
Jacksonville Excise Tax Rev. Rfdg. 6.25%
10/1/05 (AMBAC Insured) Aaa 2,000,000 2,010,000
Jacksonville Health Facs. Auth. Ind. Dev. Rev.:
Rfdg. (Cypress Village Proj.):
(Nat'l. Benevolent Assn.) 7% 12/1/22 Baa1 2,000,000 1,745,000
(Nat'l. Benevolent Assn.) 8% 12/1/24 Baa1 2,740,000 2,695,475
(Nat'l. Benevolent Assn.) 6.25% 12/1/23 Baa1 2,400,000 1,854,000
(Cypress Village Proj.) 7% 12/1/14 Baa1 1,000,000 896,250
Jacksonville Health Facs. Auth. Hosp. Rev.
(Baptist Med. Ctr.) Series A, 7.30%
6/1/19 (MBIA Insured) Aaa 500,000 513,750
Jacksonville Hosp. Rev. (Univ. Med. Ctr.):
6.50% 2/1/07 (Connie Lee Insured) AAA 750,000 741,563
6.60% 2/1/21 (Connie Lee Insured) AAA 1,275,000 1,211,250
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Jacksonville Ind. Dev. Rev. Rfdg.
(Cargill, Inc. Proj.) 6.40% 3/1/11 AA- $ 1,250,000 $ 1,184,375
Jacksonville Wtr. & Swr. Gen. Wtr. Wks.
Dev. Rev. (Jacksonville Suburban Utils.)
6.75% 6/1/22 (b) A2 1,915,000 1,809,675
Key West Util. Board Elec. Rev. Rfdg. 0%
10/1/14 (AMBAC Insured) Aaa 6,755,000 1,722,525
Kissimmee Util. Auth. Elec. Sys. Rev.
Rfdg. & Impt. 5.25% 10/1/18
(FGIC Insured) Aaa 1,000,000 800,000
Lake Worth Rfdg. 5.80% 10/1/05
(AMBAC Insured) Aaa 1,000,000 966,250
Lee County Arpt. Rev. Series A, 5.50%
10/1/10 (AMBAC Insured) Aaa 2,000,000 1,760,000
Lee County Cap. Impt. Rev. Rfdg. Series B:
0% 10/1/11 (MBIA Insured) Aaa 1,975,000 629,531
0% 10/1/12 (MBIA Insured) Aaa 1,060,000 314,025
Lee County Ind. Dev. Auth. Econ. Dev. Rev.
Rfdg. (Encore Nursing Ctr.) (Beverly
Enterprises, Inc.) 8.125% 12/1/07 - 950,000 935,750
Leesburg Hosp. Auth. Rev. Rfdg.
(Leesburg Regional Med. Ctr. Proj.)
Series B:
5.625% 7/1/13 Baa1 2,795,000 2,141,669
5.70% 7/1/18 Baa1 2,140,000 1,599,650
Leon County 5.50% 10/1/07
(MBIA Insured) Aaa 1,000,000 912,500
Martin County Ind. Dev. Auth. Ind. Dev.
Rev. Rfdg. (Indiantown Cogeneration)
Series A, 7.875% 12/15/25 Baa3 3,000,000 2,962,500
Miami Beach Health Facs. Auth. Rev. Rfdg.
(Mt. Sinai Med. Ctr. Proj.) 6.25%
11/15/08 (Cap. Gtd. Insured) Aaa 2,000,000 1,947,500
Miami Beach Redev. Agcy. Tax Increment
Rev. (City Center Proj.):
5.80% 12/1/13 (b) Baa 1,000,000 821,250
5.875% 12/1/22 (b) Baa 1,000,000 792,500
Naples Hosp. Rev. Rfdg.
(Community Hosp. Proj.):
5% 10/1/19 (MBIA Insured) Aaa 1,000,000 762,500
5.10% 10/1/07 (MBIA Insured) Aaa 3,205,000 2,772,325
Nassau County Poll. Cont. Rev. Rfdg.:
6.2% 7/1/15 Baa 1,000,000 888,750
(ITT Rayonier Proj.):
7.65% 6/1/06 Baa2 1,415,000 1,462,756
6.25% 6/1/10 Baa2 9,500,000 8,704,375
North Broward Hosp. Dist. Rev. Rfdg.
6.40% 1/1/06 (MBIA Insured) Aaa 950,000 957,125
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
North Miami Edl. Facs. Rev.
(Johnson & Wales Univ. Proj.)
Series A, 6.125% 4/1/20 - $ 6,605,000 $ 5,449,125
Orange County Hsg. Fin. Auth. Mtg. Rev.
Series A, 7.875% 9/1/10,
(GNMA Coll.) (b) AAA 235,000 237,938
Orange County Sales Tax Rev.
Series B, 5.375% 1/1/24 A1 6,500,000 5,151,250
Orange County Tourist Dev. Tax Rev. Rfdg.
Series A:
5.85% 10/1/08 (MBIA Insured) Aaa 1,795,000 1,694,031
5.90% 10/1/09 (MBIA Insured) Aaa 1,250,000 1,162,500
Orlando Util. Comm. Wtr. & Elec.
Rev. 5% 10/1/23 Aa1 2,000,000 1,510,000
Orlando Util. Comm. Wtr. & Elec. Rev.:
Rfdg. Sub-Series D:
6.75% 10/1/17 Aa 2,500,000 2,503,125
5% 10/1/23 Aa 2,375,000 1,810,938
Sub-Series A, 6.50% 10/1/20 Aaa 1,405,000 1,462,956
5.395%, 10/31/13 Aa 4,000,000 3,400,000
5.60% 10/31/13 Aa 3,400,000 2,868,750
7.242% 10/31/13, INFL (d) Aa 1,000,000 710,000
Palm Beach County Solid Waste Ind. Dev.
Rev. (Osceola Pwr. Ltd. Partnership)
Series A, 6.95% 1/1/22 - 5,000,000 4,456,250
Pinellas Park Pub. Impt. Rev. Rfdg.
Series A, 5% 10/1/13 (FGIC Insured) Aaa 1,000,000 793,750
Pinellas Sun Coast Hlth. Rev. 8.50% 3/1/20 BBB- 430,000 439,138
Plantation Health Facs. Auth. Rev.
(Covenant Retirement Communities Inc.)
7.75% 12/1/22 - 2,500,000 2,384,375
Polk County Ind. Dev. Auth. Ind. Dev. Rev.
(Winter Haven Hosp.) Series 2, 6.25%
9/1/15 (MBIA Insured) Aaa 1,500,000 1,391,250
Reedy Creek Impt. Dist. Util. Rev. Rfdg.
Series 1, 5% 10/1/14 (MBIA Insured) Aaa 1,000,000 792,500
Seminole County Wtr. & Swr. Rev.
Rfdg. & Impt.:
6% 10/1/09 (MBIA Insured) Aaa 1,500,000 1,436,250
6% 10/1/12 (MBIA Insured) Aaa 1,500,000 1,408,125
St. Johns County Ind. Dev. Auth. Hosp. Rev.
(Flagler Hosp. Proj.) 6% 8/1/22 A 4,490,000 3,586,388
St. John's County Ind. Dev. Auth. Rev.
Rfdg. (Vicars Landing Proj.)
Series A, 6.75% 2/15/12 - 4,000,000 3,610,000
St. Lucie County Solid Waste Disp. Rev.
(Florida Pwr. & Lt. Co. Proj.)
6.70% 5/1/27 (b) A2 2,000,000 1,850,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Sumter County School Dist. Rev.
(Multi-Dist. Loan Prog.) 7.15%
11/1/15 (Cap. Guaranty Insured) Aaa $ 1,000,000 $ 1,037,500
Sunrise Pub. Facs. Rev. Series B,
0% 10/1/13 (MBIA Insured) Aaa 2,840,000 777,450
Sunrise Spl. Tax Dist. #1 Rfdg. 6.375%
11/1/21, LOC Bayer Hypotheken Bank Aa1 1,500,000 1,361,250
Tampa Cap. Impt. Prog. Rev. Series B:
8.25% 10/1/05 BBB 4,500,000 4,674,375
8.375% 10/1/18 BBB 1,800,000 1,854,000
Tampa Parking Facs. Rev. Rfdg. (Util. Tax)
5.50% 10/1/10 (AMBAC Insured) Aaa 3,600,000 3,141,000
Tampa Rev. (Allegheny Health Sys.-St. Joseph)
6.75% 12/1/17 (MBIA Insured) Aaa 150,000 147,750
Tampa Wtr. & Swr. Rev. Rfdg:
Series A, 5% 10/1/14 (FGIC Insured) Aaa 1,830,000 1,436,550
Series B, 5% 10/1/14 (FGIC Insured) Aaa 1,000,000 785,000
Tarpan Springs Health Facs. Auth. Hosp. Rev.
(Helen Ellis Mem. Hosp. Proj.):
7.5% 5/1/11 BBB- 1,225,000 1,156,094
7.625% 5/1/21 BBB- 4,245,000 3,995,606
Vero Beach Wtr. & Swr. Rev. Rfdg.
Series B, 5% 12/1/21
(FGIC Insured) Aaa 1,000,000 748,750
263,405,944
PUERTO RICO - 12.9%
Puerto Rico Commonwealth Aqueduct & Swr.
Auth. Rev. Series A, 7.875% 7/1/17 Baa 2,500,000 2,618,750
Puerto Rico Commonwealth Gen. Oblig.
5% 7/1/21 Baa1 8,090,000 6,027,050
Puerto Rico Commonwealth Hwy. & Trans.
Auth. Rev.:
Rfdg. Series X, 5.50% 7/1/15 Baa1 5,000,000 4,137,500
Series W:
5.50% 7/1/13 Baa1 8,000,000 6,680,000
5.50% 7/1/15 Baa1 7,000,000 5,792,500
5.25% 7/1/20 Baa1 2,010,000 1,542,675
Puerto Rico Commonwealth Infrastructuring
Fing. Auth. Spl. Series A, 7.50%
7/1/09 Baa1 1,000,000 1,043,750
Puerto Rico Commonwealth Rfdg. & Impt.
Unltd. Tax:
5.30% 7/1/04 Baa1 2,000,000 1,812,500
5.50% 7/1/13 Baa1 3,000,000 2,520,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
PUERTO RICO - CONTINUED
Puerto Rico Elec. Pwr. Auth. Resource Rev. Series R,
6.25% 7/1/17 Baa1 $ 2,450,000 $ 2,208,063
Puerto Rico Elec. Pwr. Auth. Rev.
Rfdg. Series S, 6.125% 7/1/09 Baa1 2,000,000 1,867,500
Puerto Rico Pub. Ed. & Health Facs. Rfdg.:
Series L, 5.50% 7/1/21 Baa1 3,000,000 2,422,500
Series M, 5.75% 7/1/15 Baa1 5,000,000 4,200,000
42,872,788
U.S. VIRGIN ISLANDS - 1.8%
Virgin Islands Pub. Fin. Auth. Rev. Rfdg.
Series A, 7.25% 10/1/18
(Escrowed to Maturity)(e) - 6,300,000 5,953,500
GUAM - 3.1%
Guam Arpt. Auth. Gen. Rev.:
Series A, 6.60% 10/1/10 (b) BBB 1,500,000 1,389,375
Series B:
6.40% 10/1/05 (b) BBB 2,500,000 2,371,868
6.70% 10/1/23 (b) BBB 3,950,000 3,555,000
Guam Pwr. Auth. Rev. Series A:
5.25% 10/1/13 BBB 1,250,000 996,875
6.30% 10/1/22 BBB 2,150,000 1,889,313
10,202,431
TOTAL MUNICIPAL BONDS
(Cost $355,701,991) 322,434,663
MUNICIPAL NOTES (A) - 2.6%
FLORIDA - 2.6%
Dade County Health Facs. Auth. Hosp. Rev.
(Miami Childrens Hosp. Proj.) Series 1990,
3.55%, LOC Barnett Bank, VRDN VMIG 1 2,800,000 2,800,000
Dade County Ind. Dev. Auth. Ind. Dev. Rev.
(Dolphins Stadium Proj.) Series 1985 B,
3.70%, LOC Citibank, Marine Midland
Bank, VRDN VMIG 1 3,800,000 3,800,000
Dade County Wtr. Swr. & Sys. Rev. 3.40%,
(FGIC Insured) (Liquidity Facility
Industrial Bank of Japan) VRDN VMIG 1 2,000,000 2,000,000
TOTAL MUNICIPAL NOTES
(Cost $8,600,000) 8,600,000
TOTAL INVESTMENTS - 100%
(Cost $364,301,991) $ 331,034,663
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
110 U.S. Treasury Bond Futures March, 1995 $ 10,786,875 $ (38,811)
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 3.2%
SECURITY TYPE ABBREVIATIONS
INFL - Inverse Floating Rate Security
VRDN - Variable Rate Demand Notes
LEGEND
(i) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(j) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals (AMT securities).
(k) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(l) Coupon is inversely indexed to a floating interest rate. The price will
be more volatile than the price of a comparable fixed rate security. The
rate shown is the rate at period end.
(m) Security collateralized by an amount sufficient to pay interest and
principal.
(n) 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 $4,487,813.
INCOME TAX INFORMATION
At November 30, 1994 the aggregate cost of investment securities for income
tax purposes was $364,301,991. Net unrealized depreciation aggregated
$33,267,328, of which $324,574 related to appreciated investment securities
and $33,591,902 related to depreciated investment securities.
OTHER INFORMATION
The composition of long-term debt holdings as a percentage of total value
of investments for the period ended is as follows (ratings are unaudited):
MOODY'S RATINGS S&P RATINGS
Aaa, Aa, A 51.7% AAA, AA, A 68.2%
Baa 25.6% BBB 16.6%
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 10.2%. FMR
has determined that unrated debt securities that are lower quality account
for 6.3% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investments, is as follows:
Transportation 17.6%
Health Care 15.7
General Obligation 13.2
Industrial Development 12.8
Electric Revenue 12.5
Others
(individually less than 10%) 28.2
TOTAL 100.0%
At November 30, 1994, the fund had a capital loss carryforward of
approximately $1,972,231 which will expire on November 30, 2002.
SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1994
494.ASSETS 495. 496.
497.Investment in securities, at value (cost 498. $ 331,034,663
$364,301,991) -
See accompanying schedule
499.Receivable for investments sold 500. 5,006,835
501.Interest receivable 502. 5,948,852
503.Redemption fees receivable 504. 107
505. 506.TOTAL ASSETS 507. 341,990,457
508.LIABILITIES 509. 510.
511.Payable to custodian bank $ 45,841 512.
513.Payable for investments purchased 3,976,595 514.
515.Payable for fund shares redeemed 1,571,530 516.
517.Dividends payable 612,903 518.
519.Accrued management fee 154,981 520.
521.Payable for daily variation on futures contracts 77,623 522.
523. 524.TOTAL LIABILITIES 525. 6,439,473
526.527.NET ASSETS 528. $ 335,550,984
529.Net Assets consist of: 530. 531.
532.Paid in capital 533. $ 370,790,543
534.Accumulated undistributed net realized gain (loss) 535.
on investments (1,933,420)
536.Net unrealized appreciation (depreciation) on 537. (33,306,139)
investments
538.539.NET ASSETS, for 34,456,067 shares 540. $ 335,550,984
outstanding
541.542.NET ASSET VALUE, offering price and 543. $9.74
redemption price per share ($335,550,984 (divided by)
34,456,067 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1994
544.545.INTEREST INCOME 546. $ 24,304,277
547.EXPENSES 548. 549.
550.Management fee $ 2,214,635 551.
552.Non-interested trustees' compensation 2,454 553.
554.Total expenses before reductions 2,217,089 555.
556.Expense reductions (55,208) 2,161,881
557.558.NET INTEREST INCOME 559. 22,142,396
560.REALIZED AND UNREALIZED GAIN (LOSS) 562. 563.
561.Net realized gain (loss) on:
564. Investment securities (3,112,978) 565.
566. Futures contracts 1,265,990 (1,846,988)
567.Change in net unrealized appreciation 568. 569.
(depreciation) on:
570. Investment securities (49,869,617) 571.
572. Futures contracts (38,811) (49,908,428)
573.574.NET GAIN (LOSS) 575. (51,755,416)
576.577.NET INCREASE (DECREASE) IN NET ASSETS 578. $ (29,613,020)
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER 30,
1994 1993
579.INCREASE (DECREASE) IN NET ASSETS
580.Operations $ 22,142,396 $ 20,834,018
Net interest income
581. Net realized gain (loss) (1,846,988) 8,118,245
582. Change in net unrealized appreciation (depreciation) (49,908,428) 15,435,529
583. (29,613,020) 44,387,792
584.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
585.Distributions to shareholders: (22,142,396) (20,834,018)
From net interest income
586. From net realized gain (7,685,399) (227,395)
587. 588.TOTAL DISTRIBUTIONS (29,827,795) (21,061,413)
589.Share transactions 113,687,492 242,254,359
Net proceeds from sales of shares
590. Reinvestment of distributions 19,685,122 13,961,012
591. Cost of shares redeemed (166,831,473) (88,378,513)
592. Redemption fees 83,694 94,890
593. (33,375,165) 167,931,748
Net increase (decrease) in net assets resulting from
share transactions
594. (92,815,980) 191,258,127
595.TOTAL INCREASE (DECREASE) IN NET ASSETS
596.NET ASSETS 597. 598.
599. Beginning of period 428,366,964 237,108,837
600. End of period $ 335,550,984 $ 428,366,964
601.OTHER INFORMATION 603. 604.
602.Shares
605. Sold 10,546,906 22,071,403
606. Issued in reinvestment of distributions 1,829,088 1,252,444
607. Redeemed (15,871,258) (7,911,287)
608. Net increase (decrease) (3,495,264) 15,412,560
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
609. YEARS ENDED NOVEMBER 30, MARCH 16, 1992
(COMMENCEME
NT
OF OPERATIONS) T
O
NOVEMBER 30,
610. 1994 1993 1992
611.SELECTED PER-SHARE DATA
612.Net asset value, beginning of period $ 11.290 $ 10.520 $ 10.000
613.Income from Investment Operations .587 .615 .459
Net interest income
614. Net realized and unrealized gain (loss) (1.352) .777 .514
615. Total from investment operations (.765) 1.392 .973
616.Less Distributions (.587) (.615) (.459)
From net interest income
617. From net realized gain on investments (.200) (.010) -
618. Total distributions (.787) (.625) (.459)
619.Redemption fees added to paid in capital .002 .003 .006
620.Net asset value, end of period $ 9.740 $ 11.290 $ 10.520
621.TOTAL RETURN B -7.19% 13.52% 9.94%
622.RATIOS AND SUPPLEMENTAL DATA
623.Net assets, end of period (000 omitted) $ 335,551 $ 428,367 $ 237,109
624.Ratio of expenses to average net .54% .25% .03%A
assets C
625.Ratio of expenses to average net assets .55% .55% .55%A
before expense reductions C
626.Ratio of net interest income to average 5.49% 5.52% 6.25%A
net assets
627.Portfolio turnover rate 49% 50% 38%A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of the fund's $5 account closeout fee. Yield measures the income
paid by a fund. Since a money market fund tries to maintain a $1 share
price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1994 PAST 1 LIFE OF
YEAR FUND
Spartan Florida Municipal
Money Market Portfolio 2.46% 5.85%
Consumer Price Index 2.81% 6.39%
Average All Tax-Free
Money Market Fund 2.25% 4.90%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- - in this case, one year, or since the fund started on August 24,1992. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. Comparing the fund's performance
to the consumer price index (CPI) helps show how your investment did
compared to inflation. To measure how the fund stacked up against its
peers, you can compare its return to the average all tax-free money market
fund's total return. This average currently reflects the performance of 372
all tax-free money market funds tracked by IBC/Donoghue. (The periods
covered by the CPI and IBC/Donoghue numbers are the closest available match
to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1994 PAST 1 LIFE OF
YEAR FUND
Spartan Florida Municipal
Money Market Portfolio 2.46% 2.54%
Consumer Price Index 2.81% 2.79%
Average All Tax-Free
Money Market Fund 2.25% 2.15%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
11/30/93 2/28/94 5/31/94 8/31/94 11/30/94
Spartan Florida Municipal 2.26% 2.30% 2.60% 2.75% 3.31%
Money Market Portfolio
If Fidelity had not reimbursed 2.16% 2.20% 2.55% n/a n/a
certain fund expenses
Average All Tax-Free 1.94% 1.97% 2.35% 2.59% 3.10%
Money Market Fund
Spartan Florida Municipal 3.53% 3.59% 4.06% 4.30% 5.17%
Money Market Portfolio -
Tax-equivalent
If Fidelity had not reimbursed 3.38% 3.44% 3.98% n/a n/a
certain fund expenses
Average All Taxable 2.69% 2.79% 3.51% 4.08% 4.84%
Money Market Fund
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. This
would have been lower if Fidelity had not reimbursed certain fund expenses.
You can compare these yields to the average all tax-free money market fund.
Or you can look at the fund's tax-equivalent yield, which is based on a
combined effective 1994 federal tax rate of 36%. The tax-equivalent figures
are useful in seeing how the fund stacked up against the average taxable
money market fund as tracked by IBC/Donoghue.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Deborah Watson, Portfolio Manager of Spartan Florida
Municipal Money Market Portfolio.
Q. DEB, CAN YOU FILL US IN ON THE CHANGES IN THE MONEY MARKETS DURING THE
PAST YEAR?
A. Interest rates have climbed sharply during the period. Early this year,
the Federal Reserve Board determined that economic growth had begun to
accelerate. I anticipated that by the end of the first quarter, the Fed
might begin to increase short-term interest rates to rein in that growth
and prevent a resurgence of inflation. The first rate increase came even
sooner than I expected, on February 4, 1994, when the Fed raised the
federal funds rate by one-quarter point, from 3.00% to 3.25%. Since then,
the Fed has boosted the rate five more times to 5.50%, including the recent
three-quarter point increase in November. As a result, yields on short-term
instruments have climbed as well.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. Although I was surprised by the timing of the Fed's initial rate
increase, I had been preparing the fund for rates to move higher. The
fund's average maturity was 66 days at the end of November 1993. I let the
fund's average maturity roll down to 22 days by the end of May. In July,
the seasonal onslaught of borrowing by municipal issuers created an
increase in the supply of short-term issues, which drove yields higher. I
took advantage of that opportunity to lock in higher yields on some longer
securities, so the fund's average maturity rose to 32 days. By the end of
September, it had declined again, and was less than 30 days for the
remainder of the period.
Q. HOW DID THE FUND PERFORM?
A. On November 30, 1994, the fund's seven-day yield was 3.31%, up from
2.60% six months ago. The latest yield is the equivalent of a 5.17% yield
on a taxable investment for investors in the 36% federal income tax
bracket. The fund's total return for the 12 months ended November 30 was
2.46%. That beat the 2.25% average total return for all tax-free money
market funds during the same period, according to IBC/Donoghue.
Q. WHAT'S AHEAD FOR THE FUND?
A. The fund's assets will likely swell toward the end of this calendar year
as investors seek shelter from Florida's intangibles tax. Probably the bulk
of the new money will be invested in short-term variable-rate securities to
maintain the fund's low average maturity and liquidity since assets will
likely decrease in January. It seems likely that short-term rates will
continue to move higher during the coming months as the Fed continues to
attempt to restrain inflationary pressures. Thus, for the most part I
anticipate avoiding securities with relatively long maturities for now.
FUND FACTS
GOAL: income exempt from
federal income tax and the
Florida intangible personal
property tax and stability by
investing in high-quality,
short-term Florida municipal
securities
START DATE: August 24, 1992
SIZE: as of November 30,
1994, more than $337 million
MANAGER: Deborah Watson,
since August 1992; manager,
Spartan California and
Pennsylvania Municipal
Money Market Portfolios,
since 1989; and Fidelity
California Tax-Free Money
Market Portfolio, since 1988;
joined Fidelity in 1982
(checkmark)
MONEY MARKETS AND
DERIVATIVES:
The word "derivatives" covers
a wide range of financial
agreements, of varying
degrees of complexity, that
have market values based on
security or market indices. All
"derivative" securities in
Fidelity's money market funds
are designed to have the price
characteristics of typical
money market securities.
During the recent Federal
Reserve Board interest rate
increases, all Fidelity money
market holdings performed as
designed and the funds
maintained a stable share
price of $1.00.
The more complex of these
instruments, such as floating
rate notes with unusual and
complex floating rate
formulas, frequently have too
much price volatility to be
appropriate investments for
money market funds. Many of
them do not offer the degree
of price stability Fidelity
believes is required in order
for its funds to maintain a
stable $1.00 share price.
Therefore, despite their
frequent higher yields at the
time they are sold, Fidelity
money market funds have not
purchased these volatile
securities. While this may
sometimes have caused
Fidelity money market funds
to have lower gross yields
than certain other funds,
Fidelity believes its investors
value prudence as well as
performance.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
11/30/94 5/31/94 11/30/93
0 - 30 82 87 63
31 - 90 12 6 13
91 - 180 - 6 1
181 - 397 6 1 23
WEIGHTED AVERAGE MATURITY
11/30/94 5/31/94 11/30/93
Spartan Florida
Municipal Money Market
Portfolio 27 days 22 days 66 days
Average All Tax-Free
Money Market Fund* 46 days 43 days 64 days
ASSET ALLOCATION
AS OF NOVEMBER 30, 1994 AS OF MAY 31, 1994
Row: 1, Col: 1, Value: 68.0
Row: 1, Col: 2, Value: 21.0
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 6.0
Row: 1, Col: 5, Value: 2.0
Row: 1, Col: 1, Value: 65.0
Row: 1, Col: 2, Value: 14.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 12.0
Row: 1, Col: 5, Value: 9.0
Variable rate
demand notes
(VRDNs) 68%
Commercial
paper 21%
Tender bonds 4%
Municipal
notes 6%
Other 1%
Variable rate
demand notes
(VRDNs) 65%
Commercial
paper 14%
Tender bonds 0%
Municipal
notes 12%
Other 9%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENTS NOVEMBER 30, 1994
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - 100.0%
Alachua County Health Facs. Auth. Rev. Bonds
(Academic Research Bldg. Proj.) Series 1989:
3.60%, tender 12/1/94,
LOC Barnett Bank of Jacksonville $ 1,000,000 $ 1,000,000
3.65%, tender 12/15/94,
LOC Barnett Bank of Jacksonville 5,250,000 5,250,000
Arcadia Hosp. Rev. (Desoto Memorial Hosp.) Series 1994,
3.95%, LOC First Union Bank of Florida, VRDN 5,000,000 5,000,000
Bay County Hosp. Sys. Rev. (Bay Med. Ctr. Proj.)
Series 1988 A, 3.50%, LOC Citibank, VRDN 5,500,000 5,500,000
Broward County Fin. Auth. Multi-Family Hsg. Rev., VRDN:
(Lake Park Assoc. Ltd. Partnership) Series 1985, 3.50%,
LOC Society Bank 8,500,000 8,500,000
(Palm Aire-Oxford Proj.) Series 1990, 3.80% 6,800,000 6,800,000
Broward County Hsg. & Fin. Auth.
(Sawgrass Pines Apt. Proj.) Series 1993 A, 4%,
LOC First Union Bank of Florida, VRDN (b) 11,000,000 11,000,000
Broward County Multi-Family Hsg. Rev. (Welleby Apts. Proj.)
3.55%, LOC Bank of America, VRDN 2,500,000 2,500,000
Collier County Wtr. & Swr. Ind. Dev. Rev.
(Marco Island Util. Proj.) Series 1990, 3.90%,
LOC Sun Bank, VRDN (b) 4,600,000 4,600,000
Dade County Ind. Dev. Auth. Ind. Dev. Rev.
(Royal Store Fixtures Corp. Proj.) 3.90%,
LOC Sun Bank of Miami, VRDN (b) 2,500,000 2,500,000
Dade County Ind. Dev. Rev., VRDN:
(Guastafeste Proj.):
Series 1987, 3.90%, LOC Sun Bank (b) 1,135,000 1,135,000
Series 1991, 3.90%, LOC Sun Bank (b) 715,000 715,000
(Montenay-Dade Proj.):
Series 1988, 3.35%, LOC Banque Paribas (b) 1,500,000 1,500,000
Series 1990 A, 3.50%, LOC Banque Paribas (b) 1,690,000 1,690,000
Dade County Multi-Family Hsg. Rev.
(Biscayne View Apts. Proj.) Series 1993, 4%,
BPA Commonwealth Life Ins. Co., VRDN (b) 15,000,000 15,000,000
Dade County Water & Swr. Sys. Rev. 3.40% (Liquidity Facility
Industrial Bank of Japan) (FGIC Insured), VRDN 2,000,000 2,000,000
Duval County Hsg. & Fin. Auth. Rev.
(Lakes of Mayport Apts.) Series 1985 F, 4%,
LOC Bank of Boston, VRDN 4,300,000 4,300,000
Florida Board of Ed. Participating VRDN:
Series P-1B, 3.90%,
(Liquidity Facility Merrill Lynch & Co.)(c) 4,000,000 4,000,000
Series PA-1004, 3.90%,
(Liquidity Facility Merrill Lynch & Co)(c) 5,780,000 5,780,000
Florida Dept. Natural Resources Participating VRDN,
Series BTP-64 94A, 3.925% (Liquidity
Facility Automatic Data Processing, Inc.)(c) 7,585,000 7,585,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Florida Dept. of Trans. Participating VRDN, Series PA-11,
3.90% (Liquidity Facility Merrill Lynch & Co.) (c) $ 5,300,000 $ 5,300,000
Florida Hsg. Fin. Agcy. Multi-Family Hsg. Rev. VRDN:
(Beville-Oxford Proj.) Series 1990 B, 3.80%
(Continental Casualty Guaranteed) 1,100,000 1,100,000
(Brandon-Oxford Proj.) Series 1990 C, 3.80%
(Continental Casualty Guaranteed) 9,000,000 9,000,000
(Hillsborough-Oxford Proj.) Series D, 3.80%
(Continental Casualty Guaranteed) 13,335,000 13,335,000
(Players Club) Series 1991 C, 3.88%,
LOC Sumitomo Trust 7,100,000 7,100,000
Florida Local Govt. Fin. Auth. Rev., VRDN:
(Govt. Unit Loan Prog.) Series 1986 A:
2.90%, LOC First Union Nat'l Bank of Florida 8,000,000 8,000,000
3.55% (GE Capital Corp. Guaranteed) (FGIC Insured) 1,000,000 1,000,000
(Lake Wales Medical Centers Inc. Proj.) Series 1994A,
3.70%, LOC First Union Nat'l Bank of Florida 2,000,000 2,000,000
Florida Muni. Pwr. Agcy. Participating VRDN, Series PA-1018,
3.90% (Liquidity Facility Merrill Lynch & Co.) (c) 2,680,000 2,680,000
Greater Orlando Aviation Auth. Arpt. Facs.
Series B, 3.75% 1/12/95
(Liquidity Facility Morgan Guaranty Trust Co.), CP (b) 3,000,000
3,000,000
Hillsborough County Aviation Auth.
(Tampa International Arpt. Proj.) 3.70% 1/13/95,
LOC Nat'l. Westminster Bank, CP (b) 5,000,000 5,000,000
Indian River County Hosp. Dist. Hosp. Rev.:
Series 1985, 3.80%, LOC Bank Indosuez, VRDN 4,900,000 4,900,000
Bonds:
Series 1988:
3.55%, tender 12/8/94, LOC Kredietbank 2,350,000 2,350,000
3.80%, tender 2/7/95, LOC Kredietbank 2,000,000 2,000,000
Series 1989:
3.65%, tender 12/20/94, LOC Kredietbank 4,300,000 4,300,000
3.80%, tender 2/8/95, LOC Kredietbank 1,200,000 1,200,000
Series 1990:
3.90%, tender 2/8/95, LOC Kredietbank 5,000,000 5,000,000
Indian Trace Commty. Dev. Dist. Bonds:
(Broward County Basin I Water Mgmt. Spl. Benefit):
Series 1991, 4.10%, tender 12/7/94,
LOC Tokai Bank 1,500,000 1,500,000
4.15%, tender 12/6/94, LOC Tokai Bank 5,000,000 5,000,000
4.10%, tender 12/7/94, LOC Tokai Bank 3,900,000 3,900,000
Jacksonville Elec. Auth. Participating VRDN, Series PA-100,
3.90% (Liquidity Facility Merrill Lynch & Co.)(c) 3,700,000 3,700,000
Jacksonville Health Facs. Auth. Rev. (HSI Support Sys. Proj.)
3.55% (Liquidity Facility SunBank-Orlando)
(MBIA Insured), VRDN 1,000,000 1,000,000
Jacksonville Ind. Dev. Rev. (Samuel C. Taylor Foundation 1987
Proj.) 3.875%, LOC Barnett Bank of Jacksonville, VRDN 5,500,000
5,500,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Jacksonville (River City Renaissance Proj.)
3.80%, tender 1/27/95,
BPA Morgan Guaranty Trust Co., CP $ 3,000,000 $ 3,000,000
Lee County Hosp. Board Hosp. Rev. Bonds (Lee Memorial
Hosp. Proj.) Series 1992 B, 3.35%, tender 12/9/94
(Liquidity Facility Industrial Bank of Japan) 2,300,000 2,300,000
Lee County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Baader North America Proj.) Series1994, 3.80%,
LOC Deutsche Bank, VRDN (b) 2,200,000 2,200,000
Liberty County Ind. Dev. Rev. (Timber Energy Res. Inc. Proj.)
Series 1994, 3.65%, LOC Bank of Montreal, VRDN 8,200,000 8,200,000
Manatee County Hsg. Fin. Auth. (Harbour Pointe Proj.)
Series 1990-A, 4.15%, LOC Marine Midland
Bank, VRDN 1,000,000 1,000,000
Marion County Hsg. Fin. Auth. Rev. (Summer Trace Apts.)
Series 1985 D, 4%, LOC Bank of Boston, VRDN 4,100,000 4,100,000
Marion Commty. Hsg. Fin. Auth. Rev., VRDN:
(Belvedere Apt. Proj.) Series C, 4%,
LOC Bank of Boston 3,100,000 3,100,000
(Oakhurst Apt. Proj.) Series E, 4%,
LOC Bank of Boston 3,800,000 3,800,000
(Paddock Place Proj.) Series 1985 F, 4%,
LOC Bank of Boston 4,300,000 4,300,000
Monroe County School Dist. RAN 2.80% 12/15/95 4,000,000 4,000,000
Ocean Hwy. & Port Auth. Rev. Series 1990, 3.75%,
LOC ABN-AMRO, VRDN (b) 13,000,000 13,000,000
Okeechobee County Solid Waste Rev. (Chambers Waste Sys.)
Series 1992, 3.95%, LOC NationsBank, VRDN (b) 1,000,000 1,000,000
Orange County Health Facs. Auth. Prog. Rev. Rfdg. Series 1985,
3.60%, tender 1/26/95, BPA Banque Paribas
(MBIA Insured) 4,900,000 4,900,000
Orange County School Dist. TAN 4.75% 6/30/94 10,000,000 10,041,709
Orlando Util. Commission Water & Elec. Rev. Rfdg. Bonds:
7.90% 10/1/95 2,000,000 2,054,834
8.10% 10/1/95 1,000,000 1,046,990
Palm Beach County Health Facs. Auth. (Pooled Hosp. Loan)
3.85%, tender 1/19/95 (Liquidity Facility Credit Suisse)
(MBIA Insured) 4,000,000 4,000,000
Palm Beach County Hsg. Fin. Auth. Rev.
(Lake Crystal Apts. Proj. Phase III) Series 1988-A, 3.65%,
LOC Citibank, VRDN 7,440,000 7,440,000
Pasco County School Dist. TAN 4.75% 6/30/95 7,200,000 7,231,432
Pensacola Rev. Bonds (Harborview Corp. Proj.)
3.875%, LOC Amsouth Bank, VRDN 2,975,000 2,975,000
Pinellas County Health Facs. Auth. Rev. (Pooled Hosp. Loan
Prog.) 3.65%, LOC Chemical Bank, VRDN 2,300,000 2,300,000
Pinellas County Hsg. Fin. Auth. Multi-Family Mtg. Rev. Rfdg.
(Foxbridge Apts.) Series 1993 A, 4%,
LOC Citibank, VRDN 4,900,000 4,900,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Plant City Hosp. Rev. (South Baptist Hosp. Proj.) Series 1993,
3.95%, LOC Barnett Bank of Tampa, VRDN (b) $ 4,900,000 $ 4,900,000
Putnam County Dev. Auth. Poll. Cont. Rev.:
(Florida Pwr. & Light Co.) 3.60%, VRDN 1,000,000 1,000,000
(Seminole Elec. Coop.) Series 1984-D, 3.15%,
tender 12/15/94 (National Rural Util. CFC Guaranteed) 15,000,000
15,000,000
Sarasota County Health Facs. Auth. Hosp. Rev.
(Venice Hospital Proj.) Series 1992, 3.65%,
LOC Kredietbank, VRDN 2,100,000 2,100,000
Sarasota County Pub. Hosp. Dist. Hosp. Bonds:
(Sarasota Memorial Hosp.):
Series 1993 A:
3.65%, tender 1/17/95
(Liquidity Facility Goldman Sachs) 4,000,000 4,000,000
Series B, 3.60%, tender 1/26/95,
LOC Sumitomo Bank of Japan 4,750,000 4,750,000
3.65%, tender 2/8/95
(Liquidity Facility Goldman Sachs) 2,000,000 2,000,000
Sunshine Gov't. Fing. Comm. Rev. Bonds Series 1986,
3.15%, tender 12/20/94 LOC Morgan
Guaranty Trust Co. 4,500,000 4,500,000
Volusia County Health Facs. Auth. Rev., VRDN:
(Southwest Volusia Healthcare Corp.) Series 1994 A, 3.80%,
LOC First Union Nat'l. Bank of North Carolina 5,000,000 5,000,000
3.60%, BPA Morgan Guaranty Trust Co. (FGIC Insured) 1,300,000 1,300,000
TOTAL INVESTMENTS - 100% $ 335,659,965
Total Cost for Income Tax Purposes $ 335,659,965
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At November 30, 1994, the fund had a capital loss carryforward of
approximately $23,100 of which $100, $1,100 and $21,900 will expire on
November 30, 2000, 2001 and 2002, respectively.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
NOVEMBER 30, 1994
628.ASSETS 629. 630.
631.Investment in securities, at value - See 632. $ 335,659,965
accompanying schedule
633.Cash 634. 6,838,947
635.Interest receivable 636. 1,787,627
637. 638.TOTAL ASSETS 639. 344,286,539
640.LIABILITIES 641. 642.
643.Payable for investments purchased $ 6,576,194 644.
645.Dividends payable 46,001 646.
647.Accrued management fee 134,693 648.
649. 650.TOTAL LIABILITIES 651. 6,756,888
652.653.NET ASSETS 654. $ 337,529,651
655.Net Assets consist of: 656. 657.
658.Paid in capital 659. $ 337,552,770
660.Accumulated net realized gain (loss) on 661. (23,119)
investments
662.663.NET ASSETS, for 337,552,770 shares 664. $ 337,529,651
outstanding
665.666.NET ASSET VALUE, offering price and 667. $1.00
redemption price per share ($337,529,651 (divided by)
337,552,770 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED NOVEMBER 30, 1994
668.669.INTEREST INCOME 670. $ 10,503,661
671.EXPENSES 672. 673.
674.Management fee $ 1,818,415 675.
676.Non-interested trustees' compensation 2,132 677.
678. Total expenses before reductions 1,820,547 679.
680. Expense reductions (159,576) 1,660,971
681.682.NET INTEREST INCOME 683. 8,842,690
684.REALIZED AND UNREALIZED GAIN (LOSS) 686. (21,862)
685.Net realized gain (loss) on investment securities
687.Increase (decrease) in net unrealized gain from 688. (17)
accretion of market discount
689.690.NET GAIN (LOSS) 691. (21,879)
692.693.NET INCREASE IN NET ASSETS RESULTING FROM 694. $ 8,820,811
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED NOVEMBER 30,
1994 1993
695.INCREASE (DECREASE) IN NET ASSETS
696.Operations $ 8,842,690 $ 5,069,253
Net interest income
697. Net realized gain (loss) (21,862) (1,143)
698. Increase (decrease) in net unrealized gain from (17) 17
accretion of market discount
699. 8,820,811 5,068,127
700.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
701.Dividends to shareholders from net interest income (8,842,690) (5,069,253)
702.Share transactions at net asset value of $1.00 per 587,117,506 523,059,131
share
Proceeds from sales of shares
703. Reinvestment of dividends from net interest 8,273,320 4,777,607
income
704. Cost of shares redeemed (564,580,189) (270,561,793)
705. 30,810,637 257,274,945
Net increase (decrease) in net assets and shares
resulting from share transactions
706. 30,788,758 257,273,819
707.TOTAL INCREASE (DECREASE) IN NET ASSETS
708.NET ASSETS 709. 710.
711. Beginning of period 306,740,893 49,467,074
712. End of period $ 337,529,651 $ 306,740,893
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
713. YEARS ENDED NOVEMBER 30, AUGUST 24, 199
2
(COMMENCEME
NT
OF OPERATIONS) T
O
NOVEMBER 30,
714. 1994 1993 1992
715.SELECTED PER-SHARE DATA
716.Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000
717.Income from Investment Operations .024 .025 .008
Net interest income
718.Less Distributions (.024) (.025) (.008)
From net interest income
719.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000
720.TOTAL RETURN B 2.47% 2.51% .78%
721.RATIOS AND SUPPLEMENTAL DATA
722.Net assets, end of period (000 omitted) $ 337,530 $ 306,741 $ 49,467
723.Ratio of expenses to average net assets .46% .18% -
C
724.Ratio of expenses to average net assets .50% .50% .50%A
before expense reductions C
725.Ratio of net interest income to average 2.43% 2.48% 2.91%A
net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1994
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Florida Municipal Income Portfolio(the income fund) is a fund of
Fidelity Court Street Trust. Spartan Florida Municipal Money Market
Portfolio (the money market fund) is a fund of Fidelity Court Street Trust
II. Each trust is registered under the Investment Company Act of 1940, as
amended (the 1940 Act), as an open-end management investment company.
Fidelity Court Street Trust and Fidelity Court Street Trust II (the trusts)
are organized as a Massachusetts business trust and a Delaware business
trust, respectively. Each fund is authorized to issue an unlimited number
of shares. The following summarizes the significant accounting policies of
the income fund and the money market fund:
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix system
and/or appraisals by a pricing service, both of which consider market
transactions and dealer-supplied valuations. Short-term securities maturing
within sixty days of their purchase date are valued either at amortized
cost or original cost plus accrued interest, both of which approximate
current value. Securities for which quotations are not readily available
through the pricing service are valued at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS -
CONTINUED
These differences are primarily due to differing treatments for losses
deferred due to futures and options transactions. The income 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.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective December
1, 1993, the funds 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 income 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 the beginning of the fiscal year have been
reclassified to reflect an increase in paid in capital and a decrease in
accumulated net realized gain on investments of $12,445. No adjustments
were necessary for the money market fund.
REDEMPTION FEES. Shares held in the income fund less than 180 days are
subject to a redemption fee equal to .50% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2.OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The income fund may invest in futures and
options contracts, and may also 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, as reflected in the schedule of investments under the
caption "Futures Contracts" reflect the extent of the involvement the
income 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 $188,558,050 and $228,109,683, respectively. The face value of
futures contracts opened and closed amounted to $228,761,571 and
$216,769,051, respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management &
Research Company (FMR) pays all expenses, except the compensation of the
non-interested Trustees and certain exceptions such as interest, taxes,
brokerage commissions and extraordinary expenses. FMR receives a fee that
is computed daily at an annual rate of .55% and .50% of average net assets
for the income and money market funds, respectively.
FMR also bears the cost of providing shareholder services to each fund. To
offset the cost of providing these services, FMR or its affiliates
collected certain transaction fees from shareholders which amounted to
$6,860 and $5,246 for the income and money market funds, respectively.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
5. EXPENSE REDUCTIONS.
FMR has voluntarily agreed to reimburse the funds for total operating
expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) above a specified percentage of average net assets.
INCOME FUND. For the period, this expense limitation ranged from an annual
rate of .45% to .55% of average net assets and the reimbursement amounted
to $55,208.
MONEY MARKET FUND. For the period, this expense limitation ranged from an
annual rate of .40% to .50% of average net assets and the reimbursement
amounted to $159,576.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Court Street Trust and Fidelity Court Street
Trust II and the Shareholders of Spartan Florida Municipal Income Portfolio
and Spartan Florida Municipal Money Market Portfolio:
We have audited the accompanying statements of assets and liabilities of
Spartan Florida Municipal Income Portfolio, a portfolio of Fidelity Court
Street Trust, and Spartan Florida Municipal Money Market Portfolio, a
portfolio of Fidelity Court Street Trust II, including the schedules of
portfolio investments, as of November 30, 1994, and the related statements
of operations for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the two years then ended and the period from March
16, 1992 (commencement of operations) to November 30, 1992 for the Spartan
Florida Municipal Income Portfolio, and each of the two years then ended
and the period from August 24, 1992 (commencement of operations) to
November 30, 1992 for the Spartan Florida Municipal Money Market Portfolio.
These financial statements and financial highlights are the responsibility
of the funds' management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, 1994 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Spartan Florida Municipal Income Portfolio and Spartan Florida Municipal
Money Market Portfolio, as of November 30, 1994, the results of their
operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended, and the financial
highlights for each of the two years in the period then ended and the
period from March 16, 1992 (commencement of operations) to November 30,
1992 for the Spartan Florida Municipal Income Portfolio, and each of the
two years then ended and the period from August 24, 1992 (commencement of
operations) to November 30, 1992 for the Spartan Florida Municipal Money
Market Portfolio, in conformity with generally accepted accounting
principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 30, 1994
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER, MONEY MARKET FUND
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr. , Vice President -
MONEY MARKET FUND
Thomas J. Steffanci, Vice President -
INCOME FUND
Anne Punzak, Vice President
Thomas D. Maher, Assistant
Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
United Missouri Bank, N.A.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
United Missouri Bank, N.A.
Kansas City, MO
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
