(2_FIDELITY_LOGOS)FIDELITY
MUNICIPAL INCOME
FUND
(FORMERLY FIDELITY HIGH YIELD TAX-FREE PORTFOLIO)
SEMIANNUAL REPORT
MAY 31, 1996
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 35 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 39 Notes to the financial statements.
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, FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
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:
Although stocks have managed to post solid returns through the first five
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving for a college education, enables you to weather these ups and
downs in a long-term fund, which has higher potential returns. An
intermediate-length fund could be appropriate if your investment horizon is
two to four years, and a short-term bond fund could be the right choice if
you need your money in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
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. A fund's total
return 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 securities that have grown in value). You can also look at the fund's
income to measure performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Municipal Income -0.31% 4.23% 37.11% 108.62%
Lehman Brothers Municipal Bond Index -0.57% 4.57% 43.76% 119.85%
High Yield Municipal Debt Funds Average -0.59% 4.43% 41.14% 108.87%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Lehman Brothers Municipal Bond
Index - a broad gauge of the municipal bond market. To measure how the
fund's performance stacked up against its peers, you can compare it to the
high yield municipal debt funds average, which reflects the performance of
44 high yield municipal bond funds with similar objectives tracked by
Lipper Analytical Services over the past six months. Both benchmarks
include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Municipal Income 4.23% 6.52% 7.63%
Lehman Brothers Municipal Bond Index 4.57% 7.53% 8.20%
High Yield Municipal Debt Funds Average 4.43% 7.12% 7.63%
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
IMAHDR PRASUN SHR__CHT 19960531 19960613 163529 S00000000000001
High Yield Tax-Free LB Municipal Bond
00037 LB015
1986/05/31 10000.00 10000.00
1986/06/30 10105.15 10095.40
1986/07/31 10177.34 10156.68
1986/08/31 10673.59 10611.39
1986/09/30 10660.75 10638.03
1986/10/31 10882.61 10821.75
1986/11/30 11045.82 11036.13
1986/12/31 11043.12 11005.67
1987/01/31 11316.18 11337.05
1987/02/28 11448.94 11392.82
1987/03/31 11361.92 11272.06
1987/04/30 10595.20 10706.43
1987/05/31 10517.27 10653.33
1987/06/30 10695.01 10966.11
1987/07/31 10831.35 11077.96
1987/08/31 10881.84 11102.89
1987/09/30 10370.83 10693.52
1987/10/31 10336.11 10731.38
1987/11/30 10554.37 11011.57
1987/12/31 10729.89 11171.35
1988/01/31 11103.30 11569.28
1988/02/29 11242.87 11691.56
1988/03/31 10975.05 11555.36
1988/04/30 11055.38 11643.18
1988/05/31 11135.55 11609.53
1988/06/30 11268.78 11779.38
1988/07/31 11385.48 11856.18
1988/08/31 11437.98 11866.61
1988/09/30 11689.63 12081.40
1988/10/31 11914.28 12294.63
1988/11/30 11813.74 12182.01
1988/12/31 12041.42 12306.64
1989/01/31 12211.29 12561.14
1989/02/28 12137.41 12417.81
1989/03/31 12162.43 12388.14
1989/04/30 12554.88 12682.23
1989/05/31 12820.46 12945.64
1989/06/30 12945.04 13121.44
1989/07/31 13039.39 13300.03
1989/08/31 12981.54 13169.82
1989/09/30 12926.13 13130.57
1989/10/31 13061.48 13291.16
1989/11/30 13302.71 13523.75
1989/12/31 13413.32 13634.38
1990/01/31 13271.98 13569.89
1990/02/28 13445.76 13691.34
1990/03/31 13460.97 13695.45
1990/04/30 13218.83 13596.29
1990/05/31 13583.57 13893.10
1990/06/30 13728.64 14015.22
1990/07/31 13941.16 14221.94
1990/08/31 13796.15 14015.44
1990/09/30 13900.23 14023.43
1990/10/31 14084.98 14277.81
1990/11/30 14487.65 14564.94
1990/12/31 14549.97 14628.30
1991/01/31 14739.48 14824.61
1991/02/28 14831.74 14953.58
1991/03/31 14879.46 14958.97
1991/04/30 15083.03 15158.67
1991/05/31 15215.87 15293.43
1991/06/30 15216.68 15278.29
1991/07/31 15437.74 15464.38
1991/08/31 15574.11 15668.04
1991/09/30 15698.59 15872.04
1991/10/31 15846.19 16014.89
1991/11/30 15880.78 16059.57
1991/12/31 16030.67 16404.21
1992/01/31 16195.23 16441.61
1992/02/29 16228.37 16446.87
1992/03/31 16244.27 16452.96
1992/04/30 16399.60 16599.39
1992/05/31 16556.99 16794.77
1992/06/30 16786.58 17076.58
1992/07/31 17217.25 17588.54
1992/08/31 16988.09 17417.05
1992/09/30 17033.70 17530.96
1992/10/31 16750.09 17358.63
1992/11/30 17184.76 17669.52
1992/12/31 17370.85 17849.93
1993/01/31 17613.95 18057.52
1993/02/28 18262.19 18710.66
1993/03/31 18129.89 18512.89
1993/04/30 18302.34 18699.68
1993/05/31 18408.57 18804.78
1993/06/30 18679.46 19118.63
1993/07/31 18685.95 19143.67
1993/08/31 19091.98 19542.25
1993/09/30 19368.10 19764.83
1993/10/31 19388.50 19802.98
1993/11/30 19232.43 19628.51
1993/12/31 19648.22 20042.87
1994/01/31 19864.31 20271.76
1994/02/28 19358.29 19746.72
1994/03/31 18462.61 18942.64
1994/04/30 18558.53 19103.27
1994/05/31 18674.19 19268.89
1994/06/30 18568.50 19151.16
1994/07/31 18918.93 19502.20
1994/08/31 18987.65 19569.68
1994/09/30 18705.57 19282.40
1994/10/31 18314.85 18939.94
1994/11/30 17743.43 18597.51
1994/12/31 18184.57 19006.84
1995/01/31 18804.47 19550.05
1995/02/28 19348.68 20118.57
1995/03/31 19399.37 20349.73
1995/04/30 19409.08 20373.75
1995/05/31 20014.44 21023.87
1995/06/30 19706.42 20839.91
1995/07/31 19849.06 21037.47
1995/08/31 20092.12 21304.23
1995/09/30 20247.15 21439.09
1995/10/31 20538.31 21750.81
1995/11/30 20927.54 22111.66
1995/12/31 21126.66 22324.15
1996/01/31 21301.61 22492.70
1996/02/29 21213.25 22340.87
1996/03/31 20941.52 22055.35
1996/04/30 20856.29 21992.94
1996/05/31 20809.67 21984.14
IMATRL PRASUN SHR__CHT 19960531 19960613 163535 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Municipal Income Fund on May 31, 1986. As the chart shows, by
May 31, 1996, the value of the investment would have grown to $20,862 - a
108.62% increase on the 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 $21,985 - a
119.85% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield
of a fund that invests in
bonds will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31, 1996 1995 1994 1993 1992 1991
Dividend return 2.50% 6.54% 7.54% 6.33% 6.70% 7.11%
Capital appreciation -2.81% 11.41% -15.28% 5.59% 1.51% 2.51%
return
Total return -0.31% 17.95% -7.74% 11.92% 8.21% 9.62%
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 MAY 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 5.32(cents) 31.01(cents) 62.98(cents)
Annualized dividend rate 5.23% 5.07% 5.21%
30-day annualized yield 5.23% - -
30-day annualized tax-equivalent yield 8.17% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $11.98 over
the past month, $12.20 over the past six months and $12.10 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 36% federal tax bracket, but does not reflect payment of the federal
alternative minimum tax, if applicable.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with David Murphy, Portfolio Manager of Fidelity Municipal
Income Fund
Q. HOW DID THE FUND PERFORM, DAVE?
A. For the six-month period ended May 31, 1996, the fund had a total return
of -0.31%. For the past year, the fund returned 4.23%. For the same
periods, the Lehman Brothers Municipal Bond Index returned -0.57% and
4.57%. Additionally, the high yield municipal debt funds average had a
six-month return of -0.59% and a one-year return of 4.43%, according to
Lipper Analytical Services. Going forward, however, a more comparable peer
group for the fund will be the Lipper general municipal debt funds average.
For the six- and 12-month periods, the average returned -1.20% and 3.49%,
respectively.
Q. WHY IS GENERAL MUNICIPAL DEBT A MORE ACCURATE PEER GROUP?
A. There are going to be some changes to the fund's investment policies. As
of June 24, 1996, the fund will reserve the right to invest up to 5% of its
assets - down from 25% - in below-investment-grade securities. The fund
does not intend to seek out lower-quality bonds. Instead, this change gives
the fund additional flexibility under unusual circumstances. Fidelity will
use two additional agencies - Duff & Phelps Credit Rating Co. and Fitch
Investors Service, as well as Moody's Investors Service and Standard &
Poor's which the fund already uses - to determine the credit quality of the
fund's bonds.
Q. WHAT'S BEEN YOUR STRATEGY IN THE PAST SIX MONTHS?
A. My strategy during the period was to upgrade the credit quality of the
portfolio so that nearly all of the fund's holdings are above investment
grade. The term "investment grade" means that an independent rating agency
has determined that an issuer offers adequate protection for the timely
payment of principal and interest. During the period, investment-grade
bonds offered yields competitive with below-investment-grade bonds.
Therefore, the fund did not have to give up very much income to get a
higher quality bond. Non-investment- grade holdings declined from 9.2% of
investments to 2.9% over the past six months. Many of the
non-investment-grade bonds that remain in the portfolio represent issuers
that are currently reorganizing their debt, and thus more time will be
needed to realize their value.
Q. WHAT'S THE MUNICIPAL BOND MARKET BEEN LIKE OVER THE PAST SIX MONTHS?
A. Bond prices have fallen and their yields have risen in response to
reports indicating surprising strength in the economy. Investors often
worry that a strong economy indicates the potential for inflation, which
erodes the value of fixed-income investments. For the municipal bond
market, however, performance relative to the U.S. Treasury market was
favorable because of fading fears of radical tax reform and healthy demand
from certain market participants, including insurance companies. To get a
sense of relative performance, it's worth examining the ratio of municipal
yields to Treasury yields - expressed in percentage terms. A move from a
higher percentage (where municipals are less expensive) to a lower
percentage (where municipals are more expensive) indicates municipal bonds
have outperformed Treasuries. Six months ago, the ratio for 30-year bonds
stood at about 88%; today, it stands at about 81.5%.
Q. WE UNDERSTAND THAT AN ISSUER THAT HAD BEEN A DISAPPOINTMENT SIX MONTHS
AGO, NOW IS A POSITIVE HOLDING FOR THE FUND . . .
A. That's right. The tax-exempt bonds of the Space Center in Houston -
which are issued under the authority of the Harris County Cultural and
Educational Facilities Finance Corporation - were restructured and
performed very well for the fund. In fact, the bonds of this one issuer
added over a quarter of a percentage point to the fund's total return.
Q. WHAT OTHER INVESTMENTS PERFORMED WELL?
A. Airline bonds issued through municipal authorities performed reasonably
well during the period. These bonds benefited from the rising profitability
of the airline industry and the decrease in outstanding corporate debt. I
expect this trend to continue because of an increase in business travel and
travel related to the upcoming Olympics in Atlanta, as well as a further
reduction in outstanding corporate debt. Some of the fund's airline
holdings included AMR - which is the parent company of American Airlines -
and Delta.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Although one of my fundamental investment strategies is to move out of
par (face value) bonds in favor of premium- or discount-coupon bonds, I
wish I had been more aggressive in executing this strategy. That's because
par bonds underperformed during the period. Historically, premium-coupon
bonds - which pay higher annual income than newly issued bonds - offer
downside protection should the market fall. Discount-coupon bonds - with
annual income lower than newly issued bonds - offer price appreciation
potential should the market rally. As either of these types of bonds move
close to par, I attempt to sell them and replace them with premiums or
discounts. Therefore, I am continuously adjusting the portfolio's coupon
structure.
Q. WHAT'S YOUR OUTLOOK?
A. I have a reasonably positive outlook. A spate of new issuance earlier
this year raised the overall level of supply of municipal bonds in the
market. With the rise in interest rates in 1996, however, issuance is
expected to fall - thus lowering the number of bonds in the market. Also,
an expected $60 billion in cash from coupon payments and redemptions is
expected to hit the market in June and July. Although a good supply/demand
scenario may be positive for the market, the attractiveness of the taxable
markets relative to municipals will play a big role in whether or not
buyers will want to add to their holdings in the municipal bond market.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: seeks a high level of
income that is free from
federal income tax
START DATE: December 1,
1977
SIZE: as of May 31, 1996,
more than $1.7 billion
MANAGER: David Murphy,
since October 1995; manager,
Fidelity Limited Term Municipal
Income Fund, since 1989;
manager, Fidelity Advisor
Intermediate Municipal Income
Fund, since 1995; manager,
Fidelity Michigan Municipal
Income Fund, since May 1996;
joined Fidelity 1989
(checkmark)
DAVID MURPHY ON ADDITIONAL
POLICY CHANGES TO THE FUND:
"As of June 24, 1996, the fund
will be known as Fidelity
Municipal Income Fund. Even
though the fund's name is
being changed, the fund's
objective remains the same -
to provide federally tax-free
income. The name change is to
account for a change in the
fund's investment policy that
will allow me to buy more
securities subject to the
alternative minimum tax, or
AMT. The AMT is an alternative
method for calculating federal
income tax liabilities and is
generally limited to individuals
in high income tax brackets.
This change benefits the vast
majority of the fund's
shareholders because it gives
me greater flexibility in
pursuing all marketplace
opportunities - including
areas dominated by AMT
securities.
"AMT securities are issued by
municipalities to finance
private activity, such as
airports, multi-family housing
and industrial development.
These securities typically
offer higher yields than other
municipal securities of
comparable maturity without
necessarily involving higher
credit risk. While the investment
policy change allows the fund to
invest up to 100% of its assets in
AMT bonds, the possibility of
that occurring is unlikely."
INVESTMENT CHANGES
TOP FIVE STATES AS OF MAY 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STATES
6 MONTHS AGO
California 15.4 10.8
New York 12.1 9.7
Texas 9.2 9.2
Massachusetts 7.7 8.3
Illinois 6.2 5.0
TOP FIVE SECTORS AS OF MAY 31, 1996
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE SECTORS
6 MONTHS AGO
General Obligation 25.8 15.5
Electric Revenue 12.6 16.8
Health Care 10.6 13.1
Special Tax 10.3 9.2
Transportation 8.3 11.9
AVERAGE YEARS TO MATURITY AS OF MAY 31, 1996
6 MONTHS AGO
Years 14.4 14.6
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 MAY 31, 1996
6 MONTHS AGO
Years 7.5 7.5
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 AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF MAY 31, 1996 AS OF NOVEMBER 30, 1995
Row: 1, Col: 1, Value: 7.9
Row: 1, Col: 2, Value: 4.9
Row: 1, Col: 3, Value: 2.8
Row: 1, Col: 4, Value: 3.9
Row: 1, Col: 5, Value: 14.0
Row: 1, Col: 6, Value: 33.5
Row: 1, Col: 7, Value: 33.0
Row: 1, Col: 1, Value: 4.5
Row: 1, Col: 2, Value: 4.5
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 2.5
Row: 1, Col: 5, Value: 19.0
Row: 1, Col: 6, Value: 31.0
Row: 1, Col: 7, Value: 35.5
Aaa 38.7%
Aa, A 34.7%
Baa 19.4%
Ba, B 0.1%
Caa 0.7%
Non-rated 3.0%
Short-term investments 3.4%
Aaa 34.0%
Aa, A 34.0%
Baa 14.4%%
Ba, B 3.9%%
Caa 0.9%
Non-rated 4.9%
Short-term investments 7.9%
Row: 1, Col: 1, Value: 2.6
Row: 1, Col: 2, Value: 11.6
Row: 1, Col: 3, Value: 8.9
Row: 1, Col: 4, Value: 21.0
Row: 1, Col: 5, Value: 33.3
Row: 1, Col: 6, Value: 22.6
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED
S&P RATINGS.
INVESTMENTS MAY 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 96.6%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
ALABAMA - 1.5%
Alabama Bldg. Renovation Fin. Auth. Rev.
7.45% 9/1/11 A $ 3,000 $ 3,308 010237AU
Alabama Mental Health Fin. Auth. Spl.
Tax 7.375% 5/1/09 (Pre-Refunded to
5/1/99 @102) (g) A 3,000 3,278 010316AV
Birmingham Jefferson Civic Ctr. Auth. Spl. Tax
(Cap. Outlay) 7.25% 1/1/12 A 5,875 6,138 091156EY
Cullman Med. Park South Med. Clinic Board Rev.
(Cullman Regional Med. Ctr.) Series A:
6.50% 2/15/13 Baa 6,500 6,281 230043AL
6.50% 2/15/23 Baa 3,210 3,041 230043AM
McIntosh Ind. Dev. Board Poll. Cont. Rev.
(Ciba-Geigy Corp.) 6% 8/1/07 - 505 504 581177AB
Mobile Wtr. & Swr. Commissioners Wtr. & Swr.
Rev. Rfdg. 6.50% 1/1/09 A 4,600 4,882 607142BL
27,432
ALASKA - 1.1%
Alaska Student Loan Corp. Student Loan
Rev. Series A (f):
7.20% 7/1/99, (AMBAC Insured) Aaa 1,000 1,060 011857BG
7.30% 7/1/00, (AMBAC Insured) Aaa 3,100 3,321 011857BH
6% 7/1/04, (AMBAC Insured) Aaa 2,000 2,061 011857CF
North Slope Borough (Cap. Appreciation):
Series A:
0% 6/30/99, (MBIA Insured) Aaa 3,500 3,019 662523SL
0% 6/30/01, (MBIA Insured) Aaa 5,000 3,869 662523SN
Series B, 0% 1/1/03, (MBIA Insured) Aaa 9,000 6,379 662523RR
19,709
ARIZONA - 1.3%
Chandler Gen. Oblig. Rfdg. (Cap. Appreciation):
0% 7/1/05, (FGIC Insured) Aaa 5,700 3,497 158843KL
0% 7/1/06, (FGIC Insured) Aaa 5,700 3,278 158843KM
0% 7/1/07, (FGIC Insured) Aaa 5,700 3,071 158843KN
0% 7/1/08, (FGIC Insured) Aaa 1,700 856 158843KP
Maricopa County Ind. Dev. Auth. Hosp. Facs.
Rev. Rfdg. (Samaritan Health Svcs.)
Series A, 7% 12/1/16, (MBIA Insured) Aaa 2,000 2,273 566820GU
Phoenix Gen. Oblig. Rfdg.:
Series A, 7.50% 7/1/08 Aa1 4,900 5,807 718814CU
6% 7/1/02 Aa1 1,840 1,941 718814AH
Salt River Proj. Agric. Impt. & Pwr.
Dist. Elec. Sys. Rev. 5.05% 1/1/11 AA 2,400 2,163 79575DGG
22,886
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
ARKANSAS - 0.7%
Arkansas Dev. Fin. Auth. Rev. (Cap. Asset)
Series B, 7.10% 3/1/08 A $ 4,500 $ 4,838 04108REQ
North Little Rock Elec. Rev. Rfdg. Series A:
6.50% 7/1/10, (MBIA Insured) Aaa 3,840 4,214 660546DV
6.50% 7/1/15, (MBIA Insured) Aaa 1,000 1,086 660546DX
Pulaski County Health Facs. Board Rev. Rfdg.
(Sisters Charity Nazareth Corp.)
6.05% 11/1/09, (MBIA Insured) Aaa 1,750 1,809 74539QBS
11,947
CALIFORNIA - 14.3%
California Dept. Wtr. Resources Central
Valley Proj. Rev. Rfdg. Wtr. Sys. Series L,
8% 12/1/01 AA 7,400 8,519 130663N5
California Gen. Oblig.:
Custodial Receipts:
8% 5/1/03, (AMBAC Insured) Aaa 8,000 9,370 130622XT
4.60% 9/1/06, (AMBAC Insured) Aaa 9,850 9,247 130623RL
6.50% 3/1/02, (AMBAC Insured) Aaa 2,000 2,152 130621YR
6.80% 4/1/03 A1 2,500 2,737 130622NZ
7% 8/1/04 A1 2,000 2,232 130622PX
6% 9/1/07 A1 2,000 2,097 130623NF
7% 8/1/09 A1 5,000 5,637 130624FF
7% 10/1/09 A1 1,000 1,129 130624FT
6.30% 9/1/10 A1 4,000 4,245 130624HH
5.25% 10/1/13 A1 2,000 1,873 130628AU
5.25% 10/1/16 A1 12,000 10,965 130628AX
6.25% 10/1/19 A1 6,800 7,301 130627BB
California Hsg. Fin. Agcy. Rev. (Home Mtg.):
Series A, 5.70% 8/1/16, (MBIA Insured) Aaa 2,925 2,804 13033ERB
Series G (f):
5.90% 2/1/09, (MBIA Insured) Aaa 1,000 997 13033EKA
5.90% 8/1/09, (MBIA Insured) Aaa 2,000 1,995 13033EKB
California Pub. Wks. Board Lease Rev.:
(Community College Proj.) Series A,
6% 10/1/14 A 4,000 3,925 13068GWS
(Dept. Correction Del Norte C) Rfdg.:
4.75% 12/1/05 A 3,225 3,060 13068GSV
5.125%, 12/1/08 A 2,500 2,341 13068GSY
(Dept. Correction State Prison D-Susanville)
5.375% 6/1/18 A 1,500 1,358 13068GTQ
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
CALIFORNIA - CONTINUED
California Pub. Wks. Board Lease Rev.: - continued
(Various California State Univ. Projs.)
Series A:
Rfdg. 5.50% 6/1/10 A1 $ 18,250 $ 17,748 13068GRE
Rfdg. 5% 6/1/23 A1 5,175 4,386 13068GRD
5.25% 12/1/13 A 3,750 3,403 13068GSG
California Rural Home Mtg. Fin. Auth. Lease Rev.
(Rural Lease Purchase) Series A, 4.45%
8/1/01, (MBIA Insured) Aaa 8,000 7,900 130574AA
Castaic Lake Wtr. Agcy. Ctfs. of Prtn. Rfdg.
(Wtr. Sys. Impt. Proj.) Series A, 7.25% 8/1/09,
(MBIA Insured) Aaa 1,800 2,077 148370BG
Central Valley Fing. Auth. Cogeneration Proj. Rev.
(Carson Ice Gen. Proj.) 6.20% 7/1/20 BBB- 13,925 13,368 155689AH
Contra Costa Trans. Auth. Sales Tax Rev.
Series A, 6% 3/1/05, (FGIC Insured) Aaa 4,000 4,240 21221MBT
Foothill/Eastern Trans. Corridor Agcy. Toll
Road Rev. (Sr. Lien) Series A, 6% 1/1/16 Baa 17,000 16,320 345105BV
Industry Urban Ind. Dev. Agcy. Rfdg.
(Civic Recreational Proj.#1) Series A,
7.375% 5/1/12 - 7,860 8,157 456567MG
Long Beach Harbor Rev. (f):
9% 5/15/02, (MBIA Insured) Aaa 3,835 4,597 542424DW
8.50% 5/15/03, (MBIA Insured) Aaa 5,000 5,969 542424DX
8% 5/15/04, (MBIA Insured) Aaa 6,305 7,424 542424DY
6% 5/15/06, (MBIA Insured) Aaa 3,000 3,139 542424EA
Los Angeles County. Metropolitan Tran. Auth.
Sales Tax Rev. (Prop. C) 2nd Series A:
5.90% 7/1/05, (AMBAC Insured) Aaa 2,140 2,250 544712CW
5.90% 7/1/06, (AMBAC Insured) Aaa 1,610 1,686 544712CX
Metropolitan Wtr. Dist. Southern California
Wtrwks. Rev.:
Rfdg. Series B, 4.75% 7/1/21,
(MBIA Insured) Aaa 8,770 7,279 592663QU
Series A, 5.75% 7/1/21, (MBIA Insured) Aaa 2,000 1,940 592663PV
Northern California Pwr. Agcy. Pub. Pwr.
Rev. Rfdg. (Geothermal Proj.) Series A,
5.80% 7/1/09, (AMBAC Insured) Aaa 9,500 9,738 664843TB
Orange County Dev. Agcy. Tax Allocation
(Santa Ana Heights Proj.) 6% 9/1/15 Caa 2,800 2,569 684246CA
Sacramento City Fing. Auth. (Cap. Appreciation
Tax Allocation Comb. Proj.) Series B,
0% 11/1/06, (MBIA Insured) Aaa 2,810 1,598 785849BG
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
CALIFORNIA - CONTINUED
San Diego County Regulation Trans. Commission
Sales Tax Rev. Second Sr.-Series A:
6.25% 4/1/02, (FGIC Insured) Aaa $ 1,100 $ 1,174 797400DN
6.25% 4/1/03, (FGIC Insured) Aaa 5,000 5,363 797400DP
San Diego Pub. Facs. Fing. Auth. Swr. Rev.
6% 5/15/06, (FGIC Insured) Aaa 3,290 3,483 79730AAJ
San Francisco Bldg. Auth. Lease Rev.
(Dept. Gen. Svcs. Lease) Series A,
5% 10/1/13 A 5,500 4,826 79772LAR
San Francisco City & County Swr. Rev. Rfdg.
5.90% 10/1/08, (AMBAC Insured) Aaa 5,000 5,138 797654HK
San Mateo County Trans. Dist. Sales Tax Rev.
Crossover Rfdg. Series A, 5% 6/1/09,
(MBIA Insured) Aaa 2,635 2,493 799054BG
Santa Margarita/Dana Point Auth. Rev.
(Impt. Dist. 3, 3A, 4 & 4A) Series B,
7.25% 8/1/08, (MBIA Insured) Aaa 1,770 2,044 802248BF
Sequoia Hosp. Dist. Rev. Rfdg.
5.375% 8/15/23 Baa 3,285 2,657 817393CA
South Orange County Pub. Fing. Auth. Spl.
Tax Rev.:
(Foothill Area) Series C, 8% 8/15/08,
(FGIC Insured) Aaa 2,500 3,041 839100CC
(Sr. Lien) Series A, 7% 9/1/11,
(MBIA Insured) Aaa 3,490 3,918 839100BM
Southern California Pub. Pwr. Auth. Pwr. Proj.
Rev. Rfdg. (Palo Verde Proj.) Series A,
5% 7/1/15 A1 2,875 2,512 842475NF
Southern California Pub. Pwr. Auth. Transmission
Proj. Rev. Rfdg. Series B, 7.25% 7/1/06 Aa 3,255 3,342 842477DQ
Univ. of California Rev. (Multiple Purpose Projs.)
Series D, 6.10% 9/1/10, (MBIA Insured) Aaa 2,000 2,048 914113WM
Upland Ctfs. of Prtn. (San Antonio
Commty. Hosp.) 5% 1/1/18 A 3,000 2,475 915346DM
254,286
COLORADO - 3.9%
Aurora Wtr. Rfdg. 4.75% 11/1/14 A1 3,040 2,584 051555T4
Colorado Health Facs. Auth. Rev.:
(Hosp. Sys. - Swedish Med. Ctr.)
Series A, 7.25% 10/1/08
(Pre-Refunded to 10/1/00 @ 102) (g) Aaa 1,000 1,111 196473ZL
(Rocky Mountain Adventist):
6.625% 2/1/13 Baa 14,200 14,324 1964732N
6.625% 2/1/22 Baa 4,700 4,706 1964732M
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
COLORADO - CONTINUED
Colorado Springs Arpt. Rev. (Cap. Appreciation)
Series C:
0% 1/1/02 BBB+ $ 1,550 $ 1,118 196612AZ
0% 1/1/04 BBB+ 1,530 967 196612BD
0% 1/1/09 BBB+ 1,655 728 196612BN
0% 1/1/10 BBB+ 1,500 613 196612BP
Colorado Univ. Rev. (Biomedical Research
Bldg. Proj.) 7% 6/1/09 A 5,725 6,162
Denver City & County Arpt. Rev.:
Series A:
6.60% 11/15/97 (f) Baa 1,200 1,223 249181LA
6.90% 11/15/98 (f) Baa 6,250 6,469 249181LB
7% 11/15/99 (f) Baa 2,750 2,874 249181LC
7.50% 11/15/06
(Pre-Refunded to 11/15/02 @ 102) (g) Baa 6,500 7,483 249181JQ
Series D (f):
(Cap. Appreciation):
0% 10/15/03, (MBIA Insured) Aaa 5,000 3,350 249181NC
0% 11/15/04, (MBIA Insured) Aaa 7,500 4,725 249181MR
0% 11/15/05, (MBIA Insured) Aaa 3,000 1,774 249181NA
6.60% 11/15/96 Baa 1,465 1,479 249181HV
Highlands Ranch Metropolitan Dist. #2 Rfdg.:
5.50% 6/15/00, (FSA Insured) Aaa 1,725 1,768 430901BB
6% 6/15/03, (FSA Insured) Aaa 2,050 2,158 430901BE
Jefferson County Ctfs. of Prtn.:
Rfdg. 6.65% 12/1/08, (MBIA Insured) Aaa 3,000 3,206 472723DQ
7.125% 12/1/10, (MBIA Insured)
(Pre-Refunded to 12/1/01 @ 101) (g) Aaa 250 280 472723CW
Jefferson County Single Family Mtg. Rev.
Series 1991 A, 8.875% 10/1/13,
(MBIA Insured) Aaa 310 327 472744BW
69,429
CONNECTICUT - 0.6%
Connecticut Health & Edl. Facs. Auth. Rev. (New
Britain Mem. Hosp.) Series A, 7.50% 7/1/06 BBB- 5,000 5,244 207742PC
Connecticut Spl. Tax Oblig. Rev. Rfdg.
(Trans. Infrastructure) Series A, 5.25% 9/1/07,
(MBIA Insured) Aaa 2,925 2,892 207757VX
Norwalk Hsg. Auth. Mtg. Rev. (Monterey Village)
Series 1985 B, Section 8, 9% 11/1/99 BBB 1,790 1,835 668868BE
9,971
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
DISTRICT OF COLUMBIA - 1.3%
District of Columbia Gen. Oblig. Rfdg.:
Series A:
Custodial Receipts 5.875% 6/1/05,
(AMBAC Insured) Aaa $ 2,635 $ 2,688 254760N4
6% 6/1/11, (MBIA Insured) Aaa 2,000 2,000 254760Q9
Series B-1, 5.40% 6/1/06, (AMBAC Insured) Aaa 3,350 3,291 254760ZF
District of Columbia Hosp. Rev. (Hosp. for
Sick Children) Series A, 8.875% 1/1/21 - 5,825 6,175 254764BS
District of Columbia Redev. Land Agcy. Spl.
Tax Rev. (Washington D.C. Sports Arena)
5.625% 11/1/10 Baa 4,900 4,575 254838AF
District of Columbia Rev. (Carnegie Endowment
for Int'l. Peace) 5.75% 11/15/26 Aa 4,000 3,720 254839KZ
22,449
FLORIDA - 3.7%
Brevard County. Util. Rev. Rfdg. 5.25% 3/1/14,
(AMBAC Insured) Aaa 2,500 2,328 107480KJ
Broward County Resource Recovery Rev.
(SES Broward Co. LP South Proj.)
7.95% 12/1/08 A 4,000 4,390 115064AE
Dade County Gen. Oblig. 5.125% 10/1/26,
(MBIA Insured) Aaa 5,300 4,644 2334332A
Dade County Health Facs. Auth. Hosp. Rev.
(South Shore Hosp. & Med. Ctr.) Series A,
7.60% 8/1/24, (FHA Guaranteed) A+ 805 853 233904KP
Florida Division Bond Fin. Dept. Gen. Svcs. Rev.
(Dept. Natural Resources-Preservation 2000)
Series A, 6.25% 7/1/10, (MBIA Insured) Aaa 4,750 4,982 342812ST
Florida Muni. Pwr. Agcy. Rev. Rfdg.
(All Requirement Pwr. Supply) 6.25% 10/1/19,
(Pre-Refunded to 10/1/01 @ 102),
(AMBAC Insured) (g) Aaa 2,000 2,175 342816GC
Jacksonville Elec. Auth. Rev. (g):
6% 7/1/01 (Escrowed to Maturity) Aaa 5,060 5,218 469363AT
6.80% 7/1/12 (Escrowed to Maturity) Aaa 3,000 3,308 469363DK
Jacksonville Health Facs. Auth. Ind. Dev. Rev. Rfdg.
(Cypress Village Proj.) (Nat'l. Benevolent Assoc.)
7% 12/1/22 Baa1 2,000 2,002 46940HBA
Jacksonville Port Auth. Rev. (d)(f):
5.625% 11/1/12, (MBIA Insured) Aaa 4,000 3,830 469466DT
5.625% 11/1/18, (MBIA Insured) Aaa 5,700 5,351 469466DU
Lakeland Elec. & Wtr. Rev. Rfdg.
6.50% 10/1/05, (FGIC Insured) (d) Aaa 5,000 5,456 511678MX
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
FLORIDA - CONTINUED
Orange County Tourist Dev. Tax Rfdg. Series A,
6.50% 10/1/10, (AMBAC Insured) Aaa $ 5,000 $ 5,356 684545EP
Palm Beach County Criminal Justice Facs. Rev.
Rfdg. 5.375% 6/1/10, (FGIC Insured) Aaa 1,825 1,786 696505BL
Palm Beach County Wtr. & Swr. Rev.
5% 10/1/10, (MBIA Insured) Aaa 3,000 2,783 696572FQ
Tampa Cap. Impt. Prog. Rev. Series A,
8.25% 10/1/18 AA 10,000 10,625 875148AL
65,087
GEORGIA - 1.1%
Atlanta Downtown Dev. Auth. Rev.
Rfdg. (Underground Atlanta Proj.):
6.25% 10/1/12 Aa 2,500 2,587 047804AJ
6.25% 10/1/16 Aa 3,000 3,075 047804AL
Cobb County School Dist. Unltd.
Tax 5% 2/1/97 Aa1 2,700 2,726 190819HM
Georgia Gen. Oblig.:
Series B:
Impt. 7.20% 3/1/05 Aaa 3,000 3,446 373382K8
7.50% 4/1/97 Aaa 2,000 2,066 373382GL
6.10% 3/1/05 Aaa 2,000 2,140 373382PL
Series C, 7.25% 7/1/05 Aaa 3,100 3,581 373382P9
19,621
HAWAII - 0.3%
Honolulu City & County Multi-Family
Rev. (Hale Pauahi) Series A,
8.70% 12/1/28, (FHA Insured)
(Pre-Refunded to 6/1/96 @ 103) (g) Aaa 5,220 5,377
IDAHO - 0.4%
Boise Urban Renewal Parking Agcy. Rev.
(Tax Increment) Series A, B, C,
8.125% 9/1/15 A 2,600 2,756 097463CE
Idaho Falls Rfdg. Elec.:
0% 4/1/06, (FGIC Insured) Aaa 2,000 1,195 451182FC
0% 4/1/13, (FGIC Insured) Aaa 2,850 1,104 451182FK
Idaho Health Facs. Auth. Rev. 5.50% 12/1/07,
(AMBAC Insured) Aaa 2,000 2,063 451295LH
7,118
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
ILLINOIS - 6.1%
Chicago Board of Ed.:
6.25% 12/1/09, (MBIA Insured) Aaa $ 4,750 $ 4,993 167501QJ
6.25% 12/1/10, (MBIA Insured) Aaa 5,000 5,244 167501QK
6.25% 12/1/11, (MBIA Insured) Aaa 1,000 1,045 167501QL
Chicago Gas Supply Rev. (Peoples Gas Lt. &
Coke Co. Proj.) Series A, 5.75% 12/1/23 (f) Aa3 3,400 3,111 16753LAM
Chicago Gen. Oblig. Rfdg Series B, 5% 1/1/11,
(AMBAC Insured) Aaa 7,200 6,597 1674833W
Chicago Motor Fuel Tax Rev. Rfdg. Series A,
5.375% 1/1/14, (AMBAC Insured) Aaa 4,000 3,775 16756KBF
Chicago O'Hare Int'l. Term. Arpt. Rev. Rfdg.:
(Sr. Lien) Series A, 5% 1/1/12 A1 16,840 15,282 167592LP
(2nd Lien) (Gen. Arpt. Proj.) Series A, 6.375%
1/1/15, (MBIA Insured) Aaa 4,500 4,629 167592MG
Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. Rfdg.
(Int'l. Terminal) Series A,
7.50% 1/1/17 (f) A 4,500 4,792 167590BC
Chicago Park Dist. Rfdg.:
5.50% 1/1/00, (FGIC Insured) Aaa 1,000 1,021 167610XF
6.25% 1/1/09, (FGIC Insured) Aaa 2,250 2,348 167610XJ
Illinois Edl. Facs. Auth. Rev.
(Lewis Univ.) 6% 10/1/24 Baa 5,000 4,669 452001KV
Illinois Gen. Oblig. Rfdg. 5.25% 12/1/20,
(FGIC Insured) Aaa 4,500 3,983 452150BA
Illinois Health Facs. Auth. Rev.: 452001KV
Rfdg. (Lutheran Gen. Health Sys.) Series C:
7% 4/1/14 A 1,500 1,596 45200KXP
6% 4/1/18 A 3,000 2,835 45200KXT
Rfdg. (OSF Healthcare Sys.) 6% 11/15/13 A1 5,000 4,806
(Memorial Hosp.):
6.875% 5/1/00 BBB 1,200 1,221 45200KNY
7.125% 5/1/10 BBB 4,000 4,025 45200KNZ
Lake County Forest Preserve Dist. Unltd. Tax
(Cap. Appreciation):
0% 12/1/07 Aa 10,440 5,429 508354FR
0% 12/1/08 Aa 12,505 6,065 508354FS
Metropolitan Pier & Exposition Auth. Dedicated
State Tax Rev. (McCormick Place Expansion Proj.)
(Cap. Appreciation) Series A:
0% 6/15/07, (FGIC Insured) (c) Aaa 4,800 4,752 592247CN
0% 6/15/09, (FGIC Insured) Aaa 10,000 4,688 592247CQ
0% 6/15/10, (FGIC Insured) Aaa 7,250 3,181 592247CR
0% 6/15/12, (FGIC Insured) (c) Aaa 11,820 8,422 592247CU
108,509
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
INDIANA - 0.4%
Indianapolis Econ. Dev. Rev. Rfdg. & Impt.
(Nat'l. Benevolent Assoc.) 7.625% 10/1/22 Baa1 $ 3,000 $ 3,124 455261PQ
Indianapolis Resource Recovery Rev.
Rfdg. (Ogden Martin Sys. Inc. Proj.)
6.75% 12/1/07, (AMBAC Insured) (d) Aaa 3,080 3,326 455356BL
6,450
KANSAS - 0.5%
Kansas City Util. Sys. Rev. (Cap. Appreciation):
0% 9/1/10, (AMBAC Insured)
(Escrowed to Maturity) (g) Aaa 3,825 1,712 484790HX
0% 9/1/10, (AMBAC Insured) Aaa 2,865 1,250 484790JM
Kansas Dept. Trans. Hwy. Rev. 7.25% 3/1/05 Aa 4,750 5,498 485424AK
8,460
KENTUCKY - 1.1%
Jefferson County Cap. Projs. Corp. Rev. (Muni.
Multiple Rfdg. Lease) Series A, 0% 8/15/11 A1 5,365 2,173 473020GW
Kenton County Arpt. Board Arpt. Rev.
(Spl. Facs Delta Proj. A) 7.125% 2/1/21 (f) Baa3 10,675 11,035
491026JK
Owensboro Elec. Lt. & Pwr. Rev. Series B,
0% 1/1/07, (AMBAC Insured) Aaa 10,000 5,550 691021GJ
Univ. of Louisville Rev. Rfdg. (Consolidated Edl.
Bldgs.) Series I, 5.40% 5/1/10 A1 1,565 1,538 914391PW
20,296
LOUISIANA - 2.3%
Lake Charles Harbor & Term. Dist. Port Facs.
Rev. Rfdg. (Trunkline LNG Co. Proj.)
Series 1992, 7.75% 8/15/22 Baa2 21,000 23,152 507729BM
Louisiana Gen. Oblig. Series A:
Rfdg. 6% 8/1/01, (FGIC Insured) (d) Aaa 3,000 3,142 546415FS
6.75% 5/15/03, (MBIA Insured) Aaa 4,320 4,725 546415EX
Louisiana Offshore Term. Auth. Deepwtr. Port Rev.
Rfdg. (1st Stage) (Loop, Inc. Proj.)
Series E, 7.60% 9/1/10 A3 2,300 2,510 546510DA
Monroe-West Monroe Pub. Trust Fing. Auth. Mtg.
Rev. Rfdg. (Cap. Appreciation)
Series C, 0% 8/20/14 AA- 9,000 2,779 611382BU
St. James Parish Poll. Cont. Rev Rfdg.
(B.F. Goodrich Proj.) 14.50% 12/1/11 Baa1 500 535 790102AR
St. John Baptist Parish Sales Tax Dist. Rev. Rfdg.
Series 1989, 7.80% 12/1/14 Baa 2,700 2,957 790207BT
St. Tammany Pub. Trust Fing. Auth. Rev. Rfdg.
(Cap. Appreciation) Series C, 0% 7/20/14 Aaa 4,650 1,500 793499AE
41,300
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
MAINE - 0.5%
State Street Hsg. Preservation Corp. Hsg. Rev.
(Multi-Family Proj.) Series A:
7.20% 1/1/02 A $ 620 $ 640 85748HAB
7.375% 1/1/12 A 3,505 3,632 85748HAC
7.50% 1/1/19 A 4,700 4,876 85748HAD
9,148
MARYLAND - 0.3%
Howard County Mtg. Rev. (Heartlands Elderly
Apts. Proj.) 8.875% 12/1/10, (MBIA Insured)
(FHA Guaranteed) Aaa 250 261 442586JT
Maryland Gen. Oblig. 1st Series A-M,
6.50% 7/1/00 Aaa 3,000 3,206 574191Y9
Prince George's County Solid Waste Mgmt. Sys.
Rev. Rfdg. 5.25% 6/15/13, (FSA Insured) Aaa 1,500 1,382 74172MBL
4,849
MASSACHUSETTS - 7.7%
Boston Wtr. & Swr. Commission Rev. Gen.
Sr. Series, Series A, 5.40% 11/1/08 A 2,000 1,965 101029GU
Massachusetts Ed. Loan Auth. Rev. Issue E
Series B (f):
6.05% 7/1/08, (AMBAC Insured) Aaa 4,115 4,228 575633GF
6.15% 7/1/10, (AMBAC Insured) Aaa 1,650 1,683 575633GH
6.25% 7/1/11, (AMBAC Insured) Aaa 1,000 1,020 575633GJ
6.30% 7/1/12, (AMBAC Insured) Aaa 1,000 1,016 575633GK
Massachusetts Gen. Oblig.:
Consolidated Loan Series A, 5% 1/1/12 A1 4,000 3,700 575826ET
Rfdg. Series A:
6.25% 7/1/03 A1 8,200 8,835 575826MC
6.25% 7/1/04 A1 6,000 6,480 575826MD
Rfdg. Series B, 5.40% 11/1/07, (MBIA Insured) Aaa 6,000 6,000
575826AY
Rfdg. Series C, 5% 8/1/06 A1 4,355 4,208 575826CB
Massachusetts Health & Edl. Facs. Auth. Rev.:
(Baystate Med. Ctr.) Series D,
5% 7/1/12, (FGIC Insured) Aaa 5,820 5,296 575851Q8
(Harvard Univ.) Series P, 6.50% 11/1/03 Aaa 1,100 1,209 57585JGN
Massachusetts Hsg. Fin. Agcy. Rev. Rfdg.
(Rental) Series A, 6.65% 7/1/19,
(AMBAC Insured) (f) Aaa 2,000 2,070 575915GD
Massachusetts Ind. Fin. Agcy. Rev.:
(Atlanticare Med. Ctr.) Series A,
10.125% 11/1/14 - 7,000 6,650 575914GZ
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
MASSACHUSETTS - CONTINUED
Massachusetts Ind. Fin. Agcy. Rev.: - continued
(Cap. Appreciation) (Massachusetts Biomedical): 575914DT
Series A-2:
0% 8/1/03 A1 $ 23,300 $ 15,495 575914DT
0% 8/1/04 A1 5,000 3,119 575914EA
0% 8/1/06 A 26,800 14,606 575914EC
0% 8/1/09 A 15,800 6,853 575914EF
0% 8/1/10 A 11,000 4,483 575914EG
Massachusetts Muni. Wholesale Elec. Co.
Pwr. Supply Sys. Rev.:
Rfdg. Series A, 5.10% 7/1/08,
(AMBAC Insured) Aaa 3,575 3,387 575765MT
5% 7/1/10, (AMBAC Insured) Aaa 3,680 3,404 575765MU
5.45% 7/1/18, (AMBAC Insured) Aaa 12,500 11,437 575765MW
New England Ed. Loan Marketing Corp.
Massachusetts Student Loan Rev. Rfdg.:
Series A, 5.70% 7/1/05 (f) A1 14,125 14,143 643897AA
Series B, 5.40% 6/1/00 A1 1,500 1,521 643898BG
Series G:
5% 8/1/00 A1 2,500 2,497 643898BK
5.20% 8/1/02 A1 2,000 2,000 643898BL
137,305
MICHIGAN - 1.4%
Detroit Convention Facs. Rev. Rfdg. (Cobo Hall
Expansion Proj.) 5.25% 9/30/12 A 3,000 2,719 251131BF
Detroit Gen. Oblig. (Dist. State Aid)
5.625% 5/1/97 Baa 3,000 3,045 251093HZ
Detroit Hosp. Fin. Auth. Facs. Rev.
(Michigan Healthcare Corp. Proj.)
10% 12/1/20 (a) Caa 36,910 10,335 251145AA
Michigan Hosp. Fin. Auth. Rev. Rfdg.
(Bay Med. Ctr.) Series A, 8.25% 7/1/12 Baa1 1,000 1,074 59465CSP
Michigan Hsg. Dev. Auth. Single Family Mtg.
Rev. Series A:
7.50% 6/1/15 AA+ 470 486 594653HF
7.70% 12/1/16 AA+ 1,475 1,532 594653EK
Michigan South Central Pwr. Agcy. Pwr. Supply
Sys. Rev. Rfdg. 6.75% 11/1/10 Baa1 2,000 2,058 594689BR
Western Townships Utils. Auth. Swr. Disp. Sys.:
Ltd. Tax 8.20% 1/1/18 BBB+ 2,000 2,175 959767AK
Rfdg. 0% 1/1/05, (FSA Insured) Aaa 2,810 1,770 959767BC
25,194
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
MINNESOTA - 1.0%
Centennial Independent School Dist. #12 Rfdg.
Series B, 4.875% 2/1/12, (FGIC Insured) Aaa $ 2,610 $ 2,368 150908DE
Minneapolis Gen. Oblig. Rfdg. (Sales Tax)
6.25% 4/1/07 Aaa 1,500 1,592 6037417Q
Rochester Health Care Facs. Rev.
(Mayo Foundation/Mayo Med. Ctr.) Series I:
5.90% 11/15/09 AA+ 2,000 2,048 771902CL
5.90% 11/15/10 AA+ 2,250 2,295 771902CM
Univ. of Minnesota Rfdg.
4.80% 8/15/03 Aa 10,000 9,825 914460AW
18,128
MISSISSIPPI - 0.4%
Hinds County Ctfs. of Prtn. (Welfare Dept. Proj.)
7.75% 3/1/09 (Pre-Refunded to
3/1/99 @ 102) (g) A 1,095 1,206 433114AC
Hinds County Mtg. Rev. Rfdg. (Methodist Hosp.
& Rehabilitation) 5.60% 5/1/12,
(AMBAC Insured) Aaa 4,000 3,920 433142AL
Mississippi Home Corp. Single Family Sr. Rev.
Rfdg. Series 1990 A, 9.25% 3/1/12,
(FGIC Insured) Aaa 400 430 60535MAC
Panola County Ind. Dev. Rev. Rfdg.
(Kroger Co.) 7.125% 11/1/12 Ba1 1,925 1,992 698558AB
7,548
MISSOURI - 0.2%
Kansas City School Dist. Bldg. Corp. Rev. (Cap.
Impt. Proj.) 5% 2/1/14, (FGIC Insured) Aaa 2,330 2,115 485085DW
Missouri Regional Convention & Sports Complex
Auth. Rfdg. (Convention & Sports Proj.) Series A,
5.60% 8/15/17 A1 1,715 1,601 60636MBL
3,716
MONTANA - 0.4%
Montana Board of Investment Payroll Tax
(Workers Compensation) Series 1991,
6.875% 6/1/11, (MBIA Insured) Aaa 6,200 6,626 61213HDC
NEBRASKA - 0.9%
Douglas County Hosp. Auth. #1 Rev.
(Immanuel Med. Ctr., Inc.) 6.90% 9/1/11,
(AMBAC Insured) Aaa 3,250 3,506 259228DE
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
NEBRASKA - CONTINUED
Nebraska Pub. Pwr. Dist. Rev. Rfdg.
(Pwr. Supply Sys.):
Series B, 5.25% 1/1/13, (MBIA Insured) Aaa $ 3,650 $ 3,413 639683U6
Series C, 5% 1/1/10, (MBIA Insured) Aaa 5,880 5,461 639683U7
Omaha Rfdg. Unltd. Tax 6% 9/15/99 Aaa 1,100 1,151 681710CY
Scotts Bluff County Hosp. Auth. #1 Hosp. Rev.
(Regional West Med. Ctr. Proj.)
6.45% 12/15/04 A 3,000 3,150 810143CG
16,681
NEVADA - 0.2%
Clark County Ind. Dev. Rev. (Southwest Gas
Corp.) Series A, 6.50% 12/1/33 (f) Baa3 4,525 4,293 181004AS
NEW HAMPSHIRE - 0.1%
New Hampshire Tpk. Sys. Rev. Rfdg. Series A,
7% 11/1/06, (FGIC Insured) Aaa 2,500 2,819 644693CA
NEW JERSEY - 2.9%
Camden County Muni. Util. Auth. Swr. Rev. Rfdg.
6% 7/15/06, (FGIC Insured) Aaa 1,060 1,116 132813EL
New Jersey Econ. Dev. Auth. Econ. Dev.
Rev. Rfdg. (Statewide Realty Co. Proj.):
Series A, 11% 12/15/17 - 14,445 14,445 64577MWR
Series B, 11% 12/15/17 - 9,370 12 64577MWS
New Jersey Health Care Facs. Fing. Auth. Rev.
(Atlantic City Med. Ctr.) Series B,
8.375% 8/1/20, (FHA Guaranteed)
(Pre-Refunded to 2/1/98 @ 102) (g) Aaa 13,815 14,799 645793SW
New Jersey Trans. Trust Fund Auth. Trans. Sys.
Rev. Series A, 6% 6/15/04, (AMBAC Insured) Aaa 17,800 18,756 646135EA
Passaic County Util. Auth. Solid Waste Disp. Rev.
(Cap. Appreciation) 0% 3/1/01, (MBIA Insured) A1 3,580 2,815 702766AW
51,943
NEW MEXICO - 0.9%
Albuquerque Arpt. Rev. Rfdg. (d):
6.25% 7/1/03, (AMBAC Insured) Aaa 1,100 1,129 013538EN
6.75% 7/1/10, (AMBAC Insured) Aaa 1,700 1,766 013538EV
6.75% 7/1/12, (AMBAC Insured) Aaa 1,935 1,966 013538EX
New Mexico Edl. Assistance Foundation Student
Loan Rev. 5.25% 4/1/05, (AMBAC Insured) (f) Aaa 4,455 4,388 647111EC
New Mexico Univ. Rev. Rfdg. Series A:
6.25% 6/1/12 A1 2,100 2,202 914692TE
6% 6/1/21 A1 4,550 4,573 914692TH
16,024
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
NEW YORK - 12.0%
Metropolitan Trans. Auth. Svc. Contract
Commuter Facs. Rev. Series O:
5.75% 7/1/08 Baa1 $ 1,000 $ 970 592597C4
5.75% 7/1/13 Baa1 7,650 7,277 592597C6
Metropolitan Trans. Auth. Trans. Facs. Rev. Rfdg.:
Series A, 6.10% 7/1/21, (FSA Insured) Aaa 5,000 5,000 592598YY
Series K:
6.30% 7/1/06, (MBIA Insured) Aaa 3,500 3,767 592598VG
6.30% 7/1/07, (MBIA Insured) Aaa 5,000 5,413 592598SD
New York City Gen. Oblig.:
Rfdg. Series A:
7% 8/1/03 Baa1 2,000 2,127 649652UM
6.375% 8/1/05 Baa1 5,000 5,081 649653LD
Rfdg. Series E, 5.40% 2/15/03 Baa1 13,000 12,642 649664CS
Rfdg. Series H: 649650TP
Sub-Series H-1, 5.50% 8/1/01 Baa1 5,000 4,969 649651UX
7.875% 8/1/00 Baa1 4,940 5,378 649650TP
Series A, 6% 8/1/18, (FSA Insured)
(Escrowed to Maturity) (g) Aaa 4,900 4,943 649659BE
Series B, 7.50% 2/1/02 Baa1 2,000 2,162 649651LV
Series F, 6.10% 2/15/02 Baa1 2,490 2,527 649651ZF
Series G, 5.60% 2/1/02 Baa1 10,720 10,626 649664HP
New York City Ind. Dev. Agcy. Spl. Facs. Rev.:
(Term. One Group Assoc. Proj.) 6% 1/1/19 A 4,700 4,506 64971SAS
6.125% 1/1/24 (f) A 5,000 4,825 64971SAR
New York City Muni. Assistance Corp.
Series E, 6% 7/1/04 Aa 7,000 7,420 626190G5
New York City Muni. Wtr. Fin. Auth. Wtr. &
Swr. Sys. Rev. 6% 6/15/19, (FGIC Insured) Aaa 2,300 2,306 649706QQ
New York State Ctfs. of Prtn. 4.90% 3/1/99 Baa1 2,965 2,943 649810LT
New York State Dorm. Auth. Rev. Rfdg.
(State Univ. Edl. Facs.):
Series A:
6.50% 5/15/04 Baa1 3,000 3,146 649835LU
5.50% 5/15/08 Baa1 2,000 1,910 649834AK
5.50% 5/15/09 Baa1 4,000 3,800 649834AL
5.875% 5/15/11 Baa1 7,000 6,799 649834AN
5.50% 5/15/13 Baa1 6,000 5,528 649834AQ
Series B:
5.25% 5/15/05 Baa1 4,000 3,850 649834MV
5.25% 5/15/10 Baa1 6,600 6,056 649834NA
5.25% 5/15/11 Baa1 5,000 4,556 649834NB
5% 5/15/18 Baa1 6,000 5,018 649831U7
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
NEW YORK - CONTINUED
New York State Envir. Facs. Corp. Poll.
Cont. Rev. Rfdg. (State Wtr. Revolving Fund)
(New York City Muni. Wtr.) 5.75% 6/15/12 Aa $ 2,000 $ 1,975 649850QY
New York State Local Govt. Assistance Corp.:
Rfdg. Series C, 5.50% 4/1/17 A 26,600 25,270 649876JN
Rfdg. Series E:
6% 4/1/14 A 8,300 8,466 649876KX
5.25% 4/1/16 A 11,500 10,609 649876KY
Series A, 0% 4/1/08 A 2,000 1,023 649876AW
Series B:
0% 4/1/08 A 5,000 2,556 649876BY
6% 4/1/18 A 4,425 4,392 649876FY
Series C, 6.50% 4/1/15 A 4,600 4,732 649876CX
New York State Mtg. Agcy. Rev.
(Homeowner Mtg.):
Series 39, 6% 10/1/17 Aa 2,200 2,200 649885T9
Series 48, 6.05% 4/1/17 (f) Aa 5,570 5,507 649886CM
New York State Thruway Auth. Gen. Rev.
(Spl. Oblig.) Series A, 0% 1/1/05 BBB 8,500 5,132 650009CY
New York State Thruway Auth. Hwy. & Bridge
Trust Fund Series A, 6.25% 4/1/04,
(MBIA Insured) Aa 2,345 2,530 650013CK
Suffolk County Wtr. Auth. Wtrwks. Rev. Rfdg.
(Sr. Lien) 5.10% 6/1/09, (MBIA Insured) Aa 3,000 2,880 864779T5
212,817
NEW YORK & NEW JERSEY - 1.1%
Port Auth. New York & New Jersey:
(Delta Airlines Spl. Proj.)
Series 1R, 6.95% 6/1/08 Baa3 17,000 17,807 733580WH
Consolidated 104 3rd Series, 4.75% 1/15/26,
(AMBAC Insured) Aaa 3,175 2,604 733581DK
20,411
NORTH CAROLINA - 0.5%
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys.
Rev. Rfdg.:
Series A, 6.25% 1/1/03 A 2,000 2,055 658196KA
Series B, 7% 1/1/08 A 6,815 7,326 658196NW
9,381
NORTH DAKOTA - 0.2%
Mercer County Poll. Cont. Rev. Rfdg.
(Montana Dakota Utils. Co. Proj.)
6.65% 6/1/22, (FGIC Insured) Aaa 3,750 3,933 587850CY
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
OHIO - 0.6%
Hamilton County Swr. Sys. Rev. Rfdg. & Impt.
Metropolitan Swr. Dist. Series A,
5.35% 12/1/07, (FGIC Insured) Aaa $ 2,475 $ 2,487 407288FU
Loveland City School Dist. Unltd. Tax
6.65% 12/1/15 A 3,500 3,693 547252GN
Ohio State Bldg. Auth. (Workers Compensation
Bldg. A) 4.75% 4/1/14 A 3,500 3,036 6775536N
Warren County Hosp. Facs. Rev. Rfdg. & Impt.
(Otterbein Home Proj.) 7.20% 7/1/11,
LOC Fifth Third Bancorp Aa2 1,000 1,084 935158AV
10,300
OKLAHOMA - 0.1%
Grand River Dam Auth. Rev. Rfdg.
5.70% 6/1/05 A 1,000 1,034 386442PE
OREGON - 0.3%
Oregon Health Hsg. Edl. & Cultural Facs. Auth.
Rfdg. (Lewis & Clark College Proj.) Series A:
6% 10/1/13, (MBIA Insured) Aaa 1,750 1,777 68608FEF
6.125% 10/1/24, (MBIA Insured) Aaa 1,000 1,016 68608FEG
Portland Swr. Sys. Rev. Rfdg. Series A,
5.25% 3/1/10 A1 2,000 1,940 736742CX
4,733
PENNSYLVANIA - 4.0%
Butler County Hosp. Auth. Rev. (North Hills
Passavant Hosp.) Series A, 6.80% 6/1/06,
(FSA Insured) Aaa 5,000 5,394 123592BC
Cumberland County Muni. Auth. Rev.
(Carlisle Hosp.) 6.80% 11/15/23 Baa 4,600 4,485 230614AL
Northumberland County Auth. Commonwealth
Lease Rev. 0% 10/15/13, (MBIA Insured) Aaa 11,830 4,288 667067AR
Philadelphia Muni. Auth. Rev. Rfdg. Lease
Series D, 6.125% 7/15/08 Baa 4,000 3,930 717904FY
Philadelphia Wtr. & Wastewtr. Rev.:
Rfdg. 5% 6/15/12, (FGIC Insured) Aaa 3,000 2,715 717893BG
6.75% 8/1/04, (MBIA Insured) Aaa 2,000 2,205 717893HX
6.75% 8/1/05, (MBIA Insured) Aaa 1,500 1,656 717893HY
5.65% 6/15/12, (FGIC Insured) Aaa 35,000 33,512 717893BE
Pittsburgh Wtr. & Swr. Auth. Wtr. & Swr. Sys.
Rev. Rfdg. Series A, 4.75% 9/1/16,
(FGIC Insured) Aaa 10,000 8,575 725304DD
Wyoming Ind. Dev. Auth. Poll. Cont.
Rev. Rfdg. (Procter & Gamble Paper Proj.)
5.55% 5/1/10 Aa2 4,300 4,257 983283AD
71,017
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
PUERTO RICO - 0.4%
Puerto Rico Commonwealth Hwy. & Trans. Auth.
Hwy. Rev. Gen. Oblig. Series Y, 5% 7/1/36 Baa1 $ 3,500 $ 2,914 745181PF
Puerto Rico Pub. Bldgs. Auth. Gtd. Gov't.
Facs. Rev. Series A, 5.50% 7/1/21,
(AMBAC Insured) Aaa 3,750 3,562 745235LR
6,476
RHODE ISLAND - 0.3%
Rhode Island Depositors Econ. Protection Spl.
Oblig. Rfdg. Series A, 5.75% 8/1/12,
(MBIA Insured) Aaa 3,495 3,504 76218KEV
Rhode Island Hsg. & Mtg. Fin. Corp.
(Homeownership Opportunity) Series 3-A,
7.80% 10/1/10 Aa 1,000 1,042 762211HP
4,546
SOUTH CAROLINA - 1.2%
Greenville County Ind. Rev. (Monsanto Co.)
7.50% 10/1/07 A1 1,500 1,628 396046ER
Piedmont Muni. Pwr. Agcy. Elec. Rev. Rfdg.:
5.60% 1/1/09, (MBIA Insured) Aaa 5,240 5,246 720175KR
5.50% 1/1/10, (MBIA Insured) Aaa 2,590 2,558 720175KH
South Carolina Ed. Assistance Auth. Rev.
6.625% 9/1/06 AA 4,000 4,170 837114EF
South Carolina Pub. Svc. Auth. Rev. Rfdg.
Series A:
6.375% 7/1/21, (AMBAC Insured) Aaa 3,750 3,834 837147GK
6.25% 1/1/06, (MBIA Insured) Aaa 3,665 3,922 837147NY
21,358
SOUTH DAKOTA - 0.4%
South Dakota Hsg. Dev. Auth. Series G,
4.25% 5/1/97 Aa1 5,000 5,008 8375507G
Spearfish School Dist. #40-2 Unltd. Tax
(Lawrence County) 7.30% 7/1/11
(Pre-Refunded to 7/1/01 @ 102) (g) A 1,500 1,684 847328CE
6,692
TENNESSEE - 0.3%
Shelby County Rfdg. Series A, 6.75% 4/1/04 Aa 3,000 3,319 8216854E
Tennessee Gen. Oblig. Series A, 7% 3/1/03 Aaa 2,555 2,847 880540F5
6,166
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
TEXAS - 8.4%
Alliance Arpt. Auth. Inc. Spl. Facs. Rev.:
(American Airlines, Inc. Proj.)
7.50% 12/1/29 (f) Baa2 $ 10,000 $ 10,525 01852LAA
(Federal Express Corp.)
6.375% 4/1/21 Baa2 7,850 7,585 01852LAC
Austin Util. Sys. Rev. Rfdg. (Cap. Appreciation)
Series A, 0% 11/15/01, (MBIA Insured) Aaa 3,000 2,284 0524734S
Corpus Christi Hsg. Fin. Corp. Single Family Mtg.
Rev. (Lomas & Nettleton Co.) Series A,
13.375% 6/1/13 AA- 10 10 220138BQ
Cypress-Fairbanks Independent School Dist.
Unltd. Tax (Cap. Appreciation):
Rfdg. 0% 2/1/04, (PSF Guaranteed) Aaa 3,000 1,999 232760AL
Series A, 0% 2/15/12, (PSF Guaranteed) Aaa 5,000 1,956 232760BG
Dallas-Fort Worth Int'l. Arpt. Facs. Impt. Corp.
Rev. (AMR Corp.) 7.50% 11/1/25 (f) Baa2 25,500 26,934 235035AA
Dallas-Fort Worth Int'l. Arpt. Rev. Rfdg.
(Joint Dallas/Fort Worth Int'l. Arpt.)
6.50% 11/1/05, (FGIC Insured) Aaa 2,295 2,507 235037ZS
Dallas Hsg. Corp. Cap. Proj. Rev. Rfdg.
(Section 8 Assorted Projs.):
7.70% 8/1/05 A 1,100 1,144 235292AM
7.85% 8/1/13 A 1,000 1,047 235292AN
Dallas Independent School Dist. Unltd. Tax Rfdg.
(Cap. Appreciation) 0% 8/15/07,
(PSF Guaranteed) Aaa 2,300 1,228 2353075W
East Texas Health Facs. Dev. Corp. Hosp. Rev.
(Mem. Hosp. - Palestine):
7.25% 8/15/03 - 2,970 2,524 275573AA
7.80% 8/15/18 - 2,440 2,074 275573AB
Harris County Cultural & Ed. Facs. Fin. Corp.
Rev. Rfdg. (Space Ctr. Houston Proj.):
Series A, 9.25% 8/15/23 - 7,060 6,698 414007AH
Series B, 0% 8/15/23 - 17,860 4,398 414007AJ
Harris County Health Facs. Dev. Corp. Hosp.
Rev. Rfdg. (Texas Children's Hosp. Proj.)
5.50% 10/1/16, (MBIA Insured) Aaa 5,000 4,719 414152LN
Houston Hsg. Auth. Rev. (Low Income Elderly Hsg.)
(1st Lien):
7.50% 7/1/16 - 420 422 442384OA
7.50% 7/1/18 - 405 406 442384OC
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
TEXAS - CONTINUED
Lower Colorado River Auth. Rev. (g):
Rfdg. (Cap. Appreciation) 0% 1/1/09,
(MBIA Insured) (Escrowed to Maturity) Aaa $ 2,000 $ 998 548100XL
(Jr. Lien) 5.25% 1/1/15,
(Escrowed to Maturity) Aaa 6,000 5,655 548100P8
Lower Neches Valley Auth. Ind. Dev. Corp.
Envir. Rev. (Mobil Oil Refining Corp. Proj.)
6.35% 4/1/26 Aa2 9,500 9,488 548344AA
Lower Neches Valley Auth. Ind. Dev. Corp.
Swr. Facs. Rev. (Mobil Oil Refining Corp. Proj.)
6.40% 3/1/30 (f) Aa2 10,000 9,987 54834NAA
Port Arthur Hsg. Fin. Corp. Single Family Mtg.
Rev. Rfdg. 8.70% 3/1/12 A 910 976 733500BV
Port Dev. Corp. Ind. Dev. Rev. Rfdg.
(Cargill, Inc. Proj.) 7.70% 3/1/07 Aa2 1,000 1,071 733885AK
Round Rock Independent School Dist. Unltd. Tax:
Series A, 7.50% 8/1/03, (PSF Guaranteed) Aaa 1,300 1,495 779239Q6
6.50% 8/1/04, (PSF Guaranteed) Aaa 1,025 1,113 779239W8
San Antonio Elec. & Gas Rev.:
(Cap. Appreciation) Rfdg. Series A
0% 2/1/05, (AMBAC Insured) Aaa 3,850 2,421 7962525Y
(Cap. Appreciation) Rfdg. Series B,
0% 2/1/08, (FGIC Insured) Aaa 4,340 2,235 7962528D
Rfdg. Series B, 6% 2/1/14 Aa1 2,500 2,512 7962526E
San Antonio Wtr. Rev. (Cap. Appreciation)
0% 5/1/12, (AMBAC Insured) Aaa 5,500 1,939 796422TF
Spring Branch Independent School Dist.
Rfdg. (Cap. Appreciation) 0% 2/1/06,
(PSF Guaranteed) Aaa 5,710 3,355 8494754J
Tarrant County Wtr. Cont. & Impt. Rev. Rfdg.
Dist. #1 5% 3/1/09, (AMBAC Insured) Aaa 1,750 1,628 876424GF
Texarkana Health Facs. Dev. Corp. Hosp. Rev.
(Wadley Regional Med. Ctr. Proj.)
7% 10/1/05, (MBIA Insured) Aaa 1,750 1,886 881834BC
Texas A&M Univ. Permanent Univ. Fund
5.50% 7/1/04 Aaa 3,850 3,956 882117ZY
Texas Gen. Oblig.:
Rfdg. (Pub. Fin. Auth.) Series A, 5.70%
10/1/03 Aa 5,620 5,845 882716WK
Rfdg. (Veterans Land) 7.40% 12/1/20 Aa 2,500 2,734 882716LZ
Series B, 5.25% 10/1/13 Aa 3,000 2,809 882716M9
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
TEXAS - CONTINUED
Texas Muni. Pwr. Agcy. Rev. Rfdg. (Cap.
Appreciation) 0% 9/1/05, (AMBAC Insured) Aaa $ 13,000 $ 7,898 882555MX
148,461
UTAH - 3.2%
Intermountain Pwr. Agcy. Pwr. Supply Rev.:
Rfdg. Series A, 6.50% 7/1/08,
(AMBAC Insured) (d) Aaa 3,100 3,240 45884AFR
Rfdg. Series B:
5.55% 7/1/11 Aa 20,000 19,000 4588402Q
6% 7/1/16, (MBIA Insured) Aaa 5,000 4,975 45884ABV
Rfdg. Series C, 5.70% 7/1/17, (MBIA Insured) Aaa 5,000 4,850 45884AEK
Rfdg. Series D, 5% 7/1/21 Aa 1,000 852 45884AFC
Rfdg. Series G, 0% 7/1/12 (Pre-Refunded to
1/1/03 @ 101) (c)(g) Aaa 1,660 1,581 458840LD
Series B:
6.50% 7/1/04, (MBIA Insured) Aaa 7,000 7,604 45884ABN
6.50% 7/1/05, (MBIA Insured) Aaa 13,000 14,137 45884ABP
56,239
VERMONT - 0.5%
Vermont Edl. & Health Bldgs. Fin. Agcy.
Rev. Rfdg. (Central Vermont Hosp. Proj.)
Series A, 8% 10/1/09 (Pre-Refunded to
10/1/96 @ 102) (g) Baa1 2,500 2,583 924160NH
Vermont Muni. Bond Bank (g):
Series B, 7.20% 12/1/20
(Pre-Refunded to 12/1/99 @ 102) A 3,000 3,296 924211PT
Series 1991-1, 6.875% 12/1/22
(Pre-Refunded to 12/1/01 @ 102) A 2,385 2,653 924211RG
8,532
VIRGINIA - 1.4%
Lynchburg Ind. Dev. Auth. Hosp. Facs. 1st Mtg. Rev.
Rfdg. (Central Health, Inc.) 8.125% 1/1/16 A1 3,000 3,195 551241CJ
Peninsula Ports Hosp. Facs. Auth. Rev. Rfdg.
(Whittaker Mem. Proj.) 8.70% 8/1/23,
(FHA Guaranteed) Aa 1,500 1,581 707165DP
Richmond Gen. Oblig. Rfdg. Series B,
5.50% 1/15/04, (FGIC Insured) Aaa 1,725 1,760 7654127D
Richmond Redev. & Hsg. Auth. Mtg. Rev.
(Multi-Family Hsg. Pinebrook Proj.)
9.25% 10/1/20, (GNMA Coll.) AAA 750 771 765435CG
Upper Occoquan Swr. Auth. Rev. 4.75% 7/1/29,
(MBIA Insured) Aaa 15,000 12,187 916277FQ
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
VIRGINIA - CONTINUED
Virginia Beach Dev. Auth. Hosp. Facs. Rev.
(Virginia Beach Gen. Hosp. Proj.)
5.125% 2/15/18, (AMBAC Insured) Aaa $ 2,800 $ 2,541 927739DH
Virginia Hsg. Dev. Auth. Commonwealth Mtg.
Series B, Sub-Series B-2, 7.625% 7/1/17 Aa1 935 964 928129H5
Virginia Hsg. Dev. Auth. Multi-Family Hsg.
Series I, 5.95% 5/1/09 (f) Aa 1,890 1,888 92813AYJ
Virginia Resources Auth. Wtr. & Swr. Sys.
Rev. Series A, 7.70% 11/1/10 AA 180 195 928180MY
25,082
WASHINGTON - 3.4%
Snohomish County School Dist. #201
6.75% 12/1/06, (AMBAC Insured) Aaa 2,405 2,682 833221JQ
Washington Gen. Oblig. Rfdg.
Series R 96-C, 6% 7/1/04 Aa 2,000 2,110 939745DL
Washington Motor Vehicle Fuel Tax:
Series C, 6.50% 7/1/03 Aa 3,595 3,892 939744QG
Series D, 7% 9/1/05 Aa 2,655 2,970 939741ZR
Washington Pub. Pwr. Supply Sys.
Nuclear Proj. #2 Rev.:
Rfdg. Series C, 0% 7/1/05 Aa 16,080 9,467 939828MQ
0% 7/1/10, (FGIC Insured) INFL (h) Aaa 7,500 7,059 939828RS
5.40% 7/1/12 Aa 13,000 11,976 939828TX
Washington Pub. Pwr. Supply Sys.
Nuclear Proj. #3 Rev.:
Rfdg. Series B, 7.375% 7/1/04 Aa 1,000 1,089 939830JH
5.40% 7/1/12 Aa 21,000 19,031 939830PS
60,276
WEST VIRGINIA - 0.1%
West Virginia School Bldg. Auth. Rev. (Cap. Impt.)
Series A, 6.75% 7/1/15 A 2,000 2,105 956540DM
WYOMING - 0.7%
Natrona County Hosp. Rev. (Wyoming Med.
Ctr. Proj.) 8.125% 9/15/10 Baa1 4,500 4,825 638813AK
Wyoming Farm Loan Board Cap. Facs. Rev. (g):
0% 10/1/04 (Escrowed to Maturity) AA- 3,995 2,612 983478BL
0% 10/1/05 (Escrowed to Maturity) AA- 3,995 2,447 983478BM
0% 10/1/06 (Escrowed to Maturity) AA- 3,695 2,162 983478BN
12,046
TOTAL MUNICIPAL BONDS
(Cost $1,728,572) 1,716,206
MUNICIPAL NOTES (E) - 3.4%
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
CALIFORNIA - 1.1%
California Higher Ed. Student Loan Auth. Rev.
Series 87 C, 3.70%, LOC SLMA, VRDN (f) VMIG 1 $ 3,300 $ 3,300 130327AY
California School Cash Reserve Program Auth.
Pool Bonds TRAN Series 1995 A, 4.75%
7/3/96, LOC Industrial Bank of
Japan Ltd., (MBIA Insured) MIG 1 9,600 9,606 130583BS
Ventura County TRAN 4.50% 7/2/96 MIG 1 6,700 6,704 923035AK
19,610
COLORADO - 0.6%
Colorado Gen. Oblig. TRAN 4.50% 6/27/96 SP-1+ 11,000 11,005 196729AG
FLORIDA - 0.3%
Florida Hsg. Fin. Agcy. Rev.
(Ashley Lake Park II Proj.) Series J, 3.75%,
LOC Barclays Bank, VRDN (f) VMIG 1 1,100 1,100 3407373U
Florida Hsg. Fin. Agcy. Multi-Family Hsg. Rev.
(Brandon-Oxford) Series 90 C,
3.80%, VRDN A-1 4,000 4,000 3407375T
5,100
ILLINOIS - 0.1%
Illinois Dev. Fin. Auth. Multi-Family Hsg.
Rev. Rfdg. (Garden Glen Apts.)
Series 93, 4.05%, VRDN A-1 2,800 2,800 451915AQ
NEW YORK - 0.1%
Erie County Ind. Dev. Auth. Ind. Dev. Rev.
(The Holling Press, Inc.) Series 89 F, 3.90%,
LOC Marine Midland Bank, VRDN (f) - 1,040 1,040 295088ED
PENNSYLVANIA - 0.3%
Carbon County Ind. Dev. Auth. Resource Recovery
Rev. (Panther Creek Partners Proj.)
Series 90 A, 3.65%, tender 7/25/96,
LOC National Westminster Bank PLC (f) P-1 2,500 2,500 140991NC
Venango Ind. Dev. Auth. Resource Recovery Rev.
(Scrubgrass Proj.) Series 1990 B, 3.65%, tender
8/16/96, LOC Nat'l. Westminster Bank PLC (f) P-1 2,200 2,200 92299BGL
4,700
TEXAS - 0.8%
Brazos River Hbr. Navigation Dist. of Brazoria
County (Dow Chemical Co. Proj.) (f):
Series 1988, 3.85%, tender 6/11/96 P-1 5,000 5,000 106991EP
Series 1993, 4.15%, VRDN P-1 200 200 106226BQ
Series 1996, 4.15%, VRDN P-1 400 400 10623VAB
MUNICIPAL NOTES (E) - CONTINUED
MOODY'S PRINCIPAL VALUE (NOTE 1)
RATINGS (B) AMOUNT (000S) (000S)
TEXAS - CONTINUED
Gulf Coast Ind. Dev. Auth. Solid Waste Disp. Rev.
(Citgo Petroleum) 4.15%, LOC
Wachovia Bank of Georgia, VRDN (f) VMIG 1 $ 300 $ 300 40220MAA
Texas Gen. Oblig. TRAN Series 1995 A,
4.75% 8/30/96 MIG 1 7,850 7,872 8827156L
West Side Calhoun County Navigation Dist.
Sewage & Solid Waste Disp. Rev. (BP Chemicals,
Inc. Proj.) Series 1996, 4.10%, VRDN (f) P-1 300 300 956005AA
14,072
MULTIPLE STATES - 0.1%
Clipper Participating VRDN
Series 1995-1 Class A, 3.80%, Liquidity
Facility State Street Bank & Trust Co. (f) VMIG 1 2,646 2,646
TOTAL MUNICIPAL NOTES
(Cost $60,967) 60,973
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,789,539) $ 1,777,179
SECURITY TYPE ABBREVIATIONS
INFL - Inverse Floating Rate Security
TRAN - Tax and Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(1.) Non-income producing - issuer filed for protection under the Federal
Bankruptcy Code or is in default of interest payment.
(2.) Standard & Poor's credit ratings are used
in the absence of a rating by Moody's
Investors Service, Inc.
(3.) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(4.) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
(5.) The coupon rate shown on floating or adjustable rate securities
represents the rate
at period end.
(6.) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(7.) Security collateralized by an amount sufficient to pay interest and
principal.
(8.) 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.
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 68.8% AAA, AA, A 71.6%
Baa 17.4% BBB 13.4%
Ba 0.1% BB 3.7%
B 0.0% B 0.0%
Caa 0.7% CCC 0.0%
Ca, C 0.0% CC, C 0.0%
D 0.6%
The percentage not rated by either S&P or Moody's amounted to 3.0%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 25.8%
Electric Revenue 12.6
Health Care 10.6
Special Tax 10.3
Transportation 8.3
Industrial Development 7.9
Water & Sewer 6.7
Others (individually less than 5%) 17.8
TOTAL 100.0%
INCOME TAX INFORMATION
At May 31, 1996, the aggregate cost of invest- ment securities for income
tax purposes was $1,789,787,000. Net unrealized depreciation aggregated
$12,608,000, of which $48,882,000 related to appreciated investment
securities and $61,490,000 related to depreciated investment securities.
At November 30, 1995, the fund had a capital loss carryforward of
approximately $815,000 all of which will expire on November 30, 2002.
At November 30, 1995, the fund was required to defer approximately
$12,659,000 of losses on futures contracts.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) MAY 31, 1996 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $1,789,539) - $ 1,777,179
See accompanying schedule
Receivable for investments sold 13,518
Interest receivable 29,039
TOTAL ASSETS 1,819,736
LIABILITIES
Payable to custodian bank $ 73
Payable for investments purchased 6,053
Regular delivery
Delayed delivery 25,801
Payable for fund shares redeemed 2,735
Distributions payable 2,029
Accrued management fee 590
Other payables and accrued expenses 303
TOTAL LIABILITIES 37,584
NET ASSETS $ 1,782,152
Net Assets consist of:
Paid in capital $ 1,799,473
Undistributed net interest income 3,691
Accumulated undistributed net realized gain (loss) on (8,652)
investments
Net unrealized appreciation (depreciation) on (12,360)
investments
NET ASSETS, for 149,172 shares outstanding $ 1,782,152
NET ASSET VALUE, offering price and redemption price per $11.95
share ($1,782,152 (divided by) 149,172 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
INTEREST INCOME $ 53,538
EXPENSES
Management fee $ 3,508
Transfer agent, accounting and custodian fees 1,360
and expenses
Non-interested trustees' compensation 3
Registration fees 27
Audit 30
Legal 3
Miscellaneous 13
Total expenses before reductions 4,944
Expense reductions (18) 4,926
NET INTEREST INCOME 48,612
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 5,602
Futures contracts (2,068) 3,534
Change in net unrealized appreciation (depreciation) on:
Investment securities (58,894)
Futures contracts 2,129 (56,765)
NET GAIN (LOSS) (53,231)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (4,619)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31,1996 1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 48,612 $ 100,849
Net interest income
Net realized gain (loss) 3,534 7,565
Change in net unrealized appreciation (depreciation) (56,765) 181,819
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (4,619) 290,233
FROM OPERATIONS
Distributions to shareholders (44,921) (100,849)
From net interest income
From net realized gain (581) -
TOTAL DISTRIBUTIONS (45,502) (100,849)
Share transactions 248,585 712,326
Net proceeds from sales of shares
Reinvestment of distributions 32,887 72,092
Cost of shares redeemed (250,341) (865,693)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 31,131 (81,275)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (18,990) 108,109
NET ASSETS
Beginning of period 1,801,142 1,693,033
End of period (including undistributed net interest $ 1,782,152 $ 1,801,142
income
of $3,691 and $0, respectively)
OTHER INFORMATION
Shares
Sold 20,541 60,596
Issued in reinvestment of distributions 2,699 6,087
Redeemed (20,526) (73,582)
Net increase (decrease) 2,714 (6,899)
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31, 1996
(UNAUDITED) 1995 1994 C 1993 1992 1991
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 12.300 $ 11.040 $ 13.230 $ 12.720 $ 12.690 $ 12.610
beginning of period
Income from .335 D .677 .755 .764 .811 .845
Investment
Operations
Net interest income
Net realized and (.371) 1.260 (1.690) .700 .190 .310
unrealized gain
(loss)
Total from (.036) 1.937 (.935) 1.464 1.001 1.155
investment
operations
Less Distributions (.310) (.677) (.755) (.764) (.811) (.845)
From net interest
income
From net realized (.004) - (.500) (.190) (.160) (.230)
gain
Total distributions (.314) (.677) (1.255) (.954) (.971) (1.075)
Net asset value, end $ 11.950 $ 12.300 $ 11.040 $ 13.230 $ 12.720 $ 12.690
of period
TOTAL RETURN B (.31)% 17.95% (7.74) 11.92% 8.21% 9.62%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 1,782 $ 1,801 $ 1,693 $ 2,128 $ 2,075 $ 1,997
period (in millions)
Ratio of expenses to .56% .57% .56% .56% .57% .56%
average net assets A
Ratio of net interest 5.50% 5.69% 6.21% 5.85% 6.40% 6.72%
income to average A
net assets
Portfolio turnover rate 57% 50% 48% 53% 47% 44%
A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C 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, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
D SEE "DISTRIBUTIONS TO SHAREHOLDERS" SECTION OF NOTE 1 OF NOTES TO
FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1996 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Municipal Income Fund (the fund) (formerly Fidelity High Yield
Tax-Free Portfolio) 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 financial statements have been prepared
in conformity with generally accepted accounting principles which permit
management to make certain estimates and assumptions at the date of the
financial statements. On December 14, 1995, the Board of Trustees approved
a change in the fund's name from Fidelity High Yield Tax-Free Portfolio to
Fidelity High Yield Tax-Free Fund. On March 14, 1996, the Board of Trustees
approved a change in the fund's name from Fidelity High Yield Tax-Free Fund
to Fidelity Municipal Income Fund. 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 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 substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, market discount, capital loss carryforwards and
losses deferred due to wash sales and futures and options.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net interest income and realized
and unrealized gain (loss). Undistributed net interest income and
accumulated undistributed net realized gain (loss) on investments may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
During the period, the fund received payments from the trustees for
Michigan Health Care Corporation, a Detroit hospital system that filed for
bankruptcy in the spring of 1995. These amounts, which were recorded as
income for book purposes, remain undistributed to shareholders pending
determination by the bankruptcy courts as to their classification for
income tax purposes.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The
market value of the securities purchased or sold on a when-issued or
forward commitment basis are identified as such in the fund's schedule of
investments. The fund may receive compensation for interest forgone in the
purchase of a delayed delivery security. Losses may arise due to changes in
the market value of the underlying securities or if the counterparty does
not perform under the contract.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the bond markets and to fluctuations in
interest rates. Buying futures, writing puts, and buying calls tend to
increase the fund's exposure to the underlying instrument. Selling futures,
buying puts, and writing calls tend to decrease the fund's exposure to the
underlying instrument, or hedge other fund investments. Losses may arise
from changes in the value of the underlying instruments, if there is an
illiquid secondary market for the contracts, or if the counterparties do
not perform under the contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $558,448,000 and $482,728,000, respectively.
The market value of futures contracts opened and closed during the period
amounted to $104,751,000 and $161,635,000, respectively.
4. 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 .1100% to
.3700% for the period. In the event that these rates were lower than the
contractual rates in effect during the period, FMR voluntarily implemented
the above rates, as they resulted in the same or a lower management fee.
The annual individual fund fee rate is .25%. For the period, the management
fee was equivalent to an annualized rate of .40% 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 $1,000 for the
period.
TRANSFER AGENT AND ACCOUNTING FEES. UMB Bank, n.a. (UMB) is the custodian
and transfer and shareholder servicing agent for the fund. UMB has entered
into a sub-contract with Fidelity Service Co. (FSC), an affiliate of FMR,
under which FSC performs the activities associated with the fund's transfer
and shareholder servicing agent and accounting functions. The fund pays
account fees and asset-based fees that vary according to account size and
type of account. FSC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements. The accounting fee is based
on the level of average net assets for the month plus out-of-pocket
expenses. For the period, FSC received transfer agent and accounting fees
amounting to $1,059,000 and $247,000, respectively. For the period, the
transfer agent fees were equivalent to an annualized rate of .12% of
average net assets.
5. EXPENSE REDUCTIONS.
The fund has entered into arrangements with its custodian and transfer
agent whereby interest earned on uninvested cash balances was used to
offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $12,000 and $6,000,
respectively, under these arrangements.
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
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Fidelity Management & Research Company
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OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
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Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
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SPARTAN(registered trademark)
NEW JERSEY
MUNICIPAL INCOME
FUND
(registered trademark)
SEMIANNUAL REPORT
MAY 31, 1996
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.
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 RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
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:
Although stocks have managed to post solid returns through the first five
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that can help investors in every type of market.
First, take a long-term approach when investing. If you can afford to leave
your money invested through the inevitable ups and downs of financial
markets, you will greatly reduce your vulnerability to any single decline.
Over time, for example, stock prices have gone up - and have significantly
outperformed other types of investments and stayed ahead of inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.SM
We look forward to hearing from 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
securities that have grown in value), and the effect of the $5 account
closeout fee on an average sized account. You can also look at the fund's
income to measure performance. If Fidelity had not reimbursed certain fund
expenses during the periods shown, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Spartan New Jersey Municipal Income Fun -0.75% 3.70% 41.45% 93.60%
d
Lehman Brothers Municipal Bond Index -0.57% 4.57% 43.76% 96.79%
New Jersey Municipal Debt Funds -1.07% 3.40% 39.97% 93.78%
Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on January 1, 1988. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Lehman Brothers Municipal Bond Index, which reflects the
performance of the investment-grade bond market. To measure how the fund's
performance stacked up against its peers, you can compare it to the New
Jersey municipal debt funds average, which reflects the performance of 52
New Jersey municipal bond funds with similar objectives tracked by Lipper
Analytical Services over the past six months. Both benchmarks include
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan New Jersey Municipal Income Fun 3.70% 7.18% 8.16%
d
Lehman Brothers Municipal Bond Index 4.57% 7.53% 8.38%
New Jersey Municipal Debt Funds 3.40% 6.95% 8.18%
Average
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
IMAHDR PRASUN SHR__CHT 19960531 19960619 120512 S00000000000001
Spart. NJ Muni Income LB Muni Bond Index
00416 LB015
1988/01/01 10000.00 10000.00
1988/01/31 10382.99 10356.20
1988/02/29 10489.58 10465.67
1988/03/31 10108.42 10343.74
1988/04/30 10162.42 10422.35
1988/05/31 10195.16 10392.23
1988/06/30 10424.32 10544.27
1988/07/31 10490.37 10613.02
1988/08/31 10515.89 10622.36
1988/09/30 10760.93 10814.62
1988/10/31 11060.18 11005.50
1988/11/30 10893.59 10904.69
1988/12/31 11089.94 11016.25
1989/01/31 11261.42 11244.06
1989/02/28 11131.82 11115.77
1989/03/31 11142.30 11089.20
1989/04/30 11470.47 11352.46
1989/05/31 11712.35 11588.25
1989/06/30 11899.59 11745.62
1989/07/31 12030.89 11905.47
1989/08/31 11882.88 11788.92
1989/09/30 11837.43 11753.79
1989/10/31 12002.50 11897.54
1989/11/30 12181.54 12105.74
1989/12/31 12237.60 12204.77
1990/01/31 12116.02 12147.04
1990/02/28 12239.39 12255.76
1990/03/31 12260.70 12259.43
1990/04/30 12101.32 12170.68
1990/05/31 12416.90 12436.36
1990/06/30 12542.36 12545.68
1990/07/31 12738.80 12730.73
1990/08/31 12493.08 12545.88
1990/09/30 12573.55 12553.03
1990/10/31 12751.55 12780.74
1990/11/30 13053.06 13037.76
1990/12/31 13111.65 13094.47
1991/01/31 13270.56 13270.20
1991/02/28 13355.10 13385.65
1991/03/31 13389.34 13390.47
1991/04/30 13575.48 13569.23
1991/05/31 13686.74 13689.86
1991/06/30 13684.31 13676.31
1991/07/31 13910.25 13842.89
1991/08/31 14075.08 14025.20
1991/09/30 14253.46 14207.81
1991/10/31 14405.57 14335.68
1991/11/30 14441.01 14375.67
1991/12/31 14728.38 14684.18
1992/01/31 14753.10 14717.66
1992/02/29 14761.16 14722.37
1992/03/31 14733.38 14727.81
1992/04/30 14852.02 14858.89
1992/05/31 15067.75 15033.78
1992/06/30 15308.10 15286.05
1992/07/31 15854.07 15744.32
1992/08/31 15632.69 15590.82
1992/09/30 15697.02 15692.78
1992/10/31 15375.29 15538.52
1992/11/30 15787.95 15816.81
1992/12/31 16010.86 15978.30
1993/01/31 16206.19 16164.13
1993/02/28 16838.34 16748.79
1993/03/31 16627.12 16571.75
1993/04/30 16820.40 16738.96
1993/05/31 16957.52 16833.04
1993/06/30 17267.35 17113.98
1993/07/31 17270.89 17136.40
1993/08/31 17674.67 17493.18
1993/09/30 17885.76 17692.43
1993/10/31 17892.21 17726.57
1993/11/30 17701.58 17570.40
1993/12/31 18101.72 17941.31
1994/01/31 18291.85 18146.20
1994/02/28 17751.91 17676.22
1994/03/31 16940.43 16956.44
1994/04/30 17037.85 17100.23
1994/05/31 17231.69 17248.49
1994/06/30 17141.16 17143.10
1994/07/31 17462.85 17457.33
1994/08/31 17530.95 17517.74
1994/09/30 17262.63 17260.58
1994/10/31 16948.63 16954.03
1994/11/30 16665.09 16647.50
1994/12/31 17061.51 17013.91
1995/01/31 17573.16 17500.17
1995/02/28 17980.40 18009.07
1995/03/31 18199.53 18216.00
1995/04/30 18234.52 18237.49
1995/05/31 18669.46 18819.45
1995/06/30 18554.37 18654.78
1995/07/31 18623.76 18831.63
1995/08/31 18778.54 19070.41
1995/09/30 18946.30 19191.13
1995/10/31 19236.04 19470.17
1995/11/30 19507.36 19793.18
1995/12/31 19680.55 19983.39
1996/01/31 19785.83 20134.26
1996/02/29 19694.06 19998.36
1996/03/31 19451.60 19742.78
1996/04/30 19379.13 19686.91
1996/05/31 19361.27 19679.03
IMATRL PRASUN SHR__CHT 19960531 19960619 120518 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan New
Jersey Municipal Income Fund on January 1, 1988, when the fund started. As
the chart shows, by May 31, 1996, the value of your investment would have
grown to $19,361 a 93.61% increase on your initial investment. This assumes
you still own the fund on May 31, 1996, and therefore does not include the
effect of the $5 account closeout fee. For comparison, look at how the
Lehman Brothers Municipal Bond Index did over the same period. With
dividends reinvested, the same $10,000 would have grown to $19,679 a 96.79%
increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX
MONTHS
ENDED YEARS ENDED NOVEMBER 30,
MAY 31,
1996 1995 1994 1993 1992 1991
Dividend returns 2.59% 6.40% 5.28% 5.99% 6.59% 6.87%
Capital appreciation
returns -3.34% 10.65% -11.14% 6.12% 2.73% 3.75%
Total return -.75% 17.05% -5.86% 12.11% 9.32% 10.62%
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 MAY 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.98(cents) 29.79(cents) 60.26(cents)
Annualized dividend rate 5.31% 5.28% 5.37%
30-day annualized yield 4.84% - -
30-day annualized tax-equivalent yield 8.08% - -
</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, $11.26 over the past six months and $11.23 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 40.08% combined effective 1996 federal and state tax bracket.
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: On May 13, 1996, Steven Harvey became portfolio
manager of Spartan New Jersey Municipal Income Fund, replacing Maureen
Newman. The following is an interview with Steven Harvey.
Q. HOW HAS THE FUND PERFORMED,
STEVE?
A. For the six- and 12-month periods ended May 31, 1996, the fund had total
returns of -0.75% and 3.70%, respectively. The New Jersey municipal debt
funds average returned -1.07% for the same six-month period and 3.40% for
the same 12-month period, according to Lipper Analytical Services. Also,
for the six- and 12-month periods, the Lehman Brothers Municipal Bond Index
returned -0.57% and 4.57%, respectively.
Q. WHAT FACTORS SHAPED THE MUNICIPAL BOND MARKET'S PERFORMANCE OVER THE
PAST SIX MONTHS?
A. Signs of a strengthening U.S. economy hurt the returns of most types of
bonds during the period. Throughout the past six months, investors became
increasingly more concerned that the strengthening U.S. economy would
translate into higher inflation, which in turn could force interest rates
higher. Even though the Federal Reserve Board lowered short-term interest
rates in January, investors largely discounted the move. Bond yields rose
to levels not seen in more than a year as investors reacted to surprisingly
good economic news, particularly on the employment front. Although
municipal bonds were held back by the overall downturn in bond prices, they
recently have performed well relative to Treasuries. That's due to the
relatively low supply of municipals issued during the period, coupled with
diminishing fears of a flat tax.
Q. WHAT ARE SOME CHANGES YOU HAVE MADE SINCE TAKING OVER THE FUND IN
MID-MAY?
A. I gradually began to increase the fund's holdings in New Jersey Turnpike
bonds. At the beginning of the period, the fund had a smaller weighting
than the market in these bonds because Fidelity's research team felt they
could be susceptible to a decline in credit quality. Credit quality refers
to a municipal issuer's ability and willingness to pay principal and
interest on the debt. Toll collections were below what originally had been
anticipated, owing in part to flat traffic trends. As a result, the credit
rating of these bonds was lowered by Standard & Poor's to BBB+ from A.
Later, these bonds appeared to be cheap relative to what I believed to be
their full value. Subsequently, these bonds became eligible for bond
insurance - that is, their payment of principal and interest is guaranteed
by an AAA-rated municipal insurance company, and the bonds recouped some of
their previous losses.
Q. WHAT OTHER AREAS OF THE NEW JERSEY MUNICIPAL BOND MARKET ARE YOU LOOKING
AT NOW?
A. I have been looking closely at housing bonds. Housing bonds are
susceptible to prepayment risk; that is, the risk that the loans underlying
these bonds will be paid off early, causing the bonds to be retired
prematurely. To compensate for that risk, housing bonds tend to offer
higher levels of income compared to bonds with similar maturities, credit
ratings and other factors. In my view, that higher level of yield over
comparable bonds makes housing bonds attractive. With the help of
Fidelity's research staff, I focus on housing bonds that we believe will
prepay at a slower rate than the market is assuming. In those cases, we're
often able to find high-yielding housing bonds at attractive prices.
Q. WHY HAS THE FUND KEPT A RELATIVELY LIGHT WEIGHTING - COMPARED TO THE NEW
JERSEY MUNI MARKET - IN GENERAL OBLIGATION (GO) BONDS?
A. A GO bond is repaid with general tax revenue, in contrast to the revenue
from a specific facility built with borrowed funds, such as a toll road.
And general revenues are sensitive to both the New Jersey economy and the
state's fiscal health, neither of which are that strong at present.
Q. WHAT TYPES OF HEALTH CARE HOLDINGS DO YOU EMPHASIZE?
A. Generally, I try to find institutions - hospitals or others - that I
think can do well in the more competitive environment that New Jersey
health care organizations now face. I'll try to maintain holdings in the
leading providers with strong balance sheets and large market shares in
their respective locations. In general, I look for facilities with a
management team that is preparing for the future, as opposed to those that
will circle the wagons and fight out local turf wars.
Q. WHAT'S AHEAD FOR THE FUND?
A. There are going to be some changes to the fund's investment policies. As
of June 24, 1996, the fund will reserve the right to invest up to 5% of its
assets - down from one-third - in below-investment-grade securities. The
fund does not intend to seek out the lower-quality, below-investment-grade
bonds. Instead, this change gives the fund additional flexibility under
unusual circumstances. Fidelity also will use two additional agencies -
Duff & Phelps Credit Rating Co. and Fitch Investors Service, L.P., as well
as Moody's Investors Service and Standard & Poor's which the fund already
uses - to determine the credit quality of the fund's bonds. Rather than try
to predict the direction of interest rates, I believe that identifying the
right securities within the right sectors will be the key to performance in
1996. So I'll continue to leverage Fidelity's research capabilities in
order to pursue those opportunities.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: to provide high current
income exempt from New
Jersey state and federal
income taxes by investing
normally in investment-grade
municipal securities
START DATE: January 1, 1988
SIZE: as of May 31, 1996,
more than $352 million
MANAGER: Steven Harvey,
since May 13, 1996;
manager, Fidelity Maryland
Municipal Income and
Spartan Pennsylvania
Municipal Income funds,
since 1993; Ohio Municipal
Income Fund, since 1994;
Fidelity Massachusetts
Municipal Income Fund,
since 1995; joined Fidelity in
1986
(checkmark)
STEVE HARVEY ON THE
NEW JERSEY MUNICIPAL
MARKET:
"New Jersey is a state with a
large number of high-quality
issuers. As a reflection of
that, roughly 50% of the
fund's holdings was in the
top two tiers of the municipal
market - those with ratings
of Aaa or Aa as judged by
Moody's Investors Services
- - at the end of the period.
"The entire Atlantic
Seaboard region has been
lagging the national
economy over the past year
or so. One indication of that
is employment growth, which
is much slower in New
Jersey than the nation as a
whole. The state tightly
controls its budget and has
ended the last several years
with surpluses in spite of
recent income tax cuts.
Nevertheless, the state's
level of debt has doubled
over the past decade, which
will likely strain future
budgets. So I'll most likely
continue to emphasize
revenue bonds in the
transportation, housing and
health-care sectors."
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF MAY 31, 1996
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO
Transportation 23.4 21.5
General Obligation 23.2 16.6
Health Care 11.2 10.9
Escrowed/Prerefunded 8.7 10.7
Water & Sewer 8.4 6.1
AVERAGE YEARS TO MATURITY AS OF MAY 31, 1996
6 MONTHS AGO
Years 14.9 16.2
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF MAY 31, 1996
6 MONTHS AGO
Years 7.5 7.3
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
WILL ALSO INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. THE ACTUAL
PERFORMANCE OF THE FUND MAY DIFFER FROM THE ABOVE EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF MAY 31, 1996 AS OF NOVEMBER 30, 1995
Aaa 42.2%
Aa, A 35.8%
Baa 14.8%
Ba, B 0%
Non-rated 5.3%
Short-term
investments 1.9%
Aaa 40.0%
Aa, A 43.1%
Baa 9.5%
Ba, B 0%
Non-rated 4.3%
Short-term
investments 3.1%
Row: 1, Col: 1, Value: 42.2
Row: 1, Col: 2, Value: 35.8
Row: 1, Col: 3, Value: 14.8
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 5.3
Row: 1, Col: 6, Value: 1.9
Row: 1, Col: 1, Value: 40.0
Row: 1, Col: 2, Value: 43.1
Row: 1, Col: 3, Value: 9.5
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 4.3
Row: 1, Col: 6, Value: 3.1
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED DEBT SECURITIES THAT ARE
EQUIVALENT TO BA AND BELOW ACCOUNT FOR 0% AND 0% OF THE FUND'S INVESTMENTS
AT MAY 31, 1996 AND NOVEMBER 30, 1995, RESPECTIVELY.
INVESTMENTS MAY 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 98.1%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW JERSEY - 84.7%
Atlantic County Ctfs. of Prtn.
(Pub. Facs. Lease Agreement):
7.40% 3/1/07 (FGIC Insured) Aaa $ 3,035,000 $ 3,516,806
7.40% 3/1/08 (FGIC Insured) Aaa 3,260,000 3,781,600
Atlantic County Impt. Auth. Luxury Tax Rev. (Convention Ctr.):
7.375% 7/1/10 (MBIA Insured)
(Escrowed to maturity) (e) Aaa 1,000,000 1,158,750
7.40% 7/1/16 (MBIA Insured)
(Escrowed to maturity) (e) Aaa 3,510,000 4,119,863
Atlantic County Util. Auth. Swr. Rev. Rfdg.
Series A, 5.85% 1/15/15 (AMBAC Insured) Aaa 2,620,000 2,629,825
Bergen County Muni. Util. Auth. Solid Waste Sys. Rev.
Rfdg. Series A, 6.25% 6/15/07
(FGIC Insured) Aaa 2,000,000 2,142,500
Bergen County Util. Auth. Wtr. & Swr.
0% 12/15/07 (FGIC Insured) Aaa 7,500,000 3,984,375
Camden County Muni. Util. Auth. Swr. Rev. Rfdg.:
6% 7/15/03 (FGIC Insured) Aaa 3,180,000 3,362,850
5.50% 7/15/05 (FGIC Insured) Aaa 1,110,000 1,132,200
6% 7/15/06 (FGIC Insured) Aaa 1,060,000 1,115,650
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 1,513,688
Edison Township School Unltd. Tax:
6.50% 6/1/02 A1 1,000,000 1,080,000
6.50% 6/1/11 A1 1,000,000 1,092,500
Essex County Gen. Oblig.:
Rfdg. Series A2, 6.25% 9/1/10
(AMBAC Insured) Aaa 4,735,000 4,983,588
Series A:
5.75% 9/1/07 (AMBAC Insured) Aaa 1,385,000 1,417,894
5.75% 9/1/08 (AMBAC Insured) Aaa 1,465,000 1,488,806
5.75% 9/1/09 (AMBAC Insured) Aaa 1,550,000 1,563,562
Essex County Impt. Auth. Gen. Oblig.
7% 12/1/20 (AMBAC Insured)
(Prerefunded to 12/1/00 @ 102) (e) Aaa 1,000,000 1,110,000
Essex County Util. Auth. Solid Waste Rev. Series A:
5.75% 4/1/05 (FSA Insured) Aaa 1,000,000 1,021,250
6% 4/1/06 (FSA Insured) Aaa 1,000,000 1,033,750
Jersey City Swr. Auth. Swr. Rev. Rfdg.:
6% 1/1/07 (AMBAC Insured) Aaa 2,175,000 2,286,469
6% 1/1/09 (AMBAC Insured) Aaa 1,000,000 1,048,750
Lenape Regional High School Dist. Unltd. Tax:
7.625% 1/1/13 (MBIA Insured) Aaa 675,000 805,781
7.625% 1/1/14 (MBIA Insured) Aaa 1,000,000 1,188,750
Mercer County Impt. Auth. Unltd. Tax Rev. Rfdg.:
(Cap. Appreciation Solid Waste):
0% 4/1/08 Aa1 6,000,000 3,105,000
0% 4/1/09 Aa1 6,500,000 3,136,250
0% 4/1/10 Aa1 3,000,000 1,350,000
(Site & Disposal Facs. Proj.) 0% 4/1/09 Aa1 5,155,000 2,519,506
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW JERSEY - CONTINUED
Middlesex County Poll. Cont. Auth. Rev. Rfdg.
(Fing. Poll.) (Amerada Hess Corp.):
7.875% 6/1/22 - $ 7,750,000 $ 8,534,687
6.875% 12/1/22 - 5,000,000 5,143,750
Monmouth County Impt. Auth. Wastewtr.
Treatment Facs. Rev. (Asbury Park Proj.)
7.375% 12/1/09 Baa 1,000,000 1,105,000
Morris County Gen. Oblig. 6.5% 8/1/03 Aaa 2,180,000 2,381,650
New Jersey Bldg. Auth. Rev. 7.50% 6/15/09
(Prerefunded to 6/15/99 @ 102) (e) Aa 1,700,000 1,872,125
New Jersey Econ. Dev. Auth. Rev.:
(Edl. Testing Svc.):
Series A:
6.50% 5/15/05 (MBIA Insured) Aaa 2,500,000 2,715,625
6% 5/15/25 (MBIA Insured) Aaa 8,000,000 7,900,000
Series B:
6.125% 5/15/15 (MBIA Insured) (f) Aaa 2,000,000 2,012,500
6.25% 5/15/25 (MBIA Insured) (f) Aaa 7,700,000 7,786,625
(Mkt. Transition Fac.) Series A, 5.80%
7/1/09 (MBIA Insured) Aaa 2,500,000 2,512,500
(Weyerhauser Co. Proj.) 9% 11/1/04 A2 2,000,000 2,480,000
New Jersey Econ. Dev. Auth. Poll. Cont. Rev.
(Central Pwr. & Lt.) 7.10% 7/1/15 Baa1 1,415,000 1,506,975
New Jersey Econ. Dev. Auth. Wtr. Facs. Rev.
(American Wtr. Co. Inc. Proj.) 5.95%
11/1/29 (FGIC Insured) Aaa 5,000,000 4,825,000
New Jersey Edl. Facs. Fing. Auth. Rev.:
(Ramapo College) Series B, 7.70% 7/1/13
(Prerefunded to 7/1/98 @ 102) (e) A 1,000,000 1,086,250
5.125% 9/1/10 (AMBAC Insured) Aaa 5,000,000 4,718,750
New Jersey Gen. Oblig.:
Rfdg. Series B, 6.20% 1/15/00 Aa1 1,000,000 1,048,750
6.25% 1/15/01 Aa1 2,000,000 2,117,500
6% 7/15/03 Aa1 5,000,000 5,306,250
New Jersey Health Care Facs. Fing. Auth. Rev.:
Rfdg. (Atlantic City Med. Ctr.)
Series C, 6.80% 7/1/11 A 4,200,000 4,373,250
Rfdg. (Burdette Tomlin Mem. Hosp.)
Series D, 6.25% 7/1/06 (FGIC Insured) Aaa 1,710,000 1,804,050
(East Orange Gen. Hosp.)
Series B, 7.75% 7/1/20 BBB+ 2,450,000 2,554,125
(Elizabeth Gen. Med. Ctr.) Series C:
7.10% 7/1/99 Baa1 1,125,000 1,162,969
7.25% 7/1/06 Baa1 1,975,000 2,039,187
(Helene Fuld Med. Ctr.)
Series C, 8.125% 7/1/13 A 1,000,000 1,060,000
(Holy Name Hosp.)
Series A, 6.875% 7/1/04 Aaa 1,765,000 1,853,250
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
(Kennedy Mem. Hosp. Univ. Med. Ctr.)
Series D, 7.875% 7/1/09 A1 $ 3,000,000 $ 3,157,500
(Muhlenberg Reg. Med. Ctr.) Series B,
8% 7/1/18 (AMBAC Insured) Aaa 2,000,000 2,172,500
(Newcombe Med. Ctr.)
Series A, 7.875% 7/1/03 Baa 3,950,000 4,221,562
(Pascack Valley Hosp.)
Series 1991, 6.70% 7/1/11 BBB+ 5,200,000 5,206,500
(St. Elizabeth Hosp.) Series B, 8.25% 7/1/20 Baa 8,500,000 9,201,250
New Jersey Hsg. Fin. Agcy. (Gen. Resolution Section 8)
Series A:
6.90% 11/1/07 AA+ 2,670,000 2,810,175
6.95% 11/1/08 AA+ 2,265,000 2,378,250
7% 11/1/09 AA+ 2,855,000 2,987,044
7.05% 11/1/10 AA+ 3,500,000 3,661,875
New Jersey Hsg. & Mtg. Fin. Agcy.:
(Home Buyer) Series B, 7.90% 10/1/22
(MBIA Insured) (b) Aaa 1,410,000 1,466,400
6% 11/1/02 A+ 3,210,000 3,306,300
6.20% 11/1/04 A+ 3,100,000 3,239,500
6.45% 11/1/07 A+ 5,090,000 5,299,962
New Jersey Hwy. Auth. Garden State Parkway
Gen. Rev. (Sr. Parkway):
6% 1/1/05 A1 2,200,000 2,312,750
6.10% 1/1/06 A1 1,750,000 1,846,250
6.20% 1/1/10 (d) A1 21,000,000 22,286,250
6% 1/1/19 (Escrowed to Maturity) (e) Aaa 4,485,000 4,535,456
New Jersey Tpk. Auth. Rev.:
Rfdg.:
Series C, 6.50% 1/1/09 Baa1 1,300,000 1,381,250
10.375% 1/1/03 (Escrowed to Maturity) (e) AAA 8,880,000 10,600,500
Series A:
5% 1/1/97 Baa1 1,750,000 1,758,365
5.4% 1/1/99 Baa1 1,900,000 1,930,875
5.60% 1/1/00 Baa1 1,585,000 1,620,663
5.90% 1/1/03 Baa1 9,000,000 9,281,250
New Jersey Trans. Trust Fund Auth. Sys. Rev. (Trans. Sys.):
Series A:
6% 6/15/02 (AMBAC Insured) Aaa 3,200,000 3,368,000
6% 12/15/04 (MBIA Insured) Aaa 2,000,000 2,122,500
6.50% 6/15/05 (AMBAC Insured) Aaa 10,000,000 10,875,000
6% 12/15/05 (MBIA Insured) Aaa 3,250,000 3,440,938
6% 12/15/06 (MBIA Insured) Aaa 1,000,000 1,056,250
Series B, 6.50% 6/15/10 (MBIA Insured) Aaa 3,000,000 3,281,250
New Jersey Wastewtr. Treatment Trust Loan Rev.:
Series A, 6% 7/1/10 Aa 1,000,000 1,020,000
6.875% 6/15/06 Aa 1,320,000 1,433,850
6.875% 6/15/09 Aa 1,000,000 1,085,000
7% 6/15/10 Aa 1,750,000 1,903,125
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW JERSEY - CONTINUED
Parsippany-Troy Hills Township Unltd. Tax Rfdg.
6% 4/1/04 Aa $ 1,235,000 $ 1,304,469
Passaic County Util. Auth. (Solid Waste Sys. Proj.):
Rfdg. (Solid Waste Disp.) 0% 3/1/99
(MBIA Insured) A1 1,775,000 1,553,125
0% 3/1/99 (MBIA Insured) MIG 1 3,725,000 3,259,375
Stony Brook Reg. Swr. Auth. Rev. Series A,
7.40% 12/1/09 Aa 1,000,000 1,106,250
Union County Util. Unltd. Tax Rev. Rfdg.
5% 2/1/10 Aaa 2,000,000 1,877,500
University of Medicine & Dentistry Series C,
7.20% 12/1/19
(Prerefunded to 12/1/99 @ 102) (e) A 3,000,000 3,296,250
Wanaque Valley Reg. Swr. Auth. Rfdg.
Series B, 5.75% 9/1/18 (AMBAC Insured) Aaa 3,250,000 3,225,625
Washington Township Board of Ed.
(Gloucester County School) 5.10% 2/1/07
(MBIA Insured) Aaa 3,100,000 3,038,000
293,499,665
NEW YORK & NEW JERSEY - 10.2%
New York & New Jersey Port Auth. Consolidated :
65th Series, 7% 9/1/24 (FGIC insured) Aaa 3,500,000 3,598,560
76th Series, 6.50% 11/1/26 (b) A1 2,000,000 2,037,500
77th Series, 6.25% 1/15/27 (b) A1 5,000,000 5,043,750
85th Series, 5.375% 3/1/28 A1 9,000,000 8,325,000
100th Series, 5.75% 12/15/20 A1 8,500,000 8,245,000
104th Series, 4.75% 1/15/26
(AMBAC Insured) Aaa 8,000,000 6,560,000
Series SS, 4.90% 9/1/97 (b) MIG 1 1,600,000 1,603,200
35,413,010
PUERTO RICO - 3.2%
Puerto Rico Commonwealth Urban Renewal & Hsg.
Corp. Rfdg. 7.875% 10/1/04 Baa1 5,235,000 5,758,500
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 2,826,725
Puerto Rico Infrastructure Fing. Auth. Spl. Tax
Series 1988 A, 7.75% 7/1/08 Baa1 2,255,000 2,404,394
10,989,619
TOTAL MUNICIPAL BONDS
(Cost $331,986,177) 339,902,294
MUNICIPAL NOTES (A) - 1.9%
MOODY'S RATINGS PRINCIPAL VALUE
(UNAUDITED) (C) AMOUNT (NOTE 1)
NEW JERSEY - 1.7%
New Jersey Econ. Dev. Auth. Rev.
(Natural Gas Facs.) Series A, 3.40%
(AMBAC Insured) (BPA Union
Bank of Switzerland) VRDN (b) VMIG 1 $ 3,300,000 $ 3,300,000
New Jersey Trans. Trust Fund Auth. Sys. Rev.
Series 96A, 3.80% 6/14/96 (Liquidity Facility
Union Bank of Switzerland) CP P-1 2,500,000 2,500,275
5,800,275
NEW YORK & NEW JERSEY - 0.2%
New York & New Jersey Port Auth. Rev.
(Versatile Structure Obligation)
3.60% (BPA Morgan
Guaranty Trust Co.) VRDN VMIG 1 800,000 800,000
TOTAL MUNICIPAL NOTES
(Cost $6,600,000) 6,600,275
TOTAL INVESTMENTS - 100%
(Cost $338,586,177) $ 346,502,569
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SOLD
50 Municipal Bond Contracts Sept. 1996 $ 5,489,063 $ (28,891)
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.6%
SECURITY TYPE ABBREVIATIONS
CP - Commercial Paper
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(c) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(d) 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 $4,245,000.
(e) Security collateralized by an amount sufficient to pay interest and
principal.
(f) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
New Jersey Econ. Dev.
Auth. Rev. (Edl. Testing Svc.)
Series B, 6.125% 5/15/15
(MBIA Insured) 8/23/95 $ 1,953,920
New Jersey Econ. Dev.
Auth. Rev. (Edl. Testing Svc.)
Series B, 6.25% 5/15/25
(MBIA Insured) 8/23/95 $ 7,516,355
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 70.0% AAA, AA, A 76.5%
Baa 12.5% BBB 14.3%
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 4.4%. FMR has
determined that unrated debt securities that are lower quality account for
0% 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:
Transportation 23.4%
General Obligation 23.2
Health Care 11.2
Escrowed/Prerefunded 8.7
Water & Sewer 8.4
Housing 8.1
Other 5.9
Industrial Development 5.6
Others
(individually less than 5%) 5.5
TOTAL 100.0%
INCOME TAX INFORMATION
At May 31, 1996, the aggregate cost of investment securities for income tax
purposes was $338,586,177. Net unrealized appreciation aggregated
$7,916,392, of which $11,389,049 related to appreciated investment
securities and $3,472,657 related to depreciated investment securities.
At November 30, 1995, the fund was required to defer $852,406 of losses on
futures contracts.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MAY 31, 1996 (UNAUDITED)
1.ASSETS 2. 3.
4.Investment in securities, at value (cost $338,586,177) 5. $ 346,502,569
- - See accompanying schedule
6.Receivable for investments sold 7. 504,303
8.Interest receivable 9. 6,632,005
10.Redemption fees receivable 11. 74
12. 13.TOTAL ASSETS 14. 353,638,951
15.LIABILITIES 16. 17.
18.Payable to custodian bank $ 46,897 19.
20.Payable for fund shares redeemed 791,304 21.
22.Distributions payable 383,947 23.
24.Accrued management fee 165,056 25.
26.Payable for daily variation on futures contracts 28,891 27.
28. 29.TOTAL LIABILITIES 30. 1,416,095
31.32.NET ASSETS 33. $ 352,222,856
34.Net Assets consist of: 35. 36.
37.Paid in capital 38. $ 343,209,434
39.Accumulated undistributed net realized gain (loss) 40. 1,125,921
on investments
41.Net unrealized appreciation (depreciation) 42. 7,887,501
on investments
43.44.NET ASSETS, for 32,010,021 shares outstanding 45. $ 352,222,856
46.47.NET ASSET VALUE, offering price and redemption 48. $11.00
price per share ($352,222,856 (divided by) 32,010,021 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
49.50.INTEREST INCOME 51. $ 10,557,652
52.EXPENSES 53. 54.
55.Management fee $ 995,471 56.
57. Non-interested trustees' compensation 616 58.
59. Total expenses before reductions 996,087 60.
61. Expense reductions (60,673) 935,414
62.63.NET INTEREST INCOME 64. 9,622,238
65.REALIZED AND UNREALIZED GAIN (LOSS) 67. 68.
66.Net realized gain (loss) on:
69. Investment securities 2,389,264 70.
71. Futures contracts (221,659) 2,167,605
72.Change in net unrealized appreciation (depreciation) 73. 74.
on:
75. Investment securities (14,202,266) 76.
77. Futures contracts 3,969 (14,198,297)
78.79.NET GAIN (LOSS) 80. (12,030,692)
81.82.NET INCREASE (DECREASE) IN NET ASSETS 83. $ (2,408,454)
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
MAY 31, 1996 NOVEMBER 30,
(UNAUDITED) 1995
84.INCREASE (DECREASE) IN NET ASSETS
85.Operations $ 9,622,238 $ 19,817,770
Net interest income
86. Net realized gain (loss) 2,167,605 2,239,293
87. Change in net unrealized appreciation (depreciation) (14,198,297) 32,314,348
88. 89.NET INCREASE (DECREASE) IN NET ASSETS (2,408,454) 54,371,411
RESULTING FROM OPERATIONS
90.Distributions to shareholders (9,622,238) (19,817,770)
From net interest income
91. From net realized gain (1,282,410) -
92. 93.TOTAL DISTRIBUTIONS (10,904,648) (19,817,770)
94.Share transactions 19,388,184 44,889,052
Net proceeds from sales of shares
95. Reinvestment of distributions 8,523,419 15,486,788
96. Cost of shares redeemed (28,952,006) (55,439,570)
97. Redemption fees 7,440 18,651
98.99. (1,032,963) 4,954,921
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
100. (14,346,065) 39,508,562
101.TOTAL INCREASE (DECREASE) IN NET ASSETS
102.NET ASSETS 103. 104.
105. Beginning of period 366,568,921 327,060,359
106. End of period $ 352,222,856 $ 366,568,921
107.OTHER INFORMATION 109. 110.
108.Shares
111. Sold 1,718,324 4,079,575
112. Issued in reinvestment of distributions 757,055 1,400,485
113. Redeemed (2,573,231) (5,062,399)
114. Net increase (decrease) (97,852) 417,661
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31, 1996
(UNAUDITED) 1995 1994C 1993 1992 1991
115.SELECTED PER-SHARE DATA
116.Net asset value, beginning of period $ 11.420 $ 10.320 $ 11.760 $ 11.240 $ 11.020 $ 10.620
117.Income from Investment Operations .298 .623 .637 .640 .694 .694
Net interest income
118. Net realized and unrealized gain
(loss) (.380) 1.099 (1.291) .678 .298 .398
119. Total from investment operations (.082) 1.722 (.654) 1.318 .992 1.092
120.Less Distributions (.298) (.623) (.637) (.640) (.694) (.694)
From net interest income
121. From net realized gain (.040) - (.150) (.160) (.080) -
122. Total distributions (.338) (.623) (.787) (.800) (.774) (.694)
123.Redemption fees added to paid in
capital .000 .001 .001 .002 .002 .002
124.Net asset value, end of period $ 11.000 $ 11.420 $ 10.320 $ 11.760 $ 11.240 $ 11.020
125.TOTAL RETURN B (.75)% 17.06% (5.86)% 12.12% 9.33% 10.63%
126.RATIOS AND SUPPLEMENTAL DATA
127.Net assets, end of period (000
omitted) $ 352,223 $ 366,569 $ 327,060 $ 422,519 $ 342,734 $ 289,792
128.Ratio of expenses to average net assets .55%A .55% .55% .55% .51% .52%
D D
129.Ratio of expenses to average net assets
after .52%A .55% .55% .55% .51% .52%
expense reductions ,E
130.Ratio of net interest income to
average net assets 5.31%A 5.64% 5.70% 5.52% 6.22% 6.44%
131.Portfolio turnover rate 50%A 36% 8% 25% 33% 42%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C 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, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1996 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan New Jersey Municipal Income Fund (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 financial
statements have been prepared in conformity with generally accepted
accounting principles which permit management to make certain estimates and
assumptions at the date of the financial statements. 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 (including restricted securities) for
which quotations are not readily available 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 substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid
monthly from net interest income. Distributions from realized gains, if
any, are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for
gains/losses on futures and options transactions, capital loss
carryforwards, and losses deferred due to futures and options and excise
tax regulations. Permanent book and tax differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Any taxable gain remaining at fiscal year end
is distributed in the following year.
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.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FUTURES CONTRACTS AND OPTIONS. The fund may use futures and options
contracts to manage its exposure to the bond market and to fluctuations in
interest rates. Buying futures, writing puts, and buying calls tend to
increase the fund's exposure to the underlying instrument. Selling futures,
buying puts, and writing calls tend to decrease the fund's exposure to the
underlying instrument, or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value is shown in the schedule of investments
under the caption "Futures Contracts." This amount reflects each contract's
exposure to the underlying instrument at period end. Losses may arise from
changes in the value of the underlying instruments, if there is an illiquid
secondary market for the contracts, or if the counterparties do not perform
under the contracts' terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period,
restricted securities (excluding 144A issues) amounted to $9,799,125 or
2.8% of net assets.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $87,204,832 and $87,410,764, respectively.
The market value of futures contracts opened and closed during the period
amounted to $22,755,564 and $23,173,468, 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
$2,530 for the period.
5. EXPENSE REDUCTIONS.
FMR has entered into arrangements on behalf of the fund with the fund's
custodian and transfer agent whereby interest earned on uninvested cash
balances was used to offset a portion of the fund's expenses. During the
period, the fund's expenses were reduced by $60,673 under these
arrangements.
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FIDELITY'S MUNICIPAL BOND FUNDS
Aggressive Municipal
California Municipal Income
California Insured Municipal Income
Insured Municipal Income
Limited Term Municipal Income
Massachusetts Municipal Income
Michigan Municipal Income
Minnesota Municipal Income
Municipal Income
New York Municipal Income
New York Insured Municipal Income
Ohio Municipal Income
Spartan Aggressive Municipal
Spartan Arizona Municipal Income
Spartan California Intermediate Municipal Income
Spartan California Municipal Income
Spartan Connecticut Municipal Income
Spartan Florida Municipal Income
Spartan Intermediate Municipal Income
Spartan Maryland Municipal Income
Spartan Municipal Income
Spartan New Jersey Municipal Income
Spartan New York Intermediate Municipal Income
Spartan New York Municipal Income
Spartan Pennsylvania Municipal Income
Spartan Short-Intermediate Municipal Income
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
SPARTAN(registered trademark)
(registered trademark)
FLORIDA
MUNICIPAL
FUNDS
SEMIANNUAL REPORT
MAY 31, 1996
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN FLORIDA MUNICIPAL INCOME FUND
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 FUND
PERFORMANCE 23 How the fund has done over time.
FUND TALK 25 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 27 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 28 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 33 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 37 Notes to the financial statements.
</TABLE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first five
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that can help investors in every type of market.
First, take a long-term approach when investing. If you can afford to leave
your money invested through the inevitable ups and downs of financial
markets, you will greatly reduce your vulnerability to any single decline.
Over time, for example, stock prices have gone up - and have significantly
outperformed other types of investments and stayed ahead of inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.SM
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
SPARTAN FLORIDA MUNICIPAL INCOME FUND
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value), and the effect of the $5 account
closeout fee on an average sized account. You can also look at the fund's
income. If Fidelity had not reimbursed certain fund expenses, the life of
fund total returns, dividends and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Spartan Florida Municipal Income Fund -0.85% 4.13% 39.05%
Lehman Brothers Florida Municipal -0.87% 4.19% n/a
Bond Index
Florida Municipal Debt Funds Average -1.44% 3.29% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance over a set period - in
this case, six months, 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, the value of your investment would be $1,050. You can
compare the fund's returns to the performance of the Lehman Brothers
Florida Municipal Bond Index, which includes Florida investment-grade
municipal bonds. To measure how the fund's performance stacked up against
its peers, you can compare it to the Florida municipal debt funds average,
which reflects the performance of 80 Florida tax-exempt municipal bond
funds with similar objectives tracked by Lipper Analytical Services over
the past six months. Both benchmarks include reinvested dividends and
capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 1 LIFE OF
YEAR FUND
Spartan Florida Municipal Income Fund 4.13% 8.14%
Lehman Brothers Florida Municipal 4.19% n/a
Bond Index
Florida Municipal Debt Funds Average 3.29% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960531 19960619 142449 S00000000000001
Spartan FL Muni Income LB Municipal Bond
00427 LB015
1992/03/31 10000.00 10000.00
1992/04/30 10172.61 10089.00
1992/05/31 10350.03 10207.75
1992/06/30 10575.20 10379.03
1992/07/31 11028.26 10690.20
1992/08/31 10779.40 10585.97
1992/09/30 10823.45 10655.20
1992/10/31 10580.52 10550.46
1992/11/30 10944.39 10739.42
1992/12/31 11095.24 10849.07
1993/01/31 11245.75 10975.24
1993/02/28 11812.46 11372.22
1993/03/31 11626.24 11252.01
1993/04/30 11765.70 11365.54
1993/05/31 11841.80 11429.42
1993/06/30 12066.54 11620.18
1993/07/31 12101.29 11635.40
1993/08/31 12393.62 11877.65
1993/09/30 12566.59 12012.93
1993/10/31 12600.06 12036.12
1993/11/30 12423.65 11930.08
1993/12/31 12745.45 12181.92
1994/01/31 12914.00 12321.04
1994/02/28 12524.91 12001.93
1994/03/31 11935.22 11513.21
1994/04/30 12024.45 11610.84
1994/05/31 12139.04 11711.51
1994/06/30 12056.43 11639.95
1994/07/31 12310.26 11853.31
1994/08/31 12320.58 11894.32
1994/09/30 12130.96 11719.71
1994/10/31 11814.13 11511.57
1994/11/30 11530.36 11303.44
1994/12/31 11886.42 11552.23
1995/01/31 12279.67 11882.39
1995/02/28 12704.70 12227.93
1995/03/31 12848.58 12368.43
1995/04/30 12858.11 12383.03
1995/05/31 13293.09 12778.17
1995/06/30 13130.49 12666.36
1995/07/31 13237.10 12786.44
1995/08/31 13405.68 12948.57
1995/09/30 13499.13 13030.53
1995/10/31 13706.26 13220.00
1995/11/30 13961.59 13439.32
1995/12/31 14100.58 13568.47
1996/01/31 14182.96 13670.91
1996/02/29 14061.09 13578.63
1996/03/31 13892.16 13405.10
1996/04/30 13847.66 13367.16
1996/05/31 13843.25 13361.82
IMATRL PRASUN SHR__CHT 19960531 19960619 142454 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Florida Municipal Income Fund on March 31, 1992, shortly after the fund
started. As the chart shows, by May 31, 1996, the value of your investment
would have grown to $13,843 - a 38.43% increase on your initial investment.
This assumes you still own the fund on May 31, 1996, and therefore does not
include the effect of the $5 account closeout fee. For comparison, look at
how the Lehman Brothers Municipal Bond Index-which reflects the performance
of the investment grade municipal bond market-did over the same period.
With dividends reinvested, the same $10,000 would have grown to $13,362 - a
33.62% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
MARCH 16, 1992
SIX MONTHS (COMMENCEME
ENDED NT
MAY 31, YEARS ENDED NOVEMBER 30, OF OPERATIONS)
TO
NOVEMBER 30,
1996 1995 1994 1993 1992
Dividend returns 2.43% 6.30% 5.01% 6.10% 4.74%
Capital appreciation
returns -3.28% 14.78% -12.21% 7.41% 5.19%
Total returns -0.85% 21.08% -7.20% 13.51% 9.93%
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 MAY 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.65(cents) 27.31(cents) 55.23(cents)
Annualized dividend rate 5.05% 4.93% 5.03%
30-day annualized yield 5.12% - -
30-day annualized tax-equivalent yield 8.00% - -
</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 $10.84 over
the past month, $11.05 over the past six months and $10.97 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% 1996 federal tax bracket, but does not reflect payment of the
federal alternative minimum tax, if applicable.
SPARTAN FLORIDA MUNICIPAL INCOME FUND
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: In May1996, Jonathan Short became portfolio manager
of Spartan Florida
Municipal Income Fund, replacing
Maureen Newman.
Q. HOW HAS THE FUND PERFORMED, JON?
A. For the six- and 12-month periods ended May 31, 1996, the fund had total
returns of -0.85% and 4.13%, respectively. The Florida municipal debt funds
average returned -1.44% for the same six-month period and 3.29% for the
same 12-month period, as tracked by Lipper Analytical Services. Also, for
the same six- and 12-month periods ended May 31, 1996, the Lehman Brothers
Florida Municipal Bond Index returned -0.87% and 4.19%, respectively.
Q. WHAT IS MEANT BY TOTAL RETURN?
A. Total return is the "total" amount of return to the fund's shareholders,
and reflects both income and changes in share price. Interest income is the
main source of return for a bond fund over the long term. In addition, the
change in a bond fund's share price plays a role in determining total
return based on appreciation or depreciation of the fund's holdings. Let's
look at an example. If someone invested $100 in this fund 12 months ago,
reinvested the dividends and capital gains, and didn't sell before the end
of the period, the investment would have been worth $104.14 as of May 31,
1996. That is what is meant by a total return of 4.14%. This return is
slightly higher than the 4.13% return I cited earlier, which includes the
effect of the $5 account closeout fee.
Q. WHAT FACTORS SHAPED THE MUNICIPAL BOND MARKET'S PERFORMANCE OVER THE
PAST SIX MONTHS?
A. Signs of a strengthening economy caused yields to rise and bond prices
to fall during the period. Throughout the past six months, investors became
increasingly concerned that the strengthening U.S. economy would translate
into higher inflation, which in turn could force interest rates higher.
Even though the Federal Reserve Board lowered short-term interest rates in
January, investors largely discounted the move. In early March, an
employment report came out showing that job growth for February far
exceeded most expectations. The bond market took quite a tumble and it has
been struggling to recover. While both markets have had negative returns,
munis have fared better than Treasuries on a relative basis. That's due to
the relatively low supply of municipals issued during the period, coupled
with diminishing fears of a flat tax.
Q. WHAT HELPED THE FUND PERFORM
BETTER THAN THE FLORIDA MUNICIPAL DEBT FUNDS AVERAGE OVER THE PAST SIX
MONTHS?
A. Performance was helped by a number of specific holdings. For example,
one of the fund's best performers was Alachua County Florida Health
Facility/Santa Fe Health Care Systems. These bonds rose when the hospital
was taken over by another health concern and, as a result, the bonds were
pre-refunded and their credit rating rose to Aaa from A.
Q. WHAT ARE SOME AREAS OF THE MARKET YOU FOCUSED ON SINCE TAKING OVER?
A. I focused on increasing the fund's holdings in intermediate maturity
securities. The yield curve - which is a graphical representation of the
difference in yields between bonds with various maturities - had an upward
slope when I took over the fund. By that I mean that generally bonds with
longer maturities offered higher yields. However, the difference in yields
between bonds with intermediate maturities and those with very long
maturities in my view, wasn't adequate enough to compensate for the added
risk of long-maturity bonds.
Q. WHAT OTHER AREAS OF THE FLORIDA MUNICIPAL BOND MARKET WERE YOU LOOKING
AT?
A. I focused on non-callable securities - which can't be redeemed by their
issuer before their maturity - whenever the spread relationship between
non-callables and callables was attractive. In an environment where the
bond market is rallying, callable bonds can be taken away by their issuer,
while non-callables can't, which can give non-callables an advantage when
it comes to total return. I looked for some interesting opportunities in
zero coupon bonds at levels I viewed as relatively cheap. A zero coupon
security makes no periodic interest payments but instead is sold at a deep
discount from its face value. The buyer of such a bond receives the rate of
return by gradual appreciation of a security, which is redeemed at face
value on a specified maturity date.
Q. WHAT'S AHEAD FOR THE FUND?
A. There are going to be some changes to the fund's investment policies. As
of June 24, 1996, the fund will reserve the right to invest up to 5% of its
assets - down from one-third - in below investment-grade securities. The
fund does not intent to seek out the lower-quality, below investment-grade
bonds. Instead, this change gives the fund additional flexibility under
unusual circumstances. Fidelity also will use two additional agencies -
Duff & Phelps Credit Rating Co. and Fitch Investors Service, L.P., as well
as Moody's Investors Service and Standard & Poor's which the fund already
uses - to determine the credit quality of the fund's bonds.
Q. WHAT'S AHEAD FOR THE MUNICIPAL MARKET?
A. Given that falling interest rates were the primary engine driving the
bond market's performance last year, it looks as though it may be difficult
for municipals to match 1995's gains this year. So in my view, identifying
the right securities within the right sectors will likely be the key to
outperforming the market in 1996.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high current tax-free
income and exemption from
the Florida intangible tax by
normally investing in
investment-grade municipal
securities
START DATE: March 16, 1992
SIZE: as of May 31, 1996,
more than $385 million
MANAGER: Jonathan Short,
since May 1996; manager,
Fidelity California Municipal
Income Fund; Fidelity
California Insured Municipal
Income,
Fidelity Minnesota Municipal
Income, Spartan Arizona
Municipal Income, Spartan
California Municipal Income
and Spartan California
Intermediate Municipal
Income funds, October
1995; Fidelity Advisor
California Municipal Income
Fund, since February 1996;
joined Fidelity in 1990
(checkmark)
JONATHAN SHORT ON HIS
STRATEGY:
"My overall philosophy in
managing a portfolio is to
stress balance in both
security structure and
positioning along the yield
curve. At the same time, of
course, I'm trying to maintain
the highest yield and
tax-exempt income possible
for the fund's shareholders. I
do pay strict attention to
whether the slope of the yield
curve is providing adequate
yield compensation relative to
risk. As far as credit quality, I
felt that at the end of the
period, credit spreads were
fairly tight, and the difference
between Aaa-rated securities
and Baa-rated securities was
not as significant as it could
have been. I'll continue to be
active in positioning the fund
in those areas of credit quality
that I feel have the potential to
provide the best long-term
value for investors. I also try
to manage the fund to have a
fairly constant duration, one
that's in line with its
benchmark index."
SPARTAN FLORIDA MUNICIPAL INCOME FUND
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF MAY 31, 1996
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO
Transportation 14.8 16.3
Electric Revenue 14.4 14.4
Escrowed/Pre-Refunded 14.3 10.0
Health Care 14.0 17.8
Water & Sewer 11.3 10.5
AVERAGE YEARS TO MATURITY AS OF MAY 31, 1996
6 MONTHS AGO
Years 14.2 15.3
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF MAY 31, 1996
6 MONTHS AGO
Years 7.8 7.9
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 AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THE ABOVE EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF MAY 31, 1996 AS OF NOVEMBER 30, 1995
Aaa 59.7%
Aa, A 18.2%
Baa 15.2%
Ba, B 0.0%
Non-rated 3.5%
Short-term
investments 3.4%
Aaa 55.6%
Aa, A 17.1%
Baa 18.9%
Ba, B 0.0%
Non-rated 3.6%
Short-term
investments 4.8%
Row: 1, Col: 1, Value: 59.7
Row: 1, Col: 2, Value: 18.2
Row: 1, Col: 3, Value: 15.2
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 3.5
Row: 1, Col: 6, Value: 3.4
Row: 1, Col: 1, Value: 55.6
Row: 1, Col: 2, Value: 17.1
Row: 1, Col: 3, Value: 18.9
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 3.6
Row: 1, Col: 6, Value: 4.8
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS.
SPARTAN FLORIDA MUNICIPAL INCOME FUND
INVESTMENTS MAY 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 96.6%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
FLORIDA - 91.5%
Alachua County Health Facs. Auth. Health
Facs. Rev. (Santa Fe Health Care Facs. Proj.):
Rfdg. 6% 11/15/09 Baa1 $ 2,950,000 $ 3,027,438
Rfdg. 6.05% 11/15/09 Baa1 5,590,000 5,645,900
7.60% 11/15/13 Baa1 1,000,000 1,136,250
Bay County Ind. Dev. Correctional Facs. Rev.
(Corrections Corp. America Proj.)
Series A, 8.875% 11/1/05 (b) - 2,385,000 2,469,191
Brevard County Sales Tax Rev. Rfdg. & Impt.
5.25% 12/1/13 (FGIC Insured) Aaa 1,100,000 1,025,750
Brevard County School Board 5.1% 7/1/07
(AMBAC Insured) Aaa 2,500,000 2,418,750
Brevard County Util. Rev. Rfdg. 5.25% 3/1/14
(AMBAC Insured) Aaa 2,500,000 2,328,125
Broward County Hsg. & Fin. Auth.
Single-Family Mtg. Rev. 6.65% 8/1/21 Aaa 2,000,000 2,052,500
Broward County Resource Recovery Rev.
(SES Broward Co. LP South Proj.)
7.95% 12/1/08 A 10,725,000 11,770,688
Broward County Spl. Oblig.:
5.50% 1/1/02 (AMBAC Insured) Aaa 1,865,000 1,916,288
5.50% 1/1/04 (AMBAC Insured) Aaa 2,320,000 2,375,100
5.50% 1/1/05 (AMBAC Insured) Aaa 2,585,000 2,636,700
5% 1/1/10 (AMBAC Insured) Aaa 1,500,000 1,395,000
Broward County Wtr. & Swr. Util. Rev. Rfdg.
5.125% 10/1/15 (AMBAC Insured) Aaa 2,500,000 2,262,500
Cocoa Wtr. & Swr. Rev. Impt. Series B,
5.125% 10/1/13 (AMBAC Insured) Aaa 1,245,000 1,140,731
Dade County Rev. 6.25% 10/1/06
(MBIA Insured) Aaa 1,575,000 1,702,969
Dade County Aviation Rev. Rfdg.:
Series E, 6% 10/1/09 (AMBAC Insured) Aaa 3,000,000 3,142,500
Series Y, 5.30% 10/1/05 Aa 3,460,000 3,485,950
5.75% 10/1/26 (MBIA Insured) Aaa 2,000,000 1,900,000
Dade County Ed. Facs. Auth. Rev. 5.125% 4/1/09
(MBIA Insured) Aaa 1,475,000 1,404,938
Dade County Gtd. Entitlement Rev. Rfdg.:
0% 8/1/18 (AMBAC Insured) Aaa 14,835,000 3,597,488
Series B, 0% 2/1/02 (MBIA Insured) Aaa 1,810,000 1,362,025
Dade County Pub. Facs. Rev. Rfdg.
(Jackson Mem. Hosp.) Series A,
4.75% 6/1/10 (MBIA Insured) Aaa 3,540,000 3,186,000
Dade County Seaport Rev.:
Rfdg. 6.25% 10/1/05 (MBIA Insured) Aaa 2,995,000 3,242,088
Rfdg. 6.50% 10/1/07 (MBIA Insured) Aaa 1,500,000 1,650,000
6.20% 10/1/09 (MBIA Insured) Aaa 1,845,000 1,948,781
6.20% 10/1/10 (MBIA Insured) Aaa 1,325,000 1,389,594
5.75% 10/1/15 (MBIA Insured) Aaa 5,100,000 4,978,875
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Dade County Wtr. & Swr. Sys. Rev.:
6.25% 10/1/06 (FGIC Insured) Aaa $ 1,500,000 $ 1,618,125
6.25% 10/1/08 (FGIC Insured) Aaa 1,100,000 1,182,500
5.50% 10/1/18 (FGIC Insured) Aaa 1,000,000 948,750
5.50% 10/1/25 (FGIC Insured) Aaa 1,000,000 932,500
Dunedin Hosp. Rev. (Mease Health Care)
5.25% 11/15/06 (MBIA Insured) Aaa 1,400,000 1,394,750
Dunedin Util Sys. Rev. Rfdg. 6.25% 10/1/11
(FGIC Insured) Aaa 1,360,000 1,443,300
Duval County Hsg. Fin. Auth. Single
Family Mtg. Rev.:
Series C, 7.70% 9/1/24 (FGIC Insured)
(GNMA Coll.) Aaa 725,000 767,594
5.80% 12/1/19 (b) Aaa 1,000,000 960,000
Escambia County Health Facs. Auth. Rev.
(Baptist Hosp. & Baptist Manor):
Rfdg. Series B, 6% 10/1/01 BBB+ 2,825,000 2,616,656
6.75% 10/1/14 BBB+ 3,250,000 3,278,438
Escambia County Poll. Cont. Rev.:
Rfdg. (Gulf Pwr. Co. Proj.) 6.75%
3/1/22 A1 2,000,000 2,037,500
(Champion Int'l. Corp. Proj.)
6.90% 8/1/22 (b) Baa1 5,000,000 5,212,500
Escambia County Util. Sys. Rev. Series B,
6.25%, 1/1/15 (FGIC Insured) Aaa 1,500,000 1,576,875
Florida Hsg. Fin. Agcy. Single-Family Mtg.
Rfdg.:
Series A:
6.35% 7/1/14 Aa1 1,390,000 1,423,013
6.55% 7/1/14 Aaa 1,430,000 1,485,413
Series B, 6.55% 7/1/17 (b) Aaa 1,395,000 1,436,850
Florida Hsg. Fin. Agcy. Multi-Family Mtg.
Rfdg. (Park Colony Proj.) Series D,
5.10% 4/1/03 A+ 2,500,000 2,500,000
Florida Gen. Oblig. (Jacksonville Trans.)
6.40% 7/1/22 Aa 1,100,000 1,160,500
Florida Board Ed. Admin. Cap. Outlay Rfdg.:
(Pub. Ed.):
Series A:
5% 6/1/09 Aa 1,000,000 950,000
5% 6/1/24 Aa 5,000,000 4,300,000
Series C, 5.40% 6/1/06 Aa 2,500,000 2,521,875
Ultd. Tax Series D, 5% 6/1/15 Aa 1,250,000 1,117,188
5.75% 1/1/13 Aa 1,000,000 985,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
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 $ 1,476,563
5.70% 7/1/09 (AMBAC Insured) Aaa 3,000,000 3,030,000
Florida Mid-Bay Bridge Auth. Rev. Series A:
Series A, 7.50% 10/1/17 - 1,700,000 1,853,000
6.875% 10/1/22 - 3,000,000 3,341,250
Florida Muni. Pwr. Agcy. Rev. (Stanton II Proj.)
6.50% 10/1/20 (AMBAC Insured) Aaa 1,000,000 1,106,250
Florida Tpk. Auth. Tpk. Rev.:
Series A:
5.50% 7/1/05 (AMBAC Insured) Aaa 3,250,000 3,323,125
5.50% 7/1/06 (AMBAC Insured) Aaa 3,000,000 3,045,000
6.25% 7/1/09 (FGIC Insured) Aaa 2,325,000 2,438,344
7.20% 7/1/11 (AMBAC Insured) Aaa 1,500,000 1,691,250
6.35% 7/1/22 (FGIC Insured)
(Pre-Refunded to 7/1/02 @ 101) (e) Aaa 4,255,000 4,632,631
Rfdg. Series A:
5.25% 7/1/11 (FGIC Insured) Aaa 4,750,000 4,512,500
5% 7/1/19 (FGIC Insured) Aaa 2,000,000 1,757,500
Gainesville Util. Sys. Rev. 5.75%
10/1/04 Aa 1,000,000 1,041,250
Greater Orlando Aviation Auth. Aprt. Facs.
Rev. Series A, 6.50% 10/1/05
(FGIC Insured) (b) Aaa 3,550,000 3,834,000
Hillsborough County Aviation Auth. Rev. Rfdg.
(Tampa Int'l. Aprt.) Series A,
6.90% 10/1/11 (FGIC Insured) Aaa 4,250,000 4,547,500
Hillsborough County Rfdg. Environmentally
Sensitive LDS Acquisition & Protection
6% 7/1/02 (AMBAC Insured) Aaa 2,080,000 2,197,000
Hillsborough County Port. Auth. Dist. Rev.:
6.50% 6/1/03 Aaa 2,000,000 2,150,000
6.50% 6/1/05 Aaa 2,000,000 2,155,000
Hillsborough County Util. Rev. Rfdg.
(Cap. Appreciation) Series A:
0% 8/1/05 Aaa 8,000,000 4,910,000
0% 8/1/06 Aaa 10,000,000 5,762,500
0% 8/1/07 Aaa 7,000,000 3,806,250
Indian River County Wtr. & Swr. Rev.:
Series A, 5.50% 9/1/11
(FGIC Insured) Aaa 2,000,000 1,950,000
5.50% 9/1/16 (FGIC Insured) Aaa 1,500,000 1,432,500
Jacksonville Cap. Inpt. Rev. Ctfs.
(Gator Bowl Proj.):
5.50% 10/1/14 (AMBAC Insured) Aaa 2,000,000 1,922,500
5.50% 10/1/19 (AMBAC Insured) Aaa 2,000,000 1,890,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Jacksonville Elec. Auth. Rev.:
Rfdg. (Bulk Pwr.-Scherer 4 Proj. A)
5.20% 10/1/11 Aa1 $ 3,000,000 $ 2,827,500
(St. Johns River Issue #2) Series 5,
7% 10/1/09 Aa1 2,490,000 2,695,425
(Bulk Pwr. Supply-Scherer) 6.75% 10/1/21
(Pre-Refunded to 10/1/01 @ 101.5) (e) Aaa 1,000,000 1,096,250
Jacksonville Excise Tax Rev.:
Rfdg. 6.25% 10/1/05 (AMBAC Insured) Aaa 2,000,000 2,145,000
Series A, 6.50% 10/1/11 (AMBAC Insured) Aaa 1,200,000 1,296,000
5% 10/1/09 (FGIC Insured) Aaa 1,335,000 1,266,581
Jacksonville Health Facs. Auth. Hosp. Rev.
(Baptist Med. Ctr.) Series A, 7.30% 6/1/19
(MBIA Insured) Aaa 500,000 536,875
Jacksonville Health Facs. Auth. Ind. Dev. Rev.:
(Cypress Village Proj.) (Nat'l. Benevolent Assoc.):
Rfdg. 7% 12/1/22 Baa1 2,000,000 2,002,500
7% 12/1/14 Baa1 1,000,000 1,008,750
6.25% 12/1/23 Baa1 2,710,000 2,418,675
8% 12/1/24 Baa1 2,740,000 2,948,925
Jacksonville Ind. Dev. Rev. Rfdg. (Cargill, Inc. Proj.)
6.40% 3/1/11 AA- 1,250,000 1,295,313
Jacksonville Sales Tax Rev.
(River City Rennaissance Proj.):
6% 10/1/02 (FGIC Insured) Aaa 1,500,000 1,591,875
6% 10/1/04 (FGIC Insured) Aaa 3,430,000 3,648,663
5.65% 10/1/14 (FGIC Insured) Aaa 1,900,000 1,852,500
Jacksonville Wtr. & Swr. Dist. Rev. 6% 10/1/06
(MBIA Insured) Aaa 2,075,000 2,196,906
Jacksonville Wtr. & Swr. Gen. Waterwks Dev. Rev.
(Jacksonville Suburban Utils.)
6.75% 6/1/22 (b) A3 1,915,000 2,029,900
Key West Util. Board Elec. Rev. Rfdg. 0% 10/1/14
(AMBAC Insured) Aaa 6,755,000 2,271,369
Lakeland Elec. & Wtr. Rev.:
Rfdg. (Jr. Sub. Lien):
6.25% 10/1/02 (FGIC Insured) (d) Aaa 5,180,000 5,542,600
6.50% 10/1/06 (FGIC Insured) (d) Aaa 1,000,000 1,091,250
6.50% 10/1/07 (FGIC Insured) (d) Aaa 4,095,000 4,458,431
0% 10/1/09 (FGIC Insured) Aaa 2,840,000 1,331,250
Leesburg Hosp. Rev.:
Rfdg. (Leesburg Reg'l. Med. Ctr. Proj.) Series B:
5.625% 7/1/13 A 2,795,000 2,585,375
5.70% 7/1/18 A 3,140,000 2,865,250
5.60% 7/1/08 A 5,000,000 4,900,000
Leon County 5.50% 10/1/07 (MBIA Insured) Aaa 1,000,000 1,008,750
Martin County Ind. Dev. Auth. Rev.
(Indiantown Cogeneration Proj.)
Series A, 7.875% 1215/25 Baa3 7,000,000 7,770,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Melbourne Arpt. Rev. Rfdg. (d):
5.75% 10/1/97 (MBIA Insured) Aaa $ 190,000 $ 194,038
5.75% 10/1/98 (MBIA Insured) Aaa 205,000 210,894
5.75% 10/1/99 (MBIA Insured) Aaa 215,000 222,794
6.25% 10/1/00 (MBIA Insured) Aaa 230,000 243,513
6.25% 10/1/01 (MBIA Insured) Aaa 240,000 255,300
6.25% 10/1/02 (MBIA Insured) Aaa 260,000 278,200
6.25% 10/1/03 (MBIA Insured) Aaa 270,000 289,575
6.50% 10/1/04 (MBIA Insured) Aaa 290,000 316,463
6.50% 10/1/05 (MBIA Insured) Aaa 310,000 338,288
6.50% 10/1/06 (MBIA Insured) Aaa 325,000 354,656
6.75% 10/1/07 (MBIA Insured) Aaa 350,000 388,500
6.75% 10/1/08 (MBIA Insured) Aaa 375,000 415,313
6.75% 10/1/09 (MBIA Insured) Aaa 400,000 441,500
6.75% 10/1/10 (MBIA Insured) Aaa 425,000 466,969
Naples Hosp. Rev. Rfdg. (Community Hosp. Proj.):
5% 10/1/19 (MBIA Insured) Aaa 1,000,000 868,750
5.10% 10/1/07 (MBIA Insured) Aaa 1,500,000 1,455,000
North Broward Hosp. Dist. Rev. Rfdg.
6.40% 1/1/06 (MBIA Insured) Aaa 950,000 1,015,313
North Miami Edl. Facs. Rev. (Johnson & Wales
Univ. Proj.) Series A, 6.125% 4/1/20 - 6,605,000 6,373,825
Orange County Health Facs. Auth. Hosp. Rev.
(Adventist Health Sys.) 5.75% 11/15/05
(AMBAC Insured) Aaa 2,000,000 2,080,000
Orange County Hsg. Fin. Auth. Mtg. Rev.
Series A, 7.875% 9/1/10, (GNMA Coll.) (b) Aaa 45,000 46,406
Orange County Hsg. Fin. Auth. Single-Family
Mtg. Rev. (Mtg. Backed Secs. Proj.)
6.40% 10/1/14 Aaa 2,000,000 2,047,500
Orange County Sales Tax Rev.
Series B 5.375% 1/1/24 A1 1,000,000 891,250
Orange County Tourist Dev. Tax Rev. Rfdg. Series A:
5.75% 10/1/07 (MBIA Insured) Aaa 3,620,000 3,742,175
5.85% 10/1/08 (MBIA Insured) Aaa 1,795,000 1,860,069
5.90% 10/1/09 (MBIA Insured) Aaa 1,250,000 1,290,625
5.90% 10/1/10 (MBIA Insured) Aaa 1,000,000 1,030,000
Orlando Util. Commission Wtr. & Elec. Rev.:
Rfdg. 6% 10/1/10 Aa1 1,405,000 1,454,175
Rfdg. Sub-Series D, 6.75% 10/1/17 Aa 7,000,000 7,883,750
Sub-Series A, 6.50% 10/1/20 Aaa 6,055,000 6,660,500
Orlando Wtr. & Elec. Rev. 5.538% 10/31/13 Aa 9,400,000 8,988,750
Orlando & Orange County Expwy. Auth.
Expwy. Rev.:
7.25% 7/1/14 (Pre-Refunded to
7/1/96 @ 102) (e) Aaa 13,250,000 13,549,980
7.50% 7/1/16 (Pre-Refunded to
7/1/96 @ 102) (e) Aaa 2,155,000 2,204,091
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Orlando & Orange County Expwy. Auth. Rev.
Rfdg. Sr. Lien 5.25% 7/1/14
(AMBAC Insured) Aaa $ 4,000,000 $ 3,725,000
Osceola County School Board Ctfs. of
Partnership Series A, 5.25% 6/1/15
(AMBAC Insured) Aaa 3,750,000 3,445,313
Pinellas Park Pub. Impt. Rev. Rfdg. Series A,
5% 10/1/13 (FGIC Insured) Aaa 1,000,000 902,500
Plantation Health Facs. Auth. Rev. (Covenant
Retirement Communities Inc.) 7.75% 12/1/22 BBB+ 2,500,000 2,675,000
Polk County Ind. Dev. Auth. Ind. Dev. Rev.
(Winter Haven Hosp.) Series 2, 6.25% 9/1/15
(MBIA Insured) Aaa 1,500,000 1,546,875
Reedy Creek Util. Rev. 6.50% 10/1/16
(MBIA Inusred)
(Pre-Refunded to 10/1/01 @ 101) (e) Aaa 1,350,000 1,473,188
St. Lucie County Solid Waste Disp. Rev.
(Florida Pwr. & Lt. Co. Proj.)
6.70% 5/1/27 (b) A1 1,050,000 1,085,438
Sarasota Wtr. & Swr. Util. Rev. Rfdg. (d):
5.25% 10/1/00 (FGIC Insured) Aaa 1,150,000 1,173,000
6.25% 10/1/04 (FGIC Insured) Aaa 1,450,000 1,556,938
6.25% 10/1/07 (FGIC Insured) Aaa 1,735,000 1,852,113
Seminole County Wtr. & Swr. Rev. Rfdg. & Impt.:
6% 10/1/09 (MBIA Insured) Aaa 1,500,000 1,571,250
6% 10/1/12 (MBIA Insured) Aaa 1,500,000 1,548,750
South Miami Health Facs. Auth. Hosp. Rev.
Rfdg. (Baptist Health Sys.) 5.50% 10/1/05
(MBIA Insured) Aaa 1,980,000 2,014,650
Sumter County School Dist. Rev.
(Multi-Dist. Loan Prog.) 7.15% 11/1/15
(CGIC Insured) Aaa 1,000,000 1,160,000
Sunshine St. Governmental Fing. Commn. Rev.
Series B, 5.50% 10/1/05 (FGIC Insured) Aaa 1,000,000 1,021,250
Tampa Rev. (Allegheny Health Sys.-St. Joseph):
6.70% 12/1/07 (MBIA Insured) Aaa 2,685,000 2,744,138
6.75% 12/1/17 (MBIA Insured) Aaa 150,000 160,875
Tampa Wtr. & Swr. Rev.:
Rfdg. Series B, 5% 10/1/14 (FGIC Insured) Aaa 1,000,000 900,000
5.125% 10/1/17 (FGIC Insured) Aaa 6,890,000 6,157,938
Tarpon Springs Health Facs. Auth. Hosp. Rev.
(Helen Ellis Mem. Hosp. Proj.):
7.50% 5/1/11 BBB- 1,225,000 1,260,219
7.625% 5/1/21 BBB- 4,245,000 4,361,723
Volusia County Edl. Facs. Auth. (Embry Riddle
Aeronaut Univ.) 6.125% 10/15/16 Baa 2,000,000 1,952,500
367,076,092
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (B) AMOUNT (NOTE 1)
PUERTO RICO - 4.2%
Puerto Rico Commonwealth Aqueduct & Swr.
Auth. Rev. Series A, 7.875% 7/1/17
(Pre-Refunded to 7/1/98 @ 102) (e) Baa1 $ 2,500,000 $ 2,728,125
Puerto Rico Commonwealth Hwy. & Trans.
Auth. Rev.:
Series T, 6.625% 7/1/18
(Pre-Refunded to 7/1/02 @ 101.5) (e) Baa1 4,000,000 4,405,000
5.50% 7/1/36 Baa1 2,300,000 2,084,375
Puerto Rico Commonwealth Infrastructuring Fing.
Auth. Spl. Series A, 7.50% 7/1/09 Baa1 1,000,000 1,061,250
Puerto Rico Elec. Pwr. Auth. Rev.:
Rfdg. Series W, 6.50% 7/1/05
(MBIA Insured) Aaa 3,000,000 3,285,000
6.50% 7/1/06 (MBIA Insured) Aaa 2,000,000 2,190,000
Puerto Rico Pub. Bldgs. Auth. Gtd. Pub.
Ed. & Health Facs. Series L, 6.875% 7/1/21 Aaa 1,000,000 1,118,750
16,872,500
GUAM - 0.9%
Guam Pwr. Auth. Rev.:
Series A:
5.25% 10/1/13 BBB 1,250,000 1,092,188
6.30% 10/1/22 BBB 1,900,000 1,835,875
5.10% 10/1/03 BBB 500,000 480,000
3,408,063
TOTAL MUNICIPAL BONDS
(Cost $383,077,108) 387,356,655
MUNICIPAL NOTES (A) - 3.4%
FLORIDA - 2.6%
Dade County Ind. Dev. Auth. Rev. (Pwr. & Lt. Proj.)
Series 1993, 3.85%, VRDN VMIG 1 1,200,000 1,200,000
Dade County Health Facs. Auth. Hosp. Rev.
(Miami Childrens Hosp. Proj.) Series 1990,
3.8% LOC Barnett Bank, VRDN VMIG 1 400,000 400,000
Florida Muni. Pwr. Agcy. Participating
VRDN, 3.10% (f) 3,300,000 3,300,000
Hillsborough County Ind. Dev. Auth. Rev. Rfdg.
(Tampa Electric Co. Gann Coal Proj.)
Series 1992, 3.6%, VRDN VMIG 1 1,000,000 1,000,000
Miami Gen. Oblig. TAN 4.50% 9/27/96 MIG 1 2,000,000 2,005,580
Orange County Health Facs.
(Adventist Health Sys. Sunbelt) 3.55%,
LOC Rabobank Nederland, VRDN A-1+ 1,300,000 1,300,000
MUNICIPAL NOTES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Pinellas County Health Facs. Auth.
(Pooled Hosp. Loan Program) 3.80%,
LOC Chemical Bank, VRDN VMIG 1 $ 4,500,000 $ 4,500,000
TOTAL MUNICIPAL NOTES
(Cost $13,704,202) 13,705,580
TOTAL INVESTMENTS - 100%
(Cost $396,781,310) $ 401,062,235
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax.
(c) Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
(d) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
(e) Security collateralized by an amount sufficient to pay interest and
principal.
(f) Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At May 31, 1996, the aggregate cost of investment securities for income tax
purposes was $396,788,968. Net unrealized appreciation aggregated
$4,273,267, of which $8,512,212 related to appreciated investment
securities and $4,238,945 related to depreciated investment securities.
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 76.4% AAA, AA, A 81.9%
Baa 10.8% BBB 7.9%
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 3.5%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
Transportation 14.8%
Electric Revenue 14.4
Escrowed/Pre-Refunded 14.3
Health Care 14.0
Water & Sewer 11.3
Special Tax 10.1
General Obligation 6.3
Others
(individually less than 5%) 14.8
TOTAL 100.0%
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MAY 31, 1996 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $396,781,310) - $ 401,062,235
See accompanying schedule
Interest receivable 6,178,008
TOTAL ASSETS 407,240,243
LIABILITIES
Payable to custodian bank $ 154,907
Payable for investments purchased 1,464,756
Regular delivery
Delayed delivery 19,501,104
Distributions payable 605,411
Accrued management fee 179,939
TOTAL LIABILITIES 21,906,117
NET ASSETS $ 385,334,126
Net Assets consist of:
Paid in capital $ 384,765,137
Accumulated undistributed net realized gain (loss) (3,711,936)
on investments
Net unrealized appreciation (depreciation) 4,280,925
on investments
NET ASSETS, for 35,649,634 shares outstanding $ 385,334,126
NET ASSET VALUE, offering price and redemption price per $10.81
share ($385,334,126 (divided by) 35,649,634 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
INTEREST INCOME $ 10,815,326
EXPENSES
Management fee $ 1,086,596
Non-interested trustees' compensation 446
Total expenses before reductions 1,087,042
Expense reductions (41,994) 1,045,048
NET INTEREST INCOME 9,770,278
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,321,084
Futures contracts (594,253) 726,831
Change in net unrealized appreciation (depreciation) on:
Investment securities (13,799,434)
Futures contracts (32,586) (13,832,020)
NET GAIN (LOSS) (13,105,189)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ (3,334,911)
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED NOVEMBER
MAY 31,1996 30,1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 9,770,278 $ 19,727,290
Net interest income
Net realized gain (loss) 726,831 (2,142,817)
Change in net unrealized appreciation (depreciation) (13,832,020) 51,419,084
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (3,334,911) 69,003,557
FROM OPERATIONS
Distributions to shareholders (9,770,278) (19,727,290)
From net interest income
From net realized gain (177,944) -
TOTAL DISTRIBUTIONS (9,948,222) (19,727,290)
Share transactions 32,092,984 78,744,845
Net proceeds from sales of shares
Reinvestment of distributions 6,300,872 12,331,494
Cost of shares redeemed (35,786,898) (79,953,207)
Redemption fees 19,690 40,228
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,626,648 11,163,360
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (10,656,485) 60,439,627
NET ASSETS
Beginning of period 395,990,611 335,550,984
End of period $ 385,334,126 $ 395,990,611
OTHER INFORMATION
Shares
Sold 2,893,026 7,475,522
Issued in reinvestment of distributions 570,835 1,152,868
Redeemed (3,238,204) (7,660,480)
Net increase (decrease) 225,657 967,910
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED NOVEMBER 30, MARCH 16, 1992
ENDED (COMMENCEMENT
MAY 31, 1996 OF OPERATIONS) TO
NOVEMBER 30,
(UNAUDITED) 1995 1994E 1993 1992
SELECTED PER-SHARE DATA
Net asset value, beginning of
period $ 11.180 $ 9.740 $ 11.290 $ 10.520 $ 10.000
Income from Investment Operations
Net interest income .273 .573 .587 .615 .459
Net realized and unrealized
gain (loss) (.361) 1.439 (1.352) .777 .514
Total from investment
operations (.088) 2.012 (.765) 1.392 .973
Less Distributions (.273) (.573) (.587) (.615) (.459)
From net interest income
From net realized gain (.010) - (.200) (.010) -
Total distributions (.283) (.573) (.787) (.625) (.459)
Redemption fees added to paid in
capital .001 .001 .002 .003 .006
Net asset value, end of period $ 10.810 $ 11.180 $ 9.740 $ 11.290 $ 10.520
TOTAL RETURN B 4.14% 21.09 (7.19)% 13.52% 9.94%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000
omitted) $ 385,334 $ 395,991 $ 335,551 $ 428,367 $ 237,109
Ratio of expenses to average net
assets .55%A .55 .54% .25% .03%A
% D D ,D
Ratio of expenses to average net
assets after expense reductions .53%A .55 .54% .25% .03%A
,C %
Ratio of net interest income to
average net assets 4.94%A 5.37 5.49% 5.52% 6.25%A
%
Portfolio turnover rate 23%A 65 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.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S OPERATING EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
E EFFECTIVE DECEMBER 1, 1993 THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION ON INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TAX DIFFERENCES.
FINANCIAL HIGHLIGHTS
SPARTAN FLORIDA MUNICIPAL MONEY MARKET FUND
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 on an average size account.
Yield measures the income paid by a fund. Since a money market fund tries
to maintain a $1 share price, yield is an important measure of performance.
If Fidelity had not reimbursed the fund for certain expenses, the life of
fund total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Spartan Florida Municipal 1.59% 3.33% 11.38%
Money Market Fund
All Tax-Free Money Market Funds Average 1.54% 3.20% 10.09%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set 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, the value of your investment would be $1,050. To
measure how the fund's performance stacked up against its peers, you can
compare it to the all tax-free money market funds average, which reflects
the performance of 398 average all tax-free money market funds with similar
objectives tracked by IBC Financial Data, Inc. over the past six months.
(The periods covered by the IBC Financial Data, Inc. numbers are the
closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 1 LIFE OF
YEAR FUND
Spartan Florida Municipal 3.33% 2.90%
Money Market Fund
All Tax-Free Money Market Funds Average 3.20% 2.59%
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.
YIELDS
5/29/95 8/28/95 11/27/95 2/26/96 5/27/96
Spartan Florida Municipal 3.78% 3.38% 3.39% 2.96% 3.27%
Money Market Fund
All Tax-Free Money Market 3.61% 3.21% 3.30% 2.87% 3.12%
Funds Average
Spartan Florida Municipal 5.91% 5.28% 5.30% 4.63% 5.11%
Money Market Fund -
Tax-equivalent
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 all tax-free money market funds average as
tracked by IBC Financial Data, Inc. Or you can look at the fund's
tax-equivalent yield, which is based on an effective 1996 federal tax rate
of 36%. A portion of the fund's income may be subject to the alternative
minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
SPARTAN FLORIDA MUNICIPAL MONEY MARKET FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jan Bradburn, Portfolio Manager of Spartan Florida
Municipal Money Market Portfolio
Q. JAN, HOW HAS THE INVESTMENT CLIMATE CHANGED DURING THE PAST SIX MONTHS?
A. In Florida, technical factors associated with the Florida Intangible
Personal Property tax tended to have a disproportionate impact on my
investment decisions. However, those technical factors arose against a
backdrop colored by national fiscal and monetary trends. When the period
began, the Federal Reserve was in an easing mode, having lowered the
federal funds rate - the rate banks charge each other for overnight loans -
the previous July, followed by additional one-quarter percentage point cuts
in December, 1995 and January of this year. Heading into mid-winter, the
consensus among market participants was that we had not yet seen the last
of the rate cuts. The sentiment began to change when, testifying before
Congress in mid-February, Fed Chairman Alan Greenspan seemed to suggest
that the economy was doing better than expected. Then came the infamous
February employment report, which was significantly stronger than most
analysts had predicted. Since then, a string of positive indicators has
left little doubt in most analysts' minds that, for the time being, the
economy is in no need of further stimulus.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. On December 1, 1995, when the period began, the fund had an average
maturity of 52 days. By the end of the month, as investors sought shelter
from the Florida Intangible Personal Property tax, the fund's asset base
more than doubled. Most of the new money went into variable rate demand
notes and other short-term instruments, which lowered the fund's average
maturity to 30 days. By January 31, 1996, assets had declined sharply and
the fund's average maturity was back up around 45 days. Since then, I've
let the fund's average maturity gradually roll back down, for two reasons:
to preserve flexibility in the face of rising rates and to prepare for a
supply windfall in June, when many school districts seek financing.
Q. HOW DID THE FUND PERFORM?
A. Better than most other tax-free money market funds over the period. The
fund's seven-day yield on May 31, 1996 was 3.22%, compared to 3.36% on
November 30, 1995. The latest yield was the equivalent of a taxable yield
of 5.03% for investors in the 36% federal tax bracket. Through May 31,
1996, the fund's six-month total return was 1.59%, compared to a total
return of 1.54% for the all tax-free money market funds average, according
to IBC Financial Data, Inc. During the 12-month period, the fund's total
return was 3.33%, compared to 3.20% for the all tax-free money market funds
average.
Q. WHAT'S THE OUTLOOK?
A. Recently released economic indicators have produced some contradictory
signals, making it unclear just how strong the economy really is. In the
absence of compelling evidence one way or the other, I think it's likely
the Fed will stand pat for a while. Certainly most experts don't expect the
Fed to lower rates again anytime soon. On the other hand, if we continue to
see evidence of strong economic performance in key indicators such as
employment, housing and consumer spending, I feel it's possible that the
Fed will choose to raise rates. Given the lack of a solid direction, I'll
probably aim to keep the fund's average maturity between 45 and 55 days -
possibly longer, depending on the supply of new issues. I believe that
gives me maximum flexibility to adapt to changing conditions.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high current tax-free
income and exemption from
the Florida intangible tax, while
maintaining a stable $1.00
share price by investing mainly
in high-quality, short-term
municipal money market
securities
START DATE: August 24, 1992
SIZE: as of May 31, 1996,
more than $361 million
MANAGER: Jan Bradburn,
since 1995; also manager,
Fidelity Ohio Municipal Money
Market Fund, since 1993;
Fidelity Massachusetts
Municipal Money Market Fund
and Spartan Massachusetts
Municipal Money Market
Fund, since 1992; Spartan
New York Municipal Money
Market Fund, since 1990;
Fidelity New York Municipal
Money Market Fund, since
1989; joined Fidelity in 1989
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
usually long-term security that
gives the bond holder the
option to redeem the bond at
face value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
5/31/96 11/30/95 5/31/95
0 - 30 75 71 78
31 - 90 10 12 12
91 - 180 13 4 9
181 - 397 2 13 1
WEIGHTED AVERAGE MATURITY
5/31/96 11/30/95 5/31/95
Spartan Florida Municipal
Money Market Fund 36 days 52 days 29 days
All Tax-Free Money Market
Funds Average* 42 days 49 days 38 days
ASSET ALLOCATION
AS OF MAY 31, 1996 AS OF NOVEMBER 30, 1995
Row: 1, Col: 1, Value: 56.0
Row: 1, Col: 2, Value: 11.0
Row: 1, Col: 3, Value: 9.0
Row: 1, Col: 4, Value: 17.0
Row: 1, Col: 5, Value: 7.0
Row: 1, Col: 1, Value: 60.0
Row: 1, Col: 2, Value: 18.0
Row: 1, Col: 3, Value: 6.0
Row: 1, Col: 4, Value: 13.0
Row: 1, Col: 5, Value: 3.0
Variable rate
demand notes
(VRDNs) 56%
Commercial
paper 11%
Tender bonds 9%
Municipal
notes 17%
Other 7%
Variable rate
demand notes
(VRDNs) 60%
Commercial
paper 18%
Tender bonds 6%
Municipal
notes 13%
Other 3%
* SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
SPARTAN FLORIDA MUNICIPAL MONEY MARKET FUND
INVESTMENTS MAY 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA- 0.7%
Coconino Poll. Cont. Rev.
(Arizona Pub. Svc. Co. Navajo Proj.)
Series 1994 A, 4.10%, LOC Bank of America, VRDN (b) $ 1,200,000 $
1,200,000
Mojave County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Utilities) Series 1993 E,
3.80%, tender 8/12/96 (b) 1,300,000 1,300,000
2,500,000
FLORIDA - 94.4%
Alachua County Health Facs. Rev. Bonds
(Academic Research Bldg. Proj.) Series1989,
3.70%, tender 6/26/96, LOC Barnett Bank 6,250,000 6,250,000
Arcadia Hosp. Rev. (Desoto Memorial Hosp.) Series 1994,
3.70%, LOC First Union Bank of Florida, VRDN 5,000,000 5,000,000
Bay County Resource Recovery Rev. Bond 8% 10/14/96 2,620,000 2,739,765
Broward County Hsg. Fin. Auth. Multi-Family Hsg. Rev., VRDN:
(Lake Park Assoc. Ltd. Partnership) Series 1985, 3.65%,
LOC Society Bank 9,815,000 9,815,000
(Landings Inverrary) 3.80%, LOC PNC Bank 3,900,000 3,900,000
(Palm Aire-Oxford Proj.) Series 1990, 3.80%
(Continental Casualty Guaranteed) 1,800,000 1,800,000
(Town of Jacaranda Proj.) 3.70%,
LOC Southtrust Bank 7,400,000 7,400,000
Broward County Ind. Dev. Auth. Rev. Rfdg.
(Goldline Lab., Inc. Proj.) Series 1989 B, 3.65%,
LOC Barnett Bank, VRDN (b) 564,000 564,000
Clay County Hsg. Fin. Auth. Participating VRDN,
Series PT-61, 3.65%
(Liquidity Facility Bayerische Hypotheken (b) (c) (d) 4,950,000
4,950,000
Dade County Hsg. Fin. Auth. Participating VRDN,
Series 1995 B, 3.75%, (Liquidity Facility
Bank of America) (c) (d) 12,500,000 12,500,000
Dade County Ind. Dev. Auth. Ind. Dev. Rev. (Royal Store
Fixtures Corp. Proj.) 3.75%, LOC SunTrust Bank, VRDN (b) 2,500,000
2,500,000
Dade County Ind. Dev. Auth. Rev. (Guastafeste Proj.), VRDN (b):
Series 1987, 3.75%, LOC SunTrust Bank 1,010,000 1,010,000
Series 1991, 3.75%, LOC SunTrust Bank 625,000 625,000
Dade County Multi-Family Hsg. Rev. (Biscayne View
Apts. Proj.) Series 1993, 4% (Commonwealth Life
Insurance Co. Guaranteed) VRDN (b) 27,000,000 27,000,000
Escambia County Poll. Cont. Rev. Rfdg.
(Monsanto Co. Proj.) Series 1994, 3.65%, VRDN 1,775,000 1,775,000
Escambia County Solid Waste Disp. Rev.
(Monsanto Co. Proj.) Series 1993, 3.80%, VRDN (b) 5,300,000 5,300,000
Florida Dept. of Trans. Participating VRDN, 3.60%
(Liquidity Facility Societe Generale) (c) 17,310,000 17,310,000
Florida Hsg. Fin. Agcy. Multi-Family Hsg. Rev., VRDN:
Rfdg. (Hillsborough-Oxford Proj.) Series D, 3.80%
(Continental Casualty Guaranteed) 5,590,000 5,590,000
(Brandon-Oxford Proj.) Series 1990 C, 3.80% 2,200,000 2,200,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Florida Hsg. Fin. Agcy. Multi-Family Hsg. Rev., VRDN: - continued
(Oaks at Mill Creek Proj.) Series 1985, 3.60%,
LOC Chemical Bank $ 4,600,000 $ 4,600,000
Florida Hsg. Fin. Agcy. Rev., VRDN:
(Banyan Bay Apts. Proj.) 3.80%, LOC PNC Bank (b) 5,275,000 5,275,000
(Sun Pointe Cove Apts. Proj.) Series 1985 XX, 3.70%
(FNMA Guaranteed) 3,500,000 3,500,000
Florida Local Gov't. Fin. Auth. Series A,
3.50% 9/27/96, LOC First Union Nat'l. Bank, CP 2,500,000 2,500,000
Florida Muni. Pwr. Agcy. Participating VRDN
(Stanton II Proj.) Series PA 1018, 3.60%
(Liquidity Facility Merrill Lynch & Co.) (c) 2,520,000 2,520,000
Florida State Board of Ed.:
Participating VRDN, Series CR-164,
3.75% (Liquidity Facility Citibank) (c) 10,000,000 10,000,000
Bonds 7.75% 6/1/96 4,000,000 4,080,000
(Administrative Cap. Outlay) Series B:
6.80% 6/1/96 1,000,000 1,000,000
7.10% 6/1/96 1,000,000 1,020,000
Florida State Dept. Gen Svcs. Rev. Bonds (Environmental
Protection Agcy.) 4.50% 7/1/96, (FSA Insured) 1,160,000 1,160,552
Greater Orlando Aviation Auth. Airport Facs.
Series B, 3.60% 8/22/96
(Liquidity Facility Morgan Guaranty Trust Co.) CP (b) 2,000,000
2,000,000
Gulf Breeze Rev. Series 1995 A, 3.65%,
LOC Barnett Bank, VRDN 10,000,000 10,000,000
Hillsborough County Aviation Auth. 3.70% 8/7/96,
LOC Nat'l. Westminster Bank, CP (b) 7,500,000 7,500,000
Hillsborough County Ind. Dev. Rev. (Vigo Importing Proj.)
3.85%, LOC NationsBank, VRDN (b) 1,670,000 1,670,000
Immokalee Wtr. & Swr. Dist. Wtr. & Swr.
BAN 3.65% 8/30/96 1,000,000 1,000,000
Indian River County Hosp. Dist. Hosp. Rev. Bonds:
Series 1988, 3.20%, tender 6/11/96,
LOC Kredietbank 2,600,000 2,600,000
Series 1989, 3.60%, tender 8/13/96,
LOC Kredietbank 4,300,000 4,300,000
Series 1990, 3.20%, tender 6/11/96,
LOC Kredietbank 2,000,000 2,000,000
Jacksonville Elec. Auth. Participating VRDN, Series PA-100,
3.60% (Liquidity Facility Merrill Lynch & Co.) (c) 3,460,000 3,460,000
Jacksonville Elec. Auth. Rev. Bond
Series 3-A, 7.70% 10/1/96 3,500,000 3,597,903
Jacksonville Health Facs. Rev. (Faculty Practice Assoc.)
3.70%, LOC NationsBank, VRDN 2,000,000 2,000,000
Jacksonville Ind. Dev. Rev. (Samuel C. Taylor Foundation
1987 Proj.) 3.70%, LOC Barnett Bank, VRDN 4,900,000 4,900,000
Jacksonville River City Renaissance Prog.
3.50% 7/25/96 (Liquidity Facility Credit Suisse) CP 7,000,000 7,000,000
Lee County Ctfs. of Prtn. (Lee County Master Lease Proj.)
Series 1995, 3.60% 10/1/96 (MBIA Insured) 775,000 775,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Lee County Hsg. Fin. Auth. Single Family Mtg. Rev.
(Multi-County Proj.) Series 1996 A, 3.90%,
tender 9/16/96 (b) $ 10,000,000 $ 10,000,000
Lee County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Baader North America Proj.) Series1994, 3.65%,
LOC Deutsche Bank, VRDN (b) 2,200,000 2,200,000
Liberty County Ind. Dev. Rev. (Timber Energy
Resources Inc. Proj.) Series 1994, 3.70%,
LOC Bank of Montreal, VRDN 7,900,000 7,900,000
Manatee County Hsg. Fin. Auth. Single Family Mtg.
Rev. Bonds 3.90%, tender 10/15/96 (b) 3,000,000 3,000,000
Manatee County Hsg. Fin. Auth. (Harbor Pointe Proj.)
Series 1990 A, 4%, LOC Marine Midland Bank, VRDN 1,000,000 1,000,000
Miami TAN 4.50% 9/27/96 10,000,000 10,021,728
Monroe County School Dist. RAN 4% 12/13/96 2,000,000 2,000,000
Naples Hosp. Rev. Series 1992, 3.75%,
LOC Mellon Bank, VRDN 2,200,000 2,200,000
Ocean Hwy. & Port Auth. Rev. Series 1990 3.60%,
LOC ABN-AMRO Bank, VRDN (b) 8,100,000 8,100,000
Okeechobee County Solid Waste Rev. (Chambers Waste Sys.)
Series 1992, 3.85%, LOC NationsBank, VRDN (b) 9,900,000 9,900,000
Orange County Health Fac. Auth. Participating VRDN,
Series PA-95, 3.65% (Liquidity Facility
Merrill Lynch & Co.) (c) 3,985,000 3,985,000
Orange County Health Facs. Rev. (Adventist Health Sys.)
3.55%, LOC Rabobank, VRDN 2,250,000 2,250,000
Orange County Hsg. Fin. Auth. Rev.
(Smokewood/Sun Key Apt. Proj.) Series A, 3.60%,
LOC Citibank, VRDN 2,500,000 2,500,000
Orange County School Dist.:
RAN 4.50% 6/25/96 17,500,000 17,508,844
TAN 4.50% 10/16/96 15,000,000 15,045,011
Orlando & Orange County Expressway Rev. Bonds (Sr. Lein):
7% 7/1/96 1,900,000 1,942,664
7.25% 7/1/96 1,000,000 1,022,961
Orlando Util. Commission Wtr. & Elec.
Participating VRDN, Series SG-18, 3.60%
(Liquidity Facility Societe Generale) (c) 4,365,000 4,365,000
Palm Beach County Rev. (Norton Gallery & School of Art)
3.60%, LOC Northern Trust Company, VRDN 2,700,000 2,700,000
Pensacola Rev. Bonds (Harborview Corp. Proj.) 3.80%,
LOC Amsouth Bank, VRDN 2,920,000 2,920,000
Pinellas County Health Facs. Auth. Rev. (Pooled Hosp.
Loan Prog.) 3.80%, LOC Chemical Bank, VRDN 800,000 800,000
Pinellas County Wtr. Rev. Rfdg. Bonds 4.50% 10/1/96
(AMBAC Insured) 5,150,000 5,162,489
Plant City (South Baptist Hosp. Proj.) Series 1993, 3.80%,
LOC Barnett Bank, VRDN (b) 4,700,000 4,700,000
Seminole County School Dist. RAN 3.50% 2/19/97 6,500,000 6,512,177
Sunshine State Gov't. Fing. Commission
3.50% 6/12/96, CP 3,000,000 3,000,000
337,423,094
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ILLINOIS - 0.6 %
Chicago Illinois Single Family Mtg. Rev. Bonds Series 1996 B,
3.30%, tender 10/15/96 (MBIA Insured) (b) $ 800,000 $ 800,000
Kane, McHenry, Cook & Dekalb Counties Commty.
Unit School Dist. #300 TAN 4.25% 9/27/96 1,000,000 1,001,571
1,801,571
INDIANA - 0.3 %
Indiana Bond Bank TAN 4.25% 7/8/96 1,200,000 1,201,085
KENTUCKY - 0.3 %
Pulasky County Eastern Kentucky Pwr. Coop. Fin. Corp.
(Nat. Rural Util.) Series 1993 B, 3.20%,
tender 8/15/96 (b) 1,000,000 1,000,000
LOUISIANA - 0.2 %
Plaquemines Parish Environmental Rev. (BP Exploration &
Oil, Inc.) Series 1994, 4.10%, VRDN (b) 800,000 800,000
MICHIGAN - 0.3 %
Michigan Gen. Oblig. TAN 4% 9/30/96 1,000,000 1,002,600
MISSOURI - 0.2 %
Missouri Higher Ed. Loan Auth. Student Loan Rev.
Series 1988 A, 3.65%,
LOC Nat'l. Westminster Bank, VRDN (b) 700,000 700,000
NEW JERSEY - 0.1 %
Jackson Township BAN 3.65% 11/27/96 500,000 500,071
NEW YORK - 0.3 %
Nassau County BAN 4% 11/15/96 1,200,000 1,201,863
NORTH CAROLINA - 0.2 %
Craven County Ind. Facs. Resource Recovery Rev.
(Craven County Wood & Poll. Cont. Energy Ltd. Proj.)
Series 1989 B, 3.90%, LOC ABN-AMRO Bank, VRDN (b) 700,000 700,000
OHIO - 1.3 %
Montgomery County Gen. Oblig. BAN Series 1996 A,
4% 10/25/96 4,625,000 4,633,311
SOUTH CAROLINA - 0.4 %
South Carolina Jobs Econ. Dev. Auth. Rev.
(Wellman Inc. Proj.) Series 92, 3.95%,
LOC Wachovia Bank, VRDN (b) 500,000 500,000
South Carolina Svc. Auth. Elec. Rev.
(Elec. Sys. Expansion Proj.) 8% 7/1/96 1,000,000 1,033,562
1,533,562
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
TENNESSEE - 0.3 %
Nashville & Davidson Counties Metropolitan Wtr. &
Swr. Rev. Bonds 7.20% 1/1/97 (AMBAC Insured) $ 1,100,000 $ 1,136,207
TEXAS - 0.4 %
Brazos River Harbor Navigation Dist. Rev.
(Dow Chemical Co. Proj.) Series 1996, 4.15%, VRDN (b) 400,000 400,000
Sabine River Ind. Dev. Auth. Rev. Poll. Cont. Bonds
3.10%, tender 8/15/96
(Nat'l Rural Util. Coop. Guaranteed) 1,000,000 1,000,000
1,400,000
TOTAL INVESTMENTS - 100% $ 357,533,364
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax and Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the next interest rate reset date or, when applicable,
the final maturity date.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
(d) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Clay County Hsg. Fin.
Auth. Participating VRDN,
Series PT-61 4/21/95 $ 4,950,000
Dade County Hsg. Fin.
Auth. Participating
VRDN,
Series 1995 B 6/5/95 $ 12,500,000
INCOME TAX INFORMATION
At November 30, 1995, the fund had a capital loss carryforward of
approximately $27,100 of which $100, $1,000, $22,000 and $4,000 will expire
on November 30, 2000, 2001, 2002 and 2003, respectively.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MAY 31, 1996 (UNAUDITED)
ASSETS
Investment in securities, at value - See accompanying $ 357,533,364
schedule
Cash 260,224
Interest receivable 3,462,841
TOTAL ASSETS 361,256,429
LIABILITIES
Payable to custodian bank $ 6,065
Distributions payable 47,550
Accrued management fee 153,925
TOTAL LIABILITIES 207,540
NET ASSETS $ 361,048,889
Net Assets consist of:
Paid in capital $ 361,082,621
Accumulated net realized gain (loss) on investments (33,732)
NET ASSETS, for 361,082,621 shares outstanding $ 361,048,889
NET ASSET VALUE, offering price and redemption price per $1.00
share ($361,048,889 (divided by) 361,082,621 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
INTEREST INCOME $ 7,917,572
EXPENSES
Management fee $ 1,081,540
Non-interested trustees' compensation 744
Total expenses before reductions 1,082,284
Expense reductions (35,685) 1,046,599
NET INTEREST INCOME 6,870,973
NET REALIZED GAIN (LOSS) ON INVESTMENTS (6,336)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 6,864,637
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
MAY 31, 1996 NOVEMBER 30,
(UNAUDITED) 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 6,870,973 $ 13,518,304
Net interest income
Net realized gain (loss) (6,336) (4,277)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 6,864,637 13,514,027
FROM OPERATIONS
Distributions to shareholders from net interest income (6,870,973) (13,518,304)
Share transactions at net asset value of $1.00 per share 553,467,530 629,995,039
Proceeds from sales of shares
Reinvestment of distributions from net interest income 6,457,236 12,616,815
Cost of shares redeemed (562,265,805) (616,740,964)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (2,341,039) 25,870,890
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (2,347,375) 25,866,613
NET ASSETS
Beginning of period 363,396,264 337,529,651
End of period $ 361,048,889 $ 363,396,264
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED NOVEMBER 30, AUGUST 24, 199
ENDED 2
MAY 31, 1996 (COMMENCEME
NT
OF OPERATIONS) T
O
NOVEMBER 30,
(UNAUDITED) 1995 1994 1993 1992
SELECTED PER-SHARE
DATA
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of
period
Income from .016 .035 .024 .025 .008
Investment
Operations
Net interest
income
Less Distributions (.016) (.035) (.024) (.025) (.008)
From net interest
income
Net asset value, end $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
TOTAL RETURN B 1.59% 3.57 2.47% 2.51% 0.78%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 361,049 $ 363,396 $ 337,530 $ 306,741 $ 49,467
period (000
omitted)
Ratio of expenses .50%A .50 .00%D
to average net % .46%D .18%D
assets
Ratio of expenses to .48%A .50 .46% .18% .00%
average net assets ,C %
after expense
reductions
Ratio of net interest 3.17%A 3.52 2.43% 2.48% 2.91%A
income to 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.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1996 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Florida Municipal Income Fund(the income fund) is a fund of
Fidelity Court Street Trust. Spartan Florida Municipal Money Market Fund
(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 financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to make
certain estimates and assumptions at the date of the financial statements.
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
are valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the Board
of Trustees.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
the fiscal year. The schedules of investments include information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for market
discount, capital loss carryforwards and losses deferred due to wash sales,
and futures and options. 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.
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. 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.
DELAYED DELIVERY TRANSACTIONS. Each fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The
market value of the securities purchased or sold on a when-issued or
forward commitment basis are identified as such in the fund's schedule of
investments. The fund may receive compensation for interest forgone in the
purchase of a delayed delivery security. Losses may arise due to changes in
the market value of the underlying securities or if the counterparty does
not perform under the contract.
RESTRICTED SECURITIES. The funds are permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve
2. OPERATING POLICIES -
CONTINUED
RESTRICTED SECURITIES - CONTINUED
time-consuming negotiations and expense, and prompt sale at an acceptable
price may be difficult. At the end of the period, restricted securities
(excluding 144A issues) amounted to $17,450,000 or 4.8% of net assets for
the money market fund. The income fund had no investments in restricted
securities.
3. PURCHASES AND SALES OF INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $56,885,819 and $43,481,052, respectively.
The market value of futures contracts opened and closed during the period
amounted to $20,490,650 and $22,848,967, 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
$1,640 and $3,464 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.
5. EXPENSE REDUCTIONS.
FMR has entered into arrangements on behalf of each fund with it's
custodian and transfer agent whereby interest earned on uninvested cash
balances is used to offset a portion of each fund's expenses. During the
period, the income and money market fund's expenses were reduced by $41,994
and $35,685, respectively, under these arrangements.
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
Janice S. Bradburn, Vice President -
MONEY MARKET FUND
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer- MONEY MARKET FUND
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*
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
SPARTAN(registered trademark)
(registered trademark)
CONNECTICUT
MUNICIPAL
FUNDS
SEMIANNUAL REPORT
MAY 31, 1996
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND
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 FUND
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.
</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 RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first five
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that can help investors in every type of market.
First, take a long-term approach when investing. If you can afford to leave
your money invested through the inevitable ups and downs of financial
markets, you will greatly reduce your vulnerability to any single decline.
Over time, for example, stock prices have gone up - and have significantly
outperformed other types of investments and stayed ahead of inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.SM
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value), and the effect of the $5 account
closeout fee on an average sized account. You can also look at the fund's
income to measure performance. If Fidelity had not reimbursed certain fund
expenses during the periods shown, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Spartan Connecticut Municipal -0.60% 4.09% 39.46% 92.49%
Income Fund
Lehman Brothers Connecticut 4 Plus -0.40% 4.56% n/a n/a
Year Enhanced Municipal Bond Index
Connecticut Municipal -0.77% 3.78% n/a n/a
Debt Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on October 29, 1987. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. You can compare the fund's returns to the
performance of the Lehman Brothers Connecticut 4 Plus Year Enhanced
Municipal Bond Index, which includes Connecticut investment-grade municipal
bonds with maturities of four years or greater. To measure how the fund's
performance stacked up against its peers, you can compare it to the
Connecticut municipal debt funds average, which reflects the performance of
24 Connecticut municipal bond funds with similar objectives tracked by
Lipper Analytical Services over the past six months. Both benchmarks
include reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Connecticut Municipal 4.09% 6.88% 7.91%
Income Fund
Lehman Brothers Connecticut 4 Plus 4.56% n/a n/a
Year Enhanced Municipal Bond Index
Connecticut Municipal 3.78% n/a n/a
Debt Funds Average
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
IMAHDR PRASUN SHR__CHT 19960531 19960618 163529 S00000000000001
Spartan CT Muni Inc. LB Municipal Bond
00407 LB015
1987/10/31 10000.00 10000.00
1987/11/30 10121.14 10261.10
1987/12/31 10253.38 10409.99
1988/01/31 10621.33 10780.79
1988/02/29 10727.51 10894.75
1988/03/31 10415.77 10767.82
1988/04/30 10463.24 10849.66
1988/05/31 10515.58 10818.30
1988/06/30 10713.46 10976.57
1988/07/31 10766.94 11048.14
1988/08/31 10821.12 11057.86
1988/09/30 11033.66 11258.01
1988/10/31 11228.48 11456.71
1988/11/30 11123.75 11351.77
1988/12/31 11289.82 11467.90
1989/01/31 11442.62 11705.06
1989/02/28 11333.30 11571.50
1989/03/31 11345.51 11543.84
1989/04/30 11654.63 11817.90
1989/05/31 11899.33 12063.35
1989/06/30 12098.25 12227.17
1989/07/31 12229.60 12393.59
1989/08/31 12100.68 12272.25
1989/09/30 12064.54 12235.68
1989/10/31 12207.62 12385.32
1989/11/30 12387.76 12602.07
1989/12/31 12467.78 12705.15
1990/01/31 12357.27 12645.06
1990/02/28 12469.60 12758.23
1990/03/31 12491.34 12762.06
1990/04/30 12296.35 12669.66
1990/05/31 12602.20 12946.24
1990/06/30 12730.24 13060.04
1990/07/31 12919.64 13252.67
1990/08/31 12687.34 13060.24
1990/09/30 12769.37 13067.69
1990/10/31 12962.06 13304.73
1990/11/30 13241.66 13572.29
1990/12/31 13302.08 13631.33
1991/01/31 13449.71 13814.26
1991/02/28 13534.39 13934.45
1991/03/31 13556.04 13939.47
1991/04/30 13728.33 14125.56
1991/05/31 13850.06 14251.13
1991/06/30 13743.00 14237.02
1991/07/31 13906.13 14410.43
1991/08/31 14057.22 14600.22
1991/09/30 14183.28 14790.31
1991/10/31 14323.10 14923.42
1991/11/30 14357.59 14965.06
1991/12/31 14709.45 15286.21
1992/01/31 14731.80 15321.06
1992/02/29 14739.08 15325.97
1992/03/31 14671.72 15331.64
1992/04/30 14749.26 15468.09
1992/05/31 14951.25 15650.15
1992/06/30 15245.81 15912.76
1992/07/31 15720.88 16389.82
1992/08/31 15498.38 16230.02
1992/09/30 15604.48 16336.17
1992/10/31 15338.54 16175.58
1992/11/30 15752.71 16465.29
1992/12/31 15918.26 16633.40
1993/01/31 16155.63 16826.84
1993/02/28 16812.50 17435.47
1993/03/31 16583.73 17251.18
1993/04/30 16736.58 17425.24
1993/05/31 16834.46 17523.17
1993/06/30 17132.68 17815.63
1993/07/31 17158.04 17838.97
1993/08/31 17547.22 18210.38
1993/09/30 17760.01 18417.79
1993/10/31 17769.52 18453.34
1993/11/30 17613.41 18290.77
1993/12/31 17984.08 18676.89
1994/01/31 18192.21 18890.18
1994/02/28 17691.72 18400.92
1994/03/31 16886.79 17651.63
1994/04/30 17031.87 17801.32
1994/05/31 17133.36 17955.66
1994/06/30 17026.95 17845.95
1994/07/31 17368.71 18173.06
1994/08/31 17407.79 18235.94
1994/09/30 17121.76 17968.24
1994/10/31 16740.39 17649.12
1994/11/30 16273.39 17330.03
1994/12/31 16722.36 17711.46
1995/01/31 17257.49 18217.66
1995/02/28 17785.12 18747.42
1995/03/31 17975.02 18962.83
1995/04/30 17995.56 18985.21
1995/05/31 18555.39 19591.03
1995/06/30 18388.43 19419.61
1995/07/31 18493.83 19603.70
1995/08/31 18751.20 19852.28
1995/09/30 18902.35 19977.94
1995/10/31 19142.51 20268.42
1995/11/30 19431.77 20604.68
1995/12/31 19585.33 20802.69
1996/01/31 19756.12 20959.75
1996/02/29 19659.57 20818.27
1996/03/31 19393.70 20552.21
1996/04/30 19353.03 20494.05
1996/05/31 19315.79 20485.85
IMATRL PRASUN SHR__CHT 19960531 19960618 163535 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Connecticut Municipal Income Fund on October 31, 1987, shortly after the
fund started. As the chart shows, by May 31, 1996, the value of your
investment would have grown to $19,316 - a 93.16% increase on your initial
investment. This assumes you still own the fund on May 31, 1996, and
therefore does not include the effect of the $5 account closeout fee. For
comparison, look at how the Lehman Brothers Municipal Bond Index - which
reflects the performance of the investment-grade municipal bond market -
did over the same period. With dividends reinvested, the same $10,000 would
have grown to $20,486 - a 104.86% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX
MONTHS
ENDED YEARS ENDED NOVEMBER 30,
MAY 31,
1996 1995 1994 1993 1992 1991
Dividend return 2.53% 6.62% 5.27% 6.29% 6.59% 6.65%
Capital appreciation
returns -3.13% 12.78% -12.89% 5.52% 3.12% 1.77%
Total return -0.60% 19.40% -7.62% 11.81% 9.71% 8.42%
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 MAY 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.90(cents) 28.60(cents) 58.55(cents)
Annualized dividend rate 5.30% 5.14% 5.31%
30-day annualized yield 4.68% - -
30-day annualized tax-equivalent yield 7.66% - -
</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 $10.89 over
the past month, $11.09 over the past six months and $11.03 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% 1996 combined federal and state tax bracket but does not
reflect payment of the alternative minimum tax, if applicable.
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS:
On May 13, 1996, George Fischer became portfolio manager of Spartan
Connecticut Municipal Income Fund,
replacing Maureen Newman.
Q. HOW DID THE FUND PERFORM, GEORGE?
A. Fairly well, compared to its peer group. For the six-month period ended
May 31, 1996, the fund had a total return of -0.60%. For the same period,
the Connecticut municipal debt funds average, as tracked by Lipper
Analytical Services, returned -0.77%, while the Lehman Brothers Connecticut
4 Plus Year Enhanced Municipal Bond Index returned -0.40%. For the 12
months ended May 31, 1996, the fund returned 4.09%, the Lipper average
returned 3.78% and the index had a total return of 4.56%.
Q. WHAT WAS BEHIND THE RISE IN INTEREST RATES OVER THE PAST SEVERAL MONTHS?
A. I would say that the main "culprit" has been an economy that's turned
out to be stronger than most people had anticipated. Bond prices fell and,
correspondingly, rates rose. In general, the market prefers a steady,
low-growth environment. The rise certainly was not due to an uptick in
inflation; we haven't seen that happen for several years. From my
standpoint, having taken over management of the fund in May, I like the
fact that we had higher yields to work with in the market. That's because,
as long as inflation remains in check going forward, higher yields can help
make bonds more attractive investments relative to alternatives such as
stocks.
Q. ARE THERE ANY BENEFITS TO A STRONG ECONOMY FOR THE BOND MARKET?
A. Yes. A growing economy can reduce the need for municipalities to fund
various social services, for example, if more people are working and
providing for themselves. It can also help the revenue side, because more
workers and healthier corporations can generate better revenue streams for
municipalities to pay their debt. But you also have to keep in mind that
overall, there's probably more pressure on municipalities today than in the
past. The federal government is passing responsibilities down to the
states, where the resistance to taxes, especially new ones, is as strong as
ever.
Q. WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO SINCE YOU BEGAN MANAGING THE
FUND?
A. Actually, very few so far. As of the end of the period, I was still in
the process of reviewing all of the fund's holdings. Over the past few
years, the previous manager, Maureen Newman, had carefully selected
securities for the portfolio that she felt very strongly about. Like
Maureen, my background is also in credit analysis. From what I've seen, the
portfolio was, for the most part, in line with the way I would have
structured it through the end of the period.
Q. THE FUND HAD SIZABLE HOLDINGS IN EDUCATION BONDS DURING THE PERIOD.
WHAT'S YOUR PHILOSOPHY IN EVALUATING THE FUND'S POSITIONS IN THAT SECTOR?
A. It depends on the school. For instance, for schools such as the
University of Connecticut, I think it's important for me to see that the
state and its residents believe in and support the school. I look to see
whether parents are sending their kids there, whether there's a sense of
commitment to its future. I don't want to see what happened in California
happen here. That state went from being a national leader in support of
state colleges to withdrawing much of that support because of budget
pressures. A very different example is Quinnipiac College, a private
school. It's not a huge or super- wealthy school, but it's steady and
well-managed. It also has a couple of important niches - it's noted for
physical therapy and mass communications - that make it a first-choice
school for many students. So it's got a good story behind its attractive
bond yield, which gives the security some strength in a very competitive
environment.
Q. PUERTO RICO BONDS HAVE, IN THE PAST, PLAYED A KEY ROLE IN HELPING THE
FUND WEATHER DIFFICULTIES IN THE CONNECTICUT MUNICIPAL MARKET. HOW DO YOU
VIEW THEIR ROLE IN THE FUND'S PORTFOLIO?
A. Let me explain that a bit. From time to time, particularly when a state
is undergoing problems caused by budget difficulties or other problems,
Puerto Rico bonds - which are tax-exempt in every state - can be a useful
addition to the portfolio. That was the case during the previous period, as
Connecticut went through its biennial budget process. But, in general, I
plan to use them sparingly. I am looking to provide what shareholders want
most from this fund, which is tax-exempt income from Connecticut bonds.
Q. WE UNDERSTAND THERE WILL BE
SOME CHANGES TO THE FUND'S INVESTMENT POLICIES...
A. That's right. As of June 24, 1996, the fund will reserve the right to
invest up to 5% of its holdings - down from one-third - in below
investment-grade securities. The fund does not intend to seek out the
lower-quality, below investment-grade bonds. Instead, this change gives the
fund additional flexibility under unusual circumstances. Also, Fidelity
will use two additional credit agencies - Duff & Phelps Credit Rating Co.
and Fitch Investors Service, L.P., as well as Moody's Investors Service and
Standard & Poor's which the fund already uses - to determine the credit
quality of the fund's bonds.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SEVERAL MONTHS?
A. I'd say that the fund is very well positioned right now for the
high-tax-bracket Connecticut investor. The municipal market overall seems
to be attractive relative to corporate and U.S. Treasury bonds, as well as
to the stock market. The previous engines of job growth in the state were
defense and financial services, and nothing has stepped in to take their
place as of yet. Given that, I think that job growth will continue to be
sluggish in Connecticut and in the Northeast in general, but that the worst
may be past. I'll need to pay special attention to national trends in
health care as they relate to the fund's holdings in hospitals, which have
performed well so far. If those credits weaken, or if they don't live up to
the market's or my own expectations, I won't hesitate to sell them and look
for other good opportunities in the state.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: to provide high current
tax-free income for
Connecticut residents
START DATE: October 29, 1987
SIZE: as of May 31, 1996,
more than $331 million
MANAGER: George Fischer,
since May 1996; manager,
Spartan Bond Strategist,
since 1993; Fidelity Insured
Municipal Income, since
1995; Fidelity Municipal Bond
Fund, since 1995; joined
Fidelity in 1989
(checkmark)
GEORGE FISCHER ON HIS
INVESTMENT STYLE:
"In managing a state-specific
municipal fund, the real
challenge is to give the fund's
shareholders exactly what they
want: tax-exempt income,
delivered in a way that doesn't
expose them to undue risk.
The first way that I'll do that is
to manage the fund's duration
- - that is, its sensitivity to
interest rate changes - to be
similar to that of the fund's
benchmark index. Currently,
that's about 7 1/2 years, which
means that a movement of 100
basis points in rates would
cause the net asset value to
move by around 7 or 8% in the
opposite direction. Secondly, I
look for opportunities to invest
outside of the major issuers,
which include the general
obligations of the state, special
tax obligation bonds and those
issued by the Housing Finance
Authority. I look for what I
believe is a good combination
of high income and low risk.
Fortunately, there are some
local issuers in Connecticut
that meet these criteria,
although my style is to stay
diversified and not take on very
large positions in any one
security, no matter how
attractive it looks. The other
important aspect of my style is
to take input from our
quantitative research area.
That encompasses evaluating
weightings along the yield
curve, couponing strategies,
call features and tax
implications; in short,
everything besides credit
analysis that goes into the
pricing of a bond. I anticipate
working closely with this group
to help me craft the best
portfolio I can for my
shareholders."
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF MAY 31, 1996
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO
General Obligation 32.3 28.1
Health Care 11.9 15.0
Education 11.6 11.3
Special Tax 9.7 10.5
Housing 9.3 8.5
AVERAGE YEARS TO MATURITY AS OF MAY 31, 1996
6 MONTHS AGO
Years 14.8 15.9
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 MAY 31, 1996
6 MONTHS AGO
Years 7.4 7.3
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
CAN ALSO INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THE ABOVE EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF MAY 31, 1996 AS OF NOVEMBER 30, 1995
Aaa 41.9%
Aa, A 40.3%
Baa 13.4%
Ba, B 0.0%
Non-rated 0.5%
Short-term
investments 3.9%
Aaa 33.7%
Aa, A 44.6%
Baa 14.2%
Ba, B 2.2%
Non-rated 0.9%
Short-term
investments 4.4%
Row: 1, Col: 1, Value: 41.9
Row: 1, Col: 2, Value: 40.3
Row: 1, Col: 3, Value: 13.4
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 1.5
Row: 1, Col: 6, Value: 3.9
Row: 1, Col: 1, Value: 33.7
Row: 1, Col: 2, Value: 44.6
Row: 1, Col: 3, Value: 14.2
Row: 1, Col: 4, Value: 3.2
Row: 1, Col: 5, Value: 1.9
Row: 1, Col: 6, Value: 4.4
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS.
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND
INVESTMENTS MAY 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 96.1%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CONNECTICUT - 93.4%
Branford Gen. Oblig. Unltd. Tax:
7% 6/15/08 (FGIC Insured) Aaa $ 500,000 $ 565,625
7% 6/15/09 (FGIC Insured) Aaa 500,000 564,375
Bridgeport Gen. Oblig.:
Series A:
5.40% 9/1/08 (AMBAC Insured) Aaa 550,000 533,500
5.50% 9/1/09 (AMBAC Insured) Aaa 550,000 532,813
5.60% 9/1/10 (AMBAC Insured) Aaa 550,000 537,625
5.70% 9/1/11 (AMBAC Insured) Aaa 550,000 536,938
Series B, 7.75% 11/15/10 Baa 3,235,000 3,457,406
Unltd. Tax Series A:
7.20% 3/1/98 Baa 930,000 960,225
7.40% 3/1/00 Baa 1,080,000 1,142,100
7.25% 6/1/02 Baa 565,000 592,544
6% 9/1/03 (AMBAC Insured) Aaa 4,475,000 4,687,563
8.75% 8/15/05 (FGIC Insured) Aaa 670,000 823,263
6% 9/1/05 (AMBAC Insured) Aaa 4,000,000 4,175,000
7.625% 1/15/09 Baa 1,500,000 1,576,875
Canterbury Gen. Oblig. Unltd. Tax:
7.20% 5/1/05 A 350,000 388,938
7.20% 5/1/06 A 195,000 217,913
Cheshire Gen. Oblig. Unltd. Tax:
6.90% 2/15/06 Aa 100,000 113,250
6.90% 2/15/07 Aa 100,000 113,375
6.90% 2/15/08 Aa 100,000 113,500
Connecticut Clean Wtr. Fund Rev.:
Series 1991, 7% 1/1/11 Aaa 2,500,000 2,728,125
5.875% 11/1/03 Aaa 1,000,000 1,060,000
5.875% 5/1/04 Aaa 1,000,000 1,057,500
6.80% 7/1/05 Aaa 1,000,000 1,087,500
5.875% 4/1/08 Aaa 1,000,000 1,041,250
6% 10/1/12 (d) Aaa 6,000,000 6,172,500
Connecticut Dev. Auth. Health Care Rfdg.
(Duncaster, Inc. Proj.) 6.75% 9/1/15 Aa3 3,000,000 3,090,000
Connecticut Dev. Auth. Poll. Cont. Rev.:
(New England Pwr. Co. Proj.)
7.25% 10/15/15 A1 3,000,000 3,202,500
(United Illuminating Co. Proj.)
9.50% 6/1/16 BBB- 2,625,000 2,756,066
Connecticut Dev. Auth. Rev. (Hartford Civic Ctr.)
Series A:
6% 11/15/07 A1 1,525,000 1,599,344
6% 11/15/08 A1 3,050,000 3,170,094
4.75% 11/15/13 A1 1,525,000 1,294,344
Connecticut Dev. Auth. Wtr. Facs. Rev. Rfdg.
(Bridgeport Hydraulic Co. Proj.)
7.25% 6/1/20 A+ 1,000,000 1,073,750
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Gen. Oblig.:
Rfdg. Series B, 5.30% 3/15/07 Aa $ 1,500,000 $ 1,486,875
Series A:
6.10% 3/15/02 Aa 3,000,000 3,172,500
7% 3/15/03 Aa 5,000,000 5,550,000
Series B, 6% 10/1/05 Aa 5,000,000 5,312,500
(Cap. Appreciation College Savings Plan):
Series A, 0% 12/1/07 Aa 4,000,000 2,130,000
Unltd. Tax Series B, 0% 11/1/09 Aa 7,390,000 3,473,300
(College Savings Plan):
Series A:
0% 5/15/07 Aa 2,250,000 1,234,688
0% 5/15/10 Aa 7,980,000 3,620,925
Series B:
0% 11/15/10 Aa 4,460,000 1,967,975
0% 11/1/06 Aa 2,800,000 1,599,500
5% 10/1/06 (FGIC Insured) Aaa 1,020,000 997,050
6% 3/15/01 Aa 2,405,000 2,528,256
Connecticut Health & Ed. Facs. Auth. Rev.:
Rfdg. (Quinnipiac College) Series D:
6% 7/1/13 BBB- 3,500,000 3,259,375
6% 7/1/23 BBB- 3,975,000 3,567,563
(Bristol Hosp.) Issue A:
7% 7/1/09 (MBIA Insured) Aaa 1,750,000 1,879,063
7% 7/1/20 (MBIA Insured) Aaa 4,180,000 4,446,475
(Connecticut College) Issue B, 6.625% 7/1/11
(MBIA Insured) Aaa 1,200,000 1,282,500
(Kent School):
Series B:
3.90% 7/1/97 (MBIA Insured) Aaa 250,000 249,318
4% 7/1/98 (MBIA Insured) Aaa 200,000 198,500
4.125% 7/1/99 (MBIA Insured) Aaa 325,000 320,938
4.40% 7/1/01 (MBIA Insured) Aaa 250,000 244,688
4.50% 7/1/02 (MBIA Insured) Aaa 305,000 297,756
4.60% 7/1/03 (MBIA Insured) Aaa 150,000 146,063
4.70% 7/1/04 (MBIA Insured) Aaa 500,000 485,000
4.875% 7/1/05 (MBIAInsured) Aaa 400,000 389,500
5.10% 7/1/07 (MBIA Insured) Aaa 265,000 257,713
5.25% 7/1/08 (MBIA Insured) Aaa 305,000 297,375
5.375% 7/1/09 (MBIA Insured) Aaa 845,000 822,819
5.40% 7/1/10 (MBIA Insured) Aaa 685,000 664,450
5.50% 7/1/15 (MBIA Insured) Aaa 3,575,000 3,400,719
5.40% 7/1/23 (MBIA Insured) Aaa 2,000,000 1,842,500
(Lutheran Gen. Health Care Sys.) 7.375%
7/1/19 (Escrowed to Maturity) (e) Aaa 3,195,000 3,734,156
(New Britain Mem. Hosp.)
Series A, 7.75% 7/1/22 BBB- 6,500,000 6,784,375
(Quinnipiac College) Series C, 7.75% 7/1/20
(Pre-Refunded to 7/1/00 @102) (e) BBB- 1,000,000 1,128,750
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Health & Ed. Facs. Auth. Rev. - continued
(St. Mary's Hosp.) Issue B:
7.60% 7/1/03 Baa $ 900,000 $ 943,875
7.80% 7/1/09 Baa 4,525,000 4,711,656
(St. Raphael Hosp.) Series H:
6.50% 7/1/11 (AMBAC Insured) Aaa 2,780,000 3,026,725
6.50% 7/1/13 (AMBAC Insured) Aaa 3,125,000 3,429,688
5.25% 7/1/14 (AMBAC Insured) Aaa 4,400,000 4,141,500
(Sacred Heart Univ.) Series A:
6.85% 7/1/22 LOC Fleet Nat'l. Bank
(Pre-Refunded to 7/1/02 @102) (e) Baa 1,000,000 1,113,750
6.50% 7/1/06 Baa 250,000 247,188
6.50% 7/1/16 Baa 4,000,000 3,980,000
(Sharon Healthcare, Inc.):
Series A:
8.75% 7/1/06
(Pre-Refunded to 7/1/01 @103) (e) AAA 450,000 540,000
9% 7/1/13
(Pre-Refunded to 7/1/01 @103) (e) AAA 1,300,000 1,573,000
9.20% 7/1/21
(Pre-Refunded to 7/1/01 @103) (e) AAA 1,500,000 1,830,000
(The Griffin Hosp.) Series A, 6% 7/1/13 Baa1 850,000 785,188
(Yale-New Haven Hosp.) Series F, 7.10%
7/1/25 (MBIA Insured) Aaa 5,000,000 5,337,500
(Yale Univ.) 5.929% 6/10/30 Aaa 14,000,000 13,737,500
Connecticut Higher Ed. Supplemental Loan
Auth. Rev. (b):
Series A:
7.375% 11/15/05 A1 525,000 550,594
7.50% 11/15/10 A1 1,815,000 1,905,750
(Family Ed. Loan Prog.)
Series A, 7.20% 11/15/10 A 890,000 936,725
Connecticut Hsg. Fin. Auth. (Hsg. Mtg. Fin. Prog.):
Series A, Subseries A-2, 6.45% 5/15/22 Aa 5,500,000 5,541,250
Series B:
6.20% 5/15/12 Aa 3,000,000 3,030,000
Subseries B-1:
7.55% 11/15/08 Aa 250,000 253,750
6.125% 5/15/18 Aa 4,650,000 4,655,813
Series C, 7.625% 11/15/17 Aa 530,000 546,563
Connecticut Hsg. Fin. Auth.:
(Hsg. Mtg. Fin. Prog.):
Series E:
6.20% 5/15/14 Aa 1,000,000 1,008,750
Subseries E-1, 6.30% 5/15/17 Aa 1,950,000 1,957,313
Series F:
Subseries F-1:
5.45% 11/15/08 Aa 1,635,000 1,610,475
6% 5/15/17 Aa 1,500,000 1,479,375
5.90% 11/15/15 Aa 5,000,000 4,987,500
6.05% 5/15/17 Aa 3,600,000 3,582,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Muni. Elec. Energy Coop. Pwr.
Supply Sys. Rev.:
6% 1/1/04 (MBIA Insured) Aaa $ 3,190,000 $ 3,349,500
6% 1/1/05 (MBIA Insured) Aaa 3,380,000 3,544,775
6% 1/1/06 (MBIA Insured) Aaa 2,000,000 2,092,500
Connecticut Resource Recovery Auth. Rev.:
Rfdg. Series A, 5.50% 11/15/11
(MBIA Insured) (f) Aaa 2,500,000 2,378,125
Series B, 7.30% 11/15/12 Aaa 775,000 810,371
(American Refuse Fuel Co.) 8.10% 11/15/15 A2 4,500,000 4,888,125
5.25% 11/15/08 (MBIA Insured) (f) Aaa 8,000,000 7,620,000
5.375% 11/15/10 (MBIA Insured) (f) Aaa 1,000,000 946,250
Connecticut Spl. Tax. Oblig. Rev.:
Rfdg. (Trans. Infrastructure):
Series 1993 A, 5.375% 9/1/08 A1 6,705,000 6,579,281
Series A, 5.25% 9/1/07 A1 2,165,000 2,121,700
(Trans. Infrastructure):
Series A:
6.50% 6/1/03 A1 2,800,000 3,034,500
7.125% 6/1/10 A1 3,550,000 4,073,625
Series B:
0% 6/1/08 A1 3,500,000 1,802,500
6.15% 9/1/09 A1 1,500,000 1,591,875
6.125% 9/1/12 A1 5,000,000 5,181,250
6.50% 10/1/10 A1 3,250,000 3,558,750
6.50% 10/1/12 A1 3,500,000 3,766,875
Eastern Resource Recovery Auth. Solid Waste Rev.
(Wheelabrator Lisbon Proj.) (b):
Series A:
5% 1/1/04 A 1,000,000 958,750
5.50% 1/1/15 A 8,000,000 7,150,000
5.50% 1/1/20 A 3,000,000 2,625,000
Franklin Gen. Oblig. Unltd. Tax:
7.30% 3/15/04 A 225,000 247,219
7.30% 3/15/05 A 225,000 249,188
7.30% 3/15/06 A 225,000 252,281
Hartford County Metropolitan Dist. Gen. Oblig.
6.20% 11/15/09 Aa1 250,000 266,875
Hartford County Metropolitan Dist. Gen. Oblig.
School Boards Unltd. Tax 9.50% 6/1/03 Aa1 100,000 125,375
Manchester Redev. Agcy. Multi-Family Mtg.
Rev. Rfdg. (Bennet Hsg. Dev.)
7.20% 12/1/18 - 1,520,000 1,529,500
Meriden Gen. Oblig. Unltd. Tax 7% 10/1/07
(MBIA Insured) Aaa 500,000 566,875
Milford Gen. Oblig.:
5.20% 1/15/11 Aa 550,000 520,438
Unltd. Tax:
6.70% 2/1/05 Aa 400,000 444,000
6.70% 2/1/08 Aa 315,000 350,831
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Monteville Gen. Oblig.:
6.30% 3/1/10 Aa $ 405,000 $ 433,856
Unltd. Tax:
7% 3/15/13 Aa 220,000 250,800
7% 3/15/14 Aa 220,000 250,525
7% 3/15/15 Aa 210,000 238,875
Naugatuck Gen. Oblig. Unltd. Tax:
7.25% 9/1/04 (MBIA Insured) Aaa 215,000 245,638
6.90% 6/15/07 (FGIC Insured) Aaa 485,000 542,594
7.40% 9/1/07 (MBIA Insured) Aaa 370,000 430,125
7.40% 9/1/08 (MBIA Insured) Aaa 370,000 430,125
New Britain Gen. Oblig.:
Series B, 6% 3/1/12 (MBIA Insured) Aaa 2,000,000 2,055,000
5% 2/1/12 (MBIA Insured) Aaa 885,000 814,200
5% 2/1/13 (MBIA Insured) Aaa 885,000 806,456
Unltd. Tax:
Rfdg. 6% 2/1/12 (MBIA Insured) Aaa 400,000 411,000
7% 4/1/07 (MBIA Insured) Aaa 580,000 650,325
7% 4/1/08 (MBIA Insured) Aaa 580,000 652,500
New Haven Gen. Oblig.:
Rfdg. Series A:
5% 8/1/07 (FGIC Insured) Aaa 1,000,000 961,250
5% 8/1/08 (FGIC Insured) Aaa 2,720,000 2,587,400
5% 8/1/09 (FGIC Insured) Aaa 1,775,000 1,668,500
Series A, 7.40% 3/1/12 Baa 1,000,000 1,052,500
7% 2/15/03 (FGIC Insured) Aaa 1,000,000 1,113,750
7% 2/15/04 (FGIC Insured) Aaa 1,150,000 1,289,437
7% 2/15/05 (FGIC Insured) Aaa 1,250,000 1,409,374
8.25% 8/15/01 Baa 3,280,000 3,710,500
6% 8/1/05 (FGIC Insured) Aaa 3,410,000 3,576,237
Newington Unltd. Tax:
6.50% 2/1/06 A1 320,000 345,200
6.60% 2/1/07 A1 200,000 218,500
North Haven Unltd. Tax 7% 10/1/08 Aa 375,000 424,218
North Thompsonville Fire Dist. #10:
6.75% 6/1/07 (MBIA Insured) Aaa 180,000 200,475
6.75% 6/1/08 (MBIA Insured) Aaa 190,000 211,138
6.75% 6/1/09 (MBIA Insured) Aaa 200,000 224,750
6.75% 6/1/10 (MBIA Insured) Aaa 215,000 242,144
6.75% 6/1/11 (MBIA Insured) Aaa 230,000 259,038
Norwalk Hsg. Auth. Mtg. Rev. (Monterey Village -
Section 8) Series 1985 B, 9% 11/1/99 BBB 145,000 148,625
Plainville Gen. Oblig.:
6.60% 8/15/08 A1 250,000 273,125
Unltd. Tax:
6.60% 8/15/09 A1 250,000 274,063
6.60% 8/15/10 A1 250,000 274,687
6.60% 8/15/11 A1 250,000 275,937
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
South Central Connecticut Wtr. Sys. Auth. Rev.
11th Series, 5.625% 8/1/05 (FGIC Insured) Aaa $ 5,000,000 $ 5,112,500
Stamford Gen. Oblig. Unltd. Tax:
6.60% 1/15/07 Aaa 295,000 329,294
6.60% 1/15/08 Aaa 1,480,000 1,650,200
6.60% 1/15/09 Aaa 1,000,000 1,112,500
Stratford Gen. Oblig. Unltd. Tax 7% 6/15/08
(FGIC Insured) Aaa 500,000 564,375
Thomaston Unltd. Tax 6.50% 8/1/09 A 210,000 225,225
Univ. of Connecticut 5.50% 2/1/06
(FGIC Insured) Aaa 3,070,000 3,112,213
Vernon Gen. Oblig. Unltd. Tax:
7.10% 10/15/07 A1 250,000 289,375
7.10% 10/15/08 A1 250,000 289,375
Voluntown Gen. Oblig. Unltd. Tax:
6.75% 10/1/03 A 210,000 226,274
6.75% 10/1/04 A 210,000 227,062
6.80% 10/1/06 A 210,000 231,524
6.80% 10/1/07 A 210,000 231,000
6.80% 10/1/08 A 210,000 235,200
6.80% 10/1/09 A 185,000 206,505
West Haven Impt. Unltd. Tax 6.70% 2/15/04
(MBIA Insured) Aaa 710,000 783,662
Winchester Gen. Oblig. Unltd. Tax:
7.10% 11/15/06 A1 125,000 140,780
7.10% 11/15/08 A1 110,000 125,262
Wolcott Gen. Oblig. Unltd. Tax :
7% 6/15/09 (FGIC Insured) Aaa 445,000 493,949
7% 6/15/10 (FGIC Insured) Aaa 440,000 491,149
Woodstock Spl. Oblig. Rev. (Woodstock Academy)
7% 3/1/08 (AMBAC Insured) Aaa 725,000 788,437
315,627,456
PUERTO RICO - 2.7%
Puerto Rico Commonwealth Gen. Oblig. Unltd. Tax
6.40% 7/1/11 Baa1 1,500,000 1,558,124
Puerto Rico Commonwealth Hwy. & Trans. Auth.
Rev. Rfdg. Series V, 6.625% 7/1/12 Baa1 1,750,000 1,844,063
Puerto Rico Elec. Pwr. Auth. Rev.:
Rfdg. Series W, 7% 7/1/07 (MBIA Insured) Aaa 2,000,000 2,270,000
7% 7/1/07 (MBIA Insured) Aaa 2,000,000 2,270,000
Puerto Rico Indl., Med. & Envir. Poll. Cont.
Facs. Fing. Auth. Rev. (Motorola, Inc.)
Series A, 6.75% 1/1/14 Aa3 1,285,000 1,358,888
9,301,075
TOTAL MUNICIPAL BONDS
(Cost $317,658,505) 324,928,531
MUNICIPAL NOTES (A) - 3.9%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CONNECTICUT - 3.2%
Connecticut Dev. Auth. (Light & Pwr. Co. Proj.)
Series 1993 A, 3.65%,
LOC Deutsche Bank, VRDN VMIG 1 $ 5,600,000 $ 5,600,000
Connecticut Dev. Auth. Health Care Rev.
(Corp. for Independent Living Proj.) Series 1990,
5.35%, LOC Chemical Bank, VRDN VMIG 1 1,600,000 1,600,000
Connecticut Economic Recovery Notes Gen. Oblig.
Unltd. 4.25% 12/15/96 Aaa 1,000,000 1,003,760
Connecticut Health & Ed. Facs. Auth. Rev.
(Kent School) Series B, 3.70% 7/1/96
(MBIA Insured) Aaa 200,000 199,960
Connecticut Hsg. Fin. Auth. (Hsg. Mtg. Fin. Prog.)
Series 1995 G, 3.55% (AMBAC Insured)
(BPA Morgan Guaranty Trust Co.) VRDN VMIG 1 1,265,000 1,265,000
Connecticut Spl. Tax Oblig. Rev. (2nd Lien)
(Trans. Infrastructure Purpose) Series 1, 3.60%,
LOC Commerzbank, VRDN VMIG 1 1,000,000 1,000,000
10,668,720
PUERTO RICO - 0.7%
Puerto Rico Gov't. Dev. Bank, CP:
3.60% 6/11/96 A-1+ 1,300,000 1,300,051
3.60% 7/17/96 A-1+ 500,000 500,094
Puerto Rico Commonwealth Highway & Trans. Rev.
Participating VRDN, Series PA-114, 3%
(Liquidity Facility Merrill Lynch & Co.) (g) A-1+ 600,000 600,000
2,400,145
TOTAL MUNICIPAL NOTES
(Cost $13,068,865) 13,068,865
TOTAL INVESTMENTS - 100%
(Cost $330,727,370) $ 337,997,396
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
SOLD
140 Municipal Bond Contracts June 1996 $ 15,649,375 $ 190,293
THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 4.6%
SECURITY TYPE ABBREVIATIONS
CP - Commercial Paper
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(c) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(d) A portion of the Security was pledged to cover margin requirements for
futures contracts. At the period end, the value of securities pledged
amounted to $3,374,300.
(e) Security collateralized by an amount sufficient to pay interest and
principal.
(f) Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
(g) Provides evidence of ownership in one or more underlying municipal
bonds.
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 77.6% AAA, AA, A 78.6%
Baa 8.2% BBB 7.9%
Ba 0.0% BB 2.3%
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 0.5%. FMR has
determined that unrated debt securities that are lower quality account for
0.5% of the total value of investment in securities.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 32.3%
Health Care 11.9
Education 11.6
Special Tax 9.7
Housing 9.3
Electric Revenue 7.4
Water & Sewer 5.1
Industrial Development 5.0
Others
(individually less than 5%) 7.7
TOTAL 100.0%
INCOME TAX INFORMATION
At May 31, 1996, the aggregate cost of investment securities for income tax
purposes was $330,730,334. Net unrealized appreciation aggregated
$7,267,062 of which $12,288,180 related to appreciated investment
securities and $5,021,118 related to depreciated investment securities.
At November 30, 1995, the fund was required to defer $2,575,125 of losses
on futures contracts.
At November 30, 1995, the fund had a capital loss carryforward of
approximately $2,544,000 all of which will expire on November 30, 2003.
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MAY 31, 1996 (UNAUDITED)
1.ASSETS 2. 3.
4.Investment in securities, at value (cost $330,727,370) 5. $ 337,997,396
- - See accompanying schedule
6.Interest receivable 7. 5,061,327
8.Receivable for daily variation on futures contracts 9. 161,875
10. 11.TOTAL ASSETS 12. 343,220,598
13.LIABILITIES 14. 15.
16.Payable to custodian bank $ 71,680 17.
18.Payable for investments purchased 11,182,310 19.
Delayed delivery
20.Payable for fund shares redeemed 263,975 21.
22.Distributions payable 359,270 23.
24.Accrued management fee 154,597 25.
26. 27.TOTAL LIABILITIES 28. 12,031,832
29.30.NET ASSETS 31. $ 331,188,766
32.Net Assets consist of: 33. 34.
35.Paid in capital 36. $ 326,079,967
37.Accumulated undistributed net realized gain (loss) on 38. (2,351,520)
investments
39.Net unrealized appreciation (depreciation) on 40. 7,460,319
investments
41.42.NET ASSETS, for 30,518,501 shares outstanding 43. $ 331,188,766
44.45.NET ASSET VALUE, offering price and redemption 46. $10.85
price per share ($331,188,766 (divided by) 30,518,501 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
47.48.INTEREST INCOME 49. $ 9,853,403
50.EXPENSES 51. 52.
53.Management fee $ 953,466 54.
55.Non-interested trustees' compensation 596 56.
57. Total expenses before reductions 954,062 58.
59. Expense reductions (66,383) 887,679
60.61.NET INTEREST INCOME 62. 8,965,724
63.REALIZED AND UNREALIZED GAIN (LOSS) 65. 66.
64.Net realized gain (loss) on:
67. Investment securities 1,901,719 68.
69. Futures contracts 310,695 2,212,414
70.Change in net unrealized appreciation (depreciation) 71. 72.
on:
73. Investment securities (13,691,552) 74.
75. Futures contracts 751,349 (12,940,203)
76.77.NET GAIN (LOSS) 78. (10,727,789)
79.80.NET INCREASE (DECREASE) IN NET ASSETS 81. $ (1,762,065)
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
MAY 31, 1996 NOVEMBER 30,
(UNAUDITED) 1995
82.INCREASE (DECREASE) IN NET ASSETS
83.Operations $ 8,965,724 $ 19,553,566
Net interest income
84. Net realized gain (loss) 2,212,414 (1,590,927)
85. Change in net unrealized appreciation (depreciation) (12,940,203) 41,663,100
86. 87.NET INCREASE (DECREASE) IN NET ASSETS (1,762,065) 59,625,739
RESULTING FROM OPERATIONS
88.Distributions to shareholders (8,965,724) (19,553,566)
From net interest income
89. From net realized gain - (699,611)
90. In excess of net realized gain - (243,807)
91. 92.TOTAL DISTRIBUTIONS (8,965,724) (20,496,984)
93.Share transactions 20,131,555 49,373,918
Net proceeds from sales of shares
94. Reinvestment of distributions 6,956,076 16,090,044
95. Cost of shares redeemed (44,030,398) (61,340,934)
96. Redemption fees 10,380 14,848
97.98. (16,932,387) 4,137,876
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
99. 100.TOTAL INCREASE (DECREASE) IN NET ASSETS (27,660,176) 43,266,631
101.NET ASSETS 102. 103.
104. Beginning of period 358,848,942 315,582,311
105. End of period $ 331,188,766 $ 358,848,942
106.OTHER INFORMATION 108. 109.
107.Shares
110. Sold 1,812,194 4,630,644
111. Issued in reinvestment of distributions 627,842 1,496,456
112. Redeemed (3,964,211) (5,779,595)
113. Net increase (decrease) (1,524,175) 347,505
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED NOVEMBER 30,
ENDED
MAY 31, 1996
(UNAUDITED) 1995 1994E 1993 1992 1991
114.SELECTED PER-SHARE DATA
115.Net asset value, beginning of period $ 11.200 $ 9.960 $ 11.840 $ 11.220 $ 10.880 $ 10.730
116.Income from Investment Operations .286 .617 .640 .680 .689 .684
Net interest income
117. Net realized and unrealized gain
(loss) (.350) 1.270 (1.472) .619 .338 .188
118. Total from investment operations (.064) 1.887 (.832) 1.299 1.027 .872
119.Less Distributions (.286) (.617) (.640) (.680) (.689) (.684)
From net interest income
120. From net realized gain - (.020) (.410) - - (.040)
121. In excess of net realized gain - (.010) - - - -
122. Total distributions (.286) (.647) (1.050) (.680) (.689) (.724)
123.Redemption fees added to paid in
capital .000 .000 .002 .001 .002 .002
124.Net asset value, end of period $ 10.850 $ 11.200 $ 9.960 $ 11.840 $ 11.220 $ 10.880
125.TOTAL RETURN B (.60)% 19.41 (7.61) 11.81 9.72 8.43%
% % % %
126.RATIOS AND SUPPLEMENTAL DATA
127.Net assets, end of period (000
omitted) $ 331,189 $ 358,849 $ 315,582 $ 450,113 $ 413,748 $ 346,781
128.Ratio of expenses to average net
assets .55%A .55 .55% .55 .55 .55%
% % % C
129.Ratio of expenses to average net
assets after expense reductions .51%A, .55 .55% .55 .55 .55%
D % % %
130.Ratio of net interest income to
average net assets 5.17%A 5.73 5.83% 5.81 6.21 6.34%
% % %
131.Portfolio turnover rate 32%A 39 11% 45 11 6%
% % %
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
E 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, NET INTEREST INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
FINANCIAL HIGHLIGHTS
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET FUND
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 on an average sized account.
Yield measures the income paid by a fund. Since a money market fund tries
to maintain a $1 share price, yield is an important measure of performance.
If Fidelity had not reimbursed certain fund expenses during the periods
shown, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Spartan Connecticut Municipal 1.56% 3.23% 15.49% 16.53%
Money Market Fund
Connecticut Tax-Free 1.43% 2.97% 13.40% n/a
Money Market Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on March 4, 1991. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, the value of your
investment would be $1,050. To measure how the fund's performance stacked
up against its peers, you can compare it to the Connecticut tax-free money
market funds average, which reflects the performance of 11 Connecticut
tax-free money market funds with similar objectives tracked by IBC
Financial Data, Inc. over the past year. (The periods covered by IBC
Financial Data Inc. numbers are the closest available match to those
covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Connecticut Municipal 3.23% 2.92% 2.96%
Money Market Fund
Connecticut Tax-Free 2.97% 2.54% n/a
Money Market Funds Average
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
5/29/95 8/28/95 11/27/95 2/26/96 5/27/96
Spartan Connecticut 3.64% 3.22% 3.32% 2.94% 3.19%
Municipal
Money Market Fund
Connecticut Tax-Free 3.37% 3.01% 3.09% 2.67% 2.91%
Money Market Funds
Average
Spartan Connecticut 5.92% 5.24% 5.38% 4.77% 5.19%
Municipal
Money Market Fund -
Tax-equivalent
Portion of fund's income 11.16% 9.50% 19.03% 18.12% 13.63%
subject to state taxes
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 Connecticut tax-free money market funds average
as tracked by IBC Financial Data, Inc. Or you can look at the fund's
tax-equivalent yield, which is based on a combined effective 1996 federal
and state income tax rate of 38.88% and reflects that a portion of the
fund's income was subject to state taxes. A portion of the fund's income
may be subject to the alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free
investments are usually lower
than yields on taxable
investments. However, a
straight comparison between
the two may be misleading
because it ignores the way
taxes reduce taxable returns.
Tax-equivalent yield - the
yield you'd have to earn on a
similar taxable investment to
match the tax-free yield -
makes the comparison more
meaningful. Keep in mind that
the U.S. Government neither
insures nor guarantees a
money market fund. In fact,
there is no assurance that a
money market fund will
maintain a $1 share price.
(checkmark)
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jeff Parker,
Portfolio Manager of Spartan Connecticut Municipal Money Market Fund
Q. JEFF, HOW HAS THE INVESTMENT CLIMATE CHANGED DURING THE PAST SIX MONTHS?
A. When the period began, the Federal Reserve was in an easing mode, having
lowered the federal funds rate - the rate banks charge each other for
overnight loans - the previous July. With inflation under control, Congress
and the White House apparently making progress toward a balanced budget
agreement, and the economy losing steam, many market participants believed
it was only a matter of time before the Fed cut interest rates again. It
therefore came as no surprise when the Fed lowered the federal funds rate
one-quarter percentage point in early December, and lowered it again by an
equal amount on the last day of January 1996.
Q. WHAT HAS CHANGED SINCE THEN?
A. When Fed Chairman Alan Greenspan, testifying before Congress in
mid-February, seemed to suggest that the economy was basically sound, the
consensus shifted and rates backed up. Then came the infamous February
employment report, which was significantly stronger than most analysts had
predicted. Since then, a string of positive indicators has left little
doubt in most analysts' minds that, for the time being, the economy is in
no need of further stimulus.
Q. HOW DID YOU RESPOND TO CHANGING CONDITIONS?
A. The fund began the period with an average maturity of 62 days. In a
declining-rate environment, it usually makes sense to lock in attractive
rates for as long as possible by extending the fund's average maturity. As
evidence mounted that the economy was not as weak as we had thought, I
sought greater flexibility by reducing the fund's average maturity. By the
time the February employment report was released in early March, the fund's
average maturity was 42 days. Since then, I've held the average maturity
relatively stable, ending the period at 47 days.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on May 31, 1996 was 3.18%, compared to 3.31%
on November 30, 1995. The latest yield was the equivalent of a taxable
yield of 5.17% for Connecticut investors in the 38.88% combined federal and
state tax bracket. The fund's total return during the six-month period was
1.56%. That beat the total return of 1.43% for the Connecticut tax-free
money market funds average, according to IBC Financial Data, Inc.
Q. WHAT'S THE OUTLOOK?
A. Given recent contradictory economic signals, I think it's likely the Fed
will stand pat for a while. Certainly no one expects the Fed to lower rates
again anytime soon. On the other hand, there have been ominous signs of
growing inflationary pressures in recent months. And if we continue to see
evidence of strong economic performance in key indicators such as
employment, housing and consumer spending, it's possible that the Fed will
choose to raise rates, perhaps sometime during the third quarter. Given the
lack of a solid direction, I'll probably aim to keep the fund's average
maturity about where it is right now - between 40 and 50 days. That gives
me maximum flexibility to adapt to changing conditions and take advantage
of buying opportunities as they arise.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high current tax-free
income and stability by
investing mainly in high-quality,
short-term Connecticut
municipal money market
securities
START DATE: March 4, 1991
SIZE: as of May 31, 1996,
more than $183 million
MANAGER: Jeff Parker, since
June, 1995; manager, Fidelity
Connecticut Municipal Money
Market, Fidelity Michigan
Municipal Money Market,
Fidelity New Jersey Municipal
Money Market, and Spartan
New Jersey Municipal Money
Market, since June 1995;
joined Fidelity in 1991
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
usually long-term security that
gives the bond holder the
option to redeem the bond at
face value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
5/31/96 11/30/95 5/31/95
0 - 30 59 65 61
31 - 90 28 11 26
91 - 180 8 3 12
181 - 397 5 21 1
WEIGHTED AVERAGE MATURITY
5/31/96 11/30/95 5/31/95
Spartan Connecticut
Municipal Money Market
Fund 47 days 62 days 30 days
Connecticut Tax-Free
Money Market Funds
Average * 27 days 58 days 38 days
ASSET ALLOCATION
AS OF MAY 31, 1996 AS OF NOVEMBER 30, 1995
Row: 1, Col: 1, Value: 54.0
Row: 1, Col: 2, Value: 14.0
Row: 1, Col: 3, Value: 15.0
Row: 1, Col: 4, Value: 7.0
Row: 1, Col: 5, Value: 10.0
Row: 1, Col: 1, Value: 53.0
Row: 1, Col: 2, Value: 22.0
Row: 1, Col: 3, Value: 16.0
Row: 1, Col: 4, Value: 4.0
Row: 1, Col: 5, Value: 5.0
Variable rate
demand notes
(VRDNs) 54%
Commercial
paper 14%
Tender bonds 15%
Municipal
notes 7%
Other 10%
Variable rate
demand notes
(VRDNs) 53%
Commercial
paper 22%
Tender bonds 16%
Municipal
notes 4%
Other 5%
* SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO
INVESTMENTS MAY 31, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CONNECTICUT - 74.2%
Bethel BAN 4.25% 7/12/96 $ 600,000 $ 600,324
Clipper Participating VRDN, Series 94-1,
3.60% (Liquidity Facility State Street Bank & Trust Co.) (c) 4,934,800
4,934,800
Connecticut Dev. Auth. Health Care Rev.
(Corp. for Independent Living Proj.) Series 1990,
3.55%, LOC Chemical Bank, VRDN 8,700,000 8,700,000
Connecticut Dev. Auth. Ind. Dev. Rev.
(W.E. Bassett Co. Proj.) Series 1986, 3.85%,
LOC Bank of Boston, VRDN (b) 1,000,000 1,000,000
Connecticut Dev. Auth. Poll. Cont. Rev. (Light & Pwr. Co. Proj.)
VRDN (b):
Series 1993 B, 3.65%, LOC Union Bank of Switzerland 8,000,000
8,000,000
Series 1996 A, 3.65%,
LOC Canadian Bank Imperial Bank 5,200,000 5,200,000
Connecticut Dev. Auth. Solid Waste Disp. Fac. Rev.
(Rand-Whitney Containerboard) 3.35%,
LOC Chase Manhattan Bank, VRDN (b) 3,300,000 3,300,000
Connecticut Dev. Auth. Wtr. Facs. Rev.
(Bridgeport Hydraulic Co.) Series 1995, 3.25%,
LOC Society Generale, VRDN 4,600,000 4,600,000
Connecticut Econ. Gen. Oblig. Bonds 4.25% 12/15/96 2,535,000 2,543,475
Connecticut Econ. Recovery Notes
Series A, 5.50% 6/15/96 600,000 600,494
Connecticut Gen. Oblig.:
Bonds:
6.50% 8/1/96 1,000,000 1,004,749
Series 1990 C, 6.50% 9/15/96 500,000 504,135
Series 1995 B, 4.50% 10/1/96 2,000,000 2,004,193
Series 1996 A, 4% 5/15/97 2,000,000 2,007,400
Participating VRDN (c):
Series BT-103, 3.70% (Liquidity Facility Bankers Trust Co.) 1,600,000
1,600,000
Series MGT-27, 3.60% (Liquidity Facility Morgan
Guaranty Trust Co.) 775,000 775,000
Connecticut Health & Ed. Facs. Auth. Rev.:
Bonds:
(Connecticut Univ. Sys. Issue) Series A
4.50% 11/1/96 (MBIA Insured) 1,000,000 1,003,247
(Yale Univ.):
Series L, 3.60%, tender 7/23/96 1,800,000 1,800,000
Series O, 3.60%, tender 7/24/96 3,200,000 3,200,000
Series M, 3.60%, tender 7/25/96 6,000,000 6,000,000
Series N, 3.60%, tender 7/25/96 1,000,000 1,000,000
Series N, 3.50%, tender 8/14/96 3,100,000 3,100,000
(Charlotte Hungerford Hosp.) Series B,
3.40%, LOC Bank of Boston, VRDN 3,000,000 3,000,000
Connecticut Hsg. & Fin. Auth. Bonds (Hsg. Mtg. Fin. Prog.):
Series 1989 D:
3.80%, tender 7/23/96 (b) 800,000 800,000
3.80%, tender 7/24/96 (b) 1,800,000 1,800,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CONNECTICUT - CONTINUED
Connecticut Hsg. & Fin. Auth. Bonds (Hsg. Mtg. Fin. Prog.) - continued
Series 1990 C, 4.15%, tender 7/23/96 (b) $ 1,600,000 $ 1,600,000
Series 1993 E-1, 3.75%, tender 6/10/96 3,200,000 3,200,000
Series 1993 E-2, 3.85%, tender 6/10/96 (b) 3,440,000 3,440,000
Series 1996 A-3, 3.60%, tender 4/10/97 2,000,000 2,000,000
Series 1996 A-4, 3.65%, tender 4/10/97 (b) 3,500,000 3,500,000
Connecticut Muni. Elec. Energy Coop. Pwr. Supply Sys. Rev. Bonds
Series 1995 A, 3.35%, tender 6/18/96,
LOC Fleet Bank, NA 1,400,000 1,400,000
Connecticut Regional School Dist. #10 BAN 4% 9/30/96 1,300,000 1,301,892
Connecticut Resource Recovery Auth. Bonds (Mid-Conn Sys.)
Series A, 5.10% 11/15/96 1,000,000 1,007,540
Connecticut Second Lien Spl. Tax Oblig. Bonds
(Transport Infrastructure Purpose) Series 1, 3.60%,
LOC Commerzbank, VRDN 16,380,000 16,380,000
Connecticut Spl. Assessment Unemployment Compensation
Rev. Bonds Series A:
4.10% 5/15/97 (AMBAC Insured) 1,300,000 1,305,035
4.20% 5/15/97 700,000 702,572
Connecticut Spl. Assessment Unemployment Rev. Bonds:
Series 1993 C, 3.85%, tender 7/1/96 (FGIC Insured)
(Liquidity Facility FGIC Security Purchase Inc.) 14,600,000 14,600,000
East Haven BAN 4.25% 9/4/96 500,000 500,566
Hartford Gen. Oblig. Bond 6.75% 10/1/96 (FGIC Insured) 400,000 403,652
Hartford Redev. Auth. (Underwood Towers Proj.) (FSA Insured)
(BPA Barclays Bank) 3.75%, VRDN 1,100,000 1,100,000
New Haven BAN 4.25% 8/22/96, LOC State Street Bank
& Trust Co. 3,500,000 3,503,408
New Haven Gen. Oblig. Bonds Rfdg.
Series A, 4.50% 8/1/96 1,000,000 1,000,967
New Milford BAN 3.77% 8/16/96 1,000,000 1,000,039
Seymour BAN 4% 10/16/96 1,600,000 1,602,926
Shelton BAN 3.32% 6/4/96 600,000 600,000
Stamford Hsg. Auth. Mutimodal Rev. (Morgan St. Proj.)
Series 1994, 3.60%, LOC Deutsche Bank, VRDN (b) 2,500,000 2,500,000
Winchester BAN 3.875% 8/2/96 500,000 500,399
Windham BAN 3.50% 12/17/96 3,700,000 3,703,110
135,929,923
ILLINOIS - 0.6%
Southwestern Illinois Dev. Auth. Solid Waste Disp. Rev.
(Shell Oil Co.-Wood River Proj.) Series 1992,
4%, VRDN (b) 1,100,000 1,100,000
LOUISIANA - 2.4%
Calcasieu Parish Ind. Dev. Board Env. Rev. (Citgo Petroleum Corp.)
4.15%, LOC Banque Nationale de Paris, VRDN (b) 700,000 700,000
Plaquemines Parish Envir. Rev. Rfdg.
(BP Exploration & Oil, Inc.) VRDN (b):
Series 1995, 4.10% 2,900,000 2,900,000
Series 1994, 4.10% 800,000 800,000
4,400,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PUERTO RICO - 12.6%
Puerto Rico Commonwealth Highway & Trans. Auth.
Highway Rev. Participating VRDN, Series PA-114,
3.45% (Liquidity Facility Merrill Lynch & Co., Inc) (c) $ 4,235,000 $
4,235,000
Puerto Rico Commonwealth Pub. Impt. Participating VRDN (c):
Series BT-165, 3.60% (Liquidity Facility Bankers Trust Co.) 2,142,000
2,142,000
Series PA-97, 3.45% (MBIA Insured)
(Liquidity Facility Merrill Lynch & Co.) 2,145,000 2,145,000
Series PT-63, 3.45% (Liquidity Facility Bayerische
Hypotheken) (c) 1,155,000 1,155,000
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Rfdg. Bonds
Series W, 4.25% 7/1/96 4,365,000 4,366,198
Puerto Rico Elec. Pwr. Auth. Rev. Participating VRDN,
Series BT-105, 3.375%
(Liquidity Facility Bankers Trust Co.) (c) 3,978,000 3,978,000
Puerto Rico Govt. Dev. Bank 3.60% 7/17/96, CP 5,000,000 5,000,000
23,021,198
SOUTH CAROLINA - 0.6%
South Carolina Jobs Econ. Dev. Auth. Rev. (Wellman Inc. Proj.)
VRDN (b):
Series 1990, 3.95%, LOC Wachovia Bank 800,000 800,000
Series 1992, 3.95%, LOC Wachovia Bank 300,000 300,000
1,100,000
TEXAS - 9.6%
Brazos River Harbor Navigation Dist. of Brazoria County Rev.
(Dow Chemical Co. Proj.) Series 1993, 4.15%, VRDN (b) 6,300,000
6,300,000
Brazos River Harbor Navigation Dist. Rev.
(Dow Chemical Co. Proj.) Series 1996, 4.15% VRDN (b) 2,200,000 2,200,000
Gulf Coast Ind. Dev. Auth. Solid Waste Disp. Rev.
(Citgo Petroleum) 4.15%, LOC Wachovia Bank, VRDN (b) 5,400,000 5,400,000
Trinity River Auth. Poll. Cont. Rev. (Texas Utils. Elec. Co. Proj.)
Series 1996 A, 4% (AMBAC Insured)
(BPA Bank of New York, NA) VRDN (b) 500,000 500,000
West Side Calhoun County Naval Dist. Sewage Solid Waste
Disposal Rev. (BP Chemicals Inc. Proj.) Series 1996,
4.10%, VRDN (b) 3,200,000 3,200,000
17,600,000
TOTAL INVESTMENTS - 100% $ 183,151,121
Total Cost for Income Tax Purposes $ 183,151,159
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
VRDN - Variable Rate Demand Notes
LEGEND
(a)The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b)Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(c)Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At November 30, 1995, the fund had a capital loss carryforward of
approximately $13,000 of which $3,000 and $10,000 will expire on November
30, 2001 and 2002, respectively.
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MAY 31, 1996 (UNAUDITED)
132.ASSETS 133. 134.
135.Investment in securities, at value - See 136. $ 183,151,121
accompanying schedule
137.Cash 138. 67,800
139.Receivable for investments sold 140. 503,219
141.Interest receivable 142. 1,384,023
143. 144.TOTAL ASSETS 145. 185,106,163
146.LIABILITIES 147. 148.
149.Payable for investments purchased $ 511,177 150.
151.Share transactions in process 1,356,248 152.
153.Distributions payable 16,359 154.
155.Accrued management fee 78,057 156.
157. 158.TOTAL LIABILITIES 159. 1,961,841
160.161.NET ASSETS 162. $ 183,144,322
163.Net Assets consist of: 164. 165.
166.Paid in capital 167. $ 183,157,720
168.Accumulated net realized gain (loss) on 169. (13,398)
investments
170.171.NET ASSETS, for 183,157,720 shares 172. $ 183,144,322
outstanding
173.174.NET ASSET VALUE, offering price and 175. $1.00
redemption price per share ($183,144,322 (divided by)
183,157,720 shares)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
176.177.INTEREST INCOME 178. $ 3,248,721
179.EXPENSES 180. 181.
182.Management fee $ 451,395 183.
184.Non-interested trustees' compensation 319 185.
186. Total expenses before reductions 451,714 187.
188. Expense reductions (7,076) 444,638
189.190.NET INTEREST INCOME 191. 2,804,083
192.193.NET REALIZED GAIN (LOSS) ON INVESTMENTS 194. 35
195.196.NET INCREASE IN NET ASSETS RESULTING FROM 197. $ 2,804,118
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
MAY 31, 1996 NOVEMBER 30,
(UNAUDITED) 1995
198.INCREASE (DECREASE) IN NET ASSETS
199.Operations $ 2,804,083 $ 5,464,560
Net interest income
200. Net realized gain (loss) 35 4,063
201. Increase (decrease) in net unrealized gain from - (416)
accretion of market discount
202. 2,804,118 5,468,207
203.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
204.Distributions to shareholders from net interest (2,804,083) (5,464,560)
income
205.Share transactions at net asset value of $1.00 per 125,921,909 190,588,598
share
Proceeds from sales of shares
206. Reinvestment of distributions from net interest 2,699,895 5,248,200
income
207. Cost of shares redeemed (121,099,883) (187,273,625)
208.209. 7,521,921 8,563,173
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES
RESULTING FROM SHARE TRANSACTIONS
210. 7,521,956 8,566,820
211.TOTAL INCREASE (DECREASE) IN NET ASSETS
212.NET ASSETS 213. 214.
215. Beginning of period 175,622,366 167,055,546
216. End of period $ 183,144,322 $ 175,622,366
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED NOVEMBER 30, MARCH 4, 1991
ENDED (COMMENCEME
MAY 31, 1996 NT
OF OPERATIONS) T
O
NOVEMBER 30,
(UNAUDITED) 1995 1994 1993 1992 1991
217.SELECTED PER-SHARE
DATA 219.
218.
220.Net asset
value,
beginning
of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
221.Income
from
Investment
Operations .015 .034 .023 .022 .030 .029
Net interest income
222.Less
Distributions (.015) (.034) (.023) (.022) (.030) (.029)
From net interest income
223.Net asset
value, end
of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
224.TOTAL
RETURN B 1.56% 3.41% 2.28% 2.21% 3.08% 2.97%
225.RATIOS AND SUPPLEMENTAL DATA
229.Net assets,
end of
period
(000 omitted) $ 183,144 $ 175,622 $ 167,056 $ 163,102 $ 86,672 $ 22,247
230.Ratio of
expenses to
average net
assets .50%A .50% .50% .24%C .02%C .00%C
231.Ratio of
expenses to
average net
assets after .49%A , .50% .50% .50% .50% .50%A
expense
reductions D
232.Ratio of
net interest
income to
average 3.10%A 3.36% 2.25% 2.17% 2.90% 4.05%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. TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF
NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1996 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan Connecticut Municipal Income Fund (the income fund ) is a fund of
Fidelity Court Street Trust. Spartan Connecticut Municipal Money Market
Fund (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 financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to make
certain estimates and assumptions at the date of the financial statements.
The following summarizes the significant accounting policies of the income
fund and the money market fund:
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix system
and/or appraisals by a pricing service, both of which consider market
transactions and dealer-supplied valuations. Short-term securities maturing
within sixty days of their purchase date are valued either at amortized
cost or original cost plus accrued interest, both of which approximate
current value. Securities for which quotations are not readily available
through the pricing service are valued at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
the fiscal year. The schedules of investments include information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
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, which may result in distribution reclassifications, are
primarily due to differing treatments for futures and options transactions,
capital loss carryforwards and losses deferred due to wash sales, futures
and options and excise tax regulations.
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.
DELAYED DELIVERY TRANSACTIONS. Each fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The
market value of the securities purchased or sold on a when-issued or
forward commitment basis are identified as such in the fund's schedule of
investments. Each fund may receive compensation for interest forgone in the
purchase of a delayed delivery security. Losses may arise due to changes in
the market value of the underlying securities or if the counterparty does
not perform under the contract.
FUTURES CONTRACTS AND OPTIONS. The income fund may use futures and options
contracts to manage its exposure to the bond market and to fluctuations in
interest rates. Buying futures, writing puts, and buying calls tend to
increase the fund's exposure to the underlying instrument. Selling futures,
buying puts, and writing calls tend to decrease the fund's exposure to the
underlying instrument, or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period
end, is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $53,249,168 and $60,224,379, respectively. The
market value of futures contracts opened and closed during the period
amounted to $57,145,087 and $61,321,949, 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
$1,965 and $1,432 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.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plans (the Plans), and in accordance with Rule 12b-1 of the 1940 Act, FMR
or the funds' distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of each fund's shares. Subject to
the approval of each Board of Trustees, the Plans also authorize payments
to third parties that assist in the sale of each fund's shares or render
shareholder support services. FMR or FDC has informed the funds that
payments made to third parties under the Plans amounted to $257 for the
income fund and no payments were made for the money market fund for the
period.
5. EXPENSE REDUCTIONS.
FMR has entered into arrangements on behalf of each fund with the funds'
custodian and transfer agent whereby interest earned on uninvested cash
balances was used to offset a portion of each fund's expenses. During the
period, the each fund' s expenses were reduced by $66,383 and $7,706 for
the income and money market funds, respectively, under these arrangements.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISER,
MONEY MARKET FUND
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Thomas D. Maher, Assistant
Vice President, MONEY MARKET FUND
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant
Treasurer, MONEY MARKET FUND
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*
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
