-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ntzm+XTcHGzrL5DtPBCZiHM2PRjJlkMXqefDk/eCrJILJuk9MXNGQb3Ld9DLQ+bK EHsTip7TuzOKYESFKImoEg== 0000225323-95-000001.txt : 19950111 0000225323-95-000001.hdr.sgml : 19950111 ACCESSION NUMBER: 0000225323-95-000001 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941130 FILED AS OF DATE: 19950110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY COURT STREET TRUST CENTRAL INDEX KEY: 0000225323 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 042626105 STATE OF INCORPORATION: MA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02741 FILM NUMBER: 95500877 BUSINESS ADDRESS: STREET 1: 82 DEVONSHIRE ST CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6174391652 MAIL ADDRESS: STREET 1: 82 DEVONSHIRE STREET STREET 2: MAIL ZONE ZZ2 CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: FIDELITY HIGH YIELD MUNICIPALS DATE OF NAME CHANGE: 19870818 FORMER COMPANY: FORMER CONFORMED NAME: DEVON MUNICIPAL BOND FUND DATE OF NAME CHANGE: 19600201 FORMER COMPANY: FORMER CONFORMED NAME: FIDELITY EXTRA MUNICIPALS DATE OF NAME CHANGE: 19600201 N-30D 1 SPARTAN(registered trademark) (registered trademark) NEW JERSEY MUNICIPAL HIGH YIELD PORTFOLIO ANNUAL REPORT NOVEMBER 30, 1994 CONTENTS PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies. PERFORMANCE 4 How the fund has done over time. FUND TALK 7 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 10 A summary of major shifts in the fund's investments over the past six months and one year. INVESTMENTS 11 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 17 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 21 Notes to the financial statements. REPORT OF INDEPENDENT ACCOUNTANTS 23 The auditors' opinion. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE DEAR SHAREHOLDER: The unsettling period that began for bond investors when the Federal Reserve Board raised short-term interest rates in February has continued into the fourth quarter of 1994. The Board raised the federal funds rate - the rate banks charge each other for overnight loans - five times from February through August, taking it from 3.00% to 4.75%. A sixth increase in November lifted the rate to 5.50%. The Fed rate hikes were intended to forestall inflation that could result from an improving U.S. economy, and they led to negative returns for many bond investments and below-average returns for many stocks. The volatility we have witnessed this year follows a period in which there was a nearly perfect investing environment. Although there was a late-summer rally in stocks and, to a lesser extent in bond markets, it is impossible to predict where interest rates might go or what might happen in the markets in the months ahead. That's why it probably is a good time to again review your investment portfolio and how well it matches your goals. Keeping in mind that the negative effects of rising rates on your bond investments will only be "paper" losses unless you sell your shares, staying in your bond fund may be appropriate. The longer your investing time frame, the more likely it is that you will retain your principal investment through both up and down markets. For example, a 10-year time frame, such as saving for a college education, enables you to weather these ups and downs in a long-term fund, which has higher potential returns. An intermediate-length fund could be appropriate if your investment horizon is two to four years, and a short-term bond fund could be the right choice if you need your money in one or two years. If your time horizon is less than a year, you might want to consider moving some of your bond investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. As with any mutual fund, of course, there is no assurance that a money market fund will achieve its goal, and money market funds are not insured by any agency of the U.S. government. No matter what your investment horizon or portfolio diversity, it makes good sense to follow a regular investment plan - investing a certain amount of money at the same time each month or quarter - and to review your portfolio periodically, as we have discussed here. A periodic investment plan will not, of course, assure a profit or protect against a loss. If you have any questions, please call us at 1-800-544-8888. We stand ready to provide the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each figure includes changes in a fund's share price, reinvestment of any dividends (or income) and capital gains (the profits the fund earns when it sells bonds that have grown in value), and the effect of the $5 account closeout fee. You can also look at the fund's income. If Fidelity had not reimbursed certain fund expenses during the periods shown, the total returns, dividends and yields would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 PAST 5 LIFE OF YEAR YEARS FUND Spartan New Jersey Municipal High Yield Portfolio -5.86% 36.79% 66.64% Lehman Brothers Municipal Bond Index -5.25% 37.52% 66.52% Average New Jersey Tax-exempt Municipal Bond Fund -7.37% 35.57% n/a Consumer Price Index 2.81% 19.06% 29.90% CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period - - in this case, one year, five years, or since the fund started on January 1, 1988. For example, if you invested $1,000 in a fund that had a 5% return over the past year, you would end up with $1,050. You can compare these figures to the performance of the Lehman Brothers Municipal Bond Index - a broad gauge of the municipal bond market. To measure how the fund stacked up against its peers, you can look at the average New Jersey municipal bond fund, which currently reflects the performance of 32 New Jersey municipal bond funds tracked by Lipper Analytical Services. Both benchmarks include reinvested dividends and capital gains, if any. Comparing the fund's performance to the consumer price index helps show how your fund did compared to inflation. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 PAST 5 LIFE OF YEAR YEARS FUND Spartan New Jersey Municipal High Yield Portfolio -5.86% 6.47% 7.66% Lehman Brothers Municipal Bond Index -5.25% 6.58% 7.64% Average New Jersey Tax-exempt Municipal Bond Fund -7.37% 6.28% n/a Consumer Price Index 2.81% 3.55% 3.85% AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Spartan New JMunicipal Bon 01/01/88 10000.00 10000.00 01/31/88 10382.99 10356.20 02/29/88 10489.58 10465.67 03/31/88 10108.41 10343.74 04/30/88 10162.42 10422.35 05/31/88 10195.16 10392.23 06/30/88 10424.31 10544.27 07/31/88 10490.37 10613.02 08/31/88 10515.89 10622.36 09/30/88 10760.93 10814.62 10/31/88 11060.18 11005.50 11/30/88 10893.59 10904.69 12/31/88 11089.94 11016.25 01/31/89 11261.41 11244.06 02/28/89 11131.82 11115.77 03/31/89 11142.30 11089.20 04/30/89 11470.47 11352.46 05/31/89 11712.36 11588.25 06/30/89 11899.59 11745.62 07/31/89 12030.89 11905.47 08/31/89 11882.88 11788.92 09/30/89 11837.44 11753.55 10/31/89 12002.50 11896.95 11/30/89 12181.54 12105.14 12/31/89 12237.61 12204.41 01/31/90 12116.04 12147.04 02/28/90 12239.41 12255.15 03/31/90 12260.71 12258.83 04/30/90 12101.33 12170.57 05/31/90 12416.90 12435.88 06/30/90 12542.36 12545.32 07/31/90 12738.81 12729.74 08/31/90 12493.09 12545.16 09/30/90 12573.56 12552.68 10/31/90 12751.56 12779.89 11/30/90 13053.06 13036.76 12/31/90 13111.66 13094.12 01/31/91 13270.57 13269.58 02/28/91 13355.11 13385.03 03/31/91 13389.35 13390.38 04/30/91 13575.50 13568.48 05/31/91 13686.76 13689.24 06/30/91 13684.33 13675.55 07/31/91 13910.27 13842.39 08/31/91 14075.10 14025.11 09/30/91 14253.49 14207.43 10/31/91 14405.60 14335.30 11/30/91 14441.04 14375.44 12/31/91 14728.41 14684.51 01/31/92 14753.13 14718.29 02/29/92 14761.20 14722.70 03/31/92 14733.41 14728.59 04/30/92 14852.05 14859.68 05/31/92 15067.78 15035.02 06/30/92 15308.14 15287.61 07/31/92 15854.11 15746.24 08/31/92 15632.74 15591.92 09/30/92 15697.06 15693.27 10/31/92 15375.33 15539.48 11/30/92 15787.99 15817.63 12/31/92 16010.91 15978.97 01/31/93 16206.24 16164.33 02/28/93 16838.39 16749.48 03/31/93 16627.16 16571.93 04/30/93 16820.45 16739.31 05/31/93 16957.57 16833.05 06/30/93 17267.40 17114.16 07/31/93 17270.95 17136.41 08/31/93 17674.72 17492.85 09/30/93 17885.81 17692.27 10/31/93 17892.26 17725.88 11/30/93 17701.63 17569.89 12/31/93 18101.77 17940.62 01/31/94 18291.90 18145.14 02/28/94 17751.96 17675.18 03/31/94 16940.48 16955.80 04/30/94 17037.91 17099.93 05/31/94 17231.75 17248.70 06/30/94 17141.21 17148.65 07/31/94 17462.89 17462.47 08/31/94 17531.00 17523.59 09/30/94 17262.68 17266.00 10/31/94 16948.68 16958.66 11/30/94 16665.14 16651.71 $10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan New Jersey Municipal High Yield Portfolio on January 1, 1988, when the fund started. As the chart shows, by November 30, 1994, the value of your investment would have grown to $16,665 - a 66.65% increase on your initial investment. This assumes you still own the fund on November 30, 1994, and therefore does not include the effect of the $5 account closeout fee. For comparison, look at how the Lehman Brothers Municipal Bond Index did over the same period. With dividends reinvested, the same $10,000 would have grown to $16,652- a 66.52% increase. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. Bond prices, for example, move in the opposite direction of interest rates. In turn, the share price, return, and yield of a fund that invests in bonds will vary. That means if you sell your shares during a market downturn, you might lose money. But if you can ride out the market's ups and downs, you may have a gain. (checkmark) TOTAL RETURN COMPONENTS YEARS ENDED NOVEMBER 30, 1994 1993 1992 1991 1990 Dividend return 5.28% 5.99% 6.59% 6.87% 6.68% Capital appreciation returns -11.14% 6.12% 2.73% 3.75% 0.46% Total return -5.86% 12.11% 9.32% 10.62% 7.14% DIVIDEND returns, and capital appreciation returns are both part of a bond fund's total return. An income return reflects the dividends paid by the fund. A capital gain return reflects the amount paid by the fund to shareholders based on the profits it has from selling bonds that have grown in value. Both returns assume the dividends or gains are reinvested. Changes in the fund's share price include changes in the prices of the bonds owned by the fund. Change in share price and total return figures include the effect of the $5 account closeout fee. DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1994 PAST PAST 6 PAST 1 MONTH MONTHS YEAR Dividends per share 5.35(cents) 31.78(cents) 63.69(cents) Annualized dividend rate 6.35% 5.86% 5.74% 30-day annualized yield 6.47% - - 30-day annualized tax-equivalent yield 10.83% - -
DIVIDENDS per share show the income paid by the fund for a set period. If you annualize this number, based on an average share price of $10.25 over the past month , $10.81 over the past six months and $11.10 over the past year, you can compare the fund's income over these three periods. The 30-day annualized YIELD is a standard formula for all funds based on the yields of the bonds in the fund, averaged over the past 30 days. This figure shows you the yield characteristics of the fund's investments at the end of the period. It also helps you compare funds from different companies on an equal basis. The tax-equivalent yield shows what you would have to earn on a taxable investment to equal the fund's tax-free yield, if you're in the 40.26% combined effective 1994 federal and state tax bracket. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP Sharply rising interest rates and ongoing inflation worries caused a severe downturn in U.S. bond markets in 1994. Yields rose sharply - and prices fell - on taxable and tax-free bonds alike. For the 12 months ended November 30, 1994, the Lehman Brothers Municipal Bond Index - a broad measure of the tax-free market - had a total return of -5.25%. By comparison, the Lehman Brothers Aggregate Bond Index - a proxy of investment-grade taxable bonds - returned -3.06%. After interest rates remained low and relatively steady in December 1993 and January 1994, the rate environment changed dramatically. The Federal Reserve Board raised the federal funds rate - - the rate banks charge each other for overnight loans - from 3.00% to 5.50% from February through November. The Fed was hoping to head off future inflation that might be triggered by an improving U.S. economy. However, investors heavily sold bonds at the very threat of inflation because inflation diminishes the value of their fixed-rate income payments. Two other influences affected the performance of tax-free bonds, specifically. First, investor demand fell due to inflation worries, which dampened prices. Second, although it didn't outweigh the negative effects of lower demand, the supply of tax-free bonds fell as well. The ability of states, cities and public agencies to refinance outstanding debt at lower, more attractive rates was limited amid a rising rate environment. An interview with David Murphy, Portfolio Manager of Spartan New Jersey Municipal High Yield Portfolio Q. DAVID, HOW HAS THE FUND PERFORMED? A. Both the municipal bond market and the fund suffered losses on the heels of rising interest rates during the past 12 months, but the fund held up better than most of its competitors. The fund's total return for the year ended November 30, 1994, was -5.86%. That beat the average New Jersey tax-exempt municipal bond fund, which returned -7.37% for the same period, according to Lipper Analytical Services. Q. WHAT FACTORS CONTRIBUTED TO THE DECLINE IN BOND PRICES? A. There's definitely a lot to the story. Until February 1994, short-term interest rates had remained low for several years. That enticed many investors to use leverage, or borrowed money, to make what essentially amounted to a bet that short-term interest rates would continue to stay low and long-term interest rates would fall. However, when the Federal Reserve Board started raising short-term interest rates in February, those investors found themselves on the wrong side of the bet and were forced to liquidate their bond holdings to pay back borrowed money. The selling, or unwinding, of those positions put additional downward pressure on bond prices. Other factors - like the dollar's weakness - also contributed to the market's decline. Q. WHAT WAS YOUR STRATEGY DURING THIS VOLATILE PERIOD? A. My long-term strategy is to keep the fund positioned to take advantage of long-term trends. Inflation has stayed low over the past 12 months and in my view, will continue to do so over the next several years. While we have seen some rising industrial commodity prices, consumer prices haven't really risen and wages have remained flat. Unfortunately, it seemed that low inflation didn't determine the market's direction in 1994. Instead, all the unwinding of the leveraged positions and other factors did. Q. DESPITE THAT, THE FUND STILL BEAT MANY OF ITS COMPETITORS. WHAT WERE THE REASONS FOR THAT? A. The main factor was its stake in bonds with high coupons - or bonds with interest payments that were higher than bonds paying current interest rates. These bonds are known as "cushion" bonds because their prices are cushioned from falling as much as current coupon bonds when interest rates rise. I held a variety of cushion bonds including housing bonds, lower-quality bonds and older bonds issued when interest rates were higher than they are now. Another factor that helped the fund's performance was its 33% stake in intermediate bonds with maturities between seven and 15 years. Those didn't decline as much as longer-term bonds. However, I've recently started making a move back toward longer-term bonds since I anticipate that long-term municipal interest rates will decline more than intermediate rates over the next six months. That, in turn, could push the prices of longer-term bonds up more than intermediate bonds. Q. DID YOU CHANGE THE WAY YOU ALLOCATED THE FUND'S INVESTMENTS AMONG SECTORS? A. Not significantly. I kept the fund's sector concentrations fairly stable throughout the past 12 months. Transportation bonds still made up the largest sector at 19.2% of investments at the end of the period. Most were bonds issued by the New Jersey Highway Authority and the New Jersey Turnpike Authority. These were bought when there was a heavy supply, so they had yields that were attractive. Health care bonds, which are primarily hospital bonds, made up the fund's second largest sector concentration at 15.5% of investments at the end of November. I've kept the fund's stake in GO's, or general obligation bonds, limited to 14.8% of investments because I was concerned how recent state income tax cuts would affect the state's budget. Fortunately, improvements in New Jersey's economy have helped boost other taxes like the sales tax, and so the state has weathered the loss in income tax revenue fairly well. Even so, I think there are better values elsewhere, and will most likely continue to avoid GOs. Q. DOES 1995 LOOK MORE POSITIVE FOR MUNICIPAL BOND INVESTORS? A. I think so. In my view, most of the downturn in prices for long-term bonds seems to be behind us and the market is starting to anticipate that we're near the end of the Fed's actions to hike interest rates. What's more, fixed-income investments are starting to look fairly attractive compared to other asset categories, such as stocks. Real taxable yields - stated yields minus inflation - were about 5% at the end of the period, which is very attractive on a historical basis. I believe that these yields could help attract investors, which ultimately might help the bond market. In my opinion, the next big trend in interest rates will be down, which would boost bond prices in 1995. FUND FACTS GOAL: to provide high current income exempt from New Jersey state and federal income taxes START DATE: January 1, 1988 SIZE: as of November 30, 1994, more then $327 million MANAGER: David Murphy, since April 1991; manager, Fidelity Limited Term Municipals, since December, 1989; Spartan California Intermediate Municipal Portfolio, since December 1993; Spartan Intermediate Municipal Fund, since May 1993; Spartan New York Intermediate Municipal Portfolio, since December 1993; Spartan Short-Intermediate Municipal Fund, since December 1989; joined Fidelity in 1989 (checkmark) DAVID MURPHY'S STRATEGY: "In my view, the next big trend in interest rates is down. As a result, I believe that long-term bonds with maturities 20 years or longer are very attractive right now. I anticipate that long-term municipal interest rates will decline more than intermediate bonds - those with 5- to 15-year maturities - - over the next six months. Accordingly, longer-term bond prices should rise more than intermediate-term bond prices." (solid bullet) At the end of November 1994, the fund held one derivative investment known as an inverse floater which made up 1.4% of the fund's total investments. That was down from a year ago, when inverse floaters made up about 3% of the fund's investments. The coupon, or interest payment, of inverse floaters rises when short-term rates fall and vice versa. By using derivatives, the fund can achieve higher levels of tax-exempt income and increased flexibility in managing the overall sensitivity to changes in interest rates. However, these strategies may involve additional risk for the fund, and don't always work as intended. INVESTMENT CHANGES TOP FIVE SECTORS AS OF NOVEMBER 30, 1994 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE SECTORS 6 MONTHS AGO Transportation 19.2 17.3 Health Care 15.5 15.6 General Obligation 14.8 15.4 Industrial Development 11.2 11.1 Escrowed/Prerefunded 10.5 9.4 AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1994 6 MONTHS AGO Years 17.7 17.6 AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR AMOUNT. DURATION AS OF NOVEMBER 30, 1994 6 MONTHS AGO Years 8.7 8.3 DURATION SHOWS HOW MUCH A BOND'S PRICE FLUCTUATES WITH CHANGES IN COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE. QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1994 (MOODY'S RATINGS) Aaa 22.4% Aa, A 50.8% Baa 13.5% Ba, B 0.2% Non-rated 10.8% Short-term and other investments 2.3% Row: 1, Col: 1, Value: 22.4 Row: 1, Col: 2, Value: 50.8 Row: 1, Col: 3, Value: 13.5 Row: 1, Col: 4, Value: 1.2 Row: 1, Col: 5, Value: 10.8 Row: 1, Col: 6, Value: 2.3 WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT NOVEMBER 30, 1994 ACCOUNT FOR 6.8% OF THE FUND'S INVESTMENTS. INVESTMENTS NOVEMBER 30, 1994 Showing Percentage of Total Value of Investments MUNICIPAL BONDS - 97.7% MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) NEW JERSEY - 86.1% Atlantic County Ctfs. of Prtn. Rfdg. (Pub. Facs. Lease Agreement): 7.40% 3/1/07, (FGIC Insured) Aaa $ 3,035,000 $ 3,300,563 7.40% 3/1/08, (FGIC Insured) Aaa 3,260,000 3,528,950 Atlantic County Impt. Auth. Luxury Tax Rev. (Convention Ctr.): 7.375% 7/1/10, (MBIA Insured) (Escrowed to Maturity)(e) Aaa 1,000,000 1,053,750 7.40% 7/1/16, (MBIA Insured) (Escrowed to Maturity)(e) Aaa 3,510,000 3,742,538 Bergen County Util. Auth. Wtr. Poll. Cont. Rev. Rfdg. Series B, 5.75% 12/15/05, (FGIC Insured) Aaa 1,870,000 1,771,825 Burlington County Bridge Commission Bridge Sys. Rev., 5.30% 10/1/13 Aa 1,500,000 1,271,250 Camden County Muni. Util. Auth. Swr. Rev.: (Cap. Appreciation): Series A: 0% 9/1/16, (FGIC Insured) Aaa 5,000,000 1,131,250 0% 9/1/17, (FGIC Insured) Aaa 9,930,000 2,097,713 0% 9/1/18, (FGIC Insured) Aaa 1,375,000 269,844 Series B, 0% 9/1/16, (FGIC Insured) Aaa 16,300,000 3,687,875 Camden Gen. Oblig. Fiscal Adjustment 0% 2/15/07, (FSA Insured) Aaa 4,000,000 1,820,000 Cape May County Ind. Poll. Cont. Fing. Auth. Rev. Rfdg. (Atlantic City Elec. Co.) Series A, 6.80% 3/1/21, (MBIA Insured) Aaa 1,350,000 1,338,188 Edison Township School Unltd. Tax 6.50% 6/1/11 A1 1,000,000 985,000 Essex County Impt. Auth. Rev. (East Orange School Dist.) Series A: 5.60% 11/1/05 A 1,250,000 1,157,813 5.70% 11/1/06 A 1,600,000 1,474,000 5.80% 11/1/07 A 1,000,000 917,500 Gloucester County Impt. Auth. Solid Waste Resource Recovery Rev. (SES Gloucester Co. LP Proj.) Series A, 8.125% 7/1/10, LOC Fuji Bank Aa3 1,175,000 1,229,344 Hudson County 5.125% 8/1/08 A+ 3,000,000 2,531,250 Hudson County Impt. Auth. (Essential Purp. Pooled Gov't. Loan Prog.): 6.625% 8/1/25 A+ 4,000,000 3,885,000 7.60% 8/1/25 A 5,240,000 5,495,450 Jersey City Series B: 0% 5/15/07, (FSA Insured) Aaa 4,740,000 2,121,150 0% 5/15/11, (FSA Insured) Aaa 3,500,000 1,120,000 Jersey City Swr. Auth. Swr. Rev. Rfdg. 6% 1/1/09 (AMBAC Insured) Aaa 1,000,000 940,000 Keansburg Board of Ed. Ctfs. of Prtn. 8% 11/1/14 (Pre-Refunded to 11/1/99 @102)(e) BBB- 1,500,000 1,636,875 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) NEW JERSEY - CONTINUED Lenape Reg'l. High School Dist. Unltd. Tax: 7.625% 1/1/13, (MBIA Insured) Aaa $ 675,000 $ 736,594 7.625% 1/1/14, (MBIA Insured) Aaa 1,000,000 1,088,750 Mercer County Impt. Auth. Rev.: Rfdg.(Cap. Appreciation Solid Waste County Guaranteed): 0% 4/1/08 Aa1 6,000,000 2,437,500 0% 4/1/09 Aa1 6,500,000 2,470,000 0% 4/1/10 Aa1 3,000,000 1,057,500 0% 4/1/11 Aa1 3,500,000 1,155,000 0% 4/1/12 Aa1 7,000,000 2,135,000 0% 4/1/13 Aa1 7,000,000 1,995,000 Rfdg. (Site & Disposal Facs. Proj.) 0% 4/1/09 Aa1 5,155,000 1,946,013 (Reg'l. Sludge Proj.) 5.20% 12/15/09 (FGIC Insured) Aaa 1,540,000 1,322,475 Middlesex County Poll. Cont. Auth. Rev. Rfdg. (Fing. Poll.) (Amerada Hess Corp.): 7.875% 6/1/22 - 7,750,000 7,934,063 6.875% 12/1/22 - 5,000,000 4,606,250 Monmouth County Impt. Auth. Rev. Wastewtr. Treatment Facs. Rev. (Asbury Park Proj.) 7.375% 12/1/09 Baa 1,000,000 1,013,750 New Jersey Bldg. Auth. Bldg. Rev. 7.50% 6/15/09 Aa 1,700,000 1,842,375 New Jersey Econ. Dev. Auth. 1st Mtg. Gross Rev. (Franciscan Oaks Proj.) Series A, 8.50% 10/1/23 - 4,250,000 4,143,750 New Jersey Econ. Dev. Auth. Econ. Dev. Rev.: Rfdg. (777 Pattison Ave., Inc.) 8.95% 12/15/18 (b) ??? 6,140,000 6,124,650 Rfdg. (Holt Hauling & Warehouse) 8.60% 12/15/17 (b) - 9,000,000 8,898,750 Rfdg. (Stolt Term. Proj.) 10.50% 1/15/18 - 2,500,000 2,806,250 (Weyerhauser Co. Proj.) 9% 11/1/04 A2 2,000,000 2,310,000 New Jersey Econ. Dev. Auth. Poll. Cont. Rev. (Central Pwr. & Lt.) 7.10% 7/1/15 A2 1,415,000 1,383,163 New Jersey Health Care Facs. Fing. Auth. Rev.: Rfdg. (Atlantic City Med. Ctr.) Series C, 6.80% 7/1/11 A 4,200,000 4,037,250 (Bridgeton Hosp. & Millvile Hosp.) Series 1988 A, 7.875% 7/1/10, (MBIA Insured) (Pre-Refunded to 7/1/98 @102)(e) Aaa 1,250,000 1,367,188 (Burdette Tomlin Mem. Hosp.) Series D: 6% 7/1/02, (FGIC Insured) Aaa 1,715,000 1,719,288 6.25% 7/1/06, (FGIC Insured) Aaa 1,710,000 1,703,588 (Cathedral Health) Series A, 7.25% 2/15/21, (FHA Guaranteed) Aa 3,130,000 3,130,000 (East Orange Gen. Hosp.) Series B, 7.75% 7/1/20 BBB+ 2,450,000 2,397,938 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) NEW JERSEY - CONTINUED New Jersey Health Care Facs. Fing. Auth. Rev.: - continued (Elizabeth Gen. Med. Ctr.) Series C: 7.10% 7/1/99 Baa1 $ 1,125,000 $ 1,122,188 7.25% 7/1/06 Baa1 1,975,000 1,920,688 (Helene Fuld Med. Ctr.) Series C, 8.125% 7/1/13 A 1,000,000 1,050,000 (Holy Name Hosp.) Series A, 6.875% 7/1/04 Aaa 1,960,000 2,006,550 (Jersey Shore Med. Ctr.) Series B, 8% 7/1/18, (AMBAC Insured) (Pre-Refunded to 7/1/98 @ 102)(e) Aaa 1,905,000 2,090,738 (Kennedy Mem. Hosp.-Univ. Med. Ctr.) Series D, 7.875% 7/1/09 A 3,000,000 3,097,500 (Kimball Med. Ctr.) Issue C, 8% 7/1/13 Baa 2,900,000 2,921,750 (Lady of Lourdes Med. Ctr.) Series B, 9.75% 2/1/15, (FHA Guaranteed) (Pre-Refunded to 2/1/95 @102)(e) Aa 170,000 175,007 (Mountainside Hosp.) Series A, 9% 8/1/25, (FHA Guaranteed) (Pre-Refunded to 8/1/95 @ 102)(e) Aa 3,165,000 3,315,338 (Muhlenberg Regional Med. Ctr.) Series B, 8% 7/1/18, (AMBAC Insured) Aaa 2,000,000 2,125,000 (Newcombe Med. Ctr.) Series A, 7.875% 7/1/03 Baa 3,950,000 4,073,438 (Pascack Valley Hosp.) Series 1991, 6.70% 7/1/11 A- 5,200,000 4,725,500 (St. Elizabeth Hosp.) Series B, 8.25% 7/1/20 Baa 8,500,000 8,670,000 (St. Peters Med. Ctr.) Series F, 4.70% 7/1/ 06 (MBIA Insured) Aaa 1,000,000 835,000 New Jersey Edl. Facs. Fing. Auth. Rev. (Ramapo College) Series B, 7.70% 7/1/13 A 1,000,000 1,085,000 New Jersey Gen. Oblig. Rfdg. Series D, 6% 2/15/11 Aa1 3,000,000 2,805,000 New Jersey Hwy. Auth. Garden Pkwy. Gen. Rev. (Sr. Pkwy): 6.10% 1/1/06 A1 2,750,000 2,701,875 6.20% 1/1/10 A1 21,000,000 20,002,500 5.75% 1/1/19 A1 3,000,000 2,598,750 6% 1/1/19, (Escrowed to Maturity)(e) Aaa 4,485,000 3,958,013 New Jersey Hsg. Fin. Agcy. (Gen. Resolution Section 8) Series A: 6.90% 11/1/07 AA+ 2,670,000 2,696,700 6.95% 11/1/08 AA+ 2,265,000 2,279,156 7% 11/1/09 AA+ 2,855,000 2,865,706 7.05% 11/1/10 AA+ 3,500,000 3,500,000 New Jersey Hsg. & Mtg. Fin. Agcy. Customer Receipts Series 1, 8.491% 11/1/07, INFL (d) A+ 5,000,000 4,600,000 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) NEW JERSEY - CONTINUED New Jersey Hsg. & Mtg. Fin. Agcy. (Home Buyer) Series B, 7.90% 10/1/22, (MBIA Insured)(b) Aaa $ 1,760,000 $ 1,801,800 New Jersey Turnpike Auth. Turnpike Rev. Rfdg.: 10.375% 1/1/03 (Escrowed to Maturity)(e) AAA 10,475,000 12,255,750 Series C: 6.50% 1/1/09 A 6,700,000 6,674,875 6.50% 1/1/16 A 4,000,000 3,870,000 6.50% 1/1/16 (MBIA Insured) Aaa 2,000,000 1,945,000 New Jersey Univ. (Medicine & Dentistry) Series C, 7.20% 12/1/19 A 3,500,000 3,570,000 New Jersey Wastewtr. Treatment Trust Loan Rev.: 6.875% 6/15/06 Aa 1,320,000 1,371,150 6.875% 6/15/09 Aa 1,000,000 1,026,250 7% 6/15/10 Aa 1,750,000 1,802,500 Ocean County Utils. Auth. Wastewtr. Rev. Rfdg. Series B, 5.75% 1/1/18 Aa 2,605,000 2,253,325 Passaic Valley Swr. Commission Rfdg. (Swr. Sys.) Series D 5.75% 12/1/13 (AMBAC Insured) Aaa 1,000,000 873,750 Pennsauken Township Board of Ed. Ctfs. of Prtn. 7.75% 7/15/09, (MBIA Insured) Aaa 500,000 529,375 Rutgers State Univ. Rev. Rfdg. Series R, 5.75% 5/1/18 A1 4,000,000 3,475,000 Sayreville Hsg. Dev. Corp. Mtg. Rev. Rfdg. (Lakeview Section 8) 7.75% 8/1/24, (FHA Guaranteed) AAA 2,490,000 2,552,250 Stony Brook Reg'l. Swr. Auth. Rev. Series A, 7.40% 12/1/09 (Pre-Refunded to 12/1/99 @102)(e) Aa 1,000,000 1,086,250 Union County Unltd. Tax 5% 2/1/10 Aaa 2,000,000 1,682,500 Union County Util. Auth. Solid Waste Rev. Series A: (b) 6.95% 6/15/03 A- 9,000,000 8,921,250 7% 6/15/04 A- 7,200,000 7,110,000 7.15% 6/15/09 A- 2,840,000 2,737,050 Wanaque Valley Reg'l. Swr. Auth. Rfdg. Series B, 5.75% 9/1/18, (AMBAC Insured) Aaa 3,250,000 2,815,313 West New York Muni. Util. Auth. Swr. Rev. Rfdg. (Cap. Appreciation) 0% 12/15/19, (FGIC Insured) Aaa 2,395,000 431,100 276,275,098 NEW YORK & NEW JERSEY - 4.7% New York & New Jersey Port Auth. Consolidated: 59th Series, 7.75% 1/15/23 (Pre-Refunded to 1/15/95 @ 102)(b)(e) A1 1,000,000 1,024,550 77th Series, 6.25% 1/15/27 (b) A1 5,000,000 4,468,750 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) NEW YORK & NEW JERSEY - CONTINUED New York & New Jersey Port Auth. Consolidated: - continued 85th Series, 5.375% 3/1/28 A1 $ 9,000,000 $ 7,087,500 87th Series, 5.25% 7/15/17(b) A1 2,000,000 1,600,000 New York & New Jersey Port Auth. Spl. Oblig. Rev. (Continental Airlines Corp./ Eastern Airlines, Inc. Proj.) 9.125% 12/1/15 (b) B2 700,000 743,750 14,924,550 PUERTO RICO - 6.9% Puerto Rico Commonwealth Hwy. Auth. Hwy. Rev. Series Q, 6% 7/1/20 Baa1 4,000,000 3,460,000 Puerto Rico Commonwealth Urban Renewal & Hsg. Corp. Rfdg. 7.875% 10/1/04 Baa1 5,235,000 5,627,625 Puerto Rico Hsg. Fin. Corp. Rev. (Multi-Family Mtg. Portfolio A) Series I, 7.50% 4/1/22, LOC Puerto Rico Gov't. Dev. Bank AA 2,705,000 2,742,184 Puerto Rico Infrastructure Fing. Auth. Spl. Tax Series 1988 A, 7.75% 7/1/08 Baa1 2,255,000 2,379,025 Puerto Rico Pub. Bldgs. Auth. Rev. Rfdg. Series L, 5.50% 7/1/21 Baa1 10,000,000 8,075,000 22,283,834 TOTAL MUNICIPAL BONDS (Cost $323,649,682) 313,483,482 MUNICIPAL NOTES (A) - 2.3% NEW JERSEY - 0.8% New Jersey Econ. Dev. Auth. Ind. & Econ. Dev. (Casa DiBertacchi Corp. Facs.) Series 1988, 4.05%, LOC Marine Midland Bank, VRDN (b) A-2 1,100,000 1,100,000 New Jersey Econ. Dev. Auth. Rev. (Danic Urban Renewal Co. Proj.) Series 1985, 3.85%, LOC Marine Midland Bank, VRDN P-2 1,400,000 1,400,000 2,500,000 NEW YORK & NEW JERSEY - 1.5% New York & New Jersey Port Auth. Consolidated Notes Series SS, 4.90% 9/1/97 (b) MIG 1 5,000,000 4,937,650 TOTAL MUNICIPAL NOTES (Cost $7,500,000) 7,437,650 TOTAL INVESTMENTS (Cost $331,149,682) $ 320,921,132 SECURITY TYPE ABBREVIATIONS INFL - Inverse Floating Rate Security VRDN - Variable Rate Demand Notes LEGEND (a) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (b) Private activity obligations whose interest is subject to the federal alternative minimum tax for individuals (AMT securities). (c) Standard & Poor's Corporation credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. (d) Coupon is inversely indexed to a floating interest rate. The price will be more volatile than the price of a comparable fixed rate security. The rate shown is the rate at period end. (e) Security collateralized by an amount sufficient to pay interest and principal. INCOME TAX INFORMATION At November 30, 1994 the aggregate cost of investment securities for income tax purposes was $331,149,682. Net unrealized depreciation aggregated $10,228,550, of which $4,051,710 related to appreciated investment securities and $14,280,260 related to depreciated investment securities. At November 30, 1994, the fund had a capital loss carryforward of approximately $1,661,400 which will expire on November 30, 2002. At November 30, 1994 the fund was required to defer $17,735 of losses on futures contracts. OTHER INFORMATION The composition of long-term debt holdings as a percentage of total value of investments for the period ended is as follows (ratings are unaudited): MOODY'S RATINGS S&P RATINGS Aaa, Aa, A 55.2% AAA, AA, A 72.1% Baa 12.2% BBB 9.9% Ba 0.0% BB 0.0% B 0.2% B 0.0% Caa 0.0% CCC 0.0% Ca, C 0.0% CC, C 0.0% D 0.0% The percentage not rated by either S&P or Moody's amounted to 12.3%. FMR has determined that unrated debt securities that are lower quality account for 6.8% of the total value of investment in securities. The distribution of municipal securities by revenue source, as a percentage of total value of investments, is as follows: Transportation 19.2% Health Care 15.5 General Obligation 14.8 Industrial Development 11.2 Escrowed/Pre-Refunded 10.5 Others (individually less than 10%) 28.8 TOTAL 100.0% FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994 1.ASSETS 2. 3. 4.Investment in securities, at value (cost $331,149,682) 5. $ 320,921,132 - - See accompanying schedule 6.Interest receivable 7. 7,406,334 8.Redemption fees receivable 9. 72 10. 11.TOTAL ASSETS 12. 328,327,538 13.LIABILITIES 14. 15. 16.Payable to custodian bank $ 33,777 17. 18.Payable for fund shares redeemed 727,729 19. 20.Dividends payable 357,022 21. 22.Accrued management fee 148,651 23. 24. 25.TOTAL LIABILITIES 26. 1,267,179 27.28.NET ASSETS 29. $ 327,060,359 30.Net Assets consist of: 31. 32. 33.Paid in capital 34. $ 339,285,575 35.Accumulated undistributed net realized gain (loss) on 36. investments (1,996,666) 37.Net unrealized appreciation (depreciation) 38. (10,228,550) on investments 39.40.NET ASSETS, for 31,690,212 shares outstanding 41. $ 327,060,359 42.43.NET ASSET VALUE, offering price and redemption 44. $10.32 price per share ($327,060,359 (divided by) 31,690,212 shares)
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1994 45.46.INTEREST INCOME 47. $ 23,829,856 48.EXPENSES 49. 50. 51.Management fee $ 2,093,718 52. 53.Non-interested trustees' compensation 2,337 54. 55. 56.TOTAL EXPENSES 57. 2,096,055 58.59.NET INTEREST INCOME 60. 21,733,801 61.REALIZED AND UNREALIZED GAIN (LOSS) 63. 64. 62.Net realized gain (loss) on: 65. Investment securities (2,185,747) 66. 67. Futures contracts 313,735 (1,872,012) 68.Change in net unrealized appreciation (depreciation) 69. (42,678,448) on investment securities 70.71.NET GAIN (LOSS) 72. (44,550,460) 73.74.NET INCREASE (DECREASE) IN NET ASSETS 75. $ (22,816,659) RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED NOVEMBER 30, 1994 1993 76.INCREASE (DECREASE) IN NET ASSETS 77.Operations $ 21,733,801 $ 22,029,087 Net interest income 78. Net realized gain (loss) (1,872,012) 5,409,129 79. Change in net unrealized appreciation (depreciation) (42,678,448) 16,830,884 80. 81.NET INCREASE (DECREASE) IN NET ASSETS (22,816,659) 44,269,100 RESULTING FROM OPERATIONS 82.Distributions to shareholders: (21,733,801) (22,029,087) From net interest income 83. From net realized gain (5,384,226) (4,879,335) 84. 85.TOTAL DISTRIBUTIONS (27,118,027) (26,908,422) 86.Share transactions 52,850,946 117,264,900 Net proceeds from sales of shares 87. Reinvestment of distributions 22,039,374 22,285,985 88. Cost of shares redeemed (120,455,997) (77,178,149) 89. Redemption fees 41,637 52,148 90. Net increase (decrease) in net assets resulting (45,524,040) 62,424,884 from share transactions 91. 92.TOTAL INCREASE (DECREASE) IN NET ASSETS (95,458,726) 79,785,562 93.NET ASSETS 94. 95. 96. Beginning of period 422,519,085 342,733,523 97. End of period $ 327,060,359 $ 422,519,085 98.OTHER INFORMATION 100. 101. 99.Shares 102. Sold 4,712,112 10,139,177 103. Issued in reinvestment of distributions 1,969,361 1,932,128 104. Redeemed (10,919,165) (6,628,468) 105. Net increase (decrease) (4,237,692) 5,442,837
FINANCIAL HIGHLIGHTS
YEARS ENDED NOVEMBER 30, 1994 1993 1992 1991 1990 106.SELECTED PER-SHARE DATA 107.Net asset value, $ 11.760 $ 11.240 $ 11.020 $ 10.620 $ 10.650 beginning of period 108.Income from .637 .640 .694 .694 .674 Investment Operations Net investment income 109. Net realized and (1.291) .678 .298 .398 .050 unrealized gain (loss) 110. Total from investment (.654) 1.318 .992 1.092 .724 operations 111.Less Distributions (.637) (.640) (.694) (.694) (.674) From net investment income 112. From net realized gain (.150) (.160) (.080) - (.080) on investments 113. Total distributions (.787) (.800) (.774) (.694) (.754) 114.Redemption fees added .001 .002 .002 .002 - to paid in capital 115.Net asset value, $ 10.320 $ 11.760 $ 11.240 $ 11.020 $ 10.620 end of period 116.TOTAL RETURN A -5.86 12.12 9.33 10.63 7.15 % % % % % 117.RATIOS AND SUPPLEMENTAL DATA 118.Net assets, end of $ 327,060 $ 422,519 $ 342,734 $ 289,792 $ 209,658 period (000 omitted) 119.Ratio of expenses to .55 .55 .51 .52 .65 average net assets % % % % % 120.Ratio of expenses to .55 .55 .56 .64 .68 average net assets before % % % % % expense reductions 121.Ratio of net investment 5.70 5.52 6.22 6.44 6.47 income to average net % % % % % assets 122.Portfolio turnover rate 8 25 33 42 82 % % % % %
A TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. NOTES TO FINANCIAL STATEMENTS For the period ended November 30, 1994 1. SIGNIFICANT ACCOUNTING POLICIES. Spartan New Jersey Municipal High Yield Portfolio (the fund) is a fund of Fidelity Court Street Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The following summarizes the significant accounting policies of the fund: SECURITY VALUATION. Securities are valued based upon a computerized matrix system and/or appraisals by a pricing service, both of which consider market transactions and dealer-supplied valuations. Short-term securities maturing within sixty days of their purchase date are valued either at amortized cost or original cost plus accrued interest, both of which approximate current value. Securities for which quotations are not readily available through the pricing service are valued at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the fund is not subject to income taxes to the extent that it distributes all of its taxable income for its fiscal year. The schedule of investments includes information regarding income taxes under the caption "Income Tax Information." INTEREST INCOME. Interest income, which includes amortization of premium and accretion of original issue discount, is accrued as earned. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned between the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Distributions are declared daily and paid monthly from net investment income. Distributions from realized gains, if any, are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments for losses deferred due to wash sales. The fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. REDEMPTION FEES. Shares held in the fund less than 180 days are subject to a redemption fee equal to .50% of the proceeds of the redeemed shares. The fee, which is retained by the fund, is accounted for as an addition to paid in capital. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective December 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of the beginning of the fiscal year have been reclassified to reflect an increase in paid in capital and a decrease in accumulated net realized gain on investments of $510,154. 2. OPERATING POLICIES. FUTURES CONTRACTS AND OPTIONS. The fund may invest in futures and options contracts, and may also write options. These investments involve, to varying degrees, elements of market risk and risks in excess of the amount recognized in the Statement of Assets and Liabilities. The face or contract amounts, as reflected in the schedule of investments under the caption "Futures Contracts," reflect the extent of the involvement the fund has in the particular classes of instruments. Risks may be caused by an imperfect correlation between movements in the price of the instruments and the price of the underlying securities and interest rates. Risks also may arise if there is an illiquid secondary market for the instruments, or due to the inability of counterparties to perform. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Options traded on an exchange are valued using the last sale price or, in the absence of a sale, the last offering price. Options traded over-the-counter are valued using dealer-supplied valuations. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $29,956,528 and $84,587,907, respectively. The face value of futures contracts opened and closed amounted to $131,468,958 and $131,268,076, respectively. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management & Research Company (FMR) pays all expenses, except the compensation of the non-interested Trustees and certain exceptions such as interest, taxes, brokerage commissions and extraordinary expenses. FMR receives a fee that is computed daily at an annual rate of .55% of the fund's average net assets. FMR also bears the cost of providing shareholder services to the fund. To offset the cost of providing these services, FMR or its affiliates collect certain transaction fees from the fund's shareholders which amounted to $9,616 for the period. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Court Street Trust and the Shareholders of Spartan New Jersey Municipal High Yield Portfolio: We have audited the accompanying statement of assets and liabilities of Fidelity Court Street Trust: Spartan New Jersey Municipal High Yield Portfolio, including the schedule of portfolio investments, as of November 30, 1994, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 1994 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Court Street Trust: Spartan New Jersey Municipal High Yield Portfolio as of November 30, 1994, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with generally accepted accounting principles. /s/COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P. Boston, Massachusetts December 30, 1994 INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA OFFICERS Edward C. Johnson 3d, President J. Gary Burkhead, Senior Vice President Thomas J. Steffanci, Vice President David Murphy, Vice President Gary L. French, Treasurer John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer Arthur S. Loring, Secretary BOARD OF TRUSTEES J. Gary Burkhead Ralph F. Cox* Phyllis Burke Davis* Richard J. Flynn* Edward C. Johnson 3d E. Bradley Jones* Donald J. Kirk* Peter S. Lynch Edward H. Malone* Marvin L. Mann* Gerald C. McDonough* Thomas R. Williams* GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENTS United Missouri Bank, N.A. Kansas City, MO and Fidelity Service Co. Boston, MA CUSTODIAN United Missouri Bank, N.A. Kansas City, MO FIDELITY TAX-FREE BOND FUNDS Aggressive Tax-Free California Tax-Free High Yield California Tax-Free Insured High Yield Tax-Free Insured Tax-Free Limited Term Municipals Massachusetts Tax-Free High Yield Michigan Tax-Free High Yield Minnesota Tax-Free Municipal Bond New York Tax-Free High Yield New York Tax-Free Insured Ohio Tax-Free High Yield Spartan Aggressive Tax-Free Spartan Arizona Municipal Income Spartan California Intermediate Municipal Spartan California Municipal High Yield Spartan Connecticut Municipal High Yield Spartan Florida Municipal Income Spartan Intermediate Municipal Spartan Maryland Municipal Income Spartan Municipal Income Spartan New Jersey Municipal High Yield Spartan New York Intermediate Municipal Spartan New York Municipal High Yield Spartan Pennsylvania Municipal High Yield Spartan Short-Intermediate Municipal THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE 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 (registered trademark) Corporate Headquarters 82 Devonshire St., Boston, MA 02109 SPARTAN(registered trademark) (registered trademark) CONNECTICUT MUNICIPAL PORTFOLIOS ANNUAL REPORT NOVEMBER 30, 1994 CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies. SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO PERFORMANCE 4 How the fund has done over time. FUND TALK 7 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 10 A summary of major shifts in the fund's investments over the past six months and one year. INVESTMENTS 11 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 19 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO PERFORMANCE 23 How the fund has done over time. FUND TALK 25 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 27 A summary of major shifts in the fund's investments over the past six months and one year. INVESTMENTS 28 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 32 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 36 Notes to the financial statements. REPORT OF INDEPENDENT ACCOUNTANTS 39 The auditors' opinion.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE DEAR SHAREHOLDER: The unsettling period that began for bond investors when the Federal Reserve Board raised short-term interest rates in February has continued into the fourth quarter of 1994. The Board raised the federal funds rate - the rate banks charge each other for overnight loans - five times from February through August, taking it from 3.00% to 4.75%. A sixth increase in November lifted the rate to 5.50%. The Fed rate hikes were intended to forestall inflation that could result from an improving U.S. economy, and they led to negative returns for many bond investments and below-average returns for many stocks. The volatility we have witnessed this year follows a period in which there was a nearly perfect investing environment. Although there was a late-summer rally in stocks and, to a lesser extent in bond markets, it is impossible to predict where interest rates might go or what might happen in the markets in the months ahead. That's why it probably is a good time to again review your investment portfolio and how well it matches your goals. Keeping in mind that the negative effects of rising rates on your bond investments will only be "paper" losses unless you sell your shares, staying in your bond fund may be appropriate. The longer your investing time frame, the more likely it is that you will retain your principal investment through both up and down markets. For example, a 10-year time frame, such as saving for a college education, enables you to weather these ups and downs in a long-term fund, which has higher potential returns. An intermediate-length fund could be appropriate if your investment horizon is two to four years, and a short-term bond fund could be the right choice if you need your money in one or two years. If your time horizon is less than a year, you might want to consider moving some of your bond investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. As with any mutual fund, of course, there is no assurance that a money market fund will achieve its goal, and money market funds are not insured by any agency of the U.S. government. No matter what your investment horizon or portfolio diversity, it makes good sense to follow a regular investment plan - investing a certain amount of money at the same time each month or quarter - and to review your portfolio periodically, as we have discussed here. A periodic investment plan will not, of course, assure a profit or protect against a loss. If you have any questions, please call us at 1-800-544-8888. We stand ready to provide the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each figure includes changes in a fund's share price, reinvestment of any dividends (or income) and capital gains (the profits the fund earns when it sells bonds that have grown in value), and the effect of the $5 account closeout fee. You can also look at the fund's income. If Fidelity had not reimbursed certain fund expenses during the periods shown, the total returns and dividends would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 PAST 5 LIFE OF YEAR YEARS FUND Spartan Connecticut Municipal High Yield Portfolio -7.62% 31.36% 62.16% Lehman Brothers Municipal Bond Index -5.25% 37.52% n/a Average Connecticut Tax-exempt Municipal Bond Fund -7.65% 33.45% n/a Consumer Price Index 2.81% 19.06% 30.01% CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period - - in this case, one year, five years, or since the fund started on October 29, 1987. For example, if you invested $1,000 in a fund that had a 5% return over the past year, you would end up with $1,050. You can compare these figures to the performance of the Lehman Brothers Municipal Bond index - a broad gauge of the municipal bond market. To measure how the fund stacked up against its peers, you can look at the average Connecticut tax-exempt municipal bond fund, which currently reflects the performance of 13 Connecticut municipal bond funds tracked by Lipper Analytical Services. Both benchmarks include reinvested dividends and capital gains, if any. Comparing the fund's performance to the consumer price index (CPI) helps show how your fund did compared to inflation. (The periods covered by the CPI numbers are the closest available match to these covered by the fund.) AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 PAST 5 LIFE OF YEAR YEARS FUND Spartan Connecticut Municipal High Yield Portfolio -7.62% 5.61% 7.05% Lehman Brothers Municipal Bond Index -5.25% 6.58% n/a Average Connecticut Tax-exempt Municipal Bond Fund -7.65% 5.94% n/a Consumer Price Index 2.81% 3.55% 3.77% AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Spartan Connecticut TaxMunicipal Bond Ind 10/31/87 10000.00 10000.00 11/30/87 10121.14 10261.10 12/31/87 10253.38 10409.99 01/31/88 10621.32 10780.79 02/29/88 10727.51 10894.75 03/31/88 10415.77 10767.82 04/30/88 10463.24 10849.66 05/31/88 10515.59 10818.30 06/30/88 10713.45 10976.57 07/31/88 10766.94 11048.14 08/31/88 10821.12 11057.86 09/30/88 11033.66 11258.01 10/31/88 11228.48 11456.71 11/30/88 11123.75 11351.77 12/31/88 11289.83 11467.90 01/31/89 11442.62 11705.06 02/28/89 11333.30 11571.50 03/31/89 11345.51 11543.84 04/30/89 11654.63 11817.90 05/31/89 11899.34 12063.35 06/30/89 12098.25 12227.17 07/31/89 12229.61 12393.59 08/31/89 12100.69 12272.25 09/30/89 12064.54 12235.44 10/31/89 12207.62 12384.71 11/30/89 12387.76 12601.44 12/31/89 12467.79 12704.77 01/31/90 12357.27 12645.06 02/28/90 12469.60 12757.60 03/31/90 12491.35 12761.43 04/30/90 12296.36 12669.55 05/31/90 12602.21 12945.74 06/30/90 12730.25 13059.66 07/31/90 12919.65 13251.64 08/31/90 12687.36 13059.49 09/30/90 12769.38 13067.33 10/31/90 12962.06 13303.85 11/30/90 13241.66 13571.25 12/31/90 13302.08 13630.97 01/31/91 13449.70 13813.62 02/28/91 13534.39 13933.80 03/31/91 13556.04 13939.37 04/30/91 13728.33 14124.77 05/31/91 13850.06 14250.48 06/30/91 13743.00 14236.23 07/31/91 13906.13 14409.91 08/31/91 14057.21 14600.12 09/30/91 14183.28 14789.92 10/31/91 14323.10 14923.03 11/30/91 14357.59 14964.82 12/31/91 14709.44 15286.56 01/31/92 14731.79 15321.72 02/29/92 14739.08 15326.32 03/31/92 14671.72 15332.45 04/30/92 14749.26 15468.90 05/31/92 14951.26 15651.44 06/30/92 15245.81 15914.38 07/31/92 15720.88 16391.81 08/31/92 15498.37 16231.17 09/30/92 15604.48 16336.68 10/31/92 15338.53 16176.58 11/30/92 15752.70 16466.14 12/31/92 15918.26 16634.09 01/31/93 16155.62 16827.05 02/28/93 16812.50 17436.19 03/31/93 16583.73 17251.36 04/30/93 16736.58 17425.60 05/31/93 16834.45 17523.19 06/30/93 17132.67 17815.82 07/31/93 17158.03 17838.98 08/31/93 17547.21 18210.03 09/30/93 17760.00 18417.63 10/31/93 17769.50 18452.62 11/30/93 17613.40 18290.24 12/31/93 17984.07 18676.16 01/31/94 18192.19 18889.07 02/28/94 17691.70 18399.84 03/31/94 16886.78 17650.97 04/30/94 17031.86 17801.00 05/31/94 17133.34 17955.87 06/30/94 17026.94 17851.73 07/31/94 17368.69 18178.42 08/31/94 17407.77 18242.04 09/30/94 17121.73 17973.88 10/31/94 16740.36 17653.95 11/30/94 16273.36 17334.41 $10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan Connecticut Municipal High Yield Portfolio on October 31, 1987, shortly after the fund started. As the chart shows, by November 30, 1994, the value of your investment would have grown to $16,273 - a 62.73% increase on your initial investment. This assumes you still own the fund on November 30, and therefore does not include the effect of the $5 account closeout fee. For comparison, look at how the Lehman Brothers Municipal Bond index did over the same period. With dividends reinvested, the same $10,000 would have grown to $17,334 - a 73.34% increase. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. Bond prices, for example, move in the opposite direction of interest rates. In turn, the share price, return, and yield of a fund that invests in bonds will vary. That means if you sell your shares during a market downturn, you might lose money. But if you can ride out the market's ups and downs, you may have a gain. (checkmark) TOTAL RETURN COMPONENTS YEARS ENDED NOVEMBER 30, 1994 1993 1992 1991 1990 Dividend return 5.27% 6.29% 6.59% 6.65% 6.71% Capital appreciation returns -12.89% 5.52% 3.12% 1.77% 0.17% Total return -7.62% 11.81% 9.71% 8.42% 6.88% DIVIDEND returns and capital appreciation returns are both part of a bond fund's total return. A dividend return reflects the actual dividends paid by the fund. A capital appreciation return reflects both the amount paid by the fund to shareholders as capital gain distributions and changes in the fund's share price. Both returns assume the dividends or gains are reinvested. Capital appreciation and total returns include the effect of the $5 account closeout fee. DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1994 PAST PAST 6 PAST 1 MONTH MONTHS YEAR Dividends per share 5.27(cents) 32.08(cents) 64.01(cents) Annualized dividend rate 6.44% 6.04% 5.86% 30-day annualized yield 6.59% - - 30-day annualized tax-equivalent yield 10.78% - -
DIVIDENDS per share show the income paid by the fund for a set period. If you annualize this number, based on an average share price of $9.96 over the past month, $10.59 over the past six months and $10.93 over the past year, you can compare the fund's income over these three periods. The 30-day annualized YIELD is a standard formula for all funds based on the yields of the bonds in the fund, averaged over the past 30 days. This figure shows you the yield characteristics of the fund's investments at the end of the period. It also helps you compare funds from different companies on an equal basis. The tax-equivalent yield shows what you would have to earn on a taxable investment to equal the fund's tax-free yield, if you're in the 38.88% combined federal and state tax bracket. SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP Sharply rising interest rates and ongoing inflation worries caused a severe downturn in U.S. bond markets in 1994. Yields rose sharply - and prices fell - on taxable and tax-free bonds alike. For the 12 months ended November 30, 1994, the Lehman Brothers Municipal Bond Index - a broad measure of the tax-free market - had a total return of - -5.25%. By comparison, the Lehman Brothers Aggregate Bond Index - a proxy of investment-grade taxable bonds - returned -3.06%. After interest rates remained low and relatively steady in December 1993 and January 1994, the rate environment changed dramatically. The Federal Reserve Board raised the federal funds rate - the rate banks charge each other for overnight loans - from 3.00% to 5.50% from February through November. The Fed was hoping to head off future inflation that might be triggered by an improving U.S. economy. However, investors heavily sold bonds at the very threat of inflation because inflation diminishes the value of their fixed-rate income payments. Two other influences affected the performance of tax-free bonds, specifically. First, investor demand fell due to inflation worries, which dampened prices. Second, although it didn't outweigh the negative effects of lower demand, the supply of tax-free bonds fell as well. The ability of states, cities and public agencies to refinance outstanding debt at lower, more attractive rates was limited amid a rising rate environment. An interview with Maureen Newman, Portfolio Manager of Spartan Connecticut Municipal High Yield Portfolio Q. MAUREEN, HOW HAS THE FUND PERFORMED? A. For the year ended November 30, 1994, the fund had a total return of - -7.62%. The average Connecticut municipal fund returned -7.65% for the same period, according to Lipper Analytical Services. Q. WHAT WERE SOME OF THE FACTORS THAT CREATED SUCH A NEGATIVE ENVIRONMENT? A. The Federal Reserve Board increased the federal funds rate - the interest banks charge each other for overnight loans - six times from February through November 30. The outlook in February was that the economy was improving, but that inflation - the usual result of rapid economic growth and a negative for bond investors because it diminishes the value of fixed-income payments - was not going to be a problem. Although some may have applauded the Fed's vigilance at trying to check inflation, the Fed's move kindled inflation fears, sparking a severe drop in price in all bond markets. Q. SO WHAT HAVE YOU DONE IN RESPONSE? A. I have reduced the fund's duration, which lowers its sensitivity to changes in comparable interest rates. I did so by using derivative instruments called futures - which are widely employed for this purpose - and by buying lower duration bonds. I don't like to increase the fund's cash position to manage duration, because it reduces the income of the fund and because the limited supply of Connecticut issues can make it difficult to replace bonds later. The futures are held as a hedge against rising interest rates, allowing me to manage duration without selling bonds. Q. DOES THE FUND USE OTHER DERIVATIVE INVESTMENTS? A. Yes, less than 3% of the fund is invested in inverse floaters - whose yields rise as short-term rates fall, and vice versa. Using this type of derivative can help me to achieve higher levels of tax-exempt income and increased flexibility in managing the actual sensitivity to changes in interest rates. These investments act like very long-term bonds, effectively increasing a fund's duration, which is good in a falling interest rate environment but can hurt the fund when interest rates rise. That means that this year, with the Fed tightening, the fund's investment in inverse floaters have hurt the fund's performance somewhat. Going forward, I plan to link these investments to money market instruments created at the same time by the same issuer. When linked together, they perform like normal fixed-rate bonds with reduced interest rate sensitivity. Q. HEALTH CARE REMAINS THE FUND'S TOP SECTOR. WHAT'S YOUR OUTLOOK THERE? A. Although I'm comfortable with the specific holdings in the health care sector, in the long run I'll be working to reduce the fund's overall exposure there, because of continuing changes in the health care environment. I will accomplish this reduction in the fund's exposure to health care only as other high income opportunities arise. Another top sector in the fund is special tax bonds, securities linked to taxes such as those levied on motor vehicles or liquor. This is an area where credit remains strong. Q. AFTER THE PERIOD ENDED, ORANGE COUNTY, CALIFORNIA DECLARED BANKRUPTCY BECAUSE OF LOSSES IN ITS INVESTMENT FUND. ARE THERE CONNECTICUT MUNICIPALITIES EXPERIENCING SIMILAR PROBLEMS? A. None that we are aware of at this time. The State of Connecticut issued an announcement stating that it on occasion purchases derivatives for short-term investments, but that it has never used them for speculation. The state added that it owned no such instruments at the time of the announcement, and that it has not purchased derivatives using leverage, or borrowed money, as Orange County did. From what we know now, Connecticut municipalities have been even more conservative in their investments. As far as the general muni market is concerned, Orange County caused a temporary disruption, but the market bounced back as it sorted out the issues. I don't expect the Orange County problem to have any significant impact on the Connecticut market over the long term. With the help of Fidelity's research staff, I'll continue to monitor the situation closely. Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS? A. In my view, interest rates probably will be more stable in 1995 than they were in 1994. If I am correct, it's likely that bond prices will be more stable as well. In that type of environment, the fund's total return should be less dependent on bond price changes and more dependent on the level of income the bonds pay. So to help boost the fund's total return, I'll concentrate on pursuing a higher income for the fund. I'll do that primarily by seeking opportunities in higher-yielding, lower-rated bonds. Fidelity's research staff is one of the largest in the industry and has expertise in finding high-yielding bonds that pay enough income to compensate for the added risk that comes with a lower credit quality. FUND FACTS GOAL: to provide a high level of current income exempt from Connecticut state and federal income taxes by investing primarily in bonds rated Baa or better START DATE: October 29, 1987 SIZE: as of November 30, 1994, more than $315 million MANAGER: Maureen Newman, since July 1994; manager Michigan Tax-Free High Yield Fund since July 1994, Spartan Aggressive Municipal Fund, since October 1994 and Spartan Arizona Municipal Income Fund since October 1994; bond analyst 1985 to 1994; joined Fidelity in 1985 (checkmark) MAUREEN NEWMAN ON INVESTMENT STRATEGY: "I start with fundamental research - checking investment options issuer by issuer - to come up with investment ideas relating to changes in credit quality. I try to stay ahead of the market and the rating agencies, looking for quality trends before they happen, in order to buy into good situations on their way up and to get out of securities before the market realizes potential problems. Diversification is also a key, as I try to keep a good mix of coupons and maturities in the fund which can reduce the overall volatility of the fund." (solid bullet) There has been a limited supply of new bonds in Connecticut, partially due to a lack of activity in the state's economy. The state still has not recovered from cutbacks in the defense and insurance industries. There also has been some credit deterioration in the state in general because of this slow-down. (solid bullet) As of July 1994, Maureen Newman became the fund manager. Ms. Newman was previously a research analyst. DISTRIBUTIONS The Board of Trustees of Fidelity Court Street Trust: Spartan Connecticut High Yield Portfolio voted to pay on December 19, 1994, to shareholders of record at the opening of business on December 16, 1994, a distribution of $.03 derived from capital gains realized from sales of portfolio securities. SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO INVESTMENT CHANGES TOP FIVE SECTORS AS OF NOVEMBER 30, 1994 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE SECTORS 6 MONTHS AGO Health Care 28.5 28.7 General Obligation 25.0 23.7 Special Tax 11.6 12.0 Transportation 7.6 6.8 Education 7.1 6.9 AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1994 6 MONTHS AGO Years 18.5 19.8 AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR AMOUNT. DURATION AS OF NOVEMBER 30, 1994 6 MONTHS AGO Years 8.2 8.5 DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE. QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1994 (MOODY'S RATINGS) Aaa 17.1% Aa, A 36.5% Baa 29.5% Ba or B 2.4% Non-rated 10.2% Short-term and other investments 4.3% Row: 1, Col: 1, Value: 17.1 Row: 1, Col: 2, Value: 36.5 Row: 1, Col: 3, Value: 29.5 Row: 1, Col: 4, Value: 2.4 Row: 1, Col: 5, Value: 10.2 Row: 1, Col: 6, Value: 4.3 WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT AUGUST 31, 1994 ACCOUNT FOR 10.2% OF THE FUND'S INVESTMENTS. SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO INVESTMENTS NOVEMBER 30, 1994 Showing Percentage of Total Value of Investments MUNICIPAL BONDS - 95.7% MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) CONNECTICUT - 84.0% Branford Gen. Oblig. Unltd. Tax: 7% 6/15/08, (FGIC Insured) Aaa $ 500,000 $ 517,500 7% 6/15/09, (FGIC Insured) Aaa 500,000 511,875 Bridgeport Gen. Oblig. Series B, 7.75% 11/15/10 Ba 3,235,000 3,263,306 Bridgeport Unltd. Tax Series A: 7.20% 3/1/98 Ba 930,000 946,275 7.40% 3/1/00 Ba 1,080,000 1,097,550 7.25% 6/1/02 Ba 565,000 564,294 7.625% 1/15/09 Ba 1,500,000 1,507,500 Brookfield Gen. Oblig.: 5.25% 7/15/10 Aa 200,000 173,000 5.25% 7/15/11 Aa 200,000 171,000 5.25% 7/15/12 Aa 200,000 169,250 5.25% 7/15/13 Aa 190,000 159,838 Canterbury Unltd. Tax: 7.20% 5/1/05 A 350,000 368,813 7.20% 5/1/06 A 195,000 204,750 Cheshire Unltd. Tax: 6.90% 2/15/06 Aa 100,000 104,875 6.90% 2/15/07 Aa 100,000 103,875 6.90% 2/15/08 Aa 100,000 103,125 Connecticut Clean Wtr. Fund Rev.: 5.875% 4/1/08 Aa 1,000,000 920,000 6% 10/1/12 (f) Aa 6,000,000 5,437,500 Series 1991, 7% 1/1/11 Aa 2,500,000 2,534,375 Connecticut College Savings Unltd. Tax 0% 12/1/11 Aa 1,540,000 492,800 Connecticut Dev. Auth. 1st. Mtg. Gross Rev. (Health Care Proj.): (Baptist Homes, Inc.): 8.75% 9/1/12 - 2,415,000 2,448,206 9% 9/1/22 - 4,240,000 4,367,200 (Inter-Church Residences, Inc.): 9.50% 5/1/13 - 1,200,000 1,288,500 9.625% 4/1/21 - 3,500,000 3,780,000 (Mary Wade Home, Inc. Proj.) 8.875%, 12/1/18 - 1,670,000 1,705,488 Connecticut Dev. Auth. Health Care Rfdg. (Duncaster, Inc. Proj.) 6.75% 9/1/15 Aa3 3,000,000 2,797,500 Connecticut Dev. Auth. Health Care Rev. (Jerome Home Proj.) 8% 11/1/19 - 1,975,000 1,970,063 Connecticut Dev. Auth. Poll. Cont. Rev. (United Illuminating Co. Proj.) 9.50% 6/1/16 BBB- 2,625,000 2,782,500 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) CONNECTICUT - CONTINUED Connecticut Dev. Auth. Rev. (Hartford Civic Ctr.) Series A: 6% 11/15/07 A1 $ 1,525,000 $ 1,437,313 Series A, 6% 11/15/08 A1 1,525,000 1,420,156 Series A, 6% 11/15/08 A1 1,525,000 1,406,813 4.75% 11/15/13 A1 1,525,000 1,136,125 Connecticut Dev. Auth. Wtr. Facs. Rev. Rfdg. (Bridgeport Hydraulic Co. Proj.) 7.25% 6/1/20 A 1,000,000 1,011,250 Connecticut Gen. Oblig.: (Cap. Appreciation College Savings Plan): Series A: 0% 12/1/07 Aa 4,000,000 1,695,000 0% 12/1/08 Aa 558,000 218,318 Series B: 0% 11/1/09 Aa 11,390,000 4,257,013 0% 11/15/10 Aa 4,460,000 1,544,275 (College Savings Plan): Series 1991 A, 0% 5/15/10 Aa 1,025,000 366,438 Series A: 0% 11/1/06 Aa 2,800,000 1,291,500 0% 5/15/10 Aa 7,980,000 2,852,850 0% 5/15/11 Aa 3,350,000 1,113,875 Unltd. Tax: Series A, 0% 6/15/10 Aa 2,188,000 779,475 Series B: Rfdg.: 5.30% 3/15/07 Aa 1,500,000 1,333,125 5.50% 3/15/10 Aa 2,000,000 1,767,500 5.50% 3/15/10 Aa 1,000,000 880,000 0%, 12/15/10 Aa 2,428,000 837,660 0%, 12/15/11 Aa 1,496,000 478,720 Series A: 0% 7/1/98 Aa 780,000 642,525 0% 7/1/03 Aa 4,000,000 2,340,000 0% 7/1/04 Aa 4,514,000 2,465,773 0% 7/1/05 Aa 750,000 380,625 0% 5/15/07 Aa 2,250,000 990,000 0% 7/1/07 Aa 2,430,000 1,060,088 0% 7/1/08 Aa 1,690,000 676,000 Connecticut Health & Ed. Facs. Auth. Rev.: Rfdg. (Lawrence & Memorial Hosp.) Series D, 5% 7/1/13 (MBIA Insured) Aaa 2,000,000 1,582,500 (Bristol Hosp.) Issue A: 7% 7/1/09 (MBIA Insured) Aaa 1,750,000 1,769,688 7% 7/1/20 (MBIA Insured) Aaa 4,180,000 4,159,100 (Hartford Univ.) Series D, 6.80% 7/1/22 Baa 6,320,000 5,577,400 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) CONNECTICUT - CONTINUED Connecticut Health & Ed. Facs. Auth. Rev. - continued (Lutheran Gen. Health Care Sys.) 7.375% 7/1/19 Aaa $ 3,195,000 $ 3,406,669 (New Britain Mem. Hosp.) Series A, 7.75% 7/1/22 BBB- 16,900,000 16,139,500 (Norwalk Health Care, Inc.) Series A, 8.70% 7/1/22 - 6,600,000 6,740,250 (Quinnipiac Coll.): Rfdg. Series D: 6%, 7/1/13 BBB- 3,750,000 3,060,938 6%, 7/1/23 BBB- 3,975,000 3,085,594 Series C, 7.75% 7/1/20 (Pre-Refunded to 7/1/00 @ 102) (c) BBB- 1,000,000 1,101,250 (St. Joseph Living Ctr. Proj.) 4.75% 11/1/14 A1 3,250,000 2,331,875 (St. Mary's Hosp.) : Issue B: 7.60% 7/1/03 Baa 900,000 920,250 7.80% 7/1/09 (AMBAC Insured) Baa 9,525,000 9,513,094 Series C, 7.375% 7/1/20 Baa 7,420,000 6,900,600 (St. Raphael Hosp.) Series H: 6.50% 7/1/11, (AMBAC Insured) Aaa 2,780,000 2,693,125 6.50% 7/1/13, (AMBAC Insured) Aaa 3,125,000 3,003,906 5.25% 7/1/14, (AMBAC Insured) Aaa 4,400,000 3,635,500 (Sacred Heart Univ.) Series A, 6.85% 7/1/22, LOC Fleet Nat'l. Bank A 1,000,000 936,250 (Sharon Healthcare, Inc.) Series A: 8.75% 7/1/06 (Pre-Refunded to 7/1/01 @ 103) (c) AAA 450,000 524,813 9% 7/1/13 (Pre-Refunded to 7/1/01 @ 103) (c) AAA 1,300,000 1,532,375 9.20% 7/1/21 (Pre-Refunded to 7/1/01 @ 103) (c) AAA 1,500,000 1,785,000 (The Griffin Hosp.) Series A, 6% 7/1/13 Baa1 3,000,000 2,452,500 (Tolland County Health Care, Inc.) Series A: 8.75% 7/1/08 - 350,000 366,625 9% 7/1/13 - 1,000,000 1,063,750 9.20% 7/1/21 - 3,600,000 3,870,000 (Yale-New Haven Hosp.) Series F, 7.10% 7/1/25, (MBIA Insured) Aaa 5,000,000 5,012,500 (Yale Univ.) 7.57% 5/15/30 INFL (d) Aaa 7,000,000 4,952,500 Connecticut Higher Ed. Supplemental Loan Auth. Rev. (b): (Family Ed. Loan Prog.) Series A: 6.80% 11/15/02 A 460,000 458,850 7.20% 11/15/10 A 935,000 927,988 Series A: 7.375% 11/15/05 A1 565,000 567,119 7.50% 11/15/10 A1 1,950,000 1,959,750 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) CONNECTICUT - CONTINUED Connecticut Hsg. Fin. Auth. (Mtg. Fin. Prog.): Series B1, 7.55% 11/15/08 Aa $ 965,000 $ 972,238 Series C, 7.625% 11/15/17 Aa 540,000 540,000 Series E, 8.75% 11/15/18 Aa 4,455,000 4,700,025 Connecticut Muni. Elec. Energy Coop. Pwr. Supply Sys. Rev. Series A, 5% 1/1/18, (MBIA Insured) Aaa 5,555,000 4,346,788 Connecticut Resource Recovery Auth. Rev. (American Refuse Fuel Co.) 8.10% 11/15/15 (b) A2 4,500,000 4,798,125 Connecticut Spl. Tax. Oblig. Rev. (Trans. Infrastructure): Series A: Rfdg. 5.25% 9/1/07 A1 4,165,000 3,581,900 7.125% 6/1/10 A1 3,550,000 3,629,875 Series B: 0% 6/1/08 A1 3,500,000 1,378,125 6.15% 9/1/09 A1 1,500,000 1,406,250 6.50% 10/1/10 A1 3,250,000 3,132,188 6.125% 9/1/12 A1 5,000,000 4,543,750 6.50% 10/1/12 A1 3,500,000 3,329,375 Series 1993 A, 5.375% 9/1/08 A1 6,705,000 5,766,300 Connecticut Spl. Tax Rev. Rfdg. Rites 4.484% 10/1/03 INFL (d) A1 5,000,000 2,856,250 Eastern Connecticut Resource Recovery Auth. Solid Waste Rev. (Wheelabrator Lisbon Proj.) Series A (b): 5.50% 1/1/15 (f) A 8,000,000 6,180,000 5.50% 1/1/20 A 3,000,000 2,212,500 Franklin Unltd. Tax : 7.30% 3/15/04 A 225,000 238,500 7.30% 3/15/05 A 225,000 238,781 7.30% 3/15/06 A 225,000 239,625 Hartford County Metropolitan Dist.: School Boards Unltd. Tax 9.50% 6/1/03 Aa1 100,000 121,750 6.20% 11/15/09 Aa1 250,000 239,375 Manchester Hsg. Dev. Agcy. (Multi-Family Hsg.) 7.20% 12/1/18 - 1,565,000 1,406,544 Mansfield Gen. Oblig. Unltd. Tax: 6.80% 6/15/03 A1 300,000 309,000 6.80% 6/15/08 A1 150,000 149,625 Meriden Unltd. Tax 7% 10/1/07, (MBIA Insured) Aaa 500,000 526,250 Milford Gen. Oblig.: Unltd. Tax: 6.70% 2/1/05 Aa 400,000 413,500 6.70% 2/1/08 Aa 315,000 318,150 5.20% 1/15/11 Aa 550,000 467,500 5.20% 1/15/13 Aa 500,000 418,125 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) CONNECTICUT - CONTINUED Monteville Gen. Oblig.: 6.30% 3/1/10 Aa $ 405,000 $ 393,863 Unltd. Tax: 7% 3/15/13 Aa 220,000 228,525 7% 3/15/14 Aa 220,000 228,800 7% 3/15/15 Aa 210,000 218,400 Naugatuck Unltd. Tax: 7.25% 9/1/04, (MBIA Insured) Aaa 215,000 231,931 6.90% 6/15/07, (FGIC Insured) Aaa 485,000 503,794 7.40% 9/1/07, (MBIA Insured) Aaa 370,000 400,063 7.40% 9/1/08, (MBIA Insured) Aaa 370,000 398,213 New Britain Gen. Oblig.: Unltd. Tax: Rfdg. 6% 2/1/12 (MBIA Insured) Aaa 400,000 370,500 7% 4/1/07 (MBIA Insured) Aaa 580,000 604,650 7% 4/1/08 (MBIA Insured) Aaa 580,000 603,200 Series B, 6% 3/1/12, (MBIA Insured) Aaa 2,000,000 1,850,000 5% 2/1/12 (MBIA Insured) Aaa 885,000 722,381 5% 2/1/13 (MBIA Insured) Aaa 885,000 716,850 New Haven Facs. Rev. (Easter Seal Goodwill Rehabilitation Proj.) 8.875% 4/1/16 - 1,600,000 1,570,000 New Haven Gen. Oblig.: Series A, 7.40% 3/1/12 Baa 1,000,000 995,000 8.25% 8/15/01 Baa 3,280,000 3,538,300 Newington Unltd. Tax: 6.50% 2/1/06 A1 320,000 322,000 6.60% 2/1/07 A1 200,000 201,250 North Haven Unltd. Tax 7% 10/1/08 Aa 375,000 394,219 North Thompsonville Fire Dist.: 6.75% 6/1/07, (MBIA Insured) Aaa 180,000 185,400 6.75% 6/1/08, (MBIA Insured) Aaa 190,000 194,275 6.75% 6/1/09, (MBIA Insured) Aaa 200,000 204,500 6.75% 6/1/10, (MBIA Insured) Aaa 215,000 219,837 6.75% 6/1/11, (MBIA Insured) Aaa 230,000 235,462 Norwalk Hsg. Auth. Mtg. Rev. (Monterey Village) Series 1985 B, Section 8, 9% 11/1/99 - 165,000 167,474 Plainville Gen. Oblig.: Unltd. Tax: 6.60% 8/15/09 A1 250,000 250,938 6.60% 8/15/10 A1 250,000 249,687 6.60% 8/15/11 A1 250,000 250,000 6.60% 8/15/08 A1 250,000 248,437 Stamford Gen. Oblig. Unltd. Tax : 6.60% 1/15/07 Aaa 295,000 299,424 6.60% 1/15/08 Aaa 1,480,000 1,492,950 6.60% 1/15/09 Aaa 1,000,000 1,012,500 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) CONNECTICUT - CONTINUED Stratford Gen. Oblig. Unltd. Tax 7% 6/15/08, (FGIC Insured) Aaa $ 500,000 $ 517,500 Thomaston Unltd. Tax: 6.50% 8/1/08 A 210,000 205,800 6.50% 8/1/09 A 210,000 206,850 Vernon Unltd. Tax: 7.10% 10/15/07 A1 250,000 266,874 7.10% 10/15/08 A1 250,000 264,374 Voluntown Gen. Oblig. Unltd. Tax: 6.75% 10/1/03 A 210,000 216,562 6.75% 10/1/04 A 210,000 215,774 6.80% 10/1/06 A 210,000 216,562 6.80% 10/1/07 A 210,000 213,150 6.80% 10/1/08 A 210,000 215,250 6.80% 10/1/09 A 185,000 188,237 West Haven Impt. Unltd. Tax 6.70% 2/15/04, (MBIA Insured) Aaa 710,000 739,287 Winchester Gen. Oblig. Unltd. Tax: 7.10% 11/15/06 A1 125,000 130,312 7.10% 11/15/08 A1 110,000 113,300 Wolcott Gen. Oblig. Unltd. Tax: 7% 6/15/09 (FGIC Insured) Aaa 445,000 455,568 7% 6/15/10 (FGIC Insured) Aaa 440,000 448,250 Woodstock Spl. Oblig. Rev. (Woodstock Academy) 7% 3/1/08, (AMBAC Insured) Aaa 725,000 759,437 260,240,958 PUERTO RICO - 11.4% Puerto Rico Commonwealth Hwy. & Trns. Auth. Rev.: Rfdg.: Series M, 5.75% 7/1/15 Baa1 3,500,000 2,896,250 Series W, 5.50% 7/1/13 Baa1 14,250,000 11,898,750 Series X, 5.50% 7/1/13 Baa1 2,500,000 2,087,500 Series X, 5.50% 7/1/15 Baa1 8,000,000 6,620,000 Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Series T, 5.50% 7/1/20 Baa1 1,500,000 1,218,750 Puerto Rico Pub. Bldgs. Auth. Rev. Rfdg. Series L, 5.50% 7/1/21 Baa1 12,000,000 9,690,000 Puerto Rico Pub. Ed. & Hlth. Facs. Rfdg. Series M, 5.75% 7/1/15 Baa1 1,000,000 840,000 35,251,250 U.S. VIRGIN ISLANDS - 0.3% Virgin Islands Wtr. & Pwr. Auth. Elec. Sys. Series A, 7.40% 7/1/11 - 1,000,000 986,250 TOTAL MUNICIPAL BONDS (Cost $317,705,309) 296,478,458 MUNICIPAL NOTES (A) - 4.3% MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) CONNECTICUT - 4.3% Connecticut Special Assessment Unemployment Rev. Series 1993 B, 3.45%, LOC Industrial Bank of Japan, Mitsubishi Bank Ltd. Japan, VRDN VMIG 1 $ 6,450,000 $ 6,450,000 Connecticut State Dev. Auth. (Light & Pwr. Co. Proj. 1993) Series A, 2.75% 9/1/28, LOC Deutsche Bank, VRDN VMIG 1 7,000,000 7,000,000 TOTAL MUNICIPAL NOTES (Cost $13,450,000) 13,450,000 TOTAL INVESTMENTS - 100% (Cost $331,155,309) $ 309,928,458 FUTURES CONTRACTS EXPIRATION UNDERLYING FACE UNREALIZED DATE AMOUNT AT VALUE GAIN/(LOSS) SELL 80 U.S. Treasury Bond Futures March, 1995 $ 7,845,000 $ (28,226) 10 Municipal Bond Futures March, 1995 837,188 (7,501) $ (35,727) THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 2.8% SECURITY TYPE ABBREVIATIONS VRDN - Variable Rate Demand Notes LEGEND (f) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (g) Private activity obligations whose interest is subject to the federal alternative minimum tax for individuals. (h) Security collateralized by an amount sufficient to pay interest and principal. (i) Coupon is inversely indexed to a floating interest rate. The price will be more volatile than the price of a comparable fixed rate security. The rate shown is the rate at period end. (j) Standard & Poor's Corporation credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. (k) A portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $9,152,500. OTHER INFORMATION The composition of long-term debt holdings as a percentage of total value of investment in securities, is as follows (ratings are unaudited): MOODY'S RATINGS S&P RATINGS Aaa, Aa, A 49.0% AAA, AA, A 60.7% Baa 21.0% BBB 11.7% Ba 2.4% BB 2.4% B 0.0% B 0.0% Caa 0.0% CCC 0.0% Ca, C 0.0% CC, C 0.0% D 0.0% The percentage not rated by either S&P or Moody's amounted to 10.2%. FMR has determined that unrated debt securities that are lower quality account for 10.2% of the total value of investment in securities. The distribution of municipal securities by revenue source, as a percentage of total value of investment in securities, is as follows: Health Care 28.5% General Obligation 25.0 Special Tax 11.6 Others (individually less than 10%) 34.9 TOTAL 100.0% INCOME TAX INFORMATION At November 30, 1994, the aggregate cost of investment securities for income tax purposes was $331,161,463. Net unrealized depreciation aggregated $21,233,005, of which $5,306,594 related to appreciated investment securities and $26,539,599 related to depreciated investment securities. The fund hereby designates $876,961 as a capital gain dividend for the purpose of the dividend paid deduction. The fund has elected to defer to its fiscal year ending November 30, 1995, $1,497,452 of losses recognized during the period December 1, 1993 to November 30, 1994. SPARTAN CONNECTICUT MUNICIPAL HIGH YIELD PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994 123.ASSETS 124. 125. 126.Investment in securities, at value (cost 127. $ 309,928,458 $331,155,309) - See accompanying schedule 128.Receivable for investments sold 129. 591,856 130.Interest receivable 131. 6,262,930 132. 133.TOTAL ASSETS 134. 316,783,244 135.LIABILITIES 136. 137. 138.Payable to custodian bank $ 60,455 139. 140.Payable for fund shares redeemed 572,449 141. 142.Dividends payable 353,081 143. 144.Accrued management fee 144,876 145. 146.Payable for daily variation on futures contracts 70,072 147. 148. 149.TOTAL LIABILITIES 150. 1,200,933 151.152.NET ASSETS 153. $ 315,582,311 154.Net Assets consist of: 155. 156. 157.Paid in capital 158. $ 339,105,081 159.Accumulated undistributed net realized gain (loss) 160. (2,260,192) on investments 161.Net unrealized appreciation (depreciation) 162. (21,262,578) on investments 163.164.NET ASSETS, for 31,695,171 shares 165. $ 315,582,311 outstanding 166.167.NET ASSET VALUE, offering price and 168. $9.96 redemption price per share ($315,582,311 (divided by) 31,695,171 shares)
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1994 169.170.INTEREST INCOME 171. $ 25,246,509 172.EXPENSES 173. 174. 175.Management fee $ 2,172,808 176. 177.Non-interested trustees' compensation 2,451 178. 179. 180.TOTAL EXPENSES 181. 2,175,259 182.183.NET INTEREST INCOME 184. 23,071,250 185.REALIZED AND UNREALIZED GAIN (LOSS) 187. 188. 186.Net realized gain (loss) on: 189. Investment securities 172,704 190. 191. Futures contracts 1,323,154 1,495,858 192.Change in net unrealized appreciation 193. 194. (depreciation) on: 195. Investment securities (54,162,510) 196. 197. Futures contracts (35,727) (54,198,237) 198.199.NET GAIN (LOSS) 200. (52,702,379) 201.202.NET INCREASE (DECREASE) IN NET ASSETS 203. $ (29,631,129) RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED NOVEMBER 30, 1994 1993 204.INCREASE (DECREASE) IN NET ASSETS 205.Operations $ 23,071,250 $ 26,176,581 Net interest income 206. Net realized gain (loss) 1,495,858 14,894,691 207. Change in net unrealized appreciation (54,198,237) 8,978,171 (depreciation) 208. (29,631,129) 50,049,443 209.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 210.Distributions to shareholders: (23,071,250) (26,176,581) From net interest income 211. From net realized gain (15,541,191) - 212. 213.TOTAL DISTRIBUTIONS (38,612,441) (26,176,581) 214.Share transactions 72,572,004 109,111,103 Net proceeds from sales of shares 215. Reinvestment of distributions 31,414,952 21,413,874 216. Cost of shares redeemed (170,335,951) (118,085,422) 217. Redemption fees 62,252 52,698 218. (66,286,743) 12,492,253 Net increase (decrease) in net assets resulting from share transactions 219. (134,530,313) 36,365,115 220.TOTAL INCREASE (DECREASE) IN NET ASSETS 221.NET ASSETS 222. 223. 224. Beginning of period 450,112,624 413,747,509 225. End of period $ 315,582,311 $ 450,112,624 226.OTHER INFORMATION 228. 229. 227.Shares 230. Sold 6,627,548 9,381,355 231. Issued in reinvestment of distributions 2,812,853 1,827,287 232. Redeemed (15,753,663) (10,079,212) 233. Net increase (decrease) (6,313,262) 1,129,430
FINANCIAL HIGHLIGHTS
YEARS ENDED NOVEMBER 30, 1994 1993 1992 1991 1990 234.SELECTED PER-SHARE DATA 235.Net asset value, $ 11.840 $ 11.220 $ 10.880 $ 10.730 $ 10.730 beginning of period 236.Income from .640 .680 .689 .684 .687 Investment Operations Net interest income 237. Net realized and (1.472) .619 .338 .188 .020 unrealized gain (loss) 238. Total from investment (.832) 1.299 1.027 .872 .707 operations 239.Less Distributions (.640) (.680) (.689) (.684) (.687) From net interest income 240. From net realized gain (.410) - - (.040) (.020) on investments 241. Total distributions (1.050) (.680) (.689) (.724) (.707) 242.Redemption fees added .002 .001 .002 .002 - to paid in capital 243.Net asset value, $ 9.960 $ 11.840 $ 11.220 $ 10.880 $ 10.730 end of period 244.TOTAL RETURN A -7.61 11.81 9.72 8.43 6.89 % % % % % 245.RATIOS AND SUPPLEMENTAL DATA 246.Net assets, end of $ 315,582 $ 450,113 $ 413,748 $ 346,781 $ 251,855 period (000 omitted) 247.Ratio of expenses to .55 .55 .55 .55 .62 average net assets % % % % % 248.Ratio of expenses to .55 .55 .55 .60 .62 average net assets before % % % % % expense reductions 249.Ratio of net interest 5.83 5.81 6.21 6.34 6.51 income to average net % % % % % assets 250.Portfolio turnover rate 11 45 11 6 18 % % % % %
A TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO PERFORMANCE: THE BOTTOM LINE To measure a money market fund's performance, you can look at either total return or yield. Total return reflects the change in a fund's share price over a given period, reinvestment of its dividends (or income), and the effect of the fund's $5 account closeout fee. Yield measures the income paid by a fund. Since a money market fund tries to maintain a $1 share price, yield is an important measure of performance. If Fidelity had not voluntarily reimbursed the fund for expenses during the periods shown, the total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 LIFE OF YEAR FUND Spartan Connecticut Municipal Money Market Portfolio 2.27% 10.95% Consumer Price Index 2.81% 11.20% Average Connecticut Tax-Free Money Market Fund 2.08% 9.26% CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period - - in this case, one year, or since the fund started on March 4, 1991. For example, if you invested $1,000 in a fund that had a 5% return over the past year, you would end up with $1,050. Comparing the fund's performance to the consumer price index (CPI) helps show how your investment did compared to inflation. To measure how the fund stacked up against its peers, you can compare its return to the average Connecticut tax-free money market fund's total return. This average currently reflects the performance of 12 Connecticut tax-free money market funds tracked by IBC/Donoghue. (The periods covered by the CPI and IBC/Donoghue numbers are the closest available match to those covered by the fund.) AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 LIFE OF YEAR FUND Spartan Connecticut Municipal Money Market Portfolio 2.27% 2.81% Consumer Price Index 2.81% 2.87% Average Connecticut Tax-Free Money Market Fund 2.08% 2.44% AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had achieved that return by performing at a constant rate each year. YIELDS
11/30/93 2/28/94 5/31/94 8/31/94 11/30/94 Spartan Connecticut Municip 1.96% 2.03% 2.32% 2.63% 3.24% al Money Market Fund Average Connecticut Tax-Fr 1.81% 1.86% 2.19% 2.45% 3.01% ee Money Market Fund Spartan Connecticut Municip 3.19% 3.31% 3.78% 4.28% 5.27% al Money Market Fund - Tax-equivalent Portion of fund's income 10.1% 9.4% 6.8% 13.9% 12.5% subject to state taxes on last day of period Average All Taxable 2.69% 2.79% 3.51% 4.08% 4.84% Money Market Fund
YIELD refers to the income paid by the fund over a given period. Yields for money market funds are usually for seven-day periods, expressed as annual percentage rates. A yield that assumes income earned is reinvested or compounded is called an effective yield. The chart above shows the fund's current seven-day yield at quarterly intervals over the past year. You can compare these yields to the average tax-free money market fund. Or you can look at the fund's tax-equivalent yield, which is based on a combined effective 1994 federal and state income tax rate of 38.88% and reflects that a portion of the fund's income was subject to state taxes. The tax-equivalent figures are useful in seeing how the fund stacked up against the average taxable money market fund as tracked by IBC/Donoghue. A portion of the fund's income may be subject to the alternative minimum tax. A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE. COMPARING PERFORMANCE Yields on tax-free investments are usually lower than yields on taxable investments. However, a straight comparison between the two may be misleading because it ignores the way taxes reduce taxable returns. Tax-equivalent yield - the yield you'd have to earn on a similar taxable investment to match the tax-free yield - makes the comparison more meaningful. Keep in mind that the U.S. government neither insures nor guarantees a money market fund. In fact, there is no assurance that a money market fund will maintain a $1 share price. (checkmark) SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW An interview with Scott Orr, Portfolio Manager of Spartan Connecticut Municipal Money Market Portfolio Q. SCOTT, RISING INTEREST RATES HAVE CHANGED THE INVESTMENT CLIMATE DRAMATICALLY DURING THE PAST YEAR. CAN YOU SUMMARIZE THE MAJOR DEVELOPMENTS? A. Sure. The Federal Reserve Board has raised the federal funds rate - what banks charge each other for overnight loans - six times since the last annual report. The first three increases - in February, March and April - were a quarter-point each. Then there were two half-point increases in May and August, followed by a three-quarter-point jump in November. The trend lately has been toward larger increases, more widely spaced. By the end of November, the federal funds rate stood at 5.50%, up sharply from 3% a year ago. Q. WHAT STEPS HAVE YOU TAKEN TO MAXIMIZE RETURNS IN THE FACE OF RISING INTEREST RATES? A. The simple answer is that I've shortened the fund's average maturity. When rates are rising, it usually doesn't make sense to emphasize longer-term securities; it's better to buy shorter-term instruments and let the fund's yield rise with current rates. That's why the fund's average maturity was 68 days at the end of November, down from 72 days a year ago. Q. THE FUND'S AVERAGE MATURITY BOTTOMED OUT IN THE 30S EARLIER IN THE YEAR. IF RATES ARE STILL RISING, WHY IS THE FUND'S AVERAGE MATURITY LONGER NOW THAN IT WAS THEN? A. It's fair to say that in a rising-rate environment, normally I'd be looking for ways to shorten the fund's average maturity by adding variable rate demand notes (VRDNs) - short-term securities whose yields rise with the market. But demand for VRDNs has risen lately to the point where they've lost a lot of their appeal. Instead, I've been buying more fixed-rate securities that have attractive yields which reflect the likelihood of future rate increases. That strategy has lengthened the fund's average maturity. Q. HOW DID THE FUND PERFORM? A. The fund's seven-day yield on November 30, 1994 was 3.24%, up from 1.96% a year ago. The latest yield is equivalent to a 5.27% yield on a taxable investment for investors in Connecticut's 38.88% combined federal and state tax bracket. The fund's total return for the year ended November 30, 1994, was 2.27%. That beat the average total return of 2.08% for all Connecticut tax-free money market funds, according to IBC/Donoghue. Q. WHAT'S AHEAD? A. I found it reassuring that the last rate increase in November was higher than expected. In my view, that may give us a little breathing room before rates go up again. I think chances are excellent, however, that eventually rates will resume climbing - possibly to as high as 7.5% as the Fed seeks to meet its goal of 2.5% overall economic growth. Accordingly, I'll try to preserve the fund's flexibility with an average maturity that will probably vary between 45 and 60 days in the months ahead. FUND FACTS GOAL: tax-free income and stability by investing in high-quality, short-term, Connecticut municipal securities START DATE: March 4, 1991 SIZE: as of November 30, 1994, more than $167 million MANAGER: Scott Orr, since October 1993; manager, Fidelity Connecticut Municipal Money Market Portfolio, since October 1993; Fidelity Michigan Municipal Money Market Portfolio, Fidelity New Jersey Tax-Free Money Market Portfolio and Spartan New Jersey Money Market Portfolios, since January 1992; Spartan Arizona Money Market, since November 1994: joined Fidelity in 1989 (checkmark) MONEY MARKETS AND DERIVATIVES: The word "derivatives" covers a wide range of financial agreements, of varying degrees of complexity, that have market values based on security or market indices. All "derivative" securities in Fidelity's money market funds are designed to have the price characteristics of typical money market securities. During the recent Federal Reserve Board interest rate increases, all Fidelity money market holdings performed as designed and the funds maintained a stable share price of $1.00. The more complex of these instruments, such as floating rate notes with unusual and complex floating rate formulas, frequently have too much price volatility to be appropriate investments for money market funds. Many of them do not offer the degree of price stability Fidelity believes is required in order for its funds to maintain a stable $1.00 share price. Therefore, despite their frequent higher yields at the time they are sold, Fidelity has not purchased these volatile securities. While this may sometimes have caused Fidelity money market funds to have lower gross yields than certain other funds, Fidelity believes its investors value prudence as well as performance. SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO INVESTMENT CHANGES MATURITY DIVERSIFICATION DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS 11/30/94 5/31/94 11/30/93 0 - 30 62 61 66 31 - 90 8 26 10 91 - 180 12 12 5 181 - 397 18 1 19 WEIGHTED AVERAGE MATURITY 11/30/94 5/31/94 11/30/93 Spartan Connecticut Municipal Money Market Portfolio 68 days 41 days 72 days Average Connecticut Tax-Free Money Market Fun 61 days 60 days 76 days d* ASSET ALLOCATION AS OF NOVEMBER 30, 1994 AS OF MAY 31, 1994 Row: 1, Col: 1, Value: 53.0 Row: 1, Col: 2, Value: 20.0 Row: 1, Col: 3, Value: 18.0 Row: 1, Col: 4, Value: 3.0 Row: 1, Col: 5, Value: 6.0 Row: 1, Col: 1, Value: 47.0 Row: 1, Col: 2, Value: 20.0 Row: 1, Col: 3, Value: 21.0 Row: 1, Col: 4, Value: 11.0 Row: 1, Col: 5, Value: 1.0 Variable rate demand notes (VRDNs) 53% Commercial paper 20% Tender bonds 18% Municipal notes 3% Other 6% Variable rate demand notes (VRDNs) 47% Commercial paper 20% Tender bonds 21% Municipal notes 11% Other 1% * SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark) SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO INVESTMENTS NOVEMBER 30, 1994 Showing Percentage of Total Value of Investments MUNICIPAL SECURITIES (A) - 100% PRINCIPAL VALUE AMOUNT (NOTE 1) CALIFORNIA - 0.2% Orange County Apt. Dev. Rev. Rfdg. Bonds, Series 1990 A, 4.10%, tender 12/6/94, LOC Tokai Bank $ 341,000 $ 341,000 CONNECTICUT - 78.9% Clipper Tax Exempt Trust Participating VRDN, Series 1994-1, 3.92%, (Liquidity Facility State Street Bank & Trust Co.) (c) 4,968,215 4,968,215 Connecticut Dev. Auth. (Shelton Inn Proj.) Series 1986, 3.70%, LOC Bank of Tokyo, VRDN (b) 200,000 200,000 Connecticut Dev. Auth. Arpt. Facs. Rev. (Arpt. Hotel Bradley Assoc. Ltd., Proj.) 3.55%, LOC Daiwa Bank, VRDN 6,500,000 6,500,000 Connecticut Dev. Auth. Health. Care Rev. (Corp. for Independent Living Proj.), VRDN: Series 1990, 3.50%, LOC Cr. Commercial de France 4,700,000 4,700,000 Series 1993, 3.50%, LOC Daiwa Bank 3,200,000 3,200,000 Connecticut Dev. Auth. Poll. Cont. Rev. (Light & Pwr. Co. Proj.) Series B, 3.60%, LOC Union Bank of Switzerland, VRDN (b) 7,200,000 7,200,000 Connecticut Dev. Auth. Solid Waste Disp. Facs. Rev., VRDN (b): (Exeter Energy): Series 1989 A, 3.60%, LOC Sanwa Bank 1,500,000 1,500,000 Series 1989 B, 3.60%, LOC Sanwa Bank 4,900,000 4,900,000 (Rand-Whitney Containerboard), 3.20%, LOC Chase Manhattan Bank 3,300,000 3,300,000 Connecticut Econ. Recovery Gen. Oblig. Notes: Bonds Series A, 5.25% 12/15/94 1,000,000 1,000,845 Series 1991 B, 3.65%, BPA Canadian Imperial Bank, Industrial Bank of Japan, Nat'l. Westminster Bank, VRDN 2,100,000 2,100,000 Connecticut Gen. Oblig. Bonds: Series A, 5.20% 3/15/95 4,475,000 4,492,654 Series C, 3.90% 3/15/95 1,500,000 1,500,400 Connecticut Gen. Oblig. Participating VRDN (c): Series BT-103, 3.825% (Liquidity Facility Bankers Trust) 1,600,000 1,600,000 Series MGT-27, 3.90% (Liquidity Facility Morgan Guaranty Trust Co.) 2,325,000 2,325,000 Series PA-1, 3.90% (Liquidity Facility Merrill Lynch & Co. Inc.) 2,000,000 2,000,000 Connecticut Health & Ed. Fac. Auth.: (Charlotte Hungerford Hosp.) Series B, 3.65%, LOC Mitsubishi Bank Ltd., VRDN 1,800,000 1,800,000 (Kent School) Series A, 3.10%, LOC Barclays Bank PLC, VRDN 5,800,000 5,800,000 MUNICIPAL SECURITIES (A) - CONTINUED PRINCIPAL VALUE AMOUNT (NOTE 1) CONNECTICUT - CONTINUED Connecticut Health & Ed. Fac. Auth.: - continued Bonds: (Windham Commty. Memorial Hosp.) Series B, 3.60%, tender 12/8/94, LOC Banque Paribas $ 4,000,000 $ 4,000,000 (Yale Univ.): Series L, 3.40%, tender 1/13/95 1,550,000 1,550,000 Series M, 3.55%, tender 2/10/95 5,900,000 5,900,000 Series N, 3.55%, tender 2/10/95 1,350,000 1,350,000 Series N, 3.75%, tender 3/9/95 3,100,000 3,100,000 Series O, 3.55%, tender 2/10/95 3,200,000 3,200,000 Connecticut Hsg. Fin. Auth. (Hsg. Mtg. Fin. Prog.) Bonds: Series 1989: 3.65%, tender 2/10/95 (b) 500,000 500,000 3.75%, tender 3/10/95 (b) 2,500,000 2,500,000 3.90%, tender 3/9/95 (b) 1,165,000 1,165,000 Series 1990 C: 3.70%, tender 2/10/95 (b) 1,000,000 1,000,000 3.90%, tender 3/10/95 (b) 400,000 400,000 Series 1992 D-2, 3.65%, tender 5/15/95 (b) 2,000,000 2,000,000 Series 1993 H-1, 4.30%, tender 9/1/95 8,000,000 8,000,000 Series 1993 H-2, 4.40%, tender 9/1/95 (b) 7,000,000 7,000,000 Connecticut Second Lien Special Tax Oblig. (Transport Infrastructure) Series 1, 3.60%, LOC Industrial Bank of Japan, VRDN 5,785,000 5,785,000 Connecticut Special Assessment Unemployment Rev.: Series 1993 B, 3.55%, LOC Industrial Bank of Japan, VRDN 1,400,000 1,400,000 Bonds Series 1993 C, 3.85% tender 7/1/95, (FGIC Insured) 13,600,000 13,598,576 Connecticut Special Tax Oblig. Participating VRDN, Series PA-69, 3.90%, (Liquidity Facility Merrill Lynch & Co. Inc.) (c) 2,000,000 2,000,000 Glastonbury BAN 3.75% 12/8/94 500,000 500,066 New Britain Gen. Oblig. Bonds 8.50% 4/1/95 500,000 507,304 New Haven Air Freight Pkg. Fac. Rev. Bonds 5.30% 12/1/94 (MBIA Insured) 435,000 435,000 New Haven BAN 4.10% 3/1/95, LOC Fleet Nat'L Bank (b) 1,700,000 1,702,489 South Central Connecticut Reg. Wtr. Auth. Participating VRDN, Series MGT-6A, 3.80%, (Liquidity Facility Morgan Guaranty) (c) 2,500,000 2,500,000 Stamford BAN 4.25% 3/22/95 2,000,000 2,004,458 Stratford BAN 4.50% 10/18/95 1,000,000 1,000,365 132,185,372 MUNICIPAL SECURITIES (A) - CONTINUED PRINCIPAL VALUE AMOUNT (NOTE 1) FLORIDA - 2.5% Indian Trace Commty. Dev. Dist. Bonds (Broward County Basin I Wtr. Mgmt.): 4.10%, tender 12/7/94, LOC Tokai Bank $ 1,600,000 $ 1,600,000 4.15%, tender 12/6/94, LOC Tokai Bank 2,500,000 2,500,000 4,100,000 ILLINOIS - 1.3% Illinois Health Facs. Auth. Rev. (Methodist Med. Ctr. Proj.) Series 1985 B, 3.70%, LOC Sumitomo Bank, VRDN 2,100,000 2,100,000 NEVADA - 1.6% Las Vegas Local Impt. Bonds (Dist #404 Summelin Area) 4.15%, tender 12/6/94, LOC Tokai Bank 2,725,000 2,725,000 NEW YORK - 2.1% New York City Ind. Dev. Agcy. Ind. Dev. Rev. (Nippon Cargo Airlines Co.) Series 1992, 4.05%, LOC Industrial Bank of Japan, VRDN (b) 3,500,000 3,500,000 NORTH CAROLINA - 0.4% Craven County Ind. Facs. Resource Recovery Rev., VRDN (b): (Wood Energy Ltd. Partnership): Series 1989 A, 3.80%, LOC Mitsubishi Bank Ltd. 400,000 400,000 Series 1989 C, 3.80%, LOC Mitsubishi Bank Ltd. 300,000 300,000 700,000 PUERTO RICO - 9.4% Puerto Rico Commonwealth Participating VRDN, Series PW-6, 3.80% (Liquidity Facility Bank of Nova Scotia) (c) 2,000,000 2,000,000 Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Bonds Series J, 9.125%, (Pre-Refunded to 7/1/95) (d) 1,200,000 1,269,706 Puerto Rico Elec. Pwr. Auth. Participating VRDN, BT-105, 3.50%, (Liquidity Facility Bankers Trust Co.) (c) 3,978,000 3,978,000 Puerto Rico Ind. Med. Higher Ed. & Environmental Cont. Fac. Fin. Auth. Bonds (AFICA) Series 1988, 3%, tender 12/1/94, LOC Bank of Tokyo 1,500,000 1,500,000 Puerto Rico Hwy. And Trans. Rev. Series 1993 X, 3%, LOC Bank of Switzerland, VRDN 7,000,000 7,000,000 15,747,706 MUNICIPAL SECURITIES (A) - CONTINUED PRINCIPAL VALUE AMOUNT (NOTE 1) VIRGINIA - 3.6% Richmond Ind. Dev. Auth. (I) Rev. (Cogentrix of Richmond Inc. Proj.) Series 1990 A, 3.80%, LOC Banque Paribas, VRDN (b) $ 1,300,000 $ 1,300,000 Richmond Ind. Dev. Auth. (II) Rev. (Cogentrix of Richmond Inc.) Series 1991 A, 3.80%, LOC Banque Paribas, VRDN (b) 3,000,000 3,000,000 Richmond Ind. Dev. Auth. (III) Rev. (Cogentrix of Richmond Inc. Proj.) Series 1991 B, 3.80%, LOC Banque Paribas, VRDN (b) 1,800,000 1,800,000 6,100,000 TOTAL INVESTMENTS - 100% $ 167,499,078 Total Cost for Income Tax Purposes $ 167,498,662 SECURITY TYPE ABBREVIATIONS BAN - Bond Anticipation Notes VRDN - Variable Rate Demand Notes LEGEND (a) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (b) Private activity obligations whose interest is subject to the federal alternative minimum tax for individuals. (c) Provides evidence of ownership in one or more underlying municipal bonds. (d) Security collateralized by an amount sufficient to pay interest and principal. INCOME TAX INFORMATION At November 30, 1994 the fund had a capital loss carryforward of approximately $17,500 of which $40, $2,090, $5,330 and $10,040 will expire on November 30, 1999, 2000, 2001 and 2002, respectively. SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994 251.ASSETS 252. 253. 254.Investment in securities, at value - See 255. $ 167,499,078 accompanying schedule 256.Interest receivable 257. 904,907 258. 259.TOTAL ASSETS 260. 168,403,985 261.LIABILITIES 262. 263. 264.Payable to custodian bank $ 75,893 265. 266.Payable for investments purchased 514,330 267. 268.Share transactions in process 680,285 269. 270.Dividends payable 9,462 271. 272.Accrued management fee 68,469 273. 274. 275.TOTAL LIABILITIES 276. 1,348,439 277.278.NET ASSETS 279. $ 167,055,546 280.Net Assets consist of: 281. 282. 283.Paid in capital 284. $ 167,072,626 285.Accumulated net realized gain (loss) on 286. (17,496) investments 287.Unrealized gain from accretion of market discount 288. 416 289.290.NET ASSETS, for 167,072,626 shares 291. $ 167,055,546 outstanding 292.293.NET ASSET VALUE, offering price and 294. $1.00 redemption price per share ($167,055,546 (divided by) 167,072,626 shares)
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1994 295.296.INTEREST INCOME 297. $ 4,429,303 298.EXPENSES 299. 300. 301.Management fee $ 803,448 302. 303.Non-interested trustees' compensation 954 304. 305. 306.TOTAL EXPENSES 307. 804,402 308.309.NET INTEREST INCOME 310. 3,624,901 311.REALIZED AND UNREALIZED GAIN (LOSS) 313. (10,039) 312.Net realized gain (loss) on investment securities 314.Increase (decrease) in net unrealized gain from 315. 416 accretion of market discount 316.317.NET GAIN (LOSS) 318. (9,623) 319.320.NET INCREASE IN NET ASSETS RESULTING FROM 321. $ 3,615,278 OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED NOVEMBER 30, 1994 1993 322.INCREASE (DECREASE) IN NET ASSETS 323.Operations $ 3,624,901 $ 2,789,066 Net interest income 324. Net realized gain (loss) (10,039) (5,334) 325. Increase (decrease) in net unrealized gain from 416 - accretion of market discount 326. 3,615,278 2,783,732 327.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 328.Dividends to shareholders from net interest income (3,624,901) (2,789,066) 329.Share transactions at net asset value of $1.00 per 225,193,655 224,246,405 share Proceeds from sales of shares 330. Reinvestment of dividends from net interest 3,499,344 2,693,169 income 331. Cost of shares redeemed (224,729,453) (150,504,642) 332. 3,963,546 76,434,932 Net increase (decrease) in net assets and shares resulting from share transactions 333. 3,953,923 76,429,598 334.TOTAL INCREASE (DECREASE) IN NET ASSETS 335.NET ASSETS 336. 337. 338. Beginning of period 163,101,623 86,672,025 339. End of period $ 167,055,546 $ 163,101,623
FINANCIAL HIGHLIGHTS
340. YEARS ENDED NOVEMBER 30, MARCH 4, 1991 (COMMENCEME NT OF OPERATIONS) T O NOVEMBER 30, 341. 1994 1993 1992 1991 342.SELECTED PER-SHARE DATA 343.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 beginning of period 344.Income from Investment .023 .022 .030 .029 Operations Net interest income 345.Less Distributions (.023) (.022) (.030) (.029) From net interest income 346.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 347.TOTAL RETURN B 2.28 2.21 3.08 2.97% % % % 348.RATIOS AND SUPPLEMENTAL DATA 349.Net assets, end of period $ 167,056 $ 163,102 $ 86,672 $ 22,247 (000 omitted) 350.Ratio of expenses to average .50 .24 .02 - net assets % % % 351.Ratio of expenses to average net .50 .50 .50 .50%A assets before expense reductions % % % 352.Ratio of net interest income to 2.25 2.17 2.90 4.05%A average net assets % % %
A ANNUALIZED B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. NOTES TO FINANCIAL STATEMENTS For the period ended November 30, 1994 1. SIGNIFICANT ACCOUNTING POLICIES. Spartan Connecticut Municipal High Yield Portfolio(the high yield fund) is a fund of Fidelity Court Street Trust. Spartan Connecticut Municipal Money Market Portfolio (the money market fund) is a fund of Fidelity Court Street Trust II. Each trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. Fidelity Court Street Trust and Fidelity Court Street Trust II (the trusts) are organized as a Massachusetts business trust and a Delaware business trust, respectively. Each fund is authorized to issue an unlimited number of shares. The following summarizes the significant accounting policies of the money market fund and the high yield fund: SECURITY VALUATION. HIGH YIELD FUND. Securities are valued based upon a computerized matrix system and/or appraisals by a pricing service, both of which consider market transactions and dealer-supplied valuations. Short-term securities maturing within sixty days of their purchase date are valued either at amortized cost or original cost plus accrued interest, both of which approximate current value. Securities for which quotations are not readily available through the pricing service are valued at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and certain conditions therein, securities are valued initially at cost and thereafter assume a constant amortization to maturity of any discount or premium. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, each fund is not subject to income taxes to the extent that it distributes all of its taxable income for the fiscal year. The schedules of investments include information regarding income taxes under the caption "Income Tax Information." INTEREST INCOME. Interest income, which includes amortization of premium and accretion of original issue discount, is accrued as earned. For the money market fund, accretion of market discount represents unrealized gain until realized at the time of a security disposition or maturity. EXPENSES. Most expenses of each trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned between the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid monthly from net interest income. Distributions to shareholders from realized capital gains on investments, if any, are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED due to differing treatments for futures and options transactions The fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. REDEMPTION FEES. Shares held in the high yield fund less than 180 days are subject to a redemption fee equal to .50% of the proceeds of the redeemed shares. The fee, which is retained by the fund, is accounted for as an addition to paid in capital. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective December 1, 1993, the funds adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the funds changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of November 30, 1993 have been restated to reflect an increase in paid in capital and a decrease in accumulated net realized gain on investments of $94,330 for the high yield fund. No adjustments were necessary for the money market fund. 2. OPERATING POLICIES. FUTURES CONTRACTS AND OPTIONS. The high yield fund may invest in futures and options contracts, and may also write options. These investments involve, to varying degrees, elements of market risk and risks in excess of the amount recognized in the Statement of Assets and Liabilities. The face or contract amounts, as reflected in the schedule of investments under the caption "Futures Contracts," reflect the extent of the involvement the high yield fund has in the particular classes of instruments. Risks may be caused by an imperfect correlation between movements in the price of the instruments and the price of the underlying securities and interest rates. Risks also may arise if there is an illiquid secondary market for the instruments, or due to the inability of counterparties to perform. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Options traded on an exchange are valued using the last sale price or, in the absence of a sale, the last offering price. Options traded over-the-counter are valued using dealer-supplied valuations. 3. PURCHASES AND SALES OF INVESTMENTS. HIGH YIELD FUND. Purchases and sales of securities, other than short-term securities, aggregated $40,123,361 and 3. PURCHASES AND SALES OF INVESTMENTS - CONTINUED HIGH YIELD FUND - CONTINUED $129,295,692, respectively. The market value of futures contracts opened and closed during the period amounted to $235,896,944 and $225,739,146, respectively. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management & Research Company (FMR) pays all expenses, including the cost of providing shareholder services, except the compensation of the non-interested Trustees and certain exceptions such as interest, taxes, brokerage commissions and extraordinary expenses. FMR receives a fee that is computed daily at an annual rate of .55% and .50% of average net assets for the high yield and money market funds, respectively. To offset the cost of providing shareholder services, FMR or its affiliates collect certain transaction fees from the fund's shareholders. For the period, fees collected from shareholders amounted to $7,842 and $4,274 for the high yield and money market funds, respectively. SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the management fee payable to FMR. The fee is paid prior to any voluntary expense reimbursements which may be in effect, and after reducing the fee for any payments by FMR pursuant to the fund's Distribution and Service Plan. DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service Plans (the Plans), and in accordance with Rule 12b-1 of the Act, FMR or the funds' distributor, Fidelity Distributors Corporation (FDC), an affiliate of FMR, may use their resources to pay administrative and promotional expenses related to the sale of each fund's shares. Subject to the approval of each Board of Trustees, the Plans also authorize payments to third parties that assist in the sale of each fund's shares or render shareholder support services. FMR or FDC has informed the funds that payments made to third parties under the Plans amounted to $2,939 for the high yield fund and no payments were made for the money market fund for the period. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Court Street Trust and Fidelity Court Street Trust II and the Shareholders of Spartan Connecticut Municipal High Yield Portfolio and Spartan Connecticut Municipal Money Market Portfolio: We have audited the accompanying statements of assets and liabilities of Spartan Connecticut Municipal High Yield Portfolio, a portfolio of Fidelity Court Street Trust, and Spartan Connecticut Municipal Money Market Portfolio, a portfolio of Fidelity Court Street Trust II including the schedules of portfolio investments, as of November 30, 1994, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended for the Spartan Connecticut Municipal High Yield Portfolio, and the financial highlights for each of the three years in the period then ended and for the period March 4, 1991 (commencement of operations) to November 30, 1991 for the Spartan Connecticut Municipal Money Market Portfolio. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 1994 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Spartan Connecticut Municipal High Yield Portfolio and Spartan Connecticut Municipal Money Market Portfolio as of November 30, 1994, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended for the Spartan Connecticut Municipal High Yield Portfolio, and the financial highlights for each of the three years in the period then ended and for the period March 4, 1991 (commencement of operations) to November 30, 1991 for the Spartan Connecticut Municipal Money Market Portfolio, in conformity with generally accepted accounting principles. /s/COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P. Boston, Massachusetts December 30, 1994 INVESTMENT ADVISER (registered trademark) Fidelity Management & Research Company Boston, MA SUB-ADVISER (MONEY MARKET) FMR Texas Inc. Irving, TX OFFICERS Edward C. Johnson 3d, President J. Gary Burkhead, Senior Vice President Fred L. Henning, Jr., Vice President, MONEY MARKET FUND Thomas J. Steffanci, Vice President, HIGH YIELD FUND Scott Orr, Vice President, MONEY MARKET FUND Thomas D. Maher, Assistant Vice President, MONEY MARKET FUND Gary L. French, Treasurer John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer Arthur S. Loring, Secretary BOARD OF TRUSTEES J. Gary Burkhead Ralph F. Cox* Phyllis Burke Davis* Richard J. Flynn* Edward C. Johnson 3d E. Bradley Jones* Donald J. Kirk* Peter S. Lynch Edward H. Malone* Marvin L. Mann* Gerald C. McDonough* Thomas R. Williams* GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENTS United Missouri Bank, N.A. Kansas City, MO and Fidelity Service Co. Boston, MA CUSTODIAN United Missouri Bank, N.A. Kansas City, MO THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Account Balances 1-800-544-7544 Exchanges/Redemptions 1-800-544-7777 Mutual Fund Quotes 1-800-544-8544 Account Assistance 1-800-544-6666 Product Information 1-800-544-8888 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) * INDEPENDENT TRUSTEES AUTOMATED LINES FOR QUICKEST SERVICE (2_FIDELITY_LOGOS)FIDELITY HIGH YIELD TAX-FREE PORTFOLIO ANNUAL REPORT NOVEMBER 30, 1994 CONTENTS PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies. PERFORMANCE 4 How the fund has done over time. FUND TALK 7 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 10 A summary of major shifts in the fund's investments over the past six months. INVESTMENTS 11 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 37 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 41 Notes to the financial statements. REPORT OF INDEPENDENT 44 The auditors' opinion. ACCOUNTANTS THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMA- TION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO IN- VESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE DEAR SHAREHOLDER: The unsettling period that began for bond investors when the Federal Reserve Board raised short-term interest rates in February has continued into the fourth quarter of 1994. The Board raised the federal funds rate - the rate banks charge each other for overnight loans - five times from February through August, taking it from 3.00% to 4.75%. A sixth increase in November lifted the rate to 5.50%. The Fed rate hikes were intended to forestall inflation that could result from an improving U.S. economy, and they led to negative returns for many bond investments and below-average returns for many stocks. The volatility we have witnessed this year follows a period in which there was a nearly perfect investing environment. Although there was a late-summer rally in stocks and, to a lesser extent in bond markets, it is impossible to predict where interest rates might go or what might happen in the markets in the months ahead. That's why it probably is a good time to again review your investment portfolio and how well it matches your goals. Keeping in mind that the negative effects of rising rates on your bond investments will only be "paper" losses unless you sell your shares, staying in your bond fund may be appropriate. The longer your investing time frame, the more likely it is that you will retain your principal investment through both up and down markets. For example, a 10-year time frame, such as saving for a college education, enables you to weather these ups and downs in a long-term fund, which has higher potential returns. An intermediate-length fund could be appropriate if your investment horizon is two to four years, and a short-term bond fund could be the right choice if you need your money in one or two years. If your time horizon is less than a year, you might want to consider moving some of your bond investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. As with any mutual fund, of course, there is no assurance that a money market fund will achieve its goal, and money market funds are not insured by any agency of the U.S. government. No matter what your investment horizon or portfolio diversity, it makes good sense to follow a regular investment plan - investing a certain amount of money at the same time each month or quarter - and to review your portfolio periodically, as we have discussed here. A periodic investment plan will not, of course, assure a profit or protect against a loss. If you have any questions, please call us at 1-800-544-8888. We stand ready to provide the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each performance figure includes changes in a fund's share price, plus reinvestment of any dividends (or income) and capital gains (the profits the fund earns when it sells bonds that have grown in value). You can also look at the fund's income to measure performance. CUMULATIVE TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 PAST 5 PAST 10 YEAR YEARS YEARS High Yield Tax-Free -7.74% 33.38% 137.57% Lehman Brothers Municipal Bond Index -5.25% 37.52% 146.53% Average High Yield Municipal Bond Fund -5.38% 33.27% 131.66% Consumer Price Index 2.81% 19.06% 42.36% CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, one, five, or ten years. For example, if you invested $1,000 in a fund that had a 5% return over the past year, you would end up with $1,050. You can compare the fund's returns to the performance of the Lehman Brothers Municipal Bond Index - a broad gauge of the municipal bond market. To measure how the fund stacked up against its peers, you can look at the average high yield municipal bond fund, which currently reflects the performance of 34 high yield municipal bond funds tracked by Lipper Analytical Services. Both benchmarks include reinvested dividends and capital gains, if any. Comparing the fund's performance to the consumer price index (CPI) helps show how your fund did compared to inflation. (The CPI returns begin on the month end closest to the fund's start date.) AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 PAST 5 PAST 10 YEAR YEARS YEARS High Yield Tax-Free -7.74% 5.93% 9.04% Lehman Brothers Municipal Bond Index -5.25% 6.58% 9.44% Average High Yield Municipal Bond Fund -5.38% 5.86% 8.74% Consumer Price Index 2.81% 3.55% 3.59% AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER 10 YEARS High Yield (037)Municipal Bond Ind 11/30/84 10000.00 10000.00 12/31/84 10243.52 10187.40 01/31/85 10726.00 10775.52 02/28/85 10603.55 10506.67 03/31/85 10695.44 10597.34 04/30/85 10982.00 10985.20 05/31/85 11353.82 11366.61 06/30/85 11509.68 11485.85 07/31/85 11609.88 11508.36 08/31/85 11579.61 11428.03 09/30/85 11424.31 11313.41 10/31/85 11842.47 11701.12 11/30/85 12201.27 12120.84 12/31/85 12435.62 12227.38 01/31/86 13033.41 12947.57 02/28/86 13501.78 13461.07 03/31/86 13606.61 13465.38 04/30/86 13558.66 13475.61 05/31/86 13389.21 13256.23 06/30/86 13530.00 13382.70 07/31/86 13626.67 13463.93 08/31/86 14291.10 14066.71 09/30/86 14273.91 14102.02 10/31/86 14570.96 14345.56 11/30/86 14789.49 14629.74 12/31/86 14785.88 14589.36 01/31/87 15151.48 15028.65 02/28/87 15329.24 15102.59 03/31/87 15212.72 14942.50 04/30/87 14186.15 14192.69 05/31/87 14081.81 14122.29 06/30/87 14319.78 14536.92 07/31/87 14502.33 14685.20 08/31/87 14569.93 14718.24 09/30/87 13885.74 14175.58 10/31/87 13839.25 14225.76 11/30/87 14131.48 14597.20 12/31/87 14366.49 14809.00 01/31/88 14866.46 15336.50 02/29/88 15053.32 15498.61 03/31/88 14694.74 15318.05 04/30/88 14802.29 15434.46 05/31/88 14909.62 15389.86 06/30/88 15088.02 15615.01 07/31/88 15244.26 15716.82 08/31/88 15314.55 15730.65 09/30/88 15651.49 16015.38 10/31/88 15952.27 16298.05 11/30/88 15817.66 16148.76 12/31/88 16122.51 16313.96 01/31/89 16349.95 16651.33 02/28/89 16251.03 16461.34 03/31/89 16284.53 16422.00 04/30/89 16809.99 16811.86 05/31/89 17165.57 17161.04 06/30/89 17332.37 17394.09 07/31/89 17458.69 17630.82 08/31/89 17381.23 17458.21 09/30/89 17307.04 17405.84 10/31/89 17488.26 17618.19 11/30/89 17811.25 17926.51 12/31/89 17959.34 18073.51 01/31/90 17770.09 17988.56 02/28/90 18002.76 18148.66 03/31/90 18023.13 18154.10 04/30/90 17698.93 18023.39 05/31/90 18187.28 18416.30 06/30/90 18381.51 18578.37 07/31/90 18666.07 18851.47 08/31/90 18471.90 18578.12 09/30/90 18611.25 18589.27 10/31/90 18858.62 18925.74 11/30/90 19397.76 19306.14 12/31/90 19481.21 19391.09 01/31/91 19734.96 19650.93 02/28/91 19858.47 19821.89 03/31/91 19922.37 19829.82 04/30/91 20194.94 20093.56 05/31/91 20372.80 20272.39 06/30/91 20373.89 20252.12 07/31/91 20669.86 20499.20 08/31/91 20852.45 20769.79 09/30/91 21019.12 21039.79 10/31/91 21216.75 21229.15 11/30/91 21263.06 21288.59 12/31/91 21463.74 21746.30 01/31/92 21684.07 21796.31 02/29/92 21728.45 21802.85 03/31/92 21749.74 21811.57 04/30/92 21957.70 22005.70 05/31/92 22168.44 22265.36 06/30/92 22475.83 22639.42 07/31/92 23052.46 23318.60 08/31/92 22745.63 23090.08 09/30/92 22806.70 23240.17 10/31/92 22426.97 23012.41 11/30/92 23008.97 23424.34 12/31/92 23258.11 23663.26 01/31/93 23583.61 23937.76 02/28/93 24451.55 24804.31 03/31/93 24274.40 24541.38 04/30/93 24505.31 24789.25 05/31/93 24647.53 24928.07 06/30/93 25010.24 25344.37 07/31/93 25018.93 25377.31 08/31/93 25562.57 25905.16 09/30/93 25932.26 26200.48 10/31/93 25959.58 26250.26 11/30/93 25750.61 26019.26 12/31/93 26307.30 26568.27 01/31/94 26596.63 26871.14 02/28/94 25919.12 26175.18 03/31/94 24719.87 25109.85 04/30/94 24848.29 25323.29 05/31/94 25003.15 25543.60 06/30/94 24861.64 25395.45 07/31/94 25330.84 25860.18 08/31/94 25422.85 25950.69 09/30/94 25045.17 25569.22 10/31/94 24522.03 25114.09 11/30/94 23756.94 24653.00 $10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity High Yield Tax-Free Portfolio on November 30, 1984. As the chart shows, by November 30, 1994, the value of your investment would have grown to $23,757 - - a 137.57% increase on your initial investment. For comparison, look at how the Lehman Brothers Municipal Bond index did over the same period. With dividends reinvested, the same $10,000 would have grown to $24,653 - a 146.53% increase. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. Bond prices, for example, move in the opposite direction of interest rates. In turn, the share price, return, and yield of a fund that invests in bonds will vary. That means if you sell your shares during a market downturn, you might lose money. But if you can ride out the market's ups and downs, you may have a gain. (checkmark) TOTAL RETURN COMPONENTS YEARS ENDED NOVEMBER 30, 1994 1993 1992 1991 1990 Dividend return 5.60% 6.33% 6.70% 7.11% 7.31% Capital appreciation return (13.34) 5.59% 1.51% 2.51% 1.60% % Total return (7.74)% 11.92% 8.21% 9.62% 8.91% DIVIDEND returns and capital appreciation returns are both part of a bond fund's total return. A dividend return reflects the actual dividends paid by the fund. A capital appreciation return reflects both the amount paid by the fund to shareholders as capital gain distributions and changes in the fund's share price. Both returns assume the dividends or gains are reinvested. DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1994 PAST PAST 6 PAST 1 MONTH MONTHS YEAR Dividends per share 6.25(cents) 37.80(cents) 75.46(cents) Annualized dividend rate 6.88% 6.41% 6.21% 30-day annualized yield 6.94% - - 30-day annualized tax-equivalent yield 10.84% - -
DIVIDENDS per share show the income paid by the fund for a set period. If you annualize this number, based on an average share price of $11.05 over the past month, $11.76 over the past six months and $12.16 over the past year, you can compare the fund's income over these three periods. The 30-day annualized YIELD is a standard formula for all funds based on the yields of the bonds in the fund, averaged over the past 30 days. This figure shows you the yield characteristics of the fund's investments at the end of the period. It also helps you compare funds from different companies on an equal basis. The tax-equivalent yield shows what you would have to earn on a taxable investment to equal the fund's tax-free yield, if you're in the 36% federal tax bracket. FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP Sharply rising interest rates and ongoing inflation worries caused a severe downturn in U.S. bond markets in 1994. Yields rose sharply - and prices fell - on taxable and tax-free bonds alike. For the 12 months ended November 30, 1994, the Lehman Brothers Municipal Bond Index - a broad measure of the tax-free market - had a total return of - -5.25%. By comparison, the Lehman Brothers Aggregate Bond Index - a proxy of investment-grade taxable bonds - - returned -3.06%. After interest rates remained low and relatively steady in December 1993 and January 1994, the rate environment changed dramatically. The Federal Reserve Board raised the federal funds rate - the rate banks charge each other for overnight loans - from 3.00% to 5.50% from February through November. The Fed was hoping to head off future inflation that might be triggered by an improving U.S. economy. However, investors heavily sold bonds at the very threat of inflation because inflation diminishes the value of their fixed-rate income payments. Two other influences affected the performance of tax-free bonds, specifically. First, investor demand fell due to inflation worries, which dampened prices. Second, although it didn't outweigh the negative effects of lower demand, the supply of tax-free bonds fell as well. The ability of states, cities and public agencies to refinance outstanding debt at lower, more attractive rates was limited amid a rising rate environment. An interview with Anne Punzak, Portfolio Manager of Fidelity High Yield Tax-Free Portfolio Q. ANNE, HOW HAS THE FUND PERFORMED? A. Rising interest rates made for a very volatile year for the municipal bond market and the fund. In fact, 1994 has been one of the worst years for municipal bonds since the late 1920s. Against that backdrop, the fund's total return for the year ended November 30, 1994, was -7.74%. That lagged the performance of the average high yield municipal bond fund, which returned -5.38% for the same period, according to Lipper Analytical Services. Q. WHY DIDN'T THE FUND KEEP PACE WITH THE AVERAGE HIGH YIELD FUND? A. Mainly because it had a smaller stake in below-investment grade bonds - those rated Ba or below - than many of its competitors. The fund has a 25% limit on the amount it can invest in these bonds, while many similar funds can invest as much as half of their assets in them. Because of their relatively high yields, these bonds held up better than higher-rated, lower-yielding bonds when interest rates were rising. The fund's stake in below-investment-grade bonds was 18.6% of investments at the end of the period. I increased the fund's stake in AMT bonds, which are subject to the alternative minimum tax and are also high-yielding bonds. AMT bonds are also attractive because they're often from sectors which could benefit from further improvements in the economy, such as housing and industrial development projects. Q. WHAT CHANGES DID YOU MAKE TO THE FUND'S DURATION, WHICH MEASURES ITS SENSITIVITY TO CHANGES IN INTEREST RATES? A. In general, when interest rates rise a bond's price declines and its duration lengthens. When interest rates fall a bond's price rises and its duration shortens. So as interest rates continued to rise over the past six months, prices of the bonds in the fund declined and the duration naturally lengthened. Therefore I wanted to temper the fund's lengthening duration. One of the ways I did this was by using futures contracts. As the market fell, the value of the futures position rose and helped the fund's performance. I did remove most of the fund's futures position at the end of the period, since I expected the bond market to improve in December, which it did. That also contributed to lengthening the fund's duration. However, until I'm confident that the Fed's interest rate hikes have slowed and the market has stabilized, I may use futures contracts when I think market conditions warrant. Q. HAVE YOU CHANGED THE FUND'S ALLOCATION BY STATES? A. Yes, primarily by raising the fund's stake in California bonds to 7.7% of investments as of November 30, 1994. That made the state the third-largest state concentration. California municipal bonds are attractive because I believe the state's economy is on the mend. Some economic indicators - such as housing starts and new home sales - have shown recent strength, which to me signals that the economic outlook for the state could be brighter next year. Q. AFTER THE PERIOD ENDED, ORANGE COUNTY, CALIFORNIA DECLARED BANKRUPTCY BECAUSE OF LOSSES FROM DERIVATIVES. DOES THAT AFFECT ANY OF THE FUND'S CALIFORNIA BONDS? A. At the end of the period, the fund held bonds from five issuers who were participants in the Orange County investment pool. Of those bonds, about half are insured and their principal and interest payments are guaranteed. The remaining bonds do not carry insurance. The short-term financial condition of these uninsured issuers has been negatively impacted but I believe that they will ultimately be able to recover the majority of their investments and meet their financial obligations. Although I don't anticipate that any of these issuers will incur cash shortfalls, all of these securities have a debt service reserve fund which could be used to meet principal and interest payments if a cash shortfall were to arise. In any case, these uninsured bonds represent only about 0.5% of the fund's investments and should not have a significant impact on the fund's share price. Our research department will continue to carefully monitor these situations to determine the impact of further developments. Q. WHAT'S YOUR OUTLOOK FOR MUNICIPAL BONDS? A. For the short term, there probably will be some continued volatility. I believe it's likely that the Federal Reserve Board will raise interest rates one or two more times in an effort to stave off inflation that can accompany a quickly growing economy. However, I think that current municipal bond prices reflect most of the effects of at least one further interest rate hike. Q. SO WHAT'S AHEAD FOR INVESTORS? A. A one percent rise in long-term interest rates is not likely to have as negative consequences for bonds in 1995 as it did 1994. For example, if the yield on a high quality 30-year municipal bond rose from 7% to 8%, that bond's total return for the year could be about -4%. On the other hand, a drop in yield from 7% to 6% could mean a total return of about 15% for the year. Of course, other factors also can influence a bond's performance. But in my view, the downside risk is limited and the upside potential is good. FUND FACTS GOAL: to provide high current income exempt from federal income tax START DATE: December 1, 1977 SIZE: as of November 30, 1994, more than $1.6 billion MANAGER: Anne Punzak, since October 1993; manager, Fidelity Aggressive Tax-Free Portfolio, since January 1986; Spartan Florida Tax-Free Fund, since March 1992; Fidelity Insured Tax-Free Fund, October 1989 to September 1993; Spartan Aggressive Municipal Fund, from April 1993 to October 1993; joined Fidelity in 1985 (checkmark) ANNE PUNZAK'S OUTLOOK FOR MUNICIPAL BONDS: "In my view, interest rates will probably be more stable in 1995 than they were in 1994. If I am correct, it's likely that bond prices will be more stable as well. In that type of environment, the fund's total return will be less dependent on bond prices rising and more dependent on the level of income the bonds pay. So to help boost the fund's total return, I'll concentrate on generating a higher income for the fund. I'll do that primarily by identifying opportunities in higher-yielding, lower-rated bonds. Fidelity's research staff is one of the largest in the industry and helps me identify attractive high-yield bonds." (solid bullet) Inverse floaters, one of the financial arrangements known as derivatives, made up about 4% of the fund's investments at the end of the period. The yield on inverse floaters rises as short-term interest rates fall and vice versa. By using various derivatives, the manager hopes to achieve higher levels of tax-exempt income and increased flexibility in managing overall sensitivity to changes in interest rates. However, these strategies can involve additional risk to the fund and don't always work as intended. INVESTMENT CHANGES TOP FIVE STATES AS OF NOVEMBER 30, 1994 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO New York 9.7 8.2 Texas 8.1 6.4 California 7.7 6.3 Colorado 7.3 8.4 Illinois 7.1 6.4 TOP FIVE SECTORS AS OF NOVEMBER 30, 1994 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS 6 MONTHS AGO Health Care 24.6 27.5 General Obligations 12.4 13.1 Electric Revenue 11.4 12.9 Industrial Development 9.8 9.3 Special Tax 8.6 7.9 AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1994 6 MONTHS AGO Years 18.8 19.2 AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR AMOUNT. DURATION AS OF NOVEMBER 30, 1994 6 MONTHS AGO Years 9.1 8.8 DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE. QUALITY DIVERSIFICATION (MOODY'S RATINGS) AS OF NOVEMBER 30, 1994 AS OF MAY 31, 1994 Row: 1, Col: 1, Value: 2.6 Row: 1, Col: 2, Value: 11.7 Row: 1, Col: 3, Value: 8.9 Row: 1, Col: 4, Value: 21.0 Row: 1, Col: 5, Value: 33.2 Row: 1, Col: 6, Value: 22.6 Aaa 22.6% Aa, A 33.3% Baa 21.0% Ba 8.9% Nonrated 11.6% Short-term investments 2.6% Aaa 23.4% Aa, A 36.3% Baa 17.2%% Ba 9.8%% Nonrated 10.9% Short-term investments 2.4% Row: 1, Col: 1, Value: 2.4 Row: 1, Col: 2, Value: 10.9 Row: 1, Col: 3, Value: 9.800000000000001 Row: 1, Col: 4, Value: 17.2 Row: 1, Col: 5, Value: 36.3 Row: 1, Col: 6, Value: 23.4 WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. INVESTMENTS NOVEMBER 30, 1994 Showing Percentage of Total Value of Investment in Securities MUNICIPAL BONDS - 97.4% MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) ALABAMA - 2.1% Alabama Bldg. Renovation Fin. Auth. Rev. 7.45% 9/1/11 A $ 3,000 $ 3,146 Alabama Mental Health Fin. Auth. Spl. Tax 7.375% 5/1/09 A 3,000 3,097 Alabama Spl. Care Facs. Fing. Auth. Mobile Hosp. Rev. (Daughters of Charity Providence) 10.125% 6/1/15 Aa 700 728 Birmingham Baptist Med. Ctr. Spl. Care Facs. Fing. Auth. Rev. (Baptist Med. Ctr.) Series A, 5.50% 8/15/13, (MBIA Insured) Aaa 3,500 2,971 Birmingham Jefferson Civic Ctr. Auth. Spl. Tax (Cap. Outlay) 7.25% 1/1/12 A 5,875 6,000 Cullman Med. Park South Med. Clinic Board Rev. (Cullman Reg'l. Med. Ctr.) Series A: 6.50% 2/15/13 Baa 6,500 5,476 6.50% 2/15/23 Baa 7,000 5,653 McIntosh Ind. Dev. Board Poll. Cont. Rev. (Ciba-Geigy Corp.) 6% 8/1/07 - 2,535 2,301 Shelby County Series S, 7.40% 8/1/07 - 5,000 5,050 34,422 ALASKA - 0.4% North Slope Borough Series B, 0% 1/1/03, (MBIA Insured) Aaa 9,000 5,411 Valdez Marine Term. Rev. Rfdg. (Amerada Hess Pipeline Corp.) 6.10% 2/1/24 - 2,000 1,710 7,121 ARIZONA - 1.7 % Chandler Cap. Appreciation Rfdg.: 0% 7/1/04, (FGIC Insured) Aaa 5,700 3,099 0% 7/1/05, (FGIC Insured) Aaa 5,700 2,879 0% 7/1/06, (FGIC Insured) Aaa 5,700 2,672 0% 7/1/07, (FGIC Insured) Aaa 5,700 2,472 0% 7/1/08, (FGIC Insured) Aaa 1,700 680 0% 7/1/09, (FGIC Insured) Aaa 2,000 743 Maricopa County Ind. Dev. Auth. Hosp. Facs. Rev. Rfdg. (Samaritan Health Svcs.) Series A, 7% 12/1/16, (MBIA Insured) Aaa 2,000 2,020 Maricopa County Poll. Cont. Corp. Poll. Cont. Rev. (Pub. Svc. Co. New Mexico - Palo Verde) 7.75% 11/1/09 Ba2 7,165 7,183 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) ARIZONA - CONTINUED Phoenix Str. & Hwy. User Rev. Rfdg. (Jr. Lien) Series A, 0% 7/1/13, (FGIC Insured) Aaa $ 4,500 $ 1,215 Tucson & Pima County Ind. Dev. Auth. Single Family Mtg. Rev. (Verex Mtg. Assurance, Inc.) 9.375% 2/1/14 BB- 2,140 2,145 Tucson Wtr. Rev. Rfdg. 5.50% 7/1/14 A1 3,450 2,907 28,015 ARKANSAS - 1.2% Arkansas Dev. Fin. Auth. Rev. (Cap. Asset) Series B, 7.10% 3/1/08 A 4,500 4,579 Arkansas Univ. Rev. (Trustee) 7.20% 12/1/10 A 1,250 1,288 Baxter County Hosp. Rev. Rfdg. & Impt. 7.50% 9/1/21 Baa 4,000 3,800 Fayetteville Pub. Facs. Board Rev. Rfdg. (Butterfield Trail Village Proj.) Series A, 9.50% 9/1/14 - 2,200 2,274 North Little Rock Elec. Rev. Rfdg. Series A: 6.50% 7/1/10, (MBIA Insured) Aaa 3,840 3,763 6.50% 7/1/15, (MBIA Insured) Aaa 1,000 971 Pulaski County Health Facs. Board Rev. Rfdg. (Sisters Charity Nazareth Corp.) 6.05% 11/1/09, (MBIA Insured) Aaa 1,750 1,671 Pulaski County Hosp. Rev. Rfdg. (Arkansas Children's Hosp. Proj.) 10.125% 3/1/15 A- 800 821 19,167 CALIFORNIA - 6.8% Alameda County Ctfs. of Prtn. Rfdg. (Santa Rita Jail Proj.) 5.375% 6/1/09, (MBIA Insured) Aaa 4,730 4,115 California Pub. Works Board Lease Rev.: (California Univ. Proj.): Rfdg. (Dept. of Corrections Del Norte) Series C, 5.125%, 12/1/08 A 2,500 2,028 Series A: 5.50% 6/1/10 A 7,300 6,178 5.25% 12/1/13 A 3,750 2,967 5.625% 12/1/18 A 10,000 8,112 (Dept. Correction State Prison D - Susanville) 5.375% 6/1/18 A 1,500 1,177 California Statewide Commty. Dev. Auth. Rev. Ctfs. of Prtn.: (Eskaton Properties, Inc.) 5.80% 5/1/13 A 5,000 4,212 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) CALIFORNIA - CONTINUED (Sisters of Charity Leavenworth) 5% 12/1/23 Aa $ 2,000 $ 1,425 California Univ. Rev. Rfdg. (Multiple Purp. Proj.) Series C: 5.125% 9/1/13, (AMBAC Insured) Aaa 1,500 1,202 5% 9/1/14, (AMBAC Insured) Aaa 3,000 2,336 4.75% 9/1/15, (AMBAC Insured) Aaa 6,000 4,485 Castaic Lake Wtr. Agcy. Ctfs. of Prtn. Rfdg. (Wtr. Sys. Impt. Proj.) Series A, 7.25% 8/1/09, (MBIA Insured) Aaa 1,800 1,910 East Bay Muni. Util. Dist. Unltd. Tax Rfdg. (Spl. Dist. #1) Series E, 5% 4/1/15 Aa 3,000 2,363 East Bay Muni. Util. Wtr. Sys. Dist. Rev. Rfdg. 5% 6/1/21, (MBIA Insured) Aaa 4,025 3,019 Fresno Swr. Rev. Series A-1, 4.75% 9/1/21, (AMBAC Insured) Aaa 2,000 1,440 Industry Urban Ind. Dev. Agcy. Rfdg. (Civic Recreational Proj. #1) Series A, 7.375% 5/1/12 - 1,000 1,039 Los Angeles County Metropolitan Trans. Auth. Sales Tax Rev. Sr. (Property C Section) Series B, 4.75% 7/1/18, (AMBAC Insured) Aaa 3,500 2,564 Orange County Dev. Agcy. Tax Allocation (Santa Ana Heights Proj.) 6% 9/1/15 Baa1 2,800 2,394 Orange County Wtr. Dist. Ctfs. of Prtn. Rfdg. Series A, 5.50% 8/15/14 Aa 3,430 2,903 Rancho Wtr. Dist. Fing. Auth. Rev. Rfdg. 5% 8/15/14, (AMBAC Insured) Aaa 5,000 3,913 Sacramento City Fing. Auth. Lease Rev. Rfdg. Series A, 5.40% 11/1/20, (AMBAC Insured) Aaa 7,000 5,600 Sacramento City Fing. Auth. (Cap. Appreciation Tax Allocation Comb. Proj.) Series B, 0% 11/1/06, (MBIA Insured) Aaa 2,810 1,293 San Bernardino County Ctfs. of Prtn.: (Cap. Facs. Proj.) Series B, 7% 8/1/28 Baa1 3,000 3,221 (Med Ctr. Fing. Proj.) 5.50% 8/1/17 Baa1 3,800 2,859 San Francisco Bldg. Auth. Lease Rev. (Dept. Gen. Svcs. Lease) Series A, 5% 10/1/13 A1 6,000 4,560 San Joaquin Hills Trans. Corridor Agcy. Toll Road Rev. (Sr. Lien): 0% 1/1/17 - 3,500 617 0% 1/1/19 - 20,000 3,050 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) CALIFORNIA - CONTINUED San Jose Redev. Agcy. Tax Allocation (Merged Area Redev. Proj.): 5% 8/1/20, (MBIA Insured) Aaa $ 1,500 $ 1,131 4.75% 8/1/24, (MBIA Insured) Aaa 2,075 1,473 San Mateo County Trans. Dist. Sales Tax Rev. Crossover Rfdg. Series A, 5% 6/1/09, (MBIA Insured) Aaa 2,635 2,187 Santa Margarita/Dana Point Auth. Rev. (Impt. Dist. 3&3A,4&4A) Series B, 7.25% 8/1/08, (MBIA Insured) Aaa 1,770 1,887 Sequoia Hosp. Dist. Rev. Rfdg. 5.375% 8/15/23 Baa1 5,000 3,531 Signal Hill Redev. Agcy. Tax 5.25% 10/1/23, (MBIA Insured) Aaa 6,375 4,904 South Orange County Pub. Fing. Auth. Spl. Tax Rev.: (Sr. Lien) Series A, 7% 9/1/11, (MBIA Insured) Aaa 3,490 3,599 (Foothill Area) Series C, 8% 8/15/08, (FGIC Insured) Aaa 2,500 2,834 Southern California Pub. Pwr. Auth. Pwr. Proj. Rev. Rfdg. (Mead Adelanto Proj.) Series A, 4.75% 7/1/16, (AMBAC Insured) Aaa 3,000 2,228 Upland Ctfs. of Prtn. (San Antonio Commty. Hosp.) 5% 1/1/18 A 3,000 2,096 Walnut Creek Ctfs. of Prtn. Rfdg. (John Muit Med. Ctr.) 5% 2/15/16, (MBIA Insured) Aaa 6,250 4,813 111,665 COLORADO - 7.3% Aurora Wtr. Rfdg. 4.75% 11/1/14 A1 3,540 2,659 Avon Metropolitan Dist. Gen. Oblig. Rfdg. & Impt. (Colorado Eagle Co.) Series 1990: 8% 11/1/00 - 1,150 1,187 8.30% 11/1/10 - 2,505 2,605 Colorado Health Facs. Auth. Rev.: (Commty. Provider Pooled Loan) Series A, 7.25% 7/15/17, (Cap. Guaranty Insured) Aaa 1,878 1,913 (Hosp. - Swedish Med. Ctr.) Series A: 7.25% 10/1/08 Baa1 7,200 7,137 7.50% 10/1/20 Baa1 10,000 9,650 6.80% 1/1/23 Baa1 10,500 9,187 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) COLORADO - CONTINUED Colorado Health Facs. Auth. Rev. - continued (PSL Health Care Sys. Proj.): Series A: 6.75% 2/15/13 Baa1 $ 7,750 $ 6,927 7.25% 2/15/16 Aaa 8,000 8,160 Series B, 8.50% 2/15/21 Baa1 6,250 6,484 (Rocky Mountain Adventist): 6.625% 2/1/13 Baa 16,300 14,059 6.625% 2/1/22 Baa 4,700 3,913 (Sisters of Charity Health Care Sys.) Series A, 6.25% 5/15/12, (AMBAC Insured) Aaa 2,000 1,902 Colorado Springs Arpt. Rev. (Cap. Appreciation) Series C: 0% 1/1/02 BBB 1,550 965 0% 1/1/04 BBB 1,530 819 0% 1/1/09 BBB 1,655 573 0% 1/1/10 BBB 1,500 478 Colorado Springs Util. Rev. Rfdg. & Impt. Series A, 5.125% 11/15/23 Aa 5,000 3,838 Colorado Univ. Rev. (Biomedical Research Bldg. Proj.) 7% 6/1/09 A+ 5,725 5,782 Denver City & County Arpt. Rev.: Series A: 6.90% 11/15/98 (e) Baa 3,500 3,421 7% 11/15/99 (e) Baa 2,750 2,678 7.50% 11/15/06 Baa 6,500 6,151 7.50% 11/15/23 (e) Baa 4,800 4,398 Series B, 7.25% 11/15/23 (e) Baa 2,000 1,798 Denver City & County Ind. Dev. Rev. (Denver Univ. Prog.) Series 1991, 7.50% 3/1/11 BBB 1,000 1,016 Jefferson County Ctfs. of Prtn.: Rfdg. 6.65% 12/1/08, (MBIA Insured) Aaa 3,000 3,019 7.125% 12/1/10, (MBIA Insured) Aaa 250 258 Jefferson County Single Family Mtg. Rev. Series 1991 A, 8.875% 10/1/13, (MBIA Insured) Aaa 450 467 Lafayette Wtr. Rfdg. & Impt. Series B, 6.25% 12/1/12, (AMBAC Insured) Aaa 1,000 949 Larimer County School Dist. #R-1 Poudre Impt. Unltd. Tax 6.50% 12/15/11 A 5,000 4,850 Mountain Village Metropolitan Dist. San. Miguel County Rfdg. 8.10% 12/1/11 - 2,000 2,103 119,346 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) CONNECTICUT - 0.4% Connecticut Health & Edl. Facs. Auth. Rev. (New Britain Mem. Hosp.) Series A, 7.50% 7/1/06 BBB- $ 5,000 $ 4,813 Norwalk Hsg. Auth. Mtg. Rev. (Monterey Village) Series 1985 B, Section 8, 9% 11/1/99 BBB 2,000 2,030 6,843 DISTRICT OF COLUMBIA - 0.7% District of Columbia Hosp. Rev. (Hosp. for Sick Children) Series A, 8.875% 1/1/21 - 5,950 6,166 Metropolitan Washington Arpt. Auth. Gen. Arpt. Rev. Series A, 5.75% 10/1/20, (MBIA Insured) (e) Aaa 6,000 4,980 11,146 FLORIDA - 4.5% Brevard County Util. Rev. Rfdg. 5.25% 3/1/14, (AMBAC Insured) Aaa 2,500 2,034 Dade County Health Facs. Auth. Hosp. Rev. (South Shore Hosp. & Med. Ctr.) Series A, 7.60% 8/1/24 - 875 888 Dade County Wtr. & Swr. Sys. Rev. Rfdg. 5% 10/1/13, (FGIC Insured) Aaa 2,000 1,580 Florida Tpk. Auth. Tpk. Rev. Rfdg. Series A: 5% 7/1/13, (FGIC Insured) Aaa 3,750 3,023 5% 7/1/19, (FGIC Insured) Aaa 3,000 2,314 Jacksonville Elec. Auth. Rev. Rfdg. (St. Johns River Pwr. #2) Series 7, 5.50% 10/1/14 Aa1 10,000 8,563 Jacksonville Health Facs. Auth. Hosp. Rev. Rfdg. (Methodist Hosp. Proj.) Series A, 8% 10/1/06 - 800 773 Jacksonville Health Facs. Auth. Ind. Dev. Rev. Rfdg. (Cypress Village Proj.) (Nat'l. Benevolent Assoc.) 7% 12/1/22 Baa1 2,000 1,745 Reedy Creek Impt. Dist. Util. Rev. Rfdg. Series 1, 5% 10/1/19, (MBIA Insured) Aaa 1,500 1,149 Tampa Cap. Impt. Prog. Rev.: Series A, 8.25% 10/1/18 AA 10,000 10,263 Series B, 8.375% 10/1/18 (c) BBB 40,000 41,200 73,532 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) GEORGIA - 0.1% Savannah Port Auth. Poll. Cont. Rev. (Continental Group, Inc. Proj.) 9.875% 3/1/00 Ba2 $ 2,000 $ 2,030 HAWAII - 1.0% Hawaii Gen. Oblig. Rfdg. Series CI, 4.75% 11/1/09 Aa 7,000 5,626 Honolulu City & County: Rfdg. & Impt. Series B: 5.50% 10/1/11 Aa 3,000 2,618 5% 10/1/13 Aa 4,500 3,634 Series A, 5.75% 4/1/10 Aa 4,820 4,374 16,252 IDAHO - 0.6% Boise City Independant School Dist. Rev. 5.40% 7/30/14, (AMBAC Insured) Aaa 3,000 2,550 Boise Urban Renewal Parking Agcy. Rev. (Tax Increment) Series A, B, C, 8.125% 9/1/15 A 2,600 2,701 Idaho Falls Rfdg. Elec.: 0% 4/1/06, (FGIC Insured) Aaa 2,000 958 0% 4/1/13, (FGIC Insured) Aaa 7,150 2,002 Idaho Health Facs. Auth. Rev. 5.50% 12/1/07, (AMBAC Insured) Aaa 2,000 1,807 10,018 ILLINOIS - 6.0% Chicago Motor Fuel Tax Rev. Rfdg. Series A, 5.375% 1/1/14, (AMBAC Insured) Aaa 4,000 3,275 Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. Rfdg.: (Delta Airlines, Inc.) 6.45% 5/1/18 Ba3 1,750 1,444 Series A: 5% 1/1/12 A1 10,000 7,975 5% 1/1/16 A1 14,000 10,675 Chicago Rfdg Series B, 5% 1/1/11, (AMBAC Insured) Aaa 7,200 5,769 Grayslake Multi-Family Hsg. Rev. (Country Squire Apts.) 9.50% 12/1/25, (FHA Guaranteed) AA- 2,430 2,451 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) ILLINOIS - CONTINUED Illinois Dev. Fin. Auth. Solid Waste Disp. Rev. (Ford Heights Waste Tire Proj.) 7.875% 4/1/11 (e) - $ 18,600 $ 17,647 Illinois Edl. Facs. Auth. Rev. (Lewis University) 6% 10/1/24 Baa 5,000 4,037 Illinois Health Facs. Auth. Rev. Rfdg.: (Lutheran Gen. Health Sys.) Series C: 7% 4/1/14 A 1,500 1,427 6% 4/1/18 A 3,000 2,512 (Memorial Hosp.): 6.875% 5/1/00 BBB 1,700 1,647 7.125% 5/1/10 BBB 4,000 3,640 (OSF Healthcare Sys.) 6% 11/15/13 A1 5,000 4,269 Illinois Univ. Rev. 0% 4/1/12, (MBIA Insured) Aa 6,090 1,797 Lake County Forest Preserve Dist. Unltd. Tax (Cap. Appreciation): 0% 12/1/07 Aa 10,440 4,320 0% 12/1/08 Aa 12,505 4,736 Metropolitan Pier & Exposition Auth. Dedicated Tax Rev. (McCormick Place Expansion Proj.): Series A: 0% 6/15/07, (FGIC Insured) (b) Aaa 4,800 3,924 0% 6/15/09, (FGIC Insured) Aaa 18,175 6,657 0% 6/15/16, (FGIC Insured) (b) Aaa 11,820 6,693 Round Lake Beach Tax Increment Rev. Rfdg. 7.50% 12/1/13 - 5,000 4,537 99,432 INDIANA - 0.2% Indianapolis Econ. Dev. Rev. Rfdg. & Impt. (Nat'l. Benevolent Assoc.) 7.625% 10/1/22 Baa1 3,000 2,805 KANSAS - 0.5% Kansas City Util. Sys. Rev.: 0% 9/1/10, (AMBAC Insured) (Escrowed to Maturity) (f) Aaa 3,825 1,320 0% 9/1/10, (AMBAC Insured) Aaa 2,865 960 Kansas Dept. Trans. Hwy. Rev. Series A, 5.375% 3/1/12 (c) Aa 4,100 3,490 Wichita Hosp. Rev. Rfdg. & Impt. (St. Francis II Reg'l. Med. Ctr.) Series A-3, 6.25% 10/1/10, (MBIA Insured) Aaa 2,500 2,412 8,182 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) KENTUCKY - 2.0% Danville Multi-City Lease Rev. (Shelbyville) Series H, 6.70% 7/1/11, (MBIA Insured) Aaa $ 2,330 $ 2,330 Jefferson County Cap. Projs. Corp. Rev. (Muni. Multiple Rfdg. Lease) Series A, 0% 8/15/11 A1 5,365 1,589 Kenton County Arpt. Board Arpt. Rev. (Spl. Facs Delta Airlines Proj. A): 7.125% 2/1/21 (e) Ba1 17,500 15,356 6.125% 2/1/22 (e) Ba1 2,000 1,527 Kentucky Tpk. Auth. Econ. Dev. Road Rev. Rfdg. (Revitalization Proj.) 5.50% 7/1/09, (AMBAC Insured) Aaa 2,200 1,972 Louisville Univ. Rev. Rfdg. (Consolidated Edl. Bldgs.) Series I: 5.40% 5/1/09 A1 2,360 2,033 5.40% 5/1/10 A1 1,565 1,332 Owensboro Elec. Lt. & Pwr. Rev. Series B, 0% 1/1/07, (AMBAC Insured) Aaa 10,000 4,463 Peery County Econ. Dev. Rev. Rfdg. (The Kroger Co. Proj.) 6.60% 5/1/02 Ba2 2,435 2,319 32,921 LOUISIANA - 2.6% Lake Charles Hbr. & Term. Dist. Port Facs. Rev. Rfdg. (Trunkline LNG Co. Proj.) (Panhandle Eastern Corp.) Series 1992, 7.75% 8/15/22 Baa3 23,500 23,324 Louisiana Offshore Term. Auth. Deepwtr. Port Rev. Rfdg. (1st Stage) (Loop, Inc. Proj.) Series E, 7.60% 9/1/10 A3 2,300 2,406 Monroe-West Monroe Pub. Trust Fing. Auth. Mtg. Rev. Rfdg. (Cap. Appreciation) Series C, 0% 8/20/14 AA- 9,000 2,430 New Orleans Audubon Park Commission Aquarium Rev. Series 1992 A, 8% 4/1/12 - 5,000 4,994 St. James Parish Poll. Cont. Rev. (B.F. Goodrich Proj.) 14.50% 12/1/11 Baa1 500 579 St. John Baptist Parish Sales Tax Dist. Rfdg. Series 1989, 7.80% 12/1/14 Baa 2,700 2,886 St. Tammany Pub. Trust Fing. Auth. Rev. Rfdg. (Cap. Appreciation) Series C, 0% 7/20/14 Aa 4,650 1,261 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) LOUISIANA - CONTINUED Westside Habilitation Ctr. Cheyenville Rev. Rfdg. (Intermediate Care Fac. Mental Retardation) 8.50% 10/1/13 - $ 4,800 $ 4,416 42,296 MAINE - 0.6% State Str. Hsg. Preservation Corp. Hsg. Rev. (Multi-Family Proj.) (100 State Str.) Series A: 7.20% 1/1/02 A 620 627 7.375% 1/1/12 A 3,505 3,536 7.50% 1/1/19 A 4,700 4,747 8,910 MARYLAND - 1.2% Baltimore County Mtg. Rev. (Loch Raven Village) 10.10% 11/20/20, (GNMA Coll.) AAA 1,390 1,409 Howard County Mtg. Rev. (Heartlands Elderly Apts. Proj.) 8.875% 12/1/10, (FHA Guaranteed) (MBIA Insured) Aaa 250 255 Maryland Commty. Dev. Administration Dept. Hsg. & Commty. Dev. (Single Family Prog.) 4th Series, 7.40% 4/1/17 Aa 2,485 2,500 Maryland Energy Fing. Administration Ltd. Oblig. Solid Waste Disp. Facs. Recycling Rev. (Hagerstown Fiber LP) 9% 10/15/16 - 8,000 7,960 Maryland Health & Higher Ed. Facs. Auth. Rev.: Rfdg. (Doctors Commty. Hosp.) 5.75% 7/1/03 Baa 2,500 1,916 (Holy Cross Hosp.) Issue A, 7.125% 7/1/10, (AMBAC Insured) Aaa 1,350 1,387 Montgomery County Hsg. Opportunities Commission Hsg. Rev. (Multi-Family) Series B, 9.375% 7/1/15 Aa 445 457 Prince George's County Hosp. Rev. (Greater Southeast Health Care Sys.) 6.375% 1/1/13 Baa 2,250 1,882 Prince George's County Solid Waste Mgmt. Sys. Rev. 5.25% 6/15/13 A 1,500 1,193 18,959 MASSACHUSETTS - 6.3% Boston Wtr. & Swr. Commission 5.40% 11/1/08 A 2,000 1,720 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) MASSACHUSETTS - CONTINUED Massachusetts Gen. Oblig.: (Consolidated Loan) Series A, 5% 1/1/12 A1 $ 4,000 $ 3,125 5% 8/1/06 A1 8,355 7,081 Massachusetts Health & Edl. Facs. Auth. Rev.: (1st Mtg.) (Fairview Extended Care) Series A: 10.125% 1/1/11 - 3,010 3,217 10.25% 1/1/21 - 6,400 6,880 (St. Luke's Hosp. New Bedford) 7.70% 8/15/23 INFL, (MBIA Insured) (g) Aaa 2,600 1,765 Massachusetts Hsg. Fin. Agcy. (Hsg. Projs.) Series A, 6.30% 10/1/13, (MBIA Insured) A1 10,000 9,050 Massachusetts Hsg. Fin. Agcy. Rev. (Multi-Family) Series 1984 B,10.375% 12/1/09, (MBIA Insured) Aaa 1,000 1,000 Massachusetts Ind. Fin. Agcy. Health Care Facs. Rev. (Hampden Nursing Home Proj.) Series A, 9.75% 10/1/17 - 4,760 4,635 Massachusetts Ind. Fin. Agcy. Rev.: (1st Mtg. Reeds Landing): 7.75% 10/1/20 - 1,300 1,255 8.625% 10/1/23 - 3,000 2,820 (Atlanticare Med. Ctr.) Series A, 10.125% 11/1/04 - 7,200 7,056 (Cap. Appreciation) (Massachusetts Biomedical Research) Series A-2: 0% 8/1/03 A1 23,300 12,465 0% 8/1/04 A1 5,000 2,469 0% 8/1/06 A1 26,800 11,155 0% 8/1/09 A1 15,800 5,174 0% 8/1/10 A1 11,000 3,314 Massachusetts Muni. Wholesale Elec. Co. Pwr. Supply Sys. Rev.: Rfdg. Series A: 5.10% 7/1/08, (AMBAC Insured) Aaa 3,575 2,998 6% 7/1/18, (MBIA Insured) Aaa 3,000 2,617 Series A, 6.92% 7/1/18 INFL, (AMBAC Insured) (g) Aaa 5,000 3,150 5% 7/1/10, (AMBAC Insured) Aaa 3,680 2,981 Massachusetts Port Auth. Rev. 5% 7/1/18 Aa 3,680 2,728 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) MASSACHUSETTS - CONTINUED Massachusetts Univ. Ctfs. of Prtn. (Telecommunications Sys.) Series A: 7.45% 11/1/97 BBB- $ 810 $ 839 7.70% 5/1/99 BBB- 1,190 1,235 7.70% 11/1/99 BBB- 1,240 1,287 7.80% 5/1/00 BBB- 1,285 1,333 103,349 MICHIGAN - 4.0% Detroit Convention Facs. Rev. Rfdg. (Cobo Hall Expansion Proj.) 5.25% 9/30/12 A 3,000 2,385 Detroit Hosp. Fin. Auth. Facs. Rev. (Michigan Healthcare Corp. Proj.) 10% 12/1/20 B1 37,080 31,518 Grand Rapids San. Swr. Sys. Rev. Impt. & Rfdg. 7% 1/1/16 A1 2,195 2,198 Michigan Hosp. Fin. Auth. Rev. Rfdg.: (Bay Med. Ctr.) Series A, 8.25% 7/1/12 Baa1 1,000 1,026 (Detroit Macomb Hosp. Corp.) Series A: 7.40% 6/1/13 B 2,000 1,742 7% 6/1/15 B 3,500 2,901 (Pontiac Osteopathic Hosp.) 6% 2/1/24 Baa1 1,000 745 Michigan Hsg. Dev. Auth. Rental Hsg. Rev. Series B, 5.70% 4/1/12 A+ 2,000 1,682 Michigan Hsg. Dev. Auth. Single Family Mtg. Rev. Series A: 7.50% 6/1/15 AA+ 470 482 7.70% 12/1/16 AA+ 1,775 1,819 Michigan South Central Pwr. Agcy. Pwr. Supply Sys. Rev. Rfdg. Series 1991, 6.75% 11/1/10 BBB+ 2,000 1,947 Michigan Strategic Fund Ltd. Oblig. Rev. (Mercy Svcs. for Aging Proj.) 9.40% 5/15/20 - 9,200 9,557 Michigan Trunk Line Rfdg. Series B-1, 5.50% 10/1/21 A1 2,500 2,022 Pontiac Hosp. Fin. Auth. Rev. (North Oakland Med. Ctr. Obligated Group) 6% 8/1/18 Baa 1,700 1,294 Waterford Township Econ. Dev. Corp. Rev. Ltd Tax Oblig. (Canterbury Health Care): 8% 7/1/08 - 300 296 8.375% 7/1/23 - 1,000 1,005 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) MICHIGAN - CONTINUED Western Townships Util. Auth. Swr. Disp. Sys.: Ltd. Tax 8.20% 1/1/18 BBB+ $ 2,000 $ 2,108 Rfdg. 0% 1/1/05, (Cap. Guaranty Insured) Aaa 2,810 1,482 66,209 MINNESOTA - 1.3% Centennial Independant School Dist. #12 Rfdg. Series B, 4.875% 2/1/12, (FGIC Insured) Aaa 2,610 2,111 Minneapolis & St. Paul Hsg. & Redev. Auth. Healthcare Sys. Rev. (Healthspan Health Sys. Corp.) (Health One Sys.) Series A, 4.75% 11/15/18, (AMBAC Insured) Aaa 5,000 3,656 Minneapolis Hsg. & Redev. Auth. Mtg. Single Family Rev. 6.75% 5/1/09, (FHA Guaranteed) A1 995 1,008 Northern Muni. Pwr. Agcy. Elec. Sys. Rev. Rfdg. Series B, 5.50% 1/1/18, (AMBAC Insured) Aaa 2,000 1,687 Rochester Health Care Facs. Rev. (Mayo Foundation/Mayo Med. Ctr.): RIB Series H, 8.38% 11/15/15 INFL (g) AA+ 9,000 7,189 Series I: 5.90% 11/15/09 AA+ 2,000 1,755 5.90% 11/15/10 AA+ 2,250 1,955 St. Louis Park Health Care Facs. Auth. Rev. (Health System Obligated A) 5.20% 7/1/23, (AMBAC Insured) Aaa 2,000 1,550 St. Paul Hsg. & Redev. Auth. Hosp. Rev. (St. Paul-Ramsey Med. Ctr. Proj.) 5.50% 5/15/13, (AMBAC Insured) Aaa 1,180 1,018 21,929 MISSISSIPPI - 0.6% Hinds County Ctfs. of Prtn. (Welfare Dept. Proj.) 7.75% 3/1/09, (Pre-Refunded to 3/1/99 @ 102) (f) A 1,095 1,194 Hinds County Mtg. Rev. Rfdg. (Methodist Hosp. & Rehabilitation) 5.60% 5/1/12, (AMBAC Insured) Aaa 4,000 3,500 Mississippi Home Corp. Single Family Sr. Rev. Rfdg. Series 1990 A, 9.25% 3/1/12, (FGIC Insured) Aaa 530 555 Mississippi Hosp. Equip. & Facs. Auth. Rev. (Singing River Hosp. Sys. Proj.) 5.50% 3/1/13 Aaa 1,605 1,378 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) MISSISSIPPI - CONTINUED Panola County Ind. Dev. Rev. Rfdg. (Kroger Co.) 7.125% 11/1/12 Ba2 $ 3,250 $ 3,067 9,694 MISSOURI - 0.4% Greene County Single Family Mtg. Rev. 9.375% 12/1/06, (AMBAC Insured) Aaa 10 10 Missouri Health & Edl. Fac. Auth. Health Facs. Rev. (Barnes Jewish-Christian Health) 5.25% 5/15/12 Aa 4,000 3,235 St. Louis Reg'l. Convention & Sports Complex Auth. Series C, 7.90% 8/15/21 - 3,000 3,049 6,294 MONTANA - 0.4% Great Falls Ind. Dev. Rev. Rfdg. (K mart Corp. Proj.) 6.50% 11/15/01 A2 200 196 Montana Board of Investment Payroll Tax (Workers Compensation) Series 1991, 6.875% 6/1/11, (MBIA Insured) Aaa 6,700 6,767 6,963 NEBRASKA - 1.2% Douglas County Hosp. Auth. #1 Rev. (Immanuel Med. Ctr., Inc.) 6.90% 9/1/11, (AMBAC Insured) Aaa 3,250 3,266 Lancaster County Hosp. Auth. #1 Hosp. Rev. (Bryan Mem. Hosp. Proj.) 6.60% 6/1/12, (MBIA Insured) Aaa 1,000 961 Nebraska Pub. Pwr. Dist. Rev. Rfdg. (Pwr. Supply Sys.): Series B, 5.25% 1/1/13, (MBIA Insured) Aaa 3,650 3,011 Series C, 5% 1/1/10, (MBIA Insured) Aaa 6,380 5,240 Nebraska Investment Fin. Auth. Hosp. Rev. (Methodist Health. Sys.): 6.65% 3/1/00, (MBIA Insured) Aaa 2,500 2,600 6.75% 3/1/01, (MBIA Insured) Aaa 2,400 2,499 Scotts Bluff County Hosp. Auth. #1 Hosp. Rev. (Reg'l. West Med. Ctr. Proj.) 6.45% 12/15/04 A 3,000 2,903 20,480 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) NEVADA - 0.1% Clark County Ind. Dev. Rev. (Southwest Gas Corp.) Series A, 6.50% 12/1/33 (e) Baa3 $ 3,000 $ 2,396 NEW HAMPSHIRE - 0.1% New Hampshire Business Fin. Auth. Poll. Cont. Rev. Rfdg. (United Illuminating Co.) Series A, 5.875% 10/1/33 Baa3 2,500 1,922 NEW JERSEY - 0.9% New Jersey Econ Dev. Auth. Econ. Dev. Rev.: Series A, 11% 12/15/17 - 14,445 14,445 Series B, 11% 12/15/17 (h) - 9,370 12 14,457 NEW MEXICO - 3.0% Farmington Poll. Cont. Rev. (Pub. Svc. Co. of New Mexico San Juan Proj.): Rfdg.: Series X, 5.90% 4/1/07 Ba2 12,640 11,060 6.40% 8/15/23 Ba2 9,000 7,346 Series A, 6% 3/1/08 Ba2 14,230 12,433 Gallup Poll. Cont. Rev. Rfdg. Unltd. Tax (Plains Elec. Generation) 6.65% 8/15/17, (MBIA Insured) Aaa 11,550 11,131 New Mexico Univ. Rev.: Rfdg. Series A: 6.25% 6/1/12 A1 2,000 1,875 6% 6/1/21 A1 4,050 3,559 Series B, 5.75% 6/1/12 A1 1,700 1,500 6.50% 6/1/21 A1 1,000 933 49,837 NEW YORK - 9.7% Metropolitan Trans. Auth. Svc. Contract: (Commuter Facs.): Series O, 5.75% 7/1/13 Baa1 9,150 7,663 Series P, 5.75% 7/1/13 Baa1 7,000 5,740 Series O, 5.75% 7/1/13 Baa1 11,495 9,627 New York City Ind. Dev. Agcy. Spl. Facs. Rev. (Terminal One Group Assoc. Proj.) 6% 1/1/19 (e) A 8,000 6,800 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) NEW YORK - CONTINUED New York State Dorm. Auth. Rev.: Rfdg. (State Univ. Edl. Facs.): Series A: 5.50% 5/15/09 Baa1 $ 4,000 $ 3,330 5.50% 5/15/10, (FGIC Insured) Aaa 5,000 4,337 5.875% 5/15/11 Baa1 7,000 5,994 5.50% 5/15/13 Baa1 6,000 4,837 5.25% 5/15/15 Baa1 6,000 4,620 Series B: 5.25% 5/15/10 Baa1 5,100 4,080 5.25% 5/15/11 Baa1 5,000 3,963 (City Univ.) Series F, 5.50% 7/1/12 Baa1 4,600 3,709 (City Univ. Sys. Consolidated) Series A: 5.75% 7/1/13 Baa1 10,000 8,275 (2nd Generation) 5.75% 7/1/13 Baa1 3,600 2,979 (Court Facs. Lease) Series A: 5.625% 5/15/13 Baa1 5,510 4,484 5.375% 5/15/16 Baa1 4,000 3,100 5.25% 5/15/21 Baa1 10,375 7,652 5.50% 5/15/08 Baa1 2,000 1,687 New York State Environmental Facs. Corp. Poll. Cont. Rev. Rfdg. (State Wtr. Revolving Fund) (New York City Muni. Wtr.): 5.75% 6/15/10 Aa 10,000 8,913 5.75% 6/15/12 Aa 2,000 1,760 New York State Local Gov't. Assistance Corp.: Rfdg.: Series C, 5.50% 4/1/17 A 26,600 21,746 Series E: 6% 4/1/14 A 9,300 8,161 5.25% 4/1/16 A 11,500 8,984 RIBS 6.602% 4/1/21 INFL (g) A 4,000 2,435 Series A, 0% 4/1/08 A 2,000 803 Series B, 0% 4/1/08 A 5,000 2,006 Series D, 5.375% 4/1/14 A 5,000 4,038 New York State Tollway Auth. Gen. Rev. (Spl. Oblig.) Series A, 0% 1/1/05 BBB 8,500 4,271 Suffolk County Wtr. Auth. Wtrwks. Rev. Rfdg. (Sr. Lien) 5.10% 6/1/09, (MBIA Insured) Aaa 3,000 2,546 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) NEW YORK - CONTINUED Triborough Bridge & Tunnel Auth. Rev. Rfdg. (Gen. Purp.) Series Y, 5.50% 1/1/17 Aa $ 1,000 $ 820 159,360 NEW YORK & NEW JERSEY - 1.2% New York & New Jersey Port Auth. (Delta Airlines, Inc. Proj.) Series 1R, 6.95% 6/1/08 Ba1 21,500 20,237 NORTH CAROLINA - 0.4% North Carolina Muni. Pwr. Agcy. #1 Catawba Elec. Rev. Rfdg. 0% 1/1/09 A 13,050 4,665 Pitt County Rev. (Pitt County Mem. Hosp.) 6.75% 12/1/14, (MBIA Insured) Aaa 2,000 2,013 6,678 NORTH DAKOTA - 0.3% Mercer County Poll. Cont. Rev. Rfdg. (Montana Dakota Utils. Co. Proj.) 6.65% 6/1/22, (FGIC Insured) Aaa 4,500 4,326 OHIO - 2.4% Eaton Ind. Dev. Rev. Rfdg. (Baxter Int'l., Inc. Proj.) 6.50% 12/1/12 A3 2,605 2,410 Hamilton County Swr. Sys. Rev. Rfdg. & Impt. Metropolitan Swr. Dist. Series A, 5.35% 12/1/07, (FGIC Insured) Aaa 2,475 2,237 Loveland City School Dist. Unltd. Tax 6.65% 12/1/15 A 3,500 3,421 Montgomery County Ind. Dev. Rev. Rfdg. (The Kroger Co.) (Dixie & Needmore) 7.45% 9/1/07 Ba2 4,700 4,624 Mount Vernon Hosp. Rev. (Knox Commty. Hosp.) 7.875% 6/1/12 - 16,940 16,982 Ohio Muni. Elec. Generation Agcy. Joint Venture 5, Ctfs. Benefit Interest 5.375% 2/15/24, (AMBAC Insured) Aaa 3,750 3,005 Ohio State Bldg. Auth. (Workers Comp.) (W. Green Bldg. A) 4.75% 4/1/14 A 3,500 2,621 Warren County Hosp. Facs. Rev. Rfdg. & Impt. (Otterbein Home Proj.) 7.20% 7/1/11 Aa2 2,000 1,997 Warren Hosp. Rev. Rfdg. (Warren General Hosp. Proj.) Series B, 7.20% 11/15/09 BBB 2,750 2,564 39,861 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) OKLAHOMA - 0.6% Grand River Dam Auth. Rev. Rfdg. 5.50% 6/1/09 (c) A $ 10,250 $ 9,225 Valley View Hosp. Auth. Rev. 10% 10/1/14, (HIB Insured) A 1,140 1,150 10,375 OREGON - 1.2% Astoria Hosp. Facs. Auth. Hosp. Rev. (Columbia Mem. Hosp.) 7% 1/1/13 - 2,500 2,172 Oregon Health Hsg. Edl. & Cultural Facs. Auth. Rev. (Lewis & Clark College Proj.): Series A, 6.125% 10/1/24, (MBIA Insured) Aaa 2,100 1,890 6% 10/1/24, (MBIA Insured) Aaa 1,750 1,608 Portland Hosp. Facs. Auth. Hosp. Rev. (Legacy Health Sys.): Series A, 6.625% 5/1/11, (AMBAC Insured) Aaa 250 250 Series B: 6.625% 5/1/11, (AMBAC Insured) Aaa 2,000 2,000 6.70% 5/1/21, (AMBAC Insured) Aaa 11,000 10,917 Portland Swr. Sys. Rev. Rfdg. Series A, 5.25% 3/1/10 A1 2,000 1,695 20,532 PENNSYLVANIA - 5.1% Allegheny County Hosp. Dev. Auth. Health Facs. Rev. (Allegheny Valley School): 8% 2/1/02 Baa 1,735 1,772 8.50% 2/1/15 Baa 3,325 3,400 Allegheny County Ind. Dev. Auth. Rev. (K mart Corp.) (Commercial Dev.) Series A, 11% 1/1/07 A2 2,535 2,893 Butler County Hosp. Auth. Rev. (North Hills Passavant Hosp.) Series A, 6.80% 6/1/06, (Cap. Guaranty Insured) Aaa 5,000 5,119 Cumberland County Muni. Auth. Rev. (Carlisle Hosp.) 6.80% 11/15/23 Baa 4,600 3,858 Delaware County Auth. Rev. (1st. Mtg.) (Riddle Village Proj.): 7% 6/1/00 - 1,500 1,461 8.25% 6/1/22 - 3,000 2,835 9.25% 6/1/22 - 5,000 5,219 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) PENNSYLVANIA - CONTINUED Harrisburg Auth. Wtr. Rev. (Complimentary Auction Rate B-3) 7.87% 7/15/15 INFL, (FGIC Insured)(g) Aaa $ 4,000 $ 2,990 Lehigh County Gen. Purp. Auth. Rev. (Wiley House) 9.50% 11/1/16 - 5,930 6,004 Montgomery County Higher Ed. & Health Auth. Hosp. Rev. (United Hosp. Inc. Proj.) (St. Christopher) 8.25% 11/1/03 Ba1 2,305 2,322 Northumberland County Auth. Commonwealth Lease Rev. 0% 10/15/13, (MBIA Insured) Aaa 11,830 3,135 Pennslyvania Convention Ctr. Auth. Rev. Rfdg. Series A: 6.60% 9/1/09 Ba 3,000 2,696 6.70% 9/1/14 Ba 5,750 5,089 6.75% 9/1/19 Ba 3,000 2,629 Pennsylvania Intergovernmental Coop. Auth. Spl. Tax Rev. Rfdg. Series A: 5% 6/15/15 Baa1 5,210 4,064 5% 6/15/22, (MBIA Insured) Aaa 2,835 2,122 Philadelphia Hosp. & Higher Ed. Facs. Auth. Hosp. Rev. (Temple Univ. Hosp.) Series A, 6.50% 11/15/08 Baa1 1,000 899 Philadelphia Muni. Auth. Rev. Rfdg. Lease Series D, 6.125% 7/15/08 Ba 4,000 3,470 Philadelphia Wtr. & Wastewtr. Rev.: Rfdg.: 5% 6/15/12, (FGIC Insured) Aaa 3,000 2,389 5.75% 6/15/13 Baa 2,000 1,605 7.57% 6/15/12 INFL, (FGIC Insured) (g) Aaa 10,000 7,162 Pittsburgh Wtr. & Swr. Auth. Wtr. & Swr. Sys. Rev. Rfdg. Series A, 4.75% 9/1/16, (FGIC Insured) Aaa 10,000 7,375 Wyoming Ind. Dev. Auth. Poll. Rfdg. (Proctor & Gamble Paper Proj.) 5.55% 5/1/10 Aa2 4,300 3,719 84,227 PUERTO RICO - 0.1% Puerto Rico Pwr. Auth. Pwr. Rev. Resources Auth. Pwr. Rev. Rfdg. Series N, 7.125% 7/1/14, (Pre-Refunded to 7/1/99 @ 101.50) (f) Baa1 2,070 2,220 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) RHODE ISLAND - 0.6% Rhode Island Depositors Econ. Protection Spl. Oblig. Rfdg. Series A, 5.75% 8/1/12 Baa1 $ 3,495 $ 2,966 Rhode Island Hsg. & Mtg. Fin. Corp. (Homeownership Opportunity) Series 3-A, 7.80% 10/1/10 Aa 1,000 1,026 Rhode Island Health & Edl. Bldg. Corp. Rev.: Rfdg. (Higher Ed. Facs. Johnson & Wales Univ.) Series A, 5.25% 4/1/16, (Connie Lee Insured) Aaa 4,000 3,140 Hosp. Fing. (Westerly Hosp.) 6% 7/1/19 Baa 3,000 2,273 9,405 SOUTH CAROLINA - 0.4% Piedmont Muni. Pwr. Agcy. Elec. Rev. Rfdg.: 5.60% 1/1/09, (MBIA Insured) Aaa 5,240 4,696 5.50% 1/1/10, (MBIA Insured) Aaa 2,590 2,276 6,972 SOUTH DAKOTA - 0.1% Spearfish School Dist. #40-2 Unltd. Tax (Lawrence County) 7.30% 7/1/11 A 1,500 1,547 TENNESSEE - 0.4% Bradley County Ind. Dev. Board Ind. Dev. Rev. Rfdg. (Kroger Co. - Peytons SE Proj.) 8.10% 5/1/12 Ba2 4,000 4,100 Tennessee Hsg. Dev. Auth. Mtg. Fing. Mtg. Series A, 5.90% 7/1/18 A1 3,400 2,860 6,960 TEXAS - 8.1% Austin Util. Sys. Rev. Rfdg. 0% 5/15/09, (MBIA Insured) Aaa 3,770 1,409 Cass County Envir. Protection Rev. (Int'l. Paper Co. Proj.) Series B, 5.70% 5/1/12 A3 1,850 1,556 Corpus Christi Hsg. Fin. Corp. Single Family Mtg. Rev. (Lomas & Nettleton Co.) Series A, 13.375% 6/1/13 AA- 40 40 Cypress-Fairbanks Independent School Dist. Rfdg. Unltd. Tax Series A, 0% 2/15/12, (PSF Guaranteed) Aaa 14,000 4,183 Dallas Hsg. Corp. Cap. Proj. Rev. Rfdg. (Section 8 Assisted Projs.): 7.70% 8/1/05 A 1,100 1,101 7.85% 8/1/13 A 1,000 1,010 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) TEXAS - CONTINUED Dallas Wtrwks. & Swr. Sys. Rev. Rfdg. 5.40% 4/1/10 Aa $ 3,000 $ 2,580 East Texas Health Facs. Dev. Corp. Hosp. Rev. (Mem. Foundation Hosp. - Palestine): 7.25% 8/15/03 - 2,970 2,758 7.80% 8/15/18 - 2,440 2,236 Goose Creek Consolidated Independent School Dist. Rfdg. (Cap. Appreciation): 0% 2/15/08, (PSF Guaranteed) Aaa 2,575 1,065 0% 2/15/09, (PSF Guaranteed) Aaa 3,475 1,307 0% 2/15/10, (PSF Guaranteed) Aaa 3,270 1,140 Harris County Cultural & Ed. Facs. Fin. Corp. Rev. (Space Ctr. Houston Proj.): 9% 8/15/00 - 6,200 5,952 9.25% 8/15/15 - 18,920 17,690 Harris County Toll Road Rfdg. (Sr. Lien) 5% 8/15/16, (FGIC Insured) Aaa 8,930 6,865 Houston Hsg. Auth. Rev. (Low Income Elderly Hsg.) (1st Lien): 7.50% 7/1/16 420 401 7.50% 7/1/18 405 386 Port Arthur Hsg. Fin. Corp. Multi-Family Mtg. Rev. (Port Arthur Udal Proj.) Series E, 9.625% 1/1/28, (FHA Guaranteed) AAA 485 495 Port Arthur Hsg. Fin. Corp. Single Family Mtg. Rev. Rfdg. 8.70% 3/1/12 A 1,155 1,206 Port Corpus Christi Ind. Dev. Corp. Rev. (Valero Refining & Marketing Co.) Series A, 10.25% 6/1/17 Baa3 1,535 1,681 Port Dev. Corp. Ind. Dev. Rev. (Cargill, Inc. Proj.) 7.70% 3/1/07 Aa2 1,000 1,055 San Antonio Gen. Oblig. Rfdg. 5.75% 8/1/13 Aa 9,990 8,741 Tarrant County. Hsg. Fin. Corp. Single Family Mtg. Rev. Series A, 9% 11/15/95, (TICOR Insured) B 145 144 Texarkana Health Facs. Dev. Corp. Hosp. Rev. (Wadley Regional Med. Ctr. Proj.) 7% 10/1/15, (MBIA Insured) Aaa 1,750 1,827 Texas City Ind. Dev. Corp. Marine Term. Rev. Rfdg. (Arco Pipeline Co. Proj.) 7.375% 10/1/20 A2 6,000 6,038 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) TEXAS - CONTINUED Texas Gen. Oblig. Rfdg. (Veterans Land) 7.40% 12/1/20 Aa $ 2,500 $ 2,578 Texas Muni. Pwr. Agcy. Rev. Rfdg. (Cap. Appreciation): 0% 9/1/05, (AMBAC Insured) Aaa 13,000 6,451 0% 9/1/10, (AMBAC Insured) Aaa 6,650 2,261 Texas Nat'l. Research Lab. Commission Fing. Corp. Lease Rev. (Superconducting Super Collider) 7.10% 12/1/21 A 26,765 26,564 Texas Wtr. Dev. Board Rev. (Revolving Fund Sr. Lien): 5.25% 7/15/11 Aa 8,075 6,783 5.25% 7/15/15 Aa 6,000 4,875 Tomball Hospital Auth. Rev. Rfdg. 6.125% 7/1/23 Baa 7,500 5,747 Tyler Health Facs. Dev. Corp. Hosp. Rev. (East Texas Med. Ctr. Reg'l. Health) Series B, 6.625% 11/1/11 Baa 6,830 5,840 133,965 VERMONT - 0.8% Vermont Edl. & Health Bldgs. Fin. Agcy. Rev: Rfdg. (Central Vermont Hosp. Proj.) Series A, 8% 10/1/09 Baa1 2,500 2,566 (St. Michael's College Proj.) 6.50% 10/1/13 A- 3,000 2,659 Vermont Muni. Bond Bank: Series B, 7.20% 12/1/20 A 3,000 3,045 Series 1991-1, 6.875% 12/1/22 A 2,385 2,364 Vermont Pub. Pwr. Supply. Auth. Rev. (McNeil Proj.) Series C, 5% 7/1/15, (AMBAC Insured) Aaa 2,000 1,562 Vermont Colleges Rev. Rfdg. 5.125% 7/1/18 A 2,000 1,548 13,744 VIRGINIA - 0.9% Hopewell Ind. Dev. Auth. Resources Recovery Rev. (Stone Container Corp.) 8.25% 6/1/16 - 4,350 4,355 Lynchburg Ind. Dev. Auth. Hosp. Facs. 1st Mtg. Rev. Rfdg. (Central Health, Inc.) 8.125% 1/1/16 A1 3,000 3,173 Peninsula Ports Auth. Hosp. Facs. Auth. Rev. Rfdg. (Whittaker Mem. Proj.) 8.70% 8/1/23, (FHA Guaranteed) Aa 1,500 1,573 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) VIRGINIA - CONTINUED Richmond Redev. & Hsg. Auth. Mtg. Rev. (Multi-Family Hsg. Pinebrook Proj.) 9.25% 10/1/20, (GNMA Coll.) AAA $ 750 $ 785 Virginia Beach Dev. Auth. Hosp. Facs. Rev. (Virginia Beach Gen. Hosp. Proj.) 5.125% 2/15/18, (AMBAC Insured) Aaa 2,800 2,209 Virginia Hsg. Dev. Auth. Commonwealth Mtg. Series B, Sub-Series B-2, 7.625% 7/1/17, (AMBAC Insured) Aa 2,000 1,992 Virginia Resources Auth. Wtr. & Swr. Sys. Rev. Series A, 7.70% 11/1/10 AA 180 192 14,279 WASHINGTON - 4.8% Washington Pub. Pwr. Supply Sys. Rev. Nuclear: Proj. #1: Rfdg. Series A, 7.50% 7/1/15 Aa 1,965 2,041 6.87% 7/1/12 INFL (g) Aa 5,000 3,112 Proj. #2: Rfdg: Series A, 6.30% 7/1/12 Aa 7,000 6,484 Series C: 0% 7/1/04 Aa 1,570 826 0% 7/1/05 Aa 16,330 8,124 5.375% 7/1/11 Aa 5,560 4,580 7.07% 7/1/10 INFL, (FGIC Insured) (g) Aaa 17,500 12,600 6.87% 7/1/12 INFL (g) Aa 10,000 6,338 Proj. #3: Rfdg. Series A: 0% 7/1/09, (BIG Insured) Aaa 3,400 1,233 0% 7/1/13, (BIG Insured) Aaa 4,000 1,055 0% 7/1/10, (BIG Insured) Aaa 6,940 2,325 0% 7/1/11, (BIG Insured) Aaa 4,000 1,240 0% 7/1/12, (BIG Insured) Aaa 4,000 1,145 0% 7/1/14, (BIG Insured) Aaa 3,350 825 Rfdg. Series B, 7.125% 7/1/16 Aa 14,250 14,339 6.87% 7/1/12 INFL (g) Aa 20,500 12,761 79,028 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) WEST VIRGINIA - 0.6% West Virginia Parkway Econ. Dev. & Tourism Auth. Series C, 6.72% 5/15/13 INFL, (FGIC Insured) (g) Aaa $ 10,000 $ 7,075 West Virginia School Bldg. Auth. Rev. (Cap. Impt.) Series A, 6.75% 7/1/15 A 2,000 1,975 9,050 WISCONSIN - 0.4% Wisconsin Trans. Rev. Series A, 5.50% 7/1/14 A1 7,840 6,586 WYOMING - 1.1% Natrona County Hosp. Rev. (Wyoming Med. Ctr. Proj.) 8.125% 9/15/10 Baa1 4,500 4,601 Wyoming Commty. Dev. Auth. Single Family Mtg. Series B, 7.40% 6/1/31, (FHA Guaranteed) Aaa 2,015 2,030 Wyoming Farm Loan Board Cap. Facs. Rev.: Rfdg. 5.75% 10/1/20 AA- 7,000 5,932 0% 10/1/04 AA- 3,995 2,137 0% 10/1/05 AA- 3,995 1,973 0% 10/1/06 AA- 3,945 1,815 18,488 TOTAL MUNICIPAL BONDS (Cost $1,741,644) 1,604,432 MUNICIPAL NOTES (D) - 2.6% CALIFORNIA - 0.9% San Bernardino County Multi. Family Housing Rev. (Cedarbrook Terrace Apts.) Series 1990 A, 4.95%, LOC Sumitomo Trust & Banking Ltd., VRDN A-2 4,600 4,600 San Bernadino County TRAN 4.50% 7/31/95 SP-1 10,000 9,985 14,585 ILLINOIS - 1.1% Chicago O'Hare Int'l. Arpt. Spl. Facs. Rev. (America`n Airlines, Inc.) VRDN: Series 1984 B, 3.80%, LOC Long Term Cr. Bank of Japan P-2 14,600 14,600 Series 1984 D, 3.80%, LOC Long Term Cr. Bank of Japan P-2 3,600 3,600 18,200 MUNICIPAL NOTES (D) - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) NEW YORK - 0.0% New York State Energy Research & Dev. Auth. Poll. Cont. Rev. (Niagra Mohawk Proj.) Series 1985 A, 3.75%, LOC Toronto Dominion, VRDN A-1+ $ 1,000 $ 1,000 NORTH CAROLINA - 0.1% Halifax County Ind. Facs. Poll. Cont. Facs. Auth. (Westmoreland Hadson Proj.) (Roanoke Valley Proj.) Series 1991, 3.70%, LOC Credit Suisse, VRDN (e) - 1,600 1,600 PENNSYLVANIA - 0.4% Schuylkill County Ind. Dev. Auth. Resources Recovery Rev. (Westwood Energy Prop.) Series 1985, 3.55%, LOC Fuji Bank, VRDN P-1 6,085 6,085 SOUTH CAROLINA - 0.1% South Carolina Jobs Econ. Dev. Auth. (Wellman, Inc. Proj.) Series 92, 3.75%, LOC Wachovia Bank, VRDN (e) - 1,200 1,200 TOTAL MUNICIPAL NOTES (Cost $42,731) 42,670 TOTAL INVESTMENT IN SECURITIES - 100% (Cost $1,784,375) $ 1,647,102 FUTURES CONTRACTS AMOUNTS IN THOUSANDS EXPIRATION UNDERLYING FACE UNREALIZED DATE AMOUNT AT VALUE GAIN/(LOSS) SOLD 400 U.S. Treasury Bond Futures Contracts March, 1995 $ 39,225 $ (141) THE FACE VALUE OF FUTURES SOLD AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 2.4% SECURITY TYPE ABBREVIATIONS INFL - Inverse Floating Rate Security TRAN - Tax and Revenue Anticipation Notes VRDN - Variable Rate Demand Notes LEGEND (a) Standard & Poor's Corporation credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. (b) Debt obligation initially issued in zero coupon form which converts to coupon form at a specified rate and date. (c) A portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $13,558,000. (d) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (e) Private activity obligations whose interest is subject to the federal alternative minimum tax for individuals. (f) Security collateralized by an amount sufficient to pay interest and principal. (g) Coupon is inversely indexed to a floating interest rate. The price will be more volatile than the price of a comparable fixed rate security. The rate shown is the rate at period end. (h) Non-income producing. The composition of long-term debt holdings, as a percentage of total value of investment in securities, is as follows (ratings are unaudited): MOODY'S RATINGS S&P RATINGS Aaa, Aa, A 50.8% AAA, AA, A 53.0% Baa 16.7% BBB 14.7% Ba 6.6% BB 6.7% B 1.9% B 2.2% Caa 0.0% CCC 0.0% Ca, C 0.0% CC, C 0.0% D 0.0% The percentage not rated by either S&P or Moody's amounted to 11.6%. FMR has determined that unrated debt securities that are lower quality account for 9.7% of the total value of investment in securities. The distribution of municipal securities by revenue source, as a percentage of total value of investment in securities, is as follows: Health Care 24.6% General Obligation 12.4 Electric Revenue 11.4 Others (individually less than 10%) 51.6 TOTAL 100.0% INCOME TAX INFORMATION At November 30, 1994, the aggregate cost of investment securities for income tax purposes was $1,785,746,000. Net unrealized depreciation aggregated $138,644,000, of which $16,339,000 related to appreciated investment securities and $154,983,000 related to depreciated investment securities. At November 30, 1994, the fund was required to defer $12,394,000 of losses on futures contracts and options. At November 30, 1994, the fund had a capital loss carryforward of approximately $5,114,000 which will expire on November 30, 2002. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
(EXCEPT PER-SHARE AMOUNTS) NOVEMBER 30, 1994 353.ASSETS 354. 355. 356.Investment in securities, at value (cost $1,784,375) 357. $ 1,647,102 - - See accompanying schedule 358.Cash 359. 6,600 360.Receivable for investments sold 361. 46,024 362.Interest receivable 363. 33,098 364. 365.TOTAL ASSETS 366. 1,732,824 367.LIABILITIES 368. 369. 370.Payable for investments purchased $ 35,520 371. 372.Dividends payable 3,133 373. 374.Accrued management fee 577 375. 376.Payable for daily variation on futures contracts 282 377. 378.Other payables and accrued expenses 279 379. 380. 381.TOTAL LIABILITIES 382. 39,791 383.384.NET ASSETS 385. $ 1,693,033 386.Net Assets consist of: 387. 388. 389.Paid in capital 390. $ 1,849,187 391.Accumulated undistributed net realized gain (loss) 392. (18,740) on investments 393.Net unrealized appreciation (depreciation) on 394. (137,414) investments 395.396.NET ASSETS, for 153,357 shares outstanding 397. $ 1,693,033 398.399.NET ASSET VALUE, offering price and 400. $11.04 redemption price per share ($1,693,033 (divided by) 153,357 shares)
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1994 401.402.INTEREST INCOME 403. $ 131,885 404.EXPENSES 405. 406. 407.Management fee $ 7,976 408. 409.Transfer agent, accounting and custodian fees and 2,451 410. expenses 411.Non-interested trustees' compensation 46 412. 413.Registration fees 45 414. 415.Audit 70 416. 417.Legal 161 418. 419.Reports to shareholders 61 420. 421.Miscellaneous 11 422. 423. 424.TOTAL EXPENSES 425. 10,821 426.427.NET INTEREST INCOME 428. 121,064 429.REALIZED AND UNREALIZED GAIN (LOSS) 431. 432. 430.Net realized gain (loss) on: 433. Investment securities 12,604 434. 435. Futures contracts 6,792 19,396 436.Change in net unrealized appreciation 437. 438. (depreciation) on: 439. Investment securities (287,306) 440. 441. Futures contracts (294) (287,600) 442.443.NET GAIN (LOSS) 444. (268,204) 445.446.NET INCREASE (DECREASE) IN NET ASSETS 447. $ (147,140) RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED NOVEMBER 30, NOVEMBER 30, 1994 1993 448.INCREASE (DECREASE) IN NET ASSETS 449.Operations $ 121,064 $ 126,423 Net interest income 450. Net realized gain (loss) 19,396 76,125 451. Change in net unrealized appreciation (287,600) 40,071 (depreciation) 452. (147,140) 242,619 453.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 454.Distributions to shareholders: (121,064) (126,423) From net interest income 455. From net realized gain (80,779) (30,740) 456. 457.TOTAL DISTRIBUTIONS (201,843) (157,163) 458.Share transactions 820,839 820,243 Net proceeds from sales of shares 459. Reinvestment of distributions 150,837 116,658 460. Cost of shares redeemed (1,057,850) (969,090) 461. (86,174) (32,189) Net increase (decrease) in net assets resulting from share transactions 462. (435,157) 53,267 463.TOTAL INCREASE (DECREASE) IN NET ASSETS 464.NET ASSETS 465. 466. 467. Beginning of period 2,128,190 2,074,923 468. End of period $ 1,693,033 $ 2,128,190 469.OTHER INFORMATION 471. 472. 470.Shares 473. Sold 67,736 62,985 474. Issued in reinvestment of distributions 12,114 8,997 475. Redeemed (87,412) (74,180) 476. Net increase (decrease) (7,562) (2,198)
FINANCIAL HIGHLIGHTS
477. YEARS ENDED NOVEMBER 30, 478. 1994 1993 1992 1991 1990 479.SELECTED PER-SHARE DATA 480.Net asset value, $ 13.230 $ 12.720 $ 12.690 $ 12.610 $ 12.800 beginning of period 481.Income from .755 .764 .811 .845 .857 Investment Operations Net interest income 482. Net realized and (1.690) .700 .190 .310 .200 unrealized gain (loss) 483. Total from (.935) 1.464 1.001 1.155 1.057 investment operations 484.Less Distributions (.755) (.764) (.811) (.845) (.857) From net interest income 485. From net realized (.500) (.190) (.160) (.230) (.390) gain on investments 486. Total distributions (1.255) (.954) (.971) (1.075) (1.247) 487.Net asset value, $ 11.040 $ 13.230 $ 12.720 $ 12.690 $ 12.610 end of period 488.TOTAL RETURN (7.74) 11.92% 8.21% 9.62% 8.91% % 489.RATIOS AND SUPPLEMENTAL DATA 490.Net assets, end of $ 1,693 $ 2,128 $ 2,075 $ 1,997 $ 1,784 period (in millions) 491.Ratio of expenses .56% .56% .57% .56% .57% to average net assets 492.Ratio of net 6.21% 5.85% 6.40% 6.72% 6.96% interest income to average net assets 493.Portfolio turnover 48% 53% 47% 44% 58% rate
NOTES TO FINANCIAL STATEMENTS For the period ended November 30, 1994 SIGNIFICANT ACCOUNTING POLICIES. Fidelity High Yield Tax-Free Portfolio (the fund) is a fund of Fidelity Court Street Trust (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The following summarizes the significant accounting policies of the fund: SECURITY VALUATION. Securities are valued based upon a computerized matrix system and/or appraisals by a pricing service, both of which consider market transactions and dealer-supplied valuations. Short-term securities maturing within sixty days of their purchase date are valued either at amortized cost or original cost plus accrued interest, both of which approximate current value. Securities for which quotations are not readily available through the pricing service are valued at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, the fund is not subject to income taxes to the extent that it distributes all of its taxable income for its fiscal year. The schedule of investments includes information regarding income taxes under the caption "Income Tax Information." INTEREST INCOME. Interest income, which includes amortization of premium and accretion of original issue discount, is accrued as earned. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned between the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid monthly from net interest income. Distributions to shareholders from realized capital gains on investments, if any, are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments for futures and options transactions and losses deferred due to wash sales. The fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital and may affect net interest income per share. Any taxable income or gain remaining at fiscal year end is distributed in the following year. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective December 1, 1993, the fund adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of the beginning of the fiscal year have been reclassified to reflect an increase in paid in capital of $6,969,000, and a decrease in accumulated net realized gain on investments of $6,969,000. OPERATING POLICIES. The fund may invest in futures and options contracts, and may also write options. These investments involve, to varying degrees, elements of market risk and risks in excess of the amount recognized in the Statement of Assets and Liabilities. The face or contract amounts, as reflected in the schedule of investments under the caption "Futures Contracts," reflect the extent of the involvement the fund has in the particular classes of instruments. Risks may be caused by an imperfect correlation between movements in the price of the instruments and the price of the underlying securities and interest rates. Risks also may arise if there is an illiquid secondary market for the instruments, or due to the inability of counterparties to perform. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Options traded on an exchange are valued using the last sale price or, in the absence of a sale, the last offering price. Options traded over-the-counter are valued using dealer-supplied valuations. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $906,743,000 and $1,081,432,000, respectively. The market value of futures contracts opened and closed during the period amounted to $1,727,748,000 and $1,734,413,000, respectively. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management & Research Company (FMR) receives a monthly fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .1325% to .3700% for the period December 1, 1993 to July 31, 1994 and 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED MANAGEMENT FEE - CONTINUED .1200% to .3700% for the period August 1, 1994 to November 30, 1994. In the event that these rates were lower than the contractual rates in effect during those periods, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. The annual individual fund fee rate is .25%. For the period, the management fee was equivalent to an annual rate of .41% of average net assets. DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or the fund's distributor, Fidelity Distributors Corporation (FDC), an affiliate of FMR, may use their resources to pay administrative and promotional expenses related to the sale of the fund's shares. Subject to the approval of the Board of Trustees, the Plan also authorizes payments to third parties that assist in the sale of the fund's shares or render shareholder support services. FMR or FDC has informed the fund that payments made to third parties under the Plan amounted to $16,000 for the period. TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank) is the custodian and transfer and shareholder servicing agent for the fund. The Bank has entered into a sub-contract with Fidelity Service Co. (FSC), an affiliate of FMR, under which FSC performs the activities associated with the fund's transfer and shareholder servicing agent and accounting functions. The fund pays transfer agent fees based on the type, size, number of accounts and number of transactions made by shareholders. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. The accounting fee is based on the level of average net assets for the month plus out-of-pocket expenses. For the period, FSC received transfer agent and accounting fees amounting to $1,858,000 and $495,000, respectively. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Court Street Trust and the Shareholders of Fidelity High Yield Tax-Free Portfolio: We have audited the accompanying statement of assets and liabilities of Fidelity Court Street Trust: Fidelity High Yield Tax-Free Portfolio, including the schedule of portfolio investments, as of November 30, 1994, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 1994 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Court Street Trust: Fidelity High Yield Tax-Free Portfolio as of November 30, 1994, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with generally accepted accounting principles. /s/COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P. Boston, Massachusetts December 30, 1994 TO CALL FIDELITY FOR FUND INFORMATION AND QUOTES The Fidelity Telephone Connection offers you special automated telephone services for quotes and balances. The services are easy to use, confidential and quick. All you need is a Touch Tone telephone. YOUR PERSONAL IDENTIFICATION NUMBER (PIN) The first time you call one of our automated telephone services, we'll ask you to set up your Personal Identification Number (PIN). The PIN assures that only you have automated telephone access to your account information. Please have your Customer Number (T-account #) handy when you call -- you'll need it to establish your PIN. If you would ever like to change your PIN, just choose the "Change your Personal Identification Number" option when you call. If you forget your PIN, please call a Fidelity representative at 1-800- 544-6666 for assistance. (PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES* 1-800-544-8544 Just make a selection from this record-ed menu: PRESS For quotes on funds you own. 1. For an individual fund quote. 2. For the ten most frequently requested Fidelity fund quotes. 3. For quotes on Fidelity Select Portfolios.(registered trademark) 4. To change your Personal Identification Number (PIN). 5. To speak with a Fidelity representative. 6. (PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT BALANCES 1-800-544-7544 Just make a selection from this record- ed menu: PRESS For balances on funds you own. 1. For your most recent fund activity (purchases, redemptions, and dividends). 2. To change your Personal Identification Number (PIN). 3. To speak with a Fidelity representative. 4. * WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. TO VISIT FIDELITY For directions and hours, please call 1-800-544-9797. ARIZONA 7373 N. Scottsdale Road Scottsdale, AZ CALIFORNIA 851 East Hamilton Avenue Campbell, CA 527 North Brand Boulevard Glendale, CA 19100 Von Karman Avenue Irvine, CA 10100 Santa Monica Blvd. Los Angeles, CA 811 Wilshire Boulevard Los Angeles, CA 251 University Avenue Palo Alto, CA 1760 Challenge Way Sacramento, CA 7676 Hazard Center Drive San Diego, CA 455 Market Street San Francisco, CA 1400 Civic Drive Walnut Creek, CA COLORADO 1625 Broadway Denver, CO CONNECTICUT 185 Asylum Street Hartford, CT 265 Church Street New Haven, CT 300 Atlantic Street Stamford, CT DELAWARE 222 Delaware Avenue Wilmington, DE FLORIDA 4400 N. Federal Highway Boca Raton, FL 90 Alhambra Plaza Coral Gables, FL 4090 N. Ocean Boulevard Ft. Lauderdale, FL 4001 Tamiami Trail, North Naples, FL 1907 West State Road 434 Orlando, FL 2401 PGA Boulevard Palm Beach Gardens, FL 8065 Beneva Road Sarasota, FL 2000 66th Street, North St. Petersburg, FL GEORGIA 3525 Piedmont Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA HAWAII 700 Bishop Street Honolulu, HI ILLINOIS 215 East Erie Street Chicago, IL One North Franklin Chicago, IL 540 Lake Cook Road Deerfield, IL 1415 West 22nd Street Oak Brook, IL 1700 East Golf Road Schaumburg, IL LOUISIANA 201 St. Charles Avenue New Orleans, LA MAINE 3 Canal Plaza Portland, ME MARYLAND 1 West Pennsylvania Ave. Towson, MD 7401 Wisconsin Avenue Bethesda, MD MASSACHUSETTS 470 Boylston Street Boston, MA 21 Congress Street Boston, MA 25 State Street Boston, MA 300 Granite Street Braintree, MA 101 Cambridge Street Burlington, MA 416 Belmont Street Worcester, MA MICHIGAN 280 North Woodward Ave. Birmingham, MI 26955 Northwestern Hwy. Southfield, MI MINNESOTA 38 South Sixth Street Minneapolis, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO 200 North Broadway St. Louis, MO NEW JERSEY 60B South Street Morristown, NJ 501 Route 17, South Paramus, NJ 505 Millburn Avenue Short Hills, NJ NEW YORK 1050 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 71 Broadway New York, NY 350 Park Avenue New York, NY 10 Bank Street White Plains, NY NORTH CAROLINA 2200 West Main Street Durham, NC 4611 Sharon Road Charlotte, NC OHIO 600 Vine Street Cincinnati, OH 1903 East Ninth Street Cleveland, OH 28699 Chagrin Boulevard Woodmere Village, OH OREGON 121 S.W. Morrison Street Portland, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA TENNESSEE 5100 Poplar Avenue Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 7001 Preston Road Dallas, TX 1155 Dairy Ashford Houston, TX 1010 Lamar Street Houston, TX 2701 Drexel Drive Houston, TX 400 East Las Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX UTAH 215 South State Street Salt Lake City, UT VERMONT 199 Main Street Burlington, VT VIRGINIA 8180 Greensboro Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 1001 Fourth Avenue Seattle, WA WASHINGTON, DC 1775 K Street, N.W. Washington, DC WISCONSIN 222 East Wisconsin Avenue Milwaukee, WI INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA OFFICERS Edward C. Johnson 3d, President J. Gary Burkhead, Senior Vice President Thomas J. Steffanci, Vice President Gary L. French, Treasurer John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer Arthur S. Loring, Secretary BOARD OF TRUSTEES J. Gary Burkhead Ralph F. Cox * Phyllis Burke Davis * Richard J. Flynn * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk * Peter S. Lynch Edward H. Malone * Marvin L. Mann * Gerald C. McDonough * Thomas R. Williams * GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Co. Boston, MA CUSTODIAN United Missouri Bank, N.A. Kansas City, MO (registered trademark) Corporate Headquarters 82 Devonshire St., Boston, MA 02109 * INDEPENDENT TRUSTEES AUTOMATED LINES FOR QUICKEST SERVICE FIDELITY TAX-FREE BOND FUNDS Aggressive Tax-Free California Tax-Free High Yield California Tax-Free Insured High Yield Tax-Free Insured Tax-Free Limited Term Municipals Massachusetts Tax-Free High Yield Michigan Tax-Free High Yield Minnesota Tax-Free Municipal Bond New York Tax-Free High Yield New York Tax-Free Insured Ohio Tax-Free High Yield Spartan(registered trademark) Aggressive Municipal Spartan California Intermediate Municipal Spartan California Municipal High Yield Spartan Connecticut Municipal High Yield Spartan Florida Municipal Income Spartan Intermediate Municipal Spartan Maryland Municipal Income Spartan Municipal Income Spartan New Jersey Municipal High Yield Spartan New York Intermediate Municipal Spartan New York Municipal High Yield Spartan Pennsylvania Municipal High Yield Spartan Short-Intermediate Municipal THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Account Balances 1-800-544-7544 Exchanges/Redemptions 1-800-544-7777 Mutual Fund Quotes 1-800-544-8544 Account Assistance 1-800-544-6666 Product Information 1-800-544-8888 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) SPARTAN(registered trademark) (registered trademark) FLORIDA MUNICIPAL FUNDS ANNUAL REPORT NOVEMBER 30, 1994 CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing strategies. SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO PERFORMANCE 4 How the fund has done over time. FUND TALK 7 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 10 A summary of major shifts in the fund's investments over the past six months and one year. INVESTMENTS 11 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 19 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO PERFORMANCE 23 How the fund has done over time. FUND TALK 25 The manager's review of fund performance, strategy and outlook. INVESTMENT CHANGES 27 A summary of major shifts in the fund's investments over the past six months and one year. INVESTMENTS 28 A complete list of the fund's investments with their market values. FINANCIAL STATEMENTS 32 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 36 Notes to the financial statements. REPORT OF INDEPENDENT ACCOUNTANTS 39 The auditors' opinion.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE DEAR SHAREHOLDER: The unsettling period that began for bond investors when the Federal Reserve Board raised short-term interest rates in February has continued into the fourth quarter of 1994. The Board raised the federal funds rate - the rate banks charge each other for overnight loans - five times from February through August, taking it from 3.00% to 4.75%. A sixth increase in November lifted the rate to 5.50%. The Fed rate hikes were intended to forestall inflation that could result from an improving U.S. economy, and they led to negative returns for many bond investments and below-average returns for many stocks. The volatility we have witnessed this year follows a period in which there was a nearly perfect investing environment. Although there was a late-summer rally in stocks and, to a lesser extent in bond markets, it is impossible to predict where interest rates might go or what might happen in the markets in the months ahead. That's why it probably is a good time to again review your investment portfolio and how well it matches your goals. Keeping in mind that the negative effects of rising rates on your bond investments will only be "paper" losses unless you sell your shares, staying in your bond fund may be appropriate. The longer your investing time frame, the more likely it is that you will retain your principal investment through both up and down markets. For example, a 10-year time frame, such as saving for a college education, enables you to weather these ups and downs in a long-term fund, which has higher potential returns. An intermediate-length fund could be appropriate if your investment horizon is two to four years, and a short-term bond fund could be the right choice if you need your money in one or two years. If your time horizon is less than a year, you might want to consider moving some of your bond investment into a money market fund, which seeks income and a stable share price by investing in high-quality, short-term investments. As with any mutual fund, of course, there is no assurance that a money market fund will achieve its goal, and money market funds are not insured by any agency of the U.S. government. No matter what your investment horizon or portfolio diversity, it makes good sense to follow a regular investment plan - investing a certain amount of money at the same time each month or quarter - and to review your portfolio periodically, as we have discussed here. A periodic investment plan will not, of course, assure a profit or protect against a loss. If you have any questions, please call us at 1-800-544-8888. We stand ready to provide the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO PERFORMANCE: THE BOTTOM LINE There are several ways to evaluate a fund's historical performance. You can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. Each figure includes changes in a fund's share price, reinvestment of any dividends (or income) and capital gains (the profits the fund earns when it sells bonds that have grown in value), and the effect of the $5 account closeout fee. You can also look at the fund's income. If Fidelity had not reimbursed certain fund expenses during the periods shown, the total returns, dividends and yields would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 LIFE OF YEAR FUND Spartan Florida Municipal Income Portfolio -7.20% 15.81% Lehman Brothers Municipal Bond Index -5.25% n/a Average Florida Tax-exempt Municipal Bond Fund -8.45% n/a Consumer Price Index 2.81% 7.61% CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period - - in this case, one year or since the fund started on March 16, 1992. For example, if you invested $1,000 in a fund that had a 5% return over the past year, you would end up with $1,050. You can compare these figures to the performance of the Lehman Brothers Municipal Bond index - a broad gauge of the municipal bond market. To measure how the fund stacked up against its peers, you can look at the average Florida municipal bond fund, which currently reflects the performance of 48 Florida tax-exempt municipal bond funds tracked by Lipper Analytical Services. Both benchmarks include reinvested dividends and capital gains, if any. Comparing the fund's performance to the consumer price index helps show how your fund did compared to inflation. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 LIFE OF YEAR FUND Spartan Florida Municipal Income Portfolio -7.20% 5.56% Lehman Brothers Municipal Bond Index -5.25% n/a Average Florida Tax-exempt Municipal Bond Fund -8.45% n/a Consumer Price Index 2.81% 2.79% AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had performed at a constant rate each year. $10,000 OVER LIFE OF FUND Spartan FloriMunicipal Bon 03/31/92 10000.00 10000.00 04/30/92 10172.61 10089.00 05/31/92 10350.02 10208.05 06/30/92 10575.19 10379.55 07/31/92 11028.25 10690.93 08/31/92 10779.39 10586.16 09/30/92 10823.44 10654.97 10/31/92 10580.51 10550.55 11/30/92 10944.39 10739.41 12/31/92 11095.24 10848.95 01/31/93 11245.75 10974.80 02/28/93 11812.46 11372.08 03/31/93 11626.24 11251.54 04/30/93 11765.70 11365.18 05/31/93 11841.81 11428.83 06/30/93 12066.54 11619.69 07/31/93 12101.29 11634.79 08/31/93 12393.62 11876.80 09/30/93 12566.59 12012.19 10/31/93 12600.06 12035.02 11/30/93 12423.64 11929.11 12/31/93 12745.45 12180.81 01/31/94 12914.00 12319.67 02/28/94 12524.91 12000.59 03/31/94 11935.21 11512.17 04/30/94 12024.45 11610.02 05/31/94 12139.04 11711.03 06/30/94 12056.43 11643.11 07/31/94 12310.26 11856.17 08/31/94 12320.58 11897.67 09/30/94 12130.97 11722.78 10/31/94 11814.14 11514.11 11/30/94 11530.36 11305.70 $10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan Florida Municipal Income Portfolio on March 31, 1992, shortly after the fund started. As the chart shows, by November 30, 1994, the value of your investment would have grown to $11,530 - a 15.30% increase on your initial investment. This assumes you still own the fund on November 30, and therefore does not include the effect of the $5 account closeout fee. For comparison, look at how the Lehman Brothers Municipal Bond index did over the same period. With dividends reinvested, the same $10,000 would have grown to $11,306- a 13.06% increase. UNDERSTANDING PERFORMANCE How a fund did yesterday is no guarantee of how it will do tomorrow. Bond prices, for example, move in the opposite direction of interest rates. In turn, the share price, return, and yield of a fund that invests in bonds will vary. That means if you sell your shares during a market downturn, you might lose money. But if you can ride out the market's ups and downs, you may have a gain. (checkmark) RETURN COMPONENTS MARCH 16, 1992 (COMMENCEME NT YEARS ENDED NOVEMBER 30, OF OPERATIONS) T O NOVEMBER 30, 1994 1993 1992 Dividend return 5.01% 6.10% 4.74% Capital appreciation return -12.21% 7.41% 5.19% Total return -7.20% 13.51% 9.93% DIVIDEND returns, capital appreciation returns are both part of a bond fund's total return. An income return reflects the dividends paid by the fund. A capital gain return reflects the amount paid by the fund to shareholders based on the profits it has from selling bonds that have grown in value. Both returns assume the dividends or gains are reinvested. Changes in the fund's share price include changes in the prices of the bonds owned by the fund. Change in share price and total return figures include the effect of the $5 account closeout fee. DIVIDENDS AND YIELD
PERIODS ENDED NOVEMBER 30, 1994 PAST PAST 6 PAST 1 MONTH MONTHS YEAR Dividends per share 4.91(cents) 29.29(cents) 58.71(cents) Annualized dividend rate 6.16% 5.66% 5.52% 30-day annualized yield 6.38% - - 30-day annualized tax-equivalent yield 9.97% - -
DIVIDENDS per share show the income paid by the fund for a set period. If you annualize this number, based on an average share price of $9.69 over the past month, $10.33 over the past six months and $10.64 over the past year, you can compare the fund's income over these three periods. The 30-day annualized YIELD is a standard formula for all funds based on the yields of the bonds in the fund, averaged over the past 30 days. This figure shows you the yield characteristics of the fund's investments at the end of the period. It also helps you compare funds from different companies on an equal basis. The tax-equivalent yield shows what you would have to earn on a taxable investment to equal the fund's tax-free yield, if you're in the 36% combined federal tax bracket. SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW MARKET RECAP Sharply rising interest rates and ongoing inflation worries caused a severe downturn in U.S. bond markets in 1994. Yields rose sharply - and prices fell - on taxable and tax-free bonds alike. For the 12 months ended November 30, 1994, the Lehman Brothers Municipal Bond Index - a broad measure of the tax-free market - had a total return of - -5.25%. By comparison, the Lehman Brothers Aggregate Bond Index - a proxy of investment-grade taxable bonds - returned -3.06%. After interest rates remained low and relatively steady in December 1993 and January 1994, the rate environment changed dramatically. The Federal Reserve Board raised the federal funds rate - the rate banks charge each other for overnight loans - from 3.00% to 5.50% from February through November. The Fed was hoping to head off future inflation that might be triggered by an improving U.S. economy. However, investors heavily sold bonds at the very threat of inflation because inflation diminishes the value of their fixed-rate income payments. Two other influences affected the performance of tax-free bonds, specifically. First, investor demand fell due to inflation worries, which dampened prices. Second, although it didn't outweigh the negative effects of lower demand, the supply of tax-free bonds fell as well. The ability of states, cities and public agencies to refinance outstanding debt at lower, more attractive rates was limited amid a rising rate environment. An interview with Anne Punzak, Portfolio Manager of Spartan Florida Municipal Income Portfolio Q. ANNE, HOW HAS THE FUND PERFORMED? A. Rising interest rates made for a very volatile year for the municipal bond market and for the fund, but the fund continued to hold up better than many of its competitors. The fund's total return for the 12 months ending November 30, 1994, was -7.20%. That was better than the average Florida municipal fund which returned -8.45% for the year ended November 30, 1994, according to Lipper Analytical Services. Q. YOU MENTIONED THAT IT WAS AN UNSTABLE PERIOD. HOW DID YOU MODIFY YOUR STRATEGY TO HELP PROTECT THE FUND FROM THAT VOLATILITY? A. In the fall of 1993, I moved some of the fund's investments out of bonds with longer-term maturities of 20 years or more, and into bonds with intermediate maturities in the 10- to 20-year range. Longer-term bonds made up 42% of investments at the end of November 1994, down from 52% a year earlier. Intermediate bonds, on the other hand, rose to about 50% of investments by the end of November, up from about 40% a year earlier. Q. DID THAT STRATEGY ALSO HELP THE FUND DO BETTER THAN THE AVERAGE FLORIDA FUND? A. Yes. By making the switch from long-term to intermediate-term bonds, the fund's duration - which is a measure of its sensitivity to changes in interest rates - remained relatively short. The shorter the fund's duration, the less sensitive its share price is to changing interest rates. In hindsight, had the fund's duration been even shorter, its performance would have been better. However, I didn't anticipate just how concerned the Federal Reserve Board and investors would remain about the prospect of inflation spiraling out of control, and underestimated the effects that nervousness would have on interest rates and the municipal market. Until I'm confident that the Federal Reserve's interest rate hikes have slowed the pace of economic growth and kept inflation in check, I'll most likely continue to keep the fund's duration at about the same level. Another factor which helped the fund's performance was its stake in Baa-rated and below investment-grade bonds. These bonds made up 43.2% of investments at the end of the period. Because of their high yields, lower-rated bonds generally held up better than higher-rated bonds during the market's decline. Q. DID ANY OF THE FUND'S OTHER INVESTMENTS HOLD UP RELATIVELY WELL DURING THE DOWN DRAFT? A. Yes, the fund's stake in Puerto Rico bonds, which stood at 12.9% of investments as of November 30, 1994, held up fairly well. There was a healthy demand for these bonds which helped firm their prices. The demand was high because Puerto Rico bonds are exempt from state and federal taxes in all 50 states. When shortages of municipal bonds crept up in high-tax states, many investors used Puerto Rico bonds as a substitute for state-issued bonds to generate income free from state and federal taxes. Q. AFTER THE PERIOD ENDED, ORANGE COUNTY, CALIFORNIA, DECLARED BANKRUPTCY BECAUSE OF LOSSES IN ITS INVESTMENT FUND. ARE THERE FLORIDA MUNICIPALITIES EXPERIENCING SIMILAR PROBLEMS? A. None of the same magnitude or the same type that we are aware of at this time. The state of Florida recently revealed that some of its investments had suffered price declines, and caused unrealized losses for one of the state's treasury funds. But there are several important differences between the Florida and California situations. First, the price declines were much smaller on both an absolute and relative basis; about $200 million from the $8 billion Florida treasury fund, compared to nearly $3 billion in Orange County. Second, Orange County used leverage, or borrowed, money to buy many of its investments. That leverage, in turn, exacerbated its losses. From what we know now, most Florida municipalities have taken a more conservative approach and haven't depended heavily on leverage. Finally, Florida's unrealized losses aren't expected to cause the state to be illiquid, like Orange County ultimately became. With the help of Fidelity's research staff, I'll continue to closely monitor the situation. Q. WHAT'S YOUR OUTLOOK FOR MUNICIPAL BONDS? A. For the short term, there probably will be some continued volatility. I believe it's likely that the Fed will raise interest rates one or two more times in an effort to stave off inflation that would normally accompany a quickly growing economy. For the long term, I'm more optimistic. By spring, I think that economic growth will slow and inflation won't be a problem. If that is the case, interest rates could start to fall and municipal bond prices could begin to rise. A one percent rise in long-term interest rates is not likely to have as negative consequences for bonds in 1995 as it did in 1994. For example, if the yield on a high quality 30-year municipal bond rose from 7% to 8%, that bond's total return for the year would be about - -4%. On the other hand, a drop in yield from 7% to 6% would mean a total return of about 15% for the year. So in my view, the downside risk for the municipal bond market is limited and the upside potential is good. FUND FACTS GOAL: high current income exempt from federal income tax and the Florida intangible personal property tax by investing mainly in long-term, investment- grade Florida municipal bonds START DATE: March 16, 1992 SIZE: as of November 30, 1994, more than $335 million MANAGER: Anne Punzak, since March 1992; manager, Fidelity Aggressive Tax Free Portfolio, since January, 1986; Fidelity High Yield Tax-Free Portfolio, since October 1993; Spartan Aggressive Municipal Portfolio, April 1993 to October 1993; Fidelity Insured Tax-free Fund, October 1989 to September 1993; joined Fidelity in 1985 (checkmark) ANNE PUNZAK'S OUTLOOK FOR FLORIDA MUNICIPAL BONDS: "Over the past 12 months, higher interest rates have been the dominant factor affecting Florida municipal bond prices. But if interest rates start to stabilize, there are some positives which could work in favor of these bonds. First, the state's fiscal condition and economy are strong. On the fiscal side, the state has a relatively low level of debt and the legislature mandates a balanced budget. On the economic front, Florida has diversified its economy and has started to enjoy benefits from increased trade with Latin and South America. Second, supply and demand factors also could be a positive. The supply of municipals could be rather light next year. And demand should remain strong. Lower supply and constant demand also could help boost prices." SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO INVESTMENT CHANGES TOP FIVE SECTORS AS OF NOVEMBER 30, 1994 % OF FUND'S % OF FUND'S INVESTMENTS INVESTMENTS IN THESE SECTORS 6 MONTHS AGO Transportation 17.6 18.7 Health Care 15.7 17.8 General Obligation 13.2 10.1 Industrial Development 12.8 8.6 Electric Revenue 12.5 13.9 AVERAGE YEARS TO MATURITY AS OF NOVEMBER 30, 1994 6 MONTHS AGO Years 19.0 18.6 AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR AMOUNT. DURATION AS OF NOVEMBER 30, 1994 6 MONTHS AGO Years 9.0 8.9 DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE. QUALITY DIVERSIFICATION AS OF NOVEMBER 30, 1994 (MOODY'S RATINGS) Row: 1, Col: 1, Value: 35.0 Row: 1, Col: 2, Value: 18.3 Row: 1, Col: 3, Value: 33.9 Row: 1, Col: 4, Value: 10.2 Row: 1, Col: 5, Value: 2.6 Aaa 35.0% Aa, A 18.3% Baa 33.9% Non-rated 10.2% Short-term investments 2.6% WHERE MOODY'S RATINGS ARE NOT AVAILABLE, WE HAVE USED S&P RATINGS. UNRATED DEBT SECURITIES THAT ARE EQUIVALENT TO BA AND BELOW AT NOVEMBER 30, 1994, ACCOUNT FOR 6.3% OF THE FUND'S INVESTMENTS. SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO INVESTMENTS NOVEMBER 30, 1994 Showing Percentage of Total Value of Investments MUNICIPAL BONDS - 97.4% MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) FLORIDA - 79.6% Alachua County Health Facs. Auth. Health Facs. Rev.: Rfdg. (Santa Fe Healthcare Facs. Proj.): 6% 11/15/09 Baa1 $ 1,950,000 $ 1,628,250 7.60% 11/15/13 Baa1 1,000,000 983,750 6.05% 11/15/16 Baa1 5,590,000 4,478,988 (Beverly Enterprises Proj.) 10.125% 4/1/10 - 860,000 937,400 Bay County Ind. Dev. Correctional Facs. Rev. (Corrections Corp. America Proj.) Series A, 8.875% 11/1/05 (b) - 2,620,000 2,724,800 Brevard County Health Facs. Auth. Rev. Rfdg. (Wuesthoff Mem. Hosp.) Series B, 7.20% 4/1/13 Baa1 750,000 703,125 Broward County Rfdg. Series C, 5.50% 1/1/12 Aa 3,500,000 3,010,000 Broward County Resource Recovery Rev. (SES Broward Co. LP South Proj.) 7.95% 12/1/08 A 6,935,000 7,307,756 Broward County Wtr. & Swr. Util. Rev. Rfdg. 5.125% 10/1/15, (AMBAC Insured) Aaa 2,500,000 2,003,125 Collier County Ind. Dev. Auth. Retirement Rent Hsg. Rev. Rfdg. (Beverly Enterprises Proj.) 10.75% 3/1/03 (f) 1,345,000 1,534,981 Dade County Pub. Facs. Rev. Rfdg. (Jackson Mem. Hosp.) Series A, 4.75% 6/1/10 (MBIA Insured) Aaa 3,540,000 2,783,325 Dade County Rev. 5.125% 4/1/09 (MBIA Insured) Aaa 1,475,000 1,240,844 Delray Beach Wtr. & Swr. Rev. Series B: 0% 10/1/12, (AMBAC Insured) Aaa 4,475,000 1,325,719 0% 10/1/14, (AMBAC Insured) Aaa 4,400,000 1,122,000 Dunedin Hosp. Rev. (Mease Health Care): 5.25% 11/15/06, (MBIA Insured) Aaa 1,400,000 1,246,000 6.75% 11/15/21, (MBIA Insured) Aaa 1,000,000 1,061,250 Dunedin Util. Sys. Rev. Rfdg. 6.25% 10/1/11 (FGIC Insured) Aaa 1,360,000 1,300,500 Dunes Commty. Dev. Dist. Rev. Rfdg. (Wtr. & Swr. Proj.) 6.10% 10/1/18 A3 1,500,000 1,321,875 Duval County Hsg. Fin. Auth. Single Family Mtg. Rev. Series C, 7.70% 9/1/24, (FGIC Insured) (GNMA Coll.) Aaa 725,000 734,063 Escambia County Health Facs. Auth. Rev.: Rfdg. (Baptist Hosp. Inc.) Series B, 6% 10/1/14 BBB+ 2,825,000 2,245,875 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) FLORIDA - CONTINUED Escambia County Health Facs. Auth. Rev. - continued (Baptist Hosp. & Baptist Manor) 6.75% 10/1/14 (f) BBB+ $ 3,250,000 $ 2,839,688 Escambia County Poll. Cont. Rev.: Rfdg. (Gulf Pwr. Co. Proj.) 6.75% 3/1/22 A2 2,000,000 1,895,000 (Champion Int'l. Corp. Proj.) 6.90% 8/1/22 (b) Baa1 7,000,000 6,378,750 Escambia County Util. Sys. Rev. Series B, 6.25% 1/1/15 (FGIC Insured) Aaa 1,500,000 1,404,375 Florida Board Ed. Admin. Cap. Outlay Rfdg. (Pub. Ed.): Series A, 5% 6/1/24 Aa 5,000,000 3,718,750 Series D, 5% 6/1/15 Aa 5,000,000 3,887,500 Florida Div. Board Fin. Dept. Gen. Svcs. Rev.: (Dept. of Natural Resources Preservation) Series 2000 A: 6.75% 7/1/08 (AMBAC Insured) Aaa 1,350,000 1,385,438 4.75% 7/1/09 (MBIA Insured) Aaa 2,000,000 1,612,500 4.90% 7/1/13 (MBIA Insured) Aaa 2,000,000 1,555,000 Florida Hsg. Fin. Agcy. (Single Family Mtg.): Rfdg. Series A, 6.35% 7/1/14 Aa 1,500,000 1,383,750 Rfdg. Series B, 6.55% 7/1/17 (b) Aa 1,500,000 1,381,875 Series A, 7.90% 1/1/16 AA 255,000 256,275 Florida Mid-Bay Bridge Auth. Rev. Series A: 7.50% 10/1/17 (f) - 1,700,000 1,723,375 6.875% 10/1/22 - 3,000,000 2,932,500 Florida Muni. Pwr. Agcy. Rev. Rfdg. (Stanton II Proj.) 4.50% 10/1/16 (AMBAC Insured) Aaa 3,000,000 2,156,250 Florida Tpk. Auth. Rev.: Rfdg. Series A: 5.25% 7/1/06 (FGIC Insured) Aaa 1,500,000 1,340,625 5.25% 7/1/11 (FGIC Insured) Aaa 4,000,000 3,405,000 5% 7/1/14 (MBIA Insured) Aaa 4,000,000 3,190,000 5% 7/1/16 (FGIC Insured) Aaa 4,000,000 3,135,000 5% 7/1/19 (FGIC Insured) Aaa 6,400,000 4,936,000 Series A: 5.90% 7/1/06 (FGIC Insured) Aaa 3,000,000 2,895,000 7.20% 7/1/11 (AMBAC Insured) Aaa 1,500,000 1,625,625 Greater Orlando Aviation Auth. Arpt. Facs. Rev.: Rfdg. Series D, 6.20% 10/1/08 (AMBAC Insured) Aaa 500,000 490,000 Series A, 6.50% 10/1/05 (FGIC Insured) (b) Aaa 3,550,000 3,585,500 Hernando County Ind. Dev. Rev. Rfdg. (Beverly Enterprises, Inc.) 10% 9/1/11 - 955,000 1,055,275 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) FLORIDA - CONTINUED Hillsborough County Aviation Auth. Rev. Rfdg. (Tampa Int'l. Arpt.): Series A, 6.90% 10/1/11 (FGIC Insured) Aaa $ 4,250,000 $ 4,308,438 Series B, 5.30% 10/10/06, (FGIC Insured) Aaa 2,075,000 1,880,469 Hillsborough County Envir. Sensitive Land Acquisition & Protection Ltd. Tax 6.375% 7/1/11 A 2,000,000 1,895,000 Hillsborough County Ind. Dev. Auth. 5.60% 8/15/07 (MBIA Insured) Aaa 1,000,000 916,250 Hillsborough County Ind. Dev. Auth. Ind. Dev. Rev. 5.75% 8/15/10 (MBIA Insured) Aaa 1,000,000 900,000 Hillsborough County Util. Rev. Rfdg. (Cap. Appreciation) Series A: 0% 8/1/05 Aaa 17,445,000 8,853,338 0% 8/1/07 Aaa 9,250,000 4,035,313 7% 8/1/14 Baa1 1,245,000 1,220,100 0% 8/1/06 Aaa 13,000,000 6,126,250 Homestead Spl. Ins. Assessment Rev. (Hurricane Andrew Covered Claims) 3.85% 3/1/95 (MBIA Insured) Aaa 1,750,000 1,747,813 Indian River County Wtr. & Swr. Rev. Rfdg. Series A, 5.50% 9/1/11 (FGIC Insured) Aaa 2,000,000 1,735,000 Jacksonville Cap. Impt. Rev. Ctfs. (Gator Bowl Proj.): 5.50% 10/1/14 (AMBAC Insured) Aaa 2,000,000 1,707,500 5.50% 10/1/19 (AMBAC Insured) Aaa 2,000,000 1,667,500 Jacksonville Elec. Auth. Rev. Rfdg. (St. Johns River Pwr. Issue #2): 7% 10/1/09 Aa1 2,490,000 2,549,138 Rfdg. Series 7, 5.75% 10/1/12 Aa1 1,900,000 1,688,625 Rfdg. Series 8, 5.125% 10/1/07 Aa1 1,000,000 858,750 Rfdg. Series 8, 5.50% 10/1/13 Aa1 2,000,000 1,715,000 Jacksonville Excise Tax Rev. Rfdg. 6.25% 10/1/05 (AMBAC Insured) Aaa 2,000,000 2,010,000 Jacksonville Health Facs. Auth. Ind. Dev. Rev.: Rfdg. (Cypress Village Proj.): (Nat'l. Benevolent Assn.) 7% 12/1/22 Baa1 2,000,000 1,745,000 (Nat'l. Benevolent Assn.) 8% 12/1/24 Baa1 2,740,000 2,695,475 (Nat'l. Benevolent Assn.) 6.25% 12/1/23 Baa1 2,400,000 1,854,000 (Cypress Village Proj.) 7% 12/1/14 Baa1 1,000,000 896,250 Jacksonville Health Facs. Auth. Hosp. Rev. (Baptist Med. Ctr.) Series A, 7.30% 6/1/19 (MBIA Insured) Aaa 500,000 513,750 Jacksonville Hosp. Rev. (Univ. Med. Ctr.): 6.50% 2/1/07 (Connie Lee Insured) AAA 750,000 741,563 6.60% 2/1/21 (Connie Lee Insured) AAA 1,275,000 1,211,250 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) FLORIDA - CONTINUED Jacksonville Ind. Dev. Rev. Rfdg. (Cargill, Inc. Proj.) 6.40% 3/1/11 AA- $ 1,250,000 $ 1,184,375 Jacksonville Wtr. & Swr. Gen. Wtr. Wks. Dev. Rev. (Jacksonville Suburban Utils.) 6.75% 6/1/22 (b) A2 1,915,000 1,809,675 Key West Util. Board Elec. Rev. Rfdg. 0% 10/1/14 (AMBAC Insured) Aaa 6,755,000 1,722,525 Kissimmee Util. Auth. Elec. Sys. Rev. Rfdg. & Impt. 5.25% 10/1/18 (FGIC Insured) Aaa 1,000,000 800,000 Lake Worth Rfdg. 5.80% 10/1/05 (AMBAC Insured) Aaa 1,000,000 966,250 Lee County Arpt. Rev. Series A, 5.50% 10/1/10 (AMBAC Insured) Aaa 2,000,000 1,760,000 Lee County Cap. Impt. Rev. Rfdg. Series B: 0% 10/1/11 (MBIA Insured) Aaa 1,975,000 629,531 0% 10/1/12 (MBIA Insured) Aaa 1,060,000 314,025 Lee County Ind. Dev. Auth. Econ. Dev. Rev. Rfdg. (Encore Nursing Ctr.) (Beverly Enterprises, Inc.) 8.125% 12/1/07 - 950,000 935,750 Leesburg Hosp. Auth. Rev. Rfdg. (Leesburg Regional Med. Ctr. Proj.) Series B: 5.625% 7/1/13 Baa1 2,795,000 2,141,669 5.70% 7/1/18 Baa1 2,140,000 1,599,650 Leon County 5.50% 10/1/07 (MBIA Insured) Aaa 1,000,000 912,500 Martin County Ind. Dev. Auth. Ind. Dev. Rev. Rfdg. (Indiantown Cogeneration) Series A, 7.875% 12/15/25 Baa3 3,000,000 2,962,500 Miami Beach Health Facs. Auth. Rev. Rfdg. (Mt. Sinai Med. Ctr. Proj.) 6.25% 11/15/08 (Cap. Gtd. Insured) Aaa 2,000,000 1,947,500 Miami Beach Redev. Agcy. Tax Increment Rev. (City Center Proj.): 5.80% 12/1/13 (b) Baa 1,000,000 821,250 5.875% 12/1/22 (b) Baa 1,000,000 792,500 Naples Hosp. Rev. Rfdg. (Community Hosp. Proj.): 5% 10/1/19 (MBIA Insured) Aaa 1,000,000 762,500 5.10% 10/1/07 (MBIA Insured) Aaa 3,205,000 2,772,325 Nassau County Poll. Cont. Rev. Rfdg.: 6.2% 7/1/15 Baa 1,000,000 888,750 (ITT Rayonier Proj.): 7.65% 6/1/06 Baa2 1,415,000 1,462,756 6.25% 6/1/10 Baa2 9,500,000 8,704,375 North Broward Hosp. Dist. Rev. Rfdg. 6.40% 1/1/06 (MBIA Insured) Aaa 950,000 957,125 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) FLORIDA - CONTINUED North Miami Edl. Facs. Rev. (Johnson & Wales Univ. Proj.) Series A, 6.125% 4/1/20 - $ 6,605,000 $ 5,449,125 Orange County Hsg. Fin. Auth. Mtg. Rev. Series A, 7.875% 9/1/10, (GNMA Coll.) (b) AAA 235,000 237,938 Orange County Sales Tax Rev. Series B, 5.375% 1/1/24 A1 6,500,000 5,151,250 Orange County Tourist Dev. Tax Rev. Rfdg. Series A: 5.85% 10/1/08 (MBIA Insured) Aaa 1,795,000 1,694,031 5.90% 10/1/09 (MBIA Insured) Aaa 1,250,000 1,162,500 Orlando Util. Comm. Wtr. & Elec. Rev. 5% 10/1/23 Aa1 2,000,000 1,510,000 Orlando Util. Comm. Wtr. & Elec. Rev.: Rfdg. Sub-Series D: 6.75% 10/1/17 Aa 2,500,000 2,503,125 5% 10/1/23 Aa 2,375,000 1,810,938 Sub-Series A, 6.50% 10/1/20 Aaa 1,405,000 1,462,956 5.395%, 10/31/13 Aa 4,000,000 3,400,000 5.60% 10/31/13 Aa 3,400,000 2,868,750 7.242% 10/31/13, INFL (d) Aa 1,000,000 710,000 Palm Beach County Solid Waste Ind. Dev. Rev. (Osceola Pwr. Ltd. Partnership) Series A, 6.95% 1/1/22 - 5,000,000 4,456,250 Pinellas Park Pub. Impt. Rev. Rfdg. Series A, 5% 10/1/13 (FGIC Insured) Aaa 1,000,000 793,750 Pinellas Sun Coast Hlth. Rev. 8.50% 3/1/20 BBB- 430,000 439,138 Plantation Health Facs. Auth. Rev. (Covenant Retirement Communities Inc.) 7.75% 12/1/22 - 2,500,000 2,384,375 Polk County Ind. Dev. Auth. Ind. Dev. Rev. (Winter Haven Hosp.) Series 2, 6.25% 9/1/15 (MBIA Insured) Aaa 1,500,000 1,391,250 Reedy Creek Impt. Dist. Util. Rev. Rfdg. Series 1, 5% 10/1/14 (MBIA Insured) Aaa 1,000,000 792,500 Seminole County Wtr. & Swr. Rev. Rfdg. & Impt.: 6% 10/1/09 (MBIA Insured) Aaa 1,500,000 1,436,250 6% 10/1/12 (MBIA Insured) Aaa 1,500,000 1,408,125 St. Johns County Ind. Dev. Auth. Hosp. Rev. (Flagler Hosp. Proj.) 6% 8/1/22 A 4,490,000 3,586,388 St. John's County Ind. Dev. Auth. Rev. Rfdg. (Vicars Landing Proj.) Series A, 6.75% 2/15/12 - 4,000,000 3,610,000 St. Lucie County Solid Waste Disp. Rev. (Florida Pwr. & Lt. Co. Proj.) 6.70% 5/1/27 (b) A2 2,000,000 1,850,000 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) FLORIDA - CONTINUED Sumter County School Dist. Rev. (Multi-Dist. Loan Prog.) 7.15% 11/1/15 (Cap. Guaranty Insured) Aaa $ 1,000,000 $ 1,037,500 Sunrise Pub. Facs. Rev. Series B, 0% 10/1/13 (MBIA Insured) Aaa 2,840,000 777,450 Sunrise Spl. Tax Dist. #1 Rfdg. 6.375% 11/1/21, LOC Bayer Hypotheken Bank Aa1 1,500,000 1,361,250 Tampa Cap. Impt. Prog. Rev. Series B: 8.25% 10/1/05 BBB 4,500,000 4,674,375 8.375% 10/1/18 BBB 1,800,000 1,854,000 Tampa Parking Facs. Rev. Rfdg. (Util. Tax) 5.50% 10/1/10 (AMBAC Insured) Aaa 3,600,000 3,141,000 Tampa Rev. (Allegheny Health Sys.-St. Joseph) 6.75% 12/1/17 (MBIA Insured) Aaa 150,000 147,750 Tampa Wtr. & Swr. Rev. Rfdg: Series A, 5% 10/1/14 (FGIC Insured) Aaa 1,830,000 1,436,550 Series B, 5% 10/1/14 (FGIC Insured) Aaa 1,000,000 785,000 Tarpan Springs Health Facs. Auth. Hosp. Rev. (Helen Ellis Mem. Hosp. Proj.): 7.5% 5/1/11 BBB- 1,225,000 1,156,094 7.625% 5/1/21 BBB- 4,245,000 3,995,606 Vero Beach Wtr. & Swr. Rev. Rfdg. Series B, 5% 12/1/21 (FGIC Insured) Aaa 1,000,000 748,750 263,405,944 PUERTO RICO - 12.9% Puerto Rico Commonwealth Aqueduct & Swr. Auth. Rev. Series A, 7.875% 7/1/17 Baa 2,500,000 2,618,750 Puerto Rico Commonwealth Gen. Oblig. 5% 7/1/21 Baa1 8,090,000 6,027,050 Puerto Rico Commonwealth Hwy. & Trans. Auth. Rev.: Rfdg. Series X, 5.50% 7/1/15 Baa1 5,000,000 4,137,500 Series W: 5.50% 7/1/13 Baa1 8,000,000 6,680,000 5.50% 7/1/15 Baa1 7,000,000 5,792,500 5.25% 7/1/20 Baa1 2,010,000 1,542,675 Puerto Rico Commonwealth Infrastructuring Fing. Auth. Spl. Series A, 7.50% 7/1/09 Baa1 1,000,000 1,043,750 Puerto Rico Commonwealth Rfdg. & Impt. Unltd. Tax: 5.30% 7/1/04 Baa1 2,000,000 1,812,500 5.50% 7/1/13 Baa1 3,000,000 2,520,000 MUNICIPAL BONDS - CONTINUED MOODY'S RATINGS PRINCIPAL VALUE (UNAUDITED) (C) AMOUNT (NOTE 1) PUERTO RICO - CONTINUED Puerto Rico Elec. Pwr. Auth. Resource Rev. Series R, 6.25% 7/1/17 Baa1 $ 2,450,000 $ 2,208,063 Puerto Rico Elec. Pwr. Auth. Rev. Rfdg. Series S, 6.125% 7/1/09 Baa1 2,000,000 1,867,500 Puerto Rico Pub. Ed. & Health Facs. Rfdg.: Series L, 5.50% 7/1/21 Baa1 3,000,000 2,422,500 Series M, 5.75% 7/1/15 Baa1 5,000,000 4,200,000 42,872,788 U.S. VIRGIN ISLANDS - 1.8% Virgin Islands Pub. Fin. Auth. Rev. Rfdg. Series A, 7.25% 10/1/18 (Escrowed to Maturity)(e) - 6,300,000 5,953,500 GUAM - 3.1% Guam Arpt. Auth. Gen. Rev.: Series A, 6.60% 10/1/10 (b) BBB 1,500,000 1,389,375 Series B: 6.40% 10/1/05 (b) BBB 2,500,000 2,371,868 6.70% 10/1/23 (b) BBB 3,950,000 3,555,000 Guam Pwr. Auth. Rev. Series A: 5.25% 10/1/13 BBB 1,250,000 996,875 6.30% 10/1/22 BBB 2,150,000 1,889,313 10,202,431 TOTAL MUNICIPAL BONDS (Cost $355,701,991) 322,434,663 MUNICIPAL NOTES (A) - 2.6% FLORIDA - 2.6% Dade County Health Facs. Auth. Hosp. Rev. (Miami Childrens Hosp. Proj.) Series 1990, 3.55%, LOC Barnett Bank, VRDN VMIG 1 2,800,000 2,800,000 Dade County Ind. Dev. Auth. Ind. Dev. Rev. (Dolphins Stadium Proj.) Series 1985 B, 3.70%, LOC Citibank, Marine Midland Bank, VRDN VMIG 1 3,800,000 3,800,000 Dade County Wtr. Swr. & Sys. Rev. 3.40%, (FGIC Insured) (Liquidity Facility Industrial Bank of Japan) VRDN VMIG 1 2,000,000 2,000,000 TOTAL MUNICIPAL NOTES (Cost $8,600,000) 8,600,000 TOTAL INVESTMENTS - 100% (Cost $364,301,991) $ 331,034,663 FUTURES CONTRACTS EXPIRATION UNDERLYING FACE UNREALIZED DATE AMOUNT AT VALUE GAIN/(LOSS) PURCHASED 110 U.S. Treasury Bond Futures March, 1995 $ 10,786,875 $ (38,811) THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN SECURITIES - 3.2% SECURITY TYPE ABBREVIATIONS INFL - Inverse Floating Rate Security VRDN - Variable Rate Demand Notes LEGEND (i) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (j) Private activity obligations whose interest is subject to the federal alternative minimum tax for individuals (AMT securities). (k) Standard & Poor's Corporation credit ratings are used in the absence of a rating by Moody's Investors Service, Inc. (l) Coupon is inversely indexed to a floating interest rate. The price will be more volatile than the price of a comparable fixed rate security. The rate shown is the rate at period end. (m) Security collateralized by an amount sufficient to pay interest and principal. (n) A portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $4,487,813. INCOME TAX INFORMATION At November 30, 1994 the aggregate cost of investment securities for income tax purposes was $364,301,991. Net unrealized depreciation aggregated $33,267,328, of which $324,574 related to appreciated investment securities and $33,591,902 related to depreciated investment securities. OTHER INFORMATION The composition of long-term debt holdings as a percentage of total value of investments for the period ended is as follows (ratings are unaudited): MOODY'S RATINGS S&P RATINGS Aaa, Aa, A 51.7% AAA, AA, A 68.2% Baa 25.6% BBB 16.6% Ba 0.0% BB 0.0% B 0.0% B 0.0% Caa 0.0% CCC 0.0% Ca, C 0.0% CC, C 0.0% D 0.0% The percentage not rated by either S&P or Moody's amounted to 10.2%. FMR has determined that unrated debt securities that are lower quality account for 6.3% of the total value of investment in securities. The distribution of municipal securities by revenue source, as a percentage of total value of investments, is as follows: Transportation 17.6% Health Care 15.7 General Obligation 13.2 Industrial Development 12.8 Electric Revenue 12.5 Others (individually less than 10%) 28.2 TOTAL 100.0% At November 30, 1994, the fund had a capital loss carryforward of approximately $1,972,231 which will expire on November 30, 2002. SPARTAN FLORIDA MUNICIPAL INCOME PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994 494.ASSETS 495. 496. 497.Investment in securities, at value (cost 498. $ 331,034,663 $364,301,991) - See accompanying schedule 499.Receivable for investments sold 500. 5,006,835 501.Interest receivable 502. 5,948,852 503.Redemption fees receivable 504. 107 505. 506.TOTAL ASSETS 507. 341,990,457 508.LIABILITIES 509. 510. 511.Payable to custodian bank $ 45,841 512. 513.Payable for investments purchased 3,976,595 514. 515.Payable for fund shares redeemed 1,571,530 516. 517.Dividends payable 612,903 518. 519.Accrued management fee 154,981 520. 521.Payable for daily variation on futures contracts 77,623 522. 523. 524.TOTAL LIABILITIES 525. 6,439,473 526.527.NET ASSETS 528. $ 335,550,984 529.Net Assets consist of: 530. 531. 532.Paid in capital 533. $ 370,790,543 534.Accumulated undistributed net realized gain (loss) 535. on investments (1,933,420) 536.Net unrealized appreciation (depreciation) on 537. (33,306,139) investments 538.539.NET ASSETS, for 34,456,067 shares 540. $ 335,550,984 outstanding 541.542.NET ASSET VALUE, offering price and 543. $9.74 redemption price per share ($335,550,984 (divided by) 34,456,067 shares)
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1994 544.545.INTEREST INCOME 546. $ 24,304,277 547.EXPENSES 548. 549. 550.Management fee $ 2,214,635 551. 552.Non-interested trustees' compensation 2,454 553. 554.Total expenses before reductions 2,217,089 555. 556.Expense reductions (55,208) 2,161,881 557.558.NET INTEREST INCOME 559. 22,142,396 560.REALIZED AND UNREALIZED GAIN (LOSS) 562. 563. 561.Net realized gain (loss) on: 564. Investment securities (3,112,978) 565. 566. Futures contracts 1,265,990 (1,846,988) 567.Change in net unrealized appreciation 568. 569. (depreciation) on: 570. Investment securities (49,869,617) 571. 572. Futures contracts (38,811) (49,908,428) 573.574.NET GAIN (LOSS) 575. (51,755,416) 576.577.NET INCREASE (DECREASE) IN NET ASSETS 578. $ (29,613,020) RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED NOVEMBER 30, 1994 1993 579.INCREASE (DECREASE) IN NET ASSETS 580.Operations $ 22,142,396 $ 20,834,018 Net interest income 581. Net realized gain (loss) (1,846,988) 8,118,245 582. Change in net unrealized appreciation (depreciation) (49,908,428) 15,435,529 583. (29,613,020) 44,387,792 584.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 585.Distributions to shareholders: (22,142,396) (20,834,018) From net interest income 586. From net realized gain (7,685,399) (227,395) 587. 588.TOTAL DISTRIBUTIONS (29,827,795) (21,061,413) 589.Share transactions 113,687,492 242,254,359 Net proceeds from sales of shares 590. Reinvestment of distributions 19,685,122 13,961,012 591. Cost of shares redeemed (166,831,473) (88,378,513) 592. Redemption fees 83,694 94,890 593. (33,375,165) 167,931,748 Net increase (decrease) in net assets resulting from share transactions 594. (92,815,980) 191,258,127 595.TOTAL INCREASE (DECREASE) IN NET ASSETS 596.NET ASSETS 597. 598. 599. Beginning of period 428,366,964 237,108,837 600. End of period $ 335,550,984 $ 428,366,964 601.OTHER INFORMATION 603. 604. 602.Shares 605. Sold 10,546,906 22,071,403 606. Issued in reinvestment of distributions 1,829,088 1,252,444 607. Redeemed (15,871,258) (7,911,287) 608. Net increase (decrease) (3,495,264) 15,412,560
FINANCIAL HIGHLIGHTS
609. YEARS ENDED NOVEMBER 30, MARCH 16, 1992 (COMMENCEME NT OF OPERATIONS) T O NOVEMBER 30, 610. 1994 1993 1992 611.SELECTED PER-SHARE DATA 612.Net asset value, beginning of period $ 11.290 $ 10.520 $ 10.000 613.Income from Investment Operations .587 .615 .459 Net interest income 614. Net realized and unrealized gain (loss) (1.352) .777 .514 615. Total from investment operations (.765) 1.392 .973 616.Less Distributions (.587) (.615) (.459) From net interest income 617. From net realized gain on investments (.200) (.010) - 618. Total distributions (.787) (.625) (.459) 619.Redemption fees added to paid in capital .002 .003 .006 620.Net asset value, end of period $ 9.740 $ 11.290 $ 10.520 621.TOTAL RETURN B -7.19% 13.52% 9.94% 622.RATIOS AND SUPPLEMENTAL DATA 623.Net assets, end of period (000 omitted) $ 335,551 $ 428,367 $ 237,109 624.Ratio of expenses to average net .54% .25% .03%A assets C 625.Ratio of expenses to average net assets .55% .55% .55%A before expense reductions C 626.Ratio of net interest income to average 5.49% 5.52% 6.25%A net assets 627.Portfolio turnover rate 49% 50% 38%A
A ANNUALIZED B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. C SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS. SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO PERFORMANCE: THE BOTTOM LINE To measure a money market fund's performance, you can look at either total return or yield. Total return reflects the change in a fund's share price over a given period, reinvestment of its dividends (or income), and the effect of the fund's $5 account closeout fee. Yield measures the income paid by a fund. Since a money market fund tries to maintain a $1 share price, yield is an important measure of performance. CUMULATIVE TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 LIFE OF YEAR FUND Spartan Florida Municipal Money Market Portfolio 2.46% 5.85% Consumer Price Index 2.81% 6.39% Average All Tax-Free Money Market Fund 2.25% 4.90% CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period - - in this case, one year, or since the fund started on August 24,1992. For example, if you invested $1,000 in a fund that had a 5% return over the past year, you would end up with $1,050. Comparing the fund's performance to the consumer price index (CPI) helps show how your investment did compared to inflation. To measure how the fund stacked up against its peers, you can compare its return to the average all tax-free money market fund's total return. This average currently reflects the performance of 372 all tax-free money market funds tracked by IBC/Donoghue. (The periods covered by the CPI and IBC/Donoghue numbers are the closest available match to those covered by the fund.) AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED NOVEMBER 30, 1994 PAST 1 LIFE OF YEAR FUND Spartan Florida Municipal Money Market Portfolio 2.46% 2.54% Consumer Price Index 2.81% 2.79% Average All Tax-Free Money Market Fund 2.25% 2.15% AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return and show you what would have happened if the fund had achieved that return by performing at a constant rate each year. YIELDS 11/30/93 2/28/94 5/31/94 8/31/94 11/30/94 Spartan Florida Municipal 2.26% 2.30% 2.60% 2.75% 3.31% Money Market Portfolio If Fidelity had not reimbursed 2.16% 2.20% 2.55% n/a n/a certain fund expenses Average All Tax-Free 1.94% 1.97% 2.35% 2.59% 3.10% Money Market Fund Spartan Florida Municipal 3.53% 3.59% 4.06% 4.30% 5.17% Money Market Portfolio - Tax-equivalent If Fidelity had not reimbursed 3.38% 3.44% 3.98% n/a n/a certain fund expenses Average All Taxable 2.69% 2.79% 3.51% 4.08% 4.84% Money Market Fund YIELD refers to the income paid by the fund over a given period. Yields for money market funds are usually for seven-day periods, expressed as annual percentage rates. A yield that assumes income earned is reinvested or compounded is called an effective yield. The chart above shows the fund's current seven-day yield at quarterly intervals over the past year. This would have been lower if Fidelity had not reimbursed certain fund expenses. You can compare these yields to the average all tax-free money market fund. Or you can look at the fund's tax-equivalent yield, which is based on a combined effective 1994 federal tax rate of 36%. The tax-equivalent figures are useful in seeing how the fund stacked up against the average taxable money market fund as tracked by IBC/Donoghue. A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE. COMPARING PERFORMANCE Yields on tax-free investments are usually lower than yields on taxable investments. However, a straight comparison between the two may be misleading because it ignores the way taxes reduce taxable returns. Tax-equivalent yield - the yield you'd have to earn on a similar taxable investment to match the tax-free yield - makes the comparison more meaningful. Keep in mind that the U.S. government neither insures nor guarantees a money market fund. In fact, there is no assurance that a money fund will maintain a $1 share price. (checkmark) SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO FUND TALK: THE MANAGER'S OVERVIEW An interview with Deborah Watson, Portfolio Manager of Spartan Florida Municipal Money Market Portfolio. Q. DEB, CAN YOU FILL US IN ON THE CHANGES IN THE MONEY MARKETS DURING THE PAST YEAR? A. Interest rates have climbed sharply during the period. Early this year, the Federal Reserve Board determined that economic growth had begun to accelerate. I anticipated that by the end of the first quarter, the Fed might begin to increase short-term interest rates to rein in that growth and prevent a resurgence of inflation. The first rate increase came even sooner than I expected, on February 4, 1994, when the Fed raised the federal funds rate by one-quarter point, from 3.00% to 3.25%. Since then, the Fed has boosted the rate five more times to 5.50%, including the recent three-quarter point increase in November. As a result, yields on short-term instruments have climbed as well. Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD? A. Although I was surprised by the timing of the Fed's initial rate increase, I had been preparing the fund for rates to move higher. The fund's average maturity was 66 days at the end of November 1993. I let the fund's average maturity roll down to 22 days by the end of May. In July, the seasonal onslaught of borrowing by municipal issuers created an increase in the supply of short-term issues, which drove yields higher. I took advantage of that opportunity to lock in higher yields on some longer securities, so the fund's average maturity rose to 32 days. By the end of September, it had declined again, and was less than 30 days for the remainder of the period. Q. HOW DID THE FUND PERFORM? A. On November 30, 1994, the fund's seven-day yield was 3.31%, up from 2.60% six months ago. The latest yield is the equivalent of a 5.17% yield on a taxable investment for investors in the 36% federal income tax bracket. The fund's total return for the 12 months ended November 30 was 2.46%. That beat the 2.25% average total return for all tax-free money market funds during the same period, according to IBC/Donoghue. Q. WHAT'S AHEAD FOR THE FUND? A. The fund's assets will likely swell toward the end of this calendar year as investors seek shelter from Florida's intangibles tax. Probably the bulk of the new money will be invested in short-term variable-rate securities to maintain the fund's low average maturity and liquidity since assets will likely decrease in January. It seems likely that short-term rates will continue to move higher during the coming months as the Fed continues to attempt to restrain inflationary pressures. Thus, for the most part I anticipate avoiding securities with relatively long maturities for now. FUND FACTS GOAL: income exempt from federal income tax and the Florida intangible personal property tax and stability by investing in high-quality, short-term Florida municipal securities START DATE: August 24, 1992 SIZE: as of November 30, 1994, more than $337 million MANAGER: Deborah Watson, since August 1992; manager, Spartan California and Pennsylvania Municipal Money Market Portfolios, since 1989; and Fidelity California Tax-Free Money Market Portfolio, since 1988; joined Fidelity in 1982 (checkmark) MONEY MARKETS AND DERIVATIVES: The word "derivatives" covers a wide range of financial agreements, of varying degrees of complexity, that have market values based on security or market indices. All "derivative" securities in Fidelity's money market funds are designed to have the price characteristics of typical money market securities. During the recent Federal Reserve Board interest rate increases, all Fidelity money market holdings performed as designed and the funds maintained a stable share price of $1.00. The more complex of these instruments, such as floating rate notes with unusual and complex floating rate formulas, frequently have too much price volatility to be appropriate investments for money market funds. Many of them do not offer the degree of price stability Fidelity believes is required in order for its funds to maintain a stable $1.00 share price. Therefore, despite their frequent higher yields at the time they are sold, Fidelity money market funds have not purchased these volatile securities. While this may sometimes have caused Fidelity money market funds to have lower gross yields than certain other funds, Fidelity believes its investors value prudence as well as performance. SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO INVESTMENT CHANGES MATURITY DIVERSIFICATION DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS 11/30/94 5/31/94 11/30/93 0 - 30 82 87 63 31 - 90 12 6 13 91 - 180 - 6 1 181 - 397 6 1 23 WEIGHTED AVERAGE MATURITY 11/30/94 5/31/94 11/30/93 Spartan Florida Municipal Money Market Portfolio 27 days 22 days 66 days Average All Tax-Free Money Market Fund* 46 days 43 days 64 days ASSET ALLOCATION AS OF NOVEMBER 30, 1994 AS OF MAY 31, 1994 Row: 1, Col: 1, Value: 68.0 Row: 1, Col: 2, Value: 21.0 Row: 1, Col: 3, Value: 4.0 Row: 1, Col: 4, Value: 6.0 Row: 1, Col: 5, Value: 2.0 Row: 1, Col: 1, Value: 65.0 Row: 1, Col: 2, Value: 14.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 4, Value: 12.0 Row: 1, Col: 5, Value: 9.0 Variable rate demand notes (VRDNs) 68% Commercial paper 21% Tender bonds 4% Municipal notes 6% Other 1% Variable rate demand notes (VRDNs) 65% Commercial paper 14% Tender bonds 0% Municipal notes 12% Other 9% * SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark) SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO INVESTMENTS NOVEMBER 30, 1994 Showing Percentage of Total Value of Investments MUNICIPAL SECURITIES (A) - 100% PRINCIPAL VALUE AMOUNT (NOTE 1) FLORIDA - 100.0% Alachua County Health Facs. Auth. Rev. Bonds (Academic Research Bldg. Proj.) Series 1989: 3.60%, tender 12/1/94, LOC Barnett Bank of Jacksonville $ 1,000,000 $ 1,000,000 3.65%, tender 12/15/94, LOC Barnett Bank of Jacksonville 5,250,000 5,250,000 Arcadia Hosp. Rev. (Desoto Memorial Hosp.) Series 1994, 3.95%, LOC First Union Bank of Florida, VRDN 5,000,000 5,000,000 Bay County Hosp. Sys. Rev. (Bay Med. Ctr. Proj.) Series 1988 A, 3.50%, LOC Citibank, VRDN 5,500,000 5,500,000 Broward County Fin. Auth. Multi-Family Hsg. Rev., VRDN: (Lake Park Assoc. Ltd. Partnership) Series 1985, 3.50%, LOC Society Bank 8,500,000 8,500,000 (Palm Aire-Oxford Proj.) Series 1990, 3.80% 6,800,000 6,800,000 Broward County Hsg. & Fin. Auth. (Sawgrass Pines Apt. Proj.) Series 1993 A, 4%, LOC First Union Bank of Florida, VRDN (b) 11,000,000 11,000,000 Broward County Multi-Family Hsg. Rev. (Welleby Apts. Proj.) 3.55%, LOC Bank of America, VRDN 2,500,000 2,500,000 Collier County Wtr. & Swr. Ind. Dev. Rev. (Marco Island Util. Proj.) Series 1990, 3.90%, LOC Sun Bank, VRDN (b) 4,600,000 4,600,000 Dade County Ind. Dev. Auth. Ind. Dev. Rev. (Royal Store Fixtures Corp. Proj.) 3.90%, LOC Sun Bank of Miami, VRDN (b) 2,500,000 2,500,000 Dade County Ind. Dev. Rev., VRDN: (Guastafeste Proj.): Series 1987, 3.90%, LOC Sun Bank (b) 1,135,000 1,135,000 Series 1991, 3.90%, LOC Sun Bank (b) 715,000 715,000 (Montenay-Dade Proj.): Series 1988, 3.35%, LOC Banque Paribas (b) 1,500,000 1,500,000 Series 1990 A, 3.50%, LOC Banque Paribas (b) 1,690,000 1,690,000 Dade County Multi-Family Hsg. Rev. (Biscayne View Apts. Proj.) Series 1993, 4%, BPA Commonwealth Life Ins. Co., VRDN (b) 15,000,000 15,000,000 Dade County Water & Swr. Sys. Rev. 3.40% (Liquidity Facility Industrial Bank of Japan) (FGIC Insured), VRDN 2,000,000 2,000,000 Duval County Hsg. & Fin. Auth. Rev. (Lakes of Mayport Apts.) Series 1985 F, 4%, LOC Bank of Boston, VRDN 4,300,000 4,300,000 Florida Board of Ed. Participating VRDN: Series P-1B, 3.90%, (Liquidity Facility Merrill Lynch & Co.)(c) 4,000,000 4,000,000 Series PA-1004, 3.90%, (Liquidity Facility Merrill Lynch & Co)(c) 5,780,000 5,780,000 Florida Dept. Natural Resources Participating VRDN, Series BTP-64 94A, 3.925% (Liquidity Facility Automatic Data Processing, Inc.)(c) 7,585,000 7,585,000 MUNICIPAL SECURITIES (A) - CONTINUED PRINCIPAL VALUE AMOUNT (NOTE 1) FLORIDA - CONTINUED Florida Dept. of Trans. Participating VRDN, Series PA-11, 3.90% (Liquidity Facility Merrill Lynch & Co.) (c) $ 5,300,000 $ 5,300,000 Florida Hsg. Fin. Agcy. Multi-Family Hsg. Rev. VRDN: (Beville-Oxford Proj.) Series 1990 B, 3.80% (Continental Casualty Guaranteed) 1,100,000 1,100,000 (Brandon-Oxford Proj.) Series 1990 C, 3.80% (Continental Casualty Guaranteed) 9,000,000 9,000,000 (Hillsborough-Oxford Proj.) Series D, 3.80% (Continental Casualty Guaranteed) 13,335,000 13,335,000 (Players Club) Series 1991 C, 3.88%, LOC Sumitomo Trust 7,100,000 7,100,000 Florida Local Govt. Fin. Auth. Rev., VRDN: (Govt. Unit Loan Prog.) Series 1986 A: 2.90%, LOC First Union Nat'l Bank of Florida 8,000,000 8,000,000 3.55% (GE Capital Corp. Guaranteed) (FGIC Insured) 1,000,000 1,000,000 (Lake Wales Medical Centers Inc. Proj.) Series 1994A, 3.70%, LOC First Union Nat'l Bank of Florida 2,000,000 2,000,000 Florida Muni. Pwr. Agcy. Participating VRDN, Series PA-1018, 3.90% (Liquidity Facility Merrill Lynch & Co.) (c) 2,680,000 2,680,000 Greater Orlando Aviation Auth. Arpt. Facs. Series B, 3.75% 1/12/95 (Liquidity Facility Morgan Guaranty Trust Co.), CP (b) 3,000,000 3,000,000 Hillsborough County Aviation Auth. (Tampa International Arpt. Proj.) 3.70% 1/13/95, LOC Nat'l. Westminster Bank, CP (b) 5,000,000 5,000,000 Indian River County Hosp. Dist. Hosp. Rev.: Series 1985, 3.80%, LOC Bank Indosuez, VRDN 4,900,000 4,900,000 Bonds: Series 1988: 3.55%, tender 12/8/94, LOC Kredietbank 2,350,000 2,350,000 3.80%, tender 2/7/95, LOC Kredietbank 2,000,000 2,000,000 Series 1989: 3.65%, tender 12/20/94, LOC Kredietbank 4,300,000 4,300,000 3.80%, tender 2/8/95, LOC Kredietbank 1,200,000 1,200,000 Series 1990: 3.90%, tender 2/8/95, LOC Kredietbank 5,000,000 5,000,000 Indian Trace Commty. Dev. Dist. Bonds: (Broward County Basin I Water Mgmt. Spl. Benefit): Series 1991, 4.10%, tender 12/7/94, LOC Tokai Bank 1,500,000 1,500,000 4.15%, tender 12/6/94, LOC Tokai Bank 5,000,000 5,000,000 4.10%, tender 12/7/94, LOC Tokai Bank 3,900,000 3,900,000 Jacksonville Elec. Auth. Participating VRDN, Series PA-100, 3.90% (Liquidity Facility Merrill Lynch & Co.)(c) 3,700,000 3,700,000 Jacksonville Health Facs. Auth. Rev. (HSI Support Sys. Proj.) 3.55% (Liquidity Facility SunBank-Orlando) (MBIA Insured), VRDN 1,000,000 1,000,000 Jacksonville Ind. Dev. Rev. (Samuel C. Taylor Foundation 1987 Proj.) 3.875%, LOC Barnett Bank of Jacksonville, VRDN 5,500,000 5,500,000 MUNICIPAL SECURITIES (A) - CONTINUED PRINCIPAL VALUE AMOUNT (NOTE 1) FLORIDA - CONTINUED Jacksonville (River City Renaissance Proj.) 3.80%, tender 1/27/95, BPA Morgan Guaranty Trust Co., CP $ 3,000,000 $ 3,000,000 Lee County Hosp. Board Hosp. Rev. Bonds (Lee Memorial Hosp. Proj.) Series 1992 B, 3.35%, tender 12/9/94 (Liquidity Facility Industrial Bank of Japan) 2,300,000 2,300,000 Lee County Ind. Dev. Auth. Ind. Dev. Rev. Bonds (Baader North America Proj.) Series1994, 3.80%, LOC Deutsche Bank, VRDN (b) 2,200,000 2,200,000 Liberty County Ind. Dev. Rev. (Timber Energy Res. Inc. Proj.) Series 1994, 3.65%, LOC Bank of Montreal, VRDN 8,200,000 8,200,000 Manatee County Hsg. Fin. Auth. (Harbour Pointe Proj.) Series 1990-A, 4.15%, LOC Marine Midland Bank, VRDN 1,000,000 1,000,000 Marion County Hsg. Fin. Auth. Rev. (Summer Trace Apts.) Series 1985 D, 4%, LOC Bank of Boston, VRDN 4,100,000 4,100,000 Marion Commty. Hsg. Fin. Auth. Rev., VRDN: (Belvedere Apt. Proj.) Series C, 4%, LOC Bank of Boston 3,100,000 3,100,000 (Oakhurst Apt. Proj.) Series E, 4%, LOC Bank of Boston 3,800,000 3,800,000 (Paddock Place Proj.) Series 1985 F, 4%, LOC Bank of Boston 4,300,000 4,300,000 Monroe County School Dist. RAN 2.80% 12/15/95 4,000,000 4,000,000 Ocean Hwy. & Port Auth. Rev. Series 1990, 3.75%, LOC ABN-AMRO, VRDN (b) 13,000,000 13,000,000 Okeechobee County Solid Waste Rev. (Chambers Waste Sys.) Series 1992, 3.95%, LOC NationsBank, VRDN (b) 1,000,000 1,000,000 Orange County Health Facs. Auth. Prog. Rev. Rfdg. Series 1985, 3.60%, tender 1/26/95, BPA Banque Paribas (MBIA Insured) 4,900,000 4,900,000 Orange County School Dist. TAN 4.75% 6/30/94 10,000,000 10,041,709 Orlando Util. Commission Water & Elec. Rev. Rfdg. Bonds: 7.90% 10/1/95 2,000,000 2,054,834 8.10% 10/1/95 1,000,000 1,046,990 Palm Beach County Health Facs. Auth. (Pooled Hosp. Loan) 3.85%, tender 1/19/95 (Liquidity Facility Credit Suisse) (MBIA Insured) 4,000,000 4,000,000 Palm Beach County Hsg. Fin. Auth. Rev. (Lake Crystal Apts. Proj. Phase III) Series 1988-A, 3.65%, LOC Citibank, VRDN 7,440,000 7,440,000 Pasco County School Dist. TAN 4.75% 6/30/95 7,200,000 7,231,432 Pensacola Rev. Bonds (Harborview Corp. Proj.) 3.875%, LOC Amsouth Bank, VRDN 2,975,000 2,975,000 Pinellas County Health Facs. Auth. Rev. (Pooled Hosp. Loan Prog.) 3.65%, LOC Chemical Bank, VRDN 2,300,000 2,300,000 Pinellas County Hsg. Fin. Auth. Multi-Family Mtg. Rev. Rfdg. (Foxbridge Apts.) Series 1993 A, 4%, LOC Citibank, VRDN 4,900,000 4,900,000 MUNICIPAL SECURITIES (A) - CONTINUED PRINCIPAL VALUE AMOUNT (NOTE 1) FLORIDA - CONTINUED Plant City Hosp. Rev. (South Baptist Hosp. Proj.) Series 1993, 3.95%, LOC Barnett Bank of Tampa, VRDN (b) $ 4,900,000 $ 4,900,000 Putnam County Dev. Auth. Poll. Cont. Rev.: (Florida Pwr. & Light Co.) 3.60%, VRDN 1,000,000 1,000,000 (Seminole Elec. Coop.) Series 1984-D, 3.15%, tender 12/15/94 (National Rural Util. CFC Guaranteed) 15,000,000 15,000,000 Sarasota County Health Facs. Auth. Hosp. Rev. (Venice Hospital Proj.) Series 1992, 3.65%, LOC Kredietbank, VRDN 2,100,000 2,100,000 Sarasota County Pub. Hosp. Dist. Hosp. Bonds: (Sarasota Memorial Hosp.): Series 1993 A: 3.65%, tender 1/17/95 (Liquidity Facility Goldman Sachs) 4,000,000 4,000,000 Series B, 3.60%, tender 1/26/95, LOC Sumitomo Bank of Japan 4,750,000 4,750,000 3.65%, tender 2/8/95 (Liquidity Facility Goldman Sachs) 2,000,000 2,000,000 Sunshine Gov't. Fing. Comm. Rev. Bonds Series 1986, 3.15%, tender 12/20/94 LOC Morgan Guaranty Trust Co. 4,500,000 4,500,000 Volusia County Health Facs. Auth. Rev., VRDN: (Southwest Volusia Healthcare Corp.) Series 1994 A, 3.80%, LOC First Union Nat'l. Bank of North Carolina 5,000,000 5,000,000 3.60%, BPA Morgan Guaranty Trust Co. (FGIC Insured) 1,300,000 1,300,000 TOTAL INVESTMENTS - 100% $ 335,659,965 Total Cost for Income Tax Purposes $ 335,659,965 SECURITY TYPE ABBREVIATIONS BAN - Bond Anticipation Notes CP - Commercial Paper RAN - Revenue Anticipation Notes TAN - Tax Anticipation Notes VRDN - Variable Rate Demand Notes LEGEND (a) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. (b) Private activity obligations whose interest is subject to the federal alternative minimum tax for individuals. (c) Provides evidence of ownership in one or more underlying municipal bonds. INCOME TAX INFORMATION At November 30, 1994, the fund had a capital loss carryforward of approximately $23,100 of which $100, $1,100 and $21,900 will expire on November 30, 2000, 2001 and 2002, respectively. SPARTAN FLORIDA MUNICIPAL MONEY MARKET PORTFOLIO FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994 628.ASSETS 629. 630. 631.Investment in securities, at value - See 632. $ 335,659,965 accompanying schedule 633.Cash 634. 6,838,947 635.Interest receivable 636. 1,787,627 637. 638.TOTAL ASSETS 639. 344,286,539 640.LIABILITIES 641. 642. 643.Payable for investments purchased $ 6,576,194 644. 645.Dividends payable 46,001 646. 647.Accrued management fee 134,693 648. 649. 650.TOTAL LIABILITIES 651. 6,756,888 652.653.NET ASSETS 654. $ 337,529,651 655.Net Assets consist of: 656. 657. 658.Paid in capital 659. $ 337,552,770 660.Accumulated net realized gain (loss) on 661. (23,119) investments 662.663.NET ASSETS, for 337,552,770 shares 664. $ 337,529,651 outstanding 665.666.NET ASSET VALUE, offering price and 667. $1.00 redemption price per share ($337,529,651 (divided by) 337,552,770 shares)
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1994 668.669.INTEREST INCOME 670. $ 10,503,661 671.EXPENSES 672. 673. 674.Management fee $ 1,818,415 675. 676.Non-interested trustees' compensation 2,132 677. 678. Total expenses before reductions 1,820,547 679. 680. Expense reductions (159,576) 1,660,971 681.682.NET INTEREST INCOME 683. 8,842,690 684.REALIZED AND UNREALIZED GAIN (LOSS) 686. (21,862) 685.Net realized gain (loss) on investment securities 687.Increase (decrease) in net unrealized gain from 688. (17) accretion of market discount 689.690.NET GAIN (LOSS) 691. (21,879) 692.693.NET INCREASE IN NET ASSETS RESULTING FROM 694. $ 8,820,811 OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED NOVEMBER 30, 1994 1993 695.INCREASE (DECREASE) IN NET ASSETS 696.Operations $ 8,842,690 $ 5,069,253 Net interest income 697. Net realized gain (loss) (21,862) (1,143) 698. Increase (decrease) in net unrealized gain from (17) 17 accretion of market discount 699. 8,820,811 5,068,127 700.NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 701.Dividends to shareholders from net interest income (8,842,690) (5,069,253) 702.Share transactions at net asset value of $1.00 per 587,117,506 523,059,131 share Proceeds from sales of shares 703. Reinvestment of dividends from net interest 8,273,320 4,777,607 income 704. Cost of shares redeemed (564,580,189) (270,561,793) 705. 30,810,637 257,274,945 Net increase (decrease) in net assets and shares resulting from share transactions 706. 30,788,758 257,273,819 707.TOTAL INCREASE (DECREASE) IN NET ASSETS 708.NET ASSETS 709. 710. 711. Beginning of period 306,740,893 49,467,074 712. End of period $ 337,529,651 $ 306,740,893
FINANCIAL HIGHLIGHTS
713. YEARS ENDED NOVEMBER 30, AUGUST 24, 199 2 (COMMENCEME NT OF OPERATIONS) T O NOVEMBER 30, 714. 1994 1993 1992 715.SELECTED PER-SHARE DATA 716.Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 717.Income from Investment Operations .024 .025 .008 Net interest income 718.Less Distributions (.024) (.025) (.008) From net interest income 719.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 720.TOTAL RETURN B 2.47% 2.51% .78% 721.RATIOS AND SUPPLEMENTAL DATA 722.Net assets, end of period (000 omitted) $ 337,530 $ 306,741 $ 49,467 723.Ratio of expenses to average net assets .46% .18% - C 724.Ratio of expenses to average net assets .50% .50% .50%A before expense reductions C 725.Ratio of net interest income to average 2.43% 2.48% 2.91%A net assets
A ANNUALIZED B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. C SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS. NOTES TO FINANCIAL STATEMENTS For the period ended November 30, 1994 1. SIGNIFICANT ACCOUNTING POLICIES. Spartan Florida Municipal Income Portfolio(the income fund) is a fund of Fidelity Court Street Trust. Spartan Florida Municipal Money Market Portfolio (the money market fund) is a fund of Fidelity Court Street Trust II. Each trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. Fidelity Court Street Trust and Fidelity Court Street Trust II (the trusts) are organized as a Massachusetts business trust and a Delaware business trust, respectively. Each fund is authorized to issue an unlimited number of shares. The following summarizes the significant accounting policies of the income fund and the money market fund: SECURITY VALUATION. INCOME FUND. Securities are valued based upon a computerized matrix system and/or appraisals by a pricing service, both of which consider market transactions and dealer-supplied valuations. Short-term securities maturing within sixty days of their purchase date are valued either at amortized cost or original cost plus accrued interest, both of which approximate current value. Securities for which quotations are not readily available through the pricing service are valued at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and certain conditions therein, securities are valued initially at cost and thereafter assume a constant amortization to maturity of any discount or premium. INCOME TAXES. As a qualified regulated investment company under Subchapter M of the Internal Revenue Code, each fund is not subject to income taxes to the extent that it distributes all of its taxable income for the fiscal year. The schedules of investments include information regarding income taxes under the caption "Income Tax Information." INTEREST INCOME. Interest income, which includes amortization of premium and accretion of original issue discount, is accrued as earned. For the money market fund, accretion of market discount represents unrealized gain until realized at the time of a security disposition or maturity. EXPENSES. Most expenses of each trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned between the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid monthly from net interest income. Distributions to shareholders from realized capital gains on investments, if any, are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. 1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED DISTRIBUTIONS TO SHAREHOLDERS - CONTINUED These differences are primarily due to differing treatments for losses deferred due to futures and options transactions. The income fund also utilized earnings and profits distributed to shareholders on redemption of shares as a part of the dividends paid deduction for income tax purposes. CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective December 1, 1993, the funds adopted Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the income fund changed the classification of distributions to shareholders to better disclose the differences between financial statement amounts and distributions determined in accordance with income tax regulations. Accordingly, amounts as of the beginning of the fiscal year have been reclassified to reflect an increase in paid in capital and a decrease in accumulated net realized gain on investments of $12,445. No adjustments were necessary for the money market fund. REDEMPTION FEES. Shares held in the income fund less than 180 days are subject to a redemption fee equal to .50% of the proceeds of the redeemed shares. The fee, which is retained by the fund, is accounted for as an addition to paid in capital. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 2.OPERATING POLICIES. FUTURES CONTRACTS AND OPTIONS. The income fund may invest in futures and options contracts, and may also write options. These investments involve, to varying degrees, elements of market risk and risks in excess of the amount recognized in the Statement of Assets and Liabilities. The face or contract amounts, as reflected in the schedule of investments under the caption "Futures Contracts" reflect the extent of the involvement the income fund has in the particular classes of instruments. Risks may be caused by an imperfect correlation between movements in the price of the instruments and the price of the underlying securities and interest rates. Risks also may arise if there is an illiquid secondary market for the instruments, or due to the inability of counterparties to perform. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Options traded on an exchange are valued using the last sale price or, in the absence of a sale, the last offering price. Options traded over-the-counter are valued using dealer-supplied valuations. 3. PURCHASES AND SALES OF INVESTMENTS. Purchases and sales of securities, other than short-term securities, aggregated $188,558,050 and $228,109,683, respectively. The face value of futures contracts opened and closed amounted to $228,761,571 and $216,769,051, respectively. 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As each fund's investment adviser, Fidelity Management & Research Company (FMR) pays all expenses, except the compensation of the non-interested Trustees and certain exceptions such as interest, taxes, brokerage commissions and extraordinary expenses. FMR receives a fee that is computed daily at an annual rate of .55% and .50% of average net assets for the income and money market funds, respectively. FMR also bears the cost of providing shareholder services to each fund. To offset the cost of providing these services, FMR or its affiliates collected certain transaction fees from shareholders which amounted to $6,860 and $5,246 for the income and money market funds, respectively. SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the management fee payable to FMR. The fee is paid prior to any voluntary expense reimbursements which may be in effect, and after reducing the fee for any payments by FMR pursuant to the fund's Distribution and Service Plan. 5. EXPENSE REDUCTIONS. FMR has voluntarily agreed to reimburse the funds for total operating expenses (excluding interest, taxes, brokerage commissions and extraordinary expenses) above a specified percentage of average net assets. INCOME FUND. For the period, this expense limitation ranged from an annual rate of .45% to .55% of average net assets and the reimbursement amounted to $55,208. MONEY MARKET FUND. For the period, this expense limitation ranged from an annual rate of .40% to .50% of average net assets and the reimbursement amounted to $159,576. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Court Street Trust and Fidelity Court Street Trust II and the Shareholders of Spartan Florida Municipal Income Portfolio and Spartan Florida Municipal Money Market Portfolio: We have audited the accompanying statements of assets and liabilities of Spartan Florida Municipal Income Portfolio, a portfolio of Fidelity Court Street Trust, and Spartan Florida Municipal Money Market Portfolio, a portfolio of Fidelity Court Street Trust II, including the schedules of portfolio investments, as of November 30, 1994, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the two years then ended and the period from March 16, 1992 (commencement of operations) to November 30, 1992 for the Spartan Florida Municipal Income Portfolio, and each of the two years then ended and the period from August 24, 1992 (commencement of operations) to November 30, 1992 for the Spartan Florida Municipal Money Market Portfolio. These financial statements and financial highlights are the responsibility of the funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 1994 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Spartan Florida Municipal Income Portfolio and Spartan Florida Municipal Money Market Portfolio, as of November 30, 1994, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the two years in the period then ended and the period from March 16, 1992 (commencement of operations) to November 30, 1992 for the Spartan Florida Municipal Income Portfolio, and each of the two years then ended and the period from August 24, 1992 (commencement of operations) to November 30, 1992 for the Spartan Florida Municipal Money Market Portfolio, in conformity with generally accepted accounting principles. /s/COOPERS & LYBRAND L.L.P. COOPERS & LYBRAND L.L.P. Boston, Massachusetts December 30, 1994 INVESTMENT ADVISER (registered trademark) Fidelity Management & Research Company Boston, MA SUB-ADVISER, MONEY MARKET FUND FMR Texas Inc. Irving, TX OFFICERS Edward C. Johnson 3d, President J. Gary Burkhead, Senior Vice President Fred L. Henning, Jr. , Vice President - MONEY MARKET FUND Thomas J. Steffanci, Vice President - INCOME FUND Anne Punzak, Vice President Thomas D. Maher, Assistant Vice President Gary L. French, Treasurer John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer Arthur S. Loring, Secretary BOARD OF TRUSTEES J. Gary Burkhead Ralph F. Cox* Phyllis Burke Davis* Richard J. Flynn* Edward C. Johnson 3d E. Bradley Jones* Donald J. Kirk* Peter S. Lynch Edward H. Malone* Marvin L. Mann* Gerald C. McDonough* Thomas R. Williams* GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENTS United Missouri Bank, N.A. Kansas City, MO and Fidelity Service Co. Boston, MA CUSTODIAN United Missouri Bank, N.A. Kansas City, MO THE FIDELITY TELEPHONE CONNECTION MUTUAL FUND 24-HOUR SERVICE Account Balances 1-800-544-7544 Exchanges/Redemptions 1-800-544-7777 Mutual Fund Quotes 1-800-544-8544 Account Assistance 1-800-544-6666 Product Information 1-800-544-8888 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) * INDEPENDENT TRUSTEES AUTOMATED LINES FOR QUICKEST SERVICE -----END PRIVACY-ENHANCED MESSAGE-----