FIDELITY
(Registered trademark)
DAILY INCOME
TRUST
SEMIANNUAL REPORT
FEBRUARY 28, 1994
CONTENTS
CHECK PAGE NUMBERS !!!
PRESIDENT'S MESSAGE 3 Ned Johnson on minimizing taxes.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 8 A summary of major shifts in the
fund's investments over the last six
months
and one year.
INVESTMENTS 9 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 16 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 20 Footnotes to the financial
statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
No one wants to pay more taxes than they have to. But a recent survey of
500 U.S. households, conducted by Fidelity and Yankelovich Partners, showed
that few people took steps to reduce their taxes under the new tax laws
that went into effect last year. In fact, many people were not completely
aware of the changes until they filed their 1993 tax returns.
Whether or not you're someone whose tax bill increased as a result of these
changes, it may make sense to consider ways to keep more of what you earn.
First, if your employer offers a 401(k) or 403(b) retirement savings plan,
consider enrolling. These plans are set up so you can make regular
contributions -
before taxes - to a retirement savings plan. They offer a disciplined
savings strategy, the ability to accumulate earnings tax-deferred, and
immediate tax savings. For example, if you earn $40,000 a year and
contribute 7% of your salary to your 401(k) plan, your annual contribution
is $2,800. That reduces your taxable income to $37,200 and, if you're in
the
28% tax bracket, saves you $784 in federal taxes. In addition, you pay no
taxes on any earnings until withdrawal.
It may be a good idea to contact your benefits office as soon as possible
to find out when you can enroll or increase your contribution. Most
employers allow employees to make changes only a few times each year.
Second, consider an IRA. Many people are eligible to make an IRA
contribution (up to $2,000) that is fully tax deductible. That includes
people who are not covered by company pension plans, or those within
certain income brackets. Even if you don't qualify for a fully deductible
contribution, any IRA earnings will grow tax-deferred until withdrawal.
Third, consider tax-free investments like municipal bonds and municipal
bond funds. Often these can provide higher after-tax yields than comparable
taxable investments. For example, if you're in the new 36% federal income
tax bracket and invest $10,000 in a taxable investment yielding 7%, you'll
pay $252 in federal taxes and receive $448 in income. That same $10,000
invested in a tax-free bond fund yielding 5.5% would allow you to keep $550
in income.
These are three investment strategies that could help lower your tax bill
in 1994. If you're interested in learning more, please call us at
1-800-544-8888 or visit a Fidelity Investor Center. We look forward to
talking with you.
Best regards,
Edward C. Johnson 3d, Chairman
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, as well as reinvestment of its dividends (or income).
Yield measures the income paid by a fund. Since a money market fund tries
to maintain a $1 share price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1994 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Fidelity Daily Income Trust 1.40% 2.77% 31.21% 88.54%
Consumer Price Index 1.31% 2.52% 20.64% 43.26%
Average All Taxable
Money Market Fund 1.34% 2.69% 30.56% 86.72%
CUMULATIVE TOTAL RETURNS reflect actual performance over a set period - in
this case, six months, one, five, or 10 years. For example, if you invested
$1,000 in a fund that had a 5% return over the past year, 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 taxable money market fund's total returns. This average
currently reflects the performance of 644 taxable money market funds
tracked by IBC/Donoghue. (The periods covered by the IBC/Donoghue numbers
are the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Daily Income Trust 2.77% 5.58% 6.55%
Consumer Price Index 2.52% 3.82% 3.66%
Average All Taxable
Money Market Fund 2.69% 5.48% 6.44%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2/28/93 5/31/93 8/31/93 11/30/93 2/28/94
2.74% 2.59% 2.85% 2.84% 2.75%
Fidelity Daily Income Trust
Average All Taxable 2.71% 2.62% 2.64% 2.69% 2.79%
Money Market Fund
2.66% 2.49% 2.43% 2.35% 2.30%
MMDA
</TABLE>
Row: 1, Col: 1, Value: 2.74
Row: 1, Col: 2, Value: 2.71
Row: 1, Col: 3, Value: 2.66
Row: 2, Col: 1, Value: 2.59
Row: 2, Col: 2, Value: 2.62
Row: 2, Col: 3, Value: 2.49
Row: 3, Col: 1, Value: 2.85
Row: 3, Col: 2, Value: 2.64
Row: 3, Col: 3, Value: 2.43
Row: 4, Col: 1, Value: 2.84
Row: 4, Col: 2, Value: 2.69
Row: 4, Col: 3, Value: 2.35
Row: 5, Col: 1, Value: 2.75
Row: 5, Col: 2, Value: 2.79
Row: 5, Col: 3, Value: 2.3
Fidelity Daily
Income Trust
Average
All Taxable
Money Market
Fund
MMDA
4% -
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to those of the average taxable money market fund and
the average bank money market deposit account (MMDA). The MMDA average is
supplied by BANK RATE MONITOR.(double dagger) (Both figures are those
available closest to month end.)
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS REFLECT PAST RESULTS RATHER
THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
There are some important
differences between a bank
money market deposit
account (MMDA) and a
money market fund. First, 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.
Second, a money market
fund returns to its
shareholders income earned
by the fund's investments
after expenses. This is in
contrast to banks, which set
their MMDA rates periodically
based on current interest
rates, competitors' rates, and
internal criteria.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Burnell Stehman,
Portfolio Manager of
Fidelity Daily Income Trust
Q. BURNIE, WHAT HAS THE SHORT-TERM INTEREST RATE ENVIRONMENT BEEN LIKE OVER
THE PAST SIX MONTHS?
A. From the end of August through mid-November, short-term rates were
stable. The Federal Reserve was comfortable keeping the federal funds rate
at 3%, where it had been since September 1992. Rates moved slightly higher
during November due to increasing worries about the threat of inflation.
The economy was showing signs of strength through reports of robust
activity in housing, manufacturing, and auto sales. As a result, rates
continued to trade within a narrow range through year-end and into January.
Then, surprisingly, the Fed raised the fed funds rate to 3.25% on February
4. It was the first time the Fed had raised short-term interest rates in
five years.
Q. GIVEN THOSE CONDITIONS, HOW DID YOU POSITION THE FUND?
A. I kept the fund's average maturity in the 70-day range through October.
I did that by locking in higher-yielding issues while rates were still
stable or falling. By November, it became clear that the Fed would not be
reducing rates further, which caused me to position the fund in a more
defensive manner. I shortened the average maturity to 55 days by the end of
December. However, heading into January the economic numbers didn't reflect
a tangible inflation threat. As markets rallied, I, like many others,
thought the Fed would wait until later in the first quarter to raise rates.
As a result, I moved the average maturity out to 64 days by the end of
January in order to maintain the highest return to the fund. In hindsight,
that was a mistake. After the Fed's tightening, I sold or swapped many of
the government securities I had recently purchased in favor of
shorter-maturity, higher yielding issues. I rolled back the average
maturity to 40 days by the end of February, which positioned the fund to
benefit from the higher rate environment.
Q. SO HOW DID THE FUND PERFORM?
A. Despite February's rate hike, the fund's seven-day yield was 2.75% on
February 28, 1994. That's down slightly from six months ago, when the yield
was 2.85%. The fund's total return for the 12 months ended February 28 was
2.77%. That beat the 2.69% average total return for all taxable money
market funds tracked by IBC/Donoghue.
Q. HOW DO YOU SEE THE NEXT SIX MONTHS SHAPING UP?
A. I think short-term rates will continue to be volatile in the near term.
Investors are skittish about the possibility of further rate hikes, which I
think are inevitable. In the meantime, I plan to keep the fund's average
maturity on the short side, probably in the 35- to 40-day range. That will
allow me to purchase some of the higher-yielding issues that become
available, while keeping the fund defensively positioned should rates
indeed rise. I also had a 15% stake in variable and floating rate
instruments at the end of February, a level I plan to keep or increase.
These securities have relatively high yields related to the way they're
structured. But what makes them unique is a feature that resets their
coupons (stated interest rates) at fixed intervals. When rates are rising,
the fund can obtain a higher coupon on these issues at their reset
intervals.
FUND FACTS
GOAL: to provide current
income with share price
stability by investing in high
quality, short-term securities
START DATE: May 31, 1974
SIZE: as of February 28, 1994,
over $2.1 billion
MANAGER: Burnell Stehman,
since 1985; manager Fidelity
Daily Income Trust, 1979
- -1983; manager, several
institutional money market
funds
(checkmark)
WORDS TO KNOW
BANKERS' ACCEPTANCE (BA):
A short-term note whose
payment is guaranteed by a
bank.
CERTIFICATE OF DEPOSIT (CD):
An interest-bearing deposit
with a specific maturity. Large
denomination CDs, like the
fund buys, have negotiable
interest rates and can be sold
in the secondary market.
COMMERCIAL PAPER: A
short-term note from a bank
or corporation.
FEDERAL FUNDS RATE: The
interest rate banks charge
each other for overnight
loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager
believes interest rates will
rise. When the average
maturity is long, the fund
manager is expecting rates to
fall. When the average
maturity is neutral, the fund
manager wants to have the
flexibility to respond to rising
rates, while still capturing a
portion of the higher yields
available from issues with
longer maturities.
TIME DEPOSIT (TD): An
interest-bearing deposit with a
specific maturity. Large
denomination TDs, like the
fund buys, differ from CDs in
that they can't be sold in the
secondary market.
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/28/94 8/31/93 2/28/93
0 - 30 54 33 41
31 - 90 37 37 39
91 - 180 8 24 19
181 - 397 1 6 1
WEIGHTED AVERAGE MATURITY
2/28/94 8/31/93 2/28/93
Fidelity Daily Income Trust 40 days 67 days 56 days
Average All Taxable
Money Market Fund* 53 days 63 days 61 days
ASSET ALLOCATION
AS OF 2/28/94 AS OF 8/31/93
Row: 1, Col: 1, Value: 19.0
Row: 1, Col: 2, Value: 69.0
Row: 1, Col: 3, Value: 11.0
Row: 1, Col: 4, Value: 2.0
Row: 1, Col: 1, Value: 15.0
Row: 1, Col: 2, Value: 69.0
Row: 1, Col: 3, Value: 13.0
Row: 1, Col: 4, Value: 3.0
Bank CDs, BAs,
TDs, and notes 19%
Commercial
paper 69%
Government
securities 11%
Other 1%
Bank CDs, BAs,
TDs, and notes 15%
Commercial
paper 69%
Government
securities 13%
Other 3%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
INVESTMENTS FEBRUARY 28, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
BANKERS' ACCEPTANCES - 2.2%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Bank of New York
4/21/94 3.44% $ 11,000 $ 10,947
5/24/94 3.63 21,000 20,824 06499AAT
Trust Company Bank
6/13/94 3.40 15,000 14,855 8982769A
TOTAL BANKERS' ACCEPTANCES 46,626
CERTIFICATES OF DEPOSIT - 3.1%
Old Kent Bank & Trust Company
3/2/94 3.42 20,000 20,000 679999CK
3/14/94 3.40 15,000 15,000 679999CM
3/31/94 3.40 15,000 15,000 679999CL
Old Kent Bank - Southwest
5/31/94 3.45 10,000 10,000 67999FAF
7/12/94 3.30 5,000 5,001 67999FAH
TOTAL CERTIFICATES OF DEPOSIT 65,001
COMMERCIAL PAPER - 69.1%
American General Finance Corporation
4/7/94 3.23 25,000 24,918 225993HB
Associates Corporation of North America
3/11/94 3.27 20,000 19,982 045992UE
3/28/94 3.37 15,000 14,962 045992UA
4/8/94 3.23 15,000 14,949 045992UF
4/14/94 3.42 25,000 24,896 045992UJ
4/28/94 3.29 15,000 14,921 045992UC
5/19/94 3.50 10,000 9,924 045992UP
Bank One Milwaukee
3/3/95 3.46 15,000 14,985
Bear Stearns Companies Inc.
3/18/94 3.31 22,000 21,966 073999WS
3/21/94 3.27 20,000 19,964 073999XQ
4/6/94 3.22 10,000 9,968 073999YC
4/21/94 3.16 10,000 9,955 073999YR
BellAtlantic Financial Services
3/16/94 3.45 5,000 4,993 077994AR
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Beneficial Corporation
3/10/94 3.36% $ 25,000 $ 24,979 0819907Y
3/11/94 3.56 (a) 5,000 5,000 0819907D
3/15/94 3.59 (a) 25,000 25,000 0819907C
3/31/94 3.46 10,000 9,971 0819908G
4/11/94 3.14 25,000 24,911 0819907R
5/4/94 3.20 10,000 9,943 0819907V
CIESCO, L.P.
5/20/94 3.53 10,000 9,922 177996LR
CIT Group Holdings, Inc.
3/30/94 3.59 15,000 14,958 172990PJ
4/15/94 3.34 15,000 14,938 172990QJ
4/29/94 3.13 10,000 9,949
4/29/94 3.47 25,000 24,859 172990QW
Commercial Credit Company
3/14/94 3.39 40,000 39,951 2019905E
4/8/94 3.43 25,000 24,910 2019905Q
Corporate Receivables Corp.
4/5/94 3.46 17,000 16,943 220992CL
Dean Witter, Discover & Co.
3/4/94 3.11 25,000 24,994 24299AAS
3/23/94 3.46 9,000 8,981 24299AAW
4/25/94 3.13 30,000 29,857 24299AAR
Electronic Data Systems Corporation
3/7/94 3.19 10,000 9,995 285998EB
4/12/94 3.52 11,000 10,955 285998ED
4/13/94 3.15 10,000 9,963 285998EC
Ford Motor Credit Corporation
3/15/94 3.26 25,000 24,969 34599BNE
3/17/94 3.26 25,000 24,964 34599BNF
4/4/94 3.22 15,000 14,955 34599BPH
GTE Corporation
3/15/94 3.46 20,000 19,973 362991CM
General Electric Capital Corporation
3/21/94 3.39 25,000 24,953 369998KS
3/24/94 3.39 25,000 24,946 369998KT
7/11/94 3.30 20,000 19,762 369998LL
General Electric Capital Services Inc.
4/26/94 3.49 30,000 29,838 36999BBE
General Motors Acceptance Corporation
3/10/94 3.45 10,000 9,991 638998NX
3/22/94 3.48 10,000 9,980 638998PP
3/28/94 3.51 15,000 14,961 638998PH
3/29/94 3.51 35,000 34,905 638998PJ
Goldman Sachs Group, L.P. (The)
3/7/94 3.30 25,000 24,986 696992HH
3/22/94 3.30 15,000 14,972 696992HP
4/6/94 3.44 20,000 19,932 696992KW
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Household Finance Corporation
3/15/94 3.44% $ 8,000 $ 7,989 44199DJF
3/22/94 3.23 10,000 9,981 44199DHS
3/23/94 3.23 20,000 19,961 44199DHU
4/27/94 3.60 8,000 7,954
IBM Credit Corporation
3/8/94 3.43 15,000 14,990 449991AK
3/16/94 3.44 30,000 29,957 449991AG
ITT Corporation
4/20/94 3.49 20,000 19,904 450991FB
ITT Financial
3/22/94 3.44 15,000 14,970 450990JX
3/24/94 3.44 15,000 14,967 450990JY
International Lease Finance Corporation
3/16/94 3.46 29,000 28,958 45999CEF
MCI Communications Corp.
3/11/94 3.46 20,000 19,981 5526739S
Merrill Lynch & Co., Inc.
3/25/94 3.28 20,000 19,957 59099A8G
3/28/94 3.44 8,000 7,979 59099A9Q
4/15/94 3.42 20,000 19,915 59099A9H
4/18/94 3.42 25,000 24,887 59099A9G
Morgan Stanley Group, Inc.
4/22/94 3.47 15,000 14,925 61799EJS
4/27/94 3.52 15,000 14,917 61799EJU
NYNEX Corporation
3/16/94 3.41 8,000 7,989 67099CAD
3/21/94 3.43 9,000 8,983 67099CAE
New Center Asset Trust
3/1/94 3.41 25,000 25,000 643995AQ
3/7/94 3.41 13,000 12,993 643995AR
3/8/94 3.41 22,000 21,986 643995AT
3/30/94 3.41 15,000 14,959 643995BA
Norfolk Southern Corporation
5/3/94 3.47 14,663 14,574 65599AAM
Norwest Corporation
3/23/94 3.38 10,000 9,980 66899CBM
PHH Corporation
4/4/94 3.51 15,000 14,950 699990XQ
PNC Financial/PNC Funding
3/29/94 3.49 10,000 9,973 6934769H
4/19/94 3.47 25,000 24,883 6934769G
Prospect Street Senior Portfolio LP
3/24/94 3.46 4,112 4,103 745998HM
Prudential Funding Corporation
5/11/94 3.15 25,000 24,846 743994KC
Prudential Home Mortgage Corporation
4/11/94 3.50 15,000 14,941 74499FAD
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Sara Lee Corporation
5/26/94 3.63% $ 20,000 $ 19,828 80699FAB
Sears Credit Corp. (A)
3/29/94 3.46 10,000 9,973 81299FAT
Sears Roebuck Acceptance Corp.
3/9/94 3.51 5,000 4,996 81299ECH
Whirlpool Corporation
3/9/94 3.41 10,000 9,992 962996PB
3/14/94 3.46 8,000 7,990 962996PD
Whirlpool Financial Corporation
3/21/94 3.11 10,000 9,983 963999AE
4/5/94 3.61 15,000 14,948 963999AH
TOTAL COMMERCIAL PAPER 1,451,511
FEDERAL AGENCIES - 10.5%
FEDERAL HOME LOAN BANK - DISCOUNT NOTES - 2.2%
6/16/94 3.37 21,000 20,995 567995GP
8/24/94 3.77 25,000 24,548 567995GV
45,543
FEDERAL HOME LOAN MORTGAGE CORP. - DISCOUNT NOTES - 2.6%
5/2/94 3.41 35,000 34,796 355993QR
5/5/94 3.40 20,000 19,878 355993QG
54,674
FEDERAL NATIONAL MORTGAGE ASSOC. - AGENCY COUPONS - 1.2%
3/1/94 3.60 (a) 25,000 25,000 9931287F
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 4.5%
3/9/94 3.31 15,000 14,989 31365F9R
4/1/94 3.38 25,000 24,929 31365F9E
5/25/94 3.34 15,000 14,883 9931168C
6/20/94 3.30 25,000 24,749 993128UF
7/26/94 3.20 5,810 5,735 9931286X
7/28/94 3.45 10,000 9,861 9931167Q
95,146
TOTAL FEDERAL AGENCIES 220,363
U.S. TREASURY OBLIGATIONS - 0.9%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
U.S. Treasury Bills
7/7/94 3.34% $ 20,000 $ 19,766 99399H7G
MEDIUM-TERM NOTES (A) - 4.0%
General Motors Acceptance Corporation
5/7/94 3.49 20,000 20,000 638998PF
Goldman Sachs Group, L.P. (The) (b)
6/16/94 3.47 20,000 20,000 696992KE
9/1/94 3.47 20,000 20,000 696992KB
Norwest Corporation
3/15/94 3.37 23,000 23,000 66899CBK
TOTAL MEDIUM-TERM NOTES 83,000
SHORT-TERM NOTES (A) - 8.7%
J.P. Morgan Securities
3/1/94 3.75 40,000 40,000 616998EC
3/1/94 3.77 24,000 24,000 616998AW
Morgan Stanley Group, Inc.
3/1/94 3.70 15,000 15,000 61799EJQ
Norwest Corporation
3/1/94 3.51 18,000 18,000 66899CBL
SMM Trust Company (1993-A) (c)
3/18/94 3.36 67,000 67,000 7845689Y
SMM Trust Company (1993-D) (c)
4/28/94 3.30 5,000 5,000 83199GAC
SMM Trust Company (1993-E) (c)
4/13/94 3.30 13,000 13,000 83199GAA
TOTAL SHORT-TERM NOTES 182,000
BANK NOTES - 1.4%
Bank of New York
3/6/94 3.47 30,000 30,000 06499AAJ
REPURCHASE AGREEMENTS - 0.1%
MATURITY VALUE (NOTE 1)
AMOUNT (000S) (000S)
In a joint trading account
(U.S. Treasury Obligations)
dated 2/28/94, due 3/1/94
(Note 2)
At 3.47% $ 1 $ 1
At 3.51% 1,807 1,807 99799MXJ
TOTAL REPURCHASE AGREEMENTS 1,808
TOTAL INVESTMENTS-100% $ 2,100,075
Total Cost for Income Tax Purposes $ 2,100,075
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $40,000,000 or 1.9% of net
assets.
(c) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION
ACQUISITION AMOUNT
SECURITY DATE (000'S)
SMM Trust
Company:
(1993-A) 3/18/93 $ 67,000
(1993-D) 1/28/94 $ 5,000 83199GAC
(1993-E) 4/12/93 $ 13,000
INCOME TAX INFORMATION
At August 31, 1993, the fund had a capital loss carryforward of
approximately $345,000 which will expire on August 31, 2001.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) FEBRUARY 28, 1994 (UNAUDITED)
1.ASSETS 2. 3.
4.Investment in securities, at value (including repurchas 5. $ 2,100,075
e
agreements of $1,808) (Notes 1 and 2) - See
accompanying schedule
6.Cash 7. 29,691
8.Interest receivable 9. 2,740
10. 11.TOTAL ASSETS 12. 2,132,506
13.LIABILITIES 14. 15.
16.Payable for investments purchased $ 22,939 17.
18.Accrued management fee 483 19.
20.Other payables and accrued expenses 535 21.
22. 23.TOTAL LIABILITIES 24. 23,957
25.26.NET ASSETS 27. $ 2,108,549
28.Net Assets consist of : 29. 30.
31.Paid in capital 32. $ 2,108,632
33.Accumulated net realized gain (loss) on investments 34. (83)
35.36.NET ASSETS, for 2,108,632 shares outstanding 37. $ 2,108,549
38.39.NET ASSET VALUE, offering price and redemption p 40. $1.00
rice
per share ($2,108,549 (divided by) 2,108,632 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED FEBRUARY 28, 1994 (UNAUDITED)
41.42.INTEREST INCOME 43. $ 34,589
44.EXPENSES 45. 46.
47.Management fee (Note 3) $ 3,134 48.
49.Transfer agent fees (Note 3) 2,572 50.
51.Accounting fees and expenses (Note 3) 104 52.
53.Non-interested trustees' compensation 7 54.
55.Custodian fees and expenses 22
56.Audit 21 57.
58. 59.TOTAL EXPENSES 60. 5,860
61.62.NET INTEREST INCOME 63. 28,729
64.65.NET REALIZED GAIN (LOSS) ON INVESTMENTS (NOT 66. (365)
E 1)
67.68.NET INCREASE IN NET ASSETS RESULTING FROM OPER 69. $ 28,364
ATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 28, 1994 AUGUST 31,
(UNAUDITED) 1993
70.INCREASE (DECREASE) IN NET ASSETS
71.Operations $ 28,729 $ 65,143
Net interest income
72. Net realized gain (loss) on investments (365) (345)
73. 74.NET INCREASE (DECREASE) IN NET ASSETS RESULTI 28,364 64,798
NG FROM
OPERATIONS
75.Dividends to shareholders from net interest income (28,729) (65,143)
76.Share transactions at net asset value of $1.00 per sh 3,279,348 6,188,836
are
Proceeds from sales of shares
77. Reinvestment of dividends from net interest income 28,702 63,070
78. Cost of shares redeemed (3,295,439) (6,656,948)
79. Net increase (decrease) in net assets and shares 12,611 (405,042)
resulting from share transactions
80. 81.TOTAL INCREASE (DECREASE) IN NET ASSETS 12,246 (405,387)
82.NET ASSETS 83. 84.
85. Beginning of period 2,096,303 2,501,690
86. End of period $ 2,108,549 $ 2,096,303
</TABLE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C>
87.
SIX MONTHS YEARS ENDED AUGUST 31, EIGHT MONTHS YEARS ENDED DECEMBER 3
ENDED ENDED 1,
FEBRUARY 28, AUGUST 31,
1994
88.
(UNAUDITED) 1993 1992 1991 1990 1989 1988
89.SELECTED PER-SHARE DATA
90.Net asset value, beginning of period
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
91.Income from Investment Operations
.014 .028 .042 .064 .051 .087 .070
Net interest income
92.Less Distributions
(.014) (.028) (.042) (.064) (.051) (.087) (.070)
From net interest income
93.Net asset value, end of period
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
94.TOTAL RETURN(dagger)
1.40% 2.83% 4.32% 6.64% 5.22% 8.97% 7.15%
95.RATIOS AND SUPPLEMENTAL DATA
96.Net assets, end of period (in millions)
$ 2,109 $ 2,096 $ 2,502 $ 2,802 $ 2,981 $ 2,923 $ 3,042
97.Ratio of expenses to average net assets
.56%* .57% .55% .60% .63%* .64% .66%
98.Ratio of net interest income to
2.75%* 2.83% 4.22% 6.47% 7.69%* 8.68% 7.01%
average net assets
</TABLE>
* ANNUALIZED
(dagger) TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Daily Income Trust (the fund) is a fund of Fidelity Union Street
Trust II (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 Delaware trust. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. 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, 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.
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.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time- consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the
end of the period, restricted securities (excluding 144A issues) amounted
to $85,000,000 or 4%
of net assets for the fund.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a fee
computed daily and paid monthly, based on the level of the fund's average
net assets and gross income earned each month. The portion of the fee based
on average net assets is graduated ranging from an annual rate of .10% of
average net assets up to $2 billion to an annual rate of .05% of average
net assets in excess of $6 billion. The portion of the fee based on gross
income is equal to 4% of the gross income earned by the fund each month
(exclusive of gains realized from the sale of investments) provided the
amount of such fee, at a minimum, amounts to an annual rate of .20% and, at
a maximum, does not exceed an annual rate of .40% of the fund's average net
assets. For the period, the management fee was equivalent to an annualized
rate of .30% of average net assets.
SUB-ADVISER FEE. As the 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.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
Shareholders participating in the Fidelity Ultra Service Account(Registered
trademark) Program (the Program) pay a $5.00 monthly fee to Fidelity
Brokerage Services, Inc. (FBSI), an affiliate of FMR, for performing
services associated with the Program. For the period, fees paid to FBSI by
shareholders participating in the Program amounted to $861,867.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
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
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Burnell R. Stehman, Vice President
Thomas D. Maher, Assistant
Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Bank of New York, N.A.
New York, NY
FIDELITY'S TAXABLE
MONEY MARKET FUNDS
Fidelity Cash Reserves
Fidelity Daily Income Trust
Fidelity U.S. Government Reserves
Spartan(Registered trademark) Money Market Fund
Spartan U.S. Government
Money Market Fund
Spartan U.S. Treasury
Money Market Fund
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
