SPARTAN(registered trademark)
(registered trademark)
ARIZONA
MUNICIPAL
FUNDS
ANNUAL REPORT
AUGUST 31, 1996
CONTENTS
CHECK PAGE NUMBERS !!!
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PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING
STRATEGIES
SPARTAN ARIZONA MUNICIPAL INCOME FUND
4 PERFORMANCE
7 FUND TALK: THE MANAGER'S OVERVI
EW
10 INVESTMENT CHANGES
11 INVESTMENTS
15 FINANCIAL STATEMENTS
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
19 PERFORMANCE
21 FUND TALK: THE MANAGER'S OVERVI
EW
23 INVESTMENT CHANGES
24 INVESTMENTS
27 FINANCIAL STATEMENTS
31 NOTES TO THE FINANCIAL STATEMENTS
34 REPORT OF INDEPENDENT ACCOUNTAN
TS
35 DISTRIBUTIONS
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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,
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first eight
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in both the stock and bond markets so far
this year. In 1995, both stock and bond markets posted strong results,
while the year before, stocks posted below-average returns and bonds had
one of the worst years in history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
Keeping in mind that the effects of interest rate changes on your bond
investments will only be "paper" gains or losses unless you sell your
shares, staying in your bond fund may be appropriate if your investment
horizon is at least a year or more. The longer your investing time frame,
the more likely it is that you will retain your principal investment
through both up and down markets. For example, a 10-year time frame, such
as saving
for a college education, enables you to weather these ups and downs in a
long-term fund, which has higher potential returns. An intermediate-length
fund could be appropriate if your investment horizon is two to four years,
and a short-term bond fund could be the right choice if you need your money
in one or two years.
If your time horizon is less than a year, you might want to consider moving
some of your bond investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
No matter what your investment horizon or portfolio diversity, it makes
good sense to follow a regular investment plan - investing a certain amount
of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for you.
Best regards,
Edward C. Johnson 3d
SPARTAN ARIZONA MUNICIPAL INCOME FUND
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. A fund's total
return includes changes in share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells
securities that have grown in value), and the effect of the $5 account
closeout fee on an average size account. You can also look at the fund's
income to measure performance. If Fidelity had not reimbursed certain fund
expenses during the periods shown, the total returns, dividends, and yields
would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1996 PAST 1 LIFE OF
YEAR FUND
Spartan Arizona Municipal Income 4.71% 17.01%
Lehman Brothers Arizona Enhanced 4.73% n/a
Municipal Bond Index
Arizona Municipal Debt Funds Average 5.07% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
October 11, 1994. For example, if you invested $1,000 in a fund that had a
5% return over the past year, the value of your investment would be $1,050.
You can compare the fund's returns to the performance of the Lehman
Brothers Arizona Enhanced Municipal Bond Index, which is a total return
performance benchmark for Arizona investment-grade municipal bonds with
maturities of at least one year. To measure how the fund's performance
stacked up against its peers, you can compare it to the Arizona municipal
debt funds average which reflects the performance of 35 mutual funds with
similar objectives tracked by Lipper Analytical Services, Inc. over the
past 12 months. Both benchmarks will include reinvested dividends and
capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1996 PAST 1 LIFE OF
YEAR FUND
Spartan Arizona Municipal Income 4.71% 8.65%
Lehman Brothers Arizona Enhanced 4.73% n/a
Municipal Bond Index
Arizona Municipal Debt Funds Average 5.07% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960831 19960916 090330 S00000000000001
Spartan AZ Muni Lehman Brothers Muni
00434 LB015
1994/10/31 10000.00 10000.00
1994/11/30 9820.11 9819.20
1994/12/31 10064.35 10035.32
1995/01/31 10414.23 10322.13
1995/02/28 10773.06 10622.30
1995/03/31 10866.46 10744.35
1995/04/30 10885.64 10757.03
1995/05/31 11219.72 11100.28
1995/06/30 11111.21 11003.71
1995/07/31 11215.14 11108.03
1995/08/31 11372.18 11248.88
1995/09/30 11463.33 11320.08
1995/10/31 11631.80 11484.67
1995/11/30 11820.94 11675.21
1995/12/31 11925.02 11787.40
1996/01/31 12041.15 11876.40
1996/02/29 11942.15 11796.23
1996/03/31 11779.23 11645.48
1996/04/30 11735.76 11612.52
1996/05/31 11716.16 11607.88
1996/06/30 11827.94 11734.29
1996/07/31 11918.94 11841.07
1996/08/31 11908.53 11838.23
IMATRL PRASUN SHR__CHT 19960831 19960916 090336 R00000000000123
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Spartan Arizona Municipal Income Fund on October 31, 1994,
shortly after the fund started. As the chart shows, by August 31, 1996, the
value of the investment would have grown to $11,909 - a 19.09% increase on
the initial investment. This assumes the fund was still owned on August 31,
1996 and therefore does not include the effect of the $5 account closeout
fee. For comparison, look at how the Lehman Brothers Municipal Bond Index,
which reflects the performance of the investment-grade municipal bond
market, did over the same period. With dividends reinvested, the same
$10,000 would have grown to $11,838 - a 18.38% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of
interest rates. In turn, the
share price, return, and yield of
a fund that invests in bonds
will vary. That means if you
sell your shares during a
market downturn, you might
lose money. But if you can ride
out the market's ups and
downs, you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
YEAR ENDED OCTOBER 11, 1994
AUGUST 31, (COMMENCEMENT
OF OPERATIONS) TO
1996 AUGUST 31, 1995
Dividend return 4.92% 5.34%
Capital appreciation
return -0.21% 6.39%
Total return 4.71% 11.73%
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 on an average size account.
DIVIDENDS AND YIELD
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PERIODS ENDED AUGUST 31, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.08(cents) 24.77(cents) 51.41(cents)
Annualized dividend rate 4.54% 4.68% 4.84%
30-day annualized yield 4.57% - -
30-day annualized tax-equivalent yield 7.53% - -
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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 $10.59 over
the past month, $10.49 over the past six months and $10.62 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 39.33% combined effective 1996 federal and state income tax bracket,
but does not reflect the payment of the federal alternative minimum tax, if
applicable.
SPARTAN ARIZONA MUNICIPAL INCOME FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jonathan Short, Portfolio Manager of Spartan Arizona
Municipal Income Fund
Q. HOW DID THE FUND PERFORM, JON?
A. For the 12 months ended August 31, 1996, the fund had a total return of
4.71%. The Arizona municipal debt funds average, as tracked by Lipper
Analytical Services, returned 5.07% for the past year. Additionally, the
Lehman Brothers Arizona Enhanced Municipal Bond Index returned 4.73% for
the past year.
Q. WE UNDERSTAND THERE WERE SOME RECENT INVESTMENT POLICY CHANGES.
A. That's correct. As of June 24, 1996, the fund reserves the right to
invest up to 5% of its assets - down from one-third - in
below-investment-grade securities. The fund does not intend to seek out
lower-quality, below-investment-grade bonds. Instead, this change helps the
fund maintain a degree of flexibility under unusual circumstances. Further,
Fidelity now uses two additional agencies to determine the credit quality
of the fund's bonds. Ratings from Duff & Phelps Rating Co. and Fitch
Investors Service, L.P., are being employed, along with those from Moody's
Investors Service and Standard & Poor's that Fidelity had used previously.
Q. HOW HAVE MUNICIPALS FARED OVER THE PAST SIX MONTHS?
A. Nearly all bonds suffered a pullback primarily due to heightened
inflation fears. Several consecutive monthly employment reports indicated
that a surprising number of new jobs were created, which generally led
investors to fret that the economy was growing at a quicker-than-expected
pace. The main worry was that a fast-growing economy would translate into
higher inflation, which could prompt the Federal Reserve Board to raise
interest rates. Higher interest rates, of course, eat away at the value of
bond holdings. Despite this negative backdrop, municipals performed well
compared to Treasuries over the past six months as investors' fears of
radical tax reform - which caused munis to lag Treasuries during 1995 -
dissipated. During the period, there was also a number of bonds maturing
and being called, or paid off early, by their issuer, which strengthened
demand for municipals when this money was reinvested in the muni market.
Q. DURING THE PERIOD, YOU INCREASED THE OVERALL CREDIT QUALITY OF THE FUND.
WHAT PRECIPITATED THAT MOVE?
A. Credit spreads - which measure the difference in yields between bonds of
various credit qualities - narrowed, or lessened. As spreads narrowed, I
was able to sell some lower-rated bonds at attractive levels and replace
them with higher-rated bonds, without sacrificing much additional yield. By
upgrading the fund's holdings, it means that the fund carries less credit
risk - the risk that a borrower will not repay an obligation as promised.
Typically, I would buy the highest-rated insured bonds. But on occasion I
found selected opportunities to add uninsured bonds.
Q. WHICH LOWER-RATED BONDS DID YOU SELL AND WHAT TYPES OF HIGHER-RATED
BONDS DID YOU BUY?
A. I sold bonds issued by the Puerto Rico Electric Power Authority, rated
Baa1 by Moody's. Shareholders may recall that as a territory of the United
States, Puerto Rico can issue bonds free from local, state and federal
income taxes. I added to the fund's existing holdings in bonds issued by
the electric utility Salt River Project, which is rated AA by Moody's and
Aa by Standard & Poor's. In my view, the Salt River Project is a strong
credit and its debt service coverage - which is one indication of how able
an issuer is to pay off its debt - is quite good. Although there are some
deregulation efforts under way in Arizona, I believe that the Salt River
Project's superior competitive position could enable the utility to remain
financially strong.
Q. IN THE LAST SHAREHOLDER REPORT, YOU DISCUSSED HOW YOU HAD EMPHASIZED
INTERMEDIATE-TERM BONDS. DID YOU CONTINUE TO DO THAT OVER THE PAST SIX
MONTHS AS WELL?
A. Yes I did. The yield curve - a graphical representation of the yields
bonds of various maturities pay - flattened during the past six months.
When the yield curve flattened, longer-term bonds didn't reward investors
with as much additional yield over intermediate-term bonds as they did when
the curve was steeper. In my view, many longer-term bonds didn't offer
enough yield for the added risk, and intermediate bonds were more
attractive on a risk/return basis.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. In hindsight, I wish I bought more housing bonds. In rising
interest-rate environments, housing bonds have historically outperformed
other municipal securities.
Q. WHAT'S YOUR OUTLOOK?
A. With the presidential election coming up, there's the potential for tax
reform becoming an issue again. Should this occur, municipals may not be
able to continue their strong performance relative to Treasuries. But from
a technical standpoint, I'm cautiously optimistic. If supply remains at
current levels and demand holds firm, that would most likely be a positive
for the municipal market. But no matter what the direction of the municipal
market, I'll continue to concentrate on identifying securities that I think
have the potential to outperform the market.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high current tax-free
income for Arizona residents
START DATE: October 11, 1994
SIZE: as of August 31, 1996,
more than $20 million
MANAGER: Jonathan Short,
since October 1995; manager,
Spartan Florida Municipal
Income, since May 1996;
Fidelity Advisor California
Municipal Income, since
February 1996; Spartan
California Municipal Income,
Spartan California
Intermediate Municipal
Income, Fidelity California
Insured Municipal Income,
Fidelity California Municipal
Income, and Fidelity
Minnesota Municipal Income,
since 1995; joined Fidelity in
1990
(checkmark)
JONATHAN SHORT ON ARIZONA'S
ECONOMY:
"Arizona's economy has
continued to be quite strong
as evidenced by personal
income growth which was
approximately 7.5% over the
past year. While down from
the 10% personal income
growth rate in the prior 12
months, Arizona handily
outpaced the nation as a
whole. What's more, the
state is replacing its reliance on
natural resources and tourism
- - which was the major part
of its economy in the '80s -
with a more diversified
economy that now includes
growing high tech,
manufacturing and
electronics industries.
"Specifically, the state's
semi-conductor industry has
become an important driver of
economic growth. If the
demand for computers slows
or the U.S. economy
weakens, Arizona's economy
should weaken. But even if
either of those events occur,
the state's economic
situation most likely will
continue to outpace the
national average."
SPARTAN ARIZONA MUNICIPAL INCOME FUND
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF AUGUST 31, 1996
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO
General Obligation 30.1 23.7
Special Tax 18.2 20.4
Escrowed/Prerefunded 11.8 9.7
Electric Revenue 11.6 18.0
Education 8.6 8.8
AVERAGE YEARS TO MATURITY AS OF AUGUST 31, 1996
6 MONTHS AGO
Years 10.4 10.9
AVERAGE YEARS TO MATURITY IS BASED ON THE AVERAGE TIME UNTIL PRINCIPAL
PAYMENTS ARE EXPECTED FROM EACH OF THE FUND'S BONDS, WEIGHTED BY DOLLAR
AMOUNT.
DURATION AS OF AUGUST 31, 1996
6 MONTHS AGO
Years 6.9 7.1
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE. BEGINNING
WITH THE REPORTING CYCLE OF JUNE,1996, THE MODEL USED TO CALCULATE
DURATIONS MAY BE SLIGHTLY MODIFIED IN ORDER TO FURTHER REFINE THIS
INFORMATION. THESE CHANGES IN METHODOLOGY MAY PRODUCE ADJUSTMENTS IN
HISTORICAL DURATION FIGURES.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF AUGUST 31, 1996 AS OF FEBRUARY 29, 1996
Aaa 58.5%
Aa, A 34.0%
Baa 3.0%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 4.5%
Aaa 49.1%
Aa, A 33.7%
Baa 8.4%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 8.8%
Row: 1, Col: 1, Value: 58.5
Row: 1, Col: 2, Value: 34.0
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 4.5
Row: 1, Col: 1, Value: 49.1
Row: 1, Col: 2, Value: 33.7
Row: 1, Col: 3, Value: 8.4
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 8.800000000000001
SHOWN AS A PERCENTAGE OF THE FUND'S INVESTMENTS. WHERE MOODY'S RATINGS ARE
NOT AVAILABLE, WE HAVE USED S&P RATINGS.
SPARTAN ARIZONA MUNICIPAL INCOME FUND
INVESTMENTS AUGUST 31, 1996
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL BONDS - 95.5%
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
ARIZONA - 94.8%
Arizona Health Facs. Auth. Hosp. Sys. Rev.
Rfdg. (St. Lukes Health Sys.) 7.25% 11/1/14
(Pre-Refunded to 11/1/03 @ 102) (d) Aaa $ 400,000 $ 452,000
Arizona Pwr. Auth. Pwr. Resources Rev. Rfdg.
(Hoover Uprating Proj.) 5.25% 10/1/17
(MBIA Insured) Aaa 100,000 91,625
Arizona State Univ. Research Pk. Dev. Rev.
5% 7/1/21 (MBIA Insured) Aaa 100,000 87,375
Arizona State Univ. Rev.:
Rfdg. 6% 7/1/06 A1 1,000,000 1,057,500
7% 7/1/15 (Pre-Refunded to
7/1/02 @ 101) (d) Aaa 500,000 560,000
Arizona Trans. Board Excise Tax Rev.
(Maricopa Reg'l. Area Road):
Rfdg.:
6% 7/1/03 (AMBAC Insured) Aaa 700,000 742,000
6.50% 7/1/04 (AMBAC Insured) Aaa 100,000 109,250
Series A:
0% 7/1/02 (FGIC Insured) Aaa 300,000 223,500
5.75% 7/1/04 (AMBAC Insured) Aaa 440,000 459,250
5.75% 7/1/05 (AMBAC Insured) Aaa 400,000 416,500
7% 7/1/05 (MBIA Insured)
(Pre-Refunded to 7/1/99 @ 102) (d) Aaa 1,000,000 1,088,750
Arizona Trans. Board Hwy. Rev. Rfdg.
Series A, 6% 7/1/00 Aa 250,000 261,875
Central Wtr. Conservation Dist. Contract Rev.:
Rfdg. (Central Arizona Proj.)
Series A, 5.50% 11/1/10 A1 375,000 374,531
(Spl. Term) 6% 11/1/00 A1 250,000 262,812
Chandler Gen. Oblig.:
6.375% 7/1/03 (MBIA Insured) Aaa 175,000 190,094
6.50% 7/1/10 (MBIA Insured) Aaa 200,000 217,750
6.50% 7/1/11 (MBIA Insured) Aaa 225,000 243,562
Chandler Wtr. & Swr. Rev. Rfdg.
5.90% 7/1/00 (FGIC Insured) Aaa 200,000 208,250
Cochise Union School Dist.# 68 (Sierra Vista )
Series B, 9% 7/1/02 (FGIC Insured) (e) Aaa 200,000 243,000
Glendale Ind. Dev. Auth. Edl. Facs. Rev. Rfdg.
(American Graduate School Int'l.)
6.55% 7/1/06 (Connie Lee Insured) Aaa 150,000 166,500
Maricopa County Cfts. of Prtn.
5.625% 6/1/00 Baa 450,000 454,500
Maricopa County Gen. Oblig. Rev. Rfdg.
6.25% 7/1/00 (FGIC Insured) Aaa 240,000 253,800
Maricopa County School Dist. #1 Rfdg.
(Phoenix Elementary) Second Series,
0% 7/1/05 (MBIA Insured) Aaa 500,000 315,000
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Maricopa County School Dist. #3 Rfdg.
(Temple Elementary) 0% 7/1/08
(AMBAC Insured) Aaa $ 500,000 $ 258,750
Maricopa County School Dist. #6
(Washington Elementary) Series A,
5.375% 7/1/13 (AMBAC Insured) Aaa 300,000 290,625
Maricopa County Unified School Dist. #69
(Paradise Valley Proj. of 1994) Series B,
5.25% 7/1/15 (MBIA Insured) Aaa 300,000 282,375
Maricopa County Unified School Dist. #80
(Chandler) 6.60% 7/1/06 (FGIC Insured) Aaa 400,000 440,500
Maricopa County Unified School Dist. #97
(Deer Valley) Series A, 6% 7/1/05
(MBIA Insured) Aaa 200,000 211,500
Mesa Gen. Oblig. 5.70% 7/1/03
(FGIC Insured) Aaa 250,000 260,937
Mohave County Ind. Dev. Auth. Ind. Dev. Rev.
(North Star Steel Co. Proj.) Series B,
5.50% 12/1/20 AA- 250,000 232,500
Peoria Gen. Oblig. (1990 & 1994 Proj.) Series A:
5% 7/1/14 (AMBAC Insured) Aaa 365,000 330,325
5% 7/1/15 (AMBAC Insured) Aaa 390,000 347,587
Phoenix Arizona St. & Hwy. User Rev. Rfdg.
(Jr. Lien) 6.25% 7/1/11 (MBIA Insured) Aaa 250,000 265,000
Phoenix Arpt. Rev. Rfdg. Series D, 6.40% 7/1/12
(MBIA Insured) Aaa 810,000 849,488
Phoenix Civic Impt. Corp. Wtr. Sys. Rev. (Jr. Lien)
5.45% 7/1/19 Aa 500,000 465,625
Phoenix Gen. Oblig. Rfdg. Series A:
7.50% 7/1/08 Aa1 100,000 118,875
5% 7/1/19 Aa1 250,000 222,812
Pima County Swr. Rev. Rfdg. Series A,
5% 7/1/15 (FGIC Insured) Aaa 400,000 363,000
Pima County Unified School Dist. #1 Rfdg. (Tucson)
7.50% 7/1/10 (FGIC Insured) Aaa 250,000 297,188
Pinal County Ind. Dev. Auth. Solid Waste Disp. Rev.
(Browning Ferris Inds. Inc. Proj.) 5% 2/1/06 A2 250,000 239,063
Salt River Proj. Agric. Impt. & Pwr. Dist. Elec.
Sys. Rev. Rfdg:
Series A, 5.75% 1/1/07 Aa 300,000 312,000
Series B, 6.50% 1/1/04 Aa 400,000 435,500
Series B, 5.25% 1/1/19 (MBIA Insured) Aaa 100,000 91,750
Series C, 5% 1/1/13 Aa 150,000 137,438
Series C, 6.25% 1/1/19 Aa 500,000 513,750
Scottsdale Gen. Oblig. Rfdg.:
Series C, 6.375% 7/1/01 Aa1 250,000 268,125
5.50% 7/1/09 Aa1 100,000 100,250
MUNICIPAL BONDS - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Scottsdale Street & Hwy. User Rev. Rfdg.
5.50% 7/1/07 A1 $ 800,000 $ 815,000
Tempe Unified High School
Dist. #213 Rfdg. & Impt.:
7% 7/1/03 (FGIC Insured) Aaa 400,000 446,500
7% 7/1/08 (FGIC Insured) Aaa 310,000 356,113
Tucson Gen. Oblig. Rfdg. 6.75% 7/1/03
(FGIC Insured) Aaa 200,000 223,250
Tucson Ltd. Tax Rfdg. 7.50% 7/1/01 Aa 300,000 334,875
Tucson Street & Hwy. User Rev. Series A,
6% 7/1/10 (MBIA Insured) Aaa 400,000 421,000
Univ. of Arizona Rev. Rfdg. (Univ. Rev. Sys.)
6.375% 6/1/05 A1 400,000 430,000
Yuma County Hosp. Dist. #001
6.35% 11/15/07 A 265,000 286,863
19,127,988
PUERTO RICO - 0.5%
Puerto Rico Commonwealth Hwy. & Trans. Auth.
Hwy. Rev. 5.50% 7/1/17 Baa1 100,000 94,625
GUAM - 0.2%
Guam Pwr. Auth. Series A, 6.30% 10/1/12 BBB 50,000 50,250
TOTAL MUNICIPAL BONDS
(Cost $19,235,282) 19,272,863
MUNICIPAL NOTES (A) - 4.5%
ARIZONA - 4.5%
Coconino County Poll. Cont. Corp. Rev.
(Arizona Pub. Svc. Co. Navajo Proj.)
Series A, 4.00%, LOC Bank of America
Nat'l. Trust & Savings, VRDN (b) P-1 700,000 700,000
Pinal County Ind. Dev. Poll. Cont. Rev.
(Magna Copper Co. Proj.) 3.75%,
LOC Nat'l. Westminster Bank, VRDN P-1 200,000 200,000
TOTAL MUNICIPAL NOTES
(Cost $900,000) 900,000
TOTAL INVESTMENTS - 100%
(Cost $20,135,282) $ 20,172,863
FUTURES CONTRACTS
EXPIRATION UNDERLYING FACE UNREALIZED
DATE AMOUNT AT VALUE GAIN/(LOSS)
PURCHASED
2 Muni Bond Contracts Sep. 1996 $230,581 $ (3,268)
THE FACE VALUE OF FUTURES PURCHASED AS A PERCENTAGE OF TOTAL INVESTMENT IN
SECURITIES - 1.1%
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
3. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
4. Security collateralized by an amount sufficient to pay interest and
principal.
5. Security was pledged to cover margin requirements for futures contracts.
At the period end, the value of securities pledged amounted to $243,000.
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 90.6% AAA, AA, A 89.4%
Baa 2.7% BBB 2.5%
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 0.0% .
The distribution of municipal securities by revenue source, as a percentage
of total value of invest- ment in securities, is as follows:
General Obligation 30.1%
Special Tax 18.2
Escrowed/pre-Refunded 11.8
Electric Revenue 11.6
Education 8.6
Water & Sewer 8.3
Transportation 5.8
Others (individually less than 5%) 5.6
TOTAL 100.0%
INCOME TAX INFORMATION
At August 31, 1996, the aggregate cost of investment securities for income
tax purposes was $20,135,282. Net unrealized appreciation aggregated
$37,581, of which $262,160 related to appreciated investment securities and
$224,579 related to depreciated investment securities.
The fund hereby designates approximately $11,683 as a capital gain dividend
for the purpose of the dividend paid deduction.
At August 31, 1996, the fund was required to defer $12,125 of losses on
futures contracts and options.
SPARTAN ARIZONA MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1996
ASSETS
Investment in securities, at value (cost $20,135,282) - $ 20,172,863
See accompanying schedule
Cash 27,229
Interest receivable 215,684
TOTAL ASSETS 20,415,776
LIABILITIES
Payable for fund shares redeemed $ 4,000
Distributions payable 13,108
Accrued management fee 9,588
Payable for daily variation on futures contracts 875
TOTAL LIABILITIES 27,571
NET ASSETS $ 20,388,205
Net Assets consist of:
Paid in capital $ 20,259,293
Undistributed net interest income 2,053
Accumulated undistributed net realized gain (loss) 92,546
on investments
Net unrealized appreciation (depreciation) on 34,313
investments
NET ASSETS, for 1,948,997 shares outstanding $ 20,388,205
NET ASSET VALUE, offering price and redemption price $10.46
per share ($20,388,205 (divided by) 1,948,997 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED AUGUST 31, 1996
INTEREST INCOME $ 938,349
EXPENSES
Management fee $ 100,646
Non-interested trustees' compensation 72
Total expenses before reductions 100,718
Expense reductions (45,460) 55,258
NET INTEREST INCOME 883,091
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 252,719
Futures contracts (34,114) 218,605
Change in net unrealized appreciation (depreciation) on:
Investment securities (409,311)
Futures contracts (5,960) (415,271)
NET GAIN (LOSS) (196,666)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 686,425
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 11, 1994
AUGUST 31, (COMMENCEMENT
1996 OF OPERATIONS) TO
AUGUST 31, 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 883,091 $ 377,244
Net interest income
Net realized gain (loss) 218,605 114,520
Change in net unrealized appreciation (depreciation) (415,271) 449,584
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 686,425 941,348
FROM OPERATIONS
Distributions to shareholders (883,091) (377,244)
From net interest income
From net realized gain (227,134) -
TOTAL DISTRIBUTIONS (1,110,225) (377,244)
Share transactions 11,241,244 17,301,630
Net proceeds from sales of shares
Reinvestment of distributions 947,480 317,012
Cost of shares redeemed (4,827,267) (4,737,604)
Redemption fees 2,933 2,473
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 7,364,390 12,883,511
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 6,940,590 13,447,615
NET ASSETS
Beginning of period 13,447,615 -
End of period $ 20,388,205 $ 13,447,615
OTHER INFORMATION
Shares
Sold 1,053,176 1,696,864
Issued in reinvestment of distributions 89,057 30,535
Redeemed (457,132) (463,503)
Net increase (decrease) 685,101 1,263,896
</TABLE>
FINANCIAL HIGHLIGHTS
YEAR ENDED OCTOBER 11, 1994
AUGUST 31, (COMMENCEMENT
OF OPERATIONS) TO
1996 AUGUST 31, 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.640 $ 10.000
Income from Investment Operations .514 .504
Net interest income
Net realized and unrealized gain (loss) (.022) .637
Total from investment operations .492 1.141
Less Distributions (.514) (.504)
From net interest income
From net realized gain (.160) -
Total distributions (.674) (.504)
Redemption fees added to paid in capital .002 .003
Net asset value, end of period $ 10.460 $ 10.640
TOTAL RETURN B 4.72% 11.74%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 20,388 $ 13,448
Ratio of expenses to average net assets .30% C .06% A,
C
Ratio of net interest income to average net assets 4.82% 5.54% A
Portfolio turnover rate 32% 56% A
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in share price over a
given period, reinvestment of its dividends (or income), and the effect of
the fund's $5 account closeout fee on an average size account. Yield
measures the income paid by a fund. Since a money market fund tries to
maintain a $1 share price, yield is an important measure of performance. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the total returns and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1996 PAST 1 LIFE OF
YEAR FUND
Spartan Arizona Municipal Money Market 3.52% 7.07%
All Tax-Free Money Market Funds Average 3.09% 5.98%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
October 11, 1994. For example, if you invested $1,000 in a fund that had a
5% return over the past year, the value of your investment would be $1,050.
To measure how the fund's performance stacked up against its peers, you can
compare it to the all tax-free money market funds average, which reflects
the performance of 412 all tax-free money market funds with similar
objectives tracked by IBC Financial Data, Inc. during the period covered by
this report. (The periods covered by the IBC Financial Data, Inc. numbers
are the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1996 PAST 1 LIFE OF
YEAR FUND
Spartan Arizona Municipal Money Market 3.52% 3.68%
All Tax-Free Money Market Funds Average 3.09% 3.21%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
8/28/95 11/27/95 2/26/96 6/3/96 9/2/96
Spartan Arizona Municipal 3.71% 3.81% 3.28% 3.42% 3.27%
Money Market
If Fidelity had not reimburse 3.31% 3.51% 2.98% 3.27% 3.12%
d
certain fund expenses
All Tax-Free 3.21% 3.30% 2.87% 3.04% 2.96%
Money Market Funds
Average
Spartan Arizona Municipal 6.14% 6.28% 5.41% 5.64% 5.39%
Money Market - Tax-equivale
nt
If Fidelity had not reimburse 5.48% 5.79% 4.91% 5.39% 5.14%
d
certain fund expenses
</TABLE>
Row: 1, Col: 1, Value: 3.71
Row: 1, Col: 2, Value: 3.21
Row: 2, Col: 1, Value: 3.81
Row: 2, Col: 2, Value: 3.3
Row: 3, Col: 1, Value: 3.28
Row: 3, Col: 2, Value: 2.87
Row: 4, Col: 1, Value: 3.42
Row: 4, Col: 2, Value: 3.04
Row: 5, Col: 1, Value: 3.27
Row: 5, Col: 2, Value: 2.96
Spartan Arizona
Municipal Money
Market
All Tax-Free
Money Market
Funds Average
5% -
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. You can compare these
yields to the all tax-free money market funds average. Or you can look at
the fund's tax-equivalent yield, which is based on a combined effective
1996 federal and state income tax rate of 39.33%. Figures for the all
tax-free money market funds average are from IBC Financial Data, Inc. A
portion of the fund's income may be subject to the alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Deborah Watson became Portfolio Manager of Spartan
Arizona Municipal Money Market on August 1, 1996
Q. DEB, THERE HAVE BEEN SOME SHARP FLUCTUATIONS IN MARKET SENTIMENT OVER
THE PAST 12 MONTHS. CAN YOU SUMMARIZE THEM FOR US?
A. Sure. The investment climate has undergone a dramatic shift during the
course of the fund's fiscal year. In July 1995, just before the period
began, the Federal Reserve took steps to stimulate economic growth by
lowering the rate banks charge each other for overnight loans - known as
the federal funds rate - one-quarter percentage point. That set the mood
for the fall. With the economy growing at a moderate rate and inflationary
pressures mild, most market participants anticipated further rate cuts.
Those expectations were confirmed in December, when the Fed lowered the
federal funds rate another one-quarter percentage point and again in
January 1996, bringing the federal funds rate down to 5.25%. As late as
mid-February, most market participants believed we had not yet reached the
end of the Fed's rate-cutting cycle.
Q. WHAT PROMPTED THE TURNAROUND?
A. A series of factors, really. The first was Fed Chairman Alan Greenspan's
congressional testimony in mid-February, which left the impression that the
economy was already responding
favorably to lower interest rates. That suspicion was confirmed with the
release of the February employment report, which came in several times
higher than most analysts' expectations. From March onward, it became
increasingly apparent that the economy was in no need of further stimulus
from lower interest rates.
Q. HOW DID YOU MANAGE THE FUND IN LIGHT OF CHANGING CONDITIONS?
A. When the period began, the fund had a fairly aggressive average maturity
of around 60 days. Often when interest rates are falling - as they were
then - it makes sense to lock in current rates by extending the fund's
average maturity. By the end of the calendar year, the fund's average
maturity was even longer - almost 75 days. Then as the economy began
showing signs of strength, putting upward pressure on rates, Scott Orr, the
fund's former manager, sought greater flexibility by lowering the fund's
average maturity. He did so by selling longer-term fixed-rate securities
and replacing them with variable rate demand notes, or VRDNs. VRDNs pay
interest at a rate that resets in line with prevailing rates at short-term
intervals. The fund's average maturity fell to 38 days at the end of April
and has remained in that general range ever since. It was 43 days at the
end of August.
Q. HOW DID THE FUND PERFORM?
A. Better than its average competitor. The fund's seven-day yield on August
31, 1996 was 3.26%, compared to 3.72% a year earlier. The latest yield was
the equivalent of a taxable yield of 5.37% for Arizona investors in the
combined 39.33% state and federal tax bracket. The fund's total return for
the year was 3.52%. That beat the average total return of 3.09% during the
same period for the all tax-free money market funds average, according to
IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. When I took over the fund at the beginning of August, most market
participants were preparing for an imminent rate increase. Since then,
economic indicators have been mixed. I still think a rate increase is
possible. However, if it occurs, I don't believe it will be more than
one-half percentage point over the next six months. As seasonal
fluctuations in supply create buying opportunities among longer-term
securities, I may from time to time extend the fund's average maturity.
Overall, however, the markets remain volatile, suggesting the need for a
cautious approach going forward. That probably means I'll aim for an
average maturity of 35 to 45 days.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high current tax-free
income for Arizona residents
while maintaining a stable
$1 share price
START DATE: October 11, 1994
SIZE: as of August 31, 1996,
more than $82 million
MANAGER: Deb Watson,
since August 1996; manager,
Fidelity Connecticut
Municipal Money Market,
Spartan Connecticut
Municipal Money Market,
Fidelity Michigan Municipal
Money Market, since August
1996; Spartan Pennsylvania
Municipal Money Market,
since 1989; Fidelity
Municipal Money Market,
Capital Reserves: Municipal
Money Market, 1985-August
1996; Spartan California
Municipal Money Market,
1989-1996; Fidelity
California Municipal Money
Market, 1988-August 1996;
joined Fidelity in 1982
(checkmark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
8/31/96 2/29/96 8/31/95
0 - 30 69 62 64
31 - 90 20 10 19
91 - 180 4 21 5
181 - 397 7 7 12
WEIGHTED AVERAGE MATURITY
8/31/96 2/29/96 8/31/95
Spartan Arizona
Municipal Money Market 43 days 61 days 60 days
All Tax-Free Money
Market Funds Average * 55 days 46 days 53 days
ASSET ALLOCATION
AS OF AUGUST 31, 1996 AS OF FEBRUARY 29, 1996
Row: 1, Col: 1, Value: 65.0
Row: 1, Col: 2, Value: 23.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 12.0
Row: 1, Col: 1, Value: 54.0
Row: 1, Col: 2, Value: 17.0
Row: 1, Col: 3, Value: 1.0
Row: 1, Col: 4, Value: 8.0
Row: 1, Col: 5, Value: 20.0
Variable rate
demand notes
(VRDNs) 65%
Commercial
paper 23%
Tender bonds 0%
Municipal
notes 0%
Other 12%
Variable rate
demand notes
(VRDNs) 54%
Commercial
paper 17%
Tender bonds 1%
Municipal
notes 8%
Other 20%
* SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
INVESTMENTS AUGUST 31, 1996
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - 97.6%
Arizona Ed. Loan Mktg. Corp. Series 1991 A, 3.55%,
LOC Dresdner Bank, VRDN (b) $ 200,000 $ 200,000
Arizona Health Facs. Auth. Rev. VRDN:
(Samcor 1986 Loan Pool-Samaritan Health Care):
3.50% (FGIC Insured) (BPA Chemical Bank) 900,000 900,000
3.55%, LOC Bank One, Arizona 1,500,000 1,500,000
(Voluntary Hosp. Federation Pooled Loan Prog.):
Series 1985 A, 3.50% (FGIC Insured)
(Liquidity Facility Citibank) 225,000 225,000
Series 1985 B, 3.50% (FGIC Insured)
(Liquidity Facility Citibank) 200,000 200,000
Arizona Trans. Auth. Rev. Bonds (Maricopa County Reg'l.
Area Road Fund) Series 1995A-95B, 4% 7/1/97
(AMBAC Insured) 1,000,000 1,001,168
Arizona Water Conservation Dist. Bonds:
Series B, 5.80% 11/1/96 500,000 501,735
6.90% 11/1/96 1,000,000 1,005,253
Chandler Ind. Dev. Auth. Multi-Family Hsg. Rev.
(Southpark Apts.) 3.50%, LOC Citibank, VRDN 625,000 625,000
Coconino County Poll. Cont. Corp. Poll. Cont. Rev.
(Arizona Pub. Svc. Co. Navajo Proj.) Series 1994 A, 4%,
LOC Bank of America, VRDN (b) 4,150,000 4,150,000
Coconino Poll. Cont. Rev. (Tucson Elec. Pwr. Co. Proj.) Series A,
3.60%, LOC Canadian Imperial Bank of Commerce,
VRDN (b) 4,000,000 4,000,000
Gila County Ind. Dev. Auth. Rev. (Cobre Valley Hosp.)
Series 1995, 3.50%, LOC Bank One, VRDN 700,000 700,000
Glendale Ind. Dev. Auth. Rev. (Superior Bedding Co. Proj.)
Series 1994, 3.60%,
LOC Harris Bank & Trust Co., VRDN (b) 1,100,000 1,100,000
Glendale School Dist. #205 Participating VRDN,
Series 1996 F, 3.75% (FGIC Insured)
(Liquidity Facility Norwest Bank) (c) 2,600,000 2,600,000
Maricopa County Ind. Dev. Auth. Multi-Family Hsg.
Auth. Rev. VRDN (b):
(Privado Park Apt. Proj.) Series 1994 A, 3.60%,
LOC Bank One 1,300,000 1,300,000
(Shadow Creek Apt. Proj.) Series 1994 C, 3.60%,
LOC Bank One Arizona 500,000 500,000
Maricopa County Poll. Cont. Rev. Bonds
(Southern California Edison Co.):
Series 1985 E, 3.65%, tender 10/29/96 900,000 900,000
Series 1985 F:
3.70%, tender 10/23/96 1,300,000 1,300,000
3.65%, tender 12/2/96 1,000,000 1,000,000
Maricopa County School Impt. Bonds
(Washington Elementary School Dist. #6) Series 1996 A,
7% 7/1/97 (AMBAC Insured) 2,000,000 2,049,238
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Mohave County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Utils.) Series 1993 E (b):
3.65%, tender 10/7/96 $ 1,100,000 $ 1,100,000
3.65%, tender 11/8/96 2,500,000 2,500,000
3.75%, tender 11/13/96 1,000,000 1,000,000
Peoria Dev. Auth. Participating VRDN, Series 1996 B,
3.75% (Liquidity Facility Norwest Bank) (c) 2,750,000 2,750,000
Phoenix Civic Impt. Corp. Arpt. Rev. Series 1995, 3.55%,
LOC Landesbank Hessen-Thuringen, VRDN (b) 3,900,000 3,900,000
Phoenix Gen. Oblig. Series 1995-2, 3.75%,
LOC Morgan Guaranty Trust Co., VRDN 900,000 900,000
Phoenix Ind. Dev. Auth. Ind. Dev. Rev. (Hypercom Proj.)
Series 1996, 3.65% LOC Bank One, Arizona, VRDN (b) 1,000,000 1,000,000
Phoenix Ind. Dev. Board Auth. Multi-Family Hsg. Rev., VRDN:
(Bell Square Apt. Proj.) Series 1995, 3.70%,
LOC General Electric Capital Corp. 2,000,000 2,000,000
(Lynwood Apt. Proj.) Series 1994, 3.50%, LOC FHLB 1,900,000 1,900,000
(Paradise Lakes Apt. Proj.) Series 1995, 3.70%,
LOC General Electric Capital Corp 500,000 500,000
(Venrana Palms Apt.) Series 1994, 3.55%,
LOC First Interstate Bank (b) 5,210,000 5,210,000
Pima County Ind. Dev. Auth., VRDN:
Multi-Family Hsg. Rev. (La Cholla Apt. Proj.)
Series 1996, 3.50%, LOC Texas Commerce Bank 2,000,000 2,000,000
Multi-Family Hsg. Rev. (Quail Ridge Apt.-B) 3.60%,
LOC Bank One (b) 1,400,000 1,400,000
(Tucson Elec. Pwr. Co. Proj.) Series 1990 A, 3.60%,
LOC Bankers Trust Co. (b) 1,700,000 1,700,000
Pima County School Dist. #1 Participating VRDN,
Series 1996 D, 3.75% (FGIC Insured) (Liquidity Facility
Norwest Bank NA, Minnesota) (c) 2,000,000 2,000,000
Pinal County Ind. Dev. Auth. Hosp. Rev.
(Casa Grande Medical Ctr. Proj.) Series 1995, 3.55%,
LOC Chemical Bank, VRDN 4,000,000 4,000,000
Pinal County Ind. Dev. Auth. Ind. Dev. Rev.
(Sunbelt Refining Co. LP Proj.) Series 1988, 3.65%,
LOC Bankers Trust Co., VRDN (b) 3,400,000 3,400,000
Pinal County Ind. Dev. Poll. Cont. Rev.
(Magna Copper Co. Proj.) Series 1984, 3.75%,
LOC Nat'l. Westminster Bank PLC, VRDN 2,000,000 2,000,000
Pinal County School Impt. Bonds (Casa Grande Union
High School Dist. #82 Proj.) Series 1996 B, 6.50% 7/1/97
(AMBAC Insured) 1,125,000 1,148,754
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Salt River Proj. Agricultural Impt. & Pwr. Dist.:
Bonds:
6.75% 1/1/97 $ 500,000 $ 504,925
7.50% 1/1/97 2,000,000 2,064,750
CP:
3.60% 9/17/96 2,000,000 2,000,000
3.70% 10/15/96 2,000,000 2,000,000
3.65% 10/22/96 1,300,000 1,300,000
3.60% 10/24/96 2,000,000 2,000,000
Tempe Gen. Oblig. Bonds 8.20% 7/1/97 235,000 242,952
Yavapi County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Utils.) Series 1993 (b):
3.65%, tender 9/16/96 1,500,000 1,500,000
3.65%, tender 11/14/96 1,100,000 1,100,000
Yuma Ind. Dev. Auth. Ind. Rev., VRDN (b):
(Ardco Inc. Proj.) 3.60%,
LOC Harris Trust & Savings Bank 800,000 800,000
(Buchbinder Proj.) Series 1995, 3.60%,
LOC Harris Trust & Savings Bank 1,225,000 1,225,000
Yuma Muni. Prop. Corp. Subordinate Lien Bonds
Series 1996, 4.25% 7/1/97 (AMBAC Insured) 1,160,000 1,163,120
82,066,895
PUERTO RICO - 2.4%
Puerto Rico Gov't. Dev. Bank 3.60% 10/4/96, CP 2,000,000 2,000,000
TOTAL INVESTMENTS - 100% $ 84,066,895
Total Cost for Income Tax Purposes $ 84,067,076
SECURITY TYPE ABBREVIATIONS
CP - Commercial Paper
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
3. Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At August 31, 1996, the fund had a capital loss carryforward of
approximately $10,700 which will expire on August 31, 2004.
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AUGUST 31, 1996
ASSETS
Investment in securities, at value - $ 84,066,895
See accompanying schedule
Interest receivable 408,961
TOTAL ASSETS 84,475,856
LIABILITIES
Payable to custodian bank $ 10,793
Payable for investments purchased 1,164,627
Share transactions in process 527,939
Distributions payable 7,336
Accrued management fee 24,033
TOTAL LIABILITIES 1,734,728
NET ASSETS $ 82,741,128
Net Assets consist of:
Paid in capital $ 82,751,864
Accumulated net realized gain (loss) on investments (10,736)
NET ASSETS, for 82,751,864 shares outstanding $ 82,741,128
NET ASSET VALUE, offering price and redemption price $1.00
per share ($82,741,128 (divided by) 82,751,864 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED AUGUST 31, 1996
INTEREST INCOME $ 2,451,656
EXPENSES
Management fee $ 334,209
Non-interested trustees' compensation 256
Total expenses before reductions 334,465
Expense reductions (186,158) 148,307
NET INTEREST INCOME 2,303,349
REALIZED AND UNREALIZED GAIN (LOSS) (10,724)
Net realized gain (loss) on investment securities
Increase (decrease) in net unrealized gain from (215)
accretion
of market discount
NET GAIN (LOSS) (10,939)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,292,410
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 11, 1994
AUGUST 31, (COMMENCEMENT
1996 OF OPERATIONS) TO
AUGUST 31, 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 2,303,349 $ 984,652
Net interest income
Net realized gain (loss) (10,724) (12)
Increase (decrease) in net unrealized gain from (215) 215
accretion of market discount
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,292,410 984,855
FROM OPERATIONS
Distributions to shareholders from net interest income (2,303,349) (984,652)
Share transactions at net asset value of $1.00 per share 118,384,316 104,017,553
Proceeds from sales of shares
Reinvestment of distributions from net interest income 2,241,032 967,585
Cost of shares redeemed (90,439,136) (52,419,486)
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES 30,186,212 52,565,652
RESULTING FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 30,175,273 52,565,855
NET ASSETS
Beginning of period 52,565,855 -
End of period $ 82,741,128 $ 52,565,855
</TABLE>
FINANCIAL HIGHLIGHTS
YEAR ENDED OCTOBER 11, 1994
AUGUST 31, (COMMENCEMENT)
OF OPERATIONS TO
1996 AUGUST 31, 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 1.000 $ 1.000
Income from Investment Operations .035 .034
Net interest income
Less Distributions (.035) (.034)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000
TOTAL RETURN B 3.52% 3.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 82,741 $ 52,566
Ratio of expenses to average net assets .22% C .06% A, C
Ratio of net interest income to average net assets 3.44% 3.91% A
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Arizona Municipal Income Fund (the income fund) is a fund of
Fidelity Union Street Trust. Spartan Arizona Municipal Money Market Fund
(the money market fund) is a fund of Fidelity Union 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
Union Street Trust and Fidelity Union Street Trust II (the trusts) are
organized as a Massachusetts business trust and a Delaware business trust,
respectively. Each fund is authorized to issue an unlimited number of
shares. The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to make
certain estimates and assumptions at the date of the financial statements.
The following summarizes the significant accounting policies of the income
fund and the money market fund:
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix system
and/or appraisals by a pricing service, both of which consider market
transactions and dealer-supplied valuations. Short-term securities maturing
within sixty days of their purchase date are valued either at amortized
cost or original cost plus accrued interest, both of which approximate
current value. Securities for which quotations are not readily available
are valued at their fair value as determined in good faith under
consistently applied procedures under the general supervision of the Board
of Trustees.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
the fiscal year. The schedules of investments include information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS -
CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions, market discount and losses deferred due to
futures and options and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net interest income and
accumulated undistributed net realized gain (loss) on investments may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
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 use futures and options
contracts to manage its exposure to the bond markets and to fluctuations in
interest rates. Buying futures, writing puts, and buying calls tend to
increase the fund's exposure to the underlying instrument. Selling futures,
buying puts, and writing calls tend to decrease the fund's exposure to the
underlying instrument, or hedge other fund investments. Futures contracts
involve, to varying degrees, risk of loss in excess of the futures
variation margin reflected in the Statement of Assets and Liabilities. The
underlying face amount at value of any open futures contracts at period
end, is shown in the schedule of investments under the caption "Futures
Contracts." This amount reflects each contract's exposure to the underlying
instrument at period end. Losses may arise from changes in the value of the
underlying instruments, if there is an illiquid secondary market for the
contracts, or if the counterparties do not perform under the contracts'
terms.
Futures contracts are valued at the settlement price established each day
by the board of trade or exchange on which they are traded. Exchange-traded
options are valued using the last sale price or, in the absence of a sale,
the last offering price. Options traded over-the-counter are valued using
dealer-supplied valuations.
3. PURCHASES AND SALES OF INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $12,374,867 and $5,526,109, respectively.
The market value of futures contracts opened and closed during the period
amounted to $4,433,119 and $4,533,559, 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 collect
certain transaction fees from the funds' shareholders which amounted to
$285 and $761 for the period for the income and money market funds,
respectively.
SUB-ADVISER FEE. As the money market fund's investment sub-adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the funds' operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above a specified percentage of average net assets.
(I) INCOME FUND. For the period, this expense limitation ranged from an
annual rate of .10% to .40% of average net assets and the reimbursement
reduced expenses by $44,726. Effective June 1, 1996, the fund's expense
limitation was eliminated.
(II) MONEY MARKET FUND. For the period, this expense limitation ranged from
an annual rate of .10% to .35% of average net assets and the reimbursement
reduced expenses by $184,361.
In addition, FMR has entered into arrangements on behalf of each fund with
each fund's custodian and transfer agent whereby interest earned on
uninvested cash balances was used to offset a portion of each fund's
expenses. During the period, the income and money market funds' expenses
were reduced by $734 and $1,797, respectively, under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Union Street Trust and Fidelity Union Street
Trust II and the Shareholders of Spartan Arizona Municipal Income Fund and
Spartan Arizona Municipal Money Market Fund:
We have audited the accompanying statements of assets and liabilities of
Fidelity Union Street Trust: Spartan Arizona Municipal Income Fund (income
fund) and Fidelity Union Street Trust II: Spartan Arizona Municipal Money
Market Fund (money market fund), including the schedules of portfolio
investments as of August 31, 1996, the related statements of operations for
the year then ended, the statements of changes in net assets and the
financial highlights for the year then ended, and for the period October
11, 1994 (commencement of operations) to August 31, 1995. 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 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 August 31, 1996, 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 Union Street Trust: Spartan Arizona Municipal Income Fund and
Fidelity Union Street Trust II: Spartan Arizona Municipal Money Market Fund
as of August 31, 1996, the results of their operations for the year then
ended, the changes in their net assets and the financial highlights for the
year then ended, and for the period October 11, 1994 (commencement of
operations) to August 31, 1995, in conformity with generally accepted
accounting principles.
/s/COOPERS & LYBRAND L.L.P.
Boston, MA
October 4, 1996
DISTRIBUTIONS
The Board of Trustees of Spartan Arizona Municipal Income Fund voted to pay
on October 7, 1996 to shareholders of record at the opening of business on
October 4, 1996 a distribution of $.05 derived from capital gains realized
from sales of portfolio securities.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
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
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, 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
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
56 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
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, 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
2701 Drexel Drive
Houston, TX
1010 Lamar Street
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
511 Pine Street
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
(registered trademark)
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
Fred L. Henning, Jr., Vice President - INCOME FUND
Sarah H. Zenoble, Vice President - MONEY MARKET FUND
Deborah F. Watson, Vice President - MONEY MARKET FUND
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Thomas D. Maher, Assistant
Vice President - MONEY MARKET FUND
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer - MONEY MARKET FUND
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(registered trademark)
DAILY INCOME
TRUST
ANNUAL REPORT
AUGUST 31, 1996
CHECK PAGE NUMBERS !!!
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
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 past six
months.
INVESTMENTS 9 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 24 The auditors' opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first eight
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that can help investors in every type of market.
First, take a long-term approach when investing. If you can afford to leave
your money invested through the inevitable ups and downs of financial
markets, you will greatly reduce your vulnerability to any single decline.
Over time, for example, stock prices have gone up - and have significantly
outperformed other types of investments and stayed ahead of inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different
companies. You can increase your diversification by investing in a number
of different stock funds, or in different investment categories, such as
bonds. You should also keep money you'll need in the near future in a more
stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.SM
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in 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 AUGUST 31, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Daily Income Trust 5.25% 22.89% 74.06%
All Taxable Money Market Funds Average 5.07% 21.99% 72.26%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or 10 years. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. To measure how the
fund's performance stacked up against its peers, you can compare it to the
all taxable money market funds average which reflects the performance of
818 taxable money market funds with similar objectives tracked by IBC
Financial Data, Inc. over the past year. (The periods covered by the IBC
Financial Data, Inc. numbers are the closest available match to those
covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Daily Income Trust 5.25% 4.21% 5.70%
All Taxable Money Market Funds Average 5.07% 4.05% 5.58%
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>
8/29/95 11/28/95 2/27/96 5/28/96 9/3/96
5.45% 5.35% 5.07% 4.91% 4.96%
Fidelity Daily Income Trust
All Taxable Money 5.25% 5.26% 4.78% 4.74% 4.83%
Market Funds Average
8/30/95 11/29/95 2/28/96 5/29/96 8/28/96
2.84% 2.86% 2.76% 2.66% 2.68%
MMDA
</TABLE>
Row: 1, Col: 1, Value: 5.45
Row: 1, Col: 2, Value: 5.25
Row: 1, Col: 3, Value: 2.84
Row: 2, Col: 1, Value: 5.35
Row: 2, Col: 2, Value: 5.26
Row: 2, Col: 3, Value: 2.86
Row: 3, Col: 1, Value: 5.07
Row: 3, Col: 2, Value: 4.78
Row: 3, Col: 3, Value: 2.76
Row: 4, Col: 1, Value: 4.91
Row: 4, Col: 2, Value: 4.74
Row: 4, Col: 3, Value: 2.66
Row: 5, Col: 1, Value: 4.96
Row: 5, Col: 2, Value: 4.83
Row: 5, Col: 3, Value: 2.68
Fidelity Daily
Income Trust
All Taxable
Money Market
Funds Average
MMDA
6% -
5% -
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 the all taxable money market funds average and the
bank money market deposit account (MMDA) average. Figures for the all
taxable money market funds average are from IBC Financial Data, Inc. The
MMDA average is supplied by BANK RATE MONITOR.(Trademark)
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND 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, CAN YOU BRING US UP-TO-DATE ON HOW THE INTEREST-RATE ENVIRONMENT
HAS CHANGED DURING THE PAST YEAR?
A. Sure. A year ago when the period began, the Federal Reserve was in an
easing mode, lowering interest rates in order to stimulate the economy.
During the third quarter of 1995, the economy gathered steam, and it seemed
as if Fed policy was working. But by the fourth quarter, harsh winter
weather and a protracted budget crisis undermined the recovery and the Fed
resumed cutting rates. In December 1995 and again in January 1996, the Fed
lowered the rate banks charge each other for overnight loans - known as the
federal funds rate - a total of one-half percentage point, to 5.25%. The
consensus among market participants was that still further rate cuts would
follow.
Q. BUT THOSE CUTS NEVER MATERIALIZED. WHY?
A. In mid-February, Fed Chairman Alan Greenspan suggested to the Senate
Banking Committee that the economy was fundamentally sound and in little
danger of falling into recession. That raised the first doubts about the
need for further rate cuts. Then came the February employment report, which
showed the economy was generating new jobs at a
rate four times greater than some analyst's expectations. That prompted a
dramatic sell-off in securities markets and sent interest rates sharply
higher. Since then, the economic data have been surprisingly strong,
translating into what the Fed calls "above-trend" growth during the second
quarter of 1996. As the period ended, monetary policy remained unchanged as
economists debated the health of the economy and tried to predict the
future course of monetary policy.
Q. HOW DID YOU RESPOND TO CHANGING CONDITIONS?
A. When the period began, the fund's average maturity was 52 days, which I
consider neutral to aggressive. As interest rates fell, I gradually
extended the fund's average maturity, reaching a high of 65 days near
year-end and holding it there until early spring. Since then, as rates have
stabilized and begun to head back up, I've brought the fund's average
maturity back to a more neutral 45-50 days that gives me ample liquidity
and flexibility to respond to changing conditions.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on August 31, 1996, was 4.97%, compared to
5.49% a year ago. For the year ended August 31, 1996, the fund's total
return was 5.25%. That compares favorably with the average total return of
5.07% during the same period for the all taxable money market funds
average, according to IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. My forecast calls for a modest rate increase by the Fed between now and
year-end. Whether that's more likely to occur before or after the November
election is debatable. In the past, Fed officials have been averse to
changing policy on the eve of a presidential election. However, I believe
the Fed would not hesitate to act at any time if the inflation data were
strong enough, no matter how awkward the timing. My goal going forward will
be to maintain flexibility and build liquidity so that I can respond
immediately to a rate increase. As a hedge against Fed policy remaining
stable, I hope to take advantage of buying opportunities as they arise,
selectively adding higher yielding, longer-term maturities. For the
foreseeable future, that probably means maintaining a conservative average
maturity of around 45 days.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: to provide current
income while maintaining a
stable $1.00 share price by
investing in high-quality,
short-term money market
securities
TRADING SYMBOL: FDTXX
START DATE: May 31, 1974
SIZE: as of August 31, 1996,
more than $2.3 billion
MANAGER: Burnell Stehman,
since 1985; manager,
Fidelity Daily Income Trust,
1979-
1983; manager, several
institutional money market
funds; joined Fidelity in 1979
(checkmark)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
8/31/96 2/29/96 8/31/95
0 - 30 45 47 40
31 - 90 40 36 46
91 - 180 15 15 13
181 - 397 0 2 1
WEIGHTED AVERAGE MATURITY
8/31/96 2/29/96 8/31/95
Fidelity Daily Income Trus 50 days 52 days 52 days
t
All Taxable Money
Market Funds Average* 51 days 56 days 54 days
ASSET ALLOCATION
AS OF AUGUST 31, 1996 AS OF FEBRUARY 29, 1996
Row: 1, Col: 1, Value: 42.0
Row: 1, Col: 2, Value: 37.0
Row: 1, Col: 3, Value: 19.0
Row: 1, Col: 4, Value: 2.0
Row: 1, Col: 1, Value: 44.0
Row: 1, Col: 2, Value: 36.0
Row: 1, Col: 3, Value: 18.0
Row: 1, Col: 4, Value: 2.0
Commercial
paper 42%
Bank CDs, BAs,
TDs, and notes 37%
Government
securities 19%
Other 2%
Commercial
paper 44%
Bank CDs, BAs,
TDs, and notes 36%
Government
securities 18%
Other 2%
* SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
INVESTMENTS AUGUST 31, 1996
Showing Percentage of Total Value of Investments
BANKERS' ACCEPTANCES - 1.7%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Chase Manhattan Bank
10/17/96 5.49% $ 2,487 $ 2,470
10/31/96 5.45 1,723 1,708
11/6/96 5.48 6,557 6,493
11/15/96 5.48 15,714 15,539
NationsBank of Texas
10/30/96 5.50 13,125 13,010
TOTAL BANKERS' ACCEPTANCES 39,220
CERTIFICATES OF DEPOSIT - 6.5%
Bank of New York NY
4/29/97 5.80 7,000 7,000
Bank One, Akron
9/12/96 5.43 25,000 25,000
Chase Manhattan Bank
1/8/97 5.85 25,000 25,000
First Tennessee Bank, N.A. Memphis
10/4/96 5.36 25,000 25,000
10/21/96 5.34 4,000 4,000
Mellon Bank, N.A.
10/7/96 5.38 7,000 7,000
11/19/96 5.38 15,000 15,000
1/29/97 5.60 10,000 10,000
Old Kent Bank - Michigan
11/27/96 5.50 10,000 10,000
U.S. National Bank of Oregon
9/24/96 5.28 15,000 15,000
9/24/96 5.30 10,000 10,000
TOTAL CERTIFICATES OF DEPOSIT 153,000
COMMERCIAL PAPER - 41.6%
A.H. Robins Company, Incorporated
9/25/96 5.35 4,000 3,986
American Brands, Inc.
11/14/96 5.40 10,000 9,891
American Express Credit Corp.
10/11/96 5.35 15,000 14,912
American Home Products
9/26/96 5.36 5,000 4,981
9/27/96 5.36 4,000 3,985
Asset Securitization Cooperative Corporation
10/1/96 5.45 5,000 4,977
10/15/96 5.33 5,000 4,968
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Asset Securitization Cooperative Corporation - continued
10/22/96 5.35% $ 12,000 $ 11,910
11/7/96 5.43 6,000 5,940
Associates Corp. of North America
10/22/96 5.35 3,000 2,977
10/24/96 5.35 2,000 1,984
10/29/96 5.33 10,000 9,915
10/29/96 5.37 25,000 24,786
Bear Stearns Cos., Inc.
9/9/96 5.50 10,000 9,988
10/21/96 5.41 5,000 4,963
11/20/96 5.40 5,000 4,941
CIESCO, L.P.
9/5/96 5.45 10,000 9,994
9/12/96 5.48 10,000 9,983
10/2/96 5.50 14,000 13,934
10/7/96 5.38 15,000 14,920
10/9/96 5.35 20,000 19,888
CIT Group Holdings, Inc.
9/18/96 5.45 15,000 14,962
CPC International Inc.
9/16/96 5.48 11,000 10,975
12/20/96 5.46 15,000 14,755
Citibank Credit Card Master Trust I (Dakota Certificate Program)
9/5/96 5.45 5,000 4,997
9/9/96 5.52 6,000 5,993
9/25/96 5.34 10,000 9,964
11/20/96 5.39 3,000 2,964
CoreStates Capital Corp.
9/5/96 5.42 (a) 10,000 10,000
Corporate Asset Funding Co., Inc.
9/17/96 5.45 20,000 19,952
Dean Witter, Discover & Co.
1/31/97 5.51 20,000 19,546
Disney (Walt) Co.
11/8/96 5.44 10,000 9,900
11/21/96 5.44 5,400 5,336
du Pont (E.I.) de Nemours & Co.
11/19/96 5.35 9,000 8,896
12/3/96 5.41 30,000 29,588
Enterprise Funding Corp.
9/16/96 5.35 7,000 6,984
10/17/96 5.37 1,221 1,213
10/23/96 5.36 4,683 4,647
10/24/96 5.35 3,000 2,977
11/7/96 5.39 10,000 9,901
Fleet Funding Corporation
9/11/96 5.32 5,000 4,993
9/17/96 5.33 12,796 12,766
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Ford Motor Credit Corp.
10/8/96 5.34% $ 15,000 $ 14,918
11/5/96 5.40 17,000 16,836
12/5/96 5.43 15,000 14,789
GTE Corp.
9/26/96 5.40 4,000 3,985
9/27/96 5.38 1,000 996
10/4/96 5.38 3,000 2,985
General Electric Capital Corp.
10/16/96 5.35 10,000 9,934
11/4/96 5.48 25,000 24,763
11/5/96 5.45 10,000 9,904
1/27/97 5.76 15,000 14,655
General Electric Co.
10/22/96 5.35 12,000 11,910
General Motors Acceptance Corp.
9/24/96 5.36 14,000 13,952
11/26/96 5.68 8,000 7,894
12/4/96 5.70 13,000 12,812
2/20/97 5.70 5,000 4,867
2/24/97 5.71 5,000 4,864
2/25/97 5.71 9,000 8,754
Goldman Sachs Group, L.P. (The)
9/23/96 5.33 10,000 9,968
10/18/96 5.39 10,000 9,930
H.J. Heinz Co.
9/23/96 5.33 2,100 2,093
Household Finance Corp.
9/17/96 5.45 25,000 24,940
10/31/96 5.39 10,000 9,911
IBM Corp.
10/23/96 5.32 10,000 9,924
IBM Credit Corp.
9/18/96 5.33 35,000 34,912
Lilly (Eli) & Co.
11/12/96 5.45 15,000 14,841
Lucent Technologies, Inc.
11/18/96 5.41 15,000 14,827
McGraw Hill Companies, Inc.
9/16/96 5.41 15,000 14,967
Merrill Lynch & Co., Inc.
10/21/96 5.52 15,000 14,887
2/4/97 5.63 18,000 17,573
Monsanto Co.
9/10/96 5.45 3,050 3,046
Morgan (J.P.) & Co.
9/5/96 5.11 17,000 16,991
Morgan Stanley Group, Inc.
10/15/96 5.35 10,000 9,935
10/21/96 5.35 5,000 4,963
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Morgan Stanley Group, Inc. - continued
11/12/96 5.40% $ 15,000 $ 14,840
2/3/97 5.77 5,000 4,879
New Center Asset Trust
9/27/96 5.43 10,000 9,962
9/30/96 5.43 2,000 1,991
10/22/96 5.54 1,000 992
12/2/96 5.63 5,000 4,930
2/13/97 5.58 15,000 14,627
Norfolk Southern Corp.
11/6/96 5.47 10,000 9,902
Philip Morris Cos., Inc.
10/30/96 5.50 10,714 10,619
11/7/96 5.40 15,000 14,851
Preferred Receivables Funding Corp.
9/13/96 5.32 30,000 29,947
9/19/96 5.31 6,000 5,984
10/15/96 5.37 6,950 6,905
Sears Roebuck Acceptance Corp.
10/7/96 5.51 5,000 4,973
10/21/96 5.36 3,000 2,978
10/30/96 5.58 10,000 9,910
Sherwood Medical Company
9/5/96 5.42 4,850 4,847
9/26/96 5.35 2,000 1,993
Textron, Inc.
9/6/96 5.49 1,000 999
9/11/96 5.51 2,000 1,997
9/16/96 5.50 3,000 2,993
9/18/96 5.47 2,000 1,995
10/1/96 5.50 2,000 1,991
Transamerica Finance Corp.
11/7/96 5.42 10,000 9,901
TOTAL COMMERCIAL PAPER 972,664
FEDERAL AGENCIES - 19.4%
FEDERAL HOME LOAN BANK - AGENCY COUPONS (A) - 1.5%
9/20/96 5.34 13,000 12,999
9/20/96 5.44 10,000 9,998
10/2/96 5.46 13,000 12,999
35,996
FEDERAL HOME LOAN BANK - DISCOUNT NOTES - 0.9%
9/3/96 5.39 20,000 19,994
FEDERAL AGENCIES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
FEDERAL NATIONAL MORTGAGE ASSOC. - AGENCY COUPONS (A) - 10.9%
9/2/96 5.41% $ 50,000 $ 49,974
9/3/96 (c) 5.33 50,000 49,956
9/3/96 5.44 35,000 35,000
9/3/96 5.46 10,000 9,990
9/20/96 5.44 36,000 35,992
9/20/96 5.47 8,000 7,995
9/29/96 5.35 16,000 15,989
10/17/96 5.56 20,000 19,994
11/1/96 5.59 30,000 29,983
254,873
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 4.0%
1/7/97 5.53 25,000 24,520
2/3/97 5.62 50,000 48,825
2/11/97 5.41 20,000 19,524
92,869
STUDENT LOAN MARKETING ASSOC. - AGENCY COUPONS (A) - 2.1%
10/16/96 5.68 50,000 50,000
TOTAL FEDERAL AGENCIES 453,732
BANK NOTES - 17.7%
Bank of America, NW, N.A.
9/4/96 5.44 (a) 10,000 9,997
9/19/96 5.42 10,000 10,000
Bank of America National Trust & Savings Assoc.
9/3/96 5.43 (a) 13,000 13,000
12/31/96 5.69 5,000 4,999
Bank of New York
9/3/96 5.16 5,000 5,000
Bank of New York - Delaware (a)
10/30/96 5.78 20,000 20,000
Comerica Bank-Detroit (a)
9/1/96 5.45 15,000 15,000
10/2/96 5.58 5,000 5,000
10/27/96 5.68 15,000 14,999
Fifth Third Bank - Cincinnati
11/25/96 5.39 25,000 25,000
First National Bank of Boston
10/7/96 5.41 15,000 15,000
First National Bank of Chicago
9/4/96 5.41 30,000 30,000
BANK NOTES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
First Union National Bank of North Carolina, N.A. (a)
9/27/96 5.51% $ 35,000 $ 34,995
Household Bank FSB
9/16/96 5.50 6,000 6,000
10/22/96 5.35 4,000 4,000
Huntington National Bank
10/30/96 5.73 (a) 15,000 15,000
11/8/96 5.49 25,000 24,999
Key Bank, N.A. (a)
9/3/96 5.39 6,000 5,996
9/3/96 5.40 12,000 11,993
LaSalle National Bank
10/10/96 5.55 25,000 25,000
NBD Bank, N.A. (Michigan)
10/18/96 5.50 25,000 25,000
11/18/96 5.37 10,000 10,000
12/2/96 5.49 25,000 25,000
PNC Bank (a)
9/9/96 5.44 13,000 12,993
9/20/96 5.42 6,000 5,999
9/20/96 5.44 14,000 13,998
Wachovia Bank of North Carolina, N.A. (a)
9/26/96 5.37 25,000 24,998
TOTAL BANK NOTES 413,966
MASTER NOTES (A) - 2.7%
Goldman Sachs Group, L.P. (The)
11/8/96 5.50 13,000 13,000
J.P. Morgan Securities
9/6/96 5.43 36,000 36,000
Norwest Corp.
9/3/96 5.41 15,000 15,000
TOTAL MASTER NOTES 64,000
MEDIUM-TERM NOTES - 5.1%
Beneficial Corp. (a)
10/19/96 5.63 16,000 15,997
11/3/96 5.65 9,000 8,999
Commonwealth Life Insurance Co. (a) (d)
9/3/96 5.65 15,000 15,000
General Motors Acceptance Corp. (a)
11/1/96 5.68 13,000 13,000
2/13/97 5.35 4,000 4,000
MEDIUM-TERM NOTES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Merrill Lynch & Co., Inc. (a)
9/18/96 5.42% $ 10,000 $ 9,998
Morgan Stanley Group, Inc. (a)
9/3/96 5.42 11,000 11,000
Norwest Corp. (a)
9/10/96 5.61 23,000 23,000
PHH Corp.
1/1/97 5.67 10,610 10,677
Transamerica Life Insurance and Annuity Co. (a)
9/15/96 5.61 8,000 8,000
TOTAL MEDIUM-TERM NOTES 119,671
SHORT-TERM NOTES (A) - 3.5%
Capital One Funding Corp. (1995-E)
9/9/96 5.42 4,000 4,000
Capital One Funding Corp. (1996-B)
9/9/96 5.42 6,500 6,500
SMM Trust (1995-N) (b)
11/8/96 5.55 5,000 5,000
SMM Trust (1995-P) (b)
9/15/96 5.66 12,000 12,000
SMM Trust (1996-B) (b)
9/4/96 5.51 8,000 8,000
SMM Trust (1996-I) (b)
9/30/96 5.46 11,000 11,000
SMM Trust (1996-V) (b)
9/26/96 5.62 35,000 35,000
TOTAL SHORT-TERM NOTES 81,500
MUNICIPAL SECURITIES - 0.1%
New York Gen. Oblig.
9/10/96 5.52 3,000 3,000
REPURCHASE AGREEMENTS - 1.7%
MATURITY AMOUNT VALUE (NOTE 1)
(000S) (000S)
In a joint trading account
(U.S. Government Obligations):
dated 8/30/96 due 9/3/96
At 5.31% $ 13,931 $ 13,923
dated 8/21/96 due 9/4/96
At 5.26% 25,051 25,000
TOTAL REPURCHASE AGREEMENTS 38,923
TOTAL INVESTMENTS - 100% $ 2,339,676
Total Cost for Income Tax Purposes $ 2,339,676
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the next interest rate reset date or, when applicable,
the final maturity date.
2. 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 $71,000,000 or 3.1% of net
assets.
3. Security purchased on a delayed delivery basis (see Note 2 of Notes to
Financial Statements).
4. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Commonwealth Life
Insurance Co. 6/26/96 $ 15,000
INCOME TAX INFORMATION
At August 31, 1996, the fund had a capital loss carryforward of
approximately $999,000 of which $345,000, $536,000, $19,000 and $99,000
will expire on August 31, 2001, 2002, 2003 and 2004, respectively.
A total of 5.23% of the dividends distributed during the fiscal year was
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
The fund will notify shareholders in January 1997 of the applicable
percentage for use in preparing 1996 income tax returns.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) AUGUST 31, 1996
ASSETS
Investment in securities, at value (including repurchase $ 2,339,676
agreements of $38,923) - See accompanying
schedule
Cash 18,344
Interest receivable 10,419
TOTAL ASSETS 2,368,439
LIABILITIES
Payable for investments purchased $ 49,956
Delayed delivery
Distributions payable 32
Accrued management fee 627
Other payables and accrued expenses 442
TOTAL LIABILITIES 51,057
NET ASSETS $ 2,317,382
Net Assets consist of:
Paid in capital $ 2,317,754
Accumulated net realized gain (loss) on investments (372)
NET ASSETS, for 2,317,754 shares outstanding $ 2,317,382
NET ASSET VALUE, offering price and redemption price $1.00
per share ($2,317,382 (divided by) 2,317,754 shares)
</TABLE>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED AUGUST 31, 1996
INTEREST INCOME $ 129,292
EXPENSES
Management fee $ 7,441
Transfer agent fees 3,579
Accounting fees and expenses 224
Non-interested trustees' compensation 16
Custodian fees and expenses 45
Registration fees 75
Audit 54
Legal 13
Miscellaneous 15
Total expenses before reductions 11,462
Expense reductions (36) 11,426
NET INTEREST INCOME 117,866
NET REALIZED GAIN (LOSS) ON INVESTMENTS (99)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 117,767
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1996 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 117,866 $ 117,377
Net interest income
Net realized gain (loss) (99) (19)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 117,767 117,358
FROM OPERATIONS
Distributions to shareholders from net interest income (117,866) (117,377)
Share transactions at net asset value of $1.00 per share 7,701,468 6,588,010
Proceeds from sales of shares
Reinvestment of distributions from net interest income 115,356 114,676
Cost of shares redeemed (7,754,895) (6,579,339)
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES 61,929 123,347
RESULTING FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 61,830 123,328
NET ASSETS
Beginning of period 2,255,552 2,132,224
End of period $ 2,317,382 $ 2,255,552
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED AUGUST 31,
1996 1995 1994 1993 1992
SELECTED PER-SHARE DATA
Net asset value, beginning $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
Income from Investment .051 .053 .032 .028 .042
Operations
Net interest income
Less Distributions (.051) (.053) (.032) (.028) (.042)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN 5.25% 5.43% 3.23% 2.83% 4.32%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 2,317 $ 2,256 $ 2,132 $ 2,096 $ 2,502
(in millions)
Ratio of expenses to average .50% .54% .56% .57% .55%
net assets
Ratio of net interest income to 5.11% 5.31% 3.18% 2.83% 4.22%
average net assets
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1996
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 business trust. The financial statements
have been prepared in conformity with generally accepted accounting
principles which permit management to make certain estimates and
assumptions at the date of the financial statements. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. 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 substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of 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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase for U.S. Treasury or Federal
Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
2. OPERATING POLICIES - CONTINUED
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The
market value of the securities purchased or sold on a when-issued or
forward commitment basis are identified as such in the fund's schedule of
investments. The fund may receive compensation for interest forgone in the
purchase of a delayed delivery security. Losses may arise due to changes in
the market value of the underlying securities or if the counterparty does
not perform under the contract.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period,
restricted securities (excluding 144A issues) amounted to $15,000,000 or
0.7% of net assets (excluding 144A issues).
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee computed daily and paid monthly, based on the 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
annual rate of .32% of the fund's 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.
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 its resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN - CONTINUED
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. No payments were made to third parties under
the plan during the period.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annual rate of .16%
of the fund's average net assets.
ACCOUNTING FEES. 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 $1,352,000.
4. EXPENSE REDUCTIONS.
The fund has entered into arrangements with its custodian and transfer
agent whereby interest earned on uninvested cash balances was used to
offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $2,000 and $34,000,
respectively, under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
Fidelity Union Street Trust II:
Fidelity Daily Income Trust:
We have audited the accompanying statement of assets and liabilities of
Fidelity Union Street Trust II: Fidelity Daily Income Trust, including the
schedule of portfolio investments, as of August 31, 1996, 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 August 31, 1996 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 Union Street Trust II: Fidelity Daily Income Trust as of August
31, 1996, 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.
Dallas, Texas
September 27, 1996
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
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
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, 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
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
56 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
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, 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
2701 Drexel Drive
Houston, TX
1010 Lamar Street
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
511 Pine Street
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
(registered trademark)
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
Sarah H. Zenoble, Vice President
Burnell R. Stehman, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Thomas D. Maher, Assistant
Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
ADVISORY BOARD
William O. McCoy
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/Redemption 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
SPARTAN
(registered trademark)
(registered trademark)
MUNICIPAL
MONEY
FUND
ANNUAL REPORT
AUGUST 31, 1996
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
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 past six
months
and one year.
INVESTMENTS 9 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 38 The auditors' opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first eight
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that can help investors in every type of market.
First, take a long-term approach when investing. If you can afford to leave
your money invested through the inevitable ups and downs of financial
markets, you will greatly reduce your vulnerability to any single decline.
Over time, for example, stock prices have gone up - and have significantly
outperformed other types of investments and stayed ahead of inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different
companies. You can increase your diversification by investing in a number
of different stock funds, or in different investment categories, such as
bonds. You should also keep money you'll need in the near future in a more
stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.SM
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in share price over a
given period, reinvestment of its dividends (or income), and the effect of
the fund's $5 account closeout fee on an average size account. Yield
measures the income paid by a fund. Since a money market fund tries to
maintain a $1 share price, yield is an important measure of performance. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the total returns and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Municipal Money Fund 3.41% 17.13% 20.68%
All Tax-Free Money Market Funds Average 3.09% 14.41% 17.11%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on January 14, 1991. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. To measure how the fund's performance stacked up against its
peers, you can compare it to the all tax-free money market funds average,
which reflects the performance of 412 all tax-free money market funds with
similar objectives tracked by IBC Financial Data, Inc. over the past 12
months. (The periods covered by the IBC Financial Data, Inc. numbers are
the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED AUGUST 31, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Municipal Money Fund 3.41% 3.21% 3.39%
All Tax-Free Money Market Funds Average 3.09% 2.73% 3.21%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
8/28/95 11/27/95 2/26/96 6/3/96 9/2/96
Spartan Municipal 3.50% 3.57% 3.21% 3.31% 3.27%
Money Fund
If Fidelity had not 3.40% 3.47% 3.11% 3.20% 3.16%
reimbursed certain fund
expenses
All Tax-Free Money Market 3.21% 3.30% 2.87% 3.04% 2.96%
Funds Average
Spartan Municipal Money 5.47% 5.58% 5.02% 5.17% 5.11%
Fund - Tax-equivalent
If Fidelity had not 5.31% 5.42% 4.86% 5.00% 4.94%
reimbursed certain fund
expenses
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. If the
adviser had not reimbursed certain portfolio expenses during the periods
shown, the yields would have been lower. You can compare these yields to
the all tax-free money market funds average. Or you can look at the fund's
tax-equivalent yield, which assumes you're in the 36% federal tax bracket.
Figures for the all tax-free money market funds average are from IBC
Financial Data, Inc. A portion of the fund's income may be subject to the
alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Scott Orr, Portfolio Manager of Spartan Municipal Money
Fund
Q. SCOTT, CAN YOU TELL US SOMETHING ABOUT THE INVESTMENT CLIMATE YOU'VE
BEEN OPERATING IN FOR THE PAST YEAR?
A. In September 1995, when the period began, the economy was performing
sluggishly, inflationary pressures were mild and interest rates were
declining. In July, the Federal Reserve had responded to those conditions
by lowering the rate banks charge each other for overnight loans - known as
the federal funds rate - one-quarter percentage point. Lower interest rates
tend to stimulate economic growth by easing access to credit. Over the next
several months, the Fed twice more lowered interest rates - in December and
again on the last day of January 1996. That brought the federal funds rate
down to 5.25%. As the first half of the fund's fiscal year was drawing to a
close, most analysts believed still further rate cuts would be necessary to
lift the economy out of the doldrums. Then, suddenly, the mood shifted.
Q. WHAT PROMPTED THE CHANGE IN OUTLOOK?
A. The first sign may have been Fed Chairman Alan Greenspan's surprisingly
upbeat testimony before the Senate Banking Committee in mid-February. Then
came the infamous February employment report, which showed an increase in
new jobs nearly four times greater than most analysts' expectations. That
sent interest rates up sharply and prompted a sell-off in both the stock
and bond markets. In the months that followed, evidence accumulated in
favor of a healthier economy, and most market participants began preparing
instead for an eventual rate increase.
Q. HOW DID YOU RESPOND TO CHANGING CONDITIONS?
A. When the period began, the fund's average maturity was 70 days. That
gave the fund an aggressive stance appropriate for a declining-rate
environment. In February, however, after interest rates rose and it became
clear that conditions had changed, I moved to reposition the fund for a
rising-rate environment. Accordingly, the fund's average maturity fell to
as low as 40 days in April and stayed near there for the next couple of
months. Then, during the summer, when many states and municipalities issue
their notes, I took advantage of this supply and extended the fund's
average maturity back out toward 60 days. It was 63 days at the end of
August.
Q. HOW DID THE FUND PERFORM?
A. Better than its average competitor. The fund's seven-day yield on August
31, 1996, was 3.26%, compared to 3.48% a year earlier. The latest yield was
the equivalent of a taxable yield of 5.09% for investors in the 36% federal
tax bracket. The fund's total return for the year was 3.41%. That beat the
average total return of 3.09% during the same period for the all tax-free
money market funds average, according to IBC Financial Data, Inc.
Q. WHAT CAN WE EXPECT IN THE MONTHS AHEAD?
A. Until recently, there was widespread expectation among market
participants that a Fed rate increase was imminent - despite the Fed's
traditional reluctance to raise rates in the months preceding a
presidential election. But lately the economic signals have been mixed. My
feeling now is that inflationary pressures may have subsided sufficiently
on their own to keep the Fed on the sidelines, at least for the next
several months. I'll probably aim to keep the fund in a neutral stance,
targeting an average maturity of between 50 and 60 days.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
8/31/96 2/29/96 8/31/95
0 - 30 70 56 66
31 - 90 10 9 14
91 - 180 5 20 3
181 - 397 15 15 17
WEIGHTED AVERAGE MATURITY
8/31/96 2/29/96 8/31/95
Spartan Municipal
Money Fund 63 days 76 days 70 days
All Tax-Free Money
Market Funds Average* 55 days 46 days 53 days
ASSET ALLOCATION
AS OF AUGUST 31, 1996 AS OF FEBRUARY 29, 1996
Row: 1, Col: 1, Value: 66.0
Row: 1, Col: 2, Value: 9.0
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 14.0
Row: 1, Col: 5, Value: 1.0
Row: 1, Col: 1, Value: 50.0
Row: 1, Col: 2, Value: 16.0
Row: 1, Col: 3, Value: 14.0
Row: 1, Col: 4, Value: 20.0
Row: 1, Col: 5, Value: 0.0
Variable rate
demand notes
(VRDNs) 66%
Commercial
paper 9%
Tender bonds 10%
Municipal
notes 14%
Other 1%
Variable rate
demand notes
(VRDNs) 50%
Commercial
paper 16%
Tender bonds 14%
Municipal
notes 20%
Other 0%
* SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
INVESTMENTS AUGUST 31, 1996
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL SECURITIES (A) - 100%
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
ALABAMA - 1.8%
Alabama Ind. Dev. Auth. Rev., VRDN (b):
(Columbus Mills Inc. Proj.) Series 1994 A, 3.65%,
LOC SunTrust Bank $ 3,000 $ 3,000
(Well Built Cabinet Inc.) 3.65%, LOC Amsouth Bank 2,675 2,675
Alabama Ind. Dev. Auth. Solid Waste Disp. Rev. Bonds
(Pine City Fiber Co.) Series 94, 3.60%,
LOC Barclays Bank, VRDN 1,000 1,000
Ashland Ind. Dev. Board Rev. (Wellborn Cabinet Inc. Proj.)
Series 1991 A, 3.75%, LOC Amsouth Bank, VRDN (b) 1,340 1,340
Colbert County Ind. Dev. Board (Golden Poultry Co., Inc. Proj.)
Series 1990, 3.65%, LOC SunTrust Bank, VRDN (b) 4,300 4,300
Columbia Ind. Dev. Rev. Rfdg. (Russell Corp. Proj.) 3.65%,
LOC SunTrust Bank, VRDN (b) 2,375 2,375
Columbiana Ind. Dev. Board Rev. (NFA Corp. Proj.)
Series 1992 A, 3.75%, LOC Amsouth Bank, VRDN (b) 6,000 6,000
Decatur Ind. Dev. Board Ind. Dev. Rev. (Monsanto Co. Proj.)
Series 1996, 3.60%, VRDN (b) 1,285 1,285
Eufaula Ind. Dev. Board (Columbus Mills, Inc. Proj.) Series 1993,
3.65%, LOC SunTrust Bank, VRDN (b) 6,100 6,100
Florence Ind. Dev. Board. Rev. (Robert J. Bevis Proj.) Series 1990,
3.65%, LOC Boatmen's Nat'l. Bank of St. Louis, VRDN (b) 3,000 3,000
Geneva Ind. Dev. Board Rev. (Russell Corp. Proj.) Series 1992,
3.65%, LOC SunTrust Bank, VRDN (b) 2,575 2,575
Montgomery Ind. Dev. Board Ind. Dev. Rev. (Contech
Construction Prod.) Series 1996, 3.70%, LOC Mellon Bank,
VRDN (b) 3,000 3,000
Phoenix Ind. Dev. Auth. (Mead Coated Board Proj.)
Series 1990 A, 3.95%, VRDN 3,600 3,600
Roanoke Ind. Dev. Board Ind. Dev. Rev. (Wehadkee/Rock
Mills Proj.) Series 1992, 3.65%, LOC SunTrust Bank,
VRDN (b) 1,100 1,100
Talladega Ind. Dev. Rev. (Wehadkee Yarn Mills Proj.)
Series 1990, 3.65%, LOC SunTrust Bank, VRDN (b) 895 895
42,245
ALASKA - 1.0%
Alaska Ind. Dev. & Export Auth. (Healy Clean Coal Proj.) VRDN:
Series 1996 A, 3.60%, LOC Bank of America NW, NA 14,800 14,800
Series 1996 B, 3.50%, LOC Bank of America NW, NA (b) 6,700 6,700
Alaska Student Loan Corp. Student Loan Rev. Bonds Series A,
7% 7/1/97 (AMBAC Insured) (b) 1,000 1,023
Valdez Marine Terminal Rev. Rfdg. Bonds (Atlantic
Richfield Co.) Series 1994 A, 3.70%, tender 10/18/96 1,700 1,700
24,223
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
ARIZONA - 1.5%
Coconino County Poll. Cont. Corp. Poll. Cont. Rev. (Arizona
Pub. Svc. Co. Navajo Proj.) Series 1994 A, 4%, LOC
Bank of America, VRDN (b) $ 1,700 $ 1,700
Maricopa County Ind. Dev. Auth. Multi-Family Hsg. Rev.
(Shadow Creek Apt. Proj.) series 1994 C, 3.60%, LOC
Bank One Arizona, VRDN (b) 5,100 5,100
Phoenix Civic Impt. Corp. Arpt. Rev. Series 1995, 3.55%,
LOC Landesbank Hessen-Thuringen, VRDN (b) 17,600 17,600
Phoenix Ind. Dev. Auth. Ind. Dev. Rev. (Hypercom Proj.)
Series 1996, 3.65% LOC Bank One, Arizona, VRDN (b) 3,000 3,000
Pima County Ind. Dev. Auth. (Tucson Elec. Pwr. Co. Proj.)
Series 1990 A, 3.60%, LOC Bankers Trust Co., VRDN (b) 700 700
Pima County Ind. Dev. Auth. Multi-Family Rev. (Quail Ridge
Apt.-B) 3.60%, LOC Bank One, VRDN (b) 4,000 4,000
Pinal County Ind. Dev. Auth. Ind. Dev. Rev. (Sunbelt Refining Co.
LP Proj.) Series 1988, 3.65%, LOC Bankers Trust Co.,
VRDN (b) 3,900 3,900
36,000
ARKANSAS - 1.4%
Blythville Ind. Dev. Rev. (Arkansas Steel Processing Proj.)
Series 1992, 3.70%, LOC Credit Agricole, VRDN (b) 9,500 9,500
Clark County Solid Waste Disp. Rev. (Reynolds Metals Co.
Proj.) 3.65%, LOC SunTrust Bank, VRDN (b) 21,000 21,000
Harrison Ind. Dev. Rev. (Rock-Tenn Converting Co. Proj.)
Series 1993, 3.65%, LOC SunTrust Bank, VRDN (b) 2,500 2,500
33,000
CALIFORNIA - 9.3%
Alameda County TRAN 4.50% 6/30/97 6,700 6,729
Butte County Office of Ed. TRAN 4.75% 9/12/96 8,000 8,001
California Gen. Oblig. RAN Series 1996-97, 4.50% 6/30/97 40,200 40,395
California Higher Ed. Student Loan Auth. Rev., VRDN:
Series 1987 C, 3.50%, LOC SLMA 23,200 23,200
Series 1992 E-1, 3.55%, LOC SLMA 7,000 7,000
California Hsg. Fin. Agcy. Participating VRDN (c):
Series PA-58, 3.50% (Liquidity Facility Merrill Lynch & Co.) 1,985
1,985
Series PT-14, 3.50% (Liquidity Facility Commerzbank) 7,200 7,200
California School Cash Reserves Prog. Auth. TRAN
Series 1996 A, 4.75% 7/2/97 (MBIA Insured) 10,600 10,677
California Student Ed. Loan Mktg. Corp. Student Loan Rev.
Rfdg. Bonds Series 1994 A, 3.85%, tender 6/1/97, LOC
Dresdner Bank (b) 10,000 10,000
Fresno TRAN 4.50% 6/30/97 4,300 4,321
Fresno Unified School Dist. TRAN 4.50% 10/11/96 18,000 18,009
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
Los Angeles Commty. College Dist. TRAN Series 1996-97,
4.50% 7/1/97 $ 3,600 $ 3,614
Los Angeles County Metropolitan Trans. Auth. Participating
VRDN (c):
Series SG-46, 3.65% (AMBAC Insured) (Liquidity Facility
Society Generale) 600 600
Series SG-B2, 3.55% (Liquidity Facility Societe Generale) 14,000
14,000
Los Angeles County TRAN Series 1996-97, 4.50% 6/30/97 30,700 30,859
Los Angeles Reg'l. Arpt. Impt. Facs. Lease Rev. 3.70%,
LOC Societe Generale, VRDN (b) 1,425 1,425
Los Angeles TRAN Series 1996, 4.50% 6/19/97 12,000 12,057
Oakland TRAN Series 1996, 4.75% 6/30/97 6,700 6,746
Riverside County School Dist. TRAN Series 1996-76,
4.625% 7/17/97 2,300 2,311
Santa Clara Unified School Dist. TRAN Series 1996,
4.50% 7/2/97 2,200 2,211
South Coast TRAN Series 1996, 4.75% 6/30/97 3,200 3,217
Ventura County TRAN Series 1996, 4.75% 7/2/97 6,600 6,639
221,196
COLORADO - 1.8%
Aurora Multi Family Hsg. Rev. Series 1996, 3.85% (FNMA
Guaranteed) (b) 2,100 2,100
Colorado Health Facs. Auth. Participating VRDN,
Series 1996 B, 3.75% (Liquidity Facility Norwest
Bank, Minnesota) (c) 3,375 3,375
Colorado Student Oblig. Bond Auth. Student Loan Rev.,
VRDN (b):
Series 1989 A, 3.45%, LOC SLMA 15,800 15,800
Series 1993 B, 3.45%, LOC SLMA 3,200 3,200
Denver County Urban Renewal Auth. Tax Increment Rev. Bonds
(Urban Renewal Proj.) Series 1989 A, 4%, tender
1/30/97 (b) 5,595 5,595
Fort Lupton Wtr. Util. Enterprise Wtr. Rev. BAN Series 1995,
4.25% 1/10/97 1,100 1,100
Monte Vista Ltd. Oblig. Swr. Rev. Series 1992, 3.80%, LOC
Wachovia Bank of NC, NA, VRDN (b) 2,765 2,765
Wheatridge Ind. Dev. Rev., VRDN (b):
(Adolph Coors Co. Proj.), Series 1993, 3.70%, LOC Wachovia
Bank of NC, NA 4,600 4,600
(Leaf, Inc. Proj.) 3.60%, LOC Wachovia Bank of GA, NA 4,000 4,000
42,535
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
CONNECTICUT - 0.4%
Connecticut Economic Recovery Gen. Oblig. Bonds
4.25% 12/15/96 $ 4,800 $ 4,809
Mashantucket Western Pequot Tribe Series 1996, 3.40%
10/24/96, LOC Bank of America, CP 3,500 3,500
8,309
DELAWARE - 0.5%
Delaware Economic Dev. Auth. (Delmarva Pwr. & Light Proj.)
Series 1994, 3.80%, VRDN (b) 2,700 2,700
Delaware Hsg. Auth. Participating VRDN, Series PA-39,
3.60% (Liquidity Facility Merrill Lynch & Co.) (c) 9,030 9,030
11,730
DISTRICT OF COLUMBIA - 0.6%
Dist. of Columbia Hsg. Fin. Auth. Multi-Family Hsg. Rev. Rfdg.
(Mount Vernon Plaza Apts.) 3.60%, LOC Bank One,
VRDN (b) 13,105 13,105
FLORIDA - 1.0%
Broward County Ind. Dev. Auth. Ind. Dev. Rev. (Rib
Associates Proj.) Series 1989, 3.65%, LOC SunTrust Bank,
VRDN (b) 1,395 1,395
Dade County Hsg. Fin. Corp. Participating VRDN, Series 1991 A,
3.85% (Liquidity Facility Bank One) (b)(c) 3,790 3,790
Dade County Ind. Dev. Auth. Rev. (Guastafeste Proj.)
Series 1987, 3.65%, LOC SunTrust Bank, VRDN (b) 1,980 1,980
Florida Dept. of Trans. Participating VRDN, 3.60% (Liquidity
Facility Societe Generale) (c) 1,700 1,700
Greater Orlando Aviation Auth. Arpt. Facs. Auth. Series B,
3.60% 10/21/96 (Liquidity Facility Morgan Guaranty
Trust Co.) CP (b) 2,000 2,000
Jacksonville Gen. Oblig. (River City Renaissance Prog.)
3.70% 10/15/96, CP 1,800 1,800
Ocean Hwy. & Port Auth. Rev. Series 1990 3.50%, LOC
ABN-AMRO Bank, VRDN (b) 3,500 3,500
Orange County Health Facs. Rev. (Adventist Health Sys.)
3.45%, LOC Rabobank Nederland NV, VRDN 6,250 6,250
Orlando Utils. Commission Participating
VRDN, Series BTP-199, 3.65% (Liquidity Facility Bankers
Trust Co.) (c) 1,300 1,300
23,715
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
GEORGIA - 2.3%
Brunswick & Glynn County Dev. Auth. (Georgia Pacific
Corp. Proj.) Series 1996, 3.65%,
LOC Commerzbank, VRDN (b) $ 4,900 $ 4,900
Floyd County Dev. Auth. Ind. Dev. Rev. (Marglen Ind., Inc.
Proj.) 3.65%, LOC SunTrust Bank, VRDN (b) 5,500 5,500
Fulton County Hsg. Auth Multi Family Hsg. Rev. Rfdg.
(Holcomb's Landing Apts. Proj.) 3.55%, LOC First Union
National Bank of North Carolina, VRDN 2,500 2,500
Georgia Gen. Oblig. Participating VRDN, Series BTP-194,
3.55% (Liquidity Facility Bankers Trust Co.) (c) 5,000 5,000
Georgia Port Auth. Rev. (Mayor's Point Terminal) Series 1992,
3.65%, LOC SunTrust Bank, VRDN (b) 3,400 3,400
Greene County Ind. Dev. Rev. (Chipman-Union, Inc. Proj.)
Series 1991, 3.45%, LOC SunTrust Bank, VRDN (b) 1,800 1,800
Gwinnett County Ind. Dev. Rev. (Curtis 1000, Inc. Proj.)
Series 1996, 3.65%, LOC SunTrust Bank, VRDN (b) 4,060 4,060
Paulding County Ind. Bldg. Auth. Rev. (Cadillac Products, Inc.)
Series 1994, 3.70%, LOC NBD Bank NA, VRDN (b) 2,970 2,970
Pierce County Ind. Dev. & Bldg. Auth. Rev. (American Egg
Prods. Inc. Proj.) Series 1989, 3.65%, LOC Barclays Bank,
VRDN (b) 1,545 1,545
Rockdale TAN Series 1996, 4.10% 12/31/96 1,000 1,001
Roswell Hsg. Auth. Multi-Family Hsg. Rev. (Azalea Park
Apts.) Series 1996, 3.60% (FNMA Guaranteed) VRDN 3,200 3,200
Savannah Econ. Dev. Auth. Rev. (Home Depot, Inc.)
Series 1995 A, 3.65%, VRDN (b) 14,600 14,600
Worth County Ind. Dev. Auth. Rev. (Seabrook Ent. Proj.)
Series 1991, 3.55%, LOC Barclays Bank, VRDN (b) 4,800 4,800
55,276
HAWAII - 0.2%
Hawaii Hsg. Fin. & Dev. Corp. Participating VRDN,
Series PT-35, 3.70% (Liquidity Facility Banque
Nationale De Paris) (b)(c) 4,640 4,640
IDAHO - 0.1%
Port of Lewiston Ind. Dev. Rev. (Blount, Inc.) Series 1995,
3.75%, LOC NationsBank, VRDN (b) 1,800 1,800
ILLINOIS - 4.7%
Belvidere Ind. Dev. Rev. (R & D Thiel, Inc. Proj.) Series 1996,
3.75%, LOC First Bank NA, Minnesota, VRDN (b) 2,000 2,000
Bolingbrook Multi-Family Hsg. Rev. (Amberton Apts.)
Series 1994, 3.60%, LOC LaSalle Bank (b) 1,600 1,600
Chicago O'Hare Int'l. Arpt. Rev., Series 1988 A, 3.60%,
LOC Bayerische Landesbank, VRDN (b) 3,500 3,500
Chicago School Reform Board of Trustees Participating VRDN,
Series 96-BB, 3.61% (Liquidity Facility Bank of America) (c) 11,100
11,100
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
ILLINOIS - CONTINUED
Crestwood Ind. Dev. Rev. (GMG Warehouse LLC Proj.) 3.80%,
LOC LaSalle Nat'l. Bank, VRDN (b) $ 1,650 $ 1,650
Danville Ind. Dev. Rev. (Freight Car Svcs., Inc. Proj.) 3.80%,
LOC Chemical Bank, VRDN(b) 5,300 5,300
Illinois Dev. Fin. Auth. Ind. Dev. Rev., VRDN (b):
(Belmont Steel Proj.) Series 1991, 3.80%, LOC
Comerica Bank 4,300 4,300
(Camcraft Proj.) Series 1993, 3.75%, LOC American Nat'l.
Bank & Trust 500 500
(Chicage Fineblanking Corp. Proj.) 3.80%, LOC NBD Bank 3,800 3,800
(Chicago Symphony Proj.) Series 1996, 3.50%, LOC
Bank of America, Illinois 10,800 10,800
(Cloverhill Pastry Vend) 3.75%, LOC American Nat'l.
Bank & Trust 500 500
(F.C. Harris Pavilion Proj.) Series 1994, 3.50%
(FNMA Insured) (b) 16,900 16,900
(F.C. Ltd. Partnership), 3.80%, LOC Lasalle Nat'l. Bank 3,705 3,705
(Grayhill Inc. Proj.) Series 1995 B, 3.60%, LOC Harris Trust
& Savings Bank 3,150 3,150
(Kindlon Partners Proj.) Series 1994, 3.80%, LOC Lasalle
Nat'l. Bank 1,600 1,600
(Olive Can Co. Proj.) 3.80%, LOC LaSalle Nat'l. Bank (b) 2,200 2,200
(Rich Products Corp. Proj.) Series 1993, 3.65%, LOC
SunTrust Bank 7,800 7,800
(Touhy Ltd. Partnership) Series 1996, 3.80%, LOC LaSalle
Nat'l. Bank 3,500 3,500
(Yale-Soth Haven Proj.) Series 1994, 3.65%, LOC Bank One 2,700 2,700
Illinois Dev. Fin. Auth. Ltd. Oblig. Rev. (SWD Inc. Proj.) 3.80%,
LOC NBD Bank (b) 4,500 4,500
Illinois Edl. Facs. Auth. Rev. (Art Institute of Chicago) VRDN:
Series 1996, 3.55% (BPA Bank of America, Illinois) 2,300 2,300
Series 1996, 3.55% (Liquidity Facility Bank of
America, Illinois) 600 600
Illinois Health Fac. Auth. Rev., VRDN:
(Gottlieb Health Resources Inc.) 4%, LOC Harris Trust &
Savings Bank of Chicago 3,500 3,500
(Methodist Med. Ctr. Proj.) Series 1985 B, 3.50%, LOC 2,600 2,600
(West Suburban Hosp. Med. Ctr. Proj.) Series 1991, 3.50%,
LOC First Nat'l. Bank of Chicago, 1,100 1,100
Illinois Regional Trans. Auth. Participating VRDN, Series SG-82,
3.70% (Liquidity Facility Societe Generale) (c) 1,500 1,500
St. Charles Ind. Dev. Rev. (Pier 1 Imports-Midwest, Inc. Proj.)
Series 1986, 3.55%, LOC Nat'l. Westminster Bank, VRDN (b) 4,100 4,100
Village of Orland Park Ind. Dev. Rev. (Panduit Corp. Proj.)
Series 1996, 3.65%, LOC Wachovia Bank, VRDN (b) 4,600 4,600
111,405
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
INDIANA - 2.3%
Columbus Gen. Oblig. Rev. (Rock-Tenn Co. Mill Division)
Series 1995, 3.65%, LOC SunTrust Bank, VRDN (b) $ 2,300 $ 2,300
Hebron Econ. Dev. Rev. (Aarons Misty Glen Apt. Proj.)
Series 1996 A, 3.65%, LOC Federal Home Loan Bank,
Indianapolis, VRDN (b) 3,175 3,175
Indiana Health Facs. Fin. Auth. Rev. (Capital Access
Designated Pool) Series 1992, 3.85%, LOC Comerica
Bank, VRDN 1,420 1,420
Indiana Hosp. Equip. Fin. Auth. Rev. Series 1985 A, 3.85%
(MBIA Insured) (BPA Bank of New York) VRDN 2,700 2,700
Indiana Hsg. Fin. Auth. Single Family Mtg. Rev. Bonds
Series 1995 D-2, 3.95%, tender 11/1/96 (b) 4,385 4,385
Indianapolis Econ. Dev. Rev. (EPI Printers Inc. Proj.) Series 1995,
3.70%, LOC Comerica Bank, VRDN (b) 4,325 4,325
Indianapolis Ind. Dev. Rev. (Sohl Assoc. LLC Proj.) Series 1995,
3.70%, LOC Nat'l. City Bank, VRDN (b) 3,000 3,000
Indianapolis Pub. Impt. TAN Series 1996 A, 4.25% 1/1/97 6,400 6,410
Lebanon Econ. Dev. Rev. (White Castle Sys. Inc. Proj.) 3.65%,
LOC Bank One, VRDN (b) 2,145 2,145
Ligonier Econ. Dev. Rev. (Sharon Manufacturing Co.) 3.70%,
LOC NBD Bank, VRDN (b) 6,300 6,300
Petersburg Solid Waste Disp. Rev. (Inianapolis Pwr. & Light Co.)
Series 1995 C, 3.50%, VRDN (b) 13,500 13,500
Purdue Univ. Rev. (Student Fees) Series H, 3.50%, VRDN 1,865 1,865
St. Joseph County Ind. Rev. (Edcoat Ltd. Partnership)
Series 1995, 3.70%, LOC First Bank of Minnesota, VRDN (b) 2,800 2,800
54,325
IOWA - 1.4%
Clinton Ind. Dev. Rev. (Sethness Products Co. Proj.) 3.80%,
LOC Northern Trust Corp.,VRDN (b) 3,800 3,800
Iowa Fin. Auth. Single Family Mtg. Bonds Series 1995 B,
3.20%, tender 2/27/97 (b) 2,880 2,880
Iowa Student Loan Liquidity Corp. Rev., Series B, 3.50%
(AMBAC Insured) (BPA Norwest Bank, Minnesota) VRDN (b) 22,300 22,300
Waterloo Ind. Dev. Rev. (O'Neal Metals, Inc. Proj.) 3.75%,
LOC NationsBank, VRDN (b) 4,000 4,000
32,980
KANSAS - 0.4%
Olathe Ind. Dev. Rev. (Garmin International Inc.) Series 1995,
3.90%, LOC Boatmens' First Nat'l. Bank of Kansas City,
VRDN (b) 3,500 3,500
Wichita Solid Waste Disp. Rev. (Weyerhaeuser Co. Proj.)
3.65%, VRDN (b) 4,950 4,950
8,450
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
KENTUCKY - 0.6%
Cynthiana Ind. Dev. Rev. (E.D. Bullard Co. Proj.) 3.75%,
LOC NationsBank, VRDN (b) $ 1,440 $ 1,440
Kentucky Higher Ed. Student Loan Auth. Series 1991 E,
3.55%, VRDN (b) 4,100 4,100
McCracken County Ind. Bldg. Rev. Series 1996, 3.65%,
LOC Bank One, VRDN (b) 4,900 4,900
Scott County Ind. Building Rev. (Ropak Corp. Proj.)
Series 1994, 3.65%, LOC Bank One, VRDN (b) 4,400 4,400
14,840
LOUISIANA - 1.8%
Calcaseiu Parish Pub. Trust Auth. Solid Waste Disp. Rev.
(PPG Industries Inc. Proj.) Series 1994, 3.65%, VRDN (b) 7,300 7,300
Calcasieu Parish Sales Tax Dist. Road Impt. Rev. Series 94-01,
3.55%, LOC Nat'l. Westminster Bank, VRDN 2,400 2,400
Dequincy Poll. Cont. Rev. (Recycle Inc. South. Proj.)
Series 1995, 3.60%, LOC Fleet Bank NA, VRDN (b) 4,500 4,500
Lake Charles Harbor and Terminal Dist. Port Impt. Rev. 3.45%,
LOC Nat'l. Westminster Bank, VRDN (b) 7,000 7,000
Plaquemines Parish Environmental Rev. (BP Exploration &
Oil, Inc.) VRDN (b):
Rfdg. Series 1995, 4% 700 700
Series 1994, 4% 7,000 7,000
Plaquemines Parish Port Harbor & Terminal Dist. Port. Facs.
Rev. Bonds (Chevron Proj.) Series 1984, 3.90%,
tender 9/1/96 2,000 2,000
St. Charles Parish Poll. Cont. Rev. (Shell Oil Co.-Norco Proj.)
Series 1991, 3.95%, VRDN (b) 1,100 1,100
West Baton Rouge Parish Dist. #3 Ind. Dev. Rev.
(Dow Chemical Co. Proj.) VRDN (b):
Series 1993, 4% 7,700 7,700
Series 1995, 4% 2,200 2,200
41,900
MAINE - 0.4%
Eastport Ind. Dev. Rev. (Passamaquoddy Tribe Fibre Extrusion
Proj.) Series 1992, 3.50%, LOC NBD Bank, VRDN (b) 4,860 4,860
Maine Pub. Util. Bank Fin. Pub. Util. Rev. Rfdg. Series 1996,
3.70%, LOC Bank of New York, VRDN (b) 5,000 5,000
9,860
MARYLAND - 1.4%
Baltimore Econ. Dev. Rev., VRDN (b):
(Oles Envelope):
Series A, 3.65%, LOC First Union Nat'l. Bank 3,150 3,150
Series B, 3.65%, LOC First Union Nat'l. Bank 3,535 3,535
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
MARYLAND - CONTINUED
Baltimore Econ. Dev. Rev., VRDN (b): - continued
(Rock-Tenn Converting Co.) Series 1987, 3.65%, LOC
SunTrust Bank $ 955 $ 955
Howard County Econ. Dev. Rev. (Pace Inc. Proj.) 3.70%,
LOC NationsBank, VRDN (b) 5,000 5,000
Maryland Dept. of Hsg. & Commty. Dev. Participating VRDN,
Series PT-36, 3.70% (Liquidity Facility Banque Nationale
De Paris) (b)(c) 18,540 18,540
Prince George's County Ind. Dev. Rev. (Cintas Corp. #41 Proj.)
3.70%, LOC PNC Bank, VRDN (b) 2,475 2,475
33,655
MASSACHUSETTS - 0.4%
Massachusetts Bay Trans. Auth. RAN 4.75% 9/5/97 1,700 1,713
Massachusetts Gen. Oblig. BAN Series 1996 A, 4.25%
6/10/97 8,000 8,021
9,734
MICHIGAN - 2.6%
Detroit School Dist. RAN 4.50% 5/1/97 13,800 13,849
Michigan Gen. Oblig. TAN 4% 9/30/96 3,600 3,600
Michigan Higher Ed. Student Loan Auth. Rev., VRDN (b):
Rfdg. Series XII-F, 3.45% (MBIA Insured) (BPA
Krediet Bank, NV) 1,700 1,700
Series XII-D, 3.45% (AMBAC Insured) (BPA Krediet
Bank, NV) 5,800 5,800
Michigan Hsg. Dev. Auth. Multi-Family Hsg. Rev. Bonds (b):
Series 1988 A, 3.65%, tender 10/21/96, LOC
Credit Suisse 2,200 2,200
Series 1988 A, 3.60%, tender 10/23/96, LOC
Credit Suisse 9,000 9,000
Michigan RAN:
Series 1996 A, 4.50% 7/3/97 13,570 13,634
Series 1996-B, 4.50% 7/25/97 2,285 2,295
Michigan Strategic Fund Ltd. Oblig. Rev. (Michigan Sugar
Co. - Carrollton) 3.65%, LOC Wachovia Bank
of GA, NA, VRDN (b) 6,000 6,000
Michigan Strategic Fund Solid Wst. Disp. Rev. (Grayling
Gen. Station Proj.) Series 1990, 3.55%, LOC Barclays
Bank, VRDN (b) 1,700 1,700
Rochester Hills Econ. Dev. Corp. Ltd. Oblig. Rev.
(Cardell Corp.) 3.60%, LOC Comerica Bank, VRDN (b) 1,250 1,250
61,028
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
MINNESOTA - 0.7%
Baudette Ind. Dev. Rev. (Reid-Rowell Inc. Proj.) Series 1989,
3.80%, LOC Nations Bank, VRDN (b) $ 1,700 $ 1,700
Duluth TAN, 4.25% 12/31/96 2,200 2,205
Hennepin County Gen. Oblig. Rev. Rfdg. Series 1996 C,
3.75%, VRDN (b) 2,200 2,200
Minnesota Hsg. Fin. Agcy. Single-Family Mtg. Rev. Bonds
Series 1995-O, 3.60%, tender 12/12/96 (b) 2,200 2,200
Prior Lake Independent School Dist. # 719 Participating
VRDN, Series 1996 D, 3.75% (Liquidity Facility
Norwest Bank NA) (c) 1,000 1,000
Richfield Independent School Dist #280 Participating VRDN,
3.75% (Liquidity Facility First Bank, NA, Minnesota) (c) 1,225 1,225
Richfield Independent School Dist. # 280 Participating VRDN,
Series 94-O, 3.75% (Liquidity Facility First Bank, NA, MN) (c) 2,100
2,100
Sauk Rapids Ind. Rev. (Bermo, Inc. & Berdass Properties)
Series 1996 A, 3.85%, LOC Firstar Bank Milwaukee NA,
VRDN (b) 3,180 3,180
Spring Lake Park Independent School Dist. # 16 Participating
VRDN, Series 1996 E, 3.75% (Liquidity Facility Norwest
Bank Minnesota) (c) 1,000 1,000
16,810
MISSISSIPPI - 0.6%
Canton Ind. Dev. Auth. Rev. (McCarty Farms Proj.)
Series 1990, 3.65%, LOC SunTrust Bank, VRDN (b) 5,000 5,000
Desoto County Ind. Dev. Rev. (Flavorite Labs Proj.)
Series 1991 B, 3.75%, LOC First Tennessee Bank, NA,
VRDN (b) 3,000 3,000
Mississippi Bus. Fin. Corp. Ind. Dev. Rev. (Pillowtex Corp.
Proj.) Series 1992, 3.70%, LOC NationsBank, VRDN (b) 3,680 3,680
Noxubee County Ind. Dev. Board Rev. (Barge Forest Products
Co. Proj.) 3.80%, LOC Amsouth Bank, VRDN (b) 2,905 2,905
14,585
MISSOURI - 1.2%
Missouri Higher Ed. Loan Auth. Student Loan Rev., VRDN (b):
Series 1988 A, 3.55%, LOC Nat'l. Westminster Bank 4,600 4,600
Series 1990 A, 3.40%, LOC Nat'l. Wesminster Bank 6,300 6,300
Series 1990 B, 3.55%, LOC Nat'l. Westminster Bank 4,850 4,850
Missouri Hsg. Dev. Comm. Mtg. Rev. Bonds (Single Family
Homeownership Loan) Series D, 4.20%, tender 11/1/96
(FGIC Insured) (b) 6,800 6,800
Missouri Dev. Fin. Board Ind. Dev. Rev. (La Grange Foundry)
Series 1996, 3.72%, LOC Harris Trust & Savings Bank
Chicago, VRDN (b) 2,550 2,550
Univ. of Missouri BAN Series 1996-97, 4.75% 6/30/97 3,800 3,827
28,927
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
NEVADA - 2.7%
Clark County Ind. Dev. Rev. (Nevada Pwr. Co. Proj.) VRDN (b):
Series 1995 A, 3.70%, LOC Barclays Bank $ 22,000 $ 22,000
Series 1995 B, 3.60%, LOC Societe Generale 1,900 1,900
Clark County Poll. Cont. Rev. Bonds (Southern California Edison)
Series 1987 A (b):
3.60%, tender 9/9/96 15,190 15,190
3.70%, tender 9/9/96 4,400 4,400
3.60%, tender 9/11/96 7,500 7,500
3.65%, tender 9/13/96 2,600 2,600
Clark County School Dist. Participating VRDN (c):
Series BTP-92, 3.55% (Liquidity Facility Bankers Trust Co.) 3,100 3,100
Series SG-62, 3.70% (Liquidity Facility Societe Generale) 3,000 3,000
Nevada Director State Dept. Comm. Ind. Rev.
(Primex Corp.), 3.65%, LOC Bank One, VRDN (b) 2,865 2,865
Washoe County Gas Fac. Rev. Bonds (Sierra Pacific Pwr. Co.)
Series 1990, 3.95%, LOC Union Bank of Switzerland,
VRDN (b) 200 200
62,755
NEW HAMPSHIRE - 1.6%
New Hampshire Bus. Fin. Auth. Poll. Cont. Rev. Bonds
(New England Power Co.) Series 1990 A (b):
3.70%, tender 10/11/96 1,500 1,500
3.70%, tender 10/23/96 3,900 3,900
New Hampshire Higher Ed. & Health Facs. Rev.:
Bonds (Dartmouth Education Loan Corp.) 3.75%, tender
12/1/96 (b) 1,670 1,670
(Alice Peck Day Lifecare Ctr./Harvest Hill) 3.55%, LOC
Corestates Bank, VRDN 800 800
New Hampshire Hsg. Fin. Auth. Multi-Family Hsg. Rev., VRDN:
Rfdg. (Nashua-Oxford Proj.) Series 1990, 3.80%
(Continental Casualty Guaranteed) 1,100 1,100
(Countryside Ltd. Partnership) 3.65%, LOC General Electric
Capital Corp. (b) 1,500 1,500
(Fairways Proj.) 3.60%, LOC General Electric Capital
Corp. (b) 28,400 28,400
38,870
NEW JERSEY - 0.5%
Clifton BAN 4.50% 6/26/97 1,500 1,507
Hudson County BAN 4.375% 10/10/96 11,000 11,004
12,511
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
NEW MEXICO - 1.2%
Albuquerque Arpt. Sub. Lien Rev. Series 1996 A, 3.45%,
LOC Bayerische Landesbank Girozentrale, VRDN (b) $ 10,000 $ 10,000
Dona Ana County Ind. Rev. (Karr Tool & Mfg.) Series 1996,
3.85%, LOC Firstar Bank Milwaukee N.A. (b) 1,900 1,900
Espanol Ind. Dev. Rev. (Nambee Mills Inc. Proj.) Series A,
3.55%, LOC Nat'l. City Bank, Indiana, VRDN (b) 4,000 4,000
New Mexico Edl. Assist. Fund Student Loan Rev. Bonds
5.10% 12/1/96 1,100 1,103
New Mexico Mtg. Fin. Auth. Single Family Mtg. Rev. Bonds
Series 1996 B, 3.25%, tender 2/28/97 (FGIC Insured) (b) 4,500 4,500
New Mexico Student Loan Rev. Participating VRDN,
Series PT-67, 3.70% (Liquidity Facility Credit Suisse) (b)(c) 5,520
5,520
Santa Fe Single Family Mtg. Rev. Bonds Series 1995 B,
4%, tender 11/1/96 (FGIC Insured) 2,500 2,500
29,523
NORTH CAROLINA - 0.8%
Cleveland County Ind. Fac. & Poll. Cont. Fin. Auth. Solid
Waste Disp. (PPG Ind. Proj.) 3.65%, VRDN 3,300 3,300
Johnston County Ind. Facs. Poll. Cont. Rev. Fin. Auth. Ind.
Dev. Rev. (Kabivitrum Inc.Proj.) 3.55%, LOC Wachovia
Bank of NC, NA, VRDN 2,000 2,000
Mecklenberg County Ind. Facs. Poll. Cont. Fin. Auth.
(Stefano Foods) Series 1996, 3.70%, LOC NationsBank (b) 3,240 3,240
Piedmont Triad Arpt. Auth. Spl. Facs. Rev. (Triad Int'l.
Maintenance Corp. Proj.) Series 1989, 3.65%, LOC Mellon
Bank, VRDN (b) 9,900 9,900
18,440
NORTH DAKOTA - 0.4%
North Dakota Hsg. Fin. Agcy. Home Mtg. Fin. Bonds (b):
Series 1996 C, 3.85% 4/3/97 (FGIC Guaranteed) 5,200 5,200
Series 1996 D, 3.65% 10/3/96 (FGIC Guaranteed) 2,700 2,700
Oliver County Poll. Cont. Rev. Rfdg. (Square Butte Elec.) 3.60%
(AMBAC Insured) (BPA Bank of New York) VRDN (b) 1,700 1,700
9,600
OHIO - 1.4%
Middletown Ind. Dev. Rev. (Pilot Chemical Proj.) 3.65%,
LOC Bank One, VRDN (b) 800 800
Ohio Air Dev. Auth. Air Quality Dev. Rev. (JMG Funding Ltd.
Partnership) VRDN (b):
Series 1994-A, 3.50%, LOC Societe Generale 1,200 1,200
Series 1994-B, 3.50%, LOC Societe Generale 11,000 11,000
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
OHIO - CONTINUED
Ohio Hsg. Fin. Agcy. Mtg. Rev. Bonds Series 96A-3, 3.40%,
tender 3/3/97 (AIG Guaranteed) (b) $ 15,000 $ 15,000
Ohio Ind. Dev. Rev. (Masashi Nagai/Snair Co.) Series H,
3.65%, LOC Bank One, Columbus, VRDN 1,200 1,200
Oregon City BAN 4% 12/19/96 1,900 1,900
Summit County Ind. Dev. Rev. (Ganzhorn Properties Project)
3.65%, LOC Bank One, Akron, VRDN 1,090 1,090
Twinsburg Ind. Dev. Rev. (United Stationers, Inc. Proj.) 3.90%,
LOC PNC Bank, VRDN (b) 1,000 1,000
33,190
OKLAHOMA - 1.5%
Oklahoma Dev. Fin. Auth. Rev. (Shawnee Fdg. Ltd. Partnership
Proj.) Series 1996, 3.65%, LOC Bank of Nova Scotia,
VRDN (b) 2,000 2,000
Oklahoma Ind. Auth. Ind. Rev. (Farley Candy) 3.80%,
LOC Toronto Dominion, VRDN (b) 6,000 6,000
Oklahoma Ind. Fin. Auth. Gen. Oblig. Ind. Fin. Rev. Bonds
Series L, 3.85%, tender 11/1/96, LOC Credit Locale
de France (b) 7,600 7,600
Southeastern Ind. Auth. Solid Waste Disp. Rev. (Weyerhaeuser
Co. Proj.) 3.60%, VRDN (b) 21,000 21,000
36,600
OREGON - 1.1%
Lane County Sewer Disp. Rev. (Weyerhauser Co. Proj.)
3.65%, VRDN (b) 7,100 7,100
Oregon Econ. Dev. Dept. Solid Waste Disp. Rev.
(Weyerhaeuser Co. Proj.) Series CL, 3.65%, VRDN (b) 3,000 3,000
Port Umatilla Ltd. Oblig. Rev. (Hermiston Food Proj.)
Series 1989, 3.65%, LOC U.S. Nat'l. Bank of Oregon,
VRDN (b) 3,100 3,100
Portland Econ. Dev. Rev. (Columbia Aluminum Recycling)
3.65%, LOC U.S. Nat'l. Bank of Oregon, VRDN (b) 3,150 3,150
Portland Spl. Oblig. Rev. (Portland Bulk Terminals LLC Proj.)
3.60%, LOC Canadian Imperial Bank of Commerce,
VRDN (b) 9,500 9,500
25,850
PENNSYLVANIA - 5.6%
Alleghany County Ind. Dev. Auth. Ind. Dev. Rev. (Union Elec.
Steel Co. Proj.) Series 1996 B, 3.70%, LOC PNC Bank,
VRDN (b) 2,000 2,000
Butler County Ind. Dev. Rev. (JSM Acquisition Corp. Proj.)
Series 1989 A, 3.70%, LOC PNC Bank, VRDN (b) 1,300 1,300
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Carbon County Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Panther Creek Proj.) (b):
Series 1990 A, 3.70%, tender 11/14/96, LOC Nat'l.
Westminster Bank $ 2,000 $ 2,000
Series 1992 A, 3.70%, tender 10/15/96, LOC Nat'l.
Westminster Bank 10,000 10,000
Delaware Valley Reg'l. Fin. Auth. Local Gov't. Rev.
Series 1985 D, 3.50%, Midland Bank PLC, VRDN 9,400 9,400
Erie County Ind. Dev. Auth. Rev. (Carlisle Corp. Proj.)
Series 1993, 3.65%, LOC SunTrust Bank, VRDN (b) 1,500 1,500
Harrisburg Wtr. Rev. Auth. Participating VRDN,
Series BTP-193, 3.65% (Liquidity Facility
Bankers Trust Co.) (c) 4,200 4,200
Northumberland County Ind. Dev. Auth. Rev., VRDN (b):
(Foster Wheeler Carmel Proj.):
Series 1987 A, 3.65%, LOC Union Bank of Switzerland 11,700 11,700
Series 1987 B, 3.65%, LOC Union Bank of Switzerland 3,200 3,200
(Furman Farms Inc. Proj.) 3.95%, LOC Corestates Bank 2,085 2,085
Pennsylvania Econ. Dev. Fin. Auth. Rev., VRDN (b):
(BPS Dev. Proj.) Series 1989 D-3, 3.70%, LOC PNC Bank 200 200
(C & D Charter Pwr. Sys.) Series 1991 D-6, 3.70%,
LOC PNC Bank 1,200 1,200
(Corry Laser Technology Proj.) Series 1989 D-5, 3.70%,
LOC PNC Bank 125 125
(Johnstown Corp. Proj.) 3.70%, LOC PNC Bank 420 420
Pennsylvania Energy Dev. Auth. Rev. (B & W Edensburg Proj.)
Series 1986, 3.45%, LOC Swiss Bank Corp., VRDN (b) 4,750 4,750
Pennsylvania Higher Ed. Assistance Agcy. Student Loan Rev.,
VRDN (b):
Series 1988 A, 3.55%, LOC SLMA 24,300 24,300
Series 1988 B, 3.55%, LOC SLMA 2,700 2,700
Series 1988 C, 3.55%, LOC SLMA 5,500 5,500
Series 1994 A, 3.55%, LOC SLMA 9,600 9,600
3.55%, LOC SLMA 7,000 7,000
Pennsylvania Inter-Governmental Coop. Auth. Participating
VRDN, Series SG-67, 3.60%, LOC Societe Generale (c) 7,630 7,630
Philadelphia School Dist. TRAN Series 1996-97, 4.50%
6/30/97 3,700 3,715
Philadelphia TRAN Series 1996-97, 4.50% 6/30/97 4,900 4,921
Schuylkill County Ind. Dev. Auth. Rev. (Pine Grove Landfill Inc.)
Series 1995, 4.05%, LOC Corestates Bank, VRDN (b) 800 800
Venango Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Scrubgrass Proj.) (b):
Series 1990 A, 3.60%, tender 9/5/96, LOC Nat'l.
Westminster Bank 2,500 2,500
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Venango Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Scrubgrass Proj.) (b): - continued
Series 1990 B, 3.70%, tender 10/10/96, LOC Nat'l.
Westminster Bank $ 7,800 $ 7,800
Series 1990 B, 3.70%, tender 12/17/96, LOC Nat'l.
Westminster Bank 2,300 2,300
132,846
RHODE ISLAND - 0.3%
Providence Pub. Parking Rev. (Washington Street Garage Proj.)
Series 1991, 3.55%, LOC Morgan Guaranty Trust Co.,
VRDN (b) 2,050 2,050
Rhode Island Hsg. & Mtg. Fin. Corp. Homeownership
Opportunities Bonds Series 19-D, 3.55%, tender
1/30/97 (b) 4,000 4,000
6,050
SOUTH CAROLINA - 4.6%
Abbeville County Ind. Dev. Rev. (Springs Inds. Proj.) 3.60%, LOC
Wachovia Bank of SC, NA, VRDN (b) 4,000 4,000
Dorchester County Ind. Dev. Rev. (SYN Strand Inc.) Series 1994,
3.60%, LOC Wachovia Bank of NC, NA, VRDN (b) 6,650 6,650
Dorchester County TAN Series 1996, 4.28% 4/15/97 1,600 1,602
Marion County Ind. Dev. Rev. (New South Proj.) Series 1994,
3.75%, LOC NationsBank,VRDN (b) 3,710 3,710
South Carolina Cap. Impt. Participating VRDN, Series V,
3.60% (Liquidity Facility Automatic
Data Processing, Inc.) (c) 1,530 1,530
South Carolina Jobs Econ Dev. Auth. Rev., VRDN (b):
(Alexander Mach Inc. Proj.) Series 1994, 3.75%,
LOC NationsBank 2,500 2,500
(Alfmeir Corp.) 3.60%, LOC Bayerische Landesbank 3,500 3,500
(Drake Molding Corp. Proj.) Series 1995, 3.65%,
LOC First of America Bank, Michigan 6,120 6,120
(Foundry & Steel and Champion Tooling and Machining)
Series 1996, 3.60%, LOC Wachovia Bank of SC, NA 4,000 4,000
(Jackson Mills Inc. Proj.) Series 1994, 3.65%, LOC
SunTrust Bank 4,000 4,000
(Keys Printing Co.) 3.45%, LOC Wachovia Bank of SC, NA 4,000 4,000
(Paxar Corp. Proj.) Series 1996, 3.60%, LOC Wachovia
Bank of GA, NA 6,000 6,000
(Peace Textile America Proj.) Series 1992,
3.75%, LOC NationsBank 3,000 3,000
(Titan Wheel Int'l. Proj.) Series 1995, 3.75%,
LOC NationsBank 9,500 9,500
(Wellman Inc. Proj.) Series 1992, 4.10%, LOC Wachovia
Bank of GA, NA 9,500 9,500
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
SOUTH CAROLINA - CONTINUED
South Carolina Jobs Econ. Dev. Auth. Rev., VRDN (b): - continued
(Wellman Inc. Proj.) 3.60%, LOC Wachovia Bank of
GA, NA $ 7,500 $ 7,500
South Carolina Port Auth. Jr. Lien, 3.65%, LOC Wachovia
Bank of SC, NA, VRDN (b) 20,700 20,700
South Carolina Pub. Svc. Auth. Tender Option Bonds
Series CR-183, 3.56%, (Liquidity Facility Citibank)
VRDN (b)(c) 4,100 4,100
Spartanburg County Ind. Dev. Rev. (Prym-Dritz Corp. Proj.)
3.60%, LOC Wachovia Bank of NC, NA VRDN (b) 3,700 3,700
Union County Ind. Dev. Auth. Rev. (Federal Paper Board
Proj.) 3.60%, LOC Wachovia Bank of NC, NA, VRDN (b) 4,000 4,000
109,612
SOUTH DAKOTA - 1.5%
South Dakota Hsg. Dev. Auth. Hsg. Rev. Bonds
(Homeownership Mtg.) Series E, 4.05%, tender 10/24/96 16,000 16,000
South Dakota Hsg. Dev. Auth. Participating VRDN (b)(c):
Series PA-119, 3.70% (Liquidity Facility Merrill
Lynch & Co.) 11,400 11,400
Series PT-85, 3.70% (Liquidity Facility Rabobank
Nederland) 5,800 5,800
South Dakota School Dist. TAN Series 1996, 4.75% 7/28/97 3,400 3,424
36,624
TENNESSEE - 4.2%
Claiborne County Ind. Dev. Rev. (Royal Sterilization System)
3.75%, LOC First Tennessee Bank, NA, VRDN (b) 2,500 2,500
Hamilton County Ind. Dev. Rev. Multi-Family Hsg.
(Waterford Place Apts. Proj.) Series1987, 4.15%, LOC
Marine Midland Bank, VRDN (b) 10,100 10,100
Jackson Ind. Dev. Board Rev. (Florida Steel Corp. Proj.)
Series 1995, 3.70%, LOC NationsBank, VRDN (b) 2,000 2,000
Memphis-Shelby County Arpt. Auth. 3.65% 12/16/96, LOC
Canadian Imperial Bank of Commerce, CP (b) 9,700 9,700
Morristown Ind. Dev. (Lakeway Container Inc. Proj.) Series 1993,
3.70%, LOC First Tennessee Bank, VRDN (b) 400 400
Sevier County Pub. Bldg. Auth. Impt. Rev. Series E-2, 3.55%
(AMBAC Insured) (BPA Kredietbank NV) VRDN (b) 4,350 4,350
Tennessee Hsg. Dev. Agcy. Rev. Bonds (b):
Series 1996 1C, 3.25%, tender 2/6/97 38,000 38,001
Series PT-59A, 3.75%, tender 9/12/96 (Liquidity Facility
Credit Suisse) (d)(c) 11,425 11,425
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
TENNESSEE - CONTINUED
Tennessee Hsg. Dev. Agcy. Participating VRDN (b)(c):
Series PT-25, 3.70%, (Liquidity Facility Credit Suisse) $ 14,840 $ 14,840
Series PT-59B, 3.70% (Liquidity Facility Credit Suisse) 3,950 3,950
Trenton Ind. Dev. Rev. (Dyersburg Fabrics Inc.) Series 1990,
3.65%, LOC SunTrust Bank, VRDN (b) 1,050 1,050
Willianson County Rev. (Telco, Inc.) Series 1996, 3.75%,
LOC NationsBank, VRDN (b) 1,500 1,500
99,816
TEXAS - 14.8%
Bell County Ind. Dev. Corp. Ind. Dev. Rev. (Metal Sales
Manufacturing Corp.) 3.65%, LOC Star Bank, VRDN (b) 2,520 2,520
Bexar County Health Facs. Rev. (Army Retirement Reserves)
Series 85-B, 3.40%, LOC Rabobank Nederland, NV,
VRDN (b) 1,700 1,700
Brazos River Auth. Collateralized Poll. Cont. Rev. (Texas
Util. Elec. Co. Proj.) (b):
Rfdg. Bonds:
Series A, 3.80%, tender 9/26/96, LOC Canadian Imperial
Bank of Commerce 1,000 1,000
Series-B, 3.75%, tender 11/13/96, LOC Canadian Imperial
Bank of Commerce 29,170 29,170
Rfdg. Series 1995 C, 4%,
LOC Swiss Bank, VRDN 4,700 4,700
Brazos River Harbor Navigation Dist. of Brazoria County Rev.
(Dow Chemical Proj.) (b):
Bonds:
Series 1988:
3.65%, tender 9/12/96 3,170 3,170
3.75%, tender 10/9/96 9,480 9,480
Series 1992:
3.65%, tender 9/11/96 3,850 3,850
3.65%, tender 9/19/96 4,300 4,300
3.75%, tender 10/9/96 4,000 4,000
VRDN:
Series 1992 A, 4% 3,100 3,100
Series 1993, 4% 7,000 7,000
Series 1996, 4% 6,200 6,200
Brownsville Ind. Dev. Corp. Rev. (Rich-Seapak Corp. Proj.)
Series 1992, 3.65%, LOC SunTrust Bank, VRDN (b) 6,250 6,250
Cleburne Ind. Dev. Rev. (Southwestern Analytical Chemical
Proj.) 3.90%, LOC Nat'l. City Bank, VRDN (b) 2,475 2,475
Dallas-Fort Worth Reg'l. Arpt. Participating VRDN,
Series SGB-5, 3.60% (Liquidity Facility Societe Generale) (c) 2,000
2,000
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
TEXAS - CONTINUED
Denton County Ind. Dev. Rev. (Hydro Conduit Corp.) 3.80%,
LOC Union Bank of Switzerland, VRDN (b) $ 7,200 $ 7,200
Denton Util. Sys. Participating VRDN,
Series SGA-32, 3.60% (Liquidity Facility Societe
Generale) (c) 6,000 6,000
Grand Prairie Ind. Dev. Auth. Rev. (Precision/API Ketema
Proj.) Series 1996, 3.85%, LOC Marine Midland Bank NA,
VRDN (b) 1,000 1,000
Greater East Texas Higher Ed. Auth. Student Loan Rev. (b):
Series 1992 B, 3.60%, LOC SLMA, VRDN 1,000 1,000
Bonds Series 1993 B:
4.10%, tender 6/1/97, LOC SLMA 6,000 6,000
3.25%, tender 2/1/97, LOC SLMA 24,000 24,000
Greater Texas Student Loan Rev. Rfdg. Bonds Series 1996 A,
3.35%, tender 3/1/97, LOC SLMA 30,000 30,000
Gulf Coast Ind. Dev. Auth. Solid Waste Disp. Rev.
(Citgo Petroleum) 4.15%, LOC Wachovia Bank
of GA, NA, VRDN (b) 600 600
Gulf Coast Waste Disp. Auth. (Amoco Oil Co. Proj.) 3.95%,
VRDN (b) 1,100 1,100
Harris County Hsg. Fin. Corp. (Cypress Ridge Apt. Proj.)
Series 1996, 3.65%, LOC Bank One, Arizona, VRDN (b) 2,250 2,250
Houston Arpt. Sys. Corp. Rev. (Senior Lien) Series 1993 A,
3.60% 11/8/96, LOC Canadian Imperial Bank of Commerce,
LOC Commerzbank, CP (b) 6,700 6,700
Houston Participating VRDN, Series SGA-28, 3.60%
(Liquidity Facility Societe Generale) (c) 4,630 4,630
McKinney Ind. Dev. Corp. Ind. Dev. Rev. (Delta Daily
Food Inc. Proj.) Series 1994, 3.55%, LOC ABN-AMRO
Bank, VRDN (b) 8,500 8,500
Mineral Wells Ind. Dev. Rev. (Ameron Inter Corp.) 3.75%,
LOC Commerzbank, VRDN (b) 4,200 4,200
North Texas Higher Ed. Auth. Student Loan Rev., VRDN (b):
Series 1990, 3.55%, LOC SLMA 4,600 4,600
Series 1990, 3.55%, LOC SLMA 4,100 4,100
Series 1991 C, 3.55% (AMBAC Insured) (BPA SLMA) 1,000 1,000
Series 1991 F, 3.55% (AMBAC Insured) (BPA SLMA) 4,500 4,500
Series 1993 A, 3.55%, LOC SLMA 7,100 7,100
Orange County Navagational & Port Auth. Rev. (Coastal
Films Inc.) 3.75%, LOC NationsBank, VRDN (b) 5,000 5,000
Panhandle-Plains Higher Ed. Auth. Student Loan Rev., VRDN (b):
Series 1992 A, 3.45%, LOC SLMA 4,000 4,000
Series 1993, 3.45%, LOC SLMA 4,000 4,000
San Antonio Elec. & Gas Sys., Series A, 3.65%
9/23/96, CP 3,500 3,500
San Antonio Hsg. Fin. Auth. Rev. (Mesa Ridge
Apts. Proj.) 3.50%, LOC Landesbank Hesseth-thuringen,
VRDN (b) 2,100 2,100
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
TEXAS - CONTINUED
San Marcos Ind. Dev. Corp. Ind. Dev. Rev. (Butler
Manufacturing Co.) Series 1995, 3.67%, LOC
NationsBank, VRDN (b) $ 6,250 $ 6,250
South Texas Higher Ed. Auth. Student Loan Rev. Series 1995,
3.45%, LOC SLMA, VRDN (b) 2,300 2,300
Southeast Hsg. Fin. Corp. Participating VRDN Series 1991 C,
3.85%, (Liquidity Facility Bank One) (b)(c) 6,260 6,260
Sunbelt Ind. Dev. Corp. Rev. (Fort Dearborn Lithograph) 3.80%,
LOC NBD Bank, VRDN (b) 4,300 4,300
Texas A&M Univ. Participating VRDN,
Series SGA-21, 3.60% (Liquidity Facility Societe
Genrerale) (c) 1,600 1,600
Texas Gen. Oblig.:
Rev. Rfdg. Bonds (Veteran's Hsg. Assist Prog. Fund II)
Series 1995 E, 3.90% 11/6/96 11,000 11,000
TRAN Series 1996, 4.75% 8/29/97 72,700 73,251
Texas Pub. Fin. Auth. Participating VRDN, Series 1996 CB-2,
3.67% (Liquidity Facility Chemical Bank) (b)(c) 3,000 3,000
Texas School Board TAN 4.75% 8/29/97 (FSA Insured) 2,300 2,318
Trinity River Auth. Poll. Cont. Rev. (Texas Utils. Elec. Co.
Proj.) Series 1996 A, 3.95% (AMBAC Insured) (BPA Bank
of New York) VRDN (b) 800 800
Waxahachie Ind. Dev. Auth. Rev. (Rock-Tenn Converting
Co. Proj.) Series 1986, 3.65%, LOC SunTrust Bank, VRDN (b) 3,145 3,145
West Side Calhoun County Naval Dist. Sewage Solid
Waste Disp. Rev. (BP Chemicals, Inc. Proj.) Series 1996,
4%, VRDN (b) 1,000 1,000
349,219
UTAH - 2.0%
Salt Lake City Arpt. Rev., VRDN (b):
Series 1996 A, 3.55%, LOC Union Bank of Switzerland 20,000 20,000
Series A, 3.45% LOC Credit Suisse 13,300 13,300
Salt Lake City TRAN:
Series 1996, 4.50% 12/31/96 1,800 1,804
Series 1996, 4.50% 6/30/97 3,900 3,916
Timpanogos Spl. Svc. Dist. Participating VRDN, Series SG-83,
3.70% (Liquidity Facility Societe Generale) (c) 1,350 1,350
Utah Hsg. Fin. Agcy. Single-Family Mtg. Participating
VRDN (b)(c):
Series PT-84A, 3.70% (Liquidity Facility Rabobank
Nederland, NV) 4,540 4,540
Series PT-84B, 3.70% (Liquidity Facility Rabobank
Nederland, NV) 2,445 2,445
47,355
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
VERMONT - 0.3%
Vermont Hsg. Fin. Agcy. Participating VRDN, Series P-64,
3.70% (Liquidity Facility Bayerische Hypotheken)
(AMBAC Insured) (b)(c) $ 6,535 $ 6,535
VIRGINIA - 4.8%
Amelia County Facs. Rev. (Chambers Waste Sys. Proj.) 3.80%,
LOC Morgan Guaranty Trust Co., VRDN (b) 4,400 4,400
Bedford County Ind. Dev. Auth. (Nekoosa Packaging Corp.
Proj.) Series 1996, 3.65%, LOC Canadian Imperial Bank of
Commerce, VRDN (b) 5,000 5,000
Botetourt County Ind. Dev. Auth. (VA Forge Co. Proj.) Series 1996,
3.60%, LOC Harris Trust & Savings Bank Chicago, VRDN (b) 800 800
Campbell County Ind. Dev. Auth. Facs. Rev. (Hadson Pwr. 1
2-Altavista Proj.) Series 1990 A, 4.10%, LOC Barclays Bank,
VRDN (b) 2,600 2,600
Frederick County Ind. Dev. Auth. Rev. (Nat'l. Wildlife
Federation Proj.) Series 1996, 3.70%, LOC NationsBank,
VRDN (b) 4,190 4,190
Greensville County Ind. Dev. Auth. (Beach Mold & Tool
Virginia, Inc. Proj.) VRDN (b):
Series 1996 A, 3.70%, LOC Nat'l. City Bank Kentucky 3,000 3,000
Series 1996 B, 3.70%, LOC Nat'l. City Bank Kentucky 3,000 3,000
Halifax County Ind. Dev. Auth. Poll. Cont. Rev. Bonds:
(Virginia Elec. Pwr. Co.) Series 1992 (b):
3.70%, tender 10/8/96 13,100 13,100
3.85%, tender 11/13/96 20,000 20,000
Hampton Redev. & Hsg. Auth. Multi-Family Hsg. Rev.
(Avalon Pointe Proj.) Series 1996, 3.50% (FNMA Guaranteed)
VRDN (b) 1,200 1,200
Mecklenburg County Ind. Auth. Rev. (American Bldgs. Co.
Proj.) 3.75%, LOC LaSalle Nat'l. Bank, VRDN (b) 7,200 7,200
Smyth County Ind. Dev. Auth. Ind. Dev. Rev. (Summit Dimension
Products Proj.) Series 1995, 3.60%,
LOC Wachovia Bank of NC, NA, VRDN (b) 5,000 5,000
Southampton County Ind. Dev. Auth. Ind. Rev.
(Hadson Pwr. 11 - Southampton Proj.) series 1990 A,
4.10%, LOC Credit Suisse, VRDN (b) 4,500 4,500
Virginia Beach Dev. Auth. Rfdg. Rev. (Ocean Ranch Motel
Corp. Proj.) Series 1993, 3.70%, LOC NationsBank, VRDN 2,000 2,000
Virginia Hsg. Dev. Auth. Commonwealth Mtg. Bonds
Series 1996 B:
3.70%, tender 10/24/96 17,400 17,400
3.75%, tender 12/5/96 18,500 18,500
Virginia Hsg. Dev. Auth. Hsg. Rev. (AHC Svc. Corp.)
Series 1987 A, 3.55%, LOC Mitsubishi Bank Ltd., VRDN 700 700
112,590
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
WASHINGTON - 3.5%
Grays Harbor Ind. Dev. Corp. Solid Waste Disp. Rev.
(Weyerhaeuser Co. Proj.) 3.65%, VRDN (b) $ 9,650 $ 9,650
King County Ltd. Tax Gen. Oblig. Participating VRDN,
Series SGA-19, 3.60% (Liquidity Facility Societe Generale) (c) 5,060
5,060
Klickitat County Pub. Corp. Ind. Dev. Rev. (Rabanco Landfill
Proj.) Series 1990, 3.80%, LOC Bank of America, VRDN (b) 10,700 10,700
Pierce County Econ. Dev. Corp. Rev. (Pacifix LLC Proj.) 3.75%,
LOC Wells Fargo Bank, VRDN (b) 1,600 1,600
Port Bellingham Ind. Dev. Rev. (Sauder Woodcraft Corp.)
3.80%, LOC Bank of America, VRDN (b) 3,880 3,880
Port Longview Ind. Dev. Corp. Solid Waste Disp. Rev.
(Weyerhaeuser Co. Proj.) Series 1993, 3.60%, VRDN 22,400 22,400
Port of Grays Harbor Solid Waste Fac. Rev. (Pacific Veneer,
Weyerhaeuser Co.) Series 1993, 3.65%, VRDN (b) 1,500 1,500
Washington Gen. Oblig. Participating VRDN (c):
Series BTP-195, 3.55% (Liquidity Facility Bankers Trust Co.) 1,400
1,400
Series SGA-35, 3.60% (Liquidity Facility Societe Generale) 5,490 5,490
Series SGB-9, 3.60% (Liquidity Facility Societe Generale) 5,000 5,000
Series SGB-11, 3.60% (Liquidity Facility Societe Generale) 3,595 3,595
Washington Hsg. Fin. Participating VRDN, Series PT-86,
3.70% (Liquidity Facility Merrill Lynch & Co., Inc.) (b)(c) 1,300 1,300
Washington Pub. Pwr. Supply Sys. Participating VRDN,
Series BT-61, 3.70% (Liquidity Facility Automatic Data
Processing, Inc.) (c) 1,500 1,500
Washington Student Loan Fin. Assoc. Rev., VRDN (b):
Series 1987 B, 3.75%, LOC Sanwa Bank of California,
Sanwa Bank Ltd. 4,300 4,300
Series 1988 A, 3.45%, LOC Nat'l. Westminster Bank 4,600 4,600
81,975
WEST VIRGINIA - 2.8%
Grant County Poll. Cont. Rev. Bonds (Vepco Proj.) Series 1986,
3.75%, tender 10/9/96 (b) 7,400 7,400
Marion County Solid Waste Disp. Rev. (Grant Town
Cogeneration Proj.) VRDN (b):
Series 1990 A, 3.60%, LOC Nat'l. Westminster Bank 8,700 8,700
Series 1990 B, 3.55%, LOC Nat'l. Westminster Bank 8,100 8,100
Series 1990 C, 3.55%, LOC Nat'l. Westminster Bank 19,900 19,900
Series 1990 D, 3.55%, LOC Nat'l. Westminster Bank 9,400 9,400
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S RATINGS PRINCIPAL VALUE
UNAUDITED (C) AMOUNT (NOTE 1)
WEST VIRGINIA - CONTINUED
West Virginia Pub. Energy Auth. Energy Rev. Bonds
(Morgantown Energy Assoc.) (b):
3.60%, tender 9/10/96, LOC Swiss Bank $ 5,000 $ 5,000
3.70%, tender 10/10/96, LOC Swiss Bank 4,000 4,000
Wood County Ind. Dev. Rev. (AGA Gas Inc. Proj.)
Series 1988, 3.70%, LOC Svenska Handelsbanken,
VRDN (b) 4,800 4,800
67,300
WISCONSIN - 2.4%
Ashwaubenon Ind. Dev. Rev. (Tufco Proj.) Series 1992, 3.65%,
LOC Bank One, VRDN (b) 1,750 1,750
Butler Ind. Dev. Rev. (Western States Envelope Co.) Series 1996,
3.85%, LOC Firstar Bank Milwaukee N.A., VRDN (b) 3,500 3,500
City of Eau Claire Solid Waste Disp. Rev. (Pope & Talbot Proj.)
Series 1994, 3.60%, LOC Wachovia Bank
of GA, NA, VRDN (b) 4,000 4,000
Hartford Comm. Dev. Auth. Ind. Dev. Rev. Bonds (TNT/Larpen
Supply Proj.) 3.65%, LOC Bank One (b) 2,500 2,500
Jefferson Ind. Dev. Rev. Bonds (Generac Corp. Proj.)
Series 1994, 3.80%, LOC NBD Bank, VRDN (b) 7,200 7,200
Kenosha Unified School Dist. TRAN 4.50% 9/6/96 6,500 6,500
Prentice Ind. Dev. Rev. (Blount Proj.) Series 1994, 3.75%,
LOC NationsBank, VRDN (b) 1,200 1,200
Raymond Ind. Dev. Rev. (Richard S Werner, Inc. Proj.)
Series 1996, 3.65%, LOC Bank One, Milwaukee, VRDN (b) 2,500 2,500
Rhinelander Ind. Dev. Rev. (Red Arrow Prod. Co., Inc.)
Series 1994, 3.65%, LOC Bank One, VRDN (b) 6,650 6,650
Sturgeon Ind. Dev. Rev. (Marine Travelift Proj.) Series 1996,
3.90%, LOC Firstar Bank Milwaukee NA, VRDN (b) 1,100 1,100
Village of Pleasant Prairie Ind. Dev. Rev. (Muskie Enterprises
Inc. Proj.) Series 1995, 3.60%, LOC Harris Trust & Savings
Bank, VRDN (b) 3,800 3,800
Wisconsin Gen. Oblig. Participating VRDN, Series 944904,
3.71% (Liquidity Facility Citibank) (b)(c) 9,000 9,000
Wisconsin TRAN Series 1996, 4.50% 6/16/97 7,300 7,336
57,036
MULTIPLE STATES - 1.6%
Clipper Participating VRDN, Series 1995 1, 3.66%, (Liquidity
Facility State Street Bank & Trust) (b)(c) 33,570 33,570
Stephens Equity Trust #3 Participating VRDN, Series 1996,
3.71%, LOC Bayerische Hypotheken (c) 5,000 5,000
38,570
TOTAL INVESTMENTS - 100% $ 2,369,140
Total Cost for Income Tax Purposes $ 2,369,140
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax and Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
1.The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2.Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
3.Provides evidence of ownership in one or more underlying municipal bonds.
4.Restricted securities - Investment in securities not registered under the
Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Tennessee Hsg. Dev. Agcy.
Rev. Bonds Series PT-59A,
3.75%, tender 9/12/96
(Liquidity Facility
Credit Suisse) 6/1/95 $ 11,425,000
INCOME TAX INFORMATION
At August 31, 1996, the fund had a capital loss carryforward of
approximately $198,900 of which $900, $700, $45,800, $26,500 and $125,000
will expire on August 31, 1999, 2001, 2002, 2003 and 2004, respectively.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
(EXCEPT PER-SHARE AMOUNT) AUGUST 31, 1996
ASSETS
Investment in securities, at value - $ 2,369,140
See accompanying schedule
Cash 9,756
Interest receivable 13,769
TOTAL ASSETS 2,392,665
LIABILITIES
Payable for investments purchased $ 11,876
Distributions payable 191
Accrued management fee 791
TOTAL LIABILITIES 12,858
NET ASSETS $ 2,379,807
Net Assets consist of:
Paid in capital $ 2,380,003
Accumulated net realized gain (loss) on investments (196)
NET ASSETS, for 2,380,003 shares outstanding $ 2,379,807
NET ASSET VALUE, offering price and redemption price $1.00
per share ($2,379,807 (divided by) 2,380,003 shares)
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1996
INTEREST INCOME $ 85,604
EXPENSES
Management fee $ 11,391
Non-interested trustees' compensation 10
Total expenses before reductions 11,401
Expense reductions (2,478) 8,923
NET INTEREST INCOME 76,681
NET REALIZED GAIN (LOSS) ON INVESTMENTS (125)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 76,556
STATEMENT OF CHANGES IN NET ASSETS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1996 1995
INCREASE (DECREASE) IN NET ASSETS
Operations $ 76,681 $ 78,723
Net interest income
Net realized gain (loss) (125) (26)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 76,556 78,697
FROM OPERATIONS
Distributions to shareholders from net interest income (76,681) (78,723)
Share transactions at net asset value of $1.00 per share 3,024,077 3,154,447
Proceeds from sales of shares
Reinvestment of distributions from net interest income 73,982 75,335
Cost of shares redeemed (2,924,257) (3,311,498)
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES 173,802 (81,716)
RESULTING FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 173,677 (81,742)
NET ASSETS
Beginning of period 2,206,130 2,287,872
End of period $ 2,379,807 $ 2,206,130
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED AUGUST 31,
1996 1995 1994 1993 1992
SELECTED PER-SHARE DATA
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
Income from .034 .035 .025 .026 .038
Investment
Operations
Net interest income
Less Distributions (.034) (.035) (.025) (.026) (.038)
From net interest
income
Net asset value, end $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
TOTAL RETURN D 3.41% 3.59% 2.50% 2.66% 3.91%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 2,380 $ 2,206 $ 2,288 $ 1,696 $ 1,303
period (in millions)
Ratio of expenses to .39% B .40% B .33% B .27% B .20% B
average net assets
Ratio of net interest 3.36% 3.53% 2.48% 2.61% 3.67%
income to average
net assets
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE. TOTAL RETURNS
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
B FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 4 OF NOTES TO FINANCIAL STATEMENTS)
NOTES TO FINANCIAL STATEMENTS
For the period ended August 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Municipal Money Fund (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 business trust. The financial statements have been
prepared in conformity with generally accepted accounting principles which
permit management to make certain estimates and assumptions at the date of
the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. 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 substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. Accretion
of market discount represents unrealized gain until realized at the time of
a security disposition or maturity.
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.
RESTRICTED SECURITIES. The fund is permitted to invest in securities that
are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from registration
or to the public if the securities are registered. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt
sale at an acceptable price may be difficult. At the end of the period,
restricted securities (excluding 144A issues) amounted to $11,425,000 or
.5% of net assets.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) pays all
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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 .50% 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
$30,000 for the period.
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.
4. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the fund's operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of .40% of average net assets. For the
period, the reimbursement reduced expenses by $2,280,000.
FMR also agreed to reimburse additional operating expenses of the fund. For
the period, this reimbursement reduced expenses by $151,000.
In addition, FMR has entered into arrangements on behalf of the fund with
the fund's custodian and transfer agent whereby certain interest earned on
uninvested cash balances was used to offset a portion of the fund's
expenses. During the period, the fund's expenses were reduced by $47,000
under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
Fidelity Union Street Trust II:
Spartan Municipal Money Fund:
We have audited the accompanying statement of assets and liabilities of
Fidelity Union Street Trust II: Spartan Municipal Money Fund, including the
schedule of portfolio investments, as of August 31, 1996, 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 August 31, 1996 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 Union Street Trust II: Spartan Municipal Money Fund as of
August 31, 1996, 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.
Dallas, Texas
September 27, 1996
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call -
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC
(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
INVESTMENT ADVISER
(registered trademark)
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
Sarah H. Zenoble, Vice President
Scott Orr, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Thomas D. Maher, Assistant
Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
and
UMB Bank, n.a.
Kansas City, MO
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FIDELITY'S MUNICIPAL
MONEY MARKET FUNDS
California Municipal Money Market
Connecticut Municipal Money Market
Massachusetts Municipal Money Market
Michigan Municipal Money Market
Municipal Money Market
New Jersey Municipal Money Market
New York Municipal Money Market
Ohio Municipal Money Market
Spartan Arizona Municipal Money Market
Spartan California Municipal
Money Market
Spartan Connecticut Municipal
Money Market
Spartan Florida Municipal Money Market
Spartan Massachusetts Municipal
Money Market
Spartan Municipal Money Fund
Spartan New Jersey Municipal
Money Market
Spartan New York Municipal
Money Market
Spartan Pennsylvania Municipal
Money Market
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