SPARTAN(registered trademark)
(registered trademark)
ARIZONA
MUNICIPAL
FUNDS
(FORMERLY SPARTAN ARIZONA MUNICIPAL
PORTFOLIOS)
SEMIANNUAL REPORT
FEBRUARY 29, 1996
CONTENTS
CHECK PAGE NUMBERS !!!
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PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN ARIZONA MUNICIPAL INCOME FUND
(FORMERLY SPARTAN ARIZONA MUNICIPAL INCOME PORTFOLIO)
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months
and the life of the fund.
INVESTMENTS 11 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 15 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
(FORMERLY SPARTAN ARIZONA MUNICIPAL MONEY MARKET PORTFOLIO)
PERFORMANCE 19 How the fund has done over time.
FUND TALK 21 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 23 A summary of major shifts in the
fund's investments over the past six
months
and the life of the fund.
INVESTMENTS 24 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 27 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 31 Notes to the financial statements.
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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, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although the markets were fairly positive during 1995, no one can predict
what lies ahead for investors. The previous year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was generally
very positive.
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. Each figure
includes changes in a fund's share price, reinvestment of any dividends (or
income) and capital gains (the profits the fund earns when it sells bonds
that have grown in value), and the effect of the $5 account closeout fee.
You can also look at the fund's income. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total return, dividend,
and yield would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, 1996 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Spartan Arizona Municipal Income 5.00% 10.84% 17.34%
Lehman Brothers Arizona Municipal
Bond Index 4.86% 11.32% n/a
Arizona Municipal Debt Funds Average 4.94% 9.81% n/a
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, 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 Municipal Bond Index, which includes Arizona
investment-grade municipal bonds. To measure how the fund's performance
stacked up against its peers, you also will be able to compare it to the
Arizona municipal debt funds average which reflects the performance of 32
Arizona municipal bond funds with similar objectives tracked by Lipper
Analytical Services over the past year. Both benchmarks will include
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, 1996 PAST 1 LIFE OF
YEAR FUND
Spartan Arizona Municipal Income 10.84% 12.20%
Lehman Brothers Arizona Municipal
Bond Index 11.32% n/a
Arizona Municipal Debt Funds Average 9.81% 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
Spartan AZ MunicpalLB Municipal Bond I
10/31/94 10000.00 10000.00
11/30/94 9820.11 9819.20
12/31/94 10064.35 10035.32
01/31/95 10414.23 10322.13
02/28/95 10773.06 10622.30
03/31/95 10866.46 10744.35
04/30/95 10885.64 10757.03
05/31/95 11219.72 11100.28
06/30/95 11111.21 11003.16
07/31/95 11215.14 11107.47
08/31/95 11372.18 11248.31
09/30/95 11463.33 11319.51
10/31/95 11631.80 11484.10
11/30/95 11820.94 11674.62
12/31/95 11925.02 11786.81
01/31/96 12041.15 11875.80
02/29/96 11942.15 11795.64
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Spartan
Arizona Municipal Income Fund on October 31, 1994, shortly after the fund
started. As the chart shows, by February 29, 1996, the value of your
investment would have grown to $11,942 a 19.42% increase on your initial
investment. This assumes you still own the fund on February 29, 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 $11,796 a 17.96% 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
OCTOBER 11, 1994
SIX MONTHS (COMMENCEMENT
ENDED OF OPERATIONS) TO
FEBRUARY 29, AUGUST 31,
1996 1995
Dividend return 2.55% 5.34%
Capital appreciation
return 2.45% 6.39%
Total return 5.00% 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.
DIVIDENDS AND YIELD
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PERIODS ENDED FEBRUARY 29, 1996 PAST PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 4.06(cents) 26.64(cents) 55.56(cents)
Annualized dividend rate 4.71% 4.97% 5.23%
30-day annualized yield 4.55% - -
30-day annualized tax-equivalent yield 7.50% - -
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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 $10.86 over
the past month, $10.76 over the past six months and $10.63 over the life of
fund, 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. If the adviser had not reimbursed certain portfolio expenses
during the period shown, the yield and tax-equivalent yield would have been
4.25% and 7.01%, respectively.
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 HAS THE FUND PERFORMED, JONATHAN?
A. For the six- and 12-month periods ended February 29, 1996, the fund had
total returns of 5.00% and 10.84%, respectively. For the same periods, the
Arizona municipal debt funds average returned 4.94% and 9.81%,
respectively, as tracked by Lipper Analytical Services. Meanwhile, the
Lehman Brothers Arizona Municipal Bond Index returned 4.86% for the
six-month period and 11.32% for the 12-month period ended February 29,
1996.
Q. WHAT WERE SOME OF THE MAJOR DEVELOPMENTS IN THE MUNICIPAL BOND MARKET
OVER THE PAST SIX MONTHS?
A. Throughout the period, falling interest rates sent bond yields lower and
prices higher. During the first half of the period, interest rates drifted
lower as investors became less fearful that the economy was growing fast
enough to stir up inflation. The Federal Reserve made two quarter-point
rate cuts during the period, one in December followed by another in
January, which helped to further cheer bond investors. But in February, the
bond markets experienced a slight pullback as investors worried that some
stronger-than-expected economic indicators would prevent the Fed from
lowering rates any further. However, municipal bonds and Treasuries didn't
always perform in lock step during the period. Municipals lagged Treasuries
in the first months of the period, stifled by some investors' worries about
the flat tax proposal and its effect on the attractiveness of municipal
bonds. But in late January and early February, those fears appeared to
abate, and municipal bonds outperformed Treasury bonds.
Q. WHAT ACCOUNTS FOR THE FUND'S PERFORMANCE?
A. The main factor was its weighting in intermediate-term bonds. The yield
curve (a graphical representation of the yields bonds of various maturities
pay) steepened in the early part, and then again in the latter part of the
period. When the yield curve steepened, intermediate bonds generally
performed better than longer-term bonds. On balance, the fund's weighting
in intermediate bonds was a positive for the fund and helped its
performance relative to its competitors.
Q. SINCE TAKING OVER THE FUND ON OCTOBER 1, 1995, HOW DID YOU CHANGE THE
WAY THE FUND IS DISTRIBUTED AMONG BONDS WITH VARIOUS CREDIT QUALITIES?
A. I upgraded the fund's overall credit quality. Credit quality refers to
the particular rating, as assigned by a municipal bond rating agency, a
bond carries. Bonds rated a Baa, Aa, A and Aaa by Moody's Investors
Service, Inc. are investment-grade quality. Throughout the period, I
reduced the fund's stake in lower rated investment-grade (Baa) bonds and
replaced them with Aaa rated bonds. Credit spreads, which measure the
difference in yields between bonds of various credit ratings, narrowed. By
that I mean there was a smaller difference in the yields offered by lower-
and higher-rated investment-grade bonds. It seemed to be worthwhile to be
invested in higher-quality, investment-grade bonds because the added yield
from lower-quality bonds, in my opinion, did not compensate for the added
credit risk. As spreads narrowed, the lower-rated bonds did well relative
to higher-quality securities, which also was a positive for the fund's
performance.
Q. WHAT WAS THE ATTRACTION TO PRE-REFUNDED BONDS?
A. Their primary attraction was their high credit quality. Prerefunding is
a procedure in which a bond issuer floats a second bond in order to pay off
the first bond at its first call date. The proceeds from the sale of the
second bond are usually invested in Treasury securities. That means that
the bonds assume an Aaa rating, since they are backed by the full faith and
credit of the United States.
Q. WHAT WERE SOME OF YOUR OTHER STRATEGIES SINCE TAKING OVER THE FUND?
A. I've focused on improving the fund's structure. One way I improved
structure was by purchasing more non-callable bonds - or those that can not
be bought back by their issuer. Historically, non-callable bonds have
offered good performance characteristics while offering competitive yields.
Q. THERE WAS A NOTICEABLE INCREASE IN THE FUND'S STAKE IN SPECIAL TAX
BONDS. WHAT ARE THEY AND WHY ARE THEY ATTRACTIVE?
A. A special tax bond is a municipal revenue bond that will be repaid
through excise, sales or other taxes, as opposed to being backed by the
ordinary taxing power of the municipalities issuing them. During the
period, I added bonds issued by the Arizona Transportation Authority, which
are backed by these excise taxes. I believed their excise tax revenue
streams were relatively stable, which in my view, made these bonds
attractive.
Q. AT THE END OF THE PERIOD, ABOUT 6% OF THE FUND'S INVESTMENTS WERE IN
BONDS ISSUED BY GUAM AND PUERTO RICO. WHAT ROLE DO THESE PLAY AND WHY WERE
THEY ATTRACTIVE?
A. As territories of the United States, Guam and Puerto Rico may issue
municipal bonds free from local, state and federal income taxes in all 50
states. I continued to hold many of these territorial bonds because their
tax-exempt status could make demand for them very strong, which could
result in superior returns. However, I sold some of these territorial bonds
during the past six months in order to take advantage of opportunities to
buy Arizona securities.
Q. WHAT'S YOUR OUTLOOK?
A. Interest rates are relatively low right now. Given that falling interest
rates were the primary engine driving the bond markets' performance last
year, it may be difficult for municipals to match last year's gains this
year. So in my view, identifying the right securities within the right
sectors will be a key to out performing the market in 1996.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high current tax-free
income for Arizona residents
START DATE: October 11,
1994
SIZE: as of February 29,
1996, more than $20 million
MANAGER: Jonathan Short,
since October 1, 1995;
manager, Fidelity California
Municipal Income, Fidelity
California Insured Municipal
Income, Spartan California
Municipal Income, Fidelity
Minnesota Municipal Income,
Spartan California
Intermediate Municipal funds,
since October 1995; joined
Fidelity in 1990
(checkmark)
JONATHAN SHORT ON THE ARIZONA
ECONOMY:
"Last year was another strong
year for the Arizona economy
and its growth rate exceeded
the nation as a whole.
Housing sales were positive
and help-wanted ads,
particularly in the Phoenix
area, were up last year. The
main reason for the state's
strength lies in its broadly
diversified economy, which
helps make it less susceptible
to a downturn in the economy.
What's more, some very large
manufacturing concerns have
established plants in the state
which provided a boost to the
manufacturing employment
base. Arizona manufacturing
jobs grew at roughly a 4% rate
in 1995, compared to a 1%
rate for the nation as a whole.
"In determining the risks and
rewards available in the
Arizona municipal bond
market, I use the Lehman
Brothers Arizona Municipal
Bond Index as a proxy for the
overall market. I believe this
index is the best available
benchmark for managing the
fund."
SPARTAN ARIZONA MUNICIPAL INCOME FUND
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF FEBRUARY 29, 1996
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO
General Obligation 23.7 34.0
Special Tax 20.4 8.2
Electric Revenue 18.0 23.4
Escrowed/Prerefunded 9.7 2.2
Education 8.8 8.6
AVERAGE YEARS TO MATURITY AS OF FEBRUARY 29, 1996
6 MONTHS AGO
Years 10.9 12.5
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 FEBRUARY 29, 1996
6 MONTHS AGO
Years 7.1 7.7
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF FEBRUARY 29, 1996 AS OF AUGUST 31, 1995
Aaa 49.1%
Aa, A 33.7%
Baa 8.4%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 8.8%
Aaa 40.6%
Aa, A 39.2%
Baa 16.4%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 3.8%
Row: 1, Col: 1, Value: 48.1
Row: 1, Col: 2, Value: 3.27
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
Row: 1, Col: 1, Value: 40.6
Row: 1, Col: 2, Value: 39.2
Row: 1, Col: 3, Value: 16.4
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 3.8
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 FEBRUARY 29, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 91.2%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
ARIZONA - 85.0%
Arizona Pwr. Auth. Pwr. Resources Rev. Rfdg.
(Hoover Uprating Proj.) 5.25% 10/1/17
(MBIA Insured) Aaa $ 100,000 $ 97,625
Arizona State Univ. Research Pk. Dev. Rev.
5% 7/1/21 (MBIA Insured) Aaa 100,000 94,000
Arizona State Univ. Rev. Rfdg. 6%
7/1/06 A1 1,000,000 1,096,250
Arizona State Univ. Rev. 7% 7/1/15
(Pre-refunded to 7/1/02 @ 101) (d) Aaa 500,000 576,250
Arizona Trans. Board Excise Tax Rev.
(Maricopa County Reg'l Area Road):
Series A, 5.75% 7/1/04
(AMBAC Insured) Aaa 440,000 473,550
Series A, 5.75% 7/1/05
(AMBAC Insured) Aaa 400,000 430,500
7% 7/1/05, (MBIA Insured)
(Pre-Refunded to 7/1/99 @ 102) (d) Aaa 1,000,000 1,113,750
6% 7/1/03 (AMBAC Insured) Aaa 700,000 763,875
Arizona Trans. Board Hwy. Rev. Rfdg.
Series A, 6% 7/1/00 Aa 250,000 267,188
Central Arizona Wtr. Conservation Dist. Contract
Rev. Rfdg. (Central Arizona Proj.)
Series A, 5.50% 11/1/10 A1 375,000 388,125
Chandler Gen. Oblig.:
6.50% 7/1/10 (MBIA Insured) Aaa 200,000 226,500
6.50% 7/1/11 (MBIA Insured) Aaa 225,000 253,406
Chandler Street & Hwy. Rev. 6.375% 7/1/03
(MBIA Insured) Aaa 175,000 195,563
Chandler Wtr. & Swr. Rev. Rfdg. 5.90% 7/1/00
(FGIC Insured) Aaa 200,000 212,500
Cochise Union School Dist. #68 (Sierra Vista)
Series B, 9% 7/1/02 (FGIC Insured) Aaa 200,000 250,750
Glendale Ind. Dev. Auth. Edl. Facs. Rev. Rfdg.
(American Graduate School Int'l.)
6.55% 7/1/06 AAA 150,000 168,188
Maricopa County Cfts. of Prtn. 5.625%
6/1/00 Baa 450,000 461,813
Maricopa County Gen. Oblig. Rev. Rfdg. 6.25%
7/1/00 (FGIC Insured) Aaa 240,000 259,800
Maricopa County School Dist. #1 Rfdg.
(Phoenix Elementary) Second Series,
0% 7/1/05 (MBIA Insured) Aaa 500,000 318,750
Maricopa County School Dist. #3 Rfdg.
(Temple Elementary) 0% 7/1/08
(AMBAC Insured) Aaa 500,000 264,375
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Maricopa County Unified School Dist. #69
(Paradise Valley Proj. of 1994) Series B,
5.25% 7/1/15 (MBIA Insured) Aaa $ 300,000 $ 291,750
Maricopa County Unified School Dist. #80
(Chandler) 6.60% 7/1/06 (FGIC Insured) Aaa 400,000 456,500
Mesa Gen. Oblig. Rev. Rfdg. 5.70% 7/1/03
(FGIC Insured) Aaa 250,000 269,375
Mohave County Ind. Dev. Auth. Ind. Dev. Rev.
(North Star Steel Co. Proj.) Series B,
5.50% 12/1/20 AA- 250,000 241,563
Peoria Gen. Oblig. (1990 & 1994 Proj.) Series A:
5% 7/1/14 (AMBAC Insured) Aaa 365,000 346,294
5% 7/1/15 (AMBAC Insured) Aaa 390,000 369,525
Phoenix Arpt. Rev. Rfdg. Series D, 6.40%
7/1/12 (MBIA Insured) Aaa 810,000 864,674
Phoenix Civic Impt. Corp. Wtr. Sys. Rev.
(Jr. Lien) 5.45% 7/1/19 A1 500,000 490,624
Phoenix Gen. Oblig. Rfdg. Series A, 5% 7/1/19 Aa1 250,000 234,687
Phoenix Street & Hwy. User Rev. Rfdg. (Jr. Lien)
6.25% 7/1/11 (MBIA Insured) Aaa 250,000 269,374
Pima County Swr. Rev. Rfdg. Series A, 5%
7/1/15 (FGIC Insured) Aaa 400,000 379,000
Pinal County Ind. Dev. Auth. Solid Waste Disp.
Rev. (Browning Ferris Industries, Inc. Proj.)
5% 2/1/06 A2 250,000 242,812
Salt River Proj. Agric. Impt. & Pwr. Dist. Elec. Sys. Rev.:
Series C, 6.25% 1/1/19 Aa 500,000 526,250
Rfdg. Series A, 5.75% 1/1/07 Aa 300,000 321,750
Rfdg. Series B, 6.50% 1/1/04 Aa 400,000 448,500
Rfdg. Series B, 5.25% 1/1/19 (MBIA Insured) Aaa 100,000 95,500
Rfdg. Series C, 5% 1/1/13 Aa 150,000 142,687
Scottsdale Gen. Oblig. Rfdg.:
Series C, 6.375% 7/1/01 Aa1 250,000 275,313
5.50% 7/1/09 Aa1 100,000 104,500
Scottsdale Street & Hwy. User Rev. Rfdg.
5.50% 7/1/07 A1 800,000 846,000
Tempe Union High School Dist. #213 Rfdg. & Impt.
7% 7/1/08 (FGIC Insured) Aaa 310,000 369,675
Tucson Gen. Oblig. Rfdg.:
7.50% 7/1/01 A1 300,000 344,625
6.75% 7/1/03 (FGIC Insured) Aaa 200,000 230,000
Tucson Street & Hwy. User Rev. Series A, 6%
7/1/10 (MBIA Insured) Aaa 400,000 436,000
Tucson Wtr. Rev. Rfdg. 6.50% 7/1/16 A1 200,000 214,750
Univ. of Arizona Rev. Rfdg. (Univ. Rev. Sys.)
6.375% 6/1/05 A1 400,000 440,500
Yuma County Hosp. Dist. #001, 6.35%
11/15/07 A 265,000 293,488
17,458,474
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
PUERTO RICO - 5.9%
Puerto Rico Commonwealth Hwy. & Trans. Auth.
Hwy. Rev. 5.50% 7/1/17 Baa1 $ 100,000 $ 95,500
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Rfdg.:
Series N, 5% 7/1/12 Baa1 150,000 137,813
Series S, 7% 7/1/07 Baa1 500,000 572,500
Series O, 5% 7/1/12 Baa1 450,000 413,438
1,219,251
GUAM - 0.3%
Guam Pwr. Auth. Series A, 6.30% 10/1/12 BBB 50,000 50,438
TOTAL MUNICIPAL BONDS
(Cost $18,126,206) 18,728,163
MUNICIPAL NOTES - 8.8%
ARIZONA - 8.8%
Coconino County Poll. Cont. Corp. Rev.
(Arizona Pub. Svc. Co. Navajo Proj.)
Series A, 3.60%, LOC Bank of America
Nat'l. Trust & Savings, VRDN (a) (b) P-1 400,000 400,000
Maricopa County Poll. Cont. Rev. (Arizona Pub. Svc. Co.)
Series 1994 E, 3.45%, LOC Bank of America,
VRDN (a) P-1 500,000 ,500,000
Phoenix Civic Impt. Arpt. Impt Rev.
(Var. Sub. Arpt. Impts.) Series 1995, 3.40%,
LOC Landesbank Hessen-Thuringen,
VRDN (a) (b) VMIG 1 100,000 100,000
Pinal County Ind. Dev. Auth. Poll. Cont. Rev.
(Magma Copper Co. Proj.) 3.40%,
LOC National Westminster Bank PLC, VRDN (a) P-1 100,000 100,000
Pinal County Ind. Dev. Auth. Hosp. Rev.
(Casa Grande Med. Ctr. Proj.) 3.30%,
LOC Chemical Bank, VRDN (a) VMIG 1 200,000 200,000
Tempe Excise Tax Rev. Series 1995, 6.20%
1/1/97 MIG 1 400,000 409,500
Yuma Ind. Dev. Auth. Ind. Rev. (Ardco, Inc. Proj.)
3.45%, LOC Harris Trust & Savings Bank,
VRDN (a) (b) A-1+ 100,000 100,000
TOTAL MUNICIPAL NOTES
(Cost $1,800,000) 1,809,500
TOTAL INVESTMENTS - 100%
(Cost $19,926,206) $ 20,537,663
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(c) Standard & Poor's Corporation credit ratings are used in the absence of
a rating by Moody's Investors Service, Inc.
(d) Security collateralized by an amount sufficient to pay interest and
principal.
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 80.8% AAA, AA, A 87.3%
Baa 8.2% 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 investment in securities, is as follows:
General Obligation 23.7%
Special Tax 20.4%
Electric Revenue 18.0%
Others
(individually less than 10%) 37.9%
TOTAL 100.0%
INCOME TAX INFORMATION
At February 29, 1996, the aggregate cost of investment securities for
income tax purposes was $19,926,206. Net unrealized appreciation aggregated
$611,457, of which $636,834 related to appreciated investment securities
and $25,377 related to depreciated investment securities.
SPARTAN ARIZONA MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996 (UNAUDITED)
1.ASSETS 2. 3.
4.Investment in securities, at value (cost $19,926,206) - 5. $ 20,537,663
See accompanying schedule
6.Cash 7. 13,219
8.Interest receivable 9. 184,412
10. 11.TOTAL ASSETS 12. 20,735,294
13.LIABILITIES 14. 15.
16.Payable for investments purchased $ 439,993 17.
18.Distributions payable 12,419 19.
20.Accrued management fee 3,923 21.
22. 23.TOTAL LIABILITIES 24. 456,335
25.26.NET ASSETS 27. $ 20,278,959
28.Net Assets consist of: 29. 30.
31.Paid in capital 32. $ 19,613,033
33.Accumulated undistributed net realized gain (loss) 34. 54,469
on investments
35.Net unrealized appreciation (depreciation) 36. 611,457
on investments
37.38.NET ASSETS, for 1,889,026 shares outstanding 39. $ 20,278,959
40.41.NET ASSET VALUE, offering price and redemption 42. $10.74
price per share ($20,278,959 (divided by) 1,889,026 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
43.44.INTEREST INCOME 45. $ 420,084
46.EXPENSES 47. 48.
49.Management fee $ 45,234 50.
51.Non-interested trustees' compensation 27 52.
53. Total expenses before reductions 45,261 54.
55. Expense reductions (34,678) 10,583
56.57.NET INTEREST INCOME 58. 409,501
59.REALIZED AND UNREALIZED GAIN (LOSS) 61. 62.
60.Net realized gain (loss) on:
63. Investment securities 194,872 64.
65. Futures contracts (27,789) 167,083
66.Change in net unrealized appreciation (depreciation) 67. 68.
on:
69. Investment securities 164,565 70.
71. Futures contracts (2,692) 161,873
72.73.NET GAIN (LOSS) 74. 328,956
75.76.NET INCREASE (DECREASE) IN NET ASSETS 77. $ 738,457
RESULTING FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS OCTOBER 11, 1994
ENDED (COMMENCEMENT
FEBRUARY 29, 1996 OF OPERATIONS) TO
(UNAUDITED) AUGUST 31,
1995
78.INCREASE (DECREASE) IN NET ASSETS
79.Operations $ 409,501 $ 377,244
Net interest income
80. Net realized gain (loss) 167,083 114,520
81. Change in net unrealized appreciation (depreciation) 161,873 449,584
82. 83.NET INCREASE (DECREASE) IN NET ASSETS 738,457 941,348
RESULTING FROM OPERATIONS
84.Distributions to shareholders (409,501) (377,244)
From net interest income
85. From net realized gain (227,134) -
86. 87.TOTAL DISTRIBUTIONS (636,635) (377,244)
88.Share transactions 7,583,336 17,301,630
Net proceeds from sales of shares
89. Reinvestment of distributions 551,426 317,012
90. Cost of shares redeemed (1,405,380) (4,737,604)
91. Redemption fees 140 2,473
92.93. 6,729,522 12,883,511
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
94. 95.TOTAL INCREASE (DECREASE) IN NET ASSETS 6,831,344 13,447,615
96.NET ASSETS 97. 98.
99. Beginning of period 13,447,615 -
100. End of period $ 20,278,959 $ 13,447,615
101.OTHER INFORMATION 103. 104.
102.Shares
105. Sold 704,223 1,696,864
106. Issued in reinvestment of distributions 51,260 30,535
107. Redeemed (130,353) (463,503)
108. Net increase (decrease) 625,130 1,263,896
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SIX MONTHS OCTOBER 11, 1994
ENDED (COMMENCEMENT
FEBRUARY 29, 1996 OF OPERATIONS) TO
(UNAUDITED) AUGUST 31,
1995
109.SELECTED PER-SHARE DATA
110.Net asset value, beginning of period $ 10.640 $ 10.000
111.Income from Investment Operations .266 .504
Net interest income
112. Net realized and unrealized gain (loss) .260 .637
113. Total from investment operations .526 1.141
114.Less Distributions (.266) (.504)
From net interest income
115. From net realized gain (.160) -
116. Total distributions (.426) (.504)
117.Redemption fees added to paid in capital .000 .003
118.Net asset value, end of period $ 10.740 $ 10.640
119.TOTAL RETURN B 5.01% 11.74%
120.RATIOS AND SUPPLEMENTAL DATA
121.Net assets, end of period (000 omitted) $ 20,279 $ 13,448
122.Ratio of expenses to average net assets .13%A, .06%A,
C C
123.Ratio of net interest income to average net 4.98%A 5.54%A
assets
124.Portfolio turnover rate 49%A 56%A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSES 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 a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of the fund's $5 account closeout fee. Yield measures the income
paid by a fund. Since a money market fund tries to maintain a $1 share
price, yield is an important measure of performance. If Fidelity had not
reimbursed certain fund expenses during the periods shown, the total return
and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, 1996 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Spartan Arizona Municipal Money Market 1.82% 3.86% 5.32%
All Tax-Free Money Market Funds 1.60% 3.36% 4.44%
Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, 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 393 all tax-free money market funds with
similar objectives tracked by IBC/Donoghue during the period covered by
this report. (The periods covered by the IBC/Donoghue numbers are the
closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, 1996 PAST 1 LIFE OF
YEAR FUND
Spartan Arizona Municipal Money Market 3.86% 3.80%
All Tax-Free Money Market Funds 3.36% 3.32%
Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2/27/95 5/29/95 8/28/95 11/27/95 2/26/96
Spartan Arizona Municipal 4.15% 4.10% 3.71% 3.81% 3.28%
Money Market
If Fidelity had not reimburse 3.65% 3.70% 3.31% 3.51% 2.98%
d
certain fund expenses
All Tax-Free 3.48% 3.61% 3.21% 3.30% 2.87%
Money Market Funds
Average
Spartan Arizona Municipal 6.87% 6.79% 6.14% 6.28% 5.41%
Money Market - Tax-equivale
nt
If Fidelity had not reimburse 6.04% 6.12% 5.48% 5.79% 4.91%
d
certain fund expenses
</TABLE>
Row: 1, Col: 1, Value: 4.149999999999999
Row: 1, Col: 2, Value: 3.48
Row: 2, Col: 1, Value: 4.1
Row: 2, Col: 2, Value: 3.61
Row: 3, Col: 1, Value: 3.71
Row: 3, Col: 2, Value: 3.21
Row: 4, Col: 1, Value: 3.81
Row: 4, Col: 2, Value: 3.3
Row: 5, Col: 1, Value: 3.28
Row: 5, Col: 2, Value: 2.87
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/Donoghue. A portion of the
fund's income may be subject to the alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Scott Orr,
Portfolio Manager of Spartan
Arizona Municipal Money Fund
Q. SCOTT, WHAT KIND OF INVESTMENT CLIMATE HAVE YOU BEEN OPERATING IN FOR
THE PAST SIX MONTHS?
A. When the period began, the Fed was already in an easing mode. In July,
it had trimmed one-quarter percentage point off the rate banks charge each
other for overnight loans, known as the federal funds rate. By then,
inflation seemed well under control, and some economists were warning of a
possible recession. Then the economy surged ahead unexpectedly during the
third quarter and the Fed retreated to the sidelines, adopting a
wait-and-see attitude. By late fall and early winter, however, it was clear
that the economy was in little danger of overheating anytime soon, and the
Fed resumed cutting rates. Overall, there were two quarter-point rate cuts
during the period: the first in early December and the second on the last
day of January 1996. Until the final weeks of the period, most market
participants believed the Fed was planning at least one more rate cut. But
when Fed Chairman Alan Greenspan, testifying before Congress, seemed to
suggest that the economy was basically sound, the consensus shifted and
rates backed up slightly.
Q. HOW DID YOU POSITION THE FUND DURING THE PERIOD?
A. I tried to take advantage of declining interest rates. When the period
began, the fund's average maturity was 60 days, which I would describe as
fairly aggressive, given the supply constraints in Arizona. In a
declining-rate environment, it usually makes sense to lock in attractive
rates for as long as possible by extending the fund's average maturity.
Throughout the period, I tried to maintain an average maturity of around 60
days by buying longer-term, fixed rate securities - those with maturities
between six months and one year - and de-emphasizing variable rate
securities. If I was disappointed by anything, it was that interest rates
didn't fall faster; if they had, that might have improved the fund's
relative performance. Still, the fund's strategy served it well during the
period, helping it achieve better results than most other municipal funds.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 29, 1996, was 3.27%, compared to
3.72% on August 31, 1995. The ending yield was the equivalent of a taxable
yield of 5.39% for investors in the 39.33% combined state and federal tax
bracket. The fund's total return during the six-month period was 1.82%.
That beat the total return of 1.60% for the all tax-free money market funds
average, according to IBC/Donoghue.
Q. WHAT'S THE OUTLOOK?
A. During 1995, the economy expanded at an annual rate of just over 2%,
significantly below the Fed's target rate of 2.5% for sustainable,
non-inflationary growth. That's why, despite recent uncertainty in the
market, I still believe the next move by the Fed will most likely be
another rate cut. The timing is unclear - it could come this spring, or it
may not happen until the summer. But as long as the economy continues to
sputter and inflation remains under control, the Fed still has room to
lower rates and try to stimulate growth. When the period ended, the fund's
average maturity was close to 60 days, a level I'll seek to maintain as we
head into spring. The challenge will be to keep the fund's average maturity
long enough to maintain a competitive yield in the face of declining rates
without losing the flexibility to respond to changing conditions.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: high current tax-free
income for Arizona residents
while maintaining a stable $1
share price
START DATE: October 11, 1994
SIZE: as of February 29,
1996, more than $68 million
MANAGER: Scott Orr, since
1994; manager, Spartan
Municipal Money Market
Fund, since June 1995; also
manager of various
institutional money market
portfolios; joined Fidelity in
1989
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/29/96 8/31/95 2/28/95
0 - 30 62 64 68
31 - 90 10 19 23
91 - 180 21 5 5
181 - 397 7 12 4
WEIGHTED AVERAGE MATURITY
2/29/96 8/31/95 2/28/95
Spartan Arizona
Municipal Money Market 61 days 60 days 35 days
All Tax-Free Money
Market Funds Average * 46 days 53 days 39 days
ASSET ALLOCATION
AS OF FEBRUARY 29, 1996 AS OF AUGUST 31, 1995
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
Row: 1, Col: 1, Value: 50.0
Row: 1, Col: 2, Value: 31.0
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 4.0
Row: 1, Col: 5, Value: 14.0
Variable rate
demand notes
(VRDNs) 54%
Commercial
paper 17%
Tender bonds 1%
Municipal
notes 8%
Other 20%
Variable rate
demand notes
(VRDNs) 50%
Commercial
paper 31%
Tender bonds 1%
Municipal
notes 4%
Other 14%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
INVESTMENTS FEBRUARY 29, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - 94.7%
Arizona Ed. Loan Mktg. Corp. Series 1991 A, 3.40%,
LOC Dresdner Bank, VRDN (b) $ 200,000 $ 200,000
Arizona Health Facs. Auth. Rev., VRDN:
(Samcor 1986 Loan Pool-Samaritan Health Care):
3.25% (FGIC Insured) VRDN 900,000 900,000
3.60% (FGIC Insured) BPA Chemical Bank 1,500,000 1,500,000
(Voluntary Hosp. Federation Pooled Loan Prog.):
Series1985 A, 3.25% (FGIC Insured) 225,000 225,000
Series1985 B, 3.25% (FGIC Insured) 200,000 200,000
Arizona Trans. Auth. Rev. Bond 7.90% 7/1/96 1,000,000 1,033,496
Arizona Univ. Research Park Dev. Rfdg. Bonds Series 1995,
3.70% 7/1/96 (MBIA Insured) 200,000 200,000
Chandler Ind. Dev. Auth. Multi-Family Hsg. Rev.
(Southpark Apts.) 3.25%, LOC Citibank, VRDN 1,425,000 1,425,000
Cochise County Poll. Cont. Rev. Solid Waste Rev. Bonds
(Arizona Elec. Pwr. Coop.) 3.90%, tender 3/1/96 500,000 500,000
Coconino County Poll. Cont. Corp. Poll. Cont. Rev.
(Arizona Pub. Svc. Co.-Navajo Proj.) Series 1994 A,
3.60%, LOC Bank of America, VRDN (b) 300,000 300,000
Fountain Hills Unified School Dist. TAN
4.60% 7/31/96 1,000,000 1,002,617
Gila County Ind. Dev. Auth. Rev. (Cobre Valley Hosp.)
Series 1995, 3.30%, LOC Bank One, VRDN 700,000 700,000
Gilbert Unified School Dist. #41 TAN :
4.40% 7/31/96 1,500,000 1,504,889
4.55% 7/31/96 1,050,000 1,053,855
Maricopa County Gen. Oblig.:
Rfdg. Bonds Series 1995, 5% 7/1/96 (AMBAC Insured) 800,000 803,241
Participating VRDN, Series PT-182, 3.35%
(Liquidity Facility Bankers Trust Co.) (c) 2,900,000 2,900,000
Maricopa County Ind. Dev. Auth. Multi-Family Hsg. Auth.
Rev., VRDN: (b)
(Privado Park Apt. Proj.) Series 1994 A, 3.40%,
LOC Bank One 1,300,000 1,300,000
(Shadow Creek Apt. Proj.) Series 1994 C, 3.40%,
LOC Bank One 500,000 500,000
Maricopa County Poll. Cont. Rev.:
(Arizona Public Service) VRDN: (b)
Series 1994 B, 3.35% LOC Morgan Guaranty Trust Co. 1,000,000 1,000,000
Series 1994 E, 3.45%, LOC Bank of America 500,000 500,000
(Southern California Edison Co.) Bonds:
Series 1985 D, 3.35%, tender 3/27/96 500,000 500,000
Series 1985 F, 3.40%, tender 3/26/96 1,300,000 1,300,000
Maricopa County School Dist. #4 (Mesa Proj.) Series 1988C,
6.60% 7/1/96 (AMBAC Insured) 425,000 428,884
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Maricopa County Unified School Improvement Board
Dist. #48 Series 91 B, 5.40% 7/1/96 $1,000,000 $1,006,585
Mohave County Ind. Dev. Auth. Ind. Rev. Bonds
(Citizens Utils.) Series 1993 E: (b)
3.35%, tender 5/13/96 1,000,000 1,000,000
3.40%, tender 5/14/96 2,500,000 2,500,000
Phoenix Civic Impt. Corp. Airport Rev. Series 1995, 3.40%,
LOC Landesbank Hessen, VRDN (b) 3,800,000 3,800,000
Phoenix Gen. Oblig. Rfdg. Bonds Series 1992 B, 5.05%
7/1/96 1,000,000 1,004,531
Phoenix Gen. Oblig. Series 1995-2, 3.50% 6/1/20,
LOC Morgan Guaranty Trust Co., VRDN 700,000 700,000
Phoenix Ind. Dev. Board Auth. Multi-Family Hsg. Rev., VRDN:
(Bell Square Apt. Proj.) Series 1995, 3.55%,
LOC General Electric Capital Corp. 2,000,000 2,000,000
(Lynwood Apt. Proj.) Series 1994, 3.30%, LOC Federal
Home Loan Bank 1,900,000 1,900,000
(Paradise Lakes Apt. Proj.) Series 1995, 3.55%,
LOC General Electric Capital Corp. 500,000 500,000
(Ventana Palms Apt.) Series 1994, 3.30%,
LOC First Interstate Bank (b) 5,210,000 5,210,000
Pima County Gen. Oblig. Unified School Dist. #1
(Tucson Proj.) Series 1989 E, 8% 7/1/96 (FGIC Insured) 1,000,000
1,013,319
Pima County Ind. Dev. Auth. Multi-Family Hsg. Rev.
(Quail Ridge Apt.-B) 3.40%, LOC Bank One, VRDN (b) 1,400,000 1,400,000
Pinal County Ind. Dev. Auth. Hosp. Rev. (Medical Ctr. Proj.
1995) 3.30%, LOC Chemical Bank, VRDN 3,800,000 3,800,000
Pinal County Ind. Dev. Auth. Ind. Dev. Rev.
(Sunbelt Refining Co. LP Proj.) Series 1988, 3.40%,
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 A, 3.40%,
LOC Nat'l. Westminster Bank, VRDN 600,000 600,000
Salt River Proj. Agricultural Impt. & Pwr. Dist., CP:
3.65% 3/12/96 398,000 398,000
3.55% 3/19/96 800,000 800,000
3.20% 4/11/96 1,100,000 1,100,000
3.20% 5/13/96 800,000 800,000
Salt River Proj. Agricultural Impt. & Pwr. Dist. Elec. Sys. Rev.:
6.75% 1/1/97 500,000 512,353
7.50% 1/1/97 3,000,000 3,157,120
Tempe Excise Tax Rev. Bonds Series 1995, 6.20% 1/1/97 1,000,000
1,022,798
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Tempe Union High School Dist. #213 TAN 4.45% 7/31/96 $ 2,000,000 $
2,003,607
Tucson Gen. Oblig. Bonds Series 1984 B, 7.80% 7/1/96 1,000,000
1,032,354
Washington Elementary School Dist. #6 Bonds Series 1995 C,
7.80% 7/1/96 (MBIA Insured) 1,000,000 1,013,120
Yavapi County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Utils.) Series 1993, 3.35%, tender 5/16/96 (b) 1,100,000
1,100,000
Yuma Ind. Dev. Auth. Ind. Rev., VRDN: (b)
(Ardco Inc. Proj.) 3.45%, LOC Harris Trust & Savings Bank 900,000
900,000
(Buchbinder Proj.) Series 1995, 3.45%,
LOC Harris Trust & Savings Bank 1,225,000 1,225,000
64,875,769
PUERTO RICO - 5.3%
Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Rfdg. Bonds
Series W, 4.25% 7/1/96 1,500,000 1,501,674
Puerto Rico Gov't Dev. Bank 3.05% 3/14/96, CP 2,100,000 2,100,000
3,601,674
TOTAL INVESTMENTS - 100% $ 68,477,443
Total Cost for Income Tax Purposes $ 68,478,024
SECURITY TYPE ABBREVIATIONS
CP - Commercial Paper
TAN - Tax Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996 (UNAUDITED)
125.ASSETS 126. 127.
128.Investment in securities, at value - See 129. $ 68,477,443
accompanying schedule
130.Cash 131. 55,790
132.Interest receivable 133. 450,499
134. 135.TOTAL ASSETS 136. 68,983,732
137.LIABILITIES 138. 139.
140.Distributions payable $ 610 141.
142.Accrued management fee 10,975 143.
144. 145.TOTAL LIABILITIES 146. 11,585
147.148.NET ASSETS 149. $ 68,972,147
150.Net Assets consist of: 151. 152.
153.Paid in capital 154. $ 68,971,832
155.Accumulated net realized gain (loss) on 156. 315
investments
157.158.NET ASSETS, for 68,971,832 shares 159. $ 68,972,147
outstanding
160.161.NET ASSET VALUE, offering price and 162. $1.00
redemption price per share ($68,972,147 (divided by)
68,971,832 shares)
STATEMENT OF OPERATIONS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
163.164.INTEREST INCOME 165. $ 1,101,014
166.EXPENSES 167. 168.
169.Management fee $ 145,347 170.
171.Non-interested trustees' compensation 92 172.
173. Total expenses before reductions 145,439 174.
175. Expense reductions (101,512) 43,927
176.177.NET INTEREST INCOME 178. 1,057,087
179.REALIZED AND UNREALIZED GAIN (LOSS) 181. 327
180.Net realized gain (loss) on investment securities
182.Increase (decrease) in net unrealized gain from 183. (215)
accretion of market discount
184.185.NET GAIN (LOSS) 186. 112
187.188.NET INCREASE IN NET ASSETS RESULTING FROM 189. $ 1,057,199
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS OCTOBER 11, 1994
ENDED (COMMENCEMENT
FEBRUARY 29, 1996 OF OPERATIONS) TO
(UNAUDITED) AUGUST 31,
1995
190.INCREASE (DECREASE) IN NET ASSETS
191.Operations $ 1,057,087 $ 984,652
Net interest income
192. Net realized gain (loss) 327 (12)
193. Increase (decrease) in net unrealized gain from (215) 215
accretion of market discount
194. 1,057,199 984,855
195.NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
196.Distributions to shareholders from net interest (1,057,087) (984,652)
income
197.Share transactions at net asset value of $1.00 per 62,119,340 104,017,553
share
Proceeds from sales of shares
198. Reinvestment of distributions from net interest 1,045,969 967,585
income
199. Cost of shares redeemed (46,759,129) (52,419,486)
200.201. 16,406,180 52,565,652
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES
RESULTING FROM SHARE TRANSACTIONS
202. 16,406,292 52,565,855
203.TOTAL INCREASE (DECREASE) IN NET ASSETS
204.NET ASSETS 205. 206.
207. Beginning of period 52,565,855 -
208. End of period $ 68,972,147 $ 52,565,855
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SIX MONTHS OCTOBER 11, 1994
ENDED (COMMENCEMENT
FEBRUARY 29, 1996 OF OPERATIONS) TO
(UNAUDITED) AUGUST 31,
1995
209.SELECTED PER-SHARE DATA
210.Net asset value, beginning of period $ 1.000 $ 1.000
211.Income from Investment Operations .018 .034
Net interest income
212.Less Distributions (.018) (.034)
From net interest income
213.Net asset value, end of period $ 1.000 $ 1.000
214.TOTAL RETURN B 1.83% 3.43%
215.RATIOS AND SUPPLEMENTAL DATA
216.Net assets, end of period (000 omitted) $ 68,972 $ 52,566
217.Ratio of expenses to average net assets .15%A, .06%A,
C C
218.Ratio of net interest income to average net 3.63%A 3.91%A
assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSES WOULD HAVE BEEN
HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended February 29, 1996 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Arizona Municipal Income Fund (the income fund)(formerly Spartan
Arizona Municipal Income Portfolio) is a fund of Fidelity Union Street
Trust. Spartan Arizona Municipal Money Market Fund (the money market
fund) (formerly Spartan Arizona Municipal Money Market Portfolio) 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 funds:
SECURITY VALUATION.
INCOME FUND. Securities are valued based upon a computerized matrix system
and/or appraisals by a pricing service, both of which consider market
transactions and dealer-supplied valuations. Short-term securities maturing
within sixty days of their purchase date are valued either at amortized
cost or original cost plus accrued interest, both of which approximate
current value. Securities for which quotations are not readily available
through the pricing service are valued at their fair value as determined in
good faith under consistently applied procedures under the general
supervision of the Board of Trustees.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
the fiscal year. The schedules of investments include information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned. For the
money market fund, accretion of market discount represents unrealized gain
until realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date.
1. SIGNIFICANT ACCOUNTING
POLICIES - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatments for futures
and options transactions and losses deferred due to wash sales, futures and
options, and excise tax regulations.
REDEMPTION FEES. Shares held in the income fund less than 180 days are
subject to a redemption fee equal to .50% of the proceeds of the redeemed
shares. The fee, which is retained by the fund, is accounted for as an
addition to paid in capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
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
and written options involve, to varying degrees, risk of loss in excess of
the futures variation margin or the option value 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 $9,960,097 and $3,801,903, respectively.
The market value of futures contracts opened and closed during the period
amounted to $2,976,579 and $3,304,019, 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
$100 and $317 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.
INCOME FUND. For the period, this expense limitation ranged from an annual
rate of .10% to .25% of average net assets and the reimbursement reduced
expenses by $34,678.
MONEY MARKET FUND. For the period, this expense limitation ranged from an
annual rate of .10% to .20% of average net assets and the reimbursement
reduced expenses by $100,649.
In addition, FMR agreed to reimburse a portion of the fund's expenses. For
the period, the reimbursement reduced expenses by $863.
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)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)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
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
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
Page 38 = BLANK
Do NOT strip-in this type
Page 39 = BLANK
Do NOT strip-in this type
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
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
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
and
Fidelity Service Co.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
SPARTAN
(registered trademark)
(registered trademark)
MUNICIPAL
MONEY
FUND
SEMIANNUAL REPORT
FEBRUARY 29, 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 27 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 31 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although the markets were fairly positive in 1995, no one can predict what
lies ahead for investors. The previous year, stocks posted below-average
returns and bonds had one of the worst years in history. This downturn
followed a period in which the investing environment was almost ideal.
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 a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of the fund's $5 account closeout fee. Yield measures the income
paid by a fund. Since a money market fund tries to maintain a $1 share
price, yield is an important measure of performance. If Fidelity had not
reimbursed certain fund expenses during the periods shown, the total
returns and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, 1996 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Spartan Municipal Money Fund 1.75% 3.66% 18.01% 18.74%
All Tax-Free Money Market Funds Average 1.60% 3.36% 15.00% 15.42%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or
since the fund started on January 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 393 all tax-free money
market funds with similar objectives tracked by IBC/Donoghue over the past
six months. (The periods covered by the IBC/Donoghue numbers are the
closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, 1996 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Municipal Money Fund 3.66% 3.37% 3.40%
All Tax-Free Money Market Funds Average 3.36% 2.83% 2.86%
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
2/27/95 5/29/95 8/28/95 11/27/95 2/26/96
Spartan Municipal 3.85% 3.86% 3.50% 3.57% 3.21%
Money Fund
If Fidelity had not 3.75% 3.76% 3.40% 3.47% 3.11%
reimbursed certain fund
expenses
All Tax-Free Money Market 3.48% 3.61% 3.21% 3.30% 2.87%
Funds Average
Spartan Municipal Money 6.02% 6.03% 5.47% 5.58% 5.02%
Fund - Tax-equivalent
If Fidelity had not 5.86% 5.88% 5.31% 5.42% 4.86%
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/Donoghue. A portion of the fund's income may be subject to the
alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money 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, WHAT KIND OF INVESTMENT CLIMATE HAVE YOU BEEN OPERATING IN FOR
THE PAST SIX MONTHS?
A. When the period began, the Fed was already in an easing mode. In July,
it had trimmed one-quarter percentage point off the rate banks charge each
other for overnight loans, known as the federal funds rate. By then,
inflation seemed well under control, and some economists were warning of a
possible recession. Then the economy surged ahead unexpectedly during the
third quarter at an annual rate of 3.6% and the Fed retreated to the
sidelines, adopting a wait-and-see attitude. By late fall and early winter,
however, it was clear that the economy was in little danger of overheating
anytime soon, and the Fed resumed cutting rates. Overall, there were two
quarter-point rate cuts during the period: the first in early December and
the second on the last day of January 1996. Until the final weeks of the
period, most market participants believed the Fed was planning at least one
more rate cut. But when Fed chairman Alan Greenspan, testifying before
Congress, seemed to suggest that the economy was basically sound, the
consensus shifted and rates backed up slightly.
Q. HOW DID YOU POSITION THE FUND DURING THE PERIOD?
A. I tried to take advantage of declining interest rates. When the period
began, the fund's average maturity was 70 days, which I would describe as
fairly aggressive. In a declining rate environment, it usually makes sense
to lock in attractive rates for as long as possible by extending the fund's
average maturity. Throughout the period, I tried to maintain an average
maturity of around 70 days by buying longer-term, fixed rate securities -
those with maturities between six months and one year - and de-emphasizing
variable rate securities. Had interest rates fallen faster, that might have
improved the fund's relative performance. Still, the fund's strategy served
it well during the period, helping it achieve better results than most of
its peers.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 29, 1996, was 3.21%, compared to
3.48% on August 31, 1995. The ending yield was the equivalent of a taxable
yield of 5.02% for investors in the 36% federal tax bracket. The fund's
total return during the six-month period was 1.75%. That beat the total
return of 1.60% for the all tax-free money market funds average, according
to IBC/Donoghue.
Q. WHAT'S THE OUTLOOK?
A. During 1995, the economy expanded at an annual rate of just over 2%,
significantly below the Fed's target rate of 2.5% for sustainable,
non-inflationary growth. That's why, despite recent uncertainty in the
market, I still believe the next move by the Fed will most likely be
another rate cut. The timing is unclear - it could come this spring, or it
may not happen until the summer. But as long as the economy continues to
sputter and inflation remains under control, the Fed still has room to
lower rates and try to stimulate growth. When the period ended, the fund's
average maturity was 76 days - slightly longer than it was when the period
began. I'll probably shorten the fund a bit and target about 50 to 60 days
as we head into the spring months. The challenge will be to keep the fund's
average maturity long enough to maintain a competitive yield in the face of
declining rates without losing the flexibility to respond to changing
conditions.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
FUND FACTS
GOAL: tax-free income with
share price stability by
investing in high-quality,
short-term municipal
securities
START DATE: January 14, 1991
SIZE: as of February 29,1996,
more than $2 billion
MANAGER: Scott Orr, since
June 1995; manager, Spartan
Arizona Municipal Money
Market Fund, since 1994; also
manager of various institutional
money market portfolios;
joined Fidelity in 1989.
(checkmark)
WORDS TO KNOW
COMMERCIAL PAPER: A security
issued by a municipality to
finance capital or operating
needs.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount -
is short, the fund manager is
anticipating a rise in interest
rates. When the average
maturity is long, the manager
is expecting rates to fall.
When the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
MUNICIPAL NOTE: A security
issued in advance of future
tax or other revenues and
payable from those specific
sources.
TENDER BOND: A variable-rate,
long-term security that gives
the bond holder the option to
redeem the bond at face
value before maturity.
VARIABLE RATE DEMAND NOTE
(VRDN): A tender bond that
can be redeemed on short
notice, typically one or seven
days. VRDNs are useful in
managing the fund's average
maturity and liquidity.
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/29/96 8/31/95 2/28/95
0 - 30 56 66 71
31 - 90 9 14 16
91 - 180 20 3 11
181 - 397 15 17 2
WEIGHTED AVERAGE MATURITY
2/29/96 8/31/95 2/28/95
Spartan Municipal
Money Market Fund 76 days 70 days 32 days
All Tax-Free Money
Market Funds Average* 46 days 53 days 39 days
ASSET ALLOCATION
AS OF FEBRUARY 29, 1996 AS OF AUGUST 31, 1995
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
Row: 1, Col: 1, Value: 58.0
Row: 1, Col: 2, Value: 21.0
Row: 1, Col: 3, Value: 7.0
Row: 1, Col: 4, Value: 14.0
Row: 1, Col: 5, Value: 0.0
Variable rate
demand notes
(VRDNs) 50%
Commercial
paper 16%
Tender bonds 14%
Municipal
notes 20%
Other 0%
Variable rate
demand notes
(VRDNs) 58%
Commercial
paper 21%
Tender bonds 7%
Municipal
notes 14%
Other 0%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
INVESTMENTS FEBRUARY 29, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL SECURITIES (A) - 100%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
ALABAMA - 2.3%
Alabama Hsg. Fin. Auth. Single Family Mortgage Rev.
Bonds Series 1995 C, 3.40%, VRDN $ 5,000 $ 5,000
Alabama Ind. Dev. Auth. Rev. VRDN: (b)
(Columbus Mills Inc. Proj.) Series 1994 A, 3.45%
LOC SunTrust Bank 3,000 3,000
(Well Built Cabinet Inc.) 3.6%, Loc Amsouth Bank 2,675 2,675
Alabama Ind. Dev. Auth. Solid Waste Disp. Rev. Bonds
(Pine City Fiber Co.) Series 94, 3.35%,
LOC Barclays Bank, VRDN 1,000 1,000
Ashland Ind. Dev. Board Rev. (Wellborn Cabinet Inc. Proj.)
Series 1991 A, 3.60%, LOC Amsouth Bank, VRDN (b) 1,560 1,560
Colbert County Ind. Dev. Board (Golden Poultry Co., Inc. Proj.)
Series 1990, 3.45%, LOC SunTrust Bank, VRDN (b) 4,300 4,300
Columbia Ind. Dev. Rfdg. Rev. (Russell Corp. Proj.) 3.55%
LOC SunTrust Bank, VRDN (b) 2,800 2,800
Columbiana Ind. Dev. Board Rev. (NFA Corp. Proj.)
Series 1992 A, 3.60%, LOC Amsouth Bank, VRDN (b) 6,700 6,700
Eufaula Ind. Dev. Board (Columbus Mills Inc. Proj.)
Series 1993, 3.55%, LOC SunTrust Bank, VRDN (b) 6,100 6,100
Florence Ind. Dev. Board. Rev. (Robert J. Bevis Proj.)
Series 1990, 3.55%,
LOC Boatmen's Nat'l. Bank of St. Louis, VRDN (b) 3,325 3,325
Geneva Ind. Dev. Board Rev. (Russell Corp. Proj.) Series 1992,
3.55%, LOC SunTrust Bank, VRDN (b) 3,000 3,000
Phenix City Environmental Impt. Rev. Bonds (Mead Coated
Board Proj.) Series 1988, 3.35%, tender 4/12/96 (b) 5,500 5,500
Phenix City Ind. Dev. Board Envir. Impt. Rev.
(Mead Coated Board Proj.), 3.55%,
LOC Toronto Dominion Bank, VRDN (b) 5,600 5,600
Roanoke Ind. Dev. Board Ind. Dev. Rev. (Wehadkee/Rock Mills
Proj.) Series 1992, 3.45%, LOC SunTrust Bank, VRDN (b) 1,200 1,200
Talladega Ind. Dev. Rev. (Wehadkee Yarn Mills Proj.)
Series 1990, 3.55%, SunTrust Bank, VRDN (b) 1,030 1,030
52,790
ALASKA - 0.3%
Anchorage Gen. Oblig. TAN 4.25% 12/13/96 4,600 4,628
Harrison Ind. Dev. Rev. (Rock-Tenn Converting Co. Proj.)
Series 1993, 3.45%, LOC SunTrust Bank, VRDN (b) 2,500 2,500
7,128
ARIZONA - 2.1%
Arizona Ed. Loan Mktg. Corp. Series 1991 A, 3.40%,
LOC Dresdner Bank, VRDN (b) 10,900 10,900
Flagstaff Ind. Dev Auth. Rev. Bonds (Citizens Utils.) 3.35%,
tender 3/11/96 (b) 2,100 2,100
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Gilbert Unified School Dist. #41 4.40% 7/31/96 $ 1,200 $ 1,204
Maricopa County Gen. Oblig. Participating VRDN,
Series PT-182, 3.35% (Liquidity Facility Bankers Trust Co.) (c) 2,000
2,000
Maricopa County Ind. Dev. Auth. Multi-Family Hsg. Rev.
(Shadow Creek Apt. Proj.)Series 1994 C, 3.40%,
LOC Bank One, VRDN (b) 5,100 5,100
Mohave County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Utilities) Series 1993 E: (b)
3.35%, tender 3/11/96 1,360 1,360
3.35%, tender 4/10/96 2,500 2,500
Peoria Unified School Dist. #11 TAN 4.30% 7/31/96 3,000 3,010
Phoenix Civic Impt. Corp. Arpt. Rev. Series 1995,
3.40%, LOC Landesbank Hessen, VRDN (b) 11,000 11,000
Pima County Ind. Dev. Auth. Multi-Family Rev.
(Quail Ridge Apt.-B) 3.40%, LOC Bank One, VRDN 4,000 4,000
Pinal County Ind. Dev. Auth. Ind. Dev. Rev.
(Sunbelt Refining Co. LP Proj.) Series 1988, 3.40%,
LOC Bankers Trust Co., VRDN (b) 2,900 2,900
Yavapi County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Utility) Series 1993, 3.40%, tender 4/10/96 2,000 2,000
48,074
ARKANSAS - 1.3%
Arkansas Dev. Fin. Auth. Single Family Mtg. Rev. Bonds
3.90%, tender 8/1/96 (FGIC Insured) 3,200 3,200
Arkansas Student Loan Auth., VRDN: (b)
Series B-1, 3.25% 2,500 2,500
Series B-2, 3.25% 2,000 2,000
Series B-3, 3.25% 1,000 1,000
Blythville Ind. Dev. Rev. (Arkansas Steel Processing Proj.)
Series 1992, 3.40%, LOC Credit Agricole, VRDN (b) 9,500 9,500
Clark County Solid Waste Disp. Rev. (Reynolds Metals Co.
Proj.) 3.40%, LOC SunTrust Bank, VRDN (b) 12,000 12,000
30,200
CALIFORNIA - 12.1%
Alameda County TRAN 4.75% 7/25/96,
LOC Union Bank of Switzerland 18,000 18,051
Butte County Office of Ed. TRAN 4.75% 9/12/96 8,000 8,025
California Higher Ed. Student Loan Auth.: (b)
Bonds:
Series 1987 C, 2.80%, tender 6/1/96, LOC SLMA 28,500 28,500
Series E-5, 4.25%, tender 6/1/96, LOC SLMA 11,000 11,000
VRDN:
Series 1987 C, 3.35%, LOC SLMA 13,800 13,800
Series 1992 E-1, 3.40%, LOC SLMA 4,000 4,000
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
CALIFORNIA - CONTINUED
California Student Ed. Loan Mktg. Corp. Student Loan Rev.
Rfdg. Bonds Series 1994 A, 4.10%, tender 6/1/96,
LOC Dresdner Bank, (b) $ 9,500 $ 9,500
California School Cash Reserve Prog. Auth. TRAN
Series 1995 A, 4.75% 7/3/96 60,000 60,195
Fresno County TRAN 4.50% 7/2/96 6,900 6,909
Fresno Unified School Dist. TRAN 4.50% 10/11/96 18,000 18,052
Los Angeles Reg'l. Arpt. Impt. Facs. Lease Rev.
(Campagne Nationale Air France) 3.45%,
LOC Societe Generale, VRDN (b) 1,425 1,425
Los Angeles TRAN 4.50% 7/1/96 68,000 68,148
Oakland TRAN 4.50% 7/31/96 7,500 7,519
Oakland Unified School Dist. TRAN 4.50% 8/30/96 6,000 6,012
San Bernardino County TRAN 4.50% 7/5/96 16,000 16,029
277,165
COLORADO - 0.9%
Denver County Urban Renewal Auth. Tax Increment Rev.
Bonds (Urban Renewal Proj.) Series1989 A, 3.625%,
tender 8/8/96 (b) 9,705 9,705
Fort Lupton Colorado 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, 3.50%,
LOC Wachovia Bank, VRDN (b) 2,765 2,765
Wheatridge Ind. Dev. Rev., VRDN: (b)
(Adolph Coors Co. Proj.), Series 1993, 3.55%,
LOC Wachovia Bank 4,000 4,000
(Leaf Inc. Proj.) 3.55%, LOC Wachovia Bank 4,000 4,000
21,570
CONNECTICUT - 1.2%
Connecticut Hsg. Fin. Auth. Hsg. Mtg. Fin. Prog. Bonds
Series 1993 H-2, 3.75%, tender 4/15/96 (b) 3,000 3,000
Connecticut Special Assessment Unemployment Rev. Bonds
Series 1993 C, 3.85%, tender 7/1/96 (FGIC Insured) 20,000 20,000
Mashantucket Western Pequot Tribe Series 1996, 3.40%
10/24/96, LOC Bank of America, CP 3,500 3,500
26,500
DELAWARE - 0.7%
Delaware Econ. Dev. Auth. (Delmarva Pwr. & Light Proj.),
VRDN: (b)
3.60% 1,000 1,000
Series 1994, 3.60% 4,400 4,400
Delaware Hsg. Auth.Participating VRDN, Series PA-39,
3.35% (Liquidity Facility Merrill Lynch) (b) (c) 9,570 9,570
14,970
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
DISTRICT OF COLUMBIA - 0.6%
Dist. of Columbia Hsg. Fin. Auth. Multi-Family Hsg. Rev. Rfdg.
(Mount Vernon Plaza Apts.) Series 1991, 3.45%,
LOC Bank One, VRDN (b) $ 13,105 $ 13,105
FLORIDA - 3.2%
Broward County Ind. Dev. Auth. Ind. Dev. Rev.
(Rib Associates Proj.) Series 1989, 3.55%,
LOC SunTrust Bank, VRDN (b) 1,495 1,495
Dade County Hsg. Fin. Corp. Participating VRDN,
Series 1991 A, 3.70%
(Liquidity Facility Bank One) (b) (c) 4,985 4,985
Dade County Ind. Dev. Auth. Rev., VRDN: (b)
(Guastafeste Proj.) Series 1987, 3.55%,
LOC SunTrust Bank 1,980 1,980
(Montenay-Dade Proj.):
Series 1988, 3.40%, LOC Banque Paribas 17,625 17,625
Series 1989, 3.40%, LOC Banque Paribas 200 200
Series 1990 A, 3.40%, LOC Banque Paribas 35,703 35,703
Greater Orlando Aviation Auth. Arpt. Fac. Rev.
Series B, 3.40% 4/26/96
(Liquidity Facility Morgan Guaranty Trust Co.) CP (b) 2,800 2,800
Indian River County Hosp. Dist. Hosp. Rev. Bonds Series 1990,
3.20%, tender 4/10/96, LOC Krediet Bank 4,400 4,400
Ocean Hwy. & Port Auth. Rev. Series 1990, 3.35%,
LOC ABN-AMRO Bank, VRDN (b) 3,500 3,500
72,688
GEORGIA - 1.6%
Floyd County Dev. Auth. Ind. Dev. Rev.
(Marglen Ind. Inc. Proj.), 3.45%, LOC SunTrust Bank,
VRDN (b) 5,500 5,500
Georgia Muni. Elec. Auth. Pwr. Rev. Bonds Series L,
7.75% 1/1/97 5,250 5,542
Georgia Port Auth. Rev. (Mayor's Point Terminal) Series 1992,
3.45%, LOC SunTrust Bank, VRDN (b) 3,700 3,700
Greene County Ind. Dev. Rev. (Chipman-Union, Inc. Proj.)
Series 1991, 3.45%, LOC SunTrust Bank, VRDN (b) 1,800 1,800
Pierce County Ind. Dev. & Bldg. Auth. Rev. (American Egg
Prods. Inc. Proj.) Series 1989, 3.45%,
LOC SunTrust Bank, VRDN (b) 1,545 1,545
Savannah Econ. Dev. Auth. Rev. (Home Depot Inc.)
Series 1995 A, 3.45%, VRDN (b) 14,600 14,600
Worth County Ind. Dev. Auth. Rev. (Seabrook Ent. Proj.)
Series 1991, 3.35%, LOC Barclays Bank,
VRDN (b) 4,800 4,800
37,487
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
HAWAII - 0.2%
Hawaii Hsg. Fin. & Dev. Corp. Participating VRDN,
Series PT-35, 3.45%
(Liquidity Facility Banque Nationale De Paris) (b) (c) $ 5,265 $ 5,265
IDAHO - 0.6%
Idaho Gen. Oblig. TAN Series 1995, 4.50% 6/27/96 13,000 13,028
Port of Lewiston Ind. Dev. Rev. (Blount Inc.) Series 1995,
3.60%, LOC NationsBank,VRDN (b) 1,800 1,800
14,828
ILLINOIS - 2.1%
Chicago Collateralized Single Family Mtg. Rev. Bonds
Series 1996 B, 3.30%, tender 10/15/96 (MBIA Insured) 4,200 4,200
Danville Ind. Dev. Rev. Bonds (Freight Car Services Inc. Proj.)
3.50%, LOC Chemical Bank, VRDN (b) 5,300 5,300
Illinois Dev. Fin. Auth. Ind. Dev. Rev., VRDN: (b)
(Belmont Steel Proj.) Series 1991,
3.60%, LOC Comerica Bank 4,300 4,300
(Chicago Fineblanking Corp. Proj.) 3.50%, LOC NBD Bank 4,000 4,000
(FC Ltd. Partnership), 3.55%, LOC Lasalle Nat'l. Bank, 3,295 3,295
(Grayhill Inc. Proj.) Series 1995 B, 3.45%,
LOC Harris Trust & Savings Bank 3,150 3,150
(Kindlon Partners Proj.) Series 1994,
3.55%,LOC Lasalle Nat'l. Bank 1,400 1,400
(Rich Products Corp. Proj.)
Series 1993, 3.45%, LOC SunTrust Bank 7,800 7,800
(Yale-Soth Haven Proj.)
Series 1994, 3.50%, LOC Bank One 2,900 2,900
Ilinois Dev. Fin. Auth. Ltd. Oblig. Rev. (SWD Inc. Proj.),
3.50%, LOC NBD Bank, VRDN (b) 5,000 5,000
Illinois Gen. Oblig. Participating VRDN, Series BT-174,
3.35% (FGIC Insured) (Liquidity Facility Bankers Trust Co.) (c) 2,200
2,200
St. Charles Ind. Dev. Rev. (Pier 1 Imports-Midwest, Inc. Proj.)
Series 1986, 3.40%, LOC Nat'l. Westminster Bank,
VRDN (b) 4,100 4,100
47,645
INDIANA - 2.2%
Indiana Hsg. Fin. Auth. Single Family Mtg. Rev. Bonds: (b)
Series 1994 C, 4%, tender 7/3/96 (FGIC Insured) 3,000 3,000
Series D-2, 3.95%, tender 11/1/96 4,385 4,385
Indianapolis Econ. Dev. Rev. (EPI Printers Inc. Proj.)
Series 1995, 3.55%, LOC Comerica Bank, VRDN (b) 5,075 5,075
Indianapolis Ind. Dev. Rev. (Sohl Assoc. LLC Proj.) Series 1995,
3.55%, LOC Nat'l. City Bank, VRDN (b) 3,000 3,000
Lebanon Econ. Dev. Rev. (White Castle Sys. Inc. Proj.) 3.50%,
LOC Bank One, VRDN (b) 2,145 2,145
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
INDIANA - CONTINUED
Ligonier Econ. Dev. Rev. (Sharon Manufacturing Co.), 3.50%,
LOC NBD Bank, VRDN (b) $ 6,300 $ 6,300
Petersburg Solid Waste Disp. Rev. Bonds (Inianapolis Pwr. &
Light Co.) Series 1995 C, 3.35%, VRDN (b) 26,500 26,500
50,405
IOWA - 2.3%
Clinton Ind. Dev. Rev. (Sethness Products Co. Proj.) 3.55%,
LOC Northern Trust Corp.,VRDN (b) 3,800 3,800
Iowa Fin. Auth. Ind. Dev. Rev. (McWane Inc. Proj.)
Series 1992, 3.60%, LOC Amsouth Bank, VRDN (b) 6,000 6,000
Iowa Fin. Auth. Single Family Mtg. Bonds: (b)
Series 1995 B, 3.20%, tender 2/27/97
(FGIC Insured) 2,880 2,880
Series 1996 B, 3.20%, tender 2/27/97
(FGIC Insured) 4,160 4,160
Iowa School TRAN Series 1996 B, 4.25% 1/30/97 1,800 1,814
Iowa Student Loan Liquidity Corp. Rev., Series B, 3.45%
(AMBAC Insured) BPA Norwest Bank, VRDN (b) 30,500 30,500
Waterloo Ind. Dev. Rev. (O'Neal Metals Inc. Proj.)
3.60%, LOC NationsBank, VRDN (b) 4,000 4,000
53,154
KANSAS - 0.3%
Lawrence Gen. Oblig. BAN:
Series 1995 D, 3.45% 10/1/96 1,190 1,190
Series 1995 E, 3.45% 10/1/96 1,170 1,170
Olathe Ind. Dev. Rev. (Garmin International Inc.)
Series 1995, 3.70%, LOC Boatmens First Nat'l. Bank of
Kansas City, VRDN (b) 3,500 3,500
5,860
KENTUCKY - 0.5%
Cynthiana Ind. Dev. Rev. (E.D. Bullard Co. Proj.), 3.60%,
LOC NationsBank, VRDN (b) 1,440 1,440
Daviess County Solid Waste Disp. Facs. Rev. (Scott Paper Co.)
3.60%, LOC ABN-AMRO Bank, VRDN (b) 900 900
Pulasky County (Eastern Kentucky Pwr. Coop. Fin. Corp.)
(Nat. Rural Util. Coop.) Series 1993 B, 3.20%,
tender 8/15/96 (b) 4,500 4,500
Scott County Ind. Building Rev. (Ropak Corp. Proj.)
Series 1994, 3.50%, LOC Bank One, VRDN (b) 4,950 4,950
11,790
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
LOUISIANA - 0.8%
Calcaseiu Parish Pub. Trust Auth. Solid Waste Disp. Rev.
(PPG Industries Inc. Proj.) Series 1994, 3.45%, VRDN (b) $ 6,300 $ 6,300
Dequincy Rev. (Recycle Inc. South. Proj.)
Series 1995, 3.35%, LOC Nat'l.Westminster Bank, VRDN 4,500 4,500
Louisiana Hsg. Fin. Agcy. Single Family Mtg. Rev. Bonds
Series 1996 A, 3.45%,
tender 1//15/97 (FGIC Insured) (b) 4,500 4,500
Plaquemines Parish Environmental Rev. (BP Exploration & Oil, Inc.)
Series 1994, 3.60%, VRDN (b) 1,900 1,900
17,200
MAINE - 0.2%
Eastport Ind. Dev. Rev. (Passamaquoddy Tribe Fibre Extrusion
Proj.) Series 1992, 3.35%, LOC NBD Bank, VRDN (b) 4,860 4,860
MARYLAND - 1.5%
Baltimore Econ. Dev. Rev., VRDN: (b)
(Oles Envelope):
Series A, 3.45%, LOC First Union Bank 3,150 3,150
Series B, 3.45%, LOC First Union Bank 3,835 3,835
(Rock-Tenn Converting Co.) Series 1987,
3.55%, LOC SunTrust Bank 955 955
Howard County Econ. Dev. Rev. (Pace Inc. Proj.) 3.55%,
LOC NationsBank, VRDN (b) 5,000 5,000
Maryland Dept. of Hsg. & Commty. Dev. Participating VRDN,
Series PT-36, 3.45%,
(Liquidity Facility Banque Nationale De Paris) (b) (c) 18,540 18,540
Prince George's County Ind. Dev. Rev. (Cintas Corp. #41 Proj.),
3.55%, LOC PNC Bank, VRDN (b) 2,475 2,475
33,955
MASSACHUSETTS - 0.5%
Mass Bay Transit Auth. RAN Series 1996 A, 3.75% 2/28/97 11,800 11,857
MICHIGAN - 2.6%
Michigan Higher Ed. Student Loan Auth. Rev. Rfdg.,
Series XII-B, 3.20%, (AMBAC Insured)
BPA Krediet Bank, VRDN (b) 6,500 6,500
Michigan RAN Series 1995 B, 4.50% 7/3/96 43,000 43,098
Michigan Strategic Fund Ltd. Oblig. Rev. (Michigan Sugar Co. -
Carrollton) 3.45%, LOC SunTrust Bank, VRDN (b) 6,000 6,000
Michigan Strategic Fund Solid Waste Disp. Rev.
(Grayling Gen. Station Proj.) Series 1990, 3.40%,
LOC Barclays Bank, VRDN (b) 1,700 1,700
Rochester Hills Econ. Dev. Corp. Ltd. Oblig. Rev.
(Cardell Corp.) 3.40%, LOC Comerica Bank, VRDN (b) 1,250 1,250
58,548
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
MINNESOTA - 0.3%
Anoka County United Pwr. Assoc. Rev. Bonds (National Rural
Utilities) Series 1988 A, 3.65%, tender 3/8/96 (b) $ 1,300 $ 1,300
Baudette Ind. Dev. Rev. (Reid-Rowell Inc. Proj.) Series 1989,
3.65%, LOC NationsBank, VRDN (b) 1,800 1,800
Duluth TAN 4.25% 12/31/96 2,200 2,212
Minnesota Hsg. Fin. Agcy. Single-Family Mtg. Rev. Bonds
Series 1995 O, 3.60%, tender 12/12/96 (b) 2,200 2,200
7,512
MISSISSIPPI - 0.7%
Canton Ind. Dev. Auth. Rev. (McCarty Farms Proj.)
Series 1990, 3.55%, LOC SunTrust Bank, VRDN (b) 5,000 5,000
Desoto County Ind. Dev. Rev. (Flavorite Labs Proj.) Series 1991 B,
3.55%, LOC First Tennessee Nat'l. Corp., VRDN (b) 3,000 3,000
Mississippi Business Fin. Corp. Ind. Dev. Rev. (Pillowtex Corp.
Proj.) Series 1992, 3.55%, LOC NationsBank, VRDN (b) 4,140 4,140
Noxubee County Ind. Dev. Board Rev. (Barge Forest Products
Co. Proj.) 2.25%, LOC Amsouth Bank, VRDN (b) 3,265 3,265
15,405
MISSOURI - 0.7%
Missouri Higher Ed. Loan Auth. Student Loan Rev., VRDN : (b)
Series 1988 A, 3.40%, LOC Nat'l Westminster Bank 3,200 3,200
Series 1990 A, 3.40%, LOC Nat'l. Wesminster Bank 800 800
Series 1990 B, 3.40%, 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
15,650
NEVADA - 3.3%
Clark County Poll. Cont. Rev. Bonds
(Southern California Edison) Series 1987 A: (b)
3.75%, tender 3/12/96 11,190 11,190
3.45%, tender 3/21/96 7,500 7,500
3.45%, tender 3/26/96 4,000 4,000
3.30%, tender 5/10/96 5,000 5,000
Nevada Director State Dept. Comm. Ind. Dev. Rev.
(Primex Corp.), 3.50%, LOC Bank One, VRDN (b) 2,995 2,995
Washoe County Gas Fac. Rev. Bonds
(Sierra Pacific Pwr. Co.) Series 1990: (b)
3.80%, tender 3/8/96, LOC Union Bank of Switzerland 1,400 1,400
3.75%, tender 3/20/96, LOC Union Bank of Switzerland 6,500 6,500
3.45%, tender 5/22/96, LOC Union Bank of Switzerland 17,615 17,615
3.30%, tender 5/10/96, LOC Union Bank of Switzerland 8,190 8,190
3.40%, tender 8/12/96, LOC Union Bank of Switzerland 10,000 10,000
74,390
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NEW HAMPSHIRE - 1.1%
New Hampshire Higher Ed. & Health Facs. Auth. Rev. Bonds
(Dartmouth Education Loan Corp.) 3.75%,
tender 6/3/96 (b) $ 1,670 $ 1,670
New Hampshire Hsg. Fin. Auth. Multi-Family Hsg. Rev., VRDN:
3.40%, LOC General Electric Capital Corp. (b) 23,000 23,000
(Nashua-Oxford Proj.) Series 1990, 3.60% 1,100 1,100
25,770
NEW JERSEY - 1.0%
Camden County Muni. Util. Auth. Swr. Rev. Rfdg. Bonds
4% 7/15/96 (FGIC Insured) 1,000 1,003
East Brunswick BAN 4% 1/3/97 6,500 6,524
Hudson County BAN 4.375% 10/10/96 11,000 11,021
Morris County Gen. Oblig. BAN 3.47% 12/13/96 1,400 1,400
Washington Township BAN 4% 12/13/96 3,243 3,254
23,202
NEW MEXICO - 1.2%
Espanol Ind. Dev. Rev. (Nambee Mills Inc. Proj.) Series A,
3.55%, LOC Nat'l. City Bank, VRDN (b) 4,000 4,000
New Mexico Hsg. Auth. Single Family Mtg. Rev. Bonds
3.85%, tender 8/28/96 (b) 8,300 8,300
New Mexico Mtg. Fin. Auth. Single Family Mtg. Rev. Bonds: (b)
Series 1996 A, 3.25%, tender 12/31/96 4,500 4,500
Series 1996 B, 3.25%, tender 2/28/97 (FGIC Insured) 4,500 4,500
New Mexico Student Loan Participating VRDN,
Series PT-67, 3.45% (Liquidity Facility Credit Suisse) (b) (c) 4,400
4,400
Santa Fe Single Family Mtg. Rev. Bonds Series 1995 B, 4%,
tender 11/1/96 (FGIC Insured) 2,500 2,500
28,200
NEW YORK - 2.0%
New York City Gen. Oblig. RAN Series 1996 B, 4.75%
6/28/96, LOC Bank of Nova Scotia 41,900 42,013
New York Energy Research & Dev. Poll. Cont. Rev.
(Niagra Mohawk Proj.) Series 1986 A, 3.50%,
LOC Toronto Dominion Bank, VRDN 3,000 3,000
45,013
NORTH CAROLINA - 0.8%
Cleveland County Ind. Fac. & Poll. Cont. Fin. Auth. Solid
Waste Disp. Rev. (PPG Ind. Proj.) 3.45%, VRDN 3,300 3,300
Halifax County Ind. Fac. Poll. Cont. Fac. Auth.
(Westmoreland-Hadson & Roanoke Valley Proj.)
Series 1991, 3.45%, LOC Credit Suisse, VRDN (b) 1,900 1,900
Johnston County Ind. Facs. Poll. Cont. Rev. Fin. Auth. Ind. Dev.
Rev. (Kabivitrum Inc.Proj.) 3.50%,
LOC Wachovia Bank, VRDN 2,000 2,000
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
NORTH CAROLINA - CONTINUED
North Carolina Eastern Muni. Pwr. Agcy. Pwr. Sys. Rev. Rfdg.
Bonds Series A, 7.50% 1/1/97 $ 1,420 $ 1,496
Piedmont Triad Arpt. Auth. Spl. Facs. Rev. (Triad Int'l.
Maintenance Corp. Proj.) Series 1989, 3.55%,
LOC Mellon Bank, VRDN (b) 10,100 10,100
18,796
OHIO - 0.5%
Dayton Spl. Facs. Rev. Rfdg. (Emery Air Freight Corp. Proj.)
Series 1988 D, 3.60%, LOC Mellon Bank, VRDN (b) 1,400 1,400
Greene County BAN 4% 12/12/96 1,600 1,605
Middletown Ind. Dev. Rev. (Pilot Chemical Proj.) 3.50%,
LOC Bank One, VRDN (b) 800 800
Montgomery City BAN 3.75% 12/20/96 1,000 1,002
Ohio Ind. Dev. Rev. (Masashi Nagai/Snair Co.) Series H,
3.50%, LOC Bank One, VRDN 1,270 1,270
Ohio Pub. Facs. Higher Ed. Facs. Bonds Series II-B, 5%
11/1/96 (MBIA Insured) 2,500 2,525
Summit County Ind. Dev. Rev. (Ganzhorn Properties Project)
3.50% LOC Bank One, VRDN 1,110 1,110
Twinsburg Ind. Dev. Rev. (United Stationers, Inc. Proj.) 3.60%,
LOC PNC Bank, VRDN (b) 1,000 1,000
10,712
OKLAHOMA - 0.9%
Oklahoma Ind. Fin. Auth. Gen. Oblig. Ind. Fin. Rev. Bonds,
Series L, 3.90%, tender 5/1/96,
LOC Credit Locale de France (b) 7,600 7,600
Oklahoma Ind. Auth. Ind. Rev. (Farley Candy),
3.65%, LOC Toronto Dominion, VRDN (b) 3,000 3,000
Southeastern Ind. Auth. Solid Waste Disp. Rev.
(Weyerhaeuser Co. Proj.) 3.45%, VRDN (b) 10,000 10,000
20,600
OREGON - 0.7%
Lane County Sewer Disp. Rev. (Weyerhauser Co. Proj.)
3.55%, VRDN (b) 7,100 7,100
Oregon Econ. Dev. Dept. Solid Waste Disp. Rev.
(Weyerhaeuser Co. Proj.) Series CL, 3.55%, VRDN (b) 3,000 3,000
Port Umatilla Ltd. Oblig. Rev. (Hermiston Food Proj.)
Series 1989, 3.90%, LOC U.S.Nat'l. Bank of Oregon,
VRDN (b) 3,100 3,100
Portland Econ. Dev. Rev. (Columbia Aluminum Recycling)
3.60%, LOC U.S. Nat'l. Bank of Oregon, VRDN (b) 2,250 2,250
15,450
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
PENNSYLVANIA - 5.4%
Butler County Ind. Dev. Rev. (JSM Acquisition Corp. Proj.)
Series 1989 A, 3.55%, LOC PNC Bank, VRDN (b) $ 1,650 $ 1,650
Carbon County Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Panther Creek Partners Proj.): (b)
Series 1990 A:
3.80%, tender 3/8/96, LOC Nat'l. Westminster Bank 2,000 2,000
3.30%, tender 5/15/96, LOC Nat'l Westminster Bank 11,200 11,200
Series 1991 A:
3.75%, tender 3/20/96, LOC Nat'l. Westminster Bank 9,575 9,575
3.35%, tender 5/16/96, LOC Nat'l. Westminster Bank 3,400 3,400
Series 1992 A:
3.75%, tender 3/20/96, LOC Nat'l. Westminster Bank 5,000 5,000
3.50%, tender 5/16/96, LOC Nat'l. Westminster Bank 10,000 10,000
Series B:
3.25%, tender 5/7/96, LOC Nat'l Westminster Bank 4,000 4,000
3.45%, tender 5/9/96, LOC Nat'l. Westminster Bank 2,000 2,000
3.35%, tender 5/16/96, LOC Nat'l. Westminster Bank 8,285 8,285
Erie County Ind. Dev. Auth. Rev. (Carlisle Corp. Proj.)
Series 1993, 3.45%, SunTrust Bank, VRDN (b) 1,500 1,500
Northampton County Ind. Dev. Auth. Bonds (Citizens Utilities
Co. Proj.) Series 1991, 3.35%, tender 4/16/96 (b) 2,000 2,000
Northumberland County Ind. Dev. Auth Rev. VRDN: (b)
(Foster Wheeler Carmel Proj.):
Series 1987 A, 3.40%, LOC Union Bank of Switzerland 9,600 9,600
Series 1987 B, 3.40%, LOC Union Bank of Switzerland 1,200 1,200
(Furman Farms Inc. Proj.) 3.85%,
LOC Meridian Bank NA 2,085 2,085
Pennsylvania Econ. Dev. Fin. Auth. Rev., VRDN: (b)
(BPS Dev. Proj.) Series 1989 D-3,
3.55%, LOC PNC Bank 200 200
(C & D Charter Pwr. Sys.) Series 1991 D-6,
3.55%, LOC PNC Bank 1,200 1,200
(Corry Laser Technology Proj.) Series 1989 D-5,
3.55%, LOC PNC Bank 125 125
(Johnstown Corp. Proj.) 3.55%, LOC PNC Bank 510 510
Pennsylvania Energy Dev. Auth. Rev. (B & W Edensburg Proj.)
Series 1986, 3.20%, LOC Swiss Bank Corp., VRDN (b) 2,500 2,500
Pennsylvania Higher Ed. Assistance Agcy. Student Loan Rev.:
Series 1988 A, 3.40%, LOC SLMA, VRDN (b) 11,700 11,700
Series 1994 A, 3.40%, LOC SLMA, VRDN (b) 9,600 9,600
Venango Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Scrubgrass Proj.): (b)
Series 1990 A
3.75%, tender 3/20/96, LOC Nat'l. Westminster Bank 7,400 7,400
Series 1990 B:
3.75%, tender 3/20/96, LOC Nat'l. Westminster Bank 7,800 7,800
3.75%, tender 3/25/96, LOC Nat'l. Westminster Bank 5,000 5,000
3.50%, tender 5/16/96, LOC Nat'l. Westminster Bank 4,100 4,100
123,630
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
RHODE ISLAND - 0.3%
Providence Pub. Parking Rev. (Washington Street Garage Proj.)
Series 1991, 3.40%, LOC Credit Suisse, 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 - 4.0%
Abbeville County Ind. (Springs Inds. Proj.) 3.45%,
LOC Wachovia Bank, (b) 4,000 4,000
Dorchester County Ind. Dev. Rev. (SYN Strand Inc.) Series 1994,
3.45%, LOC Wachovia Bank, VRDN (b) 6,650 6,650
Marion County Ind. Dev. Rev. (New South Proj.) Series 1994,
3.60%, LOC NationsBank,VRDN (b) 3,855 3,855
South Carolina Jobs Econ Dev. Auth. Econ. Rev., VRDN:
(Alexander Mach Inc. Proj.) Series 1994,
3.60%, LOC NationsBank (b) 2,500 2,500
(Alfmeir Corp.) 3.45% LOC Bayerische Landesbank (b) 3,500 3,500
(Drake Molding Corp. Proj.) Series 1995,
3.50%, LOC First of America Bank (b) 6,200 6,200
(Jackson Mills Inc. Proj.) Series 1994,
3.45%, LOC SunTrust Bank (b) 4,000 4,000
(Keys Printing Co.) 3.45%, LOC Wachovia Bank (b) 4,000 4,000
(Peace Textile America Proj.) Series 1992,
3.60%, LOC NationsBank (b) 3,000 3,000
(Titan Wheel Int'l. Proj.) Series1995,
3.60%, LOC NationsBank (b) 9,500 9,500
(Wellman Inc. Proj.) 3.45%, LOC Wachovia Bank (b) 7,500 7,500
(Zeuna Staerker USA Inc. Proj.) Series 1993,
3.45%, LOC Bayerische Landesbank 7,200 7,200
South Carolina Port Auth. Jr. Lien, 3.40%,
LOC South Carolia Nat'l Bank, VRDN (b) 20,700 20,700
Spartanburg County Ind. Dev. Rev. (Prym-Dritz Corp. Proj.)
3.45%, LOC Wachovia Bank, VRDN (b) 4,100 4,100
Union County Ind. Dev. Auth. Rev. (Federal Paper Board
Proj.) 3.45%, LOC Wachovia Bank, VRDN (b) 4,000 4,000
90,705
SOUTH DAKOTA - 0.7%
South Dakota Hsg. Dev. Auth. Hsg. Rev. Bonds (Homeownership
Mtg.) Series E, 4.05%, tender 10/24/96 16,000 16,000
TENNESSEE - 4.1%
Claiborne County Ind. Dev. Rev. (Royal Sterilization System)
3.55%, LOC First Tennessee Nat'l. Corp., VRDN (b) 2,500 2,500
Hamilton County Ind. Dev. Rev. Multi-Family Hsg. (Waterford
Place Apts. Proj.) Series1987, 3.95%,
LOC Marine Midland Bank, VRDN (b) 10,100 10,100
Jackson Ind. Dev. Board Rev. (Florida Steel Corp. Proj.)
Series 1995, 3.55%, LOC NationsBank of Florida, VRDN (b) 2,000 2,000
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
TENNESSEE - CONTINUED
Memphis-Shelby County Arpt. Auth. 3.35% 5/16/96,
LOC Canadian Imperial Bank, CP $ 8,700 $ 8,700
Morristown Ind. Dev. (Lakeway Container Inc. Proj.)
Series 1993, 3.55%, LOC First Tennessee Bank (b) 400 400
Tennessee Hsg. Dev. Agcy.:
Bonds: (b)
Series 1996-1C, 3.25%, tender 2/6/97 38,000 38,004
Series PT-59A, 3.65%, tender 6/12/96
(Liquidity Facility Credit Suisse) (c) (d) 12,230 12,230
Participating VRDN: (b) (c)
Series PT-25, 3.45%, (AMBAC Insured)
(Liquidity Facility Credit Suisse) 14,840 14,840
Series PT-59B, 3.45% (Liquidity Facility Credit Suisse) 3,950 3,950
Trenton Ind. Dev. Rev. (Dyersburg Fabrics Inc.) Series 1990,
3.55%, LOC SunTrust Bank, VRDN (b) 1,050 1,050
93,774
TEXAS - 19.6%
Austin Independent School Dist. TRAN 4.096% 8/30/96 3,600 3,600
Bell County Ind. Dev. Corp. Ind. Dev. Rev. Bonds (Metal Sales
Manufacturing Corp.)3.50%, LOC Star Bank, VRDN (b) 2,800 2,800
Brazos River Hbr. Navigation Dist. of Brazoria County
Rev. Bonds (Dow Chemical Proj.): (b)
Series 1988:
3.65%, tender 3/7/96 8,570 8,570
3.70%, tender 3/8/96 9,000 9,000
3.80%, tender 3/12/96 2,000 2,000
3.45%, tender 3/27/96 7,500 7,500
3.50%, tender 3/22/96 7,050 7,050
3.35%, tender 5/21/96 9,480 9,480
Series 1992:
3.70%, tender 3/8/96 5,660 5,660
3.80%, tender 3/12/96 1,500 1,500
3.25%, tender 5/7/96 5,000 5,000
3.30%, tender 5/10/96 5,700 5,700
3.35%, tender 5/21/96 4,000 4,000
3.35%, tender 5/23/96 4,300 4,300
Brazos River Auth. Collateralized Poll. Cont. Rev.
(Texas Util. Elec.): (b)
Rfdg. Bonds:
Series A, 3.65%, tender 3/7/96,
LOC Canadian Imperial Bank 13,000 13,000
Series B, 3.30%, tender 8/15/96,
LOC Canadian Imperial Bank 29,170 29,170
Rfdg., VRDN:
Series 1995 A, 3.55%,
LOC Morgan Guaranty Trust Co. 800 800
Series 1995 B, 3.60%, LOC Union Bank of Switzerland 8,300 8,300
Series 1995 C, 3.55%, LOC Swiss Bank 9,300 9,300
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
TEXAS - CONTINUED
Brownsville Ind. Dev. Corp. Rev. (Rich-Seapak Corp. Proj.)
Series 1992, 3.45%, LOC SunTrust Bank, VRDN (b) $ 7,000 $ 7,000
Cleburne Ind. Dev. Rev. (Southwestern Analytical Chemical
Proj.) 3.65%, LOC Nat'l.City Bank, VRDN (b) 2,475 2,475
Denton County Ind. Dev. Rev. (Hydro Conduit Corp.) 3.70%,
LOC Union Bank of Switzerland, VRDN (b) 7,200 7,200
Goose Creek Cons. Ind. School Dist. TRAN: (d)
4.096% 8/31/96 2,500 2,500
4.096% 8/31/96 2,500 2,500
Greater East Texas Higher Ed. Student Loan Rev.: (b)
Bonds:
Series 1993 B, 4.10%, tender 6/1/96, LOC SLMA 6,000 6,000
Series 1993 B, 3.25%, tender 2/1/97, LOC SLMA 24,000 24,000
VRDN:
Rfdg., Series 1992 B, 3.45%, LOC SLMA 1,000 1,000
Series 1988:
3.45% (AMBAC Insured) BPA Citibank 7,500 7,500
3.45% (AMBAC Insured) BPA Citibank 29,700 29,700
Greater Texas Student Loan Rev. Rfdg. Bonds Series 1996 A,
3.35% 3/1/97, LOC SLMA 30,000 30,000
Gulf Coast Ind. Dev. Auth. Solid Waste Disp. Rev. (Citgo
Petroleum) 3.60%, LOC Wachovia Bank, VRDN (b) 1,400 1,400
Gulf Coast Waste Disp. Auth. Poll. Cont. Rev.
(Amoco Oil Co. Proj.) 3.55%, VRDN (b) 2,100 2,100
Gulf Coast Waste Disp. Auth. Rev.
(Amoco Oil Co. Proj.) 3.55%, VRDN (b) 7,500 7,500
Houston Arpt. Sys. Corp. Rev. (Sr. Lien)
Series 1993 A, 3.35% 4/8/96, LOC Commerzbank, CP 10,900 10,900
Houston TRAN: (d)
4.384% 4/4/96 2,886 2,886
4.392% 4/4/96 2,886 2,886
McKinney Ind. Dev. Corp. Ind. Dev. Rev. (Delta Daily Food
Inc. Proj.) Series 1994, 3.45%, LOC ABN-AMRO Bank,
VRDN (b) 8,500 8,500
North Texas Higher Ed. Auth. Student Loan Rev., VRDN: (b)
Series 1990, 3.40%, LOC SLMA 2,700 2,700
Series 1990, 3.40%, LOC SLMA 2,800 2,800
Series 1991 F, 3.40% (AMBAC Insured) BPA SLMA 4,500 4,500
Series 1993 A, 3.40%, LOC SLMA 7,100 7,100
Orange County Navagational & Port Auth. Rev. (Coastal Films
Inc.) 3.60%, LOC NationsBank, VRDN (b) 5,000 5,000
Panhandle-Plains Higher Ed. Auth. Student Loan Rev., VRDN: (b)
Series 1992 A, 3.20%, LOC SLMA 2,500 2,500
Series 1992 A, 3.20%, LOC SLMA 4,000 4,000
San Antonio Hsg. Fin. Auth. Rev. (Mesa Ridge Apts. Proj.)
3.55%, LOC Swiss Bank, VRDN (b) 2,100 2,100
San Marcos Ind. Dev. Corp. Ind. Dev. Rev. (Butler Manufacturing
Co.) Series 1995, 3.85%, LOC NationsBank, VRDN (b) 6,250 6,250
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
TEXAS - CONTINUED
Southeast Hsg. Fin. Corp. Participating VRDN Series 1991 C,
3.70% (Liquidity Facility Bank One) (b) (c) $ 6,890 $ 6,890
South Texas Higher Education Auth. Student Loan Rev. Bonds
Series 1995, 3.20%, LOC SLMA, VRDN (b) 18,000 18,000
Sunbelt Ind. Dev. Corp. Rev. (Fort Dearborn Lithograph)
3.50%, LOC NBD Bank, VRDN (b) 5,000 5,000
Texas Gen. Oblig.:
TRAN Series 1995 A, 4.75% 8/30/96 61,400 61,665
Bonds:
(Veterans Hsg. Assist Prog. Fund II):
Series 1995 D, 3.85%, tender 7/17/96 10,000 10,000
Series 1995 E, 3.90%, tender 11/6/96 11,000 11,000
Texas Pub. Fin. Auth. Participating VRDN, Series 1996-CB2,
3.53% (Liquidity Facility Chemical Bank) (c) 3,000 3,000
Waxahachie Ind. Dev. Auth. Rev. (Rock-Tenn Converting Co. Proj.)
Series 1986, 3.55%, LOC SunTrust Bank, VRDN (b) 3,145 3,145
448,427
UTAH - 0.7%
Intermountain Pwr. Agcy. Pwr. Supply Rev.:
Bonds, Series 1985 E, 3.85%, tender 6/17/96,
BPA Bank of America Nat'l. Trust & Savings 10,000 10,000
Rfdg. Series A, 3.90% 7/1/96 1,500 1,503
Salt Lake City Arpt. Rev. Series A, 3.20%,
LOC Credit Suisse, VRDN (b) 4,300 4,300
15,803
VERMONT - 0.4%
Vermont Hsg. Fin. Agcy. Participating VRDN, Series P-64,
3.45% (Liquidity Facility Bayerische-Hypotheken)
(AMBAC Insured) (b) (c) 6,535 6,535
Vermont Ind. Dev. Auth. Rev. (Ryegate Proj.) Series 1990,
3.35%, LOC Algemene Bank, VRDN (b) 3,000 3,000
9,535
VIRGINIA - 2.8%
Amelia County Facs. Rev. (Chambers Waste Sys. Proj.),
3.60%, LOC Morgan Guaranty Trust Co., VRDN (b) 4,400 4,400
Halifax County Ind. Dev. Auth. Poll. Cont. Rev. Bonds
(Virginia Elec. Pwr. Co.) Series 1992: (b)
3.40%, tender 5/9/96 13,100 13,100
3.40%, tender 5/13/96 20,000 20,000
Mecklenburg County Ind. Auth. Rev. (American Bldgs. Co. Proj.)
3.60%, 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, VRDN: (b)
3.45%, LOC Wachovia Bank 2,000 2,000
3.45%, LOC Wachovia Bank, 3,100 3,100
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
VIRGINIA - CONTINUED
Southampton County Ind. Dev. Auth. Ind. Rev.
(Hadson Pwr. 11 - Southampton Proj.) Series 1990 A, 3.50%,
LOC Credit Suisse, VRDN (b) $ 3,200 $ 3,200
Virginia Beach Dev. Auth. Rfdg. Rev. (Ocean Ranch Motel Corp.
Proj.) Series 1993, 3.55%, LOC NationsBank, VRDN 2,000 2,000
Virginia Hsg. Dev. Auth. Participating VRDN: (b) (c)
Series PA-80A, 3.45% (Liquidity Facility Merrill Lynch) 5,220 5,220
Series PA-80B, 3.45% (Liquidity Facility Merrill Lynch) 4,000 4,000
64,220
WASHINGTON - 2.6%
Grays Harbor Ind. Dev. Corp. Solid Waste Disp. Rev.
(Weyerhaeuser Co. Proj.) 3.55%, VRDN (b) 9,650 9,650
King County Gen. Oblig. Rfdg. Bonds Series 1996 A, 5%
1/1/97 1,800 1,824
Klickitat County Pub. Corp. Ind. Dev. Rev. (Rabanco Landfill
Proj.) Series 1990, 3.70%, LOC Bank of America,
VRDN (b) 10,700 10,700
Port Bellingham Ind. Dev. Rev. (Sauder Woodcraft Corp.),
3.70%, LOC Bank of America, VRDN (b) 3,880 3,880
Port Longview Ind. Dev. Corp. Solid Waste Disp. Rev.
(Weyerhaeuser Co. Proj.) Series1993, 3.45%, VRDN 22,400 22,400
Washington Gen. Oblig. Rev. Rfdg. Bonds Series R, 4.75%
9/1/96 1,500 1,510
Washington Hsg. Fin. Comm. Rev. Bonds
(Single Family Prog.) 4.10%, tender 6/1/96
(FGIC Insured) (b) 5,539 5,539
Washington State Pub. Pwr. Supply Sys. Rev. Bonds
(Nuclear Proj. #3) 4.10% 7/1/96 1,000 1,002
Washington Student Loan Fin. Assoc. Rev., Series 1988 A,
3.25%, LOC Nat'l. Westminster Bank, VRDN (b) 2,600 2,600
59,105
WEST VIRGINIA - 2.2%
Grant County Poll. Cont. Rev. Bonds (Vepco Proj.)
Series 1986, 3.60%, tender 3/8/96 (b) 7,400 7,400
Marion County Solid Waste Disp. Rev.
(Grant Town Cogeneration Proj.) VRDN: (b)
Series 1990 B, 3.40%, LOC Nat'l. Westminster Bank 9,500 9,500
Series 1990 C, 3.40%, LOC Nat'l. Westminster Bank 13,600 13,600
Series 1990 D, 3.40%, LOC Nat'l. Westminster Bank 6,400 6,400
West Virginia Pub. Energy Auth. Energy Rev. Bonds
(Morgantown Energy Assoc.): (b)
3.65%, tender 3/8/96, LOC Swiss Bank 1,000 1,000
3.75%, tender 3/20/95, LOC Swiss Bank 4,000 4,000
3.45%, tender 5/9/96, LOC Swiss Bank 2,000 2,000
3.30%, tender 5/15/96, LOC Swiss Bank 2,600 2,600
Wood County Ind. Dev. Rev. (AGA Gas Inc. Proj.) Series 1988,
3.90%, LOC Svenska Handelsbanken, VRDN (b) 4,800 4,800
51,300
MUNICIPAL SECURITIES (A) - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
WISCONSIN - 2.2%
Ashwaubenon Ind. Dev. Rev. (Tufco Proj.) Series 1992, 3.50%,
LOC Bank One, VRDN (b) $ 1,750 $ 1,750
City of Eau Claire Solid Waste Disp. Rev. (Pope & Talbot Proj.)
Series 1994, 3.45%, LOC Wachovia Bank, VRDN (b) 4,000 4,000
Hartford Comm. Dev. Auth. Ind. Dev. Rev. Bonds (TNT/Larpen
Supply Proj.) 3.50%, LOC Bank One, VRDN (b) 2,500 2,500
Jefferson Ind. Dev. Rev. (Generac Corp. Proj.)
Series 1994, 3.50%, LOC NBD Bank, VRDN (b) 7,200 7,200
Kenosha Unified School Dist. TRAN 4.50% 9/6/96 6,500 6,515
Little Chure Ind. Dev. Rev. (Kaukauna Cheese Proj.)
Series 1995, 3.50%, LOC Bank One, VRDN (b) 3,450 3,450
Menomonee Falls School Dist. TRAN 4.25% 8/30/96 4,300 4,307
Rhinelander Ind. Dev. Rev. (Red Arrow Prod. Co., Inc.)
Series 1994, 3.50%, LOC Bank One, VRDN (b) 7,000 7,000
Village of Pleasant Prarie Ind. Dev. Rev.
(Muskie Enterprises Inc. Proj.) Series 1995,
3.45%, LOC Harris Trust & Savings Bank, VRDN (b) 4,000 4,000
Wisconsin Gen. Oblig. Participating VRDN, Series 944904,
3.52% (Liquidity Facility Citibank) (b) (c) 9,100 9,100
49,822
WYOMING - 0.2%
Sweetwater County Envir. Impt. Rev. Bonds:
(Pacificorp. Proj.) Series 1990 A:
3.45%, tender 3/22/96, LOC Westdeutsch Landesbank 4,200 4,200
3.45%, tender 5/22/96, LOC Westdeutsch Landesbank 1,500 1,500
5,700
MULTIPLE STATES - 1.5%
Clipper Participating VRDN, Series 1995 1, 3.53%,
(Liquidity Facility State Street Bank & Trust) (b) (c) 35,000 35,000
TOTAL INVESTMENTS - 100% $ 2,286,815
Total Cost for Income Tax Purposes $ 2,286,815
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax and Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
(c) Provides evidence of ownership in one or more underlying municipal
bonds.
(d) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Tennessee Hsg. Dev. Agcy.
Rev. Bonds Series PT-59A,
4.10%, tender 6/12/96
(Liquidity Facility
Credit Suisse) 6/1/95 $ 12,230,000
Goose Creek ISD
TRAN 4.096%
8/31/96 9/26/95 $ 2,500,000
Goose Creek ISD
TRAN 4.096%
8/31/96 10/13/95 $ 2,500,000
Houston TRAN
4.384% 4/4/96 11/2/95 $ 2,886,000
Houston TRAN
4.392% 4/4/96 11/9/95 $ 2,886,000
INCOME TAX INFORMATION
At August 31 1995, the fund had a capital loss carryforward of
approximately $73,900 of which $900, $700, $45,800, and $26,500 will expire
on August 31, 1999, 2001, 2002, and 2003, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) FEBRUARY 29, 1996 (UNAUDITED)
6.ASSETS 7. 8.
9.Investment in securities, at value - See accompanying 10. $ 2,286,815
schedule
11.Cash 12. 8,511
13.Interest receivable 14. 19,513
15. 16.TOTAL ASSETS 17. 2,314,839
18.LIABILITIES 19. 20.
21.Payable for investments purchased $ 41,862 22.
23.Distributions payable 238 24.
25.Accrued management fee 715 26.
27. 28.TOTAL LIABILITIES 29. 42,815
30.31.NET ASSETS 32. $ 2,272,024
33.Net Assets consist of: 34. 35.
36.Paid in capital 37. $ 2,272,111
38.Accumulated net realized gain (loss) on investments 39. (87)
40.41.NET ASSETS, for 2,272,111 shares outstanding 42. $ 2,272,024
43.44.NET ASSET VALUE, offering price and redemption 45. $1.00
price per share ($2,272,024 (divided by) 2,272,111 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
46.47.INTEREST INCOME 48. $ 43,563
49.EXPENSES 50. 51.
52.Management fee $ 5,598 53.
Non-interested trustees' compensation 4 54.
55. Total expenses before reductions 5,602 56.
57. Expense reductions (1,272) 4,330
58.59.NET INTEREST INCOME 60. 39,233
61.62.NET REALIZED GAIN (LOSS) ON INVESTMENTS 63. (16)
64.65.NET INCREASE IN NET ASSETS RESULTING FROM 66. $ 39,217
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 1996 AUGUST 31,
(UNAUDITED) 1995
67.INCREASE (DECREASE) IN NET ASSETS
68.Operations $ 39,233 $ 78,723
Net interest income
69. Net realized gain (loss) (16) (26)
70. 71.NET INCREASE (DECREASE) IN NET ASSETS 39,217 78,697
RESULTING FROM OPERATIONS
72.Distributions to shareholders from net interest (39,233) (78,723)
income
73.Share transactions at net asset value of $1.00 per 1,555,889 3,154,447
share
Proceeds from sales of shares
74. Reinvestment of distributions from net interest 37,647 75,335
income
75. Cost of shares redeemed (1,527,626) (3,311,498)
76.77. 65,910 (81,716)
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES
RESULTING FROM SHARE TRANSACTIONS
78. 79.TOTAL INCREASE (DECREASE) IN NET ASSETS 65,894 (81,742)
80.NET ASSETS 81. 82.
83.Beginning of period 2,206,130 2,287,872
84.End of period $ 2,272,024 $ 2,206,130
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
85. SIX MONTHS YEARS ENDED AUGUST 31, JANUARY 14, 1991
ENDED (COMMENCEMENT
FEBRUARY 29, 199 OF OPERATIONS) TO
6 AUGUST 31,
86. (UNAUDITED) 1995 1994 1993 1992 1991
87.SELECTED PER-SHARE DATA
88.Net asset value,
beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
89.Income from
Investment Operations .017 .035 .025 .026 .038 .030
Net interest income
90.Less Distributions (.017) (.035) (.025) (.026) (.038) (.030)
From net interest income
91.Net asset value,
end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
92.TOTAL RETURN B 1.75% 3.59% 2.50% 2.66% 3.91% 3.03%
93.RATIOS AND SUPPLEMENTAL DATA
94.Net assets, end of
period (in millions) $ 2,272 $ 2,206 $ 2,288 $ 1,696 $ 1,303 $ 424
95.Ratio of expenses
to average net
assets .39%A, .40%C .33%C .27%C .20%C .09%A,
C C
96.Ratio of net interest
income to average
net assets 3.50%A 3.53% 2.48% 2.61% 3.67% 4.69%A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSES WOULD HAVE BEEN
HIGHER (SEE NOTE 4 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended February 29, 1996 (Unaudited)
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 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 $23,002,000 or 1%
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 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 annualized rate of .50% of the fund's average net
assets.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
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
$16,000 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 the expenses by $1,121,000.
In addition, FMR agreed to reimburse a portion of the fund's expenses. For
the period, the reimbursement reduced expenses by $151,000.
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)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)MUTUAL FUND
ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
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
Page 37 = BLANK
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Page 38 = BLANK
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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
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
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
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
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
Tax-Exempt 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
FIDELITY
(registered trademark)
DAILY INCOME
TRUST
SEMIANNUAL REPORT
FEBRUARY 29, 1996
CONTENTS
CHECK PAGE NUMBERS !!!
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 18 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 22 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although the markets were fairly positive in 1995, no one can predict what
lies ahead for investors. The previous year, stocks posted below-average
returns and bonds had one of the worst years in history. This downturn
followed a period in which the investing environment was almost ideal.
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 a fund's share price
over a given period, as well as reinvestment of its dividends (or income).
Yield measures the income paid by a fund. Since a money market fund tries
to maintain a $1 share price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, 1996 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Fidelity Daily Income Trust 2.67% 5.61% 23.38% 75.41%
All Taxable Money Market Funds Average 2.58% 5.44% 22.45% 73.09%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or 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 772 taxable money market funds with similar objectives
tracked by IBC/Donoghue during the period covered by this report.(The
periods covered by the IBC/Donoghue numbers are the closest available match
to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 29, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Daily Income Trust 5.61% 4.29% 5.78%
All Taxable Money Market Funds Average 5.44% 4.13% 5.63%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
2/28/95 5/30/95 8/29/95 11/28/95 2/27/96
5.66% 5.70% 5.45% 5.35% 5.07%
Fidelity Daily Income Trust
All Taxable Money 5.49% 5.51% 5.25% 5.26% 4.78%
Market Funds Average
3/1/95 5/31/95 8/30/95 11/29/95 2/28/96
2.88% 2.89% 2.84% 2.86% 2.76%
MMDA
</TABLE>
Row: 1, Col: 1, Value: 5.659999999999999
Row: 1, Col: 2, Value: 5.49
Row: 1, Col: 3, Value: 2.88
Row: 2, Col: 1, Value: 5.7
Row: 2, Col: 2, Value: 5.51
Row: 2, Col: 3, Value: 2.89
Row: 3, Col: 1, Value: 5.45
Row: 3, Col: 2, Value: 5.25
Row: 3, Col: 3, Value: 2.84
Row: 4, Col: 1, Value: 5.35
Row: 4, Col: 2, Value: 5.26
Row: 4, Col: 3, Value: 2.86
Row: 5, Col: 1, Value: 5.07
Row: 5, Col: 2, Value: 4.78
Row: 5, Col: 3, Value: 2.76
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/Donoghue. 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 Burnie Stehman,
Portfolio Manager of Fidelity Daily Income Trust
Q. BURNIE, CAN YOU DESCRIBE THE INVESTMENT CLIMATE YOU'VE BEEN OPERATING IN
SINCE THE END OF AUGUST?
A. Looking back, it's easy to generalize about developments during the
period: economic growth slowed, inflation remained at worst a tame threat,
and short-term interest rates declined. But while all that was happening,
the pattern wasn't always clear. When the period began, the Federal Reserve
was in an easing mode. In July, the Fed had trimmed one-quarter percentage
point off the interest rate banks charge each other for overnight loans,
known as the federal funds rate. When growth surged unexpectedly to a 3.6%
annual rate during the third quarter of 1995, it appeared as if the Fed
might have jumped the gun. But then growth slowed markedly during the
fourth quarter, inflationary pressures diminished, and the Fed resumed
cutting rates, lowering the federal funds rate in December and again in
January 1996; the total reduction during the period was one-half percentage
point. A key variable late in the period was the political battle between
Congress and the White House over the federal budget and attempts to reduce
the deficit. Add to that the disruptions caused by unusually severe winter
weather and the upshot was a tumultuous six months, marked by short-term
uncertainty and a hodgepodge of contradictory signals.
Q. HOW DID YOU POSITION THE FUND DURING THE PERIOD?
A. The fund began the period with an average maturity of 52 days and stayed
close to that throughout the fall and early winter. As time went on and the
likelihood of further interest rate cuts increased, I began extending the
fund's maturity with an eye toward locking in current rates and preserving
the fund's yield; by year-end, the fund was out around 65 days. Since then,
the fund's average maturity has gradually declined, reaching 52 days at the
end of February. One reason the fund's average maturity rolled back down
during the final months of the period was that supply was limited. A second
reason was that a market phenomenon known as an inverted yield curve
developed. I took advantage of that by investing in the higher yields that
became available temporarily on shorter term securities.
Q. HOW DID THE FUND PERFORM?
A. Better than its peers. Fidelity Daily Income Trust's seven-day yield on
February 29, 1996, was 5.05%, compared to 5.49% on August 31, 1995. The
fund's total return for the six-month period was 2.67%, compared to 2.58%
for the all taxable money market funds average, according to IBC/ Donoghue.
Q. WHAT'S THE OUTLOOK?
A. Conditions remain unsettled. Lately it seems that for every economic
indicator suggesting weakness in the economy, another suggests strength.
But when we take a longer-term view, the health and well-being of the
economy looks questionable. As long as that's the case, and inflationary
pressures remain subdued, chances are good the Fed will choose to stimulate
economic growth by cutting interest rates. Accordingly, I'll probably look
for opportunities to extend the fund slightly as supply enters the market
and attractive securities become available. My feeling now is that an
average maturity of 50 to 60 days would position the fund well in the
near-term as we await a clearer picture of political developments and the
state of the economy.
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 February 29,
1996, more than $2 billion
MANAGER: Burnell Stehman,
since 1985, 1979 -1983;
several institutional money
market funds; joined Fidelity in
1979
(checkmark)
WORDS TO KNOW
BANKERS' ACCEPTANCE (BA):
A short-term note whose
payment is guaranteed by a
bank.
CERTIFICATE OF DEPOSIT (CD):
An interest-bearing deposit
with a specific maturity. Large
denomination CDs, like the
fund buys, have negotiable
interest rates and can be sold
in the secondary market.
COMMERCIAL PAPER: A
short-term note from a bank
or corporation.
FEDERAL FUNDS RATE: The
interest rate banks charge
each other for overnight
loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity -
weighted by dollar amount-
is short, the fund manager
believes interest rates will
rise. When the average
maturity is long, the fund
manager is expecting rates to
fall. When the average
maturity is neutral, the fund
manager wants to have the
flexibility to respond to rising
rates, while still capturing a
portion of the higher yields
available from issues with
longer maturities.
TIME DEPOSIT (TD): An
interest-bearing deposit with a
specific maturity. Large
denomination TDs, like the
fund buys, differ from CDs in
that they can't be sold in the
secondary market.
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/29/96 8/31/95 2/28/95
0 - 30 47 40 48
31 - 90 36 46 42
91 - 180 15 13 10
181 - 397 2 1 0
WEIGHTED AVERAGE MATURITY
2/29/96 8/31/95 2/28/95
Fidelity Daily Income Trus 52 days 52 days 43 days
t
All Taxable Money
Market Funds Average* 56 days 54 days 40 days
ASSET ALLOCATION
AS OF FEBRUARY 29, 1996 AS OF AUGUST 31, 1995
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
Row: 1, Col: 1, Value: 54.0
Row: 1, Col: 2, Value: 37.0
Row: 1, Col: 3, Value: 9.0
Row: 1, Col: 4, Value: 0.0
Commercial
paper 44%
Bank CDs, BAs,
TDs, and notes 36%
Government
securities 18%
Other 2%
Commercial
paper 54%
Bank CDs, BAs,
TDs, and notes 37%
Government
securities 9%
Other 0%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
INVESTMENTS FEBRUARY 29, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investments
BANKERS' ACCEPTANCES - 2.7%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Bank of America National Trust & Savings Assoc.
3/15/96 5.78% $ 3,500 $ 3,492
3/18/96 5.78 3,000 2,992
Chemical Banking Corp.
3/8/96 5.74 4,000 3,996
3/11/96 5.74 6,632 6,622
4/24/96 5.80 1,000 992
5/10/96 5.71 8,571 8,479
6/10/96 5.29 3,957 3,899
6/18/96 5.27 5,000 4,922
6/24/96 5.02 3,305 3,253
6/25/96 5.25 5,100 5,016
8/6/96 4.96 3,650 3,572
8/12/96 5.05 3,521 3,442
8/13/96 5.05 3,266 3,192
CoreStates Bank of Delaware, N.A.
3/19/96 5.71 5,329 5,314
Key Bank of Washington
3/8/96 5.71 3,500 3,496
Society National Bank, Cleveland
4/29/96 5.47 2,000 1,982
TOTAL BANKERS' ACCEPTANCES 64,661
CERTIFICATES OF DEPOSIT - 4.4%
Chase Manhattan Bank
6/24/96 5.25 20,000 20,000
7/24/96 5.20 10,000 10,000
First Tennessee Bank, N.A. Memphis
3/25/96 5.47 40,000 40,000
Mellon Bank, N.A.
3/7/96 5.70 7,000 7,000
Old Kent Bank & Trust Co.
7/23/96 5.25 10,000 10,000
Old Kent Bank - Illinois
6/11/96 5.05 20,000 20,000
TOTAL CERTIFICATES OF DEPOSIT 107,000
COMMERCIAL PAPER - 44.3%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
A.H. Robins Company, Incorporated
3/5/96 5.77% $ 5,300 $ 5,297
4/4/96 5.70 1,200 1,194
American Express Credit Corp.
3/1/96 5.81 8,000 8,000
3/6/96 5.65 15,000 14,988
3/11/96 5.74 1,000 998
4/15/96 5.76 10,000 9,930
4/24/96 5.51 9,000 8,927
7/22/96 5.23 4,000 3,919
American Home Food Products, Inc.
3/20/96 5.28 20,000 19,945
4/3/96 5.44 3,000 2,985
4/19/96 5.24 5,000 4,965
American Home Products
3/4/96 5.78 5,000 4,998
4/3/96 5.71 10,000 9,949
4/26/96 5.24 5,000 4,960
5/9/96 5.19 2,000 1,980
5/10/96 5.20 2,493 2,468
American Telephone & Telegraph Co.
3/12/96 5.70 10,000 9,983
3/14/96 5.80 10,000 9,980
5/10/96 5.55 25,000 24,736
Associates Corp. of North America
3/14/96 5.72 23,000 22,953
4/4/96 5.70 6,000 5,968
4/8/96 5.67 4,000 3,976
Bear Stearns Cos., Inc.
3/27/96 5.58 14,000 13,944
Beneficial Corp.
3/1/96 5.73 14,000 14,000
4/18/96 5.56 5,000 4,964
CIESCO, L.P.
3/12/96 5.44 10,000 9,984
4/12/96 5.45 20,000 19,875
4/26/96 5.18 25,000 24,801
4/29/96 5.18 12,600 12,494
CIT Group Holdings, Inc.
3/4/96 5.82 10,000 9,995
3/21/96 5.70 7,000 6,978
Chemical Banking Corp.
3/15/96 5.69 9,000 8,980
3/19/96 5.67 5,000 4,986
4/15/96 5.45 13,000 12,913
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Chrysler Financial Corporation
3/4/96 5.60% $ 5,000 $ 4,998
3/11/96 5.35 3,000 2,996
3/12/96 5.34 5,000 4,992
3/13/96 5.32 5,000 4,991
3/27/96 5.38 4,000 3,985
3/28/96 5.38 4,000 3,984
4/10/96 5.33 4,000 3,976
CoreStates Capital Corp.
3/5/96 5.29 (a) 10,000 10,000
Corporate Asset Funding Co., Inc.
3/7/96 5.69 11,600 11,589
5/3/96 5.17 4,000 3,964
Dakota
5/15/96 5.18 3,000 2,968
5/17/96 5.22 6,000 5,934
du Pont (E.I.) de Nemours & Co.
8/2/96 5.17 5,000 4,892
Enterprise Funding Corp.
3/22/96 5.49 2,564 2,556
3/27/96 5.45 8,905 8,870
4/3/96 5.44 2,058 2,048
4/8/96 5.24 4,530 4,505
5/2/96 5.21 20,000 19,823
Ford Motor Credit Corp.
3/19/96 5.47 10,000 9,973
4/4/96 5.23 20,000 19,902
6/3/96 5.28 8,000 7,892
General Electric Capital Corp.
3/1/96 5.77 10,000 10,000
3/8/96 5.63 10,000 9,989
3/11/96 5.63 10,000 9,985
3/14/96 5.75 (a) 6,000 6,000
3/28/96 5.80 35,000 34,852
4/1/96 5.71 24,000 23,884
4/24/96 5.76 5,000 4,958
5/22/96 5.19 (a) 5,000 5,001
7/15/96 5.20 10,000 9,807
General Electric Capital Services Inc.
4/29/96 5.73 6,000 5,945
General Electric Co.
5/15/96 5.41 35,000 34,613
General Motors Acceptance Corp.
3/4/96 5.83 41,000 40,980
3/11/96 5.72 2,000 1,997
3/28/96 5.55 1,000 996
5/20/96 5.24 10,000 9,885
5/21/96 5.24 6,000 5,930
5/22/96 5.24 5,000 4,941
6/12/96 5.15 9,000 8,870
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Goldman Sachs Group, L.P. (The)
3/13/96 5.75% $ 19,000 $ 18,964
3/14/96 5.75 6,000 5,988
3/18/96 5.51 8,000 7,979
Hewlett-Packard Co.
5/31/96 5.08 9,800 9,676
7/26/96 5.09 4,000 3,919
8/21/96 5.04 17,200 16,793
IBM Corp.
3/12/96 5.72 7,000 6,988
IBM Credit Corp.
3/27/96 5.70 15,000 14,939
John Deere Capital Corp.
5/23/96 5.24 20,000 19,763
Lilly (Eli) & Co.
3/11/96 5.82 2,000 1,997
3/21/96 5.71 27,800 27,714
5/6/96 5.53 5,000 4,950
5/14/96 5.58 6,000 5,933
Merrill Lynch & Co., Inc.
3/6/96 5.50 15,000 14,989
3/8/96 5.75 5,000 4,995
3/29/96 5.83 10,000 9,956
Monsanto Co.
6/27/96 5.09 10,000 9,836
Morgan (J.P.) & Co.
9/5/96 5.11 17,000 16,558
Morgan Stanley Group, Inc.
5/16/96 5.95 15,000 14,820
7/22/96 5.12 3,000 2,940
National Rural Util. Coop. Fin. Corp.
3/6/96 5.57 5,000 4,996
NationsBank Corp.
4/8/96 5.44 10,000 9,943
New Center Asset Trust
4/2/96 5.24 25,000 24,884
PHH Corp.
3/21/96 5.28 (a) 7,000 6,999
Preferred Receivables Funding Corp.
3/5/96 5.50 10,725 10,719
5/6/96 5.18 5,000 4,953
Sears Roebuck Acceptance Corp.
3/18/96 5.49 4,000 3,990
4/25/96 5.25 25,000 24,801
Sherwood Medical Company
4/22/96 5.24 5,000 4,963
Student Loan Corporation
3/1/96 5.71 10,000 10,000
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Textron, Inc.
3/7/96 5.43% $ 2,000 $ 1,998
3/13/96 5.38 1,000 998
3/18/96 5.35 10,000 9,975
Transamerica Finance Co.
3/22/96 5.23 20,000 19,939
Transamerica Life Insurance and Annuity Co.
3/15/96 5.84 (a) 8,000 8,000
TOTAL COMMERCIAL PAPER 1,067,339
FEDERAL AGENCIES - 16.6%
FEDERAL HOME LOAN BANK - AGENCY COUPONS (A) - 1.5%
3/20/96 5.22 13,000 12,993
3/20/96 5.69 10,000 9,995
4/2/96 5.51 13,000 12,993
35,981
FEDERAL HOME LOAN BANK - DISCOUNT NOTES - 1.2%
4/3/96 5.35 3,725 3,707
6/26/96 5.01 25,000 24,599
28,306
FEDERAL HOME LOAN MORTGAGE CORP. - DISCOUNT NOTES - 3.3%
5/8/96 5.04 30,000 29,718
5/20/96 5.05 25,000 24,723
6/3/96 5.11 20,000 19,737
8/1/96 4.96 5,000 4,897
79,075
FEDERAL NATIONAL MORTGAGE ASSOC. - AGENCY COUPONS (A) - 3.5%
3/20/96 5.69 36,000 35,978
4/17/96 5.45 20,000 19,986
5/1/96 5.38 30,000 29,974
85,938
FEDERAL AGENCIES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 5.0%
3/4/96 5.58% $ 4,320 $ 4,318
3/8/96 5.59 25,000 24,973
3/13/96 5.59 11,955 11,933
3/19/96 5.46 25,000 24,933
5/3/96 5.24 20,000 19,819
5/10/96 5.23 15,000 14,850
8/9/96 4.96 20,000 19,567
120,393
STUDENT LOAN MARKETING ASSOC. - AGENCY COUPONS (A) - 2.1%
4/16/96 5.60 50,000 50,000
TOTAL FEDERAL AGENCIES 399,693
U.S. TREASURY OBLIGATIONS - 1.0%
U.S. TREASURY BILLS - 1.0%
9/5/96 5.00 25,000 24,383
BANK NOTES - 19.4%
Bank of America National Trust & Savings Assoc.
3/1/96 5.44 (a) 13,000 12,996
Bank of New York
8/2/96 5.01 25,000 25,000
8/27/96 5.08 25,000 25,000
9/3/96 5.16 5,000 5,000
Bank of New York - Delaware
4/30/96 5.65 (a) 20,000 20,000
Boatmen's First National Bank of Kansas City
3/12/96 5.34 (a) 6,000 6,000
Boatmen's National Bank of St. Louis
3/12/96 5.34 (a) 4,000 4,000
Comerica Bank-Detroit
3/1/96 5.83 (a) 15,000 14,994
4/2/96 5.63 (a) 5,000 4,997
4/27/96 5.55 (a) 15,000 14,995
First Bank N.A. - Minnesota
3/4/96 5.31 (a) 14,000 14,000
First of America Bank - Illinois
4/9/96 5.80 6,000 6,000
BANK NOTES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
First of America Bank - Michigan
3/20/96 5.57% $ 8,000 $ 8,000
5/28/96 5.33 5,000 5,000
First Union National Bank of North Carolina
3/27/96 5.63 (a) 35,000 34,986
6/28/96 5.05 20,000 20,000
Household Bank, N.A.
3/27/96 5.50 15,000 15,000
Huntington National Bank
4/30/96 5.60 (a) 15,000 15,000
Mellon Bank, N.A.
3/11/96 5.68 20,000 20,000
NBD Bank, N.A.
6/24/96 5.25 13,000 13,000
7/15/96 5.00 20,000 20,001
8/5/96 5.00 30,000 30,000
NationsBank of Texas
4/17/96 5.39 10,000 10,000
5/24/96 5.27 29,000 29,000
PNC Bank, N.A.
3/20/96 5.30 (a) 6,000 5,998
3/20/96 5.31 (a) 14,000 13,994
PNC Bank, Ohio (Central Trust)
5/3/96 5.18 10,000 10,000
Seattle First National Bank
3/4/96 5.37 (a) 10,000 9,991
Society National Bank, Cleveland
4/15/96 5.41 10,000 10,014
4/15/96 6.09 5,000 5,003
4/25/96 6.21 3,500 3,499
Wachovia Bank of North Carolina, N.A.
3/22/96 5.26 10,000 10,000
3/26/96 5.27 (a) 25,000 24,990
TOTAL BANK NOTES 466,458
MASTER NOTES (A) - 1.8%
Goldman Sachs & Co.
5/14/96 5.26 13,000 13,000
J.P. Morgan Securities
3/20/96 5.31 23,000 23,000
Norwest Corp.
3/1/96 5.32 8,000 8,000
TOTAL MASTER NOTES 44,000
MEDIUM-TERM NOTES (A) - 4.6%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Beneficial Corp.
4/19/96 5.53% $ 16,000 $ 15,994
5/3/96 5.85 9,000 8,996
Commonwealth Life Insurance Co.
3/1/96 5.73 15,000 15,000
General Electric Capital Corp.
3/1/96 5.53 10,000 10,000
General Motors Acceptance Corp.
4/5/96 5.50 5,000 5,005
5/1/96 5.43 13,000 13,000
Goldman Sachs Group, L.P. (The) (b)
3/1/96 5.91 20,000 20,000
Norwest Corp.
3/10/96 5.83 23,000 23,000
TOTAL MEDIUM-TERM NOTES 110,995
SHORT-TERM NOTES (A) - 3.5%
Capital One Funding Corp.
3/7/96 5.29 4,000 4,000
SMM Trust Company - (1995-B) (b)
3/4/96 5.49 5,000 5,000
SMM Trust Company - (1995-I) (b)
3/29/96 5.36 11,000 10,999
SMM Trust Company - (1995-J) (b)
3/15/96 5.33 47,000 47,000
SMM Trust Company - (1995-N) (b)
5/8/96 5.30 5,000 5,000
SMM Trust Company - (1995-P) (b)
3/15/96 5.86 12,000 12,000
TOTAL SHORT-TERM NOTES 83,999
REPURCHASE AGREEMENTS - 1.7%
MATURITY AMOUNT VALUE (NOTE 1)
(000S) (000S)
With Goldman Sachs & Co.
At 5.38%, dated 2/1/96 due 5/1/96:
U.S. Government Obligations
(principal amount $25,757)
7.27%, 11/1/32 $ 25,336 $ 25,000
In a joint trading account
(U.S. Government Obligations)
dated 2/29/96 due 3/1/96:
At 5.48% 16,043 16,041
TOTAL REPURCHASE AGREEMENTS 41,041
TOTAL INVESTMENTS - 100% $ 2,409,569
Total Cost for Income Tax Purposes $ 2,409,569
LEGEND
(e) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due dates on these types of
securities reflects the next interest rate reset date or, when applicable,
the final maturity date.
(f) 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 $99,999,000 or 4.2% of net
assets.
INCOME TAX INFORMATION
At August 31, 1995, the fund had a capital loss carryforward of
approximately $900,000 of which $345,000, $536,000 and $19,000 will expire
on August 31, 2001, 2002 and 2003, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 29, 1996 (UNAUDITED)
5.ASSETS 6. 7.
8.Investment in securities, at value (including repurchase 9. $ 2,409,569
agreements of $41,041) - See accompanying schedule
10.Cash 11. 23,887
12.Interest receivable 13. 6,735
14. 15.TOTAL ASSETS 16. 2,440,191
17.LIABILITIES 18. 19.
20.Payable for investments purchased $ 70,570 21.
22.Distributions payable 204 23.
24.Accrued management fee 589 25.
26.Other payables and accrued expenses 326 27.
28. 29.TOTAL LIABILITIES 30. 71,689
31.32.NET ASSETS 33. $ 2,368,502
34.Net Assets consist of: 35. 36.
37.Paid in capital 38. $ 2,368,776
39.Accumulated net realized gain (loss) on investments 40. (274)
41.42.NET ASSETS, for 2,368,776 shares outstanding 43. $ 2,368,502
44.45.NET ASSET VALUE, offering price and redemption 46. $1.00
price per share ($2,368,502 (divided by) 2,368,776 shares)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
47.48.INTEREST INCOME 49. $ 66,031
50.EXPENSES 51. 52.
53.Management fee $ 3,762 54.
55.Transfer agent fees 1,671 56.
57.Accounting fees and expenses 111 58.
59.Custodian fees and expenses 24 60.
61.Registration fees 33 62.
63.Audit 21 64.
65.Legal 6 66.
67.Miscellaneous 2 68.
69. 70.TOTAL EXPENSES 71. 5,630
72.73.NET INTEREST INCOME 74. 60,401
75.76.NET REALIZED GAIN (LOSS) ON INVESTMENTS 77. (1)
78.79.NET INCREASE IN NET ASSETS RESULTING FROM 80. $ 60,400
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, 1996 AUGUST 31,
(UNAUDITED) 1995
81.INCREASE (DECREASE) IN NET ASSETS
82.Operations $ 60,401 $ 117,377
Net interest income
83. Net realized gain (loss) (1) (19)
84. 85.NET INCREASE (DECREASE) IN NET ASSETS 60,400 117,358
RESULTING FROM OPERATIONS
86.Distributions to shareholders from net interest (60,401) (117,377)
income
87.Share transactions at net asset value of $1.00 per 3,818,734 6,588,010
share
Proceeds from sales of shares
88. Reinvestment of distributions from net interest 59,034 114,676
income
89. Cost of shares redeemed (3,764,817) (6,579,339)
90.91. 112,951 123,347
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS
92. 93.TOTAL INCREASE (DECREASE) IN NET ASSETS 112,950 123,328
94.NET ASSETS 95. 96.
97. Beginning of period 2,255,552 2,132,224
98. End of period $ 2,368,502 $ 2,255,552
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED AUGUST 31,
ENDED
FEBRUARY 29, 199
6
(UNAUDITED) 1995 1994 1993 1992 1991
99.SELECTED PER-SHARE
DATA
100.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
101.Income from .026 .053 .032 .028 .042 .064
Investment
Operations
Net interest income
102.Less Distributions (.026) (.053) (.032) (.028) (.042) (.064)
From net interest
income
103.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
104.TOTAL RETURN B 2.67% 5.43% 3.23% 2.83% 4.32% 6.64%
105.RATIOS AND SUPPLEMENTAL DATA
106.Net assets, end of $ 2,369 $ 2,256 $ 2,132 $ 2,096 $ 2,502 $ 2,802
period (in millions)
107.Ratio of expenses .49%A .54% .56% .57% .55% .60%
to average net assets
108.Ratio of net 5.30%A 5.31% 3.18% 2.83% 4.22% 6.47%
interest income to
average net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 29, 1996 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Daily Income Trust (the fund) is a fund of Fidelity Union Street
Trust II (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of 1940,
as amended (the 1940 Act), as an open-end management investment company
organized as a Delaware 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 SEC), 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, and are collateralized
by U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying U.S. Treasury or Federal Agency securities, the market
value of which is required to be at least equal to the repurchase price.
For term repurchase agreement transactions, the underlying securities are
marked-to-market daily and maintained at a value at least equal to the
repurchase price. FMR, the fund's investment adviser, is responsible for
determining that the
2. OPERATING POLICIES - CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
value of the underlying securities remains in accordance with the market
value requirements stated above.
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 .33% of average net assets.
SUB-ADVISER FEE. As the fund's investment sub-adviser, FMR Texas Inc., a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
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 annualized rate of
.15% of 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 $690,000.
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
Burnell R. Stehman, Vice President
Fred L. Henning, Jr., 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
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Bank of New York, N.A.
New York, NY
FIDELITY'S TAXABLE
MONEY MARKET FUNDS
Fidelity Cash Reserves
Fidelity Daily Income Trust
Fidelity U.S. Government Reserves
Spartan(registered trademark) Money Market Fund
Spartan U.S. Government
Money Market Fund
Spartan U.S. Treasury
Money Market Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
