FIDELITY
(registered trademark)
DAILY INCOME
TRUST
SEMIANNUAL REPORT
FEBRUARY 28, 1997
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 8 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 9 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 17 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 21 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
As 1997 begins, the stock and bond markets generally have continued on the
course they followed during the past year. Through February, stocks
maintained their unprecedented climb, with the large companies still
setting the pace. With low, stable interest rates, the bond market has
tended to mirror its historical returns in the mid-single digits.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories as bonds. You should also keep money you'll need in
the near future in a more stable investment.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are available
24 hours a day, seven days a week to provide you the information you need
to make the investments that are right for 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 the value of an
investment, assuming reinvestment of the fund's dividend income. Yield
measures the income paid by a fund. Since a money market fund tries to
maintain a $1 share price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1997 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Fidelity Daily Income Trust 2.49% 5.07% 22.96% 73.59%
All Taxable Money Market Funds Average 2.42% 4.91% 22.12% 71.83%
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 823 taxable money market funds with similar objectives
tracked by IBC Financial Data, Inc. over the past six months. (The periods
covered by the IBC Financial Data, Inc. numbers are the closest available
match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1997 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Daily Income Trust 5.07% 4.22% 5.67%
All Taxable Money Market Funds Average 4.91% 4.08% 5.56%
AVERAGE ANNUAL TOTAL RETURNS take the fund's 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>
2/25/97 12/3/96 9/3/96 5/28/96 2/27/96
4.98% 4.98% 4.96% 4.91% 5.07%
Fidelity Daily Income Trust
All Taxable Money 4.84% 4.88% 4.83% 4.74% 4.78%
Market Funds Average
2/26/97 11/27/96 8/28/96 5/29/96 2/28/96
2.63% 2.65% 2.68% 2.66% 2.76%
MMDA
</TABLE>
Row: 1, Col: 1, Value: 4.98
Row: 1, Col: 2, Value: 4.84
Row: 1, Col: 3, Value: 2.63
Row: 2, Col: 1, Value: 4.98
Row: 2, Col: 2, Value: 4.88
Row: 2, Col: 3, Value: 2.65
Row: 3, Col: 1, Value: 4.96
Row: 3, Col: 2, Value: 4.83
Row: 3, Col: 3, Value: 2.68
Row: 4, Col: 1, Value: 4.91
Row: 4, Col: 2, Value: 4.74
Row: 4, Col: 3, Value: 2.66
Row: 5, Col: 1, Value: 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 Financial Data, Inc. The
MMDA average is supplied by BANK RATE MONITOR.(Trademark)
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
There are some important
differences between a bank
money market deposit
account (MMDA) and a
money market fund. First, the
U.S. government neither
insures nor guarantees a
money market fund. In fact,
there is no assurance that a
money market fund will
maintain a $1 share price.
Second, a money market
fund returns to its
shareholders income earned
by the fund's investments
after expenses. This is in
contrast to banks, which set
their MMDA rates periodically
based on current interest
rates, competitors' rates, and
internal criteria.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Burnell Stehman, Portfolio Manager of Fidelity Daily
Income Trust
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE OVER THE PAST SIX MONTHS,
BURNIE?
A. While the Federal Reserve Board has kept the rate banks charge each
other for overnight loans - known as the fed funds rate - steady at 5.25%
since January 1996, investor sentiment as reflected by the movement in
interest rates over the past year has taken some twists and turns. In early
1996, strong economic growth and a tight labor market stirred inflation
fears, leading many market participants - myself included - to expect the
Fed to raise rates in order to slow growth and prevent inflationary
pressures from erupting. Through the summer and into October, the markets
were very sensitive to emerging economic news, with interest rates rising
in negative reaction to the anticipation of new data that might show
economic strength, then rallying with interest rate drops when other
releases indicated no significant increase in inflation. A slowdown in
third quarter economic growth to a 2.1% annual rate convinced the market
that the Fed probably would stand pat through the end of 1996 as long as
the economy continued to post moderate growth with subdued inflation . . .
and that's what happened. Early December proved to be relatively quiet, but
the market again showed volatility at the end of the month due to a pickup
in manufacturing, housing and retail sales, while consumer confidence was
reported at its highest level in seven years. That brings us to 1997.
Q. WHAT'S HAPPENED SINCE THE TURN OF THE YEAR?
A. The fed funds rate remained at 5.25%, but we've seen a continuation of
the strong growth and tight labor markets that concerned investors. At the
same time, inflation, as measured by the Consumer Price Index (CPI) and the
Producer Price Index (PPI), has remained in check. Nevertheless, psychology
and the markets turned bearish - with investors expecting interest rate
increases - after Fed Chairman Alan Greenspan's testimony before Congress
in February. In his remarks, Greenspan talked about a possible pre-emptive
interest rate increase designed to stave off higher inflation before it
emerges. As a result, the market experienced volatility as interest rates
adjusted upward in anticipation of a near-term fed rate increase.
Q. WHAT STRATEGY DID YOU PURSUE AGAINST THIS BACKDROP?
A. My strategy shifted from neutral to cautious. I extended the fund's
average maturity to about 61 days through November because growth in the
third quarter slowed enough to convince me the Fed wouldn't raise rates.
Evidence of strong fourth quarter growth caused me to become more cautious
through January, when the maturity rolled down to 45 days. At the end of
the period, the average maturity was back out to 63 days, which may appear
a bit on the aggressive end of the spectrum. I selectively invested in some
longer-term securities to take advantage of attractive yields, but I offset
those holdings with a heavier concentration in shorter-term securities.
This structure helped me increase the yield without taking undue risk, and
maintained ample liquidity for the fund to move with the market should we
see a rise in rates.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 28, 1997, was 4.98%, compared to
4.97% six months ago. For the six months that ended February 28, 1997, the
fund's total return was 2.49%, comparing favorably with the total return of
2.42% during the same period for the all taxable money market funds
average, according to IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. While I expect higher rates during the first half of the year to thwart
the inflationary concerns expressed by Chairman Greenspan, I expect them to
be limited in scope. With tight labor markets, continued evidence of solid
growth and Greenspan's testimony, I believe the market has fair warning
that the Fed probably will raise rates. My strategy for the fund currently
reflects the market's bearish sentiment. At the same time and as always,
I'll be looking for opportunities across the maturity spectrum to maximize
the fund's yield.
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
FUND NUMBER: 031
TRADING SYMBOL: FDTXX
START DATE: May 31, 1974
SIZE: as of February 28, 1997,
more than $2.3 billion
MANAGER: Burnell Stehman,
since 1985, and 1979-1983;
also manages several
institutional money market
funds; joined Fidelity in 1979
(checkmark)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/28/97 8/31/96 2/29/96
0 - 30 41 45 47
31 - 90 37 40 36
91 - 180 18 15 15
181 - 397 4 0 2
WEIGHTED AVERAGE MATURITY
2/28/97 8/31/96 2/29/96
Fidelity Daily Income Trus 63 days 50 days 52 days
t
All Taxable Money 53 days 51 days 56 days
Market Funds Average *
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF FEBRUARY 28, 1997 AS OF AUGUST 31, 1996
Row: 1, Col: 1, Value: 50.0
Row: 1, Col: 2, Value: 33.0
Row: 1, Col: 3, Value: 16.0
Row: 1, Col: 4, Value: 1.0
Row: 1, Col: 1, Value: 42.0
Row: 1, Col: 2, Value: 37.0
Row: 1, Col: 3, Value: 19.0
Row: 1, Col: 4, Value: 2.0
Commercial
paper 50%
Bank CDs, BAs,
TDs, and notes 33%
Government
securities 16%
Other 1%
Commercial
paper 42%
Bank CDs, BAs,
TDs, and notes 37%
Government
securities 19%
Other 2%
* SOURCE: IBC'S MONEY FUND REPORT (registered trademark)
INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investments in Securities
BANKERS' ACCEPTANCES - 3.3%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Chase Manhattan Bank
4/1/97 5.38% $ 2,926 $ 2,912
4/10/97 5.49 5,686 5,652
4/23/97 5.55 7,188 7,130
5/2/97 5.49 10,781 10,682
5/14/97 5.52 2,576 2,547
6/2/97 5.53 3,087 3,044
7/7/97 5.61 2,613 2,562
7/9/97 5.61 1,437 1,408
7/23/97 5.53 2,482 2,428
8/18/97 5.56 2,571 2,505
CoreStates Bank
3/24/97 5.78 10,000 9,964
First Bank NA - Minnesota
7/30/97 5.50 5,216 5,098
Mellon Bank, N.A.
3/14/97 5.50 4,300 4,292
6/16/97 5.50 20,000 19,682
8/8/97 5.44 1,000 979
TOTAL BANKERS' ACCEPTANCES 80,885
CERTIFICATES OF DEPOSIT - 7.4%
Bank of New York, NY
4/29/97 5.56 (a) 7,000 7,000
Bankers Trust Co.
4/24/97 5.41 25,000 25,000
5/23/97 5.35 2,000 2,000
Chase Manhattan Bank (USA)
3/10/97 5.77 15,000 15,000
7/28/97 5.55 9,000 9,000
Chase Manhattan Bank
4/9/97 5.40 20,000 20,000
CoreStates Bank
8/25/97 5.42 20,000 20,000
Mellon Bank, N.A.
3/26/97 5.60 25,000 25,000
4/7/97 5.50 15,000 15,000
Morgan Guaranty Trust, NY
8/5/97 5.50 16,300 16,308
8/12/97 5.55 1,000 1,000
Old Kent Bank - Michigan
5/8/97 5.37 25,000 25,000
TOTAL CERTIFICATES OF DEPOSIT 180,308
COMMERCIAL PAPER - 50.3%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
A.H. Robins Company, Inc.
3/11/97 5.43% $ 9,070 $ 9,056
4/25/97 5.36 10,000 9,919
AVCO Financial Services
3/4/97 5.38 5,000 4,998
3/5/97 5.38 5,000 4,997
3/26/97 5.38 20,000 19,926
American Express Credit Corp.
4/25/97 5.34 25,000 24,798
5/23/97 5.34 10,000 9,878
5/27/97 5.43 20,000 19,744
6/20/97 5.36 15,000 14,757
American General Finance Corp.
3/7/97 5.40 20,000 19,982
Asset Securitization Coop. Corp.
5/19/97 5.39 5,000 4,942
Associates Corp. of North America
3/3/97 5.44 13,000 12,996
3/25/97 5.49 5,000 4,982
4/2/97 5.50 10,000 9,952
5/13/97 5.36 6,000 5,936
6/5/97 5.35 23,000 22,677
6/6/97 5.39 15,000 14,786
Bear Stearns Cos., Inc.
3/24/97 5.49 20,000 19,931
5/28/97 5.35 15,000 14,806
Beneficial Corp.
3/6/97 5.43 25,000 24,981
CIESCO, L.P.
3/19/97 5.37 10,000 9,973
3/21/97 5.39 15,000 14,956
4/11/97 5.35 2,200 2,187
4/18/97 5.34 1,500 1,489
4/21/97 5.35 20,000 19,850
5/12/97 5.35 6,000 5,937
CIT Group Holdings, Inc.
3/17/97 5.48 16,000 15,962
4/16/97 5.41 10,000 9,932
CPC International Inc.
3/14/97 5.39 4,000 3,992
5/23/97 5.42 5,000 4,939
Campbell Soup Co.
9/23/97 5.44 25,000 24,246
Chrysler Financial Corporation
3/11/97 5.48 4,000 3,994
3/12/97 5.48 3,000 2,995
3/12/97 5.49 4,000 3,993
3/19/97 5.46 2,000 1,995
4/14/97 5.48 2,000 1,987
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Chrysler Financial Corporation - continued
4/21/97 5.45% $ 7,000 $ 6,946
4/29/97 5.45 2,000 1,982
Citibank Credit Card Master Trust I (Dakota Certificate Program)
3/5/97 5.37 5,000 4,997
3/6/97 5.36 5,000 4,996
4/28/97 5.34 2,000 1,983
5/19/97 5.39 3,679 3,636
5/30/97 5.44 3,000 2,960
CoreStates Capital Corp.
3/4/97 5.44 (a) 5,000 5,000
Delaware Funding Corporation
4/29/97 5.33 7,763 7,696
du Pont (E.I.) de Nemours & Co.
3/6/97 5.69 20,000 19,985
5/22/97 5.39 25,000 24,701
5/30/97 5.39 25,000 24,672
5/30/97 5.48 5,000 4,933
Enterprise Funding Corp.
4/7/97 5.41 5,000 4,973
4/14/97 5.35 20,000 19,870
5/2/97 5.44 2,199 2,179
Ford Motor Credit Corp.
3/11/97 5.38 25,000 24,963
3/17/97 5.66 25,000 24,939
4/23/97 5.37 20,000 19,844
7/21/97 5.50 25,000 24,472
7/28/97 5.51 25,000 24,445
GTE Corp.
3/10/97 5.36 3,000 2,996
General Electric Capital Corp.
3/5/97 5.76 15,000 14,991
3/12/97 5.76 13,000 12,978
3/18/97 5.39 30,000 29,925
5/6/97 5.38 25,000 24,757
5/29/97 5.44 10,000 9,869
6/3/97 5.41 13,000 12,819
7/28/97 5.52 13,000 12,711
General Electric Co.
3/3/97 5.37 6,000 5,998
General Motors Acceptance Corp.
3/3/97 5.45 25,000 24,993
3/31/97 5.70 10,000 9,954
4/14/97 5.63 9,000 8,940
4/15/97 5.63 4,000 3,973
5/7/97 5.51 11,000 10,890
6/23/97 5.62 20,000 19,654
6/25/97 5.62 6,000 5,894
8/27/97 5.50 10,000 9,734
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Goldman Sachs Group, L.P. (The)
4/23/97 5.50% $ 20,000 $ 19,842
4/29/97 5.50 30,000 29,737
5/12/97 5.45 14,000 13,852
IBM Credit Corp.
3/12/97 5.38 4,000 3,994
Lucent Technologies, Inc.
4/2/97 5.39 20,000 19,905
Merrill Lynch & Co., Inc.
3/11/97 5.76 6,000 5,991
3/12/97 5.68 3,000 2,995
3/27/97 5.41 5,000 4,981
Monsanto Co.
4/22/97 5.38 18,800 18,656
7/14/97 5.41 7,700 7,547
7/28/97 5.43 7,730 7,560
Morgan Stanley Group, Inc.
4/15/97 5.40 20,000 19,867
5/14/97 5.38 15,000 14,836
5/15/97 5.42 10,000 9,889
NationsBank Corp.
4/18/97 5.42 20,000 19,857
New Center Asset Trust
3/11/97 5.79 2,000 1,997
3/17/97 5.39 6,000 5,986
6/17/97 5.51 10,000 9,839
Norfolk Southern Corp.
5/1/97 5.44 15,000 14,863
5/8/97 5.44 10,000 9,898
Preferred Receivables Funding Corp.
4/2/97 5.30 5,075 5,051
4/23/97 5.35 10,000 9,922
4/25/97 5.35 25,000 24,798
Sears Roebuck Acceptance Corp.
4/14/97 5.40 25,000 24,837
Sherwood Medical Company
3/10/97 5.43 2,000 1,997
Smith Barney, Inc.
4/11/97 5.34 10,000 9,940
Textron, Inc.
3/3/97 5.50 1,000 1,000
3/4/97 5.50 1,000 999
3/12/97 5.48 1,000 998
3/14/97 5.47 3,000 2,994
3/21/97 5.47 2,000 1,994
Transamerica Financial Corp.
4/17/97 5.40 20,000 19,861
TOTAL COMMERCIAL PAPER 1,230,202
FEDERAL AGENCIES - 14.5%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
FEDERAL HOME LOAN BANK - AGENCY COUPONS (A) - 0.4%
3/4/97 5.40% $ 10,000 $ 9,993
FEDERAL HOME LOAN BANK - DISCOUNT NOTES - 1.0%
5/29/97 5.32 24,000 23,689
FEDERAL HOME LOAN MORTGAGE CORP. - DISCOUNT NOTES - 1.1%
4/8/97 5.42 16,000 15,911
5/9/97 5.30 10,000 9,900
25,811
FEDERAL NATIONAL MORTGAGE ASSOC. - AGENCY COUPONS (A) - 10.4%
3/2/97 5.38 50,000 49,993
3/3/97 5.40 35,000 35,000
3/3/97 5.42 50,000 49,977
3/4/97 5.33 10,000 9,995
3/9/97 5.40 35,000 34,976
3/13/97 5.43 20,000 19,988
3/20/97 5.49 8,000 8,000
3/29/97 5.31 16,000 15,997
5/1/97 5.46 30,000 29,992
253,918
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 1.6%
3/17/97 5.65 40,000 39,902
TOTAL FEDERAL AGENCIES 353,313
U.S. TREASURY OBLIGATIONS - 1.9%
U.S. TREASURY BILLS - 1.9%
3/5/98 5.67 50,000 47,290
BANK NOTES - 12.3%
Bank of America National Trust & Savings Assoc.
3/12/97 5.75 15,000 15,000
3/25/97 5.59 15,000 15,000
6/19/97 5.50 25,000 25,000
Bank of New York, NY
3/12/97 5.70 1,000 1,000
7/22/97 5.52 25,000 25,000
3/3/98 20,000 19,990
BANK NOTES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
CoreStates Capital Corp.
3/6/97 5.41% (a) $ 10,000 $ 10,000
First National Bank of Boston
4/23/97 5.41 15,000 15,000
5/5/97 5.41 20,000 20,000
First National Bank of Chicago
5/28/97 5.50 5,000 5,000
First of America Bank - Illinois
5/12/97 5.40 10,000 10,000
First of America Bank - Michigan
6/4/97 5.44 20,000 19,998
First Union National Bank of North Carolina
4/28/97 5.45 7,000 7,000
Huntington National Bank
9/30/97 5.50 5,000 5,006
Key Bank NA
3/3/97 5.35 (a) 6,000 5,999
3/3/97 5.36 (a) 12,000 11,997
LaSalle National Bank
6/18/97 5.51 10,000 10,000
7/23/97 5.53 20,000 20,000
9/8/97 6.12 5,000 5,000
NBD Bank, NA (Michigan)
5/27/97 5.41 3,000 3,006
Old Kent Bank (Illinois)
3/17/97 5.55 2,500 2,502
PNC Bank N.A.
3/10/97 5.44 (a) 13,000 12,998
3/11/97 5.35 (a) 10,000 9,995
South Trust Bank of Alabama
8/21/97 5.44 25,000 24,998
TOTAL BANK NOTES 299,489
MASTER NOTES (A) - 2.5%
Goldman Sachs Group, L.P. (The)
5/8/97 5.55 11,000 11,000
J.P. Morgan Securities
3/7/97 5.41 9,000 9,000
3/7/97 5.44 27,000 27,000
Norwest Corp.
3/3/97 5.44 15,000 15,000
TOTAL MASTER NOTES 62,000
MEDIUM-TERM NOTES - 3.5%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Associates Corp. of North America
6/13/97 5.29% $ 5,000 $ 5,019
Commonwealth Life Insurance Co. (c)
3/3/97 5.69 (a) 15,000 15,000
General Motors Acceptance Corp.
5/1/97 5.56 (a) 13,000 13,000
2/13/98 5.46 (a) 4,000 4,000
Merrill Lynch & Co., Inc.
3/18/97 5.43 (a) 10,000 9,999
Morgan Stanley Group, Inc.
3/3/97 5.38 (a) 11,000 11,000
Norwest Corp.
4/22/97 5.55 (a) 13,000 13,000
Pacific Mutual Life Insurance Co. (c)
3/9/97 5.61 (a) 5,000 5,000
Transamerica Life Insurance and Annuity Co. (c)
3/16/97 5.57 (a) 8,000 8,000
TOTAL MEDIUM-TERM NOTES 84,018
SHORT-TERM NOTES (A) - 3.6%
Capital One Funding Corp. (1995-E)
3/7/97 5.37 4,000 4,000
Capital One Funding Corp. (1996-B)
3/7/97 5.37 6,418 6,418
Capital One Funding Corp. (1996-I)
3/7/97 5.37 10,000 10,000
SMM Trust Company - (1996-B) (b)
3/4/97 5.49 8,000 8,000
SMM Trust Company - (1996-I) (b)
3/31/97 5.43 11,000 11,000
SMM Trust Company - (1996-P) (b)
3/17/97 5.46 14,000 14,000
SMM Trust Company - (1996-V) (b)
3/26/97 5.64 35,000 35,000
TOTAL SHORT-TERM NOTES 88,418
CORPORATE BONDS - 0.3%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Norwest Corp.
5/15/97 5.40% $ 5,000 $ 5,011
Philip Morris
5/1/97 5.50 2,750 2,767
TOTAL CORPORATE BONDS 7,778
REPURCHASE AGREEMENTS - 0.4%
MATURITY
AMOUNT (000S)
In a joint trading account
(U.S. Government Obligations):
dated 2/28/97 due 3/3/97
At 5.43% $ 545 545
dated 2/25/97 due 3/4/97
At 5.37% 10,010 10,000
TOTAL REPURCHASE AGREEMENTS 10,545
TOTAL INVESTMENTS - 100% $ 2,444,246
Total Cost for Income Tax Purposes $ 2,444,246
LEGEND
1. 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.
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $68,000,000 or 2.8% of net
assets.
3. Restricted securities; subject to resale restrictions.
INCOME TAX INFORMATION
At August 31, 1996, the fund had a capital loss carryforward of
approximately $999,000 of which $345,000, $536,000, $19,000 and $99,000
will expire on August 31, 2001, 2002, 2003 and 2004, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) FEBRUARY 28, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 2,444,246
agreements of $10,545) - See accompanying
schedule
Share transactions in process 23,577
Interest receivable 10,655
TOTAL ASSETS 2,478,478
LIABILITIES
Payable for investments purchased $ 85,295
Distributions payable 367
Accrued management fee 594
Other payables and accrued expenses 399
TOTAL LIABILITIES 86,655
NET ASSETS $ 2,391,823
Net Assets consist of:
Paid in capital $ 2,392,191
Accumulated net realized gain (loss) on investments (368)
NET ASSETS, for 2,392,191 shares outstanding $ 2,391,823
NET ASSET VALUE, offering price and redemption price per $1.00
share ($2,391,823 (divided by) 2,392,191 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)
INTEREST INCOME $ 64,048
EXPENSES
Management fee $ 3,709
Transfer agent fees 1,851
Accounting fees and expenses 114
Custodian fees and expenses 23
Registration fees 71
Audit 10
Legal 9
Miscellaneous 5
Total expenses before reductions 5,792
Expense reductions (35) 5,757
NET INTEREST INCOME 58,291
NET REALIZED GAIN (LOSS) ON INVESTMENTS 4
NET INCREASE IN NET ASSETS RESULTING $ 58,295
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED FEBRUARY AUGUST 31,
28, 1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 58,291 $ 117,866
Net interest income
Net realized gain (loss) 4 (99)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 58,295 117,767
FROM OPERATIONS
Distributions to shareholders from net interest income (58,291) (117,866)
Share transactions at net asset value of $1.00 per share 4,647,799 7,701,468
Proceeds from sales of shares
Reinvestment of distributions from net interest income 56,501 115,356
Cost of shares redeemed (4,629,863) (7,754,895)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 74,437 61,929
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 74,441 61,830
NET ASSETS
Beginning of period 2,317,382 2,255,552
End of period $ 2,391,823 $ 2,317,382
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED AUGUST 31,
ENDED FEBRUARY
28, 1997
(UNAUDITED) 1996 1995 1994 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
Income from .025 .051 .053 .032 .028 .042
Investment
Operations
Net interest income
Less Distributions
From net interest (.025) (.051) (.053) (.032) (.028) (.042)
income
Net asset value, end $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
TOTAL RETURN B 2.49% 5.25% 5.43% 3.23% 2.83% 4.32%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 2,392 $ 2,317 $ 2,256 $ 2,132 $ 2,096 $ 2,502
period (in millions)
Ratio of expenses to .50% A .50% .54% .56% .57% .55%
average net assets
Ratio of expenses to .49% A, .50% .54% .56% .57% .55%
average net assets C
after expense
reductions
Ratio of net interest 5.00% A 5.11% 5.31% 3.18% 2.83% 4.22%
income to average
net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 4 OF
NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1997 (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 for U.S.
Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
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 on gross
income is equal to 4% of the gross income earned by the fund each month
(exclusive of gains realized from the sale of investments) provided the
amount of such fee, at a minimum, amounts to an annual rate of .20% and, at
a maximum, does not exceed an annual rate of .40% of the fund's average net
assets. For the period, the management fee was equivalent to an annualized
rate of .32% 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 Company, Inc. (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
.16% 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 $632,000.
4. EXPENSE REDUCTIONS.
The fund has entered into an arrangement with its transfer agent whereby
interest earned on uninvested cash balances was used to offset a portion of
the fund's expenses. During the period, the fund's transfer agent fees were
reduced by $35,000 under this arrangement.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate the
service, and on your first call, the system will help you create a personal
identification number (PIN) for security.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
1
For quotes.*
2
For account balances and holdings.
3
To review orders and mutual
fund activity.
4
To change your PIN.
5
To speak to a Fidelity representative.
*
0
BY PC
Fidelity's Web site on the Internet provides a wide range of information,
including daily financial news, fund performance, interactive planning
tools and news about Fidelity products and services.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at 1-800-544-7272
for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity at
1-800-544-7272 or visit our Web site for more information on how to manage
your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES.
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Sarah H. Zenoble, Vice President
Burnell R. Stehman, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Thomas D. Maher, Assistant
Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
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
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
SPARTAN(registered trademark)
(registered trademark)
ARIZONA
MUNICIPAL
FUNDS
SEMIANNUAL REPORT
FEBRUARY 28, 1997
CHECK PAGE NUMBERS !!!
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
SPARTAN ARIZONA MUNICIPAL INCOME FUND
PERFORMANCE 4 How the fund has done over time.
FUND TALK 7 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 10 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 11 A complete list of the fund's
investments with their market value.
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
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 one year.
INVESTMENTS 24 A complete list of the fund's
investments with their market value.
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.
</TABLE>
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND
MONEY.
PRESIDENT'S MESSAGE
(PHOTO_OF_EDWARD_C_JOHNSON_3D)DEAR SHAREHOLDER:
As 1997 begins, the stock and bond markets generally have continued on the
course they followed during the past year. Through February, stocks
maintained their unprecedented climb, with the large companies still
setting the pace. With low, stable interest rates, the bond market has
tended to mirror its historical returns in the mid-single digits.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
The longer your investment time frame, the more likely it is that you will
be affected by short-term market volatility. A 10-year investment horizon
appropriate for saving for a college education, for example, enables you to
weather market cycles in a long-term fund, which may have a higher risk
potential, but also has a higher potential rate of return.
An intermediate-length fund could make sense if your investment horizon is
two to four years, while 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. These funds seek
income and a stable share price by investing in high-quality, short-term
investments. Of course, it's important to remember that there is no
assurance that a money market fund will achieve its goal of maintaining a
stable net asset value of $1.00 per share, and that these types of funds
are neither insured nor guaranteed by any agency of the U.S. government.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are available
24 hours a day, seven days a week to provide you 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. Total return
reflects the change in the value of an investment, assuming reinvestment of
the fund's dividend income and capital gains (the profits earned upon the
sale of securities that have grown in value). You can also look at the
fund's income, as reflected in the fund's yield, to measure performance. If
Fidelity had not reimbursed certain fund expenses during the periods shown,
the past one year and life of fund total returns and dividends would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Spartan Arizona Municipal Income 4.71% 4.42% 22.53%
Lehman Brothers Arizona Enhanced 5.01% 4.88% n/a
Municipal Bond Index
Arizona Municipal Debt Funds Average 4.78% 4.80% 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 Enhanced Municipal Bond Index - a total return
performance benchmark for Arizona investment-grade municipal bonds with
maturities of at least one year. To measure how the fund's performance
stacked up against its peers, you can compare it to the Arizona municipal
debt funds average, which reflects the performance of 32 mutual funds with
similar objectives tracked by Lipper Analytical Services, Inc. over the
past six months. Both benchmarks will include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1997 PAST 1 LIFE OF
YEAR FUND
Spartan Arizona Municipal Income 4.42% 8.88%
Lehman Brothers Arizona Enhanced 4.88% n/a
Municipal Bond Index
Arizona Municipal Debt Funds Average 4.80% n/a
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year. (Note: Lipper calculates average annual total returns by annualizing
each fund's total return, then taking an arithmetic average. This may
produce a slightly different figure than that obtained by averaging the
cumulative total returns and annualizing the result.)
$10,000 OVER LIFE OF FUND
IMAHDR PRASUN SHR__CHT 19960930 19961009 151627 S00000000000001
Spartan AZ Muni Inc LB Municipal Bond
00434 LB015
1994/10/31 10000.00 10000.00
1994/11/30 9820.11 9819.20
1994/12/31 10064.35 10035.32
1995/01/31 10414.23 10322.13
1995/02/28 10773.06 10622.30
1995/03/31 10866.46 10744.35
1995/04/30 10885.64 10757.03
1995/05/31 11219.72 11100.28
1995/06/30 11111.21 11003.71
1995/07/31 11215.14 11108.03
1995/08/31 11372.18 11248.88
1995/09/30 11463.33 11320.08
1995/10/31 11631.80 11484.67
1995/11/30 11820.94 11675.21
1995/12/31 11925.02 11787.40
1996/01/31 12041.15 11876.40
1996/02/29 11942.15 11796.23
1996/03/31 11779.23 11645.48
1996/04/30 11735.76 11612.52
1996/05/31 11716.16 11607.88
1996/06/30 11827.94 11734.29
1996/07/31 11918.94 11841.07
1996/08/31 11918.94 11838.23
1996/09/30 12056.07 12003.96
1996/10/31 12194.14 12139.73
1996/11/30 12400.73 12361.88
1996/12/31 12343.01 12309.96
1997/01/31 12367.61 12333.23
1997/02/28 12469.45 12446.45
$10,000 OVER LIFE OF FUND: Let's say hypothetically that $10,000 was
invested in Spartan Arizona Municipal Income Fund on October 31, 1994,
shortly after the fund started. As the chart shows, by February 28, 1997,
the value of the investment would have grown to $12,469 - a 24.69% increase
on the initial investment. 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 and capital gains, if any, reinvested, the same $10,000 would
have grown to $12,446 - a 24.46% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no
guarantee of how it will do
tomorrow. Bond prices, for
example, generally move in
the opposite direction of interest
rates. In turn, the share price,
return, and yield of a fund that
invests in bonds will vary. That
means if you sell your
shares during a market
downturn, you might lose
money. But if you can ride out
the market's ups and downs,
you may have a gain.
(checkmark)
TOTAL RETURN COMPONENTS
SIX MONTHS YEAR OCTOBER 11, 1994
ENDED ENDED (COMMENCEMENT
FEBRUARY AUGUST OF OPERATIONS) TO
28, 31, AUGUST 31,
1997 1996 1995
Dividend return 2.31% 4.92% 5.34%
Capital appreciation return 2.40% -0.21% 6.39%
Total return 4.71% 4.71% 11.73%
TOTAL RETURN COMPONENTS include both dividend returns and capital
appreciation returns. 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 capital gains paid
by the fund are reinvested. For the periods through August 31, 1996,
capital appreciation and total returns include the effect of a $5 account
closeout fee on an average size account.
DIVIDENDS AND YIELD
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PERIODS ENDED FEBRUARY 28, 1997 PAST 1 PAST 6 PAST 1
MONTH MONTHS YEAR
Dividends per share 3.72(cents) 23.79(cents) 48.56(cents)
Annualized dividend rate 4.55% 4.53% 4.61%
30-day annualized yield 4.36% - -
30-day annualized tax-equivalent yield 7.19% - -
</TABLE>
DIVIDENDS per share show the income paid by the fund for a set period. If
you annualize this number, based on an average share price of $10.66 over
the past one month, $10.59 over the past six months and $10.54 over the
past one year, you can compare the fund's income over these three periods.
The 30-day annualized YIELD is a standard formula for all funds based on
the yields of the bonds in the fund, averaged over the past 30 days. This
figure shows you the yield characteristics of the fund's investments at the
end of the period. It also helps you compare funds from different companies
on an equal basis. The tax-equivalent yield shows what you would have to
earn on a taxable investment to equal the fund's tax-free yield, if you're
in the 39.33% combined effective 1997 federal and state income tax bracket,
but does not reflect the payment of the federal alternative minimum tax, if
applicable.
SPARTAN ARIZONA MUNICIPAL INCOME FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Jonathan Short, Portfolio Manager of Spartan Arizona
Municipal Income Fund
Q. HOW HAS THE FUND PERFORMED, JONATHAN?
A. For the six- and 12-month periods ended February 28, 1997, the fund had
total returns of 4.71% and 4.42%, respectively. For the same periods, the
Arizona municipal debt funds average returned 4.78% and 4.80%,
respectively, as tracked by Lipper Analytical Services. The Lehman Brothers
Arizona Enhanced Municipal Bond Index returned 5.01% for the six-month
period and 4.88% for the 12-month period ended February 28, 1997.
Q. WHAT'S THE INVESTING ENVIRONMENT BEEN LIKE OVER THE PAST SIX MONTHS?
A. Although bond prices generally ended the period higher, uncertainty
about the direction of the economy, inflation and interest rates combined
to create an interesting backdrop for fixed income securities. In reaction
to various conflicting economic data, the fixed-income markets remained
volatile, but municipal bonds were favored by some positive factors,
including stable demand and fairly low supply. In addition, as the
presidential campaign concluded, flat tax fears generally subsided, with
investors appearing less worried that a flat tax would be enacted and
adversely affect the tax-exempt status of municipals. Those factors helped
municipals perform better than Treasuries during the past six months.
Q. WHAT WAS YOUR STRATEGY OVER THE PAST SIX MONTHS?
A. I continued to emphasize bonds with good "call protection." When
interest rates fall, municipal issuers often call - or redeem - bonds
before their maturity and issue new bonds at lower interest rates as a way
to reduce their borrowing costs. So I generally focus on bonds with good
call protection - those that have some longer period of time before they
legally can be called away, as well as non-callable bonds - which can't be
redeemed by their issuer before maturity. This emphasis on bonds with good
call protection and those that are non-callable was a positive for
performance over the past six months given that interest rates did come
down a bit and investors generally paid more for these bonds.
Q. DID YOUR FOCUS ON BONDS WITH GOOD CALL PROTECTION RELATE TO YOUR
EMPHASIS ON INTERMEDIATE-MATURITY BONDS - THOSE WITH MATURITIES OF BETWEEN
FIVE AND 20 YEARS?
A. That's part of the reason, since intermediate bonds tend to have better
call protection than longer-maturity bonds. But in addition, intermediate
bonds were more attractive from a risk/return perspective than
longer-maturity bonds. In my view, bonds with maturities of more than 20
years didn't offer enough additional yield to compensate for their added
risk, while bonds in the five- to 20-year maturity range offered better
risk-adjusted yields.
Q. IN WHICH SECTORS OF THE MUNICIPAL MARKET DID YOU FIND THE MOST
INTERESTING OPPORTUNITIES DURING THE PAST SIX MONTHS?
A. In my view, student loan bonds offered some of the best opportunities to
add yield to the fund, and I was able to buy them at what I believed to be
attractive prices. Given the concerns about prepayment, the bonds were
cheap relative to what I believed to be their value. The student loan bonds
I selected carried relatively high credit ratings and yields, as well as
relatively low risk of being prepaid. I also added high-yielding securities
to the fund, including Sierra Vista Arizona Hospital bonds and bonds issued
by Arizona Public Service Company. While both the hospital and electric
sectors have operated under more competitive circumstances over the past
several years, I felt these two entities were strong enough to profit in an
even more competitive environment.
Q. WHAT'S YOUR OUTLOOK?
A. From a supply and demand standpoint, I'm optimistic about municipals. I
don't expect to see a tremendous amount of new municipal bonds issued. What
increase in supply we might see likely will be easily digested if demand
remains firm. But how municipals fare over the next year will depend
heavily on the direction of interest rates, and I don't think anyone can
accurately pinpoint where interest rates will be a year from now. That
said, we may continue to see some volatility in the bond market as long as
there are conflicting signs about the economy and inflation trends.
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
FUND NUMBER: 434
TRADING SYMBOL: FSAMI
START DATE: October 11, 1994
SIZE: as of February 28,
1997, more than $23 million
MANAGER: Jonathan Short,
since 1995; manager,
Fidelity California Municipal
Income, Fidelity California
Insured, Spartan California
Municipal Income, Fidelity
Minnesota Municipal Income
and Spartan California
Intermediate Municipal
funds, since 1995; joined
Fidelity in 1990
(checkmark)
JON SHORT ON THE ARIZONA
ECONOMY:
"The Arizona economy -
while slowing from its recent
boom - continues to show
signs of strength, and I
remain very positive about its
prospects. In hindsight, it
appears that the Arizona
economy peaked in 1994, but
looking forward, it could
remain one of the strongest
growing states in the nation.
The state's job growth is
predicted to be second only to
Nevada's, and although we've
seen some leveling off
recently, population growth -
a main driver for the state's
strong economic performance
- - continues to be among the
fastest in the nation. Arizona
is also better positioned
economically due to the fact
that it is more broadly
diversified among various
industries than it was five
years ago, which improves its
ability to weather a national
economic downturn, if that
were to occur."
SPARTAN ARIZONA MUNICIPAL INCOME FUND
INVESTMENT CHANGES
TOP FIVE SECTORS AS OF FEBRUARY 28, 1997
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE SECTORS
6 MONTHS AGO
General Obligation 32.7 30.1
Special Tax 16.4 18.2
Electric Revenue 12.8 11.6
Education 11.1 8.6
Transportation 8.6 5.8
AVERAGE YEARS TO MATURITY AS OF FEBRUARY 28, 1997
6 MONTHS AGO
Years 10.0 10.4
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 28, 1997
6 MONTHS AGO
Years 6.5 6.9
DURATION SHOWS HOW MUCH A BOND FUND'S PRICE FLUCTUATES WITH CHANGES IN
COMPARABLE INTEREST RATES. IF RATES RISE 1%, FOR EXAMPLE, A FUND WITH A
FIVE-YEAR DURATION IS LIKELY TO LOSE ABOUT 5% OF ITS VALUE. OTHER FACTORS
ALSO CAN INFLUENCE A BOND FUND'S PERFORMANCE AND SHARE PRICE. ACCORDINGLY,
A BOND FUND'S ACTUAL PERFORMANCE MAY DIFFER FROM THIS EXAMPLE.
QUALITY DIVERSIFICATION (MOODY'S RATINGS)
AS OF FEBRUARY 28, 1997 AS OF AUGUST 31, 1996
Aaa 55.3%
Aa, A 35.1%
Baa 3.2%
Ba, B 0.0%
Non-rated 1.2%
Short-term
investments 5.2%
Aaa 58.5%
Aa, A 34.0%
Baa 3.0%
Ba, B 0.0%
Non-rated 0.0%
Short-term
investments 4.5%
Row: 1, Col: 1, Value: 55.3
Row: 1, Col: 2, Value: 35.1
Row: 1, Col: 3, Value: 3.2
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 1.2
Row: 1, Col: 6, Value: 5.2
Row: 1, Col: 1, Value: 58.5
Row: 1, Col: 2, Value: 34.0
Row: 1, Col: 3, Value: 3.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 0.0
Row: 1, Col: 6, Value: 4.5
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 28, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investments
MUNICIPAL BONDS - 94.8%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
ARIZONA - 92.5%
Agriculture Impt. & Pwr. Dist. Elec. Sys. Rev. Rfdg.
(Salt River Proj.) Series B, 6.50%, 1/1/04 Aa $ 400,000 $ 442,500
Arizona Edl. Corp. Rev. Rfdg. Series A,
6.55%, 3/1/99 A 1,000,000 1,036,250
Arizona Health Facs. Auth. Hosp. Sys. Rev.
Rfdg. (St. Lukes Health Sys) 7.25%, 11/1/14
(Pre-Refunded to 11/1/03 @ 102) (d) Aaa 385,000 436,013
Arizona Pwr. Auth. Pwr. Resource Rev. Rfdg.
(Hoover Uprating Proj.) 5.25%, 10/1/17
(MBIA Insured) Aaa 100,000 95,375
Arizona State Trans. Board Excise Tax Rev.:
(Maricopa County Reg'l Area-B) 6.50%,
7/1/04 (AMBAC Insured) Aaa 100,000 111,500
Rfdg. 6%, 7/01/05 (AMBAC Insured) Aaa 150,000 162,938
Arizona State Univ. Research Pk. Dev. Rev. 5%,
7/1/21 (MBIA Insured) Aaa 100,000 92,500
Arizona State Univ. Rev. 7%, 7/1/15
(Pre-Refunded to 7/1/02 @ 101) (d) Aaa 500,000 565,000
Arizona State Univ. Rev. Rfdg. 6%, 7/1/06 A1 1,000,000 1,087,500
Arizona Trans. Board Excise Tax Rev.
(Maricopa Reg'l. Area Road):
Rfdg. 6%, 7/1/03 (AMBAC Insured) Aaa 700,000 756,000
Series A (Cap. Appreciation) 0%,
7/1/02 (FGIC Insured) Aaa 300,000 234,375
Series A, 5.75%, 7/1/04 (AMBAC Insured) Aaa 440,000 471,350
Series A, 5.75%, 7/1/05 (AMBAC Insured) Aaa 400,000 428,500
Arizona Trans. Board Hwy. Rev. Rfdg. Series A,
6%, 7/1/00 Aa 250,000 262,500
Arizona Univ. Rev. Rfdg. (Univ. Rev. Sys.)
6.375%, 6/1/05 A1 400,000 436,500
Central Arizona Wtr. Conservation Dist. Contract
Rev. Rfdg. (Central Arizona Proj.):
Series A, 5.50%, 11/1/10 A1 375,000 387,188
Series B, 6.30%, 11/1/02 (MBIA Insured) Aaa 200,000 216,500
Chandler Gen. Oblig.:
6.375%, 7/1/03 (MBIA Insured) Aaa 175,000 193,156
6.50%, 7/1/10 (MBIA Insured) Aaa 200,000 223,500
6.50%, 7/1/11 (MBIA Insured) Aaa 225,000 250,313
Chandler Wtr. & Swr. Rev. Rfdg. 5.90%, 7/1/00,
(FGIC Insured) Aaa 200,000 210,000
Cochise County Ind. Dev. Auth. Hosp. Rev. Rfdg.
(Sierra Vista Commty. Hosp. Proj.)
6.75%, 12/1/26 - 300,000 300,375
Cochise County Union School Dist.# 68
(Sierra Vista) Series B, 9%, 7/1/02
(FGIC Insured) Aaa 200,000 242,000
Flagstaff Arizona Gen. Oblig:
6.50%, 7/1/03 (FGIC Insured) Aaa 400,000 440,500
4.50%, 7/1/13 (FGIC Insured) Aaa 200,000 180,000
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Glendale Ind. Dev. Auth. Edl. Facs. Rev. Rfdg.
(American Graduate School Int'l.) 6.55%,
7/1/06 (Connie Lee Insured) AAA $ 150,000 $ 169,875
Greenlee County Arizona Indl. Dev. Auth. Poll.
Cont. Rev. Rfdg. (Phelps Dodge Corp. Proj.)
5.45%, 6/1/09 A2 400,000 398,500
Maricopa County Cfts. of Prtn.
5.625%, 6/1/00 Baa 450,000 459,563
Maricopa County Rfdg. 6.25%, 7/1/00,
(FGIC Insured) Aaa 240,000 255,300
Maricopa County School Dist. #1
(Phoenix Elementary) Rfdg. Second Series,
0%, 7/1/05 (MBIA Insured) Aaa 500,000 334,375
Maricopa County School Dist. #3 (Temple
Elementary) Rfdg. 0%, 7/1/08 (AMBAC Insured) Aaa 500,000 278,125
Maricopa County School District #4
(Mesa Univ.) Rfdg. 5.25%, 7/1/04 (FSA Insured) Aaa 300,000 310,500
Maricopa County School Dist. #6
(Washington Elementary) Series A,
5.375%, 7/1/13 (AMBAC Insured) Aaa 300,000 298,125
Maricopa County School Dist. #14 Rfdg.
6.50%, 7/1/04 (FGIC Insured) (b) Aaa 200,000 221,750
Maricopa County Unified School Dist. #69 (Paradise
Valley Proj. of 1994) Series B, 5.25%, 7/1/15,
(MBIA Insured) Aaa 300,000 292,125
Maricopa County Unified School Dist. #80
(Chandler) 6.60%, 7/1/06 (FGIC Insured) Aaa 400,000 453,000
Maricopa County Unified School Dist. #97
(Deer Valley) Series A, 6%, 7/1/05
(MBIA Insured) Aaa 200,000 216,750
Mesa Gen. Oblig. Rev Rfdg. 5.70%, 7/1/03,
(FGIC Insured) Aaa 250,000 265,000
Mohave County Ind. Dev. Auth. Ind. Dev. Rev.
(North Star Steel Co. Proj.) Series B,
5.50%, 12/1/20 AA- 250,000 244,375
Navajo County Poll. Cont. Corp. Rev. Rfdg.
(Arizona Pub. Svc. Co.) Series A,
5.875%, 8/15/28 Baa1 200,000 200,000
Peoria Gen. Oblig. (1990 & 1994 Proj.) Series A:
5%, 7/1/14 (AMBAC Insured) Aaa 365,000 343,100
5%, 7/1/15 (AMBAC Insured) Aaa 390,000 363,675
Phoenix Arpt. Rev. Rfdg.:
Series A, 5.65%, 7/1/01 (MBIA Insured) Aaa 400,000 420,000
Series D, 6.40%, 7/1/12 (MBIA Insured) Aaa 810,000 868,725
Phoenix Civic Impt. Corp. Wtr. Sys. Rev.
5.45%, 7/1/19 Aa 500,000 488,125
MUNICIPAL BONDS - CONTINUED
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Phoenix Gen. Oblig.:
7.50%, 7/1/08 Aa1 $ 100,000 $ 121,500
5.25%, 7/1/16 Aa1 200,000 195,750
Series A, 5%, 7/1/19 Aa1 250,000 236,250
Phoenix St. & Hwy. User Rev. Rfdg.
6.25%, 7/1/11 (MBIA Insured) Aaa 250,000 269,062
Pima County School Dist. #10 Rfdg. 0%, 7/1/00,
(FGIC Insured) Aaa 300,000 259,875
Pima County Unified School Dist. #1 Tucson Rfdg.
7.50%, 7/1/10 (FGIC Insured) Aaa 250,000 305,937
Pinal County Ind. Dev. Auth. Solid Waste Disp.
Rev. (Browning Ferris Inds. Inc. Proj.)
5%, 2/1/06 (b) A3 250,000 246,250
Salt River Proj. Agric. Impt. & Pwr. Dist. Elec. Sys.
Rev. Rfdg:
Series A, 5.75%, 1/1/07 Aa 300,000 319,875
Series B, 5.25%, 1/1/19 (MBIA Insured) Aaa 100,000 95,625
Series C, 5%, 1/1/13 Aa 150,000 143,812
Series C, 6.25%, 1/1/19 Aa 500,000 521,250
Scottsdale Rfdg.:
Series C, 6.375%, 7/1/01 Aa1 250,000 270,312
5.50%, 7/1/09 Aa1 100,000 103,875
Scottsdale Street & Hwy. Sure Rev. Rfdg.
5.50%, 7/1/07 A1 800,000 837,000
Tempe Unified High School Dist. #213 Rfdg. & Impt.:
7%, 7/1/03 (FGIC Insured) Aaa 400,000 452,000
7%, 7/1/08 (FGIC Insured) Aaa 310,000 362,313
Tucson Gen. Oblig. Rfdg. 6.75%, 7/1/03,
(FGIC Insured) Aaa 200,000 224,250
Tucson Ltd. Tax Rfdg. 7.50%, 7/1/01 Aa 300,000 336,375
Tucson Street & Hwy. User Rev. Series A,
6%, 7/1/10 (MBIA Insured) Aaa 400,000 432,500
Yuma County Hosp. Dist. #001,
6.35%, 11/15/07 A 265,000 290,506
22,167,638
PUERTO RICO - 2.3%
Puerto Rico Commonwealth Hwy. & Trans.:
Auth. Hwy. Rev.: 5.50%, 7/1/17 Baa1 100,000 97,250
Series Y, 6.25%, 7/1/08 (MBIA Insured) Aaa 400,000 445,000
542,250
TOTAL MUNICIPAL BONDS
(Cost $22,195,719) 22,709,888
MUNICIPAL NOTES (A) - 5.2%
MOODY'S PRINCIPAL VALUE
RATINGS (C) AMOUNT (NOTE 1)
ARIZONA - 5.2%
Coconino County Poll. Cont. Corp. Rev.
(Arizona Pub. Svc. Co. Navajo Proj.)
Series A, 4%, LOC Bank of America Nat'l.
Trust & Savings, VRDN (b) (Cost $1,250,000) P-1 $ 1,250,000 $ 1,250,000
TOTAL INVESTMENTS - 100%
(Cost $23,445,719) $ 23,959,888
SECURITY TYPE ABBREVIATIONS
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
3. Standard & Poor's credit ratings are used in the absence of a rating by
Moody's Investors Service, Inc.
4. Security collateralized by an amount sufficient to pay interest and
principal.
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 88.7% AAA, AA, A 83.4%
Baa 3.2% BBB 2.8%
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 both S&P and Moody's amounted to 1.2%.
The distribution of municipal securities by revenue source, as a percentage
of total value of investment in securities, is as follows:
General Obligation 32.7%
Special Tax 16.4
Electric Revenue 12.8
Education 11.1
Transportation 8.6
Escrowed/Pre-Refunded 6.1
Water and Sewer 5.4
Others (individually less than 5%) 6.9
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1997, the aggregate cost of investment securities for
income tax purposes was $23,445,719. Net unrealized appreciation aggregated
$514,169, of which $545,111 related to appreciated investment securities
and $30,942 related to depreciated investment securities.
SPARTAN ARIZONA MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS FEBRUARY 28, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value (cost $23,445,719) - $ 23,959,888
See accompanying schedule
Receivable for fund shares sold 17,667
Interest receivable 238,405
TOTAL ASSETS 24,215,960
LIABILITIES
Payable to custodian bank $ 73,196
Payable for investments purchased 443,591
Distributions payable 12,431
Accrued management fee 9,915
Other payables and accrued expenses 40
TOTAL LIABILITIES 539,173
NET ASSETS $ 23,676,787
Net Assets consist of:
Paid in capital $ 23,180,007
Undistributed net investment income 2,053
Accumulated undistributed net realized gain (loss) (19,442)
on investments
Net unrealized appreciation (depreciation) on 514,169
investments
NET ASSETS, for 2,224,563 shares outstanding $ 23,676,787
NET ASSET VALUE, offering price and redemption price per $10.64
share ($23,676,787 (divided by) 2,224,563 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)
INTEREST INCOME $ 543,035
EXPENSES
Management fee $ 59,085
Non-interested trustees' compensation 41
Total expenses before reductions 59,126
Expense reductions (3,089) 56,037
NET INTEREST INCOME 486,998
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 21,228
Futures contracts 5,883 27,111
Change in net unrealized appreciation (depreciation) on:
Investment securities 476,588
Futures contracts 3,268 479,856
NET GAIN (LOSS) 506,967
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 993,965
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED FEBRUARY AUGUST 31,
28, 1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 486,998 $ 883,091
Net interest income
Net realized gain (loss) 27,111 218,605
Change in net unrealized appreciation (depreciation) 479,856 (415,271)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 993,965 686,425
FROM OPERATIONS
Distributions to shareholders (486,998) (883,091)
From net interest income
From net realized gain (139,099) (227,134)
TOTAL DISTRIBUTIONS (626,097) (1,110,225)
Share transactions 4,088,784 11,241,244
Net proceeds from sales of shares
Reinvestment of distributions 526,901 947,480
Cost of shares redeemed (1,695,534) (4,827,267)
Redemption fees 563 2,933
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 2,920,714 7,364,390
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,288,582 6,940,590
NET ASSETS
Beginning of period 20,388,205 13,447,615
End of period (including undistributed net investment $ 23,676,787 $ 20,388,205
income of $2,053 and $2,053, respectively)
OTHER INFORMATION
Shares
Sold 386,213 1,053,176
Issued in reinvestment of distributions 49,659 89,057
Redeemed (160,306) (457,132)
Net increase (decrease) 275,566 685,101
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED OCTOBER 31, 1994
ENDED FEBRUARY AUGUST 31, (COMMENCEMENT
28, 1997 OF OPERATIONS) TO
AUGUST 31,
(UNAUDITED) 1996 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.460 $ 10.640 $ 10.000
Income from Investment Operations .238 .514 .504
Net interest income
Net realized and unrealized gain (loss) .250 (.022) .637
Total from investment operations .488 .492 1.141
Less Distributions
From net interest income (.238) (.514) (.504)
From net realized gain (.070) (.160) -
Total distributions (.308) (.674) (.504)
Redemption fees added to paid in capital .000 .002 .003
Net asset value, end of period $ 10.640 $ 10.460 $ 10.640
TOTAL RETURN B 4.71% 4.72% 11.74%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 23,677 $ 20,388 $ 13,448
Ratio of expenses to average net assets .55% A .30% C .06% A,
C
Ratio of expenses to average net assets after .52% A, D .30% .06% A
expense reductions
Ratio of net interest income to average net 4.53% A 4.82% 5.54% A
assets
Portfolio turnover rate 17% A 32% 56% A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE FORMER ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES
(SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
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 the value of an
investment, assuming reinvestment of the fund's dividend income and the
effect of the fund's $5 account closeout fee on an average size account.
Yield measures the income paid by a fund. Since a money market fund tries
to maintain a $1 share price, yield is an important measure of performance.
If Fidelity had not reimbursed certain fund expenses during the periods
shown, the total returns and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1997 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
Spartan Arizona Municipal Money Market 1.62% 3.31% 8.81%
All Tax-Free Money Market Funds Average 1.48% 2.97% 7.55%
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 424 all tax-free money market funds with
similar objectives tracked by IBC Financial Data, Inc. over the past six
months. (The periods covered by the IBC Financial Data, Inc. numbers are
the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1997 PAST 1 LIFE OF
YEAR FUND
Spartan Arizona Municipal Money Market 3.31% 3.60%
All Tax-Free Money Market Funds Average 2.97% 3.17%
AVERAGE ANNUAL TOTAL RETURNS take the fund's 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>
3/3/97 12/2/96 9/2/96 6/3/96 2/26/96
Spartan Arizona Municipal 3.15% 3.31% 3.27% 3.42% 3.28%
Money Market
If Fidelity had not reimburse 3.00% 3.16% 3.12% 3.27% 2.98%
d
certain fund expenses
All Tax-Free Money 2.87% 3.05% 2.96% 3.04% 2.87%
Market Funds Average
Spartan Arizona Municipal 5.19% 5.46% 5.39% 5.64% 5.41%
Money Market - Tax-equivale
nt
If Fidelity had not reimburse 4.94% 5.21% 5.14% 5.39% 4.91%
d
certain fund expenses
</TABLE>
Row: 1, Col: 1, Value: 3.15
Row: 1, Col: 2, Value: 2.87
Row: 2, Col: 1, Value: 3.31
Row: 2, Col: 2, Value: 3.05
Row: 3, Col: 1, Value: 3.27
Row: 3, Col: 2, Value: 2.96
Row: 4, Col: 1, Value: 3.42
Row: 4, Col: 2, Value: 3.04
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
1997 federal and state income tax rate of 39.33%. Figures for the all
tax-free money market funds average are from IBC Financial Data, Inc. A
portion of the fund's income may be subject to the alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Deborah Watson, Portfolio Manager of Spartan Arizona
Municipal Money Market Fund
Q. WHAT WAS THE INVESTING ENVIRONMENT LIKE OVER THE PAST SIX MONTHS, DEB?
A. We have seen some changes in market sentiment. Starting in the early
fall, key economic indicators such as employment began to show a slower
pace of growth. This slowdown, coupled with a lack of inflationary
pressures in price indices, kept the Federal Reserve Board on the
sidelines, while the market had been anticipating the Fed to increase the
fed funds rate - the rate banks charge each other for overnight loans.
Consequently, interest rates in the market fell, while the fed funds rate
was kept steady at 5.25%. However, the January and February employment
numbers showed additional job growth. Market speculation centered on how
long the Fed would keep interest rates stable. The market eagerly awaited
Fed Chairman Alan Greenspan's testimony before Congress in late February,
trying to get an indication of where the Fed would go from there.
Q. WHAT WAS THE OUTCOME OF HIS TESTIMONY?
A. Greenspan gave a clear indication that signs of a tight labor market and
emerging growth in the economy would probably lead the Fed to raise
short-term rates at some point. The Fed would do so in an attempt to head
off inflation, even though prices haven't gone up at the same pace as
growth in the labor market thus far. However, when the Fed changes rates
there typically is a lag of 12 to 18 months before we see an economic
effect. As a result of Greenspan's comments, market sentiment became more
bearish, and the market started to price in the expectation of future
interest rate increases.
Q. WHAT WAS YOUR STRATEGY OVER THE SIX MONTHS?
A. In late summer 1996, the available supply of Arizona securities
increased. At that time, the market had priced in expectations of higher
interest rates going forward, making the new securities attractive. I
extended the average maturity of the fund to 55 days. While the fund's
maturity varied somewhat through the fall, I kept it close to 50 days until
January. From that point through the end of the period, there was a lack of
supply and, again, growing concerns about Fed rate increases that I felt
were valid. As a result, I've pursued a more cautious and defensive
approach, keeping the fund's maturity shorter and investing a higher
percentage of the fund in variable rate demand notes as I awaited further
signals from the economy and the Fed.
Q. HOW HAS THE FUND PERFORMED?
A. The fund's seven-day yield on February 28, 1997, was 3.15%, compared to
3.26% six months earlier. The latest yield was the equivalent of a taxable
yield of 5.19% for Arizona investors in the 39.33% combined state and
federal income tax bracket. The fund's six-month total return was 1.62%,
compared to a return of 1.48% for the all tax-free money market funds
average, according to IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK AS 1997 UNFOLDS?
A. I do think we're in for higher rates. At this point in time, I believe
there is a strong chance we could see the Fed increase rates within the
first or early second quarter of 1997. I do not feel the Fed will pursue a
protracted strategy of interest rate increases; instead, I think there will
be modest rate increases intended to fine-tune the economy and head off
inflation before it becomes a real problem.
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
$1.00 share price
FUND NUMBER: 433
TRADING SYMBOL: FSAXX
START DATE: October 11, 1994
SIZE: as of February 28,
1997, more than $84 million
MANAGER: Deborah Watson,
since August 1996; manager,
various Fidelity and Spartan
municipal money market
funds; joined Fidelity in 1982
(checkmark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/28/97 8/31/96 2/29/96
0 - 30 71 69 62
31 - 90 14 20 10
91 - 180 7 4 21
181 - 397 8 7 7
WEIGHTED AVERAGE MATURITY
2/28/97 8/31/96 2/29/96
Spartan Arizona
Municipal Money Market 37 days 43 days 61 days
All Tax-Free Money
Market Funds Average * 45 days 55 days 46 days
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF FEBRUARY 28, 1997 AS OF AUGUST 31, 1996
Row: 1, Col: 1, Value: 63.0
Row: 1, Col: 2, Value: 27.0
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 8.0
Row: 1, Col: 1, Value: 65.0
Row: 1, Col: 2, Value: 23.0
Row: 1, Col: 3, Value: 0.0
Row: 1, Col: 4, Value: 0.0
Row: 1, Col: 5, Value: 12.0
Variable rate
demand notes
(VRDNs) 63%
Commercial
paper 27%
Tender bonds 2%
Municipal
notes 0%
Other 8%
Variable rate
demand notes
(VRDNs) 65%
Commercial
paper 23%
Tender bonds 0%
Municipal
notes 0%
Other 12%
* SOURCE: IBC'S MONEY FUND REPORT (registered trademark)
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - 100.0%
Apache Arizona Ind. Dev. Auth. Rev. (Imperial
Components Inc.) Series 1996, 3.50%, LOC Harris Trust &
Savings Bank, Chicago, VRDN (b) $ 2,100,000 $ 2,100,000
Arizona Ed. Loan Mktg. Corp. Series 1991 A, 3.40%,
LOC Dresdner Bank, A.G., Germany, VRDN (b) 1,300,000 1,300,000
Arizona Health Facs. Auth. Rev., VRDN:
(Samcor 1986 Loan Pool-Samaritan Health Care):
3.35%, (FGIC Insured) (BPA Chase Manhattan Bank) 900,000 900,000
3.40%, LOC Bank One, Arizona 1,500,000 1,500,000
(Voluntary Hosp. Federation Pooled Loan Prog.)
Series 1985 A, 3.35%, (FGIC Insured)
(Liquidity Facility Citibank, NA) 225,000 225,000
Arizona Trans. Excise Tax Rev. Bonds (Maricopa County Reg'l.
Area Road Fund) Series 1995A-95B, 4%, 7/1/97,
(AMBAC Insured) 1,000,000 1,000,471
Cochise County Poll. Cont. Rev. Bonds
(Arizona Elec. Pwr. Coop.) 3.50%, tender 9/2/97,
(CFC Nat'l. Rural Util. Coop) (b) 2,000,000 2,000,000
Coconino County Poll. Cont. Rev., VRDN (b):
(Arizona Pub. Svc. Co. Navajo Proj.) Series 1994 A,
3.55%, LOC Bank of America, NT & SA 1,300,000 1,300,000
(Tucson Elec. Pwr. Co. Proj.) Series A, 3.35%,
LOC Canadian Imperial Bank of Commerce 4,000,000 4,000,000
Glendale Ind. Dev. Auth. Rev. (Superior Bedding Co. Proj.)
Series 1994, 3.50%, LOC Harris Trust & Savings Bank,
Chicago, VRDN (b) 2,000,000 2,000,000
Glendale School Dist. #205 Participating VRDN,
Series 1996 F, 3.50%, (FGIC Insured)
(Liquidity Facility Norwest Bank, Minnesota) (c) 2,600,000 2,600,000
Maricopa County Ind. Dev. Auth. Multi-Family Hsg. Auth. Rev.
VRDN (b):
(Privado Park Apt. Proj.) Series 1994 A, 3.40%,
(FNMA Guaranteed) 2,000,000 2,000,000
(Shadow Creek Apt. Proj.) Series 1994 C, 3.40%,
(FNMA Guaranteed) 500,000 500,000
Maricopa County Poll. Cont. Rev.:
(Arizona Pub. Svc.) Series 1994 E, 3.45%,
LOC Bank of America, VRDN 400,000 400,000
Bonds:
(Southern California Edison. Co.):
Series 1985 D, 3.45%, tender 4/9/97 200,000 200,000
Series 1985 E, 3.50%, tender 4/7/97 1,100,000 1,100,000
Series 1985 F:
3.40%, tender 4/9/97 1,400,000 1,400,000
3.50%, tender 4/9/97 1,300,000 1,300,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Maricopa County School Impt. Bonds
(Washington Elementary School Dist. #6)
Series 1996 A, 7%, 7/1/97, (AMBAC Insured) $ 2,000,000 $ 2,019,825
Mesa Ind. Dev. Auth. Participating VRDN, Series 1997 B,
3.40%, (BIG Insured) (Liquidity Facility CDC) (c) 6,500,000 6,500,000
Mesa Muni. Dev. Corp. Bonds Series 1996 A-B, 3.95%,
tender 10/8/97, LOC Westdeutsche Landesbank 5,000,000 5,000,000
Mohave County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Utils.) Series 1993 E (b):
3.65%, tender 3/7/97 1,000,000 1,000,000
3.65%, tender 3/10/97 2,500,000 2,500,000
3.55%, tender 4/8/97 1,400,000 1,400,000
Peoria Dev. Auth. Participating VRDN, Series 1996 B,
3.50%, (Liquidity Facility Norwest Bank, Minnesota) (c) 2,750,000
2,750,000
Phoenix Ind. Dev. Auth. (Continental Circuits Corp.)
Series 1996, 3.50%, LOC Bank One Arizona, VRDN (b) 1,000,000 1,000,000
Phoenix Ind. Dev. Auth. Ind. Dev. Rev. (Hypercom Proj.)
Series 1996, 3.50%, LOC Bank One, Arizona, VRDN (b) 1,000,000 1,000,000
Phoenix Ind. Dev. Auth. Multi-Family Hsg. Rev., VRDN:
Rfdg. (Paradise Lakes Apt. Proj.) Series 1995, 3.50%,
LOC GE Capital Corp 500,000 500,000
(Bell Square Apt. Proj.) Series 1995, 3.50%,
LOC General Electric Capital Corp 2,000,000 2,000,000
(La Cholla Apt. Proj.) Series 1996, 3.35%,
LOC Texas Commerce Bank 2,000,000 2,000,000
(Lynwood Apt. Proj.) Series 1994, 3.35%, LOC FHLB 1,900,000 1,900,000
(Paradise Shadows II Apt. Proj.) Series 1989, 3.35%,
LOC Citibank, NA 2,900,000 2,900,000
(Quail Ridge Apt.-B) 3.40% (FNMA Guaranteed) (b) 1,400,000 1,400,000
(Ventana Palms Apt.) Participating VRDN, 3.40%,
LOC Wells Fargo Bank, N.A. (b) 5,210,000 5,210,000
Pima County School Dist. #1 Participating VRDN,
Series 1996 D, 3.50%, (FGIC Insured) (Liquidity Facility
Norwest Bank NA, Minnesota) (c) 2,000,000 2,000,000
Pinal County Ind. Dev. Auth. Hosp. Rev.
(Casa Grande Medical Ctr. Proj.) Series 1995, 3.35%,
LOC Chase Manhattan Bank, VRDN 4,000,000 4,000,000
Pinal County School Impt. Bonds (Casa Grande Union
High School Dist. #82 Proj.) Series 1996 B, 6.50% 7/1/97
(AMBAC Insured) 1,125,000 1,134,564
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ARIZONA - CONTINUED
Salt River Proj. Agricultural Impt. and Pwr. Dist., CP:
3.50%, 3/11/97 $ 2,000,000 $ 2,000,000
3.35%, 3/12/97 1,000,000 1,000,000
3.35%, 4/8/97 2,300,000 2,300,000
3.40%, 4/10/97 2,000,000 2,000,000
Scottsdale Gen. Oblig. Bonds 7.50%, 7/1/97 840,000 850,659
Tempe Gen. Oblig. Bonds 8.20%, 7/1/97 235,000 238,202
Tucson Ind. Dev. Auth. Multi-Family Hsg. Rev.
(Lincoln Garden Proj.) 3.60%, LOC Sumitomo
Bank Ltd., VRDN 1,000,000 1,000,000
Yavapai County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Util.) Series 1993 (b):
3.65%, tender 4/7/97 1,100,000 1,100,000
3.60%, tender 4/9/97 1,500,000 1,500,000
Yuma Ind. Dev. Auth. Ind. Rev., VRDN (b):
(Ardco Inc. Proj.) 3.50%, LOC Harris Trust &
Savings Bank, Chicago 800,000 800,000
(Buchbinder Proj.) Series 1995, 3.50%,
LOC Harris Trust & Savings Bank, Chicago 1,100,000 1,100,000
Yuma Muni. Prop. Corp. Bonds Series 1996, 4.25%,
7/1/97 (AMBAC Insured) 1,160,000 1,161,304
TOTAL INVESTMENTS - 100% $ 87,090,025
Total Cost for Income Tax Purposes $ 87,090,025
SECURITY TYPE ABBREVIATIONS
CP - Commercial Paper
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
3. Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At August 31, 1996, the fund had a capital loss carryforward of
approximately $10,700 which will expire on August 31, 2004.
SPARTAN ARIZONA MUNICIPAL MONEY MARKET FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS FEBRUARY 28, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value - $ 87,090,025
See accompanying schedule
Interest receivable 459,222
TOTAL ASSETS 87,549,247
LIABILITIES
Payable to custodian bank $ 29,394
Payable for investments purchased 2,000,000
Share transactions in process 1,093,184
Distributions payable 7,159
Accrued management fee 22,875
Other payables and accrued expenses 151
TOTAL LIABILITIES 3,152,763
NET ASSETS $ 84,396,484
Net Assets consist of:
Paid in capital $ 84,407,227
Accumulated net realized gain (loss) on investments (10,743)
NET ASSETS, for 84,407,227 shares outstanding $ 84,396,484
NET ASSET VALUE, offering price and redemption price per $1.00
share ($84,396,484 (divided by) 84,407,227 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)
INTEREST INCOME $ 1,501,648
EXPENSES
Management fee $ 208,516
Non-interested trustees' compensation 168
Total expenses before reductions 208,684
Expense reductions (64,171) 144,513
NET INTEREST INCOME 1,357,135
NET GAIN (LOSS) (7)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,357,128
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED FEBRUARY AUGUST 31,
28, 1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 1,357,135 $ 2,303,349
Net interest income
Net realized gain (loss) (7) (10,724)
Increase (decrease) in net unrealized gain from - (215)
accretion of discount
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,357,128 2,292,410
FROM OPERATIONS
Distributions to shareholders from net interest income (1,357,135) (2,303,349)
Share transactions at net asset value of $1.00 per share 43,861,562 118,384,316
Proceeds from sales of shares
Reinvestment of distributions from net interest income 1,307,655 2,241,032
Cost of shares redeemed (43,513,854) (90,439,136)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,655,363 30,186,212
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,655,356 30,175,273
NET ASSETS
Beginning of period 82,741,128 52,565,855
End of period $ 84,396,484 $ 82,741,128
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED OCTOBER 31, 1994
ENDED FEBRUARY AUGUST 31, (COMMENCEMENT
28, 1997 OF OPERATIONS) TO
AUGUST 31,
(UNAUDITED) 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations .016 .035 .034
Net interest income
Less Distributions
From net interest income (.016) (.035) (.034)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN B 1.62% 3.52% 3.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 84,396 $ 82,741 $ 52,566
Ratio of expenses to average net assets .35% A .22% C .06% A,
C
Ratio of net interest income to average net 3.25% A 3.44% 3.91% A
assets
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1997 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Arizona Municipal Income Fund (the income fund) is a fund of
Fidelity Union Street Trust. Spartan Arizona Municipal Money Market Fund
(the money market fund) is a fund of Fidelity Union Street Trust II. Each
trust is registered under the Investment Company Act of 1940, as amended
(the 1940 Act), as an open-end management investment company. Fidelity
Union Street Trust and Fidelity Union Street Trust II (the trusts) are
organized as a Massachusetts business trust and a Delaware business trust,
respectively. Each fund is authorized to issue an unlimited number of
shares. The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to make
certain estimates and assumptions at the date of the financial statements.
The following summarizes the significant accounting policies of the 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. Securities for which
quotations are not readily available are valued at their fair value as
determined in good faith under consistently applied procedures under the
general supervision of the Board of Trustees. Short-term securities with
remaining maturities of sixty days or less for which quotations
are not readily available are valued at amortized cost or original cost
plus accrued interest, both of which approximate current value.
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 discount represents unrealized gain until
realized at the time of a security disposition or maturity.
EXPENSES. Most expenses of each trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income. Distributions to shareholders from
realized capital gains on investments, if any, are recorded on the
ex-dividend date. Income
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
DISTRIBUTIONS TO SHAREHOLDERS -
CONTINUED
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 transactions, market
discount, and losses deferred due to futures and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net interest income and realized
and unrealized gain (loss). Undistributed net interest income and
accumulated undistributed net realized gain (loss) on investments may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
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. The income fund may use futures contracts to manage its
exposure to the bond market and to fluctuations in interest rates. Buying
futures tends to increase the fund's exposure to the underlying instrument,
while selling futures tends to decrease the fund's exposure to the
underlying instrument or hedge other fund investments. Losses may arise
from changes in the value of the underlying instruments, if there is an
illiquid secondary market for the contracts, or if the counterparties do
not perform under the contracts' terms. Futures contracts are valued at the
settlement price established each day by the board of trade or exchange on
which they are traded.
3. PURCHASES AND SALES OF INVESTMENTS.
INCOME FUND. Purchases and sales of securities, other than short-term
securities, aggregated $4,761,697 and $1,789,908, respectively.
The market value of futures contracts opened and closed during the period
amounted to $1,598,226 and $1,834,600, 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
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
commissions and extraordinary expenses. FMR receives a fee that is computed
daily at an annual rate of .55% and .50% of average net assets for the
income and money market funds, respectively.
FMR also bears the cost of providing shareholder services to each fund. To
offset the cost of providing these services, FMR or its affiliates
collected certain transaction fees from shareholders which amounted to $85
and $179 for the income and money market funds, respectively. Effective
April 1, 1997, these transaction fees were eliminated.
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 money market fund's operating
expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) above an annual rate of .35% of average net assets.
For the period, the reimbursement reduced expenses by $62,607.
In addition, FMR has entered into arrangements on behalf of the fund with
the fund's custodian and transfer agent whereby interest earned on
uninvested cash balances was used to offset a portion of the fund's
expenses. During the period, the income and money market fund's expenses
were reduced by $3,089 and $1,564, respectively, under these arrangements.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate the
service, and on your first call, the system will help you create a personal
identification number (PIN) for security.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
1
For quotes.*
2
For account balances and holdings.
3
To review orders and mutual
fund activity.
4
To change your PIN.
5
To speak to a Fidelity representative.
*
0
BY PC
Fidelity's Web site on the Internet provides a wide range of information,
including daily financial news, fund performance, interactive planning
tools and news about Fidelity products and services.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at 1-800-544-7272
for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity at
1-800-544-7272 or visit our Web site for more information on how to manage
your investments via your PC.
* 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
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, 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
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, 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
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, 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
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President - INCOME FUND
Sarah H. Zenoble, Vice President - MONEY MARKET FUND
Deborah F. Watson, Vice President - MONEY MARKET FUND
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Thomas D. Maher, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy * - INCOME FUND
Gerald C. McDonough *
Thomas R. Williams *
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
UMB Bank, n.a.
Kansas City, MO
and
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
SPARTAN
(registered trademark)
(registered trademark)
MUNICIPAL
MONEY
FUND
SEMIANNUAL REPORT
FEBRUARY 28, 1997
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 38 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 42 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.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will begin eliminating duplicate
copies of most financial reports and prospectuses to most households, even
if they have more than one account in the fund. If additional copies of
financial reports, prospectuses or historical account information are
needed, please call 1-800-544-6666.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
As 1997 begins, the stock and bond markets generally have continued on the
course they followed during the past year. Through February, stocks
maintained their unprecedented climb, with the large companies still
setting the pace. With low, stable interest rates, the bond market has
tended to mirror its historical returns in the mid-single digits.
While it's impossible to predict the future direction of the markets with
any degree of certainty, there are certain basic principles that can help
investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will greatly
reduce your vulnerability to any single decline. We know from experience,
for example, that stock prices have gone up over longer periods of time,
have significantly outperformed other types of investments and have stayed
ahead of inflation.
Second, you can further manage your investing risk through diversification.
A stock mutual fund, for instance, is already diversified, because it
invests in many different companies. You can increase your diversification
further by investing in a number of different stock funds, or in such other
investment categories as bonds. You should also keep money you'll need in
the near future in a more stable investment.
Finally, no matter what your time horizon or portfolio diversity, it makes
good sense to follow a regular investment plan, investing a certain amount
of money in a fund at the same time each month or quarter and periodically
reviewing your overall portfolio. By doing so, you won't get caught up in
the excitement of a rapidly rising market, nor will you buy all your shares
at market highs. While this strategy - known as dollar cost averaging -
won't assure a profit or protect you from a loss in a declining market, it
should help you lower the average cost of your purchases.
If you have questions, please call us at 1-800-544-8888. We are available
24 hours a day, seven days a week to provide you the information you need
to make the investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
To evaluate a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and the
effect of the fund's $5 account closeout fee on an average size account.
Yield measures the income paid by a fund. Since a money market fund tries
to maintain a $1 share price, yield is an important measure of performance.
If Fidelity had not reimbursed certain fund expenses during the periods
shown, the total returns and yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1997 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Spartan Municipal Money Fund 1.61% 3.27% 16.50% 22.63%
All Tax-Free Money Market Funds Average 1.48% 2.97% 14.05% 18.84%
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 424 all tax-free money
market funds with similar objectives tracked by IBC Financial Data, Inc.
over the past six months. (The periods covered by the IBC Financial Data,
Inc. numbers are the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1997 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan Municipal Money Fund 3.27% 3.10% 3.38%
All Tax-Free Money Market Funds Average 2.97% 2.66% 2.88%
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and show you
what would have happened if the fund had performed at a constant rate each
year.
YIELDS
3/3/97 12/2/96 9/2/96 6/3/96 2/26/96
Spartan Municipal 3.12% 3.28% 3.27% 3.31% 3.21%
Money Fund
If Fidelity had not 3.02% 3.18% 3.16% 3.20% 3.11%
reimbursed certain
fund expenses
All Tax-Free Money Market 2.87% 3.05% 2.96% 3.04% 2.87%
Funds Average
Spartan Municipal Money 4.88% 5.13% 5.11% 5.17% 5.02%
Fund - Tax-equivalent
If Fidelity had not 4.72% 4.97% 4.94% 5.00% 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
Financial Data, Inc. A portion of the fund's income may be subject to the
alternative minimum tax.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
Yields on tax-free investments
are usually lower than yields
on taxable investments.
However, a straight
comparison between the two
may be misleading because it
ignores the way taxes reduce
taxable returns. Tax-equivalent
yield - the yield you'd have to
earn on a similar taxable
investment to match the
tax-free yield - makes the
comparison more meaningful.
Keep in mind that the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Scott Orr, Portfolio Manager of Spartan Municipal Money
Fund
Q. SCOTT, WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE OVER THE PAST SIX
MONTHS?
A. On the interest rate front, investors spent the six months trying to
figure out when the Federal Reserve Board might raise the rate banks charge
each other for overnight loans - known as the fed funds rate. Over the
period, data consistently showed growth in the economy, but the pace of
that growth was inconsistent and there weren't any signs of significant
inflation. Since the Fed had indicated that it had a bias toward raising
interest rates to prevent future inflation, the market went month-to-month
looking closely at economic data to try to figure out exactly when the Fed
might take action. In January and February, the market lulled itself into
believing that the Fed might not act for several months. Economic data
showed strength, but inflation was so well-behaved that investors convinced
themselves that the Fed might tolerate stronger growth. The market was
shaken out of this complacency when Fed Chairman Alan Greenspan testified
before Congress in late February. Greenspan made some fairly blunt
statements about the strength of the economy and reminded investors that
the Fed was biased toward raising rates to make a preemptive strike against
inflation.
Q. WHAT WAS YOUR STRATEGY DURING THIS PERIOD?
A. It's important to remind investors that the municipal money market also
is affected by technical factors - that is, issues related to supply and
demand. In late December, we often see large outflows of investments from
municipal money market funds, which then reverse quickly in January. In
addition, a lot of interest payments and bond maturities occur on January
1, adding to the cash inflows. Interest rates on variable rate securities
tend to rise when the money flows out at year-end - because there is less
demand - then fall again when demand picks up in January. Strategically, I
looked for opportunities to increase the yield of the fund by anticipating
the technical reactions in the market. Over the past few months, the
average maturity of the fund trended downward, because I purchased fewer
longer-term securities in expectation of rising interest rates in the near
future. Rates should increase in response to expected Fed action and
increased note supply this summer.
Q. HOW HAS THE FUND PERFORMED?
A. The fund's seven-day yield on February 28, 1997, was 3.12% compared to
3.26% six months ago. The latest yield was the equivalent of a taxable
yield of 4.88% for investors in the 36% federal tax bracket. The fund's
total return for the six months was 1.61%. That beat the 1.48% return for
the all tax-free money market funds average, according to IBC Financial
Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. I believe the Fed could increase short-term rates at either of its Open
Market Committee meetings in March or May. I also expect that once the
market sees the Fed act, it probably will price more Fed rate increases
into the prices of securities. I've positioned the fund in expectation of
rates that are .25% to .50% higher, investing more in shorter-term
securities, rather than buying longer-term notes that I won't be happy with
three or four months from now because they don't offer enough yield.
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
FUND NUMBER: 460
TRADING SYMBOL: FIMXX
START DATE: January 14, 1991
SIZE: as of February 28,
1997, more than $2.4 billion
MANAGER: Scott Orr, since
June 1995; manager, Fidelity
Ohio Municipal Money
Market Fund, since August
1996; also manager of
various institutional money
market portfolios; joined
Fidelity in 1989
(checkmark)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/28/97 8/31/96 2/29/96
0 - 30 72 70 56
31 - 90 7 10 9
91 - 180 15 5 20
181 - 397 6 15 15
WEIGHTED AVERAGE MATURITY
2/28/97 8/31/96 2/29/96
Spartan Municipal 40 days 63 days 76 days
Money Fund
All Tax-Free Money 45 days 55 days 46 days
Market Funds Average*
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF FEBRUARY 28, 1997 AS OF AUGUST 31, 1996
Row: 1, Col: 1, Value: 61.6
Row: 1, Col: 2, Value: 11.0
Row: 1, Col: 3, Value: 6.6
Row: 1, Col: 4, Value: 18.0
Row: 1, Col: 5, Value: 4.0
Row: 1, Col: 1, Value: 65.0
Row: 1, Col: 2, Value: 9.0
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 14.0
Row: 1, Col: 5, Value: 2.0
Variable rate
demand notes
(VRDNs) 62%
Commercial
paper 11%
Tender bonds 6%
Municipal
notes 18%
Other 3%
Variable rate
demand notes
(VRDNs) 66%
Commercial
paper 9%
Tender bonds 10%
Municipal
notes 14%
Other 1%
* SOURCE: IBC'S MONEY FUND REPORT (registered trademark)
INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ALABAMA - 1.9%
Alabama Ind. Dev. Auth. Rev., VRDN (b):
(Columbus Mills Inc. Proj.) Series 1994 A, 3.45%,
LOC SunTrust Bank, Atlanta $ 3,000 $ 3,000
(Well Built Cabinet Inc.) 3.50%, LOC Amsouth Bank 2,335 2,335
Ashland Ind. Dev. Board Rev. (Wellborn Cabinet Inc. Proj.)
Series 1991 A, 3.50%, LOC Amsouth Bank, VRDN (b) 1,340 1,340
Colbert County Ind. Dev. Board (Golden Poultry Co., Inc. Proj.)
Series 1990, 3.45%, LOC SunTrust Bank, Atlanta, VRDN (b) 3,850 3,850
Columbia Ind. Dev. Rfdg. Rev. (Russell Corp. Proj.) 3.45%,
LOC SunTrust Bank, Atlanta, VRDN (b) 2,575 2,575
Columbiana Ind. Dev. Board Rev. (NFA Corp. Proj.)
Series 1992 A, 3.50%, LOC Amsouth Bank, VRDN (b) 6,000 6,000
Decatur Ind. Dev. Board Ind. Dev. Rev. (Monsanto Co. Proj.)
Series 1996, 3.45%, VRDN (b) 1,285 1,285
Decatur Ind. Dev. Board Silid Waste Rev. (Trico Steel Co. Proj.)
Series 1997, 3.45%, LOC Chase Manhattan Bank,
VRDN (b) 2,200 2,200
Demopolis Ind. Dev. Board Ind. Dev. Rev. Board
(Systech Environmental Corp.) Series 1990, 3.45%,
LOC NBD Bank, NA, VRDN (b) 1,200 1,200
Eufaula Ind. Dev. Board (Columbus Mills, Inc. Proj.)
Series 1993, 3.45%, LOC SunTrust Bank Atlanta,
VRDN (b) 6,100 6,100
Florence Ind. Dev. Board. Rev. (Robert J. Bevis Proj.)
Series 1990, 3.45%, LOC Boatmen's Nat'l. Bank of St. Louis,
VRDN (b) 3,000 3,000
Geneva Ind. Dev. Board Rev. (Russell Corp. Proj.) Series 1992,
3.45%, LOC SunTrustBank, Atlanta, VRDN (b) 2,575 2,575
Mobile Ind. Dev. Board Ind. Rev. (Newark Group Proj.) 3.40%,
LOC First Union Nat'l. Bank) VRDN (b) 3,000 3,000
Montgomery Ind. Dev. Board Rev., VRDN (b):
(Contech Construction Prod.) Series 1996, 3.50%,
LOC Mellon Bank 3,000 3,000
(Feldmeier/Alabama Equipment 96) 3.50%,
Southtrust Bank of Alabama 1,000 1,000
Phoenix Ind. Dev. Auth. Rev. Bonds (Mead Coated Board Proj.)
Series 1988, 3.45% tender 3/5/97,
LOC ABN-AMRO Bank (b) 1,900 1,900
Roanoke Ind. Dev. Board Ind. Dev. Rev.
(Wehadkee/Rock Mills Proj.) Series 1992, 3.45%,
LOC SunTrust Bank, Atlanta, VRDN (b) 1,100 1,100
Talladega Ind. Dev. Rev. (Wehadkee Yarn Mills Proj.)
Series 1990, 3.45%, LOC SunTrustBank, Atlanta, VRDN (b) 895 895
46,355
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ALASKA - 0.5%
Alaska Ind. Dev. & Export Auth. (Healy Clean Coal Proj.)
VRDN:
Series 1996 A, 3.40%, LOC Bank of America NT & SA $ 4,200 $ 4,200
Series 1996 B, 3.40%, LOC Bank of America NT & SA (b) 5,100 5,100
Alaska Student Loan Corp. Student Loan Rev. Bonds Series A,
7%, 7/1/97, (AMBAC Insured) (b) 1,000 1,009
Valdez Marine Terminal Rev. Rfdg. Bonds (Atlantic Richfield Co.)
Series 1994 A, 3.50%, tender 3/7/97 2,300 2,300
12,609
ARIZONA - 1.6%
Arizona Health Facs. Auth. Hosp. Rev. (Northern Healthcare)
Series 1996 B, 3.35%, (MBIA Insured)
(BPA Chase Manhattan Bank) VRDN 1,600 1,600
Cochise County Poll. Cont. Rev. Bonds
(Arizona Elec. Pwr. Corp.) 3.50%, tender 9/2/97
(CFC Guaranteed-Nat'l. Rural Util. Coop.) (b) 2,400 2,400
Maricopa County Ind. Dev. Auth. Multi-Family Hsg. Rev.
(Shadow Creek Apt. Proj.) Series 1994 C, 3.40%,
(FNMA Guaranteed) VRDN (b) 5,100 5,100
Mesa Ind. Dev. Auth. Participating VRDN, Series 1997 B,
3.40%, (BIG Insured) (Liquidity Facility
Caisse des Depots et Consignations) (c) 3,200 3,200
Mohave County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Utils.) Series 1993 E, 3.45%, tender 4/9/97 (b) 2,400 2,400
Phoenix Arpt. Rev. Rfdg. Bonds Series A, 5.05%, 7/1/97,
(MBIA Insured) 1,175 1,181
Phoenix Civic Impt. Corp. Arpt. Impt. Series 1995, 3.40%,
LOC Landesbank Hessen-Thuringen, VRDN (b) 5,000 5,000
Phoenix Ind. Dev. Auth. Ind. Dev. Rev. (Hypercom Proj.)
Series 1996, 3.50%, LOC Bank One, Arizona, VRDN (b) 3,000 3,000
Pima County Ind. Dev. Auth. (Tucson Elec. Pwr. Co. Proj.)
Series 1990 A, 3.40%, LOC Bankers Trust Company,
VRDN (b) 4,000 4,000
Pima County Ind. Dev. Auth. Multi-Family Rev.
(Quail Ridge Apt.-B) 3.40%, (FNMA Guaranteed) VRDN (b) 4,000 4,000
Pinal County Ind. Dev. Auth. Ind. Dev. Rev.
(Sunbelt Refining Co. LP Proj.) Series 1988, 3.45%, LOC
Bankers Trust Company, VRDN (b) 3,900 3,900
Salt River Proj. Agricultural Impt. and Pwr. Dist.
3.55%, 3/10/97, CP 1,500 1,500
Yavapi County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizen Util.) Series 1993, 3.55%, tender 4/8/97 (b) 1,000 1,000
38,281
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ARKANSAS - 1.6%
Blythville Ind. Dev. Rev. (Arkansas Steel Processing Proj.)
Series 1992, 3.45%, LOC Credit Agricole USA, Inc.,
VRDN (b) $ 9,500 $ 9,500
Clark County Solid Waste Disp. Rev. (Reynolds Metals Co. Proj.)
3.40%, LOC SunTrust Bank, Atlanta, VRDN (b) 22,000 22,000
Harrison Ind. Dev. Rev. (Rock-Tenn Converting Co. Proj.)
Series 1993, 3.45%, LOC SunTrust Bank, Atlanta,
VRDN (b) 2,500 2,500
Independence County Ind. Dev. Rev. (Townsends of AR Inc.)
Series 1996, 3.35%, LOC Rabobank Nederland, N.V.,
VRDN (b) 1,000 1,000
Miller County Solid Waste Disp. Rev. (Tyson Foods Inc. Proj.)
Series 1996, 3.40%, LOC Commerzbank, Germany,
VRDN (b) 3,150 3,150
38,150
CALIFORNIA - 5.4%
Alameda County TRAN 4.50%, 6/30/97 6,700 6,712
California Gen. Oblig.:
Participating VRDN, Series 1996 L, 3.40%, (FGIC Insured)
(Liquidity Facility Caisse des Depots et Consignations) (c) 1,100 1,100
RAN Series 1996-97, 4.50%, 6/30/97 40,200 40,278
California Higher Ed. Loan Student Auth. Rev. VRDN (b):
Series 1987 C, 3.40, LOC Student Loan Marketing Assoc. 4,600 4,600
Series 1992 E-1, 3.40%,
LOC Student Loan Marketing Assoc. 7,000 7,000
California School Cash Reserves Prog. Auth. TRAN
Series 1996 A, 4.75%, 7/2/97 10,600 10,631
California Student Ed. Loan Mktg. Corp. Student Loan Rev.
Bonds Series 1994 A, 3.85%, tender 6/1/97,
LOC Dresdner Bank (b) 10,000 10,000
Fresno TRAN 4.50%, 6/30/97 4,300 4,308
Los Angeles Commty. College Dist. TRAN Series 1996-97,
4.50%, 7/1/97 3,600 3,606
Los Angeles County TRAN Series 1996-97, 4.50%, 6/30/97 10,700 10,726
Los Angeles Reg'l. Arpt. Impt. Facs. Lease Rev.
(Air France Intl. Arpt.) 3.45%, LOC Societe Generale,
France, VRDN (b) 1,425 1,425
Los Angeles TRAN Series 1996, 4.50%, 6/19/97 12,000 12,022
Oakland TRAN Series 1996, 4.75%, 6/30/97 6,700 6,719
Riverside County School Dist. TRAN Series 1996-76,
4.625%, 7/17/97 2,300 2,305
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
CALIFORNIA - CONTINUED
Santa Clara Unified School Dist. TRAN Series 1996,
4.50%, 7/2/97 $ 2,200 $ 2,204
South Coast Local Ed. Agencies TRAN
Series 1996, 4.75%, 6/30/97 3,200 3,207
Ventura County TRAN Series 1996, 4.75%, 7/2/97 6,600 6,616
133,459
COLORADO - 0.7%
Aurora Multi-Family Hsg. Rev. Series 1996 (Aurora Meadows
Apts.) 3.60%, (FNMA Guaranteed) (b)(c) 2,100 2,100
Colorado TRAN 4.50%, 6/27/97 1,000 1,002
Denver County Ind. Dev. (Robinson Dairy Inc. Proj.)
Series 1996, 3.40%, LOC Wells Fargo Bank, N.A.,
VRDN (b) 1,800 1,800
Monte Vista Ltd. Oblig. Swr. Rev., Series 1992, 3.60%,
LOC Wachovia Bank of NC, VRDN (b) 2,720 2,720
Wheatridge Ind. Dev. Rev., VRDN (b):
(Adolph Coors Co. Proj.), Series 1993, 3.45%,
LOC Wachovia Bank of Georgia 5,000 5,000
(Leaf, Inc. Proj.) 3.40%, LOC Wachovia Bank of NC 4,000 4,000
16,622
DELAWARE - 1.1%
Delaware Econ. Dev. Auth. (Waste Recovery Proj.) VRDN (b):
Series 1996 A, 3.40%,
LOC Canadian Imperial Bank of Commerce 11,500 11,500
Series 1996 B, 3.40%,
LOC Canadian Imperial Bank of Commerce 6,000 6,000
Delaware Econ. Dev. Auth. Facs. Rev. (Delmarva Pwr. & Lt.
Co. Proj.) Series 1988, 3.60%, VRDN (b) 1,400 1,400
Delaware Hsg. Auth. Participating VRDN, Series PA-39,
3.40%, (Liquidity Facility Merrill Lynch & Co.) (c) 8,580 8,580
27,480
DISTRICT OF COLUMBIA - 0.8%
Dist. of Columbia Hsg. Fin. Auth. Multi-Family Hsg. Rev. Rfdg.
(Mount Vernon Plaza Apts.) 3.60%,
LOC Bank One, VRDN (b) 13,105 13,105
Metro. Washington Arpt. Auth. Rev. Bonds, 3.60%,
tender 3/26/97, LOC NationsBank, N.A. (b) 7,000 7,000
20,105
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
FLORIDA - 1.2%
Dade County Hsg. Fin. Corp. Participating VRDN,
Series 1991 A, 3.57%, (Liquidity Facility
Bank One, Colorado) (b)(c) $ 3,525 $ 3,525
Florida Local Govt. Fin. Commission Series A, 3.40%, 4/11/97,
LOC First Union Nat'l. Bank, CP 7,600 7,600
Jacksonville Hosp. Rev. (Univ. Med. Ctr.) Series 1988, 3.50%,
LOC Sumitomo Bank Ltd., VRDN 2,600 2,600
Jacksonville Poll. Cont. Rev. Rfdg. Bonds (Florida Pwr. & Light
Co. Proj.) Series 1994, 3.50%, tender 3/20/97 5,900 5,900
Orlando Utils. Commission Wtr. & Elec. Participating VRDN,
Series BT-199, 3.375%,
(Liquidity Facility Bankers Trust Company) (c) 2,600 2,600
Sunshine Gov't. Fing. Commission Rev. Bonds Series 1986,
3.55%, tender 3/6/97 6,800 6,800
29,025
GEORGIA - 2.5%
Albany Dougherty County Hosp. Auth. (Phoebe Puttnay
Memorial Hosp.) Series 1996, 3.35%, (AMBAC Insured)
(BPA SunTrust Bank, Atlanta) VRDN 1,900 1,900
Brunswick & Glynn County Dev. Auth. (Georgia Pacific
Corp. Proj.) Series 1996, 3.45%, LOC Commerzbank,
Germany, VRDN (b) 4,900 4,900
Cobb County Dev. Auth. Ind. Dev. (Amoena Corp. Proj.)
Series 1992, 3.45%, LOC Bayerische Hypotheken-und
Weschel, VRDN (b) 1,000 1,000
Coweta County Ind. Dev. Auth. (E.G.O. Products, Inc. Proj.)
Series 1996, 3.40%, LOC Swiss Bank Corp., VRDN (b) 2,800 2,800
Dekalb County Multi-Family Hsg. Rev. (Eales Trace Apts.)
Series 1996, 3.45%, LOC Key Bank Nat'l. Association,
VRDN (b) 2,000 2,000
Floyd County Dev. Auth. Ind. Dev. Rev. (Marglen Ind., Inc.
Proj.), 3.45%, LOC SunTrust Bank, Atlanta, VRDN (b) 5,400 5,400
Georgia Gen. Oblig. Participating VRDN, Series BT-194,
3.65%, (Liquidity Facility Bankers Trust Company) (c) 5,000 5,000
Georgia Port Auth. Rev. (Mayor's Point Terminal) Series 1992,
3.45%, LOC SunTrust Bank, Atlanta, VRDN (b) 3,400 3,400
Georgia Muni. Elec. Auth. Proj. One Bonds, Series 1994 E,
3.55%, tender 4/8/97, LOC ABN-AMRO Bank 1,500 1,500
Greene County Ind. Dev. Rev. (Chipman-Union, Inc. Proj.)
Series 1991, 3.45%, LOC SunTrust Bank, Atlanta,
VRDN (b) 1,700 1,700
Gwinnett County Ind. Dev. Rev. (Curtis 1000, Inc. Proj.)
Series 1996, 3.75%, LOC SunTrust Bank, Atlanta,
VRDN (b) 4,060 4,060
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
GEORGIA - CONTINUED
Gwinnett County Multi-Family Hsg. Rev. (Herrington
Woods Apt.) Series 1996 A, 3.45%, LOC Key Bank Nat'l.
Assoc., VRDN (b) $ 4,300 $ 4,300
Paulding County Ind. Bldg. Auth. Rev. (Cadillac Products, Inc.)
Series 1994, 3.45%, LOC NBD Bank NA, VRDN (b) 2,750 2,750
Pierce County Ind. Dev. & Bldg. Auth. Rev. (American Egg
Prods. Inc. Proj.) Series 1989, 3.45%, LOC Barclays
Bank PLC, VRDN (b) 1,440 1,440
Richmond County Board of Ed. Gen. Oblig. Participating
VRDN, Series 1997 C, 3.45%, (Liquidity Caisse des
Depots et Cosignations) (c) 2,900 2,900
Savannah Econ. Dev. Auth. Rev. (Home Depot, Inc.)
Series 1995 A, 3.45%, VRDN (b) 15,600 15,600
Worth County Ind. Dev. Auth. Ind. Dev. Rfdg. Rev.
(Seabrook Peanut Co. Proj.) Series 1996, 3.45%,
LOC SunTrust Bank, Atlanta, VRDN 1,200 1,200
61,850
HAWAII - 0.2%
Hawaii Hsg. Fin. & Dev. Corp. Participating VRDN,
Series PT-35, 3.50%, (Liquidity Facility Banque
Nationale De Paris) (b)(c) 4,375 4,375
IDAHO - 0.1%
Idaho TAN Series 1996, 4.50%, 6/30/97 1,000 1,002
Port of Lewiston Ind. Dev. Rev. (Blount, Inc.) Series 1995,
3.50%, LOC NationsBank NASouth, VRDN (b) 1,800 1,800
2,802
ILLINOIS - 4.4%
Belvidere Ind. Dev. Rev. (R&D Thiel, Inc. Proj.) Series 1996,
3.55%, LOC First Bank, Minnesota, VRDN (b) 2,300 2,300
Bolingbrook Multi-Family Hsg. Rev. (Amberton Apts.)
Series 1994, 3.45%, LOC LaSalle Bank (b) 1,600 1,600
Chicago Gas Supply Rev. Bonds (Peoples Gas Light &
Coke Co.) 3.70%, tender 12/1/97 (b) 3,000 3,000
Chicago Ind. Dev. Rev., VRDN:
(Ampere Automotive Corp. Proj.) Series 1996, 3.50%,
LOC Harris Trust & Savings Bank, Chicago (b) 1,000 1,000
(Guernsey Bel Inc. Proj.) Series 1996 A, 3.35%,
LOC Harris Trust & Savings Bank, Chicago 1,135 1,135
Chicago O' Hare Int'l. Arpt. Rev., Series 1988 A, 3.40%,
LOC Bayerische Landesbank Girozentrale, VRDN (b) 10,500 10,500
Chicago School Reform Participating VRDN, Series 96-BB,
3.45%, (Liquidity Facility Bank of America NT & SA) (c) 11,100 11,100
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ILLINOIS - CONTINUED
Crestwood Ind. Dev. Rev. (GMG Warehouse LLC Proj.)
3.50%, LOC LaSalle Nat'l. Bank, VRDN (b) $ 1,650 $ 1,650
Danville Ind. Dev. Rev. (Freight Car Svcs., Inc. Proj.) 3.50%,
LOC Chase Manhattan Bank, VRDN (b) 5,300 5,300
Decatur Wtr. Rev. Bonds Series 1985, 3.55%, tender
3/12/97, LOC Sumitomo Bank 5,300 5,300
Illinois Dev. Fin. Auth. Ind. Dev. Rev., VRDN (b):
(Belmont Steel Proj.) Series 1991, 3.60%,
LOC Comerica Bank 4,100 4,100
(Bertsche Family/Camcraft Proj.) Series 1993, 3.55%,
LOC American Nat'l. Bank & Trust 500 500
(Chicago Fineblanking Corp. Proj.) 3.55%,
LOC NBD Bank, NA 3,800 3,800
(Cloverhill Pastry Vend.) 3.55%,
LOC American Nat'l. Bank & Trust Co. of Chicago 500 500
(FC Ltd. Partnership), 3.50%, LOC Lasalle Nat'l. Bank 3,590 3,590
(Grayhill Inc. Proj.) Series 1995 B, 3.50%,
LOC Harris Trust & Savings Bank, Chicago 2,800 2,800
(Kindlon Partners Proj.) Series 1994, 3.50%,
LOC Lasalle Nat'l. Bank 1,600 1,600
(Maples & Sprowl Steel Ltd. Proj.) Series 1996 A, 3.50%,
LOC Lasalle Nat'l. Bank 1,839 1,839
(Olive Can Co. Proj.) 3.50%, LOC LaSalle Nat'l. Bank, 2,080 2,080
(Rich Products Corp. Proj.) Series 1993, 3.45%,
LOC SunTrust Bank, Atlanta 7,100 7,100
(Touhy Ltd.) Series 1996, 3.50%, LOC LaSalle Nat'l. Bank 3,500 3,500
(Yale-South Haven Proj.) Series 1994, 3.50%,
LOC Bank One Indianapolis 2,700 2,700
Illinois Dev. Fin. Auth. Ltd. Oblig. Rev. (SWD Inc. Proj.)
3.55%, LOC NBD Bank (Michigan) VRDN (b) 4,500 4,500
Illinois Dev. Fin. Auth. Multi-Family Hsg. Rev. Rfdg.
(Garden Glen Apts.) Series 1993, 3.55%,
(Continental Casualty Guaranteed) VRDN 1,100 1,100
Illinois Dev. Fin. Auth. Poll. Cont. Rev.
(Illinois Pwr. Co. Proj.) VRDN (b):
Series 1987 B, 3.50%, LOC Bank of Tokyo-Mitsubishi Ltd 5,000 5,000
Series 1987 C, 3.50%, LOC Bank of Toyko-Mitsubishi Ltd 1,000 1,000
Illinois Health Facs. Auth. Rev. (Methodist Med. Ctr. Proj.)
Series 1985 B, 3.40%, LOC Sumitomo Bank, Ltd., VRDN 2,600 2,600
Illinois Hsg. Dev. Auth. Multi-Family Hsg. Rev.
(Williamsburg Apt. Proj.) Series 1991, 3.40%,
LOC Landesbank Hessen-Thuringen, VRDN (b) 3,200 3,200
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ILLINOIS - CONTINUED
Illinois Reg. Trans. Auth. Participating VRDN, Series SG-82,
3.35%, (Liquidity Facility Societe Generale, France) (c) $ 1,500 $ 1,500
Illinois Student Asst. Commission Student Loan Rev.
Series 1997 A, 3.45%, LOC First Nat'l. Bank of Chicago,
VRDN (b) 5,000 5,000
Lake County Solid Waste Fac. Rev. (Countryside Landfill
Inc. Proj.) Series 1996 B, 3.40%, LOC Morgan Guaranty
Trust, NY, VRDN (b) 1,000 1,000
Orland Park Ind. Dev. Rev. (Panduit Corp. Proj.) Series 1996,
3.35%, LOC Wachovia Bank of Georgia, VRDN (b) 4,600 4,600
Woodridge, Dupage, Will & Cook Counties Ind. Dev. Rev.
(McDavid Knee Guard Proj.) 3.60%, LOC Firstar Bank
Milwaukee, N.A., VRDN 1,000 1,000
107,494
INDIANA - 3.1%
Carmel Clay Ind. School Dist. TAN 4.25%, 12/31/97 2,400 2,409
Columbus Gen. Oblig. Rev. (Rock-Tenn Co. Mill Division)
Series 1995, 3.45%, LOC SunTrust Bank, Atlanta, VRDN (b) 2,300 2,300
Hebron Econ. Dev. Rev. (Herbon Pointe LLC)
Series 1996 A, 3.50%, LOC Federal Home Loan Bank,
Indianapolis, VRDN (b) 3,175 3,175
Indiana Trans. Fin. Auth. Arpt. Facs. Lease Participating
VRDN, Series BT-217, 3.375%, (Liquidity Facility Bankers
Trust Company) (c) 6,270 6,270
Indianapolis Econ. Dev. Rev., VRDN (b):
(EPI Printers Inc. Proj.) Series 1995, 3.45%,
LOC Comerica Bank 4,325 4,325
(LLC Proj.) Series 1996, 3.50%, LOC Bank One Indianapolis 800 800
Indianapolis Gas Utils Sys. (Citizens Gas & Coke)
3.50%, 7/15/97, (Liquidity NBD Bank, NA) CP 7,000 7,000
Indianapolis Ind. Dev. Rev. (Sohl Assoc. LLC Proj.) Series 1995,
3.50%, LOC First Nat'l. Bank of Boston, VRDN (b) 2,950 2,950
Lebanon Econ. Dev. Rev. (White Castle Sys. Inc. Proj.) 3.50%,
LOC Bank One, VRDN (b) 2,000 2,000
Ligonier Econ. Dev. Rev. (Sharon Manufacturing Co.), 3.55%,
LOC NBD Bank, VRDN (b) 6,300 6,300
Logansport Ind. Dev. Rev. (Nelson Tube Co.) Series 1996,
3.50%, LOC Huntington Nat'l. Bank, VRDN (b) 1,200 1,200
Munice Ind. Dev. Rev. (Diamond Plastics Corp.) Series 1996,
3.50%, LOC NationsBank of TX, VRDN (b) 1,000 1,000
Petersburg Solid Waste Disp. Rev. (Indianapolis Pwr. &
Light Co.) VRDN (b):
Series 1995 C, 3.40% 17,000 17,000
Series 1996, 3.40% 7,900 7,900
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
INDIANA - CONTINUED
Portage Township TAN 3.81%, 12/31/97 $ 1,400 $ 1,401
Rockport Ind. Dev. Rev. (AK Steel Corp. Proj.)
Series 1997 A, 3.45%, LOC PNC Bank, Ohio, VRDN (b) 3,500 3,500
St. Joseph County Ind. Rev. (Edcoat Ltd.) Series 1995, 3.50%,
LOC First Bank of Minnesota, VRDN (b) 2,800 2,800
Sullivan Poll. Cont. Rev. Bonds (Hoosier Energy Rural
Elec. Coop.) Series 1989, 5L-6, 3.50%, tender 3/20/97
(CFC Guaranteed-Nat'l. Rural Util. Coop.) 4,055 4,055
76,385
IOWA - 0.6%
Clinton Ind. Dev. Rev. (Sethness Products Co. Proj.) 3.50%,
LOC Northern Trust Co., VRDN (b) 3,600 3,600
Iowa School Corp. TRAN, Series 1996-97 A, 4.75%, 6/27/97,
(FSA Insured) 6,700 6,724
Waterloo Iowa Ind. Dev. Rev. (O'Neal Metals Inc. Proj.)
3.50%, LOC NationsBank NA South, VRDN (b) 4,000 4,000
14,324
KANSAS - 0.6%
Butler County Solid Waste Disposal and Cogeneration Rev.
(Texaco Refining & Mktg.) Series 1996 B, 3.55%, VRDN (b) 1,500 1,500
Kansas City Mtg. Participating VRDN, Series 1996 K, 3.50%,
(Liquidity Facility Caissedes Depots et Consignations) (b)(c) 3,845 3,845
Olathe Ind. Dev. Rev. (Garmin International Inc.) Series 1995,
3.80%, LOC Boatmens Nat'l. Bank of Kansas City, VRDN (b) 3,445 3,445
Wichita Solid Waste Disp. Rev. (Weyerhaeuser Co. Proj.)
3.55%, VRDN (b) 4,950 4,950
13,740
KENTUCKY - 0.8%
Cynthiana Ind. Dev. Rev. (E.D. Bullard Co. Proj.) 3.50%,
LOC NationsBank, N.A., VRDN (b) 1,440 1,440
Kentucky Higher Ed. Student Loan Auth., Series 1991 E,
3.40%, (AMBAC Insured) (BPA Credit Suisse First Boston)
VRDN (b) 3,200 3,200
Louisville & Jefferson County Reg. Arpt. Auth. Sys. Rev.
Series 1996 A, 3.45%, LOC National City Bank, Kentucky,
VRDN (b) 3,500 3,500
McCracken County Ind. Bldg. Rev. Series 1996, 3.50%,
LOC Bank One, Kentucky, N.A., VRDN (b) 4,550 4,550
Scott County Ind. Building Rev. (Ropak Corp. Proj.)
Series 1994, 3.50%,
LOC Bank One Colorado, N.A., VRDN (b) 4,400 4,400
Walton City Ind. Bldg. Rev. (Clarion Mfg. Corp. of America)
3.45%, LOC Fifth ThirdBank, Cincinatti, VRDN (b) 1,400 1,400
18,490
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
LOUISIANA - 1.9%
Calcasieu Parish Ind. Dev. Board Env. Rev. (Citgo Petroleum
Corp.) 3.55%, LOC Banque Nationale de Paris,
VRDN (b) $ 1,800 $ 1,800
Calcaseiu Parish Pub. Trust Auth. Solid Waste Disp. Rev.
(PPG Industries Inc. Proj.) Series 1994, 3.50%, VRDN (b) 7,300 7,300
Dequincy Rev. (Recycle Inc. South. Proj.) Series 1995, 3.55%,
LOC Fleet Bank NA, VRDN (b) 4,500 4,500
Desoto Parish Poll. Cont. Participating VRDN, Series 94 W,
3.50%, (Liquidity Facility Norwest Bank NA, Minnesota) (c) 1,900 1,900
Lake Charles Harbor and Terminal Dist. Port Impt. Rev. 3.35%,
LOC Nat'l. Westminster Bank PLC, VRDN (b) 7,000 7,000
Lincoln Parish (William Inds. Inc. Proj.) VRDN (b):
Series 1995, 3.40%, LOC Deutsche Bank, Germany 9,500 9,500
Series 1996, 3.40%, LOC Deutsche Bank, Germany 2,300 2,300
Plaquemines Parish Environmental Rev. (BP Exploration &
Oil, Inc.) Series 1994, 3.55%, VRDN (b) 2,300 2,300
Plaquemines Port Harbor Terminal Dist. Port Fac. Rev. Bonds
(Chevron Corp.) 4.05%, tender 9/1/97 2,000 2,000
West Baton Rouge Parish Ind. Dist. #3 Rev.
(Dow Chemical Co. Proj.):
Bonds Series 1991, 3.55%, tender 3/13/97 4,600 4,600
Series 1993, 3.55%, VRDN (b) 2,600 2,600
45,800
MAINE - 0.5%
Eastport Ind. Dev. Rev. (Passamaquoddy Tribe Fibre Extrusion
Proj.) Series 1992, 3.55%, LOC NBD Bank, VRDN (b) 4,860 4,860
Eliot School Admin. Dist. #35 BAN, 4.25%, 11/12/97 1,200 1,203
Maine Pub. Util. Fin. Bank Pub. Util. Rev. Rfdg. Series 1996,
3.45%, LOC Bank of New York, VRDN (b) 5,000 5,000
11,063
MARYLAND - 1.5%
Baltimore Econ. Dev. Rev., VRDN (b):
(Oles Envelope):
Series A, 3.45%, LOC First Union Nat'l. Bank 2,800 2,800
Series B, 3.45%, LOC First Union Nat'l. Bank 3,110 3,110
(Rock-Tenn Converting Co.) Series 1987,
3.45%, LOC SunTrust Bank, Atlanta 530 530
Howard County Econ. Dev. Rev. (Pace Inc. Proj.) 3.45%,
LOC NationsBank, NA, VRDN (b) 5,000 5,000
Maryland Commty. Dev. Administration Dept. of Hsg. &
Commty. Dev. Participating VRDN, Series PT-36, 3.50%,
(Liquidity Facility Banque Nationale De Paris) (b)(c) 18,540 18,540
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MARYLAND - CONTINUED
Maryland Econ. Dev. Auth. Rev. (Grafco Inds LP) Series 1996,
3.45%, LOC NationsBank, N.A., VRDN (b) $ 1,000 $ 1,000
Maryland Ind. Dev. Fin. Auth. Dev. Rev. (Townsend Culinary
Fac.) Series 1996, 3.35%, LOC Suntrust Bank Atlanta,
VRDN (b) 2,500 2,500
Prince George's County Ind. Dev. Rev. (Cintas Corp. #41 Proj.),
3.50%, LOC PNC Bank, Ohio, VRDN (b) 2,320 2,320
35,800
MASSACHUSETTS - 0.5%
Massachusetts Bay Trans. Auth. RAN 4.75%, 9/5/97 4,300 4,317
Massachusetts Gen. Oblig. BAN Series 1996 A,
4.25%, 6/10/97 8,000 8,007
12,324
MICHIGAN - 2.4%
Detroit School Dist. RAN 4.50%, 5/1/97 13,800 13,812
Michigan Higher Ed. Student Loan Auth. Rev. Rfdg.,
Series XII-B, 3.35%, (AMBAC Insured)
(BPA Krediet Bank, NV) VRDN (b) 2,000 2,000
Michigan Hsg. Dev. Auth. Rev. Multi-Family Hsg. Rev. Bonds
Series 1988 A (b):
3.50%, tender 4/8/97,
LOC Credit Suisse First Boston Corp 3,700 3,700
3.50%, tender 4/9/97,
LOC Credit Suisse First Boston Corp 9,000 9,000
Michigan Muni. Bond Auth. RAN:
Series 1996 A, 4.50%, 7/3/97 13,570 13,596
Series 1996 B, 4.50%, 7/25/97 2,285 2,289
Michigan Strategic Fund Bonds (Dow Chemical Proj.)
Series 1988, 3.55%, tender 4/1/97 (b) 1,750 1,750
Michigan Strategic Fund Ltd. Oblig. Rev.
(Michigan Sugar Co. - Carrollton) 3.45%, LOC Wachovia
Bank of Georgia, VRDN (b) 6,000 6,000
Michigan Strategic Fund Solid Wst. Disp. Rev., VRDN (b):
(Grayling Gen. Station Proj.) Series 1990, 3.40%,
LOC Barclays Bank Ltd 3,900 3,900
(Great Lakes Recovery) 3.45%, LOC NBD Bank, Michigan 1,200 1,200
Michigan Trunk Line Participating VRDN,
Series SG-87, 3.35%, (FGIC Insured)
(Liquidity Facility Societe Generale, France) (c) 715 715
Rochester Hills Econ. Dev. Corp. Ltd. Oblig. Rev. (Cardell Corp.)
3.40%, LOC Comerica Bank, VRDN (b) 1,100 1,100
59,062
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MINNESOTA - 0.7%
Baudette Ind. Dev. Rev. (Reid-Rowell Inc. Proj.) Series 1989,
3.55%, LOC Nations Bank, N.A. (South) VRDN (b) $ 1,600 $ 1,600
Becker Poll. Cont. Rev. Bonds (Northern States Pwr. Co.)
Series 1993 B, 3.50%, tender 3/24/97 7,000 7,000
Chaska Ind. Dev. Rev. Rfdg. (Pies Inc. Proj./Flowers Ind. Inc.)
Series 1994, 3.45%, LOC Suntrust Bank, Atlanta,
VRDN (b) 1,425 1,425
Hennepin County Gen. Oblig. Rev. Rfdg. Series 1996 C,
3.45%, VRDN (b) 2,200 2,200
Prior Lake Independent School Dist. # 719 Participating
VRDN, Series 1996 D, 3.50%, (Liquidity Facility Norwest
Bank, NA) (c) 1,000 1,000
Sauk Rapids Ind. Rev. (Bermo, Inc. & Berdass Properties)
Series 1996 A, 3.60%, LOC Firstar Bank Milwaukee NA,
VRDN (b) 3,180 3,180
Spring Lake Park Independent School Dist. # 16 Participating
VRDN, Series 1996 E, 3.50%, (Liquidity Facility Norwest
Bank, NA Minnesota) (c) 1,000 1,000
17,405
MISSISSIPPI - 0.5%
Canton Ind. Dev. Auth. Rev. (McCarty Farms Proj.)
Series 1990, 3.45%, LOC SunTrust Bank, Atlanta,
VRDN (b) 4,000 4,000
Desoto County Ind. Dev. Rev. (Flavorite Labs Proj.)
Series 1991 B, 3.55%, LOC First Tennessee Bank, NA,
VRDN (b) 2,800 2,800
Mississippi Bus. Fin. Corp. Ind. Dev. Rev. (Pillowtex Corp. Proj.)
Series 1992, 3.45%, LOC NationsBank, N.A., VRDN (b) 3,680 3,680
Noxubee County Ind. Dev. Board Rev. (Barge Forest Products
Co. Proj.) 3.75%, LOC Amsouth Bank, VRDN (b) 2,905 2,905
13,385
MISSOURI - 1.1%
Missouri Dev. Fin. Board Ind. Dev. Rev. (La Grange Foundry)
Series 1996, 3.55%, LOC Harris Trust & Savings Bank,
Chicago, VRDN (b) 2,550 2,550
Missouri Higher Ed. Loan Auth. Student Loan Rev., VRDN (b):
Series 1988 A, 3.40%,
LOC Nat'l. Westminster Bank PLC, UK 6,500 6,500
Series 1990 A, 3.40%,
LOC Nat'l. Wesminster Bank PLC, UK 6,700 6,700
Series 1990 B, 3.40%,
LOC Nat'l. Westminster Bank PLC, UK 6,850 6,850
Univ. of Missouri BAN Series 1996-97, 4.75%, 6/30/97 3,800 3,811
26,411
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MONTANA - 0.1%
Montana Board of Hsg. Single-Family Participating VRDN,
Series PT-87, 3.50%, (Liquidity Facility Banco
Santander) (b)(c) $ 1,600 $ 1,600
NEVADA - 2.8%
Clark County Ind. Dev. Rev., (Nevada Pwr. Co. Proj.)
VRDN (b):
Series 1995 A, 3.45%, LOC BarclaysBank, PLC, UK 22,000 22,000
Series 1995 B, 3.45%, LOC Societe Generale, France 1,900 1,900
Clark County Poll. Cont. Rev. Bonds
(Southern California Edison Co.) Series 1987 A (b):
Series 1987 A, 3.55%, tender 3/11/97 10,000 10,000
Series 1987 A, 3.40%, tender 4/10/97 17,090 17,090
Clark County School Dist. Participating VRDN (c):
Series BT-192, 3.45%, (Liquidity Facility Bankers Trust
Company) 3,100 3,100
Series SG-62, 3.35%, (Liquidity Facility Societe
Generale, France) 3,000 3,000
Clark County Special Fac. Arpt. Rev. Bonds (Signature Flight
Support Corp. Proj.) Series 1997 A, 3.70%, tender 6/2/97,
LOC Bayerische Landesbank 2,140 2,140
Nevada Director State Dept. Comm. Ind. Dev. Rev.
(Primex Corp.), 3.50%, LOC Bank One Indianapolis,
VRDN (b) 2,735 2,735
Nevada Hsg. Div., VRDN (b):
(Oakmont at Flamingo Rd. Proj.) Series 1996 A, 3.40%,
LOC ABN-AMRO Bank 4,700 4,700
(Pecos Owens Court Apt. Proj.) Series 1996, 3.40%,
LOC Commerzbank, Germany 2,000 2,000
Washoe County Gas Fac. Rev. (Sierra Pacific Pwr. Co.)
Series 1990, 3.55%, LOC Union Bank of Switzerland,
VRDN (b) 300 300
68,965
NEW HAMPSHIRE - 2.1%
Concord BAN 3.60%, 4/14/97 2,700 2,701
New Hampshire Bus. Fin. Auth. Poll. Cont. Rev. Auth. Bonds
(New England Pwr. Co.) Series 1990 A (b):
3.50%, tender 3/10/97 3,200 3,200
3.55%, tender 3/11/97 1,500 1,500
3.60%, tender 3/25/97 1,400 1,400
3.65%, tender 4/1/97 3,900 3,900
3.45%, tender 4/10/97 1,000 1,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
NEW HAMPSHIRE - CONTINUED
New Hamphire Higher Ed. & Health Facs. Auth. Rev.:
Bonds (Dartmouth College), 3.625%, tender 6/1/97 (b) $ 1,670 $ 1,670
(Alice Peck Day Lifecare Ctr./Harvest Hill) 3.40%,
LOC Corestates Bank, VRDN 800 800
New Hampshire Hsg. Fin. Auth. Multi-Family Housing, VRDN:
Rfdg. (Nashua-Oxford Proj.) Series 1990, 3.50%,
(Continental Casualty Co. Guaranteed) 1,100 1,100
(Fairways Proj.) 3.40%, LOC General Electric Capital
Corp. (b) 28,400 28,400
New Hampshire Hsg. Fin. Auth. Multi-Family Rev.
(Countryside Ltd.) 3.40%,LOC General Electric Capital
Corp., VRDN (b) 1,500 1,500
New Hampshire Ind. Dev. Auth. (Connecticut Light &
Pwr. Co.) Series 1988, 3.40%, LOC Union Bank of
Switzerland, VRDN (b) 1,000 1,000
New Hampshire Ind. Dev. Auth. Rev. Poll. Cont. Rev.
Series 1986, 3.35%, LOC DeutcheBank, Germany,
VRDN (b) 2,200 2,200
50,371
NEW JERSEY - 0.3%
Clifton BAN 4.50%, 6/26/97 1,500 1,503
New Jersey Hsg. & Mtg. Fin. Agcy. Participating VRDN,
Series PT-92, 3.40%, (Liquidity Bayerische Hypotheken-und
Weschel (b)(c) 6,000 6,000
7,503
NEW MEXICO - 1.1%
Albuquerque Arpt. Rev. Series 1996 A, 3.35%,
LOC Bayerische Landesbank Girozentrale, VRDN (b) 2,400 2,400
Bernalillo County Participating VRDN, Series SG-22, 3.40%,
(Liquidity Facility Societe Generale, France) (c) 9,960 9,960
Dona Ana County Ind. Rev. (Karr Tool & Mfg.) Series 1996,
3.60%, LOC Firstar Bank Milwaukee, N.A. (b) 1,900 1,900
Espanol Ind. Dev. Rev. (Nambee Mills Inc. Proj.) Series A,
3.50%, LOC Nat'l. City Bank, Indiana, VRDN (b) 4,000 4,000
New Mexico State Highway Commission Tax Rev. Highway
Series 1996, 3.35%, (FSA Insured) (Liquidity Facility
Canadian Imperial Bank of Commerce) VRDN 4,100 4,100
New Mexico Student Loan Rev. Participating VRDN,
Series PT-67, 3.50%, (Liquidity Facility Credit Suisse
First Boston Corp) (b)(c) 5,520 5,520
27,880
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
NEW YORK - 3.1%
Buffalo RAN 4.25%, 7/15/97,
LOC Landesbank Hessen-Thuringen $ 1,400 $ 1,403
New York City RAN Series 1996-B, 4.50%, 6/30/97 70,800 70,983
New York State Hsg. Fin. Agcy. Rev. (MF Associates)
Series 1991 A, 3.20%, LOC Landesbank Hessen-Thuringen,
VRDN 2,600 2,600
74,986
NORTH CAROLINA - 0.9%
Cleveland County Ind. Fac. & Poll. Cont. Fin. Auth.
Solid Waste Disp. (PPG Ind. Proj.) 3.50%, VRDN (b) 3,300 3,300
Craven County Ind. Facs. Resource Recovery Rev.
(Craven County Wood Energy LP) Series 1989 C,
3.60%, LOC Toyko-Mitsubishi Bank Ltd., VRDN (b) 1,900 1,900
Johnston County Ind. Facs. Poll. Cont. Fin. Auth. Ind. Dev.
Rev. (Kabivitrum Inc. Proj.) 3.35%, LOC Wachovia Bank,
VRDN 2,000 2,000
Mecklenberg County Ind. Facs. Poll. Cont. Fin. Auth.
(Stefano Foods Inc.) Series 1996, 3.45%,
LOC NationsBank, N.A. (b) 3,240 3,240
North Carolina Med. Care Commission Health Care Facs.
Bonds (St. Joseph of the Pines) 3.65%, tender 6/1/97,
LOC Wachovia Bank of NC 2,900 2,900
Piedmont Triad Arpt. Auth. Spl. Facs. Rev. (Triad Int'l.
Maintenance Corp. Proj.) Series 1989, 3.55%,
LOC Mellon Bank, NA, VRDN (b) 9,900 9,900
23,240
NORTH DAKOTA - 0.3%
North Dakota Hsg. Fin. Agcy. Hsg. Fin. Bonds Series 1996 C,
3.85%, 4/3/97, (FGIC Guaranteed) (b) 5,200 5,200
Oliver County Poll. Cont. Rev. Rfdg. (Square Butte Elec.)
3.40%, (AMBAC Insured) (BPA Bank of New York, NY)
VRDN (b) 3,395 3,395
8,595
OHIO - 1.6%
Bowling BAN 4%, 12/4/97 1,325 1,328
Cuyahoga Falls City BAN 4%, 8/28/97 1,000 1,002
Dublin Central School Dist. BAN 4%, 6/10/97 1,200 1,202
Elyria BAN 4%, 12/4/97 1,000 1,002
Forest Hills School Dist. (School Impt.) BAN
4.21%, 6/17/97 1,400 1,403
Franklin City BAN 4%, 12/23/97 2,044 2,048
Greene County BAN 4%, 12/11/97 1,000 1,003
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
OHIO - CONTINUED
Kent School Dist. BAN 4%, 7/15/97 $ 1,600 $ 1,602
Lorain County Independent Living & Hosp. Rev.
(Elyria United Methodist Village) 3.35%,
LOC Key Bank Nat'l Association, VRDN 1,100 1,100
Middletown Ind. Dev. Rev. (Pilot Chemical Proj.) 3.50%,
LOC Bank One, Dayton, VRDN (b) 700 700
New Bremen Local School Dist. BAN 4.20%, 5/29/97 1,000 1,001
Ohio Hsg. Fin. Agcy. Mtg. Rev. Bonds Series 1996 A,
3.40%, tender 3/3/97 (b) 15,000 15,000
Ohio Ind. Dev. Rev. (Masashi Nagai/Snair Co.) Series H,
3.40%, LOC Banc One, Columbus, VRDN (b) 1,200 1,200
Ohio Wtr. Dev. Auth. Poll. Cont. Rev. Facs. Bonds
(Cleveland Elec. Proj.) Series 1988 A, 3.35%,
tender 3/19/97, (FGIC Insured) 2,300 2,300
Summit County Ind. Dev. Rev. (Ganzhorn Properties Project)
3.50%, LOC Bank One, Akron, VRDN 1,070 1,070
Toledo BAN 4.25%, 5/15/97 3,925 3,928
Westlake School Dist. BAN 4.20%, 7/28/97 3,300 3,308
40,197
OKLAHOMA - 1.6%
Cushing Muni. Auth. Correctional Facs. Rev. Series 1996,
3.35%, LOC First Union Nat'l. Bank, VRDN 5,000 5,000
Oklahoma Dev. Fin. Auth. (Shawnee Funding L.P.)
Series 1996, 3.45%, LOC Bank of Nova Scotia, VRDN (b) 2,000 2,000
Oklahoma Hsg. Fin. Agcy. Participating VRDN,
Series 1996 G, 3.50%, (Liquidity Facility Caisse des
Depots et Consignations) (b)(c) 1,600 1,600
Oklahoma Ind. Fin. Auth. Gen. Oblig. Ind. Fin. Rev. Bonds,
Series L, 3.85%, tender 5/1/97,
LOC Credit Locale de France (b) 7,600 7,600
Oklahoma School Dist. RAN Series 1996, 4.50%, 6/30/97 1,088 1,089
Southeastern Oklahoma Ind. Auth. Solid Waste Disp. Rev.
(Weyerhaeuser Co. Proj.) 3.50%, VRDN (b) 21,000 21,000
38,289
OREGON - 1.5%
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
Oregon Econ. Dev. Rfdg. (Georgia Pacific Corp.)
Series 1996-177, 3.40%, LOC Commerzbank,
Germany, VRDN 1,700 1,700
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
OREGON - CONTINUED
Oregon Econ. Dev. Rev. (Cascade Steel Rolling Mills)
Series 176, 3.45%, LOC Commerzbank, Germany,
VRDN (b) $ 1,500 $ 1,500
Oregon Hsg. & Commty. Svcs. Dept. Mtg. Bonds
(Single Family Mtg. Prog.) Series K, 3.65%,
tender 12/11/97 (b) 8,245 8,245
Portland Econ. Dev. Rev. (Columbia Aluminum Recycling)
3.45%, LOC U.S. Nat'l. Bank of Oregon, VRDN (b) 2,950 2,950
Portland Spl. Oblig. Rev. (Portland Bulk Terminals LLC Proj.)
3.40%, LOC Canadian Imperial Bank of Commerce,
VRDN (b) 9,500 9,500
Port Umatilla Ltd. Oblig. Rev. (Hermiston Food Proj.)
Series 1989, 3.55%, LOC U.S. Nat'l. Bank of Oregon,
VRDN (b) 2,300 2,300
36,295
PENNSYLVANIA - 7.0%
Alleghany County Ind. Dev. Auth. Ind. Dev. Rev.
(Union Elec. Steel Co. Proj.) Series 1996 B, 3.50%,
LOC PNC Bank, VRDN (b) 2,000 2,000
Butler County Ind. Dev. Rev. (JSM Acquisition Corp. Proj.)
Series 1989 A, 3.50%, LOC PNC Bank, VRDN (b) 1,300 1,300
Carbon County Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Panther Creek Partners Proj.) (b):
Series 1990 A, 3.60%, tender 3/6/97,
LOC Nat'l. Westminster Bank PLC, UK 2,000 2,000
Series 1992 A, 3.50%, tender 4/7/97,
LOC Nat'l. Westminster Bank PLC, UK 10,000 10,000
Delaware County Ind. Dev. Auth. Bonds (Philadelphia Elec. Co.)
Series 1988 A, 3.35%, tender 3/19/97, (FGIC Insured)
(Liquidity Facility FGIC) 1,150 1,150
Emmaus Gen. Auth. Rev. Local Gov't. Rev. Series 1989 E-7,
3.40%, LOC Midland Bank PLC, VRDN 1,700 1,700
Erie County Ind. Dev. Auth. Rev. (Carlisle Corp. Proj.)
Series 1993, 3.45%, LOC SunTrust Bank, VRDN (b) 1,500 1,500
Harrisburg Auth. Wtr. Rev. Participating VRDN, Series BT-193,
3.375%, (Liquidity Facility Bankers Trust Company) (c) 4,200 4,200
North Lebanon Township Rev. (Grace Commty. Inc. Proj.)
Series 1992 B, 3.50%, LOC Corestates Bank, VRDN 1,425 1,425
Northumberland County Ind. Dev. Auth. Rev., VRDN (b):
(Foster Wheeler Carmel Proj.):
Series 1987 A, 3.40%, LOC Union Bank of Switzerland 11,700 11,700
Series 1987 B, 3.40%, LOC Union Bank of Switzerland 2,200 2,200
(Furman Farms Inc. Proj.) 3.75%, LOC Corestates Bank 2,085 2,085
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
PENNSYLVANIA - CONTINUED
Pennsylvania Econ. Dev. Auth., VRDN (b):
Series 1994 B-3, 3.50%, LOC PNC Bank, N.A $ 1,600 $ 1,600
Series 1995 D-4, 3.50%, LOC PNC Bank, N.A 1,300 1,300
Series 1995 D-10, 3.50%, LOC PNC Bank, N.A 1,300 1,300
Pennsylvania Econ. Dev. Fin. Auth. Rev., VRDN (b):
(BPS Dev. Proj.) Series 1989 D-3,
3.50%, LOC PNC Bank, N.A 175 175
(C&D Charter Pwr. Sys.) Series 1991 D-6,
3.50%, LOC PNC Bank, N.A 1,100 1,100
(Corry Laser Technology Proj.) Series 1989 D-5,
3.50%, PNC Bank, N.A 100 100
(Giffen, Schlaegle & Pirillia) Series 1992 A-3,
3.50%, LOC PNC Bank, N.A 650 650
(Johnstown Corp. Proj.) 3.50%, LOC PNC Bank, N.A 420 420
Pennsylvania Higher Ed. Assistance Agcy. Student Loan Rev.,
VRDN (b):
Series 1988 A, 3.40%, LOC SLMA 25,300 25,300
Series 1988 B, 3.40%, LOC SLMA 2,700 2,700
Series 1988 C, 3.40%, LOC SLMA 6,600 6,600
Series 1988 E, 3.40%, LOC SLMA 4,800 4,800
Series 1994 A, 3.40%, LOC SLMA 5,600 5,600
Pennsylvania Higher Ed. Loan Asst. Loan Rev. 3.40%,
LOC SLMA, VRDN (b) 13,400 13,400
Pennsylvania Intergovernmental Coop. Auth. Participating
VRDN, Series SG-67, 3.35% (Liquidity Facility Societe
Generale, France) (c) 4,130 4,130
Pennsylvania TAN Series 1996-97, 4.50%, 6/30/97 48,200 48,316
Philadelphia Redev. Auth. RAN (Southwark Plaza Proj.)
Series 1996, 3.85%, 12/30/97, (FGIC Insured) (b) 2,400 2,400
Philadelphia School Dist. TRAN Series 1996-97,
4.50%, 6/30/97 3,700 3,706
Philadelphia TRAN Series 1996-97, 4.50%, 6/30/97 4,900 4,909
Venango Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Scrubgrass Proj.) Series 1990 A, 3.40%, tender 4/10/97,
LOC Nat'l. Westminster Bank, PLC (b) 2,850 2,850
172,616
RHODE ISLAND - 0.2%
Cumberland TAN, 4%, 6/30/97 1,000 1,001
East Providence TAN, 4%, 7/8/97 3,800 3,805
Providence Pub. Parking (Washington Street Garage Proj.)
Series 1991, 3.40%, LOC Morgan Guaranty Trust, NY,
VRDN (b) 1,050 1,050
5,856
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
SOUTH CAROLINA - 4.2%
Abbeville County Ind. Dev. Rev. (Springs Inds. Inc.) 3.40%,
LOC Wachovia Bank of SC, NA, VRDN (b) $ 4,000 $ 4,000
Cherokee County School Dist #1 BAN 4%, 9/10/97 5,300 5,314
Dorchester County Ind. Dev. Rev. (SYN Strand Inc.)
Series 1994, 3.45%, LOC Wachovia Bank, VRDN (b) 6,650 6,650
Dorchester County TAN Series 1996, 4.28%, 4/15/97 1,600 1,600
Marion County Ind. Dev. Rev. (New South Inc.) Series 1994,
3.50%, LOC Nationsbank, NA, VRDN (b) 3,565 3,565
South Carolina Cap. Impt. Participating VRDN,
Series BT-27, 3.50%, (Liquidity Facility Automatic Data
Processing, Inc.) (c) 1,530 1,530
South Carolina Jobs Econ Dev. Auth. Rev. VRDN (b):
(Alexander Mach Inc. Proj.) Series 1994, 3.50%,
LOC NationsBank, NA 2,500 2,500
(Alfmeir Corp.) 3.45%, LOC Bayerische Landesbank 3,500 3,500
(Drake Molding Corp. Proj.) Series 1995, 3.40%,
LOC First of America Bank-Michigan 6,120 6,120
(Foundry & Steel and Champion Tooling and Machining)
Series 1996, 3.45%, LOC Wachovia Bank of SC, NA 4,000 4,000
(Jackson Mills Inc. Proj.) Series 1994, 3.45%,
LOC SunTrust Bank, Atlanta 3,500 3,500
(Keys Printing Co.) 3.45%, LOC Wachovia Bank of SC, NA 4,000 4,000
(Paxar Corp. Proj.) Series 1996, 3.45%,
LOC Wachovia Bank of GA, NA 6,000 6,000
(Peace Textile America Inc.) Series 1992, 3.50%,
LOC NationsBank, NA 3,000 3,000
(Titan Wheel Int'l. Proj.) Series 1995, 3.50%,
LOC NationsBank, NA 9,500 9,500
(Wellman Inc. Proj.) 3.45%,
LOC Wachovia Bank of GA, NA 7,500 7,500
South Carolina Port Auth. 3.40%,
LOC Wachovia Bank of SC, NA, VRDN (b) 20,700 20,700
South Carolina Pub. Serv. Auth. Participating VRDN,
Series 96C4001, 3.40%, (Liquidity Facility
Citibank, NA (c) 3,900 3,900
Spartanburg County Ind. Dev. Rev. (Prym-Dritz Corp. Proj.)
3.45%, LOC Wachovia Bank of SC, NA, VRDN (b) 3,000 3,000
Union County Ind. Dev. Auth. Rev. (Federal Paper Board
Proj.) 3.45%, LOC Wachovia Bank of SC, NA, VRDN (b) 4,000 4,000
103,879
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
SOUTH DAKOTA - 1.1%
South Dakota Hsg. Dev. Auth. Mtg. Bonds Series 1996 E,
3.75%, tender 11/13/97 (b) $ 11,000 $ 11,000
South Dakota Hsg. Dev. Auth. Participating VRDN (b)(c):
Series PA-119, 3.50%, (Liquidity Facility Merrill Lynch &
Co., Inc.) 8,240 8,240
Series PT-85, 3.50%, (Liquidity Facility Rabobank
Nederland, N.V.) 4,180 4,180
South Dakota School Dist. TAN Series 1996,
4.75%, 7/28/97 3,400 3,411
26,831
TENNESSEE - 3.4%
Claiborne County Ind. Dev. Rev. (Royal Sterilization System)
3.55%, LOC First Tennessee Bank, NA, VRDN (b) 2,200 2,200
Jackson Ind. Dev. Board Rev. (Florida Steel Corp. Proj.)
Series 1995, 3.45%, LOC NationsBank, N.A. (South),
VRDN (b) 4,000 4,000
McMinn County Ind. Dev. Board (So. Ionics Inc. Proj.)
3.50%, LOC South Trust Bank of Alabama, VRDN (b) 2,700 2,700
Memphis-Shelby County Arpt. Auth., VRDN (b):
Series 1996 B-2, 3.40%,
LOC First Union Nat'l. Bank of NC 8,000 8,000
Series 1996 B-3, 3.40%, LOC First Union Nat'l. Bank of NC 21,000 21,000
Memphis-Shelby County Poll. Cont. Rev. (Birmingham Steel)
Series 1996, 3.50%, LOC PNC Bank, Kentucky, VRDN (b) 2,700 2,700
Metropolitan Govt. Nashville & Davidson County Gen Oblig.
Participating VRDN, Series SG-11, 3.375%,
(Liquidity Facility Societe Generale, France) (c) 3,500 3,500
Nashville & Davidson Counties Health & Ed. Fin. Auth.
(Adventist Health Sys. Sunbelt) Series 1996 A, 3.30%,
LOC SunTrust Bank Central Florida, NA, VRDN 3,500 3,500
Morristown Ind. Dev. VRDN (b):
(BOS Automotive Prod) Series 1993, 3.45%,
LOC Bayerische Vereinsbank, A.G. 1,000 1,000
(Lakeway Container Inc. Proj.) Series 1993, 3.55%,
LOC First Tennessee Bank, NA 400 400
Oakridge Ind. Dev. Board Rev. Solid Waste Fac.
(Environmental L.P.) Series 1996, 3.45%,
LOC Suntrust Bank, Atlanta, VRDN (b) 1,200 1,200
Selmer-McNairy County Ind. Dev. Rev. (United Stainless Proj.)
3.40%, LOC Bank of America Illinois, VRDN (b) 1,000 1,000
Shelby County Gen. Oblig. Participating VRDN, Series SG-21,
3.40%, (Liquidity Facility Societe Generale, France) (c) 2,430 2,430
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TENNESSEE - CONTINUED
Tennessee Hsg. Dev. Agcy. Bonds (b)(c):
Series PT-59A, 3.75%, tender 6/12/97 (Liquidity Facility
Credit Suisse First Boston) (e) $ 10,165 $ 10,165
Series PT-59B, 3.70%, tender 6/12/97 (Liquidity Facility
Credit Suisse First Boston) (e) 3,950 3,950
Tennessee Hsg. Dev. Agcy. Participating VRDN,
Series PT-25, 3.50%, (Liquidity Facility Credit Suisse
First Boston) (b)(c) 13,565 13,565
Trenton Ind. Dev. Rev. (Dyersburg Fabrics Inc.) Series 1990,
3.45%, LOC SunTrust Bank, Atlanta, VRDN (b) 1,050 1,050
Williamson County First Mtg. Rev. (Telco, Inc.) Series 1996,
3.50%, LOC NationsBank of TN, VRDN (b) 1,500 1,500
83,860
TEXAS - 14.3%
Austin Higher Ed. Auth. (St. Edward's Univ.) Series 1995,
3.35%, LOC NationsBank of TX, VRDN 3,300 3,300
Austin Independent School Dist. TRAN 4.144%, 8/29/97 (e) 4,050 4,050
Bell County Ind. Dev. Corp. Ind. Dev. Rev.
(Metal Sales Manufacturing Corp.) 3.50%,
LOC Star Bank, VRDN (b) 2,520 2,520
Bexar County (Shallow Creek Apts. Proj.) 3.40%,
(FNMA Guaranteed) VRDN (b) 2,300 2,300
Brazos River Auth. Poll. Cont. Rev. Rfdg. Bonds
(Texas Utils. Elec. Co.) (b):
Series B, 3.65%, tender 5/1/97
LOC Canadian Imperial Bank of Commerce 29,170 29,170
Series 1994 A:
3.50%, tender 3/7/97, LOC Canadian Imperial
Bank of Commerce 1,000 1,000
3.60%, tender 5/10/97, LOC Canadian Imperial
Bank of Commerce 1,100 1,100
Brazos River Harbor Navigation Dist. Brazoria County (b):
Bonds:
(Dow Chemical Co.):
Series 1991, 3.60%, tender 3/12/97 6,100 6,100
Series 1992:
3.55%, tender 3/7/97 7,850 7,850
3.50%, tender 3/10/97 4,000 4,000
3.40%, tender 4/10/97 4,300 4,300
3.45%, tender 4/10/97 1,000 1,000
(Dow Chemical Co. Proj.):
Series 1988, 3.50%, tender 3/6/97 3,170 3,170
Series 1988, 3.45%, tender 3/10/97 9,480 9,480
(Dow Chemical Co. Proj.) Series 1992 A, 3.55%, VRDN 1,100 1,100
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TEXAS - CONTINUED
Brownsville Ind. Dev. Corp. Rev. (Rich-Seapak Corp. Proj.)
Series 1992, 3.45%, LOC SunTrust Bank, Atlanta,
VRDN (b) $ 6,250 $ 6,250
Cleburne Ind. Dev. Rev. (Southwestern Analytical
Chemical Proj.) 3.80%, LOC Nat'l. City Bank, Cleveland,
VRDN (b) 2,175 2,175
Dallas-Fort Worth Reg'l. Arpt. Participating VRDN,
Series SG-5, 3.40%, (Liquidity Facility Societe Generale,
France) (c) 2,000 2,000
Denton County Ind. Dev. Rev. (Hydro Conduit Corp.) 3.45%,
LOC Union Bank of Switzerland, VRDN (b) 7,200 7,200
Denton Util. Sys. Rev. Participating VRDN, Series SG-32,
3.375%, (Liquidity Facility Societe Generale, France) (c) 6,000 6,000
Georgetown Ind. Dev. Auth. Rev. (Chatsworth Products, Inc.)
Series 1996, 3.50%, LOC Bank One Texas, VRDN (b) 2,700 2,700
Goose Creek Independent School Dist. TRAN 4.144%,
8/29/97 (e) 1,880 1,880
Grand Prairie Ind. Dev. Auth. Rev. (Precision/API Ketema Proj.)
Series 1996, 3.60%, LOC Marine Midland Bank, NA,
VRDN (b) 1,000 1,000
Greater East Texas Higher Ed. Auth. Student Loan Rev. Bonds (b):
Rfdg. Series 1992 B, 3.60%, tender 9/1/97, LOC SLMA 2,200 2,200
Series 1993 B:
3.85%, tender 6/1/97, LOC SLMA 6,000 6,000
3.90%, tender 2/1/98, LOC SLMA 24,000 24,000
Greater Texas Student Loan Corp. Student Loan Rev. Rfdg.
Bonds Series 1996 A, 3.70%, tender 3/1/98, LOC SLMA (b) 20,000 20,000
Harris County Health Corp. Bonds (Sisters of Charity of
Incarnate Word) 3.50%, tender 3/10/97,
(BPA Credit Suisse First Boston) 9,100 9,100
Harris County Hsg. Fin. Corp. (The Mills Apts. Proj.) 3.40%,
(FNMA Guaranteed) VRDN (b) 4,475 4,475
Houston Participating VRDN, Series SG-28, 3.375%,
(Liquidity Facility Societe Generale, France) (c) 4,630 4,630
Houston Wtr. & Swr. Sys. Participating VRDN (c):
Series SG-77, 3.35%, (Liquidity Facility Societe Generale,
France) 4,200 4,200
Series SG-24, 3.40%, (Liquidity Facility Societe Generale,
France) 1,140 1,140
Matagorda County Navigation Dist #1 Participating VRDN (c):
Series 1989 C, 3.50%, (Liquidity Facility Caisse des
Depots et Consigns) 2,300 2,300
Series 1989 D, 3.50%, (FGIC Insured) (Liquidity Facility
Caisse des Depots et Consigns) (b) 3,500 3,500
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TEXAS - CONTINUED
Matagorda County Navigation Dist #1 (Houston Lighting
& Pwr.) Series 1997, 3.50%, (AMBAC Insured) (BPA Union
Bank of Switzerland) VRDN (b) $ 1,500 $ 1,500
McKinney Ind. Dev. Corp. Ind. Dev. Rev.
(Delta Daily Food Inc. Proj.) Series 1994, 3.35%,
LOC ABN-AMRO Bank, VRDN (b) 8,500 8,500
Mineral Wells Ind. Dev. Rev. (Ameron Inter Corp.) 3.40%,
LOC Commerzbank Germany, VRDN (b) 4,200 4,200
North Texas Higher Ed. Auth. Student Loan Rev., VRDN (b):
Rfdg. Series 1990, 3.40%, LOC SLMA, 4,100 4,100
Series 1990, 3.40%, LOC SLMA 4,600 4,600
Series 1991 C, 3.40%, (AMBAC Insured) (BPA SLMA) 1,000 1,000
Series 1991 F, 3.40%, (AMBAC Insured) (BPA SLMA) 4,500 4,500
Series 1993 A, 3.40%, LOC SLMA 8,400 8,400
Series A, 3.40%, (AMBAC Insured) (Liquidity Facility SLMA) 2,700 2,700
Orange County Navigational & Port Auth. Rev. (Coastal Films
Inc.) 3.50%, LOC NationsBank of TX, VRDN (b) 5,000 5,000
Port of Corpus Christi Ind. Dev. Corp., VRDN (b):
(Citgo Petroleum Proj.) Series 1996, 3.55%, LOC Banque
Nationale De Paris 1,200 1,200
(Coastal Corp.) Series 1997, 3.45%, LOC Banque
Nat'l. de Paris, France 7,000 7,000
Port of Corpus Christi Waste Rev. (Coastal Refining & Mktg.)
3.45%, LOC Banque Nationale de Paris, VRDN (b) 2,700 2,700
San Antonio Hsg. Fin. Auth. (Eagle's Nest Apt. Proj.)
3.40%, LOC Swiss Bank Corp., VRDN (b) 4,100 4,100
San Antonio Hsg. Fin. Auth. Corp. Multi-Family Rev.
(Mesa Ridge Apts. Proj.) 3.40%,
LOC Landesbank Hessen-Thuringen, VRDN (b) 3,200 3,200
San Antonio Hsg. Fin. Multi-Family Hsg. (Cape Cod Apts.)
Series 1990, 3.40%, (FNMA Guaranteed) VRDN (b) 3,300 3,300
San Antonio Wtr. Rev. Participating VRDN, Series 1996,
3.40%, (Liquidity Facility Citibank, NA) (c) 4,000 4,000
San Marcos Ind. Dev. Corp. Ind. Dev. Rev.
(Butler Manufacturing Co.) Series 1995, 3.50%,
LOC NationsBank of TX, VRDN (b) 6,250 6,250
Southeast Hsg. Fin. Corp. Participating VRDN, Series 1991 C,
3.57%, (Liquidity Facility Bank One) (b)(c) 5,255 5,255
Sunbelt Ind. Dev. Corp. Rev. (Fort Dearborn Lithograph) 3.55%,
LOC NBD Bank (Michigan) VRDN (b) 4,300 4,300
Texas A&M Univ. Sys. Participating VRDN, Series SG-21,
3.375%, (Liquidity Facility Societe Generale, France) (c) 1,600 1,600
Texas Gen. Oblig. TRAN Series 1996, 4.75%, 8/29/97 62,700 62,935
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TEXAS - CONTINUED
Texas Hsg. & Commty. Participating VRDN,
Series PA-126, 3.35%, (MBIA Insured) (Liquidity Facility
Merrill Lynch & Co., Inc.) (c) $ 1,400 $ 1,400
Texas School Board TAN 4.75%, 8/29/97, (FSA Insured) 2,300 2,309
Texas Pub. Fin. Auth. Participating VRDN, Series 1996-CB2,
3.50%, (Liquidity Facility Chase Manhattan Bank) (b)(c) 3,000 3,000
Waxahachie Ind. Dev. Auth. (Rock-Tenn Converting Co. Proj.)
Series 1986, 3.40%, LOC SunTrust Bank, Atlanta, VRDN (b) 3,850 3,850
352,089
UTAH - 1.5%
Intermountain Pwr. Agcy. Pwr. Supply Rev. Bonds
7%, 7/1/97 1,000 1,011
Intermountain Pwr. Agcy. Rev. Rfdg. Bonds Series E,
3.55%, tender 3/12/97, LOC Bank of America NT & SA 2,100 2,100
Salt Lake City Arpt. Rev., Series 1996 A, 3.35%,
LOC Union Bank of Switzerland, VRDN (b) 4,800 4,800
Salt Lake City TRAN Series 1996, 4.50%, 6/30/97 3,900 3,906
Timpanogos Spl. Svc. Dist. Participating VRDN,
Series SG-83, 3.35% (Liquidity Facility Societe
Generale, France) (c) 1,350 1,350
Utah Board of Regents Student Loan, 3.40%,
(AMBAC Insured) BPA Barclays Bank PLC) VRDN 4,155 4,155
Utah Hsg. Fin. Auth. Single-Family Mtg.:
Bonds Series PT-84A, 3.70%, tender 6/12/97
(Liquidity Facility Rabobank Nederland, NV) (b)(c)(e) 4,540 4,540
Participating VRDN Series PT-84B, 3.50%,
(Liquidity Facility Rabobank Nederland, NV) (b)(c) 2,445 2,445
VRDN:
Series 1996-2, 3.45% 1,900 1,900
Series 1996-3, 3.55% (b) 1,700 1,700
Series 1996-5, 3.55% (b) 9,200 9,200
37,107
VERMONT - 0.3%
Vermont Econ. Dev. Auth. (Huber and Suhner Proj.) 3.60%,
LOC Key Bank NA, VRDN 1,600 1,600
Vermont Hsg. Fin. Agcy. Single Family Hsg. Participating
VRDN, Series 2, 3.50%, (Liquidity Facility Bayerische
Hypotheken-und Weschel) (b)(c) 6,535 6,535
8,135
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
VIRGINIA - 3.4%
Amelia County Facs. Rev. (Chambers Waste Sys. Proj.),
3.45%, LOC Morgan Guaranty Trust, NY, VRDN (b) $ 4,400 $ 4,400
Bedford County Ind. Dev. Auth.
(Nekoosa Packaging Corp. Proj.) Series 1996, 3.40%,
LOC Canadian Imperial Bank of Commerce, VRDN (b) 5,000 5,000
Botetourt County Ind. Dev. Auth. (VA Forge Co. Proj.)
Series 1996, 3.50%, LOC Harris Trust & Savings Bank,
Chicago, VRDN (b) 800 800
Chesapeake Ind. Dev. Auth. Poll. Cont. Rev. Bonds
(Virginia Elec. Pwr Co.) Series 1985, 3.60%,
tender 4/10/97 1,100 1,100
Chesapeake Participating VRDN, Series PA-142, 3.35%,
(Liquidity Facility Merrill Lynch & Co., Inc.) (c) 1,200 1,200
Chesterfield County Ind. Dev. Auth. Poll. cont. Rev. Bonds
(Virginia Elec. & Pwr. Co.) Series B, 3.55%, tender 5/21/97 2,600 2,600
Frederick County Ind. Dev. Auth. Rev. (Nat'l. Wildlife Federation
Proj.) Series 1996, 3.45%, LOC NationsBank, VRDN (b) 4,190 4,190
Greensville County Ind. Dev. Auth.
(Beach Mold & Tool Virginia, Inc.) VRDN (b):
Series 1996 A, 3.50%, LOC Nat'l. City Bank Kentucky 2,790 2,790
Series 1996 B, 3.50%, LOC Nat'l. City Bank of Kentucky 2,850 2,850
3.50%, LOC Nat'l. City Bank, Kentucky 1,200 1,200
Halifax County Ind. Dev. Auth. Poll. Cont. Rev. Bonds
(Virginia Elec. Pwr. Co.) (b):
Series 1992, 3.70%, tender 3/7/97 20,000 20,000
Series 1992, 3.50%, tender 4/9/97 13,100 13,100
Hampton Redev. & Hsg. Auth. Multi-Family Hsg. Rev.
(Avalon Pointe Proj.) Series 1996, 3.35%,
(FNMA Guaranteed) VRDN (b) 1,200 1,200
King George County Ind. Dev. Auth. Solid Waste Disposal
Series 1996, 3.40%, LOC Morgan Guaranty Trust,
NY, VRDN (b) 1,400 1,400
Louisa Ind. Dev. Auth. Poll. Cont. Rev. Bonds
(Virginia Elec. & Pwr. Co.):
Series 1984, 3.45%, tender 4/16/97 2,000 2,000
Series 1985, 3.45%, tender 4/10/97 (BPA Bank of
New York) 2,300 2,300
Mecklenburg County Ind. Dev. Auth. Rev. American Bldgs.
Co. Proj.) 3.50%, LOC LaSalle National Bank, VRDN (b) 6,440 6,440
Smyth County Ind. Dev. Auth. Ind. Dev. Rev. Series 1995
(Summit Dimension Properties Proj.) 3.45%,
LOC Wachovia Bank of NC, VRDN (b) 5,000 5,000
Virginia Beach Dev. Auth. Rfdg. Rev.
(Ocean Ranch Motel Corp. Proj.) Series 1993, 3.45%,
LOC NationsBank, N.A., VRDN 2,000 2,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
VIRGINIA - CONTINUED
Virginia Hsg. Dev. Auth. Hsg. Rev. (AHC Svc. Corp.)
Series 1987 A, 3.40%, VRDN $ 3,100 $ 3,100
82,670
WASHINGTON - 3.8%
King County Ltd. Tax Gen. Oblig. Participating VRDN,
Series SG-19, 3.375%, (Liquidity Facility Societe
Generale, France) (c) 5,060 5,060
Klickitat County Pub. Corp. Ind. Dev. Rev. (Rabanco Landfill
Proj.) Series 1990, 3.45%, LOC Bank of America NT & SA,
VRDN (b) 9,100 9,100
Pierce County Econ. Dev. Corp. Rev. (Pacifix LLC Proj.)
3.60%, LOC Wells Fargo Bank, VRDN (b) 1,600 1,600
Port of Bellingham Ind. Dev. Rev. (Sauder Woodcraft Corp.),
3.45%, LOC Bank of America NT & SA, VRDN (b) 3,880 3,880
Port of Grays Harbor Solid Waste Fac. Rev.
(Pacific Veneer, Weyerhaeuser) VRDN (b):
3.55% 9,650 9,650
Series 1993, 3.55% 2,365 2,365
Port Longview Ind. Dev. Corp. Solid Waste Disp. Rev.
(Weyerhaeuser Co. Proj.) Series 1993, 3.50%, VRDN 22,400 22,400
Seattle Ltd. Tax Gen. Oblig. Participating VRDN, Series SG-12,
3.40%, (Liquidity Facility Societe Generale, France) (c) 2,600 2,600
Washington Gen. Oblig. Participating VRDN (c):
Series BT-195, 3.45%, (Liquidity Facility Bankers
Trust Company) 1,400 1,400
Series SG-9, 3.40%, (Liquidity Facility Societe
Generale, France) 5,000 5,000
Series SG-11, 3.40%, (Liquidity Facility Societe
Generale, France) 3,595 3,595
Series SG-35, 3.375%, (Liquidity Facility Societe
Generale, France) 8,990 8,990
Washington Hsg. Fin. Comm. Multi-Family Rev., VRDN (b):
(Eaglepointe Apts.) Series 1996 A, 3.45%, (MBIA Insured)
(Liquidity Facility Wells Fargo, N.A.) 2,000 2,000
(Winterhill Apt. Proj.) Series 1996 A, 3.45%, (FSA Insured)
(Liquidity Facility Wells Fargo Bank, N.A.) 2,225 2,225
Washington Hsg. Fin. Comm. Single Family Mtg. Bonds
Series PT-86, 3.70%, tender 6/12/97 (Liquidity Facility
Merrill Lynch & Co., Inc.) (b)(c)(e) 2,690 2,690
Washington Hsg. Fin. Comm. Single Family Prog. Bonds
Series 1996 4A-S, 3.75%, tender 11/1/97 (b)(c) 1,500 1,500
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
WASHINGTON - CONTINUED
Washington Pub. Pwr. Supply Sys. Participating VRDN,
Series BT-61, 3.60%, (Liquidity Facility Automatic
Data Processing, Inc.) (c) $ 1,500 $ 1,500
Washington Student Loan Fin. Assoc. Guaranteed Student
Loan Prog. Rev., VRDN (b):
Series 1987 B, 3.55%, LOC Sanwa Bank, Ltd 4,300 4,300
Series 1988 A, 3.35%, LOC Nat'l. Westminster Bank PLC 4,600 4,600
94,455
WEST VIRGINIA - 2.0%
Grant County Poll. Cont. Rev. Bonds (Virginia Elec. & Pwr. Co.)
Series 1986, 3.55%, tender, 4/16/97 (b) 7,400 7,400
Marion County Solid Waste Disp. Rev., VRDN (b)
(Grant Town Cogeneration Proj.):
Series 1990 A, 3.45%, LOC Nat'l. Westminster Bank PLC 8,600 8,600
Series 1990 C, 3.40%, LOC Nat'l. Westminster Bank PLC 12,400 12,400
Series 1990 D, 3.40%, LOC Nat'l. Westminster Bank PLC 10,200 10,200
West Virginia Pub. Energy Rev. Auth. Bonds
(Morgantown Energy Assoc.) (b):
3.55%, tender 4/15/97, LOC Swiss Bank Corp 1,600 1,600
3.60%, tender 4/8/97, LOC Swiss Bank Corp 5,000 5,000
Wood County Ind. Dev. Rev. (AGA Gas Inc. Proj.)
Series 1988, 3.70%, LOC Svenska Handelsbanken,
VRDN (b) 3,800 3,800
49,000
WISCONSIN - 2.7%
Ashwaubenon Ind. Dev. Rev. (Tufco Proj.) Series 1992,
3.50%, LOC Bank One, VRDN (b) 1,750 1,750
Beaver Dam Unified School Dist. BAN 3.85%, 10/14/97 1,200 1,201
Butler Ind. Dev. Rev. (Western States Envelope Co.)
Series 1996, 3.60%, LOC Firstar Bank Milwaukee N.A.,
VRDN (b) 3,500 3,500
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. (TNT/Larpen
Supply Proj.) 3.50%, LOC Bank One, VRDN (b) 2,500 2,500
Jefferson Ind. Dev. Rev. (Generac Corp. Proj.) Series 1994,
3.55%, LOC NBD Bank, VRDN (b) 7,200 7,200
Kenosha Unified School Dist. TRAN 4.25%, 9/26/97 4,100 4,108
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
WISCONSIN - CONTINUED
Merrill Ind. Dev. Rev. (C&H Packaging Co. Inc.) Series 1996,
3.60%, LOC Firstar Bank Milwaukee, N.A., VRDN (b) $ 1,000 $ 1,000
Oak Creek Ind. Dev. Rev. (Outlook Packaging, Inc.) 3.55%,
LOC Firstar Bank Milwaukee NA, VRDN (b) 2,000 2,000
Pleasant Prairie (Muskie Enterprises Inc. Proj.)
Series 1995, 3.50%, LOC Harris Trust & Savings Bank,
Chicago, VRDN (b) 3,800 3,800
Prentice Ind. Dev. Rev. (Blount Proj.) Series 1994, 3.50%,
LOC NationsBank, N.A. (South), VRDN (b) 1,200 1,200
Raymond Ind. Dev. Rev. (Richard S. Werner, Inc. Proj.)
Series 1996, 3.50%, LOC Bank One, Milwaukee, VRDN (b) 2,500 2,500
Rhinelander Ind. Dev. Rev., VRDN (b):
(American Plastics Co. Inc. Proj.) Series 1996, 3.60%,
LOC Firstar Bank Milwaukee, N.A 3,500 3,500
(Red Arrow Prod. Co., Inc.) Series 1994, 3.50%,
LOC Bank One 6,300 6,300
Shawano-Gresham School Dist. BAN 4.10%, 12/1/97 1,300 1,301
Sturgeon Ind. Dev. Rev. (Marine Travelift Proj.) Series 1996,
3.60%, LOC Firstar Bank Milwaukee, N.A., VRDN (b) 1,100 1,100
Whitnall School Dist. TRAN 4.50%, 9/27/97 1,000 1,002
Wisconsin Gen. Oblig. Participating VRDN, Series 944904,
3.55%, (Liquidity Facility Citibank NA) (b)(c) 9,000 9,000
Wisconsin Health & Ed. Facs. Rev. Bonds
(Alexian Village of Milwaukee) 3.55%, tender 4/7/97,
LOC Sumitomo Bank, Ltd 1,700 1,700
Wisconsin TRAN Series 1996, 4.50%, 6/16/97 8,300 8,316
66,978
WYOMING - 0.2%
Converse County Poll. Cont. Rev. Rfdg. Bonds (Pacific Corp.)
Series 1988, 3.50%, tender 3/6/97, LOC Deutsche
Bank, Germany 2,400 2,400
Gillette Campbell Co. Poll. Cont. Rev. Bonds (Pacific Corp.)
Series 1988, 3.55%, tender 3/6/97, LOC Deutsche
Bank, Germany 2,400 2,400
4,800
MULTIPLE STATES - 1.7%
Clipper Participating VRDN, Series 1995-1,
3.50%, (Liquidity Facility State Street Bank & Trust Co.,
Boston) (b)(c) 33,831 33,831
Stephens Equity Trust #3 Participating VRDN, Series 1996,
3.50%, LOC Bayerische Hypotheken (c) 5,000 5,000
Washington Gen. Oblig. Participating VRDN, Series 96C4708,
3.45%, (Liquidity Facility Citibank, NA) (c) 2,700 2,700
41,531
MUNICIPAL SECURITIES (A) - CONTINUED
SHARES VALUE (NOTE 1)
(000S)
OTHER - 2.6%
Municipal Central Cash Fund (d)(f) $ 63,403,136 $ 63,403
TOTAL INVESTMENTS - 100% $ 2,453,927
Total Cost for Income Tax Purposes $ 2,453,927
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax and Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Private activity obligations whose interest is subject to the federal
alternative minimum tax for individuals.
3. Provides evidence of ownership in one or more underlying municipal
bonds.
4. At period end, the seven-day yield on the Municipal Central Cash Fund
was 3.43%.
5. Restricted securities - investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Tennessee Hsg. Dev. Agcy.
Bonds Series PT-59A,
3.75%, tender 6/12/97
(Liquidity Facility Credit
Suisse First Boston) 6/1/95 $ 10,165
Austin Independent
School Dist. TRAN
4.144%, 8/29/97: 11/1/96 $ 1,890
11/21/96 2,160
ACQUISITION ACQUISITION
SECURITY DATE COST (000S)
Goose Creek Independent
School Dist. TRAN 11/1/96 $ 780
4.144%, 8/29/97: 12/4/96 1,100
Tennessee Hsg. Dev. Agcy.
Bonds Series PT-59B,
3.70%, tender 6/12/97
(Liquidity Facility Credit
Suisse First Boston) 1/2/97 $ 3,950
Utah Hsg. Fin. Auth.
Single-Family Mtg. Bonds
Series PT-84A, 3.70%,
tender 6/12/97 (Liquidity
Facility Rabobank
Nederland, NV) 1/2/97 $ 4,540
Washington Hsg. Fin. Comm.
Single Family Mtg. Bonds
Series PT-86, 3.70%,
(Liquidity Facility Merrill
Lynch & Co., Inc.) 1/2/97 $ 2,690
6. Information in this report regarding holdings by state an security types
do not reflect the holdings of the Municipal Central Cash Fund. A listing
of the Municipal Central Cash Fund's holdings as of its most recent fiscal
period end is available upon request.
INCOME TAX INFORMATION
At August 31, 1996, the fund had a capital loss carryforward of
approximately $198,900 of which $900, $700, $45,800, $26,500 and $125,000
will expire on August 31, 1999, 2001, 2002, 2003 and 2004, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) FEBRUARY 28, 1997 (UNAUDITED)
ASSETS
Investment in securities, at value - $ 2,453,927
See accompanying schedule
Cash 4,533
Interest receivable 19,629
TOTAL ASSETS 2,478,089
LIABILITIES
Payable for investments purchased $ 8,400
Distributions payable 208
Accrued management fee 755
Other payables and accrued expenses 26
TOTAL LIABILITIES 9,389
NET ASSETS $ 2,468,700
Net Assets consist of:
Paid in capital $ 2,468,977
Accumulated net realized gain (loss) on investments (277)
NET ASSETS, for 2,468,977 shares outstanding $ 2,468,700
NET ASSET VALUE, offering price and redemption price per $1.00
share ($2,468,700 (divided by) 2,468,977 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)
INTEREST INCOME $ 44,470
EXPENSES
Management fee $ 6,093
Non-interested trustees' compensation 32
Total expenses before reductions 6,125
Expense reductions (1,262) 4,863
NET INTEREST INCOME 39,607
NET REALIZED GAIN (LOSS) ON INVESTMENTS (81)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 39,526
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR ENDED
ENDED FEBRUARY AUGUST 31,
28, 1997 1996
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 39,607 $ 76,681
Net interest income
Net realized gain (loss) (81) (125)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 39,526 76,556
FROM OPERATIONS
Distributions to shareholders from net interest income (39,607) (76,681)
Share transactions at net asset value of $1.00 per share 1,800,055 3,024,077
Proceeds from sales of shares
Reinvestment of distributions from net interest income 38,342 73,982
Cost of shares redeemed (1,749,423) (2,924,257)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 88,974 173,802
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 88,893 173,677
NET ASSETS
Beginning of period 2,379,807 2,206,130
End of period $ 2,468,700 $ 2,379,807
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED AUGUST 31,
ENDED FEBRUARY
28, 1997
(UNAUDITED) 1996 1995 1994 1993 1992
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of
period
Income from .016 .034 .035 .025 .026 .038
Investment
Operations
Net interest
income
Less Distributions
From net (.016) (.034) (.035) (.025) (.026) (.038)
interest
income
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
TOTAL RETURN B 1.61% 3.41% 3.59% 2.50% 2.66% 3.91%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, $ 2,469 $ 2,380 $ 2,206 $ 2,288 $ 1,696 $ 1,303
end of period
(in millions)
Ratio of expenses .40% A, .40% .40% .33% .27% .20%
to average net C C C C C C
assets
Ratio of expenses .40% A .39% .40% .33% .27% .20%
to average net D
assets after
expense
reductions
Ratio of net 3.24% A 3.36% 3.53% 2.48% 2.61% 3.67%
interest income
to average net
assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL RETURNS WOULD HAVE BEEN LOWER
HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER (SEE NOTE 4 OF NOTES TO FINANCIAL STATEMENTS).
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES
WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 4 OF
NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1997 (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 original issue discount, is accrued as earned. Accretion
of 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.
MUNICIPAL CENTRAL CASH FUND. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by FMR Texas, an
affiliate of FMR. The Cash Fund is an open-end money market fund available
only to investment companies and other accounts managed by FMR and its
affiliates. The cash fund seeks preservation of capital, liquidity, and
current income exempt from federal income tax by investing in high-quality,
short-term municipal securities of various states and municipalities.
Dividends from the Cash Fund are declared daily and paid monthly from net
interest income. Income distribution received by the fund are recorded as
interest income, in the accompanying financial statements.
2. OPERATING POLICIES -
CONTINUED
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 $27,275,000 or
1.1% 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 annual rate of .50% of the fund's average net
assets.
FMR also bears the cost of providing shareholder services to the fund. To
offset the cost of providing these services, FMR or its affiliates collect
certain transaction fees from the fund's shareholders which amounted to
$6,000 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 $1,223,000.
In addition, FMR has entered into arrangements on behalf of the fund with
the fund's custodian and transfer agent whereby interest earned on
uninvested cash balances was used to offset a portion of the fund's
expenses. During the period, the fund's expenses were reduced by $39,000
under these arrangements.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a day.
BY PHONE
Fidelity TouchTone Xpressprovides a single toll-free number to access
account balances, positions, quotes and trading. It's easy to navigate the
service, and on your first call, the system will help you create a personal
identification number (PIN) for security.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
1
For quotes.*
2
For account balances and holdings.
3
To review orders and mutual
fund activity.
4
To change your PIN.
5
To speak to a Fidelity representative.
*
0
BY PC
Fidelity's Web site on the Internet provides a wide range of information,
including daily financial news, fund performance, interactive planning
tools and news about Fidelity products and services.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at 1-800-544-7272
for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)(PHONE_GRAPHIC)(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity at
1-800-544-7272 or visit our Web site for more information on how to manage
your investments via your PC.
* 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
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
265 Church Street
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300 Atlantic Street
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29 South Main Street
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DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
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90 Alhambra Plaza
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4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
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1907 West State Road 434
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2401 PGA Boulevard
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8065 Beneva Road
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1502 N. Westshore Blvd.
Tampa, 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
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, 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
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, 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
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Sarah H. Zenoble, Vice President
Scott Orr, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Thomas D. Maher, Assistant
Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L Mann *
Gerald C. McDonough *
Thomas R. Williams *
ADVISORY BOARD
William O. McCoy
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company Inc.
Boston, MA
and
UMB Bank, n.a.
Kansas City, MO
* INDEPENDENT TRUSTEES
CUSTODIAN
UMB Bank, n.a.
Kansas City, MO
FIDELITY'S MUNICIPAL
MONEY MARKET FUNDS
California Municipal Money Market
Connecticut Municipal Money Market
Massachusetts Municipal Money Market
Michigan Municipal Money Market
Municipal Money Market
New Jersey Municipal Money Market
New York Municipal Money Market
Ohio Municipal Money Market
Spartan Arizona Municipal Money Market
Spartan California Municipal
Money Market
Spartan Connecticut Municipal
Money Market
Spartan Florida Municipal Money Market
Spartan Massachusetts Municipal
Money Market
Spartan Municipal Money Fund
Spartan New Jersey Municipal
Money Market
Spartan New York Municipal
Money Market
Spartan Pennsylvania Municipal
Money Market
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
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)
TouchTone Xpress 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
