SPARTAN(registered trademark)
(REGISTERED TRADEMARK)
ARIZONA
MUNICIPAL MONEY MARKET
FUND
SEMIANNUAL REPORT
FEBRUARY 28, 1998
CONTENTS
CHECK PAGE NUMBERS !!!
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 6 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 8 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS
AND ONE YEAR.
INVESTMENTS 9 A COMPLETE LIST OF THE FUND'S INVESTMENTS.
FINANCIAL STATEMENTS 12 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 16 NOTES TO THE FINANCIAL STATEMENTS.
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 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, FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
Through the first two months of 1998, investors were still trying to
discern what effects ongoing troubles in Southeast Asia might have on
global economies and markets. The U.S. stock market continued to do
well despite these ongoing uncertainties, paced by sustained corporate
profits and signs of recovery in the Asian markets. Bonds, on the
other hand, struggled somewhat in February as the pace of stock
investors' "flight to quality" slowed in the face of this positive
news, and issuers flooded the market with new debt to take advantage
of lower interest rates. Nonetheless, these lower rates, subdued
inflation and moderate growth created a generally favorable climate
for bond investors.
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 historical 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, the total returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1998 PAST 6 PAST 1 LIFE OF
MONTHS YEAR FUND
SPARTAN AZ MUNI MONEY MARKET 1.70% 3.48% 12.60%
ALL TAX-FREE MONEY MARKET FUNDS AVERAGE 1.54% 3.14% 10.94%
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 had 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 all
tax-free money market funds with similar objectives tracked by IBC
Financial Data, Inc. The past six months average represents a peer
group of 439 money market funds. (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, 1998 PAST 1 LIFE OF
YEAR FUND
SPARTAN AZ MUNI MONEY MARKET 3.48% 3.56%
ALL TAX-FREE MONEY MARKET FUNDS AVERAGE 3.14% 3.16%
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>
3/2/98 12/1/97 9/1/97 6/2/97 3/3/97
SPARTAN ARIZONA MUNICIPAL 3.20% 3.62% 3.21% 3.60% 3.15%
MONEY MARKET
IF FIDELITY HAD NOT REIMBURSED 3.05% 3.47% 3.06% 3.45% 3.00%
CERTAIN FUND EXPENSES
ALL TAX-FREE MONEY 2.92% 3.28% 2.98% 3.27% 2.87%
MARKET FUNDS AVERAGE
SPARTAN ARIZONA MUNICIPAL 5.27% 5.96% 5.29% 5.93% 5.19%
MONEY MARKET - TAX-EQUIVALENT
IF FIDELITY HAD NOT REIMBURSED 5.03% 5.72% 5.04% 5.69% 4.94%
CERTAIN FUND EXPENSES
</TABLE>
Row: 1, Col: 1, Value: 3.2
Row: 1, Col: 2, Value: 2.92
Row: 2, Col: 1, Value: 3.62
Row: 2, Col: 2, Value: 3.28
Row: 3, Col: 1, Value: 3.21
Row: 3, Col: 2, Value: 2.98
Row: 4, Col: 1, Value: 3.6
Row: 4, Col: 2, Value: 3.27
Row: 5, Col: 1, Value: 3.15
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 over the past year. You can compare these yields to the all
tax-free money market funds average tracked by IBC Financial Data,
Inc. Or you can look at the fund's tax-equivalent yield, which is
based on a combined effective 1998 federal and state income tax rate
of 39.31%. 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 Arizona
Municipal Money Market Fund
Q. SCOTT, WHAT WAS THE INVESTING ENVIRONMENT LIKE OVER THE PAST SIX
MONTHS?
A. Economic activity was moderate to fairly strong, but inflation
remained in check. Consequently, the Federal Reserve Board opted to
keep short-term interest rates unchanged. In mid-October, several Fed
officials made comments indicating that they were thinking of raising
rates in order to slow the economy before inflation emerged. They felt
the continuation of stronger-than-expected employment growth would
force wage increases that could be passed on to the consumer - meaning
inflation. However, that was before economic and market turmoil hit
Southeast Asia in late October. The Asian situation caused concern
that U.S. export growth would weaken as Asian goods became
increasingly cheaper. The co-existence of those two factors created an
equilibrium that kept rates steady.
Q. WHAT HAPPENED AT THE END OF THE PERIOD?
A. Much of the same. Economic growth was moderately strong and
inflation was benign. Sentiment shifted a bit during the last three
months of the period, however. At the end of 1997, a growing group of
market observers began to contemplate a lowering of interest rates by
the Fed, particularly after Fed Chairman Alan Greenspan mentioned the
possibility of "deflation" if Asian goods continued to cheapen
relative to domestic goods. Conversely, though, the U.S. economy
gained some fortitude in early 1998 and most market observers
abandoned thoughts of a rate cut. Throughout the period, I believed
that the Fed would stay on the sidelines until one side - the
tightening domestic labor market or the Asian crisis - became more
critical than the other.
Q. WHAT WAS THE FUND'S STRATEGY DURING THIS PERIOD?
A. The fund was somewhat hampered by the small amount of bond issuance
in the state, especially among one-year fixed-rate notes. With that
limited issuance, the fund focused on short-term commercial paper and
variable-rate demand notes. The fund's average maturity was 32 days at
the beginning of the period. I extended the average maturity to the
mid-50s in the fall when the issuance of one-year, fixed-rate notes
picked up. From there, the maturity slowly declined to 38 days at the
end of the period, which fit pretty well with my interest-rate
outlook. I expected steady rates in the near term, but the chance for
a rate hike makes the short-term notes attractive going forward
because they give me the flexibility to extend the fund's maturity.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 28, 1998, was 3.18%,
compared to 3.21% six months ago. The more recent seven-day yield was
the equivalent of a 5.24% taxable rate of return for Arizona investors
in the 39.31% combined state and federal income tax bracket. Through
February 28, 1998, the fund's six-month total return was 1.70%,
compared to 1.54% for the all tax-free money market funds average,
according to IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. I think the Fed will maintain steady monetary policy over the next
several months. Two factors are balancing the equation. On one side,
we've seen continued strength in the economy and a tight labor market.
On the other side, there's been the economic difficulties in Asia,
which could dampen exports and hurt U.S. corporate earnings.
Therefore, I believe the Fed will maintain steady interest rates.
Later in 1998, however, I think the Fed may shift its policy toward
higher interest rates. I believe the continuing strength in the
economy and the tight labor market likely will overwhelm any influence
the Asian situation may impose on domestic monetary policy.
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, 1998,
more than $92 million
MANAGER: Scott Orr, since July
1997; manager, various Fidelity
and Spartan municipal money
market funds; joined Fidelity
in 1989
(checkmark)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/28/98 8/31/97 2/28/97
0 - 30 68 79 71
31 - 90 14 15 14
91 - 180 10 0 7
181 - 397 8 6 8
WEIGHTED AVERAGE MATURITY
2/28/98 8/31/97 2/28/97
SPARTAN ARIZONA MUNICIPAL 38 DAYS 32 DAYS 37 DAYS
MONEY MARKET
ALL TAX-FREE 43 DAYS 50 DAYS 45 DAYS
MONEY MARKET FUNDS AVERAGE*
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF FEBRUARY 28, 1998 AS OF AUGUST 31, 1997
Row: 1, Col: 1, Value: 7.0
Row: 1, Col: 2, Value: 2.5
Row: 1, Col: 3, Value: 1.5
Row: 1, Col: 4, Value: 27.0
Row: 1, Col: 5, Value: 62.0
Variable rate demand
notes (VRDNs) 72%
Commercial paper
(including CP mode) 20%
Tender bonds 2%
Municipal notes 1%
Other 5%
Variable rate demand
notes (VRDNs) 63%
Commercial paper
(including CP mode) 27%
Tender bonds 1%
Municipal notes 2%
Other 7%
Row: 1, Col: 1, Value: 5.0
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 2.5
Row: 1, Col: 4, Value: 20.0
Row: 1, Col: 5, Value: 71.0
*SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
INVESTMENTS FEBRUARY 28, 1998
Showing Percentage of Total Value of Investment in Securities
(Unaudited)
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
ARIZONA - 100.0%
Apache County Ind. Dev. Auth. VRDN:
Rev. (Imperial Components Inc.) Series 1996, 3.55%,
LOC Harris Trust & Savings Bank, Chicago (b) $ 2,100,000 $ 2,100,000
(Tucson Elec. Pwr. Co. Proj.) Series 1981 B, 3.75%,
LOC Bank of Tokyo - Mitsubishi Ltd. 4,000,000 4,000,000
Cochise County Poll. Cont. Solid Waste Rev. Bonds
(Arizona Elec. Pwr. Corp.) 3.80%, tender 3/1/98
(CFC Nat'l. Rural Util. Coop.) (b) 3,000,000 3,000,000
Coconino County Poll. Cont. Corp. Poll. Cont.
(Arizona Pub. Svc. Co. Navajo Proj.) Series 1994 A,
3.70%, LOC Kredietbank, NV, VRDN (b) 2,700,000 2,700,000
Flagstaff Ind. Dev. Auth. (Norton Envir. Inc. Proj.)
Series 1997, 3.65%, LOC Keybank NA, VRDN (b) 2,600,000 2,600,000
Glendale Ind. Dev. Auth. Rev. (Superior Bedding Co. Proj.)
Series 1994, 3.55%, LOC Harris Trust & Savings Bank,
Chicago, VRDN (b) 1,900,000 1,900,000
Glendale School Dist. #205 Participating VRDN, Series 1996 F,
3.60% (Liquidity Facility Norwest Bank, Minnesota) (c) 2,600,000
2,600,000
Maricopa County Commty. College Dist. Bonds 6% 7/1/98 1,000,000
1,006,805
Maricopa County Hosp. Rev. (Samaritan Health Sys.)
3.65% (MBIA Insured) (BPA Bank of America) VRDN 300,000 300,000
Maricopa County Ind. Dev. Auth.
Multi-Family Hsg. Auth. Rev., VRDN:
(Privado Park Apt. Proj.) Series 1994 A, 3.50%
(Fannie Mae Guaranteed) (b) 2,000,000 2,000,000
(Royal Oaks-Sun City Proj.) Series 1990, 3.45%
LOC Bank of America 400,000 400,000
(Shadow Creek Apt. Proj.) Series 1994 C, 3.50%
(Fannie Mae Guaranteed) (b) 500,000 500,000
Maricopa County Poll. Cont. Rev.:
Bonds (Southern California Edison Co.) CP mode:
Series 1985 E, 3.30%, 4/3/98 600,000 600,000
Series 1985 E, 3.50%, 4/3/98 2,000,000 2,000,000
Series 1985 F, 3.55%, 4/3/98 300,000 300,000
(Arizona Pub. Svc. Co. Palo Verde Proj.) Series 1994 B,
3.60%, LOC Morgan Guaranty Trust Co., VRDN 500,000 500,000
Mesa Gen. Oblig. Rfdg. Bonds Series 1992, 4.95% 7/1/98
(FGIC Insured) 5,000,000 5,017,596
Mesa Ind. Dev. Auth. (Western Health Network, Inc.)
Participating VRDN, Series 1997 B, 3.56%
(Liquidity Facility Caisse des Depots et Consignations) (c) 7,360,000
7,360,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
ARIZONA - CONTINUED
Mesa Muni. Dev. Corp. Bonds, CP mode:
Series 1985, 3.45% 4/7/98,
LOC Westdeutsche Landesbank $ 2,000,000 $ 2,000,000
Series 1996 A-B, 3.55% 4/1/98,
LOC Westdeutsche Landesbank 1,600,000 1,600,000
Series 1996 A-B, 3.85% 10/6/98,
LOC Westdeutsche Landesbank 5,000,000 5,000,000
Mohave County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Utilities Co.) Series 1993 E, CP mode:
3.20% 4/2/98 (b) 2,400,000 2,400,000
3.80% 4/7/98 (b) 500,000 500,000
3.60% 7/16/98 (b) 2,500,000 2,500,000
Navajo County Ind. Dev. Auth. Ind. Dev. Rev.
(Citizens Utilities Co.) Series 1997B,
3.45% 9/1/32, VRDN (b) 600,000 600,000
Phoenix Civic Impt. Corp. Arpt. Impt. Series 1995, 3.50%,
LOC Landesbank Hessen-Thuringen, VRDN (b) 1,300,000 1,300,000
Phoenix Gen. Oblig. Series 1995-2, 3.60%,
(BPA Morgan Guaranty Trust Co., NY) VRDN 2,500,000 2,500,000
Phoenix Ind. Dev. Auth., VRDN:
Ind. Dev. Rev.:
Rfdg. (V.A.W. of America Proj.) Series 1997,
3.60%, LOC Nationsbank, NA (b) 1,000,000 1,000,000
(Continental Circuits Corp.) Series 1996,
3.55%, LOC Bank One, Arizona (b) 1,000,000 1,000,000
(Plastican Proj.) Series 1997, 3.75%,
LOC Fleet Nat'l. Bank (b) 4,000,000 4,000,000
Multi-Family Hsg. Rev.:
Rfdg. (Paradise Lakes Apt. Proj.) Series 1995, 3.55%,
LOC General Electric Capital Corp. 500,000 500,000
(Bell Square Apt. Proj.) Series 1995, 3.55%,
LOC General Electric Capital Corp. 2,000,000 2,000,000
(Ventana Palms Apt.) Series 1994,3.50%,
LOC Wells Fargo Bank, N.A. (b) 5,210,000 5,210,000
Pima County Ind. Dev. Auth.
Multi-Family Rev. (Quail Ridge Apt.-B)
3.50% (Fannie Mae Guaranteed) VRDN (b) 1,400,000 1,400,000
Pinal County Ind. Dev. Auth., VRDN:
Hosp. Rev. (Casa Grande Medical Ctr. Proj.) Series 1995,
3.40%, LOC Chase Manhattan Bank 4,940,000 4,940,000
Ind. Dev. Rev. (Sunbelt Refining Co. LP Proj.) Series 1988,
3.50%, LOC Bankers Trust Company (b) 3,400,000 3,400,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
ARIZONA - CONTINUED
Pinal County Ind. Dev. Poll. Cont. Rev.
(Magna Copper Co. Proj.) Series 1984, 3.70%,
LOC Nat'l. Westminster Bank PLC, VRDN $ 100,000 $ 100,000
Salt River Proj. Agric. Impt. and Pwr. Dist., CP:
3.45% 4/1/98 1,500,000 1,500,000
3.60% 4/1/98 1,200,000 1,200,000
3.30% 4/3/98 1,000,000 1,000,000
3.55% 4/7/98 1,000,000 1,000,000
Tempe Union High School Dist. #213 TAN 4.40% 6/30/98 1,000,000
1,001,683
Tucson Ind. Dev. Auth. Multi-Family Hsg. Rev. (Lincoln Garden
Proj.) 4.15%, LOC Sumitomo Bank Ltd., VRDN 1,000,000 1,000,000
University of Arizona Sys. Rev. BAN
Series 1997, 3.95% 10/1/98 1,000,000 1,000,000
Yavapai County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Utilities Co.) Series 1993, CP mode:
3.35% 4/2/98 (b) 1,200,000 1,200,000
3.60% 4/6/98 (b) 1,800,000 1,800,000
TOTAL INVESTMENTS - 100% $ 91,536,084
Total Cost For Income Tax Purposes $ 91,536,084
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
TAN - Tax 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.
INCOME TAX INFORMATION
At August 31, 1997, the fund had a capital loss carryforward of
approximately $11,000 all of which will expire on August 31, 2004.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE - $ 91,536,084
SEE ACCOMPANYING SCHEDULE
CASH 360,279
INTEREST RECEIVABLE 450,081
TOTAL ASSETS 92,346,444
LIABILITIES
DISTRIBUTIONS PAYABLE $ 7,614
ACCRUED MANAGEMENT FEE 24,855
OTHER PAYABLES AND ACCRUED EXPENSES 150
TOTAL LIABILITIES 32,619
NET ASSETS $ 92,313,825
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 92,304,067
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS 9,758
NET ASSETS, FOR 92,304,067 SHARES OUTSTANDING $ 92,313,825
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $1.00
SHARE ($92,313,825 (DIVIDED BY) 92,304,067 SHARES)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
INTEREST INCOME $ 1,642,640
EXPENSES
MANAGEMENT FEE $ 218,375
NON-INTERESTED TRUSTEES' COMPENSATION 162
TOTAL EXPENSES BEFORE REDUCTIONS 218,537
EXPENSE REDUCTIONS (66,734) 151,803
NET INTEREST INCOME 1,490,837
NET REALIZED GAIN (LOSS) ON INVESTMENTS 22,315
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,513,152
STATEMENT OF CHANGES IN NET ASSETS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31,
(UNAUDITED) 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 1,490,837 $ 2,830,812
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 22,315 (1,821)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,513,152 2,828,991
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (1,490,837) (2,830,812)
SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 45,538,168 105,703,895
PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 1,453,443 2,737,679
COST OF SHARES REDEEMED (42,834,473) (103,046,509)
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES 4,157,138 5,395,065
RESULTING FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,179,453 5,393,244
NET ASSETS
BEGINNING OF PERIOD 88,134,372 82,741,128
END OF PERIOD $ 92,313,825 $ 88,134,372
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED AUGUST 31, OCTOBER 11, 1994
FEBRUARY 28, 1998 (COMMENCEMENT
OF OPERATIONS) TO
AUGUST 31,
(UNAUDITED) 1997 1996 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000
BEGINNING OF PERIOD
INCOME FROM INVESTMENT OPERATIONS .017 .033 .035 .034
NET INTEREST INCOME
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.017) (.033) (.035) (.034)
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN B, C 1.70% 3.39% 3.52% 3.43%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 92,314 $ 88,134 $ 82,741 $ 52,566
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE .35% A, D .35% D .22% D .06% A, D
NET ASSETS
RATIO OF NET INTEREST INCOME TO 3.41% A 3.34% 3.44% 3.91% A
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.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 4 OF NOTES TO
FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 4 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Arizona Municipal Money Market Fund (the fund) is a fund of
Fidelity Union Street Trust II (the trust) and is authorized to issue
an unlimited number of shares. The trust is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an
open-end management investment company organized as a Delaware
business trust. The financial statements have been prepared in
conformity with generally accepted accounting principles which permit
management to make certain estimates and assumptions at the date of
the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of discount, is accrued as earned. Accretion of
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 fund may invest in the
Municipal Central Cash Fund (the Cash Fund) managed by Fidelity
Investments Money Management, Inc., (formerly FMR Texas, Inc.) an
affiliate of Fidelity Management & Research Company (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
by investing in high-quality, short-term municipal securities of
various states and municipalities. Income distributions from the Cash
Fund are declared daily and paid monthly from net interest income.
Income distributions earned by the fund are recorded as interest
income in the accompanying financial statements.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, 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 $430 for the period.
SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity
Investments Money Management, Inc. (formerly 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 annualized rate of .35% of average net assets. For
the period, the reimbursement reduced the expenses by $65,559.
In addition, FMR has entered into an arrangement on behalf of the fund
with the fund's transfer agent whereby credits realized as a result of
uninvested cash balances were used to reduce a portion of the fund's
expenses. During the period, the fund's expenses were reduced by
$1,175 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)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
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)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)
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)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(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 500
Merrimack, NH 03054-0500
(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 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
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
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
48 West Putnam Avenue
Greenwich, CT
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
1907 West State Road 434
Longwood, FL
4001 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
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
155 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
1055 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
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
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
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
Fidelity Investments
Money Management, Inc.
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Boyce I. Greer, Vice President
Scott A. Orr, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, 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
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* 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, 1998
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.
FINANCIAL STATEMENTS 43 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 47 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:
Through the first two months of 1998, investors were still trying to
discern what effects ongoing troubles in Southeast Asia might have on
global economies and markets. The U.S. stock market continued to do
well despite these ongoing uncertainties, paced by sustained corporate
profits and signs of recovery in the Asian markets. Bonds, on the
other hand, struggled somewhat in February as the pace of stock
investors' "flight to quality" slowed in the face of this positive
news, and issuers flooded the market with new debt to take advantage
of lower interest rates. Nonetheless, these lower rates, subdued
inflation and moderate growth created a generally favorable climate
for bond investors.
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 historical 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-sized 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, 1998 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
SPARTAN MUNI MONEY 1.69% 3.46% 16.87% 26.87%
ALL TAX-FREE MONEY MARKET FUNDS AVERAGE 1.54% 3.14% 14.77% 22.51%
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 had 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 all tax-free money market funds with similar objectives
tracked by IBC Financial Data, Inc. The past six months average
represents a peer group of 439 money market funds. (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, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
SPARTAN MUNI MONEY 3.46% 3.17% 3.39%
ALL TAX-FREE MONEY MARKET FUNDS AVERAGE 3.14% 2.79% 2.91%
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
3/2/98 12/1/97 9/1/97 6/2/97 3/3/97
SPARTAN MUNICIPAL 3.20% 3.60% 3.18% 3.58% 3.12%
MONEY FUND
IF FIDELITY HAD NOT 3.10% 3.50% 3.08% 3.48% 3.02%
REIMBURSED CERTAIN
FUND EXPENSES
ALL TAX-FREE MONEY MARKET 2.92% 3.28% 2.98% 3.27% 2.87%
FUNDS AVERAGE
SPARTAN MUNICIPAL MONEY 5.00% 5.63% 4.97% 5.59% 4.88%
FUND - TAX-EQUIVALENT
IF FIDELITY HAD NOT 4.84% 5.47% 4.81% 5.44% 4.72%
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 Diane McLaughlin, Portfolio Manager of Spartan
Municipal Money Fund
Q. WHAT WAS THE MARKET ENVIRONMENT LIKE DURING THE PAST SIX MONTHS?
A. Economic growth was strong. Although real gross domestic product -
GDP adjusted for inflation - slowed in the third and fourth quarters
of 1997 from the torrid pace set at the beginning of that year, the
growth rate still averaged more than 3% for 1997. In addition, we
witnessed an increasingly tight labor market. Unemployment averaged
4.9% in 1997 - a rate that historically would have meant higher
inflation due to wage pressures. However, 1997 was different. The 1997
producer price index (PPI) - a measure of wholesale prices - dropped
1.2%, representing the biggest one-year drop since 1986. Similarly,
the consumer price index (CPI) finished 1997 up 1.7%, the slowest gain
in that same 11-year time period. Several reasons are cited for this
lack of inflation. Most notably, productivity improvements over the
past few years have reduced the risk of inflationary pressures that
had previously accompanied similar periods of low unemployment.
Q. WHAT OTHER FACTORS HELPED CREATE THIS LOW-INFLATION ENVIRONMENT?
A. Primarily, the financial crisis in Southeast Asia. This unusual
turn of events shifted focus from growth in the domestic economy to
the possible impact the Asian crisis might have on the economy in the
U.S. and other parts of the world. The dollar appreciated markedly
against many Asian currencies, making Asian imports to the U.S. less
expensive and, consequently, suppressing inflation. Many market
observers became concerned that the U.S. economy would slow
significantly as exports to Asian countries declined. At the end of
the period, the Federal Reserve Board assumed a neutral stance, giving
itself flexibility to raise interest rates to slow the economy if
inflation started to surface or to lower rates to stimulate growth if
the spillover from the crisis in Asia significantly hurt the U.S.
economy.
Q. WHAT WAS YOUR STRATEGY AS THIS UNFOLDED?
A. At the beginning of the period, the fund's average maturity was 48
days. For most of the period, my investment focus was on the short end
of the money market yield curve, as increased supply of these
shorter-term securities made that part of the market attractive.
However, the fund did participate in the one-year market early in the
period when supply became more plentiful and when yields factored in
future interest-rate increases. Despite purchases of these securities,
though, the fund's average maturity shortened to 34 days at the end of
the period.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 28, 1998, was 3.18%,
compared to 3.19% six months ago. The latest yield was the equivalent
of a 4.97% taxable yield for investors in the 36% federal tax bracket.
Through February 28, 1998, the fund's six-month total return was
1.69%, compared to 1.54% for the all tax-free money market funds
average, according to IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. I see two possible scenarios going forward. Domestic growth might
continue at the pace set in 1997, leading to an even tighter labor
market. In this case, I think eventual wage increases would be passed
on to the consumer - meaning inflation. On the other hand, the
spillover from the Asian turmoil may significantly dampen growth in
the U.S. and suppress inflation. I believe the Fed is waiting for more
evidence to evaluate the extent of the Asian situation, so I expect
steady Fed interest-rate policy in the near term. The market, however,
has priced in an easing - or lowering - of rates. I expect to keep the
fund's average maturity slightly shorter than that of its peers,
giving me the flexibility to extend the fund's maturity if this easing
outlook shifts and rates get more attractive.
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,
1998, more than $2.3 billion
MANAGER: Diane McLaughlin,
since 1997; manager, various
Fidelity and Spartan municipal
money market funds; joined
Fidelity in 1992
(checkmark)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/28/98 8/31/97 2/28/97
0 - 30 74 79 72
31 - 90 11 6 7
91 - 180 11 4 15
181 - 397 4 11 6
WEIGHTED AVERAGE MATURITY
2/28/98 8/31/97 2/28/97
SPARTAN MUNICIPAL MONEY FUND 34 DAYS 48 DAYS 40 DAYS
ALL TAX-FREE
MONEY MARKET FUNDS AVERAGE* 43 DAYS 50 DAYS 45 DAYS
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF FEBRUARY 28, 1998 AS OF AUGUST 31, 1997
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 8.0
Row: 1, Col: 3, Value: 5.0
Row: 1, Col: 4, Value: 20.0
Row: 1, Col: 5, Value: 67.0
Row: 1, Col: 6, Value: 25.8
Variable rate demand
notes (VRDNs) 73%
Commercial paper
(including CP mode) 10%
Tender bonds 6%
Municipal notes 10%
Other 1%
Variable rate demand
notes (VRDNs) 67%
Commercial paper
(including CP mode) 20%
Tender bonds 5%
Municipal notes 8%
Other 0%
Row: 1, Col: 1, Value: 1.5
Row: 1, Col: 2, Value: 10.0
Row: 1, Col: 3, Value: 6.0
Row: 1, Col: 4, Value: 10.0
Row: 1, Col: 5, Value: 72.5
*SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
INVESTMENTS FEBRUARY 28, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ALABAMA - 2.2%
Alabama Ind. Dev. Auth. Rev.:
(Columbus Mills, Inc. Proj.)
Series 1994 A, 3.60%, LOC SunTrust
Bank, Atlanta, VRDN (b) $ 3,000 $ 3,000
(Well Built Cabinet, Inc.)
3.60%, LOC Amsouth Bank, VRDN (b) 1,970 1,970
Ashland Ind. Dev. Board Rev. (Wellborn Cabinet Inc. Proj.)
Series 1991 A, 3.65%, LOC Amsouth Bank, VRDN (b) 1,120 1,120
Chatam Ind. Dev. Board Poll. Cont. Rev. Bonds (Alabama Elec.
Coop, Inc. Proj.) Series 1993, 3.55% 4/6/98
(Nat'l. Rural Utilities Coop. Guaranteed) CP mode 1,500 1,500
Colbert County Ind. Dev. Board (Golden Poultry Co. Proj.)
Series 1990, 3.60%, LOC SunTrust Bank, Atlanta, VRDN (b) 3,400 3,400
Columbiana Ind. Dev. Board Rev. (NFA Corp. Proj.)
Series 1992 A, 3.65%, LOC Amsouth Bank, VRDN (b) 6,000 6,000
Courtland Ind. Dev. Board (Specialty Minerals, Inc.) 3.50%,
LOC Wachovia Bank of Georgia, NA, VRDN (b) 3,000 3,000
Decatur Ind. Dev. Board Ind. Dev. Rev. (Monsanto Co. Proj.)
Series 1996, 3.55%, VRDN (b) 1,285 1,285
Decatur Ind. Dev. Board Solid Waste Rev. (Trico Steel Co. Proj.)
Series 1997, 3.55%, LOC Chase Manhattan
Bank, VRDN (b) 2,200 2,200
Demopolis Ind. Dev. Rev. Board:
(McClain of Alabama Proj.)
3.50%, LOC LaSalle Nat'l. Bank, Inc., VRDN (b) 1,000 1,000
(Systech Environmental Corp.)
Series 1990, 3.55%, LOC NBD Bank, NA, VRDN (b) 1,200 1,200
Eufaula Ind. Dev. Board (Columbus Mills, Inc. Proj.)
Series 1993, 3.60%, LOC SunTrust Bank, Atlanta, VRDN (b) 6,100 6,100
Florence Ind. Dev. Board. Rev. (Robert J. Bevis Proj.)
Series 1990, 3.60%, LOC NationsBank, NA, VRDN (b) 2,675 2,675
Jackson Ind. Dev. Auth. (Specialty Minerals, Inc.) 3.50%,
LOC Wachovia Bank of Georgia, NA, VRDN 3,245 3,245
Lafayette Ind. Dev. Rev. (Kardoes Rubber Co., Inc.) 3.60%,
LOC Amsouth Bank, NA, VRDN (b) 2,200 2,200
Montgomery Ind. Dev. Board Ind. Dev. Rev.:
(Contech Construction Prod.) Series 1996, 3.60%,
LOC Mellon Bank, NA, VRDN (b) 3,000 3,000
(Feldmeier/Alabama Equipment) Series 1996, 3.60%,
LOC Southtrust Bank of Alabama, VRDN (b) 1,000 1,000
Phoenix Ind. Dev. Board. Envir. Impt. Rev. (Mead Coated
Board Proj.) Series 1988, 3.40% 4/9/98,
LOC ABN-AMRO Bank, NV (b) 3,000 3,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ALABAMA - CONTINUED
Roanoke Ind. Dev. Board Ind. Dev. Rev., VRDN:
(SteelFab, Inc. Proj.) Series 1997, 3.60%,
LOC NationsBank, NA (b) $ 1,000 $ 1,000
(Wehadkee/Rock Mills Proj.) Series 1992, 3.60%, LOC
SunTrust Bank, Atlanta (b) 1,800 1,800
Talladega Ind. Dev. Rev. (Wehadkee Yarn Mills Proj.)
Series 1990, 3.60%, LOC SunTrust Bank,
Atlanta, VRDN (b) 1,350 1,350
Tuscaloosa County Ind. Dev. Rev. (Hanna Steel Co.)
3.60%, LOC NationsBank, NA, VRDN 910 910
Wetumpka Ind. Dev. (US Fabtec LLC Proj.) 3.90%,
LOC Bank of Tokyo-Mitsubishi Ltd., VRDN (b) 1,200 1,200
53,155
ALASKA - 0.8%
Alaska Hsg. Fin. Auth. Corp.:
Participating VRDN (c):
Series 1995 A, 3.65% (Liquidity Facility Bank of
New York, NA) 2,900 2,900
Series 1997 F, 3.51% (Liquidity Facility Bank of
America Nat'l. Trust & Savings) 1,500 1,500
Alaska Ind. Dev. & Export Auth. (Healy Clean Coal Proj.)
Series 1996 A, 3.50%, LOC Bank of America
Nat'l. Trust & Savings, VRDN 6,000 6,000
Valdex Marine Terminal Rev. Rfdg. Bonds (Atlantic
Richfield Co.) Series 1994 A, 3.75% 4/8/98, CP mode 9,575 9,575
19,975
ARIZONA - 1.5%
Apache County Ind. Dev. Auth. (Tucson Elec. Pwr. Co. Proj.)
Series 1981 B, 3.75%, LOC Bank of Tokyo-Mitsubishi Ltd.,
VRDN 5,600 5,600
Arizona Agricultural Impt. & Pwr. Dist. (Salt River Proj.) CP:
3.55% 7/13/98 (Liquidity Facility Wells Fargo, NA and
First Nat'l. Bank of Chicago) 9,000 9,000
3.55% 7/16/98 (Liquidity Facility Wells Fargo, NA and
First Nat'l. Bank of Chicago) 5,800 5,800
Cochise Poll. Cont. Rev. Solid Waste Disposal Rev. Bonds
(Arizona Elec. Pwr. Coop. Proj.) 3.55% 9/1/98
(Nat'l. Rural Utilities Coop. Guaranteed) CP mode 2,200 2,200
Mesa Ind. Dev. Auth. Participating VRDN, Series 1997 B,
3.56% (Liquidity Facility Caisse des Depots et
Consignations) (c) 3,120 3,120
Mohave County Ind. Dev. Auth. Ind. Dev. Rev. Bonds
(Citizens Util.) Series 1993 E, CP mode:
3.90% 3/9/98 (b) 2,400 2,400
3.80% 5/15/98 (b) 900 900
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ARIZONA - CONTINUED
Phoenix Ind. Dev. Auth. Rev. (Plastican Proj.) Series
1997, 3.75%, LOC Fleet Bank, NA, VRDN (b) $ 1,700 $ 1,700
Pinal County Ind. Dev. Auth. Ind. Dev. Rev. (Sunbelt
Refining Co. LP Proj.) Series 1988, 3.50%, LOC Bankers
Trust Co., VRDN (b) 3,900 3,900
Yavapi County Ind. Dev. Auth. Ind. Dev. Rev. Bonds (Citizens
Util.) Series1993, 3.90% 3/9/98, CP mode (b) 1,000 1,000
35,620
ARKANSAS - 1.3%
Arkansas Dev. Fin. Auth. Home Mtg. Participating VRDN ,
Series A-1, 3.56% (Liquidity Facility Caisse des
Depots et Consignations) (c) 7,995 7,995
Arkansas Dev. Fin. Auth. Multi-Family Hsg. Rev. (Kiehl
Partners L.P. Proj.) Series 1998, 3.60%,
LOC Bank One, Louisiana, NA, VRDN 3,000 3,000
Arkansas Dev. Fin. Auth. Single Family Mtg. Rev.
Series D, 4.05%, tender 7/1/98,
LOC Canadian Imperial Bank 3,800 3,800
Blytheville Ind. Dev. Rev. (Arkansas Steel Processing Proj.)
Series 1992, 3.65%, LOC Credit Agricole
USA, Inc., VRDN (b) 9,500 9,500
Harrison Ind. Dev. Rev. (Rock-Tenn Converting Co. Proj.)
Series 1993, 3.60%, LOC SunTrust Bank,
Atlanta, VRDN (b) 2,500 2,500
Miller County Solid Waste Disp. Rev. (Tyson Foods, Inc. Proj.)
Series 1996, 3.55%, LOC Commerzbank, AG, VRDN (b) 3,150 3,150
29,945
CALIFORNIA - 3.5%
California Gen. Oblig. Bonds 3.55% 4/7/98
(BPA Bayerische Landesbank Girozentrale and
Credit Suisse First Boston, CP 6,500 6,499
California Higher Ed. Loan Auth. Rev. Bonds
Series E-5, 3.95%, tender 6/1/98,
LOC Student Loan Marketing Association (b) 4,100 4,100
California Higher Ed. Loan Auth. Student Loan Rev. Bonds
Series 1994 A, 3.95%, tender 6/1/98, LOC State Street
Bank and Trust Co., Boston (b) 7,000 7,000
California Public Works Board Lease Rev. Bonds (Dept. of
Corrections) Series 1997 C, 4.75% 9/1/98 2,200 2,209
California Student Ed. Loan Marketing Corp. Student
Loan Rev. Rfdg. Bonds Series 1994 A, 4.05%, tender 6/1/98,
LOC Dresdner Bank (b) 10,000 10,000
California School Cash Reserves Prog. TRAN
Series A, 4.75%, 7/2/98 (AMBAC Insured) 4,500 4,512
Central Valley School Fin. Auth. TRAN Series 1997,
4.50% 8/27/98 3,600 3,610
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
CALIFORNIA - CONTINUED
Clovis Unified School Dist. TRAN (Fresno County)
4.25% 6/30/98 $ 7,700 $ 7,711
Kern High School Dist. TRAN 4.50% 8/20/98 4,300 4,312
Los Angeles County Gen. Oblig.
TRAN Series A, 4.50% 6/30/98 3,600 3,607
Los Angeles Regional Arpt. Impt. Facs. Lease Rev. (Air France
Proj.) 3.30%, LOC Societe Generale, VRDN (b) 1,425 1,425
Los Angeles Unified School Dist. TRAN Series 1997-98,
4.50% 7/1/98 4,800 4,811
Orange County Apt. Dev. Rev. (Yorba Linda Association)
Series 1985 D, 3.75%, LOC Bank of
Tokyo-Mitsubishi, Ltd., VRDN 3,200 3,200
Riverside County Gen. Oblig. TRAN 4.50% 6/30/98 7,200 7,213
San Luis Obispo County Office of Ed. TRAN
4.50% 6/30/98 2,588 2,593
South Coast Local Ed. Agencies TRAN, Series A, 4.50%
6/30/98 (MBIA Insured) 9,500 9,519
82,321
COLORADO - 1.6%
Aurora Multi-Family Hsg. Rev. (Aurora Meadows Apts.)
Series 1996, 3.70% (Fannie Mae Guaranteed) VRDN (b) 5,100 5,100
Colorado Springs Util. Sys. Rev. Participating VRDN,
Series 1996 A, 3.55% (Liquidity Facility Societe
Generale) (c) 3,880 3,880
Denver City & County Arpt. Sys. Rev. Participating VRDN:
3.61% (Liquidity Facility Caisse des Depots et
Consignations) (b)(c) 15,380 15,380
Series 1997 Q, 3.55% (Liquidity Facility
CoreStates Bank) (c) 3,160 3,160
Monte Vista Ltd. Oblig. Swr. Rev., Series 1992, 3.50%,
LOC Wachovia Bank of Georgia, NA, VRDN (b) 2,670 2,670
Westminster County Multi-Family Hsg. Rev. Rfdg.
(Lakeview Apts.) Series 1997, 3.70%
(Fannie Mae Guaranteed) VRDN (b) 2,600 2,600
Wheat Ridge County Ind. Dev. Rev. (Adolph Coors Co.
Proj.) Series 1993, 3.60%, LOC Wachovia Bank of
Georgia, NA, VRDN (b) 5,000 5,000
37,790
CONNECTICUT - 0.1%
Connecticut Hsg. Fin. Auth. Participating VRDN ,
Series 1997 L, 3.60% (Liquidity Facility
CoreStates Bank) (b)(c) 2,670 2,670
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
DELAWARE - 0.3%
Delaware Hsg. Auth. Participating VRDN, Series PA-39,
3.51% (Liquidity Facility Merrill Lynch & Co., Inc.) (c) $ 7,550 $
7,550
DISTRICT OF COLUMBIA - 0.8%
Dist. of Columbia Hsg. Fin. Auth. Multi-Family Hsg. Rev.
Rfdg. (Mount Vernon Plaza Apts.) 3.50%,
LOC Bank One, NA, VRDN (b) 13,105 13,105
Metro Washington Arpt. Auth. Rev. Bonds 3.60% 7/23/98,
LOC NationsBank, NA, CP mode (b) 7,000 7,000
20,105
FLORIDA - 2.3%
Dade County Hsg. Fin. Corp. Participating VRDN, Series
1991 A, 3.66% (Liquidity Facility Bank One, NA) (b)(c) 3,700 3,700
Florida Local Gov't. Fin. Commission Series A, CP:
3.80% 5/12/98, LOC First Union Nat'l. Bank 4,200 4,200
3.50% 6/2/98, LOC First Union Nat'l. Bank 7,100 7,100
3.60% 6/11/98, LOC First Union Nat'l. Bank 2,545 2,545
3.75% 7/14/98, LOC First Union Nat'l. Bank 6,250 6,250
Indian River County Hosp. Dist. Rev. Bonds Series 1988,
3.80% 5/15/98, LOC Kredietbank, CP mode 2,200 2,200
Jacksonville Hosp. Rev. (Univ. Med. Ctr.) Series 1988,
3.90%, LOC Sumitomo Bank Ltd., VRDN 2,500 2,500
Lee County Hosp. Board Rev. Bonds (Lee Memorial
Hosp. Proj.) Series 1997 B, 3.60% 3/31/98 (Liquidity
Facility SunTrust Bank Central Florida, NA) CP mode 5,500 5,500
Orange County Hsg. Fin. Auth. Multi-Family Hsg. Rev.
(Waterview Club) Series 1997 D, 3.55%,
LOC Key Bank NA, VRDN (b) 2,665 2,665
St. Lucie County Poll. Cont. Rev. Rfdg. Bonds:
(Florida Light & Pwr. Co. Proj.):
Series 1994 A, 3.60% 4/7/98, CP mode 4,600 4,600
Series 1994 B, 3.60% 4/9/98, CP mode 12,725 12,725
53,985
GEORGIA - 4.0%
Brunswick & Glynn County Dev. Auth. (Georgia Pacific Corp.
Proj.) Series 1996, 3.60%, LOC Commerzbank, AG,
VRDN (b) 5,900 5,900
Chattanooga County Ind. Dev. Auth.
(Aladdin Manufacturing Co.) 3.60%,
LOC Wachovia Bank of Georgia, NA, VRDN (b) 2,100 2,100
Cherokee County Dev. Auth. Rev. (Blue Circle Aggregates, Inc.)
Series 1997, 3.55%, LOC Den Danske
Bank Group, AS, VRDN (b) 2,000 2,000
Cherokee County Wtr. & Swr. Auth.
Participating VRDN, Series 1993, 3.56%
(Liquidity Facility Merrill Lynch & Co., Inc.) (c) 1,495 1,495
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
GEORGIA - CONTINUED
Clayton County Hsg. Auth. Multi-Family Hsg. Rev.
(Hyde Park Club Apts. Proj.) Series 1997, 3.55%,
LOC Key Bank NA, VRDN (b) $ 2,000 $ 2,000
Cobb County Hsg. Auth. Multi-Family Hsg. Rev.
(Williamstown Apt.) 3.60%, LOC Wachovia Bank of Georgia,
NA, VRDN (b) 1,100 1,100
Coweta County Ind. Dev. Auth. (E.G.O. Products, Inc. Proj.)
Series 1996, 3.55%, LOC Swiss Bank Corp., VRDN (b) 2,600 2,600
Dekalb County Dev. Auth. Ind. Dev. Rev. (Qualex Proj.)
3.60%, LOC Comerica Bank, Texas, VRDN (b) 1,810 1,810
Dekalb County Multi-Family Hsg. Rev. (Eagles Trace Apts.)
Series 1996, 3.55%, LOC Key Bank NA, VRDN (b) 2,000 2,000
Floyd County Dev. Auth. Ind. Dev. Rev. (Marglen Ind., Inc.
Proj.) VRDN:
Series 1997, 3.60%, LOC SunTrust Bank, Atlanta (b) 1,000 1,000
3.60%, LOC SunTrust Bank, Atlanta (b) 2,600 2,600
Georgia Participating VRDN, Series BTP-79,
3.475% (Liquidity Facility Bankers Trust Co.) (c) 3,145 3,145
Georgia Hsg. & Fin. Auth. Single Family Hsg. Rev. Bonds
3.85%, tender 9/1/98 (FGIC Guaranteed) (b) 4,400 4,400
Georgia Port Auth. Rev., VRDN:
(Colonel's Island Terminal) 3.60%,
LOC SunTrust Bank, Atlanta (b) 1,900 1,900
(Mayor's Point Terminal) Series 1992,
3.60%, LOC SunTrust Bank, Atlanta (b) 3,200 3,200
Greene County Ind. Dev. Rev. (Chipman-Union, Inc. Proj.)
Series 1991, 3.60%, LOC SunTrust Bank, Atlanta, VRDN (b) 1,550 1,550
Gwinnett County Ind. Dev. Rev., VRDN:
(Curtis 1000, Inc. Proj.) Series 1996, 3.60%,
LOC SunTrust Bank, Atlanta (b) 4,060 4,060
(Klockner Namasco Corp.) 3.55%,
LOC NationsBank, NA (b) 1,000 1,000
(O'Neal Steel Inc.) 3.55%,
LOC NationsBank, NA (b) 1,500 1,500
(Sheperd Construction Co., Inc. ) 3.60%,
LOC SunTrust Bank, Atlanta (b) 1,000 1,000
Gwinnett County Multi-Family Hsg. Rev. (Herrington
Woods Apt.) Series 1996 A, 3.55%, LOC Key
Bank NA, VRDN (b) 4,300 4,300
Henry County Dev. Auth. Solid Waste Rev. (Atlas
Roofing Corp. Proj.) Series 1997, 3.60%, LOC SunTrust
Bank, Atlanta, VRDN (b) 1,500 1,500
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
GEORGIA - CONTINUED
Jenkins County Ind. Dev. Rev. (Metal Industries Inc.
of Georgia) 3.55%, LOC NationsBank, NA, VRDN (b) $ 1,600 $ 1,600
Paulding County Ind. Bldg. Auth. Rev. (Cadillac Products, Inc.)
Series 1994, 3.55%, LOC NBD Bank, NA, VRDN (b) 2,550 2,550
Pierce County Ind. Dev. & Bldg. Auth. Rev. (American Egg
Prods. Inc. Proj.) Series 1989, 3.60%, LOC Suntrust Bank,
Atlanta, VRDN (b) 1,455 1,455
Richmond County Board of Ed. Participating
VRDN, Series 1997 C, 3.56% (Liquidity Caisse des
Depots et Consignations) (c) 2,900 2,900
Savannah Econ. Dev. Auth. Rev., VRDN:
(Fuji Vegetable Oil Inc. Proj.) 3.90% LOC Bank of
Tokyo-Mitsubishi Ltd. (b) 4,000 4,000
(Home Depot, Inc.) Series 1995 A, 3.60% (b) 15,600 15,600
(Kaolin Terminals Inc.) 3.55%, LOC NationsBank, NA (b) 8,000 8,000
Summerville Fac. Auth. Rev. (Image Ind. Inc. Proj.) Series
1997, 3.55%, LOC First Union Nat'l. Bank, VRDN (b) 4,000 4,000
Vienna Ind. Dev. Auth. (Mid Georgia Processing Co.)
3.55%, LOC NationsBank, NA, VRDN (b) 1,000 1,000
Worth County Ind. Dev. Auth. Rev. Rfdg.
(Seabrook Peanut Co. Proj.) Series 1996 B, 3.60%,
LOC SunTrust Bank, Atlanta, VRDN 1,200 1,200
94,465
HAWAII - 0.3%
Hawaii Dept. of Budget & Fin. Spl. Purp. Rev. Bonds:
(Citizens Utils.) Series 1988 A, 3.30% 4/1/98, CP mode (b) 2,600
2,600
(Kaiser Permanente) Series 1984 B, 3.70% tender 9/1/98 1,540 1,540
Hawaii Hsg. Fin. & Dev. Corp. Participating VRDN, Series PT-35,
3.61% (Liquidity Facility Banque Nationale De Paris) (b)(c) 3,345
3,345
7,485
IDAHO - 0.9%
Idaho Hsg. & Fin. Association Participating VRDN, 3.61%
(Liquidity Facility Merrill Lynch & Co., Inc.) (c) 1,945 1,945
Idaho Gen. Oblig. TAN 4.625% 6/30/98 19,200 19,246
21,191
ILLINOIS - 6.9%
Belvidere Ind. Dev. Rev. (R&D Thiel, Inc. Proj.) Series 1996,
3.70%, LOC US Bank, NA, VRDN (b) 2,300 2,300
Bolingbrook Multi-Family Hsg. Rev. (Amberton Apts.) 3.55%,
LOC LaSalle Nat'l. Bank of Chicago, VRDN (b) 4,400 4,400
Carol Stream Multi-Family Hsg. (St. Charles Square)
3.50% (Fannie Mae Guaranteed) VRDN (b) 1,415 1,415
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ILLINOIS - CONTINUED
Chicago Gas Supply Rev. Bonds (Peoples Gas Light &
Coke Co.) 3.90%, tender 12/1/98 (b) $ 3,950 $ 3,950
Chicago Ind. Dev. Rev. (Ampere Automotive Corp. Proj.)
Series 1996, 3.55%, LOC Harris Trust & Savings
Bank, Chicago, VRDN (b) 2,000 2,000
Chicago O' Hare Int'l. Arpt. Rev. Series 1988 A, 3.60%,
LOC Bayerische Landesbank Girozentrale, VRDN (b) 9,200 9,200
Chicago School Reform Participating VRDN (c):
Series 1996-BB, 3.56% (Liquidity Facility Bank of America
Nat'l. Trust & Savings) 11,100 11,100
Series 1997 E, 3.50% (Liquidity Facility CoreStates Bank) 3,125
3,125
Chicago Wtr. Rev. Participating VRDN, Series 1997 V,
3.55% (Liquidity Facility CoreStates Bank) (c) 6,500 6,500
Danville Ind. Dev. Rev. (Freight Car Svcs., Inc. Proj.) 3.75%,
LOC Chase Manhattan Bank, VRDN (b) 5,300 5,300
Glendale Heights Participating VRDN,
Series PT-106, 3.61% (Liquidity FacilityBayerische
Hypotheken-und Wechsel Bank) (c) 1,500 1,500
Illinois Dev. Fin. Auth. Adj. Rate Rev. (Olive Can Co. Proj.)
3.50%, LOC LaSalle Nat'l. Bank, Inc., VRDN (b) 1,980 1,980
Illinois Dev. Fin. Auth. Ind. Dev. Rev.:
(Belmont Steel Proj.) Series 1991, 3.65%,
LOC Lasalle Nat'l. Bank, Inc., VRDN (b) 3,800 3,800
(Camcraft Proj.) Series 1993, 3.60%, LOC
American Nat'l. Bank & Trust Co., VRDN (b) 400 400
(Chicago Fineblanking Corp. Proj.) 3.75%,
LOC NBD Bank, NA, VRDN (b) 3,400 3,400
(Cloverhill Pastry Vending) 3.60%, LOC American Nat'l.
Bank & Trust Co., VRDN (b) 400 400
(FC L. P.) 3.50%, LOC LaSalle Nat'l.
Bank, Inc., VRDN (b) 3,315 3,315
(Grayhill Inc. Proj.) Series 1995 B, 3.55%, LOC Harris
Trust & Savings Bank, Chicago, VRDN (b) 2,450 2,450
(Kindlon Partners Proj.) Series 1994, 3.50%, LOC LaSalle
Nat'l. Bank, Inc., VRDN (b) 1,500 1,500
(Mapes & Sprowl Steel Ltd. Proj.) Series 1996 A, 3.55%,
LOC LaSalle Nat'l. Bank, Inc., VRDN (b) 1,839 1,839
(Rich Products, Corp. Proj.) Series 1993, 3.60%,
LOC SunTrust Bank, Atlanta, NA, VRDN (b) 6,300 6,300
(Rich Products Corp. Proj.) Series 1998, 3.60%, LOC
SunTrust Bank, Atlanta, VRDN (b) 6,300 6,300
(Touhy L.P.) Series 1996, 3.50%, LOC LaSalle
Nat'l. Bank, Inc., VRDN (b) 3,400 3,400
(Toyal America, Inc. Proj.) 3.90%, LOC Bank of
Tokyo-Mitsubishi Ltd., VRDN 2,200 2,200
(Yale-South Haven Proj.) Series 1994, 3.55%, LOC
Bank One, Indianapolis, VRDN (b) 2,500 2,500
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
ILLINOIS - CONTINUED
Illinois Dev. Fin. Auth. Ltd. Oblig. Rev. (SWD Inc. Proj.)
3.75%, LOC NBD Bank, Michigan, VRDN (b) $ 4,000 $ 4,000
Illinois Dev. Fin. Auth. Multi-Family Hsg. Rev. Rfdg. (Garden
Glen Apts.) Series 1993, 3.60%
(Continental Casualty Guaranteed) VRDN 1,100 1,100
Illinois Dev. Fin. Auth. Poll. Cont. Rev.:
(Illinois Pwr. Co. Proj.):
Series 1987 B, 3.85%, LOC Bank of
Tokyo-Mitsubishi, Ltd., VRDN (b) 5,000 5,000
Series 1987 C, 3.85%, LOC Bank of
Tokyo-Mitsubishi Ltd., VRDN (b) 2,300 2,300
Series A, 3.55% (MBIA Insured)
(Liquidity Facility First Nat'l. Bank of Chicago) VRDN (b) 16,800
16,800
Series B, 3.50% (MBIA Insured)
(Liquidity Facility First Nat'l. Bank of Chicago) VRDN (b) 3,100
3,100
Series C, 3.50% (MBIA Insured)
(Liquidity Facility First Nat'l. Bank of Chicago) VRDN (b) 7,800
7,800
Illinois Edl. Facs. Auth. Rev. Participating VRDN,
Series 1997 U, 3.50%
(Liquidity Facility CoreStates Bank) (c) 4,535 4,535
Illinois Health Facs. Auth. Participating VRDN,
Series PT-113, 3.51%
(Liquidity Facility Rabobank Nederland, COOP Central) (c) 8,200
8,200
Illinois Health Facs. Auth. Rev. (Methodist Med. Ctr. Proj.)
Series 1985 B, 3.80%, LOC Sumitomo Bank, Ltd., VRDN 4,000 4,000
Illinois Regional Trans. Auth. Participating VRDN, Series
1996, 3.55% (Liquidity Facility Societe Generale) (c) 1,500 1,500
Illinois Student Assistance Commission Student Loan Rev.
Series 1988 A, 3.65% (MBIA Insured) (BPA Bank of America
Nat'l. Trust & Savings) (b) 3,100 3,100
Metropolitan Pier & Exposition Auth. Participating VRDN,
Series A, 3.65% (Liquidity Facility Bank
of New York, NA) (c) 4,300 4,300
Plainfield Ind. Dev. Auth. (Plainfield Molding, Inc.)
Series 1997, 3.50%, LOC LaSalle Nat'l. Bank, Inc., VRDN (b) 1,000
1,000
Village of Crestwood Ind. Dev. Rev. (GMG Warehouse
LLC Proj.) 3.50%, LOC LaSalle Nat'l. Bank, Inc., VRDN (b) 1,650
1,650
Village of Lisle Multi-Family Hsg. Rev. (Devonshire of
Lisle Proj.) Series 1991, 3.55%, LOC LaSalle Nat'l.
Bank, Inc., VRDN (b) 2,200 2,200
West Chicago Ind. Dev. Auth. Rev. (Bison Gear & Engineering
Corp.) 3.50%, LOC Bank of America, Illinois, VRDN (b) 2,600 2,600
Woodridge, Dupage, Will & Cook County Ind. Dev. Rev.
(McDavid Knee Guard Proj.) Series 1996, 3.65%,
LOC Firstar Bank of Milwaukee, NA, VRDN (b) 1,000 1,000
164,759
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
INDIANA - 3.7%
Columbus Rev. (Rock-Tenn Co. Mill Division) Series 1995,
3.60%, LOC SunTrust Bank, Atlanta, VRDN (b) $ 2,300 $ 2,300
Crawford County Ind. Dev. Rev. (Jasper Engine Exchange
Proj.) 3.60%, LOC PNC Bank, Kentucky, VRDN (b) 2,200 2,200
Elkart Commty. Schools TAN 4% 12/31/98 1,500 1,503
Gary Envir. Improv. Rev. Bonds (USX Proj.) Series 1986
3.60% 6/9/98, LOC Bank of New York, NA, CP mode 2,500 2,500
Hebron Adj. Rate Econ. Dev. Rev. (Aarons Misty Glen Apt. Proj.)
Series 1996 A, 3.55%, LOC Federal Home Loan Bank,
Indianapolis, VRDN (b) 3,175 3,175
Indiana Hsg. Fin. Auth. Single-Family Hsg. Mtg. Rev.:
Bonds Series 1997 E2, 3.85%, tender 12/1/98
(Bayerische Landesbank Girozentrale Guaranteed) (b) 4,000 4,000
Participating VRDN, 3.60% (Liquidity Facility
CoreStates Bank) (b)(c) 5,200 5,200
Indiana Trans. Fin. Auth. Arpt. Facs. Lease Participating
VRDN, Series BT-217, 3.50% (Liquidity Facility Bankers
Trust Co.) (c) 7,270 7,270
Indianapolis Econ. Dev. Rev.:
(EPI Printers Inc. Proj.) Series 1995, 3.60%,
LOC Comerica Bank, VRDN (b) 3,575 3,575
(LLC Proj.) Series 1996, 3.55%,
LOC Bank One, Indiana, VRDN (b) 800 800
Indianapolis Gas Util. Sys. Cert. of Indebtedness
(Citizens Gas & Coke Util.) CP:
3.60% 3/12/98, LOC NBD Bank, Detroit 5,700 5,700
3.65% 5/19/98, LOC NBD Bank, Detroit 3,000 3,000
Indianapolis Ind. Dev. Rev. (Sohl Assoc. LLC Proj.) Series
1995, 3.60%, LOC First Nat'l. Bank of Boston, VRDN (b) 2,850 2,850
Lawrence County Ind. Dev. Rev. (D&M Tool Proj.) 3.61%,
LOC Huntington Nat'l. Bank of Columbus, VRDN (b) 1,400 1,400
Lebanon Econ. Dev. Rev. (White Castle Sys., Inc. Proj.)
3.55%, LOC Bank One, VRDN (b) 1,845 1,845
Ligonier Econ. Dev. Rev. (Sharon Manufacturing Co.),
3.65%, LOC Comerica Bank, VRDN (b) 6,300 6,300
Logansport Ind. Dev. Rev. (Nelson Tube Co.) Series 1996,
3.51%, LOC Huntington Nat'l. Bank of Columbus, VRDN (b) 1,200 1,200
Muncie Ind. Dev. Rev. (Diamond Plastics Corp.) Series 1996,
3.60%, LOC NationsBank of Texas, VRDN (b) 1,000 1,000
Petersburg Solid Waste Disp. Rev. Bonds (Indianapolis
Pwr. & Lt. Co. Proj.):
Series 1995 C, 3.45%, VRDN (b) 17,000 17,000
Series 1996, 3.45%, VRDN (b) 7,900 7,900
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
INDIANA - CONTINUED
Rockport Ind. Dev. Rev. (AK Steel Proj.):
Series 1997 A, 3.55%, LOC PNC Bank, Ohio, VRDN (b) $ 3,500 $ 3,500
Series 1998 A, 3.55%, LOC PNC Bank, NA, VRDN (b) 3,000 3,000
St. Joseph County Ind. Econ. Dev. Auth. (Pine Oak Apts. Proj.)
3.50%, LOC Federal Home Loan Bank,
Indianapolis, VRDN (b) 1,265 1,265
88,483
IOWA - 0.6%
Clinton Ind. Dev. Rev. (Sethness Products Co. Proj.) 3.55%,
LOC Northern Trust Co., VRDN (b) 3,300 3,300
Iowa School Cash Anticipation Program TRAN Series A,
4.50% 6/26/98 (FSA Insured) 5,400 5,411
Marshalltown Commty. School Dist. RAN Series 1997,
4.50% 6/24/98 1,000 1,002
Waterloo Ind. Dev. Rev. (O'Neal Metals Inc. Proj.)
3.60%, LOC NationsBank, NA, VRDN (b) 5,000 5,000
14,713
KANSAS - 0.8%
Burlington Poll. Cont. Rev. Bonds, CP mode:
(Kansas City Pwr. & Light Co. Proj.) Series 1985 A,
3.50% 7/10/98, LOC Toronto-Dominion Bank 8,400 8,400
(Kansar Elec & Pwr.) Series 1985 C-1, 3.60% 7/10/98,
(Nat'l. Rural Utilities Coop. Guaranteed) 1,000 1,000
Olathe Ind. Dev. Rev. (Garmin International Inc.) Series 1995,
3.70%, LOC Boatmen's Nat'l. Bank of Kansas, VRDN (b) 3,445 3,445
Wichita Arpt. Facs. Rev. (Cessna Citation Proj.) 3.80%,
LOC Westdeutsche Landesbank Girozentrale, VRDN (b) 1,400 1,400
Wichita Solid Waste Disp. Rev. (Weyerhauser Co. Proj.)
3.60%, VRDN (b) 4,950 4,950
19,195
KENTUCKY - 1.4%
Cynthiana Ind. Dev. Rev. (E.D. Bullard Co. Proj.)
Series 1992, 3.60%, LOC NationsBank, NA, VRDN (b) 1,940 1,940
Franklin County Ind. Rev. (Certified Tool & Manufacturing
Proj.) 3.55%, LOC Bank One, Chicago VRDN (b) 2,045 2,045
Jefferson County Ind. Bldg. Rev. (Commercial Lithographics Co.
Proj.) 3.60%, LOC PNC Bank of Kentucky, VRDN (b) 1,750 1,750
Jefferson County Poll. Cont. Rev. Bonds (Louisville Gas & Elect.
Proj.) Series 1997 A, 3.65% 5/21/98, CP mode (b) 5,000 5,000
Louisville & Jefferson County Reg. Arpt. Auth. Sys. Rev.
Series 1996 A, 3.55%, LOC Nat'l. City Bank,
Kentucky, VRDN (b) 7,300 7,300
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
KENTUCKY - CONTINUED
McCracken County Ind. Bldg. Rev. Series 1996, 3.55%,
LOC Bank One, Kentucky, VRDN (b) $ 3,850 $ 3,850
Scott County Adj. Rate Ind. Building Rev. (Ropak Corp. Proj.)
Series 1994, 3.55%, LOC Bank One, Colorado, VRDN (b) 3,850 3,850
Trimble County Poll. Cont. Rev. Bonds (Louisville Gas & Elect.
Co.) Series 1997 A, 3.85% 3/6/98, CP mode (b) 6,700 6,700
Walton City Ind. Bldg. Rev. (Clarion Mfg. Corp. of America)
3.70%, LOC Fifth Third Bank, Cincinnati, VRDN (b) 1,400 1,400
33,835
LOUISIANA - 1.9%
Calcasieu Parish Pub. Trust Auth. Solid Waste Disp. Rev.
(PPG Industries Inc. Proj.) Series 1994, 3.55%, VRDN (b) 7,300 7,300
Calcasieu Parish Ind. Dev. (Citgo Petroleum Corp.
Project) 3.75%, LOC Banque Nationale de
Paris, VRDN (b) 1,100 1,100
Dequincy Ind. Dev. Rev. (Recycle Inc. South Proj.) Series
1995, 3.60%, LOC Fleet Bank, NA, VRDN (b) 4,075 4,075
Louisiana Pub. Facs. Auth. School Healthcare Sys. Rev. Bonds
(Sisters of Charity Incarnate Word) 3.65% 4/8/98
(BPA Toronto-Dominion Bank) CP mode 3,000 3,000
New Orleans Aviation Board Series 1997 A, 3.65%
(Liquidity Facility Credit Suisse First Boston)
(MBIA Insured) VRDN (b) 7,400 7,400
Plaquemines Parish Envir. Rev. Rfdg. (BP Exploration &
Oil, Inc.) Series 1995, 3.70%, VRDN (b) 2,000 2,000
West Baton Rouge Parish Ind. Dist. #3 Rev.
(Dow Chemical Co. Proj.):
Rdfg. Bonds Series 1991, 3.60% 4/7/98, CP mode 4,600 4,600
VRDN:
Series 1993, 3.75% (b) 12,800 12,800
Series 1994 A, 3.75% (b) 1,300 1,300
Series 1995, 3.75% (b) 1,000 1,000
44,575
MAINE - 0.5%
Maine Edl. Loan Marketing Corp. Student Loan Rev.
Series 1997 A-2, 3.65% (AMBAC Insured)
(BPA Credit Suisse First Boston) VRDN (b) 1,100 1,100
Maine Pub. Util. Fin. Bank Pub. Util. Rev. Rfdg. Series 1996,
3.60%, LOC Bank of New York, VRDN (b) 5,000 5,000
Maine State Hsg. Auth. Mtg. Purchase Participating VRDN,
Series 1997 V, 3.61% (Liquidity Facility Caisse des
Depots et Consignations) (b)(c) 2,310 2,310
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MAINE - CONTINUED
Maine State Hsg. Auth. Multi-Family Dev. Rev. (Park Village
Apts. Proj.) 3.55%, LOC General Electric Capital Corp.,
VRDN (b) $ 2,400 $ 2,400
10,810
MARYLAND - 2.2%
Howard County Econ. Dev. Rev. (Pace, Inc. Proj.) 3.55%,
LOC NationsBank, NA, VRDN (b) 4,700 4,700
Maryland Commty. Dev. Administration Dept. of Hsg. &
Commty. Dev. Participating VRDN, Series PT-36, 3.61%
(BPA Merrill Lynch & Co., Inc.) (b)(c) 16,040 16,040
Maryland Econ. Dev. Auth. Rev. (Grafco Inds. Ltd.) Series 1996,
3.55%, LOC NationsBank, NA, VRDN (b) 2,300 2,300
Maryland Ind. Dev. Fin. Auth. Dev. Rev. (Townsend Culinary
Fac.) Series 1996, 3.55%, LOC SunTrust Bank,
Atlanta, VRDN (b) 2,500 2,500
Montgomery County Hsg. Rev., VRDN:
(Grosvenor House) Series A,
3.45% (Fannie Mae Guaranteed) 6,700 6,700
(Opportunities Commission) 1997 Issue I, 3.65%,
LOC Key Bank, NA (b) 17,400 17,400
Prince George's County Ind. Dev. Rev. (Cintas Corp. #41
Proj.) 3.60%, LOC PNC Bank, Ohio, VRDN (b) 2,155 2,155
51,795
MASSACHUSETTS - 1.1%
Massachusetts Bay Trans. Auth. Series C, 3.50% 4/30/98,
LOC Westdeutsche Landesbank Girozentrale, CP 2,700 2,700
Massachusetts Participating VRDN , Series BTP-258,
3.40% (Liquidity Facility Bankers Trust Co.) (c) 4,800 4,800
Massachusetts Tpk. Auth. Participating VRDN, Series PT-135,
3.51% (Liquidity Facility Banco Santander, SA) (c) 6,100 6,100
Massachusetts Tpk. Authority West Participating VRDN,
Series 1997 N, 3.59% (Liquidity Facility Bank of America
Nat'l. Trust & Savings, San Francisco) (c) 7,200 7,200
Massachusetts Tpk. Metropolitan Hwy. Sys. Participating
VRDN, Series PA-181, 3.51% (Liquidity Facility Merrill
Lynch & Co., Inc.) (c) 1,940 1,940
Massachusetts Wtr. Resource Auth. Participating VRDN,
Series 1995 SG-17, 3.51%
(Liquidity Facility Societe Generale) (c) 2,440 2,440
25,180
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MICHIGAN - 2.0%
Detroit School Dist. BAN 4.50% 5/1/98 $ 13,900 $ 13,914
Michigan Bldg. Auth. Bonds
3.75% 3/2/98, CP 10,000 10,000
Michigan Hosp. Fin. Auth. Participating VRDN, Series 1997 X,
3.50% (Liquidity Facility CoreStates Bank) (c) 4,100 4,100
Michigan Strategic Fund (Alpha Technology Corp.) Series 1997,
3.70%, LOC Bank of Tokyo-Mitsubishi Ltd., VRDN (b) 2,200 2,200
Michigan Strategic Fund Ind. Dev. Rev.
Bonds (Dow Chemical Co. Proj.) CP Mode:
Series 1986, 3.60% 3/12/98 1,300 1,300
Series 1988, 3.55% 4/6/98 (b) 3,300 3,300
Michigan Strategic Fund Ltd. Oblig. Rev. (Michigan
Sugar Co. - Carrolton) 3.60%, LOC Wachovia Bank of
Georgia, NA, VRDN (b) 6,000 6,000
Michigan Strategic Fund Poll. Cont. Rev.
(General Motors) Series 1988 A, 3.65%, VRDN 3,100 3,100
Michigan Strategic Fund Solid Waste. Disp. Sys. Rev. (Great
Lakes Recovery) 3.50%, LOC NBD Bank,
Michigan, VRDN (b) 1,100 1,100
Michigan Trunk Line Participating VRDN, Series SG-87,
3.55% (Liquidity Facility Societe Generale) (c) 715 715
Rochester Hills Econ. Dev. Corp. Ltd. Oblig. Rev.
(Cardell Corp.) 3.60%, LOC Comerica Bank, VRDN (b) 900 900
46,629
MINNESOTA - 0.6%
Baudette Ind. Dev. Rev. (Reid-Rowell Inc. Proj.) Series 1989,
3.60%, LOC Nations Bank, NA, VRDN (b) 2,005 2,005
Becker Poll. Cont. Rev. Bonds
(Northern States Pwr. Co., Sherburne Co., Generator #3)
Series 1993 B, 3.55% 7/13/98, CP mode 2,900 2,900
Chaska Ind. Dev. Rev. Rfdg. (Pies Inc. Proj.)
Series 1994, 3.60%, LOC SunTrust Bank, Atlanta, VRDN (b) 1,425 1,425
Minnesota Hsg. Fin. Agcy. Participating VRDN, Series PT-114,
3.51%, LOC Rabobank Nederland COOP Central (c) 3,600 3,600
Prior Lake Independent School Dist. # 719 Participating
VRDN, Series 1996 D, 3.60% (Liquidity Facility
Norwest Bank, NA) (c) 1,000 1,000
Sauk Rapids Ind. Rev. (Bermo, Inc. & Berdass Properties)
Series 1996 A, 3.65%, LOC Firstar Bank
Milwaukee NA, VRDN (b) 2,915 2,915
Spring Lake Park Independent School Dist. # 16 Participating
VRDN, Series 1996 E, 3.60% (Liquidity Facility
Norwest Bank, NA Minnesota) (c) 1,000 1,000
14,845
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
MISSISSIPPI - 0.6%
Canton Ind. Dev. Auth. Rev. Rfdg. Bonds (McCarty Farms,
Inc. Proj.) Series 1997, 3.60%, LOC SunTrust
Bank, Atlanta, VRDN (b) $ 2,000 $ 2,000
Desoto County Ind. Dev. Rev. (Flavorite Labs Proj.)
Series 1991 B, 3.80%, LOC First Tennessee
Bank, NA, VRDN (b) 2,600 2,600
Mississippi Bus. Fin. Corp. (Calgon Carbon Corp.) 3.60%,
LOC PNC Bank, NA, VRDN (b) 1,000 1,000
Mississippi Bus. Fin. Corp. Ind. Dev. Rev. (Pillowtex Corp. Proj.)
Series 1992, 3.55%, LOC NationsBank, NA, VRDN (b) 3,220 3,220
Mississippi Bus. Fin. Corp. Solid Waste Disp. Rev. (Miss.
Phosphates Corp. Proj.) Series 1997 A, 3.50%, LOC Bank
of America Nat'l. Trust & Savings, VRDN (b) 3,000 3,000
Noxubee County Ind. Dev. Board Rev. (Barge Forest Products
Co. Proj.) 3.75%, LOC Amsouth Bank, VRDN (b) 2,545 2,545
14,365
MISSOURI - 0.1%
Missouri Dev. Fin. Board Ind. Dev. Rev. (La Grange Foundry)
Series 1996, 3.44%, LOC Harris Trust & Savings
Bank of Chicago, VRDN (b) 2,550 2,550
MONTANA - 0.2%
Montana Board of Hsg. Single-Family Participating VRDN (c):
Series PT-87, 3.61% (Liquidity Facility
Banco Santander, SA) (b) 1,600 1,600
Series PT-158, 3.61% (Liquidity Facility Merrill
Lynch & Co., Inc.) (b) 2,040 2,040
3,640
NEBRASKA - 0.0%
Lancaster County Leasing Corp. Participating VRDN,
Series PT-103, 3.61% (Liquidity Facility Bayerische
Hypotheken-und Wechsel Bank) (c) 1,000 1,000
NEVADA - 1.2%
Clark County Poll. Cont. Rev. Bonds (Southern California
Edison) Series 1987 A, 3.55% 3/27/98, CP mode (b) 6,800 6,800
Clark County School Dist. Participating VRDN (c):
Series BTP-192, 3.50% (Liquidity Facility Bankers Trust Co.) 3,100
3,100
Series SG-62, 3.55% (Liquidity Facility Societe
Generale) 3,000 3,000
Clark County Spl. Fac. Arpt. Rev. Bonds (Signature Flight
Support Corp. Proj.) Series 1997 A, 3.90%, tender 6/1/98,
LOC Bayerische Landesbank Girozentrale 2,540 2,540
Nevada Capital Improv. Participating VRDN, Series BTP-236,
3.50% (Liquidity Facility Bankers Trust Co.) (c) 2,200 2,200
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
NEVADA - CONTINUED
Nevada Director State Dept. Comm. Adj. Rate Ind. Rev.
(Primex Corp.) 3.55%, LOC Bank One,
Indianapolis, VRDN (b) $ 2,475 $ 2,475
Nevada Hsg. Div.:
(Oakmont at Flamingo Rd. Proj.) Series 1996 A, 3.55%,
LOC ABN-AMRO Bank, NV, VRDN (b) 4,700 4,700
(Pecos Owens Court Apt. Proj.) Series 1996, 3.55%,
LOC Commerzbank, AG, VRDN (b) 2,000 2,000
Washoe County Gas Fac. Rev. (Sierra Pacific Pwr. Co.)
Series 1990, 3.70%, LOC Union Bank of
Switzerland, VRDN (b) 2,400 2,400
29,215
NEW HAMPSHIRE - 1.5%
New Hampshire Bus. Fin. Auth. Poll. Cont. Rev.:
(United Illumination Co.) Series 1997 A, 3.50%, LOC
Barclays Bank, PLC, VRDN (b) 2,000 2,000
Bonds (New England Pwr. Co Proj.) Series 1990 A, CP mode:
3.85% 3/9/98 (b) 12,800 12,800
3.60% 4/6/98 (b) 4,500 4,500
3.70% 5/19/98 (b) 2,000 2,000
3.65% 5/20/98 (b) 3,200 3,200
3.70% 5/20/98 (b) 5,700 5,700
3.65% 5/21/98 (b) 1,000 1,000
New Hampshire Higher Ed. and Health Facs. Auth. Rev. Bonds
(Dartmouth Ed. Loan Corp.) 3.90%, tender 6/1/98 (b) 1,870 1,870
New Hampshire Hsg. Fin. Auth. Multi-Family Hsg. Rev.:
Rfdg. (Nashua-Oxford Proj.) Series 1990, 3.75%
(Continental Casualty Co. Guaranteed) VRDN 1,100 1,100
(Countryside L. P.) 3.65%, LOC General Electric
Capital Corp., VRDN (b) 1,500 1,500
35,670
NEW JERSEY - 1.2%
New Jersey Hsg. & Mtg. Fin. Agcy. Participating VRDN (c):
Series PT-92, 3.56% (Liquidity Bayerische
Hypotheken-und Wechsel Bank (b) 6,000 6,000
Series PT-118, 3.56%
(Liquidity Facility Banco Santander, SA) (b) 5,700 5,700
New Jersey Gen. Oblig., Series 1998 A, 3.55%
4/8/98 (Liquidity Facility Bank of Nova Scotia) CP 17,600 17,600
29,300
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
NEW MEXICO - 1.2%
Bernalillo County Participating VRDN, Series SGB-22,
3.55% (Liquidity Facility Societe Generale) (c) $ 8,360 $ 8,360
Dona Ana County Ind. Rev. (Karr Tool & Mfg.) Series 1996,
3.65%, LOC Firstar Bank of Milwaukee, NA, VRDN (b) 1,900 1,900
Espanol Ind. Dev. Rev. (Nambee Mills Inc. Proj.) Series A,
3.60%, LOC Nat'l. City Bank, Indiana, VRDN (b) 3,670 3,670
New Mexico Gen. Oblig. TRAN:
Series A, 4.50% 6/30/98 5,700 5,712
Series 1997, 4.50% 6/30/98 2,500 2,505
New Mexico Mtg. Fin. Auth. Single Family Mtg. Prog.
Bonds Series 1997-2, 3.90%, tender 10/15/98 (FGIC/
Capital Market Services Guaranteed) (b) 3,000 3,000
New Mexico Student Loan Rev. Participating VRDN,
Series PT-67, 3.85% (Liquidity Facility Credit Suisse
First Boston) (b)(c) 4,700 4,700
29,847
NEW YORK - 2.5%
Nassau County Gen. Oblig. BAN, Series 1998 A,
4.25% 8/17/98 2,600 2,608
New York City Gen. Oblig. Bonds
Series H-3, 3.55% 4/6/98 (FSA Insured)
(BPA State Street Bank & Trust Co., Boston) CP mode 1,500 1,500
New York City Muni. Wtr. Fin. Auth. Series 1, 3.80%
3/19/98, LOC Canadian Imperial Bank of Commerce, CP 3,500 3,500
New York City RAN Series 1988 A, 4.50% 6/30/98,
LOC Westdeutsche Landesbank Girozentrale, LOC Morgan
Guaranty and Trust Co., Inc. 31,500 31,564
New York State Local Gov't. Assistance Corp. Rev. Participating
VRDN, Series SG-99, 3.51% (Liquidity Facility Societe
Generale) (c) 6,100 6,100
New York State Mtg. Agcy. Rev. Participating VRDN (c):
Series 1997, 3.75% (Liquidity Facility Bank of
New York, NA) (b) 1,000 1,000
Series 1997 J, 3.55%
(Liquidity Facility CoreStates Bank) (b) 6,320 6,320
New York State Rev. Bonds (Envir. Quality)
Series 1986, 3.55% 4/6/98, LOC Bayerische Hypotheken
und Weschel, CP mode 2,400 2,400
New York State Urban Dev. Corp. Participating VRDN,
Series SG-33, 3.55%
(Liquidity Facility Societe Generale) (c) 5,500 5,500
60,492
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
NEW YORK & NEW JERSEY - 0.5%
New York & New Jersey Port Auth. Participating VRDN,
Series 6 (c):
3.56% (Liquidity Facility Societe Generale) (b) $ 10,680 $ 10,680
3.56% (Liquidity Facility Societe Generale) (b) 1,600 1,600
12,280
NORTH CAROLINA - 1.2%
Buncombe County Ind. Facs. & Poll. Cont. Rev., VRDN:
(Gold Star Coating) Series 1997, 3.60%, LOC
Comerica Bank, Detroit (b) 1,800 1,800
(Rich Mountain Proj) Series 1991,
3.90%, LOC Bank of Tokyo-Mitsubishi, Ltd. (b) 1,700 1,700
Charlotte Arpt. Rev. 3.50% (MBIA Insured)
(Liquidity Facility Chase Manhattan Bank) VRDN (b) 3,000 3,000
Cleveland County Ind. Fac. & Poll. Cont. Fin. Auth. Solid
Waste Disp. (PPG Ind. Proj.) 3.55%, VRDN (b) 3,300 3,300
Craven County Ind. Facs. Resource Recovery Rev.
(Craven County Wood Energy LP) Series 1989 C, 3.75%,
LOC Bank of Tokyo-Mitsubishi Ltd., VRDN (b) 500 500
Mecklenberg County Ind. Facs. Poll. Cont. Fin. Auth.
(Stefano Foods Inc.) Series 1996, 3.55%,
LOC NationsBank, NA, VRDN (b) 3,040 3,040
Piedmont Triad Arpt. Auth. Spl. Facs. Rev. (Triad Int'l.
Maintenance Corp. Proj.) Series 1989, 3.65%,
LOC Mellon Bank, NA, VRDN (b) 10,500 10,500
Surry Ind. Facs Poll. Cont. Rev. (Intex Corp.) 3.55%,
LOC NationsBank, NA, VRDN (b) 1,000 1,000
Wake County Ind. Facs. & Poll. Cont. Fin. Agcy. Rev.
(Carolina Ind. LLC) Series 1997, 3.55%,
LOC Harris Trust & Savings Bank of Chicago, VRDN (b) 3,355 3,355
28,195
NORTH DAKOTA - 0.1%
Fargo Ind. Dev. Rev. (Owen Inds., Inc. Proj.) 3.65%
LOC Mellon Bank, NA, VRDN (b) 1,000 1,000
Hebron Ind. Dev. Rev. (Dacco Inc. Proj.) 3.65%,
LOC US Bank, NA, VRDN (b) 1,500 1,500
2,500
OHIO - 0.8%
Cleveland City School Dist. Rev. Participating VRDN,
Series BTP-246, 3.50%
(Liquidity Facility Bankers Trust Co.) (c) 2,800 2,800
Cuyahoga Hosp. Rev. (Cleveland Clinic Foundation)
Series 1997 D, 3.40% (Liquidity Facility Bank of America
Nat'l. Trust & Savings) VRDN 1,000 1,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
OHIO - CONTINUED
Greene County Gen. Oblig. BAN Series C, 4.25% 6/4/98 $ 5,720 $ 5,725
Miamisburgh City School Dist. BAN 4.23% 6/17/98 1,750 1,753
Middletown Ind. Dev. Rev. (Pilot Chemical Proj.) 3.55%,
LOC Bank One, Dayton, VRDN (b) 600 600
Montgomery County Hosp. Rev. Bonds (Miami Valley Hosp.)
Series B, 3.75% 4/8/98, LOC Northern Trust Co.,
Chicago, CP Mode 3,400 3,400
Ohio Hsg. Fin. Agcy. Mtg. Rev. (Willowakes Apt. Proj.)
Series A, 3.55%, LOC Bank One, NA, VRDN (b) 1,000 1,000
Ohio Ind. Dev. Rev. (Masashi Nagai/Snair Co.) Series A,
3.55%, LOC Bank One, Columbus, VRDN (b) 1,130 1,130
Summit County Ind. Dev. Rev. (Ganzhorn Properties Proj.)
3.55%, LOC Bank One, Akron, VRDN 1,030 1,030
18,438
OKLAHOMA - 2.2%
Oklahoma Dev. Fin. Auth. (Shawnee Funding LP Proj.) Series
1996, 3.60%, LOC Bank of Nova Scotia, VRDN (b) 2,000 2,000
Oklahoma Hsg. Fin. Agcy. Participating VRDN (c):
Series 1996 G, 3.61% (Liquidity Facility Caisse des Depots
et Consignations) (b) 1,600 1,600
Series PT-104, 3.61% (Liquidity Facility Bayerische
Hypotheken-und Wechsel Bank) (b) 2,100 2,100
Oklahoma Ind. Fin. Auth. Ind. Fin. Rev. Bonds,
Series L, 3.95%, tender 5/1/98, LOC Credit
Locale de France (b) 7,600 7,600
Oklahoma School Dist. Cfts. of Prtn. RAN
Series 1997 A, 4.50% 6/30/98 3,535 3,537
Oklahoma Student Loan Auth.
Series 1997 A, 3.50% (MBIA Insured)
(BPA Student Loan Marketing Association) VRDN (b) 10,600 10,600
Southeastern Ind. Auth. Solid Waste Disp. Rev.
(Weyerhaeuser Co. Proj.) 3.55%, VRDN (b) 21,000 21,000
Tulsa Int'l. Arpt. Participating VRDN (c):
Series 1997 B1, 3.56% (Liquidity Facility Bank of
America Nat'l. Trust & Savings) (b) 2,545 2,545
Series 1997 B2, 3.51% (Liquidity Facility
Bank of America Nat'l. Trust & Savings) 2,800 2,800
53,782
OREGON - 1.1%
Lane County Swr. Disp. Rev. (Weyerhauser Co. Proj.)
3.60%, VRDN (b) 7,100 7,100
Oregon Econ. Dev. Dept. Solid Waste Disp. Rev.
(Weyerhauser Co. Proj.) Series CL, 3.60%, VRDN (b) 3,000 3,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
OREGON - CONTINUED
Oregon Econ. Dev. Rev. (Cascades Steel Rolling Mills Proj.)
Series 176, 3.50%, LOC Commerzbank, AG, VRDN (b) $ 1,500 $ 1,500
Port of Umatilla Ltd. Oblig. Rev. (Hermiston Foods Proj.)
Series 1989, 3.65%, LOC U.S. Nat'l.
Bank of Oregon, VRDN (b) 1,500 1,500
Portland Econ. Dev. Rev. (Columbia Aluminum Recycling)
3.55%, LOC U.S. Nat'l. Bank of Oregon, VRDN (b) 2,750 2,750
Portland Spl. Oblig. Rev. (Portland Bulk Terminals LLC Proj.)
3.50%, LOC Canadian Imperial Bank of
Commerce, VRDN (b) 9,500 9,500
25,350
PENNSYLVANIA - 3.8%
Berks County Ind. Dev. Auth. Ind. Dev. Rev.
(Continental Assurance Co. Proj.) Series 82, 3.70%
(Continental Casualty Co. Guaranteed) VRDN 1,335 1,335
Butler County Ind. Dev. Rev. (JSM Acquisition Corp. Proj.)
Series 1989 A, 3.60%, LOC PNC Bank, NA, VRDN (b) 900 900
Carbon County Ind. Dev. Auth. Resource Recovery Rev. Bonds
(Panther Creek Partners Proj.) CP mode:
Series 1990 A, 3.55% 3/31/98, LOC Nat'l. Westminster
Bank, PLC (b) 2,500 2,500
Series 1990 B, 3.60% 7/13/98, LOC Nat'l. Westminster
Bank, PLC (b) 1,060 1,060
Crawford County Ind. Dev. Auth. (Clear Lake Lumber, Inc.
Proj.) Series 1997, 3.60%, LOC PNC Bank, NA, VRDN 3,000 3,000
Delaware County Ind. Dev. Auth. Rev. Bonds
(Philadelphia Elec. Co. Proj.) Series 1988 C,
3.40% 3/27/98 (FGIC Insured) CP mode 2,300 2,300
Delaware Valley Reg. Fin. Auth. Participating VRDN,
Series B, 3.51% (Liquidity Facility Merrill
Lynch & Co., Inc.) (c) 3,580 3,580
Erie County Ind. Dev. Auth. Rev. (Carlisle Corp. Proj.)
Series 1993, 3.60%, LOC SunTrust Bank, Atlanta VRDN (b) 1,500 1,500
Northumberland County Ind. Dev. Auth. Rev. (Furman
Farms Inc. Proj.) 3.60%, LOC CoreStates Bank, VRDN (b) 2,085 2,085
Pennsylvania Econ. Dev. Fin. Auth. Rev., VRDN:
(BPS Dev. Proj.) Series 1989 D-3, 3.60%, LOC PNC
Bank, NA (b) 150 150
(C&D Charter Pwr. Sys.) Series 1991 D-6, 3.60%,
LOC PNC Bank, NA (b) 1,000 1,000
(Giffen, Schlaegle & Pirillia) Series 1992 A-3, 3.60%,
LOC PNC Bank, NA (b) 600 600
(Johnstown Corp. Proj.) 3.60%, LOC PNC Bank, NA (b) 330 330
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
PENNSYLVANIA - CONTINUED
Pennsylvania Econ. Dev. Fin. Auth. Rev., VRDN: - continued
(Nat'l. Gypsum Co. Shippingport Proj.) Series 1997B,
3.45%, LOC NationsBank, NA (b) $ 4,600 $ 4,600
Series 1994 B-3, 3.60%, LOC PNC Bank, NA (b) 1,500 1,500
Series 1995 D-4, 3.60%, LOC PNC Bank, NA (b) 1,200 1,200
Series 1995 D-10, 3.60%, LOC PNC Bank, NA (b) 1,200 1,200
Series 1997 B-3, 3.60%, LOC PNC Bank, NA (b) 1,800 1,800
Series 1997 B-4, 3.60%, LOC PNC Bank, NA (b) 1,800 1,800
Pennsylvania Higher Ed. Assistance Agcy. Student
Loan Rev., VRDN:
Series 1988 B, 3.55%,
LOC Student Loan Marketing Association (b) 2,100 2,100
Series 1997 A, 3.45%,
LOC Student Loan Marketing Association (b) 5,000 5,000
Pennsylvania Higher Ed. Facs. Auth. Participating VRDN (c):
Series MGT-4A, 3.50% (Liquidity Facility Morgan
Guaranty Trust Co.) 1,750 1,750
Series MGT-4B, 3.50% (Liquidity Facility Morgan
Guaranty Trust Co.) 5,225 5,225
Pennsylvania Hsg. Fin. Agcy. Single-Family Mtg. Rev.
Participating VRDN, Series PT-119, 3.51% (Liquidity
Facility Credit Suisse First Boston) (c) 3,220 3,220
Pennsylvania Inter Governmental Coop. Auth. Participating
VRDN, Series SG-67, 3.51% (Liquidity Facility Societe
Generale) (c) 1,800 1,800
Philadelphia Arpt. Rev. Trust Receipts Participating VRDN,
Series 1997, 3.65% (Liquidity Facility Bank of
New York, NA) (b)(c) 8,400 8,400
Philadelphia Gen. Oblig. TRAN Series A 1997-98,
4.50% 6/30/98 10,400 10,417
Philadelphia Redevelopment Auth. (Southwork Plaza Proj.)
Series 1997 A, 3.45%, LOC PNC Bank, NA, VRDN (b) 6,300 6,300
Philadelphia School Dist. Participating VRDN, Series 1997 W,
3.50% (Liquidity Facility CoreStates Bank) (c) 3,100 3,100
Venango Ind. Dev. Auth. Resource Recovery Bonds
(Scrubgrass Proj.) CP mode:
Series 1990 A, 3.85% 4/8/98,
LOC Nat'l. Westminster Bank, PLC (b) 2,000 2,000
Series 1990 A, 3.70% 4/9/98,
LOC Nat'l. Westminster Bank, PLC (b) 3,050 3,050
Series 1990 B, 3.85% 4/8/98,
LOC Nat'l. Westminster Bank, PLC (b) 7,050 7,050
91,852
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
SOUTH CAROLINA - 5.2%
Abbeville County Ind. Dev. (Springs Inds., Inc. Proj.) 3.60%,
LOC Wachovia Bank of Georgia, NA, VRDN (b) $ 4,000 $ 4,000
Charleston County Ind. Dev. Rev. (Zeigler Coal Holding Proj.)
3.70%, LOC Bank of America Nat'l. Trust &
Savings, VRDN (b) 2,800 2,800
Dorchester County Ind. Dev. Rev. (SYN Strand Inc.)
Series 1994, 3.60%, LOC Wachovia Bank of
Georgia, NA, VRDN (b) 6,650 6,650
Lancaster County Ind. Dev. Rev. (Synteen Tech., Inc. Proj.)
Series 1997, 3.60%, LOC NationsBank, NA, VRDN (b) 1,500 1,500
Marion County Ind. Dev. Rev. (New South Proj.) Series 1994,
3.60%, LOC NationsBank, NA, VRDN (b) 3,275 3,275
Marlboro County Solid Waste Disposal Fac.
(Willamette Ind. Inc. Proj.) Series 1995, 3.50%,
LOC Deutsche Bank, AG, VRDN (b) 1,700 1,700
Orangeburgh County Solid Waste Disp. Participating VRDN,
Series 1997 B, 3.70% (Liquidity Facility
CoreStates Bank) (b)(c) 3,595 3,595
South Carolina Cap. Impt. Participating VRDN,
Series BTP-27, 3.55% (Liquidity Facility Automatic
Data Processing, Inc.) (c) 1,530 1,530
South Carolina Hsg. Fin. & Dev. Auth. Rev. Bonds Series 1997 B,
3.90%, tender 12/1/98 (b) 7,000 7,000
South Carolina Jobs Econ. Dev. Auth. Rev., VRDN:
(Alexander Machine Inc. Proj.) Series 1994, 3.60%,
LOC NationsBank, NA (b) 2,500 2,500
(Alfmeir Corp.) 3.60%, LOC Bayerische Landesbank
Girozentrale (b) 3,500 3,500
(Chambers Richland Co. Landfill) Series 1997, 3.60%,
LOC SunTrust Bank, Atlanta (b) 2,000 2,000
(Drake Molding Corp. Proj.) Series1995, 3.55%,
LOC First of America Bank, Michigan (b) 5,955 5,955
(Foundry & Steel & Champion Tooling & Machining)
Series 1996, 3.60%, LOC Wachovia Bank of
Georgia, NA (b) 3,500 3,500
(Keys Printing Co.) 3.60%, LOC Wachovia Bank of
Georgia, NA (b) 3,800 3,800
(Mita South Carolina, Inc. Proj.) Series 1997, 3.75%,
LOC Bank of Tokyo-Mitsubishi Ltd. (b) 2,000 2,000
(Mohawk Ind. Inc. Proj.):
Series A, 3.60%,
LOC First Union Nat'l. Bank of Georgia (b) 1,000 1,000
Series B, 3.60%,
LOC First Union Nat'l. Bank of Georgia (b) 2,325 2,325
Series 1997 B, 3.60%,
LOC First Union Nat'l. Bank of Georgia (b) 1,200 1,200
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
SOUTH CAROLINA - CONTINUED
South Carolina Jobs Econ. Dev. Auth. Rev., VRDN: - continued
(Paxar Corp. Proj.) Series 1996, 3.60%, LOC Wachovia
Bank of Georgia, NA (b) $ 6,000 $ 6,000
(Peace Textile America, Inc.) Series 1992, 3.60%,
LOC NationsBank, NA (b) 3,000 3,000
(Titan Wheel Int'l. Proj.) Series1995, 3.60%,
LOC NationsBank, NA (b) 9,500 9,500
(Wellman, Inc. Proj.) 3.60%, LOC Wachovia Bank
of Georgia, NA (b) 7,500 7,500
South Carolina Pub. Serv. Auth. Rev.:
CP:
3.40% 3/11/98 (Liquidity Facility Bank of America
Nat'l. Trust & Savings Assoc. and Bank of Nova Scotia) 10,000
10,000
3.40% 4/8/98 (Liquidity Facility Bank of America
Nat'l. Trust & Savings Assoc. and Bank of Nova Scotia) 8,500 8,500
3.55% 7/24/98 (Liquidity Facility Bank of America
Nat'l. Trust & Savings Assoc. and Bank of Nova Scotia) 8,500 8,500
Participating VRDN, Series 1996, 3.51% (Liquidity Facility
Citibank, NA) (c) 3,900 3,900
Spartanburg County Tax Exempt Adj. Mode Ind. Dev. Rev.
(Prym-Dritz Corp. Proj.) 3.60%, LOC Wachovia
Bank of Georgia, NA, VRDN (b) 2,600 2,600
Union County Ind. Dev. Auth. Rev. (Federal Paper Board Proj.)
3.60%, LOC Wachovia Bank of Georgia, NA, VRDN (b) 4,000 4,000
123,330
SOUTH DAKOTA - 1.3%
South Dakota Hsg. Dev. Auth.:
(Home ownership Mtg.) Bonds:
Series G, 3.95%, tender 8/13/98 (b) 1,400 1,400
Series H, 3.95%, tender 8/13/98 (b) 2,000 2,000
Participating VRDN (c):
Series PA-119, 3.61% (Liquidity Facility Merrill
Lynch & Co., Inc.) (b) 6,640 6,640
Series PT-85, 3.61% (Liquidity Facility Rabobank
Nederland, COOP Central) (b) 6,480 6,480
Series 1997 E, 3.65%, LOC Westdeutsche Landesbank
Girozentrale, VRDN (b) 15,275 15,275
31,795
TENNESSEE - 4.5%
Chattanooga Ind. Dev. Board (Burner Systems, Inc.) 3.55%
LOC NationsBank, NA, VRDN (b) 1,500 1,500
Claiborne County Ind. Dev. Rev. (Royal Sterilization System)
3.80%, LOC First Tennessee Bank, NA, VRDN (b) 1,900 1,900
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TENNESSEE - CONTINUED
Clarksville Pub. Bldg. Auth. Rev. 3.45%,
LOC NationsBank, NA, VRDN $ 5,000 $ 5,000
Cumberland County Ind. Dev. Board Ind. Dev. Rev.
(Delbar Products, Inc. Proj.) 3.60%,
LOC PNC Bank, NA, VRDN (b) 1,000 1,000
Jackson Ind. Dev. Board Rev. (Florida Steel Corp. Proj.)
Series 1995, 3.55%, LOC NationsBank, NA, VRDN (b) 4,000 4,000
McMinn County Ind. Dev. Board (Southern Ionics, Inc. Proj.)
3.60%, LOC South Trust Bank of Alabama, VRDN (b) 2,400 2,400
Memphis-Shelby County Arpt. Auth., VRDN:
Series 1996 B-2, 3.55%, LOC First Union Nat'l. Bank of
North Carolina (b) 14,300 14,300
Series 1996 B-3, 3.55%, LOC First Union Nat'l. Bank of
North Carolina (b) 21,000 21,000
Memphis-Shelby County Poll. Cont. Rev. (Birmingham Steel)
Series 1996, 3.60%, LOC PNC Bank,
Kentucky, VRDN (b) 3,200 3,200
Memphis Ctr. Rev. Fin. Corp. (Arbors of Harbor Town Project)
Series 1990, 3.35% (Northwestern Mutual
Guaranteed) VRDN 3,400 3,400
Metropolitan Govt. of Nashville & Davidson County
Participating VRDN, Series SGA-11, 3.50% (Liquidity Facility
Societe Generale) (c) 3,500 3,500
Morristown Ind. Dev. Board (Lakeway Container Inc. Proj.)
Series 1993, 3.80%, LOC First Tennessee
Bank, NA, VRDN (b) 2,200 2,200
Morristown Ind. Dev. Rev. (Boss Automotive Proj.) Series 1993,
3.60%, LOC Bayerische Vereinsbank, AG, VRDN (b) 1,000 1,000
Oak Ridge Ind. Dev. Board Rev. Solid Waste Fac.
(Environmental L.P.) Series 1996, 3.60%,
LOC SunTrust Bank, Atlanta, VRDN (b) 1,200 1,200
Selmer McNairy County Ind. Dev. Rev. (United Stainless Proj.)
3.50%, LOC Bank of America, Illinois, VRDN (b) 1,400 1,400
Shelby County Participating VRDN, Series SGB-21,
3.55% (Liquidity Facility Societe Generale, France) (c) 5,930 5,930
South Pittsburgh Ind. Dev. Board Rev. (Lodge Manufacturing
Proj.) 3.60%, LOC SunTrust Bank, Nashville, NA, VRDN (b) 2,000 2,000
Tennessee Hsg. Dev. Agcy. Participating VRDN (c):
Series PT-25, 3.61%
(Liquidity Facility Credit Suisse First Boston) (b) 11,000 11,000
Series PT-59 A, 3.61%
(Liquidity Facility Credit Suisse First Boston) (b) 8,720 8,720
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TENNESSEE - CONTINUED
Tennessee Hsg. Dev. Agcy. Participating VRDN (c): - continued
Series PT-59 B, 3.61%
(Liquidity Facility Credit Suisse First Boston) (b) $ 3,950 $ 3,950
Trenton Ind. Dev. Rev. (Dyersburg Fabrics Inc.) Series 1990,
3.60%, LOC SunTrust Bank, Atlanta, VRDN (b) 2,045 2,045
Volunteer State Student Funding Corp. Student Loan Rev.,
VRDN:
Series 1988 A-1, 3.50%,
LOC State Street Bank & Trust Co., Boston (b) 3,000 3,000
Series 1988 A-2, 3.50%,
LOC State Street Bank & Trust Co., Boston (b) 1,700 1,700
Williamson County First Mtg. Rev. (Telco, Inc.) Series 1996,
3.60%, LOC NationsBank of Tennessee, VRDN (b) 1,500 1,500
106,845
TEXAS - 13.6%
Austin Independent School Dist. Variable Rate TRAN
4.248% 8/31/98 (d) 6,000 6,000
Bell County Ind. Dev. Corp. Ind. Dev. Rev. (Metal Sales
Manufacturing Corp.) 3.55%, LOC Star Bank, VRDN (b) 2,240 2,240
Brazos River Auth. Poll. Cont. Rev.:
(Texas Util. Elec. Co.) Series 1995 A, 3.70%, LOC Morgan
Guaranty Trust, NY, VRDN (b) 1,100 1,100
Rfdg. Bonds (Texas Utils. Elec. Co.) Series 1994 A, CP mode:
3.55% 3/31/98, LOC Canadian Imperial Bank of
Commerce (b) 1,000 1,000
3.85% 4/8/98, LOC Canadian Imperial Bank of
Commerce (b) 3,000 3,000
Brazos River Harbor Navigation Ind. Dev. Corp. Bonds
(Dow Chemical Corp.) CP mode:
Series 1986, 3.80% 3/9/98 2,140 2,140
Series 1988:
3.80% 3/23/98 (b) 2,000 2,000
3.55% 3/27/98 (b) 9,480 9,480
3.55% 4/6/98 (b) 3,150 3,150
Series 1991, 3.55% 5/22/98 21,000 21,000
Series 1992:
3.55% 3/7/98 (b) 4,000 4,000
3.70% 3/9/98 (b) 6,750 6,750
3.55% 3/31/98 (b) 5,300 5,300
Brownsville Ind. Dev. Corp. Rev. (Rich-Seapak Corp. Proj.)
Series 1997, 3.60%, LOC SunTrust Bank,
Atlanta, VRDN (b) 1,000 1,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TEXAS - CONTINUED
Cleburne Ind. Dev. Rev. (Southwestern Analytical
Chemical Proj.) 3.60%, LOC Nat'l. City Bank,
Cleveland, VRDN (b) $ 1,875 $ 1,875
Coastal Wtr. Auth of Texas Wtr. Conveyance Sys.
Participating VRDN, 3.56% (Liquidity Facility Caisse des
Depots et Consignations) (c) 5,980 5,980
Denton Util. Sys. Participating VRDN, Series SG-32,
3.50% (Liquidity Facility Societe Generale) (c) 7,000 7,000
El Paso Ind. Dev. Auth. (Camden Wire Co. Inc.) Series 1996,
3.85%, LOC NationsBank, NA, VRDN (b) 1,200 1,200
Fort Worth Wtr. & Swr. Sys. Series A, 3.90% 3/12/98, CP 2,000 2,000
Georgetown Ind. Dev. Auth. Rev. (Chatsworth Products, Inc.)
Series 1996, 3.55%, LOC Bank One, Texas, VRDN (b) 2,700 2,700
Goose Creek Consolidated Independent School Dist.
Variable Rate TRAN 4.248% 8/28/98 (d) 3,267 3,267
Grand Prairie Ind. Dev. Auth. Rev. (Precision/API
Ketema Proj.) Series 1996, 3.75%, LOC Marine Midland
Bank, NA, VRDN (b) 1,000 1,000
Greater East Texas Higher Ed. Auth. Student Loan Rev. Bonds:
Rfdg:
Series 1992 A, 3.90%, tender 9/1/98, LOC Student Loan
Marketing Association 4,300 4,300
Series 1992 B, 3.95%, tender 9/1/98, LOC Student Loan
Marketing Association (b) 2,200 2,200
Series 1996 A, 3.70%, tender 3/1/98, LOC Student Loan
Marketing Association (b) 7,200 7,200
Series 1993 B:
3.70%, tender 2/1/99, LOC Student Loan
Marketing Association (b) 24,000 24,000
4.05%, tender 6/1/98, LOC Student Loan
Marketing Association (b) 7,000 7,000
Gulf Coast Ind. Dev. Auth. (Valero Manufacturing Co.)
Series 1997 3.55%, LOC Bank of Montreal, VRDN (b) 9,000 9,000
Gulf Coast Waste Disp. Auth. Envir. Facs. Rev.
Series 1998, 3.70%, VRDN 2,500 2,500
Gulf Coast Waste Disp. Auth. Poll. Cont. Rev. (AMOCO
Oil Co.) Series 1993, 3.70%, VRDN (b) 1,500 1,500
Harlingen Ind. Dev. Auth (Gibbs-Texas Die Casting) 3.60%,
LOC Harris Trust & Savings Bank of Chicago, VRDN (b) 3,500 3,500
Harris County Health Facs Rev.
(Sisters of Charity Incarnate Word):
Bonds Series 1997A, 3.60% 6/8/98
(BPA Toronto-Dominion Bank) CP mode 5,400 5,400
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TEXAS - CONTINUED
Harris County Health Facs Rev.
(Sisters of Charity Incarnate Word): - continued
Series 1997 C, 3.50%
(BPA Credit Suisse First Boston) VRDN $ 2,000 $ 2,000
Harris County Hsg. Fin. Corp. (The Mills Apts. Proj.) 3.50%
(Fannie Mae Guaranteed) VRDN (b) 9,575 9,575
Houston Participating VRDN, Series SG-28, 3.50% (Liquidity
Facility Societe Generale) (c) 4,630 4,630
Houston Gen. Oblig. TRAN:
Series 1997 A, 4.118% 4/15/98 (d) 1,350 1,350
Series 1997 A-1, 4.126% 4/15/98 (d) 3,510 3,510
Houston Wtr. & Swr. Sys.:
Bonds Series A, 3.25% 4/6/98 (Liquidity Facility Credit Suisse
First Bank and Westdeutsche Landesbank Girozentrale) CP 3,800 3,800
Participating VRDN (c):
Series 1998, 3.65% (Liquidity Facility Bank
of New York, NA) 9,530 9,530
Series SG-24, 3.55% (Liquidity Facility Societe
Generale) 1,140 1,140
Matagorda County Navigation Dist #1 Participating VRDN (c):
Series 1989 C, 3.56% (Liquidity Facility Caisse des
Depots et Consignations) 80 80
Series 1989 D, 3.61% (Liquidity Facility
Caisse des Depots et Consignations) (b) 3,440 3,440
Mineral Wells Ind. Dev. Corp. (Electronic Interconnects)
Series 1997, 3.50%, LOC NBD Bank, NA
Detroit, VRDN (b) 2,900 2,900
North Texas Higher Ed. Student Loan Rev.,
Series 1991 C, 3.55% (AMBAC Insured) (BPA Student Loan
Marketing Association) VRDN (b) 6,500 6,500
North Texas Tollway Auth. Participating VRDN, Series 1997 A,
3.51% (Liquidity Facility Merrill Lynch & Co., Inc.) (c) 14,710
14,710
Panhandle Plains Higher Ed. Auth. Student Loan Rev.,
Series 1993 A, 3.50%, LOC Student Loan
Marketing Association, VRDN (b) 1,000 1,000
Plano Health Facs. Dev. Corp. Hosp. Rev. Bonds
(Childrens & Presbyterian Health Care Centers)
3.65% 6/9/98 (MBIA Insured)
(BPA Texas Commerce Bank, Houston) CP mode 2,000 2,000
Port Arthur Navigational Dist. Poll. Cont. Rev. (Star
Enterprise Proj.) Series 1994, 3.55%, LOC Bank
of Montreal, VRDN (b) 3,500 3,500
Port Corpus Christi Ind. Dev. Corp., VRDN:
(Coastal Refining & Marketing Co.) Series 1997, 3.55%,
LOC Banque Nat'l. de Paris (b) 7,000 7,000
(Valero Refining & Marketing Co.) 3.70%, LOC Bank
of Montreal (b) 1,000 1,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
TEXAS - CONTINUED
Port Corpus Christi Waste Rev. (Coastal Refining & Marketing)
3.75%, LOC Banque Nat'l. de Paris, VRDN (b) $ 2,700 $ 2,700
Port Neches-Groves Independent School Dist. Variable Rate
TRAN 4.248% 8/31/98 (d) 4,000 4,000
San Antonio Elec. & Gas Sys. Rev.:
Bonds, Series A, CP:
3.60% 4/6/98 3,200 3,200
3.40% 4/17/98 1,500 1,500
Participating VRDN, Series 1997 (c):
3.55% (Liquidity Facility Societe Generale) 8,000 8,000
3.55% (Liquidity Facility Societe Generale) 8,420 8,420
San Antonio Wtr. Rev. Participating VRDN, Series 1996,
3.56% (Liquidity Facility Citibank, NA) (c) 4,000 4,000
San Marcos Ind. Dev. Corp. Ind. Dev. Rev. (Butler
Manufacturing Co.) Series 1995, 3.39%, LOC
NationsBank of Texas, VRDN (b) 3,250 3,250
South Texas Higher Ed. Auth. Student Loan Rev. Series 1997,
3.65% (MBIA Insured) (BPA Student Loan
Marketing Association) VRDN (b) 5,200 5,200
Sunbelt Ind. Dev. Corp. Rev. (Fort Dearborn Lithograph)
3.75%, LOC NBD Bank, Michigan, VRDN (b) 3,600 3,600
Terrel Ind. Dev. Auth. (Consolidated Systems)
3.60%, LOC Wachovia Bank of Georgia, NA, VRDN (b) 1,800 1,800
Texas A&M Univ. Sys. Participating VRDN, Series SG-21,
3.50% (Liquidity Facility Societe Generale) (c) 1,600 1,600
Texas Association of School Boards TRAN Series 1997,
4.30% 8/31/98 6,058 6,059
Texas Gen. Oblig. TAN 4.75% 8/31/98 4,700 4,720
Texas Muni. Pwr. Agcy. Rev. Bonds 3.50% 4/14/98
(Liquidity Facility Bank Of America Nat'l. Trust & Savings
Assoc. and Canadian Imperial Bank of Commerce, CP 11,100 11,100
Texas Pub. Fin. Auth. Participating VRDN, Series 1996-CB2,
3.55% (Liquidity Facility Chase Manhattan Bank) (c) 3,000 3,000
Univ. of Texas Rev. Bonds (Univ. Fund) Series A,
3.80% 4/9/98, CP mode 7,300 7,300
Univ. of Texas Rev. Fin. Sys. Bonds 3.80% 4/9/98, CP 4,300 4,300
Waxahachie Ind. Dev. Auth. (Rock-Tenn Converting Co. Proj.)
Series 1986, 3.35%, LOC SunTrust Bank, Atlanta, VRDN (b) 3,850 3,850
White Settlement Ind. Dev. Corp. (Spl. Proj.
Manufacturing Co.) 3.55%, LOC Texas Commerce
Bank, Houston, VRDN (b) 1,200 1,200
326,246
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
UTAH - 2.1%
Intermountain Pwr. Agcy. Rev. Bonds:
CP:
Series 1997 B, 3.60% 3/12/98
(Liquidity Facility Bank of America Nat'l. Trust &
Savings Assoc. and Bank of Nova Scotia) $ 20,500 $ 20,500
Series 1997 B, 3.60% 4/7/98
(Liquidity Facility Bank of America Nat'l. Trust & Savings
Assoc. and Bank of Nova Scotia) 4,000 4,000
Series E, 3.65% 3/5/98
(Liquidity Facility Bank of America Nat'l. Trust & Savings
Assoc. and Bank of Nova Scotia) 5,300 5,300
Rfdg, CP Mode:
Series 1985 E-2, 3.35% 3/12/98,
LOC Swiss Bank Corp. 4,400 4,400
Series 1997 B, 3.50% 4/6/98,
LOC Bank of America Nat'l. Trust & Savings Assoc. 5,300 5,300
Salt Lake City Arpt. Rev., Series 1996 A, 3.45%,
LOC Union Bank of Switzerland, VRDN (b) 3,100 3,100
Timpanogos Spl. Svc. Dist. Participating VRDN, Series SG-83,
3.55% (Liquidity Facility Societe Generale) (c) 1,350 1,350
Utah Hsg. Fin. Agcy. Participating VRDN, Series PT-84B,
3.61% (Liquidity Facility Rabobank Nederland,
COOP Central) (b)(c) 1,890 1,890
Utah Hsg. Fin. Agcy. Single-Family Mtg. Bonds,
Participating VRDN, Series PT-84A, 3.61% (Liquidity
Facility Rabobank Nederland, COOP Central) (b)(c) 3,085 3,085
48,925
VERMONT - 0.3%
Vermont Econ. Dev. Auth. (Huber and Suhner Proj.) 3.70%,
LOC Key Bank, NA, VRDN 1,580 1,580
Vermont Hsg. Fin. Agcy. Participating VRDN,
Series 2, 3.61% (Liquidity Facility Bayerische
Hypotheken-und Wechsel Bank) (b)(c) 6,535 6,535
8,115
VIRGINIA - 3.5%
Amelia County Facs. Rev. (Chambers Waste Sys. Proj.),
3.50%, LOC Morgan Guaranty Trust, NY, VRDN (b) 4,400 4,400
Botetourt County Ind. Dev. Auth. (VA Forge Co. Proj.)
Series 1996, 3.55%, LOC Harris Trust & Savings
Bank of Chicago, VRDN (b) 1,800 1,800
Chesapeake Ind. Dev. Auth. Poll. Cont. Rev. Bonds (Virginia
Elec. Pwr. Co.) Series 1985, 3.90% 3/9/98, CP mode 1,100 1,100
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
VIRGINIA - CONTINUED
Chesterfield County Ind. Dev. Auth. Poll. Cont. Rev. Bonds
(Virginia Elec. Pwr. Co. Proj.) CP mode:
Series 1987 C, 3.65% 7/17/98 $ 1,000 $ 1,000
Series B:
3.60% 3/12/98 1,830 1,830
3.55% 3/31/98 1,300 1,300
3.85% 4/9/98 2,600 2,600
Frederick County Ind. Dev. Auth. Rev. (Nat'l. Wildlife
Federation Proj.) Series 1996, 3.55%,
LOC NationsBank, NA, VRDN (b) 5,150 5,150
Greensville County Ind. Dev. Auth. (Beach Mold & Tool
Virginia, Inc.) VRDN:
Series 1996 A, 3.60%, LOC Fifth Third Bank (b) 2,420 2,420
Series 1996 B, 3.60%, LOC Fifth Third Bank (b) 2,650 2,650
3.60%, LOC Fifth Third Bank (b) 1,200 1,200
Halifax County Ind. Dev. Auth. Poll. Cont. Rev. Bonds
(Virginia Elec. Co. Proj.) Series 1992, CP mode:
3.95% 3/9/98 (b) 20,000 20,000
3.65% 6/12/98 (b) 13,100 13,100
Louisa Ind. Dev. Auth. Poll. Cont. Rev. Bonds (Virginia Elec.
Pwr. Co. Proj.) Series 1985, CP mode:
3.55% 3/31/98 (BPA Bank of New York, NA) 1,000 1,000
3.80% 3/31/98 (BPA Bank of New York, NA) 2,300 2,300
Mecklenburg County Ind. Dev. Auth. Rev. (American Bldgs.
Co. Proj.) 3.60%, LOC LaSalle Nat'l. Bank, Inc., VRDN (b) 5,740
5,740
Peninsula Port Auth. of Virginia (Zeigler Coal Proj.)
Series 1997, 3.70%, LOC Bank of America Nat'l.
Trust & Savings, VRDN (b) 4,700 4,700
Prince William County Ind. Dev. Auth. Poll. Cont. Rev.
(Virginia Elec. Pwr. Co. Proj.) 3.50% 7/17/98, CP mode 1,100 1,100
Smyth County Ind. Dev. Auth. Ind. Dev. Rev. (Summit
Dimension Properties Proj.) Series 1995, VRDN:
3.60%, LOC Wachovia Bank of Georgia, NA (b) 2,900 2,900
3.60%, LOC Wachovia Bank of Georgia, NA (b) 2,000 2,000
Virginia Beach Dev. Auth. Rfdg. Rev.
(Ocean Ranch Motel Corp. Proj.)
Series 1993, 3.55%, LOC NationsBank, NA, VRDN 2,000 2,000
Virginia Instrumentality Notes Series 1997,
3.60% 4/8/98, CP 3,000 3,000
83,290
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
WASHINGTON - 3.6%
Chelan County Pub. Utils. Dist. #1 Participating VRDN,
3.61% (Liquidity Facility Merrill Lynch & Co., Inc.) (b)(c) $ 3,200 $
3,200
Grays Harbor Ind. Dev. Corp. Solid Waste Disp. Rev.
(Weyerhaeuser Co. Proj.) 3.60%, VRDN (b) 9,650 9,650
King County Ltd. Tax Participating VRDN,
Series SG-19, 3.50% (Liquidity Facility Societe
Generale) (c) 5,060 5,060
Pierce County Econ. Dev. Corp. Rev. (Pacific LLC Proj.)
3.60%, LOC Wells Fargo Bank, NA, VRDN (b) 3,000 3,000
Pilchuck Dev. Pub. Corp. (Romac Ind.) 3.80%,
LOC Union Bank of California, VRDN (b) 2,750 2,750
Port Longview Ind. Dev. Corp. Solid Waste Disp. Rev.
(Weyerhauser Co. Proj.) Series 1993, 3.55%, VRDN 22,400 22,400
Port of Grays Harbor Solid Waste Fac. Rev. (Pacific Veneer,
Weyerhauser Co.) Series 1993, 3.60%, VRDN (b) 2,365 2,365
Seattle Ltd. Tax Participating VRDN,
Series SG-12, 3.55% (Liquidity Facility Societe
Generale) (c) 2,600 2,600
Washington Econ. Dev. Auth. Fin. Auth.
(Hunter Douglas Proj.) Series 1997 A,
3.60%, LOC ABN-AMRO Bank, VRDN (b) 1,300 1,300
Washington Participating VRDN (c):
Series 195, 3.50% (Liquidity Facility Bankers Trust Co.) 1,400
1,400
Series SG-9, 3.55% (Liquidity Facility Societe Generale) 5,000
5,000
Series SG-11, 3.55% (Liquidity Facility Societe Generale) 3,595
3,595
Series SG-35, 3.50% (Liquidity Facility Societe Generale) 8,990
8,990
Washington Hsg. Fin. Commission Single Family Rev. Bonds
Series 1997 5A-5, 3.90%, tender 12/15/98,
LOC Bayerische Landesbank Girozentrale (b) 2,700 2,700
Washington Hsg. Fin. Commission Single Family Mtg.
Participating VRDN, Series PT-86, 3.61% (Liquidity Facility
Merrill Lynch & Co., Inc.) (c) 2,650 2,650
Washington Hsg. Fin. Commission Participating VRDN (c):
Series 1996, 3.79% (Liquidity Facility Citibank, NA) (b) 2,700
2,700
Series 1997 D, 3.60% (Liquidity Facility CoreStates
Bank) (b) 4,505 4,505
Washington Pub. Pwr. Supply Sys. Participating VRDN,
Series BT-61, 3.65% (Liquidity Facility Automatic Data
Processing, Inc.) (c) 1,500 1,500
Washington Student Loan Fin. Association Rev., Series 1988 A,
3.40%, LOC Nat'l. Westminster Bank, VRDN (b) 1,300 1,300
86,665
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
WEST VIRGINIA - 1.3%
Grant County Poll. Cont. Rev. Bonds (Vepco Proj.)
Series 1986, 3.95% 3/9/98, CP mode (b) $ 7,400 $ 7,400
Grant County Solid Waste Disp. Rev. Bonds
(Virginia Elec. Pwr. Co. Proj.) Series 1996,
3.60% 4/9/98, CP mode (b) 1,800 1,800
Marion County Solid Waste Disp. Rev. (Grant Town
Cogeneration Proj.) Series 1990 A, 3.55%,
LOC Nat'l. Westminster Bank, PLC, VRDN (b) 8,400 8,400
West Virginia Pub. Energy Auth. Rev. Bonds
(Morgantown Energy Association), CP mode:
3.90% 3/9/98, LOC Swiss Bank Corp. (b) 5,000 5,000
3.55% 3/31/98, LOC Swiss Bank Corp. (b) 1,000 1,000
3.60% 5/15/98, LOC Swiss Bank Corp. (b) 6,650 6,650
30,250
WISCONSIN - 3.3%
Appleton Ind. Dev. Rev. (Pensar Corp. Proj.) Series 1993,
3.55%, LOC Bank One, Wisconsin, VRDN (b) 720 720
Ashwaubenon Ind. Dev. Rev. (Tufco Proj.) Series 1992,
3.55%, LOC Bank One, Wisconsin, VRDN (b) 1,750 1,750
Butler Ind. Dev. Rev. (Western States Envelope Co.) Series 1996,
3.65%, LOC Firstar Bank of Milwaukee, VRDN (b) 3,150 3,150
Eau Claire Solid Waste. Disp. Rev. (Pope & Talbot Proj.)
Series 1994, 3.60%, LOC Wachovia Bank of
Georgia, NA, VRDN (b) 4,000 4,000
Eau Claire Area School Dist. TRAN 4.10% 9/28/98 4,900 4,905
Elkhorn Area School Dist. BAN 4.25% 4/1/98 515 515
Hartford Comm. Dev. Auth. Ind. Dev. Rev.
(TNT/Larpen Supply Proj.) 3.55%,
LOC Bank One, Wisconsin, VRDN (b) 2,400 2,400
Jefferson Ind. Dev. Rev. (Generac Corp. Proj.)
Series 1994, 3.75%, LOC NBD Bank, NA, VRDN (b) 7,000 7,000
Merrill Ind. Dev. Rev. (C&H Packaging Co. Inc.) Series 1996,
3.65%, LOC Firstar Bank of Milwaukee, VRDN (b) 945 945
Milwaukee School Dist. RAN 4.25% 8/27/98 9,300 9,317
Oak Creek Ind. Dev. Rev. (Outlook Packaging, Inc.) 3.60%,
LOC Firstar Bank of Milwaukee, VRDN (b) 2,000 2,000
Platteville Ind. Dev. Auth. Rev. (Woodward Communications)
3.55%, LOC Harris Trust & Savings Bank of
Chicago, VRDN (b) 1,550 1,550
Raymond Ind. Dev. Rev. (Richard S. Werner, Inc. Proj.)
Series 1996, 3.55%, LOC Bank One, Wisconsin, VRDN (b) 2,440 2,440
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT (000S) (000S)
WISCONSIN - CONTINUED
Rhinelander Ind. Dev. Rev., VRDN:
(American Plastics Co. Inc. Proj.) Series 1996, 3.65%,
LOC Firstar Bank of Milwaukee (b) $ 3,500 $ 3,500
(Red Arrow Prod. Co., Inc.) Series 1994, 3.55%,
LOC Bank One, Wisconsin (b) 5,600 5,600
Sturgeon Ind. Dev. Rev. (Marine Travelift Proj.) Series 1996,
3.65%, LOC Firstar Bank of Milwaukee, VRDN (b) 1,100 1,100
Sturtevant Ind. Dev. Rev. (Quadra, Inc. Proj.) 3.55%,
LOC Bank One, Wisconsin, VRDN (b) 1,300 1,300
Village of Pleasant Prairie (Muskie Enterprises Inc. Proj.)
Series 1995, 3.55%, LOC Harris Trust & Savings Bank of
Chicago, VRDN (b) 3,600 3,600
Village of Prentice Ind. Dev. Rev. (Blount Proj.)
Series 1994, 3.60%, LOC NationsBank, NA, VRDN (b) 1,200 1,200
Wisconsin Participating VRDN (c):
Series 1992, 3.50% (Liquidity Facility Bankers Trust Co.) 3,175
3,175
Series 1994, 3.66% (Liquidity Facility Citibank, NA) (b) 9,000
9,000
Wisconsin Health & Ed. Facs. Auth. Health Facs Rev., VRDN:
(Felician Svc., Inc.) 3.50% (AMBAC Insured)
(BPA First Nat'l. Bank of Chicago) 7,800 7,800
(SSM Healthcare Proj.) Series 1990A, 3.40%,
LOC Credit Suisse First Boston 2,800 2,800
79,767
WYOMING - 0.2%
Wyoming Commty. Dev. Auth. Hsg. Rev. Participating VRDN
Series 1997, 3.51% (Liquidity Facility Bayerische
Hypotheken-und Wechsel Bank) (c) 2,420 2,420
Wyoming Gen. Oblig. TRAN Series 1997, 4.25% 6/26/98 2,100 2,103
4,523
MULTIPLE STATES - 1.7%
Clipper Participating VRDN, Series 1995-1, 3.61% (Liquidity
Facility State Street Bank & Trust Co., Boston) (b)(c) 31,345 31,345
Southeast Hsg. Fin. Corp. Participating VRDN, Series 1991 C,
3.66% (Liquidity Facility Bank One) (b)(c) 4,880 4,880
Stephens Equity Trust #3 Participating VRDN, Series 1996,
3.66%, LOC Bayerische Hypotheken-und Wechsel Bank (c) 5,299 5,299
41,524
TOTAL INVESTMENTS - 100% $ 2,390,827
Total Cost for Income Tax Purposes $ 2,390,827
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. The due dates on these types of
securities reflects the next interest rate reset date or, when
applicable, the final maturity date.
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 bonds.
Security collateralized by an amount sufficient to pay interest and
principal.
4.Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
Additional information on each holding is as follows:
ACQUISITION COST
SECURITY DATE (000S)
Austin Independent School
Dist. Varable Rate TRAN
4.248% 8/31/98: 11/10/97 $ 1,680
11/19/97 $ 3,120
12/2/97 $ 1,200
Goose Creek Consolidated
Independent School Dist.
Variable Rate TRAN
4.248% 8/28/98: 11/12/97 $ 1,350
12/10/97 $ 1,917
Houston Gen. Oblig. TRAN:
Series 1997 A,
4.118% 4/15/98 10/29/97 $ 1,350
Series 1997 A-1,
4.126% 4/15/98 11/5/97 $ 3,510
Port Neches-Groves
Independent School Dist.
Varible Rate TRAN,
4.248% 8/31/98 11/12/97 $ 4,000
INCOME TAX INFORMATION
At August 31, 1997, the fund had a capital loss carryforward of
approximately $213,000 of which $1,000, $1,000, $46,000, $26,000,
$125,000 and $14,000 will expire on August 31, 1999, 2001, 2002, 2003,
2004 and 2005, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
(EXCEPT PER-SHARE AMOUNT) FEBRUARY 28, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE - SEE $ 2,390,827
ACCOMPANYING SCHEDULE
CASH 903
RECEIVABLE FOR INVESTMENTS SOLD 15
INTEREST RECEIVABLE 16,393
TOTAL ASSETS 2,408,138
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 20,997
DISTRIBUTIONS PAYABLE 196
ACCRUED MANAGEMENT FEE 722
OTHER PAYABLES AND ACCRUED EXPENSES 25
TOTAL LIABILITIES 21,940
NET ASSETS $ 2,386,198
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 2,386,503
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (305)
NET ASSETS, FOR 2,386,501 SHARES OUTSTANDING $ 2,386,198
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $1.00
SHARE ($2,386,198 (DIVIDED BY) 2,386,501 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
INTEREST INCOME $ 43,166
EXPENSES
MANAGEMENT FEE $ 5,701
NON-INTERESTED TRUSTEES' COMPENSATION 5
TOTAL EXPENSES BEFORE REDUCTIONS 5,706
EXPENSE REDUCTIONS (1,203) 4,503
NET INTEREST INCOME 38,663
NET REALIZED GAIN (LOSS) ON INVESTMENTS 18
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 38,681
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31,
(UNAUDITED) 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 38,663 $ 80,260
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 18 (125)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 38,681 80,135
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (38,663) (80,260)
SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 1,768,968 3,317,997
PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 37,585 77,871
COST OF SHARES REDEEMED (1,749,490) (3,446,433)
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES 57,063 (50,565)
RESULTING FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 57,081 (50,690)
NET ASSETS
BEGINNING OF PERIOD 2,329,117 2,379,807
END OF PERIOD $ 2,386,198 $ 2,329,117
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED AUGUST 31,
FEBRUARY 28, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<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 .017 .033 .034 .035 .025 .026
INVESTMENT
OPERATIONS
NET INTEREST
INCOME
LESS DISTRIBUTIONS
FROM NET INTEREST (.017) (.033) (.034) (.035) (.025) (.026)
INCOME
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
END OF PERIOD
TOTAL RETURN B, C 1.69% 3.38% 3.41% 3.59% 2.50% 2.66%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, $ 2,386 $ 2,329 $ 2,380 $ 2,206 $ 2,288 $ 1,696
END OF PERIOD
(IN MILLIONS)
RATIO OF EXPENSES .40% A, D .40% D .40% D .40% D .33% D .27% D
TO AVERAGE NET
ASSETS
RATIO OF EXPENSES .39% A, E .40% .39% E .40% .33% .27%
TO AVERAGE NET
ASSETS AFTER
EXPENSE
REDUCTIONS
RATIO OF NET 3.39% A 3.33% 3.36% 3.53% 2.48% 2.61%
INTEREST INCOME
TO AVERAGE NET
ASSETS
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 4 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D 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).
E 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, 1998 (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 Deleware 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
among 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 Fidelity
Investments Money Management, Inc., (formerly FMR Texas, Inc.) an
affiliate of Fidelity Management & Research Company (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
by investing in high-quality, short-term municipal securities of
various states and municipalities. Income distributions from the Cash
Fund are declared daily and paid monthly from net interest income.
Income distributions earned 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 $18,127,000 or 0.8% of net assets.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, 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 $11,000 for the period.
SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity
Investments Money Management, Inc. (formerly 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 $1,141,000.
In addition, FMR has entered into arrangements on behalf of the fund
with the fund's custodian and transfer agent whereby credits realized
as a result of uninvested cash balances were used to reduce a portion
of the fund's expenses. During the period, the fund's expenses were
reduced by $62,000 under these arrangements.
MANAGING YOUR INVESTMENTS
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investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
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* 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,
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(registered trademark)
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Boston, MA
SUB-ADVISER
Fidelity Investments
Money Management, Inc.
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Fred L. Henning, Jr., Vice President
Boyce I. Greer, Vice President
Diane M. McLaughlin, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, 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
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
GENERAL DISTRIBUTOR
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Boston, MA
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FIDELITY
(REGISTERED TRADEMARK)
DAILY INCOME
TRUST
SEMIANNUAL REPORT
FEBRUARY 28, 1998
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.
FINANCIAL STATEMENTS 16 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 20 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:
Through the first two months of 1998, investors were still trying to
discern what effects ongoing troubles in Southeast Asia might have on
global economies and markets. The U.S. stock market continued to do
well despite these ongoing uncertainties, paced by sustained corporate
profits and signs of recovery in the Asian markets. Bonds, on the
other hand, struggled somewhat in February as the pace of stock
investors' "flight to quality" slowed in the face of this positive
news, and issuers flooded the market with new debt to take advantage
of lower interest rates. Nonetheless, these lower rates, subdued
inflation and moderate growth created a generally favorable climate
for bond investors.
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 historical 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, 1998 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
FIDELITY DAILY INCOME TRUST 2.62% 5.32% 25.32% 71.98%
ALL TAXABLE MONEY MARKET FUNDS AVERAGE 2.54% 5.14% 24.44% 69.99%
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 had 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 taxable money market
funds with similar objectives tracked by IBC Financial Data, Inc. The
past six months average represents a peer group of 886 money market
funds. (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, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
FIDELITY DAILY INCOME TRUST 5.32% 4.62% 5.57%
ALL TAXABLE MONEY MARKET FUNDS AVERAGE 5.14% 4.47% 5.44%
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
3/3/98 12/2/97 9/2/97 6/3/97 2/25/97
5.21% 5.26% 5.26% 5.24% 4.98%
FIDELITY DAILY INCOME TRUST
ALL TAXABLE MONEY 5.07% 5.09% 5.04% 5.02% 4.80%
MARKET FUNDS AVERAGE
2/25/98 12/3/97 9/3/97 5/28/97 2/26/97
2.58% 2.62% 2.67% 2.66% 2.63%
MMDA
Row: 1, Col: 1, Value: 5.21
Row: 1, Col: 2, Value: 5.07
Row: 1, Col: 3, Value: 2.58
Row: 2, Col: 1, Value: 5.26
Row: 2, Col: 2, Value: 5.09
Row: 2, Col: 3, Value: 2.62
Row: 3, Col: 1, Value: 5.26
Row: 3, Col: 2, Value: 5.04
Row: 3, Col: 3, Value: 2.67
Row: 4, Col: 1, Value: 5.24
Row: 4, Col: 2, Value: 5.02
Row: 4, Col: 3, Value: 2.66
Row: 5, Col: 1, Value: 4.98
Row: 5, Col: 2, Value: 4.84
Row: 5, Col: 3, Value: 2.63
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
NOTE TO SHAREHOLDERS: John Todd became Portfolio Manager of Fidelity
Daily Income Trust on November 10, 1997.
Q. JOHN, WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE OVER THE PAST
SIX MONTHS?
A. During 1997, the markets experienced dramatic swings in
expectations. During the first and second quarters, the yield curve
steepened dramatically - meaning long-term interest rates became much
higher than short-term rates - as the market expected a classic
Federal Reserve Board response to a robust economy. Specifically, the
steep yield curve priced in the prospect of several successive
interest-rate increases by the Fed, which would be intended to cool
the economy and head off inflation. However, by about mid-year when
the six-month period began, market rate expectations adjusted downward
with the gradual, though erratic, acceptance of a new paradigm, which
illustrated that the U.S. can experience rapid growth without
rekindling inflation. But just when market observers began to expect
this stable interest-rate environment, news of currency crises and
bank failures in several Southeast Asian countries emerged. The
general fear that the localized financial turmoil in Asia would spread
globally caused a major sell-off in global equity markets in late
October. Consequently, rates generally fell and the prospects of
further interest- rate increases were priced out of the market.
Q. WHAT HAPPENED NEXT?
A. Talk of an interest-rate cut actually began to circulate, as fears
of a slowdown in U.S. exports emerged following the drastic cheapening
of Asian goods. This sentiment prevailed until the end of February
1998, when Fed Chairman Alan Greenspan said the risks were balanced -
meaning the strong economy and tight labor market, along with the
global effects of the Asian financial crisis, created a state of
equilibrium. Greenspan's comments disposed of the notion of lower
interest rates and left a reality of steady monetary policy in the
near future.
Q. WHAT WAS YOUR STRATEGY?
A. Throughout the period, I continued to purchase variable-rate
securities to take advantage of the attractive yields they were
offering and combined them with nine-month and one-year fixed-rate
securities. At the beginning of the period, the fund's average
maturity was 58 days. As the yield curve flattened - meaning little
difference existed between short-term and longer-term rates - I
shortened the fund's maturity by investing in one-month and two-month
securities because the longer-term securities didn't offer enough
yield to warrant investing in them. When short-term rates started to
fall early in 1998, I purchased longer-term securities to lock in the
more attractive rates they offered. This combination strategy left the
fund's average maturity at 59 days at the end of the period.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 28, 1998, was 5.21%,
compared to 5.26% six months ago. For the six months that ended
February 28, 1998, the fund had a total return of 2.62%, compared to
2.54% for the all taxable money market funds average, according to IBC
Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. I believe that we will see a continuance of stable interest rates
throughout the first half of 1998. However, when all is said and done,
I think the net effect of Asia's financial difficulties on the overall
U.S. economy will likely be less than feared. As such, a prolonged
tight labor market should emerge as the stronger of the two factors in
influencing monetary policy. Consequently, I expect market sentiment
will shift back toward expectations of higher interest rates later in
1998.
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,
1998, MORE THAN $2.5 BILLION
MANAGER: JOHN TODD, SINCE
NOVEMBER 1997; MANAGER,
FIDELITY CASH RESERVES, SINCE
1997; SPARTAN MONEY MARKET
FUND, SINCE 1989; FIDELITY
SELECT MONEY MARKET PORTFOLIO,
SINCE 1991; SHORT-TERM AND
MONEY MARKET INVESTMENTS FOR
THE FIDELITY ASSET MANAGER
FUNDS, SINCE 1996; JOINED
FIDELITY IN 1981
(CHECKMARK)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
2/28/98 8/31/97 2/28/97
0 - 30 57 43 41
31 - 90 24 42 37
91 - 180 10 9 18
181 - 397 9 6 4
WEIGHTED AVERAGE MATURITY
2/28/98 8/31/97 2/28/97
FIDELITY DAILY INCOME TRUST 59 DAYS 58 DAYS 63 DAYS
ALL TAXABLE MONEY
MARKET FUNDS AVERAGE* 56 DAYS 54 DAYS 53 DAYS
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF FEBRUARY 28, 1998 AS OF AUGUST 31, 1997
Row: 1, Col: 1, Value: 52.0
Row: 1, Col: 2, Value: 44.0
Row: 1, Col: 3, Value: 2.0
Row: 1, Col: 4, Value: 2.0
Row: 1, Col: 5, Value: 27.0
Row: 1, Col: 6, Value: 25.8
Commercial paper 53%
Bank CDs, BAs,
TDs, and notes 40%
Government
securities 6%
Other 1%
Commercial paper 52%
Bank CDs, BAs,
TDs, and notes 44%
Government
securities 2%
Other 2%
Row: 1, Col: 1, Value: 53.0
Row: 1, Col: 2, Value: 40.0
Row: 1, Col: 3, Value: 6.0
Row: 1, Col: 4, Value: 1.5
Row: 1, Col: 5, Value: 48.4
*SOURCE: IBC'S MONEY FUND REPORT (registered trademark)
INVESTMENTS FEBRUARY 28, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
CERTIFICATES OF DEPOSIT - 10.6%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Chase Manhattan Bank (USA) Delaware
4/6/98 5.65% $ 30,000 $ 30,000
4/6/98 5.71 10,000 9,999
First National Bank of Chicago
3/3/99 5.70 40,000 39,971
Fleet National Bank
6/10/98 5.53 73,000 73,000
Harris Trust & Savings Bank, Chicago
3/3/98 5.51 25,000 25,000
Mellon Bank, NA, Pittsburgh
3/2/98 5.80 10,000 10,000
Morgan Guaranty Trust Co., NY
3/19/98 5.95 20,000 20,000
NationsBank, NA
2/10/99 5.60 15,000 14,983
SunTrust Bank, Atlanta
5/6/98 5.52 20,000 19,999
Wachovia Bank, NA
9/17/98 5.56 (a) 25,000 24,980
TOTAL CERTIFICATES OF DEPOSIT 267,932
COMMERCIAL PAPER - 52.4%
Associates Corp. of North America
3/10/98 5.53 20,000 19,938
3/20/98 5.83 25,000 24,928
5/20/98 5.53 35,000 34,575
Bank of New York, Inc.
3/30/98 5.84 7,000 6,969
Bear Stearns Cos., Inc.
3/23/98 5.84 15,000 14,936
3/25/98 5.53 10,000 9,965
3/25/98 5.84 5,000 4,982
5/8/98 5.55 10,000 9,897
Bell Atlantic Financial Services, Inc.
3/11/98 5.53 5,000 4,993
3/12/98 5.53 15,000 14,977
Beneficial Corp.
3/18/98 5.55 10,000 9,976
3/18/98 5.83 15,000 14,962
3/23/98 5.83 10,000 9,966
5/13/98 5.52 27,000 26,707
5/18/98 5.55 15,000 14,825
CIESCO, L..P.
3/18/98 5.52 10,000 9,976
3/19/98 5.53 9,075 9,051
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
CIT Group, Inc.
5/26/98 5.65% $ 15,000 $ 14,804
Citibank Credit Card Master Trust I (Dakota Certificate Program)
3/2/98 5.70 15,000 14,998
3/11/98 5.52 5,000 4,993
5/15/98 5.54 10,000 9,888
Commercial Credit Group, Inc.
5/26/98 5.57 15,000 14,806
CoreStates Capital Corp.
3/2/98 5.58 (a) 7,000 7,000
7/13/98 5.57 (a) 15,000 15,000
Enterprise Funding Corp.
3/6/98 5.92 8,000 7,995
3/13/98 5.55 5,000 4,992
3/19/98 5.63 3,000 2,992
3/23/98 5.85 7,103 7,079
3/30/98 5.87 20,000 19,910
4/15/98 5.55 5,000 4,966
Ford Motor Credit Co.
3/4/98 5.80 20,000 19,994
3/5/98 5.51 50,000 49,977
5/11/98 5.53 20,000 19,788
GTE Corp.
3/5/98 5.63 5,000 4,998
3/19/98 5.70 10,000 9,973
3/26/98 5.60 3,000 2,989
General Electric Capital Corp.
3/10/98 5.71 30,000 29,963
3/16/98 5.53 50,000 49,893
3/16/98 5.70 5,000 4,989
3/18/98 5.53 10,000 9,976
6/4/98 5.51 20,000 19,718
8/6/98 5.54 10,000 9,765
General Electric Capital Services Inc.
3/18/98 5.68 25,000 24,939
3/27/98 5.82 10,000 9,960
4/27/98 5.73 15,000 14,870
General Electric Co.
3/16/98 5.53 15,000 14,968
3/18/98 5.53 5,000 4,988
3/24/98 5.68 15,000 14,949
3/27/98 5.80 10,000 9,960
4/30/98 5.53 15,000 14,863
6/4/98 5.50 15,000 14,789
General Motors Acceptance Corp.
3/6/98 5.87 30,000 29,981
3/9/98 5.76 24,000 23,974
3/9/98 5.84 14,000 13,984
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
General Motors Acceptance Corp. - continued
5/27/98 5.57% $ 25,000 $ 24,673
5/28/98 5.57 25,000 24,669
Goldman Sachs Group, L.P.
4/13/98 5.69 40,000 39,739
Household Finance Corp.
3/4/98 5.53 7,000 6,998
John Deere Capital Corp.
3/11/98 5.53 25,000 24,966
3/12/98 5.54 25,000 24,962
Kitty Hawk Funding Corp.
3/2/98 5.83 5,000 4,999
Merrill Lynch & Co., Inc.
3/9/98 5.54 5,000 4,995
5/26/98 5.59 35,000 34,545
Monsanto Co.
3/20/98 5.70 10,000 9,971
7/9/98 5.51 8,000 7,844
8/13/98 5.53 15,000 14,612
8/17/98 5.53 7,000 6,804
8/18/98 5.56 6,000 5,847
Morgan Stanley, Dean Witter, Discover & Co.
3/3/98 5.80 25,000 24,996
3/31/98 5.85 5,000 4,977
New Center Asset Trust
3/2/98 5.53 25,000 24,996
3/19/98 5.83 15,000 14,959
5/15/98 5.54 5,000 4,944
5/18/98 5.55 35,000 34,591
Norfolk Southern Corp.
3/4/98 5.68 3,765 3,763
3/19/98 5.77 5,000 4,986
4/1/98 5.68 4,002 3,983
Norwest Financial, Inc.
5/15/98 5.51 20,000 19,778
PHH Corp.
3/16/98 5.83 20,000 19,956
3/25/98 5.82 10,000 9,963
Preferred Receivables Funding Corp.
3/2/98 5.53 10,000 9,998
3/3/98 5.57 4,000 3,999
3/13/98 5.56 25,000 24,958
3/17/98 5.56 10,000 9,977
3/19/98 5.54 5,000 4,987
3/23/98 5.53 10,025 9,993
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Sears Roebuck Acceptance Corp.
3/2/98 5.84% $ 5,000 $ 4,999
3/19/98 5.54 10,000 9,974
3/24/98 5.55 5,000 4,983
Textron, Inc.
3/6/98 5.63 2,000 1,999
3/16/98 5.63 1,000 998
3/31/98 5.65 5,000 4,977
4/6/98 5.65 3,000 2,984
Three Rivers Funding Corp.
3/10/98 5.52 19,000 18,967
3/12/98 5.54 8,160 8,137
Triple A One Funding Corp.
3/6/98 5.62 4,000 3,998
TOTAL COMMERCIAL PAPER 1,328,738
FEDERAL AGENCIES - 2.0%
Fannie Mae - Agency Coupons (a) - 2.0%
3/13/98 5.84 20,000 19,997
4/15/98 6.06 30,000 29,996
49,993
BANK NOTES - 20.2%
Bank of America National Trust & Savings, San Francisco
7/13/98 5.52 25,000 25,003
7/27/98 5.51 25,000 25,000
Bank of New York, NA
3/3/98 5.85 20,000 20,000
BankBoston, NA
4/1/98 5.71 16,000 16,000
BankOne, Columbus
3/3/98 5.68 (a) 16,000 15,997
BankOne, Milwaukee
3/19/98 5.84 (a) 29,000 29,009
Comerica Bank, Detroit
3/17/98 5.59 (a) 5,000 4,999
3/27/98 6.20 10,000 9,999
CoreStates Bank
11/13/98 5.59 15,000 15,000
First Bank, NA, Minnesota
3/18/98 5.58 (a) 5,000 4,999
BANK NOTES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
First National Bank of Chicago, IL
2/16/99 5.70% $ 30,000 $ 29,927
Key Bank National Association
3/2/98 5.61 (a) 15,000 14,995
3/2/98 5.81 (a) 15,000 14,993
3/23/98 5.58 (a) 8,000 7,996
3/24/98 5.58 (a) 8,000 7,998
9/17/98 5.94 30,000 29,993
LaSalle National Bank
3/20/98 6.00 25,000 25,000
3/30/98 5.72 25,000 25,000
4/2/98 5.80 10,000 10,000
Morgan Guaranty Trust Co., NY
6/22/98 5.85 25,000 25,005
8/31/98 5.97 20,000 19,991
National City Bank, Kentucky
2/5/99 5.58 (a) 20,000 19,979
National City Bank, Pennsylvania
3/3/98 5.59 7,000 6,998
NationsBank, NA
10/19/98 5.54 5,000 5,000
12/22/98 5.54 25,000 25,051
Northern Trust Co., Chicago
3/2/98 5.58 (a) 7,000 6,995
PNC Bank, NA
3/2/98 5.83 (a) 5,000 4,997
3/27/98 5.59 (a) 6,000 5,999
4/16/98 5.58 (a) 30,000 29,985
9/25/98 5.57 (a) 5,000 5,002
SouthTrust Bank, Alabama
3/11/98 5.59 (a) 9,000 8,997
SunTrust Bank, Atlanta
7/24/98 5.88 6,500 6,497
US Bank, NA
3/18/98 5.57 (a) 9,000 8,997
TOTAL BANK NOTES 511,401
MASTER NOTES (A) - 4.0%
Goldman Sachs Group, L.P.
3/13/98 (b) 5.91 22,000 22,000
5/4/98 (b) 5.63 5,000 5,000
J.P. Morgan Securities, Inc.
3/6/98 5.60 64,000 64,000
SunTrust Banks, Inc.
3/6/98 5.64 10,000 10,000
TOTAL MASTER NOTES 101,000
MEDIUM-TERM NOTES (A) - 6.1%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Beneficial Corp.
3/25/98 5.59% $ 7,000 $ 6,998
4/11/98 5.55 5,000 4,998
Commonwealth Life Insurance Co. (b)
7/1/98 5.80 15,000 15,000
Merrill Lynch & Co., Inc.
3/2/98 5.74 14,000 13,998
3/4/98 5.58 4,000 3,999
Morgan Stanley, Dean Witter, Discover & Co.
3/2/98 5.82 15,000 15,001
3/2/98 5.84 10,000 10,000
3/2/98 5.89 30,000 30,000
New York Life Insurance Co.
3/23/98 5.89 25,000 25,000
Norwest Corp.
4/22/98 5.67 13,000 13,000
Pacific Mutual Life Insurance Co.
3/9/98 5.95 10,000 10,000
Transamerica Life Insurance and Annuity Co.
3/16/98 5.92 8,000 8,000
TOTAL MEDIUM-TERM NOTES 155,994
SHORT-TERM NOTES (A) - 3.3%
Capital One Funding Corp. (1995-E)
3/6/98 5.57 3,853 3,853
Capital One Funding Corp. (1996-I)
3/6/98 5.57 9,599 9,599
Capital One Funding Corp. (1997-D)
3/6/98 5.57 6,700 6,700
Capital One Funding Corp. (1997-F)
3/6/98 5.57 6,000 6,000
Capital One Funding Corp. (1997-G)
3/6/98 5.57 7,000 7,000
SMM Trust (1997-I)
3/30/98 5.63 4,000 4,000
SMM Trust (1997-P)
3/16/98 5.63 2,000 2,000
SMM Trust (1997-X)
3/12/98 5.63 4,000 4,000
Strategic Money Market Trust (1997-A)
3/23/98 5.91 24,000 24,000
Strategic Money Market Trust (1998-B)
3/5/98 5.63 18,000 18,000
TOTAL SHORT-TERM NOTES 85,152
REPURCHASE AGREEMENTS - 1.4%
MATURITY AMOUNT VALUE (NOTE 1)
(000S) (000S)
In a joint trading account
(U.S. Treasury Obligations)
dated 2/27/98 due 3/2/98
At 5.70% $ 35,634 $ 35,617
TOTAL INVESTMENTS - 100% $ 2,535,827
Total Cost for Income Tax Purposes $ 2,535,827
LEGEND
5.The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due dates on these types of
securities reflect the next interest rate reset date or, when
applicable, the final maturity date.
6.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 COST
SECURITY DATE (000S)
Commonwealth Life
Insurance Co.
5.80%, 7/1/98 7/1/97 $ 15,000
Goldman Sachs
Group, L.P.:
5.91%, 3/13/98 6/11/97 $ 22,000
5.63%, 5/4/98 8/5/97 $ 5,000
INCOME TAX INFORMATION
At August 31, 1997, the fund had a capital loss carryforward of
approximately $990,000 of which $336,000, $536,000, $19,000 and
$99,000 will expire on August 31, 2001, 2002, 2003 and 2004,
respectively.
The fund intends to elect to defer to its fiscal year ending August
31, 1998 approximately $108,000 of losses recognized during the period
November 1, 1996 to August 31, 1997.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
(EXCEPT PER-SHARE AMOUNT) FEBRUARY 28, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 2,535,827
AGREEMENTS OF $35,617) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 23,705
SHARE TRANSACTIONS IN PROCESS 15,586
INTEREST RECEIVABLE 15,069
TOTAL ASSETS 2,590,187
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 230
PAYABLE FOR INVESTMENTS PURCHASED 63,685
DISTRIBUTIONS PAYABLE 1
ACCRUED MANAGEMENT FEE 629
OTHER PAYABLES AND ACCRUED EXPENSES 410
TOTAL LIABILITIES 64,955
NET ASSETS $ 2,525,232
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 2,526,325
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (1,093)
NET ASSETS, FOR 2,525,698 SHARES OUTSTANDING $ 2,525,232
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $1.00
SHARE ($2,525,232 (DIVIDED BY) 2,525,698 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
INTEREST INCOME $ 69,310
EXPENSES
MANAGEMENT FEE $ 3,962
TRANSFER AGENT FEES 1,881
ACCOUNTING FEES AND EXPENSES 117
NON-INTERESTED TRUSTEES' COMPENSATION 8
CUSTODIAN FEES AND EXPENSES 23
REGISTRATION FEES 27
AUDIT 13
LEGAL 33
REPORTS TO SHAREHOLDERS 30
MISCELLANEOUS 8
TOTAL EXPENSES BEFORE REDUCTIONS 6,102
EXPENSE REDUCTIONS (30) 6,072
NET INTEREST INCOME 63,238
NET REALIZED GAIN (LOSS) ON INVESTMENTS 5
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 63,243
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31,
(UNAUDITED) 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 63,238 $ 119,566
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 5 (99)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 63,243 119,467
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (63,238) (119,566)
SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 5,775,567 9,437,254
PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS 61,883 116,546
COST OF SHARES REDEEMED (5,737,270) (9,446,036)
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES 100,180 107,764
RESULTING FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 100,185 107,665
NET ASSETS
BEGINNING OF PERIOD 2,425,047 2,317,382
END OF PERIOD $ 2,525,232 $ 2,425,047
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED AUGUST 31,
FEBRUARY 28, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<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 INVESTMENT .026 .051 .051 .053 .032 .028
OPERATIONS
NET INTEREST INCOME
LESS DISTRIBUTIONS
FROM NET INTEREST (.026) (.051) (.051) (.053) (.032) (.028)
INCOME
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
END OF PERIOD
TOTAL RETURN B 2.62% 5.18% 5.25% 5.43% 3.23% 2.83%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 2,525 $ 2,425 $ 2,317 $ 2,256 $ 2,132 $ 2,096
(IN MILLIONS)
RATIO OF EXPENSES TO .50% A .50% .50% .54% .56% .57%
AVERAGE NET ASSETS
RATIO OF EXPENSES TO .50% A .49% C .50% .54% .56% .57%
AVERAGE NET ASSETS AFTER
EXPENSE REDUCTIONS
RATIO OF NET INTEREST 5.22% A 5.07% 5.11% 5.31% 3.18% 2.83%
INCOME TO AVERAGE
NET ASSETS
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN AND 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.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1998 (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
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other
affiliated entities of Fidelity Management & Research Company (FMR),
may transfer uninvested cash balances into one or more joint trading
accounts. These balances are invested in one or more repurchase
agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
2. OPERATING POLICIES -
CONTINUED
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell
securities on a delayed delivery basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of
the underlying securities and the date when the securities will be
delivered and paid for are fixed at the time the transaction is
negotiated. With respect to purchase commitments, the fund identifies
securities as segregated in its custodial records with a value at
least equal to the amount of the commitment. Losses may arise due to
changes in the market value of the underlying securities or if the
counterparty does not perform under the contract.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $42,000,000 or 1.7% of net assets.
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 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 sales 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 .33% of average net assets.
SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity
Investments Money Management, Inc. (formerly 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.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
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.
4. EXPENSE REDUCTIONS.
The fund has entered into an arrangement with its transfer agent
whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of the fund's expenses. During the period,
the fund's transfer agent fees were reduced by $30,000 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)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
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)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)
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
Fidelity Investments
Money Management, Inc.
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Vice President
Fred L. Henning, Jr., Vice President
Boyce I. Greer, Vice President
John Todd, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, 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
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Bank of New York
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
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AUTOMATED LINE FOR QUICKEST SERVICE
