SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-63350) UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 36 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. [ ]
Fidelity Phillips Street Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-570-7000
Arthur S. Loring,, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) Immediately upon filing pursuant to paragraph (b)
(x) On January 11, 1994 pursuant to paragraph (b)of Rule 485
( ) 60 days after filing pursuant to paragraph (a)
( ) On ( ) pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the Notice required by
such Rule before January 30, 1994.
FIDELITY CASH RESERVES
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C>
1............................................... Cover Page
2 a............................................ Expenses
b,c.......................................... Contents; The Fund at a Glance; Who May Want To Invest
3 a............................................ Financial Highlights
b........................................... *
c........................................... Performance
d........................................... *
</TABLE>
4 a(i)......................................... Charter
<TABLE>
<CAPTION>
<S> <C>
a(ii)....................................... The Fund at a Glance; Investment Principles; Securities
and Investment Practices
b............................................ Securities and Investment Practices
c............................................ Who May Want to Invest; Investment Principles; Securities
and Investment Practices
5 a............................................ Charter
b(i)........................................ Doing Business with Fidelity; Charter
b(ii)....................................... Charter; Breakdown of Expenses
b(iii)...................................... Expenses; Breakdown of Expenses; Management Fee
c........................................ *
d........................................ The Funds at a Glance; FMR and Its Affiliates; Other
Expenses
e............................................ FMR and Its Affiliates
f............................................. Expenses
g............................................ *
5A............................................ *
6 a(i)........................................ Charter
a(ii)....................................... How to Buy Shares; How to Sell Shares; Transaction
Details; Exchange Restrictions
a(iii), b, c, *
d.............................
e........................................... Doing Business with Fidelity; How to Buy Shares; How to
Sell Shares; Investor Services
f,g......................................... Dividends, Capital Gains, and Taxes
7 a........................................... Charter; Cover Page
b........................................... How to Buy Shares; Transaction Details
c........................................... *
d........................................... How to Buy Shares
e........................................... *
f............................................ Breakdown tf Expenses
8 .............................................. How to Sell Shares; Investor Services; Transaction Details;
Exchange Restrictions
9 .............................................. *
* Not Applicable
</TABLE>
FIDELITY CASH RESERVES
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
<S> <C>
Part B: Statement of Additional
Information
Form N-1A Item Number SAI Caption
10,11......................................... Cover Page
12.............................................. *
13 a,b,c.................................... Investment Policies and Limitations
d........................................... *
14 a,b........................................ Trustees and Officers
c........................................... *
15 a,b,c..................................... *
16 a(i)....................................... FMR
a(ii)....................................... Trustees and Officers
a(iii),b................................... Management Contract; Interest of FMR Affiliates
c,d,e...................................... *
f............................................ Distribution and Service Plan
g........................................... *
h........................................... Description of the Trusts
i............................................ Interest of FMR Affiliates
17 a........................................ Portfolio Transactions
b........................................... *
c........................................... Portfolio Transactions
d,e..................................... *
18 a........................................ Description of the Trusts
b........................................... *
19 a....................................... Additional Purchase and Redemption Information
b........................................... Valuation of Portfolio Securities; Additional Purchase and
Redemption Information
c........................................... *
20.............................................. Distributions and Taxes
21 a(i),(ii)................................. Interest of FMR Affiliates
a(iii),b,c................................ *
22.............................................. Performance
23.............................................. Financial Statements
</TABLE>
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated January 11, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Investments in the funds are neither insured nor guaranteed by the
U.S. government, and there can be no assurance that a fund will
maintain a stable $1.00 share price.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, nor are they federally insured or otherwise
protected by the FDIC, the Federal Reserve Board, or any other agency.
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
CAS-pro-194
(Registered trademark)
82 Devonshire Street, Boston, MA 02109
These money market funds seek high current income while maintaining a
stable share price by investing in short-term money market securities. Cash
Reserves invests in a broad range of money market securities. U.S.
Government Reserves invests only in U.S. government securities or related
instruments.
FIDELITY
CASH RESERVES
and
FIDELITY
U.S. GOVERNMENT
RESERVES
PROSPECTUS
JANUARY 11, 1994
<r>CONTENTS</r>
KEY FACTS 4 THE FUNDS AT A GLANCE
4 WHO MAY WANT TO INVEST
EXPENSES AND PERFORMANCE 5 EXPENSES Each fund's yearly
operating expenses.
6 FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.
8 PERFORMANCE How each fund has
done over time.
YOUR ACCOUNT 10 DOING BUSINESS WITH FIDELITY
10 TYPES OF ACCOUNTS Different
ways to set up your account,
including tax-sheltered retirement
plans.
12 HOW TO BUY SHARES Opening an
account and making additional
investments.
14 HOW TO SELL SHARES Taking money
out and closing your account.
16 INVESTOR SERVICES Services to
help you manage your account.
17 DIVIDENDS, CAPITAL GAINS, AND
TAXES
SHAREHOLDER AND 19 TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.
20 EXCHANGE RESTRICTIONS
THE FUNDS IN DETAIL 22 CHARTER How each fund is
organized.
22 BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
24 INVESTMENT PRINCIPLES Each
fund's overall approach to
investing.
2 4 SECURITIES AND INVESTMENT
PRACTICES
KEY FACTS
THE FUNDS AT A GLANCE
GOAL: Income while maintaining a stable share price. As with any mutual
fund, there is no assurance that a fund will achieve its goal.
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. FMR Texas Inc. (FTX), a
subsidiary of FMR, chooses investments for the funds.
Although the funds share the same goal and the same management; they follow
different strategies and have different histories.
CASH RESERVES
STRATEGY. Invests in money market instruments of all types.
SIZE: As of November 30, 1993, the fund had over $ 10.3 billion in
assets.
U.S. GOVERNMENT RESERVES
STRATEGY. Invests in money market instruments issued or guaranteed by the
U.S. government or government agencies.
SIZE: As of November 30, 1993, the fund had over $ 1.1 billion in
assets.
WHO MAY WANT TO INVEST
Either fund may be appropriate for investors who would like to earn income
at current money market rates while preserving the value of their
investment. The rate of income will vary from day to day, generally
reflecting short-term interest rates.
Each fund is managed to keep its share price stable at $1.00. Fidelity U.S.
Government Reserves offers an added measure of safety with its focus on
U.S. government securities.
These funds do not constitute a balanced investment plan. However, because
they emphasize stability, they could be well-suited for a portion of your
savings. Both funds offer free checkwriting to give you easy access to your
money.
THE SPECTRUM OF
FIDELITY FUNDS
Broad categories of Fidelity
funds are presented here in
order of ascending risk.
Generally, investors seeking
to maximize return must
assume greater risk. The
funds in this prospectus are
in the MONEY MARKET
category.
(arrow) MONEY MARKET Seeks
income and stability by
investing in high-quality,
short-term investments.
(bullet) INCOME Seeks income by
investing in bonds.
(bullet) GROWTH AND INCOME
Seeks long-term growth and
income by investing in stocks
and bonds.
(bullet) GROWTH Seeks long-term
growth by investing mainly in
stocks.
(checkmark)
EXPENSES AND PERFORMANCE
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of the funds.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Exchange fee None
Wire redemption fee $5.00
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. Each fund also incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and fund reports. A fund's expenses are factored into its share
price or dividends and are not charged directly to shareholder accounts
(see page 22).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
CASH RESERVES
Management fee . 14%
12b-1 fee None
Other expenses .34%
TOTAL FUND OPERATING EXPENSES .48%
U.S. GOVERNMENT RESERVES
Management fee . 43%
12b-1 fee None
Other expenses .30%
Total fund operating expenses .73%
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would have paid in total expenses
if you closed your account after the number of years indicated:
CASH RESERVES
After 1 year $ 5
After 3 years $ 15
After 5 years $ 27
After 10 years $ 60
U.S. GOVERNMENT RESERVES
After 1 year $ 7
After 3 years $ 23
After 5 years $ 41
After 10 years $ 91
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary
UNDERSTANDING
EXPENSES
Operating a mutual fund
involves a variety of
expenses for portfolio
management, shareholder
statements, tax reporting, and
other services. These costs
are paid from the fund's
assets; their effect is already
factored into any quoted
share price or return.
(checkmark)
FINANCIAL HIGHLIGHTS
The tables that follow have been audited by Coopers & Lybrand (Cash
Reserves) and Price Waterhouse (U.S. Government Reserves), independent
accountants. Their unqualified reports are included in each fund's Annual
Report. Each fund's Annual Report is incorporated by reference into (is
legally a part of) the Statement of Additional Information.
CASH RESERVES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
and Ratios
Year ended 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
November 30,
Net asset value, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
beginning 0 0 0 0 0 0 0 0 0 0
of period
Income from .098 .077 .065 .061 .069 .086 .076 .061 .038 .029
Investment
Operations
Net interest
income
Dividends from (.098) (.077 (.065 (.061 (.069) (.086) (.076) (.061) (.038) (.029)
net ) ) )
interest income
Net asset value, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
end of period 0 0 0 0 0 0 0 0 0 0
Total return 10.23 8.00 6.70 6.28 7.16 8.94 7.87 6.23 3.90 2.97
% % % % % % % % % %
Net assets, end of $ 4,09 $ 4,08 $ 5,22 $ 9,28 $ 10,8 $ 10,8 $ 10,9 $ 10,5 $ 10,0 $ 10,3
period 5 6 0 0 85 97 21 19 40 14
(in millions)
Ratio of expenses .86% .82% .75% .70% .65% .74% .69% .58% .48% .48%
to average net
assets A
Ratio of net 9.81 7.73 6.39 6.22 6.95 8.60 7.62 6.03 3.86 2.92
interest income to % % % % % % % % % %
average net assets
</TABLE>
A A SPECIAL MEETING OF SHAREHOLDERS OF THE FUND WAS HELD ON NOVEMBER 17,
1993. ALL EXPENSES IN CONNECTION WITH THIS MEETING INCLUDING THE
PREPARATION OF THE PROXY STATEMENT, ITS ENCLOSURES AND ALL SOLICITATIONS
WERE REIMBURSED BY FMR.
U.S. GOVERNMENT RESERVES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share
Data and Ratios
Year ended 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993
September 30,
Net asset value, $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
beginning of period 0 0 0 0 0 0 0 0 0 0
Income from .093 .079 .067 .056 .065 .083 .076 .061 .039 .025
Investment
Operations
Net interest income
Dividends from net (.093 (.079 (.067 (.056 (.065 (.083 (.076 (.061 (.039 (.025
interest income ) ) ) ) ) ) ) ) ) )
Net asset value, end $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
of period 0 0 0 0 0 0 0 0 0 0
Total return 9.76 8.18 6.93 5.79 6.73 8.66 7.86 6.29 3.95 2.57
% % % % % % % % % %
Net assets, end of $ 340 $ 421 $ 688 $ 909 $ 1,59 $ 1,54 $ 1,58 $ 1,43 $ 1,29 $ 1,04
period 0 5 1 6 2 3
(000 omitted)
Ratio of expenses to .77% .77% .80% .81% .75% .80% .74% .72% .73% .73%
average net assets
Ratio of net interest 9.36 7.86 6.57 5.79 6.52 8.29 7.66 6.13 3.88 2.57
income to average net % % % % % % % % % %
assets
</TABLE>
PERFORMANCE
Money market fund performance can be measured as TOTAL RETURN or YIELD. The
total returns and yields that follow are based on historical fund results
and do not reflect the effect of taxes.
Cash Reserves' fiscal year runs from December 1 through November 30. U.S.
Government Reserves' fiscal year runs from October 1 through September 30.
The tables below show each fund's performance over past fiscal years
compared to a measure of inflation. The charts on page 9 help you
compare the yields of these funds to those of their competitors.
CASH RESERVES
Fiscal periods ended Past 1 Past 5 Past 10
November 30, 1993 year years years
Average annual
total return 2.97% 5.96% 6.81%
Cumulative
total return 2.97% 33.55% 93.21%
Consumer Price
Index 2.68% 21.20% 44.07%
U.S. GOVERNMENT RESERVES
Fiscal periods ended Past 1 Past 5 Past 10
September 30, 1993 year years years
Average annual
total return 2.57% 5.84% 6.65%
Cumulative
total return 2.57% 32.83% 90.41%
Consumer Price
Index 2.69% 21.12% 44.09%
UNDERSTANDING
PERFORMANCE
SEVEN-DAY YIELD illustrates
the income earned by a
money market fund over a
recent seven-day period.
TOTAL RETURN reflects both the
reinvestment of income and
the change in a fund's share
price. Since money market
funds maintain a stable $1.00
share price, current
seven-day yields are the
most common illustration of
money market fund
performance.
(checkmark)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNU AL TOTAL RETURN is a hypothetical rate of
return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the entire
period. Average annual total returns smooth out variations in performance;
they are not the same as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a yield
assumes that income earned is reinvested, it is called an EFFECTIVE YIELD.
THE CONSUMER PRICE INDEX is a widely recognized measure of
inflation calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES are the IBC/Donoghue's MONEY FUND
AVERAGES(registered trademark), which assume reinvestment of distributions.
Fidelity Cash Reserves compares its performance to the All Taxable
category, and Fidelity U.S. Government Reserves compares to the Government
category. These averages, which currently reflect the performance of over
620 and 206 mutual funds with similar objectives, respectively, are
published in the MONEY FUND REPORT(Registered trademark) by IBC USA
(Publications), Inc. The calendar-year average for the government category
was not calculated before 1986.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance call 1-800-544-8888.
TOTAL RETURNS ARE BASED ON PAST RESULTS AND ARE NOT AN INDICATION OF FUTURE
PERFORMANCE.
CASH RESERVES
7-day yield
Percent
age %
Row: 1, Col: 1, Value: 7.48
Row: 1, Col: 2, Value: 6.99
Row: 2, Col: 1, Value: 6.99
Row: 2, Col: 2, Value: 6.49
Row: 3, Col: 1, Value: 6.42
Row: 3, Col: 2, Value: 6.22
Row: 4, Col: 1, Value: 6.23
Row: 4, Col: 2, Value: 5.9
Row: 5, Col: 1, Value: 6.03
Row: 5, Col: 2, Value: 5.68
Row: 6, Col: 1, Value: 5.92
Row: 6, Col: 2, Value: 5.63
Row: 7, Col: 1, Value: 5.83
Row: 7, Col: 2, Value: 5.59
Row: 8, Col: 1, Value: 5.67
Row: 8, Col: 2, Value: 5.45
Row: 9, Col: 1, Value: 5.51
Row: 9, Col: 2, Value: 5.31
Row: 10, Col: 1, Value: 5.31
Row: 10, Col: 2, Value: 5.1
Row: 11, Col: 1, Value: 5.149999999999999
Row: 11, Col: 2, Value: 4.81
Row: 12, Col: 1, Value: 5.04
Row: 12, Col: 2, Value: 4.609999999999999
Row: 13, Col: 1, Value: 4.79
Row: 13, Col: 2, Value: 4.07
Row: 14, Col: 1, Value: 4.35
Row: 14, Col: 2, Value: 3.85
Row: 15, Col: 1, Value: 4.109999999999999
Row: 15, Col: 2, Value: 3.78
Row: 16, Col: 1, Value: 4.03
Row: 16, Col: 2, Value: 3.66
Row: 17, Col: 1, Value: 3.76
Row: 17, Col: 2, Value: 3.53
Row: 18, Col: 1, Value: 3.72
Row: 18, Col: 2, Value: 3.5
Row: 19, Col: 1, Value: 3.53
Row: 19, Col: 2, Value: 3.19
Row: 20, Col: 1, Value: 3.35
Row: 20, Col: 2, Value: 3.07
Row: 21, Col: 1, Value: 3.23
Row: 21, Col: 2, Value: 2.91
Row: 22, Col: 1, Value: 3.17
Row: 22, Col: 2, Value: 2.78
Row: 23, Col: 1, Value: 3.18
Row: 23, Col: 2, Value: 2.78
Row: 24, Col: 1, Value: 3.32
Row: 24, Col: 2, Value: 2.9
Row: 25, Col: 1, Value: 3.22
Row: 25, Col: 2, Value: 2.81
Row: 26, Col: 1, Value: 3.1
Row: 26, Col: 2, Value: 2.73
Row: 27, Col: 1, Value: 2.99
Row: 27, Col: 2, Value: 2.7
Row: 28, Col: 1, Value: 2.93
Row: 28, Col: 2, Value: 2.65
Row: 29, Col: 1, Value: 2.88
Row: 29, Col: 2, Value: 2.63
Row: 30, Col: 1, Value: 2.88
Row: 30, Col: 2, Value: 2.67
Row: 31, Col: 1, Value: 2.88
Row: 31, Col: 2, Value: 2.68
Row: 32, Col: 1, Value: 2.85
Row: 32, Col: 2, Value: 2.68
Row: 33, Col: 1, Value: 2.83
Row: 33, Col: 2, Value: 2.68
Row: 34, Col: 1, Value: 2.84
Row: 34, Col: 2, Value: 2.67
Row: 35, Col: 1, Value: 2.91
Row: 35, Col: 2, Value: 2.73
Cash
Reserves
Competitive
funds average
1992
1991
1993
U.S. GOVERNMENT RESERVES
7-day yield
Percent
age %
Row: 1, Col: 1, Value: 6.78
Row: 1, Col: 2, Value: 6.67
Row: 2, Col: 1, Value: 6.42
Row: 2, Col: 2, Value: 6.29
Row: 3, Col: 1, Value: 6.07
Row: 3, Col: 2, Value: 6.04
Row: 4, Col: 1, Value: 5.8
Row: 4, Col: 2, Value: 5.77
Row: 5, Col: 1, Value: 5.68
Row: 5, Col: 2, Value: 5.58
Row: 6, Col: 1, Value: 5.63
Row: 6, Col: 2, Value: 5.57
Row: 7, Col: 1, Value: 5.6
Row: 7, Col: 2, Value: 5.49
Row: 8, Col: 1, Value: 5.5
Row: 8, Col: 2, Value: 5.38
Row: 9, Col: 1, Value: 5.359999999999999
Row: 9, Col: 2, Value: 5.22
Row: 10, Col: 1, Value: 5.09
Row: 10, Col: 2, Value: 5.01
Row: 11, Col: 1, Value: 4.75
Row: 11, Col: 2, Value: 4.7
Row: 12, Col: 1, Value: 4.6
Row: 12, Col: 2, Value: 4.430000000000001
Row: 13, Col: 1, Value: 4.24
Row: 13, Col: 2, Value: 3.95
Row: 14, Col: 1, Value: 4.07
Row: 14, Col: 2, Value: 3.82
Row: 15, Col: 1, Value: 3.82
Row: 15, Col: 2, Value: 3.72
Row: 16, Col: 1, Value: 3.64
Row: 16, Col: 2, Value: 3.55
Row: 17, Col: 1, Value: 3.67
Row: 17, Col: 2, Value: 3.48
Row: 18, Col: 1, Value: 3.67
Row: 18, Col: 2, Value: 3.44
Row: 19, Col: 1, Value: 3.2
Row: 19, Col: 2, Value: 3.13
Row: 20, Col: 1, Value: 3.17
Row: 20, Col: 2, Value: 3.03
Row: 21, Col: 1, Value: 2.91
Row: 21, Col: 2, Value: 2.86
Row: 22, Col: 1, Value: 2.68
Row: 22, Col: 2, Value: 2.69
Row: 23, Col: 1, Value: 2.64
Row: 23, Col: 2, Value: 2.67
Row: 24, Col: 1, Value: 2.67
Row: 24, Col: 2, Value: 2.77
Row: 25, Col: 1, Value: 2.56
Row: 25, Col: 2, Value: 2.69
Row: 26, Col: 1, Value: 2.45
Row: 26, Col: 2, Value: 2.63
Row: 27, Col: 1, Value: 2.49
Row: 27, Col: 2, Value: 2.59
Row: 28, Col: 1, Value: 2.43
Row: 28, Col: 2, Value: 2.53
Row: 29, Col: 1, Value: 2.46
Row: 29, Col: 2, Value: 2.53
Row: 30, Col: 1, Value: 2.48
Row: 30, Col: 2, Value: 2.57
Row: 31, Col: 1, Value: 2.52
Row: 31, Col: 2, Value: 2.58
Row: 32, Col: 1, Value: 2.51
Row: 32, Col: 2, Value: 2.58
Row: 33, Col: 1, Value: 2.89
Row: 33, Col: 2, Value: 2.57
Row: 34, Col: 1, Value: 2.84
Row: 34, Col: 2, Value: 2.55
Row: 35, Col: 1, Value: 2.93
Row: 35, Col: 2, Value: 2.62
U.S.
Government
Reserves
Competitive
funds average
1992
1991
1993
THE CHARTS SHOW THE 7-DAY EFFECTIVE YIELDS FOR THE FUNDS AND THEIR
COMPETITIVE FUNDS AVERAGES AS OF THE LAST TUESDAY OF EACH MONTH FROM
JANUARY 1991 THROUGH NOVEMBER 1993.
<r>YOUR ACCOUNT</r>
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over 75 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed at right.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers a fund through a retirement
program, contact your employer for more information. Otherwise, call
Fidelity directly.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $ 200 billion
(bullet) Number of shareholder
accounts: over 15 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANTS
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age
and under 70 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(bullet) KEOGH OR CORPORATE PROFIT SHARING AND MONEY PURCHASE PENSION PLANS
allow self-employed individuals or small business owners (and their
employees) to make tax-deductible contributions for themselves and any
eligible employees up to $30,000 per year.
(bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(bullet) 403(B) CUSTODIAL ACCOUNTS are available to employees of most
tax-exempt institutions, including schools, hospitals, and other charitable
organizations.
(bullet) 401(K) PROGRAMS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. The funds are managed to keep share prices stable at $1.00.
Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page 13 . If there is no application
accompanying this prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
IF YOU ARE INVESTING THROUGH A TAX-SHELTERED RETIREMENT PLAN, such as an
IRA, for the first time, you will need a special application. Retirement
investing also involves its own investment procedures. Call 1-800-544-8888
for more information and a retirement application.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business
days to ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
For Fidelity retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity retirement accounts $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
For Fidelity retirement accounts $500
These minimums may vary for a Fidelity College Savings Plan account in Cash
Reserves. Refer to the College Savings Plan brochure for details.
<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
PHONE (bullet) Exchange from another (bullet) Exchange from another
1-800-544-7777 Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MAIL (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund of
complete name of the your choice. Indicate
fund of your choice. your fund account
Mail to the address number on your check.
indicated on the Mail to the address
application. printed on your account
statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
IN PERSON (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.
</TABLE>
WIRE (bullet) Call 1-800-544-7777 to (bullet) Not available for
set up your account retirement accounts.
and to arrange a wire (bullet) Wire to:
transaction. Not Bankers Trust
available for retirement Company,
accounts. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.
<TABLE>
<CAPTION>
<S> <C> <C>
AUTOMATICALLY (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or
call 1-800-544-6666 to
add it.
TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the methods
described on these two pages.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be made
in writing, except for exchanges to other Fidelity funds, which can be
requested by phone or in writing. Call 1-800-544-6666 for a retirement
distribution form.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open; ($500 for retirement
accounts).
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. Do not, however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PHONE All account types (bullet) Maximum check request:
1-800-544-7777 except $100,000.
retirement (bullet) For Money Line transfers to
your bank account; minimum:
All account types none ; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.
MAIL OR IN PERSON Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, transactions, exactly as their
UGMA, UTMA names appear on the
Retirement account account.
(bullet) The account owner should
complete a retirement
Trust distribution form. Call
1-800-544-6666 to request
one.
(bullet) The trustee must sign the
Business or letter indicating capacity as
Organization trustee. If the trustee's name
is not in the account
registration, provide a copy of
the trust document certified
Executor, within the last 60 days.
Administrator, (bullet) At least one person authorized
Conservator, by corporate resolution to act
Guardian on the account must sign the
letter.
(bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.
WIRE All account types (bullet) You must sign up for the wire
except feature before using it. To
retirement verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.
(bullet) There is a $5.00 fee for each
wire redemption, which will
be deducted from the
redemption amount.
</TABLE>
CHECK All account types (bullet) Minimum check: $500.
except retirement (bullet) All account owners must sign
a signature card to receive a
checkbook.
<TABLE>
<CAPTION>
<S> <C> <C>
TDD - SERVICE FOR THE DEAF AND HEARING-IMPAIRED: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Exchanges may have tax consequences for you. For complete policies and
restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page
19 .
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
Fidelity offers services that let you transfer money into your fund
account, or between fund accounts, automatically. Certain restrictions
apply for retirement accounts. Call 1-800-544-6666 for more information.
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM $100
FREQUENCY Monthly or quarterly
SETTING UP Complete the
appropriate section on
the fund application.
For existing accounts,
call 1-800-544-6666
for an application.
DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY
FUND
MINIMUM $100
FREQUENCY Every pay period
SETTING UP Check the
appropriate box on
the fund application,
or call
1-800-544-6666 for
an authorization form.
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
MINIMUM $100
FREQUENCY Monthly, bimonthly,
quarterly, or annually
SETTING UP To establish, call
1-800-544-6666 after
both accounts are
opened.
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains, if any, to shareholders each year. Income dividends are
declared daily and paid monthly.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers three
options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned this
option.
2. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
3. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions, if any, will be automatically invested in
another identically registered Fidelity fund.
FOR RETIREMENT ACCOUNTS, all distributions are automatically reinvested.
When you are over 59 years old, you can receive distributions in cash.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the NAV as
of the record date of the distribution. The mailing of distribution checks
will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. A
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS. Money
market funds usually don't
make capital gain
distributions .
(checkmark)
TAXES
As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-deferred retirement account, be
aware of these tax implications.
Distributions are subject to federal income tax, and may also be subject to
state or local taxes. If you live outside the United States, your
distributions could also be taxed by the country in which you reside. Your
distributions are taxable when they are paid, whether you take them in cash
or reinvest them. However, distributions declared in December and paid in
January are taxable as if they were paid on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions, if any, are taxed as dividends; long-term capital gain
distributions, if any, are taxed as long-term capital gains. Every January,
Fidelity will send you and the IRS a statement showing the taxable
distributions paid to you in the previous year.
Mutual fund dividends from U.S. government securities are generally free
from state and local income taxes. Some states, however, may limit this
benefit. In addition, some states may impose intangible property taxes.
You should consult your own tax adviser for details and up-to-date
information on the tax laws in your state.
During fiscal 1993, 61% of Fidelity U.S. Government Reserve's income
distributions were from U.S. government securities.
<r>SHAREHOLDER AND ACCOUNT POLICIES</r>
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's net asset value as of the
close of business of the NYSE, normally 4 p.m. Eastern time.
EACH FUND'S NAV is the value of a single share. The NAV is computed
by adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
Like most money market funds, each fund values the securities it owns on
the basis of amortized cost. This method minimizes the effect of changes in
a security's market value and helps each fund to maintain a stable $1.00
share price.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page 20 . Purchase orders may be refused if, in FMR's opinion,
they are of a size that would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(bullet) Redemptions may be suspended or payment dates postponed when the
NYSE is closed (other than weekends or holidays), when trading on the NYSE
is restricted, or as permitted by the SEC.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000 , you will be given 30
days' notice to reestablish the minimum balance. If you do not increase
your balance, Fidelity reserves the right to close your account and send
the proceeds to you. Your shares will be redeemed at the NAV on the day
your account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
Fidelity Distributors Corporation (FDC) may, at its own expense, provide
promotional incentives to qualified recipients who support the sale of
shares of the funds without reimbursement from the funds. Qualified
recipients are securities dealers who have sold fund shares or others,
including banks and other financial institutions, under special
arrangements in connection with FDC's sales activities. In some instances,
these incentives may be offered only to certain institutions whose
representatives provide services in connection with the sale or expected
sale of significant amounts of shares.
E XCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Each fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
<
r>THE FUNDS IN DETAIL</r>
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, Fidelity Cash
Reserves is currently a diversified fund of Fidelity Phillips Street Trust,
and Fidelity U.S. Government Reserves is currently a diversified fund of
Fidelity Charles Street Trust. Both trusts are open-end management
investment companies. Fidelity Phillips Street Trust was organized as a
Delaware business trust on September 17, 1992. Fidelity Charles Street
Trust was organized as a Massachusetts business trust on July 7, 1981.
There is a remote possibility that one fund might become liable for a
misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. As a shareholder of Cash
Reserves, the number of votes you are entitled to is based upon the dollar
value of your investment. As a shareholder of U.S. Government Reserves,
y ou are entitled to one vote for each share you own.
FMR AND ITS AFFILIATES
The funds are managed by FMR, which handles their business affairs. FTX has
primary responsibility for providing investment management services.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trusts), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services. Each fund also pays OTHER EXPENSES, which
are explained below .
FMR may, from time to time, agree to reimburse the funds for management
fees and other expenses above a specified limit. FMR retains the ability to
be repaid by a fund if expenses fall below the specified limit prior to the
end of the fiscal year. Reimbursement arrangements, which may be terminated
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month.
EACH FUND'S management fee is calculated by multiplying the sum of
three components by the fund's average net assets. One component is based
on the average net assets of all the mutual funds advised by FMR, another
is fixed for the fund, and the third is based on the fund's income.
The first component, the group fee rate, cannot rise above .37%, and it
drops as total assets under management increase. For September and
November 1993, the group fee rates were .1638% and .1627%,
respectively. The second component, the individual fund fee rate, is
.03%. The income component is 6% of the fund's gross income in excess of a
5% yield.
For Cash Reserves, t he total management fee for fiscal 1993 was
.14 %.
For U.S. Government Reserves, t he total management fee for fiscal
1993 was .43 %.
On September 1, 1993, FMR voluntarily adopted the above mentioned
management fee structure. Prior to that date, U.S. Government Reserves'
management fee was calculated by adding a group fee rate to an individual
fund fee rate (.28%) and multiplying the result by the fund's average net
assets.
FMR HAS SUB-ADVISORY AGREEMENTS with FTX, which has primary responsibility
for providing investment management, while FMR retains responsibility for
providing other management services. FMR pays FTX 50% of its management fee
(before expense reimbursements) for these services. FMR paid FTX
.07 % of Fidelity Cash Reserves' and .21 % of Fidelity U.S.
Government Reserves' average net assets for fiscal 1993.
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
The funds contract with FSC to perform many transaction and accounting
functions. These services include processing shareholder transactions,
valuing each fund's investments, and handling securities loans. In fiscal
1993, Fidelity Cash Reserves and Fidelity U.S. Government Reserves paid FSC
fees equal to .33 % and .27 %, respectively, of average net
assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
INVESTMENT PRINCIPLES
Both Cash Reserves and U.S. Government Reserves are money market funds;
they seek to earn a high level of current income while maintaining a stable
$1.00 share price. As a result, your investment earns income at
current money market rates, and when you sell your shares, they should be
worth the same amount as when you bought them. Of course, there is no
guarantee that either fund will maintain a stable $1.00 share price.
The funds invest in short term, high-quality money market instruments of
different types. Cash Reserves buys U.S. dollar-denominated instruments of
U.S. and foreign issuers, including banks and other financial institutions,
governments and their agencies and instrumentalities, and corporations.
U.S. Government Reserves invests only in obligations issued or guaranteed
as to principal and interest by the United States government or by any of
its agencies or instrumentalities; in repurchase agreements secured by
these obligations; and in reverse repurchase agreements.
Thus, Cash Reserves has the flexibility to invest more broadly in pursuit
of a high level of current income, while U.S. Government Reserves offers
the added safety of investments in U.S. government and agency obligations.
Each fund stresses income, preservation of capital, and liquidity, and does
not seek the higher yields or capital appreciation that more aggressive
investments may provide. Each fund's yield will vary from day to day,
generally reflecting current short-term interest rates and other market
conditions.
The funds follow industry-standard guidelines on the quality and maturity
of their investments, which are designed to help maintain a stable $1.00
share price. The funds will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities they buy. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a
default on the funds' investments could cause their share
prices (and the value of your investment) to change.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the funds may invest, and strategies FMR may employ in
pursuit of the funds' investment objectives. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. government. Not all U.S. government securities are backed by the full
faith and credit of the United States. For example, securities issued by
the Federal Farm Credit Bank or by the Federal National Mortgage
Association are supported by the instrumentality's right to borrow money
from the U.S. Treasury under certain circumstances. However, securities
issued by the Financing Corporation are supported only by the credit of the
entity that issued them.
FOREIGN OBLIGATIONS, including obligations of foreign banks, U.S. branches
and agencies of foreign banks, and foreign branches of U.S. banks, may
involve different risks than domestic obligations, including risks relating
to the political and economic conditions of the foreign country involved,
which could affect the payment of principal or interest.
RESTRICTIONS: U.S. Government Reserves may not invest in foreign
obligations.
ASSET-BACKED SECURITIES may include pools of mortgages, loans, receivables
or other assets. Payment of principal and interest may be largely dependent
upon the cash flows generated by the assets backing the securities.
OTHER MONEY MARKET INSTRUMENTS may include commercial paper, certificates
of deposit, bankers' acceptances, time deposits, asset-backed securities,
and short-term corporate obligations. These instruments may carry fixed or
variable interest rates.
RESTRICTIONS: U.S. Government Reserves may not invest in non-government
obligations.
STRIPPED SECURITIES are the separate income or principal components of a
debt instrument. These involve risks that are similar to those of other
debt securities, although they may be more volatile.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect the market value of a fund's assets.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another party
in return for cash. This could increase the risk of fluctuation in a fund's
yield or in the market value of its assets.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be
determined by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at an
acceptable price. The sale of other securities may be subject to legal
restrictions. Difficulty in selling securities may result in a loss or may
be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a
result, more than 10% of its assets would be invested in illiquid
securities.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one
industry.
RESTRICTIONS: Neither fund may invest more than 5% of its total assets in
the securities of any one issuer, except that Cash Reserves may invest up
to 10% of its assets in the highest - quality securities of a single
issuer for up to three days. A fund may not invest more than 25% of
its total assets in any one industry (other than the financial services
industry for Cash Reserves ; see below). These limitations do not
apply to U.S. government securities.
FINANCIAL SERVICES INDUSTRY. Companies in the financial services industry
are subject to various risks related to that industry, such as government
regulation, changes in interest rates, and exposure on loans, including
loans to foreign borrowers. If a fund invests substantially in this
industry, its performance may be affected by conditions affecting the
industry.
RESTRICTIONS: Cash Reserves will invest more than 25% of its total assets
in the financial services industry.
BORROWING. A fund may borrow from banks or from other funds advised by FMR,
or through reverse repurchase agreements , and may make additional
investments while borrowings are outstanding .
RESTRICTIONS: A fund may borrow only for temporary or
emergency purposes, but not in an amount exceeding 33% of its total
assets .
LENDING. Lending securities to broker-dealers and institutions, including
FBSI, an affiliate of FMR, is a means of earning income. This practice
could result in a loss or a delay in recovering a fund's securities. Cash
Reserves may also lend money to other funds advised by FMR.
RESTRICTIONS. Loans, in the aggregate, may not exceed 33% of a fund's total
assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
CASH RESERVES seeks as high a level of current income as is consistent with
preservation of capital and liquidity by investing in money market
instruments. The fund will not purchase a security if, as a result, more
than 25% of its total assets would be invested in a particular industry;
except that the fund will invest more than 25% of its total assets in the
financial services industry.
U.S. GOVERNMENT RESERVES seeks as high a level of current income as is
consistent with the security of principal and liquidity. The fund may
engage in repurchase agreements secured by obligations issued or guaranteed
as to principal and interest by the United States government or by any of
its agencies or instrumentalities. The fund will not purchase a security
if, as a result, more than 5% of its total assets would be invested in the
securities of a single issuer other than the U.S. government or its
agencies and instrumentalities. The fund will not purchase a security if,
as a result, more than 25% of its total assets would be invested in a
particular industry.
EACH FUND may borrow money only for temporary or emergency purposes
or engage in reverse repurchase agreements, but not in an amount exceeding
33% of the fund's total assets. Loans , in the aggregate, will be
limited to 33% of total assets .
This prospectus is printed on recycled paper using soy-based inks.
FIDELITY CASH RESERVES
A FUND OF FIDELITY PHILLIPS STREET TRUST
FIDELITY U.S. GOVERNMENT RESERVES
A FUND OF FIDELITY CHARLES STREET TRUST
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 11, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated January 11, 1994). Please retain this
document for future reference. The Annual Report of Fidelity Cash Reserves
for the fiscal year ended November 30, 1993 and the Annual Report of
Fidelity U.S. Government Reserves for the fiscal year ended September 30,
1993, are incorporated herein by reference. To obtain additional copies of
the Prospectus or an Annual Report, please call Fidelity Distributors
Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans
Contracts with Companies Affiliated with FMR
Description of the Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISER
FMR Texas Inc. (FTX)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Service Co. (FSC)
CAS-ptb-194
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with the fund's investment policies and
limitations.
Each fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the fund.
However, except for the fundamental investment limitations set forth below,
the investment policies and limitations described in this Statement of
Additional Information are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF FIDELITY CASH RESERVES
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the United States government,
its agencies or instrumentalities) if, as a result, more than 5% of it's
total assets would be invested in the securities of such issuer, provided
however, that with respect to 25% of its total assets, 10% of its total
assets may be invested in the securities of any single issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) purchase securities on margin (but the fund may obtain such credits as
may be necessary for the clearance of purchases and sales of securities);
(4) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(5) act as an underwriter (except as it may be deemed such in a sale of
restricted securities);
(6) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities in the same industry, except that the fund will invest
more than 25% of its total assets in the financial services industry;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(8) buy or sell commodities or commodity (futures) contracts;
(9) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this limit
does not apply to purchases of debt securities or to repurchase agreements;
(10) invest in oil, gas, or other mineral exploration or development
programs; or
(11) invest in companies for the purpose of exercising control or
management.
(12) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objectives, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to purchase or sell call options.
This limitation does not apply to options attached to, or acquired or
traded together with, their underlying securities, and does not apply to
securities that incorporate features similar to options.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operations.
(ix) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(x) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies, and
limitations as the fund.
For the fund's limitations on quality and maturity, see the section
entitled "Quality and Maturity" on page 5.
INVESTMENT LIMITATIONS OF FIDELITY U.S. GOVERNMENT RESERVES
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
it's total assets would be invested in the securities of such issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) purchase securities on margin (but the fund may obtain such credits as
may be necessary for the clearance of purchases and sales of securities);
(4) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(5) act as an underwriter (except as it may be deemed such in a sale of
restricted securities);
(6) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(8) buy or sell commodities or commodity (futures) contracts;
(9) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(10) invest in oil, gas, or other mineral exploration or developmental
programs;
(11) write or purchase any put or call option; or
(12) invest in companies for the purpose of exercising control or
management.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase the voting securities of
any issuer.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(vi) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of reorganization, consolidation, or merger.
(vii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(viii) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
For the fund's limitations on quality and maturity, see the section below
entitled "Quality and Maturity."
INVESTMENT POLICIES OF FIDELITY CASH RESERVES ONLY:
Investments may be made in U.S. dollar-denominated time deposits,
certificates of deposit, and bankers' acceptances of U.S. banks and their
branches located outside of the U.S., U.S. branches and agencies of foreign
banks, and foreign branches of foreign banks. The fund may also invest in
U.S. dollar-denominated securities issued or guaranteed by other U.S. or
foreign issuers, including U.S. and foreign corporations or other business
organizations, foreign governments, foreign government agencies or
instrumentalities, and U.S. and foreign financial institutions, including
savings and loan institutions, insurance companies, mortgage bankers, and
real estate investment trusts, as well as banks. The fund may purchase
obligations of banks, savings and loan institutions, and other financial
institutions whose creditworthiness might not otherwise meet the fund's
standards, provided that (i) the principal amount of the instrument
acquired by the fund is insured in full by the FDIC, and (ii) the aggregate
investment made in any one such bank or institution does not exceed
$100,000.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental
regulation. Payment of interest and principal on these obligations may also
be affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). In addition, evidences of
ownership of portfolio securities may be held outside of the U.S. and the
fund may be subject to the risks associated with the holding of such
property overseas. Various provisions of federal law governing the
establishment and operation of U.S. branches do not apply to foreign
branches of U.S. banks.
Obligations of U.S. branches and agencies of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation, as well as by governmental action in the country in which the
foreign bank has its head office.
Obligations of foreign issuers involve certain additional risks. These
risks may include future unfavorable political and economic developments,
withholding taxes, seizures of foreign deposits, currency controls,
interest limitations, or other governmental restrictions that might affect
payment of principal or interest. Additionally, there may be less public
information available about foreign banks and their branches. Foreign
issuers may be subject to less governmental regulation and supervision than
U.S. issuers. Foreign issuers also generally are not bound by uniform
accounting, auditing, and financial reporting requirements comparable to
those applicable to U.S. issuers.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, the fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security. However, in general, the fund anticipates
holding restricted securities to maturity or selling them in an exempt
transaction.
INVESTMENT POLICIES OF FIDELITY CASH RESERVES AND FIDELITY U.S. GOVERNMENT
RESERVES:
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the funds may purchase only high quality securities that FMR
believes present minimal credit risks. To be considered high quality, a
security must be U.S. government security; rated in accordance with
applicable rules in one of the two highest categories for short-term
securities by at least two nationally recognized rating services (or by
one, if only one rating service has rated the security); or, if unrated,
judged to be of equivalent quality by FMR. High-quality securities, other
than U.S. government securities, are divided into "first tier" and "second
tier" securities. First tier securities have received the highest rating
(e.g., Standard & Poor's A-1 rating) from at least two rating services
(or one, if only one has rated the security). Second tier securities have
received ratings within the two highest rating categories (e.g., Standard
& Poor's A-1 or A-2) from at least two rating services (or one, if only
one has rated the security), but do not qualify as first tier securities.
If a security has been assigned different ratings by different rating
services, at least two ratings services must have assigned the higher
rating in order for FMR to determine eligibility on the basis of that
higher rating. Based on procedures adopted by the Board of Trustees, FMR
may determine that an unrated security is of equivalent quality to a rated
first or second tier security.
Cash Reserves does not currently intend to invest more than 5% of its total
assets in second tier securities, nor to invest more than 1% of its total
assets or $1 million (whichever is greater) in the second tier securities
of a single issuer.
Both funds currently intend to maintain a dollar-weighted average maturity
of 90 days or less.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the funds may engage in
transactions with banks that are, or may be considered to be, "affiliated
persons" of a fund under the Investment Company Act of 1940. Such
transactions may be entered into only pursuant to procedures established
and periodically reviewed by the Board of Trustees. These transactions may
include repurchase agreements with custodian banks; purchases, as
principal, of short-term obligations of, and repurchase agreements with,
the 50 largest U.S. banks (measured by deposits); transactions in municipal
securities; and transactions in U.S. government securities with affiliated
banks that are primary dealers in these securities.
ASSET-BACKED SECURITIES may include pools of mortgages, loans, receivables
or other assets. Payment of principal and interest may be largely dependent
upon the cash flows generated by the assets backing the securities, and, in
certain cases, supported by letters of credit, surety bonds, or other
credit enhancements. The value of asset-backed securities may also be
affected by the creditworthiness of the servicing agent for the pool, the
originator of the loans or receivables, or the financial institution(s)
providing the credit support.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered.
When purchasing securities on a delayed-delivery basis, a fund assumes the
rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
each fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, a fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, a fund could miss a
favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
VARIABLE OR FLOATING RATE INSTRUMENTS. Variable or Floating Rate
Obligations bear variable or floating interest rates and carry rights that
permit holders to demand payment of the unpaid principal balance plus
accrued interest from the issuers or certain financial intermediaries.
Floating rate instruments have interest rates that change whenever there is
a change in a designated base rate while variable rate instruments provide
for a specified periodic adjustment in the interest rate. These formulas
are designed to result in a market value for the instrument that
approximates its par value.
A demand instrument with a conditional demand feature must have received
both a short-term and a long-term high-quality rating or, if unrated, have
been determined to be of comparable quality pursuant to procedures adopted
by the Board of Trustees. A demand instrument with an unconditional demand
feature may be acquired solely in reliance upon a short-term high-quality
rating or, if unrated, upon a finding of comparable short-term quality
pursuant to procedures adopted by the Board of Trustees.
A fund may invest in variable or floating rate instruments that
ultimately mature in more than 397 days, if the fund acquires a right to
sell the instruments that meets certain requirements set forth in Rule
2a-7. Variable rate instruments (including instruments subject to a demand
feature) that mature in 397 days or less and U.S. government securities
with a variable rate of interest adjusted no less frequently than 762 days
may be deemed to have maturities equal to the period remaining until the
next readjustment of the interest rate. Other variable rate instruments
with demand features may be deemed to have a maturity equal to the period
remaining until the next adjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand. A
floating rate instrument subject to a demand feature may be deemed to have
a maturity equal to the period remaining until the principal amount can be
recovered through demand.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. The resale price reflects the purchase price plus an
agreed-upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed-upon price, which obligation is
in effect secured by the value (at least equal to the amount of the
agreed-upon resale price and marked to market daily) of the underlying
security. A fund may engage in a repurchase agreement with respect to any
security in which it is authorized to invest, even if the underlying
security matures in more than 397 days. While it does not presently appear
possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities,
as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to limit repurchase
agreement transactions to those parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, a fund will maintain appropriate liquid assets in a segregated
custodial account to cover its obligation under the agreement. Each fund
will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of a fund's assets and may be
viewed as a form of leverage.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment). Investments currently considered
by Cash Reserves to be illiquid include repurchase agreements not entitling
the holder to payment of principal and interest within seven days. Also,
FMR may determine some restricted securities and time deposits to be
illiquid. Investments currently considered by Fidelity U.S. Government
Reserves to be illiquid include repurchase agreements not entitling the
holder to payment of principal and interest within seven days. In the
absence of market quotations, illiquid investments are valued for purposes
of monitoring amortized cost valuation at fair value as determined in good
faith by a committee appointed by the Board of Trustees. If through a
change in values, net assets, or other circumstances, the fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
STRIPPED GOVERNMENT SECURITIES. Stripped securities are created by
separating the income and principal components of a debt instrument and
selling them separately. Each of the funds may purchase U.S. Treasury
STRIPS (Separate Trading of Registered Interest and Principal of
Securities), that are created when the coupon payments and the principal
payment are stripped from an outstanding Treasury bond by the Federal
Reserve Bank. Bonds issued by the Resolution Funding Corporation (REFCORP)
can also be stripped in this fashion. REFCORP Strips are eligible
investments for the funds.
Cash Reserves can purchase privately stripped government securities, which
are created when a dealer deposits a Treasury security or federal agency
security with a custodian for safekeeping and then sells the coupon
payments and principal payment that will be generated by this security.
Proprietary receipts, such as Certificates of Accrual on Treasury
Securities (CATS), Treasury Investment Growth Receipts (TIGRS), and generic
Treasury Receipts (TRs), are stripped U.S. Treasury securities that are
separated into their component parts through trusts created by their broker
sponsors. Bonds issued by the Financing Corporation (FICO) can also be
stripped in this fashion.
Because of the SEC's views on privately stripped government securities,
Cash Reserves must evaluate them as it would non-government securities
pursuant to regulatory guidelines applicable to all money market funds.
Accordingly, the fund currently intends to purchase only those privately
stripped government securities that have either received the highest rating
from two nationally recognized rating services (or one, if only one has
rated the security) or, if unrated, been judged to be of equivalent quality
by FMR pursuant to procedures adopted by the Board of Trustees.
INTERFUND BORROWING PROGRAM. Each fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates but U.S. Government Reserves will participate in the interfund
borrowing program only as a borrower. Interfund loans and borrowings
normally will extend overnight, but can have a maximum duration of seven
days. Cash Reserves will lend through the program only when the returns are
higher than those available at the same time from other short-term
instruments (such as repurchase agreements). Cash Reserves will not lend
more than 10% of its assets to other funds. Any delay in repayment to a
lending fund could result in a lost investment opportunity or additional
borrowing costs. Each fund will not borrow through the program if, after
doing so, total outstanding borrowings would exceed 15% of total assets.
Loans may be called on one day's notice, and the fund may have to borrow
from a bank at a higher interest rate if an interfund loan is called or not
renewed.
SHORT SALES AGAINST THE BOX. A fund may sell securities short when
it owns or has the right to obtain securities equivalent in
kind or amount to the securities sold short. Short sales could be used to
protect the net asset value per share of the fund in
anticipation of increased interest rates, without sacrificing the current
yield of the securities sold short. If a fund enters into a short sale
against the box, it will be required to set aside securities equivalent in
kind and amount to the securities sold short (or securities
convertible or exchangeable into such securities) and will be required to
hold such securities while the short sale is outstanding. The funds will
incur transaction costs including interest expense , in
connection with opening, maintaining, and closing short sales against the
box.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by FMR (either directly or through affiliated
sub-advisers) pursuant to authority contained in the management contracts.
FMR is also responsible for the placement of transaction orders for other
investment companies and accounts for which it or its affiliates act as
investment adviser. Securities purchased and sold by the funds generally
will be traded on a net basis (i.e., without commission). In selecting
broker-dealers, subject to applicable limitations of the federal securities
laws, FMR will consider various relevant factors, including, but not
limited to, the size and type of the transaction; the nature and character
of the markets for the security to be purchased or sold; the execution
efficiency, settlement capability, and financial condition of the
broker-dealer firm; the broker-dealer's execution services rendered on a
continuing basis; and the reasonableness of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of broker-dealers who
provide such services on a regular basis. However, as many transactions on
behalf of the funds are placed with broker-dealers (including
broker-dealers on the list) without regard to the furnishing of such
services, it is not possible to estimate the proportion of such
transactions directed to such broker-dealers solely because such services
were provided. The selection of such broker-dealers is generally made by
FMR (to the extent possible consistent with execution considerations) based
upon the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and, conversely, research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
funds to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers, viewed in
terms of a particular transaction or FMR's overall responsibilities to the
funds and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation should
be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the fund or shares of other Fidelity funds
to the extent permitted by law. FMR may use research services provided by
and place agency transactions with Fidelity Brokerage Services, Inc. (FBSI)
and, for Cash Reserves, Fidelity Brokerage Services, Ltd. (FBSL), both
subsidiaries of FMR Corp., if the commissions are fair, reasonable, and
comparable to commissions charged by non-affiliated, qualified brokerage
firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the Securities and Exchange Commission. Pursuant to such
regulations, each fund's Board of Trustees has approved a written agreement
that permits FBSI to effect portfolio transactions on national securities
exchanges and to retain compensation in connection with such transactions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
funds and review the commissions paid by the funds over representative
periods of time to determine if they are reasonable in relation to the
benefits to the funds.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. The funds seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for the funds to seek such
recapture.
Although the Trustees and officers of the funds are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases, this system could have a detrimental
effect on the price or value of the security as far as the funds are
concerned. In other cases, however, the ability of a fund to participate in
volume transactions will produce better executions and prices for the fund.
It is the current opinion of the Trustees that the desirability of
retaining FMR as investment adviser to the fund outweighs any disadvantages
that may be said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Each fund values its investments on the basis of amortized cost. This
technique involves valuing an instrument at its cost as adjusted for
amortization of premium or accretion of discount rather than its value
based on current market quotations or appropriate substitutes which reflect
current market conditions. The amortized cost value of an instrument may be
higher or lower than the price each fund would receive if it sold the
instrument.
Valuing a fund's instruments on the basis of amortized cost and use of the
term "money market fund" are permitted by Rule 2a-7 under the Investment
Company Act of 1940 (the 1940 Act). Each fund must adhere to certain
conditions under Rule 2a-7.
The Board of Trustees of each trust oversees FMR's adherence to SEC rules
concerning money market funds, and has established procedures designed to
stabilize each fund's NAV at $1.00. At such intervals as they deem
appropriate, the Trustees consider the extent to which NAV calculated by
using market valuations would deviate from $1.00 per share. If the Trustees
believe that a deviation from a fund's amortized cost per share may result
in material dilution or other unfair results to shareholders, the Trustees
have agreed to take such corrective action, if any, as they deem
appropriate to eliminate or reduce, to the extent reasonably practicable,
the dilution or unfair results. Such corrective action could include
selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity; withholding dividends;
redeeming shares in kind; establishing NAV by using available market
quotations; and such other measures as the Trustees may deem appropriate.
During periods of declining interest rates, each fund's yield based on
amortized cost may be higher than the yield based on market valuations.
Under these circumstances, a shareholder in either fund would be able to
obtain a somewhat higher yield than would result if each respective fund
utilized market valuations to determine its NAV. The converse would apply
in a period of rising interest rates.
PERFORMANCE
Each fund may quote its performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's yields and total returns
fluctuate in response to market conditions and other factors.
YIELD CALCULATIONS. To compute each fund's yield for a period, the net
change in value of a hypothetical account containing one share reflects the
value of additional shares purchased with dividends from the original share
and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at the
beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current annualized yield. Each fund may
also calculate an effective yield by compounding the base period return
over a one year period. In addition to the current yield, each fund may
quote yields in advertising based on any historical seven-day period.
Yield information may be useful in reviewing the funds' performance and in
providing a basis for comparison with other investment alternatives.
However, the funds' yields fluctuate, unlike investments that pay a fixed
interest rate over a stated period of time. The funds' yields are
calculated on the same basis as other money market funds, as required by
applicable regulations. When comparing investment alternatives, investors
should also note the quality and maturity of the portfolio securities of
the respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates the
funds' yields will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the funds' yields will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
funds' holdings, thereby reducing the current yield of the funds. In
periods of rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's returns, including the effect of reinvesting dividends
and capital gain distributions (if any), and any change in the fund's net
asset value (NAV) over a period. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment in a fund over a stated period, and then calculating the
annually compounded percentage rate that would have produced the same
result if the rate of growth or decline in value had been constant over the
entire period. For example, a cumulative return of 100% over ten years
would produce an average annual return of 7.18%, which is the steady annual
rate that would equal 100% growth on a compounded basis in ten years. While
average annual returns are a convenient means of comparing investment
alternatives, investors should realize that a fund's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to actual year-to-year
performance.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price, if any) in order to illustrate the relationship of these
factors and their contributions to total return. An example of this type of
illustration is given below. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
HISTORICAL FUND RESULTS. The following table shows each fund's yield and
total returns for the periods ended November 30, 1993 (Cash Reserves) and
September 30, 1993 (U.S. Government Reserves):
Average Annual Total Returns Cumulative Total Returns
Seven-Day One Five Ten One Five Ten
Yield Year Years Years Year Years Years
CASH RESERVES 2.87% 2.97% 5.96% 6.81% 2.97% 33.55% 93.21%
FIDELITY U.S. GOVERNMENT
RESERVES 2.89% 2.57% 5.84% 6.65% 2.57% 32.83% 90.41 %
The following tables compare each fund's returns for the fiscal periods
shown to the records of the Standard & Poor's 500 Composite Stock Price
Index (S&P 500), the Dow Jones Industrial Average (DJIA), and the cost
of living (measured by the Consumer Price Index, or CPI) over the same
period. The S&P 500 and DJIA comparisons are provided to show how each
fund's return compared to the return of common stocks over the same period.
Of course, since the funds invest in short-term fixed-income securities,
common stocks represent a different type of investment from the funds.
Common stocks generally offer greater growth potential than the funds, but
generally are more volatile in value and may offer a greater potential for
loss. In addition, common stocks generally provide lower income than a
money market investment such as the funds. The S&P 500 and DJIA are
based on the prices of unmanaged groups of stocks and, unlike the funds'
returns, their returns do not include the effect of paying brokerage
commissions and other costs of investing.
FIDELITY CASH RESERVES. During the period November 30, 1983 to November 30,
1993, a hypothetical $10,000 investment in Fidelity Cash Reserves would
have grown to $ 19,321 , assuming all distributions were reinvested.
This was a period of widely fluctuating interest rates and should not
necessarily be considered representative of the dividend income that could
be realized from an investment in the fund today.
FIDELITY CASH RESERVES INDICES
VALUE OF
YEAR INITIAL VALUE OF VALUE OF COST
ENDED $10,000 REINVESTED REINVESTED TOTAL OF
11/30 INVESTMENT DIVIDENDS CAPITAL GAINS VALUE S&P 500 DJIA LIVING
1993 $10,000 $9,321 $0 $19,321 $39,547 $41,602 $14,407
1992 10,000 8,764 0 18,764 35,919 36,260 14,038
1991 10,000 8,060 0 18,060 30,311 30,834 13,617
1990 10,000 7,002 0 17,002 25,185 26,362 13,221
1989 10,000 5,761 0 15,761 26,094 26,811 12,441
1988 10,000 4,467 0 14,467 19,942 20,186 11,887
1987 10,000 3,501 0 13,501 16,170 16,888 11,408
1986 10,000 2,703 0 12,703 16,963 17,103 10,909
1985 10,000 1,905 0 11,905 13,286 12,688 10,771
1984 10,000 1,023 0 11,023 10,300 9,786 10,405
Explanatory Notes: With an initial investment of $10,000 made on November
30, 1983, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested), amounted to $19,321. If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments (dividends) for the period would
have amounted to $6,606 . The fund did not distribute any capital
gains during the period. Tax consequences of different investments have not
been factored into the above figures.
FIDELITY U.S. GOVERNMENT RESERVES. During the period September 30, 1983 to
September 30, 1993, a hypothetical $10,000 investment in Fidelity U.S.
Government Reserves would have grown to $ 19,041 , assuming all
distributions were reinvested. This was a period of widely fluctuating
interest rates and should not necessarily be considered representative of
the dividend income that could be realized from an investment in the fund
today.
FIDELITY U.S. GOVERNMENT RESERVES INDICES
VALUE OF
YEAR INITIAL VALUE OF VALUE OF COST
ENDED $10,000 REINVESTED REINVESTED TOTAL OF
9/30 INVESTMENT DIVIDENDS CAPITAL GAINS VALUE S&P 500 DJIA LIVING
1993 $10,000 $9,041 $0 $19,041 $39,478 $41,660 $14,409
1992 10,000 8,564 0 18,564 34,933 37,230 14,032
1991 10,000 7,858 0 17,858 31,455 33,337 13,625
1990 10,000 6,801 0 16,801 23,978 26,162 13,178
1989 10,000 5,577 0 15,577 26,422 27,642 12,413
1988 10,000 4,335 0 14,335 19,866 20,903 11,897
1987 10,000 3,431 0 13,431 22,668 24,778 11,420
1986 10,000 2,696 0 12,696 15,802 16,368 10,943
1985 10,000 1,874 0 11,874 11,994 11,859 10,750
1984 10,000 9,761 0 10,976 10,472 10,270 10,427
Explanatory Notes: With an initial investment of $10,000 made on September
30, 1983, the net amount invested in fund shares was $10,000. The cost of
the initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested) amounted to $ 19,041 . If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments (dividends) for the period would
have amounted to $ 6,459 . The fund did not distribute any capital
gains during the period. Tax consequences of different investments have not
been factored into the figures above.
A fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to the
mutual fund rankings, a fund's performance may be compared to mutual fund
performance indices prepared by Lipper.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and
services .
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
The fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES(registered
trademark)/All Taxable, and Government, which are reported in the
MONEY FUND REPORT(registered trademark), cover over 624 taxable and
202 U.S. government money market funds, respectively.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(registered trademark) number,
and CUSIP number, and discuss or quote its current portfolio manager.
A fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000
investment earning a taxable return of 10% annually would have an after-tax
value of $1,949 after ten years, assuming tax was deducted from the return
each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,100 after ten years, assuming tax was deducted at
a 31% rate from the tax-deferred earnings at the end of the ten-year
period.
The funds may also compare their performance to several products offered by
banks and thrifts. The funds may compare their yields, both the seven-day
yield and the effective yield, to those of money market accounts, Super NOW
accounts, and certificates of deposit quoted in the BANK RATE MONITOR
National Index(registered trademark), an average of the quoted rates for
100 leading banks and thrifts in ten U.S. cities, chosen to represent the
ten largest Consumer Metropolitan Statistical Areas. Unlike the funds,
certain bank and thrift products such as money market deposit accounts,
Super NOW accounts, and certificates of deposit are insured by the Federal
Deposit Insurance Corporation.
Each fund may also compare its seven-day average net yield with the BANK
RATE MONITOR National Index(registered trademark) (an index of bank money
market deposit account performance). BANK RATE MONITOR National
Index(registered trademark) is published by Advertising News Services, Inc.
of North Palm Beach, Florida 33408.
From time to time, the funds may reference the U.S. Personal Savings Rate
as quoted by the Department of Commerce. The Personal Savings Rate is
defined as that part of personal income which is neither paid out in taxes
nor spent on goods and services. The funds may also quote from commentary
which appears in published newspapers, magazines, and other periodicals.
The funds may reference the growth and variety of money market mutual funds
and the adviser's innovation and participation in the industry.
In addition, the funds may compare their yields to the Auction Average
Discount Rate for 182-day Treasury bills. Six-month Treasury bills are
issued at a discount from their face value in weekly auctions.
Consequently, their yield is quoted as a yield to maturity reflecting the
accretion of the discount as the bill matures. The funds may also compare
their yields to the federal funds rate, which is the interest rate that
banks charge each other for overnight loans through the Federal Reserve
System to meet reserve requirements. Both the yield on six-month Treasury
bills and the federal funds rate are considered to be sensitive indicators
of interest rate trends.
Cash Reserves may be advertised as an investment choice under the Fidelity
College Savings Plan mutual fund option. Fidelity College Savings Plan
advertising may contain illustrations of projected future college costs
based on assumed rates of inflation and examples of hypothetical
performance. Advertising for the Fidelity College Savings Plan mutual fund
option may be used in conjunction with advertising for the Fidelity College
Savings Plan brokerage option, a product offered through Fidelity Brokerage
Services, Inc.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
For accounts opened under the Uniform Gifts or Transfers to Minors Act, the
minimum initial investment for Cash Reserves is $1,000. The minimum is
further reduced for investors choosing the Fidelity College Savings Plan
Starter Account option, in which investors begin their account with monthly
investments of $100 or more via Fidelity Automatic Account Builder. Starter
Accounts that do not reach a $1,000 minimum within one year of
establishment may be closed.
Each fund is open for business and its NAV is calculated each day the New
York Stock Exchange (NYSE) is open for trading. The NYSE has designated the
following holiday closings for 1994: Washington's Birthday (observed), Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving
Day, and Christmas Day (observed). Although FMR expects the same holiday
schedule to be observed in the future, the NYSE may modify its holiday
schedule at any time.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier
if trading on the NYSE is restricted or as permitted by the SEC. To the
extent that portfolio securities are traded in other markets on days when
the NYSE is closed, a fund's NAV may be affected on days when investors do
not have access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the 1940
Act), each fund is required to give shareholders at least 60 days' notice
prior to terminating or modifying its exchange privilege. Under the Rule,
the 60-day notification requirement may be waived if (i) the only effect of
a modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the fund suspends the redemption of the shares
to be exchanged as permitted under the 1940 Act or by the SEC, or the fund
to be acquired suspends the sale of its shares because it is unable to
invest amounts effectively in accordance with its investment objective and
policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, a fund would be unable to invest
effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. Because the funds' income is primarily derived from interest,
dividends from the funds will not normally qualify for the
dividends-received deduction available to corporations. The funds will send
each shareholder a notice in January describing the tax status of dividends
and capital gain distributions (if any) for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Each fund may distribute any net realized
short-term capital gains once a year or more often, as necessary, to
maintain its net asset value at $1.00 per share. Short-term capital gains
distributed by the funds are taxable to shareholders as dividends, not as
capital gains. Distributions from short-term capital gains do not qualify
for the dividends-received deduction.
As of November 30, 1993, Cash Reserves had an aggregate capital loss
carry over of approximately $1,196,000 available to offset future realized
capital gains, to the extent provided in regulations, which will expire on
November 30, 2001.
As of September 30, 1993, U.S. Government Reserves had an aggregate capital
loss carryover of approximately $ 436,000 available to offset future
realized capital gains, to the extent provided in regulations, of which
$ 7,000 and $ 429,000 will expire September 30, 1995, and
September 30, 1996, respectively.
TAX STATUS OF THE FUNDS. Each fund has qualified and intends to continue to
qualify each year as a "regulated investment company" for tax purposes so
that it will not be liable for federal tax on income and capital gains
distributed to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at the
fund level, each fund intends to distribute substantially all of its net
investment income and net realized capital gains (if any) within each
calendar year as well as on a fiscal year basis. U.S. Government Reserves
is treated as a separate entity for tax purposes from other funds of
Fidelity Charles Street Trust for tax purposes.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
most states' laws provide for a pass-through of the state and local income
tax exemption afforded to direct owners of U.S. government securities.
Therefore, for residents of most states, the tax treatment of your dividend
distributions from U.S. Government Reserves will be the same as if you
directly owned your proportionate share of that fund's portfolio
securities. Thus, because the income earned on most U.S. government
securities in which the fund invests is exempt from state and local income
taxes in most states, the portion of your dividends from the fund
attributable to these securities will also be free from income taxes in
those states. The exemption from state and local income taxation does not
preclude states from assessing other taxes on the ownership of U. S.
government securities.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the funds and their shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders of the funds may be subject
to state and local taxes on distributions received from a fund.
Investors should consult their tax advisers to determine whether the funds
are suitable to their particular tax situation.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas, a wholly owned subsidiary of FMR
formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trusts are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. Trustees and officers elected or
appointed to Fidelity Cash Reserves prior to the fund's conversion from a
fund of that trust to a fund of Fidelity Phillips Street Trust served
Fidelity Cash Reserves in identical capacities. All persons named as
Trustees also serve in similar capacities for other funds advised by FMR.
Unless otherwise noted, the business address of each Trustee and officer is
82 Devonshire Street, Boston, Massachusetts 02109, which is also the
address of FMR. Those Trustees who are "interested persons" (as defined in
the Investment Company Act of 1940) by virtue of their affiliation with
either trust or with FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, 340 E. 64th Street #22C, New York, NY, Trustee (Cash
Reserves only - 1992). Prior to her retirement in September 1991,
Mrs. Davis was the Senior Vice President of Corporate Affairs of Avon
Products, Inc. She is currently a Director of BellSouth Corporation
(telecommunications), Eaton Corporation (manufacturing, 1991), and the TJX
Companies, Inc. (retail stores, 1990), and previously served as a Director
of Hallmark Cards, Inc. (1985-1991) and Nabisco Brands, Inc. In addition,
she serves as a Director of the New York City Chapter of the National
Multiple Sclerosis Society, and is a member of the Advisory Council of the
International Executive Service Corps. and the President's Advisory Council
of The University of Vermont School of Business Administration (1988).
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 30195 Chagrin Blvd., Suite 104W, Pepper Pike, OH, Trustee
(1990). Prior to his retirement in 1984, Mr. Jones was Chairman and Chief
Executive Officer of LTV Steel Company. Prior to May 1990, he was Director
of National City Corporation (a bank holding company) and National City
Bank of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he serves
as a Trustee of First Union Real Estate Investments; Chairman of the Board
of Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1 - North, Greenwich,
CT, Trustee, is a Professor at Columbia University Graduate School of
Business and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), the National Arts Stabilization Fund, Greenwich
Hospital Association (1989), and Valuation Research Corp. (appraisals and
valuations, 1993).
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction, 1988). In addition, he serves as a Trustee
of Boston College, Massachusetts Eye & Ear Infirmary, Historic
Deerfield (1989) and Society for the Preservation of New England
Antiquities, and as an Overseer of the Museum of Fine Arts of Boston
(1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), and Commercial Intertech Corp. (water treatment equipment, 1992). In
addition, he serves as a Director for United Way Services of Greater
Cleveland, a member of the Executive Committee of the Weatherhead School of
Management, and as a Trustee of The Center for Economic Education.
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee (1988).
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company. He
is a Director of Allegheny Power Systems, Inc. (electric utility), General
Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). He is also
a Trustee of Rensselaer Polytechnic Institute and of Corporate Property
Investors and a member of the Advisory Boards of Butler Capital Corporation
Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (Cash Reserves
only - 1993) is Chairman of the Board, President, and Chief Executive
Officer of Lexmark International, Inc. (office machines, 1991). Prior to
1991, he held the positions of Vice President of International Business
Machines Corporation ("IBM") and President and General Manager of various
IBM divisions and subsidiaries. Mr. Mann is a Director of M.A. Hanna
Company (chemicals, 1993) and Infomart (marketing services, 1991), a
Trammell Crow Co. In addition, he serves as the Campaign Vice Chairman of
the Tri-State United Way (1993) and is a member of the University of
Alabama President's Cabinet (1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee (1988), is President of The Wales Group, Inc. (management and
financial advisory services). Prior to retiring in 1987, Mr. Williams
served as Chairman of the Board of First Wachovia Corporation (bank holding
company), and Chairman and Chief Executive Officer of The First National
Bank of Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software, 1988), Georgia Power Company (electric utility), Gerber
Alley & Associates, Inc. (computer software), National Life Insurance
Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Vice President and General Counsel of FMR,
Vice President-Legal of FMR Corp., and Clerk of FDC.
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas Inc. (1990).
LELAND BARRON, Vice President (1991), is also a Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
ROBERT LITTERST, Vice President (1993), is also a Vice President of
other funds advised by FMR and an employee of FMR Texas Inc.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
retirement program under which they receive payments during their lifetime
from t he fund based on their basic trustee fees and length of service.
Currently, Messrs. Robert L. Johnson, William R. Spaulding, Bertram H.
Witham, and David L. Yunich participate in the program.
As of November 30, 1993, the Trustees and officers of the funds owned, in
the aggregate, less than 1% of each fund's outstanding shares.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing the fund's investments, and
compensates all officers of the trust, all Trustees who are "interested
persons" of the trust or FMR, and all personnel of the trust or FMR
performing services related to research, statistical, and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the funds; preparing all general shareholder
communications and conducting shareholder relations; maintaining the funds'
records and the registration of each fund's shares under federal and state
law; developing management and shareholder services for the funds; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
FSC, each fund pays all of its expenses, without limitation, that are not
assumed by those parties. Each fund pays for typesetting, printing, and
mailing proxy material to shareholders, legal expenses, and the fees of the
custodian, auditor, and non-interested Trustees. Although each management
contract provides that the fund will pay for typesetting, printing, and
mailing prospectuses, statements of additional information, notices, and
reports to existing shareholders, the trusts have entered into a revised
transfer agent agreement with FSC, pursuant to which FSC bears the cost of
providing these services to existing shareholders. Other expenses paid by
each fund include interest, taxes, brokerage commissions, each fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. Each fund is also liable for such nonrecurring expenses as
may arise, including costs of any litigation to which a fund may be a party
and any obligation it may have to indemnify the each trust's officers and
Trustees with respect to litigation.
FIDELITY CASH RESERVES. FMR is the fund's manager pursuant to a management
contract dated December 1, 1993, which was approved by shareholders on
November 17, 1993. For the services of FMR under the contract, the fund
pays FMR a monthly management fee calculated by adding a basic fee, which
consists of a group fee rate and an individual fund fee rate (.03%), to an
income-based component of 6% of the fund's gross income in excess of a 5%
yield, and multiplying the result by the fund's average net assets.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown on the left of the chart below. On the right, the effective
fee rate schedule shows the results of cumulatively applying the annualized
rates at varying asset levels. For example, the effective annual fee rate
at $ 227.0 billion of group net assets--their approximate level for
November 1993--was .1627 %, which is the weighted average of the
respective fee rates for each level of group net assets up to $ 227.0
billion.
AVERAGE GROUP EFFECTIVE
GROUP ANNUALIZED NET ANNUAL
ASSETS RATE ASSETS FEE RATE
0 - $3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1695
24 - 30 .1800 200 .1658
30 - 36 .1750 225 .1629
36 - 42 .1700 250 .1604
42 - 48 .1650 275 .1583
48 - 66 .1600 300 .1565
66 - 84 .1550 325 .1548
84 - 120 .1500 350 .1533
120 - 174 .1450
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
Based on the average net assets of funds advised by FMR for November
1993, the basic fee rate would be calculated as follows:
GROUP FEE RATE INDIVIDUAL FUND FEE RATE BASIC FEE
.1627 % + .03% = .1927 %
If the fund's gross yield is 5% or less, the basic fee is the total
management fee. The income-based component of the proposed fee is added to
the basic fee when the fund's yield is greater than 5%. The income-based
fee equals 6% of that portion of the fund's gross income that represents a
gross yield of more than 5% per year. The maximum income-based component is
.24% (annualized) of average net assets, at a fund gross yield of 9%. Gross
income for this purpose, includes interest accrued and/or discount earned
(including both original issue discount and market discount) on portfolio
obligations, less amortization of premium. Realized and unrealized gains
and losses, if any, are not included in gross income.
One twelfth (1/12) of the basic fee plus the income-based component is
applied to the fund's average net assets for the current month, giving a
dollar amount which is the fee for that month.
The contract further provides that FMR will reimburse the fund, in an
amount not in excess of the fund's management fee for any fiscal year, if
the fund's aggregate operating expenses exceed 1% of the average net assets
of the fund.
FIDELITY CASH RESERVES. The fund's management contract with FMR prior to
December 1, 1993 was dated January 1, 1993, and was approved by
shareholders under a Plan of Conversion on December 5, 1992. For the
services of FMR under the contract, the fund payed FMR a monthly management
fee computed on the basis of the fund's gross income. To the extent that
the monthly gross income of the fund was equivalent to an annualized yield
of 5% or less, FMR received 4% of that amount of the fund's gross income.
In addition, to the extent that the fund's monthly income exceeded an
annualized yield of 5%, FMR received 6% of that excess. For this purpose,
gross income included interest accrued or discount earned (including both
original issue and market discount), less amortization of premium. The
amount of discount or premium on portfolio instruments was fixed at the
time of purchase. Realized and unrealized gains and losses, if any, were
not included in gross income.
Pursuant to the terms of the contract, limitations were imposed on the
compensation FMR could receive under the above formula. These limitations
were based on the fund's average monthly net assets as follows:
AVERAGE MONTHLY NET ASSETS ANNUALIZED RATE
On the first $1.5 billion .50%
On the portion in excess of $1.5 to $3.0 billion .45%
On the portion in excess of $3.0 billion to $4.5 billion .43%
On the portion in excess of $4.5 billion to $6.0 billion .41%
On the portion in excess of $6.0 billion .40%
The contract provided further that FMR would reimburse the fund, in an
amount not in excess of the fund's management fee for any fiscal year, if
the fund's aggregate operating expenses exceeded 1% of the average net
assets of the fund.
As the result of a litigation settlement, the fund's previous contract
provided that through June 1992, FMR would provide a monthly credit at the
annual rate of $400,000 against the management fees due and payable by the
fund to FMR through June 1992.
For the fiscal years ended November 30, 1993, 1992, and 1991, the fund paid
fees of $13,258,000 , $17,693, 000 , and $ 31,574,000 ,
respectively (equivalent to annual rates of . 1358 %, .1726%, and
.2939%, respectively, of average net assets) to FMR for its services as
investment adviser to the fund.
FIDELITY U.S. GOVERNMENT RESERVES. FMR is the fund's manager pursuant to an
amended management contract dated December 1, 1992, which was approved by
shareholders on November 18, 1992. For the services of FMR under the
contract, the fund pays FMR a monthly management fee composed of the sum of
two elements: a group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of the
registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate
schedule shown below. On the right, the effective fee rate schedule shows
the results of cumulatively applying the annualized rates at varying asset
levels. For example, the effective annual fee rate at $216.7 billion
of group net assets - their approximate level for September 1993 - was
. 1638 %, which is the weighted average of the respective fee rates
for each level of group net assets up to that level.
AVERAGE GROUP EFFECTIVE
GROUP ANNUALIZED NET ANNUAL
ASSETS RATE ASSETS FEE RATE
0 - $3 billion .3700% $ 0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1695
24 - 30 .1800 200 .1658
30 - 36 .1750 225 .1629
36 - 42 .1700 250 .1604
42 - 48 .1650 275 .1583
48 - 66 .1600 300 .1565
66 - 84 .1550 325 .1548
84 - 120 .1500 350 .1533
120 - 174 .1450
174 - 228 .1400
228 - 282 .1375
282 - 336 .1350
Over 336 .1325
* The rates shown for average group assets in excess of $174 billion
were adopted by FMR on a voluntary basis on November 1, 1993 pending
shareholder approval of a new management contract reflecting the extended
schedule. The extended schedule provides for lower management fees as total
assets under management increase.
The individual fund fee rate is .28%. Based on the average net assets of
funds advised by FMR for September 1993, the annual management fee rate
would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
.1638% + .28% = .4438%
One twelfth (1/12) of this annual management fee rate is then applied to
the fund's average net assets for the current month, giving a dollar amount
which is the fee for that month.
The substantive difference between the current contract and the contract
prior to December 1, 1992 (which was dated January 29, 1990) is an
extension of the group fee rate table shown above.
The schedule shown above (minus the breakpoints added November 1, 1993)
was voluntarily adopted by FMR on January 1, 1992 until shareholders could
meet to approve the amended management contract. Prior to January 1, 1992,
the fund's group fee rate was based on a schedule with breakpoints ending
at .150% for average group assets in excess of $84 billion. In
addition, effective September 1, 1993, Fidelity Management & Research
Company agreed to voluntarily adopt a revised management fee structure
which provides for a lower individual fund fee rate (.03%) and the addition
of an income-based component that is identical to that of Cash Reserves.
This change will provide for lower management fees, and will be presented
to shareholders for approval at the next shareholder meeting.
During the fiscal years ended September 30, 1993, 1992, and 1991, the fund
paid fees of $4,887,000, $6,065,000, and $7,015,000 , respectively,
to FMR for its services as investment adviser to the fund. These fees were
equivalent to .4289 %, .4549%, and 4613%, respectively, of the fund's
average net assets for those years.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating each fund's expenses for purposes of this regulation, the
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses.
SUB-ADVISER. With respect to each fund, FMR has entered into a sub-advisory
agreement with FTX pursuant to which FTX has primary responsibility for
providing portfolio investment management services to the fund. Under each
sub-advisory agreement, FMR pays FTX fees equal to 50% of the management
fee payable to FMR under its management contract with each fund. The fees
paid to FTX are not reduced by any voluntary or mandatory expense
reimbursements that may be in effect from time to time. For the fiscal
years ended November 30 (Cash Reserves) and September 30 (U.S. Government
Reserves) 1993, 1992, and 1991, FMR paid FTX management fees of
$6,629,000 , $8,963,000, and $15,987,000 , respectively, for
Cash Reserves, and $2,444,000, $3,032,000, and $3,507,000 ,
respectively, for U.S. Government Reserves.
DISTRIBUTION AND SERVICE PLANS
Each fund has adopted a distribution and service plan (the Plans) under
Rule 12b-1 under the Investment Company Act of 1940 (the Rule). The Rule
provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is primarily intended to result
in the sale of shares of the fund except pursuant to a plan adopted by the
fund under the Rule. Each fund's Board of Trustees has adopted the Plan to
allow the fund and FMR to incur certain expenses that might be considered
to constitute indirect payment by the fund of distribution expenses. Under
the Plans, if the payment by a fund to FMR of management fees should be
deemed to be indirect financing by the fund of the distribution of its
shares, such payment is authorized by the Plans.
Each Plan specifically recognizes that FMR, either directly or through FDC,
may use its management fee revenues, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the funds. In addition, the
Plans provide that FMR may use its resources, including its management fee
revenues, to make payments to third parties that provide assistance in
selling shares of the funds, or to third parties, including banks, that
render shareholder support services. As of September 30, 1993 (U.S.
Government Reserves) and November 30, 1993 (Cash Reserves), no such
payments had been made to third parties by FMR.
In addition, in accordance with the terms of the litigation settlement
described on page 18,, until June 19, 1992, there had been no payment by
Cash Reserves pursuant to its Plan to any person over and above the fees
provided for by the management contract between the fund and FMR. This
provision shall continue in effect unless modification is permitted by
order of the United States District Court for the District of
Massachusetts.
Each fund's Plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
the implementation of each Plan prior to its approval, and have determined
that there is a reasonable likelihood that the Plan will benefit each fund
and its shareholders. In particular, the Trustees noted that the Plan does
not authorize payments by a fund other than those made to FMR under its
management contract with each fund. To the extent that the Plan gives FMR
and FDC greater flexibility in connection with the distribution of shares
of a fund, additional sales of the fund's shares may result. Additionally,
certain shareholder support services may be provided more effectively under
the Plans by local entities with whom shareholders have other
relationships. The Plan was approved by Cash Reserves' shareholders under a
Plan of Conversion on December 5, 1992 and U.S. Government Reserves'
shareholders on November 18, 1992.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of each fund
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. Each fund may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the Plans No preference will be shown in the
selection of investments for the instruments of such depository
institutions. In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers
pursuant to state law.
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FSC is transfer, dividend disbursing, and shareholders' servicing agent for
the funds. Under the trusts' contracts with FSC, each fund pays an annual
fee of $13.75 per regular account with a balance of $5,000 or more, $10 per
basic retail account with a balance of less than $5,000, and a supplemental
activity charge of $5.61 for monetary transactions. These fees and charges
are subject to annual cost escalation based on postal rate changes and
changes in wage and price levels as measured by the National Consumer Price
Index for Urban Areas. With respect to institutional client master
accounts, each fund pays FSC a per account fee of $95, and monetary
transactions charges of $20, or $17.50, depending on the nature of services
provided. With respect to certain broker-dealer master accounts, the funds
pay FSC a per-account fee of $30 and a charge of $6 for monetary
transactions. Fees for certain institutional retirement plan accounts are
based on the net assets of all such accounts in each fund.
Under the contracts, FSC pays out-of-pocket expenses associated with
providing transfer agent services. In addition, FSC bears the expense of
typesetting, printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
shareholders, with the exception of proxy statements.
The table on page 20 shows the transfer agent fees paid to FSC during each
fund's last three fiscal years. The fiscal year for Cash Reserves ends
November 30, and the fiscal year for U.S. Government Reserves ends
September 30.
1993 1992 1991
TRANSFER AGENT TRANSFER AGENT TRANSFER AGENT
FEES FEES FEES
CASH RESERVES $31,208,000 $29,339,000 $28,778,000
U.S. GOVERNMENT $2,955,000 $3,101,000 $3,576,000
RESERVES
Each trust's contract with FSC also provides that FSC will perform the
calculations necessary to determine the funds' net asset value per share
and dividends, and maintain the funds' accounting records. Prior to July 1,
1991, the annual fee for these pricing and bookkeeping services was based
on two schedules, one pertaining to a fund's average net assets, and one
pertaining to the type and number of transactions the fund made. The fee
rates in effect as of July 1, 1991 are based on a fund's average net
assets, specifically, .0175% for the first $500 million of average net
assets and .0075% for average net assets in excess of $500 million. The fee
is limited to a minimum of $20,000 and a maximum of $750,000 per year.
The table below shows the fees paid to FSC for pricing and bookkeeping
services, including related out-of-pocket expenses during each fund's last
three fiscal years:
1993 1992 1991
PRICING AND BOOKKEEPING PRICING AND BOOKKEEPING PRICING AND BOOKKEEPING
FEES FEES FEES
CASH RESERVES $751,000 $747,000 $474,000
U.S. GOVERNMENT $136,000 $151,000 $158,000
RESERVES
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of the funds, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Fidelity U.S. Government Reserves is a fund of Fidelity
Charles Street Trust (the Massachusetts Trust), an open-end management
investment company organized as a Massachusetts business trust on July 7,
1981. The Declaration of Trust was amended on October 30, 1981, to change
the name of the trust from Fidelity Federal Reserves to Fidelity U.S.
Government Reserves, and was further amended on December 28, 1987 to change
the name of the trust from Fidelity U.S. Government Reserves to Fidelity
Charles Street Trust. Currently, there are seven funds of Fidelity Charles
Street Trust: Fidelity U.S. Government Reserves, Fidelity
Short-Intermediate Government Fund, Fidelity Asset Manager, Fidelity Asset
Manager: Growth, Fidelity Asset Manager: Income, Spartan Investment-Grade
Bond Fund, and Spartan Short-Term Bond Fund. The Massachusetts Trust's
Declaration of Trust permits the Trustees to create additional funds.
Fidelity Cash Reserves is a fund of Fidelity Phillips Street Trust (the
Delaware Trust), an open-end management investment company organized as a
Delaware business trust on September 17, 1992. Currently, there is one fund
of the Delaware Trust: Fidelity Cash Reserves. The fund entered into an
agreement to acquire all of the assets of Fidelity Cash Reserves, a series
of a Massachusetts business trust (also called Fidelity Cash Reserves) on
January 24, 1993. The Delaware Trust's Trust Instrument permits the
Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to a trust or any
of its funds, the right of the trust or its fund to use the identifying
name "Fidelity" may be withdrawn. There is a remote possibility that one
fund might become liable for any misstatement in its prospectus or
statement of additional information about another fund.
The assets of each trust received for the issue or sale of shares of each
of its funds and all income, earnings, profits, and proceeds thereof,
subject only to the rights of creditors, are especially allocated to such
fund, and constitute the underlying assets of such fund. The underlying
assets of each fund are segregated on the books of account, and are to be
charged with liabilities with respect to such fund and with a share of the
general expenses of their respective trusts. Expenses with respect to the
trusts are to be allocated in proportion to the asset value of their
respective funds, except where allocations of direct expense can otherwise
be fairly made. The officers of the trusts, subject to the general
supervision of the Boards of Trustees, have the power to determine which
expenses are allocable to a given fund, or which are general or allocable
to all of the funds of a trust. In the event of the dissolution or
liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund available
for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The Massachusetts
Trust is an entity of the type commonly known as "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust may, under
certain circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the Massachusetts Trust shall
not have any claim against shareholders except for the payment of the
purchase price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the Massachusetts Trust or its
Trustees shall include a provision limiting the obligations created thereby
to the Massachusetts Trust and its assets. The Declaration of Trust
provides for indemnification out of each fund's property of any
shareholders held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects a Trustee
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office.
SHAREHOLDER AND TRUSTEE LIABILITY - DELAWARE TRUST. The Delaware Trust is a
business trust organized under Delaware law. Delaware law provides that
shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
courts of some states, however, may decline to apply Delaware law on this
point. The Trust Instrument contains an express disclaimer of shareholder
liability for the debts, liabilities, obligations, and expenses of the
Delaware Trust and requires that a disclaimer be given in each contract
entered into or executed by the Delaware Trust or its Trustees. The Trust
Instrument provides for indemnification out of each fund's property of any
shareholder or former shareholder held personally liable for the
obligations of the fund. The Trust Instrument also provides that each fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the fund and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which
Delaware law does not apply, no contractual limitation of liability was in
effect, and the fund is unable to meet its obligations. FMR believes that,
in view of the above, the risk of personal liability to shareholders is
extremely remote.
The Trust Instrument further provides that the Trustees, if they have
exercised reasonable care, shall not be personally liable to any person
other than the Delaware Trust or its shareholders; moreover, the Trustees
shall not be liable for any conduct whatsoever, provided that a Trustee is
not protected against any liability to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. The shares have no preemptive or conversion rights;
voting and dividend rights, the right of redemption, and the privilege of
exchange are described in the Prospectus. Shares are fully paid and
nonassessable, except as set forth under the respective "Shareholder and
Trustee Liability" headings above. Shareholders representing 10% or more of
a trust or one of its funds may, as set forth in the Declaration of Trust
or Trust Instrument, call meetings of the trust or a fund for any purpose
related to the trust or fund, as the case may be, including, in the case of
a meeting of an entire trust, the purpose of voting on removal of one or
more Trustees.
A trust or any fund may be terminated upon the sale of its assets to (or,
in the case of the Delaware Trust and its funds, merger with) another
open-end management investment company or series thereof, or upon
liquidation and distribution of its assets. Generally such terminations
must be approved by vote of the holders of a majority of the outstanding
shares of the trust or the fund, however, the Trustees of the Delaware
Trust may, without prior shareholder approval, change the form of the
organization of the Delaware Trust by merger, consolidation, or
incorporation. If not so terminated or reorganized, the trusts and their
funds will continue indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder vote,
cause the Delaware Trust to merge or consolidate into one or more trusts,
partnerships, or corporations, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the
Delaware Trust's registration statement, or cause the Delaware Trust to be
incorporated under Delaware law. The Delaware Trust may also invest all of
its assets in another investment company.
CUSTODIANS. The Bank of New York, 110 Washington Street, New York, New
York, is custodian of the assets of Fidelity Cash Reserves. Morgan
Guaranty, 60 Wall Street, New York, New York, is custodian of the assets of
Fidelity U.S. Government Reserves. Each custodian is responsible for the
safekeeping of the respective fund's assets and the appointment of
subcustodian banks and clearing agencies. The custodians take no part in
determining the investment policies of the funds or in deciding which
securities are purchased or sold by the funds. Each fund may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to its custodian.
FMR, its officers and directors, its affiliated companies, and each trust's
Trustees may from time to time have transactions with various banks,
including the banks serving as custodians for certain of the funds advised
by FMR. Transactions that have occurred to date have included mortgages and
personal and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other fund relationships.
AUDITORS. Coopers & Lybrand, 1999 Bryan Street, Dallas, Texas, serves
as Fidelity Phillips Street Trust's independent accountant. Price
Waterhouse, 1700 Pacific Avenue, Dallas, Texas serves as Fidelity Charles
Street Trust's independent accountant. The auditors examine financial
statements for the funds and provide other audit, tax, and related
services.
FINANCIAL STATEMENTS
The funds' Annual Report for the fiscal years ended November 30, 1993 (Cash
Reserves) and September 30, 1993 (U.S. Government Reserves) are separate
reports supplied with this Statement of Additional Information and are
incorporated herein by reference.
APPENDIX
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S COMMERCIAL PAPER RATINGS:
Issuers rated PRIME-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics:
Leading market positions in well established industries.
High rates of return on funds employed.
Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
Broad margins in earning coverage of fixed financial charges and with high
internal cash generation.
Well established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earning trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S COMMERCIAL PAPER
RATINGS:
A - Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with
the numbers 1 and 2 to indicate the relative degree of safety.
A-1 - This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+)
sign designation.
A-2 - Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
Moody's applies numerical modifiers, 1, 2, and 3, in its Aa generic rating
classification in its corporate bond rating system. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating
category.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S CORPORATE BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
The AA rating may be modified by the addition of a plus or minus to show
relative standing within its major rating category.
DESCRIPTION OF FITCH INVESTOR'S SERVICE, INC.'S COMMERCIAL PAPER RATINGS:
FITCH-1 - (Highest Grade) Commercial paper assigned this rating is regarded
as having the strongest degree of assurance for timely payment.
FITCH-2 - (Very Good Grade) Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the strongest
issues.
DESCRIPTION OF FITCH INVESTOR'S SERVICE, INC.'S CORPORATE BOND RATINGS:
AAA - Bonds of this rating are regarded as strictly high grade, broadly
marketable, suitable for investment by trustees and fiduciary institutions,
and liable to but slight market fluctuation other than through changes in
the money rate. The factor last named is of importance, varying with the
length of maturity. Such bonds are mainly senior issues of strong
companies, and are most numerous in the railway and public utility fields,
though some industrial obligations have this rating. The prime feature of
an AAA bond is of showing of earnings several times or many times interest
requirements with such stability of applicable earnings that safety is
beyond reasonable question whatever changes occur in conditions. Other
features may enter, such as a wide margin of protection through collateral
security or direct lien on specific property as in the case of high-class
equipment certificates or bonds that are first mortgages on valuable real
estate. Sinking funds or voluntary reduction of the debt, by call or
purchase are often factors, while guarantee or assumption by parties other
than the original debtor may influence the rating.
AA - Bonds in this group are of safety virtually beyond question, and as a
class are readily saleable while many are highly active. Their merits are
not greatly unlike those of the "AAA" class, but a bond so rated may be of
junior though strong lien - in many cases directly following an AAA bond -
or the margin of safety is strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to rating
by the lesser financial power of the enterprise and more local type of
market.
DESCRIPTION OF DUFF & PHELPS INC.'S COMMERCIAL PAPER RATINGS:
DUFF 1 - High certainty of timely payment. Liquidity factors are excellent
and supported by strong fundamental protection factors. Risk factors are
minor.
DUFF 2 - Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing internal funding needs may enlarge
total financing requirements, access to capital markets is good. Risk
factors are small.
DESCRIPTION OF DUFF & PHELPS INC.'S CORPORATE BOND RATINGS:
DUFF 1 - Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
DUFF 2 - High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) 1. Audited financial statements for Fidelity Cash Reserves for the
fiscal year ended November 30, 1993 are filed herein as Exhibit
24(a)(1).
2. Audited financial statements for Fidelity U.S. Government Reserves
(File No. 2-73133) for the fiscal year ended September 30, 1993 are
filed herein as Exhibit 24(a)(2).
(b) Exhibits
1. (a) Declaration of Trust dated December 29, 1978 is incorporated herein
by reference to Exhibit 4(b) to Registration Statement No. 2-63350 filed
December 29, 1978.
(b) Supplement to Declaration of Trust dated January 3, 1980 is
incorporated herein by reference to Exhibit 1(b) to Post-Effective
Amendment No. 10.
(c) Amendment to Declaration of Trust dated May 12, 1982 is incorporated
herein by reference to Exhibit 1(b) to Post-Effective Amendment No. 7.
(d) Amended and Restated Declaration of Trust dated November 18, 1986 is
incorporated herein by reference to Exhibit 1(d) to Post-Effective
Amendment No. 20.
(e) Amendment to Declaration of Trust dated November 28, 1988 is
incorporated herein by reference to Exhibit 1(e) to Post-Effective
Amendment No. 26.
(f) Supplement to the Declaration of Trust dated December 1, 1989 is
incorporated herein by reference to Exhibit 1(e) to Post-Effective
Amendment No. 23.
(g) Trust Instrument dated September 17, 1992 is incorporated
herein by reference to as Exhibit 1(g) to Post-Effective Amendment
No. 35.
2. Not applicable.
3. Not applicable.
4. Not applicable.
5. (a) Management Contract, dated January 24, 1993, between Fidelity
Phillips Street Trust and Fidelity Management & Research Company is
incorporated herein by reference to as Exhibit 5(a) to Post-Effective
Amendment No. 35.
(b) Sub-Advisory Agreement, dated January 24, 1993, between Fidelity
Management & Research Company and FMR Texas, Inc. (with respect to
Fidelity Phillips Street Trust) is incorporated herein by reference to as
Exhibit 5(b) to Post-Effective Amendment No. 35.
6. (a) General Distribution Agreement, dated January 24, 1993, between
Fidelity Phillips Street Trust and Fidelity Distributors Corporation is
incorporated herein by reference to as Exhibit 6(a) to Post-Effective
Amendment No. 35.
7. Retirement Program of the Trustees, dated November 1, 1989, is
incorporated herein by reference to Exhibit 7 to Post-Effective Amendment
No. 28.
8. (a) Custodian Agreement, dated July 18, 1991, between Fidelity Cash
Reserves and The Bank of New York is incorporated herein by reference to
Exhibit 8(a) to Post-Effective Amendment No. 28.
9. (a) Transfer Agent and Service Agreement dated January 24, 1993 between
Fidelity Service Company and Fidelity Phillips Street Trust is incorporated
herein by reference to as Exhibit 9(a) to Post-Effective Amendment No. 35.
(b) Schedule A (transfer agent, dividend and distribution disbursing
agent,and shareholder servicing agent) dated January 24, 1993; Schedule B
(pricing and bookkeeping) dated January 24, 1993; and Schedule C
(securities lending transactions) dated January 24, 1993 pertaining to
Fidelity Cash Reserves are incorporated herein by reference to as Exhibit
9(b) to Post-Effective Amendment No. 35.
10. Not applicable.
11. (a) Consent of Coopers & Lybrand is filed herein as Exhibit 11(a).
(b) Consent of Price Waterhouse on behalf of Fidelity U.S. Government
Reserves is filed herein as Exhibit 11(b).
12. Not applicable.
13. Not applicable.
14. (a) Fidelity Individual Retirement Custodial Agreement and Disclosure
Statement, as currently in effect, is incorporated herein by reference to
Exhibit 14(a) to Post-Effective Amendment No. 26.
(b) Fidelity Defined Contribution Retirement Plan and Trust Agreement, as
currently in effect, is incorporated herein by reference to Exhibit 14(b)
to Post-Effective Amendment No. 26.
(c) Fidelity Defined Benefit Pension Plan and Trust, as currently in
effect, is incorporated herein by reference to Exhibit 14(c) to
Post-Effective Amendment No. 26.
(d) Fidelity Group Individual Retirement Account Custodial Agreement and
Disclosure Statement, as currently in effect, is incorporated herein by
reference to Exhibit 14(d) to Post-Effective Amendment No. 26.
(e) Fidelity 403(b)(7) Custodial Account Agreement, as currently in
effect, is incorporated herein by reference to Exhibit 14(e) to
Post-Effective Amendment No. 28.
(f) Fidelity Master Plan for Savings and Investments, as currently in
effect, is incorporated herein by reference to Post-Effective Amendment No.
26.
(g) Fidelity 401(a) Prototype Plan for Tax-Exempt Employers, as currently
in effect, is incorporated herein by reference to Exhibit 14(g) to
Post-Effective Amendment No. 26.
15. Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity Cash
Reserves is incorporated herein by reference to Exhibit 15 to
Post-Effective Amendment No. 22.
16. A revised schedule for computation of performance calculations is
incorporated herein by reference to Exhibit 16 to Post-Effective Amendment
No. 32.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is substantially the same as the Board
of Trustees of other funds advised by FMR, each of which has Fidelity
Management and Research Company as its investment adviser. In addition, the
officers of these funds are substantially identical. Nonetheless,
Registrant takes the position that it is not under common control with
these other funds since the power residing in the respective boards and
officers arises as the result of an official position with the respective
funds.
Item 26. Number of Holders of Securities as of November 30, 1993
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Fidelity Cash Reserves 1,126,490
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.)
Inc. and Fidelity Management & Research (Far East)
Inc.; President and Trustee of funds advised by FMR;
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR (1990) and of a fund advised by
FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Charles F. Dornbush Senior Vice President of FMR (1991); Chief Financial
Officer of the Fidelity funds; Treasurer of FMR Texas Inc.
(1989), Fidelity Management & Research (U.K.) Inc.,
and Fidelity Management & Research (Far East) Inc.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR (1991).
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR (1991) and Treasurer of the funds
advised by FMR (1991). Prior to assuming the position as
Treasurer he was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991)
(Vice President, 1990-1991); and Senior Vice President,
Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR (1989); Income/Growth
Group Leader (1990) and International Group Leader
(1990).
Robert Haber Vice President of FMR (1991) and of funds advised by
FMR.
Daniel Harmetz Vice President of FMR (1991) and of a fund advised by
FMR.
Ellen S. Heller Vice President of FMR (1991).
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR (1989); and Director of Technical
Research.
Stephan Jonas Vice President of FMR (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR (1991) and of funds advised by
FMR.
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR (1991) and of funds advised by
FMR.
Jacques Perold Vice President of FMR (1991).
Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.
Anne Punzak Vice President of FMR (1990) and of funds advised by
FMR.
Richard A. Spillane Vice President of FMR (1990) and of funds advised by
FMR; and Director of Equity Research (1989).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader (1990).
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
(2) FMR TEXAS INC. (FMR Texas)
FMR Texas provides investment advisory services to Fidelity Management
& Research Company. The directors and officers of the Sub-Adviser have
held the following positions of a substantial nature during the past two
fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Texas; Chairman of the
Executive Committee of FMR; President and Chief Executive
Officer of FMR Corp.; Chairman of the Board and a Director
of FMR, FMR Corp., Fidelity Management & Research
(Far East) Inc. and Fidelity Management & Research
(U.K.) Inc.; President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Texas; President of FMR;
Managing Director of FMR Corp.; President and a Director of
Fidelity Management & Research (Far East) Inc. and
Fidelity Management & Research (U.K.) Inc.;
Senior Vice President and Trustee of funds advised by FMR.
Frederic L. Henning Jr. Senior Vice President of FMR Texas; Money Market Group
Leader.
Leland Baron Vice President of FMR Texas (1991) and of funds advised by
FMR.
Thomas D. Maher Vice President of FMR Texas.
Burnell Stehman Vice President of FMR Texas and of funds advised by FMR.
John Todd Vice President of FMR Texas and of funds advised by FMR.
Sarah H. Zenoble Vice President of FMR Texas and of funds advised by FMR.
Charles F. Dornbush Treasurer of FMR Texas; Treasurer of Fidelity Management
& Research (U.K.) Inc.; Treasurer of Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Chief Financial Officer of the Fidelity funds.
David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity Management
& Research (U.K.) Inc.; Clerk of Fidelity Management
& Research (Far East) Inc.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the fund's
custodian, The Bank of New York, 110 Washington Street, New York, N.Y.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 36 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Massachusetts, on the 7th day of January 1994.
FIDELITY PHILLIPS STREET TRUST
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee January 7, 1994
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer January 7, 1994
Gary L. French
/s/J. Gary Burkhead Trustee January 7, 1994
J. Gary Burkhead
/s/Ralph F. Cox * Trustee January 7, 1994
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee January 7, 1994
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee January 7, 1994
Richard J. Flynn
/s/E. Bradley Jones * Trustee January 7, 1994
E. Bradley Jones
/s/Donald J. Kirk * Trustee January 7, 1994
Donald J. Kirk
/s/Peter S. Lynch * Trustee January 7, 1994
Peter S. Lynch
/s/Edward H. Malone * Trustee January 7, 1994
Edward H. Malone
/s/Marvin L. Mann * Trustee January 7, 1994
Marvin L. Mann
/s/Gerald C. McDonough* Trustee January 7, 1994
Gerald C. McDonough
/s/Thomas R. Williams * Trustee January 7, 1994
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to any other investment company for which Fidelity Management
& Research Company acts as investment adviser and for which the
undersigned individual serves as President and Board Member (collectively,
the "Funds"), hereby severally constitute and appoint J. Gary Burkhead, my
true and lawful attorney-in-fact, with full power of substitution, and with
full power to sign for me and in my name in the appropriate capacity any
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Pre-Effective Amendments or
Post-Effective Amendments to said Registration Statements on Form N-1A or
any successor thereto, any Registration Statements on Form N-14, and any
supplements or other instruments in connection therewith, and generally to
do all such things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993
Edward C. Johnson 3d
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to any other investment company for which Fidelity Management
& Research Company acts as investment adviser and for which the
undersigned individual serves as a Director, Trustee or General Partner
(collectively, the "Funds"), hereby severally constitute and appoint Arthur
J. Brown, Arthur C. Delibert, Robert C. Hacker, Richard M. Phillips, Dana
L. Platt and Stephanie Xupolos, each of them singly, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
each of them, to sign for me and my name in the appropriate capacities any
Registration Statements of the Funds on Form N-1A or any successor thereto,
any and all subsequent Pre-Effective Amendments or Post-Effective
Amendments to said Registration Statements on Form N-1A or any successor
thereto, any Registration Statements on Form N-14, and any supplements or
other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorneys-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact
or their substitutes may do or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Marvin L. Mann
Ralph F. Cox Marvin L. Mann
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
FIDELITY
(Registered trademark)
CASH RESERVES
ANNUAL REPORT
NOVEMBER 30, 1993
CONTENTS
CHECK PAGE NUMBERS !!!
PERFORMANCE 3 How the fund has done over time.
FUND TALK 5 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 7 A summary of major shifts in the
fund's investments over the last six
months and one year.
INVESTMENTS 8 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 14 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 18 Footnotes to the financial
statements.
REPORT OF INDEPENDENT 21 The auditors' opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY
THE
FDIC.
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects both the change in a fund's share
price over a given period, and reinvestment of
its dividends (or income). Yield measures the income paid by a fund. Since
a money market fund tries to maintain
a $1 share price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Cash Reserves 2.97% 33.55% 93.21%
Consumer Price Index 2.68% 21.20% 44.07%
Average All Taxable
Money Market Fund 2.71% 32.36% 89.54%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period.
For example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. Comparing the fund's performance
to the consumer price index helps show how your investment did compared to
inflation. To measure how the fund stacked up against its peers, you can
compare its return to the average taxable money market fund's total return.
This average currently reflects the performance of 635 money market funds
tracked by IBC/Donoghue's MONEY FUND REPORT.(Registered trademark)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity Cash Reserves 2.97% 5.96% 6.81%
Consumer Price Index 2.68% 3.92% 3.72%
Average All Taxable
Money Market Fund 2.71% 6.46% 6.60%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
11/30/92 2/28/93 5/31/93 8/31/93 11/30/93
Fidelity Cash Reserves 3.15% 3.01% 2.83% 2.81% 2.87%
Average All Taxable
Money Market Fund 2.77% 2.71% 2.62% 2.64% 2.69%
MMDA 2.74% 2.66% 2.49% 2.42% 2.35%
Row: 1, Col: 1, Value: 3.15
Row: 1, Col: 2, Value: 2.77
Row: 1, Col: 3, Value: 2.74
Row: 2, Col: 1, Value: 3.01
Row: 2, Col: 2, Value: 2.71
Row: 2, Col: 3, Value: 2.66
Row: 3, Col: 1, Value: 2.83
Row: 3, Col: 2, Value: 2.62
Row: 3, Col: 3, Value: 2.49
Row: 4, Col: 1, Value: 2.81
Row: 4, Col: 2, Value: 2.64
Row: 4, Col: 3, Value: 2.42
Row: 5, Col: 1, Value: 2.87
Row: 5, Col: 2, Value: 2.69
Row: 5, Col: 3, Value: 2.35
Fidelity Cash
Reserves
Average All
Taxable Money
Market Fund
MMDA
4% -
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. This
would have been lower if Fidelity had not reimbursed certain fund expenses.
This is compared to similar yields for the average all taxable money market
fund and the average bank money market deposit account (MMDA). Figures for
the average taxable money market fund are from the IBC/Donoghue's MONEY
FUND REPORT.(Registered trademark) The MMDA average is supplied by BANK
RATE MONITOR.(double dagger)
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS REFLECT PAST RESULTS RATHER
THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
(checkmark)
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 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.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Bob Litterst,
Portfolio Manager of Cash Reserves
Q. BOB, WHAT WAS THE SHORT-TERM MARKET LIKE THIS LAST YEAR?
A. After a fairly volatile first six months, the environment in the second
half of the year was stable and trendless. Short-term interest rates
remained pretty flat from May on; for example, yields on six-month Treasury
bills ranged between just 3.0% and 3.3%. Also, the Federal Reserve kept the
federal funds rate at 3%, where it's been since September 1992. So far, the
economy has grown at a moderate pace that appears to be sustainable. That,
combined with low inflation, is exactly what the Fed likes. That said, the
fund's yield closely tracked short-term interest rates; and a very stable
rate environment meant there weren't too many opportunities to take
advantage of moving rates.
Q. GIVEN THOSE CONFINES, HOW DID YOU POSITION THE FUND IN THE LAST SIX
MONTHS?
A. Over the summer, it became clear that yield spreads were tightening -
meaning there was less difference between the yields of corporate and
Treasury issues with similar maturities. When yields on corporates fell
relative to Treasuries, they were no longer as attractive when weighed
against their higher risk. So, I increased the percentage of the fund in
Treasury and government agency debt - from about 17% at the end of May, to
about 25% by the beginning of November. The fund's emphasis on government
securities might have caused a slight reduction in yield, but I felt the
small yield loss was offset by far greater quality and liquidity. As for
the fund's average maturity, I kept it within a range of 60 to 80 days
through most of the last six months. That way I was ready to go shorter if
interest rates started to rise, but still benefited from higher rates on
securities with longer maturities.
Q. WHAT WAS THE RESULT?
A. The fund's seven-day yield on November 30, 1993 was 2.87%, compared to
2.83% at the end of May. For the year ended November 30, the fund had a
total return of 2.97%. That beat the 2.71% average total return for all
taxable money market funds tracked by IBC/Donoghue.
Q. WHAT'S YOUR OUTLOOK?
A. I believe the economy is showing stable upward momentum that is
sustainable, driven primarily by labor market gains and low long-term
interest rates. However, there are still many factors keeping economic
growth in check - corporate downsizing, higher taxes and uncertainty over
health care among them. I think the next significant move in short-term
interest rates will be up. The Fed could trigger a rise in short-term rates
by raising the federal funds rate if it perceives inflation is no longer
falling. But inflationary pressures appear quite tame; if the Fed acts at
all, I think it'll be a gentle nudge.
Q. SO HOW HAVE YOU PREPARED THE FUND FOR A POSSIBLE RISE IN RATES?
A. One way is by purchasing variable and floating rate instruments, now 22%
of the fund. These issues are higher yielding because they have longer
final maturities. But what makes them unique is a feature that resets their
coupons (stated interest rates) at fixed intervals - for example, weekly,
monthly or quarterly. When rates are rising, the fund can get a higher
coupon on these issues at their reset intervals. Also, I plan on keeping
the fund's average maturity in a neutral range - 60-75 days - to allow for
flexibility if rates do start creeping up.
FUND FACTS
GOAL: income and share price
stability by investing in high
quality, short-term investments
START DATE: May 10, 1979
SIZE: as of November 30,
1993, over $10.3 billion
MANAGER: Robert Litterst,
since January 1992; manager,
Capital
Reserves Money Market,
Fidelity VIP: Money Market
Portfolio, and Fidelity Money
Market Trust:
Retirement Money Market,
since January 1992
(checkmark)
WORDS TO KNOW
BANKERS' ACCEPTANCE (BA): A
short-term note whose
payment is guaranteed by a
bank.
CERTIFICATE OF DEPOSIT (CD): An
interest-bearing deposit with a
specific maturity. Large
denomination CDs, like the
fund buys, have negotiable
interest rates and can be sold
in the secondary market.
COMMERCIAL PAPER: A
short-term note from a bank or
corporation.
FEDERAL FUNDS RATE: The interest
rate banks charge each other
for overnight loans.
MATURITY: The time remaining
before an issuer is scheduled
to repay the principal amount
on a debt security. When the
fund's average maturity,
weighted by dollar amount, is
short, the fund manager is
expecting rates to fall. When
the average maturity is
neutral, the manager wants
the flexibility to respond to
rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
TIME DEPOSIT (TD): An
interest-bearing deposit with a
specific maturity. Large
denomination TDs, like the
fund buys, differ from CDs in
that they can't be sold in the
secondary market.
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
11/30/93 5/31/93 11/30/92
0 - 30 28 38 32
31 - 90 46 28 29
91 - 180 18 25 32
181 - 397 8 9 7
WEIGHTED AVERAGE MATURITY
11/30/93 5/31/93 11/30/92
Fidelity Cash Reserves 79 days 73 days 82 days
Average All Taxable Money
Market Fund* 59 days 64 days 62 days
ASSET ALLOCATION
AS OF 11/30/93 AS OF 5/31/93
Row: 1, Col: 1, Value: 28.0
Row: 1, Col: 2, Value: 34.0
Row: 1, Col: 3, Value: 22.0
Row: 1, Col: 4, Value: 16.0
Row: 1, Col: 1, Value: 41.0
Row: 1, Col: 2, Value: 34.0
Row: 1, Col: 3, Value: 17.0
Row: 1, Col: 4, Value: 8.0
Bank CDs, BAs,
TDs, and notes 28%
Commercial
paper 34%
Government
securities 22%
Other 16%
Bank CDs, BAs,
TDs, and notes 41%
Commercial
paper 34%
Government
securities 17%
Other 8%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(Registered trademark)
INVESTMENTS NOVEMBER 30, 1993
Showing Percentage of Total Value of Investments
CERTIFICATES OF DEPOSIT - 20.8%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 17.6%
Bank of Tokyo
2/11/94 3.44% $ 40,000 $ 40,000 0659932T
Fuji Bank, Ltd.
1/21/94 3.43 50,000 50,000 35999DGS
1/28/94 3.46 50,000 50,000 35999DGU
1/31/94 3.45 80,000 80,000 35999DGT
1/31/94 3.46 45,000 45,000 35999DGX
2/7/94 3.43 50,000 50,000 35999DGW
Industrial Bank of Japan, Ltd.
1/20/94 3.44 160,000 160,000 4559905P
2/22/94 3.44 25,000 25,000 4559905S
Mitsubishi Bank, Ltd.
12/6/93 3.19 50,000 50,000 610998TV
1/31/94 3.43 25,000 24,999 610998TT
2/28/94 3.33 75,000 75,001 610998TW
Sakura Bank, Ltd.
2/1/94 3.45 50,000 50,000 793999HX
Sanwa Bank, Ltd.
2/14/94 3.44 50,000 49,995 804999LN
Skandinaviska Enskilda Banken
2/17/94 3.39 80,000 80,000 880992FY
Societe Generale
4/25/94 3.43 385,000 385,000 833991SK
Sumitomo Bank, Ltd.
1/31/94 3.45 25,000 25,004 86699EAT
2/24/94 3.45 60,000 60,000 86699EBL
Sweden, Kingdom of (a)
12/23/93 3.19 430,000 430,000 998999AV
Swedish National Housing Finance Corp. (a)
2/23/94 3.53 97,000 97,000 956995AM
1,826,999
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 3.2%
Banco Bilbao Vizcaya, S.A.
1/10/94 3.44 30,000 29,996 05999MBA
1/18/94 3.44 10,000 9,999 05999MBB
Mitsubishi Bank, Ltd.
2/28/94 3.41 50,000 49,999 610998UE
Sumitomo Bank, Ltd.
1/18/94 3.42 50,000 50,000 86699EAQ
1/18/94 3.43 75,000 75,001 86699EAN
1/19/94 3.45 25,000 25,000 86699EAS
1/26/94 3.49 25,000 24,999 86699EBN
3/7/94 3.35 20,000 19,996 86699EBA
4/27/94 3.43 25,000 24,994 86699EBF
5/24/94 3.50 25,000 25,000 86699EBM
334,984
TOTAL CERTIFICATES OF DEPOSIT 2,161,983
COMMERCIAL PAPER - 33.7%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
ABN-AMRO North America, N.V.
12/6/93 3.22% $ 75,000 $ 74,967 03299BAK
Associates Corporation of North America
3/9/94 3.38 25,000 24,772 045992TX
Bankers Trust Corporation
2/16/94 3.37 200,000 198,584 06699FAQ
Bell Atlantic Financial Services
2/15/94 3.43 40,000 39,713 077994AF
2/22/94 3.43 34,000 33,733 077994AJ
2/25/94 3.43 40,000 39,675 077994AM
CIT Group Holdings, Inc.
1/12/94 3.33 30,000 29,886 172990NT
3/29/94 3.59 56,000 55,358 172990PH
3/30/94 3.59 60,000 59,306 172990PJ
Commercial Credit Company
2/14/94 3.40 30,000 29,789 2019904W
CoreStates Capital Corp. (a)
5/16/94 3.16 25,000 25,000 2186939E
Credit Lyonnais North America
12/6/93 3.23 50,000 49,978 225995TX
Dean Witter, Discover & Co.
12/6/93 3.16 20,000 19,991 24240V9P
12/6/93 3.17 25,000 24,989 24240V9N
Den Danske Corporation, Inc.
3/1/94 3.42 30,000 29,746 250998EA
Ford Motor Credit Corporation
3/2/94 3.28 40,000 39,672 34599BNM
3/14/94 3.26 110,000 108,987 34599BNA
General Electric Capital Corporation
2/23/94 3.36 50,000 49,615 369998JP
2/24/94 3.36 50,000 49,610 369998JQ
General Electric Financial Services Inc.
4/6/94 3.27 13,000 12,854 36999BBA
General Motors Acceptance Corporation
1/10/94 3.51 100,000 99,614 638998NP
1/12/94 3.51 172,000 171,303 638998NR
2/14/94 3.55 31,000 30,772 638998NV
2/15/94 3.45 100,000 99,282 638998ND
3/9/94 3.45 105,000 104,028 638998MY
Generale Bank
12/1/93 3.38 15,000 15,000 371995BT
12/10/93 3.38 20,000 19,983 371995BU
Goldman Sachs Group, L.P. (The)
3/11/94 3.40 85,000 84,205 696992KA
Goldman Sachs Group, L.P. (The) (a)
6/16/94 3.17 95,000 95,000 696992JE
Hanson Finance (UK) PLC
3/7/94 3.38 75,000 74,330 41199AAK
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Household Finance Corporation
12/6/93 3.23% $ 30,000 $ 29,987 44199DGS
12/7/93 3.22 60,000 59,968 44199DGQ
12/8/93 3.24 44,000 43,972 44199DHE
12/20/93 3.21 20,000 19,966 44199DHH
IBM Credit Corporation
2/4/94 3.42 25,000 24,847 449991AF
Kingdom of Denmark
2/10/94 3.38 295,000 293,063 249998BA
2/16/94 3.39 40,000 39,715 249998BB
Leeds Permanent Building Society
1/31/94 3.46 48,600 48,320 524992FU
Merrill Lynch & Co., Inc. (a)
2/28/94 3.14 75,000 75,000 59099A7J
Morgan Stanley Group, Inc.
2/22/94 3.42 115,000 114,101 61799EHP
2/28/94 3.38 115,000 114,048 61799EHT
National & Provincial Building Society
12/29/93 3.35 25,000 24,936 905998CW
Nationwide Anglia Building Society
1/18/94 3.31 5,000 4,978 638993GU
1/18/94 3.35 35,000 34,845 638993GT
New Center Asset Trust
12/6/93 3.16 160,000 159,930 643995AM
1/18/94 3.28 70,000 69,697 643995AF
2/3/94 3.40 25,000 24,850 643995AP
3/1/94 3.41 50,000 49,578 643995AQ
New South Wales Treasury Corp.
2/23/94 3.43 40,000 39,683 648992AF
Nordbanken North America, Inc.
1/18/94 3.44 75,000 74,658 684999BX
Norwest Corporation
3/23/94 3.38 25,000 24,739 66899CBP
NYNEX Corporation
2/14/94 3.40 38,000 37,733 6707689V
Sears Credit Corp. A
1/26/94 3.47 50,000 49,732 81299FAP
Sears Roebuck Acceptance Corp.
1/28/94 3.54 50,000 49,716 81299EBY
1/31/94 3.55 50,000 49,702 81299EBW
SPINTAB, AB
2/22/94 3.43 40,000 39,686 848992AR
Sweden, Kingdom of
12/6/93 3.20 15,000 14,993 998999BA
Woolworth Corporation
12/1/93 3.21 50,000 50,000 980991CM
12/2/93 3.21 50,000 49,996 980991CP
TOTAL COMMERCIAL PAPER 3,502,181
FEDERAL AGENCIES - 15.1%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
FEDERAL FARM CREDIT BANK - DISCOUNT NOTES - 0.4%
2/4/94 3.21% $ 28,910 $ 28,744 313993LP
2/8/94 3.18 15,000 14,909 313993KR
43,653
FEDERAL HOME LOAN BANK - DISCOUNT NOTES - 6.3%
2/3/94 3.20 174,800 173,812 567995ES
2/3/94 3.21 64,000 63,637 567995EK
2/4/94 3.21 15,000 14,914 567995FJ
2/9/94 3.21 70,000 69,566 567995FM
2/15/94 3.21 125,000 124,158 567995FP
2/18/94 3.21 78,700 78,149 567995FN
2/23/94 3.20 135,000 134,001 567995DL
658,237
FEDERAL NATIONAL MORTGAGE ASSOCIATION - DISCOUNT NOTES - 8.4%
12/8/93 3.38 50,000 49,968 31365A9U
12/10/93 3.38 125,000 124,896 31365A9V
12/10/93 3.39 40,000 39,967 31365A9T
2/1/94 3.20 31,815 31,641 9931162C
2/7/94 3.33 200,000 198,764 31365H9G
5/12/94 3.35 80,000 78,812 9931162H
5/17/94 3.25 150,000 147,780 9931148B
7/18/94 3.47 110,000 107,625 9931165W
7/18/94 3.48 100,000 97,837 9931164P
877,290
TOTAL FEDERAL AGENCIES 1,579,180
U.S. TREASURY OBLIGATIONS - 7.3%
U.S. TREASURY BILLS - 7.3%
2/3/94 3.30 405,000 402,660 99399HWH
5/26/94 3.35 265,000 260,725 99399H5F
6/2/94 3.35 100,000 98,332 99399H5F
TOTAL U.S. TREASURY OBLIGATIONS 761,717
BANK NOTES - 0.2%
Old Kent Bank & Trust Company
5/2/94 3.50 25,000 24,997 679999CH
MEDIUM-TERM NOTES (A) - 7.0%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Abbey National PLC, UK
6/24/94 3.24% $ 45,000 $ 45,000 007994GK
Abbey National Treasury Service
9/30/94 3.19 435,000 435,000 010998AJ
Beneficial Corporation
2/14/94 3.22 37,000 36,994 08172L9B
Goldman Sachs Group, L.P. (The)
9/1/94 3.50 94,000 94,000 696992KB
Norwest Corporation
3/15/94 3.18 114,000 114,000 66899CBK
TOTAL MEDIUM-TERM NOTES 724,994
SHORT-TERM NOTES (A) - 8.1%
CSA Funding Inc. (A)
12/7/93 3.44 22,000 22,000 129993AC
CSA Funding Inc. (B)
12/7/93 3.42 22,000 22,000 129993AD
CSA Funding Inc. (C)
12/7/93 3.42 6,000 6,000 129993AE
J.P. Morgan Securities
4/19/94 3.46 111,000 111,000 616998AW
5/23/94 3.44 185,000 185,000 616998EC
Norwest Corporation
8/1/94 3.16 78,000 78,000 66899CBL
SMM Trust Company (1993-A) (b)
12/20/93 3.24 278,000 278,000 7845689P
SMM Trust Company (1993-D) (b)
1/28/94 3.49 79,000 79,000 7845689S
SMM Trust Company (1993-E) (b)
1/13/94 3.42 61,000 61,000 7845689Q
TOTAL SHORT-TERM NOTES 842,000
FOREIGN GOVERNMENT OBLIGATIONS (UNITED STATES DOLLARS) - 1.4%
Canadian Treasury Bills
5/25/94 3.42 100,000 98,366 136992SR
5/26/94 3.42 45,000 44,261 136992SS
TOTAL FOREIGN GOVERNMENT OBLIGATIONS 142,627
MUNICIPAL BONDS - 0.4%
New York Public Housing Authority
12/9/93 3.13 40,000 40,000 6497299L
REPURCHASE AGREEMENTS - 6.0%
MATURITY AMOUNT VALUE (NOTE 1)
(000'S) (000'S)
WITH KIDDER PEABODY & CO., INC.
At 3.15%, dated 11/16/93 due 12/7/93:
U.S. Treasury Obligations
(principal amount $100,495)
5.083% to 5.931%, 10/1/20 to 2/1/23 $ 100,184 $ 100,000
49399DQEIn a joint trading account
(U.S. Treasury Obligations)
dated 11/30/93, due 12/1/93
(Note 2)
At 3.24% 278,744 278,719
99799MGN At 3.34% 245,756 245,733 99799MGM
TOTAL REPURCHASE AGREEMENTS $ 624,452
TOTAL INVESTMENTS - 100% $ 10,404,131
Total Cost for Income Tax Purposes $ 10,404,131
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST (000'S)
SMM Trust
Company:
(1993-A) 9/20/93 $ 278,000
(1993-D) 10/28/93 $ 79,000
(1993-E) 10/13/93 $ 61,000
CAPITAL LOSS CARRYFORWARDS
At November 30, 1993, the fund had a capital loss carryforward of
approximately $1,196,000 which will expire on November 30, 2001.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) NOVEMBER 30, 1993
1.ASSETS
Investment in securities, at value (including repurchase $ 10,404,131
agreements of $624,452) (Notes 1 and 2) - See
accompanying schedule
Cash 34,374
Receivable for investments sold 121,307
Interest receivable 15,834
2.TOTAL ASSETS 10,575,646
3.LIABILITIES
Payable for investments purchased $ 257,344
Dividends payable 383
Accrued management fee 1,095
Other payables and accrued expenses 2,885
4.TOTAL LIABILITIES 261,707
5.NET ASSETS $ 10,313,939
Net Assets consist of:
Paid in capital $ 10,313,906
Accumulated net realized gain (loss) on investments 33
6.NET ASSETS, for 10,313,906 shares outstanding $ 10,313,939
7.NET ASSET VALUE, offering price and redemption price $1.00
per share ($10,313,939 (divided by) 10,313,906 shares)
</TABLE>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED NOVEMBER 30, 1993
8.9.INTEREST INCOME $ 331,276
10.EXPENSES
Management fee (Note 3) $ 13,258
Transfer agent fees (Note 3) 31,208
Accounting fees and expenses (Note 3) 751
Non-interested trustees' compensation 66
Custodian fees and expenses 287
Registration fees 273
Reports to shareholders (Note 4) 872
Audit 92
Legal 125
Miscellaneous 343
11.Total expenses before expense reductions 47,275
12.Expense reductions (Note 4) (872) 46,403
13.NET INTEREST INCOME 284,873
14.15.NET REALIZED GAIN (LOSS) ON INVESTMENTS (1,196)
(NOTE 1)
16.NET INCREASE IN NET ASSETS RESULTING FROM $ 283,677
OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEARS ENDED NOVEMBER 30,
1993 1992
17.INCREASE (DECREASE) IN NET ASSETS
Operations $ 284,873 $ 395,276
Net interest income
Net realized gain (loss) on investments (1,196) 499
18.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 283,677 395,775
FROM OPERATIONS
Dividends to shareholders from net interest income (284,873) (395,276)
Share transactions at net asset value of $1.00 per share 17,583,679 13,542,927
Proceeds from sales of shares
Reinvestment of dividends from net interest income 276,200 380,235
Cost of shares redeemed (17,584,689) (14,402,740)
Net increase (decrease) in net assets and shares 275,190 (479,578)
resulting from share transactions
19.TOTAL INCREASE (DECREASE) IN NET ASSETS 273,994 (479,079)
20.NET ASSETS
Beginning of period 10,039,945 10,519,024
End of period $ 10,313,939 $ 10,039,945
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED NOVEMBER 30,
1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of
period
Income from .029 .038 .061 .076 .086
Investment
Operations
Net interest
income
Dividends from (.029) (.038) (.061) (.076) (.086)
net interest
income
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
TOTAL RETURN 2.97 3.90 6.23 7.87 8.94
% % % % %
RATIOS AND SUPPLEMENTAL DATA
Net assets, $ 10,314 $ 10,040 $ 10,519 $ 10,921 $ 10,897
end of period
(in millions)
Ratio of expenses .48 .48 .58 .69 .74
to average net % % % % %
assets (dagger)
Ratio of net interest 2.92 3.86 6.03 7.62 8.60
income to average % % % % %
net assets
</TABLE>
(dagger) SEE NOTE 4 OF NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended November 30, 1993
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Cash Reserves (the fund) is a fund of Fidelity Phillips Street
Trust (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. At a
special meeting of the shareholders of the fund held on December 16, 1992,
shareholders approved an Agreement and Plan of Conversion and Termination
(the Plan of Conversion), providing for the conversion of the fund from a
separate series of a Massachusetts business trust, to a separate series of
a Delaware business trust, effective January 24, 1993. The individual
investment objective, policies and limitations of the fund remain the same.
The following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the Act, and certain
conditions therein, securities are valued initially at cost and thereafter
assume a constant amortization to maturity of any discount or premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year.
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
RESTRICTED SECURITIES. The fund is permitted to invest in privately placed
restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense,
2. OPERATING POLICIES -
CONTINUED
RESTRICTED SECURITIES - CONTINUED
and prompt sale at an acceptable price may be difficult. At the end of the
period, restricted securities (excluding 144A issues) amounted to
$418,000,000 or 4.05% 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 gross income at
the rate of 4% of the gross income equivalent to an annualized yield of 5%
or less, and at the rate of 6% of the gross income in excess of an
annualized yield of 5%. For this purpose, gross income includes interest
accrued or discount earned (including both original issue and market
discount) less amortization of premium. The amount of management fee paid
is limited to a weighted average of a graduated series of annual limitation
rates ranging from .50% of the fund's average net assets up to $1.5 billion
to .40% of the fund's average net assets in excess of $6 billion. For the
period, the management fee was equivalent to an annual rate of .14% of
average net assets.
On November 17, 1993, the shareholders of the fund voted to approve a
proposal to amend the management contract (see Note 4). The new management
fee will be composed of a basic fund fee rate of .03% of the fund's average
net assets, plus a fixed income group fee that varies depending on FMR's
total assets under management, and an income based fee. The income based
fee is added only when the fund's yield exceeds 5%. At that time the fee
would equal 6% of that portion of the fund's gross income that represents a
gross yield of more than 5% per year. The maximum income-based component is
0.24% (annualized) of average net assets.
In connection with the Plan of Conversion, a new Management Contract, new
Sub-Advisory Agreement, and new Distribution and Service Plan identical to
those previously in effect became effective on January 24, 1993.
SUB-ADVISER FEE. As the fund's investment sub-adviser, FMR Texas Inc., a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect, and after reducing the fee
for any payments by FMR pursuant to the fund's Distribution and Service
Plan.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
4. EXPENSE REDUCTION.
A special meeting of shareholders of the fund was held on November 17,
1993. All expenses in connection with this meeting including the
preparation of the proxy statement, its enclosures and all solicitations
were reimbursed by FMR.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders
of Fidelity Cash Reserves:
We have audited the accompanying statement of assets and liabilities of
Fidelity Cash Reserves including the schedule of portfolio investments, as
of November 30, 1993, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of
the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of November 30, 1993 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Fidelity Cash Reserves as of November 30, 1993, the results of its
operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND
Dallas, Texas
December 23, 1993
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road, South
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8300 Boone Boulevard
Vienna, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Thomas D. Maher, Assistant
Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
The 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
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY
(Registered trademark)
U.S. GOVERNMENT RESERVES
ANNUAL REPORT
SEPTEMBER 30, 1993
CONTENTS
PERFORMANCE 3 How the fund has done over time.
FUND TALK 5 The manager's review of fund
performance, strategy, and outlook.
INVESTMENT CHANGES 7 A summary of major shifts in the
fund's investments over the last six
months and one year.
INVESTMENTS 8 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 11 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 15 Footnotes to the financial
statements.
REPORT OF INDEPENDENT 18 The auditor's opinion.
ACCOUNTANTS
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS
CORPORATION IS A
BANK, AND FUND SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED
BY THE
FDIC.
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects both the change in a fund's share
price over a given period, and reinvestment of its dividends (or income).
Yield measures the income paid by a fund. Since a money market fund tries
to maintain a $1 share price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
YEARS ENDED SEPTEMBER 30, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity U.S. Government Reserves 2.57% 32.83% 90.41%
Consumer Price Index 2.69% 21.12% 44.09%
Average Government Money Market Fund 2.62% 32.34% 87.53%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period.
For example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. Comparing the fund's performance
to the consumer price index helps show how your investment did compared to
inflation. To measure how the fund stacked up against its peers, you can
compare its return to the average government money market fund's total
returns. This average currently reflects the performance of over 190
government money market funds tracked by IBC/Donoghue's MONEY FUND
REPORT.(Registered trademark) (The periods covered by the IBC/Donoghue
numbers are the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
YEARS ENDED SEPTEMBER 30, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity U.S. Government Reserves 2.57% 5.84% 6.65%
Consumer Price Index 2.69% 3.91% 3.72%
Average Government Money Market Fund 2.62% 5.77% 6.49%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have
happened if the fund had achieved that return by performing at a constant
rate each year.
YIELDS
9/30/92 12/31/92 3/31/93 6/30/93 9/30/93
Fidelity U.S. Government Reserves 2.87% 2.69% 2.49% 2.46% 2.89%
Average Government
Money Market Fund 2.85% 2.68% 2.56% 2.53% 2.54%
MMDA 2.83% 2.72% 2.58% 2.47% 2.38%
Row: 1, Col: 1, Value: 2.87
Row: 1, Col: 2, Value: 2.85
Row: 1, Col: 3, Value: 2.83
Row: 2, Col: 1, Value: 2.69
Row: 2, Col: 2, Value: 2.68
Row: 2, Col: 3, Value: 2.72
Row: 3, Col: 1, Value: 2.49
Row: 3, Col: 2, Value: 2.56
Row: 3, Col: 3, Value: 2.58
Row: 4, Col: 1, Value: 2.46
Row: 4, Col: 2, Value: 2.53
Row: 4, Col: 3, Value: 2.47
Row: 5, Col: 1, Value: 2.89
Row: 5, Col: 2, Value: 2.54
Row: 5, Col: 3, Value: 2.38
3% -
2% -
1% -
0%
Fidelity
U.S. Government
Reserves
Average Governmen
t
Money Market
Fund
MMDA
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 charts above show the fund's
current seven-day yield at quarterly intervals over the past year. This is
compared to similar yields for the average government money market fund and
the average bank money market deposit account (MMDA). Figures for the
average government money market fund are from the IBC/Donoghue's MONEY FUND
REPORT.(Registered trademark) The MMDA average is supplied by BANK RATE
MONITOR.(double dagger) (Both figures are those available closest to month
end.)
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS REFLECT PAST RESULTS RATHER
THAN PREDICTING FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
(checkmark)
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 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.
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Leland Barron,
Portfolio Manager of Fidelity U.S. Government Reserves
Q. LOOKING BACK TO SEPTEMBER
1992, WHAT HAS BEEN THE TREND IN
INTEREST RATES?
A. We saw slight moves both up and down. A year ago, interest rates hit a
20-year low after falling six percentage points during the preceding three
years. Between October and December 1992 short-term interest rates climbed
3/4 of 1%. That was in part because many economic indicators pointed to a
stronger-than-expected recovery, and investors feared a rise in inflation.
In early 1993 the market accepted that the economic recovery was sluggish
and that President Clinton was serious about reducing the budget deficit.
Rates started to fall again, and remained steady during most of the spring.
Between May and June short-term rates rose about 1/3 of 1% based on the
market's renewed inflation fears. This inflation scare subsided a bit in
July, when gold, commodity and consumer prices moderated somewhat. In
response, short-term rates dropped about 1/4 of 1%. Recently the Fed
indicated that they have adopted a neutral approach regarding monetary
policy, which means they don't have a bias towards either raising or
lowering interest rates at the present time.
Q. HOW DID YOU ALTER YOUR STRATEGY TO KEEP UP WITH THESE RAPID MOVES?
A. Last September, I began lengthening the fund's average maturity to as
far out as 85 days, a move that was fairly aggressive. Interest rates were
falling,
and I wanted to lock in attractive rates for as long as possible. After
October, I began shortening the fund's maturity again as interest rates
rose slightly. By year-end, the maturity had dropped to 46 days and
remained in that general area during the first quarter of 1993. Through the
second quarter I extended the maturity to between 60 to 70 days.
I didn't expect the Fed to raise rates
immediately, and I wanted to take advantage of the rise in interest rates
in May and June. As rates declined during the last several months I've kept
the maturity at about 64 days.
Q. WHAT WERE THE RESULTS?
A. The fund's seven-day yield as of September 30, 1993 was 2.89%, compared
to 2.49% at the end of March and 2.87% at the end of September 1992. The
fund's total return for the year ended September 30, 1993 was 2.57%. During
the same period, the average government money market fund had a total
return of 2.62%, according to IBC/Donoghue. I wasn't as aggressive with the
fund's maturity as I could have been because I believed the economy would
improve faster than it did, and so, rates would rise more than they did. In
hindsight, I missed an opportunity to extend the fund's maturity sooner.
Q. WHAT'S YOUR OUTLOOK?
A. I'm interpreting what Fed officials are currently saying as a sign that
they don't see any real economic benefit from lowering short-term rates. On
the other hand, there seems to be no real reason to raise rates either.
Inflationary pressures -- increases in consumer prices, producer prices and
wages -- are mild right now and the economy has been growing at only 2 to 2
1/2 percent annually. I see the Fed holding short-term rates steady over
the next six months. So, I'll probably keep a neutral to aggressive
strategy, with the average maturity of the fund somewhere in the 65-80 day
range. Unless conditions drastically change, I probably won't go lower than
the 50s.
FUND FACTS
GOAL: income and stability
by investing in high quality,
short-term investments
START DATE: November 3,
1981
SIZE: as of September 30,
1993, over $1 billion
MANAGER: Leland Barron,
since July 1991; manager,
Spartan U.S. Government
Money Market Fund, since
July 1991, and Spartan U.S.
Treasury Money Market
Fund, since January 1991
(checkmark)
WORDS TO KNOW
AGENCY ISSUE: Debt security issued by a government agency, such as the
Federal National Mortgage Association (Fannie Mae). Although their credit
ratings are high, most agency issues are not backed by the full faith and
credit of the U.S. government.
AVERAGE MATURITY: The average maturity of debt securities in a fund,
weighted by dollar amount. When the average maturity is short, the fund
manager believes interest rates will rise. When the average maturity is
long, the fund manager is expecting rates to fall.
DISCOUNT RATE: The interest rate the Federal Reserve charges member banks
for loans.
FEDERAL FUNDS RATE: The interest rate banks charge each other for overnight
loans.
MATURITY: The amount of time remaining before a debt security is scheduled
to be redeemed.
REPURCHASE AGREEMENT: Agreement between a seller and a buyer in which the
seller promises to repurchase a block of securities at
a set price and time. Also known
as a "repo."
TREASURY OBLIGATION: Debt security issued directly by the U.S government.
Payment of principal and interest are guaranteed.
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
9/30/93 3/31/93 9/30/92
0 - 30 60.0 59.6 36.6
31 - 90 7.6 14.0 15.6
91 - 180 16.6 25.5 40.3
181 - 397 15.8 0.9 7.5
WEIGHTED AVERAGE MATURITY
9/30/93 3/31/93 9/30/92
Fidelity U.S. Government
Reserves 64 days 46 days 85 days
Average Government Money
Market Fund* 59 days 56 days 60 days
ASSET ALLOCATION
AS OF 9/30/93 AS OF 3/31/93
Row: 1, Col: 1, Value: 30.9
Row: 1, Col: 2, Value: 17.5
Row: 1, Col: 3, Value: 51.6
Row: 1, Col: 4, Value: nil
Row: 1, Col: 1, Value: 28.4
Row: 1, Col: 2, Value: 26.8
Row: 1, Col: 3, Value: 44.8
Row: 1, Col: 4, Value: nil
Federal agency
issues 30.9%
U.S. Treasury
obligations 17.5%
Repurchase
agreements 51.6%
Federal agency
issues 28.4%
U.S. Treasury
obligations 26.8%
Repurchase
agreements 44.8%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)/GOVERNMENT
INVESTMENTS SEPTEMBER 30, 1993
Showing Percentage of Total Value of Investments
FEDERAL AGENCIES - 30.9%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
FEDERAL FARM CREDIT BANK - AGENCY COUPONS - 4.1%
10/1/93 3.21% $ 18,500 $ 18,500 313993HX
10/3/94 3.43 25,000 25,003 313993JR
43,503
FEDERAL HOME LOAN BANK - AGENCY COUPONS - 2.9%
4/25/94 3.23 15,000 15,326 567995BM
4/25/94 3.33 15,000 15,505 567995AS
30,831
FEDERAL HOME LOAN BANK - DISCOUNT NOTES - 2.4%
1/19/94 3.19 15,000 14,856 567995BH
4/22/94 3.28 11,000 10,803 3133899B
25,659
FEDERAL HOME LOAN MORTGAGE CORP. - DISCOUNT NOTES - 1.6%
1/19/94 3.19 1,000 990 355993CG
1/20/94 3.15 16,000 15,846 355993FG
16,836
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 13.5%
11/23/93 3.20 22,000 21,898 31364T9B
11/24/93 3.20 20,000 19,906 31364T9F
12/6/93 3.24 13,000 12,924 31365B9Q
12/31/93 3.29 15,000 14,877 31365D9M
2/28/94 3.22 75,000 74,009 31365R9S
143,614
STUDENT LOAN MARKETING ASSOCIATION - AGENCY COUPONS - 6.4% (A)
10/5/93 3.28 30,000 30,000 863990PS
10/5/93 3.56 15,000 15,091 82399CAU
7/1/94 3.74 23,600 23,600 82399CAU
68,691
TOTAL FEDERAL AGENCIES 329,134
U.S. TREASURY OBLIGATIONS - 17.5%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
U.S. TREASURY BILLS
10/21/93 3.27% $ 10,000 $ 9,982 9949989A
11/18/93 3.16 25,000 24,896 99399HPP
1/20/94 3.25 25,000 24,753 99399HVB
2/3/94 3.30 28,000 27,684 99399HWL
4/7/94 3.35 12,000 11,797 99399HLF
5/5/94 3.30 12,000 11,770 99399HPC
5/5/94 3.35 28,000 27,456 99399HPL
6/2/94 3.47 10,000 9,773 99399HRU
6/30/94 3.30 39,000 38,057 99399HTS
TOTAL U.S. TREASURY OBLIGATIONS 186,168
REPURCHASE AGREEMENTS - 51.6%
MATURITY AMOUNT
(000S)
With Credit Lyonnais:
At 3.5%, dated 9/30/93 due 10/1/93:
U.S. Treasury Obligations
(principal amount $145,720,000)
4.25% to 9.5%, 5/15/94 to 5/31/98 $ 150,014 150,000
227993LQWith First Boston Corporation:
At 3.15%, dated 9/08/93 due 10/8/93:
U.S. Government Obligations
(principal amount $72,716,873)
3.65% to 9.5%, 7/01/98 to 7/01/23 51,635 51,500
310992BDIn a joint trading account
(U.S. Treasury Obligations)
dated 9/30/93, due 10/1/93
(Note 2)
At 3.40% 1,255 1,255
99799L7EAt 3.53% 347,109 347,075 99799L7C
TOTAL REPURCHASE AGREEMENTS 549,830
TOTAL INVESTMENTS - 100% $ 1,065,132
Total Cost for Income Tax Purposes $ 1,065,132
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
INCOME TAX INFORMATION
At September 30, 1993 the fund had a capital loss carryforward of
approximately $436,000
of which $7,000 and $429,000 will expire on September 30,1995 and 1996
respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) SEPTEMBER 30, 1993
21.ASSETS
Investment in securities, at value (including repurchase $ 1,065,132
agreements of $549,830) (Notes 1 and 2) -
See accompanying schedule
Cash 2,186
Interest receivable 1,814
22.TOTAL ASSETS 1,069,132
23.LIABILITIES
Payable for investments purchased $ 25,003
Dividends payable 139
Accrued management fee 166
Other payables and accrued expenses 434
24.TOTAL LIABILITIES 25,742
25.NET ASSETS $ 1,043,390
Net Assets consist of:
Paid in capital $ 1,043,766
Accumulated net realized gain (loss) on investments (376)
26.NET ASSETS, for 1,043,766 shares outstanding $ 1,043,390
27.NET ASSET VALUE, offering price and redemption price $1.00
per
share ($1,043,390 (divided by) 1,043,766 shares)
</TABLE>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR ENDED SEPTEMBER 30, 1993
28.INTEREST INCOME $ 37,573
29.EXPENSES
Management fee (Note 4) $ 4,887
Transfer agent fees (Note 4) 2,955
Accounting fees and expenses (Note 4) 136
Non-interested trustees' compensation 7
Custodian fees and expenses 65
Registration fees 94
Audit 30
Legal 27
Miscellaneous 87
30.TOTAL EXPENSES 8,288
31.NET INTEREST INCOME 29,285
32.NET REALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 20
33.NET INCREASE IN NET ASSETS RESULTING FROM OPERATIO $ 29,305
NS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS YEARS ENDED SEPTEMBER 30,
34.INCREASE (DECREASE) IN NET ASSETS 1993 1992
Operations $ 29,285 $ 51,665
Net interest income
Net realized gain (loss) on investments 20 23
35.NET INCREASE (DECREASE) IN NET ASSETS RESULTING 29,305 51,688
FROM OPERATIONS
Dividends to shareholders from net interest income (29,285) (51,665)
Share transactions at net asset value of $1.00 per share 1,179,994 1,539,954
Proceeds from sales of shares
Reinvestment of dividends from net interest income 27,738 49,475
Cost of shares redeemed (1,456,797) (1,732,610)
Net increase (decrease) in net assets resulting from (249,065) (143,181)
share transactions
36.TOTAL INCREASE (DECREASE) IN NET ASSETS (249,045) (143,158)
37.NET ASSETS
Beginning of period 1,292,435 1,435,593
End of period $ 1,043,390 $ 1,292,435
</TABLE>
FINANCIAL HIGHLIGHTS
YEARS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1993 1992 1991 1990 1989
SELECTED PER-SHARE DATA
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
Income from Investment .025 .039 .061 .076 .083
Operations
Net interest income
Dividends from net (.025) (.039) (.061) (.076) (.083)
interest income
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
TOTAL RETURN 2.57% 3.95% 6.29% 7.86% 8.66%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 1,043 $ 1,292 $ 1,436 $ 1,581 $ 1,545
period (in millions)
Ratio of expenses to .73% .73% .72% .74% .80%
average net assets
Ratio of net interest 2.57% 3.88% 6.13% 7.66% 8.29%
income to average
net assets
</TABLE>
NOTES TO FINANCIAL STATEMENTS
For the period ended September 30, 1993
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity U.S. Government Reserves (the fund) is a fund of Fidelity Charles
Street Trust (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 Massachusetts business trust. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR THE COST OF INVESTMENTS. Effective October 1,
1992, the fund changed its method of accounting for the cost of investments
from the average cost method to the specific identification method. The new
method of accounting for the cost of investments was adopted because it
better matches specific costs with proceeds from sales of securities and
more closely conforms realized gains with related distributions. The change
in accounting had no effect on the fund's net assets, net asset value per
share, its net increase (decrease) in net assets resulting from operations
or its distributions. The change in accounting also had no effect on net
accumulated realized gain on investments and net unrealized depreciation in
value of investment securities previously reported through September 30,
1992.
2. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT - CONTINUED
companies having management contracts with FMR, may transfer uninvested
cash balances into a joint trading account. These balances are invested in
one or more repurchase agreements that are collateralized by U.S. Treasury
or Federal Agency obligations.
3. JOINT TRADING ACCOUNT.
At the end of the period, the fund had 20% or more of its total investments
in repurchase agreements through a joint trading account. These repurchase
agreements were with entities whose creditworthiness has been reviewed and
found satisfactory by FMR. The repurchase agreements were dated 9/30/93 and
due 10/01/93. The maturity values of the joint trading account investments
were $1,255,000 at 3.40% and $347,109,000 at 3.53%. The investments in
repurchase agreements through the joint trading account
are summarized as follows:
SUMMARY OF JOINT TRADING ACCOUNT
AT 3.40% AT 3.53%
Number of Dealers or Banks 20 4
Maximum Amount With One Dealer or Bank $ 1,844,889,000 $ 2,750,000,000
Aggregate Principal Amount of Agreements 10,083,337,000 4,450,000,000
Aggregate Maturity Amount of Agreements 10,084,291,000 4,450,436,000
Aggregate Market Value of Collateral 10,297,360,000 4,585,007,000
Coupon Rates of Collateral 3.326%-14.25% 3.236%-11.5%
Maturity Dates of Collateral 11/4/93-11/15/22 1/15/98-11/1/27
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's
investment adviser, FMR receives a monthly fee that is calculated on the
basis of a group fee rate plus a fixed individual fund fee rate applied to
the average net assets of the fund. The group fee rate is the weighted
average of a series of rates ranging from .15% to .37% and is based on the
monthly average net assets of all the mutual funds advised by FMR. The
annual individual fund fee rate is .28%. For the period, the management
fee was equivalent to an annualized rate of .43% of average net assets.
On December 12, 1991, the Board of
Trustees approved a new group fee rate schedule with rates ranging from
.14% to .37%; effective January 1, 1992, FMR has voluntarily agreed to
implement this new group fee rate schedule. Effective September 1, 1993,
FMR has agreed to voluntarily adopt a revised management fee structure for
the fund. The revised structure provides for a lower individual fund fee
rate of .03% and the addition of an income component (6% of gross income in
excess of a 5% yield, up to a maximum of .24% of average net assets). These
changes will provide for lower management fees, and will be presented to
shareholders for approval at the next shareholder meeting.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
SUB-ADVISER FEE. As the fund's investment sub-adviser, FMR Texas Inc., a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect, and after reducing the fee
for any payments by FMR pursuant to the fund's Distribution and Service
Plan.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains
the fund's accounting records. The fee is based on the level of average net
assets for the month plus out-of-pocket expenses.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
Fidelity U.S. Government Reserves:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Fidelity U.S. Government Reserves at September 30, 1993, and the results of
its operations for the year then ended, the changes in its net assets for
each of the two years then ended, and its financial highlights for the
periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audits of these
financial statements in accordance with generally accepted auditing
standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities owned at September 30, 1993 by
correspondence with the custodian, provide a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE
Dallas, Texas
October 22, 1993
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios.(Registered trademark)
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Leland Barron, Vice President
Thomas D. Maher, Assistant
Vice President
Gary L. French, Treasurer
John H . Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Gerald C. McDonough*
Thomas R. Williams
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Morgan Guaranty Trust Co. 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 Money Market Fund
Spartan U.S. Government
Money Market Fund
Spartan U.S. Treasury
Money Market Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances ** 1-800-544-7544
Exchanges/Redemptions ** 1-800-544-7777
Mutual Fund Quotes ** 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
** AUTOMATED LINES FOR QUICKEST SERVICE
Exhibit 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting part of this Post
Effective Amendment No. 36 to the Registration Statement on Form N-1A (the
"Registration Statement") of Fidelity Phillips Street Trust: Fidelity Cash
Reserves of our report dated December 23, 1993, relating to the financial
statements and financial highlights, which is incorporated by reference in
said Statement of Additional Information.
We further consent to the references to our Firm in the Prospectus and
Statement of Additional Information under the headings "Financial
Highlights" and "Auditor".
COOPERS & LYBRAND
Dallas, Texas
January 7, 1994
Exhibit 11(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the Statement of
Additional Information constituting part of this Post Effective Amendment
No. 36 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated October 22, 1993, relating to the financial
statemments and financial highlights appearing in the September 30, 1993
Annual Report to Shareholders of Fidelity U. S. Government Reserves, which
is incorporated by reference in such Registration Statement. We further
consent to the references to us under the headings "Auditor" in the
Statement of Additional Information and "Financial Highlights" in the
Prospectus.
PRICE WATERHOUSE
January 5, 1994
