FIDELITY
(registered trademark)
U.S. GOVERNMENT RESERVES
SEMIANNUAL REPORT
MAY 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 8 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 9 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 12 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 16 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD OR
ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF
PRINCIPAL. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK. FOR MORE
INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL
1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been some positive market indications so far in 1995,
no one can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was almost
ideal.
These market ups and downs are a normal part of investing, and there are
some basic principles that can help investors in every type of market.
First, take a long-term approach when investing. If you can afford to leave
your money invested through the inevitable ups and downs of financial
markets, you will greatly reduce your vulnerability to any single decline.
Over time, for example, stock prices have gone up - and have significantly
outperformed other types of investments and stayed ahead of inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.SM
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects 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 MAY 31, 1995 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Fidelity U.S. Government Reserves 2.78% 4.95% 24.37% 75.80%
Average Government
Money Market Fund 2.61% 4.64% 23.53% 72.84%
Consumer Price Index 1.53% 3.19% 17.80% 41.85%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one year, five years, or ten
years. For example, if you invested $1,000 in a fund that had a 5% return
over the past year, the value of your investment would be $1,050. To
measure how the fund's performance stacked up against its peers, you can
compare it to the average government money market fund, which reflects the
performance of 226 government money market funds with similar objectives
tracked by IBC/Donoghue over the past six months. Comparing the fund's
performance to the consumer price index (CPI) helps show how your fund did
compared to inflation. (The periods covered by the CPI and IBC/Donoghue
numbers are the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1995 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity U.S. Government Reserves 4.95% 4.46% 5.80%
Average Government
Money Market Fund 4.64% 4.31% 5.62%
Consumer Price Index 3.19% 3.33% 3.56%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
5/31/94 8/30/94 11/29/94 2/28/95 5/30/95
Fidelity U.S. Government 3.46% 4.08% 5.06% 5.64% 5.58%
Reserves
Average Government 3.35% 3.91% 4.67% 5.30% 5.33%
Money Market Fund
6/1/94 8/24/94 11/30/94 3/1/95 5/31/95
2.38% 2.45% 2.68% 2.88% 2.89%
MMDA
Row: 1, Col: 1, Value: 3.46
Row: 1, Col: 2, Value: 3.35
Row: 1, Col: 3, Value: 2.38
Row: 2, Col: 1, Value: 4.08
Row: 2, Col: 2, Value: 3.91
Row: 2, Col: 3, Value: 2.45
Row: 3, Col: 1, Value: 5.06
Row: 3, Col: 2, Value: 4.67
Row: 3, Col: 3, Value: 2.68
Row: 4, Col: 1, Value: 5.64
Row: 4, Col: 2, Value: 5.3
Row: 4, Col: 3, Value: 2.88
Row: 5, Col: 1, Value: 5.58
Row: 5, Col: 2, Value: 5.33
Row: 5, Col: 3, Value: 2.89
6% -
5% -
4% -
3% -
2% -
1% -
0%
Fidelity
U.S. Government
Reserves
Average
Government
Money Market Fun
d
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 chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the average government money market fund and the
average bank money market deposit account (MMDA). Figures for the average
government money market are supplied by IBC/Donoghue. The MMDA average is
supplied by BANK RATE MONITOR(Trademark).
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
There are some important
differences between a bank
money market deposit account
(MMDA) and a money market
fund. First, the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money
market fund will maintain a $1
share price. Second, a money
market fund returns to its
shareholders income earned
by the fund's investments after
expenses. This is in contrast to
banks, which set their MMDA
rates periodically based on
current interest rates,
competitors' rates, and internal
criteria.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Leland Barron,
Portfolio Manager of Fidelity U.S. Government Reserves
Q. LELAND, WHAT KIND OF ECONOMIC ENVIRONMENT HAVE YOU BEEN OPERATING IN FOR
THE PAST SIX MONTHS?
A. This has been a transitional period. Six months ago, there was
widespread concern that the economy was overheating. The Federal Reserve
was focused on tempering the growth rate and warding off inflation. Then in
January, we began to see numbers that suggested the economy was slowing
down. That feeling was confirmed with the release of the first-quarter
growth rate in the gross domestic product, which turned out to be even
lower than I expected - only 2.8%, compared to more than 5% in the fourth
quarter of 1995. Now the prevailing sentiment in the market is that we may
be headed for a recession.
Q. HOW HAS THE MARKET RESPONDED TO THE SLOWDOWN IN THE ECONOMY?
A. Despite the Fed's rate increase in February, short-term interest rates
have fallen since December; the six-month Treasury, for example, is down
half a percentage point since then. I believe that reflects a dramatic
shift in market psychology, in tune with the turnaround in the outlook for
the economy. Earlier in the year, it looked as if rates would continue
rising through the summer, and the pricing of short-term securities
reflected that expectation. Now, there's a growing consensus among
economists that the Fed's next move may be to lower rates, which has led to
a dramatic decline in short-term yields.
Q. WHAT STRATEGIC CHOICES DID YOU MAKE DURING THE PERIOD?
A. I kept the fund's average maturity in the 30- to 40-day range, even as
rates stabilized and began heading down. Normally, I would extend the
fund's maturity in a falling-rate environment but lately I've been
reluctant to do that, for two reasons: heavy buying by foreign central
banks of short-term U.S. Treasury securities, and the fact that it looks
like the market has already priced most securities assuming a
half-percentage-point rate cut later this summer. The result is that
short-term interest rates have fallen to artificially low levels. Until
conditions stabilize, I prefer the flexibility of operating with a shorter
average maturity.
Q. HOW DID THE FUND PERFORM?
A. Better than most of its competitors. On May 31, 1995, the fund's
seven-day yield was 5.58%, compared to 5.11% at the end of last November.
The fund's total return for the six-month period was 2.78%. That beat the
average total return of 2.61% for all government money market funds during
the same period, according to IBC/Donoghue.
Q. WHAT'S THE OUTLOOK FOR THE NEXT SEVERAL MONTHS?
A. Currently, I think we're experiencing a temporary inventory correction,
rather than embarking on an extended downturn. This condition suggests the
economy will experience only moderate growth over the next several months.
I believe if the Fed becomes concerned that the economy has slowed too
much, it will more than likely lower short-term rates in the third quarter.
FUND FACTS
GOAL: income and a stable $1
share price by investing in high
quality short-term money
market securities issued or
guaranteed by the U.S.
government or government
agencies
START DATE: November 3, 1981
SIZE: as of May 31,1995,
more than $1.1 billion
MANAGER: Leland Barron,
since 1991; manager,
Spartan U.S. Government
Money Market Fund, since
1991, and Spartan U.S.
Treasury Money Market
Fund, since 1991; joined
Fidelity in 1981
(checkmark)
WORDS TO KNOW
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. When the
average maturity is neutral,
the fund manager wants to
have the flexibility to respond
to rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
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.
FEDERAL RESERVE: The
system designed to regulate
the U.S. monetary and
banking system. If the Fed
tightens the money supply, it
decreases the amount of
money available to the
banking system, which
generally causes interest
rates to rise.
MATURITY: The amount of time
remaining until a debt security
is scheduled to be redeemed.
TREASURY OBLIGATION: Debt
security issued directly by the
U.S. government. Payment of
principal and interest is
guaranteed.
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
5/31/95 11/30/94 5/31/94
0 - 30 42 72 71
31 - 90 22 5 4
91 - 180 25 18 21
181 - 397 11 5 4
WEIGHTED AVERAGE MATURITY
5/31/95 11/30/94 5/31/94
Fidelity U.S. Government
Reserves 40 days 41 days 39 days
Average Government
Money Market Fund* 41 days 38 days 41 days
ASSET ALLOCATION
AS OF MAY 31, 1995 AS OF NOVEMBER 30, 1994
Row: 1, Col: 1, Value: 55.0
Row: 1, Col: 2, Value: 5.0
Row: 1, Col: 3, Value: 39.0
Row: 1, Col: 4, Value: 2.0
Row: 1, Col: 1, Value: 52.0
Row: 1, Col: 2, Value: 3.0
Row: 1, Col: 3, Value: 44.0
Row: 1, Col: 4, Value: 2.0
Federal agency
issues 55%
U.S. Treasury
obligations 5%
Repurchase
agreements 39%
Other 1%
Federal agency
issues 52%
U.S. Treasury
obligations 3%
Repurchase
agreements 44%
Other 1%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
INVESTMENTS MAY 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investments
FEDERAL AGENCIES - 55.3%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
FEDERAL FARM CREDIT BANK - AGENCY COUPONS (A) - 2.6%
6/1/95 6.25% $ 33,000 $ 32,944
FEDERAL HOME LOAN BANK - AGENCY COUPONS (A) - 4.7%
6/1/95 6.11 32,000 31,995
6/1/95 6.58 15,000 14,983
6/8/95 6.01 13,000 12,982
59,960
FEDERAL HOME LOAN BANK - DISCOUNT NOTES - 2.0%
6/13/95 6.83 15,000 14,967
7/6/95 6.71 10,320 10,255
25,222
FEDERAL NATIONAL MORTGAGE ASSOC. - AGENCY COUPONS (A) - 8.0%
6/1/95 6.02 61,000 61,000
6/1/95 6.60 40,000 40,000
101,000
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 33.7%
6/2/95 6.51 16,000 15,997
6/28/95 6.40 30,000 29,860
7/6/95 6.71 9,530 9,470
7/11/95 6.73 15,000 14,891
8/4/95 6.00 19,000 18,800
8/4/95 6.01 38,000 37,600
8/7/95 6.38 30,000 29,655
8/8/95 6.38 9,000 8,895
8/17/95 6.35 12,000 11,842
9/1/95 5.81 51,000 50,243
9/8/95 5.81 23,000 22,633
9/14/95 6.28 46,000 45,184
9/28/95 6.00 39,000 38,243
10/10/95 6.17 23,000 22,500
10/20/95 (e) 6.08 40,000 39,076
11/2/95 6.12 32,000 31,188
426,077
STUDENT LOAN MARKETING ASSOC. - AGENCY COUPONS (A) - 4.3%
6/6/95 6.22 30,000 30,000
6/30/95 5.48 23,600 23,600
53,600
TOTAL FEDERAL AGENCIES 698,803
U.S. TREASURY OBLIGATIONS - 4.9%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
U.S. TREASURY BILLS - 4.9%
8/24/95 5.47% $ 32,000 $ 31,612
8/31/95 (d) 6.19 31,000 30,530
62,142
MEDIUM-TERM NOTES (A) (C) - 0.6%
EXPORT-IMPORT BANK, U.S. (AS GUARANTOR FOR K.A. LEASING, LTD.)
6/15/95 6.06 8,089 8,089
REPURCHASE AGREEMENTS - 39.2%
MATURITY AMOUNT
(000S)
With First Boston Corporation:
At 5.97%, dated 5/31/95 due 8/22/95:
U.S. Government Obligations
(principal amount $47,102,243)
5% to 12.25%, 1/1/04 to 1/1/33 $ 45,619 45,000
In a joint trading account (Note 2)
(U.S. Government Obligations) :
dated 5/31/95 due 6/1/95 at 6.19% 367,739 367,676
dated 5/26/95 due 6/2/95 at 6.00% 45,053 45,000
dated 5/15/95 due 6/14/95 at 6.18% (a) 37,192 (b) 37,000
TOTAL REPURCHASE AGREEMENTS 494,676
TOTAL INVESTMENTS - 100% $ 1,263,710
Total Cost for Income Tax Purposes $ 1,263,710
SECURITY TYPE ABBREVIATIONS
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the next interest rate reset date or, when applicable,
the final maturity date.
(b) The maturity amount is calculated based on the rate at period end.
(c) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $8,089,000 or 0.7% of net
assets.
(d) Security subject to repurchase within a specified time and at a
specified price (see Note 2 of Notes to Financial Statements).
(e) Security segregated in custodian records for duration of reverse
repurchase agreement (see Note 2 of Notes to Financial Statements).
INCOME TAX INFORMATION
At November 30, 1994 the fund had a capital loss carryforward of
approximately $460,000
of which $429,000 and $31,000 will expire on November 30, 1995 and 2001,
respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) MAY 31, 1995 (UNAUDITED)
1.ASSETS 2. 3.
4.Investment in securities, at value (including 5. $ 1,263,710
repurchase agreements of $494,676) - See
accompanying
schedule
6.Interest receivable 7. 2,594
8. 9.TOTAL ASSETS 10. 1,266,304
11.LIABILITIES 12. 13.
14.Payable for investments purchased $ 72,875 15.
16.Payable for reverse repurchase agreement 30,560 17.
18.Share transactions in process 1,626 19.
20.Accrued management fee 248 21.
22.Other payables and accrued expenses 382 23.
24. 25.TOTAL LIABILITIES 26. 105,691
27.28.NET ASSETS 29. $ 1,160,613
30.Net Assets consist of: 31. 32.
33.Paid in capital 34. $ 1,161,083
35.Accumulated net realized gain (loss) on investments 36. (470)
37.38.NET ASSETS, for 1,161,083 shares outstanding 39. $ 1,160,613
40.41.NET ASSET VALUE, offering price and redemption 42. $1.00
price per share ($1,160,613 (divided by) 1,161,083 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1995 (UNAUDITED)
43.44.INTEREST INCOME 45. $ 34,313
46.EXPENSES 47. 48.
49.Management fee $ 1,395 50.
51.Transfer agent fees 1,544 52.
53.Accounting fees and expenses 68 54.
55.Non-interested trustees' compensation 18 56.
57.Custodian fees and expenses 31 58.
59.Registration fees 120 60.
61.Audit 11 62.
63.Miscellaneous 5 64.
65. 66.TOTAL EXPENSES 67. 3,192
68.69.NET INTEREST INCOME 70. 31,121
71.72.NET REALIZED GAIN (LOSS) ON INVESTMENTS 73. (63)
74.75.NET INCREASE IN NET ASSETS RESULTING FROM 76. $ 31,058
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS TWO MONTHS YEAR
ENDED ENDED ENDED
MAY 31, 1995 NOVEMBER 30, SEPTEMBER 30,
(UNAUDITED) 1994 1994
77.INCREASE (DECREASE) IN NET
ASSETS
78.Operations $ 31,121 $ 8,785 $ 35,202
Net interest income
79. Net realized gain (loss) (63) - (31)
80. 81.NET INCREASE (DECREASE) IN 31,058 8,785 35,171
NET ASSETS RESULTING FROM
OPERATIONS
82.Distributions to shareholders from (31,121) (8,785) (35,202)
net interest income
83.Share transactions at net asset 763,530 275,603 1,705,793
value of $1.00 per share
Proceeds from sales of shares
84. Reinvestment of distributions from 29,850 8,212 33,487
net interest income
85. Cost of shares redeemed (762,373) (214,138) (1,722,647)
86.87. 31,007 69,677 16,633
NET INCREASE (DECREASE) IN NET
ASSETS AND SHARES RESULTING
FROM SHARE TRANSACTIONS
88. 89.TOTAL INCREASE (DECREASE) 30,944 69,677 16,602
IN
NET ASSETS
90.NET ASSETS 91. 92. 93.
94. Beginning of period 1,129,669 1,059,992 1,043,390
95. End of period $ 1,160,613 $ 1,129,669 $ 1,059,992
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
96. SIX MONTHS TWO MONTHS YEARS ENDED SEPTEMBER 30,
ENDED ENDED
MAY 31, 1995 NOVEMBER 30,
97. (UNAUDITED) 1994 1994 1993 1992 1991 1990
98.SELECTED PER-SHARE DATA
99.Net asset value, beginning
of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
100.Income from Investment
Operations .028 .008 .033 .025 .039 .061 .076
Net interest income
101.Less Distributions (.028) (.008) (.033) (.025) (.039) (.061) (.076)
From net interest income
102.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
103.TOTAL RETURN B 2.78% 0.78% 3.32% 2.57% 3.95% 6.29% 7.86%
104.RATIOS AND SUPPLEMENTAL DATA
105.Net assets, end of period
(in millions) $ 1,161 $ 1,130 $ 1,060 $ 1,043 $ 1,292 $ 1,436 $ 1,581
106.Ratio of expenses to average
net assets .56%A .36%A .51% .73% .73% .72% .74%
107.Ratio of net interest income
to average net assets 5.45%A 4.77%A 3.27% 2.57% 3.88% 6.13% 7.66%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1995 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity U.S. Government 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 September 21,
1994 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 13, 1995.
The individual investment objective, policies and limitations of the fund
remain the same. On March 17, 1994, the Board of Trustees approved a change
in the fiscal year-end of the fund from September 30 to November 30. The
following summarizes the significant accounting policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes substantially all of its taxable income for
its fiscal year. The schedule of investments includes information regarding
income taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase, and are collateralized by U.S.
Treasury or Federal Agency obligations.
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
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS - CONTINUED
purchase. The fund's investment adviser, FMR, is responsible for
determining that the value of these underlying securities remains at least
equal to the resale price.
REVERSE REPURCHASE AGREEMENTS.
At all times that a reverse repurchase agreement is outstanding, the fund
identifies cash and liquid securities as segregated in its custodian
records with a value at least equal to its obligation under the agreement.
On May 31, 1995,the fund had a reverse repurchase agreement amounting to
$30,550,000 at 5.85% outstanding. The agreement, which matured June 1,
1995, was collateralized by $40,000,000 of Federal National Mortgage
Association Discount Notes due October 20, 1995.
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 maturity values of the joint trading account
investments having variable rates are calculated based on the rate at
period end. The maturity values of the joint trading account investments
were $367,739,256 at 6.19%, $45,052,500 at 6.00% and $37,190,550
at 6.18%. The investments in repurchase agreements through the joint
trading account are summarized as follows:
SUMMARY OF JOINT TRADING ACCOUNT
DATED MAY 31, 1995 DUE JUNE 1, 1995 AT 6.19%
Number of Dealers or Banks 5
Maximum Amount With One Dealer or Bank 45%
Aggregate Principal Amount of Agreements $2,000,000,000
Aggregate Maturity Amount of Agreements $2,000,344,083
Aggregate Market Value of Collateral $2,049,561,080
Coupon Rates of Collateral 0% - 15.75%
Maturity Dates of Collateral 6/1/95 to 5/1/25
DATED MAY 26, 1995 DUE JUNE 2, 1995 AT 6.00%
Number of Dealers or Banks 1
Maximum Amount With One Dealer or Bank 100%
Aggregate Principal Amount of Agreements $300,000,000
Aggregate Maturity Amount of Agreements $300,350,000
Aggregate Market Value of Collateral $310,292,183
Coupon Rates of Collateral 5.206% - 7.705%
Maturity Dates of Collateral 9/1/24 to1/1/35
3. JOINT TRADING ACCOUNT - CONTINUED
SUMMARY OF JOINT TRADING ACCOUNT
DATED MAY 15, 1995 DUE JUNE 14, 1995 AT 6.18% (A)
Number of Dealers or Banks 1
Maximum Amount With One Dealer or Bank 100%
Aggregate Principal Amount of Agreements $250,000,000
Aggregate Maturity Amount of Agreements $251,300,000
Aggregate Market Value of Collateral $258,576,819
Coupon Rates of Collateral 5.206% - 7.705%
Maturity Dates of Collateral 9/1/24 to 1/1/35
(a) = Variable rate
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly
fee that is calculated by multiplying the sum of two components by the
fund's average net assets and adding an income-based fee. One component,
the group fee rate, is the weighted average of a series of rates and is
based on the monthly average net assets of all the mutual funds advised by
FMR. The rates ranged from .1200% to .3700% for the period. The other
component, the individual fund fee rate, is 0.03%. The income-based fee is
added only when the fund's yield exceeds 5%. At that time the income-based
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. For the period, the
management fee was equivalent to an annualized rate of .24% of average net
assets.
SUB-ADVISER FEE. As the fund's investment sub-adviser, FMR Texas Inc., a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect, and after reducing the fee
for any payments by FMR pursuant to the fund's Distribution and Service
Plan.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
During the period December 1 to December 31, 1994, FSC received fees based
on the type, size, number of accounts and the number of transactions made
by shareholders. Effective January 1, 1995, the Board of Trustees approved
a revised transfer agent contract pursuant to which FSC receives account
fees and asset-based fees that vary according to account size and type of
account. FSC pays for typesetting, printing and mailing of all shareholder
reports, except proxy statements.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
Fidelity Investments
P.O. Box 30281
Salt Lake City, UT 84130-0281
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions
World Trade Center
164 Northern Avenue
Boston, MA 02210
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
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
1271 Avenue of the
Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1903 East Ninth Street
Cleveland, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
2701 Drexel Drive
Houston, TX
1010 Lamar Street
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
215 South State Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
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.
Page 23 = BLANK
Do NOT strip-in this type
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
(registered trademark)
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Fred L. Henning, Jr., Vice President
Leland Barron, Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
Thomas D. Maher, Assistant
Vice President
Michael D. Conway, Assistant Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
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(registered trademark) Money Market Fund
Spartan U.S. Government
Money Market Fund
Spartan U.S. Treasury
Money Market Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
