FIDELITY
CASH RESERVES
SEMIANNUAL REPORT
MAY 31, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 6 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 8 A summary of major shifts in
the fund's investments over
the past six months and one
year.
INVESTMENTS 9 A complete list of the fund's
investments.
FINANCIAL STATEMENTS 26 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 30 Notes to the financial
statements.
REPORT OF INDEPENDENT 33 The auditors' opinion.
ACCOUNTANTS
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
After its first-ever close above 11,000 on the first trading day of
May, the Dow Jones Industrial Average dropped over 450 points by
month's end. The Federal Reserve Board's shift in bias toward raising
rates to ward off inflation contributed to the decline. Government
securities followed a similar path during May, as expectations of an
eventual boost in interest rates drove the price of the bellwether
30-year Treasury consistently downwards.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. You should also keep money you'll need in the near future in a
more stable investment.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
To evaluate a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the value of an investment, assuming reinvestment of the fund's
dividend income. 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.
<TABLE>
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CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY CASH RESERVES 2.39% 5.06% 28.97% 67.42%
All Taxable Money Market 2.21% 4.75% 27.63% 64.01%
Funds Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. To measure how the fund's performance stacked up
against its peers, you can compare it to the all taxable money market
funds average, which reflects the performance of taxable money market
funds with similar objectives tracked by IBC Financial Data, Inc. The
past six months average represents a peer group of 918 money market
funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY CASH RESERVES 5.06% 5.22% 5.29%
All Taxable Money Market 4.75% 4.99% 5.11%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
6/1/99 3/2/99 12/1/98 9/1/98 6/2/98
Fidelity Cash Reserves 4.59% 4.74% 4.92% 5.23% 5.21%
All Taxable Money Market 4.32% 4.37% 4.57% 5.03% 5.02%
Funds Average
6/2/99 3/3/99 12/2/98 9/2/98 6/3/98
MMDA 2.06% 2.16% 2.32% 2.55% 2.51%
Fidelity Cash
Reserves
All Taxable Money
Market Funds
Average
MMDA
6% -
5% -
4% -
3% -
2% -
1% -
0%
Row: 1, Col: 1, Value: 4.59
Row: 1, Col: 2, Value: 4.32
Row: 1, Col: 3, Value: 2.06
Row: 2, Col: 1, Value: 4.74
Row: 2, Col: 2, Value: 4.37
Row: 2, Col: 3, Value: 2.16
Row: 3, Col: 1, Value: 4.92
Row: 3, Col: 2, Value: 4.57
Row: 3, Col: 3, Value: 2.32
Row: 4, Col: 1, Value: 5.23
Row: 4, Col: 2, Value: 5.03
Row: 4, Col: 3, Value: 2.55
Row: 5, Col: 1, Value: 5.21
Row: 5, Col: 2, Value: 5.02
Row: 5, Col: 3, Value: 2.51
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
table above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the all
taxable money market funds average and the bank money market deposit
account (MMDA) average. Figures for the all taxable money market funds
average are from IBC Financial Data, Inc. The MMDA average is supplied
by BANK RATE MONITOR(trademark).
(checkmark)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.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of John Todd)
An interview with John Todd, Portfolio Manager of Fidelity Cash
Reserves
Q. JOHN, CAN YOU DESCRIBE THE ECONOMIC AND INVESTMENT BACKDROP DURING
THE SIX MONTHS THAT ENDED MAY 31, 1999?
A. During the six-month period, financial markets were in the process
of recovering from a global crisis that rocked them in 1998. That
tailspin began when Russia defaulted on some of its short-term debt in
August, and fears arose that similarly profound economic difficulties
elsewhere would hurt the U.S. economy. The turmoil was exacerbated by
the near-collapse of hedge fund Long-Term Capital Management at the
end of September. The Federal Reserve Board cut the rate banks charge
each other for overnight loans - known as the fed funds rate - three
times by a total of 0.75 percentage points during the six-week period
running from late September through mid-November. The Fed did so in
order to alleviate a credit crunch, help ease the global crisis and
sustain economic growth in the U.S. As we entered 1999, the market
anticipated the Fed would continue to lower rates. However, I felt
that the Fed had done enough and, if anything, would become concerned
enough at some point to take back at least one of its rate cuts. With
little yield advantage offered by longer-term securities, I shortened
the average maturity to the 40s by January.
Q. BUT THE FED KEPT RATES UNCHANGED . . .
A. That's right. In February and March it became evident that the U.S.
economy was not slowing as expected. Market sentiment changed, with
investors once again anticipating Fed rate increases to head off
inflation. In response, I lengthened the average maturity of the fund,
primarily by implementing a barbell strategy, focusing investments on
either end of the money market yield curve with little invested in
between. I invested in one-year securities to lock in attractive
yields that I believed figured in higher interest rates than I
expected. On the other end of the spectrum, I bought very
short-maturity instruments to enable the fund to take advantage of
buying opportunities if interest rates did rise. At that time, I
didn't feel the Fed would raise rates as much as was reflected in the
yields of longer-term money market securities. Concerns about an
imminent rate increase eased in April, and the fund's average maturity
declined along with the lower rates.
Q. THE MARKETS BECAME MORE VOLATILE IN MAY. WHAT HAPPENED?
A. The Fed announced a bias toward tightening monetary policy after
its Open Market Committee meeting toward the end of the month. In
other words, the Fed signaled its readiness to raise short-term rates
in order to slow economic growth and prevent inflation, because of
continued strong economic data. Over the past two years, economic
weakness elsewhere in the world has helped tame inflation in the U.S.
However, it now appears that economies in Asia may be on the rebound.
In addition, central banks around the world have implemented
interest-rate cuts to stimulate growth. If growth in economies outside
of the U.S. continues to accelerate, U.S. corporations should be able
to increase prices without losing market share. Oil prices rebounded
during the second quarter, as have commodity prices generally. This
combined with a continued decline in unemployment and the apparent end
of positive news regarding broad inflation measures. The markets
became more volatile in May, in anticipation of the Fed meeting and in
response to its announcement. My strategy during that period was to
mark time with the fund, buying short, one- to three-month securities
until the yield curve - a representation of the yields on securities
with differing maturities - reflected the risk of higher rates.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on May 31, 1999, was 4.60%, compared to
4.92% six months ago. For the six months that ended May 31, 1999, the
fund had a total return of 2.39%, compared to 2.21% for the all
taxable money market funds average, according to IBC Financial Data,
Inc.
Q. WHAT'S YOUR OUTLOOK?
A. At this point the question doesn't seem to be IF the Fed will raise
rates, but rather WHEN and BY HOW MUCH. With sustained growth in the
U.S. and improved growth abroad, the Fed may well seek to slow growth
and head off inflation by reversing some of the rate cuts it
implemented last year. The debate in the market currently revolves
around whether the rate hikes will come in June, later in the summer
or at both junctures. In response to this uncertainty, I will seek to
take advantage of opportunities that present themselves in this kind
of volatile market. I am presently investing with the assumption that
the Fed will take back all of last year's rate cuts by the beginning
of the fourth quarter of 1999. I plan to adjust the maturity of the
fund as these assumptions are priced into the short-term yield curve.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: seeks a high level of
current income as is consistent
with the preservation of
capital and liquidity
FUND NUMBER: 055
TRADING SYMBOL: FDRXX
START DATE: May 10, 1979
SIZE: as of May 31, 1999,
more than $34.9 billion
MANAGER: John Todd, since
1997; manager, several
other Fidelity and Spartan
taxable money market funds;
joined Fidelity in 1981
INVESTMENT CHANGES
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MATURITY DIVERSIFICATION
DAYS % OF FUND'S INVESTMENTS 5/31/99 % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 5/31/98
11/30/98
0 - 30 44 33 47
31 - 90 36 33 30
91 - 180 12 30 15
181 - 397 8 4 8
WEIGHTED AVERAGE MATURITY
5/31/99 11/30/98 5/31/98
Fidelity Cash Reserves 67 DAYS 70 Days 65 Days
All Taxable Money Market 59 DAYS 59 Days 56 Days
Funds Average *
</TABLE>
<TABLE>
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ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF MAY 31, 1999 AS OF NOVEMBER 30, 1998
Bank CDs, BAs, TDs, and Bank CDs, BAs, TDs, and
Notes 57.8% Notes 59.7%
Commercial Paper 41.2% Commercial Paper 39.3%
Government Securities 0.8% Government Securities 1.0%
Other 0.2% Other 0.0%
Row: 1, Col: 1, Value: 56.8 Row: 1, Col: 1, Value: 59.4
Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 41.4 Row: 1, Col: 3, Value: 39.3
Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: nil
Row: 1, Col: 5, Value: 1.0 Row: 1, Col: 5, Value: 1.3
Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0
Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0
Row: 1, Col: 8, Value: 0.8 Row: 1, Col: 8, Value: 0.0
</TABLE>
INVESTMENTS MAY 31, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
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CERTIFICATES OF DEPOSIT - 41.8%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
DOMESTIC CERTIFICATES OF
DEPOSIT - 2.3%
Chase Manhattan Bank (USA)
8/11/99 4.90% $ 310,000 $ 310,000
Fleet National Bank
8/3/99 5.00 (b) 122,000 121,938
Morgan Guaranty Trust Co., NY
8/9/99 4.90 360,000 360,000
791,938
LONDON BRANCH, EURODOLLAR,
DOMESTIC BANKS - 0.5%
Morgan Guaranty Trust Co., NY
7/14/99 4.87 75,000 75,001
7/16/99 4.87 78,000 78,000
11/5/99 5.00 15,000 14,997
167,998
LONDON BRANCH, EURODOLLAR,
FOREIGN BANKS - 14.3%
Abbey National Treasury
Services PLC
6/17/99 4.90 455,000 455,000
6/18/99 4.90 95,000 95,000
7/6/99 4.90 195,000 195,000
8/9/99 4.90 135,000 135,003
ABN-AMRO Bank NV
10/18/99 4.92 40,000 40,000
Bank of Scotland Treasury
Services
6/10/99 4.90 55,000 55,000
6/14/99 4.90 50,000 50,000
10/13/99 4.93 30,000 30,001
2/16/00 5.14 110,000 109,970
Banque Nationale de Paris
11/18/99 5.00 50,000 50,000
Barclays Bank PLC
9/7/99 5.03 325,000 325,000
9/7/99 5.04 180,000 179,995
Bayerische Hypo-und
Vereinsbank AG
6/9/99 4.90 60,000 60,000
6/14/99 4.85 50,000 50,000
8/18/99 4.95 90,000 90,004
8/23/99 4.92 150,000 150,002
Bayerische Landesbank
Girozentrale
8/12/99 4.96 35,000 34,996
CERTIFICATES OF DEPOSIT -
CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
LONDON BRANCH, EURODOLLAR,
FOREIGN BANKS - CONTINUED
Commerzbank AG
11/18/99 5.00% $ 25,000 $ 25,001
Credit Agricole Indosuez
8/5/99 4.90 85,000 85,000
8/5/99 4.92 45,000 44,998
8/16/99 4.92 65,000 65,000
8/16/99 4.95 90,000 89,994
9/7/99 4.90 60,000 60,017
10/12/99 4.93 120,000 120,007
10/12/99 4.94 78,000 78,001
Den Danske Bank Group AS
6/2/99 4.94 150,000 150,000
Deutsche Bank AG
8/2/99 4.90 190,000 189,993
Dresdner Bank AG
7/19/99 4.87 75,000 75,000
Halifax PLC
8/12/99 4.92 55,000 55,000
8/19/99 4.95 40,000 40,000
8/31/99 4.98 110,000 110,000
9/1/99 5.00 60,000 60,000
11/8/99 4.95 205,000 205,000
12/13/99 5.00 175,000 175,000
Kredietbank NV
6/17/99 4.90 70,000 70,000
Landesbank Hessen-Thuringen
7/1/99 4.85 65,000 65,001
Lloyds Bank PLC
6/30/99 4.84 50,000 50,000
8/10/99 4.93 65,000 65,000
8/31/99 4.88 365,000 365,000
Merita Bank PLC
6/29/99 4.90 33,000 33,000
National Westminster Bank PLC
8/31/99 4.88 75,000 75,000
Northern Rock PLC
6/14/99 4.91 35,000 35,000
6/21/99 4.90 30,000 30,000
11/4/99 4.97 50,000 50,000
CERTIFICATES OF DEPOSIT -
CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
LONDON BRANCH, EURODOLLAR,
FOREIGN BANKS - CONTINUED
Svenska Handelsbanken
6/16/99 4.85% $ 116,000 $ 116,000
8/9/99 4.92 50,000 50,000
8/23/99 4.92 25,000 25,000
11/18/99 5.00 65,000 65,000
Westdeutsche Landesbank
Girozentrale
7/8/99 4.90 150,000 149,999
4,976,982
NEW YORK BRANCH, YANKEE
DOLLAR, FOREIGN BANKS - 24.7%
ABN-AMRO Bank NV
6/7/99 5.76 15,000 15,000
6/30/99 5.05 140,000 140,001
Bank of Montreal, Canada
7/19/99 4.87 200,000 200,000
7/20/99 4.87 75,000 75,000
8/9/99 4.90 40,000 40,000
3/3/00 5.35 130,000 129,929
Bank of Nova Scotia
11/29/99 5.15 50,000 49,980
Banque Nationale de Paris
6/14/99 4.85 27,000 27,006
7/6/99 4.89 95,000 95,000
7/8/99 4.89 95,000 95,000
8/4/99 4.88 60,000 60,000
11/29/99 5.15 20,000 19,992
Barclays Bank PLC
6/1/99 4.88 (b) 340,000 339,826
6/1/99 4.89 (b) 175,000 174,904
3/1/00 5.30 95,000 94,959
Bayerische Hypo-und
Vereinsbank AG
6/7/99 4.86 200,000 200,000
6/7/99 4.90 200,000 200,000
2/10/00 5.12 170,000 169,954
Canadian Imperial Bank of
Commerce
6/1/99 4.88 (b) 345,000 344,791
2/23/00 5.17 110,000 109,961
2/29/00 5.24 91,000 90,974
5/18/00 5.30 200,000 199,870
CERTIFICATES OF DEPOSIT -
CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
NEW YORK BRANCH, YANKEE
DOLLAR, FOREIGN BANKS -
CONTINUED
Commerzbank AG
9/1/99 5.03% $ 150,000 $ 150,000
Credit Agricole Indosuez
9/1/99 5.00 135,000 135,000
3/1/00 5.22 150,000 149,967
Credit Communale de Belgique
6/7/99 4.87 100,000 100,000
8/11/99 4.92 125,000 125,000
Deutsche Bank AG
8/6/99 5.00 77,000 77,068
8/10/99 4.88 200,000 200,000
8/10/99 4.93 265,000 265,000
8/11/99 4.92 50,000 50,000
8/18/99 4.92 205,000 205,000
2/10/00 5.11 100,000 99,973
2/16/00 5.12 125,000 124,957
Dresdner Bank AG
9/13/99 4.90 150,000 150,000
Merita Bank PLC
8/4/99 4.89 65,000 65,000
8/16/99 4.90 180,000 180,000
National Westminster Bank PLC
6/7/99 5.75 145,000 144,998
9/3/99 5.02 120,000 120,000
3/15/00 5.15 150,000 149,955
Norddeutsche Landesbank
Girozentrale
6/7/99 5.76 75,000 74,999
7/26/99 5.73 200,000 199,984
2/10/00 5.10 60,000 59,984
3/1/00 5.30 105,000 104,962
5/18/00 5.33 75,000 74,951
RaboBank Nederland Coop.
Central
6/4/99 5.75 100,000 99,999
8/18/99 5.00 50,000 50,054
9/2/99 5.00 125,000 125,000
Royal Bank of Canada
6/1/99 4.95 270,000 269,836
2/18/00 5.15 125,000 124,970
2/28/00 5.26 70,000 69,977
CERTIFICATES OF DEPOSIT -
CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
NEW YORK BRANCH, YANKEE
DOLLAR, FOREIGN BANKS -
CONTINUED
Societe Generale, France
6/9/99 4.91% $ 230,000 $ 230,000
7/12/99 4.90 83,000 83,000
8/5/99 4.90 265,000 265,000
Swiss Bank Corp.
6/3/99 5.75 215,000 214,999
6/11/99 5.80 150,000 149,998
Toronto Dominion Bank
6/4/99 5.75 140,000 139,999
7/26/99 5.73 60,000 59,995
2/18/00 5.15 165,000 164,960
UBS AG
2/28/00 5.20 165,000 164,959
5/18/00 5.35 235,000 234,869
Westdeutsche Landesbank
Girozentrale
6/7/99 4.89 200,000 200,000
Westpac Banking Corp.
11/17/99 5.00 50,000 50,000
8,576,560
TOTAL CERTIFICATES OF DEPOSIT 14,513,478
COMMERCIAL PAPER - 41.2%
Abbey National Treasury
Services PLC
8/9/99 4.93 209,000 207,073
ABN-AMRO North America, Inc.
10/4/99 5.09 75,000 73,714
American General Finance Corp.
8/9/99 4.88 30,000 29,723
Aspen Funding Corp.
6/2/99 4.84 5,000 4,999
6/7/99 4.94 55,000 54,955
6/8/99 4.85 100,000 99,906
6/9/99 4.85 59,500 59,436
6/21/99 4.86 100,000 99,731
6/22/99 4.86 65,000 64,816
Asset Securitization Coop.
Corp.
6/7/99 4.91 67,000 66,946
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Asset Securitization Coop.
Corp. - continued
6/9/99 4.92% $ 48,000 $ 47,948
6/10/99 4.91 20,000 19,976
6/22/99 4.90 43,000 42,879
6/22/99 4.91 33,000 32,907
6/23/99 4.86 164,000 163,517
6/23/99 4.92 142,000 141,579
6/29/99 4.91 100,000 99,624
Associates Corp. of North
America
6/28/99 4.87 75,000 74,727
Associates First Capital Corp.
6/8/99 4.91 52,000 51,951
BP America, Inc.
6/1/99 4.90 23,227 23,227
Baker Hughes, Inc.
6/1/99 4.94 211,000 211,000
Bank One Corp.
6/23/99 4.84 70,000 69,794
Bear Stearns Companies, Inc.
8/9/99 4.89 40,000 39,630
Bradford & Bingley Building
Society
6/10/99 4.92 30,000 29,964
7/14/99 4.88 50,000 49,712
7/15/99 4.88 25,000 24,853
10/27/99 4.94 50,000 49,009
Centric Capital Corp.
6/7/99 4.91 45,000 44,964
6/10/99 4.92 5,000 4,994
6/21/99 4.85 15,750 15,708
6/24/99 4.84 100,000 99,692
7/26/99 4.87 16,063 15,945
8/4/99 4.87 25,000 24,786
Citibank Credit Card Master
Trust I (Dakota Certificate
Program)
6/1/99 4.95 57,483 57,483
6/7/99 4.97 40,000 39,967
6/9/99 4.90 80,000 79,914
6/10/99 4.90 45,000 44,945
6/18/99 4.85 5,000 4,989
6/23/99 4.85 18,000 17,947
6/23/99 4.88 30,000 29,911
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Citibank Credit Card Master
Trust I (Dakota Certificate
Program) - continued
7/12/99 4.90% $ 30,000 $ 29,835
7/20/99 4.88 20,000 19,869
7/22/99 4.88 47,000 46,679
7/22/99 4.90 18,000 17,876
7/23/99 4.88 35,000 34,756
8/9/99 4.89 100,000 99,074
Commercial Credit Group, Inc.
6/23/99 4.84 35,000 34,897
Commonwealth Bank of Australia
8/9/99 4.91 75,000 74,311
8/12/99 4.92 45,000 44,568
8/16/99 4.95 80,000 79,184
11/18/99 5.02 75,000 73,268
ConAgra, Inc.
6/3/99 4.95 41,000 40,989
Cregem North America, Inc.
7/16/99 4.88 25,000 24,849
CXC, Inc.
6/16/99 4.85 75,000 74,850
6/23/99 4.84 32,000 31,906
7/2/99 4.87 30,000 29,875
7/6/99 4.85 29,000 28,864
8/10/99 4.88 20,000 19,813
Daimler-Chrysler North
America Corp.
6/10/99 4.91 45,000 44,946
6/14/99 4.94 50,000 49,912
6/15/99 4.90 50,000 49,906
6/15/99 4.92 75,000 74,859
6/21/99 4.84 75,000 74,799
6/21/99 4.90 50,000 49,866
6/22/99 4.85 50,000 49,859
6/28/99 4.85 65,000 64,765
7/12/99 4.90 57,000 56,686
7/19/99 4.89 17,000 16,891
7/21/99 4.90 96,000 95,356
7/27/99 4.88 29,000 28,783
7/28/99 4.90 29,000 28,778
7/29/99 4.89 63,000 62,510
8/10/99 4.88 75,000 74,297
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Daimler-Chrysler North
America Corp. - continued
8/11/99 4.88% $ 25,000 $ 24,762
8/18/99 4.89 10,000 9,895
10/27/99 4.94 25,000 24,505
Deere (John) Capital Corp.
8/30/99 4.90 50,000 49,398
Delaware Funding Corp.
6/17/99 4.84 24,878 24,825
6/22/99 4.85 40,621 40,507
6/23/99 4.84 16,103 16,056
7/22/99 4.87 24,993 24,823
7/23/99 4.86 10,628 10,554
7/26/99 4.87 16,000 15,882
8/11/99 4.88 72,000 71,316
Den Danske Corp., Inc.
7/19/99 4.91 145,000 144,058
8/6/99 4.87 25,000 24,780
8/9/99 4.87 48,000 47,557
Deutsche Bank Financial, Inc.
6/15/99 4.90 170,000 169,680
Diageo Capital PLC
9/2/99 4.90 50,000 49,377
Dresdner US Finance, Inc.
6/9/99 4.90 61,099 61,033
6/21/99 4.88 300,000 299,197
Enterprise Funding Corp.
6/1/99 4.90 43,354 43,354
6/7/99 4.92 14,394 14,382
6/9/99 4.91 41,489 41,444
6/10/99 4.91 34,151 34,110
6/17/99 4.91 30,615 30,549
6/22/99 4.84 12,569 12,534
6/23/99 4.84 37,000 36,891
7/15/99 4.90 60,000 59,645
Falcon Asset Securitization
6/1/99 4.86 9,794 9,794
6/2/99 4.86 7,040 7,039
6/10/99 4.86 16,370 16,350
6/14/99 4.91 22,825 22,785
6/15/99 4.87 5,096 5,086
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Falcon Asset Securitization -
continued
6/17/99 4.87% $ 52,230 $ 52,118
6/17/99 4.91 20,930 20,885
6/23/99 4.84 27,535 27,454
6/24/99 4.85 23,000 22,929
6/30/99 4.85 75,000 74,708
Finova Capital Corp.
6/2/99 5.03 30,000 29,996
6/3/99 4.95 24,000 23,993
6/16/99 4.97 25,000 24,949
6/21/99 4.96 24,000 23,935
6/25/99 4.92 25,000 24,919
7/15/99 4.98 17,000 16,898
Ford Motor Credit Co.
7/8/99 4.86 75,000 74,628
7/19/99 4.89 300,000 298,072
General Electric Capital Corp.
6/2/99 4.95 10,000 9,999
6/8/99 4.88 135,000 134,873
6/11/99 4.90 90,000 89,879
6/14/99 4.96 180,000 179,682
6/16/99 4.90 65,000 64,869
6/21/99 4.96 195,000 194,470
7/15/99 4.88 65,000 64,616
7/19/99 4.92 200,000 198,709
7/21/99 4.87 30,000 29,800
7/23/99 4.86 50,000 49,653
8/16/99 4.94 200,000 197,965
8/30/99 5.00 130,000 128,414
10/18/99 4.93 150,000 147,214
General Motors Acceptance Corp.
6/14/99 4.94 300,000 299,472
7/26/99 4.88 20,000 19,853
7/29/99 4.89 235,000 233,175
8/16/99 4.88 275,000 272,208
Generale de Banque SA
7/9/99 4.89 37,600 37,408
7/19/99 4.88 25,000 24,839
8/10/99 4.92 100,000 99,067
8/13/99 4.92 37,000 36,640
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Generale de Banque SA -
continued
10/14/99 4.94% $ 50,000 $ 49,096
11/3/99 4.97 50,000 48,956
GTE Corp.
6/9/99 4.88 25,000 24,973
Halifax PLC
11/17/99 5.00 50,000 48,855
Heller Financial, Inc.
6/16/99 5.01 29,000 28,940
7/6/99 5.00 26,000 25,875
8/3/99 5.06 30,000 29,738
8/10/99 5.02 25,000 24,759
Household Finance Corp.
6/1/99 4.92 100,000 100,000
JC Penney Funding Corp.
6/16/99 5.00 75,000 74,844
Kitty Hawk Funding Corp.
6/8/99 4.92 63,000 62,940
6/14/99 4.92 50,000 49,912
6/15/99 4.84 32,401 32,340
6/22/99 4.85 5,238 5,223
8/31/99 5.02 30,660 30,276
Lehman Brothers Holdings, Inc.
6/14/99 5.22 34,000 33,937
6/15/99 5.22 73,000 72,854
6/21/99 5.22 54,000 53,845
6/22/99 5.22 54,000 53,838
Lloyds Bank PLC
7/7/99 4.87 40,000 39,807
11/17/99 5.00 50,000 48,855
MCI WorldCom, Inc.
6/10/99 4.95 9,000 8,989
6/15/99 4.96 39,000 38,925
6/15/99 5.09 38,932 38,856
6/21/99 5.00 11,000 10,970
6/23/99 5.10 19,000 18,941
6/28/99 5.10 23,000 22,913
6/29/99 4.97 50,000 49,808
6/29/99 5.10 20,000 19,922
7/7/99 5.10 12,000 11,940
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
MCI WorldCom, Inc. - continued
7/7/99 5.15% $ 26,000 $ 25,868
7/9/99 5.15 100,000 99,464
Merrill Lynch & Co., Inc.
7/15/99 4.87 75,000 74,558
Monsanto Co.
6/15/99 4.91 11,910 11,888
6/16/99 4.91 40,000 39,919
Morgan Stanley, Dean Witter &
Co.
6/9/99 4.91 195,000 194,790
Nationwide Building Society
6/8/99 4.91 30,000 29,972
7/8/99 4.89 70,000 69,653
7/20/99 4.88 53,000 52,652
8/5/99 4.87 118,000 116,975
11/4/99 4.98 25,000 24,474
11/10/99 5.00 46,000 44,991
New Center Asset Trust
7/28/99 4.88 65,000 64,504
8/9/99 4.91 27,000 26,750
Newport Funding Corp.
6/10/99 4.85 19,000 18,977
6/11/99 4.85 71,312 71,216
6/17/99 4.84 12,000 11,974
6/21/99 4.86 88,000 87,763
7/13/99 4.86 100,000 99,438
Nordbanken AB
6/14/99 4.90 100,000 99,825
Nordbanken, North America, Inc.
6/17/99 4.90 80,000 79,828
Norddeutsche Landesbank
Girozentrale
8/5/99 4.91 75,000 74,351
Norfolk Southern Corp.
6/1/99 5.10 18,776 18,776
6/21/99 5.02 5,000 4,986
PHH Corp.
6/16/99 4.98 50,000 49,897
6/22/99 5.01 24,000 23,930
6/23/99 5.01 10,000 9,970
7/15/99 5.05 40,000 39,755
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Preferred Receivables Funding
Corp.
6/1/99 4.89% $ 89,000 $ 89,000
6/2/99 4.90 50,000 49,993
6/7/99 4.89 75,000 74,939
6/17/99 4.86 8,710 8,691
6/21/99 4.86 17,000 16,954
6/25/99 4.87 14,120 14,074
Salomon Smith Barney
Holdings, Inc.
6/7/99 4.90 50,000 49,960
7/7/99 4.90 75,000 74,637
7/8/99 4.87 70,000 69,653
7/15/99 4.88 105,000 104,381
7/21/99 4.88 20,000 19,866
Societe Generale North
America, Inc.
8/10/99 4.92 120,000 118,880
8/10/99 4.95 90,000 89,156
Svenska Handelsbanken, Inc.
6/15/99 4.90 55,000 54,897
8/9/99 4.92 10,000 9,908
8/10/99 4.92 25,000 24,767
Three Rivers Funding Corp.
6/17/99 4.86 59,000 58,873
Triple A One Funding Corp.
6/3/99 4.84 15,000 14,996
6/7/99 4.83 6,128 6,123
6/22/99 4.84 44,345 44,220
8/4/99 4.89 20,000 19,828
Tyco International Group SA
6/1/99 5.10 29,213 29,213
6/16/99 5.05 14,997 14,966
6/17/99 5.02 44,000 43,902
6/21/99 5.08 20,353 20,296
7/8/99 5.10 26,000 25,866
7/20/99 5.06 14,000 13,905
UBS Finance (Delaware), Inc.
8/9/99 4.92 47,000 46,567
11/17/99 5.00 160,000 156,338
12/13/99 5.00 330,000 321,331
Unifunding, Inc.
7/21/99 4.88 33,000 32,779
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Unifunding, Inc. - continued
7/27/99 4.87% $ 40,000 $ 39,700
8/12/99 4.89 25,000 24,759
8/18/99 4.95 50,000 49,477
Westpac Capital Corp.
7/20/99 4.87 80,000 79,476
8/13/99 4.92 50,000 49,513
Windmill Funding Corp.
6/1/99 4.86 40,000 40,000
6/3/99 4.84 21,198 21,192
6/9/99 4.84 10,000 9,989
6/9/99 4.85 40,000 39,957
6/9/99 4.86 79,000 78,915
6/10/99 4.87 16,970 16,950
6/14/99 4.85 35,000 34,939
6/16/99 4.84 25,000 24,950
6/17/99 4.85 20,000 19,957
6/21/99 4.85 42,085 41,972
6/21/99 4.86 15,000 14,960
6/22/99 4.86 20,000 19,944
6/23/99 4.85 100,000 99,705
6/23/99 4.86 20,890 20,828
6/24/99 4.85 25,000 24,923
6/25/99 4.85 175,000 174,436
6/29/99 4.85 89,000 88,666
7/7/99 4.88 33,931 33,767
7/13/99 4.88 17,000 16,904
7/14/99 4.88 15,515 15,426
7/19/99 4.88 17,779 17,665
8/4/99 4.88 30,000 29,743
8/11/99 4.88 10,000 9,905
TOTAL COMMERCIAL PAPER 14,298,822
FEDERAL AGENCIES - 0.8%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
FANNIE MAE - 0.6%
Discount Notes - 0.6%
8/5/99 4.89% $ 175,000 $ 173,471
8/13/99 4.85 50,000 49,514
222,985
FREDDIE MAC - 0.2%
Discount Notes - 0.2%
8/13/99 4.85 50,000 49,514
TOTAL FEDERAL AGENCIES 272,499
BANK NOTES - 6.9%
Comerica Bank, Detroit
8/9/99 5.01 (b) 41,000 40,993
First National Bank of Chicago
6/7/99 4.88 50,000 50,000
First Union National Bank of
North Carolina
6/1/99 4.92 (b) 225,000 225,000
6/1/99 4.95 (b) 116,000 116,000
7/21/99 5.02 (b) 60,000 60,000
Fleet National Bank, Providence
8/4/99 5.00 (b) 121,000 120,974
Key Bank NA
6/21/99 4.80 (b) 85,000 84,991
LaSalle National Bank, Chicago
6/21/99 4.91 75,000 75,000
Mellon Bank NA, Pittsburgh
6/1/99 4.88 (b) 85,000 84,954
NationsBank NA
6/1/99 4.95 220,000 219,914
6/30/99 5.05 25,000 25,000
8/24/99 4.95 240,000 240,000
8/25/99 4.95 200,000 200,000
9/1/99 4.90 280,000 280,000
9/7/99 4.90 150,000 150,000
9/8/99 5.01 175,000 175,000
BANK NOTES - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
PNC Bank NA, Pittsburgh
6/1/99 4.78% (b) $ 120,800 $ 120,792
8/3/99 5.01 (b) 121,000 120,992
TOTAL BANK NOTES 2,389,610
MASTER NOTES - 1.6%
Goldman Sachs Group L.P.
6/8/99 5.08 (b) 240,000 240,000
J.P. Morgan Securities, Inc.
6/4/99 4.88 (b) 275,000 275,000
SunTrust Banks, Inc.
6/1/99 4.89 (b) 40,000 40,000
TOTAL MASTER NOTES 555,000
MEDIUM-TERM NOTES - 5.2%
Abbey National Treasury
Services PLC
8/17/99 4.85 (a)(b) 140,000 139,974
Bishops Gate Resources
Mortgage Trust
6/1/99 5.10 (b) 86,000 86,000
Ford Motor Credit Co.
6/1/99 4.95 (b) 228,000 228,000
General Electric Capital Corp.
6/9/99 4.98 (b) 46,000 46,000
7/12/99 4.95 (b) 86,000 86,000
8/12/99 4.95 (b) 100,000 100,000
Goldman Sachs Group L.P.
7/7/99 5.20 (b)(c) 138,000 138,000
7/27/99 5.10 (b)(c) 103,000 103,000
8/10/99 5.05 (a)(b) 95,000 95,000
Merrill Lynch & Co., Inc.
6/4/99 4.96 (b) 75,000 75,000
Monumental Life Insurance Co.
6/1/99 5.07 (c) 128,000 128,000
Morgan Guaranty Trust Co., NY
6/28/99 4.87 (b) 161,000 160,975
MEDIUM-TERM NOTES - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Norwest Corp.
7/22/99 5.02% (b) $ 118,000 $ 118,000
RACERS
7/2/99 4.94 (a)(b) 171,000 171,000
SMM Trust
6/1/99 4.98 (a)(b) 67,000 67,000
6/1/99 5.05 (a)(b) 78,000 78,000
TOTAL MEDIUM-TERM NOTES 1,819,949
SHORT-TERM NOTES - 2.0%
Capital One Funding Corp.
Series 1996 D,
6/4/99 4.99 21,581 21,581
Capital One Funding Corp.
Series 1996 F,
6/4/99 4.99 25,353 25,353
Capital One Funding Corp.
Series 1996 G,
6/4/99 4.99 3,731 3,731
Capital One Funding Corp.
Series 1996 H,
6/4/99 4.99 (b) 16,734 16,734
Capital One Funding Corp.
Series 1997 E,
6/4/99 4.99 (b) 19,400 19,400
Capital One Funding Corp.
Series 1997 F,
6/4/99 4.99 (b) 6,800 6,800
Capital One Funding Corp.
Series 1997 G,
6/4/99 4.99 9,700 9,700
Monumental Life Insurance Co.
6/14/99 5.07 (b)(c) 65,000 65,000
New York Life Insurance Co.
6/1/99 4.97 (b) 75,000 75,000
7/1/99 5.12 (b)(c) 81,000 81,000
Pacific Life Insurance Co.
6/9/99 5.07 (b)(c) 90,000 90,000
Strategic Money Market Trust
Series 1998 A,
6/16/99 5.10 (b) 291,000 291,000
TOTAL SHORT-TERM NOTES 705,299
TIME DEPOSITS - 0.3%
Southtrust Bank NA
6/1/99 4.88 100,000 100,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 0.2%
MATURITY AMOUNT (000S) VALUE (NOTE 1) (000S)
In a joint trading account $ 62,181 $ 62,147
(U.S. Government
Obligations) dated 5/28/99
due 6/1/99 At 4.91% (Cost
$62,147)
TOTAL INVESTMENT IN $ 34,716,804
SECURITIES - 100%
Total Cost for Income Tax Purposes $ 34,716,804
</TABLE>
LEGEND
(a) 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 $550,974,000 or 1.6% of net assets.
(b) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due dates on these types of
securities reflects the next interest rate reset date or, when
applicable, the final maturity date.
(c) Restricted securities - Investment in securities not registered
under the Securities Act of 1933.
Additonal information on each holding is as follows:
SECURITY ACQUISITION DATE COST (000S)
Goldman Sachs Group L.P. 12/7/98 $ 138,000
5.20%, 7/7/99
Goldman Sachs Group L.P. 1/22/99 $ 103,000
5.10%, 7/27/99
Monumental Life Insurance Co. 7/1/98 - 9/17/98 $ 128,000
5.07%, 6/1/99
Monumental Life Insurance Co. 3/12/99 $ 65,000
5.07%, 6/14/99
New York Life Insurance Co. 12/21/98 $ 81,000
5.12%, 7/1/99
Pacific Life Insurance Co. 8/21/98 $ 90,000
5.07%, 6/9/99
INCOME TAX INFORMATION
At November 30, 1998, the fund had a capital loss carryforward of
approximately $2,120,000 of which $326,000, $1,634,000 and $160,000
will expire on November 30, 2001, 2002 and 2004, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) MAY 31, 1999
ASSETS
Investment in securities, at $ 34,716,804
value (including repurchase
agreements of $62,147) - See
accompanying schedule
Receivable for fund shares 328,731
sold
Interest receivable 226,944
Prepaid expenses 770
TOTAL ASSETS 35,273,249
LIABILITIES
Payable to custodian bank $ 319
Payable for fund shares 313,124
redeemed
Accrued management fee 4,733
Other payables and accrued 8,624
expenses
TOTAL LIABILITIES 326,800
NET ASSETS $ 34,946,449
Net Assets consist of:
Paid in capital $ 34,948,352
Accumulated net realized gain (1,903)
(loss) on investments
NET ASSETS, for 34,947,123 $ 34,946,449
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($34,946,449
(divided by) 34,947,123
shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX
MONTHS ENDED MAY 31, 1999
INTEREST INCOME $ 850,429
Expenses
Management fee $ 28,168
Transfer agent fees 39,699
Accounting fees and expenses 505
Non-interested trustees' 58
compensation
Custodian fees and expenses 266
Registration fees 1,661
Audit 78
Legal 49
Interest 6
Miscellaneous 576
Total expenses before 71,066
reductions
Expense reductions (244) 70,822
NET INTEREST INCOME 779,607
NET REALIZED GAIN (LOSS) ON 217
INVESTMENTS
NET INCREASE IN NET ASSETS $ 779,824
RESULTING FROM OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 779,607 $ 1,371,565
Net realized gain (loss) 217 142
NET INCREASE (DECREASE) IN 779,824 1,371,707
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (779,607) (1,371,565)
from net interest income
Share transactions at net 46,714,447 64,184,824
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 760,974 1,338,245
distributions from net
interest income
Cost of shares redeemed (43,229,240) (58,320,882)
NET INCREASE (DECREASE) IN 4,246,181 7,202,187
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 4,246,398 7,202,329
IN NET ASSETS
NET ASSETS
Beginning of period 30,700,051 23,497,722
End of period $ 34,946,449 $ 30,700,051
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED MAY 31, YEARS ENDED NOVEMBER 30,
1999 1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .024 .052 .052 .051 .055 .037
Operations Net interest
income
Less Distributions
From net interest income (.024) (.052) (.052) (.051) (.055) (.037)
Net asset value, end of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
TOTAL RETURN B, C 2.39% 5.34% 5.30% 5.18% 5.67% 3.74%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in $ 34,946 $ 30,700 $ 23,498 $ 21,241 $ 18,432 $ 14,529
millions)
Ratio of expenses to average .43% A .47% .49% .51% .55% .52%
net assets
Ratio of expenses to average .43% A .47% .48% D .51% .55% .52%
net assets after expense
reductions
Ratio of net interest income 4.74% A 5.20% 5.22% 5.06% 5.50% 3.76%
to average net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1999
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 organized as a Delaware business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity money market funds. Deferred amounts
remain in the fund until distributed in accordance with the Plan.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Mangement & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
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. At the end of the
period, the fund had no reverse repurchase agreements outstanding.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $605,000,000 or 1.7% of net assets.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a
monthly fee 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 and an income-based fee. 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
.1100% to .3700% for the period. The annual individual fund fee rate
is .03%. In the event that these rates were lower than the contractual
rates in effect during the period, FMR voluntarily implemented the
above rates, as they resulted in the same or a lower management fee.
The income-based fee is added only when the fund's gross 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 .24% of average net
assets. For the period, the total management fee was equivalent to an
annualized rate of .17%. The income-based portion of this fee was
equal to $1,726,000.
SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity
Investments Money Management, 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.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annualized rate of .24% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
MONEY MARKET INSURANCE. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other money market funds advised by FMR or
its affiliates, has entered into insurance agreements with FIDFUNDS
Mutual Limited (FIDFUNDS), an affiliated mutual insurance company,
effective January 1, 1999. FIDFUNDS provides limited coverage for
certain loss events including issuer default as to payment of
principal or interest and bankruptcy or insolvency of a credit
enhancement provider. The insurance does not cover losses resulting
from changes in interest rates, ratings downgrades or other market
conditions. The fund may be subject to a special assessment of up to
approximately 2.5 times the fund's annual gross premium if covered
losses exceed certain levels. During the period, the fund paid
premiums of $1,321,000 to FIDFUNDS, which are being amortized over one
year.
4. EXPENSE REDUCTIONS.
The fund has entered into an arrangement with its transfer agent
whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of the fund's expenses. During the period,
the fund's transfer agent fees were reduced by $244,000 under this
arrangement.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Phillips Street Trust and the Shareholders
of Fidelity Cash 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 Cash Reserves (a fund of Fidelity Phillips Street Trust) at
May 31, 1999, and the results of its operations, the changes in its
net assets and the 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 Fidelity Cash
Reserves' management; our responsibility is to express an opinion on
these financial statements based on our audits. 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 at May 31,
1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
July 1, 1999
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpress(registered trademark) provides a single
toll-free number to access account balances, positions, quotes and
trading. It's easy to navigate the service, and on your first call,
the system will help you create a personal identification number (PIN)
for security.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments
Money Management, Inc. (FIMM),
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Boyce I. Greer, Vice President
Fred L. Henning, Jr., Vice President
John J. Todd, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
William O. McCoy *
Marvin L. Mann *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
CAS-SANN-0799 80043
1.704549.101
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
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
Exchanges/Redemption 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
FIDELITY
U.S. GOVERNMENT RESERVES
SEMIANNUAL REPORT
MAY 31, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 6 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 8 A summary of major shifts in
the fund's investments over
the past six months and one
year.
INVESTMENTS 9 A complete list of the fund's
investments.
FINANCIAL STATEMENTS 12 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 16 Notes to the financial
statements.
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
PRESIDENT'S MESSAGE
(photo_of_Edward_C_Johnson_3d)
DEAR SHAREHOLDER:
After its first-ever close above 11,000 on the first trading day of
May, the Dow Jones Industrial Average dropped over 450 points by
month's end. The Federal Reserve Board's shift in bias toward raising
rates to ward off inflation contributed to the decline. Government
securities followed a similar path during May, as expectations of an
eventual boost in interest rates drove the price of the bellwether
30-year Treasury consistently downwards.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. You should also keep money you'll need in the near future in a
more stable investment.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
To evaluate a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the value of an investment, assuming reinvestment of the fund's
dividend income. Yield measures the income paid by a fund. Since a
money market fund tries to maintain a $1 share price, yield is an
important measure of performance. If Fidelity had not reimbursed
certain fund expenses, the past five years and past 10 years total
returns would have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MAY 31, 1999 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY US GOVERNMENT RESERVES 2.34% 4.98% 28.55% 64.87%
Government Money Market Funds 2.10% 4.53% 26.36% 61.32%
Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. To measure how the fund's performance stacked up
against its peers, you can compare it to the government money market
funds average, which reflects the performance of taxable money market
funds with similar objectives tracked by IBC Financial Data, Inc. The
past six months average represents a peer group of 212 money market
funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED MAY 31, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
FIDELITY US GOVERNMENT RESERVES 4.98% 5.15% 5.13%
Government Money Market Funds 4.53% 4.79% 4.91%
Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
6/1/99 3/2/99 12/1/98 9/1/98 6/2/98
Fidelity U.S. Government 4.58% 4.64% 4.85% 5.18% 5.19%
Reserves
Government Money Market Funds 4.15% 4.19% 4.33% 4.86% 4.85%
Average
6/2/99 3/3/99 12/2/98 9/2/98 6/3/98
MMDA 2.06% 2.16% 2.32% 2.55% 2.51%
Fidelity U.S.
Government Reserves
Government Money
Market Funds
Average
MMDA
6% -
5% -
4% -
3% -
2% -
1% -
0%
Row: 1, Col: 1, Value: 4.58
Row: 1, Col: 2, Value: 4.15
Row: 1, Col: 3, Value: 2.06
Row: 2, Col: 1, Value: 4.64
Row: 2, Col: 2, Value: 4.19
Row: 2, Col: 3, Value: 2.16
Row: 3, Col: 1, Value: 4.85
Row: 3, Col: 2, Value: 4.33
Row: 3, Col: 3, Value: 2.32
Row: 4, Col: 1, Value: 5.18
Row: 4, Col: 2, Value: 4.86
Row: 4, Col: 3, Value: 2.55
Row: 5, Col: 1, Value: 5.19
Row: 5, Col: 2, Value: 4.85
Row: 5, Col: 3, Value: 2.51
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
table above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the
government money market funds average and the bank money market
deposit account (MMDA) average. Figures for the government money
market funds average are from IBC Financial Data, Inc. The MMDA
average is supplied by BANK RATE MONITOR(trademark).
(checkmark)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.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Robert Litterst)
An interview with Robert Litterst, Portfolio Manager of Fidelity U.S.
Government Reserves
Q. BOB, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE SIX MONTHS
THAT ENDED MAY 31, 1999?
A. To fully understand market sentiment during the past six months,
it's important to look back to 1998. During the first half of that
year, the Federal Reserve Board was biased toward raising short-term
interest rates in order to curb growth and head off inflation. The
U.S. economy was very strong, with real GDP - gross domestic product
adjusted for inflation - growing at a 4% annual rate. A strong housing
market, solid consumer spending and steady business investment helped
drive this growth. The pace of the economy's expansion was well above
the non-inflationary trend rate of 2% to 2.5% - the rate above which
inflation is expected to occur. Nevertheless, inflation was quite
tame. Then, in a six-week period just before the beginning of the
period, the Fed reversed course and implemented three cuts in
short-term interest rates, with the last occurring on November 17,
1998.
Q. WHY DID THE FED ACT IN SUCH AN AGGRESSIVE MANNER?
A. The moves were designed to reassure markets paralyzed by heightened
illiquidity and risk aversion, and to prevent a credit crunch from
developing. The crisis in worldwide markets was sparked by problems in
Russia and other emerging economies, which led to the well-publicized
problems of hedge fund Long-Term Capital Management. In turn, concerns
were raised about banks' risk exposure to these events. The Fed's rate
cuts lowered the rate banks charge each other for overnight loans -
known as the fed funds rate - from 5.50% to 4.75%. From the fourth
quarter of 1998, stability generally returned to world markets, and
the U.S. economy sustained very strong growth, helped along by these
rate cuts. Recently, there have been some tentative signs of higher
inflation. Coupled with stabilizing global economic conditions, these
signs caused market observers to become concerned about the
possibility of the Fed reversing one or more of the rate cuts it
implemented in the fall. That concern was confirmed at the Fed's Open
Market Committee meeting in late May, when the Fed announced its
return to a "tightening bias" - an inclination to raise interest rates
- - in order to put the brakes on the economy and keep budding
inflationary pressures from translating into higher prices.
Q. WHAT TYPE OF STRATEGY DID YOU PURSUE DURING THE PERIOD?
A. In the final two months of 1998, demand for agency notes fell
dramatically as broker/dealers and other traditional buyers of agency
securities cut back on their purchases in order to reduce risk
exposure and conserve capital. This came at a time when two government
agencies - Fannie Mae and Freddie Mac - increased their issuance.
Dampened demand and added supply made these securities very cheap on
both an absolute and a relative basis, so I increased the fund's
holdings in them to about 60% of assets. This large allocation helped
the fund when the relative performance of these securities improved in
early 1999. Through the first four months of 1999, the fund focused
primarily on agency securities and repurchase agreements in the one-
to six-month maturity range. In May, I responded with caution to the
market's increased volatility in anticipation of the Fed's meeting. At
the same time, I selectively purchased one-year fixed-rate securities
offering attractive yields that I felt priced in more Fed
interest-rate increases than I believed would occur.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on May 31, 1999, was 4.58%, compared to
4.85% six months ago. For the six months that ended May 31, 1999, the
fund had a total return of 2.34%, compared to 2.10% for the government
money market funds average, according to IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. Due to the Fed's move to a tightening bias and comments from some
Fed members indicating concern over strong domestic demand and a less
favorable inflation outlook, the market nearly unanimously expects the
Fed to raise rates at its June Open Market Committee meeting. Market
observers also generally believe there is a high likelihood of further
rate increases later in the summer. Time will tell. In the meantime, I
intend to proceed with caution, and seek out opportunities that arise
when market expectations move beyond what I consider to be a likely
outcome.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: seeks as high a
level of current income as
is consistent with the
security of principal and
liquidity
FUND NUMBER: 050
TRADING SYMBOL: FGRXX
START DATE: November 3,
1981
SIZE: as of May 31, 1999,
more than $1.4 billion
MANAGER: Robert Litterst,
since 1997; manager,
several Fidelity and Spartan
taxable money market funds;
joined Fidelity in 1991
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MATURITY DIVERSIFICATION
DAYS % OF FUND'S INVESTMENTS 5/31/99 % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
11/30/98 5/31/98
0 - 30 62 44 69
31 - 90 15 27 9
91 - 180 12 22 12
181 - 397 11 7 10
WEIGHTED AVERAGE MATURITY
5/31/99 11/30/98 5/31/98
Fidelity U.S. Government 65 DAYS 65 days 51 days
Reserves
Government Money Market 57 DAYS 56 days 53 days
Funds Average *
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
AS OF MAY 31, 1999 AS OF NOVEMBER 30, 1998
Federal Agency Issues 68.9% Federal Agency Issues 78.7%
Repurchase Agreements 31.1% Repurchase Agreements 21.3%
Row: 1, Col: 1, Value: 69.0 Row: 1, Col: 1, Value: 79.0
Row: 1, Col: 8, Value: 31.0 Row: 1, Col: 8, Value: 21.0
</TABLE>
INVESTMENTS MAY 31, 1999 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FEDERAL AGENCIES - 68.9%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
FANNIE MAE - 24.5%
Agency Coupons - 11.4%
6/10/99 4.72% (b) $ 30,000 $ 29,983
6/15/99 4.76 (b) 13,000 13,000
6/24/99 4.74 (b) 31,000 30,983
6/28/99 4.70 (b) 19,000 18,998
7/30/99 4.77 (b) 19,000 18,998
2/4/00 4.85 12,000 11,991
2/22/00 4.93 12,000 11,999
5/5/00 5.04 13,000 12,985
6/7/00 5.34 (a) 23,000 22,976
171,913
Discount Notes - 13.1%
6/4/99 4.86 24,000 23,990
6/4/99 4.87 20,000 19,992
6/4/99 5.33 10,000 9,996
6/8/99 4.87 48,000 47,955
8/9/99 5.35 12,000 11,883
8/13/99 4.85 6,000 5,942
8/17/99 4.85 12,000 11,877
8/17/99 4.86 13,000 12,867
8/20/99 5.34 17,000 16,808
9/13/99 4.89 12,000 11,835
9/17/99 4.87 12,000 11,829
11/5/99 4.87 12,000 11,751
196,725
FEDERAL HOME LOAN BANK - 20.7%
Agency Coupons - 19.6%
6/1/99 4.82 (b) 66,000 65,974
6/1/99 4.87 (b) 39,000 38,993
6/2/99 5.06 (b) 12,000 11,999
6/2/99 5.23 (b) 13,000 12,998
6/8/99 4.72 (b) 6,000 5,999
6/15/99 5.51 12,000 12,000
7/12/99 4.80 (b) 25,000 24,989
8/12/99 4.78 (b) 12,000 11,990
2/11/00 4.92 12,000 11,993
2/16/00 4.90 12,000 12,000
FEDERAL AGENCIES - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
FEDERAL HOME LOAN BANK -
CONTINUED
Agency Coupons - continued
3/1/00 5.00% $ 24,000 $ 23,996
3/3/00 5.06 12,000 11,993
3/8/00 5.17 15,000 14,989
4/5/00 5.03 10,000 9,991
5/19/00 5.13 25,000 24,984
294,888
Discount Notes - 1.1%
11/10/99 4.86 17,502 17,128
FREDDIE MAC - 23.0%
Agency Coupons - 2.6%
8/13/99 5.52 26,000 25,997
8/27/99 4.76 (b) 13,000 12,996
38,993
Discount Notes - 20.4%
6/2/99 4.87 21,520 21,517
6/3/99 4.86 25,000 24,993
6/8/99 4.85 18,000 17,983
6/11/99 4.85 25,000 24,967
6/24/99 4.89 24,950 24,873
6/25/99 4.85 9,000 8,971
8/6/99 4.82 18,000 17,844
8/13/99 4.85 5,000 4,951
8/19/99 4.85 29,000 28,699
9/2/99 4.91 27,893 27,548
9/3/99 4.83 11,000 10,864
9/3/99 4.86 10,000 9,876
9/8/99 4.85 25,019 24,692
9/10/99 4.84 30,000 29,601
9/24/99 4.80 5,000 4,925
9/24/99 4.83 25,000 24,622
306,926
STATE OF ISRAEL (GUARANTEED
BY U.S. GOVERNMENT THROUGH
AGENCY FOR INTERNATIONAL
DEVELOPMENT) - 0.7%
Agency Coupons - 0.7%
8/15/99 4.82 10,000 10,043
TOTAL FEDERAL AGENCIES 1,036,616
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 31.1%
MATURITY AMOUNT (000S) VALUE (NOTE 1) (000S)
In a joint trading account
(U.S. Government
Obligations) dated:
3/18/99 due 6/16/99 At 4.85% $ 24,291 $ 24,000
3/22/99 due 6/14/99 At 4.85% 36,407 36,000
3/24/99 due 6/14/99 At 4.85% 48,530 48,000
3/26/99 due 6/21/99 At 4.85% 50,586 50,000
5/6/99 due 8/4/99 At 4.85% 20,243 20,000
5/18/99 due 6/21/99 At 4.85% 25,115 25,000
5/21/99 due 6/21/99 At 4.83% 16,067 16,000
5/28/99 due 6/1/99 At 4.91% 249,558 249,422
TOTAL REPURCHASE AGREEMENTS 468,422
TOTAL INVESTMENT IN $ 1,505,038
SECURITIES - 100%
Total Cost for Income Tax Purposes $ 1,505,038
</TABLE>
LEGEND
(a) Security purchased on a delayed delivery or when-issued basis.
(b) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due dates on these types of
securities reflects the next interest rate reset date or, when
applicable, the final maturity date.
INCOME TAX INFORMATION
At November 30, 1998, the fund had a capital loss carryforward of
approximately $1,000 all of which will expire on November 30, 2003.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) MAY 31, 1999 (UNAUDITED)
ASSETS
Investment in securities, at $ 1,505,038
value (including repurchase
agreements of $468,422) -
See accompanying schedule
Receivable for fund shares 3,143
sold
Interest receivable 6,025
Prepaid expenses 5
TOTAL ASSETS 1,514,211
LIABILITIES
Payable for investments $ 22,976
purchased on a delayed
delivery basis
Payable for fund shares 12,242
redeemed
Distributions payable 242
Accrued management fee 200
Other payables and accrued 308
expenses
TOTAL LIABILITIES 35,968
NET ASSETS $ 1,478,243
Net Assets consist of:
Paid in capital $ 1,478,242
Accumulated net realized gain 1
(loss) on investments
NET ASSETS, for 1,478,617 $ 1,478,243
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($1,478,243
(divided by) 1,478,617
shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX
MONTHS ENDED MAY 31, 1999
(UNAUDITED)
INTEREST INCOME $ 37,083
EXPENSES
Management fee $ 1,211
Transfer agent fees 1,516
Accounting fees and expenses 76
Non-interested trustees' 3
compensation
Custodian fees and expenses 10
Registration fees 86
Audit 14
Legal 2
Miscellaneous 5
Total expenses before 2,923
reductions
Expense reductions (42) 2,881
NET INTEREST INCOME 34,202
NET REALIZED GAIN (LOSS) ON 2
INVESTMENTS
NET INCREASE IN NET ASSETS $ 34,204
RESULTING FROM OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1999 YEAR ENDED NOVEMBER 30, 1998
(UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 34,202 $ 67,494
Net realized gain (loss) 2 61
NET INCREASE (DECREASE) IN 34,204 67,555
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (34,202) (67,494)
from net interest income
Share transactions at net 895,385 1,749,474
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 32,644 64,621
distributions from net
interest income
Cost of shares redeemed (877,056) (1,677,134)
NET INCREASE (DECREASE) IN 50,973 136,961
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 50,975 137,022
IN NET ASSETS
NET ASSETS
Beginning of period 1,427,268 1,290,246
End of period $ 1,478,243 $ 1,427,268
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED MAY 31, 1999 YEARS ENDED NOVEMBER 30,
(UNAUDITED) 1998 1997 1996 1995 1994 F
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .023 .052 .051 .050 .055 .008
Operations Net interest
income
Less Distributions
From net interest income (.023) (.052) (.051) (.050) (.055) (.008)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN B, C 2.34% 5.29% 5.26% 5.12% 5.60% .78%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in $ 1,478 $ 1,427 $ 1,290 $ 1,243 $ 1,188 $ 1,130
millions)
Ratio of expenses to average .40% A .45% .48% .51% .55% .36% A, D
net assets
Ratio of expenses to average .39% A, E .44% E .48% .50% E .55% .36% A
net assets after expense
reductions
Ratio of net interest income 4.67% A 5.16% 5.13% 5.02% 5.43% 4.77% A
to average net assets
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FINANCIAL HIGHLIGHTS YEARS ENDED NOVEMBER 30,
1994 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000
period
Income from Investment .033
Operations Net interest
income
Less Distributions
From net interest income (.033)
Net asset value, end of period $ 1.000
TOTAL RETURN B, C 3.32%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in $ 1,060
millions)
Ratio of expenses to average .51%
net assets
Ratio of expenses to average .51%
net assets after expense
reductions
Ratio of net interest income 3.27%
to average net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F FOR THE TWO MONTHS ENDED NOVEMBER 30.
G FOR THE YEAR ENDED SEPTEMBER 30.
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
For the period ended May 31, 1999 (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 organized as a Delaware
business trust. The financial statements have been prepared in
conformity with generally accepted accounting principles which require
management to make certain estimates and assumptions at the date of
the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
2. OPERATING POLICIES - CONTINUED
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying
securities is fixed at the time the transaction is negotiated. The
market values of the securities purchased on a when-issued or forward
commitment basis are identified as such in each applicable fund's
schedule of investments. The fund may receive compensation for
interest forgone in the purchase of a when-issued security. With
respect to purchase commitments, the fund identifies securities as
segregated in its records with a value at least equal to the amount of
the commitment. Losses may arise due to changes in the market value of
the underlying securities, if the counterparty does not perform under
the contract, or if the issuer does not issue the securities due to
political, economic, or other factors.
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 investments in
repurchase agreements through the joint trading account are summarized
as follows:
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF JOINT TRADING
DATED MARCH 18, 1999, DUE JUNE 16, 1999 AT 4.85%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100.0%
Aggregate principal amount of agreements $100,000,000
Aggregate maturity amount of agreements $101,212,500
Aggregate market value of transferred assets $102,144,157
Coupon rates of transferred assets 5.00% to 9.50%
Maturity dates of transferred assets 1/1/00 to 5/1/29
DATED MARCH 22, 1999, DUE JUNE 14, 1999 AT 4.85%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100.0%
Aggregate principal amount of agreements $150,000,000
Aggregate maturity amount of agreements $151,697,500
Aggregate market value of transferred assets $154,387,735
Coupon rates of transferred assets 5.50% to 11.00%
Maturity dates of transferred assets 7/1/00 to 6/1/29
3. JOINT TRADING ACCOUNT - CONTINUED
SUMMARY OF JOINT TRADING
DATED MARCH 24, 1999, DUE JUNE 14, 1999 AT 4.85%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100.0%
Aggregate principal amount of agreements $200,000,000
Aggregate maturity amount of agreements $202,209,444
Aggregate market value of transferred assets $205,802,810
Coupon rates of transferred assets 5.50% to 10.50%
Maturity dates of transferred assets 10/1/00 to 6/1/29
DATED MARCH 26, 1999, DUE JUNE 21, 1999 AT 4.85%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100.0%
Aggregate principal amount of agreements $200,000,000
Aggregate maturity amount of agreements $202,344,167
Aggregate market value of transferred assets $205,742,537
Coupon rates of transferred assets 5.50% to 15.00%
Maturity dates of transferred assets 6/6/00 to 6/1/29
DATED MAY 6, 1999, DUE AUGUST 4, 1999 AT 4.85%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100.0%
Aggregate principal amount of agreements $75,000,000
Aggregate maturity amount of agreements $75,909,375
Aggregate market value of transferred assets $76,758,905
Coupon rates of transferred assets 5.50% to 10.50%
Maturity dates of transferred assets 1/1/00 to 6/1/29
DATED MAY 18, 1999, DUE JUNE 21, 1999 AT 4.85%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100.0%
Aggregate principal amount of agreements $100,000,000
Aggregate maturity amount of agreements $100,458,056
Aggregate market value of transferred assets $102,106,558
Coupon rates of transferred assets 5.50% to 10.00%
Maturity dates of transferred assets 10/1/03 to 6/1/29
3. JOINT TRADING ACCOUNT - CONTINUED
SUMMARY OF JOINT TRADING
DATED MAY 21, 1999, DUE JUNE 21, 1999 AT 4.83%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100.0%
Aggregate principal amount of agreements $100,000,000
Aggregate maturity amount of agreements $100,415,917
Aggregate market value of transferred assets $103,023,904
Coupon rates of transferred assets 5.50% to 9.50%
Maturity dates of transferred assets 1/1/00 to 5/1/29
DATED MAY 28, 1999, DUE JUNE 1, 1999 AT 4.91%
Number of dealers or banks 5
Maximum amount with one dealer or bank 43.5%
Aggregate principal amount of agreements $2,033,669,000
Aggregate maturity amount of agreements $2,034,778,190
Aggregate market value of transferred assets $2,080,431,567
Coupon rates of transferred assets 0.00% to 11.00%
Maturity dates of transferred assets 5/31/99 to 8/1/37
</TABLE>
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 and an income-based fee. 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
.1100% to .3700% for the period. The annual individual fund fee rate
is .03%. In the event that these rates were lower than the contractual
rates in effect during the period, FMR voluntarily implemented the
above rates, as they resulted in the same or a lower management fee.
The income-based fee is added only when the fund's gross 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 .24% of average net
assets. For the period, the total management fee was equivalent to an
annualized rate of .17% of the fund's average net assets. The
income-based portion of this fee was equal to $34,000.
SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity
Investments Money Management, Inc., a wholly owned subsidiary of FMR,
receives a fee from FMR of 50% of the management fee payable to FMR.
The fee is paid prior to any voluntary expense reimbursements which
may be in effect.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an
affiliate of FMR, is the fund's transfer, dividend disbursing and
shareholder servicing agent. FSC receives account fees and asset-based
fees that vary according to account size and type of account. FSC pays
for typesetting, printing and mailing of all shareholder reports,
except proxy statements. For the period, the transfer agent fees were
equivalent to an annualized rate of .21% of average net assets.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee
is based on the level of average net assets for the month plus
out-of-pocket expenses.
MONEY MARKET INSURANCE. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other money market funds advised by FMR or
its affiliates, has entered into insurance agreements with FIDFUNDS
Mutual Limited (FIDFUNDS), an affiliated mutual insurance company,
effective January 1, 1999. FIDFUNDS provides limited coverage for
certain loss events including issuer default as to payment of
principal or interest and bankruptcy or insolvency of a credit
enhancement provider. The insurance does not cover losses resulting
from changes in interest rates, ratings downgrades or other market
conditions. The fund may be subject to a special assessment of up to
approximately 2.5 times the fund's annual gross premium if covered
losses exceed certain levels. During the period, the fund paid
premiums of $9,000 to FIDFUNDS, which are being amortized over one
year.
5. EXPENSE REDUCTIONS.
The fund has entered into an arrangement with its transfer agent
whereby credits realized as a result of uninvested cash balances were
used to reduce a portion of the fund's expenses. During the period,
the fund's transfer agent fees were reduced by $42,000 under this
arrangement.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpress(registered trademark) provides a single
toll-free number to access account balances, positions, quotes and
trading. It's easy to navigate the service, and on your first call,
the system will help you create a personal identification number (PIN)
for security.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
815 East Birch Street
Brea, CA
851 East Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
950 Northgate Drive
San Rafael, CA
1400 Civic Drive
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
90 Alhambra Plaza
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
GEORGIA
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
ILLINOIS
One North Franklin Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
INDIANA
4729 East 82nd Street
Indianapolis, IN
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
7401 Wisconsin Avenue
Bethesda, MD
1 West Pennsylvania Ave.
Towson, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
29155 Northwestern Hwy.
Southfield, MI
MINNESOTA
7600 France Avenue South
Edina, MN
MISSOURI
700 West 47th Street
Kansas City, MO
8885 Ladue Road
Ladue, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
NEW YORK
1055 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
1271 Avenue of the Americas
New York, NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
NORTH CAROLINA
4611 Sharon Road
Charlotte, NC
OHIO
600 Vine Street
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
16850 SW 72 Avenue
Tigard, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
6150 Poplar Road
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
1155 Dairy Ashford Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
UTAH
215 South State Street
Salt Lake City, UT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
511 Pine Street
Seattle, WA
WASHINGTON, DC
1900 K Street, N.W.
Washington, DC
WISCONSIN
595 North Barker Road
Brookfield, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments
Money Management, Inc. (FIMM)
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Boyce I. Greer, Vice President
Fred L. Henning, Jr., Vice President
Robert A. Litterst, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
William O. McCoy *
Marvin L. Mann *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
* INDEPENDENT TRUSTEES
FUS-SANN-0799 80045
1.704672.101
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
Bank of New York
New York, NY
FIDELITY'S TAXABLE
MONEY MARKET FUNDS
Fidelity Cash Reserves
Fidelity Daily Income Trust
Fidelity U.S. Government Reserves
Spartan(registered trademark) Money Market Fund
Spartan U.S. Government
Money Market Fund
Spartan U.S. Treasury
Money Market Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress (registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
