FIDELITY
(registered trademark)
U.S. GOVERNMENT RESERVES
SEMIANNUAL REPORT
MARCH 31, 1993
CONTENTS
ABOUT FIDELITY 3 A letter from Fidelity's archives on
our investment philosophy.
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 last six
months and one year.
INVESTMENTS 9 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 12 Statements of assets and liabilities,
operations, and changes in net
assets, as well as per-share data
and ratios.
NOTES 16 Footnotes to the financial
statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK, AND FUND
SHARES ARE NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC.
ABOUT FIDELITY
To give you some insight into Fidelity's money management philosophy, we've
reprinted a
1944 letter by founder Edward
C. Johnson 2d to the shareholders of our first fund.
INVESTMENT BUSINESS NOT A SCIENCE
People often assume that the business of investment is a science, and that
the most analytical or mathematical minds should be best fitted for its
practice. This simply is not so. Investing money is in effect going into
partnership with various businesses and thus sharing their profits and
losses. Investment decisions therefore come down, in the last analysis, to
which particular enterprises one wishes to be associated with in this way,
and when. No scientist, as such, is much help to you in deciding what
friends to make or what person to marry. Nor can he be of much more help in
picking good companions for your investment funds and the periods for
profitable association with them.
"COUNTRY DOCTOR" THE BEST
INVESTMENT TYPE
The organization you pick to see that your investment funds keep good
company, so to speak, should be familiar, from actual contact, with many
kinds of enterprises and should have a "feel" for business ability and
reliability, as well as a thorough general knowledge of the investment
field. The country doctor or country banker would be the person whose
opinion you would value most respecting the ability and character of a
person living in the community. It is believed that this type of knowledge
is of much more use in investment than fancy scientific analyses.
Psychologists know that human character and ability are difficult to
analyze scientifically.
It is one of the wonders of our American system that the small investor
can, in effect, go into partnership with many of the successful businesses
of the country. Most important to him, however, is his choice of an adviser
to see that this privilege is intelligently and effectively utilized. The
investor will contribute much to his mental quiet and ease if he knows that
an organization of the "country doctor" type has charge of his investments.
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds in
the world.
(bullet) Number of Fidelity mutual
funds: over 200
(bullet) Assets in Fidelity mutual
funds: over $175 billion
(bullet) Number of shareholder
accounts: over 11 million
(bullet) Number of investment
analysts and portfolio
managers: over 200
(checkmark)
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects both the change in a fund's share
price over a given period, and reinvestment of its dividends (or income).
Yield measures the income paid by a fund. Since a money market fund tries
to maintain a $1 share price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED MARCH 31, 1993 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Fidelity U.S. Government Reserves 1.29% 3.01% 35.61% 95.95%
Consumer Price Index 1.63% 3.09% 23.26% 46.68%
Average Government Money Market Fund 1.32% 2.98% 34.96% 92.86%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period.
For example, if you invested $1,000 in a fund that had a 5% return over the
past year, you would end up with $1,050. Comparing the fund's performance
to the Consumer Price Index helps show how your investment did compared to
inflation. To measure how the fund stacked up against its peers, you can
compare its return to the average government money market fund's total
returns. This average currently reflects the performance of over 150
government money market funds tracked by IBC/Donoghue's MONEY FUND
REPORT.(registered trademark)
AVERAGE ANNUAL TOTAL RETURNS
YEARS ENDED MARCH 31, 1993 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Fidelity U.S. Government Reserves 3.01% 6.28% 6.96%
Consumer Price Index 3.09% 4.27% 3.91%
Average Government Money Market Fund 2.98% 6.18% 6.79%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
To help you compare funds from different companies on an equal basis, all
funds provide average annual total returns as of the nearest calendar
quarter-in this case, March 31, 1993.
YIELDS
3/31/92 6/30/92 9/30/92 12/31/92 3/31/93
Fidelity U.S. Government Reserves 3.75% 3.61% 2.87% 2.69% 2.49%
Average Government
Money Market Fund 3.68% 3.37% 2.85% 2.68% 2.57%
MMDA 3.59% 3.31% 2.83% 2.72% 2.58%
Row: 1, Col: 1, Value: 3.75
Row: 1, Col: 2, Value: 3.68
Row: 1, Col: 3, Value: 3.59
Row: 2, Col: 1, Value: 3.61
Row: 2, Col: 2, Value: 3.37
Row: 2, Col: 3, Value: 3.31
Row: 3, Col: 1, Value: 2.87
Row: 3, Col: 2, Value: 2.85
Row: 3, Col: 3, Value: 2.83
Row: 4, Col: 1, Value: 2.69
Row: 4, Col: 2, Value: 2.68
Row: 4, Col: 3, Value: 2.72
Row: 5, Col: 1, Value: 2.49
Row: 5, Col: 2, Value: 2.57
Row: 5, Col: 3, Value: 2.58
4% -
3% -
2% -
1% -
0%
Fidelity
U.S. Government
Reserves
Average Governmen
t
Money Market
Fund
MMDA
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The charts above shows the fund's
current seven-day yield at quarterly intervals over the past year. This is
compared to similar yields for the average government money market fund and
the average bank money market deposit account (MMDA). Figures for the
average government money market fund are from the IBC/Donoghue's MONEY FUND
REPORT.(registered trademark) The MMDA average is supplied by BANK RATE
MONITOR.(double dagger) (Both figures are those available closest to month
end.)
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS REFLECT PAST RESULTS RATHER
THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
There are some important
differences between a bank
money market deposit account
(MMDA) and a money market
fund. First, the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money fund
will maintain a $1 share price.
Second, a money market fund
returns to its shareholders
income earned by the fund's
investments after expenses.
This is in contrast to banks,
which set their MMDA rates
periodically based on current
interest rates, competitors'
rates, and internal criteria.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with
Leland Barron, Portfolio Manager of Fidelity U.S. Government Reserves
Q. HOW HAS THE INTEREST-RATE ENVIRONMENT CHANGED IN THE LAST SIX MONTHS?
A. The key factor was the Federal Reserve's decision to stop lowering
rates, which caused yields to rise slightly last fall and later stabilize.
From the middle of 1989 through September 1992, the Fed had pushed interest
rates down more than six percentage points to lows not seen since 1963.
Many expected rates to fall again in October, but the Fed chose not to act.
One reason was that the economic indicators were beginning to point toward
signs of life in the economy. Another possibly, was that the Fed was
reluctant to make a move so soon before the election. In any case, the
market reversed itself. Short-term interest rates climbed 3/4 of 1% between
October and December. In January, the market seemed to reconsider, and for
a while rates resumed falling. The mood during the last two months has been
cautious, with rates holding steady.
Q. HOW DID YOU ADOPT YOUR STRATEGY TO CHANGING CONDITIONS?
Last October, the fund's average maturity was close to 80 days, which is
aggressive. That made sense then because interest rates were falling, and I
wanted to lock in attractive rates for as long as possible. After October,
I began shortening the fund's maturity to try to keep up with rising rates.
By the end of December, it was all the way down to 46 days. Since then,
I've kept it in the middle to high 40s.
Q. BESIDES ADJUSTING THE FUND'S MATURITY, WHAT OTHER STRATEGIC CHOICES DID
YOU MAKE?
A. Among the options available to this fund are Treasury securities, backed
by the full faith and credit of the U.S. government; and short-term
securities issued by federal agencies, which have high credit ratings but
in most cases are not guaranteed by the federal government. In the past, it
has often made sense to accept the slightly higher risk of owning agency
securities, in exchange for higher rates. But lately the rate advantage has
been so slim as to be almost meaningless, so I've shifted more of the fund
into Treasuries.
Q. WHAT KIND OF RESULTS WERE YOU ABLE TO ACHIEVE?
A. The fund's 7-day yield as of March 31, 1993 was 2.49%, compared to 2.87%
at the end of September, reflecting the overall decline in interest rates.
The fund's total return from September 30, 1992 through the end of March
1993 was 1.29%. During the same period, the average U.S. government and
agencies money market fund has a total of 1.32%, according to IBC/Donoghue.
I didn't think interest rates would fall as quickly as they did in January.
In retrospect, I missed an opportunity then to extend the fund's maturity.
Q. WHAT'S YOUR OUTLOOK?
A. There are two shools of thought on the economy. Some say the strength
we're seeing is unsustainable, and interest rates will fall. But, I believe
the momentum building since the second half of last year may prove strong
enough to push rates slightly higher in the months ahead. If employment
continues to grow and inflationary pressures develop, then the Fed might
actually raise rates for the first time since February 1989. Meanwhile,
I'll most likely maintain a neutral maturity, somewhere between the high
40s and the low 50s. That lets me capture a portion of the higher yields
available from issues with longer maturities; and still hve flexibility to
respond if rates turn back up.
FUND FACTS
GOAL: income and stability
by investing in high quality,
short-term investments.
START DATE: November 3,
1981
SIZE: as of March 31, 1993,
over $1.1 billion in net assets
MANAGER: Leland Barron,
since January 1991; also
manages Spartan U.S.
Government Money Market
(since January 1991) and
Spartan U.S.
Treasury Money Market
(since January 1988).
(checkmark)
WORDS TO KNOW
DISCOUNT RATE: The interest rate the Federal Reserve charges member banks
for loans.
FEDERAL FUNDS RATE: The interest rate banks charge each other for overnight
loans.
MATURITY: The amount of time remaining before a debt security is scheduled
to be redeemed.
AVERAGE MATURITY: The average maturity of debt securities in a fund,
weighted by dollar amount. When the average maturity is short, the fund
manager believes interest rates will rise. When the average maturity is
long, the fund manager is expecting rates to fall.
TREASURY OBLIGATION: Debt security issued directly by the U.S. government.
Payment of principal and interest are guaranteed.
AGENCY ISSUE: Debt security issued by a government agency, such as the
Federal National Mortgage Association (Fannie Mae). Although their credit
ratings are high, most agency issues are not backed by the full faith and
credit of the U.S. government.
REPURCHASE AGREEMENT: Agreement between a seller and a buyer in which the
seller promises to repurchase a block of securities at
a set price and time. Also known
as a "repo."
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
3/31/93 9/30/92 3/31/92
0 - 30 59.6 36.6 61.8
31 - 90 14.0 15.6 1.1
91 - 180 25.5 40.3 22.7
181 - 397 0.9 7.5 14.4
WEIGHTED AVERAGE MATURITY
3/31/93 9/30/92 3/31/92
Fidelity U.S. Government
Reserves 46 days 85 days 70 days
Average Government
Money Market Fund* 56 days 60 days 55 days
ASSET ALLOCATION
AS OF 3/31/93 AS OF 9/30/92
Row: 1, Col: 1, Value: 44.8
Row: 1, Col: 2, Value: 26.8
Row: 1, Col: 3, Value: 28.4
Row: 1, Col: 1, Value: 34.4
Row: 1, Col: 2, Value: 13.3
Row: 1, Col: 3, Value: 52.3
Federal agency
issues 28.4%
U.S. Treasury
obligations 26.8%
Repurchase
agreements 44.8%
Federal agency
issues 52.3%
U.S. Treasury
obligations 13.3%
Repurchase
agreements 34.4%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT (registered
trademark)/GOVERNMENT
INVESTMENTS MARCH 31, 1993 (UNAUDITED)
Showing Percentage of Total Value of Investments
FEDERAL AGENCIES - 28.4%
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
FEDERAL FARM CREDIT BANK (AGENCY COUPONS) - 0.6%
8/02/93 3.16% 8,535,000 $ 8,543,806
FEDERAL FARM CREDIT BANK (DISCOUNT NOTES) - 2.7%
6/02/93 4.22 12,500,000 12,412,813
10/05/93 3.10 24,000,000 23,619,767
36,032,580
FEDERAL HOME LOAN BANK (AGENCY COUPONS) - 0.4%
7/26/93 3.14 5,000,000 5,059,005
FEDERAL HOME LOAN MORTGAGE CORP. (DISCOUNT NOTES) - 0.8%
4/30/93 3.11 10,000,000 9,975,028
FEDERAL NATIONAL MORTGAGE ASSOC. (DISCOUNT NOTES) - 15.7%
4/16/93 3.10 20,000,000 19,974,583
5/03/93 3.22 46,000,000 45,869,564
5/11/93 3.40 30,000,000 29,888,667
6/07/93 3.12 30,000,000 29,828,033
8/12/93 3.22 9,460,000 9,349,560
8/12/93 3.26 10,245,000 10,125,017
8/13/93 3.22 26,000,000 25,694,182
8/17/93 3.16 22,000,000 21,737,723
8/26/93 3.51 15,000,000 14,792,362
207,259,691
STUDENT LOAN MARKETING ASSOC. (VARIABLE RATE AGENCY COUPON) - 5.2% (A)
4/17/93 6.08 15,000,000 15,119,958
6/30/93 4.03 13,600,000 13,650,356
6/30/93 4.05 10,000,000 10,034,241
3/03/94 3.34 30,000,000 30,000,000
68,804,555
TENNESSEE VALLEY AUTHORITY (DISCOUNT NOTES) - 3.0%
5/06/93 3.03 40,000,000 39,882,556
TOTAL FEDERAL AGENCIES 375,557,221
U.S. TREASURY OBLIGATIONS - 26.8%
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
U.S. TREASURY BILLS - 22.4%
4/07/93 3.10% $180,000,000 $ 179,922,600
7/29/93 3.14 10,000,000 9,897,858
7/29/93 3.56 15,000,000 14,829,434
8/05/93 3.15 17,000,000 16,815,550
8/26/93 3.11 10,000,000 9,876,683
8/26/93 3.39 7,000,000 6,906,247
9/16/93 3.09 25,000,000 24,645,333
9/16/93 3.17 25,000,000 24,636,000
10/21/93 3.27 10,000,000 9,821,247
297,350,952
U.S. TREASURY NOTES - 4.4%
7/31/93 3.12 25,000,000 25,306,909
7/31/93 3.16 32,000,000 32,387,711
57,694,620
TOTAL U.S. TREASURY OBLIGATIONS 355,045,572
REPURCHASE AGREEMENTS - 44.8%
MATURITY AMOUNT
CREDIT LYONNAIS
At 3.50%, dated 3/31/93 due 4/1/93
U.S. Treasury Obligations
(principal amount $250,000,000)
4.25% to 4.625%, 8/31/94 to 12/31/94 $ 250,024,306 250,000,000
FIRST BOSTON CORPORATION
At 3.125%, dated 3/19/93 due 4/19/93
U.S. Government Obligations
(principal amount $149,543,457)
5.11% to 13%, 11/1/97 to 9/1/28 60,161,458 60,000,000
GOLDMAN, SACHS & CO.
At 3.10%, dated 3/19/93 due 4/19/93
U.S. Government Obligations
(principal amount $108,537,982)
6.634% to 9%, 9/1/1 to 4/1/19 36,096,875 36,000,000
REPURCHASE AGREEMENTS - CONTINUED
MATURITY AMOUNT VALUE
(NOTE 1)
KIDDER PEABODY & CO., INC.
At 3.20%, dated 3/19/93 due 4/2/93
U.S. Government Obligations
(principal amount $48,886,207)
3.53% to 7.05%, 11/1/07 to 11/1/27 $48,059,733 48,000,000
NIKKO SECURITIES CO. INTERNATIONAL, INC.
At 3.50%, dated 3/31/93 due 4/1/93
U.S. Treasury Obligations
(principal amount $139,405,000)
0% to 5.375%, 7/1/93 to 4/30/94 136,651,284 136,638,000
PAINE WEBBER, INC.
At 3.15%, dated 3/8/93 due 4/8/93
U.S. Government Obligations
(principal amount $22,090,230)
8.5% to 9%, 10/1/21 to 1/1/23 15,040,688 15,000,000
At 3.15%, dated 3/9/93 due 4/8/93
U.S. Government Obligations
(principal amount $15,231,268)
5.682% to 5.861%, 12/1/19 to 8/1/21 22,779,640 22,720,000
SHEARSON LEHMAN GOVERNMENT SECURITIES, INC.
At 3.10%, dated 3/23/93 due 4/23/93
U.S. Government Obligations
(principal amount $24,229,028)
7.361% to 9%, 5/1/05 to 1/1/21 24,064,067 24,000,000
TOTAL REPURCHASE AGREEMENTS 592,358,000
TOTAL INVESTMENTS - 100% $ 1,322,960,793
Total Cost for Income Tax Purposes $ 1,322,960,793
LEGEND
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
INCOME TAX INFORMATION
At September 30, 1992, the fund had a capital loss carryforward of
approximately $456,000
of which $27,000 and $429,000 will expire on September 30,1995 and 1996,
respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
MARCH 31, 1993 (UNAUDITED)
1.ASSETS 2. 3.
4.Investment in securities, at value (including repurchas 5. $ 1,322,960,793
e
agreements of $592,358,000) (Note 1) -
See accompanying schedule
6.Cash 7. 318,354
8.Interest receivable 9. 1,538,325
10. TOTAL ASSETS 11. 1,324,817,472
12.LIABILITIES 13. 14.
15.Payable for investments purchased $ 203,542,367 16.
17.Dividends payable 162,523 18.
19.Accrued management fee 427,843 20.
21.Other payables and accrued expenses 408,790 22.
23. TOTAL LIABILITIES 24. 204,541,523
25.26.NET ASSETS 27. $ 1,120,275,949
28.Net Assets consist of: 29. 30.
31.Paid in capital 32. $ 1,120,633,897
33.Accumulated net realized gain (loss) on investments 34. (357,948)
35.36.NET ASSETS, for 1,120,633,897 shares outstandin 37. $ 1,120,275,949
g
38.39.NET ASSET VALUE, offering price and redemption p 40. $1.00
rice per
share ($1,120,275,949(divided by)1,120,633,897 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED MARCH 31, 1993 (UNAUDITED)
41.INTEREST INCOME 42. $ 20,237,352
43.EXPENSES 44. 45.
46.Management fee (Note 3) $ 2,704,108 47.
48.Transfer agent fees (Note 3) 1,551,724 49.
50.Accounting fees and expenses (Note 3) 70,499 51.
52.Non-interested trustees' compensation 4,681 53.
54.Custodian fees and expenses 67,435 55.
56.Registration fees 15,328 57.
58.Audit 14,442 59.
60.Legal 12,417 61.
62.Miscellaneous 58,485 63.
64. TOTAL EXPENSES 65. 4,499,119
66.NET INTEREST INCOME 67. 15,738,233
68.NET REALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1) 69. 38,168
70.NET INCREASE IN NET ASSETS RESULTING FROM OPERATIO 71. $ 15,776,401
NS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEARS ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1993
72.INCREASE (DECREASE) IN NET ASSETS (UNAUDITED) 1992
73.Operations $ 15,738,233 $ 51,665,263
Net interest income
74. Net realized gain (loss) on investments 38,168 23,433
75. Net increase (decrease) in net assets resulting 15,776,401 51,688,696
from operations
76.Dividends to shareholders from net interest income (15,738,233) (51,665,263)
77.Share transactions at net asset value of $1.00 per share 611,970,495 1,539,954,152
Proceeds from sales of shares
78. Reinvestment of dividends from net interest income 14,800,955 49,475,239
79. Cost of shares redeemed (798,969,123) (1,732,609,902)
80. Net increase (decrease) in net assets resulting from (172,197,673) (143,180,511)
share transactions
81. TOTAL INCREASE (DECREASE) IN NET ASSETS (172,159,505) (143,157,078)
82.NET ASSETS 83. 84.
85. Beginning of period 1,292,435,454 1,435,592,532
86. End of period $ 1,120,275,949 $ 1,292,435,454
</TABLE>
PER-SHARE DATA
1.Selected data for a share outstanding throughout each period:
88. SIX MONTHS YEARS ENDED SEPTEMBER 30,
ENDED
MARCH 31, 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
89. (UNAUDITED) 1992 1991 1990 1989 1988
90.
91.Interest income $ .016 $ .046 $ .068 $ .083 $ .091 $ .073
92.Expenses .003 .007 .007 .007 .008 .008
93.Net interest income $ .013 $ .039 $ .061 $ .076 $ .083 $ .065
94.Dividends from net $ (.013) $ (.039) $ (.061) $ (.076) $ (.083) $ (.065)
interest income
</TABLE>
RATIOS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
95.Ratio of net interest 2.62%* 3.88% 6.13% 7.66% 8.29% 6.52%
income to average
net assets
96.Ratio of expenses to .75%* .73% .72% .74% .80% .75%
average net assets
97.Shares outstanding at 1,120 1,292 1,436 1,581 1,545 1,590
end of period - at
net asset value of
$1.00 per share
(in millions)
</TABLE>
* ANNUALIZED
NOTES TO FINANCIAL STATEMENTS
For the period ended March 31, 1993 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity U.S. Government Reserves (the fund) is a fund of Fidelity Charles
Street Trust (the trust) and is authorized to issue an unlimited number of
shares. The trust is registered under the Investment Company Act of 1940,
as amended (the Act), as an open-end management investment company
organized as a Massachusetts business trust. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the Act, and certain
conditions therein, securities are valued initially at cost and thereafter
assume a constant amortization to maturity of any discount or premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
CHANGE IN ACCOUNTING FOR THE COST OF INVESTMENTS. Effective October 1,
1992, the fund changed its method of accounting for the cost of investments
from the average cost method to the specific identification method. The new
method of accounting for the cost of investments was adopted because it
better matches specific costs with proceeds from sales of securities and
more closely conforms realized gains with related distributions. The change
in accounting had no effect on the fund's net assets, net asset value per
share, its net increase (decrease) in net assets resulting from operations
or its distributions. The change in accounting also had no effect on net
accumulated realized gain on investments previously reported through
September 30, 1992.
2. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. A the fund's investment adviser, FMR receives a monthly fee
that is calculated on the basis of a group fee rate plus a fixed individual
fund fee rate applied to the average net assets of the fund. The group fee
rate is the weighted average of a series of rates ranging from .14% to .37%
and is based on the monthly average net assets of all the mutual funds
advised by FMR. The annual individual fund fee rate is .28%. For the
period, the management fee was equivalent to an annualized rate of .45% of
average net assets.
SUB-ADVISER FEE. As the fund's investment sub-adviser, FMR Texas Inc., a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect, and after reducing the fee
for any payments by FMR pursuant to the fund's Distribution and Service
Plan.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
fund's transfer, dividend disbursing and shareholder servicing agent. FSC
receives fees based on the type, size, number of accounts and the number of
transactions made by shareholders. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEE. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19200 Von Karman Avenue
Irvine, CA
1800 Avenue of the Stars
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
2101 Hurley Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
32 West Central Boulevard
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road, South
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
107 Exchange Street
Portland, ME
MARYLAND
5 West Baltimore Street
Baltimore, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
44 Front Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
1 North Broadway
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
175 East Houston Street
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8300 Boone Boulevard
Vienna, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1800 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Leland Barron, Vice President
Thomas D. Maher, Assistant
Vice President
Gary L. French, Treasurer
John H . Costello, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox
Richard J. Flynn
Edward C. Johnson 3d
E. Bradley Jones
Donald J. Kirk
Peter S. Lynch
Edward H. Malone
Gerald C. McDonough
Thomas R. Williams
Bertram H. Witham
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Morgan Guaranty Trust Co. of New York
New York, NY
FIDELITY'S TAXABLE
MONEY MARKET FUNDS
Fidelity Cash Reserves
Fidelity Daily Income Trust
Fidelity U.S. Government Reserves
Spartan Money Market Fund
Spartan U.S. Government
Money Market Fund
Spartan U.S. Treasury
Money Market Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Assistance 1-800-544-6666
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
FAST 1-800-544-6600
Mutual Fund Quotes 1-800-544-8544
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
Tax Reporting 1-800-544-1877
TDD Service 1-800-544-0118
(for the deaf and hearing impaired)
(9 a.m. - 9 p.m. Eastern time)
