SPARTAN
(registered trademark)
(registered trademark)
U.S. TREASURY
MONEY MARKET
FUND
SEMIANNUAL REPORT
JANUARY 31, 1995
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 8 A summary of major shifts in the
fund's investments over the past six
months
and one year.
INVESTMENTS 9 A complete list of the fund's
investments with their market value.
FINANCIAL STATEMENTS 11 Statements of assets and liabilities,
operations, and changes in net
assets, as well as financial
highlights.
NOTES 15 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE
PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD OR
ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF
PRINCIPAL. NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A
BANK. FOR MORE
INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES, CALL
1-800-544-8888
FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although there have been a few positive market indications so far in 1995,
no one can predict what lies ahead for investors. Last year, stocks posted
below-average returns and bonds had one of the worst years in history. This
downturn followed a period in which the investing environment was almost
ideal.
These market ups and downs are a normal part of investing, and there are
some basic principles that can help investors in every type of market.
First, take a long-term approach when investing. If you can afford to leave
your money invested through the inevitable ups and downs of financial
markets, you will greatly reduce your vulnerability to any single decline.
Over time, for example, stock prices have gone up - and have significantly
outperformed other types of investments and stayed ahead of inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.SM
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects the change in a fund's share price
over a given period, reinvestment of its dividends (or income), and the
effect of a $5 account closeout fee. Yield measures the income paid by a
fund. Since a money market fund tries to maintain a $1 share price, yield
is an important measure of performance. If Fidelity had not reimbursed
certain fund expenses during the periods shown, the total returns and
yields would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1995 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
Spartan U.S. Treasury Money Market 2.29% 3.92% 26.25% 47.00%
Average 100% U.S. Treasury
Money Market Fund 2.18% 3.73% 24.53% n/a
Consumer Price Index 1.28% 2.80% 17.97% 30.24%
CUMULATIVE TOTAL RETURNS reflect actual performance over a specific period
- in this case, six months, one year, five years, or since the fund started
on January 5, 1988. 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. To measure
how the fund stacked up against its peers, you can compare its return to
the average 100% U.S. Treasury money market fund's total returns. The
fund's performance is now measured against this category of funds because
their investment objectives most closely mirror those of the fund. This
peer group average currently reflects the performance of 36 100% U.S.
Treasury money market funds tracked by IBC/Donoghue. Comparing the fund's
performance to the consumer price index (CPI) helps show how your
investment did compared to inflation. (The periods covered by the CPI and
IBC/Donoghue numbers are the closest available match to those covered by
the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JANUARY 31, 1995 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
Spartan U.S. Treasury Money Market 3.92% 4.77% 5.59%
Average 100% U.S. Treasury
Money Market Fund 3.73% 4.48% n/a
Consumer Price Index 2.80% 3.36% 3.80%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1/31/94 4/30/94 7/31/94 10/31/94 1/31/95
Spartan U.S. Treasury 2.76% 3.05% 3.87% 4.40% 5.18%
Money Market
If Fidelity had not reimburs 2.66% 2.95% 3.77% 4.30% 5.08%
ed
certain fund expenses
Average 100% 2.59% 2.93% 3.57% 4.20% 4.91%
U.S. Treasury
Money Market Fund
2.30% 2.31% 2.40% 2.54% 2.78%
MMDA
</TABLE>
Spartan
U.S. Treasury
Money Market
Average 100%
U.S. Treasury
Money Market
Fund
MMDA
Row: 1, Col: 1, Value: 2.76
Row: 1, Col: 2, Value: 2.59
Row: 1, Col: 3, Value: 2.3
Row: 2, Col: 1, Value: 3.05
Row: 2, Col: 2, Value: 2.93
Row: 2, Col: 3, Value: 2.31
Row: 3, Col: 1, Value: 3.87
Row: 3, Col: 2, Value: 3.57
Row: 3, Col: 3, Value: 2.4
Row: 4, Col: 1, Value: 4.4
Row: 4, Col: 2, Value: 4.2
Row: 4, Col: 3, Value: 2.54
Row: 5, Col: 1, Value: 5.18
Row: 5, Col: 2, Value: 4.91
Row: 5, Col: 3, Value: 2.78
6% -
5% -
4% -
3% -
2% -
1% -
0%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. If the
adviser had not reimbursed certain portfolio expenses during the periods
shown, the yields would have been lower. You can compare these yields to
the average 100% U.S. Treasury money market fund and the average bank money
market deposit account (MMDA). Figures for the average 100% U.S. Treasury
money market are from IBC/Donoghue. The MMDA average is supplied by BANK
RATE MONITOR,(Trademark) at month end.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST
RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
There are some important
differences between a bank
money market deposit
account (MMDA) and a
money market fund. First, the
U.S. government neither
insures nor guarantees a
money market fund. In fact,
there is no assurance that a
money market fund will
maintain a $1 share price.
Second, a money market
fund returns to its
shareholders income earned
by the fund's investments
after expenses. This is in
contrast to banks, which set
their MMDA rates periodically
based on current interest
rates, competitors' rates, and
internal criteria.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Leland Barron, Portfolio Manager of Spartan U.S. Treasury
Money Market Fund
Q. LELAND, INTEREST RATES KEPT CLIMBING DURING THE SECOND HALF OF 1994. CAN
YOU BRING US UP TO DATE?
A. The Federal Reserve has continued to tighten its monetary policy by
raising rates, although the pattern of action has changed. Last February
the Fed began a series of frequent, modest increases in the federal funds
rate - what banks charge each other for overnight loans. Lately those
increases have been fewer and further between, but they've also been more
dramatic. After three successive quarter-point increases, we saw the first
half-point increase in May. That brought the federal funds rate up to 4.25%
at the beginning of the period. Since then we've had another half-point
increase in August and a three-quarter-point increase in November. By the
end of the period, the federal funds rate was 5.50%. I should point out
that the Fed acted again on February 1, after the period ended, raising the
rate to 6.00%.
Q. WHY HAVE RATES KEPT RISING DESPITE MODEST INFLATION NUMBERS?
A. I believe the Fed has made it plain that when it comes to battling
inflation, it's determined to err on the side of caution. The Fed's main
concern is the continuing high level of economic activity. Preliminary
estimates indicate that the economy grew at a 4.5% rate during the fourth
quarter of 1994 and finished the year at 4.0% overall. That's substantially
above the Fed's target growth rate of 2.5%. Lately I've begun seeing signs
that the economy may be slowing down, but that's a recent development.
Throughout 1994, the Fed probably felt it had no choice but to keep raising
rates.
Q. HOW DID YOU POSITION THE FUND DURING THE PERIOD?
A. When rates are rising, it usually makes sense to shorten the fund's
average maturity. Throughout the period, the fund's average maturity
fluctuated between 50 and 60 days, what I consider to be a neutral range.
The main reason I chose not to go any shorter is that in a rising-rate
environment, investors sometimes overestimate how high rates will go. I
think that was the case last year, and it helped create buying
opportunities for the fund in securities with three- to six-month
maturities.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on January 31, 1995, was 5.18%, compared to
3.87% six months ago. The difference primarily reflects the continuing rise
in short-term interest rates. From July 31, 1994, through January 31, 1995,
the fund's total return was 2.29%. That beat the average total return of
2.18% for all 100 % U.S. Treasury money market funds during the same
period, according to IBC/Donoghue.
Q. WHAT'S YOUR OUTLOOK FOR THE
ECONOMY?
A. In my view, there are tentative signs that the economy may finally be
slowing down. After so many months of steadily falling unemployment, high
capacity utilization and rising commodity prices, the latest evidence would
seem to suggest that the Fed policy is having the intended effect - putting
the brakes on economic activity. If the data continue to support that
conclusion as we head into spring, then the Fed might be much less anxious
to continue raising rates. However, I think it's too early to say we've hit
the peak, and rates are going to start coming down. We could still see a
7.00% federal funds rate by year's end. I may therefore extend the fund's
average maturity slightly in the months ahead - perhaps closer to 60 days
than 50 days - but I'll probably aim to stay within a neutral range.
FUND FACTS
GOAL: income and stability by
investing in money market
investments issued and
guaranteed by the U.S.
government
START DATE: January 5, 1988
SIZE: as of January 31,1995,
more than $1.6 billion
MANAGER: Leland Barron,
since January 1991; also
manages Fidelity U.S.
Government Reserves, since
January 1991; and Spartan
U.S. Government Money
Market Fund, since February
1990; joined Fidelity in 1981
(checkmark)
WORDS TO KNOW
AVERAGE MATURITY: The
average maturity of debt
securities in a fund, weighted
by dollar amount. When the
average maturity is short, the
fund manager believes
interest rates will rise. When
the average maturity is long,
the fund manager is expecting
rates to fall. When the
average maturity is neutral,
the fund manager wants to
have the flexibility to respond
to rising rates, while still
capturing a portion of the
higher yields available from
issues with longer maturities.
DISCOUNT RATE: The interest
rate the Federal Reserve
charges member banks for
loans.
FEDERAL FUNDS RATE: The
interest rate banks charge
each other for overnight
loans.
FEDERAL RESERVE: The
system designed to regulate
the U.S. monetary and
banking system. If the Fed
tightens the money supply, it
decreases the amount of
money available to the
banking system, which
generally causes interest
rates to rise.
MATURITY: The amount of time
remaining until a debt security
is scheduled to be redeemed.
TREASURY OBLIGATION: Debt
security issued directly by the
U.S. government. Payment of
principal and interest is
guaranteed.
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS
1/31/95 7/31/94 1/31/94
0 - 30 31 27 26
31 - 90 56 45 37
91 - 180 11 28 24
181 - 397 2 0 13
WEIGHTED AVERAGE MATURITY
1/31/95 7/31/94 1/31/94
Spartan U.S. Treasury
Money Market Fund 56 days 65 days 86 days
Average 100% U.S.
Treasury Money
Market Fund* 44 days 43 days 64 days
ASSET ALLOCATION
AS OF JANUARY 31, 1995 AS OF JULY 31, 1994
Row: 1, Col: 1, Value: 60.0
Row: 1, Col: 2, Value: 40.0
Row: 1, Col: 1, Value: 58.0
Row: 1, Col: 2, Value: 42.0
U.S. Treasury
bills 60%
U.S. Treasury
notes 40%
U.S. Treasury
bills 58%
U.S. Treasury
notes 42%
* SOURCE: IBC/DONOGHUE'S MONEY FUND REPORT(registered trademark)
INVESTMENTS JANUARY 31, 1995 (UNAUDITED)
Showing Percentage of Total Value of Investments
U.S. TREASURY OBLIGATIONS - 100.0%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
U.S. TREASURY BILLS - 59.6%
2/2/95 4.88% $ 11,474 $ 11,472 9931348D
2/2/95 5.12 21,434 21,431 9931349R
2/2/95 5.34 45,839 45,832 99399H8G
2/9/95 5.05 2,051 2,049 9931347J
2/9/95 5.30 3,953 3,948 99399H7V
2/9/95 5.33 25,000 24,971 99399H7Y
2/9/95 5.44 40,000 39,952 99399H8E
2/23/95 5.64 8,683 8,654 99399H9L
3/2/95 5.67 35,693 35,532 99399H8U
3/2/95 5.68 2,300 2,290 99399H9W
3/2/95 5.73 22,801 22,697 99399H9Q
3/9/95 5.49 60,000 59,676 99399H7X
3/9/95 5.65 50,000 49,721 9127939A
3/9/95 5.72 24,608 24,469 99399H9N
3/9/95 5.80 627 623 99399H9U
3/16/95 5.20 3,571 3,549 9931348T
3/16/95 5.37 11,336 11,265 9931349W
3/16/95 5.39 31,613 31,414 99399H7L
3/16/95 5.62 30,000 29,801 9127939K
3/16/95 5.67 25,000 24,833 9127939B
3/16/95 5.71 30,000 29,799 99399H8W
3/23/95 5.51 3,746 3,718 99399H7S
3/23/95 5.67 60,000 59,534 9127939J
3/23/95 5.68 50,000 49,612 99399H8S
3/23/95 5.72 24,564 24,372 99399H8X
4/6/95 5.49 24,243 24,012 9931349P
4/6/95 5.75 10,788 10,680 9127939R
4/6/95 5.81 5,433 5,378 9127939E
4/6/95 5.83 60,002 59,389 912992EU
4/6/95 5.89 21,478 21,257 9127939T
4/13/95 5.44 1,101 1,089 9931349L
4/13/95 5.73 112,165 110,917 9127939M
4/13/95 5.74 3,411 3,373 912992JV
4/13/95 5.87 1,651 1,632 9127939F
4/20/95 5.72 1,489 1,471 99399H7R
4/20/95 5.80 74,545 73,615 912992HW
4/20/95 5.87 10,000 9,875 912992HV
4/27/95 5.91 11,266 11,112 912992GV
5/4/95 5.68 27,500 27,112 9931349X
5/4/95 6.10 20,625 20,310 912992BV
5/18/95 5.97 4,635 4,556 99399H8M
1,006,992
U.S. TREASURY OBLIGATIONS - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
U.S. TREASURY NOTES - 40.4%
2/15/95 4.98% $ 1,675 $ 1,677 993993JJ
2/15/95 5.01 24,368 24,392 993993JB
2/15/95 5.22 49,500 49,543 993993ME
2/15/95 5.28 5,749 5,749 993993LV
2/15/95 5.32 1,187 1,188 993993MM
2/15/95 5.33 10,000 10,021 993993RP
2/15/95 5.43 5,884 5,884 993993NN
2/15/95 5.45 1,310 1,311 993993PH
2/15/95 5.56 25,706 25,703 993993RT
2/28/95 5.03 28,170 28,146 993993JG
2/28/95 5.06 7,243 7,237 993993JF
2/28/95 5.36 30,000 29,966 993993MP
2/28/95 5.39 2,458 2,455 993993ML
2/28/95 5.46 50,000 49,940 993993LN
2/28/95 5.55 54,287 54,215 993993RU
3/31/95 5.53 75,000 74,789 993993RV
3/31/95 5.57 28,000 27,920 993993RW
4/30/95 5.94 2,464 2,451 993993QG
4/30/95 6.04 7,455 7,414 993993RY
4/30/95 6.18 30,000 29,827 993993RN
4/30/95 6.24 1,616 1,607 993993QM
4/30/95 6.26 39,000 38,769 993993RE
4/30/95 6.28 19,924 19,805 993993RL
5/15/95 5.75 4,824 4,823 993993MV
5/15/95 6.09 14,688 14,782 993993RX
5/15/95 6.33 45,000 45,261 993993RD
5/15/95 6.38 3,016 3,033 993993RM
5/31/95 6.13 72,467 71,976 993993SD
7/31/95 6.29 41,951 41,505 993993SA
681,389
TOTAL INVESTMENTS - 100% $ 1,688,381
Total Cost for Income Tax Purposes $ 1,688,381
INCOME TAX INFORMATION
At July 31, 1994 the fund had a capital loss carryforward of approximately
$313,000 of which $27,000 and $286,000 will expire on July 31, 2001 and
2002, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) JANUARY 31, 1995 (UNAUDITED)
1.ASSETS 2. 3.
4.Investment in securities, at value - See accompanying 5. $ 1,688,381
schedule
6.Cash 7. 1,086
8.Interest receivable 9. 11,193
10. 11.TOTAL ASSETS 12. 1,700,660
13.LIABILITIES 14. 15.
16.Dividends payable $ 180 17.
18.Accrued management fee 653 19.
20. 21.TOTAL LIABILITIES 22. 833
23.24.NET ASSETS 25. $ 1,699,827
26.Net Assets consist of: 27. 28.
29.Paid in capital 30. $ 1,699,923
31.Accumulated net realized gain (loss) on investments 32. (96)
33.34.NET ASSETS, for 1,699,923 shares outstanding 35. $ 1,699,827
36.37.NET ASSET VALUE, offering price and redemption 38. $1.00
price per share ($1,699,827 (divided by) 1,699,923 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS ENDED JANUARY 31, 1995 (UNAUDITED)
39.40.INTEREST INCOME 41. $ 39,955
42.EXPENSES 43. 44.
45.Management fee $ 4,413 46.
47.Non-interested trustees' compensation 4 48.
49. Total expenses before reductions 4,417 50.
51. Expense reductions (803) 3,614
52.53.NET INTEREST INCOME 54. 36,341
55.56.NET REALIZED GAIN (LOSS) ON INVESTMENTS 57. 86
58.59.NET INCREASE IN NET ASSETS RESULTING FROM 60. $ 36,427
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNTS IN THOUSANDS SIX MONTHS YEAR
ENDED ENDED
JANUARY 31, 1995 JULY 31,
(UNAUDITED) 1994
61.INCREASE (DECREASE) IN NET ASSETS
62.Operations $ 36,341 $ 47,134
Net interest income
63. Net realized gain (loss) 86 (286)
64. 65.NET INCREASE (DECREASE) IN NET ASSETS 36,427 46,848
RESULTING FROM OPERATIONS
66.Dividends to shareholders from net interest income (36,341) (47,134)
67.Share transactions at net asset value of $1.00 per 982,314 1,347,224
share
Proceeds from sales of shares
68. Reinvestment of dividends from net interest income 34,548 44,987
69. Cost of shares redeemed (873,522) (1,584,846)
70. Net increase (decrease) in net assets and shares 143,340 (192,635)
resulting from share transactions
71. 72.TOTAL INCREASE (DECREASE) IN NET ASSETS 143,426 (192,921)
73.NET ASSETS 74. 75.
76. Beginning of period 1,556,401 1,749,322
77. End of period $ 1,699,827 $ 1,556,401
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
78. SIX MONTHS YEARS ENDED JULY 31, SEVEN MONT YEAR
ENDED HS ENDED
JANUARY 31, 1995 ENDED DECEMBER 3
JULY 31, 1,
79. (UNAUDITED) 1994 1993 1992 1991 1990 1989
80.SELECTED PER-SHARE DATA
81.Net asset value,
beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
82.Income from
Investment Operations .023 .030 .028 .046 .069 .044 .080
Net interest income
83. Dividends from net
interest income (.023) (.030) (.028) (.046) (.069) (.044) (.080)
84.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
85.TOTAL RETURN B 2.29% 2.99% 2.87% 4.70% 7.12% 4.51% 8.31%
86.RATIOS AND SUPPLEMENTAL DATA
87.Net assets, end of period (in millions) $ 1,700 $ 1,556 $ 1,749 $ 2,475 $ 2,696 $ 364 $ 115
88.Ratio of expenses to average net
assets C .45%A .45% .42% .25% .06% .33%A .63%
89.Ratio of expenses to average net assets .55%A .55% .55% .55% .56% .76%A .91%
before expense reductions C
90.Ratio of net interest income to average
net assets 4.53%A 2.94% 2.85% 4.61% 6.60% 7.79%A 8.01%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS WOULD HAVE BEEN
LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN.
C SEE NOTE 3 OF NOTES TO FINANCIAL STATEMENTS.
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
For the period ended January 31, 1995 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Spartan U.S. Treasury Money Market Fund (the fund) is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Massachusetts business trust
and is authorized to issue an unlimited number of shares. The following
summarizes the significant accounting policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
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. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management &
Research Company (FMR) pays all expenses, including the cost of providing
shareholder services, except the compensation of the non-interested
Trustees and certain exceptions such as interest, taxes, brokerage
commissions and extraordinary expenses. FMR receives a fee that is computed
daily at an annual rate of .55% of the fund's average net assets.
To offset the cost of providing shareholder services, FMR or its affiliates
collect certain transaction fees from the fund's shareholders which
amounted to $26,287 for the period.
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.
3. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the fund's operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of .45% of average net assets. For the
period, the reimbursement reduced the expenses by $803,000.
INVESTMENT ADVISER
(registered trademark)
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
Fred L. Henning, Jr., Vice President
Thomas D. Maher, Assistant
Vice President
Arthur S. Loring, Secretary
Stephen P. Jonas, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox*
Phyllis Burke Davis*
Richard J. Flynn*
Edward C. Johnson 3d
E. Bradley Jones*
Donald J. Kirk*
Peter S. Lynch
Edward H. Malone*
Marvin L. Mann*
Gerald C. McDonough*
Thomas R. Williams*
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Morgan Guaranty Trust Co. of New York
New York, NY
FIDELITY'S TAXABLE
MONEY MARKET FUNDS
Fidelity Cash Reserves
Fidelity Daily Income Trust
Fidelity U.S. Government Reserves
Spartan Money Market Fund
Spartan U.S. Government
Money Market Fund
Spartan U.S. Treasury
Money Market Fund
THE FIDELITY
TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
