SPARTAN(REGISTERED TRADEMARK)
MONEY MARKET
FUND
SEMIANNUAL REPORT
OCTOBER 31, 1998
(FIDELITY_LOGO_GRAPHIC) (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.
INVESTMENTS 9 A complete list of the fund's investments.
FINANCIAL STATEMENTS 21 Statements of assets and liabilities,
operations, and changes in net assets,
as well as financial highlights.
NOTES 25 Notes to the financial statements.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
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,
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:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
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. 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 and the effect of the fund's $5 account closeout fee
on an average-sized account. 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 year and life of fund total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
SPARTAN MONEY MARKET 2.65% 5.38% 28.21% 71.74%
All Taxable Money Market Funds Average 2.53% 5.13% 26.45% n/a
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 since the fund started on January 23, 1989. 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 889 money market funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
SPARTAN MONEY MARKET 5.38% 5.10% 5.69%
All Taxable Money Market Funds Average 5.13% 4.81% n/a
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
11/3/98 7/28/98 4/28/98 2/3/98 10/28/97
Spartan Money Market Fund 5.02% 5.25% 5.23% 5.34% 5.30%
All Taxable Money Market 4.72% 5.01% 5.00% 5.08% 5.03%
Funds Average
10/28/98 7/29/98 4/29/98 1/28/98 10/29/97
MMDA 2.45% 2.54% 2.52% 2.55% 2.65%
Row: 1, Col: 1, Value: 5.02
Row: 1, Col: 2, Value: 4.72
Row: 1, Col: 3, Value: 2.45
Row: 2, Col: 1, Value: 5.25
Row: 2, Col: 2, Value: 5.01
Row: 2, Col: 3, Value: 2.54
Row: 3, Col: 1, Value: 5.23
Row: 3, Col: 2, Value: 5.0
Row: 3, Col: 3, Value: 2.52
Row: 4, Col: 1, Value: 5.34
Row: 4, Col: 2, Value: 5.08
Row: 4, Col: 3, Value: 2.55
Row: 5, Col: 1, Value: 5.3
Row: 5, Col: 2, Value: 5.03
Row: 5, Col: 3, Value: 2.64
Spartan Money
Market Fund
All Taxable Money
Market Funds
Average
MMDA
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. 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).
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)
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
An interview with John Todd, Portfolio Manager of Spartan Money Market
Fund
Q. JOHN, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE SIX-MONTH
PERIOD THAT ENDED OCTOBER 31, 1998?
A. Despite continued strong domestic consumption, real GDP - gross
domestic product adjusted for inflation - slowed to a 1.8% annual rate
in the second quarter of 1998 from 5.5% in the first. This slowdown
reflected, in part, the effects of the Asian economic crisis and its
influence on trade and inventories. Expectations of a slowdown in
domestic growth resulted in a downward revision to corporate profit
projections. This factor, combined with Russia's mid-August currency
devaluations and default on its short-term debt, sparked declines in
stock market indexes that had reached record highs earlier in the
third quarter, and caused the yield differential between U.S.
Treasuries and all other debt obligations to widen considerably. In
addition, falling commodity prices hurt Canada - one of the main
trading partners of the U.S. - forcing that country's central bank to
raise interest rates to keep its currency from continuing to drop in
value. We saw similar currency drops and interest-rate hikes in Latin
America, where the U.S. also trades a great deal. Fears arose that
this "Asian contagion" would start to erode U.S. economic growth and
lead to further problems in both the economy and the capital markets,
which were rocked by the well-publicized problems encountered by
several highly leveraged hedge funds.
Q. HOW DID THIS BACKDROP AFFECT MONETARY POLICY?
A. Up until mid-July, it was commonly believed that the Federal
Reserve Board might raise the rate banks charge each other for
overnight loans - the fed funds rate - to slow economic growth and
head off inflation. The Fed maintained a bias toward raising rates
until its September meeting, when it cut the fed funds rate by 0.25
percentage points to 5.25%. Explaining that it was trying to head off
slower growth in the future, the Fed's cut came amid further
deterioration in the financial markets generally and growing problems
with liquidity in the fixed-income markets specifically. Three weeks
later on October 15, the Fed - acting out of character by making an
announcement between meetings of its Open Market Committee - cut
short-term interest rates an additional one-quarter percentage point
to 5.00%, where the Fed funds rate stood at the end of the period.
This move came in response to a continued deterioration in the
fixed-income markets, and was an attempt on the Fed's part to try to
avoid a "credit crunch" - where lenders hold back from lending to even
the most creditworthy borrowers.
Q. WHAT STRATEGY DID YOU PURSUE WITH THE FUND?
A. Throughout the period, I kept the fund's average maturity longer
than the average of its peers. In the beginning of the period, the
best opportunities were found on either end of the maturity spectrum,
so I pursued a barbell strategy - focusing on investments with very
short maturities on the one hand and one-year securities on the other.
When the economic outlook started to deteriorate and the outlook
called for declining interest rates, I looked for opportunities to
maintain the fund's maturity, shifting investments from the one-year
securities to those in the three- to six-month range. Those maturities
offered the most attractive rates and were also appealing from a
credit standpoint, given the growing uncertainty in the market about
different issuers' exposure to hedge fund-related problems.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on October 31, 1998, was 5.04%, compared
to 5.23% six months ago. For the six months that ended October 31,
1998, the fund had a total return of 2.65%, compared to 2.53% for the
all taxable money market funds average, according to IBC Financial
Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. It appears that the Fed will probably lower interest rates at least
one more time before the end of the year, and then stand back to watch
what develops. While we've seen some improvements in the financial
markets since the Fed's latest rate decrease, things were not back to
normal at the end of October. While we probably will see the Fed drop
rates again, I think it is concerned about being too aggressive with
interest-rate cuts, especially when interest-rate-sensitive sectors in
the economy, such as housing and capital goods like automobiles, are
doing reasonably well. In the end, the Fed wants to make sure that it
has provided enough liquidity to the system and lowered rates enough
so that major financial dislocations are avoided - especially going
into the end of the calendar year, which tends to be a period of
volatility - without over-stimulating the economy.
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. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: SEEKS HIGH CURRENT INCOME
WITH SHARE PRICE STABILITY BY
INVESTING IN HIGH-QUALITY,
SHORT-TERM MONEY MARKET
SECURITIES OF ALL TYPES
FUND NUMBER: 454
TRADING SYMBOL: SPRXX
START DATE: JANUARY 23, 1989
SIZE: AS OF OCTOBER 31, 1998,
MORE THAN $9.7 BILLION
MANAGER: JOHN TODD, SINCE
1989; MANAGER, SEVERAL
FIDELITY TAXABLE MONEY MARKET
FUNDS; JOINED FIDELITY IN 1981
(CHECKMARK)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND'S % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS INVESTMENTS
10/31/98 4/30/98 10/31/97
0 - 30 28 45 45
31 - 90 33 26 26
91 - 180 33 20 20
181 - 397 6 9 9
WEIGHTED AVERAGE MATURITY
10/31/98 4/30/98 10/31/97
Spartan Money Market Fund 73 DAYS 73 Days 75 Days
All Taxable Money Market 58 DAYS 58 Days 55 Days
Funds Average *
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998 AS OF APRIL 30, 1998
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 0.0
Row: 1, Col: 3, Value: 36.0
Row: 1, Col: 4, Value: 64.0
Bank CDs, BAs,
TDs, and notes 64%
Commercial paper 35%
Government
securities 1%
Other 0%
Bank CDs, BAs,
TDs, and notes 64%
Commercial paper 36%
Government
securities 0%
Other 0%
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 1.5
Row: 1, Col: 3, Value: 35.0
Row: 1, Col: 4, Value: 63.5
*SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
INVESTMENTS OCTOBER 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
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CERTIFICATES OF DEPOSIT - 44.5%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
DOMESTIC CERTIFICATES OF DEPOSIT - 4.3%
Bank of America National Trust & Savings Association
3/24/99 5.34% $ 55,000 $ 55,000
Chase Manhattan Bank
3/22/99 4.95 100,000 100,000
Chase Manhattan Bank (USA)
2/22/99 5.00 10,000 10,000
CoreStates Bank NA, Philadelphia
11/9/98 5.38 (b) 5,000 5,000
First Union National Bank of North Carolina
3/9/99 5.42 70,000 70,000
4/12/99 5.44 45,000 45,000
Morgan Guaranty Trust Co., NY
12/8/98 5.29 30,000 30,000
12/9/98 5.29 25,000 25,000
12/14/98 5.29 75,000 75,000
3/22/99 4.95 11,000 11,000
426,000
LONDON BRANCH, EURODOLLAR, DOMESTIC BANKS - 1.0%
NationsBank NA
2/16/99 5.60 40,000 40,000
3/2/99 5.50 55,000 55,000
95,000
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 16.3%
Abbey National Treasury Services PLC
12/3/98 5.50 25,000 25,000
12/10/98 5.50 90,000 90,001
12/23/98 5.62 75,000 75,000
12/28/98 5.43 60,000 60,000
12/29/98 5.62 50,000 50,000
3/15/99 5.15 135,000 135,000
ABN-AMRO Bank NV
12/22/98 5.12 35,000 35,000
Bank of Scotland Treasury Services
11/9/98 5.58 45,000 45,000
11/30/98 5.35 15,000 15,000
12/29/98 5.62 30,000 30,000
2/22/99 5.03 20,000 20,001
CERTIFICATES OF DEPOSIT - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - CONTINUED
Barclays Bank PLC
12/14/98 5.28% $ 35,000 $ 35,000
12/17/98 5.60 50,000 50,000
12/29/98 5.64 100,000 100,000
Bayerische Hypo-und Vereinsbank AG
12/18/98 5.26 18,000 18,000
Commerzbank AG
12/2/98 5.22 28,000 28,006
12/31/98 5.13 50,000 50,000
Dresdner Bank AG
12/22/98 5.62 50,000 50,001
Halifax PLC
11/12/98 5.33 75,000 75,000
11/30/98 5.24 50,000 50,000
12/1/98 5.19 65,000 65,000
12/11/98 5.41 81,000 81,005
2/16/99 5.60 50,000 50,004
RaboBank Nederland Coop. Central
11/9/98 5.33 90,000 90,000
12/1/98 5.18 50,000 50,000
Societe Generale, France
11/2/98 5.29 15,000 15,000
Svenska Handelsbanken
12/1/98 5.19 30,000 30,000
12/17/98 5.41 35,000 35,000
12/29/98 5.13 45,000 45,000
2/8/99 5.39 20,000 20,000
Toronto Dominion Bank
11/5/98 5.28 85,000 85,000
Westpac Banking Corp.
12/14/98 5.30 5,000 5,000
1,607,018
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 22.9%
ABN-AMRO Bank NV
6/7/99 5.76 30,000 29,990
Bank of Montreal, Canada
11/9/98 5.30 40,000 40,000
CERTIFICATES OF DEPOSIT - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - CONTINUED
Bank of Nova Scotia
3/5/99 5.75% $ 30,000 $ 29,994
Banque Nationale de Paris
11/9/98 5.35 20,000 20,000
12/11/98 5.41 25,000 25,002
12/14/98 5.41 25,000 25,000
Barclays Bank PLC
11/12/98 5.33 75,000 75,000
3/23/99 5.45 10,000 10,001
Bayerische Hypo-und Vereinsbank AG
12/10/98 5.47 60,000 60,000
2/26/99 5.70 75,000 74,988
3/10/99 5.40 60,000 60,000
Canadian Imperial Bank of Commerce
11/4/98 5.55 70,000 70,000
12/1/98 5.54 55,000 55,000
12/2/98 5.26 38,000 38,000
12/21/98 5.12 20,000 20,000
3/2/99 5.70 55,000 54,989
Credit Agricole Indosuez
2/26/99 5.70 20,000 19,998
4/28/99 5.81 60,000 59,989
4/30/99 5.87 55,000 54,984
Credit Communale de Belgique
11/2/98 5.50 15,000 15,000
12/21/98 5.62 25,000 25,000
2/3/99 5.64 40,000 40,000
Deutsche Bank AG
2/10/99 5.60 25,000 24,997
2/11/99 5.60 20,000 20,000
3/5/99 5.75 60,000 59,989
Dresdner Bank AG
2/16/99 5.34 65,000 65,000
National Westminster Bank PLC
12/4/98 5.51 25,000 25,000
2/26/99 5.70 60,000 59,993
3/2/99 5.70 55,000 54,991
6/7/99 5.75 50,000 49,981
CERTIFICATES OF DEPOSIT - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - CONTINUED
Norddeutsche Landesbank Girozentrale
7/26/99 5.73% $ 50,000 $ 49,981
RaboBank Nederland Coop. Central
3/2/99 5.45 50,000 49,999
5/5/99 5.83 15,000 14,996
6/4/99 5.75 40,000 39,984
Royal Bank of Canada
2/10/99 5.60 55,000 54,992
2/26/99 5.70 20,000 19,996
6/11/99 5.80 50,000 49,980
Royal Bank of Scotland PLC
2/24/99 5.58 25,000 25,000
Societe Generale, France
2/26/99 5.53 10,000 10,000
Swiss Bank Corp.
12/16/98 5.55 25,600 25,608
3/19/99 5.70 75,000 74,981
4/30/99 5.87 55,000 54,984
6/3/99 5.75 75,000 74,971
Toronto Dominion Bank
2/11/99 5.60 40,000 40,000
6/4/99 5.75 50,000 49,980
7/26/99 5.73 40,000 39,983
Westdeutsche Landesbank Girozentrale
12/21/98 5.12 125,000 125,000
2/4/99 5.64 50,000 50,000
2/8/99 5.61 30,000 30,000
2/8/99 5.63 45,000 45,000
2/9/99 5.18 60,000 60,000
2,248,321
TOTAL CERTIFICATES OF DEPOSIT 4,376,339
COMMERCIAL PAPER - 35.5%
AC Acquisition Holding Co.
12/14/98 5.44 25,000 24,840
American Express Credit Corp.
2/3/99 5.45 25,000 24,652
2/18/99 5.37 50,000 49,205
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Aspen Funding Corp.
11/18/98 5.60% $ 45,000 $ 44,883
11/23/98 5.60 25,000 24,916
2/24/99 5.60 25,000 24,565
Asset Securitization Coop. Corp.
11/4/98 5.60 25,000 24,989
12/7/98 5.59 40,000 39,780
12/8/98 5.59 70,000 69,604
12/9/98 5.28 10,000 9,945
1/28/99 5.31 44,500 43,930
AVCO Financial Services, Inc.
12/9/98 5.59 20,000 19,884
CIT Group, Inc.
2/3/99 5.50 25,000 24,649
2/17/99 5.40 15,000 14,762
3/11/99 5.34 25,000 24,531
Citibank Credit Card Master Trust I (Dakota Certificate Program)
12/10/98 5.49 10,000 9,941
12/10/98 5.51 25,000 24,853
1/21/99 5.32 25,000 24,705
2/8/99 5.30 15,000 14,785
Cregem North America, Inc.
12/3/98 5.51 50,000 49,759
Delaware Funding Corp.
11/17/98 5.53 15,000 14,963
12/16/98 5.22 15,000 14,903
Den Danske Corp., Inc.
12/29/98 5.12 15,000 14,877
Deutsche Bank Financial, Inc.
11/12/98 5.59 50,000 49,916
11/13/98 5.59 75,000 74,862
11/16/98 5.36 100,000 99,778
11/19/98 5.17 11,000 10,972
du Pont (E.I.) de Nemours & Co.
11/5/98 5.28 10,000 9,994
Enterprise Funding Corp.
12/10/98 5.23 15,000 14,915
1/21/99 5.30 5,000 4,941
1/22/99 5.32 10,000 9,880
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Finova Capital Corp.
11/2/98 5.63% $ 10,000 $ 9,998
11/20/98 5.50 7,000 6,980
Ford Motor Credit Co.
12/3/98 5.52 25,000 24,879
2/1/99 5.61 25,000 24,651
General Electric Capital Corp.
11/12/98 5.59 80,000 79,865
12/17/98 5.49 69,000 68,523
2/17/99 5.60 45,000 44,264
2/22/99 5.58 25,000 24,574
2/23/99 5.58 80,000 78,624
General Electric Capital Services, Inc.
2/16/99 5.46 50,000 49,208
2/18/99 5.04 60,000 59,101
General Electric Co.
2/10/99 5.11 30,000 29,577
General Motors Acceptance Corp.
11/6/98 5.44 50,000 49,963
11/12/98 5.62 35,000 34,941
11/18/98 5.58 25,000 24,935
1/26/99 5.67 35,000 34,540
1/28/99 5.13 80,000 79,010
2/9/99 5.16 150,000 147,879
Generale de Banque SA
12/10/98 5.50 10,000 9,941
2/8/99 5.61 25,000 24,625
2/17/99 5.61 40,000 39,346
2/24/99 5.50 6,700 6,585
3/1/99 5.51 50,000 49,107
Goldman Sachs Group L.P. (The)
11/18/98 5.39 30,000 29,924
11/23/98 5.23 95,000 94,698
GTE Corp.
1/26/99 5.39 11,000 10,860
Heller Financial, Inc.
11/18/98 5.67 5,000 4,987
12/7/98 5.63 11,000 10,938
12/22/98 5.65 10,000 9,921
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Heller Financial, Inc. - continued
12/23/98 5.65% $ 15,000 $ 14,879
1/28/99 5.83 7,000 6,902
Kitty Hawk Funding Corp.
11/6/98 5.52 27,640 27,619
11/6/98 5.56 10,000 9,992
11/24/98 5.45 15,000 14,948
11/25/98 5.27 5,000 4,983
11/30/98 5.59 10,000 9,956
1/20/99 5.32 5,000 4,942
Lehman Brothers Holdings, Inc.
11/5/98 5.60 25,000 24,985
MCI WorldCom, Inc.
11/23/98 5.74 18,000 17,938
11/24/98 5.71 25,000 24,910
11/30/98 5.72 20,000 19,909
1/29/99 5.83 27,000 26,616
Merrill Lynch & Co., Inc.
11/18/98 5.60 10,000 9,974
11/30/98 5.59 10,000 9,956
11/30/98 5.65 20,000 19,911
Monsanto Co.
11/4/98 5.61 21,800 21,790
2/18/99 5.42 10,600 10,430
3/18/99 5.39 25,200 24,696
Morgan (JP) & Co., Inc.
11/30/98 5.50 25,000 24,890
12/15/98 5.55 20,000 19,867
Morgan Stanley, Dean Witter & Co.
11/12/98 5.36 (b) 25,000 25,000
1/21/99 5.22 80,000 79,073
National Australia Funding, Inc.
2/22/99 5.35 30,000 29,508
3/10/99 5.41 45,000 44,150
3/10/99 5.50 50,000 49,041
NationsBank Corp.
11/16/98 5.60 10,000 9,977
Nationwide Building Society
11/2/98 5.63 29,000 28,996
12/10/98 5.42 15,000 14,913
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Norfolk Southern Corp.
11/23/98 5.55% $ 11,000 $ 10,963
11/23/98 5.63 7,438 7,413
11/24/98 5.62 15,000 14,946
11/25/98 5.63 4,000 3,985
Preferred Receivables Funding Corp.
11/2/98 5.54 10,000 9,998
11/2/98 5.55 7,598 7,597
11/5/98 5.46 25,000 24,985
11/10/98 5.53 25,000 24,966
12/10/98 5.21 15,250 15,165
12/14/98 5.21 17,000 16,895
12/22/98 5.22 20,000 19,853
Salomon Smith Barney
11/3/98 5.60 15,000 14,995
12/3/98 5.52 35,000 34,830
1/25/99 5.27 35,000 34,570
Sears Roebuck Acceptance Corp.
12/17/98 5.19 15,000 14,901
2/25/99 5.55 15,000 14,739
Societe Generale North America, Inc.
11/5/98 5.29 50,000 49,971
12/23/98 5.45 60,000 59,534
2/25/99 5.34 50,000 49,159
Svenska Handelsbanken, Inc.
2/23/99 5.58 25,000 24,570
Textron, Inc.
11/3/98 5.74 5,000 4,998
11/9/98 5.70 12,000 11,985
11/13/98 5.77 3,572 3,565
12/14/98 5.60 7,000 6,954
Three Rivers Funding Corp.
11/16/98 5.48 12,000 11,973
Transamerica Finance Corp.
12/14/98 5.44 10,000 9,936
Triple A One Funding Corp.
12/2/98 5.25 10,000 9,955
12/3/98 5.23 10,000 9,954
12/3/98 5.25 28,218 28,087
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
UBS Finance (Delaware), Inc.
12/15/98 5.29% $ 130,000 $ 129,167
3/1/99 5.05 50,000 49,174
Unifunding, Inc.
12/16/98 5.65 15,000 14,897
12/30/98 5.14 20,000 19,833
3/19/99 5.35 20,000 19,601
TOTAL COMMERCIAL PAPER 3,486,488
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
BANK NOTES - 9.4%
Abbey National Treasury Services PLC
11/17/98 5.54 (a)(b) 45,000 44,969
First Union National Bank of North Carolina
11/2/98 5.16 (b) 35,000 34,998
11/2/98 5.17 (b) 73,000 73,000
11/4/98 5.60 40,000 40,000
1/20/99 5.22 (b) 20,000 20,000
3/1/99 5.50 85,000 85,000
3/15/99 5.50 35,000 35,000
Fleet National Bank, Providence
2/4/99 5.22 (b) 38,000 37,981
Key Bank NA
11/2/98 5.13 (b) 20,000 19,998
11/23/98 5.10 (b) 30,000 29,984
LaSalle National Bank, Chicago
11/4/98 5.27 40,000 40,000
NationsBank NA
2/22/99 5.05 40,000 40,000
2/23/99 5.04 75,000 75,000
3/17/99 5.30 65,000 65,000
3/22/99 4.95 40,000 40,000
4/13/99 5.05 65,000 65,000
4/20/99 4.90 40,000 40,000
PNC Bank NA, Pittsburgh
11/2/98 5.22 (b) 40,000 39,979
1/19/99 5.23 (b) 50,000 49,994
2/3/99 5.22 (b) 38,000 37,994
BANK NOTES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Westpac Banking Corp.
5/5/99 5.85% $ 15,000 $ 14,996
TOTAL BANK NOTES 928,893
MASTER NOTES - 2.4%
Goldman Sachs Group L.P. (The)
12/8/98 5.56 (b)(c) 130,000 130,000
J.P. Morgan Securities, Inc.
11/6/98 5.41 (b) 90,000 90,000
SunTrust Banks, Inc.
11/2/98 5.19 (b) 15,000 15,000
TOTAL MASTER NOTES 235,000
MEDIUM-TERM NOTES - 2.3%
General Electric Capital Corp.
12/9/98 5.54 (b) 15,000 15,000
Merrill Lynch & Co., Inc.
12/4/98 5.53 (b) 30,000 29,997
Morgan Guaranty Trust Co., NY
11/30/98 5.17 (b) 50,000 49,978
Morgan Stanley, Dean Witter, Discover & Co.
11/2/98 5.26 (b) 45,000 45,000
Norwest Corp.
1/22/99 5.21 (b) 50,000 50,000
Premier Auto Trust
6/8/99 5.41 37,044 37,039
TOTAL MEDIUM-TERM NOTES 227,014
SHORT-TERM NOTES - 5.1%
Capital One Funding Corp. (1994-E)
11/6/98 5.12 (b) 7,234 7,234
Capital One Funding Corp. (1995-D)
11/6/98 5.12 (b) 7,320 7,320
Capital One Funding Corp. (1995-E)
11/6/98 5.12 (b) 5,686 5,686
SHORT-TERM NOTES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Capital One Funding Corp. (1996-H)
11/6/98 5.14% (b) $ 7,310 $ 7,310
Capital One Funding Corp. (1996-I)
11/6/98 5.12 (b) 10,002 10,002
Capital One Funding Corp. (1997-F)
11/6/98 5.12 (b) 5,000 5,000
Capital One Funding Corp. (1997-G)
11/6/98 5.12 (b) 3,791 3,791
Commonwealth Life Insurance Co.
11/2/98 5.51 (b)(c) 35,000 35,000
New York Life Insurance Co.
11/6/98 5.29 (b) 40,000 40,000
11/6/98 5.64 (b) 25,000 25,000
Pacific Life Insurance Co.
12/9/98 5.63 (a)(b) 35,000 35,000
Peoples Security Life Insurance Co.
11/2/98 5.48 (b)(c) 29,000 29,000
SMM Trust (1997-P)
11/16/98 5.41 (a)(b) 18,000 18,000
SMM Trust (1997-X)
11/12/98 5.41 (a)(b) 51,000 51,000
SMM Trust (1998-I)
11/30/98 5.22 (a)(b) 20,000 20,000
Strategic Money Market Trust (1997-A)
12/16/98 5.50 (a)(b) 100,000 100,000
Strategic Money Market Trust (1998-B)
11/5/98 5.38 (a)(b) 67,000 67,000
Transamerica Life Insurance & Annuity Co.
11/6/98 5.52 (b) 30,000 30,000
TOTAL SHORT-TERM NOTES 496,343
TIME DEPOSITS - 0.8%
Bayerische Hypo-und Vereinsbank AG
11/2/98 5.75 5,000 5,000
Deutsche Bank AG
11/2/98 5.69 75,000 75,000
TOTAL TIME DEPOSITS 80,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 0.0%
MATURITY VALUE (NOTE 1)
AMOUNT (000S) (000S)
In a joint trading account (U.S. Treasury Obligations) dated $ 622 $ 622
10/30/98 due 11/2/98 At 5.64%
TOTAL INVESTMENTS - 100% $ 9,830,699
</TABLE>
Total Cost for Income Tax Purposes $ 9,830,699
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 $335,969,000 or 3.4% 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 (see Note 2 of Notes to Financial
Statements).
SECURITY ACQUISTION ACQUISITION
DATE COST
(000S)
Commonwealth Life 7/1/98 $ 35,000
Insurance Co.
5.51% 11/2/98
Goldman Sachs 3/10/98 $ 130,000
Group L.P. (The)
5.56% 12/8/98
Peoples Security 7/31/98 - $ 29,000
Life Insurance Co. 9/17/98
5.48% 11/2/98
INCOME TAX INFORMATION
At April 30, 1998, the fund had a capital loss carryforward of
approximately $2,626,000 of which $95,000, $1,893,000, $476,000 and
$162,000 will expire on April 30, 2001, 2002, 2003 and 2004,
respectively.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNTS) OCTOBER 31, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 9,830,699
AGREEMENTS OF $622) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR FUND SHARES SOLD 48,568
INTEREST RECEIVABLE 70,980
OTHER RECEIVABLES 6
TOTAL ASSETS 9,950,253
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 135,975
PAYABLE FOR FUND SHARES REDEEMED 56,689
DISTRIBUTIONS PAYABLE 2,761
ACCRUED MANAGEMENT FEE 3,721
OTHER PAYABLES AND ACCRUED EXPENSES 133
TOTAL LIABILITIES 199,279
NET ASSETS $ 9,750,974
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 9,753,584
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (2,610)
NET ASSETS, FOR 9,753,073 SHARES OUTSTANDING $ 9,750,974
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $1.00
PER SHARE ($9,750,974 (DIVIDED BY) 9,753,073 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED OCTOBER 31, 1998 (UNAUDITED)
INTEREST INCOME $ 260,663
EXPENSES
MANAGEMENT FEE $ 20,771
NON-INTERESTED TRUSTEES' COMPENSATION 18
TOTAL EXPENSES BEFORE REDUCTIONS 20,789
EXPENSE REDUCTIONS (185) 20,604
NET INTEREST INCOME 240,059
NET REALIZED GAIN (LOSS) ON INVESTMENTS 16
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 240,075
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1998 APRIL 30,
(UNAUDITED) 1998
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 240,059 $ 474,623
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 16 115
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 240,075 474,738
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (240,059) (474,623)
SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 5,413,461 14,018,870
PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 229,770 462,349
COST OF SHARES REDEEMED (4,755,328) (14,917,925)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 887,903 (436,706)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 887,919 (436,591)
NET ASSETS
BEGINNING OF PERIOD 8,863,055 9,299,646
END OF PERIOD $ 9,750,974 $ 8,863,055
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED APRIL 30,
OCTOBER 31, 1998
(UNAUDITED) 1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
BEGINNING OF PERIOD
INCOME FROM INVESTMENT .026 .053 .051 .054 .049 .031
OPERATIONS
NET INTEREST INCOME
LESS DISTRIBUTIONS
FROM NET INTEREST (.026) (.053) (.051) (.054) (.049) (.031)
INCOME
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
END OF PERIOD
TOTAL RETURN B, C 2.65% 5.43% 5.21% 5.57% 4.97% 3.14%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF $ 9,751 $ 8,863 $ 9,300 $ 8,451 $ 7,635 $ 6,453
PERIOD (IN MILLIONS)
RATIO OF EXPENSES TO .45% A .45% .45% .45% .44% D .31% D
AVERAGE NET ASSETS
RATIO OF EXPENSES TO .45% A .45% .45% .42%E .44% .31%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INTEREST 5.20% A 5.31% 5.09% 5.45% 4.89% 3.12%
INCOME TO AVERAGE
NET ASSETS
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Money Market Fund (the fund) is a fund of Fidelity Hereford
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 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.
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.
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 $194,000,000 or 2.0% of net assets.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR pays all
expenses, 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 .45% of the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund.
To offset the cost of providing these services, FMR or its affiliates
collect certain transaction fees from the fund's shareholders which
amounted to $79,000 for the period.
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. EXPENSE REDUCTIONS.
FMR has entered into an arrangement on behalf of the fund with the
fund's 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 expenses were reduced by
$185,000 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 Fidelity at
1-800-544-7272 and we'll send you an America Online CD or disk with up
to 50 free hours of Web access.
(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
19100 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
HAWAII
700 Bishop Street
Honolulu, HI
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
2200 West Main Street
Durham, 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
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BUYING SHARES
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GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
Fidelity Investments
Money Management, Inc.
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
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 Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
SPM-SANN-1298 66957
1.538241.101
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
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/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
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
SPARTAN(REGISTERED TRADEMARK)
U.S. GOVERNMENT
MONEY MARKET
FUND
SEMIANNUAL REPORT
OCTOBER 31, 1998
(FIDELITY_LOGO_GRAPHIC) (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 13 Statements of assets and liabilities,
operations, and changes in net assets,
as well as financial highlights.
NOTES 17 Notes to the financial statements.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
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,
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:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
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. 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 and the effect of the fund's $5 account closeout fee
on an average-sized account. 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 year and life of fund total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 6 PAST 1 PAST 5 LIFE OF
MONTHS YEAR YEARS FUND
SPARTAN US GOVERNMENT MONEY MARKET 2.61% 5.31% 27.57% 54.63%
Government Money Market Funds Average 2.50% 5.07% 26.15% n/a
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 since the fund started on February 5, 1990. 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 government money market funds with similar objectives
tracked by IBC Financial Data, Inc. The past six months average
represents a peer group of 427 money market funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
SPARTAN US GOVERNMENT MONEY MARKET 5.31% 4.99% 5.11%
Government Money Market Funds Average 5.07% 4.76% n/a
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
11/3/98 7/28/98 4/28/98 2/3/98 10/28/97
Spartan U.S. Government 4.91% 5.16% 5.15% 5.26% 5.25%
Money Market Fund
Government Money Market 4.49% 4.84% 4.82% 4.89% 4.85%
Funds Average
10/28/98 7/29/98 4/29/98 1/28/98 10/29/97
MMDA 2.45% 2.54% 2.52% 2.55% 2.65%
Row: 1, Col: 1, Value: 4.91
Row: 1, Col: 2, Value: 4.49
Row: 1, Col: 3, Value: 2.45
Row: 2, Col: 1, Value: 5.16
Row: 2, Col: 2, Value: 4.84
Row: 2, Col: 3, Value: 2.54
Row: 3, Col: 1, Value: 5.15
Row: 3, Col: 2, Value: 4.82
Row: 3, Col: 3, Value: 2.52
Row: 4, Col: 1, Value: 5.26
Row: 4, Col: 2, Value: 4.89
Row: 4, Col: 3, Value: 2.55
Row: 5, Col: 1, Value: 5.25
Row: 5, Col: 2, Value: 4.85
Row: 5, Col: 3, Value: 2.65
Spartan U.S.
Government Money
Market Fund
Government Money
Market Funds
Average
MMDA
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. 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).
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)
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
An interview with Robert Litterst, Portfolio Manager of Spartan U.S.
Government Money Market Fund
Q. BOB, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE AT THE START OF THE
SIX-MONTH PERIOD THAT ENDED OCTOBER 31, 1998?
A. At the beginning of the period, the Federal Reserve Board was
biased toward raising short-term interest rates in order to slow
economic growth and head off inflation. Real GDP - gross domestic
product adjusted for inflation - grew at an annual rate of 3.5% in the
four quarters that ended June 30, 1998, well above the
non-inflationary trend rate of 2% to 2.5% - the rate above which
inflation is expected to occur. An above-trend growth rate coupled
with a tight labor market - which usually leads to increased wage
costs that are passed on to the consumer in the form of price
increases - led the Fed to be concerned about rising inflation.
However, falling commodity prices and slowdowns in the manufacturing
and export sectors due to the economic crises in Asia helped subdue
inflation.
Q. BUT MORE RECENTLY, THE MARKETS HAVE BEEN IN TURMOIL . . .
A. Yes, that's right. The events that triggered volatility in the
global markets over the past three months were Russia's default on
some of its debt and its concurrent devaluation of the ruble in
mid-August. Concern about economies in other emerging markets and the
worldwide banking system evolved from those events, and fears about
the impact of the collapse of a large hedge fund further rocked the
markets in late September. Investors around the world quickly reacted
by liquidating investments that seemed to carry risk, re-allocating
them to U.S. Treasury securities in a flight to quality. Yields on
Treasuries fell sharply, and yield spreads between U.S. Treasuries and
government agency securities widened because the latter didn't
participate fully in this rally. Into the fray stepped the Fed,
lowering key short-term interest rates at its September meeting, and
in a surprise move, again on October 15.
Q. WHAT WAS THE RATIONALE THAT CAUSED THE FED TO SHIFT FROM A BIAS
TOWARD RAISING RATES TO LOWERING THEM TWO TIMES?
A. At its September meeting, the Fed cited the need to cushion
domestic growth against the effects of weakness abroad, and added that
domestic financial conditions were not as accommodating for sustained
growth in the economy. The Fed's October reduction - which, for the
first time in many years, was announced between meetings of its Open
Market Committee - appeared to be in response to fears that a "credit
crunch" - where lenders hold back from both worthy and unworthy
borrowers - might develop after this string of events. Since the Fed's
second move, it seems as if stability is returning to world markets.
Q. WHAT STRATEGY DID YOU PURSUE DURING THE PERIOD?
A. The fund's average maturity ranged from 50 to 65 days and generally
was longer than the average of its peers. A longer average maturity
generally is an indication that I expect falling interest rates. That
wasn't necessarily the case for the whole period. Earlier on, with a
neutral outlook toward the direction of interest rates, I invested
predominantly in the one- to three-month maturity range, but I
periodically extended into longer-maturity securities when they
offered the best value. Recently, I've been able to find attractively
priced agency securities in the three- to four-month sector of the
money market yield curve because their supply has increased markedly.
Of course, now that we've entered a period of interest-rate decreases,
I've looked for opportunities to extend the average maturity and lock
in attractive rates because it appeared they'd fall again.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on October 31, 1998, was 4.91%, compared
to 5.16% six months ago. For the six months that ended October 31,
1998, the fund had a total return of 2.61%, compared to 2.50% for the
U.S. Government money market funds average tracked by IBC Financial
Data, Inc.
Q. WHAT'S YOUR OUTLOOK AS 1998 WINDS DOWN AND WE HEAD INTO 1999?
A. There is a great deal of uncertainty in the financial markets. The
Fed's approach - and its effects on the markets - will depend on two
main factors: U.S. economic activity and the behavior of world
financial markets. Normally, we would only look to the former when
trying to discern Fed policy; historically, the U.S. economy has been
its primary focus. With respect to the U.S. economy, market indicators
have shown increasing signs of a slowdown, inflation has remained
benign, and unemployment has risen slightly. All of these variables
support the idea of further reduction in interest rates by the Fed.
More recently, the risk of systemic problems in worldwide financial
markets has exerted considerable influence on Fed policy. Those risks,
if anything, would be lessened by further reductions in rates. Looking
ahead, I believe the Fed is poised to respond to a faltering economy
or renewed uncertainty in the financial markets. As I said, I think
the odds are that rates could move lower over the next six months.
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. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: HIGH CURRENT INCOME,
PRESERVATION OF CAPITAL
FUND NUMBER: 458
TRADING SYMBOL: SPAXX
START DATE: FEBRUARY 5, 1990
SIZE: AS OF OCTOBER 31, 1998,
MORE THAN $884 MILLION
MANAGER: ROBERT LITTERST,
SINCE 1997; MANAGER, SEVERAL
FIDELITY AND SPARTAN TAXABLE
MONEY MARKET FUNDS; JOINED
FIDELITY IN 1991
(CHECKMARK)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND'S % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS INVESTMENTS
10/31/98 4/30/98 10/31/97
0 - 30 56 63 60
31 - 90 16 16 9
91 - 180 19 10 19
181 - 397 9 11 12
WEIGHTED AVERAGE MATURITY
10/31/98 4/30/98 10/31/97
Spartan U.S. Government 62 DAYS 61 Days 69 Days
Money Market Fund
Government Money Market 54 DAYS 54 Days 50 Days
Funds Average*
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998 AS OF APRIL 30, 1998
Row: 1, Col: 1, Value: 33.0
Row: 1, Col: 2, Value: 67.0
Row: 1, Col: 1, Value: 32.0
Row: 1, Col: 2, Value: 68.0
Federal agency
issues 67%
Repurchase
agreements 33%
Federal agency
issues 68%
Repurchase
agreements 32%
*SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
INVESTMENTS OCTOBER 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FEDERAL AGENCIES - 67.3%
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
FANNIE MAE - 30.4%
Agency Coupons - 20.5%
11/2/98 5.22% (a) $ 13,000,000 $ 12,998,758
11/3/98 4.67 (a) 8,000,000 7,998,049
11/5/98 5.16 (a) 20,000,000 19,990,978
11/14/98 5.48 (a) 8,000,000 7,996,450
11/17/98 5.20 (a) 16,000,000 15,996,284
11/20/98 5.73 8,000,000 7,999,400
11/28/98 5.01 (a) 12,000,000 11,992,571
11/28/98 5.46 (a) 25,000,000 24,987,406
12/15/98 5.26 (a) 8,000,000 7,995,621
2/1/99 4.99 (a) 12,000,000 11,993,002
2/12/99 5.43 8,000,000 7,996,310
2/19/99 5.43 5,000,000 4,997,783
2/23/99 5.45 4,000,000 3,998,617
2/23/99 5.47 4,000,000 3,998,362
2/26/99 5.56 9,000,000 8,992,730
3/16/99 5.52 8,000,000 7,996,597
3/26/99 5.55 12,000,000 11,995,233
4/15/99 5.54 5,000,000 4,995,325
184,919,476
Discount Notes - 9.9%
1/15/99 5.53 21,003,000 20,767,591
2/22/99 5.30 7,000,000 6,886,184
3/15/99 5.31 8,000,000 7,846,049
4/23/99 4.71 15,000,000 14,668,417
6/4/99 5.33 6,000,000 5,816,175
6/30/99 4.84 16,000,000 15,499,791
8/9/99 5.35 8,000,000 7,681,533
8/20/99 5.34 10,000,000 9,587,956
88,753,696
273,673,172
FEDERAL FARM CREDIT BANK - 0.9%
Agency Coupons - 0.9%
11/10/98 5.23 (a) 8,000,000 7,998,701
FEDERAL HOME LOAN BANK - 16.5%
Agency Coupons - 11.7%
11/2/98 5.06 (a) 9,000,000 8,999,513
11/2/98 5.22 (a) 13,000,000 12,998,758
FEDERAL AGENCIES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
FEDERAL HOME LOAN BANK - CONTINUED
Agency Coupons - continued
11/3/98 4.61% (a) $ 8,000,000 $ 7,996,327
11/3/98 5.46 (a) 8,000,000 7,996,658
11/4/98 4.85 (a) 16,000,000 15,996,000
11/8/98 5.23 (a) 3,000,000 2,998,158
11/27/98 5.46 (a) 5,000,000 4,997,646
12/17/98 5.81 9,000,000 8,999,365
3/11/99 5.45 8,000,000 8,003,068
3/26/99 5.58 8,000,000 7,995,138
5/19/99 5.56 10,000,000 9,999,632
6/15/99 5.51 8,000,000 7,999,719
104,979,982
Discount Notes - 4.8%
1/15/99 5.53 15,000,000 14,831,938
2/16/99 5.04 21,000,000 20,691,038
4/30/99 4.82 8,000,000 7,811,600
43,334,576
148,314,558
FREDDIE MAC - 18.5%
Agency Coupons - 3.9%
11/21/98 5.01 (a) 8,000,000 7,996,520
11/27/98 5.54 (a) 6,000,000 5,993,001
3/12/99 5.52 6,000,000 6,000,215
8/13/99 5.52 15,000,000 14,993,680
34,983,416
Discount Notes - 14.6%
11/12/98 5.18 13,000,000 12,979,523
11/13/98 5.18 5,000,000 4,991,417
12/7/98 5.50 15,201,000 15,119,295
12/21/98 5.31 29,263,000 29,050,029
1/7/99 5.52 20,000,000 19,800,303
1/22/99 5.11 8,000,000 7,908,251
1/26/99 5.12 6,000,000 5,927,760
1/28/99 5.13 8,000,000 7,901,440
2/19/99 5.27 8,850,000 8,710,465
2/22/99 5.30 7,000,000 6,886,074
FEDERAL AGENCIES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
FREDDIE MAC - CONTINUED
Discount Notes - continued
2/23/99 5.30% $ 4,000,000 $ 3,934,387
2/25/99 5.08 8,000,000 7,871,627
131,080,571
166,063,987
STUDENT LOAN MARKETING ASSOC. - 0.6%
Agency Coupons - 0.6%
2/10/99 5.53 5,000,000 4,996,381
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
GOVERNMENT GUARANTEED PARTICIPATION CERTIFICATES - 0.4%
Agency Coupons - 0.4%
8/1/99 4.75 4,000,000 4,091,968
TOTAL FEDERAL AGENCIES 605,138,767
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 32.7%
MATURITY
AMOUNT
In a joint trading account (Notes 2 and 3:
(U.S. Government Obligations) dated:
8/12/98 due $ 15,204,233 15,000,000
11/10/98 At 5.57%
8/25/98 due 20,207,328 20,000,000
11/2/98 At 5.57%
9/2/98 due 8,192,409 8,000,000
2/10/99 At 5.48%
9/3/98 due:
11/9/98 At 5.52% 12,121,440 12,000,000
12/2/98 At 5.5% 16,217,556 16,000,000
10/1/98 due 37,168,545 37,000,000
11/2/98 At 5.29%
10/5/98 due:
11/4/98 At 5.3% 12,051,233 12,000,000
12/7/98 At 5.2% 16,143,289 16,000,000
10/7/98 due 14,055,650 14,000,000
11/4/98 At 5.3%
10/8/98 due 8,036,167 8,000,000
11/9/98 At 5.25%
REPURCHASE AGREEMENTS - CONTINUED
MATURITY VALUE
AMOUNT (NOTE 1)
In a joint trading account (Notes 2 and 3):
(U.S. Government Obligations) dated: - continued
10/15/98 due:
2/10/99 At 5.1% $ 20,325,833 $ 20,000,000
2/12/99 At 5.1% 13,215,475 13,000,000
10/16/98 due 21,289,520 21,000,000
1/20/99 At 5.28%
10/19/98 due 25,516,375 25,000,000
3/22/99 At 4.86%
10/22/98 due 8,058,800 8,000,000
12/16/98 At 4.9%
10/26/98 due:
12/28/98 At 4.9% 16,135,022 16,000,000
1/25/99 At 5% 2,024,722 2,000,000
10/30/98 due 31,297,807 31,288,000
11/2/98 At 5.64%
TOTAL REPURCHASE AGREEMENTS 294,288,000
TOTAL INVESTMENTS - 100% $ 899,426,767
</TABLE>
Total Cost for Income Tax Purposes $ 899,426,767
LEGEND
(a) 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 April 30, 1998, the fund had a capital loss carryforward of
approximately $152,000 of which $1,000, $10,000, $52,000, $53,000 and
$36,000 will expire on April 30, 1999, 2001, 2002, 2003 and 2004,
respectively.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 899,426,767
AGREEMENTS OF $294,288,000) - SEE
ACCOMPANYING SCHEDULE
RECEIVABLE FOR FUND SHARES SOLD 3,013,424
INTEREST RECEIVABLE 4,097,658
TOTAL ASSETS 906,537,849
LIABILITIES
PAYABLE TO CUSTODIAN BANK $ 2,218
PAYABLE FOR INVESTMENTS PURCHASED 15,996,000
PAYABLE FOR FUND SHARES REDEEMED 5,267,761
DISTRIBUTIONS PAYABLE 261,617
ACCRUED MANAGEMENT FEE 335,052
OTHER PAYABLES AND ACCRUED EXPENSES 11,746
TOTAL LIABILITIES 21,874,394
NET ASSETS $ 884,663,455
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 884,797,566
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (134,111)
NET ASSETS, FOR 884,797,566 SHARES OUTSTANDING $ 884,663,455
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $1.00
SHARE ($884,663,455 (DIVIDED BY) 884,797,566 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1998 (UNAUDITED)
INTEREST INCOME $ 22,582,317
EXPENSES
MANAGEMENT FEE $ 1,819,300
EXPENSE REDUCTIONS (17,661) 1,801,639
NET INTEREST INCOME 20,780,678
NET REALIZED GAIN (LOSS) ON INVESTMENTS 18,056
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 20,798,734
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1998 APRIL 30,
(UNAUDITED) 1998
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 20,780,678 $ 41,528,087
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 18,056 10,320
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 20,798,734 41,538,407
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (20,780,678) (41,528,087)
SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 486,449,656 967,377,589
PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 19,757,769 39,942,463
COST OF SHARES REDEEMED (394,733,666) (1,049,909,665)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 111,473,759 (42,589,613)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 111,491,815 (42,579,293)
NET ASSETS
BEGINNING OF PERIOD 773,171,640 815,750,933
END OF PERIOD $ 884,663,455 $ 773,171,640
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED APRIL 30,
OCTOBER 31, 1998
(UNAUDITED) 1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
BEGINNING OF PERIOD
INCOME FROM INVESTMENT .026 .052 .050 .054 .047 .029
OPERATIONS
NET INTEREST INCOME
LESS DISTRIBUTIONS
FROM NET INTEREST (.026) (.052) (.050) (.054) (.047) (.029)
INCOME
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
END OF PERIOD
TOTAL RETURN B, C 2.61% 5.37% 5.16% 5.52% 4.79% 2.89%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, $ 884,663 $ 773,172 $ 815,751 $ 761,475 $ 707,194 $ 780,295
END OF PERIOD
(000 OMITTED)
RATIO OF EXPENSES TO .45% A .45% .45% .45% .45% .45% D
AVERAGE NET ASSETS
RATIO OF EXPENSES TO .45% A .45% .45% .41% E .45% .45%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INTEREST 5.13% A 5.24% 5.02% 5.42% 4.67% 2.85%
INCOME TO AVERAGE
NET ASSETS
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
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.
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan U.S. Government Money Market (the fund) is a fund of Fidelity
Hereford 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 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.
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 investments in
repurchase agreements through the joint trading account are summarized
as follows:
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF JOINT TRADING
DATED AUGUST 12, 1998, DUE NOVEMBER 10, 1998 AT 5.57%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $140,000,000
Aggregate maturity amount of agreements $141,949,500
Aggregate market value of transferred assets $144,636,915
Coupon rates of transferred assets 0%
Maturity dates of transferred assets 1/1/19 to 11/1/37
DATED AUGUST 25, 1998, DUE NOVEMBER 2, 1998 AT 5.57%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $100,000,000
Aggregate maturity amount of agreements $101,067,583
Aggregate market value of transferred assets $103,050,852
Coupon rates of transferred assets 0%
Maturity dates of transferred assets 2/2/02 to 6/1/28
DATED SEPTEMBER 2, 1998, DUE FEBRUARY 10, 1999 AT 5.48%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $100,000,000
Aggregate maturity amount of agreements $102,450,778
Aggregate market value of transferred assets $102,368,756
Coupon rates of transferred assets 6.13%
Maturity dates of transferred assets 12/1/33 to 4/1/34
3. JOINT TRADING ACCOUNT - CONTINUED
SUMMARY OF JOINT TRADING - CONTINUED
DATED SEPTEMBER 3, 1998, DUE NOVEMBER 9, 1998 AT 5.52%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $50,000,000
Aggregate maturity amount of agreements $50,702,722
Aggregate market value of transferred assets $51,453,284
Coupon rates of transferred assets 5.50% to 8%
Maturity dates of transferred assets 12/1/06 to 10/1/28
DATED SEPTEMBER 3, 1998, DUE DECEMBER 2, 1998 AT 5.50%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $200,000,000
Aggregate maturity amount of agreements $202,750,000
Aggregate market value of transferred assets $206,012,738
Coupon rates of transferred assets 6.50%
Maturity dates of transferred assets 5/1/00 to 5/1/34
DATED OCTOBER 1, 1998, DUE NOVEMBER 2, 1998 AT 5.29%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $250,000,000
Aggregate maturity amount of agreements $251,175,556
Aggregate market value of transferred assets $255,780,245
Coupon rates of transferred assets 0% to 9.24%
Maturity dates of transferred assets 5/1/14 to 8/1/34
DATED OCTOBER 5, 1998, DUE NOVEMBER 4, 1998 AT 5.30%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $70,000,000
Aggregate maturity amount of agreements $70,309,167
Aggregate market value of transferred assets $71,707,669
Coupon rates of transferred assets 0%
Maturity dates of transferred assets 5/1/19 to 11/1/37
3. JOINT TRADING ACCOUNT - CONTINUED
SUMMARY OF JOINT TRADING - CONTINUED
DATED OCTOBER 5, 1998, DUE DECEMBER 7, 1998 AT 5.20%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $200,000,000
Aggregate maturity amount of agreements $201,820,000
Aggregate market value of transferred assets $204,000,000
Coupon rates of transferred assets 5.93% to 7.76%
Maturity dates of transferred assets 6/1/21 to 2/1/37
DATED OCTOBER 7, 1998, DUE NOVEMBER 4, 1998 AT 5.30%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $200,000,000
Aggregate maturity amount of agreements $200,824,444
Aggregate market value of transferred assets $204,727,978
Coupon rates of transferred assets 8% to 8.5%
Maturity dates of transferred assets 5/5/16 to 10/1/28
DATED OCTOBER 8, 1998, DUE NOVEMBER 9, 1998 AT 5.25%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $100,000,000
Aggregate maturity amount of agreements $100,466,667
Aggregate market value of transferred assets $102,000,000
Coupon rates of transferred assets 5.93% to 7.76%
Maturity dates of transferred assets 6/1/21 to 2/1/37
DATED OCTOBER 15, 1998, DUE FEBRUARY 10, 1999 AT 5.10%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $250,000,000
Aggregate maturity amount of agreements $254,179,167
Aggregate market value of transferred assets $271,216,365
Coupon rates of transferred assets 8%
Maturity dates of transferred assets 1/15/01 to 9/15/28
3. JOINT TRADING ACCOUNT - CONTINUED
SUMMARY OF JOINT TRADING - CONTINUED
DATED OCTOBER 15, 1998, DUE FEBRUARY 12, 1999 AT 5.10%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $150,000,000
Aggregate maturity amount of agreements $152,550,000
Aggregate market value of transferred assets $154,424,269
Coupon rates of transferred assets 6% to 6.50%
Maturity dates of transferred assets 1/1/28 to 10/1/28
DATED OCTOBER 16, 1998, DUE JANUARY 20, 1999 AT 5.28%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $70,000,000
Aggregate maturity amount of agreements $70,985,600
Aggregate market value of transferred assets $71,707,669
Coupon rates of transferred assets 0%
Maturity dates of transferred assets 5/1/19 to 11/1/37
DATED OCTOBER 19, 1998, DUE MARCH 22, 1999 AT 4.86%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $200,000,000
Aggregate maturity amount of agreements $204,158,000
Aggregate market value of transferred assets $205,691,711
Coupon rates of transferred assets 6% to 6.50%
Maturity dates of transferred assets 11/1/24 to 10/1/28
DATED OCTOBER 22, 1998, DUE DECEMBER 16, 1998 AT 4.90%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $100,000,000
Aggregate maturity amount of agreements $100,748,611
Aggregate market value of transferred assets $102,091,811
Coupon rates of transferred assets 5.50% to 11%
Maturity dates of transferred assets 12/1/99 to 5/1/29
3. JOINT TRADING ACCOUNT - CONTINUED
SUMMARY OF JOINT TRADING - CONTINUED
DATED OCTOBER 26, 1998, DUE DECEMBER 28, 1998 AT 4.90%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $200,000,000
Aggregate maturity amount of agreements $201,715,000
Aggregate market value of transferred assets $204,183,623
Coupon rates of transferred assets 5.50% to 11%
Maturity dates of transferred assets 12/1/99 to 5/1/29
DATED OCTOBER 26, 1998, DUE JANUARY 25, 1999 AT 5.00%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $100,000,000
Aggregate maturity amount of agreements $101,263,889
Aggregate market value of transferred assets $102,511,499
Coupon rates of transferred assets 0%
Maturity dates of transferred assets 5/1/19 to 6/1/29
DATED OCTOBER 30 , 1998, DUE NOVEMBER 2, 1998 AT 5.64%
Number of dealers or banks 4
Maximum amount with one dealer or bank 52%
Aggregate principal amount of agreements $1,154,157,000
Aggregate maturity amount of agreements $1,154,699,624
Aggregate market value of transferred assets $1,183,248,675
Coupon rates of transferred assets 0% to 12%
Maturity dates of transferred assets 11/18/98 to 11/1/37
</TABLE>
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR pays all
expenses, 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 .45% of the fund's average net assets.
FMR also bears the cost of providing shareholder services to the fund.
To offset the cost of providing these services, FMR or its affiliates
collect certain transaction fees from the fund's shareholders which
amounted to $6,443 for the period.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
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.
5. EXPENSE REDUCTIONS.
FMR has entered into arrangements on behalf of the fund with the
fund's custodian and 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 expenses were
reduced by $17,661 under these arrangements.
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research Company
Boston, MA
SUB-ADVISER
Fidelity Investments
Money Management, Inc.
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
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
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
SPU-SANN-1298 66791
1.538283.101
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
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/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
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
SPARTAN(REGISTERED TRADEMARK)
U.S. TREASURY
MONEY MARKET
FUND
SEMIANNUAL REPORT
OCTOBER 31, 1998
(FIDELTY_LOGO_GRAPHIC) (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 11 Statements of assets and liabilities,
operations, and changes in net assets,
as well as financial highlights.
NOTES 15 Notes to the financial statements.
To reduce expenses and demonstrate respect for our environment, we
have initiated a project through which we will begin eliminating
duplicate copies of most financial reports and prospectuses to most
households, even if they have more than one account in the fund. If
additional copies of financial reports, prospectuses or historical
account information are needed, please call 1-800-544-6666.
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,
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:
What a difference one month can make. The stock and bond markets did
an about-face in October, as renewed optimism in many emerging markets
and more encouraging corporate earnings forecasts in the U.S. replaced
the concerns that had shaped the financial markets in recent months.
Equity markets worldwide bounced back strongly, while the major U.S.
bond indexes were off slightly as the flight to safety eased.
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. 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 and the effect of the fund's $5 account closeout fee
on an average-sized account. 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 year and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
SPARTAN US TREASURY MONEY MARKET 2.46% 5.01% 26.08% 67.89%
100% US Treasury Money Market 2.33% 4.77% 24.90% 65.22%
Funds Average
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 100% U.S. Treasury money
market funds average which reflects the performance of 100% U.S.
Treasury money market funds with similar objectives tracked by IBC
Financial Data, Inc. The past six months average represents a peer
group of 35 money market funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED OCTOBER 31, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
SPARTAN US TREASURY MONEY MARKET 5.01% 4.74% 5.32%
100% US Treasury Money Market 4.77% 4.54% 5.13%
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
11/3/98 7/28/98 4/28/98 2/3/98 10/28/97
Spartan U.S. Treasury 4.60% 4.89% 4.94% 4.99% 4.92%
Money Market Fund
100% US Treasury Money 4.16% 4.64% 4.69% 4.70% 4.68%
Market Funds Average
10/28/98 7/29/98 4/29/98 1/28/98 10/29/97
MMDA 2.45% 2.54% 2.52% 2.55% 2.65%
Row: 1, Col: 1, Value: 4.6
Row: 1, Col: 2, Value: 4.16
Row: 1, Col: 3, Value: 2.45
Row: 2, Col: 1, Value: 4.89
Row: 2, Col: 2, Value: 4.64
Row: 2, Col: 3, Value: 2.54
Row: 3, Col: 1, Value: 4.94
Row: 3, Col: 2, Value: 4.69
Row: 3, Col: 3, Value: 2.52
Row: 4, Col: 1, Value: 4.99
Row: 4, Col: 2, Value: 4.7
Row: 4, Col: 3, Value: 2.55
Row: 5, Col: 1, Value: 4.92
Row: 5, Col: 2, Value: 4.68
Row: 5, Col: 3, Value: 2.65
Spartan U.S. Treasury
Money Market Fund
100% US Treasury
Money Market Funds
Average
MMDA
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. You can compare these yields to the 100%
U.S. Treasury money market funds average and the bank money market
deposit account (MMDA) average. Figures for the 100% U.S. Treasury
money market funds average are from IBC Financial Data, Inc. The MMDA
average is supplied by BANK RATE MONITOR(trademark).
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)
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
An interview with Robert Litterst, Portfolio Manager of Spartan U.S.
Treasury Money Market Fund
Q. BOB, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE AT THE START OF THE
SIX-MONTH PERIOD THAT ENDED OCTOBER 31, 1998?
A. At the beginning of the period, the Federal Reserve Board was
biased toward raising short-term interest rates in order to slow
economic growth and head off inflation. Real GDP - gross domestic
product adjusted for inflation - grew at an annual rate of 3.5% in the
four quarters that ended June 30, 1998, well above the
non-inflationary trend rate of 2% to 2.5% - the rate above which
inflation is expected to occur. An above-trend growth rate coupled
with a tight labor market - which usually leads to increased wage
costs that are passed on to the consumer in the form of price
increases - led the Fed to be concerned about rising inflation.
However, falling commodity prices and slowdowns in the manufacturing
and export sectors due to the economic crises in Asia helped subdue
inflation.
Q. BUT MORE RECENTLY, THE MARKETS HAVE BEEN IN TURMOIL . . .
A. That's right. The event that triggered volatility in global markets
over the past three months was Russia's default on some of its debt
and concurrent devaluation of the ruble in mid-August. Concern about
economies in other emerging markets and the worldwide banking system
evolved from those events, and fears about the impact of the collapse
of a large hedge fund further rocked the markets in late September.
Investors around the world quickly reacted by liquidating investments
that seemed to carry risk, re-allocating them to U.S. Treasury
securities in a flight to quality. Yields on Treasuries fell - and
their prices rose - extremely sharply. Into the fray stepped the Fed,
lowering key short-term interest rates at its September meeting, and
in a surprise move, again on October 15.
Q. WHAT WAS THE RATIONALE THAT CAUSED THE FED TO SHIFT FROM A BIAS
TOWARD RAISING RATES TO LOWERING THEM TWO TIMES?
A. At its September meeting, the Fed cited the need to cushion
domestic growth against the effects of weakness abroad, and added that
domestic financial conditions were not as accommodating for sustained
growth in the economy. The Fed's October reduction - which, for the
first time in many years, was announced between meetings of its Open
Market Committee - appeared to be in response to fears that a "credit
crunch" - where lenders hold back from both worthy and unworthy
borrowers - might develop after this string of events. Since the Fed's
second move, it seems as if stability is returning to world markets.
Q. WHAT STRATEGY DID YOU PURSUE DURING THE PERIOD?
A. The fund's average maturity ranged from 60 to 85 days and generally
was longer than the average of its peers. A longer average maturity
generally is an indication that falling interest rates are expected.
That wasn't necessarily the case for the whole period. Earlier on,
with a neutral outlook toward the direction of interest rates, I
invested in longer-term money market securities because they offered
the best value. Of course, when we entered a period of interest-rate
decreases, I looked for opportunities to extend the average maturity
and lock in attractive rates because it appeared they'd fall again.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on October 31, 1998, was 4.59%, compared
to 4.94% six months ago. For the six months that ended October 31,
1998, the fund had a total return of 2.46%, compared to 2.33% for the
U.S. Treasury money market funds average tracked by IBC Financial
Data, Inc.
Q. WHAT'S YOUR OUTLOOK AS 1998 WINDS DOWN AND WE HEAD INTO 1999?
A. There is a great deal of uncertainty in the financial markets. The
Fed's approach - and its effects on the markets - will depend on two
main factors: U.S. economic activity and the behavior of world
financial markets. Normally, we would only look to the former when
trying to discern Fed policy; historically, the U.S. economy has been
its primary focus. With respect to the U.S. economy, market indicators
are showing increasing signs of a slowdown, inflation remains benign
and unemployment has risen slightly. All of these variables support
the idea of a further reduction in interest rates by the Fed. More
recently, the risk of systemic problems in worldwide financial markets
has exerted considerable influence on Fed policy. Those risks, if
anything, would be lessened by a further reduction in rates. Looking
ahead, I believe the Fed is poised to respond to a faltering economy
or renewed uncertainty in the financial markets. As I said, I think
the odds are that rates could move lower over the next six months.
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. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: INCOME WHILE
MAINTAINING A STABLE $1
SHARE PRICE BY INVESTING IN
U.S. TREASURY MONEY MARKET
SECURITIES WHOSE INTEREST IS FREE
FROM STATE AND LOCAL TAXES
FUND NUMBER: 415
TRADING SYMBOL: FDLXX
START DATE: JANUARY 5, 1988
SIZE: AS OF OCTOBER 31, 1998,
MORE THAN $2.1 BILLION
MANAGER: ROBERT LITTERST, SINCE
1997; MANAGER, SEVERAL FIDELITY
AND SPARTAN TAXABLE MONEY
MARKET FUNDS; JOINED FIDELITY
IN 1991
(CHECKMARK)
INVESTMENT CHANGES
MATURITY DIVERSIFICATION
DAYS % OF FUND'S % OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS INVESTMENTS
10/31/98 4/30/98 10/31/97
0 - 30 24 20 26
31 - 90 23 32 37
91 - 180 48 43 33
181 - 397 5 5 4
WEIGHTED AVERAGE MATURITY
10/31/98 4/30/98 10/31/97
Spartan U.S. Treasury 74 DAYS 81 Days 78 Days
Money Market Fund
100% U.S. Treasury Money Market 74 DAYS 65 Days 65 Days
Funds Average*
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF OCTOBER 31, 1998 AS OF APRIL 30, 1998
Row: 1, Col: 1, Value: 76.0
Row: 1, Col: 2, Value: 24.0
Row: 1, Col: 1, Value: 93.0
Row: 1, Col: 2, Value: 7.0
U.S. Treasury
bills 24%
U.S. Treasury
notes 76%
U.S. Treasury
bills 7%
U.S. Treasury
notes 93%
*SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
INVESTMENTS OCTOBER 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
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 - 24.2%
11/5/98 5.25% $ 30,186 $ 30,169
11/12/98 5.31 49,815 49,736
11/19/98 5.26 57,000 56,854
12/3/98 5.25 25,000 24,886
12/3/98 5.26 25,000 24,886
12/10/98 5.24 17,000 16,906
12/10/98 5.31 21,810 21,688
1/7/99 4.44 40,000 39,673
1/14/99 4.31 9,215 9,134
1/14/99 4.46 32,000 31,711
1/21/99 4.44 134,000 132,720
1/21/99 4.58 6,000 5,940
2/18/99 5.12 30,000 29,546
4/29/99 4.25 20,000 19,586
493,435
U.S. TREASURY NOTES - 59.6%
11/15/98 4.71 1,893 1,893
11/15/98 4.81 39,069 39,075
11/30/98 4.09 800 801
11/30/98 5.16 30,000 30,008
11/30/98 5.20 50,000 50,011
11/30/98 5.23 65,000 65,014
11/30/98 5.24 30,000 30,006
1/15/99 4.92 56,000 56,144
1/15/99 4.94 73,000 73,186
1/15/99 4.99 32,000 32,078
1/31/99 4.86 25,000 24,997
1/31/99 4.91 130,000 130,248
1/31/99 4.94 32,000 32,059
1/31/99 5.09 35,000 35,051
1/31/99 5.25 20,000 20,023
1/31/99 5.27 30,000 30,033
2/15/99 4.64 82,480 83,423
2/15/99 5.13 54,771 54,727
2/28/99 4.32 34,185 34,297
2/28/99 4.35 4,168 4,181
2/28/99 4.36 8,115 8,141
2/28/99 4.46 40,090 40,252
2/28/99 4.47 14,343 14,401
2/28/99 4.52 105,000 105,405
U.S. TREASURY OBLIGATIONS - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
U.S. TREASURY NOTES - CONTINUED
2/28/99 4.57% $ 18,000 $ 18,066
2/28/99 5.03 30,000 30,068
2/28/99 5.04 32,000 32,072
4/15/99 4.45 105,500 106,669
4/30/99 4.26 33,000 33,354
1,215,683
U.S. TREASURY NOTES - INTEREST ONLY STRIPS - 0.7%
5/15/99 4.36 15,000 14,652
U.S. TREASURY NOTES - PRINCIPAL ONLY STRIPS - 15.5%
11/15/98 5.20 35,000 34,927
11/15/98 5.22 40,000 39,917
11/15/98 5.23 3,259 3,252
11/15/98 5.40 25,000 24,942
11/15/98 5.65 15,000 14,973
11/15/98 5.70 30,000 29,943
2/15/99 4.62 6,000 5,919
2/15/99 4.65 19,000 18,751
2/15/99 5.30 30,000 29,539
2/15/99 5.32 30,000 29,537
2/15/99 5.33 15,000 14,768
2/15/99 5.45 10,000 9,846
2/15/99 5.51 10,000 9,845
5/15/99 4.30 14,000 13,678
5/15/99 5.00 10,000 9,735
5/15/99 5.42 11,247 10,928
8/15/99 5.01 16,000 15,388
315,888
TOTAL INVESTMENTS - 100% $ 2,039,658
Total Cost for Income Tax Purposes $ 2,039,658
</TABLE>
INCOME TAX INFORMATION
At April 30, 1998, the fund had a capital loss carryforward of
approximately $55,000 of which $8,000 and $47,000 will expire on April
30, 2002 and 2004, respectively.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) OCTOBER 31, 1998 (UNAUDITED)
ASSETS
INVESTMENT IN SECURITIES, AT VALUE - $ 2,039,658
SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 638,051
RECEIVABLE FOR FUND SHARES SOLD 5,118
INTEREST RECEIVABLE 26,912
TOTAL ASSETS 2,709,739
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 495,386
PAYABLE FOR FUND SHARES REDEEMED 9,868
DISTRIBUTIONS PAYABLE 463
ACCRUED MANAGEMENT FEE 802
PAYABLE FOR REVERSE REPURCHASE AGREEMENTS 56,857
OTHER PAYABLES AND ACCRUED EXPENSES 41
TOTAL LIABILITIES 563,417
NET ASSETS $ 2,146,322
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 2,146,364
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (42)
NET ASSETS, FOR 2,146,233 SHARES OUTSTANDING $ 2,146,322
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $1.00
SHARE ($2,146,322 (DIVIDED BY) 2,146,233 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED OCTOBER 31, 1998 (UNAUDITED)
INTEREST INCOME $ 51,943
EXPENSES
MANAGEMENT FEE $ 4,393
NON-INTERESTED TRUSTEES' COMPENSATION 4
INTEREST 273
TOTAL EXPENSES BEFORE REDUCTIONS 4,670
EXPENSE REDUCTIONS (60) 4,610
NET INTEREST INCOME 47,333
NET REALIZED GAIN (LOSS) ON INVESTMENTS 30
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 47,363
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1998 APRIL 30,
(UNAUDITED) 1998
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 47,333 $ 93,767
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 30 170
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 47,363 93,937
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (47,333) (93,767)
SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 1,025,545 1,866,456
PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 44,931 90,721
COST OF SHARES REDEEMED (836,702) (1,955,761)
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES 233,774 1,416
RESULTING FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 233,804 1,586
NET ASSETS
BEGINNING OF PERIOD 1,912,518 1,910,932
END OF PERIOD $ 2,146,322 $ 1,912,518
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED YEARS ENDED APRIL 30, NINE MONTHS YEARS ENDED JULY 31,
OCTOBER 31, 1998 ENDED
APRIL 30,
(UNAUDITED) 1998 1997 1996 1995 1994 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
BEGINNING OF
PERIOD
INCOME FROM .024 .050 .048 .051 .036 .030 .028
INVESTMENT
OPERATIONS
NET INTEREST INCOME
LESS DISTRIBUTIONS
FROM NET INTEREST (.024) (.050) (.048) (.051) (.036) (.030) (.028)
INCOME
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
END OF PERIOD
TOTAL RETURN B, C 2.46% 5.08% 4.92% 5.25% 3.66% 2.99% 2.87%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, $ 2,146 $ 1,913 $ 1,911 $ 1,795 $ 1,678 $ 1,556 $ 1,749
END OF PERIOD
(IN MILLIONS)
RATIO OF EXPENSES TO .48% A .46% .45% .45% .45% A, D .45% D .42% D
AVERAGE NET ASSETS
RATIO OF EXPENSES TO .47% A, E .46% .45% .43% E .45% A .45% .42%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET 4.85% A 4.96% 4.82% 5.14% 4.85% A 2.94% 2.85%
INTEREST INCOME TO
AVERAGE NET ASSETS
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 4 OF NOTES TO
FINANCIAL STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
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
(SEE NOTE 4 OF NOTES TO FINANCIAL STATEMENTS).
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan U.S. Treasury Money Market Fund (the fund) is a fund of
Fidelity Hereford 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.
REVERSE REPURCHASE AGREEMENTS. At all times that a reverse repurchase
agreement is outstanding, the fund identifies cash and liquid
securities as segregated in its custodian records with a value at
least equal to its obligation under the agreement. On October 31,
1998, the following reverse repurchase agreements were outstanding:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DATE MATURITY COLLATERAL COLLATERAL COLLATERAL
ENTERED AMOUNT RATE DATE AMOUNT TYPE MATURITY DATE
10/30/98 $56,857,000 4% 11/2/98 $57,000,000 U.S. Treasury Bills Nov. 19,1998
</TABLE>
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, Fidelity Management
& Research Company (FMR) pays all expenses, 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 .45% of the fund's
average net assets.
FMR also bears the cost of providing shareholder services to the fund.
To offset the cost of providing these services, FMR or its affiliates
collect certain transaction fees from the fund's shareholders which
amounted to $13,000 for the period.
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. EXPENSE REDUCTIONS.
FMR has entered into an arrangement on behalf of the fund with the
fund's 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 expenses were reduced by
$60,000 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 Fidelity at
1-800-544-7272 and we'll send you an America Online CD or disk with up
to 50 free hours of Web access.
(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
19100 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
HAWAII
700 Bishop Street
Honolulu, HI
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
2200 West Main Street
Durham, 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
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 75309-5517
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 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
INVESTMENT ADVISER
(registered trademark)
Fidelity Management & Research
Company
Boston, MA
SUB-ADVISER
Fidelity Investments
Money Management, Inc.
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
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
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
TMM-SANN-1298 66944
1.538317.101
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
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/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
(FIDELITY_LOGO_GRAPHIC) (REGISTERED TRADEMARK)
COrporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
