SPARTAN(registered trademark)
(REGISTERED TRADEMARK)
MONEY MARKET
FUND
ANNUAL REPORT
APRIL 30, 1998
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 20 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 24 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 26 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 27
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:
Low interest rates and subdued inflation were two main factors that
bolstered stock and bond markets in the U.S. during the first four
months of 1998. The stock market continued to soar to record heights
as corporate earnings proved to be stronger than expected and
investors shrugged off concerns about the effects of economic
difficulties in Asia. The Federal Reserve Board continued its steady
interest rate policy, which boosted the performance of bonds.
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.
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 APRIL 30, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
SPARTAN MONEY MARKET FUND 5.43% 26.79% 67.31%
ALL TAXABLE MONEY MARKET FUNDS AVERAGE 5.17% 24.95% 60.57%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 one year average represents a peer group of 885
money market funds. (The periods covered by IBC Financial Data, Inc.
numbers are the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
SPARTAN MONEY MARKET FUND 5.43% 4.86% 5.71%
ALL TAXABLE MONEY MARKET FUNDS AVERAGE 5.17% 4.55% 5.25%
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
4/28/98 2/3/98 10/28/97 7/29/97 4/29/97
5.23% 5.34% 5.30% 5.30% 5.22%
SPARTAN MONEY MARKET FUND
ALL TAXABLE MONEY MARKET 5.00% 5.08% 5.03% 5.02% 4.96%
FUNDS AVERAGE
4/29/98 1/28/98 10/29/97 7/30/97 4/30/97
2.52% 2.55% 2.65% 2.64% 2.64%
MMDA
Row: 1, Col: 1, Value: 5.23
Row: 1, Col: 2, Value: 5.0
Row: 1, Col: 3, Value: 2.52
Row: 2, Col: 1, Value: 5.34
Row: 2, Col: 2, Value: 5.08
Row: 2, Col: 3, Value: 2.55
Row: 3, Col: 1, Value: 5.3
Row: 3, Col: 2, Value: 5.03
Row: 3, Col: 3, Value: 2.64
Row: 4, Col: 1, Value: 5.3
Row: 4, Col: 2, Value: 5.02
Row: 4, Col: 3, Value: 2.64
Row: 5, Col: 1, Value: 5.22
Row: 5, Col: 2, Value: 4.96
Row: 5, Col: 3, Value: 2.64
6% -
5% -
4% -
3% -
2% -
1% -
0%
Spartan
Money Market Fund
All Taxable Money
Market Funds Average
MMDA
YIELD refers to the income paid by the fund over a given period.
Yields for money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income
earned is reinvested or compounded is called an effective yield. The
chart above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the 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)
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
There are some important
differences between a bank
money market deposit account
(MMDA) and a money market
fund. First, the U.S.
government neither insures nor
guarantees a money market
fund. In fact, there is no
assurance that a money
market fund will maintain a
$1 share price. Second, a
money market fund returns
to its shareholders income
earned by the fund's
investments after expenses.
This is in contrast to banks,
which set their MMDA rates
periodically based on current
interest rates, competitors'
rates, and internal criteria.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with John Todd, Portfolio Manager of Spartan Money Market
Fund
Q. JOHN, WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE OVER THE PAST 12
MONTHS?
A. At the beginning of the period, the economy appeared to moderate
from the torrid pace set in the first quarter of 1997 with most
inflation indicators, such as the producer price index (PPI) - a
measure of wholesale prices - and the consumer price index (CPI),
trending down. Many market observers hoped that this apparent
moderation would prevent the Federal Reserve Board from having to
raise short-term interest rates several more times - which it would do
to slow the economy and head off inflation - following its last rate
increase in March 1997. At that time, the Fed raised the fed funds
rate - the rate banks charge each other for overnight loans - to 5.50%
from 5.25%. However, when a true economic slowdown failed to
materialize in the late summer months, prices for money market
securities again began to price in the risk of higher rates. During
the fourth quarter of 1997, news of currency crises and bank failures
in several Southeast Asian countries emerged. The general fear that
the localized financial turmoil in Asia would spread globally caused a
major sell-off in U.S. equity markets in late October. Consequently,
rates generally fell and the prospects of further interest-rate
increases were priced out of the market.
Q. WHAT HAPPENED NEXT?
A. At the end of 1997 and into early 1998, talk of an interest-rate
cut actually began to circulate, as fears of a slowdown in exports
emerged following the drastic cheapening of Asian goods. At that
point, the yield curve flattened - meaning little difference existed
between the yields of short- and longer-maturity securities. The
yields of longer-term, fixed-income securities came down dramatically,
stimulating the residential real estate market as well as the domestic
economy generally through increased mortgage refinancings - making
consumers `wealthier' by reducing their monthly mortgage payments and
improving overall cash flow. In addition, the stock market rallied to
new heights - with the Dow Jones Industrial Average closing above
9,000 for the first time ever in April. This re-stimulated economy
seemed to overwhelm the potential negative impact of the Asian crisis
- - and again rekindled concerns that the Fed would raise interest rates
to head off inflation. However, data suggested that inflation remained
benign. First-quarter real GDP - gross domestic product adjusted for
inflation - grew at a surprisingly strong rate of 4.8%, while the
employment cost index rose at a slower-than-expected rate despite an
unusually tight labor market.
Q. WHAT WAS YOUR STRATEGY?
A. During the first half of the period when the money market yield
curve was steep - meaning the longer-maturity securities were yielding
much more than the shorter-maturity securities - and these securities
had priced in several interest-rate increases, I ran the fund with a
70-plus-day average maturity, taking advantage of the attractive
yields at the long end of the curve. Late in 1997 when the Asian
crisis built to a crescendo and the money market yield curve flattened
dramatically, I shortened the fund's average maturity to about 54
days. This enabled the fund to take advantage of attractive year-end
rates. I also shortened the maturity because some market observers
began to expect the Fed to lower rates in an effort to offset the
negative effects of the Asian crisis. I felt this was premature and -
with the yield curve flattening - there was little incentive to buy
longer-term securities. Late in the period, the market became
concerned with the resilience of the domestic economy. As a result,
market participants dismissed the notion that the Fed would lower
interest rates, so I extended the fund's average maturity to about 73
days at the end of the period because the yield curve developed a more
positive slope.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on April 30, 1998, was 5.23%, compared
to 5.23% 12 months ago. For the 12 months that ended April 30, 1998,
the fund had a total return of 5.43%, compared to 5.17% for the all
taxable money market funds average, according to IBC Financial Data,
Inc.
Q. WHAT'S YOUR OUTLOOK?
A. I think the economy will continue to receive some lingering
stimulus from the earlier decline in interest rates. I also believe
that the worst possible effects of Asia are behind us. As a result, I
think there's a good chance that the Fed will need to act preemptively
- - raising interest rates in an effort to head off future inflationary
pressures. However, I still believe we need to monitor the situation
in Asia carefully because another downturn in the financial markets
there could cause negative effects to linger in the U.S. and around
the globe. If things stay the way they are, I believe the Fed may
raise rates in the third quarter. However, the best-case scenario is
that the Fed will leave rates unchanged for the remainder of the year.
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 APRIL 30, 1998,
MORE THAN $8.8 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 ASSETS % OF FUND ASSETS % OF FUND ASSETS
4/30/98 10/31/97 4/30/97
0 - 30 45 45 57
31 - 90 26 26 20
91 - 180 20 20 11
181 - 397 9 9 12
WEIGHTED AVERAGE MATURITY
4/30/98 10/31/97 4/30/97
SPARTAN MONEY MARKET 73 DAYS 75 DAYS 69 DAYS
ALL TAXABLE MONEY 58 DAYS 55 DAYS 52 DAYS
MARKET FUNDS AVERAGE*
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998 AS OF OCTOBER 31, 1997
Row: 1, Col: 1, Value: 0.0
Row: 1, Col: 2, Value: 2.0
Row: 1, Col: 3, Value: 35.0
Row: 1, Col: 4, Value: 63.0
Bank CD's, BAs
TDs and notes 68%
Commercial Paper 28%
Government
securities 3%
Other 1%
Bank CDs, BAs,
TDs, and notes 64%
Commercial paper 35%
Government
securities 1%
Other 0%
Row: 1, Col: 1, Value: 2.0
Row: 1, Col: 2, Value: 3.5
Row: 1, Col: 3, Value: 28.0
Row: 1, Col: 4, Value: 66.5
*SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
INVESTMENTS APRIL 30, 1998
Showing Percentage of Total Value of Investments
CERTIFICATES OF DEPOSIT - 45.6%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
DOMESTIC CERTIFICATES OF DEPOSIT - 2.2%
Chase Manhattan Bank (USA) Delaware
5/11/98 5.56% $ 55,000 $ 55,000
Corestates Bank
5/4/98 5.64 12,000 12,000
5/11/98 5.60 5,000 5,000
5/29/98 5.62 5,000 5,000
Mellon Bank, NA (Pittsburgh)
5/5/98 5.58 40,000 40,000
Morgan Guaranty Trust Co., NY
8/6/98 5.90 36,995 36,992
Wachovia Bank, NA
5/18/98 5.59 (a) 15,000 14,996
Westpac Banking Corp.
5/5/99 5.85 15,000 14,993
World Savings Bank, FSB
5/1/98 5.60 10,000 10,000
193,981
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 31.4%
ABN-AMRO Bank NV
8/14/98 5.90 27,000 27,001
10/19/98 5.50 90,000 90,000
Bank of Montreal, Canada
5/4/98 5.52 45,000 45,000
5/13/98 5.53 100,000 100,000
Bank of Nova Scotia
7/21/98 5.97 12,000 11,996
8/31/98 5.97 30,000 29,994
10/1/98 5.52 25,000 25,022
3/5/99 5.75 30,000 29,985
Bank of Scotland Treasury Services
5/19/98 5.53 15,000 15,000
Banque Nationale de Paris
6/4/98 5.52 40,000 40,000
9/23/98 5.62 25,000 24,995
Barclays Bank, PLC
5/20/98 5.52 140,000 140,000
Bayerische Hypotheken-und Wechsel
5/4/98 5.57 50,000 50,000
5/11/98 5.56 30,000 30,000
Bayerische Landesbank Girozentrale
7/17/98 5.90 55,000 54,996
Bayerische Vereinsbank, AG
5/4/98 5.66 40,000 40,000
2/26/99 5.70 75,000 74,970
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
Canadian Imperial Bank of Commerce
5/5/98 5.56% $ 75,000 $ 75,000
6/3/98 5.54 55,000 55,000
8/28/98 5.97 55,000 54,990
3/2/99 5.70 55,000 54,971
Credit Agricole Indosuez
5/4/98 5.80 85,000 85,000
5/20/98 5.52 35,000 35,000
10/14/98 5.90 50,000 49,989
10/19/98 5.97 25,000 24,992
10/21/98 5.62 50,000 50,000
10/21/98 6.00 30,000 29,993
2/26/99 5.70 20,000 19,994
4/28/99 5.81 60,000 59,977
4/30/99 5.87 55,000 54,969
Deutsche Bank, AG
8/3/98 5.52 90,000 90,000
8/10/98 5.91 55,000 54,991
8/10/98 5.92 27,000 26,996
2/10/99 5.60 25,000 24,991
3/5/99 5.75 60,000 59,973
10/26/98 6.00 20,000 19,994
Generale Banque de Paris
5/12/98 5.60 15,000 15,000
National Westminster Bank, PLC
7/29/98 5.52 20,000 20,001
8/10/98 6.00 13,000 12,995
9/25/98 5.88 18,000 17,994
2/26/99 5.70 60,000 59,981
3/2/99 5.70 55,000 54,978
Rabobank Nederland, Coop. Central
5/5/99 5.83 15,000 14,991
Royal Bank of Canada
8/7/98 5.90 37,000 36,997
8/13/98 6.00 25,000 24,996
9/15/98 5.61 30,000 30,015
2/10/99 5.60 55,000 54,976
2/26/99 5.70 20,000 19,989
Royal Bank of Scotland, PLC
6/15/98 5.85 12,000 12,000
Societe Generale, France
6/3/98 5.59 50,000 50,000
6/8/98 5.58 75,000 75,000
8/4/98 5.53 10,000 10,000
8/24/98 5.55 75,000 75,000
10/20/98 5.60 70,000 70,000
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
Swiss Bank Corp.
6/1/98 5.54% $ 85,000 $ 85,000
8/19/98 5.91 25,000 24,997
8/28/98 5.97 55,000 54,991
10/21/98 5.50 90,000 90,000
12/16/98 5.55 25,600 25,638
3/19/99 5.70 75,000 74,956
4/30/99 5.87 55,000 54,969
2,821,243
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 12.0%
Abbey National Treasury Services, PLC
5/18/98 5.54 15,000 15,000
6/17/98 5.56 100,000 100,000
6/22/98 5.56 100,000 100,000
6/25/98 5.56 100,000 100,000
9/28/98 5.60 30,000 30,000
10/6/98 5.61 25,000 25,000
ABN-AMRO Bank NV
5/6/98 5.55 30,000 30,000
Bank of Nova Scotia
5/19/98 5.56 75,000 75,000
9/28/98 5.61 45,000 44,996
Barclays Bank, PLC
5/11/98 5.54 35,000 35,000
5/20/98 5.56 20,000 20,003
6/9/98 5.54 70,000 70,000
9/24/98 5.60 60,000 60,000
10/21/98 5.60 15,000 15,000
10/28/98 5.65 40,000 39,993
Lloyds Bank, PLC
10/26/98 5.53 25,000 25,046
National Westminster Bank, PLC
5/6/98 5.56 85,000 85,000
NationsBank, NA
9/14/98 5.55 65,000 65,000
Rabobank Nederland, Coop. Central
9/9/98 5.61 75,000 75,000
Toronto-Dominion Bank
6/1/98 5.54 25,000 25,000
10/14/98 5.93 30,000 30,000
Westdeutsche Landesbank Girozentrale
6/18/98 5.54 10,000 10,000
1,075,038
TOTAL CERTIFICATES OF DEPOSIT 4,090,262
COMMERCIAL PAPER - 34.5%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
ABN-AMRO North America, Inc.
7/2/98 5.84% $ 30,077 $ 29,787
7/13/98 5.84 20,000 19,773
American Express Credit Corp.
5/14/98 5.59 10,000 9,980
8/13/98 5.58 10,000 9,843
Aspen Funding Corp.
5/20/98 5.56 40,000 39,883
5/27/98 5.56 10,000 9,960
6/2/98 5.58 40,000 39,803
6/3/98 5.56 22,000 21,888
Asset Securitization Coop. Corp.
5/7/98 5.58 20,000 19,982
Associates Corp. of North America
5/11/98 5.53 5,000 4,992
5/12/98 5.53 40,000 39,933
5/13/98 5.57 20,000 19,963
5/21/98 5.57 20,000 19,939
6/2/98 5.55 5,000 4,976
Bank of Scotland Treasury Services
5/7/98 5.52 35,000 34,968
Bayerische Landesbank Girozentrale
5/27/98 5.57 40,000 39,841
Bear Stearns Cos., Inc.
5/11/98 5.59 25,000 24,962
5/20/98 5.59 5,000 4,985
Beneficial Corp.
5/13/98 5.60 25,000 24,954
6/10/98 5.55 10,000 9,939
7/14/98 5.60 15,000 14,830
7/15/98 5.60 10,000 9,885
BMW US Capital Corp.
5/6/98 5.58 10,000 9,992
5/7/98 5.58 5,000 4,995
6/10/98 5.59 14,655 14,565
6/12/98 5.60 10,000 9,936
6/15/98 5.59 15,000 14,897
Caisse des Depots et Consigns
5/6/98 5.57 10,000 9,992
Caisse d'Amortissement de la Dette Sociale
6/5/98 5.84 60,000 59,669
6/11/98 5.87 40,000 39,740
Chase Manhattan Corp.
5/21/98 5.57 85,000 84,740
Chrysler Financial Corp.
6/3/98 5.61 10,000 9,949
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
CIESCO, L.P.
5/11/98 5.58% $ 20,000 $ 19,969
6/1/98 5.54 10,000 9,953
6/24/98 5.55 10,000 9,918
CIT Group, Inc.
5/19/98 5.57 20,000 19,945
6/2/98 5.58 35,000 34,829
6/10/98 5.55 20,000 19,879
Citibank Credit Card Master Trust I (Dakota Certificate Program)
5/18/98 5.60 15,000 14,961
5/20/98 5.55 25,000 24,928
6/8/98 5.60 25,000 24,854
6/16/98 5.55 41,128 40,839
Corestates Bank
5/4/98 5.64 (a) 13,000 13,000
Cregem North America, Inc.
6/4/98 5.57 15,000 14,922
6/8/98 5.58 30,000 29,826
6/9/98 5.58 10,000 9,940
Daimler-Benz North America Corp.
5/7/98 5.52 10,000 9,991
6/10/98 5.57 16,613 16,511
Deere & Co.
5/26/98 5.56 25,000 24,905
Delaware Funding Corporation
6/18/98 5.57 10,000 9,926
Den Danske Corp., Inc.
5/28/98 5.55 15,000 14,938
7/1/98 5.59 25,000 24,767
Deutsche Bank Financial, Inc.
5/6/98 5.57 63,000 62,952
5/18/98 5.55 90,000 89,765
Diageo Capital, PLC
5/4/98 5.59 10,000 9,995
5/5/98 5.59 20,000 19,988
6/23/98 5.58 15,000 14,878
Dresdner U.S. Finance Inc.
5/15/98 5.53 45,736 45,638
Eiger Capital Corp.
5/14/98 5.58 15,000 14,970
5/26/98 5.55 15,000 14,943
Enterprise Funding Corp.
5/4/98 5.58 8,000 7,996
5/12/98 5.54 10,000 9,983
5/14/98 5.60 15,000 14,970
5/26/98 5.56 21,000 20,919
5/27/98 5.55 15,473 15,411
6/4/98 5.60 10,000 9,948
6/15/98 5.56 9,329 9,265
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Ford Motor Credit Co.
5/6/98 5.54% $ 25,000 $ 24,981
5/11/98 5.53 65,000 64,901
5/12/98 5.53 35,000 34,942
5/18/98 5.54 75,000 74,805
General Electric Capital Corp.
5/1/98 5.82 25,000 25,000
5/13/98 5.57 40,000 39,926
5/27/98 5.58 40,000 39,841
6/3/98 5.54 15,000 14,925
6/23/98 5.59 66,000 65,466
7/21/98 5.57 25,000 24,693
7/31/98 5.58 45,000 44,379
8/4/98 5.54 40,000 39,431
8/13/98 5.61 20,000 19,681
8/25/98 5.62 65,000 63,844
9/8/98 5.58 35,000 34,314
General Electric Capital Services, Inc.
8/24/98 5.62 50,000 49,118
General Electric Co.
5/6/98 5.56 40,000 39,969
5/13/98 5.57 45,000 44,917
General Motors Acceptance Corp.
5/13/98 5.60 35,000 34,935
5/27/98 5.57 60,000 59,763
5/28/98 5.57 60,000 59,753
6/3/98 5.56 75,000 74,621
GTE Corp.
5/4/98 5.83 6,600 6,597
Halifax Building Society
6/17/98 5.55 25,000 24,820
Household Finance Corp.
5/4/98 5.57 75,000 74,966
5/5/98 5.54 10,000 9,994
Kitty Hawk Funding Corp.
5/13/98 5.62 15,000 14,972
5/20/98 5.58 5,000 4,985
5/29/98 5.60 10,000 9,957
6/1/98 5.60 5,000 4,976
7/1/98 5.60 20,790 20,596
Merrill Lynch & Co., Inc.
6/15/98 5.56 25,000 24,828
6/17/98 5.59 20,000 19,856
6/30/98 5.60 20,000 19,816
Morgan Stanley, Dean Witter, Discover & Co.
6/3/98 5.60 42,000 41,787
6/16/98 5.58 20,000 19,859
Nationwide Building Society
7/8/98 5.57 10,000 9,896
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
New Center Asset Trust
5/4/98 5.58% $ 25,000 $ 24,988
5/6/98 5.60 40,000 39,969
5/15/98 5.54 10,000 9,979
5/18/98 5.55 55,000 54,858
Norfolk Southern Corp.
5/6/98 5.80 10,000 9,992
5/13/98 5.74 5,000 4,991
5/20/98 5.74 5,000 4,985
5/27/98 5.74 10,000 9,959
PHH Corp.
5/26/98 5.66 27,000 26,895
Preferred Receivables Funding Corp.
5/13/98 5.55 25,000 24,954
Sears Roebuck Acceptance Corp.
5/19/98 5.60 15,000 14,959
6/5/98 5.59 10,000 9,946
Textron, Inc.
5/6/98 5.68 10,000 9,992
Transamerica Finance Corp.
5/20/98 5.55 (a) 7,000 6,980
Triple A One Funding Corp.
5/14/98 5.57 14,531 14,502
6/3/98 5.58 23,000 22,883
Unifunding, Inc.
6/2/98 5.58 10,000 9,951
6/4/98 5.58 20,000 19,896
Westpac Capital Corp.
5/26/98 5.57 30,000 29,885
TOTAL COMMERCIAL PAPER 3,096,637
FEDERAL AGENCIES - 0.9%
FANNIE MAE - AGENCY COUPONS (A) - 0.9%
6/12/98 5.59 85,000 84,995
BANK NOTES - 6.6%
BankOne, Columbus, NA
5/5/98 5.51 (a) 66,000 65,995
Comerica Bank, Detroit
5/18/98 5.62 (a) 20,000 19,997
First Bank NA - Minnesota
5/20/98 5.62 (a) 10,000 9,999
5/20/98 5.62 (a) 15,000 14,999
BANK NOTES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Federal Union National Bank of North Carolina
5/1/98 5.43% (a) $ 35,000 $ 34,996
Harris Trust & Savings Bank, Chicago
6/8/98 5.56 15,000 15,000
Key Bank, National Association
5/1/98 5.40 (a) 45,000 44,987
5/12/98 5.62 (a) 30,000 29,998
5/26/98 5.61 (a) 44,000 43,991
5/28/98 5.61 (a) 39,000 38,991
Morgan Guaranty Trust Co., NY
8/31/98 5.85 30,710 30,715
8/31/98 5.97 38,000 37,995
National City Bank - Pennsylvania
5/4/98 5.65 27,000 26,998
NationsBank, NA
10/19/98 5.54 20,000 20,000
Northern Trust Co., Chicago
5/1/98 5.64 (a) 25,000 24,997
PNC Bank, NA
5/1/98 5.42 (a) 12,000 11,998
5/26/98 5.61 (a) 9,000 9,003
5/27/98 5.62 (a) 26,000 25,999
7/16/98 5.64 (a) 50,000 49,979
SouthTrust Bank, Alabama
5/11/98 5.62 (a) 16,000 15,997
US Bank, NA
5/20/98 5.61 (a) 16,000 15,996
TOTAL BANK NOTES 588,630
MASTER NOTES (A) - 3.0%
Goldman Sachs Group, L.P.
5/4/98 (c) 5.63 18,000 18,000
6/13/98 (c) 5.69 130,000 130,000
J.P. Morgan Securities, Inc.
5/7/98 5.63 107,000 107,000
SunTrust Bank, Inc.
5/7/98 5.61 15,000 15,000
TOTAL MASTER NOTES 270,000
MEDIUM-TERM NOTES (A) - 3.8%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
Beneficial Corp.
5/5/98 5.55% $ 17,000 $ 16,999
6/25/98 5.65 18,000 17,997
Commonwealth Life Insurance Co.
5/29/98 (c) 5.83 35,000 35,000
Merrill Lynch & Co., Inc.
5/1/98 5.46 38,000 37,998
5/4/98 5.66 17,000 17,000
Morgan Guaranty Trust Co., NY
5/1/98 5.48 45,000 45,000
New York Life Insurance Co.
6/23/98 5.69 40,000 40,000
Norwest Corp.
7/22/98 5.71 50,000 50,000
Pacific Mutual Life Insurance Co.
6/9/98 (b) 5.73 35,000 35,000
Transamerica Life Insurance & Annuity Co.
5/1/98 (c) 5.72 20,000 20,000
6/16/98 5.70 30,000 30,000
TOTAL MEDIUM-TERM NOTES 344,994
SHORT-TERM NOTES (A) - 5.6%
Capital One Funding Corp. (1994-E)
5/7/98 5.60 7,573 7,573
Capital One Funding Corp. (1995-D)
5/7/98 5.60 7,420 7,420
Capital One Funding Corp. (1995-E)
5/7/98 5.60 5,745 5,745
Capital One Funding Corp. (1996-H)
5/7/98 5.67 8,010 8,010
Capital One Funding Corp. (1996-I)
5/7/98 5.60 10,502 10,502
Capital One Funding Corp. (1997-F)
5/7/98 5.60 5,000 5,000
Capital One Funding Corp. (1997-G)
5/7/98 5.60 3,891 3,891
Liquid Asset Backed Securities Trust (1996-1)
5/15/98 (b) 5.64 41,000 41,000
Liquid Asset Backed Securities Trust (1996-2)
5/1/98 (b) 5.67 57,000 57,000
Liquid Asset Backed Securities Trust (1997-5)
5/18/98 (b) 5.64 82,000 82,000
SMM Trust (1997-I)
5/29/98 (b) 5.66 37,000 37,000
SHORT-TERM NOTES (A) - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
SMM Trust (1997-P)
5/16/98 (b) 5.66% $ 18,000 $ 18,000
SMM Trust (1997-X)
5/12/98 (b) 5.66 51,000 51,000
Strategic Money Market Trust (1997-A)
6/23/98 (b) 5.69 100,000 100,000
Strategic Money Market Trust (1998-B)
5/5/98 (b) 5.68 67,000 67,000
TOTAL SHORT-TERM NOTES 501,141
REPURCHASE AGREEMENTS - 0.0%
MATURITY AMOUNT
(000S)
In a joint trading account
(U.S. Treasury Obligations):
dated 4/30/98 due 5/1/98
At 5.52% $ 3,004 3,004
TOTAL INVESTMENTS - 100% $ 8,979,663
Total Cost for Income Tax Purposes $ 8,979,663
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.
(b) 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
$488,000,000 or 5.5% of net assets.
(c) Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
Additional information on each holding is as follows:
ACQUISITION COST
SECURITY DATE (000S)
Commonwealth
Life Insurance Co.,
5.83%, 5/29/98 7/1/97 $ 35,000
Goldman Sachs Group, L.P.:
5.63%, 5/4/98 8/5/97 $ 18,000
5.69%, 6/13/98 6/11/97 $130,000
Transamerica Life
Insurance & Annuity
Co., 5.72%, 5/1/98 5/7/97 $ 20,000
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
AMOUNT IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) APRIL 30, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 8,979,663
AGREEMENTS OF $3,004) - SEE ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 5,000
RECEIVABLE FOR FUND SHARES SOLD 38,724
INTEREST RECEIVABLE 67,323
TOTAL ASSETS 9,090,710
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 180,017
PAYABLE FOR FUND SHARES REDEEMED 43,121
DISTRIBUTIONS PAYABLE 1,076
ACCRUED MANAGEMENT FEE 3,317
OTHER PAYABLES AND ACCRUED EXPENSES 124
TOTAL LIABILITIES 227,655
NET ASSETS $ 8,863,055
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 8,865,681
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (2,626)
NET ASSETS, FOR 8,865,170 SHARES OUTSTANDING $ 8,863,055
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $1.00
SHARE ($8,863,055 (DIVIDED BY) 8,865,170 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
AMOUNT IN THOUSANDS YEAR ENDED APRIL 30, 1998
INTEREST INCOME $ 514,554
EXPENSES
MANAGEMENT FEE $ 40,209
NON-INTERESTED TRUSTEES' COMPENSATION 41
TOTAL EXPENSES BEFORE REDUCTIONS 40,250
EXPENSE REDUCTIONS (319) 39,931
NET INTEREST INCOME 474,623
NET REALIZED GAIN (LOSS) ON INVESTMENTS 115
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 474,738
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNT IN THOUSANDS YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 474,623 $ 453,728
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 115 90
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 474,738 453,818
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (474,623) (453,728)
SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 14,018,870 13,164,275
PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 462,349 441,878
COST OF SHARES REDEEMED (14,917,925) (12,757,142)
NET INCREASE (DECREASE) IN NET ASSETS AND SHARES (436,706) 849,011
RESULTING FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (436,591) 849,101
NET ASSETS
BEGINNING OF PERIOD 9,299,646 8,450,545
END OF PERIOD $ 8,863,055 $ 9,299,646
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED APRIL 30,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
BEGINNING OF PERIOD
INCOME FROM INVESTMENT OPERATIONS .053 .051 .054 .049 .031
NET INTEREST INCOME
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.053) (.051) (.054) (.049) (.031)
NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN A 5.43% 5.21% 5.57% 4.97% 3.14%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 8,863 $ 9,300 $ 8,451 $ 7,635 $ 6,453
(IN MILLIONS)
RATIO OF EXPENSES TO AVERAGE .45% .45% .45% .44% B .31% B
NET ASSETS
RATIO OF EXPENSES TO AVERAGE NET .45% .45% .42% C .44% .31%
ASSETS AFTER EXPENSE REDUCTIONS
RATIO OF NET INTEREST INCOME TO 5.31% 5.09% 5.45% 4.89% 3.12%
AVERAGE NET ASSETS
</TABLE>
A TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND WOULD HAVE
BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS
SHOWN.
B 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.
C 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 April 30, 1998
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.
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.
2. OPERATING POLICIES -
CONTINUED
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
issued) amounted to $203,000,000 or 2.3% 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 $222,000 for the period.
SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity
Investments Money Management, Inc. (formerly FMR Texas, Inc.), a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
4. EXPENSE REDUCTIONS.
FMR has entered into an arrangement on behalf of the fund with its
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 custodian and transfer agent
fees were reduced by $2,000 and $317,000, respectively, under these
arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Hereford Street Trust and the Shareholders
of Spartan Money Market Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Hereford Street Trust: Spartan Money Market Fund,
including the schedule of portfolio investments, as of April 30, 1998,
and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five
years in the period then ended. These financial statements and
financial highlights are the responsibility of the fund's management.
Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of April 30, 1998 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Hereford Street Trust: Spartan Money
Market Fund as of April 30, 1998, the results of its operations for
the year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with
generally accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 4, 1998
DISTRIBUTIONS
A total of .24% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
The fund will notify shareholders in January 1999 of the applicable
percentage for use in preparing 1998 income tax returns.
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 Xpressprovides 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.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
0
*
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.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY
MARKET FUNDS WILL BE ABLE TO
MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND
IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY
SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
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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
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
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4090 N. Ocean Boulevard
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
4001 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
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 Todd, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Thomas D. Maher, 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
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 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
SPARTAN
(REGISTERED TRADEMARK)
(REGISTERED TRADEMARK)
U.S. GOVERNMENT
MONEY MARKET
FUND
ANNUAL REPORT
APRIL 30, 1998
CONTENTS
PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES.
PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME.
FUND TALK 6 THE MANAGER'S REVIEW OF FUND
PERFORMANCE, STRATEGY AND OUTLOOK.
INVESTMENT CHANGES 8 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S
INVESTMENTS OVER THE PAST SIX MONTHS
AND ONE YEAR.
INVESTMENTS 9 A COMPLETE LIST OF THE FUND'S INVESTMENTS.
FINANCIAL STATEMENTS 12 STATEMENTS OF ASSETS AND LIABILITIES,
OPERATIONS, AND CHANGES IN NET ASSETS,
AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES 16 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT 22 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 23
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:
Low interest rates and subdued inflation were two main factors that
bolstered stock and bond markets in the U.S. during the first four
months of 1998. The stock market continued to soar to record heights
as corporate earnings proved to be stronger than expected and
investors shrugged off concerns about the effects of economic
difficulties in Asia. The Federal Reserve Board continued its steady
interest rate policy, which boosted the performance of bonds.
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.
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 APRIL 30, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
SPARTAN U.S. GOVERNMENT 5.36% 26.06% 50.70%
MONEY MARKET FUND
GOVERNMENT MONEY MARKET 5.10% 24.68% 47.02%
FUNDS AVERAGE
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 one year average represents a peer group
of 427 money market funds. (The periods covered by IBC Financial Data,
Inc. numbers are the closest available match to those covered by the
fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1998 PAST 1 PAST 5 LIFE OF
YEAR YEARS FUND
SPARTAN U.S. GOVERNMENT 5.36% 4.74% 5.10%
MONEY MARKET FUND
GOVERNMENT MONEY MARKET 5.10% 4.51% 4.78%
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
4/28/98 2/3/98 10/28/97 7/29/97 4/29/97
SPARTAN U.S. GOVERNMENT 5.15% 5.26% 5.25% 5.23% 5.18%
MONEY MARKET FUND
GOVERNMENT MONEY 4.82% 4.89% 4.85% 4.83% 4.75%
MARKET FUNDS AVERAGE
4/29/98 1/28/98 10/29/97 7/30/97 4/30/97
2.52% 2.55% 2.65% 2.64% 2.64%
MMDA
Row: 1, Col: 1, Value: 5.15
Row: 1, Col: 2, Value: 4.819999999999999
Row: 1, Col: 3, Value: 2.52
Row: 2, Col: 1, Value: 5.26
Row: 2, Col: 2, Value: 4.89
Row: 2, Col: 3, Value: 2.55
Row: 3, Col: 1, Value: 5.25
Row: 3, Col: 2, Value: 4.85
Row: 3, Col: 3, Value: 2.65
Row: 4, Col: 1, Value: 5.23
Row: 4, Col: 2, Value: 4.83
Row: 4, Col: 3, Value: 2.64
Row: 5, Col: 1, Value: 5.18
Row: 5, Col: 2, Value: 4.75
Row: 5, Col: 3, Value: 2.64
Spartan U.S.
Government
Money Market
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)
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
THERE ARE SOME IMPORTANT
DIFFERENCES BETWEEN A BANK
MONEY MARKET DEPOSIT ACCOUNT
(MMDA) AND A MONEY MARKET
FUND. FIRST, THE U.S. GOVERNMENT
NEITHER INSURES NOR GUARANTEES
A MONEY MARKET FUND. IN FACT,
THERE IS NO ASSURANCE THAT A
MONEY MARKET FUND WILL
MAINTAIN A $1 SHARE PRICE.
SECOND, A MONEY MARKET FUND
RETURNS TO ITS SHAREHOLDERS
INCOME EARNED BY THE FUND'S
INVESTMENTS AFTER EXPENSES. THIS
IS IN CONTRAST TO BANKS, WHICH
SET THEIR MMDA RATES
PERIODICALLY BASED ON CURRENT
INTEREST RATES, COMPETITORS'
RATES, AND INTERNAL CRITERIA.
(CHECKMARK)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Robert Litterst, Portfolio Manager of Spartan U.S.
Government Money Market Fund
Q. BOB, WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE OVER THE PAST 12
MONTHS?
A. As we entered the summer of 1997, short-term interest rates rose as
most in the market expected the Federal Reserve Board to raise rates
in an effort to slow the economy and head off inflation. However, the
Fed kept rates steady because inflation was well contained and
economic activity was expected to slow. Contrary to the Fed's
forecast, the economy continued on a solid pace in the third quarter,
with real GDP - gross domestic product adjusted for inflation -
growing at a 3.1% annual rate. Real GDP has grown at about a 4% annual
rate over the past year, clearly above estimates of the economy's
non-inflationary potential. While inflation has remained remarkably
subdued, many feel that growth at this rate will result in a rise in
inflation at some point. Nonetheless, the Fed has been patient, and
appears to be willing to tolerate strong growth until clear signs of
rising inflation emerge. Another factor that tempered the Fed's need
to raise rates was the financial crisis in Asia and fear that a rate
hike would further disrupt global financial markets. When all was said
and done, the Fed kept the benchmark federal funds rate - the rate
banks charge each other for overnight loans - at 5.5% for the entire
year.
Q. WERE THERE OTHER FACTORS THAT DROVE THE MARKET FOR SHORT-TERM U.S.
GOVERNMENT SECURITIES?
A. Yes, there were some developments in the U.S. Treasury market that
affected government agency money market securities because there is a
correlation between how the two markets behave. As the U.S. budget
deficit has declined, so have the financing needs of the U.S.
Treasury. As a result of reduced issuance and pay-downs of various
Treasury debt, the supply of Treasuries has fallen. Combined with
solid demand from both foreign and domestic investors during the
period, this situation pushed yields on Treasuries - and associated
government money market securities - lower. Supply issues, pertaining
to both U.S. Treasury securities and government agency securities, may
have a considerable impact on the market going forward.
Q. WHAT WAS YOUR STRATEGY?
A. I continued to use a barbell strategy - concentrating the fund on
either end of the maturity spectrum - investing in overnight to
one-month securities on the one hand and on issues with maturities of
one year on the other. I've been purchasing longer-term securities at
moments of market weakness when the short-term yield curve steepens
and longer-term investments present attractive values. The
very-short-term securities help to balance the portfolio and serve a
defensive purpose that will help the fund if the Fed raises rates
again. Overall, the fund's average maturity tended to be longer than
the average of its peers.
Q. HOW DID THE FUND PERFORM?
A. On April 30, 1998, the fund's seven-day yield was 5.16%, compared
to 5.18% 12 months ago. The fund's total return for the 12 months was
5.36%, compared to the 5.10% total return for the government money
market funds average tracked by IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. We've continued to experience strong domestic economic growth
amidst incredibly benign inflation statistics, which together - based
on history - are somewhat difficult to reconcile. Market observers
generally expect growth to slow due to the normal ebb and flow of the
economy and because they feel the impact of Asia will reduce our
ability to export goods and services to that part of the world. The
effect has been muted thus far - as real GDP grew at an annual rate of
4.2% in the first quarter of 1998. The Fed remains concerned about the
strength of the economy and also about the high valuation levels of
the stock market. The extraordinary gains in the equity market have
given rise to worries about the possibility of an asset-price bubble
developing, similar to what occurred in Japan in the late 1980s. All
of these unusual circumstances make it difficult to anticipate what
the Fed will do, but I believe there is a greater chance that the Fed
will raise rates in the next three to six months than lower them.
Accordingly, I plan to proceed with caution and continue to seek out
investments that offer an attractive risk/reward trade-off.
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
START DATE: February 5, 1990
FUND NUMBER: 458
TRADING SYMBOL: SPAXX
SIZE: as of April 30, 1998,
more than $773 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 ASSETS % OF FUND ASSETS % OF FUND ASSETS
4/30/98 10/31/97 4/30/97
0 - 30 63 60 66
31 - 90 16 9 18
91 - 180 10 19 0
181 - 397 11 12 16
WEIGHTED AVERAGE MATURITY
4/30/98 10/31/97 4/30/97
SPARTAN U.S. GOVERNMENT 61 DAYS 69 DAYS 63 DAYS
MONEY MARKET FUND
GOVERNMENT MONEY MARKET 54 DAYS 50 DAYS 47 DAYS
FUNDS AVERAGE*
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998 AS OF OCTOBER 31, 1997
ROW: 1, COL: 1, VALUE: 32.0
ROW: 1, COL: 2, VALUE: 68.0
FEDERAL AGENCY
ISSUES 49%
REPURCHASE
AGREEMENTS 51%
FEDERAL AGENCY
ISSUES 68%
REPURCHASE
AGREEMENTS 32%
ROW: 1, COL: 1, VALUE: 51.5
ROW: 1, COL: 2, VALUE: 48.5
* SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
INVESTMENTS APRIL 30, 1998
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENT IN SECURITIES
FEDERAL AGENCIES - 68.0%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
FANNIE MAE - AGENCY COUPONS - 25.9%
5/1/98 5.38% (a) $ 13,000,000 $ 12,994,279
5/1/98 5.62 (a) 21,000,000 21,002,672
5/5/98 5.55 (a) 8,000,000 7,996,033
5/15/98 5.53 22,000,000 21,995,821
5/17/98 5.53 (a) 16,000,000 15,989,952
5/21/98 5.96 9,000,000 8,999,282
6/5/98 5.44 (a) 20,000,000 19,982,200
6/10/98 5.50 4,000,000 3,998,496
6/12/98 5.59 (a) 10,000,000 9,999,444
8/14/98 5.71 9,000,000 8,995,949
8/14/98 5.80 7,000,000 6,995,358
9/9/98 5.77 4,000,000 3,998,000
9/9/98 5.79 4,000,000 3,997,805
11/20/98 5.73 8,000,000 7,993,593
2/12/99 5.43 8,000,000 7,989,718
2/19/99 5.43 5,000,000 4,994,075
2/23/99 5.45 4,000,000 3,996,403
2/23/99 5.47 4,000,000 3,995,700
2/26/99 5.56 9,000,000 8,981,297
3/16/99 5.52 8,000,000 7,991,959
3/26/99 5.55 12,000,000 11,989,184
204,877,220
FANNIE MAE - DISCOUNT NOTES - 9.6%
5/29/98 5.51 11,000,000 10,953,287
6/5/98 5.50 8,801,000 8,752,147
6/5/98 5.51 8,000,000 7,960,180
6/19/98 5.50 19,000,000 18,859,833
7/17/98 5.50 15,000,000 14,826,108
7/27/98 5.52 15,000,000 14,802,800
76,154,355
FEDERAL FARM CREDIT BANK - AGENCY COUPONS - 2.1%
5/10/98 5.53 (a) 8,000,000 7,996,334
9/2/98 5.76 9,000,000 8,996,086
16,992,420
FEDERAL HOME LOAN BANK - AGENCY COUPONS - 15.0%
5/1/98 5.38 (a) 13,000,000 12,994,279
5/1/98 5.60 (a) 9,000,000 8,997,758
5/2/98 5.56 (a) 12,000,000 11,998,116
6/9/98 5.89 9,000,000 8,999,874
6/11/98 5.88 3,500,000 3,499,799
6/12/98 5.81 5,000,000 4,999,482
7/7/98 5.45 7,000,000 7,002,779
9/18/98 5.76 13,000,000 12,998,330
FEDERAL AGENCIES - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
FEDERAL HOME LOAN BANK - AGENCY COUPONS - CONTINUED
9/24/98 5.34% $ 8,200,000 $ 8,205,854
9/24/98 5.71 6,000,000 5,997,826
10/23/98 5.70 8,000,000 7,997,000
10/23/98 5.73 8,000,000 7,995,981
12/17/98 5.81 9,000,000 8,996,824
3/26/99 5.58 8,000,000 7,988,967
118,672,869
FEDERAL HOME LOAN BANK - DISCOUNT NOTES - 1.4%
5/29/98 5.51 5,000,000 4,978,767
8/26/98 5.47 6,000,000 5,896,260
10,875,027
FREDDIE MAC - AGENCY COUPONS - 0.5%
5/20/98 5.59 (a) 4,000,000 3,999,168
FREDDIE MAC - DISCOUNT NOTES - 12.9%
5/28/98 5.50 11,000,000 10,952,960
5/28/98 5.51 7,000,000 6,973,458
5/29/98 5.49 6,000,000 5,976,470
5/29/98 5.50 72,000,000 71,693,760
3/12/99 5.52 6,000,000 6,000,518
101,597,166
STUDENT LOAN MARKETING ASSOC. - AGENCY COUPONS - 0.6%
2/10/99 5.53 5,000,000 4,989,788
TOTAL FEDERAL AGENCIES 538,158,013
MEDIUM-TERM NOTES (A) - 0.0%
EXPORT-IMPORT BANK, U.S. (AS GUARANTOR FOR K.A. LEASING, LTD.) (b)
5/15/98 5.63 449,511 449,511
REPURCHASE AGREEMENTS - 32.0%
MATURITY
AMOUNT
In a joint trading account (Notes 2 and 3):
(U.S. Government Obligations):
dated 4/30/98 due 5/1/98
At 5.57% $ 66,958,365 66,948,000
dated 2/3/98 due 5/4/98
At 5.50% 15,206,250 15,000,000
REPURCHASE AGREEMENTS - CONTINUED
MATURITY VALUE
AMOUNT (NOTE 1)
In a joint trading account (Notes 2 and 3): - continued
(U.S. Government Obligations):
dated 4/15/98 due 5/27/98
At 5.50% $ 15,096,250 $ 15,000,000
dated 4/16/98 due 5/27/98
At 5.51% 15,094,129 15,000,000
dated 4/3/98 due 6/22/98
At 5.52% 8,098,133 8,000,000
dated 4/21/98 due 6/22/98
At 5.51% 25,237,236 25,000,000
dated 4/24/98 due 6/23/98
At 5.51% 13,119,383 13,000,000
dated 4/28/98 due 6/25/98
At 5.54% 15,133,883 15,000,000
dated 4/6/98 due 6/26/98
At 5.53% 20,248,850 20,000,000
dated 4/30/98 due 7/01/98
At 5.57% 2,019,186 2,000,000
dated 4/30/98 due 7/29/98
At 5.57% 202,785 200,000
dated 3/23/98 due 9/14/98
At 5.56% 41,081,111 40,000,000
(U.S. Treasury Obligations)
dated 4/30/98 due 5/1/98
At 5.52% 18,002,762 18,000,000
TOTAL REPURCHASE AGREEMENTS 253,148,000
TOTAL INVESTMENTS - 100% $ 791,755,524
Total Cost for Income Tax Purposes $ 791,755,524
LEGEND
(d) 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.
(e) Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
Additional information on each holding is as follows:
ACQUISITION
SECURITY DATE COST
Export-Import Bank, U.S.
(as guarantor for
K.A. Leasing, Ltd.) 7/8/94 $449,511
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
AMOUNT IN THOUSANDS APRIL 30, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 791,755,524
AGREEMENTS OF $253,148,000) - SEE
ACCOMPANYING SCHEDULE
RECEIVABLE FOR FUND SHARES SOLD 1,514,430
INTEREST RECEIVABLE 3,789,205
TOTAL ASSETS 797,059,159
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 19,982,200
PAYABLE FOR FUND SHARES REDEEMED 3,460,506
DISTRIBUTIONS PAYABLE 141,109
ACCRUED MANAGEMENT FEE 289,584
OTHER PAYABLES AND ACCRUED EXPENSES 14,120
TOTAL LIABILITIES 23,887,519
NET ASSETS $ 773,171,640
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 773,323,807
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (152,167)
NET ASSETS, FOR 773,323,807 SHARES OUTSTANDING $ 773,171,640
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $1.00
SHARE ($773,171,640 (DIVIDED BY) 773,323,807 SHARES)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF OPERATIONS
AMOUNT IN THOUSANDS YEAR ENDED APRIL 30, 1998
INTEREST INCOME $ 45,075,325
EXPENSES
MANAGEMENT FEE $ 3,561,445
NON-INTERESTED TRUSTEES' COMPENSATION 3,431
TOTAL EXPENSES BEFORE REDUCTIONS 3,564,876
EXPENSE REDUCTIONS (17,638) 3,547,238
NET INTEREST INCOME 41,528,087
NET REALIZED GAIN (LOSS) ON INVESTMENTS 10,320
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 41,538,407
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 41,528,087 $ 42,049,636
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 10,320 8,871
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 41,538,407 42,058,507
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (41,528,087) (42,049,636)
SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 967,377,589 995,343,307
PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 39,942,463 40,493,872
COST OF SHARES REDEEMED (1,049,909,665) (981,570,366)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (42,589,613) 54,266,813
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS (42,579,293) 54,275,684
NET ASSETS
BEGINNING OF PERIOD 815,750,933 761,475,249
END OF PERIOD $ 773,171,640 $ 815,750,933
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED APRIL 30,
1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
OF PERIOD
INCOME FROM INVESTMENT .052 .050 .054 .047 .029
OPERATIONS
NET INTEREST INCOME
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.052) (.050) (.054) (.047) (.029)
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
END OF PERIOD
TOTAL RETURN A, B 5.37% 5.16% 5.52% 4.79% 2.89%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 773,172 $ 815,751 $ 761,475 $ 707,194 $ 780,295
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE .45% .45% .45% .45% .45% C
NET ASSETS
RATIO OF EXPENSES TO AVERAGE .45% .45% .41% D .45% .45%
NET ASSETS AFTER
EXPENSE REDUCTIONS
RATIO OF NET INTEREST INCOME TO 5.24% 5.02% 5.42% 4.67% 2.85%
AVERAGE NET ASSETS
</TABLE>
D TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE.
E THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN.
F 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.
G 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 April 30, 1998
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan U.S. Government 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.
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
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS -
CONTINUED
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 $449,511 or 0.1% of net assets.
3. JOINT TRADING ACCOUNT.
At the end of the period, the fund had 20% or more of its total
investments in repurchase agreements through a joint trading account.
These repurchase agreements were with entities whose creditworthiness
has been reviewed and found satisfactory by FMR. The maturity values
of the joint trading account investments were $66,958,365 at 5.57%,
$15,206,250 at 5.50%, $15,096,250 at 5.50%, $15,094,129 at 5.51%,
$8,098,133 at 5.52%, $25,237,236 at 5.51%, $13,119,383 at 5.51%,
$15,133,883 at 5.54%, $20,248,850 at 5.53%, $2,019,186 at 5.57%,
$202,785 at 5.57%, $41,081,111 at 5.56%, and $18,002,762 at 5.52%. The
investments in repurchase agreements through the joint trading account
are summarized as follows:
SUMMARY OF JOINT TRADING
DATED APRIL 30, 1998, DUE MAY 1, 1998 AT 5.52%
Number of dealers or banks 14
Maximum amount with one dealer or bank 19.2%
Aggregate principal amount of agreements $5,069,310,000
Aggregate maturity amount of agreements $5,070,087,938
Aggregate market value of transferred assets $5,174,819,233
Coupon rates of transferred assets 0% to 13.75%
Maturity dates of transferred assets 5/7/98 to 11/15/27
DATED APRIL 30, 1998, DUE MAY 1, 1998 AT 5.57%
Number of dealers or banks 2
Maximum amount with one dealer or bank 84.4%
Aggregate principal amount of agreements $461,364,000
Aggregate maturity amount of agreements $461,435,428
Aggregate market value of transferred assets $470,700,075
Coupon rates of transferred assets 0% to 10%
Maturity dates of transferred assets 11/30/98 to 3/1/28
3. JOINT TRADING ACCOUNT - CONTINUED
SUMMARY OF JOINT TRADING - CONTINUED
DATED FEBRUARY 3, 1998, DUE MAY 4, 1998 AT 5.50%
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 $101,375,000
Aggregate market value of transferred assets $103,448,458
Coupon rates of transferred assets 6.50% to 8%
Maturity dates of transferred assets 8/15/01 to 5/15/27
DATED APRIL 15, 1998, DUE MAY 27, 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 $201,283,333
Aggregate market value of transferred assets $204,848,299
Coupon rates of transferred assets 5.50% to 11%
Maturity dates of transferred assets 1/1/99 to 3/1/28
DATED APRIL 16, 1998, DUE MAY 27, 1998 AT 5.51%
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 $100,627,528
Aggregate market value of transferred assets $103,466,170
Coupon rates of transferred assets 0%
Maturity dates of transferred assets 2/2/02 to 3/1/28
DATED APRIL 3, 1998, DUE JUNE 22, 1998 AT 5.52%
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 $202,453,333
Aggregate market value of transferred assets $204,468,959
Coupon rates of transferred assets 0%
Maturity dates of transferred assets 6/1/18 to 1/23/92
3. JOINT TRADING ACCOUNT - CONTINUED
SUMMARY OF JOINT TRADING - CONTINUED
DATED APRIL 21, 1998, DUE JUNE 22, 1998 AT 5.51%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $149,000,000
Aggregate maturity amount of agreements $150,413,927
Aggregate market value of transferred assets $153,894,667
Coupon rates of transferred assets 0%
Maturity dates of transferred assets 10/1/09 to 9/1/32
DATED APRIL 24, 1998, DUE JUNE 23, 1998 AT 5.51%
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 $100,918,333
Aggregate market value of transferred assets $103,186,742
Coupon rates of transferred assets 0%
Maturity dates of transferred assets 1/1/24 to 7/1/34
DATED APRIL 28, 1998, DUE JUNE 25, 1998 AT 5.54%
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 $100,892,556
Aggregate market value of transferred assets $103,065,460
Coupon rates of transferred assets 0%
Maturity dates of transferred assets 11/1/23 to 10/1/26
DATED APRIL 6, 1998, DUE JUNE 26, 1998 AT 5.53%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $300,000,000
Aggregate maturity amount of agreements $303,732,750
Aggregate market value of transferred assets $309,297,318
Coupon rates of transferred assets 8.50% to 9%
Maturity dates of transferred assets 6/15/16 to 2/15/28
3. JOINT TRADING ACCOUNT - CONTINUED
SUMMARY OF JOINT TRADING - CONTINUED
DATED APRIL 30, 1998, DUE JULY 1, 1998 AT 5.57%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $15,000,000
Aggregate maturity amount of agreements $15,143,892
Aggregate market value of transferred assets $15,450,576
Coupon rates of transferred assets 0%
Maturity dates of transferred assets 6/1/23 to 3/1/27
DATED APRIL 30, 1998, DUE JULY 29, 1998 AT 5.57%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $80,000,000
Aggregate maturity amount of agreements $81,114,000
Aggregate market value of transferred assets $81,600,000
Coupon rates of transferred assets 8.50%
Maturity dates of transferred assets 9/15/24 to 2/15/28
DATED MARCH 23, 1998, DUE SEPTEMBER 14, 1998 AT 5.56%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $300,000,000
Aggregate maturity amount of agreements $308,108,333
Aggregate market value of transferred assets $308,869,022
Coupon rates of transferred assets 8.50% to 9%
Maturity dates of transferred assets 8/15/16 to 12/15/27
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 $17,439 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. (formerly FMR Texas, Inc.), a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
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 $17,638 under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Hereford Street Trust and the Shareholders
of Spartan U.S. Government Money Market Fund:
We have audited the accompanying statement of assets and liabilities
of Fidelity Hereford Street Trust: Spartan U.S. Government Money
Market Fund, including the schedule of portfolio investments, as of
April 30, 1998, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two
years in the period then ended and the financial highlights for each
of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of April 30, 1998 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Fidelity Hereford Street Trust: Spartan U.S.
Government Money Market Fund as of April 30, 1998, the results of its
operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 4, 1998
DISTRIBUTIONS
A total of 19.20% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
The fund will notify shareholders in January 1999 of the applicable
percentage for use in preparing 1998 income tax returns.
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 Litterst, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Thomas D. Maher, 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
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 1-800-544-474
SM
AUTOMATED LINE FOR QUICKEST SERVICE
SPARTAN
(REGISTERED TRADEMARK)
(REGISTERED TRADEMARK)
U.S. TREASURY
MONEY MARKET
FUND
ANNUAL REPORT
APRIL 30, 1998
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.
REPORT OF INDEPENDENT 17 THE AUDITORS' OPINION.
ACCOUNTANTS
DISTRIBUTIONS 18
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:
Low interest rates and subdued inflation were two main factors that
bolstered stock and bond markets in the U.S. during the first four
months of 1998. The stock market continued to soar to record heights
as corporate earnings proved to be stronger than expected and
investors shrugged off concerns about the effects of economic
difficulties in Asia. The Federal Reserve Board continued its steady
interest rate policy, which boosted the performance of bonds.
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.
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 APRIL 30, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
SPARTAN U.S. TREASURY MONEY MARKET 5.08% 24.71% 69.50%
100% U.S. TREASURY MONEY MARKET 4.84% 23.62% 66.86%
FUNDS AVERAGE
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, 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 one year average represents a peer group of 35 money
market funds. (The periods covered by IBC Financial Data, Inc. numbers
are the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1998 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
SPARTAN U.S. TREASURY MONEY MARKET 5.08% 4.51% 5.42%
100% U.S. TREASURY MONEY MARKET 4.84% 4.33% 5.25%
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
4/28/98 2/3/98 10/28/97 7/29/97 4/29/97
SPARTAN U.S. TREASURY 4.94% 4.99% 4.92% 4.96% 4.95%
MONEY MARKET
100% U.S. TREASURY MONEY 4.69% 4.70% 4.68% 4.74% 4.72%
MARKET FUNDS AVERAGE
4/29/98 1/28/98 10/29/97 7/30/97 4/30/97
2.52% 2.55% 2.65% 2.64% 2.64%
MMDA
Row: 1, Col: 1, Value: 4.94
Row: 1, Col: 2, Value: 4.69
Row: 1, Col: 3, Value: 2.52
Row: 2, Col: 1, Value: 4.99
Row: 2, Col: 2, Value: 4.7
Row: 2, Col: 3, Value: 2.55
Row: 3, Col: 1, Value: 4.92
Row: 3, Col: 2, Value: 4.68
Row: 3, Col: 3, Value: 2.65
Row: 4, Col: 1, Value: 4.96
Row: 4, Col: 2, Value: 4.74
Row: 4, Col: 3, Value: 2.64
Row: 5, Col: 1, Value: 4.95
Row: 5, Col: 2, Value: 4.72
Row: 5, Col: 3, Value: 2.64
Spartan
U.S. Treasury
Money Market
100% U.S.
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)
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
There are some important
differences between a bank
money market deposit account
(MMDA) and a money market
fund. First, the U.S. government
neither insures nor guarantees
a money market fund. In fact,
there is no assurance that a
money market fund will
maintain a $1 share price.
Second, a money market fund
returns to its shareholders
income earned by the fund's
investments after expenses. This
is in contrast to banks, which
set their MMDA rates
periodically based on current
interest rates, competitors' rates,
and internal criteria.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
An interview with Robert Litterst, Portfolio Manager of Spartan
U.S. Treasury Money Market Fund
Q. BOB, WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE OVER THE PAST 12
MONTHS?
A. As we entered the summer of 1997, short-term interest rates rose as
most in the market expected the Federal Reserve Board to raise rates
in an effort to slow the economy and head off inflation. However, the
Fed kept rates steady because inflation was well contained and
economic activity was expected to slow. Contrary to the Fed's
forecast, the economy continued on a solid pace in the third quarter,
with real GDP - gross domestic product adjusted for inflation -
growing at a 3.1% annual rate. Real GDP has grown at about a 4% annual
rate over the past year, clearly above estimates of the economy's
non-inflationary potential. While inflation has remained remarkably
subdued, many feel that growth at this rate will result in a rise in
inflation at some point. Nonetheless, the Fed has been patient, and
appears to be willing to tolerate strong growth until clear signs of
rising inflation emerge. Another factor that tempered the Fed's need
to raise rates was the financial crisis in Asia and fear that a rate
hike would further disrupt global financial markets. When all was said
and done, the Fed kept the benchmark federal funds rate - the rate
banks charge each other for overnight loans - at 5.5% for the entire
year.
Q. WERE THERE OTHER FACTORS THAT DROVE THE MARKET FOR SHORT-TERM
U.S. TREASURY SECURITIES?
A. Yes, there were some developments in the U.S. Treasury market that
affected the money market securities that the fund invests in. As the
U.S. budget deficit has declined, so have the financing needs of the
U.S. Treasury. As a result of reduced issuance and pay-downs of
various Treasury debt, the supply of Treasuries has fallen, especially
in the short-term Treasury bill sector. Combined with solid demand
from both foreign and domestic investors during most of the period,
this situation pushed yields on Treasuries lower. Supply issues
impacted the market much more than in the recent past, and may
continue to exert considerable influence going forward.
Q. WHAT WAS YOUR STRATEGY?
A. I continued to use a barbell strategy - concentrating the fund on
either end of the maturity spectrum - investing in one- or two-month
securities on the one hand and on issues with longer maturities on the
other. I've been purchasing longer-term securities at moments of
market weakness when the short-term yield curve steepens and longer
investments present attractive values. The shorter-term securities
help to balance the portfolio and serve a defensive purpose that will
help the fund if the Fed raises rates again. In general, the fund's
average maturity tended to be longer than the average of its peers
throughout the period. At the beginning of 1998, in anticipation of a
large Treasury paydown in the second quarter, I extended the fund's
average maturity by purchasing many securities that matured beyond the
second quarter - in an effort to avoid a difficult reinvestment period
when supply would likely decline rapidly.
Q. HOW DID THE FUND PERFORM?
A. On April 30, 1998, the fund's seven-day yield was 4.94%, compared
to 4.95% 12 months ago. The fund's total return for the 12 months was
5.08% compared to the 4.84% total return for the U.S. Treasury money
market funds average tracked by IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. We've continued to experience strong domestic economic growth
amidst incredibly benign inflation statistics, which together - based
on history - are somewhat difficult to reconcile. Market observers
generally expect growth to slow due to the normal ebb and flow of the
economy and because they feel the impact of Asia will reduce our
ability to export goods and services to that part of the world. The
effect has been muted thus far - as real GDP grew at an annual rate of
4.2% in the first quarter of 1998. The Fed remains concerned about the
strength of the economy and also about the high valuation levels of
the stock market. The extraordinary gains in the equity market have
given rise to worries about the possibility of an asset-price bubble
developing, similar to what occurred in Japan in the late 1980s. All
of these unusual circumstances make it difficult to anticipate what
the Fed will do, but I believe there is a greater chance that the Fed
will raise rates in the next three to six months than lower them.
Accordingly, I plan to proceed with caution and continue to seek out
investments that offer an attractive risk/reward trade-off.
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
START DATE: February 5, 1990
FUND NUMBER: 458
TRADING SYMBOL: SPAXX
SIZE: as of April 30, 1998,
more than $773 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 ASSETS % OF FUND ASSETS % OF FUND ASSETS
4/30/98 10/31/97 4/30/97
0 - 30 20 26 21
31 - 90 32 37 42
91 - 180 43 33 27
181 - 397 5 4 10
WEIGHTED AVERAGE MATURITY
4/30/98 10/31/97 4/30/97
SPARTAN U.S. TREASURY 81 DAYS 78 DAYS 80 DAYS
MONEY MARKET FUND
100% U.S. TREASURY 65 DAYS 65 DAYS 62 DAYS
MONEY MARKET FUNDS AVERAGE*
ASSET ALLOCATION (% OF FUND'S INVESTMENTS)
AS OF APRIL 30, 1998 AS OF OCTOBER 31, 1997
Row: 1, Col: 1, Value: 93.0
Row: 1, Col: 2, Value: 7.0
U.S. Treasury
bills 23%
U.S. Treasury
notes 77%
U.S. Treasury
bills 7%
U.S. Treasury
notes 93%
Row: 1, Col: 1, Value: 77.0
Row: 1, Col: 2, Value: 23.0
*SOURCE: IBC'S MONEY FUND REPORT(registered trademark)
INVESTMENTS APRIL 30, 1998
Showing Percentage of Total Value of Investments
U.S. TREASURY OBLIGATIONS - 100%
DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1)
DATE TIME OF PURCHASE (000S) (000S)
U.S. TREASURY BILLS - 6.7%
5/28/98 5.16% $ 17,390 $ 17,328
5/28/98 5.25 50,000 49,792
5/28/98 5.26 30,000 29,892
6/25/98 5.38 30,000 29,760
126,772
U.S. TREASURY NOTES - 93.3%
5/15/98 5.18 20,000 20,005
5/15/98 5.20 25,000 25,006
5/15/98 5.30 74,489 74,512
5/15/98 5.34 45,000 45,024
5/15/98 5.35 60,000 60,089
5/15/98 5.36 29,082 29,106
5/15/98 5.37 16,000 16,018
5/15/98 5.52 10,000 10,002
5/31/98 5.31 16,000 15,998
5/31/98 5.32 26,000 25,997
5/31/98 5.34 20,000 20,006
5/31/98 5.35 30,000 30,010
5/31/98 5.52 11,132 11,135
6/30/98 5.25 106,317 106,475
6/30/98 5.27 25,000 25,036
6/30/98 5.31 35,000 35,047
6/30/98 5.33 116,495 116,665
6/30/98 5.34 50,000 50,065
6/30/98 5.50 65,000 65,073
6/30/98 5.58 30,000 30,030
7/15/98 5.34 35,000 35,199
7/31/98 5.25 60,000 60,150
7/31/98 5.27 30,000 30,064
7/31/98 5.28 95,000 95,214
7/31/98 5.30 36,561 36,640
7/31/98 5.31 20,000 20,042
7/31/98 5.32 96,000 96,128
7/31/98 5.33 60,000 60,122
7/31/98 5.34 50,000 50,100
8/15/98 5.20 872 873
8/15/98 5.25 4,056 4,061
8/15/98 5.30 30,000 30,037
8/15/98 5.31 15,000 15,018
8/15/98 5.32 10,000 10,108
8/15/98 5.35 15,000 15,016
8/15/98 5.77 10,000 9,835
8/15/98 5.80 10,000 9,834
8/31/98 5.24 60,000 60,139
8/31/98 5.27 345 344
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
9/30/98 5.28% $ 80,000 $ 80,197
9/30/98 5.30 110,000 110,263
9/30/98 5.32 15,000 15,035
10/31/98 5.30 15,000 15,021
11/15/98 5.40 25,000 24,278
11/15/98 5.65 15,000 14,554
11/15/98 5.70 30,000 29,109
2/15/99 5.45 10,000 9,580
2/15/99 5.51 10,000 9,575
1,757,835
TOTAL INVESTMENTS - 100% $ 1,884,607
Total Cost for Income Tax Purposes $ 1,884,625
INCOME TAX INFORMATION
At April 30, 1998, the fund had a capital loss carryforward of
approximately $54,000 of which $7,000 and $47,000 will expire on April
30, 2002 and 2004, respectively.
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF ASSETS AND LIABILITIES
AMOUNT IN THOUSANDS(EXCEPT PER-SHARE AMOUNT) APRIL 30, 1998
ASSETS
INVESTMENT IN SECURITIES, AT VALUE - SEE $ 1,884,607
ACCOMPANYING SCHEDULE
RECEIVABLE FOR INVESTMENTS SOLD 89,136
RECEIVABLE FOR FUND SHARES SOLD 5,929
INTEREST RECEIVABLE 31,124
TOTAL ASSETS 2,010,796
LIABILITIES
PAYABLE FOR FUND SHARES REDEEMED $ 8,128
DISTRIBUTIONS PAYABLE 161
ACCRUED MANAGEMENT FEE 714
PAYABLE FOR REVERSE REPURCHASE AGREEMENTS 89,126
OTHER PAYABLES AND ACCRUED EXPENSES 149
TOTAL LIABILITIES 98,278
NET ASSETS $ 1,912,518
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 1,912,590
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (72)
NET ASSETS, FOR 1,912,459 SHARES OUTSTANDING $ 1,912,518
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $1.00
SHARE ($1,912,518 (DIVIDED BY) 1,912,459 SHARES)
</TABLE>
STATEMENT OF OPERATIONS
AMOUNT IN THOUSANDS YEAR ENDED APRIL 30, 1998
INTEREST INCOME $ 102,409
EXPENSES
MANAGEMENT FEE $ 8,504
NON-INTERESTED TRUSTEES' COMPENSATION 8
INTEREST 220
TOTAL EXPENSES BEFORE REDUCTIONS 8,732
EXPENSE REDUCTIONS (90) 8,642
NET INTEREST INCOME 93,767
NET REALIZED GAIN (LOSS) ON INVESTMENTS 170
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 93,937
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNT IN THOUSANDS YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
1998 1997
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 93,767 $ 90,435
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 170 24
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 93,937 90,459
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (93,767) (90,435)
SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 1,866,456 2,044,938
PROCEEDS FROM SALES OF SHARES
REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 90,721 87,196
COST OF SHARES REDEEMED (1,955,761) (2,015,989)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 1,416 116,145
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,586 116,169
NET ASSETS
BEGINNING OF PERIOD 1,910,932 1,794,763
END OF PERIOD $ 1,912,518 $ 1,910,932
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED APRIL 30, NINE MONTH YEARS ENDED JULY 31,
PERIOD ENDED
APRIL 30,
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
BEGINNING
OF PERIOD
INCOME FROM .050 .048 .051 .036 .030 .028
INVESTMENT
OPERATIONS
NET INTEREST
INCOME
LESS DISTRIBUTIONS
FROM NET INTEREST (.050) (.048) (.051) (.036) (.030) (.028)
INCOME
NET ASSET VALUE, END $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
OF PERIOD
TOTAL RETURN B, C 5.08% 4.92% 5.25% 3.66% 2.99% 2.87%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF $ 1,913 $ 1,911 $ 1,795 $ 1,678 $ 1,556 $ 1,749
PERIOD
(IN MILLIONS)
RATIO OF EXPENSES TO .46% .45% .45% .45% A, D .45% D .42% D
AVERAGE NET ASSETS
RATIO OF EXPENSES TO .46% .45% .43% E .45% A .45% .42%
AVERAGE NET ASSETS
AFTER EXPENSE
REDUCTIONS
RATIO OF NET INTEREST 4.96% 4.82% 5.14% 4.85% A 2.94% 2.85%
INCOME TO AVERAGE
NET ASSETS
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO
WOULD HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1998
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 April 30, 1998,
the following reverse repurchase agreements were outstanding:
DATE MATURITY COLLATERAL COLLATERAL COLLATERAL
ENTERED AMOUNT RATE DATE AMOUNT TYPE MATURITY DATE
4/30/98 $42,945,000 3.50% 5/1/98 $50,000,000 U.S. Treasury Notes May
15, 1998
4/30/98 $46,181,000 3.50% 5/1/98 $50,000,000 U.S. Treasury Notes June
30, 1998
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 $35,000 for the period.
SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity
Investments Money Management, Inc. (formerly FMR Texas, Inc.), a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect.
4. 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 $90,000 under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Hereford Street Trust and the Shareholders
of Spartan U.S. Treasury Money Market Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Spartan U.S. Treasury Money Market Fund (a fund of Fidelity Hereford
Street Trust) at April 30, 1998, the results of its operations for the
year then ended, and the changes in its net assets and the financial
highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements")
are the responsibility of the Spartan U.S. Treasury Money Market
Fund's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at April
30, 1998 by correspondence with the custodian and the application of
alternative auditing procedures where securities purchased were not
yet received by the custodian, provide a reasonable basis for the
opinion expressed above.
/s/Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
June 4, 1998
DISTRIBUTIONS
A total of 100% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax.
The fund will notify shareholders in January 1999 of the applicable
percentage for use in preparing 1998 income tax returns.
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 Xpressprovides 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.
SM
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
For mutual fund and brokerage trading.
For quotes.*
For account balances and holdings.
To review orders and mutual
fund activity.
To change your PIN.
To speak to a Fidelity representative.
0
*
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.
(PHONE_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call Fidelity at
1-800-544-7272 for significant savings on Web access from internetMCI.
SM
(PHONE_GRAPHIC)
FIDELITY ON-LINE XPRESS+
TM
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
4001 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 Litterst, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Thomas D. Maher, 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
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 1-800-544-5555
SM
AUTOMATED LINE FOR QUICKEST SERVICE
