SPARTAN(REGISTERED TRADEMARK)
U.S. TREASURY
MONEY MARKET
FUND
ANNUAL REPORT
APRIL 30, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 6 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 8 A summary of major shifts in
the fund's investments over
the past six months and one
year.
INVESTMENTS 9 A complete list of the fund's
investments.
FINANCIAL STATEMENTS 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
PROXY VOTING RESULTS 19
OF SPECIAL NOTE 21
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. You should also keep money you'll need in the near future in a
more stable investment.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
To evaluate a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the value of an investment, assuming reinvestment of the fund's
dividend income. Yield measures the income paid by a fund. Since a
money market fund tries to maintain a $1 share price, yield is an
important measure of performance. If Fidelity had not reimbursed
certain fund expenses, the past five year and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN US TREASURY MONEY 4.67% 27.03% 64.89%
MARKET
100% US Treasury Money Market 4.39% 25.57% n/a
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 37 money
market funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN US TREASURY MONEY 4.67% 4.90% 5.13%
MARKET
100% US Treasury Money Market 4.39% 4.66% n/a
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
4/27/99 2/2/99 11/3/98 7/28/98 4/28/98
Spartan U.S. Treasury Money 4.25% 4.32% 4.60% 4.89% 4.94%
Market Fund
100% US Treasury Money Market 3.94% 3.97% 4.16% 4.64% 4.69%
Funds Average
4/28/99 2/3/99 10/28/98 7/29/98 4/29/98
MMDA 2.10% 2.21% 2.45% 2.54% 2.52%
Spartan U.S. Treasury
Money Market Fund
100% US Treasury
Money Market Funds
Average
MMDA
6% -
5% -
4% -
3% -
2% -
1% -
0%
Row: 1, Col: 1, Value: 4.25
Row: 1, Col: 2, Value: 3.94
Row: 1, Col: 3, Value: 2.1
Row: 2, Col: 1, Value: 4.32
Row: 2, Col: 2, Value: 3.97
Row: 2, Col: 3, Value: 2.21
Row: 3, Col: 1, Value: 4.6
Row: 3, Col: 2, Value: 4.16
Row: 3, Col: 3, Value: 2.45
Row: 4, Col: 1, Value: 4.89
Row: 4, Col: 2, Value: 4.64
Row: 4, Col: 3, Value: 2.54
Row: 5, Col: 1, Value: 4.94
Row: 5, Col: 2, Value: 4.69
Row: 5, Col: 3, Value: 2.52
YIELD refers to the income paid by the fund over a given period.
Yields for money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income
earned is reinvested or compounded is called an effective yield. The
table above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the 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).
(checkmark)COMPARING
PERFORMANCE
There are some important
differences between a bank
money market deposit account
(MMDA) and a money market
fund. First, the U.S.
government neither insures
nor guarantees a money
market fund. In fact, there is
no assurance that a money
market fund will maintain a
$1 share price. Second, a
money market fund returns
to its shareholders income
earned by the fund's
investments after expenses.
This is in contrast to banks,
which set their MMDA rates
periodically based on current
interest rates, competitors'
rates, and internal criteria.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Robert Litterst)
An interview with Robert Litterst, Portfolio Manager of Spartan U.S.
Treasury Money Market Fund
Q. BOB, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE FUND'S
FISCAL YEAR THAT ENDED APRIL 30, 1999?
A. The U.S. economy was very strong, with real GDP - gross domestic
product adjusted for inflation - averaging about 4%. A strong housing
market, solid consumer spending and steady business investment helped
drive this growth. The pace of the economy's expansion was well above
the non-inflationary trend rate of 2% to 2.5% - the rate above which
inflation is expected to occur. Nevertheless, inflation was quite
tame. As a result of these conflicting signals, it was a bit of a
roller-coaster year for the Federal Reserve Board. At the beginning of
the period, the Fed was biased toward raising short-term interest
rates in order to curb growth and head off inflation. However,
beginning in August the Fed changed course and eventually lowered
rates three times during a six-week period from late September through
mid-November.
Q. WHAT LED THE FED TO ALTER ITS POLICY?
A. A crisis in worldwide markets that began with Russia's default on
its debt and devaluation of its currency in August. That event sparked
concerns about the health of other emerging economies and the
worldwide banking system. Well-publicized problems of hedge fund
Long-Term Capital Management further rocked the markets in late
September and early October. The Fed's rate cuts lowered the rate
banks charge each other for overnight loans - known as the fed funds
rate - from 5.50% to 4.75%. The moves were designed to reassure
markets paralyzed by heightened illiquidity and risk aversion, and to
prevent a credit crunch from developing. From that point in the fourth
quarter of 1998, stability generally returned to world markets, and
the U.S. economy has sustained very strong growth, with real GDP
rising at a 6% annual rate in the fourth quarter and 4.5% in the first
quarter of 1999.
Q. HOW DID THESE DEVELOPMENTS AFFECT THE FUND?
A. In response to the crisis in the fall, investors worldwide fled to
the safety and liquidity offered by U.S. Treasury securities. This
dramatic flight to quality caused the yield on the three-month
Treasury bill to drop by 1.25 percentage points. To investors who were
seeking to avoid risk and increase liquidity, short-term Treasuries
were the investment of choice. From a strategic perspective, early in
the period I employed a "barbell" structure, focusing the fund's
investments on securities at either end of the maturity spectrum, with
little in between. On the one hand, I purchased one- to three-month
securities; on the other, I looked for buying opportunities among
one-year notes that I felt priced in more Fed interest-rate increases
than I believed would occur. In the uncertain environment of last
fall, I pursued a cautious approach, looking for value in the one- to
six-month maturity range. So far in 1999, I've emphasized
cash-management bills in the one- to two-month maturity range that
were quite cheap relative to short-maturity alternatives. Going
forward, the fund will be dealing with the continued reduction of
Treasury debt, because the U.S. government currently is enjoying a
budget surplus of over $100 billion per year. Nevertheless, I believe
the U.S. Treasury will work to maintain liquidity in the short-term
U.S. Treasury market, which traditionally has been one of the largest
and most liquid debt markets in the world.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on April 30, 1999, was 4.25%, compared
to 4.94% 12 months ago. For the 12 months that ended April 30, 1999,
the fund had a total return of 4.67%, compared to 4.39% for the 100%
U.S. Treasury money market funds average, according to IBC Financial
Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. U.S. economic growth has continued to beat expectations, with few
signs of accompanying inflation. While very low commodity prices have
been cited as one of the main reasons for sustained low inflation,
productivity gains also contributed. Recently, oil prices have
reversed course and started to rise, which - coupled with signs that
global economic activity is starting to stabilize and improve - caused
market observers to become nervous about the inflation outlook. As a
result, the money-market yield curve steepened - meaning
longer-maturity yields became more attractive compared to yields for
shorter-maturities. When I think those longer-term yields protect
against possible future interest-rate increases, I will add
longer-maturity securities to the portfolio.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: income while
maintaining a stable $1 share
price by investing in U.S.
Treasury money market
securities whose interest is free
from state and local taxes
START DATE: January 5, 1988
FUND NUMBER: 415
TRADING SYMBOL: FDLXX
SIZE: as of April 30, 1999,
more than $2.0 billion
MANAGER: Robert Litterst,
since 1997; manager, several
Fidelity and Spartan taxable
money market funds; joined
Fidelity in 1991
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MATURITY DIVERSIFICATION
DAYS % OF FUND'S INVESTMENTS 4/30/99 % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
10/31/98 4/30/98
0 - 30 10 24 20
31 - 90 47 23 32
91 - 180 40 48 43
181 - 397 3 5 5
WEIGHTED AVERAGE MATURITY
4/30/99 10/31/98 4/30/98
Spartan U.S. Treasury Money 78 DAYS 74 Days 81 Days
Market Fund
100% U.S. Treasury Money 71 DAYS 74 Days 65 Days
Market Funds Average*
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
</TABLE>
AS OF APRIL 30, 1999
U.S. Treasury
bills 1%
U.S. Treasury
notes 99%
Row: 1, Col: 1, Value: 2.0
Row: 1, Col: 2, Value: 98.0
AS OF OCTOBER 31, 1998
U.S. Treasury
bills 24%
U.S. Treasury
notes 76%
Row: 1, Col: 1, Value: 24.0
Row: 1, Col: 2, Value: 76.0
INVESTMENTS APRIL 30, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -
100.0%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
U.S. TREASURY BILLS - 1.4%
9/16/99 4.64% $ 30,000 $ 29,479
U.S. TREASURY NOTES - 87.2%
5/15/99 4.66 75,000 75,040
5/15/99 4.68 80,000 80,042
5/31/99 4.51 15,000 15,024
5/31/99 4.55 20,000 20,025
5/31/99 4.56 35,000 35,045
5/31/99 4.57 71,362 71,470
5/31/99 4.58 44,000 44,074
5/31/99 4.59 40,000 40,067
5/31/99 4.64 62,288 62,360
5/31/99 4.66 2,712 2,715
5/31/99 4.67 60,000 60,096
5/31/99 4.71 90,000 90,112
5/31/99 4.72 25,000 25,027
6/30/99 4.53 547 548
6/30/99 4.54 60,000 60,138
6/30/99 4.56 50,000 50,174
6/30/99 4.57 185,000 185,590
6/30/99 4.58 1,450 1,453
6/30/99 4.63 40,000 40,087
7/15/99 4.44 30,000 30,113
7/15/99 4.45 6,720 6,745
7/15/99 4.58 25,000 25,088
7/15/99 4.59 100,000 100,350
7/31/99 4.55 20,000 20,110
7/31/99 4.59 20,000 20,059
7/31/99 4.60 170,000 170,912
7/31/99 4.63 59,091 59,259
7/31/99 4.64 20,000 20,057
8/15/99 4.64 20,000 20,075
8/15/99 4.75 2,684 2,693
8/15/99 4.80 30,000 30,097
8/31/99 4.55 30,000 30,115
8/31/99 4.62 20,000 20,073
8/31/99 4.63 40,000 40,276
8/31/99 4.64 59,500 59,909
9/30/99 4.50 4,465 4,486
9/30/99 4.53 15,000 15,153
9/30/99 4.54 15,000 15,145
U.S. TREASURY OBLIGATIONS -
CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
U.S. TREASURY NOTES - CONTINUED
9/30/99 4.57% $ 50,000 $ 50,502
9/30/99 4.63 83,477 84,297
1/31/00 4.63 10,000 10,215
1,794,816
U.S. TREASURY NOTES -
INTEREST ONLY STRIPS - 2.9%
8/15/99 4.54 30,000 29,602
8/15/99 4.57 30,000 29,599
59,201
U.S. TREASURY NOTES -
PRINCIPAL ONLY STRIPS - 8.5%
5/15/99 4.54 38,743 38,669
5/15/99 5.00 10,000 9,986
5/15/99 5.42 11,247 11,232
8/15/99 4.57 30,000 29,599
8/15/99 4.68 16,000 15,786
8/15/99 5.01 16,000 15,774
10/31/99 4.64 25,000 24,422
2/15/00 4.77 15,000 14,446
2/15/00 4.80 15,000 14,442
174,356
TOTAL INVESTMENT IN $ 2,057,852
SECURITIES - 100%
Total Cost for Income Tax Purposes $ 2,057,852
</TABLE>
INCOME TAX INFORMATION
At April 30, 1999, the fund had a capital loss carryforward of
approximately $11,000, all of which will expire on April 30, 2004.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) APRIL 30, 1999
ASSETS
Investment in securities, at $ 2,057,852
value - See accompanying
schedule
Receivable for fund shares 4,138
sold
Interest receivable 35,682
TOTAL ASSETS 2,097,672
LIABILITIES
Payable for fund shares $ 6,700
redeemed
Distributions payable 418
Accrued management fee 797
Other payables and accrued 23
expenses
TOTAL LIABILITIES 7,938
NET ASSETS $ 2,089,734
Net Assets consist of:
Paid in capital $ 2,089,829
Accumulated net realized gain (95)
(loss) on investments
NET ASSETS, for 2,089,698 $ 2,089,734
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($2,089,734
(divided by) 2,089,698
shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR
ENDED APRIL 30, 1999
INTEREST INCOME $ 103,326
Expenses
Management fee $ 9,240
Non-interested trustees' 8
compensation
Interest 322
Total expenses before 9,570
reductions
Expense reductions (110) 9,460
NET INTEREST INCOME 93,866
NET REALIZED GAIN (LOSS) ON (23)
INVESTMENTS
NET INCREASE IN NET ASSETS $ 93,843
RESULTING FROM OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED APRIL 30, 1999 YEAR ENDED APRIL 30, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 93,866 $ 93,767
Net realized gain (loss) (23) 170
NET INCREASE (DECREASE) IN 93,843 93,937
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (93,866) (93,767)
from net interest income
Share transactions at net 2,111,263 1,866,456
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 88,470 90,721
distributions from net
interest income
Cost of shares redeemed (2,022,494) (1,955,761)
NET INCREASE (DECREASE) IN 177,239 1,416
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 177,216 1,586
IN NET ASSETS
NET ASSETS
Beginning of period 1,912,518 1,910,932
End of period $ 2,089,734 $ 1,912,518
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED APRIL 30,
1999 1998 1997 1996 1995 F 1994 G
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .046 .050 .048 .051 .036 .030
Operations Net interest
income
Less Distributions
From net interest income (.046) (.050) (.048) (.051) (.036) (.030)
Net asset value, end of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
TOTAL RETURN B, C 4.67% 5.08% 4.92% 5.25% 3.66% 2.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in $ 2,090 $ 1,913 $ 1,911 $ 1,795 $ 1,678 $ 1,556
millions)
Ratio of expenses to average .47% .46% .45% .45% .45% A, D .45% D
net assets
Ratio of expenses to average .46% E .46% .45% .43% E .45% A .45%
net assets after expense
reductions
Ratio of net interest income 4.57% 4.96% 4.82% 5.14% 4.85% A 2.94%
to average net assets
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
C TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
F NINE MONTHS ENDED APRIL 30
G YEAR ENDED JULY 31
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999
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, 1999,
the fund had no reverse repurchase agreements outstanding.
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.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES -
CONTINUED
MANAGEMENT FEE - CONTINUED
FMR also bears the cost of providing shareholder services to the fund.
To offset the cost of providing these services, FMR or its affiliates
collected certain transaction fees from the fund's shareholders which
amounted to $26,000 for the period.
SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity
Investments Money Management, Inc., a wholly owned subsidiary of FMR,
receives a fee from FMR of 50% of the management fee payable to FMR.
The fee is paid prior to any voluntary expense reimbursements which
may be in effect.
4. EXPENSE REDUCTIONS.
FMR has entered into 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 $110,000 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, 1999, and the results of its operations,
the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of 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, 1999 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 7, 1999
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 2000 of amounts for use
in preparing 1999 income tax returns.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on May 19, 1999.
The results of votes taken among shareholders on proposals before them
are reported below. Each vote reported represents a single share held
on the record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
Affirmative 998,613,600.53 91.441
Withheld 93,469,630.35 8.559
TOTAL 1,092,083,230.88 100.000
PHYLLIS BURKE DAVIS
Affirmative 997,981,770.89 91.383
Withheld 94,101,459.99 8.617
TOTAL 1,092,083,230.88 100.000
ROBERT M. GATES
Affirmative 999,525,307.14 91.525
Withheld 92,557,923.74 8.475
TOTAL 1,092,083,230.88 100.000
EDWARD C. JOHNSON 3D
Affirmative 998,548,112.37 91.435
Withheld 93,535,118.51 8.565
TOTAL 1,092,083,230.88 100.000
E. BRADLEY JONES
Affirmative 996,711,152.62 91.267
Withheld 95,372,078.26 8.733
TOTAL 1,092,083,230.88 100.000
DONALD J. KIRK
Affirmative 999,396,591.71 91.513
Withheld 92,686,639.17 8.487
TOTAL 1,092,083,230.88 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
Affirmative 999,367,511.65 91.510
Withheld 92,715,719.23 8.490
TOTAL 1,092,083,230.88 100.000
WILLIAM O. MCCOY
Affirmative 999,808,402.66 91.551
Withheld 92,274,828.22 8.449
TOTAL 1,092,083.230.88 100.000
GERALD C. MCDONOUGH
Affirmative 996,915,216.74 91.286
Withheld 95,168,014.14 8.714
TOTAL 1,092,083,230.88 100.000
MARVIN L. MANN
Affirmative 999,817,337.99 91.551
Withheld 92,265,892.89 8.449
TOTAL 1,092,083,230.88 100.000
ROBERT C. POZEN
Affirmative 998,771,625.21 91.456
Withheld 93,311,605.67 8.544
TOTAL 1,092,083,230.88 100.000
THOMAS R. WILLIAMS
Affirmative 998,220,601.74 91.405
Withheld 93,862,629.14 8.595
TOTAL 1,092,083,230.88 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the fund.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 980,508,912.27 89.783
Against 18,364,177.16 1.682
Abstain 93,210,141.45 8.535
TOTAL 1,092,083,230.88 100.000
PROPOSAL 3
To approve an amended management contract for the fund to include
annual premium payments, if any, to a captive mutual insurance company
in the list of enumerated expenses borne directly by the fund and to
modify the management contract's amendment provisions.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 810,075,001.58 74.177
Against 144,806,608.18 13.260
Abstain 137,201,621.12 12.563
TOTAL 1,092,083,230.88 100.000
PROPOSAL 4
To amend the fund's fundamental investment limitation concerning
diversification.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 802,531,882.29 73.486
Against 163,346,310.14 14.958
Abstain 126,205,038.45 11.556
TOTAL 1,092,083,230.88 100.000
PROPOSAL 6
To amend the fund's fundamental investment limitation concerning the
concentration of its investments in a single industry.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 801,021,971.52 73.348
Against 162,975,826.44 14.923
Abstain 128,085,432.92 11.729
TOTAL 1,092,083,230.88 100.000
PROPOSAL 8
To amend the fund's fundamental investment limitation concerning real
estate.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 773,601,683.70 70.837
Against 183,266,375.32 16.782
Abstain 135,215,171.86 12.381
TOTAL 1,092,083,230.88 100.000
PROPOSAL 9
To amend the fund's fundamental investment limitation concerning
lending.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 770,992,591.64 70.598
Against 187,284,315.24 17.150
Abstain 133,806,324.00 12.252
TOTAL 1,092,083,230.88 100.000
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
MANAGING YOUR INVESTMENTS
Fidelity offers several ways to conveniently manage your personal
investments via your telephone or PC. You can access your account
information, conduct trades and research your investments 24 hours a
day.
BY PHONE
Fidelity TouchTone Xpress(registered trademark) provides a single
toll-free number to access account balances, positions, quotes and
trading. It's easy to navigate the service, and on your first call,
the system will help you create a personal identification number (PIN)
for security.
(PHONE_GRAPHIC)TOUCHTONE XPRESS
1-800-544-5555
PRESS
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
BY PC
Fidelity's Web site on the Internet provides a wide range of
information, including daily financial news, fund performance,
interactive planning tools and news about Fidelity products and
services.
(COMPUTER_GRAPHIC)FIDELITY'S WEB SITE
WWW.FIDELITY.COM
If you are not currently on the Internet, call EarthLink Sprint at
1-800-288-2967, and be sure to ask for registration number SMD004 to
receive a special Fidelity package that includes 30 days of free
Internet access. EarthLink is North America's #1 independent Internet
access provider.
(COMPUTER_GRAPHIC)
FIDELITY ON-LINE XPRESS+(registered trademark)
Fidelity On-line Xpress+ software for Windows combines comprehensive
portfolio management capabilities, securities trading and access to
research and analysis tools . . . all on your desktop. Call Fidelity
at 1-800-544-7272 or visit our Web site for more information on how to
manage your investments via your PC.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD
AND RETURN WILL VARY AND,
EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS
THAT YOU MAY HAVE A
GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT
MONEY MARKET FUNDS WILL BE
ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY
MARKET FUND IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND
INCLUDE CHANGES IN SHARE
PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF
ANY SALES CHARGES.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and
send you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75039-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 500
Merrimack, NH 03054-0500
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments
Money Management, Inc.
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Boyce I. Greer, Vice President
Fred L. Henning, Jr., Vice President
Robert A. Litterst, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
* INDEPENDENT TRUSTEES
TMM-ANN-0699 78216
1.703531.101
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
FIDELITY'S TAXABLE
MONEY MARKET FUNDS
Fidelity Cash Reserves
Fidelity Daily Income Trust
Fidelity U.S. Government Reserves
Spartan(registered trademark) Money Market Fund
Spartan U.S. Government
Money Market Fund
Spartan U.S. Treasury
Money Market Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
TouchTone Xpress(registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
SPARTAN(REGISTERED TRADEMARK)
U.S. GOVERNMENT
MONEY MARKET
FUND
ANNUAL REPORT
APRIL 30, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 6 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 8 A summary of major shifts in
the fund's investments over
the past six months and one
year.
INVESTMENTS 9 A complete list of the fund's
investments.
FINANCIAL STATEMENTS 13 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 17 Notes to the financial
statements.
REPORT OF INDEPENDENT 19 The auditors' opinion.
ACCOUNTANTS
DISTRIBUTIONS 20
PROXY VOTING RESULTS 21
OF SPECIAL NOTE 23
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. You should also keep money you'll need in the near future in a
more stable investment.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
To evaluate a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the value of an investment, assuming reinvestment of the fund's
dividend income. Yield measures the income paid by a fund. Since a
money market fund tries to maintain a $1 share price, yield is an
important measure of performance. If Fidelity had not reimbursed
certain fund expenses, the life of fund total return would have been
lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SPARTAN US GOVERNMENT MONEY 5.02% 28.67% 58.26%
MARKET
Government Money Market Funds 4.59% 26.26% n/a
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 217 money market funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1999 PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
SPARTAN US GOVERNMENT MONEY 5.02% 5.17% 5.10%
MARKET
Government Money Market Funds 4.59% 4.77% n/a
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
4/27/99 2/2/99 11/3/98 7/28/98 4/28/98
Spartan U.S. Government Money 4.51% 4.67% 4.91% 5.16% 5.15%
Market Fund
Government Money Market Funds 4.09% 4.20% 4.49% 4.84% 4.82%
Average
4/28/99 2/3/99 10/28/98 7/29/98 4/29/98
MMDA 2.10% 2.21% 2.45% 2.54% 2.52%
Spartan U.S.
Government Money
Market Fund
Government Money
Market Funds
Average
MMDA
6% -
5% -
4% -
3% -
2% -
1% -
0%
Row: 1, Col: 1, Value: 4.51
Row: 1, Col: 2, Value: 4.09
Row: 1, Col: 3, Value: 2.1
Row: 2, Col: 1, Value: 4.67
Row: 2, Col: 2, Value: 4.2
Row: 2, Col: 3, Value: 2.21
Row: 3, Col: 1, Value: 4.91
Row: 3, Col: 2, Value: 4.49
Row: 3, Col: 3, Value: 2.45
Row: 4, Col: 1, Value: 5.16
Row: 4, Col: 2, Value: 4.84
Row: 4, Col: 3, Value: 2.54
Row: 5, Col: 1, Value: 5.15
Row: 5, Col: 2, Value: 4.82
Row: 5, Col: 3, Value: 2.52
YIELD refers to the income paid by the fund over a given period.
Yields for money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income
earned is reinvested or compounded is called an effective yield. The
table above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the
government money market funds average and the bank money market
deposit account (MMDA) average. Figures for the government money
market funds average are from IBC Financial Data, Inc. The MMDA
average is supplied by BANK RATE MONITOR(trademark).
(checkmark)COMPARING
PERFORMANCE
There are some important
differences between a bank
money market deposit account
(MMDA) and a money market
fund. First, the U.S.
government neither insures
nor guarantees a money
market fund. In fact, there is
no assurance that a money
market fund will maintain a $1
share price. Second, a money
market fund returns to its
shareholders income earned
by the fund's investments after
expenses. This is in contrast to
banks, which set their MMDA
rates periodically based on
current interest rates,
competitors' rates, and
internal criteria.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of Robert Litterst)
An interview with Robert Litterst, Portfolio Manager of Spartan U.S.
Government Money Market Fund
Q. BOB, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE FUND'S
FISCAL YEAR THAT ENDED APRIL 30, 1999?
A. The U.S. economy was very strong, with real GDP - gross domestic
product adjusted for inflation - averaging about 4%. A strong housing
market, solid consumer spending and steady business investment helped
drive this growth. The pace of the economy's expansion was well above
the non-inflationary trend rate of 2% to 2.5% - the rate above which
inflation is expected to occur. Nevertheless, inflation was quite
tame. As a result of these conflicting signals, it was a bit of a
roller-coaster year for the Federal Reserve Board. At the beginning of
the period, the Fed was biased toward raising short-term interest
rates in order to curb growth and head off inflation. However,
beginning in August the Fed changed course and eventually lowered
rates three times during a six-week period from late September through
mid-November.
Q. WHAT LED THE FED TO ALTER ITS POLICY?
A. A crisis in worldwide markets that began with Russia's default on
its debt and devaluation of its currency in August. That event sparked
concerns about the health of other emerging economies and the
worldwide banking system. Well-publicized problems of hedge fund
Long-Term Capital Management further rocked the markets in late
September and early October. The Fed's rate cuts lowered the rate
banks charge each other for overnight loans - known as the fed funds
rate - from 5.50% to 4.75%. The moves were designed to reassure
markets paralyzed by heightened illiquidity and risk aversion, and to
prevent a credit crunch from developing. From that point in the fourth
quarter of 1998, stability generally returned to world markets, and
the U.S. economy has sustained very strong growth, with real GDP
rising at a 6% annual rate in the fourth quarter and 4.5% in the first
quarter of 1999.
Q. WHAT TYPE OF STRATEGY DID YOU PURSUE DURING THE PERIOD?
A. Early in the period, I employed a "barbell" strategy, focusing the
fund's investments on securities at either end of the maturity
spectrum, with little in between. On the one hand, I purchased one- to
three-month securities; on the other, I looked for buying
opportunities among one-year notes that I felt priced in more Fed
interest-rate increases than I believed would occur. In response to
the crisis in the fall, investors worldwide fled to the safety and
liquidity offered by U.S. Treasury securities. Government agency
securities did not fare as well, although their performance outpaced
other non-Treasury alternatives in the market. In the final two months
of 1998, demand for agency notes fell dramatically as broker/dealers
and other traditional buyers of agency securities cut back on their
purchases in order to reduce risk exposure and conserve capital. This
came at a time when two government agencies - Fannie Mae and Freddie
Mac - increased their issuance. Dampened demand and added supply made
these securities very cheap on both an absolute and a relative basis,
so I increased the fund's holdings in them to about 60% of assets.
This large allocation helped the fund when the relative performance of
these securities improved in early 1999. So far in 1999, the fund
focused primarily on agency securities and repurchase agreements in
the one- to six-month maturity range.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on April 30, 1999, was 4.51%, compared
to 5.16% 12 months ago. For the 12 months that ended April 30, 1999,
the fund had a total return of 5.02%, compared to 4.59% for the
government money market funds average, according to IBC Financial
Data, Inc.
Q. WHAT'S YOUR OUTLOOK?
A. U.S. economic growth has continued to beat expectations, with few
signs of accompanying inflation. While very low commodity prices have
been cited as one of the main reasons for sustained low inflation,
productivity gains also contributed. Recently, oil prices have
reversed course and started to rise, which - coupled with signs that
global economic activity is starting to stabilize and improve - caused
market observers to become nervous about the inflation outlook. As a
result, the money-market yield curve steepened - meaning
longer-maturity yields became more attractive compared to yields for
shorter-maturities. When I think those longer-term yields protect
against possible future interest-rate increases, I will add
longer-maturity securities to the portfolio.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: income and a stable
$1 share price by investing in
high-quality short-term money
market securities issued by the
U.S. government for
government agencies
FUND NUMBER: 458
TRADING SYMBOL: SPAXX
START DATE: February 5, 1990
SIZE: as of April 30, 1999,
more than $847 million
MANAGER: Robert Litterst,
since 1997; manager, several
Fidelity and Spartan taxable
money market funds; joined
Fidelity in 1991
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MATURITY DIVERSIFICATION
DAYS % OF FUND'S INVESTMENTS 4/30/99 % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 4/30/98
10/31/98
0 - 30 38 56 63
31 - 90 34 16 16
91 - 180 20 19 10
181 - 397 8 9 11
WEIGHTED AVERAGE MATURITY
4/30/99 10/31/98 4/30/98
Spartan U.S. Government 68 DAYS 62 Days 61 Days
Money Market
Government Money Market Funds 58 DAYS 54 Days 54 Days
Average *
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
</TABLE>
AS OF APRIL 30, 1999
Federal agency
issues 90%
Repurchase
agreements 10%
Row: 1, Col: 1, Value: 90.0
Row: 1, Col: 2, Value: 10.0
AS OF OCTOBER 31, 1998
Federal agency
issues 67%
Repurchase
agreements 33%
Row: 1, Col: 1, Value: 67.0
Row: 1, Col: 2, Value: 33.0
INVESTMENTS APRIL 30, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FEDERAL AGENCIES - 90.1%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
FANNIE MAE - 33.3%
Agency Coupons - 15.9%
5/5/99 4.72% (a) $ 20,000,000 $ 19,999,805
5/14/99 4.76 (a) 8,000,000 7,999,762
5/24/99 4.72 (a) 17,000,000 16,989,412
5/28/99 4.69 (a) 12,000,000 11,997,570
5/28/99 4.78 (a) 25,000,000 24,998,365
6/10/99 4.72 (a)(b) 15,000,000 14,991,000
6/15/99 4.76 (a) 8,000,000 7,999,128
7/30/99 4.77 (a) 12,000,000 11,997,676
2/4/00 4.85 7,000,000 6,993,847
2/22/00 4.93 7,000,000 6,999,430
5/5/00 5.04 (b) 7,000,000 6,991,530
137,957,525
Discount Notes - 17.4%
5/17/99 4.99 8,000,000 7,982,684
5/19/99 4.82 20,000,000 19,952,400
6/4/99 4.86 14,000,000 13,936,533
6/4/99 4.87 11,745,000 11,691,645
6/4/99 5.33 6,000,000 5,970,930
6/8/99 4.87 25,975,000 25,843,119
6/14/99 4.83 25,000,000 24,854,250
6/30/99 4.84 9,000,000 8,929,950
8/9/99 5.35 8,000,000 7,886,667
8/20/99 5.34 10,000,000 9,843,367
9/13/99 4.89 7,000,000 6,874,788
9/17/99 4.87 7,000,000 6,871,618
150,637,951
288,595,476
FEDERAL HOME LOAN BANK - 20.8%
Agency Coupons - 19.7%
5/3/99 4.58 (a) 16,000,000 15,997,962
5/3/99 4.83 (a) 8,000,000 7,997,113
5/5/99 4.79 (a) 8,000,000 7,998,668
5/5/99 4.88 (a) 8,000,000 7,998,641
5/10/99 4.76 (a) 3,000,000 2,999,230
5/19/99 5.56 10,000,000 9,999,967
5/27/99 4.78 (a) 5,000,000 4,999,704
6/1/99 4.82 (a) 40,000,000 39,982,715
FEDERAL AGENCIES - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
FEDERAL HOME LOAN BANK -
CONTINUED
Agency Coupons - continued
6/15/99 5.51% $ 8,000,000 $ 7,999,944
7/12/99 4.80 (a) 15,000,000 14,992,769
2/11/00 4.92 7,000,000 6,995,228
2/16/00 4.90 7,000,000 7,000,000
3/1/00 5.00 14,000,000 13,997,258
3/3/00 5.06 7,000,000 6,995,185
3/8/00 5.17 10,000,000 9,991,987
4/5/00 5.03 5,000,000 4,995,077
170,941,448
Discount Notes - 1.1%
5/14/99 4.80 2,530,000 2,525,665
5/14/99 4.81 7,000,000 6,987,993
9,513,658
180,455,106
FREDDIE MAC - 33.1%
Agency Coupons - 3.4%
5/21/99 4.72 (a) 8,000,000 7,999,654
5/27/99 4.73 (a) 6,000,000 5,997,238
8/13/99 5.52 15,000,000 14,997,694
28,994,586
Discount Notes - 29.7%
5/14/99 4.82 20,000,000 19,965,622
5/20/99 4.81 20,000,000 19,949,808
5/24/99 4.82 11,000,000 10,966,548
6/3/99 4.86 13,000,000 12,942,740
6/8/99 4.85 22,000,000 21,888,729
6/10/99 4.84 11,000,000 10,941,578
6/11/99 4.85 13,000,000 12,929,081
6/15/99 4.83 17,000,000 16,898,638
6/18/99 4.80 12,000,000 11,924,000
6/18/99 4.89 25,000,000 24,839,333
6/25/99 4.85 5,000,000 4,963,448
8/6/99 4.82 11,000,000 10,859,512
8/6/99 4.83 20,480,000 20,217,884
8/19/99 4.85 17,000,000 16,754,043
9/3/99 4.83 7,000,000 6,884,913
FEDERAL AGENCIES - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
FREDDIE MAC - CONTINUED
Discount Notes - continued
9/8/99 4.92% $ 15,000,000 $ 14,740,000
9/10/99 4.84 20,000,000 19,652,400
257,318,277
286,312,863
STATE OF ISRAEL (GUARANTEED
BY U.S. GOVERNMENT THROUGH
AGENCY FOR INTERNATIONAL
DEVELOPMENT) - 0.7%
Agency Coupons - 0.7%
8/15/99 4.82 6,000,000 6,036,170
U.S. DEPARTMENT OF HOUSING
AND URBAN DEVELOPMENT
GOVERNMENT GUARANTEED
PARTICIPATION CERTIFICATES -
2.2%
Agency Coupons - 2.2%
8/1/99 4.75 4,000,000 4,030,993
8/1/99 4.80 15,260,000 15,260,000
19,290,993
TOTAL FEDERAL AGENCIES 780,690,608
REPURCHASE AGREEMENTS - 9.9%
MATURITY AMOUNT
In a joint trading account
(U.S. Government
Obligations) dated:
3/18/99 due 6/16/99 At 4.85% $ 14,169,750 14,000,000
3/22/99 due 6/14/99 At 4.85% 21,237,650 21,000,000
3/24/99 due 6/14/99 At 4.85% 30,836,940 30,500,000
3/26/99 due 6/21/99 At 4.85% 20,234,417 20,000,000
4/30/99 due 5/3/99 At 4.95% 396,163 396,000
TOTAL REPURCHASE AGREEMENTS 85,896,000
TOTAL INVESTMENT IN $ 866,586,608
SECURITIES - 100%
Total Cost for Income Tax Purposes $ 866,586,608
</TABLE>
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 purchased on a delayed delivery or when-issued basis.
INCOME TAX INFORMATION
At April 30, 1999, the fund had a capital loss carryforward of
approximately $134,000 of which $44,000, $53,000 and $37,000 will
expire on April 30, 2002, 2003 and 2004, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
ASSETS
Investment in securities, at $ 866,586,608
value (including repurchase
agreements of $85,896,000) -
See accompanying schedule
Receivable for fund shares 2,484,840
sold
Interest receivable 3,155,195
TOTAL ASSETS 872,226,643
LIABILITIES
Payable to custodian bank $ 571
Payable for investments 21,982,530
purchased on a delayed
delivery basis
Payable for fund shares 2,354,657
redeemed
Distributions payable 222,213
Accrued management fee 321,702
Other payables and accrued 11,707
expenses
TOTAL LIABILITIES 24,893,380
NET ASSETS $ 847,333,263
Net Assets consist of:
Paid in capital $ 847,470,452
Accumulated net realized gain (137,189)
(loss) on investments
NET ASSETS, for 847,470,452 $ 847,333,263
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($847,333,263
(divided by) 847,470,452
shares)
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
INTEREST INCOME $ 44,411,836
EXPENSES
Management fee $ 3,738,588
Non-interested trustees' 1,346
compensation
Total expenses before 3,739,934
reductions
Expense reductions (42,028) 3,697,906
NET INTEREST INCOME 40,713,930
NET REALIZED GAIN (LOSS) ON 14,978
INVESTMENTS
NET INCREASE IN NET ASSETS $ 40,728,908
RESULTING FROM OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED APRIL 30, 1999 YEAR ENDED APRIL 30, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 40,713,930 $ 41,528,087
Net realized gain (loss) 14,978 10,320
NET INCREASE (DECREASE) IN 40,728,908 41,538,407
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (40,713,930) (41,528,087)
from net interest income
Share transactions at net 839,208,314 967,377,589
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 38,482,527 39,942,463
distributions from net
interest income
Cost of shares redeemed (803,544,196) (1,049,909,665)
NET INCREASE (DECREASE) IN 74,146,645 (42,589,613)
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 74,161,623 (42,579,293)
IN NET ASSETS
NET ASSETS
Beginning of period 773,171,640 815,750,933
End of period $ 847,333,263 $ 773,171,640
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED APRIL 30, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
Income from Investment .049 .052 .050 .054 .047
Operations Net interest
income
Less Distributions
From net interest income (.049) (.052) (.050) (.054) (.047)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN A, B 5.02% 5.37% 5.16% 5.52% 4.79%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 847,333 $ 773,172 $ 815,751 $ 761,475 $ 707,194
(000 omitted)
Ratio of expenses to average .45% .45% .45% .45% .45%
net assets
Ratio of expenses to average .44% C .45% .45% .41% C .45%
net assets after expense
reductions
Ratio of net interest income 4.90% 5.24% 5.02% 5.42% 4.67%
to average net assets
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE.
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, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan U.S. Government Money Market (the fund) is a fund of Fidelity
Hereford Street Trust (the trust) and is authorized to issue an
unlimited number of shares. The trust is registered under the
Investment Company Act of 1940 (the 1940 Act), as amended, as an
open-end management investment company organized as a Delaware
business trust. The financial statements have been prepared in
conformity with generally accepted accounting principles which require
management to make certain estimates and assumptions at the date of
the financial statements. The following summarizes the significant
accounting policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a
when-issued basis. Payment and delivery may take place a month or more
after the date of the transaction. The price of the underlying
securities is fixed at the time the transaction is negotiated. The
market
2. OPERATING POLICIES -
CONTINUED
WHEN-ISSUED SECURITIES - CONTINUED
values of the securities purchased on a when-issued or forward
commitment basis are identified as such in the fund's schedule of
investments. The fund may receive compensation for interest forgone in
the purchase of a when-issued security. With respect to purchase
commitments, the fund identifies securities as segregated in its
records with a value at least equal to the amount of the commitment.
The payables and receivables associated with the purchases and sales
of when-issued securities having the same settlement date and broker
are offset. When-issued securities that have been purchased from and
sold to different brokers are reflected as both payables and
receivables in the statement of assets and liabilities under the
caption "Delayed delivery." Losses may arise due to changes in the
market value of the underlying securities, if the counterparty does
not perform under the contract, or if the issuer does not issue the
securities due to political, economic, or other factors.
3. 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
collected certain transaction fees from the fund's shareholders which
amounted to $12,899 for the period.
SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity
Investments Money Management, Inc., a wholly owned subsidiary of FMR,
receives a fee from FMR of 50% of the management fee payable to FMR.
The fee is paid prior to any voluntary expense reimbursements which
may be in effect.
MONEY MARKET INSURANCE. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other money market funds advised by FMR or
its affiliates, has entered into insurance agreements with FIDFUNDS
Mutual Limited (FIDFUNDS), an affiliated mutual insurance company,
effective January 1, 1999. FIDFUNDS provides limited coverage for
certain loss events including issuer default as to payment of
principal or interest and bankruptcy or insolvency of a credit
enhancement provider. The insurance does not cover losses resulting
from changes in interest rates, ratings downgrades or other market
conditions. The fund may be subject to a special assessment of up to
approximately 2.5 times the fund's annual gross premium if covered
losses exceed certain levels. During the period, FMR has borne the
cost of the fund's premium payable to FIDFUNDS.
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 $42,028 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:
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. Government Money Market Fund(a fund of Fidelity Hereford
Street Trust) at April 30, 1999, and the results of its operations,
the changes in its net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Spartan U.S. Government 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, 1999 by
correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 7, 1999
DISTRIBUTIONS
A total of 19.73% 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 2000 of amounts for use
in preparing 1999 income tax returns.
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on May 19, 1999.
The results of votes taken among shareholders on proposals before them
are reported below. Each vote reported represents a single share held
on the record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
Affirmative 409,343,453.67 93.217
Withheld 29,788,002.23 6.783
TOTAL 439,131,455.90 100.000
PHYLLIS BURKE DAVIS
Affirmative 408,383,547.71 92.998
Withheld 30,747,908.19 7.002
TOTAL 439,131,455.90 100.000
ROBERT M. GATES
Affirmative 407,824,843.44 92.871
Withheld 31,306,612.46 7.129
TOTAL 439,131,455.90 100.000
EDWARD C. JOHNSON 3D
Affirmative 409,071,324.75 93.155
Withheld 30,060,131.15 6.845
TOTAL 439,131,455.90 100.000
E. BRADLEY JONES
Affirmative 408,491,536.32 93.023
Withheld 30,639,919.58 6.977
TOTAL 439,131,455.90 100.000
DONALD J. KIRK
Affirmative 409,373,915.87 93.224
Withheld 29,757,540.03 6.776
TOTAL 439,131,455.90 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
Affirmative 408,902,240.26 93.116
Withheld 30,229,215.64 6.884
TOTAL 439,131,455.90 100.000
WILLIAM O. MCCOY
Affirmative 409,373,915.87 93.224
Withheld 29,757,540.03 6.776
TOTAL 439,131,455.90 100.000
GERALD C. MCDONOUGH
Affirmative 408,553,935.30 93.032
Withheld 30,597,520.60 6.968
TOTAL 439,131,455.90 100.000
MARVIN L. MANN
Affirmative 409,116,074.50 93.165
Withheld 30,015,381.40 6.835
TOTAL 439,131,455.90 100.000
ROBERT C. POZEN
Affirmative 408,924,314.79 93.121
Withheld 30,207,141.11 6.879
TOTAL 439,131,455.90 100.000
THOMAS R. WILLIAMS
Affirmative 408,789,114.56 93.090
Withheld 30,342,341.34 6.910
TOTAL 439,131,455.90 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the fund.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 398,415,863.22 90.728
Against 7,896.933.41 1.798
Abstain 32,818,659.27 7.474
TOTAL 439,131,455.90 100.000
PROPOSAL 3
To approve an amended management contract for the fund to include
annual premium payments, if any, to a captive mutual insurance company
in the list of enumerated expenses borne directly by the fund and to
modify the management contract's amendment provisions.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 347,009,749.28 79.022
Against 45.461,476.97 10.352
Abstain 46,660,229.65 10.626
TOTAL 439,131,455.90 100.000
PROPOSAL 4
To amend the fund's fundamental investment limitation concerning
diversification.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 352,818,034.82 80.345
Against 40,886,242.73 9.306
Abstain 45,447,178.35 10.349
TOTAL 439,131,455.90 100.000
PROPOSAL 7
To amend the fund's fundamental investment limitation concerning
borrowing.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 347,656,672.19 79.169
Against 46,231,433.84 10.528
Abstain 45,243,349.87 10.303
TOTAL 439,131,455.90 100.000
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments
Money Management, Inc.
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Boyce I. Greer, Vice President
Fred L. Henning, Jr., Vice President
Robert A. Litterst, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
Abigail P. Johnson
* INDEPENDENT TRUSTEES
SPU-ANN-0699 78217
1.703529.101
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
FIDELITY'S TAXABLE
MONEY MARKET FUNDS
Fidelity Cash Reserves
Fidelity Daily Income Trust
Fidelity U.S. Government Reserves
Spartan(registered trademark) Money Market Fund
Spartan U.S. Government
Money Market Fund
Spartan U.S. Treasury
Money Market Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
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SPARTAN(REGISTERED TRADEMARK)
MONEY MARKET
FUND
ANNUAL REPORT
APRIL 30, 1999
(2_FIDELITY_LOGOS)(registered trademark)
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
strategies.
PERFORMANCE 4 How the fund has done over
time.
FUND TALK 6 The manager's review of fund
performance, strategy and
outlook.
INVESTMENT CHANGES 8 A summary of major shifts in
the fund's investments over
the past six months and one
year.
INVESTMENTS 9 A complete list of the fund's
investments.
FINANCIAL STATEMENTS 22 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 26 Notes to the financial
statements.
REPORT OF INDEPENDENT 28 The auditors' opinion.
ACCOUNTANTS
PROXY VOTING RESULTS 29
OF SPECIAL NOTE 31
Third party marks appearing herein are the property of their
respective owners.
All other marks appearing herein are registered or unregistered
trademarks or service marks of FMR Corp. or an affiliated company.
This report is printed on recycled paper using soy-based inks.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT
AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
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:
With 13 record-high closings, the Dow Jones Industrial Average surged
nearly 1,000 points in April. What's particularly noteworthy about
this performance is that, in some cases, gains were fueled by a
rotation out of growth stocks and into issues more sensitive to
economic swings. The strength in blue chips, combined with heavy
global, corporate and agency bond issuance, contributed to the
downward pressure on government security prices.
While it's impossible to predict the future direction of the markets
with any degree of certainty, there are certain basic principles that
can help investors plan for their future needs.
First, investors are encouraged to take a long-term view of their
portfolios. If you can afford to leave your money invested through the
inevitable up and down cycles of the financial markets, you will
greatly reduce your vulnerability to any single decline. We know from
experience, for example, that stock prices have gone up over longer
periods of time, have significantly outperformed other types of
investments and have stayed ahead of inflation.
Second, you can further manage your investing risk through
diversification. A stock mutual fund, for instance, is already
diversified, because it invests in many different companies. You can
increase your diversification further by investing in a number of
different stock funds, or in such other investment categories as
bonds. You should also keep money you'll need in the near future in a
more stable investment.
Finally, no matter what your time horizon or portfolio diversity, it
makes good sense to follow a regular investment plan, investing a
certain amount of money in a fund at the same time each month or
quarter and periodically reviewing your overall portfolio. By doing
so, you won't get caught up in the excitement of a rapidly rising
market, nor will you buy all your shares at market highs. While this
strategy - known as dollar cost averaging - won't assure a profit or
protect you from a loss in a declining market, it should help you
lower the average cost of your purchases. Of course, you should
consider your financial ability to continue your purchases through
periods of low price levels before undertaking such a strategy.
If you have questions, please call us at 1-800-544-8888, or visit our
web site at www.fidelity.com. We are available 24 hours a day, seven
days a week to provide you the information you need to make the
investments that are right for you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
To evaluate a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the value of an investment, assuming reinvestment of the fund's
dividend income. Yield measures the income paid by a fund. Since a
money market fund tries to maintain a $1 share price, yield is an
important measure of performance. If Fidelity had not reimbursed
certain fund expenses, the past five year and past 10 year total
returns would have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED APRIL 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN MONEY MARKET 5.12% 29.23% 71.51%
All Taxable Money Market 4.81% 27.51% 64.76%
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 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 919 money market funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED APRIL 30, 1999 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
SPARTAN MONEY MARKET 5.12% 5.26% 5.54%
All Taxable Money Market 4.81% 4.98% 5.15%
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
4/27/99 2/2/99 11/3/98 7/28/98 4/28/98
Spartan Money Market Fund 4.59% 4.84% 5.02% 5.25% 5.23%
All Taxable Money Market 4.28% 4.41% 4.72% 5.01% 5.00%
Funds Average
4/28/99 2/3/99 10/28/98 7/29/98 4/29/98
MMDA 2.10% 2.21% 2.45% 2.54% 2.52%
Spartan Money
Market Fund
All Taxable Money
Market Funds
Average
MMDA
6% -
5% -
4% -
3% -
2% -
1% -
0%
Row: 1, Col: 1, Value: 4.59
Row: 1, Col: 2, Value: 4.28
Row: 1, Col: 3, Value: 2.1
Row: 2, Col: 1, Value: 4.84
Row: 2, Col: 2, Value: 4.41
Row: 2, Col: 3, Value: 2.21
Row: 3, Col: 1, Value: 5.02
Row: 3, Col: 2, Value: 4.72
Row: 3, Col: 3, Value: 2.45
Row: 4, Col: 1, Value: 5.25
Row: 4, Col: 2, Value: 5.01
Row: 4, Col: 3, Value: 2.54
Row: 5, Col: 1, Value: 5.23
Row: 5, Col: 2, Value: 5.0
Row: 5, Col: 3, Value: 2.52
YIELD refers to the income paid by the fund over a given period.
Yields for money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income
earned is reinvested or compounded is called an effective yield. The
table above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the all
taxable money market funds average and the bank money market deposit
account (MMDA) average. Figures for the all taxable money market funds
average are from IBC Financial Data, Inc. The MMDA average is supplied
by BANK RATE MONITOR(trademark).
(checkmark)COMPARING
PERFORMANCE
There are some important
differences between a bank
money market deposit account
(MMDA) and a money market
fund. First, the U.S. government
neither insures nor guarantees
a money market fund. In fact,
there is no assurance that a
money market fund will
maintain a $1 share price.
Second, a money market fund
returns to its shareholders
income earned by the fund's
investments after expenses.
This is in contrast to banks,
which set their MMDA rates
periodically based on current
interest rates, competitors'
rates, and internal criteria.
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT
PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE.
FUND TALK: THE MANAGER'S OVERVIEW
(photograph of John Todd)
An interview with John Todd, Portfolio Manager of Spartan Money Market
Fund
Q. JOHN, CAN YOU DESCRIBE THE ECONOMIC AND INVESTMENT BACKDROP AT THE
BEGINNING OF THE ONE-YEAR PERIOD THAT ENDED APRIL 30, 1999, AND HOW
YOU MANAGED THE FUND ACCORDINGLY?
A. At the beginning of the period, market observers expected the
Federal Reserve Board to raise the rate banks charge each other for
overnight loans - known as the fed funds rate - in order to slow rapid
economic growth and prevent inflationary pressures from building. In
that environment, I used a barbell strategy, focusing investments on
either end of the money market yield curve with little invested in
between. With the fund's average maturity starting the period at 73
days, I invested in one-year securities to lock in attractive yields
that I believed figured in higher interest rates than I expected. On
the other end of the spectrum, I bought very short-maturity
instruments to enable the fund to take advantage of buying
opportunities if interest rates did rise. However, this backdrop
changed dramatically during the third quarter of 1998.
Q. WHAT HAPPENED AT THAT POINT, AND HOW DID THAT AFFECT YOUR STRATEGY?
A. All financial markets were sent into a tailspin when Russia
defaulted on some of its short-term debt in August, and fears arose
that similarly profound economic difficulties elsewhere would hurt the
U.S. economy. That turmoil was exacerbated by the near-collapse of
hedge fund Long-Term Capital Management at the end of September.
During the third quarter of 1998 we witnessed an incredible flight to
quality, as investors sought the safety offered by U.S. Treasury
securities. With credit concerns on the rise, I shifted the fund's
investments to securities with three- to six-month maturities, at the
same time maintaining the fund's rather long average maturity. I felt
the Fed would lower interest rates to respond to the market crisis.
The Fed did follow through with three cuts in the fed funds rate
during the six-week period running from late September through
mid-November, in order to alleviate the credit crunch, help ease the
global crisis and sustain economic growth in the U.S. As we entered
1999, the market anticipated the Fed would continue to lower rates.
However, I felt that the Fed had done enough and, if anything, would
become concerned enough at some point to take back at least one of its
rate cuts. With little yield advantage offered by longer-term
securities, I shortened the average maturity to the mid 40s by the end
of January.
Q. BUT THE FED KEPT RATES UNCHANGED . . .
A. That's right. In February and March it became evident that the U.S.
economy was not slowing as expected. Market sentiment changed, with
investors once again anticipating Fed rate increases to head off
inflation. In response, I implemented the barbell strategy once again,
because I didn't feel the Fed would raise rates as much as was
reflected in the yields of longer-term money market securities.
Concerns about an imminent rate increase eased in April, and the
fund's average maturity declined to 65 days at the end of the period.
Recently, I increased the fund's investments in short-term
variable-rate securities toward the end of the period, which will
enable me to take advantage of higher yields if rates do in fact go
up.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on April 30, 1999, was 4.59%, compared
to 5.23% 12 months ago. For the 12 months that ended April 30, 1999,
the fund had a total return of 5.12%, compared to 4.81% for the all
taxable money market funds average, according to IBC Financial Data,
Inc.
Q. WHAT'S YOUR OUTLOOK?
A. Over the past two years, economic weakness elsewhere in the world
has helped tame inflation in the U.S. However, it now appears that
economies in Asia may be on the rebound. In addition, central banks
around the world have implemented interest-rate cuts to stimulate
growth. If growth in economies outside of the U.S. starts to rekindle,
U.S. corporations should be able to increase prices without losing
market share. Oil prices were on the rebound, and commodity prices
seem to have bottomed, so inflation may be on the horizon. Therefore,
at this point I believe no change in interest rates is the best we can
hope for. However, if we witness sustained growth in the U.S. and
improved growth abroad, the Fed may well seek to slow growth and head
off inflation by reversing some of the rate cuts it implemented last
year. As a result, at the end of the period the fund's maturity
reflected a neutral, "wait and see" positioning.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS. THESE
VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FIDELITY FUND ARE BASED ON NUMEROUS
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON
BEHALF OF ANY FIDELITY FUND.
(checkmark)FUND FACTS
GOAL: seeks 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 30,1999,
more than $9.5 billion
MANAGER: John Todd, since
1989; manager, several
other Fidelity and Spartan
taxable money market funds;
joined Fidelity in 1981
INVESTMENT CHANGES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MATURITY DIVERSIFICATION
DAYS % OF FUND'S INVESTMENTS 4/30/99 % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS
10/31/98 4/30/98
0 - 30 40 28 45
31 - 90 34 33 26
91 - 180 20 33 20
181 - 397 6 6 9
WEIGHTED AVERAGE MATURITY
4/30/99 10/31/98 4/30/98
Spartan Money Market Fund 65 DAYS 73 Days 73 Days
All Taxable Money Market 61 DAYS 58 Days 58 Days
Funds Average *
ASSET ALLOCATION (% OF FUND'S
INVESTMENTS)
</TABLE>
AS OF APRIL 30, 1999
Bank CDs, BAs,
TDs, and notes 58%
Commercial paper 41%
Other 1%
Row: 1, Col: 1, Value: 58.0
Row: 1, Col: 2, Value: 41.0
Row: 1, Col: 3, Value: 1.0
AS OF OCTOBER 31, 1998
Bank CDs, BAs,
TDs, and notes 64%
Commercial paper 36%
Other 0%
Row: 1, Col: 1, Value: 64.0
Row: 1, Col: 2, Value: 36.0
Row: 1, Col: 3, Value: 0.0
INVESTMENTS APRIL 30, 1999
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT - 41.9%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
DOMESTIC CERTIFICATES OF
DEPOSIT - 1.3%
Chase Manhattan Bank (USA)
8/11/99 4.90% $ 90,000 $ 90,000
Fleet National Bank
5/3/99 4.97 (b) 38,000 37,981
127,981
LONDON BRANCH, EURODOLLAR,
DOMESTIC BANKS - 0.6%
Morgan Guaranty Trust Co., NY
7/14/99 4.87 35,000 35,001
7/16/99 4.87 22,000 22,000
57,001
LONDON BRANCH, EURODOLLAR,
FOREIGN BANKS - 14.0%
Abbey National Treasury
Services PLC
6/17/99 4.90 135,000 134,993
7/6/99 4.90 55,000 55,000
8/9/99 4.90 40,000 40,001
ABN-AMRO Bank NV
10/18/99 4.92 10,000 10,000
Bank of Scotland Treasury
Services
6/10/99 4.90 45,000 45,000
6/14/99 4.90 25,000 25,000
10/13/99 4.93 45,000 45,002
2/16/00 5.14 35,000 34,989
Banque Nationale de Paris
5/4/99 4.88 25,000 25,000
5/4/99 5.05 7,000 7,000
Barclays Bank PLC
9/7/99 5.03 100,000 100,000
9/7/99 5.04 55,000 54,998
Bayerische Hypo-und
Vereinsbank AG
5/12/99 4.89 58,000 58,000
6/9/99 4.90 20,000 20,000
8/18/99 4.95 55,000 55,003
Credit Agricole Indosuez
8/5/99 4.90 65,000 65,000
8/16/99 4.92 20,000 20,000
10/12/99 4.94 22,000 22,001
Den Danske Bank Group AS
6/2/99 4.94 50,000 50,000
CERTIFICATES OF DEPOSIT -
CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
LONDON BRANCH, EURODOLLAR,
FOREIGN BANKS - CONTINUED
Deutsche Bank AG
8/2/99 4.90% $ 60,000 $ 59,997
Dresdner Bank AG
7/19/99 4.87 25,000 25,000
8/12/99 4.95 20,000 19,998
Halifax PLC
5/17/99 4.84 25,000 25,000
5/25/99 4.87 25,000 25,000
8/12/99 4.92 30,000 30,000
8/19/99 4.95 15,000 15,000
8/31/99 4.98 25,000 25,000
Lloyds Bank PLC
8/10/99 4.93 20,000 20,000
Svenska Handelsbanken
5/4/99 4.87 40,000 40,000
6/16/99 4.85 54,000 54,001
Westdeutsche Landesbank
Girozentrale
5/17/99 4.90 80,000 80,000
7/8/99 4.90 50,000 49,999
1,335,982
NEW YORK BRANCH, YANKEE
DOLLAR, FOREIGN BANKS - 25.9%
ABN-AMRO Bank NV
6/7/99 5.76 30,000 29,998
6/30/99 5.05 42,000 42,000
Bank of Montreal, Canada
7/19/99 4.87 50,000 50,000
7/20/99 4.87 50,000 50,000
3/3/00 5.35 40,000 39,974
Banque Nationale de Paris
7/6/99 4.89 25,000 25,000
7/8/99 4.89 30,000 30,000
Barclays Bank PLC
5/3/99 4.88 (b) 95,000 94,947
3/1/00 5.30 60,000 59,971
Bayerische Hypo-und
Vereinsbank AG
6/7/99 4.90 60,000 60,000
2/10/00 5.12 50,000 49,985
CERTIFICATES OF DEPOSIT -
CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
NEW YORK BRANCH, YANKEE
DOLLAR, FOREIGN BANKS -
CONTINUED
Canadian Imperial Bank of
Commerce
5/3/99 4.88% (b) $ 100,000 $ 99,933
2/23/00 5.17 35,000 34,986
2/29/00 5.24 27,000 26,991
Commerzbank AG
5/4/99 5.01 70,000 70,000
5/10/99 5.13 50,000 50,000
9/1/99 5.03 50,000 50,000
Credit Agricole Indosuez
9/1/99 5.00 55,000 55,000
Credit Communale de Belgique
8/11/99 4.92 35,000 35,000
Deutsche Bank AG
5/4/99 4.88 60,000 60,000
5/6/99 5.04 40,000 40,000
8/6/99 5.00 23,000 23,030
8/10/99 4.93 80,000 80,000
8/11/99 4.92 25,000 25,000
2/10/00 5.11 30,000 29,991
2/16/00 5.12 50,000 49,981
Dresdner Bank AG
5/10/99 4.89 50,000 50,000
Landesbank Hessen-Thuringen
3/1/00 5.22 50,000 49,980
National Westminster Bank PLC
6/7/99 5.75 50,000 49,997
9/2/99 5.03 40,000 40,000
9/3/99 5.02 35,000 35,000
3/15/00 5.15 45,000 44,981
Norddeutsche Landesbank
Girozentrale
7/26/99 5.73 50,000 49,994
2/10/00 5.10 20,000 19,994
RaboBank Nederland Coop.
Central
5/5/99 5.83 15,000 15,000
6/4/99 5.75 40,000 39,998
9/2/99 5.00 35,000 35,000
Royal Bank of Canada
5/3/99 4.89 (b) 45,000 44,974
6/11/99 5.80 50,000 49,996
CERTIFICATES OF DEPOSIT -
CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
NEW YORK BRANCH, YANKEE
DOLLAR, FOREIGN BANKS -
CONTINUED
Royal Bank of Canada -
continued
2/18/00 5.15% $ 40,000 $ 39,989
2/28/00 5.26 20,000 19,993
Societe Generale, France
5/24/99 4.87 70,000 70,000
6/9/99 4.91 70,000 70,000
7/12/99 4.90 25,000 25,000
8/5/99 4.90 80,000 80,000
Swiss Bank Corp.
6/3/99 5.75 75,000 74,995
Toronto Dominion Bank
5/10/99 5.15 50,000 50,000
6/4/99 5.75 50,000 49,997
7/26/99 5.73 40,000 39,995
2/18/00 5.15 50,000 49,986
United Bank of Switzerland AG
2/28/00 5.20 50,000 49,986
Westdeutsche Landesbank
Girozentrale
6/7/99 4.89 60,000 60,000
2,466,642
SAN FRANCISCO BRANCH, YANKEE
DOLLAR, FOREIGN BANKS - 0.1%
Banque Nationale de Paris
5/4/99 5.01 15,000 15,000
TOTAL CERTIFICATES OF DEPOSIT 4,002,606
COMMERCIAL PAPER - 41.4%
Abbey National Treasury
Services PLC
8/9/99 4.93 95,000 93,731
ABN-AMRO North America, Inc.
10/4/99 5.09 25,000 24,465
Aspen Funding Corp.
5/11/99 4.91 20,000 19,973
5/12/99 4.90 20,000 19,970
6/2/99 4.84 8,000 7,966
Asset Securitization Coop.
Corp.
5/18/99 4.89 60,000 59,863
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Asset Securitization Coop.
Corp. - continued
5/25/99 4.89% $ 5,000 $ 4,984
6/7/99 4.91 21,000 20,895
6/22/99 4.90 15,000 14,895
6/23/99 4.86 50,000 49,645
6/23/99 4.92 45,000 44,679
6/29/99 4.91 30,000 29,762
Associates First Capital Corp.
6/7/99 4.91 26,000 25,870
6/8/99 4.91 62,000 61,683
Bradford & Bingley Building
Society
5/24/99 4.89 20,000 19,938
6/10/99 4.92 10,000 9,946
7/15/99 4.88 25,000 24,749
Centric Capital Corp.
5/10/99 4.92 10,000 9,988
7/26/99 4.86 15,000 14,832
CIESCO L.P.
5/26/99 4.89 23,000 22,923
Citibank Credit Card Master
Trust I (Dakota Certificate
Program)
5/14/99 4.90 20,000 19,965
5/19/99 4.91 20,000 19,952
6/7/99 4.97 12,000 11,940
7/22/99 4.90 7,000 6,923
Commonwealth Bank of Australia
8/9/99 4.91 25,000 24,667
8/12/99 4.92 15,000 14,794
8/16/99 4.95 5,000 4,928
ConAgra, Inc.
5/3/99 5.00 10,000 9,997
5/25/99 4.94 17,000 16,949
5/26/99 4.95 10,000 9,966
5/27/99 5.00 15,000 14,946
6/3/99 4.95 9,000 8,959
Cregem North America, Inc.
7/16/99 4.88 15,000 14,847
11/4/99 4.97 25,000 24,377
CXC, Inc.
6/16/99 4.89 20,000 19,876
7/6/99 4.85 8,000 7,929
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Daimler-Chrysler North
America Corp.
5/18/99 4.90% $ 20,000 $ 19,954
5/19/99 4.90 25,000 24,939
6/10/99 4.91 15,000 14,919
6/21/99 4.90 15,000 14,897
7/12/99 4.90 16,000 15,845
7/21/99 4.90 27,000 26,707
7/27/99 4.88 8,000 7,907
7/28/99 4.90 8,000 7,906
Delaware Funding Corp.
5/19/99 4.90 46,000 45,889
5/24/99 4.90 10,000 9,969
6/17/99 4.84 50,000 49,687
6/22/99 4.85 20,000 19,861
Deutsche Bank Financial, Inc.
5/10/99 4.90 50,000 49,940
6/15/99 4.90 50,000 49,698
Enterprise Funding Corp.
5/4/99 4.93 20,000 19,992
5/14/99 4.90 10,000 9,982
5/20/99 4.91 10,124 10,098
6/11/99 4.92 14,706 14,625
6/14/99 4.91 13,534 13,454
Falcon Asset Securitization
5/4/99 4.89 66,275 66,248
5/5/99 4.89 8,345 8,340
5/6/99 4.89 90,000 89,939
5/7/99 4.89 63,750 63,698
6/21/99 4.85 20,000 19,864
Finova Capital Corp.
5/3/99 5.05 8,000 7,998
5/24/99 4.95 10,000 9,969
6/2/99 5.03 5,000 4,978
6/16/99 4.97 8,000 7,950
6/25/99 4.92 5,000 4,963
6/25/99 4.96 17,000 16,872
Ford Motor Credit Co.
5/18/99 4.87 75,000 74,829
General Electric Capital Corp.
6/2/99 4.95 30,000 29,871
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
General Electric Capital
Corp. - continued
6/14/99 4.90% $ 50,000 $ 49,704
6/14/99 4.96 50,000 49,701
6/21/99 4.96 80,000 79,446
8/16/99 4.94 50,000 49,284
8/30/99 5.00 25,000 24,590
10/18/99 4.93 55,000 53,751
General Electric Credit
Capital Services, Inc.
6/9/99 4.92 42,000 41,779
General Motors Acceptance Corp.
5/19/99 4.90 48,000 47,884
6/14/99 4.94 90,000 89,464
7/29/99 4.89 65,000 64,225
Generale de Banque SA
8/13/99 4.92 43,000 42,404
Goldman Sachs Group L.P.
5/25/99 4.90 50,000 49,838
Heller Financial, Inc.
5/5/99 5.03 13,000 12,993
5/24/99 5.08 7,000 6,978
6/16/99 5.01 9,000 8,943
7/6/99 5.00 7,000 6,937
JC Penney Funding Corp.
5/11/99 5.00 17,000 16,977
5/12/99 5.00 5,000 4,992
5/17/99 5.01 25,000 24,945
Kitty Hawk Funding Corp.
5/21/99 4.90 16,206 16,162
5/21/99 4.91 4,000 3,989
5/28/99 4.95 20,000 19,927
6/3/99 4.84 6,780 6,750
6/7/99 4.89 25,061 24,936
6/8/99 4.92 19,000 18,903
Lehman Brothers Holdings, Inc.
6/14/99 5.22 34,000 33,786
6/21/99 5.22 11,000 10,920
6/22/99 5.22 23,000 22,829
MCI WorldCom, Inc.
5/5/99 5.02 2,000 1,999
5/5/99 5.03 27,000 26,985
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
MCI WorldCom, Inc. - continued
6/23/99 5.10% $ 13,000 $ 12,904
6/29/99 5.11 10,900 10,810
7/7/99 5.10 12,000 11,888
7/7/99 5.15 34,000 33,679
Morgan Stanley, Dean Witter &
Co.
5/12/99 4.90 25,000 24,963
5/17/99 4.90 66,000 65,857
6/9/99 4.91 60,000 59,685
Nationwide Building Society
6/8/99 4.91 10,000 9,949
8/5/99 4.87 33,000 32,594
New Center Asset Trust
7/21/99 4.87 20,000 19,784
8/9/99 4.91 10,000 9,866
Newport Funding Corp.
5/5/99 4.91 35,000 34,981
5/12/99 4.91 25,000 24,963
5/19/99 4.92 25,000 24,939
5/25/99 4.96 15,000 14,951
Nordbanken AB
5/26/99 4.96 10,000 9,966
Nordbanken, North America, Inc.
6/17/99 4.90 50,000 49,684
Norddeutsche Landesbank
Girozentrale
8/5/99 4.91 15,000 14,808
Norfolk Southern Corp.
5/10/99 5.02 4,000 3,995
5/12/99 5.03 9,000 8,986
5/19/99 5.03 3,000 2,993
5/26/99 5.00 5,000 4,983
PHH Corp.
5/12/99 5.02 25,000 24,962
5/12/99 5.03 5,000 4,992
5/17/99 5.04 40,000 39,911
5/19/99 5.03 5,000 4,988
5/26/99 5.04 8,000 7,972
6/22/99 5.01 6,000 5,957
6/23/99 5.01 5,000 4,963
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Preferred Receivables Funding
Corp.
5/10/99 4.90% $ 37,785 $ 37,739
5/18/99 4.94 20,000 19,954
5/20/99 4.91 81,975 81,765
5/26/99 4.91 14,000 13,953
5/28/99 4.90 23,035 22,951
6/16/99 4.91 17,175 17,069
Salomon Smith Barney
Holdings, Inc.
5/5/99 4.92 55,000 54,970
5/21/99 4.89 20,000 19,946
Societe Generale North
America, Inc.
5/3/99 4.86 45,000 44,988
5/25/99 4.87 90,000 89,710
8/10/99 4.95 30,000 29,594
Svenska Handelsbanken, Inc.
6/15/99 4.90 20,000 19,880
8/9/99 4.92 10,000 9,867
Three Rivers Funding Corp.
5/20/99 4.84 8,110 8,089
5/26/99 4.85 18,896 18,833
Triple A One Funding Corp.
5/5/99 4.89 22,438 22,426
5/14/99 4.90 6,551 6,540
6/3/99 4.84 6,000 5,974
6/15/99 4.92 10,201 10,139
Tyco International Group SA
5/10/99 5.07 18,000 17,978
5/18/99 5.11 13,000 12,969
5/20/99 5.10 9,500 9,475
5/26/99 5.08 5,000 4,983
5/27/99 5.09 10,000 9,964
7/8/99 5.10 7,000 6,933
UBS Finance (Delaware), Inc.
8/9/99 4.92 40,000 39,466
Unifunding, Inc.
5/3/99 4.86 30,000 29,992
5/19/99 4.90 10,000 9,976
Westpac Capital Corp.
8/13/99 4.92 50,000 49,307
8/16/99 4.95 30,000 29,569
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Windmill Funding Corp.
5/25/99 4.90% $ 8,000 $ 7,974
6/9/99 4.84 11,000 10,943
6/10/99 4.87 5,000 4,973
6/14/99 4.85 15,000 14,912
6/16/99 4.85 10,000 9,938
7/14/99 4.88 10,000 9,901
TOTAL COMMERCIAL PAPER 3,950,194
BANK NOTES - 6.0%
Comerica Bank, Detroit
5/10/99 4.99 (b) 13,000 12,997
First Union National Bank of
North Carolina
5/3/99 4.94 (b) 108,000 108,000
7/21/99 5.02 (b) 20,000 20,000
Fleet National Bank, Providence
5/4/99 4.97 (b) 38,000 37,990
Key Bank NA
5/21/99 4.80 (b) 30,000 29,995
Mellon Bank NA, Pittsburgh
5/3/99 4.88 (b) 24,000 23,986
NationsBank NA
5/3/99 4.95 65,000 64,972
8/24/99 4.95 60,000 60,000
8/25/99 4.95 75,000 75,000
9/8/99 5.01 50,000 50,000
PNC Bank NA, Pittsburgh
5/3/99 4.82 (b) 40,000 39,995
5/3/99 4.98 (b) 38,000 37,997
Westpac Banking Corp.
5/5/99 5.85 15,000 15,000
TOTAL BANK NOTES 575,932
MASTER NOTES - 2.0%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Goldman Sachs Group L.P.
6/8/99 5.08% (b) $ 80,000 $ 80,000
J.P. Morgan Securities, Inc.
5/7/99 4.91 (b) 90,000 90,000
SunTrust Banks, Inc.
5/3/99 4.85 (b) 15,000 15,000
TOTAL MASTER NOTES 185,000
MEDIUM-TERM NOTES - 4.2%
Abbey National Treasury
Services PLC
5/17/99 4.85 (a)(b) 45,000 44,988
Bishops Gate Resources
Mortgage Trust
5/1/99 5.14 (b) 27,000 27,000
Ford Motor Credit Co.
5/3/99 4.95 (b) 66,000 66,000
General Electric Capital Corp.
6/9/99 4.98 (b) 15,000 15,000
7/12/99 4.95 (b) 24,000 24,000
Goldman Sachs Group L.P.
5/10/99 5.05 (a)(b) 29,000 29,000
7/7/99 5.20 (b)(c) 44,000 44,000
7/27/99 5.10 (b)(c) 24,000 24,000
Merrill Lynch & Co., Inc.
6/4/99 4.96 (b) 30,000 29,999
Morgan Guaranty Trust Co., NY
5/27/99 4.86 (b) 50,000 49,990
Norwest Corp.
7/22/99 5.02 (b) 50,000 50,000
TOTAL MEDIUM-TERM NOTES 403,977
SHORT-TERM NOTES - 3.2%
Capital One Funding Corp.
Series 1994 E,
5/7/99 4.89 (b) 6,312 6,312
Capital One Funding Corp.
Series 1995 D,
5/7/99 4.89 (b) 7,020 7,020
SHORT-TERM NOTES - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S)
PURCHASE
Capital One Funding Corp.
Series 1995 E,
5/7/99 4.89% (b) $ 5,586 $ 5,586
Capital One Funding Corp.
Series 1996 H,
5/7/99 4.89 (b) 7,210 7,210
Capital One Funding Corp.
Series 1996 I,
5/7/99 4.89 (b) 8,734 8,734
Capital One Funding Corp.
Series 1997 F,
5/7/99 4.89 (b) 5,000 5,000
Capital One Funding Corp.
Series 1997 G,
5/7/99 4.89 (b) 3,791 3,791
Monumental Life Insurance Co.
5/3/99 5.04 (b)(c) 29,000 29,000
5/3/99 5.11 (b)(c) 35,000 35,000
New York Life Insurance Co.
5/7/99 4.97 (b) 25,000 25,000
7/1/99 5.12 (b)(c) 26,000 26,000
Pacific Life Insurance Co.
6/9/99 5.07 (b)(c) 35,000 35,000
SMM Trust Series 1998 I,
5/28/99 4.90 (a)(b) 20,000 20,000
Strategic Money Market Trust
Series 1998 A,
6/16/99 5.10 (b) 91,000 91,000
TOTAL SHORT-TERM NOTES 304,653
TIME DEPOSITS - 0.8%
First National Bank of Chicago
5/3/99 4.94 75,000 75,000
REPURCHASE AGREEMENTS - 0.5%
MATURITY AMOUNT (000S)
In a joint trading account $ 49,312 49,292
(U.S. Government
obligations) dated 4/30/99
due 5/3/99 At 4.95%
TOTAL INVESTMENT IN $ 9,546,654
SECURITIES - 100%
Total Cost for Income Tax Purposes $ 9,546,654
</TABLE>
LEGEND
(a) Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers. At the period end, the value of these securities
amounted to $93,988,000 or 1.0% of net assets.
(b) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due dates on these types of
securities reflect the next interest rate reset date or, when
applicable, the final maturity date.
(c) Restricted securities - Investment in securities not registered
under the Securities Act of 1933.
SECURITY ACQUISITION DATE COST (000S)
Goldman Sachs Group L.P. 12/7/98 $ 44,000
5.2%, 7/7/99
Goldman Sachs Group L.P. 1/22/99 $ 24,000
5.1%, 7/27/99
Monumental Life Insurance Co. 7/31/98 - 9/17/98 $ 29,000
5.04%, 5/3/99
Monumental Life Insurance Co. 7/1/98 $ 35,000
5.11%, 5/3/99
New York Life Insurance Co. 12/21/98 $ 26,000
5.12%, 7/1/99
Pacific Life Insurance Co. 8/21/98 $ 35,000
5.07%, 6/9/99
INCOME TAX INFORMATION
At April 30, 1999, the fund had a capital loss carryforward of
approximately $2,519,000 of which $1,881,000, $476,000 and $162,000
will expire on April 30, 2002, 2003 and 2004, respectively.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AMOUNTS IN THOUSANDS (EXCEPT
PER-SHARE AMOUNT) APRIL 30,
1999
ASSETS
Investment in securities, at $ 9,546,654
value (including repurchase
agreements of $49,292) - See
accompanying schedule
Receivable for fund shares 27,997
sold
Interest receivable 62,396
Other receivables 6
TOTAL ASSETS 9,637,053
LIABILITIES
Payable for investments $ 88,752
purchased
Payable for fund shares 34,385
redeemed
Distributions payable 2,212
Accrued management fee 3,616
Other payables and accrued 140
expenses
TOTAL LIABILITIES 129,105
NET ASSETS $ 9,507,948
Net Assets consist of:
Paid in capital $ 9,510,476
Accumulated net realized gain (2,528)
(loss) on investments
NET ASSETS, for 9,509,965 $ 9,507,948
shares outstanding
NET ASSET VALUE, offering $1.00
price and redemption price
per share ($9,507,948
(divided by) 9,509,965
shares)
STATEMENT OF OPERATIONS
AMOUNTS IN THOUSANDS YEAR
ENDED APRIL 30, 1999
INTEREST INCOME $ 514,550
EXPENSES
Management fee $ 42,521
Non-interested trustees' 38
compensation
Total expenses before 42,559
reductions
Expense reductions (375) 42,184
NET INTEREST INCOME 472,366
NET REALIZED GAIN (LOSS) ON 98
INVESTMENTS
NET INCREASE IN NET ASSETS $ 472,464
RESULTING FROM OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
AMOUNTS IN THOUSANDS YEAR ENDED APRIL 30, 1999 YEAR ENDED APRIL 30, 1998
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest income $ 472,366 $ 474,623
Net realized gain (loss) 98 115
NET INCREASE (DECREASE) IN 472,464 474,738
NET ASSETS RESULTING FROM
OPERATIONS
Distributions to shareholders (472,366) (474,623)
from net interest income
Share transactions at net 10,977,091 14,018,870
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 446,239 462,349
distributions from net
interest income
Cost of shares redeemed (10,778,535) (14,917,925)
NET INCREASE (DECREASE) IN 644,795 (436,706)
NET ASSETS AND SHARES
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE (DECREASE) 644,893 (436,591)
IN NET ASSETS
NET ASSETS
Beginning of period 8,863,055 9,299,646
End of period $ 9,507,948 $ 8,863,055
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
YEARS ENDED APRIL 30, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
Income from Investment .050 .053 .051 .054 .049
Operations Net interest
income
Less Distributions
From net interest income (.050) (.053) (.051) (.054) (.049)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN A, B 5.12% 5.43% 5.21% 5.57% 4.97%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 9,508 $ 8,863 $ 9,300 $ 8,451 $ 7,635
(in millions)
Ratio of expenses to average .45% .45% .45% .45% .44% C
net assets
Ratio of expenses to average .45% .45% .45% .42% D .44%
net assets after expense
reductions
Ratio of net interest income 5.00% 5.31% 5.09% 5.45% 4.89%
to average net assets
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN.
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE.
C 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.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended April 30, 1999
1. SIGNIFICANT ACCOUNTING POLICIES.
Spartan Money Market Fund (the fund) is a fund of Fidelity Hereford
Street Trust (the trust) and is authorized to issue an unlimited
number of shares. The trust is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Delaware business trust. The
financial statements have been prepared in conformity with generally
accepted accounting principles which require management to make
certain estimates and assumptions at the date of the financial
statements. The following summarizes the significant accounting
policies of the fund:
SECURITY VALUATION. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, the fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for its fiscal year. The schedule of investments
includes information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. Under a Deferred Compensation Plan (the
Plan) non-interested Trustees must defer receipt of a portion of, and
may elect to defer receipt of an additional portion of, their annual
compensation. Deferred amounts are treated as though equivalent dollar
amounts had been invested in shares of the fund or are invested in a
cross-section of other Fidelity money market funds. Deferred amounts
remain in the fund until distributed in accordance with the Plan.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (the SEC), the fund, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the fund's investment
2. OPERATING POLICIES -
CONTINUED
REPURCHASE AGREEMENTS -
CONTINUED
adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
RESTRICTED SECURITIES. The fund is permitted to invest in securities
that are subject to legal or contractual restrictions on resale. These
securities generally may be resold in transactions exempt from
registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
At the end of the period, restricted securities (excluding 144A
issues) amounted to $193,000,000 or 2.0% of net assets.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR pays all
expenses, except the compensation of the non-interested Trustees and
certain exceptions such as interest, taxes, brokerage commissions and
extraordinary expenses. FMR receives a fee that is computed daily at
an annual rate of 0.45% 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
collected certain transaction fees from shareholders which amounted to
$159,000 for the period.
SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity
Investments Money Management, Inc., a wholly owned subsidiary of FMR,
receives a fee from FMR of 50% of the management fee payable to FMR.
The fee is paid prior to any voluntary expense reimbursements which
may be in effect.
MONEY MARKET INSURANCE. Pursuant to an Exemptive Order issued by the
SEC, the fund, along with other money market funds advised by FMR or
its affiliates, has entered into insurance agreements with FIDFUNDS
Mutual Limited (FIDFUNDS), an affiliated mutual insurance company,
effective January 1, 1999. FIDFUNDS provides limited coverage for
certain loss events including issuer default as to payment of
principal or interest and bankruptcy or insolvency of a credit
enhancement provider. The insurance does not cover losses resulting
from changes in interest rates, ratings downgrades or other market
conditions. The fund may be subject to a special assessment of up to
approximately 2.5 times the fund's annual gross premium if covered
losses exceed certain levels. During the period, FMR has borne the
cost of the fund's premium payable to FIDFUNDS.
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 $375,000 under these arrangements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Fidelity Hereford Street Trust and the Shareholders
of Spartan 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 Money Market Fund (a fund of Fidelity Hereford Street Trust)
at April 30, 1999, and the results of its operations, the changes in
its net assets and the financial highlights for the periods indicated,
in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Spartan 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, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 7, 1999
PROXY VOTING RESULTS
A special meeting of the fund's shareholders was held on May 19, 1999.
The results of votes taken among shareholders on proposals before them
are reported below. Each vote reported represents a single share held
on the record date for the meeting.
PROPOSAL 1
To elect as Trustees the following twelve nominees.
# OF % OF
VOTES CAST VOTES CAST
RALPH F. COX
Affirmative 5,974,392,783.10 91.646
Withheld 544,581,193.76 8.354
TOTAL 6,518,973,976.86 100.000
PHYLLIS BURKE DAVIS
Affirmative 5,967,819,474.89 91.545
Withheld 551,154,501.97 8.455
TOTAL 6,518,973,976.86 100.000
ROBERT M. GATES
Affirmative 5,968,116,491.41 91.550
Withheld 550,857,485.45 8.450
TOTAL 6,518,973,976.86 100.000
EDWARD C. JOHNSON 3D
Affirmative 5,974,136,887.42 91.642
Withheld 544,837,089.44 8.358
TOTAL 6,518,973,976.86 100.000
E. BRADLEY JONES
Affirmative 5,963,456,420.48 91.478
Withheld 555,517,556.38 8.522
TOTAL 6,518,973,976.86 100.000
DONALD J. KIRK
Affirmative 5,974,589,484.34 91.649
Withheld 544,384,492.52 8.351
TOTAL 6,518,973,976.86 100.000
# OF % OF
VOTES CAST VOTES CAST
PETER S. LYNCH
Affirmative 5,974,802,767.68 91.653
Withheld 544,171,209.18 8.347
TOTAL 6,518,973,976.86 100.000
WILLIAM O. MCCOY
Affirmative 5,975,679,888.78 91.666
Withheld 543,294,088.08 8.334
TOTAL 6,518,973,976.86 100.000
GERALD C. MCDONOUGH
Affirmative 5,964,582,171.27 91.496
Withheld 554,391,805.59 8.504
TOTAL 6,518,973,976.86 100.000
MARVIN L. MANN
Affirmative 5,976,529,694.42 91.679
Withheld 542,444,282.44 8.321
TOTAL 6,518,973,976.86 100.000
ROBERT C. POZEN
Affirmative 5,975,012,293.16 91.656
Withheld 543,961,683.70 8.344
TOTAL 6,518,973,976.86 100.000
THOMAS R. WILLIAMS
Affirmative 5,969,417,459.36 91.570
Withheld 549,556,517.50 8.430
TOTAL 6,518,973,976.86 100.000
PROPOSAL 2
To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the fund.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 4,492,051,833.30 90.062
Against 58,748,594.05 1.177
Abstain 436,958,862.73 8.761
TOTAL 4,987,759,290.08 100.000
PROPOSAL 3
To approve an amended management contract for the fund to include
annual premium payments, if any, to a captive mutual insurance company
in the list of enumerated expenses borne directly by the fund and to
modify the management contract's amendment provisions.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 3,912,311,388.34 78.438
Against 432,765,021.03 8.677
Abstain 642,682,880.71 12.885
TOTAL 4,987,759,290.08 100.000
PROPOSAL 4
To amend the fund's fundamental investment limitation concerning
diversification.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 4,001,162,106.60 80.220
Against 358,958,199.10 7.196
Abstain 627,638,984.38 12.584
TOTAL 4,987,759,290.08 100.000
PROPOSAL 5
To amend the fund's fundamental investment objective.
# OF % OF
VOTES CAST VOTES CAST
Affirmative 3,976,908,112.15 79.733
Against 384,230,553.34 7.704
Abstain 626,620,624.59 12.563
TOTAL 4,987,759,290.08 100.000
OF SPECIAL NOTE
INTRODUCING FIDELITY'S NEW, REORGANIZED PROSPECTUS
Recently, the SEC issued new disclosure requirements for all mutual
fund prospectuses. While Fidelity could have complied by simply
following the new requirements, we saw a different opportunity. We saw
the chance to create a brand new prospectus: one that is better
organized, easier to use and more informative than ever.
The new format of the Fidelity mutual fund prospectus puts the
information you need to make informed investment decisions right at
your fingertips. In the opening pages, you will find the SEC-mandated
summary that highlights the fund's investment objectives, strategies
and risks. There's also an easy-to-read performance chart and fee
table right up front.
Inside, you will find additional features we've introduced to make the
fund prospectus a more useful tool. In our new Shareholder Information
section, for example, we have provided practical, beneficial
information - from how to buy or sell shares, key contact information,
investment services, ways to set up your account and more - all in one
convenient location.
We invite you to spend a moment and review our new prospectus. It is
designed to help make your investment decision easier, no matter which
of the Fidelity funds you invest in.
INVESTMENT ADVISER
Fidelity Management & Research
Company
Boston, MA
INVESTMENT SUB-ADVISER
Fidelity Investments
Money Management, Inc.
Merrimack, NH
OFFICERS
Edward C. Johnson 3d, President
Robert C. Pozen, Senior Vice President
Boyce I. Greer, Vice President
Fred L. Henning, Jr., Vice President
John J. Todd, Vice President
Eric D. Roiter, Secretary
Richard A. Silver, Treasurer
Matthew N. Karstetter, Deputy Treasurer
Stanley N. Griffith, Assistant Vice President
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Thomas J. Simpson, Assistant Treasurer
BOARD OF TRUSTEES
Ralph 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
Abigail P. Johnson
* INDEPENDENT TRUSTEES
SPM-ANN-0699 78181
1.703534.101
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Company, Inc.
Boston, MA
CUSTODIAN
The Bank of New York
New York, NY
FIDELITY'S TAXABLE MONEY MARKET FUNDS
Fidelity Cash Reserves
Fidelity Daily Income Trust
Fidelity U.S. Government Reserves
Spartan(registered trademark) Money Market Fund
Spartan U.S. Government
Money Market Fund
Spartan U.S. Treasury
Money Market Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Exchanges/Redemptions 1-800-544-7777
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
(registered trademark)
TouchTone Xpress(registered trademark) 1-800-544-5555
AUTOMATED LINE FOR QUICKEST SERVICE
(2_FIDELITY_LOGOS)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
