-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SqLR9eFoUezyq7UWUHMIapAnEIoFWRM/kAjydlEcrJLWVJVHoI8ycLbZXUk9v3Qr AMpihD35JP2YvyCAjREeyA== /in/edgar/work/0000278001-00-000011/0000278001-00-000011.txt : 20000713 0000278001-00-000011.hdr.sgml : 20000713 ACCESSION NUMBER: 0000278001-00-000011 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000531 FILED AS OF DATE: 20000712 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY PHILLIPS STREET TRUST CENTRAL INDEX KEY: 0000278001 STANDARD INDUSTRIAL CLASSIFICATION: [0000 ] IRS NUMBER: 042667982 STATE OF INCORPORATION: MA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-02890 FILM NUMBER: 671637 BUSINESS ADDRESS: STREET 1: 82 DEVONSHIRE ST CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 2142816360 MAIL ADDRESS: STREET 1: FIDLEITY INVESTMENTS MAILZONE DW4B STREET 2: P.O. BOX 650471 CITY: DALLAS STATE: TX ZIP: 75265-0471 FORMER COMPANY: FORMER CONFORMED NAME: FIDELITY CASH RESERVES DATE OF NAME CHANGE: 19930122 N-30D 1 0001.txt FIDELITY(REGISTERED TRADEMARK) CASH RESERVES SEMIANNUAL REPORT MAY 31, 2000 (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 23 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 27 Notes to the financial statements. REPORT OF INDEPENDENT 31 The auditors' opinion. ACCOUNTANTS Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation. Other 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, THE 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 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: The technology sell-off that began in mid-March continued to hamper equity markets, driving the tech-heavy NASDAQ index down more than 16% year to date through the end of May. Broader equity indexes, including the S&P 500(registered trademark), also were down, but not as much as more concentrated performance measures. In bond markets, Treasuries got a boost late in the period as economic reports showed the first signs of a slowing economy. 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 1-800-544-6666, 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.
CUMULATIVE TOTAL RETURNS PERIODS ENDED MAY 31, 2000 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY CASH RESERVES 2.87% 5.43% 29.43% 62.86% All Taxable Money Market 2.69% 5.09% 27.99% 59.21% Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year, five years or 10 years. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. To measure how the fund's performance stacked up against its peers, you can compare it to the all taxable money market funds average, which reflects the performance of taxable money market funds with similar objectives tracked by iMoneyNet, Inc. The past six months average represents a peer group of 989 money market funds. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED MAY 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY CASH RESERVES 5.43% 5.30% 5.00% All Taxable Money Market 5.09% 5.05% 4.75% 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 5/30/00 2/29/00 11/30/99 8/31/99 6/1/99 Fidelity Cash Reserves 6.15% 5.53% 5.32% 4.93% 4.59% All Taxable Money Market 5.76% 5.27% 5.03% 4.64% 4.32% Funds Average 5/31/00 3/1/00 12/1/99 9/1/99 6/2/99 MMDA 2.10% 2.09% 2.07% 2.06% 2.06% Fidelity Cash Reserves All Taxable Money Market Funds Average MMDA 6% - 5% - 4% - 3% - 2% - 1% - 0% Row: 1, Col: 1, Value: 6.15 Row: 1, Col: 2, Value: 5.76 Row: 1, Col: 3, Value: 2.1 Row: 2, Col: 1, Value: 5.53 Row: 2, Col: 2, Value: 5.270000000000001 Row: 2, Col: 3, Value: 2.09 Row: 3, Col: 1, Value: 5.319999999999999 Row: 3, Col: 2, Value: 5.03 Row: 3, Col: 3, Value: 2.07 Row: 4, Col: 1, Value: 4.930000000000001 Row: 4, Col: 2, Value: 4.64 Row: 4, Col: 3, Value: 2.06 Row: 5, Col: 1, Value: 4.59 Row: 5, Col: 2, Value: 4.319999999999999 Row: 5, Col: 3, Value: 2.06 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 iMoneyNet, 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 Fidelity Cash Reserves Q. JOHN, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE SIX MONTHS THAT ENDED MAY 31, 2000? A. The U.S. economy grew rapidly and unemployment fell to 30-year lows. Historically, these conditions would have caused inflation to accelerate, and the Federal Reserve Board moved carefully through most of the period in an attempt to contain the inflationary pressures that usually accompany this backdrop. To do so, in February and March the Fed implemented two 0.25 percentage point increases in the rate banks charge each other for overnight loans - known as the fed funds rate. The Fed was concerned about developing imbalances related to U.S. economic growth in the form of excess spending and tight labor markets. Until recently, there were very few signs of inflation problems. New technologies were credited with increasing productivity, keeping prices down. However, data released in March and April indicated that inflationary pressures were starting to build. There was an uptick in the consumer price index, and gross domestic product in the first quarter came in at a robust annualized rate of more than 5% for the third quarter in a row. Most importantly, at the end of April there was an unexpected increase in the employment cost index (ECI), a comprehensive measure of labor costs. Year over year, the ECI accelerated to 4.3% in the first quarter of 2000 - a high for the current economic expansion - from a 3.4% rate in the fourth quarter of 1999. Before the release of this data, market participants anticipated that the Fed would continue to raise rates cautiously. Afterward, market prices started to reflect the expectation that the Fed would become more aggressive. The Fed followed through, raising the fed funds rate by 0.50 percentage points - up to 6.50% - at its May meeting. Q. WHAT WAS YOUR STRATEGY WITH THE FUND? A. Our view early in the period was that the Fed would embark on a protracted program of raising rates, in order to attack the imbalances that could result in inflationary pressures. As a result, we structured the portfolio with a relatively short maturity and aimed to invest in as many securities as possible that matured right around the dates when the Fed held its Open Market Committee meetings. By doing so, we were able to reinvest the maturing assets in securities offering increasing yields. Part of our strategy involved using floating-rate securities, whose yields are reset at regular intervals or in response to changes in benchmark money market rates. In order to keep the fund's average maturity fairly short, we also dedicated a significant part of the portfolio to asset-backed commercial paper with one- and two-month maturities. These high-quality, highly liquid securities helped us achieve our goal of keeping the fund's maturity fairly short, investing from one Fed meeting to the next. Q. HOW DID THE FUND PERFORM? A. The fund's seven-day yield on May 31, 2000, was 6.16%, compared to 5.32% six months ago. For the six months that ended May 31, 2000, the fund had a total return of 2.87%, compared to 2.69% for the all taxable money market funds average, according to iMoneyNet, Inc. Q. WHAT IS YOUR OUTLOOK, JOHN? A. There is a very good chance that the Fed will continue its anti-inflation efforts by implementing additional short-term rate increases, because the Fed doesn't want to fall behind the curve. The effects of monetary policy lag its implementation, and the middle of 2000 will mark the one-year anniversary of the beginning of the Fed's program of interest-rate hikes. The summer would be a good time for the Fed to pause to assess the cumulative effects of the rate increases it has made to that point. Unless there is a major flare-up in inflation, the general feeling in the marketplace is that the Fed will step back for a while at that time. The upcoming presidential election also encourages the Fed to stay in the background, at least until the elections are over. The Fed does not want to become an issue in the campaign season, but it will maintain a presence if conditions warrant it. 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 a high level of current income as is consistent with the preservation of capital and liquidity FUND NUMBER: 055 TRADING SYMBOL: FDRXX START DATE: May 10,1979 SIZE: as of May 31, 2000, more than $42.3 billion MANAGER: John Todd, since 1997; manager, several other Fidelity and Spartan taxable money market funds; joined Fidelity in 1981 INVESTMENT CHANGES
MATURITY DIVERSIFICATION DAYS % OF FUND'S INVESTMENTS 5/31/00 % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 11/30/99 5/31/99 0 - 30 53.3 35.8 43.7 31 - 90 25.9 40.5 35.5 91 - 180 10.6 19.7 12.2 181 - 397 10.2 4.0 8.6 WEIGHTED AVERAGE MATURITY 5/31/00 11/30/99 5/31/99 Fidelity Cash Reserves 67 DAYS 62 Days 67 Days All Taxable Money Market 50 DAYS 54 Days 59 Days Funds Average**
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF MAY 31, 2000 AS OF NOVEMBER 30, 1999 Commercial Paper 45.3% Commercial Paper 51.2% Bank CDs, BAs, TDs, and Bank CDs, BAs, TDs, and Notes 51.2% Notes 50.4% Government Securities 1.4% Government Securities 0.0% Other Investments and Net Other Investments and Net Other Assets 2.1% Other Assets (1.6)%* * OTHER INVESTMENTS AND NET OTHER ASSETS ARE NOT INCLUDED IN THE PIE CHART. Row: 1, Col: 1, Value: 45.3 Row: 1, Col: 1, Value: 51.2 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 51.2 Row: 1, Col: 3, Value: 50.4 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 4, Value: nil Row: 1, Col: 5, Value: 1.4 Row: 1, Col: 5, Value: nil Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 8, Value: 2.1 Row: 1, Col: 8, Value: nil
**SOURCE: IMONEYNET, INC. INVESTMENTS MAY 31, 2000 Showing Percentage of Net Assets
CERTIFICATES OF DEPOSIT - 35.2% DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE DOMESTIC CERTIFICATES OF DEPOSIT - 3.2% American Express Centurion Bank 6/1/00 6.29% $ 100,000 $ 100,000 Citibank NA, New York 11/3/00 6.78 160,000 160,000 First Tennessee Bank NA, Memphis 6/12/00 6.20 75,000 74,996 First Union National Bank, North Carolina 6/20/00 6.89 (b) 232,000 232,000 11/21/00 6.48 280,000 280,000 5/15/01 7.35 300,000 300,000 Firstar Bank NA 6/9/00 6.42 200,000 200,000 1,346,996 LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 15.3% Abbey National Treasury Services PLC 8/15/00 6.27 465,000 465,000 11/6/00 6.75 530,000 530,000 11/9/00 6.50 300,000 300,000 Bank of Scotland Treasury Services PLC 8/24/00 6.75 200,000 200,000 Barclays Bank PLC 6/19/00 6.55 350,000 350,000 6/28/00 6.55 500,000 500,000 7/28/00 5.80 175,000 175,000 Bayerische Hypo-und Vereinsbank AG 6/13/00 6.10 340,000 340,000 6/27/00 6.22 275,000 275,000 8/21/00 6.76 60,000 60,000 11/1/00 6.70 270,000 270,000 12/11/00 6.50 300,000 300,000 Deutsche Bank AG 6/16/00 6.55 25,000 24,994 Dresdner Bank AG 8/21/00 6.75 240,000 240,000 Halifax PLC 6/30/00 6.10 280,000 280,000 12/7/00 6.43 25,000 25,000 ING Bank NV 6/28/00 6.11 170,000 170,000 8/3/00 6.25 250,000 250,002 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 ING Bank NV - continued 8/21/00 6.75% $ 90,000 $ 90,000 9/25/00 6.39 280,000 280,004 11/8/00 6.51 210,000 210,009 Landesbank Hessen-Thuringen 11/20/00 7.00 210,000 210,010 National Australia Bank Ltd. 11/30/00 6.43 100,000 100,002 11/30/00 6.50 100,000 100,002 Northern Rock PLC 8/29/00 6.80 50,000 50,001 8/30/00 6.80 50,000 50,001 RaboBank Nederland Coop. Central 11/6/00 6.83 315,000 315,000 12/18/00 6.52 135,000 135,000 Societe Generale 12/18/00 6.54 210,000 210,000 6,505,025 NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 16.7% Banque Nationale de Paris (BNP) 6/26/00 6.10 200,000 200,000 8/2/00 5.85 150,000 149,989 Barclays Bank PLC 6/14/00 5.66 180,000 179,997 Canadian Imperial Bank of Commerce 6/20/00 6.19 90,000 90,000 6/21/00 6.19 250,000 250,000 6/26/00 6.55 200,000 200,000 8/17/00 6.75 185,000 185,000 11/20/00 7.01 195,000 195,000 Credit Agricole Indosuez 6/1/00 6.17 (b) 125,000 124,950 Credit Communale de Belgique SA 5/2/01 7.11 100,000 99,974 5/3/01 7.10 100,000 99,974 Deutsche Bank AG 6/12/00 6.39 (b) 230,000 229,911 11/16/00 7.01 145,000 145,000 2/5/01 6.75 425,000 424,849 2/22/01 6.82 200,000 199,931 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 Deutsche Bank AG - continued 5/3/01 7.10% $ 100,000 $ 99,974 Dresdner Bank AG 6/23/00 6.58 (b) 170,000 169,990 12/29/00 7.05 345,000 345,000 Lloyds Bank PLC 7/17/00 5.70 75,000 74,995 Merita Bank PLC 8/16/00 6.74 100,000 100,000 National Westminster Bank PLC 7/12/00 5.75 300,000 299,984 Norddeutsche Landesbank Girozentrale 7/12/00 5.76 95,000 94,995 2/8/01 6.75 110,000 109,964 5/8/01 7.15 215,000 214,962 RaboBank Nederland Coop. Central 7/12/00 5.75 35,000 34,998 Royal Bank of Canada 6/13/00 6.45 (b) 275,000 274,868 5/2/01 7.00 150,000 149,974 5/3/01 7.10 15,000 14,996 Royal Bank of Scotland PLC 6/6/00 6.40 200,000 200,000 6/9/00 6.45 50,000 50,000 6/22/00 6.20 100,000 100,000 Societe Generale 6/9/00 6.42 (b) 280,000 279,899 6/19/00 6.56 (b) 138,000 137,992 6/29/00 6.61 (b) 121,000 120,950 Svenska Handelsbanken AB 6/12/00 5.60 175,000 174,999 5/2/01 7.00 190,000 189,967 Toronto Dominion Bank 6/19/00 6.06 400,000 400,000 UBS AG 7/5/00 5.80 200,000 199,993 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 UBS AG - continued 12/7/00 6.45% $ 50,000 $ 49,912 5/1/01 7.00 395,000 394,932 7,057,919 TOTAL CERTIFICATES OF DEPOSIT 14,909,940 COMMERCIAL PAPER - 45.3% Aspen Funding Corp. 6/8/00 6.42 150,000 149,814 9/18/00 6.35 265,000 260,065 Asset Securitization Coop. Corp. 6/6/00 6.34 78,000 77,932 6/7/00 6.43 150,000 149,840 6/19/00 6.46 85,000 84,728 6/21/00 6.20 75,000 74,746 7/17/00 6.67 45,000 44,620 7/18/00 6.67 100,000 99,138 7/19/00 6.68 225,000 223,020 Bank of America Corp. 6/23/00 6.20 300,000 298,882 11/6/00 6.84 200,000 194,198 Barclays U.S. Funding Corp. 6/15/00 6.53 455,000 453,850 BBL North America Funding Corp. 8/16/00 6.77 100,000 98,594 Caisse des Depots et Consignations 6/20/00 6.54 250,000 249,142 CBA Finance, Inc. 8/3/00 6.25 100,000 98,940 Centric Capital Corp. 6/26/00 6.56 45,000 44,796 CIT Group, Inc. 6/15/00 6.55 30,000 29,924 Citibank Credit Card Master Trust I (Dakota Certificate Program) 6/2/00 6.33 40,000 39,993 6/14/00 6.51 25,000 24,942 6/20/00 6.56 25,000 24,914 6/21/00 6.56 25,000 24,909 COMMERCIAL PAPER - CONTINUED DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE Citibank Credit Card Master Trust I (Dakota Certificate Program) - continued 7/6/00 6.65% $ 25,000 $ 24,840 7/24/00 6.68 25,000 24,757 Comdisco, Inc. 6/1/00 6.63 18,000 18,000 ConAgra, Inc. 6/6/00 6.72 50,000 49,953 6/8/00 6.72 75,000 74,902 6/15/00 6.72 35,000 34,909 6/15/00 6.73 25,000 24,935 7/6/00 6.84 137,000 136,096 Conoco, Inc. 6/26/00 6.76 50,000 49,767 6/29/00 6.75 25,000 24,870 Corporate Receivables Corp. 8/14/00 6.77 200,000 197,262 8/16/00 6.77 75,000 73,946 Cregem North America, Inc. 11/22/00 6.44 25,000 24,257 11/27/00 6.45 150,000 145,413 11/28/00 6.44 150,000 145,387 CXC, Inc. 6/7/00 6.24 100,000 99,897 7/12/00 6.67 50,000 49,624 7/13/00 6.67 90,450 89,752 8/23/00 6.77 100,000 98,467 Daimler-Chrysler North America Holding Corp. 6/7/00 6.41 150,000 149,840 8/21/00 6.78 50,000 49,251 Delaware Funding Corp. 6/15/00 6.54 253,266 252,624 Den Danske Corp., Inc. 7/19/00 6.67 72,795 72,154 Deutsche Bank Financial, Inc. 8/15/00 6.76 400,000 394,458 Dexia CLF Finance Co. 8/11/00 6.24 118,500 117,086 Dominion Resources, Inc. 6/8/00 6.82 50,000 49,934 6/8/00 6.83 40,000 39,947 6/9/00 6.83 75,000 74,887 6/12/00 6.83 40,000 39,917 COMMERCIAL PAPER - CONTINUED DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE Dominion Resources, Inc. - continued 6/13/00 6.85% $ 70,000 $ 69,841 6/15/00 6.85 42,000 41,889 Edison Asset Securitization LLC 6/1/00 6.30 150,000 150,000 6/2/00 6.30 25,000 24,996 6/7/00 6.41 100,000 99,894 6/13/00 6.56 200,000 199,565 6/15/00 6.56 50,000 49,873 6/19/00 6.56 100,406 100,079 6/22/00 6.48 200,000 199,250 6/22/00 6.56 247,352 246,411 7/13/00 6.67 386,747 383,765 7/17/00 6.68 63,813 63,274 7/24/00 6.68 30,000 29,708 7/25/00 6.69 150,000 148,513 Enterprise Funding Corp. 6/20/00 6.23 16,654 16,600 Falcon Asset Securitization Corp. 6/1/00 6.16 95,695 95,695 6/1/00 6.28 81,740 81,740 6/2/00 6.16 40,000 39,993 6/2/00 6.31 96,000 95,983 6/9/00 6.31 75,940 75,834 6/12/00 6.45 50,000 49,902 6/12/00 6.46 246,140 245,657 6/15/00 6.40 80,000 79,802 6/19/00 6.43 45,000 44,856 6/20/00 6.55 43,500 43,350 6/20/00 6.56 61,930 61,717 6/22/00 6.56 25,000 24,905 6/27/00 6.56 100,000 99,529 6/29/00 6.56 192,425 191,449 8/15/00 6.77 140,705 138,753 Fortis Funding LLC 7/24/00 6.24 25,000 24,777 8/1/00 6.25 50,000 49,487 8/16/00 6.77 50,000 49,297 GE Capital International Funding, Inc. 6/7/00 6.40 60,000 59,936 6/9/00 6.44 50,000 49,929 6/20/00 6.20 150,000 149,516 COMMERCIAL PAPER - CONTINUED DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE GE Capital International Funding, Inc. - continued 7/17/00 6.66% $ 200,000 $ 198,313 General Electric Capital Corp. 8/23/00 6.77 100,000 98,467 8/24/00 6.77 80,000 78,759 11/8/00 6.88 225,000 218,350 General Electric Capital Services, Inc. 11/7/00 6.88 250,000 242,657 General Motors Acceptance Corp. 7/13/00 6.66 250,000 248,075 7/18/00 6.67 230,000 228,018 8/28/00 6.75 481,620 473,826 Goldman Sachs Group, Inc. 6/14/00 6.11 400,000 399,132 GTE Corp. 7/6/00 6.70 48,200 47,888 7/10/00 6.72 105,000 104,241 7/14/00 6.76 56,000 55,552 Heller Financial, Inc. 6/19/00 6.66 50,000 49,835 6/22/00 6.68 50,000 49,806 6/23/00 6.68 50,000 49,797 6/27/00 6.76 25,000 24,878 ING America Insurance Holdings, Inc. 6/1/00 6.30 25,000 25,000 7/7/00 6.60 25,000 24,837 11/8/00 6.95 35,000 33,955 Kitty Hawk Funding Corp. 6/16/00 6.20 8,101 8,080 6/16/00 6.59 32,853 32,763 6/20/00 6.56 12,075 12,033 7/24/00 6.68 283,454 280,696 8/15/00 6.27 100,000 98,733 9/20/00 6.41 50,000 49,043 Lehman Brothers Holdings, Inc. 7/20/00 6.44 (b) 58,000 58,000 7/25/00 6.47 (b) 125,000 125,000 8/2/00 6.54 (b) 111,000 111,000 Montauk Funding Corp. 6/12/00 6.45 50,000 49,902 6/14/00 6.46 100,000 99,768 6/15/00 6.57 340,000 339,137 COMMERCIAL PAPER - CONTINUED DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE Montauk Funding Corp. - continued 8/16/00 6.74% $ 180,000 $ 177,481 Nationwide Building Society 6/8/00 6.43 200,000 199,751 6/9/00 6.43 100,000 99,858 8/21/00 6.77 200,000 197,008 New Center Asset Trust 6/19/00 6.57 300,000 299,021 Newport Funding Corp. 6/1/00 6.24 100,000 100,000 6/16/00 6.56 90,000 89,756 6/26/00 6.12 153,000 152,363 Norfolk Southern Corp. 6/1/00 6.48 47,704 47,704 6/7/00 6.64 6,893 6,885 6/19/00 6.89 20,000 19,932 7/6/00 6.92 28,037 27,850 Park Avenue Receivables Corp. 6/6/00 6.34 25,000 24,978 6/8/00 6.44 31,055 31,016 6/9/00 6.45 150,000 149,786 6/12/00 6.54 82,246 82,082 PHH Corp. 6/1/00 6.90 100,000 100,000 6/5/00 6.63 45,000 44,967 Preferred Receivables Funding Corp. 6/1/00 6.28 69,297 69,297 6/2/00 6.34 100,000 99,982 6/7/00 6.44 200,000 199,786 6/8/00 6.44 79,300 79,201 6/12/00 6.54 26,570 26,517 6/20/00 6.22 11,740 11,702 6/20/00 6.23 30,560 30,461 6/26/00 6.58 110,000 109,501 6/29/00 6.58 100,000 99,492 7/6/00 6.65 123,895 123,100 7/24/00 6.69 10,000 9,903 RaboBank Nederland Coop. Central 6/22/00 6.10 85,000 84,703 Rohm & Haas Co. 6/1/00 6.90 35,000 35,000 COMMERCIAL PAPER - CONTINUED DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE Salomon Smith Barney Holdings, Inc. 6/2/00 6.16% $ 100,000 $ 99,983 6/19/00 6.50 50,000 49,839 7/24/00 6.69 150,000 148,540 Societe Generale NA 8/3/00 6.25 110,000 108,833 12/26/00 6.69 110,000 105,952 Southern Co. 6/26/00 6.60 75,000 74,658 Svenska Handelsbanken, Inc. 11/20/00 6.46 30,000 29,117 Triple-A One Funding Corp. 6/6/00 6.34 42,527 42,490 Tyco International Group SA 6/15/00 6.82 58,000 57,847 6/20/00 6.88 69,000 68,751 6/26/00 6.88 245,000 243,838 UBS Finance, Inc. 6/22/00 6.54 168,750 168,110 6/26/00 6.55 560,000 557,473 Variable Funding Capital Corp. 6/9/00 6.45 50,000 49,929 6/12/00 6.50 375,000 374,260 7/6/00 6.64 100,000 99,359 7/20/00 6.67 50,000 49,551 7/21/00 6.68 50,000 49,542 8/16/00 6.77 50,000 49,297 Ventures Business Trust 6/20/00 6.59 150,000 149,481 Windmill Funding Corp. 6/1/00 6.28 50,000 50,000 6/5/00 6.17 50,000 49,966 6/5/00 6.34 50,000 49,965 6/6/00 6.34 75,000 74,934 6/7/00 6.39 100,000 99,894 6/8/00 6.40 25,000 24,969 6/9/00 6.45 100,000 99,858 6/12/00 6.16 50,000 49,907 6/12/00 6.45 75,000 74,853 6/12/00 6.46 50,000 49,902 6/19/00 6.46 50,000 49,840 6/20/00 6.56 50,000 49,828 COMMERCIAL PAPER - CONTINUED DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE Windmill Funding Corp. - continued 6/22/00 6.55% $ 25,000 $ 24,905 6/27/00 6.56 50,000 49,765 6/28/00 6.56 100,000 99,511 TOTAL COMMERCIAL PAPER 19,169,455 FEDERAL AGENCIES - 1.4% FEDERAL HOME LOAN BANK - 0.4% Discount Notes - 0.4% 2/1/01 6.50 161,000 154,316 FREDDIE MAC - 1.0% Discount Notes - 1.0% 6/29/00 6.14 160,000 159,247 2/1/01 6.57 86,000 82,392 2/7/01 6.50 200,000 191,494 433,133 TOTAL FEDERAL AGENCIES 587,449 BANK NOTES - 4.8% Bank of America NA 6/21/00 6.10 410,000 410,000 8/15/00 6.27 15,000 14,997 8/15/00 6.75 190,000 190,000 11/20/00 7.00 120,000 120,000 Bank One NA, Chicago 7/19/00 6.15 120,000 120,000 7/19/00 6.26 (b) 200,000 199,946 7/21/00 6.27 (b) 210,000 209,926 Comerica Bank, Detroit 6/12/00 6.52 (b) 180,000 179,973 First Union National Bank, North Carolina 7/5/00 6.38 (b) 190,000 190,000 7/26/00 6.32 (b) 143,000 143,000 Fleet National Bank 6/1/00 6.71 (b) 150,000 149,992 6/1/00 6.78 (b) 75,000 74,982 BANK NOTES - CONTINUED DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE Lasalle Bank NA 2/5/01 6.75% $ 30,000 $ 29,990 TOTAL BANK NOTES 2,032,806 MASTER NOTES - 0.7% J.P. Morgan Securities, Inc. 6/7/00 6.60 (b) 280,000 280,000 MEDIUM-TERM NOTES - 6.1% Abbey National Treasury Services PLC 8/3/00 5.85 150,000 149,988 AT&T Corp. 6/7/00 6.48 (b) 460,000 460,000 Bank of Scotland Treasury Services PLC 7/19/00 6.28 (b) 129,000 129,003 Centex Home Mortgage LLC 6/20/00 6.75 (a)(b) 190,000 190,000 CIESCO LP 6/19/00 6.55 (b) 170,000 169,996 CIT Group, Inc. 6/1/00 6.61 (b) 190,000 189,884 6/1/00 6.70 (b) 160,000 159,994 Ford Motor Credit Co. 6/12/00 6.06 (b) 250,000 249,910 8/23/00 6.80 (b) 310,000 309,952 General Motors Acceptance Corp. 6/14/00 6.05 (b) 140,000 139,934 General Motors Acceptance Corp. Mortgage Credit 6/1/00 6.25 85,000 85,000 Merrill Lynch & Co., Inc. 6/5/00 6.26 (b) 190,000 189,984 Morgan Stanley Dean Witter & Co. 6/30/00 6.30 (b) 150,000 149,993 TOTAL MEDIUM-TERM NOTES 2,573,638 SHORT-TERM NOTES - 3.5% DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE Jackson National Life Insurance Co. 6/1/00 6.53% (b)(c) $ 130,000 $ 130,000 Monumental Life Insurance Co. 6/1/00 6.32 (b)(c) 78,000 78,000 6/1/00 6.35 (b)(c) 65,000 65,000 8/1/00 6.58 (b)(c) 50,000 50,000 New York Life Insurance Co. 6/1/00 6.22 (b)(c) 75,000 75,000 7/3/00 6.41 (b)(c) 81,000 81,000 Pacific Life Insurance Co. 6/9/00 6.22 (b)(c) 90,000 90,000 RACERS Series 1999 16MM, 6/2/00 6.22 (a)(b) 171,000 171,000 Strategic Money Market Trust Series 1999 A6, 7/13/00 6.40 (a)(b) 305,000 305,000 Strategic Money Market Trust Series 2000 B, 6/13/00 6.15 (a)(b) 130,000 130,000 Transamerica Occidental Life Insurance Co. 8/30/00 6.56 (b)(c) 200,000 200,000 Travelers Insurance Co. 7/28/00 6.61 (b)(c) 95,000 95,000 TOTAL SHORT-TERM NOTES 1,470,000 TIME DEPOSITS - 0.9% Societe Generale 6/1/00 6.81 400,000 400,000
REPURCHASE AGREEMENTS - 1.6% MATURITY AMOUNT (000S) In a joint trading account $ 1,497 1,497 (U.S. Government Obligations) dated 5/31/00 due 6/1/00 At 6.56% With: Bank of America NA At 6.89%, 135,026 135,000 dated 5/31/00 due 6/1/00 (Commercial Paper Obligations) (principal amount $135,000,000) 0% - 6.58%, 6/1/00 - 7/5/00 REPURCHASE AGREEMENTS - CONTINUED MATURITY AMOUNT (000S) VALUE (NOTE 1) (000S) With: - continued Deutsche Bank Securities, $ 500,096 $ 500,000 Inc. At 6.89%, dated 5/31/00 due 6/1/00 (Corporate Obligations) (principal amount $500,000,000) 0% - 9.80%, 1/15/02 - 2/15/47 Goldman Sachs & Co. At 6.85%, 50,010 50,000 dated 5/31/00 due 6/1/00 (Commercial Paper Obligations) (principal amount $50,000,000) 0%, 6/6/00 - 6/22/00 TOTAL REPURCHASE AGREEMENTS 686,497 TOTAL INVESTMENT PORTFOLIO - 42,109,785 99.5% NET OTHER ASSETS - 0.5% 196,309 NET ASSETS - 100% $ 42,306,094 Total Cost for Income Tax Purposes $ 42,109,785
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 $796,000,000 or 1.9% of net assets. (b) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due dates on these types of securities reflects the next interest rate reset date or, when applicable, the final maturity date. (c) Restricted securities - Investment in securities not registered under the Securities Act of 1933. Additional information on each holding is as follows: SECURITY ACQUISITION DATE COST (000S) Jackson National Life 7/6/99 $ 130,000 Insurance Co. 6.53%, 6/1/00 Monumental Life Insurance 7/31/98 - 9/17/98 $ 78,000 Co.: 6.32%, 6/1/00 6.35%, 6/1/00 3/12/99 $ 65,000 6.58%, 8/1/00 2/1/00 $ 50,000 New York Life Insurance Co.: 8/13/99 $ 75,000 6.22%, 6/1/00 6.41%, 7/3/00 12/20/99 $ 81,000 Pacific Life Insurance Co. 8/31/99 $ 90,000 6.22%, 6/9/00 Transamerica Occidental Life 4/28/00 $ 200,000 Insurance Co. 6.56%, 8/30/00 Travelers Insurance Co. 4/28/00 $ 95,000 6.61%, 7/28/00 INCOME TAX INFORMATION At November 30, 1999, the fund had a capital loss carryforward of approximately $1,899,000 of which $105,000, $1,634,000 and $160,000 will expire on November 30, 2001, 2002 and 2004, respectively. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) MAY 31, 2000 ASSETS Investment in securities, at $ 42,109,785 value (including repurchase agreements of $686,497) - See accompanying schedule Cash 164 Receivable for fund shares 379,735 sold Interest receivable 250,132 Other receivables 23 Prepaid expenses 858 TOTAL ASSETS 42,740,697 LIABILITIES Payable for fund shares $ 414,242 redeemed Distributions payable 3,414 Accrued management fee 8,501 Other payables and accrued 8,446 expenses TOTAL LIABILITIES 434,603 NET ASSETS $ 42,306,094 Net Assets consist of: Paid in capital $ 42,307,797 Accumulated net realized gain (1,703) (loss) on investments NET ASSETS, for 42,306,568 $ 42,306,094 shares outstanding NET ASSET VALUE, offering $1.00 price and redemption price per share ($42,306,094 (divided by) 42,306,568 shares) STATEMENT OF OPERATIONS AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 2000 INTEREST INCOME $ 1,223,151 EXPENSES Management fee $ 44,624 Transfer agent fees 40,193 Accounting fees and expenses 606 Non-interested trustees' 66 compensation Custodian fees and expenses 279 Registration fees 1,725 Audit 91 Legal 92 Interest 18 Miscellaneous 731 Total expenses before 88,425 reductions Expense reductions (605) 87,820 NET INTEREST INCOME 1,135,331 NET REALIZED GAIN (LOSS) ON 196 INVESTMENTS NET INCREASE IN NET ASSETS $ 1,135,527 RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999 INCREASE (DECREASE) IN NET ASSETS Operations Net interest income $ 1,135,331 $ 1,687,220 Net realized gain (loss) 196 221 NET INCREASE (DECREASE) IN 1,135,527 1,687,441 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (1,135,331) (1,687,220) from net interest income Share transactions at net 73,135,393 89,997,182 asset value of $1.00 per share Proceeds from sales of shares Reinvestment of 1,108,395 1,646,256 distributions from net interest income Cost of shares redeemed (69,918,647) (84,362,953) NET INCREASE (DECREASE) IN 4,325,141 7,280,485 NET ASSETS AND SHARES RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) 4,325,337 7,280,706 IN NET ASSETS NET ASSETS Beginning of period 37,980,757 30,700,051 End of period $ 42,306,094 $ 37,980,757
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED MAY 31, YEARS ENDED NOVEMBER 30, 2000 1999 1998 1997 1996 1995 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 .028 .048 .052 .052 .051 .055 Operations Net interest income Less Distributions From net interest income (.028) (.048) (.052) (.052) (.051) (.055) Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 TOTAL RETURN B, C 2.87% 4.94% 5.34% 5.30% 5.18% 5.67% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 42,306 $ 37,981 $ 30,700 $ 23,498 $ 21,241 $ 18,432 (in millions) Ratio of expenses to average .44% A .44% .47% .49% .51% .55% net assets Ratio of expenses to average .44% A .44% .47% .48% D .51% .55% net assets after expense reductions Ratio of net interest income 5.68% A 4.85% 5.20% 5.22% 5.06% 5.50% to average net assets
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. D FMR 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 May 31, 2000 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity Cash Reserves (the fund) is a fund of Fidelity Phillips 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, Federal Agency, or other obligations found to be satisfactory by FMR are transferred to an account of 2. OPERATING POLICIES - CONTINUED REPURCHASE AGREEMENTS - CONTINUED 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. 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. The average daily balance during the period for which the reverse repurchase agreement was outstanding amounted to $135,000,000. The weighted average interest rate was 4.75%. INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the SEC, the fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the fund to borrow from, or lend money to, other participating funds. WHEN-ISSUED SECURITIES. The fund may purchase or sell securities on a when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities is fixed at the time the transaction is negotiated. 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. Losses may arise due to changes in the 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. 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 $864,000,000 or 2.0% of net assets. 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund and an income-based fee. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEE - CONTINUED advised by FMR. The rates ranged from .0920% to .3700% for the period. The annual individual fund fee rate is .03%. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. The income-based fee is added only when the fund's gross yield exceeds 5%. At that time the income-based fee would equal 6% of that portion of the fund's gross income that represents a gross yield of more than 5% per year. The maximum income-based component is .24% of average net assets. For the period, the total management fee was equivalent to an annualized rate of .22%. The income-based portion of this fee was equal to $13,469,000, or an annualized rate of .07% of the fund's average net assets. 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. TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annualized rate of .20% of average net assets. ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is based on the level of average net assets for the month plus out-of-pocket expenses. 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. 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, the fund paid premiums of $1,471,000 for the calendar year 2000 to FIDFUNDS, which are being amortized over one year. 4. INTERFUND LENDING PROGRAM. The fund participated in the interfund lending program as a lender. The average daily loan balance during the period for which loans were outstanding amounted 4. INTERFUND LENDING PROGRAM - CONTINUED to $23,256,000. The weighted average interest rate was 5.89%. Interest earned from the interfund lending program amounted to $23,000 and is included in interest income on the Statement of Operations. At period end there were no interfund loans outstanding. 5. EXPENSE REDUCTIONS. Through an arrangement with the fund's transfer agent, 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 transfer agent fees were reduced by $605,000 under this arrangement. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Phillips Street Trust and the Shareholders of Fidelity Cash Reserves: 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 Fidelity Cash Reserves (a fund of Fidelity Phillips Street Trust) at May 31, 2000, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fidelity Cash Reserves' 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 auditing standards generally accepted in the United States 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 May 31, 2000 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Boston, Massachusetts June 30, 2000 INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISER Fidelity Investments Money Management, Inc. OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Dwight D. Churchill, Vice President Boyce I. Greer, Vice President John J. Todd, Vice President Eric D. Roiter, Secretary Robert A Dwight, Treasurer Maria F. Dwyer, Deputy Treasurer Stanley N. Griffith, Assistant Vice President John H. Costello, Assistant Treasurer Thomas J. Simpson, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d Donald J. Kirk * Ned C. Lautenbach * Peter S. Lynch William O. McCoy * Marvin L. Mann * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Michael Cook Abigail P. Johnson GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA * INDEPENDENT TRUSTEES 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 and Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 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) Fidelity Automated Service Telephone (FAST(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 FIDELITY(REGISTERED TRADEMARK) U.S. GOVERNMENT RESERVES SEMIANNUAL REPORT MAY 31, 2000 (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 12 Statements of assets and liabilities, operations, and changes in net assets, as well as financial highlights. NOTES 16 Notes to the financial statements. Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation. Other 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, THE 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 1-800-544-6666 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: The technology sell-off that began in mid-March continued to hamper equity markets, driving the tech-heavy NASDAQ index down more than 16% year to date through the end of May. Broader equity indexes, including the S&P 500(registered trademark), also were down, but not as much as more concentrated performance measures. In bond markets, Treasuries got a boost late in the period as economic reports showed the first signs of a slowing economy. 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 1-800-544-6666, 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 10 year total return would have been lower.
CUMULATIVE TOTAL RETURNS PERIODS ENDED MAY 31, 2000 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY US GOVERNMENT RESERVES 2.79% 5.32% 29.01% 60.45% Government Retail Money 2.57% 4.86% 26.78% 56.78% Market Funds Average
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms over a set period - in this case, six months, one year, five years or 10 years. For example, if you had invested $1,000 in a fund that had a 5% return over the past year, the value of your investment would be $1,050. To measure how the fund's performance stacked up against its peers, you can compare it to the government retail money market funds average, which reflects the performance of taxable money market funds with similar objectives tracked by iMoneyNet, Inc. The past six months average represents a peer group of 224 money market funds. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED MAY 31, 2000 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS FIDELITY US GOVERNMENT RESERVES 5.32% 5.23% 4.84% Government Retail Money 4.86% 4.85% 4.59% Market 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 5/30/00 2/29/00 11/30/99 8/31/99 6/1/99 Fidelity U.S. Government 5.90% 5.44% 5.23% 4.85% 4.58% Reserves Government Retail Money 5.53% 5.07% 4.80% 4.45% 4.15% Market Funds Average 5/31/00 3/1/00 12/1/99 9/1/99 6/2/99 MMDA 2.10% 2.09% 2.07% 2.06% 2.06% Fidelity U.S. Government Reserves Government Retail Money Market Funds Average MMDA 6% - 5% - 4% - 3% - 2% - 1% - 0% Row: 1, Col: 1, Value: 5.9 Row: 1, Col: 2, Value: 5.53 Row: 1, Col: 3, Value: 2.1 Row: 2, Col: 1, Value: 5.44 Row: 2, Col: 2, Value: 5.07 Row: 2, Col: 3, Value: 2.09 Row: 3, Col: 1, Value: 5.23 Row: 3, Col: 2, Value: 4.8 Row: 3, Col: 3, Value: 2.07 Row: 4, Col: 1, Value: 4.85 Row: 4, Col: 2, Value: 4.45 Row: 4, Col: 3, Value: 2.06 Row: 5, Col: 1, Value: 4.58 Row: 5, Col: 2, Value: 4.15 Row: 5, Col: 3, Value: 2.06 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 retail money market funds average and the bank money market deposit account (MMDA) average. Figures for the government retail money market funds average are from iMoneyNet, 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 Fidelity U.S. Government Reserves Q. BOB, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE DURING THE SIX MONTHS THAT ENDED MAY 31, 2000? A. U.S. economic growth remained strong, boosted by consumer spending. Consumers spent freely due to a strong job market, as unemployment dropped to historically low levels. The wealth effect created by rising stock and real estate prices as well as high confidence also encouraged consumers to spend. Until recently, there was little evidence of inflation. Technological improvements increased productivity so that the economy could grow at faster rates without generating the inflationary pressures experienced in the past. However, in light of very strong growth and some worrisome signals on the inflation front, the Federal Reserve Board continued to raise short-term rates during the period, increasing the rate banks charge each other for overnight loans - known as the fed funds rate - by increments of 0.25 percentage points in February and March, and by 0.50 percentage points in May. Q. WHAT HAPPENED MORE RECENTLY? A. Evidence emerged that inflation was starting to pick up. Specifically, the employment cost index (ECI) - a measure of the costs that businesses incur for wages and benefits - rose sharply in the first quarter of 2000. Combined with continued strong demand in the economy, this data caused the market to anticipate a more aggressive Fed policy. As mentioned above, the Fed did in fact follow through with a more aggressive 0.50 percentage point hike at its May meeting, bringing the fed funds rate to 6.50% by the end of the period. Q. THERE WERE RUMBLINGS IN CONGRESS ABOUT EXAMINING THE IMPLICIT GOVERNMENT GUARANTEE OF AGENCY-SECURITY DEBT. HOW DID THAT AFFECT THE FUND? A. U.S. Treasury securities are backed by the full faith and credit of the U.S. government. However, securities issued by government sponsored entities (GSEs) - agencies such as Fannie Mae and Freddie Mac - enjoy only the implied support of the U.S. government, because the agencies were created by an act of Congress. Recently, the U.S. Treasury and some in Congress called into question some GSE activities that fall outside the agencies' original mission. These parties also are concerned that the agencies have grown so rapidly and to such a great size that if they encounter significant problems, the entire financial system may be threatened. So far, these discussions have had no real impact on agency money market securities. We are confident that any changes will happen far enough in the future that we will be able to make any appropriate changes to our approach. Q. WHAT WAS YOUR STRATEGY WITH THE FUND? A. With interest rates on the rise, I was cautious. Nevertheless, I kept the fund's average maturity consistently longer than that of its peers. That may appear to be unusual in a period of rising rates - when one would normally maintain a shorter maturity to enable the fund to invest in higher yields quickly. However, I was able to take advantage of buying opportunities in longer-term securities that factored in our expectations of future Fed rate hikes. At the end of 1999, we employed tactics that focused on earning the highest possible yields over the turn from 1999 to 2000. Finally, I'd mention that our floating-rate investments - whose yields are reset at regular intervals - generally boosted fund performance. However, our holdings in these securities declined recently because they became extremely expensive, so we did not replace maturing positions. Q. HOW DID THE FUND PERFORM? A. The fund's seven-day yield on May 31, 2000, was 5.90%, compared to 5.23% six months ago. For the six months that ended May 31, 2000, the fund had a total return of 2.79%, compared to 2.57% for the government retail money market funds average, according to iMoneyNet, Inc. Q. WHAT IS YOUR OUTLOOK, BOB? A. Fed rate hikes generally take some time before they influence the economy, and recent economic data, especially the May employment report, suggest that past increases are finally influencing the economy. This development, combined with the Fed's past pattern of not raising rates at the meeting which follows an aggressive move, has reduced the odds of a June rate hike. Nonetheless, a further rate hike is likely later in the summer if consumer demand does not slow or if the risk of future inflation rises. For my part, I'll continue to follow a cautious approach until the economic outlook becomes clearer. 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 as high a level of current income as is consistent with the security of principal and liquidity FUND NUMBER: 050 TRADING SYMBOL: FGRXX START DATE: November 3, 1981 SIZE: as of May 31, 2000, more than $1.5 billion MANAGER: Robert Litterst, since 1997; manager, several Fidelity and Spartan taxable money market funds; joined Fidelity in 1991 INVESTMENT CHANGES
MATURITY DIVERSIFICATION DAYS % OF FUND'S INVESTMENTS 5/31/00 % OF FUND'S INVESTMENTS % OF FUND'S INVESTMENTS 5/31/99 11/30/99 0 - 30 52.0 50.3 62.1 31 - 90 30.1 23.5 14.3 91 - 180 9.0 14.2 12.3 181 - 397 8.9 12.0 11.3 WEIGHTED AVERAGE MATURITY 5/31/00 11/30/99 5/31/99 FIDELITY U.S. GOVERNMENT 57 DAYS 60 Days 65 Days RESERVES Government Retail Money 47 DAYS 54 Days 57 Days Market Funds Average**
ASSET ALLOCATION (% OF FUND'S NET ASSETS) AS OF MAY 31, 2000 AS OF NOVEMBER 30, 1999 Federal Agency Issues 76.7% Federal Agency Issues 70.6% Repurchase Agreements 25.9% Repurchase Agreements 28.8% Net Other Assets (2.6)%* Net Other Assets 0.6% Row: 1, Col: 1, Value: 76.7 Row: 1, Col: 1, Value: 70.59999999999999 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 4, Value: 25.9 Row: 1, Col: 4, Value: 28.8 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 5, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 6, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 7, Value: 0.0 Row: 1, Col: 8, Value: 0.0 Row: 1, Col: 8, Value: 0.6000000000000001
* NET OTHER ASSETS IS NOT INCLUDED IN THE PIE CHART. **SOURCE: IMONEYNET, INC. INVESTMENTS MAY 31, 2000 (UNAUDITED) Showing Percentage of Net Assets
FEDERAL AGENCIES - 76.7% DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE FANNIE MAE - 35.1% Agency Coupons - 16.9% 6/1/00 6.62% (b) $ 24,000 $ 23,998 6/2/00 6.02 (b) 15,000 14,998 6/7/00 5.25 23,000 23,000 6/8/00 6.57 (a)(b) 34,000 33,972 6/9/00 5.38 11,000 11,000 7/14/00 6.08 (b) 58,000 57,996 8/4/00 6.39 (b) 31,000 30,997 8/13/00 6.50 (b) 35,000 34,987 3/1/01 6.55 11,000 10,999 3/20/01 6.49 15,000 14,996 256,943 Discount Notes - 18.2% 6/29/00 6.14 40,000 39,812 7/13/00 6.18 53,000 52,623 7/28/00 5.73 15,000 14,871 8/10/00 6.09 13,000 12,851 8/17/00 6.63 60,000 59,162 8/31/00 6.13 25,956 25,566 9/14/00 6.24 10,000 9,824 11/2/00 6.68 15,000 14,585 11/9/00 6.84 18,000 17,468 11/22/00 6.90 10,000 9,677 5/10/01 7.20 22,000 20,591 277,030 FEDERAL HOME LOAN BANK - 20.2% Agency Coupons - 16.9% 6/1/00 6.63 (b) 36,000 35,991 6/4/00 6.22 (b) 30,000 29,992 6/7/00 6.42 (b) 15,000 14,998 6/14/00 5.47 7,000 7,000 7/5/00 6.13 (b) 58,000 57,986 7/15/00 6.09 (b) 30,000 29,991 8/17/00 5.86 13,000 12,989 9/15/00 6.70 12,000 11,769 11/3/00 6.00 16,000 15,997 11/3/00 6.02 6,000 5,998 FEDERAL AGENCIES - CONTINUED DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE FEDERAL HOME LOAN BANK - CONTINUED Agency Coupons - continued 12/1/00 6.03% $ 11,000 $ 10,991 2/7/01 6.48 22,860 22,825 256,527 Discount Notes - 3.3% 8/16/00 6.10 34,332 33,902 8/16/00 6.12 17,000 16,787 50,689 FREDDIE MAC - 17.9% Agency Coupons - 3.5% 6/20/00 5.94 (b) 11,000 10,992 7/10/00 6.06 (b) 25,000 24,986 1/16/01 6.43 18,000 17,307 53,285 Discount Notes - 14.4% 6/2/00 5.40 15,000 14,998 6/2/00 5.46 14,000 13,998 6/13/00 5.51 12,000 11,979 6/13/00 6.09 59,000 58,881 6/13/00 6.10 25,000 24,950 6/15/00 5.45 12,000 11,976 6/23/00 5.50 11,000 10,965 7/5/00 5.61 9,000 8,955 7/20/00 6.13 21,000 20,830 11/9/00 6.85 13,000 12,615 2/7/01 6.50 15,000 14,362 5/24/01 7.22 15,000 13,999 218,508 PROJECT AMERICA SHIP I, INC. - - 0.8% Agency Coupons - 0.8% 1/31/01 6.33 (b) 12,500 12,500 STATE OF ISRAEL (GUARANTEED BY U.S. GOVERNMENT THROUGH AGENCY FOR INTERNATIONAL DEVELOPMENT) - 1.2% Agency Coupons - 1.2% 9/15/00 6.80 17,250 17,164 FEDERAL AGENCIES - CONTINUED DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT (000S) VALUE (NOTE 1) (000S) PURCHASE STUDENT LOAN MARKETING ASSOCIATION - 1.5% Agency Coupons - 1.5% 6/6/00 6.63% (b) $ 7,000 $ 6,999 6/6/00 6.68 (b) 16,000 15,998 22,997 TOTAL FEDERAL AGENCIES 1,165,643
REPURCHASE AGREEMENTS - 25.9% MATURITY AMOUNT (000S) In a joint trading account (U.S. Government Obligations) dated: 4/7/00 due 6/7/00 At 6.1% $ 30,310 30,000 5/3/00 due 6/1/00 At 6.28% 50,253 50,000 5/4/00 due 6/2/00 At 6.29% 44,223 44,000 5/18/00 due 6/29/00 At 6.5% 50,379 50,000 5/25/00 due 6/26/00 At 6.5% 44,254 44,000 5/31/00 due 6/1/00 At 6.56% 176,637 176,605 TOTAL REPURCHASE AGREEMENTS 394,605 TOTAL INVESTMENT PORTFOLIO - 1,560,248 102.6% NET OTHER ASSETS - (2.6)% (40,101) NET ASSETS - 100% $ 1,520,147 Total Cost for Income Tax Purposes $ 1,560,248
LEGEND (a) Security purchased on a delayed delivery or when-issued basis. (b) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due dates on these types of securities reflects the next interest rate reset date or, when applicable, the final maturity date. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) MAY 31, 2000 (UNAUDITED) ASSETS Investment in securities, at $ 1,560,248 value (including repurchase agreements of $394,605) - See accompanying schedule Receivable for fund shares 5,318 sold Interest receivable 6,654 Prepaid expenses 5 TOTAL ASSETS 1,572,225 LIABILITIES Payable for investments $ 17,355 purchased Regular delivery Delayed delivery 33,972 Distributions payable 208 Accrued management fee 291 Other payables and accrued 252 expenses TOTAL LIABILITIES 52,078 NET ASSETS $ 1,520,147 Net Assets consist of: Paid in capital $ 1,520,100 Accumulated net realized gain 47 (loss) on investments NET ASSETS, for 1,520,463 $ 1,520,147 shares outstanding NET ASSET VALUE, offering $1.00 price and redemption price per share ($1,520,147 (divided by) 1,520,463 shares) STATEMENT OF OPERATIONS AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 2000 (UNAUDITED) INTEREST INCOME $ 44,510 EXPENSES Management fee $ 1,594 Transfer agent fees 1,331 Accounting fees and expenses 76 Non-interested trustees' 2 compensation Custodian fees and expenses 9 Registration fees 52 Audit 14 Legal 4 Miscellaneous 5 Total expenses before 3,087 reductions Expense reductions (52) 3,035 NET INTEREST INCOME 41,475 NET REALIZED GAIN (LOSS) ON 47 INVESTMENTS NET INCREASE IN NET ASSETS $ 41,522 RESULTING FROM OPERATIONS
STATEMENT OF CHANGES IN NET ASSETS AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 2000 YEAR ENDED NOVEMBER 30, 1999 (UNAUDITED) INCREASE (DECREASE) IN NET ASSETS Operations Net interest income $ 41,475 $ 71,603 Net realized gain (loss) 47 13 NET INCREASE (DECREASE) IN 41,522 71,616 NET ASSETS RESULTING FROM OPERATIONS Distributions to shareholders (41,475) (71,603) from net interest income Share transactions at net 967,962 1,804,876 asset value of $1.00 per share Proceeds from sales of shares Reinvestment of 39,876 68,873 distributions from net interest income Cost of shares redeemed (1,029,917) (1,758,851) NET INCREASE (DECREASE) IN (22,079) 114,898 NET ASSETS AND SHARES RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) (22,032) 114,911 IN NET ASSETS NET ASSETS Beginning of period 1,542,179 1,427,268 End of period $ 1,520,147 $ 1,542,179
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED MAY 31, 2000 YEARS ENDED NOVEMBER 30, (UNAUDITED) 1999 1998 1997 1996 1995 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 .028 .048 .052 .051 .050 .055 Operations Net interest income Less Distributions From net interest income (.028) (.048) (.052) (.051) (.050) (.055) Net asset value, end of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 period TOTAL RETURN B, C 2.79% 4.86% 5.29% 5.26% 5.12% 5.60% RATIOS AND SUPPLEMENTAL DATA Net assets, end of period $ 1,520 $ 1,542 $ 1,427 $ 1,290 $ 1,243 $ 1,188 (in millions) Ratio of expenses to average .41% A .41% .45% .48% .51% .55% net assets Ratio of expenses to average .40% A, D .40% D .44% D .48% .50% D .55% net assets after expense reductions Ratio of net interest income 5.52% A 4.77% 5.16% 5.13% 5.02% 5.43% to average net assets
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN. D FMR 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 May 31, 2000 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES. Fidelity U.S. Government Reserves (the fund) is a fund of Fidelity Phillips 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. 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, Federal Agency, or other obligations found to be satisfactory by FMR 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 after the customary settlement 2. OPERATING POLICIES - CONTINUED WHEN-ISSUED SECURITIES - CONTINUED period for that security. The price of the underlying securities is fixed at the time the transaction is negotiated. The 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. Losses may arise due to changes in the 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. JOINT TRADING ACCOUNT. At the end of the period, the fund had 20% or more of its total investments in repurchase agreements through a joint trading account. These repurchase agreements were with entities whose creditworthiness has been reviewed and found satisfactory by FMR. The investments in repurchase agreements through the joint trading account are summarized as follows: SUMMARY OF JOINT TRADING
DATED APRIL 7, 2000, DUE JUNE 7, 2000 AT 6.10% Number of dealers or banks 1 Maximum amount with one 100.0% dealer or bank Aggregate principal amount of $625,000,000 agreements Aggregate maturity amount of $631,460,069 agreements Aggregate market value of $637,616,295 transferred assets Coupon rates of transferred 5.50% to 6.45% assets Maturity dates of transferred 4/29/09 to 11/1/37 assets DATED MAY 3, 2000, DUE JUNE 1, 2000 AT 6.28% Number of dealers or banks 1 Maximum amount with one 100.0% dealer or bank Aggregate principal amount of $500,000,000 agreements Aggregate maturity amount of $502,529,444 agreements Aggregate market value of $510,000,259 transferred assets Coupon rates of transferred 0.00% to 9.00% assets Maturity dates of transferred 9/14/00 to 4/1/34 assets 3. JOINT TRADING ACCOUNT - CONTINUED SUMMARY OF JOINT TRADING - CONTINUED DATED MAY 4, 2000, DUE JUNE 2, 2000 AT 6.29% Number of dealers or banks 1 Maximum amount with one 100.0% dealer or bank Aggregate principal amount of $200,000,000 agreements Aggregate maturity amount of $201,013,389 agreements Aggregate market value of $204,511,157 transferred assets Coupon rates of transferred 5.50% to 11.50% assets Maturity dates of transferred 8/1/00 to 6/1/30 assets DATED MAY 18, 2000, DUE JUNE 29, 2000 AT 6.50% Number of dealers or banks 1 Maximum amount with one 100.0% dealer or bank Aggregate principal amount of $250,000,000 agreements Aggregate maturity amount of $251,895,833 agreements Aggregate market value of $255,000,000 transferred assets Coupon rates of transferred 5.50% to 9.00% assets Maturity dates of transferred 12/1/03 to 8/1/37 assets DATED MAY 25, 2000, DUE JUNE 26, 2000 AT 6.50% Number of dealers or banks 1 Maximum amount with one 100.0% dealer or bank Aggregate principal amount of $200,000,000 agreements Aggregate maturity amount of $201,155,556 agreements Aggregate market value of $205,021,076 transferred assets Coupon rates of transferred 5.50% to 15.00% assets Maturity dates of transferred 6/1/00 to 6/1/30 assets DATED MAY 31, 2000, DUE JUNE 1, 2000 AT 6.56% Number of dealers or banks 12 Maximum amount with one 15.3% dealer or bank Aggregate principal amount of $8,414,000,000 agreements Aggregate maturity amount of $8,415,533,735 agreements Aggregate market value of $8,582,777,915 transferred assets Coupon rates of transferred 0.00% to 17.00% assets Maturity dates of transferred 6/1/00 to 11/1/37 assets
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly fee that is calculated on the basis of a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund and an income-based fee. The group fee rate is the weighted average of a series of rates and is based on the monthly average net assets of all the mutual funds advised by FMR. The rates ranged from .0920% to .3700% for the period. The annual individual fund fee rate is .03%. In the event that these rates were lower than the contractual rates in effect during the period, FMR voluntarily implemented the above rates, as they resulted in the same or a lower management fee. The income-based fee is added only when the fund's gross yield exceeds 5%. At that time the income-based fee would equal 6% of that portion of the fund's gross income that represents a gross yield of more than 5% per year. The maximum income-based component is .24% of average net assets. For the period, the total management fee was equivalent to an annualized rate of .21%. The income-based portion of this fee was equal to $422,000, or an annualized rate of .06% of the fund's average net assets. 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. TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. FSC receives account fees and asset-based fees that vary according to account size and type of account. FSC pays for typesetting, printing and mailing of all shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annualized rate of .18% of average net assets. ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is based on the level of average net assets for the month plus out-of-pocket expenses. 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. 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, the fund paid premiums of $9,430 for the calendar year 2000 to FIDFUNDS, which are being amortized over one year. 5. EXPENSE REDUCTIONS. Through arrangements with the fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce a portion of the fund's expenses. During the period, the fund's custodian and transfer agent fees were reduced by $51,000 and $1,000, respectively, under these arrangements. 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 Automated Service Telephone 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)FIDELITY AUTOMATED SERVICE TELEPHONE (FAST(registered trademark)) 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 1-800-544-0240 or visit our web site for more information on how to manage your investments via your PC. * WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. TO VISIT FIDELITY For directions and hours, please call 1-800-544-9797. ARIZONA 7373 N. Scottsdale Road Scottsdale, AZ CALIFORNIA 815 East Birch Street Brea, CA 851 East Hamilton Avenue Campbell, CA 527 North Brand Boulevard Glendale, CA 19200 Von Karman Avenue Irvine, CA 10100 Santa Monica Blvd. Los Angeles, CA 251 University Avenue Palo Alto, CA 1760 Challenge Way Sacramento, CA 7676 Hazard Center Drive San Diego, CA 8 Montgomery Street San Francisco, CA 950 Northgate Drive San Rafael, CA 1400 Civic Drive Walnut Creek, CA 6300 Canoga Avenue Woodland Hills, CA COLORADO 1625 Broadway Denver, CO CONNECTICUT 48 West Putnam Avenue Greenwich, CT 265 Church Street New Haven, CT 300 Atlantic Street Stamford, CT 29 South Main Street West Hartford, CT DELAWARE 222 Delaware Avenue Wilmington, DE FLORIDA 4400 N. Federal Highway Boca Raton, FL 90 Alhambra Plaza Coral Gables, FL 4090 N. Ocean Boulevard Ft. Lauderdale, FL 1907 West State Road 434 Longwood, FL 8880 Tamiami Trail, North Naples, FL 2401 PGA Boulevard Palm Beach Gardens, FL 8065 Beneva Road Sarasota, FL 1502 N. Westshore Blvd. Tampa, FL GEORGIA 3445 Peachtree Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA ILLINOIS One North Franklin Street Chicago, IL 1415 West 22nd Street Oak Brook, IL 1700 East Golf Road Schaumburg, IL 3232 Lake Avenue Wilmette, IL INDIANA 4729 East 82nd Street Indianapolis, IN MAINE Three Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD One W. Pennsylvania Ave. Towson, MD MASSACHUSETTS 801 Boylston Street Boston, MA 155 Congress Street Boston, MA 25 State Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 416 Belmont Street Worcester, MA MICHIGAN 280 Old N. Woodward Ave. Birmingham, MI 29155 Northwestern Hwy. Southfield, MI MINNESOTA 7600 France Avenue South Edina, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO NEW JERSEY 150 Essex Street Millburn, NJ 56 South Street Morristown, NJ 501 Route 17, South Paramus, NJ NEW YORK 1055 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 1271 Avenue of the Americas New York, NY 71 Broadway New York, NY 350 Park Avenue New York, NY NORTH CAROLINA 4611 Sharon Road Charlotte, NC OHIO 600 Vine Street Cincinnati, OH 28699 Chagrin Boulevard Woodmere Village, OH OREGON 16850 SW 72nd Avenue Tigard, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA RHODE ISLAND 47 Providence Place Providence, RI TENNESSEE 6150 Poplar Avenue Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 4017 Northwest Parkway Dallas, TX 1155 Dairy Ashford Street Houston, TX 2701 Drexel Drive Houston, TX 400 East Las Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX 19740 IH 45 North Spring, TX UTAH 215 South State Street Salt Lake City, UT VIRGINIA 1861 International Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 511 Pine Street Seattle, WA WASHINGTON, DC 1900 K Street, N.W. Washington, DC WISCONSIN 595 North Barker Road Brookfield, WI INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA INVESTMENT SUB-ADVISER Fidelity Investments Money Management, Inc. OFFICERS Edward C. Johnson 3d, President Robert C. Pozen, Senior Vice President Dwight D. Churchill, Vice President Boyce I. Greer, Vice President Robert A. Litterst, Vice President Eric D. Roiter, Secretary Robert A. Dwight, Treasurer Maria F. Dwyer, Deputy Treasurer Stanley N. Griffith, Assistant Vice President John H. Costello, Assistant Treasurer Thomas J. Simpson, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d Donald J. Kirk * Ned C. Lautenbach * Peter S. Lynch William O. McCoy * Marvin L. Mann * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Michael Cook Abigail P. Johnson GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA * INDEPENDENT TRUSTEES TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA CUSTODIAN 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 and Account Assistance 1-800-544-6666 Product Information 1-800-544-6666 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) Fidelity Automated Service Telephone (FAST(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 -----END PRIVACY-ENHANCED MESSAGE-----