-----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, M1RzZypl1ovkyspPwSYkVSx2f47AXoRYGGnH8qXFGNL5Ok9y7CGT+kXnuPlwk1vW Qdgr48WgoMOU3+UW/HBBzg== 0000278001-98-000005.txt : 19980721 0000278001-98-000005.hdr.sgml : 19980721 ACCESSION NUMBER: 0000278001-98-000005 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980720 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY PHILLIPS STREET TRUST CENTRAL INDEX KEY: 0000278001 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [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: 98668551 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 FIDELITY (REGISTERED TRADEMARK) CASH RESERVES SEMIANNUAL REPORT MAY 31, 1998 CONTENTS PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES. PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME. FUND TALK 6 THE MANAGER'S REVIEW OF FUND PERFORMANCE, STRATEGY AND OUTLOOK. INVESTMENT CHANGES 8 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S INVESTMENTS OVER THE PAST SIX MONTHS AND ONE YEAR. INVESTMENTS 9 A COMPLETE LIST OF THE FUND'S INVESTMENTS. FINANCIAL STATEMENTS 21 STATEMENTS OF ASSETS AND LIABILITIES, OPERATIONS, AND CHANGES IN NET ASSETS, AS WELL AS FINANCIAL HIGHLIGHTS. NOTES 25 NOTES TO THE FINANCIAL STATEMENTS. REPORT OF INDEPENDENT 28 THE AUDITORS' REPORT ACCOUNTANTS To reduce expenses and demonstrate respect for our environment, we have initiated a project through which we will begin eliminating duplicate copies of most financial reports and prospectuses to most households, even if they have more than one account in the fund. If additional copies of financial reports, prospectuses or historical account information are needed, please call 1-800-544-6666. THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, 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 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: While low interest rates and subdued inflation provided support for stock and bond markets in the U.S. during the first five months of 1998, concerns about continuing economic and political difficulties in Asia colored their performance. The stock market reached record heights due to stronger-than-expected corporate earnings, but retreated at times when concerns surfaced about how the Asian volatility would affect business prospects. The bond market benefited from these retreats, as investors sought alternatives offering lower volatility. While it's impossible to predict the future direction of the markets with any degree of certainty, there are certain basic principles that can help investors plan for their future needs. First, investors are encouraged to take a long-term view of their portfolios. If you can afford to leave your money invested through the inevitable up and down cycles of the financial markets, you will greatly reduce your vulnerability to any single decline. We know from experience, for example, that stock prices have gone up over longer periods of time, have significantly outperformed other types of investments and have stayed ahead of inflation. Second, you can further manage your investing risk through diversification. A stock mutual fund, for instance, is already diversified, because it invests in many different companies. You can increase your diversification further by investing in a number of different stock funds, or in such other investment categories as bonds. You should also keep money you'll need in the near future in a more stable investment. Finally, no matter what your time horizon or portfolio diversity, it makes good sense to follow a regular investment plan, investing a certain amount of money in a fund at the same time each month or quarter and periodically reviewing your overall portfolio. By doing so, you won't get caught up in the excitement of a rapidly rising market, nor will you buy all your shares at market highs. While this strategy - known as dollar cost averaging - won't assure a profit or protect you from a loss in a declining market, it should help you lower the average cost of your purchases. If you have questions, please call us at 1-800-544-8888. We are available 24 hours a day, seven days a week to provide you the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE To evaluate a money market fund's historical performance, you can look at either total return or yield. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income. 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, 1998 PAST 6 PAST 1 PAST 5 PAST 10 MONTHS YEAR YEARS YEARS FIDELITY CASH RESERVES 2.66% 5.40% 26.42% 72.68% ALL TAXABLE MONEY MARKET FUNDS AVERAGE 2.55% 5.16% 25.19% 68.31% 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 IBC Financial Data, Inc. The past six months average represents a peer group of 889 money market funds. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED MAY 31, 1998 PAST 1 PAST 5 PAST 10 YEAR YEARS YEARS FIDELITY CASH RESERVES 5.40% 4.80% 5.61% ALL TAXABLE MONEY MARKET FUNDS AVERAGE 5.16% 4.59% 5.36% 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 6/2/98 3/3/98 12/2/97 9/2/97 6/3/97 FIDELITY CASH RESERVES 5.21% 5.28% 5.31% 5.29% 5.25% ALL TAXABLE MONEY MARKET 5.02% 5.07% 5.09% 5.04% 5.02% FUNDS AVERAGE 6/3/98 2/25/98 12/3/97 9/3/97 5/28/97 MMDA 2.51% 2.58% 2.62% 2.67% 2.66% Row: 1, Col: 1, Value: 5.21 Row: 1, Col: 2, Value: 5.02 Row: 1, Col: 3, Value: 2.51 Row: 2, Col: 1, Value: 5.28 Row: 2, Col: 2, Value: 5.07 Row: 2, Col: 3, Value: 2.58 Row: 3, Col: 1, Value: 5.31 Row: 3, Col: 2, Value: 5.09 Row: 3, Col: 3, Value: 2.62 Row: 4, Col: 1, Value: 5.29 Row: 4, Col: 2, Value: 5.04 Row: 4, Col: 3, Value: 2.67 Row: 5, Col: 1, Value: 5.25 Row: 5, Col: 2, Value: 5.02 Row: 5, Col: 3, Value: 2.66 Fidelity Cash Reserves All Taxable Money Market Funds Average MMDA 6% - 5% - 4% - 3% - 2% - 1% - 0% YIELD refers to the income paid by the fund over a given period. Yields for money market funds are usually for seven-day periods, expressed as annual percentage rates. A yield that assumes income earned is reinvested or compounded is called an effective yield. The chart above shows the fund's current seven-day yield at quarterly intervals over the past year. You can compare these yields to the all taxable money market funds average and the bank money market deposit account (MMDA) average. Figures for the all taxable money market funds average are from IBC Financial Data, Inc. The MMDA average is supplied by BANK RATE MONITOR(trademark). A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE. COMPARING PERFORMANCE There are some important differences between a bank money market deposit account (MMDA) and a money market fund. First, the U.S. government neither insures nor guarantees a money market fund. In fact, there is no assurance that a money market fund will maintain a $1 share price. Second, a money market fund returns to its shareholders income earned by the fund's investments after expenses. This is in contrast to banks, which set their MMDA rates periodically based on current interest rates, competitors' rates, and internal criteria. (checkmark) FUND TALK: THE MANAGER'S OVERVIEW An interview with John Todd, Portfolio Manager of Fidelity Cash Reserves Q. JOHN, WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE OVER THE PAST SIX MONTHS? A. During most of the period, market observers tried to gauge the potential effects of the Southeast Asian crisis on the U.S. economy. At the end of 1997 and into early 1998, talk of an interest-rate cut by the Federal Reserve Board began to circulate, as fears of a slowdown in exports emerged following the drastic cheapening of Asian goods. The cut would have aimed to rekindle economic growth if this slowdown had happened. At that point, the yield curve flattened - meaning little difference existed between the yields of short- and longer-maturity securities. The yields of longer-term, fixed-income securities came down dramatically, stimulating the residential real estate market as well as the domestic economy generally through increased mortgage refinancings - making consumers "wealthier" by reducing their monthly mortgage payments and improving overall cash flow. In addition, the stock market rallied to new heights - with the Dow Jones Industrial Average closing above 9,000 for the first time ever in April. Q. HOW DID THESE FACTORS INFLUENCE FEDERAL RESERVE BOARD POLICY? A. This re-stimulated economy seemed to overwhelm the potential negative impact of the Asian crisis - and again rekindled concerns that the Fed would raise interest rates to slow growth and head off inflation. However, data suggested that inflation remained benign. First-quarter real GDP - gross domestic product adjusted for inflation - - grew at a surprisingly strong rate of 4.8%, while the employment cost index rose at a slower-than-expected rate despite an unusually tight labor market. This subdued inflation environment has allowed the Fed to leave the fed funds rate - the rate banks charge each other for overnight loans - unchanged at 5.5% for more than a year now. Q. WHAT WAS YOUR STRATEGY? A. Early in 1998, when the Asian crisis built to a crescendo and the money market yield curve flattened dramatically, I shortened the fund's average maturity to about 54 days. This enabled the fund to take advantage of attractive year-end rates. I also shortened the maturity because some market observers began to expect the Fed to lower rates in an effort to offset the negative effects of the Asian crisis. I felt this was premature and - with the yield curve flattening - there was little incentive to buy longer-term securities. Late in the period, the market became concerned with the resilience of the domestic economy. As a result, market participants dismissed the notion that the Fed would lower interest rates, so I extended the fund's average maturity to about 65 days at the end of the period as the yield curve developed a more positive slope, with longer-term securities offering more attractive yields. Q. HOW DID THE FUND PERFORM? A. The fund's seven-day yield on May 31, 1998, was 5.23%, compared to 5.30% six months ago. For the six months that ended May 31, 1998, the fund had a total return of 2.66%, compared to 2.55% for the all taxable money market funds average, according to IBC Financial Data, Inc. Q. WHAT'S YOUR OUTLOOK? A. I think that the worst possible effects of Asia may hit the U.S. economy during the second quarter. However, I still believe we need to monitor the situation in Asia carefully, because the area's financial markets are currently experiencing another downturn and the maximum negative effects on global economies have yet to be felt. In addition, I believe that unless there are visible signs - and soon - of a slowdown in domestic demand, the Fed will be forced to take pre-emptive action by raising short-term interest rates in an effort to slow the economy and head off future inflationary pressures. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND FACTS GOAL: income and a stable $1 share price by investing in high-quality, short-term money market securities of all types FUND NUMBER: 055 TRADING SYMBOL: FDRXX START DATE: May 10, 1979 SIZE: as of May 31, 1998, more than $25.9 billion MANAGER: John Todd, since 1997; manager, Spartan Money Market Fund, since 1989; Fidelity Select Money Market Portfolio, since 1991; joined Fidelity in 1981 (checkmark) INVESTMENT CHANGES MATURITY DIVERSIFICATION DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS 5/31/98 11/30/97 5/31/97 0 - 30 47 44 49 31 - 90 30 29 29 91 - 180 15 18 10 181 - 397 8 9 12 WEIGHTED AVERAGE MATURITY 5/31/98 11/30/97 5/31/97 FIDELITY CASH RESERVES 65 DAYS 69 DAYS 67 DAYS ALL TAXABLE MONEY MARKET FUNDS AVERAGE* 56 DAYS 55 DAYS 52 DAYS ASSET ALLOCATION (% OF FUND'S INVESTMENTS) AS OF MAY 31, 1998 AS OF NOVEMBER 30, 1997 Row: 1, Col: 1, Value: 2.0 Row: 1, Col: 2, Value: 43.0 Row: 1, Col: 3, Value: 55.0 Bank CDs, BAs, TDs, and notes 67% Commercial paper 27% Government securities 3% Other 3% Bank CDs, BAs, TDs, and notes 56% Commercial paper 43% Government securities 1% Other 0% Row: 1, Col: 1, Value: 3.0 Row: 1, Col: 2, Value: 3.0 Row: 1, Col: 3, Value: 27.0 Row: 1, Col: 4, Value: 67.0 *SOURCE: IBC'S MONEY FUND REPORT(registered trademark) INVESTMENTS MAY 31, 1998 Showing Percentage of Total Value of Investments CERTIFICATES OF DEPOSIT - 37.7% DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) DOMESTIC CERTIFICATES OF DEPOSIT - 0.8% CoreStates Bank 6/9/98 5.60% (a) $ 15,000 $ 15,000 6/30/98 5.61 (a) 35,000 35,000 6/4/98 5.62 (a) 30,000 30,000 Morgan Guaranty Trust Co., NY 8/6/98 5.90 93,000 92,995 Wachovia Bank, NA 6/17/98 5.59 (a) 40,000 39,991 212,986 CHICAGO BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 1.4% ABN-AMRO Bank NV 8/14/98 5.90 70,000 70,002 10/19/98 5.50 210,000 210,000 Bank of Montreal, Canada 7/20/98 5.57 80,000 80,000 360,002 NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 22.4% Bayerische Hypotheken und Wechsel 7/20/98 5.56 165,000 165,000 Bayerische Landesbank Girozentrale 7/17/98 5.90 140,000 139,993 Bayerische Vereinsbank AG 2/26/99 5.70 200,000 199,929 Canadian Imperial Bank of Commerce 6/3/98 5.54 145,000 145,000 6/8/98 5.54 40,000 40,000 8/28/98 5.97 145,000 144,980 10/6/98 5.52 75,000 75,046 3/2/99 5.70 145,000 144,932 Credit Agricole Indosuez 10/14/98 5.90 150,000 149,977 10/19/98 5.97 50,000 49,987 10/21/98 5.62 150,000 150,000 10/21/98 6.00 65,000 64,988 2/26/99 5.70 10,000 9,997 4/28/99 5.81 190,000 189,934 4/30/99 5.87 150,000 149,921 Deutsche Bank, AG 8/3/98 5.52 250,000 250,000 8/10/98 5.91 145,000 144,984 8/10/98 5.92 70,000 69,994 2/10/99 5.60 75,000 74,975 3/5/99 5.75 240,000 239,904 CERTIFICATES OF DEPOSIT - CONTINUED DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - CONTINUED Dresdner Bank, AG 6/1/98 5.54% $ 190,000 $ 190,000 Landesbank Hessen-Thuringen 6/30/98 5.79 80,000 80,004 National Westminster Bank, PLC 7/29/98 5.52 23,000 23,001 8/10/98 6.00 32,000 31,992 9/25/98 5.88 42,000 41,988 2/26/99 5.70 140,000 139,960 3/2/99 5.70 145,000 144,948 Rabobank Nederland, Coop Central 5/5/99 5.83 50,000 49,973 Royal Bank of Canada 8/7/98 5.90 96,000 95,995 8/13/98 6.00 50,000 49,995 9/15/98 5.61 95,000 95,037 2/10/99 5.60 145,000 144,945 2/26/99 5.70 95,000 94,953 Royal Bank of Scotland, PLC 6/15/98 5.85 30,000 30,000 Societe Generale, France 6/3/98 5.59 135,000 135,000 6/8/98 5.58 200,000 200,000 8/4/98 5.53 30,000 30,000 8/24/98 5.55 200,000 200,000 10/20/98 5.60 180,000 180,000 Swiss Bank Corp. 6/1/98 5.54 240,000 240,000 8/19/98 5.91 70,000 69,994 8/28/98 5.97 140,000 139,984 10/21/98 5.50 210,000 210,000 12/16/98 5.55 70,000 70,090 3/19/99 5.70 185,000 184,901 4/30/99 5.87 150,000 149,921 Westdeutsche Landesbank Girozentrale 6/1/98 5.54 35,000 35,000 7/20/98 5.56 100,000 100,000 5,757,222 PORTLAND BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 0.6% Bank of Nova Scotia 7/21/98 5.97 28,000 27,994 8/31/98 5.97 80,000 79,988 10/1/98 5.52 50,000 50,034 158,016 CERTIFICATES OF DEPOSIT - CONTINUED DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) SAN FRANCISCO BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 0.4% Banque Nationale de Paris 6/4/98 5.52% $ 105,000 $ 105,000 LONDON BRANCH, EURODOLLAR, DOMESTIC BANKS - 0.7% NationsBank, NA 9/14/98 5.55 180,000 180,000 LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 11.4% Abbey National Treasury Services, PLC 6/17/98 5.56 400,000 400,000 6/22/98 5.56 200,000 200,000 6/25/98 5.56 300,000 300,000 9/28/98 5.60 80,000 80,000 10/6/98 5.61 75,000 75,000 Bank of Nova Scotia 9/28/98 5.61 105,000 104,995 Barclays Bank, PLC 6/8/98 5.54 176,000 176,000 6/15/98 5.57 30,000 30,002 8/24/98 5.58 400,000 400,000 9/8/98 5.60 150,000 150,004 9/24/98 5.60 190,000 190,000 10/21/98 5.60 45,000 45,000 10/28/98 5.65 110,000 109,984 Bayerische Vereinsbank AG 9/22/98 5.59 75,000 75,002 Commerzbank AG 9/22/98 5.59 75,000 75,002 National Australia Bank Ltd. 9/16/98 5.60 40,000 39,997 Norddeutsche Landesbank Girozentrale 10/27/98 5.62 50,000 50,002 Rabobank Nederland, Coop Central 9/9/98 5.61 225,000 225,000 Toronto-Dominion Bank 6/1/98 5.54 75,000 75,000 10/14/98 5.93 70,000 70,000 Westdeutsche Landesbank Girozentrale 6/18/98 5.54 40,000 40,000 2,910,988 TOTAL CERTIFICATES OF DEPOSIT 9,684,214 COMMERCIAL PAPER - 42.8% DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) ABN-AMRO North America, Inc. 7/2/98 5.84% $ 70,000 $ 69,662 7/13/98 5.84 50,000 49,673 American Express Credit Corp. 6/24/98 5.55 50,000 49,824 6/29/98 5.55 35,000 34,850 8/13/98 5.58 30,000 29,668 Aspen Funding Corp. 6/3/98 5.56 54,000 53,983 6/2/98 5.58 110,000 109,983 6/16/98 5.55 75,000 74,828 6/17/98 5.55 40,000 39,902 7/6/98 5.58 155,000 154,165 Asset Securitization Coop. Corp. 6/1/98 5.56 40,000 40,000 6/17/98 5.55 160,000 159,608 6/26/98 5.58 42,000 41,839 7/30/98 5.58 40,000 39,639 Associates Corp. of North America 6/1/98 5.55 100,000 100,000 6/1/98 5.58 100,000 100,000 6/4/98 5.55 25,000 24,989 7/27/98 5.58 45,000 44,614 8/24/98 5.60 35,000 34,549 Bank of New York, Inc. 6/22/98 5.55 30,000 29,903 Bank of Nova Scotia 7/27/98 5.57 50,000 49,571 Bayerische Vereinsbank AG 7/2/98 5.58 100,000 99,526 Bear Stearns Cos., Inc. 7/23/98 5.58 30,000 29,760 7/27/98 5.60 25,000 24,785 8/24/98 5.60 50,000 49,356 Beneficial Corp. 6/4/98 5.56 25,000 24,989 6/10/98 5.55 25,000 24,966 6/24/98 5.56 35,000 34,877 6/29/98 5.56 75,000 74,678 6/30/98 5.56 25,000 24,889 7/14/98 5.60 35,000 34,770 7/15/98 5.60 35,000 34,765 BMW US Capital Corp. 6/10/98 5.59 35,000 34,952 6/12/98 5.60 20,000 19,966 6/15/98 5.59 40,000 39,914 6/16/98 5.55 19,000 18,957 7/22/98 5.59 40,000 39,687 8/20/98 5.58 10,000 9,878 COMMERCIAL PAPER - CONTINUED DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) Caisse des Depots et Consigns 6/4/98 5.57% $ 60,000 $ 59,972 6/18/98 5.54 55,000 54,857 Caisse d'Amortissement de la Dette Sociale 6/5/98 5.84 140,000 139,912 6/11/98 5.87 110,000 109,826 Chrysler Financial Corp. 6/3/98 5.61 35,000 34,989 CIESCO, L.P. 6/1/98 5.54 25,000 25,000 6/9/98 5.55 75,000 74,908 6/17/98 5.54 30,000 29,927 6/24/98 5.55 30,000 29,895 7/27/98 5.57 75,000 74,357 CIT Group, Inc. 6/10/98 5.55 60,000 59,918 6/25/98 5.82 20,000 19,925 6/29/98 5.55 40,000 39,828 7/15/98 5.57 15,000 14,899 Citibank Credit Card Master Trust I (Dakota Certificate Program) 6/9/98 5.60 65,000 64,920 6/16/98 5.55 10,000 9,977 6/17/98 5.55 100,000 99,756 7/16/98 5.58 50,000 49,655 7/21/98 5.57 25,000 24,808 7/22/98 5.58 60,000 59,530 Commercial Credit Group, Inc. 6/1/98 5.54 25,000 25,000 7/13/98 5.57 25,000 24,839 7/16/98 5.57 20,000 19,862 CoreStates Bank 6/2/98 5.61 (a) 26,000 26,000 Cregem North America, Inc. 6/4/98 5.57 100,000 99,954 6/5/98 5.58 20,500 20,487 6/8/98 5.58 45,000 44,952 6/9/98 5.58 20,000 19,976 Daimler-Benz North America Corp. 6/10/98 5.57 10,000 9,986 6/17/98 5.55 70,000 69,829 8/3/98 5.58 35,548 35,206 Delaware Funding Corporation 6/15/98 5.55 150,000 149,677 6/18/98 5.57 22,000 21,943 Den Danske Corp., Inc. 7/1/98 5.59 75,000 74,656 9/30/98 5.60 40,000 39,262 COMMERCIAL PAPER - CONTINUED DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) Deutsche Bank Financial, Inc. 6/16/98 5.55% $ 200,000 $ 199,540 6/29/98 5.55 250,000 248,928 10/26/98 6.00 45,000 44,990 Diageo Capital, PLC 6/9/98 5.55 52,000 51,936 6/10/98 5.55 25,000 24,965 6/15/98 5.55 20,000 19,957 6/23/98 5.58 65,000 64,780 7/31/98 5.58 18,000 17,835 Eiger Capital Corp. 6/10/98 5.55 19,779 19,752 6/23/98 5.56 33,673 33,559 Enterprise Funding Corp. 6/4/98 5.60 20,700 20,690 6/10/98 5.58 15,000 14,979 6/15/98 5.56 25,779 25,724 6/24/98 5.55 17,604 17,542 7/8/98 5.57 25,214 25,071 7/13/98 5.58 43,000 42,723 7/14/98 5.58 30,000 29,802 7/15/98 5.57 31,513 31,301 Fina Oil and Chemical Company 6/9/98 5.60 15,000 14,981 6/17/98 5.61 10,000 9,975 Ford Motor Credit Co. 6/10/98 5.54 100,000 99,862 7/7/98 5.57 150,000 149,170 7/8/98 5.57 21,000 20,881 7/9/98 5.56 185,000 183,924 7/22/98 5.56 50,000 49,610 7/22/98 5.57 50,000 49,609 7/23/98 5.58 120,000 119,043 7/24/98 5.58 30,000 29,756 7/27/98 5.57 150,000 148,714 8/20/98 5.58 200,000 197,556 General Electric Capital Corp. 6/3/98 5.54 45,000 44,986 6/17/98 5.55 180,000 179,559 6/23/98 5.59 100,000 99,664 7/14/98 5.57 30,000 29,802 7/20/98 5.57 125,000 124,071 7/21/98 5.57 30,000 29,772 7/28/98 5.58 40,000 39,650 7/31/98 5.58 125,000 123,863 8/6/98 5.54 125,000 123,765 8/13/98 5.61 60,000 59,328 COMMERCIAL PAPER - CONTINUED DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) General Electric Capital Corp. - continued 8/24/98 5.62% $ 250,000 $ 246,780 8/25/98 5.62 85,000 83,892 9/8/98 5.58 90,000 88,656 General Electric Co. 7/20/98 5.58 155,000 153,835 9/10/98 5.61 50,000 49,227 General Motors Acceptance Corp. 6/3/98 5.56 150,000 149,954 6/17/98 5.55 210,000 209,485 7/22/98 5.58 150,000 148,825 9/30/98 5.63 90,000 88,336 General Motors Corp. 6/24/98 5.57 20,000 19,929 Generale Banque 7/9/98 5.55 30,000 29,826 Goldman Sachs Group, L.P. 9/18/98 5.60 50,000 49,167 GTE Corp. 6/18/98 5.60 15,000 14,961 6/22/98 5.60 25,000 24,919 6/25/98 5.60 20,000 19,926 7/28/98 5.62 61,000 60,464 Halifax Building Society 6/16/98 5.55 19,000 18,956 6/17/98 5.55 70,000 69,829 Household Finance Corp. 6/1/98 5.54 30,000 30,000 6/24/98 5.56 25,000 24,912 7/20/98 5.59 30,000 29,775 IBM Corp. 7/22/98 5.57 30,000 29,765 Kitty Hawk Funding Corp. 6/1/98 5.60 15,000 15,000 6/11/98 5.55 21,805 21,772 6/18/98 5.56 75,000 74,805 6/24/98 5.55 35,348 35,223 7/9/98 5.57 25,000 24,854 7/16/98 5.58 35,494 35,250 7/20/98 5.58 85,012 84,372 Merrill Lynch & Co., Inc. 6/1/98 5.55 20,000 20,000 6/15/98 5.56 75,000 74,839 6/17/98 5.59 55,000 54,865 6/25/98 5.56 50,000 49,816 6/30/98 5.60 55,000 54,755 Morgan Stanley, Dean Witter, Discover & Co. 6/3/98 5.60 115,000 114,965 6/15/98 5.58 15,000 14,968 COMMERCIAL PAPER - CONTINUED DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) Morgan Stanley, Dean Witter, Discover & Co. - continued 6/15/98 5.61% (a) $ 65,000 $ 65,000 6/16/98 5.55 30,000 29,931 6/16/98 5.58 60,000 59,863 Nationwide Building Society 7/7/98 5.59 50,000 49,724 7/8/98 5.57 20,000 19,887 7/13/98 5.60 50,000 49,679 8/4/98 5.58 75,000 74,267 New Center Asset Trust 6/16/98 5.55 95,000 94,782 7/27/98 5.60 140,000 138,794 9/30/98 5.64 110,000 107,963 Norfolk Southern Corp. 6/3/98 5.74 10,000 9,997 6/8/98 5.72 20,000 19,978 6/9/98 5.73 30,000 29,962 6/15/98 5.72 18,000 17,960 7/1/98 5.75 32,000 31,847 Norwest Financial, Inc. 6/10/98 5.54 25,000 24,966 Preferred Receivables Funding Corp. 6/1/98 5.56 25,000 25,000 6/11/98 5.55 48,100 48,026 6/16/98 5.55 49,325 49,212 6/16/98 5.56 27,275 27,212 6/17/98 5.55 26,805 26,739 6/17/98 5.57 25,445 25,382 6/17/98 5.58 40,000 39,901 6/18/98 5.56 15,000 14,961 6/18/98 5.57 15,435 15,395 6/22/98 5.56 57,775 57,589 6/23/98 5.57 56,385 56,194 6/24/98 5.56 26,935 26,840 Sears Roebuck Acceptance Corp. 6/5/98 5.59 20,000 19,988 6/10/98 5.55 25,000 24,966 6/15/98 5.55 35,000 34,925 6/17/98 5.55 30,000 29,926 Societe Generale North America, Inc. 6/1/98 5.68 70,000 70,000 Southern Co. 6/15/98 5.55 40,000 39,914 Textron, Inc. 6/1/98 5.90 5,000 5,000 6/10/98 5.70 37,000 36,948 7/8/98 5.74 15,000 14,912 7/13/98 5.75 10,000 9,934 7/20/98 5.76 6,000 5,953 COMMERCIAL PAPER - CONTINUED DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) Three Rivers Funding Corp. 6/10/98 5.54% $ 50,000 $ 49,931 6/10/98 5.60 25,307 25,272 Transamerica Finance Corp. 6/15/98 5.57 63,000 62,865 7/20/98 5.57 17,300 17,170 Triple A One Funding Corp. 6/8/98 5.56 50,000 49,946 6/9/98 5.57 15,743 15,724 6/10/98 5.59 60,000 59,917 6/15/98 5.57 12,012 11,986 6/17/98 5.57 21,388 21,335 7/7/98 5.58 40,000 39,779 Unifunding, Inc. 6/2/98 5.58 65,000 64,990 7/2/98 5.60 16,000 15,924 8/4/98 5.58 32,000 31,687 Westpac Capital Corp. 9/21/98 5.59 90,000 88,463 TOTAL COMMERCIAL PAPER 10,973,477 FEDERAL AGENCIES (A) - 0.8% FANNIE MAE - AGENCY COUPONS - 0.8% 6/12/98 5.59 200,000 199,997 BANK NOTES - 6.6% Bank of America National Trust & Savings, San Francisco 6/8/98 5.54 200,000 200,000 7/22/98 5.51 47,000 46,999 Bank One, NA 6/2/98 5.74 (a) 170,000 169,997 Comerica Bank, Detroit 6/17/98 5.62 (a) 53,000 52,995 First Bank NA - Minnesota 6/17/98 5.62 (a) 60,000 59,997 First Union National Bank of North Carolina, NA 6/1/98 5.64 (a) 100,000 99,990 Harris Trust & Savings Bank, Chicago 6/8/98 5.56 60,000 60,000 Key Bank, NA 6/1/98 5.65 (a) 103,000 102,975 6/12/98 5.61 (a) 70,000 69,999 6/24/98 5.60 (a) 84,000 83,992 6/29/98 5.60 (a) 92,000 91,985 BANK NOTES - CONTINUED DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) Morgan Guaranty Trust Co., NY 8/31/98 5.85% $ 72,000 $ 72,008 8/31/98 5.97 112,000 111,989 National City Bank - Pennsylvania 6/2/98 5.62 (a) 65,000 65,000 NationsBank, NA 10/19/98 5.54 50,000 50,000 Northern Trust Co., Chicago 6/1/98 5.61 (a) 65,000 64,996 PNC Bank, NA 6/1/98 5.67 (a) 30,000 29,998 6/25/98 5.60 (a) 18,000 18,004 7/16/98 5.64 (a) 135,000 134,951 SouthTrust Bank, Alabama 6/11/98 5.61 (a) 32,000 31,995 US Bank, NA 6/17/98 5.61 (a) 32,000 31,993 Westpac Banking Corp. 5/5/99 5.85 50,000 49,978 TOTAL BANK NOTES 1,699,841 MASTER NOTES (A) - 2.5% J.P. Morgan Securities 6/2/98 5.63 10,000 10,000 6/11/98 5.63 250,000 250,000 Goldman Sachs Group, L.P. (The) 6/11/98 (c) 5.69 325,000 325,000 6/11/98 5.72 25,000 25,000 Suntrust Bank, Inc. 6/11/98 5.61 40,000 40,000 TOTAL MASTER NOTES 650,000 MEDIUM-TERM NOTES (A) - 3.7% Bank of Scotland Treasury Services 8/7/98 5.67 250,000 250,000 Beneficial Corp. 6/25/98 5.65 50,000 49,995 7/11/98 5.61 43,000 42,998 Commonwealth Life Insurance Co. 6/30/98 (c) 5.81 50,000 50,000 MEDIUM-TERM NOTES (A) - CONTINUED DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) Merrill Lynch & Co., Inc. 6/1/98 5.76% $ 97,000 $ 96,996 Morgan Stanley, Dean Witter, Discover & Co. 6/1/98 5.73 125,000 125,000 Morgan Stanley Group, Inc. 6/1/98 5.68 5,000 5,000 New York Life Insurance Co. 6/23/98 5.69 105,000 105,000 Norwest Corp. 7/22/98 5.71 118,000 118,000 Pacific Mutual Life Insurance Co. 6/9/98 (b) 5.73 90,000 90,000 Transamerica Life Insurance and Annuity Co. 7/13/98 5.67 20,000 20,000 TOTAL MEDIUM-TERM NOTES 952,989 SHORT-TERM NOTES (A) - 5.1% Capital One Funding Corp. (1996-D) 6/4/98 5.59 23,065 23,065 Capital One Funding Corp. (1996-F) 6/4/98 5.59 38,717 38,717 Capital One Funding Corp. (1996-G) 6/4/98 5.59 4,023 4,023 Capital One Funding Corp. (1996-H) 6/4/98 5.66 18,770 18,770 Capital One Funding Corp. (1997-E) 6/4/98 5.59 20,200 20,200 Capital One Funding Corp. (1997-F) 6/4/98 5.59 7,000 7,000 Capital One Funding Corp. (1997-G) 6/4/98 5.59 10,000 10,000 Liquid Asset Backed Securities Trust (1996-1) 6/15/98 (b) 5.64 91,000 91,000 Liquid Asset Backed Securities Trust (1996-2) 6/1/98 (b) 5.64 134,000 134,000 Liquid Asset Backed Securities Trust (1997-5) 6/17/98 (b) 5.64 211,000 211,000 SMM Trust (1997-P) 6/16/98 (b) 5.66 62,000 62,000 SMM Trust (1997-X) 6/12/98 (b) 5.65 168,000 168,000 SMM Trust (1998-I) 6/29/98 (b) 5.64 58,000 58,000 Strategic Money Market Trust (1998-B) 6/5/98 (b) 5.66 170,000 170,000 SHORT-TERM NOTES (A) - CONTINUED DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) Strategic Money Market Trust (1997-A) 6/23/98 (b) 5.69% $ 225,000 $ 225,000 Transamerica Corp. 6/5/98 5.70 65,000 65,000 TOTAL SHORT-TERM NOTES 1,305,775 TIME DEPOSITS - 0.8% Bayerische Vereinsbank, AG 6/1/98 5.69 210,000 210,000 REPURCHASE AGREEMENTS - 0.0% MATURITY AMOUNT (000S) In a joint trading account (U.S. Treasury Obligations) dated 5/29/98 due 6/1/98 At 5.64% $ 2,744 2,743 TOTAL INVESTMENTS - 100% $ 25,679,036 Total Cost for Income Tax Purposes $ 25,679,036 LEGEND (a) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due dates on these types of securities reflects the next interest rate reset date or, when applicable, the final maturity date. (b) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $1,209,000,000 or 4.7% of net assets. (c) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (see Note 2 of Notes to Financial Statements). Additional information on each holding is as follows: ACQUISITION ACQUISITION SECURITY DATE COST (000S) Commonwealth Life Insurance Co. 5.81%, 6/30/98 7/1/97 $50,000 Goldman Sachs Group, L.P. (The) 5.69% 6/11/98 3/10/98 $325,000 INCOME TAX INFORMATION At November 30, 1997, the fund had a capital loss carryforward of approximately $2,262,000 of which $468,000, $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 AMOUNTS) MAY 31, 1998 ASSETS INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 25,679,036 AGREEMENTS OF $2,743) - SEE ACCOMPANYING SCHEDULE RECEIVABLE FOR FUND SHARES SOLD 237,349 INTEREST RECEIVABLE 204,918 OTHER RECEIVABLES 5 TOTAL ASSETS 26,121,308 LIABILITIES PAYABLE FOR FUND SHARES REDEEMED $ 174,794 DISTRIBUTIONS PAYABLE 679 ACCRUED MANAGEMENT FEE 4,406 OTHER PAYABLES AND ACCRUED EXPENSES 6,487 TOTAL LIABILITIES 186,366 NET ASSETS $ 25,934,942 NET ASSETS CONSIST OF: PAID IN CAPITAL $ 25,937,172 ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (2,230) NET ASSETS, FOR 25,935,943 SHARES OUTSTANDING $ 25,934,942 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE $1.00 PER SHARE ($25,934,942 (DIVIDED BY) 25,935,943 SHARES)
STATEMENT OF OPERATIONS AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1998 INTEREST INCOME $ 696,099 EXPENSES MANAGEMENT FEE $ 25,463 TRANSFER AGENT FEES 30,531 ACCOUNTING FEES AND EXPENSES 405 NON-INTERESTED TRUSTEES' COMPENSATION 58 CUSTODIAN FEES AND EXPENSES 193 REGISTRATION FEES 783 AUDIT 34 LEGAL 45 MISCELLANEOUS 64 TOTAL EXPENSES BEFORE REDUCTIONS 57,576 EXPENSE REDUCTIONS (258) 57,318 NET INTEREST INCOME 638,781 NET REALIZED GAIN (LOSS) ON INVESTMENTS 32 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 638,813
STATEMENT OF CHANGES IN NET ASSETS AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED MAY 31, NOVEMBER 30, 1998 1997 INCREASE (DECREASE) IN NET ASSETS OPERATIONS $ 638,781 $ 1,170,690 NET INTEREST INCOME NET REALIZED GAIN (LOSS) 32 42 NET INCREASE (DECREASE) IN NET ASSETS RESULTING 638,813 1,170,732 FROM OPERATIONS DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (638,781) (1,170,690) SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 29,312,316 47,096,513 PROCEEDS FROM SALES OF SHARES REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 622,933 1,134,911 COST OF SHARES REDEEMED (27,498,061) (45,974,342) NET INCREASE (DECREASE) IN NET ASSETS AND SHARES 2,437,188 2,257,082 RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) IN NET ASSETS 2,437,220 2,257,124 NET ASSETS BEGINNING OF PERIOD 23,497,722 21,240,598 END OF PERIOD $ 25,934,942 $ 23,497,722
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED YEARS ENDED NOVEMBER 30, MAY 31, 1998 1997 1996 1995 1994 1993 SELECTED PER-SHARE DATA NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 BEGINNING OF PERIOD INCOME FROM .026 .052 .051 .055 .037 .029 INVESTMENT OPERATIONS NET INTEREST INCOME LESS DISTRIBUTIONS FROM NET INTEREST (.026) (.052) (.051) (.055) (.037) (.029) INCOME NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 END OF PERIOD TOTAL RETURN B, C 2.66% 5.30% 5.18% 5.67% 3.74% 2.97% RATIOS AND SUPPLEMENTAL DATA NET ASSETS, END $ 25,935 $ 23,498 $ 21,241 $ 18,432 $ 14,529 $ 10,314 OF PERIOD (IN MILLIONS) RATIO OF EXPENSES .48% A .49% .51% .55% .52% .48% TO AVERAGE NET ASSETS RATIO OF EXPENSES .47% A, D .48% D .51% .55% .52% .48% TO AVERAGE NET ASSETS AFTER EXPENSE REDUCTIONS RATIO OF NET 5.28% A 5.22% 5.06% 5.50% 3.76% 2.92% INTEREST INCOME 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 (SEE NOTE 4 OF NOTES TO FINANCIAL STATEMENTS). 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 (SEE NOTE 4 OF NOTES TO FINANCIAL STATEMENTS). NOTES TO FINANCIAL STATEMENTS For the period ended May 31, 1998 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. Under the Plan, deferred amounts are treated as though equivalent dollar amounts had been invested in shares of a cross-section of Fidelity money market funds, including shares of the fund. Deferred amounts remain in the fund until distributed in accordance with the Plan. DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid monthly from net interest income. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 2. OPERATING POLICIES. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency securities are transferred to an account of the 2. OPERATING POLICIES - CONTINUED REPURCHASE AGREEMENTS - CONTINUED fund, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the fund's investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. RESTRICTED SECURITIES. The fund is permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. At the end of the period, restricted securities (excluding 144A issues) amounted to $375,000,000 or 1.4% 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 by multiplying the sum of two components, a group fee rate plus a fixed individual fund fee rate applied to the average net assets of the fund and adding 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 .1100% 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% (annualized) of average net assets. For the period, the management fee was equivalent to an annualized rate of .21% of average net assets. SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity Investments Money Management, Inc. (formerly FMR Texas, Inc.), a wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the management fee payable to FMR. The fee is paid prior to any voluntary expense reimbursements which may be in effect. 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 .25% of average net assets. 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED 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. 4. EXPENSE REDUCTIONS. The fund has entered into an arrangement with its 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 transfer agent fees were reduced by $258,000 under this arrangement. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees of Fidelity Phillips Street Trust and the Shareholders of Fidelity Cash Reserves: We have audited the accompanying statement of assets and liabilities of Fidelity Phillips Street Trust: Fidelity Cash Reserves, including the schedule of portfolio investments, as of May 31, 1998, and the related statement of operations for the six months then ended, the statement of changes in net assets for the six months then ended and for the year ended November 30, 1997, and the financial highlights for the six months ended May 31, 1998 and for each of the five years in the period ended November 30, 1997. These financial statements and financial highlights are the responsibility of the fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of May 31, 1998 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Fidelity Phillips Street Trust: Fidelity Cash Reserves as of May 31, 1998, the results of its operations for the six months then ended, the changes in its net assets for the six months then ended and for the year ended November 30, 1997, and the financial highlights for the six months ended May 31, 1998 and for each of the five years in the period ended November 30, 1997, in conformity with generally accepted accounting principles. PricewaterhouseCoopers LLP Boston, Massachusetts July 2, 1998 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 For mutual fund and brokerage trading. For quotes.* For account balances and holdings. To review orders and mutual fund activity. To change your PIN. To speak to a Fidelity representative. 0 * BY PC Fidelity's Web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services. (COMPUTER_GRAPHIC)FIDELITY'S WEB SITE WWW.FIDELITY.COM If you are not currently on the Internet, call Fidelity at 1-800-544-7272 for significant savings on Web access from internetMCI. SM (COMPUTER_GRAPHIC) FIDELITY ON-LINE XPRESS+ TM Fidelity On-line Xpress+ software for Windows combines comprehensive portfolio management capabilities, securities trading and access to research and analysis tools . . . all on your desktop. Call Fidelity at 1-800-544-7272 or visit our Web site for more information on how to manage your investments via your PC. * WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. TO VISIT FIDELITY For directions and hours, please call 1-800-544-9797. ARIZONA 7373 N. Scottsdale Road Scottsdale, AZ CALIFORNIA 815 East Birch Street Brea, CA 851 East Hamilton Avenue Campbell, CA 527 North Brand Boulevard Glendale, CA 19100 Von Karman Avenue Irvine, CA 10100 Santa Monica Blvd. Los Angeles, CA 251 University Avenue Palo Alto, CA 1760 Challenge Way Sacramento, CA 7676 Hazard Center Drive San Diego, CA 455 Market Street San Francisco, CA 950 Northgate Drive San Rafael, CA 1400 Civic Drive Walnut Creek, CA 6300 Canoga Avenue Woodland Hills, CA COLORADO 1625 Broadway Denver, CO CONNECTICUT 48 West Putnam Avenue Greenwich, CT 265 Church Street New Haven, CT 300 Atlantic Street Stamford, CT 29 South Main Street West Hartford, CT DELAWARE 222 Delaware Avenue Wilmington, DE FLORIDA 4400 N. Federal Highway Boca Raton, FL 90 Alhambra Plaza Coral Gables, FL 4090 N. Ocean Boulevard Ft. Lauderdale, FL 1907 West State Road 434 Longwood, FL 8880 Tamiami Trail, North Naples, FL 2401 PGA Boulevard Palm Beach Gardens, FL 8065 Beneva Road Sarasota, FL 1502 N. Westshore Blvd. Tampa, FL GEORGIA 3445 Peachtree Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA HAWAII 700 Bishop Street Honolulu, HI ILLINOIS One North Franklin Street Chicago, IL 1415 West 22nd Street Oak Brook, IL 1700 East Golf Road Schaumburg, IL 3232 Lake Avenue Wilmette, IL INDIANA 4729 East 82nd Street Indianapolis, IN MAINE 3 Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD 1 West Pennsylvania Ave. Towson, MD MASSACHUSETTS 470 Boylston Street Boston, MA 155 Congress Street Boston, MA 25 State Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 416 Belmont Street Worcester, MA MICHIGAN 280 North Woodward Ave. Birmingham, MI 29155 Northwestern Hwy. Southfield, MI MINNESOTA 7600 France Avenue South Edina, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO 200 North Broadway St. Louis, MO NEW JERSEY 150 Essex Street Millburn, NJ 56 South Street Morristown, NJ 501 Route 17, South Paramus, NJ NEW YORK 1055 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 1271 Avenue of the Americas New York, NY 71 Broadway New York, NY 350 Park Avenue New York, NY NORTH CAROLINA 4611 Sharon Road Charlotte, NC 2200 West Main Street Durham, NC OHIO 600 Vine Street Cincinnati, OH 28699 Chagrin Boulevard Woodmere Village, OH OREGON 16850 SW 72 Avenue Tigard, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA TENNESSEE 6150 Poplar Road Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 4017 Northwest Parkway Dallas, TX 1155 Dairy Ashford Street Houston, TX 2701 Drexel Drive Houston, TX 400 East Las Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX 19740 IH 45 North Spring, TX UTAH 215 South State Street Salt Lake City, UT VIRGINIA 8180 Greensboro Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 511 Pine Street Seattle, WA WASHINGTON, DC 1900 K Street, N.W. Washington, DC WISCONSIN 595 North Barker Road Brookfield, WI INVESTMENT ADVISER (registered trademark) 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 Todd, Vice President Eric D. Roiter, Secretary Richard A. Silver, Treasurer Thomas D. Maher, Assistant Vice President John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer Thomas J. Simpson, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk * Peter S. Lynch William O. McCoy * Marvin L. Mann * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead 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/Redemption 1-800-544-7777 Account Assistance 1-800-544-6666 Product Information 1-800-544-8888 Retirement Accounts 1-800-544-4774 (8 a.m. - 9 p.m.) TDD Service 1-800-544-0118 for the deaf and hearing impaired (9 a.m. - 9 p.m. Eastern time) TouchTone Xpress (registered trademark) 1-800-544-5555 AUTOMATED LINE FOR QUICKEST SERVICE FIDELITY (REGISTERED TRADEMARK) U.S. GOVERNMENT RESERVES SEMIANNUAL REPORT MAY 31, 1998 CONTENTS PRESIDENT'S MESSAGE 3 NED JOHNSON ON INVESTING STRATEGIES. PERFORMANCE 4 HOW THE FUND HAS DONE OVER TIME. FUND TALK 6 THE MANAGER'S REVIEW OF FUND PERFORMANCE, STRATEGY AND OUTLOOK. INVESTMENT CHANGES 8 A SUMMARY OF MAJOR SHIFTS IN THE FUND'S INVESTMENTS OVER THE PAST SIX MONTHS AND ONE YEAR. INVESTMENTS 9 A COMPLETE LIST OF THE FUND'S INVESTMENTS. FINANCIAL STATEMENTS 12 STATEMENTS OF ASSETS AND LIABILITIES, OPERATIONS, AND CHANGES IN NET ASSETS, AS WELL AS FINANCIAL HIGHLIGHTS. NOTES 16 NOTES TO THE FINANCIAL STATEMENTS. 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 1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. To reduce expenses and demonstrate respect for our environment, we have initiated a project through which we will begin eliminating duplicate copies of most financial reports and prospectuses to most households, even if they have more than one account in the fund. If additional copies of financial reports, prospectuses or historical account information are needed, please call 1-800-544-6666. PRESIDENT'S MESSAGE (photo_of_Edward_C_Johnson_3d) DEAR SHAREHOLDER: While low interest rates and subdued inflation provided support for stock and bond markets in the U.S. during the first five months of 1998, concerns about continuing economic and political difficulties in Asia colored their performance. The stock market reached record heights due to stronger-than-expected corporate earnings, but retreated at times when concerns surfaced about how the Asian volatility would affect business prospects. The bond market benefited from these retreats, as investors sought alternatives offering lower volatility. While it's impossible to predict the future direction of the markets with any degree of certainty, there are certain basic principles that can help investors plan for their future needs. First, investors are encouraged to take a long-term view of their portfolios. If you can afford to leave your money invested through the inevitable up and down cycles of the financial markets, you will greatly reduce your vulnerability to any single decline. We know from experience, for example, that stock prices have gone up over longer periods of time, have significantly outperformed other types of investments and have stayed ahead of inflation. Second, you can further manage your investing risk through diversification. A stock mutual fund, for instance, is already diversified, because it invests in many different companies. You can increase your diversification further by investing in a number of different stock funds, or in such other investment categories as bonds. You should also keep money you'll need in the near future in a more stable investment. Finally, no matter what your time horizon or portfolio diversity, it makes good sense to follow a regular investment plan, investing a certain amount of money in a fund at the same time each month or quarter and periodically reviewing your overall portfolio. By doing so, you won't get caught up in the excitement of a rapidly rising market, nor will you buy all your shares at market highs. While this strategy - known as dollar cost averaging - won't assure a profit or protect you from a loss in a declining market, it should help you lower the average cost of your purchases. If you have questions, please call us at 1-800-544-8888. We are available 24 hours a day, seven days a week to provide you the information you need to make the investments that are right for you. Best regards, Edward C. Johnson 3d PERFORMANCE: THE BOTTOM LINE To evaluate a money market fund's historical performance, you can look at either total return or yield. Total return reflects the change in the value of an investment, assuming reinvestment of the fund's dividend income. 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 and 10 years total returns would have been lower. CUMULATIVE TOTAL RETURNS PERIODS ENDED MAY 31, 1998 PAST 6 PAST 1 PAST 5 PAST 10 MONTHS YEAR YEARS YEARS FIDELITY US GOVERNMENT RESERVES 2.64% 5.36% 25.95% 69.73% GOVERNMENT MONEY MARKET FUNDS AVERAGE 2.52% 5.10% 24.90% 67.85% 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 money market funds average, which reflects the performance of taxable money market funds with similar objectives tracked by IBC Financial Data, Inc. The past six months average represents a peer group of 221 money market funds. AVERAGE ANNUAL TOTAL RETURNS PERIODS ENDED MAY 31, 1998 PAST 1 PAST 5 PAST 10 YEAR YEARS YEARS FIDELITY US GOVERNMENT RESERVES 5.36% 4.72% 5.43% GOVERNMENT MONEY MARKET FUNDS AVERAGE 5.10% 4.55% 5.33% 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 6/2/98 3/3/98 12/2/97 9/2/97 6/3/97 FIDELITY U.S. 5.19% 5.26% 5.30% 5.26% 5.22% GOVERNMENT RESERVES GOVERNMENT MONEY 4.85% 4.90% 4.89% 4.87% 4.93% MARKET FUNDS AVERAGE 6/3/98 2/25/98 12/3/97 9/3/97 5/28/97 MMDA 2.51% 2.58% 2.62% 2.67% 2.66% Row: 1, Col: 1, Value: 5.19 Row: 1, Col: 2, Value: 4.85 Row: 1, Col: 3, Value: 2.51 Row: 2, Col: 1, Value: 5.26 Row: 2, Col: 2, Value: 4.9 Row: 2, Col: 3, Value: 2.58 Row: 3, Col: 1, Value: 5.3 Row: 3, Col: 2, Value: 4.89 Row: 3, Col: 3, Value: 2.62 Row: 4, Col: 1, Value: 5.26 Row: 4, Col: 2, Value: 4.87 Row: 4, Col: 3, Value: 2.67 Row: 5, Col: 1, Value: 5.22 Row: 5, Col: 2, Value: 4.930000000000001 Row: 5, Col: 3, Value: 2.66 6% - 5% - 4% - 3% - 2% - 1% - 0% Fidelity U.S. Government Reserves Government Money Market Funds Average MMDA YIELD refers to the income paid by the fund over a given period. Yields for money market funds are usually for seven-day periods, expressed as annual percentage rates. A yield that assumes income earned is reinvested or compounded is called an effective yield. The chart above shows the fund's current seven-day yield at quarterly intervals over the past year. You can compare these yields to the government money market funds average and the bank money market deposit account (MMDA) average. Figures for the government money market funds average are from IBC Financial Data, Inc. The MMDA average is supplied by BANK RATE MONITOR(Trademark). A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS WILL VARY, AND REFLECT PAST RESULTS RATHER THAN PREDICT FUTURE PERFORMANCE. COMPARING PERFORMANCE There are some important differences between a bank money market deposit account (MMDA) and a money market fund. First, the U.S. government neither insures nor guarantees a money market fund. In fact, there is no assurance that a money market fund will maintain a $1 share price. Second, a money market fund returns to its shareholders income earned by the fund's investments after expenses. This is in contrast to banks, which set their MMDA rates periodically based on current interest rates, competitors' rates, and internal criteria. (checkmark) FUND TALK: THE MANAGER'S OVERVIEW An interview with Robert Litterst, Portfolio Manager of Fidelity U.S. Government Reserves Q. BOB, WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE OVER THE PAST SIX MONTHS? A. While inflation has remained remarkably subdued during a period of strong economic growth, many felt that growth at this rate would result in a rise in inflation at some point. Nonetheless, the Federal Reserve Board has been patient, and appeared to be willing to tolerate strong growth until clear signs of rising inflation emerged. Another factor that tempered the Fed's need to adjust short-term interest rates was the Asian crisis and fear that a rate hike would further disrupt global financial markets. When all was said and done, the Fed has kept the benchmark federal funds rate - the rate banks charge each other for overnight loans - at 5.5% for more than a year now. Q. WERE THERE OTHER FACTORS THAT DROVE THE MARKET FOR SHORT-TERM U.S. GOVERNMENT SECURITIES? A. Yes, there were some developments in the U.S. Treasury market that affected government agency money market securities, because there is a correlation between how the two markets behave. As the U.S. budget deficit has declined, so have the financing needs of the U.S. Treasury. As a result of reduced issuance and pay-downs of various Treasury debt, the supply of Treasuries has fallen. Combined with strong demand from both foreign and domestic investors during the period, this situation pushed yields on Treasuries - and associated government money market securities - lower. Supply issues, pertaining to both U.S. Treasury securities and government agency securities, may have a considerable impact on the market going forward. Q. WHAT WAS YOUR STRATEGY? A. I continued to use a barbell strategy - concentrating the fund on either end of the maturity spectrum - investing in overnight to one-month securities on the one hand and issues with maturities of one year on the other. I've been purchasing longer-term securities at moments of market weakness when they presented attractive values. The very-short-term securities help to balance the portfolio and serve a defensive purpose that will help the fund if the Fed raises rates again. Although the fund's average maturity was shorter than its peers at the end of the period, the fund's overall average maturity tended to be longer than the average of its peers. Q. HOW DID THE FUND PERFORM? A. On May 31, 1998, the fund's seven-day yield was 5.18%, compared to 5.29% six months ago. The fund's total return for the six months was 2.64%, compared to the 2.52% total return for the government money market funds average tracked by IBC Financial Data, Inc. Q. WHAT'S YOUR OUTLOOK? A. We've continued to experience strong domestic economic growth amidst incredibly benign inflation statistics, which together - based on history - are somewhat difficult to reconcile. Generally, market observers expect growth to slow due to the normal ebb and flow of the economy and because it appears the impact of Asia will reduce our ability to export goods and services to that part of the world. The effect has been muted thus far, as real GDP - or gross domestic product adjusted for inflation - grew at an annual rate of 4.8% in the first quarter of 1998. Recently, however, evidence appeared to be mounting that the Asian crisis was affecting the U.S. economy. In fact, many market observers expect a sharp reduction in growth in the second quarter. It seems that financial instability in Asia is dominating Fed thinking at the moment, and I think that the Fed would not want to risk further destabilization by raising rates here. Accordingly, I believe the Fed will leave rates unchanged in the next few months. During this time, I hope to find good opportunities in short-term securities as market volatility continues. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND FACTS GOAL: income 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: 050 TRADING SYMBOL: FGRXX START DATE: November 3, 1981 SIZE: as of May 31, 1998, more than $1.2 billion MANAGER: Robert Litterst, since 1997; manager, several Fidelity and Spartan taxable money market funds; joined Fidelity in 1991 (checkmark) INVESTMENT CHANGES MATURITY DIVERSIFICATION DAYS % OF FUND ASSETS % OF FUND ASSETS % OF FUND ASSETS 5/31/98 11/30/97 5/31/97 0 - 30 69 58 67 31 - 90 9 12 15 91 - 180 12 18 5 181 - 397 10 12 13 WEIGHTED AVERAGE MATURITY 5/31/98 11/30/97 5/31/97 FIDELITY U.S. GOVERNMENT 51 DAYS 64 DAYS 61 DAYS RESERVES GOVERNMENT MONEY MARKET 53 DAYS 46 DAYS 47 DAYS FUNDS AVERAGE* ASSET ALLOCATION (% OF FUND'S INVESTMENTS) AS OF MAY 31, 1998 AS OF NOVEMBER 30, 1997 Row: 1, Col: 1, Value: 47.0 Row: 1, Col: 2, Value: 3.0 Row: 1, Col: 3, Value: 5.6 Row: 1, Col: 4, Value: 36.4 Row: 1, Col: 5, Value: 53.0 Row: 1, Col: 6, Value: 25.8 Federal agency issues 53% Repurchase agreements 47% Federal agency issues 53% Repurchase agreements 47% Row: 1, Col: 1, Value: 47.0 Row: 1, Col: 2, Value: 0.0 Row: 1, Col: 3, Value: 0.0 Row: 1, Col: 4, Value: 0.0 Row: 1, Col: 5, Value: 53.0 *SOURCE: IBC'S MONEY FUND REPORT(registered trademark) INVESTMENTS MAY 31, 1998 (UNAUDITED) Showing Percentage of Total Value of Investment in Securities FEDERAL AGENCIES - 53.1% DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) FANNIE MAE - AGENCY COUPONS - 27.9% 6/1/98 5.58% (a) $ 20,000 $ 19,992 6/2/98 5.63 (a) 12,000 11,995 6/5/98 5.53 (a) 33,000 32,973 6/10/98 5.50 10,000 9,999 6/12/98 5.59 (a) 10,000 10,000 6/15/98 5.53 (a) 45,000 44,995 6/17/98 5.53 (a) 25,000 24,986 6/26/98 5.46 14,000 14,058 8/14/98 5.59 (a) 14,000 13,989 8/14/98 5.71 13,000 12,996 8/14/98 5.80 10,000 9,995 8/28/98 5.55 (a) 45,000 44,961 9/9/98 5.77 6,000 5,998 9/9/98 5.79 5,000 4,998 11/20/98 5.73 13,000 12,991 2/12/99 5.43 12,000 11,986 2/19/99 5.43 8,000 7,992 2/23/99 5.45 6,000 5,995 2/23/99 5.47 7,000 6,993 2/26/99 5.56 13,000 12,976 3/16/99 5.52 14,000 13,987 3/26/99 5.55 18,000 17,985 352,840 FANNIE MAE - DISCOUNT NOTES - 3.8% 7/17/98 5.50 25,000 24,827 7/27/98 5.52 24,000 23,797 48,624 FEDERAL FARM CREDIT BANK - AGENCY COUPONS - 1.0% 6/10/98 5.53 (a) 12,000 11,995 FEDERAL FARM CREDIT BANK - DISCOUNT NOTES - 1.0% 9/2/98 5.76 (a) 13,000 12,996 FEDERAL HOME LOAN BANK - AGENCY COUPONS - 15.0% 6/1/98 5.58 (a) 20,000 19,992 6/1/98 5.60 (a) 14,000 13,997 6/2/98 5.53 (a) 18,000 17,999 6/9/98 5.89 14,000 14,000 6/11/98 5.88 3,500 3,500 6/12/98 5.81 7,000 7,000 7/7/98 5.45 11,000 11,002 FEDERAL AGENCIES - CONTINUED DUE ANNUALIZED YIELD AT PRINCIPAL AMOUNT VALUE (NOTE 1) DATE TIME OF PURCHASE (000S) (000S) FEDERAL HOME LOAN BANK - AGENCY COUPONS - CONTINUED 8/27/98 5.55% (a) $ 10,000 $ 9,992 9/18/98 5.76 20,000 19,998 9/24/98 5.71 9,000 8,997 9/24/98 5.34 13,000 13,007 10/23/98 5.70 12,000 11,996 10/23/98 5.73 12,000 11,995 12/17/98 5.81 14,000 13,996 3/26/99 5.58 12,000 11,985 189,456 FREDDIE MAC - AGENCY COUPONS - 2.9% 6/20/98 5.53 (a) 12,000 11,999 6/21/98 5.52 (a) 15,000 14,989 3/12/99 5.52 10,000 10,001 36,989 FREDDIE MAC - DISCOUNT NOTES - 0.6% 8/10/98 5.49 8,000 7,916 STUDENT LOAN MARKETING ASSOCIATION - AGENCY COUPONS - 0.9% 2/10/99 5.53 11,450 11,428 TOTAL FEDERAL AGENCIES 672,244 REPURCHASE AGREEMENTS - 46.9% MATURITY AMOUNT (000S) In a joint trading account (Notes 2 and 3) (U.S. Government Obligations): dated 5/29/98 due 6/1/98 At 5.64% $ 356,983 356,815 dated 4/3/98 due 6/22/98 At 5.52% 13,159 13,000 dated 4/21/98 due 6/22/98 At 5.51% 38,361 38,000 dated 4/24/98 due 6/23/98 At 5.51% 28,257 28,000 dated 4/28/98 due 6/25/98 At 5.54% 25,223 25,000 dated 4/6/98 due 6/26/98 At 5.53% 35,435 35,000 REPURCHASE AGREEMENTS - CONTINUED MATURITY AMOUNT VALUE (NOTE 1) (000S) (000S) In a joint trading account (Notes 2 and 3) (U.S. Government Obligations): - continued dated 5/29/98 due 6/29/98 At 5.55% $ 30,143 $ 30,000 dated 4/30/98 due 7/1/98 At 5.57% 5,048 5,000 dated 4/30/98 due 7/29/98 At 5.57% 2,089 2,060 dated 3/23/98 due 9/14/98 At 5.56% 61,622 60,000 TOTAL REPURCHASE AGREEMENTS 592,875 TOTAL INVESTMENT IN SECURITIES - 100% $ 1,265,119 Total Cost For Income Tax Purposes $ 1,265,119 LEGEND (d) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due dates on these types of securities reflect the next interest rate reset date or, when applicable, the final maturity date. INCOME TAX INFORMATION At November 30, 1997, the fund had a capital loss carryforward of approximately $61,000 all of which will expire on November 30, 2003. FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES AMOUNTS IN THOUSANDS (EXCEPT PER-SHARE AMOUNT) MAY 31, 1998 (UNAUDITED) ASSETS INVESTMENT IN SECURITIES, AT VALUE (INCLUDING $ 1,265,119 REPURCHASE AGREEMENTS OF $592,875) - SEE ACCOMPANYING SCHEDULE RECEIVABLE FOR FUND SHARES SOLD 11,442 INTEREST RECEIVABLE 8,242 TOTAL ASSETS 1,284,803 LIABILITIES PAYABLE FOR FUND SHARES REDEEMED $ 1,911 DISTRIBUTIONS PAYABLE 111 ACCRUED MANAGEMENT FEE 218 OTHER PAYABLES AND ACCRUED EXPENSES 315 TOTAL LIABILITIES 2,555 NET ASSETS $ 1,282,248 NET ASSETS CONSIST OF: PAID IN CAPITAL $ 1,282,291 ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (43) NET ASSETS, FOR 1,282,667 SHARES OUTSTANDING $ 1,282,248 NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER $1.00 SHARE ($1,282,248 (DIVIDED BY) 1,282,667 SHARES)
STATEMENT OF OPERATIONS AMOUNTS IN THOUSANDS SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED) INTEREST INCOME $ 35,835 EXPENSES MANAGEMENT FEE $ 1,303 TRANSFER AGENT FEES 1,421 ACCOUNTING FEES AND EXPENSES 73 NON-INTERESTED TRUSTEES' COMPENSATION 3 CUSTODIAN FEES AND EXPENSES 6 REGISTRATION FEES 28 AUDIT 16 LEGAL 2 MISCELLANEOUS 6 TOTAL EXPENSES BEFORE REDUCTIONS 2,858 EXPENSE REDUCTIONS (62) 2,796 NET INTEREST INCOME 33,039 NET REALIZED GAIN (LOSS) ON INVESTMENTS 18 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 33,057
STATEMENT OF CHANGES IN NET ASSETS AMOUNTS IN THOUSANDS SIX MONTHS ENDED YEAR ENDED MAY 31, 1998 NOVEMBER 30, (UNAUDITED) 1997 INCREASE (DECREASE) IN NET ASSETS OPERATIONS $ 33,039 $ 62,498 NET INTEREST INCOME NET REALIZED GAIN (LOSS) 18 24 NET INCREASE (DECREASE) IN NET ASSETS RESULTING 33,057 62,522 FROM OPERATIONS DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (33,039) (62,498) SHARE TRANSACTIONS AT NET ASSET VALUE OF $1.00 PER SHARE 815,155 1,599,242 PROCEEDS FROM SALES OF SHARES REINVESTMENT OF DISTRIBUTIONS FROM NET INTEREST INCOME 31,575 59,780 COST OF SHARES REDEEMED (854,746) (1,611,507) NET INCREASE (DECREASE) IN NET ASSETS AND SHARES (8,016) 47,515 RESULTING FROM SHARE TRANSACTIONS TOTAL INCREASE (DECREASE) IN NET ASSETS (7,998) 47,539 NET ASSETS BEGINNING OF PERIOD 1,290,246 1,242,707 END OF PERIOD $ 1,282,248 $ 1,290,246
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED YEARS ENDED NOVEMBER 30, TWO MONTHS ENDED YEARS ENDED MAY 31, 1998 NOVEMBER 30, SEPTEMBER 30, FINANCIAL HIGHLIGHTS (UNAUDITED) 1997 1996 1995 1994 1994 1993 SELECTED PER-SHARE DATA NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 INCOME FROM INVESTMENT OPERATIONS .026 .051 .050 .055 .008 .033 .025 NET INTEREST INCOME LESS DISTRIBUTIONS FROM NET INTEREST INCOME (.026) (.051) (.050) (.055) (.008) (.033) (.025) NET ASSET VALUE, END OF PERIOD $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 TOTAL RETURN B, C 2.64% 5.26% 5.12% 5.60% 0.78% 3.32% 2.57% RATIOS AND SUPPLEMENTAL DATA NET ASSETS, END OF PERIOD (IN MILLIONS) $ 1,282 $ 1,290 $ 1,243 $ 1,188 $ 1,130 $ 1,060 $ 1,043 RATIO OF EXPENSES TO AVERAGE NET ASSETS .45% A .48% .51% .55% .36% A, D .51% .73% RATIO OF EXPENSES TO AVERAGE NET ASSETS .44% A, E .48% .50% E .55% .36% A .51% .73% AFTER EXPENSE REDUCTIONS RATIO OF NET INTEREST INCOME TO AVERAGE 5.24% A 5.13% 5.02% 5.43% 4.77% A 3.27% 2.57% NET ASSETS
A ANNUALIZED B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. C TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE BEEN HIGHER. E FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS). NOTES TO FINANCIAL STATEMENTS For the period ended May 31, 1998 (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. The schedule of investments includes information regarding income taxes under the caption "Income Tax Information." INTEREST INCOME. Interest income, which includes amortization of premium and accretion of discount, is accrued as earned. EXPENSES. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust. DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid monthly from net interest income. SECURITY TRANSACTIONS. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. 2. OPERATING POLICIES. JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other affiliated entities of Fidelity Management & Research Company (FMR), may transfer uninvested cash balances into one or more joint trading accounts. These balances are invested in one or more repurchase agreements for U.S. Treasury or Federal Agency obligations. REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency securities are transferred to an account of the fund, or to the Joint Trading Account, at a bank custodian. The securities are marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest). FMR, the fund's investment adviser, is responsible for determining that the value of the underlying securities remains in accordance with the market value requirements stated above. 2. OPERATING POLICIES - CONTINUED RESTRICTED SECURITIES. The fund is permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. At the end of the period, the fund had no investments in restricted securities. 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 MAY 29, 1998, DUE JUNE 1, 1998 AT 5.64% Number of dealers or banks 7 Maximum amount with one dealer or bank 29.2% Aggregate principal amount of agreements $1,584,166,000 Aggregate maturity amount of agreements $1,584,910,867 Aggregate market value of transferred assets $1,621,699,699 Coupon rates of transferred assets 0% to 14.05% Maturity dates of transferred assets 8/1/99 to 8/1/37 DATED APRIL 3, 1998, DUE JUNE 22, 1998 AT 5.52% Number of dealers or banks 1 Maximum amount with one dealer or bank 100% Aggregate principal amount of agreements $200,000,000 Aggregate maturity amount of agreements $202,453,333 Aggregate market value of transferred assets $205,751,686 Coupon rates of transferred assets 0% Maturity dates of transferred assets 12/12/12 to 5/1/34 DATED APRIL 21, 1998, DUE JUNE 22, 1998 AT 5.51% Number of dealers or banks 1 Maximum amount with one dealer or bank 100% Aggregate principal amount of agreements $149,000,000 Aggregate maturity amount of agreements $150,413,927 Aggregate market value of transferred assets $151,982,806 Coupon rates of transferred assets 0% to 6% Maturity dates of transferred assets 7/1/23 to 5/1/28 3. JOINT TRADING ACCOUNT - CONTINUED SUMMARY OF JOINT TRADING - CONTINUED DATED APRIL 24, 1998, DUE JUNE 23, 1998 AT 5.51% Number of dealers or banks 1 Maximum amount with one dealer or bank 100% Aggregate principal amount of agreements $100,000,000 Aggregate maturity amount of agreements $100,918,333 Aggregate market value of transferred assets $103,122,593 Coupon rates of transferred assets 0% Maturity dates of transferred assets 2/1/19 to 6/1/37 DATED APRIL 28, 1998, DUE JUNE 25, 1998 5.54% Number of dealers or banks 1 Maximum amount with one dealer or bank 100% Aggregate principal amount of agreements $100,000,000 Aggregate maturity amount of agreements $100,892,556 Aggregate market value of transferred assets $103,022,365 Coupon rates of transferred assets 0% Maturity dates of transferred assets 6/1/23 to 8/1/34 DATED APRIL 6, 1998, DUE JUNE 26, 1998 5.53% Number of dealers or banks 1 Maximum amount with one dealer or bank 100% Aggregate principal amount of agreements $300,000,000 Aggregate maturity amount of agreements $303,732,750 Aggregate market value of transferred assets $310,196,339 Coupon rates of transferred assets 8.50% to 9% Maturity dates of transferred assets 6/15/16 to 2/15/26 DATED MAY 29, 1998, DUE JUNE 29, 1998 5.55% Number of dealers or banks 1 Maximum amount with one dealer or bank 100% Aggregate principal amount of agreements $180,000,000 Aggregate maturity amount of agreements $180,860,250 Aggregate market value of transferred assets $183,600,000 Coupon rates of transferred assets 8.50% Maturity dates of transferred assets 5/15/16 to 8/15/26 DATED APRIL 30, 1998, DUE JULY 1, 1998 5.57% Number of dealers or banks 1 Maximum amount with one dealer or bank 100% Aggregate principal amount of agreements $15,000,000 Aggregate maturity amount of agreements $15,143,892 Aggregate market value of transferred assets $15,445,957 Coupon rates of transferred assets 0% Maturity dates of transferred assets 9/1/24 to 7/1/27 3. JOINT TRADING ACCOUNT - CONTINUED SUMMARY OF JOINT TRADING - CONTINUED DATED APRIL 30, 1998, DUE JULY 29, 1998 AT 5.57% Number of dealers or banks 1 Maximum amount with one dealer or bank 100% Aggregate principal amount of agreements $80,000,000 Aggregate maturity amount of agreements $81,114,000 Aggregate market value of transferred assets $81,975,028 Coupon rates of transferred assets 8.50% Maturity dates of transferred assets 6/15/16 to 2/15/28 DATED MARCH 23, 1998, DUE SEPTEMBER 14, 1998 5.56% Number of dealers or banks 1 Maximum amount with one dealer or bank 100% Aggregate principal amount of agreements $300,000,000 Aggregate maturity amount of agreements $308,108,333 Aggregate market value of transferred assets $310,065,367 Coupon rates of transferred assets 8.50% to 9% Maturity dates of transferred assets 1/15/16 to 2/15/27 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES. MANAGEMENT FEE. As the fund's investment adviser, FMR receives a monthly fee that is calculated by multiplying the sum of two components, a group fee rate plus a fixed individual fund fee rate, applied to the average net assets of the fund and adding 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 .1100% to .3700% for the period. 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 individual fund fee rate is .03%. 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% (annualized) of average net assets. For the period, the management fee was equivalent to an annualized rate of .21% of average net assets. SUB-ADVISER FEE. As the fund's investment sub-adviser, Fidelity Investments Money Management, Inc. (formerly FMR Texas, Inc.), a wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the management fee payable to FMR. The fee is paid prior to any voluntary expense reimbursements which may be in effect. TRANSFER AGENT FEES. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, is the fund's transfer, dividend disbursing and shareholder servicing agent. FSC 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED TRANSFER AGENT FEES - CONTINUED 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 .23% 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. 5. EXPENSE REDUCTIONS. The fund has entered into an arrangement with its 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 transfer agent fees were reduced by $62,000 under this arrangement. MANAGING YOUR INVESTMENTS Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day. BY PHONE Fidelity TouchTone Xpress(registered trademark) provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security. (PHONE_GRAPHIC)TOUCHTONE XPRESS 1-800-544-5555 PRESS For mutual fund and brokerage trading. For quotes.* For account balances and holdings. To review orders and mutual fund activity. To change your PIN. To speak to a Fidelity representative. 0 * BY PC Fidelity's Web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services. (COMPUTER_GRAPHIC)FIDELITY'S WEB SITE WWW.FIDELITY.COM If you are not currently on the Internet, call Fidelity at 1-800-544-7272 for significant savings on Web access from internetMCI. SM (COMPUTER_GRAPHIC) FIDELITY ON-LINE XPRESS+ TM Fidelity On-line Xpress+ software for Windows combines comprehensive portfolio management capabilities, securities trading and access to research and analysis tools . . . all on your desktop. Call Fidelity at 1-800-544-7272 or visit our Web site for more information on how to manage your investments via your PC. * WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND RETURN WILL VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS MEANS THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO ASSURANCE THAT MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. TOTAL RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. TO VISIT FIDELITY For directions and hours, please call 1-800-544-9797. ARIZONA 7373 N. Scottsdale Road Scottsdale, AZ CALIFORNIA 815 East Birch Street Brea, CA 851 East Hamilton Avenue Campbell, CA 527 North Brand Boulevard Glendale, CA 19100 Von Karman Avenue Irvine, CA 10100 Santa Monica Blvd. Los Angeles, CA 251 University Avenue Palo Alto, CA 1760 Challenge Way Sacramento, CA 7676 Hazard Center Drive San Diego, CA 455 Market Street San Francisco, CA 950 Northgate Drive San Rafael, CA 1400 Civic Drive Walnut Creek, CA 6300 Canoga Avenue Woodland Hills, CA COLORADO 1625 Broadway Denver, CO CONNECTICUT 48 West Putnam Avenue Greenwich, CT 265 Church Street New Haven, CT 300 Atlantic Street Stamford, CT 29 South Main Street West Hartford, CT DELAWARE 222 Delaware Avenue Wilmington, DE FLORIDA 4400 N. Federal Highway Boca Raton, FL 90 Alhambra Plaza Coral Gables, FL 4090 N. Ocean Boulevard Ft. Lauderdale, FL 1907 West State Road 434 Longwood, FL 8880 Tamiami Trail, North Naples, FL 2401 PGA Boulevard Palm Beach Gardens, FL 8065 Beneva Road Sarasota, FL 1502 N. Westshore Blvd. Tampa, FL GEORGIA 3445 Peachtree Road, N.E. Atlanta, GA 1000 Abernathy Road Atlanta, GA HAWAII 700 Bishop Street Honolulu, HI ILLINOIS One North Franklin Street Chicago, IL 1415 West 22nd Street Oak Brook, IL 1700 East Golf Road Schaumburg, IL 3232 Lake Avenue Wilmette, IL INDIANA 4729 East 82nd Street Indianapolis, IN MAINE 3 Canal Plaza Portland, ME MARYLAND 7401 Wisconsin Avenue Bethesda, MD 1 West Pennsylvania Ave. Towson, MD MASSACHUSETTS 470 Boylston Street Boston, MA 155 Congress Street Boston, MA 25 State Street Boston, MA 300 Granite Street Braintree, MA 44 Mall Road Burlington, MA 416 Belmont Street Worcester, MA MICHIGAN 280 North Woodward Ave. Birmingham, MI 29155 Northwestern Hwy. Southfield, MI MINNESOTA 7600 France Avenue South Edina, MN MISSOURI 700 West 47th Street Kansas City, MO 8885 Ladue Road Ladue, MO 200 North Broadway St. Louis, MO NEW JERSEY 150 Essex Street Millburn, NJ 56 South Street Morristown, NJ 501 Route 17, South Paramus, NJ NEW YORK 1055 Franklin Avenue Garden City, NY 999 Walt Whitman Road Melville, L.I., NY 1271 Avenue of the Americas New York, NY 71 Broadway New York, NY 350 Park Avenue New York, NY NORTH CAROLINA 4611 Sharon Road Charlotte, NC 2200 West Main Street Durham, NC OHIO 600 Vine Street Cincinnati, OH 28699 Chagrin Boulevard Woodmere Village, OH OREGON 16850 SW 72 Avenue Tigard, OR PENNSYLVANIA 1735 Market Street Philadelphia, PA 439 Fifth Avenue Pittsburgh, PA TENNESSEE 6150 Poplar Road Memphis, TN TEXAS 10000 Research Boulevard Austin, TX 4017 Northwest Parkway Dallas, TX 1155 Dairy Ashford Street Houston, TX 2701 Drexel Drive Houston, TX 400 East Las Colinas Blvd. Irving, TX 14100 San Pedro San Antonio, TX 19740 IH 45 North Spring, TX UTAH 215 South State Street Salt Lake City, UT VIRGINIA 8180 Greensboro Drive McLean, VA WASHINGTON 411 108th Avenue, N.E. Bellevue, WA 511 Pine Street Seattle, WA WASHINGTON, DC 1900 K Street, N.W. Washington, DC WISCONSIN 595 North Barker Road Brookfield, WI INVESTMENT ADVISER Fidelity Management & Research Company Boston, MA (REGISTERED TRADEMARK) 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 Litterst, Vice President Eric D. Roiter, Secretary Richard A. Silver, Treasurer Thomas D. Maher, Assistant Vice President John H. Costello, Assistant Treasurer Leonard M. Rush, Assistant Treasurer Thomas J. Simpson, Assistant Treasurer BOARD OF TRUSTEES Ralph F. Cox * Phyllis Burke Davis * Robert M. Gates * Edward C. Johnson 3d E. Bradley Jones * Donald J. Kirk * Peter S. Lynch William O. McCoy * Marvin L. Mann * Gerald C. McDonough * Robert C. Pozen Thomas R. Williams * ADVISORY BOARD J. Gary Burkhead GENERAL DISTRIBUTOR Fidelity Distributors Corporation Boston, MA TRANSFER AND SHAREHOLDER SERVICING AGENT Fidelity Service Company, Inc. Boston, MA * INDEPENDENT TRUSTEES 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 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 -----END PRIVACY-ENHANCED MESSAGE-----