SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO 2-77909)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 26 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Daily Money Fund
(Exact Name of Registrant as Specified in Declaration of Trust)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code (617) 570-7000
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, MA 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) Immediately upon filing pursuant to paragraph (b)
( ) On ( ) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)
(x ) On (September 19, 1994 ) pursuant to paragraph (a)
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the notice required by
such rule on September 30, 1994.
DAILY MONEY FUND:
U.S. TREASURY INCOME PORTFOLIO
CROSS REFERENCE SHEET
PART B STATEMENT OF ADDITIONAL INFORMATION
10,11 Cover Page
12 FMR; Fund Organization
13a,b,c Investment Policies, Risks, and Limitations
d *
14a,b Trustees and Officers
c *
15a *
b Fund Organization
c *
16a,(i,ii) FMR; Trustees and Officers
a(iii),b,c,d Management Contract, Distribution and Service Plan
e Portfolio Transactions
f Management Contract, Distribution and Service Plan
g *
h Description of the Fund
i Management Contracts, Distribution and Service Plan
17a Portfolio Transactions
b *
c,d Portfolio Transactions
e *
18a Description of the Fund
b *
19a Management Contract, Distribution and Service Plan
b How to Invest, Exchange and Redeem
20 Distributions and Taxes
21a(i,ii) Management Contract, Distribution and Service Plan
22 Performance
23 Financial Statements for the Portfolios' fiscal year ended July 31, 1994
will be filed by subsequent amendment.
*Not Applicable
DAILY MONEY FUND:
U.S. TREASURY INCOME PORTFOLIO
CROSS REFERENCE SHEET
PART A PROSPECTUS CAPTION
1 Cover Page
2 Summary of Portfolio Expenses
3a,b *
c Performance
4a(i) The Portfolio and the Fidelity Organization
a(ii),b,c Investment Objective; Investment Policies, Risks, and
Limitations; Appendix
5a The Portfolio and the Fidelity Organization
b,c,d,e Management Contract, Distribution and Service Plan
f Portfolio Transactions
6a(i) The Portfolio and the Fidelity Organization
a(ii) How to Invest, Exchange and Redeem
a(iii) The Portfolio and the Fidelity Organization
b.c.d *
f,g How to Invest, Exchange and Redeem; Distributions and Taxes
7a Management Contract, Distribution and Service Plan
b(i,ii) How to Invest, Exchange and Redeem
b(iii,iv) *
b(v) How to Invest, Exchange and Redeem
c *
d How to Invest, Exchange and Redeem
e,f(i,ii) Management Contract, Distribution and Service Plan
f(iii) *
8 How to Invest, Exchange and Redeem
9 *
*Not Applicable
82 DEVONSHIRE STREET
FIDELITY U.S. TREASURY INCOME PORTFOLIO BOSTON, MASSACHUSETTS 02109
__________________________________________________________________________
___________________________________
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 19, 1994
Fidelity U.S. Treasury Income Portfolio (the Portfolio), a portfolio of
Daily Money Fund (the Fund), offers institutional, corporate and individual
investors a convenient and economical means of investing in a
professionally managed portfolio. The Portfolio seeks as high a level of
current income as is consistent with the security of principal and
liquidity. The Portfolio invests only in U.S. Treasury securities, namely
bills, notes, bonds, and other direct obligations of the U.S. Treasury that
are guaranteed as to principal and interest by the full faith and credit of
the U.S. government. The Portfolio provides income that is exempt from
state and local income tax (in most states) under state law.
AN INVESTMENT IN THE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE PORTFOLIO WILL
MAINTAIN A STABLE $1.00 SHARE PRICE.
This Prospectus and Statement of Additional Information is designed to
provide investors with information that they should know before investing.
Please read and retain this document for future reference. The Portfolio's
financial statements and financial highlights, included in the Annual
Report, for the fiscal period ended July 31, 1994, are incorporated herein
by reference. To obtain additional copies of these documents, please call
the number below.
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 RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
For further information, or assistance in opening a new account, please
call:
NATIONWIDE 800-843-3001
If you are investing through a Financial Institution, contact that
Institution directly.
__________________________________________________________________________
___________________________________
TABLE OF CONTENTS
Summary of Portfolio Expenses 2
Portfolio Summary 2
Financial Highlights 3
Investment Objective 3
Investment Policies, Risks, and Limitations 3
How to Invest, Exchange and Redeem 4
Distributions and Taxes 7
Portfolio Transactions 8
Performance 9
Management Contract, Distribution and Service Plan 10
The Portfolio and the Fidelity Organization 12
Trustees and Officers 14
Appendix . 16
Financial Statements . 16
__________________________________________________________________________
___________________________________ THESE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SUMMARY OF PORTFOLIO EXPENSES
The purpose of the table below is to assist investors in understanding the
various costs and expenses that an investor in the Portfolio would bear
directly or indirectly. This expense summary format below was developed for
use by all mutual funds to help investors make their investment decisions.
This expense information should be considered along with other important
information including the Portfolio's investment objective and past
performance. There are no transaction expenses associated with purchases or
sales of the Portfolio's shares.
A. ANNUAL OPERATING EXPENSES
(as a percentage of average net assets):
Management Fees .20%*
Other Expenses .00
TOTAL OPERATING EXPENSES .20%
* NET OF REIMBURSEMENT
B. EXAMPLE:
Investors would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) redemption at the end of each time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$2 $6 $11 $26
EXPLANATION OF TABLE
A. ANNUAL OPERATING EXPENSES. Management fees are based on the Portfolio's
historical expenses. Management fees are paid by the Portfolio to Fidelity
Management & Research Company (FMR) for managing its investments and
business affairs. FMR is responsible for the payment of all expenses of the
Portfolio with the exception of certain limited expenses. Please refer to
the section "Management Contract, Distribution and Service Plan" on page ,
for further information.
FMR has voluntarily agreed to temporarily limit the total operating
expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses) to an annual rate of .20% of the Portfolio's
average net assets. If this agreement had not been in effect, the Total
Operating Expenses (which include Management Fees and Other Expenses) would
have been .42%.
B. EXAMPLE. The hypothetical example illustrates the expenses associated
with a $1,000 investment in the Portfolio over periods of one, three, five,
and ten years based on expenses in the table above and an assumed annual
rate of return of 5%. THE RETURN OF 5% AND EXPENSES SHOULD NOT BE
CONSIDERED INDICATIONS OF ACTUAL OR EXPECTED PORTFOLIO PERFORMANCE OR
EXPENSES, BOTH OF WHICH MAY VARY.
PORTFOLIO SUMMARY
INVESTMENT OBJECTIVE. The Portfolio seeks as high a level of current income
as is consistent with the security of principal and liquidity, and to
maintain a constant net asset value per share (NAV) of $1.00. The Portfolio
invests only in U.S. Treasury securities, namely bills, notes, bonds, and
other direct obligations of the U.S. Treasury that are guaranteed as to
payment of principal and interest by the full faith and credit of the U.S.
government.
INVESTING IN THE PORTFOLIO. The Portfolio's shares may be purchased at the
next determined NAV without a sales charge. The Portfolio requires a
minimum initial investment of $100,000. Additional investments may be made
in any amount. For immediate acceptance of purchases, federal funds must be
transmitted. Investors should be aware that there is a possibility that
unusual changes in interest rates could cause the Portfolio's share price
to change, although the Portfolio only invests in the highest quality
securities. See "How to Invest" on page .
REDEMPTION OF SHARES. Investors may redeem all or any part of the value of
their accounts by instructing the Portfolio to redeem shares as described
under "How to Redeem" on page . Redemptions may be requested by telephone
and are effected at the NAV next determined after receipt of the request.
Amounts redeemed will be wired to the investor's bank account designated on
the account application.
INVESTMENT ADVISER. FMR, 82 Devonshire Street, Boston, MA 02109, is the
investment adviser to the Portfolio. FMR, one of the largest investment
management organizations in the United States, serves as investment adviser
to investment companies which had aggregate net assets of more than $___
billion and more than __ million accounts as of July 31, 1994. FMR has
entered into a sub-advisory agreement with FMR Texas Inc. (FMR Texas)
pursuant to which FMR Texas has primary responsibility for providing
investment management services to the Portfolio. See the sections
"Management Contract, Distribution and Service Plan" and "FMR" on pages
and , respectively.
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVE
The Portfolio's investment objective is to seek as high a level of current
income as is consistent with the security of principal and liquidity, and
to maintain a constant NAV of $1.00 per share. The Portfolio invests only
in U.S. Treasury securities, namely bills, notes and bonds and other direct
obligations of the U.S. Treasury that are guaranteed as to payment of
principal and interest by the full faith and credit of the U.S. government.
The Portfolio's investment objective is fundamental and can only be changed
by vote of a majority of the outstanding shares of the Portfolio.
The Portfolio may not always achieve its objective, but it will follow the
investment style described in the following paragraphs. The Portfolio's
investments may bear fixed or variable rates of interest, and its share
price and yield are not guaranteed by the U.S. government.
INVESTMENT POLICIES, RISKS, AND LIMITAT IONS
The Portfolio limits its investments to those U.S. Treasury securities
whose interest is specifically exempt from state and local income taxes
under federal law; of course, the interest is not exempt from federal
income tax. However, shareholders do not directly receive interest on U.S.
government securities, but rather receive dividends from the Portfolio that
are derived from such interest. Most states allow the character of the
Portfolio's income to pass through to its shareholders, so that
distributions from the Portfolio are exempt from state and local income
taxes to the extent that they are derived from interest that is exempt from
such taxes when received directly by a taxpaying shareholder. See
"Distributions and Taxes" on page for further information. The Portfolio
does not engage in repurchase agreements because income from such
investments is generally not exempt from state and local income taxes.
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board
of Trustees, the Portfolio may purchase only high quality securities
that FMR believes present minimal credit risks. To be considered high
quality, a security must be a U.S. government security; rated in accordance
with applicable rules in one of the two highest categories for short-term
securities by at least two nationally recognized rating services (or by
one, if only one rating service has rated the security); or, if unrated,
judged to be of equivalent quality by FMR. The Portfolio currently intends
to limit its investments to securities with remaining maturities of 397
days or less, and to maintain a dollar-weighted average maturity of 90 days
or less.
SUITABILITY. The Portfolio is designed as an economical and convenient
vehicle for institutional, corporate and individual investors who seek to
obtain the yields available from money market instruments and income that
is free from state and local income taxes in most states, while maintaining
liquidity. By itself, the Portfolio does not constitute a balanced
investment plan. Investors should recognize that many securities can
provide a higher yield than U.S. Treasury securities, although they will
not provide the same high quality and security of principal, and may not
provide state and local income tax advantages.
The Portfolio offers the advantages associated with large purchasing power.
Generally, in purchasing money market investments from dealers, the
percentage difference between the bid and ask prices tends to decrease as
the size of the transaction increases. The Portfolio also offers investors
the opportunity to participate in a portfolio of U.S. Treasury securities
which is more diversified than the investor's investment might otherwise
permit.
Investment in the Portfolio relieves the investor of many management and
administrative burdens usually associated with the direct purchase and sale
of money market instruments. These include surveying the market for the
best terms at which to buy and sell; scheduling and monitoring maturities
and reinvestments; receipt, delivery and safekeeping of securities; and
portfolio record keeping.
The Portfolio's ability to achieve its investment objective depends on the
quality and maturity of its investments. Although the Portfolio's policies
are designed to help maintain a stable $1.00 share price, all money market
instruments can change in value when interest rates or issuers'
creditworthiness change, or if an issuer or guarantor of a security fails
to pay interest or principal when due. If these changes in value were large
enough, the Portfolio's share price could fall below $1.00. In general,
securities with longer maturities are more vulnerable to price changes,
although they may provide higher yields.
INVESTMENT LIMITATIONS. Unless otherwise noted, whenever an investment
policy or limitation states a maximum percentage of the Portfolio's assets
which may be invested in any security or other asset or sets forth a policy
regarding quality standards, such standards or percentage limitation shall
be determined immediately after and as a result of the Portfolio's
acquisition of such security or other asset. Accordingly, any later
increase or decrease in percentage resulting from a change in values, net
assets, or other circumstances will not be considered when determining
whether the investment complies with the Portfolio's investment policies
and limitations.
The Portfolio's fundamental investment policies and limitations may not be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (1940 Act) )
of the Portfolio. However, except for the Portfolio's investment objective
and the numbered investment limitations set forth below, the investment
policies and limitations described in this Prospectus and Statement of
Additional Information are not fundamental and may be changed without
shareholder approval. The following are the Portfolio's fundamental
investment limitations set forth in their entirety. The Portfolio may not:
1. issue senior securities, except as permitted under the 1940 Act;
2. borrow money, except that the Portfolio may (i) borrow money for
temporary or emergency purposes (not for leveraging or investment) and (ii)
engage in reverse repurchase agreements for any purpose; provided that (i)
and (ii) in combination do not exceed 33 1/3% of the Portfolio's total
assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that come to exceed this amount will be reduced
within three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
3. underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
4. purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities), if, as a result, more than 25% of the Portfolio's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
5. purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Portfolio
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
6. purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; and
7. lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
8. The Portfolio may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objectives, policies and limitations as the
Portfolio.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL:
(i) The Portfolio may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an affiliate
serves as investment advisor or (b) by engaging in reverse repurchase
agreements with any party (reverse repurchase agreements are treated as
borrowings for purposes of fundamental investment limitation 2). The
Portfolio will not purchase any security while borrowings representing more
than 5% of its total assets are outstanding.
The Portfolio will not borrow from other portfolios advised by FMR or its
affiliates if total outstanding borrowings immediately after such borrowing
would exceed 15% of the Portfolio's total assets.
(ii) Subject to revision upon 90 days' notice to shareholders, the
Portfolio does not intend to engage in reverse repurchase agreements.
(iii) The Portfolio does not currently intend to make loans, but this
limitation does not apply to purchases of debt securities.
(iv) The Portfolio does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies, and
limitations as the Portfolio.
For the Portfolio's policies on quality and maturity, see the section
entitled "Quality and Maturity" on page 3.
HOW TO INVEST, EXCHANGE AND REDEEM
Shares of the Portfolio are offered continuously and may be purchased at
the NAV next determined after an order is received and accepted. The
Portfolio does not impose any sales charge in connection with purchases of
its shares, although institutions may charge their clients fees in
connection with purchases and sales for the accounts of their clients. The
Portfolio reserves the right to suspend the offering of shares for a period
of time. The Portfolio also reserves the right to reject any specific
purchase order including certain purchases by exchange (see "How to
Exchange" on page 5). Purchase orders may be refused if, in FMR's opinion,
they are of a size that would disrupt management of the Portfolio.
Investments in the Portfolio must be made using the Federal Reserve Wire
System. Checks will not be accepted as a means of investment.
SHARE PRICE. The NAV for the Portfolio is determined by Fidelity Service
Co. (Service), 82 Devonshire Street, Boston, MA 02109 as of 12:00 noon,
Eastern time, each day the Portfolio is open for business. (See "Holiday
Schedule" on page .) The NAV of the Portfolio is determined by adding the
value of all securities and other assets of the Portfolio, deducting its
actual and accrued liabilities, and dividing by the number of Portfolio
shares outstanding. (See "How Net Asset Value is Determined" on page .)
MINIMUM INVESTMENT AND ACCOUNT BALANCE. The minimum initial investment to
establish a new account in the Portfolio is $100,000. Subsequent
investments may be made in any amount. To keep an account open, a minimum
balance of $100,000 must be maintained. If an account balance falls below
$100,000 due to redemption, the Portfolio may close the account and wire
the proceeds to the bank account of record. An investor will be notified if
the minimum balance is not being maintained and will be allowed 30 days to
make additional investments before the account is closed. For the purposes
of determining the minimum balance, multiple accounts invested in the
Portfolio will be aggregated.
HOW TO INVEST. An initial investment in the Portfolio must be preceded or
accompanied by a completed, signed application. Unless you already have a
Fidelity mutual fund account, you must complete and sign the application.
The application should be forwarded to:
Fidelity Investments Client Services
82 Devonshire Street ZR5
Boston, MA 02109
An investor may purchase shares of the Portfolio by wiring funds through
the Federal Reserve Wire System to the Portfolio's custodian bank. In order
to receive same-day acceptance of the investment, investors must telephone
Institutional Trading before 12:00 noon, Eastern time, to advise them of
the wire and for wiring instructions:
NATIONWIDE 800-343-6310
IN MASSACHUSETTS 800-462-2603 OR 617-439-0270
Investors will be entitled to the dividend declared by the Portfolio on the
day of purchase, provided the Portfolio's custodian bank receives the wire
by the close of the Federal Reserve Wire System on the day the purchase
order is accepted. Investors are advised to wire funds as early in the day
as possible, and to provide advance notice to Institutional Trading for
large transactions.
HOW TO EXCHANGE. The Portfolio's shares may be exchanged (subject to the
minimum initial investment requirement of the fund whose shares are being
purchased) for shares of other Fidelity funds that are registered in the
investor's state. Exchanges must be made between accounts that are
registered in the same name, address, and taxpayer identification number.
Investors must consult the prospectus of the fund to be acquired to
determine eligibility and suitability.
TO EXCHANGE BY TELEPHONE. Exchanges may be requested by calling
Institutional Trading:
NATIONWIDE 800-343-6310
IN MASSACHUSETTS 800-462-2603 OR 617-439-0270
TO EXCHANGE BY MAIL. Written requests for exchange should contain the name,
account number, and number of shares to be redeemed, and the name of the
fund whose shares are being purchased. The letter must be signed by a
person authorized to act on the account. Letters should be sent to Client
Services:
Fidelity Investments Client Services
82 Devonshire Street ZR5
Boston, MA 02109
An exchange involves the redemption of all or a portion of the shares of
one fund and the purchase of shares in another fund. Shares will be
redeemed at the next-determined NAV following receipt of the exchange
order. Shares of the fund to be acquired will be purchased at its
next-determined NAV after redemption proceeds are made available. If you
exchange into a fund with a sales charge, you pay the percentage difference
between that fund's sales charge and any sales charge you already have paid
in connection with the shares you are exchanging. Investors should note
that under certain circumstances, the Portfolio may take up to seven days
to make redemption proceeds available for the exchange purchase of shares
of another fund. In addition, the Portfolio hereby reserves the right at
any time, without prior notice, to refuse exchange purchases by any person
or group if, in FMR's judgment, the Portfolio would be unable to invest
effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected. Your exchanges may be
restricted or refused if the Portfolio receives or anticipates simultaneous
orders affecting significant portions of the Portfolio's assets. In
particular, a pattern of exchanges that coincide with a "market timing"
strategy may be disruptive to the Portfolio. Although the Portfolio will
attempt to give you prior notice whenever it is reasonably able to do so,
it may impose these restrictions at any time. The exchange privilege may be
modified or terminated at any time.
Pursuant to Rule 11a-3 under the the 1940 Act, the Portfolio is required to
give shareholders at least 60 days' notice prior to terminating or
modifying the Portfolio's exchange privilege. Under the Rule, the 60 day
notification requirement may be waived if (i) the only effect of a
modification would be to reduce or eliminate an administrative fee,
redemption fee or deferred sales charge ordinarily payable at the time of
exchange, or (ii) the Portfolio suspends the redemption of shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
HOW TO REDEEM. Shareholders may redeem all or any part of the value of
their account(s) on any business day. Redemptions may be requested by
telephone and are effected at the NAV next determined after receipt of the
redemption request.
Shareholders must designate on their applications their U.S. commercial
bank account(s) into which they wish redemption proceeds deposited. A
shareholder may change the bank account(s) designated to receive amounts
redeemed at any time prior to making a redemption request. A letter of
instruction, including a signature guarantee, should be sent to Client
Services. Signature guarantees will be accepted from banks, brokers,
dealers, municipal securities dealers, municipal securities brokers,
government securities dealers, government securities brokers, credit unions
(if authorized under state law), national securities exchanges, registered
securities associations, clearing agencies and savings associations.
Redemption proceeds will be wired via the Federal Reserve Wire System to
the bank account of record on the same day a redemption request is
received, provided it is made before 12:00 noon Eastern time. Shares
redeemed will not receive the dividend declared on the day of redemption.
Redemption requests can be made by calling Institutional Trading:
NATIONWIDE 800-343-6310
IN MASSACHUSETTS 800-462-2603 OR 617-439-0270
There is no charge imposed for wiring of redemption proceeds. If you
purchase shares through a financial institution, they may charge a fee for
these services.
Under the 1940 Act, the right of redemption may be suspended or the date of
payment postponed for more than seven days at times when the New York Stock
Exchange (NYSE) is closed, other than customary weekend or holiday
closings, or when trading on the NYSE is restricted, or under certain
emergency circumstances as determined by the Securities and Exchange
Commission (SEC). If investors are unable to execute a transaction by
telephone (for example, during time of unusual market activity) they may
consider placing their order by mail. In case of the suspension of the
right of redemption, investors may either withdraw their request for
redemption or receive payment based on the NAV next determined after
termination of the suspension.
ADDITIONAL INFORMATION. You may initiate many transactions by telephone.
Note that Fidelity will not be responsible for any losses resulting from
unauthorized transactions if it follows reasonable procedures designed to
verify the identity of the caller. Fidelity will request personalized
security codes or other information, and may also record calls. You should
verify the accuracy of your confirmation statements immediately after you
receive them. If you do not want the ability to redeem and exchange by
telephone, call Fidelity for instructions.
In order to allow FMR to manage the Portfolio effectively, investors are
strongly urged to initiate all trades (investments, exchanges or
redemptions of shares) as early in the day as possible and to notify the
Portfolio at least one day in advance of transactions in excess of $5
million. In advising the Portfolio of such transactions, the name of the
registered shareholder and the account number must be supplied for each
transaction.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the Portfolio's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
INVESTOR ACCOUNTS. Fidelity Investments Institutional Operations Company
(FIIOC) is the transfer, dividend disbursing and shareholder servicing
agent for the Portfolio and maintains an account for each investor
expressed in terms of full and fractional shares of the Portfolio rounded
to the nearest 1/1000th of a share.
The Portfolio does not issue share certificates, but FIIOC mails investors
a confirmation of each investment or redemption from their account. Within
ten days after the end of each month, FIIOC will send investors a statement
setting forth the transactions in their account for the month and the
month-end balance of full and fractional shares held in the account. The
cost of the investor services described above are paid by FMR.
SUBACCOUNTING AND SPECIAL SERVICES. Special processing has been arranged
with FIIOC for banks, corporations and other institutions that wish to open
multiple accounts (a master account and subaccounts). An investor wishing
to utilize FIIOC's subaccounting facilities or other special services for
individual or multiple accounts will be required to enter into a separate
agreement with FIIOC. Charges for these services, if any, will be
determined on the basis of the level of services to be rendered.
Subaccounts may be opened with the initial investment or at a later date.
HOLIDAY SCHEDULE. The Portfolio is open for business and its NAV is
calculated every day that both the Federal Reserve Bank of New York (New
York Fed) and the NYSE are open for trading. The following holiday closings
have been scheduled for 1994: Dr. Martin Luther King, Jr. Day (observed),
Presidents' Day, Good Friday, Memorial Day (observed), Independence Day
(observed), Labor Day, Columbus Day (observed), Veterans' Day (observed),
Thanksgiving Day, and Christmas Day (observed). Although FMR expects the
same holiday schedule, with the addition of New Year's Day, to be observed
in the future, the New York Fed or the NYSE may modify its holiday schedule
at any time. The right is reserved to advance the time by which purchase
and redemption orders must be received on any day: (1) that the
principal government securities markets close early, such as on days in
advance of holidays generally observed by participants in such markets; (2)
the New York Fed or NYSE close early, or (3) as permitted by the SEC. To
the extent that the Portfolio's securities are traded in other markets on
days the New York Fed or the NYSE is closed, the Portfolio's NAV may be
affected on days when investors do not have access to the Portfolio to
purchase or redeem shares. Certain Fidelity funds may follow different
holiday closing schedules.
HOW NET ASSET VALUE IS DETERMINED. The Portfolio values its investments on
the basis of amortized cost. This technique involves valuing an instrument
at its cost as adjusted for amortization of premium or accretion of
discount rather than its value based on current market quotations or
appropriate substitutes which reflect current market conditions. The
amortized cost value of an instrument may be higher or lower than the price
the Portfolio would receive if it sold the instrument.
Valuing the Portfolio's instruments on the basis of amortized cost and use
of the term "money market fund" are permitted by Rule 2a-7 under the 1940
Act. The Portfolio must adhere to certain conditions under Rule 2a-7; these
conditions are summarized on page 3.
The Board of Trustees of the Fund oversees FMR's adherence to SEC rules
concerning money market funds, and has established procedures designed to
stabilize the Portfolio's NAV at $1.00. At such intervals as they deem
appropriate, the Trustees consider the extent to which NAV calculated by
using market valuations would deviate from $1.00 per share. If the Trustees
believe that a deviation from the Portfolio's amortized cost per share may
result in material dilution or other unfair results to shareholders, the
Trustees have agreed to take such corrective action, if any, as they deem
appropriate to eliminate or reduce, to the extent reasonably practicable,
the dilution or unfair results. Such corrective action could include
selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity; withholding dividends;
redeeming shares in kind; establishing NAV by using available market
quotations; and such other measures as the Trustees may deem appropriate.
During periods of declining interest rates, the Portfolio's yield based on
amortized cost may be higher than the yield based on market valuations.
Under these circumstances, a shareholder in the Portfolio would be able to
obtain a somewhat higher yield than would result if the Portfolio utilized
market valuations to determine its NAV. The converse would apply in a
period of rising interest rates.
DISTRIBUTIONS AND TAXES
DIVIDENDS. The Portfolio ordinarily declares dividends from net investment
income daily and pays such dividends monthly. The Portfolio intends to
distribute substantially all of its net investment income and capital
gains, if any, to shareholders within each calendar year as well as on a
fiscal year basis.
Dividends from the Portfolio will not normally qualify for the
dividends-received deduction available to corporations, since the
Portfolio's income is primarily derived from interest income and short-term
capital gains. Depending upon state law, a portion of the Portfolio's
dividends attributable to interest income derived from U.S. government
securities may be exempt from state and local taxation. The Portfolio will
provide information on the portion of dividends, if any, that
qualifies for this exemption.
CAPITAL GAIN DISTRIBUTIONS. The Portfolio may distribute short-term capital
gains once a year or more often as necessary to maintain its NAV at $1.00
per share or to comply with distribution requirements under federal tax
law. The Portfolio does not anticipate earning long-term capital gains on
securities held by the Portfolio.
If you request to have distributions mailed to you and the U.S. Postal
Service cannot deliver your checks, or if your checks remain uncashed for
six months, Fidelity may reinvest your distributions at the then-current
NAV. All subsequent distributions will then be reinvested until you provide
Fidelity with alternate instructions.
FEDERAL TAXES. Dividends derived from net investment income and short-term
capital gains are taxable as ordinary income. Distributions are taxable
when paid, except that distributions declared in December and paid in
January are taxable as if paid on December 31st, whether you receive
distributions in cash or reinvest them in additional shares. The Portfolio
will send you an IRS Form 1099-DIV by January 31st showing your taxable
distributions for the past calendar year.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
most states' laws provide for a pass-through of the state and local income
tax exemption afforded to direct owners of U.S. government securities.
Therefore, for residents of most states, the tax treatment of your dividend
distributions from the Portfolio will be the same as if you directly owned
your proportionate share of the Portfolio's portfolio securities. Thus,
because the income earned on most U.S. government securities in which the
Portfolio invests is exempt from state and local income taxes in most
states, the portion of your dividends from the Portfolio attributable to
these securities will also be free from income taxes in those states. Some
states may impose intangible property taxes. The exemption from state and
local income taxation does not preclude states from assessing other taxes
on the ownership of U.S. government securities.
Mutual fund dividends from U.S. government securities generally are free
from state and local taxes. However, particular states may limit this
benefit, and some types of securities such as repurchase agreements and
some asset-backed securities, may not qualify for this benefit.
TAX STATUS OF THE PORTFOLIO. The Portfolio has qualified and intends to
qualify as a "regulated investment company" under the Internal Revenue Code
of 1986, as amended (the Code), so that the Portfolio will not be liable
for federal income or excise tax on net investment income or capital gains
to the extent that these are distributed to shareholders in accordance with
applicable provisions of the Code.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the Portfolio and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal tax, shareholders may be subject to
state or local taxes on their investments. Investors should consult their
tax advisors for details and up-to-date information on the tax laws in
their state to determine whether the Portfolio is suitable to their
particular tax situations.
When investors sign their account application, they will be asked to
certify that their Social Security or taxpayer identification number is
correct and that they are not subject to 31% backup withholding for failing
to report income to the Internal Revenue Service (IRS). If investors
violate IRS regulations, the IRS can require the Portfolio to withhold 31%
of their taxable distributions and redemptions.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the Portfolio by FMR pursuant to authority contained in the
Management Contract. Since FMR has granted investment management authority
to the sub-advisor (see "Management Contract" below), the sub-advisor is
authorized to place orders for the purchase and sale of Portfolio
securities, and will do so in accordance with the policies described below.
FMR is also responsible for the placement of transaction orders for other
investment companies and accounts for which it acts or its affiliates act
as investment adviser. Securities purchased and sold by the Portfolio
generally will be traded on a net basis (i.e., without commission). In
selecting broker-dealers, subject to applicable limitations of the federal
securities laws, FMR considers various relevant factors, including, but not
limited to, the size and type of the transaction; the nature and character
of the markets for the security to be purchased or sold; the execution
efficiency, settlement capability, and financial condition of the
broker-dealer firm; the broker-dealer's execution services rendered on a
continuing basis; and the reasonableness of any commissions.
The Portfolio may execute Portfolio transactions with broker-dealers who
provide research and execution services to the Portfolio or other accounts
over which FMR exercises or its affiliates exercise investment discretion.
Such services may include advice concerning the value of securities; the
advisability of investing in, purchasing or selling securities; the
availability of securities or the purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). FMR maintains a
listing of broker-dealers who provide such services on a regular basis.
However, as many transactions on behalf of the Portfolio are placed with
broker-dealers (including broker-dealers on the list) without regard to the
furnishing of such services, it is not possible to estimate the proportion
of such transactions directed to such dealers solely because such services
were provided. The selection of such broker-dealers is generally made by
FMR (to the extent possible consistent with execution considerations) based
upon the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the Portfolio may be useful to FMR in rendering investment
management services to the Portfolio or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying out
its obligations to the Portfolio. The receipt of such research has not
reduced FMR's normal independent research activities; however, it enables
FMR to avoid the additional expenses that could be incurred if FMR tried to
develop comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
Portfolio to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the Portfolio and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the Portfolio or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services, Ltd. (FBSI), subsidiaries of
FMR Corp., if the commissions are fair, reasonable and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. Section 11(a) of the Securities Exchange Act of 1934
prohibits members of national securities exchanges from executing exchange
transactions for accounts which they or their affiliates manage, unless
certain requirements are satisfied. Pursuant to such requirements, the
Board of Trustees has authorized FBSI to execute portfolio transactions on
national securities exchanges in accordance with approved procedures and
applicable SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
Portfolio and review commissions paid by the Portfolio over representative
periods of time to determine if they are reasonable in relation to the
benefits to the Portfolio.
From time to time, the Trustees will review whether the recapture for the
benefit of the Portfolio of some portion of the brokerage commissions or
similar fees paid by the Portfolio on portfolio transactions is legally
permissible and advisable. The Portfolio seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine, in the exercise of their business
judgment whether it would be advisable for the Portfolio to seek such
recapture.
Although the Trustees and officers of the Portfolio are substantially the
same as those of other funds managed by FMR, investment decisions for the
Portfolio are made independently from those of other funds managed by FMR
or accounts managed by FMR affiliates. It sometimes happens that the same
security is held in the portfolio of more than one of these funds.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment adviser, particularly when the same
security is suitable for the investment objective of more than one fund.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as the Portfolio is concerned. In other cases,
however, the ability of the Portfolio to participate in volume transactions
will produce better executions and prices for the Portfolio. It is the
current opinion of the Trustees that the desirability of retaining FMR as
investment adviser to the Portfolio outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
PERFORMANCE
The Portfolio advertises its YIELD and EFFECTIVE YIELD in advertisements or
in reports or other communications to shareholders. Both yield figures are
based on historical earnings and are not intended to indicate future
performance. The Portfolio's yield refers to the income generated by an
investment in the Portfolio over a seven-day period expressed as an annual
percentage rate. The Portfolio also may calculate an effective yield by
compounding the base period return over a one-year period. The effective
yield will be slightly higher than the yield because of the compounding
effect on this assumed reinvestment. In addition to the current yield, the
Portfolio may quote yields in advertising based on any historical seven day
period. The Portfolio's annualized current yield for the 7 days ended
______, 1994 was ___%. The Portfolio's annualized effective yield for the 7
days ended _________ was _____%. If FMR had not reimbursed the Portfolio,
yields would have been lower.
The Portfolio's TOTAL RETURN is based on the overall dollar or percentage
change in value of a hypothetical investment in the Portfolio, assuming
dividends are reinvested. A CUMULATIVE TOTAL RETURN reflects the
Portfolio's performance over a stated period of time. An AVERAGE ANNUAL
TOTAL RETURN reflects the hypothetical annually compounded rate that would
have produced the same cumulative total return if performance had been
constant over the entire period. Because average annual returns tend to
smooth out variations in the Portfolio's performance, investors should
recognize that they are not the same as actual year-by-year results.
1 Year Life
Average Annual Total Returns
Cumulative Total Returns
Total returns are historical, will vary and are for the period ended July
31, 1994. Life of Portfolio figures are from October 3, 1990 to July 31,
1994.
The Portfolio's performance may be compared to the performance of other
mutual funds in general, or to the performance of particular types of
mutual funds. These comparisons may be expressed as mutual fund rankings
prepared by Lipper analytical Services, Inc. (Lipper), an independent
service located in Summit, New Jersey that monitors the performance of
mutual funds. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to
the mutual fund rankings, the Portfolio's performance may be compared to
mutual fund performance indices prepared by Lipper.
The Portfolio may be compared in advertising to Certificates of Deposits
(CDs) or other investments issued by banks. Mutual funds differ from bank
investments in several respects. For example, the Portfolio may offer
greater liquidity or higher potential returns than CDs, and the Portfolio
does not guarantee your principal or your return.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the Consumer Price Index) and
combinations of various capital markets. The performance of these capital
markets is based on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
The Portfolio may compare its performance or the performance of securities
in which it may invest to averages published by IBC USA (Publications),
Inc. of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGESTM/ GOVERNMENT ONLY -
INSTITUTIONAL ONLY, which is reported in the MONEY FUND REPORT, covers over
100 money market funds.
The Portfolio's yield may be compared to yields on other money market
securities or averages of other money market securities as reported by the
Federal Reserve Bulletin, by TeleRate, a financial information network, or
by Salomon Brothers Inc., a broker-dealer firm.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging. In addition, Fidelity may
quote financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques.
The Portfolio may present its fund number, QuotronTM number and CUSIP
number, and discuss or quote its current portfolio manager.
The principal value and interest rate of CDs and money market securities
are fixed at the time of purchase whereas the Portfolio's yield will
fluctuate. Unlike some CDs and certain other money market securities, money
market mutual funds are not insured by the Federal Depository Insurance
Corporation (FDIC). Investors should give consideration to the quality and
maturity of the portfolio securities of the respective investment companies
when comparing investment alternatives.
The Portfolio may reference the growth and variety of money market mutual
funds and the adviser's innovation and participation in the industry.
MANAGEMENT CONTRACT, DISTRIBUTION AND SERVICE PLAN
MANAGEMENT CONTRACT. The Fund employs FMR to furnish investment advisory
and other services to the Portfolio. Under its Management Contract with the
Fund on behalf of the Portfolio, FMR acts as investment adviser and,
subject to the supervision of the Board of Trustees, directs the
investments of the Portfolio, in accordance with its investment objective,
policies and limitations. FMR also provides the Portfolio with all
necessary office facilities and personnel for servicing the Portfolio's
investments, compensates all officers of the Fund who are "interested
persons" of the Fund or of FMR, and performs services relating to research,
statistical and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provides the management and administrative services necessary
for the operation of the Portfolio. These services include providing
facilities for maintaining the Portfolio's organization, supervising
relations with the custodians, transfer and pricing agents, accountants,
underwriters and other persons dealing with the Portfolio, preparing all
general shareholder communications and conducting shareholder relations,
maintaining the Portfolio's records and the registration of the Portfolio's
shares under federal and state securities laws, developing management and
shareholder services for the Portfolio and furnishing reports, evaluations
and analyses on a variety of subjects to the Trustees.
FMR pays all the expenses of the Portfolio as described herein. Specific
expenses payable by FMR include, without limitation, the fees and expenses
of registering and qualifying the Portfolio and its shares for distribution
under federal and state securities laws; expenses of typesetting for
printing prospectuses; custodian charges; auditing and legal expenses;
insurance expense; association membership dues; the expense of reports to
shareholders; shareholder's meetings; and proxy solicitation. FIIOC
performs transfer agency, dividend disbursing and shareholder servicing
functions for the Portfolio and Service, calculates the Portfolio's NAV and
dividends, and maintains the Portfolio's general accounting records, the
costs of which services are borne by FMR pursuant to its Management
Contract with the Fund on behalf of the Portfolio. Both FIIOC and Service
are affiliates of FMR.
FMR pays all other expenses of the Portfolio with the following exceptions:
the payment of fees and expenses of all Trustees of the Fund who are not
"interested persons" of the Fund or FMR; brokerage fees or commissions (if
any); interest on borrowings; and such extraordinary non-recurring expenses
as may arise, including litigation to which the Portfolio may be a party.
For these services the Portfolio pays a monthly management fee to FMR at
the annual rate of .42% of the average net assets of the Portfolio as
determined as of the close of business on each day throughout the month.
The management fees paid to FMR are reduced by an amount equal to the fees
and expenses of those Trustees who are not "interested persons" of the Fund
or FMR. The Management Contract was approved by the shareholders on
September 30, 1993.
Effective September 1, 1991, FMR has voluntarily agreed to temporarily
limit the Portfolio's total expenses (excluding interest, taxes, brokerage
commissions and extraordinary expenses) to an annual rate of .20% of the
Portfolio's average net assets (see Note 3 of Notes to Financial
Statements).
For the fiscal years ended July 31, 1994, 1993, and 1992, management fees
for the Portfolio amounted to ________, $2,325,068, and $1,989,404,
respectively. If FMR had not reimbursed the Portfolio for certain expenses,
its fee would have been $________ and $4,892,175 for fiscal years 1994 and
1993, respectively.
From time to time, FMR may reimburse all or some of the Portfolio's
expenses at various levels depending on the Portfolio's size and market
conditions.
SUB-ADVISO R . FMR has entered into a sub-advisory agreement with FMR
Texas. Pursuant to the agreement, FMR Texas has primary responsibility for
providing portfolio investment management services to the Portfolio, while
FMR retains responsibility for providing other management services. Under
the sub-advisory agreement, FMR pays FMR Texas a fee equal to 50% of the
management fee payable to FMR under its current Management Contract with
the Fund on behalf of the Portfolio. The fees paid to FMR Texas are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time. For the fiscal years ended July 31, 1994, 1993,
and 1992, FMR paid FMR Texas fees amounting to $_________, $2,446,088, and
$2,124,907, respectively. The Sub-Advisory Agreement was approved by the
shareholders on September 30, 1993.
DISTRIBUTION AND SERVICE PLAN. The Portfolio has a Distribution Agreement
with Fidelity Distributors Corporation (Distributors), 82 Devonshire
Street, Boston, MA 02109, a wholly-owned subsidiary of FMR Corp.
Distributors, a Massachusetts corporation organized on July 18, 1960, is a
broker-dealer registered under the Securities Exchange Act of 1934 and a
member of the National Association of Securities Dealers, Inc. The
Distribution Agreement calls for Distributors to use all reasonable
efforts, consistent with its other business, to secure purchasers for
shares of the Portfolio, which are continuously offered. Promotional and
administrative expenses, in connection with the offer and sale of shares,
are paid by FMR.
Distributors also acts as general distributor for the other publicly
offered Fidelity Funds. The expenses of these operations are borne by FMR
or Distributors.
The Fund's Board of Trustees has approved a Distribution and Service Plan
(the Plan) on behalf of the Portfolio pursuant to Rule 12b-1 (the Rule)
under the 1940 Act. The Rule provides in substance that a mutual fund may
not engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the mutual fund
except pursuant to a plan adopted by the mutual fund under the Rule. The
Board has approved the Plan to allow the Portfolio and FMR to incur certain
expenses that might be considered to constitute indirect payment by the
Portfolio of distribution expenses. Under the Plan, if the payment by the
Portfolio to FMR of management fees should be deemed to be indirect
financing by the Portfolio of the distribution of its shares, such payment
is authorized by the Plan. The Plan does not authorize the payment of
additional fees or expenses by the Portfolio to FMR or to any other party.
The Plan specifically recognizes that FMR, either directly or through
Distributors, may use its management fee revenue, past profits or other
resources, without limitation, to pay promotional and administrative
expenses in connection with the offer and sale of shares of the Portfolio.
In addition, the Plan provides that FMR may use its resources, including
its management fee revenue, to make payments to third parties that provide
assistance in selling shares of the Portfolio or to third parties,
including banks, that render shareholder support services. The Trustees
have not yet authorized any such payments.
The Portfolio's Plan was approved by the shareholders on September 30,
1993. As required by the Rule, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan prior to their
approval, and have determined that there is a reasonable likelihood that
the Plan will benefit the Portfolio and its shareholders. In particular,
the Trustees noted that the Plan does not authorize payments by the
Portfolio other than those made to FMR under its Management Contract with
the Fund on behalf of the Portfolio. To the extent that the Plan gives FMR
and Distributors greater flexibility in connection with the distribution of
shares of the Portfolio, additional sales of the Portfolio's shares may
result. Additionally, certain shareholder support services may be provided
more effectively under the Plan by local entities with whom shareholders
have other relationships.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined, in Distributors' opinion
it should not prohibit banks from being paid for shareholder servicing and
recordkeeping. Distributors intends to engage banks only to perform such
functions. However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates or
subsidiaries, as well as further judicial or administrative decisions or
interpretations, could prevent a bank from continuing to perform all or a
part of the contemplated services. If a bank were prohibited from so
acting, the Trustees would consider what actions, if any, would be
necessary to continue to provide efficient and effective shareholder
services. In such event, changes in the operation of the Portfolio might
occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law. The Portfolio may execute
portfolio transactions with and purchase securities issued by depository
institutions that may receive payments under the Plan. No preference for
the instruments of such depository institutions will be shown in the
selection of investments.
THE PORTFOLIO AND THE FIDELITY ORGANIZATION
FUND ORGANIZATION. Fidelity U.S. Treasury Income Portfolio is a portfolio
of Daily Money Fund, an open-end management investment company originally
organized as a Massachusetts business trust on June 7, 1982, as amended and
restated September 1, 1989. On September 30, 1993, the Fund was converted
to a Delaware business trust pursuant to an agreement approved by
shareholders on March 24, 1993. Currently, there are six portfolios of the
Fund: Money Market Portfolio, U.S. Treasury Portfolio, U.S. Treasury Income
Portfolio, Capital Reserves: Money Market Portfolio, Capital Reserves: U.S.
Government Portfolio, and Capital Reserves: Municipal Money Market
Portfolio. The Trust Instrument permits the Trustees to create additional
portfolios.
In the event that FMR ceases to be the investment adviser to the Portfolio,
the right of the Fund or Portfolio to use the identifying name "Fidelity"
may be withdrawn. There is a remote possibility that one portfolio might
become liable for any misstatement in its prospectus or statement of
additional information about another portfolio.
The assets of the Fund received for the issue or sale of shares of each
portfolio and all income, earnings, profits, and proceeds thereof, subject
only to the rights of creditors, are especially allocated to such
portfolio, and constitute the underlying assets of such portfolio. The
underlying assets of each portfolio are segregated on the books of account,
and are to be charged with the liabilities of such portfolio and with a
share of the general expenses of the Fund. Expenses with respect to the
Fund are to be allocated in proportion to the asset value of the respective
portfolios, except where allocations of direct expense can otherwise be
fairly made. The officers of the Fund, subject to the general supervision
of the Board of Trustees, have the power to determine which expenses are
allocable to a given portfolio, or which are general or allocable to all of
the portfolios. In the event of the dissolution or liquidation of the Fund,
shareholders of each portfolio are entitled to receive as a class the
underlying assets of such portfolio available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The Fund is a business trust organized
under Delaware law. Delaware law provides that shareholders shall be
entitled to the same limitations of personal liability extended to
stockholders of private corporations for profit. The courts of some states,
however, may decline to apply Delaware law on this point. The Trust
Instrument contains an express disclaimer of shareholder liability for the
debts, liabilities, obligations, and expenses of the Fund and requires that
a disclaimer be given in each contract entered into or executed by the Fund
or the Trustees. The Trust Instrument provides for indemnification out of
each portfolio's property of any shareholder or former shareholder held
personally liable for the obligations of the portfolio. The Trust
Instrument also provides that each portfolio shall, upon request, assume
the defense of any claim made against any shareholder for any act or
obligation of the portfolio and satisfy any judgment thereon. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which Delaware law does not apply,
no contractual limitation of liability was in effect, and the Portfolio is
unable to meet its obligations. FMR believes that, in view of the above,
the risk of personal liability to shareholders is extremely remote.
The Trust Instrument further provides that the Trustees, if they have
exercised reasonable care, shall not be personally liable to any person
other than the Fund or its shareholders; moreover, the Trustees shall not
be liable for any conduct whatsoever, provided that a Trustee is not
protected against any liability to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
VOTING RIGHTS. The Portfolio's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption, and the privilege of exchange
are described herein. Shares are fully paid and nonassessable, except as
set forth under the heading "Shareholder and Trustee Liability" above.
Shareholders representing 10% or more of the Fund or a portfolio may, as
set forth in the Trust Instrument, call meetings of the Fund or portfolio
for any purpose related to the Fund or portfolio, as the case may be,
including, in the case of a meeting of the entire Fund, the purpose of
voting on removal of one or more Trustees. The Fund or any portfolio may be
terminated upon the sale of its assets to, or merger with, another open-end
management investment company or series thereof, or upon liquidation and
distribution of its assets. Generally such terminations must be approved by
vote of the holders of a majority of the outstanding shares of the Fund or
a Portfolio; however, the Trustees may, without prior shareholder approval,
change the form of organization of the Fund by merger, consolidation, or
incorporation. If not so terminated or reorganized, the Fund and its
portfolios will continue indefinitely. Under the Trust Instrument, the
Trustees may, without shareholder vote, cause the Trust to merge or
consolidate into one or more trusts, partnerships, or corporations, or
cause the Fund to be incorporated under Delaware law, so long as the
surviving entity is an open-end management investment company that will
succeed to or assume the Fund's registration statement. Each portfolio may
also invest all of its assets in another investment company.
As of _____ __, 1994 the following owned of record or beneficially 5% or
more of the outstanding shares of the Portfolio: ___________. A
shareholder owning of record or beneficially more than 25% of the
Portfolio's outstanding shares may be considered to be a "controlling
person." Their votes could have a more significant effect on matters
presented at a shareholders' meeting than votes of other shareholders.
CUSTODIAN. Morgan Guaranty Trust Company of New York, New York, NY, is
custodian of the assets of the Portfolio. The custodian is responsible for
the safekeeping of the Portfolio's assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the Portfolio or in deciding which
securities are purchased or sold by the Portfolio. The Portfolio may,
however, invest in obligations of the custodian and may purchase securities
from or sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the Fund's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the funds advised by
FMR. Transactions that have occurred to date include mortgages and personal
and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other Fund relationships.
AUDITOR. Coopers & Lybrand, 1999 Bryman Street, Dallas, Texas, serves
as the Portfolio's independent accountant. The auditor examines financial
statements for the Portfolio and provides other audit, tax, and related
services.
FMR. FMR, 82 Devonshire Street, Boston, Massachusetts 02109, the
Portfolio's adviser, is the original Fidelity company founded in 1946. FMR
provides a number of mutual funds and other clients with investment
research and Portfolio management services. FMR maintains a large staff of
experienced investment personnel and a full complement of related support
facilities. As of July 31, 1994, FMR advised funds having more than __
million shareholder accounts with a total value of more than $____ billion.
Distributors distributes shares for the Fidelity funds.
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: Service, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; FIIOC, which performs shareholder servicing functions for certain
institutional customers; and Fidelity Investments Retail Marketing Company,
which provides marketing services to various companies within the Fidelity
organization. Through ownership of voting common stock, Edward C. Johnson
3d (President and Trustee of the Fund), Johnson family members, and various
trusts for the benefit of the Johnson family form a controlling group with
respect to FMR Corp.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas, a wholly owned subsidiary of FMR
formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business address
at 82 Devonshire Street, Boston, MA. It is composed of a number of
different subsidiaries and divisions which provide a variety of financial
products and services. The Portfolio employs various Fidelity companies to
perform certain activities required for its operation.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Fund are listed below. Except as
indicated, each individual has held the office shown or other offices in
the same company for the last five years. Trustees and officers elected or
appointed to the Fund prior to conversion to a Delaware trust served the
Massachusetts business trust in identical capacities. All persons named as
Trustees and officers also serve in similar capacities for other funds
advised by FMR. Unless otherwise noted, the business address of each
Trustee and officer is 82 Devonshire Street, Boston, MA 02109, which is
also the address of FMR. Those Trustees who are "interested persons" (as
defined in the 1940 Act) by virtue of their affiliation with either the
Fund or FMR, are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to 1994, he was
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Sanifill Corporation (non-hazardous waste,
1993) and CH2M Hill Companies (engineering). In addition, he served on the
Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, P.O. Box 264, Bridgehampton, NY, Trustee (1992). Prior
to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc. (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he serves
as a Trustee of First Union Real Estate Investments, Chairman of the Board
of Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Greenwich, CT, Trustee, is a Professor
at Columbia University Graduate School of Business and a financial
consultant. Prior to 1987, he was Chairman of the Financial Accounting
Standards Board. Mr. Kirk is a Director of General Re Corporation
(reinsurance), and Valuation Research Corp. (appraisals and valuations,
1993). In addition, he serves as Vice Chairman of the Board of Directors
of the National Arts Stabilization Fund and Vice Chairman of the Board of
Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992) and
Associated Estates Realty Corporation (a Real Estate Investment Trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee (1988).
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company. He
is a Director of Allegheny Power Systems, Inc. (electric utility), General
Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). In
addition, he serves as a Trustee of Corporate Property Investors, the EPS
Foundation at Trinity College, the Naples Philharmonic Center for the Arts,
and Rensellar Polytechnic Institute, and he is a member of the Advisory
Boards of Butler Capital Corporation Funds and Warburg, Pineus Partnership
Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company
of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Vice President and General Counsel of FMR,
Vice President - Legal of FMR Corp., and Vice President and Clerk of
Distributors.
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General counsel of FMR Texas, Inc. (1990).
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the fund based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
APPENDIX
The following paragraphs provide a brief description of the securities
in which the Portfolio may invest and the transactions it may make. The
Portfolio may invest or engage in one or more of the following securities
or transactions if they are consistent with the Portfolio's investment
objective and policies.
AFFILIATED BANK TRANSACTIONS. The Portfolio may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the Portfolio under the Investment company Act of 1940.
These transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50 largest
U.S. banks (measured by deposits); municipal securities; U.S. government
securities with affiliated financial institutions that are primary dealers
in these securities; short-term currency transactions and short-term
borrowings. In accordance with exemptive orders issued by the SEC, the
Board of Trustees has established and periodically reviews procedures
applicable to transactions involving affiliated financial institutions.
INTERFUND BORROWING PROGRAM. The Portfolio has received permission from the
SEC to lend money to and borrow money from other funds advised by FMR or
its affiliates, but it will participate in the interfund borrowing program
only as a borrower. Interfund loans normally will extend overnight, but can
have a maximum duration of seven days. The Portfolio will borrow through
the program only when the costs are equal to or lower than the cost of bank
loans. The Portfolio will not borrow through the program if, after doing
so, total outstanding borrowings would exceed 15% of total assets. Loans
may be called on one day's notice, and the Portfolio may have to borrow
from a bank at a higher interest rate if an interfund loan is called or not
renewed.
DELAYED - DELIVERY TRANSACTIONS. The Portfolio may buy and sell
securities on a delayed-delivery or when-issued basis. These transactions
involve a commitment by the Portfolio to purchase or sell specific
securities at a predetermined price and/or yield, with payment and delivery
taking place after the customary settlement period for that type of
security (and more than seven days in the future). Typically, no interest
accrues to the purchaser until the security is delivered.
When purchasing securities on a delayed-delivery basis, the Portfolio
assumes the rights and risks of ownership, including the risk of price and
yield fluctuations. Because the Portfolio is not required to pay for
securities until the delivery date, these risks are in addition to the
risks associated with the Portfolio's other investments. If the Portfolio
remains substantially fully invested at a time when delayed-delivery
purchases are outstanding, the delayed-delivery purchases may result in a
form of leverage. When delayed-delivery purchases are outstanding, the
Portfolio will set aside appropriate liquid assets in a segregated
custodial account to cover its purchase obligations. When the Portfolio has
sold a security on a delayed-delivery basis, the Portfolio does not
participate in further gains or losses with respect to the security. If the
other party to a delayed-delivery transaction fails to deliver or pay for
the securities, the Portfolio could miss a favorable price or yield
opportunity, or could suffer a loss.
The Portfolio may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
STRIPPED GOVERNMENT SECURITIES. Stripped securities are created by
separating the income and principal components of a debt instrument and
selling them separately. The Portfolio may purchase U.S. Treasury STRIPS
(Separate Trading of Registered Interest and Principal of Securities) that
are created when coupon payments and the principal payment are stripped
from an outstanding Treasury bond by a Federal Reserve Bank.
DAILY MONEY FUND:
CAPITAL RESERVES: MONEY MARKET PORTFOLIO,
CAPITAL RESERVES: U.S. GOVERNMENT PORTFOLIO
CAPITAL RESERVES: MUNICIPAL MONEY MARKET PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A Item Number
Part A Prospectus Caption
1............................... Cover Page
2............................... Summary of Portfolio Expenses
3a,b............................ The Portfolio's Financial History
c.............................. Performance
4a(i)........................... The Portfolios and the Fidelity
Organization
a(ii),b,c...................... Investment Objectives; Investment
Policies, Risks, and Limitations; Appendix
5a.............................. The Portfolios and the Fidelity
Organization
5A.............................. *
b,c,d,e,f........................ Management, Distribution and Service
Fees
g.............................. Portfolio Transactions
6a(i)........................... The Portfolios and the Fidelity
Organization
a(ii).......................... How to Invest, Exchange and Redeem
a(iii)......................... The Portfolios and the Fidelity
Organization
b,c,d.......................... *
e.............................. Cover Page; How to Invest, Exchange and
Redeem
f,g............................ How to Invest, Exchange and Redeem;
Distributions and Taxes
7a.............................. Management, Distribution and Service Fees
b(i,ii)........................ How to Invest, Exchange and Redeem
b(iii,iv)...................... *
b(v)........................... How to Invest, Exchange and Redeem
c.............................. *
d.............................. How to Invest, Exchange and Redeem
e,f(i,ii)...................... Management, Distribution and Service Fees
f(iii)......................... *
8............................... How to Invest, Exchange and Redeem
9............................... *
*Not Applicable
Part B Statement of Additional Information
10,11........................... Cover Page
12.............................. FMR; Description of the Fund
13a,b,c......................... Investment Policies and Limitations
d............................. *
14a,b........................... Trustees and Officers
c............................. *
15a............................. *
b............................. Description of the Fund
c............................. *
16a(i,ii)....................... FMR; Trustees and Officers
a(iii),b,c,d.................. Management Contracts; Contracts with
Companies Affiliated with FMR
e............................. Portfolio Transactions
f............................. Distribution and Service Plans
g............................. *
h............................. Description of the Fund
i............................. Contracts with Companies Affiliated with
FMR
17a............................. Portfolio Transactions
b............................. *
c,d........................... Portfolio Transactions
e............................. *
18a............................. Description of the Fund
b............................. *
19a............................. Distribution and Service Plans
b............................. Valuation of Portfolio Securities
20.............................. Distributions and Taxes
21a(i,ii)....................... Contracts with Companies Affiliated with
FMR
a(iii),b,c.................... *
22.............................. Performance
23.............................. The Portfolios' Annual Reports for the
fiscal year ended July 31, 1994 will be filed by subsequent amendment.
*Not Applicable
<<MARK>>>CAPITAL RESERVES:
Money Market Portfolio
U.S. Government Portfolio82 Devonshire Street
Municipal Money Market PortfolioBoston, Massachusetts, 02109
PROSPECTUS
Capital Reserves: Money Market Portfolio (Money Market Portfolio), Capital
Reserves: U.S. Government Portfolio (U.S. Government Portfolio) and Capital
Reserves: Municipal Money Market Portfolio (Municipal Money Market
Portfolio) (each , a Portfolio), portfolios of Daily Money Fund (the
Fund), each offers individual and institutional investors a convenient and
economical way to invest in professionally managed portfolios of money
market instruments. Money Market Portfolio and U.S. Government Portfolio
each seeks as high a level of current income as is consistent with the
preservation of capital and liquidity by investing in money market
instruments within the prescribed standards ^. Municipal Money
Market Portfolio is designed to provide investors with as high a level of
current income, exempt from federal income taxes, as is consistent with a
diversified portfolio of high - quality short-term municipal
obligations selected ^ for preservation of capital and liquidity.
AN INVESTMENT IN EACH PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT EACH PORTFOLIO WILL
MAINTAIN A STABLE $1.00 SHARE PRICE.
This Prospectus is designed to provide investors with information that they
should know before investing. Please read and retain this document for
future reference. The Annual Report is ^ attached .
A Statement of Additional Information (dated September ^ 26, 1994)
has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. This free Statement of Additional
Information is available upon request from National Financial Services
Corporation ^ (the Distributor) , 82 Devonshire Street, Boston,
Massachusetts 02109. To obtain an additional copy of these documents please
call the appropriate number below.
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 RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL .
For further information, or assistance in opening an account, please call:
NATIONWIDE 800-843-3001
IN MASSACHUSETTS, CALL COLLECT 617-330-0586
If you are investing through a Financial Institution, contact that
Institution directly.
TABLE OF CONTENTS
Summary of Portfolio Expenses
^ Financial History
Investment Objectives
^ Investment Policies , Risks, and Limitations
Portfolio Transactions
Performance
Distributions and Taxes
How To Invest, Exchange and Redeem
The Portfolios and the Fidelity Organization
Management, Distribution and Service Fees
Appendix
Financial Statements 18
September 26, 1994
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
SUMMARY OF PORTFOLIO EXPENSES
The expense summary format below was developed for use by all mutual
funds to help investors make their investment decisions. Of course, ^
investors should consider this expense information along with other
important information, including each Portfolio's investment objective and
its past performance. There are no transaction expenses associated with
purchases, exchanges , or redemptions of each Portfolio's shares.
A. ANNUAL OPERATING EXPENSES (as a percentage of average net assets) for
each ^ Portfolio:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
^ Money Market U.S. Government Municipal Money
Portfolio Portfolio Market
Portfolio
Management Fees ___%* ___%* ___%*
12b-1 Fees ___% ___% ___%
Other Expenses ___% ___% ___%
Total Operating .99% .99% .99 %
Expenses
*Net of
reimburse-
^ ment
</TABLE>
EXAMPLE: An investor would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) full redemption at the
end of each time period:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
^ Money Market U.S. Government Municipal Money
Portfolio Portfolio Market
Portfolio
1 Year $ __ $ __ $ __
3 Years $ __ $ __ $ __
5 Years $ __ $ __ $ __
10 Years $___ $___ $___
</TABLE>
EXPLANATION OF TABLE
The purpose of the table above is to assist investors in understanding the
various costs and expenses that an investor in a Portfolio would bear
directly or indirectly.
A. ANNUAL OPERATING EXPENSES are based on each Portfolio's historical
expenses after reimbursement. Management fees are paid by each Portfolio
to Fidelity Management & Research Company (FMR) for managing its
investments and business affairs. Each Portfolio has adopted a Distribution
and Service Plan ^ pursuant to Rule 12b-1 ^ under the Investment Company
Act of 1940 ^ (1940 Act). 12b-1 ^ fees are paid by the
Portfolios to the Distributor for services and expenses in connection with
the distribution of Portfolio shares ^. Long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales ^
charges permitted by the National Association of Securities Dealers,
Inc. (NASD) due to 12b-1 payments. Each Portfolio incurs other expenses for
maintaining shareholder records, furnishing shareholder statements and
reports, and other services. Management fees, 12b-1 fees and other expenses
^ are reflected in each Portfolio's share price and are not charged
directly to individual accounts. FMR will voluntarily reimburse each
Portfolio's expenses to the extent that total Portfolio operating expenses,
including management fees (but excluding interest, taxes, brokerage
commissions and extraordinary expenses), exceed an annual rate of .99% of
average net assets. If FMR were not reimbursing each Portfolio, ^
management fees and total operating expenses would ^ have been
__% and __% for Money Market Portfolio, ^ __% and __% for U.S.
Government Portfolio, and ^ __% and __% for Municipal Money Market
Portfolio. Please refer to ^ " Management, Distribution and Service
Fees " on page for further information.
B. EXAMPLE: The above hypothetical example illustrates the expenses
associated with a $1,000 investment in each Portfolio over periods
of 1, 3, 5, and 10 years, based on the expenses in the table and an assumed
annual rate of return of 5%. THE RETURN OF 5% AND EXPENSES SHOULD NOT BE
CONSIDERED INDICATIONS OF ACTUAL OR EXPECTED PORTFOLIO PERFORMANCE, BOTH OF
WHICH MAY VARY.
^ FINANCIAL HISTORY
FINANCIAL HIGHLIGHTS
The ^ tables that follow are included in each Portfolio's Annual Report
and have been audited by ^ _________________ , independent
accountants. Their ^ report on the financial statements and financial
highlights is included in the Annual Report. The financial statements and
financial highlights are part of this prospectus . On September 29,
1993 Capital Reserves: Money Market Portfolio, Capital Reserves: U.S.
Government Portfolio, and Capital Reserves: Municipal Money Market
Portfolio were each converted from separate series of a Massachusetts
business trust to separate series of a Delaware business trust and each
adopted the audited financial statements of its predecessor portfolio as
its own.
^
INVESTMENT OBJECTIVES ^
Money Market Portfolio's and U.S. Government Portfolio's investment ^
objective is to seek as high a level of current income as is
consistent with the preservation of capital and liquidity by investing in
money market instruments.
MUNICIPAL MONEY MARKET PORTFOLIO'S investment objective is to provide
investors with as high a level of current income, exempt from federal
income taxes, as is consistent with a portfolio of high quality, short-term
municipal obligations selected on the basis of preservation of capital and
liquidity. ^
Each Portfolio may not ^ achieve its objective, but it will ^ follow the
investment style described in the following paragraphs. Except for each
Portfolio's investment objective and the investment limitations identified
as fundamental, each Portfolio's investment policies are not
fundamental ^ policies and may be changed without shareholder
approval.
INVESTMENT POLICIES, RISKS AND LIMITATIONS
MONEY MARKET PORTFOLIO invests in a broad range of short-term, U.S.
dollar-denominated obligations of domestic and foreign issuers.
The Portfolio will purchase only ^ debt obligations that are of high
quality. These instruments include:
(bullet) Obligations of foreign and domestic banks, savings and loan
associations, consumer and industrial finance companies, securities
brokerage companies, real estate-related companies, leasing companies, and
a variety of insurance-related firms ^ such as multi-line, property
and casualty, and life insurance companies . These obligations may
include time deposits, certificates of deposit, bankers' acceptances, and
commercial paper.
(bullet) Obligations issued or guaranteed as to principal and interest by
governments or their agencies or instrumentalities.
(bullet) Other short-term money market obligations, including commercial
paper, notes , and bonds.
^
Money Market Portfolio invests in U.S. dollar-denominated obligations of
U.S. banks and foreign branches of U.S. banks, foreign banks and foreign
branches of foreign banks (referred to as Eurodollars), and U.S. branches
and agencies of foreign banks (referred to as Yankee dollars). Eurodollar
and Yankee dollar investments involve risks that are different from
investments in ^ domestic banks. These risks may include ^ unfavorable
political and economic developments and possible withholding taxes, seizure
of foreign deposits, currency controls, interest limitations , or
other governmental restrictions ^ that might affect the payment of
principal or interest on securities owned by the Portfolio. Additionally,
there may be less public information available about foreign banks and
their branches and agencies. Although FMR carefully considers these factors
when making investments, the Portfolio does not limit the amount of its
assets that can be invested in any ^ type of instrument or in any ^ foreign
country.
Because the Money Market Portfolio concentrates more than 25% of its
total assets in the financial services industry, its performance may be
affected by conditions affecting banks and other financial services
companies. Companies in the financial services industry are subject to
various risks related to that industry, such as governmental regulations,
changes in interest rates, and exposure on loans, including loans to
foreign borrowers. Investments in the financial services industry may
include obligations of foreign and domestic banks, savings and loan
associations, consumer and industrial finance companies, securities
brokerage companies, leasing companies, and a variety of firms in the
insurance field. These obligations include time deposits, certificates of
deposit, bankers' acceptances, and commercial paper.
U.S. GOVERNMENT PORTFOLIO. As a non-fundamental policy, the Portfolio
intends to invest 100% of its total assets in U.S. Treasury bills, notes,
bonds, and other direct obligations of the U.S. Treasury. The Portfolio
also may engage in repurchase agreements backed by these obligations. This
policy may be changed only upon 90 days' notice to shareholders.^ The
Portfolio will ^ invest only in securities of U.S. government
agencies or instrumentalities that are ^ backed by the full faith and
credit of the United States.
Money Market Portfolio and U.S. Government Portfolio may invest in illiquid
securities, may purchase zero coupon bonds and purchase or sell
securities on a delayed-delivery basis, and may engage in repurchase
agreements and reverse repurchase agreements. Money Market Portfolio may
also purchase restricted securities.
^
MUNICIPAL MONEY MARKET PORTFOLIO. It is ^ the Portfolio's
fundamental policy ^ that at least 80% of its income will be exempt from
federal income tax under normal conditions. ^ The Portfolio
also maintains the ability under normal conditions to invest as much
as 100% of its assets in municipal securities issued to finance private
activities, whose interest is a preference item for purposes of the federal
alternative minimum tax (AMT). Such private activity securities might
include industrial development bonds and bonds issued to finance such
projects as solid waste disposal facilities, student loans, or water and ^
sewerage projects. Thus, if you are subject to the AMT, a portion of
your income may not be exempt from federal income tax (see
" Distributions and Taxes " on page 8).
Municipal Money Market Portfolio may invest up to 25% of its total assets
in a single issuer's securities. The Portfolio may invest any portion of
its assets in industrial revenue bonds (IRBs) backed by private issuers,
and may invest up to 25% of its total assets in IRBs related to a single
industry. The Portfolio may also invest more than 25% ^ of its total
assets in securities whose revenue sources are from similar types of
projects, e.g., education, electric utilities, health care, housing,
transportation, or water, sewer, and gas utilities. ^ Economic ,
business or political developments or changes ^ may affect all
securities of a similar type. Therefore, developments affecting a single
issuer or industry, or securities financing similar types of projects,
could have a significant effect on the Portfolio's performance.
Municipal securities are issued to raise money for various public purposes,
including general purpose financing for state and local governments as well
as financing for specific projects or public facilities. Municipal
securities may be backed by the full taxing power of a municipality or by
the revenues from a specific project or the credit of a private
organization. Some municipal securities are insured by private insurance
companies, while others may be supported by letters of credit furnished by
domestic or foreign banks. FMR monitors the financial condition of parties
(including insurance companies, banks, and corporations) upon whose
creditworthiness ^ it relies in determining the credit quality of
securities the Portfolio may purchase.
Municipal Money Market Portfolio invests in high quality, short- term
municipal securities but also may invest in high - quality, long-term
fixed, variable, or floating rate instruments (including tender option
bonds) whose features give them interest rates, maturities, and prices
similar to short-term instruments. The Portfolio's investments in municipal
securities may include tax, revenue, or bond anticipation notes; tax-exempt
commercial paper; general obligation or revenue bonds (including municipal
lease obligations and resource recovery bonds); and zero coupon bonds. The
Portfolio may invest in illiquid securities, may ^ buy or sell
securities on a when-issued or delayed-delivery basis, and may
purchase restricted securities. See the Appendix for further discussion of
the Portfolio's investments.
^ FMR normally invests the Portfolio's assets according to its
investment strategy and does not expect to invest in federally taxable
obligations ^ . The Portfolio also reserves the right to hold a
substantial amount of uninvested cash or to invest more than normally
permitted in federally taxable obligations for temporary defensive
purposes ^.
QUALITY. Pursuant to procedures adopted by the Board of Trustees, Money
Market Portfolio and Municipal Money Market Portfolio may purchase only
high - quality securities that FMR believes present minimal credit
risks. To be considered high quality, a security must be a U.S. government
security, or rated in accordance with applicable rules in one of the
two highest categories for short-term securities by at least two nationally
recognized rating services (or by one, if only one rating service has rated
the security) or, if unrated, judged to be of equivalent quality by FMR.
High - quality securities are divided into "first tier" and "second
tier" securities. FIRST TIER SECURITIES have received the highest rating
(e.g., Standard & Poor's Corporation's (S&P) A-1 rating) from at
least two rating services (or one, if only one rating service has rated the
security). SECOND TIER SECURITIES have received ratings within the two
highest categories (e.g., S&P's A- 1 or A-2) from at least two rating
services (or one, if only one has rated the security), but do not qualify
as first tier securities. If a security has been assigned different ratings
by different rating services, at least two rating services must have
assigned the higher rating in order for FMR to determine eligibility on the
basis of that higher rating. Based on procedures adopted by the Board of
Trustees, FMR may determine that an unrated security is of equivalent
quality to a rated first or second tier security.
Money Market Portfolio may not invest more than 5% of its total assets in
second tier securities. In addition, Money Market Portfolio may not invest
more than 1% of its total assets or $1 million (whichever is greater) in
the second tier securities of a single issuer.
MATURITY. Each Portfolio must limit its investments to securities with
remaining effective maturities of 397 days or less and must maintain a
dollar-weighted average maturity of 90 days or less.
Each Portfolio's ability to achieve its investment objective depends on
the quality and maturity of its investments. Although each Portfolio's
policies are designed to help maintain a stable $1.00 share price, all
money market instruments can change in value when interest rates or
issuers' creditworthiness change, or if an issuer or guarantor of a
security fails to pay interest or principal when due. ^ If these changes in
value were large enough, a Portfolio's share price could ^ fall
below $1.00. In general, securities with longer maturities are more
vulnerable to price changes, although they may provide higher yields.
INVESTMENT LIMITATIONS
The following summarizes each Portfolio's principal investment
limitations. A complete listing is contained in the Statement of Additional
Information.
1. Money Market Portfolio normally may not invest more than 5% of its total
assets in the securities (other than U.S. government securities) of any
single issuer. Under certain conditions, however, the Portfolio may invest
^ up to 25% of its total assets in the first tier securities of a
single issuer for up to three business days ^ and will invest more than
25% of its total assets in the financial services industry.
2. ^ U.S. Government Portfolio and Municipal Money Market
Portfolio each will not purchase a security if, as a result: (a) with
respect to 75% of its total assets, more that 5% of its total assets would
be invested in securities of any single issuer; or (b) more than 25% of its
total assets would be invested in issuers having their principal business
activities in a particular industry^. These limitations do not apply to
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities for either Portfolio and, for Municipal Money Market
Portfolio, to tax-exempt obligations issued or guaranteed by the U.S., a
state, or local government .
3.(a) Each Portfolio may borrow money ^ or engage in reverse
repurchase agreements for temporary or emergency purposes , but not
in an amount exceeding 33 1/3% of its total assets. (b) Each Portfolio may
borrow money from banks or from other funds advised by FMR or an affiliate.
(c) Each Portfolio will not purchase securities when borrowings
^ (excluding reverse repurchase agreements) exceed 5% of its total
assets.
4. Money Market Portfolio (a) may lend its portfolio securities to
broker-dealers and institutions but only when the loans are fully
collateralized; (b) may make loans to other funds advised by FMR and its
affiliates not to exceed 10% of its net assets; and (c) will limit these
loans to 33 1/3% of its total assets.
Except for the Portfolios' investment objectives, Money Market
Portfolio's ability to invest more than 25% of its total assets in the
financial services industry (see limitation 1), limitation 2, and the
33 1/3% limitations on borrowings and loans, the Portfolios' policies and
limitations described in this Prospectus are not fundamental and may be
changed without shareholder approval. As a non-fundamental policy, each
Portfolio may not purchase a security if, as a result, more than 10% of its
net assets would be invested in illiquid investments. These limitations
and the policies discussed in "Investment Objectives ^ Policies , Risks
and Limitations " are considered at the time of purchase; the sale of
securities is not required in the event of a subsequent change in
circumstances.
^
PORTFOLIO TRANSACTIONS
Money market obligations are generally traded in the over-the- counter
market through broker-dealers. A broker-dealer is a securities firm or bank
which makes a market for securities by offering to buy at one price and to
sell at a slightly higher price. The difference between the prices is known
as a spread. Since FMR trades (directly or through affiliated
sub-advisers), a large amount of securities, including those of Fidelity's
other funds, broker-dealers are willing to work with the Portfolios on a
more favorable spread than would be possible for most individual investors.
Each Portfolio has authorized FMR to allocate transactions to some
dealers who help distribute the Portfolio's shares or shares of Fidelity's
other funds and on an agency basis, to Fidelity Brokerage Services, Inc.
(FBSI) and Fidelity Brokerage Services, Ltd. (FBSL), affiliates of FMR. FMR
will make such allocations if commissions are comparable to those charged
by non-affiliated, qualified broker-dealers for similar services.
Higher commissions may be paid to firms that provide research services, to
the extent permitted by law. FMR also is authorized to allocate brokerage
transactions to FBSI in order to secure from FBSI research services
produced by third party, independent entities. FMR may use this research
information in managing each Portfolio's assets, as well as assets of other
clients.
PERFORMANCE
Each Portfolio may quote its current yield, effective yield and total
return in advertising or in reports or other communications with
shareholders. All performance information is historical and is not intended
to indicate future performance.
Each Portfolio's current yield and effective yield calculations ^ for the
seven-day period ended July 31, ^ 1994 are shown below.
<TABLE>
<CAPTION>
<S> <C> <C>
Money Market Portfolio U.S. Government Portfolio Municipal Money
Current Effective Current Effective Market Portfolio
Yield Yield Yield Yield Current Effective
Yield Yield
</TABLE>
The CURRENT YIELD refers to the income generated by an investment in ^
a Portfolio over a seven-day period expressed as an annual
percentage rate. The EFFECTIVE YIELD is calculated similarly, but assumes
that the income earned from the investment is reinvested.
The effective yield will be slightly higher than the current yield
because of the compounding effect on this assumed reinvestment. In addition
to the current yield, each Portfolio may quote yields in advertising based
on any historical seven-day period.
Municipal Money Market Portfolio also may quote ^ TAX - EQUIVALENT
YIELD, which shows the taxable yield an investor would have to earn, before
taxes, to equal the Portfolio's tax-free yield. A tax equivalent yield is
calculated by dividing the Portfolio's tax-exempt yield by the result of
one minus a stated federal and/or state tax rate.
Each Portfolio's TOTAL RETURN is based on the overall dollar or
percentage change in value of a hypothetical investment in a Portfolio
assuming dividend distributions are reinvested. A CUMULATIVE TOTAL RETURN
reflects a Portfolio's performance over a stated period of time. An AVERAGE
ANNUAL TOTAL RETURN reflects the hypothetical annually compounded rate that
would have produced the same cumulative total return if performance had
been constant over the entire period. Because average annual returns tend
to smooth out variations in a Portfolio's performance, investors should
recognize that they are not the same as actual year-by-year results.
DISTRIBUTIONS AND TAXES
INCOME DIVIDENDS. Income dividends normally are declared daily and paid
monthly. Each Portfolio intends to distribute substantially all of its net
investment income and capital gains to shareholders each year. Any net
realized capital gains normally are declared in December.
FEDERAL TAXES - MONEY MARKET PORTFOLIO AND U.S. GOVERNMENT PORTFOLIO.
Distributions from the Portfolios' income and short- term capital gains are
taxable as ordinary income. The Portfolios' distributions are taxable when
they are paid, whether you take them in cash or reinvest them in additional
shares, except that distributions declared in December and paid in January
are taxable as if paid on December 31. The Portfolios will send you a tax
statement by January 31 showing the tax status of the distributions you
received in the past year, and will file a copy with the Internal Revenue
Service (IRS).
STATE AND LOCAL TAXES. Mutual fund dividends from U.S. government
securities generally are free from state and local income taxes. However,
particular states may limit this benefit, and some types of securities,
such as repurchase agreements and some agency-backed securities, may not
qualify for this benefit. Some states may impose intangible property
taxes.
FEDERAL TAXES - MUNICIPAL MONEY MARKET PORTFOLIO. ^ Although
dividends derived from Municipal Money Market Portfolio's tax- exempt
income are not subject to federal income tax, ^ shareholders must
report these dividends to the IRS ^. Exempt- interest dividends are
included in income for purposes of computing the portion of Social Security
and railroad retirement benefits that may be subject to federal tax.
Shareholders who are subject to the federal AMT must include the portion of
the Portfolio's exempt-interest dividends derived from "private activity"
bonds as a tax preference item in their AMT computation.
If the Portfolio earns taxable income or capital gains from its
investments, these amounts will be designated as taxable distributions.
Dividends from taxable investment income and short- term capital gains are
taxable as ordinary income. Gains on the sale of tax-free bonds result
in a taxable distribution. Short-term capital gains and a portion of the
gain on bonds purchased at a discount are taxed as dividends.
Distributions are taxable when they are paid, whether you take them in cash
or reinvest them in additional shares, except that distributions declared
in December and paid in January are taxable as if paid on December 31. The
Portfolio will send you a tax statement showing the amount of tax-exempt
distributions and AMT income, if any, for the past calendar year, and will
send a tax statement by January 31 if the Portfolio makes any taxable
distributions.
OTHER TAX INFORMATION. The information above is only a summary of some of
the ^ tax consequences generally affecting each Portfolio and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal tax, ^ shareholders may be
subject to state or local taxes on their ^ investments . Investors
should consult their tax advisors for details and up-to-date information
to determine whether a Portfolio is suitable to their particular tax
situation.
When an account application is signed, investors will be asked to certify
that their Social Security or taxpayer identification number is correct and
that they are not subject to 31% backup withholding for failing to report
income to the IRS. If an investor violates IRS regulations, the IRS can
require a Portfolio to withhold 31% of the investor's taxable distributions
and redemptions.
HOW TO INVEST, EXCHANGE AND REDEEM
Shares of each Portfolio are offered continuously and may be purchased at
the net asset value per share (NAV) next determined after an order is
received and accepted. The Portfolios do not impose any sales charges in
connection with purchases of their shares, although institutions may charge
their clients fees in connection with purchases and sales for ^ their
clients' accounts ^. Each Portfolio may discontinue offering its shares
generally or in any particular state without notice to shareholders.
IF YOU ARE INVESTING THROUGH A SECURITIES DEALER OR BANK (FINANCIAL
INSTITUTION), CONTACT THAT FINANCIAL INSTITUTION DIRECTLY.
If you are purchasing shares of the Portfolios through a program of
services offered by a Financial Institution, you should read the program
materials in conjunction with this Prospectus. Certain features of the
Portfolios , such as the minimum for subsequent investment amounts and
exchanges with certain Fidelity funds, may be modified in these
programs and administrative charges (in addition to payments the Financial
Institution may receive pursuant to a Portfolio's Distribution and Service
Plan) may be imposed for the services rendered.^ For further information,
including copies of prospectuses, statements of additional information and
applications, contact your Financial Institution or the Portfolio directly.
SHARE PRICE. Fidelity Service Co. (Service) calculates NAV for Money
Market Portfolio and U.S. Government Portfolio at 2:00 p.m. and 4:00 p.m.
Eastern time and for Municipal Money Market Portfolio at 12:00 noon and
4:00 p.m. Eastern time each day ^ the applicable Portfolio is open
for business (see "Holiday Schedule" on page ). The NAV of each Portfolio
is determined by adding the amortized cost valuation and other assets of
the Portfolio, deducting its actual and accrued liabilities, and dividing
by the number of Portfolio shares outstanding ^. Each Portfolio
values its portfolio securities on the basis of amortized cost. Shares
purchased at the 2:00 p.m. price (or 12:00 noon price for
Municipal Money Market Portfolio) ^ earn the income dividend declared that
day. Shares purchased at the 4:00 p.m. price (including all purchases by
check) begin to earn income dividends on the following business day.
MINIMUM INVESTMENT AND ACCOUNT BALANCE. The minimum initial investment to
establish a new account in each Portfolio is $1,000. Subsequent investments
must be at least $250. If you want to keep your account open, please leave
$500 in it. If your account balance falls below $500 due to redemption,
your account may be closed and the proceeds mailed to you at the record
address. You will be given 30 days' notice that your account will be closed
unless you make an additional investment to increase your account balance
to the $500 minimum.
HOW TO INVEST
Unless investors already have a Fidelity mutual fund account, they must
complete and sign the application.
INVESTING BY CHECK. Investors or their Financial ^ Institution
must send a check payable to Capital Reserves (name of Portfolio), together
with a completed application to:
Capital Reserves
FIIOC, ZR5
P.O. Box 1182
Boston, MA 02103-1182
Checks must be drawn on a U.S. bank.
INVESTING BY MAIL. To make additional investments directly, mail
a check with the investor's account number ^ to the address above. If an
investor makes a purchase with more than one check, each check must have a
value of at least $50 ^ and the minimum investment requirement still
applies. Each Portfolio reserves the right to limit the number of checks
processed at one time. If a check does not clear, the investor's purchase
will be canceled and the investor could be liable for any losses or fees
incurred.
INVESTING BY WIRE. An investor may purchase shares of each Portfolio by
wire. For wiring information and instructions, investors should call the
institution through which they trade, or Client Administration at
1-800-843-3001. ^ To receive same - day acceptance of the
investment, investors must telephone Institutional Trading at
1-800-343-6310 between 8:30 a.m. and 2:00 p.m. (or 12:00 noon for Municipal
Money Market Portfolio) Eastern time on days each Portfolio is open for
business ^ to advise them of the wire and to place the trade.
Investors are urged to initiate the purchase of shares as early in the
day as possible and to provide advance notice on large transactions ^. If
Institutional Trading is not advised of the order prior to 2:00 p.m. (or
12:00 noon for Municipal Money Market Portfolio) Eastern time, or if
clearing house funds are transferred via the Bank Wire System, the order
will be accepted on the business day following the day of transfer and
shares will begin earning dividends on that day. There is no fee imposed by
the Portfolios for wire purchases. However, banks may impose such a fee.
HOW TO EXCHANGE
An exchange is a convenient way to buy shares of ^ a Portfolio or
other Fidelity funds. The Fidelity family of funds has a variety of
investment objectives. You may exchange shares of each Portfolio for shares
of other Fidelity funds that are registered in your state (subject
to the minimum initial investment requirement and the terms of the program
of services offered by your Financial Institution) ^. Investors may only
exchange between accounts that are registered in the same name, address,
and taxpayer identification number. Investors should consult the prospectus
of the ^ fund to be acquired to determine eligibility and suitability. To
protect fund performance and shareholders, Fidelity discourages frequent
trading in response to short-term market fluctuations. In particular,
exchanges that coincide with " market timing" strategies can have adverse
effects on the funds.
The Portfolios reserve the right at any time without prior notice to
refuse exchange purchases by any person or group if, in FMR's judgment, ^
a Portfolio would be unable to invest effectively in accordance with
its investment objective and policies or would otherwise potentially be
adversely affected. The exchange privilege may be modified or terminated in
the future.
TO EXCHANGE BY TELEPHONE. Exchanges may be requested by calling
Institutional Trading:
Nationwide 800-343-6310
In Massachusetts 800-462-2603 or 617-439-0270
TO EXCHANGE BY MAIL. Written requests for exchanges should ^
include the ^ Portfolio's name, account number, ^ number of
shares to be redeemed, and the portfolio name of the fund whose
shares ^ are being purchased. The letter must be signed by a person
authorized to act on the account. Letters should be sent to:
Capital Reserves
FIIOC, ZR5
P.O. Box 1182
Boston, MA 02103-1182
RESTRICTIONS. Currently, there is no limit on the number of exchanges out
of each Portfolio, nor are there any administrative or redemption fees
applicable to exchanges out of the Portfolios. However, other funds may
restrict or limit exchanges, and may impose administrative fees of up to
$7.50 and redemption fees of up to 1.5% on exchanges. Check each fund's
prospectus for details.
TAXES. Each exchange actually represents the sale of shares of one fund
or portfolio and the purchase of shares in another, which may produce a
gain or loss for tax purposes.
Shares will be redeemed at the next determined NAV following receipt of
the exchange order. Shares of the fund to be acquired will be purchased at
its next determined NAV after redemption proceeds are made available.
Investors will earn dividends in the acquired fund in accordance with ^
that fund's customary policy, normally on the day the exchange
request is received. Investors should note that under certain
circumstances, a ^ Portfolio may take up to seven days to make
redemption proceeds available for the exchange purchase of shares of
another fund.
HOW TO REDEEM
Investors may redeem all or a portion of their shares on any business
day. Shares will be redeemed at the next NAV calculated after the Portfolio
has received and accepted a redemption request. If an account is closed by
an investor, any accrued dividends will be paid at the beginning of the
following month. A Portfolio may hold payment until it is reasonably
satisfied that investments made by check have been collected (which can
take up to seven days). Shares redeemed at the 2:00 p.m. price (or 12:00
noon price for Municipal Money Market Portfolio) do not receive the
dividend declared on the day of redemption. Shares redeemed at the 4:00
p.m. price do receive the dividends declared on the day of redemption.
REDEMPTION REQUESTS BY CHECK (MINIMUM $500):
- - An investor must have applied for the checkwriting feature on the
account.
- - An investor may write any number of checks.
- - If the amount of a check is greater than the value of the account, the
check will be returned and the investor may be subject to extra charges.
REDEMPTION REQUESTS BY WIRE MAY BE MADE BY CALLING INSTITUTIONAL TRADING:
Nationwide 800-343-6310
In Massachusetts 800-462-2603 or 617-439-0270
An investor must apply for the wire feature on the account application.
Institutional Trading will then notify the investor that this feature is
active and wire redemptions may then be made by calling Institutional
Trading during trading hours.
If telephone instructions are received before 2:00 p.m. (or 12:00 noon
for Municipal Money Market Portfolio) Eastern time, proceeds of the
redemption will be wired in federal funds on the same day to the client's
bank account designated on the application. If instructions are received
after 2:00 p.m. (or 12:00 noon ^ for Municipal Money Market
Portfolio) and before 4:00 p.m. Eastern time, redemption of shares will
be processed at 4:00 p.m. Eastern time and proceeds will be wired on the
next business day.
A shareholder may change the bank account(s) designated to receive an
amount redeemed at any time by sending a letter of instruction with a
signature guarantee to:
^ Fidelity Investments Institutional Operations Company (FIIOC)
Mail Zone ZR5
P.O. Box 1182
Boston, MA 02103-1182
Further documentation may be required when deemed appropriate by FIIOC.
REDEMPTION REQUESTS BY MAIL. A letter of instruction is required,
specifying the name of the Portfolio, the number of shares to be redeemed,
the investor's name and account number, and the additional requirements
listed below that apply to the particular account.
<TABLE>
<CAPTION>
<S> <C>
TYPE OF REGISTRATION ^ REQUIREMENTS
Individual, Joint Tenants, ^ Letter of instruction signed by
Sole Proprietorship, ^ all person(s) required to sign
Custodial (Uniform ^ Gifts or for the account exactly as it
Transfers to ^ Minors Act), ^ is registered, accompanied by
General Partners ^ signature guarantee(s).
Corporations, Associations Letter of instruction and a ^
corporate resolution, signed by
^ person(s) required to sign
for ^ the account accompanied
by ^ signature guarantee(s).
Trusts A ^ letter of instruction
signed by ^ the Trustee(s)
with signature ^ guarantee(s).
(If the Trustee's ^ name is not
registered on the ^ account,
also provide a copy of ^ the
trust document, certified ^
within the last 60 days.)
</TABLE>
^ An investor who does not fall into any of these registration categories
(i.e., executors, administrators, conservators, guardians) should call
Institutional Trading for further instructions.
A signature guarantee is a widely accepted way to protect you and ^
FIIOC by verifying the signature on your redemption request; it may
not be provided by a notary public.
Signature guarantees will be accepted from banks, brokers, dealers,
municipal securities dealers, municipal securities brokers, government
securities dealers, government securities brokers, credit unions (if
authorized under state law), national securities exchanges, registered
securities associations, clearing agencies, and savings associations.
If making immediate payment of redemption proceeds could adversely affect
a Portfolio, it may take up to seven (7) days to pay an investor. Also,
when the New York Stock Exchange (NYSE) is closed (or when trading is
restricted) for any reason other than its customary weekend or holiday
closings, or under any emergency circumstances as determined by the
Securities and Exchange Commission (SEC) to merit such action, the
Portfolios may suspend redemption or postpone payment dates. If investors
have been unable to execute transactions by telephone to Institutional
Trading or by calling their Financial Institution (for example, during
times of unusual market activity), they should consider placing their
orders by mail to FIIOC at the address given above. In cases of suspension
of the right of redemption, an investor may either withdraw a request for
redemption or receive payment based on the next determined NAV after the
termination of the suspension.
CHOOSING A DISTRIBUTION OPTION
^ The Portfolios offer two distribution options:
A. THE SHARE OPTION reinvests dividend distributions in additional shares.
This option is assigned automatically if no choice is made on ^ your
application ^ and provides for the purchase of new shares at their
NAV as of the close of business on the day dividends are distributed.
B. THE INCOME-EARNED OPTION reinvests capital gain distributions and pays
income dividends in cash.
STATEMENTS AND REPORTS
Investors will receive a monthly statement which details every
transaction that affects their share balance or account registration. A
statement with tax information will be mailed by January 31 of each year
and also will be filed with the IRS. At least twice a year, investors will
receive the Portfolios' financial statements. To reduce expenses, only one
copy of the Portfolios' reports (such as the Portfolios' Annual Report) may
be mailed to each household. Investors should contact their Financial
Institution or the Portfolios to request additional reports.
ADDITIONAL INFORMATION. Each Portfolio also reserves the right to reject
any specific purchase order including certain purchases by exchange (see
"How to Exchange" on page ). Purchase orders may be refused if, in FMR's
opinion, they are of a size that would disrupt management of a Portfolio.
^ You may initiate many transactions by telephone. Note that
Fidelity will not be responsible for any losses resulting from unauthorized
transactions if it follows reasonable procedures designed to verify the
identity of the caller. Fidelity will request personalized security codes
or other information, and may also record calls. ^ You should verify
the accuracy of ^ your confirmation statements immediately after ^
you receive them. ^ If you do not want the ability to redeem
and exchange by telephone ^ , call Fidelity for instructions.
HOLIDAY SCHEDULE. Money Market Portfolio and U.S. Government Portfolio
are open for business and their ^ respective NAVs are calculated ^
each day ^ both the Federal Reserve Bank of New York (New York Fed)
and the NYSE are open for trading. Municipal Money Market Portfolio is open
for business and its NAV is calculated each day ^ both the Federal Reserve
Bank of Kansas City (Kansas City Fed) and the NYSE are open for trading.
The following holiday closings have been ^ designated for 1994: Dr.
Martin Luther King, Jr. Day (observed), Presidents' Day^ , Good
Friday, Memorial Day^ , Independence Day^ , Labor Day, Columbus
Day^ , Veterans' Day^, Thanksgiving Day, and Christmas Day
(observed). ^ Although FMR expects the same holiday schedule , with the
addition of New Year's Day, to be observed in the future, the New York
Fed ^ (for Money Market Portfolio and U.S. Government Portfolio), the
Kansas City Fed ^ (for Municipal Money Market Portfolio) or the NYSE
may modify its holiday schedule at any time. ^ The right is reserved to
advance the time by which purchase and redemption orders must be received
on any day: (1) that the New York Fed ^ (for Money Market and U.S.
Government Portfolios) or the Kansas City Fed ^ (for Municipal Money
Market Portfolio) or the NYSE closes early, or (2) as permitted
by the SEC^. Certain Fidelity funds may follow different holiday closing
schedules.
THE PORTFOLIOS AND THE FIDELITY ORGANIZATION
Each Portfolio is a diversified portfolio of Daily Money Fund^, an
open-end management investment company originally organized as a
Massachusetts business trust by Declaration of Trust dated June 7, 1982,
amended and restated as of September 1, 1989, and reorganized as a Delaware
business trust on September 29, 1993. The Fund's Board of Trustees
supervises Fund activities and reviews contractual arrangements with
companies that provide the Portfolios with services. The Fund is not
required to hold annual shareholder meetings, although special meetings may
be called for a specific Portfolio or the Fund as a whole for purposes such
as electing or removing Trustees, changing fundamental investment policies
or approving a management contract. Shareholders receive one vote for each
share of a Portfolio they own and fractional votes for each fractional
share of a Portfolio they own. Separate votes are taken by each Portfolio
if a matter affects just that Portfolio.
Fidelity Investments is one of America's largest investment management
organizations and has its principal business address at 82 Devonshire
Street, Boston, Massachusetts. It includes a number of different companies
that provide a variety of financial services and products. FMR employs
various Fidelity companies to perform activities required to operate the
Fund.
FMR, the ^ Portfolios' adviser, is the original Fidelity company,
founded in 1946. It provides a number of mutual funds and other clients
with investment research and portfolio management services. It maintains a
large staff of experienced investment personnel and a full complement of
related support facilities. As of July 31, ^ 1994 , FMR advised funds
having more than ^ __ million shareholder accounts with a total value
of more than ^ $___ billion.
FMR Texas Inc. (FMR Texas), the Portfolios' sub-adviser, is a wholly
owned subsidiary of FMR that provides advice and investment management
services with respect to money market instruments. FMR Texas, a Texas
corporation, has its principal offices at 400 East Las Colinas Boulevard,
Irving, Texas.
Fidelity Distributors Corporation distributes shares for the Fidelity
funds. FMR Corp. is the parent company for the Fidelity companies. Through
ownership of voting common stock, Edward C. Johnson 3d (President and a
Trustee of the Fund), Johnson family members, and various trusts for the
benefit of the Johnson family form a controlling group with respect to FMR
Corp.
MANAGEMENT, DISTRIBUTION AND SERVICE FEES
MANAGEMENT CONTRACTS. For managing its investments and business affairs,
each Portfolio pays FMR a monthly management fee at the annual rate of .50%
of its average net assets for the month. ^ Management fees for the
fiscal year ended July 31, ^ 1994 were $_________ (Money Market
Portfolio), $___________ (U.S. Government Portfolio), and $___________
(Municipal Money Market Portfolio) . FMR is voluntarily reimbursing each
Portfolio's expenses to the extent that total portfolio operating expenses,
including management fees (but excluding interest, taxes, brokerage
commissions and extraordinary expenses), exceed an annual rate of .99% of
average net assets. FMR, on behalf of each Portfolio, has entered into a
sub-advisory agreement with FMR Texas, under which FMR Texas has primary
responsibility for providing portfolio investment management services,
while FMR retains responsibility for providing other management services.
Under each sub-advisory agreement, FMR pays FMR Texas a fee equal to 50% of
the management fee retained by FMR under its current management contract
with each Portfolio, after payments by FMR pursuant to each Portfolio's ^
distribution and service plan. The fees paid to FMR Texas are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time.
DISTRIBUTION AND SERVICE PLANS. The Trustees of the Fund have adopted a
Distribution and Service Plan ^ on behalf of each Portfolio (the Plan)
pursuant to Rule 12b-1 under the ^ 1940 Act ^ (the Rule). The
Rule provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is intended primarily to result
in the sale of shares of the fund except pursuant to a plan adopted by the
fund under the Rule. The Board of Trustees has adopted the Plans to allow
each Portfolio and FMR to incur certain expenses that might be considered
to constitute direct or indirect payment by the Portfolios of distribution
expenses.
Under the Plans, each Portfolio is authorized to pay ^ the
Distributor , 82 Devonshire Street, Boston, Massachusetts, an affiliate
of FMR and the distributor of the ^ Portfolios' shares , a monthly
distribution fee as compensation for its services and expenses in
connection with ^ such distribution ^. Each Portfolio pays to the
Distributor a distribution fee at an annual rate of .35% of its average net
assets. The distribution fee is ^ a Portfolio expense ^ in addition
to the management fee and the Portfolios' other expenses. Such expenses
reduce the Portfolios' net investment income and total return.
The Distributor may pay all or a portion of the distribution fee to
securities dealers ^ or other entities, including banks and other
financial institutions that have selling agreements with the Portfolios
(Qualified Recipients) as compensation for selling shares of the Portfolios
and providing ongoing shareholder support services. In addition, each Plan
also specifically recognizes that FMR may make payments from its management
fee, revenue, past profits or other resources to Qualified Recipients for
their services to the Portfolios' shareholders. Qualified Recipients
currently may be compensated by FMR at a maximum annual rate of up to .25%
of the average net assets of the Portfolios with respect to which they
provide or have provided shareholder support or distribution services. The
Distributor also may act in the capacity of a Qualified Recipient, and as
such may receive compensation under the Plans. Qualified Recipients,
including the Distributor acting ^ as a Qualified Recipient, at
their discretion may retain any portion of their compensation received
pursuant to the Plans and reallow the balance of such compensation to their
correspondents.
The Distributor ^ will , at its own expense, provide promotional
incentives to Qualified Recipients who support the sale of shares of the
Portfolios ^. ^ In some instances, these incentives ^ will be
offered only to certain ^ types of Qualified Recipients, such as
those whose representatives provide services in connection with the
sale or expected sale of significant amounts of shares.
The NASD has approved amendments which subject asset-based sales
charges to its maximum sales charge rule. Fees paid pursuant to ^
each Portfolio's Distribution and Service Plan will be limited by
the restrictions imposed by the NASD rule.
The Glass-Steagall Act generally prohibits federally and state chartered
or supervised banks from engaging in the business of underwriting, selling
or distributing securities. Although the scope of this prohibition under
the Glass-Steagall Act has not been fully defined, in Distributors' opinion
it should not prohibit banks from being paid for performing shareholder
servicing and recordkeeping. If, because of changes in law or regulation,
or because of new interpretations of existing law, a bank or ^ a
Portfolio were prevented from continuing these arrangements, it is
expected that other arrangements would be made for these services and that
shareholders would not suffer adverse financial consequences. In addition,
state securities laws on this issue may differ from the interpretations of
federal law expressed herein, and banks and other financial institutions
may be required to register as dealers pursuant to state law.
FIIOC, 82 Devonshire Street, Boston, Massachusetts, an affiliate of FMR,
acts as transfer and dividend-paying agent and maintains shareholder
records for Money Market Portfolio and U.S. Government Portfolio. United
Missouri Bank, N.A. (United Missouri) acts as transfer and dividend-paying
agent and maintains shareholder records for Municipal Money Market
Portfolio. United Missouri has entered into a sub-contract with FIIOC ^
which provides that FIIOC performs the processing activities
associated with the transfer agent and shareholder servicing functions for
Municipal Money Market Portfolio. Under each contract , FIIOC is paid
fees based on the total number of accounts in each Portfolio and the number
of transactions made by shareholders of each Portfolio. In addition, FIIOC
pays all transfer agent and related out-of-pocket expenses. Fees for
institutional retirement plan accounts, if any, would be based on the net
asset value of all such accounts in ^ a Portfolio. For fiscal ^
1994 these payments amounted to ^ $_______ (Money Market
Portfolio), $_________ (U.S. Government Portfolio), and $_________
(Municipal Money Market Portfolio) .
Money Market Portfolio and U.S. Government Portfolio pay Service, 82
Devonshire Street, Boston, Massachusetts, an affiliate of FMR, to calculate
their daily share prices and to maintain their general accounting records.
United Missouri employs Service to perform these functions ^ for
Municipal Money Market Portfolio. The fees for pricing and bookkeeping
services are based on each Portfolio's average net assets, and must fall
within a range of $20,000 to $750,000 per year. For fiscal ^ 1994
fees for pricing and bookkeeping services amounted to ^ $_______ (Money
Market Portfolio), $_________ (U.S. Government Portfolio), and $_________
(Municipal Money Market Portfolio) .
APPENDIX
The following paragraphs provide a brief description of the securities in
which the Portfolios may invest and the transactions they may make. The
Portfolios are not limited by this discussion, however, and may purchase
other types of securities and enter into other types of transactions if
they are consistent with the Portfolios' investment objectives and
policies.
ASSET-BACKED SECURITIES. Asset-backed securities may include
interests in pools of mortgages, loans, ^ receivables or other
assets . Payment of principal and interest may be largely dependent upon
the cash flows generated by the assets backing the securities.
BANKERS' ACCEPTANCES. Bankers' acceptances are negotiable obligations of
a bank to pay a draft which has been drawn on it by a customer. These
obligations are backed by large banks and usually backed by goods in
international trade.
CERTIFICATES OF DEPOSIT. Certificates of deposit are negotiable
certificates representing a commercial bank's obligations to repay funds
deposited with it, earning specified rates of interest over a given period
of time.
COMMERCIAL PAPER. Short-term obligations issued by banks, broker-
dealers, corporations, and other entities for purposes such as financing
their current operations.
DELAYED-DELIVERY TRANSACTIONS. ^ Securities can be bought and sold
on a when-issued or delayed-delivery basis, with payment and delivery
taking place at a future date. The market value of securities purchased in
this way may change before the delivery date, which could affect the market
value of a Portfolio's assets. Ordinarily, ^ the Portfolios will not
earn interest on the securities purchased until they are delivered.
^
INTERFUND BORROWING PROGRAM. The Portfolios have received permission from
the SEC to lend money to and borrow money from other funds advised by FMR
or its affiliates. U.S. Government Portfolio and Municipal Money Market
Portfolio will participate in the interfund lending program only as
borrowers. Interfund loans and borrowings normally will extend overnight,
but can have a maximum duration of seven days. Money Market Portfolio will
lend through the program only when the returns are higher than those
available at the same time from other short-term instruments (such as
repurchase agreements), and each Portfolio will borrow through the program
only when the costs are equal to or lower than the cost of bank loans.
Money Market Portfolio will not lend more than 10% of its assets to other
funds, and each Portfolio will not borrow through the program if, after
doing so, total outstanding borrowings would exceed 15% of total assets.
Loans may be called on one day's notice, and the Portfolios may have to
borrow from a bank at a higher interest rate if an interfund loan is called
or not renewed. Any delay in repayment to a lending fund could result in a
lost investment opportunity or additional borrowing costs.
ILLIQUID INVESTMENTS.^ Under the supervision of the Board of Trustees,
FMR determines the liquidity of each Portfolio's investments. The absence
of a trading market can make it difficult to ascertain a market value for
illiquid investments. ^ Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult
or impossible for ^ a Portfolio to sell illiquid investments
promptly at an acceptable price.
MUNICIPAL ^ SECURITIES include GENERAL OBLIGATION SECURITIES, which are
backed by the full taxing power of a municipality, and REVENUE SECURITIES,
which are backed by the revenues of a specific tax, project, or facility.
INDUSTRIAL REVENUE BONDS are a type of revenue bond backed by the credit
and security of a private issuer and may involve greater risk. PRIVATE ^
ACTIVITY MUNICIPAL SECURITIES , which may be subject to the federal
alternative minimum tax, include securities issued to finance housing
projects, student loans, and privately owned solid waste disposal and water
and sewage treatment facilities.
TAX AND REVENUE ANTICIPATION NOTES are issued by municipalities in
expectation of future tax or other revenues, and are payable from those
specific taxes or revenues. BOND ANTICIPATION NOTES normally provide
interim financing in advance of an issue of bonds or notes, the proceeds of
which are used to repay the anticipation notes. TAX-EXEMPT COMMERCIAL PAPER
is issued by municipalities to help finance short-term capital or operating
needs.
MUNICIPAL LEASE OBLIGATIONS are issued by a state or local government or
authority to acquire land and a wide variety of equipment and facilities.
These obligations typically are not fully backed by the municipality's
credit, and their interest may become taxable if the lease is assigned. If
funds are not appropriated for the following year's lease payments, the
lease may terminate, with the possibility of significant loss to the
Portfolio. CERTIFICATES OF PARTICIPATION in municipal lease obligations or
installment sales contracts entitle the holder to a proportionate interest
in the lease-purchase payments made.
RESOURCE RECOVERY BONDS ^ are a type of revenue bond issued to build
facilities such as solid waste incinerators or waste-to- energy plants.
Typically, a private corporation will be involved, at least during the
construction phase, and the revenue stream will be secured by fees or rents
paid by municipalities for use of the facilities. The viability of a
resource recovery project, environmental protection regulations, and
project operator tax incentives may affect the value and credit quality of
resource recovery bonds.
VARIABLE OR FLOATING RATE ^ OBLIGATIONS , including certain
participation interests in municipal obligations, have interest rate
adjustment formulas that help to stabilize their market values. Many
variable and floating rate instruments also carry demand features that
permit ^ the Portfolios to sell them at par value plus accrued
interest on short notice. When determining the maturity of a variable or
floating rate instrument, ^ a Portfolio may look to the date the
demand feature can be exercised, or to the date the interest rate is
readjusted, rather than to the final maturity of the instrument.
A DEMAND FEATURE is a put that entitles the security holder to repayment
of the principal amount of the underlying security on no more than 30 days'
notice at any time or at specified intervals not exceeding 397 days. A
STANDBY COMMITMENT is a put that entitles the security holder to same-day
settlement at amortized cost plus accrued interest.
Issuers or financial intermediaries who provide demand features or
standby commitments often support their ability to buy securities on demand
by obtaining LETTERS OF CREDIT (LOCs) or other guarantees from domestic or
foreign banks. LOCs also may be used as credit supports for other types of
municipal instruments. FMR may rely upon its evaluation of a bank's credit
in determining whether to purchase an instrument supported by ^ an
LOC. In evaluating a foreign bank's credit, FMR will consider whether
adequate public information about the bank is available and whether the
bank may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might affect the
bank's ability to honor its credit commitment.
TENDER OPTION BONDS ^ are created by coupling an intermediate- or
long-term, fixed-rate tax-exempt bond with a tender agreement that gives
the holder the option to tender the bond at its face value. In return for
providing the tender option, the sponsor (usually a bank, broker-dealer, or
other financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate that would cause the
bond, coupled with the tender option, to trade at par value. Subject to
applicable regulatory requirements, Municipal Money Market Portfolio may
buy tender option bonds if the tender option agreement gives the Portfolio
the right to tender the bond to its sponsor no less frequently than once
every 397 days. A sponsor may terminate a tender option if, for example,
the issuer of the underlying bond defaults on interest payments.
MONEY MARKET. Refers to the marketplace where short-term, high grade debt
securities are traded. These securities include U.S. government
obligations, commercial paper, certificates of deposit and bankers'
acceptances, time deposits and short-term corporate obligations. These
securities normally carry specific rates of return. A portfolio may invest
in variable rate obligations which provide for adjustments in interest
rates on specific dates, and floating rate obligations which have an
interest rate that changes whenever there is a change in the designated
base rate.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions by which a
Portfolio purchases a security and simultaneously commits to resell that
security to the seller at a higher price. In the event of the bankruptcy of
the other party to a repurchase agreement, the Portfolio could experience
delays in recovering cash. To the extent that, in the meantime, the value
of the securities purchased ^ had decreased or the value of the
securities it lent had increased, a Portfolio could experience a loss.
In all cases FMR must find the creditworthiness of the other party to a
transaction satisfactory.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement ,
a Portfolio temporarily transfers possession of a portfolio instrument to
another party, such as a bank or broker- dealer, in return for cash. At the
same time, the Portfolio agrees to repurchase the instrument at an
agreed-upon price and time. ^ The Portfolios expect that they will
engage in reverse repurchase agreements for temporary purposes such as to
fund redemptions or when it is able to invest the cash so acquired at a
rate higher than the cost of the agreement, which would increase income
earned by the Portfolio. Reverse repurchase agreements may increase the
risk of fluctuation in the market value of the Portfolios' assets or in
their yield.
RESTRICTED SECURITIES^ cannot be sold to the public without registration
under the Securities Act of 1933^. Unless registered for sale, these
securities can only be sold in privately negotiated transactions or
pursuant to an exemption from registration.
TIME DEPOSITS. Non-negotiable deposits in a banking institution earning a
specified interest rate over a given period of time.
U.S. GOVERNMENT OBLIGATIONS. Debt securities issued or guaranteed by the
U.S. Treasury or by an agency or instrumentality of the U.S. government.
Not all U.S. government obligations are backed by the full faith and credit
of the United States. For example, securities issued by the Federal Farm
Credit Bank or by the Federal National Mortgage Association are supported
by the agency's right to borrow money from the U.S. Treasury under certain
circumstances. Securities issued by the Federal Home Loan ^ Banks
are supported only by the credit of ^ those entities . There is no
guarantee that the government will support these types of securities, and
therefore they involve more risk than other government obligations.
ZERO COUPON BONDS. Zero coupon bonds do not make regular interest
payments; instead, they are sold at a deep discount from their face value
and are redeemed at face value when they mature. Because zero coupon bonds
do not pay current income, their prices can be very volatile when interest
rates change. In calculating its daily dividend, each Portfolio takes into
account as income a portion of the difference between a zero coupon bond's
purchase price and its face value.
CAPITAL RESERVES:
MONEY MARKET PORTFOLIO
U.S. GOVERNMENT PORTFOLIO
MUNICIPAL MONEY MARKET PORTFOLIO
PORTFOLIOS OF DAILY MONEY FUND
STATEMENT OF ADDITIONAL INFORMATION
This Statement is not a prospectus but should be read in conjunction with
the Portfolios' current Prospectus (dated September ^ 26, 1994) .
Please retain this Statement for future reference. The Portfolios'
financial statements and financial highlights, included in the Annual
Report, for the fiscal period ended July 31, 1994 are attached to the
Prospectus. To obtain an addit<<MARK>>>ional ^
copy of the ^ Prospectus and Annual Report, please call Fidelity
nationwide at 800-843-3001. If you are investing through a financial
institution, contact that institution directly.
TABLE OF CONTENTS
Page
Investment Policies and ^ Limitations2
Portfolio ^ Transactions10
Valuation of Portfolio ^ Securities11
^ Performance12
Additional Purchase and Redemption ^ Information16
Distributions and ^ Taxes16
^ FMR18
Trustees and ^ Officers18
Management ^ Contracts20
Contracts With Companies Affiliated With ^ FMR21
Distribution and Service ^ Plans22
Description of the ^ Fund24
^ Financial Statements26
Appendix27
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISER
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
National Financial Services Corporation (the Distributor)
TRANSFER AGENTS
Fidelity Investments Institutional Operations Company (FIIOC)
United Missouri Bank, N.A. (United Missouri)
^
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a Portfolio's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation shall be
determined immediately after and as a result of the Portfolio's acquisition
of such security or other asset. Accordingly, any subsequent change in
values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the Portfolio's investment
policies and limitations.
Each Portfolio's fundamental investment policies and limitations may not
be changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 ^ (1940
Act)) of the Portfolio. However, except for the fundamental investment
limitations set forth below, the investment policies and limitations
described in this Statement of Additional Information are not fundamental,
and may be changed without shareholder approval.
INVESTMENT LIMITATIONS OF MONEY MARKET PORTFOLIO
THE FOLLOWING ARE MONEY MARKET PORTFOLIO'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE PORTFOLIO MAY NOT:
(1) with respect to 75% of the Portfolio's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities) if, as a
result thereof, (a) more than 5% of the Portfolio's total assets would be
invested in the securities of that issuer, or (b) the Portfolio would hold
more than 10% of the voting securities of such issuer;
(2) issue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the Portfolio may (i) borrow money for
temporary or emergency purposes (not for leveraging or investment) and (ii)
engage in reverse repurchase agreements for any purpose; provided that (i)
and (ii) in combination do not exceed 33 1/3% of the Portfolio's total
assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that come to exceed this amount will be
reduced within three days (not including Sundays and holidays) to the
extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities if, as a result, more than 25% of the Portfolio's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the Portfolio
will invest more than 25% of its total assets in the financial services
industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the
Portfolio from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(8) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, (but this limit
does not apply to purchases of debt securities or to repurchase
agreements).
(9) The Portfolio may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objectives, policies, and limitations as the
Portfolio.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The Portfolio does not currently intend to purchase a security (other
than a security issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities) if, as a result, more than 5% of its total
assets would be invested in the securities of a single issuer; provided
that the Portfolio may invest up to 25% of its total assets in the first
tier securities of a single issuer for up to three business days.
(ii) ^ The Portfolio does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
^ (iii) The Portfolio may borrow money only (a) from a bank or from
a registered investment company or portfolio for which FMR or an affiliate
serves as investment adviser or (b) by engaging in reverse repurchase
agreements with any party. The Portfolio will not purchase any security
while borrowings (excluding reverse repurchase agreements) representing
more than 5% of its total assets are outstanding. The Portfolio will not
borrow from other funds advised by FMR or its affiliates if total
outstanding borrowings immediately after such borrowing would exceed 15% of
the Portfolio's total assets.
^ (iv) The Portfolio does not currently intend to purchase any
security if, as a result, more than 10% of its net assets would be invested
in securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be sold
or disposed of in the ordinary course of business at approximately the
prices at which they are valued.
^ (v) The Portfolio does not currently intend to lend assets other
than securities to other parties, except by lending money (up to 10% of the
Portfolio's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or repurchase agreements).
^ (vi) The Portfolio does not currently intend to purchase the
securities of any issuer (other than securities issued or guaranteed by
domestic or foreign governments or political subdivisions thereof) if, as a
result, more than 5% of its total assets would be invested in the
securities of business enterprises that, including predecessors, have a
record of less than three years of continuous operation.
^ (vii) The Portfolio does not currently intend to invest in oil,
gas, or other mineral exploration or development programs or leases.
^ (viii) The Portfolio does not currently intend to invest all of
its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives,
policies, and limitations as the Portfolio.
(ix) The Portfolio does not currently intend to purchase or sell
futures contracts or call options. This limitation does not apply to
options attached to, or traded together with, their underlying securities,
and does not apply to securities that incorporate features similar to
options and futures contracts.
INVESTMENT LIMITATIONS OF U.S. GOVERNMENT PORTFOLIO
THE FOLLOWING ARE U.S. GOVERNMENT PORTFOLIO'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE PORTFOLIO MAY NOT:
(1) with respect to 75% of the Portfolio's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities) if, as a
result thereof, (a) more than 5% of the Portfolio's total assets would be
invested in the securities of that issuer, or (b) the Portfolio would hold
more than 10% of the voting securities of such issuer;
(2) issue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the Portfolio may (i) borrow money for
temporary or emergency purposes (not for leveraging or investment) or (ii)
engage in reverse repurchase agreements for any purpose provided that (i)
and (ii) in combination do not exceed 33 1/3% of the Portfolio's total
assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that come to exceed this amount will be
reduced within three days (not including Sundays and holidays) to the
extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities ) if, as a result, more than 25% of the Portfolio's
total assets would be invested in the securities of companies whose
principal business activities in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the
Portfolio from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(8) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, (but this limit
does not apply to purchases of debt securities or to repurchase
agreements).
(9) The Portfolio may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objectives, policies, and limitations as the
Portfolio.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) ^ The Portfolio does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
^ (ii) The Portfolio may borrow money only (a) from a bank or from
a registered investment company or portfolio for which FMR or an affiliate
serves as investment adviser or (b) by engaging in reverse repurchase
agreements with any party. The Portfolio will not purchase any security
while borrowings (excluding reverse repurchase agreements) representing
more than 5% of its total assets are outstanding. The Portfolio will not
borrow from other funds advised by FMR or its affiliates if total
outstanding borrowings immediately after such borrowing would exceed 15% of
the Portfolio's total assets.
^ (iii) The Portfolio does not currently intend to purchase any
security if, as a result, more than 10% of its net assets would be invested
in securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be sold
or disposed of in the ordinary course of business at approximately the
prices at which they are valued.
^ (iv) The Portfolio does not currently intend to make loans, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
^ (v) The Portfolio does not currently intend to purchase the
securities of any issuer (other than securities issued or guaranteed by
domestic or foreign governments or political subdivisions thereof) if, as a
result, more than 5% of its total assets would be invested in the
securities of business enterprises that, including predecessors, have a
record of less than three years of continuous operation.
^ (vi) The Portfolio does not currently intend to invest in oil,
gas, or other mineral exploration or development programs or leases.
^ (vii) The Portfolio does not currently intend to invest all of
its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objectives,
policies, and limitations as the Portfolio.
(viii) The Portfolio does not currently intend to purchase or sell
futures contracts or call options. This limitation does not apply to
options attached to, or traded together with, their underlying securities,
and does not apply to securities that incorporate features similar to
options and futures contracts.
INVESTMENT LIMITATIONS OF MUNICIPAL MONEY MARKET PORTFOLIO
THE FOLLOWING ARE MUNICIPAL MONEY MARKET PORTFOLIO'S FUNDAMENTAL
INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE PORTFOLIO MAY NOT:
(1) with respect to 75% of the Portfolio's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities) if, as a
result thereof, (a) more than 5% of the Portfolio's total assets would be
invested in the securities of that issuer, or (b) the Portfolio would hold
more than 10% of the voting securities of such issuer;
(2) issue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the Portfolio may (i) borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings that
come to exceed this amount will be reduced within three days (not including
Sundays and holidays) to the extent necessary to comply with the 33 1/3%
limitation;
(4) underwrite securities issued by others, except to the extent that
the Portfolio may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
Portfolio's total assets would be invested in the securities of companies
whose principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Portfolio from investing in securities or other instruments backed by
real estate or securities of companies engaged in the real estate
business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(8) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, (but this limit
does not apply to purchases of debt securities or to repurchase
agreements).
(9) The Portfolio may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objectives, policies, and limitations as the
Portfolio.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) ^ The Portfolio does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
^ (ii) The Portfolio may borrow money only (a) from a bank or from
a registered investment company or portfolio for which FMR or an affiliate
serves as investment adviser or (b) by engaging in reverse repurchase
agreements with any party (reverse repurchase agreements are treated as
borrowings for purposes of fundamental investment limitation (3)). The
Portfolio will not purchase any security while borrowings representing more
than 5% of its total assets are outstanding. The Portfolio will not borrow
from other funds advised by FMR or its affiliates if total outstanding
borrowings immediately after such borrowing would exceed 15% of the
Portfolio's total assets.
^ (iii) The Portfolio does not currently intend to purchase any
security if, as a result, more than 10% of its net assets would be invested
in securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be sold
or disposed of in the ordinary course of business at approximately the
prices at which they are valued.
^ (iv) The Portfolio does not currently intend to engage in
repurchase agreements or make loans, but this limitation does not apply to
purchases of debt securities.
^ (v) The Portfolio does not currently intend to purchase the
securities of any issuer (other than securities issued or guaranteed by
domestic or foreign governments or political subdivisions thereof) if, as a
result, more than 5% of its total assets would be invested in the
securities of business enterprises that, including predecessors, have a
record of less than three years of continuous operation.
^ (vi) The Portfolio does not currently intend to invest in oil,
gas, or other mineral exploration or development programs or leases.
^ (vii) The Portfolio does not currently intend to invest all of its
assets in the securities of a single open-end management investment company
with substantially the same fundamental investment objectives, policies,
and limitations as the Portfolio.
(viii) The Portfolio does not currently intend to invest more than 25%
of its total assets in industrial revenue bonds related to a single
industry.
(ix) The Portfolio does not currently intend to purchase or sell
futures contracts or call options. This limitation does not apply to
options attached to, or traded together with, their underlying securities,
and does not apply to securities that incorporate features similar to
options and futures contracts.
AFFILIATED BANK TRANSACTIONS. ^ The Portfolios may engage in
transactions with ^ financial institutions that are, or may be
considered to be, "affiliated persons" of the Portfolios under the ^
1940 Act . These transactions may include repurchase agreements with
custodian banks; ^ short-term obligations of, and repurchase agreements
with, the 50 largest U.S. banks (measured by deposits); ^ municipal
securities; ^ U.S. government securities with affiliated ^ financial
institutions that are primary dealers in these securities ;
short-term currency transactions; and short-term borrowings. In accordance
with exemptive orders issued by the Securities and Exchange Commission
(SEC), the Board of Trustees has established and periodically reviews
procedures applicable to transactions involving affiliated financial
institutions .
ASSET-BACKED SECURITIES^. Asset-backed securities may include
interests in pools of mortgages, loans, ^ receivables or other
assets . Payment of principal and interest may be largely dependent
upon the cash flows generated by the assets backing the securities, and, in
certain cases, supported by letters of credit, surety bonds, or other
credit enhancements. The value of asset-backed securities may also be
affected by the creditworthiness of the servicing agent for the pool, the
originator of the loans or receivables, or the financial institution(s)
providing the credit support.
DELAYED-DELIVERY TRANSACTIONS. ^ Securities may ^ be bought
and ^ sold on a delayed-delivery or when-issued basis. These
transactions involve a commitment by a Portfolio to purchase or sell
specific securities at a predetermined price or yield, with payment and
delivery taking place after the customary settlement period for that type
of security (and more than seven days in the future). Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities on a delayed-delivery basis, ^ a
Portfolio assumes the rights and risks of ownership, including the risk of
price and yield fluctuations. Because a Portfolio is not required to pay
for securities until the delivery date, these risks are in addition to the
risks associated with the Portfolio's other investments. If a Portfolio
remains substantially fully invested at a time when delayed- delivery
purchases are outstanding, the delayed-delivery purchases may result in a
form of leverage. When delayed-delivery purchases are outstanding, the
Portfolio will set aside appropriate liquid assets in a segregated
custodial account to cover its purchase obligations. When a Portfolio has
sold a security on a delayed-delivery basis, the Portfolio does not
participate in further gains or losses with respect to the security. If
the other party to a delayed-delivery transaction fails to delivery or pay
for the securities, the Portfolio could miss a favorable price or yield
opportunity, or could suffer a loss.
Each Portfolio may renegotiate delayed-delivery transactions after they
are entered into, and may sell underlying securities before they are
delivered, which may result in capital gains or losses.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of ^ a Portfolio's investments and, through reports
from FMR, the Board monitors investments in illiquid instruments. In
determining the liquidity of the Portfolios' investments, FMR may consider
various factors including (1) the frequency of trades and quotations, (2)
the number of dealers and prospective purchasers in the marketplace, (3)
dealer undertakings to make a market, (4) the nature of the security
(including any demand or tender features) and (5) the nature of the market
place for trades (including the ability to assign or offset the Portfolios'
rights and obligations relative to the investment). Investments currently
considered to be illiquid include repurchase agreements not entitling the
holder to payment of principal and interest within seven days ^ . Also,
FMR may determine some restricted securities ^ , time deposits ^
and ^ municipal lease obligations ^. In the absence of market quotations,
illiquid investments are valued for purposes of monitoring amortized cost
valuation at fair value as determined in good faith by a committee
appointed by the Board of Trustees. If through a change in values, net
assets or other circumstances, a Portfolio were in a position where more
than 10% ^ of its net assets were invested in illiquid securities, it
would seek to take appropriate steps to protect liquidity.
REPURCHASE AGREEMENTS^ are transactions by which a Portfolio purchases a
security and simultaneously commits to resell that security to the seller
at an agreed upon price on an agreed upon date. The resale price reflects
the purchase price plus an agreed upon incremental amount which is
unrelated to the coupon rate or maturity of the purchased security. A
repurchase agreement involves the obligation of the seller to pay the
agreed upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed upon resale price and marked to
market daily) of the underlying security. A Portfolio may engage in a
repurchase agreement with respect to any security in which it is authorized
to invest, even though the security matures in more than one year. While
it does not presently appear possible to eliminate all risks from these
transactions (particularly the possibility of a market decline in the value
of underlying securities, as well as delay and costs to a Portfolio in
connection with bankruptcy proceedings), it is the policy of the Portfolios
to limit repurchase agreements to those parties whose credit worthiness has
been reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES ^ generally can be sold ^ in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a Portfolio may be obligated to pay all or part
of the registration expense and a considerable period may elapse between
the time it decides to seek registration and the time the Portfolio may be
permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, the
Portfolio might obtain a less favorable price than prevailed when it
decided to seek registration of the security. However, in general, the
Portfolios anticipate holding restricted securities to maturity or selling
them in an exempt transaction.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
Portfolio sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the Portfolio will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. ^
A Portfolio will enter into reverse repurchase agreements only with
parties whose creditworthiness has been found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of the
Portfolio's assets and may be viewed as a form of leverage.
SHORT SALES AGAINST THE BOX^. A Portfolio may sell securities short when
it owns or has the right to obtain securities equivalent in kind or amount
to the securities sold short. Short sales could be used to protect the net
asset value per share of the Portfolio in anticipation of increased
interest rates, without sacrificing the current yield of the securities
sold short. If a Portfolio enters into a short sale against the box, it
will be required to set aside securities equivalent in kind and amount to ^
the securities sold short (or securities convertible or ^
exchangeable into such securities) and will be required to hold such
securities while the short sale is outstanding. The Portfolio will incur
transaction costs, including interest expenses, in connection with opening,
maintaining and closing short sales against the box.
VARIABLE OR FLOATING RATE ^ OBLIGATIONS ^ bear variable or floating
interest rates and carry rights that permit holders to demand payment of
the unpaid principal balance plus accrued interest from the issuers or
certain financial intermediaries. Floating rate instruments have interest
rates that change whenever there is a change in a designated base rate
while variable rate instruments provide for a specified periodic adjustment
in the interest rate. These formulas are designed to result in a market
value for the ^ instrument that approximates its par value.
A demand instrument with a conditional demand feature must have received
both a short-term and a long-term high quality rating or, if unrated, have
been determined to be of comparable quality pursuant to procedures adopted
by the Board of Trustees. A demand instrument with an unconditional demand
feature may be acquired solely in reliance upon a short-term high quality
rating or, if unrated, upon a finding of comparable short-term quality
pursuant to procedures adopted by the Board of Trustees.
^ A Portfolio may invest in fixed-rate bonds that are subject to
third party puts and in participation interests in such bonds held in trust
or otherwise. These bonds and participation interests have tender options
or demand features that permit ^ a Portfolio to tender (or put) the
bonds to an institution at periodic intervals and to receive the principal
amount thereof. ^ A Portfolio considers variable rate instruments
structured in this way (Participating VRDOs) to be essentially equivalent
to other VRDOs it purchases. The IRS has not ruled whether the interest on
Participating VRDOs is tax-exempt, and, accordingly, ^ a Portfolio
intends to purchase these instruments based on opinions of bond counsel.
^ A Portfolio may invest in variable or floating rate instruments
that ultimately mature in more than 397 days, if the ^ Portfolio
acquires a right to sell the instruments that meets certain
requirements set forth in Rule 2a-7. Variable rate instruments (including
instruments subject to a demand feature) that mature in 397 days or less,^
may be deemed to have maturities equal to the period remaining until the
next readjustment of the interest rate. Other variable rate instruments
with demand features may be deemed to have a maturity equal to the period
remaining until the next adjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand. A
floating rate instrument subject to a demand feature may be deemed to have
a maturity equal to the period remaining until the principal amount can be
recovered through demand.
TENDER OPTION BONDS ^ are created by coupling an intermediate - or
long-term ^ tax-exempt bond (generally held pursuant to a custodial
arrangement) with a tender agreement that gives the holder the option to
tender the bond at its face value. As consideration for providing the
tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, the Portfolio effectively holds a demand
obligation that bears interest at the prevailing short-term tax- exempt
rate. Subject to applicable regulatory requirements, ^ a Portfolio
may buy tender option bonds if the agreement gives the Portfolio the right
to tender the bond to its sponsor no less frequently than once every 397
days. In selecting tender option bonds for ^ a Portfolio, FMR will
consider the creditworthiness of the issuer of the underlying bond, the
custodian, and the third party provider of the tender option. In certain
instances, a sponsor may terminate a tender option if, for example, the
issuer of the underlying bond defaults on interest payments.
ZERO COUPON BONDS do not make regular interest payments. Instead, they
are sold at a deep discount from their face value when they mature.
Because zero coupon bonds do not pay current income, their prices can be
very volatile when interest rates change. In calculating its daily
dividend, each Portfolio takes into account as income a portion of the
difference between a zero coupon bond's purchase price and its face
value.
STANDBY COMMITMENTS are puts that entitle holders to same-day settlement
at an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. ^ A
Portfolio may acquire standby commitments to enhance the liquidity of
portfolio securities but only when the issuers of the commitments present
minimal risk of default.
Ordinarily Municipal Money Market Portfolio will not transfer a standby
commitment to a third party, although it could sell the underlying
municipal security to a third party at any time. ^ The Portfolio
may purchase standby commitments separate from or in conjunction with the
purchase of securities subject to such commitments. In the latter case,
the Portfolio would pay a higher price for the securities acquired, thus
reducing their yield to maturity. Standby commitments will not affect the
dollar-weighted average maturity of the Portfolio, or the valuation of the
securities underlying the commitments.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand. FMR
may rely upon its evaluation of a bank's credit in determining whether to
purchase an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
Standby commitments are subject to certain risks, including the ability of
issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by the Portfolio; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS^ . A Portfolio may invest a portion of
its assets in municipal leases and participation interests therein. These
obligations, which may take the form of a lease, an installment purchase,
or a conditional sale contract, are issued by state and local governments
and authorities to acquire land and a wide variety of equipment and
facilities. Generally, the Portfolio will not hold such obligations
directly as a lessor of the property, but will purchase a participation
interest in a municipal obligation from a bank or other third party. A
participation interest gives ^ the Portfolio a specified, undivided
interest in the obligation in proportion to its purchased interest in the
total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non- appropriation
clauses free the issuer from debt issuance limitations.
FEDERAL TAXABLE OBLIGATIONS^. Municipal Money Market Portfolio does not
intend to invest in securities whose interest is federally taxable;
however, from time to time, the Portfolio may invest a portion of its
assets on a temporary basis in fixed-income obligations whose interest is
subject to federal income tax. For example, the Portfolio may invest in
obligations whose interest is federally taxable pending the investment or
reinvestment in municipal securities of proceeds from the sale of its
shares or sales of portfolio securities.
Should the Portfolio invest in federally taxable obligations, it would
purchase securities that in FMR's judgment are of high quality. These
would include obligations issued or guaranteed by the U.S. government or
its agencies or instrumentalities; obligations of domestic banks; and
repurchase agreements. The Portfolio will purchase taxable obligations
only if they meet its quality requirements ^.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before state legislatures that
would affect the state tax treatment of the Portfolio's distributions. If
such proposals were enacted, the availability of municipal obligations and
the value of the Portfolio's holdings would be affected and the Trustees
would reevaluate the Portfolio's investment ^ objective and
policies.
The Portfolio anticipates being as fully invested as practicable in
municipal securities; however, there may be occasions when, as a result of
maturities of portfolio securities, sales of Portfolio shares, or in order
to meet redemption requests, the Portfolio may hold cash that is not
earning income. In addition, there may be occasions when, in order to
raise cash to meet redemptions, the Portfolio may be required to sell
securities at a loss.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the Portfolios by FMR (either directly or through affiliated ^
sub-advisers) pursuant to authority contained in each Portfolio's ^
management contract. Since FMR has granted investment management
authority to the sub-adviser (see the section entitled "Management
Contracts"), the sub-adviser will be authorized to place orders for the
purchase and sale of portfolio securities, and will do so in accordance
with the policies described below . FMR is also responsible for the
placement of transaction orders for other investment companies and accounts
for which it or its affiliates act as investment adviser. Securities
purchased and sold by the Portfolios generally will be traded on a net
basis (i.e., without commission). In selecting brokers-dealers, subject to
applicable limitations of the federal securities laws, FMR will consider
various relevant factors, including, but not limited to, the size and type
of the transaction; the nature and character of the markets for the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions.
The Portfolios may execute portfolio transactions with broker-
dealers who provide research and execution services to the Portfolios ^
or other accounts over which FMR or its affiliates exercise investment
discretion. Such services may include advice concerning the value of
securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or the purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and performance
of accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). FMR maintains a
listing of broker- dealers who provide such services on a regular
basis. However, as many transactions on behalf of the Portfolios are
placed with broker- dealers (including broker- dealers on the
list) without regard to the furnishing of such services, it is not possible
to estimate the proportion of such transactions directed to such
broker- dealers solely because such services were provided. The
selection of such broker-dealers generally is made by FMR (to the
extent possible consistent with execution considerations) ^ based upon the
quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the Portfolios may be useful to FMR in rendering investment
management services to the Portfolios ^ or their other clients, and
conversely , such information provided by broker- dealers who have
executed transaction orders on behalf of other FMR clients may be useful to
FMR in carrying out its obligations to the Portfolios. The receipt of such
research has not reduced FMR's normal independent research activities;
however, it enables FMR to avoid the additional expenses that could be
incurred if FMR ^ tried to develop comparable information through
its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the Portfolios to pay such higher commissions, FMR must determine in good
faith that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-
dealers , viewed in terms of a particular transaction or FMR's
overall responsibilities to the Portfolios and its other clients. In
researching this determination, FMR will not attempt to place a specific
dollar value on the brokerage and research services provided , or to
determine what portion of the compensation should be related to those
services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the Portfolios or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services, Ltd. (FBSL), subsidiaries of
FMR Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non- affiliated, qualified brokerage firms for
similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC
rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
Portfolios and review the commissions paid by ^ each
Portfolio over representative periods of time to determine if they are
reasonable in relation to the benefits to the Portfolios.
From time to time, the Trustees will review whether the recapture for the
benefit of the Portfolios of some portion of the brokerage commissions or
similar fees paid by the Portfolios on portfolio transactions is legally
permissible and advisable. ^ Each Portfolio seeks to recapture
soliciting broker- dealer fees on the tender of portfolio securities,
but at present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are available
and are legally permissible and, if so, to determine in the exercise of
their business judgment whether it would be advisable for ^ each
Portfolio to seek such recapture.
Although the Trustees and officers are substantially the same as those of
other funds managed by FMR, investment decisions for ^ each
Portfolio are made independently from those of other funds managed by
FMR or accounts managed by FMR affiliates. It sometimes happens that the
same security is held in the portfolio of more than one of these funds or
accounts. Simultaneous transactions are inevitable when several funds
and accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or account .
When two or more ^ funds are simultaneously engaged in the purchase
or sale of the same security, the prices and amounts are allocated in
accordance with ^ procedures believed to be appropriate and equitable
for each fund . In some cases this system could have a detrimental
effect on the price or value of the security as far as the Portfolios are
concerned. In other cases, however, the ability of the Portfolios to
participate in volume transactions will produce better executions and
prices for the Portfolios. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to the Portfolios
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
Each Portfolio values its investments on the basis of amortized cost.
This technique involves valuing an instrument at its cost as adjusted for
amortization of premium or accretion of discount rather than its value
based on current market quotations or appropriate substitutes which reflect
current market conditions. The amortized cost value of an instrument may
be higher or lower than the price a Portfolio would receive if it sold the
instrument.
Valuing each Portfolio's instruments on the basis of amortized cost and
use of the term "money market fund" are permitted by Rule 2a-7 under the
1940 Act. Each Portfolio must adhere to certain conditions under Rule
2a-7; these conditions are summarized in the Prospectus.
The Board of Trustees of the Fund oversees FMR's adherence to SEC rules
concerning money market funds, and has established procedures designed to
stabilize each Portfolio's NAV at $1.00. At such intervals as they deem
appropriate, the Trustees consider the extent to which NAV calculated by
using market valuations would deviate from $1.00 per share. If the
Trustees believe that a deviation from the Portfolios' amortized cost per
share may result in material dilution or other unfair results to
shareholders, the Trustees have agreed to take such corrective action, if
any, as they deem appropriate to eliminate or reduce, to the extent
reasonably practicable, the dilution or unfair results. Such corrective
action could include selling portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity;
withholding dividends; redeeming shares in kind; establishing NAV by using
available market quotations; and such other measures as the Trustees may
deem appropriate.
During periods of declining interest rates, a Portfolio's yield based on
amortized cost may be higher than the yield based on market valuations.
Under these circumstances, a shareholder in a Portfolio would be able to
obtain a somewhat higher yield than would result if the Portfolio utilized
market valuations to determine its NAV. The converse would apply in a
period of rising interest rates.
PERFORMANCE
A Portfolio may be compared in advertising to Certificates of Deposit
(CDs) or other investments issued by banks. Mutual funds differ from bank
investments in several respects. For example, a Portfolio may offer
greater liquidity or higher potential returns than CDs, and a Portfolio
does not guarantee your principal or your return.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial strategies.
For example, Fidelity's FundMatch$ Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
asset allocation funds and other Fidelity funds, products, and
services.
The ^ Portfolio may compare its performance or the performance of
securities in which it may invest to averages published by IBC USA
(Publications), Inc. of Ashland, Massachusetts. These averages
assume reinvestment of distributions. The ^ IBC/Donoghue's MONEY
FUND ^ AVERAGES(trademark)/All Taxable, which ^ is reported
in the MONEY FUND REPORT(registered trademark)^ , covers over
^ ___ taxable ^ money market funds ^ and the IBC/Donoghue's MONEY
FUND AVERAGES(trademark)/All Tax-Free, which is reported in the MONEY FUND
REPORT(registered trademark), covers over ___ tax-free money market
funds.
^ Municipal Money Market Portfolio may compare and contrast in
advertising the relative advantages of investing in a mutual fund versus an
individual municipal bond. Unlike tax-free mutual funds, individual
municipal bonds offer a stated rate of interest and, if held to maturity,
repayment of principal. Although some individual municipal bonds might
offer a higher return, they do not offer the reduced risk of a mutual fund
that invests in many different securities. The initial investment
requirements and sales charges of many tax-free mutual funds are lower than
the purchase cost of individual municipal bonds, which are generally issued
in $5,000 denominations and are subject to direct brokerage costs.
^ In advertising materials, Fidelity may reference or discuss its
products and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals , including model
portfolios or allocations, as they relate to fund management,
investment philosophy, and investment techniques. ^ Fidelity may also
reprint, and use as advertising and sales literature, articles from
Fidelity Focus, a quarterly magazine provided free of charge to Fidelity
fund shareholders.
^ A Portfolio may present its fund number, Quotron(trademark) number,
and CUSIP number, and discuss or quote its current portfolio manager.
^ Money Market Portfolio and U.S. Government Portfolio may be available
for purchase through retirement plans or other programs offering deferral
of, or exemption from, income taxes, which may produce superior after-tax
returns over time. For example, a $1,000 investment earning a taxable
return of 10% annually would have an after-tax value of $1,949 after ten
years, assuming tax was deducted from the return each year at a 31% rate.
An equivalent tax-deferred investment would have an after-tax value of
$2,100 after ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period .
Municipal Money Market Portfolio also may quote its tax-equivalent yield,
which shows the taxable yield an investor would have to earn, before taxes,
to equal the Portfolio's tax-free yield. A tax-equivalent yield is
calculated by dividing the Portfolio's tax-exempt yield by the result of
one minus a state federal and/or state tax rate.
The following chart, based on 1993 tax tables, may be used to indicate
approximate effective federal tax brackets and tax-equivalent yields.
^ 1994 TAX RATES AND TAX-EQUIVALENT YIELDS
Federal If individual tax-free yield is:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tax 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Single Return Joint Return Bracket Then taxable-equivalent yield is:
**
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
^ $22,751 - $55,100 $38,001 - $91,850 28% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72% 11.11%
$55,101 - $115,000 $91,851 - $140,000 31% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14% 11.59%
$115,001 - $250,000 $140,001 - $250,000 36% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94% 12.50%
$250,001 - + $250,001 - + 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59% . 13.25%
</TABLE>
*Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only; does not include impact of preferential rate
on long-term capital gain income.
**Excludes the impact of the phaseout of personal exemptions, limitation on
itemized deductions, and other credits, exclusions, and adjustments which
may raise a taxpayer's marginal tax rate. An increase in a shareholder's
marginal tax rate would increase that shareholder's tax- equivalent yield.
^
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of a Portfolio's return, including the effect of reinvesting
dividends and capital gain distributions (if any). Average annual returns
are calculated by determining the growth or decline in value of a
hypothetical historical investment in a Portfolio over a stated period, and
then calculating the annually compounded percentage rate that would have
produced the same results if the rate of growth or decline in value had
been constant over that period. For example, a cumulative return of 100%
over ten years would produce an average annual return of 7.18%, which is
the steady annual rate that would equal 100% growth on a compounded basis
in ten years. While average annual returns are a convenient means of
comparing investment alternatives, investors should realize that a
Portfolio's performance is not constant over time, but changes from year to
year, and that average annual returns represent averaged figures as opposed
to the actual year-to-year performance ^.
In addition to average annual returns, a Portfolio may quote unaveraged or
cumulative total returns reflecting the simple change in the value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as percentages or as dollar amounts and may be
calculated for a single investment, a series of investments or a series of
redemptions over any time period. Total returns may be broken down into
their components of income and capital in order to illustrate the
relationship of these factors and their contributions to total return.
Total returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration. The Portfolios'
cumulative total returns and average annual returns for the fiscal year
ended July 31, ^ 1994 were as follows:
MONEY MARKET PORTFOLIO
HISTORICAL FUND RESULTS
Cumulative Total Returns Average Annual Total Returns
One Year Life of Fund* One Year Life of Fund
^ % % % %
* Life of Portfolio from October 23, 1990 (commencement of operations) ^ .
The following chart shows the income and capital elements of the
Portfolio's year-by-year total returns for the period October 23, 1990
through July 31, ^ 1994 as compared to the cost of living measured
by the Consumer Price Index over the same period.
During the period from October 23, 1990 through July 31, ^ 1994 , a
hypothetical investment of $10,000 in the Portfolio would have grown to ^
$________ assuming all dividends were reinvested.
Value of Value of
Period Initial Value of Reinvested Consumer
Ended $10,000 Reinvested Capital Gains Total Price
7/31 Investment Dividends Distributions Value Index**
1991* $10,000 $ ^ $ $ $
1992 ^ $ $ $ $ $
1993 ^ $ $ $ $ $
1994 $ $ $ $ $
* October 23, 1990 (commencement of operations) ^.
** From month-end closest to the initial investment date
Explanatory Notes: With an initial investment of $10,000 made on October
23, 1990, the net amount invested in shares of the Portfolio was $10,000.
The cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends for the period covered (that is, their cash
value at the time they were reinvested) amounted to ^ $______ . If
distributions had not been reinvested, the amount of distributions earned
from the Portfolio over time would have been smaller and the cash payments
(dividends) for the period would have come to ^ $_____ . The
Portfolio did not distribute any capital gains during the period.
U.S. GOVERNMENT PORTFOLIO
HISTORICAL FUND RESULTS
Cumulative Total Returns Average Annual Total Returns
One Year Life of Fund* One Year Life of Fund
^ ____% _____% ____% ____%
* Life of Portfolio from October 23, 1990 (commencement of operations) ^ .
The following chart shows the income and capital elements of the
Portfolio's year-by-year total returns for the period October 23, 1990
through July 31, ^ 1994 as compared to the cost of living measured
by the Consumer Price Index over the same period.
During the period from October 23, 1990 through July 31, ^ 1994 , a
hypothetical investment of $10,000 in the Portfolio would have grown to ^
$______ assuming all dividends were reinvested.
Value of Value of
Period Initial Reinvested Value of Consumer
Ended $10,000 Dividends Reinvested Total Price
7/31 Investment Distributions Capital Gains Value Index**
1991* $10,000 ^ $ $ $ $
1992 ^ $ $ $ $ $
1993 ^ $ $ $ $
1994 $ $ $
* October 23, 1990 (commencement of operations) ^.
** From month-end closest to the initial investment date
Explanatory Notes: With an initial investment of $10,000 made on October
23, 1990, the net amount invested in shares of the Portfolio was $10,000.
The cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends for the period covered (that is, their cash
value at the time they were reinvested) amounted to ^ $______ . If
distributions had not been reinvested, the amount of distributions earned
from the Portfolio over time would have been smaller and the cash payments
(dividends) for the period would have come to ^ $_____ . The
Portfolio did not distribute any capital gains during the period.
MUNICIPAL MONEY MARKET PORTFOLIO
HISTORICAL FUND RESULTS
Cumulative Total Returns Average Annual Total Returns
One Year Life of Fund* One Year Life of Fund
^ ____% ____% ____% ____%
* Life of Portfolio from November 29, 1990 (commencement of operations) ^.
The following chart shows the income and capital elements of the
Portfolio's year-by-year total returns for the period November 29, 1990
through July 31, ^ 1994 as compared to the cost of living measured
by the Consumer Price Index over the same period.
During the period from November 29, 1990 through July 31, ^ 1994 , a
hypothetical investment of $10,000 in the Portfolio would have grown to ^
$______ assuming all dividends were reinvested.
Value of Value of Value of
Period Initial Reinvested Reinvested Consumer
Ended $10,000 Dividend Capital Gains Total Price
7/31 Investment Distributions Distributions Value Index**
1991* $10,000 ^ $ $ $ $
1992 ^ $ $ $ $ $
1993 ^ $ $ $ $ $
1994 $ $ $ $ $
* November 29, 1990 (commencement of operations) ^.
** From month-end closest to the initial investment date
Explanatory Notes: With an initial investment of $10,000 made on November
29, 1990, the net amount invested in shares of the Portfolio was $10,000.
The cost of the initial investment ($10,000) together with the aggregate
cost of reinvested dividends for the period covered (that is, their cash
value at the time they were reinvested) amounted to ^ $_____ . If
distributions had not been reinvested, the amount of distributions earned
from the Portfolio over time would have been smaller and the cash payments
(dividends) for the period would have come to ^ $___ . The Portfolio
did not distribute any capital gains during the period.
Each Portfolio may reference the growth and variety of money market mutual
funds and the adviser's innovation and participation in the industry.
Each Portfolio's performance may be compared to the performance of
other mutual funds in general, or to the performance of particular types of
mutual funds. These comparisons may be expressed as mutual fund rankings
prepared by Lipper Analytical Services, Inc. (Lipper), an independent
service located in Summit, New Jersey that monitors the performance of
mutual funds. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank the Portfolios based on yield. In
addition to the mutual fund rankings, a Portfolio's performance may be
compared to mutual fund performance indices prepared by Lipper.
From time to time, a Portfolio's performance may also be compared to
other mutual funds tracked by financial or business publications and
periodicals. For example, a Portfolio may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating service
that rates mutual funds on the basis of risk-adjusted performance.
Rankings that compare the performance of Fidelity funds to one another in
appropriate categories over specific periods of time may also be quoted in
advertising.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with the
security types in any capital market may or may not correspond directly to
those of the funds. Ibbotson calculates total returns in the same method
as the funds. The funds may also compare performance to that of other
compilations or indices that may be developed and made available in the
future.
According to the Investment Company Institute, over the past ten years,
sales in tax-exempt funds increased from ^ $____ billion in ^
198_ to approximately $ ^ ____ billion at the end of ^
199__ .
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a Portfolio's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 (the Rule) under the 1940 Act, a Portfolio is
required to give shareholders at least 60 days' notice prior to terminating
or modifying its exchange privilege. Under the Rule, the 60- day
notification requirement may be waived if (i) the only effect of a
modification would be to reduce or eliminate an administrative fee,
redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) a Portfolio suspends the redemption of shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares
because it is unable to invest amounts effectively in accordance with its
investment objective and policies.
The Portfolios have notified shareholders that they reserve the right at
any time, without prior notice, to refuse exchange purchases by any person
or group if, in FMR's judgment, the Portfolios would be unable to invest
effectively in accordance with their investment objectives and policies, or
would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
MONEY MARKET PORTFOLIO AND U.S. GOVERNMENT PORTFOLIO ^ DIVIDENDS:
Dividends from each Portfolio will not normally qualify for the
dividends-received deduction available to corporations, since each
Portfolio's income is primarily derived from interest income and short-
term capital gains. Depending upon state law, a portion of each
Portfolio's dividends attributable to interest income derived from U.S.
government securities may be exempt from state and local taxation. The
Portfolios will provide information on the portion of each Portfolio's
dividends, if any, that qualify for this exemption.
MUNICIPAL MONEY MARKET PORTFOLIO ^ DIVIDENDS: Dividends from the
Portfolio will not normally qualify for the dividends-received deduction
available to corporations, since the Portfolio's income is primarily
derived from tax-exempt interest income and short-term capital gains.
Depending upon state law, a portion of each Portfolio's dividends
attributable to tax-exempt interest earned on obligations issued by that
state may be exempt from state and local taxation. The Portfolio will
provide information on the portion of the Portfolio's dividends, if any,
that qualify for this exemption.
CAPITAL GAIN DISTRIBUTIONS: ^ Long-term capital gains (if any) earned
by Municipal Money Market Portfolio on the sale of securities and
distributed to shareholders are federally taxable as long-term capital
gains, regardless of the length of time that shareholders have held their
shares. If a shareholder receives a long-term capital gain distribution on
shares of the Portfolio and such shares are held six months or less and are
sold at a loss, the portion of the loss equal to the amount of the
long-term capital gain distribution will be considered a long-term loss for
tax purposes.
A portion of the gain on bonds purchase at a discount after April 30,
1993 and short-term capital gains distributed by the Portfolio are
federally taxable to shareholders as dividends, not as capital gains.
Distributions from short-term capital gains do not qualify for the
dividends-received deduction. Dividend distributions resulting from a
recharacterization of gain from the sale of bonds purchased at a discount
after April 30, 1993 are not considered income for purposes of Municipal
Money Market Portfolio's policy of investing so that at least 80% of its
income is free from federal income tax. Each Portfolio may distribute any
net realized short-term capital gains once a year or more often as
necessary to maintain its NAV at $1.00 per share.
TAX STATUS OF THE PORTFOLIOS: Each Portfolio has qualified and intends to
qualify as a "registered investment company" under the Internal Revenue
Code of 1986, as amended (the Code), so that each Portfolio will not be
liable for federal income or excise taxes on net investment income or
capital gains to the extent that these are distributed to shareholders in
accordance with applicable provisions of the Code.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) is subject to the federal alternative minimum tax (AMT),
although the interest continues to be excludable from gross income for
other tax purposes. Interest from private activity securities is a
tax-preference item for the purposes of determining whether a taxpayer is
subject to the AMT and the amount of AMT to be paid, if any. Private
activity securities issued after August 7, 1986 to benefit a private or
industrial uses or to finance a private facility are affected by this
rule.
In order for Municipal Money Market Portfolio to distribute its tax-
exempt interest as exempt interest dividends, it must hold at least 50% of
its total assets in tax-exempt obligations at the end of each fiscal
quarter. Because Municipal Money Market Portfolio intends to invest
substantially all of its assets in tax-exempt obligations, the Portfolio
expects to comply with the 50% asset test. The Portfolio purchases
municipal obligations based on the opinions of counsel regarding the
federal income tax status of the obligations. These opinions generally
will be based upon covenants by the issuers regarding continuing compliance
with federal tax requirements. If the issuer of an obligation fails to
comply with its covenants at any time, interest on the obligation could
become federally taxable retroactive to the date the obligation was issued.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
most ^ state law provides for a pass-through of the state and local
income tax exemption afforded to direct owners of U.S. government
securities. ^ Some states limit this pass through to mutual funds that
invest a certain amount in U.S. government securities; and some types of
securities, such as repurchase agreements and some agency-backed
securities, may not qualify for this pass-through benefit. The tax
treatment of your dividend distributions from the U.S. Government Portfolio
will be the same as if you directly owned your proportionate share of the ^
U.S. government securities ^ in the fund's portfolio.
Because the income earned on most U.S. government securities in which
the Portfolio invests is exempt from state and local income taxes in most
states, the portion of your dividends from the Portfolio attributable to
these securities will also be free from income taxes ^. The exemption from
state and local income taxation does not preclude states from ^
assessing other taxes on the ownership of U.S. government
securities.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: Fidelity Service Co.,
which is the transfer and shareholder servicing agent for certain of the
funds advised by FMR; FIIOC, which performs shareholder servicing functions
for certain institutional customers; and Fidelity Investments Retail
Marketing Company, which provides marketing services to various companies
within the Fidelity organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K. and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas, a wholly owned subsidiary of FMR
formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Fund are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. Trustees and officers elected or
appointed prior to the Fund's conversion to a Delaware business trust
served the Massachusetts business trust in identical capacities. All
persons named as Trustees and officers serve in similar capacities for
other funds advised by FMR. Unless otherwise noted, the business address
of each Trustee and officer is 82 Devonshire Street, Boston, Massachusetts
02109, which is also the address of FMR. Those Trustees who are
"interested persons" (as defined in the Investment Company Act of 1940) by
virtue of their affiliation with the Fund or FMR are indicated by an
asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a Director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
a consultant to Western Mining Corporation (1994). Prior to February
1994, he was President of Greenhill Petroleum Corporation (petroleum
exploration and production, 1990). ^ Until March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of ^ Sanifill
Corporation ^ (non-hazardous waste, 1993) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, ^ P.O. Box 264, Bridgehampton , NY, Trustee
(1992). Prior to her retirement in September 1991, Mrs. Davis was the
Senior Vice President of Corporate Affairs of Avon Products, Inc. She is
currently a Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores, 1990), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she serves as a Director
of the New York City Chapter of the National Multiple Sclerosis Society,
and is a member of the Advisory Council of the International Executive
Service Corps. and the President's Advisory Council of The University of
Vermont School of Business Administration^.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, ^ 3881-2 Lander Road, Chagrin Falls , OH, Trustee
(1990). Prior to his retirement in 1984, Mr. Jones was Chairman and Chief
Executive Officer of LTV Steel Company. Prior to May 1990, he was Director
of National City Corporation (a bank holding company) and National City
Bank of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation^, Hyster-Yale Materials Handling, Inc.(1989), and RPM,
Inc. (manufacturer of chemical products, 1990). In addition, he serves as
a Trustee of First Union Real Estate Investments; Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich,
CT, Trustee, is a Professor at Columbia University Graduate School of
Business and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance)^, and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board
of Directors of the National Arts Stabilization Fund and Vice Chairman of
the Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction^ ) . In addition, he serves as a
Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic
Deerfield (1989) and Society for the Preservation of New England
Antiquities, and as an Overseer of the Museum of Fine Arts of Boston
(1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989),
is Chairman of G.M. Management Group (strategic advisory services). Prior
to his retirement in July 1988, he was Chairman and Chief Executive Officer
of Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush- Wellman Inc. (metal
refining), and York International Corp. (air conditioning and
refrigeration, 1989) ^ , Commercial Intertech Corp. (water treatment
equipment, 1992) ^ and Associated Estates Realty Corporation (a real
estate investment trust, 1993) .
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee (1988).
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). ^
In addition, he serves as a Trustee of Corporate Property
Investors , the EPS Foundation at Trinity College, the Naples
Philharmonic Center for the Arts, and Rensselaer Polytechnic
Institute, and he is a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN,55 Railroad Avenue, Greenwich, CT, Trustee (199) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
199) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (199) and is a member of the University of Alabama president's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee^, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of ^ BellSouth Corporation
(telecommunications), ConAgra, Inc. (agricultural products), Fisher
Business Systems, Inc. (computer software^ ) , Georgia Power Company
(electric utility), Gerber Alley & Associates, Inc. (computer
software), National Life Insurance Company of Vermont, American Software,
Inc. (1989), and AppleSouth Inc. (restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of
the Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President-Legal of FMR Corp., and Clerk of
Fidelity Distributors Corporation .
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas Inc. (1990).
ROBERT LITTERST, Vice President of Money Market Portfolio (1992), is an
employee of FMR.
SARAH ZENOBLE, Vice President of Municipal Money Market Portfolio
(1992) is an employee of FMR.
Under a retirement plan that became effective November 1, 1989, ^
Trustees , upon reaching age 72, ^ become eligible to participate
in a defined benefit retirement program under which ^ they receive
payments during their lifetime from the Fund based on their basic trustees
fees and length of service. Currently, Messrs. Robert L. Johnson,
William R. Spaulding,^ Bertram H. Witham and David L. Yunich participate in
the program. On July 31, ^ 1994 , the Trustees and officers of the
Fund owned in the aggregate less than 1% of each Portfolio's outstanding
shares.
MANAGEMENT CONTRACTS
Each Portfolio employs FMR to furnish investment advisory and other
services. Under its management contract with each Portfolio, FMR acts as
investment adviser and, subject to the supervision of the Board of
Trustees, directs the investments of each Portfolio in accordance with its
investment objective, policies, and limitations. FMR also provides each
Portfolio with all necessary office facilities and personnel for servicing
the Portfolio's investments, and compensates all officers of the Fund, all
Trustees who are an "interested persons" of the Fund or of FMR, and all
personnel of the Fund or FMR performing services relating to research,
statistical and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each Portfolio. These services include
providing facilities for maintaining each Portfolio's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each Portfolio;
preparing all general shareholder communications and conducting shareholder
relations; maintaining each Portfolio's records and the registration of
each Portfolio's shares under federal and state law; developing management
and shareholder services for each Portfolio; and furnishing reports,
evaluations and analyses on a variety of subjects to the Board of Trustees.
In addition to the management fees payable to FMR, payments under each
Portfolio's Distribution and Service Plan and the fees payable to FIIOC,
each Portfolio pays all of its expenses, without limitation, that are not
assumed by those parties. Each Portfolio pays for typesetting, printing,
and mailing of proxy material to shareholders, legal expenses, and the fees
of the custodian, auditor, and non-interested Trustees. Other expenses
paid by the Portfolios include interest taxes, brokerage commissions, the
Portfolios' proportionate share of insurance premiums and Investment
Company Institute dues, and costs of registering shares under various
federal and state securities laws. The Portfolios are also liable for such
nonrecurring expenses as may arise, including costs of any litigation to
which a Portfolio may be a party, and any obligation it may have to
indemnify the Fund's officers and Trustees with respect to litigation.
FMR is each Portfolio's manager pursuant to a management contract dated ^
September 23, 1993 . For the services of FMR under each contract,
each Portfolio pays FMR a monthly management fee at the annual rate of .50%
of the average net assets of that Portfolio throughout the month. For the
fiscal years ended July 31, 1994, 1993, and 1992, ^ FMR
received the following fees:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
^ 1994 1993 1992
Money Market ^ Portfolio $2,216,684 $1,052,468
U.S. Government ^ Portfolio 1,347,482 1,052,067
Municipal Money Market ^ Portfolio 458,762 243,546
</TABLE>
During ^ these periods FMR voluntarily agreed to reimburse each
Portfolio if and to the extent that, the operating expenses of each
Portfolio, including management fees but excluding certain expenses were in
excess of an annual rate of .95% of its average net assets.^ For the
fiscal years ended July 31, 1994, 1993, and 1992, ^ the total
operating expenses exceeded the limitations by the following amounts:
^
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money Market ^ Portfolio 1994 1993 1992
U.S. Government ^ Portfolio $844,393 $ 728,122
Municipal Money Market ^ Portfolio 329,676 1,037,629
252,273 216,109
</TABLE>
To comply with the California Code of Regulations, FMR will reimburse a
Portfolio if and to the extent that a Portfolio's aggregate annual
operating expenses exceed specified percentages of its average net assets.
The applicable percentages are 2 1/2% of the first $30 million, 2% of the
next $70 million, and 1 1/2% of average net assets in excess of $100
million. When calculating a Portfolio's expenses for purposes of this
regulation, a Portfolio may exclude interest, taxes, brokerage commissions,
and extraordinary expenses, as well as a portion of its distribution plan
expenses.
SUB-ADVISER. On behalf of each Portfolio, FMR has entered into a
sub-advisory agreement with FMR Texas pursuant to which FMR Texas has
primary responsibility for providing portfolio investment management
services to the Portfolios.
Under ^ each sub-advisory agreement, FMR pays FMR Texas fees equal
to 50% of the management fee retained by FMR under its current management
contract with each Portfolio, after payments by FMR pursuant to each
Portfolio's 12b-1 plan. The fees paid to FMR Texas are not reduced by any
voluntary or mandatory expense reimbursements that may be in effect from
time to time. The table below shows fees paid to FMR Texas for the fiscal
years ended July 31, 1994, 1993, and 1992 . ^
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money Market ^ Portfolio 1994 1993 1992
U.S. Government ^ Portfolio $690,829 $206,724
Municipal Money Market ^ Portfolio 435,543 116,058
149,002 47,905
</TABLE>
CONTRACTS WITH COMPANIES AFFILIATED WITH FMR
FIIOC is transfer ^ , dividend disbursing, and shareholders'
servicing agent for Money Market Portfolio and U.S. Government Portfolio.
United Missouri is the custodian and transfer agent for Municipal
Money Market Portfolio. United Missouri has ^ a sub-contract with
FIIOC ^ under ^ which FIIOC performs ^ as transfer, dividend disbursing,
and shareholders' servicing agent for Municipal Money Market Portfolio.
Under the Fund's contracts with FIIOC and United Missouri's subcontract
with FIIOC, each Portfolio pays a per-account fee of $95 and a monetary
transaction fee of $20 or $17.50 depending on the nature of the services
provided. From June 1, 1990 through December 31, 1992, FIIOC was paid a
per account fee and a monetary transaction fee of $65 and $14, or $60 and
$12, respectively. Fees for certain institutional retirement plan accounts
are based on the net assets of all such accounts in Money Market Portfolio
and U.S. Government Portfolio. Under the contracts, FIIOC pays
out-of-pocket expenses associated with providing transfer agent ^
services . In addition, FIIOC bears the expense of typesetting,
printing , and mailing prospectuses, statements of additional
information, and all other reports, notices , and statements to
shareholders, ^ with the exception of proxy statements. Transfer agent
fees, including reimbursement for out-of-pocket expenses, paid to FIIOC for
the fiscal years ended July 31, 1994, 1993, and 1992 are shown in the table
below.
^ TRANSFER AGENT FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money Market ^ Portfolio 1994 1993 1992
^ U.S. Government Portfolio $ $888,002 $371,500
Municipal Money Market Portfolio $ 210,488 119,614
$ 49,660 26,798
</TABLE>
The Fund (on behalf of each of Money Market Portfolio and U.S.
Government Portfolio) has a contract with Service and United Missouri (on
behalf of Municipal Money Market Portfolio) has a subcontract with Service.
The contracts provide that Service will perform the calculations
necessary to determine ^ the Portfolios' net asset value per share
and dividends , and ^ maintain the Portfolios' accounting
records. The ^ fee rates in effect are based on a Portfolio's net
assets, specifically .0175% for the first $500 million of average net
assets and .0075% for average net assets in excess of $500 million. The
fee is limited to a minimum of $20,000 and a maximum of $750,000 per year.
^ Pricing and bookkeeping fees, including related out-of-pocket
expenses, paid to Service for ^ fiscal 1994, 1993, and 1992 are
shown in the table below.
^ PRICING AND BOOKKEEPING FEES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money Market ^ Portfolio 1994 1993 1992
U.S. Government ^ Portfolio $ $76,919 $30,943
Municipal Money Market ^ Portfolio $ 47,339 33,693
$ 26,418 28,699
</TABLE>
The transfer agent fees and charges , and pricing and bookkeeping
fees described above for Municipal Money Market Portfolio are paid by
United Missouri, which is entitled to reimbursement from ^ Municipal
Money Market Portfolio for these expenses.
Each Portfolio has a Distribution Agreement with National Financial
Services Corporation (the Distributor), a Massachusetts corporation
organized June 3, 1981. The Distributor is a broker-dealer registered
under the Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. Each distribution agreement calls
for the Distributor to use all reasonable efforts, consistent with its
other business, to secure purchasers for shares of the Portfolios, which
are continuously offered at net asset value. Promotional and administrative
expenses in connection with the offer and sale of shares are paid by FMR.
DISTRIBUTION AND SERVICE PLANS
The Trustees of the Fund on behalf of each Portfolio have adopted a
Distribution and Service Plan (each Plan) pursuant to Rule 12b-1 (the Rule)
under the 1940 Act.^ As required by the Rule, the Trustees carefully
considered all pertinent factors relating to the implementation of the Plan
prior to its approval, and have determined that there is a reasonable
likelihood that the Plan will benefit each Portfolio and its shareholders.
In particular, the Trustees noted that payments under the Plans may provide
additional incentives to promote the sale of shares of the Portfolios,
which may result in additional sales of the Portfolio's shares and an
increase in the Portfolios' assets. Each Portfolio pays the Distributor a
distribution fee as compensation for its services and expenses in
connection with the distribution of shares of the Portfolios at the annual
rate of .35% of its average net assets determined as of the close of
business on each day throughout the month. This distribution fee is paid
by the Portfolios, not by individual accounts.
The Distributor may pay all or a portion of the distribution fee to
securities dealers and banks that have selling agreements with the
Portfolios (Qualified Recipients) as compensation for selling shares of the
Portfolios and providing ongoing shareholder support services. In
addition, the Plans also specifically recognize that FMR may make payments
from its management fee revenue, past profits or other resources to
Qualified Recipients for their services to the Portfolios' shareholders.
Qualified Recipients currently may be compensated by FMR at a maximum
annual rate of up to .25% of the average net assets of the Portfolios with
respect to which they provide or have provided shareholder support or
distribution services. The percentage amount payable varies according to
the aggregate dollar level of assets to which the Qualified Recipient is
related in all three Portfolios. The Distributor also may act in the
capacity of a Qualified Recipient, and as such may receive compensation
under the Plans. Qualified Recipients, including the Distributor acting in
the capacity of a Qualified Recipient, at their discretion may retain any
portion of their compensation received pursuant to the Plans and reallow
the balance of such compensation to their correspondents. Under the Plans,
if the payment by the Portfolio to FMR of management fees should be deemed
to be indirect financing of the distribution of the Portfolio's shares,
such payment is authorized by the Plan. The table below shows distribution
fees paid to the Distributor for the three fiscal periods ended July 31,
1994. ^
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money Market ^ Portfolio 1994 1993 1992
U.S. Government ^ Portfolio $1,551,678 $736,728
Municipal Money Market ^ Portfolio 943,237 736,447
321,133 170,483
</TABLE>
The table below shows fees paid by FMR under the Plans for fiscal
1994, 1993 ^ and 1992 . ^
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money Market ^ Portfolio 1994 1993 1992
U.S. Government ^ Portfolio $835,027 $639,020
Municipal Money Market ^ Portfolio 476,396 819,952
160,759 147,736
</TABLE>
For fiscal 1994, 1993, and 1992, ^ the Distributor
reallocated out of the fees paid by FMR the following amounts to
non-affiliated third parties, as shown in the table below.
^
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money Market ^ Portfolio 1994 1993 1992
U.S. Government ^ Portfolio $1,285,593 $946,281
Municipal Money Market ^ Portfolio 464,693 742,278
251,561 217,870
</TABLE>
Out of fees paid by the Portfolios and FMR for the 1994, 1993,
and 1992^ fiscal periods, the Distributor retained the following
amounts:
^
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money Market ^ Portfolio 1994 1993 1992
U.S. Government ^ Portfolio $1,101,112 $429,467
Municipal Money Market ^ Portfolio 954,940 814,121
230,331 100,349
</TABLE>
Each Plan may be deemed by the Staff of the SEC to be a " compensation
plan" because payments made are not tied directly to actual expenses
incurred, and the Distributor is given discretion concerning what expenses
are payable under the Plan. The fees received by the Distributor pursuant
to the Plan may exceed or, particularly in the early years of the
Portfolios, be less than the estimated direct and indirect costs incurred
by the Distributor in providing its services under the Plan and the General
Distribution Agreement with each Portfolio. If the fees received exceed
expenses incurred, the Distributor may be deemed to have received a
"profit" to the extent of such excess. For example, if the Distributor
pays $1 for distribution related expenses and receives $2 under the Plan,
the $1 difference could be said to be a profit for the Distributor. If the
fees received are less than expenses incurred, each Plan does not carryover
any excess costs over fees to a subsequent annual period. Any revenue from
an increase in distribution fees may not be used against excess costs
incurred in a previous period.
The Plans do not provide for specific payment by each Portfolio of any of
the expenses of the Distributor, nor obligate the Distributor or FMR to
perform any specific type or level of distribution activities or incur any
specific level of expense in connection with distribution activities.
After payments by the Distributor for advertising, marketing and
distribution and payments to Qualified Recipients, the amounts remaining,
if any, may be used as the Distributor may elect.
Functions of Qualified Recipients may include, among other things,
services rendered in the distribution of shares of the Portfolios,
answering routine client inquiries regarding a Portfolio, providing
necessary facilities and personnel to establish and maintain shareholder
records, processing purchase and redemption transactions, processing
automatic investment and redemption of client cash account balances,
assisting clients in changing dividend options, account registrations and
addresses, performing sub-accounting, arranging for bank wires, and
providing such other services as the Portfolios may reasonably request, to
the extent the Qualified Recipient is permitted to do so by applicable
statute, rule or regulation.
The fees to be paid to Qualified Recipients, and the basis on which
payment is made, are determined by Distributors and/or FMR; provided,
however, that a majority of the Board of Trustees, including a majority of
those Trustees who are not "interested persons" of the Portfolios and have
no direct or indirect interest in the operations of the Plans or any
related agreements (the "Independent Trustees") may at any time and from
time to time decrease the maximum percentage amount and/or maximum total
amount payable to Qualified Recipients with respect to the shares to which
they are related, or remove any person as a Qualified Recipient.
The Glass-Steagall Act generally prohibits federally and state chartered
or supervised banks from engaging in the business of underwriting, selling
or distributing securities. Although the scope of this prohibition under
the Glass-Steagall Act has not been clearly defined, in the Distributor's
opinion it should not prohibit banks from being paid for shareholder
servicing and recordkeeping functions. The Distributor intends to engage
banks only to perform such functions. However, changes in federal or state
statutes and regulation pertaining to the permissible activities of banks
and their affiliates or subsidiaries, as well as further judicial or
administrative decisions or interpretations, could prevent a bank from
continuing to perform all or a part of the contemplated services. If a bank
were prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of a
Portfolio might occur, including possible termination of any automatic
investment or redemption or other services then provided by the bank. It
is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences. Each Portfolio may
execute portfolio transactions with and purchase securities issued by
depository institutions that act as Qualified Recipients. No preference
will be shown in the selection of investments for the instruments of such
depository institutions acting as Qualified Recipients under the Plans. In
addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein, and banks and financial
institutions may be required to register as dealers pursuant to state law.
Under its terms, each Plan shall remain in effect from year to year as
long as such continuance is approved at least annually by a vote of a
majority of the Trustees and of the Independent Trustees. Each Plan may
not be amended to increase materially the amount to be spent for
distribution without the approval of a majority of the outstanding shares
of the Portfolio, and may not be materially amended in any case without a
vote of a majority of the outstanding shares of the Portfolio, and may not
be materially amended in any case without a vote of a majority of the
Trustees and of the Independent Trustees. So long as each Plan is in
effect, the selection and nomination of the Trustees who are not interested
persons of the Fund shall be committed to the discretion of the Trustees
who are not interested persons of the Fund. Each Plan may be terminated at
any time by vote of a majority of the Independent Trustees, or by vote of a
majority of the outstanding shares of a Portfolio, and terminates
automatically in the event of its assignment.
DESCRIPTION OF THE FUND
TRUST ORGANIZATION. Capital Reserves: Money Market Portfolio, U.S.
Government Portfolio and Municipal Money Market Portfolio are portfolios of
Daily Money Fund (the Fund), an open-end management investment company
organized as a Delaware business trust on September 29, 1993. The
Portfolios acquired all of the assets of Capital Reserves: Money Market
Portfolio, U.S. Government Portfolio, and Municipal Money Market Portfolio,
respectively, portfolios of Daily Money Fund, a Massachusetts business
trust, on September 29, 1993. Currently, there are six ^ series of
the Fund: Money Market Portfolio, U.S. Treasury Portfolio, Capital
Reserves: Money Market Portfolio, Capital Reserves: U.S. Government
Portfolio, Capital Reserves: Municipal Money Market Portfolio, and Fidelity
U.S. Treasury Income Portfolio. The Trust Instrument permits the Trustees
to create additional ^ series .
In the event that FMR ceases to be the investment adviser to the Fund or a
Portfolio, the right of the Fund or Portfolio to use the identifying name
"Fidelity" may be withdrawn. There is a remote possibility that one
portfolio might become liable for any misstatement in its prospectus or
statement of additional information about another portfolio.
The assets of the Fund received for the issue or sale of shares of each
Portfolio and all income, earnings, profits, and proceeds thereof, subject
only to the rights of creditors, are especially allocated to such
Portfolio, and constitute the underlying assets of such Portfolio. The
underlying assets of each Portfolio are segregated on the books of account,
and are to be charged with the liabilities with respect to such Portfolio
and with a share of the general expenses of the Fund. Expenses with
respect to the Fund are to be allocated in proportion to the asset value of
the respective Portfolios, except where allocations of direct expense can
otherwise be fairly made. The officers of the Fund, subject to the general
supervision of the Board of Trustees, have the power to determine which
expenses are allocable to a given Portfolio, or which are general or
allocable to all of the Portfolios. In the event of the dissolution or
liquidation of the Fund, shareholders of each Portfolio are entitled to
receive as a class the underlying assets of such Portfolio available for
distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The Fund is a business trust organized
under Delaware law. Delaware law provides that shareholders shall be
entitled to the same limitations of personal liability extended to
stockholders of private corporations for profit. The courts of some
states, however, may decline to apply Delaware law on this point. The
Trust Instrument contains an express disclaimer of shareholder liability
for the debts, liabilities, obligations, and expenses of the Fund and
requires that a disclaimer be given in each contract entered into or
executed by the Fund or the Trustees. The Trust Instrument provides for
indemnification out of each Portfolio's property of any shareholder or
former shareholder held personally liable for the obligations of the
Portfolio. The Trust Instrument also provides that each Portfolio shall,
upon request, assume the defense of any claim made against any shareholder
for any act or obligation of the Portfolio and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which
Delaware law does not apply, no contractual limitation of liability was in
effect, and the Portfolio is unable to meet its obligations. FMR believes
that, in view of the above, the risk of personal liability to shareholders
is extremely remote.
The Trust Instrument further provides that the Trustees, if they have
exercised reasonable care, shall not be personally liable to any person
other than the Fund or its shareholders; moreover, the Trustees shall not
be liable for any conduct whatsoever, provided that ^ Trustees are
not protected against any liability to which ^ they would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of ^
their office.
VOTING RIGHTS. Each Portfolio's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption, and the privilege of exchange
are described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the heading " Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of the Fund or a Portfolio
may, as set forth in the Trust Instrument, call meetings of the Fund or
Portfolio for any purpose related to the Fund or Portfolio, as the case may
be, including, in the case of a meeting of the entire Fund, the purpose of
voting on removal of one or more Trustees.
The Fund or any Portfolio may be terminated upon the sale of its assets
to, or merger with, another open-end management investment company or
series thereof, or upon liquidation and distribution of its assets.
Generally, such terminations must be approved by vote of the holders of a
majority of the outstanding shares of the Fund or the Portfolio; however,
the Trustees may, without prior shareholder approval, change the form of
organization of the ^ Fund by merger, consolidation, or
incorporation. If not so terminated or reorganized, the Fund and each
Portfolio will continue indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder vote,
cause the Fund to merge or consolidate into one or more trusts,
partnerships, or corporations, or cause the Fund to be incorporated under
Delaware law, so long as the surviving entity is an open-end management
investment company that will succeed to or assume the ^ Fund's
registration statement. ^ Each portfolio may ^ invest all of its
assets in another investment company.
^ As of ________________, 1994 , the following owned of record or
beneficially 5% or more of the outstanding shares of the Portfolios:
^ [WILL BE UPDATED]
CUSTODIAN. Morgan Guaranty Trust Company of New York, 60 Wall Street, New
York, New York 10260 is custodian of the assets of Money Market Portfolio
and U.S. Government Portfolio. United Missouri Bank, N.A., 1010 Grand
Avenue, Kansas City, Missouri 64106 is custodian of the assets of Municipal
Money Market Portfolio.
The custodians are responsible for the safekeeping of the Portfolios'
assets and the appointment of subcustodian banks and clearing agencies.
The custodians take no part in determining the investment policies of each
Portfolio or in deciding which securities are purchased or sold by each
Portfolio. Each Portfolio may, however, invest in obligations of the
custodian and may purchase or sell securities from the custodian.
FMR, its officers and directors, its affiliated companies, and the Fund's
Trustees may, from time to time have transactions with various banks that,
including the banks serving as custodians for certain of the funds advised
by FMR. Transactions that have occurred to date include mortgages and
personal and general business loans. In the judgment of FMR, the terms and
conditions of those transactions were not influenced by existing or
potential custodial or other Portfolio relationships.
AUDITOR. ^ ___________________ , 1999 Bryan Street, Dallas, Texas
serves as the Fund's independent accountant. The auditor examines
financial statements for the Portfolios and provides other audit, tax, and
related services.
FINANCIAL STATEMENTS
Each Portfolio's financial statements and financial highlights for the
fiscal period ended July 31, 1994 are included in each Portfolio's annual
report, which is a separate report attached to the prospectus. Each
Portfolio's financial statements and financial highlights are incorporated
herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the ^
Portfolios. The Portfolios may, however, consider the ratings for
other types of investments and the ratings assigned by other rating
organizations when determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF COMMERCIAL
PAPER:
Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics:
_ Leading market positions in well established industries.
_ High rates of return on funds employed.
_ Conservative capitalization structures with moderate reliance on debt
and ample asset protection.
_ Broad margins in earning coverage of fixed financial charges and with
high internal cash generation.
_ Well established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample
alternative liquidity is maintained.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF STATE AND
MUNICIPAL NOTES:
Moody's ratings for state and municipal and other short-term obligations
will be designated Moody's Investment Grade (MIG or VMIG for variable rate
obligations). This distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important in the short
run. Symbols used will be as follows:
MIG-1/VMIG-1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2 - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF MUNICIPAL BOND:
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and generally are referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger than
in Aaa securities.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S RATINGS OF COMMERCIAL:
A - Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2, and 3 to indicate the relative degree of
safety.
A-1 - This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+)
sign designation.
A-2 - Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for
issues designated A-1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S RATINGS OF CORPORATE
BONDS:
AAA - Debt rated AAA is the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S RATINGS OF STATE AND
MUNICIPAL NOTES:
SP-1 - Very strong or strong capacity to pay principle and interest.
Those issues determined to possess overwhelming safety characteristics will
be given a (+) designation.
SP-2 - Satisfactory capacity to pay principal and interest.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S RATINGS OF MUNICIPAL
BONDS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal, and differs from the highest-rated debt issues only in small
degree.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) 1. Audited financial statements and financial highlights for each
fund for the fiscal year end July 31, 1994 will be filed by subsequent
amendment.
(b) Exhibits:
1. (a) Trust Instrument dated June 20, 1991 was electronically filed and
is incorporated by reference as Exhibit 1(a) to Post Effective Amendment
No. 25.
2. (a) By-Laws of the Trust dated June 20, 1991 were electronically filed
and are incorporated by reference as Exhibit 2(a) to Post Effective
Amendment No. 25.
3. Not applicable.
4. Not applicable.
5. (a) Management Contract dated September 30, 1993 between Daily Money
Fund, on behalf of U.S. Treasury Income, and Fidelity Management &
Research Company was electronically filed and is incorporated herein by
reference as Exhibit 5(a) to Post-Effective Amendment No. 25.
(b) Management Contract dated September 30, 1993 between Daily Money Fund,
on behalf of Money Market Portfolio, and Fidelity Management & Research
Company was electronically filed and is incorporated herein by reference as
Exhibit 5(b) to Post-Effective Amendment No. 25.
(c) Management Contract dated September 30, 1993 between Daily Money Fund,
on behalf of U.S. Treasury Portfolio, and Fidelity Management &
Research Company was electronically filed and is incorporated herein by
reference as Exhibit 5(c) to Post-Effective Amendment No. 25.
(d) Management Contract dated September 30, 1993 between Daily Money Fund,
on behalf of Capital Reserves: Municipal Money Market Portfolio, and
Fidelity Management & Research Company was electronically filed and is
incorporated herein by reference as Exhibit 5(d) to Post-Effective
Amendment No. 25.
(e) Management Contract dated September 30, 1993 between Daily Money Fund,
on behalf of Capital Reserves: Money Market Portfolio, and Fidelity
Management & Research Company was electronically filed and is
incorporated herein by reference as Exhibit 5(e) to Post-Effective
Amendment No. 25.
(f) Management Contract dated September 30, 1993 between Daily Money Fund,
on behalf of Capital Reserves: U.S. Government Portfolio, and Fidelity
Management & Research Company was electronically filed and is
incorporated herein by reference as Exhibit 5(f) to Post-Effective
Amendment No. 25.
(g) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of Money Market
Portfolio, was electronically filed and is incorporated herein by reference
as Exhibit 5(g) to Post-Effective Amendment No. 25.
(h) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of U.S. Treasury
Portfolio, was electronically filed and is incorporated herein by reference
as Exhibit 5(h) to Post-Effective Amendment No. 25.
(i) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of Capital
Reserves: Money Market Portfolio, was electronically filed and is
incorporated herein by reference as Exhibit 5(i) to Post-Effective
Amendment No. 25.
(j) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of U.S.
Government Portfolio, was electronically filed and is incorporated herein
by reference as Exhibit 5(j) to Post-Effective Amendment No. 25.
(k) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of Capital
Reserves: Municipal Money Market Portfolio, was electronically filed and
is incorporated herein by reference as Exhibit 5(k) to Post-Effective
Amendment No. 25.
(l) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of U.S. Treasury
Portfolio, was electronically filed and is incorporated herein by reference
as Exhibit 5(l) to Post-Effective Amendment No. 25.
6. (a) General Distribution Agreement dated September 30, 1993 between
Daily Money Fund, on behalf of Money Market Portfolio, and Fidelity
Distributors Corporation was electronically filed and is incorporated
herein by reference as Exhibit 6(a) to Post-Effective Amendment No. 25.
(b) General Distribution Agreement dated September 30, 1993 between Daily
Money Fund, on behalf of U.S. Treasury Portfolio, and Fidelity Distributors
Corporation was electronically filed and is incorporated herein by
reference as Exhibit 6(b) to Post-Effective Amendment No. 25.
(c) General Distribution Agreement dated September 30, 1993 between Daily
Money Fund, on behalf of U.S. Treasury Income Portfolio, and Fidelity
Distributors Corporation was electronically filed and is incorporated
herein by reference as Exhibit 6(c) to Post-Effective Amendment No. 25.
(d) General Distribution Agreement dated September 30, 1993 between Daily
Money Fund, on behalf of Capital Reserves: U.S. Government Portfolio, and
National Financial Services Corporation was electronically filed and is
incorporated herein by reference as Exhibit 6(d) to Post-Effective
Amendment No. 25.
(e) General Distribution Agreement dated September 30, 1993 between Daily
Money Fund, on behalf of Capital Reserves: Municipal Money Market
Portfolio, and National Financial Services Corporation was electronically
filed and is incorporated herein by reference as Exhibit 6(e) to
Post-Effective Amendment No. 25.
(f) General Distribution Agreement dated September 30, 1993 between Daily
Money Fund, on behalf of Capital Reserves: Money Market Portfolio, and
National Financial Services Corporation was electronically filed and is
incorporated herein by reference as Exhibit 6(f) to Post-Effective
Amendment No. 25.
7. (a) Retirement Plan for non-interested person Trustees, Directors or
General Partners is incorporated herein by reference to Exhibit 7 to
Post-Effective Amendment No. 18.
8. (a) Custodian Agreement between Daily Money Fund on behalf of U.S.
Treasury Income Portfolio; Money Market Portfolio, U.S. Treasury Portfolio;
Capital Reserves: U.S. Government Portfolio, Money Market Portfolio and
Morgan Guaranty Trust Company of New York was electronically filed and is
incorporated herein by reference as Exhibit 8(a) to Post-Effective
Amendment No. 25.
(b) Custodian Agreement between Daily Money Fund on behalf of Capital
Reserves: Municipal Money Market Portfolio and United Missouri Bank was
electronically filed and is incorporated herein by reference as Exhibit
8(b) to Post-Effective Amendment No. 25.
(c) Sub-Custodian Agreement between Fidelity Investment Companies
(including Daily Money Fund on behalf of U.S. Treasury Income Portfolio;
Daily Money Fund: Money Market Portfolio, U.S. Treasury Portfolio; Capital
Reserves: U.S. Government Portfolio, Money Market Portfolio) and Morgan
Guaranty Trust Company of New York and between Fidelity Investment
Companies (including Daily Money Fund on behalf of Capital Reserves:
Municipal Money Market Portfolio) and United Missouri Bank was
electronically filed and is incorporated herein by reference as Exhibit
8(c) to Post Effective Amendment No. 22.
(d) Form of Supplemental Custodian Agreement between Fidelity Investment
Companies (including Daily Money Fund on behalf of U.S. Treasury Income
Portfolio; Daily Money Fund: Money Market Portfolio, U.S. Treasury
Portfolio; Capital Reserves: U.S. Government Portfolio, Money Market
Portfolio) and Morgan Guaranty Trust Company of New York was electronically
filed and is incorporated herein by reference as Exhibit 8(d) to Post
Effective Amendment No. 22.
9. (a) Amended Transfer Agent Agreement dated September 30, 1993 between
Daily Money Fund and Fidelity Investment Institutional Operations Company
was electronically filed and is incorporated herein by reference as Exhibit
9(a) to Post-Effective Amendment No. 25.
(b) Schedule A dated September 30, 1993 for Capital Reserves: Money
Market Portfolio was electronically filed and is incorporated herein by
reference as Exhibit 9(b) to Post-Effective Amendment No. 25.
(c) Schedule A dated September 30, 1993 for Capital Reserves: U.S.
Government Portfolio was electronically filed and is incorporated herein by
reference as Exhibit 9(c) to Post-Effective Amendment No. 25.
(d) Schedule A dated September 30, 1993 for U.S. Treasury Portfolio
was electronically filed and is incorporated herein by refereence as
Exhibit 9(d) to Post-Effective Amendment No. 25.
(e) Schedule A dated September 30, 1993 for U.S. Treasury Income
Portfolio was electronically filed herein as Exhibit 9(e) to Post-Effective
Amendment No. 25.
(f) Schedule A dated September 30, 1993 for Capital Reserves: Money
Market Portfolio was electronically filed and is incorporated herein by
reference as Exhibit 9(f) to Post-Effective Amendment No. 25.
(g) Transfer Agent Agreement dated September 30, 1993 between Daily
Money Fund: Capital Reserves: Municipal Money Market Portfolio and United
Missouri Bank, N.A. was electronically filed and is incorporated herein by
reference as Exhibit 9(g) to Post-Effective Amendment No. 25.
(h) Schedule A dated September 30, 1993 for Capital Reserves:
Municipal Money Market Portfolio was electronically filed and is
incorporated herein by reference as Exhibit 9(h) to Post-Effective
Amendment No. 25.
(i) Appointment of Sub-transfer Agent between FMR Corp. and Fidelity
Investment Institutional Operations Company on behalf of Daily Money Fund:
Capital Reserves: Municipal Money Market Portfolio was electronically
filed and is incorporated herein by reference as Exhibit 9(i) to
Post-Effective Amendment No. 25.
(j) Form of Schedule B between Daily Money Fund on behalf of U.S.
Treasury Income Portfolio; Money Market Portfolio, U.S. Treasury
Portfolio; Capital Reserves: U.S. Government Portfolio, Money Market
Portfolio and Fidelity Service Company was electronically filed and is
incorporated herein by reference to Exhibit 9(e) to Post Effective
Amendment No. 22.
(k) Form of Schedule C between Daily Money Fund on behalf of U.S.
Treasury Income Portfolio; Money Market Portfolio, U.S. Treasury
Portfolio; Capital Reserves: U.S. Government Portfolio, Money Market
Portfolio and Fidelity Service Company was electronically filed and is
incorporated herein by reference to Exhibit 9(g) to Post Effective
Amendment No. 22.
(l) Service Agreement dated September 30, 1993 between Daily Money
Fund: Capital Reserves Municipal Money Market Portfolio and United
Missouri Bank, N.A. was electronically filed and is incorporated herein by
reference as Exhibit 9(l) to Post-Effective Amendment No. 25.
(m) Schedule B dated September 30, 1993 for Capital Reserves:
Municipal Money Market Portfolio was electronically filed and is
incorporated herein by reference as Exhibit 9(m) to Post-Effective
Amendment No. 25.
(n) Schedule C dated September 30, 1993 for Capital Reserves:
Municipal Money Market Portfolio was electronically filed and is
incorporated herein by reference as Exhibit 9(n) to Post-Effective
Amendment No. 25.
10. Not applicable.
11. Not applicable.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15. (a) Service Plan dated September 30, 1993 between Daily Money Fund,
Fidelity Management & Research Company, and Fidelity Distributors
Corporation was electronically filed and is incorporated herein by
reference as Exhibit 15(a) to Post-Effective Amendment No. 26.
(b) Distribution and Service Plan dated September 30, 1993 for Daily
Money Fund: U.S. Treasury Income Portfolio was electronically filed and
incorporated herein by reference as Exhibit 15(b) to Post-Effective
Amendment No. 25.
(c) Distribution and Service Plan dated September 30, 1993 for Daily
Money Fund: Capital Reserves: Money Market Portfolio, U.S. Government
Portfolio, and Municipal Money Market Portfolio was electronically filed
and is incorporated herein by reference as Exhibit 15(c) to Post-Effective
Amendment No. 25.
(d) Distribution and Service Plan for Class B of Daily Money Fund: U.S.
Treasury Portfolio was electronically filed and incorporated herein by
reference as Exhibit 15(d) to Post-Effective Amendment No. 25.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is the same as the boards of other
funds advised by FMR, each of which has Fidelity Management & Research
Company as its investment adviser. In addition, the officers of these funds
are substantially identical. Nonetheless, Registrant takes the position
that it is not under common control with these other funds since the power
residing in the respective boards and officers arises as the result of an
official position with the respective funds.
Item 26. Number of Holders of Securities
May 31, 1994
Title of Class Number of Record Holders
Money Market Portfolio 12,256
U.S. Treasury Portfolio
7,425
U.S. Treasury Income Portfolio
2,086
Capital Reserves: Money Market Portfolio
3,334
Capital Reserves: U.S. Government Portfolio
394
Capital Reserves: Municipal Money Market Portfolio
177
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the reasonable
and fair means for determining whether indemnification shall be provided to
any past or present Trustee or officer. It states that the Registrant
shall indemnify any present or past Trustee or officer to the fullest
extent permitted by law against liability and all expenses reasonably
incurred by him in connection with any claim, action, suit or proceeding in
which he is involved by virtue of his service as a trustee, an officer, or
both. Additionally, amounts paid or incurred in settlement of such matters
are covered by this indemnification. Indemnification will not be provided
in certain circumstances, however. These include instances of willful
misfeasance, bad faith, gross negligence, and reckless disregard of the
duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc., Fidelity Management & Research (U.K.) Inc. and
Fidelity Management & Research (Far East) Inc.;
President and Trustee of funds advised by FMR;
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Charles F. Dornbush Senior Vice President of FMR; Chief Financial Officer of
the Fidelity funds; Treasurer of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR and Treasurer of the funds advised
by FMR. Prior to assuming the position as Treasurer he
was Senior Vice President, Fund Accounting - Fidelity
Accounting & Custody Services Co.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Income/Growth Group
Leader and International Group Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR; and Director of Technical
Research.
Stephan Jonas Vice President of FMR (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Jacques Perold Vice President of FMR.
Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Richard A. Spillane Vice President of FMR and of funds advised by FMR; and
Director of Equity Research.
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader.
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
(4) FMR TEXAS INC. (FMR Texas)
FMR Texas provides investment advisory services to Fidelity Management
& Research Company. The directors and officers of the Sub-Adviser have
held the following positions of a substantial nature during the past two
fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Texas; Chairman of the
Executive Committee of FMR; President and Chief
Exective Officer of FMR Corp.; Chairman of the Board
and a Director of FMR, FMR Corp., Fidelity
Management & Research (Far East) Inc. and
Fidelity Management & Research (U.K.) Inc.;
President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Texas; President of FMR;
Managing Director of FMR Corp.; President and a
Director of Fidelity Management & Research (Far
East) Inc. and Fidelity Management & Research
(U.K.) Inc.; Senior Vice President and Trustee of funds
advised by FMR.
Fred L. Henning Jr. Senior Vice President of FMR Texas; Money Market
Group Leader.
Leland Barron Vice President of FMR Texas and of funds advised by
FMR.
Thomas D. Maher Vice President of FMR Texas.
Burnell R. Stehman Vice President of FMR Texas and of funds advised by
FMR.
John J. Todd Vice President of FMR Texas and of funds advised by
FMR.
Sarah H. Zenoble Vice President of FMR Texas and of funds advised by
FMR.
Charles F. Dornbush Treasurer of FMR Texas; Treasurer of Fidelity
Management & Research (U.K.) Inc.; Treasurer of
Fidelity Management & Research (Far East) Inc.;
Senior Vice President and Chief Financial Officer of the
Fidelity funds.
David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity Management
& Research (U.K.) Inc.; Clerk of Fidelity
Management & Research (Far East) Inc.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire Street, Boston, MA 02109, or the funds'
respective custodian: United Missouri Bank, N.A., 1010 Grand Avenue, Kansas
City, MO, or Morgan Guaranty Trust Company of New York, 61 Wall Street,
37th Floor, New York, N.Y.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 26 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Boston, and Commwealth of Massachusetts, on the 11th day of July, 1994.
DAILY MONEY FUND
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee July 11, 1994
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer July 11, 1994
Gary L. French
/s/J. Gary Burkhead Trustee July 11, 1994
J. Gary Burkhead
/s/Ralph F. Cox * Trustee July 11, 1994
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee July 11, 1994
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee July 11, 1994
Richard J. Flynn
/s/E. Bradley Jones * Trustee July 11, 1994
E. Bradley Jones
/s/Donald J. Kirk * Trustee July 11, 1994
Donald J. Kirk
/s/Peter S. Lynch * Trustee July 11, 1994
Peter S. Lynch
/s/Edward H. Malone * Trustee July 11, 1994
Edward H. Malone
/s/Marvin L. Mann * Trustee July 11, 1994
Marvin L. Mann
/s/Gerald C. McDonough* Trustee July 11, 1994
Gerald C. McDonough
/s/Thomas R. Williams * Trustee July 11, 1994
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to any other investment company for which Fidelity Management
& Research Company acts as investment adviser and for which the
undersigned individual serves as a Director, Trustee or General Partner
(collectively, the "Funds"), hereby severally constitute and appoint Arthur
J. Brown, Arthur C. Delibert, Robert C. Hacker, Richard M. Phillips, Dana
L. Platt and Stephanie Xupolos, each of them singly, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
each of them, to sign for me and my name in the appropriate capacities any
Registration Statements of the Funds on Form N-1A or any successor thereto,
any and all subsequent Pre-Effective Amendments or Post-Effective
Amendments to said Registration Statements on Form N-1A or any successor
thereto, any Registration Statements on Form N-14, and any supplements or
other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorneys-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact
or their substitutes may do or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Marvin L. Mann
Ralph F. Cox Marvin L. Mann
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to any other investment company for which Fidelity Management
& Research Company acts as investment adviser and for which the
undersigned individual serves as President and Board Member (collectively,
the "Funds"), hereby severally constitute and appoint J. Gary Burkhead, my
true and lawful attorney-in-fact, with full power of substitution, and with
full power to sign for me and in my name in the appropriate capacity any
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Pre-Effective Amendments or
Post-Effective Amendments to said Registration Statements on Form N-1A or
any successor thereto, any Registration Statements on Form N-14, and any
supplements or other instruments in connection therewith, and generally to
do all such things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993
Edward C. Johnson 3d
