SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-77909)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 34 [X]
and
REGISTRATION STATEMENT (No. 811-3480)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 34 [ ]
Daily Money Fund
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-563-7000
Siobian Perkins
Morris, Nichols, Arsht & Tunnell
1201 N. Market Street, P.O. Box 1347
Wilmington, DE 19899-1347
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b)
(x) on (December 1, 1995) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(i)
( ) on ( ) pursuant to paragraph (a)(i)
( ) 75 days after filing pursuant to paragraph (a)(ii)
( ) on ( ) pursuant to paragraph (a)(ii) of rule 485.
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and filed the Notice required by such Rule
on September 22, 1995.
DAILY MONEY FUND :
U.S. TREASURY PORTFOLIO: CLASS B
CROSS REFERENCE SHEET
Form N-1A Item Number
Part A Prospectus Caption
1 Cover Page
2 Expenses
3 a,b Financial Highlights
c Performance
d Performance
4 a(i) Charter
a(ii) Investment Principles and Risks; Securities and
Investment Practices
b Securities and Investment Practices
c Who May Want to Invest; Investment Principles
and Risks; Securities and Investment Practices
5 a Charter
b(i) Cover Page; Charter
b(ii) FMR and Its Affiliates; Charter; Breakdown of
Expenses
b(iii) Expenses; Breakdown of Expenses
c,d, Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates
e FMR and Its Affiliates; Other Expenses
f Expenses
g Expenses; FMR and Its Affiliates
5A
*
6 a(i) Charter
a(ii) How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange Restrictions
a(iii) *
b FMR and Its Affiliates
c Exchange Restrictions
d *
e Cover Page; How to Buy Shares; How to Sell Shares; Investor Services;
Exchange Restrictions
f,g Dividends, Capital Gains, and Taxes
7 a Charter; Cover page
b How to Buy Shares; Transaction Details
c How to Buy Shares; Transaction Details
d How to Buy Shares
e, Transaction Details
f, Breakdown of Expenses
8 How to Sell Shares; Investor Services; Transaction Details; Exchange
Restrictions
9 *
* Not Applicable
DAILY MONEY FUND:
U.S. TREASURY PORTFOLIO -
CLASS B
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how the fund
invests and the services available to shareholders.
To learn more about the fund and its investments, you can obtain a copy of
the fund's most recent financial report and portfolio listing or a copy of
the Statement of Additional Information (SAI) dated December 1, 1995. The
SAI has been filed with the Securities and Exchange Commission (SEC) and is
incorporated herein by reference (legally forms a part of the prospectus).
For a free copy of either document, contact your investment professional,
or call Fidelity Client Services at 1-800-843-3001.
INVESTMENTS IN THE FUND ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL MAINTAIN A
STABLE $1.00 SHARE PRICE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL AMOUNT INVESTED.
LIKE ALL MUTUAL FUNDS, 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.
DMFB-pro-1295
The fund seeks to obtain as high a level of current income as is consistent
with the preservation of capital and liquidity.
PROSPECTUS
DECEMBER 1, 1995(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
CONTENTS
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KEY FACTS WHO MAY WANT TO INVEST
EXPENSES' Class B's sales charge (load) and its
yearly operating expenses.
FINANCIAL HIGHLIGHTS A summary of the fund's
financial data.
PERFORMANCE
THE FUND IN DETAIL CHARTER How the fund is organized.
INVESTMENT PRINCIPLES AND RISKS The fund's
overall approach to investing.
BREAKDOWN OF EXPENSES How operating costs
are calculated and what they include.
YOUR ACCOUNT TYPES OF ACCOUNTS Different ways to set up your
account, including tax-sheltered retirement plans.
HOW TO BUY SHARES Opening an account and
making additional investments.
HOW TO SELL SHARES Taking money out and closing
your account.
INVESTOR SERVICES Services to help you manage
your account.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS Share price calculations and
the timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
SALES CHARGE WAIVERS
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
The fund offers investors a convenient way to invest in a professionally
managed portfolio of money market instruments.
The fund is designed for investors who would like to earn current income
while preserving the value of their investment.
The rate of income will vary from day to day, generally reflecting
short-term interest rates.
The fund is managed to keep its share price stable at $1.00 and offers an
added measure of safety with its focus on U.S. Treasury securities.
The fund does not constitute a balanced investment plan. However, because
it emphasizes stability, it could be well-suited for a portion of your
savings.
The fund is composed of two classes of shares. Each class of the
fund has a common investment objective and investment portfolio. Initial
Class shares do not have a sales charge, but do pay a distribution fee.
Class B shares do not have a front-end sales charge, but do have a
contingent deferred sales charge (CDSC), and pay a distribution fee and a
shareholder service fee. Because Initial Class shares do not have a sales
charge, have a lower distribution fee and do not have a
shareholder service fee, Initial Class shares are expected to have a higher
total return than Class B shares. You may obtain more information about
Initial Class shares which are not offered through this prospectus, from
your investment professional or by calling Fidelity Client Services at
1-800-843-3001.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy, sell or
exchange Class B shares of the fund. See "Transaction Details," page , for
an explanation of how and when these charges apply.
A contingent deferred sales charge (CDSC) is imposed on redemptions of
Class B shares according to the schedule that was in effect when you
originally purchased the Advisor fund Class B shares that you exchanged.
See "Transaction Details," page , for information about the CDSC.
Maximum CDSC (as a % of the lesser 4.00%
of original purchase price or redemption proceeds)
Maximum sales charge on None
reinvested distributions
Redemption fee None
Exchange fee None
ANNUAL OPERATING EXPENSES are paid out of the fund's assets. The
fund pays a management fee to Fidelity Management & Research Company (FMR).
The fund also incurs other expenses for services such as maintaining
shareholder records, and furnishing shareholder account statements and
financial reports.
12b-1 fees include a distribution fee and a shareholder service fee.
Distribution fees are paid by FMR and Class B to the distributor for
services and expenses in connection with the distribution of Class B
shares. Shareholder service fees are paid by Class B to investment
professionals for services and expenses incurred in connection with
providing personal service and/or maintenance of Class B shareholder
accounts. Payments by FMR may be made from its management fee, its past
profits or other source . Payments by Class B are made directly out
of Class B assets. Long-term s hareholders may pay more than the
economic equivalent of the maximum sales charge s permitted by the
National Association of Securities Dealers, Inc., due to 12b-1 fees.
Class B's expenses are factored into its share price or dividends and are
not charged directly to shareholder accounts (see "Breakdown of Expenses"
on page ).
The following are projections based on historical expenses of Class B and
are calculated as a percentage of average net assets of Class B of the
fund.
Class B
Management fee * 0.1 8
%
12b-1 fee (including 0.25% Shareholder 1.00
Service Fee) %
Other expenses (after reimbursement) 0.1 7
%
Total operating expenses 1.35
%
* THE RATE FOR MANAGEMENT FEES REPRESENTS THE NET RATE RETAINED BY
FMR AFTER PAYMENT MADE TO THE DISTRIBUTOR. THE MANAGEMENT FEE BEFORE
PAYMENTS MADE TO THE DISTRIBUTOR BY FMR IS 0 .50%.
EXPENSE TABLE EXAMPLE: You would pay the following expenses, including the
maximum CDSC, on a $1,000 investment in Class B shares of the fund,
assuming a 5% annual return and either (1) full redemption or (2) no
redemption, at the end of each time period:
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1 Year 3 Years 5 Years 10 Years
(1) $54[A] $73[A] $84[A] $126[B]
(2) $14 $43 $74 $126
</TABLE>
[A] REFLECTS DEDUCTION OF APPLICABLE CDSC.
[B] REFLECTS CONVERSION TO INITIAL CLASS SHARES AFTER SIX YEARS.
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY.
FMR has voluntarily agreed to reimburse Class B to the extent that total
operating expenses (excluding interest, taxes, brokerage commissions, and
extraordinary expenses) are in excess of 1.35% of its average net assets.
If this agreement were not in effect, other expenses and total operating
expenses of Class B would have been 1.41% and 2.59% respectively as
a percentage of average net assets .
FINANCIAL HIGHLIGHTS
The financial highlights table that follows and each fund's
financial statements are included in the fund's Annual Report and have
been audited by Coopers & Lybrand L.L.P . , independent
accountants. Their report s on the financial statements and
financial highlights are included in the Annual Report. The
financial statements , the financial highlights and the
reports are incorporated by reference into the fund's SAI, which
may be obtained free of charge from Fidelity Client Services or your
investment professional.
U.S. TREASURY PORTFOLIO - CLASS B
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Selected Per-Share Data and Ratios
Fiscal years ended July 31 1995 1994 A
Net asset value, beginning of period $ 1.000 $ 1.000
Income from Investment Operations
Net interest income .042 .002
Less Distributions
From net interest income (.042) (.002)
Net asset value, end of period $ 1.000 $ 1.000
Total return B,C 4.28% .25%
Net assets, end of period (000 omitted) $ 3,154 $ 628
Ratio of expenses to average net assets 1.35% 1.35%D
Ratio of expenses to average net assets before expense reductions 2.59% 2.52%D
Ratio of net interest income to average net assets 4.22% 3.03%D
</TABLE>
A JULY 1, 1994 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1994
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE LEVIED
ON CLASS B SHARE REDEMPTIONS AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT
ANNUALIZED.
C TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED
DURING THE PERIODS SHOWN.
D ANNUALIZED
U.S. TREASURY PORTFOLIO - INITIAL CLASS
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Selected Per-Share Data and Ratios
Fiscal years ended July 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
Net asset value, beginning of
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment
Operations
Net interest income
.049 .029 .027 .042 .065 .079 .083 .063 .057 .069
Less Distributions
From net interest income
(.049) (.029) (.027) (.042) (.065) (.079) (.083) (.063) (.057) (.069)
Net asset value, end of period
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total return A
5.02 2.89 2.78 4.25 6.69 8.24 8.64 6.45 5.81 7.15
% % % % % % % % % %
Net assets, end of period
$ 1,828 $ 2,025 $ 2,949 $ 3,094 $ 1,702 $ 1,177 $ 994 $ 320 $ 240 $ 157
(In millions)
Ratio of expenses to average
.65 .60 .57 .59 .59 .59 .64 .64 .58 .60
net assets
% % % % % % % % % %
Ratio of expenses to average
.66 .60 .57 .59 .59 .59 .64 .64 .58 .60
net assets before expense
% % % % % % % % % %
reductions
Ratio of net interest income to
4.89 2.81 2.73 4.14 6.42 7.91 8.47 6.26 5.67 6.89
average net assets
% % % % % % % % % %
</TABLE>
A TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
PERFORMANCE
Money market fund performance can be measured as TOTAL RETURN or YIELD.
The exclusion of any applicable sales charge from a performance calculation
produces a higher return.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
Average annual and cumulative total returns usually will include the effect
of paying the maximum applicable sales charge.
YIELD refers to the income generated by an investment in the fund over a
given period of time, expressed as an annual percentage rate. When a yield
assumes that income earned is reinvested, it is called an EFFECTIVE YIELD.
SEVEN-DAY YIELD illustrates the income earned by an investment in a money
market fund over a recent seven-day period. Since money market funds
maintain a stable $1.00 share price, current seven-day yields are the most
common illustration of money market fund performance.
The fund's recent performance and holdings are detailed twice a year
in financial reports, which are sent to all shareholders.
For current performance call Fidelity Client Services at 1-800-843-3001.
THE FUND IN DETAIL
CHARTER
U.S. TREASURY PORTFOLIO IS A MUTUAL FUND: an investment that pools
shareholders' money and invests it toward a specified goal. The fund is a
diversified fund of Daily Money Fund, an open-end management investment
company organized as a Delaware business trust on September 29, 1993.
THE FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the fund's activities,
review contractual arrangements with companies that provide services to the
fund, and review the fund's performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUND MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These meetings
may be called to elect or remove trustees, change fundamental policies,
approve a management contract, or for other purposes. Shareholders not
attending these meetings are encouraged to vote by proxy. The transfer
agent will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. You are entitled to one
vote for each share you own.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust, respectively.
FMR AND ITS AFFILIATES
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, Massachusetts 02109. It includes a number
of different subsidiaries and divisions which provide a variety of
financial services and products. The fund employs various Fidelity
companies to perform activities required for its operation.
The fund is managed by FMR, which handles the fund's business affairs. FMR
Texas Inc. (FMR Texas), located in Irving, Texas, has primary
responsibility for providing investment management services.
As of September 30, 1995 , FMR advised funds having approximately
22 million shareholder accounts with a total value of more than
$ 335 billion.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets Fidelity's
funds and services. Fidelity Investments Institutional Operations Company
(FIIOC) performs transfer agent servicing functions for Class B of the
fund.
FMR Corp. is the ultimate parent company of FMR and FMR Texas. Members of
the Edward C. Johnson 3d family are the predominant owners of a class of
shares of common stock representing approximately 49% of the voting power
of FMR Corp. Under the Investment Company Act of 1940 (the 1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
To carry out the fund's transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that the fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
The fund may invest in U.S. Treasury bills, notes and bonds, and other
direct obligations of the U.S. Government that are guaranteed as to payment
of principal and interest by the full faith and credit of the U.S.
Government, and in repurchase agreements backed by those obligations. The
fund intends to invest exclusively in U . S. Treasury bills,
notes and bonds, and repurchase agreements backed by those obligations.
When you sell your shares, they should be worth the same amount as when you
bought them. Of course, there is no guarantee that the fund will maintain a
stable $1.00 share price. The fund follows industry-standard guidelines on
the quality and maturity of its investments, which are designed to help
maintain a stable $1.00 share price. The fund will purchase only
high-quality securities that FMR believes present minimal credit risks and
will observe maturity restrictions on securities it buys. In general,
securities with longer maturities are more vulnerable to price changes,
although they may provide higher yields. It is possible that a major change
in interest rates or a default on the fund's investments could cause its
share price (and the value of your investment) to change.
The fund earns income at current money market rates. It stresses
preservation of capital, liquidity and income and does not seek the
higher yields or capital appreciation that more aggressive investments may
provide. The fund's yield will vary from day to day and generally
reflects current short-term interest rates and other market conditions.
It is important to note that neither the fund nor its yield is guaranteed
by the U.S. Government.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the fund may invest, strategies FMR may employ in
pursuit of the fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of the fund's limitations and more detailed information
about the fund's investments are contained in the fund's SAI. Policies and
limitations are considered at the time of purchase; the sale of instruments
is not required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with the fund's investment
objective and policies and that doing so will help the fund achieve its
goal. Current holdings are described in the fund's financial reports, which
are sent to shareholders twice a year. For a free SAI or financial report,
contact your investment professional or call Fidelity Client Services at
1-800-843-3001.
U.S. GOVERNMENT MONEY MARKET SECURITIES are short-term debt obligations
issued or guaranteed by the U.S. Treasury or by an agency or
instrumentality of the U.S. Government. Not all U.S. Government securities
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 instrumentality's right
to borrow money from the U.S. Treasury under certain circumstances.
However, securities issued by the Financing Corporation are supported only
by the credit of the entity that issued them.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a benchmark
rate changes. These interest rate adjustments are designed to help
stabilize the security's price.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other money market
securities, although they may be more volatile.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund buys a security
at one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the fund
temporarily transfers possession of a portfolio instrument to another party
in return for cash. This could increase the risk of fluctuation in the
fund's yield or in the market value of its assets.
PUT FEATURES entitle the holder to put (sell back) a security to the issuer
or a financial intermediary. In exchange for this benefit, the fund may pay
periodic fees or accept a lower interest rate.
ILLIQUID SECURITIES. Some investments may be determined by FMR, under the
supervision of the Board of Trustees, to be illiquid, which means that they
may be difficult to sell promptly at an acceptable price. Difficulty in
selling securities may result in a loss or may be costly to the fund.
RESTRICTIONS: The fund may not purchase a security if, as a result, more
than 10% of its net assets would be invested in illiquid securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect the market value of the fund's assets.
BORROWING. The fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements, and may make additional
investments while borrowings are outstanding.
RESTRICTIONS: The fund may borrow only for temporary or emergency purposes,
or engage in reverse repurchase agreements, but not in an amount exceeding
331/3% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
The fund seeks to obtain as high a level of current income as is consistent
with the preservation of capital and liquidity.
The fund may borrow only for temporary or emergency purposes, or engage in
reverse repurchase agreements, but not in an amount exceeding 33 1/3% of
its total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the fund pays fees related to its daily operations.
Expenses paid out of Class B's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted
from shareholder accounts.
The fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services. The fund also pays OTHER EXPENSES, which
are explained below.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fund pays
the fee at the annual rate of 0.50% of its average net assets.
FMR HAS A SUB-ADVISORY AGREEMENT with FMR Texas, which has primary
responsibility for providing investment management for the fund, while FMR
retains responsibility for providing the fund with other management
services. For these services FMR pays FMR Texas 50% of its management fee
(before expense reimbursements but after payments made by FMR pursuant to
Class B's Distribution and Service Plan). FMR paid FMR Texas 0.10 %
of the fund's average net assets for the fiscal year ended July
31, 19 95 .
OTHER EXPENSES
While the management fee is a significant component of the fund's annual
operating costs, the fund has other expenses as well.
FIIOC performs certain transfer agency, dividend disbursing and shareholder
services for Class B. Fidelity Service Co. (FSC) calculates the NAV and
dividends for Class B, and maintains the fund's general accounting records.
For the f i scal year ended July 31, 1995, fees paid by
Class B to FIIOC amounted to 0.59 % of Class B's average net assets
and fees paid by the fund to FSC amounted to 0.01 % of the fund's
average net assets.
Class B shares have adopted a DISTRIBUTION AND SERVICE PLAN. Under the
Plan, Class B is authorized to pay FDC a monthly distribution fee as
compensation for its services and expenses in connection with the
distribution of Class B shares. FDC is paid a distribution fee monthly by
FMR and Class B at an annual rate of 0.75% of Class B's average net
assets throughout the month.
In addition, pursuant to the Class B Plan, investment professionals are
compensated at an annual rate of 0.25% of Class B's average net
assets throughout the month for providing personal service to and/or
maintenance of Class B shareholder accounts.
The Plan specifically recognizes that FMR may make payments from its
management fee revenue, past profits or other resources to reimburse FDC
for expenses incurred in connection with the distribution of Class B
shares. The Board of Trustees has authorized FMR to pay FDC a distribution
fee from its management fee revenue, past profits or other resources at an
annual rate of up to 0.38% of Class B's average net assets. For the
fiscal year ended July 31, 1995, FMR paid FDC monthly at an
annual rate of 0.32 % of Class B's average net assets throughout
the month.
The fund also pays other expenses, such as legal, audit, and custodian
fees; in some instances, proxy solicitation costs; and the compensation of
trustees who are not affiliated with Fidelity.
YOUR ACCOUNT
TYPES OF ACCOUNTS
Read your investment professional's program materials in conjunction with
this prospectus for additional service features or fees that may apply.
Certain features of the fund such as minimum initial or subsequent
investment amounts, may be modified in these programs, and administrative
charges may be imposed for the services rendered.
The different ways to set up (register) your account by exchange with
Fidelity are listed below.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers the fund through a retirement program,
contact your employer for more information. Otherwise, call your investment
professional directly.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal
age under 701/2 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(solid bullet) 401(K) PLANS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA). Contact your investment
professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened by exchange.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Contact your investment professional.
HOW TO BUY SHARES
Class B shares of the fund are offered only by exchange to investors in
Class B shares of the Fidelity Advisor f unds or through reinvestment
of distributions i n Class B shares . DIRECT PURCHASES OF CLASS B
SHARES WILL NOT BE ACCEPTED. Exchanges from Class B of a Fidelity
Advisor fund must be from an account with the same registration, including
name, address and taxpayer ID number. Contact your investment professional
or, if you are investing through a broker-dealer or insurance
representative, call 1-800-522-7297. If you are investing through a bank
representative, call 1-800-843-3001.
CLASS B'S SHARE PRICE, called NAV, is calculated every business day. Class
B shares are sold without a front-end sales charge but may be subject to a
CDSC upon redemption . F or information on how the CDSC is calculated,
see " Transaction Details ," page . The fund is managed to keep
its share price stable at $1.00.
Shares are purchased at the next NAV calculated after your order is
received and accepted by the transfer agent. NAV is normally calculated at
2:00 p.m. and 4:00 p.m. Eastern time.
It is the responsibility of your investment professional to submit your
order to purchase or redeem shares for you to receive the next determined
NAV.
Shareholders of record as of 2:00 p.m. Eastern time will be entitled to
dividends declared that day.
Shares purchased after 2:00 p.m. Eastern time begin to earn income
dividends on the following business day.
Share certificates are not available for Class B shares.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT VIA EXCHANGE $1,000
For Fidelity Advisor retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity Advisor retirement accounts $100
MINIMUM BALANCE $500
For Fidelity Advisor retirement accounts none
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next NAV calculated after your order is received and accepted by the
transfer agent, less any applicable CDSC. NAV is normally calculated at
2:00 p.m. and 4:00 p.m. Eastern time.
TO SELL SHARES IN AN ACCOUNT, you may use any of the methods described on
these pages.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR NON-RETIREMENT ACCOUNT SHARES,
please leave at least $ 500 worth of shares in the account to
keep it open.
TO SELL SHARES BY BANK WIRE, you will need to sign up for this service in
advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of shares,
(small solid bullet) Your account registration has changed within the last
30 days,
(small solid bullet) The check is being mailed to a different address than
the one on your account (record address),
(small solid bullet) The check is being made payable to someone other than
the account owner,
(small solid bullet) The redemption proceeds are being transferred to a
Fidelity Advisor account with a different registration, or
(small solid bullet) You wish to have redemption proceeds wired to a
non-predesignated bank account.
You should be able to obtain a signature guarantee from a bank, broker,
dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency, or savings association. A notary public
cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) The applicable class name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be redeemed
and
(small solid bullet) Any other applicable requirements listed in the
following table.
Deliver your letter to your i nvestment p rofessional, or mail
it to the following address:
(small solid bullet) If you purchased your shares through a
b roker- d ealer or i nsurance r epresentative:
Daily Money Fund:
U. S. Treasury Portfolio
P.O. Box 8302
Boston, MA 02266-8302
(small solid bullet) If you purchased your shares through a b ank
r epresentative:
Fidelity Investments Institutional Operations Company
P.O. Box 1182
Boston, MA 02103-1182
Unless otherwise instructed, the transfer agent will send a check to the
record address.
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ACCOUNT TYPE SPECIAL REQUIREMENTS
PHONE All account types except (small solid bullet) Maximum check request: $100,000.
YOUR INVESTMENT
PROFESSIONAL retirement
(phone_graphic) All account types (small solid bullet) Y ou may exchange to Class B of Fidelity
Advisor funds if both accounts are
registered with the same name(s),
address, and taxpayer ID number.
Mail or in Person
(mail_graphic)
(hand_graphic) Individual, Joint Tenant, (small solid bullet) The letter of instruction (with signature
Sole Proprietorship, guaranteed) must be signed by all persons
UGMA, UTMA required to sign for transactions, exactly as
their names appear on the account and
Retirement account sent to your investment professional.
(small solid bullet) The account owner should complete a
retirement distribution form. Contact your
investment professional or, if you
purchased your shares through a
broker-dealer or insurance representative,
call 1-800-522-7297. If you purchased your
shares through a bank representative, call
1-800-843-3001.
Trust (small solid bullet) The trustee must sign the letter indicating
capacity as trustee. If the trustee's name is
not in the account registration, provide a
copy of the trust document certified within
the last 60 days.
Business or Organization (small solid bullet) At least one person authorized by
corporate resolution to act on the account
must sign the letter (with signature
guaranteed).
Executor, Administrator, (small solid bullet) For instructions, contact your investment
Conservator/Guardian professional or, if you purchased your
shares through a broker-dealer or
insurance representative, call
1-800-522-7297. If you purchased your
shares through a bank representative, call
1-800-843-3001.
Wire (wire_graphic) All account types (small solid bullet) You must sign up for the wire feature before
using it. To verify that it is in place, contact
your investment professional or, if you
purchased your shares through a
broker-dealer or insurance representative,
call 1-800-522-7297. If you purchased your
shares through a bank representative, call
1-800-843-3001. Minimum wire: $ 500.
(small solid bullet) Redemption proceeds will be wired via the
Federal Reserve Wire System to your bank
account of record. If your redemption
request is received by the transfer agent
before 2:00 p.m. Eastern time, redemption
proceeds will normally be wired on that
day. If your redemption request is received
by the transfer agent after 2:00 p.m.
Eastern time, redemption proceeds will
normally be wired on the following business
day.
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(small solid bullet) Confirmation statements (after every transaction that
affects your account balance or your account registration)
(small solid bullet) Account statements (monthly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed,
even if you have more than one account in the fund. Call your investment
professional if you need additional copies of financial reports or
historical account information.
One easy way to pursue your financial goals is to invest money
regularly. The fund offers a convenient service that lets you transfer
money between fund accounts, automatically. While regular investment plans
do not guarantee a profit and will not protect you against loss in a
declining market, they can be an excellent way to invest for retirement, a
home, educational expenses, and other long-term financial goals. Certain
restrictions apply for retirement accounts. Call you investment
professional for more information.
REGULAR INVESTMENT PLANS
FIDELITY ADVISOR SYSTEMATIC EXCHANGE PROGRAM
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO FIDELITY ADVISOR FUND
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, quarterly, (small solid bullet) To establish, call your investment professional after
semi-annually, or both accounts are opened.
annually (small solid bullet) To change the amount or frequency of your
investment, contact your investment professional
directly or, if you purchased your shares through a
broker-dealer or insurance representative, call
1-800-522-7297. If you purchased your shares
through a bank representative, call 1-800-843-3001.
(small solid bullet) The account from which the exchanges are to be
processed must have a minimum balance of
$10,000. The account into which the exchange is
being processed must have a minimum of $1,000.
(small solid bullet) Both accounts must have the same registrations
and taxpayer ID numbers.
(small solid bullet) Call at least 2 business days prior to your next
scheduled exchange date.
</TABLE>
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
The fund distributes substantially all of its net investment income and
capital gains, if any, to shareholders each year. Income dividends are
declared daily and paid monthly.
Income dividends declared are accrued daily throughout the month and
are normally distributed on the first business day of the following month.
Based on prior approval of the fund, dividends relating to Class B shares
redeemed during the month can be distributed on the day of redemption. The
fund reserves the right to limit this service. Shareholders may elect to
receive dividend distributions in cash.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. Class B offers two options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your application, you
will be assigned this option.
2. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
For retirement accounts, all distributions are automatically reinvested.
When you are over 59 1/2 years old, you can receive distributions in cash.
Shares purchased through reinvestment of dividend and capital gain
distributions are not subject to a sales charge.
Dividends will be reinvested at Class B's NAV on the last day of the month.
Capital gain distributions, if any, will be reinvested at the NAV as of the
record date of the distribution. The mailing of distribution checks will
begin within seven days.
TAXES
As with any investment, you should consider how your investment in the fund
will be taxed. If your account is not a tax-deferred retirement
account , you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, the fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions,
if any, are taxed as long-term capital gains.
Mutual fund dividends from U.S. Government securities are generally 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 the benefit. In
addition, some states may impose intangible property taxes. You should
consult your own tax adviser for details and up-to-date information on the
tax laws in your state.
During the fiscal year ended July 31, 1995, 28 % of
U.S. Treasury Portfolio's income distributions was derived from interest on
U.S. Government securities, which is generally exempt from state income
tax.
Every January, Fidelity will send you and the IRS a statement showing the
taxable distributions paid to you in the previous year.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, the fund
may have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
THE FUND IS OPEN FOR BUSINESS and its NAV is normally calculated each day
that both the Federal Reserve Bank of New York (New York Fed) and the New
York Stock Exchange (NYSE) are open. The following holiday closings have
been scheduled for 1996: New Year's Day , Martin Luther King's
Birthday , Washington's Birthday, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veteran's Day,
Thanksgiving Day, and Christmas Day. Although FMR expects the same holiday
schedule to be observed in the future, the New York Fed or the NYSE may
modify its holiday schedule at any time. On any day that the New York Fed
or the NYSE closes early, the principal government securities markets close
early (such as on days in advance of holidays generally observed by
participants in such markets), or as permitted by the SEC, the right is
reserved to advance the time on that day by which purchase and redemption
orders must be received.
To the extent that portfolio securities are traded in other markets on days
when the New York Fed or the NYSE is closed, the fund's NAV may be affected
on days when investors do not have access to the fund to purchase or redeem
shares. Certain Fidelity funds may follow different holiday closing
schedules.
A CLASS'S NAV is the value of a single share. The NAV of Class B is
computed by adding Class B's pro rata share of the value of the fund's
investments, cash, and other assets, subtracting Class B's pro rata share
of the value of the fund's liabilities, subtracting the liabilities
allocated to Class B, and dividing the result by the number of Class B
shares outstanding. The fund values its portfolio securities on the basis
of amortized cost. This method minimizes the effect of changes in a
security's market value and helps the fund maintain a stable $1.00 share
price.
THE OFFERING PRICE (price to buy one share)is Class B's NAV. The REDEMPTION
PRICE (price to sell one share) is Class B's NAV, minus any applicable
CDSC.
Your Class B shares retain the CDSC schedule that was in effect when you
originally purchased the Advisor fund Class B shares that you
exchanged.
The CDSC will be calculated based on the lesser of the cost of Class B
shares at the initial date of purchase or the value of Class B shares at
redemption, not including any reinvested dividends or capital gains. In
determining the applicability and rate of any CDSC at redemption, Class B
shares representing reinvested dividends and capital gains, if any, will be
redeemed first, followed by Class B shares that have been held for the
longest period of time. Class B shares acquired through distributions
(dividends or capital gains) will not be subject to a CDSC.
CONVERSION FEATURE. After a maximum holding period of six years from the
initial date of purchase, Class B shares and any capital appreciation
associated therewith, convert automatically to Initial Class shares
of the fund . Conversion to Initial Class shares will be made
at NAV. At the time of conversion, a portion of the Class B shares
purchased through the reinvestment of dividends or capital gains (Dividend
Shares) will also convert to Initial Class shares. The portion of
Dividend Shares that will convert is determined by the ratio of your
converting Class B non-Dividend Shares to your total Class B non-Dividend
Shares.
INITIAL CLASS SHARES. The fund offers Initial Class shares to
individual, institutional and corporate investors at NAV. Initial Class
shares may be exchanged for shares of other Fidelity funds. If Initial
Class shares were purchased in connection with a Fidelity Advisor fund
program, those Initial Class shares may be exchanged for Class A shares of
Fidelity Advisor funds. Transfer agency, dividend disbursing and
shareholder services for Initial Class shares are performed by FIIOC.
Unlike Class B shares, Initial Class share purchases are not restricted
only to purchases by exchange. Initial Class shares have adopted a
Distribution and Service Plan that recognizes that FMR may use its
resources, including its management fee, to pay expenses associated with
the sale of Initial Class shares. The Board of Trustees has authorized FMR
to pay FDC a distribution fee from its management fee revenue, past profits
or other resources at an annual rate of up to 0.38% of the Initial Class's
average net assets. For the fiscal year ended July 31, 1995, FMR paid FDC
at the annual rate of 0.32% of the Initial Class's average net assets
throughout the month. Investment professionals may receive different levels
of compensation with respect to one class of shares over another class of
shares in the fund. For the fiscal year ended July 31, 1995, total
operating expenses for the Initial Class was 0.65% of average net assets,
after voluntarily expense reimbursements of 0.01% by FMR.
For more information about the CDSC, including the conversion feature and
the permitted circumstances for CDSC waivers, contact your investment
professional.
REINSTATEMENT PRIVILEGE. If you have sold all or part of your Class B
shares, you may reinvest an amount equal to all or a portion of the
redemption proceeds in Class B shares of the fund or Class B shares of a
Fidelity Advisor fund, at the NAV next determined after receipt of your
investment order, provided that such reinvestment is made within 30 days of
redemption. Under these circumstances, the dollar amount of the CDSC you
paid will be reimbursed to you by reinvesting that amount in Class B shares
of the fund or Class B shares of the Fidelity Advisor fund, as applicable.
You must reinstate your Class B shares into an account with the same
registration. This privilege may be exercised only once by a shareholder
with respect to the fund and certain restrictions may apply. For purposes
of the CDSC schedule, the holding period will continue as if the Class B
shares had not been redeemed.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require the fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does not
follow 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 the confirmation
statements immediately after receipt. If you do not want the ability to
redeem and exchange by telephone, call Fidelity for instructions.
Additional documentation may be required from corporations, associations
and certain fiduciaries.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail.
THE FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. The fund also reserves the right to reject any specific purchase
by exchange. See "Exchange Restrictions" on page . Purchases by exchange
may be refused if, in FMR's opinion, they would disrupt management of the
fund.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) Shares redeemed before 2:00 p.m. Eastern time do not
receive the dividend declared on the day of redemption; shares redeemed
after 2:00 p.m. Eastern time do receive the dividend declared on the day of
redemption.
(small solid bullet) The fund may withhold redemption proceeds until it is
reasonably assured that investments credited to your account have been
received and collected.
When the NYSE or the New York Fed 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 SEC to merit such
action, the fund may suspend redemption or postpone payment dates. In cases
of suspension of the right of redemption, the request for redemption may
either be withdrawn or payment may be made based on the NAV next determined
after the termination of the suspension.
IF YOUR NON-RETIREMENT ACCOUNT BALANCE FALLS BELOW $ 500 due
to redemption, the account may be closed and the proceeds less any
applicable CDSC, may be mailed to your address of record. You will be given
30 days' notice that your account will be closed unless it is increased to
the minimum.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder you have the privilege of exchanging Class B shares for
Class B shares of a Fidelity Advisor fund seven calendar days after
purchase. Currently, there is no limit on the number of exchanges out of
the fund.
Exchange instructions may be given by you in writing or by telephone
directly to the transfer agent or through your investment professional. For
more information on entering an exchange transaction, please consult your
investment professional.
WHEN YOU PLACE AN ORDER TO EXCHANGE SHARES, Class B shares will
be redeemed at the next determined NAV after your order is received and
accepted by the transfer agent. Shares of the fund to be acquired will be
purchased at its next determined NAV after redemption proceeds are made
available. You should note that, under certain circumstances, the fund may
take up to seven days to make redemption proceeds available for the
exchange purchase of shares of another fund. In addition, please note the
following:
(small solid bullet) Exchanges will not be permitted until a completed and
signed account application is on file.
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) The fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if the
fund receives or anticipates simultaneous orders affecting significant
portions of the fund's assets. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to the fund.
(small solid bullet) Any exchanges of Class B shares are not subject to a
CDSC.
Although the fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
fund reserves the right to terminate or modify the exchange privilege in
the future.
SALES CHARGE WAIVERS
THE CDSC ON CLASS B SHARES MAY BE WAIVED:
1. In cases of disability or death, provided that Class B shares are
redeemed within one year following the death or the initial determination
of disability, or
2. In connection with a total or partial redemption related to
certain distributions from retirement plans or accounts.
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related SAI, in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the fund or FDC. This Prospectus and the related SAI do not
constitute an offer by the fund or by FDC to sell or to buy shares of the
fund to any person to whom it is unlawful to make such offer.
DAILY MONEY FUND :
U.S. TREASURY PORTFOLIO: CLASS B
CROSS REFERENCE SHEET
Form N-1A Item Number Statement of Additional Information
Part B
10 a,b Cover Page
11 Table of Contents
12 *
13 a,b,c Investment Policies and Limitations
d *
14 a,b,c Trustees and Officers
15 a,b,c Trustees and Officers, FMR
16 a(i) FMR
a(ii) Trustees and Officers
a(iii),b Management Contract
c *
d Management Contract
e *
f Distribution and Service Plan
g *
h Description of the Trust
i Contracts with FMR Affiliates
17 a Portfolio Transactions
b *
c,d Portfolio Transactions
18 a Description of the Trust
b *
19 a Additional Purchase and Redemption Information
b Valuation
c *
20 Distributions and Taxes
21 a(i,ii) Contracts with FMR Affiliates, Distribution and Service Plan
a(iii),b,c *
22 Performance
23 Financial Statements
* Not Applicable
DAILY MONEY FUND
U.S. TREASURY PORTFOLIO: CLASS B
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 1, 1995
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the fund's current Prospectus (dated
December 1, 1995). Please retain this document for future reference. The
fund's financial statements and financial highlights, included in the
Annual Report, for the fiscal year ended July 31, 1995, are incorporated
herein by reference. To obtain an additional copy of the Prospectus or the
Annual Report, please call Fidelity Client Services at 1-800-843-3001.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contract
Contracts with FMR Affiliates
Distribution and Service Plan
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISOR
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Investments Institutional Operations Company (FIIOC)
CUSTODIAN
The Bank of New York
DMFB-ptb-1295
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 the fund'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 fund'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 fund's investment policies and
limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities," (as defined in the Investment Company Act of 1940 (the 1940
Act)), of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if , as a result ,
more than 5% of its total assets would be invested in the securities of
such issuer; provided, however, that with respect to 25% of its total
assets, 10%, of its assets may be invested in the securities of an issuer;
(2) issue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund 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 fund'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
fund 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 the 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 fund'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 fund
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;
(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
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(9) write or purchase any put or call options.
(10) The fund 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 objective, policies and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund 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) Subject to revision upon 60 days' notice to shareholders, the fund
does not currently intend to purchase securities on margin, except that the
fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.
(iii) The fund 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 fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund 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 fund's total
assets.
(iv) The fund 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 fund does not currently intend to make loans, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(v i ) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of reorganization, consolidation, or merger.
(viii) The fund 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.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development program or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
( xi ) The fund 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 objective, policies, and
limitations as the fund.
For purposes of limitation (viii), pass-through entities and other
special purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
SHAREHOLDER NOTICE. The fund intends to invest 100% of its total assets in
U.S. Treasury bills, notes and bonds and in repurchase agreements backed by
those obligations. This operating policy may be changed upon 90 days'
notice to shareholders.
The fund does not intend to purchase futures contracts or options on
futures contracts. This operating policy may be changed only upon approval
by the Board of Trustees and 60 day's notice to shareholders.
For the fund's policies on quality and maturity, see section entitled
"Quality and Maturity" on page .
AFFILIATED BANK TRANSACTIONS. The fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund 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.
DELAYED-DELIVERY TRANSACTIONS. The fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by the fund 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. Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities on a delayed-delivery basis, the fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because the fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If the fund 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 fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When the fund has sold a security on a
delayed-delivery basis, the fund 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 fund could miss a favorable price or yield opportunity, or could suffer
a loss.
The fund 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 the fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the fund's 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 marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by the fund to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days.
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, the fund were in a
position where more than 10% of its net assets was invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive order
issued by the SEC, the fund has received permission to lend money to, and
borrow money from, other funds advised by FMR or its affiliates. Interfund
loans and borrowings normally extend overnight, but can have a maximum
duration of seven days. Loans may be called on one day's notice. A fund
will lend through the program only when the returns are higher than those
available from other short-term instruments (such as repurchase
agreements), and will borrow through the program only when the costs are
equal to or lower than the cost of bank loans. A fund 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. The fund does not
currently intend to participate in the program as a lender.
PUT FEATURES entitle the holder to sell a security back to the issuer at
any time or at specified intervals. They are subject to the risk that the
put provider is unable to honor the put feature (purchase the security).
QUALITY AND MATURITY Pursuant to procedures adopted by the Board of
Trustees, the fund may purchase only high-quality securities that FMR
believes present minimal credit risks. To be considered high-quality, a
security must be 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 fund may not invest more than 5% of its total assets in second tier
securities. In addition, the fund 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.
The fund 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. When determining the maturity of a
security, the fund may look to an interest rate reset or demand feature.
REPURCHASE AGREEMENTS. In a repurchase agreement, the fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. 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. To protect the fund
from the risk that the original seller will not fulfill its obligation, the
securities are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental amount. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
that the value of the underlying security will be less than the resale
price, as well as delays and costs to the fund in connection with
bankruptcy proceedings), it is the fund's current policy to engage in
repurchase agreement transactions with parties whose creditworthiness has
been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, the fund
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 fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The fund 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 fund's
assets and may be viewed as a form of leverage.
SHORT SALES "AGAINST THE BOX." The fund 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 fund in anticipation of increased interest
rates, without sacrificing the current yield of the securities sold short.
If the fund 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.
STRIPPED GOVERNMENT SECURITIES. Stripped securities are created by
separating the income and principal components of a debt instrument and
selling them separately. U.S. Treasury STRIPS (Separate Trading of
Registered Interest and Principal of Securities) are created when the
coupon payments and the principal payment are stripped from an outstanding
Treasury bond by the Federal Reserve Bank. Bonds issued by government
agencies also may be stripped in this fashion.
VARIABLE AND FLOATING RATE OBLIGATIONS provide for periodic adjustments of
the interest rate paid on the security. Variable rate securities provide
for a specified periodic adjustment in the interest rate, while floating
rate securities have interest rates that change whenever there is a change
in a designated benchmark rate. Some variable or floating rate securities
have put features.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the fund by FMR pursuant to authority contained in the management
contract. FMR has granted investment management authority to the
sub-adviser (see the section entitled "Management Contract"), and the
sub-adviser 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 or its
affiliates act as investment adviser. Securities purchased and sold by the
fund 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 fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the fund 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; and the availability of
securities or the purchasers or sellers of securities. In addition, such
broker-dealers may furnish analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy and
performance of accounts; effect securities transactions, and perform
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 fund 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 fund may be useful to FMR in rendering investment management
services to the fund 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 fund. 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
fund 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
fund 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 fund 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 (FBS), subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services. From
September 1992 through December 1994, FBS operated under the name Fidelity
Brokerage Services Limited, Inc. (FBSL). As of January 1995, FBSL was
converted to an unlimited liability company and assumed the name FBS. Prior
to September 4, 1992, FBSL operated under the name Fidelity Portfolio
Services, Ltd. (FPSL) as a wholly owned subsidiary of Fidelity
International Limited (FIL). Edward C. Johnson 3d is Chairman of FIL. Mr.
Johnson 3d, Johnson family members, and various trusts for the benefit of
the Johnson family own, directly or indirectly, more than 25% of the voting
common stock of FIL.
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 fund 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
fund and review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
For the fiscal years ended July 31, 1995, 1994 and 1993, the fund paid no
brokerage commissions.
During the fiscal year ended July 31, 1995, the fund paid no
commissions to brokerage firms that provided research services.
From time to time, the Trustees will review whether the recapture for the
benefit of the fund of some portion of the brokerage commissions or similar
fees paid by the fund on portfolio transactions is legally permissible and
advisable. The fund 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 fund to seek such recapture.
Although the Trustees and officers of the fund are substantially the same
as those of other funds managed by FMR, investment decisions for the fund
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 fund is concerned. In other cases,
however, the ability of the fund to participate in volume transactions will
produce better executions and prices for the fund. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to the fund outweighs any disadvantages that may be said
to exist from exposure to simultaneous transactions.
VALUATION
Fidelity Service Co . (FSC) normally determines the fund's net asset
value per share (NAV) at 2:00 p.m. and 4:00 p.m. Eastern time. The
valuation of portfolio securities is determined as of these times for the
purpose of computing the fund's NAV.
Portfolio securities and other assets are valued on the basis of
amortized cost. This technique involves initially valuing an instrument at
its cost as adjusted for amortization of premium or accretion of discount
rather than its current market value. The amortized cost value of an
instrument may be higher or lower than the price the fund would receive if
sold the instrument.
During periods of declining interest rates, the fund's yield based on
amortized cost valuation may be higher than would result if the fund used
market valuations to determine its NAV. The converse would apply during
periods of rising interest rates.
Valuing the fund's investments on the basis of amortized cost and use of
the term "money market fund" are permitted pursuant to Rule 2a-7 under the
1940 Act. The fund must adhere to certain conditions under Rule 2a-7, as
summarized in the section entitled "Quality and Maturity" on page .
The Board of Trustees oversees FMR's adherence to the provisions of Rule
2a-7 and has established procedures designed to stabilize the fund's NAV at
$1.00. At such intervals as they may 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 fund'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.
PERFORMANCE
The fund may quote performance in various ways. All performance information
supplied by the fund in advertising is historical and is not intended to
indicate future returns. Yield and total return fluctuate in response to
market conditions and other factors.
YIELD CALCULATIONS. To compute a class's yield for a period, the net change
in value of a hypothetical account containing one share reflects the value
of additional shares purchased with dividends from the one original share
and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at the
beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current annualized yield. An effective
yield may also be calculated by compounding the base period return over a
one-year period. In addition to the current yield, the fund may quote
yields in advertising based on any historical seven-day period. Yields for
each class of the fund are calculated on the same basis as other
money market funds, as required by applicable regulations.
Yield information may be useful in reviewing a class's performance and in
providing a basis for comparison with other investment alternatives.
However, each class's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates a
class's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates a class's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to the fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing a class's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a class's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in a class's NAV over a
stated period. Average annual total returns are calculated by determining
the growth or decline in value of a hypothetical historical investment in a
class over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of
growth or decline in value had been constant over the period. For example,
a cumulative total return of 100% over ten years would produce an average
annual return of 7.18%, which is the steady annual rate of return that
would equal 100% growth on a compounded basis in ten years. While average
annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a class's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of a class.
In addition to average annual total returns, a class may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, 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 (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
HISTORICAL FUND RESULTS. The following table shows the 7-day yields and
total returns for each class of the fund for the period ended July
31, 1995.
U.S. Treasury Portfolio
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Seven-Day One Five One Five Ten Years
Yield Year Years Ten years Year Years
Class B* 4.51 % 0.28% 3.99% 5.69 % 0.28 % 21.59% 73.97 %
Initial Class 5.18% 5.02% 4.32% 5.77% 5.02% 23.53% 75.31%
</TABLE>
* Average annual and cumulative total returns include the effect of
applicable contingent deferred sales charges (CDSC) of 4% and 1 % for one
and five year periods shown.
Initial offering of Class B shares took place on July 1, 1994. Returns
prior to that date are those of Initial Class, the original class of the
fund and do not reflect Class B's 1.00% 12b-1 fee. Initial Class shares are
sold to eligible investors without a sales load, but with a 12b-1 fee of up
to 0.38%. If FMR had not reimbursed certain fund expenses during the
periods shown, the Class B's seven-day yield would have been 3.49% and
total returns would have been lower.
The following table s show the income and capital elements of each
class 's cumulative total return. The table s compare each
class 's return to the record of the Standard & Poor's Composite Index
of 500 Stocks (S&P 500), the Dow Jones Industrial Average (DJIA), and the
cost of living (measured by the Consumer Price Index, or CPI) over the same
period. The CPI information is as of the month end closest to the initial
investment date for the fund. The S&P 500 and DJIA comparisons are provided
to show how each class 's total return compared to the record of a
broad average of common stocks and a narrower set of stocks of major
industrial companies, respectively, over the same period. Of course, since
the fund invests in short-term fixed-income securities, common stocks
represent a different type of investment from the fund. Common stocks
generally offer greater growth potential than the funds, but generally
experience greater price volatility, which means greater potential for
loss. In addition, common stocks generally provide lower income than
fixed-income investments such as the fund. Figures for the S&P 500 and DJIA
are based on the prices of unmanaged groups of stocks and, unlike the
fund's returns, do not include the effect of paying brokerage commissions
or other costs of investing.
During the ten-year period ended July 31, 1995, a hypothetical
investment of $10,000 in Class B would have grown to $ 17,397
assuming all dividends were reinvested. This was a period of fluctuating
interest rates and the figures below should not be considered
representative of the dividend income or capital gain or loss that could be
realized from an investment in Class B today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Portfolio: CLASS B INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Year Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living*
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1986 $ 10,000 $ 715 $ 0 $ 10,715 $ 12,842 $ 13,687 $ 10,158
1987 $ 10,000 $ 1,337 $ 0 $ 11,337 $ 17,891 $ 20,474 $ 10,557
1988 $ 10,000 $ 2,069 $ 0 $ 12,069 $ 15,796 $ 17,540 $ 10,993
1989 $ 10,000 $ 3,112 $ 0 $ 13,112 $ 20,837 $ 22,744 $ 11,540
19 90 $ 10,000 $ 4,192 $ 0 $ 14,192 $ 22,191 $ 25,790 $ 12,096
1991 $ 10,000 $ 5,141 $ 0 $ 15,141 $ 25,023 $ 27,856 $ 12,635
1992 $ 10,000 $ 5,785 $ 0 $ 15,785 $ 28,227 $ 32,199 $ 13,033
1993 $ 10,000 $ 6,224 $ 0 $ 16,224 $ 30,696 $ 34,590 $ 13,395
1994 $ 10,000 $ 6,683 $ 0 $ 16,683 $ 32,279 $ 37,808 $ 13,766
1995 $ 10,000 $ 7,397 $ 0 $ 17,397 $ 40,706 $ 48,533 $ 14,147
</TABLE>
* From month end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on July 31,
198 5 the net amount invested in Class B was $10,000. The cost of the
initial investment ($10,000) together with the aggregate cost of reinvested
dividends for the period covered (their cash value at the time they were
reinvested), amounted to $ 17,397 . If distributions had not been
reinvested, the amount of distributions earned from Class B over time would
have been smaller and the cash payments (dividends) for the period would
have amounted to $ 5,552 . The fund did not distribute any capital
gains during the period. Neither tax consequences of different investments
nor CDSC's have not been factored into the above figures. Initial
offering of Class B shares took place on July 1, 1994. Returns prior to
that date are those of Initial Class, the original class of the fund and do
not reflect Class B's 1.00% 12b-1 fee. Initial Class shares are sold to
eligible investors without a sales load, but with a 12b-1 fee of up to
0.38%. If FMR had not reimbursed certain fund expenses during the periods
shown, total returns would have been lower.
During the ten year period ended July 31, 1995, a hypothetical $10,000
investment in Initial Class would have grown to $17,531, assuming all
distributions were reinvested. This was a period of fluctuating interest
rates and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in Initial Class today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Portfolio: INITIAL CLASS INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Year Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living*
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1986 $ 10,000 $ 715 $ 0 $ 10,715 $ 12,842 $ 13,687 $ 10,158
1987 $ 10,000 $ 1,337 $ 0 $ 11,337 $ 17,891 $ 20,474 $ 10,557
1988 $ 10,000 $ 2,069 $ 0 $ 12,069 $ 15,796 $ 17,540 $ 10,993
1989 $ 10,000 $ 3,112 $ 0 $ 13,112 $ 20,837 $ 22,744 $ 11,540
1990 $ 10,000 $ 4,192 $ 0 $ 14,192 $ 22,191 $ 25,790 $ 12,096
1991 $ 10,000 $ 5,141 $ 0 $ 15,141 $ 25,023 $ 27,856 $ 12,635
1992 $ 10,000 $ 5,785 $ 0 $ 15,785 $ 28,227 $ 32,199 $ 13,033
1993 $ 10,000 $ 6,224 $ 0 $ 16,224 $ 30,696 $ 34,590 $ 13,395
1994 $ 10,000 $ 6,692 $ 0 $ 16,692 $ 32,279 $ 37,808 $ 13,766
1995 $ 10,000 $ 7,531 $ 0 $ 17,531 $ 40,706 $ 48,533 $ 14,147
</TABLE>
* From month end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on July 31,
1985, the net amount invested in Initial Class shares was $10,000. The cost
of the initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the times
they were reinvested), amounted to $17,531. If distributions had not been
reinvested, the amount of distributions earned from the Initial Class over
time would have been smaller, and cash payments (dividends) for the period
would have amounted to $5,629. The fund did not distribute any capital
gains during the period. Tax consequences of different investments haves
not been factored into the above figures.
PERFORMANCE COMPARISONS. A class'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. In addition to the mutual fund
rankings, a class's performance may be compared to stock, bond, and
money market mutual fund performance indices prepared by Lipper or other
organizations. When comparing these indices, it is important to remember
the risk and return characteristics of each type of investment. For
example, while stock mutual funds may offer higher potential returns, they
also carry the highest degree of share price volatility. Likewise, money
market funds may offer greater stability of principal, but generally do not
offer the higher potential returns available from stock mutual funds.
From time to time, a class's performance may also be compared to
other mutual funds tracked by financial or business publications and
periodicals. For example, the fund 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.
The fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, the
fund may offer greater liquidity or higher potential returns than CDs, the
fund does not guarantee your principal or your return, and fund shares are
not FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
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.
The fund 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 749 Taxable and 229 U.S. Government money market funds.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include the following: other Fidelity funds;
retirement investing; model portfolios or allocations; and saving for
college or other goals. In addition, Fidelity may quote or reprint
financial or business publications and periodicals, as they relate to
current economic and political conditions, fund management, portfolio
composition, and investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services and
products.
Class B may be advertised as part of certain asset allocation programs
involving other Fidelity or non-Fidelity mutual funds. These asset
allocation programs may advertise a model portfolio and its performance
results.
Class B may be advertised as part of a no transaction fee (NTF) program in
which Fidelity and non-Fidelity mutual funds are offered. An NTF program
may advertise performance results.
The fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
The fund 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.
As of September 30, 199 5 , FMR advised over $ 26.5
billion in tax-free fund assets, $ 77 billion in money market fund
assets, $ 226 billion in equity fund assets, $ 55 billion in
international fund assets, and $ 22 billion in Spartan fund assets.
The fund may reference the growth and variety of money market mutual funds
and the adviser's innovation and participation in the industry. The equity
funds under management figure represents the largest amount of equity fund
assets under management by a mutual fund investment adviser in the United
States, making FMR America's leading equity (stock) fund manager. FMR, its
subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
In addition to performance rankings, each fund may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A fund's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on yield.
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 the NAV of the Class B Shares. 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, the fund 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 exchange, or (ii) the fund
suspends the redemption of the 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.
In the prospectus, the fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
CLASS B WAIVERS. The contingent deferred sales charge (CDSC) on Class B
shares may be waived in the c ase of (1) disability or death,
provided that the redemption is made within one year following the death or
initial determination of disability, or (2) in connection with a
total or partial redemption made in connection with distributions from
retirement plan accounts at age 70 1/2 which are permitted without penalty
pursuant to the Internal Revenue Code.
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.
DIVIDENDS. Because the fund's income is primarily derived from interest,
dividends from the fund generally will not qualify for the
dividends-received deduction available to corporate shareholders.
Short-term capital gains are distributed as dividend income, but do not
qualify for the dividends-received deduction. A portion of the fund's
dividends derived from certain U.S. Government obligations may be exempt
from state and local taxation. The fund will send each shareholder a notice
in January describing the tax status of dividend and capital gain
distributions (if any) for the prior year.
CAPITAL GAIN DISTRIBUTIONS. The fund may distribute short-term capital
gains once a year or more often as necessary, to maintain its net asset
value at $1.00 per share. The fund does not anticipate earning long-term
capital gains on securities held by the fund.
As of fiscal year end July 31, 1995, the fund had a capital loss
carryforward aggregating approximately $ 476,000 . This loss
carryforward, of which $ 15,000 and $461,000 will expire on fiscal
year end July 31, 2001 and 2002 respectively, is available to offset
future capital gains.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
state laws provide 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 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
benefit. The tax treatment of your dividend distributions from the fund
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 fund invests is
exempt from state and local income taxes, the portion of your dividends
from the fund 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. In a number of states, corporate franchise (income)
tax laws do not exempt interest earned on U.S. Government securities
whether such securities are held directly or through a fund.
TAX STATUS OF T HE FUND. The fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
the fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis.
The fund is treated as a separate entity from the other funds of Daily
Money Fund for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether the fund is suitable to their particular tax
situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the 1940 Act, control of a company is presumed where
one individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting common
stock and the execution of the shareholders' voting agreement, members of
the Johnson family may be deemed, under the 1940 Act, to form a controlling
group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
FIIOC, which performs shareholder servicing functions for institutional
customers and funds sold through intermediaries; and Fidelity Investments
Retail Marketing Company, which provides marketing services to various
companies within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust 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 Daily Money Fund prior to the fund's conversion from a series
of a Massachusetts business trust served in identical capacities. All
persons named as Trustees also serve in similar capacities for other funds
advised by FMR. The business address of each Trustee and officer who is an
"interested person" (as defined in the 1940 Act) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The business
address of all the other Trustees is Fidelity Investments, P.O. Box 9235,
Boston, Massachusetts 02205-9235. Those Trustees who are "interested
persons" by virtue of their affiliation with either the trust or FMR are
indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (65), 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., Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD (54), Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX (63), 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 (63), 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 is a member of the President's Advisory Council of The
University of Vermont School of Business Administration.
RICHARD J. FLYNN (71), 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 Trustee of
College of the Holy Cross and Old Sturbridge Village, Inc, and he
previously served as a Director of Mechanics Bank (1971-1995).
E. BRADLEY JONES (6 8 ), Trustee (1990). Prior to his retirement in
1984, Mr. Jones was Chairman and Chief Executive Officer of LTV Steel
Company. He is a Director of TRW Inc. (original equipment and replacement
products), Cleveland-Cliffs Inc (mining), Consolidated Rail Corporation,
Birmingham Steel Corporation, and RPM, Inc. (manufacturer of chemical
products, 1990), and he previously served as a Director of NACCO
Industries, Inc. (mining and marketing, 1985-1995) and Hyster-Yale
Materials Handling, Inc. (1985-1995). In addition, he serves as a Trustee
of First Union Real Estate Investments, a Trustee and member of the
Executive Committee of the Cleveland Clinic Foundation, a Trustee and
member of the Executive Committee of University School (Cleveland), and a
Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (6 3 ), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial consultant.
From 1987 to January 1995, Mr. Kirk was a Professor at Columbia University
Graduate School of Business. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and he previously served as a Director of
Valuation Research Corp. (appraisals and valuations, 1993-1995). In
addition, he serves as Vice Chairman of the Board of Directors of the
National Arts Stabilization Fund, Vice Chairman of the Board of Trustees of
the Greenwich Hospital Association, and as a Member of the Public Oversight
Board of the American Institute of Certified Public Accountants' SEC
Practice Section (1995).
*PETER S. LYNCH (52), Trustee (1990) is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR 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) 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 (66), Trustee, 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), Commercial Intertech Corp. (water
treatment equipment, 1992), and Associated Estates Realty Corporation (a
real estate investment trust, 1993).
EDWARD H. MALONE (7 1 ), Trustee. 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 (62), 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 (6 7 ), 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., and AppleSouth,
Inc. (restaurants, 1992).
FRED L. HENNING, JR.(56), Vice President, is Vice President of Fidelity's
money market (1994) and fixed-income (1995) funds and Senior Vice President
of FMR Texas Inc.
LELAND BARRON (3 7 ), Vice President, is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
ARTHUR S. LORING (48), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER (48), Treasurer (1995), is Treasurer of the Fidelity
funds and is an employee of FMR (1995). Before joining FMR, Mr. Rathgeber
was a Vice President of Goldman Sachs & Co. (1978-1995), where he served in
various positions, including Vice President of Proprietary Accounting
(1988-1992), Global Co-Controller (1992-1994), and Chief Operations Officer
of Goldman Sachs (Asia) LLC (1994-1995).
THOMAS D. MAHER (50), 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). Prior to 1990, Mr. Maher was an
employee of FMR.
JOHN H. COSTELLO (49), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (49), Assistant Treasurer (1994), is an employee of FMR
(1994). Prior to becoming Assistant Treasurer of the Fidelity funds, Mr.
Rush was Chief Compliance Officer of FMR Corp. (1993-1994); Chief Financial
Officer of Fidelity Brokerage Services, Inc. (1990-1993); and Vice
President, Assistant Controller, and Director of the Accounting Department
- - First Boston Corp. (1986-1990).
The following table sets forth information describing the compensation of
each current Trustee of the fund for his or her services as trustee for the
fiscal year ended July 31, 1995.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Trustees Aggregate Pension or Estimated Annual Total
Compensation Retirement Benefits Upon Compensation
from Benefits Accrued Retirement from from the Fund
the Fund* as Part of F und the Fund Complex*
Expenses from the Complex*
Fund Complex*
J. Gary Burkhead ** $ 0 $ 0 $ 0 $ 0
Ralph F. Cox 924 5,200 52,000 125,000
Phyllis Burke Davis 880 5,200 52,000 122,000
Richard J. Flynn 1137 0 52,000 154,500
Edward C. Johnson 3d ** 0 0 0 0
E. Bradley Jones 912 5,200 49,400 123,500
Donald J. Kirk 925 5,200 52,000 125,000
Peter S. Lynch ** 0 0 0 0
Gerald C. McDonough 912 5,200 52,000 125,000
Edward H. Malone 912 5,200 44,200 128,000
Marvin L. Mann 912 5,200 52,000 125,000
Thomas R. Williams 912 5,200 52,000 126,500
</TABLE>
* Information is as of December 31, 1994 for 206 funds in the complex.
** Interested trustees of the fund are compensated by FMR.
Under a retirement program adopted in July 1988, the non-interested
Trustees, upon reaching age 72, become eligible to participate in a
retirement program under which they receive payments during their lifetime
from a fund based on their basic trustee fees and length of service. The
obligation of a fund to make such payments is not secured or funded.
Trustees become eligible if, at the time of retirement, they have served on
the Board for at least five years. Currently, Messrs. Ralph S. Saul,
William R. Spaulding, Bertram H. Witham, and David L. Yunich, all former
non-interested Trustees, receive retirement benefits under the program.
On November 3, 1995, the Trustees and officers owned, in the
aggregate, less than 1 % of the fund's total outstanding shares.
As of November 3, 1995, the following owned of record or beneficially 5%
or more of the outstanding shaes of Class B:
IFG Network Securities (13.39%)
Slavic Mutual Funds Mangement Corp (9.78%)
Mariner Financial (8.05%)
A.G. Edwards & Sons (6.02%)
Royal Alliance Assoc., Inc. (5.40%)
As of November 3, 1995, the following owned of record or
beneficially 5% or more of the outstanding shares of Class B: IFG
Network Securities, Slavic Mutual Funds Management Corp., Mariner
Financial, A.G. Edwards & Sons and Royal Alliance Association, Inc.
A shareholder owning of record of beneficially more than 25% of the
fund 's or Class B's outstanding shares may be considered a
controlling person. Th at shareholder's vote could have a more
significant effect on matters presented at a shareholders meeting than
votes of other shareholders.
MANAGEMENT CONTRACT
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser
and, subject to the supervision of the Board of Trustees, directs the
investments of the fund in accordance with its investment objective,
policies, and limitations. FMR also provides the fund with all necessary
office facilities and personnel for servicing the fund's investments,
compensates all officers of the fund and all Trustees who are "interested
persons" of the trust 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 the fund. These services include providing facilities
for maintaining the fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with the fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining the fund's
records and the registration of the fund's shares under federal and state
laws; developing management and shareholder services for the fund; and
furnishing reports, evaluations and analyses on a variety of subjects to
the Trustees.
In addition to the management fee payable to FMR and the fees payable to
FIIOC and FSC, the fund or class thereof, as applicable, pays all of its
expenses, without limitation, that are not assumed by those parties. The
fund pays for the typesetting, printing, and mailing of its proxy materials
to shareholders, legal expenses, and the fees of the custodian, auditor and
non-interested Trustees. Although the fund's current management contract
provides that the fund will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices and reports to
shareholders, the trust, on behalf of the fund, has entered into a revised
transfer agent agreement with FIIOC, pursuant to which FIIOC bears the
costs of providing these services to existing shareholders of the
applicable class. Other expenses paid by the fund include interest, taxes,
brokerage commissions, the fund's proportionate share of insurance premiums
and Investment Company Institute dues, and the costs of registering shares
under federal and state securities laws. The fund is also liable for such
non-recurring expenses as may arise, including costs of any litigation to
which the fund may be a party, and any obligation it may have to indemnify
its officers and Trustees with respect to litigation.
FMR is the fund's manager pursuant to a management contract dated September
30 , 1993, approved by shareholders on March 24, 1993.
For the services of FMR under the contract, the fund pays FMR a monthly
management fee at the annual rate of 0.50% of the average net assets of the
fund throughout the month. For the fiscal years ended July 31, 1995, 1994
and 1993, FMR received $ 9,784 , 211 , $ 13,343,263 and
$ 14,208 , 606 respectively.
FMR may, from time to time, voluntarily reimburse all or a portion of the
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to be
repaid for these expense reimbursements in the amount that expenses fall
below the limit prior to the end of the fiscal year. Expense reimbursements
by FMR will increase the fund's total returns and yield and repayment of
the reimbursement by the fund will lower its total returns and yield.
To comply with the California Code of Regulations, FMR will reimburse the
fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 21/2% of the first $30 million, 2% of the next
$70 million, and 11/2% of average net assets in excess of $100 million.
When calculating the fund's expenses for purposes of this regulation, the
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
SUB-ADVISER. 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 fund.
Under the sub-advisory agreement dated September 30, 1993 , which was
approved by shareholders on March 24, 1993 , FMR pays FMR Texas fees
equal to 50% of the management fee payable to FMR under its management
contract with the fund, after payments by FMR pursuant to each class's
12b-1 plan, if any. 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. On behalf of the fund for the fiscal years ended July 31
1995, 1994, and 1993 FMR paid FMR Texas fees of $ 1,886,692 ,
$2,367,209, and $2,400,702, respectively.
CONTRACTS WITH FMR AFFILIATES
FIIOC is transfer, dividend disbursing, and shareholder servicing agent for
the fund. FIIOC receives an annual account fee and an asset based fee based
on account size. With respect to certain retirement accounts, FIIOC
receives asset-based fees only. With respect to certain other retirement
accounts, FIIOC receives annual account fees and asset - based fees
based on fund type.
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.
FSC performs the calculations necessary to determine NAV and dividends for
Class B and maintains the fund's accounting records. The annual fee rates
for these pricing and bookkeeping services are based on the fund's average
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 FSC by the fund for fiscal 1995, 1994, and
1993 were $ 196,883 , $250,737 and $ 263,327 ,
respectively.
The fund has a distribution agreement with FDC, a Massachusetts corporation
organized on July 18, 1960. FDC is a broker-dealer registered under the
Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. The distribution agreement calls for FDC to use
all reasonable efforts, consistent with its other business, to secure
purchasers for shares of each fund, which are continuously offered at NAV.
Promotional and administrative expenses in connection with the offer and
sale of shares are paid by FDC. The table below shows the sales charge
revenue paid to FDC, and retained by FDC, for the following fiscal periods
ending:
CDSC Revenue
$ Paid to FDC $ Retained By FDC
7/1/94 - 7/31/94 $ -- $ --
8/1/94 - 7/31/95 $ 8,806 $ 8,806
DISTRIBUTION AND SERVICE PLAN
The Trustees have approved a Distribution and Service Plan (the Plan) on
behalf of Class B of the fund (the Plan) pursuant to Rule 12b-1 under 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 primarily
intended to result in the sale of shares of a fund except pursuant to a
plan approved on behalf of the fund under the Rule. The Plan, as approved
by the Trustees, allows Class B of the fund and FMR to incur certain
expenses that might be considered to constitute direct or indirect payment
by the fund of distribution expenses.
Pursuant to the Plan, FDC is paid a distribution fee at an annual rate of
0 .75% of Class B's average net assets determined as of the close of
business on each day throughout the month. Class B also pays investment
professionals a service fee at an annual rate of 0.25% of its average daily
net assets determined at the close of business on each day throughout the
month for the personal service and/or maintenance of shareholder accounts.
For the fiscal years ended July 31, 1995 and 1994, FDC was paid
distribution fees of $ 21,362 and $ 73 , respectively . In
addition, for the fiscal year ended July 31, 1995, and 1994, Class B paid
shareholder service fees of $ 11,949 and $ 44 , respectively.
Under the Plan, if the payment of management fees by the fund to FMR is
deemed to be indirect financing by the fund of the distribution of its
shares, such payment is authorized by the Plan. The Plan specifically
recognizes that FMR, either directly or through FDC, may use its management
fee revenue, as well as its past profits or other
resources from any other source to reimburse FDC for expenses
incurred in connection with distribution of Class B shares; including
payments made to third parties that assist in selling shares of the
applicable class of the fund, or to third parties, including banks, that
render shareholder support services.
Prior to approving the Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and have
determined that there is a reasonable likelihood that the Plan will benefit
Class B and its shareholders. To the extent that the Plan gives FMR and FDC
greater flexibility in connection with the distribution of Class B of the
fund, additional sales of fund shares may result. Furthermore, certain
shareholder support services may be provided more effectively under the
Plan by local entities with whom shareholders have other relationships.
The Class B plan does not provide for specific payments by Class B of any
of the expenses of FDC, or obligate FDC or FMR to perform any specific type
of level of distribution activities or incur any specific level of expense
in connection with distribution activities. After payments by FDC for
advertising, marketing and distribution, and payments to third parties, the
amounts remaining, if any, may be used as FDC may elect.
The Plan was approved by FMR as the then sole shareholder of Class B on
May 2 , 199 4 .
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 by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC 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 funds
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 fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plan. No
preference for the instruments of such depository institutions will be
shown in the selection of investments.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. U.S. Treasury Portfolio: is a fund of Daily
Money Fund, an open-end management investment company originally
organized as a Massachusetts business trust . On September 29,
1993, the trust was converted to a Delaware business trust pursuant to an
agreement approved by shareholders on March 24, 1993. The fund acquired
all of the assets of the U.S. Treasury Portfolio, on September 29, 1993.
Currently, there are six funds of the trust : U.S. Treasury
Portfolio; Money Market Portfolio; Treasury Only; 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 funds.
In the event that FMR ceases to be the investment adviser to a fund, the
right of the trust or fund to use the identifying name "Fidelity" may be
withdrawn.
The assets of the Trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expenses can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust 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 trust and requires
that a disclaimer be given in each contract entered into or executed by the
trust or the Trustees. The Trust Instrument provides for indemnification
out of the fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund. The Trust Instrument
also provides that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
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 fund 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 trust 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. Claims
asserted against one class of shares may subject holders of another class
of shares to certain liabilities.
VOTING RIGHTS. The fund's capital consists of shares of beneficial
interest. Class B Shares have no preemptive rights; the 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
non-assessable, except as set forth under the heading "Shareholder and
Trustee Liability" above. Shareholders representing 10% or more of the
trust , a fund or a class may, as set forth in the Trust
Instrument, call meetings of the trust, fund or class for any purpose
related to the trust , or fund or class , as the case may be,
including, in the case of a meeting of the entire trust, the purpose of
voting on removal of one or more Trustees.
The trust or the fund 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 trust or the fund; however, the
Trustees may, without prior shareholder approval, change the form of
organization of the trust by merger, consolidation, or incorporation. If
not so terminated or reorganized, the trust and its funds 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 trust 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 trust registration
statement. Each fund may also invest all of its assets in another
investment company.
CUSTODIAN. The Bank of New York, 48 Wall Street, New York,
NY, 10260 is custodian of the assets of the fund. The custodian is
responsible for the safekeeping of the fund's assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the fund or in deciding which
securities are purchased or sold by the fund. However, the fund may invest
in obligations of the custodian and may purchase securities from or sell
securities to the custodian. Chemical Bank, headquartered in New York, also
may serve as a special purpose custodian of certain assets in connection
with pooled repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain 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 L.L.P., 1999 Bryan Street, Dallas, TX
75201, serves as the fund's independent accountant. The auditor
examines financial statements for the funds and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
The fund's financial statements and financial highlights for the fiscal
year ended July 31, 1995 are included in the fund's Annual Report, which is
a separate report supplied with this S AI . The fund's financial
statements and financial highlights are incorporated herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the fund.
The fund 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 COMMERCIAL PAPER RATINGS:
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. Earning 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 alternate
liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S COMMERCIAL PAPER RATINGS:
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.
DAILY MONEY FUND: INITIAL CLASS
U.S. TREASURY PORTFOLIO AND MONEY MARKET PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A Item Number
Part A Prospectus Caption
1 Cover Page
2 Expenses
3 a,b Financial Highlights
c *
d Financial Highlights
4 a(i) Charter
(ii) Investment Principles and Risks; Securities and Investment
Practices; Fundamental Investment Policies and Restrictions
b Securities and Investment Practices
c Who May Want To Invest; Investment Principals and Risks; Securities and
Investment Practices
5 a,b(i) Charter
(ii) FMR and Its Affiliates; Charter; Breakdown of Expenses
(iii) Expenses; Breakdown of Expenses
c,d FMR and Its Affiliates
e FMR and Its Affiliates; Breakdown of Expenses; Other Expenses
f Expenses
g Expenses; FMR and Its Affiliates
5A *
6 a(i) Charter
(ii) How to Buy Shares; How to Sell Shares; Investor Services;
Transaction Details; Exchange Restrictions
(iii) *
b FMR and Its Affiliates
c Charter
d *
e Cover Page; How to Buy Shares; How to Sell Shares; Investor Services;
Exchange Restrictions
f,g Dividends, Capital Gains, and Taxes
7 a Charter; Cover Page
b How to Buy Shares; Transaction Details
c *
d How to Buy Shares
e Transaction Details; Breakdown of Expenses
f Breakdown of Expenses; Other Expenses
8 How to Sell Shares; Investor Services; Transaction Details; Exchange
Restrictions
9 *
*Not Applicable
DAILY MONEY FUND:
MONEY MARKET PORTFOLIO -
INITIAL CLASS
U.S. TREASURY PORTFOLIO -
INITIAL CLASS
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy of
a fund's most recent financial report and portfolio listing or a copy of
the Statement of Additional Information (SAI) dated December 1, 1995. The
SAI has been filed with the Securities and Exchange Commission (SEC) and is
incorporated herein by reference (legally forms a part of the prospectus).
For a free copy of either document, contact Fidelity Client Services at
1-800-843-3001 or your investment professional.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT A FUND WILL MAINTAIN A
STABLE $1.00 SHARE PRICE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL AMOUNT INVESTED.
LIKE ALL MUTUAL FUNDS, 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.
DMF-pro-1295
Each fund seeks to obtain as high a level of current income as is
consistent with the preservation of capital and liquidity.
PROSPECTUS
DECEMBER 1, 1995(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Initial Class's yearly operating
expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's
financial data.
PERFORMANCE
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's
overall approach to investing.
BREAKDOWN OF EXPENSES How operating costs
are calculated and what they include.
YOUR ACCOUNT TYPES OF ACCOUNTS Different ways to set up your
account, including tax-sheltered retirement plans.
HOW TO BUY SHARES Opening an account and
making additional investments.
HOW TO SELL SHARES Taking money out and closing
your account.
INVESTOR SERVICES Services to help you manage
your account.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS Share price calculations and
the timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Each fund offers investors a convenient way to invest in a
professionally managed portfolio of money market instruments.
Each fund is designed for investors who would like to earn current income
while preserving the value of their investment.
The rate of income will vary from day to day, generally reflecting
short-term interest rates.
Each fund is managed to keep its share price stable at $1.00. U.S. Treasury
Portfolio offers an added measure of safety with its focus on U.S.
Treasury securities.
These funds do not constitute a balanced investment plan. However, because
they emphasize stability, they could be well-suited for a portion of your
savings. Each fund offers free checkwriting to give you easy access to your
money.
U.S. Treasury Portfolio is composed of two classes of shares. Each class of
the fund has a common investment objective and investment portfolio.
Initial Class shares do not have a sales charge, but do pay a distribution
fee. Class B shares do not have a front-end sales charge, but do have a
contingent deferred sales charge (CDSC), and pay a distribution fee and a
shareholder service fee. Class B shares are available only by exchange from
Class B of a Fidelity Advisor fund. Because Initial Class shares do not
have a sales charge, have a lower distribution fee and do not have
a shareholder service fee, Initial Class shares are expected to have
a higher total return than Class B shares. You may obtain more information
about Class B shares, which are not offered through this prospectus, from
your investment professional or by calling Fidelity Client Services at
1-800-843-3001.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
Initial Class shares of a fund.
Maximum sales charge on purchases and None
reinvested distributions
Maximum deferred sales charge None
Redemption fee None
Exchange fee None
ANNUAL OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to Fidelity Management & Research Company (FMR).
Each fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and financial
reports.
12b-1 fees are paid by FMR from its management fee, its past profits or
other source, to the distributor for services and expenses in connection
with the distribution of Initial Class shares. Long-term shareholders may
pay more than the economic equivalent of the maximum sales charges
permitted by the National Association of Securities Dealers, Inc., due to
12b-1 fees.
Initial Class's expenses are factored into its share price or dividends and
are not charged directly to shareholder accounts (see "Breakdown of
Expenses" on page ).
The following are projections based on historical expenses of the
I nitial Class of each fund, and are calculated as a percentage of
average net assets of the Initial Class of each fund.
MONEY MARKET PORTFOLIO
Management fee * 0.28
%
12b-1 fee (Distribution fee) 0.22
%
Other expenses (after reimbursement) 0.15
%
Total operating expenses 0.65
%
U.S. TREASURY PORTFOLIO
Management fee * 0.18
%
12b-1 fee (Distribution fee) 0.32
%
Other expenses (after reimbursement) 0.15
%
Total operating expenses 0.65
%
* THE RATE FOR MANAGEMENT FEES REPRESENTS THE NET RATE RETAINED BY FMR
AFTER PAYMENT MADE TO THE DISTRIBUTOR. THE MANAGEMENT FEE BEFORE PAYMENTS
MADE TO THE DISTRIBUTOR BY FMR IS 0.50%.
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment in Initial Class shares, assuming a 5% annual return and full
redemption at the end of each time period:
1 3 5 10
Year Years Years Years
<TABLE>
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Money Market Portfolio $ 7 $ 21 $ 36 $ 81
U.S. Treasury Portfolio $ 7 $ 21 $ 36 $ 81
</TABLE>
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY.
FMR has voluntarily agreed to reimburse each fund's Initial Class to the
extent that total operating expenses (excluding interest, taxes, brokerage
commissions, and extraordinary expenses) are in excess of 0.65% of its
average net assets. If these agreements were not in effect, other
expenses and total operating expenses for each fund's Initial Class
would have been the following amounts, as a percentage of average net
assets, 0.31 % and 0.81 %, respectively, for Money Market
Portfolio and 0.16 % and 0.66 %, respectively, for U.S.
Treasury Portfolio.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow and each fund's financial
statements are included in each fund's Annual Report and have been audited
by Coopers & Lybrand L.L.P. , independent accountants. Their reports
on the financial statements and financial highlights are included in each
Annual Report. The financial statements, the financial highlights, and the
reports are incorporated by reference into the funds' SAI, which may be
obtained free of charge from Fidelity Client Services.
MONEY MARKET PORTFOLIO - INITIAL CLASS
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Fiscal years ended July 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
Net asset value, beginning
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
Income from Investment
.050 .029 .028 .041 .067 .080 .085 .066 .057 .072
Operations
Net interest income
Less Distributions
(.050) (.029) (.028) (.041) (.067) (.080) (.085) (.066) (.057) (.072)
From net interest income
Net asset value, end of
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Total return A
5.16 2.98 2.82 4.21 6.90 8.34 8.81 6.81 5.87 7.39
% % % % % % % % % %
Net assets, end of period
$ 2,139 $ 1,525 $ 1,451 $ 1,531 $ 1,714 $ 1,350 $ 894 $ 561 $ 441 $ 389
(In millions)
Ratio of expenses to
.65 .65 .61 .59 .60 .61 .64 .66 .62 .60
average net assets
% % % % % % % % % %
Ratio of expenses to
.81 .74 .61 .59 .60 .61 .73 .66 .62 .60
average net assets before
% % % % % % % % % %
expense reductions
Ratio of net interest income
5.11 2.96 2.76 4.19 6.61 7.99 8.56 6.57 5.78 7.11
to average net assets
% % % % % % % % % %
</TABLE>
A TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
U.S. TREASURY PORTFOLIO - INITIAL CLASS
<TABLE>
<CAPTION>
<S>
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Selected Per-Share Data and Ratios
Fiscal years ended July 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
Net asset value, beginning of
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment
Operations
Net interest income
.049 .029 .027 .042 .065 .079 .083 .063 .057 .069
Less Distributions
(.049) (.029) (.027) (.042) (.065) (.079) (.083) (.063) (.057) (.069)
From net interest income
Net asset value, end of period
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total return A
5.02 2.89 2.78 4.25 6.69 8.24 8.64 6.45 5.81 7.15
% % % % % % % % % %
Net assets, end of period
$ 1,828 $ 2,025 $ 2,949 $ 3,094 $ 1,702 $ 1,177 $ 994 $ 320 $ 240 $ 157
(In millions)
Ratio of expenses to average
.65 .60 .57 .59 .59 .59 .64 .64 .58 .60
net assets
% % % % % % % % % %
Ratio of expenses to average
.66 .60 .57 .59 .59 .59 .64 .64 .58 .60
net assets before expense
% % % % % % % % % %
reductions
Ratio of net interest income to
4.89 2.81 2.73 4.14 6.42 7.91 8.47 6.26 5.67 6.89
average net assets
% % % % % % % % % %
</TABLE>
A TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
PERFORMANCE
Money market fund performance can be measured as TOTAL RETURN or YIELD.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a yield
assumes that income earned is reinvested, it is called an EFFECTIVE YIELD.
SEVEN-DAY YIELD illustrates the income earned by an investment in a money
market fund over a recent seven-day period. Since money market funds
maintain a stable $1.00 share price, current seven-day yields are the most
common illustration of money market fund performance.
The funds' performance and holdings are detailed twice a year in financial
reports, which are sent to all shareholders.
For current performance call Fidelity Client Services at 1-800-843-3001.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. Each fund is a diversified fund of
Daily Money Fund, an open-end management investment company organized as a
Delaware business trust on September 29, 1993.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent will mail proxy materials in advance, including a voting
card and information about the proposals to be voted on. You are entitled
to one vote for each share you own.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust, respectively.
FMR AND ITS AFFILIATES
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, Massachusetts 02109. It includes a number
of different subsidiaries and divisions which provide a variety of
financial services and products. The funds employ various Fidelity
companies to perform activities required for their operation.
The funds are managed by FMR, which handles their business affairs. FMR
Texas Inc. (FMR Texas), located in Irving, Texas, has primary
responsibility for providing investment management services.
As of September 30 , 1995, FMR advised funds having approximately
22 million shareholder accounts with a total value of more than
$ 335 billion.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets Fidelity's
funds and services. Fidelity Investments Institutional Operations Company
(FIIOC) performs transfer agent servicing functions for the Initial Class
shares of each fund.
FMR Corp. is the ultimate parent company of FMR and, FMR Texas. Members of
the Edward C. Johnson 3d family are the predominant owners of a class of
shares of common stock representing approximately 49% of the voting power
of FMR Corp. Under the Investment Company Act of 1940 (the 1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
U.S. TREASURY PORTFOLIO may invest in U.S. Treasury bills, notes a nd
bonds, and other direct obligations of the U.S. Government that are
guaranteed as to payment of principal and interest by the full faith and
credit of the U.S. Government , and in repurchase agreements backed
by those obligations. The fund intends to invest exclusively in U.S.
Treasury bills, notes and bonds and repurchase agreements backed by those
obligations.
MONEY MARKET PORTFOLIO invests in U.S. dollar-denominated money market
instruments of domestic and foreign issuers. The fund will invest in
securities rated in the highest rating category by at least two nationally
recognized rating services, or by one if only one rating service has rated
an obligation. The fund may purchase unrated obligations determined to be
of equivalent quality pursuant to procedures adopted by the Board of
Trustees. Under normal conditions, the fund will invest more than 25% of
its total assets in obligations of companies in the financial services
industry.
COMMON POLICIES
When you sell your shares of the funds, they should be worth the same
amount as when you bought them. Of course, there is no guarantee that the
funds will maintain a stable $1.00 share price. The funds follow
industry-standard guidelines on the quality and maturity of their
investments, which are designed to help maintain a stable $1.00 share
price. The funds will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities they buy. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a
default on the funds' investments could cause their share prices (and the
value of your investment) to change.
The funds earn income at current money market rates. They stress
preservation of capital, liquidity, and income and do not seek the
higher yields or capital appreciation that more aggressive investments may
provide. Each fund's yield will vary from day to day and generally reflects
current short-term interest rates and other market conditions. It is
important to note that neither the funds nor their yields are guaranteed by
the U.S. Government.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of each fund's limitations and more detailed information
about each fund's investments are contained in the funds '
SAI. Policies and limitations are considered at the time of purchase; the
sale of instruments is not required in the event of a subsequent change in
circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Current holdings are described in each fund's financial reports, which are
sent to shareholders twice a year. For a free SAI or financial report,
contact your investment professional or call Fidelity Client Services at
1-800-843-3001.
MONEY MARKET SECURITIES are high-quality, short-term obligations issued by
the U.S. Government, corporations, financial institutions, and other
entities. These obligations may carry fixed, variable, or floating interest
rates. A security's credit may be enhanced by a bank, insurance company, or
other entity. Some money market securities employ a trust or other similar
structure to modify the maturity, price characteristics, or quality of
financial assets so that they are eligible investments for money market
funds. If the structure does not perform as intended, adverse tax or
investment consequences may result.
U.S. GOVERNMENT MONEY MARKET SECURITIES are short-term debt obligations
issued or guaranteed by the U.S. Treasury or by an agency or
instrumentality of the U.S. Government. Not all U.S. Government securities
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 instrumentality's right
to borrow money from the U.S. Treasury under certain circumstances.
However, securities issued by the Financing Corporation are supported only
by the credit of the entity that issued them.
FOREIGN SECURITIES may involve different risks than domestic securities,
including risks relating to the political and economic conditions of the
foreign country involved, which could affect the payment of principal or
interest. Issuers of foreign securities include foreign governments,
corporations, and banks.
ASSET-BACKED SECURITIES 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.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a benchmark
rate changes. These interest rate adjustments are designed to help
stabilize the security's price.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other money market
securities, although they may be more volatile.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another party
in return for cash. This could increase the risk of fluctuation in the
fund's yield or in the market value of its assets.
OTHER MONEY MARKET SECURITIES may include commercial paper, certificates of
deposit, bankers' acceptances, and time deposits.
PUT FEATURES entitle the holder to put (sell back) a security to the issuer
or a financial intermediary. In exchange for this benefit, a fund may pay
periodic fees or accept a lower interest rate. The credit quality of the
investment may be affected by the creditworthiness of the put provider.
Demand features, standby commitments, and tender options are types of put
features.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities, and some other securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTIONS. A fund may not purchase a security if, as a result, more than
10% of its net assets would be invested in illiquid securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect the market value of a fund's assets.
FINANCIAL SERVICES INDUSTRY. Companies in the financial services industry
are subject to various risks related to that industry, such as government
regulation, changes in interest rates, and exposure on loans, including
loans to foreign borrowers. If a fund invests substantially in this
industry, its performance may be affected by conditions affecting the
industry.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry. Economic,
business, or political changes can affect all securities of a similar type.
RESTRICTIONS: Money Market Portfolio may not invest more than 5% of its
total assets in any one issuer, except that the fund may invest up to 10%
of its total assets in the highest quality securities of a single issuer
for up to three business days. These limitations do not apply to U.S.
Government securities.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements, and may make additional
investments while borrowings are outstanding.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, or engage in reverse repurchase agreements, but not in an amount
exceeding 331/3% of its total assets.
LENDING. A fund may lend money to other funds advised by FMR.
RESTRICTIONS: Loans in the aggregate, may not exceed 331/3% of a fund's
total assets. U.S. Treasury Portfolio does not intend to engage in lending.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
Each fund seeks to obtain as high a level of current income as is
consistent with the preservation of capital and liquidity.
Money Market Portfolio, under normal conditions, will invest more than 25%
of its total assets in obligations of companies in the financial services
industry.
Each fund may borrow only for temporary or emergency purposes, or engage in
reverse repurchase agreements, but not in an amount exceeding 331/3% of its
total assets.
Loans, in the aggregate, may not exceed 331/3% of a fund's total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each fund's Initial Class assets are
reflected in that class's share price or dividends; they are neither billed
directly to shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services. Each fund also pays OTHER EXPENSES, which
are explained below.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Each fund
pays the fee at the annual rate of 0.50 % of its average net assets.
FMR HAS SUB ADVISORY AGREEMENTS with FMR Texas, which has primary
responsibility for providing investment management for each fund, while FMR
retains responsibility for providing each fund with other management
services. For these services, FMR pays FMR Texas 50% of each fund's
management fee (before expense reimbursements but after payments made by
FMR pursuant to each fund's Initial Class Distribution and Service
Plan). FMR paid FMR Texas 0.14 % of Money Market Portfolio's and
0.10 % of U.S. Treasury Portfolio's average net assets for the
fiscal year ended July 31, 1995.
OTHER EXPENSES
While the management fee is a significant component of each fund's annual
operating costs, the funds have other expenses as well.
FIIOC performs certain transfer agency, dividend disbursing and shareholder
services for Initial Class shares. Fidelity Service Co. (FSC) calculates
the NAV and dividends for Initial Class shares, and maintains each fund's
general accounting records. For the fiscal year ended July 31, 1995,
fees paid by the Initial Class to FIIOC were equal to
0.28 % (U.S. Treasury Portfolio) and 0.13 % (Money
Market Portfolio) of its average net assets ; and fees paid by
each fund to FSC were equal to 0.01% of U. S. Treasury Portfolio's
average net assets and 0.01% of Money Market Portfolio's average net
assets.
Initial Class shares of each fund have adopted a DISTRIBUTION AND SERVICE
PLAN. Each Plan recognizes that FMR may use its resources, including
management fees, to pay expenses associated with the sale of Initial Class
shares. The Board of Trustees has authorized FMR to pay FDC a
distribution fee from its management fee revenues, past profits or other
resources at an annual rate of up to 0.38% of the Initial Class's
average net assets. For the fiscal year ended July 31, 1995, FMR paid
FDC at an annual rate of 0.22% of Money Market Portfolio's Initial Class
average net assets throughout the month and 0.32% of U.S. Treasury
Portfolio's Initial Class average net assets throughout the
month.
Each fund pays other expenses, such as legal, audit, and custodian fees; in
some instances, proxy solicitation costs; and the compensation of trustees
who are not affiliated with Fidelity.
YOUR ACCOUNT
TYPES OF ACCOUNTS
If you invest through an investment professional, read your investment
professional's program materials in conjunction with this prospectus for
additional service features or fees that may apply. Certain features of the
funds, such as minimum initial or subsequent investment amounts, may be
modified in these programs, and administrative charges may be imposed for
the services rendered.
The different ways to set up (register) your account with Fidelity are
listed below.
The account guidelines that follow may not apply to certain retirement
accounts. If your employer offers a fund through a retirement program,
contact your employer for more information. Otherwise, contact your
investment professional directly or call Fidelity Client Services at
1-800-843-3001.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT (THE FOLLOWING OPTIONS ARE AVAILABLE ONLY FOR TAXABLE FUNDS)
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal
age under 701/2 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(solid bullet) 401(K) PLANS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA). Contact your investment
professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH CLASS'S SHARE PRICE, called NAV, is calculated every business day. The
funds are managed to keep share prices stable at $1.00.
Shares are purchased at the next NAV calculated after your order is
received and accepted by the transfer agent. NAV is normally calculated at
2:00 p.m. and 4:00 p.m. Eastern time.
It is the responsibility of your investment professional to submit your
order to purchase shares for you to receive the next determined NAV.
Shareholders of record as of 2:00 p.m. Eastern time will be entitled to
dividends declared that day.
Shares purchased after 2:00 p.m. Eastern time begin to earn income
dividends on the following business day.
Share certificates are not available for Initial Class shares.
IF YOU ARE NEW TO FIDELITY, an initial investment must be preceded or
accompanied by a completed, signed application, which should be forwarded
to:
Fidelity Client Services
c/o Daily Money Fund:
Money Market Portfolio - Initial Class or
U.S. Treasury Portfolio - Initial Class
FIIOC
P.O. Box 1182
Boston, MA 02103-1182
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Place a purchase order and wire money into your
account,
(small solid bullet) Open your account by exchanging from Class A of
a Fidelity Advisor fund or from another Fidelity fund, or
(small solid bullet) Contact your investment professional.
BY MAIL . You or your investment professional must send a check
payable to the fund in which you plan to invest. When making subsequent
investments by check, please write your fund account number on the check.
All investments by check should be sent to the above address.
BY WIRE . For wiring information and instructions, you should call
the investment professional through which you trade, or if you trade
directly through Fidelity, call Fidelity Client Services. There is no fee
imposed by the funds for wire purchases. However, if you buy shares through
an investment professional, the investment professional may impose a fee
for wire purchases.
Fidelity Client Services:
Nationwide 1-800-843-3001
Your wire must be received by the transfer agent in good order at
the applicable fund's designated wire bank before the close of the Federal
Reserve Wire System on the day of purchase.
You are advised to wire funds as early in the day as possible and to
provide advance notice to Fidelity Client Services for large purchases.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $1,000
For Fidelity Advisor retirement accounts $500
TO ADD TO AN ACCOUNT $250
For Fidelity Advisor retirement accounts $100
MINIMUM BALANCE $500
For Fidelity Advisor retirement accounts none
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next NAV calculated after your order is received and accepted by the
transfer agent. NAV is normally calculated at 2:00 p.m. and 4:00 p.m.
Eastern time.
TO SELL SHARES IN A NON-RETIREMENT ACCOUNT, you may use any of the
methods described below.
TO SELL SHARES IN A FIDELITY RETIREMENT ACCOUNT, your request must be
made in writing, except for exchanges to Class A shares of a Fidelity
Advisor fund or shares of other Fidelity funds, which can be requested by
phone or in writing.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR NON-RETIREMENT ACCOUNT
SHARES, please leave at least $500 worth of shares in the account to
keep it open.
BY TELEPHONE. Redemption requests may be made by calling Fidelity Client
Services at 1-800-843-3001.
BY MAIL. Send a letter of instruction with signature guarantee(s) to the
address on page . The letter should specify the name of the fund, the
number of shares to be sold, name, account numbers, address, and should
include the additional requirements listed below that apply to each
particular account.
<TABLE>
<CAPTION>
<S> <C>
TYPE OF REGISTRATION REQUIREMENTS
Individual, Joint Tenants, Letter of instruction signed by all person(s) required
Sole Proprietorship, Custodial, (Uniform Gifts or to sign for the account exactly as it is registered,
Transfers to Minors Act), General Partners accompanied by 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>
If you do not fall into any of these registration categories (i.e.,
executors, administrators, conservators, or guard ians) you should call
your investment professional or Fidelity Client Services at 1-800-843-3001
for further instructions.
BY WIRE. Redemptions may be made by calling Fidelity Client Services at
1-800-843-3001.
You must designate on your account application the U.S. commercial bank
account(s) into which you wish the redemption proceeds to be deposited.
Fidelity Client Services will then notify you that this feature has been
activated and that you may request wire redemptions.
You may change the bank account(s) designated to receive redemption
proceeds at any time prior to making a redemption request. You should send
a letter of instruction, including a signature guarantee, to Fidelity
Client Services at the address shown on page .
You should be able to obtain a signature guarantee from a bank, broker,
dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency, or savings association. A notary public
cannot provide a signature guarantee.
There is no fee imposed by the funds for wiring of redemption proceeds.
However, if you sell shares through an investment professional, the
investment professional may impose a fee for wire redemptions.
Redemption proceeds will be wired via the Federal Reserve Wire System to
your bank account of record. If your redemption request is received by
the transfer agent before 2:00 p.m. Eastern time, redemption proceeds
will normally be wired on that day . If your redemption request is
received by the transfer agent after 2:00 p.m. Eastern time, redemption
proceeds will normally be wired on the following business day.
A fund reserves the right to take up to seven days to pay you if making
immediate payment would adversely affect the fund.
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. The minimum amount for a check is $500. Do not, however, try to
close out your account by check.
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available Monday through Friday
8:30 a.m. to 6 :00 p.m. Eastern time.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction,
except a reinvestment, that affects your account balance or your account
registration)
(small solid bullet) Account statements ( monthly )
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed,
even if you have more than one account in a fund. Contact your investment
professional, or call Fidelity Client Services at 1-800-843-3001 if you
need additional copies of financial reports or historical account
information.
SUB-ACCOUNTING AND SPECIAL SERVICES. Special processing has been arranged
with FIIOC for institutions that wish to open multiple accounts (a master
account and sub-accounts). You may be required to enter into a separate
agreement with FIIOC. Charges for these services, if any, will be
determined based on the level of services to be rendered.
One easy way to pursue your financial goals is to invest money regularly.
The funds offer a convenient service that lets you transfer money between
fund accounts, automatically. While regular investment plans do not
guarantee a profit and will not protect you against loss in a declining
market, they can be an excellent way to invest for retirement, a home,
educational expenses, and other long-term financial goals. Certain
restrictions apply for retirement accounts. Call your investment
professional for more information.
REGULAR INVESTMENT PLANS
FIDELITY ADVISOR SYSTEMATIC EXCHANGE PROGRAM
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO FIDELITY ADVISOR FUND
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, quarterly, (small solid bullet) To establish, call your investment professional after
semi-annually, or both accounts are opened.
annually (small solid bullet) To change the amount or frequency of your
investment, contact your investment professional
directly or, if you purchased your shares through a
b roker- d ealer or i nsurance r epresentative, call
1-800-522-7297. If you purchased your shares
through a b ank r epresentative, call 1-800-843-3001.
(small solid bullet) The account from which the exchanges are to be
processed must have a minimum balance of
$10,000. The account into which the exchange is
being processed must have a minimum of $1,000.
(small solid bullet) Both accounts must have the same registrations
and taxpayer ID numbers.
(small solid bullet) Call at least 2 business days prior to your next
scheduled exchange date.
</TABLE>
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains, if any, to shareholders each year. Income dividends are
declared daily and paid monthly.
Income dividends declared are accrued daily throughout the month and are
normally distributed on the first business day of the following month.
Based on prior approval of each fund, dividends relating to Initial Class
shares redeemed during the month can be distributed on the day of
redemption. Each fund reserves the right to limit this service.
Shareholders may elect to receive dividend distributions in cash.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. The funds offer two options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your application, you
will be assigned this option.
2. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
For retirement accounts, all distributions are automatically reinvested.
When you are over 59 1/2 years old, you can receive distributions in cash.
Dividends will be reinvested at the fund's Initial Class NAV on the
last day of the month. Capital gain distributions, if any, will be
reinvested at the NAV as of the record date of the distribution. The
mailing of distribution checks will begin within seven days.
TAXES
As with any investment, you should consider how your investment in a fund
will be taxed. If your account is not a tax-deferred retirement account,
you should be aware of these tax implications.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. If you live outside the
United States, your distributions could also be taxed by the country in
which you reside. Your distributions are taxable when they are paid,
whether you take them in cash or reinvest them. However, distributions
declared in December and paid in January are taxable as if they were paid
on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions,
if any, are taxed as long-term capital gains.
Mutual fund dividends from U.S. Government securities are generally 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 the benefit. In
addition, some states may impose intangible property taxes. You should
consult your own tax adviser for details and up-to-date information on the
tax laws in your state.
During the fiscal year ended July 31, 1995, 2% of Money Market
Portfolio's and 28% of U.S. Treasury Portfolio's income distributions were
derived from interest on U.S. Government securities which is generally
exempt from state income tax.
Every January, Fidelity will send you and the IRS a statement
showing the taxable distributions paid to you in the previous year.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
EACH FUND IS OPEN FOR BUSINESS and its NAV is normally calculated each day
that both the Federal Reserve Bank of New York (New York Fed) and the New
York Stock Exchange (NYSE) are open. The following holiday closings have
been scheduled for 1996: New Year's Day, Martin Luther King's Birthday,
Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.
Although FMR expects the same holiday schedule to be observed in the
future, the New York Fed or the NYSE may modify its holiday schedule at any
time. On any day that the New York Fed or the NYSE closes early, the
principal government securities markets close early (such as on days in
advance of holidays generally observed by participants in such markets), or
as permitted by the SEC, the right is reserved to advance the time on that
day by which purchase and redemption orders must be received.
To the extent that portfolio securities are traded in other markets on days
when the New York Fed or the NYSE is closed, each fund's NAV may be
affected on days when investors do not have access to the fund to purchase
or redeem shares. Certain Fidelity funds may follow different holiday
closing schedules.
A CLASS'S NAV is the value of a single share. The NAV of the Initial
Class of each fund is computed by adding the Initial Class's pro rata share
of the value of the fund's investments, cash, and other assets, subtracting
the Initial Class's pro rata share of the value of the fund's
liabilities, subtracting the liabilities allocated to the Initial Class,
and dividing the result by the number of Initial Class shares of that fund
that are outstanding. Each fund values its portfolio securities on the
basis of amortized cost. This method minimizes the effect of changes in a
security's market value and helps each fund maintain a stable $1.00 share
price.
THE OFFERING PRICE (price to buy one share) and REDEMPTION PRICE (price to
sell one share) of the Initial Class are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a
fund to withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity may only be
liable for losses resulting from unauthorized transactions if it does not
follow 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 the confirmation
statements immediately after receipt. If you do not want the ability to
redeem and exchange by telephone, call Fidelity for instructions.
Additional documentation may be required from corporations, associations
and certain fiduciaries.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page 18. Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
TO ALLOW FMR TO MANAGE THE FUNDS MOST EFFECTIVELY, you are urged to
initiate all trades as early in the day as possible and to notify Fidelity
Client Services in advance of large transactions.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check, each
check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number of
checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
canceled and you could be liable for any losses or fees a fund or
Fidelity has incurred.
Shareholders of record as of 2:00 p.m. Eastern time will be entitled to
dividends declared that day.
Shares purchased after 2:00 p.m. Eastern time begin to
earn income dividends on the following business day.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) Shares redeemed before 2:00 p.m. Eastern time do not
receive the dividend declared on the day of redemption. Shares redeemed
after 2:00 p.m. Eastern time do receive the dividend declared on the day of
redemption.
(small solid bullet) A fund may withhold redemption proceeds until it is
reasonably assured that investments credited to your account have been
received and collected.
(small solid bullet) If you sell shares by writing a check and the amount
of the check is greater than the value of your account, your check will be
returned to you and you may be subject to additional charges.
When the NYSE or the New York Fed 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 SEC to merit such
action, a fund may suspend redemption or postpone payment dates. In
cases of suspension of the right of redemption, the request for redemption
may either be withdrawn or payment may be made based on the NAV next
determined after the termination of the suspension.
IF YOUR NON-RETIREMENT ACCOUNT BALANCE FALLS BELOW $500 due to redemption,
the account may be closed and the proceeds may be mailed to your address of
record. You will be given 30 days' notice that your account will be closed
unless it is increased to the minimum.
FIDELIT Y MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds.
If you have purchased Initial Class shares of a fund in connection with the
Fidelity Advisor funds program, your Initial Class shares may be
exchanged only for Class A shares of Fidelity Advisor funds , Initial
Class shares of the other fund offered through this prospectus, or shares
of Daily Tax-Exempt Money Fund . Other shareholders may not exchange
Initial Class shares of a fund for Class A shares of Fidelity Advisor
f unds.
An exchange involves the redemption of all or a portion of the shares of
one fund and the purchase of shares of another fund.
BY TELEPHONE. Exchanges may be requested on any day a fund is open for
business by contacting your investment professional or calling Fidelity
Client Services at 1-800-843-3001 between 8:30 a.m. and 4 :00 p.m.
Eastern time.
BY MAIL. You may exchange shares on any business day by submitting written
instructions with an authorized signature which is on file for that
account. Written requests for exchanges should contain the fund name,
account number, the number of shares to be redeemed, and the name of the
fund to be purchased. Written requests for exchange should be mailed to
Fidelity Client Services at the address on page .
WHEN YOU PLACE AN ORDER TO EXCHANGE SHARES, Initial Class shares will be
redeemed at the next determined NAV after your order is received and
accepted by the transfer agent. Shares of the fund to be acquired will be
purchased at its next determined NAV after redemption proceeds are made
available. You should note that, under certain circumstances, a fund may
take up to seven days to make redemption proceeds available for the
exchange purchase of shares of another fund. In addition, please note the
following:
(small solid bullet) Exchanges will not be permitted until a completed and
signed account application is on file.
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) You will earn dividends in the acquired fund in
accordance with the fund's customary policy, normally on the day the
exchange request is received.
(small solid bullet) 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 have already paid in connection with the shares you are
exchanging.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Currently, there is no limit on the number of
exchanges out of a fund, nor are there any administrative or
redemption fees applicable to exchanges out of a fund.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related SAI, in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the fund s or FDC. This Prospectus and the related SAI
do not constitute an offer by the fund s or by FDC to sell or to buy
shares of the fund s to any person to whom it is unlawful to make
such offer.
DAILY MONEY FUND: INITIAL CLASS
U.S. TREASURY PORTFOLIO AND MONEY MARKET PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A Item Number
Part B Statement of Additional Information
10 a,b Cover Page
11 Table of Contents
12 *
13 a,b,c Investment Policies and Limitations
d *
14 a,b,c Trustees and Officers
15 a,b,c FMR; Trustees and Officers
16 a(i) FMR
(ii) Trustees and Officers
(iii),b Management Contracts
c *
d Management Contracts
e *
f Distribution and Service Plans
g *
h Description of the Trust
i Contracts with FMR Affiliates
17 a Portfolio Transactions
b *
c,d Portfolio Transactions
18 a Description of the Trust
b *
19 a Additional Purchase, Exchange, and Redemption Information
b Valuation
c *
20 Distributions and Taxes
21 a(i)(ii) Distribution and Service Plans; Contracts with FMR Affiliates
(iii),b,c *
22 Performance
23 Financial Statements
_______________
*Not Applicable
DAILY MONEY FUND:
MONEY MARKET PORTFOLIO
U.S. TREASURY PORTFOLIO
INITIAL CLASS
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 1, 1995
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus (dated
December 1, 1995). Please retain this document for future reference. The
funds' financial statements and financial highlights, included in the
Annual Report, for the fiscal year ended July 31, 1995, are incorporated
herein by reference. To obtain an additional copy of the Prospectus or the
Annual Report, please call Fidelity Client Services at 1-800-843-3001.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation
Performance
Additional Purchase, Exchange and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Contracts with FMR Affiliates
Distribution and Service Plans
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISOR
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
Fidelity Investments Institutional Operations Company (FIIOC)
CUSTODIAN
The Bank of New York
DMF-ptb-1295
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 fund'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 a fund'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 each fund's investment policies and
limitations.
Each fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (the 1940
Act)) of each fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations described
in this SAI are not fundamental and may be changed without shareholder
approval.
INVESTMENT LIMITATIONS OF U.S. TREASURY PORTFOLIO
THE FOLLOWING ARE U.S. TREASURY PORTFOLIO'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if , as a result ,
more than 5% of its total assets would be invested in the securities of
such issuer; provided, however, that with respect to 25% of its total
assets, 10% of its assets may be invested in the securities of an issuer;
(2) issue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund 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 fund'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
fund 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 the 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 fund'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 fund
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;
(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
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(9) write or purchase any put or call options.
(10) The fund 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 objective, policies and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund 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) Subject to revision upon 60 days' notice to shareholders, the fund
does not currently intend to purchase securities on margin, except that the
fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.
(iii) The fund 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 fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund 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 fund's total
assets.
(iv) The fund 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 fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contract s .
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of reorganization, consolidation, or merger.
(viii) The fund 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 securities of business
enterprises that, including predecessors, have a record of less than three
years' continuous operation;
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development program or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi) The fund 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 objective, policies, and
limitations as the fund.
For purposes of limitation (viii), pass-through entities and other
special purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
For the fund's policies on quality and maturity, see section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF MONEY MARKET PORTFOLIO
THE FOLLOWING ARE MONEY MARKET PORTFOLIO'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if , as a result ,
more than 5% of its total assets would be invested in the securities of
such issuer; provided, however, that with respect to 25% of its total
assets 10% of its assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund 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 fund'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
fund 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 fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund 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 fund
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;
(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
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(9) write or purchase any put or call options.
(10) The fund 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 objective, policies and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase a security (other
than a security issued or guaranteed by the U.S. Government or any of its
agents 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 fund may invest up to 10% of its total assets in the first tier
securities of a single issuer for up to three business days.
( ii ) The fund 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 i ) Subject to revision upon 60 days' notice to shareholders, the
fund does not currently intend to purchase securities on margin, except
that the fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in connection
with futures contracts and options on futures contracts shall not
constitute purchasing securities on margin.
(i v ) The fund 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 fund will not purchase any security while
borrowings (excluding reverse repurchase agreements) representing more than
5% of its total assets are outstanding. The fund 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 fund's total
assets.
(v) The fund 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 i ) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund'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 to repurchase
agreements.)
(vi i ) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contract.
(vii i ) The fund does not currently intend to (a) purchase securities
of other investment companies, except in the open market where no
commission except the ordinary broker's commission is paid, or (b) purchase
or retain securities issued by other open-end investment companies.
Limitations (a) and (b) do not apply to securities received as dividends,
through offers of exchange, or as a result of reorganization,
consolidation, or merger.
( ix ) The fund 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 securities of
business enterprises that, including predecessors, have a record of less
than three years' continuous operation;
(x) The fund does not currently intend to invest in oil, gas, or
other mineral exploration or development program or leases.
(x i ) The fund does not currently intend to purchase the securities
of any issuer if those officers and Trustees of the Trust and those
officers and directors of FMR who individually own more than 1/2 of 1% of
the securities of such issuer together own more than 5% of such issuer's
securities.
(xii) The fund 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 objective, policies, and
limitations as the fund.
For purposes of limitation (ix), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises".
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
SHAREHOLDER NOTICE. U.S. Treasury Portfolio intends to invest 100% of
its total assets in U.S. Treasury bills, notes and bonds and in repurchase
agreements backed by those obligations. This operating policy may be
changed upon 90 days' notice to shareholders.
Each of U.S. Treasury Portfolio and Money Market Portfolio do not intend to
purchase futures contracts or options on futures contracts. This operating
policy may be changed only upon approval by the Board of Trustees and 60
days' notice to shareholders.
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the funds.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund 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 include 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 entities providing the
credit support.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund 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. Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund 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 fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund 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 fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund 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.
DOMESTIC AND FOREIGN ISSUERS. Investments may be made in U.S.
dollar-denominated time deposits, certificates of deposit, and bankers'
acceptances of U.S. banks and their branches located outside of the United
States, U.S. branches and agencies of foreign banks, and foreign branches
of foreign banks. A fund may also invest in U.S. dollar-denominated
securities issued or guaranteed by other U.S. or foreign issuers, including
U.S. and foreign corporations or other business organizations, foreign
governments, foreign government agencies or instrumentalities, and U.S. and
foreign financial institutions, including savings and loan institutions,
insurance companies, mortgage bankers, and real estate investment trusts,
as well as banks.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental
regulation. Payment of interest and principal on these obligations may also
be affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). In addition, evidence of
ownership of portfolio securities may be held outside of the United States
and a fund may be subject to the risks associated with the holding of such
property overseas. Various provisions of federal law governing the
establishment and operation of U.S. branches do not apply to foreign
branches of U.S. banks.
Obligations of U.S. branches and agencies of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation, as well as by governmental action in the country in which the
foreign bank has its head office.
Obligations of foreign issuers involve certain additional risks. These
risks may include future unfavorable political and economic developments,
withholding taxes, seizures of foreign deposits, currency controls,
interest limitations, or other governmental restrictions that might affect
payment of principal or interest, or the ability to honor a credit
commitment. Additionally, there may be less public information available
about foreign entities. Foreign issuers may be subject to less governmental
regulation and supervision than U.S. issuers. Foreign issuers also
generally are not bound by uniform accounting, auditing, and financial
reporting requirements comparable to those applicable to U.S. issuers.
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 fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's 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 marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by the funds 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 and time deposits to be illiquid.
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 fund were in a
position where more than 10% of its net assets was invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
INTERFUND BORROWING PROGRAM. Pursuant to an exemptive order issued by the
SEC, each fund has received permission to lend money to, and borrow money
from, other funds advised by FMR or its affiliates. Interfund loans and
borrowings normally extend overnight, but can have a maximum duration of
seven days. Loans may be called on one day's notice. A fund will lend
through the program only when the returns are higher than those available
from other short-term instruments (such as repurchase agreements), and will
borrow through the program only when the costs are equal to or lower than
the cost of bank loans. A fund 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. U.S. Treasury Portfolio does not currently
intend to participate in the program as a lender.
MONEY MARKET SECURITIES are high-quality, short-term obligations. Some
money market securities employ a trust or other similar structure to modify
the maturity, price characteristics, or quality of financial assets. For
example, put features can be used to modify the maturity of a security, or
interest rate adjustment features can be used to enhance price stability.
If the structure does not perform as intended, adverse tax or investment
consequences may result. Neither the Internal Revenue Service (IRS) nor any
other regulatory authority has ruled definitively on certain legal issues
presented by structured securities. Future tax or other regulatory
determinations could adversely affect the value, liquidity, or tax
treatment of the income received from these securities or the nature and
timing of distributions made by the funds.
MUNICIPAL SECURITIES are issued to raise money for a variety of public or
private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities. They
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. The value of some or all municipal
securities may be affected by uncertainties in the municipal market related
to legislation or litigation involving the taxation of municipal securities
or the rights of municipal securities holders. A fund may own a municipal
security directly or through a participation interest.
PUT FEATURES entitle the holder to sell a security back to the issuer or a
third party at any time or at specified intervals. They are subject to the
risk that the put provider is unable to honor the put feature (purchase the
security). Put providers often support their ability to buy securities on
demand by obtaining letters of credit or other guarantees from other
entities. Demand features, standby commitments, and tender options are
types of put features.
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the funds may purchase only high-quality securities that FMR
believes present minimal credit risks. To be considered high-quality, a
security must be 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 are those deemed to be in the highest
rating category (e.g., Standard & Poor's A-1), and second tier securities
are those deemed to be in the second highest rating category (e.g.,
Standard & Poor's A-2). Split-rated securities may be determined to be
either first tier or second tier based on applicable regulations.
A fund may not invest more than 5% of its total assets in second tier
securities. In addition, a fund 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.
A fund 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. When determining the maturity of a
security, a fund may look to an interest rate reset or demand feature.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. 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. To protect the fund
from the risk that the original seller will not fulfill its obligation, the
securities are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental amount. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
that the value of the underlying security will be less than the resale
price, as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to engage in repurchase
agreement transactions with parties whose creditworthiness 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 fund 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 it may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security. However, in general, each fund anticipates holding restricted
securities to maturity or selling them in an exempt transaction.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
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 fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. A
fund 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 fund's assets and may be
viewed as a form of leverage.
SHORT SALES "AGAINST THE BOX." A fund may sell securities short when it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short. Short sales could be used to protect the net
asset value per share (NAV) of the fund in anticipation of increased
interest rates, without sacrificing the current yield of the securities
sold short. If a fund 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.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. FMR may rely on its evaluation of
the credit of a bank or another entity in determining whether to purchase a
security supported by a letter of credit guarantee, insurance or other
source of credit or liquidity. In evaluating the credit of a foreign bank
or other foreign entities, FMR will consider whether adequate public
information about the entity is available and whether the entity may be
subject to unfavorable political or economic developments, currency
controls, or other government restrictions that might affect its ability to
honor its commitment.
STRIPPED GOVERNMENT SECURITIES. Stripped securities are created by
separating the income and principal components of a debt instrument and
selling them separately. U.S. Treasury STRIPS (Separate Trading of
Registered Interest and Principal of Securities) are created when the
coupon payments and the principal payment are stripped from an outstanding
Treasury bond by the Federal Reserve Bank. Bonds issued by government
agencies also may be stripped in this fashion.
Privately stripped government securities are created when a dealer deposits
a Treasury security or federal agency security with a custodian for
safekeeping and then sells the coupon payments and principal payment that
will be generated by this security. Proprietary receipts, such as
Certificates of Accrual on Treasury Securities (CATS), Treasury Investment
Growth Receipts (TIGRS), and generic Treasury Receipts (TRs), are stripped
U.S. Treasury securities that are separated into their component parts
through trusts created by their broker sponsors. Bonds issued by government
agencies also may be stripped in this fashion.
Because of the SEC's views on privately stripped government securities, a
fund must evaluate them as it would non-government securities pursuant to
regulatory guidelines applicable to all money market funds. A fund
currently intends to purchase only those privately stripped government
securities that have either received the highest rating from two nationally
recognized rating services (or one, if only one has rated the security) or,
if unrated, have been judged to be of equivalent quality by FMR pursuant to
procedures adopted by the Board of Trustees.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments of
the interest rate paid on the security. Variable rate securities provide
for a specified periodic adjustment in the interest rate, while floating
rate securities have interest rates that change whenever there is a change
in a designated benchmark rate. Some variable or floating rate securities
have put features.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of each fund by FMR pursuant to authority contained in the
management contract. FMR has granted investment management authority to the
sub-adviser (see the section entitled "Management Contracts"), and the
sub-adviser 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 or its
affiliates act as investment adviser. Securities purchased and sold by a
fund 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 funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds 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; and the availability of
securities or the purchasers or sellers of securities. In addition, such
broker-dealers may furnish analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy,
and performance of accounts; effect securities transactions, and perform
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 funds 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 funds may be useful to FMR in rendering investment management
services to the funds 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 funds. 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
each fund 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 funds 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 funds 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 (FBS), subsidiaries of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. From September 1992 through December 1994, FBS operated
under the name Fidelity Brokerage Services Limited, Inc. (FBSL). As of
January 1995, FBSL was converted to an unlimited liability company and
assumed the name FBS. Prior to September 4, 1992, FBSL operated under the
name Fidelity Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary
of Fidelity International Limited (FIL). Edward C. Johnson 3rd is Chairman
of FIL. Mr. Johnson 3rd, Johnson family members, and various trusts for the
benefit of the Johnson family own, directly or indirectly, more than 25% of
the voting common stock of FIL.
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.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the funds and review the commissions paid by each fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund.
During fiscal 1993, 1994, and 1995, the funds paid no commissions to
brokerage firms that provided research services.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund 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 fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
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 each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to each fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION
Fidelity Service Co . (FSC) normally determines a fund's NAV at 2:00
p.m. and 4:00 p.m. Eastern time. The valuation of portfolio securities is
determined as of these times for the purpose of computing each fund's NAV.
Portfolio securities and other assets are valued on the basis of
amortized cost. This technique involves initially valuing an instrument at
its cost as adjusted for amortization of premium and accretion of discount
rather than its current market value. The amortized cost value of an
instrument may be higher or lower than the price a fund would receive if it
sold the instrument.
During periods of declining interest rates, a fund's yield based on
amortized cost valuation may be higher than would result if the fund used
market valuations to determine its NAV. The converse would apply during
periods of rising interest rates.
Valuing each fund's investments on the basis of amortized cost and use of
the term "money market fund" are permitted pursuant to Rule 2a-7 under the
1940 Act. Each fund must adhere to certain conditions under Rule 2a-7, as
summarized in the section entitled "Quality and Maturity" on page .
The Board of Trustees oversees FMR's adherence to the provisions of Rule
2a-7 and has established procedures designed to stabilize each fund'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 a
fund'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.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Yield and total return fluctuate in
response to market conditions and other factors.
YIELD CALCULATIONS. To compute a class's yield for a period, the net change
in value of a hypothetical account containing one share reflects the value
of additional shares purchased with dividends from the one original share
and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at the
beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current annualized yield. A fund also may
calculate an effective yield by compounding the base period return over a
one-year period. In addition to the current yield, the funds may quote
yields in advertising based on any historical seven-day period. Yields for
the funds are calculated on the same basis as other money market funds, as
required by applicable regulations.
Yield information may be useful in reviewing a class's performance and in
providing a basis for comparison with other investment alternatives.
However, each class's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates a
class's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the class's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the class's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a class's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the class's NAV over a
stated period. Average annual total returns are calculated by determining
the growth or decline in value of a hypothetical historical investment in a
class over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of
growth or decline in value had been constant over the period. For example,
a cumulative total return of 100% over ten years would produce an average
annual total return of 7.18%, which is the steady annual rate of return
that would equal 100% growth on a compounded basis in ten years. While
average annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a class's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of a class.
In addition to average annual total returns, a class may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, 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 (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
HISTORICAL RESULTS. The following table shows 7-day yields and total
returns for Initial Class for the period ended July 31, 1995.
Average Annual Total Returns Cumulative Total Returns
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Seven-Day One Five Ten One Five Ten
Yield Year Years Years Year Years Years
US Treasury 5.18 % 5.02% 4.32% 5.77% 5.02% 23.53% 75.31%
Money Market 5.41 % 5.16% 4.41% 5.91% 5.16% 24.05% 77.58%
</TABLE>
Note: If FMR had not reimbursed certain fund expenses during these periods,
U.S. Treasury Portfolio's and Money Market Portfolio's Initial Class
yields would have been 5.18 % and 5.25 %, respectively; and
total returns would have been lower.
The following table shows the income and capital elements of each fund's
Initial Class cumulative total return. The table compares the Initial
Class's return to the record of the Standard & Poor's Composite Index of
500 stocks (S&P 500), the Dow Jones Industrial Average (DJIA), and the cost
of living (measured by the Consumer Price Index, or CPI) over the same
period. The CPI information is as of the month end closest to the initial
investment date for each fund. The S&P 500 and DJIA comparisons are
provided to show how each class's total return compared to the record of a
broad average of common stocks and a narrower set of stocks of major
industrial companies, respectively, over the same period. Of course, since
each fund invests in short-term fixed-income securities, common stocks
represent a different type of investment from the fund. Common stocks
generally offer greater growth potential than the funds, but generally
experience greater price volatility, which means greater potential for
loss. In addition, common stocks generally provide lower income than a
fixed-income investment such as the funds. Figures for the S&P 500 and DJIA
are based on the prices of unmanaged groups of stocks and, unlike the
funds' returns, do not include the effect of paying brokerage commissions
or other costs of investing.
U.S. TREASURY PORTFOLIO - INITIAL CLASS
HISTORICAL FUND RESULTS
During the ten year period ended July 31, 1995, a hypothetical $10,000
investment in U.S. Treasury Portfolio-Initial Class would have grown to
$ 17,531 , assuming all distributions were reinvested. This was a
period of fluctuating interest rates and the figures below should not be
considered representative of the dividend income or capital gain or loss
that could be realized from an investment in Initial Class today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1986 $ 10,000 $ 715 $ 0 $ 10,715 $ 12,842 $ 13,687 $ 10,158
1987 10,000 1,337 0 11,337 17,891 20,474 10,557
1988 10,000 2,069 0 12,069 15,796 17,540 10,993
1989 10,000 3,112 0 13,112 20,837 22,744 11,540
1990 10,000 4,192 0 14,192 22,191 25,790 12,096
1991 10,000 5,141 0 15,141 25,023 27,856 12,635
1992 10,000 5,785 0 15,785 28,227 32,199 13,033
1993 10,000 6,224 0 16,224 30,696 34,590 13,395
1994 10,000 6,692 0 16,692 32,279 37,808 13,766
1995 10,000 7,531 0 17,531 40,706 48,533 14,147
</TABLE>
** From month-end closest to initial investment date
Explanatory Notes: With an initial investment of $10,000 made on July 31,
198 5 , the net amount invested in Initial Class shares was $10,000.
The cost of the initial investment ($10,000), together with the aggregate
cost of reinvested dividends for the period covered (their cash value at
the time they were reinvested), amounted to $ 17,531 . If
distributions had not been reinvested, the amount of distributions earned
from the Initial Class over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $ 5,629 . The fund
did not distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
MONEY MARKET PORTFOLIO - INITIAL CLASS
HISTORICAL FUND RESULTS
During the ten year period ended July 31, 1995, a hypothetical $10,000
investment in Money Market Portfolio - Initial Class would have
grown to $ 17,758 , assuming all distributions were reinvested. This
was a period of fluctuating interest rates and the figures below should not
be considered representative of the dividend income or capital gain or loss
that could be realized from an investment in Initial Class today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1986 $ 10,000 $ 739 $ 0 $ 10,739 $ 12,842 $ 13,687 $ 10,158
1987 10,000 1,369 0 11,369 17,891 20,474 10,557
1988 10,000 2,143 0 12,143 15,796 17,540 10,993
1989 10,000 3,213 0 13,213 20,837 22,744 11,540
1990 10,000 4,314 0 14,314 22,191 25,790 12,096
1991 10,000 5,303 0 15,303 25,023 27,856 12,635
1992 10,000 5,947 0 15,947 28,227 32,199 13,033
1993 10,000 6,397 0 16,397 30,696 34,590 13,395
1994 10,000 6,886 0 16,886 32,279 37,808 13,766
1995 10,000 7,758 0 17,758 40,706 48,533 14,147
</TABLE>
** From month-end closest to initial investment date
Explanatory Notes: With an initial investment of $10,000 made on July 31,
198 5 , the net amount invested in Initial Class shares was $10,000.
The cost of the initial investment ($10,000), together with the aggregate
cost of reinvested dividends for the period covered (their cash value at
the time they were reinvested), amounted to $17,758 . If
distributions had not been reinvested, the amount of distributions earned
from the Initial Class over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $5,758 . The fund
did not distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
PERFORMANCE COMPARISONS. A class'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, a class's performance may
be compared to stock, bond, and money market mutual fund performance
indices prepared by Lipper or other organizations. When comparing these
indices, it is important to remember the risk and return characteristics of
each type of investment. For example, while stock mutual funds may offer
higher potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability of
principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, a class's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund 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.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
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.
A fund 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 749 taxable and 229 U.S. Government money market funds.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include other Fidelity funds; retirement investing;
brokerage products and services; model portfolios or allocations; saving
for college or other goals; charitable giving; and the Fidelity credit
card. In addition, Fidelity may quote or reprint financial or business
publications and periodicals as they relate to current economic and
political conditions, fund management, portfolio composition, investment
philosophy, investment techniques, the desirability of owning a particular
mutual fund, and Fidelity services and products. 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 fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
A fund 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.
As of September 30 , 1995, FMR advised over $26.5 billion
tax-free fund assets over, $77 billion in money market fund
asset s over, $226 billion in equity fund assets over, $55
billion in international fund assets over, $22 billion in Spartan
fund assets. The funds may reference the growth and variety of money market
mutual funds and the adviser's innovation and participation in the
industry. The equity funds under management figure represents the largest
amount of equity fund assets under management by a mutual fund investment
adviser in the United States, making FMR America's leading equity (stock)
fund manager. FMR, its subsidiaries, and affiliates maintain a worldwide
information and communications network for the purpose of researching and
managing investments abroad.
In addition to performance rankings, each fund may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A fund's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE 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 class'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 under the 1940 Act, each fund 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 fund suspends the
redemption of the shares to be exchanged as permitted under the 1940 Act or
the rules and regulations thereunder, or a 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.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective 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.
DIVIDENDS. Because each fund's income is primarily derived from interest,
dividends from the fund generally will not qualify for the
dividends-received deduction available to corporate shareholders.
Short-term capital gains are distributed as dividend income, but do not
qualify for the dividends-received deduction. A portion of each fund's
dividends derived from certain U.S. Government obligations may be exempt
from state and local taxation. Each fund will send each shareholder a
notice in January describing the tax status of dividend and capital gain
distributions (if any) for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Each fund 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. Each fund does not anticipate earning
long-term capital gains on securities held by the fund.
As of July 31, 1995, Money Market Portfolio and U.S. Treasury Portfolio
had capital loss carryforwards aggregating approximately $774,000 and
$476,000, respectively. The loss carryforward for Money Market Portfolio of
which $30,000, $35,000, $125,000, and $584,000 will expire on July 31,
2000, 2001, 2002, and 2003, respectively, is available to offset future
capital gains. The loss carryforward for U.S. Treasury Portfolio of which
$15,000 and $461,000 will expire on July 31, 2001 and 2002, respectively,
is available to offset future capital gains.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
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 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
benefit. The tax treatment of your dividend distributions from a fund will
be the same as if you directly owned your proportionate share of the U.S.
Government securities in each fund's portfolio. Because the income earned
on most U.S. Government securities in which each fund invests is exempt
from state and local income taxes, the portion of your dividends from each
fund 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.
In a number of states, corporate franchise (income) tax laws do not exempt
interest earned on U.S. Government securities whether such securities are
held directly or through a fund.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. Because Money Market Portfolio does not currently anticipate
that securities of foreign issuers will constitute more than 50% of its
total assets at the end of its fiscal year, shareholders should not expect
to claim a foreign tax credit or deduction on their federal income tax
returns with respect to foreign taxes withheld.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis.
Each fund is treated as a separate entity from the other funds of Daily
Money Fund for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the 1940 Act, control of a company is presumed where
one individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting common
stock and the execution of the shareholders' voting agreement, members of
the Johnson family may be deemed, under the 1940 Act, to form a controlling
group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
FIIOC, which performs shareholder servicing functions for institutional
customers and funds sold through intermediaries; and Fidelity Investments
Retail Marketing Company, which provides marketing services to various
companies within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust 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 Daily Money Fund prior to the funds ' conversion from
series of a Massachusetts business trust served in identical capacities.
All persons named as Trustees also serve in similar capacities for other
funds advised by FMR. The business address of each Trustee and officer who
is an "interested person" (as defined in the 1940 Act) is 82 Devonshire
Street, Boston, Massachusetts 02109, which is also the address of FMR. The
business address of all the other Trustees is Fidelity Investments, P.O.
Box 9235, Boston, Massachusetts 02205-9235. Those Trustees who are
"interested persons" by virtue of their affiliation with either the trust
or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (65), 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., Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD (54), Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX (63), 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 (63), 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 is a member of the President's Advisory Council of The
University of Vermont School of Business Administration.
RICHARD J. FLYNN (71), 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 Trustee of
College of the Holy Cross and Old Sturbridge Village, Inc, and he
previously served as a Director of Mechanics Bank (1971-1995).
E. BRADLEY JONES (6 8 ), Trustee (1990). Prior to his retirement in
1984, Mr. Jones was Chairman and Chief Executive Officer of LTV Steel
Company. He is a Director of TRW Inc. (original equipment and replacement
products), Cleveland-Cliffs Inc (mining), Consolidated Rail Corporation,
Birmingham Steel Corporation, and RPM, Inc. (manufacturer of chemical
products, 1990), and he previously served as a Director of NACCO
Industries, Inc. (mining and marketing, 1985-1995) and Hyster-Yale
Materials Handling, Inc. (1985-1995). In addition, he serves as a Trustee
of First Union Real Estate Investments, a Trustee and member of the
Executive Committee of the Cleveland Clinic Foundation, a Trustee and
member of the Executive Committee of University School (Cleveland), and a
Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (6 3 ), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial consultant.
From 1987 to January 1995, Mr. Kirk was a Professor at Columbia University
Graduate School of Business. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and he previously served as a Director of
Valuation Research Corp. (appraisals and valuations, 1993-1995). In
addition, he serves as Vice Chairman of the Board of Directors of the
National Arts Stabilization Fund, Vice Chairman of the Board of Trustees of
the Greenwich Hospital Association, and as a Member of the Public Oversight
Board of the American Institute of Certified Public Accountants' SEC
Practice Section (1995).
*PETER S. LYNCH (52), Trustee (1990) is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR 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) 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 (66), Trustee, 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), Commercial Intertech Corp. (water
treatment equipment, 1992), and Associated Estates Realty Corporation (a
real estate investment trust, 1993).
EDWARD H. MALONE (7 1 ), Trustee. 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 (62), 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 (6 7 ), 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., and AppleSouth,
Inc. (restaurants, 1992).
FRED L. HENNING, JR.(56), Vice President, is Vice President of Fidelity's
money market (1994) and fixed-income (1995) funds and Senior Vice President
of FMR Texas Inc.
LELAND BARRON (3 7 ), Vice President, is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
JOHN TODD (46), Vice President, is also Vice President of other funds
advised by FMR and an employee of FMR Texas Inc.
ARTHUR S. LORING (4 8 ), Secretary, is Senior Vice President (1993)
and General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER (48), Treasurer (1995), is Treasurer of the Fidelity
funds and is an employee of FMR (1995). Before joining FMR, Mr. Rathgeber
was a Vice President of Goldman Sachs & Co. (1978-1995), where he served in
various positions, including Vice President of Proprietary Accounting
(1988-1992), Global Co-Controller (1992-1994), and Chief Operations Officer
of Goldman Sachs (Asia) LLC (1994-1995).
THOMAS D. MAHER (50), 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). Prior to 1990, Mr. Maher was an
employee of FMR.
JOHN H. COSTELLO (49), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (49), Assistant Treasurer (1994), is an employee of FMR
(1994). Prior to becoming Assistant Treasurer of the Fidelity funds, Mr.
Rush was Chief Compliance Officer of FMR Corp. (1993-1994); Chief Financial
Officer of Fidelity Brokerage Services, Inc. (1990-1993); and Vice
President, Assistant Controller, and Director of the Accounting Department
- - First Boston Corp. (1986-1990).
The following table sets forth information describing the compensation of
each current trustee of each fund for his or her services as trustee for
the fiscal year ended July 31, 1995.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J. Gary Ralph Phyllis Richard Edward C. E. Donald Peter S. Gerald C. Edward Marvin Thomas
Burkhead** F. Cox Burke J. Flynn Johnson Bradley J. Kirk Lynch** McDonough H. L. Mann R.
Davis 3d** Jones Malone Williams
Money $ 0 $ 862 $ 823 $ 1,061 $ 0 $ 853 $ 863 $ 0 $ 854 $ 853 $ 852 $ 843
Market
U.S. 0 924 880 1,137 0 912 925 0 912 912 912 903
Treasury
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Trustees Pension or Estimated Annual Total
Retirement Benefits Upon Compensation
Benefits Accrued Retirement from from the Fund
as Part of Fund the Fund Complex*
Expenses from the Complex*
Fund Complex*
J. Gary Burkhead** $ 0 $ 0 $ 0
Ralph F. Cox 5,200 52,000 125,000
Phyllis Burke Davis 5,200 52,000 122,000
Richard J. Flynn 0 52,000 154,500
Edward C. Johnson 3d** 0 0 0
E. Bradley Jones 5,200 49,400 123,500
Donald J. Kirk 5,200 52,000 125,000
Peter S. Lynch** 0 0 0
Gerald C. McDonough 5,200 52,000 125,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 125,000
Thomas R. Williams 5,200 52,000 126,500
</TABLE>
* Information is as of December 31, 1994 for 206 funds in the complex.
** Interested trustees of the fund are compensated by FMR.
Under a retirement program adopted in July 1988, the non-interested
Trustees, upon reaching age 72, become eligible to participate in a
retirement program under which they receive payments during their lifetime
from a fund based on their basic trustee fees and length of service. The
obligation of a fund to make such payments are not secured or funded.
Trustees become eligible if, at the time of retirement, they have served on
the Board for at least five years. Currently, Messrs. Ralph S. Saul,
William R. Spaulding, Bertram H. Witham, and David L. Yunich, all former
non-interested Trustees, receive retirement benefits under the program.
On November 3, 1995 , the Trustees and officers of each class
owned, in the aggregate, less than 1 % of each class 's total
outstanding shares.
As of November 3, 1995 the following owned of record or beneficially
5% or more of outstanding shares of each class .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
U. S. Treasury Portfolio Bank of America (28.95%)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Texas Commerce Bank, N.A. (14.82%)
Money Market Portfolio NatWest Investor Services Corp. (5.10%)
</TABLE>
A shareholder owning of record or beneficially more than 25% of a fund's
outstanding shares may be considered a controlling person. That
shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other shareholders.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing each fund's investments,
compensates all officers of each fund and all Trustees who are "interested
persons" of the trust or of FMR, and all personnel of each 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 fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations and analyses on a variety of subjects
to the Trustees.
In addition to the management fee payable to FMR and the fees payable to
FIIOC and FSC, each fund, or class thereof, as applicable, pays all of its
expenses, without limitation, that are not assumed by those parties. Each
fund pays for the typesetting, printing and mailing of its proxy material
to shareholders, legal expenses, and the fees of the custodian, auditor and
non-interested Trustees. Although each fund's current management contract
provides that each fund will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices and reports to
shareholders, the trust, on behalf of each fund has entered into a revised
transfer agent agreement with FIIOC, pursuant to which FIIOC bears the cost
of providing these services to existing shareholders of the applicable
class. Other expenses paid by each fund include interest, taxes, brokerage
commissions, each fund's proportionate share of insurance premiums and
Investment Company Institute dues, and the costs of registering shares
under federal and state securities laws. Each fund is also liable for such
non-recurring expenses as may arise, including costs of any litigation to
which each fund may be a party, and any obligation it may have to indemnify
its officers and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated September
30, 1993 which were approved by shareholders on March 24, 1993.
For the services of FMR under each contract, each fund pays FMR a monthly
management fee at the annual rate of 0.50% of average net assets throughout
the month. Fees received by FMR for the last three fiscal years are shown
in the table below.
Fiscal Year Ended Management Fees Paid to FMR
U.S. Treasury Portfolio 1995 $ 9,784,211
1994 13,343,263
1993 14,208,606
Money Market Portfolio 1995 9,232,796
1994 7,553,008
1993 7,773,471
FMR may, from time to time, voluntarily reimburse all or a portion of each
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to be
repaid for these expense reimbursements in the amount that expenses fall
below the limit prior to the end of the fiscal year. Expense reimbursements
by FMR will increase each fund's total returns and yield and repayment of
the reimbursement by each fund will lower its total returns and yield.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that the fund'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 each fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investments in foreign securities.
SUB-ADVISER . FMR has entered into sub-advisory agreements with FMR
Texas pursuant to which FMR Texas has primary responsibility for providing
portfolio investment management services to each fund. Under the
sub-advisory agreements, each dated September 30, 1993 , which were
approved by shareholders on March 24, 1993 , FMR pays FMR Texas fees
equal to 50% of the management fee payable to FMR under its management
contract with each fund, after payments by FMR pursuant to each fund's
12b-1 plan, if any. 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 following table shows fees FMR paid to FMR Texas on
behalf of each fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1995 1994 1993
U.S. Treasury Portfolio $ 1,886,692 $ 2,367,209 $ 2,400,702
Money Market Portfolio 2,556,301 1,884,963 1,726,876
</TABLE>
CONTRACTS WITH FMR AFFILIATES
FIIOC is transfer, dividend disbursing, and shareholder servicing agent for
the funds. FIIOC receives an annual account fee and an asset-based fee
based on account size. With respect to certain retirement accounts, FIIOC
receives asset-based fees only. With respect to certain other retirement
accounts, FIIOC receives annual account fees and asset-based fees based on
fund type.
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.
FSC performs the calculations necessary to determine NAV and dividends for
the Initial Class of each fund, and maintains each fund's accounting
records. The annual fee rates for these pricing and bookkeeping services
are based on a fund's average 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 FSC for the past
three fiscal years were as follows:
Pricing and Bookkeeping Fees
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 1993
U.S. Treasury Portfolio $ 196,883 $ 250,737 $ 263,327
Money Market Portfolio 188,697 163,480 167,470
</TABLE>
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at NAV. Promotional and administrative expenses in connection with
the offer and sale of shares are paid by F MR .
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved a Distribution and Service Plan on behalf of the
Initial Class of each fund (the Plans) 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
primarily intended to result in the sale of shares of a fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow the Initial Class of the funds
and FMR to incur certain expenses that might be considered to constitute
indirect payment by the funds of distribution expenses.
Under each Plan, if the payment of management fees by the funds to FMR
is deemed to be indirect financing by the funds of the distribution of
their shares, such payment is authorized by the Plans. Each Plan
specifically recognizes that FMR may use its management fee revenue, as
well as its past profits, or other resources from any other source to
reimburse FDC for payments made to third parties that assist in selling
Initial Class shares of each fund, or to third parties, including banks,
that render shareholder support services.
Under the Initial Class Plans, payments made by FMR to FDC during the
fiscal year ended July 31, 1995 were $4,120,195 for Money Market Portfolio
and $6,010,828 for U.S. Treasury Portfolio.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of each Plan, and have
determined that there is a reasonable likelihood that the Plan will benefit
each fund and its shareholders. In particular, the Trustees noted that each
Plan does not authorize payments by the Initial Class of each fund other
than those made to FMR under its management contract with the fund. To the
extent that each plan gives FMR and FDC greater flexibility in connection
with the distribution of shares of the applicable class of each fund,
additional sales of fund shares may result. Furthermore, certain
shareholders support services may be provided more effectively under the
Plans by local entities with whom shareholders have other relationships.
Each Plan was approved by Initial Class shareholders on March 24, 1993.
Each Plan was approved by shareholders, in connection with a reorganization
transaction on September 29, 1993, pursuant to an Agreement and Plan of
Conversion.
Each Plan allows FDC to make payments to certain third parties with whom
FDC has entered into written Service Contracts and who assist or have
assisted in selling Initial Class shares of the fund or who provide
shareholder support services (investment professionals), for assistance in
selling Initial Class shares of the fund or for providing shareholder
support services. Each Plan authorizes FMR to make payments from its
management fee, its past profits or any other source available to it, to
reimburse FDC for these payments to investment professionals, provided that
such payments cannot exceed the amount of the management fee. The maximum
amount payable to investment professionals under each Plan, as determined
by the Board of Trustees, is currently at the annual rate of 0.38% of the
average net asset value of the applicable class for shareholder support or
distribution services.
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 by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC 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 funds
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.
Each fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plans.
No preference for the instruments of such depository institutions will be
shown in the selection of investments.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Money Market Portfolio and U.S. Treasury Portfolio are
funds of Daily Money Fund, an open-end management investment company
organized as a Delaware business trust on September 29 , 1993. The
funds acquired all of the assets of Money Market Portfolio and U.S.
Treasury Portfolio, respectively, on September 29, 1993 .
Currently, there are six funds of Daily Money Fund: U.S. Treasury
Portfolio; Money Market Portfolio; Treasury Only; 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 funds.
In the event that FMR ceases to be the investment adviser to a fund, the
right of the trust or fund to use the identifying name "Fidelity" may be
withdrawn. There is a remote possibility that one fund might become liable
for any misstatement in its prospectus or statement of additional
information about another fund.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust 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 trust and requires
that a disclaimer be given in each contract entered into or executed by the
trust or the Trustees. The Trust Instrument provides for indemnification
out of each fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund. The Trust Instrument
also provides that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
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 fund 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 trust 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. Claims
asserted against one class of shares may subject holders of another class
of shares to certain liabilities.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. Initial Class 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
trust, a fund or a class may, as set forth in the Trust Instrument, call
meetings of the trust, fund, or class for any purpose related to the trust,
fund or class, as the case may be, including, in the case of a meeting of
the entire trust, the purpose of voting on removal of one or more Trustees.
The trust or any fund 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 trust or the fund; however, the Trustees may,
without prior shareholder approval, change the form of organization of the
trust by merger, consolidation, or incorporation. If not so terminated or
reorganized, the trust and its funds 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 trust 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 trust registration
statement. Each fund may invest all of its assets in another investment
company.
CUSTODIAN. The Bank of New York, 48 Wall Street, New York,
New York 10260, is custodian of the assets of each fund. The custodian is
responsible for the safekeeping of a fund's assets and the appointment of
the subcustodian banks and clearing agencies. The custodian takes no part
in determining the investment policies of a fund or in deciding which
securities are purchased or sold by a fund. However, a fund may invest in
obligations of the custodian and may purchase securities from or sell
securities to the custodian. Chemical Bank, headquartered in New York, also
may serve as a special purpose custodian of certain assets in connection
with pooled repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain 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 L.L.P., 1999 Bryan Street, Dallas, TX 75201,
serves as the funds' independent accountant. The auditor examines
financial statements for the funds and provides other audit, tax, and
related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended July 31, 1995 are included in the fund's Annual Report, which is
a separate report supplied with this SAI. Each fund's financial statements
and financial highlights are incorporated herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the
funds. The funds 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 COMMERCIAL PAPER RATINGS:
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. Earning 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 alternate
liquidity is maintained.
Issuers rated PRIME-3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes
in the level of debt protection measurements and the requirement for
relatively high financial leverage. Adequate alternate liquidity is
maintained.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S COMMERCIAL PAPER RATINGS:
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.
A-3 - This designation indicates that the capacity for timely payment is
satisfactory. These issues are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the
higher designations.
CAPITAL RESERVES: MONEY MARKET PORTFOLIO, U.S. GOVERNMENT PORTFOLIO,
AND MUNICIPAL MONEY MARKET PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A Item Number
Part A Prospectus Caption
1 Cover Page
2 Expenses
3 a,b Financial Highlights
c *
d Financial Highlights
4 a(i) Charter
(ii) Investment Principles and Risks; Securities and Investment
Practices; Fundamental Investment Policies and Restrictions
b Securities and Investment Practices
c Who May Want To Invest; Investment Principals and Risks; Securities and
Investment Practices
5 a,b(i) Charter
(ii) FMR and Its Affiliates; Charter; Breakdown of Expenses
(iii) Expenses; Breakdown of Expenses
c,d FMR and Its Affiliates
e FMR and Its Affiliates; Breakdown of Expenses; Other Expenses
f Expenses
g Expenses; FMR and Its Affiliates
5A *
6 a(i) Charter
(ii) How to Buy Shares; How to Sell Shares; Investor Services;
Transaction Details; Exchange Restrictions
(iii) *
b FMR and Its Affiliates
c Charter
d *
e Cover Page; How to Buy Shares; How to Sell Shares; Investor Services;
Exchange Restrictions
f,g Dividends, Capital Gains, and Taxes
7 a Charter; Cover Page
b How to Buy Shares; Transaction Details
c *
d How to Buy Shares
e Transaction Details; Breakdown of Expenses
f Breakdown of Expenses; Other Expenses
8 How to Sell Shares; Investor Services; Transaction Details; Exchange
Restrictions
9 *
*Not Applicable
CAPITAL RESERVES:
MONEY MARKET PORTFOLIO
U.S. GOVERNMENT PORTFOLIO
MUNICIPAL MONEY MARKET PORTFOLIO
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy of
each fund's most recent financial report and portfolio listing or a copy of
the Statement of Additional Information (SAI) dated December 1, 1995. The
SAI has been filed with the Securities and Exchange Commission (SEC) and is
incorporated herein by reference (legally forms a part of the prospectus).
For a free copy of either document, call Fidelity Client Services at
1-800-843-3001 or your investment professional.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT A FUND WILL MAINTAIN A
STABLE $1.00 SHARE PRICE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL AMOUNT INVESTED.
LIKE ALL MUTUAL FUNDS, 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.
CAPR-pro-1295
Funds of Daily Money Fund
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.
Municipal Money Market Portfolio seeks 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.
PROSPECTUS
DECEMBER 1, 1995(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Each fund's yearly operating expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's
financial data.
PERFORMANCE
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's
overall approach to investing.
BREAKDOWN OF EXPENSES How operating costs
are calculated and what they include.
YOUR ACCOUNT TYPES OF ACCOUNTS Different ways to set up your
account, including tax-sheltered retirement plans.
HOW TO BUY SHARES Opening an account and
making additional investments.
HOW TO SELL SHARES Taking money out and closing
your account.
INVESTOR SERVICES Services to help you manage
your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND TAXES
ACCOUNT POLICIES
TRANSACTION DETAILS Share price calculations and
the timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Each fund offers individual and institutional investors a convenient way to
invest in professionally managed portfolios of money market instruments.
Each fund is designed for those investors who would like to earn current
income (tax-free income in the case of Municipal Money Market Portfolio)
while preserving the value of their investment.
The rate of income will vary from day to day, generally reflecting
short-term interest rates.
Each fund is managed to keep its share price stable at $1.00. U.S.
Government Portfolio offers an added measure of safety with its focus on
U.S. Government securities.
None of the funds constitutes a balanced investment plan. However, because
they emphasize stability, they could be well-suited for a portion of your
savings. Each fund offers free checkwriting to give you easy access to your
money.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and None
reinvested distributions
Maximum deferred sales None
charge
Redemption fee None
Exchange fee None
ANNUAL OPERATING EXPENSES are paid out of each fund's assets. Each fund
pays a management fee to Fidelity Management & Research Company (FMR). Each
fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and financial
reports.
12b-1 fees are paid by each fund to the distributor for services and
expenses in connection with the distribution of each fund's shares.
Long-term shareholders may pay more than the economic equivalent of the
maximum sales charges permitted by the National Association of Securities
Dealers, Inc., due to 12b-1 fees.
Each fund's expenses are factored into its share price or dividends and are
not charged directly to shareholder accounts (see "Breakdown of Expenses"
on page ).
The following are projections based on historical expenses of each fund and
are calculated as a percentage of average net assets of each fund.
Money U.S. Municipal
Market Govern Money
Portfoli ment Market
o Portfoli Portfolio
o
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Management Fee 0.33 0.39 % 0.33 %
(after reimbursement) %
12b-1 fee 0 .35 0 .35% 0 .35%
(Distribution Fee) %
Other expenses 0.31 0.25 % 0.31 %
%
Total operating 0.99 0.99 % 0.99 %
expenses %
</TABLE>
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment, assuming a 5% annual return and full redemption at the end of
each time period:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 3 5 10
Year Years Years Years
Money Market Portfolio $ 10 $ 32 $ 55 $ 12
1
U.S. Government Portfolio $ 10 $ 32 $ 55 $ 12
1
Municipal Money Market Portfolio $ 10 $ 32 $ 55 $ 12
1
</TABLE>
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY.
FMR has voluntarily agreed to reimburse each fund to the extent that total
operating expenses (excluding interest, taxes, brokerage commissions and
extraordinary expenses) are in excess of 0 .99% of its average net
assets. If these agreements were not in effect, the management fees and
total operating expenses of each fund would have been the following
amounts, as a percentage of average net assets, 0.50 % and
1.16 % for Money Market Portfolio, 0.50 % and 1.10 % for
U.S. Government Portfolio, and 0.50 % and 1.16 % for Municipal
Money Market Portfolio.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow and each fund's financial
statements are included in the funds' Annual Report and have been audited
by Coopers & Lybrand L.L.P. , independent accountants. Their reports
on the financial statements and financial highlights are included in the
Annual Report. The financial statements, the financial highlights, and the
reports are incorporated by reference into the funds' SAI, which may be
obtained free of charge from National Financial Services Corporation
(NFSC).
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Fiscal years ended July 31 1995 1994 1993 1992 1991A
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations .048 .027 .025 .041 .047
Net interest income
Less Distributions (.048) (.027) (.025) (.041) (.047)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total return B 4.86 2.72 2.57 4.13 4.79
% % % % %
Net assets, end of period (000 omitted) $ 975,97 $ 680,14 $ 601,49 $ 354,18 $ 108,991
5 9 8 9
Ratio of expenses to average net assets .99 .98 .95 .82 .83
% % % % %C
Ratio of expenses to average net assets before expense reductions 1.16 1.12 1.14 1.17 1.25
% % % % %C
Ratio of net interest income to average net assets 4.80 2.70 2.52 3.81 5.71
% % % % %C
</TABLE>
A OCTOBER 23,1990 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1991
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
C ANNUALIZED
U.S. GOVERNMENT PORTFOLIO
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Fiscal years ended July 31 1995 1994 1993 1992 1991A
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations .045 .025 .024 .041 .046
Net interest income
Less Distributions (.045) (.025) (.024) (.041) (.046)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total return B 4.64 2.52 2.40 4.15 4.66
% % % % %
Net assets, end of period (000 omitted) $ 201,96 $ 306,26 $ 264,48 $ 308,54 $ 80,762
5 1 3 2
Ratio of expenses to average net assets .99 .98 .95 .65 .70
% % % % %C
Ratio of expenses to average net assets before expense reductions 1.10 1.03 1.07 1.14 1.27
% % % % %C
Ratio of net interest income to average net assets 4.41 2.50 2.39 3.82 5.65
% % % % %C
</TABLE>
A OCTOBER 23,1990 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1991
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
C ANNUALIZED
MUNICIPAL MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Fiscal years ended July 31 1995 1994 1993 1992 1991A
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations .029 .018 .019 .031 .028
Net interest income
Less Distributions (.029) (.018) (.019) (.031) (.028)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total return B 2.94 1.80 1.96 3.14 2.82
% % % % %
Net assets, end of period (000 omitted) $ 123,81 $ 116,497 $ 116,274 $ 68,497 $ 19,578
9
Ratio of expenses to average net assets .99 .98 .95 .95 .95
% % % % %C
Ratio of expenses to average net assets before expense reductions 1.16 1.04 1.23 1.40 2.63
% % % % %C
Ratio of net interest income to average net assets 2.89 1.78 1.92 2.89 3.97
% % % % %C
</TABLE>
A NOVEMBER 29, 1990 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1991
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
C ANNUALIZED
PERFORMANCE
Money market fund performance can be measured as TOTAL RETURN or YIELD.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a yield
assumes that income earned is reinvested, it is called an EFFECTIVE YIELD.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn before
taxes to equal a tax-free yield.
SEVEN-DAY YIELD illustrates the income earned by an investment in a money
market fund over a recent seven-day period. Since money market funds
maintain a stable $1.00 share price, current seven-day yields are the most
common illustration of money market fund performance.
The funds' performance, and holdings are detailed twice a year in financial
reports, which are sent to all shareholders.
For current performance call Fidelity Client Services at 1-800-843-3001.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. Each fund is a diversified fund of
Daily Money Fund, an open-end management investment company organized as a
Delaware business trust on September 29, 1993.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent will mail proxy materials in advance, including a voting
card and information about the proposals to be voted on. You are entitled
to one vote for each share you own.
FMR AND ITS AFFILIATES
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, Massachusetts 02109. It includes a number
of different subsidiaries and divisions which provide a variety of
financial services and products. The funds employ various Fidelity
companies to perform activities required for their operation.
The funds are managed by FMR, which handles their business affairs. FMR
Texas, Inc. (FMR Texas), located in Irving, Texas, has primary
responsibility for providing investment management services.
As of September 30 , 1995, FMR advised funds having approximately
22 million shareholder accounts with a total value of more than
$ 335 billion.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
NFSC distributes and markets Fidelity's funds and services. Fidelity
Investments Institutional Operations Company (FIIOC) performs transfer
agent servicing functions for the funds.
FMR Corp. is the ultimate parent company of FMR and FMR Texas. Members of
the Edward C. Johnson 3d family are the predominant owners of a class of
shares of common stock representing approximately 49% of the voting power
of FMR Corp. Under the Investment Company Act of 1940 (the 1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
UMB Bank, n.a. (UMB) is Municipal Money Market Portfolio's transfer agent,
although it employs FIIOC to perform these functions for the fund. UMB is
located at 1010 Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
MONEY MARKET PORTFOLIO invests in high quality, short-term U.S.
dollar - denominated obligations of domestic and foreign issuers.
Under normal conditions, the fund will invest more than 25% of its total
assets in obligations of companies in the financial services industry.
U.S. GOVERNMENT PORTFOLIO invests only in obligations issued or guaranteed
as to principal and interest by the U.S. Government, including U.S.
Treasury bills, notes, and bonds , and obligations issued by U.S.
Government agencies or instrumentalities that are backed by the full faith
and credit of the United States. The fund may also engage in repurchase
agreements for these obligations.
MUNICIPAL MONEY MARKET PORTFOLIO invests in high-quality, short-term
municipal obligations, whose interest payments are exempt from federal
income tax. Under normal conditions, the fund will invest so that at least
80% of its income is exempt from federal income tax. The fund may also
invest up to 100% of its total assets in municipal obligations that are
subject to the federal alternative minimum tax.
FMR normally invests Municipal Money Market Portfolio's assets according to
its investment strategy and does not expect to invest in federally taxable
obligations. The fund 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.
COMMON POLICIES
When you sell your shares of the funds, they should be worth the same
amount as when you bought them. Of course , there is no guarantee
that the funds will maintain a stable $1.00 share price. The funds follow
industry-standard guidelines on the quality and maturity of their
investments, which are designed to help maintain a stable $1.00 share
price. The funds will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities they buy. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a
default on the funds' investments could cause their share prices (and the
value of your investment) to change.
If you are subject to the federal alternative minimum tax, you should note
that Municipal Money Market Portfolio may invest all of its assets in
municipal securities issued to finance private activities. The interest
from these investments is a tax-preference item for purposes of the tax.
The funds earn income at current money market rates. Each fund stresses
preservation of capital, liquidity, and income (tax-free income in
the case of Municipal Money Market Portfolio), and do not seek the higher
yields or capital appreciation that more aggressive investments may
provide. Each fund's yield will vary from day to day and generally reflects
current short-term interest rates and other market conditions. It is
important to note that neither the funds nor their yields are guaranteed by
the U.S. Government.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of each fund's limitations and more detailed information
about each fund's investments are contained in the funds' SAI. Policies and
limitations are considered at the time of purchase; the sale of instruments
is not required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Current holdings are described in each fund's financial reports, which are
sent to shareholders twice a year. For a free SAI or financial report, call
Fidelity Client Services at 1-800-843-3001 or your investment professional.
MONEY MARKET SECURITIES are high-quality, short-term obligations issued by
the U.S. Government, corporations, financial institutions, municipalities,
local and state governments, and other entities. These obligations may
carry fixed, variable, or floating interest rates. Some money market
securities employ a trust or other similar structure to modify the
maturity, price characteristics, or quality of financial assets so that
they are eligible investments for money market funds. A security's credit
may be enhanced by a bank, insurance company, or other entity. If the
structure does not perform as intended, adverse tax or investment
consequences may result.
U.S. GOVERNMENT MONEY MARKET SECURITIES are short-term debt obligations
issued or guaranteed by the U.S. Treasury or by an agency or
instrumentality of the U.S. Government. Not all U.S. Government securities
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 instrumentality's right
to borrow money from the U.S. Treasury under certain circumstances.
However, securities issued by the Financing Corporation are supported only
by the credit of the entity that issued them.
MUNICIPAL SECURITIES are issued to raise money for a variety of public or
private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities. They
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. The value of some or all municipal
securities may be affected by uncertainties in the municipal market related
to legislation or litigation involving the taxation of municipal securities
or the rights of municipal securities holders. A fund may own a municipal
security directly or through a participation interest.
FOREIGN SECURITIES may involve different risks than domestic securities,
including risks relating to the political and economic conditions of the
foreign country involved, which could affect the payment of principal or
interest. Issuers of foreign securities include foreign governments,
corporations, and banks.
ASSET-BACKED SECURITIES 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.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a benchmark
rate changes. These interest rate adjustments are designed to help
stabilize the security's price.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other money market
securities, although they may be more volatile.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another party
in return for cash. This could increase the risk of fluctuation in the
fund's yield or in the market value of its assets.
OTHER MONEY MARKET SECURITIES may include commercial paper, certificates of
deposit, bankers' acceptances, and time deposits.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
OTHER MUNICIPAL SECURITIES may include obligations of U.S. territories and
possessions such as Guam, the Virgin Islands, and Puerto Rico, and their
political subdivisions and public corporations.
PUT FEATURES entitle the holder to put (sell back) a security to the issuer
or a financial intermediary. In exchange for this benefit, a fund may pay
periodic fees or accept a lower interest rate. The credit quality of the
investment may be affected by the creditworthiness of the put provider.
Demand features, standby commitments, and tender options are types of put
features.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities, and some other securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its net assets would be invested in illiquid securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect the market value of a fund's assets.
FINANCIAL SERVICES INDUSTRY. Companies in the financial services industry
are subject to various risks related to that industry, such as government
regulation, changes in interest rates, and exposure on loans, including
loans to foreign borrowers. If a fund invests substantially in this
industry, its performance may be affected by conditions affecting the
industry.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry, or type of
project. Economic, business, or political changes can affect all securities
of a similar type.
RESTRICTIONS: Money Market Portfolio may not invest more than 5% of its
total assets in any one issuer, except that the fund may invest up to 25%
of its total assets in the highest quality securities of a single issuer
for up to three business days.
With respect to 75% of its total assets, Municipal Money Market Portfolio
may not purchase a security if, as a result, more than 5% would be invested
in the securities of a single issuer. The fund may invest more than 25% of
its total assets in tax-free securities that finance similar types of
projects.
These limitations do not apply to U.S. Government securities.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements, and may make additional
investments while borrowings are outstanding.
RESTRICTIONS: Money Market Portfolio and U.S. Government Portfolio may
borrow only for temporary or emergency purposes, or engage in reverse
repurchase agreements, but not in an amount exceeding 331/3% of its total
assets. Municipal Money Market Portfolio may borrow only for temporary or
emergency purposes, but not in an amount exceeding 331/3% of its total
assets.
LENDING. The funds may lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a fund's
total assets. U.S. Government Portfolio and Municipal Money Market
Portfolio do not intend to engage in lending.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
Money Market Portfolio seeks as high a level of current income as is
consistent with the preservation of capital and liquidity by investing in
money market instruments. Under normal conditions, the fund will invest
more than 25% of its total assets in obligations of companies in the
financial services industry.
U.S. Government Portfolio seeks 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 seeks 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. Under normal
conditions, the fund will invest so that at least 80% of its income is
exempt from federal income tax.
With respect to 75% of its total assets, Municipal Money Market
Portfolio may not purchase a security if, as a result, more than 5% would
be invested in the securities of a single issuer.
Money Market Portfolio and U.S. Government Portfolio may borrow only for
temporary or emergency purposes, or engage in reverse repurchase
agreements, but not in an amount exceeding 331/3% of its total assets.
Municipal Money Market Portfolio may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each fund's assets are reflected in that
fund's share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services. Each fund also pays OTHER EXPENSES, which
are explained below.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Each fund
pays the fee at the annual rate of 0.50% of its average net assets.
FMR HAS SUB ADVISORY AGREEMENTS with FMR Texas, which has primary
responsibility for providing investment management for each fund, while FMR
retains responsibility for providing each fund with other management
services. For these services, FMR pays FMR Texas 50% of each fund's
management fee (before expense reimbursements but after payments made by
FMR pursuant to each fund's Distribution and Service Plan). FMR paid FMR
Texas 0.13% of Money Market Portfolio's, 0.13% of U.S.
Government Portfolio's, and 0.12 % of Municipal Money Market
Portfolio's average net assets for the fiscal year ended July 31,
1995.
OTHER EXPENSES
While the management fee is a significant component of each fund's annual
operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing and shareholder
servicing functions for Money Market Portfolio and U.S. Government
Portfolio. Fidelity Service Co. (FSC) calculates the NAV and dividends for
Money Market Portfolio and U.S. Government Portfolio, and maintains
the general accounting records for Money Market Portfolio and U.S.
Government Portfolio.
In the fiscal y ear ended July 31, 1995, Money Market
Portfolio and U.S. Government Portfolio paid FIIOC fees equal to
0.24 % and 0.15 %, respectively, of its average net assets; and
Money Market Portfolio and U.S. Government Portfolio paid FSC fees equal to
0.01 % and 0.02 %, respectively, of its average net
assets.
UMB has entered into sub-arrangements pursuant to which FIIOC performs
transfer agency, dividend disbursing and shareholder services for Municipal
Money Market Portfolio. UMB has entered into sub-arrangements pursuant to
which FSC calculates the NAV and dividends for Municipal Money Market
Portfolio, and maintains the fund's general accounting records. All of the
fees are paid to FIIOC and FSC by UMB, which is reimbursed by Municipal
Money Market Portfolio for such payments.
In the fiscal year ended July 31, 1995, fees paid by UMB to
FIIOC on behalf of Municipal Money Market Portfolio amounted to
0.13 % of its average net assets. In the fiscal year ended
July 31, 1995, fees paid by UMB to FSC on behalf of Municipal Money
Market Portfolio amounted to 0.02 % of its average net assets.
Each fund has adopted a DISTRIBUTION AND SERVICE PLAN. Under the Plan, each
fund is authorized to pay NFSC a monthly distribution fee as compensation
for its services and expenses in connection with the distribution of shares
of each fund, and providing personal service to and/or maintenance of
shareholder accounts. Each fund pays NFSC a monthly
distribution fee at an annual rate of 0.35% of its average net
assets throughout the month.
NFSC may pay all or a portion of the distribution fee to investment
professionals that have selling agreements with the funds (qualified
recipients) as compensation for distribution services and ongoing
shareholder support services. NFSC may act in the capacity of a qualified
recipient, and as such may receive compensation under the Plan.
The Plan specifically recognizes that FMR may make payments from its
management fee revenue, past profits or other resources to qualified
recipients for services in connection with sales of fund shares or
shareholder support. The Board of Trustees has authorized such
payments. FMR may pay up to 0.25% of a fund's average net assets
throughout the month based upon the level of shareholder support and
distribution services provided.
NFSC will, at its own expense, provide promotional incentives to
qualified recipients who support the sale of fund shares. In some
instances, these incentives will be offered only to certain types of
qualified recipients, such as those qualified recipients whose
representatives provide services in connection with the sale or expected
sale of significant amounts of shares.
Each fund also pays other expenses, such as legal, audit, and custodian
fees; in some instances, proxy solicitation costs; and the compensation of
trustees who are not affiliated with Fidelity.
YOUR ACCOUNT
TYPES OF ACCOUNTS
If you are investing through a securities dealer, financial or other
institution ( investment professional ), contact that investment
professional directly. Certain features of a fund may be modified when
it is made available through a program of services offered by an
investment professional, and administrative charges (in addition to
payments the investment professional may receive pursuant to the
Distribution and Service Plan) may be imposed for the services rendered.
The different ways to set up (register) your account with Fidelity are
listed on the right .
The account guidelines that follow may not apply to certain funds or to
certain retirement accounts. For instance, Municipal Money Market Portfolio
is not available for purchase in retirement accounts. If your employer
offers a fund through a retirement program, contact your employer for more
information. Otherwise call Fidelity Client Services or your
investment professional directly.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT (THE FOLLOWING OPTIONS ARE AVAILABLE ONLY FOR MONEY MARKET
PORTFOLIO AND U.S. GOVERNMENT PORTFOLIO)
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal
age under 701/2 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(solid bullet) 401(K) PLANS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA). Contact your investment
professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called NAV, is calculated every business day. The
funds are managed to keep share prices stable at $1.00.
Shares are purchased at the next NAV calculated after your order is
received and accepted by the transfer agent. NAV is normally calculated at
2:00 p.m. and 4:00 p.m. Eastern time for Money Market Portfolio and U.S.
Government Portfolio, and 12:00 noon and 4:00 p.m. Eastern time for
Municipal Money Market Portfolio.
It is the responsibility of your investment professional to submit your
order to purchase shares for you to receive the next determined NAV.
Shareholders of record as of 2:00 p.m. (12:00 noon for Municipal Money
Market Portfolio) Eastern time will be entitled to dividends declared that
day.
Shares purchased after 2:00 p.m. (12:00 noon for Municipal Money Market
Portfolio) Eastern time begin to earn income dividends on the following
business day.
Share certificates are not available for the funds.
IF YOU ARE NEW TO FIDELITY, an initial investment must be preceded or
accompanied by a completed, signed application, which should be forwarded
to:
Fidelity Client Services
Capital Reserves
FIIOC
P.O. Box 1182
Boston, MA 02103-1182
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Place a purchase order and w ire money into your
account,
(small solid bullet) Open your account by exchanging from another Fidelity
fund, or
(small solid bullet) Contact your investment professional.
BY MAIL. You or your investment professional must send a check payable
to the fund in which you plan to invest. When making subsequent investments
by check, please write your fund account number on the check. All
investments by check should be sent to the above address.
BY WIRE . For wiring information and instructions, you should call
the investment professional through which you trade or if you trade
directly through Fidelity, call Fidelity Client Services . There is
no fee imposed by the funds for wire purchases. However, if you buy shares
through a n investment professional, the investment
professional may impose a fee for wire pur chases .
Fidelity Client Services:
Nationwide 1-800-843-3001
Your wire must be received by the transfer agent in good order at the
applicable fund's designated wire bank before the close of the Federal
Reserve Wire System on the day of purchase.
You are advised to wire funds as early in the day as possible, and to
provide advance notice to Fidelity Client Services for large purchases.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $1,000
TO ADD TO AN ACCOUNT $250
MINIMUM BALANCE $500
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next NAV calculated after your order is received and accepted by the
transfer agent. NAV is normally calculated at 2:00 p.m. and 4:00 p.m.
Eastern time for Money Market Portfolio and U.S. Government Portfolio and
12:00 noon and 4:00 p.m. Eastern time for Municipal Money Market Portfolio.
TO SELL SHARES IN AN ACCOUNT, you may use any of the methods described on
these two pages.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, please leave at
least $500 worth of shares in the account to keep it open.
It is the responsibility of your investment professional to submit your
order to redeem shares for you to receive the next determined NAV.
BY TELEPHONE. Redemption requests may be made by calling Fidelity Client
Services at the phone number listed on page .
BY MAIL. Send a letter of instruction with signature guarantee(s) to the
address given on page . The letter should specify the name of the fund, the
number of shares to be sold, name, account numbers, address, and should
include the additional requirements listed on the right that apply
to each particular account.
<TABLE>
<CAPTION>
<S> <C>
TYPE OF REGISTRATION REQUIREMENTS
Individual, Joint Tenants, Letter of instruction signed by all person(s)
Sole Proprietorship, Custodial, (Uniform Gifts or required to sign for the account exactly as it is
Transfers to Minors Act), General Partners registered, accompanied by 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>
If you do not fall into any of these registration categories (i.e.,
executors, administrators, conservators, or guard ians) you should call
Fidelity Client Services or your investment professional for further
instructions.
BY WIRE. Redemptions may be made by calling Fidelity Client
Services:
Nationwide 1- 800-843-3001
You must designate on your account application the U.S. commercial bank
account(s) into which you wish the redemption proceeds to be deposited.
Fidelity Client Services will then notify you that this feature has been
activated and that you may request wire redemptions.
You may change the bank account(s) designated to receive redemption
proceeds at any time prior to making a redemption request. You should send
a letter of instruction, including a signature guarantee, to Fidelity
Client Services at the address shown on page .
You should be able to obtain a signature guarantee from a bank, broker,
dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency, or savings association. A notary public
cannot provide a signature guarantee.
There is no fee imposed by the funds for wiring of redemption proceeds.
However, if you sell shares through a n investment
professional, the investment professional may impose a fee for wire
redemptions.
Redemption proceeds will be wired via the Federal Reserve Wire System to
your bank account of record. If your redemption request is received
by the transfer agent before 2:00 p.m. Eastern time (12:00 noon
Eastern time for redemptions from Municipal Money Market Portfolio),
redemption proceeds will normally be wired on that day . If your
redemption request is received by the transfer agent after 2:00 p.m.
Eastern time, redemption proceeds will normally be wired on the following
business day.
A fund reserves the right to take up to seven days to pay you if making
immediate payment would adversely affect the fund.
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. The minimum amount for a check is $500. Do not, however, try to
close out your account by check.
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available Monday through Friday,
8:30 a.m. to 6 :00 p.m. Eastern time. Whenever you call, you can
speak with someone equipped to provide the information or service you need.
STATEMENTS AND REPORTS that the transfer agent sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction,
except a reinvestment, that affects your account balance or your account
registration)
(small solid bullet) Account statements (monthly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed,
even if you have more than one account in a fund. Call Fidelity Client
Services at 1-800-843-3001 or contact your investment professional
if you need additional copies of financial reports or historical
account information.
SUB-ACCOUNTING AND SPECIAL SERVICES. Special processing has been arranged
with FIIOC for institutions that wish to open multiple accounts (a master
account and sub-accounts). You may be required to enter into a separate
agreement with FIIOC. Charges for these services, if any, will be
determined based on the level of services to be rendered.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains, if any, to shareholders each year. Income dividends are
declared daily and paid monthly.
Income dividends declared are accrued daily throughout the month and are
normally distributed on the first business day of the following month.
Based on prior approval of each fund, dividends relating to shares redeemed
during the month can be distributed on the day of redemption. Each fund
reserves the right to limit this service. Shareholders may elect to receive
dividend distributions in cash.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. The funds offer two options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned this
option.
2. CASH OPTION. You will be sent a check for your dividend and
capital gain distributions, if any.
For retirement accounts, all distributions are automatically reinvested.
When you are over 59 1/2 years old, you can receive distributions in cash.
Dividends will be reinvested at each fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the NAV as
of the record date of the distribution. The mailing of distribution checks
will begin within seven days.
TAXES
As with any investment, you should consider how an investment in the funds
could affect you. Below are some of the funds' tax implications. If your
account is not a tax-deferred retirement account, be aware of these tax
implications.
TAXES ON DISTRIBUTIONS. Interest income that Municipal Money Market
Portfolio earns is distributed to shareholders as income dividends.
Interest that is federally tax-free remains tax-free when it is
distributed. Distributions from Money Market Portfolio and U.S. Government
Portfolio, however, are subject to federal income tax and may also be
subject to state or local taxes. If you live outside the United States,
your distributions from these funds could also be taxed by the country in
which you reside.
For federal tax purposes, Money Market Portfolio's and U.S. Government
Portfolio's income and short-term capital gain distributions are taxed as
dividends; long-term capital gain distributions, if any, are taxed as
long-term capital gains.
However, for shareholders of Municipal Money Market Portfolio, gain on the
sale of tax-free bonds results in taxable distributions. Short-term capital
gains and a portion of the gain on bonds purchased at a discount are taxed
as dividends; long-term capital gain distributions, if any, are taxed as
long-term capital gains.
Mutual fund dividends from U.S. Government securities are generally 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 the benefit. In
addition, some states may impose intangible property taxes. You should
consult your own tax adviser for details and up-to-date information on the
tax laws in your state.
During the fiscal year ended July 31, 1995, 27 % of
U.S. Government Portfolio's and 1% of Money Market Portfolio's
income distributions w ere derived from interest on U.S.
Government securities which is generally exempt from state income tax.
Distributions are taxable when they are paid, whether you take them in cash
or reinvest them. However, distributions declared in December and paid in
January are taxable as if they were paid on December 31.
Every January, the transfer agent will send you and the IRS a statement
showing the taxable distributions paid to you in the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Municipal Money Market Portfolio may invest up to
100% of its assets in these securities. Individuals who are subject to the
tax must report this interest on their tax returns.
A portion of Municipal Money Market Portfolio's dividends may be free from
state or local taxes. Income from investments in your state are often
tax-free to you. Each year, the transfer agent will send you a breakdown of
Municipal Money Market Portfolio's income from each state to help you
calculate your taxes.
During the fiscal year ended July 31, 1995, 100 % of
Municipal Money Market Portfolio's income dividends was free from federal
income tax. And during the fiscal year ended July 31, 1995 ,
79 % of Municipal Money Market Portfolio's income dividends was
subject to the federal alternative minimum tax.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
EACH FUND IS OPEN FOR BUSINESS and its NAV is normally calculated each day
that both the Federal Reserve Bank of New York (New York Fed) (for Money
Market Portfolio and U.S. Government Portfolio) or the Federal Reserve Bank
of Kansas City (Kansas City Fed) (for Municipal Money Market Portfolio) and
the New York Stock Exchange (NYSE) are open. The following holiday closings
have been scheduled for 1996: New Year's Day, Martin Luther King's
Birthday, Washington's Birthday, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving Day, and Christmas Day. Although FMR expects the same holiday
schedule to be observed in the future, the Kansas City Fed, the New York
Fed, or the NYSE may modify its holiday schedule at any time. On any day
that the Kansas City Fed, New York Fed, or the NYSE closes early, the
principal government securities markets close early (such as on days in
advance of holidays generally observed by participants in such markets), or
as permitted by the SEC, the right is reserved to advance the time on that
day by which purchase and redemption orders must be received.
To the extent that portfolio securities are traded in other markets on days
when the Kansas City Fed, the New York Fed, or the NYSE is closed, each
fund's NAV may be affected on days when investors do not have access to the
fund to purchase or redeem shares. Certain Fidelity funds may follow
different holiday closing schedules.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and dividing the result by the number of
shares outstanding. Each fund values its portfolio securities on the basis
of amortized cost. This method minimizes the effect of changes in a
security's market value and helps each fund maintain a stable $1.00 share
price.
THE OFFERING PRICE (price to buy one share) and REDEMPTION PRICE (price to
sell one share) of each fund are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity and the transfer
agent may only be liable for losses resulting from unauthorized
transactions if they do not follow reasonable procedures designed to verify
the identity of the caller. Fidelity and the transfer agent will request
personalized security codes or other information, and may also record
calls. You should verify the accuracy of the confirmation statements
immediately after receipt. If you do not want the ability to redeem and
exchange by telephone, call the transfer agent for instructions. Additional
documentation may be required from corporations, associations and certain
fiduciaries.
IF YOU ARE UNABLE TO REACH THE TRANSFER AGENT BY PHONE (for example, during
periods of unusual market activity), consider placing your order by mail.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
TO ALLOW FMR TO MANAGE THE FUNDS MOST EFFECTIVELY, you are urged to
initiate all trades as early in the day as possible and to notify Fidelity
Client Services in advance of large transactions.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) The funds do not accept cash.
(small solid bullet) When making a purchase with more than one check, each
check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number of
checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
canceled and you could be liable for any losses or fees a fund or the
transfer agent has incurred.
Shareholders of record as of 2:00 p.m. (12:00 noon for Municipal
Money Market Portfolio) Eastern time will be entitled to dividends
declared that day.
Shares purchased after 2:00 p.m. (12:00 noon for Municipal Money Market
Portfolio) Eastern time begin to earn income dividends on the
following business day.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) Shares redeemed before 2:00 p.m. (12:00 noon
for Municipal Money Market Portfolio) Eastern time do not
receive the dividend declared on the day of redemption. Shares redeemed
after 2:00 p.m. (12:00 noon for Municipal Money Market Portfolio)
Eastern time do receive the dividend declared on the day of redemption.
(small solid bullet) A fund may withhold redemption proceeds until it is
reasonably assured that investments credited to your account have been
received and collected.
(small solid bullet) If you sell shares by writing a check and the amount
of the check is greater than the value of your account, your check will be
returned to you and you may be subject to additional charges.
When the NYSE, the Kansas City Fed, or the New York Fed 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
SEC to merit such action, a fund may suspend redemption or postpone payment
dates. In cases of suspension of the right of redemption, the request for
redemption may either be withdrawn or payment may be made based on the NAV
next determined after the termination of the suspension.
IF YOUR ACCOUNT BALANCE FALLS BELOW $500 due to redemption, the account may
be closed and the proceeds may be mailed to your address of record. You
will be given 30 days' notice that your account will be closed unless it is
increased to the minimum.
THE TRANSFER AGENT MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds
An exchange involves the redemption of all or a portion of the shares of
one fund and the purchase of shares of another fund.
BY TELEPHONE. Exchanges may be requested on any day a fund is open
for business by calling Fidelity Client Services at the number
listed on page between 8:30 a.m. and 4 :00 p.m.
Eastern time (12:00 noon Eastern time for exchanges from Municipal Money
Market Portfolio).
BY MAIL. You may exchange shares on any business day by submitting written
instructions with an authorized signature which is on file for that
account. Written requests for exchanges should contain the fund name,
account number, the number of shares to be redeemed, and the name of the
fund to be purchased. Written requests for exchange should be mailed to
Fidelity Client Services at the address on page .
WHEN YOU PLACE AN ORDER TO EXCHANGE SHARES, shares will be redeemed at the
next determined NAV after your order is received and accepted by the
transfer agent. Shares of the fund to be acquired will be purchased at its
next determined NAV after redemption proceeds are made available. You
should note that, under certain circumstances, a fund may take up to seven
days to make redemption proceeds available for the exchange purchase of
shares of another fund. In addition, please note the following:
(small solid bullet) Exchanges will not be permitted until a completed and
signed account application is on file.
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) You will earn dividends in the acquired fund in
accordance with the fund's customary policy, normally on the day the
exchange request is received.
(small solid bullet) 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 have already paid in connection with the shares you are
exchanging.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Currently, there is no limit on the number of
exchanges out of a fund, nor are there any administrative or redemption
fees applicable to exchanges out of a fund.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related SAI, in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the fund or NFSC. This Prospectus and the related SAI do not
constitute an offer by the fund or by NFSC to sell or to buy shares of the
fund to any person to whom it is unlawful to make such offer.
CAPITAL RESERVES: MONEY MARKET PORTFOLIO, U.S. GOVERNMENT PORTFOLIO,
AND MUNICIPAL MONEY MARKET PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A Item Number
Part B Statement of Additional Information
10 a,b Cover Page
11 Table of Contents
12 *
13 a,b,c Investment Policies and Limitations
d *
14 a,b,c Trustees and Officers
15 a,b,c FMR; Trustees and Officers
16 a(i) FMR
(ii) Trustees and Officers
(iii),b Management Contracts
c *
d Management Contracts
e *
f Distribution and Service Plans
g *
h Description of the Trust
i Contracts with FMR Affiliates
17 a Portfolio Transactions
b *
c,d Portfolio Transactions
18 a Description of the Trust
b *
19 a Additional Purchase, Exchange, and Redemption Information
b Valuation
c *
20 Distributions and Taxes
21 a(i)(ii) Distribution and Service Plans; Contracts with FMR Affiliates
(iii),b,c *
22 Performance
23 Financial Statements
_______________
*Not Applicable
CAPITAL RESERVES:
MONEY MARKET PORTFOLIO
U.S. GOVERNMENT PORTFOLIO
MUNICIPAL MONEY MARKET PORTFOLIO
FUNDS OF DAILY MONEY FUND
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 1, 1995
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus (dated
December 1, 1995). Please retain this document for future reference. The
funds' financial statements and financial highlights, included in the
Annual Report, for the fiscal year ended July 31, 1995, are incorporated
herein by reference. To obtain an additional copy of the Prospectus or the
Annual Report, please call Fidelity Client Services at 1-800-843-3001.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation
Performance
Additional Purchase, Exchange and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Contracts With FMR Affiliates
Distribution and Service Plans
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISER
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
National Financial Services Corporation (NFSC)
TRANSFER AGENT FOR MONEY MARKET PORTFOLIO AND U.S. GOVERNMENT PORTFOLIO
Fidelity Investments Institutional Operations Company (FIIOC)
TRANSFER AGENT FOR MUNICIPAL MONEY MARKET PORTFOLIO
UMB Bank, n.a. (UMB)
CAPR-ptb-1295
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 fund'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 fund'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 a fund's investment policies and
limitations.
A fund'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 fund.
However, except for the fundamental investment limitations listed below,
the investment policies and limitations described in this SAI 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 FUND MAY NOT:
(1) with respect to 75% of the fund'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, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10% of
the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund 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 fund'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
fund 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 fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund 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 fund
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
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund 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 objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund 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
fund 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 fund 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) Subject to revision upon 60 days' notice to shareholders, the fund
does not currently intend to purchase securities on margin, except that the
fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.
(iv) The fund 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 fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund 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 fund's total
assets.
(v) The fund 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.
(vi) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund'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).
(vii) The fund 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.
(viii) The fund does not currently intend to purchase or retain securities
issued by other open-end investment companies. This limitation does not
apply to securities received as dividends, through offers of exchange, or
as a result of reorganization, consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund 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 objective, policies, and
limitations as the fund.
(xi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
For purposes of limitation (vii), pass-through entities and other
special purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
INVESTMENT LIMITATIONS OF U.S. GOVERNMENT PORTFOLIO
THE FOLLOWING ARE U.S. GOVERNMENT PORTFOLIO'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund'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,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund 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 fund'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
fund 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 fund'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 fund
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
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund 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 objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund 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 fund 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 fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund 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 fund's total
assets.
(iii) Subject to revision upon 60 days' notice to shareholders, the fund
does not currently intend to purchase securities on margin, except that the
fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.
(iv) The fund 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 fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(vi) The fund 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 fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(viii) The fund does not currently intend to purchase or retain securities
issued by other open-end investment companies. This limitation does not
apply to securities received as dividends, through offers of exchange, or
as a result of reorganization, consolidation, or merger.
(ix) The fund 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 objective, policies, and
limitations as the fund.
(x) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
For purposes of limitation (vi), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
INVESTMENT LIMITATIONS OF MUNICIPAL MONEY MARKET PORTFOLIO
THE FOLLOWING ARE MUNICIPAL MONEY MARKET PORTFOLIO'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund'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, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10% of
the outstanding voting securities of that issuer;
(2) issue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the portfolio may 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
fund 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
fund'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 fund
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
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund 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 objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund 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 fund 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 fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund 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 fund's total
assets.
(iii) Subject to revision upon 60 days' notice to shareholders, the fund
does not currently intend to purchase securities on margin, except that the
fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.
(iv) The fund 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 fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(vi) The fund 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 fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(viii) The fund does not currently intend to purchase or retain securities
issued by other open-end investment companies. This limitation does not
apply to securities received as dividends, through offers of exchange, or
as a result of reorganization, consolidation, or merger.
(ix) The fund 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 objective, policies, and
limitations as the fund.
(x) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
For purposes of limitation (vi), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
U.S. Government Portfolio, invests only in obligations issued or guaranteed
as to principal and interest by the U.S. Government, including U.S.
Treasury bills, notes and bonds, and obligations issued by U.S. Government
agencies or instrumentalities that are backed by the full faith and credit
of the United States. The fund may also engage in repurchase agreements for
these oblibations. These operating policies may be changed upon 90 days'
notice to shareholders.
As an operating policy, subject to change only upon approval by the Board
of Trustees and 60 days' prior notice to shareholders, each of Money Market
Portfolio, U.S. Government Portfolio and Municipal Money Market Portfolio
currently do not intend to purchase futures contracts or options on futures
contracts.
For the funds' policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the funds.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund 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 include 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 entities providing the
credit support.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund 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. Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund 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 fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund 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 fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund 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.
DOMESTIC AND FOREIGN ISSUERS. Investments may be made U.S.
dollar-denominated time deposits, certificates of deposit, and bankers'
acceptances of U.S. banks and their branches located outside of the United
States, U.S. branches and agencies of foreign banks, and foreign branches
of foreign banks. A fund may also invest in U.S. dollar-denominated
securities issued or guaranteed by other U.S. or foreign issuers, including
U.S. and foreign corporations or other business organizations, foreign
governments, foreign government agencies or instrumentalities, and U.S. and
foreign financial institutions, including savings and loan institutions,
insurance companies, mortgage bankers, and real estate investment trusts,
as well as banks.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental
regulation. Payment of interest and principal on these obligations may also
be affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). In addition, evidence of
ownership of fund securities may be held outside of the United States and a
fund may be subject to the risks associated with the holding of such
property overseas. Various provisions of federal law governing the
establishment and operation of U.S. branches do not apply to foreign
branches of U.S. banks.
Obligations of U.S. branches and agencies of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation, as well as by governmental action in the country in which the
foreign bank has its head office.
Obligations of foreign issuers involve certain additional risks. These
risks may include future unfavorable political and economic developments,
withholding taxes, seizures of foreign deposits, currency controls,
interest limitations, or other governmental restrictions that might affect
payment of principal or interest, or the ability to honor a credit
commitment. Additionally, there may be less public information available
about foreign entities. Foreign issuers may be subject to less governmental
regulation and supervision than U.S. issuers. Foreign issuers also
generally are not bound by uniform accounting auditing, and financial
reporting requirements comparable to those applicable to U.S. issuers.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, Municipal Money
Market Portfolio does not intend to invest in securities whose interest is
federally taxable. However, from time to time on a temporary basis,
Municipal Money Market Portfolio may invest a portion of its assets in
fixed-income obligations whose interest is subject to federal income tax.
Should Municipal Money Market Portfolio invest in federally taxable
obligations, it would purchase securities that, in FMR's judgment, are of
high quality. These obligations would include those issued or guaranteed by
the U.S. Government or its agencies or instrumentalities and repurchase
agreements backed by such obligations.
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 Municipal Money Market Portfolio's
distributions. If such proposals were enacted, the availability of
municipal obligations and the value of Municipal Money Market Portfolio's
holdings would be affected and the Trustees would reevaluate the fund's
investment objectives and policies.
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 fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's 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 marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by the funds 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, municipal lease obligations, and time deposits to be illiquid.
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 fund 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.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive order
issued by the SEC, each fund has received permission to lend money to, and
borrow money from, other funds advised by FMR or its affiliates. Municipal
Money Market Portfolio will participate in the interfund borrowing program
only as a borrower. Interfund loans and borrowings normally extend
overnight, but can have a maximum duration of seven days. Loans may be
called on one day's notice. Money Market Portfolio and U.S. Government
Portfolio will lend through the program only when the returns are higher
than those available from other short-term instruments (such as repurchase
agreements). A fund will borrow through the program only when the costs are
equal to or lower than the costs of bank loans. A fund 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. U.S. Government
Portfolio does not currently intend to participate in the program as a
lender.
MUNICIPAL MARKET DISRUPTION RISK. The value of municipal securities
may be affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal securities or
the rights of municipal securities holders in the event of bankruptcy.
Municipal bankruptcies are relatively rare, and certain provisions of the
U.S. Bankruptcy Code governing such bankruptcies are unclear and remain
untested. Further, the application of state law to municipal issuers could
produce varying results among the states or among municipal securities
issuers within a state. These legal uncertainties could affect the
municipal securities market generally, certain specific segments of the
market, or the relative credit quality of particular securities. Any of
these effects could have a significant impact on the prices of some or all
of the municipal securities held by a fund, making it more difficult for
the fund to maintain a stable net asset value per share.
MONEY MARKET SECURITIES are high-quality, short-term obligations. Some
money market securities employ a trust or other similar structure to modify
the maturity, price characteristics, or quality of financial assets. For
example, put features can be used to modify the maturity of a security, or
interest rate adjustment features can be used to enhance price stability.
If the structure does not perform as intended, adverse tax or investment
consequences may result. Neither the Internal Revenue Service (IRS) nor any
other regulatory authority has ruled definitively on certain legal issues
presented by structured securities. Future tax or other regulatory
determinations could adversely affect the value, liquidity, or tax
treatment of the income received from these securities or the nature and
timing of distributions made by the funds.
MUNICIPAL LEASES and participation interests therein may take the form of a
lease, an installment purchase, or a conditional sale contract and are
issued by state and local governments and authorities to acquire land or a
wide variety of equipment and facilities. Generally, the funds 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 a fund 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.
PUT FEATURES entitle the holder to sell a security back to the issuer or
third party at any time or at specified intervals. They are subject to the
risk that the put provider is unable to honor the put feature (purchase the
security). Put providers often support their ability to buy securities on
demand by obtaining letters of credit or other guarantees from other
entities. Demand features, standby commitments, and tender options are
types of put features.
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the funds may purchase only high-quality securities that FMR
believes present minimal credit risks. To be considered high-quality, a
security must be 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 are those deemed to be in the highest
rating category (e.g., Standard & Poor's A-1 or SP-1), and second tier
securities are those deemed to be in the second highest rating category
(e.g., Standard & Poor's A-2 or SP-2). Split rated securities may be
determined to be either first tier or second tier based on applicable
regulations.
Each of Money Market Portfolio and U.S. Government Portfolio may not invest
more than 5% of its total assets in second tier securities. In addition,
each of Money Market Portfolio and U.S. Government 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.
A fund currently intends to limit investments to securities with remaining
maturities of 397 days or less, and to maintain a dollar-weighted average
maturity of 90 days or less. When determining the maturity of a security, a
fund may look to an interest rate reset or demand feature.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. 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. To protect the fund
from the risk that the original seller will not fulfill its obligation, the
securities are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental amount. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
that the value of the underlying security will be less than the resale
price, as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to engage in repurchase
agreement transactions with parties whose creditworthiness 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 fund 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 it may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security. However, in general, each fund anticipates holding restricted
securities to maturity or selling them in an exempt transaction.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
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 fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. A
fund 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 fund's assets and may be
viewed as a form of leverage.
SHORT SALES "AGAINST THE BOX." A fund 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 a fund in anticipation of increased interest
rates, without sacrificing the current yield of the securities sold short.
If a fund 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.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. FMR may rely on its evaluation of
the credit of a bank or another entity in determining whether to purchase a
security supported by a letter of credit guarantee, insurance or other
source of credit or liquidity. In evaluating the credit of a foreign bank
or other foreign entities, FMR will consider whether adequate public
information about the entity is available and whether the entity may be
subject to unfavorable political or economic developments, currency
controls, or other government restrictions that might affect its ability to
honor its commitment.
STRIPPED GOVERNMENT SECURITIES. Stripped securities are created by
separating the income and principal components of a debt instrument and
selling them separately. U.S. Treasury STRIPS (Separate Trading of
Registered Interest and Principal of Securities) are created when the
coupon payments and the principal payment are stripped from an outstanding
Treasury bond by the Federal Reserve Bank. Bonds issued by government
agencies may also be stripped in this fashion.
Privately stripped government securities are created when a dealer deposits
a Treasury security or federal agency security with a custodian for
safekeeping and then sells the coupon payments and principal payment that
will be generated by this security. Proprietary receipts, such as
Certificates of Accrual on Treasury Securities (CATS), Treasury Investment
Growth Receipts (TIGRS), and generic Treasury Receipts (TRs), are stripped
U.S. Treasury securities that are separated into their component parts
through trusts created by their broker sponsors. Bonds issued by government
agencies may also be stripped in this fashion.
Because of the SEC's views on privately stripped government securities, a
fund must evaluate them as it would non-government securities pursuant to
regulatory guidelines applicable to all money market funds. A fund
currently intends to purchase only those privately stripped government
securities that have either received the highest rating from two nationally
recognized rating services (or one, if only one has rated the security) or,
if unrated, have been judged to be of equivalent quality by FMR pursuant to
procedures adopted by the Board of Trustees.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments of
the interest rate paid on the security. Variable rate securities provide
for a specified periodic adjustment in the interest rate, while floating
rate securities have interest rates that change whenever there is a change
in a designated benchmark rate. Some variable or floating rate securities
have put features.
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, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by FMR pursuant to authority contained in the fund's
management contract. FMR has granted investment management authority to the
sub-adviser (see the section entitled "Management Contracts"), and the
sub-adviser 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 or its
affiliates act as investment adviser. Securities purchased and sold by the
fund 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 funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds 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; and the availability of
securities or the purchasers or sellers of securities. In addition, such
broker-dealers may furnish analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy,
and performance of accounts; effect securities transactions, and perform
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 funds 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 funds may be useful to FMR in rendering investment management
services to the funds 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 funds. 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
each fund 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 funds 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 funds 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 (FBS), subsidiaries of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. From September 1992 through December 1994, FBS operated
under the name Fidelity Brokerage Services Limited, Inc. (FBSL). As of
January 1995, FBSL was converted to an unlimited liability company and
assumed the name FBS. Prior to September 4, 1992, FBSL operated under the
name Fidelity Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary
of Fidelity International Limited (FIL). Edward C. Johnson 3d is Chairman
of FIL. Mr. Johnson 3d, Johnson family members, and various trusts for the
benefit of the Johnson family own, directly or indirectly, more than 25% of
the voting common stock of FIL.
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.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the funds and review the commissions paid by each fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund.
For fiscal 1995, 1994, and 1993, the funds paid no brokerage commissions.
During fiscal 1995, the funds paid no commissions to brokerage firms
that provided research services.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund 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 fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
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 each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to each fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION
Fidelity Service Company (FSC) normally determines Money Market Portfolio's
and U.S. Government Portfolio's net asset value per share (NAV) at 2:00
p.m. and 4:00 p.m. Eastern time, and Municipal Money Market Portfolio's NAV
at 12:00 noon and 4:00 p.m. Eastern time. The valuation of portfolio
securities is determined as of these times for the purpose of computing
each fund's NAV.
Portfolio securities and other assets are valued on the basis of amortized
cost. This technique involves initially valuing an instrument at its cost
as adjusted for amortization of premium or accretion of discount rather
than its current market value. The amortized cost value of an instrument
may be higher or lower than the price a fund would receive if it sold the
instrument.
During periods of declining interest rates, a fund's yield based on
amortized cost valuation may be higher than would result if the fund used
market valuations to determine its NAV. The converse would apply during
periods of rising interest rates.
Valuing each fund's investments on the basis of amortized cost and use of
the term "money market fund" are permitted pursuant to Rule 2a-7 under the
1940 Act. Each fund must adhere to certain conditions under Rule 2a-7, as
summarized in the section entitled "Quality and Maturity" on page .
The Board of Trustees oversees FMR's adherence to the provisions of Rule
2a-7 and has established procedures designed to stabilize each fund'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 a
fund'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.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's yield and total return
fluctuate in response to market conditions and other factors.
YIELD CALCULATIONS. To compute a fund's yield for a period, the net change
in value of a hypothetical account containing one share reflects the value
of additional shares purchased with dividends from the one original share
and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at the
beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current annualized yield. A fund also may
calculate an effective yield by compounding the base period return over a
one-year period. In addition to the current yield, the funds may quote
yields in advertising based on any historical seven-day period. Yields for
the funds are calculated on the same basis as other money market funds, as
required by applicable regulations.
Yield information may be useful in reviewing a fund's performance and in
providing a basis for comparison with other investment alternatives.
However, each fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates a
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
Municipal Money Market Portfolio's tax-equivalent yield is the rate an
investor would have to earn from a fully taxable investment before taxes to
equal the fund's tax-free yield. Tax-equivalent yields are calculated by
dividing the fund's yield by the result of one minus a stated federal or
combined federal and state tax rate. If only a portion of the fund's yield
is tax-exempt, only that portion is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 199 5 . It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 2.00 % to 8.00 %. Of
course, no assurance can be given that the fund will achieve any specific
tax-exempt yield. While the fund invests principally in obligations whose
interest is exempt from federal income tax, other income received by the
fund may be taxable.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 TAX RATES AND TAX-EQUIVALENT YIELDS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Taxable Federal
Income* Income If individual tax-exempt yield is:
Tax
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bracket ** 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single return Joint return Then taxable equivalent yield is
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$23,351 - $56,5 5 0 $3 9 ,001 - $94,250 28.0% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72% 11.11%
$56,5 5 1 - $117,950 $94,251 - $143,600 31.0% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14 11.59%
%
$117,951 - $143,601 - 256,500 36.0% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94 12.50
$256,500 % %
$256,501 $256,501 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.
** Excludes the impact of the phaseout of personal exemptions, limitations
on itemized deductions, and other credits, exclusions, and adjustments
which may increase a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
Municipal Money Market Portfolio may invest a portion of its assets in
obligations that are subject to federal income tax. When the fund invests
in these obligations, its tax-equivalent yields will be lower. In the table
above, tax-equivalent yields are calculated assuming investments are 100%
federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the fund's NAV over a
stated period. Average annual total returns are calculated by determining
the growth or decline in value of a hypothetical historical investment in a
fund over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of
growth or decline in value had been constant over the period. For example,
a cumulative total return of 100% over ten years would produce an average
annual total return of 7.18%, which is the steady annual rate of return
that would equal 100% growth on a compounded basis in ten years. While
average annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a fund's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, 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 (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
HISTORICAL FUND RESULTS. The following table shows each fund's 7-day
yields, tax-equivalent yields, and total returns for the period ended July
31, 1995.
The tax-equivalent yield is based on a 36 % federal income tax rate.
Note that Municipal Money Market Portfolio may invest in securities whose
income is subject to the federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seven-Day Tax- One Five Life of One Five Life of
Yield Equivalent Year Years Fund* Year Years Fund*
Yield
Money
Market 5.08% N/A 4.86% N/A 3.99% 4.86% N/A 20.55%
Portfolio
U.S.
Government 4.87% N/A 4.64% N/A 3.85% 4.64% N/A 19.74%
Portfolio
Municipal
Money 3.01% 4.70% 2.94% N/A 2.71% 2.94% N/A 13.31%
Market Portfolio
</TABLE>
* From commencement of operations: Money Market Portfolio - 10/23/90; U.S.
Government Portfolio - 10/23/90; and Municipal Money Market Portfolio -
11/29/90.
Note: If FMR had not reimbursed certain fund expenses during these periods,
Money Market Portfolio's, U.S. Government Portfolio's, and Municipal Money
Market Portfolio's yield would have been 4.91%, 4.76%, and 2.84% ,
respectively, and total returns would have been lower.
The following tables show the income and capital elements of each fund's
cumulative total return. The table compares each fund's return to the
record of the Standard & Poor's Composite Index of 500 Stocks (S&P 500),
the Dow Jones Industrial Average (DJIA), and the cost of living (measured
by the Consumer Price Index, or CPI) over the same period. The CPI
information is as of the month end closest to the initial investment date
for each fund. The S&P 500 and DJIA comparisons are provided to show how
each fund's total return compared to the record of a broad average of
common stocks and a narrower set of stocks of major industrial companies,
respectively, over the same period. Of course, since each fund invests in
short-term fixed-income securities, common stocks represent a different
type of investment from the fund. Common stocks generally offer greater
growth potential than the funds, but generally experience greater price
volatility, which means greater potential for loss. In addition, common
stocks generally provide lower income than a fixed-income investment such
as the funds. Figures for the S&P 500 and DJIA are based on the prices of
unmanaged groups of stocks and, unlike the funds' returns, do not include
the effect of paying brokerage commissions or other costs of investing.
MONEY MARKET PORTFOLIO
HISTORICAL FUND RESULTS
During the period from October 23, 1990 (commencement of operations) to
July 31, 1995, a hypothetical $10,000 investment in Money Market Portfolio
would have grown to $12,055 , assuming all distributions were
reinvested. This was a period of fluctuating interest rates and the figures
below should not be considered representative of the dividend income or
capital gain or loss that could be realized from an investment in the fund
today.
MONEY MARKET PORTFOLIO INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Year Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living**
July 31 $10,000 Dividend Capital Gain
Investment Distributions Distributions
1991* $ 10,000 $ 479 $ 0 $ 10,479 $ 12,650 $ 12,358 $ 10,202
1992 $ 10,000 $ 912 $ 0 $ 10,912 $ 14,269 $ 14,284 $ 10,524
1993 $ 10,000 $ 1,192 $ 0 $ 11,192 $ 15,517 $ 15,345 $ 10,816
1994 $ 10,000 $ 1,496 $ 0 $ 11,496 $ 16,317 $ 16,772 $ 11,116
1995 $ 10,000 $ 2,055 $ 0 $ 12,055 $ 20,577 $ 21,530 $ 11,423
</TABLE>
* From October 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on October
23, 1990, the net amount invested in fund shares was $10,000. The cost
of the initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (their cash value at the time
they were reinvested), amounted to $12,055 . If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments (dividends) for the period would
have amounted to $1,873. The fund did not distribute any capital
gains during the period. Tax consequences of different investments have not
been factored into the above figures.
U.S. GOVERNMENT PORTFOLIO
HISTORICAL FUND RESULTS
During the period from October 23, 1990 (commencement of operations) to
July 31, 1995, a hypothetical $10,000 investment in U.S. Government
Portfolio would have grown to $11,974, assuming all distributions
were reinvested. This was a period of fluctuating interest rates and the
figures below should not be considered representative of the dividend
income or capital gain or loss that could be realized from an investment in
the fund today.
U.S. GOVERNMENT PORTFOLIO INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Year Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living**
July 31 $10,000 Dividend Capital Gain
Investment Distributions Distributions
1991* $ 10,000 $ 466 $ 0 $ 10,466 $ 12,650 $ 12,358 $ 10,202
1992 $ 10,000 $ 900 $ 0 $ 10,900 $ 14,269 $ 14,284 $ 10,524
1993 $ 10,000 $ 1,162 $ 0 $ 11,162 $ 15,517 $ 15,345 $ 10,816
1994 $ 10,000 $ 1,443 $ 0 $ 11,443 $ 16,317 $ 16,772 $ 11,116
1995 $ 10,000 $ 1,974 $ 0 $ 11,974 $ 20,577 $ 21,530 $ 11,423
</TABLE>
* From October 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on October
23 , 19 90 , the net amount invested in fund shares was $10,000.
The cost of the initial investment ($10,000), together with the aggregate
cost of reinvested dividends for the period covered (their cash value at
the time they were reinvested), amounted to $ 11,974 . If
distributions had not been reinvested, the amount of distributions earned
from the fund over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $ 1,805. The fund
did not distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
MUNICIPAL MONEY MARKET PORTFOLIO
HISTORICAL FUND RESULTS
During the period from November 29, 1990 (commencement of operations) to
July 31, 1995, a hypothetical $10,000 investment in Municipal Money Market
Portfolio would have grown to $ 11,331 , assuming all distributions
were reinvested. This was a period of fluctuating interest rates and the
figures below should not be considered representative of the dividend
income or capital gain or loss that could be realized from an investment in
the fund today.
MUNICIPAL MONEY MARKET PORTFOLIO INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Year Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living**
July 31 $10,000 Dividend Capital Gain
Investment Distributions Distributions
1991* $ 10,000 $ 282 $ 0 $ 10,282 $ 12,463 $ 12,216 $ 10,179
1992 $ 10,000 $ 605 $ 0 $ 10,605 $ 14,058 $ 14,120 $ 10,501
1993 $ 10,000 $ 813 $ 0 $ 10,813 $ 15,288 $ 15,168 $ 10,792
1994 $ 10,000 $ 1,007 $ 0 $ 11,007 $ 16,076 $ 16,580 $ 11,091
1995 $ 10,000 $ 1,331 $ 0 $ 11,331 $ 20,273 $ 21,283 $ 11,398
</TABLE>
* From November 29, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on
November 29 , 19 90 , the net amount invested in fund shares was
$10,000. The cost of the initial investment ($10,000), together with the
aggregate cost of reinvested dividends for the period covered (their cash
value at the time they were reinvested), amounted to $ 11,331 . If
distributions had not been reinvested, the amount of distributions earned
from the fund over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $ 1,251 . The fund
did not distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
PERFORMANCE COMPARISONS. A fund'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, a fund's performance may be
compared to stock, bond, and money market mutual fund performance indices
prepared by Lipper or other organizations. When comparing these indices, it
is important to remember the risk and return characteristics of each type
of investment. For example, while stock mutual funds may offer higher
potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability of
principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund 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.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
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.
A fund 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 749 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 391 tax-free
money market funds
In advertising materials, Fidelity may reference or discuss its products
and services, which may include other Fidelity funds; retirement investing;
brokerage products and services; model portfolios or allocations; saving
for college or other goals; charitable giving; and the Fidelity credit
card. In addition, Fidelity may quote or reprint financial or business
publications and periodicals as they relate to current economic and
political conditions, fund management, portfolio composition, investment
philosophy, investment techniques, the desirability of owning a particular
mutual fund, and Fidelity services and products. 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 fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
A fund 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.
As of September 30 , 199 5 , FMR advised over $ 26.5
billion in tax-free fund assets, over $ 77 billion in money
market fund assets, over $ 226 billion in equity fund assets,
over $ 55 billion in international fund assets, and over
$ 22 billion in Spartan fund assets. The funds may reference the
growth and variety of money market mutual funds and the adviser's
innovation and participation in the industry. The equity funds under
management figure represents the largest amount of equity fund assets under
management by a mutual fund investment adviser in the United States, making
FMR America's leading equity (stock) fund manager. FMR, its subsidiaries,
and affiliates maintain a worldwide information and communications network
for the purpose of researching and managing investments abroad.
In addition to performance rankings, each fund may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A fund's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE 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 fund'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 under the 1940 Act, each fund 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 fund 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.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its 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.
DIVIDENDS. Because each fund's income is primarily derived from interest,
dividends from the fund generally will not qualify for the
dividends-received deduction available to corporate shareholders.
Short-term capital gains are distributed as dividend income, but do not
qualify for the dividends-received deduction. A portion of each fund's
dividends derived from certain U.S. government obligations may be exempt
from state and local taxation.
To the extent that Municipal Money Market Portfolio's income is designated
as federally tax-exempt interest, the daily dividends declared by the fund
are also federally tax-exempt. Short-term capital gains are distributed as
dividend income, but do not qualify for the dividends-received deduction.
These gains will be taxed as ordinary income.
Each fund will send each shareholder a notice in January describing the tax
status of dividend and capital gain distributions (if any) for the prior
year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as Social Security
benefits, may be subject to federal income tax on up to 85% of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
Municipal Money Market Portfolio purchases securities that are free of
federal income tax based on opinions of counsel regarding the tax
status . These opinions will generally be based on covenants by the
issuers or other parties regarding continuing compliance with federal tax
requirements. If at any time the covenants are not complied with,
distribution to shareholders of interest on a security could become
federally taxable retroactive to the date the security was issued. For
certain types of structured securities, opinions of counsel may also be
based on the effect of the structure on the federal tax treatment of the
income.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities 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 will be
considered tax-exempt for purposes of Municipal Money Market Portfolio's
policy on investing so that at least 80% of its income is free from federal
income tax. 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 the amount of AMT to be paid, if any. Private activity
securities issued after August 7, 1986 to benefit a private or industrial
user or to finance a private facility are affected by this rule.
A portion of the gain on bonds purchased with market discount after April
30, 1993 and short-term capital gains distributed by the fund are taxable
to shareholders as dividends, not as capital gains. Dividend distributions
resulting from a recharacterization of gain from the sale of bonds
purchased with market discount after April 30, 1993 are not considered
income for the purposes of Municipal Money Market Portfolio's policy of
investing so that at least 80% of its income is free from federal income
tax. Municipal Money Market Portfolio may distribute any net realized
short-term capital gains and taxable market discounts once a year or more
often, as necessary, to maintain its net asset value at $1.00 per share.
Corporate investors should note that a tax preference item for the purposes
of the corporate AMT is 75% of the amount by which adjusted current
earnings (which includes tax-exempt interest) exceeds the alternative
minimum taxable income of the corporation. If a shareholder receives an
exempt-interest dividend and sells shares at a loss after holding them for
a period of six months or less, the loss will be disallowed to the extent
of the amount of the exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Each fund may distribute any net realized
short-term capital gains once a year or more often as necessary, to
maintain its net asset value at $1.00 per share. Money Market Portfolio
and U.S. Government Portfolio do not anticipate earning long-term
capital gains on securities held by the funds. Municipal Money Market
Portfolio does not anticipate distributing long-term capital gains.
As of the fiscal year ended July 31, 1995, Money Market Portfolio had a
capital loss carryforward aggregating approximately $ 131,000, all of
which will expire on July 31, 2002.
As of the fiscal year ended July 31, 1995, U.S. Government had a capital
loss carryforward aggregating approximately $ 56,000 . This loss
carryforward, of which $6,000, $35,000, and $15,000 will expire on
July 31, 2001 , 2002, and 2003, respectively, is available to offset
future capital gains.
As of the fiscal year ended July 31, 1995, Municipal Money Market had a
capital loss carryforward aggregating approximately $10,000. This loss
carryforward, of which $3,000, $2,000 and $5,000 will expire on July 31,
2000, 2001, 2002, respectively, is available to offset future capital
gains.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
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 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
benefit. The tax treatment of your dividend distributions from a fund 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 a fund invests is exempt from
state and local income taxes, the portion of your dividends from the fund
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.
In a number of states, corporate franchise (income) tax laws do not exempt
interest earned on U.S. Government securities whether such securities are
held directly or through a fund.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of Money
Market Portfolio's total assets are invested in securities of foreign
issuers, the fund may elect to pass through foreign taxes paid and thereby
allow shareholders to take a credit or deduction on their individual tax
returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis.
Each fund is treated as a separate entity from the other funds of Daily
Money Fund for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the 1940 Act, control of a company is presumed where
one individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting common
stock and the execution of the shareholders' voting agreement, members of
the Johnson family may be deemed, under the 1940 Act, to form a controlling
group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
FIIOC, which performs shareholder servicing functions for institutional
customers and funds sold through intermediaries; and Fidelity Investments
Retail Marketing Company, which provides marketing services to various
companies within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust 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 Daily Money Fund prior to the funds' conversion from series of
a Massachusetts business trust served in identical capacities. All persons
named as Trustees also serve in similar capacities for other funds advised
by FMR. The business address of each Trustee and officer who is an
"interested person" (as defined in the 1940 Act) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The business
address of all the other Trustees is Fidelity Investments, P.O. Box 9235,
Boston, Massachusetts 02205-9235. Those Trustees who are "interested
persons" by virtue of their affiliation with either the trust or FMR are
indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (65), 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., Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD (54), Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX (63), 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 (63), 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 is a member of the President's Advisory Council of The
University of Vermont School of Business Administration.
RICHARD J. FLYNN (71), 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 Trustee of
College of the Holy Cross and Old Sturbridge Village, Inc., and he
previously served as a Director of Mechanics Bank (1971-1995).
E. BRADLEY JONES (68), Trustee (1990). Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company. He is
a Director of TRW Inc. (original equipment and replacement products),
Cleveland-Cliffs Inc (mining), Consolidated Rail Corporation, Birmingham
Steel Corporation, and RPM, Inc. (manufacturer of chemical products, 1990),
and he previously served as a Director of NACCO Industries, Inc. (mining
and marketing, 1985-1995) and Hyster-Yale Materials Handling, Inc.
(1985-1995). In addition, he serves as a Trustee of First Union Real Estate
Investments, a Trustee and member of the Executive Committee of the
Cleveland Clinic Foundation, a Trustee and member of the Executive
Committee of University School (Cleveland), and a Trustee of Cleveland
Clinic Florida.
DONALD J. KIRK (63), Trustee, is Executive-in-Residence (1995) at Columbia
University Graduate School of Business and a financial consultant. From
1987 to January 1995, Mr. Kirk was a Professor at Columbia University
Graduate School of Business. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and he previously served as a Director of
Valuation Research Corp. (appraisals and valuations, 1993-1995). In
addition, he serves as Vice Chairman of the Board of Directors of the
National Arts Stabilization Fund, Vice Chairman of the Board of Trustees of
the Greenwich Hospital Association, and as a Member of the Public Oversight
Board of the American Institute of Certified Public Accountants' SEC
Practice Section (1995).
*PETER S. LYNCH (52), Trustee (1990) is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR 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) 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 (66), Trustee, 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), Commercial Intertech Corp. (water
treatment equipment, 1992), and Associated Estates Realty Corporation (a
real estate investment trust, 1993).
EDWARD H. MALONE (71), Trustee. 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 (62), 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 (67), 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., and AppleSouth,
Inc. (restaurants, 1992).
FRED L. HENNING, JR. (56), Vice President, is Vice President of Fidelity's
money market (1994) and fixed-income (1995) funds and Senior Vice President
of FMR Texas Inc.
LELAND BARRON (36), Vice President of U.S. Government Portfolio (1994) and
other funds advised by FMR, is an employee of FMR Texas Inc.
ROBERT LITTERST (36), Vice President of Money Market Portfolio (1992), is
an employee of FMR Texas Inc.
DEBORAH F. WATSON (36), Vice President of Municipal Money Market Portfolio
(1995), and other funds advised by FMR, is an employee of FMR Texas Inc.
ARTHUR S. LORING (48), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER (48), Treasurer (1995), is Treasurer of the Fidelity
funds and is an employee of FMR (1995). Before joining FMR, Mr. Rathgeber
was a Vice President of Goldman Sachs & Co. (1978-1995), where he served in
various positions, including Vice President of Proprietary Accounting
(1988-1992), Global Co-Controller (1992-1994), and Chief Operations Officer
of Goldman Sachs (Asia) LLC (1994-1995).
THOMAS D. MAHER (50), 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). Prior to 1990, Mr. Maher was an
employee of FMR.
JOHN H. COSTELLO (49), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (49), Assistant Treasurer (1994), is an employee of FMR
(1994). Prior to becoming Assistant Treasurer of the Fidelity funds, Mr.
Rush was Chief Compliance of Officer of FMR Corp. (1993-1994); Chief
Financial Officer of Fidelity Brokerage Services, Inc. (1990-1993); and
Vice President, Assistant Controller , and Director of the Accounting
Department - First Boston Corp. 1986-1990).
The following table sets forth information describing the compensation of
each current trustee of each fund for his or her services as trustee for
the fiscal year ended July 31, 1995.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J. Gary Ralph F. Phyllis Richard Edward C. E. Donald Peter S. Gerald C. Edward Marvin L. Thomas
Burkhead** Cox Burke J. Flynn Johnson 3d** Bradley J. Kirk Lynch** McDonough H. Mann R.
Davis Jones Malone Williams
Money $ 0 $ 340 $ 324 $ 418 $ 0 $ 336 $ 340 $ 0 $ 336 $ 336 $ 336 $ 331
Market
Portfolio
U.S. $ 0 $ 131 $ 124 $ 162 $ 0 $ 130 $ 131 $ 0 $ 129 $ 130 $ 129 $ 129
Government
Portfolio
Municipal $ 0 $ 56 $ 53 $ 69 $ 0 $ 55 $ 56 $ 0 $ 55 $ 55 $ 55 $ 55
Money
Market
Portfolio
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Trustees Pension or Estimated Annual Total
Retirement Benefits Upon Compensation
Benefits Accrued Retirement from from the Fund
as Part of Fund the Fund Complex*
Expenses from the Complex*
Fund Complex*
J. Gary Burkhead** $ 0 $ 0 $ 0
Ralph F. Cox 5,200 52,000 125,000
Phyllis Burke Davis 5,200 52,000 122,000
Richard J. Flynn 0 52,000 154,500
Edward C. Johnson 3d** 0 0 0
E. Bradley Jones 5,200 49,400 123,500
Donald J. Kirk 5,200 52,000 125,000
Peter S. Lynch** 0 0 0
Gerald C. McDonough 5,200 52,000 125,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 125,000
Thomas R. Williams 5,200 52,000 126,500
</TABLE>
* Information is as of December 31, 1994 for 206 funds in the
complex.
** Interested trustees of the fund are compensated by FMR.
Under a retirement program adopted in July 1988, the non-interested
Trustees, upon reaching age 72, become eligible to participate in a
retirement program under which they receive payments during their lifetime
from a fund based on their basic trustee fees and length of service. The
obligation of a fund to make such payments is not secured or funded.
Trustees become eligible if, at the time of retirement, they have served on
the Board for at least five years. Currently, Messrs. Ralph S. Saul,
William R. Spaulding, Bertram H. Witham, and David L. Yunich, all former
non-interested Trustees, receive retirement benefits under the program.
On November 3, 1995, the Trustees and officers of each fund owned,
in the aggregate, less than 1 % of each fund's total outstanding
shares.
As of November 3, 1995, the following owned of record or beneficially 5%
or more of outstanding shares of the funds:
MONEY MARKET PORTFOLIO: Muriel Siebert & Co., Inc., New York, NY - 15%;
Securities America Inc., Omaha, NE - 8%.
U.S. GOVERNMENT MONEY MARKET PORTFOLIO: Saperston Financial Group, Buffalo,
NY - 22%; Muriel Siebert & Co., Inc., New York, NY - 8%; FirsTier Bank,
Omaha, NE - 8%; Securities America Inc., Omaha, NE - 7%; Liberty Bank &
Trust of Tulsa, Tulsa, OK - 7%.
MUNICIPAL MONEY MARKET PORTFOLIO: Muriel Siebert & Co., Inc., New York, NY
- - 12%; Securities America Inc., Omaha, NE - 11%; Meridian Capital Markets
Inc., Reading, PA - 8%; FirsTierBank, Omaha, NE 7%; Walnut Street
Securities Inc., Clayton, MO - 6%.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are an
"interested persons" of each fund or of FMR, and all personnel of each 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 fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees.
In addition to the management fees payable to FMR and the fees payable to
UMB, FIIOC, and FSC, each fund pays all of its expenses, without
limitation, that are not assumed by those parties. Each fund pays for the
typesetting, printing, and mailing of its proxy materials to shareholders,
legal expenses, and the fees of the custodian, auditor, and non-interested
Trustees. Although each fund's current management contract provides that
each fund will pay for typesetting, printing, and mailing prospectuses,
statements of additional information, notices and reports to shareholders,
the trust, on behalf of each fund has entered into a revised transfer agent
agreement with UMB or FIIOC, as applicable, pursuant to which UMB or FIIOC
bears the costs of providing these services to existing shareholders. Other
expenses paid by each fund include interest, taxes, brokerage commissions,
each fund's proportionate share of insurance premiums and Investment
Company Institute dues, and the costs of registering shares under federal
and state securities laws. Each fund is also liable for such nonrecurring
expenses as may arise, including costs of any litigation to which the fund
may be a party, and any obligation it may have to indemnify its officers
and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated September
30, 1993, which were approved by shareholders on March 24, 1993.
For the services of FMR under each contract, each fund pays FMR a monthly
management fee at the annual rate of 0 .50% of average net assets
throughout the month. Fees received by FMR for the last three fiscal years
are shown in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Fiscal Year Ended Management Fees Paid to Management Fees Paid to
FMR FMR
after reimbursement
Money Market Portfolio 1995 $ 3,817,786 $ 2,557,392
1994 $ 3,322,784 $ 2,441,872
1993 $ 2,216,684 $ 1,372,291
U.S. Government Portfolio 1995 $ 1,295,663 $ 1,014,365
1994 $ 1,571,910 $ 1,419,388
1993 $ 1,347,482 $ 1,017,806
Municipal Money Market Portfolio 1995 $ 597,379 $ 396,087
1994 $ 662,897 $ 594,337
1993 $ 458,762 $ 206,489
</TABLE>
FMR may, from time to time, voluntarily reimburse all or a portion of each
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expense s ). FMR retains the
ability to be repaid for these expense reimbursements in the amount that
expenses fall below the limit prior to the end of the fiscal year. Expense
reimbursements by FMR will increase each fund's total returns and yield and
repayment of the reimbursement by each fund will lower its total returns
and yield.
During the fiscal periods reported, FMR voluntarily agreed, subject to
revision or termination, to reimburse the funds to the extent that the
fund's aggregate operating expenses were in excess of an annual rate of its
average net assets. The table below identifies the funds in reimbursement;
the level at which reimbursement began; and the dollar amount reimbursed
for each period.
Fund Level at Which Dollar Amount Reimbursed
Reimbursement Began
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1995 1994 1993* 1995 1994 1993
Money Market Portfolio 0.99% 0.99% 0.99% $ 1,260,394 $ 880,912 $ 844,393
U.S. Government Portfolio 0.99% 0.99% 0.99% 281,298 152,522 329,676
Municipal Money Market 0.99% 0.99% 0.99% 201,292 68,560 252,273
Portfolio
</TABLE>
* For August and September the level at which reimbursement began was
0.95%.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that each fund'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 each fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investment in foreign securities.
SUB-ADVISER. 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 each fund.
Under each sub-advisory agreement, dated September 30, 1993, which was
approved by shareholders on March 24, 1993, FMR pays FMR Texas fees equal
to 50% of the management fee payable to FMR under its management contract
with each fund, after payments by FMR pursuant to each fund's 12b-1 plan,
if any. 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 following table shows fees FMR paid to FMR Texas on behalf of each
fund.
1995 1994 1993
Money Market Portfolio $ 961,077 $ 883,835 $ 690,829
U.S. Government Portfolio $ 344,347 $ 358,950 $ 435,543
Municipal Money Market Portfolio $ 146,653 $ 187,077 $ 149,002
CONTRACTS WITH FMR AFFILIATES
FIIOC is transfer, dividend disbursing, and shareholder servicing agent for
Money Market Portfolio and U.S. Government Portfolio. UMB is the transfer
agent and shareholder servicing agent for Municipal Money Market Portfolio.
UMB has entered into a sub-arrangement with FIIOC pursuant to which FIIOC
performs transfer, dividend disbursing, and shareholder services for
Municipal Money Market Portfolio. FIIOC receives an annual and an
asset-based fee based on account size. With respect to certain
retirement accounts, FIIOC receives asset-based fees only. With respect to
certain other retirement accounts, FIIOC receives annual account fees and
asset-based fees based on fund types.
For accounts that FIIOC maintains on behalf of UMB, FIIOC receives all such
fees.
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. Also,
FIIOC pays out-of-pocket expenses associated with transfer agent services.
FSC calculates NAV and dividends for Money Market Portfolio and U.S.
Government Portfolio, and maintain the ir accounting
records . UMB has sub-arrangements with FSC pursuant to which FSC
performs the calculations necessary to determine NAV and dividends for
Municipal Money Market Portfolio, and maintains Municipal Money Market
Portfolio's accounting records. The annual fee rates for these pricing and
bookkeeping services are based on each fund's average 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 FSC for
fiscal 1995, 1994, and 1993 are shown in the table below.
Pricing and Bookkeeping Fees
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 1993
Money Market Portfolio $ 107,425 $ 99,866 $ 76,919
U.S. Government Portfolio $ 45,446 $ 55,216 $ 47,337
Municipal Money Market Portfolio $ 27,568 $ 29,177 $ 26,418
</TABLE>
The transfer agent fees and charges described above for Municipal
Money Market Portfolio, and the pricing and bookkeeping fees
described above for Municipal Money Market Portfolio are paid to
FIIOC and FSC, respectively, by UMB, which is entitled to reimbursement
from Municipal Money Market Portfolio for these expenses.
Each fund has a distribution agreement with NFSC, a Massachusetts
corporation organized on June 3, 1981. NFSC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreement calls
for NFSC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by NFSC.
DISTRIBUTION AND SERVICE PLAN
The Trustees have approved a Distribution and Service Plan on behalf of the
funds (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 primarily intended to result
in the sale of shares of a fund except pursuant to a plan approved on
behalf of the fund under the Rule. The Plan, as approved by the Trustees,
allow the funds and FMR to incur certain expenses that might be considered
to constitute direct or indirect payment by the funds of distribution
expenses.
Pursuant to the Plan, each fund pays NFSC a distribution fee at an
annual rate of 0.35% of its average net assets determined as
of the close of business on each day throughout the month.
For the fiscal years ended July 31, 1995, 1994, and 1993, Money Market
Portfolio paid distribution fees of $ 2,672,415 , $ 2,325,949 ,
and $ 1,551,678 , respectively.
For the fiscal years ended July 31, 1995, 1994, and 1993, U.S. Government
Portfolio paid distribution fees of $ 906,961 , $ 1,100,338 , and
$ 943,237 , respectively.
For the fiscal years ended July 31, 1995, 1994, and 1993, Municipal Money
Market Portfolio paid distribution fees of $ 418,166 ,
$ 463,096 , and $ 321,113 , respectively.
Under each Plan, if the payment of management fees by the funds to FMR is
deemed to be indirect financing by the funds of the distribution of their
shares, such payment is authorized by the Plans. Each Plan specifically
recognizes that FMR may use its management fee revenue, past profits, or
other resources from any other source to make payments to investment
professionals that have selling agreements with the funds (qualified
recipients) as compensation for distribution and ongoing shareholder
support services.
NFSC may act in the capacity of a qualified recipient, and as such may
receive compensation under the Plan. Qualified recipients, at their
discretion, may retain any portion of the compensation they receive under
the Plan.
Under the Plan, payments made by FMR on behalf of Money Market Portfolio to
NFSC during the fiscal year ended July 31, 1995, 1994, and 1993 amounted to
$ 1,895,583 , $ 1,555,114 , and $ 835,027 , respectively.
Under the Plan, payments made by FMR on behalf of U.S. Government Portfolio
to NFSC during the fiscal year ended July 31, 1995, 1994, and 1993 amounted
to $ 607,170 , $ 854,010 , and $ 476,396 , respectively.
Under the Plan, payments made by FMR on behalf of Municipal Money Market
Portfolio to NFSC during the fiscal year ended July 31, 1995, 1994, and
1993 amounted to $ 304,074 , $ 288,744 , and $ 160,759 ,
respectively.
Out of fees paid by the Portfolios and FMR for the fiscal years ended
July 31, 1995, 1994 and 1993, NFSC retained the following amounts:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 1993
Money Market Portfolio $ 824,898 $ 1,471,097 $ 1,101,112
U.S. Government Portfolio 112,207 974,958 954,940
Municipal Money Market Portfolio 146,983 250,578 230,331
</TABLE>
Prior to approving the Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
have determined that there is a reasonable likelihood that the Plan will
benefit the fund and its shareholders. To the extent that the Plan
gives FMR and NFSC greater flexibility in connection with the distribution
of shares of each fund, additional sales of fund shares may result.
Furthermore, certain shareholder support services may be provided more
effectively under the Plan by local entities with whom shareholders have
other relationships.
The Plan does not provide for specific payments by the funds of any
expenses of NFSC, or obligate NFSC 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 NFSC for
advertising, marketing and distribution, and payments to third parties, the
amounts remaining, if any, may be used as NFSC may elect.
The Plan was approved by each fund's shareholders, in connection with a
reorganization transaction on September 29, 1993, pursuant to an Agreement
and Plan of Conversion.
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 by the courts or
appropriate regulatory agencies, NFSC believes that the Glass-Steagall Act
should not prohibit a bank from performing shareholder support services, or
servicing and recordkeeping functions. NFSC 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 the funds
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.
Each fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plan. No
preference for the instruments of such depository institutions will be
shown in the selection of investments.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Capital Reserves: Money Market Portfolio, Capital
Reserves: U.S. Government Portfolio, and Capital Reserves: Municipal Money
Market Portfolio are funds of Daily Money Fund, an open-end management
investment company organized as a Delaware business trust on September 29,
1993. The funds acquired all of the assets of Money Market Portfolio, U.S.
Government Portfolio, and Municipal Money Market Portfolio, respectively,
of Daily Money Fund on September 29, 1993.Currently, there are six funds of
Daily Money Fund: Capital Reserves: Money Market Portfolio, Capital
Reserves: U.S. Government Portfolio, Capital Reserves: Municipal Money
Market Portfolio, Money Market Portfolio, U.S. Treasury Portfolio, and
Treasury Only. The Trust Instrument permits the Trustees to create
additional funds.
In the event that FMR ceases to be the investment adviser to a fund,
the right of the trust or fund to use the identifying names "Fidelity" may
be withdrawn. There is a remote possibility that one fund might become
liable for any misstatement in its prospectus or statement of additional
information about another fund.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust 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 trust and requires
that a disclaimer be given in each contract entered into or executed by the
trust or the Trustees. The Trust Instrument provides for indemnification
out of each fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund. The Trust Instrument
also provides that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
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 fund 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 trust 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 fund'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 trust or a fund may, as
set forth in the Trust Instrument, call meetings of the trust or fund for
any purpose related to the trust or fund, as the case may be, including, in
the case of a meeting of the entire trust, the purpose of voting on removal
of one or more Trustees.
The trust or any fund 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 trust or the fund; however, the Trustees may,
without prior shareholder approval, change the form of organization of the
trust by merger, consolidation, or incorporation. If not so terminated or
reorganized, the trust and its funds 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 trust 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 trust registration
statement. Each fund may invest all of its assets in another investment
company.
CUSTODIAN. The Bank of New York, 48 Wall Street, New York, New York ,
is custodian of the assets of Money Market Portfolio and U.S. Government
Portfolio. UMB, 1010 Grand Avenue, Kansas City, Missouri 64106 is custodian
of the assets of Municipal Money Market Portfolio. The custodian is
responsible for the safekeeping of a fund's assets and the appointment of
the subcustodian banks and clearing agencies. The custodian takes no part
in determining the investment policies of a fund or in deciding which
securities are purchased or sold by a fund. However, a fund may invest in
obligations of the custodian and may purchase securities from or sell
securities to the custodian. Chemical Bank, headquartered in New York, also
may serve as a special purpose custodian of certain assets in connection
with pooled repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain 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 L.L.P, 1999 Bryan Street, Dallas, TX
75201, serves as the funds' independent accountant. The auditor
examines financial statements for the funds and provides other audit, tax,
and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended July 31, 1995 are included in the funds' Annual Report, which is
a separate report supplied with this SAI. Each fund's financial statements
and financial highlights are incorporated herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the
funds. A fund 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 COMMERCIAL PAPER RATINGS:
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. Earning 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 alternate
liquidity is maintained.
Issuers rated PRIME-3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes
in the level of debt protection measurements and the requirement for
relatively high financial leverage. Adequate alternate liquidity is
maintained.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S COMMERCIAL PAPER RATINGS:
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.
A-3 - This designation indicates that the capacity for timely payment is
satisfactory. These issues are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the
higher designations.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) 1. Financial Statements and Financial Highlights included in
the Annual Report for Daily Money Fund on behalf of Capital Reserves: Money
Market Portfolio, Capital Reserves: U.S. Government Portfolio, Capital
Reserves: Municipal Money Market Portfolio, Money Market Portfolio: Initial
Class, U.S. Treasury Portfolio: Initial Class, U.S. Treasury Portfolio:
Class B for the fiscal year ended July 31, 1995 are included in the fund's
Prospectus, are incorporated by reference into the fund's Statement of
Additional Information, and were filed on September 28, 1995 pursuant to
Rule 30d-1 under the Investment Company Act of 1940 and are incorporated
herein by reference.
(b) Exhibits:
1. (a) Trust Instrument dated June 20, 1991 was electronically filed and
is incorporated herein by reference to Exhibit 1(a) to Post Effective
Amendment No. 22.
(b) Certificate of Trust of Daily Money Fund II, dated June 20, 1991 was
electronically filed and is incorporated herein by reference to Exhibit
1(b) to Post-Effective Amendment No. 30 .
(c) Certificate of Amendment of Daily Money Fund II to Daily Money Fund,
dated July 14, 1991 was electronically filed and is incorporated herein by
reference as Exhibit 1(c) to Post Effective Amendment No. 30.
2. (a) By-Laws of the Trust effective May 19, 1994 were electronically
filed and are incorporated herein by reference to Exhibit 2(a) to Fidelity
Union Street Trust II's Post-Effective Amendment No. 10.
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 Portfolio, 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 Capital Reserves:
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
Income 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.
(g) Service Contract between Fidelity Distributors Corporation and
"Qualified Receipients" with respect to shares of U.S. Treasury Portfolio
and Money Market Portfolio is electronically filed herein as Exhibit 6(g).
(h) Service Contract (Administrative and Recordkeeping Services Only)
between Fidelity Distributors Corporation and " Qualified Receipients"
with repect to shares of U.S. Treasury Portfolio and Money Market Portfolio
is electronically filed herein as Exhibit 6(h).
7. (a) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners was electronically filed and is incorporated herein by
reference to Exhibit 7 to Union Street Trust's Post-Effective Amendment No.
87.
8 (a) Custodian Agreement and Appendix C, dated December 1, 1994 between
the Bank of New York and Fidelity Daily Money Fund on behalf of Fidelity
U.S. Treasury Income Portfolio; Money Market Portfolio; U.S. Treasury
Portfolio; and, Capital Reserves: U.S. Government Portfolio and Money
Market Portfolio was electronically filed and is incorporated herein by
reference to Exhibit 8(a) to Fidelity Hereford Street Trust's
Post-Effective Amendment No. 4 (File No. 33-52577).
(b) Appendix A, dated September 14, 1995, to the Custodian Agreement,
dated December 1, 1994, between The Bank of New York and Fidelity Daily
Money Fund on behalf of Fidelity U.S. Treasury Income Portfolio; Money
Market Portfolio; U.S. Treasury Portfolio; and, Capital Reserves: U.S.
Government Portfolio and Money Market Portfolio was electronically filed
and is incorporated herein by reference to Exhibit 8(d) to Fidelity Charles
Street Trust's Post-Effective Amendment No. 54 (File No. 2-73133).
(c) Appendix B, dated September 14, 1995, to the Custodian Agreement,
dated December 1, 1994, between The Bank of New York and Fidelity Daily
Money Fund on behalf of Fidelity U.S. Treasury Income Portfolio; Money
Market Portfolio; U.S. Treasury Portfolio; and, Capital Reserves: U.S.
Government Portfolio and Money Market Portfolio was electronically filed
and is incorporated herein by reference to Exhibit 8(e) to Fidelity Charles
Street Trust's Post-Effective Amendment No. 54 (File No. 2-73133).
(d) Custodian Agreement, Appendix A, Appendix B, and Appendix C, dated
December 1, 1994, between UMB Bank, n.a. and Fidelity Daily Money Fund on
behalf of Capital Reserves: Municipal Money Market Portfolio was
electronically filed and is incorporated herein by reference to Exhibit 8
to Fidelity California Municipal Trust's Post-Effective Amendment No. 28
(File No. 2-83367).
9. Not applicable.
10. None.
11. Consent of Coopers & Lybrand L.L.P. is electronically filed herein as
Exhibit 11.
12. None.
13. None.
14. (a ) Retirement Plan for Fidelity Individual Retirement Accounts, as
currently in effect, was electronically filed and is incorporated herein by
reference to Exhibit 14(a) to Union Street Trust's Post-Effective Amendment
No. 87
(b) Retirement Plan for Portfolio Advisory Services Individual Retirement
Account, as currently in effect, was electronically filed and is
incorporated herein by reference as Exhibit 14(i) to Union Street Trust's
Post-Effective Amendment No. 87.
(c) Retirement Plan for NFSC Individual Retirement Account, as currently
in effect, was electronically filed and is incorporated herein by reference
to Exhibit 14(h) to Union Street Trust's Post-Effective Amendment No. 87.
(d) NFSC Defined Contribution Plan, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
14(k) to Union Street's Trust Post-Effective Amendment No. 87.
(e) Fidelity Institutional Individual Retirement Account Custodian
Agreement and Disclosure Statement, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
14(d) to Union Street Trust's Post-Effective Amendment No. 87.
(f) Fidelity 403(b)(7) Individual Custodial Agreement, as currently in
effect, was electronically filed and is incorporated herein by reference to
Exhibit 14(j) to Union Street Trust's Post-Effective Amendment No. 87.
(g) Fidelity 403(b) Custodial Agreement, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
14(e) to Union Street Trust's Post-Effective Amendment No. 87.
(h) The CORPORATE plan for Retirement Profit Sharing/401k Plan, as
currently in effect, was electronically filed and is incorporated herein by
reference to Exhibit 14(l) to Union Street Trust's Post-Effective Amendment
No. 87.
(i) The CORPORATE plan for Retirement Money Purchase Pension Plan, as
currently in effect, was electronically filed and is incorporated herein by
reference to Exhibit 14(m) to Union Street Trust's Post-Effective Amendment
No. 87.
(j) Fidelity Advisor Funds Individual Retirement Account Custodial
Agreement Disclosure Statement in effect as of January 1, 1994 was filed
electronically and is incorporated herein by reference to Exhibit 14(b) to
Advisor Series I Post-Effective Amendment No. 22.
(k) Plymouth Defined Contribution Plan, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
14(o) to Commonwealth Trust's Post-Effective Amendment No. 57.
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. 25.
(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 to Exhibit 15(c) to Post-Effective
Amendment No. 30.
(d) Distribution and Service Plan for Class B of Daily Money Fund: U.S.
Treasury Portfolio was electronically filed and is incorporated herein by
reference as Exhibit 15(d) to Post-Effective Amendment No. 30 .
(e) Distribution and Service Plan pursuant to Rule 12b-1, for Treasury
Only Class II was electronically filed and is incorporated herein by
reference as Exhibit 15(e) to Post-Effective Amendment 31. Service Contract
between F
(f) Distribution and Service Plan pursuant to Rule 12b-1, for Treasury
Only Class III was electronically filed and is incorporated herein by
reference as Exhibit 15(f) to Post-Effective Amendment No. 31.
16. Schedules for computations of performance quotations for Daily Money
Fund: Treasury Only were electronically filed and are incorporated herein
by reference to Exhibit 16 to Post-Effective Amendment No. 30.
17. A Financial Data Schedule is electronically filed herein as Exhibit
17.
18. A Multiple Class of Shares Plan was electronically filed and is
incorporated herein by reference as Exhibit 18 to Post-Effective Amendment
31.
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
As of November 9, 1995
Title of Class Number of Record Holders
Money Market Portfolio - Initial Class 179,204
U.S. Treasury Portfolio - Initial Class 32,711
U.S. Treasury Portfolio-Class B 253
Treasury Only - Class I 2,701
Treasury Only - Class II 1
Treasury Only - Class III 2
Capital Reserves: Money Market Portfolio 125,019
Capital Reserves: U.S. Government Portfolio 11,692
Capital Reserves: Municipal Money Market Portfolio 7,812
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 and Director of FMR.
Robert Beckwitt Vice President of FMR and of funds advised by FMR.
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Dwight Churchill Vice President of FMR (1993).
William 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.
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.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Lawrence Greenberg Vice President of FMR (1993).
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Equity Division Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Richard Haberman Senior Vice President of FMR (1993).
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; Director of Technical Research.
Stephen P. Jonas Treasurer and Vice President of FMR (1993)); Treasurer of
FMR Texas Inc. (1993), Fidelity Management & Research
(U.K.) Inc. (1993), and Fidelity Management & Research
(Far East) Inc. (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); High Income
Division 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.
Malcolm W. MacNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR; Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Andrew Offit Vice President of FMR (1993).
Judy Pagliuca Vice President of FMR (1993).
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Lee Sandwen Vice President of FMR (1993).
Patricia A. Satterthwaite Vice President of FMR (1993) and of a fund advised by
FMR.
Thomas T. Soviero Vice President of FMR (1993).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Gary L. Swayze Vice President of FMR and of funds advised by FMR;
Tax-Free Fixed-Income Group Leader.
Thomas Sweeney Vice President of FMR (1993).
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; 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.; Secretary of
funds advised by FMR.
</TABLE>
(2) 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; Fixed-Income
Division Leader (1995).
Robert Auld Vice President of FMR Texas (1993).
Leland Barron Vice President of FMR Texas and of funds advised by
FMR.
Robert Litterst Vice President of FMR Texas and of funds advised by
FMR (1993).
Thomas D. Maher Vice President of FMR Texas and Assistant Vice
President of funds advised by FMR.
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; Money Market Division
Leader (1995).
Stephen P. Jonas Treasurer of FMR Texas Inc. (1993), Fidelity
Management & Research (U.K.) Inc. (1993), and Fidelity
Mangement & Research (Far East) Inc. (1993); Treasurer
and Vice President of FMR (1993).
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:
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
custodians UMB Bank, n.a., 1010 Grand Avenue, Kansas City, MO. and The Bank
of New York, 48 Wall Street, New York, N.Y.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant, on behalf of Daily Money Fund: Capital Reserves: Money
Market Portfolio, Capital Reserves: U.S. Government Portfolio, Capital
Reserves: Municipal Money Market Portfolio, Money Market Portfolio:Initial
Class, U.S. Treasury Portfolio: Initial Class, U.S. Treasury Portfolio;
Class B, undertakes to deliver to each person who has received the
prospectus or annual or semiannual financial report for a fund in an
electronic format, upon his or her request and without charge, a paper copy
of the prospectus or annual or semiannual report for the fund.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 34 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, and Commonwealth of Massachusetts, on the 29th day
of November 1995.
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 November 29, 1995
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Kenneth A. Rathgeber Treasurer November 29, 1995
Kenneth A. Rathgeber
/s/J. Gary Burkhead Trustee November 29, 1995
J. Gary Burkhead
/s/Ralph F. Cox * Trustee November 29, 1995
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee November 29, 1995
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee November 29, 1995
Richard J. Flynn
/s/E. Bradley Jones * Trustee November 29, 1995
E. Bradley Jones
/s/Donald J. Kirk * Trustee November 29, 1995
Donald J. Kirk
/s/Peter S. Lynch * Trustee November 29, 1995
Peter S. Lynch
/s/Edward H. Malone * Trustee November 29, 1995
Edward H. Malone
/s/Marvin L. Mann_____* Trustee November 29, 1995
Marvin L. Mann
/s/Gerald C. McDonough* Trustee November 29, 1995
Gerald C. McDonough
/s/Thomas R. Williams * Trustee November 29, 1995
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated December 15, 1994 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated December 15, 1994 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 A. Djinis, 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 fifteenth day of December, 1994.
/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 December 15, 1994
Edward C. Johnson 3d
SERVICE CONTRACT Exhibit 6(g)
__________________________________________________________________________
__________
WITH RESPECT TO SHARES OF:
(X) Daily Money Fund: Money Market
Portfolio
(X) Daily Money Fund: U.S. Treasury Portfolio
( ) Daily Tax-Exempt Money Fund
To Fidelity Distributors Corporation:
We desire to enter into a Contract with you for activities
in connection with the distribution of shares and the ser-
vicing of shareholders of the Fund noted above (the
"Fund") of which you are the principal underwriter as
defined in the Investment Company Act of 1940 (the "Act") and for which you
are the agent for the continuous distribution of shares.
THE TERMS AND CONDITIONS OF THIS CONTRACT
ARE AS FOLLOWS:
1. We shall provide distribution and certain shareholder
services for our clients who own Fund shares ("clients"),
which services may include, without limitation: sale of
shares of the Fund; answering client inquiries regarding
the Fund; assistance to clients in changing dividend
options, account designations and addresses; performance
of subaccounting; processing purchase and redemption
transactions, including automatic investment and redemp-
tion of client account cash balances; providing periodic
statements showing a client's account balance and the
integration of such statements with other transactions;
arranging for bank wires; and providing such other infor-
mation and services as you reasonably may request.
2. We shall provide such office space and equipment,
telephone facilities and personnel (which may be all or
any part of the space, equipment and facilities currently
used in our business, or all or any personnel employed by
us) as is necessary or beneficial for providing information
and services to shareholders of the Fund, and to assist you
in servicing accounts of clients.
3. We agree to indemnify and hold you, the Fund, and
the Fund's adviser and transfer agent harmless from any
and all direct or indirect liabilities or losses resulting from
requests, directions, actions or inactions, of or by us or
our officers, employees or agents regarding the purchase,
redemption, transfer or registration of shares for our cli-
ents. Such indemnification shall survive the termination of
this Contract.
Neither we nor any of our officers, employees or agents
are authorized to make any representation concerning
Fund shares except those contained in the then current
Fund Prospectus, copies of which will be supplied by you
to us; and we shall have no authority to act as agent for
the Fund or for you.
4. In consideration of the services and facilities described
herein, we shall be entitled to receive, and you shall cause
to be paid to us by yourself or by Fidelity Management &
Research Company, investment adviser of the Fund, such
fees as are set forth in the accompanying "Fee Schedule
for Qualified Recipients." We understand that the payment
of such fees has been authorized pursuant to a Service
Plan approved by the Board of Trustees of the Fund, and
those Trustees who are not "interested persons" of the Fund
(as defined in the Act) and who have no direct or indirect
financial interest in the operation of the Service Plan or in
any agreements related to the Service Plan (hereinafter
referred to as "Qualified Trustees"), and shareholders of
the Fund, that such fees will be paid out of the fees paid
to the Fund's investment adviser, said adviser's past prof-
its or any other source available to said adviser; that the
cost to the Fund for such fees shall not exceed the amount
of the advisory and service fee; and that such fees are sub-
ject to change during the term of this Contract and shall be
paid only so long as this Contract is in effect.
5. We agree to conduct our activities in accordance with
any applicable federal or state laws, including securities
laws and any obligation thereunder to disclose to our cli-
ents the receipt of fees in connection with their investment
in the Fund.
6. You reserve the right, at your discretion and without
notice, to suspend the sale of shares or withdraw the sale
of shares of the Fund.
7. This Contract shall continue in force for one year from
the effective date (see below), and thereafter shall con-
tinue automatically for successive annual periods, pro-
vided such continuance is specifically subject to termi-
nation without penalty at any time if a majority of the
Fund's Qualified Trustees vote to terminate or not to con-
tinue the Service Plan. This Contract is also terminable
without penalty at any time the Service Plan is terminated
by vote of a majority of the Fund's outstanding voting
securities upon 60 days' written notice thereof to us. This
Contract may also be terminated by us, for any reason,
upon 15 days' written notice to you. Notwithstanding anything contained
herein, in the event that the Service Plan
shall terminate or we shall fail to perform the distribution
and shareholder servicing functions contemplated by this
Contract, such determination to be made in good faith by
the Fund or you, this Contract is terminable effective upon
receipt of notice thereof by us. This Contract will also
terminate automatically in the event of its assignment
(as defined in the Act).
8. All communications to you shall be sent to you at your offices, 82
Devonshire Street, Boston, MA 02109. Any
notice to us shall be duly given if mailed or telegraphed to
us at the address shown in this Contract.
9. This Contract shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
Very truly yours,
__________________________________________________________________________
____________________________
Name of Qualified Recipient (Please Print or Type)
__________________________________________________________________________
____________________________
Street City State
Zip Code
By
__________________________________________________________________________
_________________________
Authorized Signature
Date__________________________________________
NOTE: Please return two signed copies of this Service Contract to Fidelity
Distributors Corporation. Upon acceptance, one
countersigned copy will be returned to you.
FOR INTERNAL USE ONLY:
EFFECTIVE DATE __________________________________
10834-SA4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Prospectuses
and Statements of Additional Information in Post-Effective Amendment No. 34
to the Registration Statement on Form N-1A of Daily Money Fund: Capital
Reserves: Money Market Portfolio, Capital Reserves: U.S. Government
Portfolio, Capital Reserves: Municipal Money Market Portfolio, (report
dated August 24, 1995) and Money Market Portfolio: Initial Class, U.S.
Treasury Portfolio: Initial Class, U.S. Treasury Portfolio: Class B (report
dated August 25, 1995) relating to the financial statements and financial
highlights included in the July 31, 1995 Annual Reports to Shareholders of
Capital Reserves: Money Market Portfolio, Capital Reserves: U.S. Government
Portfolio, Capital Reserves: Municipal Money Market Portfolio, Money Market
Portfolio: Initial Class, U.S. Treasury Portfolio: Initial Class, U.S.
Treasury Portfolio: Class B.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the Statements
of Additional Information.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
November 29.1995
SERVICE CONTRACT
(ADMINISTRATIVE AND RECORDKEEPING SERVICES ONLY)
EXHIBIT 6(H)
__________________________________________________________________________
__________
WITH RESPECT TO SHARES OF:
(X) Daily Money Fund: Money Market
Portfolio
(X) Daily Money Fund: U.S. Treasury Portfolio
( ) Daily Tax-Exempt Money Fund
To Fidelity Distributors Corporation:
We desire to enter into a Contract with you for activities
in connection with the servicing of beneficial owners of
shares of the Fund(s) noted above (the "Fund") of which
you are the principal underwriter as defined in the Invest-
ment Company Act of 1940 (the "Act") and for which you
are the agent for the continuous distribution of shares.
THE TERMS AND CONDITIONS OF THIS CONTRACT
ARE AS FOLLOWS:
1. We shall provide recordkeeping and certain Fund-
related services for our clients who beneficially own Fund
shares ("clients"), which services may include, without limitation:
answering client inquries regarding the Fund; assistance to clients in
changing dividend options, account designations and addresses; performance
of subaccounting; processing purchase and redemption transactions,
including automatic investment and redemption of client account cash
balances; providing periodic statements showing a client's account balance
and the integration of such statements with other transactions; arranging
for bank wires; and providing such other information and services as you or
our clients reasonably may request.
2. We shall provide such office space and equipment,
telephone facilities and personnel (which may be all or
any part of the space, equipment and facilities currently
used in our business, or all or any personnel employed by
us) as is necessary or beneficial for providing Fund-related information
and services to clients.
3. We agree to indemnify and hold you, the Fund, and
the Fund's adviser and transfer agent harmless from any
and all direct or indirect liabilities or losses resulting from
requests, directions, actions or inactions, of or by us or
our officers, employees or agents regarding the purchase,
redemption, transfer or registration of shares of the fund. Such
indemnification shall survive the termination of
this Contract.
Neither we nor any of our officers, employees or agents
are authorized to make any representation concerning
Fund shares except those contained in the then current
Fund Prospectus, and which are consistent with our capabilities under
applicable law; and we shall have no authority to act as agent for the Fund
or for you.
4. In consideration of the services and facilities described
herein, we shall be entitled to receive, and you shall cause
to be paid to us by yourself or by Fidelity Management
& Research Company, investment adviser of the Fund,
such fees as are set forth in the accompanying "Fee
Schedule for Qualified Recipients." We understand that
the payment of such fees has been authorized pursuant to
a Service Plan approved by the Board of Trustees of the
Fund, and those Trustees who are not "interested persons"
of the Fund (as defined in the Act) and who have no direct
or indirect financial interest in the operation of the Service
Plan or in any agreements related to the Service Plan
(hereinafter referred to as "Qualified Trustees"), and
shareholders of the Fund, that such fees will be paid out
of the fees paid to the Fund's investment adviser, said
adviser's past profits or any other source available to said
adviser; that the cost to the Fund for such fees shall not
exceed the amount of the advisory and service fee; and
that such fees are subject to change during the term of this
Contract and shall be paid only so long as this Contract is
in effect.
5. We agree to conduct our activities in accordance with
any applicable federal or state laws, including securities
laws and any obligation thereunder to disclose to our cli-
ents the receipt of fees in connection with their beneficial
ownership of shares of the Fund.
6. You reserve the right, at your discretion and without
notice, to suspend the sale of shares or withdraw the sale
of shares of the Fund.
7. This Contract shall continue in force for one year from
the effective date (see below), and thereafter shall con-
tinue automatically for successive annual periods, pro-
vided such continuance is specifically subject to termi-
nation without penalty at any time if a majority of the
Fund's Qualified Trustees vote to terminate or not to con-
tinue the Service Plan. This Contract is also terminable
without penalty at any time the Service Plan is terminated
by vote of a majority of the Fund's outstanding voting
securities upon 60 days' written notice thereof to us. This
Contract may also be terminated by us, for any reason,
upon 15 days' written notice to you. Notwithstanding anything contained
herein, in the event that the Service Plan
shall terminate or we shall fail to perform the record-
keeping and client servicing functions contemplated by
this Contract, such determination to be made in good faith
by the Fund or you, this Contract is terminable effective
upon receipt of notice thereof by us. This Contract will
also terminate automatically in the event of its assignment
(as defined in the Act).
8. All communications to you shall be sent to you at your offices, 82
Devonshire Street, Boston, MA 02109. Any
notice to us shall be duly given if mailed or telegraphed to
us at the address shown in this Contract.
9. This Contract shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
Very truly yours,
__________________________________________________________________________
____________________________
Name of Qualified Recipient (Please Print or Type)
__________________________________________________________________________
____________________________
Street City State
Zip Code
By
__________________________________________________________________________
_________________________
Authorized Signature
Date__________________________________________
NOTE: Please return two signed copies of this Service Contract to Fidelity
Distributors Corporation. Upon acceptance, one
countersigned copy will be returned to you.
FOR INTERNAL USE ONLY:
EFFECTIVE DATE __________________________________
10834-SAR3
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000028540
<NAME> Daily Money Fund
<SERIES>
<NUMBER> 11
<NAME> Money Market Portfolio
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Jul-31-1995
<PERIOD-END> jul-31-1995
<INVESTMENTS-AT-COST> 2,153,526
<INVESTMENTS-AT-VALUE> 2,153,526
<RECEIVABLES> 9,528
<ASSETS-OTHER> 3,855
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,166,909
<PAYABLE-FOR-SECURITIES> 25,001
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,519
<TOTAL-LIABILITIES> 27,520
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,140,163
<SHARES-COMMON-STOCK> 2,140,163
<SHARES-COMMON-PRIOR> 1,525,058
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (774)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,139,389
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 106,286
<OTHER-INCOME> 0
<EXPENSES-NET> 12,003
<NET-INVESTMENT-INCOME> 94,283
<REALIZED-GAINS-CURRENT> (584)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 93,699
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 94,283
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,812,791
<NUMBER-OF-SHARES-REDEEMED> 9,282,735
<SHARES-REINVESTED> 85,048
<NET-CHANGE-IN-ASSETS> 614,521
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (190)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,233
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,898
<AVERAGE-NET-ASSETS> 1,846,557
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .050
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .050
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000028540
<NAME> Daily Money Fund
<SERIES>
<NUMBER> 21
<NAME> U.S. Treasury Portfolio - Initial Class
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Jul-31-1995
<PERIOD-END> jul-31-1995
<INVESTMENTS-AT-COST> 1,838,454
<INVESTMENTS-AT-VALUE> 1,838,454
<RECEIVABLES> 5,824
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,844,279
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 13,428
<TOTAL-LIABILITIES> 13,428
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,831,277
<SHARES-COMMON-STOCK> 1,828,122
<SHARES-COMMON-PRIOR> 2,025,604
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (426)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,830,851
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 108,425
<OTHER-INCOME> 0
<EXPENSES-NET> 12,749
<NET-INVESTMENT-INCOME> 95,676
<REALIZED-GAINS-CURRENT> 29
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 95,705
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 95,474
<DISTRIBUTIONS-OF-GAINS> 0
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<NAME> Daily Money Fund
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<NAME> Daily Money Fund
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