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. 38 [X]
and
REGISTRATION STATEMENT (No. 811-3480)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 38 [ X]
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
Siobhan 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 July 31, 1996 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.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date for a
previously filed
post-effective amendment.
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 May 24, 1996.
ADVISOR ANNUITY SAI/PART B
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS CLASS I
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 .............................. Expenses
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance
d .............................. Cover Page
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 Principles
and Risks; Securities and Investment Practices
5 a .............................. Charter
b i............................. FMR and Its Affiliates
ii........................... FMR and Its Affiliates; Charter; Breakdown of
Expenses
iii.......................... Expenses; Breakdown of Expenses; Management
Fee
c .............................. FMR and Its Affiliates
d .............................. Charter; Breakdown of Expenses; Cover Page;
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 .............................. Cover Page; Charter
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 .............................. *
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL
MONEY MARKET
FUNDS
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 July 31, 1996. 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.
IMMI-pro-0796
FUND
NUMBER
TREASURY ONLY CLASS I 680
TREASURY CLASS I 695
GOVERNMENT CLASS I 057
DOMESTIC CLASS I 690
RATED MONEY MARKET CLASS I 052
MONEY MARKET CLASS I 059
TAX-EXEMPT CLASS I 056
PROSPECTUS
JULY 31, 1996(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Class I'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 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 institutional and corporate investors a convenient and
economical 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. Each of
Treasury Only, Treasury, and Government offers an added measure of safety
with its focus on U.S. Treasury or Government 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
investment.
Each fund is composed of multiple classes of shares. All classes of a fund
have a common investment objective and investment portfolio. Class I shares
do not have a sales charge and do not pay a distribution fee. Class II
shares do not have a sales charge, but do pay a 0.15% distribution fee.
Class III shares do not have a sales charge, but do pay a 0.25%
distribution fee. Because Class I shares have no sales charge and do not
pay a distribution fee, Class I shares are expected to have a higher total
return than Class II and Class III shares. You may obtain more information
about Class II and Class III shares, which are not offered through this
prospectus, from your investment professional, or by calling Fidelity
Client Services at 1-800-843-3001. Contact your investment professional to
discuss which class is appropriate for you.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
Class I 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). In
addition, each fund is responsible for certain other expenses.
Class I'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 I of
each fund and are calculated as a percentage of average net assets of Class
I of each fund.
Class I Operating Expenses
TREASURY ONLY Management fee 0.20%
A
12b-1 fee (Distribution fee) None
Other expenses 0.00
%
Total operating expenses 0.20%
A
TREASURY Management fee 0.20
%
12b-1 fee (Distribution fee) None
Other expenses 0.00%
A
Total operating expenses 0.20%
A
GOVERNMENT Management fee 0.20
%
12b-1 fee (Distribution fee) None
Other expenses 0.00%
A
Total operating expenses 0.20%
A
DOMESTIC Management fee 0.20
%
12b-1 fee (Distribution fee) None
Other expenses 0.00%
A
Total operating expenses 0.20%
A
RATED MONEY MARKET Management fee 0.20%
A
12b-1 fee (Distribution fee) None
Other expenses 0.00
%
Total operating expenses 0.20%
A
MONEY MARKET Management fee 0.18%
A
12b-1 fee (Distribution fee) None
Other expenses 0.00%
A
Total operating expenses 0.18%
A
TAX-EXEMPT Management fee 0.20
%
12b-1 fee (Distribution fee) None
Other expenses 0.00%
A
Total operating expenses 0.20%
A
A AFTER EXPENSE REDUCTIONS.
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment in Class I shares, assuming a 5% annual return and full
redemption at the end of each time period:
1 3 5 10
Year Years Years Years
Treasury Only $ 2 $ 6 $ 11 $ 26
Treasury $ 2 $ 6 $ 11 $ 26
Government $ 2 $ 6 $ 11 $ 26
Domestic $ 2 $ 6 $ 11 $ 26
Rated Money Market $ 2 $ 6 $ 11 $ 26
Money Market $ 2 $ 6 $ 10 $ 23
Tax-Exempt $ 2 $ 6 $ 11 $ 26
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 I of each fund to the extent
that total operating expenses (excluding interest, taxes, brokerage
commissions, and extraordinary expenses) are in excess of 0.20% (0.18% for
Money Market), of its average net assets. If these agreements were not in
effect, the management fee, other expenses, and total operating expenses,
as a percentage of average net assets, of Class I of each fund would have
been the following amounts: 0.42 %, 0.00 %, and 0.42 %
for Treasury Only; 0.20 %, 0.04 %, and 0.24 % for
Treasury; 0.20 %, 0.04 %, and 0.24 % for Government;
0.20 %, 0.07 %, and 0.27 % for Domestic; 0.42 %,
0.00 %, and 0.42 % for Rated Money Market; 0.20 %,
0.09 %, and 0.29 % for Money Market; and 0.20 %,
0.06 %, and 0.26 % for Tax-Exempt.
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 independent accountants. Price Waterhouse LLP serves as
independent accountants for each of Treasury, Government, Domestic, and
Money Market. Coopers & Lybrand L.L.P. serves as independent
accountants for each of Treasury Only, Rated Money Market, and Tax-Exempt.
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 Fidelity Client Services at
the phone number listed on page .
TREASURY ONLY - CLASS I
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended March 31 1996 1995A 1994B 1993B 1992B 1991C
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations .054 .033 .032 .031 .045 .055
Net interest income
Less Distributions (.054) (.033) (.032) (.031) (.045) (.055)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total returnD 5.56% 3.38% 3.27% 3.10% 4.64% 5.63%
Net assets, end of period (000
omitted) $ 1,361,050 $ 1,266,285 $ 1,049,170 $ 1,047,791 $ 1,197,559 $ 705,543
Ratio of expenses to average net
assetsE .20% .20%F .20% .20% .20% .03%F
Ratio of net interest income to
average 5.41% 5.02%F 3.22% 3.05% 4.43% 6.34%F
net assets
</TABLE>
A AUGUST 1, 1994 TO MARCH 31, 1995
B YEAR ENDED JULY 31
C OCTOBER 3, 1990 (COMMENCEMENT OF OPERATIONS)TO JULY 31, 1991
D TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
F ANNUALIZED
TREASURY - CLASS I
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and
Ratios
Years ended
March 31 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987A
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 .056 .047 .030 .034 .053 .076 .088 .078 .064 .009
Less Distributions
From net
interest
income (.056) (.047) (.030) (.034) (.053) (.076) (.088) (.078) (.064) (.009)
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
returnB 5.79% 4.78% 3.06% 3.46% 5.41% 7.87% 9.13% 8.11% 6.60% .93%
Net assets,
end of
period
(000 $ 7,134,0 $ 4,688, $ 4,551, $ 5,589, $ 5,476, $ 3,281, $ 1,481, $ 658,06 $ 379,50 $ 26,314
omitted) 49 198 918 663 852 686 324 8 1
Ratio of
expenses
to average
net .20% .18% .18% .18% .18% .18% .19% .20% .20% .20%D
assetsC
Ratio of
net
investment
income to 5.61% 4.71% 3.01% 3.38% 5.12% 7.50% 8.63% 7.92% 6.46% 6.11%D
average net assets
</TABLE>
A FEBRUARY 2, 1987 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1987
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
GOVERNMENT - CLASS I
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and
Ratios
Years ended
March 31 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
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 .057 .048 .031 .035 .054 .077 .088 .079 .068 .063
Less Distributions
From net
interest
income (.057) (.048) (.031) (.035) (.054) (.077) (.088) (.079) (.068) (.063)
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 5.84% 4.86% 3.13% 3.56% 5.55% 7.94% 9.15% 8.19% 6.98% 6.51%
Net assets,
end of
period
(000 $ 3,064,1 $ 3,321, $ 3,764, $ 5,686, $ 4,603, $ 3,613, $ 2,815, $ 1,918, $ 1,878, $ 1,358,
omitted) 36 066 544 166 781 838 622 342 786 659
Ratio of
expenses to
average
net .20% .18% .18% .18% .18% .18% .20% .20% .20% .20%
assetsB
Ratio of
net
interest
income to 5.69% 4.77% 3.07% 3.50% 5.33% 7.62% 8.74% 7.90% 6.78% 6.28%
average net assets
</TABLE>
A TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
B FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
DOMESTIC - CLASS I
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
Years ended March 31 1996 1995 1994 1993 1992 1991 1990A
Net asset value, beginning of
period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations
Net interest income .057 .049 .031 .034 .054 .078 .035
Less Distributions
From net interest income (.057) (.049) (.031) (.034) (.054) (.078) (.035)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total returnB 5.85% 4.97% 3.14% 3.50% 5.50% 8.11% 3.52%
Net assets, end of period (000
omitted) $ 1,117,917 $ 771,937 $ 656,976 $ 804,354 $ 558,727 $ 355,369 $ 330,974
Ratio of expenses to average
net assetsC .20% .18% .18% .18% .18% .18% .06%D
Ratio of net interest income to
average net 5.66% 4.94% 3.09% 3.43% 5.24% 7.79% 8.44%D
assets
</TABLE>
A NOVEMBER 3, 1989 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1990
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
RATED MONEY MARKET - CLASS I
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and
Ratios
Years ended
March 1996A 1995B 1994B 1993B 1992C 1991D 1990D 1989D 1988D 1987D 1986D
31
Net asset
value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning
of period
Income from
Investment
Operations
Net
interest
income .032 .054 .033 .029 .034 .063 .080 .089 .070 .062 .069
Less Distributions
From net
interest (.032) (.054) (.033) (.029) (.034) (.063) (.080) (.089) (.070) (.062) (.069)
income
Net asset
value, end $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
Total
returnE 3.21% 5.53% 3.34% 2.93% 3.44% 6.44% 8.27% 9.26% 7.27% 6.42% 7.07%
Net assets,
end of $ 223,772 $ 300,86 $ 399,33 $ 611,41 $ 765,72 $ 851,87 $ 944,78 $ 1,273,7 $ 1,035,7 $ 1,231,7 $ 1,300,8
period 3 3 0 1 2 2 45 56 68 32
(000 omitted)
Ratio of
expenses
to .27%F,G .42% .42% .42% .42%G .42% .42% .42% .42% .42% .42%
average
net assets
Ratio of
net
interest 5.46%G 5.33% 3.24% 2.89% 4.04%G 6.38% 8.01% 8.91% 7.00% 6.22% 6.87%
income
to average net
assets
</TABLE>
A SEPTEMBER 1, 1995 TO MARCH 31, 1996
B YEAR ENDED AUGUST 31
C NOVEMBER 1, 1991 TO AUGUST 31, 1992
D YEAR ENDED OCTOBER 31
E TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN FOR THE PERIOD ENDED MARCH 31, 1996 WOULD HAVE BEEN LOWER HAD
CERTAIN EXPENSES NOT BEEN REDUCED.
F FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
G ANNUALIZED
MONEY MARKET - CLASS I
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
Selected Per-Share Data
and Ratios
Years ended 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
March 31
Net asset
value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning
of period
Income from
Investment
Operations
Net
interest .057 .049 .032 .035 .055 .078 .089 .080 .069 .064
income
Less Distributions
From net
interest (.057) (.049) (.032) (.035) (.055) (.078) (.089) (.080) (.069) (.064)
income
Net asset
value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
Total
returnA 5.90% 4.99% 3.20% 3.58% 5.59% 8.13% 9.25% 8.35% 7.14% 6.57%
Net assets,
end of $ 6,465,95 $ 5,130,12 $ 3,200,27 $ 4,332,99 $ 3,990,39 $ 4,706,93 $ 4,127,87 $ 2,627,45 $ 2,524,76 $ 1,569,19
period 3 3 7 5 5 6 9 0 7 9
(000 omitted)
Ratio of
expenses .18% .18% .18% .18% .18% .18% .20% .20% .20% .20%
to average net
assetsB
Ratio of
net 5.73% 5.00% 3.15% 3.50% 5.42% 7.80% 8.82% 8.11% 6.95% 6.33%
interest income to
average net assets
</TABLE>
A TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
B FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
TAX-EXEMPT - CLASS I
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data
and Ratios
Years ended 1996 1995A 1994B 1993B 1992B 1991B 1990B 1989B 1988B 1987B
March 31
Net asset
value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of
period
Income from
Investment
Operations
Net
interest .036 .027 .024 .026 .040 .053 .058 .058 .046 .042
income
Less Distributions
From net (.036) (.027) (.024) (.026) (.040) (.053) (.058) (.058) (.046) (.042)
interest income
Net asset
value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end
of period
Total
returnC 3.70% 2.74% 2.44% 2.66% 4.02% 5.40% 6.00% 5.97% 4.72% 4.28%
Net
assets,
end of $ 1,806,91 $ 1,876,81 $ 2,390,66 $ 2,239,03 $ 2,556,99 $ 2,116,84$ 1,984,63 $ 2,006,86 $ 2,080,84 $ 1,850,05
period (000 8 5 3 1 5 1 6 7 6 3
omitted)
Ratio of
expenses .19% .18%E .18% .18% .18% .18% .20% .20% .20% .20%
to average net
assetsD
Ratio of
net 3.64% 3.20%E 2.41% 2.62% 3.90% 5.28% 5.82% 5.80% 4.65% 4.20%
interest income to
average net
assets
</TABLE>
A JUNE 1, 1994 TO MARCH 31, 1995
B YEAR ENDED MAY 31
C TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
D FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
E 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. Treasury Only is a diversified fund
of Daily Money Fund, an open-end management investment company organized as
a Delaware business trust on September 29, 1993. Treasury, Government,
Domestic, and Money Market are diversified funds of Fidelity Institutional
Cash Portfolios, an open-end management investment company organized as a
Delaware business trust on May 30, 1993. Rated Money Market is a
diversified fund of Fidelity Money Market Trust, an open-end management
investment company organized as a Delaware business trust on December 29,
1994. Tax-Exempt is a diversified fund of Fidelity Institutional Tax-Exempt
Cash Portfolios, an open-end management investment company organized as a
Delaware business trust on January 29, 1992. There is a remote possibility
that one fund might become liable for a misstatement in the prospectus
about another fund.
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 of each of Treasury Only, Treasury,
Government, Domestic, Money Market, and Tax-Exempt. For shareholders of
Rated Money Market, the number of votes you are entitled to is based upon
the dollar value of your investment.
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 May 31 , 19 96 , FMR advised funds having approximately
26 million shareholder accounts with a total value of more than
$ 394 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 I 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.
UMB Bank, n.a. (UMB) is Tax-Exempt's transfer agent, although it employs
FIIOC to perform these functions for Class I of 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
EACH FUND'S INVESTMENT APPROACH
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. Each fund stresses
preservation of capital, liquidity, and income (tax-free income in the case
of Tax-Exempt) and does 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.
TREASURY ONLY seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share (NAV) of $1.00.
The fund invests only in U.S. Treasury securities. The fund does not enter
into repurchase agreements or reverse repurchase agreements.
The fund will invest in those securities whose interest is specifically
exempt from state and local income taxes under federal law; such interest
is not exempt from federal income tax.
TREASURY seeks to obtain as high a level of current income as is consistent
with the preservation of principal and liquidity within the limitations
prescribed for the fund.
The fund invests only in U.S. Treasury securities and repurchase agreements
for these securities. The fund does not enter into reverse repurchase
agreements.
GOVERNMENT seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. Government securities and repurchase
agreements for these securities. The fund also may enter into reverse
repurchase agreements.
DOMESTIC seeks to obtain as high a level of current income as is consistent
with the preservation of principal and liquidity within the limitations
prescribed for the fund.
The fund invests only in the highest-quality U.S. dollar-denominated money
market securities of domestic issuers, including U.S. Government securities
and repurchase agreements. Securities are "highest-quality" if rated in the
highest rating category by at least two nationally recognized rating
services, or by one if only one rating service has rated a security, or, if
unrated, determined to be of equivalent quality by FMR. The fund also may
enter into reverse repurchase agreements.
RATED MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. dollar-denominated money market securities of
domestic and foreign issuers rated in the highest rating category by at
least two nationally recognized rating services, U.S. Government
securities , and repurchase agreements. The fund also may enter into
reverse repurchase agreements.
MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in the highest-quality U.S. dollar-denominated money
market securities of domestic and foreign issuers, including U.S.
Government securities and repurchase agreements. Securities are
"highest-quality" if rated in the highest rating category by at least two
nationally recognized rating services, or by one if only one rating service
has rated a security, or, if unrated, determined to be of equivalent
quality by FMR. The fund also may enter into reverse repurchase agreements.
TAX-EXEMPT seeks to obtain as high a level of interest income exempt from
federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal.
The fund invests primarily in high-quality, short-term municipal
securities, but also may invest in high-quality, long-term instruments
whose features give them interest rates, maturities, and prices similar to
short-term instruments. Securities in which the fund invests must be rated
in the highest rating category for short-term securities by at least one
nationally recognized rating service and rated in one of the two highest
categories for short-term securities by another nationally recognized
rating service if rated by more than one nationally recognized rating
service, or, if unrated, determined to be of equivalent quality by FMR.
The fund, under normal conditions, will invest so that at least 80% of its
income distributions is exempt from federal income tax. The fund does
not currently intend to purchase municipal securities whose interest
is subject to the federal alternative minimum tax.
FMR normally invests the fund's assets according to its investment strategy
and does not expect to invest in federally taxable obligations. The fund
also reserves the right to hold a substantial amount of uninvested cash or
to invest more than normally permitted in federally taxable obligations for
temporary, defensive purposes.
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.
Fund holdings are detailed 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.
MONEY MARKET SECURITIES are high-quality, short-term instruments
issued by the U.S. Government, corporations, financial institutions,
municipalities, local and state governments, and other entities. These
securities may carry fixed, variable, or floating interest rates.
Some money market securities employ a trust or 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. TREASURY MONEY MARKET SECURITIES are short-term debt
obligations issued by the U.S. Treasury and include bills, notes, and
bonds. U.S. Treasury securities are backed by the full faith and credit of
the United States.
U.S. GOVERNMENT MONEY MARKET SECURITIES are short-term debt
instruments 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, U.S. Government securities such as those issued
by the Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under
certain circumstances. Other U.S. Government securities , such as
those issued by the Federal Farm Credit Banks Funding
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.
CREDIT SUPPORT. Issuers may employ various forms of credit enhancement,
including letters of credit, guarantees, or insurance from a bank,
insurance company, or other entity. These arrangements expose the fund to
the credit risk of the entity. In the case of foreign entities, extensive
public information about the entity may not be available and the entity may
be subject to unfavorable political, economic, or governmental developments
which might affect its ability to honor its commitment.
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. The risks associated with stripped securities are
similar to those of other money market securities, although stripped
securities may be more volatile. U.S. Treasury securities that have
been stripped by a Federal Reserve Bank are obligations issued by the U.S.
Treasury.
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.
RESTRICTION: A fund may not purchase a security if, as a result, more than
10% of its 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.
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.
RESTRICTIONS: Each of Domestic, Rated Money Market, and Money Market will
invest more than 25% of its total assets in the financial services
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: Each of Domestic, Rated Money Market, and Money Market may
not invest more than 5% of its total assets in any one issuer, except that
each 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.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
These limitations do not apply to U.S. Government securities.
Tax-Exempt may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
BORROWING. A 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 of Government, Domestic, Rated Money Market, and Money
Market 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. Each of Treasury Only, Treasury, and Tax-Exempt may borrow
only for temporary or emergency purposes, 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. Treasury Only, Treasury, Government, and Tax-Exempt do not
lend money to other funds advised by FMR.
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.
Treasury Only seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share (NAV) of $1.00.
Each of Treasury, Government, Domestic, Rated Money Market, and Money
Market seeks to obtain as high a level of current income as is consistent
with the preservation of principal and liquidity within the limitations
prescribed for the fund.
Tax-Exempt seeks to obtain as high a level of interest income exempt from
federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal. The fund, under normal conditions, will invest so
that at least 80% of its income distributions is exempt from federal income
tax.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
Each of Domestic, Rated Money Market, and Money Market will invest more
than 25% of its total assets in obligations of companies in the financial
services industry.
Each of Government, Domestic, Rated Money Market, and Money Market 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. Tax-Exempt 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 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 class's 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
Each fund pays FMR a management fee every month . Each of
Treasury, Government, Domestic, Money Market, and Tax-Exempt pays FMR a
fee at an annual rate of 0.20% of its average net assets.
Each of Treasury Only and Rated Money Market pays FMR a fee at an annual
rate of 0.42% of its average net assets. FMR pays all of the other expenses
of Treasury Only and Rated Money Market with limited exceptions.
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. FMR pays FMR Texas 50% of its management fee (before expense
reimbursements) for these services. F or the fiscal year ended March
31, 1996 , FMR paid FMR Texas 0.10% of each of Treasury's, Government's,
Domestic's, Money Market's, and Tax-Exempt's average net assets, and 0.21%
of each of Treasury Only's and Rated Money Market's average net assets.
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 Class I shares of Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market (the Taxable
Funds). Fidelity Service Co. (FSC) calculates the NAV and dividends for
each Taxable Fund, and maintains the general accounting records for each
Taxable Fund. These expenses are paid by FMR on behalf of Treasury Only and
Rated Money Market pursuant to its management contracts.
For the fiscal year ended March 31, 1996, Class I of each of Treasury,
Government, and Domestic paid FIIOC fees equal to 0.03% of its average net
assets, and Class I of Money Market paid FIIOC fees equal to 0.08% of its
average net assets. For the fiscal year ended March 31, 1996, each of
Treasury, Government, Domestic, and Money Market paid FSC fees equal to
0.01% of its average net assets.
UMB has entered into a sub-arrangement with FIIOC. FIIOC performs transfer
agency, dividend disbursing and shareholder services for Class I shares of
Tax-Exempt. UMB has also entered into a sub-arrangement with FSC. FSC
calculates the NAV and dividends for Tax-Exempt, and maintains Tax-Exempt's
general accounting records. All of the fees are paid to FIIOC and FSC by
UMB, which is reimbursed by Class I or the fund, as appropriate, for such
payments.
For the fiscal year ended March 31, 1996, fees paid by UMB to FIIOC on
behalf of Class I of Tax-Exempt amounted to 0.02 % of Class I's
average net assets, and fees paid by UMB to FSC on behalf of Tax-Exempt
amounted to 0.01 % of its average net assets.
Class I of each fund has 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 Class I shares. This may include
reimbursing FDC for payments to third parties, such as banks or
broker-dealers, that provide shareholder support services or engage in the
sale of the funds' Class I shares. The Board of Trustees of each fund has
authorized such payments.
Each fund (other than Treasury Only and Rated Money Market) 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. Each of Treasury Only and Rated Money Market also
pays other expenses, such as brokerage fees and commissions, interest on
borrowings (only Treasury Only), taxes, and the compensation of trustees
who are not affiliated with Fidelity.
YOUR ACCOUNT
If you invest through an investment professional, your investment
professional, including a broker-dealer or financial institution, may
charge you a transaction fee with respect to the purchase and sale of fund
shares. 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.
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. Class I shares are
sold without a sales charge.
Shares are purchased at the next NAV calculated after your order is
received and accepted by the transfer agent. NAV is normally calculated at
the times indicated in the table below.
NAV Calculation Times
Fund (Eastern Time)
Treasury Only 2:00 p.m.
Treasury 3:00 p.m. and 5:00 p.m.
Government 3:00 p.m. and 5:00 p.m.
Domestic 3:00 p.m. and 5:00 p.m.
Rated Money Market 3:00 p.m. and 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
You will receive the next NAV calculated after your
investment professional has submitted your purchase order.
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 Fidelity Institutional Money Market Funds
FIIOC
P.O. Box 1182
Boston, MA 02103-1182
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Place a purchase order and wire money into your
account, or
(small solid bullet) Open an account by exchanging from the same class of
any fund that is offered through this prospectus.
INVESTMENTS IN THE FUNDS MUST BE MADE USING THE FEDERAL RESERVE WIRE
SYSTEM. Checks and Automated Clearing House payments will not be accepted
as a means of investment.
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
In order to receive same-day acceptance of your investment, you must
contact Fidelity Client Services and place your order between 8:30 a.m. and
the following times on days the funds are open for business.
Closing Times
Fund (Eastern Time)
Treasury Only 2:00 p.m.
Treasury 5:00 p.m.
Government 5:00 p.m.
Domestic 5:00 p.m.
Rated Money Market 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
All wires 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 that day.
You are advised to wire funds as early in the day as possible, and to
provide advance notice to Fidelity Client Services for purchases over $10
million ($5 million for Treasury Only).
You will earn dividends on the day of your investment, provided (i) you
contact Fidelity Client Services and place your trade between 8:30 a.m. and
the closing time indicated in the table above on days the fund is
open for business, and (ii) the fund's designated wire bank receives the
wire before the close of the Federal Reserve Wire System on the day your
purchase order is accepted by the transfer agent.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $1,000,000*
MINIMUM BALANCE $1,000,000
* THE MINIMUM INITIAL INVESTMENT OF $1 MILLION MAY BE WAIVED IF YOUR
AGGREGATE BALANCE IN THE FIDELITY INSTITUTIONAL MONEY MARKET FUNDS IS
GREATER THAN $10 MILLION. PLEASE CONTACT FIDELITY CLIENT SERVICES FOR MORE
INFORMATION REGARDING THIS WAIVER.
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 the times indicated in the
table on page .
You will receive the next NAV calculated after your
investment professional has submitted your redemption order.
Redemption requests may be made by calling Fidelity Client Services at the
phone number listed on page .
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 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 the closing time indicated in the table on page ,
redemption proceeds will normally be wired on that day.
A fund reserves the right to take up to seven days to pay you if making
immediate payment would adversely affect the fund.
You are advised to place your trades as early in the day as possible,
and to provide advance notice to Fidelity Client Services for redemptions
over $10 million ($5 million for Treasury Only).
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
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 and
prospectuses will be mailed, even if you have more than one account in a
fund. Call Fidelity Client Services at 1-800-843-3001 if you need
additional copies of financial reports, prospectuses, 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 Class I shares
redeemed during the month can be distributed on the day of redemption. Each
fund reserves the right to limit this service.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. Class I 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 wire for your dividend and capital gain
distributions, if any.
Dividends will be reinvested at each fund's Class I 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.
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.
TAXES ON DISTRIBUTIONS. Interest income that Tax-Exempt earns is
distributed to shareholders as income dividends. Interest that is federally
tax-free is designated as tax-free when it is distributed.
Distributions from the Taxable Funds, 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, income and short-term capital gain distributions
from each Taxable Fund are taxed as dividends; long-term capital gain
distributions, if any, are taxed as long-term capital gains.
F or shareholders of Tax-Exempt, 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 market 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.
For the fiscal year ended March 31, 1996, 100 % of Treasury Only's;
23 % of Treasury's; 29 % of Government's; 3 % of
Domestic's; 9 % of Rated Money Market's; and 2 % of Money
Market's income distributions were 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.
A portion of Tax-Exempt'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 Tax-Exempt's income from
each state to help you calculate your taxes.
During the fiscal year ended March 31, 1996, 100 % of Tax-Exempt's
income dividends was free from federal income 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 the
Taxable Funds) or the Federal Reserve Bank of Kansas City (Kansas City Fed)
(for Tax-Exempt) 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, the Kansas City Fed, or the
NYSE may modify its holiday schedule at any time. On any day that the New
York Fed, the Kansas City 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, the Kansas City Fed, or the NYSE is closed, each
class'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 I of each
fund is computed by adding Class I's pro rata share of the value of the
fund's investments, cash, and other assets, subtracting Class I's pro rata
share of the value of the fund's liabilities, subtracting the liabilities
allocated to Class I, and dividing the result by the number of Class I
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 Class l 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.
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.
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 by federal funds
wire; checks will not be accepted for purchases.
(small solid bullet) If your wire is not received by the close of the
Federal Reserve Wire System, you could be liable for any losses or fees a
fund or the transfer agent has incurred or for interest and penalties.
The income declared for each of Treasury, Government, Domestic, and Rated
Money Market is based on estimates of net interest income for the fund.
Actual income may differ from estimates, and differences, if any, will be
included in the calculation of subsequent dividends.
Shareholders of record as of the closing time indicated in the table on
page will be entitled to dividends declared that 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 of each fund do not 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.
When the NYSE, the New York Fed (for the Taxable Funds), or the
Kansas City Fed (for Tax-Exempt) 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 $1,000,000 due to redemption, the
account may be closed and the proceeds may be wired to your bank account 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 Class I shares of any
fund offered through this prospectus at no charge for Class I shares of any
other fund offered through this prospectus.
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 1-800-843-3001
between 8:30 a.m. and the closing time indicated in the table on page .
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, class
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, Class I 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) Exchanges may have tax consequences for you.
(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.
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 funds or FDC. This Prospectus and the related SAI do not
constitute an offer by the funds or by FDC to sell or to buy shares of the
funds to any person to whom it is unlawful to make such offer.
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS - CLASS I
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page; Table of Contents
12 ............................ *
13 a - c ............................ Investment Policies and Limitations
d ............................ Portfolio Transactions
14 a - c ............................ Trustees and Officers
15 a ............................ *
b ............................ Description of the Trusts
c ............................ Trustees and Officers
16 a i ............................ FMR
ii ............................ Trustees and Officers
iii ............................ Management Contracts
b,c,d ............................ Management Contracts
e ............................ *
f ............................ Distribution and Service Plans
g ............................ *
h ............................ Description of the Trusts
i ............................ Management Contracts
17 a ............................ Portfolio Transactions
b ............................ Portfolio Transactions
c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trusts
b ............................ *
19 a ............................ Additional Purchase, Exchange and Redemption
Information
b ............................ Additional Purchase, Exchange and Redemption
Information; Valuation
c ............................ *
20 Distributions and Taxes
21 a, b ............................ Distribution and Service Plans; Management
Contracts
c ............................ *
22 ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS: CLASS I
TREASURY ONLY, TREASURY, GOVERNMENT, DOMESTIC, RATED MONEY MARKET, MONEY
MARKET, AND TAX-EXEMPT
Treasury Only is a series of Daily Money Fund; Treasury, Government,
Domestic, and Money Market are series of Fidelity Institutional Cash
Portfolios; Rated Money Market is a series of Fidelity Money Market Trust;
and Tax-Exempt is a series of Fidelity Institutional Tax-Exempt Cash
Portfolios
STATEMENT OF ADDITIONAL INFORMATION
JULY 31, 1996
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus for
Class I shares (dated July 31, 1996). Please retain this document for
future reference. The funds' financial statements and financial highlights,
included in the Annual Report, for the fiscal year ended March 31, 1996,
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 Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISER
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT FOR TAXABLE FUNDS
Fidelity Investments Institutional Operations Company (FIIOC)
TRANSFER AGENT FOR TAX-EXEMPT
UMB Bank, n.a. (UMB)
IMMI-ptb-0796
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 will 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 cannot 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 TREASURY ONLY
THE FOLLOWING ARE TREASURY ONLY'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) 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;
(3) 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;
(4) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(8) The 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) 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 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.
(vi) 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.
(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 (i) to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger , or (ii) to securities of other open-end
investment companies managed by FMR or a successor or affiliate purchased
pursuant to an exemptive order granted by the SEC .
(viii) 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.
Subject to revision upon 90 days' notice to shareholders, the fund does not
intend to engage in reverse repurchase agreements.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF TREASURY
THE FOLLOWING ARE TREASURY'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;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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 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 an
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 a security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(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 contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(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 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.
As an operating policy, the fund intends to invest 100% of its total assets
in U.S. Treasury bills, notes, and bonds and repurchase agreements
comprised of those obligations at all times. This policy may only be
changed upon 90 days' notice to shareholders.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF GOVERNMENT
THE FOLLOWING ARE GOVERNMENT'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;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(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 contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(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 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 issuers 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 the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF DOMESTIC
THE FOLLOWING ARE DOMESTIC'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) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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
securities 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 10% of its total assets in the first tier
securities of a single issuer for up to three business days. (This limit
does not apply to securities of other open-end investment companies managed
by FMR or a successor or affiliate purchased pursuant to an exemptive order
granted by the SEC.)
(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) 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) 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.
(viii) 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.)
(ix) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) 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 the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF RATED MONEY MARKET
THE FOLLOWING ARE RATED MONEY MARKET'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;
(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) invest in oil, gas, or other mineral exploration or development
programs; or
(10) write or purchase any put or call option. 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.
(11) 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
securities 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 10% of its total assets in the first tier
securities of a single issuer for up to three business days. (This limit
does not apply to securities of other open-end investment companies managed
by FMR or a successor or affiliate purchased pursuant to an exemptive order
granted by the SEC.)
(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) 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 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 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.)
(viii) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(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 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 (ix), pass-through entities and other special
purposes 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 .
INVESTMENT LIMITATIONS OF MONEY MARKET
THE FOLLOWING ARE MONEY MARKET'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) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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
securit ies 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 10% of its total assets in the first tier
securities of a single issuer for up to three business days. (This limit
does not apply to securities of other open-end investment companies managed
by FMR or a successor or affiliate purchased pursuant to an exemptive order
granted by the SEC.)
(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) 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) 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.
(viii) 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.)
(ix) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) 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 the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF TAX-EXEMPT
THE FOLLOWING ARE TAX-EXEMPT'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) make short sales of securities;
(4) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions;
(5) borrow money, except that the fund 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;
(6) 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;
(7) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies,
instrumentalities, territories or possessions, or issued or guaranteed by a
state government or political subdivision thereof) if as a result more than
25% of the value of its total assets would be invested in securities of
companies having their principal business activities in the same industry;
(8) purchase or sell real estate, but this shall not prevent the fund from
investing in municipal bonds or other obligations secured by real estate or
interests therein;
(9) purchase or sell physical commodities;
(10) 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; or
(11) invest in oil, gas, or other mineral exploration or development
programs.
(12) 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.
For purposes of investment limitations (1) and (7), FMR identifies the
issuer of a security depending on its terms and conditions. In identifying
the issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) 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 (5)). 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.
(ii) 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.
(iii) 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.
(iv) 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.
(v) The fund does not currently intend to (a) purchase the 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(vi) 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.
(vii) 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.
Securities must be rated in accordance with applicable rules in the highest
rating category for short-term securities by at least one nationally
recognized rating service (NRSRO) and rated in one of the two highest
categories for short-term securities by another NRSRO if rated by more than
one NRSRO, or, if unrated, judged to be equivalent to highest quality by
FMR pursuant to procedures adopted by the Board of Trustees. The fund's
policy regarding limiting investments to the highest rating category may be
changed upon 90 days' prior notice to shareholders.
For the fund's 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 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.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, Tax-Exempt does not
intend to invest in securities whose interest is federally taxable.
However, from time to time on a temporary basis, Tax-Exempt may invest a
portion of its assets in fixed-income obligations whose interest is subject
to federal income tax.
Should Tax-Exempt 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 Tax-Exempt's distributions. If such
proposals were enacted, the availability of municipal obligations and the
value of Tax-Exempt's holdings would be affected and the Trustees would
reevaluate Tax-Exempt'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. Treasury
Only, Treasury, Government, and Tax-Exempt currently intend to participate
in this program only as borrowers. A fund will borrow through the program
only when the costs are equal to or lower than the cost of bank loans.
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). 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.
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.
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 a 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.
MUNICIPAL SECTORS:
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open transmission
access to any electricity supplier, although it is not presently known to
what extent competition will evolve. Other risks include: (a) the
availability and cost of fuel, (b) the availability and cost of capital,
(c) the effects of conservation on energy demand, (d) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (e) timely and sufficient rate
increases, and (f) opposition to nuclear power.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
other state or local health care reform measures; medical and technological
advances which dramatically alter the need for health services or the way
in which such services are delivered; changes in medical coverage which
alter the traditional fee-for-service revenue stream; and efforts by
employers, insurers, and governmental agencies to reduce the costs of
health insurance and health care services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They generally are
secured by the revenues derived from mortgages purchased with the proceeds
of the bond issue. It is extremely difficult to predict the supply of
available mortgages to be purchased with the proceeds of an issue or the
future cash flow from the underlying mortgages. Consequently, there are
risks that proceeds will exceed supply, resulting in early retirement of
bonds, or that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student loans.
Bonds issued to supply educational institutions with funds are subject to
the risk of unanticipated revenue decline, primarily the result of
decreasing student enrollment or decreasing state and federal funding.
Among the factors that may lead to declining or insufficient revenues are
restrictions on students' ability to pay tuition, availability of state and
federal funding, and general economic conditions. Student loan revenue
bonds are generally offered by state (or substate) authorities or
commissions and are backed by pools of student loans. Underlying student
loans may be guaranteed by state guarantee agencies and may be subject to
reimbursement by the United States Department of Education through its
guaranteed student loan program. Others may be private, uninsured loans
made to parents or students which are supported by reserves or other forms
of credit enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student loan
revenue bonds are impacted by numerous factors, including the rate of
student loan defaults, seasoning of the loan portfolio, and student
repayment deferral during periods of forbearance. Other risks associated
with student loan revenue bonds include potential changes in federal
legislation regarding student loan revenue bonds, state guarantee agency
reimbursement and continued federal interest and other program subsidies
currently in effect.
WATER AND SEWER. Water and sewer revenue bonds are often considered to have
relatively secure credit as a result of their issuer's importance, monopoly
status, and generally unimpeded ability to raise rates. Despite this, lack
of water supply due to insufficient rain, run-off, or snow pack is a
concern that has led to past defaults. Further, public resistance to rate
increases, costly environmental litigation, and Federal environmental
mandates are challenges faced by issuers of water and sewer bonds.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways, or other transit
facilities. Airport bonds are dependent on the general stability of the
airline industry and on the stability of a specific carrier who uses the
airport as a hub. Air traffic generally follows broader economic trends and
is also affected by the price and availability of fuel. Toll road bonds are
also affected by the cost and availability of fuel as well as toll levels,
the presence of competing roads, and the general economic health of an
area. Fuel costs and availability also affect other transportation-related
securities, as does the presence of alternate forms of transportation, such
as public transportation.
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 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 or second tier based on applicable
regulations.
Each of Treasury Only, Treasury, Government, Domestic, Rated Money Market,
and Money Market may not invest more than 5% of its total assets in second
tier securities. In addition, each of Treasury Only, Treasury, Government,
Domestic, Rated Money Market, and Money Market 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.
Each 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 a 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 a 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 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. The fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining, and closing short sales
against the box.
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 government securities are
created by separating the income and principal components of a U.S.
Government security 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 security by a Federal Reserve
Bank.
Privately stripped government securities are created when a dealer deposits
a U.S. Treasury security or other U.S. Government security with a
custodian for safekeeping . The custodian issues separate receipts for
the coupon payments and principal payment , which the dealer then
sells . Proprietary receipts, such as Certificates of Accrual on
Treasury Securities (CATS) and Treasury Investment Growth Receipts
(TIGRS), and generic receipts, such as Treasury Receipts (TRs), are
privately stripped U.S. Treasury securities .
Because the SEC does not consider privately stripped government
securities to be U.S. Government securities for purposes of Rule
2a-7 , a fund must evaluate them as it would non-government securities
pursuant to regulatory guidelines applicable to all money market funds.
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 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 th at fund and FMR's 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 the fiscal years ended March 31, 1996, 1995, and 1994, the funds paid
no brokerage commissions. During the fiscal year ended March 31, 1996, the
funds paid no fees to brokerage firms that provided research.
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 a class's net asset
value per share (NAV) at 12:00 noon Eastern time for Tax-Exempt; 2:00 p.m.
Eastern time for Treasury Only; 3:00 p.m. Eastern time for Money Market;
and 3:00 p.m. and 5:00 p.m. Eastern time for Treasury, Government,
Domestic, and Rated Money Market. The valuation of portfolio securities is
determined as of these times for the purpose of computing each class'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 class's yield based on
amortized cost valuation may be higher than that which 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 class'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
class'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 class's 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 funds may quote
yields in advertising based on any historical seven-day period. Yields for
each class 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 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 a class's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
A class's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment before taxes to equal the class's tax-free
yield. Tax-equivalent yields are calculated by dividing a class's yield by
the result of one minus a stated federal or combined federal and state tax
rate. If only a portion of a class'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 1996. 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 % to 7 %. Of course, no
assurance can be given that a class will achieve any specific tax-exempt
yield. While Tax-Exempt invests principally in obligations whose interest
is exempt from federal income tax, other income received by the fund may be
taxable.
1996 TAX RATES AND TAX-EQUIVALENT YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal If individual tax-exempt yield is:
Taxable Income* Tax 2% 3% 4% 5%
6 % 7 %
Single Return Joint Return Bracket** Then taxable-equivalent yield is:
$ 0 - $ 24,000 $0 $ 40,100 15.0% 2.35% 3.53% 4.71% 5.88% 7.06% 8.24 %
24,001 - 58,150 40,101 - 96,900 28.0% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72%
58,151 - 121,300 96,901 - 147,700 31.0% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14%
121,301 - 263,750 147,701 - 263,750 36.0% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94%
263,751 - + 263,751 - + 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59%
</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.
Tax-Exempt 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 yield 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 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 the 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 7-day yields,
tax-equivalent yields, and total returns for Class I of each fund for the
period ended March 31, 1996.
The tax-equivalent yield is based on a 36 % federal income tax rate.
Average Annual Total Returns Cumulative Total Returns
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seven-Da Tax- One Five Ten One Five Ten
y Equivalent Year Years Years/ Year Years Years/
Yield Yield Life of Life of
Fund* Fund*
Treasury Only - 5.01 % N/A 5.56 % 4.40 % 4.66 % 5.56 % 24.04 % 28.42 %
Class I
Treasury - Class I 5.20 % N/A 5.79 % 4.49 % 6.00 % 5.79 % 24.58 % 70.58 %
Government - 5.24 % N/A 5.84 % 4.58 % 6.15 % 5.84 % 25.12 % 81.72 %
Class I
Domestic - Class I 5.15 % N/A 5.85 % 4.59 % 5.39 % 5.85 % 25.14 % 40.06 %
Rated Money 5.18 % N/A 5.69 % 4.37 % 5.98 % 5.69 % 23.86 % 78.73 %
Market - Class I
Money Market - 5.22 % N/A 5.90 % 4.65 % 6.25 % 5.90 % 25.50 % 83.42 %
Class I
Tax-Exempt - 3.26 % 5.09 % 3.70 % 3.27 % 4.27 % 3.70 % 17.43 % 51.90 %
Class I
</TABLE>
* Life of Fund figures are from commencement of operations ( October
3, 1990 for Treasury Only; February 2, 1987 for Treasury; and
November 3, 1989 for Domestic) through the fund's 1996 fiscal year
end.
Note: If FMR had not reimbursed certain expenses during these periods,
total returns would have been lower and the 7-day yields for the
period ending March 31, 1996 for Class I of each fund would have been:
Seven-day Tax-Equivalent
Yield Yield
Treasury Only - Class I 4.79 % N/A
Treasury - Class I 5.15 % N/A
Government - Class I 5.19 % N/A
Domestic - Class I 5.07 % N/A
Rated Money Market - Class I 4.96 % N/A
Money Market - Class I 5.10 % N/A
Tax-Exempt - Class I 3.23 % 5.05 %
The following tables show the income and capital elements of each fund's
Class I cumulative total return. Each table compares a fund's Class I
return to the record of the Standard & Poor's 500 Index (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
Class I 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' Class I returns, do not
include the effect of paying brokerage commissions or other costs of
investing.
TREASURY ONLY
HISTORICAL FUND RESULTS
During the period from October 3, 1990 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class I of Treasury
Only would have grown to $ 12,842 , 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 Class I
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
TREASURY ONLY INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 2,842 $ 0 $ 12,842 $ 24,020 $ 26,101 $ 11,733
1995+ 10,000 2,165 0 12,165 18,183 18,980 11,409
1994 10,000 1,624 0 11,624 15,735 16,157 11,093
1993 10,000 1,285 0 11,285 15,506 14,846 10,821
1992 10,000 913 0 10,913 13,454 13,573 10,497
1991* 10,000 353 0 10,353 12,114 11,848 10,173
</TABLE>
* From October 3, 1990 (commencement of operations).
+ The fiscal year end of the fund changed from July 31 to March 31 in
February 1995.
Explanatory Notes: With an initial investment of $10,000, made on October
3, 1990, the net amount invested in Class I shares of the fund 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 $ 12,842 . If
distributions had not been reinvested, the amount of distributions earned
from Class I shares of the fund over time would have been smaller, and cash
payments (dividends) for the period would have amounted to $ 2,506 .
The fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
TREASURY
HISTORICAL FUND RESULTS
During the period from February 2, 1987 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class I of Treasury
would have grown to $ 17,058 , 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 Class I
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
TREASURY INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 7,058 $ 0 $ 17,058 $ 31,337 $ 34,517 $ 14,002
1995 10,000 6,124 0 16,124 23,722 25,101 13,615
1994 10,000 5,389 0 15,389 20,528 21,366 13,237
1993 10,000 4,932 0 14,932 20,229 19,633 12,914
1992 10,000 4,433 0 14,433 17,552 17,950 12,527
1991 10,000 3,692 0 13,692 15,805 15,668 12,140
1990 10,000 2,693 0 12,693 13,816 14,014 11,574
1989 10,000 1,632 0 11,632 11,583 11,432 10,998
1988 10,000 759 0 10,759 9,804 9,560 10,477
1987* 10,000 93 0 10,093 10,694 10,731 10,081
</TABLE>
* From February 2, 1987 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on February
2, 1987, the net amount invested in Class I shares of the fund 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 $ 17,058 . If
distributions had not been reinvested, the amount of distributions earned
from Class I shares of the fund over time would have been smaller, and cash
payments (dividends) for the period would have amounted to $ 5,355 .
The fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
GOVERNMENT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class I of Government would have grown to $ 18,172 ,
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 Class I of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 8,172 $ 0 $ 18,172 $ 36,984 $ 42,184 $ 14,311
1995 10,000 7,169 0 17,169 27,997 30,676 13,915
1994 10,000 6,373 0 16,373 24,228 26,112 13,529
1993 10,000 5,876 0 15,876 23,875 23,994 13,199
1992 10,000 5,330 0 15,330 20,715 21,937 12,803
1991 10,000 4,524 0 14,524 18,653 19,148 12,408
1990 10,000 3,455 0 13,455 16,306 17,127 11,829
1989 10,000 2,327 0 12,327 13,670 13,972 11,241
1988 10,000 1,394 0 11,394 11,571 11,684 10,708
1987 10,000 651 0 10,651 12,622 13,115 10,303
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class I shares of the fund 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 $ 18,172 . If
distributions had not been reinvested, the amount of distributions earned
from Class I shares of the fund over time would have been smaller, and cash
payments (dividends) for the period would have amounted to $ 5,989 .
The fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
DOMESTIC
HISTORICAL FUND RESULTS
During the period from November 3, 1989 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class I of Domestic
would have grown to $ 14,006 , 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 Class I
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
DOMESTIC INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 4,006 $ 0 $ 14,006 $ 23,110 $ 25,742 $ 12,396
1995 10,000 3,232 0 13,232 17,494 18,720 12,054
1994 10,000 2,605 0 12,605 15,139 15,935 11,720
1993 10,000 2,222 0 12,222 14,919 14,642 11,433
1992 10,000 1,808 0 11,808 12,944 13,387 11,091
1991 10,000 1,192 0 11,192 11,655 11,685 10,748
1990* 10,000 352 0 10,352 10,189 10,451 10,247
</TABLE>
* From November 3, 1989 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on November
3, 1989, the net amount invested in Class I shares of the fund 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 $ 14,006 . If
distributions had not been reinvested, the amount of distributions earned
from Class I shares of the fund over time would have been smaller, and cash
payments (dividends) for the period would have amounted to $ 3,377 .
The fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
RATED MONEY MARKET
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class I of Rated Money Market would have grown to
$ 17,873 , 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 Class I of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
RATED MONEY MARKET INDICES
Period Ended Value of Value of Value of Total S&P DJIA Cost of
3/31 Initial Reinvested Reinvested Value 500 Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996+ $ 10,000 $ 7,873 $ 0 $ 17,873 $ 36,984 $ 42,184 $ 14,311
1995 10,000 6,911 0 16,911 27,997 30,676 13,915
1994 10,000 6,148 0 16,148 24,228 26,112 13,529
1993 10,000 5,694 0 15,694 23,875 23,994 13,199
1992+ 10,000 5,195 0 15,195 20,715 21,937 12,803
1991 10,000 4,430 0 14,430 18,653 19,148 12,408
1990 10,000 3,381 0 13,381 16,306 17,127 11,829
1989 10,000 2,276 0 12,276 13,670 13,972 11,241
1988 10,000 1,355 0 11,355 11,571 11,684 10,708
1987 10,000 628 0 10,628 12,622 13,115 10,303
</TABLE>
+ The fiscal year end of the fund changed from August 31 to March 31 in
June 1995, and from October 31 to August 31 in July 1992.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class I shares of the fund 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 $ 17,873 . If
distributions had not been reinvested, the amount of distributions earned
from Class I shares of the fund over time would have been smaller, and cash
payments (dividends) for the period would have amounted to $ 5,823 .
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
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class I of Money Market would have grown to $ 18,342 ,
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 Class I of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 8,342 $ 0 $ 18,342 $ 36,984 $ 42,184 $ 14,311
1995 10,000 7,320 0 17,320 27,997 30,676 13,915
1994 10,000 6,496 0 16,496 24,228 26,112 13,529
1993 10,000 5,985 0 15,985 23,875 23,994 13,199
1992 10,000 5,431 0 15,431 20,715 21,937 12,803
1991 10,000 4,615 0 14,615 18,653 19,148 12,408
1990 10,000 3,515 0 13,515 16,306 17,127 11,829
1989 10,000 2,370 0 12,370 13,670 13,972 11,241
1988 10,000 1,417 0 11,417 11,571 11,684 10,708
1987 10,000 657 0 10,657 12,622 13,115 10,303
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class I shares of the fund 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 $ 18,342 . If
distributions had not been reinvested, the amount of distributions earned
from Class I shares of the fund over time would have been smaller, and cash
payments (dividends) for the period would have amounted to $ 6,083 .
The fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
TAX-EXEMPT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class I of Tax-Exempt would have grown to $ 15,190 ,
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 Class I of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
TAX-EXEMPT INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 5,190 $ 0 $ 15,190 $ 36,984 $ 42,184 $ 14,311
1995+ 10,000 4,647 0 14,647 27,997 30,676 13,915
1994 10,000 4,195 0 14,195 24,228 26,112 13,529
1993 10,000 3,859 0 13,859 23,875 23,994 13,199
1992 10,000 3,477 0 13,477 20,715 21,937 12,803
1991 10,000 2,935 0 12,935 18,653 19,148 12,408
1990 10,000 2,246 0 12,246 16,306 17,127 11,829
1989 10,000 1,533 0 11,533 13,670 13,972 11,241
1988 10,000 921 0 10,921 11,571 11,684 10,708
1987 10,000 430 0 10,430 12,622 13,115 10,303
</TABLE>
+ The fiscal year end of the fund changed from May 31 to March 31 in
February 1995.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class I shares of the fund 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 $ 15,190 . If
distributions had not been reinvested, the amount of distributions earned
from Class I shares of the fund over time would have been smaller, and cash
payments (dividends) for the period would have amounted to $ 4,188 .
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 such comparison 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)/Government, which is reported in the MONEY FUND
REPORT(registered trademark), covers over 230 government money
market funds; IBC/Donoghue's MONEY FUND AVERAGES(trademark)/All
Taxable, which is reported in the MONEY FUND REPORT(registered
trademark), covers over 800 taxable money market funds; and
IBC/Donoghue's MONEY FUND AVERAGES(trademark)/All Tax-Free, which is
reported in the MONEY FUND REPORT(registered trademark), covers over
398 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.
As of May 31 , 1996, FMR advised over $ 27 billion in tax-free
fund assets, $ 86 billion in money market fund assets, $ 277
billion in equity fund assets, $ 53 billion in international fund
assets, and $ 23 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 class may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A class'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
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. 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 each fund'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.
Tax-Exempt purchases municipal securities whose interest FMR believes is
free f rom federal income tax . Ge nerally ,
issuers or other parties have entered into covenants requiring
continuing compliance with federal tax requirements to preserve the
tax-free status of interest payments over the life of the security . If
at any time the covenants are not complied with, or if the IRS
determines that the issuer did not comply with relevant tax requirements,
interest payments from a security could become federally taxable
retroactive to the date the security was issued. For certain types
of structured securities, the tax status of the pass-through of tax-free
income may also be based on the federal tax treatment of the
structure .
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 Tax-Exempt's policy of investing so
that at least 80% of its income distribution 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 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 Tax-Exempt's policy of investing so that at
least 80% of its income distribution is free from federal income tax.
Tax-Exempt may distribute any net realized short-term capital gains and
taxable market discount once a year or more often, as necessary, to
maintain its net asset value at $1.00 per share.
It is the current position of the staff of the SEC that a fund that uses
the term "tax-exempt" in its name may not derive more than 20% of its
income from municipal obligations that pay interest that is a preference
item for purposes of the AMT. According to this position, at least 80% of
Tax-Exempt's income would have to be exempt from the AMT as well as from
federal income taxes.
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. Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market do not
anticipate earning long-term capital gains on securities held by each fund.
Tax-Exempt does not anticipate distributing long-term capital gains.
As of the fiscal year ended March 31, 1996, Treasury Only had capital loss
carryforwards aggregating approximately $ 299,000 . The loss
carryforward for Treasury Only, of which $ 22,000, $162,000, and
$115,000 will expire on March 31, 2001, 2002, and 2004 ,
respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Treasury had capital loss
carryforwards aggregating approximately $ 1,038,000 . The loss
carryforward for Treasury, of which $ 31,000, $142,000, $1,000, $330,000,
and $534,000 will expire on March 31, 1997, 1999, 2001, 2002, and
2003 , respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Government had capital loss
carryforwards aggregating approximately $ 1,096,700 . The loss
carryforward for Government, of which $ 200, $53,000, $271,000, $761,000,
and $11,500 will expire on March 31, 1997, 2001, 2002, 2003, and
2004 , respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Domestic had capital loss
carryforwards aggregating approximately $ 93,000 . The loss
carryforward for Domestic, of which $ 44,000 and $49,000 will expire
on March 31, 2001 and 2003 , respectively, is available to offset
future capital gains.
As of the fiscal year ended March 31, 1996, Rated Money Market had capital
loss carryforwards aggregating approximately $ 47,000 . The loss
carryforward for Rated Money Market, of which $ 32,000, $2,000, and
$13,000 will expire on March 31, 1997, 1998, and 2004 ,
respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Money Market had capital loss
carryforwards aggregating approximately $ 2,025,000 . The loss
carryforward for Money Market, of which $ 336,000, $898,000, $547,000,
and $244,000, will expire on March 31, 2001, 2002, 2003, and
2004 , respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Tax-Exempt had capital loss
carryforwards aggregating approximately $527,000 . The loss
carryforward for Tax-Exempt, which will expire on Ma y 31, 1996 , 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 a fund'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 its
respective Trust 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 , Members of the Advisory Board, and executive officers
of each 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 each trust prior
to the funds' conversions from series of Massachusetts business trusts
served each trust in identical capacities. All persons named as Trustees
and Members of the Advisory Board 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 and Members of
the Advisory Board is Fidelity Investments, P.O. Box 9235, Boston,
Massachusetts 02205-9235. Those Trustees who are "interested persons" by
virtue of their affiliation with either a trust or FMR are indicated by an
asterisk (*).
*EDWARD C. JOHNSON 3d (64), 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 (53), 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 (62), Trustee (1991), is a management consultant
(1994). Prior to February 1994, he was President of Greenhill Petroleum
Corporation (petroleum exploration and production). 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 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), 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 and Chairman of the non-interested Trustees,
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 (67), Trustee. 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), 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 (62), 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 Chairman of the Board of Directors of the National
Arts Stabilization Fund, as Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association, as a Member of the Public Oversight Board
of the American Institute of Certified Public Accountants' SEC Practice
Section (1995), and as a Public Governor of the National Association of
Securities Dealers, Inc. (1996).
*PETER S. LYNCH (52), Trustee, 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.
GERALD C. McDONOUGH (65), Trustee and Vice-Chairman of the non-interested
Trustees, 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 (70), 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 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 (61), 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.
THOMAS R. WILLIAMS (66), 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).
WILLIAM O. McCOY (62), Member of the Advisory Board (1996), is the Vice
President of Finance for the University of North Carolina (16-school
system, 1995). Prior to his retirement in December 1994, Mr. McCoy was Vice
Chairman of the Board of BellSouth Corporation (telecommunications) and
President of BellSouth Enterprises. He is currently a Director of Liberty
Corporation (holding company), Weeks Corporation of Atlanta (real estate,
1994), and Carolina Power and Light Company (electric utility, 1996).
Previously, he was a Director of First American Corporation (bank holding
company, 1979-1996). In addition, Mr. McCoy serves as a member of the Board
of Visitors for the University of North Carolina at Chapel Hill (1994) and
for the Kenan Flager Business School (University of North Carolina at
Chapel Hill).
FRED L. HENNING, JR. (55), 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 C. BARRON (37), Vice President (1989), is also Vice President
of other funds advised by FMR and an employee of FMR Texas Inc.
BURNELL STEHMAN (64), Vice President (1992), is also Vice President of
other funds advised by FMR and an employee of FMR Texas Inc.
JOHN TODD (47), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
SCOTT A. ORR (34), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
ARTHUR S. LORING (47), 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 (47), 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, is Assistant Vice President
of Fidelity's money market funds and Vice President and Associate General
Counsel of FMR Texas Inc.
JOHN H. COSTELLO (48), 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) and Chief
Financial Officer of Fidelity Brokerage Services, Inc. (1990-1993).
THOMAS J. SIMPSON (37), Assistant Treasurer (1996), is Assistant
Treasurer of Fidelity's money market funds and an employee of FMR (1996).
Prior to joining FMR, Mr. Simpson was Vice-President and Fund Controller of
Liberty Investment Services (1987-1995).
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 March 31, 1996.
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
Treasury $ 0 $ 515 $515 $ 640 $ 0 $ 520 $ 520 $ 0 $ 509 $ 515 $ 522 $ 516
Only
Treasury 0 2,563 2,522 3,151 0 2,555 2,555 0 2,488 2,563 2,590 2,522
Government 0 1,449 1,428 1,783 0 1,443 1,443 0 1,415 1,449 1,470 1,433
Domestic 0 416 396 492 0 400 400 0 392 416 423 399
Rated
Money 0 120 120 150 0 121 121 0 119 120 121 120
Market
Money 0 2,646 2,568 3,210 0 2,598 2,598 0 2,541 2,652 2,681 2,576
Market
Tax-Exempt 0 800 787 984 0 795 795 0 780 800 811 789
</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 52,000 128,000
Phyllis Burke Davis 5,200 52,000 125,000
Richard J. Flynn 0 52,000 160,500
Edward C. Johnson 3d** 0 0 0
E. Bradley Jones 5,200 49,400 128,000
Donald J. Kirk 5,200 52,000 129,500
Peter S. Lynch** 0 0 0
Gerald C. McDonough 5,200 52,000 128,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 128,000
Thomas R. Williams 5,200 52,000 125,000
</TABLE>
* Information is as of December 31, 1995 for 219 funds in the complex.
** Interested trustees of the fund are compensated by FMR.
For the fiscal year ended March 31, 1996, Edward H. Malone accrued
deferred compensation of $897 from Money Market.
The non-interested Trustees may elect to defer receipt of all or a
percentage of their annual fees in accordance with the terms of a Deferred
Compensation Plan (the Plan). Under the Plan, compensation deferred by a
Trustee is periodically adjusted as though an equivalent amount had been
invested and reinvested in shares of one or more funds in the complex
designated by such Trustee (designated securities). The amount paid to the
Trustee under the Plan will be determined based upon the performance of
such investments. Deferral of Trustees' fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate the fund to retain the services of
any Trustee or to pay any particular level of compensation to the Trustee.
Each fund may invest in such designated securities under the Plan without
shareholder approval. Only non-interested Trustees are eligible to
participate in the Plan.
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.
As of July 1, 1996, less than 1% of Treasury Only's, approximately
13.36% of Domestic's, less than 1% of Rated Money Market's, and
approximately 35.84% of Money Market's total outstanding shares were held
by an FMR affiliate, FMR Corp. Mr. Edward C. Johnson 3d, President and
Trustee of the funds, is a member of a family group which, by virtue of its
owning approximately 49% of the voting securities of FMR Corp., may be
deemed under the 1940 Act to form a controlling group with respect to FMR
Corp. Therefore, based on his membership in this family group, Mr. Edward
C. Johnson 3d may be deemed to own beneficially these shares. As of this
date, with the exception of Mr. Johnson 3d's ownership of the Treasury
Only, Domestic, Rated Money Market, and Money Market shares, the Trustees
and officers of the funds owned, in the aggregate, less than 1% of each
fund's total outstanding shares.
As of July 1, 1996, the following owned of record or beneficially 5% or
more of outstanding shares of each class of the funds:
Treasury Only - Class I: First Union National Bank, Charlotte, NC (34.66%);
Shawmut Bank of Boston, N.A., Boston, MA (9.47%); Ropes & Gray, Boston, MA
(6.49%); and First American Trust Company, Santa Ana, CA (5.20%).
Treasury Only - Class II: FMR Corp., Boston, MA (100%).
Treasury Only - Class III: Bankers Trust Company, New York, NY (35.01%);
Texas Commerce Bank, N.A., Houston, TX (31.63%); and Liberty National Bank
& Trust, Oklahoma City, OK (16.24%).
Treasury - Class I: First Union National Bank, Charlotte, NC (11.28%);
Texas Commerce Bank, N.A., Houston, TX (9.25%); First Trust, St. Paul, MN
(8.93%); and First Interstate Bank, Portland, OR (7.97%).
Treasury - Class II: Texas Commerce Bank, N.A., Houston, TX (74.64%);
Boatmen's Trust Company, St. Louis, MO (12.13%); and Nationsbank,
Charlotte, NC (8.27%).
Treasury - Class III: Bank of New York, New York, NY (71.78%); and First
Union National Bank, Charlotte, NC (15.64%).
Government - Class I: First Tennessee Bank, Memphis, TN (11.86%); Texas
Commerce Bank, N.A. (8.75%); and Shawmut Bank of Boston, N.A. (5.54%).
Government - Class II: First Union National Bank, Charlotte, NC (72.39%);
and Bank of Boston, Waterbury, CT (27.08%).
Government - Class III: Texas Commerce Bank, N.A., Houston, TX (65.68%);
Liberty National Bank & Trust Co., Oklahoma City, OK (15.11%); Boatmen's
Trust Company, St. Louis, MO (12.16%); Whitney National Bank, New Orleans,
LA (8.21%); and Nationsbank, Charlotte, NC (5.34%).
Domestic - Class I: First Union National Bank, Charlotte, NC (13.87%); FMR
Corp., Boston, MA (13.36%); Intel Corporation, Santa Clara, CA (9.41%) and
Texas Commerce Bank, N.A., Houston, TX (8.05%).
Domestic - Class II: FMR Corp., Boston, MA (83.87%); and Barnett Banks
Trust Co., Jacksonville, FL (16.13%).
Domestic - Class III: First Union National Bank, Charlotte, NC (23.37%);
Rainier Bancorporation, Seattle, WA (19.24%); Boatmen's Trust Company, St.
Louis, MD (16.61%); Reliance Trust Company, Atlanta, GA (14.09%); Texas
Commerce Bank, N.A., Houston, TX (10.70%); and Exchange Bank, Santa Rosa,
CA (5.79%).
Rated Money Market - Class I; Promus Companies, Memphis, TN (21.39%);
Metric Partners, Foster City, CA (9.83%); and Independence Mining Company,
Denver, CO (5.98%).
Rated Money Market - Class II: FMR Corp., Boston, MA (100%).
Rated Money Market - Class III: Texas Commerce Bank, N.A. (95.37%).
Money Market - Class I: FMR Corp., Boston, MA (37.29%); and Citibank, N.A.,
New York, NY (8.13%).
Money Market - Class II: Texas Commerce Bank, N.A. (43.82%); Nationsbank,
Charlotte, NC (26.54%); First Security Bank of Utah, Salt Lake City, UT
(19.38%); and Boatmen's Trust Company, St. Louis, MO (6.12%).
Money Market - Class III: First Union National Bank, Charlotte, NC
(24.55%); Old Republic International Corp., Chicago, IL (17.50%); North
American Trust Company, San Diego, CA (17.27%); Republic National Bank of
New York, New York, NY (11.15%); Nationsbank, Charlotte, NC (10.32%); and
Texas Commerce Bank, W.A. (9.87%).
Tax-Exempt - Class I: Shawmut Bank of Boston, N.A., Boston, MA (12.98%);
and Wachovia Bank & Trust Company, Winston-Salem, NC (7.67%).
Tax-Exempt - Class II: First Union National Bank, Charlotte, NC (99.04%).
Tax-Exempt - Class III: Bank of New York, New York, NY (64.40%); and First
Security Bank, Batesville, MS (30.06%).
A shareholder owning of record or beneficially more than 25% of a class'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, all Trustees who are "interested
persons" of the trusts or of FMR, and all personnel of each fund or FMR for
performing services relating to research, statistical and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provides the management and administrative services necessary
for the operation of 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
UMB, 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 (other than Treasury Only and Rated Money Market) 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 (other than Treasury Only's and Rated Money
Market'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 trusts, on behalf of
each fund, have entered into revised transfer agent agreements with FIIOC
and UMB, as applicable, pursuant to which FIIOC or UMB bears the costs of
providing these services to existing shareholders of the applicable
classes. Other expenses paid by each fund (other than Treasury Only and
Rated Money Market) 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 the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.
FMR is responsible for the payment of all expenses of Treasury Only and
Rated Money Market with certain exceptions. Specific expenses payable by
FMR include, without limitation, expenses for the typesetting, printing,
and mailing of proxy materials to shareholders; legal expenses, and the
fees of the custodian, auditor, and interested Trustees; costs of
typesetting, printing, and mailing prospectuses and statements of
additional information, notices and reports to shareholders; and the fund's
proportionate share of insurance premiums and Investment Company Institute
dues. FMR also provides for transfer agent and dividend disbursing services
through FIIOC and portfolio and general accounting record maintenance
through FSC.
FMR pays all other expenses of Treasury Only and Rated Money Market with
the following exceptions: fees and expenses of all Trustees of the
applicable trust who are not "interested persons" of the trust or FMR (the
non-interested Trustees); interest on borrowings (only for Treasury Only);
taxes; brokerage commissions (if any); and such nonrecurring expenses as
may arise, including costs of any litigation to which a fund may be a
party, and any obligation it may have to indemnify the officers and
Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated May 30,
1993 for Treasury, Government, Domestic, and Money Market (the FICP funds);
January 29, 1992 for Tax-Exempt; September 30, 1993 for Treasury Only; and
December 29, 1994 for Rated Money Market. The management contracts were
approved by shareholders on November 18, 1992, November 13, 1991, March 24,
1993, and December 8, 1994, respectively.
For the services of FMR under each contract, each fund (other than Treasury
Only and Rated Money Market) pays FMR a monthly management fee at the
annual rate of 0.20% of average net assets throughout the month. Treasury
Only and Rated Money Market each pays FMR a monthly management fee at the
annual rate of 0.42% of average net assets throughout the month. The
management fees paid to FMR by Treasury Only and Rated Money Market are
reduced by an amount equal to the fees and expenses paid by the respective
funds to the non-interested Trustees. Fees received by FMR for the last
three fiscal periods are shown in the table below.
Fund Fiscal Year Ended Management Fees Paid to FMR
Treasury Only 3/31/96 $ 5,448,560 *
3/31/95** 3,279,429 *
7/31/94 4,716,697 *
7/31/93 4,892,175 *
Treasury 3/31/96 13,337,040
3/31/95 8,680,344
3/31/94 9,834,015
Government 3/31/96 6,905,768
3/31/95 6,680,088
3/31/94 9,660,519
Domestic 3/31/96 1,924,309
3/31/95 1,923,368
3/31/94 1,525,574
Rated Money Market 3/31/96** 714,940 *
8/31/95 1,352,919 *
8/31/94 1,781,535 *
8/31/93 2,893,862 *
Money Market 3/31/96 13,337,921
3/31/95 10,436,518
3/31/94 10,551,990
Tax-Exempt 3/31/96 3,883,600
3/31/95** 3,789,731
5/31/94 5,099,831
5/31/93 5,036,875
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
** The fiscal year end of Treasury Only changed from July 31 to March 31 in
February 1995. The fiscal year end of Rated Money Market changed from
August 31 to March 31 in June 1995. The fiscal year end of Tax-Exempt
changed from May 31 to March 31 in February 1995.
FMR may, from time to time, voluntarily reimburse all or a portion of each
class's operating expenses (exclusive of interest, taxes, brokerage
commissions, extraordinary expenses , and any applicable 12b-1 fees ).
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 class's total
returns and yield and repayment of the reimbursement by each class will
lower its total returns and yield.
Effective July 1, 1995, FMR voluntarily agreed, subject to revision
or termination, to reimburse each fund if and to the extent that
each fund's aggregate operating expenses, including management fees but
excluding any applicable 12b-1 fees , were in excess of the annual
rate of 0.20% (0.18% for Money Market) of its average net
assets. Prior to July 1, 1995, FMR voluntarily agreed to reimburse each
fund if and to the extent each fund's aggregate operating expenses,
including management fees but excluding any applicable 12b-1 fees, were in
excess of 0.18% (0.20% for Treasury Only) of its average net assets.
The table below identifies the dollar amount reimbursed to management fees
for each fund during the last three fiscal periods.
Fund Fiscal Year Dollar Amount
Ended Reimbursed
Treasury Only 3/31/96 $ 2,856,829
3/31/95* 1,719,806
7/31/94 2,474,345
7/31/93 2,567,107
Rated Money Market 3/31/96 255,565
Money Market 3 / 31/96 1,335,614
3/31/95 3,002,430 **
3/31/94 2,444,993 **
* August 1, 1994 to March 31, 1995
** Amount of total reimbursement
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 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 the sub-advisory agreements dated May 30, 1993, January 29, 1992,
September 30, 1993, and December 29, 1994, for the FICP funds, Tax-Exempt,
Treasury Only, and Rated Money Market, respectively, FMR pays FMR Texas
fees equal to 50% of the management fees payable to FMR under its
management contract with each fund. Each sub-advisory agreement was
approved by shareholders on November 18, 1992, November 13, 1991, March 24,
1993, and December 8, 1994, for the FICP funds, Tax-Exempt, Treasury Only,
and Rated Money Market, respectively. The fees paid to FMR Texas are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time. The table below shows fees paid by FMR to FMR
Texas on behalf of each fund for the fiscal years ended March 31, 1996,
1995, and 1994.
1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Treasury Only* $ 2,724,280 $ 1,639,715 $ 2,358,349 $ 2,446,088
Treasury 6,668,520 4,340,172 4,917,0 08 --
Government 3,452,884 3,340,044 4,830,260 --
Domestic 962,155 961,684 762,787 --
Rated Money Market** 357,470 676,460 890,768 1,446,931
Money Market 6,668,961 5,218,259 5,275,995 --
Tax-Exempt*** 1,941,800 1,894,866 2,549,916 2,518,438
</TABLE>
* Figures for Treasury Only are for the fiscal year ended March 31, 1996,
the fiscal period August 1, 1994 to March 31, 1995, and the fiscal years
ended July 31, 1994 and 1993.
** Figures for Rated Money Market are for the fiscal period September 1,
1995 to March 31, 1996, and the fiscal years ended August 31, 1995, 1994,
and 1993.
*** Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, and the fiscal years
ended May 31, 1994 and 1993.
CONTRACTS WITH FMR AFFILIATES
FIIOC, an affiliate of FMR, is the transfer, dividend disbursing, and
shareholder servicing agent for Class I shares of Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market (the Taxable
Funds).
UMB is the transfer agent for Class I shares of Tax-Exempt. UMB has entered
into a sub-contract with FIIOC under the terms of which FIIOC performs the
processing activities associated with providing transfer agent and
shareholder servicing functions for Class I shares of Tax-Exempt.
Under this arrangement FIIOC receives an annual account fee and an
asset-based fee each based on account size and fund type for each retail
account and certain institutional accounts. With respect to certain
institutional retirement accounts, FIIOC receives an annual account fee and
an asset-based fee based on account type or fund type. These annual account
fees are subject to increase based on postal rate changes.
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, an affiliate of FMR, performs the calculations necessary to determine
NAV and dividends for Class I shares of each Taxable Fund, and maintains
each Taxable Fund's accounting records. UMB has a sub-contract with
FSC, under the terms of which FSC performs the calculations necessary to
determine NAV and dividends for Class I of Tax-Exempt, and maintains the
account ing records for Tax-Exempt. The annual fee rates for pricing and
bookkeeping services are based on each fund's average net assets,
specifically, .0175% of the first $500 million of average net assets and
.0075% of average net assets in excess of $500 million. The fee is limited
to a minimum of $40,000 and a maximum of $800,000 per year.
Transfer agent fees and pricing and bookkeeping fees for Tax-Exempt are
paid to FIIOC and FSC, respectively, by UMB which is entitled to
reimbursement from Class I or the fund, as applicable, for these expenses.
FMR bears the cost of transfer, dividend disbursing, shareholder
servicing and pricing and bookkeeping services pursuant to its
management contracts with Treasury Only and Rated Money Market.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for the past three fiscal years were as follows:
1996 1995 1994
Treasury $ 550,798 $ 375,762 $ 419,147
Government 309,220 331,070 412,411
Domestic 122,381 122,139 107,464
Money Market 551,158 441,370 445, 362
Tax-Exempt 249,803 309,306 * 304,324 **
$ 325,195***
* From 6/1/94 - 3/31/95
** From 6/1/93 - 5/31/94
*** From 6/1/92 - 5/31/93
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 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 FMR.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved a Distribution and Service Plan on behalf of
Class I 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 Class I 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 its other resources to pay expenses associated with the sale of
Class I shares. This may include reimbursing FDC for payments made to third
parties, such as banks or broker-dealers , that provide shareholder
support services or engage in the sale of Class I shares. The Trustees have
authorized such payments.
Prior to approving each 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 I of the applicable fund and its shareholders. In particular, the
Trustees noted that each Plan does not authorize payments by Class I 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 Class I of
each fund, additional sales of fund shares may result. Furthermore, certain
shareholder support services may be provided more effectively under the
Plans by local entities with whom shareholders have other relationships.
The Plans were approved by shareholders of Class I of each FICP fund on
November 18, 1992, by shareholders of Class I of Tax-Exempt on November 31,
1991, by shareholders of Class I of Treasury Only on March 24, 1993, and by
shareholders of Class I of Rated Money Market on December 8, 1994. Each
Plan was approved by shareholders, in connection with a reorganization
transaction on May 30, 1993 for the FICP funds, January 29, 1992 for
Tax-Exempt, September 29, 1993 for Treasury Only, and December 29, 1994 for
Rated Money Market, 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, 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 TRUSTS
TRUST ORGANIZATION. Treasury Only is a fund of Daily Money Fund, an
open-end management investment company originally organized as a
Massachusetts business trust on June 7, 1982, pursuant to a Declaration of
Trust that was amended and restated on September 1, 1989. 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 Delaware trust,
which was organized on June 20, 1991 under the name Daily Money Fund II,
succeeded to the name Daily Money Fund on July 14, 1995. Currently, there
are six funds of the trust: Treasury Only, Money Market Portfolio, U.S.
Treasury Portfolio, Capital Reserves: U.S. Government Portfolio, Capital
Reserves: Money Market Portfolio, and Capital Reserves: Municipal Money
Market Portfolio. The Trust Instrument permits the Trustees to create
additional funds.
Treasury, Government, Domestic, and Money Market are funds of Fidelity
Institutional Cash Portfolios, an open-end management investment company
originally organized as a Massachusetts business trust on November 10,
1981, pursuant to a Declaration of Trust that was amended and restated on
April 9, 1985. On May 30, 1993, the trust was converted to a Delaware
business trust pursuant to an agreement approved by shareholders on
November 18, 1992. The Delaware trust, which was organized on June 20, 1991
under the name Fidelity Government Securities Fund, succeeded to the name
Fidelity Institutional Cash Portfolios II on May 28, 1993, and then to the
name Fidelity Institutional Cash Portfolios on May 28, 1993. Currently,
there are four funds of the trust: Treasury, Government, Domestic, and
Money Market. The Trust Instrument permits the Trustees to create
additional funds.
Rated Money Market is a fund of Fidelity Money Market Trust, an open-end
management investment company originally organized as a Massachusetts
business trust on August 21, 1978, pursuant to a Declaration of Trust that
was amended and restated on November 1, 1989. On December 29, 1994, the
trust was converted to a Delaware business trust pursuant to an agreement
approved by shareholders on December 8, 1994. The Delaware trust, which was
organized on June 20, 1991 under the name Fidelity Money Market Trust II,
succeeded to the name Fidelity Money Market Trust on December 29, 1994.
Currently, there are three funds of Fidelity Money Market Trust: Rated
Money Market, Retirement Money Market Portfolio, and Retirement Government
Money Market Portfolio. The Trust Instrument permits the Trustees to create
additional funds.
Tax-Exempt is a fund of Fidelity Institutional Tax-Exempt Cash Portfolios,
an open-end management investment company originally organized as a
Massachusetts business trust on March 1, 1982, pursuant to a Declaration of
Trust that was amended and restated on April 9, 1985, and supplemented on
December 15, 1989. On January 29, 1992, the trust was converted to a
Delaware business trust pursuant to an agreement approved by shareholders
on November 13, 1991. The Delaware trust, which was organized on June 20,
1991 under the name Fidelity Institutional Tax-Exempt Cash Portfolios II,
succeeded to the name Fidelity Institutional Tax-Exempt Cash Portfolios on
January 29, 1992. Currently, Tax-Exempt is the only fund of Fidelity
Institutional Tax-Exempt Cash Portfolios. 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 trusts 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 trusts 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 trusts, 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 a 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. Each 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
Instruments contain an express disclaimer of shareholder liability for the
debts, liabilities, obligations, and expenses of the trusts and require
that a disclaimer be given in each contract entered into or executed by the
trust or the Trustees. The Trust Instruments provide 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 Instruments
also provide 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 Instruments further provide 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. As a shareholder of Rated Money Market, you receive one vote for
each dollar value of net asset value you own. 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 non-assessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of a trust, fund, or class may, as set forth in
each of the Trust Instruments, 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.
Any trust or 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 fund (or, for Rated Money Market, as
determined by the current value of each shareholder's investment in the
fund or trust); however, the Trustees may, without prior shareholder
approval, change the form of organization of the trust or fund by merger,
consolidation, or incorporation. If not so terminated, the trust and its
funds will continue indefinitely.
Under the Trust Instruments, the Trustees may, without shareholder vote,
cause a 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's 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 each fund, except Tax-Exempt. UMB, 1010 Grand
Avenue, Kansas City, Missouri, is custodian of the assets of Tax-Exempt.
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.
AUDITORS. Coopers & Lybrand L.L.P., 1999 Bryan Street, Suite 3000,
Dallas, TX 75201 serves as the independent accountant for Treasury
Only, Rated Money Market, and Tax-Exempt. Price Waterhouse LLP, 2001
Ross Avenue, Suite 1800, Dallas, TX 75201 serves as the independent
accountant for the FICP funds. The auditors examine financial statements
for the funds and provide other audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended March 31, 1996 are included in each fund's Annual Report, which
is a separate report supplied with this Statement of Additional
Information. 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 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 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.
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS CLASS II
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 .............................. Expenses
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance
d .............................. Cover Page
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 Principles
and Risks; Securities and Investment Practices
5 a .............................. Charter
b i............................. FMR and Its Affiliates
ii........................... FMR and Its Affiliates; Charter; Breakdown of
Expenses
iii.......................... Expenses; Breakdown of Expenses; Management
Fee
c .............................. FMR and Its Affiliates
d .............................. Charter; Breakdown of Expenses; Cover Page;
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 .............................. Cover Page; Charter
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 .............................. *
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL
MONEY MARKET
FUNDS
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 July 31, 1996. 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.
IMMII-pro-0796
FUND
NUMBER
TREASURY ONLY CLASS II 542
TREASURY CLASS II 600
GOVERNMENT CLASS II 604
DOMESTIC CLASS II 692
RATED MONEY MARKET CLASS II 619
MONEY MARKET CLASS II 541
TAX-EXEMPT CLASS II 544
PROSPECTUS
JULY 31, 1996(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Class II'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 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 institutional and corporate 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. Each of
Treasury Only, Treasury, and Government offers an added measure of safety
with its focus on U.S. Treasury or Government 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
investment.
Each fund is composed of multiple classes of shares. All classes of a fund
have a common investment objective and investment portfolio. Class I shares
do not have a sales charge and do not pay a distribution fee. Class II
shares do not have a sales charge, but do pay a 0.15% distribution fee.
Class III shares do not have a sales charge, but do pay a 0.25%
distribution fee. Because Class I shares have no sales charge and do not
pay a distribution fee, Class I shares are expected to have a higher total
return than Class II and Class III shares. You may obtain more information
about Class I and Class III shares, which are not offered through this
prospectus, from your investment professional, or by calling Fidelity
Client Services at 1-800-843-3001. Contact your investment professional to
discuss which class is appropriate for you.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
Class II 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). In
addition, each fund is responsible for certain other expenses.
12b-1 fees are paid by Class II of each fund to the distributor for
services and expenses in connection with the distribution of Class II
shares of each fund.
Class II'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 estimated expenses of Class
II of each fund and are calculated as a percentage of average net assets of
Class II of each fund.
Class II Operating Expenses
TREASURY ONLY Management fee 0.20%
A
12b-1 fee (Distribution fee) 0.15
%
Other expenses 0.00
%
Total operating expenses 0.35%
A
TREASURY Management fee 0.20
%
12b-1 fee (Distribution fee) 0.15
%
Other expenses 0.00%
A
Total operating expenses 0.35%
A
GOVERNMENT Management fee 0.20
%
12b-1 fee (Distribution fee) 0.15
%
Other expenses 0.00%
A
Total operating expenses 0.35%
A
DOMESTIC Management fee 0.20
%
12b-1 fee (Distribution fee) 0.15
%
Other expenses 0.00%
A
Total operating expenses 0.35%
A
RATED MONEY MARKET Management fee 0.20%
A
12b-1 fee (Distribution fee) 0.15
%
Other expenses 0.00
%
Total operating expenses 0.35%
A
MONEY MARKET Management fee 0.18%
A
12b-1 fee (Distribution fee) 0.15
%
Other expenses 0.00%
A
Total operating expenses 0.33%
A
TAX-EXEMPT Management fee 0.20
%
12b-1 fee (Distribution fee) 0.15
%
Other expenses 0.00%
A
Total operating expenses 0.35%
A
A AFTER EXPENSE REDUCTIONS.
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment in Class II shares, assuming a 5% annual return and full
redemption at the end of each time period:
1 3
Year Years
Treasury Only $ 4 $ 11
Treasury $ 4 $ 11
Government $ 4 $ 11
Domestic $ 4 $ 11
Rated Money Market $ 4 $ 11
Money Market $ 3 $ 11
Tax-Exempt $ 4 $ 11
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 II of each fund to the extent
that total operating expenses (excluding interest, taxes, brokerage
commissions, extraordinary expenses, and 12b-1 fees) are in excess of 0.20%
(0.18% for Money Market), of its average net assets. If these agreements
were not in effect, the management fee, other expenses, and total operating
expenses, as a percentage of average net assets, of Class II of each fund
would have been the following amounts: 0.42 %, 0.00 %, and
0.57 % for Treasury Only; 0.20 %, 0.21 %, and
0.56 % for Treasury; 0.20 %, 0.18 %, and 0.53 % for
Government; 0.20 %, 0.14 %, and 0.49 % for Domestic;
0.42 %, 0.00 %, and 0.57 % for Rated Money Market;
0.20 %, 0.13 %, and 0.48 % for Money Market; and
0.20 %, 0.10 %, and 0.45 % for Tax-Exempt. These
projections are based on estimated expenses for the first year.
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 independent accountants. Price Waterhouse LLP serves as
independent accountants for each of Treasury, Government, Domestic, and
Money Market. Coopers & Lybrand L.L.P. serves as independent
accountants for each of Treasury Only, Rated Money Market, and Tax-Exempt.
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 Fidelity Client Services at
the phone number listed on page .
TREASURY ONLY - CLASS II
Selected Per-Share Data and Ratios
Year ended March 31 1996A
Net asset value, beginning of period $ 1.000
Income from Investment Operations
.020
Net interest income
Less Distributions
(.020)
From net interest income
Net asset value, end of period $ 1.000
Total returnB 2.04%
Net assets, end of period (000 omitted) $ 102
Ratio of expenses to average net assets .35%C
,D
Ratio of net interest income to average net assets 5.03%D
A NOVEMBER 6 1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
TREASURY - CLASS II
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Per-Share Data and Ratios
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Year ended March 31 1996A
Net asset value, beginning of period $ 1.000
Income from Investment Operations
Net interest income .021
Less Distributions
From net interest income (.021)
Net asset value, end of period $ 1.000
Total returnB 2.14%
Net assets, end of period (000 omitted) $ 40,470
Ratio of expenses to average net assets .35%C,
D
Ratio of net investment income to average net assets 5.18%D
</TABLE>
A NOVEMBER 6, 1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31,1996
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
GOVERNMENT - CLASS II
Selected Per-Share Data and Ratios
Year ended March 31 1996A
Net asset value, beginning of period $ 1.000
Income from Investment Operations
Net interest income .021
Less Distributions
From net interest income (.021)
Net asset value, end of period $ 1.000
Total returnB 2.16%
Net assets, end of period (000 omitted) $ 102
Ratio of expenses to average net assets .35%C,
D
Ratio of net interest income to average net assets 5.33%D
A NOVEMBER 6, 1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
DOMESTIC - CLASS II
Selected Per-Share Data and Ratios
Year ended March 31 1996A
Net asset value, beginning of period $ 1.000
Income from Investment Operations
Net interest income .021
Less Distributions
From net interest income (.021)
Net asset value, end of period $ 1.000
Total returnB 2.15%
Net assets, end of period (000 omitted) $ 2,105
Ratio of expenses to average net assets .35%C,
D
Ratio of net interest income to average net assets 5.20%D
A NOVEMBER 6, 1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
RATED MONEY MARKET - CLASS II
Selected Per-Share Data and Ratios
Year ended March 31 1996A
Net asset value, beginning of period $ 1.000
Income from Investment Operations
Net interest income .021
Less Distributions
From net interest income (.021)
Net asset value, end of period $ 1.000
Total returnB 2.15%
Net assets, end of period (000 omitted) $ 4,709
Ratio of expenses to average net assets .35%C,
D
Ratio of net interest income to average net assets 5.06%D
A NOVEMBER 6, 1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
MONEY MARKET - CLASS II
Selected Per-Share Data and Ratios
Year ended March 31 1996A
Net asset value, beginning of period $ 1.000
Income from Investment Operations
Net interest income .022
Less Distributions
From net interest income (.022)
Net asset value, end of period $ 1.000
Total returnB 2.17%
Net assets, end of period (000 omitted) $ 64,200
Ratio of expenses to average net assets .33%C,
D
Ratio of net interest income to average net assets 5.29%D
A NOVEMBER 6, 1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
TAX-EXEMPT - CLASS II
Selected Per-Share Data and Ratios
Year ended March 31 1996A
Net asset value, beginning of period $ 1.000
Income from Investment Operations
Net interest income .013
Less Distributions
From net interest income (.013)
Net asset value, end of period $ 1.000
Total returnB 1.34%
Net assets, end of period (000 omitted) $ 968
Ratio of expenses to average net assets .35%C,
D
Ratio of net interest income to average net assets 3.17%D
A NOVEMBER 6,1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D 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. Treasury Only is a diversified fund
of Daily Money Fund, an open-end management investment company organized as
a Delaware business trust on September 29, 1993. Treasury, Government,
Domestic, and Money Market are diversified funds of Fidelity Institutional
Cash Portfolios, an open-end management investment company organized as a
Delaware business trust on May 30, 1993. Rated Money Market is a
diversified fund of Fidelity Money Market Trust, an open-end management
investment company organized as a Delaware business trust on December 29,
1994. Tax-Exempt is a diversified fund of Fidelity Institutional Tax-Exempt
Cash Portfolios, an open-end management investment company organized as a
Delaware business trust on January 29, 1992. There is a remote possibility
that one fund might become liable for a misstatement in the prospectus
about another fund.
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 of each of Treasury Only, Treasury,
Government, Domestic, Money Market, and Tax-Exempt. For shareholders of
Rated Money Market, the number of votes you are entitled to is based upon
the dollar value of your investment.
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 May 31 , 19 96 , FMR advised funds having approximately
26 million shareholder accounts with a total value of more than
$ 394 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 II 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.
UMB Bank, n.a. (UMB) is Tax-Exempt's transfer agent, although it employs
FIIOC to perform these functions for Class II of 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
EACH FUND'S INVESTMENT APPROACH
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. Each fund stresses
preservation of capital, liquidity, and income (tax-free income in the case
of Tax-Exempt) and does 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.
TREASURY ONLY seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share (NAV) of $1.00.
The fund invests only in U.S. Treasury securities. The fund does not enter
into repurchase agreements or reverse repurchase agreements.
The fund will invest in those securities whose interest is specifically
exempt from state and local income taxes under federal law; such interest
is not exempt from federal income tax.
TREASURY seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. Treasury securities and repurchase agreements
for these securities. The fund does not enter into reverse repurchase
agreements.
GOVERNMENT seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. Government securities and repurchase
agreements for these securities. The fund also may enter into reverse
repurchase agreements.
DOMESTIC seeks to obtain as high a level of current income as is consistent
with the preservation of principal and liquidity within the limitations
prescribed for the fund.
The fund invests only in the highest-quality U.S. dollar-denominated money
market securities of domestic issuers, including U.S. Government securities
and repurchase agreements. Securities are "highest-quality" if rated in the
highest rating category by at least two nationally recognized rating
services, or by one if only one rating service has rated a security, or, if
unrated, determined to be of equivalent quality by FMR. The fund also may
enter into reverse repurchase agreements.
RATED MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. dollar-denominated money market securities of
domestic and foreign issuers rated in the highest rating category by at
least two nationally recognized rating services, U.S. Government
securities , and repurchase agreements. The fund also may enter into
reverse repurchase agreements.
MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in the highest-quality U.S. dollar-denominated money
market securities of domestic and foreign issuers, including U.S.
Government securities and repurchase agreements. Securities are
"highest-quality" if rated in the highest rating category by at least two
nationally recognized rating services, or by one if only one rating service
has rated a security, or, if unrated, determined to be of equivalent
quality by FMR. The fund also may enter into reverse repurchase
agreements.
TAX-EXEMPT seeks to obtain as high a level of interest income exempt from
federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal.
The fund invests primarily in high-quality, short-term municipal
securities, but also may invest in high-quality, long-term instruments
whose features give them interest rates, maturities, and prices similar to
short-term instruments. Securities in which the fund invests must be rated
in the highest rating category for short-term securities by at least one
nationally recognized rating service and rated in one of the two highest
categories for short-term securities by another nationally recognized
rating service if rated by more than one nationally recognized rating
service, or, if unrated, determined to be of equivalent quality by FMR.
The fund, under normal conditions, will invest so that at least 80% of its
income distributions is exempt from federal income tax. The fund does not
currently intend to purchase municipal securities whose interest is
subject to the federal alternative minimum tax.
FMR normally invests the fund's assets according to its investment strategy
and does not expect to invest in federally taxable obligations. The fund
also reserves the right to hold a substantial amount of uninvested cash or
to invest more than normally permitted in federally taxable obligations for
temporary, defensive purposes.
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.
Fund holdings are detailed 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.
MONEY MARKET SECURITIES are high-quality, short-term instruments
issued by the U.S. Government, corporations, financial institutions,
municipalities, local and state governments, and other entities.
These securities may carry fixed, variable, or floating interest
rates. Some money market securities employ a trust or 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. TREASURY MONEY MARKET SECURITIES are short-term debt obligations
issued by the U.S. Treasury and include bills, notes, and bonds. U.S.
Treasury securities are backed by the full faith and credit of the United
States.
U.S. GOVERNMENT MONEY MARKET SECURITIES are short-term debt instruments
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,
U.S. Government securities such as those issued by the
Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under
certain circumstances. Other U.S. Government securities , such as
those issued by the Federal Farm Credit Banks Funding
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.
CREDIT SUPPORT . Issuers may employ various forms of credit
enhancement, including letters of credit, guarantees, or insurance from a
bank, insurance company, or other entity. These arrangements expose the
fund to the credit risk of the entity. In the case of foreign
entities, extensive public information about the entity may not be
available and the entity may be subject to unfavorable political, economic,
or governmental developments which might affect its ability to honor its
commitment.
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. The risks associated with stripped securities are
similar to those of other money market securities, although stripped
securities may be more volatile. U.S. Treasury securities that have
been stripped by a Federal Reserve Bank are obligations issued by the U.S.
Treasury.
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.
RESTRICTION: A fund may not purchase a security if, as a result, more than
10% of its 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.
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.
RESTRICTIONS: Each of Domestic, Rated Money Market, and Money Market will
invest more than 25% of its total assets in the financial services
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: Each of Domestic, Rated Money Market, and Money Market may
not invest more than 5% of its total assets in any one issuer, except that
each 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.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
These limitations do not apply to U.S. Government securities.
Tax-Exempt may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
BORROWING. A 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 of Government, Domestic, Rated Money Market, and Money
Market 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. Each of Treasury Only, Treasury, and Tax-Exempt may borrow
only for temporary or emergency purposes, 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. Treasury Only, Treasury, Government, and Tax-Exempt do not
lend money to other funds advised by FMR .
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.
Treasury Only seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share (NAV) of $1.00.
Each of Treasury, Government, Domestic, Rated Money Market, and Money
Market seeks to obtain as high a level of current income as is consistent
with the preservation of principal and liquidity within the limitations
prescribed for the fund.
Tax-Exempt seeks to obtain as high a level of interest income exempt from
federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal. The fund, under normal conditions, will invest so
that at least 80% of its income distributions is exempt from federal income
tax.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
Each of Domestic, Rated Money Market, and Money Market will invest more
than 25% of its total assets in obligations of companies in the financial
services industry.
Each of Government, Domestic, Rated Money Market, and Money Market 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. Tax-Exempt 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 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 class's 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
Each fund pays FMR a management fee every month . Each of
Treasury, Government, Domestic, Money Market, and Tax-Exempt pays FMR a
fee at an annual rate of 0.20% of its average net assets.
Each of Treasury Only and Rated Money Market pays FMR a fee at an annual
rate of 0.42% of its average net assets. FMR pays all of the other expenses
of Treasury Only and Rated Money Market with limited exceptions.
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. FMR pays FMR Texas 50% of its management fee (before expense
reimbursements) for these services . F or the fiscal year ended March
31, 1996 , FMR paid FMR Texas 0.10% of each of Treasury's, Government's,
Domestic's, Money Market's, and Tax-Exempt's average net assets, and 0.21%
of each of Treasury Only's and Rated Money Market's average net assets.
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 Class II shares of Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market (the Taxable
Funds). Fidelity Service Co. (FSC) calculates the NAV and dividends for
each Taxable Fund, and maintains the general accounting records for each
Taxable Fund. These expenses are paid by FMR on behalf of Treasury Only and
Rated Money Market pursuant to its management contracts.
For the fiscal year ended March 31, 1996, Class II of each of Treasury and
Money Market paid FIIOC fees equal to 0.03% of its average net assets,
Class II of Government paid FIIOC fees equal to 0.12% of its average net
assets, and Class II of Domestic paid FIIOC fees equal to 0.07% of its
average net assets. For the fiscal year ended March 31, 1996, each of
Treasury, Government, Domestic, and Money Market paid FSC fees equal to
0.01% of its average net assets.
UMB has entered into a sub-arrangement with FIIOC. FIIOC performs transfer
agency, dividend disbursing and shareholder services for Class II shares of
Tax-Exempt. UMB has also entered into a sub-arrangement with FSC. FSC
calculates the NAV and dividends for Tax-Exempt, and maintains Tax-Exempt's
general accounting records. All of the fees are paid to FIIOC and FSC by
UMB, which is reimbursed by Class II or the fund, as appropriate, for such
payments.
For the fiscal year ended March 31, 1996, fees paid by UMB to FIIOC on
behalf of Class II of Tax-Exempt amounted to 0.06% of Class II's average
net assets, and fees paid by UMB to FSC on behalf of Tax-Exempt amounted to
0.01% of its average net assets.
Class II of each fund has adopted a DISTRIBUTION AND SERVICE PLAN. Under
the Plans, Class II of each fund is authorized to pay FDC a monthly
distribution fee as compensation for its services and expenses in
connection with the distribution of Class II shares of each fund. Class II
of each fund currently pays FDC monthly at an annual rate of 0.15% of its
average net assets throughout the month.
The Plans specifically recognize 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 II
shares, including payments made to investment professionals that provide
shareholder support services or engage in the sale of the fund s'
Class II shares. The Board of Trustees of each fund has
authorized such payments.
Each fund (other than Treasury Only and Rated Money Market) 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. Each of Treasury Only and Rated Money Market also
pays other expenses, such as brokerage fees and commissions, interest on
borrowings (only Treasury Only), taxes, and the compensation of trustees
who are not affiliated with Fidelity.
YOUR ACCOUNT
If you invest through an investment professional, your investment
professional, including a broker-dealer or financial institution, may
charge you a transaction fee with respect to the purchase and sale of fund
shares. 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.
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. Class II shares are
sold without a sales charge.
Shares are purchased at the next NAV calculated after your order is
received and accepted by the transfer agent. NAV is normally calculated at
the times indicated in the table below.
NAV Calculation Times
Fund (Eastern Time)
Treasury Only 2:00 p.m.
Treasury 3:00 p.m. and 5:00 p.m.
Government 3:00 p.m. and 5:00 p.m.
Domestic 3:00 p.m. and 5:00 p.m.
Rated Money Market 3:00 p.m. and 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
You will receive the next NAV calculated after your investment
professional has submitted your purchase order.
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 Fidelity Institutional Money Market Funds
FIIOC
P.O. Box 1182
Boston, MA 02103-1182
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Place a purchase order and wire money into your
account, or
(small solid bullet) Open an account by exchanging from the same class of
any fund that is offered through this prospectus.
INVESTMENTS IN THE FUNDS MUST BE MADE USING THE FEDERAL RESERVE WIRE
SYSTEM. Checks and Automated Clearing House payments will not be accepted
as a means of investment.
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
In order to receive same-day acceptance of your investment, you must
contact Fidelity Client Services and place your order between 8:30 a.m. and
the following times on days the funds are open for business.
Fund Closing Times
(Eastern Time)
Treasury Only 2:00 p.m.
Treasury 5:00 p.m.
Government 5:00 p.m.
Domestic 5:00 p.m.
Rated Money Market 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
All wires 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 that day.
You are advised to wire funds as early in the day as possible, and to
provide advance notice to Fidelity Client Services for purchases over $10
million ($5 million for Treasury Only).
You will earn dividends on the day of your investment, provided (i) you
contact Fidelity Client Services and place your trade between 8:30 a.m. and
the closing time indicated in the table above on days the fund is open for
business, and (ii) the fund's designated wire bank receives the wire before
the close of the Federal Reserve Wire System on the day your purchase order
is accepted by the transfer agent.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $1,000,000*
MINIMUM BALANCE $1,000,000
* THE MINIMUM INITIAL INVESTMENT OF $1 MILLION MAY BE WAIVED IF YOUR
AGGREGATE BALANCE IN THE FIDELITY INSTITUTIONAL MONEY MARKET FUNDS IS
GREATER THAN $10 MILLION. PLEASE CONTACT FIDELITY CLIENT SERVICES FOR MORE
INFORMATION REGARDING THIS WAIVER.
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 the times indicated in the
table on page .
You will receive the next NAV calculated after your
investment professional has submitted your redemption order.
Redemption requests may be made by calling Fidelity Client Services at the
phone number listed on page .
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 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 the closing time indicated in the table on page ,
redemption proceeds will normally be wired on that day.
A fund reserves the right to take up to seven days to pay you if making
immediate payment would adversely affect the fund.
You are advised to place your trades as early in the day as possible, and
to provide advance notice to Fidelity Client Services for redemptions over
$10 million ($5 million for Treasury Only).
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
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 and
prospectuses will be mailed, even if you have more than one account in a
fund. Call Fidelity Client Services at 1-800-843-3001 if you need
additional copies of financial reports, prospectuses, 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 Class II shares
redeemed during the month can be distributed on the day of redemption. Each
fund reserves the right to limit this service.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. Class II 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 wire for your dividend and capital gain
distributions, if any.
Dividends will be reinvested at each fund's Class II 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.
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.
TAXES ON DISTRIBUTIONS. Interest income that Tax-Exempt earns is
distributed to shareholders as income dividends. Interest that is federally
tax-free is designated as tax-free when it is distributed.
Distributions from the Taxable Funds, 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, income and short-term capital gain distributions
from each Taxable Fund are taxed as dividends; long-term capital gain
distributions, if any, are taxed as long-term capital gains.
F or shareholders of Tax-Exempt, 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 market 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.
For the fiscal year ended March 31, 1996, 100 % of Treasury Only's;
23 % of Treasury's; 29 % of Government's; 3 % of
Domestic's; 9 % of Rated Money Market's; and 2 % of Money
Market's income distributions were 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.
A portion of Tax-Exempt'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 Tax-Exempt's income from
each state to help you calculate your taxes.
During the fiscal year ended March 31, 1996, 100 % of Tax-Exempt's
income dividends was free from federal income 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 the
Taxable Funds) or the Federal Reserve Bank of Kansas City (Kansas City Fed)
(for Tax-Exempt) 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, the Kansas City Fed, or the
NYSE may modify its holiday schedule at any time. On any day that the New
York Fed, the Kansas City 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, the Kansas City Fed, or the NYSE is closed, each
class'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 II of each
fund is computed by adding Class II's pro rata share of the value of the
fund's investments, cash, and other assets, subtracting Class II's pro rata
share of the value of the fund's liabilities, subtracting the liabilities
allocated to Class II, and dividing the result by the number of Class II
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 Class lI 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.
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.
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 by federal funds
wire; checks will not be accepted for purchases.
(small solid bullet) If your wire is not received by the close of the
Federal Reserve Wire System, you could be liable for any losses or fees a
fund or the transfer agent has incurred or for interest and penalties.
The income declared for each of Treasury, Government, Domestic, and Rated
Money Market is based on estimates of net interest income for the fund.
Actual income may differ from estimates, and differences, if any, will be
included in the calculation of subsequent dividends.
Shareholders of record as of the closing time indicated in the table on
page will be entitled to dividends declared that 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 of each fund do not 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.
When the NYSE, the New York Fed (for the Taxable Funds), or the
Kansas City Fed (for Tax-Exempt) 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 $1,000,000 due to redemption, the
account may be closed and the proceeds may be wired to your bank account 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 Class II shares of
any fund offered through this prospectus at no charge for Class II shares
of any other fund offered through this prospectus.
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 1-800-843-3001
between 8:30 a.m. and the closing time indicated in the table on page
.
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, class
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, Class II 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) Exchanges may have tax consequences for you.
(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.
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 funds or FDC. This Prospectus and the related SAI do not
constitute an offer by the funds or by FDC to sell or to buy shares of the
funds to any person to whom it is unlawful to make such offer.
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS - CLASS II
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page; Table of Contents
12 ............................ *
13 a - c ............................ Investment Policies and Limitations
d ............................ Portfolio Transactions
14 a - c ............................ Trustees and Officers
15 a ............................ *
b ............................ Description of the Trusts
c ............................ Trustees and Officers
16 a i ............................ FMR
ii ............................ Trustees and Officers
iii ............................ Management Contracts
b,c,d ............................ Management Contracts
e ............................ *
f ............................ Distribution and Service Plans
g ............................ *
h ............................ Description of the Trusts
i ............................ Management Contracts
17 a ............................ Portfolio Transactions
b ............................ Portfolio Transactions
c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trusts
b ............................ *
19 a ............................ Additional Purchase, Exchange and Redemption
Information
b ............................ Additional Purchase, Exchange and Redemption
Information; Valuation
c ............................ *
20 Distributions and Taxes
21 a, b ............................ Distribution and Service Plans; Management
Contracts
c ............................ *
22 ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS: CLASS II
TREASURY ONLY, TREASURY, GOVERNMENT, DOMESTIC, RATED MONEY MARKET, MONEY
MARKET, AND TAX-EXEMPT
Treasury Only is a series of Daily Money Fund; Treasury, Government,
Domestic, and Money Market are series of Fidelity Institutional Cash
Portfolios; Rated Money Market is a series of Fidelity Money Market Trust;
and Tax-Exempt is a series of Fidelity Institutional Tax-Exempt Cash
Portfolios
STATEMENT OF ADDITIONAL INFORMATION
JULY 31, 1996
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus for
Class II shares (dated July 31, 1996). Please retain this document for
future reference. The funds' financial statements and financial highlights,
included in the Annual Report, for the fiscal year ended March 31, 1996,
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 Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISER
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT FOR TAXABLE FUNDS
Fidelity Investments Institutional Operations Company (FIIOC)
TRANSFER AGENT FOR TAX-EXEMPT
UMB Bank, n.a. (UMB)
IMMII-ptb-0796
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 will 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 cannot 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 TREASURY ONLY
THE FOLLOWING ARE TREASURY ONLY'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) 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;
(3) 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;
(4) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(8) The 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) 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 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.
(vi) 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.
(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 invest ment companies. Limitations
(a) and (b) do not apply (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(viii) 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.
Subject to revision upon 90 days' notice to shareholders, the fund does not
intend to engage in reverse repurchase agreements.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF TREASURY
THE FOLLOWING ARE TREASURY'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;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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 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 an
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 a security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(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 contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) 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 (i) to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger , or (ii) to securities of other open-end
investment companies managed by FMR or a successor or affiliate purchased
pursuant to an exemptive order granted by the SEC .
(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 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.
As an operating policy, the fund intends to invest 100% of its total assets
in U.S. Treasury bills, notes, and bonds and repurchase agreements
comprised of those obligations at all times. This policy may only be
changed upon 90 days' notice to shareholders.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF GOVERNMENT
THE FOLLOWING ARE GOVERNMENT'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;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(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 contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) 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 (i) to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger , or (ii) to securities of other open-end
investment companies managed by FMR or a successor or affiliate purchased
pursuant to an exemptive order granted by the SEC .
(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 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 issuers 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 the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF DOMESTIC
THE FOLLOWING ARE DOMESTIC'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) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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 securities 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 10% of its total assets in the
first tier securities of a single issuer for up to three business days.
(This limit does not apply to securities of other open-end investment
companies managed by FMR or a successor or affiliate purchased pursuant to
an exemptive order granted by the SEC.)
(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) 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) 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.
(viii) 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.)
(ix) 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 (i) to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger , or (ii) to securities of other open-end
investment companies managed by FMR or a successor or affiliate purchased
pursuant to an exemptive order granted by the SEC .
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) 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 the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF RATED MONEY MARKET
THE FOLLOWING ARE RATED MONEY MARKET'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;
(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) invest in oil, gas, or other mineral exploration or development
programs; or
(10) write or purchase any put or call option. 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.
(11) 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 securities 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 10% of its total assets in the
first tier securities of a single issuer for up to three business days.
(This limit does not apply to securities of other open-end investment
companies managed by FMR or a successor or affiliate purchased pursuant to
an exemptive order granted by the SEC.)
(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) 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 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 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.)
(viii) 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 (i) to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger , or (ii) to securities of other open-end
investment companies managed by FMR or a successor or affiliate purchased
pursuant to an exemptive order granted by the SEC .
(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 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 (ix), pass-through entities and other special
purposes 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 .
INVESTMENT LIMITATIONS OF MONEY MARKET
THE FOLLOWING ARE MONEY MARKET'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) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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
securities 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 10% of its total assets in the first tier
securities of a single issuer for up to three business days. (This limit
does not apply to securities of other open-end investment companies managed
by FMR or a successor or affiliate purchased pursuant to an exemptive order
granted by the SEC.)
(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) 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) 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.
(viii) 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.)
(ix) 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 (i) to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger , or (ii) to securities of other open-end
investment companies managed by FMR or a successor or affiliate purchased
pursuant to an exemptive order granted by the SEC .
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) 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 the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF TAX-EXEMPT
THE FOLLOWING ARE TAX-EXEMPT'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) make short sales of securities;
(4) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions;
(5) borrow money, except that the fund 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;
(6) 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;
(7) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies,
instrumentalities, territories or possessions, or issued or guaranteed by a
state government or political subdivision thereof) if as a result more than
25% of the value of its total assets would be invested in securities of
companies having their principal business activities in the same industry;
(8) purchase or sell real estate, but this shall not prevent the fund from
investing in municipal bonds or other obligations secured by real estate or
interests therein;
(9) purchase or sell physical commodities;
(10) 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; or
(11) invest in oil, gas, or other mineral exploration or development
programs.
(12) 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.
For purposes of investment limitations (1) and (7), FMR identifies the
issuer of a security depending on its terms and conditions. In identifying
the issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) 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 (5)). 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.
(ii) 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.
(iii) 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.
(iv) 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.
(v) The fund does not currently intend to (a) purchase the 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 (i) to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger , or (ii) to securities of other open-end
investment companies managed by FMR or a successor or affiliate purchased
pursuant to an exemptive order granted by the SEC .
(vi) 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.
(vii) 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.
Securities must be rated in accordance with applicable rules in the highest
rating category for short-term securities by at least one nationally
recognized rating service (NRSRO) and rated in one of the two highest
categories for short-term securities by another NRSRO if rated by more than
one NRSRO, or, if unrated, judged to be equivalent to highest quality by
FMR pursuant to procedures adopted by the Board of Trustees. The fund's
policy regarding limiting investments to the highest rating category may be
changed upon 90 days' prior notice to shareholders.
For the fund's 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 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.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, Tax-Exempt does not
intend to invest in securities whose interest is federally taxable.
However, from time to time on a temporary basis, Tax-Exempt may invest a
portion of its assets in fixed-income obligations whose interest is subject
to federal income tax.
Should Tax-Exempt 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 Tax-Exempt's distributions. If such
proposals were enacted, the availability of municipal obligations and the
value of Tax-Exempt's holdings would be affected and the Trustees would
reevaluate Tax-Exempt'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. Treasury
Only, Treasury, Government, and Tax-Exempt currently intend to participate
in this program only as borrowers. A fund will borrow through the program
only when the costs are equal to or lower than the cost of bank loans.
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). 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.
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.
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 a 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.
MUNICIPAL SECTORS:
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open transmission
access to any electricity supplier, although it is not presently known to
what extent competition will evolve. Other risks include: (a) the
availability and cost of fuel, (b) the availability and cost of capital,
(c) the effects of conservation on energy demand, (d) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (e) timely and sufficient rate
increases, and (f) opposition to nuclear power.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
other state or local health care reform measures; medical and technological
advances which dramatically alter the need for health services or the way
in which such services are delivered; changes in medical coverage which
alter the traditional fee-for-service revenue stream; and efforts by
employers, insurers, and governmental agencies to reduce the costs of
health insurance and health care services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They generally are
secured by the revenues derived from mortgages purchased with the proceeds
of the bond issue. It is extremely difficult to predict the supply of
available mortgages to be purchased with the proceeds of an issue or the
future cash flow from the underlying mortgages. Consequently, there are
risks that proceeds will exceed supply, resulting in early retirement of
bonds, or that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student loans.
Bonds issued to supply educational institutions with funds are subject to
the risk of unanticipated revenue decline, primarily the result of
decreasing student enrollment or decreasing state and federal funding.
Among the factors that may lead to declining or insufficient revenues are
restrictions on students' ability to pay tuition, availability of state and
federal funding, and general economic conditions. Student loan revenue
bonds are generally offered by state (or substate) authorities or
commissions and are backed by pools of student loans. Underlying student
loans may be guaranteed by state guarantee agencies and may be subject to
reimbursement by the United States Department of Education through its
guaranteed student loan program. Others may be private, uninsured loans
made to parents or students which are supported by reserves or other forms
of credit enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student loan
revenue bonds are impacted by numerous factors, including the rate of
student loan defaults, seasoning of the loan portfolio, and student
repayment deferral during periods of forbearance. Other risks associated
with student loan revenue bonds include potential changes in federal
legislation regarding student loan revenue bonds, state guarantee agency
reimbursement and continued federal interest and other program subsidies
currently in effect.
WATER AND SEWER. Water and sewer revenue bonds are often considered to have
relatively secure credit as a result of their issuer's importance, monopoly
status, and generally unimpeded ability to raise rates. Despite this, lack
of water supply due to insufficient rain, run-off, or snow pack is a
concern that has led to past defaults. Further, public resistance to rate
increases, costly environmental litigation, and Federal environmental
mandates are challenges faced by issuers of water and sewer bonds.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways, or other transit
facilities. Airport bonds are dependent on the general stability of the
airline industry and on the stability of a specific carrier who uses the
airport as a hub. Air traffic generally follows broader economic trends and
is also affected by the price and availability of fuel. Toll road bonds are
also affected by the cost and availability of fuel as well as toll levels,
the presence of competing roads, and the general economic health of an
area. Fuel costs and availability also affect other transportation-related
securities, as does the presence of alternate forms of transportation, such
as public transportation.
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 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 or second tier based on applicable
regulations.
Each of Treasury Only, Treasury, Government, Domestic, Rated Money Market,
and Money Market may not invest more than 5% of its total assets in second
tier securities. In addition, each of Treasury Only, Treasury, Government,
Domestic, Rated Money Market, and Money Market 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.
Each 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 a 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 a 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 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. The fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining, and closing short sales
against the box.
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 government securities are
created by separating the income and principal components of a U.S.
Government security 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 security by a Federal Reserve
Bank.
Privately stripped government securities are created when a dealer deposits
a U.S. Treasury security or other U.S. Government security
with a custodian for safekeeping . The custodian issues separate receipts
for the coupon payments and principal payment , which the dealer then
sells. Proprietary receipts, such as Certificates of Accrual on
Treasury Securities (CATS) and Treasury Investment Growth Receipts
(TIGRS), and generic receipts, such as Treasury Receipts (TRs),
are privately stripped U.S. Treasury securities .
Because the SEC does not consider privately stripped government
securities to be U.S. Government securities for purposes of Rule
2a-7 , a fund must evaluate them as it would non-government securities
pursuant to regulatory guidelines applicable to all money market funds.
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 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 th at fund and FMR's 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 the fiscal years ended March 31, 1996, 1995, and 1994, the funds paid
no brokerage commissions. During the fiscal year ended March 31, 1996, the
funds paid no fees to brokerage firms that provided research.
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 a class's net asset
value per share (NAV) at 12:00 noon Eastern time for Tax-Exempt; 2:00 p.m.
Eastern time for Treasury Only; 3:00 p.m. Eastern time for Money Market;
and 3:00 p.m. and 5:00 p.m. Eastern time for Treasury, Government,
Domestic, and Rated Money Market. The valuation of portfolio securities is
determined as of these times for the purpose of computing each class'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 class's yield based on
amortized cost valuation may be higher than that which 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 class'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
class'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 class's 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 funds may quote
yields in advertising based on any historical seven-day period. Yields for
each class 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 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 a class's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
A class's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment before taxes to equal the class's tax-free
yield. Tax-equivalent yields are calculated by dividing a class's yield by
the result of one minus a stated federal or combined federal and state tax
rate. If only a portion of a class'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 1996. 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 % to 7 %. Of course, no
assurance can be given that a class will achieve any specific tax-exempt
yield. While Tax-Exempt invests principally in obligations whose interest
is exempt from federal income tax, other income received by the fund may be
taxable.
1996 TAX RATES AND TAX-EQUIVALENT YIELDS
<TABLE>
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Federal If individual tax-exempt yield is:
Taxable Income* Tax 2% 3% 4% 5% 6% 7%
Single Return Joint Return Bracket** Then taxable-equivalent yield is:
$ 0 - $ 24,000 $ 0 $ 40,100 15.0% 2.35% 3.53% 4.71% 5.88% 7.06% 8.24%
24,001 - 58,150 40,101 - 96,900 28.0% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72%
58,151 - 121,300 96,901 - 147,700 31.0% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14%
121,301 - 263,750 147,701 - 263,750 36.0% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94%
263,751 - + 263,751 - + 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59%
</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.
Tax-Exempt 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 yield 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 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 the 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, tax-equivalent
yields, and total returns for Class II of each fund for the period ended
March 31, 1996. The initial offering of the Class II shares of the funds
began on November 1, 1995. Class II shares have a 0.15% 12b-1 fee, which is
not reflected in the figures for periods prior to that date. The figures
for periods prior to the initial offering date reflect the performance of
Class I, the original class of each fund, which class does not have a 12b-1
fee. Class II figures would have been lower had 12b-1 fees been reflected
in all periods.
The tax-equivalent yield is based on a 36 % federal income tax rate.
Average Annual Total Returns Cumulative Total Returns
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seven-Da Tax- One Five Ten One Five Ten
y Equivalent Year Years Years/ Year Years Years/
Yield Yield Life of Life of
Fund* Fund*
Treasury
Only - 4.83% N/A 5.50% 4.39% 4.64% 5.50% 23.96% 28.33%
Class II
Treasury -
Class II 5.06% N/A 5.73% 4.48% 5.99% 5.73% 24.51% 70.48%
Government
- - 5.10% N/A 5.78% 4.57% 6.15% 5.78% 25.04% 81.61%
Class II
Domestic -
Class II 5.00% N/A 5.78% 4.57% 5.38% 5.78% 25.06% 39.97%
Rated
Money 5.03% N/A 5.63% 4.36% 5.97% 5.63% 23.78% 78.62%
Market - Class II
Money
Market - 5.07% N/A 5.84% 4.64% 6.25% 5.84% 25.43% 83.31%
Class II
Tax-Exempt
- - 3.11% 4.86% 3.64% 3.25% 4.26% 3.64% 17.36% 51.81%
Class II
</TABLE>
* Life of Fund figures are from commencement of operations ( October
3, 1990 for Treasury Only; February 2, 1987 for Treasury ;
and November 3, 1989 for Domestic) through the fund's 1996 fiscal
year end .
Note: If FMR had not reimbursed certain expenses during these periods,
total returns would have been lower and the 7-day yields for the
period ending March 31, 1996 for Class II of each fund would have been:
Seven-day Tax-Equivalent
Yield * Yield *
Treasury Only - Class II 4.61 % N/A
Treasury - Class II 4.81 % N/A
Government - Class II -21.64 % N/A
Domestic - Class II -37.94 % N/A
Rated Money Market - Class II 4.81 % N/A
Money Market - Class II 4.90 % N/A
Tax-Exempt - Class II 0.69 % 1.08 %
* Figures are based on actual expenses of Class II of each fund from
commencement of operations (11/6/95) through the fiscal year ended March
31, 1996.
The following tables show the income and capital elements of each fund's
Class II cumulative total return. Each table compares a fund's Class II
return to the record of the Standard & Poor's 500 Index (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 Class II 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' Class II returns, do
not include the effect of paying brokerage commissions or other costs of
investing.
CLASS II CHARTS. The initial offering of the Class II shares of each fund
began on November 1, 1995. Class II shares have a 0.15% 12b-1 fee, which is
not reflected in the figures prior to that date. The figures for periods
prior to the initial offering date reflect the performance of Class I, the
original class of each fund, which class does not have a 12b-1 fee. Class
II figures would have been lower had 12b-1 fees been reflected in all
periods.
TREASURY ONLY
HISTORICAL FUND RESULTS
During the period from October 3, 1990 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class II of Treasury
Only would have grown to $ 12,833 , 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 Class II
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Treasury Only INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 2,833 $ 0 $ 12,833 $ 24,020 $ 26,101 $ 11,733
1995+ 10,000 2,165 0 12,165 18,183 18,980 11,409
1994 10,000 1,624 0 11,624 15,735 16,157 11,093
1993 10,000 1,285 0 11,285 15,506 14,846 10,821
1992 10,000 913 0 10,913 13,454 13,573 10,497
1991* 10,000 353 0 10,353 12,114 11,848 10,173
</TABLE>
* From October 3, 1990 (commencement of operations).
+ The fiscal year end of the fund changed from July 31 to March 31 in
February 1995.
Explanatory Notes: With an initial investment of $10,000, made on October
3, 1990, the net amount invested in Class II shares of the fund 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 $ 12,833 . If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 2,500 . The fund did not distribute any capital gains during the
period. Tax consequences of different investments have not been factored
into the above figures.
TREASURY
HISTORICAL FUND RESULTS
During the period from February 2, 1987 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class II of Treasury
would have grown to $ 17,048 , 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 Class II
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Treasury INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 7,048 $ 0 $ 17,048 $ 31,337 $ 34,517 $ 14,002
1995 10,000 6,124 0 16,124 23,722 25,101 13,615
1994 10,000 5,389 0 15,389 20,528 21,366 13,237
1993 10,000 4,932 0 14,932 20,229 19,633 12,914
1992 10,000 4,433 0 14,433 17,552 17,950 12,527
1991 10,000 3,692 0 13,692 15,805 15,668 12,140
1990 10,000 2,693 0 12,693 13,816 14,014 11,574
1989 10,000 1,632 0 11,632 11,583 11,432 10,998
1988 10,000 759 0 10,759 9,804 9,560 10,477
1987* 10,000 93 0 10,093 10,694 10,731 10,081
</TABLE>
* From February 2, 1987 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on February
2, 1987, the net amount invested in Class II shares of the fund 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 $ 17,048 . If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 5,349 . The fund did not distribute any capital gains during the
period. Tax consequences of different investments have not been factored
into the above figures.
GOVERNMENT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class II of Government would have grown to $ 18,161 ,
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 Class II of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Government INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 8,161 $ 0 $ 18,161 $ 36,984 $ 42,184 $ 14,311
1995 10,000 7,169 0 17,169 27,997 30,676 13,915
1994 10,000 6,373 0 16,373 24,228 26,112 13,529
1993 10,000 5,876 0 15,876 23,875 23,994 13,199
1992 10,000 5,330 0 15,330 20,715 21,937 12,803
1991 10,000 4,524 0 14,524 18,653 19,148 12,408
1990 10,000 3,455 0 13,455 16,306 17,127 11,829
1989 10,000 2,327 0 12,327 13,670 13,972 11,241
1988 10,000 1,394 0 11,394 11,571 11,684 10,708
1987 10,000 651 0 10,651 12,622 13,115 10,303
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class II shares of the fund 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 $ 18,161 . If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 5,983 . The fund did not distribute any capital gains during the
period. Tax consequences of different investments have not been factored
into the above figures.
DOMESTIC
HISTORICAL FUND RESULTS
During the period from November 3, 1989 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class II of Domestic
would have grown to $ 13,997 , 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 Class II
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Domestic INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 3,997 $ 0 $ 13,997 $ 23,110 $ 25,742 $ 12,396
1995 10,000 3,232 0 13,232 17,494 18,720 12,054
1994 10,000 2,605 0 12,605 15,139 15,935 11,720
1993 10,000 2,222 0 12,222 14,919 14,642 11,433
1992 10,000 1,808 0 11,808 12,944 13,387 11,091
1991 10,000 1,192 0 11,192 11,655 11,685 10,748
1990* 10,000 352 0 10,352 10,189 10,451 10,247
</TABLE>
* From November 3, 1989 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on November
3, 1989, the net amount invested in Class II shares of the fund 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 $ 13,997 . If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 3,371 . The fund did not distribute any capital gains during the
period. Tax consequences of different investments have not been factored
into the above figures.
RATED MONEY MARKET
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class II of Rated Money Market would have grown to
$ 17,862 , 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 Class II of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
RATED MONEY MARKET INDICES
Period Ended Value of Value of Value of Total S&P DJIA Cost of
3/31 Initial Reinvested Reinvested Value 500 Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996+ $ 10,000 $ 7,862 $ 0 $ 17,862 $ 36,984 $ 42,184 $ 14,311
1995 10,000 6,911 0 16,911 27,997 30,676 13,915
1994 10,000 6,148 0 16,148 24,228 26,112 13,529
1993 10,000 5,694 0 15,694 23,875 23,994 13,199
1992+ 10,000 5,195 0 15,195 20,715 21,937 12,803
1991 10,000 4,430 0 14,430 18,653 19,148 12,408
1990 10,000 3,381 0 13,381 16,306 17,127 11,829
1989 10,000 2,276 0 12,276 13,670 13,972 11,241
1988 10,000 1,355 0 11,355 11,571 11,684 10,708
1987 10,000 628 0 10,628 12,622 13,115 10,303
</TABLE>
+ The fiscal year end of the fund changed from August 31 to March 31 in
June 1995, and from October 31 to August 31 in July 1992.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class II shares of the fund 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 $ 17,862 . If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 5,817 . 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
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class II of Money Market would have grown to $ 18,331 ,
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 Class II of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Money Market INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 8,331 $ 0 $ 18,331 $ 36,984 $ 42,184 $ 14,311
1995 10,000 7,320 0 17,320 27,997 30,676 13,915
1994 10,000 6,496 0 16,496 24,228 26,112 13,529
1993 10,000 5,985 0 15,985 23,875 23,994 13,199
1992 10,000 5,431 0 15,431 20,715 21,937 12,803
1991 10,000 4,615 0 14,615 18,653 19,148 12,408
1990 10,000 3,515 0 13,515 16,306 17,127 11,829
1989 10,000 2,370 0 12,370 13,670 13,972 11,241
1988 10,000 1,417 0 11,417 11,571 11,684 10,708
1987 10,000 657 0 10,657 12,622 13,115 10,303
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March
31, 1986, the net amount invested in Class II shares of the fund 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 $18,331. If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to $6,077. The
fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
TAX-EXEMPT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class II of Tax-Exempt would have grown to $ 15,181 ,
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 Class II of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Tax-Exempt INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 5,181 $ 0 $ 15,181 $ 36,984 $ 42,184 $ 14,311
1995+ 10,000 4,647 0 14,647 27,997 30,676 13,915
1994 10,000 4,195 0 14,195 24,228 26,112 13,529
1993 10,000 3,859 0 13,859 23,875 23,994 13,199
1992 10,000 3,477 0 13,477 20,715 21,937 12,803
1991 10,000 2,935 0 12,935 18,653 19,148 12,408
1990 10,000 2,246 0 12,246 16,306 17,127 11,829
1989 10,000 1,533 0 11,533 13,670 13,972 11,241
1988 10,000 921 0 10,921 11,571 11,684 10,708
1987 10,000 430 0 10,430 12,622 13,115 10,303
</TABLE>
+ The fiscal year end of the fund changed from May 31 to March 31 in
February 1995.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class II shares of the fund 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 $ 15,181 . If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 4,182 . 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 such comparison 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)/Government, which is reported in the MONEY FUND
REPORT(registered trademark), covers over 230 government money
market funds; IBC/Donoghue's MONEY FUND AVERAGES(trademark)/All
Taxable, which is reported in the MONEY FUND REPORT(registered
trademark), covers over 800 taxable money market funds; and
IBC/Donoghue's MONEY FUND AVERAGES(trademark)/All Tax-Free, which is
reported in the MONEY FUND REPORT(registered trademark), covers over
398 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.
As of May 31 , 1996, FMR advised over $ 27 billion in tax-free
fund assets, $ 86 billion in money market fund assets, $ 277
billion in equity fund assets, $ 53 billion in international fund
assets, and $ 23 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 class may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A class'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
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. 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 each fund'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.
Tax-Exempt purchases municipal securities whose interest FMR believes is
free from federal income tax . Generally , issuers
or other parties have entered into covenants requiring continuing
compliance with federal tax requirements to preserve the tax-free status
of interest payments over the life of the security. If at any time the
covenants are not complied with, or if the IRS determines that the
issuer did not comply with relevant tax requirements, interest
payments from a security could become federally taxable retroactive
to the date the security was issued. For certain types of structured
securities, the tax status of the pass-through of tax-free income
may also be based on the federal tax treatment of the structure .
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 Tax-Exempt's policy of investing so
that at least 80% of its income distribution 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 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 Tax-Exempt's policy of investing so that at
least 80% of its income distribution is free from federal income tax.
Tax-Exempt may distribute any net realized short-term capital gains and
taxable market discount once a year or more often, as necessary, to
maintain its net asset value at $1.00 per share.
It is the current position of the staff of the SEC that a fund that uses
the term "tax-exempt" in its name may not derive more than 20% of its
income from municipal obligations that pay interest that is a preference
item for purposes of the AMT. According to this position, at least 80% of
Tax-Exempt's income would have to be exempt from the AMT as well as from
federal income taxes.
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. Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market do not
anticipate earning long-term capital gains on securities held by each fund.
Tax-Exempt does not anticipate distributing long-term capital gains.
As of the fiscal year ended March 31, 1996, Treasury Only had capital loss
carryforwards aggregating approximately $ 299,000 . The loss
carryforward for Treasury Only, of which $ 22,000, $162,000, and
$115,000 will expire on March 31, 2001, 2002, and 2004 ,
respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Treasury had capital loss
carryforwards aggregating approximately $ 1,038,000 . The loss
carryforward for Treasury, of which $ 31,000, $142,000, $1,000, $330,000,
and $534,000 will expire on March 31, 1997, 1999, 2001, 2002, and
2003 , respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Government had capital loss
carryforwards aggregating approximately $ 1,096,700 . The loss
carryforward for Government, of which $ 200, $53,000, $271,000, $761,000,
and $11,500 will expire on March 31, 1997, 2001, 2002, 2003, and
2004 , respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Domestic had capital loss
carryforwards aggregating approximately $ 93,000 . The loss
carryforward for Domestic, of which $ 44,000 and $49,000 will expire
on March 31, 2001 and 2003 , respectively, is available to offset
future capital gains.
As of the fiscal year ended March 31, 1996, Rated Money Market had capital
loss carryforwards aggregating approximately $ 47,000 . The loss
carryforward for Rated Money Market, of which $ 32,000, $2,000, and
$13,000 will expire on March 31, 1997, 1998, and 2004 ,
respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Money Market had capital loss
carryforwards aggregating approximately $ 2,025,000 . The loss
carryforward for Money Market, of which $ 336,000, $898,000, $547,000,
and $244,000, will expire on March 31, 2001, 2002, 2003, and
2004 , respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Tax-Exempt had capital loss
carryforwards aggregating approximately $ 527,000. The loss
carryforward for Tax-Exempt, which will expire on Ma y 31,
1996 , 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 a fund'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 its
respective Trust 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 , Members of the Advisory Board, and executive officers
of each 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 each trust prior
to the funds' conversions from series of Massachusetts business trusts
served each trust in identical capacities. All persons named as Trustees
and Members of the Advisory Board 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 and Members of
the Advisory Board is Fidelity Investments, P.O. Box 9235, Boston,
Massachusetts 02205-9235. Those Trustees who are "interested persons" by
virtue of their affiliation with either a trust or FMR are indicated by an
asterisk (*).
*EDWARD C. JOHNSON 3d (64), 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 (53), 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 (62), Trustee (1991), is a management consultant
(1994). Prior to February 1994, he was President of Greenhill Petroleum
Corporation (petroleum exploration and production). 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 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), 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 and Chairman of the non-interested Trustees,
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 (67), Trustee. 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), 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 (62), 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 Chairman of the Board of Directors of the National
Arts Stabilization Fund, as Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association, as a Member of the Public Oversight Board
of the American Institute of Certified Public Accountants' SEC Practice
Section (1995), and as a Public Governor of the National Association of
Securities Dealers, Inc. (1996).
*PETER S. LYNCH (52), Trustee, 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.
GERALD C. McDONOUGH (65), Trustee and Vice-Chairman of the non-interested
Trustees, 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 (70), 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 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 (61), 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.
THOMAS R. WILLIAMS (66), 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).
WILLIAM O. McCOY (62), Member of the Advisory Board (1996), is the Vice
President of Finance for the University of North Carolina (16-school
system, 1995). Prior to his retirement in December 1994, Mr. McCoy was Vice
Chairman of the Board of BellSouth Corporation (telecommunications) and
President of BellSouth Enterprises. He is currently a Director of Liberty
Corporation (holding company), Weeks Corporation of Atlanta (real estate,
1994), and Carolina Power and Light Company (electric utility, 1996).
Previously, he was a Director of First American Corporation (bank holding
company, 1979-1996). In addition, Mr. McCoy serves as a member of the Board
of Visitors for the University of North Carolina at Chapel Hill (1994) and
for the Kenan Flager Business School (University of North Carolina at
Chapel Hill).
FRED L. HENNING, JR. (55), 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 C. BARRON (37), Vice President (1989), is also Vice President
of other funds advised by FMR and an employee of FMR Texas Inc.
BURNELL STEHMAN (64), Vice President (1992), is also Vice President of
other funds advised by FMR and an employee of FMR Texas Inc.
JOHN TODD (47), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
SCOTT A. ORR (34), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
ARTHUR S. LORING (47), 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 (47), 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, is Assistant Vice President
of Fidelity's money market funds and Vice President and Associate General
Counsel of FMR Texas Inc.
JOHN H. COSTELLO (48), 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) and Chief
Financial Officer of Fidelity Brokerage Services, Inc. (1990-1993).
THOMAS J. SIMPSON (37), Assistant Treasurer (1996), is Assistant
Treasurer of Fidelity's money market funds and an employee of FMR (1996).
Prior to joining FMR, Mr. Simpson was Vice-President and Fund Controller of
Liberty Investment Services (1987-1995).
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 March 31, 1996.
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
Treasury $ 0 $ 515 $ 515 $640 $ 0 $ 520 $ 520 $ 0 $ 509 $ 515 $ 522 $ 516
Only
Treasury 0 2,563 2,522 3,151 0 2,555 2,555 0 2,488 2,563 2,590 2,522
Government 0 1,449 1,428 1,783 0 1,443 1,443 0 1,415 1,449 1,470 1,433
Domestic 0 416 396 492 0 400 400 0 392 416 423 399
Rated Money 0 120 120 150 0 121 121 0 119 120 121 120
Market
Money 0 2,646 2,568 3,210 0 2,598 2,598 0 2,541 2,652 2,681 2,576
Market
Tax-Exempt 0 800 787 984 0 795 795 0 780 800 811 789
</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 52,000 128,000
Phyllis Burke Davis 5,200 52,000 125,000
Richard J. Flynn 0 52,000 160,500
Edward C. Johnson 3d** 0 0 0
E. Bradley Jones 5,200 49,400 128,000
Donald J. Kirk 5,200 52,000 129,500
Peter S. Lynch** 0 0 0
Gerald C. McDonough 5,200 52,000 128,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 128,000
Thomas R. Williams 5,200 52,000 125,000
</TABLE>
* Information is as of December 31, 1995 for 219 funds in the complex.
** Interested trustees of the fund are compensated by FMR.
For the fiscal year ended March 31, 1996, Edward H. Malone accrued
deferred compensation of $897 from Money Market.
The non-interested Trustees may elect to defer receipt of all or a
percentage of their annual fees in accordance with the terms of a Deferred
Compensation Plan (the Plan). Under the Plan, compensation deferred by a
Trustee is periodically adjusted as though an equivalent amount had been
invested and reinvested in shares of one or more funds in the complex
designated by such Trustee (designated securities). The amount paid to the
Trustee under the Plan will be determined based upon the performance of
such investments. Deferral of Trustees' fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate the fund to retain the services of
any Trustee or to pay any particular level of compensation to the Trustee.
Each fund may invest in such designated securities under the Plan without
shareholder approval. Only non-interested Trustees are eligible to
participate in the Plan.
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.
As of July 1, 1996, less than 1% of Treasury Only's, approximately
13.36% of Domestic's, less than 1% of Rated Money Market's, and
approximately 35.84% of Money Market's total outstanding shares were held
by an FMR affiliate, FMR Corp. Mr. Edward C. Johnson 3d, President and
Trustee of the funds, is a member of a family group which, by virtue of its
owning approximately 49% of the voting securities of FMR Corp., may be
deemed under the 1940 Act to form a controlling group with respect to FMR
Corp. Therefore, based on his membership in this family group, Mr. Edward
C. Johnson 3d may be deemed to own beneficially these shares. As of this
date, with the exception of Mr. Johnson 3d's ownership of the Treasury
Only, Domestic, Rated Money Market, and Money Market shares, the Trustees
and officers of the funds owned, in the aggregate, less than 1% of each
fund's total outstanding shares.
As of July 1, 1996, the following owned of record or beneficially 5% or
more of outstanding shares of each class of the funds:
Treasury Only - Class I: First Union National Bank, Charlotte, NC (34.66%);
Shawmut Bank of Boston, N.A., Boston, MA (9.47%); Ropes & Gray, Boston, MA
(6.49%); and First American Trust Company, Santa Ana, CA (5.20%).
Treasury Only - Class II: FMR Corp., Boston, MA (100%).
Treasury Only - Class III: Bankers Trust Company, New York, NY (35.01%);
Texas Commerce Bank, N.A., Houston, TX (31.63%); and Liberty National Bank
& Trust, Oklahoma City, OK (16.24%).
Treasury - Class I: First Union National Bank, Charlotte, NC (11.28%);
Texas Commerce Bank, N.A., Houston, TX (9.25%); First Trust, St. Paul, MN
(8.93%); and First Interstate Bank, Portland, OR (7.97%).
Treasury - Class II: Texas Commerce Bank, N.A., Houston, TX (74.64%);
Boatmen's Trust Company, St. Louis, MO (12.13%); and Nationsbank,
Charlotte, NC (8.27%).
Treasury - Class III: Bank of New York, New York, NY (71.78%); and First
Union National Bank, Charlotte, NC (15.64%).
Government - Class I: First Tennessee Bank, Memphis, TN (11.86%); Texas
Commerce Bank, N.A. (8.75%); and Shawmut Bank of Boston, N.A. (5.54%).
Government - Class II: First Union National Bank, Charlotte, NC (72.39%);
and Bank of Boston, Waterbury, CT (27.08%).
Government - Class III: Texas Commerce Bank, N.A., Houston, TX (65.68%);
Liberty National Bank & Trust Co., Oklahoma City, OK (15.11%); Boatmen's
Trust Company, St. Louis, MO (12.16%); Whitney National Bank, New Orleans,
LA (8.21%); and Nationsbank, Charlotte, NC (5.34%).
Domestic - Class I: First Union National Bank, Charlotte, NC (13.87%); FMR
Corp., Boston, MA (13.36%); Intel Corporation, Santa Clara, CA (9.41%) and
Texas Commerce Bank, N.A., Houston, TX (8.05%).
Domestic - Class II: FMR Corp., Boston, MA (83.87%); and Barnett Banks
Trust Co., Jacksonville, FL (16.13%).
Domestic - Class III: First Union National Bank, Charlotte, NC (23.37%);
Rainier Bancorporation, Seattle, WA (19.24%); Boatmen's Trust Company, St.
Louis, MD (16.61%); Reliance Trust Company, Atlanta, GA (14.09%); Texas
Commerce Bank, N.A., Houston, TX (10.70%); and Exchange Bank, Santa Rosa,
CA (5.79%).
Rated Money Market - Class I; Promus Companies, Memphis, TN (21.39%);
Metric Partners, Foster City, CA (9.83%); and Independence Mining Company,
Denver, CO (5.98%).
Rated Money Market - Class II: FMR Corp., Boston, MA (100%).
Rated Money Market - Class III: Texas Commerce Bank, N.A. (95.37%).
Money Market - Class I: FMR Corp., Boston, MA (37.29%); and Citibank, N.A.,
New York, NY (8.13%).
Money Market - Class II: Texas Commerce Bank, N.A. (43.82%); Nationsbank,
Charlotte, NC (26.54%); First Security Bank of Utah, Salt Lake City, UT
(19.38%); and Boatmen's Trust Company, St. Louis, MO (6.12%).
Money Market - Class III: First Union National Bank, Charlotte, NC
(24.55%); Old Republic International Corp., Chicago, IL (17.50%); North
American Trust Company, San Diego, CA (17.27%); Republic National Bank of
New York, New York, NY (11.15%); Nationsbank, Charlotte, NC (10.32%); and
Texas Commerce Bank, W.A. (9.87%).
Tax-Exempt - Class I: Shawmut Bank of Boston, N.A., Boston, MA (12.98%);
and Wachovia Bank & Trust Company, Winston-Salem, NC (7.67%).
Tax-Exempt - Class II: First Union National Bank, Charlotte, NC (99.04%).
Tax-Exempt - Class III: Bank of New York, New York, NY (64.40%); and First
Security Bank, Batesville, MS (30.06%).
A shareholder owning of record or beneficially more than 25% of a class'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, all Trustees who are "interested
persons" of the trusts or of FMR, and all personnel of each fund or FMR for
performing services relating to research, statistical and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provides the management and administrative services necessary
for the operation of 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
UMB, 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 (other than Treasury Only and Rated Money Market) 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 (other than Treasury Only's and Rated Money
Market'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 trusts, on behalf of
each fund, have entered into revised transfer agent agreements with FIIOC
and UMB, as applicable, pursuant to which FIIOC or UMB bears the costs of
providing these services to existing shareholders of the applicable
classes. Other expenses paid by each fund (other than Treasury Only and
Rated Money Market) 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 the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.
FMR is responsible for the payment of all expenses of Treasury Only and
Rated Money Market with certain exceptions. Specific expenses payable by
FMR include, without limitation, expenses for the typesetting, printing,
and mailing of proxy materials to shareholders; legal expenses, and the
fees of the custodian, auditor, and interested Trustees; costs of
typesetting, printing, and mailing prospectuses and statements of
additional information, notices and reports to shareholders; and the fund's
proportionate share of insurance premiums and Investment Company Institute
dues. FMR also provides for transfer agent and dividend disbursing services
through FIIOC and portfolio and general accounting record maintenance
through FSC.
FMR pays all other expenses of Treasury Only and Rated Money Market with
the following exceptions: fees and expenses of all Trustees of the
applicable trust who are not "interested persons" of the trust or FMR (the
non-interested Trustees); interest on borrowings (only for Treasury Only);
taxes; brokerage commissions (if any); and such nonrecurring expenses as
may arise, including costs of any litigation to which a fund may be a
party, and any obligation it may have to indemnify the officers and
Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated May 30,
1993 for Treasury, Government, Domestic, and Money Market (the FICP funds);
January 29, 1992 for Tax-Exempt; September 30, 1993 for Treasury Only; and
December 29, 1994 for Rated Money Market. The management contracts were
approved by shareholders on November 18, 1992, November 13, 1991, March 24,
1993, and December 8, 1994, respectively.
For the services of FMR under each contract, each fund (other than Treasury
Only and Rated Money Market) pays FMR a monthly management fee at the
annual rate of 0.20% of average net assets throughout the month. Treasury
Only and Rated Money Market each pays FMR a monthly management fee at the
annual rate of 0.42% of average net assets throughout the month. The
management fees paid to FMR by Treasury Only and Rated Money Market are
reduced by an amount equal to the fees and expenses paid by the respective
funds to the non-interested Trustees. Fees received by FMR for the last
three fiscal periods are shown in the table below.
Fund Fiscal Year Ended Management Fees Paid to FMR
Treasury Only 3/31/96 $ 5,448,560 *
3/31/95** 3,279,429 *
7/31/94 4,716,697 *
7/31/93 4,892,175 *
Treasury 3/31/96 13,337,040
3/31/95 8,680,344
3/31/94 9,834,015
Government 3/31/96 6,905,768
3/31/95 6,680,088
3/31/94 9,660,519
Domestic 3/31/96 1,924,309
3/31/95 1,923,368
3/31/94 1,525,574
Rated Money Market 3/31/96** 714,940 *
8/31/95 1,352,919 *
8/31/94 1,781,535 *
8/31/93 2,893,862 *
Money Market 3/31/96 13,337,921
3/31/95 10,436,518
3/31/94 10,551,990
Tax-Exempt 3/31/96 3,883,600
3/31/95** 3,789,731
5/31/94 5,099,831
5/31/93 5,036,875
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
** The fiscal year end of Treasury Only changed from July 31 to March 31 in
February 1995. The fiscal year end of Rated Money Market changed from
August 31 to March 31 in June 1995. The fiscal year end of Tax-Exempt
changed from May 31 to March 31 in February 1995.
FMR may, from time to time, voluntarily reimburse all or a portion of each
class's operating expenses (exclusive of interest, taxes, brokerage
commissions, extraordinary expenses , and any applicable 12b-1
fees ). 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 class's total returns and yield and repayment of the reimbursement by
each class will lower its total returns and yield.
Effective July 1, 1995, FMR voluntarily agreed, subject to revision
or termination, to reimburse each fund if and to the extent that
each fund's aggregate operating expenses, including management fees but
excluding any applicable 12b-1 fees, were in excess of the annual
rate of 0.20% (0.18% for Money Market) of its average net assets.
Prior to July 1, 1995, FMR voluntarily agreed to reimburse each fund if
and to the extent each fund's aggregate operating expenses, including
management fees but excluding 12b-1 fees, were in excess of 0.18% (0.20%
for Treasury Only) of its average net assets.
The table below identifies the dollar amount reimbursed to management fees
for each fund during the last three fiscal periods.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Fund Fiscal Year
Dollar Amount
Ended Reimbursed
Treasury Only 3/31/96 $ 2,856,829
3/31/95* 1,719,806
7/31/94 2,474,345
7/31/93 2,567,107
Rated Money Market 3/31/96 255,565
Money Market 3/31/96 1,335,614
3/31/95 3,002,430**
3/31/94 2,444,993**
</TABLE>
* August 1, 1994 to March 31, 1995
** Amount of total reimbursement
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 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 the sub-advisory agreements dated May 30, 1993, January 29, 1992,
September 30, 1993, and December 29, 1994, for the FICP funds, Tax-Exempt,
Treasury Only, and Rated Money Market, respectively, FMR pays FMR Texas
fees equal to 50% of the management fees payable to FMR under its
management contract with each fund. Each sub-advisory agreement was
approved by shareholders on November 18, 1992, November 13, 1991, March 24,
1993, and December 8, 1994, for the FICP funds, Tax-Exempt, Treasury Only,
and Rated Money Market, respectively. The fees paid to FMR Texas are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time. The table below shows fees paid by FMR to FMR
Texas on behalf of each fund for the fiscal years ended March 31, 1996,
1995, and 1994.
1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Treasury Only* $ 2,724,280 $ 1,639,715 $ 2,358,349 $ 2,446,088
Treasury 6,668,520 4,340,172 4,917,008 --
Government 3,452,884 3,340,044 4,830,260 --
Domestic 962,155 961,684 762,787 --
Rated Money Market** 357,470 676,460 890,768 1,446,931
Money Market 6,668,961 5,218,259 5,275,995 --
Tax-Exempt*** 1,941,800 1,894,866 2,549,916 2,518,438
</TABLE>
* Figures for Treasury Only are for the fiscal year ended March 31, 1996,
the fiscal period August 1, 1994 to March 31, 1995, and the fiscal years
ended July 31, 1994 and 1993.
** Figures for Rated Money Market are for the fiscal period September 1,
1995 to March 31, 1996, and the fiscal years ended August 31, 1995, 1994,
and 1993.
*** Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, and the fiscal years
ended May 31, 1994 and 1993.
CONTRACTS WITH FMR AFFILIATES
FIIOC, an affiliate of FMR, is the transfer, dividend disbursing, and
shareholder servicing agent for Class II shares of Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market (the Taxable
Funds).
UMB is the transfer agent for Class II shares of Tax-Exempt. UMB has
entered into a sub-contract with FIIOC under the terms of which FIIOC
performs the processing activities associated with providing transfer agent
and shareholder servicing functions for Class II shares of Tax-Exempt.
Under this arrangement FIIOC receives an annual account fee and an
asset-based fee each based on account size and fund type for each retail
account and certain institutional accounts. With respect to certain
institutional retirement accounts, FIIOC receives an annual account fee and
an asset-based fee based on account type or fund type. These annual account
fees are subject to increase based on postal rate changes.
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, an affiliate of FMR, performs the calculations necessary to determine
NAV and dividends for Class II shares of each Taxable Fund, and maintains
each Taxable Fund's accounting records. UMB has a sub-contract with FSC,
under the terms of which FSC performs the calculations necessary to
determine NAV and dividends for Class II of Tax-Exempt, and maintains the
accounting records for Tax-Exempt . The annual fee rates for pricing
and bookkeeping services are based on each fund's average net assets,
specifically, .0175% of the first $500 million of average net assets and
.0075% of average net assets in excess of $500 million. The fee is limited
to a minimum of $40,000 and a maximum of $800,000 per year.
Transfer agent fees and pricing and bookkeeping fees for Tax-Exempt are
paid to FIIOC and FSC, respectively, by UMB which is entitled to
reimbursement from Class II or the fund, as applicable, for these expenses.
FMR bears the cost of transfer, dividend disbursing, shareholder
servicing and pricing and bookkeeping services pursuant to its management
contracts with Treasury Only and Rated Money Market.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for the past three fiscal years were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
Treasury $ 550,798 $ 375,762 $ 419,147
Government 309,220 331,070 412,411
Domestic 122,381 122,139 107,464
Money Market 551,158 441,370 445,362
Tax-Exempt 249,803 309,306* 304,324**
325,195***
</TABLE>
* From 6/1/94 - 3/31/95
** From 6/1/93 - 5/31/94
*** From 6/1/92 - 5/31/93
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 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 FMR.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved a Distribution and Service Plan on behalf of
Class II 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 Class II of 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 each Class II Plan, FDC is paid a monthly distribution fee as a
percentage of Class II's average net assets at an annual rate of 0.15%,
determined as of the close of business on each day throughout the month.
For the fiscal year ended March 31, 1996, Class II of each fund paid the
following distribution fees:
1996
Treasury Only $ 1,279
Treasury 48,843
Government 61
Domestic 102
Rated Money Market 1,389
Money Market 23,203
Tax-Exempt 363
FDC retained none of the distribution fees paid by Class II of each fund
for the period reported above.
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 its other resources from any other sources to reimburse
FDC for expenses incurred in connection with the distribution of
Class II shares, including payments made to third parties that assist in
selling Class II shares of each fund, or to third parties, including banks
that render shareholder support services or engage in the sale of Class II
shares. The Trustees have authorized such payments.
Prior to approving each 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 II of the applicable fund and its shareholders. To the extent that
each Plan gives FMR and FDC greater flexibility in connection with the
distribution of shares of Class II of each fund, additional sales of fund
shares may result. Furthermore, certain shareholder support services may be
provided more effectively under the Plans by local entities with whom
shareholders have other relationships.
The Plans do not provide for specific payments by Class II of any of the
expenses of FDC or obligate FDC 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 FDC for
advertising, marketing and distribution, and payments to third parties, the
amounts remaining, if any, may be used as FDC may elect.
The Plans were approved by FMR as the then sole shareholder of Class II of
each fund on October 31, 1995.
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 TRUSTS
TRUST ORGANIZATION. Treasury Only is a fund of Daily Money Fund, an
open-end management investment company originally organized as a
Massachusetts business trust on June 7, 1982, pursuant to a Declaration of
Trust that was amended and restated on September 1, 1989. 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 Delaware trust,
which was organized on June 20, 1991 under the name Daily Money Fund II,
succeeded to the name Daily Money Fund on July 14, 1995. Currently, there
are six funds of the trust: Treasury Only, Money Market Portfolio, U.S.
Treasury Portfolio, Capital Reserves: U.S. Government Portfolio, Capital
Reserves: Money Market Portfolio, and Capital Reserves: Municipal Money
Market Portfolio. The Trust Instrument permits the Trustees to create
additional funds.
Treasury, Government, Domestic, and Money Market are funds of Fidelity
Institutional Cash Portfolios, an open-end management investment company
originally organized as a Massachusetts business trust on November 10,
1981, pursuant to a Declaration of Trust that was amended and restated on
April 9, 1985. On May 30, 1993, the trust was converted to a Delaware
business trust pursuant to an agreement approved by shareholders on
November 18, 1992. The Delaware trust, which was organized on June 20, 1991
under the name Fidelity Government Securities Fund, succeeded to the name
Fidelity Institutional Cash Portfolios II on May 28, 1993, and then to the
name Fidelity Institutional Cash Portfolios on May 28, 1993. Currently,
there are four funds of the trust: Treasury, Government, Domestic, and
Money Market. The Trust Instrument permits the Trustees to create
additional funds.
Rated Money Market is a fund of Fidelity Money Market Trust, an open-end
management investment company originally organized as a Massachusetts
business trust on August 21, 1978, pursuant to a Declaration of Trust that
was amended and restated on November 1, 1989. On December 29, 1994, the
trust was converted to a Delaware business trust pursuant to an agreement
approved by shareholders on December 8, 1994. The Delaware trust, which was
organized on June 20, 1991 under the name Fidelity Money Market Trust II,
succeeded to the name Fidelity Money Market Trust on December 29, 1994.
Currently, there are three funds of Fidelity Money Market Trust: Rated
Money Market, Retirement Money Market Portfolio, and Retirement Government
Money Market Portfolio. The Trust Instrument permits the Trustees to create
additional funds.
Tax-Exempt is a fund of Fidelity Institutional Tax-Exempt Cash Portfolios,
an open-end management investment company originally organized as a
Massachusetts business trust on March 1, 1982, pursuant to a Declaration of
Trust that was amended and restated on April 9, 1985, and supplemented on
December 15, 1989. On January 29, 1992, the trust was converted to a
Delaware business trust pursuant to an agreement approved by shareholders
on November 13, 1991. The Delaware trust, which was organized on June 20,
1991 under the name Fidelity Institutional Tax-Exempt Cash Portfolios II,
succeeded to the name Fidelity Institutional Tax-Exempt Cash Portfolios on
January 29, 1992. Currently, Tax-Exempt is the only fund of Fidelity
Institutional Tax-Exempt Cash Portfolios. 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 trusts 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 trusts 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 trusts, 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 a 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. Each 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
Instruments contain an express disclaimer of shareholder liability for the
debts, liabilities, obligations, and expenses of the trusts and require
that a disclaimer be given in each contract entered into or executed by the
trust or the Trustees. The Trust Instruments provide 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 Instruments
also provide 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 Instruments further provide 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. As a shareholder of Rated Money Market, you receive one vote for
each dollar value of net asset value you own. 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 non-assessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of a trust, fund, or class may, as set forth in
each of the Trust Instruments, 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.
Any trust or 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 fund (or, for Rated Money Market, as
determined by the current value of each shareholder's investment in the
fund or trust); however, the Trustees may, without prior shareholder
approval, change the form of organization of the trust or fund by merger,
consolidation, or incorporation. If not so terminated, the trust and its
funds will continue indefinitely.
Under the Trust Instruments, the Trustees may, without shareholder vote,
cause a 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's 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 each fund, except Tax-Exempt. UMB, 1010 Grand
Avenue, Kansas City, Missouri, is custodian of the assets of Tax-Exempt.
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.
AUDITORS. Coopers & Lybrand L.L.P., 1999 Bryan Street, Suite 3000,
Dallas, TX 75201 serves as the independent accountant for Treasury
Only, Rated Money Market, and Tax-Exempt. Price Waterhouse LLP, 2001
Ross Avenue, Suite 1800, Dallas, TX 75201 serves as the independent
accountant for the FICP funds. The auditors examine financial statements
for the funds and provide other audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended March 31, 1996 are included in each fund's Annual Report, which
is a separate report supplied with this Statement of Additional
Information. 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 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 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.
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS CLASS III
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 .............................. Expenses
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance
d .............................. Cover Page
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 Principles
and Risks; Securities and Investment Practices
5 a .............................. Charter
b i............................. FMR and Its Affiliates
ii........................... FMR and Its Affiliates; Charter; Breakdown of
Expenses
iii.......................... Expenses; Breakdown of Expenses; Management
Fee
c .............................. FMR and Its Affiliates
d .............................. Charter; Breakdown of Expenses; Cover Page;
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 .............................. Cover Page; Charter
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 .............................. *
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL
MONEY MARKET
FUNDS
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 July 31, 1996. 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.
IMMIII-pro-0796
FUND
NUMBER
TREASURY ONLY CLASS III 543
TREASURY CLASS III 696
GOVERNMENT CLASS III 657
DOMESTIC CLASS III 691
RATED MONEY MARKET CLASS III 652
MONEY MARKET CLASS III 659
TAX-EXEMPT CLASS III 684
PROSPECTUS
JULY 31, 1996(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
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KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Class III'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 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 institutional and corporate 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. Each of
Treasury Only, Treasury, and Government offers an added measure of safety
with its focus on U.S. Treasury or Government 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
investment.
Each fund is composed of multiple classes of shares. All classes of a fund
have a common investment objective and investment portfolio. Class I shares
do not have a sales charge and do not pay a distribution fee. Class II
shares do not have a sales charge, but do pay a 0.15% distribution fee.
Class III shares do not have a sales charge, but do pay a 0.25%
distribution fee. Because Class I shares have no sales charge and do not
pay a distribution fee, Class I shares are expected to have a higher total
return than Class II and Class III shares. You may obtain more information
about Class I and Class II shares, which are not offered through this
prospectus, from your investment professional, or by calling Fidelity
Client Services at 1-800-843-3001. Contact your investment professional to
discuss which class is appropriate for you.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
Class III 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). In
addition, each fund is responsible for certain other expenses.
12b-1 fees are paid by Class III of each fund to the distributor for
services and expenses in connection with the distribution of Class III
shares of each fund.
Class III'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 estimated or historical
expenses of Class III of each fund and are calculated as a percentage of
average net assets of Class III of each fund.
Class III Operating Expenses
TREASURY ONLY Management fee 0.20%A
12b-1 fee (Distribution fee) 0.25%
Other expenses 0.00%
Total operating expenses 0.45%A
TREASURY Management fee 0.20%
12b-1 fee (Distribution fee) 0.25%
Other expenses 0.00%A
Total operating expenses 0.45%A
GOVERNMENT Management fee 0.20%
12b-1 fee (Distribution fee) 0.25%
Other expenses 0.00%A
Total operating expenses 0.45%A
DOMESTIC Management fee 0.20%
12b-1 fee (Distribution fee) 0.25%
Other expenses 0.00%A
Total operating expenses 0.45%A
RATED MONEY MARKET Management fee 0.20%A
12b-1 fee (Distribution fee) 0.25%
Other expenses 0.00%
Total operating expenses 0.45%A
MONEY MARKET Management fee 0.18%A
12b-1 fee (Distribution fee) 0.25%
Other expenses 0.00%A
Total operating expenses 0.43%A
TAX-EXEMPT Management fee 0.20%
12b-1 fee (Distribution fee) 0.25%
Other expenses 0.00%A
Total operating expenses 0.45%A
A AFTER EXPENSE REDUCTIONS.
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment in Class III shares, assuming a 5% annual return and full
redemption at the end of each time period:
1 3 5 10
Year Years Years Years
Treasury Only $ 5 $ 14 n/a n/a
Treasury $ 5 $ 14 $ 25 $ 57
Government $ 5 $ 14 $ 25 $ 57
Domestic $ 5 $ 14 $ 25 $ 57
Rated Money Market $ 5 $ 14 n/a n/a
Money Market $ 4 $ 14 $ 24 $ 54
Tax-Exempt $ 5 $ 14 n/a n/a
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 III of each fund to the
extent that total operating expenses (excluding interest, taxes, brokerage
commissions, extraordinary expenses, and 12b-1 fees) are in excess of 0.20%
(0.18% for Money Market), of its average net assets. If these agreements
were not in effect, the management fee, other expenses, and total operating
expenses, as a percentage of average net assets, of Class III of each fund
would have been the following amounts: 0.42 %, 0.00 %, and
0.67 % for Treasury Only; 0.20 %, 0.06 %, and
0.51 % for Treasury; 0.20 %, 0.17 %, and 0.62 % for
Government; 0.20 %, 0.22 %, and 0.67 % for Domestic;
0.42 %, 0.00 %, and 0.67 % for Rated Money Market;
0.20 %, 0.09 %, and 0.54 % for Money Market; and
0.20 %, 0.19%, and 0.64% for Tax-Exempt. Projections for
Tax-Exempt are based on estimated expenses for the first year.
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 independent accountants. Price Waterhouse LLP serves as independent
accountants for each of Treasury, Government, Domestic, and Money Market.
Coopers & Lybrand L.L.P. serves as independent accountants for each of
Treasury Only, Rated Money Market, and Tax-Exempt. 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 Fidelity Client Services at the phone number listed on
page .
TREASURY ONLY - CLASS III
Selected Per-Share Data and Ratios
Year ended March 31 1996A
Net asset value, beginning of period $ 1.000
Income from Investment Operations
.020
Net interest income
Less Distributions
(.020)
From net interest income
Net asset value, end of period $ 1.000
Total returnB 2.00%
Net assets, end of period (000 omitted) $ 4,097
Ratio of expenses to average net assets .45%C
,D
Ratio of net interest income to average net assets 4.86%D
A NOVEMBER 6 1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
TREASURY - CLASS III
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Selected Per-Share Data and
Ratios
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Years ended March 31 1996 1995 1994A
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations
Net interest income .054 .044 .012
Less Distributions
From net interest income (.054) (.044) (.012)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000
Total returnB 5.50% 4.45% 1.21%
Net assets, end of period (000 omitted) $ 1,435,302 $ 585,571 $ 5,175
Ratio of expenses to average net assets .46%C .50%C .50%C
,D
Ratio of net investment income to average net assets 5.28% 4.91% 2.69%D
</TABLE>
A OCTOBER 22, 1993 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1994
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
GOVERNMENT - CLASS III
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Selected Per-Share Data and Ratios
Years ended March 31 1996 1995A
Net asset value, beginning of period $ 1.000 $ 1.000
Income from Investment Operations
Net interest income .054 .045
Less Distributions
From net interest income (.054) (.045)
Net asset value, end of period $ 1.000 $ 1.000
Total returnB 5.58% 4.57%
Net assets, end of period (000 omitted) $ 194,489 $ 40,516
Ratio of expenses to average net assets .45%C .43%C
,D
Ratio of net interest income to average net assets 5.30% 5.13%D
</TABLE>
A APRIL 4, 1994 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1995
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
DOMESTIC - CLASS III
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Selected Per-Share Data and Ratios
Years ended March 31 1996 1995A
Net asset value, beginning of period $ 1.000 $ 1.000
Income from Investment Operations
Net interest income .054 .035
Less Distributions
From net interest income (.054) (.035)
Net asset value, end of period $ 1.000 $ 1.000
Total returnB 5.56% 3.51%
Net assets, end of period (000 omitted) $ 47,396 $ 26,545
Ratio of expenses to average net assets .47%C .50%C
,D
Ratio of net interest income to average net assets 5.40% 5.14%D
</TABLE>
A JULY 19, 1994 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1995
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
RATED MONEY MARKET - CLASS III
Selected Per-Share Data and Ratios
Year ended March 31 1996A
Net asset value, beginning of period $ 1.000
Income from Investment Operations
Net interest income .021
Less Distributions
From net interest income (.021)
Net asset value, end of period $ 1.000
Total returnB 2.11%
Net assets, end of period (000 omitted) $ 1,610
Ratio of expenses to average net assets .45%C,
D
Ratio of net interest income to average net assets 5.01%D
A NOVEMBER 6, 1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
MONEY MARKET - CLASS III
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Selected Per-Share Data and Ratios
Years ended March 31 1996 1995 1994A
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations
Net interest income .055 .046 .011
Less Distributions
From net interest income (.055) (.046) (.011)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000
Total returnB 5.61% 4.66% 1.08%
Net assets, end of period (000 omitted) $ 229,530 $ 457,286 $ 89,463
Ratio of expenses to average net assets .45%C .50%C .50%C
,D
Ratio of net interest income to average net assets 5.46% 4.94% 2.83%D
</TABLE>
A NOVEMBER 17, 1993 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1994
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D ANNUALIZED
TAX-EXEMPT - CLASS III
Selected Per-Share Data and Ratios
Year ended March 31 1996A
Net asset value, beginning of period $ 1.000
Income from Investment Operations
Net interest income .013
Less Distributions
From net interest income (.013)
Net asset value, end of period $ 1.000
Total returnB 1.30%
Net assets, end of period (000 omitted) $ 988
Ratio of expenses to average net assets .45%C,
D
Ratio of net interest income to average net assets 3.00%D
A NOVEMBER 6,1995 (COMMENCEMENT OF OPERATIONS) TO MARCH 31, 1996
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. TOTAL
RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING
THE PERIOD SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
D 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. Treasury Only is a diversified fund
of Daily Money Fund, an open-end management investment company organized as
a Delaware business trust on September 29, 1993. Treasury, Government,
Domestic, and Money Market are diversified funds of Fidelity Institutional
Cash Portfolios, an open-end management investment company organized as a
Delaware business trust on May 30, 1993. Rated Money Market is a
diversified fund of Fidelity Money Market Trust, an open-end management
investment company organized as a Delaware business trust on December 29,
1994. Tax-Exempt is a diversified fund of Fidelity Institutional Tax-Exempt
Cash Portfolios, an open-end management investment company organized as a
Delaware business trust on January 29, 1992. There is a remote possibility
that one fund might become liable for a misstatement in the prospectus
about another fund.
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 of each of Treasury Only, Treasury,
Government, Domestic, Money Market, and Tax-Exempt. For shareholders of
Rated Money Market, the number of votes you are entitled to is based upon
the dollar value of your investment.
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 May 31 , 1996, FMR advised funds having approximately 26
million shareholder accounts with a total value of more than $3 94
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 III 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.
UMB Bank, n.a. (UMB) is Tax-Exempt's transfer agent, although it employs
FIIOC to perform these functions for Class III of 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
EACH FUND'S INVESTMENT APPROACH
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. Each fund stresses
preservation of capital, liquidity, and income (tax-free income in the case
of Tax-Exempt) and does 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.
TREASURY ONLY seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share (NAV) of $1.00.
The fund invests only in U.S. Treasury securities. The fund does not enter
into repurchase agreements or reverse repurchase agreements.
The fund will invest in those securities whose interest is specifically
exempt from state and local income taxes under federal law; such interest
is not exempt from federal income tax.
TREASURY seeks to obtain as high a level of current income as is consistent
with the preservation of principal and liquidity within the limitations
prescribed for the fund.
The fund invests only in U.S. Treasury securities and repurchase agreements
for these securities. The fund does not enter into reverse repurchase
agreements.
GOVERNMENT seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. Government securities and repurchase
agreements for these securities. The fund also may enter into reverse
repurchase agreements.
DOMESTIC seeks to obtain as high a level of current income as is consistent
with the preservation of principal and liquidity within the limitations
prescribed for the fund.
The fund invests only in the highest-quality U.S. dollar-denominated money
market securities of domestic issuers, including U.S. Government securities
and repurchase agreements. Securities are "highest-quality" if rated in the
highest rating category by at least two nationally recognized rating
services, or by one if only one rating service has rated a security, or, if
unrated, determined to be of equivalent quality by FMR. The fund also may
enter into reverse repurchase agreements.
RATED MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. dollar-denominated money market securities of
domestic and foreign issuers rated in the highest rating category by at
least two nationally recognized rating services, U.S. Government
securities , and repurchase agreements. The fund also may enter into
reverse repurchase agreements.
MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in the highest-quality U.S. dollar-denominated money
market securities of domestic and foreign issuers, including U.S.
Government securities and repurchase agreements. Securities are
"highest-quality" if rated in the highest rating category by at least two
nationally recognized rating services, or by one if only one rating service
has rated a security, or, if unrated, determined to be of equivalent
quality by FMR. The fund also may enter into reverse repurchase agreements.
TAX-EXEMPT seeks to obtain as high a level of interest income exempt from
federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal.
The fund invests primarily in high-quality, short-term municipal
securities, but also may invest in high-quality, long-term instruments
whose features give them interest rates, maturities, and prices similar to
short-term instruments. Securities in which the fund invests must be rated
in the highest rating category for short-term securities by at least one
nationally recognized rating service and rated in one of the two highest
categories for short-term securities by another nationally recognized
rating service if rated by more than one nationally recognized rating
service, or, if unrated, determined to be of equivalent quality by FMR.
The fund, under normal conditions, will invest so that at least 80% of its
income distributions is exempt from federal income tax. The fund does not
currently intend to purchase municipal securities whose interest is
subject to the federal alternative minimum tax.
FMR normally invests the fund's assets according to its investment strategy
and does not expect to invest in federally taxable obligations. The fund
also reserves the right to hold a substantial amount of uninvested cash or
to invest more than normally permitted in federally taxable obligations for
temporary, defensive purposes.
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.
Fund holdings are detailed 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.
MONEY MARKET SECURITIES are high-quality, short-term instruments
issued by the U.S. Government, corporations, financial institutions,
municipalities, local and state governments, and other entities. These
securities may carry fixed, variable, or floating interest rates.
Some money market securities employ a trust or 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. TREASURY MONEY MARKET SECURITIES are short-term debt obligations
issued by the U.S. Treasury and include bills, notes, and bonds. U.S.
Treasury securities are backed by the full faith and credit of the United
States.
U.S. GOVERNMENT MONEY MARKET SECURITIES are short-term debt
instruments 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, U.S. Government securities such as those issued
by the Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under
certain circumstances. Other U.S. Government securities , such as
those issued by the Federal Farm Credit Banks Funding
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.
CREDIT SUPPORT. Issuers may employ various forms of credit enhancement,
including letters of credit, guarantees, or insurance from a bank,
insurance company, or other entity. These arrangements expose the fund to
the credit risk of the entity. In the case of foreign entities, extensive
public information about the entity may not be available and the entity may
be subject to unfavorable political, economic, or governmental developments
which might affect its ability to honor its commitment.
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. The risks associated with stripped securities are
similar to those of other money market securities, although stripped
securities may be more volatile. U.S. Treasury securities that have
been stripped by a Federal Reserve Bank are obligations issued by the U.S.
Treasury.
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.
RESTRICTION: A fund may not purchase a security if, as a result, more than
10% of its 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.
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.
RESTRICTIONS: Each of Domestic, Rated Money Market, and Money Market will
invest more than 25% of its total assets in the financial services
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: Each of Domestic, Rated Money Market, and Money Market may
not invest more than 5% of its total assets in any one issuer, except that
each 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.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
These limitations do not apply to U.S. Government securities.
Tax-Exempt may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
BORROWING. A 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 of Government, Domestic, Rated Money Market, and Money
Market 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. Each of Treasury Only, Treasury, and Tax-Exempt may borrow
only for temporary or emergency purposes, 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. Treasury Only, Treasury, Government, and Tax-Exempt do not
lend money to other funds advised by FMR.
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.
Treasury Only seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share (NAV) of $1.00.
Each of Treasury, Government, Domestic, Rated Money Market, and Money
Market seeks to obtain as high a level of current income as is consistent
with the preservation of principal and liquidity within the limitations
prescribed for the fund.
Tax-Exempt seeks to obtain as high a level of interest income exempt from
federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal. The fund, under normal conditions, will invest so
that at least 80% of its income distributions is exempt from federal income
tax.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
Each of Domestic, Rated Money Market, and Money Market will invest more
than 25% of its total assets in obligations of companies in the financial
services industry.
Each of Government, Domestic, Rated Money Market, and Money Market 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. Tax-Exempt 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 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 class's 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
Each fund pays FMR a management fee every month. Each of
Treasury, Government, Domestic, Money Market, and Tax-Exempt pays FMR
a fee at an annual rate of 0.20% of its average net
assets . Each of Treasury Only and Rated Money Market pays FMR a fee at
an annual rate of 0.42% of its average net assets. FMR pays all of the
other expenses of Treasury Only and Rated Money Market with limited
exceptions.
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. FMR pays FMR Texas 50% of its management fee (before expense
reimbursements) for these services. For the fiscal year ended March 31,
1996 , FMR paid FMR Texas 0.10% of each of Treasury's, Government's,
Domestic's, Money Market's, and Tax-Exempt's average net assets, and 0.21%
of each of Treasury Only's and Rated Money Market's average net assets.
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 Class III shares of Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market (the Taxable
Funds). Fidelity Service Co. (FSC) calculates the NAV and dividends for
each Taxable Fund, and maintains the general accounting records for each
Taxable Fund. These expenses are paid by FMR on behalf of Treasury Only and
Rated Money Market pursuant to its management contracts.
For the fiscal year ended March 31, 1996, Class III of Treasury paid
FIIOC fees equal to 0.03% of its average net assets, and Class III of
each of Government, Domestic, and Money Market paid FIIOC fees equal to
0.04% of its average net assets. For the fiscal year ended March 31, 1996,
each of Treasury, Government, Domestic, and Money Market paid FSC fees
equal to 0.01% of its average net assets.
UMB has entered into a sub-arrangement with FIIOC. FIIOC performs transfer
agency, dividend disbursing and shareholder services for Class III shares
of Tax-Exempt. UMB has also entered into a sub-arrangement with FSC. FSC
calculates the NAV and dividends for Tax-Exempt, and maintains Tax-Exempt's
general accounting records. All of the fees are paid to FIIOC and FSC by
UMB, which is reimbursed by Class III or the fund, as appropriate, for such
payments.
For the fiscal year ended March 31, 1996, fees paid by UMB to FIIOC on
behalf of Class III of Tax-Exempt amounted to 0.04 % of Class III's
average net assets, and fees paid by UMB to FSC on behalf of Tax-Exempt
amounted to 0.01 % of its average net assets.
Class III of each fund has adopted a DISTRIBUTION AND SERVICE PLAN. Under
the Plans, Class III of each fund is authorized to pay FDC a monthly
distribution fee as compensation for its services and expenses in
connection with the distribution of Class III shares of each fund. Class
III of each fund currently pays FDC monthly at an annual rate of 0.25% of
its average net assets throughout the month.
The Plans specifically recognize 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 III
shares, including payments made to investment professionals that provide
shareholder support services or engage in the sale of the funds' Class
III shares. The Board of Trustees of each fund has authorized such
payments.
Each fund (other than Treasury Only and Rated Money Market) 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. Each of Treasury Only and Rated Money Market also
pays other expenses, such as brokerage fees and commissions, interest on
borrowings (only Treasury Only), taxes, and the compensation of trustees
who are not affiliated with Fidelity.
YOUR ACCOUNT
If you invest through an investment professional, your investment
professional, including a broker-dealer or financial institution, may
charge you a transaction fee with respect to the purchase and sale of fund
shares. 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.
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. Class III
shares are sold without a sales charge.
Shares are purchased at the next NAV calculated after your order is
received and accepted by the transfer agent. NAV is normally calculated at
the times indicated in the table below.
NAV Calculation Times
Fund (Eastern Time)
Treasury Only 2:00 p.m.
Treasury 3:00 p.m. and 5:00 p.m.
Government 3:00 p.m. and 5:00 p.m.
Domestic 3:00 p.m. and 5:00 p.m.
Rated Money Market 3:00 p.m. and 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
You will receive the next NAV calculated after your
investment professional has submitted your purchase order.
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 Fidelity Institutional Money Market Funds
FIIOC
P.O. Box 1182
Boston, MA 02103-1182
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Place a purchase order and wire money into your
account, or
(small solid bullet) Open an account by exchanging from the same class of
any fund that is offered through this prospectus.
INVESTMENTS IN THE FUNDS MUST BE MADE USING THE FEDERAL RESERVE WIRE
SYSTEM. Checks and Automated Clearing House payments will not be accepted
as a means of investment.
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
In order to receive same-day acceptance of your investment, you must
contact Fidelity Client Services and place your order between 8:30 a.m. and
the following times on days the funds are open for business.
Fund Closing Times
(Eastern Time )
Treasury Only 2:00 p.m.
Treasury 5:00 p.m.
Government 5:00 p.m.
Domestic 5:00 p.m.
Rated Money Market 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
All wires 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 that day.
You are advised to wire funds as early in the day as possible, and to
provide advance notice to Fidelity Client Services for purchases over $10
million ($5 million for Treasury Only).
You will earn dividends on the day of your investment, provided (i) you
contact Fidelity Client Services and place your trade between 8:30 a.m. and
the closing time indicated in the table above on days the fund is
open for business, and (ii) the fund's designated wire bank receives the
wire before the close of the Federal Reserve Wire System on the day your
purchase order is accepted by the transfer agent.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $1,000,000*
MINIMUM BALANCE $1,000,000
* THE MINIMUM INITIAL INVESTMENT OF $1 MILLION MAY BE WAIVED IF YOUR
AGGREGATE BALANCE IN THE FIDELITY INSTITUTIONAL MONEY MARKET FUNDS IS
GREATER THAN $10 MILLION. PLEASE CONTACT FIDELITY CLIENT SERVICES FOR MORE
INFORMATION REGARDING THIS WAIVER.
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 the times indicated in the
table on page .
You will receive the next NAV calculated after your
investment professional has submitted your redemption order.
Redemption requests may be made by calling Fidelity Client Services at the
phone number listed on page .
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 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 the closing time indicated in the table on page
, redemption proceeds will normally be wired on that day.
A fund reserves the right to take up to seven days to pay you if making
immediate payment would adversely affect the fund.
You are advised to place your trades as early in the day as possible,
and to provide advance notice to Fidelity Client Services for
redemptions over $10 million ($5 million for Treasury Only).
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
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 and
prospectuses will be mailed, even if you have more than one account in a
fund. Call Fidelity Client Services at 1-800-843-3001 if you need
additional copies of financial reports, prospectuses, 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 Class III
shares redeemed during the month can be distributed on the day of
redemption. Each fund reserves the right to limit this service.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. Class III 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 wire for your dividend and capital gain
distributions, if any.
Dividends will be reinvested at each fund's Class III 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.
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.
TAXES ON DISTRIBUTIONS. Interest income that Tax-Exempt earns is
distributed to shareholders as income dividends. Interest that is federally
tax-free i s designated as tax-free when it is distributed.
Distributions from the Taxable Funds, 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, income and short-term capital gain distributions
from each Taxable Fund are taxed as dividends; long-term capital gain
distributions, if any, are taxed as long-term capital gains.
F or shareholders of Tax-Exempt, 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 market 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.
For the fiscal year ended March 31, 1996, 100 % of Treasury Only's;
23 % of Treasury's; 29% of Government's; 3 % of
Domestic's; 9 % of Rated Money Market's; and 2 % of Money
Market's income distributions were 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.
A portion of Tax-Exempt'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 Tax-Exempt's income from
each state to help you calculate your taxes.
During the fiscal year ended March 31, 1996, 100 % of Tax-Exempt's
income dividends was free from federal income 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 the
Taxable Funds) or the Federal Reserve Bank of Kansas City (Kansas City Fed)
(for Tax-Exempt) 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, the Kansas City Fed, or the
NYSE may modify its holiday schedule at any time. On any day that the New
York Fed, the Kansas City 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, the Kansas City Fed, or the NYSE is closed, each
class'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 III of each
fund is computed by adding Class III's pro rata share of the value of the
fund's investments, cash, and other assets, subtracting Class III's pro
rata share of the value of the fund's liabilities, subtracting the
liabilities allocated to Class III, and dividing the result by the number
of Class III 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 Class lII 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.
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.
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 by federal funds
wire; checks will not be accepted for purchases.
(small solid bullet) If your wire is not received by the close of the
Federal Reserve Wire System, you could be liable for any losses or fees a
fund or the transfer agent has incurred or for interest and penalties.
The income declared for each of Treasury, Government, Domestic, and Rated
Money Market is based on estimates of net interest income for the fund.
Actual income may differ from estimates, and differences, if any, will be
included in the calculation of subsequent dividends.
Shareholders of record as of the closing time indicated in the table on
page will be entitled to dividends declared that 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 of each fund do not 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.
When the NYSE, the New York Fed (for the Taxable Funds), or the Kansas
City Fed (for Tax-Exempt) 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 $1,000,000 due to redemption, the
account may be closed and the proceeds may be wired to your bank account 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 Class III shares of
any fund offered through this prospectus at no charge for Class III shares
of any other fund offered through this prospectus.
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 1-800-843-3001
between 8:30 a.m. and the closing time indicated in the table on page
.
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, class
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, Class III 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) Exchanges may have tax consequences for you.
(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.
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 funds or FDC. This Prospectus and the related SAI do not
constitute an offer by the funds or by FDC to sell or to buy shares of the
funds to any person to whom it is unlawful to make such offer.
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS - CLASS III
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page; Table of Contents
12 ............................ *
13 a - c ............................ Investment Policies and Limitations
d ............................ Portfolio Transactions
14 a - c ............................ Trustees and Officers
15 a ............................ *
b ............................ Description of the Trusts
c ............................ Trustees and Officers
16 a i ............................ FMR
ii ............................ Trustees and Officers
iii ............................ Management Contracts
b,c,d ............................ Management Contracts
e ............................ *
f ............................ Distribution and Service Plans
g ............................ *
h ............................ Description of the Trusts
i ............................ Management Contracts
17 a ............................ Portfolio Transactions
b ............................ Portfolio Transactions
c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trusts
b ............................ *
19 a ............................ Additional Purchase, Exchange and Redemption
Information
b ............................ Additional Purchase, Exchange and Redemption
Information; Valuation
c ............................ *
20 Distributions and Taxes
21 a, b ............................ Distribution and Service Plans; Management
Contracts
c ............................ *
22 ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS: CLASS III
TREASURY ONLY, TREASURY, GOVERNMENT, DOMESTIC, RATED MONEY MARKET, MONEY
MARKET, AND TAX-EXEMPT
Treasury Only is a series of Daily Money Fund; Treasury, Government,
Domestic, and Money Market are series of Fidelity Institutional Cash
Portfolios; Rated Money Market is a series of Fidelity Money Market Trust;
and Tax-Exempt is a series of Fidelity Institutional Tax-Exempt Cash
Portfolios
STATEMENT OF ADDITIONAL INFORMATION
JULY 31, 1996
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus for
Class III shares (dated July 31, 1996). Please retain this document for
future reference. The funds' financial statements and financial highlights,
included in the Annual Report, for the fiscal year ended March 31, 1996,
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 Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISER
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT FOR TAXABLE FUNDS
Fidelity Investments Institutional Operations Company (FIIOC)
TRANSFER AGENT FOR TAX-EXEMPT
UMB Bank, n.a. (UMB)
IMMIII-ptb-0796
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 will 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 cannot 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 TREASURY ONLY
THE FOLLOWING ARE TREASURY ONLY'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) 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;
(3) 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;
(4) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(8) The 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) 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 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.
(vi) 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.
(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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(viii) 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.
Subject to revision upon 90 days' notice to shareholders, the fund does not
intend to engage in reverse repurchase agreements.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF TREASURY
THE FOLLOWING ARE TREASURY'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;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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 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 an
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 a security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(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 contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(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 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.
As an operating policy, the fund intends to invest 100% of its total assets
in U.S. Treasury bills, notes, and bonds and repurchase agreements
comprised of those obligations at all times. This policy may only be
changed upon 90 days' notice to shareholders.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF GOVERNMENT
THE FOLLOWING ARE GOVERNMENT'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;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(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 contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(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 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 issuers 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 the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF DOMESTIC
THE FOLLOWING ARE DOMESTIC'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) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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
securit ies 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 10% of its total assets in the first tier
securities of a single issuer for up to three business days. (This limit
does not apply to securities of other open-end investment companies managed
by FMR or a successor or affiliate purchased pursuant to an exemptive order
granted by the SEC.)
(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) 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) 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.
(viii) 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.)
(ix) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) 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 the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF RATED MONEY MARKET
THE FOLLOWING ARE RATED MONEY MARKET'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;
(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) invest in oil, gas, or other mineral exploration or development
programs; or
(10) write or purchase any put or call option. 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.
(11) 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 securities 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 10% of its total assets in the
first tier securities of a single issuer for up to three business days.
(This limit does not apply to securities of other open-end investment
companies managed by FMR or a successor or affiliate purchased pursuant to
an exemptive order granted by the SEC.)
(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) 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 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 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.)
(viii) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(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 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 (ix), pass-through entities and other special
purposes 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 .
INVESTMENT LIMITATIONS OF MONEY MARKET
THE FOLLOWING ARE MONEY MARKET'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) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(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 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
securit ies 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 10% of its total assets in the first tier
securities of a single issuer for up to three business days. (This limit
does not apply to securities of other open-end investment companies managed
by FMR or a successor or affiliate purchased pursuant to an exemptive order
granted by the SEC.)
(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) 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 invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) 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.
(viii) 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.)
(ix) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) 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 the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF TAX-EXEMPT
THE FOLLOWING ARE TAX-EXEMPT'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) make short sales of securities;
(4) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions;
(5) borrow money, except that the fund 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;
(6) 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;
(7) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies,
instrumentalities, territories or possessions, or issued or guaranteed by a
state government or political subdivision thereof) if as a result more than
25% of the value of its total assets would be invested in securities of
companies having their principal business activities in the same industry;
(8) purchase or sell real estate, but this shall not prevent the fund from
investing in municipal bonds or other obligations secured by real estate or
interests therein;
(9) purchase or sell physical commodities;
(10) 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; or
(11) invest in oil, gas, or other mineral exploration or development
programs.
(12) 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.
For purposes of investment limitations (1) and (7), FMR identifies the
issuer of a security depending on its terms and conditions. In identifying
the issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) 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 (5)). 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.
(ii) 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.
(iii) 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.
(iv) 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.
(v) 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 (i) to securities received as dividends, through
offers of exchange, or as a result of a reorganization, consolidation, or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate purchased pursuant to an
exemptive order granted by the SEC.
(vi) 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.
(vii) 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.
Securities must be rated in accordance with applicable rules in the highest
rating category for short-term securities by at least one nationally
recognized rating service (NRSRO) and rated in one of the two highest
categories for short-term securities by another NRSRO if rated by more than
one NRSRO, or, if unrated, judged to be equivalent to highest quality by
FMR pursuant to procedures adopted by the Board of Trustees. The fund's
policy regarding limiting investments to the highest rating category may be
changed upon 90 days' prior notice to shareholders.
For the fund's 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 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.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, Tax-Exempt does not
intend to invest in securities whose interest is federally taxable.
However, from time to time on a temporary basis, Tax-Exempt may invest a
portion of its assets in fixed-income obligations whose interest is subject
to federal income tax.
Should Tax-Exempt 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 Tax-Exempt's distributions. If such
proposals were enacted, the availability of municipal obligations and the
value of Tax-Exempt's holdings would be affected and the Trustees would
reevaluate Tax-Exempt'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. Treasury
Only, Treasury, Government, and Tax-Exempt currently intend to participate
in this program only as borrowers. A fund will borrow through the program
only when the costs are equal to or lower than the cost of bank loans.
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). 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.
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.
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 a 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.
MUNICIPAL SECTORS:
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open transmission
access to any electricity supplier, although it is not presently known to
what extent competition will evolve. Other risks include: (a) the
availability and cost of fuel, (b) the availability and cost of capital,
(c) the effects of conservation on energy demand, (d) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (e) timely and sufficient rate
increases, and (f) opposition to nuclear power.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
other state or local health care reform measures; medical and technological
advances which dramatically alter the need for health services or the way
in which such services are delivered; changes in medical coverage which
alter the traditional fee-for-service revenue stream; and efforts by
employers, insurers, and governmental agencies to reduce the costs of
health insurance and health care services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They generally are
secured by the revenues derived from mortgages purchased with the proceeds
of the bond issue. It is extremely difficult to predict the supply of
available mortgages to be purchased with the proceeds of an issue or the
future cash flow from the underlying mortgages. Consequently, there are
risks that proceeds will exceed supply, resulting in early retirement of
bonds, or that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student loans.
Bonds issued to supply educational institutions with funds are subject to
the risk of unanticipated revenue decline, primarily the result of
decreasing student enrollment or decreasing state and federal funding.
Among the factors that may lead to declining or insufficient revenues are
restrictions on students' ability to pay tuition, availability of state and
federal funding, and general economic conditions. Student loan revenue
bonds are generally offered by state (or substate) authorities or
commissions and are backed by pools of student loans. Underlying student
loans may be guaranteed by state guarantee agencies and may be subject to
reimbursement by the United States Department of Education through its
guaranteed student loan program. Others may be private, uninsured loans
made to parents or students which are supported by reserves or other forms
of credit enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student loan
revenue bonds are impacted by numerous factors, including the rate of
student loan defaults, seasoning of the loan portfolio, and student
repayment deferral during periods of forbearance. Other risks associated
with student loan revenue bonds include potential changes in federal
legislation regarding student loan revenue bonds, state guarantee agency
reimbursement and continued federal interest and other program subsidies
currently in effect.
WATER AND SEWER. Water and sewer revenue bonds are often considered to have
relatively secure credit as a result of their issuer's importance, monopoly
status, and generally unimpeded ability to raise rates. Despite this, lack
of water supply due to insufficient rain, run-off, or snow pack is a
concern that has led to past defaults. Further, public resistance to rate
increases, costly environmental litigation, and Federal environmental
mandates are challenges faced by issuers of water and sewer bonds.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways, or other transit
facilities. Airport bonds are dependent on the general stability of the
airline industry and on the stability of a specific carrier who uses the
airport as a hub. Air traffic generally follows broader economic trends and
is also affected by the price and availability of fuel. Toll road bonds are
also affected by the cost and availability of fuel as well as toll levels,
the presence of competing roads, and the general economic health of an
area. Fuel costs and availability also affect other transportation-related
securities, as does the presence of alternate forms of transportation, such
as public transportation.
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 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 or second tier based on applicable
regulations.
Each of Treasury Only, Treasury, Government, Domestic, Rated Money Market,
and Money Market may not invest more than 5% of its total assets in second
tier securities. In addition, each of Treasury Only, Treasury, Government,
Domestic, Rated Money Market, and Money Market 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.
Each 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 a 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 a 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 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. The fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining, and closing short sales
against the box.
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 government securities are
created by separating the income and principal components of a U.S.
Government security 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 security by a Federal Reserve
Bank.
Privately stripped government securities are created when a dealer deposits
a U.S. Treasury security or other U.S. Government security
with a custodian for safekeeping . The custodian issues separate
receipts for the coupon payments and principal payment , which the
dealer then sells. Proprietary receipts, such as Certificates of
Accrual on Treasury Securities (CATS) and Treasury Investment Growth
Receipts (TIGRS), and generic receipts, such as Treasury Receipts
(TRs), are privately stripped U.S. Treasury securities .
Because the SEC does not consider privately stripped government
securities to be U.S. Government securities for purposes of Rule
2a-7 , a fund must evaluate them as it would non-government securities
pursuant to regulatory guidelines applicable to all money market funds.
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 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 that fund and FMR's 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 the fiscal years ended March 31, 1996, 1995, and 1994, the funds paid
no brokerage commissions. During the fiscal year ended March 31, 1996, the
funds paid no fees to brokerage firms that provided research.
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 a class's net asset
value per share (NAV) at 12:00 noon Eastern time for Tax-Exempt; 2:00 p.m.
Eastern time for Treasury Only; 3:00 p.m. Eastern time for Money Market;
and 3:00 p.m. and 5:00 p.m. Eastern time for Treasury, Government,
Domestic, and Rated Money Market. The valuation of portfolio securities is
determined as of these times for the purpose of computing each class'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 class's yield based on
amortized cost valuation may be higher than that which 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 class'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
class'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 class's 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 funds may quote
yields in advertising based on any historical seven-day period. Yields for
each class 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 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 a class's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
A class's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment before taxes to equal the class's tax-free
yield. Tax-equivalent yields are calculated by dividing a class's yield by
the result of one minus a stated federal or combined federal and state tax
rate. If only a portion of a class'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 1996. 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 % to 7 %. Of course, no
assurance can be given that a class will achieve any specific tax-exempt
yield. While Tax-Exempt invests principally in obligations whose interest
is exempt from federal income tax, other income received by the fund may be
taxable.
1996 TAX RATES AND TAX-EQUIVALENT YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Federal If individual tax-exempt yield is:
Taxable Income* Tax 2 % 3 % 4 % 5 % 6 % 7 %
Single Return Joint Return Bracket** Then taxable-equivalent yield is:
$ 0 - $ 24,000 $ 0 - $ 40,100 15.0% 2.35 % 3.53 % 4.71 % 5.88 % 7.06 % 8.24 %
24,001 - 58,150 40,101 - 96,900 28.0% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72%
58,151 - 121,300 96,901 - 147,700 31.0% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14%
121,301 - 263,750 147,701 - 263,750 36.0% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94%
263,751 - + 263,751 - + 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59%
</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.
Tax-Exempt 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 yield 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 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 the 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, tax-equivalent
yields, and total returns for Class III of each fund for the period ended
March 31, 1996. The initial offerings of the funds' Class III shares began
on the following dates: Treasury Only (11/ 6 /95), Treasury
(10/22/93), Government (4/4/94), Domestic (7/19/94), Rated Money Market
(11/ 6 /95), Money Market (11/17/93), and Tax-Exempt (11/ 6 /95).
The figures for periods prior to the initial offering dates reflect the
performance of Class I, the original class of each fund, which class does
not have a 12b-1 fee. Class III figures would have been lower had 12b-1
fees been reflected in all periods. Class III shares of Government have a
0.25% 12b-1 fee, which is reflected in the figures for periods after its
initial offering of Class III shares. Prior to July 1, 1995, Class III
shares of Treasury, Domestic, and Money Market had a 0.32% 12b-1 fee, which
is reflected in figures after the initial offering dates of Class III
shares of these funds. Effective July 1, 1995, Class III shares of
Treasury, Domestic, and Money Market have a 0.25% 12b-1 fee, which is
reflected in figures after that date for Class III shares of these funds.
Effective November 1, 1995, Class III shares of Treasury Only, Rated Money
Market, and Tax-Exempt have a 0.25% 12b-1 fee, which is reflected in
figures after that date for these funds.
The tax-equivalent yield is based on a 36 % federal income tax rate.
<TABLE>
<CAPTION>
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Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seven-Da Tax- One Five Ten One Five Ten
y Equivalent Year Years Years/ Year Years Years/
Yield Yield Life of Life of
Fund* Fund*
Treasury
Only - 4.79 % N/A 5.46 % 4.38 % 4.63 % 5.46 % 23.91 % 28.29 %
Class III
Treasury - 4.96 % N/A 5.50 % 4.34 % 5.91 % 5.50 % 23.68 % 69.34 %
Class III
Government - 5.00 % N/A 5.58 % 4.48 % 6.10 % 5.58 % 24.50 % 80.82 %
Class III
Domestic - 4.90 % N/A 5.56 % 4.48 % 5.31 % 5.56 % 24.52 % 39.36 %
Class III
Rated Money 4.93 % N/A 5.58 % 4.35 % 5.97 % 5.58 % 23.73 % 78.55 %
Market - Class III
Money
Market - 4.97 % N/A 5.61 % 4.50 % 6.18 % 5.61 % 24.62 % 82.12 %
Class III
Tax-Exempt - 3.01 % 4.70 % 3.60 % 3.24 % 4.26 % 3.60 % 17.31 % 51.75 %
Class III
</TABLE>
* Life of Fund figures are from commencement of operations (October 3,
1990 for Treasury Only; February 2, 1987 for Treasury; and November 3, 1989
for Domestic) through the fund's 1996 fiscal year end.
Note: If FMR had not reimbursed certain expenses during these periods,
total returns would have been lower and the 7-day yields for the period
ending March 31, 1996 for Class III of each fund would have been:
Seven-day Tax-Equivalent
Yield Yield
Treasury Only - Class III 4.57 % N/A
Treasury - Class III 4.90 % N/A
Government - Class III 4.78 % N/A
Domestic - Class III 4.68 % N/A
Rated Money Market - Class III 4.71 % N/A
Money Market - Class III 4.82 % N/A
Tax-Exempt - Class III 2.50 % * 3.91 % *
* Figure is based on actual expenses of Class III of the fund from
commencement of operations (11/6/950) through the fiscal year ended March
31, 1996.
The following tables show the income and capital elements of each fund's
Class III cumulative total return. Each table compares a fund's Class III
return to the record of the Standard & Poor's 500 Index (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 Class III 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' Class III returns, do
not include the effect of paying brokerage commissions or other costs of
investing.
CLASS III CHARTS. The initial offerings of the funds' Class III shares
began on the following dates: Treasury Only (11/1/95), Treasury (10/22/93),
Government (4/4/94), Domestic (7/19/94), Rated Money Market (11/1/95),
Money Market (11/17/93), and Tax-Exempt (11/1/95). The figures for periods
prior to the initial offering dates reflect the performance of Class I, the
original class of each fund, which class does not have a 12b-1 fee. Class
III figures would have been lower had 12b-1 fees been reflected in all
periods. Class III shares of Government have a 0.25% 12b-1 fee, which is
reflected in the figures for periods after its initial offering of Class
III shares. Prior to July 1, 1995, Class III shares of Treasury, Domestic,
and Money Market had a 0.32% 12b-1 fee, which is reflected in figures after
the initial offering dates of Class III shares of these funds. Effective
July 1, 1995, Class III shares of Treasury, Domestic, and Money Market have
a 0.25% 12b-1 fee, which is reflected in figures after that date for Class
III shares of these funds. Effective November 1, 1995, Class III shares of
Treasury Only, Rated Money Market, and Tax-Exempt have a 0.25% 12b-1 fee,
which is reflected in figures after that date for these funds.
TREASURY ONLY
HISTORICAL FUND RESULTS
During the period from October 3, 1990 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class III of Treasury
Only would have grown to $ 12,829 , 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 Class III
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Treasury Only INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 2,829 $ 0 $ 12,829 $ 24,020 $ 26,101 $ 11,733
1995+ 10,000 2,165 0 12,165 18,183 18,980 11,409
1994 10,000 1,624 0 11,624 15,735 16,157 11,093
1993 10,000 1,285 0 11,285 15,506 14,846 10,821
1992 10,000 913 0 10,913 13,454 13,573 10,497
1991* 10,000 353 0 10,353 12,114 11,848 10,173
</TABLE>
* From October 3, 1990 (commencement of operations).
+ The fiscal year end of the fund changed from July 31 to March 31 in
February 1995.
Explanatory Notes: With an initial investment of $10,000, made on October
3, 1990, the net amount invested in Class III shares of the fund 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 $ 12,829 . If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 2,496 . The fund did not distribute any capital gains during the
period. Tax consequences of different investments have not been factored
into the above figures.
TREASURY
HISTORICAL FUND RESULTS
During the period from February 2, 1987 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class III of Treasury
would have grown to $ 16,934 , 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 Class III
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Treasury INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 6,934 $ 0 $ 16,934 $ 31,337 $ 34,517 $ 14,002
1995 10,000 6,050 0 16,050 23,722 25,101 13,615
1994 10,000 5,367 0 15,367 20,528 21,366 13,237
1993 10,000 4,932 0 14,932 20,229 19,633 12,914
1992 10,000 4,433 0 14,433 17,552 17,950 12,527
1991 10,000 3,692 0 13,692 15,805 15,668 12,140
1990 10,000 2,693 0 12,693 13,816 14,014 11,574
1989 10,000 1,632 0 11,632 11,583 11,432 10,998
1988 10,000 759 0 10,759 9,804 9,560 10,477
1987* 10,000 93 0 10,093 10,694 10,731 10,081
</TABLE>
* From February 2, 1987 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on February
2, 1987, the net amount invested in Class III shares of the fund 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 $ 16,934 . If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 5,281 . The fund did not distribute any capital gains during the
period. Tax consequences of different investments have not been factored
into the above figures.
GOVERNMENT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class III of Government would have grown to $ 18,082 ,
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 Class III of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Government INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 8,082 $ 0 $ 18,082 $ 36,984 $ 42,184 $ 14,311
1995 10,000 7,126 0 17,126 27,997 30,676 13,915
1994 10,000 6,373 0 16,373 24,228 26,112 13,529
1993 10,000 5,876 0 15,876 23,875 23,994 13,199
1992 10,000 5,330 0 15,330 20,715 21,937 12,803
1991 10,000 4,524 0 14,524 18,653 19,148 12,408
1990 10,000 3,455 0 13,455 16,306 17,127 11,829
1989 10,000 2,327 0 12,327 13,670 13,972 11,241
1988 10,000 1,394 0 11,394 11,571 11,684 10,708
1987 10,000 651 0 10,651 12,622 13,115 10,303
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class III shares of the fund 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 $ 18,082 . If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 5,940 . The fund did not distribute any capital gains during the
period. Tax consequences of different investments have not been factored
into the above figures.
DOMESTIC
HISTORICAL FUND RESULTS
During the period from November 3, 1989 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class III of Domestic
would have grown to $ 13,936 , 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 Class III
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Domestic INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 3,936 $ 0 $ 13,936 $ 23,110 $ 25,742 $ 12,396
1995 10,000 3,202 0 13,202 17,494 18,720 12,054
1994 10,000 2,605 0 12,605 15,139 15,935 11,720
1993 10,000 2,222 0 12,222 14,919 14,642 11,433
1992 10,000 1,808 0 11,808 12,944 13,387 11,091
1991 10,000 1,192 0 11,192 11,655 11,685 10,748
1990* 10,000 352 0 10,352 10,189 10,451 10,247
</TABLE>
* From November 3, 1989 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on November
3, 1989, the net amount invested in Class III shares of the fund 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 $ 13,936. If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 3,327 . The fund did not distribute any capital gains during the
period. Tax consequences of different investments have not been factored
into the above figures.
RATED MONEY MARKET
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class III of Rated Money Market would have grown to
$ 17,855 , 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 Class III of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
RATED MONEY MARKET INDICES
Period Ended Value of Value of Value of Total S&P DJIA Cost of
3/31 Initial Reinvested Reinvested Value 500 Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996+ $ 10,000 $ 7,855 $ 0 $ 17,855 $ 36,984 $ 42,184 $ 14,311
1995 10,000 6,911 0 16,911 27,997 30,676 13,915
1994 10,000 6,148 0 16,148 24,228 26,112 13,529
1993 10,000 5,694 0 15,694 23,875 23,994 13,199
1992+ 10,000 5,195 0 15,195 20,715 21,937 12,803
1991 10,000 4,430 0 14,430 18,653 19,148 12,408
1990 10,000 3,381 0 13,381 16,306 17,127 11,829
1989 10,000 2,276 0 12,276 13,670 13,972 11,241
1988 10,000 1,355 0 11,355 11,571 11,684 10,708
1987 10,000 628 0 10,628 12,622 13,115 10,303
</TABLE>
+ The fiscal year end of the fund changed from August 31 to March 31 in
June 1995, and from October 31 to August 31 in July 1992.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class III shares of the fund 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 $ 17,855 . If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 5,813 . 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
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class III of Money Market would have grown to $ 18,212 ,
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 Class III of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Money Market INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 8,212 $ 0 $ 18,212 $ 36,984 $ 42,184 $ 14,311
1995 10,000 7,244 0 17,244 27,997 30,676 13,915
1994 10,000 6,476 0 16,476 24,228 26,112 13,529
1993 10,000 5,985 0 15,985 23,875 23,994 13,199
1992 10,000 5,431 0 15,431 20,715 21,937 12,803
1991 10,000 4,615 0 14,615 18,653 19,148 12,408
1990 10,000 3,515 0 13,515 16,306 17,127 11,829
1989 10,000 2,370 0 12,370 13,670 13,972 11,241
1988 10,000 1,417 0 11,417 11,571 11,684 10,708
1987 10,000 657 0 10,657 12,622 13,115 10,303
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class III shares of the fund 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 $ 18,212 . If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 6,012 . The fund did not distribute any capital gains during the
period. Tax consequences of different investments have not been factored
into the above figures.
TAX-EXEMPT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class III of Tax-Exempt would have grown to $ 15,175 ,
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 Class III of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Tax-Exempt INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 5,175 $ 0 $ 15,175 $ 36,984 $ 42,184 $ 14,311
1995+ 10,000 4,647 0 14,647 27,997 30,676 13,915
1994 10,000 4,195 0 14,195 24,228 26,112 13,529
1993 10,000 3,859 0 13,859 23,875 23,994 13,199
1992 10,000 3,477 0 13,477 20,715 21,937 12,803
1991 10,000 2,935 0 12,935 18,653 19,148 12,408
1990 10,000 2,246 0 12,246 16,306 17,127 11,829
1989 10,000 1,533 0 11,533 13,670 13,972 11,241
1988 10,000 921 0 10,921 11,571 11,684 10,708
1987 10,000 430 0 10,430 12,622 13,115 10,303
</TABLE>
+ The fiscal year end of the fund changed from May 31 to March 31 in
February 1995.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class III shares of the fund 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 $ 15,175 . If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller, and
cash payments (dividends) for the period would have amounted to
$ 4,178 . 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 such comparison 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)/Government, which is reported in the MONEY FUND
REPORT(registered trademark), covers over 230 government money
market funds; IBC/Donoghue's MONEY FUND AVERAGES(trademark)/All
Taxable, which is reported in the MONEY FUND REPORT(registered
trademark), covers over 800 taxable money market funds; and
IBC/Donoghue's MONEY FUND AVERAGES(trademark)/All Tax-Free, which is
reported in the MONEY FUND REPORT(registered trademark), covers over
398 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.
As of May 31 , 1996, FMR advised over $ 27 billion in tax-free
fund assets, $ 86 billion in money market fund assets, $ 277
billion in equity fund assets, $ 53 billion in international fund
assets, and $ 23 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 class may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A class'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
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. 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 each fund'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.
Tax-Exempt purchases municipal securities whose interest FMR believes
is free from federal income tax . G enerally ,
issuers or other parties have entered into covenants requiring
continuing compliance with federal tax requirements to preserve the
tax-free status of interest payments over the life of the security. If
at any time the covenants are not complied with, or if the IRS
determines that the issuer did not comply with relevant tax requirements,
interest payments from a security could become federally taxable
retroactive to the date the security was issued. For certain types
of structured securities, the tax status of the pass-through of
tax-free income may also be based on the federal tax treatment of the
structure.
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 Tax-Exempt's policy of investing so
that at least 80% of its income distribution 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 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 Tax-Exempt's policy of investing so that at
least 80% of its income distribution is free from federal income tax.
Tax-Exempt may distribute any net realized short-term capital gains and
taxable market discount once a year or more often, as necessary, to
maintain its net asset value at $1.00 per share.
It is the current position of the staff of the SEC that a fund that uses
the term "tax-exempt" in its name may not derive more than 20% of its
income from municipal obligations that pay interest that is a preference
item for purposes of the AMT. According to this position, at least 80% of
Tax-Exempt's income would have to be exempt from the AMT as well as from
federal income taxes.
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. Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market do not
anticipate earning long-term capital gains on securities held by each fund.
Tax-Exempt does not anticipate distributing long-term capital gains.
As of the fiscal year ended March 31, 1996, Treasury Only had capital loss
carryforwards aggregating approximately $ 299,000 . The loss
carryforward for Treasury Only, of which $ 22,000, $162,000, and
$115,000 will expire on March 31, 2001, 2002, and 2004 ,
respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Treasury had capital loss
carryforwards aggregating approximately $ 1,038,000 . The loss
carryforward for Treasury, of which $31,000, $142,000, $1,000, $330,000,
and $534,000 will expire on March 31, 1997, 1999, 2001, 2002, and
2003 , respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Government had capital loss
carryforwards aggregating approximately $ 1,096,700 . The loss
carryforward for Government, of which $200, $53,000, $271,000, $761,000,
and $11,500 will expire on March 31, 1997, 2001, 2002, 2003 ,
and 2004, respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Domestic had capital loss
carryforwards aggregating approximately $ 93,000 . The loss
carryforward for Domestic, of which $ 44,000 and $49,000 will expire
on March 31, 2001 and 2003 , respectively, is available to offset
future capital gains.
As of the fiscal year ended March 31, 1996, Rated Money Market had capital
loss carryforwards aggregating approximately $ 47,000 . The loss
carryforward for Rated Money Market, of which $ 32,000, $2,000, and
$13,000 will expire on March 31 , 1997, 1998, and 2004 ,
respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Money Market had capital loss
carryforwards aggregating approximately $ 2,025,000 . The loss
carryforward for Money Market, of which $336,000, $898,000, $547,000,
and $244,000, will expire on March 31 , 2001, 2002, 2003, and
2004 , respectively, is available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Tax-Exempt had capital loss
carryforwards aggregating approximately $ 527,000 . The loss
carryforward for Tax-Exempt, which will expire on May 31,
1996 , 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 a fund'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 its
respective Trust 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 , Members of the Advisory Board, and executive officers
of each 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 each trust prior
to the funds' conversions from series of Massachusetts business trusts
served each trust in identical capacities. All persons named as Trustees
and Members of the Advisory Board 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 and Members of
the Advisory Board is Fidelity Investments, P.O. Box 9235, Boston,
Massachusetts 02205-9235. Those Trustees who are "interested persons" by
virtue of their affiliation with either a trust or FMR are indicated by an
asterisk (*).
*EDWARD C. JOHNSON 3d (64), 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 (53), 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 (62), Trustee (1991), is a management consultant
(1994). Prior to February 1994, he was President of Greenhill Petroleum
Corporation (petroleum exploration and production). 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 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), 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 and Chairman of the non-interested Trustees,
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 (67), Trustee. 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), 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 (62), 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 Chairman of the Board of Directors of the National
Arts Stabilization Fund, as Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association, as a Member of the Public Oversight Board
of the American Institute of Certified Public Accountants' SEC Practice
Section (1995), and as a Public Governor of the National Association of
Securities Dealers, Inc. (1996).
*PETER S. LYNCH (52), Trustee, 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.
GERALD C. McDONOUGH (65), Trustee and Vice-Chairman of the non-interested
Trustees, 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 (70), 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 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 (61), 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.
THOMAS R. WILLIAMS (66), 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).
WILLIAM O. McCOY (62), Member of the Advisory Board (1996), is the Vice
President of Finance for the University of North Carolina (16-school
system, 1995). Prior to his retirement in December 1994, Mr. McCoy was Vice
Chairman of the Board of BellSouth Corporation (telecommunications) and
President of BellSouth Enterprises. He is currently a Director of Liberty
Corporation (holding company), Weeks Corporation of Atlanta (real estate,
1994), and Carolina Power and Light Company (electric utility, 1996).
Previously, he was a Director of First American Corporation (bank holding
company, 1979-1996). In addition, Mr. McCoy serves as a member of the Board
of visitors for the University of North Carolina at Chapel Hill (1994) and
for the Kenan Flager Business School (University of North Carolina at
Chapel Hill).
FRED L. HENNING, JR. (55), 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 C. BARRON (37), Vice President (1989), is also Vice President
of other funds advised by FMR and an employee of FMR Texas Inc.
BURNELL STEHMAN (64), Vice President (1992), is also Vice President of
other funds advised by FMR and an employee of FMR Texas Inc.
JOHN TODD (47), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
SCOTT A. ORR (34), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
ARTHUR S. LORING (47), 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 (47), 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, is Assistant Vice President
of Fidelity's money market funds and Vice President and Associate General
Counsel of FMR Texas Inc.
JOHN H. COSTELLO (48), 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) and Chief
Financial Officer of Fidelity Brokerage Services, Inc. (1990-1993).
THOMAS J. SIMPSON (37), Assistant Treasurer (1996), is Assistant
Treasurer of Fidelity's money market funds and an employee of FMR (1996).
Prior to joining FMR, Mr. Simpson was Vice-President and Fund Controller of
Liberty Investment Services (1987-1995).
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 March 31, 1996.
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
Treasury $ 0 $ 515 $ 515 $ 640 $ 0 $ 520 $ 520 $ 0 $ 509 $ 515 $ 522 $ 516
Only
Treasury 0 2,563 2,522 3,151 0 2,555 2,555 0 2,488 2,563 2,590 2,522
Government 0 1,449 1,428 1,783 0 1,443 1,443 0 1,415 1,449 1,470 1,433
Domestic 0 416 396 492 0 400 400 0 392 416 423 399
Rated
Money 0 120 120 150 0 121 121 0 119 120 121 120
Market
Money 0 2,646 2,568 3,210 0 2,598 2,598 0 2,541 2,652 2,681 2,576
Market
Tax-Exempt 0 800 787 984 0 795 795 0 780 800 811 789
</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* Complex*
Expenses from the
Fund Complex*
J. Gary Burkhead** $ 0 $ 0 $ 0
Ralph F. Cox 5,200 52,000 128,000
Phyllis Burke Davis 5,200 52,000 125,000
Richard J. Flynn 0 52,000 160,500
Edward C. Johnson 3d** 0 0 0
E. Bradley Jones 5,200 49,400 128,000
Donald J. Kirk 5,200 52,000 129,500
Peter S. Lynch** 0 0 0
Gerald C. McDonough 5,200 52,000 128,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 128,000
Thomas R. Williams 5,200 52,000 125,000
</TABLE>
* Information is as of December 31, 1995 for 219 funds in the complex.
** Interested trustees of the fund are compensated by FMR.
For the fiscal year ended March 31, 1996, Edward H. Malone accrued
deferred compensation of $897 from Money Market.
The non-interested Trustees may elect to defer receipt of all or a
percentage of their annual fees in accordance with the terms of a Deferred
Compensation Plan (the Plan). Under the Plan, compensation deferred by a
Trustee is periodically adjusted as though an equivalent amount had been
invested and reinvested in shares of one or more funds in the complex
designated by such Trustee (designated securities). The amount paid to the
Trustee under the Plan will be determined based upon the performance of
such investments. Deferral of Trustees' fees in accordance with the Plan
will have a negligible effect on a fund's assets, liabilities, and net
income per share, and will not obligate the fund to retain the services of
any Trustee or to pay any particular level of compensation to the Trustee.
Each fund may invest in such designated securities under the Plan without
shareholder approval. Only non-interested Trustees are eligible to
participate in the Plan.
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.
As of July 1, 1996, less than 1% of Treasury Only's, approximately
13.36% of Domestic's, less than 1% of Rated Money Market's, and
approximately 35.84% of Money Market's total outstanding shares were held
by an FMR affiliate, FMR Corp. Mr. Edward C. Johnson 3d, President and
Trustee of the funds, is a member of a family group which, by virtue of its
owning approximately 49% of the voting securities of FMR Corp., may be
deemed under the 1940 Act to form a controlling group with respect to FMR
Corp. Therefore, based on his membership in this family group, Mr. Edward
C. Johnson 3d may be deemed to own beneficially these shares. As of this
date, with the exception of Mr. Johnson 3d's ownership of the Treasury
Only, Domestic, Rated Money Market, and Money Market shares, the Trustees
and officers of the funds owned, in the aggregate, less than 1% of each
fund's total outstanding shares.
As of July 1, 1996, the following owned of record or beneficially 5% or
more of outstanding shares of each class of the funds:
Treasury Only - Class I: First Union National Bank, Charlotte, NC (34.66%);
Shawmut Bank of Boston, N.A., Boston, MA (9.47%); Ropes & Gray, Boston, MA
(6.49%); and First American Trust Company, Santa Ana, CA (5.20%).
Treasury Only - Class II: FMR Corp., Boston, MA (100%).
Treasury Only - Class III: Bankers Trust Company, New York, NY (35.01%);
Texas Commerce Bank, N.A., Houston, TX (31.63%); and Liberty National Bank
& Trust, Oklahoma City, OK (16.24%).
Treasury - Class I: First Union National Bank, Charlotte, NC (11.28%);
Texas Commerce Bank, N.A., Houston, TX (9.25%); First Trust, St. Paul, MN
(8.93%); and First Interstate Bank, Portland, OR (7.97%).
Treasury - Class II: Texas Commerce Bank, N.A., Houston, TX (74.64%);
Boatmen's Trust Company, St. Louis, MO (12.13%); and Nationsbank,
Charlotte, NC (8.27%).
Treasury - Class III: Bank of New York, New York, NY (71.78%); and First
Union National Bank, Charlotte, NC (15.64%).
Government - Class I: First Tennessee Bank, Memphis, TN (11.86%); Texas
Commerce Bank, N.A. (8.75%); and Shawmut Bank of Boston, N.A. (5.54%).
Government - Class II: First Union National Bank, Charlotte, NC (72.39%);
and Bank of Boston, Waterbury, CT (27.08%).
Government - Class III: Texas Commerce Bank, N.A., Houston, TX (65.68%);
Liberty National Bank & Trust Co., Oklahoma City, OK (15.11%); Boatmen's
Trust Company, St. Louis, MO (12.16%); Whitney National Bank, New Orleans,
LA (8.21%); and Nationsbank, Charlotte, NC (5.34%).
Domestic - Class I: First Union National Bank, Charlotte, NC (13.87%); FMR
Corp., Boston, MA (13.36%); Intel Corporation, Santa Clara, CA (9.41%) and
Texas Commerce Bank, N.A., Houston, TX (8.05%).
Domestic - Class II: FMR Corp., Boston, MA (83.87%); and Barnett Banks
Trust Co., Jacksonville, FL (16.13%).
Domestic - Class III: First Union National Bank, Charlotte, NC (23.37%);
Rainier Bancorporation, Seattle, WA (19.24%); Boatmen's Trust Company, St.
Louis, MD (16.61%); Reliance Trust Company, Atlanta, GA (14.09%); Texas
Commerce Bank, N.A., Houston, TX (10.70%); and Exchange Bank, Santa Rosa,
CA (5.79%).
Rated Money Market - Class I; Promus Companies, Memphis, TN (21.39%);
Metric Partners, Foster City, CA (9.83%); and Independence Mining Company,
Denver, CO (5.98%).
Rated Money Market - Class II: FMR Corp., Boston, MA (100%).
Rated Money Market - Class III: Texas Commerce Bank, N.A. (95.37%).
Money Market - Class I: FMR Corp., Boston, MA (37.29%); and Citibank, N.A.,
New York, NY (8.13%).
Money Market - Class II: Texas Commerce Bank, N.A. (43.82%); Nationsbank,
Charlotte, NC (26.54%); First Security Bank of Utah, Salt Lake City, UT
(19.38%); and Boatmen's Trust Company, St. Louis, MO (6.12%).
Money Market - Class III: First Union National Bank, Charlotte, NC
(24.55%); Old Republic International Corp., Chicago, IL (17.50%); North
American Trust Company, San Diego, CA (17.27%); Republic National Bank of
New York, New York, NY (11.15%); Nationsbank, Charlotte, NC (10.32%); and
Texas Commerce Bank, W.A. (9.87%).
Tax-Exempt - Class I: Shawmut Bank of Boston, N.A., Boston, MA (12.98%);
and Wachovia Bank & Trust Company, Winston-Salem, NC (7.67%).
Tax-Exempt - Class II: First Union National Bank, Charlotte, NC (99.04%).
Tax-Exempt - Class III: Bank of New York, New York, NY (64.40%); and First
Security Bank, Batesville, MS (30.06%).
A shareholder owning of record or beneficially more than 25% of a class'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, all Trustees who are "interested
persons" of the trusts or of FMR, and all personnel of each fund or FMR for
performing services relating to research, statistical and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provides the management and administrative services necessary
for the operation of 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
UMB, 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 (other than Treasury Only and Rated Money Market) 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 (other than Treasury Only's and Rated Money
Market'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 trusts, on behalf of
each fund, have entered into revised transfer agent agreements with FIIOC
and UMB, as applicable, pursuant to which FIIOC or UMB bears the costs of
providing these services to existing shareholders of the applicable
classes. Other expenses paid by each fund (other than Treasury Only and
Rated Money Market) 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 the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.
FMR is responsible for the payment of all expenses of Treasury Only and
Rated Money Market with certain exceptions. Specific expenses payable by
FMR include, without limitation, expenses for the typesetting, printing,
and mailing of proxy materials to shareholders; legal expenses, and the
fees of the custodian, auditor, and interested Trustees; costs of
typesetting, printing, and mailing prospectuses and statements of
additional information, notices and reports to shareholders; and the fund's
proportionate share of insurance premiums and Investment Company Institute
dues. FMR also provides for transfer agent and dividend disbursing services
through FIIOC and portfolio and general accounting record maintenance
through FSC.
FMR pays all other expenses of Treasury Only and Rated Money Market with
the following exceptions: fees and expenses of all Trustees of the
applicable trust who are not "interested persons" of the trust or FMR (the
non-interested Trustees); interest on borrowings (only for Treasury Only);
taxes; brokerage commissions (if any); and such nonrecurring expenses as
may arise, including costs of any litigation to which a fund may be a
party, and any obligation it may have to indemnify the officers and
Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated May 30,
1993 for Treasury, Government, Domestic, and Money Market (the FICP funds);
January 29, 1992 for Tax-Exempt; September 30, 1993 for Treasury Only; and
December 29, 1994 for Rated Money Market. The management contracts were
approved by shareholders on November 18, 1992, November 13, 1991, March 24,
1993, and December 8, 1994, respectively.
For the services of FMR under each contract, each fund (other than Treasury
Only and Rated Money Market) pays FMR a monthly management fee at the
annual rate of 0.20% of average net assets throughout the month. Treasury
Only and Rated Money Market each pays FMR a monthly management fee at the
annual rate of 0.42% of average net assets throughout the month. The
management fees paid to FMR by Treasury Only and Rated Money Market are
reduced by an amount equal to the fees and expenses paid by the respective
funds to the non-interested Trustees. Fees received by FMR for the last
three fiscal periods are shown in the table below.
Fund Fiscal Year Ended Management Fees Paid to FMR
Treasury Only 3/31/96 $ 5,448,560 *
3/31/95** 3,279,429 *
7/31/94 4,716,697 *
7/31/93 4,892,175 *
Treasury 3/31/96 13,337,040
3/31/95 8,680,344
3/31/94 9,834,015
Government 3/31/96 6,905,768
3/31/95 6,680,088
3/31/94 9,660,519
Domestic 3/31/96 1,924,309
3/31/95 1,923,368
3/31/94 1,525,574
Rated Money Market 3/31/96** 714,940 *
8/31/95 1,352,919 *
8/31/94 1,781,535 *
8/31/93 2,893,862 *
Money Market 3/31/96 13,337,921
3/31/95 10,436,518
3/31/94 10,551,990
Tax-Exempt 3/31/96 3,883,600
3/31/95** 3,789,731
5/31/94 5,099,831
5/31/93 5,036,875
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
** The fiscal year end of Treasury Only changed from July 31 to March 31 in
February 1995. The fiscal year end of Rated Money Market changed from
August 31 to March 31 in June 1995. The fiscal year end of Tax-Exempt
changed from May 31 to March 31 in February 1995.
FMR may, from time to time, voluntarily reimburse all or a portion of each
class's operating expenses (exclusive of interest, taxes, brokerage
commissions, extraordinary expenses , and any applicable 12b-1 fees ).
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 class's total
returns and yield and repayment of the reimbursement by each class will
lower its total returns and yield.
Effective July 1, 1995 , FMR voluntarily agreed, subject to revision
or termination, to reimburse each fund if and to the extent that
each fund's aggregate operating expenses, including management fees but
excluding any applicable 12b-1 fees, were in excess of the annual
rate of 0.20% (0.18% for Money Market) of its average net assets.
Prior to July 1, 1995, FMR voluntarily agreed to reimburse each fund if and
to the extent each fund's aggregate operating expenses, including
management fees but excluding any applicable 12b-1 fees, were in excess of
0.18% (0.20% for Treasury Only) of its average net assets.
The table below identifies the dollar amount reimbursed to management fees
for each fund during the last three fiscal periods.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Fund Fiscal Year
Dollar Amount
Ended Reimbursed
Treasury Only 3/31/96 $ 2,856,829
3/31/95* 1,719,806
7/31/94 2,474,345
7/31/93 2,567,107
Rated Money Market 3/31/96 255,565
Money Market 3/31/96 1,335,614
3/31/95 3,002,430**
3/31/94 2,444,993**
</TABLE>
* August 1, 1994 to March 31, 1995
** Amount of total reimbursement
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 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 the sub-advisory agreements dated May 30, 1993, January 29, 1992,
September 30, 1993, and December 29, 1994, for the FICP funds, Tax-Exempt,
Treasury Only, and Rated Money Market, respectively, FMR pays FMR Texas
fees equal to 50% of the management fees payable to FMR under its
management contract with each fund. Each sub-advisory agreement was
approved by shareholders on November 18, 1992, November 13, 1991, March 24,
1993, and December 8, 1994, for the FICP funds, Tax-Exempt, Treasury Only,
and Rated Money Market, respectively. The fees paid to FMR Texas are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time. The table below shows fees paid by FMR to FMR
Texas on behalf of each fund for the fiscal years ended March 31, 1996,
1995, and 1994.
1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Treasury Only* $ 2,724,280 $ 1,639,715 $ 2,358,349 $ 2,446,088
Treasury 6,668,520 4,340,172 4,917,008 --
Government 3,452,884 3,340,044 4,830,260 --
Domestic 962,155 961,684 762,787 --
Rated Money Market** 357,470 676,460 890,768 1,446,931
Money Market 6,668,961 5,218,259 5,275,995 --
Tax-Exempt*** 1,941,800 1,894,866 2,549,916 2,518,438
</TABLE>
* Figures for Treasury Only are for the fiscal year ended March 31, 1996,
the fiscal period August 1, 1994 to March 31, 1995, and the fiscal years
ended July 31, 1994 and 1993.
** Figures for Rated Money Market are for the fiscal period September 1,
1995 to March 31, 1996, and the fiscal years ended August 31, 1995, 1994,
and 1993.
*** Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, and the fiscal years
ended May 31, 1994 and 1993.
CONTRACTS WITH FMR AFFILIATES
FIIOC, an affiliate of FMR, is the transfer, dividend disbursing, and
shareholder servicing agent for Class III shares of Treasury Only,
Treasury, Government, Domestic, Rated Money Market, and Money Market (the
Taxable Funds).
UMB is the transfer agent for Class III shares of Tax-Exempt. UMB has
entered into a sub-contract with FIIOC under the terms of which FIIOC
performs the processing activities associated with providing transfer agent
and shareholder servicing functions for Class III shares of Tax-Exempt.
Under this arrangement FIIOC receives an annual account fee and an
asset-based fee each based on account size and fund type for each retail
account and certain institutional accounts. With respect to certain
institutional retirement accounts, FIIOC receives an annual account fee and
an asset-based fee based on account type or fund type. These annual account
fees are subject to increase based on postal rate changes.
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, an affiliate of FMR, performs the calculations necessary to determine
NAV and dividends for Class III shares of each Taxable Fund, and maintains
each Taxable Fund's accounting records. UMB has a sub-contract with FSC,
under the terms of which FSC performs the calculations necessary to
determine NAV and dividends for Class III of Tax-Exempt, and maintains the
accounting records for Tax-Exempt. The annual fee rates for pricing
and bookkeeping services are based on each fund's average net assets,
specifically, .0175% of the first $500 million of average net assets and
.0075% of average net assets in excess of $500 million. The fee is limited
to a minimum of $40,000 and a maximum of $800,000 per year.
Transfer agent fees and pricing and bookkeeping fees for Tax-Exempt are
paid to FIIOC and FSC, respectively, by UMB which is entitled to
reimbursement from Class III, or the fund, as applicable, for these
expenses. FMR bears the cost of transfer, dividend disbursing,
shareholder servicing and pricing and bookkeeping services pursuant to its
management contracts with Treasury Only and Rated Money Market.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for the past three fiscal years were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
Treasury $ 550,798 $ 375,762 $ 419,147
Government 309,220 331,070 412,411
Domestic 122,381 122,139 107,464
Money Market 551,158 441,370 445,362
Tax-Exempt 249,803 309,306* 304,324**
325,195***
</TABLE>
* From 6/1/94 - 3/31/95
** From 6/1/93 - 5/31/94
*** From 6/1/92 - 5/31/93
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 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 FMR.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved a Distribution and Service Plan on behalf of
Class III 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 Class III of 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 each Class III Plan, FDC is paid a monthly distribution fee as
a percentage of Class III's average net assets at an annual rate of 0.25%,
determined as of the close of business on each day throughout the month.
For the fiscal years ended March 31, 1996, 1995 and 1994, Class III of each
fund paid the following distribution fees:
1996 1995 1994
Treasury Only $ 49,368 N/A N/A
Treasury 2,411,341 $ 418,917 $ 2,065
Government 192,457 46,340 N/A
Domestic 110,404 52,640 N/A
Rated Money Market 509 N/A N/A
Money Market 508,094 812,749 40,685
Tax-Exempt 2,566 N/A N/A
FDC retained none of the distribution fees paid by Class III of each
fund for the periods reported above.
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 its other resources from any other sources to reimburse
FDC for expenses incurred in connection with the distribution of
Class III shares, including payments made to third parties that assist in
selling Class III shares of each fund, or to third parties, including banks
that render shareholder support services or engage in the sale of Class III
shares. The Trustees have authorized such payments.
Prior to approving each 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 III of the applicable fund and its shareholders. To the extent that
each Plan gives FMR and FDC greater flexibility in connection with the
distribution of shares of Class III of each fund, additional sales of fund
shares may result. Furthermore, certain shareholder support services may be
provided more effectively under the Plans by local entities with whom
shareholders have other relationships.
The Plans do not provide for specific payments by Class III of any of the
expenses of FDC or obligate FDC 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 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 for Treasury was approved by FMR as the then sole shareholder on
October 22, 1993. The Plan for Government was approved by FMR as the then
sole shareholder on April 4, 1994. The Plan for Domestic was approved by
FMR as the then sole shareholder on July 19, 1994. The Plan for Money
Market was approved by FMR as the then sole shareholder on November 17,
1993. The Plans for Treasury Only, Tax-Exempt, and Rated Money Market were
approved by FMR as the then sole shareholder on October 31, 1995.
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 TRUSTS
TRUST ORGANIZATION. Treasury Only is a fund of Daily Money Fund, an
open-end management investment company originally organized as a
Massachusetts business trust on June 7, 1982, pursuant to a Declaration of
Trust that was amended and restated on September 1, 1989. 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 Delaware trust,
which was organized on June 20, 1991 under the name Daily Money Fund II,
succeeded to the name Daily Money Fund on July 14, 1995. Currently, there
are six funds of the trust: Treasury Only, Money Market Portfolio, U.S.
Treasury Portfolio, Capital Reserves: U.S. Government Portfolio, Capital
Reserves: Money Market Portfolio, and Capital Reserves: Municipal Money
Market Portfolio. The Trust Instrument permits the Trustees to create
additional funds.
Treasury, Government, Domestic, and Money Market are funds of Fidelity
Institutional Cash Portfolios, an open-end management investment company
originally organized as a Massachusetts business trust on November 10,
1981, pursuant to a Declaration of Trust that was amended and restated on
April 9, 1985. On May 30, 1993, the trust was converted to a Delaware
business trust pursuant to an agreement approved by shareholders on
November 18, 1992. The Delaware trust, which was organized on June 20, 1991
under the name Fidelity Government Securities Fund, succeeded to the name
Fidelity Institutional Cash Portfolios II on May 28, 1993, and then to the
name Fidelity Institutional Cash Portfolios on May 28, 1993. Currently,
there are four funds of the trust: Treasury, Government, Domestic, and
Money Market. The Trust Instrument permits the Trustees to create
additional funds.
Rated Money Market is a fund of Fidelity Money Market Trust, an open-end
management investment company originally organized as a Massachusetts
business trust on August 21, 1978, pursuant to a Declaration of Trust that
was amended and restated on November 1, 1989. On December 29, 1994, the
trust was converted to a Delaware business trust pursuant to an agreement
approved by shareholders on December 8, 1994. The Delaware trust, which was
organized on June 20, 1991 under the name Fidelity Money Market Trust II,
succeeded to the name Fidelity Money Market Trust on December 29, 1994.
Currently, there are three funds of Fidelity Money Market Trust: Rated
Money Market, Retirement Money Market Portfolio, and Retirement Government
Money Market Portfolio. The Trust Instrument permits the Trustees to create
additional funds.
Tax-Exempt is a fund of Fidelity Institutional Tax-Exempt Cash Portfolios,
an open-end management investment company originally organized as a
Massachusetts business trust on March 1, 1982, pursuant to a Declaration of
Trust that was amended and restated on April 9, 1985, and supplemented on
December 15, 1989. On January 29, 1992, the trust was converted to a
Delaware business trust pursuant to an agreement approved by shareholders
on November 13, 1991. The Delaware trust, which was organized on June 20,
1991 under the name Fidelity Institutional Tax-Exempt Cash Portfolios II,
succeeded to the name Fidelity Institutional Tax-Exempt Cash Portfolios on
January 29, 1992. Currently, Tax-Exempt is the only fund of Fidelity
Institutional Tax-Exempt Cash Portfolios. 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 trusts 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 trusts 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 trusts, 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 a 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. Each 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
Instruments contain an express disclaimer of shareholder liability for the
debts, liabilities, obligations, and expenses of the trusts and require
that a disclaimer be given in each contract entered into or executed by the
trust or the Trustees. The Trust Instruments provide 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 Instruments
also provide 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 Instruments further provide 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. As a shareholder of Rated Money Market, you receive one vote for
each dollar value of net asset value you own. 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 non-assessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of a trust, fund, or class may, as set forth in
each of the Trust Instruments, 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.
Any trust or 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 fund (or, for Rated Money Market, as
determined by the current value of each shareholder's investment in the
fund or trust); however, the Trustees may, without prior shareholder
approval, change the form of organization of the trust or fund by merger,
consolidation, or incorporation. If not so terminated, the trust and its
funds will continue indefinitely.
Under the Trust Instruments, the Trustees may, without shareholder vote,
cause a 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's 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 each fund, except Tax-Exempt. UMB, 1010 Grand
Avenue, Kansas City, Missouri, is custodian of the assets of Tax-Exempt.
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.
AUDITORS. Coopers & Lybrand L.L.P., 1999 Bryan Street, Suite 3000, Dallas,
TX 75201 serves as the independent accountant for Treasury Only, Rated
Money Market, and Tax-Exempt. Price Waterhouse LLP, 2001 Ross Avenue, Suite
1800, Dallas, TX 75201 serves as the independent accountant for the FICP
funds. The auditors examine financial statements for the funds and provide
other audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended March 31 , 1996 are included in each fund's Annual Report,
which is a separate report supplied with this Statement of Additional
Information. 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 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 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.
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: Treasury Only for the fiscal year
ended March 31, 1996, are included in the fund's prospectuses, are
incorporated by reference into the fund's Statements of Additional
Information, and were filed May 22, 1996 for Daily Money Fund: Treasury
Only, 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, 1995 was electronically filed and is incorporated herein by
reference as Exhibit 1(c) to Post-Effective Amendment No. 31.
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) Specimen of Service Contract between Fidelity Distributors Corporation
and "Qualified Recipients" with respect to shares of U.S. Treasury
Portfolio and Money Market Portfolio was electronically filed and is
incorporated herein by reference to Exhibit 6(g) to Post-Effective
Amendment No. 34.
(h) Specimen of Service Contract (Administrative and Recordkeeping
Services Only) between Fidelity Distributors Corporation and " Qualified
Recipients" with respect to shares of U.S. Treasury Portfolio and Money
Market Portfolio was electronically filed and is incorporated herein by
reference to Exhibit 6(h) to Post-Effective Amendment No. 34.
(i) Specimen of Service Contract between Fidelity Distributors Corporation
and "Qualified Recipients" with respect to Fidelity Institutional Money
Market Funds was electronically filed and is incorporated herein by
reference to Exhibit 6(e) to Fidelity Institutional Cash Portfolios'
Post-Effective Amendment No. 32.
(j) Specimen of Service Contract (Administrative and Recordkeeping
Services Only) between Fidelity Distributors Corporation and "Qualified
Recipients" with respect to Fidelity Institutional Money Market Funds was
electronically filed and is incorporated herein by reference to Exhibit
6(f) to Fidelity Institutional Cash Portfolios' Post-Effective Amendment
No. 32.
(k) Form of Bank Agency Agreement (most recently revised May 1994) was
electronically filed and is incorporated herein by reference to Exhibit
6(g) to Advisor Series II's Post-Effective Amendment No. 26.
(l) Form of Selling Dealer Agreement for Bank Related Transactions (most
recently revised June 1994) was electronically filed and is incorporated
herein by reference to Exhibit 6(i) to Advisor Series II's Post-Effective
Amendment No. 26.
(m) Form of Selling Dealer Agreement (most recently revised July 1996) was
electronically filed and is incorporated herein by reference to Exhibit
6(i) to Fidelity Institutional Cash Portfolios' Post-Effective Amendment
No. 32.
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.
(b) The Fee Deferral Plan for Non-Interested Person Directors and Trustees
of the Fidelity Funds, effective as of December 1, 1995, was electronically
filed and incorporated herein by reference to Exhibit 7(b) to Fidelity
School Street Trust's Post-Effective Amendment No. 47 (File No. 2-57157).
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 Treasury
Only; Money Market Portfolio; U.S. Treasury Portfolio; and Capital
Reserves: U.S. Government Portfolio and Money Market Portfolio were
electronically filed and are 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 January 18, 1996, to the Custodian Agreement, dated
December 1, 1994, between The Bank of New York and Fidelity Daily Money
Fund on behalf of Treasury Only; 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(b) to Fidelity Institutional Cash Portfolios'
Post-Effective Amendment No. 31 (File No. 2-74808).
(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 Treasury Only; 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).
(e) Fidelity Group Repo Custodian Agreement among The Bank of New York, J.
P. Morgan Securities, Inc., and the Fidelity Funds, as currently in effect,
was electronically filed and is incorporated herein by reference to Exhibit
8(d) of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(f) Schedule 1 to the Fidelity Group Repo Custodian Agreement among The
Bank of New York, J. P. Morgan Securities, Inc., as currently in effect,
was electronically filed and is incorporated herein by reference to Exhibit
8(e) of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(g) Fidelity Group Repo Custodian Agreement among Chemical Bank, Greenwich
Capital Markets, Inc., and the Fidelity Funds, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
8(f) of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
(h) Schedule 1 to the Fidelity Group Repo Custodian Agreement among
Chemical Bank, Greenwich Capital Markets, Inc., and the Fidelity Funds, as
currently in effect, was electronically filed and is incorporated herein by
reference to Exhibit 8(g) of Fidelity Institutional Cash Portfolios' (File
No. 2-74808) Post-Effective Amendment No. 31.
(i) Joint Trading Account Custody Agreement between the The Bank of New
York and the Fidelity Funds, as currently in effect, was electronically
filed and is incorporated herein by reference to Exhibit 8(h) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective Amendment
No. 31.
(j) First Amendment to Joint Trading Account Custody Agreement between the
The Bank of New York and the Fidelity Funds, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
8(i) of Fidelity Institutional Cash Portfolios' (File No. 2-74808)
Post-Effective Amendment No. 31.
9. Not applicable.
10. None.
11. Consent of auditor 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 to Exhibit 15(a) to Post-Effective Amendment No. 35.
(f) Distribution and Service Plan pursuant to Rule 12b-1, for Treasury
Only Class III was electronically filed and is incorporated herein by
reference to Exhibit 15(b) to Post-Effective Amendment No. 35.
16. Schedules and data points for cumulative and average total returns and
7-day, effective, and tax-equivalent yields for 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) A Multiple Class of Shares Plan for Fidelity Institutional Money
Market Funds, dated August 1, 1996, was electronically filed and is
incorporated herein by reference to Exhibit 18(a) to Fidelity Institutional
Cash Portfolios' Post-Effective Amendment No. 32.
(b) Schedule I, dated August 1, 1996, to the Multiple Class of Shares Plan
for Fidelity Institutional Money Market Funds, dated August 1, 1996, was
electronically filed and is incorporated herein by reference to Exhibit
18(b) to Fidelity Institutional Cash Portfolios' Post-Effective Amendment
No. 32.
(c) A Multiple Class of Shares Plan for Daily Money Fund: U.S. Treasury
Portfolio, dated August 1, 1996, is electronically filed herein as Exhibit
18(c).
(d) Schedule I, dated August 1, 1996, to the Multiple Class of Shares Plan
for Daily Money Fund: U.S. Treasury Portfolio, dated August 1, 1996, is
electronically filed herein as Exhibit 18(d).
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 April 30, 1996
Title of Class Number of Record Holders
Money Market Portfolio - Initial Class 203,822
U.S. Treasury Portfolio - Initial Class 35,144
U.S. Treasury Portfolio-Class B 481
Treasury Only - Class I 2,344
Treasury Only - Class II 11
Treasury Only - Class III 166
Capital Reserves: Money Market Portfolio 136,375
Capital Reserves: U.S. Government Portfolio 11,799
Capital Reserves: Municipal Money Market Portfolio 9,638
Item 27. Indemnification
Article X, Section 10.02 of the Trust Instrument 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 Advisor
(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 C. Habermann 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.
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
Robert F. Hill Vice President of FMR; Director of Technical
Research.
Curtis Hollingsworth Vice President of FMR (1993).
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).
Richard Spillane Vice President of FMR; Senior Vice President and
Director of Operations and Compliance of FMR U.K.
(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).
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.
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.
Edward C. Johnson 3d Chairman and Director of FMR Texas;
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., 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 Management & 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.
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
Mark Peterson Director None
Neal Litvak President None
Arthur S. Loring Vice President and Clerk Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity Service
Co., 82 Devonshire Street, Boston, MA 02109, or the funds' respective
custodian: The Bank of New York, 110 Washington Street, New York, N.Y.;
UMB Bank, n.a., 1010 Grand Avenue, Kansas City, MO.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant, on behalf of Daily Money Fund, 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. 38 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 22 day of
July 1996.
DAILY MONEY FUND
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee July 22, 1996
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Kenneth A. Rathgeber Treasurer July 22, 1996
Kenneth A. Rathgeber
/s/J. Gary Burkhead Trustee July 22, 1996
J. Gary Burkhead
/s/Ralph F. Cox * Trustee July 22, 1996
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee July 22, 1996
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee July 22, 1996
Richard J. Flynn
/s/E. Bradley Jones * Trustee July 22, 1996
E. Bradley Jones
July 22, 1996
/s/Donald J. Kirk * Trustee
Donald J. Kirk
/s/Peter S. Lynch * Trustee July 22, 1996
Peter S. Lynch
/s/Edward H. Malone * Trustee July 22, 1996
Edward H. Malone
/s/Marvin L. Mann_____* Trustee July 22, 1996
Marvin L. Mann
/s/Gerald C. McDonough* Trustee July 22, 1996
Gerald C. McDonough
/s/Thomas R. Williams * Trustee July 22, 1996
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 Arthur C. Delibert pursuant to a power of attorney
dated December 15, 1994 and filed herewith.
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
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
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Prospectuses
and Statements of Additional Information constituting part of
Post-Effective Amendment No. 38 to the Registration Statement on Form N-1A
of Daily Money Fund: Treasury Only, of our report dated May 7, 1996 on the
financial statements and financial highlights included in the March 31,
1996 Annual Report to Shareholders of Daily Money Fund: Treasury Only.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditors" in the Statements
of Additional Information.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
July 22, 1996
Exhibit 18
MULTIPLE CLASS OF SHARES PLAN
FOR
DAILY MONEY FUND: U.S. TREASURY PORTFOLIO
DATED AUGUST 1, 1996
This Amended and Restated Multiple Class of Shares Plan (the "Plan"), when
effective in accordance with its provisions, shall be the written plan
contemplated by Rule 18f-3 under the Investment Company Act of 1940 (the
"1940 Act") for Daily Money Fund: U.S. Treasury Portfolio (the "Fund"), a
portfolio of Daily Money Fund (the "Trust").
1. Classes Offered. The Fund offers two classes of its shares: Initial
Class and Class B.
2. Distribution and Shareholder Service Fees. Distribution fees and/or
shareholder service fees shall be calculated and paid in accordance with
the terms of the then-effective plan pursuant to Rule 12b-l under the 1940
Act for the applicable class. Distribution and shareholder service fees
currently authorized are as set forth in Schedule I to this Plan.
3. Conversion Privilege. After a maximum holding period of six years from
the initial date of purchase, Class B shares convert automatically to
Initial Class shares of the Fund. Simultaneously, a portion of the Class
B shares purchased through the reinvestment of Class B dividends or capital
gains distributions ("Dividend Shares") will also convert to Initial Class
shares. The portion of Dividend Shares that will convert at that time is
determined by the ratio of converting Class B non-Dividend Shares held by a
shareholder to that shareholder's total Class B non-Dividend Shares. All
conversions pursuant to this paragraph 3 shall be made on the basis of the
relative net asset values of the two classes, without the imposition of any
sales load, fee, or other charge.
4. Exchange Privileges.
Initial Class: Initial Class shares purchased through the Fidelity Advisor
Funds program may be exchanged for shares of (i) any Fidelity Advisor Fund:
Class A or Class T; (ii) Daily Money Fund: Money Market Portfolio: Initial
Class; and (iii) Daily Tax-Exempt Money Fund. Other Initial Class shares
may be exchanged for shares of (i) any Fidelity Retail Fund offering an
exchange privilege to other Fidelity Retail Funds; (ii) Daily Money Fund:
Money Market Portfolio: Initial Class; and (iii) Daily Tax-Exempt Money
Fund.
Class B: Shares of Class B may be exchanged for shares of any Fidelity
Advisor Fund: Class B.
5. Expense Allocations. Expenses shall be allocated under this Plan as
follows:
A. Class expenses: The following expenses shall be allocated exclusively
to the applicable specific class of shares: (i) distribution and
shareholder service fees; (ii) transfer agent fees; and (iii) Blue Sky
state registration fees.
B. Fund expenses: Expenses not allocated to specific classes as specified
above shall be charged to the Fund and allocated daily to each class on the
basis of relative net assets (settled shares). For purposes of this
paragraph, "relative net assets (settled shares)" are net assets valued in
accordance with generally accepted accounting principles but excluding the
value of subscriptions receivable, in relation to the net assets of the
Fund.
6. Voting Rights. Each class of shares governed by this Plan (i) shall
have exclusive voting rights on any matter submitted to shareholders that
relates solely to its arrangement; and (ii) shall have separate voting
rights on any matter submitted to shareholders in which the interests of
one class differ from the interests of any other class.
7. Effective Date of Plan. This Plan shall become effective upon the
first business day of the month following approval by a vote of at least a
majority of the Trustees of the Trust, and a majority of the Trustees of
the Trust who are not "interested persons" of the Trust, which vote shall
have found that this Plan as proposed to be adopted, including expense
allocations, is in the best interests of each class individually and of the
Fund as a whole; or upon such other date as the Trustees shall determine.
8. Amendment of Plan. Any material amendment to this Plan shall become
effective upon the first business day of the month following approval by a
vote of at least a majority of the Trustees of the Trust, and a majority of
the Trustees of the Trust who are not "interested persons" of the Trust,
which vote shall have found that this Plan as proposed to be amended,
including expense allocations, is in the best interests of each class
individually and of the Fund as a whole; or upon such other date as the
Trustees shall determine.
9. Severability. If any provision of this Plan shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
the Plan shall not be affected thereby.
10. Limitation of Liability. Consistent with the limitation of
shareholder liability as set forth in the Trust's Declaration of Trust or
other organizational document, any obligations assumed by any Fund or class
thereof, and any agreements related to this Plan shall be limited in all
cases to the relevant Fund and its assets, or class and its assets, as the
case may be, and shall not constitute obligations of any other Fund or
class of shares. All persons having any claim against the Fund, or any
class thereof, arising in connection with this Plan, are expressly put on
notice of such limitation of shareholder liability, and agree that any such
claim shall be limited in all cases to the relevant Fund and its assets, or
class and its assets, as the case may be, and such person shall not seek
satisfaction of any such obligation from the shareholders or any
shareholder of the Trust, class or Fund; nor shall such person seek
satisfaction of any such obligation from the Trustees or any individual
Trustee of the Trust.
SCHEDULE I DATED AUGUST 1, 1996 TO MULTIPLE CLASS OF SHARES PLAN
FOR DAILY MONEY FUND: U.S. TREASURY PORTFOLIO DATED AUGUST 1, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FUND/CLASS SALES CHARGE DISTRIBUTION FEE SHAREHOLDER
(AS A PERCENTAGE OF SERVICE FEE
AVERAGE NET ASSETS) (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
DMF: U.S. Treasury Portfolio
Initial Class none 0.20-0.38* none
Class B contingent deferred 0.75** 0.25
</TABLE>
* Pursuant to the Distribution and Service Plan for the Initial Class, FMR
is required to make distribution payments from its management fee, its past
profits or any other source available. FMR makes such payments at the
annual rate of between 0.20% and 0.38% of Initial Class average net assets.
** Pursuant to the Distribution and Service Plan for Class B, FMR may make
distribution payments from its management fee, its past profits or any
other source available. FMR may make such payments at the annual rate of
between 0.20% and 0.38% of Class B average net assets. The balance of
Class B's distribution fee is paid directly out of Class B assets.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000028540
<NAME> Daily Money Fund
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<NUMBER> 32
<NAME> Treasury Only Class II
<MULTIPLIER> 1,000
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<PERIOD-TYPE> Year
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<PERIOD-END> mar-31-1996
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<TABLE> <S> <C>
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<NAME> Daily Money Fund
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<NUMBER> 33
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<AVERAGE-NET-ASSETS> 49,166
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .020
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<PER-SHARE-DIVIDEND> .020
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<TABLE> <S> <C>
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<NAME> Daily Money Fund
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<NUMBER> 31
<NAME> Treasury Only Class I
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