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. 40
and
REGISTRATION STATEMENT (No. 811-3480)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
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 PerkinsMorris, 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 ( November 29, 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 September 19, 1996.
FIDELITY DAILY MONEY FUND
CAPITAL RESERVES: MONEY MARKET PORTFOLIO, U.S, GOVERMENT PORTFOLIO, AND
MUNICIPAL MONEY MARKET PORTFOLIO
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
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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
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 November 29,
1996. The SAI has been filed with the Securities and Exchange Commission
(SEC) and is available along with other related materials on the SEC's
Internet Web site (http:/www.sec.gov). The SAI is incorporated herein by
reference (legally forms a part of the prospectus). For a free copy of
either document, call Fidelity Client Services at 1-800-843-3001, or
your investment professional.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT A FUND WILL MAINTAIN A
STABLE $1.00 SHARE PRICE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
LIKE ALL MUTUAL FUNDS, THESE
SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
CAPR-pro-1196
Funds of Daily Money Fund
CAPITAL RESERVES:
MONEY MARKET PORTFOLIO
(fund number 6 82)
U.S. GOVERNMENT PORTFOLIO
(fund number 68 1)
MUNICIPAL MONEY MARKET PORTFOLIO
(fund number 6 83)
Money Market Portfolio and U.S. Government Portfolio each seeks as high a
level of current income as is consistent with the preservation of capital
and liquidity by investing in money market instruments.
Municipal Money Market Portfolio seeks to provide investors with as high a
level of current income, exempt from federal income taxes, as is consistent
with a portfolio of high quality short-term municipal obligations selected
on the basis of preservation of capital and liquidity.
PROSPECTUS
NOVEMBER 29, 1996(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
CONTENTS
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KEY FACTS WHO MAY WANT TO INVEST
E XPENSES Each fund's yearly operating expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's
financial data.
P ERFORMANCE
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's
overall approach to investing.
BREAKDOWN OF EXPENSES How operating costs
are calculated and what they include.
YOUR ACCOUNT TYPES OF ACCOUNTS Different ways to set up your
account, including tax-sheltered retirement plans.
HOW TO BUY SHARES Opening an account and
making additional investments.
HOW TO SELL SHARES Taking money out and closing
your account.
INVESTOR SERVICES Services to help you manage
your account.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS Share price calculations and
the timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Each fund offers individual and institutional investors a convenient way to
invest in professionally managed portfolios of money market instruments.
Each fund is designed for those investors who would like to earn current
income (tax-free income in the case of Municipal Money Market Portfolio)
while preserving the value of their investment.
The rate of income will vary from day to day, generally reflecting
short-term interest rates.
Each fund is managed to keep its share price stable at $1.00. U.S.
Government Portfolio offers an added measure of safety with its focus on
U.S. Government securities.
These funds do not constitute a balanced investment plan. However,
because they emphasize stability, they could be well-suited for a portion
of your investments. Each fund offers free checkwriting to give you
easy access to your money.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you
buy or sell shares of a fund.
Maximum sales charge on purchases and reinvested distributions None
Maximum deferred sales charge None
Redemption fee None
Exchange fee None
ANNUAL OPERATING EXPENSES are paid out of each fund's assets. Each fund
pays a management fee to Fidelity Management & Research Company (FMR). Each
fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and financial
reports.
12b-1 fees are paid by each fund to the distributor for services and
expenses in connection with the distribution of each fund's shares.
Long-term shareholders may pay more than the economic equivalent of the
maximum sales charges permitted by the National Association of Securities
Dealers, Inc., due to 12b-1 fees.
Each fund's expenses are factored into its share price or dividends and are
not charged directly to shareholder accounts (see "Breakdown of Expenses"
on page ).
The following figures are based on historical expenses of each fund
and are calculated as a percentage of average net assets of each fund.
MONEY MARKET PORTFOLIO
Management fee .33 %
A
12b-1 fee (Distribution Fee) .35%
Other expenses .31 %
Total operating expenses .99%
A
U.S. GOVERNMENT PORTFOLIO
Management fee .30 %
A
12b-1 fee (Distribution Fee) .35%
Other expenses .34 %
Total operating expenses .99%
A
MUNICIPAL MONEY MARKET PORTFOLIO
Management fee .29 %
A
12b-1 fee (Distribution Fee) .35%
Other expenses .35 %
Total operating expenses .99%
A
A AFTER EXPENSE REDUCTIONS
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment, assuming a 5% annual return and full redemption at the end of
each time period:
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1 3 5 10
Year Years Years Years
Money Market Portfolio $ 10 $ 32 $ 55 $ 12
1
U.S. Government Portfolio $ 10 $ 32 $ 55 $ 12
1
Municipal Money Market Portfolio $ 10 $ 32 $ 55 $ 12
1
</TABLE>
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY.
FMR has voluntarily agreed to reimburse each fund to the extent that
total operating expenses exceed 0.99% of its average net assets. If these
agreements were not in effect, the management fees and total operating
expenses, as a percentage of average net assets, of each fund would have
been 0.50% and 1.16% for Money Market Portfolio, 0.50% and 1.19% for U.S.
Government Portfolio, and 0.50% and 1.20% for Municipal Money Market
Portfolio. Expenses eligible for reimbursement do not include interest,
taxes, brokerage commissions and extraordinary expenses.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow and each fund's financial
statements are included in the funds' Annual Report and have been audited
by Coopers & Lybrand L.L.P., independent accountants. Their reports on the
financial statements and financial highlights are included in the Annual
Report. The financial statements, the financial highlights, and the reports
are incorporated by reference into the funds' SAI, which may be obtained
free of charge from Fidelity Client Services at the phone number listed on
page .
MONEY MARKET PORTFOLIO
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1.Selected Per-Share Data and Ratios
2.Fiscal years ended July 31 1996 1995 1994 1993 1992 1991A
3.Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
4.Income from Investment Operations .047 .048 .027 .025 .041 .047
Net interest income
5.Less Distributions (.047) (.048) (.027) (.025) (.041) (.047)
From net interest income
6.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
7.Total returnB 4.80% 4.86% 2.72% 2.57% 4.13% 4.79%
8.Net assets, end of period (000 omitted) $ 1,230,547 $ 975,975 $ 680,149 $ 601,498 $ 354,189 $ 108,991
9.Ratio of expenses to average net assets .99% .99% .98% .95% .82% .83%C
D D D D D ,D
10.Ratio of net interest income to average
net 4.69% 4.80% 2.70% 2.52% 3.81% 5.71%C
assets
</TABLE>
A OCTOBER 23, 1990 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1991
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
C ANNUALIZED
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.
U.S. GOVERNMENT PORTFOLIO
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11.Selected Per-Share Data and Ratios
12.Fiscal years ended July 31 1996 1995 1994 1993 1992 1991A
13.Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
14.Income from Investment Operations .046 .045 .025 .024 .041 .046
Net interest income
15.Less Distributions (.046) (.045) (.025) (.024) (.041) (.046)
From net interest income
16.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
17.Total returnB 4.70% 4.64% 2.52% 2.40% 4.15% 4.66%
18.Net assets, end of period (000 omitted) $ 200,504 $ 201,965 $ 306,261 $ 264,483 $ 308,542 $ 80,762
19.Ratio of expenses to average net assets .99% .99% .98% .95% .65% .70%C
D D D D D ,D
20.Ratio of net interest income to average net 4.62% 4.41% 2.50% 2.39% 3.82% 5.65%C
assets
</TABLE>
A OCTOBER 23, 1990 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1991
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
C ANNUALIZED
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.
MUNICIPAL MONEY MARKET PORTFOLIO
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21.Selected Per-Share Data and Ratios
22.Fiscal years ended July 31 1996 1995 1994 1993 1992 1991A
23.Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
24.Income from Investment Operations .028 .029 .018 .019 .031 .028
Net interest income
25.Less Distributions (.028) (.029) (.018) (.019) (.031) (.028)
From net interest income
26.Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
27.Total returnB 2.83% 2.94% 1.80% 1.96% 3.14% 2.82%
28.Net assets, end of period (000 omitted) $ 129,174 $ 123,819 $ 116,497 $ 116,274 $ 68,497 $ 19,578
29.Ratio of expenses to average net assets .99% .99% .98% .95% .95% .95%
D D D D D C,D
30.Ratio of net interest income to average net
assets 2.79% 2.89% 1.78% 1.92% 2.89% 3.97%
C
</TABLE>
A NOVEMBER 29, 1990 (COMMENCEMENT OF OPERATIONS) TO JULY 31, 1991
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED AND
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
C ANNUALIZED
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.
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 over a given period,
assuming reinvestment of any dividends and capital gains. A CUMULATIVE
TOTAL RETURN reflects actual performance over a stated period of time. An
AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that, if
achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period. Average annual total
returns smooth out variations in performance; they are not the same as
actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a yield
assumes that income earned is reinvested, it is called an EFFECTIVE YIELD.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn before
taxes to equal a tax-free yield.
SEVEN-DAY YIELD illustrates the income earned by an investment in a money
market fund over a recent seven-day period. Since money market funds
maintain a stable $1.00 share price, current seven-day yields are the most
common illustration of money market fund performance.
The funds' performance and holdings are detailed twice a year in financial
reports, which are sent to all shareholders. For current performance call
Fidelity Client Services at 1-800-843-3001.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. Each fund is a diversified fund of
Daily Money Fund, an open-end management investment company organized as a
Delaware business trust on September 29, 1993.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent will mail proxy materials in advance, including a voting
card and information about the proposals to be voted on. You are entitled
to one vote for each share you own.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business address
at 82 Devonshire Street, Boston, Massachusetts 02109. It includes a number
of different subsidiaries and divisions which provide a variety of
financial services and products. The funds employ various Fidelity
companies to perform activities required for their operation.
The funds are managed by FMR, which handles their business affairs. FMR
Texas Inc. (FMR Texas), located in Irving, Texas, has primary
responsibility for providing investment management services.
As of October 31, 1996, FMR advised funds having approximately 27
million shareholder accounts with a total value of more than $415
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.
National Financial Services Corporation ( NFSC ) distributes
and markets Fidelity's funds and services. Fidelity Investments
Institutional Operations Company (FIIOC) performs transfer agent servicing
functions for the funds.
FMR Corp. is the ultimate parent company of FMR and FMR Texas. Members of
the Edward C. Johnson 3d family are the predominant owners of a class of
shares of common stock representing approximately 49% of the voting power
of FMR Corp. Under the Investment Company Act of 1940 (the 1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
UMB Bank, n.a. (UMB) is Municipal Money Market Portfolio's transfer agent,
although it employs FIIOC to perform these functions for the fund. UMB is
located at 1010 Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
EACH FUND'S INVESTMENT APPROACH
MONEY MARKET PORTFOLIO invests only in high-quality U.S.
dollar-denominated money market securities of domestic and foreign issuers,
including U.S. Government securities and repurchase agreements. The fund
also may enter into reverse repurchase agreements.
U.S. GOVERNMENT PORTFOLIO invests only in U.S. Government securities
that are backed by the full faith and credit of the United States and
repurchase agreements for these securities. The fund also may enter into
reverse repurchase agreements.
MUNICIPAL MONEY MARKET invests in high-quality, short-term municipal
obligations whose interest payments are exempt from federal income tax.
Under normal conditions, the fund will invest so that at least 80% of its
income is exempt from federal income tax. The fund may also invest up to
100% of its total assets in municipal securities whose interest is
subject to the federal alternative minimum tax.
When you sell your shares of the funds, they should be worth the same
amount as when you bought them. Of course, there is no guarantee that the
funds will maintain a stable $1.00 share price. The funds follow
industry-standard guidelines on the quality and maturity of their
investments, which are designed to help maintain a stable $1.00 share
price. The funds will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities they buy. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a
default on the funds' investments could cause their share prices (and the
value of your investment) to change.
If you are subject to the federal alternative minimum tax, you should note
that Municipal Money Market Portfolio may invest all of its assets in
municipal securities issued to finance private activities. The interest
from these investments is a tax-preference item for purposes of the tax.
The funds earn income at current money market rates. Each fund stresses
preservation of capital, liquidity, and income (tax-free income in the case
of Municipal Money Market Portfolio), and 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.
FMR normally invests Municipal Money Market Portfolio's assets according to
its investment strategy and does not expect to invest in federally taxable
obligations. Municipal Money Market Portfolio also reserves the right to
hold a substantial amount of uninvested cash or to invest more than
normally permitted in federally taxable obligations for temporary,
defensive purposes.
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 y ear. 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 mar ket 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 State s. For
example, U.S. Government securities such as those issued by the Federal
National Mortgage Association are su pported 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.
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 ma r ket 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 another party . In exchange for this benefit, a fund may accept a
lower interest rate. The credit quality of the investment may be affected
by the creditworthiness of the put provider. Demand features, standby
commitments, and tender options are types of put features.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities, and some other securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTIONS : A fund may not purchase a security if, as a result,
more than 10% of its assets would be invested in illiquid securities.
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.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment an d 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: Money Market Portfolio will invest more than 25% of its
total assets in the financial services industry.
CASH MANAGEMENT. A fund may invest in a pooled account of repurchase
agreements and in a money market fund available only to funds and accounts
managed by FMR or its affiliates, whose goal is to seek a high level of
current income (exempt from federal income tax in the case of a tax-free
money market fund) while maintaining a stable $1.00 share price. A major
change in interest rates or a default on the money market fund's
investments could cause its share price to change.
RESTRICTIONS: Municipal Money Market Portfolio does not currently intend to
invest in a pooled account of repurchase agreements. Money Market Portfolio
and U.S. Government Portfolio do not currently intend to invest in a money
market fund.
DIVERSIFICATION. Diversifying a fund's investment portfolio can
reduce the risks of investing. This may include limiting the amount of
money invested in any one issuer or, on a broader scale, in any one
industry or type of project. Economic, business, or political changes can
affect all securities of a similar type.
RESTRICTIONS: Money Market Portfolio may not invest more than 5% of
its total assets in any one issuer, except that the fund may invest up to
25% of its total assets in the highest quality securities of a single
issuer for up to three business days.
With respect to 75% of its total assets, Municipal Money Market Portfolio
may not purchase a security if, as a result, more than 5% would be invested
in the securities of a single issuer. The fund may invest more than 25% of
its total assets in tax-free securities that finance similar types of
projects.
These limitations do not apply to U.S. Government securities.
BORROWING. Each fund may borrow from banks or from other funds
advised by FMR, or through reverse repurchase agreements, and may make
additional investments while borrowings are outstanding.
RESTRICTIONS: Money Market Portfolio and U.S. Government Portfolio
may borrow only for temporary or emergency purposes, or engage in reverse
repurchase agreements, but not in an amount exceeding 331/3% of its total
assets. Municipal Money Market Portfolio may borrow only for temporary or
emergency purposes, but not in an amount exceeding 331/3% of its total
assets.
L ENDING. A fund may lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a
fund's total assets. U.S. Government Portfolio and Municipal Money Market
Portfolio 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.
Money Market Portfolio seeks as high a level of current income as is
consistent with the preservation of capital and liquidity by investing in
money market instruments.
U.S. Government Portfolio seeks as high a level of current income as is
consistent with the preservation of capital and liquidity by investing in
money market instruments.
Municipal Money Market Portfolio seeks to provide investors with as high a
level of current income, exempt from federal income taxes, as is consistent
with a portfolio of high quality, short-term municipal obligations selected
on the basis of preservation of capital and liquidity. Under normal
conditions, the fund will invest so that at least 80% of its income is
exempt from federal income tax.
With respect to 75% of its total assets, Municipal Money Market Portfolio
may not purchase a security if, as a re sult, more than 5% would be
invested in the securities of any one issuer.
Money Market Portfolio will invest more than 25% of its total assets in the
financial services industry.
Money Market Portfolio and U.S. Government Portfolio may borrow only for
temporary or emergency purposes, or engage in reverse repurchase
agreements, but not in an amount exceeding 331/3% of its total assets.
Municipal Money Market Portfolio may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of a fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each fund's assets are reflected in that
fund's share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services. Each fund also pays OTHER EXPENSES ,
which are explained below.
MANAGEMENT FEE
E ach fund pays FMR a monthly management fee at an annual rate of 0.50%
of its average net assets.
FMR HAS SUB ADVISORY AGREEMENTS with FMR Texas, which has primary
responsibility for providing investment management for each fund, while FMR
retains responsibil ity for providing each fund with other management
services. FMR pays FMR Texas 50% of each fund's management fee (before
expense reimbursements but after payments made by FMR pursuant to each
fund's Distribution and Service Plan) for these services. FMR paid FMR
Texas 0.13 % of Money Market Portfolio's, 0.14 % of U.S.
Government Portfolio's, and 0.13 % of Municipal Money Market
Portfolio's average net assets for the fiscal year ended July 31, 1996.
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 shares of Money Market Portfolio and U.S.
Government Portfolio. Fidelity Service Co . (FSC) calculates the NAV
and dividends for shares of Money Market Portfolio and U.S. Government
Portfolio, and maintains the general accounting records for Money Market
Portfolio and U.S. Government Portfolio.
For the fiscal year ended July 31, 1996, Money Market Portfolio and U.S.
Government Portfolio each paid FIIOC fees equal to 0.26 % and
0.21 %, respectively, of its average net assets, and paid FSC fees
equal to 0.01% and 0.02%, respectively, of its average net assets.
UMB has entered into a sub-arrangement with FIIOC. FIIOC performs
transfer agency, dividend disbursing and shareholder services for Municipal
Money Market Portfolio. UMB has also entered into a sub-arrangement with
FSC. FSC calculates the NAV and dividends for Municipal Money Market
Portfolio, and maintains Municipal Money Market Portfolio's general
accounting records. All of the fees are paid to FIIOC and FSC by UMB, which
is reimbursed by the fund, as appropriate, for such payments.
For the fiscal year ended July 31, 1996, fees paid by UMB to FIIOC on
behalf of Municipal Money Market Portfolio amounted to 0.21% of its
average net assets and fees paid by UMB to FSC on behalf of Municipal
Money Market Portfolio amounted to 0.03 % of its average net assets.
Each fund has adopted a DISTRIBUTION AND SERVICE PLAN. Under the Plan, each
fund is authorized to pay NFSC a monthly distribution fee as compensation
for its services and expenses in connection with the distribution of shares
of each fund, and providing personal service to and/or maintenance of
shareholder accounts. Each fund pays NFSC a monthly distribution fee at an
annual rate of 0.35% of its average net assets throughout the month. NFSC
may pay all or a portion of the distribution fee to investment
professionals that have selling agreements with the funds (qualified
recipients) as compensation for distribution services and ongoing
shareholder support services. NFSC may act in the capacity of a qualified
recipient, and as such may receive compensation under the Plan.
The Plan specifically recognizes that FMR may make payments from its
management fee revenue, past profits or other resources to qualified
recipients for services in connection with sales of fund shares or
shareholder support. The Board of Trustees has authorized such payments.
FMR may pay up to 0.25% of a fund's average net assets throughout the month
based upon the level of shareholder support and distribution services
provided.
NFSC will, at its own expense, provide promotional incentives to qualified
recipients who support the sale of fund shares. In some instances, these
incentives will be offered only to certain types of qualified recipients,
such as those qualified recipients whose representatives provide services
in connection with the sale or expected sale of significant amounts of
shares.
Each fund also pays other expenses, such as legal, audit, and custodian
fees; in some instances, proxy solicitation costs; and the compensation of
trustees who are not affiliated with Fidelity.
YOUR ACCOUNT
TYPES OF ACCOUNTS
If you 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.
The different ways to set up (register) your account with Fidelity are
listed on the right.
The account guidelines that follow may not apply to certain funds or to
certain retirement accounts. For instance, municipal funds are not
available for purchase in retirement accounts. If you are investing
through a retirement account or i f your employer offers a fund through
a retirement program, you may be subject to additional fees. For more
information, please refer to your program materials, contact your
employer , or call your retirement benefits number or Fidelity
directly , as appropriate .
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
RETIREMENT (THE FOLLOWING OPTIONS ARE AVAILABLE ONLY FOR TAXABLE FUNDS)
TO SHELTER YOUR RETIREMENT SAVINGS FROM TAXES
Retirement plans allow individuals to shelter investment income and
capital gains from current taxes. In addition, contributions to these
accounts may be tax deductible. Retirement accounts require special
applications and typically have lower minimums.
(solid bullet) INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal
age under 701/2 with earned income to invest up to $2,000 per tax year.
Individuals can also invest in a spouse's IRA if the spouse has earned
income of less than $250.
(solid bullet) ROLLOVER IRAS retain special tax advantages for certain
distributions from employer-sponsored retirement plans.
(solid bullet) SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) provide small
business owners or those with self-employed income (and their eligible
employees) with many of the same advantages as a Keogh, but with fewer
administrative requirements.
(solid bullet) 401(K) PLANS allow employees of corporations of all sizes to
contribute a percentage of their wages on a tax-deferred basis. These
accounts need to be established by the trustee of the plan.
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA). Contact your investment
professional.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called NAV, is calculated every business day. The
funds are managed to keep share prices stable at $1.00.
Shares are purchased at the next NAV calculated after your order is
received and accepted by the transfer agent. NAV is normally calculated at
the times indicated in the table below.
Fund NAV Calculation Times
(Eastern Time)
Money Market Portfolio 2:00 p.m. and 4:00 p.m.
U.S. Government Portfolio 2:00 p.m. and 4:00 p.m.
Municipal Money Market Portfolio 12:00 noon and 4:00 p.m.
You will receive the NAV next determined after your investment
professional has submitted your purchase order.
Shareholders of record as of 2:00 p.m. (12:00 noon for Municipal Money
Market Portfolio) Eastern time will be entitled to dividends declared that
day.
Shares purchased after 2:00 p.m. (12:00 noon for Municipal Money Market
Portfolio) Eastern time will begin to earn income dividends on the
following business day.
Share certificates are not available for the funds.
IF YOU ARE NEW TO FIDELITY, an initial investment must be preceded or
accompanied by a completed, signed application, which should be forwarded
to:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0081
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail an account application with a check,
(small solid bullet) Place an order and wire money into your account,
(small solid bullet) Open your account by exchanging from another Fidelity
fund, or
(small solid bullet) Contact your investment professional.
BY MAIL. You or your investment professional must send a check payable to
the fund in which you plan to invest. When making subsequent investments by
check, please write your fund account number on the check. All investments
by check should be sent to the above address.
BY WIRE. You must sign up for the wire feature before using it. For
wiring information and instructions, you should call the investment
professional through which you trade or if you trade directly through
Fidelity, call Fidelity Client Services. There is no fee imposed by the
funds for wire purchases. However, if you buy shares through an investment
professional, the investment professional may impose a fee for wire
purchases.
Fidelity Client Services:
Nationwide 1-800-843-3001
Your wire must be received by the transfer agent in good order at the
applicable fund's designated wire bank before the close of the Federal
Reserve Wire System on the day of purchase.
You are advised to wire funds as early in the day as possible, and to
provide advance notice to Fidelity Client Services for large purchases.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $1,000
TO ADD TO AN ACCOUNT $250
MINIMUM BALANCE $500
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time
by selling (redeeming) some or all of your shares. Your shares will be sold
at the next NAV calculated after your order is received and accepted by the
transfer agent. NAV is normally calculated at the times listed on page
.
TO SELL SHARES IN ACCOUNT, you may use any of the methods described on
these two pages.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR ACCOUNT SHARES, please leave at
least $500 worth of shares in the account to keep it open.
You will receive the NAV next determined after your investment
professional has submitted your redemption order.
BY TELEPHONE. Redemption requests may be made by calling Fidelity Client
Services at 1-800-843-3001.
BY MAIL. Send a letter of instruction with signature guarantee(s) to the
address given on page . The letter should specify the name of the fund, the
number of shares to be sold, name, account numbers, address, and should
include the additional requirements listed on the right that apply to each
particular account.
<TABLE>
<CAPTION>
<S> <C>
TYPE OF REGISTRATION REQUIREMENTS
Individual, Joint Tenants, Letter of instruction signed by all person(s)
Sole Proprietorship, Custodial, (Uniform Gifts or required to sign for the account exactly as it is
Transfers to Minors Act), General Partners registered, accompanied by signature
guarantee(s).
Corporations, Associations Letter of instruction and a corporate resolution,
signed by person(s) required to sign for the
account accompanied by signature guarantee(s).
Trusts A letter of instruction signed by the Trustee(s) with
signature guarantee(s). (If the Trustee's name is
not registered on the account, also provide a copy
of the trust document, certified within the last 60
days.)
</TABLE>
If you do not fall into any of these registration categories (i.e.,
executors, administrators, conservators, or guardians) you should call
your investment professional or Fidelity Client Services for further
instructions.
BY WIRE. Redemptions may be made by calling Fidelity Client Services at
1-800-843-3001.
You must designate on your account application the U.S. commercial bank
account(s) into which you wish the redemption proceeds to be deposited.
Fidelity Client Services will then notify you that this feature has been
activated and that you may request wire redemptions.
You may change the bank account(s) designated to receive redemption
proceeds at any time prior to making a redemption request. You should send
a letter of instruction, including a signature guarantee, to Fidelity
Client Services at the address shown on page .
You should be able to obtain a signature guarantee from a bank, broker,
dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency, or savings association. A notary public
cannot provide a signature guarantee.
There is no fee imposed by the funds for wiring of redemption proceeds.
However, if you sell shares through an investment professional, the
investment professional may impose a fee for wire redemptions.
Redemption proceeds will be wired via the Federal Reserve Wire System to
your bank account of record. If your redemption request is received by the
transfer agent before 2:00 p.m. Eastern time (12:00 noon Eastern time for
redemptions from Municipal Money Market Portfolio), redemption proceeds
will normally be wired on that day. If your redemption request is received
by the transfer agent after 2:00 p.m. Eastern time (12:00 noon Eastern
time for Municipal Money Market Portfolio) , redemption proceeds will
normally be wired on the following business day.
A fund reserves the right to take up to seven days to pay you if making
immediate payment would adversely affect the fund.
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. The minimum amount for a check is $500. Do not, however, try to
close out your account by check.
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available Monday through Friday,
8:30 a.m. to 6:00 p.m. Eastern time.
STATEMENTS AND REPORTS that 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 shares redeemed
during the month can be distributed on the day of redemption. Each fund
reserves the right to limit this service. Shareholders may elect to receive
dividend distributions in cash.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. The funds offer two options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned this
option.
2. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
For retirement accounts, all distributions are automatically reinvested.
When you are over 59 1/2 years old, you can receive distributions in cash.
Dividends will be reinvested at each fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the NAV as
of the record date of the distribution. The mailing of distribution checks
will begin within seven days.
TAXES
As with any investment, you should consider how an investment in the funds
could affect you. Below are some of the funds' tax implications. If your
account is not a tax-deferred retirement account, be aware of these tax
implications.
TAXES ON DISTRIBUTIONS. Interest income that Municipal Money Market
Portfolio earns is distributed to shareholders as income dividends.
Interest that is federally tax-free remains tax-free when it is
distributed. Distributions from Money Market Portfolio and U.S. Government
Portfolio, however, are subject to federal income tax and may also be
subject to state or local taxes. If you live outside the United States,
your distributions from these funds could also be taxed by the country in
which you reside.
For federal tax purposes, Money Market Portfolio's and U.S. Government
Portfolio's income and short-term capital gain distributions are taxed as
dividends; long-term capital gain distributions, if any, are taxed as
long-term capital gains.
However, for shareholders of Municipal Money Market Portfolio, gain on the
sale of tax-free bonds results in taxable distributions. Short-term capital
gains and a portion of the gain on bonds purchased at a discount are taxed
as dividends; long-term capital gain distributions, if any, are taxed as
long-term capital gains.
Mutual fund dividends from U.S. Government securities are generally free
from state and local income taxes. However, particular states may limit
this benefit, and some types of securities, such as repurchase agreements
and some agency-backed securities, may not qualify for the benefit. In
addition, some states may impose intangible property taxes. You should
consult your own tax adviser for details and up-to-date information on the
tax laws in your state.
For the fiscal year ended July 31, 1996, 0.35 % of Money
Market Portfolio's and 20.7 % of U.S. Government Portfolio'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.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Municipal Money Market Portfolio may invest up to
100% of its assets in these securities. Individuals who are subject to the
tax must report this interest on their tax returns.
A portion of Municipal Money Market Portfolio's dividends may be free from
state or local taxes. Income from investments in your state are often
tax-free to you. Each year, the transfer agent will send you a breakdown of
Municipal Money Market Portfolio's income from each state to help you
calculate your taxes.
During the fiscal year ended July 31, 1996, 100 % of Municipal Money
Market Portfolio's income dividends was free from federal income tax.
During the fiscal year ended July 31, 1996, 83.94 % of Municipal
Money Market Portfolio's income dividends was subject to the federal
alternative minimum tax.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
EACH FUND IS OPEN FOR BUSINESS and its NAV is normally calculated each day
that both the Federal Reserve Bank of Kansas City (Kansas City Fed) (for
Municipal Money Market Portfolio) or the Federal Reserve Bank of New York
(New York Fed) (for Money Market Portfolio and U.S. Government Portfolio)
and the New York Stock Exchange (NYSE) are open. The following holiday
closings have been sched uled for 1997: New Year's Day, Martin Luther
King's Birthday, Washington's Birthday, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day,
and Christmas Day. Although FMR expects the same holiday schedule to be
observed in the future, the Kansas City Fed, the New York Fed, or the NYSE
may modify its holiday schedule at any time. On any day that the Kansas
City Fed, the New York Fed, or the NYSE closes early, the principal
government securities markets close early (such as on days in advance of
holidays generally observed by participants in such markets), or as
permitted by the SEC, the right is reserved to advance the time on that day
by which purchase and redemption orders must be received.
To the extent that portfolio securities are traded in other markets on days
when the Kansas City Fed, the New York Fed, or the NYSE is closed, each
fund's NAV may be affected on days when investors do not have access to the
fund to purchase or redeem shares. Certain Fidelity funds may follow
different holiday closing schedules.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and dividing the result by the number of
shares outstanding. Each fund values its portfolio securities on the basis
of amortized cost. This method minimizes the effect of changes in a
security's market value and helps each fund maintain a stable $1.00 share
price.
THE OFFERING PRICE (price to buy one share) and REDEMPTION PRICE (price to
sell one share) of each fund are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity and the transfer
agent may only be liable for losses resulting from unauthorized
transactions if they do not follow reasonable procedures designed to verify
the identity of the caller. Fidelity and the transfer agent will request
personalized security codes or other information, and may also record
calls. You should verify the accuracy of the confirmation statements
immediately after receipt. If you do not want the ability to redeem and
exchange by telephone, call the transfer agent for instructions. Additional
documentation may be required from corporations, associations, and certain
fiduciaries.
IF YOU ARE UNABLE TO REACH THE TRANSFER AGENT BY PHONE (for example, during
periods of unusual market activity), consider placing your order by mail.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on this page. Purchase orders may be refused if, in FMR's opinion,
they would disrupt management of a fund.
TO ALLOW FMR TO MANAGE THE FUNDS MOST EFFECTIVELY, you are urged to
initiate all trades as early in the day as possible and to notify Fidelity
Client Services in advance of large transactions.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) The funds do not accept cash.
(small solid bullet) When making a purchase with more than one check, each
check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number of
checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
canceled and you could be liable for any losses or fees a fund or the
transfer agent has incurred.
Shareholders of record as of 2:00 p.m. (12:00 noon for Municipal Money
Market Portfolio) Eastern time will be entitled to dividends declared that
day.
Shares purchased after 2:00 p.m. (12:00 noon for Municipal Money Market
Portfolio) Eastern time begin to earn income dividends on the following
business day.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) Shares redeemed before 2:00 p.m. (12:00 noon for
Municipal Money Market Portfolio) Eastern time do not receive the dividend
declared on the day of redemption. Shares redeemed after 2:00 p.m. (12:00
noon for Municipal Money Market Portfolio) Eastern time do receive the
dividend declared on the day of redemption.
(small solid bullet) A fund may withhold redemption proceeds until it is
reasonably assured that investments credited to your account have been
received and collected.
(small solid bullet) If you sell shares by writing a check and the amount
of the check is greater than the value of your account, your check will be
returned to you and you may be subject to additional charges.
When the NYSE, the Kansas City Fed, or the New York Fed is closed (or when
trading is restricted) for any reason other than its customary weekend or
holiday closings, or under any emergency circumstances as determined by the
SEC to merit such action, a fund may suspend redemption or postpone payment
dates. In cases of suspension of the right of redemption, the request for
redemption may either be withdrawn or payment may be made based on the NAV
next determined after the termination of the suspension.
IF YOUR ACCOUNT BALANCE FALLS BELOW $500 due to redemption, the account may
be closed and the proceeds may be mailed to your address of record. You
will be given 30 days' notice that your account will be closed unless it is
increased to the minimum.
THE TRANSFER AGENT MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds.
An exchange involves the redemption of all or a portion of the shares of
one fund and the purchase of shares of another fund.
BY TELEPHONE. Exchanges may be requested on any day a fund is open for
business by calling Fidelity Client Services at the number listed on page
between 8:30 a.m. and 4:00 p.m. Eastern time.
BY MAIL. You may exchange shares on any business day by submitting written
instructions with an authorized signature which is on file for that
account. Written requests for exchanges should contain the fund name,
account number, the number of shares to be redeemed, and the name of the
fund to be purchased. Written requests for exchange should be mailed to
Fidelity Client Services at the address on page .
WHEN YOU PLACE AN ORDER TO EXCHANGE SHARES, shares will be redeemed at the
next determined NAV after your order is received and accepted by the
transfer agent. Shares of the fund to be acquired will be purchased at its
next determined NAV after redemption proceeds are made available. You
should note that, under certain circumstances, a fund may take up to seven
days to make redemption proceeds available for the exchange purchase of
shares of another fund. In addition, please note the following:
(small solid bullet) Exchanges will not be permitted until a completed and
signed account application is on file.
(small solid bullet) The fund you are exchanging into must be available for
sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) You will earn dividends in the acquired fund in
accordance with the fund's customary policy, normally on the day the
exchange request is received.
(small solid bullet) If you exchange into a fund with a sales charge, you
pay the percentage difference between that fund's sales charge and any
sales charge you have already paid in connection with the shares you are
exchanging.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Currently, there is no limit on the number of
exchanges out of a fund, nor are there any administrative or redemption
fees applicable to exchanges out of a fund.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
No dealer, sales representative, or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related SAI, in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or NFSC. This Prospectus and the related SAI do not
constitute an offer by the funds or by NFSC to sell or to buy shares of the
funds to any person to whom it is unlawful to make such offer.
FIDELITY DAILY MONEY FUND
CAPITAL RESERVES: MONEY MARKET PORTFOLIO, U.S. GOVERNMENT PORTFOLIO, AND
MUNICIPAL MONEY MARKET PORTFOLIO
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
CAPITAL RESERVES:
MONEY MARKET PORTFOLIO
U.S. GOVERNMENT PORTFOLIO
MUNICIPAL MONEY MARKET PORTFOLIO
FUNDS OF DAILY MONEY FUND
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 29, 1996
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus (dated
November 29, 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 July 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 Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISER
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
National Financial Services Corporation (NFSC)
TRANSFER AGENT FOR MONEY MARKET PORTFOLIO AND U.S. GOVERNMENT PORTFOLIO
Fidelity Investments Institutional Operations Company (FIIOC)
TRANSFER AGENT FOR MUNICIPAL MONEY MARKET PORTFOLIO
UMB Bank, n.a. (UMB)
CAPR-ptb-1196
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation shall be
determined immediately after and as a result of the fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with a fund's investment policies and
limitations.
A fund's fundamental investment policies and limitations may not be changed
without approval by a "majority of the outstanding voting securities" (as
defined in the Investment Company Act of 1940 (1940 Act)) of the fund.
However, except for the fundamental investment limitations listed below,
the investment policies and limitations described in this SAI are not
fundamental, and may be changed without shareholder approval.
INVESTMENT LIMITATIONS OF MONEY MARKET PORTFOLIO
THE FOLLOWING ARE MONEY MARKET PORTFOLIO'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. Government or any of its agencies or instrumentalities) if, as a
result, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10% of
the outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase a security (other than
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 25% of its total assets in th e 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) Subject to revision upon 60 days' notice to shareholders, the fund
does not currently intend to purchase securities on margin, except that the
fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to 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 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 or a reorganization, consolidation or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate 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 the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(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 invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitation (ix), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
INVESTMENT LIMITATIONS OF U.S. GOVERNMENT PORTFOLIO
THE FOLLOWING ARE U.S. GOVERNMENT PORTFOLIO'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii)
eng age in reverse repurchase agreements for any purpose; provided that
(i) and (ii) in combination do not exceed 33 1/3% of the fund's total
assets (including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that come to exceed this amount will be reduced
within three days (not including Sundays and holidays) to the extent
necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) Subject to revision upon 60 days' notice to shareholders, the fund
does not currently intend to purchase securities on margin, except that the
fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to 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 make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(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 or a reorganization, consolidation or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate pursuant to an exemptive order
granted by the SEC.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitation (viii), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
INVESTMENT LIMITATIONS OF MUNICIPAL MONEY MARKET PORTFOLIO
THE FOLLOWING ARE MUNICIPAL MONEY MARKET PORTFOLIO'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities) if, as a
result, (a) more than 5% of the fund's total assets would be invested in
the securities of that issuer, or (b) the fund would hold more than 10% of
the outstanding voting securities of that issuer;
(2) issue senior securities except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the 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;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
fund's total assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(9) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
For purposes of investment limitations (1) and (5), 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 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) Subject to revision upon 60 days' notice to shareholders, the fund
does not currently intend to purchase securities on margin, except that the
fund may obtain such short-term credits as are necessary for the clearance
of transactions, and provided that margin payments in connection with
futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (3)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(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 or a reorganization, consolidation or
merger, or (ii) to securities of other open-end investment companies
managed by FMR or a successor or affiliate pursuant to an exemptive order
granted by the SEC.
(viii) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitation (viii), pass-through entities and other special
purpose vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
U.S. Government Portfolio, invests only in obligations issued or guaranteed
as to principal and interest by the U.S. Government, including U.S.
Treasury bills, notes and bonds, and obligations issued by U.S. Government
agencies or instrumentalities that are backed by the full faith and credit
of the United States. The fund may also engage in repurchase agreements for
these obligations. These operating policies may be changed upon 90 days'
notice to shareholders.
As an operating policy, subject to change only upon approval by the Board
of Trustees and 60 days' prior notice to shareholders, each of Money Market
Portfolio, U.S. Government Portfolio and Municipal Money Market Portfolio
currently do not intend to purchase futures contracts or options on futures
contracts.
For the funds' policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
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.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that doing so will help the fund achieve its goal.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the 1940 Act. These transactions may include
repurchase agreements with custodian banks; short-term obligations of, and
repurchase agreements with, the 50 largest U.S. banks (measured by
deposits); municipal securities; U.S. Government securities with affiliated
financial institutions that are primary dealers in these securities;
short-term currency transactions; and short-term borrowings. In accordance
with exemptive orders issued by the Securities and Exchange Commission
(SEC), the Board of Trustees has established and periodically reviews
procedures applicable to transactions involving affiliated financial
institutions.
ASSET-BACKED SECURITIES include pools of mortgages, loans, receivables or
other assets. Payment of principal and interest may be largely dependent
upon the cash flows generated by the assets backing the securities and, in
certain cases, supported by letters of credit, surety bonds, or other
credit enhancements. The value of asset-backed securities may also be
affected by the creditworthiness of the servicing agent for the pool, the
originator of the loans or receivables, or the entities providing the
credit support.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
DOMESTIC AND FOREIGN ISSUERS. Investments may be made U.S.
dollar-denominated time deposits, certificates of deposit, and bankers'
acceptances of U.S. banks and their branches located outside of the United
States, U.S. branches and agencies of foreign banks, and foreign branches
of foreign banks. A fund may also invest in U.S. dollar-denominated
securities issued or guaranteed by other U.S. or foreign issuers, including
U.S. and foreign corporations or other business organizations, foreign
governments, foreign government agencies or instrumentalities, and U.S. and
foreign financial institutions, including savings and loan institutions,
insurance companies, mortgage bankers, and real estate investment trusts,
as well as banks.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental
regulation. Payment of interest and principal on these obligations may also
be affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). In addition, evidence of
ownership of fund securities may be held outside of the United States and a
fund may be subject to the risks associated with the holding of such
property overseas. Various provisions of federal law governing the
establishment and operation of U.S. branches do not apply to foreign
branches of U.S. banks.
Obligations of U.S. branches and agencies of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation, as well as by governmental action in the country in which the
foreign bank has its head office.
Obligations of foreign issuers involve certain additional risks. These
risks may include future unfavorable political and economic developments,
withholding taxes, seizures of foreign deposits, currency controls,
interest limitations, or other governmental restrictions that might affect
payment of principal or interest, or the ability to honor a credit
commitment. Additionally, there may be less public information available
about foreign entities. Foreign issuers may be subject to less governmental
regulation and supervision than U.S. issuers. Foreign issuers also
generally are not bound by uniform accounting auditing, and financial
reporting requirements comparable to those applicable to U.S. issuers.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, Municipal Money
Market Portfolio does not intend to invest in securities whose interest is
federally taxable. However, from time to time on a temporary basis,
Municipal Money Market Portfolio may invest a portion of its assets in
fixed-income obligations whose interest is subject to federal income tax.
Should Municipal Money Market Portfolio invest in federally taxable
obligations, it would purchase securities that, in FMR's judgment, are of
high quality. These obligations would include those issued or guaranteed by
the U.S. Government or its agencies or instrumentalities and repurchase
agreements backed by such obligations.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before state legislatures that
would affect the state tax treatment of Municipal Money Market Portfolio's
distributions. If such proposals were enacted, the availability of
municipal obligations and the value of Municipal Money Market Portfolio's
holdings would be affected and the Trustees would reevaluate the fund's
investment objectives and policies.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by the funds to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days. Also, FMR may determine some restricted
securities, municipal lease obligations, and time deposits to be illiquid.
In the absence of market quotations, illiquid investments are valued for
purposes of monitoring amortized cost valuation at fair value as determined
in good faith by a committee appointed by the Board of Trustees. If through
a change in values, net assets, or other circumstances, a fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive order
issued by the SEC, each fund has received permission to lend money to, and
borrow money from, other funds advised by FMR or its affiliates. Municipal
Money Market Portfolio and U.S. G overnment Portfolio currently intend to
participate in this program only as borrowers. A fund will borrow through
the program o nly 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 wil l lend through the program only when the returns
are higher than those available from an investment in 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.
MUNICIPAL MARKET DISRUPTION RISK. The value of municipal securities
may be affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal securities or
the rights of municipal securities holders in the event of bankruptcy.
Municipal bankruptcies are relatively rare, and certain provisions of the
U.S. Bankruptcy Code governing such bankruptcies are unclear and remain
untested. Further, the application of state law to municipal issuers could
produce varying results among the states or among municipal securities
issuers within a state. These legal uncertainties could affect the
municipal securities market generally, certain specific segments of the
market, or the relative credit quality of particular securities. Any of
these effects could have a significant impact on the prices of some or all
of the municipal securities held by a fund, making it more difficult for
the fund to maintain a stable net asset value per share.
MUNICIPAL 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 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.
MUNICIPAL LEASES and participation interests therein may take the form of a
lease, an installment purchase, or a conditional sale contract and are
issued by state and local governments and authorities to acquire land or a
wide variety of equipment and facilities. Generally, the funds will not
hold such obligations directly as a lessor of the property, but will
purchase a participation interest in a municipal obligation from a bank or
other third party. A participation interest gives a fund a specified,
undivided interest in the obligation in proportion to its purchased
interest in the total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
PUT FEATURES entitle the holder to sell a security back to the issuer or
third party at any time or at specified intervals. They are subject to the
risk that the put provider is unable to honor the put feature (purchase the
security). Put providers often support their ability to buy securities on
demand by obtaining letters of credit or other guarantees from other
entities. Demand features, standby commitments, and tender options are
types of put features.
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the funds may purchase only high-quality securities that FMR
believes present minimal credit risks. To be considered high-quality, a
security must be rated in accordance with applicable rules in one of the
two highest categories for short-term securities by at least two nationally
recognized rating services (or by one, if only one rating service has rated
the security); or, if unrated, judged to be of equivalent quality by FMR.
High-quality securities are divided into "first tier" and "second tier"
securities. First tier securities are those deemed to be in the highest
rating category (e.g., Standard & Poor's A-1 or SP-1), and second tier
securities are those deemed to be in the second highest rating category
(e.g., Standard & Poor's A-2 or SP-2). Split rated securities may be
determined to be either first tier or second tier based on applicable
regulations.
Each of Money Market Portfolio and U.S. Government Portfolio may not invest
more than 5% of its total assets in second tier securities. In addition,
each of Money Market Portfolio and U.S. Government Portfolio may not invest
more than 1% of its total assets or $1 million (whichever is greater) in
the second tier securities of a single issuer.
A fund currently intends to limit investments to securities with remaining
maturities of 397 days or less, and to maintain a dollar-weighted average
maturity of 90 days or less. When determining the maturity of a security, a
fund may look to an interest rate reset or demand feature.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. To protect the fund
from the risk that the original seller will not fulfill its obligation, the
securities are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental amount. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
that the value of the underlying security will be less than the resale
price, as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to engage in repurchase
agreement transactions with parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time it may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security. However, in general, each fund anticipates holding restricted
securities to maturity or selling them in an exempt transaction.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. A
fund will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of the fund's assets and may be
viewed as a form of leverage.
SHORT SALES "AGAINST THE BOX." A fund may sell securities short when it
owns or has the right to obtain securities equivalent in kind or amount to
the securities sold short. Short sales could be used to protect the net
asset value per share of a fund in anticipation of increased interest
rates, without sacrificing the current yield of the securities sold short.
If a fund enters into a short sale against the box, it will be required to
set aside securities equivalent in kind and amount to the securities sold
short (or securities convertible or exc hangeable into such securities)
and will be required to hold such securities while the short sale is
outstanding. The fund will incur transactions costs, including interest
expense, 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 GO VERNMENT SECURITIES. Stripped government securities are
created by separating the income and principal components of a U.S.
Government security and selling them separately. 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 the funds and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services (FBS), subsidiaries of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. From September 1992 through December 1994, FBS operated
under the name Fidelity Brokerage Services Limited, Inc. (FBSL). As of
January 1995, FBSL was converted to an unlimited liability company and
assumed the name FBS. Prior to September 4, 1992, FBSL operated under the
name Fidelity Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary
of Fidelity International Limited (FIL). Edward C. Johnson 3d is Chairman
of FIL. Mr. Johnson 3d, Johnson family members, and various trusts for the
benefit of the Johnson family own, directly or indirectly, more than 25% of
the voting common stock of FIL.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the funds and review the commissions paid by each fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund.
For the fiscal years ended July 31, 1996, 1995, and 1994, the funds paid
no brokerage commissions. During the fiscal year ended July 31, 1996, the
funds paid no fees to brokerage firms that provided research services.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment adviser, particularly when the same
security is suitable for the investment objective of more than one fund or
account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to each fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION
Fidelity Service Co . (FSC) normally determines Money Market
Portfolio's and U.S. Government Portfolio's net asset value per share (NAV)
at 2:00 p.m. and 4:00 p.m. Eastern time, and Municipal Money Market
Portfolio's NAV at 12:00 noon and 4:00 p.m. Eastern time. The valuation of
portfolio securities is determined as of these times for the purpose of
computing each fund's NAV.
Portfolio securities and other assets are valued on the basis of amortized
cost. This technique involves initially valuing an instrument at its cost
as adjusted for amortization of premium or accretion of discount rather
than its current market value. The amortized cost value of an instrument
may be higher or lower than the price a fund would receive if it sold the
instrument.
During periods of declining interest rates, a fund's yield based on
amortized cost valuation may be higher than would result if the fund used
market valuations to determine its NAV. The converse would apply during
periods of rising interest rates.
Valuing each fund' investments on the basis of amortized cost and use of
the term "money market fund" are permitted pursuant to Rule 2a-7 under the
1940 Act. Each fund must adhere to certain conditions under Rule 2a-7, as
summarized in the section entitled "Quality and Maturity" on page .
The Board of Trustees oversees FMR's adherence to the provisions of Rule
2a-7 and has established procedures designed to stabilize each fund's NAV
at $1.00. At such intervals as they deem appropriate, the Trustees consider
the extent to which NAV calculated by using market valuations would deviate
from $1.00 per share. If the Trustees believe that a deviation from a
fund's amortized cost per share may result in material dilution or other
unfair results to shareholders, the Trustees have agreed to take such
corrective action, if any, as they deem appropriate to eliminate or reduce,
to the extent reasonably practicable, the dilution or unfair results. Such
corrective action could include selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends; redeeming shares in kind; establishing NAV
by using available market quotations; and such other measures as the
Trustees may deem appropriate.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Each fund's yield and total return
fluctuate in response to market conditions and other factors.
YIELD CALCULATIONS. To compute a fund's yield for a period, the net change
in value of a hypothetical account containing one share reflects the value
of additional shares purchased with dividends from the one original share
and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at the
beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current annualized yield. A fund also may
calculate an effective yield by compounding the base period return over a
one-year period. In addition to the current yield, the funds may quote
yields in advertising based on any historical seven-day period. Yields for
the funds are calculated on the same basis as other money market funds, as
required by applicable regulations.
Yield information may be useful in reviewing a fund's performance and in
providing a basis for comparison with other investment alternatives.
However, each fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates a
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
Municipal Money Market's tax-equivalent yield is the rate an investor would
have to earn from a fully taxable investment before taxes to equal the
fund's tax-free yield. Tax-equivalent yields are calculated by dividing a
fund's yield by the result of one minus a stated federal or combined
federal and state tax rate. If only a portion of a fund's yield is
tax-exempt, only that portion is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under expected federal income tax laws for
199 7 . 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 fund will achieve
any specific tax-exempt yield. While Municip al Money Marke t invests
principally in obligations whose interest is exempt from federal income
tax, other income received by the fund may be taxable.
EXPECTED+ 199 7 TAX RATES AND TAX-EQUIVALENT YIELDS
<TABLE>
<CAPTION>
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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 - $ 24,650 $ 0 - $ 41,200 15.0% 2.35% 3.53% 4.71% 5.88% 7.06% 8.24%
$ 24,651 - $ 59,750 $ 41,201 - $ 99,600 28.0% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72%
$ 59,750 - $ 124,650 $ 99,601 - $ 151,750 31.0% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14%
$ 124,651 - $ 271,050 $ 151,750 - $ 271,050 36.0% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94%
$ 271,050 + $ 271,050 + 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59%
</TABLE>
+ The 1997 tax rates are not expected to be materially different from
the expected 1997 tax rates shown above.
* Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions, limitations
on itemized deductions, and other credits, exclusions, and adjustments
which may increase a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
Municipal Money Market Portfolio may invest a portion of its assets in
obligations that are subject to federal income tax. When the fund invests
in these obligations, its tax-equivalent yields will be lower. In the table
above, tax-equivalent yields are calculated assuming investments are 100%
federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the fund's NAV over a
stated period. Average annual total returns are calculated by determining
the growth or decline in value of a hypothetical historical investment in a
fund over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of
growth or decline in value had been constant over the period. For example,
a cumulative total return of 100% over ten years would produce an average
annual total return of 7.18%, which is the steady annual rate of return
that would equal 100% growth on a compounded basis in ten years. While
average annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a fund's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
HISTORICAL FUND RESULTS. The following table shows each fund's 7-day
yields, tax-equivalent yields, and total returns for the period
ended July 31, 1996.
The tax-equivalent yield is based on a 36 % federal income tax rate.
Note that Municipal Money Market may invest in securities whose income is
subject to the federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
Seven-Day Tax- One Five One Five
Yield Equivalent Year Years Life of Year Years Life of
Yield Fund* Fund*
Money Market 4.51 % N/A 4.80 % 3.81 % 4.13 % 4.80 % 20.56 % 26.34 %
Portfolio
Seven-Day Tax- One Five One Five
Yield Equivalent Year Years Life of Year Years Life of
Yield Fund* Fund*
U.S.
Government 4.41 % N/A 4.70 % 3.68 % 3.99 % 4.70 % 19.79 % 25.37 %
Portfolio
Seven-Day Tax- One Five One Five
Yield Equivalent Year Years Life of Year Years Life of
Yield Fund* Fund*
Municipal
Money 2.74 % 4.28 % 2.83 % 2.53 % 2.73 % 2.83 % 13.32 % 16.52 %
Market Portfolio
</TABLE>
* From commencement of operations: Money Market Portfolio-10/23/90; U.S.
Government Portfolio-10/23/90; and Municipal Money Market
Portfolio-11/29/90.
Note: If FMR had not reimbursed certain fund expenses during these periods,
Money Market Portfolio's, U.S. Government Portfolio's, and Municipal Money
Market Portfolio's yield would have been 4.34 %, 4.21 %, and
2.53 %, respectively, and total returns would have been lower.
The following table shows the income and capital elements of each fund's
cumulative total return. The table compares each fund's return to the
record of the Standard & Poor's of 500 Index (S&P 500 (registered
trademark)), the Dow Jones Industrial Average (DJIA), and the cost of
living as measured by the Consumer Price Index (CPI), over the same period.
The CPI information is as of the month end closest to the initial
investment date for each fund. The S&P 500 and DJIA comparisons are
provided to show how each fund's total return compared to the record of a
broad unmanaged index of common stocks and a narrower set of stocks of
major industrial companies, respectively, over the same period. Because
each fund invests in short-term fixed-income securities, common stocks
represent a different type of investment from the fund s . Common
stocks generally offer greater growth potential than the funds, but
generally experience greater price volatility, which means greater
potential for loss. In addition, common stocks generally provide lower
income than fixed-income investment s such as the funds. T he
S&P 500 and DJIA returns are based on the prices of unmanaged groups
of stocks and, unlike each fund ' s returns, do not include the
effect of brokerage commissions or other costs of investing.
The following tables show the growth in value of a hypothetical $10,000
investment in each fund during the life of each fund, assuming all
distributions were reinvested. The figures below reflect the fluctuating
interest rates of the specified periods and should not be considered
representative of the dividend income or capital gain or loss that could be
realized from an investment in a fund today. Tax consequences of a
different investments have not been factored into the figures below.
MONEY MARKET PORTFOLIO
HISTORICAL FUND RESULTS
During the period from October 23, 1990 (commencement of operations) to
July 31, 1996, a hypothe tical $10,000 investment in Money Market
Portfolio would have grown to $ 12,634.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL RESERVES: MONEY MARKET PORTFOLIO INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P 500 DJIA Cost of
Ended
July 31 Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 2,634 $ 0 $ 12,634 $ 23,986 $ 25,847 $ 11,760
1995 $ 10,000 $ 2,055 $ 0 $ 12,055 $ 20,577 $ 21,530 $ 11,423
1994 $ 10,000 $ 1,496 $ 0 $ 11,496 $ 16,317 $ 16,772 $ 11,116
1993 $ 10,000 $ 1,192 $ 0 $ 11,192 $ 15,517 $ 15,345 $ 10,816
1992 $ 10,000 $ 912 $ 0 $ 10,912 $ 14,269 $ 14,284 $ 10,524
1991* $ 10,000 $ 479 $ 0 $ 10,479 $ 12,650 $ 12,358 $ 10,202
</TABLE>
* From October 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Money Market
Portfolio on October 23, 1990, the net amount invested in fund shares
was $10,000. The cost of the initial investment ($10,000), together with
the aggregate cost of reinvested dividends and capital gain
distributions for the period covered (their cash value at the time they
were reinvested), amounted to $ 12,634 . If distributions had not been
reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $ 2,342 for dividends . The fund did not distribute any
capital gains during the period.
U.S. GOVERNMENT PORTFOLIO
HISTORICAL FUND RESULTS
During the period from October 23, 1990 (commencement of operations) to
July 31, 1996, a hypothetical $10,000 investment in U.S. Government
Portfolio would have grown to $ 12,537.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL RESERVES: U.S. GOVERNMENT PORTFOLIO INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P 500 DJIA Cost of
Ended July 31 Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 2,537 $ 0 $ 12,537 $ 23,986 $ 25,847 $ 11,760
1995 $ 10,000 $ 1,974 $ 0 $ 11,974 $ 20,577 $ 21,530 $ 11,423
1994 $ 10,000 $ 1,443 $ 0 $ 11,443 $ 16,317 $ 16,772 $ 11,116
1993 $ 10,000 $ 1,162 $ 0 $ 11,162 $ 15,517 $ 15,345 $ 10,816
1992 $ 10,000 $ 900 $ 0 $ 10,900 $ 14,269 $ 14,284 $ 10,524
1991* $ 10,000 $ 466 $ 0 $ 10,466 $ 12,650 $ 12,358 $ 10,202
</TABLE>
* From October 23, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in U.S.
Government Portfolio on October 23, 1990, the net amount invested in
fund shares was $10,000. The cost of the initial investment ($10,000),
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the time
they were reinvested), amounted to $ 12,537 . If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $ 2,265 for dividends . The fund did not distribute any
capital gains during the period.
MUNICIPAL MONEY MARKET PORTFOLIO
HISTORICAL FUND RESULTS
During the period from November 29, 1990 (commencement of operations) to
July 31, 1996, a hypothetica l $10,000 investment in Municipal Money
Market Portfolio would have grown to $11, 652.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL RESERVES: MUNICIPAL MONEY MARKET PORTFOLIO INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Value of Value of Value of Total S&P 500 DJIA Cost of
Ended
July 31 Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ 1,652 $ 0 $ 11,652 $ 23,632 $ 25,550 $ 11,734
1995 $ 10,000 $ 1,331 $ 0 $ 11,331 $ 20,273 $ 21,283 $ 11,398
1994 $ 10,000 $ 1,007 $ 0 $ 11,007 $ 16,076 $ 16,580 $ 11,091
1993 $ 10,000 $ 813 $ 0 $ 10,813 $ 15,288 $ 15,168 $ 10,792
1992 $ 10,000 $ 605 $ 0 $ 10,605 $ 14,058 $ 14,120 $ 10,501
1991* $ 10,000 $ 282 $ 0 $ 10,282 $ 12,463 $ 12,216 $ 10,179
</TABLE>
* From November 29, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Municipal
Money Market Portfolio on November 29, 1990, the net amount invested in
fund shares was $10,000. The cost of the initial investment ($10,000),
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the time
they were reinvested), amounted to $ 11,652 . If distributions had not
been reinvested, the amount of distributions earned from the fund over time
would have been smaller, and cash payments for the period would have
amounted to $ 1,531 for dividends. The fund did not distribute any
capital gains during the period.
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. Generally, Lipper rankings are based on total
return, assume reinvestment of distributions, do not take sales charges or
redemption fees into consideration, and are 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 228 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 814 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 410 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 October 31, 1996, F MR advised over $ 28 billion in
tax-free fund assets, $ 93 billion in money market fund assets,
$ 289 billion in equity fund assets, $ 59 billion in
international fund assets, and $ 24 billion in Spartan fund assets.
The funds may reference the growth and variety of money market mutual funds
and the adviser's innovation and participation in the industry. The equity
funds under management figure represents the largest amount of equity fund
assets under management by a mutual fund investment adviser in the United
States, making FMR America's leading equity (stock) fund manager. FMR, its
subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
In addition to performance rankings, each fund may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A fund's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may
be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) a fund suspends the
redemption of shares to be exchanged as permitted under the 1940 Act or the
rules and regulations thereunder, or the fund to be acquired suspends the
sale of its shares because it is unable to invest amounts effectively in
accordance with its investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objectives and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions
DIVIDENDS. Because each fund's income is primarily derived from interest,
dividends from the fund generally will not qualify for the
dividends-received deduction available to corporate shareholders.
Short-term capital gains are distributed as dividend income, but do not
qualify for the dividends-received deduction. A portion of each fund's
dividends derived from certain U.S. government obligations may be exempt
from state and local taxation.
To the extent that Municipal Money Market Portfolio's income is designated
as federally tax-exempt interest, the daily dividends declared by the fund
are also federally tax-exempt. Short-term capital gains are distributed as
dividend income, but do not qualify for the dividends-received deduction.
These gains will be taxed as ordinary income.
Each fund will send each shareholder a notice in January describing the tax
status of dividend and capital gain distributions (if any) for the prior
year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as Social Security
benefits, may be subject to federal income tax on up to 85% of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
Municipal Money Market Portfolio purchases 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 Municipal Money Market Portfolio's
policy on investing so that at least 80% of its income is free from federal
income tax. Interest from private activity securities is a tax preference
item for the purposes of determining whether a taxpayer is subject to the
AMT and the the amount of AMT to be paid, if any. Private activity
securities issued after August 7, 1986 to benefit a private or industrial
user or to finance a private facility are affected by this rule.
A portion of the gain on bonds purchased with market discount after April
30, 1993 and short-term capital gains distributed by the fund are taxable
to shareholders as dividends, not as capital gains. Dividend distributions
resulting from a recharacterization of gain from the sale of bonds
purchased with market discount after April 30, 1993 are not considered
income for the purposes of Municipal Money Market Portfolio's policy of
investing so that at least 80% of its income is free from federal income
tax. Municipal Money Market Portfolio may distribute any net realized
short-term capital gains and taxable market discounts once a year or more
often, as necessary, to maintain its net asset value at $1.00 per share.
Corporate investors should note that a tax preference item for the purposes
of the corporate AMT is 75% of the amount by which adjusted current
earnings (which includes tax-exempt interest) exceeds the alternative
minimum taxable income of the corporation. If a shareholder receives an
exempt-interest dividend and sells shares at a loss after holding them for
a period of six months or less, the loss will be disallowed to the extent
of the amount of the exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Each fund may distribute any net realized
short-term capital gains once a year or more often as necessary, to
maintain its net asset value at $1.00 per share. Money Market Portfolio and
U.S. Government Portfolio do not anticipate earning long-term capital gains
on securities held by the funds. Municipal Money Market Portfolio does not
anticipate distributing long-term capital gains.
As of the fiscal year ended July 31, 1996, Money Market Portfolio had a
capital loss carryforward aggregating approximately $79,000, all of which
will expire on July 31, 2002.
As of the fiscal year ended July 31, 1996, U.S. Government Portfolio had a
capital loss carryforward aggregating approximately $53,000. This loss
carryforward, of which $3,000, $35,000 and $15,000 will expire on July 31,
2001, 2002, and 2003, respectively, is available to offset future capital
gains.
As of the fiscal year ended July 31, 1996, Municipal Money Market Portfolio
had a capital loss carryforward aggregating approximately $25,000. This
loss carryforward, of which $3,000, $2,000, $5,000 and $15,000 will expire
on July 31, 2000, 2001, 2002, and 2004, respectively, is available to
offset future capital gains.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
state law provides for a pass-through of the state and local income tax
exemption afforded to direct owners of U.S. Government securities. Some
states limit this to mutual funds that invest a certain amount in U.S.
Government securities, and some types of securities, such as repurchase
agreements and some agency backed securities, may not qualify for this
benefit. The tax treatment of your dividend distributions from a fund will
be the same as if you directly owned your proportionate share of the U.S.
Government securities in the fund's portfolio. Because the income earned on
most U.S. Government securities in which a fund invests is exempt from
state and local income taxes, the portion of your dividends from the fund
attributable to these securities will also be free from income taxes. The
exemption from state and local income taxation does not preclude states
from assessing other taxes on the ownership of U.S. Government securities.
In a number of states, corporate franchise (income) tax laws do not exempt
interest earned on U.S. Government securities whether such securities are
held directly or through a fund.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of Money
Market Portfolio's total assets are invested in securities of foreign
issuers, the fund may elect to pass through foreign taxes paid and thereby
allow shareholders to take a credit or deduction on their individual tax
returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis.
Each fund is treated as a separate entity from the other funds of Daily
Money Fund for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the 1940 Act, control of a company is presumed where
one individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting common
stock and the execution of the shareholders' voting agreement, members of
the Johnson family may be deemed, under the 1940 Act, to form a controlling
group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
FIIOC, which performs shareholder servicing functions for institutional
customers and funds sold through intermediaries; and Fidelity Investments
Retail Marketing Company, which provides marketing services to various
companies within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advis ory Board, and executiv e officers
of the trust are listed below. Except as indicated, each individual has
held the office shown or ot her offices in the sa me company for the
last five years. Trustees and officers elected or appointed to Daily Money
Fund prior to th e funds' conversion from series of a Massachusetts
business trust served in identical capacities. All persons named as
Trustees and M embers of the Advisory Board also serve in similar
capacities for other funds advised by FMR. The business address of each
T rustee and officer w ho 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 the trust or FMR are
indicated by an asterisk (*).
*EDWARD C. JOHNSON 3 d (66), 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 BURKHEA D (55), 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 (64), Trust ee (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), CH2M Hill Companies (engineering),
Rio Grande, Inc. (oil and gas production), and Daniel Industries (petroleum
measurement equipment manufacturer). In addition, he is a member of
advisory boards of Texas A&M University and the University of Texas at
Austin.
PHYLLIS BURKE DAVI S (64), 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. FLY NN (72), 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 JON ES (69), 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 (64), T rustee, 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, Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association, 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. LYNC H (53), 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 (67), Trustee and Vice-Chairman of the
non-interested Trustees, is Chairman of G.M. Manag ement 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
Brush-Wellman Inc. (metal refining), York International Corp. (air
conditioning and refrigeration), Commercial Intertech Corp. (hydraulic
systems, building systems, and metal products, 1992), CUNO, Inc. (liquid
and gas filtration products, 1996), and Associated Estates Realty
Corporation (a real estate investment trust, 1993). Mr. McDonough served as
a Director of ACME-Cleveland Corp. (metal working, telecommunications, and
electronic products) from 1987-1996.
EDWARD H. MALONE (72), T rustee. 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 (63), 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. WILLIAM S (68), 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. McCO Y (63), 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).
SARAH ZENOBLE (47), Vice President, is Vice President of Fidelity's
money market funds (1996) and Vice-President of FMR Texas Inc.
ARTHUR S. LORIN G (49), 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. RATHGEBE R (49), Treas urer (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. MAHE R (51), 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 (50), A ssistant Treasurer, is an employee of FMR.
LEONARD M. RUS H (50), 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. SIM PSON (38), 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).
LELAND C. BARR ON (37), Vice President (1989), is also Vice President
of other funds advised by FMR and an employee of FMR Texas Inc.
ROBERT LITTER ST (36), Vice President of Money Market Portfolio
(1992), is an employee of FMR Texas Inc.
SCOTT A. ORR (34), Vice President (1992), is also Vice President of
Municipal Money Market Portfolio (1996), and other funds advised by FMR and
an employee of FMR.
The following table sets forth information describing the compensation of
each current trustee of each fund for his or her services as trustee for
the fiscal year ended July 31, 1 996.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J. Gary Ralph Phyllis Richard Edward C. E. Donald Peter S. Gerald C. Edward Marvin Thomas Willia m
Burkhead** F. Cox Burke J. Johnson Bradley J. Kirk Lynch** McDonough H. L. Mann R. O.
Davis Flynn 3d** Jones Malone Williams McCoy
Money $ 0 $ 387 $ 373 $ 484 $ 0 $ 377 $ 377 $ 0 $ 373 $ 379 $ 379 $ 377 $ 99
Market
Portfolio
U.S. 0 75 73 94 0 73 73 0 72 73 73 73 17
Government
Portfolio
Municipal 0 47 45 59 0 46 46 0 4 5 46 46 46 11
Money
Market
Portfolio
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Trustees Pension or Estimated Annual Total
Retirement Benefits Upon Compensation
Benefits Accrued Retirement from from the Fund
as Part of Fund the Fund Complex*
Expenses from the Complex*
Fund Complex*
J. Gary Burkhead** $ 0 $ 0 $ 0
Ralph F. Cox 5,200 52,000 128,000
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
William O. McCoy N/A N/A 0
</TABLE>
* Information is as of December 31, 1995 for 219 funds in the complex.
** Interested trustees of the fund are compensated by FMR.
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.
Under a retirement program adopted in July 1988 and modified in November
1995, each non-interested Trustee may receive payments from a Fidelity fund
during his or her lifetime based on his or her basic trustee fees and
length of service. The obligation of a fund to make such payments is
neither secured nor funded. A Trustee becomes eligible to participate in
the program at the end of the calender year in which he or she reaches age
72, provided that, at the time of retirement, he or she has served as a
Fidelity fund Trustee for at least five years. Currently, Messrs. Ralph S.
Saul, William R. Spaulding, Bertram H. Witham, and David L. Yunich, all
former non-interested Trustees, receive retirement benefits under the
program.
On October 31 , 199 6, the Trustees, Members of the Advisory Board,
and officers of each fund owned, in the aggregate, less than 1% of each
fund's total outstanding shares.
As of October 31, 1996, the following owned of record or beneficially 5%
or more of outstanding shares of the funds:
MONEY MARKET PORTFOLIO: Muriel Siebert & Co., Inc., New York, NY - 13.73%;
Securities America Inc., Omaha, NE - 9.65%; MMl Investor's Services Inc.,
Springfield, MA - 5.33%; H.D. Vest Advisory Services, Irving, TX - 5.16%
U.S. GOVERNMENT PORTFOLIO: Saperston Financial Group, Buffalo, NY - 13.52%;
GW & Wade, Wellesley, MA - 12.37%; Muriel Siebert & Co., Inc., New York, NY
- - 10.63%; Securities America Inc., Omaha, NE - 7.51%; Citibank, Arizona,
Phoenix, AZ - 5.69%; Brown, Lisle/Cummings, Inc., Providence, RI - 5.23%.
MUNICIPAL MONEY MARKET PORTFOLIO: Securities America Inc., Omaha, NE
- -15.61%; Muriel Siebert & Co., Inc., New York, NY - 14.07%; The Boston
Group, L.P., Los Angeles, CA - 5.48%.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are an
"interested persons" of each fund or of FMR, and all personnel of each fund
or FMR performing services relating to research, statistical, and
investment activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees.
In addition to the management fees payable to FMR and the fees payable to
UMB, FIIOC, and FSC, each fund pays all of its expenses, without
limitation, that are not assumed by those parties. Each fund pays for the
typesetting, printing, and mailing of its proxy materials to shareholders,
legal expenses, and the fees of the custodian, auditor, and non-interested
Trustees. Although each fund's current management contract provides that
each fund will pay for typesetting, printing, and mailing prospectuses,
statements of additional information, notices and reports to shareholders,
the trust, on behalf of each fund has entered into a revised transfer agent
agreement with UMB or FIIOC, as applicable, pursuant to which UMB or FIIOC
bears the costs of providing these services to existing shareholders. Other
expenses paid by each fund include interest, taxes, brokerage commissions,
each fund's proportionate share of insurance premiums and Investment
Company Institute dues, and the costs of registering shares under federal
and state securities laws. Each fund is also liable for such nonrecurring
expenses as may arise, including costs of any litigation to which the fund
may be a party, and any obligation it may have to indemnify its officers
and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated September
30, 1993, which were approved by shareholders on March 24, 1993.
For the services of FMR under each contract, each fund pays FMR a monthly
management fee at the annual rate of 0.50% of average net assets throughout
the month. Fees received by FMR for the last three fiscal years are shown
in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Fiscal Year Ended Management Fees Paid to FMR Management Fees Paid to
FMR after reimbursement
Money Market Portfolio July 31, 1996 $ 5,493,30 5 $ 3,591,209
July 31, 1995 $ 3,817,786 $ 2,557,392
July 31, 1994 $ 3,322,784 $ 2,441,872
U.S. Government Portfolio July 31, 1996 $ 1,034,073 $ 627,139
July 31, 1995 $ 1,295,663 $ 1,014,365
July 31, 1994 $ 1,571,910 $ 1,419,388
Municipal Money Market Portfolio July 31, 1996 $ 658,114 $ 383,550
July 31, 1995 $ 597,379 $ 396,087
July 31, 1994 $ 662,897 $ 594,337
</TABLE>
FMR may, from time to time, voluntarily reimburse all or a portion of each
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to be
repaid for these expense reimbursements in the amount that expenses fall
below the limit prior to the end of the fiscal year. Expense reimbursements
by FMR will increase each fund's total returns and yield and repayment of
the reimbursement by each fund will lower its total returns and yield.
During the fiscal periods reported, FMR voluntarily agreed, subject to
revision or termination, to reimburse the funds to the extent that the
fund's aggregate operating expenses were in excess of an annual rate of its
average net assets. The table below identifies the funds in reimbursement;
the level at which reimbursement began; and the dollar amount reimbursed
for each period.
Fund Level at Which Reimbursement Began Dollar Amount Reimbursed
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1996 1995 1994
Money Market Portfolio 0.99% 0.99% 0.99% $ 1,902,09 6 $ 1,260,394 $ 880,912
U.S. Government Portfolio 0.99% 0.99% 0.99% 406,93 4 281,298 152,522
Municipal Money Market 0.99% 0.99% 0.99% 274,56 4 201,292 68,560
Portfolio
</TABLE>
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that each fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating each fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses and
custodian fees attributable to investment in foreign securities.
SUB-ADVISER. FMR has entered into a sub-advisory agreement with FMR Texas
pursuant to which FMR Texas has primary responsibility for providing
portfolio investment management services to each fund.
Under each sub-advisory agreement, dated September 30, 1993, which was
approved by shareholders on March 24, 1993, FMR pays FMR Texas fees equal
to 50% of the management fee payable to FMR under its management contract
with each fund, after payments by FMR pursuant to each fund's 12b-1 plan,
if any. The fees paid to FMR Texas are not reduced by any voluntary or
mandatory expense reimbursements that may be in effect from time to time.
The following table shows fees FMR paid to FMR Texas on behalf of each
fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
Money Market Portfolio $ 1,373,386 $ 961,077 $ 88 3 ,835
U.S. Government Portfolio $ 282,649 $ 344,347 $ 358,950
Municipal Money Market Portfolio $ 165,355 $ 146,653 $ 187,077
</TABLE>
CONTRACTS WITH FMR AFFILIATES
FIIOC, an affiliate of FMR, is the tr ansfer, dividend disbursing, and
shareholder servicing agent for shares of Money Market Portfolio and U.S.
Government Portfolio.
UMB is the transfer agent for shares of Municipal Money Market Portfolio.
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 shares of Municipal Money
Market Portfolio.
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 change.
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 shares of Money Market Portfolio and U.S.
Government Portfolio and maintain Money Market Portfolio's and U.S.
Government Portfolio'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 shares of Municipal Money Market Portfolio,
and maintains the accounting records for Municipal Money Market Portfolio.
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 Municipal Money
Market Portfolio are paid to FIIOC and FSC, respectively, by UMB which is
entitled to reimbursement from the fund, as applicable, for these expenses.
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
Money Market Portfolio $ 132,892 $ 107,425 $ 99,866
U.S. Government Portfolio $ 38,918 $ 45,4 46 $ 55,216
Municipal Money Market Portfolio $ 39,758 $ 27,5 68 $ 29,177
</TABLE>
FSC also receives fees for administering each fund's securities lending
program. For fiscal year ended July 31, 1996, 1995, and 1994, there were no
securities lending fees incurred by the funds.
Each fund has a distribution agreement with NFSC, a Massachusetts
corporation organized on June 3, 1981. NFSC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for NFSC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at NAV. Promotional and administrative expenses in connection with
the offer and sale of shares are paid by FMR.
DISTRIBUTION AND SERVICE PLAN
The Trustees have approved a Distribution and Service Plan on behalf of the
funds (the Plan) pursuant to Rule 12b-1 under the 1940 Act (the Rule). The
Rule provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is primarily intended to result
in the sale of shares of a fund except pursuant to a plan approved on
behalf of the fund under the Rule. The Plan, as approved by the Trustees,
allow the funds and FMR to incur certain expenses that might be considered
to constitute direct or indirect payment by the funds of distribution
expenses.
Pursuant to the Plan, each fund pays NFSC a distribution fee at an annual
rate of 0.35% of its average net assets determined as of the close of
business on each day throughout the month.
For the fiscal years ended July 31, 1996, 1995, and 1994, Money Market
Portfolio paid distribution fees of $3,849,391, $2,672,415, and $2,325,949,
respectively.
For the fiscal years ended July 31, 1996, 1995, and 1994, U.S. Government
Portfolio paid distribution fees of $724,703, $906,961, and $1,100,338,
respectively.
For the fiscal years ended July 31, 1996, 1995, and 1994, Municipal Money
Market Portfolio paid distribution fees of $460,679, $418,166, and
$463,096, respectively.
Under each Plan, if the payment of management fees by the funds to FMR is
deemed to be indirect financing by the funds of the distribution of their
shares, such payment is authorized by the Plans. Each Plan specifically
recognizes that FMR may use its management fee revenue, past profits, or
other resources from any other source to make payments to investment
professionals that have selling agreements with the funds (qualified
recipients) as compensation for distribution and ongoing shareholder
support services.
NFSC may act in the capacity of a qualified recipient, and as such may
receive compensation under the Plan. Qualified recipients, at their
discretion, may retain any portion of the compensation they receive under
the Plan.
Under the Plan, payments made by FMR on behalf of Money Market Portfolio to
NFSC during the fiscal year ended July 31, 1996, 1995, and 1994 amounted to
$ 2,746,533 , $1,895,583, and $1,555,114, respectively.
Under the Plan, payments made by FMR on behalf of U.S. Government Portfolio
to NFSC during the fiscal year ended July 31, 1996, 1995, and 1994 amounted
to $ 468,775 , $607,170, and $ 854 ,010, respectively.
Under the Plan, payments made by FMR on behalf of Municipal Money Market
Portfolio to NFSC during the fiscal year ended July 31, 1996, 1995, and
1994 amounted to $ 327,405 , $304,074, and $288,744, respectively.
Out of fees paid by the Portfolios and FMR for the fiscal years ended July
31, 1996, 1995 and 1994, NFSC retained the following amounts:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
Money Market Portfolio $ 1,135,034 $ 824,898 $ 1,471,097
U.S. Government Portfolio 208,118 112,207 974,958
Municipal Money Market Portfolio 147,199 146,983 250,578
</TABLE>
Prior to approving the Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and have
determined that there is a reasonable likelihood that the Plan will benefit
the fund and its shareholders. To the extent that the Plan gives FMR and
NFSC greater flexibility in connection with the distribution of shares of
each fund, additional sales of fund shares may result. Furthermore, certain
shareholder support services may be provided more effectively under the
Plan by local entities with whom shareholders have other relationships.
The Plan does not provide for specific payments by the funds of any
expenses of NFSC, or obligate NFSC or FMR to perform any specific type or
level of distribution activities or incur any specific level of expense in
connection with distribution activities. After payments by NFSC for
advertising, marketing and distribution, and payments to third parties, the
amounts remaining, if any, may be used as NFSC may elect.
The Plan was approved by each fund's shareholders, in connection with a
reorganization transaction on September 29, 1993, pursuant to an Agreement
and Plan of Conversion.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, NFSC believes that the Glass-Steagall Act
should not prohibit a bank from performing shareholder support services, or
servicing and recordkeeping functions. NFSC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulation pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plan. No
preference for the instruments of such depository institutions will be
shown in the selection of investments.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Capital Reserves: Money Market Portfolio, Capital
Reserves: U.S. Government Portfolio, and Capital Reserves: Municipal Money
Market Portfolio, are funds of Daily Money Fund, an open-end management
investment company organized as a Delaware business trust on September 29,
1993. The funds acquired all of the assets of the Money Market Portfolio,
U.S. Government Portfolio, and Municipal Money Market Portfolio,
respectively, of Daily Money Fund on September 29, 1993. Currently, there
are six funds of Daily Money Fund: Capital Reserves: Money Market
Portfolio, Capital Reserves: U.S. Government Portfolio, Capital Reserves:
Municipal Money Market Portfolio, Money Market Portfolio, U.S. Treasury
Portfolio, and Treasury Only. The Trust Instrument permits the Trustees to
create additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying name "Fidelity"
may be withdrawn. There is a remote possibility that one fund might become
liable for any misstatement in its prospectus or statement of additional
information about another fund.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is a business trust organized
under Delaware law. Delaware law provides that shareholders shall be
entitled to the same limitations of personal liability extended to
stockholders of private corporations for profit. The courts of some states,
however, may decline to apply Delaware law on this point. The Trust
Instrument contains an express disclaimer of shareholder liability for the
debts, liabilities, obligations, and expenses of the trust and requires
that a disclaimer be given in each contract entered into or executed by the
trust or the Trustees. The Trust Instrument provides for indemnification
out of each fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund. The Trust Instrument
also provides that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply, no contractual
limitation of liability was in effect, and the fund is unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is extremely remote.
The Trust Instrument further provides that the Trustees, if they have
exercised reasonable care, shall not be personally liable to any person
other than the trust or its shareholders; moreover, the Trustees shall not
be liable for any conduct whatsoever, provided that Trustees are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption, and the privilege of exchange
are described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the heading "Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of the trust or a fund may, as
set forth in the Trust Instrument, call meetings of the trust or fund for
any purpose related to the trust or fund, as the case may be, including, in
the case of a meeting of the entire trust, the purpose of voting on removal
of one or more Trustees.
The trust or any fund may be terminated upon the sale of its assets to, or
merger with, another open-end management investment company or series
thereof, or upon liquidation and distribution of its assets. Generally such
terminations must be approved by vote of the holders of a majority of the
outstanding shares of the trust or the fund; however, the Trustees may,
without prior shareholder approval, change the form of organization of the
trust by merger, consolidation, or incorporation. If not so terminated or
reorganized, the trust and its funds will continue indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder vote,
cause the trust to merge or consolidate into one or more trusts,
partnerships, or corporations, or cause the trust to be incorporated under
Delaware law, so long as the surviving entity is an open-end management
investment company that will succeed to or assume the trust registration
statement. Each fund may invest all of its assets in another investment
company.
CUSTODIAN. The Bank of New York, 48 Wall Street, New York, New York, is
custodian of the assets of Money Market Portfolio and U.S. Government
Portfolio. UMB, 1010 Grand Avenue, Kansas City, Missouri 64106 is custodian
of the assets of Municipal Money Market Portfolio . Each custodian is
responsible for the safekeeping of a fund's assets and the appointment of
any subcustodian banks and clearing agencies. A 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 its custodian and may purchase securities from or sell
securities to its custodian. Chase Manhattan Bank, headquartered in New
York, also may serve as a special purpose custodian of certain assets of
the taxable funds in connection with pooled repurchase agreement
transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain funds advised by FMR.
Transactions that have occurred to date include mortgages and personal and
general business loans. In the judgment of FMR, the terms and conditions of
those transactions were not influenced by existing or potential custodial
or other fund relationships.
AUDITOR. Coopers & Lybrand L.L.P., 1999 Bryan Street, Dallas, TX 75201
serves as the funds' independent accountant. The auditor examines financial
statements for the funds and provides other audit, tax, and related
services.
FINANCIAL STATEMENTS
Each fund's financial statements , financial highlights for the
fiscal year ended July 31, 1996 , and the report of the auditors
theron are included in the fund's Annual Report, which is a separate
report supplied with this Statement of Additional Information. Each fund's
financial statements , financial highlights , and the report of the
auditors theron 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 on behalf of Money Market Portfolio:
Initial Class, U.S. Treasury Portfolio: Initial Class, and U.S. Treasury
Portfolio: Class B for the fiscal year ended July 31, 1996 are included in
the funds' Prospectus, are incorporated by reference into the funds'
Statement of Additional Information, and were filed on September 11, 1996
pursuant to Rule 30d-1 under the Investment Company Act of 1940 and are
incorporated by reference. Financial Statements and Financial Highlights
included in the Annual Report for Daily Money Fund on behalf of Capital
Reserves: Money Market Portfolio, Capital Reserves: U.S. Government
Portfolio, and Capital Reserves: Municipal Money Market Portfolio are
incorporated by reference into the funds' Prospectus and Statement of
Additional Information, and were filed on October 23, 1996 pursuant to
Rule 30d-1 under the Investment Company Act of 1940 and are incorporated by
reference.
(b) Exhibits:
1. (a) Trust Instrument dated June 20, 1991 was electronically filed and
is incorporated herein by reference to Exhibit 1(a) to Post Effective
Amendment No. 22.
(b) Certificate of Trust of Daily Money Fund II, dated June 20, 1991 was
electronically filed and is incorporated herein by reference to Exhibit
1(b) to Post-Effective Amendment No. 30 .
(c) Certificate of Amendment of Daily Money Fund II to Daily Money Fund,
dated July 14, 1991 was electronically filed and is incorporated herein by
reference as Exhibit 1(c) to Post Effective Amendment No. 30.
2. (a) By-Laws of the Trust effective May 19, 1994 were electronically
filed and are incorporated herein by reference to Exhibit 2(a) to Fidelity
Union Street Trust II's Post-Effective Amendment No. 10.
3. Not applicable.
4. Not applicable.
5. (a) Management Contract dated September 30, 1993 between Daily Money
Fund, on behalf of U.S. Treasury Income Portfolio, and Fidelity Management
& Research Company was electronically filed and is incorporated herein by
reference as Exhibit 5(a) to Post-Effective Amendment No. 25.
(b) Management Contract dated September 30, 1993 between Daily Money Fund,
on behalf of Money Market Portfolio, and Fidelity Management & Research
Company was electronically filed and is incorporated herein by reference as
Exhibit 5(b) to Post-Effective Amendment No. 25.
(c) Management Contract dated September 30, 1993 between Daily Money Fund,
on behalf of U.S. Treasury Portfolio, and Fidelity Management & Research
Company was electronically filed and is incorporated herein by reference as
Exhibit 5(c) to Post-Effective Amendment No. 25.
(d) Management Contract dated September 30, 1993 between Daily Money Fund,
on behalf of Capital Reserves: Municipal Money Market Portfolio, and
Fidelity Management & Research Company was electronically filed and is
incorporated herein by reference as Exhibit 5(d) to Post-Effective
Amendment No. 25.
(e) Management Contract dated September 30, 1993 between Daily Money Fund,
on behalf of Capital Reserves: Money Market Portfolio, and Fidelity
Management & Research Company was electronically filed and is incorporated
herein by reference as Exhibit 5(e) to Post-Effective Amendment No. 25.
(f) Management Contract dated September 30, 1993 between Daily Money Fund,
on behalf of Capital Reserves: U.S. Government Portfolio, and Fidelity
Management & Research Company was electronically filed and is incorporated
herein by reference as Exhibit 5(f) to Post-Effective Amendment No. 25.
(g) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of Money Market
Portfolio, was electronically filed and is incorporated herein by reference
as Exhibit 5(g) to Post-Effective Amendment No. 25.
(h) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of U.S. Treasury
Portfolio, was electronically filed and is incorporated herein by reference
as Exhibit 5(h) to Post-Effective Amendment No. 25.
(i) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of Capital Reserves:
Money Market Portfolio, was electronically filed and is incorporated herein
by reference as Exhibit 5(i) to Post-Effective Amendment No. 25.
(j) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of Capital Reserves:
U.S. Government Portfolio, was electronically filed and is incorporated
herein by reference as Exhibit 5(j) to Post-Effective Amendment No. 25.
(k) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of Capital Reserves:
Municipal Money Market Portfolio, was electronically filed and is
incorporated herein by reference as Exhibit 5(k) to Post-Effective
Amendment No. 25.
(l) Sub-Advisory Agreement dated September 30, 1993 between FMR Texas Inc.
and Fidelity Management & Research Company, on behalf of U.S. Treasury
Income Portfolio, was electronically filed and is incorporated herein by
reference as Exhibit 5(l) to Post-Effective Amendment No. 25.
6. (a) General Distribution Agreement dated September 30, 1993 between
Daily Money Fund, on behalf of Money Market Portfolio, and Fidelity
Distributors Corporation was electronically filed and is incorporated
herein by reference as Exhibit 6(a) to Post-Effective Amendment No. 25.
(b) General Distribution Agreement dated September 30, 1993 between Daily
Money Fund, on behalf of U.S. Treasury Income 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) Amendment, dated October 1, 1996, to the General Distribution
Agreement between Daily Money Fund on behalf of Fidelity U.S. Treasury
Income Portfolio and Fidelity Distributors Corporation is filed herein as
Exhibit 6(g).
(h) Service Contract between Fidelity Distributors Corporation and
"Qualified Receipients" with respect to shares of U.S. Treasury Portfolio
and Money Market Portfolio was electronically filed and is incorporated
herein by reference as Exhibit 6(g) to Post-Effective Amendment No. 34.
(i) Service Contract (Administrative and Recordkeeping Services Only)
between Fidelity Distributors Corporation and " Qualified Receipients"
with repect to shares of U.S. Treasury Portfolio and Money Market Portfolio
was electronically filed and is incorporated herein by reference as Exhibit
6(h) to Post-Effective Amendment No. 34.
(j) 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.
(k) Form of Selling Dealer Agreement (most recently revised July 1996) was
electronically filed and is incorporated by reference to Exhibit 6 (i) to
Fidelity Institutional Cash Portfolio's 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.
8 (a) Custodian Agreement and Appendix C, dated December 1, 1994, between
The Bank of New York and the Fidelity Daily Money Fund Trust on behalf of
Fidelity U.S. Treasury Income Portfolio; Money Market Portfolio; U.S.
Treasury Portfolio; and, Capital Reserves: U.S. Government Portfolio and
Money Market Portfolio is incorporated herein by reference to Exhibit 8(a)
of Fidelity Hereford Street Trust's Post-Effective Amendment No. 4 (File
No. 33-52577).
(b) Appendix A, dated August 31, 1996, to the Custodian Agreement, dated
December 1, 1994, between The Bank of New York and Daily Money Fund on
behalf of Capital Reserves: Money Market Portfolio, Capital Reserves: U.S.
Government Portfolio, Treasury Only, Money Market Portfolio, and U.S.
Treasury Portfolio is filed herein as Exhibit 8(b).
(c) Appendix B, dated July 31, 1996, to the Custodian Agreement, dated
December 1, 1994, between The Bank of New York and Fidelity Daily Money
Fund Trust on behalf of Fidelity U.S. Treasury Income Portfolio; Money
Market Portfolio; U.S. Treasury Portfolio; and, Capital Reserves: U.S.
Government Portfolio and Money Market Portfolio is incorporated herein by
reference to Exhibit 8(c) of Fidelity Income Fund's Post-Effective
Amendment No. 35 (File No. 2-92661).
(d) Custodian Agreement, Appendix A, Appendix B, and Appendix C, dated
December 1, 1994, between UMB Bank, n.a. and Daily Money Fund on behalf of
Capital Reserves: Municipal Money Market Portfolio is incorporated herein
by reference to Exhibit 8 of 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, was electronically
filed and is incorporated herein by reference to Exhibit 8(d) to Fidelity
Institutional Cash Portfolio's 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., and the Fidelity Funds was
electronically filed and is incorporated herein by reference to Exhibit
8(e) to Post-Effectvie Amendment No 31
(g) Fidelity Group Repo Custodian Agreement among Chemical Bank, Greenwich
Capital Markets, Inc., and the Fidelity Funds was electronically filed and
is incorporated herein by reference to Exhibit 8(f) to Post-Effective
Amendment No. 31.
(h) Joint Trading Account Custody Agreement between the The Bank of New
York and the Fidelity Funds was electronically filed and is incorporated
herein by reference to Exhibit 8(h) to post-Effective Amendment No. 31.
(i) First Amendment to Joint Trading Account Custody Agreement between the
The Bank of New York and the Fidelity Funds was electronically filed and is
incorporated herein by reference to Exhibit 8(i) to Post-Effective
Amendment No. 31.
9. Not applicable.
10. None.
11. Consent of Coopers & Lybrand L.L.P. is electronically filed herein as
Exhibit 11.
12. None.
13. None.
14. (a ) Retirement Plan for Fidelity Individual Retirement Accounts, as
currently in effect, was electronically filed and is incorporated herein by
reference to Exhibit 14(a) to Union Street Trust's Post-Effective Amendment
No. 87
(b) Retirement Plan for Portfolio Advisory Services Individual Retirement
Account, as currently in effect, was electronically filed and is
incorporated herein by reference as Exhibit 14(i) to Union Street Trust's
Post-Effective Amendment No. 87.
(c) Retirement Plan for NFSC Individual Retirement Account, as currently
in effect, was electronically filed and is incorporated herein by reference
to Exhibit 14(h) to Union Street Trust's Post-Effective Amendment No. 87.
(d) NFSC Defined Contribution Plan, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
14(k) to Union Street's Trust Post-Effective Amendment No. 87.
(e) Fidelity Institutional Individual Retirement Account Custodian
Agreement and Disclosure Statement, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
14(d) to Union Street Trust's Post-Effective Amendment No. 87.
(f) Fidelity 403(b)(7) Individual Custodial Agreement, as currently in
effect, was electronically filed and is incorporated herein by reference to
Exhibit 14(j) to Union Street Trust's Post-Effective Amendment No. 87.
(g) Fidelity 403(b) Custodial Agreement, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
14(e) to Union Street Trust's Post-Effective Amendment No. 87.
(h) The CORPORATE plan for Retirement Profit Sharing/401k Plan, as
currently in effect, was electronically filed and is incorporated herein by
reference to Exhibit 14(l) to Union Street Trust's Post-Effective Amendment
No. 87.
(i) The CORPORATE plan for Retirement Money Purchase Pension Plan, as
currently in effect, was electronically filed and is incorporated herein by
reference to Exhibit 14(m) to Union Street Trust's Post-Effective Amendment
No. 87.
(j) Fidelity Advisor Funds Individual Retirement Account Custodial
Agreement Disclosure Statement in effect as of January 1, 1994 was filed
electronically and is incorporated herein by reference to Exhibit 14(b) to
Advisor Series I Post-Effective Amendment No. 22.
(k) Plymouth Defined Contribution Plan, as currently in effect, was
electronically filed and is incorporated herein by reference to Exhibit
14(o) to Commonwealth Trust's Post-Effective Amendment No. 57.
15. (a) Service Plan dated September 30, 1993 between Daily Money Fund,
Fidelity Management & Research Company, and Fidelity Distributors
Corporation was electronically filed and is incorporated herein by
reference as Exhibit 15(a) to Post-Effective Amendment No. 25.
(b) Distribution and Service Plan dated September 30, 1993 for Daily Money
Fund: U.S. Treasury Income Portfolio was electronically filed and
incorporated herein by reference as Exhibit 15(b) to Post-Effective
Amendment No. 25.
(c) Distribution and Service Plan dated September 30, 1993 for Daily Money
Fund: Capital Reserves: Money Market Portfolio, U.S. Government Portfolio,
and Municipal Money Market Portfolio was electronically filed and is
incorporated herein by reference to Exhibit 15(c) to Post-Effective
Amendment No. 30.
(d) Distribution and Service Plan for Class B of Daily Money Fund: U.S.
Treasury Portfolio was electronically filed and is incorporated herein by
reference as Exhibit 15(d) to Post-Effective Amendment No. 30 .
(e) Distribution and Service Plan pursuant to Rule 12b-1, for Treasury
Only Class II was electronically filed and is incorporated herein by
reference as Exhibit 15(e) to Post-Effective Amendment 31. Service Contract
between F
(f) Distribution and Service Plan pursuant to Rule 12b-1, for Treasury
Only Class III was electronically filed and is incorporated herein by
reference as Exhibit 15(f) to Post-Effective Amendment No. 31.
16. Schedules for computations of performance quotations for Daily Money
Fund: Treasury Only were electronically filed and are incorporated herein
by reference to Exhibit 16 to Post-Effective Amendment No. 30.
17. A Financial Data Schedule is electronically filed herein as Exhibit
17.
18. A Multiple Class of Shares Plan was electronically filed and is
incorporated herein by reference as Exhibit 18 to Post-Effective Amendment
31.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is the same as the boards of other
funds advised by FMR, each of which has Fidelity Management & Research
Company as its investment adviser. In addition, the officers of these funds
are substantially identical. Nonetheless, Registrant takes the position
that it is not under common control with these other funds since the power
residing in the respective boards and officers arises as the result of an
official position with the respective funds.
Item 26. Number of Holders of Securities
As of October 31, 1996
Title of Class Number of Record Holders
Money Market Portfolio - Initial Class 204,512
U.S. Treasury Portfolio - Initial Class 33,811
U.S. Treasury Portfolio-Class B 711
Treasury Only - Class I 2,038
Treasury Only - Class II 14
Treasury Only - Class III 171
Capital Reserves: Money Market Portfolio 157,199
Capital Reserves: U.S. Government Portfolio 13,971
Capital Reserves: Municipal Money Market Portfolio 11,542
Item 27. Indemnification
Pursuant to Del. Code Ann. title 12 (sub-section) 3817, a Delaware
business trust may provide in its governing instrument for the
indemnification of its officers and trustees from and against any and all
claims and demands whatsoever. Article X, Section 10.02 of the Trust
Instrument states that the Registrant shall indemnify any present trustee
or officer to the fullest extent permitted by law against liability, and
all expenses reasonably incurred by him or her in connection with any
claim, action, suit or proceeding in which he or she is involved by virtue
of his or her service as a trustee, officer, or both, and against any
amount incurred in settlement thereof. Indemnification will not be provided
to a person adjudged by a court or other adjudicatory body to be liable to
the Registrant or its shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of his or her duties
(collectively, "disabling conduct"), or not to have acted in good faith in
the reasonable belief that his or her action was in the best interest of
the Registrant. In the event of a settlement, no indemnification may be
provided unless there has been a determination, as specified in the Trust
Instrument, that the officer or trustee did not engage in disabling
conduct.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against any
loss, liability, claim, damages or expense arising by reason of any person
acquiring any shares, based upon the ground that the registration
statement, Prospectus, Statement of Additional Information, shareholder
reports or other information filed or made public by the Registrant
included a materially misleading statement or omission. However, the
Registrant does not agree to indemnify the Distributor or hold it harmless
to the extent that the statement or omission was made in reliance upon, and
in conformity with, information furnished to the Registrant by or on behalf
of the Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of their own
disabling conduct.
Pursuant to the agreement by which Fidelity Investments Institutional
Operations Company ("FIIOC") is appointed sub-transfer agent, the Transfer
Agent agrees to indemnify FIIOC for FIIOC's losses, claims, damages,
liabilities and expenses (including reasonable counsel fees and expenses)
(losses) to the extent that the Transfer Agent is entitled to and receives
indemnification from the Portfolio for the same events. Under the Transfer
Agency Agreement, the Registrant agrees to indemnify and hold the Transfer
Agent harmless against any losses, claims, damages, liabilities, or
expenses (including reasonable counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other than the
Registrant, including by a shareholder which names the Transfer Agent
and/or the Registrant as a party and is not based on and does not result
from the Transfer Agent's willful misfeasance, bad faith or negligence or
reckless disregard of duties, and arises out of or in connection with the
Transfer Agent's performance under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent contributed to
by the Transfer Agent's willful misfeasance, bad faith or negligence or
reckless disregard of duties) which results from the negligence of the
Registrant, or from the Transfer Agent's acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any
person duly authorized by the Registrant, or as a result of the Transfer
Agent's acting in reliance upon advice reasonably believed by the Transfer
Agent to have been given by counsel for the Registrant, or as a result of
the Transfer Agent's acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.]
Pursuant to the agreement by which Fidelity Investments Institutional
Operations Company ("FIIOC") is appointed transfer agent, the Registrant
agrees to indemnify and hold FIIOC harmless against any losses, claims,
damages, liabilities or expenses (including reasonable counsel fees and
expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other than the
Registrant, including by a shareholder, which names FIIOC and/or the
Registrant as a party and is not based on and does not result from FIIOC's
willful misfeasance, bad faith or negligence or reckless disregard of
duties, and arises out of or in connection with FIIOC's performance under
the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent contributed to
by FIIOC's willful misfeasance, bad faith or negligence or reckless
disregard of duties) which results from the negligence of the Registrant,
or from FIIOC's acting upon any instruction(s) reasonably believed by it to
have been executed or communicated by any person duly authorized by the
Registrant, or as a result of FIIOC's acting in reliance upon advice
reasonably believed by FIIOC to have been given by counsel for the
Registrant, or as a result of FIIOC's acting in reliance upon any
instrument or stock certificate reasonably believed by it to have been
genuine and signed, countersigned or executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and Director of FMR, FMR Corp., FMR Texas
Inc., FMR (U.K.) Inc., and FMR (Far East) Inc.; Chairman
of the Board and Representative Director of Fidelity
Investments Japan Limited; President and Trustee of funds
advised by FMR.
J. Gary Burkhead President and Director of FMR, FMR Texas Inc., FMR
(U.K.) Inc., and FMR (Far East) Inc.; Managing Director of
FMR Corp.; Senior Vice President and Trustee of funds
advised by FMR.
Peter S. Lynch Vice Chairman of the Board and Director of FMR.
Marta Amieva Vice President of FMR.
Dwight D. Churchill Vice President of FMR.
John D. Crumrine Assistant Treasurer of FMR, FMR (U.K.) Inc., FMR (Far
East) Inc., and FMR Texas Inc.; Vice President and
Treasurer of FMR Corp.
William Danoff Vice President of FMR and of a fund advised by FMR.
Scott E. DeSano Vice President of FMR.
Craig P. Dinsell Vice President of FMR.
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
George C. Domolky Vice President of FMR.
Larry A. Domash Vice President of FMR.
Bettina Doulton Vice President of FMR and of funds advised by FMR.
Margaret L. Eagle Vice President of FMR and a fund advised by FMR.
Richard B. Fentin Senior Vice President of FMR and Vice President of a fund
advised by FMR.
Gregory Fraser Vice President of FMR and of a fund advised by FMR.
Jay Freedman Assistant Clerk of FMR; Clerk of FMR Corp., FMR (U.K.)
Inc., and FMR (Far East) Inc.; Secretary of FMR Texas Inc.
Robert Gervis Vice President of FMR.
David L. Glancy Vice President of FMR and of a fund advised by FMR.
Kevin E. Grant 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 and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
Boyce I. Greer Vice President of FMR.
Bart Grenier Vice President of FMR.
Robert Haber Vice President of FMR.
Richard C. Habermann Senior Vice President of FMR; Vice President of funds
advised by FMR.
William J. Hayes Senior Vice President of FMR; Vice President of Equity
funds advised by FMR.
Richard Hazlewood Vice President of FMR and of a fund advised by FMR.
Fred L. Henning Jr. Senior Vice President of FMR; Vice President of
Fixed-Income funds advised by FMR.
John R. Hickling Vice President of FMR and of a fund advised by FMR.
Robert F. Hill Vice President of FMR; Director of Technical Research.
Curt Hollingsworth Vice President of FMR and of funds advised by FMR.
Abigail P. Johnson Vice President of FMR and of a fund advised by FMR.
Stephen P. Jonas Vice President of FMR; Treasurer of FMR, FMR (U.K.)
Inc., FMR (Far East) Inc., and FMR Texas Inc.
David B. Jones Vice President of FMR.
Steven Kaye Vice President of FMR and of a fund advised by FMR.
Francis V. Knox Vice President of FMR; Compliance Officer of FMR (U.K.)
Inc.
David P. Kurrasch Vice President of FMR.
Robert A. Lawrence Senior Vice President of FMR; Vice President of High
Income funds advised by FMR.
Alan Leifer Vice President of FMR.
Harris Leviton Vice President of FMR and of a fund advised by FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Arthur S. Loring Senior Vice President, Clerk, and General Counsel of FMR;
Vice President/Legal, and Assistant Clerk of FMR Corp.;
Secretary of funds advised by FMR.
Richard R. Mace Jr. Vice President of FMR and of funds advised by FMR.
Malcolm W. MacNaught II Vice President of FMR and of a fund advised by FMR.
Robert H. Morrison Vice President of FMR; Director of Equity Trading.
David L. Murphy Vice President of FMR and of funds advised by FMR.
Andrew S. Offit Vice President of FMR and of a fund advised by FMR.
Jacques Perold Vice President of FMR.
Brian S. Posner Vice President of FMR and of a fund advised by FMR.
Anne Punzak Vice President of FMR.
Kenneth A. Rathgeber Vice President of FMR; Treasurer of funds advised by
FMR.
Lee H. Sandwen Vice President of FMR.
Patricia A. Satterthwaite Vice President of FMR and of a fund advised by FMR.
Thomas T. Soviero Vice President of FMR and of a fund advised by FMR.
Richard Spillane Vice President of FMR; Senior Vice President and Director
of Operations and Compliance of FMR (U.K.) Inc.
Robert E. Stansky Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Thomas Sweeney Vice President of FMR and of a fund advised by FMR.
Beth F. Terrana Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Yoko Tilley Vice President of FMR.
Joel C. Tillinghast Vice President of FMR and of a fund advised by FMR.
Robert Tuckett Vice President of FMR.
Jennifer Uhrig Vice President of FMR and of a fund advised by FMR.
George A. Vanderheiden Senior Vice President of FMR; Vice President 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 of the Board and Director of FMR
Texas, FMR, FMR Corp., FMR (Far East) Inc.,
and FMR (U.K.) Inc.; Chairman of the
Executive Committee of FMR; President and
Chief Executive Officer of FMR Corp.;
Chairman of the Board and Representative
Director of Fidelity Investments Japan Limited;
President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Texas, FMR,
FMR (Far East) Inc., and FMR (U.K.) Inc.;
Managing Director of FMR Corp.; Senior Vice
President and Trustee of funds advised by FMR.
Robert H. Auld Vice President of FMR Texas.
Leland C. Barron Vice President of FMR Texas and of funds
advised by FMR.
Robert K. Duby Vice President of FMR Texas and of funds
advised by FMR.
Robert Litterst Vice President of FMR Texas and of funds
advised by FMR.
Thomas D. Maher Vice President of FMR Texas and Assistant Vice
President of Money Market funds advised by
FMR.
Scott A. Orr Vice President of FMR Texas and 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 and of Money
Market funds advised by FMR.
Stephen P. Jonas Treasurer of FMR Texas, FMR (U.K.) Inc.,
FMR (Far East) Inc., and FMR; Vice President
of FMR.
John D. Crumrine Assistant Treasurer of FMR Texas, FMR (U.K.)
Inc., FMR (Far East) Inc., and FMR; Vice
President and Treasurer of FMR Corp.
Jay Freedman Secretary of FMR Texas; Clerk of FMR (U.K.)
Inc., FMR (Far East) Inc., and FMR Corp.;
Assistant Clerk of FMR.
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 Litvack 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
custodians UMB Bank, n.a., 1010 Grand Avenue, Kansas City, MO. and The Bank
of New York, 48 Wall Street, New York, N.Y.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
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. 40 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___ day of
November, 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 November 13, 1996
Edward C. Johnson 3d (Principal Executive Officer)
/s/Kenneth A. Rathgeber *** Treasurer November 13, 1996
Kenneth A. Rathgeber
/s/J. Gary Burkhead Trustee November 13, 1996
J. Gary Burkhead
/s/Ralph F. Cox * Trustee November 13, 1996
Ralph F. Cox
/s/Phyllis Burke Davis ** Trustee November 13, 1996
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee November 13, 1996
Richard J. Flynn
/s/E. Bradley Jones ** Trustee November 13, 1996
E. Bradley Jones
/s/Donald J. Kirk * Trustee November 13, 1996
Donald J. Kirk
/s/Peter S. Lynch ** Trustee November 13, 1996
Peter S. Lynch
/s/Edward H. Malone * Trustee November 13, 1996
Edward H. Malone
/s/Marvin L. Mann * Trustee November 13, 1996
Marvin L. Mann
/s/Gerald C. McDonough * Trustee November 13, 1996
Gerald C. McDonough
/s/Thomas R. Williams * Trustee November 13, 1996
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by J.Gary Burkhead pursuant to a power of
attorney dated October 17, 1996 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 17, 1996 and filed herewith.
** Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated December 15, 1994 and filed herewith.
***Signature affixed by John Costello pursuant to a power of attorney dated
October 17, 1996 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 Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Aberdeen Street Trust Fidelity Money Market Trust
Fidelity Beacon Street Trust Fidelity Municipal Trust II
Fidelity California Municipal Trust II Fidelity New York Municipal Trust II
Fidelity Court Street Trust II Fidelity Phillips Street Trust
Fidelity Hereford Street Trust Fidelity Revere Street Tust
Fidelity Union Street Trust II
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company or an affiliate acts as investment adviser and for which the
undersigned individual serves as President and Director, Trustee, or
Gerneral Partner (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 him 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
Amendments, 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 deems
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and the Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission. I hereby ratify
and confirm all that said attorney-in-fact or his substitutes may do or
cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 17, 1996
Edward C. Johnson 3d
POWER OF ATTORNEY
I, the undersigned Treasurer and principal financial and accounting
officer of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Money Market Trust
Fidelity Aberdeen Street Trust Fidelity Municipal Trust II
Fidelity Beacon Street Trust Fidelity New York Municipal Trust II
Fidelity California Municipal Trust II Fidelity Phillips Street Trust
Fidelity Court Street Trust II Fidelity Revere Street Trust
Fidelity Hereford Street Trust Fidelity Union Street Trust II
Fidelity Institutional Cash Portfolios
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company or an affiliate acts as investment adviser and for which the
undersigned individuals serves as Treasurer and principal financial and
accounting officer (collectively, the "Funds"), hereby severally constitute
and appoint John H. Costello and John E. Ferris each of them singly, my
true and lawful attorneys-in-fact, with full power of substitution, and
with full power to each of them 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
Amendments, 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 the 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/Kenneth A. Rathgeber October 17, 1996
Kenneth A. Rathgeber
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Director, Trustee or General Partner (collectively,
the "Funds"), hereby severally constitute and appoint Arthur J. Brown,
Arthur C. Delibert, Robert C. Hacker, Richard M. Phillips, Dana L. Platt
and Stephanie A. Djinis, each of them singly, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
each of them, to sign for me and my name in the appropriate capacities any
Registration Statements of the Funds on Form N-1A or any successor thereto,
any and all subsequent Pre-Effective Amendments or Post-Effective
Amendments to said Registration Statements on Form N-1A or any successor
thereto, any Registration Statements on Form N-14, and any supplements or
other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorneys-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact
or their substitutes may do or cause to be done by virtue hereof.
WITNESS our hands on this fifteenth day of December, 1994.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Marvin L. Mann
Ralph F. Cox Marvin L. Mann
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
POWER OF ATTORNEY
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 Money Market Trust
Fidelity Aberdeen Street Trust Fidelity Municipal Trust II
Fidelity Beacon Street Trust Fidelity New York Municipal Trust II
Fidelity California Municipal Trust II Fidelity Phillips Street Trust
Fidelity Court Street Trust II Fidelity Revere Street Trust
Fidelity Hereford Street Trust Fidelity Union Street Trust II
Fidelity Institutional Cash Portfolios
</TABLE>
plus any other investment company for which Fidelity Management & Research
Company or an affiliateacts as investment adviser and for which the
undersigned individuals serve as Directors, Trustees or General Partners
(collectively, the "Funds"), hereby severally constitute and appoint Arthur
J. Brown, Arthur C. Delibert, Stephanie A. Djinis, Robert C. Hacker, Thomas
M. Leahey, Richard M. Phillips and Dana L. Platt, each of them singly, our
true and lawful attorneys-in-fact, with full power of substitution, and
with full power to each of them, to sign for us and in our names in the
appropriate capacities, any Registration Statements of the Funds on Form
N-1A, Form N-8A, or any successor thereto, any and all subsequent
Amendments, 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
our names 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 the Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this seventeenth day of October, 1996.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead ___________________
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Gerald C. McDonough
Ralph F. Cox Gerald C. McDonough
___________________ /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Marvin L. Mann
Richard J. Flynn Marvin L. Mann
___________________ /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
Exhibit 6 (g)
AMENDMENT TO GENERAL DISTRIBUTION AGREEMENT
Effective October 1, 1996, Paragraph 8 of the General Distribution
Agreement between each of the funds or portfolios indicated on the attached
Schedule A shall be amended to read in full as follows:
8. Portfolio Securities - Portfolio securities of the issuer may be bought
or sold by or through the Distributor, and the Distributor may participate
directly or indirectly in brokerage commissions or "spreads" for
transactions in portfolio securities of the Issuer.
Signed on behalf of each of the funds or portfolios identified on Schedule
A.
On Behalf of Each of the Funds or Portfolios:
Attest:_/s/Arthur S. Loring___ By:___/s/J. Gary Burkhead_______
Arthur S. Loring J. Gary Burkhead
Secretary
FIDELITY
DISTRIBUTORS CORPORATION:
Attest:__/s/Arthur S. Loring_______ By:__/s/Neal Litvak_________________
Arthur S. Loring Neal Litvack
AMENDMENT TO GENERAL DISTRIBUTION AGREEMENT
Schedule A
Daily Money Fund:
Fidelity U.S. Treasury Income Portfolio
Daily Tax-Exempt Money Fund
Fidelity Advisor Series VIII:
Fidelity Advisor Strategic Income Fund
Exhibit 8 (b)
APPENDIX "A"
TO
CUSTODIAN AGREEMENT
BETWEEN
The Bank of New York and each of the following Investment Companies
Dated as of August 31, 1996
The following is a list of the Funds and their respective Portfolios for
which the Custodian shall serve under a Custodian Agreement dated as of
December 1, 1994:
FUND Portfolio Effective as of:
Fidelity Aberdeen Street Trust Fidelity Freedom Income Fund August 31,
1996
Fidelity Freedom 2000 Fund August 31, 1996
Fidelity Freedom 2010 Fund August 31, 1996
Fidelity Freedom 2020 Fund August 31, 1996
Fidelity Freedom 2030 Fund August 31, 1996
Fidelity Advisor Annuity Fund Fidelity Advisor Annuity Government
Investment Fund December 1, 1994
Fidelity Advisor Annuity High Yield Fund December 1, 1994
Fidelity Advisor Annuity Money Market Fund September 14, 1995
Fidelity Advisor Series II Fidelity Advisor Government Investment Fund
December 1, 1994
Fidelity Advisor High Yield Fund December 1, 1994
Fidelity Advisor Short Fixed-Income Fund December 1, 1994
Fidelity Advisor IV Fidelity Advisor Limited Term Bond Fund December 1,
1994
Fidelity Institutional Short-Intermediate Government Portfolio December 1,
1994
Fidelity Real Estate High Income Fund December 1, 1994
Fidelity Advisor Series VIII Fidelity Advisor Strategic Income Fund
December 1, 1994
Fidelity Boston Street Trust Fidelity Target Timeline 1999 January 18,
1996
Fidelity Target Timeline 2001 January 18, 1996
Fidelity Target Timeline 2003 January 18, 1996
Fidelity Charles Street Trust Fidelity Short-Intermediate Government Fund
December 1, 1994
Spartan Short-Term Income Fund December 1, 1994
Spartan Investment-Grade Bond Fund December 1, 1994
Fidelity Commonwealth Trust Fidelity Intermediate Bond Fund December 1,
1994
Fidelity Covington Trust Fidelity Real Estate High Income Fund II May 16,
1996
Daily Money Fund Capital Reserves: Money Market Portfolio September 14,
1995
Capital Reserves: U.S. Government Portfolio September 14, 1995
Treasury only (f/k/a Fidelity U.S.
Treasury Income Portfolio) September 14, 1995
Money Market Portfolio September 14, 1995
U. S. Treasury Portfolio September 14, 1995
Fidelity Devonshire Trust Spartan Long-Term Government Bond Fund December
1, 1994
Spartan Adjustable Rate Government Fund December 1, 1994
Fidelity Fixed-Income Trust Fidelity Short-Term Bond Portfolio December 1,
1994
Fidelity Investment Grade Bond Fund December 1, 1994
Spartan Government Income Fund December 1, 1994
Spartan High Income Fund December 1, 1994
Spartan Short-Intermediate Government Fund December 1, 1994
Fidelity Government Securities Fund Fidelity Government Securities Fund
December 1, 1994
Fidelity Hereford Street Trust Spartan Money Market Fund December 1, 1994
Spartan U.S. Government Money Market Fund September 14, 1995
Spartan U.S. Treasury Money Market Fund September 14, 1995
Fidelity Income Fund Fidelity Ginnie Mae Portfolio December 1, 1994
Fidelity Mortgage Securities Portfolio December 1, 1994
Spartan Limited Maturity Government Fund December 1, 1994
Fidelity Institutional Cash Portfolios Domestic (f/k/a Domestic Money
Market Portfolio) September 14, 1995
Money Market (f/k/a Money Market Portfolio) September 14, 1995
Government (f/k/a U.S. Government Portfolio) September 14, 1995
Treasury II (f/k/a U.S. Treasury Portfolio II) September 14, 1995
Fidelity Institutional Trust Fidelity U.S. Bond Index Portfolio December 1,
1994
Fidelity Money Market Trust Domestic Money Market Portfolio September 14,
1995
Retirement Government Money Market Portfolio September 14, 1995
Retirement Money Market Portfolio September 14, 1995
Fidelity Phillips Street Trust Fidelity Cash Reserves December 1, 1994
Fidelity U.S. Government Reserves September 14, 1995
Fidelity School Street Trust Spartan Bond Strategist December 1, 1994
Fidelity Select Portfolios Money Market Portfolio December 1, 1994
Fidelity Summer Street Trust Fidelity Capital & Income Fund December 1,
1994
Fidelity Union Street Trust Spartan Ginnie Mae Fund December 1, 1994
Fidelity Union Street Trust II Fidelity Daily Income Trust December 1,
1994 Spartan World Money Market Fund December 1, 1994
Variable Insurance Products Fund High Income Portfolio December 1, 1994
Variable Insurance Products Fund II Investment Grade Bond Portfolio
December 1, 1994
Variable Insurance Products Fund Money Market Portfolio September 14,
1995
IN WITNESS WHEREOF, each of the parties hereto has caused this Appendix to
be executed in its name and behalf as of the day and year first set forth
opposite each such Portfolio.
Each of the Investment Companies The Bank of New York
listed on this Appendix "A", on behalf
of each of their respective Portfolios
By: /s/ Kenneth A. Rathgeber By: /s/ Stephen E. Grunston
Name: Kenneth A. Rathgeber Name: Stephen E. Grunston
Title: Treasurer Title: Vice President
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Prospectus
and Statement of Additional Information in Post-Effective Amendment No.40
to the Registration Statement on Form N-1A of Daily Money Fund: Capital
Reserves: Money Market Portfolio; Capital Reserves: U.S. Government
Portfolio; and Capital Reserves: Municipal Money Market Portfolio, of our
report dated August 30, 1996 on the financial statements and financial
highlights included in the July 31, 1996 Annual Report to Shareholders of
Capital Reserves: Money Market Portfolio, Capital Reserves: U.S. Government
Portfolio, and Capital Reserves: Municipal Money Market Portfolio.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditor" in the Statement of
Additional Information.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
November 14, 1996
TO BE USED IN A POST-EFFECTIVE AMENDMENT WHERE THERE ARE TWO OR MORE
PROSPECTUSES COVERING FUNDS IN THE SAME TRUST (E.G., DEVONSHIRE TRUST).
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Prospectuses
and Statements of Additional Information in Post-Effective Amendment No. [
] to the Registration Statement on Form N-1A of [TRUST NAME: FUND NAMES] of
our reports dated [DATE OF OPINION] on the financial statements and
financial highlights included in the [FISCAL YEAR END] Annual Reports to
Shareholders of [FUND NAMES].
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the Statements
of Additional Information.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
[DATE HANDING OFF 485(b) FOR FILING]
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000028540
<NAME> Daily Money Fund
<SERIES>
<NUMBER> 41
<NAME> Capital Reserves: Money Market Portfolio
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> jul-31-1996
<PERIOD-END> jul-31-1996
<INVESTMENTS-AT-COST> 1,262,089
<INVESTMENTS-AT-VALUE> 1,262,089
<RECEIVABLES> 3,960
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