SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-74808)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 31 [X]
and
REGISTRATION STATEMENT (No. 811-3320)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 31 [ X]
Fidelity Institutional Cash Portfolios
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-563-7000
Siobhan Perkins
Morris, Nichols, Arsht & Tunnell
1201 N. Market Street, P.O. Box 1347
Wilmington, DE 19899-1347
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b)
( ) on ( ) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(i)
(X ) on July 31, 1996 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 will file the Notice required by such
Rule by May 31, 1996.
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS CLASS I
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 .............................. Expenses
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance
d .............................. Cover Page
4 a i............................. Charter
ii........................... Investment Principles and Risks; Securities and
Investment Practices; Fundamental Investment
Policies and Restrictions
b .............................. Securities and Investment Practices
c .............................. Who May Want to Invest; Investment Principles
and Risks; Securities and Investment Practices
5 a .............................. Charter
b i............................. FMR and Its Affiliates
ii........................... FMR and Its Affiliates; Charter; Breakdown of
Expenses
iii.......................... Expenses; Breakdown of Expenses; Management
Fee
c .............................. FMR and Its Affiliates
d .............................. Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates
e .............................. FMR and its Affiliates; Breakdown of Expenses;
Other Expenses
f .............................. Expenses
g .............................. Expenses; FMR and Its Affiliates
5A .............................. *
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange
Restrictions
iii.......................... *
b ............................. FMR and Its Affiliates
c .............................. Charter
d .............................. Cover Page; Charter
e .............................. Cover Page; How to Buy Shares; How to Sell
Shares; Investor Services; Exchange Restrictions
f, g .............................. Dividends, Capital Gains, and Taxes
7 a .............................. Charter; Cover Page
b .............................. How to Buy Shares; Transaction Details
c .............................. *
d .............................. How to Buy Shares
e .............................. Transaction Details; Breakdown of Expenses
f .............................. Breakdown of Expenses; Other Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL
MONEY MARKET
FUNDS - CLASS I
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy
of a fund's most recent financial report and portfolio listing or a copy of
the Statement of Additional Information (SAI) dated July 31, 1996 .
The SAI has been filed with the Securities and Exchange Commission (SEC)
and is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, contact Fidelity Client
Services at 1-800-843-3001, or your investment professional.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT A FUND WILL MAINTAIN A
STABLE $1.00 SHARE PRICE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
LIKE ALL MUTUAL FUNDS, THESE
SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
IMMI-pro-0796
TREASURY ONLY
TREASURY
GOVERNMENT
DOMESTIC
RATED MONEY MARKET
MONEY MARKET
TAX-EXEMPT
PROSPECTUS
DATED JULY 31, 1996 (FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109
CONTENTS
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Class I's yearly operating expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's
financial data.
PERFORMANCE
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's
overall approach to investing.
BREAKDOWN OF EXPENSES How operating costs
are calculated and what they include.
YOUR ACCOUNT HOW TO BUY SHARES Opening an account and
making additional investments.
HOW TO SELL SHARES Taking money out and
closing your account.
INVESTOR SERVICES Services to help you manage
your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND TAXES
ACCOUNT POLICIES
TRANSACTION DETAILS Share price calculations
and the timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
KEY FACTS
WHO MAY WANT TO INVEST
Each fund offers institutional and corporate investors a convenient and
economical way to invest in a professionally managed portfolio of money
market instruments.
Each fund is designed for investors who would like to earn current income
while preserving the value of their investment.
The rate of income will vary from day to day, generally reflecting
short-term interest rates.
Each fund is managed to keep its share price stable at $1.00. Each of
Treasury Only, Treasury, and Government offers an added measure of safety
with its focus on U.S. Treasury or Government securities.
These funds do not constitute a balanced investment plan. However, because
they emphasize stability, they could be well-suited for a portion of your
investment.
Each fund is composed of multiple classes of shares. All
class es of a fund ha ve a common investment objective and
investment portfolio. Class I shares do not have a sales charge and do not
pay a distribution fee. Class II shares do not have a sales charge, but do
pay a 0.15% distribution fee. Class III shares do not have a sales charge,
but do pay a 0.25% distribution fee. Because Class I shares have no sales
charge and do not pay a distribution fee, Class I shares are expected to
have a higher total return than Class II and Class III shares. You may
obtain more information about Class II and Class III shares, which are not
offered through this prospectus, from your investment professional ,
or by calling Fidelity Client Services at 1-800-843-3001. Contact your
investment professional to discuss which class is appropriate for
you.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
Class I shares of a fund.
Maximum sales charge on purchases and None
reinvested distributions
Maximum deferred sales None
charge
Redemption fee None
Exchange fee None
ANNUAL OPERATING EXPENSE S are paid out of each fund's assets. Each fund
pays a management fee to Fidelity Management & Research Company (FMR). In
addition, each fund is responsible for certain other expenses.
Class I's expenses are factored into its share price or dividends and are
not charged directly to shareholder accounts (see "Breakdown of Expenses"
on page ).
The following are projections based on historical expenses of Class
I of each fund and are calculated as a percentage of average net assets of
Class I of each fund.
Class I Operating Expenses
TREASURY ONLY Management fee
12b-1 fee (Distribution fee) None
Other expenses
Total operating expenses
TREASURY Management fee
12b-1 fee (Distribution fee) None
Other expenses
Total operating expenses
GOVERNMENT Management fee
12b-1 fee (Distribution fee) None
Other expenses
Total operating expenses
DOMESTIC Management fee
12b-1 fee (Distribution fee) None
Other expenses
Total operating expenses
RATED MONEY MARKET Management fee
12b-1 fee (Distribution fee) None
Other expenses
Total operating expenses
MONEY MARKET Management fee
12b-1 fee (Distribution fee) None
Other expenses
Total operating expenses
TAX-EXEMPT Management fee
12b-1 fee (Distribution fee) None
Other expenses
Total operating expenses
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment in Class I shares, assuming a 5% annual return and full
redemption at the end of each time period:
1 3 5 10
Year Years Years Years
Treasury Only $ $ $ $
Treasury $ $ $ $
Government $ $ $ $
Domestic $ $ $ $
Rated Money Market $ $ $ $
Money Market $ $ $ $
Tax-Exempt $ $ $ $
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY.
FMR has voluntarily agreed to reimburse Class I of each fund to the extent
that total operating expenses (excluding interest, taxes, brokerage
commissions, and extraordinary expenses) are in excess of 0.20% (0.18% for
Money Market), of its average net assets. If these agreements were not in
effect, the management fee, other expenses, and total operating
expenses, as a percentage of average net assets, of Class I of each fund
would have been the following amounts: __%, __%, and __% for Treasury
Only; __%, __%, and __% for Treasury; __%, __%, and __% for Government;
__%, __%, and __% for Domestic; __%, __%, and __% for Rated Money Market;
__%, __%, and __% for Money Market; and __%, __%, and __% for
Tax-Exempt.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow and each fund's financial
statements are included in each fund's Annual Report and have been audited
by independent accountants. ___ serves as independent accountants for each
of Treasury, Government, Domestic, and Money Market. ______ serves as
independent accountants for each of Treasury Only, Rated Money Market, and
Tax-Exempt. Their reports on the financial statements and financial
highlights are included in the Annual Report. The financial statements, the
financial highlights, and the reports are incorporated by reference into
the funds' SAI, which may be obtained free of charge from Fidelity Client
Services at the phone number listed on page __.
PERFORMANCE
Money market fund performance can be measured as TOTAL RETURN or YIELD.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a yield
assumes that income earned is reinvested, it is called an EFFECTIVE YIELD.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn before
taxes to equal a tax-free yield.
SEVEN-DAY YIELD illustrates the income earned by an investment in a money
market fund over a recent seven-day period. Since money market funds
maintain a stable $1.00 share price, current seven-day yields are the most
common illustration of money market fund performance.
The funds' performance a nd holdings are detailed twice a year in
financial reports, which are sent to all shareholders.
For current performance call Fidelity Client Services at 1-800-843-3001.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools
shareholders' money and invests it toward a specified goal. Treasury Only
is a diversified fund of Daily Money Fund, an open-end management
investment company organized as a Delaware business trust on September 29,
1993. Treasury, Government, Domestic, and Money Market are diversified
funds of Fidelity Institutional Cash Portfolios, an open-end management
investment company organized as a Delaware business trust on May 30, 1993.
Rated Money Market is a diversified fund of Fidelity Money Market Trust, an
open-end management investment company organized as a Delaware business
trust on December 29, 1994. Tax-Exempt is a diversified fund of
Fidelity Institutional Tax-Exempt Cash Portfolios , an open-end
management investment company organized as a Delaware business trust on
January 29, 1992. There is a remote possibility that one fund might become
liable for a misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent will mail proxy materials in advance, including a voting
card and information about the proposals to be voted on. You are
entitled to one vote for each share you own of each of Treasury Only,
Treasury, Government, Domestic, Money Market, and Tax-Exempt. For
shareholders of Rated Money Market, the number of votes you are entitled to
is based upon the dollar value of your investment.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust, respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business address
at 82 Devonshire Street, Boston, Massachusetts 02109. It includes a number
of different subsidiaries and divisions which provide a variety of
financial services and products. The funds employ various Fidelity
companies to perform activities required for their operation.
The funds are managed by FMR, which handles their business affairs. FMR
Texas Inc. (FMR Texas), located in Irving, Texas, has primary
responsibility for providing investment management services.
As of __, 19_, FMR advised funds having approximately __million
shareholder accounts with a total value of more than $__ billion.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets Fidelity's
funds and services. Fidelity Investments Institutional Operations Company
(FIIOC) performs transfer agent servicing functions for Class I shares of
each fund.
FMR Corp. is the ultimate parent company of FMR and FMR Texas. Members of
the Edward C. Johnson 3d family are the predominant owners of a class of
shares of common stock representing approximately 49% of the voting power
of FMR Corp. Under the Investment Company Act of 1940 (the 1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
UMB Bank, n.a. (UMB) is Tax-Exempt's transfer agent, although it employs
FIIOC to perform these functions for Class I of the fund. UMB is located at
1010 Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
EACH FUND'S INVESTMENT APPROACH
When you sell your shares of the funds, they should be worth the same
amount as when you bought them. Of course, there is no guarantee that the
funds will maintain a stable $1.00 share price. The funds follow
industry-standard guidelines on the quality and maturity of their
investments, which are designed to help maintain a stable $1.00 share
price. The funds will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities they buy. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a
default on the funds' investments could cause their share prices (and the
value of your investment) to change.
The funds earn income at current money market rates. Each fund stresses
preservation of capital, liquidity, and income (tax-free income in the case
of Tax-Exempt) and does not seek the higher yields or capital appreciation
that more aggressive investments may provide. Each fund's yield will vary
from day to day, and generally reflects current short-term interest rates
and other market conditions. It is important to note that neither the funds
nor their yields are guaranteed by the U.S. Government.
TREASURY ONLY seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share (NAV) of $1.00.
The fund invests only in U.S. Treasury securitie s. The fund does not
enter into repurchase agreements or reverse repurchase agreements.
The fund will invest in those securities whose interest is specifically
exempt from state and local income taxes under federal law; such interest
is not exempt from federal income tax.
TREASURY seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
Th e fund invests only in U.S. Treasury securities and repurchase
agreements for these securities. The fund does not enter into reverse
repurchase agreements.
GOVERNMENT seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. Government s ecurities and
re purchase agreements for these securities. The fun d also
may enter into reverse repurchase agreements.
DOMESTIC seeks to obtain as high a level of current income as is consistent
with the preservation of principal and liquidity within the limitations
prescribed for the fund.
The fund invests only in the highest-quality U.S.
dollar-denominated money market securities of domestic issuers ,
including U.S. Government securities and repurchase agreements. Securities
are "highest-quality" if rated in the highest rating category by at
least two nationally recognized rating services, or by one if only one
rating service has rated a security, or, if unrated, determined to
be of equivalent quality by FMR. The fund also may enter into reverse
repurchase agreements.
RATED MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. dollar-denominated money market securities
of domestic and foreign issuers rated in the highest rating category by
at least two nationally recognized rating services , including U.S.
Government securities and repurchase agreements. The fund also may enter
into reverse repurchase agreements.
MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in the highest-quality U.S. dollar-denominated
money market securities of domestic and foreign issuers ,
including U.S. Government securities and repurchase agreements. Securities
are "highest-quality" if rated in the highest rating category by at
least two nationally recognized rating services, or by one if only one
rating service has rated a security, or, if unrated, deter mined to
be of equivalent quality by FMR . The fund also may enter into
reverse repurchase agreements.
TAX-EXEMPT seeks to obtain as high a level of interest income exempt
from federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal.
The fund invests primarily in high-quality, short-term municipal
securities, but also may invest in high-quality, long-term instruments
whose features give them interest rates, maturities, and prices similar to
short-term instruments. Securities in which the fund invests must be rated
in the highest rating category for short-term securities by at least one
nationally recognized rating service and rated in one of the two highest
categories for short-term securities by another nationally recognized
rating service if rated by more than one nationally recognized rating
service , or, if unrated, determined to be of
equivalent quality by FMR .
The fund, under normal conditions, will invest so that at least 80% of its
income distributions is exempt from federal income tax. The fund does not
currently intend to purchase municipal securities subject to the
federal alternative minimum tax.
FMR normally invests the fund's assets according to its investment strategy
and does not expect to invest in federally taxable obligations. The fund
also reserves the right to hold a substantial amount of uninvested cash or
to invest more than normally permitted in federally taxable obligations for
temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of each fund's limitations and more detailed information
about each fund's investments are contained in the funds' SAI. Policies and
limitations are considered at the time of purchase; the sale of instruments
is not required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Fund holdings are de tailed in each fund's financial reports,
which are sent to shareholders twice a year. For a free SAI or financial
report, call Fidelity Client Services at 1-800-843-3001.
MONEY MARKET SECURITIES are high-quality, short-term obligations
issued by the U.S. Government, corporations, financial institutions,
municipalities, local and state governments, and other entities. These
obligations may carry fixed, variable, or floating interest rates.
Some money market securities employ a trust or other similar structure to
modify the maturity, price characteristics, or quality of financial assets
so that they are eligible investments for money market funds. If the
structure does not perform as intended, adverse tax or investment
consequences may result.
U.S. GOVERNMENT MONEY MARKET SECURITIES are short-term debt
obligations issued or guaranteed by the U.S. Treasury or by an
agency or instrumentality of the U.S. Government. Not all U.S. Government
securities are backed by the full faith and credit of the United States.
For example, securities issued by the Federal Farm Credit Bank or by the
Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under
certain circumstances. However, securities issued by the Financing
Corporation are supported only by the credit of the entity that issued
them.
MUNICIPAL SECURITIES are issued to raise money for a variety of public or
private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities. They
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. The value of some or all
municipal securities may be affected by uncertainties in the municipal
market related to legislation or litigation involving the taxation of
municipal securities or the rights of municipal securities holders. A fund
may own a municipal security directly or through a participation interest.
CREDIT SUPPORT. Issuers may employ various forms of credit
enhancement, including letters of credit, guarantees, or insurance from a
bank, insurance company, or other entity. These arrangements expose the
fund to the credit risk of the entity. In the case of foreign entities,
extensive public information about the entity may not be available and the
entity may be subject to unfavorable political, economic, or governmental
developments which might affect its ability to honor its commitment.
FOREIGN SECURITIES may involve different risks than domestic securities,
including risks relating to the political and economic conditions of the
foreign country involved, which could affect the payment of principal or
interest. Issuers of foreign securities include foreign governments,
corporations, and banks.
ASSET-BACKED SECURITIES include interests in pools of mortgages, loans,
receivables, or other assets. Payment of principal and interest may be
largely dependent upon the cash flows generated by the assets backing the
securities.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a benchmark
rate changes. These interest rate adjustments are designed to help
stabilize the security's price.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other money market
securities, although they may be more volatile.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another party
in return for cash. This could increase the risk of fluctuation in the
fund's yield or in the market value of its assets.
OTHER MONEY MARKET SECURITIES may include commercial paper, certificates of
deposit, bankers' acceptances, and time deposits.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
OTHER MUNICIPAL SECURITIES may include obligations of U.S. territories and
possessions such as Guam, the Virgin Islands, and Puerto Rico, and their
political subdivisions and public corporations.
PUT FEATURES entitle the holder to put (sell back) a security to the issuer
or a financial intermediary. In exchange for this benefit, a fund may pay
periodic fees or accept a lower interest rate. The credit quality of the
investment may be affected by the creditworthiness of the put provider.
Demand features, standby commitments, and tender options are types of put
features.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities, and some other securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTION: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period.
FINANCIAL SERVICES INDUSTRY. Companies in the financial services industry
are subject to various risks related to that industry, such as government
regulation, changes in interest rates, and exposure on loans, including
loans to foreign borrowers. If a fund invests substantially in this
industry, its performance may be affected by conditions affecting the
industry.
RESTRICTIONS: Each of Domestic, Rated Money Market, and Money Market
will invest more than 25% of its total assets in the financial services
industry.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type.
RESTRICTIONS: Each of Domestic, Rated Money Market, and Money
Market may not invest more than 5% of its total assets in any one issuer,
except that each fund may invest up to 10% of its total assets in the
highest quality securities of a single issuer for up to three business
days.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
These limitations do not apply to U.S. Government securities.
Tax-Exempt may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements, and may make additional
investments while borrowings are outstanding.
RESTRICTIONS: Each of Government, Domestic, Rated Money Market, and
Money Market may borrow only for temporary or emergency purposes, or
engage in reverse repurchase agreements, but not in an amount exceeding
331/3% of its total assets. Each of Treasury Only, Treasury, and
Tax-Exempt may borrow only for temporary or emergency purposes, but not
in an amount exceeding 331/3% of its total assets.
LENDING. A fund may lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a fund's
total assets. Treasury Only, Treasury, Government, and Tax-Exempt do not
intend to engage in lending.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
Treasury Only seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share ( NAV ) of $1.00.
Each of Treasury, Government, Domestic, Rated Money Market, and Money
Market seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
Tax-Exempt seeks to obtain as high a level of interest income exempt
from federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal. The fund, under normal conditions, will invest so
that at least 80% of its income distributions is exempt from federal income
tax.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
Each of Domestic, Rated Money Market, and Money Market will invest
more than 25% of its total assets in obligations of companies in the
financial services industry.
Each of Government, Domestic, Rated Money Market, and Money Market
may borrow only for temporary or emergency purposes, or engage in
reverse repurchase agreements, but not in an amount exceeding 331/3% of its
total assets. Tax-Exempt may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of a fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each class's assets are reflected in that
class's share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services. Each fund also pays OTHER EXPENSES, which
are explained below.
MANAGEMENT FEE
Each fund's management fee is calculated and paid to FMR every month.
Each fund pays FMR a fee at the annual rate of its average net assets as
indicated in the table below.
FUND NAME: MANAGEMENT FEE:
Treasury Only 0.42%
Treasury 0.20%
Government 0.20%
Domestic 0.20%
Rated Money Market 0.42%
Money Market 0.20%
Tax-Exempt 0.20%
FMR pays all of the expenses of each of Treasury Only and Rated Money
Market with limited exceptions.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR Texas, which has primary
responsibility for providing investment management for each fund, while FMR
retains responsibility for providing each fund with other management
services. FMR pays FMR Texas 50% of its management fee (before expense
reimbursements) for these services. FMR paid FMR Texas the following
percentage of each fund's average net assets for the fiscal year ended
March 31, 1996:
FUND NAME: PERCENTAGE OF
AVERAGE
NET ASSETS:
Treasury Only
Treasury
Government
Domestic
Rated Money Market
M oney Market
Tax-Exempt
OTHER EXPENSES
While the management fee is a significant component of each fund's annual
operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing , and shareholder
servicing functions for Class I shares of Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market (the Taxable
Funds). Fidelity Service Co. (FSC) calculates the NAV and dividends for
each Taxable Fund, and maintains the general accounting records for
each Taxable Fund. These expenses are paid by FMR on behalf of
Treasury Only and Rated Money Market pursuant to its management contracts.
For the fiscal year ended March 31, 1996, transfer agent and pricing and
bookkeeping fees paid (as a percentage of average net assets) were as
follows:
Fund Name Class I to FIIOC Each Fund to
FSC
Treasury
Government
Domestic
Money Market
UMB has entered into a sub-arrangement with FIIOC. FI IOC
performs transfer agency, dividend disbursing and shareholder services for
Class I shares o f Tax-Exempt. UMB has also entered into a
sub-arrangement with FSC . FSC calculates the NAV and
dividends for T ax-Exempt, and maintains Tax-Exempt's general
accounting records . All of the fees are paid to FIIOC and FSC by
UMB, which is reimbursed by Class I or the fund, as appropriate, for such
payments.
For the fiscal year ended March 31, 1996, fees paid by UMB to FIIOC on
behalf of Class I of Tax-Exempt amounted to ___% of Class I's average net
assets, and fees paid by UMB to FSC on behalf of Tax-Exempt amounted to
___% of its average net assets.
Class I of each fund has adopted a DISTRIBUTION AND SERVICE PLAN. Each plan
recognizes that FMR may use its resources, including management fees, to
pay expenses associated with the sale of Class I shares. This may include
reimbursing FDC for payments to third parties, such as banks or
broker-dealers, that provide shareholder support services or engage in the
sale of the funds' Class I shares. The Board of Trustees of each fund has
authorized such payments.
Each fund (other than Treasury Only and Rated Money Market) also pays
other expenses, such as legal, audit, and custodian fees; in some
instances, proxy solicitation costs; and the compensation of trustees who
are not affiliated with Fidelity. Each of Treasury Only and Rated Money
Market also pays other expenses, such as brokerage fees and commissions,
interest on borrowings (only Treasury Only), taxes, and the compensation of
trustees who are not affiliated with Fidelity.
YOUR ACCOUNT
HOW TO BUY SHARES
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.
EACH CLASS'S SHARE PRICE, called NAV, is calculated every business day. The
funds are managed to keep share prices stable at $1.00. Class I
shares are sold without a sales charge.
Shares are purchased at the next NAV calculated after your order is
received and accepted by the transfer agent. NAV is normally calculated at
the times indicated in the table below.
NAV CALCULATION TIMES
FUND (EASTERN TIME)
Treasury Only 2:00 p.m.
Treasury 3:00 p.m. and 5:00 p.m.
Government 3:00 p.m. and 5:00 p.m.
Domestic 3:00 p.m. and 5:00 p.m.
Rated Money Market 3:00 p.m. and 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
You will receive the NAV next determined after your investment
professional has submitted your purchase order.
IF YOU ARE NEW TO FIDELITY, an initial investment must be preceded or
accompanied by a completed, signed application, which should be forwarded
to:
Fidelity Client Services
c/o Fidelity Institutional Money Market Funds
FIIOC
P.O. Box 1182
Boston, MA 02103-1182
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Place a purchase order and wire money into your
account, or
(small solid bullet) Open an account by exchanging from the same class of
any fund that is offered through this prospectus.
INVESTMENTS IN THE FUNDS MUST BE MADE USING THE FEDERAL RESERVE WIRE
SYSTEM. Checks and Automated Clearing House payments will not be accepted
as a means of investment.
For wiring information and instructions, you should call the investment
professional through which you trade or if you trade directly through
Fidelity, call Fidelity Client Services. There is no fee imposed by the
funds for wire purchases. However, if you buy shares through an investment
professional, the investment professional may impose a fee for wire
purchases.
Fidelity Client Services:
Nationwide 1-800-843-3001
In order to receive same-day acceptance of your investment, you must
contact Fidelity Client Services and place your order between 8:30 a.m. and
the following times on days the funds are open for business.
FUND CLOSING TIMES
Treasury Only 2:00 p.m.
Treasury 5:00 p.m.
Government 5:00 p.m.
Domestic 5:00 p.m.
Rated Money Market 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
All wires must be received by the transfer agent in good order at the
applicable fund's designated wire bank before the close of the Federal
Reserve Wire System on that day.
In order to purchase shares of Treasury , Government, Domestic, and Rated
Money Market after 3:00 p.m. Eastern time, you should contact
Fidelity Client Services one week in advance to make late-trading
arrangements.
You are advised to wire funds as early in the day as possible, and to
provide advance notice to Fidelity Client Services for purchases over $10
million ($5 million for Treasury Only).
You will earn dividends on the day of your investment, provided (i) you
contact Fidelity Client Services and place your trade between 8:30 a.m. and
the closing time indicated in the table on the left on days the fund is
open for business, and (ii) the fund's designated wire bank receives the
wire before the close of the Federal Reserve Wire System on the day your
purchase order is accepted by the transfer agent.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $1,000,000*
MINIMUM BALANCE $1,000,000
* The minimum initial investment of $1 million may be waived if your
aggregate balance in the Fidelity Institutional Money Market Funds is
greater than $10 million. Please contact Fidelity Client Services for more
information regarding this waiver.
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next NAV calculated after your order is received and accepted by the
transfer agent. NAV is normally calculated at the times indicated in the
table on page __.
You will receive the NAV next determined after your investment professional
has submitted your redemption order.
R edemption requests may be made by calling Fidelity Client Services at
the phone number listed on page __.
You must designate on your account application the U.S. commercial bank
account(s) into which you wish the redemption proceeds to be deposited.
Fidelity Client Services will then notify you that this feature has been
activated and that you may request redemptions.
You may change the bank account(s) designated to receive redemption
proceeds at any time prior to making a redemption request. You should send
a letter of instruction, including a signature guarantee, to Fidelity
Client Services at the address shown on page__.
You should be able to obtain a signature guarantee from a bank, broker,
dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency, or savings association. A notary public
cannot provide a signature guarantee.
There is no fee imposed by the funds for wiring of redemption proceeds.
However, if you sell shares through an investment professional, the
investment professional may impose a fee for wire redemptions.
Redemption proceeds will be wired via the Federal Reserve Wire System to
your bank account of record. If your redemption request is received by the
transfer agent before the closing time indicated in the table on page __,
redemption proceeds will normally be wired on that day.
A fund reserves the right to take up to seven days to pay you if making
immediate payment would adversely affect the fund.
In order to redeem shares of Treasury , Government, Domestic, and Rated
Money Market after 3:00 p.m. Eastern time, you should contact
Fidelity Client Services one week in advance to make late trading
arrangements.
You are advised to place your trades as early in the day as possible.
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that the transfer agent sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction,
except a reinvestment, that affects your account balance or your account
registration)
(small solid bullet) Account statements (monthly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
a fund. Call Fidelity Client Services at 1-800-843-3001 if you need
additional copies of financial reports , prospectuses, or historical
account information.
SUB-ACCOUNTING AND SPECIAL SERVICES. Special processing has been arranged
with FIIOC for institutions that wish to open multiple accounts (a master
account and sub-accounts). You may be required to enter into a separate
agreement with FIIOC. Charges for these services, if any, will be
determined based on the level of services to be rendered.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains, if any, to shareholders each year. Income dividends are
declared daily and paid monthly.
Income dividends declared are accrued daily throughout the month and are
normally distributed on the first business day of the following month.
Based on prior approval of each fund, dividends relating to Class I shares
redeemed during the month can be distributed on the day of redemption. Each
fund reserves the right to limit this service.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. Class I offers two options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your application, you
will be assigned this option.
2. CASH OPTION. You will be sent a wire for your dividend and capital gain
distributions, if any.
Dividends will be reinvested at each fund's Class I NAV on the last day of
the month. Capital gain distributions, if any, will be reinvested at the
NAV as of the record date of the distribution.
TAXES
As with any investment, you should consider how an investment in the funds
could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. Interest income that Tax-Exempt earns is
distributed to shareholders as income dividends. Interest that is federally
tax-free remains tax-free when it is distributed. Distributions from the
Taxable Funds, however, are subject to federal income tax and may also be
subject to state or local taxes. If you live outside the United States,
your distributions from these funds could also be taxed by the country in
which you reside.
For federal tax purposes, income and short-term capital gain
distributions from each Taxable Fund are taxed as dividends; long-term
capital gain distributions, if any, are taxed as long-term capital gains.
However, for shareholders of Tax-Exempt, gain on the sale of tax-free bonds
results in taxable distributions. Short-term capital gains and a portion of
the gain on bonds purchased at 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 March 31, 1996, __% of Treasury Only's; __% of
Treasury's; __% of Government's; __% of Domestic's; __% of Rated Money
Market's; and __% of Money Market's income distributions were derived from
interest on U.S. Government securities, which is generally exempt from
state income tax.
Distributions are taxable when they are paid, whether you take them in cash
or reinvest them. However, distributions declared in December and paid in
January are taxable as if they were paid on December 31.
Every January, the transfer agent will send you and the IRS a statement
showing the taxable distributions paid to you in the previous year.
A portion of Tax-Exempt's dividends may be free from state or local taxes.
Income from investments in your state are often tax-free to you. Each year,
the transfer agent will send you a breakdown of Tax-Exempt's income from
each state to help you calculate your taxes.
During the fiscal year ended March 31, 1996, __% of Tax-Exempt's
income dividends was free from federal income tax.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
EACH FUND IS OPEN FOR BUSINESS and its NAV is normally calculated each day
that both the Federal Reserve Bank of New York (New York Fed) (for
the Taxable Funds) or the Federal Reserve Bank of Kansas City
(Kansas City Fed) (for Tax-Exempt) and the New York Stock Exchange (NYSE)
are open. The following holiday closings have been scheduled for 1996: New
Year's Day, Martin Luther King's Birthday, Washington's Birthday, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day , Thanksgiving Day, and Christmas Day. Although FMR
expects the same holiday schedule to be observed in the future, the New
York Fed, the Kansas City Fed, or the NYSE may modify its holiday
schedule at any time. On any day that the New York Fed, the Kansas
City Fed, or the NYSE closes early, the principal government securities
markets close early (such as on days in advance of holidays generally
observed by participants in such markets), or as permitted by the SEC, the
right is reserved to advance the time on that day by which purchase and
redemption orders must be received.
To the extent that portfolio securities are traded in other markets on days
when the New York Fed, the Kansas City Fed, or the NYSE is closed,
each fund's NAV may be affected on days when investors do not have access
to the fund to purchase or redeem shares. Certain Fidelity funds may follow
different holiday closing schedules.
A CLASS'S NAV is the value of a single share. The NAV of Class I of each
fund is computed by adding Class I's pro rata share of the value of the
fund's investments, cash, and other assets, subtracting Class I's pro rata
share of the value of the fund's liabilities, subtracting the liabilities
allocated to Class I, and dividing the result by the number of Class I
shares of that fund that are outstanding. Each fund values its portfolio
securities on the basis of amortized cost. This method minimizes the effect
of changes in a security's market value and helps each fund maintain a
stable $1.00 share price.
The OFFERING PRICE (price to buy one share) and REDEMPTION PRICE (price to
sell one share) of Class l are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity and the transfer
agent may only be liable for losses resulting from unauthorized
transactions if they do not follow reasonable procedures designed to verify
the identity of the caller. Fidelity and the transfer agent will request
personalized security codes or other information, and may also record
calls. You should verify the accuracy of the confirmation statements
immediately after receipt. If you do not want the ability to redeem and
exchange by telephone, call the transfer agent for instructions. Additional
documentation may be required from corporations, associations , and
certain fiduciaries.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page __. Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
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 transactions in excess of $10 million ($5
million for Treasury Only).
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) All of your purchases must be made by federal funds
wire; checks will not be accepted for purchases.
(small solid bullet) If your wire is not received by the close of the
Federal Reserve Wire System, you could be liable for any losses or fees a
fund or the transfer agent has incurred or for interest and penalties.
The income declared for each of Treasury, Government, Domestic, and
Rated Money Market is based on estimates of net interest income for the
fund. Actual income may differ from estimates, and differences, if any,
will be included in the calculation of subsequent dividends.
Shareholders of record as of the closing time indicated in the table on
page __ will be entitled to dividends declared that day.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) Shares of each fund do not receive the dividend
declared on the day of redemption.
(small solid bullet) A fund may withhold redemption proceeds until it is
reasonably assured that investments credited to your account have been
received and collected.
When the NYSE, the 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 $1,000,000 due to redemption, the
account may be closed and the proceeds may be wired to your bank account of
record. You will be given 30 days' notice that your account will be closed
unless it is increased to the minimum.
THE TRANSFER AGENT MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder you have the privilege of exchanging Class I shares of any
fund offered through this prospectus at no charge for Class I shares of any
other fund offered through this prospectus.
An exchange involves the redemption of all or a portion of the shares of
one fund and the purchase of shares of another fund.
BY TELEPHONE. Exchanges may be requested on any day a fund is open for
business by calling Fidelity Client Services at the number listed on page
__ between 8:30 a.m. and the closing time indicated in the table on page
__.
BY MAIL. You may exchange shares on any business day by submitting written
instructions with an authorized signature which is on file for that
account. Written requests for exchanges should contain the fund name,
class name, account number, the number of shares to be redeemed, and
the name of the fund to be purchased. Written requests for exchange should
be mailed to Fidelity Client Services at the address on page __.
WHEN YOU PLACE AN ORDER TO EXCHANGE SHARES, Class I shares will be redeemed
at the next determined NAV after your order is received and accepted by the
transfer agent. Shares of the fund to be acquired will be purchased at its
next determined NAV after redemption proceeds are made available. You
should note that, under certain circumstances, a fund may take up to seven
days to make redemption proceeds available for the exchange purchase of
shares of another fund. In addition, please note the following:
(small solid bullet) Exchanges will not be permitted until a completed and
signed account application is on file.
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) You will earn dividends in the acquired fund in
accordance with the fund's customary policy, normally on the day the
exchange request is received.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
No dealer, sales representative , or any other person has been
authorized to give any information or to make any representations, other
than those contained in this Prospectus and in the related SAI, in
connection with the offer contained in this Prospectus. If given or made,
such other information or representations must not be relied upon as having
been authorized by the funds or FDC. This Prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell or to buy shares of
the funds to any person to whom it is unlawful to make such offer.
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS - CLASS I
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page; Table of Contents
12 ............................ *
13 a - c ............................ Investment Policies and Limitations
d ............................ Portfolio Transactions
14 a - c ............................ Trustees and Officers
15 a ............................ *
b ............................ Description of the Trusts
c ............................ Trustees and Officers
16 a i ............................ FMR
ii ............................ Trustees and Officers
iii ............................ Management Contracts
b,c,d ............................ Management Contracts
e ............................ *
f ............................ Distribution and Service Plans
g ............................ *
h ............................ Description of the Trusts
i ............................ Management Contracts
17 a ............................ Portfolio Transactions
b ............................ Portfolio Transactions
c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trusts
b ............................ *
19 a ............................ Additional Purchase, Exchange and Redemption
Information
b ............................ Additional Purchase, Exchange and Redemption
Information; Valuation
c ............................ *
20 Distributions and Taxes
21 a, b ............................ Distribution and Service Plans; Management
Contracts
c ............................ *
22 ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS: CLASS I
TREASURY ONLY, TREASURY, GOVERNMENT, DOMESTIC, RATED MONEY MARKET, MONEY
MARKET, AND TAX-EXEMPT
Treasury Only is a series of Daily Money Fund; Treasury, Government,
Domestic, and Money Market are series of Fidelity Institutional Cash
Portfolios; Rated Money Market is a series of Fidelity Money Market Trust;
and Tax-Exempt is a series of Fidelity Institutional Tax-Exempt Cash
Portfolios
STATEMENT OF ADDITIONAL INFORMATION
JULY 31, 1996
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus (dated
July 31, 1996). Please retain this document for future reference. The
funds' financial statements and financial highlights, included in the
Annual Report, for the fiscal year ended March 31, 1996, are incorporated
herein by reference. To obtain an additional copy of the Prospectus or the
Annual Report, please call Fidelity Client Services at 1-800-843-3001.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation
Performance
Additional Purchase, Exchange , and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Contracts with FMR Affiliates
Distribution and Service Plans
Description of the Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISER
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT FOR TAXABLE FUNDS
Fidelity Investments Institutional Operations Company (FIIOC)
TRANSFER AGENT FOR TAX-EXEMPT
UMB Bank, n.a. (UMB)
IMMI- PTB -0 7 96
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
P rospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any subsequent
change in values, net assets, or other circumstances will not be considered
when determining whether the investment complies with a fund's
investment policies and limitations.
A fund's fundamental investment policies and limitations
can 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 TREASURY ONLY
THE FOLLOWING ARE TREASURY ONLY'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(8) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL:
(i) The fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vi) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
Subject to revision upon 90 days' notice to shareholders, the fund does
not intend to engage in reverse repurchase agreements.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF TREASURY
THE FOLLOWING ARE TREASURY'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an affiliate
serves as an investment adviser or (b) by engaging in reverse repurchase
agreements with any party. The fund will not purchase any security while
borrowings (excluding reverse repurchase agreements) representing more than
5% of its total assets are outstanding. The fund will not borrow from other
funds advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase a security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
As an operating policy, the fund intends to invest 100% of its total
assets in U.S. Treasury bills, notes, and bonds and repurchase agreements
comprised of those obligations at all times. This policy may only be
changed upon 90 days' notice to shareholders.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF GOVERNMENT
THE FOLLOWING ARE GOVERNMENT'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuers together own more than 5% of such issuer's securities.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF DOMESTIC
THE FOLLOWING ARE DOMESTIC'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(viii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(ix) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF RATED MONEY MARKET
THE FOLLOWING ARE RATED MONEY MARKET'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments;
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(9) invest in oil, gas, or other mineral exploration or development
programs; or
(10) write or purchase any put or call option. This limitation does not
apply to options attached to, or acquired or traded together with, their
underlying securities, and does not apply to securities that incorporate
features similar to options.
(11) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL:
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in securities of business
enterprises that, including predecessors, have a record of less than three
years continuous operation.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitation (ix), pass-through entities and other special
purposes vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF MONEY MARKET
THE FOLLOWING ARE MONEY MARKET'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(viii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(ix) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of reorganization, consolidation, or merger.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF TAX-EXEMPT
THE FOLLOWING ARE TAX-EXEMPT'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) make short sales of securities;
(4) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions;
(5) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(6) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(7) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies,
instrumentalities, territories or possessions, or issued or guaranteed by a
state government or political subdivision thereof) if as a result more than
25% of the value of its total assets would be invested in securities of
companies having their principal business activities in the same industry;
(8) purchase or sell real estate, but this shall not prevent the fund from
investing in municipal bonds or other obligations secured by real estate or
interests therein;
(9) purchase or sell physical commodities;
(10) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements; or
(11) invest in oil, gas, or other mineral exploration or development
programs.
(12) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
For purposes of investment limitations (1) and (7), FMR identifies the
issuer of a security depending on its terms and conditions. In identifying
the issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (5)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(ii) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iii) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(iv) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(v) The fund does not currently intend to (a) purchase the securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(vi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(vii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
Securities must be rated in accordance with applicable rules in the highest
rating category for short-term securities by at least one nationally
recognized rating service (NRSRO) and rated in one of the two highest
categories for short-term securities by another NRSRO if rated by more than
one NRSRO, or, if unrated, judged to be equivalent to highest quality by
FMR pursuant to procedures adopted by the Board of Trustees. The fund's
policy regarding limiting investments to the highest rating category may be
changed upon 90 days' prior notice to shareholders.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the funds.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the 1940 Act. These transactions may include
repurchase agreements with custodian banks; short-term obligations of, and
repurchase agreements with, the 50 largest U.S. banks (measured by
deposits); municipal securities; U.S. Government securities with affiliated
financial institutions that are primary dealers in these securities;
short-term currency transactions; and short-term borrowings. In accordance
with exemptive orders issued by the Securities and Exchange Commission
(SEC), the Board of Trustees has established and periodically reviews
procedures applicable to transactions involving affiliated financial
institutions.
ASSET-BACKED SECURITIES include pools of mortgages, loans,
receivables , or other assets. Payment of principal and interest may
be largely dependent upon the cash flows generated by the assets backing
the securities and, in certain cases, supported by letters of credit,
surety bonds, or other credit enhancements. The value of asset-backed
securities may also be affected by the creditworthiness of the servicing
agent for the pool, the originator of the loans or receivables, or the
entities providing the credit support.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
DOMESTIC AND FOREIGN ISSUERS. Investments may be made in U.S.
dollar-denominated time deposits, certificates of deposit, and bankers'
acceptances of U.S. banks and their branches located outside of the United
States, U.S. branches and agencies of foreign banks, and foreign branches
of foreign banks. A fund may also invest in U.S. dollar-denominated
securities issued or guaranteed by other U.S. or foreign issuers, including
U.S. and foreign corporations or other business organizations, foreign
governments, foreign government agencies or instrumentalities, and U.S. and
foreign financial institutions, including savings and loan institutions,
insurance companies, mortgage bankers, and real estate investment trusts,
as well as banks.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental
regulation. Payment of interest and principal on these obligations may also
be affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). In addition, evidence of
ownership of portfolio securities may be held outside of the United States
and a fund may be subject to the risks associated with the holding of such
property overseas. Various provisions of federal law governing the
establishment and operation of U.S. branches do not apply to foreign
branches of U.S. banks.
Obligations of U.S. branches and agencies of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation, as well as by governmental action in the country in which the
foreign bank has its head office.
Obligations of foreign issuers involve certain additional risks. These
risks may include future unfavorable political and economic developments,
withholding taxes, seizures of foreign deposits, currency controls,
interest limitations, or other governmental restrictions that might affect
payment of principal or interest, or the ability to honor a credit
commitment. Additionally, there may be less public information available
about foreign entities. Foreign issuers may be subject to less governmental
regulation and supervision than U.S. issuers. Foreign issuers also
generally are not bound by uniform accounting, auditing, and financial
reporting requirements comparable to those applicable to U.S. issuers.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, Tax-Exempt does not
intend to invest in securities whose interest is federally taxable.
However, from time to time on a temporary basis, Tax-Exempt may invest a
portion of its assets in fixed-income obligations whose interest is subject
to federal income tax.
Should Tax-Exempt invest in federally taxable obligations, it would
purchase securities that, in FMR's judgment, are of high quality. These
obligations would include those issued or guaranteed by the U.S. Government
or its agencies or instrumentalities and repurchase agreements backed by
such obligations.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before state legislatures that
would affect the state tax treatment of Tax-Exempt's distributions. If such
proposals were enacted, the availability of municipal obligations and the
value of Tax-Exempt's holdings would be affected and the Trustees would
reevaluate Tax-Exempt's investment objectives and policies.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by the funds to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days. Also, FMR may determine some restricted
securities, municipal lease obligations, and time deposits to be illiquid.
In the absence of market quotations, illiquid investments are valued for
purposes of monitoring amortized cost valuation at fair value as determined
in good faith by a committee appointed by the Board of Trustees. If through
a change in values, net assets, or other circumstances, a fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, each fund has received permission to lend money
to, and borrow money from, other funds advised by FMR or its affiliates.
Treasury Only, Treasury, Government, and Tax-Exem pt currently
intend to particip ate in this program only as borrowers. A fund will
borrow thr o ugh the program only wh en the costs are equal to
or lower than the cost of bank loans. Interfund loans and borrowings
normally extend overnigh t, but can have a maximum duration of seven
days. Loans may be called on one day's notice. Domestic, Rated Money
Market, and Money Market will lend through the program only when the
returns are higher than those available from other short-term instruments
(such as repurchase agreements). A fund may have to borrow from a bank
at a higher interest rate if an interfund loan is called or not renewed.
Any delay in repayment to a lending fund could result in a lost investment
opportunity or additional borrowing costs .
MONEY MARKET SECURITIES are high-quality, short-term obligations. Some
money market securities employ a trust or other similar structure to modify
the maturity, price characteristics, or quality of financial assets. For
example, put features can be used to modify the maturity of a security, or
interest rate adjustment features can be used to enhance price stability.
If the structure does not perform as intended, adverse tax or investment
consequences may result. Neither the Internal Revenue Service (IRS) nor any
other regulatory authority has ruled definitively on certain legal issues
presented by structured securities. Future tax or other regulatory
determinations could adversely affect the value, liquidity, or tax
treatment of the income received from these securities or the nature and
timing of distributions made by the funds.
MUNICIPAL LEASES and participation interests therein may take the form of a
lease, an installment purchase, or a conditional sale contract and are
issued by state and local governments and authorities to acquire land or a
wide variety of equipment and facilities. Generally, the funds will not
hold such obligations directly as a lessor of the property, but will
purchase a participation interest in a municipal obligation from a bank or
other third party. A participation interest gives a fund a specified,
undivided interest in the obligation in proportion to its purchased
interest in the total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
MUNICIPAL MARKET DISRUPTION RISK. The value of municipal
securities may be affected by uncertainties in the municipal market related
to legislation or litigation involving the taxation of municipal securities
or the rights of municipal securities holders in the event of a bankruptcy.
Municipal bankruptcies are relatively rare, and certain provisions of the
U.S. Bankruptcy Code governing such bankruptcies are unclear and remain
untested. Further, the application of state law to municipal issuers could
produce varying results among the states or among municipal securities
issuers within a state. These legal uncertainties could affect the
municipal securities market generally, certain specific segments of the
market, or the relative credit quality of particular securities. Any of
these effects could have a significant impact on the prices of some or all
of the municipal securities held by a fund, making it more difficult for
the fund to maintain a stable net asset value per share.
MUNICIPAL SECTORS:
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open transmission
access to any electricity supplier, although it is not presently known to
what extent competition will evolve. Other risks include: (a) the
availability and cost of fuel, (b) the availability and cost of capital,
(c) the effects of conservation on energy demand, (d) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (e) timely and sufficient rate
increases, and (f) opposition to nuclear power.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
other state or local health care reform measures; medical and technological
advances which dramatically alter the need for health services or the way
in which such services are delivered; changes in medical coverage which
alter the traditional fee-for-service revenue stream; and efforts by
employers, insurers, and governmental agencies to reduce the costs of
health insurance and health care services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They generally are
secured by the revenues derived from mortgages purchased with the proceeds
of the bond issue. It is extremely difficult to predict the supply of
available mortgages to be purchased with the proceeds of an issue or the
future cash flow from the underlying mortgages. Consequently, there are
risks that proceeds will exceed supply, resulting in early retirement of
bonds, or that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student loans.
Bonds issued to supply educational institutions with funds are subject to
the risk of unanticipated revenue decline, primarily the result of
decreasing student enrollment or decreasing state and federal funding.
Among the factors that may lead to declining or insufficient revenues are
restrictions on students' ability to pay tuition, availability of state and
federal funding, and general economic conditions. Student loan revenue
bonds are generally offered by state (or substate) authorities or
commissions and are backed by pools of student loans. Underlying student
loans may be guaranteed by state guarantee agencies and may be subject to
reimbursement by the United States Department of Education through its
guaranteed student loan program. Others may be private, uninsured loans
made to parents or students which are supported by reserves or other forms
of credit enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student loan
revenue bonds are impacted by numerous factors, including the rate of
student loan defaults, seasoning of the loan portfolio, and student
repayment deferral during periods of forbearance. Other risks associated
with student loan revenue bonds include potential changes in federal
legislation regarding student loan revenue bonds, state guarantee agency
reimbursement and continued federal interest and other program subsidies
currently in effect.
WATER AND SEWER. Water and sewer revenue bonds are often considered to have
relatively secure credit as a result of their issuer's importance, monopoly
status, and generally unimpeded ability to raise rates. Despite this, lack
of water supply due to insufficient rain, run-off, or snow pack is a
concern that has led to past defaults. Further, public resistance to rate
increases, costly environmental litigation, and F ederal
environmental mandates are challenges faced by issuers of water and sewer
bonds.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways , or other transit
facilities. Airport bonds are dependent on the general stability of the
airline industry and on the stability of a specific carrier who uses the
airport as a hub. Air traffic generally follows broader economic trends and
is also affected by the price and availability of fuel. Toll road bonds are
also affected by the cost and availability of fuel as well as toll levels,
the presence of competing roads, and the general economic health of
an area. Fuel costs and availability also affect other
transportation-related securities, as does the presence of alternate forms
of transportation, such as public transportation.
PUT FEATURES entitle the holder to sell a security back to the issuer or a
third party at any time or at specified intervals. They are subject to the
risk that the put provider is unable to honor the put feature (purchase the
security). Put providers often support their ability to buy securities on
demand by obtaining letters of credit or other guarantees from other
entities. Demand features, standby commitments, and tender options are
types of put features.
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the funds may purchase only high-quality securities that FMR
believes present minimal credit risks. To be considered high-quality, a
security must be rated in accordance with applicable rules in one of the
two highest categories for short-term securities by at least two nationally
recognized rating services (or by one, if only one rating service has rated
the security); or, if unrated, judged to be of equivalent quality by FMR.
High-quality securities are divided into "first tier" and "second tier"
securities. First tier securities are those deemed to be in the highest
rating category (e.g., Standard & Poor's A-1 or SP-1), and second tier
securities are those deemed to be in the second highest rating category
(e.g., Standard & Poor's A-2 or SP-2). Split-rated securities may be
determined to be either first or second tier based on applicable
regulations.
Each of Treasury Only, Treasury, Government, Domestic, Rated Money
Market, and Money Market may not invest more than 5% of its total
assets in second tier securities. In addition, each of Treasury Only,
Treasury, Government, Domestic, Rated Money Market, and Money Market
may not invest more than 1% of its total assets or $1 million
(whichever is greater) in the second tier securities of a single issuer.
Each fund currently intends to limit its investments to securities with
remaining maturities of 397 days or less, and to maintain a dollar-weighted
average maturity of 90 days or less. When determining the maturity of a
security, a fund may look to an interest rate reset or demand feature.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. To protect a
fund from the risk that the original seller will not fulfill its
obligation, the securities are held in an account of the fund at a bank,
marked-to-market daily, and maintained at a value at least equal to the
sale price plus the accrued incremental amount. While it does not presently
appear possible to eliminate all risks from these transactions
(particularly the possibility that the value of the underlying security
will be less than the resale price, as well as delays and costs to a fund
in connection with bankruptcy proceedings), it is 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 the fund in anticipation of increased
interest rates, without sacrificing the current yield of the securities
sold short. If a fund enters into a short sale against the box, it will be
required to set aside securities equivalent in kind and amount to the
securities sold short (or securities convertible or exchangeable into such
securities) and will be required to hold such securities while the short
sale is outstanding. The fund will incur transaction costs, including
interest expenses, in connection with opening, maintaining, and closing
short sales against the box.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. FMR may rely on its evaluation of
the credit of a bank or another entity in determining whether to purchase a
security supported by a letter of credit guarantee, insurance or other
source of credit or liquidity. In evaluating the credit of a foreign bank
or other foreign entities, FMR will consider whether adequate public
information about the entity is available and whether the entity may be
subject to unfavorable political or economic developments, currency
controls, or other government restrictions that might affect its ability to
honor its commitment.
STRIPPED GOVERNMENT SECURITIES. Stripped securities are created by
separating the income and principal components of a debt instrument and
selling them separately. U.S. Treasury S TRIPS (Separate Trading of
Registered Interest and Principal of Securities) are created when the
coupon payments and the principal payment are stripped from an outstanding
Treasury bond by the Federal Reserve Bank . Bonds issued by
g overnment agencies also may be stripped in this fashion.
Privately stripped government securities are created when a dealer deposits
a Treasury security or f ederal agency security with a custodian for
safekeeping and then sells the coupon payments and principal payment that
will be generated by this security. Proprietary receipts, such as
Certificates of Accrual on Treasury Securities (CATS), Treasury Investment
Growth Receipts (TIGRS), and generic Treasury Receipts (TRs), are stripped
U.S. Treasury securities that are separated into their component parts
through trusts created by their broker sponsors . Bonds issued by
government agencies also may be stripped in this fashion.
Because of the SEC's views on privately stripped government securities, a
fund must evaluate them as it would non-government securities pursuant to
regulatory guidelines applicable to all money market funds. A fund
currently intends to purchase only those privately stripped government
securities that have either received the highest rating from two nationally
recognized rating services (or one, if only one has rated the security) or,
if unrated, have been judged to be of equivalent quality by FMR pursuant to
procedures adopted by the Board of Trustees.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments of
the interest rate paid on the security. Variable rate securities provide
for a specified periodic adjustment in the interest rate, while floating
rate securities have interest rates that change whenever there is a change
in a designated benchmark rate. Some variable or floating rate securities
have put features.
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 March 31, 1996, 1995, and 1994, the funds
paid no brokerage commissions. During the fiscal year ended March 31, 1996,
the funds paid no fees to brokerage firms that provided research.
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment adviser, particularly when the same
security is suitable for the investment objective of more than one fund or
account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to each fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION
Fidelity Service Company (FSC) normally determines a class's net asset
value per share (NAV) at 12:00 noon Eastern time for Tax-Exempt; 2:00 p.m.
Eastern time for Treasury Only; 3:00 p.m. Eastern time for Money Market;
and 3:00 p.m. and 5:00 p.m. Eastern time for Treasury, Government,
Domestic, and Rated Money Market. The valuation of portfolio securities is
determined as of these times for the purpose of computing each class's
NAV.
Portfolio securities and other assets are valued on the basis of amortized
cost. This technique involves initially valuing an instrument at its cost
as adjusted for amortization of premium or accretion of discount rather
than its current market value. The amortized cost value of an instrument
may be higher or lower than the price a fund would receive if it sold the
instrument.
During periods of declining interest rates, a class' s yield based on
amortized cost valuation may be higher than that which would result
if the fund used market valuations to determine its NAV. The converse would
apply during periods of rising interest rates.
Valuing each fund's investments on the basis of amortized cost and use
of the term "money market fund" are permitted pursuant to Rule 2a-7 under
the 1940 Act. Each fund must adhere to certain conditions under Rule 2a-7,
as summarized in the section entitled "Quality and Maturity" on page
___.
The Board of Trustees oversees FMR's adherence to the provisions of Rule
2a-7 and has established procedures designed to stabilize each
class's NAV at $1.00. At such intervals as they deem appropriate,
the Trustees consider the extent to which NAV calculated by using market
valuations would deviate from $1.00 per share. If the Trustees believe that
a deviation from a 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 class's yield a nd total
return fluctuate in response to market conditions and other factors.
YIELD CALCULATIONS. To compute a class's yield for a period, the net change
in value of a hypothetical account containing one share reflects the value
of additional shares purchased with dividends from the one original share
and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at the
beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current annualized yield. An effective
yield may also be calculated by compounding the base period return over a
one-year period. In addition to the current yield, the funds may quote
yields in advertising based on any historical seven-day period. Yields
for each cla ss are calculated on the same basis as other money market
funds, as required by applicable regulations.
Yield information may be useful in reviewing a class's performance and in
providing a basis for comparison with other investment alternatives.
However, each class's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates a
class's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates a class's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing a class's current yield. In
periods of rising interest rates, the opposite can be expected to occur.
A class's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment before taxes to equal the class's tax-free
yield. Tax-equivalent yields are calculated by dividing a class's yield by
the result of one minus a stated federal or combined federal and state tax
rate. If only a portion of a class's yield is tax-exempt, only that portion
is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 1996. It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from _% to _%. Of course, no
as surance can be given that a class will achieve any specific
tax-exempt yield. While Tax-Exempt invests principally in
obligations whose interest is exempt from federal income tax, other income
received by the fund may be taxable.
1996 TAX RATES AND TAX-EQUIVALENT YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal If individual tax-exempt yield is:
Taxable Income* Tax % % % % % % % % %
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single Return Joint Return Bracket** Then taxable-equivalent yield is
</TABLE>
$ $ % % % % % % % % %
* Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions, limitations
on itemized deductions, and other credits, exclusions, and adjustments
which may increase a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
Tax-Exempt may invest a portion of its assets in obligations that are
subject to federal income tax. When the fund invests in these obligations,
its tax-equivalent yield will be lower. In the table above, tax-equivalent
yields are calculated assuming investments are 100% federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising
reflect all aspects of a class's return, including the effect of
reinvesting dividends and capital gain distributions, and any change in the
class's NAV over a stated period. Average annual total returns are
calculated by determining the growth or decline in value of a hypothetical
historical investment in a class over a stated period, and then calculating
the annually compounded percentage rate that would have produced the same
result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative total return of 100% over ten years would
produce an average annual total return of 7.18%, which is the steady annual
rate of return that would equal 100% growth on a compounded basis in ten
years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that a class's
performance is not constant over time, but changes from year to year, and
that average annual total returns represent averaged figures as opposed to
the actual year-to-year performance of the class.
In addition to average annual total returns, a class may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
HISTORICAL FUND RESULTS. The following table shows 7-day yields,
tax-equivalent yields, and total returns for Class I of each fund for the
period ended March 31 , 1996.
The tax-equivalent yield is based on a __% federal income tax rate.
<TABLE>
<CAPTION>
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Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seven-Da Tax- One Five Ten One Five Ten
y Equivalen Year Years Years/ Year Years Years/
Yield t Life of Life of
Yield Fund* Fund*
Treasury Only - % N/A % % % % % %
Class I
Treasury - Class I % N/A % % % % % %
Government - % N/A % % % % % %
Class I
Domestic - Class I % N/A % % % % % %
Rated Money % N/A % % % % % %
Market - Class I
Money Market - % N/A % % % % % %
Class I
Tax-Exempt - % % % % % % % %
Class I
</TABLE>
* Life of Fund figures are from commencement of operations of each fund,
except Government, Rated Money Market, Money Market, and Tax-Exempt which
each report "Ten Years" figures. Commencement of operations for each fund
is as follows: Treasury Only - October 3, 1990; Treasury - February 2,
1987; Government - July 25, 1985; Domestic - November 3, 1989; Rated Money
Market - March 15, 1979; Money Market - July 5, 1985; and Tax-Exempt - July
25, 1985.
Note: If FMR had not reimbursed certain fund expenses during these periods,
total returns would have been lower and the yields for Class I of each fund
would have been:
Seven-day
Tax-Equivalent
Yield Yield
Treasury Only - Class I % N/A
Treasury - Class I % N/A
Government - Class I % N/A
Domestic - Class I % N/A
Rated Money Market - Class I % N/A
Money Market - Class I % N/A
Tax-Exempt - Class I % %
The following tables show the income and capital elements of each fund's
Class I cumulative total return. Each table compares a fund's Class I
return to the record of the Standard & Poor's Composite Index of 500 Stocks
(S&P 500), the Dow Jones Industrial Average (DJIA), and the cost of living
(measured by the Consumer Price Index, or CPI) over the same period. The
CPI information is as of the month-end closest to the initial investment
date for each fund. The S&P 500 and DJIA comparisons are provided to show
how each fund's Class I total return compared to the record of a broad
average of common stocks and a narrower set of stocks of major industrial
companies, respectively, over the same period. Of course, since each fund
invests in short-term fixed-income securities, common stocks represent a
different type of investment from the fund. Common stocks generally offer
greater growth potential than the funds, but generally experience greater
price volatility, which means greater potential for loss. In addition,
common stocks generally provide lower income than a fixed-income investment
such as the funds. Figures for the S&P 500 and DJIA are based on the prices
of unmanaged groups of stocks and, unlike the funds' Class I returns, do
not include the effect of paying brokerage commissions or other costs of
investing.
TREASURY ONLY
HISTORICAL FUND RESULTS
During the period from October 3, 1990 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class I of Treasury
Only would have grown to $______, assuming all distributions were
reinvested. This was a period of fluctuating interest rates and the figures
below should not be considered representative of the dividend income or
capital gain or loss that could be realized from an investment in Class I
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995+ 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991* 10,000 0
</TABLE>
* From October 3, 1990 (commencement of operations).
+ The fiscal year end of the fund changed from July 31 to March 31 in
February 1995.
Explanatory Notes: With an initial investment of $10,000 , made on
October 3, 1990, the net amount invested in Class I shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested) , amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class I shares of the fund over time would have been smaller, and cash
payments (dividends) for the period would have amounted to $. The fund did
not distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
TREASURY
HISTORICAL FUND RESULTS
During the period from February 2, 1987 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class I of Treasury
would have grown to $, assuming all distributions were reinvested. This was
a period of fluctuating interest rates and the figures below should not be
considered representative of the dividend income or capital gain or loss
that could be realized from an investment in Class I of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987* 10,000 0
</TABLE>
* From February 2, 1987 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on February
2, 1987, the net amount invested in Class I shares of the fund was $10,000.
The cost of the initial investment ($10,000) , together with the
aggregate cost of reinvested dividends for the period covered (their cash
value at the time they were reinvested), amounted to $. If distributions
had not been reinvested, the amount of distributions earned from Class I
shares of the fund over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $. The fund did not
distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
GOVERNMENT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class I of Government would have grown to $, assuming all
distributions were reinvested. This was a period of fluctuating interest
rates and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in Class I of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class I shares of the fund was $10,000.
The cost of the initial investment ($10,000) , together with the
aggregate cost of reinvested dividends for the period covered (their cash
value at the time they were reinvested), amounted to $. If distributions
had not been reinvested, the amount of distributions earned from Class I
shares of the fund over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $. The fund did not
distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
DOMESTIC
HISTORICAL FUND RESULTS
During the period from November 3, 1989 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class I of Domestic
would have grown to $______, assuming all distributions were reinvested.
This was a period of fluctuating interest rates and the figures below
should not be considered representative of the dividend income or capital
gain or loss that could be realized from an investment in Class I of the
fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990* 10,000 0
</TABLE>
* From November 3, 1989 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on November
3, 1989, the net amount invested in Class I shares of the fund was $10,000.
The cost of the initial investment ($10,000) , together with the
aggregate cost of reinvested dividends for the period covered (their cash
value at the time they were reinvested), amounted to $. If distributions
had not been reinvested, the amount of distributions earned from Class I
shares of the fund over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $ ______ . The fund
did not distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
RATED MONEY MARKET
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class I of Rated Money Market would have grown to $, assuming
all distributions were reinvested. This was a period of fluctuating
interest rates and the figures below should not be considered
representative of the dividend income or capital gain or loss that could be
realized from an investment in Class I of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P DJIA Cost of
3/31 Initial Reinvested Reinvested Value 500 Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 + $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 + 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
+ The fiscal year end of the fund changed from August 31 to March
31 in June 1995, and from October 31 to August 31 in July 1992.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class I shares of the fund was $10,000.
The cost of the initial investment ($10,000) , together with the
aggregate cost of reinvested dividends for the period covered (their cash
value at the time they were reinvested), amounted to $. If distributions
had not been reinvested, the amount of distributions earned from Class I
shares of the fund over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $. The fund did not
distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
MONEY MARKET
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class I of Money Market would have grown to $, assuming all
distributions were reinvested. This was a period of fluctuating interest
rates and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in Class I of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class I shares of the fund was $10,000.
The cost of the initial investment ($10,000) , together with the
aggregate cost of reinvested dividends for the period covered (their cash
value at the time they were reinvested), amounted to $. If distributions
had not been reinvested, the amount of distributions earned from Class I
shares of the fund over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $. The fund did not
distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
TAX-EXEMPT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class I of Tax-Exempt would have grown to $, assuming all
distributions were reinvested. This was a period of fluctuating interest
rates and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in Class I of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 + 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
+ The fiscal year end of the fund changed from May 31 to March 31
in February 1995.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class I shares of the fund was $10,000.
The cost of the initial investment ($10,000) , together with the
aggregate cost of reinvested dividends for the period covered (their cash
value at the time they were reinvested), amounted to $. If distributions
had not been reinvested, the amount of distributions earned from Class I
shares of the fund over time would have been smaller, and cash payments
(dividends) for the period would have amounted to $. The fund did not
distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed as
mutual fund rankings prepared by Lipper Analytical Services, Inc. (Lipper),
an independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of
total return, assuming reinvestment of distributions, but does not take
sales charges or redemption fees into consideration, and such comparison
is prepared without regard to tax consequences. Lipper may also rank
funds based on yield. In addition to the mutual fund rankings, a fund's
performance may be compared to stock, bond, and money market mutual fund
performance indices prepared by Lipper or other organizations. When
comparing these indices, it is important to remember the risk and return
characteristics of each type of investment. For example, while stock mutual
funds may offer higher potential returns, they also carry the highest
degree of share price volatility. Likewise, money market funds may offer
greater stability of principal, but generally do not offer the higher
potential returns available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND
AVERAGES(trademark)/Government, which is reported in the MONEY FUND
REPORT(registered trademark), covers over ___ 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 ___
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 ___ 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 March 31 , 1996, FMR advised over $__ billion in tax-free
fund assets, $__ billion in money market fund assets, $___ billion in
equity fund assets, $__ billion in international fund assets, and $___
billion in Spartan fund assets. The funds may reference the growth and
variety of money market mutual funds and the adviser's innovation and
participation in the industry. The equity funds under management figure
represents the largest amount of equity fund assets under management by a
mutual fund investment adviser in the United States, making FMR America's
leading equity (stock) fund manager. FMR, its subsidiaries, and affiliates
maintain a worldwide information and communications network for the purpose
of researching and managing investments abroad.
In addition to performance rankings, each class may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A class's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a class's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may
be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) a fund suspends the
redemption of the shares to be exchanged as permitted under the 1940 Act or
the rules and regulations thereunder, or a fund to be acquired suspends the
sale of its shares because it is unable to invest amounts effectively in
accordance with its investment objective and policies.
In the prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable
to invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DIVIDENDS. Because each fund's income is primarily derived from interest,
dividends from the fund generally will not qualify for the
dividends-received deduction available to corporate shareholders.
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. G overnment obligations
may be exempt from state and local taxation.
To the extent that each fund's income is designated as federally tax-exempt
interest, the daily dividends declared by the fund are also federally
tax-exempt. Short-term capital gains are distributed as dividend income,
but do not qualify for the dividends-received deduction. These gains will
be taxed as ordinary income.
Each fund will send each shareholder a notice in January describing the tax
status of dividend and capital gain distributions (if any) for the prior
year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as Social Security
benefits, may be subject to federal income tax on up to 85% of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
Tax-Exempt purchases municipal securities that are free of federal
income tax based on opinions of counsel regarding th e tax status.
These opinions will generall y be based on covenants by the
issuers or other parties regarding continuing compliance with federal tax
requirements. If at any time the covenants are not complied with,
distribution to shareholders of interest on a security could become
federally taxable retroactive to the date a security was issued. For
certain types of structured securities, opinions of counsel may also be
based on the effect of the structure on the federal tax treatment of the
income.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities is subject to the federal alternative minimum tax
(AMT), although the interest continues to be excludable from gross income
for other tax purposes. Interest from private activity securities will be
considered tax - exempt for purposes of Tax-Exempt's policy o f
investing so that at least 80% of its income distribution is free
from federal income tax. Interest from private activity securities is a tax
preference item for the purposes of determining whether a taxpayer is
subject to the AMT and the a mount of AMT to be paid, if any. Private
activity securities issued after August 7, 1986 to benefit a private or
industrial user or to finance a private facility are affected by this rule.
A portion of the gain on bonds purchased with market discount after April
30, 1993 and short-term capital gains distributed by the fund are taxable
to shareholders as dividends, not as capital gains. Dividend distributions
resulting from a recharacterization of gain from the sale of bonds
purchased with market discount after April 30, 1993 are not considered
income for the purposes of Tax-Exempt's policy of investing so that at
least 80% of its income distribution is free from federal income
tax. Tax - Exempt may distribute any net realized short-term capital
gains and taxable market discount once a year or more often, as
necessary, to maintain its net asset value at $1.00 per share.
It is the current position of the staff of the SEC that a fund that uses
the term "tax-exempt" in its name may not derive more than 20% of its
income from municipal obligations that pay interest that is a preference
item for purposes of the AMT. According to this position, at least 80% of
Tax-Exempt's income would have to be exempt from the AMT as well as from
federal income taxes.
Corporate investors should note that a tax preference item for the purposes
of the corporate AMT is 75% of the amount by which adjusted current
earnings (which includes tax-exempt interest) exceeds the alternative
minimum taxable income of the corporation. If a shareholder receives an
exempt-interest dividend and sells shares at a loss after holding them for
a period of six months or less, the loss will be disallowed to the extent
of the amount of the exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Each fund may distribute any net realized
short-term capital gains once a year or more often as necessary, to
maintain its net asset value at $1.00 per share. Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market do not
anticipate earning long-term capital gains on securities held by each fund.
Tax-Exempt does not anticipate distributing long-term capital gains.
As of the fiscal year ended March 31, 1996, Treasury Only had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Treasury Only, of which $ will expire on March 31, , respectively, is
available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Treasury had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Treasury, of which $ will expire on March 31, , respectively, is available
to offset future capital gains.
As of the fiscal year ended March 31, 1996, Government had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Government, of which $ will expire on March 31, , respectively, is
available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Domestic had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Domestic, of which $ will expire on March 31, , respectively, is available
to offset future capital gains.
As of the fiscal year ended March 31, 1996, Rated Money Market had capital
loss carryforwards aggregating approximately $. The loss carryforward for
Rated Money Market, of which $ will expire on March 31 , respectively, is
available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Money Market had capital loss
carryforwards aggregating approximately $. The loss carryforward for Money
Market, of which $ will expire on March 31, , respectively, is available to
offset future capital gains.
As of the fiscal year ended March 31, 1996, Tax-Exempt had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Tax-Exempt, which will expire on March 31, , is available to offset future
capital gains.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
state law provides for a pass-through of the state and local income tax
exemption afforded to direct owners of U.S. Government securities. Some
states limit this to mutual funds that invest a certain amount in U.S.
Government securities, and some types of securities, such as repurchase
agreements and some agency backed securities, may not qualify for this
benefit. The tax treatment of your dividend distributions from a fund will
be the same as if you directly owned your proportionate share of the U.S.
Government securities in the fund's portfolio. Because the income earned on
most U.S. Government securities in which a fund invests is exempt from
state and local income taxes, the portion of your dividends from the fund
attributable to these securities will also be free from income taxes. The
exemption from state and local income taxation does not preclude states
from assessing other taxes on the ownership of U.S. Government securities.
In a number of states, corporate franchise (income) tax laws do not exempt
interest earned on U.S. Government securities whether such securities are
held directly or through a fund.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of a fund's
total assets are invested in securities of foreign issuers, the fund may
elect to pass through foreign taxes paid and thereby allow shareholders to
take a credit or deduction on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis.
Each fund is treated as a separate entity from the other funds of its
respective Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the 1940 Act, control of a company is presumed where
one individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting common
stock and the execution of the shareholders' voting agreement, members of
the Johnson family may be deemed, under the 1940 Act, to form a controlling
group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
FIIOC, which performs shareholder servicing functions for institutional
customers and funds sold through intermediaries; and Fidelity Investments
Retail Marketing Company, which provides marketing services to various
companies within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees and executive officers of each trust are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. Trustees and officers
elected or appointed to each trust prior to the funds' conversions from
series of Massachusetts business trusts served each trust in identical
capacities. All persons named as Trustees also serve in similar capacities
for other funds advised by FMR. The business address of each Trustee and
officer who is an "interested person" (as defined in the 1940 Act) is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. The business address of all the other Trustees is Fidelity
Investments, P.O. Box 9235, Boston, Massachusetts 02205-9235. Those
Trustees who are "interested persons" by virtue of their affiliation with
either a trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (64), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc., Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD (53), Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX (62), Trustee (1991), is a consultant to Western Mining
Corporation (1994). Prior to February 1994, he was President of Greenhill
Petroleum Corporation (petroleum exploration and production ) . Until
March 1990, Mr. Cox was President and Chief Operating Officer of Union
Pacific Resources Company (exploration and production). He is a Director of
Sanifill Corporation (non-hazardous waste, 1993) and CH2M Hill Companies
(engineering). In addition, he serves o n the Board of Directors of
the Texas State Chamber of Commerce, and he is a member of advisory
boards of Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS (63), Trustee (1992). Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of BellSouth
Corporation (telecommunications), Eaton Corporation (manufacturing, 1991),
and the TJX Companies, Inc. (retail stores ) , and previously served
as a Director of Hallmark Cards, Inc. (1985-1991) and Nabisco Brands, Inc.
In addition, she is a member of the President's Advisory Council of The
University of Vermont School of Business Administration.
RICHARD J. FLYNN (71), Trustee and Chairman of the non-interested
Trustees , is a financial consultant. Prior to September 1986, Mr. Flynn
was Vice Chairman and a Director of the Norton Company (manufacturer of
industrial devices). He is currently a Trustee of College of the Holy Cross
and Old Sturbridge Village, Inc., and he previously served as a Director of
Mechanics Bank (1971-1995).
E. BRADLEY JONES (67), Trustee . Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company. He is
a Director of TRW Inc. (original equipment and replacement products),
Cleveland-Cliffs Inc . (mining), Consolidated Rail Corporation,
Birmingham Steel Corporation, and RPM, Inc. (manufacturer of chemical
products ) , and he previously served as a Director of NACCO
Industries, Inc. (mining and marketing, 1985-1995) and Hyster-Yale
Materials Handling, Inc. (1985-1995). In addition, he serves as a Trustee
of First Union Real Estate Investments, a Trustee and member of the
Executive Committee of the Cleveland Clinic Foundation, a Trustee and
member of the Executive Committee of University School (Cleveland), and a
Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (62), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial consultant.
From 1987 to January 1995, Mr. Kirk was a Professor at Columbia University
Graduate School of Business. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and he previously served as a Director of
Valuation Research Corp. (appraisals and valuations, 1993-1995). In
addition, he serves as Chairman of the Board of Directors of the National
Arts Stabilization Fund, as Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association, as a Member of the Public Oversight Board
of the American Institute of Certified Public Accountants' SEC Practice
Section (1995), and as a Public Governor of the National Association of
Securities Dealers, Inc. (1996).
*PETER S. LYNCH (52), Trustee , is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice President
of Fidelity Magellan Fund and FMR Growth Group Leader; and Managing
Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity
Investments Corporate Services (1991-1992). He is a Director of W.R. Grace
& Co. (chemicals) and Morrison Knudsen Corporation (engineering and
construction). In addition, he serves as a Trustee of Boston College,
Massachusetts Eye & Ear Infirmary, Historic Deerfield (1989) and Society
for the Preservation of New England Antiquities, and as an Overseer of the
Museum of Fine Arts of Boston .
GERALD C. McDONOUGH (65), Trustee and Vice-Chairman of the
non-interested Trustees , is Chairman of G.M. Management Group
(strategic advisory services). Prior to his retirement in July 1988, he was
Chairman and Chief Executive Officer of Leaseway Transportation Corp.
(physical distribution services). Mr. McDonough is a Director of
ACME-Cleveland Corp. (metal working, telecommunications and electronic
products), Brush-Wellman Inc. (metal refining), York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp. (water
treatment equipment, 1992), and Associated Estates Realty Corporation (a
real estate investment trust, 1993).
EDWARD H. MALONE (70), Trustee. Prior to his retirement in 1985, Mr.
Malone was Chairman, General Electric Investment Corporation and a Vice
President of General Electric Company. He is a Director of Allegheny Power
Systems, Inc. (electric utility), General Re Corporation (reinsurance) and
Mattel Inc. (toy manufacturer). In addition, he serves as a Trustee of the
Naples Philharmonic Center for the Arts and Rensselaer Polytechnic
Institute, and he is a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN (61), Trustee (1993) , is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and subsidiaries.
Mr. Mann is a Director of M.A. Hanna Company (chemicals, 1993) and Infomart
(marketing services, 1991), a Trammell Crow Co. In addition, he serves as
the Campaign Vice Chairman of the Tri-State United Way (1993) and is a
member of the University of Alabama President's Cabinet .
THOMAS R. WILLIAMS (66), Trustee, is President of The Wales Group, Inc.
(management and financial advisory services). Prior to retiring in 1987,
Mr. Williams served as Chairman of the Board of First Wachovia Corporation
(bank holding company), and Chairman and Chief Executive Officer of The
First National Bank of Atlanta and First Atlanta Corporation (bank holding
company). He is currently a Director of BellSouth Corporation
(telecommunications), ConAgra, Inc. (agricultural products), Fisher
Business Systems, Inc. (computer software), Georgia Power Company (electric
utility), Gerber Alley & Associates, Inc. (computer software), National
Life Insurance Company of Vermont, American Software, Inc., and AppleSouth,
Inc. (restaurants, 1992).
FRED L. HENNING, JR. (55), Vice President, is Vice President of Fidelity's
money market (1994) and fixed-income (1995) funds and Senior Vice President
of FMR Texas Inc.
LELAND BARRON (37), Vice President (1989), is also Vice President of
other funds advised by FMR and an employee of FMR Texas Inc.
BURNELL STEHMAN (64), Vice President (1992), is also Vice President of
other funds advised by FMR and an employee of FMR Texas Inc.
JOHN TODD (47), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
SCOTT A. ORR (34), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
ARTHUR S. LORING (47), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER (47), Treasurer (1995), is Treasurer of the Fidelity
funds and is an employee of FMR (1995). Before joining FMR, Mr. Rathgeber
was a Vice President of Goldman Sachs & Co. (1978-1995), where he served in
various positions, including Vice President of Proprietary Accounting
(1988-1992), Global Co-Controller (1992-1994), and Chief Operations Officer
of Goldman Sachs (Asia) LLC (1994-1995) .
THOMAS D. MAHER (50), Assistant Vice President , is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas Inc.
JOHN H. COSTELLO (48), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (49), A ssistant 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) .
The following table sets forth information describing the compensation of
each current trustee of each fund for his or her services as trustee for
the fiscal year ended March 31, 1996.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J. Gary Ralph F. Phyllis Richard Edward C. E. Donald Peter S. Gerald C. Edward Marvin L. Thomas
Burkhead** Cox Burke J. Flynn Johnson 3d** Bradley J. Kirk Lynch** McDonough H. Mann R.
Davis Jones Malone Williams
Treasury $ 0 $ $ $ $ 0 $ $ $ 0 $ $ $ $
Only
Treasury 0 0 0
Government 0 0 0
Domestic 0 0 0
Rated Money 0 0 0
Market
Money 0 0 0
Market
Tax-
Exempt 0 0 0
</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 12 8 ,000
Phyllis Burke Davis 5,200 52,000 12 5 ,000
Richard J. Flynn 0 52,000 1 60 ,500
Edward C. Johnson 3d** 0 0 0
E. Bradley Jones 5,200 49,400 12 8 , 0 00
Donald J. Kirk 5,200 52,000 12 9 , 5 00
Peter S. Lynch** 0 0 0
Gerald C. McDonough 5,200 52,000 12 8 ,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 12 8 ,000
Thomas R. Williams 5,200 52,000 125,000
</TABLE>
* Information is as of December 31, 199 5 for 2 19 funds in the
complex.
** Interested trustees of the fund are compensated by FMR.
For the fiscal year ended March 31, 1996, [Name of Trustee(s)], accrued
deferred compensation from [Name of Fund(s)] as follows:
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, the non-interested
Trustees, upon reaching age 72, become eligible to participate in a
retirement program under which they receive payments during their lifetime
from a fund based on their basic trustee fees and length of service. The
obligation of a fund to make such payments is not secured or funded.
Trustees become eligible if, at the time of retirement, they have served on
the Board for at least five years. Currently, Messrs. Ralph S. Saul,
William R. Spaulding, Bertram H. Witham, and David L. Yunich, all former
non-interested Trustees, receive retirement benefits under the program.
As of [date not earlier than July 1, 1996], the Trustees and officers of
each fund owned, in the aggregate, less than __% of each fund's total Class
I outstanding shares.
As of [date not earlier than July 1, 1996], the following owned of record
or beneficially 5% or more of outstanding shares of each class of the
funds:
[IF FUND HAS A SHAREHOLDER WHO OWNS 25% OR MORE: A shareholder owning of
record or beneficially more than 25% of a class's outstanding shares
may be considered a controlling person. That shareholder's vote could have
a more significant effect on matters presented at a shareholders' meeting
than votes of other shareholders.]
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing each fund's investments,
compensates all officers of each fund, all Trustees who are "interested
persons" of the trusts or of FMR, and all personnel of each fund or FMR for
performing services relating to research, statistical and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provides the management and administrative services
necessary for the operation of each fund. These services include providing
facilities for maintaining each fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees.
In addition to the management fee payable to FMR and the fees payable to
UMB, FIIOC, and FSC , each fund or class thereof, as
applicable, pays all of its expenses, without limitation, that are not
assumed by those parties. Each fund (other than Treasury Only and Rated
Money Market) pays for the typesetting, printing, and mailing of its proxy
materials to shareholders, legal expenses, and the fees of the custodian,
auditor and non-interested Trustees. Although each fund's (other than
Treasury Only's and Rated Money Market's) current management contract
provides that the fund will pay for typesetting, printing, and
mailing prospectuses, statements of additional information, notices and
reports to shareholders, the trusts, on behalf of each fund , have
entered into revised transfer agent agreements with FIIOC and UMB, as
applicable, pursuant to which FIIOC or UMB bears the costs of providing
these services to existing shareholders of the applicable classes. Other
expenses paid by each fund (other than Treasury Only and Rated Money
Market) include interest, taxes, brokerage commissions, e ach fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. Each fund is also liable for such non-recurring expenses
as may arise, including costs of any litigation to which the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.
FMR is responsible for the payment of all expenses of Treasury Only and
Rated Money Market with certain exceptions. Specific expenses payable by
FMR include, without limitation, expenses for the typesetting, printing,
and mailing of proxy materials to shareholders; legal expenses, and the
fees of the custodian, auditor, and interested Trustees; costs of
typesetting, printing, and mailing prospectuses and statements of
additional information, notices and reports to shareholders; and the fund's
proportionate share of insurance premiums and Investment Company Institute
dues. FMR also provides for transfer agent and dividend disbursing services
through FIIOC and portfolio and general accounting record maintenance
through FSC.
FMR pays all other expenses of Treasury Only and Rated Money Market with
the following exceptions: fees and expenses of all Trustees of the
applicable trust who are not "interested persons" of the trust or
FMR (the non-interested Trustees); interest on borrowings (only for
Treasury Only); taxes; brokerage commissions (if any); and such
nonrecurring expenses as may arise, including costs of any litigation to
which a fund may be a party, and any obligation it may have to indemnify
the officers and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated May 30,
1993 for Treasury, Government, Domestic, and Money Market ( the FICP
funds ) ; January 29, 1992 for Tax-Exempt; September 30, 1993 for
Treasury Only; and December 29, 1994 for Rated Money Market . The
management contracts were approved by shareholders on November 18,
1992, November 13, 1991, March 24, 1993, and December 8, 1994,
respectively.
For the services of FMR under each contract, each fund (other than
Treasury Only and Rated Money Market) pays FMR a monthly management fee
at the annual rate of 0.20% of average net assets throughout the month.
Treasury Only and Rated Money Market each pays FMR a monthly management
fee at the annual rate of 0.42% of average net assets throughout the month.
The management fees paid to FMR by Treasury Only and Rated Money Market are
reduced by an amount equal to the fees and expenses paid by the respective
funds to the non-interested Trustees. Fees received by FMR for the last
three fiscal periods are shown in the table below.
Fund Fiscal Year Ended Management Fees Paid to FMR
<TABLE>
<CAPTION>
<S> <C> <C>
Treasury Only 3/31/96 $ *
3/31/95** *
7/31/94 *
7/31/93 *
Treasury 3/31/96
3/31/95
3/31/94
Government 3/31/96
3/31/95
3/31/94
Domestic 3/31/96
3/31/95
3/31/94
Fund Fiscal Year Ended Management Fees Paid to FMR
Rated Money Market 3/31/96** *
8/31/95 *
8/31/94 *
8/31/93 *
Money Market 3/31/96
3/31/95
3/31/94
Tax-Exempt 3/31/96
3/31/95**
5/31/94
5/31/93
</TABLE>
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
** The fiscal year end of Treasury Only changed from July 31 to March 31 in
February 1995. The fiscal year end of Rated Money Market changed from
August 31 to March 31 in June 1995. The fiscal year end of Tax-Exempt
changed from May 31 to March 31 in February 1995.
FMR may, from time to time, voluntarily reimburse all or a portion of each
class 's operating expenses (exclusive of interest, taxes, brokerage
commissions, 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 class's total returns and yield and
repayment of the reimbursement by each class will lower its total
returns and yield.
During the fiscal periods reported, FMR voluntarily agreed , subject
to revision or termination, to reimburse Class I of certain funds if and to
the extent that each fund's Class I aggregate operating
expenses , including management fees, were in excess of an annual
rate of its average net assets. The table below identifies the
classes in reimbursement; the expense limit for such
reimbursement; the amount of management fees incurred under each
contract before reimbursement; and the dollar amount reimbursed for
each fiscal year ended March 31, 1996, 1995, and 1994.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Expense Management Fee Dollar Amount Fiscal Year
Fund Limit Before Reimbursement Reimbursed Ended
Treasury Only - Class I*
Treasury Only - Class II
Treasury Only - Class III
Treasury - Class I
Treasury - Class II
Treasury - Class III
Government - Class I
Government - Class II
Government - Class III
Domestic - Class I
Domestic - Class II
Domestic - Class III
Rated Money Market - Class I**
Rated Money Market - Class II**
Rated Money Market - Class
III**
Money Market - Class I
Money Market - Class II
Money Market - Class III
Tax-Exempt - Class I***
Tax-Exempt - Class II***
Tax-Exempt - Class III***
</TABLE>
* Figures for Treasury Only are for the fiscal year ended March 31,
1996, the fiscal period August 1, 1994 to March 31, 1995, and the fiscal
years ended July 31, 1994 and 1993.
** Figures for Rated Money Market are for the fiscal period September 1,
1995 to March 31, 1996, and the fiscal years ended August 31, 1995, 1994,
and 1993.
*** Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, and the fiscal years
ended May 31, 1994 and 1993.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating each fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its custodian fees attributable to
investment in foreign securities.
SUB-ADVISER. FMR has entered into a sub-advisory agreement with FMR Texas
pursuant to which FMR Texas has primary responsibility for providing
portfolio investment management services to each fund.
Under the sub-advisory agreements dated May 30, 1993, January 29, 1992,
September 30, 1993, and December 29, 1994, for the FICP funds, Tax-Exempt,
Treasury Only, and Rated Money Market, respectively, FMR pays FMR Texas
fees equal to 50% of the management fees payable to FMR under its
management contract with each fund. Each sub-advisory agreement was
approved by shareholders on November 18, 1992, November 13, 1991, March 24,
1993, and December 8, 1994, for the FICP funds, Tax-Exempt, Treasury Only,
and Rated Money Market, respectively. The fees paid to FMR Texas are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time. The table below shows fees paid by FMR to FMR
Texas on behalf of each fund for the fiscal years ended March 31, 1996,
1995, and 1994.
1996 1995 1994 1993
Treasury Only* $ $ $ $
Treasury N/A
Government N/A
Domestic N/A
Rated Money Market** N/A
Money Market
Tax-Exempt***
* Figures for Treasury Only are for the fiscal year ended March 31,
1996, the fiscal period August 1, 1994 to March 31, 1995, and the fiscal
years ended July 31, 1994 and 1993.
** Figures for Rated Money Market are for the fiscal period September 1,
1995 to March 31, 1996, and the fiscal years ended August 31, 1995, 1994,
and 1993.
*** Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, and the fiscal years
ended May 31, 1994 and 1993.
CONTRACTS WITH FMR AFFILIATES
FIIOC, an affiliate of FMR, is the transfer, dividend disbursing, and
shareholder servicing agent for Class I shares of Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market (the Taxable
Funds).
UMB is the transfer agent for Class I shares of Tax-Exempt. UMB has entered
into a sub-contract with FIIOC under the terms of which FIIOC performs the
processing activities associated with providing transfer agent and
shareholder servicing functions for Class I shares of Tax-Exempt.
Under this arrangement FIIOC receives an annual account fee and an
asset-based fee each based on account size and fund type for each retail
account and certain institutional accounts. With respect to certain
institutional retirement accounts, FIIOC receives an annual account fee and
an asset-based fee based on account type or fund type. These annual account
fees are subject to increase based on postal rate changes.
For accounts that FIIOC maintains on behalf of UMB, FIIOC receives all such
fees.
FIIOC bears the expense of typesetting, printing, and mailing prospectuses,
statements of additional information, and all other reports, notices, and
statements to shareholders, with the exception of proxy statements. Also,
FIIOC pays out-of-pocket expenses associated with transfer agent services.
FSC, an affiliate of FMR, performs the calculations necessary to determine
NAV and dividends for Class I shares of each Taxable Fund, and maintains
each Taxable Fund's accounting records. UMB has an additional sub-contract
with FSC, under the terms of which FSC performs the calculations necessary
to determine NAV and dividends for Class I of Tax-Exempt, and maintains the
fund's accounting records. 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.
FMR bears the cost of transfer, dividend disbursing, shareholder servicing,
and pricing and bookkeeping services pursuant to its management contracts
with Treasury Only and Rated Money Market. The transfer agent fee and
charges and pricing and bookkeeping fees for Tax-Exempt are paid to FIIOC
and FSC, respectively, by UMB which is entitled to reimbursement from Class
I or the fund, as applicable, for these expenses.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for the past three fiscal years were as follows:
Pricing and Bookkeeping Fees
1996 1995 1994 1993
Treasury $ $ $ N/A
Government N/A
Domestic N/A
Money Market N/A
Tax-Exempt* $
* Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, annualized, and the
fiscal years ended May 31, 1994 and 1993.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at NAV. Promotional and administrative expenses in connection with
the offer and sale of shares are paid by FMR.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved a Distribution and Service Plan on behalf of
Class I of each fund (the Plans) pursuant to Rule 12b-1 under the 1940 Act
(the Rule). The Rule provides in substance that a mutual fund may not
engage directly or indirectly in financing any activity that is primarily
intended to result in the sale of shares of a fund except pursuant to a
plan approved on behalf of the fund under the Rule. The Plans, as approved
by the Trustees, allow Class I of the funds and FMR to incur certain
expenses that might be considered to constitute indirect payment by the
funds of distribution expenses.
Under each Plan, if the payment of management fees by the funds to FMR is
deemed to be indirect financing by the funds of the distribution of their
shares, such payment is authorized by the Plans. Each Plan specifically
recognizes that FMR may use its management fee revenue , as well as
its past profits, or its other resources to pay expenses
associated with the sale of Class I shares. This may include reimbursing
FDC for payments made to third parties, such as banks or broker-dealers
that provide shareholder support services or engage in the sale of Class I
shares. The Trustees have authorized such payments.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
have determined that there is a reasonable likelihood that the Plan will
benefit Class I of the applicable fund and its shareholders. In
particular, the Trustees noted that each Plan does not authorize payments
by Class I of each fund other than those made to FMR under its management
contract with the fund. To the extent that each Plan gives FMR and FDC
greater flexibility in connection with the distribution of shares of
Class I of each fund, additional sales of fund shares may result.
Furthermore, certain shareholder support services may be provided more
effectively under the Plans by local entities with whom shareholders have
other relationships.
The Plans were approved by shareholders of Class I of each FICP fund on
November 18, 1992 , by shareholders of Class I of Tax-Exempt on November
31, 1991, by shareholders of Class I of Treasury Only on March 24, 1993,
and by shareholders of Class I of Rated Money Market on December 8, 1994.
Each Plan was approved by shareholders, in connection with a reorganization
transaction on May 30, 1993 for the FICP funds, January 29, 1992 for
Tax-Exempt, September 29, 1993 for Treasury Only, and December 29, 1994 for
Rated Money Market, pursuant to an Agreement and Plan of Conversion.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plans.
No preference for the instruments of such depository institutions will be
shown in the selection of investments.
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Treasury Only is a fund of Daily Money Fund,
an open-end management investment company originally organized as a
Massachusetts business trust on June 7, 1982, pursuant to a Declaration of
Trust that was amended and restated on September 1, 1989. On September 29,
1993, the trust was converted to a Delaware business trust pursuant to an
agreement approved by shareholders on March 24, 1993. The Delaware trust,
which was organized on June 20, 1991 under the name Daily Money Fund II,
succeeded to the name Daily Money Fund on July 14, 1995. Currently, there
are six funds of the trust: Treasury Only, Money Market Portfolio, U.S.
Treasury Portfolio, Capital Reserves: U.S. Government Portfolio, Capital
Reserves: Money Market Portfolio, and Capital Reserves: Municipal Money
Market Portfolio. The Trust Instrument permits the Trustees to create
additional funds.
Treasury, Government, Domestic, and Money Market are funds of Fidelity
Institutional Cash Portfolios, an open-end management investment company
originally organized as a Massachusetts business trust on November 10,
1981, pursuant to a Declaration of Trust that was amended and restated on
April 9, 1985. On May 30, 1993, the trust was converted to a Delaware
business trust pursuant to an agreement approved by shareholders on
November 18, 1992. The Delaware trust, which was organized on June 20, 1991
under the name Fidelity Government Securities Fund, succeeded to the name
Fidelity Institutional Cash Portfolios II on May 28, 1993, and then to the
name Fidelity Institutional Cash Portfolios on May 28, 1993. Currently,
there are four funds of the trust: Treasury, Government, Domestic, and
Money Market. The Trust Instrument permits the Trustees to create
additional funds.
Rated Money Market is a fund of Fidelity Money Market Trust, an open-end
management investment company an open-end management investment company
originally organized as a Massachusetts business trust on August 21, 1978,
pursuant to a Declaration of Trust that was amended and restated on
November 1, 1989. On December 29, 1994, the trust was converted to a
Delaware business trust pursuant to an agreement approved by shareholders
on December 8, 1994. The Delaware trust, which was organized on June 20,
1991 under the name Fidelity Money Market Trust II, succeeded to the name
Fidelity Money Market Trust on December 29, 1994. Currently, there are
three funds of Fidelity Money Market Trust: Rated Money Market, Retirement
Money Market Portfolio, and Retirement Government Money Market Portfolio.
The Trust Instrument permits the Trustees to create additional funds.
Tax-Exempt is a fund of Fidelity Institutional Tax-Exempt Cash Portfolios,
an open-end management investment company originally organized as a
Massachusetts business trust on March 1, 1982, pursuant to a Declaration of
Trust that was amended and restated on April 9, 1985, and supplemented on
December 15, 1989. On January 29, 1992, the trust was converted to a
Delaware business trust pursuant to an agreement approved by shareholders
on November 13, 1991. The Delaware trust, which was organized on June 20,
1991 under the name Fidelity Institutional Tax-Exempt Cash Portfolios II,
succeeded to the name Fidelity Institutional Tax-Exempt Cash Portfolios on
January 29, 1992. Currently, Tax-Exempt is the only fund of Fidelity
Institutional Tax-Exempt Cash Portfolios. The Trust Instrument permits the
Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to a fund, the
right of the trust or fund to use the identifying name "Fidelity" may be
withdrawn. There is a remote possibility that one fund might become liable
for any misstatement in its prospectus or statement of additional
information about another fund.
The assets of the trusts received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trusts are to
be allocated in proportion to the asset value of the respective funds,
except where allocations of direct expense can otherwise be fairly made.
The officers of the trusts, subject to the general supervision of the Board
of Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of a trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. Each trust is a business trust organized
under Delaware law. Delaware law provides that shareholders shall be
entitled to the same limitations of personal liability extended to
stockholders of private corporations for profit. The courts of some states,
however, may decline to apply Delaware law on this point. The Trust
Instruments contain an express disclaimer of shareholder liability for the
debts, liabilities, obligations, and expenses of the trusts and require
that a disclaimer be given in each contract entered into or executed by the
trust or the Trustees. The Trust Instruments provide for indemnification
out of each fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund. The Trust Instruments
also provide that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply, no contractual
limitation of liability was in effect, and the fund is unable to
meet its obligations. FMR believes that, in view of the above, the
risk of personal liability to shareholders is extremely remote.
The Trust Instruments further provide that the Trustees, if they have
exercised reasonable care, shall not be personally liable to any person
other than the trust or its shareholders; moreover, the Trustees shall not
be liable for any conduct whatsoever, provided that Trustees are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office. Claims
asserted against one class of shares may subject holders of another class
of shares to certain liabilities.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder of Rated Money Market, you receive one vote for
each dollar value of net asset value you own. The shares have no preemptive
or conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the Prospectus.
Shares are fully paid and non-assessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of a trust, fund , or class may, as set
forth in each of the Trust Instruments, call meetings of the trust, fund,
or class, for any purpose related to the trust, fund, or class, as the case
may be, including, in the case of a meeting of the entire trust, the
purpose of voting on removal of one or more Trustees.
Any trust or fund may be terminated upon the sale of its assets to, or
merger with, another open-end management investment company or series
thereof, or upon liquidation and distribution of its assets. Generally such
terminations must be approved by vote of the holders of a majority of the
outstanding shares of the trust or fund (or, for Rated Money Market, as
determined by the current value of each shareholder's investment in the
fund or trust); however, the Trustees may, without prior shareholder
approval, change the form of organization of the trust or fund by
merger, consolidation, or incorporation. If not so terminated, the trust
and its funds will continue indefinitely.
Under the Trust Instruments, the Trustees may, without shareholder vote,
cause a trust to merge or consolidate into one or more trusts,
partnerships, or corporations, or cause the trust to be incorporated under
Delaware law, so long as the surviving entity is an open-end management
investment company that will succeed to or assume the trust's registration
statement. Each fund may invest all of its assets in another investment
company.
CUSTODIAN. The Bank of New York, 48 Wall Street, New York, New York,
is custodian of the assets of each fund, except Tax-Exempt. UMB, 1010 Grand
Avenue, Kansas City, Missouri, is custodian of the assets of Tax-Exempt.
The custodian is responsible for the safekeeping of a fund's assets and the
appointment of the subcustodian banks and clearing agencies. The custodian
takes no part in determining the investment policies of a fund or in
deciding which securities are purchased or sold by a fund. However, a fund
may invest in obligations of the custodian and may purchase securities from
or sell securities to the custodian. Chemical Bank, headquartered in New
York, also may serve as a special purpose custodian of certain assets in
connection with pooled repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain funds advised by FMR.
Transactions that have occurred to date include mortgages and personal and
general business loans. In the judgment of FMR, the terms and conditions of
those transactions were not influenced by existing or potential custodial
or other fund relationships.
AUDITORS. ____ serves as the independent accountant for Treasury
Only, Rated Money Market, and Tax-Exempt. ____ serves as the independent
accountant for the FICP funds. The auditors examine financial statements
for the funds and provide other audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended March 31, 199 6 are included in each fund's
Annual Report, which is a separate report supplied with this Statement of
Additional Information. Each fund's financial statements and financial
highlights are incorporated herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating organizations when
determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S COMMERCIAL PAPER RATINGS:
Issuers rated PRIME-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics:
Leading market positions in well established industries.
High rates of return on funds employed.
Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
Broad margins in earning coverage of fixed financial charges and with high
internal cash generation.
Well established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earning trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S COMMERCIAL PAPER RATINGS:
A - Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with
the numbers 1, 2, and 3 to indicate the relative degree of safety.
A-1 - This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+)
sign designation.
A-2 - Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS CLASS II
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 .............................. Expenses
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance
d .............................. Cover Page
4 a i............................. Charter
ii........................... Investment Principles and Risks; Securities and
Investment Practices; Fundamental Investment
Policies and Restrictions
b .............................. Securities and Investment Practices
c .............................. Who May Want to Invest; Investment Principles
and Risks; Securities and Investment Practices
5 a .............................. Charter
b i............................. FMR and Its Affiliates
ii........................... FMR and Its Affiliates; Charter; Breakdown of
Expenses
iii.......................... Expenses; Breakdown of Expenses; Management
Fee
c .............................. FMR and Its Affiliates
d .............................. Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates
e .............................. FMR and its Affiliates; Breakdown of Expenses;
Other Expenses
f .............................. Expenses
g .............................. Expenses; FMR and Its Affiliates
5A .............................. *
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange
Restrictions
iii.......................... *
b ............................. FMR and Its Affiliates
c .............................. Charter
d .............................. Cover Page; Charter
e .............................. Cover Page; How to Buy Shares; How to Sell
Shares; Investor Services; Exchange Restrictions
f, g .............................. Dividends, Capital Gains, and Taxes
7 a .............................. Charter; Cover Page
b .............................. How to Buy Shares; Transaction Details
c .............................. *
d .............................. How to Buy Shares
e .............................. Transaction Details; Breakdown of Expenses
f .............................. Breakdown of Expenses; Other Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL
MONEY MARKET
FUNDS - CLASS II
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy
of a fund's most recent financial report and portfolio listing or a copy of
the Statement of Additional Information (SAI) dated July 31, 1996 .
The SAI has been filed with the Securities and Exchange Commission (SEC)
and is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, contact Fidelity Client
Services at 1-800-843-3001, or your investment professional.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT A FUND WILL MAINTAIN A
STABLE $1.00 SHARE PRICE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
LIKE ALL MUTUAL FUNDS, THESE
SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
IMMII-pro-0796
TREASURY ONLY
TREASURY
GOVERNMENT
DOMESTIC
RATED MONEY MARKET
MONEY MARKET
TAX-EXEMPT
PROSPECTUS
DATED JULY 31, 1996 (FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109
CONTENTS
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Class II's yearly operating expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's
financial data.
PERFORMANCE
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's
overall approach to investing.
BREAKDOWN OF EXPENSES How operating costs
are calculated and what they include.
YOUR ACCOUNT HOW TO BUY SHARES Opening an account and
making additional investments.
HOW TO SELL SHARES Taking money out and
closing your account.
INVESTOR SERVICES Services to help you manage
your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND TAXES
ACCOUNT POLICIES
TRANSACTION DETAILS Share price calculations
and the timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
KEY FACTS
WHO MAY WANT TO INVEST
Each fund offers institutional and corporate investors a convenient way to
invest in a professionally managed portfolio of money market instruments.
Each fund is designed for investors who would like to earn current income
while preserving the value of their investment.
The rate of income will vary from day to day, generally reflecting
short-term interest rates.
Each fund is managed to keep its share price stable at $1.00. Each of
Treasury Only, Treasury, and Government offers an added measure of safety
with its focus on U.S. Treasury or Government securities.
These funds do not constitute a balanced investment plan. However, because
they emphasize stability, they could be well-suited for a portion of your
investment.
Each fund is composed of multiple classes of shares. All
class es of a fund ha ve a common investment objective and
investment portfolio. Class I shares do not have a sales charge and do not
pay a distribution fee. Class II shares do not have a sales charge, but do
pay a 0.15% distribution fee. Class III shares do not have a sales charge,
but do pay a 0.25% distribution fee. Because Class I shares have no sales
charge and do not pay a distribution fee, Class I shares are expected to
have a higher total return than Class II and Class III shares. You may
obtain more information about Class I and Class III shares, which are not
offered through this prospectus, from your investment professional ,
or by calling Fidelity Client Services at 1-800-843-3001. Contact your
investment professional to discuss which class is appropriate for
you.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
Class II shares of a fund.
Maximum sales charge on purchases and None
reinvested distributions
Maximum deferred sales None
charge
Redemption fee None
Exchange fee None
ANNUAL OPERATING EXPENSE S are paid out of each fund's assets. Each fund
pays a management fee to Fidelity Management & Research Company (FMR). In
addition, each fund is responsible for certain other expenses.
12b-1 fees are paid by Class II of each fund to the distributor for
services and expenses in connection with the distribution of Class II
shares of each fund. 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.
Class II 's expenses are factored into its share price or dividends
and are not charged directly to shareholder accounts (see "Breakdown of
Expenses" on page ).
The following are projections based on historical expenses of Class
II of each fund and are calculated as a percentage of average net
assets of Class II of each fund.
Class II Operating Expenses
TREASURY ONLY Management fee
12b-1 fee (Distribution fee) 0.15
%
Other expenses
Total operating expenses
TREASURY Management fee
12b-1 fee (Distribution fee) 0.15
%
Other expenses
Total operating expenses
GOVERNMENT Management fee
12b-1 fee (Distribution fee) 0.15
%
Other expenses
Total operating expenses
DOMESTIC Management fee
12b-1 fee (Distribution fee) 0.15
%
Other expenses
Total operating expenses
RATED MONEY MARKET Management fee
12b-1 fee (Distribution fee) 0.15
%
Other expenses
Total operating expenses
MONEY MARKET Management fee
12b-1 fee (Distribution fee) 0.15
%
Other expenses
Total operating expenses
TAX-EXEMPT Management fee
12b-1 fee (Distribution fee) 0.15
%
Other expenses
Total operating expenses
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment in Class II shares, assuming a 5% annual return and full
redemption at the end of each time period:
1 3 5 10
Year Years Years Years
Treasury Only $ $ $ $
Treasury $ $ $ $
Government $ $ $ $
Domestic $ $ $ $
Rated Money Market $ $ $ $
Money Market $ $ $ $
Tax-Exempt $ $ $ $
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY.
FMR has voluntarily agreed to reimburse Class II of each fund to the
extent that total operating expenses (excluding interest, taxes, brokerage
commissions, extraordinary expenses , and 12b-1 fees ) are in excess
of 0.20% (0.18% for Money Market), of its average net assets. If these
agreements were not in effect, the management fee, other expenses, and
total operating expenses, as a percentage of average net assets, of Class
II of each fund would have been the following amounts: __%, __%, and __%
for Treasury Only; __%, __%, and __% for Treasury; __%, __%, and __% for
Government; __%, __%, and __% for Domestic; __%, __%, and __% for Rated
Money Market; __%, __%, and __% for Money Market; and __%, __%, and __% for
Tax-Exempt.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow and each fund's financial
statements are included in each fund's Annual Report and have been audited
by independent accountants. ___ serves as independent accountants for each
of Treasury, Government, Domestic, and Money Market. ______ serves as
independent accountants for each of Treasury Only, Rated Money Market, and
Tax-Exempt. Their reports on the financial statements and financial
highlights are included in the Annual Report. The financial statements, the
financial highlights, and the reports are incorporated by reference into
the funds' SAI, which may be obtained free of charge from Fidelity Client
Services at the phone number listed on page __.
PERFORMANCE
Money market fund performance can be measured as TOTAL RETURN or YIELD.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a yield
assumes that income earned is reinvested, it is called an EFFECTIVE YIELD.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn before
taxes to equal a tax-free yield.
SEVEN-DAY YIELD illustrates the income earned by an investment in a money
market fund over a recent seven-day period. Since money market funds
maintain a stable $1.00 share price, current seven-day yields are the most
common illustration of money market fund performance.
The funds' performance a nd holdings are detailed twice a year in
financial reports, which are sent to all shareholders.
For current performance call Fidelity Client Services at 1-800-843-3001.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools
shareholders' money and invests it toward a specified goal. Treasury Only
is a diversified fund of Daily Money Fund, an open-end management
investment company organized as a Delaware business trust on September 29,
1993. Treasury, Government, Domestic, and Money Market are diversified
funds of Fidelity Institutional Cash Portfolios, an open-end management
investment company organized as a Delaware business trust on May 30, 1993.
Rated Money Market is a diversified fund of Fidelity Money Market Trust, an
open-end management investment company organized as a Delaware business
trust on December 29, 1994. Tax-Exempt is a diversified fund of
Fidelity Institutional Tax-Exempt Cash Portfolios , an open-end
management investment company organized as a Delaware business trust on
January 29, 1992. There is a remote possibility that one fund might become
liable for a misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent will mail proxy materials in advance, including a voting
card and information about the proposals to be voted on. You are
entitled to one vote for each share you own of each of Treasury Only,
Treasury, Government, Domestic, Money Market, and Tax-Exempt. For
shareholders of Rated Money Market, the number of votes you are entitled to
is based upon the dollar value of your investment.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust, respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business address
at 82 Devonshire Street, Boston, Massachusetts 02109. It includes a number
of different subsidiaries and divisions which provide a variety of
financial services and products. The funds employ various Fidelity
companies to perform activities required for their operation.
The funds are managed by FMR, which handles their business affairs. FMR
Texas Inc. (FMR Texas), located in Irving, Texas, has primary
responsibility for providing investment management services.
As of __, 19_, FMR advised funds having approximately __million
shareholder accounts with a total value of more than $__ billion.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets Fidelity's
funds and services. Fidelity Investments Institutional Operations Company
(FIIOC) performs transfer agent servicing functions for Class I I
shares of each fund.
FMR Corp. is the ultimate parent company of FMR and FMR Texas. Members of
the Edward C. Johnson 3d family are the predominant owners of a class of
shares of common stock representing approximately 49% of the voting power
of FMR Corp. Under the Investment Company Act of 1940 (the 1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
UMB Bank, n.a. (UMB) is Tax-Exempt's transfer agent, although it employs
FIIOC to perform these functions for Class II of the fund. UMB is located
at 1010 Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
EACH FUND'S INVESTMENT APPROACH
When you sell your shares of the funds, they should be worth the same
amount as when you bought them. Of course, there is no guarantee that the
funds will maintain a stable $1.00 share price. The funds follow
industry-standard guidelines on the quality and maturity of their
investments, which are designed to help maintain a stable $1.00 share
price. The funds will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities they buy. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a
default on the funds' investments could cause their share prices (and the
value of your investment) to change.
The funds earn income at current money market rates. Each fund stresses
preservation of capital, liquidity, and income (tax-free income in the case
of Tax-Exempt) and does not seek the higher yields or capital appreciation
that more aggressive investments may provide. Each fund's yield will vary
from day to day, and generally reflects current short-term interest rates
and other market conditions. It is important to note that neither the funds
nor their yields are guaranteed by the U.S. Government.
TREASURY ONLY seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share (NAV) of $1.00.
The fund invests only in U.S. Treasury securitie s. The fund does not
enter into repurchase agreements or reverse repurchase agreements.
The fund will invest in those securities whose interest is specifically
exempt from state and local income taxes under federal law; such interest
is not exempt from federal income tax.
TREASURY seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
Th e fund invests only in U.S. Treasury securities and repurchase
agreements for these securities. The fund does not enter into reverse
repurchase agreements.
GOVERNMENT seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. Government s ecurities and
re purchase agreements for these securities. The fun d also
may enter into reverse repurchase agreements.
DOMESTIC seeks to obtain as high a level of current income as is consistent
with the preservation of principal and liquidity within the limitations
prescribed for the fund.
The fund invests only in the highest-quality U.S.
dollar-denominated money market securities of domestic issuers ,
including U.S. Government securities and repurchase agreements. Securities
are "highest-quality" if rated in the highest rating category by at
least two nationally recognized rating services, or by one if only one
rating service has rated a security, or, if unrated, determined to
be of equivalent quality by FMR. The fund also may enter into reverse
repurchase agreements.
RATED MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. dollar-denominated money market securities
of domestic and foreign issuers rated in the highest rating category by
at least two nationally recognized rating services , including U.S.
Government securities and repurchase agreements. The fund also may enter
into reverse repurchase agreements.
MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in the highest-quality U.S. dollar-denominated
money market securities of domestic and foreign issuers ,
including U.S. Government securities and repurchase agreements. Securities
are "highest-quality" if rated in the highest rating category by at
least two nationally recognized rating services, or by one if only one
rating service has rated a security, or, if unrated, deter mined to
be of equivalent quality by FMR . The fund also may enter into
reverse repurchase agreements.
TAX-EXEMPT seeks to obtain as high a level of interest income exempt
from federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal.
The fund invests primarily in high-quality, short-term municipal
securities, but also may invest in high-quality, long-term instruments
whose features give them interest rates, maturities, and prices similar to
short-term instruments. Securities in which the fund invests must be rated
in the highest rating category for short-term securities by at least one
nationally recognized rating service and rated in one of the two highest
categories for short-term securities by another nationally recognized
rating service if rated by more than one nationally recognized rating
service , or, if unrated, determined t o be of
equivalent quality by FMR .
The fund, under normal conditions, will invest so that at least 80% of its
income distributions is exempt from federal income tax. The fund does not
currently intend to purchase municipal securities subject to the
federal alternative minimum tax.
FMR normally invests the fund's assets according to its investment strategy
and does not expect to invest in federally taxable obligations. The fund
also reserves the right to hold a substantial amount of uninvested cash or
to invest more than normally permitted in federally taxable obligations for
temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of each fund's limitations and more detailed information
about each fund's investments are contained in the funds' SAI. Policies and
limitations are considered at the time of purchase; the sale of instruments
is not required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Fund holdings are de tailed in each fund's financial reports,
which are sent to shareholders twice a year. For a free SAI or financial
report, call Fidelity Client Services at 1-800-843-3001.
MONEY MARKET SECURITIES are high-quality, short-term obligations
issued by the U.S. Government, corporations, financial institutions,
municipalities, local and state governments, and other entities. These
obligations may carry fixed, variable, or floating interest rates.
Some money market securities employ a trust or other similar structure to
modify the maturity, price characteristics, or quality of financial assets
so that they are eligible investments for money market funds. If the
structure does not perform as intended, adverse tax or investment
consequences may result.
U.S. GOVERNMENT MONEY MARKET SECURITIES are short-term debt
obligations issued or guaranteed by the U.S. Treasury or by an
agency or instrumentality of the U.S. Government. Not all U.S. Government
securities are backed by the full faith and credit of the United States.
For example, securities issued by the Federal Farm Credit Bank or by the
Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under
certain circumstances. However, securities issued by the Financing
Corporation are supported only by the credit of the entity that issued
them.
MUNICIPAL SECURITIES are issued to raise money for a variety of public or
private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities. They
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. The value of some or all
municipal securities may be affected by uncertainties in the municipal
market related to legislation or litigation involving the taxation of
municipal securities or the rights of municipal securities holders. A fund
may own a municipal security directly or through a participation interest.
CREDIT SUPPORT. Issuers may employ various forms of credit
enhancement, including letters of credit, guarantees, or insurance from a
bank, insurance company, or other entity. These arrangements expose the
fund to the credit risk of the entity. In the case of foreign entities,
extensive public information about the entity may not be available and the
entity may be subject to unfavorable political, economic, or governmental
developments which might affect its ability to honor its commitment.
FOREIGN SECURITIES may involve different risks than domestic securities,
including risks relating to the political and economic conditions of the
foreign country involved, which could affect the payment of principal or
interest. Issuers of foreign securities include foreign governments,
corporations, and banks.
ASSET-BACKED SECURITIES include interests in pools of mortgages, loans,
receivables, or other assets. Payment of principal and interest may be
largely dependent upon the cash flows generated by the assets backing the
securities.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a benchmark
rate changes. These interest rate adjustments are designed to help
stabilize the security's price.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other money market
securities, although they may be more volatile.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another party
in return for cash. This could increase the risk of fluctuation in the
fund's yield or in the market value of its assets.
OTHER MONEY MARKET SECURITIES may include commercial paper, certificates of
deposit, bankers' acceptances, and time deposits.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
OTHER MUNICIPAL SECURITIES may include obligations of U.S. territories and
possessions such as Guam, the Virgin Islands, and Puerto Rico, and their
political subdivisions and public corporations.
PUT FEATURES entitle the holder to put (sell back) a security to the issuer
or a financial intermediary. In exchange for this benefit, a fund may pay
periodic fees or accept a lower interest rate. The credit quality of the
investment may be affected by the creditworthiness of the put provider.
Demand features, standby commitments, and tender options are types of put
features.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities, and some other securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTION: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period.
FINANCIAL SERVICES INDUSTRY. Companies in the financial services industry
are subject to various risks related to that industry, such as government
regulation, changes in interest rates, and exposure on loans, including
loans to foreign borrowers. If a fund invests substantially in this
industry, its performance may be affected by conditions affecting the
industry.
RESTRICTIONS: Each of Domestic, Rated Money Market, and Money Market
will invest more than 25% of its total assets in the financial services
industry.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type.
RESTRICTIONS: Each of Domestic, Rated Money Market, and Money
Market may not invest more than 5% of its total assets in any one issuer,
except that each fund may invest up to 10% of its total assets in the
highest quality securities of a single issuer for up to three business
days.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
These limitations do not apply to U.S. Government securities.
Tax-Exempt may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements, and may make additional
investments while borrowings are outstanding.
RESTRICTIONS: Each of Government, Domestic, Rated Money Market, and
Money Market may borrow only for temporary or emergency purposes, or
engage in reverse repurchase agreements, but not in an amount exceeding
331/3% of its total assets. Each of Treasury Only, Treasury, and
Tax-Exempt may borrow only for temporary or emergency purposes, but not
in an amount exceeding 331/3% of its total assets.
LENDING. A fund may lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a fund's
total assets. Treasury Only, Treasury, Government, and Tax-Exempt do not
intend to engage in lending.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
Treasury Only seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share ( NAV ) of $1.00.
Each of Treasury, Government, Domestic, Rated Money Market, and Money
Market seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
Tax-Exempt seeks to obtain as high a level of interest income exempt
from federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal. The fund, under normal conditions, will invest so
that at least 80% of its income distributions is exempt from federal income
tax.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
Each of Domestic, Rated Money Market, and Money Market will invest
more than 25% of its total assets in obligations of companies in the
financial services industry.
Each of Government, Domestic, Rated Money Market, and Money Market
may borrow only for temporary or emergency purposes, or engage in
reverse repurchase agreements, but not in an amount exceeding 331/3% of its
total assets. Tax-Exempt may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of a fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each class's assets are reflected in that
class's share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services. Each fund also pays OTHER EXPENSES, which
are explained below.
MANAGEMENT FEE
Each fund's management fee is calculated and paid to FMR every month.
Each fund pays FMR a fee at the annual rate of its average net assets as
indicated in the table below.
FUND NAME: MANAGEMENT FEE:
Treasury Only 0.42%
Treasury 0.20%
Government 0.20%
Domestic 0.20%
Rated Money Market 0.42%
Money Market 0.20%
Tax-Exempt 0.20%
FMR pays all of the expenses of each of Treasury Only and Rated Money
Market with limited exceptions.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR Texas, which has primary
responsibility for providing investment management for each fund, while FMR
retains responsibility for providing each fund with other management
services. FMR pays FMR Texas 50% of its management fee (before expense
reimbursements) for these services. FMR paid FMR Texas the following
percentage of each fund's average net assets for the fiscal year ended
March 31, 1996:
FUND NAME: PERCENTAGE OF
AVERAGE
NET ASSETS:
Treasury Only
Treasury
Government
Domestic
Rated Money Market
M oney Market
Tax-Exempt
OTHER EXPENSES
While the management fee is a significant component of each fund's annual
operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing , and shareholder
servicing functions for Class II shares of Treasury Only,
Treasury, Government, Domestic, Rated Money Market, and Money Market (the
Taxable Funds). Fidelity Service Co. (FSC) calculates the NAV and
dividends for each Taxable Fund, and maintains the general accounting
records for each Taxable Fund. These expenses are paid by FMR on
behalf of Treasury Only and Rated Money Market pursuant to its management
contracts.
For the fiscal year ended March 31, 1996, transfer agent and pricing and
bookkeeping fees paid (as a percentage of average net assets) were as
follows:
Fund Name Class II to FIIOC Each Fund to
FSC
Treasury
Government
Domestic
Money Market
UMB has entered into a sub-arrangement with FIIOC. FI IOC
performs transfer agency, dividend disbursing and shareholder services for
Class II shares o f Tax-Exempt. UMB has also entered into a
sub-arrangement with FSC . FSC calculates the NAV and
dividends for T ax-Exempt, and maintains Tax-Exempt's g eneral
accounting records . All of the fees are paid to FIIOC and FSC by
UMB, which is reimbursed by Class II or the fund, as appropriate,
for such payments.
For the fiscal year ended March 31, 1996, fees paid by UMB to FIIOC on
behalf of Class II of Tax-Exempt amounted to ___% of Class II's average net
assets, and fees paid by UMB to FSC on behalf of Tax-Exempt amounted to
___% of its average net assets.
Class II of each fund has adopted a DISTRIBUTION AND SERVICE PLAN. Under
the Plans, Class II of each fund is authorized to pay FDC a monthly
distribution fee as compensation for its services and expenses in
connection with the distribution of Class II shares of each fund. Class II
of each fund currently pays FDC monthly at an annual rate of 0.15% of its
average net assets throughout the month.
The Plans specifically recognize that FMR may make payments from its
management fee revenue, past profits, or other resources to reimburse FDC
for expenses incurred in connection with the distribution of Class II
shares, including payments made to investment professionals that provide
shareholder support services or engage in the sale of fund shares. The
Board of Trustees of each fund has authorized such payments.
Each fund (other than Treasury Only and Rated Money Market) also pays other
expenses, such as legal, audit, and custodian fees; in some instances,
proxy solicitation costs; and the compensation of trustees who are not
affiliated with Fidelity. Each of Treasury Only and Rated Money Market also
pays other expenses, such as brokerage fees and commissions, interest on
borrowings (only Treasury Only), taxes, and the compensation of trustees
who are not affiliated with Fidelity.
YOUR ACCOUNT
HOW TO BUY SHARES
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.
EACH CLASS'S SHARE PRICE, called NAV, is calculated every business day. The
funds are managed to keep share prices stable at $1.00. Class II
shares are sold without a sales charge.
Shares are purchased at the next NAV calculated after your order is
received and accepted by the transfer agent. NAV is normally calculated at
the times indicated in the table below.
NAV CALCULATION TIMES
FUND (EASTERN TIME)
Treasury Only 2:00 p.m.
Treasury 3:00 p.m. and 5:00 p.m.
Government 3:00 p.m. and 5:00 p.m.
Domestic 3:00 p.m. and 5:00 p.m.
Rated Money Market 3:00 p.m. and 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
You will receive the NAV next determined after your investment
professional has submitted your purchase order.
IF YOU ARE NEW TO FIDELITY, an initial investment must be preceded or
accompanied by a completed, signed application, which should be forwarded
to:
Fidelity Client Services
c/o Fidelity Institutional Money Market Funds
FIIOC
P.O. Box 1182
Boston, MA 02103-1182
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Place a purchase order and wire money into your
account, or
(small solid bullet) Open an account by exchanging from the same class of
any fund that is offered through this prospectus.
INVESTMENTS IN THE FUNDS MUST BE MADE USING THE FEDERAL RESERVE WIRE
SYSTEM. Checks and Automated Clearing House payments will not be
accepted as a means of investment.
For wiring information and instructions, you should call the investment
professional through which you trade or if you trade directly through
Fidelity, call Fidelity Client Services. There is no fee imposed by the
funds for wire purchases. However, if you buy shares through an
investment professional, the investment professional may impose a fee
for wire purchases.
Fidelity Client Services:
Nationwide 1-800-843-3001
In order to receive same-day acceptance of your investment, you must
contact Fidelity Client Services and place your order between 8:30 a.m. and
the following times on days the funds are open for business.
FUND CLOSING TIMES
Treasury Only 2:00 p.m.
Treasury 5:00 p.m.
Government 5:00 p.m.
Domestic 5:00 p.m.
Rated Money Market 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
All wires must be received by the transfer agent in good order at the
applicable fund's designated wire bank before the close of the Federal
Reserve Wire System on that day.
In order to purchase shares of Treasury , Government, Domestic, and Rated
Money Market after 3:00 p.m. Eastern time, you should contact
Fidelity Client Services one week in advance to make late-trading
arrangements.
You are advised to wire funds as early in the day as possible, and to
provide advance notice to Fidelity Client Services for purchases over $10
million ($5 million for Treasury Only).
You will earn dividends on the day of your investment, provided (i) you
contact Fidelity Client Services and place your trade between 8:30 a.m. and
the closing time indicated in the table on the left on days the fund is
open for business, and (ii) the fund's designated wire bank receives the
wire before the close of the Federal Reserve Wire System on the day your
purchase order is accepted by the transfer agent.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $1,000,000*
MINIMUM BALANCE $1,000,000
* The minimum initial investment of $1 million may be waived if your
aggregate balance in the Fidelity Institutional Money Market Funds is
greater than $10 million. Please contact Fidelity Client Services for more
information regarding this waiver.
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next NAV calculated after your order is received and accepted by the
transfer agent. NAV is normally calculated at the times indicated in the
table on page __.
You will receive the NAV next determined after your investment professional
has submitted your redemption order.
R edemption requests may be made by calling Fidelity Client Services at
the phone number listed on page __.
You must designate on your account application the U.S. commercial bank
account(s) into which you wish the redemption proceeds to be deposited.
Fidelity Client Services will then notify you that this feature has been
activated and that you may request redemptions.
You may change the bank account(s) designated to receive redemption
proceeds at any time prior to making a redemption request. You should send
a letter of instruction, including a signature guarantee, to Fidelity
Client Services at the address shown on page__.
You should be able to obtain a signature guarantee from a bank, broker,
dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency, or savings association. A notary public
cannot provide a signature guarantee.
There is no fee imposed by the funds for wiring of redemption proceeds.
However, if you sell shares through an investment professional, the
investment professional may impose a fee for wire redemptions.
Redemption proceeds will be wired via the Federal Reserve Wire System to
your bank account of record. If your redemption request is received by the
transfer agent before the closing time indicated in the table on page __,
redemption proceeds will normally be wired on that day.
A fund reserves the right to take up to seven days to pay you if making
immediate payment would adversely affect the fund.
In order to redeem shares of Treasury , Government, Domestic, and Rated
Money Market after 3:00 p.m. Eastern time, you should contact
Fidelity Client Services one week in advance to make late trading
arrangements.
You are advised to place your trades as early in the day as possible.
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that the transfer agent sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction,
except a reinvestment, that affects your account balance or your account
registration)
(small solid bullet) Account statements (monthly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
a fund. Call Fidelity Client Services at 1-800-843-3001 if you need
additional copies of financial reports , prospectuses, or historical
account information.
SUB-ACCOUNTING AND SPECIAL SERVICES. Special processing has been arranged
with FIIOC for institutions that wish to open multiple accounts (a master
account and sub-accounts). You may be required to enter into a separate
agreement with FIIOC. Charges for these services, if any, will be
determined based on the level of services to be rendered.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains, if any, to shareholders each year. Income dividends are
declared daily and paid monthly.
Income dividends declared are accrued daily throughout the month and are
normally distributed on the first business day of the following month.
Based on prior approval of each fund, dividends relating to Class II
shares redeemed during the month can be distributed on the day of
redemption. Each fund reserves the right to limit this service.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. Class II offers two options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your application, you
will be assigned this option.
2. CASH OPTION. You will be sent a wire for your dividend and capital gain
distributions, if any.
Dividends will be reinvested at each fund's Class II NAV on the last
day of the month. Capital gain distributions, if any, will be reinvested at
the NAV as of the record date of the distribution.
TAXES
As with any investment, you should consider how an investment in the funds
could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. I nterest income that Tax-Exempt earns is
distributed to shareholders as income dividends. Interest that is federally
tax-free remains tax-free when it is distributed. Distributions from the
Taxable Funds, however, are subject to federal income tax and may also be
subject to state or local taxes. If you live outside the United States,
your distributions from these funds could also be taxed by the country in
which you reside.
For federal tax purposes, income and short-term capital gain
distributions from each Taxable Fund are taxed as dividends; long-term
capital gain distributions, if any, are taxed as long-term capital gains.
However, for shareholders of Tax-Exempt, gain on the sale of tax-free bonds
results in taxable distributions. Short-term capital gains and a portion of
the gain on bonds purchased at 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 March 31, 1996, __% of Treasury Only's; __% of
Treasury's; __% of Government's; __% of Domestic's; __% of Rated Money
Market's; and __% of Money Market's income distributions were derived from
interest on U.S. Government securities, which is generally exempt from
state income tax.
Distributions are taxable when they are paid, whether you take them in cash
or reinvest them. However, distributions declared in December and paid in
January are taxable as if they were paid on December 31.
Every January, the transfer agent will send you and the IRS a statement
showing the taxable distributions paid to you in the previous year.
A portion of Tax-Exempt's dividends may be free from state or local taxes.
Income from investments in your state are often tax-free to you. Each year,
the transfer agent will send you a breakdown of Tax-Exempt's income from
each state to help you calculate your taxes.
During the fiscal year ended March 31, 1996, __% of Tax-Exempt's
income dividends was free from federal income tax.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
EACH FUND IS OPEN FOR BUSINESS and its NAV is normally calculated each day
that both the Federal Reserve Bank of New York (New York Fed) (for
the Taxable Funds) or the Federal Reserve Bank of Kansas City
(Kansas City Fed) (for Tax-Exempt) and the New York Stock Exchange (NYSE)
are open. The following holiday closings have been scheduled for 1996: New
Year's Day, Martin Luther King's Birthday, Washington's Birthday, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day , Thanksgiving Day, and Christmas Day. Although FMR
expects the same holiday schedule to be observed in the future, the New
York Fed, the Kansas City Fed, or the NYSE may modify its holiday
schedule at any time. On any day that the New York Fed, the Kansas
City Fed, or the NYSE closes early, the principal government securities
markets close early (such as on days in advance of holidays generally
observed by participants in such markets), or as permitted by the SEC, the
right is reserved to advance the time on that day by which purchase and
redemption orders must be received.
To the extent that portfolio securities are traded in other markets on days
when the New York Fed, the Kansas City Fed, or the NYSE is closed,
each fund's NAV may be affected on days when investors do not have access
to the fund to purchase or redeem shares. Certain Fidelity funds may follow
different holiday closing schedules.
A CLASS'S NAV is the value of a single share. The NAV of Class II of
each fund is computed by adding Class II 's pro rata share of the
value of the fund's investments, cash, and other assets, subtracting Class
II 's pro rata share of the value of the fund's liabilities,
subtracting the liabilities allocated to Class II , and dividing the
result by the number of Class II shares of that fund that are
outstanding. Each fund values its portfolio securities on the basis of
amortized cost. This method minimizes the effect of changes in a security's
market value and helps each fund maintain a stable $1.00 share price.
The OFFERING PRICE (price to buy one share) and REDEMPTION PRICE (price to
sell one share) of Class lI are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the I RS. If you violate IRS regulations, the IRS can require a
fund to withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity and the transfer
agent may only be liable for losses resulting from unauthorized
transactions if they do not follow reasonable procedures designed to verify
the identity of the caller. Fidelity and the transfer agent will request
personalized security codes or other information, and may also record
calls. You should verify the accuracy of the confirmation statements
immediately after receipt. If you do not want the ability to redeem and
exchange by telephone, call the transfer agent for instructions. Additional
documentation may be required from corporations, associations , and
certain fiduciaries.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page __. Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
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 transactions in excess of $10 million ($5
million for Treasury Only).
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) All of your purchases must be made by federal funds
wire; checks will not be accepted for purchases.
(small solid bullet) If your wire is not received by the close of the
Federal Reserve Wire System, you could be liable for any losses or fees a
fund or the transfer agent has incurred or for interest and penalties.
The income declared for each of Treasury, Government, Domestic, and
Rated Money Market is based on estimates of net interest income for the
fund. Actual income may differ from estimates, and differences, if any,
will be included in the calculation of subsequent dividends.
Shareholders of record as of the closing time indicated in the table on
page __ will be entitled to dividends declared that day.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) Shares of each fund do not receive the dividend
declared on the day of redemption.
(small solid bullet) A fund may withhold redemption proceeds until it is
reasonably assured that investments credited to your account have been
received and collected.
When the NYSE, the 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 $1,000,000 due to redemption, the
account may be closed and the proceeds may be wired to your bank account of
record. You will be given 30 days' notice that your account will be closed
unless it is increased to the minimum.
THE TRANSFER AGENT MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder you have the privilege of exchanging Class II
shares of any fund offered through this prospectus at no charge for Class
II shares of any other fund offered through this prospectus.
An exchange involves the redemption of all or a portion of the shares of
one fund and the purchase of shares of another fund.
BY TELEPHONE. Exchanges may be requested on any day a fund is open for
business by calling Fidelity Client Services at the number listed on page
__ between 8:30 a.m. and the closing time indicated in the table on page
__.
BY MAIL. You may exchange shares on any business day by submitting written
instructions with an authorized signature which is on file for that
account. Written requests for exchanges should contain the fund name,
class name, account number, the number of shares to be redeemed, and
the name of the fund to be purchased. Written requests for exchange should
be mailed to Fidelity Client Services at the address on page __.
WHEN YOU PLACE AN ORDER TO EXCHANGE SHARES, Class II shares will be
redeemed at the next determined NAV after your order is received and
accepted by the transfer agent. Shares of the fund to be acquired will be
purchased at its next determined NAV after redemption proceeds are made
available. You should note that, under certain circumstances, a fund may
take up to seven days to make redemption proceeds available for the
exchange purchase of shares of another fund. I n addition, please
note the following:
(small solid bullet) Exchanges will not be permitted until a completed and
signed account application is on file.
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) You will earn dividends in the acquired fund in
accordance with the fund's customary policy, normally on the day the
exchange request is received.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. I n particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
No dealer, sales representative , or any other person has been
authorized to give any information or to make any representations, other
than those contained in this Prospectus and in the related SA I , in
connection with the offer contained in this Prospectus. If given or made,
such other information or representations must not be relied upon as having
been authorized by the funds or FDC. This Prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell or to buy shares of
the funds to any person to whom it is unlawful to make such offer.
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS - CLASS II
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page; Table of Contents
12 ............................ *
13 a - c ............................ Investment Policies and Limitations
d ............................ Portfolio Transactions
14 a - c ............................ Trustees and Officers
15 a ............................ *
b ............................ Description of the Trusts
c ............................ Trustees and Officers
16 a i ............................ FMR
ii ............................ Trustees and Officers
iii ............................ Management Contracts
b,c,d ............................ Management Contracts
e ............................ *
f ............................ Distribution and Service Plans
g ............................ *
h ............................ Description of the Trusts
i ............................ Management Contracts
17 a ............................ Portfolio Transactions
b ............................ Portfolio Transactions
c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trusts
b ............................ *
19 a ............................ Additional Purchase, Exchange and Redemption
Information
b ............................ Additional Purchase, Exchange and Redemption
Information; Valuation
c ............................ *
20 Distributions and Taxes
21 a, b ............................ Distribution and Service Plans; Management
Contracts
c ............................ *
22 ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS: CLASS II
TREASURY ONLY, TREASURY, GOVERNMENT, DOMESTIC, RATED MONEY MARKET, MONEY
MARKET, AND TAX-EXEMPT
Treasury Only is a series of Daily Money Fund; Treasury, Government,
Domestic, and Money Market are series of Fidelity Institutional Cash
Portfolios; Rated Money Market is a series of Fidelity Money Market Trust;
and Tax-Exempt is a series of Fidelity Institutional Tax-Exempt Cash
Portfolios
STATEMENT OF ADDITIONAL INFORMATION
JULY 31, 1996
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus (dated
July 31, 1996). Please retain this document for future reference. The
funds' financial statements and financial highlights, included in the
Annual Report, for the fiscal year ended March 31, 1996, are incorporated
herein by reference. To obtain an additional copy of the Prospectus or the
Annual Report, please call Fidelity Client Services at 1-800-843-3001.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation
Performance
Additional Purchase, Exchange , and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Contracts with FMR Affiliates
Distribution and Service Plans
Description of the Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISER
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT FOR TAXABLE FUNDS
Fidelity Investments Institutional Operations Company (FIIOC)
TRANSFER AGENT FOR TAX-EXEMPT
UMB Bank, n.a. (UMB)
IMMI I - PTB -0 7 96
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
P rospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any subsequent
change in values, net assets, or other circumstances will not be considered
when determining whether the investment complies with a fund's
investment policies and limitations.
A fund's fundamental investment policies and limitations
can 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 TREASURY ONLY
THE FOLLOWING ARE TREASURY ONLY'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(8) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL:
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vi) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
Subject to revision upon 90 days' notice to shareholders, the fund does not
intend to engage in reverse repurchase agreements.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF TREASURY
THE FOLLOWING ARE TREASURY'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as an
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase a security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
As an operating policy, the fund intends to invest 100% of its total assets
in U.S. Treasury bills, notes, and bonds and repurchase agreements
comprised of those obligations at all times. This policy may only be
changed upon 90 days' notice to shareholders.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF GOVERNMENT
THE FOLLOWING ARE GOVERNMENT'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuers together own more than 5% of such issuer's securities.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF DOMESTIC
THE FOLLOWING ARE DOMESTIC'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(viii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(ix) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF RATED MONEY MARKET
THE FOLLOWING ARE RATED MONEY MARKET'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments;
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(9) invest in oil, gas, or other mineral exploration or development
programs; or
(10) write or purchase any put or call option. This limitation does not
apply to options attached to, or acquired or traded together with, their
underlying securities, and does not apply to securities that incorporate
features similar to options.
(11) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL:
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in securities of business
enterprises that, including predecessors, have a record of less than three
years continuous operation.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitation (ix), pass-through entities and other special
purposes vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF MONEY MARKET
THE FOLLOWING ARE MONEY MARKET'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(viii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(ix) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of reorganization, consolidation, or merger.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF TAX-EXEMPT
THE FOLLOWING ARE TAX-EXEMPT'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) make short sales of securities;
(4) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions;
(5) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(6) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(7) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies,
instrumentalities, territories or possessions, or issued or guaranteed by a
state government or political subdivision thereof) if as a result more than
25% of the value of its total assets would be invested in securities of
companies having their principal business activities in the same industry;
(8) purchase or sell real estate, but this shall not prevent the fund from
investing in municipal bonds or other obligations secured by real estate or
interests therein;
(9) purchase or sell physical commodities;
(10) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements; or
(11) invest in oil, gas, or other mineral exploration or development
programs.
(12) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
For purposes of investment limitations (1) and (7), FMR identifies the
issuer of a security depending on its terms and conditions. In identifying
the issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (5)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(ii) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iii) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(iv) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(v) The fund does not currently intend to (a) purchase the securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(vi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(vii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
Securities must be rated in accordance with applicable rules in the highest
rating category for short-term securities by at least one nationally
recognized rating service (NRSRO) and rated in one of the two highest
categories for short-term securities by another NRSRO if rated by more than
one NRSRO, or, if unrated, judged to be equivalent to highest quality by
FMR pursuant to procedures adopted by the Board of Trustees. The fund's
policy regarding limiting investments to the highest rating category may be
changed upon 90 days' prior notice to shareholders.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the funds.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the 1940 Act. These transactions may include
repurchase agreements with custodian banks; short-term obligations of, and
repurchase agreements with, the 50 largest U.S. banks (measured by
deposits); municipal securities; U.S. Government securities with affiliated
financial institutions that are primary dealers in these securities;
short-term currency transactions; and short-term borrowings. In accordance
with exemptive orders issued by the Securities and Exchange Commission
(SEC), the Board of Trustees has established and periodically reviews
procedures applicable to transactions involving affiliated financial
institutions.
ASSET-BACKED SECURITIES include pools of mortgages, loans,
receivables , or other assets. Payment of principal and interest may
be largely dependent upon the cash flows generated by the assets backing
the securities and, in certain cases, supported by letters of credit,
surety bonds, or other credit enhancements. The value of asset-backed
securities may also be affected by the creditworthiness of the servicing
agent for the pool, the originator of the loans or receivables, or the
entities providing the credit support.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
DOMESTIC AND FOREIGN ISSUERS. Investments may be made in U.S.
dollar-denominated time deposits, certificates of deposit, and bankers'
acceptances of U.S. banks and their branches located outside of the United
States, U.S. branches and agencies of foreign banks, and foreign branches
of foreign banks. A fund may also invest in U.S. dollar-denominated
securities issued or guaranteed by other U.S. or foreign issuers, including
U.S. and foreign corporations or other business organizations, foreign
governments, foreign government agencies or instrumentalities, and U.S. and
foreign financial institutions, including savings and loan institutions,
insurance companies, mortgage bankers, and real estate investment trusts,
as well as banks.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental
regulation. Payment of interest and principal on these obligations may also
be affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). In addition, evidence of
ownership of portfolio securities may be held outside of the United States
and a fund may be subject to the risks associated with the holding of such
property overseas. Various provisions of federal law governing the
establishment and operation of U.S. branches do not apply to foreign
branches of U.S. banks.
Obligations of U.S. branches and agencies of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation, as well as by governmental action in the country in which the
foreign bank has its head office.
Obligations of foreign issuers involve certain additional risks. These
risks may include future unfavorable political and economic developments,
withholding taxes, seizures of foreign deposits, currency controls,
interest limitations, or other governmental restrictions that might affect
payment of principal or interest, or the ability to honor a credit
commitment. Additionally, there may be less public information available
about foreign entities. Foreign issuers may be subject to less governmental
regulation and supervision than U.S. issuers. Foreign issuers also
generally are not bound by uniform accounting, auditing, and financial
reporting requirements comparable to those applicable to U.S. issuers.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, Tax-Exempt does not
intend to invest in securities whose interest is federally taxable.
However, from time to time on a temporary basis, Tax-Exempt may invest a
portion of its assets in fixed-income obligations whose interest is subject
to federal income tax.
Should Tax-Exempt invest in federally taxable obligations, it would
purchase securities that, in FMR's judgment, are of high quality. These
obligations would include those issued or guaranteed by the U.S. Government
or its agencies or instrumentalities and repurchase agreements backed by
such obligations.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before state legislatures that
would affect the state tax treatment of Tax-Exempt's distributions. If such
proposals were enacted, the availability of municipal obligations and the
value of Tax-Exempt's holdings would be affected and the Trustees would
reevaluate Tax-Exempt's investment objectives and policies.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by the funds to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days. Also, FMR may determine some restricted
securities, municipal lease obligations, and time deposits to be illiquid.
In the absence of market quotations, illiquid investments are valued for
purposes of monitoring amortized cost valuation at fair value as determined
in good faith by a committee appointed by the Board of Trustees. If through
a change in values, net assets, or other circumstances, a fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, each fund has received permission to lend money
to, and borrow money from, other funds advised by FMR or its affiliates.
Treasury Only, Treasury, Government, and Tax-Exem pt currently
intend to particip ate in this program only as borrowers. A fund will
borrow thr o ugh the program only wh en 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. Domestic, Rated Money
Market, and Money Market will lend through the program only when the
returns are higher than those available from other short-term instruments
(such as repurchase agreements). A fund may have to borrow from a bank
at a higher interest rate if an interfund loan is called or not renewed.
Any delay in repayment to a lending fund could result in a lost investment
opportunity or additional borrowing costs .
MONEY MARKET SECURITIES are high-quality, short-term obligations. Some
money market securities employ a trust or other similar structure to modify
the maturity, price characteristics, or quality of financial assets. For
example, put features can be used to modify the maturity of a security, or
interest rate adjustment features can be used to enhance price stability.
If the structure does not perform as intended, adverse tax or investment
consequences may result. Neither the Internal Revenue Service (IRS) nor any
other regulatory authority has ruled definitively on certain legal issues
presented by structured securities. Future tax or other regulatory
determinations could adversely affect the value, liquidity, or tax
treatment of the income received from these securities or the nature and
timing of distributions made by the funds.
MUNICIPAL LEASES and participation interests therein may take the form of a
lease, an installment purchase, or a conditional sale contract and are
issued by state and local governments and authorities to acquire land or a
wide variety of equipment and facilities. Generally, the funds will not
hold such obligations directly as a lessor of the property, but will
purchase a participation interest in a municipal obligation from a bank or
other third party. A participation interest gives a fund a specified,
undivided interest in the obligation in proportion to its purchased
interest in the total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
MUNICIPAL MARKET DISRUPTION RISK. The value of municipal
securities may be affected by uncertainties in the municipal market related
to legislation or litigation involving the taxation of municipal securities
or the rights of municipal securities holders in the event of a bankruptcy.
Municipal bankruptcies are relatively rare, and certain provisions of the
U.S. Bankruptcy Code governing such bankruptcies are unclear and remain
untested. Further, the application of state law to municipal issuers could
produce varying results among the states or among municipal securities
issuers within a state. These legal uncertainties could affect the
municipal securities market generally, certain specific segments of the
market, or the relative credit quality of particular securities. Any of
these effects could have a significant impact on the prices of some or all
of the municipal securities held by a fund, making it more difficult for
the fund to maintain a stable net asset value per share.
MUNICIPAL SECTORS:
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open transmission
access to any electricity supplier, although it is not presently known to
what extent competition will evolve. Other risks include: (a) the
availability and cost of fuel, (b) the availability and cost of capital,
(c) the effects of conservation on energy demand, (d) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (e) timely and sufficient rate
increases, and (f) opposition to nuclear power.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
other state or local health care reform measures; medical and technological
advances which dramatically alter the need for health services or the way
in which such services are delivered; changes in medical coverage which
alter the traditional fee-for-service revenue stream; and efforts by
employers, insurers, and governmental agencies to reduce the costs of
health insurance and health care services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They generally are
secured by the revenues derived from mortgages purchased with the proceeds
of the bond issue. It is extremely difficult to predict the supply of
available mortgages to be purchased with the proceeds of an issue or the
future cash flow from the underlying mortgages. Consequently, there are
risks that proceeds will exceed supply, resulting in early retirement of
bonds, or that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student loans.
Bonds issued to supply educational institutions with funds are subject to
the risk of unanticipated revenue decline, primarily the result of
decreasing student enrollment or decreasing state and federal funding.
Among the factors that may lead to declining or insufficient revenues are
restrictions on students' ability to pay tuition, availability of state and
federal funding, and general economic conditions. Student loan revenue
bonds are generally offered by state (or substate) authorities or
commissions and are backed by pools of student loans. Underlying student
loans may be guaranteed by state guarantee agencies and may be subject to
reimbursement by the United States Department of Education through its
guaranteed student loan program. Others may be private, uninsured loans
made to parents or students which are supported by reserves or other forms
of credit enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student loan
revenue bonds are impacted by numerous factors, including the rate of
student loan defaults, seasoning of the loan portfolio, and student
repayment deferral during periods of forbearance. Other risks associated
with student loan revenue bonds include potential changes in federal
legislation regarding student loan revenue bonds, state guarantee agency
reimbursement and continued federal interest and other program subsidies
currently in effect.
WATER AND SEWER. Water and sewer revenue bonds are often considered to have
relatively secure credit as a result of their issuer's importance, monopoly
status, and generally unimpeded ability to raise rates. Despite this, lack
of water supply due to insufficient rain, run-off, or snow pack is a
concern that has led to past defaults. Further, public resistance to rate
increases, costly environmental litigation, and F ederal
environmental mandates are challenges faced by issuers of water and sewer
bonds.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways , or other transit
facilities. Airport bonds are dependent on the general stability of the
airline industry and on the stability of a specific carrier who uses the
airport as a hub. Air traffic generally follows broader economic trends and
is also affected by the price and availability of fuel. Toll road bonds are
also affected by the cost and availability of fuel as well as toll levels,
the presence of competing roads, and the general economic health of
an area. Fuel costs and availability also affect other
transportation-related securities, as does the presence of alternate forms
of transportation, such as public transportation.
PUT FEATURES entitle the holder to sell a security back to the issuer or a
third party at any time or at specified intervals. They are subject to the
risk that the put provider is unable to honor the put feature (purchase the
security). Put providers often support their ability to buy securities on
demand by obtaining letters of credit or other guarantees from other
entities. Demand features, standby commitments, and tender options are
types of put features.
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the funds may purchase only high-quality securities that FMR
believes present minimal credit risks. To be considered high-quality, a
security must be rated in accordance with applicable rules in one of the
two highest categories for short-term securities by at least two nationally
recognized rating services (or by one, if only one rating service has rated
the security); or, if unrated, judged to be of equivalent quality by FMR.
High-quality securities are divided into "first tier" and "second tier"
securities. First tier securities are those deemed to be in the highest
rating category (e.g., Standard & Poor's A-1 or SP-1), and second tier
securities are those deemed to be in the second highest rating category
(e.g., Standard & Poor's A-2 or SP-2). Split-rated securities may be
determined to be either first or second tier based on applicable
regulations.
Each of Treasury Only, Treasury, Government, Domestic, Rated Money
Market, and Money Market may not invest more than 5% of its total
assets in second tier securities. In addition, each of Treasury Only,
Treasury, Government, Domestic, Rated Money Market, and Money Market
may not invest more than 1% of its total assets or $1 million
(whichever is greater) in the second tier securities of a single issuer.
Each fund currently intends to limit its investments to securities with
remaining maturities of 397 days or less, and to maintain a dollar-weighted
average maturity of 90 days or less. When determining the maturity of a
security, a fund may look to an interest rate reset or demand feature.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. To protect a
fund from the risk that the original seller will not fulfill its
obligation, the securities are held in an account of the fund at a bank,
marked-to-market daily, and maintained at a value at least equal to the
sale price plus the accrued incremental amount. While it does not presently
appear possible to eliminate all risks from these transactions
(particularly the possibility that the value of the underlying security
will be less than the resale price, as well as delays and costs to a fund
in connection with bankruptcy proceedings), it is 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 the fund in anticipation of increased
interest rates, without sacrificing the current yield of the securities
sold short. If a fund enters into a short sale against the box, it will be
required to set aside securities equivalent in kind and amount to the
securities sold short (or securities convertible or exchangeable into such
securities) and will be required to hold such securities while the short
sale is outstanding. The fund will incur transaction costs, including
interest expenses, in connection with opening, maintaining, and closing
short sales against the box.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. FMR may rely on its evaluation of
the credit of a bank or another entity in determining whether to purchase a
security supported by a letter of credit guarantee, insurance or other
source of credit or liquidity. In evaluating the credit of a foreign bank
or other foreign entities, FMR will consider whether adequate public
information about the entity is available and whether the entity may be
subject to unfavorable political or economic developments, currency
controls, or other government restrictions that might affect its ability to
honor its commitment.
STRIPPED GOVERNMENT SECURITIES. Stripped securities are created by
separating the income and principal components of a debt instrument and
selling them separately. U.S. Treasury S TRIPS (Separate Trading of
Registered Interest and Principal of Securities) are created when the
coupon payments and the principal payment are stripped from an outstanding
Treasury bond by the Federal Reserve Bank . Bonds issued by
government agencies also may be stripped in this fashion.
Privately stripped government securities are created when a dealer deposits
a Treasury security or f ederal agency security with a custodian for
safekeeping and then sells the coupon payments and principal payment that
will be generated by this security. Proprietary receipts, such as
Certificates of Accrual on Treasury Securities (CATS), Treasury Investment
Growth Receipts (TIGRS), and generic Treasury Receipts (TRs), are stripped
U.S. Treasury securities that are separated into their component parts
through trusts created by their broker sponsors . Bonds issued by
government agencies also may be stripped in this fashion.
Because of the SEC's views on privately stripped government securities, a
fund must evaluate them as it would non-government securities pursuant to
regulatory guidelines applicable to all money market funds. A fund
currently intends to purchase only those privately stripped government
securities that have either received the highest rating from two nationally
recognized rating services (or one, if only one has rated the security) or,
if unrated, have been judged to be of equivalent quality by FMR pursuant to
procedures adopted by the Board of Trustees.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments of
the interest rate paid on the security. Variable rate securities provide
for a specified periodic adjustment in the interest rate, while floating
rate securities have interest rates that change whenever there is a change
in a designated benchmark rate. Some variable or floating rate securities
have put features.
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 March 31, 1996, 1995, and 1994, the funds
paid no brokerage commissions. During the fiscal year ended March 31, 1996,
the funds paid no fees to brokerage firms that provided research.
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment adviser, particularly when the same
security is suitable for the investment objective of more than one fund or
account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to each fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION
Fidelity Service Company (FSC) normally determines a class's net asset
value per share (NAV) at 12:00 noon Eastern time for Tax-Exempt; 2:00 p.m.
Eastern time for Treasury Only; 3:00 p.m. Eastern time for Money Market;
and 3:00 p.m. and 5:00 p.m. Eastern time for Treasury, Government,
Domestic, and Rated Money Market. The valuation of portfolio securities is
determined as of these times for the purpose of computing each class's
NAV.
Portfolio securities and other assets are valued on the basis of amortized
cost. This technique involves initially valuing an instrument at its cost
as adjusted for amortization of premium or accretion of discount rather
than its current market value. The amortized cost value of an instrument
may be higher or lower than the price a fund would receive if it sold the
instrument.
During periods of declining interest rates, a class' s yield based on
amortized cost valuation may be higher than that which would result
if the fund used market valuations to determine its NAV. The converse would
apply during periods of rising interest rates.
Valuing each fund's investments on the basis of amortized cost and use
of the term "money market fund" are permitted pursuant to Rule 2a-7 under
the 1940 Act. Each fund must adhere to certain conditions under Rule 2a-7,
as summarized in the section entitled "Quality and Maturity" on page
___.
The Board of Trustees oversees FMR's adherence to the provisions of Rule
2a-7 and has established procedures designed to stabilize each
class's NAV at $1.00. At such intervals as they deem appropriate,
the Trustees consider the extent to which NAV calculated by using market
valuations would deviate from $1.00 per share. If the Trustees believe that
a deviation from a 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 class's yield a nd total
return fluctuate in response to market conditions and other factors.
YIELD CALCULATIONS. To compute a class's yield for a period, the net change
in value of a hypothetical account containing one share reflects the value
of additional shares purchased with dividends from the one original share
and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at the
beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current annualized yield. An effective
yield may also be calculated by compounding the base period return over a
one-year period. In addition to the current yield, the funds may quote
yields in advertising based on any historical seven-day period. Yields
for each cla ss are calculated on the same basis as other money market
funds, as required by applicable regulations.
Yield information may be useful in reviewing a class's performance and in
providing a basis for comparison with other investment alternatives.
However, each class's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates a
class's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates a class's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing a class's current yield. In
periods of rising interest rates, the opposite can be expected to occur.
A class's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment before taxes to equal the class's tax-free
yield. Tax-equivalent yields are calculated by dividing a class's yield by
the result of one minus a stated federal or combined federal and state tax
rate. If only a portion of a class's yield is tax-exempt, only that portion
is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 1996. It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from _% to _%. Of course, no
as surance can be given that a class will achieve any specific
tax-exempt yield. While Tax-Exempt invests principally in
obligations whose interest is exempt from federal income tax, other income
received by the fund may be taxable.
1996 TAX RATES AND TAX-EQUIVALENT YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal If individual tax-exempt yield is:
Taxable Income* Tax % % % % % % % % %
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single Return Joint Return Bracket** Then taxable-equivalent yield is
</TABLE>
$ $ % % % % % % % % %
* Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions, limitations
on itemized deductions, and other credits, exclusions, and adjustments
which may increase a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
Tax-Exempt may invest a portion of its assets in obligations that are
subject to federal income tax. When the fund invests in these obligations,
its tax-equivalent yield will be lower. In the table above, tax-equivalent
yields are calculated assuming investments are 100% federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising
reflect all aspects of a class's return, including the effect of
reinvesting dividends and capital gain distributions, and any change in the
class's NAV over a stated period. Average annual total returns are
calculated by determining the growth or decline in value of a hypothetical
historical investment in a class over a stated period, and then calculating
the annually compounded percentage rate that would have produced the same
result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative total return of 100% over ten years would
produce an average annual total return of 7.18%, which is the steady annual
rate of return that would equal 100% growth on a compounded basis in ten
years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that a class's
performance is not constant over time, but changes from year to year, and
that average annual total returns represent averaged figures as opposed to
the actual year-to-year performance of the class.
In addition to average annual total returns, a class may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
HISTORICAL RESULTS. The following table shows 7-day yields, tax-equivalent
yields, and total returns for Class II of each fund for the period ended
March 31, 1996. The initial offering of the Class II shares of the funds
began on November 1, 1995. Class II shares have a 0.15% 12b-1 fee, which is
not reflected in the figures for periods prior to that date. The figures
for periods prior to the initial offering date reflect the performance of
Class I, the original class of each fund, which class does not have a 12b-1
fee. Class II figures would have been lower had 12b-1 fees been reflected
in all periods.
The tax-equivalent yield is based on a __% federal income tax rate.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seven-Da Tax- One Five Ten One Five Ten
y Equivalen Year Years Years/ Year Years Years/
Yield t Life of Life of
Yield Fund* Fund*
Treasury Only - % N/A % % % % % %
Class II
Treasury - Class II % N/A % % % % % %
Government - % N/A % % % % % %
Class II
Domestic - Class % N/A % % % % % %
II
Rated Money % N/A % % % % % %
Market - Class II
Money Market - % N/A % % % % % %
Class II
Tax-Exempt - % % % % % % % %
Class II
</TABLE>
* Life of Fund figures are from commencement of operations of each fund,
except Government, Rated Money Market, Money Market, and Tax-Exempt which
each report "Ten Years" figures. Commencement of operations for each fund
is as follows: Treasury Only - October 3, 1990; Treasury - February 2,
1987; Government - July 25, 1985; Domestic - November 3, 1989; Rated Money
Market - March 15, 1979; Money Market - July 5, 1985; and Tax-Exempt - July
25, 1985.
Note: If FMR had not reimbursed certain fund expenses during these periods,
total returns would have been lower and the yields for Class II of each
fund would have been:
<TABLE>
<CAPTION>
<S> <C> <C>
Seven-day
Tax-Equivalent
Yield Yield
Treasury Only - Class II % N/A
Treasury - Class II % N/A
Government - Class II % N/A
Domestic - Class II % N/A
Rated Money Market - Class II % N/A
Money Market - Class II % N/A
Tax-Exempt - Class II % %
</TABLE>
The following tables show the income and capital elements of each fund's
Class II cumulative total return. Each table compares a fund's Class II
return to the record of the Standard & Poor's Composite Index of 500 Stocks
(S&P 500), the Dow Jones Industrial Average (DJIA), and the cost of living
(measured by the Consumer Price Index, or CPI) over the same period. The
CPI information is as of the month-end closest to the initial investment
date for each fund. The S&P 500 and DJIA comparisons are provided to show
how each fund's Class II total return compared to the record of a broad
average of common stocks and a narrower set of stocks of major industrial
companies, respectively, over the same period. Of course, since each fund
invests in short-term fixed-income securities, common stocks represent a
different type of investment from the fund. Common stocks generally offer
greater growth potential than the funds, but generally experience greater
price volatility, which means greater potential for loss. In addition,
common stocks generally provide lower income than a fixed-income investment
such as the funds. Figures for the S&P 500 and DJIA are based on the prices
of unmanaged groups of stocks and, unlike the funds' Class II returns, do
not include the effect of paying brokerage commissions or other costs of
investing.
CLASS II CHARTS. The initial offering of the Class II shares of each fund
began on November 1, 1995. Class II shares have a 0.15% 12b-1 fee, which is
not reflected in the figures prior to that date. The figures for periods
prior to the initial offering date reflect the performance of Class I, the
original class of each fund, which class does not have a 12b-1 fee. Class
II figures would have been lower had 12b-1 fees been reflected in all
periods.
TREASURY ONLY
HISTORICAL FUND RESULTS
During the period from October 3, 1990 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class II of Treasury
Only would have grown to $______, assuming all distributions were
reinvested. This was a period of fluctuating interest rates and the figures
below should not be considered representative of the dividend income or
capital gain or loss that could be realized from an investment in Class II
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995+ 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991* 10,000 0
</TABLE>
* From October 3, 1990 (commencement of operations).
+ The fiscal year end of the fund changed from July 31 to March 31 in
February 1995.
Explanatory Notes: With an initial investment of $10,000 , made on
October 3, 1990, the net amount invested in Class II shares of the
fund was $10,000. The cost of the initial investment ($10,000) ,
together with the aggregate cost of reinvested dividends for the period
covered (their cash value at the time they were reinvested) ,
amounted to $. If distributions had not been reinvested, the amount of
distributions earned from Class II shares of the fund over time
would have been smaller, and cash payments (dividends) for the period would
have amounted to $. The fund did not distribute any capital gains during
the period. Tax consequences of different investments have not been
factored into the above figures.
TREASURY
HISTORICAL FUND RESULTS
During the period from February 2, 1987 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class II of Treasury
would have grown to $, assuming all distributions were reinvested. This was
a period of fluctuating interest rates and the figures below should not be
considered representative of the dividend income or capital gain or loss
that could be realized from an investment in Class II of the fund
today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987* 10,000 0
</TABLE>
* From February 2, 1987 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on February
2, 1987, the net amount invested in Class II shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to $. The
fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
GOVERNMENT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class II of Government would have grown to $, assuming all
distributions were reinvested. This was a period of fluctuating interest
rates and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in Class II of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class II shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to $. The
fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
DOMESTIC
HISTORICAL FUND RESULTS
During the period from November 3, 1989 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class II of Domestic
would have grown to $______, assuming all distributions were reinvested.
This was a period of fluctuating interest rates and the figures below
should not be considered representative of the dividend income or capital
gain or loss that could be realized from an investment in Class II of the
fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990* 10,000 0
</TABLE>
* From November 3, 1989 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on November
3, 1989, the net amount invested in Class II shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to
$ ______ . The fund did not distribute any capital gains during the
period. Tax consequences of different investments have not been factored
into the above figures.
RATED MONEY MARKET
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class II of Rated Money Market would have grown to $,
assuming all distributions were reinvested. This was a period of
fluctuating interest rates and the figures below should not be considered
representative of the dividend income or capital gain or loss that could be
realized from an investment in Class II of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P DJIA Cost of
3/31 Initial Reinvested Reinvested Value 500 Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 + $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 + 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
+ The fiscal year end of the fund changed from August 31 to March
31 in June 1995, and from October 31 to August 31 in July 1992.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class II shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to $. The
fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
MONEY MARKET
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class II of Money Market would have grown to $, assuming all
distributions were reinvested. This was a period of fluctuating interest
rates and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in Class II of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class II shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to $. The
fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
TAX-EXEMPT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class II of Tax-Exempt would have grown to $, assuming all
distributions were reinvested. This was a period of fluctuating interest
rates and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in Class II of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 + 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
+ The fiscal year end of the fund changed from May 31 to March 31
in February 1995.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class II shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class II shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to $. The
fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed as
mutual fund rankings prepared by Lipper Analytical Services, Inc. (Lipper),
an independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of
total return, assuming reinvestment of distributions, but does not take
sales charges or redemption fees into consideration, and such comparison
is prepared without regard to tax consequences. Lipper may also rank
funds based on yield. In addition to the mutual fund rankings, a fund's
performance may be compared to stock, bond, and money market mutual fund
performance indices prepared by Lipper or other organizations. When
comparing these indices, it is important to remember the risk and return
characteristics of each type of investment. For example, while stock mutual
funds may offer higher potential returns, they also carry the highest
degree of share price volatility. Likewise, money market funds may offer
greater stability of principal, but generally do not offer the higher
potential returns available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND
AVERAGES(trademark)/Government, which is reported in the MONEY FUND
REPORT(registered trademark), covers over ___ 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 ___
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 ___ 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 March 31 , 1996, FMR advised over $__ billion in tax-free
fund assets, $__ billion in money market fund assets, $___ billion in
equity fund assets, $__ billion in international fund assets, and $___
billion in Spartan fund assets. The funds may reference the growth and
variety of money market mutual funds and the adviser's innovation and
participation in the industry. The equity funds under management figure
represents the largest amount of equity fund assets under management by a
mutual fund investment adviser in the United States, making FMR America's
leading equity (stock) fund manager. FMR, its subsidiaries, and affiliates
maintain a worldwide information and communications network for the purpose
of researching and managing investments abroad.
In addition to performance rankings, each class may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A class's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a class's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may
be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) a fund suspends the
redemption of the shares to be exchanged as permitted under the 1940 Act or
the rules and regulations thereunder, or a fund to be acquired suspends the
sale of its shares because it is unable to invest amounts effectively in
accordance with its investment objective and policies.
In the prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable
to invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DIVIDENDS. Because each fund's income is primarily derived from interest,
dividends from the fund generally will not qualify for the
dividends-received deduction available to corporate shareholders.
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. G overnment obligations
may be exempt from state and local taxation.
To the extent that each fund's income is designated as federally tax-exempt
interest, the daily dividends declared by the fund are also federally
tax-exempt. Short-term capital gains are distributed as dividend income,
but do not qualify for the dividends-received deduction. These gains will
be taxed as ordinary income.
Each fund will send each shareholder a notice in January describing the tax
status of dividend and capital gain distributions (if any) for the prior
year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as Social Security
benefits, may be subject to federal income tax on up to 85% of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
Tax-Exempt purchases municipal securities that are free of federal
income tax based on opinions of counsel regarding th e tax status.
These opinions will generall y be based on covenants by the
issuers or other parties regarding continuing compliance with federal tax
requirements. If at any time the covenants are not complied with,
distribution to shareholders of interest on a security could become
federally taxable retroactive to the date a security was issued. For
certain types of structured securities, opinions of counsel may also be
based on the effect of the structure on the federal tax treatment of the
income.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities is subject to the federal alternative minimum tax
(AMT), although the interest continues to be excludable from gross income
for other tax purposes. Interest from private activity securities will be
considered tax - exempt for purposes of Tax-Exempt's policy o f
investing so that at least 80% of its income distribution is free
from federal income tax. Interest from private activity securities is a tax
preference item for the purposes of determining whether a taxpayer is
subject to the AMT and the a mount of AMT to be paid, if any. Private
activity securities issued after August 7, 1986 to benefit a private or
industrial user or to finance a private facility are affected by this rule.
A portion of the gain on bonds purchased with market discount after April
30, 1993 and short-term capital gains distributed by the fund are taxable
to shareholders as dividends, not as capital gains. Dividend distributions
resulting from a recharacterization of gain from the sale of bonds
purchased with market discount after April 30, 1993 are not considered
income for the purposes of Tax-Exempt's policy of investing so that at
least 80% of its income distribution is free from federal income
tax. Tax - Exempt may distribute any net realized short-term capital
gains and taxable market discount once a year or more often, as
necessary, to maintain its net asset value at $1.00 per share.
It is the current position of the staff of the SEC that a fund that uses
the term "tax-exempt" in its name may not derive more than 20% of its
income from municipal obligations that pay interest that is a preference
item for purposes of the AMT. According to this position, at least 80% of
Tax-Exempt's income would have to be exempt from the AMT as well as from
federal income taxes.
Corporate investors should note that a tax preference item for the purposes
of the corporate AMT is 75% of the amount by which adjusted current
earnings (which includes tax-exempt interest) exceeds the alternative
minimum taxable income of the corporation. If a shareholder receives an
exempt-interest dividend and sells shares at a loss after holding them for
a period of six months or less, the loss will be disallowed to the extent
of the amount of the exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Each fund may distribute any net realized
short-term capital gains once a year or more often as necessary, to
maintain its net asset value at $1.00 per share. Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market do not
anticipate earning long-term capital gains on securities held by each fund.
Tax-Exempt does not anticipate distributing long-term capital gains.
As of the fiscal year ended March 31, 1996, Treasury Only had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Treasury Only, of which $ will expire on March 31, , respectively, is
available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Treasury had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Treasury, of which $ will expire on March 31, , respectively, is available
to offset future capital gains.
As of the fiscal year ended March 31, 1996, Government had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Government, of which $ will expire on March 31, , respectively, is
available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Domestic had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Domestic, of which $ will expire on March 31, , respectively, is available
to offset future capital gains.
As of the fiscal year ended March 31, 1996, Rated Money Market had capital
loss carryforwards aggregating approximately $. The loss carryforward for
Rated Money Market, of which $ will expire on March 31 , respectively, is
available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Money Market had capital loss
carryforwards aggregating approximately $. The loss carryforward for Money
Market, of which $ will expire on March 31, , respectively, is available to
offset future capital gains.
As of the fiscal year ended March 31, 1996, Tax-Exempt had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Tax-Exempt, which will expire on March 31, , is available to offset future
capital gains.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
state law provides for a pass-through of the state and local income tax
exemption afforded to direct owners of U.S. Government securities. Some
states limit this to mutual funds that invest a certain amount in U.S.
Government securities, and some types of securities, such as repurchase
agreements and some agency backed securities, may not qualify for this
benefit. The tax treatment of your dividend distributions from a fund will
be the same as if you directly owned your proportionate share of the U.S.
Government securities in the fund's portfolio. Because the income earned on
most U.S. Government securities in which a fund invests is exempt from
state and local income taxes, the portion of your dividends from the fund
attributable to these securities will also be free from income taxes. The
exemption from state and local income taxation does not preclude states
from assessing other taxes on the ownership of U.S. Government securities.
In a number of states, corporate franchise (income) tax laws do not exempt
interest earned on U.S. Government securities whether such securities are
held directly or through a fund.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of a fund's
total assets are invested in securities of foreign issuers, the fund may
elect to pass through foreign taxes paid and thereby allow shareholders to
take a credit or deduction on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis.
Each fund is treated as a separate entity from the other funds of its
respective Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the 1940 Act, control of a company is presumed where
one individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting common
stock and the execution of the shareholders' voting agreement, members of
the Johnson family may be deemed, under the 1940 Act, to form a controlling
group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
FIIOC, which performs shareholder servicing functions for institutional
customers and funds sold through intermediaries; and Fidelity Investments
Retail Marketing Company, which provides marketing services to various
companies within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees and executive officers of each trust are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. Trustees and officers
elected or appointed to each trust prior to the funds' conversions from
series of Massachusetts business trusts served each trust in identical
capacities. All persons named as Trustees also serve in similar capacities
for other funds advised by FMR. The business address of each Trustee and
officer who is an "interested person" (as defined in the 1940 Act) is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. The business address of all the other Trustees is Fidelity
Investments, P.O. Box 9235, Boston, Massachusetts 02205-9235. Those
Trustees who are "interested persons" by virtue of their affiliation with
either a trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (64), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc., Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD (53), Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX (62), Trustee (1991), is a consultant to Western Mining
Corporation (1994). Prior to February 1994, he was President of Greenhill
Petroleum Corporation (petroleum exploration and production ) . Until
March 1990, Mr. Cox was President and Chief Operating Officer of Union
Pacific Resources Company (exploration and production). He is a Director of
Sanifill Corporation (non-hazardous waste, 1993) and CH2M Hill Companies
(engineering). In addition, he serves o n the Board of Directors of
the Texas State Chamber of Commerce, and he is a member of advisory
boards of Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS (63), Trustee (1992). Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of BellSouth
Corporation (telecommunications), Eaton Corporation (manufacturing, 1991),
and the TJX Companies, Inc. (retail stores ) , and previously served
as a Director of Hallmark Cards, Inc. (1985-1991) and Nabisco Brands, Inc.
In addition, she is a member of the President's Advisory Council of The
University of Vermont School of Business Administration.
RICHARD J. FLYNN (71), Trustee and Chairman of the non-interested
Trustees , is a financial consultant. Prior to September 1986, Mr. Flynn
was Vice Chairman and a Director of the Norton Company (manufacturer of
industrial devices). He is currently a Trustee of College of the Holy Cross
and Old Sturbridge Village, Inc., and he previously served as a Director of
Mechanics Bank (1971-1995).
E. BRADLEY JONES (67), Trustee . Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company. He is
a Director of TRW Inc. (original equipment and replacement products),
Cleveland-Cliffs Inc . (mining), Consolidated Rail Corporation,
Birmingham Steel Corporation, and RPM, Inc. (manufacturer of chemical
products ) , and he previously served as a Director of NACCO
Industries, Inc. (mining and marketing, 1985-1995) and Hyster-Yale
Materials Handling, Inc. (1985-1995). In addition, he serves as a Trustee
of First Union Real Estate Investments, a Trustee and member of the
Executive Committee of the Cleveland Clinic Foundation, a Trustee and
member of the Executive Committee of University School (Cleveland), and a
Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (62), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial consultant.
From 1987 to January 1995, Mr. Kirk was a Professor at Columbia University
Graduate School of Business. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and he previously served as a Director of
Valuation Research Corp. (appraisals and valuations, 1993-1995). In
addition, he serves as Chairman of the Board of Directors of the National
Arts Stabilization Fund, as Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association, as a Member of the Public Oversight Board
of the American Institute of Certified Public Accountants' SEC Practice
Section (1995), and as a Public Governor of the National Association of
Securities Dealers, Inc. (1996).
*PETER S. LYNCH (52), Trustee , is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice President
of Fidelity Magellan Fund and FMR Growth Group Leader; and Managing
Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity
Investments Corporate Services (1991-1992). He is a Director of W.R. Grace
& Co. (chemicals) and Morrison Knudsen Corporation (engineering and
construction). In addition, he serves as a Trustee of Boston College,
Massachusetts Eye & Ear Infirmary, Historic Deerfield (1989) and Society
for the Preservation of New England Antiquities, and as an Overseer of the
Museum of Fine Arts of Boston .
GERALD C. McDONOUGH (65), Trustee and Vice-Chairman of the
non-interested Trustees , is Chairman of G.M. Management Group
(strategic advisory services). Prior to his retirement in July 1988, he was
Chairman and Chief Executive Officer of Leaseway Transportation Corp.
(physical distribution services). Mr. McDonough is a Director of
ACME-Cleveland Corp. (metal working, telecommunications and electronic
products), Brush-Wellman Inc. (metal refining), York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp. (water
treatment equipment, 1992), and Associated Estates Realty Corporation (a
real estate investment trust, 1993).
EDWARD H. MALONE (70), Trustee. Prior to his retirement in 1985, Mr.
Malone was Chairman, General Electric Investment Corporation and a Vice
President of General Electric Company. He is a Director of Allegheny Power
Systems, Inc. (electric utility), General Re Corporation (reinsurance) and
Mattel Inc. (toy manufacturer). In addition, he serves as a Trustee of the
Naples Philharmonic Center for the Arts and Rensselaer Polytechnic
Institute, and he is a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN (61), Trustee (1993) , is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and subsidiaries.
Mr. Mann is a Director of M.A. Hanna Company (chemicals, 1993) and Infomart
(marketing services, 1991), a Trammell Crow Co. In addition, he serves as
the Campaign Vice Chairman of the Tri-State United Way (1993) and is a
member of the University of Alabama President's Cabinet .
THOMAS R. WILLIAMS (66), Trustee, is President of The Wales Group, Inc.
(management and financial advisory services). Prior to retiring in 1987,
Mr. Williams served as Chairman of the Board of First Wachovia Corporation
(bank holding company), and Chairman and Chief Executive Officer of The
First National Bank of Atlanta and First Atlanta Corporation (bank holding
company). He is currently a Director of BellSouth Corporation
(telecommunications), ConAgra, Inc. (agricultural products), Fisher
Business Systems, Inc. (computer software), Georgia Power Company (electric
utility), Gerber Alley & Associates, Inc. (computer software), National
Life Insurance Company of Vermont, American Software, Inc., and AppleSouth,
Inc. (restaurants, 1992).
FRED L. HENNING, JR. (55), Vice President, is Vice President of Fidelity's
money market (1994) and fixed-income (1995) funds and Senior Vice President
of FMR Texas Inc.
LELAND BARRON (37), Vice President (1989), is also Vice President of
other funds advised by FMR and an employee of FMR Texas Inc.
BURNELL STEHMAN (64), Vice President (1992), is also Vice President of
other funds advised by FMR and an employee of FMR Texas Inc.
JOHN TODD (47), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
SCOTT A. ORR (34), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
ARTHUR S. LORING (47), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER (47), Treasurer (1995), is Treasurer of the Fidelity
funds and is an employee of FMR (1995). Before joining FMR, Mr. Rathgeber
was a Vice President of Goldman Sachs & Co. (1978-1995), where he served in
various positions, including Vice President of Proprietary Accounting
(1988-1992), Global Co-Controller (1992-1994), and Chief Operations Officer
of Goldman Sachs (Asia) LLC (1994-1995) .
THOMAS D. MAHER (50), Assistant Vice President , is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas Inc.
JOHN H. COSTELLO (48), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (49), A ssistant 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) .
The following table sets forth information describing the compensation of
each current trustee of each fund for his or her services as trustee for
the fiscal year ended March 31, 1996.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J. Gary Ralph F. Phyllis Richard Edward C. E. Donald Peter S. Gerald C. Edward Marvin L. Thomas
Burkhead** Cox Burke J. Flynn Johnson 3d** Bradley J. Kirk Lynch** McDonough H. Mann R.
Davis Jones Malone Williams
Treas
ury $ 0 $ $ $ $ 0 $ $ $ 0 $ $ $ $
Only
Treas
ury 0 0 0
Govern
ment 0 0 0
Domes
tic 0 0 0
Rated
Money 0 0 0
Market
Money 0 0 0
Market
Tax-
Exempt 0 0 0
</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 12 8 ,000
Phyllis Burke Davis 5,200 52,000 12 5 ,000
Richard J. Flynn 0 52,000 1 60 ,500
Edward C. Johnson 3d** 0 0 0
E. Bradley Jones 5,200 49,400 12 8 , 0 00
Donald J. Kirk 5,200 52,000 12 9 , 5 00
Peter S. Lynch** 0 0 0
Gerald C. McDonough 5,200 52,000 12 8 ,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 12 8 ,000
Thomas R. Williams 5,200 52,000 125,000
</TABLE>
* Information is as of December 31, 199 5 for 2 19 funds in the
complex.
** Interested trustees of the fund are compensated by FMR.
For the fiscal year ended March 31, 1996, [Name of Trustee(s)], accrued
deferred compensation from [Name of Fund(s)] as follows:
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, the non-interested
Trustees, upon reaching age 72, become eligible to participate in a
retirement program under which they receive payments during their lifetime
from a fund based on their basic trustee fees and length of service. The
obligation of a fund to make such payments is not secured or funded.
Trustees become eligible if, at the time of retirement, they have served on
the Board for at least five years. Currently, Messrs. Ralph S. Saul,
William R. Spaulding, Bertram H. Witham, and David L. Yunich, all former
non-interested Trustees, receive retirement benefits under the program.
As of [date not earlier than July 1, 1996], the Trustees and officers of
each fund owned, in the aggregate, less than __% of each fund's total Class
II outstanding shares.
As of [date not earlier than July 1, 1996], the following owned of record
or beneficially 5% or more of outstanding shares of each class of the
funds:
[IF FUND HAS A SHAREHOLDER WHO OWNS 25% OR MORE: A shareholder owning of
record or beneficially more than 25% of a class's outstanding shares
may be considered a controlling person. That shareholder's vote could have
a more significant effect on matters presented at a shareholders' meeting
than votes of other shareholders.]
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing each fund's investments,
compensates all officers of each fund, all Trustees who are "interested
persons" of the trusts or of FMR, and all personnel of each fund or FMR for
performing services relating to research, statistical and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provides the management and administrative services
necessary for the operation of each fund. These services include providing
facilities for maintaining each fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees.
In addition to the management fee payable to FMR and the fees payable to
UMB, FIIOC, and FSC , each fund or class thereof, as
applicable, pays all of its expenses, without limitation, that are not
assumed by those parties. Each fund (other than Treasury Only and Rated
Money Market) pays for the typesetting, printing, and mailing of its proxy
materials to shareholders, legal expenses, and the fees of the custodian,
auditor and non-interested Trustees. Although each fund's (other than
Treasury Only's and Rated Money Market's) current management contract
provides that the fund will pay for typesetting, printing, and
mailing prospectuses, statements of additional information, notices and
reports to shareholders, the trusts, on behalf of each fund , have
entered into revised transfer agent agreements with FIIOC and UMB, as
applicable, pursuant to which FIIOC or UMB bears the costs of providing
these services to existing shareholders of the applicable classes. Other
expenses paid by each fund (other than Treasury Only and Rated Money
Market) include interest, taxes, brokerage commissions, e ach fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. Each fund is also liable for such non-recurring expenses
as may arise, including costs of any litigation to which the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.
FMR is responsible for the payment of all expenses of Treasury Only and
Rated Money Market with certain exceptions. Specific expenses payable by
FMR include, without limitation, expenses for the typesetting, printing,
and mailing of proxy materials to shareholders; legal expenses, and the
fees of the custodian, auditor, and interested Trustees; costs of
typesetting, printing, and mailing prospectuses and statements of
additional information, notices and reports to shareholders; and the fund's
proportionate share of insurance premiums and Investment Company Institute
dues. FMR also provides for transfer agent and dividend disbursing services
through FIIOC and portfolio and general accounting record maintenance
through FSC.
FMR pays all other expenses of Treasury Only and Rated Money Market with
the following exceptions: fees and expenses of all Trustees of the
applicable trust who are not "interested persons" of the trust or
FMR (the non-interested Trustees); interest on borrowings (only for
Treasury Only); taxes; brokerage commissions (if any); and such
nonrecurring expenses as may arise, including costs of any litigation to
which a fund may be a party, and any obligation it may have to indemnify
the officers and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated May 30,
1993 for Treasury, Government, Domestic, and Money Market ( the FICP
funds ) ; January 29, 1992 for Tax-Exempt; September 30, 1993 for
Treasury Only; and December 29, 1994 for Rated Money Market . The
management contracts were approved by shareholders on November 18,
1992, November 13, 1991, March 24, 1993, and December 8, 1994,
respectively.
For the services of FMR under each contract, each fund (other than
Treasury Only and Rated Money Market) pays FMR a monthly management fee
at the annual rate of 0.20% of average net assets throughout the month.
Treasury Only and Rated Money Market each pays FMR a monthly management
fee at the annual rate of 0.42% of average net assets throughout the month.
The management fees paid to FMR by Treasury Only and Rated Money Market are
reduced by an amount equal to the fees and expenses paid by the respective
funds to the non-interested Trustees. Fees received by FMR for the last
three fiscal periods are shown in the table below.
Fund Fiscal Year Ended Management Fees Paid to FMR
<TABLE>
<CAPTION>
<S> <C> <C>
Treasury Only 3/31/96 $ *
3/31/95** *
7/31/94 *
7/31/93 *
Treasury 3/31/96
3/31/95
3/31/94
Government 3/31/96
3/31/95
3/31/94
Domestic 3/31/96
3/31/95
3/31/94
Fund Fiscal Year Ended Management Fees Paid to FMR
Rated Money Market 3/31/96** *
8/31/95 *
8/31/94 *
8/31/93 *
Money Market 3/31/96
3/31/95
3/31/94
Tax-Exempt 3/31/96
3/31/95**
5/31/94
5/31/93
</TABLE>
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
** The fiscal year end of Treasury Only changed from July 31 to March 31 in
February 1995. The fiscal year end of Rated Money Market changed from
August 31 to March 31 in June 1995. The fiscal year end of Tax-Exempt
changed from May 31 to March 31 in February 1995.
FMR may, from time to time, voluntarily reimburse all or a portion of each
class's operating expenses (exclusive of interest, taxes, brokerage
commissions, 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 class 's total returns and yield and
repayment of the reimbursement by each class will lower its total
returns and yield.
During the fiscal periods reported, FMR voluntarily agreed , subject
to revision or termination, to reimburse Class II of certain funds
if and to the extent that each fund's Class II aggregate
operating expenses , including management fees but excluding 12b-1 fees,
were in excess of an annual rate of its average net assets. The table
below identifies the classes in reimbursement; the expense limit
for such reimbursement; the amount of management fees incurred under
each contract before reimbursement; and the dollar amount reimbursed
for each fiscal year ended March 31, 1996, 1995, and 1994.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Expense Management Fee Dollar Amount Fiscal Year
Fund Limit Before Reimbursement Reimbursed Ended
Treasury Only - Class I*
Treasury Only - Class II
Treasury Only - Class III
Treasury - Class I
Treasury - Class II
Treasury - Class III
Government - Class I
Government - Class II
Government - Class III
Domestic - Class I
Domestic - Class II
Domestic - Class III
Rated Money Market - Class I**
Rated Money Market - Class II**
Rated Money Market - Class III**
Money Market - Class I
Money Market - Class II
Money Market - Class III
Tax-Exempt - Class I***
Tax-Exempt - Class II***
Tax-Exempt - Class III***
</TABLE>
* Figures for Treasury Only are for the fiscal year ended March 31,
1996, the fiscal period August 1, 1994 to March 31, 1995, and the fiscal
years ended July 31, 1994 and 1993.
** Figures for Rated Money Market are for the fiscal period September 1,
1995 to March 31, 1996, and the fiscal years ended August 31, 1995, 1994,
and 1993.
*** Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, and the fiscal years
ended May 31, 1994 and 1993.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating each fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its custodian fees attributable to
investment in foreign securities.
SUB-ADVISER. FMR has entered into a sub-advisory agreement with FMR Texas
pursuant to which FMR Texas has primary responsibility for providing
portfolio investment management services to each fund.
Under the sub-advisory agreements dated May 30, 1993, January 29, 1992,
September 30, 1993, and December 29, 1994, for the FICP funds, Tax-Exempt,
Treasury Only, and Rated Money Market, respectively, FMR pays FMR Texas
fees equal to 50% of the management fees payable to FMR under its
management contract with each fund. Each sub-advisory agreement was
approved by shareholders on November 18, 1992, November 13, 1991, March 24,
1993, and December 8, 1994, for the FICP funds, Tax-Exempt, Treasury Only,
and Rated Money Market, respectively. The fees paid to FMR Texas are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time. The table below shows fees paid by FMR to FMR
Texas on behalf of each fund for the fiscal years ended March 31, 1996,
1995, and 1994.
1996 1995 1994 1993
Treasury Only* $ $ $ $
Treasury N/A
Government N/A
Domestic N/A
Rated Money Market** N/A
Money Market
Tax-Exempt***
* Figures for Treasury Only are for the fiscal year ended March 31,
1996, the fiscal period August 1, 1994 to March 31, 1995, and the fiscal
years ended July 31, 1994 and 1993.
** Figures for Rated Money Market are for the fiscal period September 1,
1995 to March 31, 1996, and the fiscal years ended August 31, 1995, 1994,
and 1993.
*** Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, and the fiscal years
ended May 31, 1994 and 1993.
CONTRACTS WITH FMR AFFILIATES
FIIOC, an affiliate of FMR, is the transfer, dividend disbursing, and
shareholder servicing agent for Class II shares of Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market (the Taxable
Funds).
UMB is the transfer agent for Class II shares of Tax-Exempt. UMB has
entered into a sub-contract with FIIOC under the terms of which FIIOC
performs the processing activities associated with providing transfer agent
and shareholder servicing functions for Class II shares of Tax-Exempt.
Under this arrangement FIIOC receives an annual account fee and an
asset-based fee each based on account size and fund type for each retail
account and certain institutional accounts. With respect to certain
institutional retirement accounts, FIIOC receives an annual account fee and
an asset-based fee based on account type or fund type. These annual account
fees are subject to increase based on postal rate changes.
For accounts that FIIOC maintains on behalf of UMB, FIIOC receives all such
fees.
FIIOC bears the expense of typesetting, printing, and mailing prospectuses,
statements of additional information, and all other reports, notices, and
statements to shareholders, with the exception of proxy statements. Also,
FIIOC pays out-of-pocket expenses associated with transfer agent services.
FSC, an affiliate of FMR, performs the calculations necessary to determine
NAV and dividends for Class II shares of each Taxable Fund, and maintains
each Taxable Fund's accounting records. UMB has an additional sub-contract
with FSC, under the terms of which FSC performs the calculations necessary
to determine NAV and dividends for Class II of Tax-Exempt, and maintains
the fund's accounting records. 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.
FMR bears the cost of transfer, dividend disbursing, shareholder servicing,
and pricing and bookkeeping services pursuant to its management contracts
with Treasury Only and Rated Money Market. The transfer agent fee and
charges and pricing and bookkeeping fees for Tax-Exempt are paid to FIIOC
and FSC, respectively, by UMB which is entitled to reimbursement from Class
II or the fund, as applicable, for these expenses.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for the past three fiscal years were as follows:
Pricing and Bookkeeping Fees
1996 1995 1994 1993
Treasury $ $ $ N/A
Government N/A
Domestic N/A
Money Market N/A
Tax-Exempt* $
* Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, annualized, and the
fiscal years ended May 31, 1994 and 1993.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at NAV. Promotional and administrative expenses in connection with
the offer and sale of shares are paid by FMR.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved a Distribution and Service Plan on behalf of
Class II of each fund (the Plans) pursuant to Rule 12b-1 under the
1940 Act (the Rule). The Rule provides in substance that a mutual fund may
not engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of a fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow Class II of the funds and
FMR to incur certain expenses that might be considered to constitute
indirect payment by the funds of distribution expenses.
Pursuant to each Class II Plan, FDC is paid a monthly distribution fee
as a percentage of Class II's average net assets at an annual rate of
0.15%, determined as of the close of business on each day throughout the
month.
For the fiscal year ended March 31, 1996, Class II of each fund paid the
following distribution fees:
1996
Treasury Only $
Treasury
Government
Domestic
Rated Money Market
Money Market
Tax-Exempt
of which the following was retained by FDC:
1996 1994
Treasury Only $ N/A
Treasury
Government
Domestic
Rated Money Market $
Money Market
Tax-Exempt $
Under each Plan, if the payment of management fees by the funds to FMR is
deemed to be indirect financing by the funds of the distribution of their
shares, such payment is authorized by the Plans. Each Plan specifically
recognizes that FMR may use its management fee revenue , as well as
its past profits, or its other resources to reimburse FDC for
expenses incurred with the distribution of Class II shares, including
payments made to third parties that assist in selling Class II shares of
each fund, or to third parties, including banks that render shareholder
support services or engage in the sale of Class II shares. The Trustees
have authorized such payments.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
have determined that there is a reasonable likelihood that the Plan will
benefit Class II of the applicable fund and its shareholders.
To the extent that each Plan gives FMR and FDC greater flexibility in
connection with the distribution of shares of Class II of each fund,
additional sales of fund shares may result. Furthermore, certain
shareholder support services may be provided more effectively under the
Plans by local entities with whom shareholders have other relationships.
The Plans do not provide for specific payments by Class II of any of the
expenses of FDC or obligate FDC or FMR to perform any specific type or
level of distribution activities or incur any specific level of expense in
connection with distribution activities. After payments by FDC for
advertising, marketing and distribution, and payments to third parties, the
amounts remaining, if any, may be used as FDC may elect.
The Plans were approved by FMR as the then sole shareholder of Class II of
each fund on October 31, 1995.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plans.
No preference for the instruments of such depository institutions will be
shown in the selection of investments.
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Treasury Only is a fund of Daily Money Fund,
an open-end management investment company originally organized as a
Massachusetts business trust on June 7, 1982, pursuant to a Declaration of
Trust that was amended and restated on September 1, 1989. On September 29,
1993, the trust was converted to a Delaware business trust pursuant to an
agreement approved by shareholders on March 24, 1993. The Delaware trust,
which was organized on June 20, 1991 under the name Daily Money Fund II,
succeeded to the name Daily Money Fund on July 14, 1995. Currently, there
are six funds of the trust: Treasury Only, Money Market Portfolio, U.S.
Treasury Portfolio, Capital Reserves: U.S. Government Portfolio, Capital
Reserves: Money Market Portfolio, and Capital Reserves: Municipal Money
Market Portfolio. The Trust Instrument permits the Trustees to create
additional funds.
Treasury, Government, Domestic, and Money Market are funds of Fidelity
Institutional Cash Portfolios, an open-end management investment company
originally organized as a Massachusetts business trust on November 10,
1981, pursuant to a Declaration of Trust that was amended and restated on
April 9, 1985. On May 30, 1993, the trust was converted to a Delaware
business trust pursuant to an agreement approved by shareholders on
November 18, 1992. The Delaware trust, which was organized on June 20, 1991
under the name Fidelity Government Securities Fund, succeeded to the name
Fidelity Institutional Cash Portfolios II on May 28, 1993, and then to the
name Fidelity Institutional Cash Portfolios on May 28, 1993. Currently,
there are four funds of the trust: Treasury, Government, Domestic, and
Money Market. The Trust Instrument permits the Trustees to create
additional funds.
Rated Money Market is a fund of Fidelity Money Market Trust, an open-end
management investment company an open-end management investment company
originally organized as a Massachusetts business trust on August 21, 1978,
pursuant to a Declaration of Trust that was amended and restated on
November 1, 1989. On December 29, 1994, the trust was converted to a
Delaware business trust pursuant to an agreement approved by shareholders
on December 8, 1994. The Delaware trust, which was organized on June 20,
1991 under the name Fidelity Money Market Trust II, succeeded to the name
Fidelity Money Market Trust on December 29, 1994. Currently, there are
three funds of Fidelity Money Market Trust: Rated Money Market, Retirement
Money Market Portfolio, and Retirement Government Money Market Portfolio.
The Trust Instrument permits the Trustees to create additional funds.
Tax-Exempt is a fund of Fidelity Institutional Tax-Exempt Cash Portfolios,
an open-end management investment company originally organized as a
Massachusetts business trust on March 1, 1982, pursuant to a Declaration of
Trust that was amended and restated on April 9, 1985, and supplemented on
December 15, 1989. On January 29, 1992, the trust was converted to a
Delaware business trust pursuant to an agreement approved by shareholders
on November 13, 1991. The Delaware trust, which was organized on June 20,
1991 under the name Fidelity Institutional Tax-Exempt Cash Portfolios II,
succeeded to the name Fidelity Institutional Tax-Exempt Cash Portfolios on
January 29, 1992. Currently, Tax-Exempt is the only fund of Fidelity
Institutional Tax-Exempt Cash Portfolios. The Trust Instrument permits the
Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to a fund, the
right of the trust or fund to use the identifying name "Fidelity" may be
withdrawn. There is a remote possibility that one fund might become liable
for any misstatement in its prospectus or statement of additional
information about another fund.
The assets of the trusts received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trusts are to
be allocated in proportion to the asset value of the respective funds,
except where allocations of direct expense can otherwise be fairly made.
The officers of the trusts, subject to the general supervision of the Board
of Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of a trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. Each trust is a business trust organized
under Delaware law. Delaware law provides that shareholders shall be
entitled to the same limitations of personal liability extended to
stockholders of private corporations for profit. The courts of some states,
however, may decline to apply Delaware law on this point. The Trust
Instruments contain an express disclaimer of shareholder liability for the
debts, liabilities, obligations, and expenses of the trusts and require
that a disclaimer be given in each contract entered into or executed by the
trust or the Trustees. The Trust Instruments provide for indemnification
out of each fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund. The Trust Instruments
also provide that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply, no contractual
limitation of liability was in effect, and the fund is unable to
meet its obligations. FMR believes that, in view of the above, the
risk of personal liability to shareholders is extremely remote.
The Trust Instruments further provide that the Trustees, if they have
exercised reasonable care, shall not be personally liable to any person
other than the trust or its shareholders; moreover, the Trustees shall not
be liable for any conduct whatsoever, provided that Trustees are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office. Claims
asserted against one class of shares may subject holders of another class
of shares to certain liabilities.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder of Rated Money Market, you receive one vote for
each dollar value of net asset value you own. The shares have no preemptive
or conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the Prospectus.
Shares are fully paid and non-assessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of a trust, fund , or class may, as set
forth in each of the Trust Instruments, call meetings of the trust, fund,
or class, for any purpose related to the trust, fund, or class, as the case
may be, including, in the case of a meeting of the entire trust, the
purpose of voting on removal of one or more Trustees.
Any trust or fund may be terminated upon the sale of its assets to, or
merger with, another open-end management investment company or series
thereof, or upon liquidation and distribution of its assets. Generally such
terminations must be approved by vote of the holders of a majority of the
outstanding shares of the trust or fund (or, for Rated Money Market, as
determined by the current value of each shareholder's investment in the
fund or trust); however, the Trustees may, without prior shareholder
approval, change the form of organization of the trust or fund by
merger, consolidation, or incorporation. If not so terminated, the trust
and its funds will continue indefinitely.
Under the Trust Instruments, the Trustees may, without shareholder vote,
cause a trust to merge or consolidate into one or more trusts,
partnerships, or corporations, or cause the trust to be incorporated under
Delaware law, so long as the surviving entity is an open-end management
investment company that will succeed to or assume the trust's registration
statement. Each fund may invest all of its assets in another investment
company.
CUSTODIAN. The Bank of New York, 48 Wall Street, New York, New York,
is custodian of the assets of each fund, except Tax-Exempt. UMB, 1010 Grand
Avenue, Kansas City, Missouri, is custodian of the assets of Tax-Exempt.
The custodian is responsible for the safekeeping of a fund's assets and the
appointment of the subcustodian banks and clearing agencies. The custodian
takes no part in determining the investment policies of a fund or in
deciding which securities are purchased or sold by a fund. However, a fund
may invest in obligations of the custodian and may purchase securities from
or sell securities to the custodian. Chemical Bank, headquartered in New
York, also may serve as a special purpose custodian of certain assets in
connection with pooled repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain funds advised by FMR.
Transactions that have occurred to date include mortgages and personal and
general business loans. In the judgment of FMR, the terms and conditions of
those transactions were not influenced by existing or potential custodial
or other fund relationships.
AUDITORS. ____ serves as the independent accountant for Treasury
Only, Rated Money Market, and Tax-Exempt. ____ serves as the independent
accountant for the FICP funds. The auditors examine financial statements
for the funds and provide other audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended March 31, 199 6 are included in each fund's
Annual Report, which is a separate report supplied with this Statement of
Additional Information. Each fund's financial statements and financial
highlights are incorporated herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating organizations when
determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S COMMERCIAL PAPER RATINGS:
Issuers rated PRIME-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics:
Leading market positions in well established industries.
High rates of return on funds employed.
Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
Broad margins in earning coverage of fixed financial charges and with high
internal cash generation.
Well established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earning trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S C OMMERCIAL PAPER RATINGS:
A - Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with
the numbers 1, 2, and 3 to indicate the relative degree of safety.
A-1 - This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+)
sign designation.
A-2 - Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS CLASS III
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 .............................. Expenses
3 a .............................. Financial Highlights
b .............................. *
c .............................. Performance
d .............................. Cover Page
4 a i............................. Charter
ii........................... Investment Principles and Risks; Securities and
Investment Practices; Fundamental Investment
Policies and Restrictions
b .............................. Securities and Investment Practices
c .............................. Who May Want to Invest; Investment Principles
and Risks; Securities and Investment Practices
5 a .............................. Charter
b i............................. FMR and Its Affiliates
ii........................... FMR and Its Affiliates; Charter; Breakdown of
Expenses
iii.......................... Expenses; Breakdown of Expenses; Management
Fee
c .............................. FMR and Its Affiliates
d .............................. Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates
e .............................. FMR and its Affiliates; Breakdown of Expenses;
Other Expenses
f .............................. Expenses
g .............................. Expenses; FMR and Its Affiliates
5A .............................. *
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange
Restrictions
iii.......................... *
b ............................. FMR and Its Affiliates
c .............................. Charter
d .............................. Cover Page; Charter
e .............................. Cover Page; How to Buy Shares; How to Sell
Shares; Investor Services; Exchange Restrictions
f, g .............................. Dividends, Capital Gains, and Taxes
7 a .............................. Charter; Cover Page
b .............................. How to Buy Shares; Transaction Details
c .............................. *
d .............................. How to Buy Shares
e .............................. Transaction Details; Breakdown of Expenses
f .............................. Breakdown of Expenses; Other Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL
MONEY MARKET
FUNDS - CLASS III
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a copy
of a fund's most recent financial report and portfolio listing or a copy of
the Statement of Additional Information (SAI) dated July 31, 1996 .
The SAI has been filed with the Securities and Exchange Commission (SEC)
and is incorporated herein by reference (legally forms a part of the
prospectus). For a free copy of either document, contact Fidelity Client
Services at 1-800-843-3001, or your investment professional.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT A FUND WILL MAINTAIN A
STABLE $1.00 SHARE PRICE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
LIKE ALL MUTUAL FUNDS, THESE
SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
IMMIII-pro-0796
TREASURY ONLY
TREASURY
GOVERNMENT
DOMESTIC
RATED MONEY MARKET
MONEY MARKET
TAX-EXEMPT
PROSPECTUS
DATED JULY 31, 1996 (FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109
CONTENTS
KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Class III's yearly operating expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's
financial data.
PERFORMANCE
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's
overall approach to investing.
BREAKDOWN OF EXPENSES How operating costs
are calculated and what they include.
YOUR ACCOUNT HOW TO BUY SHARES Opening an account and
making additional investments.
HOW TO SELL SHARES Taking money out and
closing your account.
INVESTOR SERVICES Services to help you manage
your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS, AND TAXES
ACCOUNT POLICIES
TRANSACTION DETAILS Share price calculations
and the timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
KEY FACTS
WHO MAY WANT TO INVEST
Each fund offers institutional and corporate investors a convenient way to
invest in a professionally managed portfolio of money market instruments.
Each fund is designed for investors who would like to earn current income
while preserving the value of their investment.
The rate of income will vary from day to day, generally reflecting
short-term interest rates.
Each fund is managed to keep its share price stable at $1.00. Each of
Treasury Only, Treasury, and Government offers an added measure of safety
with its focus on U.S. Treasury or Government securities.
These funds do not constitute a balanced investment plan. However, because
they emphasize stability, they could be well-suited for a portion of your
investment.
Each fund is composed of multiple classes of shares. All
class es of a fund ha ve a common investment objective and
investment portfolio. Class I shares do not have a sales charge and do not
pay a distribution fee. Class II shares do not have a sales charge, but do
pay a 0.15% distribution fee. Class III shares do not have a sales charge,
but do pay a 0.25% distribution fee. Because Class I shares have no sales
charge and do not pay a distribution fee, Class I shares are expected to
have a higher total return than Class II and Class III shares. You may
obtain more information about Class I and Class II shares, which are not
offered through this prospectus, from your investment professional ,
or by calling Fidelity Client Services at 1-800-843-3001. Contact your
investment professional to discuss which class is appropriate for
you.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
Class III shares of a fund.
Maximum sales charge on purchases and None
reinvested distributions
Maximum deferred sales None
charge
Redemption fee None
Exchange fee None
ANNUAL OPERATING EXPENSE S are paid out of each fund's assets. Each fund
pays a management fee to Fidelity Management & Research Company (FMR). In
addition, each fund is responsible for certain other expenses.
12b-1 fees are paid by Class III of each fund to the distributor for
services and expenses in connection with the distribution of Class III
shares of each fund. 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.
Class III 's expenses are factored into its share price or dividends
and are not charged directly to shareholder accounts (see "Breakdown of
Expenses" on page ).
The following are projections based on historical expenses of Class
III of each fund and are calculated as a percentage of average net
assets of Class III of each fund.
Class III Operating Expenses
TREASURY ONLY Management fee
12b-1 fee (Distribution fee) 0.25
%
Other expenses
Total operating expenses
Class III Operating Expenses
TREASURY Management fee
12b-1 fee (Distribution fee) 0.25
%
Other expenses
Total operating expenses
GOVERNMENT Management fee
12b-1 fee (Distribution fee) 0.25
%
Other expenses
Total operating expenses
DOMESTIC Management fee
12b-1 fee (Distribution fee) 0.25
%
Other expenses
Total operating expenses
RATED MONEY MARKET Management fee
12b-1 fee (Distribution fee) 0.25
%
Other expenses
Total operating expenses
MONEY MARKET Management fee
12b-1 fee (Distribution fee) 0.25
%
Other expenses
Total operating expenses
TAX-EXEMPT Management fee
12b-1 fee (Distribution fee) 0.25
%
Other expenses
Total operating expenses
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment in Class III shares, assuming a 5% annual return and full
redemption at the end of each time period:
1 3 5 10
Year Years Years Years
Treasury Only $ $ $ $
Treasury $ $ $ $
Government $ $ $ $
Domestic $ $ $ $
Rated Money Market $ $ $ $
Money Market $ $ $ $
Tax-Exempt $ $ $ $
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY.
FMR has voluntarily agreed to reimburse Class III of each fund to
the extent that total operating expenses (excluding interest, taxes,
brokerage commissions, extraordinary expenses , and 12b-1 fees ) are
in excess of 0.20% (0.18% for Money Market), of its average net assets. If
these agreements were not in effect, the management fee, other expenses,
and total operating expenses, as a percentage of average net assets, of
Class III of each fund would have been the following amounts: __%, __%,
and __% for Treasury Only; __%, __%, and __% for Treasury; __%, __%, and
__% for Government; __%, __%, and __% for Domestic; __%, __%, and __% for
Rated Money Market; __%, __%, and __% for Money Market; and __%, __%, and
__% for Tax-Exempt.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow and each fund's financial
statements are included in each fund's Annual Report and have been audited
by independent accountants. ___ serves as independent accountants for each
of Treasury, Government, Domestic, and Money Market. ______
serves as independent accountants for each of Treasury Only, Rated Money
Market, and Tax-Exempt. Their reports on the financial statements and
financial highlights are included in the Annual Report. The financial
statements, the financial highlights, and the reports are incorporated by
reference into the funds' SAI, which may be obtained free of charge from
Fidelity Client Services at the phone number listed on page __.
PERFORMANCE
Money market fund performance can be measured as TOTAL RETURN or YIELD.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a yield
assumes that income earned is reinvested, it is called an EFFECTIVE YIELD.
A TAX-EQUIVALENT YIELD shows what an investor would have to earn before
taxes to equal a tax-free yield.
SEVEN-DAY YIELD illustrates the income earned by an investment in a money
market fund over a recent seven-day period. Since money market funds
maintain a stable $1.00 share price, current seven-day yields are the most
common illustration of money market fund performance.
The funds' performance a nd holdings are detailed twice a year in
financial reports, which are sent to all shareholders.
For current performance call Fidelity Client Services at 1-800-843-3001.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools
shareholders' money and invests it toward a specified goal. Treasury Only
is a diversified fund of Daily Money Fund, an open-end management
investment company organized as a Delaware business trust on September 29,
1993. Treasury, Government, Domestic, and Money Market are diversified
funds of Fidelity Institutional Cash Portfolios, an open-end management
investment company organized as a Delaware business trust on May 30, 1993.
Rated Money Market is a diversified fund of Fidelity Money Market Trust, an
open-end management investment company organized as a Delaware business
trust on December 29, 1994. Tax-Exempt is a diversified fund of
Fidelity Institutional Tax-Exempt Cash Portfolios , an open-end
management investment company organized as a Delaware business trust on
January 29, 1992. There is a remote possibility that one fund might become
liable for a misstatement in the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent will mail proxy materials in advance, including a voting
card and information about the proposals to be voted on. You are
entitled to one vote for each share you own of each of Treasury Only,
Treasury, Government, Domestic, Money Market, and Tax-Exempt. For
shareholders of Rated Money Market, the number of votes you are entitled to
is based upon the dollar value of your investment.
Separate votes are taken by each class of shares, fund, or trust, if a
matter affects just that class of shares, fund, or trust, respectively.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business address
at 82 Devonshire Street, Boston, Massachusetts 02109. It includes a number
of different subsidiaries and divisions which provide a variety of
financial services and products. The funds employ various Fidelity
companies to perform activities required for their operation.
The funds are managed by FMR, which handles their business affairs. FMR
Texas Inc. (FMR Texas), located in Irving, Texas, has primary
responsibility for providing investment management services.
As of __, 19_, FMR advised funds having approximately __million
shareholder accounts with a total value of more than $__ billion.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets Fidelity's
funds and services. Fidelity Investments Institutional Operations Company
(FIIOC) performs transfer agent servicing functions for Class III
shares of each fund.
FMR Corp. is the ultimate parent company of FMR and FMR Texas. Members of
the Edward C. Johnson 3d family are the predominant owners of a class of
shares of common stock representing approximately 49% of the voting power
of FMR Corp. Under the Investment Company Act of 1940 (the 1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
UMB Bank, n.a. (UMB) is Tax-Exempt's transfer agent, although it employs
FIIOC to perform these functions for Class III of the fund. UMB is located
at 1010 Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
EACH FUND'S INVESTMENT APPROACH
When you sell your shares of the funds, they should be worth the same
amount as when you bought them. Of course, there is no guarantee that the
funds will maintain a stable $1.00 share price. The funds follow
industry-standard guidelines on the quality and maturity of their
investments, which are designed to help maintain a stable $1.00 share
price. The funds will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities they buy. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a
default on the funds' investments could cause their share prices (and the
value of your investment) to change.
The funds earn income at current money market rates. Each fund stresses
preservation of capital, liquidity, and income (tax-free income in the case
of Tax-Exempt) and does not seek the higher yields or capital appreciation
that more aggressive investments may provide. Each fund's yield will vary
from day to day, and generally reflects current short-term interest rates
and other market conditions. It is important to note that neither the funds
nor their yields are guaranteed by the U.S. Government.
TREASURY ONLY seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share (NAV) of $1.00.
The fund invests only in U.S. Treasury securitie s. The fund does not
enter into repurchase agreements or reverse repurchase agreements.
The fund will invest in those securities whose interest is specifically
exempt from state and local income taxes under federal law; such interest
is not exempt from federal income tax.
TREASURY seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
Th e fund invests only in U.S. Treasury securities and repurchase
agreements for these securities. The fund does not enter into reverse
repurchase agreements.
GOVERNMENT seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. Government s ecurities and
re purchase agreements for these securities. The fun d also
may enter into reverse repurchase agreements.
DOMESTIC seeks to obtain as high a level of current income as is consistent
with the preservation of principal and liquidity within the limitations
prescribed for the fund.
The fund invests only in the highest-quality U.S.
dollar-denominated money market securities of domestic issuers ,
including U.S. Government securities and repurchase agreements. Securities
are "highest-quality" if rated in the highest rating category by at
least two nationally recognized rating services, or by one if only one
rating service has rated a security, or, if unrated, determined to
be of equivalent quality by FMR. The fund also may enter into reverse
repurchase agreements.
RATED MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in U.S. dollar-denominated money market securities
of domestic and foreign issuers rated in the highest rating category by
at least two nationally recognized rating services , including U.S.
Government securities and repurchase agreements. The fund also may enter
into reverse repurchase agreements.
MONEY MARKET seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
The fund invests only in the highest-quality U.S. dollar-denominated
money market securities of domestic and foreign issuers ,
including U.S. Government securities and repurchase agreements. Securities
are "highest-quality" if rated in the highest rating category by at
least two nationally recognized rating services, or by one if only one
rating service has rated a security, or, if unrated, deter mined to
be of equivalent quality by FMR . The fund also may enter into
reverse repurchase agreements.
TAX-EXEMPT seeks to obtain as high a level of interest income exempt
from federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal.
The fund invests primarily in high-quality, short-term municipal
securities, but also may invest in high-quality, long-term instruments
whose features give them interest rates, maturities, and prices similar to
short-term instruments. Securities in which the fund invests must be rated
in the highest rating category for short-term securities by at least one
nationally recognized rating service and rated in one of the two highest
categories for short-term securities by another nationally recognized
rating service if rated by more than one nationally recognized rating
service , or, if unrated, determined to be of
equivalent quality by FMR.
The fund, under normal conditions, will invest so that at least 80% of its
income distributions is exempt from federal income tax. The fund does not
currently intend to purchase municipal securities subject to the
federal alternative minimum tax.
FMR normally invests the fund's assets according to its investment strategy
and does not expect to invest in federally taxable obligations. The fund
also reserves the right to hold a substantial amount of uninvested cash or
to invest more than normally permitted in federally taxable obligations for
temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Any restrictions listed supplement those discussed earlier in this section.
A complete listing of each fund's limitations and more detailed information
about each fund's investments are contained in the funds' SAI. Policies and
limitations are considered at the time of purchase; the sale of instruments
is not required in the event of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Fund holdings are de tailed in each fund's financial reports,
which are sent to shareholders twice a year. For a free SAI or financial
report, call Fidelity Client Services at 1-800-843-3001.
MONEY MARKET SECURITIES are high-quality, short-term obligations
issued by the U.S. Government, corporations, financial institutions,
municipalities, local and state governments, and other entities. These
obligations may carry fixed, variable, or floating interest rates.
Some money market securities employ a trust or other similar structure to
modify the maturity, price characteristics, or quality of financial assets
so that they are eligible investments for money market funds. If the
structure does not perform as intended, adverse tax or investment
consequences may result.
U.S. GOVERNMENT MONEY MARKET SECURITIES are short-term debt obligations
issued or guaranteed by the U.S. Treasury or by an agency or
instrumentality of the U.S. Government. Not all U.S. Government securities
are backed by the full faith and credit of the United States. For example,
securities issued by the Federal Farm Credit Bank or by the Federal
National Mortgage Association are supported by the instrumentality's right
to borrow money from the U.S. Treasury under certain circumstances.
However, securities issued by the Financing Corporation are supported only
by the credit of the entity that issued them.
MUNICIPAL SECURITIES are issued to raise money for a variety of public or
private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities. They
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. The value of some or all
municipal securities may be affected by uncertainties in the municipal
market related to legislation or litigation involving the taxation of
municipal securities or the rights of municipal securities holders. A fund
may own a municipal security directly or through a participation interest.
CREDIT SUPPORT. Issuers may employ various forms of credit
enhancement, including letters of credit, guarantees, or insurance from a
bank, insurance company, or other entity. These arrangements expose the
fund to the credit risk of the entity. In the case of foreign entities,
extensive public information about the entity may not be available and the
entity may be subject to unfavorable political, economic, or governmental
developments which might affect its ability to honor its commitment.
FOREIGN SECURITIES may involve different risks than domestic securities,
including risks relating to the political and economic conditions of the
foreign country involved, which could affect the payment of principal or
interest. Issuers of foreign securities include foreign governments,
corporations, and banks.
ASSET-BACKED SECURITIES include interests in pools of mortgages, loans,
receivables, or other assets. Payment of principal and interest may be
largely dependent upon the cash flows generated by the assets backing the
securities.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a benchmark
rate changes. These interest rate adjustments are designed to help
stabilize the security's price.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. Their risks are similar to those of other money market
securities, although they may be more volatile.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
temporarily transfers possession of a portfolio instrument to another party
in return for cash. This could increase the risk of fluctuation in the
fund's yield or in the market value of its assets.
OTHER MONEY MARKET SECURITIES may include commercial paper, certificates of
deposit, bankers' acceptances, and time deposits.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
OTHER MUNICIPAL SECURITIES may include obligations of U.S. territories and
possessions such as Guam, the Virgin Islands, and Puerto Rico, and their
political subdivisions and public corporations.
PUT FEATURES entitle the holder to put (sell back) a security to the issuer
or a financial intermediary. In exchange for this benefit, a fund may pay
periodic fees or accept a lower interest rate. The credit quality of the
investment may be affected by the creditworthiness of the put provider.
Demand features, standby commitments, and tender options are types of put
features.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities, and some other securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTION: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period.
FINANCIAL SERVICES INDUSTRY. Companies in the financial services industry
are subject to various risks related to that industry, such as government
regulation, changes in interest rates, and exposure on loans, including
loans to foreign borrowers. If a fund invests substantially in this
industry, its performance may be affected by conditions affecting the
industry.
RESTRICTIONS: Each of Domestic, Rated Money Market, and Money Market
will invest more than 25% of its total assets in the financial services
industry.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry or type of
project. Economic, business, or political changes can affect all securities
of a similar type.
RESTRICTIONS: Each of Domestic, Rated Money Market, and Money
Market may not invest more than 5% of its total assets in any one issuer,
except that each fund may invest up to 10% of its total assets in the
highest quality securities of a single issuer for up to three business
days.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
These limitations do not apply to U.S. Government securities.
Tax-Exempt may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
BORROWING. Each fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements, and may make additional
investments while borrowings are outstanding.
RESTRICTIONS: Each of Government, Domestic, Rated Money Market, and
Money Market may borrow only for temporary or emergency purposes, or
engage in reverse repurchase agreements, but not in an amount exceeding
331/3% of its total assets. Each of Treasury Only, Treasury, and
Tax-Exempt may borrow only for temporary or emergency purposes, but not
in an amount exceeding 331/3% of its total assets.
LENDING. A fund may lend money to other funds advised by FMR.
RESTRICTIONS: Loans, in the aggregate, may not exceed 331/3% of a fund's
total assets. Treasury Only, Treasury, Government, and Tax-Exempt do not
intend to engage in lending.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
Treasury Only seeks as high a level of current income as is consistent with
the security of principal and liquidity, and to maintain a constant net
asset value per share ( NAV ) of $1.00.
Each of Treasury, Government, Domestic, Rated Money Market, and Money
Market seeks to obtain as high a level of current income as is
consistent with the preservation of principal and liquidity within the
limitations prescribed for the fund.
Tax-Exempt seeks to obtain as high a level of interest income exempt
from federal income tax as is consistent with a portfolio of high-quality,
short-term municipal obligations selected on the basis of liquidity and
stability of principal. The fund, under normal conditions, will invest so
that at least 80% of its income distributions is exempt from federal income
tax.
With respect to 75% of its total assets, Tax-Exempt may not purchase a
security if, as a result, more than 5% of its total assets would be
invested in the securities of a single issuer.
Each of Domestic, Rated Money Market, and Money Market will invest
more than 25% of its total assets in obligations of companies in the
financial services industry.
Each of Government, Domestic, Rated Money Market, and Money Market
may borrow only for temporary or emergency purposes, or engage in
reverse repurchase agreements, but not in an amount exceeding 331/3% of its
total assets. Tax-Exempt may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
Loans, in the aggregate, may not exceed 331/3% of a fund's total
assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each class's assets are reflected in that
class's share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services. Each fund also pays OTHER EXPENSES, which
are explained below.
MANAGEMENT FEE
Each fund's management fee is calculated and paid to FMR every month. Each
fund pays FMR a fee at the annual rate of its average net assets as
indicated in the table below.
FUND NAME: MANAGEMENT FEE:
Treasury Only 0.42%
Treasury 0.20%
Government 0.20%
Domestic 0.20%
Rated Money Market 0.42%
Money Market 0.20%
Tax-Exempt 0.20%
FMR pays all of the expenses of each of Treasury Only and Rated Money
Market with limited exceptions.
FMR HAS SUB-ADVISORY AGREEMENTS with FMR Texas, which has primary
responsibility for providing investment management for each fund, while FMR
retains responsibility for providing each fund with other management
services. FMR pays FMR Texas 50% of its management fee (before expense
reimbursements) for these services. FMR paid FMR Texas the following
percentage of each fund's average net assets for the fiscal year ended
March 31, 1996:
FUND NAME: PERCENTAGE OF
AVERAGE
NET ASSETS:
Treasury Only
Treasury
Government
Domestic
Rated Money Market
M oney Market
Tax-Exempt
OTHER EXPENSES
While the management fee is a significant component of each fund's annual
operating costs, the funds have other expenses as well.
FIIOC performs transfer agency, dividend disbursing , and shareholder
servicing functions for Class III shares of Treasury Only,
Treasury, Government, Domestic, Rated Money Market, and Money Market (the
Taxable Funds). Fidelity Service Co. (FSC) calculates the NAV and
dividends for each Taxable Fund, and maintains the general accounting
records for each Taxable Fund. These expenses are paid by FMR on
behalf of Treasury Only and Rated Money Market pursuant to its management
contracts.
For the fiscal year ended March 31, 1996, transfer agent and pricing and
bookkeeping fees paid (as a percentage of average net assets) were as
follows:
Fund Name Class III to Each Fund to
FIIOC FSC
Treasury
Government
Domestic
Money Market
UMB has entered into a sub-arrangement with FIIOC. FI IOC
performs transfer agency, dividend disbursing and shareholder services for
Class III shares o f Tax-Exempt. UMB has also entered into
a sub-arrangement with FSC . FSC calculates the NAV and
dividends for T ax-Exempt, and maintains Tax-Exempt's general
accounting records. A ll of the fees are paid to FIIOC and FSC by
UMB, which is reimbursed by Class III or the fund, as appropriate,
for such payments.
For the fiscal year ended March 31, 1996, fees paid by UMB to FIIOC on
behalf of Class III of Tax-Exempt amounted to ___% of Class III's average
net assets, and fees paid by UMB to FSC on behalf of Tax-Exempt amounted to
___% of its average net assets.
Class III of each fund has adopted a DISTRIBUTION AND SERVICE PLAN. Under
the Plans, Class III of each fund is authorized to pay FDC a monthly
distribution fee as compensation for its services and expenses in
connection with the distribution of Class III shares of each fund. Class
III of each fund currently pays FDC monthly at an annual rate of 0.25% of
its average net assets throughout the month.
The Plans specifically recognize that FMR may make payments from its
management fee revenue, past profits, or other resources to reimburse FDC
for expenses incurred in connection with the distribution of Class III
shares, including payments made to investment professionals that provide
shareholder support services or engage in the sale of fund shares. The
Board of Trustees of each fund has authorized such payments.
Each fund (other than Treasury Only and Rated Money Market) also pays other
expenses, such as legal, audit, and custodian fees; in some instances,
proxy solicitation costs; and the compensation of trustees who are not
affiliated with Fidelity. Each of Treasury Only and Rated Money Market also
pays other expenses, such as brokerage fees and commissions, interest on
borrowings (only Treasury Only), taxes, and the compensation of trustees
who are not affiliated with Fidelity.
YOUR ACCOUNT
HOW TO BUY SHARES
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.
EACH CLASS'S SHARE PRICE, called NAV, is calculated every business day. The
funds are managed to keep share prices stable at $1.00. Class III
shares are sold without a sales charge.
Shares are purchased at the next NAV calculated after your order is
received and accepted by the transfer agent. NAV is normally calculated at
the times indicated in the table below.
NAV CALCULATION TIMES
FUND (EASTERN TIME)
Treasury Only 2:00 p.m.
Treasury 3:00 p.m. and 5:00 p.m.
Government 3:00 p.m. and 5:00 p.m.
Domestic 3:00 p.m. and 5:00 p.m.
Rated Money Market 3:00 p.m. and 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
You will receive the NAV next determined after your investment
professional has submitted your purchase order.
IF YOU ARE NEW TO FIDELITY, an initial investment must be preceded or
accompanied by a completed, signed application, which should be forwarded
to:
Fidelity Client Services
c/o Fidelity Institutional Money Market Funds
FIIOC
P.O. Box 1182
Boston, MA 02103-1182
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Place a purchase order and wire money into your
account, or
(small solid bullet) Open an account by exchanging from the same class of
any fund that is offered through this prospectus.
INVESTMENTS IN THE FUNDS MUST BE MADE USING THE FEDERAL RESERVE WIRE
SYSTEM. Checks and Automated Clearing House payments will not be
accepted as a means of investment.
For wiring information and instructions, you should call the investment
professional through which you trade or if you trade directly through
Fidelity, call Fidelity Client Services. There is no fee imposed by the
funds for wire purchases. However, if you buy shares through an
investment professional, the investment professional may impose a fee
for wire purchases.
Fidelity Client Services:
Nationwide 1-800-843-3001
In order to receive same-day acceptance of your investment, you must
contact Fidelity Client Services and place your order between 8:30 a.m. and
the following times on days the funds are open for business.
FUND CLOSING TIMES
Treasury Only 2:00 p.m.
Treasury 5:00 p.m.
Government 5:00 p.m.
Domestic 5:00 p.m.
Rated Money Market 5:00 p.m.
Money Market 3:00 p.m.
Tax-Exempt 12:00 noon
All wires must be received by the transfer agent in good order at the
applicable fund's designated wire bank before the close of the Federal
Reserve Wire System on that day.
In order to purchase shares of Treasury , Government, Domestic, and Rated
Money Market after 3:00 p.m. Eastern time, you should contact
Fidelity Client Services one week in advance to make late-trading
arrangements.
You are advised to wire funds as early in the day as possible, and to
provide advance notice to Fidelity Client Services for purchases over $10
million ($5 million for Treasury Only).
You will earn dividends on the day of your investment, provided (i) you
contact Fidelity Client Services and place your trade between 8:30 a.m. and
the closing time indicated in the table on the left on days the fund is
open for business, and (ii) the fund's designated wire bank receives the
wire before the close of the Federal Reserve Wire System on the day your
purchase order is accepted by the transfer agent.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $1,000,000*
MINIMUM BALANCE $1,000,000
* The minimum initial investment of $1 million may be waived if your
aggregate balance in the Fidelity Institutional Money Market Funds is
greater than $10 million. Please contact Fidelity Client Services for more
information regarding this waiver.
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next NAV calculated after your order is received and accepted by the
transfer agent. NAV is normally calculated at the times indicated in the
table on page __.
You will receive the NAV next determined after your investment professional
has submitted your redemption order.
R edemption requests may be made by calling Fidelity Client Services at
the phone number listed on page __.
You must designate on your account application the U.S. commercial bank
account(s) into which you wish the redemption proceeds to be deposited.
Fidelity Client Services will then notify you that this feature has been
activated and that you may request redemptions.
You may change the bank account(s) designated to receive redemption
proceeds at any time prior to making a redemption request. You should send
a letter of instruction, including a signature guarantee, to Fidelity
Client Services at the address shown on page__.
You should be able to obtain a signature guarantee from a bank, broker,
dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency, or savings association. A notary public
cannot provide a signature guarantee.
There is no fee imposed by the funds for wiring of redemption proceeds.
However, if you sell shares through an investment professional, the
investment professional may impose a fee for wire redemptions.
Redemption proceeds will be wired via the Federal Reserve Wire System to
your bank account of record. If your redemption request is received by the
transfer agent before the closing time indicated in the table on page __,
redemption proceeds will normally be wired on that day.
A fund reserves the right to take up to seven days to pay you if making
immediate payment would adversely affect the fund.
In order to redeem shares of Treasury , Government, Domestic, and Rated
Money Market after 3:00 p.m. Eastern time, you should contact
Fidelity Client Services one week in advance to make late trading
arrangements.
You are advised to place your trades as early in the day as possible.
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that the transfer agent sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction,
except a reinvestment, that affects your account balance or your account
registration)
(small solid bullet) Account statements (monthly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in
a fund. Call Fidelity Client Services at 1-800-843-3001 if you need
additional copies of financial reports , prospectuses, or historical
account information.
SUB-ACCOUNTING AND SPECIAL SERVICES. Special processing has been arranged
with FIIOC for institutions that wish to open multiple accounts (a master
account and sub-accounts). You may be required to enter into a separate
agreement with FIIOC. Charges for these services, if any, will be
determined based on the level of services to be rendered.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains, if any, to shareholders each year. Income dividends are
declared daily and paid monthly.
Income dividends declared are accrued daily throughout the month and are
normally distributed on the first business day of the following month.
Based on prior approval of each fund, dividends relating to Class
III shares redeemed during the month can be distributed on the day
of redemption. Each fund reserves the right to limit this service.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. Class III offers two options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the same
class of the fund. If you do not indicate a choice on your application, you
will be assigned this option.
2. CASH OPTION. You will be sent a wire for your dividend and capital gain
distributions, if any.
Dividends will be reinvested at each fund's Class III NAV on the
last day of the month. Capital gain distributions, if any, will be
reinvested at the NAV as of the record date of the distribution.
TAXES
As with any investment, you should consider how an investment in the funds
could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. I nterest income that Tax-Exempt earns is
distributed to shareholders as income dividends. Interest that is federally
tax-free remains tax-free when it is distributed. Distributions from the
Taxable Funds, however, are subject to federal income tax and may also be
subject to state or local taxes. If you live outside the United States,
your distributions from these funds could also be taxed by the country in
which you reside.
For federal tax purposes, income and short-term capital gain
distributions from each Taxable Fund are taxed as dividends; long-term
capital gain distributions, if any, are taxed as long-term capital gains.
However, for shareholders of Tax-Exempt, gain on the sale of tax-free bonds
results in taxable distributions. Short-term capital gains and a portion of
the gain on bonds purchased at 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 March 31, 1996, __% of Treasury Only's; __% of
Treasury's; __% of Government's; __% of Domestic's; __% of Rated Money
Market's; and __% of Money Market's income distributions were derived from
interest on U.S. Government securities, which is generally exempt from
state income tax.
Distributions are taxable when they are paid, whether you take them in cash
or reinvest them. However, distributions declared in December and paid in
January are taxable as if they were paid on December 31.
Every January, the transfer agent will send you and the IRS a statement
showing the taxable distributions paid to you in the previous year.
A portion of Tax-Exempt's dividends may be free from state or local taxes.
Income from investments in your state are often tax-free to you. Each year,
the transfer agent will send you a breakdown of Tax-Exempt's income from
each state to help you calculate your taxes.
During the fiscal year ended March 31, 1996, __% of Tax-Exempt's
income dividends was free from federal income tax.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
EACH FUND IS OPEN FOR BUSINESS and its NAV is normally calculated each day
that both the Federal Reserve Bank of New York (New York Fed) (for
the Taxable Funds) or the Federal Reserve Bank of Kansas City
(Kansas City Fed) (for Tax-Exempt) and the New York Stock Exchange (NYSE)
are open. The following holiday closings have been scheduled for 1996: New
Year's Day, Martin Luther King's Birthday, Washington's Birthday, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day , Thanksgiving Day, and Christmas Day. Although FMR
expects the same holiday schedule to be observed in the future, the New
York Fed, the Kansas City Fed, or the NYSE may modify its holiday
schedule at any time. On any day that the New York Fed, the Kansas
City Fed, or the NYSE closes early, the principal government securities
markets close early (such as on days in advance of holidays generally
observed by participants in such markets), or as permitted by the SEC, the
right is reserved to advance the time on that day by which purchase and
redemption orders must be received.
To the extent that portfolio securities are traded in other markets on days
when the New York Fed, the Kansas City Fed, or the NYSE is closed,
each fund's NAV may be affected on days when investors do not have access
to the fund to purchase or redeem shares. Certain Fidelity funds may follow
different holiday closing schedules.
A CLASS'S NAV is the value of a single share. The NAV of Class III
of each fund is computed by adding Class III 's pro rata share of the
value of the fund's investments, cash, and other assets, subtracting Class
III 's pro rata share of the value of the fund's liabilities,
subtracting the liabilities allocated to Class III , and dividing the
result by the number of Class III shares of that fund that are
outstanding. Each fund values its portfolio securities on the basis of
amortized cost. This method minimizes the effect of changes in a security's
market value and helps each fund maintain a stable $1.00 share price.
The OFFERING PRICE (price to buy one share) and REDEMPTION PRICE (price to
sell one share) of Class lII are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your social security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the I RS. If you violate IRS regulations, the IRS can require a
fund to withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity and the transfer
agent may only be liable for losses resulting from unauthorized
transactions if they do not follow reasonable procedures designed to verify
the identity of the caller. Fidelity and the transfer agent will request
personalized security codes or other information, and may also record
calls. You should verify the accuracy of the confirmation statements
immediately after receipt. If you do not want the ability to redeem and
exchange by telephone, call the transfer agent for instructions. Additional
documentation may be required from corporations, associations , and
certain fiduciaries.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page __. Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
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 transactions in excess of $10 million ($5
million for Treasury Only).
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) All of your purchases must be made by federal funds
wire; checks will not be accepted for purchases.
(small solid bullet) If your wire is not received by the close of the
Federal Reserve Wire System, you could be liable for any losses or fees a
fund or the transfer agent has incurred or for interest and penalties.
The income declared for each of Treasury, Government, Domestic, and
Rated Money Market is based on estimates of net interest income for the
fund. Actual income may differ from estimates, and differences, if any,
will be included in the calculation of subsequent dividends.
Shareholders of record as of the closing time indicated in the table on
page __ will be entitled to dividends declared that day.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your order is received and accepted by the
transfer agent. Note the following:
(small solid bullet) Shares of each fund do not receive the dividend
declared on the day of redemption.
(small solid bullet) A fund may withhold redemption proceeds until it is
reasonably assured that investments credited to your account have been
received and collected.
When the NYSE, the 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 $1,000,000 due to redemption, the
account may be closed and the proceeds may be wired to your bank account of
record. You will be given 30 days' notice that your account will be closed
unless it is increased to the minimum.
THE TRANSFER AGENT MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder you have the privilege of exchanging Class III
shares of any fund offered through this prospectus at no charge for Class
III shares of any other fund offered through this prospectus.
An exchange involves the redemption of all or a portion of the shares of
one fund and the purchase of shares of another fund.
BY TELEPHONE. Exchanges may be requested on any day a fund is open for
business by calling Fidelity Client Services at the number listed on page
__ between 8:30 a.m. and the closing time indicated in the table on page
__.
BY MAIL. You may exchange shares on any business day by submitting written
instructions with an authorized signature which is on file for that
account. Written requests for exchanges should contain the fund name,
class name, account number, the number of shares to be redeemed, and
the name of the fund to be purchased. Written requests for exchange should
be mailed to Fidelity Client Services at the address on page __.
WHEN YOU PLACE AN ORDER TO EXCHANGE SHARES, Class III shares will be
redeemed at the next determined NAV after your order is received and
accepted by the transfer agent. Shares of the fund to be acquired will be
purchased at its next determined NAV after redemption proceeds are made
available. You should note that, under certain circumstances, a fund may
take up to seven days to make redemption proceeds available for the
exchange purchase of shares of another fund. I n addition, please
note the following:
(small solid bullet) Exchanges will not be permitted until a completed and
signed account application is on file.
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification number.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) You will earn dividends in the acquired fund in
accordance with the fund's customary policy, normally on the day the
exchange request is received.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. I n particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
No dealer, sales representative , or any other person has been
authorized to give any information or to make any representations, other
than those contained in this Prospectus and in the related SA I , in
connection with the offer contained in this Prospectus. If given or made,
such other information or representations must not be relied upon as having
been authorized by the funds or FDC. This Prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell or to buy shares of
the funds to any person to whom it is unlawful to make such offer.
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS - CLASS III
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page; Table of Contents
12 ............................ *
13 a - c ............................ Investment Policies and Limitations
d ............................ Portfolio Transactions
14 a - c ............................ Trustees and Officers
15 a ............................ *
b ............................ Description of the Trusts
c ............................ Trustees and Officers
16 a i ............................ FMR
ii ............................ Trustees and Officers
iii ............................ Management Contracts
b,c,d ............................ Management Contracts
e ............................ *
f ............................ Distribution and Service Plans
g ............................ *
h ............................ Description of the Trusts
i ............................ Management Contracts
17 a ............................ Portfolio Transactions
b ............................ Portfolio Transactions
c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trusts
b ............................ *
19 a ............................ Additional Purchase, Exchange and Redemption
Information
b ............................ Additional Purchase, Exchange and Redemption
Information; Valuation
c ............................ *
20 Distributions and Taxes
21 a, b ............................ Distribution and Service Plans; Management
Contracts
c ............................ *
22 ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
FIDELITY INSTITUTIONAL MONEY MARKET FUNDS: CLASS III
TREASURY ONLY, TREASURY, GOVERNMENT, DOMESTIC, RATED MONEY MARKET, MONEY
MARKET, AND TAX-EXEMPT
Treasury Only is a series of Daily Money Fund; Treasury, Government,
Domestic, and Money Market are series of Fidelity Institutional Cash
Portfolios; Rated Money Market is a series of Fidelity Money Market Trust;
and Tax-Exempt is a series of Fidelity Institutional Tax-Exempt Cash
Portfolios
STATEMENT OF ADDITIONAL INFORMATION
JULY 31, 1996
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus (dated
July 31, 1996). Please retain this document for future reference. The
funds' financial statements and financial highlights, included in the
Annual Report, for the fiscal year ended March 31, 1996, are incorporated
herein by reference. To obtain an additional copy of the Prospectus or the
Annual Report, please call Fidelity Client Services at 1-800-843-3001.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation
Performance
Additional Purchase, Exchange , and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Contracts with FMR Affiliates
Distribution and Service Plans
Description of the Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISER
FMR Texas Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT FOR TAXABLE FUNDS
Fidelity Investments Institutional Operations Company (FIIOC)
TRANSFER AGENT FOR TAX-EXEMPT
UMB Bank, n.a. (UMB)
IMMI II - PTB -0 7 96
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
P rospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any subsequent
change in values, net assets, or other circumstances will not be considered
when determining whether the investment complies with a fund's
investment policies and limitations.
A fund's fundamental investment policies and limitations
can 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 TREASURY ONLY
THE FOLLOWING ARE TREASURY ONLY'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(5) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(6) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; or
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements.
(8) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL:
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vi) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
Subject to revision upon 90 days' notice to shareholders, the fund does not
intend to engage in reverse repurchase agreements.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF TREASURY
THE FOLLOWING ARE TREASURY'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as an
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase a security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
As an operating policy, the fund intends to invest 100% of its total assets
in U.S. Treasury bills, notes, and bonds and repurchase agreements
comprised of those obligations at all times. This policy may only be
changed upon 90 days' notice to shareholders.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF GOVERNMENT
THE FOLLOWING ARE GOVERNMENT'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(ii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iii) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(iv) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to make loans, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuers together own more than 5% of such issuer's securities.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF DOMESTIC
THE FOLLOWING ARE DOMESTIC'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(viii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(ix) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF RATED MONEY MARKET
THE FOLLOWING ARE RATED MONEY MARKET'S FUNDAMENTAL INVESTMENT LIMITATIONS
SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments;
(8) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(9) invest in oil, gas, or other mineral exploration or development
programs; or
(10) write or purchase any put or call option. This limitation does not
apply to options attached to, or acquired or traded together with, their
underlying securities, and does not apply to securities that incorporate
features similar to options.
(11) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL:
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in securities of business
enterprises that, including predecessors, have a record of less than three
years continuous operation.
(x) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xi) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of limitation (ix), pass-through entities and other special
purposes vehicles or pools of financial assets, such as issuers of
asset-backed securities or investment companies, are not considered
"business enterprises."
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF MONEY MARKET
THE FOLLOWING ARE MONEY MARKET'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of such issuer,
provided, however, that with respect to 25% of its total assets, 10% of its
assets may be invested in the securities of an issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the fund may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii)
in combination do not exceed 33 1/3% of the fund's total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed this amount will be reduced within three
days (not including Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
(4) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that the fund will
invest more than 25% of its total assets in the financial services
industry;
(6) buy or sell real estate;
(7) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
(8) invest in oil, gas, or other mineral exploration or development
programs; or
(9) invest in companies for the purpose of exercising control or
management.
(10) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies and limitations as the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) The fund does not currently intend to purchase a security (other than a
security issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of a single issuer; provided that the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party. The fund will not purchase any security while borrowings
(excluding reverse repurchase agreements) representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest in interests in real
estate investment trusts that are not readily marketable, or to invest in
interests in real estate limited partnerships that are not listed on the
NYSE or the AMEX or traded on the NASDAQ National Market System.
(vii) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(viii) The fund does not currently intend to lend assets other than
securities to other parties, except by lending money (up to 10% of the
fund's net assets) to a registered investment company or portfolio for
which FMR or an affiliate serves as investment adviser. (This limitation
does not apply to purchases of debt securities or to repurchase
agreements.)
(ix) The fund does not currently intend to (a) purchase securities of other
investment companies, except in the open market where no commission except
the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of reorganization, consolidation, or merger.
(x) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(xi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(xii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF TAX-EXEMPT
THE FOLLOWING ARE TAX-EXEMPT'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) with respect to 75% of the fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the fund's total assets would be invested in the
securities of that issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of that issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) make short sales of securities;
(4) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions;
(5) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
(6) underwrite securities issued by others, except to the extent that the
fund may be considered an underwriter within the meaning of the Securities
Act of 1933 in the disposition of restricted securities;
(7) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies,
instrumentalities, territories or possessions, or issued or guaranteed by a
state government or political subdivision thereof) if as a result more than
25% of the value of its total assets would be invested in securities of
companies having their principal business activities in the same industry;
(8) purchase or sell real estate, but this shall not prevent the fund from
investing in municipal bonds or other obligations secured by real estate or
interests therein;
(9) purchase or sell physical commodities;
(10) lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements; or
(11) invest in oil, gas, or other mineral exploration or development
programs.
(12) The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and limitations as the fund.
For purposes of investment limitations (1) and (7), FMR identifies the
issuer of a security depending on its terms and conditions. In identifying
the issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (5)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(ii) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iii) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(iv) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(v) The fund does not currently intend to (a) purchase the securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(vi) The fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(vii) The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
Securities must be rated in accordance with applicable rules in the highest
rating category for short-term securities by at least one nationally
recognized rating service (NRSRO) and rated in one of the two highest
categories for short-term securities by another NRSRO if rated by more than
one NRSRO, or, if unrated, judged to be equivalent to highest quality by
FMR pursuant to procedures adopted by the Board of Trustees. The fund's
policy regarding limiting investments to the highest rating category may be
changed upon 90 days' prior notice to shareholders.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page __.
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the funds.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the 1940 Act. These transactions may include
repurchase agreements with custodian banks; short-term obligations of, and
repurchase agreements with, the 50 largest U.S. banks (measured by
deposits); municipal securities; U.S. Government securities with affiliated
financial institutions that are primary dealers in these securities;
short-term currency transactions; and short-term borrowings. In accordance
with exemptive orders issued by the Securities and Exchange Commission
(SEC), the Board of Trustees has established and periodically reviews
procedures applicable to transactions involving affiliated financial
institutions.
ASSET-BACKED SECURITIES include pools of mortgages, loans,
receivables , or other assets. Payment of principal and interest may
be largely dependent upon the cash flows generated by the assets backing
the securities and, in certain cases, supported by letters of credit,
surety bonds, or other credit enhancements. The value of asset-backed
securities may also be affected by the creditworthiness of the servicing
agent for the pool, the originator of the loans or receivables, or the
entities providing the credit support.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
DOMESTIC AND FOREIGN ISSUERS. Investments may be made in U.S.
dollar-denominated time deposits, certificates of deposit, and bankers'
acceptances of U.S. banks and their branches located outside of the United
States, U.S. branches and agencies of foreign banks, and foreign branches
of foreign banks. A fund may also invest in U.S. dollar-denominated
securities issued or guaranteed by other U.S. or foreign issuers, including
U.S. and foreign corporations or other business organizations, foreign
governments, foreign government agencies or instrumentalities, and U.S. and
foreign financial institutions, including savings and loan institutions,
insurance companies, mortgage bankers, and real estate investment trusts,
as well as banks.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental
regulation. Payment of interest and principal on these obligations may also
be affected by governmental action in the country of domicile of the branch
(generally referred to as sovereign risk). In addition, evidence of
ownership of portfolio securities may be held outside of the United States
and a fund may be subject to the risks associated with the holding of such
property overseas. Various provisions of federal law governing the
establishment and operation of U.S. branches do not apply to foreign
branches of U.S. banks.
Obligations of U.S. branches and agencies of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation, as well as by governmental action in the country in which the
foreign bank has its head office.
Obligations of foreign issuers involve certain additional risks. These
risks may include future unfavorable political and economic developments,
withholding taxes, seizures of foreign deposits, currency controls,
interest limitations, or other governmental restrictions that might affect
payment of principal or interest, or the ability to honor a credit
commitment. Additionally, there may be less public information available
about foreign entities. Foreign issuers may be subject to less governmental
regulation and supervision than U.S. issuers. Foreign issuers also
generally are not bound by uniform accounting, auditing, and financial
reporting requirements comparable to those applicable to U.S. issuers.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, Tax-Exempt does not
intend to invest in securities whose interest is federally taxable.
However, from time to time on a temporary basis, Tax-Exempt may invest a
portion of its assets in fixed-income obligations whose interest is subject
to federal income tax.
Should Tax-Exempt invest in federally taxable obligations, it would
purchase securities that, in FMR's judgment, are of high quality. These
obligations would include those issued or guaranteed by the U.S. Government
or its agencies or instrumentalities and repurchase agreements backed by
such obligations.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before state legislatures that
would affect the state tax treatment of Tax-Exempt's distributions. If such
proposals were enacted, the availability of municipal obligations and the
value of Tax-Exempt's holdings would be affected and the Trustees would
reevaluate Tax-Exempt's investment objectives and policies.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by the funds to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days. Also, FMR may determine some restricted
securities, municipal lease obligations, and time deposits to be illiquid.
In the absence of market quotations, illiquid investments are valued for
purposes of monitoring amortized cost valuation at fair value as determined
in good faith by a committee appointed by the Board of Trustees. If through
a change in values, net assets, or other circumstances, a fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, each fund has received permission to lend money
to, and borrow money from, other funds advised by FMR or its affiliates.
Treasury Only, Treasury, Government, and Tax-Exem pt currently
intend to particip ate in this program only as borrowers. A fund will
borrow thr o ugh the program only wh en 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. Domestic, Rated Money
Market, and Money Market will lend through the program only when the
returns are higher than those available from other short-term instruments
(such as repurchase agreements). A fund may have to borrow from a bank
at a higher interest rate if an interfund loan is called or not renewed.
Any delay in repayment to a lending fund could result in a lost investment
opportunity or additional borrowing costs .
MONEY MARKET SECURITIES are high-quality, short-term obligations. Some
money market securities employ a trust or other similar structure to modify
the maturity, price characteristics, or quality of financial assets. For
example, put features can be used to modify the maturity of a security, or
interest rate adjustment features can be used to enhance price stability.
If the structure does not perform as intended, adverse tax or investment
consequences may result. Neither the Internal Revenue Service (IRS) nor any
other regulatory authority has ruled definitively on certain legal issues
presented by structured securities. Future tax or other regulatory
determinations could adversely affect the value, liquidity, or tax
treatment of the income received from these securities or the nature and
timing of distributions made by the funds.
MUNICIPAL LEASES and participation interests therein may take the form of a
lease, an installment purchase, or a conditional sale contract and are
issued by state and local governments and authorities to acquire land or a
wide variety of equipment and facilities. Generally, the funds will not
hold such obligations directly as a lessor of the property, but will
purchase a participation interest in a municipal obligation from a bank or
other third party. A participation interest gives a fund a specified,
undivided interest in the obligation in proportion to its purchased
interest in the total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
MUNICIPAL MARKET DISRUPTION RISK. The value of municipal
securities may be affected by uncertainties in the municipal market related
to legislation or litigation involving the taxation of municipal securities
or the rights of municipal securities holders in the event of a bankruptcy.
Municipal bankruptcies are relatively rare, and certain provisions of the
U.S. Bankruptcy Code governing such bankruptcies are unclear and remain
untested. Further, the application of state law to municipal issuers could
produce varying results among the states or among municipal securities
issuers within a state. These legal uncertainties could affect the
municipal securities market generally, certain specific segments of the
market, or the relative credit quality of particular securities. Any of
these effects could have a significant impact on the prices of some or all
of the municipal securities held by a fund, making it more difficult for
the fund to maintain a stable net asset value per share.
MUNICIPAL SECTORS:
ELECTRIC UTILITIES INDUSTRY. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open transmission
access to any electricity supplier, although it is not presently known to
what extent competition will evolve. Other risks include: (a) the
availability and cost of fuel, (b) the availability and cost of capital,
(c) the effects of conservation on energy demand, (d) the effects of
rapidly changing environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (e) timely and sufficient rate
increases, and (f) opposition to nuclear power.
HEALTH CARE INDUSTRY. The health care industry is subject to regulatory
action by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for the
health care industry is payments from the Medicare and Medicaid programs.
As a result, the industry is sensitive to legislative changes and
reductions in governmental spending for such programs. Numerous other
factors may affect the industry, such as general and local economic
conditions; demand for services; expenses (including malpractice insurance
premiums); and competition among health care providers. In the future, the
following elements may adversely affect health care facility operations:
adoption of legislation proposing a national health insurance program;
other state or local health care reform measures; medical and technological
advances which dramatically alter the need for health services or the way
in which such services are delivered; changes in medical coverage which
alter the traditional fee-for-service revenue stream; and efforts by
employers, insurers, and governmental agencies to reduce the costs of
health insurance and health care services.
HOUSING. Housing revenue bonds are generally issued by a state, county,
city, local housing authority, or other public agency. They generally are
secured by the revenues derived from mortgages purchased with the proceeds
of the bond issue. It is extremely difficult to predict the supply of
available mortgages to be purchased with the proceeds of an issue or the
future cash flow from the underlying mortgages. Consequently, there are
risks that proceeds will exceed supply, resulting in early retirement of
bonds, or that homeowner repayments will create an irregular cash flow.
Many factors may affect the financing of multi-family housing projects,
including acceptable completion of construction, proper management,
occupancy and rent levels, economic conditions, and changes to current laws
and regulations.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student loans.
Bonds issued to supply educational institutions with funds are subject to
the risk of unanticipated revenue decline, primarily the result of
decreasing student enrollment or decreasing state and federal funding.
Among the factors that may lead to declining or insufficient revenues are
restrictions on students' ability to pay tuition, availability of state and
federal funding, and general economic conditions. Student loan revenue
bonds are generally offered by state (or substate) authorities or
commissions and are backed by pools of student loans. Underlying student
loans may be guaranteed by state guarantee agencies and may be subject to
reimbursement by the United States Department of Education through its
guaranteed student loan program. Others may be private, uninsured loans
made to parents or students which are supported by reserves or other forms
of credit enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student loan
revenue bonds are impacted by numerous factors, including the rate of
student loan defaults, seasoning of the loan portfolio, and student
repayment deferral during periods of forbearance. Other risks associated
with student loan revenue bonds include potential changes in federal
legislation regarding student loan revenue bonds, state guarantee agency
reimbursement and continued federal interest and other program subsidies
currently in effect.
WATER AND SEWER. Water and sewer revenue bonds are often considered to have
relatively secure credit as a result of their issuer's importance, monopoly
status, and generally unimpeded ability to raise rates. Despite this, lack
of water supply due to insufficient rain, run-off, or snow pack is a
concern that has led to past defaults. Further, public resistance to rate
increases, costly environmental litigation, and F ederal
environmental mandates are challenges faced by issuers of water and sewer
bonds.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways , or other transit
facilities. Airport bonds are dependent on the general stability of the
airline industry and on the stability of a specific carrier who uses the
airport as a hub. Air traffic generally follows broader economic trends and
is also affected by the price and availability of fuel. Toll road bonds are
also affected by the cost and availability of fuel as well as toll levels,
the presence of competing roads, and the general economic health of
an area. Fuel costs and availability also affect other
transportation-related securities, as does the presence of alternate forms
of transportation, such as public transportation.
PUT FEATURES entitle the holder to sell a security back to the issuer or a
third party at any time or at specified intervals. They are subject to the
risk that the put provider is unable to honor the put feature (purchase the
security). Put providers often support their ability to buy securities on
demand by obtaining letters of credit or other guarantees from other
entities. Demand features, standby commitments, and tender options are
types of put features.
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the funds may purchase only high-quality securities that FMR
believes present minimal credit risks. To be considered high-quality, a
security must be rated in accordance with applicable rules in one of the
two highest categories for short-term securities by at least two nationally
recognized rating services (or by one, if only one rating service has rated
the security); or, if unrated, judged to be of equivalent quality by FMR.
High-quality securities are divided into "first tier" and "second tier"
securities. First tier securities are those deemed to be in the highest
rating category (e.g., Standard & Poor's A-1 or SP-1), and second tier
securities are those deemed to be in the second highest rating category
(e.g., Standard & Poor's A-2 or SP-2). Split-rated securities may be
determined to be either first or second tier based on applicable
regulations.
Each of Treasury Only, Treasury, Government, Domestic, Rated Money
Market, and Money Market may not invest more than 5% of its total
assets in second tier securities. In addition, each of Treasury Only,
Treasury, Government, Domestic, Rated Money Market, and Money Market
may not invest more than 1% of its total assets or $1 million
(whichever is greater) in the second tier securities of a single issuer.
Each fund currently intends to limit its investments to securities with
remaining maturities of 397 days or less, and to maintain a dollar-weighted
average maturity of 90 days or less. When determining the maturity of a
security, a fund may look to an interest rate reset or demand feature.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. To protect a
fund from the risk that the original seller will not fulfill its
obligation, the securities are held in an account of the fund at a bank,
marked-to-market daily, and maintained at a value at least equal to the
sale price plus the accrued incremental amount. While it does not presently
appear possible to eliminate all risks from these transactions
(particularly the possibility that the value of the underlying security
will be less than the resale price, as well as delays and costs to a fund
in connection with bankruptcy proceedings), it is 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 the fund in anticipation of increased
interest rates, without sacrificing the current yield of the securities
sold short. If a fund enters into a short sale against the box, it will be
required to set aside securities equivalent in kind and amount to the
securities sold short (or securities convertible or exchangeable into such
securities) and will be required to hold such securities while the short
sale is outstanding. The fund will incur transaction costs, including
interest expenses, in connection with opening, maintaining, and closing
short sales against the box.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. FMR may rely on its evaluation of
the credit of a bank or another entity in determining whether to purchase a
security supported by a letter of credit guarantee, insurance or other
source of credit or liquidity. In evaluating the credit of a foreign bank
or other foreign entities, FMR will consider whether adequate public
information about the entity is available and whether the entity may be
subject to unfavorable political or economic developments, currency
controls, or other government restrictions that might affect its ability to
honor its commitment.
STRIPPED GOVERNMENT SECURITIES. Stripped securities are created by
separating the income and principal components of a debt instrument and
selling them separately. U.S. Treasury S TRIPS (Separate Trading of
Registered Interest and Principal of Securities) are created when the
coupon payments and the principal payment are stripped from an outstanding
Treasury bond by the Federal Reserve Bank . Bonds issued by
g overnment agencies also may be stripped in this fashion.
Privately stripped government securities are created when a dealer deposits
a Treasury security or f ederal agency security with a custodian for
safekeeping and then sells the coupon payments and principal payment that
will be generated by this security. Proprietary receipts, such as
Certificates of Accrual on Treasury Securities (CATS), Treasury Investment
Growth Receipts (TIGRS), and generic Treasury Receipts (TRs), are stripped
U.S. Treasury securities that are separated into their component parts
through trusts created by their broker sponsors . Bonds issued by
government agencies also may be stripped in this fashion.
Because of the SEC's views on privately stripped government securities, a
fund must evaluate them as it would non-government securities pursuant to
regulatory guidelines applicable to all money market funds. A fund
currently intends to purchase only those privately stripped government
securities that have either received the highest rating from two nationally
recognized rating services (or one, if only one has rated the security) or,
if unrated, have been judged to be of equivalent quality by FMR pursuant to
procedures adopted by the Board of Trustees.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments of
the interest rate paid on the security. Variable rate securities provide
for a specified periodic adjustment in the interest rate, while floating
rate securities have interest rates that change whenever there is a change
in a designated benchmark rate. Some variable or floating rate securities
have put features.
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 March 31, 1996, 1995, and 1994, the funds
paid no brokerage commissions. During the fiscal year ended March 31, 1996,
the funds paid no fees to brokerage firms that provided research.
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Although the Trustees and officers of each fund are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds and accounts
are managed by the same investment adviser, particularly when the same
security is suitable for the investment objective of more than one fund or
account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to each fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION
Fidelity Service Company (FSC) normally determines a class's net asset
value per share (NAV) at 12:00 noon Eastern time for Tax-Exempt; 2:00 p.m.
Eastern time for Treasury Only; 3:00 p.m. Eastern time for Money Market;
and 3:00 p.m. and 5:00 p.m. Eastern time for Treasury, Government,
Domestic, and Rated Money Market. The valuation of portfolio securities is
determined as of these times for the purpose of computing each class's
NAV.
Portfolio securities and other assets are valued on the basis of amortized
cost. This technique involves initially valuing an instrument at its cost
as adjusted for amortization of premium or accretion of discount rather
than its current market value. The amortized cost value of an instrument
may be higher or lower than the price a fund would receive if it sold the
instrument.
During periods of declining interest rates, a class' s yield based on
amortized cost valuation may be higher than that which would result
if the fund used market valuations to determine its NAV. The converse would
apply during periods of rising interest rates.
Valuing each fund's investments on the basis of amortized cost and use
of the term "money market fund" are permitted pursuant to Rule 2a-7 under
the 1940 Act. Each fund must adhere to certain conditions under Rule 2a-7,
as summarized in the section entitled "Quality and Maturity" on page
___.
The Board of Trustees oversees FMR's adherence to the provisions of Rule
2a-7 and has established procedures designed to stabilize each
class's NAV at $1.00. At such intervals as they deem appropriate,
the Trustees consider the extent to which NAV calculated by using market
valuations would deviate from $1.00 per share. If the Trustees believe that
a deviation from a 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 class's yield a nd total
return fluctuate in response to market conditions and other factors.
YIELD CALCULATIONS. To compute a class's yield for a period, the net change
in value of a hypothetical account containing one share reflects the value
of additional shares purchased with dividends from the one original share
and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at the
beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current annualized yield. An effective
yield may also be calculated by compounding the base period return over a
one-year period. In addition to the current yield, the funds may quote
yields in advertising based on any historical seven-day period. Yields
for each cla ss are calculated on the same basis as other money market
funds, as required by applicable regulations.
Yield information may be useful in reviewing a class's performance and in
providing a basis for comparison with other investment alternatives.
However, each class's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates a
class's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates a class's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing a class's current yield. In
periods of rising interest rates, the opposite can be expected to occur.
A class's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment before taxes to equal the class's tax-free
yield. Tax-equivalent yields are calculated by dividing a class's yield by
the result of one minus a stated federal or combined federal and state tax
rate. If only a portion of a class's yield is tax-exempt, only that portion
is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 1996. It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from _% to _%. Of course, no
as surance can be given that a class will achieve any specific
tax-exempt yield. While Tax-Exempt invests principally in
obligations whose interest is exempt from federal income tax, other income
received by the fund may be taxable.
1996 TAX RATES AND TAX-EQUIVALENT YIELDS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal If individual tax-exempt yield is:
Taxable Income* Tax % % % % % % % % %
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single Return Joint Return Bracket** Then taxable-equivalent yield is
</TABLE>
$ $ % % % % % % % % %
* Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions, limitations
on itemized deductions, and other credits, exclusions, and adjustments
which may increase a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
Tax-Exempt may invest a portion of its assets in obligations that are
subject to federal income tax. When the fund invests in these obligations,
its tax-equivalent yield will be lower. In the table above, tax-equivalent
yields are calculated assuming investments are 100% federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising
reflect all aspects of a class's return, including the effect of
reinvesting dividends and capital gain distributions, and any change in the
class's NAV over a stated period. Average annual total returns are
calculated by determining the growth or decline in value of a hypothetical
historical investment in a class over a stated period, and then calculating
the annually compounded percentage rate that would have produced the same
result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative total return of 100% over ten years would
produce an average annual total return of 7.18%, which is the steady annual
rate of return that would equal 100% growth on a compounded basis in ten
years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that a class's
performance is not constant over time, but changes from year to year, and
that average annual total returns represent averaged figures as opposed to
the actual year-to-year performance of the class.
In addition to average annual total returns, a class may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
HISTORICAL RESULTS. The following table shows 7-day yields, tax-equivalent
yields, and total returns for Class III of each fund for the period ended
March 31, 1996. The initial offerings of the funds' Class III shares began
on the following dates: Treasury Only (11/1/95), Treasury (10/22/93),
Government (4/4/94), Domestic (7/19/94), Rated Money Market (11/1/95),
Money Market (11/17/93), and Tax-Exempt (11/1/95). The figures for periods
prior to the initial offering dates reflect the performance of Class I, the
original class of each fund, which class does not have a 12b-1 fee. Class
III figures would have been lower had 12b-1 fees been reflected in all
periods. Class III shares of Government have a 0.25% 12b-1 fee, which is
reflected in the figures for periods after its initial offering of Class
III shares. Prior to July 1, 1995, Class III shares of Treasury, Domestic,
and Money Market had a 0.32% 12b-1 fee, which is reflected in figures after
the initial offering dates of Class III shares of these funds. Effective
July 1, 1995, Class III shares of Treasury, Domestic, and Money Market have
a 0.25% 12b-1 fee, which is reflected in figures after that date for Class
III shares of these funds. Effective November 1, 1995, Class III shares of
Treasury Only, Rated Money Market, and Tax-Exempt have a 0.25% 12b-1 fee,
which is reflected in figures after that date for these funds.
The tax-equivalent yield is based on a __% federal income tax rate.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seven-Da Tax- One Five Ten One Five Ten
y Equivalen Year Years Years/ Year Years Years/
Yield t Life of Life of
Yield Fund* Fund*
Treasury Only - % N/A % % % % % %
Class III
Treasury - Class % N/A % % % % % %
III
Government - % N/A % % % % % %
Class III
Domestic - Class % N/A % % % % % %
III
Rated Money % N/A % % % % % %
Market - Class III
Money Market - % N/A % % % % % %
Class III
Tax-Exempt - % % % % % % % %
Class III
</TABLE>
* Life of Fund figures are from commencement of operations of each fund,
except Government, Rated Money Market, Money Market, and Tax-Exempt which
each report "Ten Years" figures. Commencement of operations for each fund
is as follows: Treasury Only - October 3, 1990; Treasury - February 2,
1987; Government - July 25, 1985; Domestic - November 3, 1989; Rated Money
Market - March 15, 1979; Money Market - July 5, 1985; and Tax-Exempt - July
25, 1985.
Note: If FMR had not reimbursed certain fund expenses during these periods,
total returns would have been lower and the yields for Class III of each
fund would have been:
<TABLE>
<CAPTION>
<S> <C> <C>
Seven-day
Tax-Equivalent
Yield Yield
Treasury Only - Class III % N/A
Treasury - Class III % N/A
Government - Class III % N/A
Domestic - Class III % N/A
Rated Money Market - Class III % N/A
Money Market - Class III % N/A
Tax-Exempt - Class III % %
</TABLE>
The following tables show the income and capital elements of each fund's
Class III cumulative total return. Each table compares a fund's Class III
return to the record of the Standard & Poor's Composite Index of 500 Stocks
(S&P 500), the Dow Jones Industrial Average (DJIA), and the cost of living
(measured by the Consumer Price Index, or CPI) over the same period. The
CPI information is as of the month-end closest to the initial investment
date for each fund. The S&P 500 and DJIA comparisons are provided to show
how each fund's Class III total return compared to the record of a broad
average of common stocks and a narrower set of stocks of major industrial
companies, respectively, over the same period. Of course, since each fund
invests in short-term fixed-income securities, common stocks represent a
different type of investment from the fund. Common stocks generally offer
greater growth potential than the funds, but generally experience greater
price volatility, which means greater potential for loss. In addition,
common stocks generally provide lower income than a fixed-income investment
such as the funds. Figures for the S&P 500 and DJIA are based on the prices
of unmanaged groups of stocks and, unlike the funds' Class III returns, do
not include the effect of paying brokerage commissions or other costs of
investing.
CLASS III CHARTS. The following table shows 7-day yields, tax-equivalent
yields, and total returns for Class III of each fund for the period ended
March 31, 1996. The initial offerings of the funds' Class III shares began
on the following dates: Treasury Only (11/1/95), Treasury (10/22/93),
Government (4/4/94), Domestic (7/19/94), Rated Money Market (11/1/95),
Money Market (11/17/93), and Tax-Exempt (11/1/95). The figures for periods
prior to the initial offering dates reflect the performance of Class I, the
original class of each fund, which class does not have a 12b-1 fee. Class
III figures would have been lower had 12b-1 fees been reflected in all
periods. Class III shares of Government have a 0.25% 12b-1 fee, which is
reflected in the figures for periods after its initial offering of Class
III shares. Prior to July 1, 1995, Class III shares of Treasury, Domestic,
and Money Market had a 0.32% 12b-1 fee, which is reflected in figures after
the initial offering dates of Class III shares of these funds. Effective
July 1, 1995, Class III shares of Treasury, Domestic, and Money Market have
a 0.25% 12b-1 fee, which is reflected in figures after that date for Class
III shares of these funds. Effective November 1, 1995, Class III shares of
Treasury Only, Rated Money Market, and Tax-Exempt have a 0.25% 12b-1 fee,
which is reflected in figures after that date for these funds.
TREASURY ONLY
HISTORICAL FUND RESULTS
During the period from October 3, 1990 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class III of Treasury
Only would have grown to $______, assuming all distributions were
reinvested. This was a period of fluctuating interest rates and the figures
below should not be considered representative of the dividend income or
capital gain or loss that could be realized from an investment in Class III
of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995+ 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991* 10,000 0
</TABLE>
* From October 3, 1990 (commencement of operations).
+ The fiscal year end of the fund changed from July 31 to March 31 in
February 1995.
Explanatory Notes: With an initial investment of $10,000 , made on
October 3, 1990, the net amount invested in Class III shares of the
fund was $10,000. The cost of the initial investment ($10,000) ,
together with the aggregate cost of reinvested dividends for the period
covered (their cash value at the time they were reinvested) ,
amounted to $. If distributions had not been reinvested, the amount of
distributions earned from Class III shares of the fund over time
would have been smaller, and cash payments (dividends) for the period would
have amounted to $. The fund did not distribute any capital gains during
the period. Tax consequences of different investments have not been
factored into the above figures.
TREASURY
HISTORICAL FUND RESULTS
During the period from February 2, 1987 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class III of Treasury
would have grown to $, assuming all distributions were reinvested. This was
a period of fluctuating interest rates and the figures below should not be
considered representative of the dividend income or capital gain or loss
that could be realized from an investment in Class III of the fund
today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987* 10,000 0
</TABLE>
* From February 2, 1987 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on February
2, 1987, the net amount invested in Class III shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to $. The
fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
GOVERNMENT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class III of Government would have grown to $, assuming all
distributions were reinvested. This was a period of fluctuating interest
rates and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in Class III of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class III shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to $. The
fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
DOMESTIC
HISTORICAL FUND RESULTS
During the period from November 3, 1989 (commencement of operations) to
March 31, 1996, a hypothetical $10,000 investment in Class III of Domestic
would have grown to $______, assuming all distributions were reinvested.
This was a period of fluctuating interest rates and the figures below
should not be considered representative of the dividend income or capital
gain or loss that could be realized from an investment in Class III of the
fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990* 10,000 0
</TABLE>
* From November 3, 1989 (commencement of operations).
Explanatory Notes: With an initial investment of $10,000 made on November
3, 1989, the net amount invested in Class III shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to
$ ______ . The fund did not distribute any capital gains during the
period. Tax consequences of different investments have not been factored
into the above figures.
RATED MONEY MARKET
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class III of Rated Money Market would have grown to $,
assuming all distributions were reinvested. This was a period of
fluctuating interest rates and the figures below should not be considered
representative of the dividend income or capital gain or loss that could be
realized from an investment in Class III of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P DJIA Cost of
3/31 Initial Reinvested Reinvested Value 500 Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 + $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 + 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
+ The fiscal year end of the fund changed from August 31 to March
31 in June 1995, and from October 31 to August 31 in July 1992.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class III shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to $. The
fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
MONEY MARKET
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class III of Money Market would have grown to $, assuming all
distributions were reinvested. This was a period of fluctuating interest
rates and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in Class III of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class III shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to $. The
fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
TAX-EXEMPT
HISTORICAL FUND RESULTS
During the ten year period ended March 31, 1996, a hypothetical $10,000
investment in Class III of Tax-Exempt would have grown to $, assuming all
distributions were reinvested. This was a period of fluctuating interest
rates and the figures below should not be considered representative of the
dividend income or capital gain or loss that could be realized from an
investment in Class III of the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INDICES
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
3/31 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1996 $ 10,000 $ $ 0 $ $ $ $
1995 + 10,000 0
1994 10,000 0
1993 10,000 0
1992 10,000 0
1991 10,000 0
1990 10,000 0
1989 10,000 0
1988 10,000 0
1987 10,000 0
</TABLE>
+ The fiscal year end of the fund changed from May 31 to March 31 in
February 1995.
Explanatory Notes: With an initial investment of $10,000 made on March 31,
1986, the net amount invested in Class III shares of the fund was
$10,000. The cost of the initial investment ($10,000) , together with
the aggregate cost of reinvested dividends for the period covered (their
cash value at the time they were reinvested), amounted to $. If
distributions had not been reinvested, the amount of distributions earned
from Class III shares of the fund over time would have been smaller,
and cash payments (dividends) for the period would have amounted to $. The
fund did not distribute any capital gains during the period. Tax
consequences of different investments have not been factored into the above
figures.
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed as
mutual fund rankings prepared by Lipper Analytical Services, Inc. (Lipper),
an independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Lipper generally ranks funds on the basis of
total return, assuming reinvestment of distributions, but does not take
sales charges or redemption fees into consideration, and such comparison
is prepared without regard to tax consequences. Lipper may also rank
funds based on yield. In addition to the mutual fund rankings, a fund's
performance may be compared to stock, bond, and money market mutual fund
performance indices prepared by Lipper or other organizations. When
comparing these indices, it is important to remember the risk and return
characteristics of each type of investment. For example, while stock mutual
funds may offer higher potential returns, they also carry the highest
degree of share price volatility. Likewise, money market funds may offer
greater stability of principal, but generally do not offer the higher
potential returns available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND
AVERAGES(trademark)/Government, which is reported in the MONEY FUND
REPORT(registered trademark), covers over ___ 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 ___
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 ___ 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 March 31 , 1996, FMR advised over $__ billion in tax-free
fund assets, $__ billion in money market fund assets, $___ billion in
equity fund assets, $__ billion in international fund assets, and $___
billion in Spartan fund assets. The funds may reference the growth and
variety of money market mutual funds and the adviser's innovation and
participation in the industry. The equity funds under management figure
represents the largest amount of equity fund assets under management by a
mutual fund investment adviser in the United States, making FMR America's
leading equity (stock) fund manager. FMR, its subsidiaries, and affiliates
maintain a worldwide information and communications network for the purpose
of researching and managing investments abroad.
In addition to performance rankings, each class may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A class's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a class's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may
be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) a fund suspends the
redemption of the shares to be exchanged as permitted under the 1940 Act or
the rules and regulations thereunder, or a fund to be acquired suspends the
sale of its shares because it is unable to invest amounts effectively in
accordance with its investment objective and policies.
In the prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable
to invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DIVIDENDS. Because each fund's income is primarily derived from interest,
dividends from the fund generally will not qualify for the
dividends-received deduction available to corporate shareholders.
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. G overnment obligations
may be exempt from state and local taxation.
To the extent that each fund's income is designated as federally tax-exempt
interest, the daily dividends declared by the fund are also federally
tax-exempt. Short-term capital gains are distributed as dividend income,
but do not qualify for the dividends-received deduction. These gains will
be taxed as ordinary income.
Each fund will send each shareholder a notice in January describing the tax
status of dividend and capital gain distributions (if any) for the prior
year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as Social Security
benefits, may be subject to federal income tax on up to 85% of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
Tax-Exempt purchases municipal securities that are free of federal
income tax based on opinions of counsel regarding th e tax status.
These opinions will generall y be based on covenants by the
issuers or other parties regarding continuing compliance with federal tax
requirements. If at any time the covenants are not complied with,
distribution to shareholders of interest on a security could become
federally taxable retroactive to the date a security was issued. For
certain types of structured securities, opinions of counsel may also be
based on the effect of the structure on the federal tax treatment of the
income.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities is subject to the federal alternative minimum tax
(AMT), although the interest continues to be excludable from gross income
for other tax purposes. Interest from private activity securities will be
considered tax - exempt for purposes of Tax-Exempt's policy o f
investing so that at least 80% of its income distribution is free
from federal income tax. Interest from private activity securities is a tax
preference item for the purposes of determining whether a taxpayer is
subject to the AMT and the a mount of AMT to be paid, if any. Private
activity securities issued after August 7, 1986 to benefit a private or
industrial user or to finance a private facility are affected by this rule.
A portion of the gain on bonds purchased with market discount after April
30, 1993 and short-term capital gains distributed by the fund are taxable
to shareholders as dividends, not as capital gains. Dividend distributions
resulting from a recharacterization of gain from the sale of bonds
purchased with market discount after April 30, 1993 are not considered
income for the purposes of Tax-Exempt's policy of investing so that at
least 80% of its income distribution is free from federal income
tax. Tax - Exempt may distribute any net realized short-term capital
gains and taxable market discount once a year or more often, as
necessary, to maintain its net asset value at $1.00 per share.
It is the current position of the staff of the SEC that a fund that uses
the term "tax-exempt" in its name may not derive more than 20% of its
income from municipal obligations that pay interest that is a preference
item for purposes of the AMT. According to this position, at least 80% of
Tax-Exempt's income would have to be exempt from the AMT as well as from
federal income taxes.
Corporate investors should note that a tax preference item for the purposes
of the corporate AMT is 75% of the amount by which adjusted current
earnings (which includes tax-exempt interest) exceeds the alternative
minimum taxable income of the corporation. If a shareholder receives an
exempt-interest dividend and sells shares at a loss after holding them for
a period of six months or less, the loss will be disallowed to the extent
of the amount of the exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Each fund may distribute any net realized
short-term capital gains once a year or more often as necessary, to
maintain its net asset value at $1.00 per share. Treasury Only, Treasury,
Government, Domestic, Rated Money Market, and Money Market do not
anticipate earning long-term capital gains on securities held by each fund.
Tax-Exempt does not anticipate distributing long-term capital gains.
As of the fiscal year ended March 31, 1996, Treasury Only had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Treasury Only, of which $ will expire on March 31, , respectively, is
available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Treasury had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Treasury, of which $ will expire on March 31, , respectively, is available
to offset future capital gains.
As of the fiscal year ended March 31, 1996, Government had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Government, of which $ will expire on March 31, , respectively, is
available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Domestic had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Domestic, of which $ will expire on March 31, , respectively, is available
to offset future capital gains.
As of the fiscal year ended March 31, 1996, Rated Money Market had capital
loss carryforwards aggregating approximately $. The loss carryforward for
Rated Money Market, of which $ will expire on March 31 , respectively, is
available to offset future capital gains.
As of the fiscal year ended March 31, 1996, Money Market had capital loss
carryforwards aggregating approximately $. The loss carryforward for Money
Market, of which $ will expire on March 31, , respectively, is available to
offset future capital gains.
As of the fiscal year ended March 31, 1996, Tax-Exempt had capital loss
carryforwards aggregating approximately $. The loss carryforward for
Tax-Exempt, which will expire on March 31, , is available to offset future
capital gains.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
state law provides for a pass-through of the state and local income tax
exemption afforded to direct owners of U.S. Government securities. Some
states limit this to mutual funds that invest a certain amount in U.S.
Government securities, and some types of securities, such as repurchase
agreements and some agency backed securities, may not qualify for this
benefit. The tax treatment of your dividend distributions from a fund will
be the same as if you directly owned your proportionate share of the U.S.
Government securities in the fund's portfolio. Because the income earned on
most U.S. Government securities in which a fund invests is exempt from
state and local income taxes, the portion of your dividends from the fund
attributable to these securities will also be free from income taxes. The
exemption from state and local income taxation does not preclude states
from assessing other taxes on the ownership of U.S. Government securities.
In a number of states, corporate franchise (income) tax laws do not exempt
interest earned on U.S. Government securities whether such securities are
held directly or through a fund.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Foreign governments may
also impose taxes on other payments or gains with respect to foreign
securities. If, at the close of its fiscal year, more than 50% of a fund's
total assets are invested in securities of foreign issuers, the fund may
elect to pass through foreign taxes paid and thereby allow shareholders to
take a credit or deduction on their individual tax returns.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis.
Each fund is treated as a separate entity from the other funds of its
respective Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the 1940 Act, control of a company is presumed where
one individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting common
stock and the execution of the shareholders' voting agreement, members of
the Johnson family may be deemed, under the 1940 Act, to form a controlling
group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
FIIOC, which performs shareholder servicing functions for institutional
customers and funds sold through intermediaries; and Fidelity Investments
Retail Marketing Company, which provides marketing services to various
companies within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees and executive officers of each trust are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. Trustees and officers
elected or appointed to each trust prior to the funds' conversions from
series of Massachusetts business trusts served each trust in identical
capacities. All persons named as Trustees also serve in similar capacities
for other funds advised by FMR. The business address of each Trustee and
officer who is an "interested person" (as defined in the 1940 Act) is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. The business address of all the other Trustees is Fidelity
Investments, P.O. Box 9235, Boston, Massachusetts 02205-9235. Those
Trustees who are "interested persons" by virtue of their affiliation with
either a trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (64), Trustee and President, is Chairman, Chief
Executive Officer and a Director of FMR Corp.; a Director and Chairman of
the Board and of the Executive Committee of FMR; Chairman and a Director of
FMR Texas Inc., Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD (53), Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management & Research (Far East) Inc.
RALPH F. COX (62), Trustee (1991), is a consultant to Western Mining
Corporation (1994). Prior to February 1994, he was President of Greenhill
Petroleum Corporation (petroleum exploration and production ) . Until
March 1990, Mr. Cox was President and Chief Operating Officer of Union
Pacific Resources Company (exploration and production). He is a Director of
Sanifill Corporation (non-hazardous waste, 1993) and CH2M Hill Companies
(engineering). In addition, he serves o n the Board of Directors of
the Texas State Chamber of Commerce, and he is a member of advisory
boards of Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS (63), Trustee (1992). Prior to her retirement in
September 1991, Mrs. Davis was the Senior Vice President of Corporate
Affairs of Avon Products, Inc. She is currently a Director of BellSouth
Corporation (telecommunications), Eaton Corporation (manufacturing, 1991),
and the TJX Companies, Inc. (retail stores ) , and previously served
as a Director of Hallmark Cards, Inc. (1985-1991) and Nabisco Brands, Inc.
In addition, she is a member of the President's Advisory Council of The
University of Vermont School of Business Administration.
RICHARD J. FLYNN (71), Trustee and Chairman of the non-interested
Trustees , is a financial consultant. Prior to September 1986, Mr. Flynn
was Vice Chairman and a Director of the Norton Company (manufacturer of
industrial devices). He is currently a Trustee of College of the Holy Cross
and Old Sturbridge Village, Inc., and he previously served as a Director of
Mechanics Bank (1971-1995).
E. BRADLEY JONES (67), Trustee . Prior to his retirement in 1984, Mr.
Jones was Chairman and Chief Executive Officer of LTV Steel Company. He is
a Director of TRW Inc. (original equipment and replacement products),
Cleveland-Cliffs Inc . (mining), Consolidated Rail Corporation,
Birmingham Steel Corporation, and RPM, Inc. (manufacturer of chemical
products ) , and he previously served as a Director of NACCO
Industries, Inc. (mining and marketing, 1985-1995) and Hyster-Yale
Materials Handling, Inc. (1985-1995). In addition, he serves as a Trustee
of First Union Real Estate Investments, a Trustee and member of the
Executive Committee of the Cleveland Clinic Foundation, a Trustee and
member of the Executive Committee of University School (Cleveland), and a
Trustee of Cleveland Clinic Florida.
DONALD J. KIRK (62), Trustee, is Executive-in-Residence (1995) at
Columbia University Graduate School of Business and a financial consultant.
From 1987 to January 1995, Mr. Kirk was a Professor at Columbia University
Graduate School of Business. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and he previously served as a Director of
Valuation Research Corp. (appraisals and valuations, 1993-1995). In
addition, he serves as Chairman of the Board of Directors of the National
Arts Stabilization Fund, as Vice Chairman of the Board of Trustees of the
Greenwich Hospital Association, as a Member of the Public Oversight Board
of the American Institute of Certified Public Accountants' SEC Practice
Section (1995), and as a Public Governor of the National Association of
Securities Dealers, Inc. (1996).
*PETER S. LYNCH (52), Trustee , is Vice Chairman and Director of FMR
(1992). Prior to May 31, 1990, he was a Director of FMR and Executive Vice
President of FMR (a position he held until March 31, 1991); Vice President
of Fidelity Magellan Fund and FMR Growth Group Leader; and Managing
Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity
Investments Corporate Services (1991-1992). He is a Director of W.R. Grace
& Co. (chemicals) and Morrison Knudsen Corporation (engineering and
construction). In addition, he serves as a Trustee of Boston College,
Massachusetts Eye & Ear Infirmary, Historic Deerfield (1989) and Society
for the Preservation of New England Antiquities, and as an Overseer of the
Museum of Fine Arts of Boston .
GERALD C. McDONOUGH (65), Trustee and Vice-Chairman of the
non-interested Trustees , is Chairman of G.M. Management Group
(strategic advisory services). Prior to his retirement in July 1988, he was
Chairman and Chief Executive Officer of Leaseway Transportation Corp.
(physical distribution services). Mr. McDonough is a Director of
ACME-Cleveland Corp. (metal working, telecommunications and electronic
products), Brush-Wellman Inc. (metal refining), York International Corp.
(air conditioning and refrigeration), Commercial Intertech Corp. (water
treatment equipment, 1992), and Associated Estates Realty Corporation (a
real estate investment trust, 1993).
EDWARD H. MALONE (70), Trustee. Prior to his retirement in 1985, Mr.
Malone was Chairman, General Electric Investment Corporation and a Vice
President of General Electric Company. He is a Director of Allegheny Power
Systems, Inc. (electric utility), General Re Corporation (reinsurance) and
Mattel Inc. (toy manufacturer). In addition, he serves as a Trustee of the
Naples Philharmonic Center for the Arts and Rensselaer Polytechnic
Institute, and he is a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN (61), Trustee (1993) , is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and subsidiaries.
Mr. Mann is a Director of M.A. Hanna Company (chemicals, 1993) and Infomart
(marketing services, 1991), a Trammell Crow Co. In addition, he serves as
the Campaign Vice Chairman of the Tri-State United Way (1993) and is a
member of the University of Alabama President's Cabinet .
THOMAS R. WILLIAMS (66), Trustee, is President of The Wales Group, Inc.
(management and financial advisory services). Prior to retiring in 1987,
Mr. Williams served as Chairman of the Board of First Wachovia Corporation
(bank holding company), and Chairman and Chief Executive Officer of The
First National Bank of Atlanta and First Atlanta Corporation (bank holding
company). He is currently a Director of BellSouth Corporation
(telecommunications), ConAgra, Inc. (agricultural products), Fisher
Business Systems, Inc. (computer software), Georgia Power Company (electric
utility), Gerber Alley & Associates, Inc. (computer software), National
Life Insurance Company of Vermont, American Software, Inc., and AppleSouth,
Inc. (restaurants, 1992).
FRED L. HENNING, JR. (55), Vice President, is Vice President of Fidelity's
money market (1994) and fixed-income (1995) funds and Senior Vice President
of FMR Texas Inc.
LELAND BARRON (37), Vice President (1989), is also Vice President of
other funds advised by FMR and an employee of FMR Texas Inc.
BURNELL STEHMAN (64), Vice President (1992), is also Vice President of
other funds advised by FMR and an employee of FMR Texas Inc.
JOHN TODD (47), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
SCOTT A. ORR (34), Vice President (1992), is also Vice President of other
funds advised by FMR and an employee of FMR Texas Inc.
ARTHUR S. LORING (47), Secretary, is Senior Vice President (1993) and
General Counsel of FMR, Vice President-Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER (47), Treasurer (1995), is Treasurer of the Fidelity
funds and is an employee of FMR (1995). Before joining FMR, Mr. Rathgeber
was a Vice President of Goldman Sachs & Co. (1978-1995), where he served in
various positions, including Vice President of Proprietary Accounting
(1988-1992), Global Co-Controller (1992-1994), and Chief Operations Officer
of Goldman Sachs (Asia) LLC (1994-1995) .
THOMAS D. MAHER (50), Assistant Vice President , is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas Inc.
JOHN H. COSTELLO (48), Assistant Treasurer, is an employee of FMR.
LEONARD M. RUSH (49), A ssistant 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) .
The following table sets forth information describing the compensation of
each current trustee of each fund for his or her services as trustee for
the fiscal year ended March 31, 1996.
COMPENSATION TABLE
Aggregate Compensation
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
J. Gary Ralph F. Phyllis Richard Edward C. E. Donald Peter S. Gerald C. Edward Marvin L. Thomas
Burkhead** Cox Burke J. Flynn Johnson 3d** Bradley J. Kirk Lynch** McDonough H. Mann R.
Davis Jones Malone
Williams
Trea
sury $ 0 $ $ $ $ 0 $ $ $ 0 $ $ $ $
Only
Trea
sury 0 0 0
Govern
ment 0 0 0
Domes
tic 0 0 0
Rated
Money 0 0 0
Market
Money 0 0 0
Market
Tax-
Exempt 0 0 0
</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 12 8 ,000
Phyllis Burke Davis 5,200 52,000 12 5 ,000
Richard J. Flynn 0 52,000 1 60 ,500
Edward C. Johnson 3d** 0 0 0
E. Bradley Jones 5,200 49,400 12 8 , 0 00
Donald J. Kirk 5,200 52,000 12 9 , 5 00
Peter S. Lynch** 0 0 0
Gerald C. McDonough 5,200 52,000 12 8 ,000
Edward H. Malone 5,200 44,200 128,000
Marvin L. Mann 5,200 52,000 12 8 ,000
Thomas R. Williams 5,200 52,000 125,000
</TABLE>
* Information is as of December 31, 199 5 for 2 19 funds in the
complex.
** Interested trustees of the fund are compensated by FMR.
For the fiscal year ended March 31, 1996, [Name of Trustee(s)], accrued
deferred compensation from [Name of Fund(s)] as follows:
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, the non-interested
Trustees, upon reaching age 72, become eligible to participate in a
retirement program under which they receive payments during their lifetime
from a fund based on their basic trustee fees and length of service. The
obligation of a fund to make such payments is not secured or funded.
Trustees become eligible if, at the time of retirement, they have served on
the Board for at least five years. Currently, Messrs. Ralph S. Saul,
William R. Spaulding, Bertram H. Witham, and David L. Yunich, all former
non-interested Trustees, receive retirement benefits under the program.
As of [date not earlier than July 1, 1996], the Trustees and officers of
each fund owned, in the aggregate, less than __% of each fund's total Class
III outstanding shares.
As of [date not earlier than July 1, 1996], the following owned of record
or beneficially 5% or more of outstanding shares of each class of the
funds:
[IF FUND HAS A SHAREHOLDER WHO OWNS 25% OR MORE: A shareholder owning of
record or beneficially more than 25% of a class's outstanding shares
may be considered a controlling person. That shareholder's vote could have
a more significant effect on matters presented at a shareholders' meeting
than votes of other shareholders.]
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing each fund's investments,
compensates all officers of each fund, all Trustees who are "interested
persons" of the trusts or of FMR, and all personnel of each fund or FMR for
performing services relating to research, statistical and investment
activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provides the management and administrative services
necessary for the operation of each fund. These services include providing
facilities for maintaining each fund's organization; supervising relations
with custodians, transfer and pricing agents, accountants, underwriters,
and other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees.
In addition to the management fee payable to FMR and the fees payable to
UMB, FIIOC, and FSC , each fund or class thereof, as
applicable, pays all of its expenses, without limitation, that are not
assumed by those parties. Each fund (other than Treasury Only and Rated
Money Market) pays for the typesetting, printing, and mailing of its proxy
materials to shareholders, legal expenses, and the fees of the custodian,
auditor and non-interested Trustees. Although each fund's (other than
Treasury Only's and Rated Money Market's) current management contract
provides that the fund will pay for typesetting, printing, and
mailing prospectuses, statements of additional information, notices and
reports to shareholders, the trusts, on behalf of each fund , have
entered into revised transfer agent agreements with FIIOC and UMB, as
applicable, pursuant to which FIIOC or UMB bears the costs of providing
these services to existing shareholders of the applicable classes. Other
expenses paid by each fund (other than Treasury Only and Rated Money
Market) include interest, taxes, brokerage commissions, e ach fund's
proportionate share of insurance premiums and Investment Company Institute
dues, and the costs of registering shares under federal and state
securities laws. Each fund is also liable for such non-recurring expenses
as may arise, including costs of any litigation to which the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.
FMR is responsible for the payment of all expenses of Treasury Only and
Rated Money Market with certain exceptions. Specific expenses payable by
FMR include, without limitation, expenses for the typesetting, printing,
and mailing of proxy materials to shareholders; legal expenses, and the
fees of the custodian, auditor, and interested Trustees; costs of
typesetting, printing, and mailing prospectuses and statements of
additional information, notices and reports to shareholders; and the fund's
proportionate share of insurance premiums and Investment Company Institute
dues. FMR also provides for transfer agent and dividend disbursing services
through FIIOC and portfolio and general accounting record maintenance
through FSC.
FMR pays all other expenses of Treasury Only and Rated Money Market with
the following exceptions: fees and expenses of all Trustees of the
applicable trust who are not "interested persons" of the trust or
FMR (the non-interested Trustees); interest on borrowings (only for
Treasury Only); taxes; brokerage commissions (if any); and such
nonrecurring expenses as may arise, including costs of any litigation to
which a fund may be a party, and any obligation it may have to indemnify
the officers and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated May 30,
1993 for Treasury, Government, Domestic, and Money Market ( the FICP
funds ) ; January 29, 1992 for Tax-Exempt; September 30, 1993 for
Treasury Only; and December 29, 1994 for Rated Money Market . The
management contracts were approved by shareholders on November 18,
1992, November 13, 1991, March 24, 1993, and December 8, 1994,
respectively.
For the services of FMR under each contract, each fund (other than
Treasury Only and Rated Money Market) pays FMR a monthly management fee
at the annual rate of 0.20% of average net assets throughout the month.
Treasury Only and Rated Money Market each pays FMR a monthly management
fee at the annual rate of 0.42% of average net assets throughout the month.
The management fees paid to FMR by Treasury Only and Rated Money Market are
reduced by an amount equal to the fees and expenses paid by the respective
funds to the non-interested Trustees. Fees received by FMR for the last
three fiscal periods are shown in the table below.
Fund Fiscal Year Ended Management Fees Paid to FMR
Treasury Only 3/31/96 $ *
3/31/95** *
7/31/94 *
7/31/93 *
Treasury 3/31/96
3/31/95
3/31/94
Government 3/31/96
3/31/95
3/31/94
Domestic 3/31/96
3/31/95
3/31/94
Rated Money Market 3/31/96** *
8/31/95 *
8/31/94 *
8/31/93 *
Money Market 3/31/96
3/31/95
3/31/94
Tax-Exempt 3/31/96
3/31/95**
5/31/94
5/31/93
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
** The fiscal year end of Treasury Only changed from July 31 to March 31 in
February 1995. The fiscal year end of Rated Money Market changed from
August 31 to March 31 in June 1995. The fiscal year end of Tax-Exempt
changed from May 31 to March 31 in February 1995.
FMR may, from time to time, voluntarily reimburse all or a portion of each
class's operating expenses (exclusive of interest, taxes, brokerage
commissions, 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 class' s total returns and yield and
repayment of the reimbursement by each class will lower its total
returns and yield.
During the fiscal periods reported, FMR voluntarily agreed , subject
to revision or termination, to reimburse Class III of certain funds
if and to the extent that each fund's Class III aggregate
operating expenses , including management fees but excluding 12b-1
fees, were in excess of an annual rate of its average net assets. The
table below identifies the classes in reimbursement; the expense
limit for such reimbursement ; the amount of management fees incurred
under each contract before reimbursement; and the dollar amount
reimbursed for each fiscal year ended March 31, 1996, 1995, and
1994.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Expense Management Fee Dollar Amount Fiscal Year
Fund Limit Before Reimbursement Reimbursed Ended
Treasury Only - Class I*
Treasury Only - Class II
Treasury Only - Class III
Treasury - Class I
Treasury - Class II
Treasury - Class III
Government - Class I
Government - Class II
Government - Class III
Domestic - Class I
Domestic - Class II
Domestic - Class III
Rated Money Market - Class I**
Rated Money Market - Class II**
Rated Money Market - Class III**
Money Market - Class I
Money Market - Class II
Money Market - Class III
Tax-Exempt - Class I***
Tax-Exempt - Class II***
Tax-Exempt - Class III***
</TABLE>
* Figures for Treasury Only are for the fiscal year ended March 31,
1996, the fiscal period August 1, 1994 to March 31, 1995, and the fiscal
years ended July 31, 1994 and 1993.
** Figures for Rated Money Market are for the fiscal period September 1,
1995 to March 31, 1996, and the fiscal years ended August 31, 1995, 1994,
and 1993.
*** Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, and the fiscal years
ended May 31, 1994 and 1993.
To comply with the California Code of Regulations, FMR will reimburse each
fund if and to the extent that the fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating each fund's expenses for purposes of this regulation, each
fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its custodian fees attributable to
investment in foreign securities.
SUB-ADVISER. FMR has entered into a sub-advisory agreement with FMR Texas
pursuant to which FMR Texas has primary responsibility for providing
portfolio investment management services to each fund.
Under the sub-advisory agreements dated May 30, 1993, January 29, 1992,
September 30, 1993, and December 29, 1994, for the FICP funds, Tax-Exempt,
Treasury Only, and Rated Money Market, respectively, FMR pays FMR Texas
fees equal to 50% of the management fees payable to FMR under its
management contract with each fund. Each sub-advisory agreement was
approved by shareholders on November 18, 1992, November 13, 1991, March 24,
1993, and December 8, 1994, for the FICP funds, Tax-Exempt, Treasury Only,
and Rated Money Market, respectively. The fees paid to FMR Texas are not
reduced by any voluntary or mandatory expense reimbursements that may be in
effect from time to time. The table below shows fees paid by FMR to FMR
Texas on behalf of each fund for the fiscal years ended March 31, 1996,
1995, and 1994.
1996 1995 1994 1993
Treasury Only* $ $ $ $
Treasury N/A
Government N/A
Domestic N/A
Rated Money Market** N/A
Money Market
Tax-Exempt***
* Figures for Treasury Only are for the fiscal year ended March 31,
1996, the fiscal period August 1, 1994 to March 31, 1995, and the fiscal
years ended July 31, 1994 and 1993.
** Figures for Rated Money Market are for the fiscal period September 1,
1995 to March 31, 1996, and the fiscal years ended August 31, 1995, 1994,
and 1993.
*** Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, and the fiscal years
ended May 31, 1994 and 1993.
CONTRACTS WITH FMR AFFILIATES
FIIOC, an affiliate of FMR, is the transfer, dividend disbursing, and
shareholder servicing agent for Class III shares of Treasury Only,
Treasury, Government, Domestic, Rated Money Market, and Money Market (the
Taxable Funds).
UMB is the transfer agent for Class III shares of Tax-Exempt. UMB has
entered into a sub-contract with FIIOC under the terms of which FIIOC
performs the processing activities associated with providing transfer agent
and shareholder servicing functions for Class III shares of Tax-Exempt.
Under this arrangement FIIOC receives an annual account fee and an
asset-based fee each based on account size and fund type for each retail
account and certain institutional accounts. With respect to certain
institutional retirement accounts, FIIOC receives an annual account fee and
an asset-based fee based on account type or fund type. These annual account
fees are subject to increase based on postal rate changes.
For accounts that FIIOC maintains on behalf of UMB, FIIOC receives all such
fees.
FIIOC bears the expense of typesetting, printing, and mailing prospectuses,
statements of additional information, and all other reports, notices, and
statements to shareholders, with the exception of proxy statements. Also,
FIIOC pays out-of-pocket expenses associated with transfer agent services.
FSC, an affiliate of FMR, performs the calculations necessary to determine
NAV and dividends for Class III shares of each Taxable Fund, and maintains
each Taxable Fund's accounting records. UMB has an additional sub-contract
with FSC, under the terms of which FSC performs the calculations necessary
to determine NAV and dividends for Class III of Tax-Exempt, and maintains
the fund's accounting records. 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.
FMR bears the cost of transfer, dividend disbursing, shareholder servicing,
and pricing and bookkeeping services pursuant to its management contracts
with Treasury Only and Rated Money Market. The transfer agent fee and
charges and pricing and bookkeeping fees for Tax-Exempt are paid to FIIOC
and FSC, respectively, by UMB which is entitled to reimbursement from Class
I or the fund, as applicable, for these expenses.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for the past three fiscal years were as follows:
Pricing and Bookkeeping Fees
1996 1995 1994 1993
Treasury $ $ $ N/A
Government N/A
Domestic N/A
Money Market N/A
Tax-Exempt* $
* Figures for Tax-Exempt are for the fiscal year ended March 31, 1996,
the fiscal period June 1, 1994 to March 31, 1995, annualized, and the
fiscal years ended May 31, 1994 and 1993.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at NAV. Promotional and administrative expenses in connection with
the offer and sale of shares are paid by FMR.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved a Distribution and Service Plan on behalf of
Class III of each fund (the Plans) pursuant to Rule 12b-1 under the
1940 Act (the Rule). The Rule provides in substance that a mutual fund may
not engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of a fund except
pursuant to a plan approved on behalf of the fund under the Rule. The
Plans, as approved by the Trustees, allow Class III of the funds and
FMR to incur certain expenses that might be considered to constitute
indirect payment by the funds of distribution expenses.
Pursuant to each Class III Plan, FDC is paid a monthly distribution fee
as a percentage of Class III's average net assets at an annual rate of
0.25%, determined as of the close of business on each day throughout the
month.
For the fiscal years ended March 31, 1996, 1995 and 1994, Class III of each
fund paid the following distribution fees:
1996 1995 1994
Treasury Only $ N/A N/A
Treasury $ $
Government N/A
Domestic N/A
Rated Money Market N/A N/A
Money Market
Tax-Exempt N/A N/A
of which the following was retained by FDC:
1996 1995 1994
Treasury Only $ N/A N/A
Treasury $
Government N/A
Domestic N/A
Rated Money Market $ N/A N/A
Money Market
Tax-Exempt $ N/A N/A
Under each Plan, if the payment of management fees by the funds to FMR is
deemed to be indirect financing by the funds of the distribution of their
shares, such payment is authorized by the Plans. Each Plan specifically
recognizes that FMR may use its management fee revenue , as well as
its past profits, or its other resources to reimburse FDC for
expenses incurred with the distribution of Class III shares, including
payments made to third parties that assist in selling Class III shares of
each fund, or to third parties, including banks that render shareholder
support services or engage in the sale of Class III shares. The Trustees
have authorized such payments.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
have determined that there is a reasonable likelihood that the Plan will
benefit Class III of the applicable fund and its shareholders.
To the extent that each Plan gives FMR and FDC greater flexibility in
connection with the distribution of shares of Class III of each
fund, additional sales of fund shares may result. Furthermore, certain
shareholder support services may be provided more effectively under the
Plans by local entities with whom shareholders have other relationships.
The Plans do not provide for specific payments by Class III of any of
the expenses of FDC or obligate FDC or FMR to perform any specific type or
level of distribution activities or incur any specific level of expense in
connection with distribution activities. After payments by FDC for
advertising, marketing and distribution, and payments to third parties, the
amounts remaining, if any, may be used as FDC may elect.
The Plan for Treasury was approved by FMR as the then sole shareholder on
October 22, 1993. The Plan for Government was approved by FMR as the then
sole shareholder on April 4, 1994. The Plan for Domestic was approved by
FMR as the then sole shareholder on July 19, 1994. The Plan for Money
Market was approved by FMR as the then sole shareholder on November 17,
1993. The Plans for Treasury Only, Tax-Exempt, and Rated Money Market were
approved by FMR as the then sole shareholder on October 31, 1995.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plans.
No preference for the instruments of such depository institutions will be
shown in the selection of investments.
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Treasury Only is a fund of Daily Money Fund,
an open-end management investment company originally organized as a
Massachusetts business trust on June 7, 1982, pursuant to a Declaration of
Trust that was amended and restated on September 1, 1989. On September 29,
1993, the trust was converted to a Delaware business trust pursuant to an
agreement approved by shareholders on March 24, 1993. The Delaware trust,
which was organized on June 20, 1991 under the name Daily Money Fund II,
succeeded to the name Daily Money Fund on July 14, 1995. Currently, there
are six funds of the trust: Treasury Only, Money Market Portfolio, U.S.
Treasury Portfolio, Capital Reserves: U.S. Government Portfolio, Capital
Reserves: Money Market Portfolio, and Capital Reserves: Municipal Money
Market Portfolio. The Trust Instrument permits the Trustees to create
additional funds.
Treasury, Government, Domestic, and Money Market are funds of Fidelity
Institutional Cash Portfolios, an open-end management investment company
originally organized as a Massachusetts business trust on November 10,
1981, pursuant to a Declaration of Trust that was amended and restated on
April 9, 1985. On May 30, 1993, the trust was converted to a Delaware
business trust pursuant to an agreement approved by shareholders on
November 18, 1992. The Delaware trust, which was organized on June 20, 1991
under the name Fidelity Government Securities Fund, succeeded to the name
Fidelity Institutional Cash Portfolios II on May 28, 1993, and then to the
name Fidelity Institutional Cash Portfolios on May 28, 1993. Currently,
there are four funds of the trust: Treasury, Government, Domestic, and
Money Market. The Trust Instrument permits the Trustees to create
additional funds.
Rated Money Market is a fund of Fidelity Money Market Trust, an open-end
management investment company an open-end management investment company
originally organized as a Massachusetts business trust on August 21, 1978,
pursuant to a Declaration of Trust that was amended and restated on
November 1, 1989. On December 29, 1994, the trust was converted to a
Delaware business trust pursuant to an agreement approved by shareholders
on December 8, 1994. The Delaware trust, which was organized on June 20,
1991 under the name Fidelity Money Market Trust II, succeeded to the name
Fidelity Money Market Trust on December 29, 1994. Currently, there are
three funds of Fidelity Money Market Trust: Rated Money Market, Retirement
Money Market Portfolio, and Retirement Government Money Market Portfolio.
The Trust Instrument permits the Trustees to create additional funds.
Tax-Exempt is a fund of Fidelity Institutional Tax-Exempt Cash Portfolios,
an open-end management investment company originally organized as a
Massachusetts business trust on March 1, 1982, pursuant to a Declaration of
Trust that was amended and restated on April 9, 1985, and supplemented on
December 15, 1989. On January 29, 1992, the trust was converted to a
Delaware business trust pursuant to an agreement approved by shareholders
on November 13, 1991. The Delaware trust, which was organized on June 20,
1991 under the name Fidelity Institutional Tax-Exempt Cash Portfolios II,
succeeded to the name Fidelity Institutional Tax-Exempt Cash Portfolios on
January 29, 1992. Currently, Tax-Exempt is the only fund of Fidelity
Institutional Tax-Exempt Cash Portfolios. The Trust Instrument permits the
Trustees to create additional funds.
In the event that FMR ceases to be the investment adviser to a fund, the
right of the trust or fund to use the identifying name "Fidelity" may be
withdrawn. There is a remote possibility that one fund might become liable
for any misstatement in its prospectus or statement of additional
information about another fund.
The assets of the trusts received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trusts are to
be allocated in proportion to the asset value of the respective funds,
except where allocations of direct expense can otherwise be fairly made.
The officers of the trusts, subject to the general supervision of the Board
of Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of a trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. Each trust is a business trust organized
under Delaware law. Delaware law provides that shareholders shall be
entitled to the same limitations of personal liability extended to
stockholders of private corporations for profit. The courts of some states,
however, may decline to apply Delaware law on this point. The Trust
Instruments contain an express disclaimer of shareholder liability for the
debts, liabilities, obligations, and expenses of the trusts and require
that a disclaimer be given in each contract entered into or executed by the
trust or the Trustees. The Trust Instruments provide for indemnification
out of each fund's property of any shareholder or former shareholder held
personally liable for the obligations of the fund. The Trust Instruments
also provide that each fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the fund
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply, no contractual
limitation of liability was in effect, and the fund is unable to
meet its obligations. FMR believes that, in view of the above, the
risk of personal liability to shareholders is extremely remote.
The Trust Instruments further provide that the Trustees, if they have
exercised reasonable care, shall not be personally liable to any person
other than the trust or its shareholders; moreover, the Trustees shall not
be liable for any conduct whatsoever, provided that Trustees are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office. Claims
asserted against one class of shares may subject holders of another class
of shares to certain liabilities.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder of Rated Money Market, you receive one vote for
each dollar value of net asset value you own. The shares have no preemptive
or conversion rights; the voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the Prospectus.
Shares are fully paid and non-assessable, except as set forth under the
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of a trust, fund , or class may, as set
forth in each of the Trust Instruments, call meetings of the trust, fund,
or class, for any purpose related to the trust, fund, or class, as the case
may be, including, in the case of a meeting of the entire trust, the
purpose of voting on removal of one or more Trustees.
Any trust or fund may be terminated upon the sale of its assets to, or
merger with, another open-end management investment company or series
thereof, or upon liquidation and distribution of its assets. Generally such
terminations must be approved by vote of the holders of a majority of the
outstanding shares of the trust or fund (or, for Rated Money Market, as
determined by the current value of each shareholder's investment in the
fund or trust); however, the Trustees may, without prior shareholder
approval, change the form of organization of the trust or fund by
merger, consolidation, or incorporation. If not so terminated, the trust
and its funds will continue indefinitely.
Under the Trust Instruments, the Trustees may, without shareholder vote,
cause a trust to merge or consolidate into one or more trusts,
partnerships, or corporations, or cause the trust to be incorporated under
Delaware law, so long as the surviving entity is an open-end management
investment company that will succeed to or assume the trust's registration
statement. Each fund may invest all of its assets in another investment
company.
CUSTODIAN. The Bank of New York, 48 Wall Street, New York, New York,
is custodian of the assets of each fund, except Tax-Exempt. UMB, 1010 Grand
Avenue, Kansas City, Missouri, is custodian of the assets of Tax-Exempt.
The custodian is responsible for the safekeeping of a fund's assets and the
appointment of the subcustodian banks and clearing agencies. The custodian
takes no part in determining the investment policies of a fund or in
deciding which securities are purchased or sold by a fund. However, a fund
may invest in obligations of the custodian and may purchase securities from
or sell securities to the custodian. Chemical Bank, headquartered in New
York, also may serve as a special purpose custodian of certain assets in
connection with pooled repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain funds advised by FMR.
Transactions that have occurred to date include mortgages and personal and
general business loans. In the judgment of FMR, the terms and conditions of
those transactions were not influenced by existing or potential custodial
or other fund relationships.
AUDITORS. ____ serves as the independent accountant for Treasury
Only, Rated Money Market, and Tax-Exempt. ____ serves as the independent
accountant for the FICP funds. The auditors examine financial statements
for the funds and provide other audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended March 31, 199 6 are included in each fund's
Annual Report, which is a separate report supplied with this Statement of
Additional Information. Each fund's financial statements and financial
highlights are incorporated herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating organizations when
determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S COMMERCIAL PAPER RATINGS:
Issuers rated PRIME-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics:
Leading market positions in well established industries.
High rates of return on funds employed.
Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
Broad margins in earning coverage of fixed financial charges and with high
internal cash generation.
Well established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earning trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S C OMMERCIAL 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 Statement and Exhibits.
(a) 1. Financial Statements and Financial Highlights, included in the
Annual Report for Fidelity Institutional Cash Portfolios for the fiscal
year ended March 31, 1996, will be filed by subsequent amendment.
(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. 26.
(b) Certificate of Trust, dated June 20, 1991 was electronically filed
and is incorporated herein by reference to Exhibit 1(b) to Post-Effective
Amendment No. 26.
(c) Certificate of Amendment of Fidelity Government Securities Fund to
Fidelity Institutional Cash Portfolios II, dated May 28, 1993 was
electronically filed and is incorporated herein by reference to Exhibit
1(c) to Post-Effective Amendment No. 26.
(d) Certificate of Amendment of Fidelity Institutional Cash Portfolios
II to Fidelity Institutional Cash Portfolios, dated May 28, 1993 was
electronically filed and is incorporated herein by reference to Exhibit
1(d) to Post-Effective Amendment No. 26.
2. Bylaws of the Trust effective May 19, 1994 were electronically filed
and are incorporated herein by reference to Exhibit 2(a) to Union Street
Trust II's Post-Effective Amendment No. 10.
3. Not applicable.
4. Not applicable.
5. (a) Management Contract between Fidelity Institutional Cash
Portfolios: Money Market Portfolio and Fidelity Management & Research
Company, dated May 30, 1993, was electronically filed and is incorporated
herein by reference to Exhibit 5(a) to Post-Effective Amendment No. 26.
(b) Management Contract between Fidelity Institutional Cash Portfolios:
U.S. Government Portfolio and Fidelity Management & Research Company, dated
May 30, 1993, was electronically filed and is incorporated herein by
reference to Exhibit 5(c) to Post-Effective Amendment No. 26.
(c) Management Contract between Fidelity Institutional Cash Portfolios:
U.S. Treasury Portfolio II and Fidelity Management & Research Company,
dated May 30, 1993, was electronically filed and is incorporated herein by
reference to Exhibit 5(d) to Post-Effective Amendment No. 26.
(d) Management Contract between Fidelity Institutional Cash Portfolios:
Domestic Money Market Portfolio and Fidelity Management & Research Company,
dated May 30, 1993, was electronically filed and is incorporated herein
by reference to Exhibit 5(e) to Post-Effective Amendment No. 26.
(e) Sub-Advisory agreement between Fidelity Management & Research
Company on behalf of Fidelity Institutional Cash Portfolios: U.S. Treasury
Portfolio II and FMR Texas Inc., dated May 30, 1993, was electronically
filed and is incorporated herein by reference to Exhibit 5(g) to
Post-Effective Amendment No. 26.
(f) Sub-Advisory agreement between Fidelity Management & Research
Company on behalf of Fidelity Institutional Cash Portfolios: U.S.
Government Portfolio and FMR Texas Inc., dated May 30, 1993, was
electronically filed and is incorporated herein by reference to Exhibit
5(h) to Post-Effective Amendment No. 26.
(g) Sub-Advisory agreement between Fidelity Management & Research
Company on behalf of Fidelity Institutional Cash Portfolios: Domestic Money
Market Portfolio and FMR Texas Inc., dated May 30, 1993, was electronically
filed and is incorporated herein by reference to Exhibit 5(i) to
Post-Effective Amendment No. 26.
(h) Sub-Advisory agreement between Fidelity Management & Research
Company on behalf of Fidelity Institutional Cash Portfolios: Money Market
Portfolio and FMR Texas Inc., dated May 30, 1993, was electronically filed
and is incorporated herein by reference to Exhibit 5(j) to Post-Effective
Amendment No. 26.
6. (a) General Distribution Agreement between Fidelity Institutional Cash
Portfolios: U.S. Treasury Portfolio II and Fidelity Distributors
Corporation, dated May 30, 1993, was electronically filed and is
incorporated herein by reference to Exhibit 6(b) to Post-Effective
Amendment No. 26.
(b) General Distribution Agreement between Fidelity Institutional Cash
Portfolios: U.S. Government Portfolio and Fidelity Distributors
Corporation, dated May 30, 1993, was electronically filed and is
incorporated herein by reference to Exhibit 6(c) to Post-Effective
Amendment No. 26.
(c) General Distribution Agreement between Fidelity Institutional Cash
Portfolios: Domestic Money Market Portfolio and Fidelity Distributors
Corporation, dated May 30, 1993, was electronically filed and is
incorporated herein by reference to Exhibit 6(d) to Post-Effective
Amendment No. 26.
(d) General Distribution Agreement between Fidelity Institutional Cash
Portfolios: Money Market Portfolio and Fidelity Distributors Corporation,
dated May 30, 1993, was electronically filed and is incorporated herein by
reference to Exhibit 6(e) to Post-Effective Amendment No. 26.
7. (a) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners effective November 1, 1989, was electronically filed
and is incorporated herein by reference to Exhibit 7 to Union Street
Trust's Post-Effective Amendment No. 87.
(b) The Fee Deferral Plan for Non-Interested Person Directors and
Trustees of the Fidelity Funds, effective as of December 1, 1995, was
electronically filed and incorporated herein by reference to Exhibit 7(b)
to Fidelity School Street Trust's Post-Effective Amendment No. 47 (File
No. 2-57157).
8. (a) Custodian Agreement and Appendix C, dated December 1, 1994,
between The Bank of New York and Fidelity Institutional Cash Portfolios on
behalf of U.S. Treasury Portfolio II, U.S. Government Portfolio, Money
Market Portfolio, and Domestic Money Market Portfolio were electronically
filed and are incorporated herein by reference to Exhibit 8(a) to Fidelity
Hereford Street Trust's Post-Effective Amendment No. 4 (File No. 33-52577).
(b) Appendix A, dated January 18, 1996, to the Custodian Agreement,
dated December 1, 1994, between The Bank of New York and Fidelity
Institutional Cash Portfolios on behalf of Treasury II, Government, Money
Market, and Domestic is electronically filed herein as Exhibit 8(b).
(c) Appendix B, dated September 14, 1995, to the Custodian Agreement,
dated December 1, 1994, between The Bank of New York and Fidelity
Institutional Cash Portfolios Trust on behalf of Treasury II, Government,
Money Market, and Domestic was electronically filed and is incorporated
herein by reference to Exhibit 8(e) to Fidelity Charles Street Trust's
Post-Effective Amendment No. 54 (File No. 2-73133).
(d) Fidelity Group Repo Custodian Agreement among The Bank of New York,
J. P. Morgan Securities, Inc., and the Fidelity Funds, is electronically
filed herein as Exhibit 8(d).
(e) Schedule 1 to the Fidelity Group Repo Custodian Agreement among The
Bank of New York, J. P. Morgan Securities, Inc., and the Fidelity Funds is
electronically filed herein as Exhibit 8(e).
(f) Fidelity Group Repo Custodian Agreement among Chemical Bank,
Greenwich Capital Markets, Inc., and the Fidelity Funds is electronically
filed herein as Exhibit 8(f).
(g) Schedule 1 to the Fidelity Group Repo Custodian Agreement among
Chemical Bank, Greenwich Capital Markets, Inc., and the Fidelity Funds is
electronically filed herein as Exhibit 8(g).
(h) Joint Trading Account Custody Agreement between the The Bank of New
York and the Fidelity Funds is electronically filed herein as Exhibit 8(h).
(i) First Amendment to Joint Trading Account Custody Agreement between
the The Bank of New York and the Fidelity Funds is electronically filed
herein as Exhibit 8(i).
9. Not applicable.
10. Not applicable.
11. Consent of auditor will be electronically filed by subsequent
amendment.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15. (a) Distribution and Service Plan of Fidelity Institutional Cash
Portfolios: Money Market Portfolio was electronically filed and is
incorporated herein by reference to Exhibit 15(a) to Post-Effective
Amendment No. 26.
(b) Distribution and Service Plan of Fidelity Institutional Cash
Portfolios: U.S. Government Portfolio was electronically filed and is
incorporated herein by reference to Exhibit 15(c) to Post-Effective
Amendment No. 26.
(c) Distribution and Service Plan of Fidelity Institutional Cash
Portfolios: U.S. Treasury Portfolio II was electronically filed and is
incorporated herein by reference to Exhibit 15(d) to Post-Effective
Amendment No. 26.
(d) Distribution and Service Plan of Fidelity Institutional Cash
Portfolios: Domestic Money Market Portfolio was electronically filed and is
incorporated herein by reference to Exhibit 15(e) to Post-Effective
Amendment No. 26.
(e) Distribution and Service Plan pursuant to Rule 12b-1, for each of
the portfolios of Fidelity Institutional Cash Portfolios: Class II, is
electronically filed herein as Exhibit 15(a).
(f) Distribution and Service Plan pursuant to Rule 12b-1, for each of
the portfolios of Fidelity Institutional Cash Portfolios: Class III, is
electronically filed herein as Exhibit 15(b).
16. Schedules and data points for cumulative and average total returns and
7-day, effective, and tax-equivalent yields for U.S. Treasury Portfolio
were electronically filed and are incorporated herein by reference to
Exhibit 16 to Post-Effective Amendment No. 26.
17. A Financial Data Schedule will be electronically filed by subsequent
amendment.
18. A Multiple Class of Shares Plan is electronically filed herein as
Exhibit 18.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is the same as the boards of the other
Fidelity funds, each of which has Fidelity Management & Research Company as
its investment adviser. In addition, the officers of these funds are
substantially identical. Nonetheless, Registrant takes the position that
it is not under common control with these other funds since the power
residing in the respective Boards and officers arises as the result of an
official position with the respective funds.
Item 26. Number of Holders of Securities
as of April 30, 1996
Title of Class Number of Recordholders
Treasury Class I 1,246
Treasury Class II 34
Treasury Class III 416
Government Class I 733
Government Class II 3
Government Class III 230
Domestic Class I 403
Domestic Class II 2
Domestic Class III 97
Money Market Class I 1,402
Money Market Class II 57
Money Market Class III 635
Item 27. Indemnification
Article X, Section 10.02 of the Trust Instrument sets forth the reasonable
and fair means for determining whether indemnification shall be provided to
any past or present Trustee or officer. It states that the Registrant
shall indemnify any present or past Trustee or officer to the fullest
extent permitted by law against liability and all expenses reasonably
incurred by him in connection with any claim, action, suit or proceeding in
which he is involved by virtue of his service as a trustee, an officer, or
both. Additionally, amounts paid or incurred in settlement of such matters
are covered by this indemnification. Indemnification will not be provided
in certain circumstances, however. These include instances of willful
misfeasance, bad faith, gross negligence, and reckless disregard of the
duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Advisor
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc., Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.; President
and Trustee of funds advised by FMR.
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman and Director of FMR.
Robert Beckwitt Vice President of FMR and of funds advised by FMR.
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Dwight Churchill Vice President of FMR (1993).
William Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Lawrence Greenberg Vice President of FMR (1993).
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Equity Division Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR (1993).
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
Robert F. Hill Vice President of FMR; Director of Technical Research.
Curtis Hollingsworth Vice President of FMR (1993).
Stephen P. Jonas Treasurer and Vice President of FMR (1993)); Treasurer of
FMR Texas Inc. (1993), Fidelity Management & Research
(U.K.) Inc. (1993), and Fidelity Management & Research
(Far East) Inc. (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); High Income
Division Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Malcolm W. MacNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR; Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Andrew Offit Vice President of FMR (1993).
Judy Pagliuca Vice President of FMR (1993).
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Lee Sandwen Vice President of FMR (1993).
Patricia A. Satterthwaite Vice President of FMR (1993) and of a fund advised by
FMR.
Thomas T. Soviero Vice President of FMR (1993).
Richard Spillane Vice President of FMR; Senior Vice President and Director
of Operations and Compliance of FMR U.K. (1993).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Gary L. Swayze Vice President of FMR and of funds advised by FMR;
Tax-Free Fixed-Income Group Leader.
Thomas Sweeney Vice President of FMR (1993).
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; Growth Group Leader.
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk, and General Counsel
of FMR; Vice President, Legal of FMR Corp.; Secretary of
funds advised by FMR.
</TABLE>
(2) FMR TEXAS INC. (FMR Texas)
FMR Texas provides investment advisory services to Fidelity Management &
Research Company. The directors and officers of the Sub-Adviser have held
the following positions of a substantial nature during the past two fiscal
years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Texas; Chairman of the
Executive Committee of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of the Board
and a Director of FMR, FMR Corp., Fidelity
Management & Research (Far East) Inc. and Fidelity
Management & Research (U.K.) Inc.; President and
Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Texas; President of FMR;
Managing Director of FMR Corp.; President and a
Director of Fidelity Management & Research (Far East)
Inc. and Fidelity Management & Research (U.K.) Inc.;
Senior Vice President and Trustee of funds advised by
FMR.
Fred L. Henning, Jr. Senior Vice President of FMR Texas; Fixed-Income
Division Leader (1995).
Robert Auld Vice President of FMR Texas (1993).
Leland Barron Vice President of FMR Texas and of funds advised by
FMR.
Robert Litterst Vice President of FMR Texas and of funds advised by
FMR (1993).
Thomas D. Maher Vice President of FMR Texas and Assistant Vice
President of funds advised by FMR.
Burnell R. Stehman Vice President of FMR Texas and of funds advised by
FMR.
John J. Todd Vice President of FMR Texas and of funds advised by
FMR.
Sarah H. Zenoble Vice President of FMR Texas; Money Market Division
Leader (1995).
Stephen P. Jonas Treasurer of FMR Texas Inc. (1993), Fidelity
Management & Research (U.K.) Inc. (1993), and Fidelity
Management & Research (Far East) Inc. (1993);
Treasurer and Vice President of FMR (1993).
David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity Management
& Research (U.K.) Inc.; Clerk of Fidelity Management &
Research (Far East) Inc.
</TABLE>
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
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity Service
Co., 82 Devonshire Street, Boston, MA 02109, or the funds' respective
custodian: The Bank of New York, 110 Washington Street, New York, N.Y.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant, on behalf of Fidelity Institutional Cash Portfolios,
undertakes to deliver to each person who has received the prospectus or
annual or semiannual financial report for a fund in an electronic format,
upon his or her request and without charge, a paper copy of the prospectus
or annual or semiannual report for the fund.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 31 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 sixth day of May 1996.
FIDELITY INSTITUTIONAL CASH PORTFOLIOS
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 May 6, 1996
Edward C. Johnson 3d (Principal
Executive
Officer)
/s/Kenneth A. Rathgeber Treasurer May 6, 1996
Kenneth A. Rathgeber
/s/J. Gary Burkhead Trustee May 6, 1996
J. Gary Burkhead
/s/Ralph F. Cox * Trustee May 6, 1996
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee May 6, 1996
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee May 6, 1996
Richard J. Flynn
/s/E. Bradley Jones * Trustee May 6, 1996
E. Bradley Jones
/s/Donald J. Kirk * Trustee May 6, 1996
Donald J. Kirk
/s/Peter S. Lynch * Trustee May 6, 1996
Peter S. Lynch
/s/Edward H. Malone * Trustee May 6, 1996
Edward H. Malone
/s/Marvin L. Mann * Trustee May 6, 1996
Marvin L. Mann
/s/Gerald C. McDonough* Trustee May 6, 1996
Gerald C. McDonough
/s/Thomas R. Williams * Trustee May 6, 1996
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated December 15, 1994 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated December 15, 1994 and filed herewith.
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Director, Trustee or General Partner (collectively,
the "Funds"), hereby severally constitute and appoint Arthur J. Brown,
Arthur C. Delibert, Robert C. Hacker, Richard M. Phillips, Dana L. Platt
and Stephanie A. Djinis, each of them singly, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
each of them, to sign for me and my name in the appropriate capacities any
Registration Statements of the Funds on Form N-1A or any successor thereto,
any and all subsequent Pre-Effective Amendments or Post-Effective
Amendments to said Registration Statements on Form N-1A or any successor
thereto, any Registration Statements on Form N-14, and any supplements or
other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorneys-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact
or their substitutes may do or cause to be done by virtue hereof.
WITNESS our hands on this fifteenth day of December, 1994.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Marvin L. Mann
Ralph F. Cox Marvin L. Mann
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity any
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Pre-Effective Amendments or
Post-Effective Amendments to said Registration Statements on Form N-1A or
any successor thereto, any Registration Statements on Form N-14, and any
supplements or other instruments in connection therewith, and generally to
do all such things in my name and behalf in connection therewith as said
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d December 15, 1994
Edward C. Johnson 3d
APPENDIX "A"
TO
CUSTODIAN AGREEMENT
BETWEEN
The Bank of New York and each of the following Investment Companies
Dated as of January 18, 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 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
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 Investors Trust SLAM: Government Money Market
Portfolio 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: Teasurer Title: Vice President
FIDELITY GROUP
REPO CUSTODIAN AGREEMENT
FOR JOINT TRADING ACCOUNT
AGREEMENT dated as of February 12, 1996, among THE BANK OF NEW YORK, a
banking corporation organized under the laws of the State of New York
("Repo Custodian"), J.P. MORGAN SECURITIES INC. ("Seller") and each of the
entities listed on Schedule A-1, A-2, A-3 and A-4 (collectively, the
"Funds" and each a "Fund") hereto, acting on behalf of itself or (i) in the
case of the Funds listed on Schedule A-1 or A-2 hereto which are portfolios
or series, acting through the series company listed on Schedule A-1 or A-2
hereto, (ii) in the case of the accounts listed on Schedule A-3 hereto,
acting through Fidelity Management & Research Company, and (iii) in the
case of the commingled or individual accounts listed on Schedule A-4
hereto, acting through Fidelity Management Trust Company (collectively, the
"Funds" and each, a "Fund").
WITNESSETH
WHEREAS, each of the Funds has entered into a master repurchase agreement
dated as of February 12, 1996, (the "Master Agreement") with Seller
pursuant to which from time to time one or more of the Funds, as buyers,
and Seller, as seller, may enter into repurchase transactions effected
through one or more joint trading accounts (collectively, the "Joint
Trading Account") established and administered by one or more custodians of
the Funds identified on Schedule C hereto (each a "Custodian"); and,
WHEREAS, in each such repurchase transaction Seller will sell to such
Funds certain Securities (as hereinafter defined) selected from Eligible
Securities (as hereinafter defined) held by Repo Custodian, subject to an
agreement by Seller to repurchase such Securities; and
WHEREAS, Repo Custodian currently maintains a cash and securities account
(the "Seller Account") for Seller for the purpose of, among other things,
effecting repurchase transactions hereunder; and
WHEREAS, the Funds desire that the Repo Custodian serve as the custodian
for the Funds in connection with the repurchase transactions effected
hereunder, and that the Repo Custodian hold cash, Cash Collateral (as
hereinafter defined) and Securities for the Funds for the purpose of
effecting repurchase transactions hereunder.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Definitions.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
(a) "Banking Day" shall mean any day on which the Funds, Seller Custodian,
Repo Custodian, and the Federal Reserve Banks where the Custodian and the
Repo Custodian are located, are each open for business.
(b) "Cash Collateral" shall mean all cash, denominated in U.S. Dollars,
credited by Repo Custodian to a Transaction Account pursuant to Paragraphs
3, 6, 8 or 9 of the Master Agreement.
(c) "Custodian" shall have the meaning set forth in the preamble of this
Agreement.
(d) "Eligible Securities" shall mean those securities which are identified
as permissible securities for a particular Transaction Category.
(e) "FICASH I Transaction" and "FICASH III Transaction " shall mean a
repurchase transaction in which the Repurchase Date is the Banking Day next
following the Sale Date and for which securities issued by the government
of the United States of America that are direct obligations of the
government of the United States of America shall constitute Eligible
Securities.
(f) "FICASH II Transaction" shall mean a repurchase transaction in which
the Repurchase Date is the Banking Day next following the Sale Date and for
which one or more of the following two categories of securities, as
specified by the Funds, shall constitute Eligible Securities: (x)
securities issued by the government of the United States of America that
are direct obligations of the government of the United States of America,
or (y) securities issued by or guaranteed as to principal and interest by
the government of the United States of America, or by its agencies and/or
instrumentalities, including, but not limited to, the Federal Home Loan
Bank, Federal Home Loan Mortgage Corp., Government National Mortgage
Association, Federal National Mortgage Association, Federal Farm Credit
Bank, Federal Intermediate Credit Bank, Banks for Cooperatives, and Federal
Land Banks.
(g) "FITERM I Transaction" and "FITERM III Transaction" shall mean a
repurchase transaction in which the Repurchase Date is a date fixed by
agreement between Seller and the Participating Funds which is not the
Banking Day next following the Sale Date and for which securities issued by
the government of the United States of America that are direct obligations
of the government of the United States of America shall constitute Eligible
Securities.
(h) "FITERM II Transaction" shall mean a repurchase transaction in which
the Repurchase Date is a date fixed by agreement between Seller and the
Participating Funds which is not the Banking Day next following the Sale
Date and for which one or more of the following two categories of
securities, as specified by the Funds, shall constitute Eligible
Securities: (x) securities issued by the government of the United States
of America that are direct obligations of the government of the United
States of America, or (y) securities issued by or guaranteed as to
principal and interest by the government of the United States of America,
or by its agencies and/or instrumentalities, including, but not limited to,
the Federal Home Loan Bank, Federal Home Loan Mortgage Corp., Government
National Mortgage Association, Federal National Mortgage Association,
Federal Farm Credit Bank, Federal Intermediate Credit Bank, Banks for
Cooperatives, and Federal Land Banks.
(i) "Fund" shall have the meaning set forth in the preamble of this
Agreement.
(j) "Fund Agent" shall mean the agent for the Participating Funds
designated in Paragraph 18 of the Master Agreement.
(k) "Joint Trading Account" shall have the meaning set forth in the
preamble of this Agreement.
(l) "Margin Percentage" with respect to any repurchase transaction shall
be 102% or such other percentage as is agreed to by Seller and the
Participating Funds (except that in no event shall the Margin Percentage be
less than 100%).
(m) "Market Value" shall have the meaning set forth in Paragraph 4 of the
Master Agreement.
(n) "Master Agreement" shall have the meaning set forth in the preamble of
this Agreement.
(o) "1940 Act" shall mean have the meaning set forth in Paragraph 3(c) of
this Agreement.
(p) "Partial Payment" shall have the meaning set forth in Section 4(g) of
this Agreement.
(q) "Participating Funds" shall mean those Funds that are parties to a
particular repurchase transaction effected through the Joint Trading
Account.
(r) "Pricing Rate" shall mean the per annum percentage rate agreed to by
Seller and the Participating Funds for a repurchase transaction.
(s) "Pricing Services" shall have the meaning set forth in Paragraph 7 of
this Agreement.
(t) "Repo Custodian" shall have the meaning set forth in the preamble of
this Agreement.
(u) "Repurchase Date" shall mean the date fixed by agreement between
Seller and the Participating Funds on which the Seller is to repurchase
Securities and Cash Collateral, if any, from the Participating Funds and
the Participating Funds are to resell the Securities and Cash Collateral,
if any, including any date determined by application of the provisions of
Paragraphs 7 and 15 of the Master Agreement.
(v) "Repurchase Price" for each repurchase transaction shall mean the Sale
Price, plus an incremental amount determined by applying the Pricing Rate
to the Sale Price, calculated on the basis of a 360-day year and the number
of actual days elapsed from (and including) the Sale Date to (but
excluding) the Repurchase Date.
(w) "Sale Date" shall mean the Banking Day on which Securities and Cash
Collateral, if any, are to be sold to the Participating Funds by Seller
pursuant to a repurchase transaction hereunder.
(x) "Sale Price" shall mean the price agreed upon by the Participating
Funds and Seller at which the Securities and Cash Collateral, if any, are
to be sold to the Participating Funds by Seller.
(y) "Securities" shall mean all Eligible Securities delivered by Seller or
to be delivered by Seller to the Participating Funds pursuant to a
particular repurchase transaction and not yet repurchased hereunder,
together with all rights related thereto and all proceeds thereof.
(z) "Securities System" shall have the meaning set forth in Paragraph 3(c)
of this Agreement.
(aa) "Seller" shall have the meaning set forth in the preamble to this
Agreement.
(bb) "Seller Account" shall have the meaning set forth in the preamble of
this Agreement.
(cc) "Transaction Account" shall mean a cash account established and
maintained by Repo Custodian for the Funds to effect repurchase
transactions pursuant to the Master Agreement.
(dd) "Transaction Category" shall mean the particular type of repurchase
transaction effected hereunder, as determined with reference to the term of
the transaction and the categories of Securities that constitute Eligible
Securities therefor, which term shall include FICASH I Transactions, FICASH
II Transactions, FICASH III Transactions, FITERM I Transactions, FITERM II
Transactions, FITERM III Transactions, and such other transaction
categories as may from time to time be designated by the Funds by notice to
Seller, Custodian and Repo Custodian.
2. Appointment of Repo Custodian. Upon the terms and conditions set forth
in this Agreement, Repo Custodian is hereby appointed by the Funds to act
as the custodian for the Participating Funds to hold cash, Cash Collateral
and Securities for the purpose of effecting repurchase transactions for the
Participating Funds through the Joint Trading Account pursuant to the
Master Agreement. Repo Custodian hereby acknowledges the terms of the
Master Agreement between the Funds and Seller (attached as an Exhibit
hereto), as amended from time to time, and agrees to abide by the
provisions thereof to the extent such provisions relate to the
responsibilities and operations of Repo Custodian hereunder.
3. Maintenance of Transaction Accounts.
(a) Repo Custodian shall establish and maintain one or more Transaction
Accounts for the purpose of effecting repurchase transactions hereunder for
the Funds, in each case pursuant to the Master Agreement. From time to
time the Funds may cause Custodian, on behalf of the Funds, to deposit
Securities and cash with Repo Custodian in the designated Transaction
Account, in each case in accordance with Paragraph 3 of the Master
Agreement.
(b) Repo Custodian shall keep all Securities, cash and Cash Collateral
received for the Participating Funds segregated at all times from those of
any other person, firm or corporation in its possession and shall identify
all such Securities, cash and Cash Collateral as subject to this Agreement
and the Master Agreement. Segregation may be accomplished by physical
segregation with respect to certificated securities held by the Repo
Custodian and, in addition, by appropriate identification on the books and
records of Repo Custodian in the case of all other Securities, cash and
Cash Collateral. Title to all Securities and Cash Collateral under a
repurchase transaction shall pass to the Participating Funds that are
parties to such repurchase transaction. All such Securities and Cash
Collateral shall be held by Repo Custodian for the Participating Funds, and
shall be subject at all times to the proper instructions of the
Participating Funds, or the Custodian on behalf of the Participating Funds,
with respect to the holding, transfer or disposition of such Securities and
Cash Collateral. Repo Custodian shall include in its records for each
Transaction Account all instructions received by it which evidence an
interest of the Participating Funds in the Securities and Cash Collateral
and shall hold physically segregated any written agreement, receipt or
other writing received by it which evidences an interest of the
Participating Funds in the Securities and Cash Collateral.
(c) Any requirement to "deliver" or "transfer" cash or Cash Collateral to
the Participating Funds or to "credit" a Transaction Account under this or
any other paragraph of this Agreement shall be made in immediately
available funds. If Repo Custodian is required to "deliver" or "transfer"
Securities to the Participating Funds under this or any other paragraph of
this Agreement, Repo Custodian shall take, or cause to be taken, the
following actions to perfect the Participating Funds' interest in such
Securities as an outright purchaser: (i) in the case of certificated
securities and instruments held by Seller, by physical delivery of the
share certificates or other instruments representing the Securities and by
physical segregation of such certificates or instruments from the Repo
Custodian's other assets in a manner indicating that the Securities are
being held for the Participating Funds (such securities and instruments to
be delivered in form suitable for transfer or accompanied by duly executed
instruments of transfer or assignment in blank and accompanied by such
other documentation as the Participating Funds may request), (ii) in the
case of Securities held in a customer only account in a clearing agency or
federal book-entry system authorized for use by the Funds and meeting the
requirements of Rule 17f-4 under the Investment Company Act of 1940, as
amended (the "1940 Act") (such authorized agency or system being referred
to herein as a "Securities System"), by appropriate entry on the books and
records of Repo Custodian identifying the Securities as belonging to the
Participating Funds, or (iii) in the case of Securities held in Repo
Custodian's own account in a Securities System, by transfer to a customer
only account in the Securities System and by appropriate entry on the books
and records of Repo Custodian identifying such Securities as belonging to
the Participating Funds; provided, further, that Repo Custodian shall
confirm to the Participating Funds the identity of the Securities
transferred or delivered. Acceptance of a "due bill", "trust receipt" or
similar receipt or notification of segregation issued by a third party with
respect to Securities held by such third party shall not constitute good
delivery of Securities to Repo Custodian for purposes of this Agreement or
the Master Agreement and shall expressly violate the terms of this
Agreement and the Master Agreement. The Funds shall identify by notice to
Repo Custodian and Seller those agencies or systems which have been
approved by the Funds for use under this Agreement and the Master
Agreement. The Funds hereby notify Repo Custodian and Seller that the
following agencies and systems have been approved by the Funds for use
under this Agreement and the Master Agreement, until such time as Repo
Custodian and Seller shall have been notified by the Funds to the contrary:
(i) Participants Trust Company; (ii) The Depository Trust Company; and
(iii) any book-entry system as provided in (A) Subpart O of Treasury
Circular No. 300, 31 CFR 306.115, (B) Subpart B of Treasury Circular Public
Debt Series No. 27-76, 31 CFR 350.2, or (C) the book-entry regulations of
federal agencies substantially in the form of 31 CFR 306.115.
4. Repurchase Transactions.
(a) Repo Custodian shall make all credits and debits to the Transaction
Account and effect the transfer of Securities to or from the Participating
Funds upon proper instructions received from the Participating Funds, or
the Custodian on behalf of the Participating Funds, and shall make all
credits and debits to the Seller Account and effect the transfer of
Securities to or from the Seller upon proper instructions received from
Seller. In the event that Repo Custodian receives conflicting proper
instructions from Seller and the Participating Funds, or the Custodian on
behalf of the Participating Funds, Repo Custodian shall follow the
Participating Funds' or the Custodian's proper instructions. The
Participating Funds shall give Repo Custodian only such instructions as
shall be permitted by the Master Agreement. Notwithstanding the preceding
sentence, the Participating Funds, or the Custodian on behalf of the
Participating Funds, may from time to time instruct Repo Custodian to
transfer cash from the Transaction Account to Custodian.
(b) (i) Whenever on any Banking Day one or more Funds and Seller agree to
enter into a repurchase transaction, Seller and the Participating Funds, or
the Custodian on behalf of the Participating Funds, will give Repo
Custodian proper instructions by telephone or otherwise on the Sale Date,
specifying the Transaction Category, Repurchase Date, Sale Price,
Repurchase Price or the applicable Pricing Rate and the Margin Percentage
for each such repurchase transaction.
(ii) In the case of repurchase transactions in which the Repurchase Date
is the Banking Day next following the Sale Date (x) the Participating Funds
may increase or decrease the Sale Price for any such repurchase transaction
by no more than 10% of the initial Sale Price by causing to be delivered
further proper instructions by telephone or otherwise to Repo Custodian
prior to the close of business on the Sale Date and (y) Seller and the
Participating Funds may by mutual consent agree to increase or decrease the
Sale Price by more than 10% of the initial Sale Price by causing to be
provided further proper instructions to Repo Custodian by the close of
business on the Sale Date. In any event, Repo Custodian shall not be
responsible for determining whether any such increase or decrease of the
Sale Price exceeds the 10% limitation.
(c) Seller will take such actions as are necessary to ensure that on the
Sale Date the aggregate Market Value of all Securities held by Repo
Custodian for Seller and cash in the Seller Account equals or exceeds the
Margin Percentage of the Sale Price. Seller shall give Repo Custodian
proper instructions specifying with respect to each of the Securities which
is to be the subject of a repurchase transaction (a) the name of the issuer
and the title of the Securities, and (b) the Market Value of such
Securities. Such instructions shall constitute Seller's instructions to
Repo Custodian to transfer the Securities to the Participating Funds and/or
Cash Collateral from the Seller Account to the Transaction Account.
(d) Prior to the close of business on the Sale Date, the Participating
Funds shall transfer to, or maintain on deposit with, Repo Custodian in the
Transaction Account immediately available funds in an amount equal to the
Sale Price with respect to a particular repurchase transaction.
(e) Prior to the close of business on the Sale Date, Repo Custodian shall
transfer Securities from Seller to the Participating Funds and/or cash held
in the Seller Account to the Transaction Account and shall transfer to the
Seller Account immediately available funds from the Transaction Account in
accordance with the following provisions:
(i) Repo Custodian shall determine that all securities to be transferred
by Seller to the Participating Funds are Eligible Securities. Any
securities which are not Eligible Securities for a particular repurchase
transaction hereunder shall not be included in the calculations set forth
below and shall not be transferred to the Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value of the
Securities and cash, if any, to be so transferred.
(iii) Repo Custodian shall notify Seller in the event that the aggregate
Market Value of Securities and cash, if any, applicable to the repurchase
transaction is less than the Margin Percentage of the Sale Price and Seller
shall transfer, by the close of business on the Sale Date, to Repo
Custodian additional Securities and/or cash in the amount of such
deficiency. If Seller does not, by the close of business on the Sale Date,
transfer additional Securities and/or cash, the Market Value of which
equals or exceeds such deficiency, Repo Custodian may, at its option,
without notice to Seller, advance the amount of such deficiency to Seller
in order to effectuate the repurchase transaction. It is expressly agreed
that Repo Custodian is not obligated to make an advance to Seller to enable
it to complete any repurchase transaction.
(iv) Subject to the provisions of Subparagraph (v) below, Repo Custodian
shall cause the Securities applicable to the repurchase transaction
received from Seller to be transferred to the Participating Funds and shall
cause any cash received from Seller to be transferred to the Transaction
Account, against transfer of the Sale Price from the Transaction Account to
the Seller Account, such transfers of Securities and/or cash and funds to
occur simultaneously on a delivery versus payment basis.
(v) Notwithstanding anything to the contrary, if, for any repurchase
transaction, the amount of immediately available funds in the Transaction
Account is less than the agreed upon Sale Price in connection with the
repurchase transaction immediately prior to effectuating such repurchase
transaction, or if the aggregate Market Value of the Securities and cash,
if any, applicable to such repurchase transaction is less than the Sale
Price multiplied by the Margin Percentage immediately prior to effectuating
such repurchase transaction, Repo Custodian shall effect the repurchase
transaction to the best of its ability by transferring Securities from
Seller to the Participating Funds and/or cash from the Seller Account to
the Transaction Account with an aggregate Market Value equal to the lesser
of (x) the amount of immediately available funds in the Transaction Account
multiplied by the Margin Percentage and (y) the aggregate Market Value of
the Securities available for transfer from Seller to the Participating
Funds and cash, if any, in the Seller Account, against the transfer of
immediately available funds from the Transaction Account to the Seller
Account in an amount equal to the aggregate Market Value of the Securities
and/or cash to be transferred divided by the Margin Percentage; provided,
however, that in either such event Repo Custodian shall have the right not
to transfer to the Participating Funds such Securities and not to transfer
such cash, if any, to the Transaction Account and not to transfer from the
designated Transaction Account such funds as Repo Custodian determines, in
its sole discretion, will not be the subject of a repurchase transaction.
The actions of Repo Custodian pursuant to this subparagraph (e)(v) shall
not affect the obligations and liabilities of the parties to each other
pursuant to the Master Agreement with regard to such repurchase
transaction.
(f) In the event that on a Banking Day Seller desires to substitute
Securities applicable to such repurchase transaction with Eligible
Securities and/or Cash Collateral (to the extent provided in the Master
Agreement), Repo Custodian shall perform such substitution in accordance
with the following provisions:
(i) Repo Custodian shall determine that all securities to be transferred
to the Participating Funds are Eligible Securities. Any securities which
are not eligible for repurchase transactions hereunder shall not be
included in the calculations set forth below and shall not be transferred
to the Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value of the
Eligible Securities and/or Cash Collateral to be transferred. Repo
Custodian shall not make any substitution if, at the time of substitution,
the aggregate Market Value of all Securities and any Cash Collateral
applicable to such repurchase transaction immediately after such
substitution would be less than the Margin Percentage of the Repurchase
Price (calculated as if the Repurchase Date were the date of substitution).
(iii) Repo Custodian shall then deliver to the Seller, subject to the
qualifications set forth above, the Securities to be substituted against
the delivery by Repo Custodian of substitute Eligible Securities to the
Participating Funds and/or the crediting of the Transaction Account with
Cash Collateral.
(iv) In the event Seller has caused Repo Custodian to credit the
Transaction Account with Cash Collateral in lieu of substitute Eligible
Securities, and has failed to deliver Eligible Securities against such Cash
Collateral not later than the close of business on such Banking Day in
accordance with the terms of the Master Agreement, Repo Custodian shall
promptly, but in no event later than 10:00 a.m. the following Banking Day,
notify the Participating Funds and Seller of such failure.
(g) With respect to each repurchase transaction, at 10:00 a.m. New York
time, or at such other time as specified in proper instructions of the
Participating Funds (or the Custodian on behalf of the Participating Funds)
on the Repurchase Date, Repo Custodian shall debit the Seller Account and
credit the Transaction Account in the amount of the Repurchase Price and
shall transfer Securities from the Participating Funds to the Seller and
Cash Collateral, if any, from the Transaction Account to the Seller Account
in accordance with the following provisions:
(i) If the amount of available funds in the Seller Account equals or
exceeds the Repurchase Price, Repo Custodian shall debit the Seller Account
and credit the Transaction Account in the amount of the Repurchase Price
and shall transfer all Securities applicable to such repurchase transaction
from the Participating Funds to the Seller and debit the Transaction
Account and credit the Seller Account in the amount of any Cash Collateral
applicable to such repurchase transaction.
(ii) If the amount of available funds in the Seller Account is less than
the Repurchase Price, then Repo Custodian shall notify the Seller of the
amount of the deficiency and Seller shall promptly cause such amount to be
transferred to the Seller Account. If Seller fails to cause the transfer
of the entire amount of the deficiency to the Seller Account, then Repo
Custodian may, at its option and without notice to Seller, advance to
Seller the amount of such remaining deficiency. It is expressly agreed
that Repo Custodian is not obligated to make any advance to Seller. If,
following such transfer and/or advance, the amount of available funds in
the Seller Account equals or exceeds the Repurchase Price then Repo
Custodian shall debit the Seller Account and credit the Transaction Account
in the amount of the Repurchase Price and shall transfer from the
Participating Funds to the Seller all Securities applicable to such
repurchase transaction and debit the Transaction Account and credit the
Seller Account in the amount of any Cash Collateral applicable to such
repurchase transaction.
(iii) If the Seller fails to cause the transfer of the entire amount of
the deficiency, as required by (ii) above, and Repo Custodian fails to
advance to Seller an amount sufficient to eliminate the entire deficiency,
then Repo Custodian shall debit the Seller Account in the amount of all
immediately available funds designated by Seller as applicable to the
repurchase transaction and credit the Transaction Account in such amount
(such amount being referred to as the "Partial Payment") and shall transfer
Securities from the Participating Funds to the Seller such that the
aggregate Market Value of all remaining Securities and Cash Collateral in
the Transaction Account with respect to such repurchase transaction shall
at least equal the difference between Margin Percentage of the Repurchase
Price and the Partial Payment.
5. Payments on Securities. Repo Custodian shall credit to the Seller
Account as soon as received, all principal, interest and other sums paid by
or on behalf of the issuer in respect of the Securities and collected by
Repo Custodian, except as otherwise provided in Paragraph 8 of the Master
Agreement.
6. Daily Statement. On each Banking Day on which any Participating Funds
have an outstanding repurchase transaction, Repo Custodian shall deliver by
facsimile to Custodian and to the Participating Funds a statement
identifying the Securities held by Repo Custodian with respect to such
repurchase transaction and the cash and Cash Collateral, if any, held by
Repo Custodian in the Transaction Account, including a statement of the
then current Market Value of such Securities and the amounts, if any,
credited to the Transaction Account as of the close of trading on the
previous Banking Day. Repo Custodian shall also deliver to Custodian and
the Participating Funds such additional statements as the Participating
Funds may reasonably request.
7. Valuation.
(a) Repo Custodian shall confirm the Market Value of Securities and the
amount of Cash Collateral, if any (i) on the Sale Date prior to
transferring the Sale Price out of the Transaction Account to the Seller
Account against the receipt from Seller of the Securities and Cash
Collateral, if any, and (ii) on each Banking Day on which such repurchase
transaction is outstanding. If on any Banking Day the aggregate Market
Value of the Securities and Cash Collateral with respect to any repurchase
transaction is less than the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Banking Day) for such
transaction, Repo Custodian shall promptly, but in any case no later than
10:00 a.m. the following Banking Day, notify Seller. If on any Banking Day
the aggregate market value of the Securities and Cash Collateral with
respect to any repurchase transaction is less than the Margin Percentage of
the Repurchase Price (calculated as if the Repurchase Date were such
Banking Day) for such transaction, and Seller fails to deliver additional
Eligible Securities applicable to such repurchase transaction or an
additional amount of Cash Collateral by the close of business on such
Banking Day such that the aggregate market value of the Securities and Cash
Collateral at least equals the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Banking Day), Repo
Custodian shall promptly, but in any event no later than 10:00 a.m. the
following Banking Day, notify the Participating Funds of such failure. For
purposes of determining Seller's margin maintenance requirements on the
Sale Date for repurchase transactions in which the Repurchase Date is the
Banking Day immediately following the Sale Date, such aggregate market
value shall equal at least the Margin Percentage of the Sale Price.
(b) Repo Custodian shall determine the bid side portion of the Market
Value of the Securities by reference to the independent pricing services
("Pricing Services") set forth on Schedule B. It is understood and agreed
that Repo Custodian shall use the prices made available by the Pricing
Services on the Banking Day of such determination unless Seller and the
Participating Funds mutually agree that some other prices shall be used and
so notify Repo Custodian by proper instructions of the sum of the prices of
all such Securities priced in such different manner. In the event that
Repo Custodian is unable to obtain a valuation of any Securities from the
Pricing Services, Repo Custodian shall request a bid quotation from a
broker's broker or a broker dealer, set forth in Schedule B, other than
Seller. In the event Repo Custodian is unable to obtain a bid quotation
for any Securities from such a broker's broker or a broker dealer, Repo
Custodian (i) shall not include any such Securities in the determination of
whether the aggregate Market Value of the Securities and any Cash
Collateral equals at least the Margin Percentage of the Repurchase Price
and (ii) shall redeliver such Securities to Seller if the Market Value of
all other Securities and any Cash Collateral with respect to such
repurchase transaction equals at least the Margin Percentage of the
Repurchase Price (calculated as if the Repurchase Date were such Banking
Day). The Repo Custodian may rely on prices quoted by Pricing Services,
broker's brokers or broker dealers, except Seller, as set forth in Schedule
B.
(c) (i) If, on any Banking Day, the aggregate Market Value of the
Securities and any Cash Collateral with respect to a repurchase transaction
is less than the Margin Percentage of the Repurchase Price (calculated as
if the Repurchase Date were such Banking Day) applicable to such repurchase
transaction, Repo Custodian shall deliver to the Participating Funds an
amount of additional Eligible Securities applicable to such repurchase
transaction and/or debit the Seller Account and credit the Transaction
Account with an additional amount of Cash Collateral, such that the
aggregate Market Value of all Securities and any Cash Collateral with
respect to such repurchase transaction shall equal at least the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase Date
were such Banking Day) applicable to such repurchase transaction; except
that, for purposes of determining Seller's margin maintenance requirements
on the Sale Date for repurchase transactions in which the Repurchase Date
is the Banking Day immediately following the Sale Date, such aggregate
market value shall equal at least the Margin Percentage of the Sale Price.
(ii) If, on any Banking Day, the aggregate Market Value of the Securities
and any Cash Collateral with respect to a repurchase transaction exceeds
the Margin Percentage of the Repurchase Price (calculated as if the
Repurchase Date were such Banking Day) applicable to such repurchase
transaction, Repo Custodian shall return to the Seller all or a portion of
such Securities or Cash Collateral, if any; provided that the Market Value
of the remaining Securities and any Cash Collateral with respect to the
repurchase transaction shall be at least equal to the Margin Percentage of
the Repurchase Price (calculated as if the Repurchase Date were such
Banking Day) applicable to such repurchase transaction. At any time and
from time to time with respect to any repurchase transaction, if authorized
by the Participating Funds, or the Custodian on behalf of the Participating
Funds, the Repo Custodian shall debit the Transaction Account by an amount
of Cash Collateral and credit the Seller Account by the same amount of Cash
Collateral against simultaneous delivery from Seller to the Participating
Funds of Eligible Securities applicable to such repurchase transaction with
a Market Value at least equal to the amount of Cash Collateral credited and
debited.
8. Authorized Persons. Schedule C hereto sets forth those persons who are
authorized to act for Repo Custodian, Custodian, Seller and the Funds,
respectively, under this Agreement.
9. Proper Instructions. Proper instructions shall mean a tested telex,
facsimile, a written request, direction, instruction or certification
signed or initialed by or on behalf of the party giving the instructions by
one or more authorized persons (as provided in Paragraph 8); provided,
however, that no instructions directing the delivery of Securities or the
payment of funds to any individual who is an authorized signatory of
Custodian or Repo Custodian shall be signed by that individual.
Telephonic, other oral or electro-mechanical or electronic instructions
(including the code which may be assigned by Repo Custodian to Custodian
from time to time) given by one of the above authorized persons shall also
be considered proper instructions if the party receiving such instructions
reasonably believes them to have been given by an authorized person with
respect to the transaction involved. Oral instructions will be confirmed
by tested telex, facsimile or in writing in the manner set forth above.
The Funds authorize Repo Custodian to tape record any and all telephonic or
other oral instructions given to Repo Custodian. Proper instructions may
relate to specific transactions or to types or classes of transactions, and
may be in the form of standing instructions.
10. Standard of Care.
(a) Repo Custodian shall be obligated to exercise reasonable care and
diligence in carrying out the provisions of this Agreement and the Master
Agreement and shall be liable to each of the Funds and Seller for any
expenses or damages to the Funds or Seller for breach of Repo Custodian's
standard of care in this Agreement, as further provided in this Paragraph.
Repo Custodian assumes responsibility for loss to any property held by it
pursuant to the provisions of this Agreement which is occasioned by the
negligence of, or conversion, misappropriation or theft by, Repo
Custodian's officers, employees and agents. Repo Custodian, at its option,
may insure itself against loss from any cause but shall be under no
obligation to obtain insurance directly for the benefit of the Funds. So
long as and to the extent that Repo Custodian exercises reasonable care and
diligence and acts without negligence, misfeasance or misconduct, Repo
Custodian shall not be liable to Seller or the Funds for (i) any action
taken or omitted in good faith in reliance upon proper instructions, (ii)
any action taken or omitted in good faith upon any notice, request,
certificate or other instrument reasonably believed by it to be genuine and
to be signed by the proper party or parties, (iii) any delay or failure to
act as may be required under this Agreement or under the Master Agreement
when such delay or failure is due to any act of God or war, (iv) the
actions or omissions of a Securities System, (v) the title, validity or
genuineness of any security received, delivered or held by it pursuant to
this Agreement or the Master Agreement, (vi) the legality of the purchase
or sale of any Securities by or to the Participating Funds or Seller or the
propriety of the amount for which the same are purchased or sold (except to
the extent of Repo Custodian's obligations hereunder to determine whether
securities are Eligible Securities and to calculate the Market Value of
Securities and any Cash Collateral), (vii) the due authority of any person
listed on Schedule C to act on behalf of Custodian, Seller or the Funds, as
the case may be, with respect to this Agreement or (viii) the errors of the
Pricing Services, broker's brokers or broker dealers set forth in Schedule
B.
(b) Repo Custodian shall not be liable to Seller or the Funds for, or
considered to be the custodian of, any Eligible Securities or any money to
be used in a repurchase transaction, whether or not such money is
represented by any check, draft, or other instrument for the payment of
money, until the Eligible Securities have been delivered in accordance with
Paragraph 3 or until Repo Custodian actually receives and collects such
money on behalf of Seller or the Funds directly or by the final crediting
of the Seller Account or a Transaction Account through the Securities
System, except that this Paragraph 10(b) shall not be deemed to limit the
liability of Repo Custodian to Seller or the Funds if the non-delivery of
such Eligible Securities or the failure to receive and collect such money
results from the breach by Repo Custodian of its obligations under this
Agreement or the Master Agreement.
(c) Repo Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it are such as
properly may be held by the Participating Funds; provided that
notwithstanding anything to the contrary herein, Repo Custodian shall be
obligated to act in accordance with the guidelines and proper instructions
of the Participating Funds, or the Custodian on behalf of the Participating
Funds, with respect to the types of Eligible Securities and the issuers of
such Eligible Securities that may be used in specific repurchase
transactions.
(d) Repo Custodian promptly shall notify the Fund Agent and the Custodian
if Securities held by Repo Custodian are in default or if payment on any
Securities has been refused after due demand and presentation and Repo
Custodian shall take action to effect collection of any such amounts upon
the proper instructions of the Participating Funds, or the Custodian on
behalf of the Participating Funds, and assurances satisfactory to it that
it will be reimbursed for its costs and expenses in connection with any
such action.
(e) Repo Custodian shall have no duties, other than such duties as are
necessary to effectuate repurchase transactions in accordance with this
Agreement and the Master Agreement within the standard of care set forth in
Paragraph 10(a) above and in a commercially reasonable manner.
11. Representations and Additional Covenants of Repo Custodian.
(a) Repo Custodian represents and warrants that (i) it is duly authorized
to execute and deliver this Agreement and to perform its obligations
hereunder and has taken all necessary action to authorize such execution,
delivery and performance, (ii) the execution, delivery and performance of
this Agreement do not and will not violate any ordinance, declaration of
trust, partnership agreement, articles of incorporation, charter, rule or
statute applicable to it or any agreement by which it is bound or by which
any of its assets are affected, (iii) the person executing this Agreement
on its behalf is duly and properly authorized to do so, (iv) it has (and
will maintain) a copy of this Agreement and evidence of its authorization
in its official books and records, and (v) this Agreement has been executed
by one of its duly authorized officers at the level of Vice President or
higher.
(b) Repo Custodian further represents and warrants that (i) it has not
pledged, encumbered, hypothecated, transferred, disposed of, or otherwise
granted, any third party an interest in any Securities, (ii) it does not
have any security interest, lien or right of setoff in the Securities, and
(iii) it has not been notified by any third party, in its capacity as Repo
Custodian, custodian bank or clearing bank, of the existence of any lien,
claim, charge or encumbrance with respect to any Securities that are the
subject of such repurchase transaction. Repo Custodian agrees that (i) it
will not pledge, encumber, hypothecate, transfer, dispose of, or otherwise
grant, any third party an interest in any Securities, (ii) it will not
acquire any security interest, lien or right of setoff in the Securities,
and (iii) it will promptly notify the Fund Agent, if, during the term of
any outstanding repurchase transaction, it is notified by any third party,
in its capacity as Repo Custodian, custodian bank or clearing bank, of the
Participating Funds or Seller, of the existence of any lien, claim, charge
or encumbrance with respect to any Securities that are the subject of such
repurchase transaction.
12. Indemnification.
(a) Notwithstanding the Participating Fund's obligation to the Repo
Custodian under Paragraph 12(b) below, so long as and to the extent that
Repo Custodian is in the exercise of reasonable care and diligence and acts
without negligence, misfeasance or misconduct, Seller will indemnify Repo
Custodian and hold it harmless against any and all losses, claims, damages,
liabilities or actions to which it may become subject, and reimburse it for
any expenses (including attorneys' fees and expenses) incurred by it in
connection therewith, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon or in any way related to this
Agreement, the Master Agreement or those arrangements. Without limiting
the generality of the foregoing indemnification, Repo Custodian shall be
indemnified by Seller for all costs and expenses, including attorneys'
fees, for its successful defense against claims that Repo Custodian
breached its standard of care and was negligent or engaged in misfeasance
or misconduct.
(b) So long as and to the extent that Repo Custodian is in the exercise of
reasonable care and diligence and acts without negligence, misconduct or
misfeasance, the Participating Funds will indemnify Repo Custodian and hold
it harmless against any and all losses, claims, damages, liabilities or
actions to which it may become subject, and reimburse it for any expenses
(including attorneys' fees and expenses) incurred by it in connection
therewith, insofar as such losses, claims, damages, liabilities or actions
result from the negligence, misconduct or misfeasance of the Participating
Funds under this Agreement.
13. Rights and Remedies. The rights and remedies conferred upon the
parties hereto shall be cumulative, and the exercise or waiver of any
thereof shall not preclude or inhibit the exercise of any additional rights
and remedies.
14. Modification or Amendment. Except as otherwise provided in this
Paragraph 14, no modification, waiver or amendment of this Agreement shall
be binding unless in writing and executed by the parties hereto. Schedule
A, listing the Funds, may be amended from time to time to add or delete
Funds by the Funds (i) delivering an executed copy of an addendum to
Schedule A to Seller and Repo Custodian, and (ii) amending Schedule A to
the Master Agreement in accordance with the provisions therein. The
amendment of Schedule A as provided above shall constitute appointment of
Repo Custodian as a custodian for such Fund. Schedule B may be amended
from time to time by an instrument in writing, or counterpart thereof,
executed by Repo Custodian, Seller and the Funds. Schedule C may be
amended from time to time to change an authorized person of: (i) the
Funds, by written notice to Repo Custodian and Seller by Ms. Sarah Zenoble
or the Treasurer of the Funds (or such persons who may be authorized from
time to time in writing by Ms. Zenoble or the President or Treasurer of
Fidelity Management and Research Company to trade on behalf of Fidelity's
taxable money market funds); (ii) Seller, by written notice to Repo
Custodian and the Funds by any Vice President of Seller; (iii) Repo
Custodian, by written notice to Seller, Custodian and the Funds by any Vice
President of Repo Custodian; and (iv) Custodian, by written notice to Repo
Custodian by any Vice President of Custodian. Schedule D may be amended
from time to time by any party hereto by delivery of written notice to the
other parties hereto. Repo Custodian shall receive notice of any amendment
to the Master Agreement at the address set forth in Schedule D hereto; and,
if such amendment would have a material adverse effect on the rights of, or
would materially increase the obligations of Repo Custodian under this
Agreement, any such amendment shall also require the consent of Repo
Custodian. Any such amendment shall be deemed not to be material if Repo
Custodian fails to object in writing within 21 days after receipt of notice
thereof. No amendment to this Agreement shall affect the rights or
obligations of any Fund with respect to any outstanding repurchase
transaction entered into under this Agreement and the Master Agreement
prior to such amendment or with respect to any actions or omissions by any
party hereto prior to such amendment. In the event of conflict between
this Agreement and the Master Agreement, the Master Agreement shall
control.
15. Termination. This Agreement shall terminate forthwith upon
termination of the Master Agreement or may be terminated by any party
hereto on ten Banking Days' written notice to the other parties; provided,
however, that any such termination shall not affect any repurchase
transaction then outstanding or any rights or obligations under this
Agreement or the Master Agreement with respect to any actions or omissions
of any party hereto prior to termination. In the event of termination,
Repo Custodian will deliver any Securities, Cash Collateral or cash held by
it or any agent to Custodian or to such successor custodian or custodian or
subcustodian as the Participating Funds shall instruct.
16. Compensation. Seller agrees to pay Repo Custodian compensation for
the services to be rendered hereunder, based upon rates which shall be
agreed upon from time to time.
17. Notices. Except with respect to communications between Custodian and
the Funds which shall be governed by the custodian agreement or
subcustodian agreement between such parties, as the case may be, and except
as otherwise provided herein or as the parties to the Agreement shall from
time to time otherwise agree, all instructions, notices, reports and other
communications contemplated by this Agreement shall be given to the party
entitled to receive such notice at the telephone number and address listed
on Schedule D hereto.
18. Severability. If any provision of this Agreement is held to be
unenforceable as a matter of law, the other terms and provisions hereof
shall not be affected thereby and shall remain in full force and effect.
19. Binding Nature. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their successors and assignees;
provided that, no party hereto may assign this Agreement or any of the
rights or obligations hereunder without the prior written consent of the
other parties.
20. Headings. Section headings are for reference purposes only and shall
not be construed as a part of this Agreement.
21. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
22. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF.
23. Limitation of Liability. Seller is hereby expressly put on notice
that the Declarations of Trust or the Certificates and Agreements of
Limited Partnership, as the case may be, of each Participating Fund contain
a limitation of liability provision pursuant to which the obligations
assumed by such Participating Fund hereunder shall be limited in all cases
to such Participating Fund and its assets or, in the case of a series Fund,
to the assets of that series only, and neither Seller nor its respective
agents or assigns shall seek satisfaction of any such obligation from the
officers, employees, agents, directors, trustees, shareholders or partners
of any such Participating Fund or series.
24. Rights and Obligations of Each Fund. The rights and obligations set
forth in this Agreement with respect to each repurchase transaction shall
accrue only to the Participating Funds in accordance with their respective
interests therein. No other Fund shall receive any rights or have any
liabilities arising from any action or inaction of any Participating Fund
under this Agreement with respect to such repurchase transaction.
25. General Provisions. This Agreement supersedes any other custodian
agreement by and among Seller, the Funds, and Repo Custodian concerning
repurchase transactions effected through the Joint Trading Account. It is
understood and agreed that time is of the essence with respect to the
performance of each party's respective obligations hereunder.
26. Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
(a) In the case of transactions in which one of the parties is a broker or
dealer registered with the SEC under Section 15 of the Exchange Act, the
Securities Investor Protection Corporation has taken the position that the
provisions of the Securities Investor Protection Act of 1970 (the "SIPA")
do not protect the other party with respect to any transaction hereunder;
and
(b) In the case of transactions in which one of the parties is a
government securities broker or a government securities dealer registered
with the SEC under Section 15C of the Exchange Act, SIPA will not provide
protection to the other party with respect to any transaction hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE BANK OF NEW YORK
Dated: By: /s/ Ken Rindos
Title: Ken Rindos
Senior Vice President
J.P. MORGAN SECURITIES INC.
Dated: By: /s/ Mindy R. Connelly
Title: Mindy R. Connelly
Vice President
FIDELITY INVESTMENT COMPANIES LISTED ON SCHEDULE A-1 HERETO AND ACCOUNTS
LISTED ON SCHEDULE A-3 HERETO
Dated: By: /s/ Kenneth A. Rathgeber
Name: Kenneth A. Rathgeber
Title: Treasurer of the Fidelity Investment Companies listed on Schedule
A-1 and Vice President of Fidelity Management & Research Company
FIDELITY INVESTMENT COMPANIES LISTED ON SCHEDULE A-2 HERETO
Dated: By: /s/ David J. Saul
Name: David J. Saul
Title: Director of the Fidelity International (Bermuda) Funds Limited,
on behalf of the Funds listed on Schedule A-2
ACCOUNTS LISTED ON SCHEDULE A-4 HERETO
By: FIDELITY MANAGEMENT TRUST COMPANY
Dated: By: /s/ John P. O'Reilly, Jr.
Name: John P. O'Reilly, Jr.
Title: Executive Vice President
SCHEDULE A-1
DAILY MONEY FUND
Capital Reserves: Money Market Portfolio
Capital Reserves U.S. Government Portfolio
Fidelity U.S. Treasury Income Portfolio
Money Market Portfolio
U.S. Treasury Portfolio
FIDELITY ADVISOR ANNUITY FUNDS
Fidelity Advisor Annuity Government Investment Fund
Fidelity Advisor Annuity Growth Opportunities Fund
Fidelity Advisor Annuity High Yield Fund
Fidelity Advisor Annuity Income & Growth Fund
Fidelity Advisor Annuity Money Market Fund
Fidelity Advisor Annuity Overseas Fund
FIDELITY ADVISOR SERIES I
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Institutional Equity Portfolio Growth
Fidelity Advisor Large Cap Fund
Fidelity Advisor Mid Cap Fund
FIDELITY ADVISOR SERIES II
Fidelity Advisor Government Investment Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Income & Growth Fund
Fidelity Advisor Short Fixed-Income Fund
FIDELITY ADVISOR SERIES III
Fidelity Advisor Equity Income Fund
FIDELITY ADVISOR SERIES IV
Fidelity Advisor Intermediate Term Bond Fund
Fidelity Real Estate High Income Fund
Fidelity Institutional Short-Intermediate Government Fund
FIDELITY ADVISOR SERIES V
Fidelity Advisor Global Resources Fund
FIDELITY ADVISOR SERIES VII
Fidelity Advisor Overseas Fund
FIDELITY ADVISOR SERIES VIII
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Strategic Income Fund
Fidelity Boston Street Trust
FIDELITY BOSTON STREET TRUST
Fidelity Target Timeline 1999
Fidelity Target Timeline 2001
Fidelity Target Timeline 2003
FIDELITY CAPITAL TRUST
Fidelity Capital Appreciation Fund
Fidelity Disciplined Equity Fund
Fidelity Stock Selector
Fidelity Value Fund
FIDELITY CHARLES STREET TRUST
Fidelity Asset Manager
Fidelity Asset Manager: Growth
Fidelity Asset Manager: Income
Fidelity Short-Intermediate Government Fund
Spartan Investment-Grade Bond Fund
Spartan Short-Term Income Fund
FIDELITY COMMONWEALTH TRUST
Fidelity Intermediate Bond Fund
Fidelity Market Index Fund
Fidelity Small Cap Stock Fund
Fidelity Large Cap Stock Fund
FIDELITY CONGRESS STREET FUND
FIDELITY CONTRAFUND
FIDELITY DESTINY PORTFOLIOS
Destiny I
Destiny II
FIDELITY DEUTSCHE MARK PERFORMANCE PORTFOLIO, L.P.
FIDELITY DEVONSHIRE TRUST
Fidelity Equity-Income Fund
Fidelity Mid-Cap Stock Fund
Fidelity Real Estate Investment Portfolio
Fidelity Utilities Fund
Spartan Long-Term Government Bond Fund
FIDELITY EXCHANGE FUND
FIDELITY FINANCIAL TRUST
Fidelity Convertible Securities Fund
Fidelity Equity-Income II Fund
Fidelity Retirement Growth Fund
FIDELITY FIXED-INCOME TRUST
Fidelity Investment Grade Bond Fund
Fidelity Short-Term Bond Portfolio
Spartan Government Income Fund
Spartan High Income Fund
Spartan Short-Intermediate Government Fund
FIDELITY GOVERNMENT SECURITIES FUND
FIDELITY HASTINGS STREET TRUST
Fidelity Fifty
Fidelity Fund
FIDELITY HEREFORD STREET TRUST
Spartan Money Market Fund
Spartan U.S. Government Money Market Fund
Spartan U.S. Treasury Money Market Fund
FIDELITY ADVISOR KOREA FUND, INC.
FIDELITY EMERGING ASIA FUND, INC.
FIDELITY INCOME FUND
Fidelity Ginnie Mae Portfolio
Fidelity Mortgage Securities Portfolio
Spartan Limited Maturity Government Fund
FIDELITY INSTITUTIONAL CASH PORTFOLIOS
Domestic Money Market Portfolio
Money Market Portfolio
U.S. Government Portfolio
U.S. Treasury Portfolio
FIDELITY INSTITUTIONAL INVESTORS TRUST
State and Local Asset Management Series: Government Money Market
Portfolio
FIDELITY INSTITUTIONAL TRUST
Fidelity U.S. Bond Index Portfolio
Fidelity U.S. Equity Index Portfolio
FIDELITY INVESTMENT TRUST
Fidelity Canada Fund
Fidelity Diversified International Fund
Fidelity Emerging Markets Fund
Fidelity Europe Capital Appreciation Fund
Fidelity Europe Fund
Fidelity France Fund
Fidelity Germany Fund
Fidelity Global Bond Fund
Fidelity Hong Kong & China Fund
Fidelity International Growth & Income Fund
FIDELITY INVESTMENT TRUST (CONT.)
Fidelity International Value Fund
Fidelity Japan Fund
Fidelity Japan Small Companies Fund
Fidelity Latin America fund
Fidelity New Markets Income Fund
Fidelity Nordic Fund
Fidelity Overseas Fund
Fidelity Pacific Basin Fund
Fidelity Short-Term World Income Fund
Fidelity Southeast Asia Fund
Fidelity United Kingdom Fund
Fidelity Worldwide Fund
FIDELITY MAGELLAN FUND
FIDELITY MONEY MARKET TRUST
Rated Money Market
Retirement Government Money Market Portfolio
Retirement Money Market Portfolio
FIDELITY MT. VERNON STREET TRUST
Fidelity Emerging Growth Fund
Fidelity Growth Company Fund
Fidelity New Millennium Fund
FIDELITY PHILLIPS STREET TRUST
Fidelity Cash Reserves
Fidelity U.S. Government Reserves
FIDELITY PURITAN TRUST
Fidelity Balanced Fund
Fidelity Global Balanced Fund
Fidelity Low-Priced Stock Fund
Fidelity Puritan Fund
FIDELITY SCHOOL STREET TRUST
Spartan Bond Strategist
FIDELITY SECURITIES FUND
Fidelity Blue Chip Growth Fund
Fidelity Dividend Growth Fund
Fidelity Growth & Income Portfolio
Fidelity OTC Portfolio
FIDELITY SELECT PORTFOLIOS
Air Transportation Portfolio
American Gold Portfolio
Automotive Portfolio
Biotechnology Portfolio
Brokerage and Investment Management Portfolio
Chemicals Portfolio
Computers Portfolio
Construction and Housing Portfolio
Consumer Products Portfolio
Defense and Aerospace Portfolio
Developing Communications Portfolio
Electronics Portfolio
Energy Portfolio
Energy Service, Portfolio
Environmental Services Portfolio
Financial Services Portfolio
Food and Agriculture, Portfolio
Health Care Portfolio
Home Finance Portfolio
Industrial Equipment Portfolio
Industrial Materials Portfolio
Insurance Portfolio
Leisure Portfolio
Medical Delivery Portfolio
Money Market Portfolio
Multimedia Portfolio
Natural Gas Portfolio
Paper and Forest Products Portfolio
Precious Metals and Minerals Portfolio
Regional Banks Portfolio
Retailing Portfolio
Software and Computer Services Portfolio
Technology Portfolio
Telecommunications Portfolio
Transportation Portfolio
Utilities Growth Portfolio
FIDELITY STERLING PERFORMANCE PORTFOLIO, L.P.
FIDELITY SUMMER STREET TRUST
Fidelity Capital & Income Fund
FIDELITY TREND FUND
FIDELITY UNION STREET TRUST
Fidelity Export Fund
Spartan Ginnie Mac Fund
FIDELITY UNION STREET TRUST II
Fidelity Daily Income Trust
Spartan World Money Market Fund
FIDELITY YEN PERFORMANCE PORTFOLIO, L.P.
NORTH CAROLINA CAPITAL MANAGEMENT TRUST
Cash Portfolio
Term Portfolio
VARIABLE INSURANCE PRODUCTS FUND
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Money Market Portfolio
Overseas Portfolio
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager: Growth Portfolio
Asset Manager Portfolio
Contrafund Portfolio
Index 500 Portfolio
Investment Grade Bond Portfolio
DIVIDEND FUNDING
REDEMPTION FUNDING
FIDELITY ADVISOR WORLD U.S. LARGE-CAP STOCK FUND (BERMUDA) LTD.
FIDELITY ADVISOR WORLD EUROPE FUND (BERMUDA) LTD.
FIDELITY ADVISOR WORLD SOUTHEAST ASIA FUND (BERMUDA) LTD.
FIDELITY ADVISOR WORLD U.S. LIMITED TERM BOND FUND (BERMUDA) LTD.
FIDELITY ADVISOR WORLD U.S. GOVERNMENT INVESTMENT FUND (BERMUDA) LTD.
FIDELITY ADVISOR WORLD U.S. TREASURY MONEY FUND (BERMUDA) LTD.
SCHEDULE A-2
SCHEDULE A-3
ACCOUNTS
Massachusetts Municipal Depository Trust
SCHEDULE A-4
ACCOUNTS
The Fidelity Group Trust for Employee Benefits Plans
SCHEDULE B
PRICING SOURCES
PRICING SERVICES
U.S. Government Securities Interactive Data Services or Mellon Data
Services (or any other pricing service mutually agreed upon by Seller and
the Funds)
GNMA - The Bond Buyer
FHLMC - The Bond Buyer
All other U.S. Government
and Agency Securities Interactive Data Services or Mellon Data Services
(or any other pricing service mutually agreed upon by Seller and the Funds)
BROKERS' BROKERS AND BROKER DEALERS
U.S. Government Securities - Any Primary Dealer
GNMA - Any Primary Broker-Dealer's bid rate for such security
FHLMC - Any Primary Broker-Dealer's bid rate for such security
All other U.S. Government and Agency Securities - Any Primary
Broker-Dealer's bid rate for such security
Prices shall be as of the business day of the date of determination or
the last quote available. The pricing services, Brokers' Brokers and
Broker Dealers may be changed from time to time by agreement of all the
parties.
SCHEDULE C
AUTHORIZED PERSONS
Repo Custodian
Ken Rindos
Kurt Woetzel
Custodian
Ken Rindos
Kurt Woetzel
Seller
Joseph P. Blauvelt
Michael B. Boyer
Robert E. Curry
Patrick Doyle
Frank Forgione
Edward J. Frederick
Christopher Juliano
Joseph Marrone
Thomas T. McGee
John S. Mehrtens
John A. Michielini
Allen Smith, II
The Funds
Barron, Leland C. Harlow, Katharyn M. Stehman, Burnell R.
Carbone, John M. Henning, Frederick L. Jr. Todd, Deborah
Curtis, Fritz Huyck, Timothy Todd, John J.
Duby, Robert K. Jamen, Jon Torres, Joseph E.
Egan, Dorothy T. Litterst, Robert Williams, Richard
Glocke, David Silver, Samuel Zenoble, Sarah
SCHEDULE D
NOTICES
If to Custodian: The Bank of New York
One Wall Street, 4th Floor
New York, NY 10286
Telephone: (212) 635-7947
Attention: Sherman Yu, Esq.
With a copy to the Fund Agent
If to Repo Custodian: The Bank of New York
One Wall Street, 4th Floor
New York, New York 10286
Telephone: (212) 635-4809
Attention: Ms. Kristin Smith
If to Seller: J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Telephone: (212) 483-2323
Attention: Middle Office Traders Support
If to any of the Funds: FMR Texas Inc.
400 East Las Colinas Blvd., CP9M
Irving, Texas 75039
Telephone: (214) 584-7800
Attention: Ms. Deborah R. Todd or
Mr. Samuel Silver
If to the Fund Agent: Fidelity Investments
[Name of Fund]
400 East Las Colinas Blvd., CP9E
Irving, Texas 75039
Telephone: (214) 584-4071
Attention: Mr. Mark Mufler
277282.c1
SCHEDULE 1
The following lists the additional counterparties to the Repo Custodian
Agreement for Joint Trading Account between The Bank of New York and the
Fidelity Funds:
BZW Government Securities, Inc.
CS First Boston Corp.
Daiwa Securities America, Inc.
Deutsche Bank Securities Corp.
Donaldson, Lufkin & Jenerette Securities Corp.
Fuji Securities, Inc.
Goldman Sachs & Co
Morgan Stanley & Co., Inc.
NationsBanc Capital Markets
Nikko Securities Co. International, Inc.
Nomura Securities International, Inc.
Prudential Securities, Inc.
Salomon Brothers, Inc.
Sanwa BJK Securities Co., LP
SBC Capital Markets, Inc.
Smith Barney, Inc.
FIDELITY GROUP
REPO CUSTODIAN AGREEMENT
FOR JOINT TRADING ACCOUNT
AGREEMENT dated as of November 13, 1995, among CHEMICAL BANK, a banking
corporation organized under the laws of the State of New York ("Repo
Custodian"), GREENWICH CAPITAL MARKETS, INC. ("Seller") and each of the
entities listed on Schedule A-1, A-2, A-3 and A-4 hereto acting on behalf
of itself or (i) in the case of a series company, on behalf of one or more
of its portfolios or series listed on Schedule A-1 or A-2 hereto, (ii) in
the case of the accounts listed on Schedule A-3 hereto, acting through
Fidelity Management & Research Company, and (iii) in the case of the
commingled or individual accounts listed on Schedule A-4 hereto, acting
through Fidelity Management Trust Company (collectively, the "Funds" and
each, a "Fund").
WITNESSETH
WHEREAS, each of the Funds has entered into a master repurchase agreement
dated as of November 13, 1995, (the "Master Agreement") with Seller
pursuant to which from time to time one or more of the Funds, as buyers,
and Seller, as seller, may enter into repurchase transactions effected
through one or more joint trading accounts (collectively, the "Joint
Trading Account") established and administered by one or more custodians of
the Funds identified on Schedule C hereto (each a "Custodian"); and,
WHEREAS, in each such repurchase transaction Seller will sell to such
Funds certain Securities (as hereinafter defined) selected from Eligible
Securities (as hereinafter defined) held by Repo Custodian , subject to an
agreement by Seller to repurchase such Securities; and
WHEREAS, Repo Custodian currently maintains a cash and securities account
(the "Seller Account") for Seller for the purpose of, among other things,
effecting repurchase transactions hereunder; and
WHEREAS, the Funds desire that the Repo Custodian serve as the custodian
for each of the Funds in connection with the repurchase transactions
effected hereunder, and that the Repo Custodian hold cash, Cash Collateral
(as hereinafter defined) and Securities for each of the Funds for the
purpose of effecting repurchase transactions hereunder.
NOW THEREFORE, the parties hereto hereby agree as follows:
1. Definitions.
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
(a) "Banking Day" shall mean any day on which the Funds, Seller Custodian,
Repo Custodian, and the Federal Reserve Banks where the Custodian and the
Repo Custodian are located, are each open for business.
(b) "Cash Collateral" shall mean all cash, denominated in U.S. Dollars,
credited by Repo Custodian to a Transaction Account pursuant to Paragraphs
3, 6, 8 or 9 of the Master Agreement.
(c) "Custodian" shall have the meaning set forth in the preamble of this
Agreement.
(d) "Eligible Securities" shall mean those securities which are identified
as permissible securities for a particular Transaction Category.
(e) "FICASH I Transaction" and "FICASH III Transaction" shall mean a
repurchase transaction in which the Repurchase Date is the Banking Day next
following the Sale Date and for which securities issued by the government
of the United States of America that are direct obligations of the
government of the United States of America shall constitute Eligible
Securities.
(f) "FICASH II Transaction" shall mean a repurchase transaction in which
the Repurchase Date is the Banking Day next following the Sale Date and for
which one or more of the following two categories of securities, as
specified by the Funds, shall constitute Eligible Securities: (x)
securities issued by the government of the United States of America that
are direct obligations of the government of the United States of America,
or (y) securities issued by or guaranteed as to principal and interest by
the government of the United States of America, or by its agencies and/or
instrumentalities, including, but not limited to, the Federal Home Loan
Bank, Federal Home Loan Mortgage Corp., Government National Mortgage
Association, Federal National Mortgage Association, Federal Farm Credit
Bank, Federal Intermediate Credit Bank, Banks for Cooperatives, and Federal
Land Banks.
(g) "FITERM I Transaction" and "FITERM III Transaction" shall mean a
repurchase transaction in which the Repurchase Date is a date fixed by
agreement between Seller and the Participating Funds which is not the
Banking Day next following the Sale Date, or if applicable, the date fixed
upon exercise of an Unconditional Resale Right (as hereinafter defined) by
the Participating Funds and for which securities issued by the government
of the United States of America that are direct obligations of the
government of the United States of America shall constitute Eligible
Securities.
(h) "FITERM II Transaction" shall mean a repurchase transaction in which
the Repurchase Date is a date fixed by agreement between Seller and the
Participating Funds which is not the Banking Day next following the Sale
Date, or, if applicable, the date fixed upon exercise of an Unconditional
Resale Right (as hereinafter defined) by the Participating Funds and for
which one or more of the following two categories of securities, as
specified by the Funds, shall constitute Eligible Securities: (x)
securities issued by the government of the United States of America that
are direct obligations of the government of the United States of America,
or (y) securities issued by or guaranteed as to principal and interest by
the government of the United States of America, or by its agencies and/or
instrumentalities, including, but not limited to, the Federal Home Loan
Bank, Federal Home Loan Mortgage Corp., Government National Mortgage
Association, Federal National Mortgage Association, Federal Farm Credit
Bank, Federal Intermediate Credit Bank, Banks for Cooperatives, and Federal
Land Banks.
(i) "Fund" shall have the meaning set forth in the preamble of this
Agreement.
(j) "Fund Agent" shall mean the agent for the Participating Funds
designated in Paragraph 18 of the Master Agreement.
(k) "Joint Trading Account" shall have the meaning set forth in the
preamble of this Agreement.
(l) "Margin Percentage" with respect to any repurchase transaction shall
be 102% or such other percentage as is agreed to by Seller and the
Participating Funds (except that in no event shall the Margin Percentage be
less than 100%).
(m) "Market Value" shall have the meaning set forth in Paragraph 4 of the
Master Agreement.
(n) "Master Agreement" shall have the meaning set forth in the preamble of
this Agreement.
(o) "1940 Act" shall mean have the meaning set forth in Paragraph 3(c) of
this Agreement.
(p) "Partial Payment" shall have the meaning set forth in Section 4(g) of
this Agreement.
(q) "Participating Funds" shall mean those Funds that are parties to a
particular repurchase transaction effected through the Joint Trading
Account.
(r) "Pricing Rate" shall mean the per annum percentage rate agreed to by
Seller and the Participating Funds for a particular repurchase transaction.
(s) "Pricing Services" shall have the meaning set forth in Paragraph 7 of
this Agreement.
(t) "Repo Custodian" shall have the meaning set forth in the preamble of
this Agreement.
(u) "Repurchase Date" shall mean the date fixed by agreement between
Seller and the Participating Funds on which the Seller is to repurchase
Securities and Cash Collateral, if any, from the Participating Funds and
the Participating Funds are to resell the Securities and Cash Collateral,
if any, including any date determined by application of the provisions of
Paragraphs 7(a) and 15 of the Master Agreement.
(v) "Repurchase Price" for each repurchase transaction shall mean the Sale
Price, plus an incremental amount determined by applying the Pricing Rate
to the Sale Price, calculated on the basis of a 360-day year and the number
of actual days elapsed from (and including) the Sale Date to (but
excluding) the Repurchase Date.
(w) "Sale Date" shall mean the Banking Day on which Securities and Cash
Collateral, if any, are to be sold to the Participating Funds by Seller
pursuant to a repurchase transaction hereunder.
(x) "Sale Price" shall mean the price agreed upon by the Participating
Funds and Seller at which the Securities and Cash Collateral, if any, are
to be sold to the Participating Funds by Seller.
(y) "Securities" shall mean all Eligible Securities delivered by Seller or
to be delivered by Seller to the Participating Funds pursuant to a
particular repurchase transaction and not yet repurchased hereunder,
together with all rights related thereto and all proceeds thereof.
(z) "Securities System" shall have the meaning set forth in Paragraph 3(c)
of this Agreement.
(aa) "Seller" shall have the meaning set forth in the preamble to this
Agreement.
(bb) "Seller Account" shall have the meaning set forth in the preamble of
this Agreement.
(cc) "Transaction Account" shall mean a cash account established and
maintained by Repo Custodian for the Funds to effect repurchase
transactions pursuant to the Master Agreement.
(dd) "Transaction Category" shall mean the particular type of repurchase
transaction effected hereunder, as determined with reference to the term of
the transaction and the categories of Securities that constitute Eligible
Securities therefor, which term shall include FICASH I Transactions, FICASH
II Transactions, FICASH III Transactions, FITERM I Transactions, FITERM II
Transactions, FITERM III Transactions, and such other transaction
categories as may from time to time be designated by the Funds by notice to
Seller, Custodian and Repo Custodian.
(ee) "Unconditional Resale Right" shall have the meaning set forth in
Paragraph 7(b) of the Master Agreement.
(ff) "Valuation Day" shall mean any day on which Repo Custodian is open
for business.
2. Appointment of Repo Custodian. Upon the terms and conditions set forth
in this Agreement, Repo Custodian is hereby appointed by the Funds to act
as the custodian for the Participating Funds to hold cash, Cash Collateral
and Securities for the purpose of effecting repurchase transactions for the
Participating Funds through the Joint Trading Account pursuant to the
Master Agreement. Repo Custodian hereby acknowledges the terms of the
Master Agreement between the Funds and Seller (attached as an Exhibit
hereto), as amended from time to time, and agrees to abide by the
provisions thereof to the extent such provisions relate to the
responsibilities and operations of Repo Custodian hereunder.
3. Maintenance of Transaction Accounts.
(a) Repo Custodian shall establish and maintain one or more Transaction
Accounts for the purpose of effecting repurchase transactions hereunder for
the Funds, in each case pursuant to the Master Agreement. From time to
time the Funds may cause Custodian, on behalf of the Funds, to deposit
Securities and cash with Repo Custodian in the designated Transaction
Account, in each case in accordance with Paragraph 3 of the Master
Agreement.
(b) Repo Custodian shall keep all Securities, cash and Cash Collateral
received for the Participating Funds segregated at all times from those of
any other person, firm or corporation in its possession and shall identify
all such Securities, cash and Cash Collateral as subject to this Agreement
and the Master Agreement. Segregation may be accomplished by physical
segregation with respect to certificated securities held by the Repo
Custodian and, in addition, by appropriate identification on the books and
records of Repo Custodian in the case of all other Securities, cash and
Cash Collateral. Title to all Securities and Cash Collateral under a
repurchase transaction shall pass to the Participating Funds that are
parties to such repurchase transaction. All such Securities and Cash
Collateral shall be held by Repo Custodian for the Participating Funds, and
shall be subject at all times to the proper instructions of the
Participating Funds, or the Custodian on behalf of the Participating Funds,
with respect to the holding, transfer or disposition of such Securities and
Cash Collateral. Repo Custodian shall include in its records for each
Transaction Account all instructions received by it which evidence an
interest of the Participating Funds in the Securities and Cash Collateral
and shall hold physically segregated any written agreement, receipt or
other writing received by it which evidences an interest of the
Participating Funds in the Securities and Cash Collateral.
(c) Any requirement to "deliver" or "transfer" cash or Cash Collateral to
the Participating Funds or to "credit" a Transaction Account under this or
any other paragraph of this Agreement shall be made in immediately
available funds. If Repo Custodian is required to "deliver" or "transfer"
Securities to the Participating Funds under this or any other paragraph of
this Agreement, Repo Custodian shall take, or cause to be taken, the
following actions to perfect the Participating Funds' interest in such
Securities as an outright purchaser: (i) in the case of certificated
securities and instruments held by Seller, by physical delivery of the
share certificates or other instruments representing the Securities and by
physical segregation of such certificates or instruments from the Repo
Custodian's other assets in a manner indicating that the Securities are
being held for the Participating Funds (such securities and instruments to
be delivered in form suitable for transfer or accompanied by duly executed
instruments of transfer or assignment in blank and accompanied by such
other documentation as the Participating Funds may request), (ii) in the
case of Securities held in a customer only account in a clearing agency or
federal book-entry system authorized for use by the Funds and meeting the
requirements of Rule 17f-4 under the Investment Company Act of 1940, as
amended (the "1940 Act") (such authorized agency or system being referred
to herein as a "Securities System"), by appropriate entry on the books and
records of Repo Custodian identifying the Securities as belonging to the
Participating Funds, or (iii) in the case of Securities held in Repo
Custodian's own account in a Securities System, by transfer to a customer
only account in the Securities System and by appropriate entry on the books
and records of Repo Custodian identifying such Securities as belonging to
the Participating Funds; provided, further, that Repo Custodian shall
confirm to the Participating Funds the identity of the Securities
transferred or delivered. Acceptance of a "due bill", "trust receipt" or
similar receipt or notification of segregation issued by a third party with
respect to Securities held by such third party shall not constitute good
delivery of Securities to Repo Custodian for purposes of this Agreement or
the Master Agreement and shall expressly violate the terms of this
Agreement and the Master Agreement. The Funds shall identify by notice to
Repo Custodian and Seller those agencies or systems which have been
approved by the Funds for use under this Agreement and the Master
Agreement. The Funds hereby notify Repo Custodian and Seller that the
following agencies and systems have been approved by the Funds for use
under this Agreement and the Master Agreement, until such time as Repo
Custodian and Seller shall have been notified by the Funds to the contrary:
(i) Participants Trust Company; (ii) The Depository Trust Company; and
(iii) any book-entry system as provided in (A) Subpart O of Treasury
Circular No. 300, 31 CFR 306.115, (B) Subpart B of Treasury Circular Public
Debt Series No. 27-76, 31 CFR 350.2, or (C) the book-entry regulations of
federal agencies substantially in the form of 31 CFR 306.115.
4. Repurchase Transactions.
(a) Repo Custodian shall make all credits and debits to the Transaction
Account and effect the transfer of Securities to or from the Participating
Funds upon proper instructions received from the Participating Funds, or
the Custodian on behalf of the Participating Funds, and shall make all
credits and debits to the Seller Account and effect the transfer of
Securities to or from the Seller upon proper instructions received from
Seller. In the event that Repo Custodian receives conflicting proper
instructions from Seller and the Participating Funds, or the Custodian on
behalf of the Participating Funds, Repo Custodian shall follow the
Participating Funds' or the Custodian's proper instructions. The
Participating Funds shall give Repo Custodian only such instructions as
shall be permitted by the Master Agreement. Notwithstanding the preceding
sentence, the Participating Funds, or the Custodian on behalf of the
Participating Funds, may from time to time instruct Repo Custodian to
transfer cash from the Transaction Account to Custodian so long as such
transfer is not in contravention of the Master Agreement.
(b) (i) Whenever on any Banking Day one or more Funds and Seller agree to
enter into a repurchase transaction, Seller and the Participating Funds, or
the Custodian on behalf of the Participating Funds, will give Repo
Custodian proper instructions by telephone or otherwise by 5:00 p.m. New
York time on the Sale Date, specifying the Transaction Category, Repurchase
Date, Sale Price, Repurchase Price or the applicable Pricing Rate and the
Margin Percentage for each such repurchase transaction.
(ii) In the case of repurchase transactions in which the Repurchase Date
is the Banking Day next following the Sale Date (x) the Participating Funds
may increase or decrease the Sale Price for any such repurchase transaction
by no more than 10% of the initial Sale Price by causing to be delivered
further proper instructions by telephone or otherwise to Repo Custodian by
5:15 p.m. New York time (or at such later time as may be agreed upon by the
parties) on the Sale Date and (y) Seller and the Participating Funds may by
mutual consent agree to increase or decrease the Sale Price by more than
10% of the initial Sale Price by causing to be provided further proper
instructions to Repo Custodian by the close of business on the Sale Date.
In any event, Repo Custodian shall not be responsible for determining
whether any such increase or decrease of the Sale Price exceeds the 10%
limitation.
(c) Seller will take such actions as are necessary to ensure that on the
Sale Date the aggregate Market Value of all Securities held by Repo
Custodian for Seller and cash in the Seller Account equals or exceeds the
Margin Percentage of the Sale Price. Seller shall give Repo Custodian
proper instructions specifying with respect to each of the Securities which
is to be the subject of a repurchase transaction (a) the name of the issuer
and the title of the Securities, and (b) the Market Value of such
Securities. Such instructions shall constitute Seller's instructions to
Repo Custodian to transfer the Securities to the Participating Funds and/or
Cash Collateral from the Seller Account to the Transaction Account.
(d) By 5:00 p.m. New York Time on the Sale Date, the Participating Funds
shall transfer to, or maintain on deposit with, Repo Custodian in the
Transaction Account immediately available funds in an amount equal to the
Sale Price with respect to a particular repurchase transaction.
(e) Prior to the close of business on the Sale Date, Repo Custodian shall
transfer Securities from Seller to the Participating Funds and/or cash held
in the Seller Account to the Transaction Account and shall transfer to the
Seller Account immediately available funds from the Transaction Account in
accordance with the following provisions:
(i) Repo Custodian shall determine that all securities to be transferred
by Seller to the Participating Funds are Eligible Securities. Any
securities which are not Eligible Securities for a particular repurchase
transaction hereunder shall not be included in the calculations set forth
below and shall not be transferred to the Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value of the
Securities and cash, if any, to be so transferred.
(iii) Repo Custodian shall notify Seller in the event that the aggregate
Market Value of Securities and cash, if any, applicable to the repurchase
transaction is less than the Margin Percentage of the Sale Price and Seller
shall transfer, by the close of business on the Sale Date, to Repo
Custodian additional Securities and/or cash in the amount of such
deficiency. If Seller does not, by the close of business on the Sale Date,
transfer additional Securities and/or cash, the Market Value of which
equals or exceeds such deficiency, Repo Custodian may, at its option,
without notice to Seller, advance the amount of such deficiency to Seller
in order to effectuate the repurchase transaction. It is expressly agreed
that Repo Custodian is not obligated to make an advance to Seller to enable
it to complete any repurchase transaction.
(iv) Subject to the provisions of Subparagraph (v) below, Repo Custodian
shall cause the Securities applicable to the repurchase transaction
received from Seller to be transferred to the Participating Funds and shall
cause any cash received from Seller to be transferred to the Transaction
Account, against transfer of the Sale Price from the Transaction Account to
the Seller Account, such transfers of Securities and/or cash and funds to
be deemed to occur simultaneously.
(v) Notwithstanding anything to the contrary, if, for any repurchase
transaction, the amount of immediately available funds in the Transaction
Account is less than the agreed upon Sale Price in connection with the
repurchase transaction immediately prior to effectuating such repurchase
transaction, or if the aggregate Market Value of the Securities and cash,
if any, applicable to such repurchase transaction is less than the Sale
Price multiplied by the Margin Percentage immediately prior to effectuating
such repurchase transaction, Repo Custodian shall effect the repurchase
transaction to the best of its ability by transferring Securities from
Seller to the Participating Funds and/or cash from the Seller Account to
the Transaction Account with an aggregate Market Value equal to the lesser
of (x) the amount of immediately available funds in the Transaction Account
multiplied by the Margin Percentage and (y) the aggregate Market Value of
the Securities available for transfer from Seller to the Participating
Funds and cash, if any, in the Seller Account, against the transfer of
immediately available funds from the Transaction Account to the Seller
Account in an amount equal to the aggregate Market Value of the Securities
and/or cash to be transferred divided by the Margin Percentage; provided,
however, that in either such event Repo Custodian shall have the right not
to transfer to the Participating Funds such Securities and not to transfer
such cash, if any, to the Transaction Account and not to transfer from the
designated Transaction Account such funds as Repo Custodian determines, in
its sole discretion, will not be the subject of a repurchase transaction.
The actions of Repo Custodian pursuant to this subparagraph (e)(v) shall
not affect the obligations and liabilities of the parties to each other
pursuant to the Master Agreement with regard to such repurchase
transaction.
(f) In the event that on a Banking Day Seller desires to substitute
Securities applicable to such repurchase transaction with Eligible
Securities and/or Cash Collateral (to the extent provided in the Master
Agreement), Repo Custodian shall perform such substitution in accordance
with the following provisions:
(i) Repo Custodian shall determine that all securities to be transferred
to the Participating Funds are Eligible Securities. Any securities which
are not eligible for repurchase transactions hereunder shall not be
included in the calculations set forth below and shall not be transferred
to the Participating Funds.
(ii) Repo Custodian shall then calculate the aggregate Market Value of the
Eligible Securities and/or Cash Collateral to be transferred. Repo
Custodian shall not make any substitution if, at the time of substitution,
the aggregate Market Value of all Securities and any Cash Collateral
applicable to such repurchase transaction immediately after such
substitution would be less than the Margin Percentage of the Repurchase
Price (calculated as if the Repurchase Date were the date of substitution).
(iii) Repo Custodian shall then deliver to the Seller, subject to the
qualifications set forth above, the Securities to be substituted against
the delivery by Repo Custodian of substitute Eligible Securities to the
Participating Funds and/or the crediting of the Transaction Account with
Cash Collateral.
(iv) In the event Seller has caused Repo Custodian to credit the
Transaction Account with Cash Collateral in lieu of substitute Eligible
Securities, and has failed to deliver Eligible Securities against such Cash
Collateral not later than the close of business on such Banking Day in
accordance with the terms of the Master Agreement, Repo Custodian shall
promptly, but in no event later than 10:00 a.m. the following Banking Day,
notify the Participating Funds and Seller of such failure.
(g) With respect to each repurchase transaction, at 9:00 a.m. New York
time, or at such other time as specified in proper instructions of the
Participating Funds (or the Custodian on behalf of the Participating Funds)
on the Repurchase Date, Repo Custodian shall debit the Seller Account and
credit the Transaction Account in the amount of the Repurchase Price and
shall transfer Securities from the Participating Funds to the Seller and
Cash Collateral, if any, from the Transaction Account to the Seller Account
in accordance with the following provisions:
(i) If the amount of available funds in the Seller Account equals or
exceeds the Repurchase Price, Repo Custodian shall debit the Seller Account
and credit the Transaction Account in the amount of the Repurchase Price
and shall transfer all Securities applicable to such repurchase transaction
from the Participating Funds to the Seller and debit the Transaction
Account and credit the Seller Account in the amount of any Cash Collateral
applicable to such repurchase transaction.
(ii) If the amount of available funds in the Seller Account is less than
the Repurchase Price, then Repo Custodian shall notify the Seller of the
amount of the deficiency and Seller shall promptly cause such amount to be
transferred to the Seller Account. If Seller fails to cause the transfer
of the entire amount of the deficiency to the Seller Account, then Repo
Custodian may, at its option and without notice to Seller, advance to
Seller the amount of such remaining deficiency. It is expressly agreed
that Repo Custodian is not obligated to make any advance to Seller. If,
following such transfer and/or advance, the amount of available funds in
the Seller Account equals or exceeds the Repurchase Price then Repo
Custodian shall debit the Seller Account and credit the Transaction Account
in the amount of the Repurchase Price and shall transfer from the
Participating Funds to the Seller all Securities applicable to such
repurchase transaction and debit the Transaction Account and credit the
Seller Account in the amount of any Cash Collateral applicable to such
repurchase transaction.
(iii) If the Seller fails to cause the transfer of the entire amount of
the deficiency, as required by (ii) above, and Repo Custodian fails to
advance to Seller an amount sufficient to eliminate the entire deficiency,
then Repo Custodian shall debit the Seller Account in the amount of all
immediately available funds designated by Seller as applicable to the
repurchase transaction and credit the Transaction Account in such amount
(such amount being referred to as the "Partial Payment") and shall transfer
Securities from the Participating Funds to the Seller such that the
aggregate Market Value of all remaining Securities and Cash Collateral in
the Transaction Account with respect to such repurchase transaction shall
at least equal the difference between Margin Percentage of the Repurchase
Price and the Partial Payment.
5. Payments on Securities. Repo Custodian shall credit to the Seller
Account as soon as received, all principal, interest and other sums paid by
or on behalf of the issuer in respect of the Securities and collected by
Repo Custodian, except as otherwise provided in Paragraph 8 of the Master
Agreement.
6. Daily Statement. On each Banking Day on which any Participating Funds
have an outstanding repurchase transaction, Repo Custodian shall deliver by
facsimile, or other electronic means acceptable to the Participating Funds,
the Custodian and the Repo Custodian, to Custodian and to the Participating
Funds a statement identifying the Securities held by Repo Custodian with
respect to such repurchase transaction and the cash and Cash Collateral, if
any, held by Repo Custodian in the Transaction Account, including a
statement of the then current Market Value of such Securities and the
amounts, if any, credited to the Transaction Account as of the close of
trading on the previous Banking Day. Repo Custodian shall also deliver to
Custodian and the Participating Funds such additional statements as the
Repo Custodian and the Participating Funds may agree upon from time to
time.
7. Valuation.
(a) Repo Custodian shall confirm the Market Value of Securities and the
amount of Cash Collateral, if any (i) on the Sale Date prior to
transferring the Sale Price out of the Transaction Account to the Seller
Account against the receipt from Seller of the Securities and Cash
Collateral, if any, and (ii) on each Valuation Day on which such repurchase
transaction is outstanding. If on any Valuation Day the aggregate Market
Value of the Securities and Cash Collateral with respect to any repurchase
transaction is less than the Margin Percentage of the Repurchase Price
(calculated as if the Repurchase Date were such Valuation Day) for such
transaction, Repo Custodian shall promptly, but in any case no later than
10:00 a.m. the following Valuation Day, notify Seller. If on any Valuation
Day the aggregate market value of the Securities and Cash Collateral with
respect to any repurchase transaction is less than the Margin Percentage of
the Repurchase Price (calculated as if the Repurchase Date were such
Valuation Day) for such transaction, and Seller fails to deliver additional
Eligible Securities applicable to such repurchase transaction or an
additional amount of Cash Collateral by the close of business on such
Valuation Day such that the aggregate market value of the Securities and
Cash Collateral at least equals the Margin Percentage of the Repurchase
Price (calculated as if the Repurchase Date were such Valuation Day), Repo
Custodian shall promptly, but in any event no later than 10:00 a.m. the
following Valuation Day, notify the Participating Funds of such failure.
(b) Repo Custodian shall determine the bid side portion of the Market
Value of the Securities by reference to the independent pricing services
("Pricing Services") set forth on Schedule B. It is understood and agreed
that Repo Custodian shall use the prices made available by the Pricing
Services at the close of business of the preceding Valuation Day. In the
event that Repo Custodian is unable to obtain a valuation of any Securities
from the Pricing Services, Repo Custodian shall request a bid quotation
from a broker's broker or a broker dealer, set forth in Schedule B, other
than Seller. In the event Repo Custodian is unable to obtain a bid
quotation for any Securities from such a broker's broker or a broker
dealer, Repo Custodian (i) shall not include any such Securities in the
determination of whether the aggregate Market Value of the Securities and
any Cash Collateral equals at least the Margin Percentage of the Repurchase
Price and (ii) shall redeliver such Securities to Seller if the Market
Value of all other Securities and any Cash Collateral with respect to such
repurchase transaction equals at least the Margin Percentage of the
Repurchase Price (calculated as if the Repurchase Date were such Valuation
Day). The Repo Custodian may rely on prices quoted by Pricing Services,
broker's brokers or broker dealers, except Seller, as set forth in Schedule
B.
(c) (i) If, on any Valuation Day, the aggregate Market Value of the
Securities and any Cash Collateral with respect to a repurchase transaction
is less than the Margin Percentage of the Repurchase Price (calculated as
if the Repurchase Date were such Valuation Day) applicable to such
repurchase transaction, Repo Custodian shall deliver to the Participating
Funds an amount of additional Eligible Securities applicable to such
repurchase transaction and/or debit the Seller Account and credit the
Transaction Account with an additional amount of Cash Collateral, such that
the aggregate Market Value of all Securities and any Cash Collateral with
respect to such repurchase transaction shall equal at least the Margin
Percentage of the Repurchase Price (calculated as if the Repurchase Date
were such Valuation Day) applicable to such repurchase transaction.
(ii) If, on any Valuation Day, the aggregate Market Value of the
Securities and any Cash Collateral with respect to a repurchase transaction
exceeds the Margin Percentage of the Repurchase Price (calculated as if the
Repurchase Date were such Valuation Day) applicable to such repurchase
transaction, Repo Custodian shall return to the Seller all or a portion of
such Securities or Cash Collateral, if any; provided that the Market Value
of the remaining Securities and any Cash Collateral with respect to the
repurchase transaction shall be at least equal to the Margin Percentage of
the Repurchase Price (calculated as if the Repurchase Date were such
Valuation Day) applicable to such repurchase transaction. At any time and
from time to time with respect to any repurchase transaction, if authorized
by the Participating Funds, or the Custodian on behalf of the Participating
Funds, the Repo Custodian shall debit the Transaction Account by an amount
of Cash Collateral and credit the Seller Account by the same amount of Cash
Collateral against simultaneous delivery from Seller to the Participating
Funds of Eligible Securities applicable to such repurchase transaction with
a Market Value at least equal to the amount of Cash Collateral credited and
debited.
8. Authorized Persons. Schedule C hereto sets forth those persons who are
authorized to act for Repo Custodian, Custodian, Seller and the Funds,
respectively, under this Agreement.
9. Proper Instructions. Proper instructions shall mean a tested telex,
facsimile, a written request, direction, instruction or certification
signed or initialed by or on behalf of the party giving the instructions by
one or more authorized persons (as provided in Paragraph 8); provided,
however, that no instructions directing the delivery of Securities or the
payment of funds to any individual who is an authorized signatory of
Custodian or Repo Custodian shall be signed by that individual.
Telephonic, other oral or electro-mechanical or electronic instructions
(including the code which may be assigned by Repo Custodian to Custodian
from time to time) given by one of the above authorized persons shall also
be considered proper instructions if the party receiving such instructions
reasonably believes them to have been given by an authorized person with
respect to the transaction involved. Oral instructions will be confirmed
by tested telex, facsimile or in writing in the manner set forth above.
The Funds and Seller authorize Repo Custodian to tape record any and all
telephonic or other oral instructions given to Repo Custodian. Proper
instructions may relate to specific transactions or to types or classes of
transactions, and may be in the form of standing instructions.
10. Standard of Care.
(a) Repo Custodian shall be obligated to use reasonable care and diligence
in carrying out the provisions of this Agreement and the Master Agreement
and shall be liable to the Funds and/or Seller only for direct damages
resulting from the negligence or willful misconduct of the Repo Custodian
or its officers, employees or agents. The parties hereby agree that Repo
Custodian shall not be liable for consequential, special or indirect
damages, even if Repo Custodians has been advised as to the possibility
thereof. So long as and to the extent that Repo Custodian exercises
reasonable care and diligence and acts without negligence, misfeasance or
misconduct, Repo Custodian shall not be liable to Seller or the Funds for
(i) any action taken or omitted in good faith in reliance upon proper
instructions, (ii) any action taken or omitted in good faith upon any
notice, request, certificate or other instrument reasonably believed by it
to be genuine and to be signed by the proper party or parties, (iii) any
delay or failure to act as may be required under this Agreement or under
the Master Agreement when such delay or failure is due to any act of God or
war, (iv) the actions or omissions of a Securities System, (v) the title,
validity or genuineness of any security received, delivered or held by it
pursuant to this Agreement or the Master Agreement, (vi) the legality of
the purchase or sale of any Securities by or to the Participating Funds or
Seller or the propriety of the amount for which the same are purchased or
sold (except to the extent of Repo Custodian's obligations hereunder to
determine whether securities are Eligible Securities and to calculate the
Market Value of Securities and any Cash Collateral), (vii) the due
authority of any person listed on Schedule C to act on behalf of Custodian,
Seller or the Funds, as the case may be, with respect to this Agreement or
(viii) the errors of the Pricing Services, broker's brokers or broker
dealers set forth in Schedule B.
(b) Repo Custodian shall not be liable to Seller or the Funds for, or
considered to be the custodian of, any Eligible Securities or any money to
be used in a repurchase transaction, whether or not such money is
represented by any check, draft, or other instrument for the payment of
money, until the Eligible Securities have been delivered in accordance with
Paragraph 3 or until Repo Custodian actually receives and collects such
money on behalf of Seller or the Funds directly or by the final crediting
of the Seller Account or a Transaction Account through the Securities
System, except that this Paragraph 10(b) shall not be deemed to limit the
liability of Repo Custodian to Seller or the Funds if the non-delivery of
such Eligible Securities or the failure to receive and collect such money
results from the breach by Repo Custodian of its obligations under this
Agreement or the Master Agreement.
(c) Repo Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it are such as
properly may be held by the Participating Funds; provided that
notwithstanding anything to the contrary herein, Repo Custodian shall be
obligated to act in accordance with the guidelines and proper instructions
of the Participating Funds, or the Custodian on behalf of the Participating
Funds, with respect to the types of Eligible Securities and the issuers of
such Eligible Securities that may be used in specific repurchase
transactions.
(d) Repo Custodian promptly shall notify the Fund Agent and the Custodian
if Securities held by Repo Custodian are in default or if payment on any
Securities has been refused after due demand and presentation and Repo
Custodian shall take action to effect collection of any such amounts upon
the proper instructions of the Participating Funds, or the Custodian on
behalf of the Participating Funds, and assurances satisfactory to it that
it will be reimbursed for its costs and expenses in connection with any
such action.
(e) Repo Custodian shall have no duties, other than such duties as are
necessary to effectuate repurchase transactions in accordance with this
Agreement and the Master Agreement within the standard of care set forth in
Paragraph 10(a) above and in a commercially reasonable manner.
11. Representations and Additional Covenants of Repo Custodian.
(a) Repo Custodian represents and warrants that (i) it is duly authorized
to execute and deliver this Agreement and to perform its obligations
hereunder and has taken all necessary action to authorize such execution,
delivery and performance, (ii) the execution, delivery and performance of
this Agreement do not and will not violate any ordinance, declaration of
trust, partnership agreement, articles of incorporation, charter, rule or
statute applicable to it or any agreement by which it is bound or by which
any of its assets are affected, (iii) the person executing this Agreement
on its behalf is duly and properly authorized to do so, (iv) it has (and
will maintain) a copy of this Agreement and evidence of its authorization
in its official books and records, and (v) this Agreement has been executed
by one of its duly authorized officers at the level of Vice President or
higher.
(b) Repo Custodian further represents and warrants that (i) it has not
pledged, encumbered, hypothecated, transferred, disposed of, or otherwise
granted, any third party an interest in any Securities, (ii) it does not
have any security interest, lien or right of setoff in the Securities, and
(iii) it has not received notification from any third party, in its
capacity as Repo Custodian, custodian bank or clearing bank, of any lien,
claim, charge or encumbrance with respect to any Securities that are the
subject of such repurchase transaction. Repo Custodian agrees that (i) it
will not pledge, encumber, hypothecate, transfer, dispose of, or otherwise
grant, any third party an interest in any Securities, (ii) it will not
acquire any security interest, lien or right of setoff in the Securities,
and (iii) it will promptly notify the Fund Agent, if, during the term of
any outstanding repurchase transaction, it is notified by any third party,
in its capacity as Repo Custodian, custodian bank or clearing bank, of the
Participating Funds or Seller, of the existence of any lien, claim, charge
or encumbrance with respect to any Securities that are the subject of such
repurchase transaction.
12. Indemnification.
(a) Notwithstanding the Participating Fund's obligation to the Repo
Custodian under Paragraph 12(b) below, so long as and to the extent that
Repo Custodian is in the exercise of reasonable care and diligence and acts
without negligence, misfeasance or misconduct, Seller will indemnify Repo
Custodian and hold it harmless against any and all losses, claims, damages,
liabilities or actions to which it may become subject, and reimburse it for
any expenses (including attorneys' fees and expenses) incurred by it in
connection therewith, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon or in any way related to this
Agreement, the Master Agreement or any transactions contemplated hereby or
thereby or effected hereunder or thereunder. Without limiting the
generality of the foregoing indemnification, Repo Custodian shall be
indemnified by Seller for all costs and expenses, including attorneys'
fees, for its successful defense against claims that Repo Custodian
breached its standard of care and was negligent or engaged in misfeasance
or misconduct.
(b) So long as and to the extent that Repo Custodian is in the exercise of
reasonable care and diligence and acts without negligence, misconduct or
misfeasance, the Participating Funds will indemnify Repo Custodian and hold
it harmless against any and all losses, claims, damages, liabilities or
actions to which it may become subject, and reimburse it for any expenses
(including attorneys' fees and expenses) incurred by it in connection
therewith, insofar as such losses, claims, damages, liabilities or actions
result from the negligence, misconduct or misfeasance of the Participating
Funds under this Agreement.
13. Rights and Remedies. The rights and remedies conferred upon the
parties hereto shall be cumulative, and the exercise or waiver of any
thereof shall not preclude or inhibit the exercise of any additional rights
and remedies.
14. Modification or Amendment. Except as otherwise provided in this
Paragraph 14, no modification, waiver or amendment of this Agreement shall
be binding unless in writing and executed by the parties hereto. Schedule
A, listing the Funds, may be amended from time to time to add or delete
Funds by the Funds (i) delivering an executed copy of an addendum to
Schedule A to Seller and Repo Custodian, and (ii) amending Schedule A to
the Master Agreement in accordance with the provisions therein. The
amendment of Schedule A as provided above shall constitute appointment of
Repo Custodian as a custodian for such Fund. Schedule B may be amended
from time to time by an instrument in writing, or counterpart thereof,
executed by Repo Custodian, Seller and the Funds. Schedule C may be
amended from time to time to change an authorized person of: (i) the
Funds, by written notice to Repo Custodian and Seller by Ms. Sarah Zenoble
or the Treasurer of the Funds (or such persons who may be authorized from
time to time in writing by Ms. Zenoble or the President or Treasurer of
Fidelity Management and Research Company to trade on behalf of Fidelity's
taxable money market funds); (ii) Seller, by written notice to Repo
Custodian and the Funds by any Vice President of Seller; (iii) Repo
Custodian, by written notice to Seller, Custodian and the Funds by any Vice
President of Repo Custodian; and (iv) Custodian, by written notice to Repo
Custodian by any Vice President of Custodian. Schedule D may be amended
from time to time by any party hereto by delivery of written notice to the
other parties hereto. Repo Custodian shall receive notice of any amendment
to the Master Agreement at the address set forth in Schedule D hereto; and,
if such amendment would have a material adverse effect on the rights of, or
would materially increase the obligations of Repo Custodian under this
Agreement, any such amendment shall also require the consent of Repo
Custodian. Any such amendment shall be deemed not to be material if Repo
Custodian fails to object in writing within 21 days after receipt of notice
thereof. No amendment to this Agreement shall affect the rights or
obligations of any Fund with respect to any outstanding repurchase
transaction entered into under this Agreement and the Master Agreement
prior to such amendment or with respect to any actions or omissions by any
party hereto prior to such amendment. In the event of conflict between
this Agreement and the Master Agreement, the Master Agreement shall
control.
15. Termination. This Agreement shall terminate forthwith upon
termination of the Master Agreement or may be terminated by any party
hereto on ten Valuation Days' written notice to the other parties;
provided, however, that any such termination shall not affect any
repurchase transaction then outstanding or any rights or obligations under
this Agreement or the Master Agreement with respect to any actions or
omissions of any party hereto prior to termination. In the event of
termination, Repo Custodian will deliver any Securities, Cash Collateral or
cash held by it or any agent to Custodian or to such successor custodian or
custodian or subcustodian as the Participating Funds shall instruct.
16. Compensation. Seller agrees to pay Repo Custodian compensation for
the services to be rendered hereunder, based upon rates which shall be
agreed upon from time to time.
17. Notices. Except with respect to communications between Custodian and
the Funds which shall be governed by the custodian agreement or
subcustodian agreement between such parties, as the case may be, and except
as otherwise provided herein or as the parties to the Agreement shall from
time to time otherwise agree, all instructions, notices, reports and other
communications contemplated by this Agreement shall be given to the party
entitled to receive such notice at the telephone number and address listed
on Schedule D hereto.
18. Severability. If any provision of this Agreement is held to be
unenforceable as a matter of law, the other terms and provisions hereof
shall not be affected thereby and shall remain in full force and effect.
19. Binding Nature. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their successors and assignees;
provided that, no party hereto may assign this Agreement or any of the
rights or obligations hereunder without the prior written consent of the
other parties.
20. Headings. Section headings are for reference purposes only and shall
not be construed as a part of this Agreement.
21. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
22. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAW PRINCIPLES THEREOF.
23. Limitation of Liability. Repo Custodian and Seller are hereby
expressly put on notice of the limitation of liability set forth in the
Declarations of Trust and in the Certificates and Agreements of Limited
Partnership of the Funds and agree that the obligations assumed by any Fund
hereunder shall be limited in all cases to a Fund and its assets or, in the
case of a series Fund, to the assets of that series only, and neither
Seller, Repo Custodian nor their respective agents or assigns shall seek
satisfaction of any such obligation from the officers, agents, employees,
directors, trustees, shareholders or partners of any such Fund or series.
24. Rights and Obligations of Each Fund. The rights and obligations set
forth in this Agreement with respect to each repurchase transaction shall
accrue only to the Participating Funds in accordance with their respective
interests therein. No other Fund shall receive any rights or have any
liabilities arising from any action or inaction of any Participating Fund
under this Agreement with respect to such repurchase transaction.
25. General Provisions. This Agreement supersedes any other custodian
agreement by and among Seller, the Funds, and Repo Custodian concerning
repurchase transactions effected through the Joint Trading Account. It is
understood and agreed that time is of the essence with respect to the
performance of each party's respective obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CHEMICAL BANK
Dated: By: /s/ Anthony Isola Title: Anthony Isola
Vice President
GREENWICH CAPITAL MARKETS, INC.
Dated: By: /s/ Konrad R. Kruger
Title: Konrad R. Kruger
Co-President
FIDELITY INVESTMENT COMPANIES LISTED ON SCHEDULE A-1 HERETO AND ACCOUNTS
LISTED ON SCHEDULE A-3 HERETO
Dated: By: /s/ Kenneth A. Rathgeber
Name: Kenneth A. Rathgeber
Title: Treasurer of the Fidelity Investment Companies listed on Schedule
A-1 and Vice President of Fidelity Management & Research Company
FIDELITY INVESTMENT COMPANIES LISTED ON SCHEDULE A-2 HERETO
Dated: By: /s/ David J. Saul
Name: David J. Saul
Title: Director of the Fidelity Investment Companies listed on Schedule
A-2
ACCOUNTS LISTED ON SCHEDULE A-4 HERETO
By: FIDELITY MANAGEMENT TRUST COMPANY
Dated: By: /s/ John P. O'Reilly, Jr.
Name: John P. O'Reilly, Jr.
Title: Executive Vice President
SCHEDULE A-1
DAILY MONEY FUND
Capital Reserves: Money Market Portfolio
Capital Reserves U.S. Government Portfolio
Fidelity U.S. Treasury Income Portfolio
Money Market Portfolio
U.S. Treasury Portfolio
FIDELITY ADVISOR ANNUITY FUNDS
Fidelity Advisor Annuity Government Investment Fund
Fidelity Advisor Annuity Growth Opportunities Fund
Fidelity Advisor Annuity High Yield Fund
Fidelity Advisor Annuity Income & Growth Fund
Fidelity Advisor Annuity Money Market Fund
Fidelity Advisor Annuity Overseas Fund
FIDELITY ADVISOR SERIES I
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Institutional Equity Portfolio Growth
Fidelity Advisor Large Cap Fund
Fidelity Advisor Mid Cap Fund
FIDELITY ADVISOR SERIES II
Fidelity Advisor Government Investment Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Income & Growth Fund
Fidelity Advisor Short Fixed-Income Fund
FIDELITY ADVISOR SERIES III
Fidelity Advisor Equity Income Fund
FIDELITY ADVISOR SERIES IV
Fidelity Advisor Intermediate Term Bond Fund
Fidelity Real Estate High Income Fund
Fidelity Institutional Short-Intermediate Government Fund
FIDELITY ADVISOR SERIES V
Fidelity Advisor Global Resources Fund
FIDELITY ADVISOR SERIES VII
Fidelity Advisor Overseas Fund
FIDELITY ADVISOR SERIES VIII
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Strategic Income Fund
Fidelity Boston Street Trust
FIDELITY BOSTON STREET TRUST
Fidelity Target Timeline 1999
Fidelity Target Timeline 2001
Fidelity Target Timeline 2003
FIDELITY CAPITAL TRUST
Fidelity Capital Appreciation Fund
Fidelity Disciplined Equity Fund
Fidelity Stock Selector
Fidelity Value Fund
FIDELITY CHARLES STREET TRUST
Fidelity Asset Manager
Fidelity Asset Manager: Growth
Fidelity Asset Manager: Income
Fidelity Short-Intermediate Government Fund
Spartan Investment-Grade Bond Fund
Spartan Short-Term Income Fund
FIDELITY COMMONWEALTH TRUST
Fidelity Intermediate Bond Fund
Fidelity Market Index Fund
Fidelity Small Cap Stock Fund
Fidelity Large Cap Stock Fund
FIDELITY CONGRESS STREET FUND
FIDELITY CONTRAFUND
FIDELITY DESTINY PORTFOLIOS
Destiny I
Destiny II
FIDELITY DEUTSCHE MARK PERFORMANCE PORTFOLIO, L.P.
FIDELITY DEVONSHIRE TRUST
Fidelity Equity-Income Fund
Fidelity Mid-Cap Stock Fund
Fidelity Real Estate Investment Portfolio
Fidelity Utilities Fund
Spartan Long-Term Government Bond Fund
FIDELITY EXCHANGE FUND
FIDELITY FINANCIAL TRUST
Fidelity Convertible Securities Fund
Fidelity Equity-Income II Fund
Fidelity Retirement Growth Fund
FIDELITY FIXED-INCOME TRUST
Fidelity Investment Grade Bond Fund
Fidelity Short-Term Bond Portfolio
Spartan Government Income Fund
Spartan High Income Fund
Spartan Short-Intermediate Government Fund
FIDELITY GOVERNMENT SECURITIES FUND
FIDELITY HASTINGS STREET TRUST
Fidelity Fifty
Fidelity Fund
FIDELITY HEREFORD STREET TRUST
Spartan Money Market Fund
Spartan U.S. Government Money Market Fund
Spartan U.S. Treasury Money Market Fund
FIDELITY ADVISOR KOREA FUND, INC.
FIDELITY EMERGING ASIA FUND, INC.
FIDELITY INCOME FUND
Fidelity Ginnie Mae Portfolio
Fidelity Mortgage Securities Portfolio
Spartan Limited Maturity Government Fund
FIDELITY INSTITUTIONAL CASH PORTFOLIOS
Domestic Money Market Portfolio
Money Market Portfolio
U.S. Government Portfolio
U.S. Treasury Portfolio
FIDELITY INSTITUTIONAL INVESTORS TRUST
State and Local Asset Management Series: Government Money Market
Portfolio
FIDELITY INSTITUTIONAL TRUST
Fidelity U.S. Bond Index Portfolio
Fidelity U.S. Equity Index Portfolio
FIDELITY INVESTMENT TRUST
Fidelity Canada Fund
Fidelity Diversified International Fund
Fidelity Emerging Markets Fund
Fidelity Europe Capital Appreciation Fund
Fidelity Europe Fund
Fidelity France Fund
Fidelity Germany Fund
Fidelity Global Bond Fund
Fidelity Hong Kong & China Fund
Fidelity International Growth & Income Fund
FIDELITY INVESTMENT TRUST (CONT.)
Fidelity International Value Fund
Fidelity Japan Fund
Fidelity Japan Small Companies Fund
Fidelity Latin America fund
Fidelity New Markets Income Fund
Fidelity Nordic Fund
Fidelity Overseas Fund
Fidelity Pacific Basin Fund
Fidelity Short-Term World Income Fund
Fidelity Southeast Asia Fund
Fidelity United Kingdom Fund
Fidelity Worldwide Fund
FIDELITY MAGELLAN FUND
FIDELITY MONEY MARKET TRUST
Rated Money Market
Retirement Government Money Market Portfolio
Retirement Money Market Portfolio
FIDELITY MT. VERNON STREET TRUST
Fidelity Emerging Growth Fund
Fidelity Growth Company Fund
Fidelity New Millennium Fund
FIDELITY PHILLIPS STREET TRUST
Fidelity Cash Reserves
Fidelity U.S. Government Reserves
FIDELITY PURITAN TRUST
Fidelity Balanced Fund
Fidelity Global Balanced Fund
Fidelity Low-Priced Stock Fund
Fidelity Puritan Fund
FIDELITY SCHOOL STREET TRUST
Spartan Bond Strategist
FIDELITY SECURITIES FUND
Fidelity Blue Chip Growth Fund
Fidelity Dividend Growth Fund
Fidelity Growth & Income Portfolio
Fidelity OTC Portfolio
FIDELITY SELECT PORTFOLIOS
Air Transportation Portfolio
American Gold Portfolio
Automotive Portfolio
Biotechnology Portfolio
Brokerage and Investment Management Portfolio
Chemicals Portfolio
Computers Portfolio
Construction and Housing Portfolio
Consumer Products Portfolio
Defense and Aerospace Portfolio
Developing Communications Portfolio
Electronics Portfolio
Energy Portfolio
Energy Service, Portfolio
Environmental Services Portfolio
Financial Services Portfolio
Food and Agriculture, Portfolio
Health Care Portfolio
Home Finance Portfolio
Industrial Equipment Portfolio
Industrial Materials Portfolio
Insurance Portfolio
Leisure Portfolio
Medical Delivery Portfolio
Money Market Portfolio
Multimedia Portfolio
Natural Gas Portfolio
Paper and Forest Products Portfolio
Precious Metals and Minerals Portfolio
Regional Banks Portfolio
Retailing Portfolio
Software and Computer Services Portfolio
Technology Portfolio
Telecommunications Portfolio
Transportation Portfolio
Utilities Growth Portfolio
FIDELITY STERLING PERFORMANCE PORTFOLIO, L.P.
FIDELITY SUMMER STREET TRUST
Fidelity Capital & Income Fund
FIDELITY TREND FUND
FIDELITY UNION STREET TRUST
Fidelity Export Fund
Spartan Ginnie Mac Fund
FIDELITY UNION STREET TRUST II
Fidelity Daily Income Trust
Spartan World Money Market Fund
FIDELITY YEN PERFORMANCE PORTFOLIO, L.P.
NORTH CAROLINA CAPITAL MANAGEMENT TRUST
Cash Portfolio
Term Portfolio
VARIABLE INSURANCE PRODUCTS FUND
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Money Market Portfolio
Overseas Portfolio
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager: Growth Portfolio
Asset Manager Portfolio
Contrafund Portfolio
Index 500 Portfolio
Investment Grade Bond Portfolio
DIVIDEND FUNDING
REDEMPTION FUNDING
FIDELITY ADVISOR WORLD U.S. LARGE-CAP STOCK FUND (BERMUDA) LTD.
FIDELITY ADVISOR WORLD EUROPE FUND (BERMUDA) LTD.
FIDELITY ADVISOR WORLD SOUTHEAST ASIA FUND (BERMUDA) LTD.
FIDELITY ADVISOR WORLD U.S. LIMITED TERM BOND FUND (BERMUDA) LTD.
FIDELITY ADVISOR WORLD U.S. GOVERNMENT INVESTMENT FUND (BERMUDA) LTD.
FIDELITY ADVISOR WORLD U.S. TREASURY MONEY FUND (BERMUDA) LTD.
SCHEDULE A-2
SCHEDULE A-3
ACCOUNTS
Massachusetts Municipal Depository Trust
SCHEDULE A-4
ACCOUNTS
The Fidelity Group Trust for Employee Benefits Plans
SCHEDULE B
PRICING SOURCES
PRICING SERVICES
U.S. Government Securities Interactive Data Services or Mellon Data
Services (or any other pricing service mutually agreed upon by Seller and
the Funds)
GNMA - The Bond Buyer
FHLMC - The Bond Buyer
All other U.S. Government
and Agency Securities Interactive Data Services or Mellon Data Services
(or any other pricing service mutually agreed upon by Seller and the Funds)
BROKERS' BROKERS AND BROKER DEALERS
U.S. Government Securities - Any Primary Dealer
GNMA - Any Primary Broker-Dealer's bid rate for such security
FHLMC - Any Primary Broker-Dealer's bid rate for such security
All other U.S. Government and Agency Securities - Any Primary
Broker-Dealer's bid rate for such security
Prices shall be as of the business day immediately preceding the date of
determination or the last quote available. The pricing services, Brokers'
Brokers and Broker Dealers may be changed from time to time by agreement of
all the parties.
SCHEDULE C
AUTHORIZED PERSONS
Repo Custodian
Anthony Isola
Raymond Stancil
William Mosca
Leonardo Nichols
Alan Mann
Allen B. Clark
Custodian
Ken Rindos
Kurt Woetzel
Seller
Gary F. Holloway
Konrad R. Kruger
Stephen M. Peet
Raymond E. Humiston
P. Michael Florio
Ben Carpenter
Blake S. Drexler
Derick B. Burgher
Lyn Kratovil
The Funds
Leland Barron
Wickliffe Curtis
Dorothy Egan
David Glocke
Katharyn Harlow
Timothy Huyck
Jon Jamen
Robert Litterst
Sam Silver
Burnell Stehman
Jeffrey St. Peters
Deborah Todd
John Todd
Joseph Torres
Richard Williams
SCHEDULE D
NOTICES
If to Custodian: Morgan Guaranty Trust Co. of New York
15 Broad Street, 16th Floor
New York, New York 10015
Telephone: (212) 483-4150
Attention: Ms. Kimberly Smith
or
The Bank of New York
One Wall Street, 4th Floor
New York, NY 10286
Telephone: (312) 635-4808
Attention: Claire Meskovic
With a copy to the Fund Agent
If to Repo Custodian: Chemical Bank
4 New York Plaza
21st Floor
New York, NY 10004-2477
Telephone: (212) 623-6446
Attention: Anthony Isola
If to Seller: Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Telephone: (203) 625-7909
Attention: Peter Sanchez
If to any of the Funds: FMR Texas Inc.
400 East Las Colinas Blvd., CP9M
Irving, Texas 75039
Telephone: (214) 584-7800
Attention: Ms. Deborah R. Todd or
Mr. Samuel Silver
If to the Fund Agent: Fidelity Investments
[Name of Fund]
400 East Las Colinas Blvd., CP9E
Irving, Texas 75039
Telephone: (214) 584-4071
Attention: Mr. Mark Mufler
277262.c1
SCHEDULE 1
The following lists the additional counterparties to the Repo Custodian
Agreement for Joint Trading Account between Chemical Bank and the Fidelity
Funds:
Chase Securities, Inc.
CS First Boston Corp.
Dresdner Securities (U.S.A.), Inc.
HSBC Securities, Inc.
Lehman Government Securities, Inc.
Merrill Lynch Government Securities, Inc.
Paine Webber, Inc.
Salomon Brothers, Inc.
UBS Securities, Inc.
JOINT TRADING ACCOUNT CUSTODY AGREEMENT
Between
THE BANK OF NEW YORK
and
FIDELITY FUNDS
Dated as of: May 11, 1995
TABLE OF CONTENTS
Page
ARTICLE I - APPOINTMENT OF CUSTODIAN 2
ARTICLE II - POWERS AND DUTIES OF CUSTODIAN 2
Section 2.01. Establishment of Accounts 2
Section 2.02. Receipt of Funds 2
Section 2.03. Repurchase Transactions 2
Section 2.04. Other Transfers 4
Section 2.05. Custodian's Books and Records 5
Section 2.06. Reports by Independent Certified Public Accountants 5
Section 2.07. Securities System 6
Section 2.08. Collections 6
Section 2.09. Notices, Consents, Etc. 6
Section 2.10. Notice of Custodian's Inability to Perform 7
ARTICLE III - PROPER INSTRUCTIONS AND RELATED MATTERS 7
Section 3.01. Proper Instructions; Special Instruction 7
Section 3.02. Authorized Persons 8
Section 3.03. Investment Limitations 8
Section 3.04. Persons Having Access to Assets of the Funds 8
Section 3.05. Actions of Custodian Based on Proper Instructions and Special
Instructions 9
ARTICLE IV - STANDARD OF CARE; INDEMNIFICATION 9
Section 4.02. Liability of Custodian for Actions of Securities Systems 9
Section 4.03. Indemnification 9
Section 4.04. Funds, Right to Proceed 10
ARTICLE V - COMPENSATION 11
Section 5.01. Compensation 11
Section 5.02. Waiver of Right of Set-Off 11
ARTICLE VI - TERMINATION 11
Section 6.01. Events of Termination 11
Section 6.02. Successor Custodian; Payment of Compensation 11
ARTICLE VII - MISCELLANEOUS 12
Section 7.01. Representative Capacity and Binding Obligation 12
Section 7.02. Entire Agreement 12
Section 7.03. Amendments 12
Section 7.04. Interpretation 12
Section 7.05. Captions 13
Section 7.06. Governing Law 13
Section 7.07. Notice and Confirmations 13
Section 7.08. Assignment 14
Section 7.09. Counterparts 14
Section 7.10. Confidentiality; Survival of Obligations 14
JOINT TRADING ACCOUNT CUSTODY AGREEMENT
AGREEMENT dated as of May 11, 1995 by and between The Bank of New York
(hereinafter referred to as the "Custodian") and each of the entities
listed on Schedules A-1, A-2, A-3 and A-4 hereto, acting on behalf of
itself or, (i) in the case of a series company, on behalf of one or more of
its portfolios or series listed on Schedule A-1 or A-2 hereto, (ii) in the
case of the accounts listed on Schedule A-3 hereto, acting through Fidelity
Management & Research Company, and (iii) in the case of the commingled or
individual accounts listed on Schedule A-4 hereto, acting through Fidelity
Management Trust Company (collectively, the "Funds" and each, a "Fund").
W I T N E S S E T H
WHEREAS, each of the Funds desire to appoint the Custodian as its
custodian for the purpose of establishing and administering one or more
joint trading accounts or subaccounts thereof (individually, an "Account"
and collectively, the "Accounts") and holding cash and securities for the
Funds in connection with repurchase transactions effected through the
Accounts; and
WHEREAS, one or more of the Funds may, from time to time, enter into one
or more written repurchase agreements pursuant to which one or more of the
Funds agrees to purchase and resell, and the sellers named in such
agreements agree to sell and repurchase through the Accounts, certain
securities (collectively, the "Securities") (such repurchase agreements
being hereinafter referred to, collectively, as the "Repurchase
Agreements"); and
WHEREAS, each of the custodians identified in ScheduleB hereto (each, a
"Fund Custodian") serves as the primary custodian for one or more of the
Funds; and
WHEREAS, from time to time one or more of the Funds may arrange to
transfer cash or Securities from one or more Fund Custodians to the
Custodian or transfer cash or Securities from the Custodian to one or more
Fund Custodians, or in the case of Funds in which Custodian is also Fund
Custodian, such Fund may arrange for transfer of cash or Securities between
an Account and an account maintained by Custodian in its capacity as Fund
Custodian for such Fund, in each event in connection with Repurchase
Agreement transactions; and
WHEREAS, from time to time, such Funds may arrange to transfer cash or
securities from the Custodian to the seller in such Repurchase Agreement
transactions, or in the case in which Custodian is also the clearing bank
for such seller, such Funds may arrange for transfer of cash or securities
between an Account and an account maintained by Custodian for such seller
in its capacity as clearing bank, in each event in connection with
two-party Repurchase Agreement transactions; and
WHEREAS, each of the custodians identified in Schedule C hereto (each, a
"Repo Custodian") serves as a third-party custodian of the Funds for
purposes of effecting third-party Repurchase Agreement transactions; and
WHEREAS, from time to time one or more of the Funds may arrange to
transfer cash or Securities from the Custodian to one or more Repo
Custodians or transfer cash or Securities from one or more Repo Custodians
to the Custodian, or in the case in which Custodian is also Repo Custodian,
such Funds may arrange for transfer of cash or securities between an
Account and an account maintained for such Funds in its capacity as Repo
Custodian, in each event in connection with third-party Repurchase
Agreement transactions;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I - APPOINTMENT OF CUSTODIAN
Each of the Funds hereby employs and appoints the Custodian as its
custodian, subject to the terms and provisions of this Agreement.
ARTICLE II - POWERS AND DUTIES OF CUSTODIAN
As custodian, the Custodian shall have and perform the powers and duties,
and only such powers and duties, as are set forth in this Agreement.
Section 2.01. Establishment of Accounts. The Custodian shall establish
one or more Accounts as segregated joint trading accounts for the Funds
through which the Funds shall, from time to time, effect Repurchase
Agreement transactions.
Section 2.02. Receipt of Funds. The Custodian shall, from time to time,
receive funds for or on behalf of the Funds and shall hold such funds in
safekeeping. Upon receipt of Proper Instructions, the Custodian shall
credit funds so received to one or more Accounts designated in such Proper
Instructions. Promptly after receipt of such funds from the Fund Custodian
or a Repo Custodian or promptly following the transfer to an Account from
any account maintained by Custodian in its capacity as Fund Custodian, or
as Repo Custodian, the Custodian shall provide written confirmation of such
receipt to the Fund Custodian or Repo Custodian, when and as applicable,
and of such receipt or transfer to the Fund Agent designated in Section
7.07(b) hereof (the "Fund Agent"). The Custodian shall designate on its
books and records the funds allocable to each Account and the identity of
each Fund participating in such Account.
Section 2.03. Repurchase Transactions. The Funds may, from time to time,
enter into Repurchase Agreement transactions. In connection with each such
Repurchase Agreement transaction, unless otherwise specifically directed by
Special Instructions, the Custodian shall take the following actions:
(a) Purchase of Securities. Upon receipt of Proper Instructions, the
Custodian shall pay for and receive Securities and any cash denominated in
U.S. Dollars which is serving as collateral ("Cash Collateral"), provided
that payment therefor shall be made by the Custodian only against prior or
simultaneous receipt of the Securities and any Cash Collateral in the
manner prescribed in subsection 2.03(b) below. Except as provided in
Section2.04 hereof, in no event shall the Custodian deliver funds from an
Account for the purchase of Securities and any Cash Collateral prior to
receipt of the Securities and any Cash Collateral by the Custodian or a
Securities System (as hereinafter defined). The Custodian is not under any
obligation to make credit available to the Funds to complete transactions
hereunder. Promptly after the transfer of funds and receipt of Securities
and any Cash Collateral, the Custodian shall provide a confirmation to the
Fund Agent, setting forth (i) the Securities and any Cash Collateral which
the Custodian has received pursuant to the Repurchase Agreement
transaction, (ii) the amount of funds transferred from the applicable
Account, and (iii) any security or transaction identification numbers
reasonably requested by the Fund Agent.
(b) Receipt and Holding of Securities. In connection with each Repurchase
Agreement transaction, the Custodian shall receive and hold the Securities
as follows: (i) in the case of certificated securities, by physical receipt
of the certificates or other instruments representing such Securities and
by physical segregation of such certificates or instruments from other
assets of the Custodian in a manner indicating that such Securities belong
to specified Funds; and (ii) in the case of Securities held in book-entry
form by a Securities System (as hereinafter defined), by appropriate
transfer and registration of such Securities to a customer only account of
the Custodian on the book-entry records of the Securities System, and by
appropriate entry on the books and records of the Custodian identifying
such Securities as belonging to specified Funds.
(c) Sale of Securities. Upon receipt of Proper Instructions, the
Custodian shall make delivery of Securities and any Cash Collateral held in
or credited to an Account against prior or simultaneous payment for such
Securities in immediately available funds in the form of: (i) cash, bank
credit, or bank wire transfer received by the Custodian; or (ii) credit to
the customer only account of the Custodian with a Securities System.
Notwithstanding the foregoing, the Custodian shall make delivery of
Securities held in physical form in accordance with "street delivery
custom" to a broker or its clearing agent, against delivery to the
Custodian of a receipt for such Securities; provided that the Custodian
shall have taken all actions possible to ensure prompt collection of the
payment for, or the return of such Securities by the broker or its clearing
agent. Promptly after the transfer of Securities and any Cash Collateral
and the receipt of funds, the Custodian shall provide a confirmation to the
Fund Agent, setting forth the amount of funds received by the Custodian or
a Securities System for credit to the applicable Account.
(d) Additional Functions. Upon receipt of Proper Instructions, the
Custodian shall take all such other actions as specified in such Proper
Instructions and as shall be reasonable or necessary with respect to
Repurchase Agreement transactions and the Securities and funds transferred
and received pursuant to such transactions, including, without limitation,
all such actions as shall be prescribed in the event of a default under a
Repurchase Agreement.
(e) Nondiscretionary Functions. The Custodian shall attend to all
non-discretionary details in connection with the purchase, sale, transfer
or other dealings with Securities or other assets of the Funds held by the
Custodian.
(f) In the event that the Custodian is directed by Proper Instructions to
make any payment or transfer of funds on behalf of a Fund for which there
would be, at the close of business on the date of such payment or transfer,
insufficient funds held by the Custodian on behalf of such Fund, the
Custodian may, in its discretion, provide an overdraft ("Overdraft") to the
Fund, in an amount sufficient to allow the completion of such payment or
transfer. Any Overdraft provided hereunder: (a) shall be payable on the
next Business Day, unless otherwise agreed by the Fund and the Custodian;
and (b) shall accrue interest form the date of the Overdraft to the date of
payment in full by the Fund at a rate agreed upon in writing, from time to
time, by the Custodian and the Fund. The Custodian and the Funds
acknowledge that the purpose of such Overdrafts is to temporarily finance
the purchase or sale of securities for prompt delivery in accordance with
the terms hereof, or to meet emergency expenses not reasonably foreseeable
by a particular Fund. The Funds hereby agree that the Custodian shall have
a continuing lien and security interest in and to all Securities whose
purchase is financed by Custodian and which are in Custodian's possession
or in the possession or control of any third party acting on Custodian's
behalf and the proceeds thereof. In this regard, Custodian shall be
entitled to all the rights and remedies of a pledgee under common law and a
secured party under the New York Uniform Commercial Code and any other
applicable laws or regulations as then in effect.
Section 2.04. Other Transfers.
(a) In addition to transfers of funds and Securities referred to in
Section 2.03, the Custodian shall transfer funds and Securities held in an
Account: (a) upon receipt of Proper Instructions, to (i)any Fund
Custodian, or (ii)any other account maintained for any Fund by the
Custodian in its capacity as a Fund Custodian, (iii)any Repo Custodian or
(iv) any other account maintained for any Fund by the Custodian in its
capacity as a Repo Custodian; or (b) upon receipt of Special Instructions,
and subject to Section 3.04 hereof, to any other person or entity
designated in such Special Instructions.
(b) Determination of Fund Custodian Daily Net Amount. On each banking
day, based upon daily transaction information provided to the Custodian by
the Funds, Custodian shall determine: (i) the amount of cash due to be
transferred on such day by each Fund Custodian to the Custodian in
connection with all Repurchase Agreement transactions in which the date
fixed for the repurchase and resale of Securities is the banking day next
following the date on which the sale and purchase of such Securities takes
place (each, an "Overnight Repo Transaction") to be effected through the
Accounts in such day; and (ii) the amount of cash due to be transferred on
such day by Custodian to such Fund Custodian in connection with all
outstanding Overnight Repo Transactions previously effected through the
Accounts (the difference between (i) and (ii) with respect to each Fund
Custodian being referred to as the "Fund Custodian Daily Net Amount"). On
each banking day, Custodian shall notify each Fund Custodian of the
foregoing determination and, unless otherwise directed in accordance with
Proper Instructions, Custodian shall (i) instruct such Fund Custodian to
transfer cash to the Custodian equal to the Fund Custodian Daily Net Amount
(if the Fund Custodian Daily Net Amount is positive) or (ii) transfer to
such Fund Custodian cash equal to the Fund Custodian Daily Net Amount (if
the Fund Custodian Daily Net Amount is negative).
(c) Determination of Repo Custodian Daily Net Amount. On each banking
day, based upon daily transaction information provided to the Custodian by
the Funds and each Repo Custodian, Custodian shall determine: (i) the
amount of cash due to be transferred on such day by each Repo Custodian on
behalf of the Funds to all counterparties in connection with all
third-party Overnight Repo Transactions to be effected through the Accounts
on such day; and (ii) the amount of cash due to be transferred on such day
by each Repo Custodian on behalf of all counterparties to the Funds in
connection with all outstanding third-party Overnight Repo Transactions
previously effected through the Accounts (the difference between (i) and
(ii) with respect to each Repo Custodian being referred to as the "Repo
Custodian Daily Net Amount"). On each banking day, Custodian shall notify
the Funds of the foregoing determinations and, unless otherwise directed in
accordance with Proper Instructions, Custodian shall (i) transfer to each
Repo Custodian cash equal to the Repo Custodian Daily Net Amount (if the
Repo Custodian Daily Net Amount is positive) or (ii) instruct each Repo
Custodian to transfer to the Custodian cash equal to the Repo Custodian
Daily Net Amount (if the Repo Custodian Daily Net Amount is negative).
Section 2.05. Custodian's Books and Records. The Custodian shall provide
any assistance reasonably requested by the Funds in the preparation of
reports to shareholders of the Funds and others, audits of accounts, and
other ministerial matters of like nature. The Custodian shall maintain
complete and accurate records with respect to cash and Securities held for
the benefit of the Funds as required by the rules and regulations of the
Securities and Exchange Commission applicable to investment companies
registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), including: (a) journals or other records of
original entry containing a detailed and itemized daily record of all
receipts and deliveries of securities (including certificate and
transaction identification numbers, if any), and all receipts and
disbursements of cash; (b) ledgers or other records reflecting Securities
in transfer, and Securities in physical possession; and (c) cancelled
checks and bank records related thereto. The Custodian shall keep such
other books and records of the Funds relating to repurchase transactions
effected through the Accounts as the Funds shall reasonably request. Such
books and records maintained by the Custodian shall reflect at all times
the identity of each Fund participating in each Account and the aggregate
amount of the Securities and any Cash Collateral held by the Custodian on
behalf of the Funds in such Account pursuant to this Agreement. All such
books and records maintained by the Custodian shall be maintained in a form
acceptable to the Funds and in compliance with the rules and regulations of
the Securities and Exchange Commission, including, but not limited to,
books and records required to be maintained by Section 31(a) of the
Investment Company Act and the rules from time to time adopted thereunder.
All books and records maintained by the Custodian relating to the Accounts
shall at all times be the property of the Funds and shall be available
during normal business hours for inspection and use by the Funds and their
agents, including, without limitation, their independent certified public
accountants. Notwithstanding the preceding sentence, the Funds shall not
take any actions or cause Custodian to take any actions which would cause,
either directly or indirectly, the Custodian to violate any applicable
laws, regulations, rules or orders.
Section 2.06. Reports by Independent Certified Public Accountants. At the
request of the Funds, the Custodian shall deliver to the Funds such annual
reports and other interim reports prepared by the independent certified
public accountants of the Custodian with respect to the services provided
by the Custodian under this Agreement, including, without limitation, the
Custodian's accounting system, internal accounting control and procedures
for safeguarding Securities, including Securities deposited and/or
maintained in a Securities System. Such reports, which shall be of
sufficient scope and in sufficient detail as may reasonably be required by
the Funds and as may reasonably by obtained by the Custodian, shall provide
reasonable assurance to the Funds that the procedures employed by the
independent certified public accountants are reasonably designed to detect
any material inadequacies with respect to the matters discussed in the
report, shall state in detail the material inadequacies disclosed by such
examination, and, if no such inadequacies exist, shall so state.
Section 2.07. Securities System. As used herein the term "Securities
System" shall mean each of the following: (a) the Depository Trust
Company; (b) the Participants Trust Company; (c) any book-entry system as
provided in (i) Subpart0 of Treasury Circular No. 300, 31CFR 306.115, (ii)
SubpartB of Treasury Circular Public Debt Series No. 27-76, 31CFR 350.2, or
(iii) the book-entry regulations of federal agencies substantially in the
form of 31CFR 306.115; or (d) any domestic clearing agency registered with
the Securities and Exchange Commission under Section17A of the Securities
Exchange Act of 1934, as amended (or as may otherwise be authorized by the
Securities and Exchange Commission to serve in the capacity of depository
or clearing agent for the securities or other assets of investment
companies) which acts as a securities depository and the use of which has
been approved in Special Instructions. Use of a Securities System by the
Custodian shall be in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
(A) The Custodian may deposit and/or maintain Securities held hereunder in
a Securities System, provided that such Securities are represented in an
account of the Custodian in the Securities System which account shall not
contain any assets of the Custodian other than assets held as a fiduciary,
custodian, or otherwise for customers.
(B) The Custodian shall, if requested by the Funds, provide the Funds with
all reports obtained by the Custodian with respect to the Securities
System's accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System.
(C) Upon receipt of Special Instructions, the Custodian shall terminate
the use hereunder of any Securities System (except for the federal
book-entry system) as promptly as practicable and shall take all actions
reasonably practicable to safeguard the Securities and other assets of the
Funds maintained with such Securities System.
Section 2.08. Collections. The Custodian shall (a) collect, receive and
deposit in the applicable Account all income and other payments with
respect to Securities held by the Custodian hereunder; (b) endorse and
deliver any instruments required to effect such collection; and (c) execute
ownership and other certificates and affidavits for all federal, state and
foreign tax purposes in connection with receipt of income or other payments
with respect to Securities, or in connection with the transfer of
Securities.
Section 2.09. Notices, Consents, Etc. The Custodian shall deliver to the
Funds, in the most expeditious manner practicable, all notices, consents or
announcements affecting or relating to Securities held by the Custodian on
behalf of the Funds that are received by the Custodian, and, upon receipt
of Proper Instructions, the Custodian shall execute and deliver such
consents or other authorizations as may be required.
Section 2.10. Notice of Custodian's Inability to Perform. The Custodian
shall promptly notify the Funds in writing by facsimile transmission or
such other manner as the Funds may designate, if, for any reason: (a) the
Custodian determines that it is unable to perform any of its duties or
obligations hereunder or its duties or obligations with respect to any
repurchase transaction; or (b) the Custodian reasonably foresees that it
will be unable to perform any such duties or obligations.
ARTICLE III - PROPER INSTRUCTIONS AND RELATED MATTERS
Section 3.01. Proper Instructions; Special Instruction.
(a) Proper Instructions. As used herein, the term "Proper Instructions"
shall mean: (i) a tested telex, a written (including, without limitation,
facsimile transmission) request, direction, instruction or certification
signed or initialed by one or more Authorized Persons (as hereinafter
defined); (ii) a telephonic or other oral communication by one or more
Authorized Persons; or (iii) a communication effected directly between
electromechanical or electronic devices or systems (including, without
limitation, computers) by one or more Authorized Persons; provided,
however, that communications of the types described in clauses (ii) and
(iii) above purporting to be given by an Authorized Person shall be
considered Proper Instructions only if the Custodian reasonably believes
such communications to have been given by an Authorized Person with respect
to the transaction involved. Proper Instructions in the form of oral
communications shall be confirmed by the Funds by tested telex or in
writing in the manner set forth in clause(i) above, but the lack of such
confirmation shall in no way affect any action taken by the Custodian in
reliance upon such oral instructions prior to the Custodian's receipt of
such confirmation. Each of the Funds and the Custodian is hereby
authorized to record any and all telephonic or other oral instructions
communicated to the Custodian. Proper Instructions may relate to specific
transactions or to types or classes of transactions, and may be in the form
of standing instructions.
(b) Special Instructions. As used herein, the term "Special Instructions"
shall mean Proper Instructions countersigned or confirmed in writing by, in
the case of the entities listed in Schedules A-1 or A-2 hereto, the
Treasurer or any Assistant Treasurer of the Funds or any other person
designated in writing by the Treasurer of the Funds, and in the case of
each of the entities listed on Schedules A-3 or A-4, by the officer who is
a signatory to this Agreement on behalf of such entity or any other person
designated in writing by such officer or an officer of such entity of
higher authority, which countersignature or written confirmation shall be
(i) included on the same instrument containing the Proper Instructions or
on a separate instrument relating thereto, and (ii) delivered by hand, by
facsimile transmission, or in such other manner as the parties hereto may
agree in writing.
(c) Address for Proper Instructions and Special Instructions. Proper
Instructions and Special Instructions shall be delivered to the Custodian
at the address and/or telephone, telecopy or telex number agreed upon from
time to time by the Custodian and the Funds.
Section 3.02. Authorized Persons. Concurrently with the execution of this
Agreement and from time to time thereafter, as appropriate, the Funds shall
deliver to the Custodian, duly certified as appropriate by the Treasurer or
any Assistant Treasurer of the Funds or by a Secretary or Assistant
Secretary of the Funds, and in the case of each of the entities listed on
Schedules A-3 or A-4, by the officer who is a signatory to this Agreement
on behalf of such entity or any other person designated in writing by such
officer or an officer of higher authority, a certificate setting forth (a)
the names, signatures and scope of authority of all persons authorized to
give Proper Instructions or any other notice, request, direction,
instruction, certificate or instrument on behalf of the Funds
(collectively, the "Authorized Persons," and individually, an "Authorized
Person"), and (b) the names and signatures of those persons authorized to
issue Special Instructions. Such certificate may be accepted and relied
upon by the Custodian as conclusive evidence of the facts set forth therein
and shall be considered to be in full force and effect until delivery to
the Custodian of a similar certificate to the contrary. Upon delivery of a
certificate which deletes the name of a person previously authorized to
give Proper Instructions or to issue Special Instructions, such person
shall no longer be considered an Authorized Person or authorized to issue
Special Instructions, as applicable.
Section 3.03. Investment Limitations. In performing its duties hereunder
the Custodian may assume, unless and until it receives special Instructions
to the contrary (a "Contrary Notice"), that Proper Instructions received by
it are not in conflict with or in any way contrary to any investment or
other limitation applicable to any of the Funds. The Custodian shall in no
event be liable to the Funds and shall be indemnified by the Funds for any
loss, damage or expense to the Custodian arising out of any violation of
any investment or other limitation to which any Fund is subject, except to
the extent that such loss, damage or expense: (i) relates to a violation
of any investment or other limitation of a Fund occurring after receipt by
the Custodian of a Contrary Notice; or (ii) arises from a breach of this
Agreement by the Custodian.
Section 3.04. Persons Having Access to Assets of the Funds. No Authorized
Person, Trustee, officer, employee or agent of the Funds (other than the
Custodian) shall have physical access to the assets of the Funds held by
the Custodian, or shall be authorized or permitted to withdraw any such
assets for delivery to an account of such person, nor shall the Custodian
deliver any such assets to any such person; provided, however, that nothing
in this Section 3.04 shall prohibit: (a) any Authorized Person from giving
Proper Instructions, or the persons described in Section 3.01(b) from
issuing Special Instructions, so long as such action does not result in
delivery of or access to assets of the Funds prohibited by this Section
3.04; or (b) the Funds' independent certified public accountants from
examining or reviewing the assets of the Funds held by the Custodian.
Section 3.05. Actions of Custodian Based on Proper Instructions and
Special Instructions. Subject to the provisions of Section 4.01 hereof,
the Custodian shall not be responsible for the title, validity or
genuineness of any property, or evidence of title thereof, received by it
or delivered by it pursuant to this Agreement.
ARTICLE IV - STANDARD OF CARE; INDEMNIFICATION
Section 4.01. Standard of Care.
(a) General Standard of Care. The Custodian shall exercise reasonable
care and diligence in carrying out all of its duties and obligations under
this Agreement, and shall be liable to the Funds for all loss, damage and
expense incurred or suffered by the Funds, resulting from the failure of
the Custodian to exercise such reasonable care and diligence or from any
other breach by the Custodian of the terms of this Agreement.
(b) Acts of God, Etc. In no event shall the Custodian incur liability
hereunder if the Custodian is prevented, forbidden or delayed from
performing, or omits to perform, any act or thing which this Agreement
provides shall be performed or omitted to be performed by reason of: (i)
any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or of any foreign country,
or political subdivision thereof or of any court of competent jurisdiction;
or (ii) any act of God or war; unless, in each case, such delay or
nonperformance is caused by (A) the negligence, misfeasance or misconduct
of the Custodian, or (B) a malfunction or failure of equipment maintained
or operated by the Custodian other than a malfunction or failure caused by
events beyond the Custodian's control and which could not reasonably be
anticipated and/or prevented by the Custodian.
(c) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any loss, damage or expense to the Funds, the Custodian
shall use all commercially reasonable efforts and shall take all reasonable
steps under the circumstances to mitigate the effects of such event and to
avoid continuing harm to the Funds.
Section 4.02. Liability of Custodian for Actions of Securities Systems.
Notwithstanding the provisions of Section4.01 to the contrary, the
Custodian shall not be liable to the Funds for any loss, damage or expense
resulting from the use by the Custodian of a Securities System, unless such
loss, damage or expense is caused by, or results from, negligence,
misfeasance or misconduct of the Custodian. In the case of loss, damage or
expense resulting from use of a Securities System by the Custodian, the
Custodian shall take all reasonable steps to enforce such rights as it may
have against the Securities System to protect the interest of the Funds.
Section 4.03. Indemnification.
(a) Indemnification Obligations. Subject to the limitations set forth in
this Agreement, the Funds severally agree to indemnify and hold harmless
the Custodian from all claims and liabilities (including reasonable
attorneys' fees) incurred or assessed against the Custodian for actions
taken in reliance upon Proper Instructions or Special Instructions;
provided, however, that such indemnity shall not apply to claims and
liabilities occasioned by or resulting from the negligence, misfeasance or
misconduct of the Custodian, or any other breach of this Agreement by the
Custodian. In addition, the Funds severally agree to indemnify the
Custodian against any liability incurred by the Custodian by reason of
taxes assessed to the Custodian, or other costs, liability or expenses
incurred by the Custodian, resulting directly or indirectly solely from the
fact that securities and other property of the Funds is registered in the
name of the Custodian; provided, however, in no event shall such
indemnification be applicable to income, franchise or similar taxes which
may be imposed or applied against the Custodian or charges imposed by a
Federal Reserve Bank with respect to intra-day overdrafts unless separately
agreed to by the Funds.
(b) Extent of Liability. Notwithstanding anything to the contrary
contained herein, with respect to the indemnification obligations of the
Funds provided in this Section4.03, each Fund shall be: (i) severally, and
not jointly and severally, liable with each of the other Funds; and (ii)
liable only for its pro rata share of such liabilities, determined with
reference to such Fund's proportionate interest in the aggregate of assets
held by the Custodian in the Account with respect to which such liability
relates at the time such liability was incurred, as reflected on the books
and records of the Funds.
(c) Notice of Litigation, Right to Prosecute, Etc. The Custodian shall
promptly notify the Funds in writing of the commencement of any litigation
or proceeding brought against the Custodian in respect of which indemnity
may be sought against the Funds pursuant to this Section4.03. The Funds
shall be entitled to participate in any such litigation or proceeding and,
after written notice from the Funds to the Custodian, the Funds may assume
the defense of such litigation or proceeding with counsel of their choice
at their own expense. The Custodian shall not consent to the entry of any
judgment or enter into any settlement in any such litigation or proceeding
without providing the Funds with adequate notice of any such settlement or
judgment, and without the Funds' prior written consent. The Custodian
shall submit written evidence to the Funds with respect to any cost or
expense for which it seeks indemnification in such form and detail as the
Funds may reasonably request.
Section 4.04. Funds, Right to Proceed. Notwithstanding anything to the
contrary contained herein, the Funds shall have, at their election upon
reasonable notice to the Custodian, the right to enforce, to the extent
permitted by any applicable agreement and applicable law, the Custodian's
rights against any Securities System or other person for loss, damage or
expense caused the Custodian or the Funds by such Securities System or
other person, and shall be entitled to enforce the rights of the Custodian
with respect to.any claim against such Securities System or other person
which the Custodian may have as a consequence of any such loss, damage or
expense if and to the extent that the Custodian or any Fund has not been
made whole for any such loss, damage or expense.
ARTICLE V - COMPENSATION
Section 5.01. Compensation. The Custodian shall be compensated for its
services hereunder in an amount, and at such times, as may be agreed upon,
from time to time, by the Custodian and the Funds. Each Fund shall be
severally, and not jointly, liable with the other Funds only for its pro
rata share of such compensation, determined with reference to such Fund's
proportionate interest in each Repurchase Agreement transaction to which
such compensation relates.
Section 5.02. Waiver of Right of Set-Off. The Custodian hereby waives and
relinquishes all contractual and common law rights of set-off to which it
may now or hereafter be or become entitled with respect to any obligations
of the Funds to the Custodian arising under this Agreement.
ARTICLE VI - TERMINATION
Section 6.01. Events of Termination. This Agreement shall continue in
full force and effect until the first to occur of: (a) termination by the
Custodian or the Funds by an instrument in writing delivered to the other
party, such termination to take effect not sooner than ninety (90) days
after the date of such delivery; or (b) termination by the Funds by written
notice delivered to the Custodian, based upon the Funds' determination that
there is a reasonable basis to conclude that the Custodian is insolvent or
that the financial condition of the Custodian is deteriorating in any
material respect, in which case termination shall take effect upon the
Custodians receipt of such notice or at such later time as the Funds shall
designate; provided, however, that this Agreement may be terminated as to
one or more Funds (but less than all Funds) by delivery of an amended
Schedule A-1, A-2, A-3 or A-4 pursuant to Section7.03 hereof. The
execution and delivery of an amended Schedule A-1, A-2, A-3 or A-4 which
deletes one or more Funds shall constitute a termination of this Agreement
only with respect to such deleted Fund(s).
Section 6.02. Successor Custodian; Payment of Compensation. Each of the
Funds may identify a successor custodian to which the cash, Securities and
other assets of such Fund shall, upon termination of this Agreement, be
delivered; provided that in the case of the termination of this Agreement
with respect to any of the Funds, such Fund or Funds shall direct the
Custodian to transfer the assets of such Fund or Funds held by the
Custodian pursuant to Proper Instructions. The Custodian agrees to
cooperate with the Funds in the execution of documents and performance or
all other actions necessary or desirable in order to substitute the
successor custodian for the Custodian under this Agreement. In the event
of termination, each Fund shall make payment of such Fund's applicable
share of unpaid compensation within a reasonable time following termination
and delivery of a statement to the Funds setting forth such fees. The
termination of this Agreement with respect to any of the Funds shall be
governed by the provisions of this ArticleVI as to notice, payments and
delivery of securities and other assets, and shall not affect the
obligations of the parties hereunder with respect to the other Funds set
forth in Schedule A-1, A-2, A-3 or A-4 as amended from time to time.
ARTICLE VII - MISCELLANEOUS
Section 7.01. Representative Capacity and Binding Obligation. A COPY OF
THE DECLARATION OF TRUST OR OTHER ORGANIZATIONAL DOCUMENTS OF EACH FUND IS
ON FILE WITH THE SECRETARY OF THE STATE OF EACH FUND'S FORMATION, AND
NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT IS NOT EXECUTED ON BEHALF OF THE
TRUSTEES OF ANY FUND AS INDIVIDUALS, AND THE OBLIGATIONS OF THIS AGREEMENT
ARE NOT BINDING UPON ANY OF THE SHAREHOLDERS, TRUSTEES, DIRECTORS,
PARTNERS, OFFICERS, EMPLOYEES OR AGENTS OF ANY FUND INDIVIDUALLY, BUT ARE
BINDING ONLY UPON THE ASSETS AND PROPERTY OF THE FUNDS, AND IN THE CASE OF
SERIES COMPANIES, SUCH FUNDS' RESPECTIVE PORTFOLIOS OR SERIES.
THE CUSTODIAN AGREES THAT NO SHAREHOLDER, TRUSTEE, DIRECTOR, PARTNER,
OFFICER, EMPLOYEE OR AGENT OF ANY FUND MAY BE HELD PERSONALLY LIABLE OR
RESPONSIBLE FOR ANY OBLIGATIONS OF THE FUNDS ARISING OUT OF THIS AGREEMENT.
WITH RESPECT TO OBLIGATIONS OF EACH FUND ARISING OUT OF THIS AGREEMENT, THE
CUSTODIAN SHALL LOOK FOR PAYMENT OR SATISFACTION OF ANY CLAIM SOLELY TO THE
ASSETS AND PROPERTY OF THE FUND TO WHICH SUCH OBLIGATION RELATES AS THOUGH
EACH FUND HAD SEPARATELY CONTRACTED WITH THE CUSTODIAN BY SEPARATE WRITTEN
INSTRUMENT."
Section 7.02. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the
subject matter hereof.
Section 7.03. Amendments. No provision of this Agreement may be amended
except by a statement in writing signed by the party against which
enforcement of the amendment is sought; provided, however, Schedule A-1,
A-2, A-3 or A-4 listing the Funds which are parties hereto, Schedule B
listing the Fund Custodians and Schedule C listing the Repo Custodians may
be amended from time to time to add or delete one or more Funds, Fund
Custodians or Repo Custodians, as the case may be, by the Funds' delivery
of an amended Schedule A-1, A-2, A-3 or A-4, Schedule B or Schedule C to
the Custodian. The deletion of one or more Funds from Schedule A-1, A-2,
A-3 or A-4 shall have the effect of terminating this Agreement as to such
Fund(s), but shall not affect this Agreement with respect to any other
Fund.
Section 7.04. Interpretation. In connection with the operation of this
Agreement, the Custodian, and the Funds may agree in writing from time to
time on such provisions interpretative of or in addition to the provisions
of this Agreement as may in their joint opinion be consistent with the
general tenor of this Agreement. No interpretative or additional
provisions made as provided in the preceding sentence shall be deemed to be
an amendment of this Agreement.
Section 7.05. Captions. Headings contained in this Agreement, which are
included as convenient references only, shall have no bearing upon the
interpretation of the terms of the Agreement or the obligations of the
parties hereto.
Section 7.06. Governing Law. THE PROVISIONS OF THIS AGREEMENT SHALL BE
GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.
Section 7.07. Notice and Confirmations.
(a) Except as provided in Section 7.07(b) below and except in the case of
Proper Instructions or Special Instructions, notices and other writings
contemplated by this Agreement shall be delivered by hand or by facsimile
transmission (provided that in the case of delivery by facsimile
transmission, notice shall also be mailed postage prepaid) to the parties
at the following addresses:
(i) If to the Funds:
FMR Texas Inc.
400 East Las Colinas Blvd., CP9M
Irving, Texas 75039
Telephone: (214) 584-7800
Attention: Ms. Deborah Todd or
Mr. Samuel Silver
(ii) If to the Custodian:
The Bank of New York
One Wall Street
Fourth Floor
New York, NY 10286
Attn: Claire Meskovic
Telephone: (212) 635-4808
Telefax: (212) 635-4828
(b) The Custodian may provide the confirmations required by Sections 2.02
and 2.03 of this Agreement by making the information available in the form
of a communication directly between electromechanical or electrical devices
or systems (including, without limitation, computers) (or in such other
manner as the parties hereto may agree in writing) to the following Fund
Agent:
Fidelity Accounting and Custody
Domestic Securities Operations
400 East Las Colinas Blvd., CP9E
Irving, Texas 75039
Telephone: (214) 506-4071
Attention: Mr. Mark Mufler
The address and telephone number of the Funds, the Fund Agent and the
Custodian and the identity of the Fund Agent specified in this Section 7.07
may be changed by written notice of the Funds to Custodian or Custodian to
the Funds, as the case may be. All written notices which are required or
provided to be given hereunder shall be effective upon actual receipt by
the entity to which such notice is given.
Section 7.08. Assignment. This Agreement shall be binding on and shall
inure to the benefit of the parties hereto and their respective successors
and assigns, provided that, no party hereto may assign this Agreement or
any of its rights or obligations hereunder without the prior written
consent of each of the other parties.
Section 7.09. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original. This Agreement
shall become effective when one or more counterparts have been signed and
delivered by each of the parties.
Section 7.10. Confidentiality; Survival of Obligations. The parties
hereto agree that they shall each shall treat confidentially the terms and
conditions of this Agreement and all information provided by each party to
the others regarding its business and operations. All confidential
information provided by a party hereto shall be used by any other party
hereto solely for the purpose of rendering services pursuant to this
Agreement and, except as may be required in carrying out this Agreement,
shall not be disclosed to any third party without the prior consent of such
providing party. The foregoing shall not be applicable to any information
that is publicly available when provided or thereafter becomes publicly
available other than through a breach of this Agreement, or that is
required to be disclosed by any bank examiner of the Custodian, any auditor
of the parties hereto or by judicial or administrative process or otherwise
by applicable law or regulation. The provisions of this Section 7.10 and
Sections3.03, 4.01, 4.02, 4.03, 4.04, 4.05, 7.01 and 7.06 shall survive any
termination of this Agreement, provided that in the event of termination
the Custodian agrees that it shall transfer and return Securities and other
assets held by the Custodian for the benefit of the Funds as the Funds
direct pursuant to Proper Instructions.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.
BANK OF NEW YORK
By: /s/Ken Rindos
Name: Ken Rindos
Title: Senior Vice President
FIDELITY INVESTMENT COMPANIES LISTED
ON SCHEDULE A-1 HERETO AND ACCOUNTS
LISTED ON SCHEDULE A-3 HERETO
Dated:
By: /s/Stephen P. Jonas
Name: Stephen P. Jonas
Title: Treasurer of the Fidelity Investment Companies
listed on ScheduleA-1 and Vice President of
Fidelity Management& Research Company
FIDELITY INVESTMENT COMPANIES LISTED
ON SCHEDULE A-2 HERETO
Dated:
By: /s/Brett J. Goodwin
Name: Brett J. Goodwin
Title: Director of the Fidelity International (Bermuda)
Funds Limited, on behalf of the Funds listed on
Schedule A-2
ACCOUNTS LISTED ON SCHEDULE A-4 HERETO
By: FIDELITY MANAGEMENT TRUST COMPANY
Dated:
By: /s/John P. O'Reilly, Jr.
Name: John P. O'Reilly, Jr.
Title: Executive Vice President
94975.c5
SCHEDULES A-1, A-2, A-3 AND A-4
TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT BETWEEN
THE BANK OF NEW YORK AND FIDELITY FUNDS DATED AS OF MAY 11, 1995
The following is a list of the Funds to which this Agreement applies:
SCHEDULE A-1
DAILY MONEY FUND
Capital Reserves: Money Market Portfolio
Capital Reserves: Municipal Money Market Portfolio
Capital Reserves: U.S. Government Portfolio
Fidelity U.S. Treasury Income Portfolio
Money Market Portfolio
U.S. Treasury Portfolio
FIDELITY ADVISOR ANNUITY FUNDS
Fidelity Advisor Annuity Government Investment Fund
Fidelity Advisor Annuity Growth Opportunities Fund
Fidelity Advisor Annuity High Yield Fund
Fidelity Advisor Annuity Income & Growth Fund
Fidelity Advisor Annuity Money Market Fund
Fidelity Advisor Annuity Overseas Fund
Fidelity Advisor Annuity Strategic Income Fund
FIDELITY ADVISOR SERIES I
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Institutional Equity Portfolio Growth
FIDELITY ADVISOR SERIES II
Fidelity Advisor Government Investment Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Income & Growth Fund
Fidelity Advisor Short Fixed-Income Fund
FIDELITY ADVISOR SERIES III
Fidelity Advisor Equity Portfolio Income
Fidelity Advisor Institutional Equity Portfolio Income
FIDELITY ADVISOR SERIES IV
Fidelity Advisor Institutional Limited Term Bond Fund
Fidelity Advisor Limited Term Bond Fund
Fidelity Institutional Short-Intermediate Government Portfolio
Fidelity Institutional Short-Intermediate Government Portfolio II
Fidelity Real Estate High Income Fund
FIDELITY ADVISOR SERIES V
Fidelity Advisor Global Resources Fund
Fidelity Advisor High Income Municipal Fund
FIDELITY ADVISOR SERIES VII
Fidelity Advisor Overseas Portfolio
FIDELITY ADVISOR SERIES VIII
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Strategic Opportunities Fund
FIDELITY CAPITAL TRUST
Fidelity Capital Appreciation Fund
Fidelity Disciplined Equity Fund
Fidelity Stock Selector
Fidelity Value Fund
FIDELITY CHARLES STREET
Fidelity Asset Manager
Fidelity Asset Manager: Growth
Fidelity Asset Manager: Income
Fidelity Short-Intermediate Government Fund
Fidelity U.S. Government Reserves
Spartan Investment-Grade Bond Fund
Spartan Short-Term Income Fund
FIDELITY COMMONWEALTH TRUST
Fidelity Intermediate Bond Fund
Fidelity Market Index Fund
Fidelity Small Cap Stock Fund
Fidelity Large Cap Stock Fund
FIDELITY CONGRESS STREET FUND
FIDELITY CONTRAFUND
FIDELITY DESTINY PORTFOLIOS
Destiny I
Destiny II
FIDELITY DEUTSCHE MARK PERFORMANCE PORTFOLIO, L.P.
FIDELITY DEVONSHIRE TRUST
Fidelity Equity-Income Fund
Fidelity Mid-Cap Stock Fund
Fidelity Real Estate Investment Portfolio
Fidelity Utilities Fund
Spartan Long-Term Government Bond Fund
FIDELITY EXCHANGE FUND
FIDELITY FINANCIAL TRUST
Fidelity Convertible Securities Fund
Fidelity Equity-Income II Fund
Fidelity Retirement Growth Fund
FIDELITY FIXED-INCOME TRUST
Fidelity Investment Grade Bond Fund
Fidelity Short-Term Income Portfolio
Spartan Government Income Fund
Spartan High Income Fund
Spartan Short-Intermediate Government Fund
FIDELITY GOVERNMENT SECURITIES FUND
FIDELITY HASTINGS STREET TRUST
Fidelity Fifty
Fidelity Fund
FIDELITY HEREFORD STREET TRUST
Spartan Money Market Fund
Spartan U.S. Government Money Market Fund
FIDELITY EMERGING ASIA FUND
FIDELITY INCOME FUND
Fidelity Ginnie Mae Portfolio
Fidelity Mortgage Securities Portfolio
Spartan Limited Maturity Government Fund
FIDELITY INSTITUTIONAL CASH PORTFOLIOS
Domestic Money Market Portfolio
Money Market Portfolio
U.S. Government Portfolio
U.S. Treasury Portfolio
U.S. Treasury Portfolio II
FIDELITY INSTITUTIONAL INVESTORS TRUST
State and Local Asset Management Series: Government Money Market
Portfolio
FIDELITY INSTITUTIONAL TRUST
Fidelity U.S. Bond Index Portfolio
Fidelity U.S. Equity Index Portfolio
FIDELITY INVESTMENT TRUST
Fidelity Canada Fund
Fidelity Diversified International Fund
Fidelity Emerging Markets Fund
Fidelity Europe Capital Appreciation Fund
Fidelity Europe Fund
Fidelity Global Bond Fund
Fidelity International Growth & Income Fund
Fidelity International Value Fund
Fidelity Japan Fund
Fidelity Latin America Fund
Fidelity New Markets Income Fund
Fidelity Overseas Fund
Fidelity Pacific Basin Fund
Fidelity Short-Term World Income Fund
Fidelity Southeast Asia Fund
Fidelity Worldwide Fund
FIDELITY MAGELLAN FUND
FIDELITY MONEY MARKET TRUST
Domestic Money Market Portfolio
Retirement Government Money Market Portfolio
Retirement Money Market Portfolio
U.S. Government Portfolio
U.S. Treasury Portfolio
FIDELITY MT. VERNON STREET TRUST
Fidelity Emerging Growth Fund
Fidelity Growth Company Fund
Fidelity New Millennium Fund
FIDELITY PHILLIPS STREET TRUST
Fidelity Cash Reserves
FIDELITY PURITAN TRUST
Fidelity Balanced Fund
Fidelity Global Balanced Fund
Fidelity Low-Priced Stock Fund
Fidelity Puritan Fund
FIDELITY SCHOOL STREET TRUST
Fidelity Limited Term Municipals
Spartan Bond Strategist
FIDELITY SECURITIES FUND
Fidelity Blue Chip Growth Fund
Fidelity Dividend Growth Fund
Fidelity Growth & Income Portfolio
Fidelity OTC Portfolio
FIDELITY SELECT PORTFOLIOS
Air Transportation Portfolio
American Gold Portfolio
Automotive Portfolio
Biotechnology Portfolio
Brokerage and Investment Management Portfolio
Chemicals Portfolio
Computers Portfolio
Construction and Housing Portfolio
Consumer Products Portfolio
Defense and Aerospace Portfolio
Developing Communications Portfolio
Electronics Portfolio
Energy Portfolio
Energy Service Portfolio
Environmental Services Portfolio
Financial Services Portfolio
Food and Agriculture Portfolio
Health Care Portfolio
Home Finance Portfolio
Industrial Equipment Portfolio
Industrial Materials Portfolio
Insurance Portfolio
Leisure Portfolio
Medical Delivery Portfolio
Money Market Portfolio
Multimedia Portfolio
Natural Gas Portfolio
Paper and Forest Products Portfolio
Precious Metals and Minerals Portfolio
Regional Banks Portfolio
Retailing Portfolio
Software and Computer Services Portfolio
Technology Portfolio
Telecommunications Portfolio
Transportation Portfolio
Utilities Growth Portfolio
FIDELITY STERLING PERFORMANCE PORTFOLIO, LP.
FIDELITY SUMMER STREET TRUST
Fidelity Capital & Income Fund
FIDELITY TREND FUND
FIDELITY UNION STREET TRUST
Fidelity Export Company Fund
Spartan Ginnie Mae Fund
FIDELITY UNION STREET TRUST II
Fidelity Daily Income Trust
Spartan World Money Market Fund
FIDELITY U.S. INVESTMENTS - BOND FUND, LP.
FIDELITY U.S. INVESTMENTS - GOVERNMENT SECURITIES FUND, LP.
FIDELITY YEN PERFORMANCE PORTFOLIO, LP.
SPARTAN U.S. TREASURY MONEY MARKET FUND
VARIABLE INSURANCE PRODUCTS FUND
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Money Market Portfolio
Overseas Portfolio
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager: Growth Portfolio
Asset Manager Portfolio
Contrafund Portfolio
Index 500 Portfolio
Investment Grade Bond Portfolio
DIVIDEND FUNDING
REDEMPTION FUNDING
SCHEDULE A-2
FIDELITY INTERNATIONAL (BERMUDA) FUNDS LTD.
Fidelity International U.S. Treasury Portfolio
FIDELITY INCOME PLUS FUND
SCHEDULE A-3
ACCOUNTS
Massachusetts Municipal Depository Trust
SCHEDULE A-4
ACCOUNTS
The Fidelity Group Trust for Employee Benefits Plans
SCHEDULE B
TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT
BETWEEN THE BANK OF NEW YORK AND
FIDELITY FUNDS DATED AS OF MAY 11, 1995
The following is a list of the Fund Custodians of the Funds:
The Bank of New York
Morgan Guaranty Trust Company
Brown Brothers Harriman & Co.
First Union National Bank Charlotte
Chase Manhattan Bank, N.A.
State Street Bank and Trust Company
SCHEDULE C
TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT
BETWEEN THE BANK OF NEW YORK AND
FIDELITY FUNDS DATED AS OF MAY 11, 1995
The following is a list of Repo Custodians of the Funds:
The Bank of New York
Chemical Bank
Morgan Guaranty Trust Company
FIRST AMENDMENT TO
JOINT TRADING ACCOUNT CUSTODY AGREEMENT
BETWEEN
THE BANK OF NEW YORK
AND
FIDELITY FUNDS
FIRST AMENDMENT TO JOINT TRADING ACCOUNT CUSTODY AGREEMENT BETWEEN THE
BANK OF NEW YORK AND FIDELITY FUNDS, dated as of July 14, 1995, by and
between THE BANK OF NEW YORK ("Custodian") and each of the entities listed
on SchedulesA-1, A-2, A-3 and A-4 hereto on behalf of itself or, (i) in the
case of a series company, on behalf of one or more of its portfolios or
series listed on SchedulesA-1 or A-2 hereto, (ii) in the case of the
accounts listed on Schedule A-3 hereto, acting through Fidelity Management
& Research Company, and (iii)in the case of the commingled or individual
accounts listed on Schedule A-4 hereto, acting through Fidelity Management
Trust Company (collectively, the "Funds" and each, a "Fund").
WITNESSETH
WHEREAS, Custodian and certain of the Funds have entered into that certain
Joint Trading Account Custody Agreement between The Bank of New York and
Fidelity Funds, dated as of May 11, 1995 (the "Agreement"), pursuant to
which the Funds have appointed the Custodian as its custodian for the
purpose of establishing and administering one or more joint trading
accounts or subaccounts thereof (individually, an "Account" and
collectively, the "Accounts") and holding cash and securities for the Funds
in connection with repurchase transactions effected through the Accounts;
and
WHEREAS, Seller and the Funds desire to amend the Agreement as set forth
below.
NOW, THEREFORE, in consideration of the premises and mutual promises and
covenants contained herein, the parties hereto agree as follows. Unless
otherwise defined herein or the context otherwise requires, terms used in
this Amendment, including the preamble and recitals, have the meanings
provided in the Agreement.
The Agreement is hereby amended by deleting Paragraph2.03(f) in its
entirety and substituting the following in lieu thereof:
"(f) Overdraft. In the event that the Custodian is directed by Proper
Instructions to make any payment or transfer of funds on behalf of a Fund
for which there would be, at the close of business on the date of such
payment or transfer, insufficient funds held by the Custodian on behalf of
such Fund, the Custodian may, in its discretion, provide an overdraft
("Overdraft") to the Fund (such Fund being referred to herein as an
"Overdraft Fund"), in an amount sufficient to allow the completion of such
payment or transfer. Any Overdraft provided hereunder: (a) shall be
payable on the next Business Day, unless otherwise agreed by the Overdraft
Fund and the Custodian; and (b) shall accrue interest from the date of the
Overdraft to the date of payment in full by the Overdraft Fund at a rate
agreed upon in writing, from time to time, by the Custodian and the
Overdraft Fund. The Custodian and the Funds acknowledge that the purpose
of such Overdrafts is to temporarily finance the purchase or sale of
securities for prompt delivery in accordance with the terms hereof. The
Custodian hereby agrees to notify each Overdraft Fund by 3:00 p.m., New
York time, of the amount of any Overdraft. Provided that Custodian has
given the notice required by this subparagraph (f), the Funds hereby agree
that, as security for the Overdraft of an Overdraft Fund, the Custodian
shall have a continuing lien and security interest in and to all interest
of such Overdraft Fund in Securities whose purchase is financed by
Custodian and which are in Custodian's possession or in the possession or
control of any third party acting on Custodian's behalf and the proceeds
thereof. In this regard, Custodian shall be entitled to all the rights and
remedies of a pledgee under common law and a secured party under the New
York Uniform Commercial Code and any other applicable laws or regulations
as then in effect."
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed and delivered under seal by their duly authorized officers.
BANK OF NEW YORK
By: /s/Kurt D. Woetzel
Name: Kurt D. Woetzel
Title: Senior Vice President
FIDELITY INVESTMENT COMPANIES LISTED
ON SCHEDULE A-1 HERETO AND ACCOUNTS
LISTED ON SCHEDULE A-3 HERETO
Dated:
By: /s/Kenneth A. Rathgeber
Name: Kenneth A. Rathgeber
Title: Treasurer of the Fidelity Investment Companies
listed on ScheduleA-1 and Vice President of
Fidelity Management& Research Company
FIDELITY INVESTMENT COMPANIES LISTED
ON SCHEDULE A-2 HERETO
Dated:
By: /s/David J. Saul
Name: David J. Saul
Title: Director of the Fidelity International (Bermuda)
Funds Limited, on behalf of the Funds listed on
Schedule A-2
ACCOUNTS LISTED ON SCHEDULE A-4 HERETO
By: FIDELITY MANAGEMENT TRUST COMPANY
Dated:
By: /s/John P. O'Reilly, Jr.
Name: John P. O'Reilly, Jr.
Title: Executive Vice President
SCHEDULE A-1
DAILY MONEY FUND
Capital Reserves: Money Market Portfolio
Capital Reserves: U.S. Government Portfolio
Fidelity U.S. Treasury Income Portfolio
Money Market Portfolio
U.S. Treasury Portfolio
FIDELITY ADVISOR ANNUITY FUNDS
Fidelity Advisor Annuity Government Investment Fund
Fidelity Advisor Annuity Growth Opportunities Fund
Fidelity Advisor Annuity High Yield Fund
Fidelity Advisor Annuity Income & Growth Fund
Fidelity Advisor Annuity Money Market Fund
Fidelity Advisor Annuity Overseas Fund
FIDELITY ADVISOR SERIES I
Fidelity Advisor Equity Portfolio Growth
Fidelity Advisor Institutional Equity Portfolio Growth
FIDELITY ADVISOR SERIES II
Fidelity Advisor Government Investment Fund
Fidelity Advisor Growth Opportunities Fund
Fidelity Advisor High Yield Fund
Fidelity Advisor Income & Growth Fund
Fidelity Advisor Short Fixed-Income Fund
FIDELITY ADVISOR SERIES III
Fidelity Advisor Equity Income
FIDELITY ADVISOR SERIES IV
Fidelity Advisor Limited Term Bond Fund
Fidelity Real Estate High Income Fund
Fidelity Institutional Short-Intermediate Government Portfolio
FIDELITY ADVISOR SERIES V
Fidelity Advisor Global Resources Fund
FIDELITY ADVISOR SERIES VII
Fidelity Advisor Overseas Portfolio
FIDELITY ADVISOR SERIES VIII
Fidelity Advisor Emerging Markets Income Fund
Fidelity Advisor Strategic Opportunities Fund
Fidelity Advisor Strategic Income Fund
FIDELITY CAPITAL TRUST
Fidelity Capital Appreciation Fund
Fidelity Disciplined Equity Fund
Fidelity Stock Selector
Fidelity Value Fund
FIDELITY CHARLES STREET
Fidelity Asset Manager
Fidelity Asset Manager: Growth
Fidelity Asset Manager: Income
Fidelity Short-Intermediate Government Fund
Spartan Investment-Grade Bond Fund
Spartan Short-Term Income Fund
FIDELITY COMMONWEALTH TRUST
Fidelity Intermediate Bond Fund
Fidelity Market Index Fund
Fidelity Small Cap Stock Fund
Fidelity Large Cap Stock Fund
FIDELITY CONGRESS STREET FUND
FIDELITY CONTRAFUND
FIDELITY DESTINY PORTFOLIOS
Destiny I
Destiny II
FIDELITY DEUTSCHE MARK PERFORMANCE PORTFOLIO, L.P.
FIDELITY DEVONSHIRE TRUST
Fidelity Equity-Income Fund
Fidelity Mid-Cap Stock Fund
Fidelity Real Estate Investment Portfolio
Fidelity Utilities Fund
Spartan Long-Term Government Bond Fund
FIDELITY EXCHANGE FUND
FIDELITY FINANCIAL TRUST
Fidelity Convertible Securities Fund
Fidelity Equity-Income II Fund
Fidelity Retirement Growth Fund
FIDELITY FIXED-INCOME TRUST
Fidelity Investment Grade Bond Fund
Fidelity Short-Term Bond Portfolio
Spartan Government Income Fund
Spartan High Income Fund
Spartan Short-Intermediate Government Fund
FIDELITY GOVERNMENT SECURITIES FUND
FIDELITY HASTINGS STREET TRUST
Fidelity Fifty
Fidelity Fund
FIDELITY HEREFORD STREET TRUST
Spartan Money Market Fund
Spartan U.S. Government Money Market Fund
FIDELITY ADVISOR KOREA FUND, INC.
FIDELITY EMERGING ASIA FUND
FIDELITY INCOME FUND
Fidelity Ginnie Mae Portfolio
Fidelity Mortgage Securities Portfolio
Spartan Limited Maturity Government Fund
FIDELITY INSTITUTIONAL CASH PORTFOLIOS
Domestic Money Market Portfolio
Money Market Portfolio
U.S. Government Portfolio
U.S. Treasury Portfolio
U.S. Treasury Portfolio II
FIDELITY INSTITUTIONAL INVESTORS TRUST
State and Local Asset Management Series: Government Money Market Portfolio
FIDELITY INSTITUTIONAL TRUST
Fidelity U.S. Bond Index Portfolio
Fidelity U.S. Equity Index Portfolio
FIDELITY INVESTMENT TRUST
Fidelity Canada Fund
Fidelity Diversified International Fund
Fidelity Emerging Markets Fund
Fidelity Europe Capital Appreciation Fund
Fidelity Europe Fund
Fidelity Global Bond Fund
Fidelity International Growth & Income Fund
Fidelity International Value Fund
Fidelity Japan Fund
Fidelity Latin America Fund
Fidelity New Markets Income Fund
Fidelity Overseas Fund
Fidelity Pacific Basin Fund
Fidelity Short-Term World Income Fund
Fidelity Southeast Asia Fund
Fidelity Worldwide Fund
FIDELITY MAGELLAN FUND
FIDELITY MONEY MARKET TRUST
Domestic Money Market Portfolio
Retirement Government Money Market Portfolio
Retirement Money Market Portfolio
U.S. Government Portfolio
U.S. Treasury Portfolio
FIDELITY MT. VERNON STREET TRUST
Fidelity Emerging Growth Fund
Fidelity Growth Company Fund
Fidelity New Millennium Fund
FIDELITY PHILLIPS STREET TRUST
Fidelity Cash Reserves
Fidelity U.S. Government Reserves
FIDELITY PURITAN TRUST
Fidelity Balanced Fund
Fidelity Global Balanced Fund
Fidelity Low-Priced Stock Fund
Fidelity Puritan Fund
FIDELITY SCHOOL STREET TRUST
Spartan Bond Strategist
FIDELITY SECURITIES FUND
Fidelity Blue Chip Growth Fund
Fidelity Dividend Growth Fund
Fidelity Growth & Income Portfolio
Fidelity OTC Portfolio
FIDELITY SELECT PORTFOLIOS
Air Transportation Portfolio
American Gold Portfolio
Automotive Portfolio
FIDELITY SELECT PORTFOLIOS (CONTINUED)
Biotechnology Portfolio
Brokerage and Investment Management Portfolio
Chemicals Portfolio
Computers Portfolio
Construction and Housing Portfolio
Consumer Products Portfolio
Defense and Aerospace Portfolio
Developing Communications Portfolio
Electronics Portfolio
Energy Portfolio
Energy Service Portfolio
Environmental Services Portfolio
Financial Services Portfolio
Food and Agriculture Portfolio
Health Care Portfolio
Home Finance Portfolio
Industrial Equipment Portfolio
Industrial Materials Portfolio
Insurance Portfolio
Leisure Portfolio
Medical Delivery Portfolio
Money Market Portfolio
Multimedia Portfolio
Natural Gas Portfolio
Paper and Forest Products Portfolio
Precious Metals and Minerals Portfolio
Regional Banks Portfolio
Retailing Portfolio
Software and Computer Services Portfolio
Technology Portfolio
Telecommunications Portfolio
Transportation Portfolio
Utilities Growth Portfolio
FIDELITY STERLING PERFORMANCE PORTFOLIO, LP.
FIDELITY SUMMER STREET TRUST
Fidelity Capital & Income Fund
FIDELITY TREND FUND
FIDELITY UNION STREET TRUST
Fidelity Export Company Fund
Spartan Ginnie Mae Fund
FIDELITY UNION STREET TRUST II
Fidelity Daily Income Trust
Spartan World Money Market Fund
FIDELITY U.S. INVESTMENTS - BOND FUND, LP.
FIDELITY U.S. INVESTMENTS - GOVERNMENT SECURITIES FUND, LP.
FIDELITY YEN PERFORMANCE PORTFOLIO, LP.
NORTH CAROLINA CAPITAL MANAGEMENT TRUST
Cash Portfolio
Term Portfolio
SPARTAN U.S. TREASURY MONEY MARKET FUND
VARIABLE INSURANCE PRODUCTS FUND
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Money Market Portfolio
Overseas Portfolio
VARIABLE INSURANCE PRODUCTS FUND II
Asset Manager: Growth Portfolio
Asset Manager Portfolio
Contrafund Portfolio
Index 500 Portfolio
Investment Grade Bond Portfolio
DIVIDEND FUNDING
REDEMPTION FUNDING
SCHEDULE A-2
FIDELITY INTERNATIONAL (BERMUDA) FUNDS LTD.
Fidelity International U.S. Treasury Portfolio
FIDELITY INCOME PLUS FUND
SCHEDULE A-3
ACCOUNTS
Massachusetts Municipal Depository Trust
SCHEDULE A-4
ACCOUNTS
The Fidelity Group Trust for Employee Benefits Plans
DISTRIBUTION AND SERVICE PLAN
FIDELITY INSTITUTIONAL CASH PORTFOLIOS
CLASS II
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "Act") for the Class II shares (the "Class
II") of each portfolio (the "Portfolio"), a series of Fidelity
Institutional Cash Portfolios (the "Fund").
2. The Fund has entered into a General Distribution Agreement on behalf of
the Portfolio with Fidelity Distributors Corporation (the "Distributor"), a
wholly-owned subsidiary of Fidelity Management & Research Company (the
"Adviser"), under which the Distributor uses all reasonable efforts,
consistent with its other business, to secure purchasers of the Portfolio's
shares of beneficial interest (the "Shares"). Such efforts may include,
but neither are required to include nor are limited to, the following:
(1) formulation and implementation of marketing and promotional activities,
such as mail promotions and television, radio, newspaper, magazine and
other mass media advertising;
(2) preparation, printing and distribution of sales literature;
(3) preparation, printing and distribution of prospectuses of the Portfolio
and reports to recipients other than existing shareholders of the
Portfolio;
(4) obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Distributor may from time to
time, deem advisable;
(5) making payments to securities dealers and others engaged in the sales
of Shares or who engage in shareholder support services; and
(6) providing training, marketing and support to such dealers and others
with respect to the sale of Shares.
3. In consideration for the services provided and the expenses incurred by
the Distributor pursuant to the General Distribution Agreement, Class II of
the Portfolio shall pay to the Distributor a fee at the annual rate of .15%
of such Class' average daily net assets throughout the month, or such
lesser amount as may be established from time to time by the Trustees of
the Fund, as specified in paragraph 6 of this Plan; provided that, for any
period during which the total of such fee and all other expenses of the
Portfolio (or of Class II), would exceed the gross income of the Portfolio
(or of Class II), such fee shall be reduced by such excess. Such fee shall
be computed and paid monthly. The determination of daily net assets shall
be made at the close of business each day throughout the month and computed
in the manner specified in the Portfolio's then current Prospectus for the
determination of the net asset value of shares of Class II, but shall
exclude assets attributable to any other Class of the Portfolio. The
Distributor may use all or any portion of the fee received pursuant to the
Plan to compensate securities dealers or other persons who have engaged in
the sale of Shares or in shareholder support services pursuant to
agreements with the Distributor, or to pay any of the expenses associated
with other activities authorized under paragraph 2 thereof.
4. Each Class of the Portfolio presently pays, and will continue to pay, a
management fee to the Adviser pursuant to a management agreement between
the Portfolio and the Adviser (the "Management Contract"). It is
recognized that the Adviser may use its management fee revenue, as well as
its past profits or its resources from any other source, to reimburse the
Distributor for expenses incurred in connection with the distribution of
Shares, including the activities referred to in paragraphs 2 and 3 hereof.
To the extent that the payment of management fees by the Class to the
Adviser should be deemed to be indirect financing of any activity primarily
intended to result in the sale of shares within the meaning of Rule 12b-1,
then such payment shall be deemed to be authorized by this Plan.
5. This Plan shall become effective upon the first business day of the
month following approval by a vote of at least a "majority of the
outstanding voting securities" (as defined in the Act) of Class II, this
Plan having been approved by a vote of a majority of the Trustees of the
Fund, including a majority of Trustees who are not "interested persons" of
the Fund (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement
related to the Plan (the "Independent Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain in
effect until May 31, 1996, and from year to year thereafter; provided,
however, that such continuance is subject to approval annually by a vote of
a majority of the Trustees of the Fund, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on this Plan. This Plan may be amended at any time by the Board of
Trustees, provided that (a) any amendment to increase materially the
maximum fee provided for in paragraph 3 hereof, or any amendment of the
Management Contract to increase the amount to be paid by the Portfolio
thereunder, shall be effective only upon approval by a vote of a majority
of the outstanding voting securities of Class II, in the case of the Plan,
or upon approval by a vote of a majority of the outstanding voting
securities of the Portfolio, in the case of the Management Contract, and
(b) any material amendment of this Plan shall be effective only upon
approval in the manner provided in the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of
a majority of the outstanding voting securities of the Class.
8. During the existence of this Plan, the Fund shall require the Adviser
and/or the Distributor to provide the Fund, for review by the Fund's
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any activity
primarily intended to result in the sale of shares of Class II (making
estimates of such costs where necessary or desirable) and the purposes for
which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform any
specific type or level of distribution activities or to incur any specific
level of expenses for activities primarily intended to result in the sale
of shares of the Class.
10. Consistent with the limitation of shareholder liability as set forth
in the Fund's Declaration of Trust, any obligation assumed by Class II
pursuant to this Plan or any agreement related to this Plan shall be
limited in all cases to Class II and its assets and shall not constitute an
obligation of any shareholder of the Fund or of any other series or Class
of the Fund.
11. If any provision of the Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
DISTRIBUTION AND SERVICE PLAN
FIDELITY INSTITUTIONAL CASH PORTFOLIOS
CLASS III
1. This Distribution and Service Plan (the "Plan"), when effective in
accordance with its terms, shall be the written plan contemplated by
Securities and Exchange Commission Rule 12b-1 under the Investment Company
Act of 1940, as amended (the "Act") for the Class III shares (the "Class
III") of each portfolio (the "Portfolio"), a series of Fidelity
Institutional Cash Portfolios (the "Fund").
2. The Fund has entered into a General Distribution Agreement on behalf of
the Portfolio with Fidelity Distributors Corporation (the "Distributor"), a
wholly-owned subsidiary of Fidelity Management & Research Company (the
"Adviser"), under which the Distributor uses all reasonable efforts,
consistent with its other business, to secure purchasers of the Portfolio's
shares of beneficial interest (the "Shares"). Such efforts may include,
but neither are required to include nor are limited to, the following:
(1) formulation and implementation of marketing and promotional activities,
such as mail promotions and television, radio, newspaper, magazine and
other mass media advertising;
(2) preparation, printing and distribution of sales literature;
(3) preparation, printing and distribution of prospectuses of the Portfolio
and reports to recipients other than existing shareholders of the
Portfolio;
(4) obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Distributor may from time to
time, deem advisable;
(5) making payments to securities dealers and others engaged in the sales
of Shares or who engage in shareholder support services; and
(6) providing training, marketing and support to such dealers and others
with respect to the sale of Shares.
3. In consideration for the services provided and the expenses incurred by
the Distributor pursuant to the General Distribution Agreement, Class III
of the Portfolio shall pay to the Distributor a fee at the annual rate of
.25% of such Class' average daily net assets throughout the month, or such
lesser amount as may be established from time to time by the Trustees of
the Fund, as specified in paragraph 6 of this Plan; provided that, for any
period during which the total of such fee and all other expenses of the
Portfolio (or of Class III), would exceed the gross income of the Portfolio
(or of Class III), such fee shall be reduced by such excess. Such fee
shall be computed and paid monthly. The determination of daily net assets
shall be made at the close of business each day throughout the month and
computed in the manner specified in the Portfolio's then current Prospectus
for the determination of the net asset value of shares of Class III, but
shall exclude assets attributable to any other Class of the Portfolio. The
Distributor may use all or any portion of the fee received pursuant to the
Plan to compensate securities dealers or other persons who have engaged in
the sale of Shares or in shareholder support services pursuant to
agreements with the Distributor, or to pay any of the expenses associated
with other activities authorized under paragraph 2 thereof.
4. Each Class of the Portfolio presently pays, and will continue to pay, a
management fee to the Adviser pursuant to a management agreement between
the Portfolio and the Adviser (the "Management Contract"). It is
recognized that the Adviser may use its management fee revenue, as well as
its past profits or its resources from any other source, to reimburse the
Distributor for expenses incurred in connection with the distribution of
Shares, including the activities referred to in paragraphs 2 and 3 hereof.
To the extent that the payment of management fees by the Class to the
Adviser should be deemed to be indirect financing of any activity primarily
intended to result in the sale of shares within the meaning of Rule 12b-1,
then such payment shall be deemed to be authorized by this Plan.
5. This Plan shall become effective upon the first business day of the
month following approval by a vote of at least a "majority of the
outstanding voting securities" (as defined in the Act) of Class III, this
Plan having been approved by a vote of a majority of the Trustees of the
Fund, including a majority of Trustees who are not "interested persons" of
the Fund (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreement
related to the Plan (the "Independent Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan.
6. This Plan shall, unless terminated as hereinafter provided, remain in
effect until May 31, 1996, and from year to year thereafter; provided,
however, that such continuance is subject to approval annually by a vote of
a majority of the Trustees of the Fund, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on this Plan. This Plan may be amended at any time by the Board of
Trustees, provided that (a) any amendment to increase materially the
maximum fee provided for in paragraph 3 hereof, or any amendment of the
Management Contract to increase the amount to be paid by the Portfolio
thereunder, shall be effective only upon approval by a vote of a majority
of the outstanding voting securities of Class III, in the case of the Plan,
or upon approval by a vote of a majority of the outstanding voting
securities of the Portfolio, in the case of the Management Contract, and
(b) any material amendment of this Plan shall be effective only upon
approval in the manner provided in the first sentence of this paragraph 6.
7. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of
a majority of the outstanding voting securities of the Class.
8. During the existence of this Plan, the Fund shall require the Adviser
and/or the Distributor to provide the Fund, for review by the Fund's
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended in connection with financing any activity
primarily intended to result in the sale of shares of Class III (making
estimates of such costs where necessary or desirable) and the purposes for
which such expenditures were made.
9. This Plan does not require the Adviser or Distributor to perform any
specific type or level of distribution activities or to incur any specific
level of expenses for activities primarily intended to result in the sale
of shares of the Class.
10. Consistent with the limitation of shareholder liability as set forth
in the Fund's Declaration of Trust, any obligation assumed by Class III
pursuant to this Plan or any agreement related to this Plan shall be
limited in all cases to Class III and its assets and shall not constitute
an obligation of any shareholder of the Fund or of any other series or
Class of the Fund.
11. If any provision of the Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
MULTIPLE CLASS OF SHARES PLAN
FOR
FIDELITY INSTITUTIONAL CASH PORTFOLIOS
DATED JUNE 15, 1995
This Multiple Class of Shares Plan (the "Plan"), when effective in
accordance with its provisions, shall be the written plan contemplated by
Rule 18f-3 under the Investment Company Act of 1940 (the "1940" Act) for
Treasury, Government, Domestic, and Money Market (each, a "Portfolio"),
portfolios of Fidelity Institutional Cash Portfolios (the "Fund").
1. Classes Offered. Each Portfolio may offer three classes of its shares:
Classes I, II and III.
2. Distribution and Shareholder Service Fees. Distribution fees and/or
shareholder service fees shall be calculated and paid in accordance with
the terms of the then-effective plan pursuant to Rule 12b-l under the 1940
Act for the applicable class. Distribution and shareholder service fees
currently authorized are as set forth in Schedule I to this Plan.
3. Exchange Privileges. Shares of any class may be exchanged for shares
of the same class of (i) any Portfolio of Fidelity Institutional Cash
Portfolios; (ii) Fidelity Institutional Tax-Exempt Cash Portfolios:
Tax-Exempt; (iii) Daily Money Fund: Treasury Only; and (iv) Fidelity Money
Market Trust: Rated Money Market.
4. Expense Allocations. Expenses shall be allocated under this Plan as
follows:
A. Class expenses: The following expenses shall be allocated exclusively
to the applicable specific class of shares: (i) distribution and
shareholder service fees; (ii) transfer agent fees; and (iii) Blue Sky
state registration fees.
B. Portfolio expenses: Expenses not allocated to specific classes as
specified above shall be charged to the Portfolio and allocated daily to
each class on the basis of relative net assets (settled shares). For
purposes of this paragraph, "relative net assets (settled shares)" are net
assets valued in accordance with generally accepted accounting principles
but excluding the value of subscriptions receivable, in relation to the net
assets of the Portfolio.
5. Voting Rights. Each class of shares governed by this Plan (i) shall
have exclusive voting rights on any matter submitted to shareholders that
relates solely to its arrangement; and (ii) shall have separate voting
rights on any matter submitted to shareholders in which the interests of
one class differ from the interests of any other class.
6. Effective Date of Plan. This Plan shall become effective upon the
first business day of the month following approval by a vote of at least a
majority of the Trustees of the Fund, and a majority of the Trustees of the
Fund who are not "interested persons" of the Fund, which vote shall have
found that this Plan as proposed to be adopted, including the expense
allocation, is in the best interests of each class individually and of the
Portfolio as a whole; or upon such other date as the Trustees shall
determine. Any material amendment to this Plan shall become effective upon
the first business day of the month following approval by a vote of at
least a majority of the Trustees of the Fund, and a majority of the
Trustees of the Fund who are not "interested persons" of the Fund, which
vote shall have found that this Plan as proposed to be amended, including
the expense allocation, is in the best interests of each class individually
and of the Portfolio as a whole; or upon such other date as the Trustees
shall determine.
7. Severability. If any provision of this Plan shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
the Plan shall not be affected thereby.
8. Limitation of Liability. Consistent with the limitation of shareholder
liability as set forth in each Fund's Declaration of Trust or other
organizational document, any obligations assumed by any Portfolio or class
thereof, and any agreements related to this Plan shall be limited in all
cases to the relevant Portfolio and its assets, or class and its assets, as
the case may be, and shall not constitute obligations of any other
Portfolio or class of shares. All persons having any claim against the
Portfolio, or any class thereof, arising in connection with this Plan, are
expressly put on notice of such limitation of shareholder liability, and
agree that any such claim shall be limited in all cases to the relevant
Portfolio and its assets, or class and its assets, as the case may be, and
such person shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Fund, Class or Portfolio; nor shall
such person seek satisfaction of any such obligation from the Trustees or
any individual Trustee of the Fund.
SCHEDULE I TO MULTIPLE CLASS OF SHARES PLAN
FOR FIDELITY INSTITUTIONAL MONEY MARKET FUNDS PRODUCT LINE
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<CAPTION>
<S> <C> <C> <C>
FUND/CLASS SALES CHARGE DISTRIBUTION FEE SHAREHOLDER
(AS A PERCENTAGE OF SERVICE FEE
AVERAGE NET ASSETS) (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Treasury: none none none
Class I none 0.15 none
Class II none 0.25 none
Class III
Government: none none none
Class I none 0.15 none
Class II none 0.25 none
Class III
Domestic: none none none
Class I none 0.15 none
Class II none 0.25 none
Class III
Money Market: none none none
Class I none 0.15 none
Class II none 0.25 none
Class III
Tax-Exempt: none none none
Class I none 0.15 none
Class II none 0.25 none
Class III
Treasury Only: none none none
Class I none 0.15 none
Class II none 0.25 none
Class III
Rated Money Market: none none none
Class I none 0.15 none
Class II none 0.25 none
Class III
</TABLE>
