<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO 2-77169)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 25 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Amendment No.
The North Carolina Capital Management Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 617-570-6200
Arthur S. Loring, Secretary, 82 Devonshire St., Boston, MA 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] On ( ) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[x] On August 19, 1994 pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the notice required by
such Rule on or around August 31, 1994.
DC-142717.2
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THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST:
CASH PORTFOLIO & TERM PORTFOLIO
Form N-1A Item Number Caption
1 . Cover Page
2 . Summary of Portfolio Expenses; Questions and
Answers About the Portfolios
3 a Financial Highlights
4 a(i) . Description of the Trust
a(ii) Investment Objectives; Description of the Trust
b Investment Limitations
c Investment Objectives; Questions and Answers
about the Portfolios
5 a Trustees and Officers
b Management Contracts; Questions and Answers
About the Portfolios
c FMR
d Custodian; Distribution of Shares and
Distribution Plans
e Shareholder Accounts
f Questions and Answers About the Portfolios;
Management Contracts; Distribution of shares and
Distribution Plans
g *
5A a Portfolio Manager Interview
b Financial Highlights
c *
6 a Description of the Trust; Investment Objectives
and Policies
b,c,d *
e Cover Page
f How to Invest
g Distributions and Taxes
7 a How to Invest; Questions and Answers About the
Portfolios; Distribution of Shares and
Distribution Plans
b How to Invest; Valuation of Portfolio
Securities; Investment Objective and Policies
c,d . *
e Distribution of Shares and Distribution Plans;
Questions and Answers About the Portfolios
8 a How to Redeem; Questions and Answers About the
Portfolios
b,c . *
d How to Redeem
9 . *
* Not Applicable
DC-142716.2
[LG932210.030] -3- 8/9/93
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Form N-1A Item Number Caption
10 a,b . Cover Page
11 Table of Contents
12 Description of the Trust
13 a,b,c Investment Objective and Policies
Investment Limitations
d *
14 a,b . Trustees and Officers; FMR
c *
15 a Trustees and Officers; FMR
b *
c Trustees and Officers
16 a(i-ii) Trustees and Officers
a(iii),b Management Contracts
c,d,e *
f Distribution of Shares and Distribution Plans
g *
h Custodian; Description of the Trust
i Management Contracts; Custodian; Distribution of
Shares and Distribution Plans
17 a Portfolio Transactions
b *
c,d . Portfolio Transactions
18 a Description of the Trust
b *
19 a *
b Valuation of Portfolio Securities
c,d . *
20 Distribution and Taxes
21 a(i-ii) Distribution of Shares and Distribution Plans
*
a(iii),b,c
22 Performance
23 Financial Statements for the fiscal year ended
June 30, 1994 to be filed by subsequent
amendment
* Not Applicable
LG912940.126
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THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST
PROSPECTUS AND
STATEMENT OF ADDITIONAL INFORMATION
82 Devonshire Street, Boston, Massachusetts 02109
Cash Portfolio and Term Portfolio (the Portfolios) are diversified
portfolios of The North Carolina Capital Management Trust (the Trust), an
open-end, management investment company. Portfolio shares are offered
exclusively to local governments and public authorities of the State of North
Carolina, as those terms are defined in 20 NCAC 3.0702(3) (eligible
investors). The Portfolios of the Trust can provide eligible investors a
specialized, convenient and economical means of investing in two
professionally managed portfolios:
Cash Portfolio seeks to obtain as high a level of current income as is
consistent with the preservation of capital and liquidity, and to maintain a
constant net asset value per share of $1.00, through investment in high-grade
money market instruments, including obligations of the U.S. government and
the State of North Carolina, commercial paper ^, bonds and notes of any North
Carolina local government or public authority.
An investment in Cash Portfolio is neither insured nor guaranteed by the
U.S. government and there can be no assurance that Cash Portfolio will
maintain a stable $1.00 share price.
Term Portfolio seeks to obtain as high a level of current income as is
consistent with the preservation of capital by investing in obligations of
the U.S. government and agencies and instrumentalities of the U.S.
government, obligations of the State of North Carolina, bonds and notes of
any North Carolina local government or public authority, and in other
high-grade money market instruments. Term Portfolio's net asset value per
share (NAV) will fluctuate. Term Portfolio accounts are established only in
conjunction with new or existing Cash Portfolio accounts.
This Prospectus and Statement of Additional Information is designed to
provide investors with information they should know before investing. Please
read and retain this document for future reference. The Trust's Annual Report
to Shareholders is included herein.
Mutual fund shares are not deposits or obligations of^, or guaranteed
by, any depository institution. Shares are not insured by the FDIC, the
Federal Reserve Board or any other agency, and are subject to investment
risk, including the possible loss of principal.
For further information or assistance in opening an account or to obtain
additional copies of this report, please call Sterling Capital Distributors,
Inc. in Charlotte, North Carolina:
DC-146545.1
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. Toll-free 800-222-3232
. or locally 704-372-8798
_____________________________________________________________________________
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.
_____________________________________________________________________________
August 19, 1994
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_____________________________________________________________________________
Table of Contents
Page Page
Summary of Portfolio Expenses . Distributions and Taxes . . . .
Questions and Answers about the Trustees and Officers . . . . .
Portfolios . . . . . . . . . Management Contracts . . . . .
Financial Highlights . . . . . Distribution of Shares and
Portfolio Manager Interview . . Distribution Plans . . . . .
Investment Objectives . . . ^ Portfolio Transactions . . . .
How to Invest . . . . . . . . . FMR . . . . . . . . . . . . . .
How to Redeem . . . . . . . . . Custodian . . . . . . . . . . .
Valuation of Portfolio Investment Limitations . . . .
Securities . . . . . . . . . . Description of the Trust . . .
Performance . . . . . . . . . . Appendix . . . . . . . . . . .
Financial Statements . . . . .
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_____________________________________________________________________________
SUMMARY OF PORTFOLIO EXPENSES
_____________________________________________________________________________
The purpose of the table below is to assist investors in understanding
the various costs and expenses that an investor in the Portfolios would bear
directly or indirectly. The expense summary format below was developed for
use by all mutual funds to help investors make their investment decisions. Of
course investors should consider this expense information, along with other
important information, including the Portfolio's investment objective and
past performance.
Cash Portfolio Term Portfolio
A. Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fee(s) . . . . . . . . . . . ^.xx%* .xx%*
----- ----
12b-1 Fee(s) . . . . . . . . . . . . . ^.xx% .xx%
----- ----
Other Expenses . . . . . . . . . . . . ^ x x
----- ----
Total Portfolio Operating Expenses . . ^.xx% .xx%
===== ====
* Net of 12b-1 fees
B. Example: Investors would pay the following expenses on a $1,000
investment in each Portfolio, assuming (1) a 5% annual return and (2) full
redemption at the end of each time period:
1 Year 3 Years 5 Years 10
Years
Cash Portfolio . . . . . . . . . . ^ $ $ $ $
Term Portfolio . . . . . . . . . . ^ $ $ $ $
Explanation of Table
A. Annual Portfolio Operating Expenses are based on the Portfolios'
historical expenses. Management fees are paid by each Portfolio to Fidelity
Management & Research Company (FMR) for managing its investments and business
affairs. Each Portfolio's Distribution and Service Plan ^(Plan) pursuant to
Rule 12b-1 of the Investment Company Act of 1940 (the 1940 Act) requires FMR
to make payments to Fidelity Distributors Corporation (Distributors) from its
management fees. Pursuant to each Plan, Distributors passes all fees paid
under the Plan to Sterling Capital Distributors, Inc. (Sterling). Please
refer to the "Management Contract" and "Distribution of Shares and
Distribution Plans" on pages __ and __ for further information. Long-term
shareholders of Term Portfolio may pay more than the economic equivalent of
the maximum front-end sales charges permitted by the NASD due to 12b-1 ^
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fees. Each Portfolio incurs Other Expenses for maintaining shareholder
records, furnishing shareholder statements and reports, and for other
services. These expenses are paid by FMR. Management Fees, 12b-1 Fees and
Other Expenses already have been reflected in the share price and are not
charged directly to individual shareholder accounts.
B. Example. The hypothetical example illustrates the expenses associated
with a $1,000 investment in Cash Portfolio and Term Portfolio over periods of
1, 3, 5 and 10 years based on the expenses in the table and an assumed annual
rate of return of 5%. The return of 5% and expenses should not be considered
indications of actual or expected Portfolio performance or expenses, both of
which may vary.
_____________________________________________________________________________
QUESTIONS AND ANSWERS ABOUT THE PORTFOLIOS
_____________________________________________________________________________
What is the investment objective of each Portfolio?
Cash Portfolio and Term Portfolio shares are offered exclusively to
local governments and public authorities of the State of North Carolina,
school administrative units, local ABC boards, community colleges or public
hospitals, as those terms are defined in 20 NCAC 3.0702(3). Each Portfolio
may invest only in securities qualifying as permitted investments under North
Carolina G.S. 159-30(c), as amended, and 20 NCAC 3.0703. Each Portfolio can
provide eligible investors a specialized, convenient and economical means of
investing in two professionally managed Portfolios:
Cash Portfolio seeks to obtain as high a level of current income as is
consistent with the preservation of capital and liquidity, and to maintain a
constant NAV of $1.00 through investment in high-grade money market
instruments, including obligations of the U.S. government and the State of
North Carolina, commercial paper, and ^ bonds and notes of any North Carolina
local government or public authority. For the purpose of this Prospectus and
Statement of Additional Information, Cash Portfolio considers "high-grade"
and "high quality" to be synonymous. These instruments are discussed in
detail in "Investment Objectives" ^ beginning on page __.
While the Portfolio invests in high quality securities, investment in
the Portfolio is not without risk. Cash Portfolio's investments in
instruments other than direct obligations of the U.S. government, such as
obligations of the State of North Carolina, are subject to the ability of the
issuer to make payment at maturity.
Term Portfolio seeks to obtain as high a level of current income as is
consistent with the preservation of capital by investing in obligations of
the U.S. government and agencies and instrumentalities of the U.S.
government, obligations of the State of North Carolina, bonds and notes of
any North Carolina local government or public authority, commercial paper and
in other high-grade money market instruments. These instruments may be longer
term than those purchased by Cash Portfolio and they are discussed in detail
beginning on page __.
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Term Portfolio is designed for shareholders who intend to remain
invested for longer periods than Cash Portfolio shareholders and, therefore,
can seek the higher yields that normally are available from instruments with
longer maturities. Term Portfolio generally will have a longer
dollar-weighted average portfolio maturity than Cash Portfolio, and may
invest in issues whose maturity is longer than 397 days, though not more than
seven years. Accordingly, Term Portfolio may not be an appropriate investment
for those investors ^ who require daily liquidity in order to meet current
obligations. Like Cash Portfolio, Term Portfolio emphasizes high current
income rather than growth of principal, but Term Portfolio's NAV will
fluctuate. The market value of portfolio securities generally may be expected
to rise when interest rates fall, or to fall when interest rates rise.
Under what authority is the Trust a legal investment?
North Carolina G.S. 159-30(c)(8) provides authority to invest in the
Trust. In 1981, the state legislature first provided authority (through a
predecessor statute, N.C.G.S. 159- 30(c)(6a)) for eligible investors to
invest in mutual funds designed for local government investment and certified
as legal investments by the North Carolina Local Government Commission (the
Commission). After review of various proposals submitted to the Commission in
response to a Request for Proposals issued under the authority of 20 NCAC
3.0700, the Commission selected FMR, Sterling ^, and First Union National
Bank of North Carolina (First Union) to organize, operate and distribute such
an investment vehicle. The Trust is the only mutual fund so certified as a
legal investment for North Carolina municipal corporations, public
authorities, school administrative units, local ABC boards, community
colleges and public hospitals. Certification by the Commission does not
represent an assurance that either Portfolio of the Trust will achieve its
investment objective.
What are the benefits of investing in the Portfolios as compared to investing
directly in such instruments?
By pooling funds of many North Carolina local government units, each
Portfolio provides certain benefits.
Cash Portfolio provides:
Liquidity - the ability to make investments or redemptions of any size
on any business day, and earn daily income while the money is invested;
Convenience - the ability to invest or withdraw funds via bank wire
initiated by a toll-free telephone call or by check or to purchase or redeem
shares by exchange from Term Portfolio accounts via a toll-free call. ^
Investors no longer need to schedule maturities to meet cash flow
requirements or to maintain detailed cash flow schedules for investment
purposes;
Diversification - the ability to participate in a diversified portfolio
of high quality money market instruments; the Portfolio may purchase
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obligations of the U.S. government and the State of North Carolina, ^ bonds
and notes of any North Carolina local government or public authority, and
other money market instruments;
Current High Yield - the ability to gain increased income by ^
participating in a pool of funds which is able to secure the greater
liquidity and higher yields offered by large denomination money market
instruments.
Term Portfolio provides:
Higher Yield - the potential to receive the higher yields which normally
are available from obligations with maturities greater than 397 days. Term
Portfolio's NAV will fluctuate;
Diversification - the ability to participate in a portfolio which may
purchase U.S. government and government agency obligations, obligations of
the State of North Carolina, and bonds and notes of any North Carolina local
government or public authority, and high-grade money market instruments;
Economies of Scale - because ^ FMR purchases and sells a large number of
U.S. government securities for other funds for which it is investment
adviser, ^ broker-dealers generally are willing to offer more favorable
spreads to the Portfolio than would be possible for most ^ investors directly
investing in the same securities (see "Portfolio Transactions," page __);
Convenience - the ability to invest or withdraw funds via bank wire
initiated by a toll-free telephone call, or to purchase or redeem shares by
exchange from Cash Portfolio accounts via a toll-free telephone call.
Who is the investment adviser?
FMR, 82 Devonshire Street, Boston, MA 02109, is the investment adviser
to the Portfolios (see "Management Contracts," page __). FMR is one of the
largest investment management organizations in the United States and serves
as investment adviser to a number of investment companies, which had
aggregate net assets of more than ^ $ billion and approximately ^ xx million
accounts as of June 30, ^ 1994. In addition, FMR was selected by the
Treasurer of the Commonwealth of Massachusetts to serve as adviser to the
Massachusetts Municipal Depository Trust ^, an investment vehicle similar in
purpose to Cash Portfolio ^.
Who are the distribution and service and general distribution agents?
Sterling, One First Union Center, 301 S. College Street, Suite 3200,
Charlotte, NC 28202-6005, is the distribution and service agent for shares of
the Portfolios. Sterling is a wholly-owned subsidiary of Sterling Capital
Management Company (Sterling Capital), headquartered in Charlotte, which
provides discretionary investment management to approximately 140 pension,
profit-sharing, endowment, hospitals, and individual clients. The firm was
established in 1971 and is one of the largest advisers headquartered in North
Carolina registered under the Investment Advisers Act of 1940 (see
"Distribution of Shares and Distribution Plans," page __).
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Distributors, 82 Devonshire Street, Boston, MA 02109, a wholly-owned
subsidiary of FMR Corp., is the general distribution agent for the
Portfolios. Distributors has entered into a Distribution and Service Agent
Agreement with Sterling pursuant to which Sterling has assumed primary
responsibility for sales and service activities.
Who is the custodian?
First Union ^, Charlotte, NC 28288, is the custodian of the assets of
the Portfolios. First Union is a wholly-owned subsidiary of First Union
Corporation, which is headquartered in Charlotte, NC (see "Custodian," page
__).
What are the expenses of each Portfolio?
Each Portfolio pays a management fee to FMR, the investment adviser,
which is computed daily and paid monthly ^. The management fee is calculated
based on the average net assets of each Portfolio according to the following
schedule: .41% of average net assets through $100 million; .40% of average
net assets in excess of $100 million through $200 million; .39% of average
net assets in excess of $200 million through $800 million; and .38% of
average net assets in excess of $800 million. FMR is responsible for all
other expenses of each Portfolio with certain exceptions (see "Management
Contracts," page __).
How do you open accounts in the Portfolios?
Each Portfolio's shares are offered continuously through Sterling at the
next determined NAV without a sales charge (see "Valuation of Portfolio
Securities," page __). There is no minimum initial investment to open an
account, and additional investments may be made in any amount. A Cash
Portfolio account may be opened for eligible investors who follow the
instructions under "How to Invest" on page __. A Term Portfolio account may
be opened only in conjunction with a Cash Portfolio account.
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_____________________________________________________________________________
FINANCIAL HIGHLIGHTS
_____________________________________________________________________________
Per Share Data and Ratios*
^[Financial Highlights to be filed by subsequent amendment.]
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_____________________________________________________________________________
PORTFOLIO MANAGER INTERVIEW
_____________________________________________________________________________
[Performance Data and Annual Report inserted here.]
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_____________________________________________________________________________
INVESTMENT OBJECTIVES ^
_____________________________________________________________________________
Cash Portfolio's investment objective is to seek as high a level of
current income as is consistent with the preservation of capital and
liquidity.
Term Portfolio's investment objective is to seek to obtain as high a
level of current income as is consistent with the preservation of capital.
INVESTMENT POLICIES AND RISKS
Cash Portfolio seeks to achieve this objective by investing only in
certain of those high grade money market instruments, including obligations
of the U.S. government and the State of North Carolina, and bonds and notes
of any North Carolina local government or public authority, which are
authorized for investment by units of local government as specified in North
Carolina G.S. 159-30 (the Statute), as amended from time to time, and in 20
NCAC 3.0703(a) (the Code). As a fundamental policy, the Portfolio will invest
only in those instruments which qualify pursuant to the Statute and the Code.
The following investment policies of the Portfolio are non-fundamental,
which means that if the Statute or the Code or any legislation or regulations
relating to these parameters change in the future the Trustees may authorize
corresponding changes in the instruments in which the Portfolio may invest,
without first obtaining shareholder approval. Currently, the rulings,
regulations and interpretations to which the Portfolio adheres allow the
Portfolio to invest only in the following instruments:
(i) Obligations of the United States or obligations fully guaranteed
both as to principal and interest by the United States;
(ii) Obligations of the State of North Carolina and bonds and notes of
any North Carolina local government or public authority rated investment
grade or better;
(iii) Obligations of the Federal Financing Bank, the Federal Farm
Credit Bank, the Bank for Cooperatives, the Federal Intermediate Credit Bank,
the Federal Land Banks, the Federal Home Loan Banks, the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association, the
Government National Mortgage Association, the Federal Housing Administration,
the Farmers Home Administration and the United States Postal Service;
(iv) Savings certificates issued by any savings and loan association
organized under the laws of the State of North Carolina or by any federal
savings and loan association having its principal office in North Carolina;
provided that any principal amount of such certificate in excess of the
amount insured by the federal government or any agency thereof, or by a
mutual deposit guaranty association authorized by the Administrator of the
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Savings Institutions Division of the Department of Economic and Community
Development of the State of North Carolina, be fully collateralized;
(v) Evidences of ownership of, or fractional undivided interests in,
future interest and principal payments on either direct obligations of the
United States government or obligations the principal of and the interest on
which are guaranteed by the United States, which obligations are held by a
bank or trust company organized and existing under the laws of the United
States or any state in the capacity of custodian;
(vi) Commercial paper bearing the highest rating of at least one
nationally recognized rating service and not bearing a rating below the
highest by any nationally recognized rating service which rates the
particular obligation;
(vii) Bills of exchange or time drafts drawn on and accepted by a
commercial bank (commonly referred to as "bankers' acceptances") and eligible
for use as collateral by member banks in borrowing from a federal reserve
bank, provided that the accepting bank or its holding company is either (a)
incorporated in the State of North Carolina or (b) has outstanding publicly
held obligations bearing the highest rating of at least one nationally
recognized rating service and not bearing a rating below the highest by any
nationally recognized rating service which rates the particular obligations;
(viii) Repurchase agreements with respect to either direct
obligations of the United States or obligations the principal of and the
interest on which are guaranteed by the United States if entered into with a
broker or dealer which is a dealer recognized as a primary dealer by the
Federal Reserve Bank, or any commercial bank, trust company or national
banking association, the deposits of which are insured by the ^ Federal
Deposit Insurance Corporation (FDIC) or any successor thereof.
Cash Portfolio may also invest more than 25% of its assets in
obligations of domestic banks.
Cash Portfolio has adopted a fundamental policy requiring it to use its
best efforts to maintain a stable NAV of $1.00 and values its securities on
the basis of amortized cost (see " Valuation of Portfolio Securities," page
__) pursuant to Rule 2a-7 under the 1940 Act.
Quality. Pursuant to procedures adopted by the Board of Trustees, and as
permitted pursuant to the Statute and the Code, Cash Portfolio may purchase
only high quality securities that FMR believes present minimal credit risks.
To be considered high quality, a security must be a U.S. government security;
rated in accordance with applicable rules in one of the two highest
categories for short-term securities by at least two nationally recognized
rating services (or by one, if only one rating service has rated the
security); or, if unrated, judged to be of equivalent quality by FMR.
High quality securities are divided into "first tier" and "second tier"
securities. First tier securities have received the highest rating (e.g.,
Standard & Poor's A-1 rating) from at least two rating services (or one, if
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only one has rated the security). Second tier securities have received
ratings within the two highest categories (e.g., Standard & Poor's A-1 or
A-2) from at least two rating services (or one, if only one has rated the
security), but do not qualify as first tier securities. If a security has
been assigned different ratings by different rating services, at least two
rating services must have assigned the higher rating in order for FMR to
determine eligibility on the basis of that higher rating. Based on procedures
adopted by the Board of Trustees, FMR may determine that an unrated security
is of equivalent quality to a rated first or second tier security.
Cash Portfolio may not invest more than 5% of its total assets in second
tier securities. In addition, the Portfolio may not invest more than 1% of
its total assets or $1 million (whichever is greater) in the second tier
securities of a single issuer.
Maturity. Cash Portfolio must limit its investments to securities with
remaining maturities of 397 days or less and must maintain a dollar-weighted
average maturity of 90 days or less.
Cash Portfolio's ability to achieve its investment objective depends on
the quality and maturity of its investments. Although the Portfolio's
policies are designed to help maintain a stable $1.00 share price, all money
market instruments can change in value when interest rates or issuers'
creditworthiness change, or if an issuer or guarantor of a security fails to
pay interest or principal when due. If these changes in value were large
enough, the Portfolio's share price could fall below $1.00. In general,
securities with longer maturities are more vulnerable to price changes,
although they may provide higher yields.
^
Term Portfolio seeks to achieve its objective by investing in
obligations of the U.S. government, its agencies or instrumentalities, and
other obligations guaranteed by the U.S. government, obligations of the State
of North Carolina, bonds and notes of any North Carolina local government or
public authority, and in high grade money market instruments, as permitted
pursuant to the Statute and the Code, as amended from time to time.
Instruments in which the Portfolio may invest are the same as those shown in
(i) through (viii) for Cash Portfolio, except that, under the current Code,
FMR has been permitted to extend the remaining maturities of the instruments
it purchases to seven years at the time of purchase. Although investing in
longer term bonds may provide opportunity for higher yields, generally, the
longer the term to maturity of a bond, the greater the potential for price
volatility. The share value of Term Portfolio will tend to move inversely
with changes in interest rates.
Term Portfolio may invest up to 25% of its assets in the financial
services industry^; therefore, developments in the financial services
industry could affect the Portfolio's performance. However, in FMR's view the
risks of untimely payment of principal and interest associated with the high
grade instruments in which the Portfolio may invest are minimal.
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While each Portfolio invests in high quality (Cash Portfolio) or
high-grade (Term Portfolio) securities, investment in either Portfolio is not
without risk. For Term Portfolio, high grade is defined as a security rated
in the top three categories ^ rated by a nationally recognized rating
service. Each Portfolio's investments in instruments other than the direct
obligations of the U.S. government are subject to the ability of the issuer
to make payment at maturity. Investments in obligations of the State of North
Carolina or municipalities within the State are subject to political or
economic conditions of the State or municipality. Also each Portfolio may
invest in restricted and illiquid securities. For a description of these
obligations and ratings, see the Appendix on page __.
The investment objectives and policies set forth above are supplemented
by the investment limitations on page __. Except as noted, each Portfolio's
objective, policies and limitations are fundamental.^ No assurance can be
given, of course, that either Portfolio will achieve its investment
objective.
_____________________________________________________________________________
HOW TO INVEST
_____________________________________________________________________________
Each Portfolio's shares are offered to North Carolina governmental units
who are eligible ^ investors as defined in 20 NCAC 3.0702(3). Shares are sold
without a sales charge; there is no minimum initial investment requirement
and subsequent investments may be made in any amount. An initial investment
must be preceded by a completed, signed application.
The NAV for each Portfolio is determined by Fidelity Service Co.
(Service), 82 Devonshire Street, Boston, MA 02109, each day the Portfolios
are open for business. NAV is determined by adding the value of all
securities and other assets of ^ a Portfolio, deducting its actual and
accrued liabilities, and dividing by the number of shares outstanding (see
"Valuation of Portfolio Securities" on page __).
The Portfolios are open for business and their NAVs are calculated every
day that both the Federal Reserve Bank of Richmond (Richmond Fed) and the
Trust's custodian, First Union, are open. The following holiday closings have
been ^ designated for 1994: Dr. Martin Luther King, Jr. Day (observed),
Presidents' Day, Good Friday, Memorial Day^, Independence Day (observed),
Labor Day, Columbus Day^, Veterans' Day^, Thanksgiving Day and Christmas Day
(observed). Although FMR expects the same holiday schedule, with the addition
of New Year's Day, to be observed in the future, the ^ Richmond Fed or First
Union may modify its holiday schedule at any time. ^ The right is reserved to
advance the time by which purchase and redemption orders must be received on
any day that: (1) the Richmond Fed or First Union closes early; (2) as
permitted by the Securities and Exchange Commission (SEC). To the extent
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portfolio securities are traded on days that the Richmond Fed or First Union
is closed, the Portfolios' NAVs may be affected on days when investors do not
have access to the ^ Portfolios to purchase or redeem shares.
Cash Portfolio's NAV normally is priced at 12 noon Eastern time (12
noon) and 4:00 p.m. Eastern time (4 p.m.). Term Portfolio's NAV normally is
calculated at 4 p.m.
Purchases will be processed at the NAV next calculated after orders are
received and accepted. Term Portfolio investors begin to earn dividends as of
the first business day following the day of their purchase. For Cash
Portfolio investors, purchases processed at 12 noon will earn the dividend
declared for that day; purchases processed at 4 p.m. will begin to earn
dividends the following business day.
Dividends declared by each Portfolio are accrued throughout the month
and are paid on the first business day of the following month. These
dividends will be reinvested automatically in additional shares of a
Portfolio unless the shareholder elects (on the application) to receive them
in cash.
Cash Portfolio offers four ways to buy shares:
By Mail: You may purchase shares of Cash Portfolio by sending a check
drawn on a U.S. bank payable to "NCCMT: Cash Portfolio" to:
The North Carolina Capital Management Trust
c/o Sterling Capital Distributors, Inc.
One First Union Center
301 S. College Street, Suite 3200
Charlotte, NC 28202-6005
Investments should be accompanied by the Portfolio's name, the name on
your account, your account number and a precoded Portfolio investment slip
which will be supplied when you open your account.
By Wire: You may purchase shares of Cash Portfolio by wiring federal
funds directly to the custodian, First Union, Charlotte, NC. You may obtain
wire instructions by calling Sterling ^ toll-free at 800-222-3232 or locally
at 704-372-8798. Prior to your initial investment by wire, you must obtain an
account number by calling Sterling and by mailing a completed and signed
application to:
The North Carolina Capital Management Trust
c/o Sterling Capital Distributors, Inc.
One First Union Center
301 S. College Street, Suite 3200
Charlotte, NC 28202-6005
All wire purchases made by federal funds should be preceded by a
telephone call before 12 noon on the day of the wire. If Sterling is not
advised of the order prior to 12 noon on the day of the wire, or if federal
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<PAGE>
funds are not received the same day the order is placed, the order will be
accepted on the following business day. TO SECURE SAME DAY ACCEPTANCE OF WIRE
TRANSFERS, PLEASE CALL STERLING TOLL-FREE AT 800-222-3232 OR LOCALLY AT
704-372- 8798 BY 12 NOON. THIS CALL SHOULD BE MADE PRIOR TO YOUR BANK WIRING
FUNDS TO STERLING.
Cash Portfolio also may accept investments of certain federal or state
transfer payments wired directly to the custodian, provided that properly
executed instructions have been filed with Sterling and the appropriate
sending agency. Additional information regarding such investments may be
obtained by calling Sterling toll-free at 800-222-3232 or locally at ^ 704-
372-8798.
In Person: Once your Cash Portfolio account has been opened, you may
make subsequent investments by check, if they are accompanied by an
appropriate precoded investment slip when presented to any branch of First
Union. An investment made by check will be priced at 4 p.m. that day provided
investment is made prior to the close of business of the branch. If such an
investment is made after the business closing of the particular branch, it
will not be accepted until the following business day.
By Exchange: Additional investments to Cash Portfolio accounts may be
made by exchange of shares from Term Portfolio. To do so, you may make your
exchange by 4 p.m. on any business day by calling Sterling toll-free at
800-222-3232 ^ or locally at 704-372-8798. Shares ^ from your Term Portfolio
account will be redeemed at the NAV next determined ^ on the business day on
which your order is received, to pay for the purchase of Cash Portfolio
shares. You will receive the income dividend declared that day for Term
Portfolio. You will receive shares of Cash Portfolio based on the NAV
determined at that time, but will not receive dividends until the next
business day.
Exchanges from Term Portfolio to Cash Portfolio made on Friday or the
day before a Portfolio holiday will not receive dividends from Cash Portfolio
until the next business day. However, you will continue receiving dividends
from Term Portfolio until the next business day.
Term Portfolio shares are available only to investors with a new or
existing account in Cash Portfolio and can be purchased in three ways:
By Wire: You may purchase shares of Term Portfolio by wiring federal
funds directly to the custodian, First Union ^, Charlotte, NC. You may obtain
wire instructions by calling Sterling toll-free at 800-222-3232 or locally at
704-372-8798. Prior to your initial investment by wire, you must obtain an
account number by calling Sterling and by mailing a completed and signed
application to:
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<PAGE>
The North Carolina Capital Management Trust
c/o Sterling Capital Distributors, Inc.
One First Union Center
301 S. College Street, Suite 3200
Charlotte, NC 28202-6005
Term Portfolio must receive your wire no later than 12 noon on the
business day following your order to purchase shares. If Sterling is not
advised of the order prior to 4 p.m. on the business day on which your order
is received or if federal funds are not received the next business day, your
order may be canceled, and you could be held liable for resulting fees and
losses.
All wire purchases must be preceded by a telephone call before 4 p.m.
the business day prior to the wiring of funds. In order to allow FMR to
manage the Portfolio most effectively, you are strongly encouraged to notify
Sterling of your purchase prior to 12 noon the day prior to the wiring of
funds. PLEASE CALL STERLING TOLL-FREE AT 800-222-3232 OR LOCALLY AT
704-372-8798. THIS CALL SHOULD BE MADE THE BUSINESS DAY BEFORE YOUR BANK
WIRES FUNDS TO STERLING.
By Exchange: Additional investments ^ in Term Portfolio ^ shares may be
made by exchange of shares from Cash Portfolio. To do so, make your exchange
by 4 p.m. on any business day by calling Sterling toll-free at 800-222-3232
or locally at 704-372-8798. Sterling will purchase the requested shares of
Term Portfolio on the day your exchange request is accepted, and you will
receive the NAV next determined that day for Term Portfolio. Sterling will
redeem shares of Cash Portfolio at the NAV determined at that time to pay for
the purchase of Term Portfolio shares. You will receive the income dividend
declared by Cash Portfolio on the business day the exchange request is
accepted and will receive the income dividend declared by Term Portfolio on
the following business day.
By Securities Exchange. Shares of Term Portfolio may be purchased in
exchange for securities held by an investor which are acceptable to the
Portfolio. Only securities which meet Term Portfolio's objective, policies
and limitations will be eligible for exchange; however, Distributors reserves
the right to refuse a tender for any reason. A gain or loss for federal
income tax purposes may be realized by the investor upon a securities
exchange depending upon the cost basis of the securities tendered.
Investors interested in this service should call Sterling ^ toll-free
at 800-222-3232 or locally at 704-372-8798 for further information, including
specific details about the securities exchange program and instructions on
submission of a letter of intention to Sterling. PLEASE DO NOT SEND
SECURITIES TO THE PORTFOLIO OR TO STERLING.
Investor Accounts
Fidelity Investments Institutional Operations Company (FIIOC) performs
the transfer agent and dividend disbursing functions for each Portfolio and
maintains one or more accounts for each shareholder expressed in full and
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<PAGE>
fractional shares of each Portfolio rounded to the nearest 1/1000th of a
share. An account in either Portfolio must be registered in the name of an
eligible investor.
Each shareholder may establish multiple accounts as necessary to satisfy
requirements regarding commingling of funds or for accounting convenience.
Each such account is administered separately. In addition, special
subaccounting services are available to certain eligible shareholders through
FIIOC. For more complete information, call Sterling toll-free at 800-222-3232
or locally at 704-372-8798. A shareholder utilizing multiple accounts may
transfer funds between accounts by written request or by telephone followed
by written verification.
The Portfolios do not issue share certificates, but FIIOC mails
shareholders a confirmation of all investments or redemptions. FIIOC will
send shareholders a monthly statement setting forth transactions in their
account for the preceding period and the period-end balance of shares held in
the account.
Arbitrage Reporting Services. Special reporting is available for state
and local entities that require rebate calculations for the invested proceeds
of their issued tax-exempt obligations pursuant to the Tax Reform Act of 1986
(see " Distributions and Taxes" on page __). ^ Sterling, FMR, their
affiliates ^ and the Portfolios do not assume responsibility for the accuracy
of the services provided. Please contact Sterling for more information.
General Information. The offering of shares of either Portfolio may be
suspended for a period of time, and each Portfolio reserves the right to
reject any specific purchase order. Purchase orders may be refused if, in
FMR's opinion, they are of a size that would disrupt management of the
Portfolios. If the Trustees determine that existing conditions make cash
payments undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing the Portfolios' ^ NAVs. 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, the Portfolios are required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may
be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange or (ii) a Portfolio temporarily
suspends the offering of shares as permitted under the 1940 Act or by the ^
rules and regulations thereunder, or the Portfolio 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. Each Portfolio ^
reserves the right at any time, without prior notice, to refuse exchange
purchases by any person or group if, in FMR's judgment, the Portfolio would
be unable to invest effectively in accordance with its investment objective
and policies, or would otherwise potentially be adversely affected.
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<PAGE>
_____________________________________________________________________________
HOW TO REDEEM
_____________________________________________________________________________
Shareholders may redeem all or any part of the value of their accounts
on any business day (see "How to Invest" on page __). Redemptions are
effected at the NAV next determined after receipt of the request for
redemption. If the shares to be redeemed represent an investment made by
check, Cash Portfolio can hold payment on redemption until it is reasonably
satisfied that the investment has been collected (which can take up to seven
days). If you need immediate access to your investments, you should utilize
the invest-by-wire service described under "How to Invest" on page __.
In order to allow FMR to manage the Portfolios most effectively, you are
urged to notify Sterling one day in advance of redemptions or exchanges in
excess of $5 million.
For your convenience, and to enable you to continue earning daily
dividends as long as possible, Cash Portfolio has arranged for the following
procedures for redemption:
By Check: If you are a Cash Portfolio shareholder, you may elect to have
a special checking account with First Union for the purpose of redeeming
funds from your accounts by check. There is no minimum amount per check and
you may write an unlimited number of checks, although FIIOC reserves the
right to limit the number of checks a shareholder may write during a
specified period. Upon receipt of a completed signature card, you will be
provided with a supply of checks at no charge. Additional supplies of checks
are available at no charge upon request to Sterling.
Checks may be drawn on First Union for any amount and made payable to
any person. When such a check is presented to First Union, a sufficient
number of full and fractional shares will be redeemed at the next determined
NAV after receipt of the check from the account to cover the amount of the
check. You are advised to determine whether use of the check writing feature
may be limited by North Carolina G.S. 159-28.
The check redemption procedure enables you to receive the dividends
declared on the shares to be redeemed through the day shares are redeemed
from your accounts. Accordingly, check redemption is not appropriate for a
complete liquidation of an account. If the amount of a redemption check is
greater than the value of the shares in the account, the check will be
returned to the depositor. Cash Portfolio and First Union reserve the right
to suspend the procedure permitting redemptions by check, and intend to do so
in the event that federal legislation or regulations impose reserve
requirements or other restrictions which are deemed by the Trustees to be
adverse to the interest of shareholders.
By Telephone: If you have elected to do so on your Cash Portfolio
application, you may instruct that redemption proceeds in any amount be wired
directly to your existing account in any North Carolina bank as designated on
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<PAGE>
the application. You should determine that such designated institutions
satisfy any legal requirements under North Carolina law prior to completing
the application. Such proceeds will be wired on the same business day
provided that Sterling receives telephone instructions prior to 12 noon.
Instructions for telephone redemption received after 12 noon will be
processed on the following business day. You may change the designated bank
account, or add additional accounts without limitation, by filing properly
executed instructions with Sterling prior to requesting a redemption.
By Mail: You may redeem any amount from your Cash Portfolio ^ account at
any time by submitting written instructions with an authorized signature
which is on file for that account. The request should be mailed to:
The North Carolina Capital Management Trust
c/o Sterling Capital Distributors, Inc.
One First Union Center
301 S. College Street, Suite 3200
Charlotte, NC 28202-6005
A check made payable to the account registration will be mailed to the
address of record, normally on the day following receipt of redemption
instructions, but no later than seven (7) days following receipt of
redemption instructions in proper form.
Term Portfolio has arranged for the following redemption procedures:
By Telephone: If you have elected to do so on your Term Portfolio
application, you may instruct that redemption proceeds in any amount be wired
directly to your existing account in any North Carolina bank as designated on
the application. You should determine that such designated institutions
satisfy any legal requirements under North Carolina law prior to completing
the application. Such proceeds will be wired on the following business day
provided that Sterling receives telephone instructions prior to 4 p.m. You
will earn the dividend for the day the redemption instruction is placed. You
may change the designated bank account, or add additional accounts without
limitation, by filing properly executed instructions with Sterling prior to
requesting a redemption.
By Mail: You may redeem any amount from your Term Portfolio accounts at
any time by submitting written instructions with an authorized signature
which is on file for that account. The request should be mailed to:
The North Carolina Capital Management Trust
c/o Sterling Capital Distributors, Inc.
One First Union Center
301 S. College Street, Suite 3200
Charlotte, NC 28202-6005
A check made payable to the account registration will be mailed to the
address of record, normally on the day following receipt of redemption
instructions, but no later than seven (7) days following receipt of
redemption instructions in proper form.
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<PAGE>
An investor may initiate many transactions by telephone. Note that
neither Sterling nor Fidelity will be responsible for any losses resulting
from unauthorized transactions if each follows reasonable procedures designed
to verify the identity of the caller. Sterling will request personalized
security codes or other information, and may also record calls. The investor
should verify the accuracy of ^ his or her confirmation statements
immediately after ^ he or she receives them. If the investor does not want
the ability to redeem and exchange by telephone, he or she should call
Sterling for instructions.
Under the 1940 Act, the right of redemption may be suspended or the date
of payment postponed for more than seven (7) days at times when the New York
Stock Exchange (NYSE) is closed (other than customary weekend or holiday
closings) or trading on the NYSE is restricted or under certain emergency or
other circumstances as determined by the SEC to merit such action. In case of
suspension of the right of redemption, you may either withdraw your request
for redemption or receive payment based on the NAV next determined after the
termination of the suspension.
_____________________________________________________________________________
VALUATION OF PORTFOLIO SECURITIES
_____________________________________________________________________________
Cash Portfolio values its investments on the basis of amortized cost.
This technique involves valuing an instrument at its cost as adjusted for
amortization of premium or accretion of discount rather than its value based
on current market quotations or appropriate substitutes which reflect current
market conditions of the instrument. The amortized cost value of an
instrument may be higher or lower than the price the Portfolio would receive
if it sold the instrument.
Valuing Cash Portfolio's instruments on the basis of amortized cost, and
use of the term "money market fund," are permitted by Rule 2a-7 under the
1940 Act. Cash Portfolio must adhere to certain conditions under Rule 2a-7 ^
which are summarized on page __.
The Trustees oversee FMR's adherence to SEC rules concerning money
market funds, and ^ have established procedures designed to stabilize the
Portfolio's NAV at $1.00. At such intervals as they may deem appropriate, the
Trustees consider the extent to which NAV calculated by using market
valuations would deviate from $1.00 per share. If the Trustees believe that a
deviation from Cash Portfolio's amortized cost per share may result in
material dilution or other unfair results to existing 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; or
such other measures as the Trustees may deem appropriate.
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<PAGE>
During periods of declining interest rates, the Portfolio's yield based
on amortized cost may tend to be higher than a yield based on market
valuations. Under these circumstances, a shareholder in Cash Portfolio would
be able to obtain a somewhat higher yield than would result if the Portfolio
utilized market valuations to determine its NAV. The converse would apply in
a period of rising interest rates.
Term Portfolio's NAV will fluctuate according to market conditions.
Securities and other assets held by the Portfolio are valued primarily on the
basis of market quotations, or if quotations are not available, as determined
in good faith under procedures adopted by the Trustees.
_____________________________________________________________________________
PERFORMANCE
_____________________________________________________________________________
Each Portfolio may quote its performance in various ways. All
performance information supplied in advertising or in reports or other
communications with shareholders is historical and is not intended to
indicate future results. Term Portfolio's share price fluctuates in response
to market conditions and other factors, and the value of Term Portfolio
shares when redeemed may be more or less than their original cost.
Yield Calculations. Cash Portfolio's yield refers to the income
generated by an investment in the Portfolio over a seven day period expressed
as an annual percentage rate. The effective yield, although calculated
similarly, will be slightly higher than the yield because it assumes that
income earned from the investment is reinvested (the compounding effect of
reinvestment). In addition to the current yield, Cash Portfolio may quote
yields in advertising based on any historical seven day period.
Cash Portfolio's yield and effective yield calculations are illustrated
below for the seven day period ended June 30, ^ 1994:
Current Effective
Yield Yield
^ x.xx% x.xx%
Yields for Term Portfolio are computed by dividing the Portfolio's
interest income for a given 30-day or one month period, net of expenses, by
the average number of shares entitled to receive distributions during the
period, dividing this figure by the Portfolio's NAV at the end of the period,
and annualizing the result (assuming compounding of income) in order to
arrive at an annual percentage rate. Income is calculated for purposes of
yield quotations in accordance with standardized methods applicable to all
stock and bond funds. In general, interest income is reduced with respect to
bonds trading at a discount by adding a portion of the discount to daily
income. Capital gains and losses generally are excluded from the calculation.
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<PAGE>
Term Portfolio also may quote its distribution rate, which expresses the
historical amount of income dividends paid by the Portfolio as a percentage
of the Portfolio's share price. The distribution rate is calculated by
dividing the Portfolio's daily dividend per share by its share price for each
day in the 30-day period, averaging the resulting percentages, and then
expressing the average rate in annualized terms.
Because yield accounting methods differ from the methods used for other
accounting purposes, yields may not equal a Portfolio's distribution rate,
the income paid to your account, or the income reported in the Portfolio's
financial statements.
Total Return Calculations. Total returns quoted in advertising reflect
all aspects of a Portfolio's return, including the effect of reinvesting
dividends and capital gain distributions (if any). Average annual total
returns are calculated by determining the growth or decline in value of a
hypothetical historical investment in a Portfolio over a stated period and
then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over 10
years would produce an average annual total return of 7.18%, which is the
steady annual rate that would equal 100% growth on a compounded basis in 10
years. While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that a Portfolio's
performance is not constant over time, but changes from year to year, and
that average annual total returns represent averaged figures as opposed to
the actual year-to-year performance of a Portfolio.
In addition to average annual total returns, each Portfolio 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 dollar amounts, and may be
calculated for a single investment, a series of investments, or a series of
redemptions over any time period. Total returns may be broken down into their
components of income and capital in order to illustrate the relationship of
these factors and their contributions to total return. Total returns, yields
and other performance information may be quoted numerically or in a table,
graph or similar illustration. ^ Term Portfolio's cumulative and average
annual total returns for the fiscal year ended June 30, ^ 1994 are as
follows:
Average Annual Total Returns Cumulative Total Returns
30-day
30-day Distribution One Five Life of One Five Life of
Yield Rate Year Year Portfolio* Year YearPortfolio*
^ x.xx% x.xx% x.xx% x.xx% x.xx% x.xx% xx.xx% xx.xx%
*Life of Portfolio: March 19, 1987 (commencement of operations) to June 30, ^
1994.
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<PAGE>
NOTE: If FMR, Distributors and Sterling had not voluntarily waived
certain Portfolio expenses during the Five Year and Life of Portfolio
periods, total returns would have been lower.
The following chart shows the income and capital elements of Term
Portfolio's total return. During the period from March 19, 1987 to June 30, ^
1994, a hypothetical $10,000 investment in Term Portfolio would have grown to
^ $xx,xxx, assuming all distributions were reinvested. The chart also
compares the Portfolio's return to the cost of living (as measured by the
Consumer Price Index or CPI) over the same period.
TERM PORTFOLIO INDEX
Value of Value of Value of
Initial Reinvested Reinvested Cost
$10,000 Dividend Cap. Gain Total of
Period Ending Investment Distributions Distributions Value Living*
6/30/87# $9,910 $186 $ 0 $10,096 $10,125
6/30/88 9,820 985 0 10,805 10,526
6/30/89 9,780 1,937 0 11,717 11,070
6/30/90 9,730 2,941 0 12,671 11,588
6/30/91 9,820 3,970 0 13,790 12,132
6/30/92 9,910 4,826 0 14,736 12,507
6/30/93 9,940 5,353 0 15,293 12,881
6/30/94
#From March 19, 1987 (commencement of operations).
*Cost of Living as measured by the CPI starting at month-end closest to
initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on March
19, 1987, the net amount invested in Portfolio shares was $10,000. The cost
of the initial investment ($10,000), together with the aggregate cost of
reinvested dividends for the period covered (that is, their cash value at the
time they were reinvested), amounted to ^ $-----. If distributions had not
been reinvested, the amount of distributions earned from the Portfolio over
time would have been smaller, and the cash payments for the period would have
come to ^ $---- for income dividends. The Portfolio did not distribute any
capital gains during the period. If FMR, Distributors and Sterling had not
voluntarily waived certain Portfolio expenses during the years 1987 through
1991, the Portfolio's returns would have been lower.
Each Portfolio's performance may be compared in advertising to the
performance of other mutual funds in general or to the performance of
particular types of mutual funds, especially those with similar objectives.
This comparative performance may be expressed as a ranking prepared by Lipper
Analytical Services, Inc. (Lipper, sometimes referred to as Lipper Analytical
Services), an independent service located in Summit, New Jersey that monitors
the performance of mutual funds. The Lipper performance analysis ranks funds
on the basis of total return, assuming reinvestment of distributions, but
does not take sales charges or redemption fees into consideration, and is
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<PAGE>
prepared without regard to tax consequences. Cash Portfolio also may
reference the growth and variety of money market mutual funds and Fidelity's
innovation and participation in the industry.
The Portfolios may be compared in advertising to Certificates of Deposit
(Cds) or other investments issued by banks. Mutual funds differ form bank
investments in several respects. For example, a Portfolio may offer greater
liquidity or higher potential returns than Cds, and the Portfolios do not
guarantee your principal or your return.
Yield information may be useful in reviewing each Portfolio's
performance and in providing a basis for comparison with other investment
alternatives. It is important to recognize that each Portfolio has a yield
which fluctuates, unlike securities which pay a fixed interest rate over a
stated period of investment. Each Portfolio calculates its yields in
accordance with standardized methods applicable to all stock and bond funds.
When comparing investment alternatives, investors also should note the
quality and maturity of ^ each Portfolio's securities.
Each Portfolio may compare its performance or the performance of
securities in which it may invest to averages published by IBC USA
(Publications), Inc. of Ashland, Massachusetts. These averages assume
reinvestment of distributions. The MONEY FUND ^ AVERAGES(REGISTERED
TRADEMARK)/All Taxable, which is reported in the MONEY FUND ^
REPORT(REGISTERED TRADEMARK), covers over ^ 659 taxable money market funds.
The BOND FUND REPORT ^ AVERAGES(REGISTERED TRADEMARK)/ Taxable Bonds, which
is reported in the BOND FUND ^ REPORT , covers over ^ 376 taxable bond
funds. When evaluating comparisons to money market funds, investors should
consider the relevant differences in investment objectives and policies.
Specifically, money market funds invest in short-term, high-quality
instruments and seek to maintain a stable $1.00 share price. Term Portfolio,
however, invests in longer-term instruments and its share price changes daily
in response to a variety of factors.
_____________________________________________________________________________
DISTRIBUTIONS AND TAXES
_____________________________________________________________________________
Dividends. Each Portfolio ordinarily declares dividends from net
investment income daily and pays such dividends monthly. Each Portfolio
intends to distribute substantially all of its net investment income and
capital gains, if any, to shareholders within each calendar year as well as
on a fiscal year basis.
Capital Gain Distributions. Cash Portfolio may distribute short-term
capital gains once a year or more often as necessary to maintain its NAV at
$1.00 or to comply with distribution requirements under federal tax law. ^
Cash Portfolio does not anticipate earning long-term capital gains on
securities held by ^ it.
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<PAGE>
Term Portfolio's net realized capital gains, if any, will be distributed
annually and reinvested in additional shares of the Portfolio at the
Portfolio's NAV on the record date, unless shareholders have elected, on the
application, to receive them in cash.
Federal Taxes. Dividends derived from net investment income and
short-term capital gains are taxable as ordinary income. Distributions are
taxable when they are paid, whether investors take them in cash or reinvest
them in additional shares, except that distributions declared in December and
paid in January are taxable as if paid on December 31st.
It is anticipated that most ^ investors in the Portfolios will be
"political subdivisions" of the State of North Carolina. Section 115(1) of
the Internal Revenue Code of 1986, as amended (Internal Revenue Code),
provides in part that gross income does not include income derived from the
exercise of any essential governmental function accruing to a State or any
political subdivision thereof. The receipt of revenue from each Portfolio for
the benefit of a ^ political subdivision investing in a Portfolio may
constitute an exercise of an essential governmental function. A portion of
the earnings derived from funds which are subject to the arbitrage
limitations or rebate requirements of the Internal Revenue Code may be
required to be paid to the U.S. Treasury as computed in accordance with such
requirements.
Tax Status of the Trust. Each Portfolio has qualified and intends to
continue to qualify as a "regulated investment company" under Subchapter M of
the Internal Revenue Code ^, so that a Portfolio will not be liable for
federal income or excise taxes on net investment income or capital gains to
the extent that these are distributed to shareholders in accordance with
applicable provisions of the Internal Revenue Code.
Other Tax Information. The information above is only a summary of some
of the federal tax consequences generally affecting each Portfolio and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal taxes, investors may be subject to state
or local taxes on their investment. Investors should consult their tax
advisors to determine whether a Portfolio is suitable to their particular tax
situation.
_____________________________________________________________________________
TRUSTEES AND OFFICERS
_____________________________________________________________________________
The Trustees and executive officers 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. Unless otherwise noted, the business
address of each Trustee and officer is 82 Devonshire Street, Boston, MA,
which is also the address of FMR. The Trustees who are "interested persons"
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<PAGE>
(as defined in the 1940 Act) by virtue of their affiliation with the
Portfolios, FMR or Sterling Capital ^ are indicated by an asterisk (*).
* William L. Byrnes, President and Trustee (1990) is a Director of
Fidelity International Limited and Vice Chairman, a Director and Managing
Director of FMR Corp.
John David "J.D." Foust, 609 Lakestone Drive, Raleigh, NC, Trustee
(1990) is a financial consultant (Donaldson, Lufkin & Jenrette Securities
Corporation, 1990). Prior to 1990, he served as Deputy State Treasurer and
Secretary of the Local Government Commission (1977-1989).
* W. Olin Nisbet III, One First Union Center, 301 S. College Street, Suite
3200, Charlotte, NC, Trustee (1990) and Vice President is Chairman and a
Director of Sterling Capital ^ and President and Director of Sterling ^.
Mr. Nisbet is a director of Datasouth Computer Corporation (1988) and serves
as Governor of the Investment Counsel Association of America (1988), an
Advisor of the Kitty Hawk Capital-Venture Capital Partnership (1988), and a
Trustee of Davidson College (1987).
Helen A. Powers, CC-2 Crowfields Drive, Asheville, NC, Trustee (1990).
Prior to Ms. Powers' retirement in April 1990, she served as Secretary of the
North Carolina Department of Revenue (1985). Prior to 1985 she was Senior
Vice President of North Carolina National Bank and served as a member of the
North Carolina Banking Commission.
Bertram H. Witham, 89 Fox Hill Road, Stamford, CT, Trustee and Chairman
of the Board, is a consultant (Treasurer until his retirement in 1978) to IBM
Corp. He is also a Director of Systems Control Technology, Inc. (computer
software).
J. Gary Burkhead, Senior Vice President, is President of FMR; and
President and a Director of FMR Texas Inc. (FMR Texas) (1989), Fidelity
Management & Research (U.K.) Inc. and Fidelity Management & Research (Far
East) Inc. He is also a Trustee for other funds managed by FMR.
James Calvin Rivers, Jr., One First Union Center, 301 S. College Street,
Suite 3200, Charlotte, NC, Vice President of the Trust (1992), is Director
and Senior Vice President of Sterling Capital ^, Vice President of Sterling
^, Chairman of Board of Trustees of Oldsfield School (1987) and Vice
President of Southern Piedmont Region Alzheimer's Association.
Robert K. Duby, Vice President of Term Portfolio (1992) and an employee
of FMR.
Burnell R. Stehman, Vice President of Cash Portfolio (1991), Vice
President of FMR Texas (1989).
Thomas D. Maher, Assistant Vice President of Cash Portfolio (1990), is
Assistant Vice President of Fidelity's money market funds and Vice President
and Associate General Counsel of FMR Texas (1990).
- 27 -
<PAGE>
Gary L. French, Treasurer (1991). Treasurer of the funds advised by FMR
(1991). Prior to becoming Treasurer of the Fidelity funds, Mr. French was
Senior Vice President, Fund Accounting - Fidelity Accounting & Custody
Services Co. (1991); Vice President, Fund Accounting - Fidelity Accounting &
Custody Services Co. (1990);and Senior Vice President, Chief Financial and
Operations Officer - Huntington Advisers, Inc. (1985-1990).
John H. Costello, Assistant Treasurer and an employee of FMR.
Arthur S. Loring, Secretary, is Vice President and General Counsel of
FMR, Vice President - Legal of FMR Corp., and Clerk of Distributors.
David H. Potel, Assistant Secretary (1988) and an employee of FMR Corp.
As of the date of this Prospectus and Statement of Additional
Information, the Trustees and officers of the Trust, in the aggregate,
beneficially owned less than 1% of the outstanding shares of Cash Portfolio
and Term Portfolio.
_____________________________________________________________________________
MANAGEMENT CONTRACTS
_____________________________________________________________________________
Each Portfolio employs FMR to furnish investment advisory and other
services. In addition, FMR is responsible for the payment of all of the
expenses of each Portfolio with the exception of certain limited expenses.
Under FMR's Management Contract with each of the Portfolios, FMR acts as
investment adviser and, subject to the supervision of the Board of Trustees,
directs the investments of ^ the respective Portfolios in accordance with its
investment objective, policies and limitations. FMR also provides each
Portfolio with all necessary office space and office facilities, equipment
and personnel for servicing each Portfolio's investments, and compensates all
officers of the Trust who are also employees of FMR and all personnel of each
Portfolio or FMR performing services relating to research, statistical and
investment activities. In addition, FMR or its affiliates, subject to the
supervision of the Board of Trustees, provides the management and
administrative services necessary for the operation of each Portfolio. These
services include providing facilities for maintaining each Portfolio's
organization, supervising relations with custodians, transfer and pricing
agents, accountants, underwriters and other persons dealing with the
Portfolios^; preparing all general shareholder communications and conducting
shareholder relations^; maintaining each Portfolio's records and the
registration of the Portfolios' shares under federal and state law^;
developing management and shareholder services and furnishing reports^; and
providing evaluations and analyses on a variety of subjects to the Trustees.
FMR pays all custodian fees, otherwise maintains each Portfolio's
organization, and pays all of the expenses of each Portfolio with the
following exceptions: the payment of fees and expenses of all Trustees of the
Trust who are not " interested persons" of the Trust or FMR; brokerage fees
or commissions (if any); interest on borrowings; taxes; and such
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<PAGE>
extraordinary non-recurring expenses as may arise, including litigation to
which the Trust may be a party.
^ FIIOC is transfer, dividend disbursing ^, and shareholders' servicing
agent for the Portfolios. The costs of these services are borne by FMR
pursuant to its management contract with each ^ of the Portfolios. Service
calculates the Portfolio's NAV and dividends, and maintains each Portfolio's
portfolio and general accounting records. The costs of these services are
also borne by FMR pursuant to its management contract with each of the
Portfolios.
^ Each Portfolio pays FMR a monthly management fee at an annual rate of:
.41% of average net assets through $100 million; .40% of average net assets
in excess of $100 million through $200 million; .39% of average net assets in
excess of $200 million through $800 million; and .38% of average net assets
in excess of $800 million.
Specific expenses payable by FMR in addition to those described above
include, without limitation, the fees and expenses of registering and
qualifying each Portfolio and its shares for distribution under federal and
any applicable North Carolina state securities laws (the Trust has received a
"no action" letter pursuant to which its shares will not be registered under
North Carolina securities laws); expenses of printing ^ prospectuses and
statements of additional information for use by existing shareholders;
auditing and legal expenses; association membership dues; and the expense of
reports to shareholders, shareholders' meetings and proxy solicitations. The
management fee for both Portfolios will be reduced by the amount equal to the
fees and expenses of the "non-interested" Trustees.
^
For the fiscal years ended June 30, 1994, 1993 ^ and 1992 ^, FMR
received $___________, $5,955,535 ^ and $6,335,186 ^ , respectively (before
reduction of fees and expenses of the "non- interested" Trustees) for its
services as investment adviser to Cash Portfolio, which was equivalent to an
annualized rate of .xx%, .39%, and .39% ^ respectively, of the Portfolio's
average net assets.
^
For the fiscal years ended June 30, 1994, 1993 ^ and 1992 ^ FMR received
$___________, $342,067 ^ and $407,084 ^, respectively, (before reduction of
fees and expenses of the "non- interested" Trustees) for its services as
investment adviser to Term Portfolio, which was equivalent to an annualized
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<PAGE>
rate of .xx%, .41% ^ and .41% ^, respectively, of the Portfolio's average
net assets.
^
FMR, on behalf of Cash Portfolio, has entered into a sub-advisory
agreement with FMR Texas, under which FMR Texas ^ has primary responsibility
for providing portfolio investment management services, while FMR retains
responsibility for providing other management services. Under each
sub-advisory agreement, FMR pays FMR Texas a fee equal to 50% of the
management fee retained by FMR under its current management contract with the
Portfolio, after payments by FMR pursuant to the Portfolio's ^ Plan. The fees
paid to FMR Texas are not reduced to reflect any voluntary or mandatory
expense reimbursements that may be in effect from time to time. For the
periods ended June 30, 1994, 1993 ^ and 1992 ^ FMR paid $___________,
$1,692,977 ^ and $1,769,420, ^ respectively, to FMR Texas.
_____________________________________________________________________________
DISTRIBUTION OF SHARES AND DISTRIBUTION PLANS
_____________________________________________________________________________
Each Portfolio has entered into a General Distribution Agreement with
Distributors, a wholly-owned subsidiary of FMR Corp. Under the General
Distribution Agreement, Distributors has direct responsibility to each
Portfolio with respect to all distribution activities. Distributors has, in
turn, entered into a Distribution and Service Agent Agreement with Sterling,
a wholly-owned subsidiary of Sterling Capital ^, which is an affiliate of
United Asset Management Corporation, Boston, MA, to act as distribution agent
of shares of each Portfolio. Under the Distribution and Service Agent
Agreement, Sterling has assumed from Distributors primary responsibility with
respect to the distribution of each Portfolio's shares.
Sterling Capital ^ provides discretionary investment management to
approximately 140 pension, profit-sharing, endowment, hospitals, and
individual clients. The firm was established in 1971 and is one of the
largest advisers headquartered in North Carolina registered under the
Investment Advisers Act of 1940. Assets under management as of June 30, ^
1994 were in excess of ^ $x billion, with clients geographically dispersed
throughout the country.
^ Each Portfolio has adopted a ^ Plan ^ pursuant to Rule 12b-1 of the
1940 Act. No separate payments are authorized to be made by the Portfolios
under the ^ Plans. Rather, the ^ Plans require FMR to make payments from its
management fees to Sterling through Distributors,^ according to the following
schedule: .14% of average net assets through $100 million; .15% of average
net assets in excess of $100 million through $200 million; .16% of average
- 30 -
<PAGE>
net assets in excess of $200 million through $800 million; and .17% of
average net assets in excess of $800 million.
Amounts payable under ^ each Plan accrue in the fiscal period in which
they are incurred and are not carried over to future accounting periods. It
is possible that the fees paid by the Portfolios pursuant to the ^ Plans may
exceed the direct costs of providing services under the ^ Plans. Distributors
and Sterling reserve the right to reimburse the distribution and service fee
from time to time.
Under ^ each Plan, Distributors and its agent, Sterling, use their best
efforts to distribute shares of each Portfolio, print and distribute ^
prospectuses and statements of additional information and promotional
literature to other than existing shareholders, provide cash management
advice through financial management seminars and periodic newsletters to
local governmental units in North Carolina, maintain a local office, organize
and maintain an advisory board comprised of local government financial
officers, and provide assistance in servicing shareholder accounts. Sterling
also has assumed certain shareholder servicing functions which include the
processing of shareholder inquiries, account maintenance, and processing
purchases, redemptions, transfers and exchanges.
^ During the 1994 fiscal year, distribution fees were allocated to
provide marketing and promotional activities; presentations at seminars; the
publication and mailing of a quarterly newsletter to ^ investors; servicing
of current ^ investor accounts; office facilities and personnel; and
distribution of ^ prospectuses and statements of additional information to
other than current ^ investors. The employment of Sterling under ^ each Plan
provides a local presence which is required under the North Carolina
administrative code, and which enhances each Portfolio's ability to provide
the above services to ^ investors.
Each Portfolio's Plan has been approved by the Trustees and shareholders
of the applicable Portfolio. The Trustees have determined that ^ each Plan is
in the best interests of the shareholders of ^ the applicable Portfolio. ^
Rule 12b-1 requires the careful consideration by the Trustees of all
pertinent factors relating to the implementation of the Plans prior to their
approval, and the proper recording of their deliberations. The ^ Trustees
have complied with such requirements.
The Glass-Steagall Act generally prohibits federally and state chartered
or supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined, in Distributors' opinion it
should not prohibit a bank from being paid for shareholder support services
and recordkeeping functions. Distributors intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
- 31 -
<PAGE>
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 ^ Portfolios 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 under federal law, and in some states, banks and other
financial institutions may be required to register as dealers. The ^
Portfolios 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 ^.
_____________________________________________________________________________
PORTFOLIO TRANSACTIONS
_____________________________________________________________________________
All orders for the purchase or sale of portfolio securities are placed
on behalf of each Portfolio by FMR ^ pursuant to authority contained in its ^
management contract. Since FMR has granted investment management authority to
the sub-adviser on behalf of Cash Portfolio (see the section entitled
"Management Contracts"), 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 also is 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 Cash Portfolio generally will be traded on a net basis (i.e., without
commission). In selecting ^ broker-dealers, subject to applicable limitations
of the federal securities laws, FMR will consider various relevant factors,
including, but not limited to, the size and type of the transaction; the
nature and character of the markets for the security to be purchased or sold;
the execution efficiency^, settlement capability, and financial condition of
the ^ broker-dealer firm; the ^ broker-dealer's execution services rendered
on a continuing basis; and the reasonableness of any commissions.
Each Portfolio may execute portfolio transactions with ^ broker-dealers
who provide research and execution services to each Portfolio or other
accounts over which FMR or its affiliates exercise investment discretion.
Such services may include advice concerning the value of securities; the
advisability of investing in, purchasing or selling securities; the
availability of securities or the purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). FMR maintains a listing of ^
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<PAGE>
broker-dealers who provide such services on a regular basis. However, as many
transactions on behalf of Cash Portfolio are placed with dealers (including ^
broker-dealers on the list ^ maintained by FMR) 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 each Portfolio may be useful to FMR in rendering investment
management services to the Portfolios and/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 Portfolios. The receipt of such research
has not reduced FMR's normal independent research activities; however, it
enables FMR to avoid 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, Ltd. (FBSL), subsidiaries of FMR Corp., if the
commissions are fair, reasonable, and comparable to commissions charged by
non-affiliated, qualified brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
- 33 -
<PAGE>
The Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of each Portfolio and review the commissions, if any, paid by each
Portfolio over representative periods of time to determine if they are
reasonable in relation to the benefits to the Portfolios.
Term Portfolio's turnover rate may vary greatly from year to year as
well as within a particular year and also may be affected by cash
requirements for redemptions of the Portfolio's shares. The portfolio
turnover rate for the annual periods ended June 30, ^ 1994 and ^ 1993 was ^
xxx% and ^ 612%, respectively. Because a higher turnover rate increases
transaction costs and may increase taxable capital gains, FMR carefully
weighs the anticipated benefits of short-term investments against these
consequences.
For fiscal year 1994, 1993, 1992, the fund paid no brokerage
commissions.
From time to time the Trustees will review whether the recapture for the
benefit of the fund[s] 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.
- 34 -
<PAGE>
Investment decisions for the Portfolios are made independently from
those of other funds managed by FMR or accounts managed by FMR's 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 or accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment objective
of more than one fund.
When two or more funds or accounts are simultaneously engaged in the
purchase or sale of the same security, the prices and amounts are allocated
in accordance with a formula considered by the officers of the funds involved
to be equitable to each fund. In some cases, this system could have a
detrimental effect on the price or volume of the security as far as the
Portfolios are concerned. In other cases, however, the ability of Portfolios
to participate in volume transactions will produce better executions and
prices for the Portfolios. It is the current opinion of the Trustees that the
desirability of retaining FMR as investment adviser to the Portfolios
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
_____________________________________________________________________________
FMR
_____________________________________________________________________________
FMR, a corporation organized in 1946, serves as investment adviser to a
number of investment companies whose aggregate net assets on June 30, ^ 1994
were in excess of ^ $xxx billion. The Fidelity family of funds currently
includes a large number of funds with a broad range of investment objectives
and permissible portfolio compositions. In addition, FMR serves as investment
adviser to certain other funds which are offered to limited groups of
investors.
^
FMR is a wholly-owned subsidiary of FMR Corp., a parent company
organized in 1972. At present, the principal operating activities of FMR
Corp. are those conducted by three of its divisions as follows: Service,
which is the transfer and shareholder servicing agent for certain of the
funds advised by FMR; ^ FIIOC, which performs shareholder servicing functions
for certain institutional customers; and Fidelity Investments Retail
Marketing Company, which provides marketing services to various companies
within the Fidelity organization. Through ownership of voting common stock,
Edward C. Johnson 3d, Johnson family members, and various trusts for the
benefit of the Johnson family form a controlling group with respect to FMR
Corp.
Several affiliates of FMR also are engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory and administrative services to retirement plans and corporate
- 35 -
<PAGE>
employee benefit accounts. Fidelity Management & Research (U.K.) Inc. and
Fidelity Management & Research (Far East) Inc., both wholly owned
subsidiaries of FMR formed in 1986, supply investment research information,
and may supply portfolio management services, to FMR in connection with
certain funds advised by FMR. Analysts employed by FMR, FMR U.K. and FMR Far
East research and visit thousands of domestic and foreign companies each
year. FMR Texas, a wholly-owned subsidiary of FMR formed in 1989, supplies
portfolio management and research services in connection with certain money
market funds advised by FMR.
Robert Duby is portfolio manager and vice president of Fidelity's North
Carolina Capital Management Trust's Term Portfolio, which he has managed
since November 1991. Previously, he has managed Fidelity Institutional Cash
Portfolios, Massachusetts Municipal Depository Trust and Money Market Trust.
_____________________________________________________________________________
CUSTODIAN
_____________________________________________________________________________
First Union is custodian of the assets of each Portfolio, the fees for
which are paid by FMR pursuant to the provisions of ^ the management
contracts. First Union is a wholly-owned subsidiary of First Union
Corporation, headquartered in Charlotte, North Carolina and incorporated
under the laws of North Carolina. First Union Corporation is the parent of
corporations other than First Union, including First Union Mortgage
Corporation.
The custodian is responsible for the safekeeping of the Trust's assets
and the appointment of the subcustodian banks and clearing agencies. The
custodian takes no part in determining the investment policies of the
Portfolios or in deciding which securities are purchased or sold by the
Portfolios. The Portfolios may, however, invest in obligations of the
custodian and may purchase securities from or sell securities to the
custodian.
FMR, its officers and directors, its affiliated companies and the
Trust's Trustees may from time to time have transactions with various banks,
including custodian banks for certain of the funds advised by FMR.
Transactions that have occurred to date have included 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 Trust relationships.
_____________________________________________________________________________
INVESTMENT LIMITATIONS
_____________________________________________________________________________
Each Portfolio's fundamental investment policies and limitations may not
be changed without approval by a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of the Portfolio. The following are
each Portfolio's fundamental limitations.
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<PAGE>
Cash Portfolio 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, (a) more
than 5% of the Portfolio's total assets would be invested in the securities
of such issuer, provided, however, that in the case of certificates of
deposit and bankers' acceptances up to 25% of the Portfolio's total assets
may be invested without regard to such 5% limitation, but shall instead be
subject to a 10% limitation; or (b) the Portfolio would hold more than 10% of
the outstanding voting securities of that issuer;
2. make short sales of securities;
3. purchase securities on margin (but the Portfolio may obtain such
credits as may be necessary for the clearance of purchases and sales of
securities);
4. borrow money, except from a bank for temporary or emergency
purposes (not for leveraging or investment) in an amount not to exceed
one-third of the current value of the total assets of the Portfolio
(including the amount borrowed) less its liabilities (not including the
amount borrowed) at the time the borrowing is made. (If at any time the
Portfolio's borrowings exceed this limitation due to a decline in net assets,
such borrowings will be promptly (within three days) reduced to the extent
necessary to comply with the limitation. The Portfolio will borrow only to
facilitate redemptions requested by shareholders which might otherwise
require untimely disposition of portfolio securities and will not purchase
securities while borrowings are outstanding);
5. act as an underwriter (except as it may be deemed such in a sale
of restricted securities);
6. knowingly purchase a security which is subject to legal or
contractual restrictions on resale or for which there is no readily available
market quotation or engage in a repurchase agreement maturing in more than
seven days with respect to any security if, as a result, more than 10% of the
Portfolio's total assets (taken at current value) would be invested in such
securities (investments in instruments of smaller banks (see page __) which
are not readily marketable will be considered to be within this 10%
limitation);
7. purchase the security 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 25% of
the Portfolio's total assets would be invested in the securities of one or
more issuers having their principal business activities in the same industry,
provided, however, that it may invest more than 25% of its total assets in
the obligations of banks. Neither finance companies as a group nor utility
companies as a group are considered a single industry for purposes of this
policy;
- 37 -
<PAGE>
8. buy or sell real estate;
9. buy or sell commodities, or commodity (futures) contracts;
10. make loans to other persons, except (i) by the purchase of debt
obligations in which the Portfolio is authorized to invest in accordance with
its investment objective, and (ii) by engaging in repurchase agreements. In
addition, the Portfolio may lend its portfolio securities to ^
broker-dealers or other institutional investors, provided that the borrower
delivers cash or cash equivalent collateral to the Portfolio and agrees to
maintain such collateral so that it equals at least 100% of the value of the
securities loaned. Any such securities loan may not be made if, as a result
thereof, the aggregate value of all securities loaned exceeds 33 1/3% of the
total assets of the Portfolio;
11. purchase the securities of other investment companies or
investment trusts;
12. 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 the value of the Portfolio's total assets would be invested in
securities of companies, which, including predecessors, have a record of less
than three years' continuous operation;
13. invest in oil, gas, or other mineral exploration or development
programs;
14. 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 the
Portfolio would be purchasing or retaining the securities of any issuer, any
of whose officers, directors, or security holders is a Trustee, director, or
officer of the Portfolio or of its investment adviser, if or so long as the
Trustees, directors, and officers of the Portfolio and of its investment
adviser together own beneficially more than 5% of any class of securities of
such issuer;
15. write or purchase any put or call option; or
16. invest in companies for the purpose of exercising control or
management.
Term Portfolio may not:
1. purchase the securities of any issuer (except the United States
government, its agencies or instrumentalities or securities which are backed
by the full faith and credit of the United States) if, as a result, (a) more
than 5% of its total assets would be invested in the securities of such
issuer, provided, however, that up to 25% of its total assets may be invested
without regard to such 5% limitation; (b) the Portfolio would hold more than
10% of the voting securities of any issuer;
- 38 -
<PAGE>
2. make short sales of securities;
3. purchase any securities on margin, except for such short- term
credits as are necessary for the clearance of transactions, or write or
purchase any put or call options or any combinations thereof;
4. borrow money, except from a bank for temporary or emergency
purposes and not for investment purposes, and then in an amount not exceeding
331/3% of the value of the Portfolio's total assets at the time of borrowing;
if at any time the Portfolio's borrowings exceed this limitation due to a
decline in net assets, such borrowings will be promptly (within three days)
reduced to the extent necessary to comply with the limitation (the Portfolio
will not purchase securities for investment while borrowings equaling 5% or
more of its total assets are outstanding);
5. underwrite any issue of securities, except to the extent that the
purchase of bonds in accordance with the Portfolio's investment objective,
policies, and limitations, either directly from the issuer, or from an
underwriter for an issuer, may be deemed to be underwriting;
6. knowingly purchase or otherwise acquire any securities which are
subject to legal or contractual restrictions on resale or for which there is
no readily available market or engage in any repurchase agreements which
mature in more than seven days if, as a result, more than 10% of the value of
its net assets would be invested in all such securities;
7. purchase the securities of any issuer (except the United States
government, its agencies or instrumentalities or securities which are backed
by the full faith and credit of the United States) if, as a result, more than
25% of total Portfolio assets would be invested in any one industry;
8. purchase or sell real estate, but this shall not prevent the
Portfolio from investing in bonds or other obligations secured by real estate
or interests therein;
9. purchase or sell commodities or commodity contracts;
10. make loans, except (i) by the purchase of a portion of an issue of
debt securities in accordance with its investment objective, policies, and
limitations, and (ii) by engaging in repurchase agreements and loan
transactions with respect to such debt obligations if, as a result thereof,
not more than 33 1/3% of the Portfolio's total assets (taken at current
value) would be subject to loan transactions;
11. purchase the securities of other investment companies or
investment trusts;
12. invest in oil, gas or other mineral exploration or development
programs; or
13. pledge, mortgage, or hypothecate its assets, except that, to
secure borrowings permitted by (4) above, it may pledge securities having a
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market value at the time of pledge not exceeding 33 1/3% of the value of the
Portfolio's total assets.
Investment limitations (4) for Cash and Term Portfolio are construed in
conformity with the 1940 Act; accordingly, "three days" means three business
days, exclusive of Sundays and holidays.
The following investment limitations are not fundamental and may be
changed without shareholder approval.
i. Cash Portfolio does not currently intend to purchase the voting
securities of any issuer.
ii. Cash Portfolio does not currently intend to purchase a security
(other than a security issued or guaranteed by the U.S. government or any of
its agencies or instrumentalities) if, as a result more than 5% of its total
assets would be invested in the securities of a single issuer; provided that,
with respect to certificates of deposit and bankers' acceptances, the
Portfolio may invest up to 10% of its total assets in the first tier
securities of a single issuer for up to three business days.
iii. Each Portfolio does not currently intend to engage in securities
lending and will do so only when the Trustees determine that it is advisable
and appropriate.
Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of a Portfolio's assets which may be invested in
any security or other asset, or sets forth a policy regarding quality
standards, such standard or percentage limitation shall be determined
immediately after and as a result of the Portfolio's acquisition of such
security or other asset. Accordingly, any subsequent change in values, net
assets or other circumstances will not be considered when determining whether
the investment complies with the Portfolio's investment policies and
limitations.
_____________________________________________________________________________
DESCRIPTION OF THE TRUST
_____________________________________________________________________________
Trust Organization. Cash Portfolio and Term Portfolio are ^ series of
the Trust, an open-end, management investment company originally organized as
a Massachusetts business trust ^ pursuant to a Declaration of Trust, dated
April 26, 1982, and amended and restated on November 1, 1987. The Declaration
of Trust permits the Trustees to create additional series (or portfolios).
Currently, there are two ^ series of the Trust: Cash Portfolio and Term
Portfolio.
^
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<PAGE>
In the event that FMR ceases to be the investment adviser to ^ a
Portfolio, the right of the Trust or Portfolio to use the identifying name
Fidelity may be withdrawn.^
The assets of the Trust received for the issue or sale of shares of each
Portfolio and all income, earnings, profits, and proceeds thereof, subject
only to the rights of creditors, are especially allocated to such Portfolio,
and constitute the underlying assets of such Portfolio. The underlying assets
of each Portfolio are segregated on the books of account, and are to be
charged with the liabilities with respect to such Portfolio and with a share
of the general expenses of the Trust. Expenses with respect to the Trust are
to be allocated in proportion to the asset value of the respective
Portfolios, except where allocations of direct expense can otherwise be
fairly made. The officers of the Trust, subject to the general supervision of
the Board of Trustees, have the power to determine which expenses are
allocable to a given Portfolio, or which are general or allocable to all of
the Portfolios. In the event of the dissolution or liquidation of the Trust,
shareholders of each Portfolio are entitled to receive as a class the
underlying assets of such Portfolio available for distribution.
Shareholder and Trustee Liability. The Trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of Trust
provides that the Trust shall not have any claim against shareholders except
for the payment of the purchase price of shares and requires that each
agreement, obligation, or instrument entered into or executed by the Trust or
its Trustees shall include a provision limiting the obligations created
thereby to the Trust and its assets. The Declaration of Trust provides for
indemnification out of each Portfolio's property of any shareholder held
personally liable for the obligations of the Portfolio. The Declaration of
Trust also provides that each Portfolio shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation
of the Portfolio and satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Portfolio itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects ^ the Trustees
against any liability to which ^ they would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of ^ their office.
Voting Rights. Each Portfolio's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting and
dividend rights, the right of redemption, and the privilege of exchange are
described in ^ this Prospectus and Statement of Additional Information.
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<PAGE>
Shares are fully paid and nonassessable, except as set forth under the
heading " Shareholder and Trustee Liability" above. Shareholders representing
10% or more of a Trust or a Portfolio may, as set forth in the Declarations
of Trust, call meetings of a Trust or a Portfolio for any purpose related to
the Trust or a Portfolio, as the case may be, including, in the case of a
meeting of ^ the entire Trust, the purpose of voting on removal of one or
more Trustees. The Trust or a Portfolio may be terminated upon the sale of
its assets to another open-end management investment company, or upon
liquidation and distribution of its assets, if approved by vote of the
holders of a majority of the outstanding shares of the Trust or the
Portfolio. If not so terminated, the Trust ^ and the Portfolios will continue
indefinitely.
As of June , 1994, the following owned of record or beneficially more
than 5% of outstanding shares: [to be added by subsequent amendment.]
Auditor. ^____________ serves as the Trust's independent accountants.
The auditor examines the annual financial statements of the ^ Portfolios and
provides other audit, tax and related services.
_____________________________________________________________________________
APPENDIX
_____________________________________________________________________________
The following paragraphs provide a brief description of securities in
which the Portfolios may invest and transactions they may make. The
Portfolios are not limited by this discussion, however, and may purchase
other types of securities and enter into other types of transactions if they
are consistent with the Portfolios' investment objectives and policies.
Affiliated Bank Transactions: ^ A Portfolio may engage in transactions
with ^ financial institutions that are, or may be considered to be,
"affiliated persons" of ^ the Portfolio 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; and short-term borrowings. In accordance with exemptive
orders issued by the SEC, the Board of Trustees has established and
periodically reviews procedures applicable to transactions involving
affiliated financial institutions.
Banker's Acceptance: Negotiable obligations of a bank to pay a draft
which has been drawn on it by a customer. These obligations are backed by
large banks and usually backed by goods in international trade.
Bills of Exchange: A type of time draft commonly referred to as
"bankers' acceptances."
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<PAGE>
Commercial Paper: Short-term obligations issued by banks, ^
broker-dealers, corporations and other entities for purposes such as
financing their current operations.
Delayed-Delivery Transactions: Each Portfolio may buy and sell
securities on a delayed-delivery or when-issued basis. These transactions
involve a commitment by a Portfolio to purchase or sell specific securities
at a predetermined price and/or yield, with payment and delivery taking place
after the customary settlement period for that type of security (and more
than seven days in the future). Typically, no interest accrues to the
purchaser until the security is delivered. Term Portfolio may receive fees
for entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, a Portfolio
assumes the rights and risks of ownership, including the risk of price and
yield fluctuations. Because a Portfolio is not required to pay for securities
until the delivery date, these risks are in addition to the risks associated
with the Portfolio's other investments. If a Portfolio remains substantially
fully invested at a time when delayed delivery purchases are outstanding, the
delayed delivery purchases may result in a form of leverage. When delayed
delivery purchases are outstanding, the Portfolio will set aside appropriate
liquid assets in a segregated custodial account to cover its purchase
obligations. When a Portfolio has sold a security on a delayed- delivery
basis, a Portfolio does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery transaction
fails to deliver or pay for the securities, a Portfolio could miss a
favorable price or yield opportunity, or could suffer a loss.
A Portfolio may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
Domestic Banks. Cash Portfolio's investments in domestic bank
obligations are limited to those banks having total assets in excess of one
billion dollars and subject to regulation by the U.S. ^ government. The
Portfolio may also invest in certificates of deposits issued by banks insured
by the ^ FDIC having total assets of less than one billion dollars, provided
that the portfolio will at no time own more than an aggregate of $100,000 in
principal and interest obligations (or any higher principal amount or
principal and interest which in the future may be fully covered by FDIC
insurance) of any one such issuer.
Financial Services Industry. For Term Portfolio, companies in the
financial services industry are subject to various risks related to that
industry, such as governmental regulation, changes in interest rates, and
exposure on loans, including loans to foreign borrowers. Investments in the
financial services industry may include obligations of domestic banks ^ and
savings and loan associations. These obligations include time deposits,
certificates of deposit, bankers' acceptances, and commercial paper.
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<PAGE>
Money Market: For the Portfolios, refers to the marketplace where
short-term, high-quality debt securities are traded, including U.S.
government obligations, commercial paper, certificates of deposit and
bankers' acceptances, time-deposits and short-term corporate obligations.
Money market instruments carry fixed rates of return or have variable or
floating interest rates.
Municipal Bonds: For the Portfolios, include general obligation
securities, which are backed by the full taxing power of a municipality, or
revenue securities, which are backed by the revenues of a specific tax,
project, or facility. Industrial development bonds are a type of revenue bond
backed by the credit and security of a private issuer and may involve greater
risk.
Illiquid Investments are investments that cannot be sold or disposed of
in the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the Portfolio's investments and, through reports from FMR,
the Board monitors investments in illiquid instruments. In determining the
liquidity of the each Portfolios' investments, FMR may consider various
factors, including (1) the frequency of trades and quotations, (2) the number
of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features), and (5) the nature of the marketplace for trades
(including the ability to assign or offset each Portfolios' rights and
obligations relating to the investment). Investments currently considered by
each Portfolio to be illiquid include repurchase agreements not entitling the
holder to payment of principal and interest within seven days and some
restricted securities. In the absence of market quotations, illiquid
investments are priced at fair value as determined in good faith by the Board
of Trustees. If through a change in values, net assets, or other
circumstances, each Portfolio were in a position where more than 10% of its
total assets were invested in illiquid ^ securities, it would seek to take
appropriate steps to protect liquidity.
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, each Portfolio may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time it
decides to seek registration and the time each Portfolio may be permitted to
sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, each Portfolio might
obtain a less favorable price than prevailed when it decided to seek
registration of the security. However, in general, Cash Portfolio anticipates
holding restricted securities to maturity or selling them in an exempt
transaction.
Repurchase Agreements: In a repurchase agreement, each Portfolio
purchases a security and simultaneously commits to resell that security to
the seller at an agreed-upon price on an agreed-upon date within a number of
days from the date of purchase. The resale price reflects the purchase price
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<PAGE>
plus an agreed-upon incremental amount which is unrelated to the coupon rate
or maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed-upon price, which obligation is in
effect secured by the value (at least equal to the amount of the agreed-upon
resale price and marked to market daily) of the underlying security. Each
Portfolio may engage in repurchase agreements with respect to any security in
which each Portfolio is authorized to invest. While it does not presently
appear possible to eliminate all risks from these transactions (particularly
the possibility of a decline in the market value of the underlying
securities, as well as delays and costs to the Portfolios in connection with
bankruptcy proceedings), it is each Portfolio's current policy to limit
repurchase agreement transactions to those ^ permitted pursuant to statute
and code.
U.S. Government Obligations: Debt securities including bills,
certificates of indebtedness, notes, and bonds issued by the U.S. Treasury or
by an agency or instrumentality of the U.S. government which is established
under the authority of an act of Congress. Although not all obligations of
agencies and instrumentalities are direct obligations of the U.S. Treasury,
payment of the interest and principal on these obligations generally is
backed directly or indirectly by the U.S. government. This support can range
from backing of the full faith and credit of the United States (U.S. Treasury
securities), to U.S. government guarantees, or to the backing solely of the
issuing instrumentality itself.
Zero Coupon Bonds: Term Portfolio is permitted to invest in zero coupon
bonds. Zero coupon bonds do not make 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, Term Portfolio takes into account as income a portion of the
difference between a zero coupon bond's purchase price and its face value.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and
principal components of an outstanding U.S. Treasury bond and selling them as
individual securities. Bonds issued by the Resolution Funding Corporation
(REFCORP) and the Financing Corporation (FICO) can also be separated in this
fashion. Original issue zeros are zero coupon securities originally issued by
the U.S. government or a government agency in zero coupon form.
Variable or Floating Rate Instruments. The Portfolios may invest in
variable or floating rate instruments (including notes purchased directly
from issuers). Variable or floating rate instruments bear variable or
floating interest rates and may carry rights that permit holders to demand
full payment from the issuers or certain financial intermediaries. Floating
rate securities have interest rates that change whenever there is a change in
a designated market-based interest rate, while variable rate instruments
provide for a specified periodic adjustment in the interest rate. These
formulas are designed to result in a market value for the instrument that
approximates its par value.
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<PAGE>
Cash Portfolio may invest in variable or floating rate instruments that
ultimately mature in more than 397 days, if Cash Portfolio acquires a right
to sell the securities that meets certain requirements set forth in Rule
2a-7. Variable rate instruments (including instruments subject to a demand
feature) that mature in 397 days or less may be deemed to have maturities
equal to the period remaining until the next readjustment of the interest
rate. Other variable rate instruments with demand features may be deemed to
have a maturity equal to the longer of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount can be recovered through demand. A floating rate instrument subject to
a demand feature may be deemed to have a maturity equal to the period
remaining until the principal amount can be recovered through demand.
Ratings
The descriptions that follow are examples of eligible ratings for the ^
Portfolios. The Portfolios may, however, consider the ratings for other types
of investments and the ratings assigned by other rating organizations when
determining the eligibility of a particular investment.
Description of Standard & Poor's Corporation's highest 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, 3 to indicate the relative degree of safety.
A-1 - This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics will be denoted
with a plus (+) sign designation.
A-2 - Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for
issues designated A-1.
A-3 - This designation indicates that the capacity for timely payment is
satisfactory. These issues are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the
higher designations.
Description of Moody's Investors Service, Inc.'s highest commercial paper
rating:
Prime 1 - issuers (or related institutions) having a superior capacity
for repayment of short-term promissory obligations. Prime-1 repayment
capacity normally will be evidenced by the following characteristics:
- Leading market positions in well established industries.
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<PAGE>
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges with high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2 - issuers (or related supporting institutions) having 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.
Prime-3 - issuers (or related supporting institutions) having an
acceptable capacity for repayment of short-term promissory obligations. The
effect of the industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes
in the level of debt protection measurements and the requirement for
relatively high financial leverage. Adequate alternate liquidity is
maintained.
Description of Moody's Investors Service, Inc.'s Ratings of State and
Municipal Notes:
Moody's ratings for state and municipal and other short- term obligations
will be designated Moody's Investment Grade (MIG, or VMIG for variable rate
obligations). This distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important in the short run.
Symbols used will be as follows:
MIG-1/VMIG-1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2 - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
MIG-3/VMIG-3 - This designation denotes favorable quality, with all
security elements accounted for, but there is lacking the undeniable strength
of the preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.
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<PAGE>
Description of Standard & Poor's Corporation's Ratings of State and Municipal
Notes:
SP-1 - Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics will
be given a plus (+) designation.
SP-2 - Satisfactory capacity to pay principal and interest.
SP-3 - Speculative capacity to pay principal and interest.
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PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (1) Audited financial statements and financial highlights for the
funds for the fiscal year end June 30, 1994 will be filed by subsequent
amendment.
(b) Exhibits:
(1) Amended and Restated Declaration of Trust dated November 1, 1987,
is incorporated herein by reference to Exhibit 1(c) to Post-Effective
Amendment No. 10.
(2) By-Laws of the Trust are incorporated herein by reference to
Exhibit 2 to the Registration Statement No. 2-77169 filed April 26, 1982.
(3) Not applicable.
(4) Not applicable.
(5) (a) Management Contract between Term Portfolio and Fidelity
Management & Research Company dated December 13, 1990 is incorporated herein
by reference as Exhibit 5(a) to Post Effective Amendment No. 17.
(b) Management Contract between Cash Portfolio and Fidelity
Management & Research Company dated December 13, 1990 is incorporated herein
by reference as Exhibit 5(b) to Post Effective Amendment No. 17.
(c) Sub-Advisory Agreement between FMR Texas Inc. and Fidelity
Management & Research Company on behalf of Cash Portfolio dated January 1,
1991 is incorporated herein by reference as Exhibit 5(c) to Post Effective
Amendment No. 17.
(6) (a) General Distribution Agreement between Cash Portfolio and
Fidelity Distributors Corporation dated April 1, 1987 is incorporated herein
by reference as Exhibit 6(a) to Post-Effective Amendment No. 15.
(b) General Distribution Agreement between Term Portfolio and
Fidelity Distributors Corporation dated April 1, 1987 is incorporated herein
by reference as Exhibit 6(b) to Post-Effective Amendment No. 15.
(c) Amendment to the General Distribution Agreement dated January 1,
1988 for Cash Portfolio and Term Portfolio is incorporated herein by
reference as Exhibit 6(c) to Post-Effective Amendment No. 15.
(7) Not applicable.
DC-142697.2
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(8) (a) Custodian Agreement between Registrant and First Union
National Bank dated August 25, 1982 is incorporated herein by reference to
Exhibit 8 to Post-Effective Amendment No. 3.
(b) Subcustodian Agreement dated November 1, 1990 between First Union
National Bank of North Carolina and Shawmut Bank, N.A. is incorporated herein
by reference as Exhibit 9(b) to Post-Effective Amendment No. 21.
(c) Subcustodian Agreement dated March 18, 1991 between First Union
National Bank of North Carolina and Morgan Guaranty Trust Company of New York
is incorporated herein by reference to Exhibit 9(c) to Post-Effective
Amendment No. 21.
(9) (a) Amended Transfer Agent Agreement between Registrant, FMR Corp.
and Fidelity Investments Institutional Operations Company dated June 1, 1989
is incorporated herein by reference as Exhibit 9(a) to
Post-Effective Amendment No. 14.
(b) Amended Service Agreement between Registrant, FMR Corp. and
Fidelity Service Company dated June 1, 1989 is incorporated herein by
reference as Exhibit 9(b) to Post-Effective Amendment No. 14.
(c) Schedule B between Registrant and Fidelity Service Co. dated July
1, 1991 is incorporated herein by reference as Exhibit 9(c) to
Post-Effective Amendment No. 21.
(10) Not applicable.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) (a) Plan of Distribution between the Cash Portfolio and Fidelity
Distributors Corporation is incorporated herein by reference to Exhibit 7 to
Form N1Q filed for the quarter ended December 31, 1982.
(b) Plan of Distribution between the Term Portfolio and Fidelity
Distributors Corporation dated July 1, 1986 is incorporated herein by
reference to Exhibit 15(a)(2) to Post-Effective Amendment No. 10.
(c) Distribution and Service Plan between Term Portfolio and Fidelity
Distributors Corporation dated December13, 1990 is incorporated herein by
reference as Exhibit 15(c) to Post Effective Amendment No. 17.
(d) Distribution and Service Plan between Cash Portfolio and Fidelity
Distributors Corporation dated December13, 1990 is incorporated herein by
reference as Exhibit 15(d) to Post Effective Amendment No. 17.
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<PAGE>
(e) Distribution and Service Agent Agreement between Fidelity
Distributors Corporation and Sterling Capital Distributors, Inc., dated
December 13, 1990 on behalf of Term Portfolio, is incorporated herein by
reference as Exhibit 15(e) to Post Effective Amendment No. 17.
(f) Distribution and Service Agent Agreement between Fidelity
Distributors Corporation and Sterling Capital Distributors, Inc., on behalf
of Cash Portfolio, is incorporated herein by reference as Exhibit 15(f) to
Post Effective Amendment No. 17.
(16) (a) Schedule for computations of performance quotations for Cash
Portfolio is incorporated herein by reference as Exhibit 16(a) to
Post-Effective Amendment No. 11.
(b) Schedule for computations of performance quotations for Term Portfolio
is incorporated herein by reference as Exhibit 16(b) to Post-Effective
Amendment No. 11.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is a separate entity from the Board of
other funds advised by FMR, each of which has Fidelity Management & Research
Company as its investment adviser. The officers of these funds are elected
separately and are substantially different. The 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
July --, 1994
Title of ClassNumber of Record Holders
Shares of
beneficial
interest
Cash Portfolio ---
Term Portfolio ---
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the reasonable
and fair means for determining whether indemnification shall be provided to
any past or present Trustee or officer. It states that the Registrant shall
indemnify any present or past Trustee or officer to the fullest extent
permitted by law against liability and all expenses reasonably incurred by
him in connection with any claim, action, suit or proceeding in which he is
involved by virtue of his service as a trustee, an officer, or both.
Additionally, amounts paid or incurred in settlement of such matters are
covered by this indemnification. Indemnification will not be provided in
certain circumstances, however. These include instances of willful
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<PAGE>
misfeasance, bad faith, gross negligence, and reckless disregard of the
duties involved in the conduct of the particular office involved.
Item 28.Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment companies.
The directors and officers of the Adviser have held, during the past two
fiscal years, the following positions of a substantial nature.
Edward C. Johnson 3d Chairman of the Executive Committee of FMR;
President and Chief Executive Officer of FMR
Corp.; Chairman of the Board and a Director
of FMR, FMR Corp., FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc. and
Fidelity Management & Research (Far East)
Inc.; President and Trustee of funds advised
by FMR;
J. Gary Burkhead President of FMR; Managing Director of FMR
Corp.; President and a Director of FMR Texas
Inc., Fidelity Management & Research (U.K.)
Inc. and Fidelity Management & Research (Far
East) Inc.; Senior Vice President and Trustee
of funds advised by FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
David Breazzano Vice President of FMR (1993) and of a fund
advised by FMR.
Stephan Campbell Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by
FMR; Corporate Preferred Group Leader.
Will Danof 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.
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<PAGE>
Charles F. Dornbush Senior Vice President of FMR; Chief Financial
Officer of the Fidelity funds; Treasurer of
FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management
& Research (Far East) Inc.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised
by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a
fund advised by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by
FMR.
Gary L. French Vice President of FMR and Treasurer of the
funds advised by FMR. Prior to assuming the
position as Treasurer he was Senior Vice
President, Fund Accounting - Fidelity
Accounting & Custody Services Co.
Michael S. Gray Vice President of FMR and of funds advised by
FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised
by FMR.
William J. Hayes Senior Vice President of FMR; Income/Growth
Group Leader and International Grouup Leader.
Robert Haber Vice President of FMR and of funds advised by
FMR.
Daniel Harnetz 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; and Director of
Technical Research.
Stephan Jonas Vice President of FMR (1993).
David B. Jones Vice President of FMR (1993).
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<PAGE>
Steven Kaye Vice President of FMR (1993) and of a fund
advised by FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High
Income Group Leader.
Alan Leifer Vice President of FMR and of a fund advised
by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund
advised by FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by
FMR.
Robert H. Morrison Vice President of FMR and Director of Equity
Trading.
David Murphy Vice President of FMR and of funds advised by
FMR.
Jacques Perold Vice President of FMR.
Brian Posner Vice President of FMR (1993) and of a fund
advised by FMR.
Anne Punzak Vice President of FMR and of funds advised by
FMR.
Richard A. Spillane Vice President of FMR and of funds advised by
FMR; and Director of Equity Research.
Robert E. Stansky Senior Vice President of FMR (1993) and of
funds advised by FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and
Fixed-Income Division Head.
Gary L. Swayze Vice President of FMR and of funds advised by
FMR; and Tax-Free Fixed-Income Group Leader.
Donald Taylor Vice President of FMR (1993) and of funds
advised by FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of
funds advised by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund
advised by FMR.
- 54 -
<PAGE>
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President
of funds advised by FMR; and Growth Group
Leader.
Jeffrey Vinik Senior Vice President of FMR (1993) and of a
fund advised by FMR.
Guy E. Wickwire Vice President of FMR and of funds advised by
FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and
General Counsel of FMR; Vice President, Legal
of FMR Corp.; and Secretary of funds advised
by FMR.
FMR Texas provides investment advisory services to Fidelity Management &
Research Company. The directors and officers of the Sub-Adviser have held
the following positions of a substantial nature during the past two fiscal
years.
Edward C. Johnson 3d Chairman and Director of FMR Texas; Chairman
of the Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.;
Chairman of the Board and a Director of FMR,
FMR Corp., Fidelity Management & Research (Far
East) Inc. and Fidelity Management & Research
(U.K.) Inc.; President and Trustee of funds
advised by FMR.
J. Gary Burkhead President and Director of FMR Texas; President
of FMR; Managing Director of FMR Corp.;
President and a Director of Fidelity
Management & Research (Far East) Inc. and
Fidelity Management & Research (U.K.) Inc.
(1986); Senior Vice President and Trustee of
funds advised by FMR.
Frederic L. Henning Jr. Senior Vice President of FMR Texas; Money
Market Group Leader.
Leland Baron Vice President of FMR Texas and of funds
advised by FMR.
Thomas D. Maher Vice President of FMR Texas.
- 55 -
<PAGE>
Burnell Stehman Vice President of FMR Texas and of funds
advised by FMR.
John Todd Vice President of FMR Texas and of funds
advised by FMR.
Sarah H. Zenoble Vice President of FMR Texas and of funds
advised by FMR.
Charles F. Dornbush Treasurer of FMR Texas; Treasurer of Fidelity
Management & Research (U.K.) Inc.; Treasurer
of Fidelity Management & Research (Far East)
Inc.; Senior Vice President and Chief
Financial Officer of the Fidelity funds.
David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity
Management & Research (U.K.) Inc.; Clerk of
Fidelity Management & Research (Far East)
Inc..
Item 29.Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)
Name and Principal Positions and Offices Positions and
Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson Director Trustee and
3d President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and ClerkSecretary
*82 Devonshire Street, Boston, MA
(c) Not applicable.
- 56 -
<PAGE>
STERLING CAPITAL DISTRIBUTORS, INC.
Name and Principal Positions and Offices Posititons and
Offices
Business Address* with Underwriter With Registrant
W. Olin Nisbet III President, Director Vice President
Robert Livingston Vice President, DirectorNone
Avinger
Tanya Lee Mitchell Secretary, Treasurer None
*1770 Independence Center, Charlotte, NC
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 Portfolios' custodian, First
Union National Bank, Charlotte, North Carolina.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable
LG921620.012
- 57 -
<PAGE>
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. 25 to the Registration Statement to be signed no its
behalf by the undersigned, thereunto duly authorized, in the City of Boston,
and Commonwealth of Massachusetts, on the day of June, 1994.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST
By:_______________________________
William L. Byrnes, 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)
_________________ Treasurer (Principal Financial
Gary L. French and Accounting Officer) June __, 1994
_________________
William L. Byrnes Trustee June __, 1994
_________________*
John David Foust Trustee June __, 1994
_________________* Trustee June __, 1994
W. Olin Nisbet III
________________** Trustee June __, 1994
Helen A. Powers
_________________* Trustee June __, 1994
Bertram H. Witham
*Signatures affixed by Robert C. Hacker pursuant to a power of attorney dated
April 17, 1991 and filed herewith.
**Signature affixed by Robert C. Hacker pursuant to a power of attorney dated
July 17, 1991 and filed herewith.
DC-145898.1 - 58 -
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee of The North Carolina Cash Management Trust:
Cash Portfolio and Term Portfolio (the Trust), hereby severally constitute
and appoint Arthur J. Brown, Robert C. Hacker, Richard M. Phillips, Dana L.
Platt and Arthur C. Delibert, each of them singly, my true and lawful
attorneys-in-fact, with full power of substitution, and with full power to
each of them, to sign for me and in my name in the appropriate capacities,
all Pre-Effective Amendments to any Registration Statements of the Trust, any
and all subsequent Post-Effective Amendments to said Registration Statements,
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 attorneys-in-fact or their substitutes may do or cause to be done
by virtue hereof.
WITNESS my hand on this 17th day of July 1991
/s/Helen A. Powers
__________________
Helen A. Powers
- 59 -
<PAGE>
POWER OF ATTORNEY
We, the undersigned Trustees of The North Carolina Cash Management Trust:
Cash Portfolio and Term Portfolio (the Trust), hereby severally constitute
and appoint Arthur J. Brown, Robert C. Hacker, Richard M. Phillips, Dana L.
Platt and Arthur C. Delibert, each of them singly, our true and lawful
attorneys-in-fact, with full power of substitution, and with full power to
each of them, to sign for us and in our name in the appropriate capacities,
all Pre-Effective Amendments to any Registration Statements of the Trust, any
and all subsequent Post-Effective Amendments to said Registration Statements,
any Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such things in
our names and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the Securities Act
of 1933 and Investment Company Act of 1940, and all related requirements of
the Securities and Exchange Commission, hereby ratifying and confirming all
that said attorneys-in-fact or their substitutes may do or cause to be done
by virtue hereof.
WITNESS our hands on this 17th day of April 1991
/s/William L. Byrnes
________________________
William L. Byrnes
/s/John David Foust
________________________
John David Foust
/s/W. Olin Nisbet III
________________________
W. Olin Nisbet III
________________________
Helen A. Powers
/s/Bertram H. Witham
________________________
Bertram H. Witham
- 60 -
<PAGE>
