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. 26 [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
[x] On August 19, 1994 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] On ______________ 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 29, 1994.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST:
CASH PORTFOLIO & TERM PORTFOLIO
Form N-1A Item Number Caption
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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; Investment Policies and Risks; Description of the Trust
b Investment Limitations
c Investment Objectives; Investment Policies and Risks; Questions and Answer
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; Investment Policies and Risks
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 Objectives;
Investment Policies and Risks
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 *
</TABLE>
* Not Applicable
Form N-1A Item Number Caption
<TABLE>
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10 a,b Cover Page
11 Table of Contents
12 Description of the Trust
13 a,b,c Investment Objectives; Investment Policies and Risks
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 are filed as Exhibit
24(a).
</TABLE>
* Not Applicable
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:
(bullet) TOLL-FREE 800-222-3232
(bullet) 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.
TABLE OF CONTENTS
PAGE PAGE
Summary of Portfolio Expenses
Questions and Answers about
the Portfolios
Financial Highlights 8
Investment Objectives
Investment Policies and Risks
How to Invest
How to Redeem
Valuation of Portfolio Securities
Performance
Distributions and Taxes
Trustees and Officers
Management Contracts
Distribution of Shares and
Distribution Plans
Portfolio Transactions
FMR
Custodian
Investment Limitations
Description of the Trust
Appendix
Annual Report 45
1.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) .23 %* . 27 %*
12b-1 Fee(s) . 16 % . 14 %
Other Expenses 0 0
Total Portfolio Operating Expenses . 39 % . 41 %
* 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 $4 $13 $22 $49
TERM PORTFOLIO $4 $13 $23 $52
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 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.
2.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 .
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
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;
HIGH LEVEL OF CURRENT INCOME - 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 $ 200 billion and approximately
18 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 ).
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.
CASH PORTFOLIO - FINANCIAL HIGHLIGHTS
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YEARS ENDED JUNE 30,
PROSPECTUS
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
SELECTED PER-SHARE DATA
Net asset value,
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
Income from Investment
.031 .030 .046 .070 .082 .085 .067 .059 .073 .091
Operations
Net interest income
Less Distributions
(.031) (.030) (.046) (.070) (.082) (.085) (.067) (.059) (.073) (.091)
From net interest
income
Net asset value,
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
TOTAL RETURN A
3.10% 3.04% 4.67% 7.23% 8.55% 8.83% 6.88% 6.03% 7.53% 9.47%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
$ 1,221,447 $ 1,303,118 $ 1,651,078 $ 1,405,579 $ 1,080,055 $ 894,838 $ 653,148 $ 406,567 $ 383,217 $ 275,158
(000 omitted)
Ratio of expenses to
.39% .39% .39% .40% .42% .43% .43% .44% .46% .46%
average net assets
Ratio of expenses to
.39% .39% .39% .41% .44% .46% .47% .49% .53% .56%
average net assets before
expense reductions
Ratio of net interest income
3.05% 3.00% 4.47% 6.90% 8.20% 8.61% 6.68% 5.85% 7.24% 8.72%
to average net assets
</TABLE>
A THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
TERM PORTFOLIO - FINANCIAL HIGHLIGHTS
9
PROSPECTUS
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YEARS ENDED JUNE 30, MARCH 19, 1987
(COMMENCEMENT OF
OPERATIONS) TO
1994 1993 1992 1991 1990 1989 1988 JUNE 30, 1987
SELECTED PER-SHARE DATA
Net asset value,
beginning of period $ 9.940 $ 9.910 $ 9.820 $ 9.730 $ 9.780 $ 9.820 $ 9.910 $ 10.000
Income from Investment
Operations .288 .337 .560 .741 .816 .832 .762 .185
Net investment income
Net realized and
unrealized gain (.046) .031 .097 .090 (.050) (.040) (.090) (.090)
(loss) on investments
Total from investment
operations .242 .368 .657 .831 .766 .792 .672 .095
Less Distributions (.312) (.338) (.567) (.741) (.816) (.832) (.762) (.185)
In excess of net realized gain
From net realized gain
on investments (.020) - - - - - - -
Total distributions (.332) (.338) (.567) (.741) (.816) (.832) (.762) (.185)
Net asset value,
end of period $ 9.850 $ 9.940 $ 9.910 $ 9.820 $ 9.730 $ 9.780 $ 9.820 $ 9.910
TOTAL RETURN B,C 2.47% 3.78% 6.86% 8.83% 8.15% 8.44% 7.02% .96%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of
period (000 omitted) $ 66,495 $ 79,765 $ 89,303 $ 83,656 $ 83,412 $ 83,770 $ 116,556 $ 45,215
Ratio of expenses to
average net assets .41% .41% .41% .41% .40% .40% .27% .14%A
Ratio of expenses to
average net assets .41% .41% .41% .45% .50% .50% .50% .50%A
before expense reductions
Ratio of net investment
income to 3.14% 3.41% 5.69% 7.56% 8.37% 8.52% 7.75% 6.63%A
average net assets
Portfolio turnover
rate 494% 612% 424% 78% 23% 14% 30% 407%A
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A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
The Financial Highlights for Cash Portfolio and Term Portfolio have been
audited by Coopers & Lybrand, independent accountants. Their report on
the financial statements and financial highlights is included on page 66.
3.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.
4.INVESTMENT POLICIES AND RISKS
CASH PORTFOLIO seeks to achieve its 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
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;
1. (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; or 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 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.
C ash Portfolio currently intends to 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.
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 beginning 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.
6.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 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 Ca pital 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 Ca pital 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 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:
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 4 p.m. on the business day prior to the wiring of
funds. 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.
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 to Term Portfolio
accounts 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
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.
7.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 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.
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.
8.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 11 .
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.
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.
9.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
4.02 % 4.10 %
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.
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 YEAR PORTFOLIO*
4.26 % 3.21 % 2.47 % 5.99 % 6.36 %
2.47 % 33.74 % 56.70 %
*Life of Portfolio: March 19, 1987 (commencement of operations) to June
30, 1994.
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 $ 15,670 , 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 D ISTRIBUTIONS DISTRIBUTIONS VALUE LIVING*
6/30/87(dagger) $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 9,850 5,789 31 15,670 13,203
(dagger)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 $ 15,805 . 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 $ 4,553 for income dividends and $20
for capital gain distributions . 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 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
(C D s) or other investments issued by banks. Mutual funds differ
f ro m bank investments in several respects. For example, a Portfolio
may offer greater liquidity or higher potential returns than C D s,
and the Portfolios do not guarantee your principal or your return , and
Portfolio shares are not FDIC insured .
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(registered trademark), 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.
10.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.
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.
11.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"
(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 United Asset Management 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 -1990 ). Prior to 1985
she was Senior Vice President of North Carolina National Bank and served as
a member of the North Carolina Banking Commission. Ms. Powers is a
trustee of Warren Wilson College (1992), a director of Memorial Mission
Medical Center (1991) and the Memorial Mission Foundation (1993), for which
the New Women's Health Center has been designated the HELEN POWERS WOMEN'S
HEALTH CENTER.
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. Chairman and Director of Villager Companies (property management),
Director and member of Executive Committee of Bill Glass Ministries.
Trustee of other funds advised by FMR.
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 and Vice President of
Sterling .
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). Vice President of other funds advised by
FMR.
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).
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.
12.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 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
$ 5,398,481, $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 each year of . 39 % of the Portfolio's
average net assets.
For the fiscal years ended June 30, 1994, 1993 and 1992 FMR received
$302,965, $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
rate each year of .41% 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
$1,574,452 , $1,692,977 and $1,769,420, respectively, to FMR Texas.
13.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 $ 1.3 billion, with 145 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 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 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 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.
14.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 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.
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 494% 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 s 1994, 1993 and 1992, Term Portfolio
paid no brokerage commissions.
From time to time the Trustees will review whether the recapture for the
benefit of the portfolio of some portion of the brokerage
commissions or similar fees paid by the portfolio on portfolio
transactions is legally permissible and advisable. Each portfolio
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
portfolio to seek such recapture.
Although the Trustees and officers of each portfolio are
substantially the same as those of other funds managed by FMR, investment
decisions for each Portfolios 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 portfolio outweighs any disadvantages
that may be said to exist from exposure to simultaneous transactions.
15.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 $ 200 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 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
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 vice president and portfolio manager of
Fidelity's North Carolina Capital Management Trust's Term Portfolio, which
he has managed since November 1991. H e is also manages
Massachusetts Municipal Depository Trust.
16.CUSTODIAN
First Union is custodian of the assets of each Portfolio. 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. Morgan Guaranty
Trust Company of New York and The Bank of New York, each headquartered in
New York, also may serve as custodian of assets in connection with certain
repurchase agreement transactions. Custodian fees are paid by FMR pursuant
to the provisions of the management contracts.
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.
17.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.
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;
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;
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 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 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.
ii. 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.
18.DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Cash Portfolio and Term Portfolio are series of
T he North Carolina Capital Management Trust, an open-end,
management investment company 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.
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.
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 30 , 1994, substantial (i.e., 5% or more) record
ownership of Term Portfolio was as follows: City of Charlotte, 600 E.
Fourth Street, Charlotte, NC 28202 (11.99%); Wake County, P.O. Box 550,
Raleigh, NC 27602 (9.82%); Alamance County, 124 W. Elm Street, Graham, NC
27253 (6.08%). As of June 30, 1994, there was no substantial record
ownership of Cash Portfolio.
AUDITOR. Coopers & Lybrand 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.
19.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."
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. C ompanies 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.
MONEY MARKET: R efers 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: I nclude 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, including
restricted securities, it would seek to take appropriate steps to
protect liquidity.
RESTRICTED SECURITIES: G enerally 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 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: 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, a 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. 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.
2. 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
RATINGS:
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.
- 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.
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.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (1) Financial Statements for the fiscal year ended June 30, 1994 are
printed as part of the combined prospectus and statement of additional
information and are filed hereine as Exhibit 24(a).
(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.
(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) Consent of Coopers & Lybrand is filed herein as Exhibit 11.
(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 December 13, 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 December 13, 1990 is incorporated herein by
reference as Exhibit 15(d) to Post Effective Amendment No. 17.
(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
June 30, 1994
Title of Class Number of Record
Holders
Shares of beneficial interest
Cash Portfolio 1918
Term Portfolio 171
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
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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).
Robert Beckwitt Vice President of FMR and of funds advised by FMR.
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Dwight Churchill Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR and Treasurer of the funds advised
by FMR.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Lawrence Greenberg Vice President of FMR (1993).
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Equity Division Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Richard Haberman Senior Vice President of FMR (1993).
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR; and Director of Technical
Research.
Stephen Jonas Treasurer and Vice President of FMR (1993); Treasurer of
FMR Texas Inc. (1993), Fidelity Management &
Research (U.K.) Inc. (1993), and Fidelity Management
& Research (Far East) Inc. (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Division Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Malcolm W. McNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Andrew Offit Vice President of FMR (1993).
Judy Pagliuca Vice President of FMR (1993).
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Lee Sandwen Vice President of FMR (1993).
Patricia A. Satterthwaite Vice President of FMR (1993) and of a fund .
Thomas T. Soviero Vice President of FMR (1993).
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 Leader.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Thomas Sweeney Vice President of FMR (1993).
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; 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 a fund 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.
</TABLE>
(4) FMR TEXAS INC. (FMR Texas)
FMR Texas provides investment advisory services to Fidelity Management
& Research Company. The directors and officers of the Sub-Adviser have
held the following positions of a substantial nature during the past two
fiscal years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Texas; Chairman of the
Executive Committee of FMR; President and Chief
Exective Officer of FMR Corp.; Chairman of the Board
and a Director of FMR, FMR Corp., Fidelity
Management & Research (Far East) Inc. and
Fidelity Management & Research (U.K.) Inc.;
President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Texas; President of FMR;
Managing Director of FMR Corp.; President and a
Director of Fidelity Management & Research (Far
East) Inc. and Fidelity Management & Research
(U.K.) Inc.; Senior Vice President and Trustee of funds
advised by FMR.
Fred L. Henning, Jr. Senior Vice President of FMR Texas; Money Market
Division Leader.
Robert Auld Vice President of FMR Texas (1993).
Leland Barron Vice President of FMR Texas and of funds advised by
FMR.
Robert Litterst Vice President of FMR Texas and of funds advised by
FMR (1993).
Thomas D. Maher Vice President of FMR Texas.
Burnell R. Stehman Vice President of FMR Texas and of funds advised by
FMR.
John J. Todd Vice President of FMR Texas and of funds advised by
FMR.
Sarah H. Zenoble Vice President of FMR Texas and of funds advised by
FMR.
Steven Jonas Treasurer of FMR Texas Inc. (1993), Fidelity Manage-
ment & Research (U.K.) Inc. (1993), and Fidelity
Man- agement & Research (Far East) Inc.
(1993); Treasurer and Vice President of FMR (1993).
David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity Management
& Research (U.K.) Inc.; Clerk of Fidelity
Management & Research (Far East) Inc.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
STERLING CAPITAL DISTRIBUTORS, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
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 Avinger Vice President, Director None
Tanya Lee Mitchell Secretary, Treasurer None
</TABLE>
* 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
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. 26 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Boston, and Commonwealth of Massachusetts, on the 8 day of August, 1994.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST
By /s/ William L. Byrnes
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)
/s/Gary L. French Treasurer (Principal Financial August 8, 1994
Gary L. French and Accounting Officer)
/s/William L. Byrnes Trustee August 8, 1994
William L. Byrnes
/s/John David Foust * Trustee August 8, 1994
John David Foust
/s/W. Olin Nisbet III * Trustee August 8, 1994
W. Olin Nisbet III
/s/Helen A. Powers ** Trustee August 8, 1994
Helen A. Powers
/s/Bertram H. Witham * Trustee August 8, 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.
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 ournames 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
WILLIAM L. BYRNES
William L. Byrnes
JOHN DAVID FOUST
John David Foust
W. OLIN NISBET III
W. Olin Nisbet III
Helen A. Powers
BERTRAM H. WITHAM
Bertram H. Witham
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 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
HELEN A. POWERS
Helen A. Powers
NORTH CAROLIN
A
CAPITAL
MANAGEMENT
TRUST
CASH PORTFOLIO
NORTH CAROLIN
A
CAPITAL
MANAGEMENT
TRUST
TERM PORTFOLIO
PERFORMANCE UPDATE
FOR THE PERIOD ENDED JUNE 30, 1994
Annualized net yield 4.02% 4.26%
(7 day)
(30 day)
One-year dividends per share 3.05(cents) 31.22(cents)
One-year dividend rate* 3.05% 3.15%
Five-year cumulative total return** 29.43% 33.74%
Ten-year cumulative total return** 87.90% N/A
Life of fund cumulative total return** 120.86% 56.70%
One-year total return** 3.10% 2.47%
Five-year average annual total return** 5.29% 5.99%
Ten-year average annual total return** 6.51% N/A
Life of fund average annual total return** 6.92% 6.36%
* The dividend rate reflects actual dividends paid during the period. It
is based on an average share price of $9.91 for Term Portfolio.
** TOTAL RETURNS include changes in share price (except for Cash
Portfolio) and reinvestment of dividends and capital gains, if any. AVERAGE
ANNUAL TOTAL RETURNS for more than one year assume a steady compounded rate
of return and are not the funds' year-by-year results, which fluctuated
over the periods shown. LIFE OF FUND figures are from commencement of
operations, September 2, 1982 , for Cash Portfolio and March 19,
1987 , for Term Portfolio, to the period listed above. If the adviser
had not reimbursed certain fund expenses during the 5 and 10 year and Life
of f und periods, figures would have been lower.
ALL FUND PERFORMANCE NUMBERS ARE HISTORICAL; THE FUNDS' SHARE PRICE
(EXCEPT FOR CASH PORTFOLIO), YIELD AND RETURN WILL VARY AND YOU MAY HAVE A
GAIN OR LOSS WHEN YOU REDEEM OR SELL YOUR SHARES. AN INVESTMENT IN CASH
PORTFOLIO IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT. CASH
PORTFOLIO CANNOT ASSURE THAT IT WILL MAINTAIN A STABLE $1.00 SHARE PRICE.
$10,000 OVER LIFE OF FUND
03/31/87 10000.00 10000.00
04/30/87 9952.13 10026.00
05/31/87 9987.11 10060.09
06/30/87 10075.11 10130.51
07/31/87 10117.21 10173.06
08/31/87 10150.09 10206.63
09/30/87 10173.02 10204.59
10/31/87 10313.87 10367.86
11/30/87 10350.32 10395.85
12/31/87 10431.71 10449.91
01/31/88 10534.02 10553.37
02/29/88 10598.65 10614.58
03/31/88 10634.17 10657.03
04/30/88 10679.05 10686.87
05/31/88 10704.61 10711.45
06/30/88 10782.52 10790.72
07/31/88 10822.65 10833.88
08/31/88 10875.06 10866.38
09/30/88 10959.87 10950.05
10/31/88 11046.86 11031.08
11/30/88 11065.43 11047.63
12/31/88 11133.28 11087.40
01/31/89 11213.20 11176.10
02/28/89 11266.85 11221.92
03/31/89 11329.37 11290.38
04/30/89 11448.82 11416.83
05/31/89 11559.37 11541.27
06/30/89 11692.27 11690.16
07/31/89 11814.55 11814.07
08/31/89 11839.65 11828.25
09/30/89 11912.24 11898.03
10/31/89 12036.32 12038.43
11/30/89 12120.85 12135.94
12/31/89 12194.79 12203.90
01/31/90 12244.05 12245.40
02/28/90 12309.56 12318.87
03/31/90 12381.65 12381.70
04/30/90 12438.06 12444.84
05/31/90 12561.64 12569.29
06/30/90 12644.78 12674.87
07/31/90 12770.27 12795.28
08/31/90 12830.76 12868.22
09/30/90 12914.73 12957.01
10/31/90 13028.08 13074.92
11/30/90 13138.09 13161.21
12/31/90 13265.16 13292.82
01/31/91 13365.86 13403.15
02/28/91 13458.28 13479.55
03/31/91 13526.84 13576.60
04/30/91 13632.00 13675.71
05/31/91 13697.56 13737.25
06/30/91 13761.50 13793.58
07/31/91 13841.54 13884.61
08/31/91 13962.49 14009.58
09/30/91 14051.41 14107.64
10/31/91 14140.63 14216.27
11/30/91 14241.78 14327.16
12/31/91 14387.14 14454.67
01/31/92 14423.24 14492.25
02/29/92 14467.04 14531.38
03/31/92 14472.28 14563.35
04/30/92 14579.32 14649.28
05/31/92 14653.76 14721.06
06/30/92 14704.99 14794.66
07/31/92 14749.10 14902.66
08/31/92 14837.15 14977.18
09/30/92 14924.18 15074.53
10/31/92 14821.30 15059.45
11/30/92 14776.80 15068.49
12/31/92 14899.07 15152.87
01/31/93 15052.39 15233.18
02/28/93 15109.14 15286.50
03/31/93 15149.79 15333.89
04/30/93 15202.86 15387.56
05/31/93 15209.58 15387.56
06/30/93 15260.74 15458.34
07/31/93 15304.90 15500.08
08/31/93 15360.88 15569.83
09/30/93 15399.15 15614.98
10/31/93 15440.24 15649.33
11/30/93 15464.70 15677.50
12/31/93 15504.63 15732.37
01/31/94 15560.38 15796.87
02/28/94 15534.75 15781.08
03/31/94 15545.22 15781.08
04/30/94 15538.50 15766.87
05/31/94 15580.59 15798.41
06/30/94 15637.60 15853.70
$10,000 OVER LIFE OF FUND: Let's say you invested $10,000 in Term
Portfolio on March 31, 1987, shortly after the fund started. As the chart
shows, by June 30, 1994, the value of your investment would have grown to
$15,638 - a 56.38% increase on your initial investment. For comparison,
look at how the Salomon Brothers 12-Month Treasury Bill Index did over the
same period*. With dividends reinvested, the same $10,000 investment would
have grown to $15,854 - a 58.54% increase.
* THE $10,000 INVESTMENT IN THE SALOMON BROTHERS 12-MONTH TREASURY BILL
INDEX WAS MADE ON MARCH 31, 1987, MONTH END CLOSEST TO TERM PORTFOLIO'S
COMMENCEMENT OF OPERATIONS DATE.
3.
AN INTERVIEW WITH
ROBERT DUBY: PORTFOLIO MANAGER OF
NORTH CAROLINA CAPITAL MANAGEMENT TRUST
TERM PORTFOLIO
&
BURNELL STEHMAN: PORTFOLIO MANAGER OF
NORTH CAROLINA CAPITAL MANAGEMENT TRUST
CASH PORTFOLIO
Q: BOB, HOW DID THE TERM PORTFOLIO PERFORM?
A: MR. DUBY: The fund's total return for the year ended June 30,
199 4 , was 2.47%, compared to 2. 55 % for its benchmark, the
one-year Treasury bill. I should point out that the fund registered about
two-thirds of its total gains during the first half of the fiscal year.
Since then, declines in the fund's net asset value have all but cancelled
out the income derived from the fund's yield.
Q: HOW DO YOU EXPLAIN THAT?
A: MR. DUBY: The short answer is pretty simple: rising interest rates. When
rates go up, bond prices go down. Rates began creeping up last fall on
signs that the economy was finally turning the corner. Those signs
multiplied when the economy grew in the fourth quarter of 1993. Then on
February 4, 1994, the Federal Reserve tacked 0.25% onto the federal funds
rate, the rate banks charge each other for overnight loans. It was the
first Fed increase in five years, and was followed in quick succession by
two more quarter-point increases in March and April and a half-point
increase in May. By the end of June, the federal funds rate stood at 4.25%.
Q: HOW DO YOU PROTECT THE FUND IN A RISING-RATE ENVIRONMENT?
A: MR. DUBY: By shortening the duration, which measures how much the fund's
share price will vary in response to changing interest rates. A lower
duration translates into less movement in share price, and that's what you
want when interest rates are rising. The fund was already in a defensive
mode when the fiscal year began, with a duration of about 0.8 year. As
rates rose throughout the spring I rolled back even more, though perhaps
not as quickly as I should have. The fund's duration was 0.4 year by the
end of June.
Q: HOW DOES DURATION AFFECT YIELD?
A: MR. DUBY: Duration and yield tend to move in the same direction. The
longer the fund's duration, the higher its yield; but again, always at the
expense of greater-share-price volatility. My goal with Term Portfolio is
to provide an incrementally higher yield than Cash Portfolio, and so far
I've been able to do that. But higher yields mean greater risks.
Shareholders
who choose Term Portfolio need to
understand that. If share-price stability is an
absolute requirement, then - between the se
funds - they belong in Cash Portfolio.
Q: WHAT CAN WE EXPECT GOING FORWARD?
A: MR. DUBY: Inflation is the key variable,
and the outlook is mixed. I think there's
probably more fear of inflation in the
market right now than the numbers
would justify. There's no question the
economy is growing, and at a fairly healthy
pace. Capacity utilization is expanding to the
point where it could soon begin to affect
wages and prices. Also disturbing is the
recent sharp drop in the value of the dollar
compared to the Japanese yen. But that's
been offset to some degree by continuing
efforts to cut costs and streamline operations.
Given the uncertainty, though, I'll likely
keep the fund's duration about where it is,
in the half-year range. Safeguarding as much
as possible the fund's net asset value is prob-
ably more important in the current climate
than reaching for the highest possible yield.
"MY GOAL WITH TERM
PORTFOLIO IS TO
PROVIDE AN
INCREMENTALLY HIGHER
YIELD THAN CASH
PORTFOLIO, AND SO FAR
I'VE BEEN ABLE TO DO
THAT. BUT HIGHER
YIELDS MEAN GREATER
RISKS. SHAREHOLDERS
WHO CHOOSE TERM
PORTFOLIO NEED TO
UNDERSTAND THAT. IF
SHARE-PRICE STABILITY
IS AN ABSOLUTE
REQUIREMENT, THEN -
BETWEEN THESE FUNDS
- THEY BELONG IN THE
CASH PORTFOLIO."
- - BOB DUBY
Q: LET'S TURN TO CASH PORTFOLIO. BURNIE, WILL YOU BRING US UP TO DATE ON
THE PERFORMANCE OF THE CASH P ORTFOLIO?
A: MR. STEHMAN: Sure. For the year ended June 30, 1994, the fund's total
return was 3.10%. During the same period, the average taxable money market
fund tracked by IBC/Donoghue had a total return of 2.89%. Recent yields
have been higher than the average yield for the past year. At the end of
June, the fund's yield was 4.02%, compared to 2.79% a year ago.
Q: HOW HAVE YOU COPED WITH RISING INTEREST RATES?
A: MR. STEHMAN: Like most of my competitors, I entered 1994 assuming the
Fed would eventually have to increase rates; my guess then was it would
happen sometime in March. And again, like my competitors, I was surprised
when the initial increase came in February. All in all, though, the fund
was fairly well positioned. The fund's average maturity was already a
neutral
45 days at the end of January. I whittled that down when rates started to
climb, in part by selling some of the fund's lower-yielding longer-term
securities and replacing them with shorter-term securities at prevailing
rates. That helped me keep pace with the successive rate increases as the
Fed's perception of moderate growth in the economy was upheld throughout
the spring. By
the end of March, the fund's average maturity was 33 days.
I've stayed in that range ever since.
Q: ARE RATES LIKELY TO MOVE EVEN HIGHER?
A: MR. STEHMAN: I can't predict with certainty where interest rates are
headed; no one can. I will say that the Fed's initial increase in February
signaled the end of a policy dating back to 1989 that was designed to
accommodate economic growth. By May, with the final half-point increase of
the period, the Fed governors announced they had achieved their goal of a
neutral monetary policy. The next step, presumably, would be restrictive. I
agree with Bob - inflation is the key, and that's a tough call. But
certainly, I wouldn't be surprised to see rates tick up another
notch or two over the next six months. That would put short-
term rates somewhere in the neighborhood of 5% by year-end.
Q: HOW WILL THAT AFFECT YOUR STRATEGY?
A: MR. STEHMAN: It probably means that until rates do rise, I'll keep the
fund's average maturity about where it was at the end
of June - about 35 days, or well within the defensive range.
This is not the time to be locking in current rates for longer periods of
time. With so much uncertainty, I'd rather have the flexibility to respond
quickly to changes in the market.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST -
CASH PORTFOLIO
INVESTMENTS/JUNE 30, 1994
(Showing Percentage of Total Value of Investments)
ANNUALIZED
DUE YIELD AT TIME PRINCIPAL VALUE
DATE OF PURCHASE AMOUNT (NOTE 1)
COMMERCIAL PAPER (dagger) - 85.9%
AVCO Financial Services, Inc.
7/18/94 4.28% $ 10,000,000 $ 9,979,836
7/20/94 4.28 20,000,000 19,954,927
7/28/94 4.31 10,000,000 9,967,825
7/29/94 4.31 10,000,000 9,966,633
8/12/94 4.37 10,000,000 9,949,366
American Express Credit Corporation
8/17/94 4.38 15,000,000 14,914,812
8/18/94 4.38 25,000,000 24,855,001
American General Finance Corporation
8/12/94 4.42 15,000,000 14,923,000
8/17/94 4.50 20,000,000 19,883,805
9/9/94 4.45 5,000,000 4,957,223
American Telephone & Telegraph Company
8/18/94 4.45 10,000,000 9,941,333
Associates Corporation of North America
7/27/94 4.32 20,000,000 19,937,889
8/9/94 4.37 20,000,000 19,905,750
8/15/94 4.41 7,000,000 6,961,719
8/22/94 4.53 10,000,000 9,935,000
Banc One Diversified Services Corp.
7/28/94 4.42 7,000,000 6,976,900
Bear Stearns Companies Inc.
7/27/94 4.43 15,000,000 14,952,333
8/2/94 4.47 10,000,000 9,960,622
BellAtlantic Financial Services
7/18/94 4.40 3,340,000 3,333,108
7/21/94 4.31 17,700,000 17,657,716
7/25/94 4.43 10,075,000 10,045,447
Beneficial Corporation
7/22/94 4.38 20,000,000 19,949,250
7/26/94 4.32 15,000,000 14,955,208
8/23/94 4.55 10,000,000 9,933,750
ANNUALIZED
DUE YIELD AT TIME PRINCIPAL VALUE
DATE OF PURCHASE AMOUNT (NOTE 1)
COMMERCIAL PAPER (dagger) - CONTINUED
CIT Group Holdings, Inc.
7/28/94 4.35% $ 25,000,000 $ 24,918,812
8/19/94 4.50 25,000,000 24,848,576
Citizen Utilities Company
8/25/94 4.53 8,000,000 7,945,000
Commercial Credit Company
7/14/94 4.41 2,800,000 2,795,571
7/25/94 4.43 3,000,000 2,991,200
7/26/94 4.32 20,000,000 19,940,277
9/7/94 4.45 5,000,000 4,958,445
Cooper Industries, Inc.
7/15/94 4.28 12,000,000 11,980,073
7/19/94 4.29 21,600,000 21,553,776
CoreStates Capital Corp.
7/15/94 4.35 (a) 10,000,000 10,000,000
8/5/94 4.37 10,000,000 9,957,805
8/29/94 4.45 9,000,000 8,934,952
Corporate Asset Funding Company, Inc.
7/13/94 4.53 5,100,000 5,092,351
7/21/94 4.31 3,000,000 2,992,833
8/8/94 4.37 2,000,000 1,990,817
8/12/94 4.38 1,500,000 1,492,387
Corporate Receivables Corp.
7/12/94 4.53 17,800,000 17,775,525
7/21/94 4.29 7,900,000 7,881,260
Dillard Investment Co., Inc.
7/5/94 4.26 15,000,000 14,992,916
Eaton Corporation
7/20/94 4.31 6,000,000 5,986,383
Exxon Asset Management Company
7/11/94 4.35 17,700,000 17,678,760
Ford Motor Credit Corporation
7/26/94 4.32 2,700,000 2,691,937
8/4/94 4.38 20,000,000 19,917,833
CASH PORTFOLIO
INVESTMENTS/JUNE 30, 1994 - CONTINUED
ANNUALIZED
DUE YIELD AT TIME PRINCIPAL VALUE
DATE OF PURCHASE AMOUNT (NOTE 1)
COMMERCIAL PAPER (dagger) - CONTINUED
Ford Motor Credit Corporation - continued
8/5/94 4.38% $ 20,000,000 $ 19,915,417
8/31/94 4.46 15,000,000 14,887,658
General Electric Capital Corporation
7/15/94 4.27 (a) 15,000,000 15,000,000
7/19/94 4.37 10,000,000 9,978,250
8/17/94 4.71 10,000,000 9,939,292
General Electric Capital Services Inc.
7/22/94 3.30 20,000,000 19,962,083
7/27/94 4.32 20,000,000 19,937,889
Goldman Sachs Group, L.P. (The)
7/6/94 4.00 5,000,000 4,997,257
Golden Peanut Co.
8/5/94 4.33 1,200,000 1,194,983
8/8/94 4.70 10,000,000 9,950,917
8/11/94 4.38 2,000,000 1,990,092
Hertz Corporation
7/29/94 4.32 6,000,000 5,979,933
Household Finance Corporation
8/16/94 4.57 25,000,000 24,855,611
ITT Hartford Group, Inc.
7/7/94 4.26 7,920,000 7,914,390
7/7/94 4.26 3,450,000 3,447,556
7/12/94 4.28 20,000,000 19,973,905
International Lease Finance Corporation
7/22/94 4.28 15,399,000 15,360,643
Merck & Company, Inc.
8/15/94 4.31 25,000,000 24,867,188
MetLife Funding Corp.
7/13/94 4.31 1,037,000 1,035,513
Morgan Stanley Group, Inc.
7/1/94 4.58 20,000,000 20,000,000
ANNUALIZED
DUE YIELD AT TIME PRINCIPAL VALUE
DATE OF PURCHASE AMOUNT (NOTE 1)
COMMERCIAL PAPER (dagger) - CONTINUED
New Center Asset Trust
7/13/94 4.29% $ 16,000,000 $ 15,977,173
7/29/94 4.43 15,000,000 14,948,667
PHH Corporation
7/14/94 4.27 25,000,000 24,961,632
Preferred Receivables Funding Corporation
7/12/94 4.28 18,700,000 18,675,602
7/13/94 4.27 15,000,000 14,978,751
7/15/94 4.28 4,000,000 3,993,373
7/18/94 4.29 6,000,000 5,987,902
7/21/94 4.29 5,218,000 5,205,621
Principal Mutual Life Insurance Company
7/8/94 4.26 8,110,000 8,103,297
7/11/94 4.26 5,000,000 4,994,097
Prospect Street Senior Portfolio, L.P.
8/10/94 4.43 2,517,000 2,504,695
8/18/94 4.43 3,026,000 3,008,247
Prudential Home Mortgage Company
7/25/94 4.43 20,000,000 19,941,334
Sears Credit Corp. - B
7/7/94 4.30 5,000,000 4,996,426
Smith Barney, Inc.
7/20/94 4.43 6,000,000 5,986,067
7/26/94 4.45 6,000,000 5,981,583
8/16/94 4.38 10,000,000 9,944,417
Student Loan Corporation
8/10/94 4.38 6,300,000 6,269,550
Texaco Inc.
8/10/94 4.38 15,000,000 14,927,501
U.S. Leasing International, Inc.
7/5/94 4.28 1,000,000 999,524
7/14/94 4.28 18,000,000 17,972,245
7/25/94 4.32 4,000,000 3,988,539
CASH PORTFOLIO
INVESTMENTS/JUNE 30, 1994 - CONTINUED
ANNUALIZED
DUE YIELD AT TIME PRINCIPAL VALUE
DATE OF PURCHASE AMOUNT (NOTE 1)
COMMERCIAL PAPER (dagger) - CONTINUED
U.S. Leasing International, Inc. - continued
7/25/94 4.37% $ 15,000,000 $ 14,956,600
7/28/94 4.33 10,000,000 9,967,750
TOTAL COMMERCIAL PAPER 1,053,575,112
FEDERAL AGENCIES - 14.0%
Federal Farm Credit Bank - Discount Notes - 2.0%
7/28/94 3.22 1,550,000 1,546,314
9/8/94 4.59 5,000,000 4,956,587
9/12/94 4.03 4,500,000 4,463,957
9/13/94 4.03 4,000,000 3,967,522
10/18/94 4.45 8,000,000 7,894,636
22,829,016
Federal Home Loan Bank - Discount Notes - 0.0%
8/26/94 4.45 345,000 342,638
Federal Home Loan Mortgage Corp. - Discount Notes - 2.9%
8/9/94 4.44 5,000,000 4,976,167
8/19/94 4.40 15,000,000 14,910,983
8/30/94 4.44 10,000,000 9,926,834
8/31/94 4.46 6,205,000 6,158,738
35,972,722
Federal National Mortgage Assoc. - Agency Coupons - 2.0%
7/1/94 4.85 (a) 25,000,000 25,000,000
Federal National Mortgage Assoc. - Discount Notes - 7.1%
7/20/94 4.49 4,000,000 3,990,606
8/15/94 4.43 25,000,000 24,863,125
8/25/94 3.97 15,885,000 15,790,352
8/25/94 4.34 6,195,000 6,154,302
8/29/94 4.45 1,260,000 1,250,914
9/30/94 4.57 25,000,000 24,715,625
10/27/94 4.50 10,000,000 9,855,777
86,620,701
TOTAL FEDERAL AGENCIES 170,765,077
MATURITY VALUE
AMOUNT (NOTE 1)
REPURCHASE AGREEMENTS - 0.1%
In a joint trading account
(U.S. Treasury Obligations)
dated 6/30/94, due 7/1/94
(Note 2)
At 4.29% $ 1,829,218 $ 1,829,000
TOTAL COST OF INVESTMENTS - 100% $ 1,226,169,189
Total Cost of Investments for Income Tax Purposes - $1,226,169,189
(dagger) Cash Portfolio only purchases commercial paper with the highest
possible rating from at least one nationally recognized rating service. A
substantial portion of Cash Portfolio's investments are in commercial paper
of banks, finance companies and companies in the securities industry.
LEGEND:
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the next interest rate reset date or when applicable,
the final maturity date.
INCOME TAX INFORMATION:
At June 30, 1994, Cash Portfolio had a capital loss carryforward of
approximately $103,000 of which $43,000 and $60,000 will expire on June 30,
2001 and 2002, respectively.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST -
CASH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ASSETS
Investment in securities, at value (including $ 1,226,169,189
repurchase agreements of $1,829,000)
(Notes 1 and 2) - See accompanying schedule
Cash 61,790
Interest receivable 220,738
Total assets 1,226,451,717
LIABILITIES
Share transactions in process $ 4,189,773
Dividends payable 386,888
Accrued management fee 428,334
Total liabilities 5,004,995
NET ASSETS $ 1,221,446,722
Net Assets consist of:
Paid in capital $ 1,221,528,266
Accumulated net realized gain (loss) (81,544)
on investments
NET ASSETS, for 1,221,528,266 shares $ 1,221,446,722
outstanding
NET ASSET VALUE, offering price and redemption $1.00
price per share ($1,221,446,722 (divided by)
1,221,528,266 shares)
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INTEREST INCOME $ 47,904,554
EXPENSES
Management fee (Note 3) $ 5,314,720
Non-interested trustees 83,761
TOTAL EXPENSES 5,398,481
NET INTEREST INCOME 42,506,073
NET REALIZED GAIN (LOSS) ON INVESTMENTS (60,018)
(NOTE 1)
NET INCREASE IN NET ASSETS RESULTING FROM $ 42,446,055
OPERATIONS
</TABLE>
CASH PORTFOLIO
FINANCIAL STATEMENTS - CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED JUNE 30,
1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations $ 42,506,073 $ 46,169,925
Net interest income
Net realized gain (loss) on investments (60,018) (43,303)
NET INCREASE (DECREASE) IN NET ASSETS 42,446,055 46,126,622
RESULTING
FROM OPERATIONS
Dividends to shareholders from net interest (42,506,073) (46,169,925)
income
Share transactions at net asset value of $1.00 per 5,225,281,864 4,742,135,300
share
Proceeds from sales of shares
Reinvestment of dividends from net interest 37,442,132 40,277,956
income
Cost of shares redeemed (5,344,335,280) (5,130,329,612)
Net increase (decrease) in net assets and shares (81,611,284) (347,916,356)
resulting from share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS (81,671,302) (347,959,659)
NET ASSETS
Beginning of period 1,303,118,024 1,651,077,683
End of period $ 1,221,446,722 $ 1,303,118,024
</TABLE>
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST -
TERM PORTFOLIO
INVESTMENTS/JUNE 30, 1994
(Showing Percentage of Total Value of Investments)
PRINCIPAL VALUE
AMOUNT (NOTE 1)
U.S. TREASURY OBLIGATIONS - 88.1%
Bills, yields at date of purchase:
3.31%, 9/22/94 $ 15,000,000 $ 14,856,150
3.48%, 1/12/95 35,000,000 34,099,450
3.73%, 2/9/95 10,000,000 9,699,600
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $59,023,403) 58,655,200
MATURITY
AMOUNT
REPURCHASE AGREEMENTS - 11.9%
Investments in repurchase agreements,
(U.S. Treasury obligations),
in a joint trading account at 4.29%
dated 6/30/94 due 7/1/94 $ 7,927,945 7,927,000
TOTAL INVESTMENTS - 100%
(Cost $66,950,403) $ 66,582,200
OTHER INFORMATION:
Purchases and sales of long-term U.S. government and government agency
obligations aggregated $110,125,613 and $160,349,690, respectively.
INCOME TAX INFORMATION:
At June 30, 1994, the aggregate cost of investment securities for income
tax purposes was $66,950,403. Gross and net unrealized depreciation
aggregated $368,203.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST -
TERM PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ASSETS
Investment in securities, at value $ 66,582,200
(including repurchase agreements of $7,927,000)
(cost $66,950,403) (Notes 1 and 2) -
See accompanying schedule
Cash 387
Total assets 66,582,587
LIABILITIES
Payable for fund shares redeemed $ 3,979
Dividends payable 59,510
Accrued management fee 15,894
Other payables and accrued expenses 8,242
Total liabilities 87,625
NET ASSETS $ 66,494,962
Net Assets consist of (Note 1):
Paid in capital $ 67,078,026
Distributions in excess of net investment income (15,526)
Distributions in excess of net realized gain (199,335)
Net unrealized appreciation (depreciation) on (368,203)
investment securities
NET ASSETS, for 6,748,911 shares outstanding $ 66,494,962
NET ASSET VALUE, offering price and redemption $9.85
price per share ($66,494,962 (divided by)
6,748,911 shares)
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME $ 2,631,049
Interest
EXPENSES
Management fee (Note 3) $ 300,144
Non-interested trustees' compensation 2,821
Total expenses 302,965
Net investment income 2,328,084
REALIZED AND UNREALIZED GAIN (LOSS) ON (35,609)
INVESTMENTS (NOTE 1)
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (423,150)
(depreciation) on investment securities
Net gain (loss) (458,759)
Net increase (decrease) in net assets resulting $ 1,869,325
from operations
</TABLE>
TERM PORTFOLIO
FINANCIAL STATEMENTS - CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED JUNE 30,
1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations $ 2,328,084 $ 2,844,639
Net investment income
Net realized gain (loss) (35,609) 302,550
Change in net unrealized appreciation (423,150) 4,579
(depreciation)
Net increase (decrease) in net assets resulting 1,869,325 3,151,768
from operations
Distributions to shareholders: (2,331,093) (2,844,163)
From net investment income
In excess of net realized gain (150,872) -
Total distributions (2,481,965) (2,844,163)
Share transactions 13,152,053 32,585,986
Net proceeds from sales of shares
Reinvestment of distributions 1,744,308 1,983,108
Cost of shares redeemed (27,554,108) (44,414,054)
Net increase (decrease) in net assets resulting (12,657,747) (9,844,960)
from share transactions
Total increase (decrease) in net assets (13,270,387) (9,537,355)
NET ASSETS
Beginning of period 79,765,349 89,302,704
End of period (including distributions in excess $ 66,494,962 $ 79,765,349
of net investment income of $15,526 and
$60,863, respectively)
OTHER INFORMATION
Shares
Sold 1,327,420 3,288,533
Issued in reinvestment of distributions 176,025 200,034
Redeemed (2,782,280) (4,469,229)
Net increase (decrease) (1,278,835) (980,662)
</TABLE>
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES. Cash Portfolio and Term Portfolio (the
funds) are funds of The North Carolina Capital Management Trust (the
trust), formerly The North Carolina Cash Management Trust. The trust is
registered under the Investment Company Act of 1940, as amended (the 1940
Act), as an open-end management investment company organized as a
Massachusetts business trust. Shares of the trust are offered exclusively
to local governments and public authorities of the State of North Carolina.
Each fund is authorized to issue an unlimited number of shares. The
following summarizes the significant accounting policies of the funds:
SECURITY VALUATION.
CASH PORTFOLIO. As permitted under Rule 2a-7 of the Act, and certain
conditions therein, securities are valued initially at cost and thereafter
assume a constant amortization to maturity of any discount or premium.
TERM PORTFOLIO. Securities are valued based upon a computerized matrix
system and/or appraisals by a pricing service, both of which consider
market transactions and dealer-supplied valuations. Short-term securities
maturing within sixty days are valued either at amortized cost or original
cost plus accrued interest, both of which approximate current value.
Securities for which market quotations are not readily available are valued
at their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME.
CASH PORTFOLIO. Interest income, which includes amortization of premium and
accretion of original issue discount, is accrued as earned.
TERM PORTFOLIO. Interest income, which includes accretion of original issue
discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
DISTRIBUTIONS TO SHAREHOLDERS.
CASH PORTFOLIO. Dividends are declared daily and paid monthly from net
interest income.
TERM PORTFOLIO. Distributions are declared daily and paid monthly from net
investment income. Distributions from realized gains, if any, are recorded
on the ex-dividend date.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to capital loss
carryforwards and losses deferred due to excise tax regulations. Term
Portfolio also utilized earnings and profits distributed to shareholders on
redemption of shares as a part of the dividends paid deduction for income
tax purposes.
Permanent book and tax differences relating to shareholder distributions
will result in reclassifications to paid in capital. Undistributed net
investment income may include temporary book and tax basis differences
which will reverse in a subsequent period.
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS. Effective July 1,
1993, the funds adopted Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distributions by Investment Companies. As a result,
the funds changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, for Term Portfolio, amounts as of June 30, 1993 have been
reclassified to reflect a decrease in paid in capital of $185,331, a
decrease in distributions in excess of net investment income of $234,757
and a decrease in accumulated net realized gain on investments of $49,426.
No adjustments were necessary for Cash Portfolio. Any taxable income or
gain remaining at fiscal year end is distributed in the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The funds, through their custodian, receive delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The funds' investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the funds, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury obligations.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR pays all expenses
except the compensation of any trustee or officer not employed by Fidelity
Investments and certain exceptions such as interest, taxes, brokerage
commissions and extraordinary expenses.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
FMR receives a fee that is based upon a graduated series of rates ranging
from .38% to .41% of each fund's average net assets. The management fees
paid to FMR were equivalent to an annual rate of .39% and .41% for the Cash
and Term Portfolios, respectively.
SUB-ADVISER FEE. As Cash Portfolio's investment sub-adviser, FMR Texas
Inc., a wholly- owned subsidiary of FMR, receives a fee from FMR of 50% of
the management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect, and after reducing the fee
for any payments by FMR pursuant to the fund's Distribution and Service
Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plans (the Plans), and in accordance with Rule 12b-1 of the Act, FMR pays
Fidelity Distributors Corporation (Distributors), an affiliate of FMR, a
distribution and service fee that is based on a graduated series of rates
ranging from .14% to .17% of each fund's average net assets. For the
period, FMR paid Distributors $2,249,578 and $102,203 on behalf of the Cash
and Term Portfolios, respectively, all of which was paid to Sterling
Capital Distributors, Inc., a wholly-owned subsidiary of Sterling Capital
Management Company.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of The North Carolina Capital Management Trust and
the Shareholders of Cash Portfolio and Term Portfolio:
We have audited the accompanying statements of assets and liabilities of
The North Carolina Capital Management Trust (comprised of the Cash
Portfolio and the Term Portfolio), including the schedules of portfolio
investments, as of June 30, 1994 and the related statements of operations
for the year then ended, the statements of changes in net assets for each
of the two years in the period then ended and the financial highlights for
each of the ten years in the period ended June 30, 1994 of the Cash
Portfolio, and for each of the seven years in the period ended June 30,
1994 and for the period March 19, 1987 (commencement of operations) to June
30, 1987 of the Term Portfolio. These financial statements and financial
highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of June 30, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the respective aforementioned Portfolios comprising The North Carolina
Capital Management Trust as of June 30, 1994, the results of their
operations for the year then ended, the changes in their net assets for the
two years in the period then ended and the financial highlights on pages 8
& 9 for the periods set forth above, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
July 26, 1994
NEITHER THE TRUST NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK AND TRUST
SHARES ARE
NOT BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST
82 Devonshire Street, Boston, Massachusetts 02109
Distribution Agent
STERLING CAPITAL DISTRIBUTORS, INC.
Custodian
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
Investment Adviser
FIDELITY MANAGEMENT & RESEARCH COMPANY
Transfer Agent
FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY
NC-pro-894
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
The North Carolina Capital Management Trust:
We consent to the inclusion in the Statement of Additional Information in
Post-Effective Amendment No. 26 to the Registration Statement No. 2-77169
on Form N-1A of The North Carolina Capital Management Trust (comprised of
the Cash Portfolio and the Term Portfolio) of our report dated July 26,
1994, which appears in the Annual Report to Shareholders relating to the
financial statements and financial highlights which is included in said
Statement of Additional Information.
We also consent to the references to our Firm under the headings "Financial
Highlights" and "Auditor" in the Prospectus and Statement of Additional
Information of this Post-Effective Amendment.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
August 8, 1994
