SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-77169)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 33 [X]
and
REGISTRATION STATEMENT (No. 811-3455)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 33 [ ]
The North Carolina Capital Management Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-570-7000
Arthur S. Loring, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b)
(x) on (August 19, 1996) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(i)
( ) on ( ) pursuant to paragraph (a)(i)
( ) 75 days after filing pursuant to paragraph (a)(ii)
( ) on ( ) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date for a
previously filed
post-effective amendment.
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the Notice required by
such Rule on or before August 29, 1996.
The North Carolina Capital Management Trust:
Cash Portfolio and Term Portfolio
Cross Reference Sheet
Form N-1A Item Number
Part A Prospectus Caption
1 a,b Cover Page
2 a Expenses
b,c Contents; Who May Want to Invest
3 a Financial Highlights
b *
c Performance
d Performance
4 a(i) Charter
a(ii) Investment Principles and Risks; Securities and Investment
Practices; Fundamental Investment Policies and Restrictions
b Securities and Investment Practices
c Who May Want to Invest; Investment Principles and Risks; Securities and
Investment Practices
5 a Charter
b(i) Cover Page; FMR and its Affiliates
b(ii) FMR and Its Affiliates; Breakdown of
Expenses
b(iii) Expenses; Breakdown of Expenses
c FMR and Its Affiliates
d Cover Page; Charter; Breakdown of Expenses; FMR and Its Affiliates
e FMR and Its Affiliates, Breakdown of Expenses
f Expenses
g Expenses; FMR and Its Affiliates, Breakdown of Expenses
5A *
6 a(i) Charter
a(ii) How to Buy Shares; How to Sell Shares; Investor
Services; Transaction Details; Exchange Restrictions
a(iii) *
b *
c How to Buy Shares; Exchange Restrictions
d *
e Cover Page; How to Buy Shares; How to Sell Shares; Investor Services;
Transaction Details
f,g Dividends, Capital Gains, and Taxes
7 a Cover page; FMR and its Affiliates
b How to Buy Shares; Transaction Details
c How to Buy Shares; Transaction Details
d How to Buy Shares
e Breakdown of Expenses
f Expenses; Breakdown of Expenses
8 How to Sell Shares; Investor Services; Transaction Details; Exchange
Restrictions
9 *
* Not applicable
THE NORTH CAROLINA
CAPITAL
MANAGEMENT TRUST:
CASH PORTFOLIO AND TERM
PORTFOLIO
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
To learn more about Cash Portfolio and Term Portfolio (each a "fund" or
collectively the "funds") and their investments, you can obtain a copy of
the funds' most recent financial report and portfolio listing or read the
Statement of Additional Information (SAI) dated August 19, 1996 attached to
this prospectus. The SAI has been filed with the Securities and Exchange
Commission (SEC) and is available along with other related materials on
the SEC's Internet Web site (http://www.sec.gov). The SAI is
incorporated herein by reference (legally forms a part of the prospectus).
For a free copy of either document, or for information or assistance in
opening an account, please call Sterling Capital Distributors, Inc.
(Sterling) in Charlotte, North Carolina:
(medium solid bullet) Toll-free 1-800-222-3232
(medium solid bullet) or locally 1-704-372-8798
INVESTMENTS IN CASH PORTFOLIO ARE 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.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT
INSURED BY THE FDIC, FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL AMOUNT INVESTED.
LIKE ALL MUTUAL FUNDS, THESE
SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NC-pro-0896
16126
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, and in bonds and notes of any
North Carolina local government or public authority.
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 high-grade
money market instruments.
PROSPECTUS
DATED AUGUST 19, 1996
AND
ANNUAL REPORT
FOR THE YEAR ENDED(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109
JUNE 30, 1996
THE
N
C
ORTH
AROLINA
CAPITAL MANAGEMENT TRUST
CONTENTS
PROSPECTUS
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KEY FACTS WHO MAY WANT TO INVEST
EXPENSES Each fund's yearly operating
expenses.
FINANCIAL HIGHLIGHTS A summary of each fund's
financial data.
PERFORMANCE
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS Each fund's
overall approach to investing.
BREAKDOWN OF EXPENSES How operating costs
are calculated and what they include.
YOUR ACCOUNT HOW TO BUY SHARES Opening an account and
making additional investments.
HOW TO SELL SHARES Taking money out and
closing your account.
INVESTOR SERVICES Services to help you manage
your account.
SHAREHOLDER AND ACCOUNT POLICIES DIVIDENDS, CAPITAL GAINS, AND TAXES
TRANSACTION DETAILS Share price calculations
and the timing of purchases and redemptions.
EXCHANGE RESTRICTIONS
</TABLE>
ANNUAL REPORT
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CASH PORTFOLIO:
PERFORMANCE A-1 How the fund has done over time.
FUND TALK A-3 The manager's review of the fund's performance,
strategy, and outlook.
INVESTMENTS A-4 A complete list of the fund's investments with
their market values.
FINANCIAL STATEMENTS A-7 Statements of assets and liabilities, operations,
and changes in net assets.
TERM PORTFOLIO:
PERFORMANCE A-9 How the fund has done over time.
FUND TALK A-12 The manager's review of the fund's performance,
strategy, and outlook.
INVESTMENTS A-13 A complete list of the fund's investments with
their market values.
FINANCIAL STATEMENTS A-14 Statements of assets and liabilities, operations,
and changes in net assets.
NOTES A-16 Notes to the financial statements.
REPORT OF INDEPENDENT ACCOUNTANTS A-18 The auditor's opinion.
</TABLE>
KEY FACTS
WHO MAY WANT TO INVEST
Shares of Cash Portfolio and Term Portfolio are offered exclusively to the
following entities of the State of North Carolina: local governments and
public authorities, as those terms are defined in North Carolina General
Statute 159-7, and school administrative units, local ABC boards, community
colleges or public hospitals (collectively , "investors" ).
Each fund offers an economical and convenient vehicle for investment of
available cash by investors.
Cash Portfolio is designed for investors who would like to earn current
income while preserving the value of their investment. The rate of income
will vary from day to day, generally reflecting short-term interest rates.
Cash Portfolio is managed to keep its share price stable at $1.00. Cash
Portfolio does not constitute a balanced investment plan. However, because
it emphasizes stability, it could be well-suited for a portion of your
investment. Cash Portfolio offers free checkwriting to give you a
convenient way to manage your assets.
Term Portfolio is designed for investors who seek high current income from
a portfolio of investment-grade debt securities. Term Portfolio's level of
risk and potential reward depend on the quality and maturity of its
investments. Term Portfolio may not be an appropriate investment for those
investors who require daily liquidity in order to meet current obligations.
When you sell your Term Portfolio shares, they may be worth more or less
than what you paid for them.
The value of Term Portfolio's investments and the income they generate vary
from day to day, and generally reflect changes in interest rates, market
conditions, and other political and economic news. Term Portfolio is not in
itself a balanced investment plan.
You should consider your investment objective and tolerance for risk when
making an investment decision.
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Cash Term
Portfoli Portfoli
o o
Maximum sales charge on None None
purchases and
reinvested distributions
Maximum deferred sales None None
charge
Redemption fee None None
Exchange fee None None
ANNUAL OPERATING EXPENSES are paid out of each fund's assets. Each fund
pays a management fee to Fidelity Management & Research Company (FMR). FMR
is responsible for the payment of most of the other expenses of each
fund.
12b-1 fees are paid by FMR from its management fee to Sterling, through
Fidelity Distributors Corporation (FDC), for services and expenses in
connection with the distribution of fund shares. Term Portfolio
shareholders may pay more than the economic equivalent of the maximum sales
charges permitted by the National Association of Securities Dealers, Inc.,
due to 12b-1 fees.
Each fund's expenses are factored into its share price or dividends and are
not charged directly to shareholder accounts (see "Breakdown of Expenses"
on page ).
The following are projections based on historical expenses of each fund,
and are calculated as a percentage of average net assets of each fund.
Cash Term
Portfoli Portfoli
o o
Management fee* 0.20 % 0.23 %
12b-1 fee (Distribution Fee) 0.16 % 0.15 %
Other expenses 0.00 % 0.00 %
Total operating expenses 0.36 % 0.38 %
* The rate for management fees represents the net rate retained by
FMR after payments made to the distributor. The management fee r ates
before payments made to the distributor by FMR are 0.36 % and
0.38 % for Cash Portfolio and Term Portfolio, respectively.
EXPENSE TABLE EXAMPLE: You would pay the following expenses on a $1,000
investment, assuming a 5% annual return and full redemption at the end of
each time period:
1 3 5 10
Year Years Years Years
Cash Portfolio $ 4 $ 12 $ 20 $ 46
Term Portfolio $ 4 $ 12 $ 21 $ 48
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED COSTS OR RETURNS, ALL OF WHICH MAY VARY.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow for Cash Portfolio and Term
Portfolio and each fund's financial statements that are included in the
funds' Annual Report have been audited by Coopers & Lybrand L.L.P. ,
independent accountants. Their report on the financial statements and
financial highlights is included in the Annual Report. The financial
statements and the report are attached.
CASH PORTFOLIO
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1.Selected Per-Share Data
and Ratios
2.Years ended June 30
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
3.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
4.Income from Investment
.053 .052 .031 .030 .046 .070 .082 .085 .067 .059
Operations
Net interest income
5.Less Distributions
(.053) (.052) (.031) (.030) (.046) (.070) (.082) (.085) (.067) (.059)
From net interest income
6.Net asset value, end of
$ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
7.Total return A
5.43% 5.28% 3.10% 3.04% 4.67% 7.23% 8.55% 8.83% 6.88% 6.03%
8.Net assets, end of period
$ 1,740,3 $ 1,589,1 $ 1,221,4 $ 1,303,1 $ 1,651,0 $ 1,405,5 $ 1,080,0 $ 894,83 $ 653,14 $ 406,56
(000 omitted)
20 01 47 18 78 79 55 8 8 7
9.Ratio of expenses to
.36% .39% .39% .39% .39% .40% B .42% B .43% B .43% B .44% B
average net assets
10.Ratio of net interest
5.27% 5.22% 3.05% 3.00% 4.47% 6.90% 8.20% 8.61% 6.68% 5.85%
income to average
net assets
</TABLE>
A TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN.
B FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
TERM PORTFOLIO
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11.Selected Per-Share
Data and Ratios
12.Years
ended June
30 1996 1995 1994C 1993 1992 1991 1990 1989 1988 198713.D
14.Net asset
value, $ 9.910 $ 9.850 $ 9.940 $ 9.910 $ 9.820 $ 9.730 $ 9.780 $ 9.820 $ 9.910 $ 10.000
beginning of period
15.Income
from .601 .505 .288 .337 .560 .741 .816 .832 .762 .185
Investment Operations
Net investment income
16. Net
realized
and (.093) .059 (.046) .031 .097 .090 (.050) (.040) (.090) (.090)
unrealized gain (loss)
17. Total from
investment .508 .564 .242 .368 .657 .831 .766 .792 .672 .095
operations
18.Less
Distributions (.598) (.504) (.312) (.338) (.567) (.741) (.816) (.832) (.762) (.185)
From net investment
income
19. In excess
of net -- -- (.020) -- -- -- -- -- -- --
realized gain
20. Total
distributions (.598) (.504) (.332) (.338) (.567) (.741) (.816) (.832) (.762) (.185)
21.Net asset
value, end of $ 9.820 $ 9.910 $ 9.850 $ 9.940 $ 9.910 $ 9.820 $ 9.730 $ 9.780 $ 9.820 $ 9.910
period
22.Total
returnB 5.25 5.87 2.47 3.78 6.86 8.83 8.15 8.44 7.02 .96%
% % % % % % % % %
23.Net assets,
end of $ 64,355 $ 70,351 $ 66,495 $ 79,765 $ 89,303 $ 83,656 $ 83,412 $ 83,770 $ 116,556 $ 45,215
period (000 omitted)
24.Ratio of
expenses to .38 .41 .41 .41 .41 .41% .40% .40% .27% .14%
average net
assets % % % % % E E E E 25.A ,E
26.Ratio of net
investment 6.06 5.12 3.14 3.41 5.69 7.56 8.37 8.52 7.75 6.63%
income to
average net % % % % % % % % % 27.A
assets
28.Portfolio
turnover
rate 89 519 494 612 424 78 23 14 30 407%
% % % % % % % % % 29.A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
T OTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN .
C EFFECTIVE JULY 1, 1994 , THE FUND 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, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
D MARCH 19, 1987 (COMMENCEMENT OF OPERATIONS) TO JUNE 30, 1987
E FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD HAVE
BEEN HIGHER.
PERFORMANCE
Performance can be measured as TOTAL RETURN or YIELD.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. Yields for
Term Portfolio are calculated according to a standard that is required for
all stock and bond funds. Because this differs from other accounting
methods, the quoted yield for Term Portfolio may not equal the income
actually paid to shareholders.
When a yield assumes that income earned is reinvested, it is called an
EFFECTIVE YIELD.
SEVEN-DAY YIELD illustrates the income earned by an investment in Cash
Portfolio over a recent seven-day period. Since money market funds maintain
a stable $1.00 share price, current seven-day yields are the most common
illustration of money market fund performance.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free financial report, call Sterling toll-free at
1-800-222-3232 or locally at 1-704-372-8798.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. Each fund is a diversified fund of
The North Carolina Capital Management Trust, an open-end management
investment company organized as a Massachusetts business trust on April 26,
1982.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review the funds' performance. The majority of trustees are not
otherwise affiliated with Fidelity or Sterling.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
The transfer agent will mail proxy materials in advance, including a voting
card and information about the proposals to be voted on. You are entitled
to one vote for each share you own.
FMR AND ITS AFFILIATES
Fidelity Investments is one of the largest investment management
organizations in the United States and has its principal business address
at 82 Devonshire Street, Boston, Massachusetts 02109. It includes a number
of different subsidiaries and divisions which provide a variety of
financial services and products. The funds employ various Fidelity
companies to perform activities required for their operation.
The funds are managed by FMR, which chooses their investments and handles
their business affairs. FMR Texas Inc. (FMR Texas), located in Irving,
Texas, has primary responsibility for providing investment management
services for Cash Portfolio.
As of June 30, 1996, FMR advised funds having approximately 26
million shareholder accounts with a total value of more than $ 394
billion.
Burnell Stehman is vice president and manager of The North Carolina Capital
Management Trust: Cash Portfolio, which he has managed since 198 2 .
He also manages several other money market funds . Mr. Stehman joined
Fidelity in 1979.
Curtis Hollingsworth is vice president and manager of The North
Carolina Capital Management Trust: Term Portfolio, which he has managed
since October 1995. He also manages several other bond funds. Mr.
Hollingsworth joined Fidelity in 1983.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
FDC distributes and markets Fidelity's funds and services. Fidelity
Investments Institutional Operations Company (FIIOC) performs transfer
agent servicing functions for each fund.
FMR Corp. is the ultimate parent company of FMR and FMR Texas. Members of
the Edward C. Johnson 3d family are the predominant owners of a class of
shares of common stock representing approximately 49% of the voting power
of FMR Corp. Under the Investment Company Act of 1940 (the 1940 Act),
control of a company is presumed where one individual or group of
individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form a
controlling group with respect to FMR Corp.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
EACH FUND'S INVESTMENT APPROACH
CASH PORTFOLIO invests only in those high-grade money market instruments
which are authorized for investment by units of local government as
specified in North Carolina General Statute 159-30 (the Statute), as
amended from time to time, and in 20 North Carolina Administrative Code
3.0703 (the Code).
Pursuant to an investment policy set by the Trustees, Cash Portfolio
may invest more than 25% of its total assets in obligations of banks as
permitted pursuant to the Statute and the Code. 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. Cash Portfolio may also invest in certificates of
deposit issued by banks insured by the Federal Deposit Insurance
Corporation (FDIC) having total assets of less than one billion dollars,
provided that the fund 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. Cash Portfolio will use its best
efforts to maintain a constant net asset value per share (NAV) of $1.00.
When you sell your shares of Cash Portfolio, they should be worth the same
amount as when you bought them. Of course, there is no guarantee that Cash
Portfolio will maintain a stable $1.00 share price. Cash Portfolio follows
industry-standard guidelines on the quality and maturity of its
investments, which are designed to help maintain a stable $1.00 share
price. Cash Portfolio will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities it buys. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a
default on Cash Portfolio's investments could cause its share price (and
the value of your investment) to change.
Cash Portfolio earns income at current money market rates. It stresses
preservation of capital, liquidity, and income and does not seek the higher
yields or capital appreciation that more aggressive investments may
provide. Cash Portfolio's yield will vary from day to day and generally
reflects current short-term interest rates and other markets conditions.
TERM PORTFOLIO invests in obligations of the U.S. Government, its agencies
or instrumentalities, obligations fully guaranteed by the U.S. Government,
or obligations of the State of North Carolina and bonds and notes of any
North Carolina local government or public authority, as permitted pursuant
to the Statute and the Code. In addition, the fund may invest in other
instruments pursuant to the Statute and the Code. Pursuant to an investment
policy set by the Trustees, Term Portfolio may, under normal
circumstances, invest up to 25% of its total assets in the finance
industry. Term Portfolio expects to invest predominantly in U.S.
Government securities.
Under the current Code, Term Portfolio may invest in securities with
maturities of up to seven years. FMR seeks to manage the fund so that it
generally reacts to changes in interest rates similarly to government bonds
with maturities of three years or less. As of June 30, 1996, the fund's
dollar-weighted average maturity was approximately 1 year.
The total return from a bond is a combination of income and price gains or
losses. While income is the most important component of bond returns over
time, Term Portfolio's emphasis on income does not mean that it invests
only in the highest-yielding bonds available, or that it can avoid risks to
principal. In selecting investments for Term Portfolio, FMR considers a
bond's income potential together with its potential for price gains or
losses. FMR focuses on assembling a portfolio of income-producing
securities that it believes will provide the best trade - off between
risk and return within the range of securities that are eligible
investments for Term Portfolio.
Term Portfolio's yield and share price change daily and are based on
changes in interest rates, market conditions, other economic and political
news, and on the quality and maturity of its investments. In general, bond
prices rise when interest rates fall, and vice versa. This effect is
usually more pronounced for longer-term securities. FMR may use various
investment techniques to hedge a portion of Term Portfolio's risk, but
there is no guarantee that these strategies will work as intended. When you
sell your Term Portfolio shares, they may be worth more or less than what
you paid for them.
FMR normally invests Term Portfolio's assets according to its investment
strategy. Term Portfolio also reserves the right to invest without
limitation in investment-grade money market or short-term debt instruments
for temporary, defensive purposes.
Each fund'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 and
economic conditions of the State or municipality.
THE STATUTE AND THE CODE. The following investment policies are
non-fundamental, which means that if the Statute or the Code, or any
legislation or regulations relating to those parameters change in the
future, the Trustees may authorize corresponding changes in the instruments
in which the funds may invest without first obtaining shareholder approval.
Currently, the rulings, regulations and interpretations to which the funds
adhere allow the funds 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 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;
(iii) Obligations of the State of North Carolina and bonds and notes of any
North Carolina local government or public authority;
(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 Commerce of the State of
North Carolina, be fully collateralized;
(v) Prime quality 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;
(vi) 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;
(vii) 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; or
(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, as defined by the Securities Exchange Act of 1934, which is a
dealer recognized as a primary dealer by a Federal Reserve Bank, or any
commercial bank, trust company or national banking association, the
deposits of which are insured by the FDIC or any successor thereof.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which a fund may invest, strategies FMR may employ in
pursuit of a fund's investment objective, and a summary of related risks.
Certain of the securities, instruments, or techniques listed may not be
eligible for purchase or use by a fund since each fund's investments are
subject to the Statute and the Code and any investment policies set by the
Trustees. Any restrictions listed supplement those discussed earlier in
this section. A complete listing of each fund's limitations and more
detailed information about each fund's investments are contained in the
funds' SAI. Policies and limitations are considered at the time of
purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques
unless it believes that they are consistent with a fund's investment
objective and policies and that doing so will help a fund achieve its goal.
Fund holdings and recent investment strategies are detailed in each fund's
financial reports, which are sent to shareholders twice a year. For a free
financial report, call Sterling toll-free at 1-800-222-3232 or locally at
1-704-372-8798.
MONEY MARKET SECURITIES are high-quality, short-term instruments
issued by the U.S. Government, corporations, financial institutions, and
other entities. These securities may carry fixed, variable, or
floating interest rates. Some money market securities employ a trust or
similar structure to modify the maturity, price characteristics, or quality
of financial assets so that they are eligible investments for money market
funds. If the structure does not perform as intended, adverse tax or
investment consequences may result.
OTHER MONEY MARKET SECURITIES may include commercial paper, certificates
of deposit, bankers' acceptances, and time deposits.
U.S. GOVERNMENT SECURITIES are high-quality debt instruments issued
or guaranteed by the U.S. Treasury or by an agency or instrumentality of
the U.S. Government. Not all U.S. Government securities are backed by the
full faith and credit of the United States. For example, U.S. Government
securities such as those issued by the Federal National Mortgage
Association are supported by the instrumentality's right to borrow money
from the U.S. Treasury under certain circumstances. Other U.S.
Government securities , such as those issued by the Federal
Farm Credit Banks Funding Corporation, are supported only by the credit
of the entity that issued them.
RESTRICTION: A fund may invest in U.S. Government securities as permitted
pursuant to the Statute and the Code.
MUNICIPAL SECURITIES are issued to raise money for a variety of public or
private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities. They
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. The value of some or all municipal
securities may be affected by uncertainties in the municipal market related
to legislation or litigation involving the taxation of municipal securities
or the rights of municipal securities holders.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. In
general, bond prices rise when interest rates fall, and vice versa. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
RESTRICTION: Term Portfolio currently intends to invest in debt
securities rated A-quality and above by Moody's Investors Service, or
Standard & Poor's, or unrated but judged to be of equivalent quality by
FMR.
CREDIT SUPPORT. Issuers may employ various forms of credit enhancement,
including letters of credit, guarantees, or insurance from a bank,
insurance company, or other entity. These arrangements expose the fund to
the credit risk of the entity.
MORTGAGE SECURITIES are interests in pools of commercial or residential
mortgages, and include complex instruments such as collateralized mortgage
obligations and stripped mortgage-backed securities. Mortgage securities
may be issued by the U.S. Government or by private entities. For example,
Ginnie Maes are interests in pools of mortgage loans insured or guaranteed
by a U.S. Government agency. Because mortgage securities pay both interest
and principal as their underlying mortgages are paid off, they are subject
to prepayment risk. This is especially true for stripped securities. Also,
the value of a mortgage security may be significantly affected by changes
in interest rates. Some mortgage securities may have a structure that makes
their reaction to interest rates and other factors difficult to predict,
making their value highly volatile.
RESTRICTION: A fund may invest in mortgage-backed securities as permitted
pursuant to the Statute and the Code.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a benchmark
rate changes.
STRIPPED SECURITIES are the separate income or principal components of a
debt security. The risks associated with stripped securities are
similar to those of other debt securities, although stripped
securities may be more volatile, and the value of certain types of
stripped securities may move in the same direction as interest rates.
U.S. Treasury securities that have been stripped by a Federal Reserve Bank
are obligations issued by the U.S. Treasury.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund buys a security at
one price and simultaneously agrees to sell it back at a higher price.
Delays or losses could result if the other party to the agreement defaults
or becomes insolvent.
PUT FEATURES entitle the holder to put (sell back) a security to the issuer
or a financial intermediary. In exchange for this benefit, a fund may pay
periodic fees or accept a lower interest rate. The credit quality of the
investment may be affected by the creditworthiness of the put provider.
Demand features, standby commitments, and tender options are types of put
features.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of some illiquid securities, and some other securities, may be
subject to legal restrictions. Difficulty in selling securities may result
in a loss or may be costly to a fund.
RESTRICTION: Cash Portfolio may not purchase a security if, as a result,
more than 10% of its total assets would be invested in illiquid and
restricted securities.
RESTRICTION: Term Portfolio may not purchase a security if, as a result,
more than 10% of its assets would be invested in illiquid and restricted
securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period.
FINANCIAL SERVICES INDUSTRY. Companies in the financial services industry
are subject to various risks related to that industry, such as government
regulation, changes in interest rates, and exposure on loans, including
loans to foreign borrowers. If a fund invests substantially in this
industry, its performance may be affected by conditions affecting the
industry.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested
in any one issuer or, on a broader scale, in any one industry. Economic,
business, or political changes can affect all securities of a similar type.
RESTRICTIONS: Cash Portfolio may not invest more than 5% of its total
assets in any one issuer, except that, with respect to certificates of
deposit and bankers' acceptances, the fund may invest up to 10% of its
total assets in the highest quality securities of a single issuer for up to
three business days.
With respect to 75% of its total assets, Term Portfolio may not purchase a
security if, as a result, more than 5% would be invested in the securities
of any one issuer. Term Portfolio may not invest more than 25% of its total
assets in any one industry.
These limitations do not apply to U.S. Government securities.
BORROWING. A fund may borrow from banks. If Term Portfolio borrows money,
its share price may be subject to greater fluctuation until the borrowing
is paid off.
RESTRICTIONS: Each fund may borrow only for temporary or emergency
purposes, but not in an amount exceeding 331/3% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
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, and in bonds and notes of any
North Carolina local government or public authority.
Cash Portfolio invests only in those high-grade money market instruments
which are authorized for investment by units of local government as
specified in North Carolina General Statute 159-30 (the Statute), as
amended from time to time, and in 20 North Carolina Administrative Code
3.0703 (the Code). Cash Portfolio may invest more than 25% of its total
assets in obligations of banks. Cash Portfolio will use its best efforts to
maintain a constant net asset value per share (NAV) of $1.00.
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 high-grade
money market instruments.
Term Portfolio invests in obligations of the U.S. Government, its agencies
or instrumentalities, obligations fully guaranteed by the U.S. Government,
or obligations of the State of North Carolina and bonds and notes of any
North Carolina local government or public authority, as permitted pursuant
to the Statute and the Code.
Cash Portfolio may not purchase a security if, as a result, more than
10% of its total assets would be invested in illiquid and restricted
securities.
Term Portfolio may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid and restricted
securities.
With respect to 75% of its total assets, Term Portfolio may not purchase a
security if, as a result, more than 5% would be invested in the securities
of any one issuer. Term Portfolio may not invest more than 25% of its total
assets in any one industry. These limitations do not apply to U.S.
Government securities.
Each fund may borrow only for temporary or emergency purposes, but not in
an amount exceeding 331/3% of its total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of each fund's assets are reflected in that
fund's share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
FMR may, from time to time, agree to reimburse each fund for management
fees above a specified limit. Reimbursement arrangements, which may be
terminated at any time without notice, can decrease each fund's expenses
and boost its performance.
MANAGEMENT FEE
Each fund pays FMR a monthly management fee at an annual rate
of 0.365% of average net assets through $400 million; 0.360% of average
net assets in excess of $400 million through $800 million; 0.355% of
average net assets in excess of $800 million through $1.2 billion; 0.350%
of average net assets in excess of $1.2 billion through $1.6 billion;
0.340% of average net assets in excess of $1.6 billion through $2.0
billion; and 0.330% of average net assets in excess of $2.0 billion. FMR
pays most of the other expenses of each fund with certain exceptions .
FMR HAS A SUB-ADVISORY AGREEMENT with FMR Texas, which has primary
responsibility for providing investment management for Cash Portfolio,
while FMR retains responsibility for providing Cash Portfolio with other
management services. FMR pays FMR Texas 50% of its management fee (before
expense reimbursements, but after payments made by FMR pursuant to Cash
Portfolio's Distribution and Service Plan) for these services. FMR paid FMR
Texas 0.10 % of Cash Portfolio's average net assets for the fiscal
year ended 1996.
OTHER EXPENSES
FIIOC performs transfer agency, dividend disbursing and shareholder
servicing functions for each fund. Fidelity Service Co. (FSC) calculates
the NAV and dividends for each fund and maintains each fund's general
accounting records. These expenses are paid by FMR pursuant to its
management contract.
FDC has entered into a Distribution and Service Agent Agreement with
Sterling pursuant to which Sterling acts as distribution agent of shares of
Cash Portfolio and Term Portfolio.
Each fund has adopted a DISTRIBUTION AND SERVICE PLAN . Each Plan
recognizes that FMR may use its management fee to pay expenses associated
with the sale of fund shares. FMR pays FDC a monthly distribution fee, all
of which FDC pays Sterling, as compensation for Sterling's services and
expenses in connection with the distribution of shares of each fund and
providing certain shareholder servicing functions, which include the
processing of shareholder inquiries, account maintenance, and processing
purchases, redemptions, transfers, and exchanges. FMR currently pays
Sterling, through FDC, monthly according to the following schedule: 0.160%
of average net assets through $1.6 billion; 0.155% of average net assets in
excess of $1.6 billion through $2.0 billion; and 0.150% of average net
assets in excess of $2.0 billion.
Each fund pays all other expenses, such as brokerage fees and commissions,
interest on borrowings, taxes, and the compensation of trustees who are not
affiliated with Fidelity or Sterling.
The portfolio turnover rate for Term Portfolio for the fiscal year ended
1996 was 89 %. This rate varies from year to year.
YOUR ACCOUNT
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called NAV, is calculated every business day. Cash
Portfolio is managed to keep its share price stable at $1.00. Each fund's
shares are sold without a sales charge.
Shares are purchased at the next NAV calculated after your order is
received and accepted by Sterling. Cash Portfolio's NAV is normally
calculated at 12:00 noon and 4:00 p.m. Eastern time. Term Portfolio's NAV
is normally calculated at 4:00 p.m. Eastern time. For details on dividends,
see "Dividends, Capital Gains, and Taxes" and "Transaction Details" on page
and page .
Share certificates are not available for Cash Portfolio or Term Portfolio.
IF YOU ARE NEW TO THE FUNDS, you must complete and sign an account
application prior to making an initial investment.
Term Portfolio shares are available only to investors with a new or
existing account in Cash Portfolio.
Once you have opened an account, you may purchase shares of each fund
according to the methods described in the charts on pages and . If there
is no account application accompanying this prospectus, call Sterling
toll-free at 1-800-222-3232 or locally at 1-704-372-8798.
CASH PORTFOLIO
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Mail
(mail_graphic) (small solid bullet) Send a completed, signed (small solid bullet) Make your check payable to "NCCMT:
application to the following address: Cash Portfolio." Indicate your account
The North Carolina Capital number and mail your check and a
Management Trust precoded fund investment slip, which will
c/o Sterling Capital Distributors, be supplied upon request when you
Inc. open your account, to the following
One First Union Center address:
301 S. College Street, Suite 3200 The North Carolina Capital
Charlotte, NC 28202-6005 Management Trust
c/o Sterling Capital Distributors, Inc.
One First Union Center
301 S. College Street, Suite 3200
Charlotte, NC 28202-6005
Phone
1-800-544-777
(phone_graphic) (small solid bullet) Not available. (small solid bullet) Exchange from a Term Portfolio account
with the same registration, including
name, and address.
(small solid bullet) Call Sterling toll-free at 1-800-222-3232
or locally at 1-704-372-8798 before 4:00
p.m. Eastern time.
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In Person (hand_graphic) (small solid bullet) Not available. (small solid bullet) Bring your check and a precoded fund
investment slip, which will be supplied
upon request when you open your
account, to any branch of First Union
National Bank of North Carolina (First
Union) before the close of business of
the branch if you want your investment
to be made that same day.
Wire (wire_graphic) (small solid bullet) Not available. (small solid bullet) You may obtain wire instructions by
calling Sterling toll-free at
1-800-222-3232 or locally at
1-704-372-8798.
(small solid bullet) Call Sterling before 12:00 noon Eastern
time on the day of the wire.
(small solid bullet) Federal funds and certain federal or
state transfer payments will be accepted
by wire.
(small solid bullet) If Sterling is not advised of the order
prior to 12:00 noon Eastern time on the
day of the wire , or if federal funds are
not received the same day the order is
placed, your order may be canceled,
and you could be held liable for resulting
fees and losses.
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TERM PORTFOLIO
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Mail (mail_graphic) (small solid bullet) Send a completed, signed (small solid bullet) Not available.
application to the following address:
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
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<S> <C> <C>
Phone 1-800-544-777
(phone_graphic) (small solid bullet) Not available. (small solid bullet) Exchange from a Cash Portfolio account
with the same registration, including
name, and address.
(small solid bullet) Call Sterling toll-free at 1-800-222-3232
or locally at 1-704-372-8798 before 4:00
p.m. Eastern time.
In Person (hand_graphic) (small solid bullet) Not available. (small solid bullet) Not available.
Wire (wire_graphic) (small solid bullet) Not available. (small solid bullet) You may obtain wire instructions by
calling Sterling toll-free at
1-800-222-3232 or locally at
1-704-372-8798.
(small solid bullet) Call Sterling before 4:00 p.m. Eastern
time on the business day prior to the
wiring of funds.
(small solid bullet) Only federal funds will be accepted by
wire.
(small solid bullet) If Sterling is not advised of the order
prior to 4:00 p.m. Eastern time 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.
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HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next NAV calculated after your order is received and accepted by
Sterling. Cash Portfolio's NAV is normally calculated at 12:00 noon and
4:00 p.m. Eastern time. Term Portfolio's NAV is normally calculated at 4:00
p.m. Eastern time. For details on dividends, see "Dividends, Capital Gains,
and Taxes" and "Transaction Details" on page and page .
TO SELL SHARES IN AN ACCOUNT, you may use any of the methods described on
these two pages.
TO SELL SHARES BY BANK WIRE, you will need to sign up for this service in
advance.
S ELLING SHARES BY TELEPHONE. Redemption requests may be made by an
authorized finance official (or his/her agent or designee) who has
completed the account application by calling Sterling toll-free at
1-800-222-3232 or locally at 1-704-372-8798 before 4:00 p.m. Eastern
time.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be redeemed,
and
(small solid bullet) Any other applicable requirements listed in the chart
on page .
Mail your letter to the following address:
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
Unless otherwise instructed, the transfer agent will send a check to the
record address.
SELLING SHARES BY WIRE . If you elected to do so on your account
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. You may change the designated bank account,
or add additional accounts without limitation, by sending a letter of
instruction to Sterling at the address shown above prior to requesting a
redemption.
There is no fee imposed by the funds for wiring of redemption proceeds.
Redemption proceeds will be wired via the Federal Reserve Wire System to
the bank account of record. For details on how to redeem by wire, refer to
the chart on page .
SELLING SHARES BY CHECK (CASH PORTFOLIO ONLY). If you hold
shares of Cash Portfolio, you may elect on your account application to
establish a special checking account with First Union, the fund's
custodian, to redeem shares from your Cash Portfolio account by writing a
check. Fidelity reserves the right to limit the number of checks you may
write during a specified period. Once your request to establish a checking
account and a completed signature card are received, you will be provided
with a supply of checks. Additional supplies of checks are available upon
request to Sterling.
Checks will be drawn on First Union. To cover the amount of a check a
sufficient number of full and fractional shares will be redeemed from your
Cash Portfolio account at the next determined NAV after Sterling receives
the check from First Union. YOU ARE ADVISED THAT THE USE OF THE
CHECKWRITING FEATURE MAY BE LIMITED BY NORTH CAROLINA GENERAL STATUTE
159-28. Please note that Cash Portfolio is not permitted or authorized
to function as an "official depository" for any of its shareholders.
The checkwriting feature enables you to receive the dividends declared on
the shares to be redeemed through the day of redemption. Accordingly, check
redemption is not an appropriate way to close your Cash Portfolio account.
If the amount of a 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 checkwriting feature, 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.
ACCOUNT SPECIAL REQUIREMENTS
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PHONE All accounts (small solid bullet) You may exchange to Cash
Portfolio from Term Portfolio, and
vice versa, if both accounts are
registered with the same name(s),
and address.
(small solid bullet) An authorized finance official (or
his/her agent or designee) who has
completed the account application
may call Sterling toll-free at
1-800-222-3232 or locally at
1-704-372-8798 before 4:00 p.m.
Eastern time.
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<S> <C> <C>
Mail or in Person (mail_graphic)(hand_graphic) All accounts (small solid bullet) The letter of instruction must be
signed by an authorized finance
official (or his/her agent or
designee) who has completed the
account application
Wire (wire_graphic) All accounts (small solid bullet) You must sign up for the wire
feature before using it. To verify that
it is in place, call Sterling toll-free at
1-800-222-3232 or locally at
1-704-372-8798.
(small solid bullet) Your wire redemption request must
be received by
Sterling before 12:00 noon Eastern
time for Cash Portfolio for money to
be wired on the same business day,
or before 4:00 p.m. Eastern time for
Cash Portfolio or Term Portfolio for
money to be wired on the next
business day.
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Check (check_graphic) Cash Portfolio accounts (small solid bullet) All account owners must sign a
signature card to receive a
checkbook.
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INVESTOR SERVICES
Fidelity and Sterling provide a variety of services to help you manage your
account.
INFORMATION SERVICES
STATEMENTS AND REPORTS that the transfer agent sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction,
except a reinvestment, that affects your account balance or your account
registration)
(small solid bullet) Account statements (monthly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed, even if you have more than one account in a
fund. Call Sterling toll-free at 1-800-222-3232 or locally at
1-704-372-8798 if you need additional copies of financial reports and
prospectuses or historical account information.
SPECIAL SERVICES. Special processing has been arranged with Fidelity for
institutions that wish to open multiple accounts. You may be required to
enter into a separate agreement with Fidelity. Charges for these services,
if any, will be determined based on the level of services to be rendered.
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. Sterling, FMR, their affiliates and the funds do not assume
responsibility for the accuracy of the services provided. Please call
Sterling toll-free at 1-800-222-3232 or locally at 1-704-372-8798 for more
information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your shares of Cash Portfolio and buy
shares of Term Portfolio, and vice versa, by telephone or in writing.
Note that exchanges out of a fund may have tax and/or accounting
consequences for you. For details on policies and restrictions governing
exchanges, including circumstances under which a shareholder's exchange
privilege may be suspended or revoked, see "Exchange Restrictions," page .
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains, if any, to shareholders each year. Income dividends are
declared daily and paid monthly.
Capital gains for Term Portfolio are normally distributed in December.
Income dividends declared are accrued daily throughout the month and are
normally distributed on the first business day of the following month.
Shareholders may elect to receive dividend distributions in cash.
DISTRIBUTION OPTIONS
When you open an account, specify on your account application how you want
to receive your distributions. The funds offer two options:
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned this
option.
2. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
Dividends will be reinvested at each fund's NAV on the las t day of
the month. Capital gain distributions, if any, will be reinvested at the
NAV as of the date the fund deducts the distribution from its
NAV. The mailing of distribution checks will begin within seven days.
TAXES
As with any investment, you should consider the tax consequences, if any,
of your investment in a fund.
It is anticipated that most investors in the funds will be "political
subdivisions" of the State of North Carolina. Section 115(1) of the
Internal Revenue Code, as amended (Internal Revenue Code), provides in part
that gross income does not include income derived from the exercise of any
essential governmental function and accruing to a state or any political
subdivision thereof. The receipt of revenue from each fund for the benefit
of a political subdivision investing in a fund 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.
Although most investors in each fund will be tax-exempt entities, the
information that follows pertains to taxable and tax-exempt investors who
must account for income and gains that may result from certain shareholder
transactions.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax,
and may also be subject to state or local taxes. Your distributions are
taxable when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31.
For federal tax purposes, each fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions,
if any, are taxed as long-term capital gains.
TAXES ON TRANSACTIONS. Your redemptions - including exchanges - are subject
to capital gains tax. A capital gain or loss is the difference between the
cost of your shares and the price you receive when you sell them.
Whenever you sell shares of a fund, the transfer agent will send you a
confirmation statement showing how many shares you sold and at what price.
You will also receive a transaction statement monthly. However, it is up to
you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. BE SURE TO KEEP YOUR
REGULAR ACCOUNT STATEMENTS; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a capital
gain distribution from its NAV, you will pay the full price for the shares
and then receive a portion of the price back in the form of a distribution
that may be taxable to you.
There are tax requirements that all funds must follow in order to avoid
federal taxation. In its effort to adhere to these requirements, a fund may
have to limit its investment activity in some types of instruments.
TRANSACTION DETAILS
EACH FUND IS OPEN FOR BUSINESS and its NAV is calculated each day that
each of the Federal Reserve Bank of Richmond (Richmond Fed) ,
First Union, the funds' custodian, and the New York Stock Exchange
(NYSE) are open ; unless following such schedule would cause the
funds to be closed for two consecutive business days, in which case, each
fund will be open for business and its NAV will be calculated each day that
the Richmond Fed and First Union are open for business.
The following holiday closings have been scheduled for 1996: New Year's
Day, Dr. Martin Luther King Jr. Day (observed), President's Day, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving
Day and Christmas Day. Although FMR expects the same holiday schedule to be
observed in the future, the Richmond Fed , First Union , or the
NYSE may modify its holiday schedule at any time. On any day that the
Richmond Fed , First Union , or the NYSE closes early, or as
permitted by the SEC, the right is reserved to advance the time on that day
by which purchase and redemption orders must be received.
To the extent that portfolio securities are traded in other markets on days
when the Richmond Fed , First Union or the NYSE is closed,
each fund's NAV may be affected on days when investors do not have access
to the fund to purchase or redeem shares.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and dividing the result by the number of
shares outstanding. Cash Portfolio values its portfolio securities on the
basis of amortized cost. This method minimizes the effect of changes in a
security's market value and helps Cash Portfolio maintain a stable $1.00
share price.
Term Portfolio's assets are valued primarily on the basis of market
quotations. If quotations are not readily available, assets are valued by a
method that the Board of Trustees believes accurately reflects fair value.
THE OFFERING PRICE (price to buy one share) and REDEMPTION PRICE (price to
sell one share) of each fund are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you may be asked to certify that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Fidelity and Sterling may
only be liable for losses resulting from unauthorized transactions if they
do not follow reasonable procedures designed to verify the identity of the
caller. Sterling may request certain information for verification purposes,
and Sterling records all telephone calls for your protection. You should
verify the accuracy of the confirmation statements immediately after
receipt. If you do not want the ability to redeem and exchange by
telephone, please call Sterling toll-free at 1-800-222-3232 or locally at
1-704-372-8798 for instructions. Additional documentation may be required
from corporations, associations, and certain fiduciaries.
IF YOU ARE UNABLE TO REACH STERLING BY PHONE (for example, during periods
of unusual market activity), consider placing your order by sending a
facsimile to 1-704-372-2962 or telegram to Sterling.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they would
disrupt management of a fund.
TO ALLOW FMR TO MANAGE THE FUNDS MOST EFFECTIVELY, you are urged to
initiate all trades as early in the day as possible and to notify Sterling
in advance of transactions in excess of $5 million.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be purchased at the
next NAV calculated after your order is received and accepted by Sterling.
Note the following:
(small solid bullet) All of your purchases must be made in U.S. dollars and
checks must be drawn on U.S. banks.
(small solid bullet) The funds do not accept cash.
(small solid bullet) Cash Portfolio reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will be
canceled and you could be liable for any losses or fees Cash Portfolio or
the transfer agent has incurred.
(small solid bullet) For Cash Portfolio, purchase orders received by
Sterling before 12:00 noon Eastern time will earn the dividend declared for
that day; purchase orders received by Sterling between 12:00 noon and 4:00
p.m. Eastern time will begin to earn dividends the following business day.
(small solid bullet) For Term Portfolio, purchase orders received by
Sterling before 4:00 p.m. Eastern time will begin to earn dividends the
following business day.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your order is received and accepted by Sterling.
Note the following:
(small solid bullet) Normally, redemption proceeds will be mailed to you on
the next business day, but if making immediate payment could adversely
affect a fund, it may take up to seven days to pay you.
(small solid bullet) For Cash Portfolio, for redemption orders placed
before 12:00 noon Eastern time, you will not earn that day's dividend; for
redemption orders received between 12:00 noon and 4:00 p.m. Eastern time,
you will earn that day's dividend.
(small solid bullet) For Term Portfolio, for redemption orders placed
before 4:00 p.m. Eastern time, you will earn that day's dividend.
(small solid bullet) For Term Portfolio, shares redeemed on a Friday or
prior to a holiday will continue to earn dividends until the next business
day.
(small solid bullet) A fund may withhold redemption proceeds until it is
reasonably assured that investments credited to your account have been
received and collected.
(small solid bullet) If you sell shares of Cash Portfolio by writing a
check and the amount of the check is greater than the value of your
account, your check will be returned to you and you may be subject to
additional charges.
When the NYSE is closed (or when trading is restricted) for any
reason other than its customary weekend or holiday closings, or under any
emergency circumstances as determined by the SEC to merit such action, a
fund may suspend redemption or postpone payment dates. In cases of
suspension of the right of redemption, the request for redemption may
either be withdrawn or payment may be made based on the NAV next determined
after the termination of the suspension.
THE TRANSFER AGENT MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder you have the privilege of exchanging shares of Cash
Portfolio for shares of Term Portfolio, and vice versa.
An exchange involves the redemption of all or a portion of the shares of
one fund and the purchase of shares of another fund.
BY TELEPHONE. Exchanges may be requested on any day a fund is open for
business by calling Sterling toll-free at 1-800-222-3232 or locally at
1-704-372-8798 before 4:00 p.m. Eastern time.
WHEN YOU PLACE AN ORDER TO EXCHANGE SHARES, shares will be redeemed at the
NAV next determined on the business day on which your order is received and
accepted by Sterling. You should note that, under certain circumstances, a
fund may take up to seven days to make redemption proceeds available for
the exchange purchase of shares of another fund. In addition, please note
the following:
(small solid bullet) Exchanges will not be permitted until a completed and
signed account application is on file.
(small solid bullet) The fund you are exchanging into must be registered
for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name and address.
(small solid bullet) Before exchanging into a fund, read its prospectus.
(small solid bullet) You begin to earn dividends in the acquired fund on
the business day following receipt by Sterling of the exchange request.
(small solid bullet) When exchanging from Cash Portfolio to Term Portfolio,
you will purchase shares of Term Portfolio on the day your exchange request
is accepted by Sterling, and you will receive the NAV next determined that
day for Term Portfolio. You 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 by Sterling and will receive
the income dividend declared by Term Portfolio on the following business
day. However, if your exchange request is accepted by Sterling on a Friday
or prior to a holiday, you will continue to earn dividends from Cash
Portfolio until the next business day.
(small solid bullet) When exchanging from Term Portfolio to Cash Portfolio,
shares of Term Portfolio will earn dividends through the date of
redemption; however, exchange orders from Term Portfolio accepted by
Sterling on a Friday or prior to a holiday will continue to earn dividends
until the next business day.
(small solid bullet) Exchanges may have tax and/or accounting
consequences for you.
(small solid bullet) Currently, there is no limit on the number of
exchanges out of a fund, nor are there any administrative or redemption
fees applicable to exchanges out of a fund.
(small solid bullet) Because excessive trading can hurt fund performance
and shareholders, each fund reserves the right to temporarily or
permanently terminate the exchange privilege.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would be
unable to invest the money effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely
affected.
(small solid bullet) Your exchanges may be restricted or refused if a fund
receives or anticipates simultaneous orders affecting significant portions
of the fund's assets. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
No dealer, sales representative, or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus and in the related SAI, in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds, FDC, or Sterling. This Prospectus and the related
SAI do not constitute an offer by the funds, FDC, or Sterling to sell or to
buy shares of the funds to any person to whom it is unlawful to make such
offer.
[This page intentionally left blank.]
The North Carolina Capital Management Trust:
Cash Portfolio and Term Portfolio
Cross Reference Sheet
Form N-1A Item Number
Part B Statement of Additional Information Caption
10a,b Cover Page
11 Cover Page
12 *
13a,b,c Investment Policies and Limitations
d Portfolio Transactions
14a,b Trustees and Officers
c Trustees and Officers
15a Description of the Trust
b Description of the Trust
c Trustees and Officers
16a(i) FMR
a(ii) Trustees and Officers
a(iii),b Management Contract
c Management Contract
d *
e *
f Distribution and Service Plan
g *
h Description of the Trust
i Contracts with FMR Affiliates
17a Portfolio Transactions
b Portfolio Transactions
c Portfolio Transactions
d *
e *
18a Description of the Trust
b *
19a Additional Purchase, Exchange and Redemption Information
b Valuation
c *
20 Distributions and Taxes
21a(i,ii) Contracts with FMR Affiliates
a(iii),b,c *
22a Performance
b Performance
23 Financial Statements for the fiscal year ended June 30, 1996 are
incorporated herein by reference
* Not applicable
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST:
CASH PORTFOLIO
TERM PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 19, 1996
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus (dated
August 19, 1996). Please retain this document for future reference. The
funds' financial statements and financial highlights, included in the
Annual Report, for the fiscal year ended June 30, 1996, are incorporated
herein by reference. To obtain an additional copy of the Prospectus, Annual
Report, or this SAI, please call Sterling Capital Distributors, Inc. in
Charlotte, North Carolina at the appropriate number listed below:
(medium solid bullet)<UNDEF>Toll-free 1-800-222-3232
(medium solid bullet)<UNDEF>or locally 1-704-372-8798
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation
Performance
Additional Purchase, Exchange and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Contracts with FMR Affiliates
Distribution and Service Plans
Description of the Trust
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISER (CASH PORTFOLIO ONLY)
FMR Texas, Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
DISTRIBUTION AND SERVICE AGENT
Sterling Capital Distributors, Inc. (Sterling)
TRANSFER AGENT
Fidelity Investments Institutional Operations Company (FIIOC)
CUSTODIAN
First Union National Bank of North Carolina (First Union)
NC-ptb-0896
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a fund's assets that may be
invested in any security or other asset, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be
determined immediately after and as a result of a fund's acquisition of
such security or other asset. Accordingly, any subsequent change in values,
net assets, or other circumstances will not be considered when determining
whether the investment complies with a fund's investment policies and
limitations.
A fund's fundamental investment policies and limitations cannot be changed
without approval by a "majority of the outstanding voting securities" (as
defined in the Investment Company Act of 1940 (the 1940 Act)) of a fund.
However, except for the fundamental investment limitations listed below,
the investment policies and limitations described in this SAI are not
fundamental and may be changed without shareholder approval.
CASH PORTFOLIO
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer (other than obligations issued or
guaranteed as to principal and interest by the government of the United
States, its agencies or instrumentalities), if, as a result, more than 5%
of the fund'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 fund's total assets may be invested
without regard to such 5% limitation, but shall instead be subject to a 10%
limitation;
(2) pledge assets, except that the fund may pledge not more than one-third
of its total assets (taken at current value) to secure borrowings made in
accordance with limitation (5) below;
(3) make short sales of securities;
(4) purchase securities on margin (but the fund may obtain such credits as
may be necessary for the clearance of purchases and sales of securities);
(5) 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 fund (including the amount
borrowed) less its liabilities (not including the amount borrowed) at the
time the borrowing is made. (If at any time the fund'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 fund 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);
(6) act as an underwriter (except as it may be deemed such in a sale of
restricted securities);
(7) 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 "qualified repurchase agreement" maturing in more
than seven days with respect to any security, if, as a result, more than
10% of the fund's total assets (taken at current value) would be invested
in such securities (investments in instruments of smaller banks which are
not readily marketable will be considered to be within this 10%
limitation);
(8) 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 25%
of the fund'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;
(9) buy or sell real estate;
(10) buy or sell commodities, or commodity (futures) contracts;
(11) make loans to other persons, except (i) by the purchase of debt
obligations in which the fund is authorized to invest in accordance with
its investment objective, and (ii) by engaging in "qualified repurchase
agreements." In addition, the fund may lend its portfolio securities to
broker-dealers or other institutional investors, provided that the borrower
delivers cash or cash equivalent collateral to the fund 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 fund;
(12) purchase the securities of other investment companies or investment
trusts;
(13) purchase the securities of a company if such purchase, at the time
thereof, would cause more than 5% of the value of the fund's total assets
to be invested in securities of companies, which, including predecessors,
have a record of less than three years' continuous operation;
(14) invest in oil, gas, or other mineral exploration or development
programs;
(15) purchase or retain the securities of any issuer, any of whose
officers, directors, or security holders is a Trustee, director, or officer
of the fund or of its investment adviser, if or so long as the Trustees,
directors, and officers of the fund and of its investment adviser together
own beneficially more than 5% of any class of securities of such issuer;
(16) write or purchase any put or call option; or
(17) invest in companies for the purpose of exercising control or
management.
Investment limitation (5) is construed in conformity with the 1940 Act;
accordingly, "three days" means three business days, exclusive of Sundays
and holidays.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(I) The fund does not currently intend to purchase a security (other than
a security issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities) if, as a result, more than 5% of its total
assets would be invested in the securities of a single issuer; provided
that, with respect to certificates of deposit and bankers' acceptances, the
fund may invest up to 10% of its total assets in the first tier securities
of a single issuer for up to three business days.
(II) The fund does not currently intend to engage in securities lending
and will do so only when the Trustees determine that it is advisable and
appropriate.
For the fund's policies on quality and maturity, see the section entitled
"Quality and Maturity" on page .
TERM PORTFOLIO
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND 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; or (b) the fund 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 33
1/3% of the value of the fund's total assets at the time of borrowing; if
at any time the fund'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 fund 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 fund'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 fund assets would be invested in any one industry;
(8) purchase or sell real estate, but this shall not prevent the fund 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 fund'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 limitation (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 fund's total assets.
Investment limitation (4) is construed in conformity with the 1940 Act;
accordingly, "three days" means three business days, exclusive of Sundays
and holidays.
THE FOLLOWING LIMITATION IS NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(I) The fund does not currently intend to engage in securities lending and
will do so only when the Trustees determine that it is advisable and
appropriate.
(II) The fund does not currently intend to 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 fund (including the amount borrowed) less its
liabilities (not including the amount borrowed) at the time the borrowing
is made. (If at any time the fund'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
fund 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).
Investment limitation (ii) is construed in conformity with the 1940 Act;
accordingly, "three days" means three business days, exclusive of Sundays
and holidays.
Each fund's investments must be consistent with its investment objective
and policies. Accordingly, not all of the security types and investment
techniques discussed below are eligible investments for each of the funds.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be, "affiliated
persons" of the fund under the 1940 Act. These transactions may include
repurchase agreements with custodian banks; short-term obligations of, and
repurchase agreements with, the 50 largest U.S. banks (measured by
deposits); municipal securities; U.S. Government securities with affiliated
financial institutions that are primary dealers in these securities;
short-term currency transactions, and short-term borrowings. In accordance
with exemptive orders issued by the Securities and Exchange Commission
(SEC), the Board of Trustees has established and periodically reviews
procedures applicable to transactions involving affiliated financial
institutions.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered. Term
Portfolio may receive fees for entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a delayed-delivery
basis, the fund does not participate in further gains or losses with
respect to the security. If the other party to a delayed-delivery
transaction fails to deliver or pay for the securities, the fund could miss
a favorable price or yield opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of a fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of a fund's investments, FMR may consider various factors,
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the fund's rights and
obligations relating to the investment).
Investments currently considered by a fund to be illiquid include
repurchase agreements not entitling the holder to payment of principal and
interest within seven days. Also, FMR may determine some
government-stripped fixed-rate mortgage-backed securities, restricted
securities and time deposits to be illiquid.
In the absence of market quotations, illiquid investments are
valued , for Cash Portfolio , for purposes of monitoring
amortized cost valuation at fair value, and priced , for Term
Portfolio , at fair value, as determined in good faith by a committee
appointed by the Board of Trustees. If through a change in values, net
assets, or other circumstances, a fund were in a position where more than
10% of its net assets was invested in illiquid securities, it would seek to
take appropriate steps to protect liquidity.
MONEY MARKET SECURITIES are high-quality, short-term obligations. Some
money market securities employ a trust or other similar structure to modify
the maturity, price characteristics, or quality of financial assets. For
example, put features can be used to modify the maturity of a security, or
interest rate adjustment features can be used to enhance price stability.
If the structure does not perform as intended, adverse tax or investment
consequences may result. Neither the Internal Revenue Service (IRS) nor any
other regulatory authority has ruled definitively on certain legal issues
presented by structured securities. Future tax or other regulatory
determinations could adversely affect the value, liquidity, or tax
treatment of the income received from these securities or the nature and
timing of distributions made by a fund .
MORTGAGE-BACKED SECURITIES. A fund may purchase mortgage-backed securities
issued by government and non-government entities such as banks, mortgage
lenders, or other financial institutions. A mortgage-backed security is an
obligation of the issuer backed by a mortgage or pool of mortgages or a
direct interest in an underlying pool of mortgages. Some mortgage-backed
securities, such as collateralized mortgage obligations or CMOs, make
payments of both principal and interest at a variety of intervals; others
make semiannual interest payments at a predetermined rate and repay
principal at maturity (like a typical bond). Mortgage-backed securities are
based on different types of mortgages including those on commercial real
estate or residential properties. Other types of mortgage-backed securities
will likely be developed in the future, and a fund may invest in them if
FMR determines they are consistent with a fund's investment objective and
policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment
risk. Prepayment, which occurs when unscheduled or early payments are made
on the underlying mortgages, may shorten the effective maturities of these
securities and may lower their total returns.
RESTRICTION: A fund may invest in mortgage-backed securities as permitted
pursuant to North Carolina General Statute 159-30 (the Statute) and 20
North Carolina Administrative Code 3.0703 (the Code).
PUT FEATURES entitle the holder to sell a security back to the issuer or a
third party at any time or at specified intervals. They are subject to the
risk that the put provider is unable to honor the put feature (purchase the
security). Put providers often support their ability to buy securities on
demand by obtaining letters of credit or other guarantees from other
entities. Demand features, standby commitments, and tender options are
types of put features.
QUALITY AND MATURITY (CASH PORTFOLIO ONLY). Pursuant to procedures adopted
by the Board of Trustees, the fund may purchase only high-quality
securities that FMR believes present minimal credit risks. To be considered
high-quality, a security must be rated in accordance with applicable rules
in one of the two highest categories for short-term securities by at least
two nationally recognized rating services (or by one, if only one rating
service has rated the security); or, if unrated, judged to be of equivalent
quality by FMR.
High-quality securities are divided into "first tier" and "second tier"
securities. First tier securities are those deemed to be in the highest
rating category (e.g., Standard & Poor's A-1), and second tier securities
are those deemed to be in the second highest rating category (e.g.,
Standard & Poor's A-2). Split-rated securities may be determined to be
either first tier or second tier based on applicable regulations.
The fund may not invest more than 5% of its total assets in second tier
securities. In addition, the fund 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.
The fund currently intends to limit its investments to securities with
remaining maturities of 397 days or less, and to maintain a dollar-weighted
average maturity of 90 days or less. When determining the maturity of a
security, the fund may look to an interest rate reset or demand feature.
RESTRICTION: Cash Portfolio may invest in securities as permitted pursuant
to the Statute and the Code.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is unrelated to
the coupon rate or maturity of the purchased security. To protect the fund
from the risk that the original seller will not fulfill its obligation, the
securities are held in an account of the fund at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus the
accrued incremental amount. While it does not presently appear possible to
eliminate all risks from these transactions (particularly the possibility
that the value of the underlying security will be less than the resale
price, as well as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy, as set forth in North
Carolina General Statute 159-30(c), to engage in repurchase agreement
transactions 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.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time it may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security. However, in general, Cash Portfolio anticipates holding
restricted securities to maturity or selling them in an exempt transaction.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. FMR may rely on its evaluation of
the credit of a bank or another entity in determining whether to purchase a
security supported by a letter of credit guarantee, insurance or other
source of credit or liquidity.
STRIPPED GOVERNMENT SECURITIES. Stripped government securities are
created by separating the income and principal components of a U.S.
Government security and selling them separately. U.S. Treasury STRIPS
(Separate Trading of Registered Interest and Principal of Securities) are
created when the coupon payments and the principal payment are stripped
from an outstanding Treasury security by a Federal Reserve
Bank.
STRIPPED MORTGAGE-BACKED SECURITIES are created when a U.S. Government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while
the holder of the "interest-only" security (IO) receives interest payments
from the same underlying security.
The prices of stripped mortgage-backed securities may be particularly
affected by changes in interest rates. As interest rates fall, prepayment
rates tend to increase, which tends to reduce prices of IOs and increase
prices of POs. Rising interest rates can have the opposite effect.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic
adjustments of the interest rate paid on the security. Variable rate
securities provide for a specified periodic adjustment in the interest
rate, while floating rate securities have interest rates that change
whenever there is a change in a designated benchmark rate. Some variable or
floating rate securities have put features.
ZERO COUPON BONDS do not make 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
dividends, a fund takes into account as income a portion of the difference
between a zero coupon bond's purchase price and its face value.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of each fund by FMR pursuant to authority contained in the
management contract. On behalf of Cash Portfolio, FMR has granted
investment management authority to the sub-adviser (see the section
entitled "Management Contracts"), and the sub-adviser is authorized to
place orders for the purchase and sale of portfolio securities, and will do
so in accordance with the policies described below. FMR is also responsible
for the placement of transaction orders for other investment companies and
accounts for which it or its affiliates act as investment adviser.
Securities purchased and sold by 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
considers various relevant factors, including, but not limited to, the size
and type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; and the
reasonableness of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; and the availability of
securities or the purchasers or sellers of securities. In addition, such
broker-dealers may furnish analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy,
and performance of accounts; effect securities transactions, and perform
functions incidental thereto (such as clearance and settlement). FMR
maintains a listing of broker-dealers who provide such services on a
regular basis. However, as many transactions on behalf of Cash Portfolio
are placed with broker-dealers (including broker-dealers on the list)
without regard to the furnishing of such services, it is not possible to
estimate the proportion of such transactions directed to such
broker-dealers solely because such services were provided. The selection of
such broker-dealers generally is made by FMR (to the extent possible
consistent with execution considerations) based upon the quality of
research and execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
each fund to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the funds and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds or shares of other Fidelity
funds to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Brokerage Services (FBS), subsidiaries of FMR
Corp., if the commissions are fair, reasonable, and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services. From September 1992 through December 1994, FBS operated
under the name Fidelity Brokerage Services Limited, Inc. (FBSL). As of
January 1995, FBSL was converted to an unlimited liability company and
assumed the name FBS. Prior to September 4, 1992, FBSL operated under the
name Fidelity Portfolio Services, Ltd. (FPSL) as a wholly owned subsidiary
of Fidelity International Limited (FIL). Edward C. Johnson 3d is Chairman
of FIL. Mr. Johnson 3d, Johnson family members, and various trusts for the
benefit of the Johnson family own, directly or indirectly, more than 25% of
the voting common stock of FIL.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to execute portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio transactions
on behalf of the funds and review the commissions paid by each fund over
representative periods of time to determine if they are reasonable in
relation to the benefits to the fund.
For the fiscal periods ended June 30, 1996 and 1995, Term Portfolio's
turnover rates were 89% and 519%, respectively. Because a high
turnover rate increases transaction costs and may increase taxable gains,
FMR carefully weighs the anticipated benefits of short-term investing
against these consequences. An increased turnover rate is due to a greater
volume of shareholder purchase orders, short-term interest rate volatility
and other special market conditions.
For the fiscal years ended 1996, 1995, and 1994, the funds paid no
brokerage commissions.
During the fiscal year ended 1996, the funds paid no fees to brokerage
firms that provided research services.
From time to time the Trustees will review whether the recapture for the
benefit of the funds of some portion of the brokerage commissions or
similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at present no
other recapture arrangements are in effect. The Trustees intend to continue
to review whether recapture opportunities are available and are legally
permissible and, if so, to determine in the exercise of their business
judgment whether it would be advisable for each fund to seek such
recapture.
Investment decisions for each fund are made independently from those of
other funds managed by FMR or accounts managed by FMR affiliates. It
sometimes happens that the same security is held in the portfolio of more
than one of these funds or accounts. Simultaneous transactions are
inevitable when several funds and accounts are managed by the same
investment adviser, particularly when the same security is suitable for the
investment objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each fund. In
some cases this system could have a detrimental effect on the price or
value of the security as far as each fund is concerned. In other cases,
however, the ability of the funds to participate in volume transactions
will produce better executions and prices for the funds. It is the current
opinion of the Trustees that the desirability of retaining FMR as
investment adviser to each fund outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION
Fidelity Service Co. (FSC) normally determines Cash Portfolio's net asset
value per share (NAV) at 12:00 noon and 4:00 p.m. Eastern time and Term
Portfolio's NAV at 4:00 p.m. Eastern time. The valuation of portfolio
securities is determined as of these times for the purpose of computing
each fund's NAV.
For CASH PORTFOLIO, portfolio securities and other assets are valued on the
basis of amortized cost. This technique involves initially valuing an
instrument at its cost as adjusted for amortization of premium or accretion
of discount rather than its current market value. The amortized cost value
of an instrument may be higher or lower than the price the fund would
receive if it sold the instrument.
During periods of declining interest rates, Cash Portfolio's yield based on
amortized cost valuation may be higher than would result if the fund used
market valuations to determine its NAV. The converse would apply during
periods of rising interest rates.
Valuing Cash Portfolio's investments on the basis of amortized cost and use
of the term "money market fund" are permitted pursuant to Rule 2a-7 under
the 1940 Act. Cash Portfolio must adhere to certain conditions under Rule
2a-7, as summarized in the section entitled "Quality and Maturity" on page
.
The Board of Trustees oversees FMR's adherence to the provisions of Rule
2a-7 and has established procedures designed to stabilize Cash Portfolio's
NAV at $1.00. At such intervals as they deem appropriate, the Trustees
consider the extent to which NAV calculated by using market valuations
would deviate from $1.00 per share. If the Trustees believe that a
deviation from Cash Portfolio's amortized cost per share may result
in material dilution or other unfair results to shareholders, the Trustees
have agreed to take such corrective action, if any, as they deem
appropriate to eliminate or reduce, to the extent reasonably practicable,
the dilution or unfair results. Such corrective action could include
selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity; withholding dividends;
redeeming shares in kind; establishing NAV by using available market
quotations; and such other measures as the Trustees may deem appropriate.
For TERM PORTFOLIO, portfolio securities are valued by various methods
depending on the primary market or exchange on which they trade.
Fixed-income securities and other assets for which market quotations are
readily available may be valued at market values determined by such
securities' most recent bid prices (sales prices if the principal market is
an exchange) in the principal market in which they normally are traded, as
furnished by recognized dealers in such securities or assets.
Fixed-income securities may also be valued on the basis of information
furnished by a pricing service that uses a valuation matrix which
incorporates both dealer-supplied valuations and electronic data processing
techniques. Use of pricing services has been approved by the Board of
Trustees. A number of pricing services are available, and the Trustees, on
the basis of an evaluation of these services, may use various pricing
services or discontinue the use of any pricing service.
Short-term securities are valued either at amortized cost or at original
cost plus accrued interest, both of which approximate current value.
Securities and other assets for which there is no readily available market
value are valued in good faith by a committee appointed by the Board of
Trustees. The procedures set forth above need not be used to determine the
value of the securities owned by the fund if, in the opinion of a committee
appointed by the Board of Trustees, some other method would more accurately
reflect the fair market value of such securities.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. Term Portfolio's share price, and each
fund's yield and total return fluctuate in response to market conditions
and other factors, and the value of Term Portfolio's shares when redeemed
may be more or less than their original cost.
YIELD CALCULATIONS. To compute Cash Portfolio's yield for a period, the net
change in value of a hypothetical account containing one share reflects the
value of additional shares purchased with dividends from the one original
share and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at the
beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current annualized yield. Cash Portfolio
also may calculate a compound effective yield by compounding the base
period return over a one-year period. In addition to the current yield,
Cash Portfolio may quote yields in advertising based on any historical
seven-day period. Yields for Cash Portfolio are calculated on the same
basis as other money market funds, as required by regulation.
For Term Portfolio, yields are computed by dividing Term 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 dividends during the
period, dividing this figure by Term 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 Term Portfolio's 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 premium over
their par value by subtracting a portion of the premium from income on a
daily basis, and is increased 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.
Income calculated for the purposes of determining Term Portfolio's yield
differs from income as determined for other accounting purposes. Because of
the different accounting methods used, and because of the compounding of
income assumed in yield calculations, Term Portfolio's yield may not equal
its distribution rate, the income paid to your account, or the income
reported in Term Portfolio's financial statements.
Yield information may be useful in reviewing a fund's performance and in
providing a basis for comparison with other investment alternatives.
However, each fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of respective investment companies they have chosen to
consider.
Investors should recognize that in periods of declining interest rates a
fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the fund's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net
new money to a fund from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
fund's holdings, thereby reducing the fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur.
Term Portfolio also may quote its distribution rate, which expresses the
historical amount of income dividends paid by Term Portfolio as a
percentage of Term Portfolio's share price. The distribution rate is
calculated by dividing Term 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.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the fund's NAV over a
stated period. Average annual total returns are calculated by determining
the growth or decline in value of a hypothetical historical investment in a
fund over a stated period, and then calculating the annually compounded
percentage rate that would have produced the same result if the rate of
growth or decline in value had been constant over the period. For example,
a cumulative total return of 100% over ten years would produce an average
annual total return of 7.18%, which is the steady annual rate of return
that would equal 100% growth on a compounded basis in ten years. While
average annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a fund's performance is not
constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. Total returns may be quoted on a
before-tax or after-tax basis. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration.
NET ASSET VALUE. Charts and graphs using Term Portfolio's NAVs, adjusted
NAVs, and benchmark indices may be used to exhibit performance. An adjusted
NAV includes any distributions paid by Term Portfolio and reflects all
elements of its return. Unless otherwise indicated, Term Portfolio's
adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL FUND RESULTS. The following tables show Cash Portfolio's 7-day
yield, Term Portfolio's 30-day yield, and total returns for periods ended
June 30, 1996.
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Seven-d One Five Ten One Five Ten
ay Yield Year Years* Years* Year Years* Years*
Cash Portfolio 5.06% 5.43% 4.30% 5.89% 5.43% 23.42% 77.19%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Thirty-da One Five Life of One Five Life of
y Yield Year Years* Fund+* Year Years* Fund+*
Term Portfolio 5.59% 5.25% 4.83% 6.18% 5.25% 26.62% 74.61%
</TABLE>
+ From March 19, 1987 (commencement of operations).
* Note: If FMR had not reimbursed certain fund expenses during these
periods, the funds' total returns would have been lower.
The following tables show the income and capital elements of each fund's
cumulative total return. The tables compare each fund's return to the
record of the Standard & Poor's 500 Index (S&P 500), the Dow Jones
Industrial Average (DJIA), and the cost of living (measured by the Consumer
Price Index, or CPI) over the same period. The CPI information is as of the
month end closest to the initial investment date for each fund. The S&P 500
and DJIA comparisons are provided to show how each fund's total return
compared to the record of a broad average of common stocks and a narrower
set of stocks of major industrial companies, respectively, over the same
period. Of course, since Cash Portfolio invests in short-term fixed-income
securities and Term Portfolio invests in fixed-income securities, common
stocks represent a different type of investment from each fund. Common
stocks generally offer greater growth potential than the funds, but
generally experience greater price volatility, which means greater
potential for loss. In addition, common stocks generally provide lower
income than a fixed-income investment such as the funds. Figures for the
S&P 500 and DJIA are based on the prices of unmanaged groups of stocks and,
unlike the funds' returns, do not include the effect of paying brokerage
commissions or other costs of investing.
During the ten-year period ended June 30, 1996 (for Cash Portfolio), and
the period from March 19, 1987 (commencement of operations) to June 30,
1996 (for Term Portfolio), a hypothetical $10,000 investment in Cash
Portfolio and Term Portfolio would have grown to $ 17,719 and
$ 17,461 , respectively, assuming all distributions were reinvested.
This was a period of fluctuating interest rates and bond prices and the
figures below should not be considered representative of the dividend
income or capital gain or loss that could be realized from an investment in
the fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
CASH PORTFOLIO INDICES
Year Value of Value of Value of Total S&P 500 DJIA CPI
Ended Initial Reinvested Reinvested Value
$10,000 Dividend Capital Gain
Investment Distributions Distributions
6/30/87 $ 10,000 $ 603 $ 0 $ 10,603 $ 12,518 $ 13,204 $ 10,365
6/30/88 $ 10,000 $ 1,333 $ 0 $ 11,333 $ 11,656 $ 12,095 $ 10,776
6/30/89 $ 10,000 $ 2,334 $ 0 $ 12,334 $ 14,050 $ 14,294 $ 11,333
6/30/90 $ 10,000 $ 3,389 $ 0 $ 13,389 $ 16,366 $ 17,518 $ 11,863
6/30/91 $ 10,000 $ 4,357 $ 0 $ 14,357 $ 17,577 $ 18,353 $ 12,420
6/30/92 $ 10,000 $ 5,027 $ 0 $ 15,027 $ 19,935 $ 21,590 $ 12,804
6/30/93 $ 10,000 $ 5,484 $ 0 $ 15,484 $ 22,657 $ 23,566 $ 13,187
6/30/94 $ 10,000 $ 5,964 $ 0 $ 15,964 $ 22,976 $ 24,971 $ 13,516
6/30/95 $ 10,000 $ 6,807 $ 0 $ 16,807 $ 28,964 $ 32,219 $ 13,927
6/30/96 $ 10,000 $ 7,719 $ 0 $ 17,719 $ 36,495 $ 40,890 $ 14,311
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on July 1,
1986, the net amount invested in Cash 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 (their cash value at the
time they were reinvested), amounted to $ 17,719 . If distributions
had not been reinvested, the amount of distributions earned from the fund
over time would have been smaller, and cash payments (dividends) for
the period would have amounted to $ 5,736. Cash Portfolio did not
distribute any capital gains during the period. Tax consequences of
different investments have not been factored into the above figures.
TERM PORTFOLIO INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Year Value of Value of Value of Total S&P 500 DJIA CPI**
Ended Initial Reinvested Reinvested Value
$10,000 Dividend Capital Gain
Investment Distributions Distributions
6/30/87* $ 9,910 $ 186 $ 0 $ 10,096 $ 10,474 $ 10,662 $ 10,125
6/30/88 $ 9,820 $ 985 $ 0 $ 10,805 $ 9,753 $ 9,766 $ 10,526
6/30/89 $ 9,780 $ 1,937 $ 0 $ 11,717 $ 11,755 $ 11,542 $ 11,070
6/30/90 $ 9,730 $ 2,941 $ 0 $ 12,671 $ 13,693 $ 14,146 $ 11,588
6/30/91 $ 9,820 $ 3,970 $ 0 $ 13,790 $ 14,707 $ 14,819 $ 12,132
6/30/92 $ 9,910 $ 4,826 $ 0 $ 14,736 $ 16,680 $ 17,433 $ 12,507
6/30/93 $ 9,940 $ 5,353 $ 0 $ 15,293 $ 18,957 $ 19,029 $ 12,881
6/30/94 $ 9,850 $ 5,789 $ 31 $ 15,670 $ 19,224 $ 20,164 $ 13,202
6/30/95 $ 9,910 $ 6,649 $ 31 $ 16,590 $ 24,235 $ 26,016 $ 13,604
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
6/30/96 $ 9,820 $ 7,610 $ 31 $ 17,461 $ 30,536 $ 33,017 $ 13,979
</TABLE>
* From March 19, 1987 (commencement of operations).
** From 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 Term Portfolio shares was $10,000. The
cost of the initial investment ($10,000), together with the aggregate cost
of reinvested dividends and capital gain distributions for the period
covered (their cash value at the time they were reinvested), amounted to
$ 17,655 . If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller, and
cash payments for the period would have amounted to $ 5,655 for
dividends and $ 20 for capital gains distributions. Tax consequences
of different investments have not been factored into the above figures.
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed as
mutual fund rankings prepared by Lipper Analytical Services, Inc. (Lipper),
an independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Generally, Lipper rankings are based
on total return, assum e reinvestment of distributions, do
not take sales charges or redemption fees into consideration, and
are prepared without regard to tax consequences. Lipper may also
rank funds based on yield. In addition to the mutual fund rankings, a
fund's performance may be compared to stock, bond, and money market mutual
fund performance indices prepared by Lipper or other organizations. When
comparing these indices, it is important to remember the risk and return
characteristics of each type of investment. For example, while stock mutual
funds may offer higher potential returns, they also carry the highest
degree of share price volatility. Likewise, money market funds may offer
greater stability of principal, but generally do not offer the higher
potential returns available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, a fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
A fund may be compared in advertising to Certificates of Deposit (CDs) or
other investments issued by banks or other depository institutions. Mutual
funds differ from bank investments in several respects. For example, a fund
may offer greater liquidity or higher potential returns than CDs, a fund
does not guarantee your principal or your return, and fund shares are not
FDIC insured.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market, and
political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and
goal setting; questionnaires designed to help create a personal financial
profile; worksheets used to project savings needs based on assumed rates of
inflation and hypothetical rates of return; and action plans offering
investment alternatives. Materials may also include discussions of
Fidelity's asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND REPORT
AVERAGES(trademark)/ All Taxable Money Market Funds, which is
reported in the MONEY FUND REPORT(registered trademark), covers over
814 taxable money market funds. The BOND FUND REPORT
AVERAGES(trademark)/Taxable Bond Funds, which is reported in the BOND FUND
REPORT(registered trademark), covers over 543 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. A bond fund,
however, invests in longer-term instruments and its share price changes
daily in response to a variety of factors.
In advertising materials, Fidelity may quote or reprint financial or
business publications and periodicals as they relate to current economic
and political conditions, fund management, portfolio composition,
investment philosophy, investment techniques, the desirability of owning a
particular mutual fund, and Fidelity services and products.
A fund may present its fund number, Quotron(trademark) number, and CUSIP
number, and discuss or quote its current portfolio manager.
VOLATILITY. Term Portfolio may quote various measures of volatility and
benchmark correlation in advertising. In addition, Term Portfolio may
compare these measures to those of other funds. Measures of volatility seek
to compare Term Portfolio's historical share price fluctuations or total
returns to those of a benchmark. Measures of benchmark correlation indicate
how valid a comparative benchmark may be. All measures of volatility and
correlation are calculated using averages of historical data. In
advertising, Term Portfolio may also discuss or illustrate examples of
interest rate sensitivity.
MOMENTUM INDICATORS indicate Term Portfolio's price movements over specific
periods of time. Each point on the momentum indicator represents the fund's
percentage change in price movements over that period.
Term Portfolio may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program,
an investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share
can be lower than if fixed numbers of shares are purchased at the same
intervals. In evaluating such a plan, investors should consider their
willingness to continue purchasing shares during periods of low price
levels.
As of June 30, 1996, FMR advised over $ 27 billion in tax-free fund
assets, $ 86 billion in money market fund assets, $ 276 b illion
in equity fund assets, $ 54 billion in international fund assets, and
$ 23 billion in Spartan fund assets. The funds may reference the
growth and variety of money market mutual funds and the adviser's
innovation and participation in the industry. The equity funds under
management figure represents the largest amount of equity fund assets under
management by a mutual fund investment adviser in the United States, making
FMR America's leading equity (stock) fund manager. FMR, its subsidiaries,
and affiliates maintain a worldwide information and communications network
for the purpose of researching and managing investments abroad.
In addition to performance rankings, each fund may compare its total
expense ratio to the average total expense ratio of similar funds tracked
by Lipper. A fund's total expense ratio is a significant factor in
comparing bond and money market investments because of its effect on yield.
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are valued in
computing a fund's NAV. Shareholders receiving securities or other property
on redemption may realize a gain or loss for tax purposes, and will incur
any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement may
be waived if (i) the only effect of a modification would be to reduce or
eliminate an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) the fund suspends
the redemption of the shares to be exchanged as permitted under the 1940
Act or the rules and regulations thereunder, or the fund to be acquired
suspends the sale of its shares because it is unable to invest amounts
effectively in accordance with its investment objective and policies.
In the prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, the fund would be unable to
invest effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. Because each fund's income is primarily derived from interest,
dividends from each fund generally will not qualify for the
dividends-received deduction available to corporate shareholders.
Short-term capital gains are distributed as dividend income, but do not
qualify for the dividends-received deduction. A portion of each fund's
dividends derived from certain U.S. Government obligations may be exempt
from state and local taxation.
CAPITAL GAIN DISTRIBUTIONS. Cash Portfolio may distribute any net realized
short-term capital gains once a year or more often as necessary, to
maintain its NAV at $1.00 per share. Cash Portfolio does not anticipate
earning long-term capital gains on securities held by the fund.
Long-term capital gains earned by Term Portfolio on the sale of securities
and distributed to shareholders are federally taxable as long-term capital
gains, regardless of the length of time shareholders have held their
shares. If a shareholder receives a long-term capital gain distribution on
shares of Term Portfolio, and such shares are held six months or less and
are sold at a loss, the portion of the loss equal to the amount of the
long-term capital gain distribution will be considered a long-term loss for
tax purposes. Short-term capital gains distributed by Term Portfolio are
taxable to shareholders as dividends, not as capital gains.
As of June 30, 1996, Cash Portfolio had a capital loss carryforward
aggregating approximately $ 59,000 . This loss carryforward, of
which $54,000 and $5,000 will expire on June 30, 2002 and 2004,
respectively, is available to offset future capital gains.
As of June 30, 1996, Term Portfolio had a capital loss carryforward
aggregating approximately $ 244,200 . This loss carryforward,
which will expire on June 30, 2003, is available to offset
future capital gains.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business trusts,
state law provides for a pass-through of the state and local income tax
exemption afforded to direct owners of U.S. Government securities. Some
states limit this to mutual funds that invest a certain amount in U.S.
Government securities, and some types of securities, such as repurchase
agreements and some agency backed securities, may not qualify for this
benefit. The tax treatment of your dividend distributions from a
fund will be the same as if you directly owned your proportionate share
of the U.S. Government securities in a fund's portfolio. Because the
income earned on most U.S. Government securities in which a fund
invests is exempt from state and local income taxes, the portion of your
dividends from a fund attributable to these securities will also be
free from income taxes. The exemption from state and local income taxation
does not preclude states from assessing other taxes on the ownership of
U.S. Government securities. In a number of states, corporate franchise
(income) tax laws do not exempt interest earned on U.S. Government
securities whether such securities are held directly or through a fund.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company and
avoid being subject to federal income or excise taxes at the fund level,
each fund intends to distribute substantially all of its net investment
income and net realized capital gains within each calendar year as well as
on a fiscal year basis.
Each fund is treated as a separate entity from the other fund of The North
Carolina Capital Management Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting each fund and its shareholders,
and no attempt has been made to discuss individual tax consequences. In
addition to federal income taxes, shareholders may be subject to state and
local taxes on fund distributions, and shares may be subject to state and
local personal property taxes. Investors should consult their tax advisers
to determine whether a fund is suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two classes.
Class B is held predominantly by members of the Edward C. Johnson 3d family
and is entitled to 49% of the vote on any matter acted upon by the voting
common stock. Class A is held predominantly by non-Johnson family member
employees of FMR Corp. and its affiliates and is entitled to 51% of the
vote on any such matter. The Johnson family group and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Under the 1940 Act, control of a company is presumed where
one individual or group of individuals owns more than 25% of the voting
stock of that company. Therefore, through their ownership of voting common
stock and the execution of the shareholders' voting agreement, members of
the Johnson family may be deemed, under the 1940 Act, to form a controlling
group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: FSC, which is the transfer
and shareholder servicing agent for certain of the funds advised by FMR;
FIIOC, which performs shareholder servicing functions for institutional
customers and funds sold through intermediaries; and Fidelity Investments
Retail Marketing Company, which provides marketing services to various
companies within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that sets forth all employees'
fiduciary responsibilities regarding the funds, establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades in most securities require pre-clearance, and participation
in initial public offerings is prohibited. In addition, restrictions on the
timing of personal investing in relation to trades by Fidelity funds and on
short-term trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. The business address of each
Trustee and officer who is an "interested person" (as defined in the 1940
Act) is 82 Devonshire Street, Boston, Massachusetts 02109, which is also
the address of FMR. The business address of all the other Trustees is
Fidelity Investments, P.O. Box 9235, Boston, Massachusetts 02205-9235.
Those Trustees who are "interested persons" by virtue of their affiliation
with the trust, FMR, or Sterling are indicated by an asterisk (*).
*WILLIAM L. BYRNES (74), PRESIDENT AND TRUSTEE, is a Director of Fidelity
International Limited and Vice Chairman, a Director and Managing Director
of FMR Corp.
JOHN DAVID "J.D." FOUST (68), TRUSTEE, is a financial consultant
(Robinson-Humphrey Company Inc., 1995). Prior to 1995, Mr. Foust was a
financial consultant to Donaldson, Lufkin, & Jenrette Securities
Corporation (1990-1995). Prior to 1990, he served as Deputy State Treasurer
and Secretary of the Local Government Commission (1977-1989).
*W. OLIN NISBET III (56), TRUSTEE AND VICE PRESIDENT, is Chairman and
Director of Sterling Capital and Chairman and Director of Sterling. Mr.
Nisbet is a rotating director of United Asset Management Corporation (1988
and 1994) and serves as Governor of the Investment Counsel Association of
America (since 1988), an Advisor of the Kitty Hawk Capital-Venture Capital
Partnership (1988), and a Trustee of Davidson College (1987).
HELEN A. POWERS (71), TRUSTEE. 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
Nation al Bank (now NationsBank). She served as a member of
the North Carolina Banking Commission (1981-1985). In April 1995, Ms.
Powers was reappointed to serve 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 in Asheville,
N.C. has been designated the HELEN POWERS WOMEN'S HEALTH CENTER.
BERTRAM H. WITHAM (77), TRUSTEE and CHAIRMAN OF THE BOARD, is Chairman and
Director of Preferred Lodging Systems (property management), Director and
member of Executive Committee of Bill Glass Ministries, and Trustee of
other funds advised by FMR. Previously, he served as a consultant
(Treasurer until his retirement in 1978) to IBM Corp.
J. GARY BURKHEAD (55), SENIOR VICE PRESIDENT, is President of FMR; and
President and a Director of FMR Texas Inc., Fidelity Management & Research
(U.K.) Inc., and Fidelity Management & Research (Far East) Inc. He is a
Trustee of other funds managed by FMR.
J. CALVIN RIVERS, JR. (50), VICE PRESIDENT (1992), is Director and
Executive Vice President of Sterling Capital and Director and President of
Sterling.
FRED L. HENNING, JR. (57), VICE PRESIDENT of Term Portfolio (1995), is Vice
President of Fidelity's money market (1994) and fixed-income (1995) funds
and Senior Vice President of FMR Texas, Inc.
CURTIS HOLLINGSWORTH (39), VICE PRESIDENT of Term Portfolio (1995), is an
employee of FMR.
BURNELL R. STEHMAN (64), VICE PRESIDENT of Cash Portfolio (1991), Vice
President of FMR Texas (1989) and of other funds advised by FMR.
ARTHUR S. LORING (48), SECRETARY, is Senior Vice President (1993) and
General Counsel of FMR, Vice President - Legal of FMR Corp., and Vice
President and Clerk of FDC.
KENNETH A. RATHGEBER (49), TREASURER, (1995), is Treasurer of the Fidelity
funds and is an employee of FMR (1995). Before joining FMR, Mr. Rathgeber
was a Vice President of Goldman Sachs & Co. (1978-1995), where he served in
various positions, including Vice President of Proprietary Accounting
(1988-1992), Global Co-Controller (1992-1994), and Chief Operations Officer
of Goldman Sachs (Asia) LLC (1994-1995).
THOMAS D. MAHER (51), ASSISTANT VICE PRESIDENT of Cash Portfolio, is
Assistant Vice President of Fidelity's money market funds and Vice
President and Associate General Counsel of FMR Texas Inc.
JOHN H. COSTELLO (49), ASSISTANT TREASURER (1995), is an employee of FMR.
LEONARD M. RUSH (50), ASSISTANT TREASURER (1994), is an employee of FMR
(1994). Prior to becoming Assistant Treasurer of the Fidelity funds, Mr.
Rush was Chief Compliance Officer of FMR Corp. (1993-1994) and Chief
Financial Officer of Fidelity Brokerage Services, Inc. (1990-1993).
THOMAS J. SIMPSON (38), ASSISTANT TREASURER (1996), is
Assistant Treasurer of Fidelity's money market funds and an employee of
FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund
Controller of Liberty Investment Services (1987-1995).
DAVID H. POTEL (39), ASSISTANT SECRETARY, is an employee of FMR Corp.
The following table sets forth information describing the compensation of
each current trustee of each fund for his or her services as trustee for
the fiscal year ended June 30, 1996.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Trustees Aggregate Aggregate Pension or Estimated Total
Compensation Compensation Retirement Annual Compensation
from from Benefits Benefits upon from the Fund
Cash Portfolio* Term Portfolio* Accrued as Retirement Complex**
Part of Fund from the Fund
Expenses from Complex**
the Fund
Complex**
William L. Byrnes+ $ 0 $ 0 $ 0 $ 0 $ 0
John David Foust $ 25,032 $ 968 $ 0 $ 0 $ 26,000
W. Olin Nisbet III+ $ 0 $ 0 $ 0 $ 0 $ 0
Helen A. Powers $ 30,060 $ 1,014 $ 0 $ 0 $ 30,500
Bertram H. $ 29,992 $ 1,012 $ 0 $ 0 $ 54,429
Witham
</TABLE>
* Includes compensation paid to the Trustees by each fund. For the fiscal
year ended June 30, 1996, certain of the non-interested t rustees '
aggregate compensation from a fund includes accrued deferred
compensation as follows: Helen A. Powers, $31,074 and Bertram H. Witham,
$31,004. Each fund's trustees do not receive any pension or retirement
benefits from the funds as compensation for their services as trustees of
the funds.
** Information is as of December 31, 1995 for 219 funds in the Fund
Complex. Mr. Witham is a Director or Trustee of four investment companies
in the Fund Complex, including Cash Portfolio and Term Portfolio. Under a
retirement program adopted in July 1988 by the other open-end investment
companies in the Fund Complex (the "other Open-End Funds"), Mr. Witham,
upon reaching age 72, became eligible to participate in a retirement
program under which he receives payments during his lifetime from a fund
based upon his basic trustee fees and length of service as trustee for the
other Open-End Funds. During the year ended June 30, 1996, he received
$ 50,000 in payments under that retirement program. The obligation of
the other Open-End Funds to make such payments is not secured or funded.
+ Messrs. Byrnes and Nisbet, who are "interested persons" of Cash Portfolio
and Term Portfolio, do not receive any compensation from Cash Portfolio or
Term Portfolio or other investment companies in the Fund Complex for their
services as Trustees, and are compensated by FMR.
The non-interested trustees may elect to defer receipt of all or a
percentage of their annual fees in accordance with the terms of a Deferred
Compensation Plan (the Plan). A fund's obligation to make payments of
amounts accrued under the Plan is a general unsecured obligation of the
fund payable solely from the fund's general assets and property. No shares
of a fund shall be purchased for a trustee's account. Deferral of trustees'
fees in accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate the
fund to retain the services of any trustee or to pay any particular level
of compensation to the trustee. This Plan shall be administered under the
direction of, and may be interpreted, amended or supplemented by, the
trustees acting by majority vote (excluding any trustee whose benefit is
the subject of such vote.)
The Trustees and officers of each fund are not eligible investors in the
funds. As of July 25, 1996 , therefore, the Trustees and officers of
each fund did not own any of the outstanding share s of the funds .
As of July 25, 1996, the following owned of record or beneficially 5% or
more of the outstanding shares of Cash Portfolio: Wake County, P.O. Box
550, Raleigh, NC 27602 (6.45%).
As of July 25, 1996, the following owned of record or beneficially 5% or
more of the outstanding shares of Term Portfolio: City of Charlotte, 600
East Fourth Street, Charlotte, NC 28202-2870 (12.51%); City of Burlington,
P.O. Box 1358, Burlington, NC 27216-1358 (8.13%); Alamance County, Term
Account, 124 W. Elm St., Graham, NC 27253-2894 (6.34%); Wake County, P.O.
Box 550, Raleigh, NC 27602-0550 (6.33%); Onslow County Hospital Authority,
P.O. Box 1358, 317 Western Bo, Jacksonville, NC 28541 (5.53%); Northern
Hospital of Surry County, P.O. Box 1101, Mount Airy N, NC 27030-1101
(5.13%).
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides each fund with all necessary
office facilities and personnel for servicing each fund's investments,
compensates all officers of each fund and all Trustees who are "interested
persons" of the trust, and all personnel of each fund or FMR performing
services relating to research, statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the Board
of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing facilities
for maintaining each fund's organization; supervising relations with
custodians, transfer and pricing agents, accountants, underwriters, and
other persons dealing with each fund; preparing all general shareholder
communications and conducting shareholder relations; maintaining each
fund's records and the registration of each fund's shares under federal and
state laws; developing management and shareholder services for each fund;
and furnishing reports, evaluations, and analyses on a variety of subjects
to the Trustees.
FMR is responsible for the payment of most of the other expenses of
each fund. Specific expenses payable by FMR include, without limitation,
expenses for typesetting, printing, and mailing proxy materials to
shareholders; legal expenses, and the fees of the custodian, auditor and
interested trustees ; costs of typesetting, printing, and mailing
prospectuses and statements of additional information, notices and reports
to shareholders; and each fund's proportionate share of insurance premiums
and Investment Company Institute dues. FMR also provides for transfer agent
and dividend disbursing services through FIIOC and portfolio and general
accounting record maintenance through FSC.
Each fund pays all other expenses including, without limitation, fees and
expenses of all Trustees of the trust who are not "interested persons" of
the trust, FMR, or Sterling (the non-interested Trustees); interest on
borrowings; taxes; brokerage commissions (if any); and such nonrecurring
expenses as may arise, including costs of any litigation to which a fund
may be a party, and any obligation it may have to indemnify the officers
and Trustees with respect to litigation.
FMR is each fund's manager pursuant to management contracts dated
January 22 , 1996 which were approved by shareholders on
December 12, 1990 and amended on January 22, 1996. The management fee paid
by each fund to FMR is reduced by an amount equal to the fees and expenses
paid by the fund to the non-interested Trustees.
For the services of FMR under each contract, each fund pays FMR a monthly
management fee at an annual rate of 0.365% of average net assets
through $400 million; 0.360% of average net assets in excess of $400
million through $800 million; 0.355% of average net assets in excess of
$800 million through $1.2 billion; 0.350% of average net assets in excess
of $1.2 billion through $1.6 billion; 0.340% of average net assets in
excess of $1.6 billion through $2.0 billion; and 0.330% of average net
assets in excess of $2.0 billion. Fees received by FMR, after reduction of
fees and expenses paid by the fund to the non-interested Trustees, for the
last three fiscal years are shown in the table below.
Fiscal Year Ended Management Fees Paid to FMR
Cash Portfolio 1996 $ 6,553,221
1995 $ 5,555,766
1994 $ 5,314,720
Term Portfolio 1996 $ 238,697
1995 $ 261,780
1994 $ 300,144
* Prior to November 1, 1995, the management fees were based on the
following schedule: 0.41% of average net assets through $100 million; 0.40%
of average net assets in excess of $100 million through $200 million; 0.39%
of average net assets in excess of $200 million through $800 million; and
0.38% of average net assets in excess of $800 million. Each fund's
shareholders approved a revised management fee schedule on January 22,
1996, which became effective on February 1, 1996. From November 1, 1995 to
February 1, 1996, FMR voluntarily implemented this revised management fee
schedule, which provides for lower management fee rates as each fund's
assets increase.
FMR may, from time to time, voluntarily reimburse all or a portion of each
fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to be
repaid for these expense reimbursements in the amount that expenses fall
below the limit prior to the end of the fiscal year. Expense reimbursements
by FMR will increase each fund's total returns and yield and repayment of
the reimbursement by each fund will lower its total returns and yield.
SUB-ADVISER. On behalf of Cash Portfolio, FMR has entered into a
sub-advisory agreement with FMR Texas pursuant to which FMR Texas has
primary responsibility for providing portfolio investment management
services to Cash Portfolio.
Under the sub-advisory agreement dated January 1, 1991, which was approved
by shareholders on December 12, 1990, FMR pays FMR Texas fees equal to 50%
of the management fee payable to FMR under its management contract with
Cash Portfolio, after payments by FMR pursuant to Cash Portfolio's 12b-1
plan, if any. The fees paid to FMR Texas are not reduced by any voluntary
or mandatory expense reimbursements that may be in effect from time to
time. On behalf of Cash Portfolio, for the fiscal years ended 1996, 1995,
and 1994, FMR paid FMR Texas fees of $ 1,803,612 , $1,597,195, and
$1,574,452, respectively.
CONTRACTS WITH FMR AFFILIATES
FIIOC, an affiliate of FMR, is the transfer, dividend disbursing, and
shareholder servicing agent for shares of each fund.
Under this arrangement FIIOC receives an annual account fee and an
asset-based fee each based on account size and fund type for each retail
account and certain institutional accounts. With respect to certain
institutional retirement accounts, FIIOC receives an annual account fee and
an asset-based fee based on account type or fund type. These annual account
fees are subject to increase based on postal rate changes.
FIIOC bears the expense of typesetting, printing, and mailing
prospectuses, statements of additional information, and all other reports,
notices, and statements to shareholders, with the exception of proxy
statements. Also, FIIOC pays out-of-pocket expenses associated with
transfer agent services.
FSC, an affiliate of FMR, performs the calculations necessary to determine
the NAV and dividends for the shares of each fund, and maintains each
fund's accounting records. For pricing and bookkeeping services, FSC
receives a fee based on each fund's average net assets.
FMR must bear the cost of transfer, dividend disbursing, shareholder
servicing and pricing and bookkeeping services pursuant to its management
contract with each fund.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreements call
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at NAV. Promotional and administrative expenses in connection with
the offer and sale of shares are paid by FMR. FDC has entered into a
Distribution and Service Agent Agreement with Sterling, a wholly-owned
subsidiary of Sterling Capital Management Company (Sterling Capital),
headquartered in Charlotte, NC, which is an affiliate of United Asset
Management Corporation, Boston, MA, to act as distribution agent of shares
of each fund. Under the Distribution and Service Agent Agreement, Sterling
has assumed from FDC primary responsibility with respect to the
distribution of each fund's shares.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved Distribution and Service Plans on behalf of the
funds (the Plans) pursuant to Rule 12b-1 under the 1940 Act (the Rule). The
Rule provides in substance that a mutual fund may not engage directly or
indirectly in financing any activity that is primarily intended to result
in the sale of shares of a fund except pursuant to a plan approved on
behalf of the fund under the Rule. The Plans, as approved by the Trustees,
allow the funds and FMR to incur certain expenses that might be considered
to constitute direct or indirect payment by the funds of distribution
expenses.
Under each Plan, if the payment of management fees by the funds to FMR is
deemed to be indirect financing by the funds of the distribution of their
shares, such payment is authorized by the Plans. Each Plan specifically
recognizes that FMR may use its management fee revenue to compensate FDC
for services in connection with the distribution of shares, including
payments made to third parties that assist in selling shares of each fund,
or to third parties that render shareholder support services.
Pursuant to the Plans, from its management fees, FMR pays Sterling, through
FDC, a monthly distribution fee at an annual rate according to the
following schedule: 0.160% of average net assets through $1.6 billion;
0.155% of average net assets in excess of $1.6 billion through $2.0
billion; and 0.150% of average net assets in excess of $2.0 billion.
For the fiscal year ended June 30, 1996, FMR paid Sterling through FDC
$ 2,945,998 on behalf of Cash Portfolio and $ 94,164 on behalf
of Term Portfolio. Prior to February 1, 1996, the distribution fees were
based on the following schedule: 0.14% of average net assets through $100
million; 0.15% of average net assets in excess of $100 million through $200
million; 0.16% of average net assets in excess of $200 million through $800
million; and 0.17% of average net assets in excess of $800 million.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of each Plan, and have
determined that there is a reasonable likelihood that the Plan will benefit
each fund and its shareholders. In particular, the Trustees noted that each
Plan does not authorize payments by each fund other than those made to FMR
under its management contract with the fund. To the extent that each Plan
gives FMR and FDC greater flexibility in connection with the distribution
of shares of each fund, additional sales of fund shares may result.
Furthermore, certain shareholder support services may be provided more
effectively under the Plans by local entities with whom shareholders have
other relationships.
The Plans were approved by shareholders of each fund on December 12, 1990
and amended on January 22, 1996.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling, or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined by the courts or
appropriate regulatory agencies, FDC believes that the Glass-Steagall Act
should not preclude a bank from performing shareholder support services, or
servicing and recordkeeping functions. FDC intends to engage banks only to
perform such functions. However, changes in federal or state statutes and
regulations pertaining to the permissible activities of banks and their
affiliates or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions, if
any, would be necessary to continue to provide efficient and effective
shareholder services. In such event, changes in the operation of the funds
might occur, including possible termination of any automatic investment or
redemption or other services then provided by the bank. It is not expected
that shareholders would suffer any adverse financial consequences as a
result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed
herein, and banks and other financial institutions may be required to
register as dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase securities
issued by, depository institutions that receive payments under the Plans.
No preference for the instruments of such depository institutions will be
shown in the selection of investments.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. Cash Portfolio and Term Portfolio are funds of The
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. Currently, Cash Portfolio and Term Portfolio are the only
funds of the trust. The Declaration of Trust permits the Trustees to create
additional funds.
In the event that FMR ceases to be the investment adviser to the trust or a
fund, the right of the trust or fund to use the identifying name "Fidelity"
may be withdrawn. There is a remote possibility that one fund might become
liable for any misstatement in its prospectus or SAI about another fund.
The assets of the trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the trust. Expenses with respect to the trust are to be
allocated in proportion to the asset value of the respective funds, except
where allocations of direct expense can otherwise be fairly made. The
officers of the trust, subject to the general supervision of the Board of
Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is an entity of the type
commonly known as "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 the 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 fund's property of any
shareholders held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the fund 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 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 fund's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption, and the privilege of exchange
are described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the heading "Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of the trust or a fund may, as
set forth in the Declaration of Trust, call meetings of the trust or a fund
for any purpose related to the trust or fund, as the case may be,
including, in the case of a meeting of the entire trust, the purpose of
voting on removal of one or more Trustees. The trust or any fund may be
terminated upon the sale of its assets to 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 fund. If not so terminated, the trust and the funds will
continue indefinitely.
CUSTODIAN. First Union National Bank of North Carolina, Two First Union
Center, Charlotte, NC 28288, is custodian of the assets of each fund. The
custodian is responsible for the safekeeping of a fund's assets and the
appointment of the subcustodian banks and clearing agencies. The custodian
takes no part in determining the investment policies of a fund or in
deciding which securities are purchased or sold by a fund. However, a fund
may invest in obligations of the custodian and may purchase securities from
or sell securities to the custodian. The Bank of New York and The Chase
Manhattan Bank , each headquartered in New York, also may serve as a
special purpose custodian of certain assets in connection with pooled
repurchase agreement transactions.
FMR, its officers and directors, its affiliated companies, and the Board of
Trustees may, from time to time, conduct transactions with various banks,
including banks serving as custodians for certain funds advised by FMR.
Transactions that have occurred to date include mortgages and personal and
general business loans. In the judgment of FMR, the terms and conditions of
those transactions were not influenced by existing or potential custodial
or other fund relationships.
AUDITOR. Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA
(Term Portfolio) and 1999 Bryan Street, Dallas, TX (Cash Portfolio),
serves as the trust's independent accountant. The auditor examines
financial statements for the funds and provides other audit, tax, and
related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the fiscal
year ended June 30, 1996 are included in the funds' Annual Report, which is
attached. Each fund's financial statements and financial highlights are
incorporated herein by reference.
APPENDIX
The descriptions that follow are examples of eligible ratings for the
funds. A fund may, however, consider the ratings for other types of
investments and the ratings assigned by other rating organizations when
determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE'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. All security
elements are 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 RATINGS OF STATE AND MUNICIPAL NOTES:
SP-1 - Strong capacity to pay principal and interest. An issue determined
to possess a very strong capacity to pay debt service is given a plus (+)
designation.
SP-2 - Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of
the notes.
SP-3 - Speculative capacity to pay principal and interest.
DESCRIPTION OF MOODY'S INVESTORS SERVICE'S MUNICIPAL BOND RATINGS:
AAA - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than the Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
There are nine basic rating categories for long-term obligations. They
range from Aaa (highest quality) to C (lowest quality). Those bonds within
the Aa, A, Baa, Ba and B categories that Moody's believes possess the
strongest credit attributes within those categories are designated by the
symbols Aa1, A1, Baa1, Ba1 and B1.
DESCRIPTION OF STANDARD & POOR'S MUNICIPAL BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
DESCRIPTION OF MOODY'S INVESTORS SERVICE'S COMMERCIAL PAPER RATINGS:
Issuers rated PRIME-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following
characteristics:
Leading market positions in well established industries.
High rates of return on funds employed.
Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
Broad margins in earning coverage of fixed financial charges and with high
internal cash generation.
Well established access to a range of financial markets and assured sources
of alternate liquidity.
Issuers rated PRIME-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earning trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Issuers rated PRIME-3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of 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 STANDARD & POOR'S COMMERCIAL PAPER RATINGS:
A - Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with
the numbers 1, 2, and 3 to indicate the relative degree of safety.
A-1 - This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+)
sign designation.
A-2 - Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.
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.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)(1) Financial Statements and Financial Highlights, included in the
Annual Report, for Cash Portfolio for the fiscal year ended June 30, 1996
are incorporated by reference into the fund's Statement of Additional
Information and were filed on August 5, 1996 for The North Carolina Capital
Management Trust (File No. 811-3455) pursuant to Rule 30d-1 under the
Investment Company Act of 1940 and are incorporated herein by reference.
(a)(2) Financial Statements and Financial Highlights, included in the
Annual Report, for Term Portfolio for the fiscal year ended June 30, 1996
are incorporated by reference into the fund's Statement of Additional
Information and were filed on August 5, 1996 for The North Carolina Capital
Management Trust (File No. 811-3455) pursuant to Rule 30d-1 under the
Investment Company Act of 1940 and are incorporated herein by reference.
(b) Exhibits:
(1) Amended and Restated Declaration of Trust dated November 1, 1987, was
electronically filed and is incorporated herein by reference as Exhibit 1
to Post-Effective Amendment No. 28.
(a) Supplement to the Declaration of Trust, dated October 18, 1993, was
electronically filed and is incorporated herein by reference as Exhibit
1(a) to Post-Effective Amendment No. 28.
(2) By-Laws of the Trust were electronically filed and are incorporated
herein by reference as Exhibit 2 to Post-Effective Amendment No. 28.
(3) Not applicable.
(4) Not applicable.
(5) (a) Management Contract between The North Carolina Capital Management
Trust: Term Portfolio and Fidelity Management & Research Company dated
January 22, 1996 is electronically filed herein as Exhibit 5(a).
(b) Management Contract between The North Carolina Capital Management
Trust: Cash Portfolio and Fidelity Management & Research Company dated
January 22, 1996 is electronically filed herein as Exhibit 5(b).
(c) Sub-Advisory Agreement between FMR Texas Inc. and Fidelity
Management & Research Company on behalf of Cash Portfolio dated January 1,
1991 was electronically filed and is incorporated herein by reference as
Exhibit 5(c) to Post-Effective Amendment No. 28.
(6) (a) General Distribution Agreement between The North Carolina Cash
Management Trust: Cash Portfolio and Fidelity Distributors Corporation
dated April 1, 1987 was electronically filed and is incorporated herein by
reference as Exhibit 6(a) to Post-Effective Amendment No. 28.
(b) General Distribution Agreement between The North Carolina Cash
Management Trust: Term Portfolio and Fidelity Distributors Corporation
dated April 1, 1987 was electronically filed and is incorporated herein by
reference as Exhibit 6(b) to Post-Effective Amendment No. 28.
(c) Amendment to the General Distribution Agreement dated January 1,
1988 for Cash Portfolio and Term Portfolio was electronically filed and is
incorporated herein by reference as Exhibit 6(c) to Post-Effective
Amendment No. 28.
(7) Not applicable.
(8) (a) Custodian Agreement, Appendix A, Appendix B, and Appendix C
between Registrant and First Union National Bank of North Carolina dated
December 6, 1991 was electronically filed and is incorporated herein by
reference as Exhibit 8(a) to Post-Effective Amendment No. 30.
(b) Subcustodian Agreement, Appendix A, Appendix B, and Appendix C
between First Union National Bank of North Carolina and The Bank of New
York on behalf of the Registrant dated December 6, 1991 is electronically
filed herein as Exhibit 8(b).
(c) Fidelity Group Repo Custodian Agreement among The Bank of New York,
J. P. Morgan Securities, Inc., and the Registrant, dated February 12, 1996,
is incorporated herein by reference to Exhibit 8(d) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective Amendment
No. 31.
(d) Schedule 1 to the Fidelity Group Repo Custodian Agreement between
The Bank of New York and the Registrant, dated February 12, 1996, is
incorporated herein by reference to Exhibit 8(e) of Fidelity Institutional
Cash Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(e) Fidelity Group Repo Custodian Agreement among Chemical Bank,
Greenwich Capital Markets, Inc., and the Registrant, dated November 13,
1995, is incorporated herein by reference to Exhibit 8(f) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective Amendment
No. 31.
(f) Schedule 1 to the Fidelity Group Repo Custodian Agreement between
Chemical Bank and the Registrant, dated November 13, 1995, is incorporated
herein by reference to Exhibit 8(g) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(g) Schedule 1 to the Fidelity Group Repo Custodian Agreement between
Chemical Bank and the Registrant, dated November 13, 1995, is incorporated
herein by reference to Exhibit 8(g) of Fidelity Institutional Cash
Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(h) Joint Trading Account Custody Agreement between The Bank of New York
and the Registrant, dated May 11, 1995, is incorporated herein by reference
to Exhibit 8(i) of Fidelity Institutional Cash Portfolios' (File No.
2-74808) Post-Effective Amendment No. 31.
(i) First Amendment to Joint Trading Account Custody Agreement between
The Bank of New York and the Registrant, dated July 14, 1995, is
incorporated herein by reference to Exhibit 8(h) of Fidelity Institutional
Cash Portfolios' (File No. 2-74808) Post-Effective Amendment No. 31.
(9) Not applicable.
(10) Not applicable.
(11) Consent of Coopers & Lybrand L.L.P. is filed herein as Exhibit 11.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) (a) Distribution and Service Plan between The North Carolina Capital
Management Trust: Term Portfolio and Fidelity Distributors Corporation
dated January 22, 1996 is electronically filed herein as Exhibit 15(a).
(b) Distribution and Service Plan between The North Carolina Capital
Management Trust: Cash Portfolio and Fidelity Distributors Corporation
dated January 22, 1996 is electronically filed herein as Exhibit 15(b).
(c) Distribution and Service Agent Agreement between Fidelity
Distributors Corporation and Sterling Capital Distributors, Inc., on behalf
of Term Portfolio, dated January 22, 1996 is electronically filed herein as
Exhibit 15(c).
(d) Distribution and Service Agent Agreement between Fidelity
Distributors Corporation and Sterling Capital Distributors, Inc., on behalf
of Cash Portfolio, dated January 22, 1996 is electronically filed herein as
Exhibit 15(d).
(16) (a) Schedule and data points for 7-day yield for Cash Portfolio were
electronically filed and are incorporated herein by reference as Exhibit
16(a) to Post-Effective Amendment No 31.
(b) Schedule and data points for 30-day yield for Term Portfolio were
electronically filed and are incorporated herein by reference as Exhibit
16(b) to Post-Effective Amendment No. 30.
(c) Schedule and data points for total return for Term Portfolio were
electronically filed and are incorporated herein by reference as Exhibit
16(c) to Post-Effective Amendment No. 30.
(d) Schedule and data points for adjusted NAV for Term Portfolio were
electronically filed and are incorporated herein by reference as Exhibit
16(d) to Post-Effective Amendment No. 30.
(17) Financial Data Schedules for Cash Portfolio and Term Portfolio are
filed herein as Exhibit 17.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is a separate entity from the Board of
other funds advised by FMR, each of which has Fidelity Management &
Research Company as its investment adviser. The officers of these funds are
elected separately and are substantially different. The Registrant takes
the position that it is not under common control with these other funds
since the power residing in the respective boards and officers arises as
the result of an official position with the respective funds.
Item 26. Number of Holders of Securities
July 25, 1996
Title of Class Number of Record Holders
Cash Portfolio 701
Term Portfolio 54
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 or her in connection with any claim, action,
suit or proceeding in which he or she is involved by virtue of his or her
service as a trustee, 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.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR;
President and Chief Executive Officer of FMR Corp.;
Chairman of the Board and a Director of FMR, FMR
Corp., FMR Texas Inc., Fidelity Management &
Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.; President and Trustee of
funds advised by FMR.
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc., Fidelity
Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman and Director of FMR.
Robert Beckwitt Vice President of FMR and of funds advised by FMR.
Stephan Campbell Vice President of FMR (1993).
Dwight Churchill Vice President of FMR (1993).
William Danoff Vice President of FMR (1993) and of a fund advised
by FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised
by FMR.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund
advised by FMR.
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Lawrence Greenberg Vice President of FMR (1993).
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Equity Division
Leader.
Robert Haber Vice President of FMR and of funds advised by FMR.
Richard C. Habermann Senior Vice President of FMR (1993).
Daniel Harmetz Vice President of FMR and of a fund advised by FMR.
Ellen S. Heller Vice President of FMR.
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
Robert F. Hill Vice President of FMR; Director of Technical
Research.
Curtis Hollingsworth Vice President of FMR (1993).
Stephen P. Jonas Treasurer and Vice President of FMR (1993));
Treasurer of FMR Texas Inc. (1993), Fidelity
Management & Research (U.K.) Inc. (1993), and
Fidelity Management & Research (Far East) Inc.
(1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised
by FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); High Income
Division Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised
by FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Malcolm W. MacNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR; Director of Equity Trading.
David Murphy Vice President of FMR and of funds advised by FMR.
Andrew Offit Vice President of FMR (1993).
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR and of funds advised by FMR.
Lee Sandwen Vice President of FMR (1993).
Patricia A. Satterthwaite Vice President of FMR (1993) and of a fund advised
by FMR.
Thomas T. Soviero Vice President of FMR (1993).
Richard Spillane Vice President of FMR; Senior Vice President and
Director of Operations and Compliance of FMR U.K.
(1993).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds
advised by FMR.
Gary L. Swayze Vice President of FMR and of funds advised by FMR;
Tax-Free Fixed-Income Group Leader.
Thomas Sweeney Vice President of FMR (1993).
Beth F. Terrana Senior Vice President of FMR (1993) and of funds
advised by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised
by FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; Growth Group Leader.
Arthur S. Loring Senior Vice President (1993), Clerk, and General
Counsel of FMR; Vice President, Legal of FMR Corp.;
Secretary of funds advised by FMR.
</TABLE>
(2) FMR TEXAS INC. (FMR Texas)
FMR Texas provides investment advisory services to Fidelity Management &
Research Company. The directors and officers of the Sub-Adviser have held
the following positions of a substantial nature during the past two fiscal
years.
Edward C. Johnson 3d Chairman and Director of FMR Texas;
Chairman of the Executive Committee of FMR;
President and Chief Executive Officer of FMR
Corp.; Chairman of the Board and a Director of
FMR, FMR Corp., Fidelity Management &
Research (Far East) Inc. and Fidelity
Management & Research (U.K.) Inc.; President
and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Texas; President
of FMR; Managing Director of FMR Corp.;
President and a Director of Fidelity
Management & Research (Far East) Inc. and
Fidelity Management & Research (U.K.) Inc.;
Senior Vice President and Trustee of funds
advised by FMR.
Fred L. Henning, Jr. Senior Vice President of FMR Texas;
Fixed-Income Division Leader (1995).
Robert Auld Vice President of FMR Texas (1993).
Leland Barron Vice President of FMR Texas and of funds
advised by FMR.
Robert Litterst Vice President of FMR Texas and of funds
advised by FMR (1993).
Thomas D. Maher Vice President of FMR Texas and Assistant Vice
President of funds advised by FMR.
Burnell R. Stehman Vice President of FMR Texas and of funds
advised by FMR.
John J. Todd Vice President of FMR Texas and of funds
advised by FMR.
Sarah H. Zenoble Vice President of FMR Texas; Money Market
Division Leader (1995).
Stephen P. Jonas Treasurer of FMR Texas Inc. (1993), Fidelity
Management & Research (U.K.) Inc. (1993),
and Fidelity Management & Research (Far East)
Inc. (1993); Treasurer and Vice President of
FMR (1993).
David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity
Management & Research (U.K.) Inc.; Clerk of
Fidelity Management & Research (Far East)
Inc.
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
Mark Peterson Director None
Neal Litvak President None
Arthur S. Loring Vice President and Clerk Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity Service
Co., 82 Devonshire Street, Boston, MA 02109, or the Portfolios' custodian,
First Union National Bank, Charlotte, North Carolina.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant, on behalf of Cash Portfolio and Term Portfolio, undertakes
to deliver to each person who has received the prospectus or annual or
semiannual financial report for a fund in an electronic format, upon his or
her request and without charge, a paper copy of the prospectus or annual or
semiannual report for the fund.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for the effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 33 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 6th day of
August 1996.
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/ Kenneth A. Rathgeber Treasurer August 6, 1996
Kenneth A. Rathgeber
/s/ William L. Byrnes* Trustee August 6, 1996
William L. Byrnes
/s/ John David Foust* Trustee August 6, 1996
John David Foust
/s/ W. Olin Nisbet III* Trustee August 6, 1996
W. Olin Nisbet III
/s/ Helen A. Powers** Trustee August 6, 1996
Helen A. Powers
/s/ Bertram H. Witham* Trustee August 6, 1996
Bertram H. Witham
+ Signature affixed by Arthur S. Loring pursuant to a power of attorney
dated July 17, 1991 and filed herewith.
* 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
I, the undersigned Trustee of The North Carolina Cash Management Trust:
Cash Portfolio and Term Portfolio (the Trust), hereby severally constitute
and appoint Arthur J. Brown, Robert C. Hacker, Richard M. Phillips, Dana L.
Platt and Arthur C. Delibert, each of them singly, my true and lawful
attorneys-in-fact, with full power of substitution, and with full power to
each of them, to sign for me and in my name in the appropriate capacities,
all Pre-Effective Amendments to any Registration Statements of the Trust,
any and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in my name and behalf in connection therewith as said
attorneys-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorneys-in-fact
or their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on this 17th day of July 1991
/s/Helen A. Powers
__________________
Helen A. Powers
POWER OF ATTORNEY
We, the undersigned Trustees of The North Carolina Cash Management Trust:
Cash Portfolio and Term Portfolio (the Trust), hereby severally constitute
and appoint Arthur J. Brown, Robert C. Hacker, Richard M. Phillips, Dana L.
Platt and Arthur C. Delibert, each of them singly, our true and lawful
attorneys-in-fact, with full power of substitution, and with full power to
each of them, to sign for us and in our name in the appropriate capacities,
all Pre-Effective Amendments to any Registration Statements of the Trust,
any and all subsequent Post-Effective Amendments to said Registration
Statements, any Registration Statements on Form N-14, and any supplements
or other instruments in connection therewith, and generally to do all such
things in our names and behalf in connection therewith as said
attorneys-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and Investment Company Act of
1940, and all related requirements of the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorneys-in-fact
or their substitutes may do or cause to be done by virtue hereof.
WITNESS our hands on this 17th day of April 1991
/s/William L. Byrnes
________________________
William L. Byrnes
/s/John David Foust
________________________
John David Foust
/s/W. Olin Nisbet III
________________________
W. Olin Nisbet III
________________________
Helen A. Powers
/s/Bertram H. Witham
________________________
Bertram H. Witham
POWER OF ATTORNEY
I, the undersigned President of the North Carolina Cash Management Trust:
Cash Portfolio and Term Portfolio (the Trust), hereby severally constitute
and appoint Arthur S. Loring my true and lawful attorney-in-fact, with full
power of substitution, and with full power to sign for me and in my name in
the appropriate capacity, all Pre-Effective Amendments to any Registration
Statements of the Trust, any and all subsequent Post-Effective Amendments
to said Registration Statements, any Registration Statements on Form N-14,
and any supplements or other instruments in connection therewith, and
generally to do all such things in my name and behalf in connection
therewith as said attorney-in-fact deems necessary or appropriate, to
comply with the provisions of the Securities Act of 1933 and Investment
Company Act of 1940, and all related requirements of the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact or his substitutes may do or cause to be done by virtue
hereof.
WITNESS my hand on this 17th day of July 1991
/s/ William L. Byrnes
William L. Byrnes
MANAGEMENT CONTRACT
between
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST:
TERM PORTFOLIO
and
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 22nd day of January, 1996, by and between The North
Carolina Capital Management Trust, a Massachusetts business trust which
may issue one or more series of shares of beneficial interest (hereinafter
called the "Trust"), on behalf of Term Portfolio (hereinafter called the
"Portfolio"), and Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Adviser").
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Trust's Board of Trustees, direct the investments of the Portfolio
in accordance with the investment objective, policies and limitations as
provided in the Portfolio's prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Trust who are also employees of the Adviser and
of all personnel of the Trust or the Adviser performing services relating
to research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds and
other securities and investment instruments on behalf of the Portfolio. The
investment policies and all other actions of the Portfolio are and shall at
all times be subject to the control and direction of the Trust's Board of
Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance of) the management and administrative services necessary for
the operation of the Portfolio. The Adviser shall, subject to the
supervision of the Board of Trustees, perform various services for the
Portfolio, including but not limited to: (i) providing the Portfolio with
office space, equipment and facilities (which may be its own) for
maintaining its organization; (ii) on behalf of the Portfolio, supervising
relations with, and monitoring the performance of custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting shareholder
relations; (v) maintaining the Portfolio's existence and its records; and
(vi) investigating the development of and developing and implementing, if
appropriate, management and shareholder services designed to enhance the
value or convenience of the Portfolio as an investment vehicle. The Adviser
also shall pay the following Portfolio fees and expenses: (i) legal and
audit expenses; (ii) custodian, registrar and transfer agent fees and
expenses; (iii) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (iv) expenses of printing and
mailing reports and notices and proxy material to shareholders of the
Portfolio; (v) all other expenses incidental to holding meetings of the
Portfolio's shareholders, including proxy solicitations therefor; (vi) a
pro rata share, based on relative net assets of the Portfolio and other
registered investment companies having Advisory and Service or Management
Contracts with the Adviser, of 50% of insurance premiums for fidelity and
other coverage; (vii) its proportionate share of association membership
dues; (viii) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; and (ix)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Portfolio as the Trust's Board of Trustees may request from
time to time or as the Adviser may deem to be desirable. The Adviser shall
make recommendations to the Trust's Board of Trustees with respect to
Portfolio policies, and shall carry out such policies as are adopted by the
Trustees. The Adviser shall, subject to review by the Board of Trustees,
furnish such other services as the Adviser shall from time to time
determine to be necessary or useful to perform its obligations under this
Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are advantageous
to the Portfolio and at commission rates which are reasonable in relation
to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Trust shall periodically review the commissions paid by
the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the
Portfolio.
(d) The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Trust are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Trust, and that
the Adviser may be or become interested in the Portfolio as a shareholder
or otherwise.
3. For the services and facilities to be furnished hereunder, the Adviser
shall receive a management fee paid monthly based upon the average daily
net assets of the Portfolio (computed in the manner set forth in the
Declaration of Trust) throughout the month. The fee shall be payable as
soon as practicable after the last day of each month at an annual rate
determined as set forth below. The fee rate shall be determined on a
cumulative basis pursuant to the following schedule:
The Annual Fee Rate Is
<TABLE>
<CAPTION>
<S> <C> <C>
On average daily net assets of the Portfolio through $400 million 0.365%
On average daily net assets in excess of $400 million through $800 million 0.360%
On average daily net assets in excess of $800 million through $1.2 billion 0.355%
On average daily net assets in excess of $1.2 billion through $1.6 billion 0.350%
On average daily net assets in excess of $1.6 billion through $2.0 billion 0.340%
On average daily net assets in excess of $2.0 billion 0.330%
</TABLE>
provided that the fee so computed shall be reduced by the compensation,
including reimbursement of expenses, paid by the Portfolio to those
Trustees of the Trust who are not "interested persons" of the Trust or the
Adviser. In the case of initiation or termination of this Contract during
any month, the fee for that month shall be reduced proportionately on the
basis of the number of business days during which it is in effect and the
fee computed upon the average net assets for the business days it is so in
effect for that month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Trust's Trustees other than
those who are "interested persons" of the Trust or the Adviser; and (iv)
such non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Trust's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31,
1996, and indefinitely thereafter, but only so long as the continuance
after such date shall be specifically approved at least annually by vote of
the Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Portfolio to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust's Declaration of Trust and
agrees that the obligations assumed by the Trust pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other Portfolios of
the Trust. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust are separate and distinct from those of any and all
other Portfolios.
8. The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST
on behalf of term Portfolio
By /s/ J. Gary burkhead
j. gary burkhead, senior vice president
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ j. gary burkhead
j. gary burkhead, president
MANAGEMENT CONTRACT
BETWEEN
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST:
CASH PORTFOLIO
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 22nd day of January, 1996, by and between The North
Carolina Capital Management Trust, a Massachusetts business trust which may
issue one or more series of shares of beneficial interest (hereinafter
called the "Trust"), on behalf of Cash Portfolio (hereinafter called the
"Portfolio"), and Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Adviser").
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision
of the Trust's Board of Trustees, direct the investments of the Portfolio
in accordance with the investment objective, policies and limitations as
provided in the Portfolio's prospectus or other governing instruments, as
amended from time to time, the Investment Company Act of 1940 and rules
thereunder, as amended from time to time (the "1940 Act"), and such other
limitations as the Portfolio may impose by notice in writing to the
Adviser. The Adviser shall also furnish for the use of the Portfolio office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio; and shall pay the salaries and
fees of all officers of the Trust who are also employees of the Adviser and
of all personnel of the Trust or the Adviser performing services relating
to research, statistical and investment activities. The Adviser is
authorized, in its discretion and without prior consultation with the
Portfolio, to buy, sell, lend and otherwise trade in any stocks, bonds and
other securities and investment instruments on behalf of the Portfolio. The
investment policies and all other actions of the Portfolio are and shall at
all times be subject to the control and direction of the Trust's Board of
Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance of) the management and administrative services necessary for
the operation of the Portfolio. The Adviser shall, subject to the
supervision of the Board of Trustees, perform various services for the
Portfolio, including but not limited to: (i) providing the Portfolio with
office space, equipment and facilities (which may be its own) for
maintaining its organization; (ii) on behalf of the Portfolio, supervising
relations with, and monitoring the performance of custodians, depositories,
transfer and pricing agents, accountants, attorneys, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to be
necessary or desirable; (iii) preparing all general shareholder
communications, including shareholder reports; (iv) conducting shareholder
relations; (v) maintaining the Portfolio's existence and its records; and
(vi) investigating the development of and developing and implementing, if
appropriate, management and shareholder services designed to enhance the
value or convenience of the Portfolio as an investment vehicle. The Adviser
also shall pay the following Portfolio fees and expenses: (i) legal and
audit expenses; (ii) custodian, registrar and transfer agent fees and
expenses; (iii) fees and expenses related to the registration and
qualification of the Trust and the Portfolio's shares for distribution
under state and federal securities laws; (iv) expenses of printing and
mailing reports and notices and proxy material to shareholders of the
Portfolio; (v) all other expenses incidental to holding meetings of the
Portfolio's shareholders, including proxy solicitations therefor; (vi) a
pro rata share, based on relative net assets of the Portfolio and other
registered investment companies having Advisory and Service or Management
Contracts with the Adviser, of 50% of insurance premiums for fidelity and
other coverage; (vii) its proportionate share of association membership
dues; (viii) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; and (ix)
expenses of printing and mailing Prospectuses and Statements of Additional
Information and supplements thereto sent to existing shareholders.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Portfolio as the Trust's Board of Trustees may request from
time to time or as the Adviser may deem to be desirable. The Adviser shall
make recommendations to the Trust's Board of Trustees with respect to
Portfolio policies, and shall carry out such policies as are adopted by the
Trustees. The Adviser shall, subject to review by the Board of Trustees,
furnish such other services as the Adviser shall from time to time
determine to be necessary or useful to perform its obligations under this
Contract.
(c) The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or
dealers affiliated with the Adviser. The Adviser shall use its best efforts
to seek to execute portfolio transactions at prices which are advantageous
to the Portfolio and at commission rates which are reasonable in relation
to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who
also provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Portfolio
and/or the other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction
or the overall responsibilities which the Adviser and its affiliates have
with respect to accounts over which they exercise investment discretion.
The Trustees of the Trust shall periodically review the commissions paid by
the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the
Portfolio.
(d) The Adviser shall, in acting hereunder, be an independent contractor.
The Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Trust are or may be or become interested in the Adviser as directors,
officers or otherwise and that directors, officers and stockholders of the
Adviser are or may be or become similarly interested in the Trust, and that
the Adviser may be or become interested in the Portfolio as a shareholder
or otherwise.
3. For the services and facilities to be furnished hereunder, the Adviser
shall receive a management fee paid monthly based upon the average daily
net assets of the Portfolio (computed in the manner set forth in the
Declaration of Trust) throughout the month. The fee shall be payable as
soon as practicable after the last day of each month at an annual rate
determined as set forth below. The fee rate shall be determined on a
cumulative basis pursuant to the following schedule:
The Annual Fee Rate Is
<TABLE>
<CAPTION>
<S> <C> <C>
On average daily net assets of the Portfolio through $400 million 0.365%
On average daily net assets in excess of $400 million through $800 million 0.360%
On average daily net assets in excess of $800 million through $1.2 billion 0.355%
On average daily net assets in excess of $1.2 billion through $1.6 billion 0.350%
On average daily net assets in excess of $1.6 billion through $2.0 billion 0.340%
On average daily net assets in excess of $2.0 billion 0.330%
</TABLE>
provided that the fee so computed shall be reduced by the compensation,
including reimbursement of expenses, paid by the Portfolio to those
Trustees of the Trust who are not "interested persons" of the Trust or the
Adviser. In the case of initiation or termination of this Contract during
any month, the fee for that month shall be reduced proportionately on the
basis of the number of business days during which it is in effect and the
fee computed upon the average net assets for the business days it is so in
effect for that month.
4. It is understood that the Portfolio will pay all its expenses other
than those expressly stated to be payable by the Adviser hereunder, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in
connection with the purchase or sale of securities and other investment
instruments; (iii) fees and expenses of the Trust's Trustees other than
those who are "interested persons" of the Trust or the Adviser; and (iv)
such non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Portfolio is a party
and the legal obligation which the Portfolio may have to indemnify the
Trust's Trustees and officers with respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and
activities do not, during the term of this Contract, interfere, in a
material manner, with the Adviser's ability to meet all of its obligations
with respect to rendering services to the Portfolio hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser,
the Adviser shall not be subject to liability to the Portfolio or to any
shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until July 31,
1996, and indefinitely thereafter, but only so long as the continuance
after such date shall be specifically approved at least annually by vote of
the Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent, such consent on the
part of the Portfolio to be authorized by vote of a majority of the
outstanding voting securities of the Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract
must have been approved by the vote of a majority of those Trustees of the
Trust who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior
written notice to the other, terminate this Contract, without payment of
any penalty, by action of its Trustees or Board of Directors, as the case
may be, or with respect to the Portfolio by vote of a majority of the
outstanding voting securities of the Portfolio. This Contract shall
terminate automatically in the event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust's Declaration of Trust and
agrees that the obligations assumed by the Trust pursuant to this Contract
shall be limited in all cases to the Portfolio and its assets, and the
Adviser shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio or any other Portfolios of
the Trust. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser
understands that the rights and obligations of any Portfolio under the
Declaration of Trust are separate and distinct from those of any and all
other Portfolios.
8. The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended and subject to such orders as may be granted by the
Securities and Exchange Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and
their respective seals to be hereunto affixed, all as of the date written
above.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST
on behalf of cash Portfolio
By /s/ j. gary burkhead
j. gary burkhead, senior vice president
FIDELITY MANAGEMENT & RESEARCH COMPANY
By /s/ J. gary burkhead
j. gary burkhead, president
SUBCUSTODIAN AGREEMENT
Date as of : December 6, 1991
Among
NORTH CAROLINA CASH MANAGEMENT TRUST,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
and
THE BANK OF NEW YORK
TABLE OF CONTENTS
ARTICLE Page
I. APPOINTMENT OF SUBCUSTODIAN 1
II. POWERS AND DUTIES OF SUBCUSTODIAN 1
2.01 Safekeeping 2
2.02 Manner of Holding Securities 2
2.03 Security Purchases 2
2.04 Exchanges of Securities 3
2.05 Sales of Securities 3
2.06 Depositary Receipts 5
2.07 Exercise of Rights; Tender Offers 5
2.08 Stock Dividends, Rights, Etc. 6
2.09 Options 6
2.10 Futures Contracts 6
2.11 Borrowing 5
2.12 Interest Bearing Deposits 6
2.13 Foreign Exchange Transactions 6
2.14 Securities Loans 7
2.15 Collections 7
2.16 Dividends, Distributions and Redemptions 8
2.17 Proceeds from Shares Sold 8
2.18 Proxies, Notices, Etc. 8
2.19 Bills and Other Disbursements 9
2.20 Nondiscretionary Functions 9
2.21 Bank Accounts 9
2.22 Deposit of Fund Assets in Securities Systems 10
2.23 Other Transfers 11
2.24 Establishment of Segregated Account 11
2.25 Subcustodian's Books and Records 12
2.26 Opinion of Fund's Independent Certified
Public Accountants 12
2.27 Reports of Independent Certified
Public Accountants 12
2.28 Overdraft Facility 13
III. PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS 13
3.01 Proper Instructions; Special Instructions 13
3.02 Authorized Persons 14
3.03 Persons Having Access to Assets
of the Portfolios 15
3.04 Actions of Subcustodian Based on Proper
Instructions and Special Instructions 15
IV. SECONDARY SUBCUSTODIANS 15
4.01 Domestic Subcustodians 15
4.02 Foreign Subcustodians and Interim
Subcustodians 16
4.03 Termination of a Subcustodian 17
4.04 Certification Regarding Foreign Subcustodians 17
V. STANDARD OF CARE; INDEMNIFICATION 18
5.01 Standard of Care 18
5.02 Liability of Subcustodian for Actions of Other Persons 19
5.03 Indemnification 20
5.04 Investment Limitations 21
5.05 Fund's Right to Proceed 21
VI. COMPENSATION 22
VII. TERMINATION 22
7.01 Termination of Agreement in Full 22
7.02 Termination as to One or More Portfolios 23
VIII. DEFINED TERMS 24
IX. MISCELLANEOUS 24
9.01 Execution of Documents, Etc. 24
9.02 Representative Capacity; Nonrecourse Obligations 24
9.03 Several Obligations of the Portfolios 25
9.04 Representations and Warranties 25
9.05 Entire Agreement 26
9.06 Waivers and Amendments 26
9.07 Interpretation 26
9.08 Captions 27
9.09 Governing Law 27
9.10 Notices 27
9.11 Assignment 28
9.12 Counterparts 28
9.13 Confidentiality; Survival of Obligations 28
SUBCUSTODIAN AGREEMENT
AGREEMENT made as of the 6th day of December, 1991 among North Carolina
Cash Management Trust (the "Fund"), First Union National Bank of North
Carolina (the "Custodian") and The Bank of New York (the "Subcustodian").
W I T N E S S E T H
WHEREAS, the Fund may, from time to time organize one or more series of
shares, in addition to the series set forth in Appendix "A" attached
hereto, each of which shall represent an interest in a separate portfolio
of cash, securities and other assets (all such existing and additional
series now or hereafter listed on Appendix "A" being hereinafter referred
to individually, as a "Portfolio," and collectively, as the "Portfolios");
and
WHEREAS, the Fund, on behalf of the Portfolios, has appointed the
Custodian as custodian pursuant to the terms and conditions of a Custodian
Agreement dated December 6, 1991 by and between the Fund and the Custodian
(the "Custodian Agreement").
WHEREAS, the Custodian desires to appoint the Subcustodian as subcustodian
on behalf of the Portfolios in accordance with the provisions of the
Investment Company Act of 1940 (the "1940 Act") and the rules and
regulations thereunder, under the terms and conditions set forth in the
Custodian Agreement and this Agreement, and the Subcustodian has agreed so
to act as subcustodian.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF SUBCUSTODIAN
On behalf of the Portfolios, the Custodian hereby employs and appoints the
Subcustodian as a subcustodian, subject to the terms and provisions of this
Agreement. The Custodian shall deliver to the Subcustodian, or shall cause
to be delivered to the Subcustodian, cash, securities and other assets
owned by the Portfolios from time to time during the term of this Agreement
and shall specify the Portfolio to which such cash, securities and other
assets are to be specifically allocated.
ARTICLE II
POWERS AND DUTIES OF SUBCUSTODIAN
As subcustodian, the Subcustodian shall have and perform the powers and
duties set forth in this Article II. Pursuant to and in accordance with
Article IV hereof, the Subcustodian may appoint one or more Secondary
Subcustodians (as hereinafter defined) to exercise the powers and perform
the duties of the Subcustodian set forth in this Article II and references
to the Subcustodian in this Article II shall include any Secondary
Subcustodian so appointed.,
Section 2.01. Safekeeping. The Subcustodian shall keep safely all cash,
securities and other assets of the Portfolios delivered to the Subcustodian
and, on behalf of the Custodian, the Subcustodian shall, from time to time,
accept delivery of cash, securities and other assets for safekeeping.
Section 2.02. Manner of Holding Securities.
(a) The Subcustodian shall at all times hold securities of the Portfolios
either: (i) by physical possession of the share certificates or other
instruments representing such securities in registered or bearer form; or
(ii) in book-entry form by a Securities System (as hereinafter defined) in
accordance with the provisions of Section 2.22 below.
(b) The Subcustodian shall at all times hold registered securities of
each Portfolio in the name of the Subcustodian, the Portfolio or a nominee
of either of them, unless specifically directed by Proper Instructions to
hold such registered securities in so-called street name; provided that, in
any event, all such securities and other assets shall be held in an account
of the Subcustodian containing only assets of a Portfolio, or only assets
held by Subcustodian as a fiduciary or custodian for customers, and
provided further, that the records of the Subcustodian shall indicate at
all times the Portfolio or other customer for which such securities and
other assets are held in such account and the respective interests therein.
Section 2.03. Security Purchases. Upon receipt of Proper Instructions
(as hereinafter defined), the Subcustodian shall pay for and receive
securities purchased for the account of a Portfolio, provided that payment
shall be made by Subcustodian only upon receipt of the securities: (a) by
the Subcustodian; (b) by a clearing corporation of a national securities
exchange of which the Subcustodian is a member; or (c) by a Securities
System. Notwithstanding the foregoing, upon receipt of Proper
Instructions: (i) in the case of a repurchase agreement, the Subcustodian
may release funds to a Securities System prior to the receipt of advice
from the Securities System that the securities underlying such repurchase
agreement have been transferred by book-entry into the Account (as
hereinafter defined) maintained with such Securities System by the
Subcustodian, provided that the Subcustodian's instructions to the
Securities System require that the Securities System may make payment of
such funds to the other party to the repurchase agreement only upon
transfer by book-entry of the securities underlying the repurchase
agreement into the Account; (ii) in the case of time deposits, call account
deposits, currency deposits, and other deposits, foreign exchange
transactions, futures contracts or options, pursuant to Sections 2.09,
2.10, 2.12 and 2.13 hereof, the Subcustodian may make payment therefor
before receipt of an advice or confirmation evidencing said deposit or
entry into such transaction; and (iii) in the case of the purchase of
securities, the settlement of which occurs outside of the United States of
America, the Subcustodian may make payment therefor and receive delivery of
such securities in accordance with local custom and practice generally
accepted by Institutional Clients (as hereinafter defined) in the country
in which the settlement occurs, but in all events subject to the standard
of care set forth in Article V hereof. For purposes of this Agreement, an
"Institutional Client" shall mean a major commercial bank, corporation,
insurance company, or substantially similar institution, which, as a
substantial part of its business operations, purchases or sells securities
and makes uses of custodian services.
Section 2.04. Exchanges of Securities. Upon receipt of Proper
Instructions, the Subcustodian shall exchange securities held by it for the
account of a Portfolio for other securities in connection with any
reorganization, recapitalization, split-up of shares, change of par value,
conversion or other event relating to the securities or the issuer of such
securities, and shall deposit any such securities in accordance with the
terms of any reorganization or protective plan. The Subcustodian shall,
without receiving Proper Instructions: surrender securities in temporary
form for definitive securities; surrender securities for transfer into the
name of the Subcustodian, a Portfolio or a nominee of either of them, as
permitted by Section 2.02(b); and surrender securities for a different
number of certificates or instruments representing the same number of
shares or same principal amount of indebtedness, provided that the
securities to be issued will be delivered to the Subcustodian or a nominee
of the Subcustodian.
Section 2.05. Sales of Securities. Upon receipt of Proper Instructions,
the Subcustodian shall make delivery of securities which have been sold for
the account of a Portfolio, but only against payment therefor in the form
of: (a) cash, certified check, bank cashier's check, bank credit, or bank
wire transfer; (b) credit to the account of the Subcustodian with a
clearing corporation of a national securities exchange of which the
Subcustodian is a member; or (c) credit to the Account of the Subcustodian
with a Securities System, in accordance with the provisions of Section 2.22
hereof. Notwithstanding the foregoing: (i) in the case of the sale of
securities, the settlement of which occurs outside of the United States of
America, such securities shall be delivered and paid for in accordance with
local custom and practice generally accepted by Institutional Clients in
the country in which the settlement occurs, but in all events subject to
the standard of care set forth in Article V hereof; and (ii) in the case of
securities held in physical form, such securities shall be delivered and
paid for in accordance with "street delivery custom" to a broker or its
clearing agent, against delivery to the Subcustodian of a receipt for such
securities, provided that the Subcustodian shall have taken reasonable
steps to ensure prompt collection of the payment for, or the return of,
such securities by the broker or its clearing agent, and provided further
that the Subcustodian shall not be responsible for the selection of or the
failure or inability to perform of such broker or its clearing agent.
Section 2.06. Depositary Receipts. Upon receipt of Proper Instructions,
the Subcustodian shall surrender securities to the depositary used for such
securities by an issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter referred to, collectively as "ADRs"),
against a written receipt therefor adequately describing such securities
and written evidence satisfactory to the Subcustodian that the depositary
has acknowledged receipt of instructions to issue ADRs with respect to such
securities in the name of the Subcustodian or a nominee of the
Subcustodian, for delivery to the Subcustodian at such place as the
Subcustodian may from time to time designate. Upon receipt of Proper
Instructions, the Subcustodian shall surrender ADRs to the issuer thereof,
against a written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the Subcustodian that the
issuer of the ADRs has acknowledged receipt of instructions to cause its
depository to deliver the securities underlying such ADRs to the
Subcustodian.
Section 2.07. Exercise of Rights; Tender Offers. Upon receipt of Proper
Instructions, the Subcustodian shall: (a) deliver warrants, puts, calls,
rights or similar securities to the issuer or trustee thereof, or to the
agent of such issuer or trustee, for the purpose of exercise or sale,
provided that the new securities, cash or other assets, if any, acquired as
a result of such actions are to be delivered to the Subcustodian; and (b)
deposit securities upon invitations for tenders thereof, provided that the
consideration for such securities is to be paid or delivered to the
Subcustodian, or the tendered securities are to be returned to the
Subcustodian. Notwithstanding any provision of this Agreement to the
contrary, the Subcustodian shall take all necessary action, unless
otherwise directed to the contrary in Proper Instructions, to comply with
the terms of all mandatory or compulsory exchanges, calls, tenders,
redemptions, or similar rights of security ownership, and shall promptly
notify the Custodian of such action in writing by facsimile transmission or
in such other manner as the Custodian and Subcustodian may agree in
writing.
Section 2.08. Stock Dividends, Rights, Etc. The Subcustodian shall
receive and collect all stock dividends, rights and other items of like
nature and, upon receipt of Proper Instructions, take action with respect
to the same as directed in such Proper Instructions.
Section 2.09. Options. Upon receipt of Proper Instructions and in
accordance with the provisions of any agreement between the Subcustodian,
any registered broker-dealer and, if necessary, the Fund relating to
compliance with the rules of the Options Clearing Corporation or of any
registered national securities exchange or similar organization(s), the
Subcustodian shall: (a) receive and retain confirmations or other
documents, if any, evidencing the purchase or writing of an option on a
security or securities index by a Portfolio; (b) deposit and maintain in a
segregated account, securities (either physically or by book-entry in a
Securities System), cash or other assets; and (c) pay, release and/or
transfer such securities, cash or other assets in accordance with notices
or other communications evidencing the expiration, termination or exercise
of such options furnished by the Options Clearing Corporation, the
securities or options exchange on which such options are traded, or such
other organization as may be responsible for handling such option
transactions. The Fund and the broker-dealer shall be responsible for the
sufficiency of assets held in any segregated account established in
compliance with applicable margin maintenance requirements and the
performance of other terms of any option contract.
Section 2.10. Futures Contracts. Upon receipt of Proper Instructions, or
pursuant to the provisions of any futures margin procedural agreement among
the Fund, on behalf of any Portfolio, the Subcustodian and any futures
commission merchant (a "Procedural Agreement"), the Subcustodian shall:
(a) receive and retain confirmations, if any, evidencing the purchase or
sale of a futures contract or an option on a futures contract by a
Portfolio; (b) deposit and maintain in a segregated account, cash,
securities and other assets designated as initial, maintenance or variation
"margin" deposits intended to secure the Portfolio's performance of its
obligations under any futures contracts purchased or sold or any options on
futures contracts written by the Portfolio, in accordance with the
provisions of any Procedural Agreement designed to comply with the rules of
the Commodity Futures Trading Commission and/or any commodity exchange or
contract market (such as the Chicago Board of Trade), or any similar
organization(s), regarding such margin deposits; and (c) release assets
from and/or transfer assets into such margin accounts only in accordance
with any such Procedural Agreements. The Fund and such futures commission
merchant shall be responsible for the sufficiency of assets held in the
segregated account in compliance with applicable margin maintenance
requirements and the performance of any futures contract or option on a
futures contract in accordance with its terms.
Section 2.11. Borrowing. Upon receipt of Proper Instructions, the
Subcustodian shall deliver securities of a Portfolio to lenders or their
agents, or otherwise establish a segregated account as agreed to by the
Custodian and the Subcustodian, as collateral for borrowings effected by
the Fund on behalf of a Portfolio, provided that such borrowed money is
payable by the lender (a) to or upon the Subcustodian's order, as
Subcustodian for such Portfolio, and (b) concurrently with delivery of such
securities.
Section 2.12. Interest Bearing Deposits.
Upon receipt of Proper Instructions directing the Subcustodian to purchase
interest bearing fixed term and call deposits (hereinafter referred to
collectively, as "Interest Bearing Deposits") for the account of a
Portfolio, the Subcustodian shall purchase such Interest Bearing Deposits
in the name of a Portfolio with such banks or trust companies (including
the Subcustodian, any Secondary Subcustodian, or any subsidiary or
affiliate of the Subcustodian) (hereinafter referred to as "Banking
Institutions") and in such amounts as the Custodian may direct pursuant to
Proper Instructions. Such Interest Bearing Deposits may be denominated in
U.S. Dollars or other currencies, as the Custodian may determine and direct
pursuant to Proper Instructions. The Subcustodian shall include in its
records with respect to the assets of each Portfolio appropriate notation
as to the amount and currency of each such Interest Bearing Bank Deposit,
the accepting Banking Institution and all other appropriate details, and
shall retain such forms of advice or receipt evidencing such account, if
any, as may be forwarded to the Subcustodian by the Banking Institution.
The responsibilities of the Subcustodian for Interest Bearing Deposits
accepted on the Subcustodian's books in the United States shall be that of
a U.S. bank for a similar deposit. With respect to Interest Bearing
Deposits other than those accepted on the Subcustodian's books, (a) the
Subcustodian shall be responsible for the collection of income as set forth
in Section 2.15 and the transmission of cash and instructions to and from
such accounts; and (b) the Subcustodian shall have no duty with respect to
the selection of the Banking Institution or, so long as the Subcustodian
acts in accordance with Proper Instructions, for the failure of such
Banking Institution to pay upon demand. Upon receipt of Proper
Instructions, the Subcustodian shall take such reasonable actions as the
Custodian deems necessary or appropriate to cause each such Interest
Bearing Deposit Account to be insured to the maximum extent possible by all
applicable deposit insurers including, without limitation, the Federal
Deposit Insurance Corporation.
Section 2.13. Foreign Exchange Transactions.
(a) Foreign Exchange Transactions Other than as Principal. Upon receipt
of Proper Instructions, the Subcustodian shall settle foreign exchange
contracts or options to purchase and sell foreign currencies for spot and
future delivery on behalf of and for the account of a Portfolio with such
currency brokers or Banking Institutions as the Custodian may determine and
direct pursuant to Proper Instructions. The Subcustodian shall be
responsible for the transmission of cash and instructions to and from the
currency broker or Banking Institution with which the contract or option is
made, the safekeeping of all certificates and other documents and
agreements evidencing or relating to such foreign exchange transactions and
the maintenance of proper records as set forth in Section 2.25. The
Subcustodian shall have no duty with respect to the selection of the
currency brokers or Banking Institutions with which the Custodian deals or,
so long as the Subcustodian acts in accordance with Proper Instructions,
for the failure of such brokers or Banking Institutions to comply with the
terms of any contract or option.
(b) Foreign Exchange Contracts as Principal. The Subcustodian shall not
be obligated to enter into foreign exchange transactions as principal.
However, if the Subcustodian has made available to the Custodian its
services as a principal in foreign exchange transactions, upon receipt of
Proper Instructions, the Subcustodian shall enter into foreign exchange
contracts or options to purchase and sell foreign currencies for spot and
future delivery on behalf of and for the account of a Portfolio with the
Subcustodian as principal. The Subcustodian shall be responsible for the
selection of the currency brokers or Banking Institutions and the failure
of such currency brokers or Banking Institutions to comply with the terms
of any contract or option.
(c) Payments. Notwithstanding anything to the contrary contained herein,
upon receipt of Proper Instructions the Subcustodian may, in connection
with a foreign exchange contract, make free outgoing payments of cash in
the form of U.S. Dollars or foreign currency prior to receipt of
confirmation of such foreign exchange contract or confirmation that the
countervalue currency completing such contract has been delivered or
received.
Section 2.14. Securities Loans. Upon receipt of Proper Instructions, the
Subcustodian shall, in connection with loans of securities by a Portfolio,
deliver securities of such Portfolio to the borrower thereof prior to
receipt of the collateral, if any, for such borrowing; provided that, in
cases of loans of securities secured by cash collateral, the Subcustodian's
instructions to the Securities System shall require that the Securities
System deliver the securities of the Portfolio to the borrower thereof only
upon receipt of the collateral for such borrowing.
Section 2.15. Collections. The Subcustodian shall, and shall cause any
Secondary Subcustodian to: (a) collect amounts due and payable to the Fund
with respect to portfolio securities and other assets of each Portfolio;
(b) promptly credit to the account of each Portfolio all income and other
payments relating to portfolio securities and other assets held by the
Subcustodian hereunder upon Subcustodian's receipt of such income or
payments or as otherwise agreed in writing by the Subcustodian and the
Custodian; (c) promptly endorse and deliver any instruments required to
effect such collections; and (d) promptly execute ownership and other
certificates and affidavits for all federal, state and foreign tax purposes
in connection with receipt of income or other payments with respect to
portfolio securities and other assets of each Portfolio, or in connection
with the transfer of such securities or other assets; provided, however,
that with respect to portfolio securities registered in so-called street
name, the Subcustodian shall use its best efforts to collect amounts due
and payable to the Fund. The Subcustodian shall promptly notify the
Custodian in writing by facsimile transmission or in such other manner as
the Custodian and Subcustodian may agree in writing if any amount payable
with respect to portfolio securities or other assets of the Portfolios is
not received by the Subcustodian when due. The Subcustodian shall not be
responsible for the collection of amounts due and payable with respect to
portfolio securities or other assets that are in default.
Section 2.16. Dividends, Distributions and Redemptions. The Subcustodian
shall promptly release funds or securities: (a) upon receipt of Proper
Instructions, to one or more Distribution Accounts designated by the
Custodian in such Proper Instructions; or (b) upon receipt of Special
Instructions, as otherwise directed by the Custodian, for the purpose of
the payment of dividends or other distributions to shareholders of the
Portfolios, and payment to shareholders who have requested repurchase or
redemption of their shares of the Portfolio(s) (collectively, the
"Shares"). For purposes of this Agreement, a "Distribution Account" shall
mean an account established at a Banking Institution designated by the
Custodian in Special Instructions.
Section 2.17. Proceeds from Shares Sold. The Subcustodian shall receive
funds representing cash payments received for Shares issued or sold from
time to time by the Fund, and shall promptly credit such funds to the
account(s) of the applicable Portfolio(s). The Subcustodian shall promptly
notify the Custodian of Subcustodian's receipt of cash in payment for
Shares issued by the Fund by facsimile transmission or in such other manner
as the Custodian and Subcustodian may agree in writing. Upon receipt of
Proper Instructions, the Subcustodian shall: (a) deliver all federal funds
received by the Subcustodian in payment for Shares in payment for such
investments as may be set forth in such Proper Instructions and at a time
agreed upon between the Subcustodian and the Custodian; and (b) make
federal funds available to the Custodian as of specified times agreed upon
from time to time by the Custodian and the Subcustodian, in the amount of
checks received in payment for Shares which are deposited to the accounts
of the Portfolios.
Section 2.18. Proxies, Notices, Etc. The Subcustodian shall deliver to
the Custodian, in the most expeditious manner practicable, all forms of
proxies, all notices of meetings, and any other notices or announcements
affecting or relating to securities owned by the Portfolios that are
received by the Subcustodian, any Secondary Subcustodian, or any nominee of
either of them, and, upon receipt of Proper Instructions, the Subcustodian
shall execute and deliver, or cause such Subcustodian or nominee to execute
and deliver, such proxies or other authorizations as may be required.
Except as directed pursuant to Proper Instructions, neither the
Subcustodian nor any Secondary Subcustodian or nominee shall vote upon any
such securities, or execute any proxy to vote thereon, or give any consent
or take any other action with respect thereto.
Section 2.19. Bills and Other Disbursements. Upon receipt of Proper
Instructions, the Subcustodian shall pay or cause to be paid, all bills,
statements, or other obligations of the Portfolios.
Section 2.20. Nondiscretionary Functions. The Subcustodian shall attend
to all nondiscretionary details in connection with the sale, exchange,
substitution, purchase, transfer or other dealings with securities or other
assets of the Portfolios held by the Subcustodian, except as otherwise
directed from time to time pursuant to Proper Instructions.
Section 2.21. Bank Accounts
(a) Accounts with the Subcustodian and any Secondary Subcustodians. The
Subcustodian shall open and operate a bank account or accounts (hereinafter
referred to collectively, as "Bank Accounts") on the books of the
Subcustodian or any Secondary Subcustodian provided that such account(s)
shall be in the name of the Subcustodian or a nominee of the Subcustodian,
for the account of a Portfolio, and shall be subject only to the draft or
order of the Subcustodian; provided however, that such Bank Accounts in
countries other than the United States may be held in an account of the
Subcustodian containing only assets held by the Subcustodian as a fiduciary
or custodian for customers, and provided further, that the records of the
Subcustodian shall indicate at all times the Portfolio or other customer
for which such securities and other assets are held in such account and the
respective interests therein. Such Bank Accounts may be denominated in
either U.S. Dollars or other currencies. The responsibilities of the
Subcustodian for deposits accepted on the Subcustodian's books in the
United States shall be that of a U.S. bank for a similar deposit. The
responsibilities of the Subcustodian for deposits accepted on any
Subcustodian's books shall be governed by the provisions of Section 5.02.
(b) Accounts With Other Banking Institutions. The Subcustodian may open
and operate Bank Accounts on behalf of a Portfolio, in the name of the
Subcustodian or a nominee of the Subcustodian, at a Banking Institution
other than the Subcustodian or any Secondary Subcustodian, provided that
such account(s) shall be in the name of the Subcustodian or a nominee of
the Subcustodian, for the account of a Portfolio, and shall be subject only
to the draft or order of the Subcustodian; provided, however, that such
Bank Accounts may be held in an account of the Subcustodian containing only
assets held by the Subcustodian as a fiduciary or custodian for customers,
and provided further, that the records of the Subcustodian shall indicate
at all times the Portfolio or other customer for which such securities and
other assets are held in such account and the respective interests therein.
Such Bank Accounts may be denominated in either U.S. Dollars or other
currencies. Subject to the provisions of Section 5.01(a), the Subcustodian
shall be responsible for the selection of the Banking Institution and for
the failure of such Banking Institution to pay according to the terms of
the deposit.
(c) Deposit Insurance. Upon receipt of Proper Instructions, the
Subcustodian shall take such reasonable actions as the Custodian deems
necessary or appropriate to cause each deposit account established by the
Subcustodian pursuant to this Section 2.21 to be insured to the maximum
extent possible by all applicable deposit insurers including, without
limitation, the Federal Deposit Insurance Corporation.
Section 2.22. Deposit of Fund Assets in Securities Systems. The
Subcustodian may deposit and/or maintain domestic securities owned by the
Portfolios in: (a) The Depository Trust Company; (b) the Participants
Trust Company; (c) any book-entry system as provided in (i) Subpart O of
Treasury Circular No. 300, 31 CFR 306.115, (ii) Subpart B of Treasury
Circular Public Debt Series No. 27-76, 31 CFR 350.2, or (iii) the
book-entry regulations of federal agencies substantially in the form of 31
CFR 306.115; or (d) any other domestic clearing agency registered with the
Securities and Exchange Commission ("SEC") under Section 17A of the
Securities Exchange Act of 1934 (or as may otherwise be authorized by the
Securities and Exchange Commission to serve in the capacity of depository
or clearing agent for the securities or other assets of investment
companies) which acts as a securities depository and the use of which the
Custodian has previously approved by Special Instructions (as hereinafter
defined) (each of the foregoing being referred to in this Agreement as a
"Securities System"). Use of a Securities System shall be in accordance
with applicable Federal Reserve Board and SEC rules and regulations, if
any, and subject to the following provisions:
(A) The Subcustodian may deposit and/or maintain securities held
hereunder in a Securities System, provided that such securities are
represented in an account ("Account") of the Subcustodian in the Securities
System which account shall not contain any assets of the Subcustodian other
than assets held as a fiduciary, custodian, or otherwise for customers.
(B) The books and records of the Subcustodian shall at all times identify
those securities belonging to each Portfolio which are maintained in a
Securities System.
(C) The Subcustodian shall pay for securities purchased for the account
of a Portfolio only upon (w) receipt of advice from the Securities System
that such securities have been transferred to the account of the
Subcustodian, and (x) the making of an entry on the records of the
Subcustodian to reflect such payment and transfer for the account of such
Portfolio. The Subcustodian shall transfer securities sold for the account
of a Portfolio only upon (y) receipt of advice from the Securities System
that payment for such securities has been transferred to the Account of the
Subcustodian, and (z) the making of an entry on the records of the
Subcustodian to reflect such transfer and payment for the account of such
Portfolio. Copies of all advices from the Securities System relating to
transfers of securities for the account of a Portfolio shall identify such
Portfolio, shall be maintained for the Portfolio by the Subcustodian. The
Subcustodian shall deliver to the Custodian on the next succeeding business
day daily transaction reports which shall include each day's transactions
in the Securities System for the account of each Portfolio. Such
transaction reports shall be delivered to the Custodian or any agent
designated by the Custodian pursuant to Proper Instructions, by computer or
in such other manner as the Custodian and Subcustodian may agree in
writing.
(D) The Subcustodian shall, if requested by the Custodian pursuant to
Proper Instructions, provide the Custodian with all reports obtained by the
Subcustodian or any Subcustodian with respect to a Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System.
(E) Upon receipt of Special Instructions, the Subcustodian shall
terminate the use of any Securities System (except the federal book-entry
system) on behalf of any Portfolio as promptly as practicable and shall
take all actions reasonably practicable to safeguard the securities of the
Portfolios maintained with such Securities System.
Section 2.23. Other Transfers. Upon receipt of Special Instructions, the
Subcustodian shall make such other dispositions of securities, funds or
other property of the Portfolios in a manner or for purposes other than as
expressly set forth in this Agreement, provided that the Special
Instructions relating to such disposition shall include a statement of the
purpose for which the delivery is to be made, the amount of funds and/or
securities to be delivered, and the name of the person or persons to whom
delivery is to be made, and shall otherwise comply with the provisions of
Sections 3.01 and 3.03 hereof.
Section 2.24. Establishment of Segregated Account. Upon receipt of
Proper Instructions, the Subcustodian shall establish and maintain on its
books a segregated account or accounts for and on behalf of a Portfolio,
into which account or accounts may be transferred cash and/or securities or
other assets of such Portfolio, including securities maintained by the
Subcustodian in a Securities System pursuant to Section 2.22 hereof, said
account or accounts to be maintained: (a) for the purposes set forth in
Sections 2.09, 2.10 and 2.11 hereof; (b) for the purposes of compliance by
the Fund with the procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the SEC relating to the
maintenance of segregated accounts by registered investment companies; or
(c) for such other purposes as set forth, from time to time, in Special
Instructions.
Section 2.25. Subcustodian's Books and Records. The Subcustodian shall
provide any assistance reasonably requested by the Custodian in the
preparation of reports to Fund shareholders and others, audits of accounts,
and other ministerial matters of like nature. The Subcustodian shall
maintain complete and accurate records with respect to securities and other
assets held for the accounts of the Portfolios as required by the rules and
regulations of the SEC applicable to investment companies registered under
the 1940 Act, including: (a) journals or other records of original entry
containing a detailed and itemized daily record of all receipts and
deliveries of securities (including certificate and transaction
identification numbers, if any), and all receipts and disbursements of
cash; (b) ledgers or other records reflecting (i) securities in transfer,
(ii) securities in physical possession, (iii) securities borrowed, loaned
or collateralizing obligations of the Portfolios, (iv) monies borrowed and
monies loaned (together with a record of the collateral therefor and
substitutions of such collateral), and (v) dividends and interest received;
and (c) cancelled checks and bank records related thereto. The
Subcustodian shall keep such other books and records of the Fund as the
Fund shall reasonably request. All such books and records maintained by
the Subcustodian shall be maintained in a form acceptable to the Fund and
in compliance with the rules and regulations of the SEC, including, but not
limited to, books and records required to be maintained by Section 31(a) of
the 1940 Act and the rules and regulations from time to time adopted
thereunder. All books and records maintained by the Subcustodian pursuant
to this Agreement shall at all times be the property of the Fund and shall
be available during normal business hours for inspection and use by the
Fund and its agents, including, without limitation, its independent
certified public accountants. Notwithstanding the preceding sentence, the
Fund shall not take any actions or cause the Subcustodian to take any
actions which would cause, either directly or indirectly, the Subcustodian
to violate any applicable laws, regulations or orders.
Section 2.26. Opinion of Fund's Independent Certified Public Accountants.
The Subcustodian shall take all reasonable action as the Fund may request
to obtain from year to year favorable opinions from the Fund's independent
certified public accountants with respect to the Subcustodian's activities
hereunder in connection with the preparation of the Fund's Form N-1A and
the Fund's Form N-SAR or other periodic reports to the SEC and with respect
to any other requirements of the SEC.
Section 2.27. Reports by Independent Certified Public Accountants. At
the request of the Fund, the Subcustodian shall deliver to the Fund a
written report prepared by the Subcustodian's independent certified public
accountants with respect to the services provided by the Subcustodian under
this Agreement, including, without limitation, the Subcustodian's
accounting system, internal accounting control and procedures for
safeguarding cash, securities and other assets, including cash, securities
and other assets deposited and/or maintained in a Securities System or with
a Subcustodian. Such report shall be of sufficient scope and in sufficient
detail as may reasonably be required by the Fund and as may reasonably be
obtained by the Subcustodian.
Section 2.28. Overdraft Facility. In the event that the Subcustodian is
directed by Proper Instructions to make any payment or transfer of funds on
behalf of a Portfolio for which there would be, at the close of business on
the date of such payment or transfer, insufficient funds held by the
Subcustodian on behalf of such Portfolio, the Subcustodian may, in its
discretion, provide an overdraft (an "Overdraft") to the Fund on behalf of
such Portfolio, in an amount sufficient to allow the completion of such
payment. Any Overdraft provided hereunder: (a) shall be payable on the
next Business Day, unless otherwise agreed by the Fund and the
Subcustodian; and (b) shall accrue interest from the date of the Overdraft
to the date of payment in full by the Fund on behalf of the applicable
Portfolio at a rate agreed upon in writing, from time to time, by the
Subcustodian and the Fund. The Subcustodian and the Fund acknowledge that
the purpose of such Overdrafts is to temporarily finance the purchase or
sale of securities for prompt delivery in accordance with the terms hereof,
or to meet emergency expenses not reasonably foreseeable by the Fund. The
Subcustodian shall promptly notify the Fund in writing (an "Overdraft
Notice") of any Overdraft by facsimile transmission or in such other manner
as the Fund and the Subcustodian, the Fund, on behalf of a Portfolio, shall
pledge, assign and grant to the Subcustodian a security interest in certain
specified securities of the Portfolio, as security for Overdrafts provided
to such Portfolio, under the terms and conditions set forth in Appendix "C"
attached hereto.
ARTICLE III
PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS
Section 3.01. Proper Instructions and Special Instructions.
(a) Proper Instructions. As used herein, the term "Proper Instructions"
shall mean: (i) a tested telex, a written (including, without limitation,
facsimile transmission) request, direction, instruction or certification
signed or initialed by or on behalf of the Custodian by one or more
Authorized Persons (as hereinafter defined); (ii) a telephonic or other
oral communication by one or more Authorized Persons; or (iii) a
communication effected directly between an electro-mechanical or electronic
device or system (including, without limitation, computers) by or on behalf
of the Custodian by one or more Authorized Persons; provided, however, that
communications of the types described in clauses (ii) and (iii) above
purporting to be given by an Authorized Person shall be considered Proper
Instructions only if the Subcustodian reasonably believes such
communications to have been given by an Authorized Person with respect to
the transaction involved. Proper Instructions in the form of oral
communications shall be confirmed by the Custodian by tested telex or in
writing in the manner set forth in clause (i) above, but the lack of such
confirmation shall in no way affect any action taken by the Subcustodian in
reliance upon such oral instructions prior to the Subcustodian's receipt of
such confirmation. The Custodian and the Subcustodian are hereby
authorized to record any and all telephonic or other oral instructions
communicated to the Subcustodian. Proper Instructions may relate to
specific transactions or to types or classes of transactions, and may be in
the form of standing instructions.
(b) Special Instructions. As used herein, the term "Special
Instructions" shall mean Proper Instructions countersigned or confirmed in
writing by the Treasurer or any Assistant Treasurer of the Custodian or any
other person designated by the Treasurer of the Custodian in writing, which
countersignature or confirmation shall be (i) included on the same
instrument containing the Proper Instructions or on a separate instrument
relating thereto, and (ii) delivered by hand, by facsimile transmission, or
in such other manner as the Custodian and the Subcustodian agree in
writing.
(c) Address for Proper Instructions and Special Instructions. Proper
Instructions and Special Instructions shall be delivered to the
Subcustodian at the address and/or telephone, telecopy or telex number
agreed upon from time to time by the Subcustodian and the Custodian.
Section 3.02. Authorized Persons. Concurrently with the execution of
this Agreement and from time to time thereafter, as appropriate, the
Custodian shall deliver to the Subcustodian, duly certified as appropriate
by a Treasurer or Assistant Treasurer of the Custodian, a certificate
setting forth: (a) the names, titles, signatures and scope of authority of
all persons authorized to give Proper Instructions or any other notice,
request, direction, instruction, certificate or instrument on behalf of the
Custodian (collectively, the "Authorized Persons" and individually, an
"Authorized Person"); and (b) the names, titles and signatures of those
persons authorized to issue Special Instructions. Such certificate may be
accepted and relied upon by the Subcustodian as conclusive evidence of the
facts set forth therein and shall be considered to be in full force and
effect until delivery to the Subcustodian of a similar certificate to the
contrary. Upon delivery of a certificate which deletes the name(s) of a
person previously authorized to give Proper Instructions or to issue
Special Instructions, such persons shall no longer be considered an
Authorized Person or authorized to issue Special Instructions.
Section 3.03. Persons Having Access to Assets of the Portfolios.
Notwithstanding anything to the contrary contained in this Agreement, no
Authorized Person, Trustee, officer, employee or agent of the Custodian
shall have physical access to the assets of any Portfolio held by the
Subcustodian nor shall the Subcustodian deliver any assets of a Portfolio
for deliver to an account of such person; provided, however, that nothing
in this Section 3.03 shall prohibit (a) any Authorized Person from giving
Proper Instructions, or any person authorized to issue Special Instructions
from issuing Special Instructions, so long as such action does not result
in delivery of or access to assets of any Portfolio prohibited by this
Section 3.03; or (b) the Fund's independent certified public accountants
from examining or reviewing the assets of the Portfolios held by the
Subcustodian. The Custodian shall deliver to the Subcustodian a written
certificate identifying such Authorized Persons, Trustees, officers,
employees and agents of the Fund.
Section 3.04. Actions of Subcustodian Based on Proper Instructions and
Special Instructions. So long as and to the extent that the Subcustodian
acts in accordance with (a) Proper Instructions or Special Instructions, as
the case may be, and (b) the terms of this Agreement, the Subcustodian
shall not be responsible for the title, validity or genuineness of any
property, or evidence of title thereof, received by it or delivered by it
pursuant to this Agreement.
ARTICLE IV
SECONDARY SUBCUSTODIANS
The Subcustodian may, from time to time, in accordance with the relevant
provisions of this Article IV, appoint one or more Domestic Subcustodians,
Foreign Subcustodians and Interim Subcustodians to act on behalf of a
Portfolio. (For purposes of this Agreement, all duly appointed Domestic
Subcustodians, Foreign Subcustodians, Interim Subcustodians, and Special
Subcustodians are hereinafter referred to collectively, as "Secondary
Subcustodians.")
Section 4.01. Domestic Subcustodians. The Subcustodian may, at any time
and from time to time, appoint any bank as defined in Section 2(a)(5) of
the 1940 Act meeting the requirements of a custodian under Section 17(f) of
the 1940 Act and the rules and regulations thereunder, to act on behalf of
one or more Portfolios as a subcustodian for purposes of holding cash,
securities and other assets of such Portfolios and performing other
functions of the Subcustodian within the United States (a "Domestic
Subcustodian"); provided, that the Subcustodian shall notify the Fund in
writing of the identity and qualifications of any proposed Domestic
Subcustodian at least thirty (30) days prior to appointment of such
Domestic Subcustodian, and the Fund may, in its sole discretion, by written
notice to the Subcustodian disapprove of the appointment of such Domestic
Subcustodian. If following notice by the Subcustodian to the Fund
regarding appointment of a Domestic Subcustodian and the expiration of
thirty (30) days after the date of such notice, the Fund shall have failed
to notify the Subcustodian of its disapproval thereof, the Subcustodian
may, in its discretion, appoint such proposed Domestic Subcustodian as its
subcustodian.
Section 4.02. Foreign Subcustodians and Interim Subcustodians.
(a) Foreign Subcustodians. The Subcustodian may, at any time and from
time to time, appoint: (i) any bank, trust company or other entity meeting
the requirements of an "eligible foreign custodian" under Section 17(f) of
the 1940 Act and the rules and regulations thereunder or by order of the
Securities and Exchange Commission exempted therefrom, or (ii) any bank as
defined in Section 2(a) (5) of the 1940 Act meeting the requirements of a
custodian under Section 17(f) of the 1940 Act and the rules and regulations
thereunder to act on behalf of one or more Portfolios as a subcustodian for
purposes of holding cash, securities and other assets of such Portfolios
and performing other functions of the Subcustodian in countries other than
the United States of America (a "Foreign Subcustodian"); provided, that,
prior to the appointment of any Foreign Subcustodian, the Subcustodian
shall have obtained written confirmation of the approval of the Board of
Trustees or other governing body or entity of the Fund on behalf of the
applicable Portfolio(s) (which approval may be withheld in the sole
discretion of such Board of Trustees or other governing body or entity)
with respect to (i) the identity and qualifications of any proposed Foreign
Subcustodian, (ii) the country or countries in which, and the securities
depositories or clearing agencies, if any, through which, any proposed
Foreign Subcustodian is authorized to hold securities and other assets of
the Portfolio(s), and (iii) the form and terms of the subcustodian
agreement to be entered into between such proposed Foreign Subcustodian and
the Subcustodian. Each such duly approved Foreign Subcustodian and the
countries where and the securities depositories and clearing agencies
through which they may hold securities and other assets of the Funds shall
be listed on Appendix "B" attached hereto, as it may be amended, from time
to time, in accordance with the provisions of Section 9.06(b) hereof. The
Fund shall be responsible for informing the Subcustodian sufficiently in
advance of a proposed investment which is to be held in a country in which
no Foreign Subcustodian is authorized to act, in order that there shall be
sufficient time for the Subcustodian to effect the appropriate arrangements
with a proposed foreign subcustodian, including obtaining approval as
provided in this Section 4.02(a). The Subcustodian shall not amend any
subcustodian agreement entered into with a Foreign Subcustodian, or agree
to change or permit any changes thereunder, or waive any rights under such
agreement, which materially affect the Fund's rights or the Foreign
Subcustodian's obligations or duties to the Fund under such agreement,
except upon prior approval pursuant to Special Instructions.
(b) Interim Subcustodians. Notwithstanding the foregoing, in the event
that a Portfolio shall invest in a security or other asset to be held in a
country in which no Foreign Subcustodian is authorized to act, the
Subcustodian shall promptly notify the Fund in writing by facsimile
transmission or in such other manner as the Fund and Subcustodian shall
agree in writing of the unavailability of an approved Foreign Subcustodian
in such country; and the Subcustodian shall appoint any Person designated
by the fund to hold such security or other asset. (Any person appointed as
a subcustodian pursuant to this Section 4.02(b) is hereinafter referred to
as an "Interim Subcustodian.")
Section 4.03. Termination of a Secondary Subcustodian. The Subcustodian
shall (i) cause each Domestic Subcustodian and Foreign Subcustodian to, and
(ii) use its best efforts to cause each Interim Subcustodian to, perform
all of its obligations in accordance with the terms and conditions of the
subcustodian agreement between the Subcustodian and such Secondary
Subcustodian. In the event that the Subcustodian is unable to cause such
Secondary Subcustodian to fully perform its obligations thereunder, the
Subcustodian shall forthwith, upon the receipt of Special Instructions,
terminate such Secondary Subcustodian with respect to the Fund and, if
necessary or desirable, appoint a replacement Secondary Subcustodian in
accordance with the provisions of Section 4.01 or Section 4.02, as the case
may be. In addition to the foregoing, the Subcustodian (A) may, at any
time in its discretion, upon written notification to the Fund, terminate
any Domestic Subcustodian, Foreign Subcustodian or Interim Subcustodian,
and (B) shall, upon receipt of Special Instructions, terminate any
Secondary Subcustodian with respect to the Fund, in accordance with the
termination provisions under the applicable subcustodian agreement.
Section 4.05. Certification Regarding Foreign Subcustodians. Upon
request of the Fund, the Subcustodian shall deliver to the Fund a
certificate stating: (i) the identity of each Foreign Subcustodian then
acting on behalf of the Subcustodian; (ii) the countries in which and the
securities depositories and clearing agents through which each such Foreign
Subcustodian is then holding cash, securities and other assets of any
Portfolio; and (iii) such other information as may be requested by the Fund
to ensure compliance with Rule 17(f)-5 under the 1940 Act.
ARTICLE V
STANDARD OF CARE; INDEMNIFICATION
Section 5.01. Standard of Care.
(a) General Standard of Care. The Subcustodian shall exercise reasonable
care and diligence in carrying out all of its duties and obligations under
this Agreement, and shall be liable to the Custodian for all loss, damage
and expense suffered or incurred by the Custodian, and shall be liable to
the Fund for all loss, damage and expense suffered or incurred by the Fund
or the Portfolios, resulting from the failure of the Subcustodian to
exercise such reasonable care and diligence.
(b) Actions Prohibited by Applicable Law, Etc. In no event shall the
Subcustodian incur liability hereunder if the Subcustodian or any Secondary
Subcustodian or Securities System, or any subcustodian, securities
depository or securities system utilized by any such Secondary
Subcustodian, or any nominee of the Subcustodian or any Secondary
Subcustodian (individually, a "Person") is prevented, forbidden or delayed
from performing, or omits to perform, any act or thing which this Agreement
provides shall be performed or omitted to be performed, by reason of: (i)
any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or of any foreign country,
or political subdivision thereof or of any court or competent jurisdiction;
or (ii) any act of God or war or other similar circumstance beyond the
control of the Subcustodian, unless, in each case, such delay or
nonperformance is caused by (A) the negligence, misfeasance or misconduct
of the applicable Person or (B) a malfunction or failure of equipment
operated or utilized by the applicable Person other than a malfunction or
failure beyond such Person's control and which could not reasonably be
anticipated and/or prevented by such Person.
(c) Mitigation by Subcustodian. Upon the occurrence of any event which
causes or may cause any loss, damage or expense to the Fund, any Portfolio
or the Custodian, (i) the Subcustodian shall, (ii) the Subcustodian shall
cause any applicable Domestic Subcustodian or Foreign Subcustodian to, and
(iii) the Subcustodian shall use its best efforts to cause any applicable
Interim Subcustodian to, use all commercially reasonable efforts and take
all reasonable steps under the circumstances to mitigate the effects of
such event and to avoid continuing harm to the Fund, the Portfolios and the
Custodian.
(d) Advice of Counsel. The Subcustodian shall be entitled to receive and
act upon advice of counsel on all matters. The Subcustodian shall be
without liability for any action reasonably taken or omitted in good faith
pursuant to the advice of (i) counsel for the Fund, or (ii) at the expense
of the Subcustodian, such other counsel as the Fund and the Subcustodian
may agree upon; provided, however, with respect to the performance of any
action or omission of any action upon such advice, the Subcustodian shall
be required to conform to the standard of care set forth in Section
5.01(a).
(e) Expenses of the Fund. In addition to the liability of the
Subcustodian under this Article V, the Subcustodian shall be liable to the
Fund and to the Custodian for all reasonable costs and expenses incurred by
the Fund or the Custodian, respectively, in connection with any claim by
the Fund or the Custodian against the Subcustodian arising from the
obligations of the Subcustodian hereunder including, without limitation,
all reasonable attorneys' fees and expenses incurred by the Fund or the
Custodian in asserting any such claim, and all expenses incurred by the
Fund or the Custodian in connection with any investigations, lawsuits or
proceedings relating to such claim; provided, that the fund or the
Custodian has recovered from the Subcustodian for such claim.
(f) Liability for Past Records. The Subcustodian shall have no liability
in respect of any loss, damage or expense suffered by the Fund or the
Custodian, insofar as such loss, damage or expense arises from the
performance of the Subcustodian's duties hereunder by reason of the
Subcustodian's reliance upon records that were maintained for the Fund by
entities other than the Subcustodian prior to the Subcustodian's employment
hereunder.
Section 5.02. Liability of Subcustodian for Actions of Other Persons.
(a) Domestic Subcustodians and Foreign Subcustodians. The Subcustodian
shall be liable for the actions or omissions of any Domestic Subcustodian
or any Foreign Subcustodian to the same extent as if such action or
omission were performed by the Subcustodian itself. In the event of any
loss, damage or expense suffered or incurred by the Fund or the Custodian
caused by or resulting from the actions or omissions of any Domestic
Subcustodian or Foreign Subcustodian for which the Subcustodian would
otherwise be liable, the Subcustodian shall promptly reimburse the Fund or
the Custodian in the amount of any such loss, damage or expense.
(b) Interim Subcustodians. Notwithstanding the provisions of Section
5.01 to the contrary, the Subcustodian shall not be liable to the Fund or
the Custodian for any loss, damage or expense suffered or incurred by the
Fund, any Portfolio or the Custodian resulting from the actions or
omissions of an Interim Subcustodian unless such loss, damage or expense is
caused by, or results from, the negligence, misfeasance or misconduct of
the Subcustodian; provided, however, in the event of any such loss, damage
or expense, the Subcustodian shall take all reasonable steps to enforce
such rights as it may have against such Interim Subcustodian to protect the
interests of the Fund, the Portfolios and the Custodian.
(c) Securities System. Notwithstanding the provisions of Section 5.01 to
the contrary, the Subcustodian shall not be liable to the Fund or the
Custodian for any loss, damage or expense suffered or incurred by the Fund,
any Portfolio or the Custodian resulting from the use by the Subcustodian
of a Securities System, unless such loss, damage or expense is caused by,
or results from, the negligence, misfeasance or misconduct of the
Subcustodian; provided, however, that in the event of any such loss, damage
or expense, the Subcustodian shall take all reasonable steps to enforce
such rights as it may have against the Securities System to protect the
interests of the Fund, the Portfolios and the Custodian.
(d) Reimbursement of Expenses. The Fund and the Custodian agree to
reimburse the Subcustodian for all reasonable out-of-pocket expenses
incurred by the Subcustodian in connection with the fulfillment of its
obligations to the Fund and the Custodian respectively, under this Section
5.02; provided, however, that such reimbursement shall not apply to
expenses occasioned by or resulting from the negligence, misfeasance or
misconduct of the Subcustodian.
Section 5.03. Indemnification.
(a) Indemnification Obligations. Subject to the limitations set forth in
this Agreement, the Fund agrees to indemnify and hold harmless the
Subcustodian and its nominees from all loss, damage and expense (including
reasonable attorneys' fees) suffered or incurred by the Subcustodian or its
nominee caused by or arising from actions taken by the Subcustodian in the
performance of its duties and obligations under this Agreement; provided,
however, that such indemnity shall not apply to loss, damage and expense
occasioned by or resulting from the negligence, misfeasance or misconduct
of the Subcustodian or its nominee. In addition, the Fund agrees to
indemnify any Person against any liability incurred by reason of taxes
assessed to such Person, or other loss, damage or expenses incurred by such
Person, resulting from the fact that securities and other property of the
Portfolios are registered in the name of such Person; provided, however,
that in no event shall such indemnification be applicable to income,
franchise or similar taxes which may be imposed or assessed against any
Person.
(b) Notice of Litigation, Right to Prosecute, Etc. The Fund shall not be
liable for indemnification under this Section 5.03 unless a Person shall
have promptly notified the Fund in writing of the commencement of any
litigation or proceeding brought against such Person in respect of which
indemnity may be sought under this Section 5.03. With respect to claims in
such litigation or proceedings for which indemnity by the Fund may be
sought and subject to applicable law and the ruling of any court of
competent jurisdiction, the Fund shall be entitled to participate in any
such litigation or proceeding and, after written notice from the Fund to
any Person, the Fund may assume the defense of such litigation or
proceeding with counsel of its choice at its own expense in respect of that
portion of the litigation for which the Fund may be subject to an
indemnification obligation; provided, however, a Person shall be entitled
to participate in (but not control) at its own cost and expense, the
defense of any such litigation or proceeding if the Fund has not
acknowledged in writing its obligation to indemnify the Person with respect
to such litigation or proceeding. If the fund is not permitted to
participate or control such litigation or proceeding under applicable law
or by a ruling of a court of competent jurisdiction, such Person shall
reasonably prosecute such litigation or proceedings. A Person shall not
consent to the entry of any judgment or enter into any settlement in any
such litigation or proceeding without providing the Fund with adequate
notice of any such settlement or judgment, and without the Fund's prior
written consent. All Persons shall submit written evidence to the Fund
with respect to any cost or expense for which they are seeking
indemnification in such form and detail as the Fund may reasonably request.
Section 5.04. Investment Limitations. If the Subcustodian has otherwise
complied with the terms and conditions of this Agreement in performing its
duties generally, and more particularly in connection with the purchase,
sale or exchange of securities made by or for a Portfolio, the Subcustodian
shall not be liable to the Fund and the Fund agrees to indemnify the
Subcustodian and its nominees, for any loss, damage or expense suffered or
incurred by the Subcustodian and its nominees arising out of any violation
of any investment or other limitation to which the Fund is subject.
Section 5.05. Fund's Right to Proceed. Notwithstanding anything to the
contrary contained herein, the Fund shall have, at its election upon
reasonable notice to the Subcustodian, the right to enforce, to the extent
permitted by any applicable agreement and applicable law, the
Subcustodian's rights against any Secondary Subcustodian, Securities
System, or other Person for loss, damage or expense caused the Fund by such
Secondary Subcustodian, Securities System, or other Person, and shall be
entitled to enforce the rights of the Subcustodian with respect to any
claim against such Secondary Subcustodian, Securities System or other
Person, which the Subcustodian may have as a consequence of any such loss,
damage or expense, if and to the extent that the Fund has not been made
whole for any such loss or damage. If the Subcustodian makes the Fund
whole for any such loss or damage, the Subcustodian shall retain the
ability to enforce its rights directly against such Secondary Subcustodian,
Securities System or other Person. Upon the Fund's election to enforce any
rights of the Subcustodian under this Section 5.05, the Fund shall
reasonably prosecute all actions and proceedings directly relating to the
rights of the Subcustodian in respect of the loss, damage or expense
incurred by the Fund; provided that, so long as the Fund has acknowledged
in writing its obligation to indemnify the Subcustodian under Section 5.03
hereof with respect to such claim, the Fund shall retain the right to
settle, compromise and/or terminate any action or proceeding in respect of
the loss, damage or expense incurred by the Fund without the Subcustodian's
consent and provided further, that if the Fund has not made an
acknowledgement of its obligation to indemnify, the Fund shall not settle,
compromise or terminate any such action or proceeding without the written
consent of the Subcustodian, which consent shall not be unreasonably
withheld or delayed. The Subcustodian agrees to cooperate with the Fund
and take all actions reasonably requested by the Fund in connection with
the Fund's enforcement of any rights of the Subcustodian. The Fund agrees
to reimburse the Subcustodian for all reasonable out-of-pocket expenses
incurred by the Subcustodian in connection with the fulfillment of its
obligations under this Section 5.05; provided, however, that such
reimbursement shall not apply to expenses occasioned by or resulting from
the negligence, misfeasance or misconduct of the Subcustodian.
ARTICLE VI
COMPENSATION
On behalf of each Portfolio, the Custodian shall compensate the
Subcustodian in an amount, and at such times, as may be agreed upon in
writing, from time to time, by the Subcustodian and the Custodian.
ARTICLE VII
TERMINATION
Section 7.01. Termination of Agreement in Full. This Agreement shall
continue in full force and effect until the first to occur of: (a)
termination by the Subcustodian by an instrument in writing delivered or
mailed to the Custodian, such termination to take effect not sooner than
ninety (90) days after the date of such delivery; (b) termination by the
Custodian by an instrument in writing delivered or mailed to the
Subcustodian, such termination to take effect not sooner than thirty (30)
days after the date of such delivery; or (c) termination of the Custodian
Agreement, in which case termination shall take effect upon the date of
termination of the Custodian agreement. In the event of termination
pursuant to this Section 7.01, the Custodian shall make payment of all
accrued fees and unreimbursed expenses within a reasonable time following
termination and delivery of a statement to the Custodian setting forth such
fees and expenses. The Custodian shall identify in any notice of
termination a successor subcustodian to which the cash, securities and
other assets of the Portfolios shall, upon termination of this Agreement,
be delivered. In the event that no written notice designating a successor
subcustodian shall have been delivered to the Subcustodian on or before the
date when termination of this Agreement shall become effective, the
Subcustodian may deliver to a bank or trust company doing business in
Boston, Massachusetts, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report, of
not less than $25,000,000, all securities and other assets held by the
Subcustodian and all instruments held by the Subcustodian relative thereto
and all other property held by it under this Agreement. Thereafter, such
bank or trust company shall be the successor of the Subcustodian under this
Agreement. In the event that securities and other assets remain in the
possession of the Subcustodian after the date of termination hereof owing
to failure of the Custodian to appoint a successor subcustodian, the
Subcustodian shall be entitled to compensation for its services in
accordance with the fee schedule most recently in effect, for such period
as the Subcustodian retains possession of such securities and other assets,
and the provisions of this Agreement relating to the duties and obligations
of the Subcustodian, the Custodian and the Fund shall remain in full force
and effect. In the event of the appointment of a successor subcustodian,
it is agreed that the cash, securities and other property owned by the Fund
and held by the Subcustodian, any Secondary Subcustodian or nominee shall
be delivered to the successor subcustodian; and the Subcustodian agrees to
cooperate with the Fund and the Custodian in the execution of documents and
performance of other actions necessary or desirable in order to substitute
the successor subcustodian for the Subcustodian under this Agreement.
Section 7.02. Termination as to One or More Portfolios. This Agreement
may be terminated as to one or more Portfolios (but less than all of the
Portfolios) by delivery of an amended Appendix "A" deleting such Portfolios
pursuant to Section 9.06(a) hereof. The execution and delivery of an
amended Appendix "A" which deletes one or more Portfolios shall constitute
a termination of this Agreement only with respect to such deleted
Portfolio(s), shall be governed by the preceding provisions of Section 7.01
as to the identification of a successor subcustodian and the delivery of
cash, securities and other assets of the Portfolio(s) so deleted, and shall
not affect the obligations of the Subcustodian, the Custodian and the Fund
hereunder with respect to the other Portfolios set forth in Appendix "A,"
as amended from time to time.
ARTICLE VIII
DEFINED TERMS
The following terms are defined in the following sections:
Term Section
Account 2.22
ADRs 2.06
Authorized Person(s) 3.02
Banking Institution 2.12(a)
Business Day Appendix "C"
Bank Accounts 2.21
Distribution Account 2.16
Domestic Subcustodian 4.01
Foreign Subcustodian 4.02(a)
Institutional Client 2.03
Interim Subcustodian 4.02(b)
Overdraft 2.28
Overdraft Notice 2.28
Person 5.01(b)
Portfolio Preamble
Procedural Agreement 2.10
Proper Instructions 3.01(a)
SEC 2.22
Secondary Subcustodian Article IV
Securities System 2.22
Shares 2.16
Special Instructions 3.01(b)
1940 Act Preamble
ARTICLE IX
MISCELLANEOUS
Section 9.01. Execution of Documents, Etc.
(a) Actions by the Fund. Upon request, the Fund shall execute and
deliver to the Subcustodian such proxies, powers of attorney or other
instruments as may be reasonable and necessary or desirable in connection
with the performance by the Subcustodian or any Secondary Subcustodian of
their respective obligations under this Agreement or any applicable
subcustodian agreement, provided that the exercise by the Subcustodian or
any Secondary Subcustodian of any such rights shall in all events be in
compliance with the terms of this Agreement.
(b) Actions by Subcustodian. Upon receipt of Proper Instructions, the
Subcustodian shall execute and deliver to the Custodian or to such other
parties as the Custodian may designate in such Proper Instructions, all
such documents, instruments or agreements as may be reasonable and
necessary or desirable in order to effectuate any of the transactions
contemplated hereby.
(c) Actions by Custodian. Upon request, the Custodian shall execute and
deliver to the Subcustodian such proxies, powers of attorney or other
instruments as may be reasonable and necessary or desirable in connection
with the performance by the Subcustodian of its respective obligations
under this Agreement, provided that the exercise by the Subcustodian of any
such rights shall in all events be in compliance with the terms of this
Agreement.
Section 9.02. Representative Capacity; Nonrecourse Obligations. A COPY
OF THE DECLARATION OF TRUST OF THE FUND IS ON FILE WITH THE SECRETARY OF
THE STATE OF THE FUND'S FORMATION, AND NOTICE IS HEREBY GIVEN THAT THIS
AGREEMENT IS NOT EXECUTED ON BEHALF OF THE TRUSTEES OF THE FUND AS
INDIVIDUALS, AND THE OBLIGATIONS OF THIS AGREEMENT ARE NOT BINDING UPON ANY
OF THE TRUSTEES, OFFICERS, SHAREHOLDERS OR PARTNERS OF THE FUND
INDIVIDUALLY, BUT ARE BINDING ONLY UPON THE ASSETS AND PROPERTY OF THE
PORTFOLIOS. THE SUBCUSTODIAN AND THE CUSTODIAN EACH AGREE THAT NO
SHAREHOLDER, TRUSTEE, OFFICER OR PARTNER OF THE FUND MAY BE HELD PERSONALLY
LIABLE OR RESPONSIBLE FOR ANY OBLIGATIONS OF THE FUND ARISING OUT OF THIS
AGREEMENT.
Section 9.03. Several Obligations of the Portfolios. WITH RESPECT TO ANY
OBLIGATIONS OF THE FUND ON BEHALF OF THE PORTFOLIOS ARISING OUT OF THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE OBLIGATIONS ARISING UNDER
SECTIONS 2.28, 5.03, 5.05 AND ARTICLE VI HEREOF, THE SUBCUSTODIAN SHALL
LOOK FOR PAYMENT OR SATISFACTION OF ANY OBLIGATION SOLELY TO THE ASSETS AND
PROPERTY OF THE PORTFOLIO TO WHICH SUCH OBLIGATION RELATES AS THOUGH THE
FUND AND THE CUSTODIAN HAD SEPARATELY CONTRACTED WITH THE SUBCUSTODIAN BY
SEPARATE WRITTEN INSTRUMENT WITH RESPECT TO EACH PORTFOLIO.
Section 9.04. Representations and Warranties.
(a) Representations and Warranties of the Fund. The Fund hereby
represents and warrants that each of the following shall be true, correct
and complete at all times during the term of this Agreement: (i) the Fund
is duly organized under the laws of its jurisdiction of organization and is
registered as an open-end management investment company under the 1940 Act;
and (ii) the execution, delivery and performance by the Fund of this
Agreement are (w) within its power, (x) have been duly authorized by all
necessary action, and (y) will not (A) contribute to or result in a breach
of or default under or conflict with any existing law, order, regulation,
or ruling of any governmental or regulatory agency or authority, or (B)
violate any provision of the Fund's corporate charter, Declaration of Trust
or other organizational document, or bylaws, or any amendment thereof or
any provision of its most recent Prospectus or Statement of Additional
Information.
(b) Representations and Warranties of the Custodian. The Custodian
hereby represents and warrants that each of the following shall be true,
correct and complete at all times during the term of this Agreement: (i)
the Custodian is duly organized under the laws of its jurisdiction of
organization and qualifies to act as a custodian to open-end management
investment companies under the provisions of the 1940 Act; and (ii) the
execution, delivery and performance by the Custodian of this Agreement are
(w) within its power, (x) have been duly authorized by all necessary
action, and (y) will not (A) contribute to or result in a breach of or
default under or conflict with any existing law, order, regulation or
ruling of any governmental or regulatory agency or authority, or (B)
violate any provision of the Custodian's corporate charter, or other
organizational document, or bylaws, or any amendment thereof.
(c) Representations and Warranties of the Subcustodian. The
Subcustodian hereby represents and warrants that each of the following
shall be true, correct and complete at all times during the term of this
Agreement: (i) the Subcustodian is duly organized under the laws of its
jurisdiction of organization and qualifies to act as a custodian to
open-end management investment companies under the provisions of the 1940
Act; and (ii) the execution, delivery and performance by the Subcustodian
of this Agreement are (w) within its power, (x) have been duly authorized
by all necessary action, and (y) will not (A) contribute to or result in a
breach of or default under or conflict with any existing law, order,
regulation or ruling of any governmental or regulatory agency or authority,
or (B) violate any provision of the Subcustodian's corporate charter, or
other organizational document, or bylaws, or any amendment thereof.
Section 9.05. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the
subject matter hereof and accordingly, supercedes as of the effective date
of this Agreement any subcustodian agreement heretofore in effect between
the Fund, the Custodian and the Subcustodian.
Section 9.06. Waivers and Amendments. No provision of this Agreement may
be waived, amended or terminated except by a statement in writing signed by
the party against which enforcement of such waiver, amendment or
termination is sought; provided, however: (a) Appendix "A" listing the
Portfolios for which the Subcustodian serves as subcustodian may be amended
from time to time to add or delete one or more Portfolios, by the
Custodian's execution and delivery to the Subcustodian of an amended
Appendix "A," and the execution of such amended Appendix by the
Subcustodian, in which case such amendment shall take effect immediately
upon execution by the Subcustodian; (b) Appendix "B" listing Foreign
Subcustodians approved by the Fund may be amended from time to time to add
or delete one or more Foreign Subcustodians by the Fund's execution and
delivery to the Subcustodian of an amended Appendix "B", in which case such
amendment shall take effect immediately upon execution by the Subcustodian;
and (c) Appendix "C" setting forth the procedures relating to the
Subcustodian's security interest may be amended only by an instrument in
writing executed by the Fund and the Subcustodian.
Section 9.07. Interpretation. In connection with the operation of this
Agreement, the Subcustodian, the Custodian and the Fund may agree in
writing from time to time on such provisions interpretative of or in
addition to the provisions of this Agreement as may in their joint opinion
be consistent with the general tenor of this Agreement. No interpretative
or additional provisions made as provided in the preceding sentence shall
be deemed to be an amendment of this Agreement.
Section 9.08. Captions. Headings contained in this Agreement, which are
included as convenient references only, shall have no bearing upon the
interpretation of the terms of the Agreement or the obligations of the
parties hereto.
Section 9.09. Governing Law. Insofar as any question or dispute may
arise in connection with the custodianship of foreign securities pursuant
to an agreement with a Foreign Subcustodian that is governed by the laws of
the State of New York, the provisions of this Agreement shall be construed
in accordance with and governed by the laws of the State of New York,
provided that in all other instances this Agreement shall be construed in
accordance with and governed by the laws of the Commonwealth of
Massachusetts, in each case without giving effect to principles of
conflicts of law.
Section 9.10. Notices. Except in the case of Proper Instructions or
Special Instructions, notices and other writings contemplated by this
Agreement shall be delivered by hand or by facsimile transmission (provided
that in the case of delivery by facsimile transmission, notice shall also
be mailed postage prepaid to the parties at the following addresses:
(a) If to the Fund:
North Carolina Cash Management Trust
c/o Fidelity Management & Research Company
82 Devonshire Street
Boston, Massachusetts 02109
Attn: Treasurer
Telephone: (617) 570-6556
Telefax: (617) 742-1231
(b) If to the Custodian:
First Union National Bank of North Carolina
Trust Operations
Two First Union Center
Charlotte, North Carolina 28288-1151
Attention: Nancy Stoker
Telephone: (704) 374-6157
Telefax: (704) 374-3211
(c) If the to the Subcustodian:
The Bank of New York
110 Washington Street, 13th Floor
New York, NY 10286
ATTN: Lawrence Musso
Telephone: (212) 693-5045
Telefax: (212) 693-5065
or to such other address as either party may have designated in writing to
the other party hereto.
Section 9.11. Assignment. This Agreement shall be binding on and shall
inure to the benefit of the Fund, the Custodian the Subcustodian and their
respective successors and assigns, provided that, subject to the provisions
of Section 7.01 hereof, neither party hereto may assign this Agreement or
any of its rights or obligations hereunder without the prior written
consent of the other party.
Section 9.12. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original. This Agreement
shall become effective when one or more counterparts have been signed and
delivered by each of the parties.
Section 9.13. Confidentiality; Survival of Obligations. The parties
hereto agree that each shall treat confidentially the terms and conditions
of this Agreement and all information provided by each party to the other
regarding its business and operations. All confidential information
provided by a party hereto shall be used by any other party hereto solely
for the purpose of rendering services pursuant to this Agreement and,
except as may be required in carrying out this Agreement, shall not be
disclosed to any third party without the prior consent of such providing
party. The foregoing shall not be applicable to any information that is
publicly available when provided or thereafter becomes publicly available
other than through a breach of this Agreement, or that is required to be
disclosed by any bank examiner of the Subcustodian or any Secondary
Subcustodian, any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable law or regulation. The
provisions of this Section 9.13 and Sections 9.01, 9.02, 9.03, 9.09,
Section 2.28, Section 3.04, Section 7.01, Article V and Article VI hereof
and any other rights or obligations incurred or accrued by any party hereto
prior to termination of this Agreement shall survive any termination of
this Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.
NORTH CAROLINA CASH MANAGEMENT FIRST UNION NATIONAL BANK OF
TRUST NORTH CAROLINA
By: /s/Gary L. French By: /s/Patricia P. Balentine
Name: Gary L. French Name: Patricia P. Balentine
Title: Treasurer Title: Vice President & Trust Officer
THE BANK OF NEW YORK
By: /s/Stephen E. Grunston
Name: Stephen E. Grunston
Title: Vice President
APPENDIX "A"
TO
SUBCUSTODIAN AGREEMENT
AMONG
NORTH CAROLINA CASH MANAGEMENT TRUST,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA and
THE BANK OF NEW YORK
Dated as of December 6, 1991
The following is a list of Portfolios for which the Subcustodian shall
serve under a Subcustodian Agreement dated as of December 6, 1991:
Portfolio Name Effective as of:
Cash Portfolio December 6, 1991
Term Portfolio December 6, 1991
IN WITNESS WHEREOF, each of the parties hereto has caused this Appendix to
be executed in its name and behalf as of the day and year first set forth
opposite each such Portfolio.
THE BANK OF NEW YORK FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: /s/Stephen E. Grunston By: /s/Patricia P. Balentine
Name: Stephen E. Grunston Name: Patricia P. Balentine
Title: Vice President Title: Vice President & Trust Officer
APPENDIX "B"
TO
SUBCUSTODIAN AGREEMENT
AMONG
NORTH CAROLINA CASH MANAGEMENT TRUST,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA AND
THE BANK OF NEW YORK
Dated as of December 6, 1991
The following is a list of Foreign Subcustodians under the Subcustodian
Agreement dated as of December 6, 1991:
A. Special Subcustodians:
None
NORTH CAROLINA CASH MANAGEMENT
TRUST
By: /s/Gary L. French
Name: Gary L. French
Title: Treasurer
APPENDIX "C"
TO
SUBCUSTODIAN AGREEMENT
AMONG
NORTH CAROLINA CASH MANAGEMENT TRUST,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA AND
THE BANK OF NEW YORK
Dated as of December 6, 1991
PROCEDURES RELATING TO SUBCUSTODIAN'S SECURITY INTEREST
As security for any Overdrafts (as defined in the Subcustodian Agreement)
of any Portfolio, the Fund, on behalf of such Portfolio, shall pledge,
assign and grant to the Subcustodian a security interest in Collateral (as
hereinafter defined), under the terms, circumstances and conditions set
forth in this Appendix "C".
Section 1. Defined Terms. As used in this Appendix "C" the following
terms shall have the following respective meanings:
(a) "Business Day" shall mean any day that is not a Saturday, a Sunday or
a day on which the Subcustodian is closed for business.
(b) "Collateral" shall mean, with respect to any Portfolio, the
securities having a fair market value (as determined in accordance with the
procedures set forth in the prospectus for the Portfolio) equal to the
aggregate of all Overdraft Obligations of such Portfolio: (i) identified
in any Pledge Certificate executed on behalf of such Portfolio; or (ii)
designated by the Subcustodian for such Portfolio pursuant to Section 3 of
this Appendix C. Such securities shall consist of marketable securities
held by the Subcustodian on behalf of such Portfolio or, if no such
marketable securities are held by the Subcustodian on behalf of such
Portfolio, such other securities designated by the Fund in the applicable
Pledge Certificate or by the Subcustodian pursuant to Section 3 of this
Appendix C.
(c) "Overdraft Obligations" shall mean, with respect to any Portfolio,
the amount of any outstanding Overdraft(s) provided by the Subcustodian to
such Portfolio together with all accrued interest thereon.
(d) "Pledge Certificate" shall mean a Pledge Certificate in the form
attached to this Appendix "C" as Schedule 1 executed by a duly authorized
officer of the Fund and delivered by the Fund to the Subcustodian by
facsimile transmission or in such other manner as the Fund and the
Subcustodian may agree in writing.
(e) "Release Certificate" shall mean a Release Certificate in the form
attached to this Appendix "C" as Schedule 2 executed by a duly authorized
officer of the Subcustodian and delivered by the Subcustodian to the Fund
by facsimile transmission or in such other manner as the Fund and the
Subcustodian may agree in writing.
(f) "Written Notice" shall mean a written notice executed by a duly
authorized officer of the party delivering the notice.
Section 2. Pledge of Collateral. To the extent that any Overdraft
Obligations of any Portfolio are not satisfied within one (1) Business Day
after receipt by the Fund of a Written Notice requesting security for such
Overdraft Obligation and stating the amount of such Overdraft Obligation,
the Fund, on behalf of such Portfolio, shall pledge, assign and grant to
the Subcustodian a first priority security interest, by delivering to the
Subcustodian, a Pledge Certificate executed by the Fund on behalf of such
Portfolio describing the applicable Collateral. Such Written Notice may,
in the discretion of the Subcustodian, be included within or accompany the
Overdraft Notice relating to the applicable Overdraft Obligations.
Section 3. Failure to Pledge Collateral. In the event that the Fund
shall fail: (a) to pay, on behalf of the applicable Portfolio, the
Overdraft Obligation described in such Written Notice; (b) to deliver to
the Subcustodian a Pledge Certificate pursuant to Section 2; or (c) to
identify substitute securities pursuant to Section 6 upon the sale or
maturity of any securities identified as Collateral, the Subcustodian may,
by Written Notice to the Fund specify Collateral which shall secure the
applicable Overdraft Obligation. The Fund, on behalf of any applicable
Portfolio, hereby pledges, assigns and grants to the Subcustodian a first
priority security interest in any and all Collateral specified in such
Written Notice; provided that such pledge, assignment and grant of security
shall be deemed to be effective only upon receipt by the Fund of such
Written Notice.
Section 4. Delivery of Additional Collateral. If at any time the
Subcustodian shall notify the Fund by Written Notice that the fair market
value of the Collateral securing any Overdraft Obligation is less than the
amount of such Overdraft Obligation, the Fund, on behalf of the applicable
Portfolio, shall deliver to the Subcustodian, within one (1) Business Day
following the Fund's receipt of such Written Notice, an additional Pledge
Certificate describing additional Collateral. If the Fund shall fail to
deliver such additional Pledge Certificate, the Subcustodian may specify
Collateral which shall secure the unsecured amount of the applicable
Overdraft Obligation in accordance with Section 3 of this Appendix C.
Section 5. Release of Collateral. Upon payment by the Fund of any
Overdraft Obligation secured by the pledge of Collateral, the Subcustodian
shall promptly deliver to the Fund a Release Certificate pursuant to which
the Subcustodian shall release Collateral from the lien under the
applicable Pledge Certificate or Written Notice pursuant to Section 3
having a fair market value equal to the amount paid by the Fund on account
of such Overdraft Obligation. In addition, if at any time the Fund shall
notify the Subcustodian by Written Notice that the Fund desires that
specified Collateral be released and: (a) that the fair market value of
the Collateral securing any Overdraft Obligation shall exceed the amount of
such Overdraft Obligation; or (b) that the Fund has delivered a Pledge
Certificate substituting Collateral for such Overdraft Obligation, the
Subcustodian shall deliver to the Fund, within one (1) Business Day
following the Subcustodian's receipt of such Written Notice, a Release
Certificate relating to the the Collateral specified in such.
Section 6. Substitution of Collateral. The Fund may substitute
securities for any securities identified as Collateral by delivery to the
Subcustodian of a Pledge Certificate executed by the Fund on behalf of the
applicable Portfolio, indicating the securities pledged as Collateral.
Section 7. Security for Individual Portfolios' Overdraft Obligations.
The pledge of Collateral by the Fund on behalf of any individual Portfolio
shall secure only the Overdraft Obligations of such Portfolio. In no event
shall the pledge of Collateral by one Portfolio be deemed or considered to
be security for the Overdraft Obligations of any other Portfolio.
Section 8. Subcustodian's Remedies. Upon (a) the Fund's failure to pay
any Overdraft Obligation of a Portfolio within thirty (30) days after
receipt by the Fund of a Written Notice demanding security therefore, and
(b) one (1) Business Day's prior Written Notice to the Fund, the
Subcustodian may elect to enforce its security interest in the Collateral
securing such Overdraft Obligation, by taking title to (at the then
prevailing fair market value), or selling in a commercially reasonable
manner, so much of the Collateral as shall be required to pay such
Overdraft Obligation in full. Notwithstanding the provisions of any
applicable law, including, without limitation, the provisions of any
applicable law, including, without limitation, the Uniform Commercial Code,
the remedy set forth in the preceding sentence shall be the only right or
remedy to which the Subcustodian is entitled with respect to the pledge and
security interest granted pursuant to any Pledge Certificate or Section 3,
without limiting the foregoing, the Subcustodian hereby waives and
relinquishes all contractual and common law rights of set off to which it
may now or hereafter be or become entitled with respect to any obligations
of the Fund to the Subcustodian arising under this Appendix C to the
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Appendix to
be executed in its name and behalf as of the day and year first set forth
opposite each such Portfolio.
NORTH CAROLINA CASH MANAGEMENT THE BANK OF NEW YORK
TRUST
By: /s/Gary L. French By: /s/Stephen E. Grunston
Name: Gary L. French Name: Stephen E. Grunston
Title: Treasurer Title: Vice President
SCHEDULE 1
TO
APPENDIX "C"
PLEDGE CERTIFICATE
This Pledge Certificate is delivered pursuant to the Subcustodian
Agreement dated as of
[ ] (the "Agreement"), between North Carolina Cash
Management Trust (the "Fund"), First Union National Bank of North Carolina
(the "Custodian") and the Bank of New York (the "Subcustodian").
Capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Agreement. Pursuant to [Section 2 or
Seciton 4] of Appendix "C" attached to the Agreement, the Fund, on behalf
of [ ] (the "Portfolio"), hereby pledges, assigns and grants to
the Subcustodian a first priority security interest in the securities
listed on Exhibit "A" attached to this Pledge Certificate (collectively,
the "Pledged Securities"). Upon delivery of this Pledge Certificate, the
Pledged Securities shall constitute Collateral, and shall secure all
Overdraft Obligations of the Portfolio described in that certain Written
Notice dated ________, 19__, delivered by the Subcustodian to the Fund.
The pledge, assignment and grant of security in the Pledged Securities
hereunder shall be subject in all respect to the terms and conditions of
the Agreement, including, without limitation, Sections 7 and 8 of Appendix
"C" attached thereto.
IN WITNESS WHEREOF, the Fund has caused this Pledge Certificate to be
executed in its name, on behalf of the Portfolio this ________ day of 19__.
NORTH CAROLINA CASH
MANAGEMENT TRUST
By: _____________________________
Name: _____________________________
Title: _____________________________
EXHIBIT "A"
TO
PLEDGE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
SCHEDULE 2
TO
RELEASE CERTIFICATE
This Release Certificate is delivered pursuant to the Subcustodian
Agreement dated as of
[ ] (the "Agreement"), between North Carolina Cash Management
Trust (the "Fund"), First Union National Bank of North Carolina (the
"Custodian") and The Bank of New York (the "Subcustodian"). Capitalized
terms used herein without definition shall have the respective meanings
ascribed to them in the Agreement. Pursuant to Section 5 of Appendix "C"
attached to the Agreement, the Subcustodian hereby releases the securities
listed on Exhibit "A" attached to this Release Certificate from the lien
under the [Pledge Certificate dated , 19 or the Written
Notice delivered pursuant to Section 3 of Appendix "C" dated ,
19 ].
IN WITNESS WHEREOF, the Subcustodian has caused this Pledge Certificate to
be executed in its name and on its behalf this ________ day of 19__.
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: _____________________________
Name: _____________________________
Title: _____________________________
EXHIBIT "A"
TO
RELEASE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Prospectus
and Statement of Additional Information in Post-Effective Amendment No. 33
to the Registration Statement on Form N-1A of The North Carolina Capital
Management Trust: Cash Portfolio and Term Portfolio of our report dated
August 2, 1996 on the financial statements and financial highlights
included in the June 30, 1996 Annual Report to Shareholders of Cash
Portfolio and Term Portfolio.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditor" in the Statement of
Additional Information.
/s/COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Dallas Texas
August 6, 1996
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST:
TERM PORTFOLIO DISTRIBUTION AND SERVICE PLAN
THIS PLAN made as of the 22nd day of January, 1996, by and between THE
NORTH CAROLINA CAPITAL MANAGEMENT TRUST, a Massachusetts business trust
which may issue one or more series of shares of beneficial interest
(hereinafter called the "Trust"), on behalf of TERM PORTFOLIO, a series of
the Trust (hereinafter called the "Portfolio"), FIDELITY MANAGEMENT &
RESEARCH COMPANY, a Massachusetts Corporation (hereinafter called the
"Adviser"), and FIDELITY DISTRIBUTORS CORPORATION, a Massachusetts
corporation (hereinafter called the "Distributor"):
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered as such under the Investment Company
Act of 1940 (the "Act"); and
WHEREAS, the Trust intends to distribute the Portfolio's shares of
beneficial interest ("shares") in accordance with Rule 12b-1 under the Act,
and desires to adopt a Distribution and Service Plan pursuant to such Rule,
and the Board of Trustees of the Trust has determined that there is a
reasonable likelihood that this will benefit the Portfolio and its
shareholders; and
WHEREAS, the Trust desires to increase the level of shareholder services
provided within the State of North Carolina, and the Board of Trustees has
determined that there is a reasonable likelihood that such in-state service
will benefit the Portfolio and its shareholders; and
WHEREAS, the Trust desires to retain the Distributor to provide, or secure
the provision of through an agent(s), facilities and personnel and to
render services with respect to the Portfolio in accordance with such
Distribution and Service Plan in the manner and on the terms and conditions
hereinafter set forth; and
WHEREAS, the Trust understands that the Distributor has retained the
services of Sterling Capital Distributors, Inc. ("Sterling"), a corporation
organized and existing under the laws of the State of North Carolina, as
its agent to perform or provide various of the facilities, personnel and
services described herein:
NOW, THEREFORE, the Trust hereby adopts a Distribution and Service Plan on
behalf of the Portfolio in accordance with Rule 12b-1 under the Act, and
the parties hereto agree to the following terms and conditions of the Plan:
1. Subject to the supervision of the Board of Trustees, the Trust hereby
retains the Distributor to provide facilities, personnel and a program with
respect to the marketing and promotional activities of the Portfolio (the
"Distribution Services"). Without limiting the generality of the foregoing,
the Distributor shall be responsible for, and shall accomplish itself,
through its affiliates, or through its agent, Sterling, the following: (i)
formulate and implement marketing and promotional activities, including but
not limited to direct mail promotions, regional orientation meetings and
financial management seminars; (ii) prepare and contract for printing of a
periodic newsletter and the mailing and distribution thereof, such
newsletter to be distributed to potential and participating local units and
to provide information regarding the Portfolio and items of technical and
general interest to local treasurers and/or other financial officials;
(iii) provide office space and equipment, telephone facilities and
dedicated personnel as necessary to provide the services hereunder; (iv)
arrange and contract for the preparation and printing of sales literature
and seminar materials and the mailing and distribution thereof; (v) bear
the expenses of printing (not including typesetting) and distributing
Prospectuses and Statements of Additional Information to other than
existing shareholders; (vi) obtain, evaluate and provide to the Portfolio
such information, analyses and opinions with respect to marketing and
promotional activities as the Portfolio may, from time to time, reasonably
request; and (vii) organize and maintain a Trust advisory board comprised
of local government financial officials. Such board shall meet at least
semi-annually with a primary purpose of providing a representative review
of Trust, Distributor or Sterling service initiatives, as well as providing
an informal communication device between shareholders and the Trust. The
Board shall not be responsible for providing any advice with respect to
investment matters.
2. Subject to the supervision of the Board of Trustees, the Distributor
shall also facilitate and coordinate a program whereby certain shareholder
servicing functions (the "Shareholder Services") are provided by the
Distributor, its affiliates, or its agent, Sterling, within the boundaries
of the State of North Carolina. Such program shall be undertaken in
conjunction with the Trust's transfer agent, and shall be subject to such
controls, provisions and procedures as shall be satisfactory to
Distributors and said transfer agent. To the extent deemed practicable by
the Distributor, such program shall provide for the following functions and
services to be performed, in whole or in part, in North Carolina: (i)
establishment, maintenance and close-out of shareholder accounts; (ii)
shareholder inquiry, communication and problem resolution services; (iii)
completion of shareholder audit confirmations; (iv) receipt of orders for
transactions in shares of the Portfolio, and timely conveyance of such
orders to the Trust or its transfer agent; and (v) such concomitant duties
as are deemed appropriate by the Distributor.
3. The Distributor, its affiliates or its agent(s) shall directly bear all
costs of rendering the services to be performed under this Plan, including
but not limited to the compensation of personnel necessary to provide such
services, and all other costs for travel, office space, facilities,
equipment, printing, telephone service, heat, light, power and other
utilities.
4. The Portfolio shall, from time to time, furnish or otherwise make
available to the Distributor such financial reports, proxy statements and
other information relating to the business and affairs of the Portfolio as
the Distributor may reasonably require in order to discharge its duties and
obligations hereunder.
5. The Adviser agrees to pay the Distributor as soon as practicable after
the end of each month and the Distributor agrees to accept, as full
compensation for all services and facilities to be provided hereunder, a
fee based on the monthly average of the net assets of the Portfolio
determined as of the close of business on each business day throughout the
month. The fee shall be payable by the Adviser from the Management Fee paid
to the Adviser by the Portfolio pursuant to the Management Contract dated
January 22, 1996 between the Adviser and the Portfolio. The fee due the
Distributor shall be payable at an annual rate determined on a cumulative
basis pursuant to the following schedule:
The Annual Fee Rate Is
<TABLE>
<CAPTION>
<S> <C> <C>
On the first $400 million of average daily net assets 0.160%
On average daily net assets in excess of $400 million through $800 million 0.160%
On average daily net assets in excess of $800 million through $1.2 billion 0.160%
On average daily net assets in excess of $1.2 billion through $1.6 billion 0.160%
On average daily net assets in excess of $1.6 billion through $2.0 billion 0.155%
On average daily net assets in excess of $2.0 billion 0.150%
</TABLE>
All parties to this Plan understand that the agreement between the
Distributor and its agent, Sterling, will provide for a full pass-through
to Sterling of the fees payable hereunder, such payments by the Distributor
to Sterling to be made in consideration of Sterling's responsibilities
under its agreement with the Distributor. The Distributor, in consultation
with Sterling, reserves the right to reduce or waive the distribution fee
from time to time.
If this Plan becomes effective subsequent to the first day of a month or
shall terminate before the last day of a month, compensation for the part
of the month the Plan is in effect shall be prorated based on the number of
business days during such month that this Plan was in effect.
6. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws, or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or relieve or deprive the Board of Trustees of the Trust
of the responsibility for and control of the conduct of the affairs of the
Portfolio.
7. This Plan shall become effective upon approval by a vote of at least a
"majority of the outstanding voting securities of the Portfolio," and upon
approval by a vote of the Trustees of the Trust, and of the Trustees who
are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this Plan. For the purposes of this Plan, the terms
"interested persons" and "majority of the outstanding voting securities of
the Portfolio" are used as defined in the Act.
8. This Plan shall remain in effect until July 31, 1996 and from year to
year thereafter, provided, however, that such continuance is subject to
approval annually by a vote of the Trustees of the Trust and of the
Trustees who are not interested persons of the Trust, and who have no
direct or indirect financial interest in the operation of this Plan or in
any agreements related to the Plan, cast in person at a meeting called for
the purpose of voting on this Plan. If such annual approval is not
obtained, the Plan shall expire 12 months after the date of the last
approval. This Plan may be amended at any time by the Board of Trustees
provided that (a) any amendment to increase materially the amount to be
spent for the services described herein shall be effective only upon
approval by a vote of a majority of the outstanding shares of the
Portfolio, and (b) any material amendments of this Plan shall be effective
only upon approval in the manner provided in the first sentence in this
paragraph.
9. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Trustees who are not interested
persons of the Trust and who have no direct or indirect financial interest
in the operation of this Plan or in any agreements related to this Plan, or
by a vote of a majority of the outstanding voting securities of the
Portfolio.
10. Nothing herein contained shall limit the freedom of the Distributor or
any "affiliated person," as defined in the Act, to render investment
supervisory and corporate administrative services to other investment
companies, to act as distributor, adviser or investment counselor to other
persons, firms or corporations and to engage in other business activities.
11. Neither the Distributor nor any of its employees or agents are
authorized to make any representations with respect to the sale of shares
except those contained in the then current Prospectus and Statement of
Additional Information of the Portfolio.
12. The provisions of this Paragraph 12 shall be applicable only with
respect to the provision of Distribution Services. The provision of
Shareholder Services shall not be affected by this Paragraph 12, but shall
be governed by the provisions of Paragraph 13, below. The Portfolio will
indemnify and hold the Distributor harmless from judgments against the
Distributor resulting from specific acts or omissions in the performance of
Distribution Services under this Plan which are the result of written
instructions of a majority of the Board of Trustees of the Trust, so long
as there is an express finding that such acts or omissions did not
constitute willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties or a breach of fiduciary duty. The Portfolio shall
similarly indemnify and hold harmless any agent of the Distributor with
respect to such judgments against the agent resulting from specific acts or
omissions in the performance of Distribution Services under this Plan which
are the result of written instructions of a majority of the Board of
Trustees of the Trust, so long as there is an express finding that such
acts or omissions did not constitute willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties or a breach of fiduciary
duty. No provision of this Paragraph 12 shall be deemed to protect the
Distributor or an agent against any liability to the Portfolio or its
shareholders to which it might otherwise be subject by reason of any
willful misfeasance, bad faith or gross negligence in the performance of
its Distribution Services duties or the reckless disregard of its
Distribution Services obligations under this Plan. No provision hereof
shall be deemed to protect any Trustee or officer of the Trust against any
such liability to which he might otherwise be subject by reason of any
willful misfeasance, bad faith or gross negligence in the performance of
his duties or the reckless disregard of his obligation.
13. The provisions of this Paragraph 13 shall be applicable only with
respect to the provision of Shareholder Services. The provision of
Distribution Services shall not be affected by this Paragraph 13, but shall
be governed by the provisions of Paragraph 12, above.
A. The Trust shall indemnify and hold the Distributor harmless against
any losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other than
the Trust, including by a shareholder, which names the Distributor and/or
the Trust as a party and is not based on and does not result from the
Distributor's willful misfeasance, bad faith or negligence or reckless
disregard of duties, and arises out of or in connection with the
Distributor's performance hereunder; or
(2) any claim, demand, action or suit (except to the extent contributed
to by the Distributor's willful misfeasance, bad faith or negligence or
reckless disregard of duties) which results from the negligence of the
Trust, or from the Distributor's acting upon any instruction(s) reasonably
believed by it to have been executed or communicated by any person duly
authorized by the Trust, or as a result of the Distributor's acting in
reliance upon advice reasonably believed by the Distributor to have been
given by counsel for the Trust.
B. The Distributor shall indemnify and hold the Trust harmless against
any losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or suit
brought by any person other than the Distributor, which names the Trust
and/or the Distributor as a party and is based upon and arises out of acts,
errors or omissions of the Distributor constituting negligence, lack of
good faith or willful misconduct in the performance of the Distributor's
Shareholder Service duties under this Agreement.
14. In the event that either party requests the other to indemnify or hold
it harmless hereunder, the party requesting indemnification (the
"Indemnified Party") shall inform the other party (the "Indemnifying
Party") of the relevant facts known to Indemnified Party concerning the
matter in question. The Indemnified Party shall use reasonable care to
identify and promptly to notify the Indemnifying Party concerning any
matter which presents, or appears likely to present, a claim for
indemnification. The Indemnifying Party shall have the election of
defending the Indemnified Party against any claim which may be the subject
of indemnification or of holding the Indemnified Party harmless hereunder.
In the event the Indemnifying Party so elects, it will so notify the
Indemnified Party and thereupon the Indemnifying Party shall take over
defense of the claim and, if so requested by the Indemnifying Party, the
Indemnified Party shall incur no further legal or other expenses related
thereto for which it shall be entitled to indemnity or to being held
harmless hereunder; provided, however, that nothing herein shall prevent
the Indemnified Party from retaining counsel at its own expense to defend
any claim. Except with the Indemnifying Party's prior written consent, the
Indemnified Party shall in no event confess any claim or make any
compromise in any matter in which the Indemnifying Party will be asked to
indemnify or hold Indemnified Party harmless hereunder.
15. The Distributor shall provide the Trust, for review by its Board of
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended pursuant to the Plan and the purposes for
which such expenditures were made. Such written report shall be in a form
satisfactory to the Trust and shall supply all information necessary for
the Board to discharge its responsibilities, including its responsibilities
pursuant to Rule 12b-1.
16. While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons of the Trust shall be committed to
the discretion of the Trustees who are not interested persons.
17. The Trust shall preserve copies of this Plan and any agreements
related to and all reports made pursuant to Section 15 hereof, for a period
of not less than six years from the date of this Plan or any such report,
as the case may be, the first two years in an easily accessible place.
18. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the Act. To
the extent the applicable law of the Commonwealth of Massachusetts or any
of the provisions herein conflict with the applicable provisions of the
Act, the latter shall control.
19. The Distributor is hereby expressly put on notice of the limitation
of shareholder liability as set forth in the Trust's Declaration of Trust
and agrees that the obligations assumed by the Trust pursuant to this Plan
and any agreements related to this Plan shall be limited in all cases to
the Portfolio and its assets, and neither the Distributor nor its agents
shall seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. In addition, neither the Distributor nor its
agents shall seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Distributor understands that the rights and
obligations of any series of the Trust under the Trust's Declaration of
Trust are separate and distinct from those of any and all other series.
20. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise the remainder of the Plan shall not be
affected thereby.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST:
CASH PORTFOLIO DISTRIBUTION AND SERVICE PLAN
THIS PLAN made as of the 22nd day of January, 1996, by and between THE
NORTH CAROLINA CAPITAL MANAGEMENT TRUST a Massachusetts business trust
which may issue one or more series of shares of beneficial interest
(hereinafter called the "Trust"), on behalf of CASH PORTFOLIO, a series of
the Trust (hereinafter called the "Portfolio"), FIDELITY MANAGEMENT &
RESEARCH COMPANY a Massachusetts Corporation (hereinafter called the
"Adviser"), and FIDELITY DISTRIBUTORS CORPORATION, a Massachusetts
corporation (hereinafter called the "Distributor");
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered as such under the Investment Company
Act of 1940 (the "Act"); and
WHEREAS, the Trust intends to distribute the Portfolio's shares of
beneficial interest ("shares") in accordance with Rule 12b-1 under the Act,
and desires to adopt a Distribution and Service Plan pursuant to such Rule,
and the Board of Trustees of the Trust has determined that there is a
reasonable likelihood that this will benefit the Portfolio and its
shareholders; and
WHEREAS, the Trust desires to increase the level of shareholder services
provided within the State of North Carolina, and the Board of Trustees has
determined that there is a reasonable likelihood that such in-state service
will benefit the Portfolio and its shareholders; and
WHEREAS, the Trust desires to retain the Distributor to provide, or secure
the provision of through an agent(s), facilities and personnel and to
render services with respect to the Portfolio in accordance with such
Distribution and Service Plan in the manner and on the terms and conditions
hereinafter set forth; and
WHEREAS, the Trust understands that the Distributor has retained the
services of Sterling Capital Distributors, Inc. ("Sterling"), a corporation
organized and existing under the laws of the State of North Carolina, as
its agent to perform or provide various of the facilities, personnel and
services described herein:
NOW, THEREFORE, the Trust hereby adopts a Distribution and Service Plan on
behalf of the Portfolio in accordance with Rule 12b-1 under the Act, and
the parties hereto agree to the following terms and conditions of the Plan:
1. Subject to the supervision of the Board of Trustees, the Trust hereby
retains the Distributor to provide facilities, personnel and a program with
respect to the marketing and promotional activities of the Portfolio (the
"Distribution Services"). Without limiting the generality of the foregoing,
the Distributor shall be responsible for, and shall accomplish itself,
through its affiliates, or through its agent, Sterling, the following: (i)
formulate and implement marketing and promotional activities, including but
not limited to direct mail promotions, regional orientation meetings and
financial management seminars; (ii) prepare and contract for printing of a
periodic newsletter and the mailing and distribution thereof, such
newsletter to be distributed to potential and participating local units and
to provide information regarding the Portfolio and items of technical and
general interest to local treasurers and/or other financial officials;
(iii) provide office space and equipment, telephone facilities and
dedicated personnel as necessary to provide the services hereunder; (iv)
arrange and contract for the preparation and printing of sales literature
and seminar materials and the mailing and distribution thereof; (v) bear
the expenses of printing (not including typesetting) and distributing
Prospectuses and Statements of Additional Information to other than
existing shareholders; (vi) obtain, evaluate and provide to the Portfolio
such information, analyses and opinions with respect to marketing and
promotional activities as the Portfolio may, from time to time, reasonably
request; and (vii) organize and maintain a Trust advisory board comprised
of local government financial officials. Such board shall meet at least
semi-annually with a primary purpose of providing a representative review
of Trust, Distributor or Sterling service initiatives, as well as providing
an informal communication device between shareholders and the Trust. The
Board shall not be responsible for providing any advice with respect to
investment matters.
2. Subject to the supervision of the Board of Trustees, the Distributor
shall also facilitate and coordinate a program whereby certain shareholder
servicing functions (the "Shareholder Services") are provided by the
Distributor, its affiliates, or its agent, Sterling, within the boundaries
of the State of North Carolina. Such program shall be undertaken in
conjunction with the Trust's transfer agent, and shall be subject to such
controls, provisions and procedures as shall be satisfactory to
Distributors and said transfer agent. To the extent deemed practicable by
the Distributor, such program shall provide for the following functions and
services to be performed, in whole or in part, in North Carolina: (i)
establishment, maintenance and close-out of shareholder accounts; (ii)
shareholder inquiry, communication and problem resolution services; (iii)
completion of shareholder audit confirmations; (iv) receipt of orders for
transactions in shares of the Portfolio, and timely conveyance of such
orders to the Trust or its transfer agent; and (v) such concomitant duties
as are deemed appropriate by the Distributor.
3. The Distributor, its affiliates or its agent(s) shall directly bear all
costs of rendering the services to be performed under this Plan, including
but not limited to the compensation of personnel necessary to provide such
services, and all other costs for travel, office space, facilities,
equipment, printing, telephone service, heat, light, power and other
utilities.
4. The Portfolio shall, from time to time, furnish or otherwise make
available to the Distributor such financial reports, proxy statements and
other information relating to the business and affairs of the Portfolio as
the Distributor may reasonably require in order to discharge its duties and
obligations hereunder.
5. The Adviser agrees to pay the Distributor as soon as practicable after
the end of each month and the Distributor agrees to accept, as full
compensation for all services and facilities to be provided hereunder, a
fee based on the monthly average of the net assets of the Portfolio
determined as of the close of business on each business day throughout the
month. The fee shall be payable by the Adviser from the Management Fee paid
to the Adviser by the Portfolio pursuant to the Management Contract dated
January 22, 1996 between the Adviser and the Portfolio. The fee due the
Distributor shall be payable at an annual rate determined on a cumulative
basis pursuant to the following schedule:
The Annual Fee Rate Is
<TABLE>
<CAPTION>
<S> <C> <C>
On the first $400 million of average daily net assets 0.160%
On average daily net assets in excess of $400 million through $800 million 0.160%
On average daily net assets in excess of $800 million through $1.2 billion 0.160%
On average daily net assets in excess of $1.2 billion through $1.6 billion 0.160%
On average daily net assets in excess of $1.6 billion through $2.0 billion 0.155%
On average daily net assets in excess of $2.0 billion 0.150%
</TABLE>
All parties to this Plan understand that the agreement between the
Distributor and its agent, Sterling, will provide for a full pass-through
to Sterling of the fees payable hereunder, such payments by the Distributor
to Sterling to be made in consideration of Sterling's responsibilities
under its agreement with the Distributor. The Distributor, in consultation
with Sterling, reserves the right to reduce or waive the distribution fee
from time to time.
If this Plan becomes effective subsequent to the first day of a month or
shall terminate before the last day of a month, compensation for the part
of the month the Plan is in effect shall be prorated based on the number of
business days during such month that this Plan was in effect.
6. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Declaration of Trust or By-Laws, or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or relieve or deprive the Board of Trustees of the Trust
of the responsibility for and control of the conduct of the affairs of the
Portfolio.
7. This Plan shall become effective upon approval by a vote of at least a
"majority of the outstanding voting securities of the Portfolio," and upon
approval by a vote of the Trustees of the Trust, and of the Trustees who
are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the operation of this Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this Plan. For the purposes of this Plan, the terms
"interested persons" and "majority of the outstanding voting securities of
the Portfolio" are used as defined in the Act.
8. This Plan shall remain in effect until July 31, 1996, and from year to
year thereafter, provided, however, that such continuance is subject to
approval annually by a vote of the Trustees of the Trust and of the
Trustees who are not interested persons of the Trust, and who have no
direct or indirect financial interest in the operation of this Plan or in
any agreements related to the Plan, cast in person at a meeting called for
the purpose of voting on this Plan. If such annual approval is not
obtained, the Plan shall expire 12 months after the date of the last
approval. This Plan may be amended at any time by the Board of Trustees
provided that (a) any amendment to increase materially the amount to be
spent for the services described herein shall be effective only upon
approval by a vote of a majority of the outstanding shares of the
Portfolio, and (b) any material amendments of this Plan shall be effective
only upon approval in the manner provided in the first sentence in this
paragraph.
9. This Plan may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Trustees who are not interested
persons of the Trust and who have no direct or indirect financial interest
in the operation of this Plan or in any agreements related to this Plan, or
by a vote of a majority of the outstanding voting securities of the
Portfolio.
10. Nothing herein contained shall limit the freedom of the Distributor
or any "affiliated person," as defined in the Act, to render investment
supervisory and corporate administrative services to other investment
companies, to act as distributor, adviser or investment counselor to other
persons, firms or corporations and to engage in other business activities.
11. Neither the Distributor nor any of its employees or agents are
authorized to make any representations with respect to the sale of shares
except those contained in the then current Prospectus and Statement of
Additional Information of the Portfolio.
12. The provisions of this Paragraph 12 shall be applicable only with
respect to the provision of Distribution Services. The provision of
Shareholder Services shall not be affected by this Paragraph 12, but shall
be governed by the provisions of Paragraph 13, below. The Portfolio will
indemnify and hold the Distributor harmless from judgments against the
Distributor resulting from specific acts or omissions in the performance of
Distribution Services under this Plan which are the result of written
instructions of a majority of the Board of Trustees of the Trust, so long
as there is an express finding that such acts or omissions did not
constitute willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties or a breach of fiduciary duty. The Portfolio shall
similarly indemnify and hold harmless any agent of the Distributor with
respect to such judgments against the agent resulting from specific acts or
omissions in the performance of Distribution Services under this Plan which
are the result of written instructions of a majority of the Board of
Trustees of the Trust, so long as there is an express finding that such
acts or omissions did not constitute willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties or a breach of fiduciary
duty. No provision of this Paragraph 12 shall be deemed to protect the
Distributor or an agent against any liability to the Portfolio or its
shareholders to which it might otherwise be subject by reason of any
willful misfeasance, bad faith or gross negligence in the performance of
its Distribution Services duties or the reckless disregard of its
Distribution Services obligations under this Plan. No provision hereof
shall be deemed to protect any Trustee or officer of the Trust against any
such liability to which he might otherwise be subject by reason of any
willful misfeasance, bad faith or gross negligence in the performance of
his duties or the reckless disregard of his obligation.
13. The provisions of this Paragraph 13 shall be applicable only with
respect to the provision of Shareholder Services. The provision of
Distribution Services shall not be affected by this Paragraph 13, but shall
be governed by the provisions of Paragraph 12, above.
A. The Trust shall indemnify and hold the Distributor harmless against
any losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other than
the Trust, including by a shareholder, which names the Distributor and/or
the Trust as a party and is not based on and does not result from the
Distributor's willful misfeasance, bad faith or negligence or reckless
disregard of duties, and arises out of or in connection with the
Distributor's performance hereunder; or
(2) any claim, demand, action or suit (except to the extent contributed
to by the Distributor's willful misfeasance, bad faith or negligence or
reckless disregard of duties) which results from the negligence of the
Trust, or from the Distributor's acting upon any instruction(s) reasonably
believed by it to have been executed or communicated by any person duly
authorized by the Trust, or as a result of the Distributor's acting in
reliance upon advice reasonably believed by the Distributor to have been
given by counsel for the Trust.
B. The Distributor shall indemnify and hold the Trust harmless against
any losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or suit
brought by any person other than the Distributor, which names the Trust
and/or the Distributor as a party and is based upon and arises out of acts,
errors or omissions of the Distributor constituting negligence, lack of
good faith or willful misconduct in the performance of the Distributor's
Shareholder Service duties under this Agreement.
14. In the event that either party requests the other to indemnify or hold
it harmless hereunder, the party requesting indemnification (the
"Indemnified Party") shall inform the other party (the "Indemnifying
Party") of the relevant facts known to Indemnified Party concerning the
matter in question. The Indemnified Party shall use reasonable care to
identify and promptly to notify the Indemnifying Party concerning any
matter which presents, or appears likely to present, a claim for
indemnification. The Indemnifying Party shall have the election of
defending the Indemnified Party against any claim which may be the subject
of indemnification or of holding the Indemnified Party harmless hereunder.
In the event the Indemnifying Party so elects, it will so notify the
Indemnified Party and thereupon the Indemnifying Party shall take over
defense of the claim and, if so requested by the Indemnifying Party, the
Indemnified Party shall incur no further legal or other expenses related
thereto for which it shall be entitled to indemnity or to being held
harmless hereunder; provided, however, that nothing herein shall prevent
the Indemnified Party from retaining counsel at its own expense to defend
any claim. Except with the Indemnifying Party's prior written consent, the
Indemnified Party shall in no event confess any claim or make any
compromise in any matter in which the Indemnifying Party will be asked to
indemnify or hold Indemnified Party harmless hereunder.
15. The Distributor shall provide the Trust, for review by its Board of
Trustees, and the Trustees shall review, at least quarterly, a written
report of the amounts expended pursuant to the Plan and the purposes for
which such expenditures were made. Such written report shall be in a form
satisfactory to the Trust and shall supply all information necessary for
the Board to discharge its responsibilities, including its responsibilities
pursuant to Rule 12b-1.
16. While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons of the Trust shall be committed to
the discretion of the Trustees who are not interested persons.
17. The Trust shall preserve copies of this Plan and any agreements
related to and all reports made pursuant to Section 15 hereof, for a period
of not less than six years from the date of this Plan or any such report,
as the case may be, the first two years in an easily accessible place.
18. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the Act. To
the extent the applicable law of the Commonwealth of Massachusetts or any
of the provisions herein conflict with the applicable provisions of the
Act, the latter shall control.
19. The Distributor is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust's Declaration of Trust and
agrees that the obligations assumed by the Trust pursuant to this Plan and
any agreements related to this Plan shall be limited in all cases to the
Portfolio and its assets, and neither the Distributor nor its agents shall
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. In addition, neither the Distributor nor its
agents shall seek satisfaction of any such obligations from the Trustees or
any individual Trustee. The Distributor understands that the rights and
obligations of any series of the Trust under the Trust's Declaration of
Trust are separate and distinct from those of any and all other series.
20. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise the remainder of the Plan shall not be
affected thereby.
DISTRIBUTION AND SERVICE AGENT AGREEMENT
between
FIDELITY DISTRIBUTORS CORPORATION
and
STERLING CAPITAL DISTRIBUTORS, INC.
with respect to shares of
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST:
TERM PORTFOLIO
WHEREAS, Fidelity Distributors Corporation ("Distributors"), a
Massachusetts corporation with principal offices at 82 Devonshire Street,
Boston, Massachusetts 02109, has entered into a Distribution and Service
Plan (the "Plan,") with The North Carolina Capital Management Trust (the
"Trust"), an open-end, diversified, management investment company organized
as a Massachusetts business trust with principal offices at 82 Devonshire
Street, Boston, Massachusetts 02109, on behalf of Term Portfolio, a series
of the Trust (the "Portfolio") and Fidelity Management & Research Company
(the "Adviser") an investment adviser with principal offices at 82
Devonshire Street, Boston, Massachusetts 02109, pursuant to the provisions
of Rule 12b-1 under the Investment Company Act of 1940 (the "Act"); and
WHEREAS, Distributors has entered into a General Distribution Agreement
with the Portfolio; and
WHEREAS, the Plan contemplates the retention by Distributors of Sterling
Capital Distributors, Inc. ("Sterling"), a North Carolina corporation with
principal offices at One First Union Center, 301 South College Street,
Charlotte, North Carolina 28202, as agent with respect to the provision of
various distribution and shareholder services required to be performed
under the Plan;
NOW THEREFORE, the parties hereto enter into this Agreement as of the 22nd
day of January, 1996, on the following terms and conditions:
1. Subject to the overall supervision of Distributors and the Board of
Trustees of the Trust, Distributors hereby retains Sterling to provide
facilities, personnel and a program with respect to the marketing and
promotional activities of the Portfolio. Without limiting the generality
of the foregoing, Sterling shall accomplish the following: (i) formulate
and implement marketing and promotional activities, including but not
limited to direct mail promotions, regional orientation meetings and
financial management seminars; (ii) prepare and contract for printing of a
periodic newsletter and the mailing and distribution thereof, such
newsletter to be distributed to potential and participating local units and
to provide information regarding the Portfolio and items of technical and
general interest to local treasurers and/or other financial officials;
(iii) provide office space and equipment, telephone facilities and
dedicated personnel as necessary to provide the services hereunder; (iv)
arrange and contract for the preparation and printing of sales literature
and seminar materials and the mailing and distribution thereof; (v) bear
the expenses of printing (not including typesetting) and distributing
prospectuses to other than existing shareholders, (vi) obtain, evaluate and
provide to Distributors such information, analyses and opinions with
respect to marketing and promotional activities as Distributors may, from
time to time, reasonably request in connection with its reporting and
informational responsibilities to the Portfolio; and (vii) organize and
maintain a Portfolio advisory board comprised of local government financial
officials. Such board shall meet at least semi-annually with a primary
purpose of providing a representative review of Portfolio, Distributors or
Sterling service initiatives, as well as providing an informal
communication device between shareholders and the Portfolio. Sterling
understands that the board shall not be responsible for providing any
advice with respect to investment matters.
2. Subject to such controls, provisions and procedures as shall be provided
to Sterling by Distributors or the Trust's transfer agent, Sterling shall
perform the following functions and shareholder services at its facilities
within the boundaries of the State of North Carolina: (i) establishment,
maintenance and close-out of shareholder accounts; (ii) shareholder
inquiry, communication and problem resolution services; (iii) completion of
shareholder audit confirmations; (iv) receipt of orders for transactions in
shares of the Portfolio, and timely conveyance of such orders to the Trust
or its transfer agent; and (v) such concomitant duties as are deemed
appropriate by Distributors.
3. Subject to such terms as Sterling and Distributors shall from time to
time agree upon, Sterling shall directly bear all costs of rendering the
services to be performed under this Agreement, including but not limited to
the compensation of personnel necessary to provide such services, and all
other costs for travel, office space, facilities, equipment, printing,
telephone service, heat, light, power and other utilities.
4. Distributors shall, from time to time, furnish or otherwise make
available to Sterling such financial reports, proxy statements and other
information relating to the business and affairs of the Portfolio as
Sterling may reasonably require in order to discharge its duties and
obligations hereunder.
5. Distributors agrees to pay Sterling as soon as practicable after the end
of each month and Sterling agrees to accept, as full compensation for all
services and facilities to be provided hereunder, a fee based on the
monthly average of the net assets of the Portfolio determined as of the
close of business on each business day throughout the month. The fee shall
be payable at an annual rate determined on a cumulative basis pursuant to
the following schedule:
The Annual Fee Rate Is
<TABLE>
<CAPTION>
<S> <C> <C>
On the first $400 million of average daily net assets 0.160%
On average daily net assets in excess of $400 million through $800 million 0.160%
On average daily net assets in excess of $800 million through $1.2 billion 0.160%
On average daily net assets in excess of $1.2 billion through $1.6 billion 0.160%
On average daily net assets in excess of $1.6 billion through $2.0 billion 0.155%
On average daily net assets in excess of $2.0 billion 0.150%
</TABLE>
Sterling understands that Distributors, with the consent of Sterling, has
reserved the right to reduce or waive the distribution fee from time to
time.
If this Agreement becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month, compensation for the
part of the month this Agreement is in effect shall be prorated based on
the number of business days during such month that this Agreement was in
effect.
6. Sterling hereby warrants and represents that it has obtained all
regulatory licenses and approvals, and has otherwise done all things
legally necessary, to perform its duties under this Agreement; and further
represents and warrants that Sterling will maintain its legal ability to so
perform during the term of this Agreement.
7. This Agreement shall become effective on February 1, 1996, if approved
by a vote of the Trustees of the Trust, and of the Trustees who are not
"interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan, cast in person at a
meeting called for the purpose of voting on this Agreement. For the
purpose of the Agreement, the terms "interested persons" and "majority of
the outstanding voting securities of the Portfolio" are used as defined in
the Act.
8. Sterling is not authorized to give any information or make any
representations with respect to the sale of shares, other than those
contained in the appropriate registration statements or prospectuses of the
Portfolio filed with the Securities and Exchange Commission under the
Securities Act of 1933 (as they may be amended from time to time), or
contained in shareholder reports or other material that may be prepared by
or on behalf of the Portfolio for Distributors's or Sterling's use. This
shall not be construed to prevent Sterling from preparing and distributing
sales literature or other material as it may deem appropriate, provided any
such material is delivered to Distributors for its approval in advance of
its use.
9. This Agreement shall remain in effect until July 31, 1996, and from year
to year thereafter, provided, however, that such continuance is subject to
approval annually by a vote of the Trustees of the Trust and of the
Trustees who are not interested persons of the Trust, and who have no
direct or indirect financial interest in the operation of this Agreement,
cast in person at a meeting called for the purpose of voting on this
Agreement. If such annual approval is not obtained, the Agreement shall
expire 12 months after the date of the last approval. Sterling understands
that the Plan may be amended at any time by the Board of Trustees provided
that (a) any amendment to increase materially the amount to be spent for
the services therein described shall be effective only upon approval by a
vote of a majority of the outstanding shares of the Portfolio, and (b) any
material amendments of the Plan shall be effective only upon approval in
the manner provided in the first sentence in this paragraph.
10. This Agreement may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Trustees who are not interested
persons of the Trust and who have no direct or indirect financial interest
in the operation of this Agreement or by a vote of a majority of the
outstanding voting securities of the Portfolio, on not more than sixty
days' written notice. Notwithstanding anything contained herein, in the
event that the Plan shall terminate or Sterling shall fail to
satisfactorily perform its responsibilities hereunder, such determination
to be made in good faith by Distributors, this Agreement may be terminated
effective upon 30 days' written notice to Sterling by Distributors.
11. Nothing herein contained shall limit the freedom of Sterling or any
"affiliated person," as defined in the Act, to render investment
supervisory or distribution services to other investment companies, to act
as distributor, adviser or investment counselor to other persons, firms or
corporations and to engage in other business activities, provided that
Sterling shall not render investment supervisory, shareholder or
distribution services to any other investment company of the Term Portfolio
type whose shares are offered for sale in North Carolina during the term of
this Agreement.
12. The provisions of this Paragraph 12 shall be applicable only with
respect to the provision of Distribution Services. The provision of
Shareholder Services shall not be affected by this Paragraph 12, but shall
be governed by the provisions of Paragraph 13, below. Distributors will
indemnify and hold Sterling harmless from judgments against Sterling
resulting from specific acts or omissions in the performance of
Distribution Services under this Agreement which are the result of written
instructions of a majority of the Board of Trustees of the Trust so long as
there is an express finding that such acts or omissions did not constitute
willful misfeasance, bad faith, gross negligence or reckless disregard of
its duties or a breach of fiduciary duty.
No provision of this Paragraph 12 shall be deemed to protect Sterling
against any liability to the Portfolio or its shareholders to which it
might otherwise be subject by reason of any willful misfeasance, bad faith
or gross negligence in the performance of its Distribution Services duties
or the reckless disregard of its Distribution Services obligations under
this Agreement.
13. The provisions of this Paragraph 13 shall be applicable only with
respect to the provision of Shareholder Services. The provision of
Distribution Services shall not be affected by this Paragraph 13, but shall
be governed by the provisions of Paragraph 12, above.
A. To the extent that Distributors is indemnified by the Trust,
Distributors shall indemnify and hold Sterling harmless against any losses,
claims, damages, liabilities or expenses (including reasonable counsel fees
and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other than
Distributors, which names Sterling and/or Distributors as a party and is
not based on and does not result from Sterling's willful misfeasance, bad
faith or negligence or reckless disregard of duties, and arises out of or
in connection with Sterling's performance hereunder; or
(2) any claim, demand, action or suit (except to the extent contributed to
by Sterling's willful misfeasance, bad faith or negligence or reckless
disregard of duties) which results from the negligence of Distributors, or
from Sterling's acting upon any instruction(s) reasonably believed by it to
have been executed or communicated by any person duly authorized by the
Trust or Distributors, or as a result of Sterling's acting in reliance upon
advice reasonably believed by Sterling to have been given by counsel for
the Trust.
B. Sterling shall indemnify and hold Distributors and its affiliates
(including, without limitation, the Trust's transfer agent) harmless
against any losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand,
action or suit brought by any person other than Sterling, (including
without limitation, any suit which names the Trust, Distributors, the
Trust's transfer agent, an affiliate of any of the foregoing, and/or
Sterling), and is based upon and arises out of acts, errors or omissions of
Sterling constituting negligence, lack of good faith or willful misconduct
in the performance of Sterling's Shareholder Service duties under this
Agreement.
14. In the event that either party requests the other to indemnify or hold
it harmless hereunder, the party requesting indemnification (the
"Indemnified Party") shall inform the other party (the "Indemnifying
Party") of the relevant facts known to Indemnified Party concerning the
matter in question. The Indemnified Party shall use reasonable care to
identify and promptly to notify the Indemnifying Party concerning any
matter which presents, or appears likely to present, a claim for
indemnification. The Indemnifying Party shall have the election of
defending the Indemnified Party against any claim which may be the subject
of indemnification or of holding the Indemnified Party harmless hereunder.
In the event the Indemnifying Party so elects, it will so notify the
Indemnified Party and thereupon the Indemnifying Party shall take over
defense of the claim and, if so requested by the Indemnifying Party, the
Indemnified Party shall incur no further legal or other expenses related
thereto for which it shall be entitled to indemnity or to being held
harmless hereunder; provided, however, that nothing herein shall prevent
the Indemnified Party from retaining counsel at its own expense to defend
any claim. Except with the Indemnifying Party's prior written consent, the
Indemnified Party shall in no event confess any claim or make any
compromise in any matter in which the Indemnifying Party will be asked to
indemnify or hold Indemnified Party harmless hereunder.
15. This Agreement shall automatically terminate in the event of its
"assignment," as defined in the Act.
16. This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the Act. To
the extent the applicable law of the Commonwealth of Massachusetts or any
of the provisions herein conflict with the applicable provisions of the
Act, the latter shall control.
17. Sterling is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust's Declaration of Trust and
agrees that any obligations of the Portfolio shall be limited in all cases
to the Portfolio and its assets, and neither Sterling nor its agents shall
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. In addition, neither Sterling nor its agents
shall seek satisfaction of any such obligations from the Trustees or any
individual Trustee.
18. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise the remainder of the Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by the respective officers thereunto duly authorized and their
respective corporate seals to be hereunto affixed, as of the day and year
first above written.
STERLING CAPITAL DISTRIBUTORS, INC.
By: /s/ J. Calvin Rivers, Jr.
J. Calvin Rivers, Jr., President
FIDELITY DISTRIBUTORS CORPORATION
By: /s/ Neal Litvack
Neal Litvack, President
Supplemental Agreement
Whereas Fidelity Distributors Corporation ("Distributors") and Sterling
Capital Distributors, Inc. ("Sterling") have entered into a Distribution
and Service Agent Agreement (the "Agreement") dated as of January 22, 1996,
with respect to the shares of The North Carolina Capital Management Trust:
Term Portfolio (the "Portfolio").
And whereas Paragraph 3 of the Agreement provides:
3. Subject to such terms as Sterling and Distributors shall from time to
time agree upon, Sterling shall directly bear all costs of rendering the
services to be performed under this Agreement, including but not limited to
the compensation of personnel necessary to provide such services, and all
other costs for travel, office space, facilities, equipment, printing,
telephone service, heat, light, power and other utilities.
Now, therefore, representatives of Distributors and Sterling have entered
into negotiations and have agreed upon the following terms with reference
to the provisions of said Paragraph 3:
(i) Distributors or its affiliate shall bear 50% of the cost of Tymnet
Xlink 9.6 Leased Line Service (the "Xlink Service") providing data
telecommunication service between Sterling and the Portfolio's transfer
agent. If, in the reasonable judgment of Distributors, the replacement or
improvement of such Xlink Service is appropriate, the cost of such
replacement or improvement shall be allocated upon such basis as the
parties shall then agree.
(ii) In addition to its obligations under the Agreement, Sterling shall
bear all costs of appropriate postage paid or payable by Distributors or
its affiliates for the purpose of providing confirmations and monthly
statements to shareholders of the Portfolio.
(iii) The expenses to be borne by Sterling (i) of Xlink Service, and (ii)
of postage described in the preceding paragraph, shall be paid by
Distributors or its affiliate and shall be deducted from the fee payable to
Sterling pursuant to Paragraph 5 of the Agreement. All other expenses to
be borne by Sterling pursuant to the Agreement shall be paid by Sterling
directly.
(iv) Paragraph 3 of the Agreement shall not be construed to require
Sterling to bear the costs of printing prospectuses which offer shares of
the Portfolio.
(v) The terms of this letter shall be effective as of February 1, 1996.
(vi) Except as expressly set forth in paragraphs (i)-(vi) hereof, all
terms and conditions of the Agreement shall remain unchanged and in full
force and effect.
Agreement with terms (i)-(vi) hereof is signified by Sterling and
Distributors by authorized signature below.
Sterling Capital Distributors, Inc.
By: /s/ J. Calvin Rivers, Jr.
J. Calvin Rivers, Jr., President
Fidelity Distributors Corporation
By: /s/ Neal Litvack
Neal Litvack, President
DISTRIBUTION AND SERVICE AGENT AGREEMENT
between
FIDELITY DISTRIBUTORS CORPORATION
and
STERLING CAPITAL DISTRIBUTORS, INC.
with respect to shares of
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST:
CASH PORTFOLIO
WHEREAS, Fidelity Distributors Corporation ("Distributors"), a
Massachusetts corporation with principal offices at 82 Devonshire Street,
Boston, Massachusetts 02109, has entered into a Distribution and Service
Plan (the "Plan,") with The North Carolina Capital Management Trust (the
"Trust"), an open-end, diversified, management investment company organized
as a Massachusetts business trust with principal offices at 82 Devonshire
Street, Boston, Massachusetts 02109, on behalf of Cash Portfolio, a series
of the Trust (the "Portfolio") and Fidelity Management & Research Company
(the "Adviser") an investment adviser with principal offices at 82
Devonshire Street, Boston, Massachusetts 02109, pursuant to the provisions
of Rule 12b-1 under the Investment Company Act of 1940 (the "Act"); and
WHEREAS, Distributors has entered into a General Distribution Agreement
with the Portfolio; and
WHEREAS, the Plan contemplates the retention by Distributors of Sterling
Capital Distributors, Inc. ("Sterling"), a North Carolina corporation with
principal offices at One First Union Center, 301 South College Street,
Charlotte, North Carolina 28202, as agent with respect to the provision of
various distribution and shareholder services required to be performed
under the Plan;
NOW THEREFORE, the parties hereto enter into this Agreement as of the 22nd
day of January, 1996, on the following terms and conditions:
1. Subject to the overall supervision of Distributors and the Board of
Trustees of the Trust, Distributors hereby retains Sterling to provide
facilities, personnel and a program with respect to the marketing and
promotional activities of the Portfolio. Without limiting the generality
of the foregoing, Sterling shall accomplish the following: (i) formulate
and implement marketing and promotional activities, including but not
limited to direct mail promotions, regional orientation meetings and
financial management seminars; (ii) prepare and contract for printing of a
periodic newsletter and the mailing and distribution thereof, such
newsletter to be distributed to potential and participating local units and
to provide information regarding the Portfolio and items of technical and
general interest to local treasurers and/or other financial officials;
(iii) provide office space and equipment, telephone facilities and
dedicated personnel as necessary to provide the services hereunder; (iv)
arrange and contract for the preparation and printing of sales literature
and seminar materials and the mailing and distribution thereof; (v) bear
the expenses of printing (not including typesetting) and distributing
prospectuses to other than existing shareholders, (vi) obtain, evaluate and
provide to Distributors such information, analyses and opinions with
respect to marketing and promotional activities as Distributors may, from
time to time, reasonably request in connection with its reporting and
informational responsibilities to the Portfolio; and (vii) organize and
maintain a Portfolio advisory board comprised of local government financial
officials. Such board shall meet at least semi-annually with a primary
purpose of providing a representative review of Portfolio, Distributors or
Sterling service initiatives, as well as providing an informal
communication device between shareholders and the Portfolio. Sterling
understands that the board shall not be responsible for providing any
advice with respect to investment matters.
2. Subject to such controls, provisions and procedures as shall be provided
to Sterling by Distributors or the Trust's transfer agent, Sterling shall
perform the following functions and shareholder services at its facilities
within the boundaries of the State of North Carolina: (i) establishment,
maintenance and close-out of shareholder accounts; (ii) shareholder
inquiry, communication and problem resolution services; (iii) completion of
shareholder audit confirmations; (iv) receipt of orders for transactions in
shares of the Portfolio, and timely conveyance of such orders to the Trust
or its transfer agent; and (v) such concomitant duties as are deemed
appropriate by Distributors.
3. Subject to such terms as Sterling and Distributors shall from time to
time agree upon, Sterling shall directly bear all costs of rendering the
services to be performed under this Agreement, including but not limited to
the compensation of personnel necessary to provide such services, and all
other costs for travel, office space, facilities, equipment, printing,
telephone service, heat, light, power and other utilities.
4. Distributors shall, from time to time, furnish or otherwise make
available to Sterling such financial reports, proxy statements and other
information relating to the business and affairs of the Portfolio as
Sterling may reasonably require in order to discharge its duties and
obligations hereunder.
5. Distributors agrees to pay Sterling as soon as practicable after the end
of each month and Sterling agrees to accept, as full compensation for all
services and facilities to be provided hereunder, a fee based on the
monthly average of the net assets of the Portfolio determined as of the
close of business on each business day throughout the month. The fee shall
be payable at an annual rate determined on a cumulative basis pursuant to
the following schedule:
The Annual Fee Rate Is
<TABLE>
<CAPTION>
<S> <C> <C>
On the first $400 million of average daily net assets 0.160%
On average daily net assets in excess of $400 million through $800 million 0.160%
On average daily net assets in excess of $800 million through $1.2 billion 0.160%
On average daily net assets in excess of $1.2 billion through $1.6 billion 0.160%
On average daily net assets in excess of $1.6 billion through $2.0 billion 0.155%
On average daily net assets in excess of $2.0 billion 0.150%
</TABLE>
Sterling understands that Distributors, with the consent of Sterling, has
reserved the right to reduce or waive the distribution fee from time to
time.
If this Agreement becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month, compensation for the
part of the month this Agreement is in effect shall be prorated based on
the number of business days during such month that this Agreement was in
effect.
6. Sterling hereby warrants and represents that it has obtained all
regulatory licenses and approvals, and has otherwise done all things
legally necessary, to perform its duties under this Agreement; and further
represents and warrants that Sterling will maintain its legal ability to so
perform during the term of this Agreement.
7. This Agreement shall become effective on February 1, 1996, if approved
by a vote of the Trustees of the Trust, and of the Trustees who are not
"interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan, cast in person at a
meeting called for the purpose of voting on this Agreement. For the
purpose of the Agreement, the terms "interested persons" and "majority of
the outstanding voting securities of the Portfolio" are used as defined in
the Act.
8. Sterling is not authorized to give any information or make any
representations with respect to the sale of shares, other than those
contained in the appropriate registration statements or prospectuses of the
Portfolio filed with the Securities and Exchange Commission under the
Securities Act of 1933 (as they may be amended from time to time), or
contained in shareholder reports or other material that may be prepared by
or on behalf of the Portfolio for Distributors's or Sterling's use. This
shall not be construed to prevent Sterling from preparing and distributing
sales literature or other material as it may deem appropriate, provided any
such material is delivered to Distributors for its approval in advance of
its use.
9. This Agreement shall remain in effect until July 31, 1996, and from year
to year thereafter, provided, however, that such continuance is subject to
approval annually by a vote of the Trustees of the Trust and of the
Trustees who are not interested persons of the Trust, and who have no
direct or indirect financial interest in the operation of this Agreement,
cast in person at a meeting called for the purpose of voting on this
Agreement. If such annual approval is not obtained, the Agreement shall
expire 12 months after the date of the last approval. Sterling understands
that the Plan may be amended at any time by the Board of Trustees provided
that (a) any amendment to increase materially the amount to be spent for
the services therein described shall be effective only upon approval by a
vote of a majority of the outstanding shares of the Portfolio, and (b) any
material amendments of the Plan shall be effective only upon approval in
the manner provided in the first sentence in this paragraph.
10. This Agreement may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Trustees who are not interested
persons of the Trust and who have no direct or indirect financial interest
in the operation of this Agreement or by a vote of a majority of the
outstanding voting securities of the Portfolio, on not more than sixty
days' written notice. Notwithstanding anything contained herein, in the
event that the Plan shall terminate or Sterling shall fail to
satisfactorily perform its responsibilities hereunder, such determination
to be made in good faith by Distributors, this Agreement may be terminated
effective upon 30 days' written notice to Sterling by Distributors.
11. Nothing herein contained shall limit the freedom of Sterling or any
"affiliated person," as defined in the Act, to render investment
supervisory or distribution services to other investment companies, to act
as distributor, adviser or investment counselor to other persons, firms or
corporations and to engage in other business activities, provided that
Sterling shall not render investment supervisory, shareholder or
distribution services to any other investment company of the Cash Portfolio
type whose shares are offered for sale in North Carolina during the term of
this Agreement.
12. The provisions of this Paragraph 12 shall be applicable only with
respect to the provision of Distribution Services. The provision of
Shareholder Services shall not be affected by this Paragraph 12, but shall
be governed by the provisions of Paragraph 13, below. Distributors will
indemnify and hold Sterling harmless from judgments against Sterling
resulting from specific acts or omissions in the performance of
Distribution Services under this Agreement which are the result of written
instructions of a majority of the Board of Trustees of the Trust so long as
there is an express finding that such acts or omissions did not constitute
willful misfeasance, bad faith, gross negligence or reckless disregard of
its duties or a breach of fiduciary duty.
No provision of this Paragraph 12 shall be deemed to protect Sterling
against any liability to the Portfolio or its shareholders to which it
might otherwise be subject by reason of any willful misfeasance, bad faith
or gross negligence in the performance of its Distribution Services duties
or the reckless disregard of its Distribution Services obligations under
this Agreement.
13. The provisions of this Paragraph 13 shall be applicable only with
respect to the provision of Shareholder Services. The provision of
Distribution Services shall not be affected by this Paragraph 13, but shall
be governed by the provisions of Paragraph 12, above.
A. To the extent that Distributors is indemnified by the Trust,
Distributors shall indemnify and hold Sterling harmless against any losses,
claims, damages, liabilities or expenses (including reasonable counsel fees
and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other than
Distributors, which names Sterling and/or Distributors as a party and is
not based on and does not result from Sterling's willful misfeasance, bad
faith or negligence or reckless disregard of duties, and arises out of or
in connection with Sterling's performance hereunder; or
(2) any claim, demand, action or suit (except to the extent contributed to
by Sterling's willful misfeasance, bad faith or negligence or reckless
disregard of duties) which results from the negligence of Distributors, or
from Sterling's acting upon any instruction(s) reasonably believed by it to
have been executed or communicated by any person duly authorized by the
Trust or Distributors, or as a result of Sterling's acting in reliance upon
advice reasonably believed by Sterling to have been given by counsel for
the Trust.
B. Sterling shall indemnify and hold Distributors and its affiliates
(including, without limitation, the Trust's transfer agent) harmless
against any losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand,
action or suit brought by any person other than Sterling, (including
without limitation, any suit which names the Trust, Distributors, the
Trust's transfer agent, an affiliate of any of the foregoing, and/or
Sterling), and is based upon and arises out of acts, errors or omissions of
Sterling constituting negligence, lack of good faith or willful misconduct
in the performance of Sterling's Shareholder Service duties under this
Agreement.
14. In the event that either party requests the other to indemnify or hold
it harmless hereunder, the party requesting indemnification (the
"Indemnified Party") shall inform the other party (the "Indemnifying
Party") of the relevant facts known to Indemnified Party concerning the
matter in question. The Indemnified Party shall use reasonable care to
identify and promptly to notify the Indemnifying Party concerning any
matter which presents, or appears likely to present, a claim for
indemnification. The Indemnifying Party shall have the election of
defending the Indemnified Party against any claim which may be the subject
of indemnification or of holding the Indemnified Party harmless hereunder.
In the event the Indemnifying Party so elects, it will so notify the
Indemnified Party and thereupon the Indemnifying Party shall take over
defense of the claim and, if so requested by the Indemnifying Party, the
Indemnified Party shall incur no further legal or other expenses related
thereto for which it shall be entitled to indemnity or to being held
harmless hereunder; provided, however, that nothing herein shall prevent
the Indemnified Party from retaining counsel at its own expense to defend
any claim. Except with the Indemnifying Party's prior written consent, the
Indemnified Party shall in no event confess any claim or make any
compromise in any matter in which the Indemnifying Party will be asked to
indemnify or hold Indemnified Party harmless hereunder.
15. This Agreement shall automatically terminate in the event of its
"assignment," as defined in the Act.
16. This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the Act. To
the extent the applicable law of the Commonwealth of Massachusetts or any
of the provisions herein conflict with the applicable provisions of the
Act, the latter shall control.
17. Sterling is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust's Declaration of Trust and
agrees that any obligations of the Portfolio shall be limited in all cases
to the Portfolio and its assets, and neither Sterling nor its agents shall
seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. In addition, neither Sterling nor its agents
shall seek satisfaction of any such obligations from the Trustees or any
individual Trustee.
18. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise the remainder of the Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by the respective officers thereunto duly authorized and their
respective corporate seals to be hereunto affixed, as of the day and year
first above written.
STERLING CAPITAL DISTRIBUTORS, INC.
By: /s/ J. Calvin Rivers, Jr.
J. Calvin Rivers, Jr., President
FIDELITY DISTRIBUTORS CORPORATION
By: /s/ Neal Litvack
Neal Litvack, President
Supplemental Agreement
Whereas Fidelity Distributors Corporation ("Distributors") and Sterling
Capital Distributors, Inc. ("Sterling") have entered into a Distribution
and Service Agent Agreement (the "Agreement") dated as of January 22, 1996,
with respect to the shares of The North Carolina Capital Management Trust:
Cash Portfolio (the "Portfolio").
And whereas Paragraph 3 of the Agreement provides:
3. Subject to such terms as Sterling and Distributors shall from time to
time agree upon, Sterling shall directly bear all costs of rendering the
services to be performed under this Agreement, including but not limited to
the compensation of personnel necessary to provide such services, and all
other costs for travel, office space, facilities, equipment, printing,
telephone service, heat, light, power and other utilities.
Now, therefore, representatives of Distributors and Sterling have entered
into negotiations and have agreed upon the following terms with reference
to the provisions of said Paragraph 3:
(i) Distributors or its affiliate shall bear 50% of the cost of Tymnet
Xlink 9.6 Leased Line Service (the "Xlink Service") providing data
telecommunication service between Sterling and the Portfolio's transfer
agent. If, in the reasonable judgment of Distributors, the replacement or
improvement of such Xlink Service is appropriate, the cost of such
replacement or improvement shall be allocated upon such basis as the
parties shall then agree.
(ii) In addition to its obligations under the Agreement, Sterling shall
bear all costs of appropriate postage paid or payable by Distributors or
its affiliates for the purpose of providing confirmations and monthly
statements to shareholders of the Portfolio.
(iii) The expenses to be borne by Sterling (i) of Xlink Service, and (ii)
of postage described in the preceding paragraph, shall be paid by
Distributors or its affiliate and shall be deducted from the fee payable to
Sterling pursuant to Paragraph 5 of the Agreement. All other expenses to
be borne by Sterling pursuant to the Agreement shall be paid by Sterling
directly.
(iv) Paragraph 3 of the Agreement shall not be construed to require
Sterling to bear the costs of printing prospectuses which offer shares of
the Portfolio.
(v) The terms of this letter shall be effective as of February 1, 1996.
(vi) Except as expressly set forth in paragraphs (i)-(vi) hereof, all
terms and conditions of the Agreement shall remain unchanged and in full
force and effect.
Agreement with terms (i)-(vi) hereof is signified by Sterling and
Distributors by authorized signature below.
Sterling Capital Distributors, Inc.
By: /s/ J. Calvin Rivers, Jr.
J. Calvin Rivers, Jr., President
Fidelity Distributors Corporation
By: /s/ Neal Litvack
Neal Litvack, President
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