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. 37 [X]
and
REGISTRATION STATEMENT (No. 811-3455)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 37 [X]
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
Eric D. Roiter, 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)
( ) on ( ) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(i)
(X) on (August 18, 1998) 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.
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,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
f Expenses
g Expenses; FMR and Its Affiliates
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
h *
7 a Cover Page; FMR and Its Affiliates
b,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 18, 1998 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, NOR
HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NC-PRO-0898
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 A UGUST 18, 1998
AND
ANNUAL REPORT
FOR THE YEAR EN DE D(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109 JUNE 30, 1998
THE
N
C
ORTH
AROLINA
CAPITAL MANAGEMENT TRUST
AND
STATEMENT OF ADDITIONAL INFORMATION
DATED AUGUS T 18, 1998
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
KEY FACTS P - WHO MAY WANT TO INVEST
4
P - EXPENSES EACH FUND'S YEARLY OPERATING EXPENSES.
4
P - FINANCIAL HIGHLIGHTS A SUMMARY OF EACH FUND'S FINANCIAL
6 DATA.
P- PERFORMANCE HOW EACH FUND HAS DONE OVER TIME.
7
THE FUNDS IN DETAIL P- CHARTER HOW EACH FUND IS ORGANIZED.
7
INVESTMENT PRINCIPLES AND RISKS EACH FUND'S OVERALL
APPROACH TO INVESTING.
P- BREAKDOWN OF EXPENSES HOW OPERATING COSTS ARE
10 CALCULATED AND WHAT THEY INCLUDE.
P- HOW TO BUY SHARES OPENING AN ACCOUNT AND MAKING
10 ADDITIONAL INVESTMENTS.
P- HOW TO SELL SHARES TAKING MONEY OUT AND CLOSING YOUR
12 ACCOUNT.
P- INVESTOR SERVICES SERVICES TO HELP YOU MANAGE YOUR
14 ACCOUNT.
SHAREHOLDER AND ACCOUNT POLICIES P- DIVIDENDS, CAPITAL GAINS, AND TAXES
14
P- TRANSACTION DETAILS SHARE PRICE CALCULATIONS AND THE
15 TIMING OF PURCHASES AND REDEMPTIONS.
P- EXCHANGE RESTRICTIONS
16
</TABLE>
ANNUAL REPORT
<TABLE>
<CAPTION>
<S> <C> <C>
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-5 A COMPLETE LIST OF THE FUND'S INVESTMENTS WITH THEIR
MARKET VALUES.
FINANCIAL STATEMENTS A-8 STATEMENTS OF ASSETS AND LIABILITIES, OPERATIONS, AND
CHANGES IN NET ASSETS, AS WELL AS FINANCIAL HIGHLIGHTS.
TERM PORTFOLIO:
PERFORMANCE A-12 HOW THE FUND HAS DONE OVER TIME.
FUND TALK A-15 THE MANAGER'S REVIEW OF THE FUND'S PERFORMANCE, STRATEGY,
AND OUTLOOK.
INVESTMENTS A-16 A COMPLETE LIST OF THE FUND'S INVESTMENTS WITH THEIR
MARKET VALUES.
FINANCIAL STATEMENTS A-17 STATEMENTS OF ASSETS AND LIABILITIES, OPERATIONS, AND
CHANGES IN NET ASSETS, AS WELL AS FINANCIAL HIGHLIGHTS.
NOTES A-21 NOTES TO THE FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT ACCOUNTANTS A-23 THE AUDITOR'S OPINION.
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF ADDITIONAL INFORMATION S-1
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.
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 economic and political 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 may pay when you buy
or sell shares of a fund.
CASH PORTFOLIO
CASH TERM
PORTFOLI PORTFOLI
O O
SAL ES C HARGE ON PURCHASES AND NONE NONE
RE INVEST ED DISTRIBUTIONS
D EFE RRED SALES CHARGE ON REDEMPTIONS 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 for 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 P-).
The following figures are based on historical expenses [, adjusted
to reflect current fees,] of each fund and are calculated as a
percentage of average net assets of each fund. FMR has entered
into arrangements o n beha lf of [the/each] fund with the fund's
custodian and tran sfer agent whereby credits realized as a
result of uni nvested cash balances are used to reduce fund
ex pense s. Including [this/these] reduction[s], the total
[fun d] operating expenses presented in the table would
hav e been __% [for Cash Portfolio and __% for Term
Portfolio] .]
CASH PORTFOLIO [REPEAT FOR EACH]
CASH TERM
PORTFOLI PORTFOLI
O O
MANAGEMENT FEE* % %
12B-1 FEE (DISTRIBUTION FEE) % %
OTHER EXPENSES % %
TOTAL OPERATING EXPENSES % %
* The management fee rate represents the net rate retained by FMR
after paym en t made to the distributor. The management fee rates
before payments made to the distributor by FMR are ___% and __%
for Cash Portfolio and Term Portfolio, respectively.
EXPENSE TABLE EXAMPLE: You would pay the following amount in total
expenses on a $1,000 investment in shares of a fund, assuming a 5%
annual return and full redemption at the end of each time period.
Total expenses shown below include any shareholder transaction
expenses and a fun d's annual operating expenses.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
CASH PORTFOLIO $ $ $ $
TERM PORTFOLIO $ $ $ $
THESE EXAMPLES ILLUSTRATE THE EFFECT OF EXPENSES, BUT ARE NOT MEANT TO
SUGGEST ACTUAL OR EXPECTED EXPENSES OR RETURNS, ALL OF WHICH MAY VARY.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow for Cash Portfolio and
Term Portfolio have been audited b y ______ _, independent
accountants. The funds' financial highlights, financial statements,
and report of the auditor are included in the funds' Annual Report,
which is attached.
[FINANCIAL HIG HLIGHTS TABLE FOR EACH FUND TO FOLLOW.]
PERFORMANCE
Performance can be measured as TOTAL RETURN or YIELD.
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. 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 annual 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 periodically throughout the year to oversee the
funds' activities, review contractual arrangements with companies that
provide services to the funds, and review the funds' performance. One
trustee serves as trustee for other Fidelity funds. The majority of
trustees are not otherwise affiliated with Fidelity or Sterling.
THE FUNDS MAY HOLD SPECIAL SHAREHOLDER 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. Fidelity Investments Money
Management, Inc. (FIMM), located in Merrimack, New Hampshire, has
primary res ponsibility for providing investment management
services for Cash Portfolio.
As of June 30, 1 998, FMR advised funds having approximately
__million shareholder accounts with a total value of more than $__
bil lion.
Robert Duby is manager of The North Carolina Capital Management
Trust: Cash Portfolio, which he has managed since May 1998. He also
manages other funds. Mr. D uby join ed Fidelity as a
portfolio manager in 1982.
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
accounts 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, Inc. (FIIOC) performs
transfer agent servicing functions for each fund.
FMR Corp. is the ultimate parent company of FMR and F IMM .
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.
As of ____, 1998, approximately ____% and ____% of each of Cash
Portfolio's and Term Portfolio's total outstanding shares,
respectively, were held by [FMR/FMR and [an] FMR affiliate[s]/[an]
FMR affiliate[s].]
As of _____, 1998, approximately ____% of Cash Portfolio's total
outstanding shares were held by [NAME OF SHAREHOLDER]; approximately
___% of Term Portfolio's total out standing shares were held by
[NAME OF SHAREHOLDER]; a nd approximately ___% of [NAME OF FUND]'s
total outstandin g shares were held by [NAME OF SHAREHOLDER].]
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
MONEY MARKET FUNDS IN GENERAL. The yield of a money market fund will
change daily based on changes in interest rates and market conditions.
Money market funds comply with industry-standard requirements for
the quality , maturity, and diversification of their investments,
which are designed to help maintain a stable $1.00 share price. Of
course, there is no guarantee that a money market fund will be able to
maintain a stable $1.00 share price. It is possible that a major
change in interest rates or a default on the fund's investments could
cause its share price (and the value of your investment) to change.
FIDELITY'S APPROACH TO MONEY MARKET FUNDS. Money market funds earn
income at current money market rates. In managing money market funds,
FMR stresses preservation of capital, liquidity, and income.
Cash Portfolio will purchase only high-quality securities that
FMR believes present minimal credit risks and will observe maturity
restrictions on securities it buys.
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.
BOND FUNDS IN GENERAL. The yield and share price of a bond fund change
daily based on changes in interest rates and market conditions, and in
response to other economic, political or financial events. The types
and maturities of the securities a bond fund purchases and the credit
quality of their issuers will impact a bond fund's reaction to these
events.
The total return from a bond includes both income and price gains
or losses. While income is the most important component of bond
returns over time, a bond fund's emphasis on income does not mean the
fund invests only in the highest-yielding bonds available, or that it
can avoid loss es of principal.
INTEREST RATE RISK. In general, bond prices rise when interest rates
fall and fall when interest rates rise. Longer-term bonds are usually
more sensitive to interest rate changes. In other words, the longer
the maturity of a bond, the greater the impact a change in interest
rates is likely to have on the bond's price. In addition, short-term
interest rates and long-term interest rates do not necessarily move in
the same amount or in the same direction. A short-term bond tends to
react to changes in short-term interest rates and a long-term bond
tends to react to changes in long-term interest rates.
ISSUER RISK. The price of a bond is affected by the credit quality of
its issuer. Changes in the financial condition of an issuer, changes
in general economic conditions, and changes in specific economic
conditions that affect a particular type of issuer can impact the
credit quality of an issuer. Lower quality bonds generally tend to be
more sensitive to these changes than higher quality bonds.
PREPAYMENT RISK. Many types of debt securities, including mortgage
securities, are subject to prepayment risk. Prepayment risk occurs
w hen the issuer of a security can pre pay principal prior to the
security's maturity. Securities subject to prepayment risk generally
offer less potential for gains during a declining interest rate
environment, and similar or greater potential for loss in a rising
interest rate environment. In addition, the potential impact of
prepayment features on the price of a debt security may be
diffic ult to predict and result in greater volatility.
FIDELITY'S APPROACH TO BOND FUNDS. In selecting investments for a bond
fund, FMR considers a bond's expected income together with its
potential for price gains or losses.
FMR focuses on assembling a portfolio of income-producing bonds that
it believes will provide the best balance between risk and return
within the univ erse of [eligible] securities in which
the fund may i nvest. FMR's evaluation of a potential investment
includes an analysis of the credit quality of the issuer, its
structural features, its current price compared to FMR's estimate of
its long-term value, and any short-term trading opportunities
resulting from market inefficiencies.
In structuring a bond fund, FMR allocates assets among different
market sectors (for example, U.S. Treasury or U.S. Govern ment
agency securities) and different maturities based on its view of the
relative value of each sector or maturity. The performance of the fund
will depend on how successful FMR is in pursuing this approach.
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
governmen t bonds with maturities of three years or less. In
determining a security's maturity for the purposes of calculating the
fund's average maturity, an estimate of the average time for its
principal to be paid may be used. This can be substantially shorter
than its stated final maturity. As of June 30, 1998, Term Portfolio's
dollar-weighted average maturity was approximately __ years.
FMR may use various investment techniques to hedge a portion of Term
Portfolio's risks, but there is no guarantee that these
strategies will work as FMR intends . When you sell your Term
Portfolio shares, they may be worth more or less than what you paid
for them.
FMR normally invests each fund'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 local government or public authority within
the State are subject to political and economic conditions of the
State or local government or public authority within the State.
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, Fannie Mae (formerly known as
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 because 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 the
f und 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 SAI or financial
report, call Sterling toll-free at 1-800-222-3232 or locally at
1-704-372-8798.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the investor
a fixed, variable, or floating 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 sold at a discount from
their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes.
RESTRICTIONS: Term Portfolio currently intends to invest in debt
securities rated A-quality and above by Moody's Investors Service
(Moody's) or rated in the equivalent categories by Standard & Poor's
(S&P), or is unrated but judged to be of equivalent quality by FMR.
MONEY MARKET SECURITIES are high-quality, short-term instruments
issued by the U.S. Government, corporations, financial
institutions, and other entities. These securities m ay carry
fixed, variable, or floating interest rates. Money market
securities may be structured to be, or may employ a trust or other
form so that they are, eligible investments for money m arket
funds. If a structure fails to function as intended, adverse tax or
investment consequences may result.
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 Fannie Mae 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 fully or partially backed by the local government, or by
the credit of a private issuer or the current or anticipated revenues
from specific projects or assets. Because many municipal securities
are issued to finance similar types of projects, especially those
relating to education, health care, housing, transportation, and
utilities, the municipal markets can be affected by conditions in
those sectors. In addition, all municipal securities may be affected
by uncertainties regarding their tax status, legislative changes, or
rights of municipal securities holders.
CREDIT AND LIQUIDITY SUPPORT. Issuers may employ various forms of
credit and liquidity enhancement, including letters of credit,
guarantees, puts and demand features, and insurance, provided by
entities such as banks and other financial institutions. These
arrangements expose a fund to the credit risk of the entity providing
the credit or liquidity support. Changes in the credit quality of the
provider could affect the value of the security and a fund's share
price.
ASSET-BACKED SECURITIES i nclude interests in pools of mortgages,
loans, receivables, or other assets. Payment of principal and interest
may be largely dependent upon the cash flows generated by the assets
backing the securities.
RESTRICTION: A fund may invest in asset-backed securities as
permitted pursuant to the Stat ute and the Code.
MORTGAGE SECURITIES include interests in pools of commercial or
residential mortgages, and may include complex instruments such as
collateralized mortgage obligations and stripped mortgage-backed
securities. Mortgage securities may be issued by agencies or
instrumentalities of the U.S. Government or by private entities.
The price 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 price highly volatile.
Also, mortgage securities, especially stripped mortgage-backed
securities, are subject to prepayment risk. Securities subject to
prepayment risk generally offer less potential for gains during a
declining interest rate environment, and similar or greater potential
for loss in a rising int erest rate environment.
RESTRICTION: A fund may invest in mortgage securities as permitted
p ursuant 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. These interest rate adjustments may be
designed to help stabilize the security's price.
STRIPPED SECURITIES are the separate income or principal components of
a debt security. The risks associated with stripped securities are
similar to those of other 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.
OTHER MONEY MARKET SECURITIES may include commercial paper,
certificates of deposit, bankers' acceptances, and time deposits.
PUT FEATURES entitle the holder to put (sell back) a security to the
issuer or another party. In exchange for this benefit, a fund may
accept a lower interest rate. The credit quality of the investment may
be affected by the creditworthiness of the put provider. Demand
features, standby commitments, and tender options are types of put
features.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities, and some
other securities, may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to a fund.
RESTRICTIONS: Cash Portfolio may not inves t more than 10% of
its total assets in illiquid and restricted securities.
RESTRICTIONS: Term Portfolio may not invest more than 10% of its
assets in illiqu id and restricted securities.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS are trading
practices in which payment and delivery for the security take place at
a later date than is customary for that type of security. The market
value of the 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.
CASH MANAGEMENT. The funds may invest in money market securities and
in repurchase agreements.
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 the securitie s of 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. These
limitations do not apply to U.S. Government securities.
RESTRICTIONS: With respect to 75% of its total assets, Term Portfolio
may not inve st more than 5% in the securities of any one
issuer. This limitation does not apply to U.S. Government securities.
Term Portfolio may not invest more than 25% of its total assets in any
one industry. This limitation does 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, the original Portfolio of the trust, 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 of $1.00 per share 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 seeks to
achieve this objective by investing only in certain of 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, as amended, and 20 North Carolina
Administrative Code 3.0703, as amended. Cash Portfolio may invest more
than 25% of its total assets in the obligations of banks. Cash
Portfolio will use its best efforts to maintain a constant net asset
value of $1.00 per share.
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
seeks to achieve its objective by normally investing only in
obligations of the United States, its agencies or instrumentalities,
or obligations fully guaranteed by the U.S. government, in obligations
of the State of North Carolina and bonds and notes of any North
Carolina local government or public authority, and in high grade money
market instruments, as permitted pursuant to North Carolina General
Statute 159-30, as amended and 20 North Carolina Administrative Code
3.0703, as amended.
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 total assets, Term Portfolio may not invest
m ore than 5% in the securities of any one issuer . This limitation
does not apply to U.S. Government securities.
Term Portfolio may not invest more than 25% of its total assets in any
one industry. This limitation does 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 the funds for
management fees above a specified limit. FMR retains the ability
to be repaid by a fund if expenses fall below the specified limit
prior to the end of the fiscal yea r. Reimbursement arrangements,
which may be terminated at any time without notice, can decrease a
fund's expenses and boost its performance.
MANAGEMENT FEE
Each fund's management fee is calculated and paid to FMR every month.
FMR pays most of the other expenses of each fund. Each fund's annual
management fee rate is 0.350% o f average net assets through
$1.0. billion; 0.320% of average net assets in excess of $1.0. billion
through $2.0 billion; and 0.290% of average net assets in excess of
$2.0 billion.
On January 1, 1998, FMR reduced the management fee rate for each
fund from 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
e xcess of $2.0 billion.
FIMM is Cash Portfolio's sub-adviser and has primary
responsibility for managing its investments. FMR is responsible for
providing other management services. FMR pays FIMM 50% of its
management fee (before expense reimbursements but after payments made
by FMR pursuant to Cash Portfolio's Distribution and Service Plan) for
FIMM's services. FMR paid FIMM and FMR Texas, Inc., the predecessor
company to F IMM, fees equal to ___% and __%, respectively, of Cash
Portfolio's average net assets for the fiscal year ended June 30,
199 8.
FIIOC performs transfer agency, dividend disbursing and shareholder
servicing functions for each fund. Fidelity Service Company, Inc.
(FSC) calculates the NAV and dividends for each fund and maintains
the general accounting records for each fund. These expenses
are paid by FMR pursuant to its management contract with each
fund.
Each fund pays other expenses, including brokerage fees and
commissions, interest on borrowings, taxes, and the compensation of
trustees who are not affiliated with Fidelity or Sterling.
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, redempt ions,
transfers, and exchanges. FMR currently pays Ster ling ,
through FDC, monthly according to the following sche dule:
0.150% of average net assets through $1.0 bil lion; 0.150% of
average net assets in excess of $1.0 billion throug h $2.0
billion; and 0.140% of average net assets in exce ss of $2.0
billion.
For the fiscal year ended Ju ne 1998, the portfolio turnover
rate for Term Portfolio was __%. Portfolio turnover rates fo r
Term Portfolio will vary from year to year. [High turnover
rate s increase transaction costs and may increase taxable
capital gains. FMR considers these effects when evaluating the
anticipated benefits of short-term investin g.]
YOUR ACCOUNT
HOW TO BUY SHARES
THE PRICE TO BUY ONE SHARE of each fund is the fund's net asset
value per share (NAV). Cash Portfolio is managed to keep its NAV
stable at $1.00. Each fund's shares are sol d without a sales
charge.
Your shares will be purchased at the next NAV calculated after your
order is received in proper form. Each fund's NAV is normally
calculated each business day at 4:00 p.m. Eastern time, and also at
12:00 noon Eastern time for Cash Portfolio. For details on dividends,
see "Dividends, Capital Gains, and Taxes" and "Transaction Details" on
page __ and __.
Each fund 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 manage ment of a fund.
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.
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CASH PORTFOLIO TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
MAIL
(MAIL_GRAPHIC) SEND A COMPLETED, SIGNED APPLICATION TO
THE FOLLOWING MAKE YOUR CHECK PAYABLE TO "NCCMT: CASH PORTFOLIO."
ADDRESS: INDICATE YOUR ACCOUNT NUMBER AND MAIL YOUR CHECK AND
THE NORTH CAROLINA CAPITAL MANAGEMENT
TRUST A PRECODED FUND INVESTMENT SLIP, WHICH WILL BE
C/O STERLING CAPITAL DISTRIBUTORS, INC. SUPPLIED UPON REQUEST WHEN YOU OPEN YOUR ACCOUNT, TO
ONE FIRST UNION CENTER THE FOLLOWING ADDRESS:
301 S. COLLEGE STREET, SUITE 3200 THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST
CHARLOTTE, NC 28202-6005 C/O STERLING CAPITAL DISTRIBUTORS, INC.
ONE FIRST UNION CENTER
301 S. COLLEGE STREET, SUITE 3200
CHARLOTTE, NC 28202-6005
PHONE 1-800-544-7777
(PHONE_GRAPHIC) NOT AVAILABLE. EXCHANGE FROM A TERM PORTFOLIO ACCOUNT WITH THE SAME
REGISTRATION, INCLUDING NAME, AND ADDRESS.
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) NOT AVAILABLE. 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 BEFORE THE CLOSE OF BUSINESS OF
THE BRANCH IF YOU WANT YOUR INVESTMENT TO BE MADE
THAT SAME DAY.
WIRE (WIRE_GRAPHIC) NOT AVAILABLE. YOU MAY OBTAIN WIRE INSTRUCTIONS BY CALLING STERLING
TOLL-FREE AT 1-800-222-3232 OR LOCALLY AT
1-704-372-8798.
FEDER AL FUNDS, AUTOMATED CLEARING HOUSE SYSTEM
(AC H) PAYMENTS, AND CERTAIN STATE TRANSFER PAYMENTS
WILL BE ACCEPTED BY WIRE.
FOR FEDER AL FU NDS, CALL STERLING BEFORE 12:00 NOON
EASTERN TI ME O N THE DAY YOU SEND YOUR WIRE. IF
STERLING IS NOT AD VISED OF YOUR ORDER BEFORE 12:00
NOON EASTERN TI ME ON THE DAY YOU SEND YOUR FEDERAL
FUNDS WIRE, OR IF F EDER AL FUNDS ARE NOT RECEIVED
THE
SAME DAY YOUR O RDER IS PLA CED, YOUR ORDER MAY BE
CANCELED, AND YOU COULD BE HELD LIABLE
FOR RESULTING
FEES AND LOSSES.
FOR ACH PA YMENTS, CALL STERLING BEFORE 4:00 P.M.
EASTERN TIM E ON THE BUSINESS DAY BEFORE THE ACH
PAYMENT IS TO BE D EDU CTED FROM YOUR BANK ACCOUNT.
TERM PORTFOLIO TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
MAIL (MAIL_GRAPHIC) SEND A COMPLETED, SIGNED APPLICATION
TO THE
FOLLOWING NOT AVAILABLE.
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
PHONE 1-800-544-777
(PHONE_GRAPHIC) NOT AVAILABLE. EXCHANGE FROM A CASH PORTFOLIO ACCOUNT WITH THE SAME
REGISTRATION, INCLUDING NAME, AND ADDRESS.
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) NOT AVAILABLE. NOT AVAILABLE.
WIRE (WIRE_GRAPHIC) NOT AVAILABLE. YOU MAY OBTAIN WIRE INSTRUCTIONS BY CALLING STERLING
TOLL-FREE AT 1-800-222-3232 OR LOCALLY AT
1-704-372-8798.
FOR FE DERAL FUNDS WIRES, CALL STERLING BEFORE
4:00 P.M.
EAS TERN TIME ON THE BUSINESS DAY BEFORE YOU SEND
YOUR WIRE. IF STERLING IS NOT ADVISED OF
YOUR ORDER
BEF ORE 4:00 P.M. EASTERN TIME ON THE BUSINESS DAY
BEF ORE YOU SEND YOUR FEDERAL FUNDS WIRE, OR
IF FEDERAL
FU NDS ARE NOT RECEIVED THE NEXT BUSINESS DAY, YOUR
O RDER MAY BE CANCELED, AND YOU COULD BE HELD LIABLE
FOR RESU LTING FEES AND LOSSES.
FOR A CH PAYMENTS, CALL STERLING BEFORE 4:00 P.M.
EASTERN TIM E ON THE BUSINESS DAY BEFORE THE ACH
PAYMENT IS TO BE DEDUCTED FROM YOUR BANK ACCOUNT.
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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.
TH E PRICE TO SELL ONE SHARE of each fund is the fund's NA V.
Your shares will be sold at the next NAV calculated after your
order is received in proper form. Each fund's NAV is normally
calculated each business day at 4:00 p.m. Eastern time and also at
12:00 noon Eastern time for Cash Portfolio. 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.
SELLING 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 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 in
proper fo rm, 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.
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ACCOUNT SPECIAL REQUIREMENTS
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.
MAIL OR IN PERSON
(MAIL_GRAPHIC)
(HAND_GRAPHIC) ALL ACCOUNTS 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) F OR F EDERAL FUNDS WIRES, YOUR REDEMPTION REQUEST MUST
BE RE CEIVED BY STERLING BEFORE 12:00 NOON EASTERN TIME
FOR CASH PORTFOLIO FOR MONEY TO BE WIRED ON THE SAME
BU SINE SS DAY, OR BEFORE 4:00 P.M. EASTERN TIME FOR CASH
PO RTFOLIO OR TERM PORTFOLIO FOR MONEY TO BE WIRED ON THE
N EXT BUSINESS DAY.
(SMALL SOLID BULLET) F OR ACH PAYMENTS, YOUR REDEMPTION REQUEST MUST BE
RECEIVED BY STERLING BEFORE 4:00 P.M. EASTERN TIME FOR
PAYMENT TO BE RECEIVED BY YOUR BANK ON THE NEXT
BUSINESS DAY.
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,
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 t elephon e 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," p age _ _.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Term Portfolio distributes substantially all of its net investment
income and capital gains to shareholders each year. For Term
Portfolio, income dividends are declared daily and paid monthly.
Capital gains are normally distributed in D ecember.
C ash Por tfolio distributes substantially all of its net
investment income and capital gains, if any, to shareholders each
year. Income dividends are declared daily and paid monthly.
Income dividends declared are accrued daily throughout the month and
are normally distributed on the first business day of the following
month.
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. For Term Portfolio, you will be sent a check for your
dividend and capital gain distributions. For Cash Portfolio, you will
be sent a wire for your dividend and capital gain distributions, if
any.
Dividends will be reinvested at each fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the
NAV as of the date a fun d deducts the distribution from its
NA V. 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
gains are distributed as dividends and taxed as ordinary income;
capital gain distr ibutions, 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 when a fund has realized but
not yet distributed income or capital gains, 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
THE FUNDS ARE OPE N FOR BUSINESS each day that each of the Federal
Reserve B ank of Richmond (Richmond Fed), First Union (th e
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 1 998:
New Year's Day, Martin Luther King's Birthday, President's Day,
Good Friday, Memorial Day, Independence Day (o bserved), 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.
For Cash Portfolio, assets are valued on the basis of amortized cost.
This method minimizes the effect of changes in a security's market
value and helps the money market fund maintain a stable $1.00 share
price. For Term Portfolio, assets are valued on the basis of
information furnished by a pricing service or market quotations, if
available, or by another method that the Board of Trustees believes
accurately reflects fair value. For Term Portfolio, short-term
securities with remaining maturities of sixty days or less for which
quotations and information furnished by a pricing service are not
readily available are valued on the basis of amortized cost.
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 OR ELECTRONICALLY.
Fidelity and Sterling will not be respon sible for any
losses resulting from unauthorized transactions if they follow
reasonable s ec urity procedures designed to verify the identity
of the inv estor. Sterling may request certain information for
verification purposes, and Sterling records all telephone calls for
your protection. [For transactions conducted through the Internet,
Fidelity recommends the use of an Internet browser with 128-bit
encryption.] You should verify the accuracy of your confirmation
statements immediately after y ou receive t hem. 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.
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 in proper
form . 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 C ash Portfolio, shares purchased in
connection with a non-AC H order that is received in proper form
before 12:00 noo n Eastern time will earn the dividend declared for
that da y; shares purchased in connection with a non-ACH order
that is received in proper form between 12:00 noon and 4:00 p.m.
Eastern time will begin to earn dividends the following business day.
(small solid bullet) For Cash Portfoli o, shares purchased in
connection with an ACH order t hat is received in proper form
before 4:00 p.m. Eastern time will begin to earn dividends the
following business day.
(small solid bullet) For Term Portfoli o, purchase orders
received in proper form by Sterling before 4:00 p.m. Eastern
time will begin to earn dividends the following business day.
(small solid bullet) For Term Portfol io, shares purchased in
connection with an order that is received in proper form before 4:00
p.m. Eastern time will begin to earn dividends the followi ng
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 i n proper
form. 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, shares redeemed in
connection with a non- ACH order that is received in proper form
before 12:00 noo n Eastern time will not earn that day's dividend;
shares re deemed in connection with a non-ACH order tha t is
received in proper form between 12:00 noon and 4:00 p.m.
Eastern time will earn that day's dividend.
(small solid bullet) For Cash Portfolio, shares redeemed in
connection with an ACH order that is received in proper form before
4:00 p.m. E astern time will earn that day's dividend.
(small solid bullet) For Term Portfolio, shares redeemed in
connection with an order that is received in proper form before 4:00
p.m. Eastern time 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.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permi tted by the
SEC.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
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 in proper form. You should note that, under certain
circumst ances, a fund may take up to seven days to make redemption
proceeds available for the exchange purchase of shares of another
fund. In addition, please note the following:
(small solid bullet) Exchanges will not be permitted until a completed
and signed account application is on file.
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name 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 in proper form 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 received in proper fo rm 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 Ste rling and will
receive the income dividend declared by Term Portfolio on the
following business day. However, if your exchange request is received
i n proper fo rm 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
received in proper form 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.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, each f und 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 or F DC or S terling.
This Prospectus and the related SAI do not constitute an offer by the
funds or by FD C or Ste rling to sell or to buy shares of the
funds to any person to whom it is unlawful to make such offer.
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,c Trustees and Officers
15a,b Description of the Trust
c Trustees and Officers
16a(i) FMR
a(ii) Trustees and Officers
a(iii),b,c Management Contracts
d,e *
f Distribution and Service Plans
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
* Not applicable
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST:
CASH PORTFOLIO
TERM PORTFOLIO
STATE MENT OF ADDITIONAL INFORMATION
August 18, 1998
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the funds' current Prospectus
(da ted August 18, 1998). Please retain this document for future
reference. To obtain a free additional copy of the Prospectus and
Annual Report, please call Sterling Capital Distributors, Inc. in
Charlotte, North Carolina at the appropriate number listed below:
Toll-free 1-800-222-3232
or locally 1-704-372-8798
TABLE OF CONTENTS PAGE
INVESTMENT POLICIES AND LIMITATIONS S-20
PORTFOLIO TRANSACTIONS
VALUATION S-24
PERFORMANCE S- 25
ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION S- 28
DISTRIBUTIONS AND TAXES S- 28
FMR S- 29
TRUSTEES AND OFFICERS S- 29
MANAGEMENT CONTRACTS S- 30
DISTRIBUTION AND SERVICE PLANS S- 31
CONTRACTS WITH FMR AFFILIATES S- 31
DESCRIPTION OF THE TRUST
FINANCIAL STATEMENTS S- 32
APPENDIX S- 32
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISER
Fidelity I nvestments Money Management, Inc. (FIMM)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
DISTRIBUTION AND SERVICE AGENT
Sterling Capital Distributors, Inc. (Sterling)
CUSTODIAN
First Union National Bank of North Carolina (First Union)
TRANSFER AGENT
Fidelity Investments Institutional Operations Company, Inc. (FIIOC)
NC -ptb -0898
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 th e
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 th e 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.
INVESTMENT LIMITATIONS OF 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 3 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 securityholders 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, "3 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 .
INVESTMENT LIMITATIONS OF 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) pledge, mortgage, or hypothecate its assets, except that, to
secure borrowings permitted by limitation (5) below, 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;
(3) make short sales of securities;
(4) purchase any securities on margin, except for such short-term
credits as are necessary for the clearance of transactions;
(5) borrow money, except 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 3 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);
(6) 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;
(7) 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;
(8) 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;
(9) 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;
(10) purchase or sell commodities or commodity contracts;
(11) 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;
(12) write or purchase any put or call options or any combinations
thereof;
(13) purchase the securities of other investment companies or
investment trusts; or
(14) invest in oil, gas or other mineral exploration or development
programs.
Investment limitation (5) is construed in conformity with the 1940
Act; accordingly, "3 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 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 involve 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
transaction s; and short-term borrowings. In accordance with
exemptive orders issued by the Securities and Exchange Commission
(SEC), the Board of Trustees has established and periodically reviews
procedures applicable to transactions involving affiliated financial
institutions.
ASSET-BACKED SECURITIES represent interests in pools of mortgages,
loans, receivables or other assets. Payment of interest and repayment
of principal may be largely dependent upon the cash flows generated by
the assets backing the securities and, in certain cases, supported by
letters of credit, surety bonds, or other credit enhancements.
Asset-backed security values may also be affected by the
creditworthiness of the servicing agent for the pool, the originator
of the loans or receivables, or the entities providing the credit
enhancement. In addition, these securities may be subject to
prepayment risk.
RESTRICTION: A fund may invest in asset-backed securities as permitted
pursuant to North Carolina General Statute 159-30 (the Statute) and 20
North Carolina Administrative Code 3.0703 (the Code).
DELAYED-DELIVERY TRANSACTIONS. Securities may be bought and sold on
a delayed-delivery or when-issued basis. These transactions involve a
commitment 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 or price concessions for entering into
delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, th e
purchase r assumes the rights and risks of ownership, including the
risks of price and yield fluctuations and the risk that the security
will not be issued as anticipated. Beca use payment for the
securities is not required until the delivery date, these r isks
are in addition to the risks associated with a fund's investments.
If a fund remains substan tially 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, a fund will set aside appropriate liquid
assets in a segregated custodial account to cover the 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, a fund could
miss a favorable price or yield opportunity or suffer a loss.
A fund may renegotiate a delayed delivery transaction and may sell the
underlying securities before delivery, which may result in capital
gains or losses for the fund.
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 FMR t o be illiquid include
repurchase agreements not entitling the holder to repayment of
principal and payme nt of 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
priced at fair value as determined in good faith by a committee
appointed by the Board of Trustees. For Cash Portfolio, illiquid
investments are valued by this method for purposes of monitoring
amortized cost valuation.
MONEY MARKET SECURITIES are high-quality, short-term obligations.
Money market securities may be structured to be, or may employ a
trust or other form so that they are, eligible investments for
mon ey market funds. 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 a structure fails to
function 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 certain structured securities. Future tax or other
regulatory determinations could adversely affect the value, liquidity,
or tax treatment of the income received from these securities or the
nature and timing of distributions made by the fund.
MORTGAGE-BACKED SECURITIES are issued by government and
non-government entities such as banks, mortgage lenders, or other
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 range of specified 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. Stripped
mortgage-backed securities are created when the interest and principal
components of a mortgage-backed security are separated and sold as
individual securities. In the case of a stripped mortgage-backed
security, the holder of the "principal-only" security (PO) receives
the principal payments made by the underlying mortgage, while the
holder of the "interest-only" se curity (IO) receives interest
payments from the same underlying mortgage.
The value of mortgage-backed securities may change due to shifts in
the market's perception of issuers and changes in interest rates. In
addition, regulatory or tax changes may adversely affect the
mortgage-backed 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, which is the risk that early principal payments
made on the underlying mortgages, usually in response to a reduction
in interest rates, will result in the return of principal to the
investor, causing it to be invested subsequently at a lower current
interest rate. Alternatively, in a rising interest rate environment,
mortgage-backed security values may be adversely affected when
prepayments on underlying mortgages do not occur as anticipated,
resulting in the extension of the security's effective maturity and
the related increase in interest rate sensitivity of a longer-term
instrument. The prices of stripped mortgage-backed securities tend to
be more volatile in response to changes in interest rates than those
of non-stripped mortgage-backed securities.
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 taxabl e fund may not invest more than 5% of its total
assets in second tier securities. In addition, the taxable 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 North Carolina General Statute 159-30 (the Statute) and
20 North Carolina Administrative Code 3.0703 (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.
As protection against the risk that the original seller will
not fulfill its obligation, the securities are held in a sep arate
acco unt 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 the fund in connection with bankruptcy
proceed ings) , as set forth in North Carolina General Statute
159-30(c), the funds will engage i n repurchase agreement
transactions with a broker or dealer that 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 other entity in determining whether
to purchase a security supported by a letter of credit guarantee, put
or demand feature, 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. 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 U.S. Treasury security by a Federal
Reserve Bank.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments
in 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 are structured with put
features that permit holders to demand payment of the unpaid principal
balance plus accrued interest from the i ssuers or certain
financial inter med iaries.
ZERO COUPON BONDS do not make interest payments; instead, they are
sold at a 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 more volatile than other types of
fixed-income securities when interest rates change. In calculating a
fund's dividend, a portion of the difference between a zero coupon
bond's purchase price and its face value is considered income.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
management contract. FMR 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. 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.
If FMR grants investment management authority to a sub-adviser (see
the section entitled "Management Contracts"), that 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
above.
Each fund may execute portfolio transactions with broker-dealers
who provide research and execution services to the fund 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; and effect securities transactions and perform functions
incidental thereto (such as clearance and settlement).
For transactions in fixed-income securities, FMR's selection of
broker-dealers is generally based on the availability of a security
and its price and, to a lesser extent, on the overall quality of
execution and other services, including research, provided by the
broker-dealer.
The receipt of research from broker-dealers that execute transactions
on behalf of a fund may be useful to FMR in rendering
investment management services to that fun d 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 a fund . 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.
Fixed-income securities are generally purchased from an issuer or
underwriter acting as principal for the securities, on a net basis
with no brokerage commission paid. However, the dealer is compensated
by a difference between the security's original purchase price and the
selling price, the so-called "bid-asked spread." Securities may also
be purchased from underwriters at prices that include underwriting
fees.
Subject to applicable limitations of the federal securities laws, a
fu nd may pay a broker-dealer 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 a fun d 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
t h at fund or 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 fund or shares of
other Fidelity funds to the extent permitted by law. FMR may use
research services provided by and place agency transactions with
National Financial Services Corporation (NFSC) and Fidelity Brokerage
Services J apan LLC (FBSJ), indirect subsidiaries of FMR Corp.,
if the commissions are fair, reasonable, and comparable to commissions
charged by non-affiliated, qualified brokerage firms for similar
services. Prior to December 9, 1997, FMR used research services
provided by and placed agency transactions with Fidelity Brokerage
Services (F BS), an indirect subsidiary of FMR Corp.
FMR may allocate brokerage transactions to broker-dealers
(including affiliates of FMR) who have entered into arrangements with
FMR under which the broker-dealer allocates a portion of the
commissions paid by a fund toward the reduction of that fund's
expenses. The transaction quality must, however, be comparable to
those of other qualified broker-dealers.
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 NFSC to execute portfolio transactions on
national securities exchanges in accordance with approved procedures
and applicable SEC rules.
The Trustees of each fund periodically review FMR's performance of
its responsibilities in connection with the placement of portfolio
transactio ns on behalf of the fund and review the commissions
paid by the fund over representative periods of time to determine if
they are reasonable in relation to the benefits to the fund.
Fo r the fiscal periods ended June 30, 1997 and 1998, the
portfolio turnover rates were ___% and ___%, respectively for Term
Portfolio. B ecause a high turnover rate increases transaction
costs and may increase taxable gains, FMR carefully weighs the
antici p ated benefits of short-term investing against these
consequences. [Variations in turnover rate may be due to a fluctuating
volume of s hareholder purchase and redemption orders, market
conditions, or changes in FMR's investment outlook.]
[The following tables show the brokerage commissions paid by the
funds. Significant changes in brokerage commissions paid by a fund
from year to year may result from changing asset levels throughout the
year.] A fund may pay both commissions and spreads in connection with
the placement of portfolio transactions. [For the fiscal years ended
June 1998, 1997, and 1996, the funds paid no brokerage commissions.]
[ T he following table shows the total amount of brokerage
commissions paid by each fund.
FISCAL TOTAL
YEAR AMOUNT PAID
ENDED
CA SH PORTFOLIO JUNE
1 99 8 $
TE RM PORTFOLIO
19 98
[Of the following tables, the first shows the total amount of
brokerage commissions paid by each fund to NFSC [and/,] FBS] [and
FBSJ], as applicable,] for the past three fiscal years. The second
table shows the approximate percentage of aggregate brokerage
commissions paid by a fund to NFSC [[and/,] FBS] [and FBSJ]] for
transactions involving the approximate percentage of the aggregate
dollar amount of transactions for which the fund paid brokerage
commissions for the fiscal year ended 1998. [NFSC [[[,/and] FBS,] [and
FBSJ]] [is/are] paid on a commission basis].]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
T OTAL AMOUNT PAID
FI SCAL TO NFSC [TO FBS] [TO FBSJ]
YEAR
ENDED
C ASH PORTFOLIO JUNE
1 998 $ [$ ] [$ ]
TE RM PORTFOLIO
19 98 [ ] [ ]
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FISCAL % OF % OF [% OF [% OF [% OF [% OF
YEAR AGGREGATE AGGREGATE AGGREGATE AGGREGATE AGGREGATE AGGREGATE
ENDED COMMISSIONS DOLLAR COMMISSIONS DOLLAR COMMISSIONS DOLLAR
1998 PAID TO AMOUNT OF PAID TO AMOUNT OF PAID TO AMOUNT OF
NFSC TRANSACTIONS FBS] TRANSACTIONS FBSJ] TRANSACTIONS
EFFECTED EFFECTED EFFECTED
THROUGH THROUGH THROUGH
NFSC FBS] FBSJ]
C ASH PORTFOLIO JUNE % % [ %] [ %] [ %] [ %]
TE RM PORTFOLIO JUNE % % [ %] [ %] [ %] [ %]
</TABLE>
[ (dagger) The difference between the percentage of aggregate
brokerage commissions paid to, and the percentage of the aggregate
dollar am ount of transactions effected through, [[NFSC] [,/and]
[FBS] [and FBSJ]] is a result of the low commission rates charged by
[[ NF SC] [,/and] [FBS] [and FBSJ]].]
[Th e following table shows the dollar amount of brokerage
commissions paid to firms that provided research services and the
a pproximate dollar amount of the transactions involved for the
fiscal year ended 1998].
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIS CAL YEAR $ AMOUNT OF $ AMOUNT OF
ENDED 199 8 COMMISSIONS PAID TO BROKERAGE
FIRMS TRANSACTIONS
THAT PROVIDED INVOLVED*
RESEARCH SERVICES*
C ASH PORTFOLIO JUNE $ $
T ERM PORTFOLIO JUNE
</TABLE>
[*The provision of research services was not necessarily a factor
in the placement of all this business with such firms.]
[For the fiscal year ended June 30, 1998 the funds paid no
brokerage commissions to 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
For Cash Portfolio, Fidelity Service Company, Inc. (FSC) normally
determines the fund's net asset value per share (NAV) at 12:00 noon
and 4:00 p.m. Eastern time. For Term Portfolio, FSC normally
determines the fund's NAV as of the close of the New York Stock
Exchange (NYSE) (normally 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.
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.
Or, fixed-income securities and convertible securities may 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 funds may use various pricing
services or discontinue the use of any pricing service.
Short-term securities with remaining maturities of sixty days or
less for which market quotations and information furnished by a
pricing service are not readily available are valued either at
amortized cost or at original cost plus accrued interest, both of
which approximate current value. In addition, securities and other
assets for which there is no readily available market value may be
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 acc urately reflect the fair market value of such securities.
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, the fund's yield based on
amortized cost valuation may be higher than would result if the fund
used market valuations to determine its NAV. The converse would apply
during periods of rising interest rates.
Valuing the fund's investments on the basis of amortized cost and use
of the term "money market fund" are permitted pursuant to Rule 2a-7
under the 1940 Act. The fund must adhere to certain conditions under
Rule 2a-7, as summarized in the section entitled "Quality and
M atu rity" on page ___.
The Board of Trustees oversees FMR's adherence to the provisions of
Rule 2a-7 and has established procedures designed to stabilize the
fund's NAV at $1.00. At such intervals as they deem appropriate, the
Trustees consider the extent to which NAV calculated by using market
valuations would deviate from $1.00 per share. If the Trustees believe
that a deviation from the fund's amortized cost per share may result
in material dilution or other unfair results to shareholders, the
Trustees have agreed to take such corrective action, if any, as they
deem appropriate to eliminate or reduce, to the extent reasonably
practicable, the dilution or unfair results. Such corrective action
could include selling portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends; redeeming shares in kind;
establishing NAV by using available market quotations; and such other
measures as the Trustees may deem appropriate.
PERFORMANCE
A fund 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. The share price of Term
Portfolio, the yield of Term Portfolio and C ash Portfolio, 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 CALCULATION S ( CASH PORTFOLIO). To compute the yield for
Cash Portfolio 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 an effective yield by compounding the base period return
over a one-year period. In addition to the current yield, Cash
Po rtfolio may quote yields in advertising based on any
historical seven-day period. Yields for Cash Portfolio fund are
calculated on the same basis as ot her money market funds, as
required by applicable regulation.
Yield information may be useful in reviewing the fund's performance
and in providing a basis for comparison with other investment
alternatives. However, the 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 the 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 the 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.
YIELD CALCULATIONS (TERM PORTFOLIO). Yields for the fund are
computed by dividing the fund's interest and income for a given 30-day
o r one-month period, net of expenses, by the average number of
shares entitled to receive distributions during the period, dividing
this figure by the fund's NAV or offering price, as applicable at
the end of the period, and annualizing the result (assuming
compounding of income) in order to arrive at an annual percentage
rate. Income is calculated for purposes of yield quotations in
accordance with standardized methods applicable to all stock and bond
funds. In general, interest income is reduced with respect to bonds
trading at a 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. Income is adjusted to reflect gains and
losses from principal repayments received by a fund with respect to
mortgage-related securities and other asset-backed securities. Other
capital gains and losses generally are excluded from the
calculation.
Income calculated for the purposes of calculating the fund'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, the fund's yield
may not equal its distribution rate, the income paid to your account,
or the income reported in the fund's financial statements.
Yield information may be useful in reviewing the fund's performance
and in providing a basis for comparison with other investment
alternatives. However, the 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 the 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,
t he inflow of net new money to the 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 net asset
values, adjusted net asset values, and benchmark indices may be
used to exhibit performance. An adjusted NAV includes any
distributions paid by the fund and reflects all elements of its
return. Unless ot herwise indicated, the fund's adjusted NAVs are
not adjusted for sales charges, if any.
CALCULATING HISTORICAL CASH PORTFOLIO RESULTS. The following
tables show performance for the fund calculated including certain fund
expenses.
CALCULATING HISTORICAL TERM PORTFOLIO RESULTS. The following
tables show performance for the fund calculated including certain fund
expenses.
HISTORICAL CASH PORTFOLIO RESULTS. The following table shows
the fund's 7-day yield and total return for the periods ended June 30,
1998.
HISTORICAL TERM PORTFOLIO RESULTS. The following tables show
the fund's yield and total return for the periods ended June 30, 1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
SEVEN-DAY ONE FIVE TEN ONE FIVE TEN
YIELD YEAR YEARS YEARS* YEAR YEARS YEARS*
CASH PORTFOLIO % % % % % % %
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns
Thirty-Day One Five Ten One Five Ten
Yield Year Years Years* Year Years Years*
Term Portfolio % % % % % % %
</TABLE>
*Note: If FMR had not reimbursed certain fund expenses during these
periods, each fund's 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, as measured
by the Consumer Price Index (CPI), over the same period. The CPI
information is as of the month-end closest to the initial investment
date for each fund. The S&P 500 and DJIA comparisons are provided to
show how each fund's total return compared to the record of a broad
unmanaged index of common stocks and a narrower set of stocks of major
industrial companies, respectively, over the same period. Because
each fund invests in fixed-income securities, common stocks represent
a different type of investment from the funds. Comm on stocks
generally offer greater growth potential than the funds, but generally
experience greater price volatility, which means greater potential for
loss. In addition, common stocks generally provide lower income than
fixed-income investments such as the funds. The S&P 500 and DJIA
returns are based on the prices of unmanaged groups of stocks and,
unlike each fund's returns, do not include the effect of brokerage
commissions or other costs of investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each fund during the 10-year period ended June
3 0, 1998, assuming all distributions were reinvested. Total
returns are based on past results and are not an indication of future
pe rform ance. Tax consequences of different investments have not
been factored into the figures below.
During the 10-year period ended June 30, 1998, a hypoth etical
$10,000 investment in Cash Portfolio would have grown to $______ .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
CASH PORTFOLIO INDICES
Year Ended Value of Value of Value of Total S&P 500 DJIA Cost of
June 30 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
199 8 $ $ $ $ $ $ $
1997 $ $ $ $ $ $ $
1996 $ $ $ $ $ $ $
1995 $ $ $ $ $ $ $
1994 $ $ $ $ $ $ $
1993 $ $ $ $ $ $ $
1992 $ $ $ $ $ $ $
1991 $ $ $ $ $ $ $
1990 $ $ $ $ $ $ $
1989 $ $ $ $ $ $ $
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Cash
Portfolio on July 1, 1 988, 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 and
capital gain distributions for the period covered (their cash value at
the time they were reinvested) amounted to $______. If
distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have am ou nted to $______ for
dividends. [The fund did not distribute any capital gains during the
period.]
During the 10-year period ended June 30, 1998 , a hypothetical
$10,000 investment in Term Portfolio would have grown to $______ .
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
TERM PORTFOLIO INDICES
Year Ended Value of Value of Value of Total S&P 500 DJIA Cost of
June 30 Initial Reinvested Reinvested Value Living
$10,000 Dividend Capital Gain
Investment Distributions Distributions
19 98 $ $ $ $ $ $ $
1997 $ $ $ $ $ $ $
1996 $ $ $ $ $ $ $
1995 $ $ $ $ $ $ $
1994 $ $ $ $ $ $ $
1993 $ $ $ $ $ $ $
1992 $ $ $ $ $ $ $
1991 $ $ $ $ $ $ $
1990 $ $ $ $ $ $ $
1989* $ $ $ $ $ $ $
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Term
Portfolio on July 1, 1988, 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 $_ _____. 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 $___ __ _ for
dividends and $_______ for capital gains distributions.
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Analytical Services, Inc.
(Lipper), an independent service located in Summit, New Jersey that
monitors the performance of mutual funds. Generally, Lipper rankings
are based on total return, assume reinvestment of distributions, do
not take sales c harges or trading fees into consideration, and
are prepared without regard to tax consequences. Lipper may also rank
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 fu nd 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. Term Portfolio may advertise
risk r atings, including symbols or numbers, prepared by
independent rating agencies.
A fund's performance may also be compared to that of a benchmark index
representing the universe of securities in which the fund may invest.
The total return of a benchmark index reflects reinvestment of all
dividends and capital gains paid by securities included in the index.
Unlike a fund's returns, however, the index returns do not reflect
brokerage commissions, transaction fees, or other costs of investing
directly in the securities included in the index.
Term Portfolio may compare its performance to that of the Lehman
Brothers 1-Year Treasury Index, a one security total return index
whi ch at the beginning of every month selects the Treasury
maturing closest to but not beyond one year from that date.
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.
Cash Portfolio may compare its performance or the performance of
securities in which it may invest to averages published by IBC
Financial Data, Inc. of Ashland, Massachusetts. These averages assume
reinvestment of distributions. IBC's MONEY FUND REPORT
AV ERAGES(trademark)/[____], which is reported in IBC's MONEY FUND
REPORT(trademark), covers over ___ [name type] money market funds.
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, the fund may
compare these measures to those of other funds. Measures of volatility
seek to compare the fund'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 price movements over specific
periods of time for Term Portfolio. Each point on the momentum
indicator represents a 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 ability to continue purchasing
shares during periods of low price levels.
As of June 30, 1998, FMR advised over $__ billion in municipal
fund assets, $__ billion in money market fund assets, $___ billion in
eq uity fund assets, $__ billion in international fund assets,
and $___ billion in Spartan fund assets. The funds may reference the
growth and variety of money market mutual funds and the adviser's
innovation and participation in the industry. The equity funds under
management figure represents the largest amount of equity fund assets
under management by a mutual fund investment adviser in the United
States, making FMR America's leading equity (stock) fund manager. FMR,
its subsidiaries, and affiliates maintain a worldwide information and
communications network for the purpose of researching and managing
investments abroad.
In addition to performance rankings, each 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 each 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
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 securities may
be exempt from state and local taxation. Mortgage security paydown
gains (losses) on mortgage securities purchased by Term Portfolio on
or prior to June 8, 1997 are generally t axable as ordinary income
and, therefore, increase (decrease) taxable dividend distributions.
CAPITAL GAIN DISTRIBUTIONS. L ong-term capital gains earned by each
fund 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 capital gain distribution on shares of a fund, 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 capital gain distribution will be
considered a long-term loss for tax purposes. Short-term capital gains
distributed by each fund are taxable to shareholders as dividends, not
as capital gains. 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. Cash Portfolio does not anticipate
distributing long-term capital gains.
[As of June 30, 199 8,[___] hereby designates approximately
$_______ as a capital gain dividend for the purpose of the
dividend-paid deduc tio n.]
[As of June 30, 1998, Cash Po rtfolio had a capital loss
carryforward aggregating approximately $____. This loss carryforward,
of which $___, $___, and $___will e xpire o n June 30, 200_,
____, and ____ , respectively, is available to offset future capital
gains.]
[As of June 30, 1998, Term Portf olio had a capital loss
carryforward aggregating approximately $____. This loss carryforward,
of which $___, $___, and $___will e xpi re on June 30, 200_,
____, and ____ , respectively, is available to offset future capital
gains.]
STATE AND LOCAL TAX ISSUES. F or mutual funds organized as business
trusts, state law provides for a pass-through of the state and local
income tax exemption afforded t o direct owners of U.S. Government
securities. Some states limit this pass-through 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 a proportionate share of the U.S. Government
securities. Because the income earned on most U.S. Government
s ecurities is exempt from state and local income taxes, the
portion of 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, and intends to comply with
other tax rules applicable to regulated investment companies.
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 its division, 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 accounts pursuant to a code of ethics that sets forth all
employ ees' 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 Investment Company Act of 1940) 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 ( 7 6), 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 (7 0), 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 (5 8), 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 Chairman (1997)
and a Trustee of Davidson College (1987).
HELEN A. POWERS (73 ), 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 National 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) and the North Carolina
Community Foundation (1997), 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 (79 ), 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.
ROBERT C. POZEN (51 ), SENIOR VICE PRESIDENT (1997), is also
President and a Director of FMR (1997); and President and a Director
of Fidelity Invest men ts Money Management, Inc. (1998), Fidelity
Management & Research (U.K.) Inc. (1997), and Fidelity Management &
Research (Far East) Inc. (1997). Previously, Mr. Pozen served as
General Counsel, Managing Director, and Senior Vice President of FMR
Corp. He is a Trustee of other funds advised by FMR.
J. CALVIN RIVERS, JR. ( 52 ), VICE PRESIDENT (1992), is Director
and Executive Vice President of Sterling Capital and Director and
President of Sterling.
FRED L. HENNING, JR. ( 59), VICE PRESIDENT (1997), is Vice
President of Fidelity's fixed-income funds (1995) and Senior Vice
President of FMR.
CURTIS HOLLINGSWORTH (4 1), VICE PRESIDENT of Term Portfolio
(1995), is an employee of FMR.
DWIGHT D. CHURCHILL (4 4), VICE PRESIDENT of Term Portfolio
(1997), and of other funds advised by FMR; and Senior Vice President
of FMR (1997), and V ice President of FIMM (1998). Mr. Churchill
joined Fidelity in 1993 as Vice President and Group Leader of Taxable
Fixed-Inco me Investments.
BOYCE GREER ( 4 2), VICE PRESIDENT of Cash Portfolio (1997), and
of other funds advised by FMR; and Senior Vice President of FMR
(1997), and Vice President of FIMM (1998). Mr. Greer served as the
Leader of the Fixed-Income Group for Fidelity Management Trust
Compa ny (1993-1995) and was Vice President and Group Leader of
Municipal Fixed-Income Investments (1996- 1 997).
ERIC D. ROITER (49), S ECRETARY (1998), is Vice President (1998) and
General Counsel of FMR (1998). Mr. Roiter was an Adjunct Member,
Faculty of Law, at Columbia University Law School (1996-1997). Prior
to joining Fidelity, Mr. Roiter was a partner at Debevoise & Plimpton
(1981-1997) and s erved as an Assistant General Counsel of the U.S.
Securities and Exchange Commission (1979-1981).
RICHARD A. SILVER (5 1 ), TREASURER (1997), is Treasurer of the
Fidelity funds and is an employee of FMR (1997). Before joining FMR,
Mr. Silver served as Executive Vice President, Fund Accounting &
Administration at First Data Investor Services Group, Inc.
(1996-1997). Prior to 1996, Mr. Silver was Senior Vice President and
Chief Financial Officer at The Colonial Group, Inc. Mr. Silver also
served as Chairman of the Accounting/Treasurer's Committee of the
Investment Company Institute (1987-1993).
JOHN H. COSTELLO ( 5 1), ASSISTANT TREASURER (1995), is an
employee of FMR.
LEONARD M. RUSH ( 5 2), 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 ( 40 ), ASSISTANT TREASURER of Term Portfolio
(1998) and ASSISTANT TREASURER of Cash Portfolio (1996), is Assistant
Treasurer of Fidelity's Municipal Bond Funds (1996) and of Fidelity's
Money Market Funds (1996) 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 (4 1 ), ASSISTANT SECRETARY, is an employee of FMR
Corp.
The following table sets forth information describing the compensation
of each Trustee of each fund for his or her services for the fiscal
year ended June 30, 19 98.
Compensation Table
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Trustees Aggregate Aggregate Total
Compensation from Compensation from Compensation
Cash Portfolio* Term Portfolio* from the Fund
Complex**
William L. Byrne s+ $ __ $ __ $ __
John David Fo ust $ __ $ __ $ __
W. Olin Nisbet II I+ $ __ $ __ $ __
Helen A. Pow er s $ __ $ __ $ __
Bertram H. Witha m $ __ $ __ $ __
</TABLE>
* I ncludes compensation paid to the Trustees by each fund. For
the fiscal year ended June 30, 1998, certain of the non-interested
trustees' aggregate compensation from a fund includes accrued
deferred compensation as follows: Helen A. Powers, $____ a nd
Bertram H. Witham, $____. The Trustees do not receive any pension or
retirement benefits from the funds as compensation for their services
as trustees of the funds.
** Information is for the calendar year ended December 31, 1997 for
230 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 and modified in November 1995 and November 1996 by the other
open-end investment companies in the Fund Complex (the "Other Open-End
Funds"), Mr. Witham may receive payments from the Other Open-End Funds
during his lifetime based on his basic trustee fees and length of
service. The obligation of the Other Open-End Funds to make such
payments is neither secured nor funded. Mr. Witham became eligible to
participate in the program at the end of the calendar year in which he
reached age 72. During the year ended June 30, 1998, he received $____
in payments under that retir ement program.
+ 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
portion of their annual fees in accordance with the terms of a
Deferred Compensation Plan (the Plan). Interest is accrued on amounts
deferred under 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.
Deferral of Trustees' fees in accordance with the Plan will not
obligate any fund to retain the services of any Trustee or to pay any
particular level of compensation to any Trustee. The Plan is
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 June 30, 1998, therefore, the Trustees
and officers of each fund did not own any of the outstanding shares of
the funds.
[As of June 30, 1998, no shareholder owned of record or
beneficially 5% or more of Cash Portfolio's outstanding shares.]
[As of June 30, 1998, the following owned of record or
beneficially 5% or more of Term Portfolio's outstanding shares: .]
MANAGEMENT CONTRACTS
FMR is manager of Cash Portfolio and Term Portfolio pursuant to
management contracts dated January 22, 1996, which were approved by
shareholders on December 12, 1990 and amended on January 22, 1996.
MANAGEMENT SERVICES. Each fund employs FMR to furnish investment
advisory and other services. Under the terms of 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 the fund in accordance with its investment objective, policies, and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the fund's investments,
compensates all officers of each fund and all Trustees who are
"interested persons" of the trust or of FMR, and all personnel of each
fund or FMR performing services relating to research, statistical, and
investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. Under the terms of each fund's management
contract, each fund is responsible for payment of all expenses other
than those specifically payable by FMR. Expenses payable by FMR
include expenses for typesetting, printing, and mailing proxy
materials to shareholders and all other expenses of proxy
solicitations and shareholder meetings, legal expenses, fees of the
custodian, auditor and interested Trustees, each fund's proportionate
share of insurance premiums and Investment Company Institute dues, and
the costs of registering shares under federal securities laws and
making necessary filings under state securities laws. Each fund's
management contract further provides that FMR will pay for
typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders; however,
under the terms of each fund's transfer agent agreement, the transfer
agent bears the costs of providing these services to existing
shareholders. FMR also pays all fees associated with transfer agent,
dividend disbursing, and shareholder services and pricing and
bookkeeping services.
Each fund pays the following expenses: fees and expenses of the
non-interested Trustees, interest, 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 its officers and Trustees with respect to
litigation.
MANAGEMENT FEES. For the services of FMR under each management
contract, each fund pays FMR a monthly management fee at the annual
rate of 0.350% of its average net assets through $1.0 billion; 0.320%
of its average net assets in excess of $1.0 billion through $2.0
billion; and 0.290% of its average net assets in excess of $2.0
billion, throughout the month.
The management fee paid to FMR by each fund is reduced by an amount
equal to the fees and expenses paid by the fund to the non-interested
Trustees.
The following table shows the amount of management fees paid by each
fund to FMR for the past three fiscal years, and the amount of credits
reducing management fees for each fund.
Fund Amount of
Fiscal Years Ended Credits Reducing Management Fees
June 30 Management Fees Paid to FMR
Cash Portfolio 19 98 $ $*
19 97 $ $*
1 996 $ $*
Term Portfolio 19 98 $ $*
19 97 $ $*
199 6 $ $*
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
** 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. After
February 1, 1996 through December 31, 1997, FMR voluntarily
implemented the following revised management fee schedule: 0.365% of
its average net assets through $400 million; 0.360% of its average net
assets in excess of $400 million through $800 million; 0.355% of its
average net assets in excess of $800 million through $1.2 billion;
0.350% of its average net assets in excess of $1.2 billion through
$1.6 billion; 0.340% of its average net assets in excess of $1.6
billion through $2.0 billion; and 0.330% of its average net assets
in excess of $2.0 billion.
FMR may, from time to time, voluntarily reimburse all or a portion of
a 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 a fund's total returns and
yield, and repayment of the reimbursement by a fund will lower its
total returns and yield.
SUB-ADVISER. On behalf of Cash Portf olio, FMR has entered into a
sub-advisory agreement with FIMM pursuant to which FIMM has primary
responsibility for providing portfolio investment management services
to the fund. Previously, FMR Texas Inc. (FMR Texas) had primary
responsibility for providing investment management services to
Cash Portfolio. On January 23, 1998, FMR Texas was merged into FIMM,
which succeed ed to th e operations of FMR Texas.
Under the terms of the sub-advisory agreement, FMR pays FIMM fees
equal to 50% of the management fee payable to FMR under its management
contract with Cash Portfolio. Th e fees paid to FIMM 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 June
30, 1998, 1997, and 1996, FMR paid FMR Texas fees of $________,
$_ ________ and $________, respectively. On behalf of Cash
Portfolio, for the fiscal years ended June 30 1998, FMR pa id
FIMM fees of $________.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved Distribution and Service Plans on behalf of
each fund (the Plans) pursuant to Rule 12b-1 under the 1940 Act (the
Rule). The Rule provides in substance that a mutual fund may not
engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of the 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 fund to FMR
is deemed to be indirect financing by the fund of the distribution of
its shares, such payment is authorized by the Plan. 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 the fund, or to third parties that render
shareholder support services.
Pursuant to the Plans, FMR, from its management fee, pays Sterling,
through FDC, a monthly distribution fee at an annual rate according to
the following schedule: 0.150% of average net assets through $1.0
billion; 0.150% of average net assets in excess of $1.0 billion
thro ugh $2.0 billion; and 0.140% or average net assets in excess
of $2.0 billion.
Prior to January 1, 1998, FMR, from its management fee, paid
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 billi on; and 0.150% of average net assets in
excess of $2.0 billion.
For th e fiscal year ended June 30, 1998, FMR paid Sterling,
through FDC, $____ on behalf of Cash Portfolio and $____ on behalf of
Term Portfolio.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the fund and its shareholders. In particular, the Trustees
noted that each Plan does not authorize payments by the 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 fund shares, 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 for Cash Portfolio and Term Portfolio 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.
CONTRACTS WITH FMR AFFILIATES
Each fund has entered into a transfer agent agreement with FIIOC, an
affiliate of FMR. Under the terms of the agreements, FIIOC performs
transfer agency, dividend disbursing, and shareholder services for
each fund.
F or providing transfer agency services, FIIOC receives an
asset-based fee paid monthly with respect to each account in the fund.
FIIOC pay s out-of-pocket expenses associated with providing
transfer agent services. In addition, FIIOC bears the expense of
type setting, printing, and mailing prospectuses, statements of
additional information, and all other reports, notices, and statements
to existing shareholders, with the exception of proxy statements.
Each fund has also entered into a service agent agreement with FSC,
an affiliate of FMR. Under the terms of the agreements, FSC
ca lculates the NAV and dividends for each fund and maintains each
fund's portfolio and general accounting records.
For providing pricing and bookkeeping services, FSC receives a
monthly fee based on each fund's average daily net assets throughout
the month.
For Cash Portfolio and Term Portfolio, FMR bears the cost of
transfer agency, dividend disbursing, and shareholder services,
pricing and bookkeeping services, and administration of the securities
lending program, as applicable, under the terms of its management
con tract with each fund.
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR organized as a Massachusetts corporation on July 18,
1960. FDC is a broker-dealer registered under the Securities Exchange
Act of 1934 and a member of the National Association of Securities
Dealers, Inc. The distribution agreements call for FDC to use all
reasonable efforts, consistent with its other business, to secure
purchasers for shares of the 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 in turn 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. Under the terms of the agreement, Sterling has assumed from FDC
primary responsibility for the distribution of each fund's shares.
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
statement of additional information about another fund.
The assets of the trust received for the issue or sale of shares of
each fund and all income, earnings, profits, and proceeds thereof,
subject only to the rights of creditors, are especially allocated to
such fund, and constitute the underlying assets of such fund. The
underlying assets of each fund are segregated on the books of account,
and are to be charged with the liabilities with respect to such fund
and with a share of the general expenses of the trust. Expenses with
respect to the trust are to be allocated in proportion to the asset
value of the respective funds, except where allocations of direct
expense can otherwise be fairly made. The officers of the trust,
subject to the general supervision of the Board of Trustees, have the
power to determine which expenses are allocable to a given fund, or
which are general or allocable to all of the funds. In the event of
the dissolution or liquidation of the trust, shareholders of each fund
are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The trust is 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 shareholder 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, North Carolina, is custodian of the assets of
the funds. The custodian is responsible for the safekeeping of a
fund's assets and the appointment of any 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 special purpose
custodians of certain assets in connection with 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. _____ ___ _., 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, 1998, a nd report of the auditor, are
included in the funds' Annual Report, which is attached to the funds'
prospectus. The funds' financial statements, including the financial
highlights, and report of the auditor are incorporated herein by
reference. For a free additional copy of the funds' Annual Report,
contact Sterling toll-free at 1-800-222-3232 or locally at
1-704-372-8798, One First Union Square, Charlotte, NC 28202.
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 RATINGS OF MUNICIPAL
OBLIGATIONS
Moody's ratings for short-term municipal obligations will be
designated Moody's Investment Grade ("MIG"). A two-component rating is
assigned to variable rate demand obligations. The first component
represents an evaluation of the degree of risk associated with
scheduled principal repayment and interest payments and is designated
by a long-term rating, e.g., "Aaa" or "A." The second component
represents an evaluation of the degree of risk associated with the
demand feature and is designated "VMIG."
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.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF MUNICIPAL NOTES
Municipal notes maturing in three years or less will likely receive a
"note" rating symbol. Notes that have a put option or demand feature
are assigned a dual rating. The first rating addresses the likelihood
of repayment of principal and payment of interest due and for
short-term obligations is designated by a note rating symbol. The
second rating addresses only the demand feature, and is designated by
a commercial paper rating symbol, e.g., "A-1" or "A-2."
SP-1 - Strong capacity to pay principal and interest. Issues
determined to possess very strong characteristics are 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.
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF MUNICIPAL
OBLIGATIONS
Moody's ratings for long-term municipal obligations fall within nine
categories. They range from Aaa (highest quality) to C (lowest
quality). Those bonds within the Aa through B categories that Moody's
believes possess the strongest credit attributes within those
categories are designated by the symbol "1."
AAA - Bonds that 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 that 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 that 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.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF MUNICIPAL DEBT
Municipal debt issues may be designated by Standard & Poor's as either
investment grade ("AAA" through "BBB") or speculative grade ("BB"
through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA through CCC may be modified by the addition of a plus sign (+) or
minus sign (-) to show relative standing within the major rating
categories.
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 highest 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 RATINGS OF COMMERCIAL PAPER
Moody's assigns short-term debt ratings to obligations which have an
original maturity not exceeding one year.
Issuers rated PRIME-1 (or related supporting institutions) have a
superior ability for repayment of principal and payment of interest.
Issuers rated PRIME-2 (or related supporting institutions) have a
strong ability for repayment of principal and payment of interest.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF COMMERCIAL PAPER
Debt issues considered short-term in the relevant market may be
assigned a Standard & Poor's commercial paper rating.
A-1 - This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign
(+) designation.
A-2 - Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated A-1.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements and Financial Highlights for The North
Carolina Capital Management Trust, on behalf of Cash Portfolio and
Term Portfolio, for the fiscal year ended June 30, 1998 will be filed
by subsequent amendment.
(b) Exhibits:
(1) Amended and Restated Declaration of Trust dated November 1,
1987, was electronically filed and is incorporated herein by reference
to Exhibit 1 of 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 to Exhibit 2 of 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, was electronically filed and is
incorporated herein by reference to Exhibit 5(a) of Post-Effective
Amendment No. 33.
(b) Management Contract between The North Carolina Capital
Management Trust: Cash Portfolio and Fidelity Management & Research
Company, dated January 22, 1996, was electronically filed and is
incorporated herein by reference to Exhibit 5(b) of Post-Effective
Amendment No. 33.
(c) Sub-Advisory Agreement between FMR Texas Inc. (currently known
as Fidelity Investments Money Management, Inc.) and Fidelity
Management & Research Company on behalf of Cash Portfolio dated
January 1, 1991 was electronically filed and is incorporated herein by
reference to Exhibit 5(c) of Post-Effective Amendment No. 28.
(6) (a) General Distribution Agreement between The North Carolina
Capital Management Trust: Cash Portfolio and Fidelity Distributors
Corporation dated April 30, 1997 was electronically filed and is
incorporated herein by reference to Exhibit 6(a) of Post-Effective
Amendment No. 36.
(b) General Distribution Agreement between The North Carolina Capital
Management Trust: Term Portfolio and Fidelity Distributors Corporation
dated April 30, 1997 was electronically filed and is incorporated
herein by reference to Exhibit 6(b) of Post-Effective Amendment No.
36.
(7) Non-interested Trustees' Deferred Compensation Plan dated June
15, 1992 for The North Carolina Cash Management Trust (currently known
as The North Carolina Capital Management Trust) was electronically
filed and is incorporated herein by reference to Exhibit 7 of
Post-Effective Amendment No. 36.
(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 to Exhibit 8(a) of 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 was
electronically filed and is incorporated herein by reference to
Exhibit 8(b) of Post-Effective Amendment No. 33.
(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) 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(h) of Fidelity Institutional Cash Portfolios'
(File No. 2-74808) Post-Effective Amendment No. 31.
(h) 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(i) of Fidelity
Institutional Cash Portfolios' (File No. 2-74808) Post-Effective
Amendment No. 31.
(9) Not applicable.
(10) Not applicable.
(11) Not applicable.
(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 was electronically filed and is
incorporated herein by reference to Exhibit 15(a) of Post-Effective
Amendment No. 33.
(b) Distribution and Service Plan between The North Carolina
Capital Management Trust: Cash Portfolio and Fidelity Distributors
Corporation dated January 22, 1996 was electronically filed and is
incorporated herein by reference to Exhibit 15(b) of Post-Effective
Amendment No. 33.
(c) Distribution and Service Agent Agreement between Fidelity
Distributors Corporation and Sterling Capital Distributors, Inc., on
behalf of Term Portfolio, dated January 22, 1996 was electronically
filed and is incorporated herein by reference to Exhibit 15(c) of
Post-Effective Amendment No. 33.
(d) Distribution and Service Agent Agreement between Fidelity
Distributors Corporation and Sterling Capital Distributors, Inc., on
behalf of Cash Portfolio, dated January 22, 1996 was electronically
filed and is incorporated herein by reference to Exhibit 15(d) of
Post-Effective Amendment No. 33.
(e) Amendment to Distribution and Service Plan between The North
Carolina Capital Management Trust: Term Portfolio and Fidelity
Distributors Corporation was electronically filed and is incorporated
herein by reference to Exhibit 15(e) of Post-Effective Amendment No.
36.
(f) Amendment to Distribution and Service Plan between The North
Carolina Capital Management Trust: Cash Portfolio and Fidelity
Distributors Corporation was electronically filed and is incorporated
herein by reference to Exhibit 15(f) of Post-Effective Amendment No.
36.
(g) Amendment to Distribution and Service Agent Agreement between
Fidelity Distributors Corporation and Sterling Capital Distributors,
Inc., on behalf of Term Portfolio, was electronically filed and is
incorporated herein by reference to Exhibit 15(g) of Post-Effective
Amendment No. 36.
(h) Amendment to Distribution and Service Agent Agreement between
Fidelity Distributors Corporation and Sterling Capital Distributors,
Inc., on behalf of Cash Portfolio, was electronically filed and is
incorporated herein by reference to Exhibit 15(h) of Post-Effective
Amendment No. 36.
(16) (a) Schedule and data points for 7-day yield for Cash Portfolio
were electronically filed and are incorporated herein by reference to
Exhibit 16(a) of 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 to
Exhibit 16(b) of 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 to
Exhibit 16(c) of 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 to
Exhibit 16(d) of Post-Effective Amendment No. 30.
(17) Financial Data Schedules will be filed by subsequent amendment.
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
Title of Class: Shares of Beneficial Interest as of April 30, 1998
Name of Series Number of Record Holders
Cash Portfolio 1,334
Term Portfolio 64
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification
shall be provided to any past or present Trustee or officer. It states
that the Registrant shall indemnify any present or past Trustee or
officer to the fullest extent permitted by law against liability and
all expenses reasonably incurred by him in connection with any claim,
action, suit, or proceeding in which he is involved by virtue of his
service as a Trustee, an officer, or both. Additionally, amounts paid
or incurred in settlement of such matters are covered by this
indemnification. Indemnification will not be provided in certain
circumstances, however. These include instances of willful
misfeasance, bad faith, gross negligence, and reckless disregard of
the duties involved in the conduct of the particular office involved.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against
any loss, liability, claim, damages or expense arising by reason of
any person acquiring any shares, based upon the ground that the
registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made
public by the Registrant included a materially misleading statement or
omission. However, the Registrant does not agree to indemnify the
Distributor or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with,
information furnished to the Registrant by or on behalf of the
Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of
willful misfeasance, bad faith, gross negligence, and reckless
disregard of the obligations and duties under the Distribution
Agreement.
Pursuant to the agreement by which Fidelity Investments Institutional
Operations Company, Inc. ("FIIOC") is appointed transfer agent, the
Registrant agrees to indemnify and hold FIIOC harmless against any
losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder, which names FIIOC
and/or the Registrant as a party and is not based on and does not
result from FIIOC's willful misfeasance, bad faith or negligence or
reckless disregard of duties, and arises out of or in connection with
FIIOC's performance under the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by FIIOC's willful misfeasance, bad faith or negligence
or reckless disregard of duties) which results from the negligence of
the Registrant, or from FIIOC's acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any
person duly authorized by the Registrant, or as a result of FIIOC's
acting in reliance upon advice reasonably believed by FIIOC to have
been given by counsel for the Registrant, or as a result of FIIOC's
acting in reliance upon any instrument or stock certificate reasonably
believed by it to have been genuine and signed, countersigned or
executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
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 Board and Director of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman
of the Board and Director of FMR Corp., FIMM, FMR
U.K., and FMR FAR EAST; Chairman of the Executive
Committee of FMR; Director of Fidelity Investments
Japan Limited; President and Trustee of funds advised
by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice President
and Trustee of funds advised by FMR; President and
Director of FIMM, FMR U.K., and FMR FAR EAST;
Previously, General Counsel, Managing Director, and
Senior Vice President of FMR Corp.
Peter S. Lynch Vice Chairman of the Board and Director of FMR.
Marta Amieva Vice President of FMR.
John H. Carlson Vice President of FMR and of funds advised by FMR.
Dwight D. Churchill Senior Vice President of FMR and Vice President of
Bond Funds advised by FMR; Vice President of FIMM.
Brian Clancy Vice President of FMR and Treasurer of FMR, FIMM,
FMR U.K., and FMR FAR EAST.
Barry Coffman Vice President of FMR.
Arieh Coll Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR, FIMM, FMR U.K., FMR
FAR EAST; Treasurer of FMR Corp.
William Danoff Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Scott E. DeSano Vice President of FMR.
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
Walter C. Donovan Vice President of FMR.
Bettina Doulton Vice President of FMR and of funds advised by FMR.
Margaret L. Eagle Vice President of FMR and of funds advised by FMR.
William R. Ebsworth Vice President of FMR.
Richard B. Fentin Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Gregory Fraser Vice President of FMR and of a fund advised by FMR.
Jay Freedman Assistant Clerk of FMR; Clerk of FMR Corp., FMR
U.K., and FMR FAR EAST; Secretary of FIMM.
Robert Gervis Vice President of FMR.
David L. Glancy Vice President of FMR and of a fund advised by FMR.
Kevin E. Grant Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
Boyce I. Greer Senior Vice President of FMR and Vice President of
Money Market Funds advised by FMR.
Bart A. Grenier Vice President of High-Income Funds advised by
FMR;Vice President of FMR.
Robert Haber Vice President of FMR.
Richard C. Habermann Senior Vice President of FMR; Vice President of funds
advised by FMR.
Richard Hazelwood Vice President of FMR.
Fred L. Henning Jr. Senior Vice President of FMR and Vice President of
Fixed-Income funds advised by FMR.
Bruce T. Herring Vice President of FMR.
John R. Hickling Vice President of FMR and of a fund advised by FMR.
Robert F. Hill Vice President of FMR; Director of Technical Research.
Curt Hollingsworth Vice President of FMR and of funds advised by FMR.
Abigail P. Johnson Senior Vice President of FMR and Vice President of
funds advised by FMR; Director of FMR Corp.;
Associate Director and Senior Vice President of Equity
funds advised by FMR.
David B. Jones Vice President of FMR.
Steven Kaye Vice President of FMR and of a fund advised by FMR.
Francis V. Knox Vice President of FMR; Compliance Officer of FMR
U.K.
Robert A. Lawrence Senior Vice President of FMR and Vice President of
Fidelity Real Estate High Income and Fidelity Real
Estate High income II funds advised by FMR; Associate
Director and Senior Vice President of Equity funds
advised by FMR; Previously, Vice President of High
Income funds advised by FMR.
Harris Leviton Vice President of FMR and of a fund advised by FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Richard R. Mace Jr. Vice President of FMR and of funds advised by FMR.
Charles A. Mangum Vice President of FMR and of a fund advised by FMR.
Kevin McCarey Vice President of FMR and of a fund advised by FMR.
Diane M. McLaughlin Vice President of FMR.
Neal P. Miller Vice President of FMR.
David L. Murphy Vice President of FMR and of funds advised by FMR.
Scott A. Orr Vice President of FMR and of funds advised by FMR.
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR.
Kevin A. Richardson Vice President of FMR.
Eric D. Roiter Senior Vice President and General Counsel of FMR and
Secretary of funds advised by FMR.
Mark S. Rzepczynski Vice President of FMR.
Lee H. Sandwen Vice President of FMR.
Patricia A. Satterthwaite Vice President of FMR and of a fund advised by FMR.
Fergus Shiel Vice President of FMR.
Richard A. Silver Vice President of FMR.
Carol A. Smith-Fachetti Vice President of FMR.
Steven J. Snider Vice President of FMR.
Thomas T. Soviero Vice President of FMR and of a fund advised by FMR.
Richard Spillane Senior Vice President of FMR; Associate Director and
Senior Vice President of Equity funds advised by FMR;
Previously, Senior Vice President and Director of
Operations and Compliance of FMR U.K.
Thomas M. Sprague Vice President of FMR and of funds advised by FMR.
Robert E. Stansky Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Scott D. Stewart Vice President of FMR.
Cynthia L. Strauss Vice President of FMR.
Thomas Sweeney Vice President of FMR and of a fund advised by FMR.
Beth F. Terrana Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Yoko Tilley Vice President of FMR.
Joel C. Tillinghast Vice President of FMR and of a fund advised by FMR.
Robert Tuckett Vice President of FMR.
Jennifer Uhrig Vice President of FMR and of funds advised by FMR.
George A. Vanderheiden Senior Vice President of FMR and Vice President of
funds advised by FMR; Director of FMR Corp.
Steven S. Wymer Vice President of FMR and of a fund advised by FMR.
</TABLE>
(2) FIDELITY INVESTMENTS MONEY MANAGEMENT, INC. (FIMM)
FIMM provides investment advisory services to Fidelity Management &
Research Company. The directors and officers of the Sub-Adviser have
held the following positions of a substantial nature during the past
two fiscal years.
Edward C. Johnson 3d Chairman of the Board and Director of FIMM,
FMR, FMR Corp., FMR FAR EAST, and FMR
U.K.; Chairman of the Executive Committee of
FMR; President and Chief Executive Officer of
FMR Corp.; Director of Fidelity Investments
Japan Limited; President and Trustee of funds
advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice
President and Trustee of funds advised by FMR;
President and Director of FIMM, FMR U.K., and
FMR FAR EAST; Previously, General Counsel,
Managing Director, and Senior Vice President of
FMR Corp.
Robert H. Auld Vice President of FIMM.
Dwight D. Churchill Vice President of FIMM; Senior Vice President
of FMR and Vice President of Bond Funds
advised by FMR.
Brian Clancy Treasurer of FIMM, FMR FAR EAST, FMR
U.K., and FMR and Vice President of FMR.
Robert K. Duby Vice President of FIMM and of funds advised by
FMR.
Jay Freedman Secretary of FIMM; Clerk of FMR U.K., FMR
FAR EAST, and FMR Corp.; Assistant Clerk of
FMR.
Robert Litterst Vice President of FIMM and of funds advised by
FMR.
Thomas D. Maher Vice President of FIMM and Assistant Vice
President of Money Market funds advised by
FMR.
Stephen G. Manning Assistant Treasurer of FIMM, FMR U.K., FMR
FAR EAST, and FMR; Treasurer of FMR Corp.
Scott A. Orr Vice President of FIMM and of funds advised by
FMR.
Burnell R. Stehman Vice President of FIMM and of funds advised by
FMR.
John J. Todd Vice President of FIMM and of funds advised by
FMR.
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for
most funds advised by FMR.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
James Curvey Director None
Martha B. Willis President None
Eric D. Roiter Senior Vice President 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 Company, Inc., 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 has duly caused this
Post-Effective Amendment No. 37 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 8th day
of June, 1998.
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/ Richard A. Silver Treasurer June 8, 1998
Richard A. Silver
/s/ William L. Byrnes* Trustee June 8, 1998
William L. Byrnes
/s/ John David Foust_* Trustee June 8, 1998
John David Foust
/s/ W. Olin Nisbet III_* Trustee June 8, 1998
W. Olin Nisbet III
/s/ Helen A. Powers** Trustee June 8, 1998
Helen A. Powers
/s/ Bertram H. Witham_* Trustee June 8, 1998
Bertram H. Witham
+ Signature affixed by Eric D. Roiter pursuant to a power of attorney
dated April 24, 1998 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 President of The North Carolina Capital Management
Trust: Cash Portfolio and Term Portfolio (collectively, the "Trust"),
hereby constitute and appoint Eric D. Roiter my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Trust on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, or any successor thereto, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such
things in my name and on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after April 24, 1998.
WITNESS my hand as of the date set forth below.
/s/ William L. Byrnes April 24, 1998
William L. Byrnes
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
