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. 40 [X]
and
REGISTRATION STATEMENT (No. 811-3455)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 40 [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: 617-563-7000
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)
(X) on (August 19, 1999) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(i)
( ) on ( ) pursuant to paragraph (a)(i)
( ) 75 days after filing pursuant to paragraph (a)(ii)
( ) on ( ) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how
each fund invests and the services available to shareholders.
To learn more about Cash Portfolio and Term Portfolio (each a "fund"
or collectively the "funds") and their investments, you can obtain a
copy of the funds' most recent financial report and portfolio listing
or read the Statement of Additional Information (SAI) dated August 19,
1999 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.
THE NORTH CAROLINA CAPITAL
MANAGEMENT TRUST:
CASH PORTFOLIO AND TERM PORTFOLIO
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 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.
TERM PORTFOLIO seeks to obtain as high a level of current income as is
consistent with the preservation of capital by investing in
obligations of the U.S. Government and agencies and instrumentalities
of the U.S. Government, obligations of the State of North Carolina,
bonds and notes of any North Carolina local government or public
authority and in high grade money market instruments.
PROSPECTUS
DATED AUGUST 19, 1999
A ND
A NNUAL REPORT
F OR THE YEAR ENDED JUNE 30, 1999
A ND
STATEMENT OF ADDITIONAL INFORMATION
DATED AUGUST 19, 1999
(FIDELITY_LOGO_GRAPHIC)
THE
NORTH
CAROLINA
CAPITAL MANAGEMENT TRUST
82 DEVONSHIRE STREET, BOSTON, MA 02109
CONTENTS
PROSPECTUS
FUND SUMMARY 4 INVESTMENT SUMMARY
4 PERFORMANCE
6 FEE TABLE
FUND BASICS 8 INVESTMENT DETAILS
9 VALUING SHARES
SHAREHOLDER INFORMATION 10 BUYING AND SELLING SHARES
14 EXCHANGING SHARES
15 ACCOUNT FEATURES AND POLICIES
16 DIVIDENDS AND CAPITAL GAIN
DISTRIBUTIONS
17 TAX CONSEQUENCES
FUND SERVICES 17 FUND MANAGEMENT
18 FUND DISTRIBUTION
APPENDIX 18 FINANCIAL HIGHLIGHTS
21 THE STATUTE AND THE CODE
ANNUAL REPORT
CASH PORTFOLIO:
PERFORMANCE A-1 How the fund has done over
time.
FUND TALK A-3 The manager's review of the
fund's performance,
strategy, and outlook.
INVESTMENTS A-4 A complete list of the fund's
investments.
FINANCIAL STATEMENTS A-7 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
TERM PORTFOLIO:
PERFORMANCE A-11 How the fund has done over
time.
FUND TALK A-14 The manager's review of the
fund's performance,
strategy, and outlook.
INVESTMENTS A-15 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS A-16 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES A-20 Notes to the financial
statements.
REPORT OF INDEPENDENT A-22 The auditors' opinion.
ACCOUNTANTS
STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF ADDITIONAL S-1
INFORMATION
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON
THE COVER AND DO NOT NECESSARILY REPRESENT THE VIEWS OF FIDELITY OR
ANY OTHER PERSON IN THE FIDELITY ORGANIZATION. ANY SUCH VIEWS ARE
SUBJECT TO CHANGE AT ANY TIME BASED UPON MARKET OR OTHER CONDITIONS
AND FIDELITY DISCLAIMS ANY RESPONSIBILITY TO UPDATE SUCH VIEWS.
THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND, BECAUSE
INVESTMENT DECISIONS FOR A FUND ARE BASED ON NUMEROUS FACTORS,
MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF
A FUND.
FUND SUMMARY
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE
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 of $1.00 per share.
PRINCIPAL INVESTMENT STRATEGIES
Fidelity Management & Research Company (FMR)'s principal investment
strategies include:
(small solid bullet) Investing in those money market instruments that
are authorized for investment by units of local government as
specified in North Carolina General Statute 159-30, as amended (the
Statute) and 20 North Carolina Administrative Code 3.0703, as amended
(the Code).
(small solid bullet) Investing in U.S. dollar-denominated money market
securities of domestic issuers rated in the highest category by a
nationally recognized rating service, U.S. Government securities and
repurchase agreements.
(small solid bullet) Generally maintaining a dollar-weighted average
maturity at 60 days or less.
(small solid bullet) Investing in compliance with industry-standard
requirements for money market funds for the quality, maturity and
diversification of investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries that provide credit support or a maturity-shortening
structure can be affected by adverse political, regulatory, market or
economic developments in those countries.
(small solid bullet) ISSUER-SPECIFIC CHANGES. A decline in the credit
quality of an issuer or the provider of credit support or a
maturity-shortening structure for a security can cause the price of a
money market security to decrease.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation
(FDIC) or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the fund.
INVESTMENT OBJECTIVE
TERM PORTFOLIO seeks to obtain as high a level of current income as is
consistent with the preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR's principal investment strategies include:
(small solid bullet) Normally investing 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, bonds and notes of any North Carolina local government
or public authority and high-grade money market instruments as
permitted pursuant to the Statute and the Code.
(small solid bullet) Investing in securities rated in the three
highest categories by at least one nationally recognized rating
service, or, if unrated, determined to be of equivalent quality.
(small solid bullet) Investing predominantly in U.S. Government
securities.
(small solid bullet) Managing the fund so that it generally reacts to
changes in interest rates similarly to government bonds with
maturities of three years or less.
(small solid bullet) Allocating assets across different market sectors
and maturities.
(small solid bullet) Analyzing a security's structural features,
current pricing and trading opportunities, and the credit quality of
its issuer to select investments.
PRINCIPAL INVESTMENT RISKS
The fund is subject to the following principal investment risks:
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) PREPAYMENT. The ability of an issuer of a debt
security to repay principal prior to a security's maturity can cause
greater price volatility if interest rates change.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the FDIC or any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in each fund's
performance from year to year and compares Term Portfolio's
performance to the performance of a market index and an average of the
performance of similar funds over various periods of time. Returns are
based on past results and are not an indication of future performance.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR-BY-YEAR RETURNS
CASH PORTFOLIO
Calendar Years
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
9.22% 8.11% 5.93% 3.56% 2.88% 4.02% 5.74% 5.22% 5.38% 5.39%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 9.219999999999999
Row: 2, Col: 1, Value: 8.109999999999999
Row: 3, Col: 1, Value: 5.930000000000001
Row: 4, Col: 1, Value: 3.56
Row: 5, Col: 1, Value: 2.88
Row: 6, Col: 1, Value: 4.02
Row: 7, Col: 1, Value: 5.74
Row: 8, Col: 1, Value: 5.22
Row: 9, Col: 1, Value: 5.38
Row: 10, Col: 1, Value: 5.39
DURING THE PERIODS SHOWN IN THE CHART FOR CASH PORTFOLIO, THE HIGHEST
RETURN FOR A QUARTER WAS 2.36% ( QUARTER ENDING JUNE 30,
1989 ) AND THE LOWEST RETURN FOR A QUARTER WAS 0.69% (QUARTER
ENDING JUNE 30, 1993).
THE YEAR-TO-DATE RETURN AS OF JUNE 30, 1999 FOR CASH PORTFOLIO WAS
2.35 %.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TERM PORTFOLIO
Calendar Years
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
9.53% 8.78% 8.46% 3.56% 4.06% 2.73% 7.14% 5.16% 5.78% 5.80%
</TABLE>
Percentage (%)
Row: 1, Col: 1, Value: 9.529999999999999
Row: 2, Col: 1, Value: 8.779999999999999
Row: 3, Col: 1, Value: 8.460000000000001
Row: 4, Col: 1, Value: 3.56
Row: 5, Col: 1, Value: 4.06
Row: 6, Col: 1, Value: 2.73
Row: 7, Col: 1, Value: 7.14
Row: 8, Col: 1, Value: 5.159999999999999
Row: 9, Col: 1, Value: 5.78
Row: 10, Col: 1, Value: 5.8
DURING THE PERIODS SHOWN IN THE CHART FOR TERM PORTFOLIO, THE HIGHEST
RETURN FOR A QUARTER WAS 3.20% (QUARTER ENDING JUNE 30,
1989) AND THE LOWEST RETURN FOR A QUARTER WAS -0.17%
(QUARTER ENDING DECEMBER 31, 1992).
THE YEAR-TO-DATE RETURN AS OF JUNE 30, 1999 FOR TERM PORTFOLIO WAS
1.84 %.
AVERAGE ANNUAL RETURNS
For the periods ended Past 1 year Past 5 years Past 10 years
December 31, 1998
Cash Portfolio 5.39% 5.15% 5.53%
Term Portfolio 5.80% 5.31% 6.08%
LB 1-Year US Treasury 5.84% 5.68% 6.36%
Lipper Short US Government 5.79% 5.31% 6.08%
Bonds Funds Average
If FMR had not reimbursed certain fund expenses during these periods,
each fund's returns would have been lower.
The Lehman Brothers 1-Year Treasury Index is a one security index
which at the beginning of every month selects the Treasury maturing
closest to but not beyond one year from that date.
The Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold, or sell shares of a fund. The annual fund
operating expenses provided below for each fund are based on
historical expenses.
SHAREHOLDER FEES (PAID BY THE INVESTOR DIRECTLY)
Sales charge (load) on None
purchases and reinvested
distributions
Deferred sales charge (load) None
on redemptions
ANNUAL FUND OPERATING EXPENSES (PAID FROM FUND ASSETS)
CASH PORTFOLIO Management feeA 0.17%
Distribution and Service 0.15%
(12b-1) fee
Other expenses 0.00%
Total annual fund operating 0.32%
expenses
TERM PORTFOLIO Management feeA 0.20%
Distribution and Service 0.15%
(12b-1) fee
Other expenses 0.00%
Total annual fund operating 0.35%
expenses
A THE MANAGEMENT FEE RATE REPRESENTS THE NET RATE RETAINED BY FMR
AFTER PAYMENT MADE TO THE DISTRIBUTOR. THE MANAGEMENT FEE RATES BEFORE
PAYMENT MADE TO THE DISTRIBUTOR BY FMR ARE 0.32 % AND
0.35 % FOR CASH PORTFOLIO AND TERM PORTFOLIO, RESPECTIVELY.
Because 12b-1 fees are paid by FMR from its management fee,
long-term shareholders may pay more than the economic equivalent of
the maximum sales charges permitted by the National Association of
Securities Dealers, Inc., due to 12b-1 fees.
This EXAMPLE helps you compare the cost of investing in the funds with
the cost of investing in other mutual funds.
Let's say, hypothetically, that each fund's annual return is 5% and
that your shareholder fees and each fund's annual operating expenses
are exactly as described in the fee table. This example illustrates
the effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years
indicated:
CASH PORTFOLIO 1 year $ 33
3 years $ 103
5 years $ 180
10 years $ 406
TERM PORTFOLIO 1 year $ 36
3 years $ 113
5 years $ 197
10 years $ 443
FUND BASICS
INVESTMENT DETAILS
INVESTMENT OBJECTIVE
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 of $1.00 per share.
PRINCIPAL INVESTMENT STRATEGIES
FMR invests the fund's assets in those money market instruments that
are authorized for investment by units of local government as
specified in the Statute and the Code. More detail regarding the
provisions of the Statute and the Code is included in the Appendix.
FMR invests the fund's assets in U.S. dollar-denominated money market
securities of domestic issuers rated in the highest category by a
nationally recognized rating service, U.S. Government securities and
repurchase agreements.
FMR generally intends to maintain the fund's dollar-weighted average
maturity at 60 days or less.
In buying and selling securities for the fund, FMR complies with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of the fund's investments. FMR
stresses maintaining a stable $1.00 share price, liquidity and income.
INVESTMENT OBJECTIVE
TERM PORTFOLIO seeks to obtain as high a level of current income as is
consistent with the preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES
FMR normally invests the fund's assets 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, bonds and notes of any North Carolina local government
or public authority and high-grade money market instruments, as
permitted pursuant to the Statute and the Code. More detail regarding
the provisions of the Statute and the Code is included in the
Appendix. FMR currently intends to invest the fund's assets in
high-quality securities. Securities are "high-quality" if rated in the
three highest categories by at least one nationally recognized rating
service, or, if unrated, determined to be of equivalent quality by
FMR. FMR expects to invest the fund's assets predominantly in U.S.
Government securities. FMR may invest up to 25% of the fund's total
assets in the finance industry.
FMR seeks to manage the fund so that it generally reacts to changes in
interest rates similarly to government bonds with maturities of three
years or less. However, under the current Code, FMR may invest the
fund's assets in securities with maturities of up to seven years. As
of June 30, 1999, the dollar-weighted average maturity of the fund was
approximately one year. In determining a security's maturity
for 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 maturity.
FMR allocates the fund's assets among different market sectors (for
example U.S. Treasury or U.S. Government agency securities) and
different maturities based on its view of the relative value of each
sector or maturity.
In buying and selling securities for the fund, FMR analyzes a
security's structural features, current price compared to its
estimated long-term value, and any short-term trading opportunities
resulting from market inefficiencies, and the credit quality of its
issuer.
DESCRIPTION OF PRINCIPAL SECURITY TYPES
MONEY MARKET SECURITIES are high-quality, short-term securities that
pay a fixed, variable or floating interest rate. Securities are often
specifically structured so that they are eligible investments for a
money market fund. For example, in order to satisfy the maturity
restrictions for a money market fund, some money market securities
have demand or put features which have the effect of shortening the
security's maturity. Money market securities include bank certificates
of deposit, bank acceptances, bank time deposits, notes, commercial
paper and U.S. Government securities.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. 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
include corporate bonds, government securities, and mortgage and other
asset-backed securities.
U.S. GOVERNMENT SECURITIES are high-quality securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of
the U.S. Government. U.S. Government securities may be backed by the
full faith and credit of the U.S. Treasury, the right to borrow from
the U.S. Treasury, or the agency or instrumentality issuing or
guaranteeing the security. U.S. Government securities include mortgage
and other asset-backed securities.
A REPURCHASE AGREEMENT is an agreement to buy a security at one price
and a simultaneous agreement to sell it back at an agreed-upon price.
PRINCIPAL INVESTMENT RISKS
Many factors affect each fund's performance.
Cash Portfolio's yield will change daily based on changes in interest
rates and other market conditions. Although the fund is managed to
maintain a stable $1.00 share price, there is no guarantee that the
fund will be able to do so. For example, a major increase in interest
rates or a decrease in the credit quality of the issuer of one of the
fund's investments could cause the fund's share price to decrease.
Term Portfolio's yield and share price change daily based on changes
in interest rates and market conditions and in response to other
economic, political or financial developments. The fund's reaction to
these developments will be affected by the types and maturities of the
securities in which the fund invests, the financial condition,
industry and economic sector, and geographic location of an issuer,
and the fund's level of investment in the securities of that issuer.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
The following factors may significantly affect a fund's performance:
INTEREST RATE CHANGES. Debt and money market securities have varying
levels of sensitivity to changes in interest rates. In general, the
price of a debt or money market security can fall when interest rates
rise and can rise when interest rates fall. Securities with longer
maturities and mortgage securities can be more sensitive to interest
rate changes. In other words, the longer the maturity of a security,
the greater the impact a change in interest rates could have on the
security's price. In addition, short-term and long-term interest rates
do not necessarily move by the same amount or in the same direction.
Short-term securities tend to react to changes in short-term interest
rates, and long-term securities tend to react to changes in long-term
interest rates.
FOREIGN EXPOSURE. Entities located in foreign countries that provide
credit support or a maturity-shortening structure can involve
increased risks. Extensive public information about the provider may
not be available and unfavorable political, economic or governmental
developments could affect the value of the security.
PREPAYMENT. Many types of debt securities, including mortgage
securities, are subject to prepayment risk. Prepayment occurs when the
issuer of a security can repay principal prior to the security's
maturity. Securities subject to prepayment 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 can be difficult to predict and result
in greater volatility.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of security or issuer, and changes in general
economic or political conditions can affect the credit quality or
value of an issuer's securities. Entities providing credit support or
a maturity-shortening structure also can be affected by these types of
changes. If the structure of a security fails to function as intended,
the security could decline in value.
In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes for Term Portfolio. If FMR does so, different factors could
affect Term Portfolio's performance and the fund may not achieve its
investment objective.
FUNDAMENTAL INVESTMENT POLICIES
The policies discussed below are fundamental, that is, subject to
change only by 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 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
3.073, as amended.
VALUING SHARES
The funds are open for business each day that each of the Federal
Reserve Bank of Richmond (Richmond Fed), First Union National Bank of
North Carolina (First Union) (the funds' custodian), and the New York
Stock Exchange (NYSE) are open, unless following such schedule would
cause the funds to be closed for two consecutive business days, in
which case, each fund will be open for business each day that the
Richmond Fed and First Union are open for business.
Each fund's net asset value per share (NAV) is the value of a single
share. Each fund's NAV is normally calculated each business day as of
4:00 p.m. Eastern time. However, NAV may be calculated earlier on any
day the Richmond Fed, First Union, or the NYSE closes early, or as
permitted by the Securities and Exchange Commission (SEC). Each fund's
assets are valued as of these times for the purpose of computing the
fund's NAV.
The following holiday closings have been scheduled for 1999: New
Year's Day, Martin Luther King, Jr. Day, Presidents ' Day, Good
Friday, Memorial Day, Independence Day (observed), Labor Day,
Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects th e 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.
To the extent that each fund's assets are traded in other markets on
days when the Richmond Fed, First Union , or the NYSE is closed,
the value of the fund's assets may be affected on days when the fund
is not open for business. In addition, trading in some of a fund's
assets may not occur on days when the fund is open for business.
Cash Portfolio's assets are valued on the basis of amortized cost.
Term Portfolio's assets are valued primarily on the basis of
information furnished by a pricing service or market quotations.
Certain short-term securities are valued on the basis of amortized
cost. If market quotations or information furnished by a pricing
service is not readily available for a security or if a security's
value has been materially affected by events occurring after the close
of the exchange or market on which the security is principally traded,
that security may be valued by another method that the Board of
Trustees believes accurately reflects fair value. A security's
valuation may differ depending on the method used for determining
value.
SHAREHOLDER INFORMATION
BUYING AND SELLING SHARES
GENERAL INFORMATION
F or account, product and service information, please contact
Sterling using one of the following methods:
(small solid bullet) By Phone (8:30 a.m. - 5:00 p.m. Eastern time,
Monday through Friday):
Toll-free, 1-800-222-3232.
Locally, 1-704-372-8798.
(small solid bullet) By Mail 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
(small solid bullet) By Internet using the following Web site (for
existing participants only): www.fidelitypublic.com/nccmtnet
Certain methods, such as by telephone or electronically , may be
unavailable or delayed (for example, during periods of unusual market
activity). You should consider other methods of contacting Sterling,
such as sending a facsimile to 1-704-372-2962 or a telegram to
Sterling.
BUYING SHARES
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.
In addition, shares of Term Portfolio are available only to investors
with a new or existing account in Cash Portfolio.
The price to buy one share of each fund is the fund's NAV. Each fund's
shares are sold without a sales charge.
Your shares will be bought at the next NAV calculated after your order
is received in proper form.
Short-term or excessive trading into and out of a fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, a fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
that fund. For these purposes, FMR may consider an investor's trading
history in that fund or other funds, and accounts under common
ownership or control.
Each fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, note the following:
(small solid bullet) You are advised to place your trades as early in
the day as possible and to provide Sterling with advance notice of
large purchases.
(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) Sterling does not accept cash.
(small solid bullet) Sterling reserves the right to limit the number
of checks processed at one time.
(small solid bullet) Checks received by First Union after 2:00 p.m.
Eastern time are not considered received in proper form until the next
business day.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
the transfer agent has incurred.
(small solid bullet) If you do not notify Sterling of a wire order or
if your wire order is not received in proper form by the close of
business of the Federal Wire System on the day of purchase, your order
will be canceled and you could be liable for any losses or fees a fund
or the transfer agent has incurred.
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Cash Portfolio
To Open an Account To Add to an Account
Mail (small solid bullet) Send a completed, (small solid bullet) Make your check
(LETTER_GRAPHIC) signed application to the following payable to "NCCMT: Cash Portfolio."
address: Indicate youraccount number
The North Carolina Capital
Management Trust and mail your check and a precoded
c/o Sterling Capital
Distributors, Inc. fund investment
One First Union Center slip, which will be supplied upon
301 S. College Street,
Suite 3200 request when you open your
Charlotte, NC 28202-6005 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
Phone (small solid bullet) Not
(PHONE_GRAPHIC) available. (small solid bullet) Exchange from a
Term Portfolio
account with the same registration,
including name and address.
(small solid bullet) Call Sterling
toll-free at
1-800-222-3232 or locally
at 1-704-372-8798
before 4:00 p.m. Eastern time.
In Person (small solid bullet) Not
(HAND_GRAPHIC) available. (small solid bullet) Bring your check
(HAND_GRAPHIC) 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.
Wire (small solid bullet) Not
(WIRE_GRAPHIC) available. (small solid bullet) Obtain wire
instructions by
calling Sterling toll-free at
1-800-222-3232
or locally at 1-704-372-8798.
(small solid bullet) Purchase shares
of Cash Portfolio with federal funds,
through the Automated Clearing
House System, or through
certain state transfer payment systems.
(small solid bullet) For federal funds
purchases, call Sterling before
12:00 noon Eastern time on the day
you send your federal funds wire.
(small solid bullet) For ACH purchases,
call Sterling before 4:00 p.m. Eastern
time on the business day before the
ACH payment is to be
deducted from your bank account.
Internet (small solid bullet) Not
(COMPUTER_GRAPHIC) available. (small solid bullet) Before placing your
(COMPUTER_GRAPHIC) order, you should have completed an
application to obtain a personal logon
indentification number and
password. Use your personal logon
identification number and
password to
place all subsequent orders.
(small solid bullet) Place your
order
to buy shares through the NCCMT Web
site at
www.fidelitypublic.com/nccmtnet.
(small solid bullet) For federal
funds
purchases, place your order to buy
shares before 12:00
noon Eastern time on the day you
send your federal funds wire.
(small solid bullet) For ACH purchases,
place your order to buy shares before
4:00 p.m. Eastern time
on the day before the ACH payment is
to be deducted
from your bank account.
(small solid bullet) Exchange
from a
Term Portfolio
account with the same registration,
including name and address,
before 4:00 p.m. Eastern time.
</TABLE>
<TABLE>
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Term Portfolio
To Open an Account To Add to an Account
Mail (small solid bullet) Send
(LETTER_GRAPHIC) a completed, (small solid bullet) Not available
signed application to the
following address:
The North Carolina Capital
Management Trust
c/o Sterling Capital
Distributors, Inc.
One First Union Center
301 S. College Street,
Suite 3200
Charlotte, NC 28202-6005
Phone (small solid bullet) Not
(PHONE_GRAPHIC) available. (small solid bullet) Exchange from a
Cash Portfolio
account with the same registration,
including name
and address.
(small solid bullet) Call Sterling
toll-free at
1-800-222-3232 or locally at
1-704-372-8798
before 4:00 p.m. Eastern time.
In Person (small solid bullet) Not
(HAND_GRAPHIC) available. (small solid bullet) Not available
Wire (small solid bullet) Not
(WIRE_GRAPHIC) available. (small solid bullet) Obtain wire
instructions by
calling Sterling toll-free at
1-800-222-3232
or locally at 1-704-372-8798.
(small solid bullet) Purchase
shares of Term
Portfolio with federal funds,
through the
Automated Clearing House System,
or through
certain state transfer payment
systems.
(small solid bullet) For federal
funds purchases,
call Sterling before 4:00 p.m.
Eastern time on the day you send
your federal funds wire.
(small solid bullet) For ACH
purchases, call
Sterling before 4:00 p.m. Eastern
time on the
business day before the ACH
payment is to be
deducted from your bank account.
Internet (small solid bullet) Not
(COMPUTER_GRAPHIC) available. (small solid bullet) Before placing
your order, you
should have completed an application
to obtain a personal logon
indentification number and
password. Use your personal logon
identification
number and password to place all
subsequent orders.
(small solid bullet) Place your order
to buy shares
through the NCCMT Web site at
www.fidelitypublic.com/nccmtnet.
(small solid bullet) For federal funds
purchases, place your order to buy
shares before 4:00 p.m.
Eastern time on the day you send
your federal funds wire.
(small solid bullet) For ACH
purchases, place your
order to buy shares before 4:00 p.m.
Eastern time on the day before the
ACH payment is to be deducted
from your bank account.
(small solid bullet) Exchange from a
Cash Portfolio
account with the same registration,
including name
and address, before 4:00 p.m.
Eastern time.
</TABLE>
SHAREHOLDER INFORMATION
SELLING SHARES
The price to sell one share of each fund is the fund's NAV.
Your shares will be sold at the next NAV calculated after your order
is received in proper form.
When you place an order to sell shares, note the following:
(small solid bullet) You are advised to place your trades as early in
the day as possible and to provide Sterling with advance notice of
large redemptions.
(small solid bullet) Normally, Fidelity will process redemptions on
the same business day, provided your redemption wire request for Cash
Portfolio is received in proper form by Sterling before 12:00 noon
Eastern time, and will process all other redemptions by the next
business day, but Fidelity may take up to seven days to process
redemptions if making immediate payment would adversely affect a fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until money from prior purchases sufficient to cover your
redemption has been received and collected. This can take up to seven
business days after a purchase.
(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 permitted by the SEC.
(small solid bullet) Redemption proceeds may be paid in securities or
other assets rather than in cash if the Board of Trustees determines
it is in the best interests of a fund.
(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) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, the transfer agent
will send a check to the record address.
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<CAPTION>
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Account Special Requirements
Phone All accounts (small solid bullet) Exchange to
(PHONE_GRAPHIC) 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 All accounts (small solid bullet) The letter of
(LETTER_GRAPHIC) instruction must be
signed by an authorized finance
official (or his/her agent
or designee) who has completed
the account application.
Wire All accounts (small solid bullet) You must sign
(WIRE_GRAPHIC) 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) For federal
funds redemptions, your
redemption request must be
received by Sterling before
12:00 noon Eastern time for Cash
Portfolio for money to be
wired on the same business day,
or before 4:00 p.m.
Eastern time for Cash Portfolio
or Term Portfolio for
money to be wired on the next
business day.
(small solid bullet) For ACH
redemptions, 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 Cash Portfolio
(CHECK_GRAPHIC) accounts (small solid bullet) All account
owners must sign a
signature card to receive
a checkbook.
Internet All accounts (small solid bullet) Before placing
(COMPUTER_GRAPHIC) your order, you
should have completed an
application to
obtain a personal logon
indentification number and
password. Use your personal
logon identification
number and password to place
all subsequent orders.
(small solid bullet) Place your
order to buy shares
through the NCCMT Web site at
www.fidelitypublic.com/nccmtnet.
(small solid bullet) For federal
funds purchases,
place your order to buy shares
before 12:00 noon
Eastern time for Cash Portfolio
for money to be wired
on the same business day,
or before 4:00 p.m. Eastern time
for Cash Portfolio or Term
Portfolio for money to be
wired on the next business day.
(small solid bullet) For ACH
redemptions, place your
order to sell shares before
4:00 p.m. Eastern time
for payment to be received by
your bank on the next
business day.
(small solid bullet) Exchange to
Cash Portfolio
from Term Portfolio, and vice
versa, if both
accounts are registered with
the same
name(s) and address,
before 4:00 p.m. Eastern time.
</TABLE>
EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
As a shareholder you have the privilege of exchanging shares of Cash
Portfolio for shares of Term Portfolio, and vice versa.
However, you should note the following policies and restrictions
governing exchanges:
(small solid bullet) You may exchange only 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) 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) Each fund may 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.
The funds may terminate or modify the exchange privileges in the
future.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
funds.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account, or call Sterling toll-free at 1-800-222-3232 or
locally at 1-704-372-8798, to add the feature after your account is
opened. When designating a North Carolina bank to receive redemption
proceeds, you should determine that the bank satisfies any legal
requirement under North Carolina law prior to signing up for the Wire
feature.
(small solid bullet) To change the bank account designated to receive
redemption proceeds, or to add the Wire feature on additional
accounts, at any time prior to making a redemption request, you should
send a letter of instruction 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
(small solid bullet) Call Sterling toll-free at 1-800-222-3232 or
locally at 1-704-372-8798 to verify that this feature is set up on
your account.
ON-LINE TRADING
TO ACCESS AND MANAGE YOUR ACCOUNT OVER THE INTERNET AT NCCMT'S WEB
SITE.
(small solid bullet) For account balances and holdings;
(small solid bullet) To review recent account history;
(small solid bullet) For Cash Portfolio and Term Portfolio trading;
and
(small solid bullet) To access research and analysis tools.
CHECKWRITING
TO REDEEM SHARES FROM YOUR CASH PORTFOLIO ACCOUNT.
(small solid bullet) To set up, complete the appropriate section on
the application when opening your account.
(small solid bullet) To add the feature after your account is opened,
call Sterling toll-free at 1-800-222-3232 or locally at
1-704-372-8798.
(small solid bullet) All account owners must sign a signature card to
receive a checkbook.
(small solid bullet) The transfer agent may limit the number of checks
you may write during a specified period.
(small solid bullet) Do not try to close out your account by check.
(small solid bullet) To obtain more checks, call Sterling toll-free at
1-800-222-3232 or locally at 1-704-372-8798.
(small solid bullet) YOU ARE ADVISED THAT THE USE OF THE CHECKWRITING
FEATURE MAY BE LIMITED BY NORTH CAROLINA GENERAL STATUTE 159-28.
(small solid bullet) CASH PORTFOLIO IS NOT PERMITTED OR AUTHORIZED
TO FUNCTION AS AN "OFFICIAL DEPOSITORY" FOR ANY OF ITS SHAREHOLDERS.
THIRD PARTY CHECKS ARE NOT PERMITTED.
(small solid bullet) Cash Portfolio and First Union may 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 Board of Trustees to be adverse
to the interest of shareholders.
ARBITRAGE REPORTING SERVICES. Special reporting is available for state
and local entities that require rebate information 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 for more information.
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that the transfer agent sends to you include
the following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(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 at 1-800-222-3232 if you need additional
copies of financial reports or prospectuses.
You may initiate many TRANSACTIONS BY TELEPHONE OR ELECTRONICALLY.
Fidelity and Sterling will not be responsible for any losses resulting
from unauthorized transactions if they follow reasonable security
procedures designed to verify the identity of the investor. Sterling
may request certain information for verification purposes, and
Sterling records all telephone calls for your protection. For
transactions conducted through the Internet, you must use an
Internet browser with 128-bit encryption. You should verify the
accuracy of your confirmation statements immediately after you receive
them.
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.
The transfer agent may charge a FEE FOR CERTAIN SERVICES, such as
providing historical account documents.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Each fund earns interest, dividends , and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. Each fund may also realize capital gains
from its investments, and distributes these gains (less losses), if
any, to shareholders as capital gain distributions.
Term Portfolio normally declares dividends daily and pays them
monthly. Term Portfolio normally pays capital gain distributions in
August and December.
Distributions you receive from Cash Portfolio consist primarily of
dividends. Cash Portfolio normally declares dividends daily and pays
them monthly.
EARNING DIVIDENDS
For Cash Portfolio, shares purchased by a wire order prior to 12:00
noon Eastern time, with receipt of the wire in proper form by First
Union before the close of the Federal Reserve Wire System on that day,
begin to earn dividends on the day of purchase. Cash Portfolio shares
purchased by all other orders begin to earn dividends on the first
business day following the day of purchase.
For Term Portfolio, shares begin to earn dividends on the first
business day following the day of purchase.
For Cash Portfolio, shares redeemed by a wire order prior to 12:00
noon Eastern time earn dividends through the day prior to the day of
redemption. Cash Portfolio shares redeemed by all other orders earn
dividends until, but not including, the next business day following
the day of redemption.
For Term Portfolio, shares earn dividends until, but not including,
the next business day following the day of redemption.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
each fund's distributions:
1. REINVESTMENT OPTION. Your dividends 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. Your dividends and capital gain distributions, if any,
will be paid in cash.
If the option you prefer is not listed on your account application, or
if you want to change your current option, call Sterling.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in a fund could have tax
consequences for you.
M ost 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 of
its political subdivision s . The receipt of revenue from
each fund for the benefit of a political subdivision investing in the
fund may constitute an exercise of an essential governmental function.
A portion of the earnings derived from funds that 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 those 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 you receive from each fund are
subject to federal income tax, and may also be subject to state or
local taxes.
For federal tax purposes, each fund's dividends and distributions of
short-term capital gains are taxable to you as ordinary income. Each
fund's distributions of long-term capital gains, if any, are taxable
to you generally as capital gains.
If a fund's distributions exceed its income and capital gains realized
in any year, all or a portion of those distributions may be treated as
a return of capital to shareholders for tax purposes. A return of
capital will generally not be taxable to you, but will reduce the cost
basis of your shares and result in a higher reported capital gain or a
lower reported capital loss when you sell your shares.
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "buying a dividend" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a taxable distribution.
Any taxable distributions you receive from a fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash, you will
receive certain December distributions in January, but those
distributions will be taxable as if you received them on December 31.
TAXES ON TRANSACTIONS. Your Term Portfolio redemptions, including
exchanges, may result in a capital gain or loss for federal tax
purposes. A capital gain or loss on your investment in a fund is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES
FUND MANAGEMENT
Each fund is a mutual fund, an investment that pools shareholders'
money and invests it toward a specified goal.
FMR is each fund's manager.
A s of March 25, 1999, FMR had approximately $521.7 billion in
discretionary assets under management.
As the manager, FMR is responsible for choosing the funds' investments
and handling their business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, serves as sub-adviser for each fund. FIMM is primarily
responsible for choosing investments for each fund.
F IMM is an affiliate of FMR. As of March 29, 1999, FIMM
h ad approximately $159.8 billion in discretionary assets under
management.
A fund could be adversely affected if the computer systems used by FMR
and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised each fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on a fund.
Robert Duby is vice president and manager of The North Carolina
Capital Management Trust: Cash Portfolio and Term Portfolio, which he
has managed since May 1998 and December 1998, respectively. He also
manages other funds. Mr. Duby joined Fidelity as a portfolio manager
in 1982.
From time to time a manager, analyst or other Fidelity employee may
express views regarding a particular company, security, industry or
market sector. The views expressed by any such person are the views of
only that individual as of the time expressed and do not necessarily
represent the views of Fidelity or any other person in the Fidelity
organization. Any such views are subject to change at any time based
upon market or other conditions and Fidelity disclaims any
responsibility to update such views. These views may not be relied on
as investment advice and, because investment decisions for the funds
are based on numerous factors, may not be relied on as an indication
of trading intent on behalf of the funds.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Each fund pays a management fee to FMR. The management fee is
calculated and paid to FMR every month.
FMR pays most other expenses of each fund.
Each fund's annual management fee rate is 0.350% of 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.
For the fiscal year ended June 30, 1999, Cash Portfolio paid a
management fee of 0.32% of the fund's average net assets, a nd
Term Portfolio paid a management fee of 0.35% of the fund's average
net assets.
FMR pays FIMM for providing assistance with investment advisory
services.
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 year. Reimbursement arrangements, which may be
terminated by FMR at any time, can decrease a fund's expenses and
boost its performance.
FUND DISTRIBUTION
Fidelity Distributors Corporation (FDC) distributes each fund's shares
through Sterling.
Each of Cash Portfolio and Term Portfolio has adopted a Distribution
and Service Plan pursuant to Rule 12b-1 under the Investment Company
Act of 1940 that recognizes that FMR may use its management fee to pay
expenses incurred in connection with providing services intended to
result in the sale of fund shares and/or shareholder support services.
FMR pays FDC a monthly 12b-1 fee, all of which FDC pays Sterling, as
compensation for providing services intended to result in the sale of
fund shares and/or shareholder support services, such as processing
shareholder inquiries, account maintenance, and processing purchases,
redemptions, transfers, and exchanges. FMR currently pays Sterling,
through FDC, a monthly 12b-1 fee 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 through $2.0 billion; and 0.140%
of average net assets in excess of $2.0 billion.
Because 12b-1 fees are paid by FMR from its management fee, they
will increase the cost of your investment and may cost you more than
paying other types of sales charges.
To receive payments made pursuant to a Distribution and Service Plan,
intermediaries must sign the appropriate agreement with FDC in
advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of a fund, provided that the fund receives
brokerage services and commission rates comparable to those of other
broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this prospectus and in the related SAI,
in connection with the offer contained in this prospectus. If given or
made, such other information or representations must not be relied
upon as having been authorized by the funds or FDC or Sterling. This
prospectus and the related SAI do not constitute an offer by the funds
or by FDC or Sterling to sell shares of the funds to, or to buy shares
of the funds from, any person to whom it is unlawful to make such
offer.
APPENDIX
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
fund's financial history for the past 5 years. Certain information
reflects financial results for a single fund share. Total returns for
each period include the reinvestment of all dividends and
distributions. This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose
report, along with each fund's financial highlights and financial
statements, are included in the funds' annual report. A free copy of
the annual report is available upon request.
<TABLE>
<CAPTION>
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CASH PORTFOLIO
Years ended June 30, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
Income from Investment .049 .053 .051 .053 .052
Operations Net interest
income
Less Distributions
From net interest income (.049) (.053) (.051) (.053) (.052)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN 5.05% 5.47% 5.25% 5.43% 5.28%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in $ 2,792 $ 2,480 $ 1,984 $ 1,740 $ 1,589
millions)
Ratio of expenses to average .32% .34% .35% .36% .39%
net assets
Ratio of net interest income 4.92% 5.34% 5.13% 5.27% 5.22%
to average net assets
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
TERM PORTFOLIO
Years ended June 30, 1999 1998 1997 1996 1995
SELECTED PER-SHARE DATA
Net asset value, beginning of $ 9.510 $ 9.650 $ 9.820 $ 9.910 $ 9.850
period
Income from Investment .615 B .660 B .729 B .601 .505
Operations Net investment
income
Net realized and unrealized (.157) (.134) (.170) (.093) .059
gain (loss)
Total from investment .458 .526 .559 .508 .564
operations
Less Distributions
From net investment income (.618) (.666) (.729) (.598) (.504)
Net asset value, end of period $ 9.350 $ 9.510 $ 9.650 $ 9.820 $ 9.910
TOTAL RETURN A 4.94% 5.63% 5.89% 5.25% 5.87%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in $ 93 $ 76 $ 69 $ 64 $ 70
millions)
Ratio of expenses to average .35% .36% .37% .38% .41%
net assets
Ratio of expenses to average .35% .35% C .37% .38% .41%
net assets after expense
reductions
Ratio of net investment 6.51% 6.93% 7.48% 6.06% 5.12%
income to average net assets
Portfolio turnover rate 256% 433% 232% 89% 519%
</TABLE>
A THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIOD SHOWN.
B NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
C FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
THE STATUTE AND THE CODE
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.
You can obtain additional information about the funds. The funds' SAI
includes more detailed information about the funds' investments. The
SAI is incorporated herein by reference (legally forms a part of the
prospectus). Each fund's annual and semi-annual reports include a
discussion of the fund's holdings and recent market conditions and the
funds' investment strategies that affected performance. For a free
copy of any of these documents or to request other information or ask
questions about the funds, call Sterling at 1-800-222-3232.
The SAI, the funds' annual and semi-annual reports and other
related materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBER, 811-3455.
Fidelity is a registered trademark of FMR Corp.
The third party marks appearing above are the marks of their
respective owners.
1 .705571.101 NC-pro-0899
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST:
CASH PORTFOLIO
TERM PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 19, 1999
This statement of additional information (SAI) is not a prospectus.
Portions of the funds' annual report are incorporated herein. The
annual report is supplied with this SAI. To obtain a free
additional copy of the prospectus, dated August 19, 1999, or an annual
report, please call Sterling at 1-800-222-3232.
TABLE OF CONTENTS PAGE
Investment Policies and 3
Limitations
Portfolio Transactions 6
Valuation 6
Performance 7
Additional Purchase, Exchange 13
and Redemption Information
Distributions and Taxes 13
Trustees and Officers 14
Control of Investment Advisers 15
Management Contracts 15
Distribution Services 16
Transfer and Service Agent 17
Agreements
Description of the Trust 17
Financial Statements 18
Appendix 18
NC-ptb-0899
1.78662.101
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 the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the 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 the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed without
shareholder approval.
INVESTMENT LIMITATIONS OF 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) issue senior securities, except as permitted pursuant to
limitations (6) and (12);
(3) 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 (6) below;
(4) make short sales of securities;
(5) purchase securities on margin (but the fund may obtain such
credits as may be necessary for the clearance of purchases and sales
of securities);
(6) 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.);
(7) act as an underwriter (except as it may be deemed such in a
sale of restricted securities);
(8) 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);
(9) 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;
(10) buy or sell real estate;
(11) buy or sell commodities, or commodity (futures) contracts;
(12) 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;
(13) purchase the securities of other investment companies or
investment trusts;
(14) 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;
(15) invest in oil, gas, or other mineral exploration or
development programs;
(16) 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;
(17) write or purchase any put or call option; or
(18) invest in companies for the purpose of exercising control
or management.
Investment limitation (6) 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 obligations issued or guaranteed as to principal and
interest by the government of the United States, its agencies or
instrumentalities) if, as a result, more than 5% of its total assets
would be invested in the securities of 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 purposes of limitation: (1) and (i), certain securities subject to
guarantees (including insurance, letters of credit and demand
features) are not considered securities of their issuer, but are
subject to separate diversification requirements, in accordance with
industry standard requirements for money market funds.
For purposes of limitation (9), the fund may invest in obligations of
banks as permitted pursuant to North Carolina General Statute
159-30 (the Statute) and 20 North Carolina Administrative Code 3.0703
(the Code). FMR limits the fund's investments in domestic bank
obligations to those banks having total assets in excess of one
billion dollars and subject to regulation by the U.S. Government. FMR
may also invest the fund's assets in certificates of deposit issued by
banks insured by the 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.
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) issue senior securities, except as permitted pursuant to
limitations (6) and (12) ;
(3) pledge, mortgage, or hypothecate its assets, except that,
to secure borrowings permitted by limitation (6) 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;
(4) make short sales of securities;
(5) purchase any securities on margin, except for such
short-term credits as are necessary for the clearance of transactions;
(6) 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);
(7) 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;
(8) 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;
(9) 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;
(10) 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;
(11) purchase or sell commodities or commodity contracts;
(12) 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;
(13) write or purchase any put or call options or any
combinations thereof;
(14) purchase the securities of other investment companies or
investment trusts; or
(15) invest in oil, gas or other mineral exploration or
development programs.
Investment limitation (6) 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 transactions;
and short-term borrowings. In accordance with exemptive orders issued
by the Securities and Exchange Commission (SEC), the Board of Trustees
has established and periodically reviews procedures applicable to
transactions involving affiliated financial institutions.
ASSET-BACKED SECURITIES 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 other factors
including changes in interest rates, the availability of information
concerning the pool and its structure, 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 the Statute and the Code.
BORROWING. Each 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.
CASH MANAGEMENT. A fund can hold uninvested cash or can invest it in
cash equivalents such as money market securities or repurchase
agreements. Generally, these securities offer less potential for gains
than other types of securities.
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value
of each investment by the time remaining to its maturity, adding these
calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a
stated final maturity basis, although there are some exceptions to
this rule.
For example, if it is probable that the issuer of an instrument will
take advantage of a maturity-shortening device, such as a call,
refunding, or redemption provision, the date on which the instrument
will probably be called, refunded, or redeemed may be considered to be
its maturity date. Also, the maturities of mortgage securities,
including collateralized mortgage obligations, and some asset-backed
securities are determined on a weighted average life basis, which is
the average time for principal to be repaid. For a mortgage security,
this average time is calculated by estimating the timing of principal
payments, including unscheduled prepayments, during the life of the
mortgage. The weighted average life of these securities is likely to
be substantially shorter than their stated final maturity.
FINANCIAL SERVICES EXPOSURE. Financial services companies are highly
dependent on the supply of short-term financing. The value of
securities of issuers in the financial services sector can be
sensitive to changes in government regulation and interest rates and
to economic downturns in the United States and abroad.
ILLIQUID SECURITIES cannot be sold or disposed of in the ordinary
course of business at approximately the prices at which they are
valued. Difficulty in selling securities may result in a loss or may
be costly to a fund. 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
securities. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency and volume
of trades and quotations, (2) the number of dealers and prospective
purchasers in the marketplace, (3) dealer undertakings to make a
market and (4) the nature of the security and the market in which it
trades (including any demand, put or tender features, the mechanics
and other requirements for transfer, any letters of credit or other
credit enhancement features, any ratings, the number of holders, the
method of soliciting offers, the time required to dispose of the
security, and the ability to assign or offset the rights and
obligations of the security).
INVESTMENT-GRADE DEBT SECURITIES. Investment-grade debt securities are
medium and high-quality securities. Some may possess speculative
characteristics and may be more sensitive to economic changes and to
changes in the financial conditions of issuers. A debt security is
considered to be investment-grade if it is rated investment-grade by
Moody's Investors Service, Standard & Poor's, Duff & Phelps Credit
Rating Co., or Fitch IBCA Inc., or is unrated but considered to be of
equivalent quality by FMR.
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 money 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 funds.
MORTGAGE SECURITIES are issued by government and non-government
entities such as banks, mortgage lenders, or other institutions. A
mortgage 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 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 securities are based on different types of
mortgages, including those on commercial real estate or residential
properties. Stripped mortgage securities are created when the interest
and principal components of a mortgage security are separated and sold
as individual securities. In the case of a stripped mortgage 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" security (IO) receives interest payments from
the same underlying mortgage.
Fannie Maes and Freddie Macs are pass-through securities issued by
Fannie Mae and Freddie Mac, respectively. Fannie Mae and Freddie Mac,
which guarantee payment of interest and repayment of principal on
Fannie Maes and Freddie Macs, respectively, are federally chartered
corporations supervised by the U.S. Government that act as
governmental instrumentalities under authority granted by Congress.
Fannie Mae is authorized to borrow from the U.S. Treasury to meet its
obligations. Fannie Maes and Freddie Macs are not backed by the full
faith and credit of the U.S. Government.
The value of mortgage 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
securities market as a whole. Non-government mortgage securities may
offer higher yields than those issued by government entities, but also
may be subject to greater price changes than government issues.
Mortgage 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 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 securities tend to be more volatile in response to changes in
interest rates than those of non-stripped mortgage securities.
T o earn additional income for a fund, FMR may use a trading
strategy that involves selling mortgage securities and simultaneously
agreeing to purchase similar securities on a later date at a set
price. This trading strategy may result in an increased portfolio
turnover rate which increases costs and may increase taxable gains.
RESTRICTION: A fund may invest in mortgage securities as
permitted pursuant to the Statute and the Code.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
or private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities.
They may be issued in anticipation of future revenues and may be
backed by the full taxing power of a municipality, the revenues from a
specific project, or the credit of a private organization. The value
of some or all municipal securities may be affected by uncertainties
in the municipal market related to legislation or litigation involving
the taxation of municipal securities or the rights of municipal
securities holders. A municipal security may be owned directly or
through a participation interest.
RESTRICTION: A fund may invest in municipal securities as permitted
pursuant to the Statute and 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. In exchange
for this benefit, a fund may accept a lower interest rate. Securities
with put features 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.
REPURCHASE AGREEMENTS involve an agreement to purchase a security and
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 separate account at a bank, marked-to-market
daily, and maintained at a value at least equal to the sale price plus
the accrued incremental amount. The value of the security purchased
may be more or less than the price at which the counterparty has
agreed to purchase the security. In addition, delays or losses could
result if the other party to the agreement defaults or becomes
insolvent. The funds will engage in 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 are subject to legal restrictions on their sale.
Difficulty in selling securities may result in a loss or be costly to
a fund. 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, the holder of a registered security
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, the holder might obtain a less
favorable price than prevailed when it decided to seek registration of
the security.
SOURCES OF LIQUIDITY OR CREDIT SUPPORT. Issuers may employ
various forms of credit and liquidity enhancements, including letters
of credit, guarantees, puts, and demand features, and insurance
provided by domestic or foreign entities such as banks and other
financial institutions. FMR may rely on its evaluation of the
credit of the liquidity or credit enhancement provider in determining
whether to purchase a security supported by such enhancement. In
evaluating the credit of a foreign bank or other foreign entities, FMR
will consider whether adequate public information about the entity is
available and whether the entity may be subject to unfavorable
political or economic developments, currency controls, or other
government restrictions that might affect its ability to honor its
commitment. Changes in the credit quality of the entity providing the
enhancement could affect the value of the security or a fund's share
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.
TEMPORARY DEFENSIVE POLICIES. Term Portfolio reserves the right to
invest without limitation in investment-grade money market or
short-term debt instruments for temporary, defensive purposes.
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 issuers or certain financial
intermediaries.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS involve a
commitment to purchase or sell specific securities at a predetermined
price or yield in which payment and delivery take place after the
customary settlement period for that type of security. Typically, no
interest accrues to the purchaser until the security is delivered.
When purchasing securities pursuant to one of these transactions, the
purchaser 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. Because payment for the securities
is not required until the delivery date, these risks are in addition
to the risks associated with a fund's investments. If a fund remains
substantially fully invested at a time when a purchase is outstanding,
the purchases may result in a form of leverage. When a fund has sold a
security pursuant to one of these transactions, 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 when-issued or forward transaction and may
sell the underlying securities before delivery, which may result in
capital gains or losses for the fund.
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 investment
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
investment 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 investment 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 fund 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
fund 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 fund to pay such higher commissions, FMR
must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and research services provided
by such executing broker-dealers, viewed in terms of a particular
transaction or FMR's overall responsibilities to that 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.
To the extent permitted by applicable law, FMR is authorized to
allocate portfolio transactions in a manner that takes into account
assistance received in the distribution of shares of the funds or
other Fidelity funds and to use the research services of brokerage and
other firms that have provided such assistance. FMR may use research
services provided by and place agency transactions with National
Financial Services Corporation (NFSC) and Fidelity Brokerage Services
Japan 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 (FBS), 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 investment 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
transactions 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.
For the fiscal periods ended June 30, 1999 and 1998, the
portfolio turnover rates were 256% and 433%, respectively, for Term
Portfolio. Variations in turnover rate may be due to a fluctuating
volume of shareholder purchase and redemption orders, market
conditions, or changes in FMR's investment outlook.
For the fiscal years ended June 30, 1999, 1998, and 1997 the funds
paid no brokerage commissions.
For the fiscal year ended June 30, 1999 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 investment 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 investment accounts.
Simultaneous transactions are inevitable when several funds and
investment 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 investment 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
Each fund's net asset value per share (NAV) is the value of a single
share. The NAV of each fund 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.
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.
The procedures set forth above need not be used to determine the value
of the securities owned by a fund if, in the opinion of the Board of
Trustees, some other method would more accurately reflect the fair
value of such securities. For example, securities and other assets for
which there is no readily available market value may be valued in good
faith by the Board of Trustees. In making a good faith determination
of the value of a security, the Board of Trustees may review price
movements in futures contracts and American Depositary Receipts
(ADRs), market and trading trends, the bid/ask quotes of brokers and
off-exchange institutional trading.
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 a fund would receive if it sold the instrument.
At such intervals as they deem appropriate, the Trustees consider the
extent to which NAV calculated by using market valuations would
deviate from the $1.00 per share calculated using amortized cost
valuation. If the Trustees believe that a deviation from a fund's
amortized cost per share may result in material dilution or other
unfair results to shareholders, the Trustees have agreed to take such
corrective action, if any, as they deem appropriate to eliminate or
reduce, to the extent reasonably practicable, the dilution or unfair
results. Such corrective action could include selling portfolio
instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends; redeeming
shares in kind; establishing NAV by using available market quotations;
and such other measures as the Trustees may deem appropriate.
PERFORMANCE
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 Cash Portfolio, and return
fluctuate in response to market conditions and other factors, and the
value of Term Portfolio's shares when redeemed may be more or less
than their original cost.
YIELD CALCULATIONS (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
Portfolio may quote yields in advertising based on any historical
seven-day period. Yields for Cash Portfolio are calculated on the same
basis as other money market funds, as required by 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 or
one-month period, net of expenses, by the average number of shares
entitled to receive distributions during the period, dividing this
figure by the fund's NAV at the end of the period, and annualizing the
result (assuming compounding of income) in order to arrive at an
annual percentage rate. Income is calculated for purposes of yield
quotations in accordance with standardized methods applicable to all
stock and bond funds. In general, interest income is reduced with
respect to bonds trading at a 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 the 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,
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.
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.
RETURN CALCULATIONS. 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 a fund's NAV over a
stated period. A cumulative return reflects actual performance over a
stated period of time. Average annual 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 return of
100% over ten years would produce an average annual 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 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 returns
represent averaged figures as opposed to the actual year-to-year
performance of a fund.
In addition to average annual returns, a fund may quote unaveraged or
cumulative returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative 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. 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 return.
Returns may be quoted on a before-tax or after-tax basis. Returns,
yields and other performance information may be quoted numerically or
in a table, graph, or similar illustration.
NET ASSET VALUE. Charts and graphs using Term Portfolio's NAVs,
adjusted NAVs, and benchmark indexes may be used to exhibit
performance. An adjusted NAV includes any distributions paid by a fund
and reflects all elements of its return. Unless otherwise indicated, a
fund's adjusted NAVs are not adjusted for sales charges, if any.
HISTORICAL CASH PORTFOLIO AND TERM PORTFOLIO RESULTS. The following
tables show Cash Portfolio's 7-day yield, Term Portfolio's 30-day
yield, and both portfolios' return s for the fiscal periods
ended June 30, 1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Average Annual Returns Cumulative Returns
Seven-Day Yield One Year Five Years Ten Years One Year Five Years Ten Years
Cash Portfolio 4.70% 5.05% 5.30% 5.30% 5.05% 29.45% 67.54%
Average Annual Returns Cumulative Returns
Thirty-Day Yield One Year Five Years Ten Years One Year Five Years Ten Years
Term Portfolio 4.96% 4.94% 5.52% 5.75% 4.94% 30.79% 74.92%
</TABLE>
Note: If FMR had not reimbursed certain fund expenses during these
periods, each fund's returns would have been lower.
The following tables show the income and capital elements of each
fund's cumulative 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 return compared to the record of a market
capitalization-weighted 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. Common
stocks generally offer greater growth potential than the funds, but
generally experience greater price volatility, which means greater
potential for loss. In addition, common stocks generally provide lower
income than 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
30, 1999, assuming all distributions were reinvested. Returns are
based on past results and are not an indication of future performance.
Tax consequences of different investments have not been factored into
the figures below.
During the 10-year period ended June 30, 1999, a hypothetical
$10,000 investment in Cash Portfolio would have grown to $16,754.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CASH PORTFOLIO INDEXES
Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Fiscal Year
Ended Investment Distributions Gain Distributions
1999 $ 10,000 $ 6,754 $ 0 $ 16,754 $ 55,906
1998 $ 10,000 $ 5,948 $ 0 $ 15,948 $ 45,542
1997 $ 10,000 $ 5,120 $ 0 $ 15,120 $ 34,989
1996 $ 10,000 $ 4,366 $ 0 $ 14,366 $ 25,976
1995 $ 10,000 $ 3,626 $ 0 $ 13,626 $ 20,616
1994 $ 10,000 $ 2,943 $ 0 $ 12,943 $ 16,353
1993 $ 10,000 $ 2,554 $ 0 $ 12,554 $ 16,126
1992 $ 10,000 $ 2,183 $ 0 $ 12,183 $ 14,189
1991 $ 10,000 $ 1,640 $ 0 $ 11,640 $ 12,511
1990 $ 10,000 $ 855 $ 0 $ 10,855 $ 11,649
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
CASH PORTFOLIO INDEXES
DJIA Cost of Living
Fiscal Year Ended
1999 $ 58,506 $ 13,392
1998 $ 46,964 $ 13,135
1997 $ 39,596 $ 12,917
1996 $ 28,607 $ 12,627
1995 $ 22,541 $ 12,288
1994 $ 17,470 $ 11,926
1993 $ 16,487 $ 11,636
1992 $ 15,105 $ 11,297
1991 $ 12,840 $ 10,959
1990 $ 12,256 $ 10,467
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Cash
Portfolio on July 1, 1989, the net amount invested in fund 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 t o $16,754. 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
wou ld have amounted to $5,173 for dividends. Cash Portfolio did not
distribute any capital gains during the period.
During the 10-year period ended June 30, 1999, a hypothetical
$10,000 investment in Term Portfolio would have grown to $17,492.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
TERM PORTFOLIO INDEXES
Value of Initial $10,000 Value of Reinvested Dividend Value of Reinvested Capital Total Value S&P 500
Fiscal Year
Ended Investment Distributions Gain Distributions
1999 $ 9,560 $ 7,907 $ 25 $ 17,492 $ 55,906
1998 $ 9,724 $ 6,920 $ 25 $ 16,669 $ 45,542
1997 $ 9,867 $ 5,887 $ 26 $ 15,780 $ 34,989
1996 $ 10,041 $ 4,836 $ 26 $ 14,903 $ 25,976
1995 $ 10,133 $ 4,000 $ 27 $ 14,160 $ 20,616
1994 $ 10,072 $ 3,276 $ 26 $ 13,374 $ 16,353
1993 $ 10,164 $ 2,888 $ 0 $ 13,052 $ 16,126
1992 $ 10,133 $ 2,444 $ 0 $ 12,577 $ 14,189
1991 $ 10,041 $ 1,729 $ 0 $ 11,770 $ 12,511
1990 $ 9,949 $ 866 $ 0 $ 10,815 $ 11,649
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TERM PORTFOLIO
DJIA Cost of Living
Fiscal Year Ended
1999 $ 58,506 $ 13,392
1998 $ 46,964 $ 13,135
1997 $ 39,596 $ 12,917
1996 $ 28,607 $ 12,627
1995 $ 22,541 $ 12,288
1994 $ 17,470 $ 11,926
1993 $ 16,487 $ 11,636
1992 $ 15,105 $ 11,297
1991 $ 12,840 $ 10,959
1990 $ 12,256 $ 10,467
</TABLE>
Explanatory Notes: With an initial investment of $10,000 in Term
Portfolio on July 1, 1989, the net amount invested in fund 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 $18,261. 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 $6,022 for dividends and $20 for capital
gain 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 Inc. (Lipper), an
independent service located in Summit, New Jersey that monitors the
performance of mutual funds. Generally, Lipper rankings are based on
return, assume reinvestment of distributions, do not take sales
charges 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
indexes prepared by Lipper or other organizations. When comparing
these indexes, it is important to remember the risk and return
characteristics of each type of investment. For example, while stock
mutual funds may offer higher potential returns, they also carry the
highest degree of share price volatility. Likewise, money market funds
may offer greater stability of principal, but generally do not offer
the higher potential returns available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and
periodicals. For example, a fund may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising. A bond fund may advertise risk
ratings, including symbols or numbers, prepared by independent rating
agencies.
A fund's performance may also be compared to that of the benchmark
index representing the universe of securities in which the fund may
invest. The return of the index reflects reinvestment of all dividends
and capital gains paid by securities included in the index. Unlike a
fund's returns, however, the index's 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 index which 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 indexes.
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 returns in the
same method as the funds. The funds may also compare performance to
that of other compilations or indexes 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
AVERAGES(trademark)/IBC All-Taxable Money Market Index, which is
reported in IBC's MONEY FUND REPORT(trademark), covers over 930
money market funds.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; brokerage products and services; model
portfolios or allocations; saving for college or other goals; and
charitable giving. In addition, Fidelity may quote or reprint
financial or business publications and periodicals as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services
and products. Fidelity may also reprint, and use as advertising and
sales literature, articles from Fidelity Focus(registered trademark),
a quarterly magazine provided free of charge to Fidelity fund
shareholders.
A fund may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote its current portfolio manager.
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 a fund's historical share price fluctuations or
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 , 1999, FMR advised over $33 billion in
municipal fund assets, $125 billion in taxable fixed-income fund
assets, $128 billion in money market fund assets, $566 billion in
equity fund assets, $15 billion in international fund assets, and $43
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, a 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.
DISTRIBUTIONS AND TAXES
DIVIDENDS. Because each fund's income is primarily derived from
interest, dividends from the fund generally will not qualify for the
dividends-received deduction available to corporate shareholders.
Short-term capital gains are taxable as dividends, but do not qualify
for the dividends-received deduction.
CAPITAL GAIN DISTRIBUTIONS. Each fund's long-term capital gain
distributions are federally taxable to shareholders generally as
capital gains. Cash Portfolio may distribute any net realized capital
gains once a year or more often, as necessary.
As of June 30 , 1999, Term Portfolio had a capital loss
carryforward aggregating approximately $2,941,000. This loss
carryforward, of which $244,000, $450,000, $1,410,000 and $837,000
will expire on June 30 , 2003, 2005, 2006 and 2007,
respectively, is available to offset future capital gains.
STATE AND LOCAL TAX ISSUES. For mutual funds organized as business
trusts, state law provides for a pass-through of the state and local
income tax exemption afforded to direct owners of U.S. Government
securities. Some states limit this 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 dividends 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 certain U.S. Government securities is exempt from
state and local personal income taxes, the portion of dividends from a
fund attributable to these securities will also be free from state and
local personal income taxes. The exemption from state and local
personal income taxation does not preclude states from assessing other
taxes on the ownership of U.S. Government securities.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code 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.
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. It is up to you or your tax preparer to determine
whether the sale of shares of a fund resulted in a capital gain or
loss or other tax consequence to you. 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.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust are listed below. The
Board of Trustees governs each fund and is responsible for protecting
the interests of shareholders. The Trustees are experienced executives
who meet periodically throughout the year to oversee each fund's
activities, review contractual arrangements with companies that
provide services to each fund, and review each fund's performance.
Except as indicated, each individual has held the office shown or
other offices in the same company for the last five years. The
business address of each Trustee and officer who is an "interested
person" (as defined in the 1940 Act) is 82 Devonshire Street, Boston,
Massachusetts 02109, which is also the address of FMR. The business
address of all the other Trustees is Fidelity Investments, P.O. Box
9235, Boston, Massachusetts 02205-9235. Those Trustees who are
"interested persons" by virtue of their affiliation with the trust,
FMR, or Sterling are indicated by an asterisk (*).
*WILLIAM L. BYRNES (77), 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 (71), 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). He also serves as financial consultant to the North
Carolina Global TransPark Authority.
*W. OLIN NISBET III (59), 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 (74), 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 Bank of America ). 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 (80), TRUSTEE AND CHAIRMAN OF THE BOARD, is Chairman
and Director of Preferred Lodging Systems (property management),
Director and member of the 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 1987) to IBM
Corp.
ROBERT C. POZEN (52), SENIOR VICE PRESIDENT (1997), is Chairman and
Director of FMR (1997); and President and Director of Fidelity
Investments Money Management, Inc. (1998), Fidelity Management and
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. (53), VICE PRESIDENT (1992), is Director and
Executive Vice President of Sterling Capital and Director and
President of Sterling. Mr. Rivers is also a director of Bojangle's
Inc. (1998).
BOYCE I. GREER (43), is VICE PRESIDENT of Cash Portfolio (1997), Vice
President of Term Portfolio (1999), Group Leader of the Money Market
Group (1997), 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 Company (1993-1995) and was Vice
President and Group Leader of Municipal Fixed-Income Investments
(1996-1997).
FRED L. HENNING, JR. (60), is VICE PRESIDENT of Fidelity's
Fixed-Income Group (1995), Senior Vice President of FMR (1995), and
Senior Vice President of FIMM (1998). Before assuming his current
responsibilities, Mr. Henning was head of Fidelity's Money Market
Division.
ROBERT K. DUBY (53), is VICE PRESIDENT of Cash Portfolio and Term
Portfolio (1999) and other funds advised by FMR. Prior to his current
responsibilities, Mr. Duby has managed a variety of Fidelity funds.
ERIC D. ROITER (50), SECRETARY (1998), is Vice President (1998) and
General Counsel of FMR (1998) and Vice President and Clerk of FDC
(1998). Prior to joining Fidelity, Mr. Roiter was with the law firm of
Debevoise & Plimpton, as an associate (1981-1984) and as a partner
(1985-1997), and served as an Assistant General Counsel of the U.S.
Securities and Exchange Commission (1979-1981). Mr. Roiter was an
Adjunct Member, Faculty of Law, at Columbia University Law School
(1996-1997).
RICHARD A. SILVER (52), 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).
MATTHEW N. KARSTETTER (37), DEPUTY TREASURER (1998), is Deputy
Treasurer of the Fidelity funds and is an employee of FMR (1998).
Before joining FMR, Mr. Karstetter served as Vice President of
Investment Accounting and Treasurer of IDS Mutual Funds at American
Express Financial Advisors (1996-1998). Prior to 1996, Mr. Karstetter
was Vice President, Mutual Fund Services at State Street Bank & Trust
(1991-1996).
JOHN H. COSTELLO (52), ASSISTANT TREASURER, is an employee of FMR.
LEONARD M. RUSH (53), 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 (1996), is Assistant
Treasurer of Fidelity's Fixed-Income Funds (1998) 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 (42), 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, 1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMPENSATION TABLE
Trustees Aggregate Compensation from Aggregate Compensation from Total Compensation from the
Cash Portfolio* Term Portfolio* Fund Complex**
William L. Byrnes+ $ 0 $ 0 $ 0
John David Foust $ 25,268 $ 732 $ 26,000
W. Olin Nisbet III+ $ 0 $ 0 $ 0
Helen A. Powers $ 25,268 $ 732 $ 26,000
Bertram H. Witham $ 25,268 $ 732 $ 50,000
</TABLE>
* Includes compensation paid to the Trustees by each fund. For the
fiscal year ended June 30, 1999, certain of the non-interested
trustees' aggregate compensation from a fund includes accrued deferred
compensation as follows: Helen A. Powers , $26,000 and Bertram
H. Witham $26,000. 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, 1998 for
235 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 fiscal year ended June 30, 1999, he
received $50, 000 in payments under that retirement 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, 1999, therefore, the Trustees and officers
of each fund did not own any of the outstanding shares of the funds.
As of June 30, 1999, the following owned of record or beneficially
5% or more (up to and including 25%) of Term Portfolio's outstanding
shares: County of Chowan, Edenton, NC (14.67%); City of Charolotte,
Charlotte, NC (7.67%); Lenoir Memorial Hospital Inc., Kinston, NC
(6.46%); City of Burlington, Burlington, NC (6.15%); Gaston-Lincoln
Area Mental Health Program, Gastonia, NC (5.45%).
CONTROL OF INVESTMENT ADVISER S
FMR Corp., organized in 1972, is the ultimate parent company of FMR
and FIMM. 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 Investment Company Act of 1940 (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
investment accounts pursuant to a code of ethics that sets forth all
employees' fiduciary responsibilities regarding the funds, establishes
procedures for personal investing and restricts certain transactions.
For example, all personal trades in most securities require
pre-clearance, and participation in initial public offerings is
prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by Fidelity funds and on short-term
trading have been adopted.
MANAGEMENT CONTRACTS
Each fund has entered into a management contract with FMR, pursuant to
which FMR furnishes investment advisory and other services.
MANAGEMENT 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 the fund's average net assets through
$1.0 billion; 0.320% of the fund's average net assets in excess of
$1.0 billion through $2.0 billion; and 0.290% of the fund's 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Amount of Credits Reducing Management Fees Paid to FMR
Fiscal Years Ended June 30, Management Fees
Cash Portfolio 1999 $ 2,631 $ 9,312,715*
1998 $ 24,849 $ 8,148,558*
1997 $ 1,021 $ 7,209,085*
Term Portfolio 1999 $ 637 $ 299,302*
1998 $ 1,155 $ 248,851*
1997 $ 61 $ 239,335*
</TABLE>
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
During the reporting period, FMR voluntarily modified the breakpoints
in the management fee rate schedule on January 1, 1998 to provide for
lower management fee rates as assets under management increase.
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), which is subject to revision
or termination. 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 returns and
yield, and repayment of the reimbursement by a fund will lower its
returns and yield.
SUB-ADVISER. FMR has entered into a sub-advisory agreement with FIMM
pursuant to which FIMM has primary responsibility for choosing
investments for each fund. Prior to January 23, 1998, 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 succeeded to the 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 each fund after payments, if any, made by FMR pursuant
to the fund's Distribution and Service Plan. The 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 and 1997, FMR paid FMR Texas fees of $1,265,704 and $1,964,861
respectively. On behalf of Cash Portfolio, for the fiscal year ended
June 30, 1999 and 1998, FMR paid FIMM a fee of $2,502,854 and
$950,391, respectively.
On behalf of Term Portfolio for the fiscal year ended June 30, 1999,
FMR paid FIMM a fee of $45,648 .
DISTRIBUTION SERVICES
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR. 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.
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
pay FDC for expenses incurred in connection with providing services
intended to result in the sale of fund shares and/or shareholder
support services. In addition, each Plan provides that FMR, through
FDC, may pay Sterling for providing those services.
Pursuant to each Plan, FMR pays Sterling, through FDC, a monthly 12b-1
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 through $2.0 billion; and 0.140% of average
net assets in excess of $2.0 billion. Average net assets are
determined at the close of business on each day throughout the month.
For the fiscal year ended June 30, 1999, FMR paid Sterling, through
FDC, 12b-1 fees of $ 4,309,638 on behalf of Cash Portfolio and
$ 129,747 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 or stabilization of cash flows 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 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.
TRANSFER AND SERVICE AGENT AGREEMENTS
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.
For providing transfer agency services, FIIOC receives an asset-based
fee paid monthly with respect to each account in a fund.
FIIOC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FIIOC bears the expense of typesetting,
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 agreement, FSC calculates 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 contract
with each fund.
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 on
April 26, 1982, and amended and restated on November 1, 1987.
Currently, there are two funds in The North Carolina Capital
Management Trust: Cash Portfolio and Term Portfolio. The Trustees are
permitted to create additional funds in the trust.
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 to the rights of creditors, are allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets
of each fund in the trust shall be charged with the liabilities and
expenses attributable to such fund. Any general expenses of the trust
shall be allocated between or among any one or more of the funds.
SHAREHOLDER LIABILITY. The trust is an entity commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders
of such a trust may, under certain circumstances, be held personally
liable for the obligations of the trust.
The Declaration of Trust provides that the trust shall not have any
claim against shareholders except for the payment of the purchase
price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the trust or the Trustees
relating to the trust 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 or former shareholder held
personally liable for the obligations of the fund solely by reason of
his or her being or having been a shareholder and not because of his
or her acts or omissions or for some other reason. 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 a 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.
VOTING RIGHTS. Each fund's capital consists of shares of beneficial
interest. As a shareholder, you are entitled to one vote for each
share that you own. The voting rights of shareholders can be changed
only by a shareholder vote. Shares may be voted in the aggregate, by
fund and by class.
The trust or any of its funds 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 a vote of
shareholders of the trust or the fund. In the event of the dissolution
or liquidation of the trust, shareholders of each of its funds are
entitled to receive the underlying assets of such fund available for
distribution. In the event of the dissolution or liquidation of a
fund, shareholders of that fund are entitled to receive the underlying
assets of the fund available for distribution.
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 Bank of New York and The Chase Manhattan Bank,
each headquartered in New York, also may serve as special purpose
custodian of certain assets in connection with repurchase agreement
transactions.
FMR, its officers and directors, its affiliated companies, and members
of 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. PricewaterhouseCoopers LLP, 160 Federal Street,
Boston, Massachusetts, serves as independent accountant for each fund.
The auditor examines financial statements for the funds and provides
other audit, tax, and related services.
FINANCIAL STATEMENTS
The funds' financial statements and financial highlights for the
fiscal year ended June 30, 1999, and report of the auditor, are
included in the funds' annual report and are incorporated herein by
reference.
APPENDIX
Fidelity, Fidelity Investments, and Fidelity Focus are registered
trademarks of FMR Corp.
THE THIRD PARTY MARKS APPEARING ABOVE ARE THE MARKS OF THEIR
RESPECTIVE OWNERS.
(This page intentionally left blank.)
PART C. OTHER INFORMATION
Item 23. Exhibits
(a) (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.
(2) 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.
(b) By-Laws of the Trust were electronically filed and are
incorporated herein by reference to Exhibit 2 of Post-Effective
Amendment No. 28.
(c) Not applicable.
(d) (1) 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.
(2) 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.
(3) 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.
(4) Sub-Advisory Agreement between Fidelity Management &
Research Company, Fidelity Investments Money Management,
Inc., and the Registrant, on behalf of The North Carolina
Capital Management Trust: Term Portfolio, dated January 1,
1999, is incorporated herein by reference to Exhibit d(4)
of Post-Effective Amendment No. 39.
(e) (1) 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.
(2) 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.
(f) 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.
(g) (1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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
(6) 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.
(7) 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.
(h) Not applicable.
(i) Legal Opinion of Kirkpatrick & Lockhart LLP, dated August 16,
1999, is filed herein as Exhibit (i).
(j) Consent of PricewaterhouseCoopers LLP, dated August 10, 1999, is
filed herein as Exhibit (j).
(j) Not applicable.
(k) Not applicable.
(l) Not applicable.
(m) (1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
(8) 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.
(n) Not applicable.
(o) Not applicable.
Item 24. Trusts Controlled by or under Common Control with this Trust
The Board of Trustees of the Trust is not the same as the board of
the Fidelity funds, each of which has Fidelity Management & Research
Company, or an affiliate, as its investment adviser. The officers of
the Trust are elected separately and are different from those of the
Fidelity funds. The Trust takes the position that it is not under
common control with the Fidelity funds because the power residing in
the respective boards and officers arises as the result of an official
position with the respective trusts.
Item 25. 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 Trust shall indemnify any present or past trustee or officer
to the fullest extent permitted by law against liability, and all
expenses reasonably incurred by him or her in connection with any
claim, action, suit or proceeding in which he or she is involved by
virtue of his or her service as a trustee or officer and against any
amount incurred in settlement thereof. Indemnification will not be
provided to a person adjudged by a court or other adjudicatory body to
be liable to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his
or her duties (collectively, "disabling conduct"), or not to have
acted in good faith in the reasonable belief that his or her action
was in the best interest of the Trust. In the event of a settlement,
no indemnification may be provided unless there has been a
determination, as specified in the Declaration of Trust, that the
officer or trustee did not engage in disabling conduct.
Pursuant to Section 11 of the Distribution Agreement, the Trust
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 (including the
reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees
incurred in connection therewith) 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
Trust (as from time to time amended) included an untrue statement of a
material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading
under the 1933 Act, or any other statute or the common law. However,
the Trust 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
Trust by or on behalf of the Distributor. In no case is the indemnity
of the Trust in favor of the Distributor or any person indemnified to
be deemed to protect the Distributor or any person against any
liability to the Issuer or its security holders to which the
Distributor or such person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this 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 26. Business and Other Connections of Investment Advisers
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
82 Devonshire Street, Boston, MA 02109
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held,
during the past two fiscal years, the following positions of a
substantial nature.
Edward C. Johnson 3d Chairman of the Board and
Director of FMR; President
and Chief Executive Officer
of FMR Corp.; Chairman of
the Board and Director of
FMR Corp., Fidelity
Investments Money
Management, Inc. (FIMM),
Fidelity Management &
Research (U.K.) Inc. (FMR
U.K.), and Fidelity
Management & Research (Far
East) Inc. (FMR Far East);
Chairman of the Executive
Committee of FMR; Director
of Fidelity Investments
Japan Limited (FIJ);
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; Director
of Strategic Advisers, Inc.;
Previously, General Counsel,
Managing Director, and
Senior Vice President of FMR
Corp.
Peter S. Lynch Vice Chairman of the Board
and Director 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.
Laura B. Cronin 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.
Frederic G. Corneel Tax Counsel of FMR.
Stephen G. Manning Assistant Treasurer of FMR,
FIMM, FMR U.K., and FMR Far
East; Vice President and
Treasurer of FMR Corp.
William Danoff Senior Vice President of FMR
and Vice President of funds
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
a fund 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., FMR
Far East, and Strategic
Advisers, Inc.; Secretary of
FIMM; Vice President Deputy
General Counsel FMR Corp.
David L. Glancy Vice President of FMR and of
a fund advised by FMR.
Barry A. Greenfield Vice President of FMR.
Boyce I. Greer Senior Vice President of FMR
and Vice President of Money
Market Funds advised by FMR;
Vice President of FIMM.
Bart A. Grenier Senior Vice President of FMR
and Vice President of
High-Income Funds advised by
FMR.
Robert J. Haber Vice President of FMR.
Richard C. Habermann Senior Vice President of FMR
and Vice President of funds
advised by 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.
Robert F. Hill Vice President of FMR and
Director of Technical
Research.
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 Senior Vice President of FMR
and of a fund advised by FMR.
Francis V. Knox Vice President of FMR;
Compliance Officer of FMR
U.K. and FMR Far East.
Harris Leviton Vice President of 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.
Neal P. Miller Vice President of FMR.
Jacques Perold Vice President of FMR.
Alan Radlo Vice President of FMR.
Eric D. Roiter Vice President, General
Counsel, and Clerk of FMR
and Secretary of funds
advised by 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 and of
funds advised by 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
a fund 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.
Thomas Sweeney Vice President of FMR.
Beth F. Terrana Senior Vice President of FMR
and Vice President of funds
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.
(2) FIDELITY INVESTMENTS MONEY MANAGEMENT, INC. (FIMM)
Contra Way, Merrimack, NH 03054
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
(FIJ); President and Trustee
of funds advised by FMR.
Robert C. Pozen President and Director of
FIMM; Senior Vice President
and Trustee of funds advised
by FMR; President and
Director of FIMM, FMR U.K.,
and FMR Far East; Director
of Strategic Advisers, Inc.;
Previously, General Counsel,
Managing Director, and
Senior Vice President of FMR
Corp.
Fred L. Henning Jr. Senior Vice President of
FIMM; Senior Vice President
of FMR and Vice President of
Fixed-Income Funds advised
by FMR.
Boyce I. Greer Vice President of FIMM;
Senior Vice President of FMR
and Vice President of Money
Market Funds advised by FMR.
Dwight D. Churchill Vice President of FIMM;
Senior Vice President of FMR
and Vice President of Bond
Funds advised by FMR.
Laura B. Cronin Treasurer of FIMM, FMR Far
East, FMR U.K., and FMR and
Vice President of FMR.
Jay Freedman Secretary of FIMM; Clerk of
FMR U.K., FMR Far East, FMR
Corp., and Strategic
Advisers, Inc.; Assistant
Clerk of FMR; Secretary of
FIMM; Vice President Deputy
General Counsel FMR Corp.
Susan Englander Hislop Assistant Clerk of FIMM, FMR
U.K., and FMR Far East.
Stephen G. Manning Assistant Treasurer of FIMM,
FMR U.K., FMR Far East, and
FMR; Vice President and
Treasurer of FMR Corp.
Item 27. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for
all funds advised by FMR or an affiliate.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Fund
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
James Curvey Director None
Martha B. Willis President None
Eric D. Roiter 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 28. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company, Fidelity Service
Company, Inc. or Fidelity Investments Institutional Operations
Company, Inc., 82 Devonshire Street, Boston, MA 02109, or the fundS'
custodian, First Union National Bank of North Carolina, Two First
Union Center, Charlotte, NC.
Item 29. Management Services
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for the effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Post-Effective Amendment No. 40 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 16th day of August 1999.
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 August 16, 1999
Richard A. Silver
/s/William L. Byrnes Trustee August 16, 1999
* William L. Byrnes
/s/John David Foust Trustee August 16, 1999
* John David Foust
/s/W. Olin Nisbet III Trustee August 16, 1999
* W. Olin Nisbet III
/s/Helen A. Powers Trustee August 16, 1999
** Helen A. Powers
/s/Bertram H. Witham Trustee August 16, 1999
* 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
Exhibit (i)
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
WASHINGTON, D. C. 20036-1800
TELEPHONE 202-778-9000
August 16, 1999
North Carolina Capital Management Trust
82 Devonshire Street
Boston, Massachusetts 02109
Ladies and Gentlemen:
You have requested our opinion, as counsel to North Carolina Capital
Management Trust ("the Trust"), as to certain matters regarding the
issuance of Shares of the Trust. As used in this letter, the term
"Shares" means the shares of beneficial interest of Cash Portfolio,
and Term Portfolio, each a series of the Trust.
As such counsel, we have examined certified or other copies, believed
by us to be genuine, of the Trust's Declaration of Trust and by-laws
and such resolutions and minutes of meetings of the Trust's Board of
Trustees and other documents as we have deemed relevant to our
opinion, as set forth herein. Our opinion is limited to the laws and
facts in existence on the date hereof, and it is further limited to
the laws (other than the conflict of law rules) in the Commonwealth of
Massachusetts that in our experience are normally applicable to the
issuance of shares by unincorporated voluntary associations and to the
Securities Act of 1933 ("1933 Act"), the Investment Company Act of
1940 ("1940 Act") and the regulations of the Securities and Exchange
Commission ("SEC") thereunder.
Based on present laws and facts, we are of the opinion that the
issuance of the Shares has been duly authorized by the Trust and that,
when sold in accordance with the terms contemplated by Post-Effective
Amendment 40 to the Trust's Registration Statement on Form N-1A and
each subsequent Post-Effective Amendment ("PEA") to said Registration
Statement, including receipt by the Trust of full payment for the
Shares and compliance with the 1933 Act and the 1940 Act, the Shares
will have been validly issued, fully paid and non-assessable.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under
certain circumstances, be held personally liable for the obligations
of the Trust. The Declaration of Trust states that all persons
extending credit to, contracting with or having any claim against the
Trust or the Trustees shall look only to the assets of the appropriate
series of the Trust for payment under such credit, contract or claim;
and neither the Shareholders nor the Trustees, nor any of their
agents, whether past, present or future, shall be personally liable
therefor. It also requires that every note, bond, contract or other
undertaking issued by or on behalf of the Trust or the Trustees
relating to the Trust shall include a recitation limiting the
obligation represented thereby to the Trust and its assets. The
Declaration of Trust further provides: (1) for indemnification from
the assets of the series of the Trust for all loss and expense of any
shareholder held personally liable for the obligations of the Trust
solely by virtue of ownership of shares of the Trust; and (2) for the
series of the Trust to assume the defense of any claim against the
shareholder for any act or obligation of the series of the Trust.
Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trust
or series would be unable to meet its obligations.
We hereby consent to this opinion accompanying or being incorporated
by reference in the PEA when it is filed with the SEC.
Very truly yours,
/s/KIRKPATRICK & LOCKHART LLP
KIRKPATRICK & LOCKHART LLP
Exhibit (j)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the
Prospectus and Statement of Additional Information in Post-Effective
Amendment No. 40 to the Registration Statement on Form N-1A of The
North Carolina Capital Management Trust: Cash Portfolio and Term
Portfolio, of our report dated August 10, 1999 on the financial
statements and financial highlights included in the June 30, 1999
Annual Report to Shareholders of The North Carolina Capital Management
Trust: Cash Portfolio and Term Portfolio.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditor" in the
Statement of Additional Information.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 18, 1999
