THE
NORTH
CAROLINA
CAPITAL MANAGEMENT TRUST
CASH PORTFOLIO
TERM PORTFOLIO
SEMIANNUAL REPORT
DECEMBER 31, 1998
NC-SANN-0299 70554
1.540079.101
CONTENTS
THE NORTH CAROLINA CAPITAL
MANAGEMENT TRUST:
CASH PORTFOLIO:
PERFORMANCE 3 How the fund has done over
time.
FUND TALK 5 The manager's review of the
fund's performance,
strategy, and outlook.
INVESTMENTS 7 A complete list of the fund's
investments.
FINANCIAL STATEMENTS 10 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
TERM PORTFOLIO:
PERFORMANCE 14 How the fund has done over
time.
FUND TALK 17 The manager's review of the
fund's performance,
strategy, and outlook.
INVESTMENTS 18 A complete list of the fund's
investments with their
market values.
FINANCIAL STATEMENTS 19 Statements of assets and
liabilities, operations, and
changes in net assets, as
well as financial highlights.
NOTES 23 Notes to the financial
statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE
FUNDS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUNDS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
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 THE POSSIBLE LOSS OF PRINCIPAL OF
PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS CORPORATION NOR STERLING
CAPITAL DISTRIBUTORS, INC. IS A BANK.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST: CASH PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
To evaluate a money market fund's historical performance, you can look
at either total return or yield. Total return reflects the change in
the value of an investment, assuming reinvestment of the fund's
dividend income and capital gains (the profits earned upon the sale of
securities that have grown in value). Yield measures the income paid
by a fund. Since a money market fund tries to maintain a $1 share
price, yield is an important measure of performance. If Fidelity had
not reimbursed certain expenses, the past 10 years total returns would
have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1998 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
NCCMT - Cash Portfolio 2.64% 5.39% 28.53% 71.30%
All Taxable Money Market 2.45% 5.04% 26.87% 67.15%
Funds Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. To measure how the fund's performance stacked up
against its peers, you can compare it to the all taxable money market
funds average, which reflects the performance of taxable money market
funds with similar objectives tracked by IBC Financial Data, Inc. The
past six months average represents a peer group of 887 money market
funds.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
NCCMT - Cash Portfolio 5.39% 5.15% 5.53%
All Taxable Money Market 5.04% 4.88% 5.31%
Funds Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.
YIELDS
12/29/98 9/29/98 6/30/98 3/31/98 12/29/97
NCCMT - Cash Portfolio 4.97% 5.29% 5.33% 5.33% 5.48%
All Taxable Money Market 4.53% 4.93% 5.04% 5.05% 5.12%
Funds Average
12/30/98 9/30/98 7/1/98 4/1/98 12/31/97
MMDA 2.23% 2.51% 2.51% 2.53% 2.60%
Row: 1, Col: 1, Value: 4.97
Row: 1, Col: 2, Value: 4.53
Row: 1, Col: 3, Value: 2.23
Row: 2, Col: 1, Value: 5.29
Row: 2, Col: 2, Value: 4.93
Row: 2, Col: 3, Value: 2.51
Row: 3, Col: 1, Value: 5.33
Row: 3, Col: 2, Value: 5.04
Row: 3, Col: 3, Value: 2.51
Row: 4, Col: 1, Value: 5.33
Row: 4, Col: 2, Value: 5.05
Row: 4, Col: 3, Value: 2.53
Row: 5, Col: 1, Value: 5.48
Row: 5, Col: 2, Value: 5.12
Row: 5, Col: 3, Value: 2.6
6% -
5% -
4% -
3% -
2% -
1% -
0%
Cash Portfolio
All Taxable Money
Market Funds Average
MMDA
YIELD refers to the income paid by the fund over a given period.
Yields for money market funds are usually for seven-day periods,
expressed as annual percentage rates. A yield that assumes income
earned is reinvested or compounded is called an effective yield. The
chart above shows the fund's current seven-day yield at quarterly
intervals over the past year. You can compare these yields to the all
taxable money market funds average and the average bank money market
deposit account (MMDA). Figures for the all taxable money market funds
average are from IBC Financial Data, Inc. The MMDA average is supplied
by BANK RATE MONITOR.(Trademark)
A MONEY MARKET FUND'S TOTAL RETURNS AND YIELDS
WILL VARY, AND REFLECT PAST RESULTS RATHER THAN
PREDICT FUTURE PERFORMANCE.
COMPARING
PERFORMANCE
There are some important differences between
a bank money market deposit account (MMDA)
and a money market fund. First, the U.S.
government neither insures nor guarantees a
money market fund. In fact, there is no
assurance that a money market fund will
maintain a $1 share price. Second, a money
market fund returns to its shareholders income
earned by the fund's investments after
expenses. This is in contrast to banks, which set
their MMDA rates periodically based on current
interest rates, competitors' rates, and internal
criteria.
(checkmark)
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST: CASH PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Robert Duby, Portfolio Manager of The North Carolina Capital
Management Trust: Cash Portfolio
Q. BOB, WHAT WAS THE INVESTMENT ENVIRONMENT LIKE IN THE LAST SIX
MONTHS OF 1998?
A. The period started with positive consumer and market sentiment at
record-high levels, as economic data exhibited robust strength,
unemployment was at record-low levels and inflation remained
non-existent. This backdrop continued through the first part of the
third quarter of 1998, with the stock market marching upward in July.
Market observers expected the Federal Reserve Board might have to "tap
the brakes" to slow the economy and head off inflation by raising
short-term interest rates. But then, turmoil in foreign markets arose,
creating a very challenging environment in the money market area
through the rest of the year, with wide fluctuations in both money
market yields and market sentiment. The downturn began when Russia
defaulted on some of its debt in August, helping spark additional
chaos in other emerging markets. Investors around the world became
"risk averse," worrying more about getting their capital back than
receiving a high yield on their investments. The news worsened with
the near-collapse of Long-Term Capital Management, a huge hedge fund
in the U.S., which required a subsequent infusion of about $3.5
billion of private capital in order to avoid destabilizing
already-shaky markets in the U.S. and abroad.
Q. WHAT WAS THE FED'S RESPONSE TO THESE EVENTS?
A. The Fed instituted the first of three separate 0.25 percentage
point cuts to the rate banks charge each other for overnight loans -
known as the fed funds target rate - on September 29. In lowering that
rate from 5.50% to 5.25%, the Fed announced that "the action was taken
to cushion the effects on prospective economic growth in the United
States of increasing weakness in foreign economies and of less
accommodative financial conditions domestically." The market was
disappointed that the move was only 0.25 percentage points and not
0.50, but short-term interest rates fell and immediately began to
price in further decreases. The second cut, implemented on October 15
between meetings of the Fed's Open Market Committee, was unexpected
and surprising, and turned out to be the needed medicine to stabilize
a nervous market. A final so-called "insurance cut" - implemented to
reduce the downside risk remaining in global markets - occurred at the
end of November when the fed funds rate target was lowered to 4.75%.
Since then, stability has returned in the most part to our market as
we began the new year. The difference between the yields offered by
Treasuries versus other securities - which had become quite wide as
nervous investors fled to the safety offered by U.S. Treasury
securities - narrowed to more appropriate levels, and market sentiment
returned to a more balanced feeling. Domestic growth continued to
exceed expectations, even with a sharp slowdown on the manufacturing
side. Consumer confidence improved from lower levels in the fourth
quarter, with the stock market's strong performance at year-end
helping to boost those feelings.
Q. WHAT KIND OF STRATEGY DID YOU PURSUE AS ALL OF THIS WAS UNFOLDING?
HOW DID THE FUND PERFORM?
A. My investment strategy for the fund was similar to past strategies:
I lengthened the fund's average maturity on market weakness and
shortened it on market strength. A cautious approach was followed
during the first part of the fourth quarter as the market turmoil in
both foreign and domestic markets unfolded. The portfolio's average
maturity was held in the 45- to 50-day range, as I concentrated new
investments in the one- to three-month area. U.S. government agency
holdings in the fund increased from 3% at the end of June to
approximately 21% at the end of the period. As market sentiment
improved, the portfolio was lengthened somewhat to take advantage of
the year-end "window dressing" pressures - when increased demand by
banks and other institutions causes rates to rise - by purchasing
longer investments. In terms of performance, the fund's seven-day
yield on December 31, 1998, was 4.98%, compared to 5.33% six months
ago. Through December 31, 1998, the fund's six-month total return was
2.64%, compared to 2.45% for the all taxable money market funds
average tracked by IBC Financial Data, Inc.
Q. WHAT'S YOUR OUTLOOK FOR THE BEGINNING OF 1999?
A. My current interest-rate outlook is for no change in Fed monetary
policy over the next few months. However, my bias has switched from
the possibility of an interest-rate cut to a more neutral stance. The
strength of the domestic economy continues to surprise market
participants, and members of the Fed Open Market Committee have
recently suggested that their bias could be changed to one favoring an
interest-rate increase - to slow growth and head off inflation -
should the economy continue to exceed expectations. The portfolio will
be positioned appropriately. That is, I will allow its maturity to
shorten somewhat should the strength continue, so that I can purchase
higher-yielding securities should interest rates rise. The current
thinking at the Federal Reserve is that the downside risks to the
economic outlook no longer predominate and that the upside risks
deserve equal weight.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE ANNUAL REPORT AS
STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY
TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND FACTS
GOAL: seeks to obtain high current income
consistent with the preservation of capital and
liquidity, and to maintain a constant net asset
value per share of $1.00
START DATE: September 2, 1982
SIZE: as of December 31, 1998, more than
$3.1 billion
MANAGER: Robert Duby, since 1998; joined
Fidelity in 1982
(checkmark)
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST: CASH PORTFOLIO
INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
COMMERCIAL PAPER (A) - 75.9%
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
AC Acquisition Holding Co.
3/12/99 5.12% $ 5,000,000 $ 4,950,903
3/17/99 5.18 20,000,000 19,787,500
American General Finance Corp.
2/17/99 5.29 50,000,000 49,659,250
Asset Securitization Coop.
Corp.
2/10/99 5.36 5,000,000 4,970,556
2/16/99 5.43 14,000,000 13,904,294
2/17/99 5.35 10,000,000 9,931,197
3/15/99 5.28 10,000,000 9,894,556
4/14/99 5.17 10,000,000 9,854,656
4/15/99 5.14 5,000,000 4,927,056
4/15/99 5.17 5,000,000 4,926,622
Associates Corp. of North
America
1/25/99 5.52 40,000,000 39,856,000
1/26/99 5.52 25,000,000 24,906,250
3/24/99 5.00 30,000,000 29,665,167
4/15/99 4.93 25,000,000 24,652,611
Associates First Capital Corp.
3/23/99 5.15 10,000,000 9,885,700
AVCO Financial Services, Inc.
2/16/99 5.29 8,415,000 8,358,549
2/23/99 5.32 27,000,000 26,791,710
2/24/99 5.32 10,000,000 9,921,400
3/8/99 5.20 7,000,000 6,934,165
3/15/99 5.15 38,000,000 37,608,558
3/30/99 5.19 10,000,000 9,874,844
Bank One Corp.
3/22/99 5.09 10,000,000 9,888,889
BankAmerica Corp.
3/10/99 5.26 10,000,000 9,902,344
3/18/99 5.22 60,000,000 59,350,200
4/7/99 5.14 15,000,000 14,798,000
Bear Stearns Companies, Inc.
2/10/99 5.34 40,000,000 39,766,222
3/11/99 5.40 5,000,000 4,949,113
3/15/99 5.40 5,000,000 4,946,264
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
Chase Manhattan Corp.
3/11/99 5.26% $ 10,000,000 $ 9,900,908
Chrysler Financial LLC
2/24/99 5.30 5,000,000 4,960,625
3/15/99 5.15 15,000,000 14,845,483
CIESCO L.P.
2/4/99 5.45 75,000,000 74,616,083
2/11/99 5.35 75,000,000 74,545,583
CIT Group, Inc.
2/4/99 5.50 25,000,000 24,872,972
2/9/99 5.32 10,000,000 9,943,125
4/5/99 5.08 5,000,000 4,934,722
Citibank Credit Card Master
Trust I (Dakota Certificate
Program)
2/5/99 5.41 10,000,000 9,947,986
2/9/99 5.37 3,000,000 2,982,775
2/9/99 5.48 5,000,000 4,970,750
2/16/99 5.43 7,000,000 6,952,147
2/17/99 5.43 4,000,000 3,972,061
3/3/99 5.27 3,000,000 2,973,567
3/4/99 5.27 10,000,000 9,910,444
Commercial Credit Group, Inc.
2/16/99 5.25 25,000,000 24,833,889
Delaware Funding Corp.
1/19/99 5.30 25,231,000 25,164,769
2/2/99 5.52 5,038,000 5,013,459
2/5/99 5.29 21,686,000 21,575,311
2/24/99 5.25 7,000,000 6,945,400
Enterprise Funding Corp.
1/15/99 5.46 6,000,000 5,987,400
1/15/99 5.48 15,756,000 15,722,606
1/29/99 5.42 40,000,000 39,832,622
2/12/99 5.39 5,000,000 4,968,908
2/12/99 5.50 15,671,000 15,571,816
2/24/99 5.42 10,000,000 9,919,750
2/26/99 5.30 10,613,000 10,526,327
3/9/99 5.27 11,000,000 10,893,544
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
Falcon Asset Securitization
1/20/99 5.73% $ 6,570,000 $ 6,550,235
2/16/99 5.30 10,000,000 9,932,917
2/22/99 5.35 9,000,000 8,931,100
Fleet Funding Corp.
1/14/99 5.47 35,000,000 34,931,244
1/28/99 5.42 18,491,000 18,416,389
1/29/99 5.44 17,000,000 16,928,600
Ford Motor Credit Co.
2/1/99 5.61 10,000,000 9,952,983
2/5/99 5.26 25,000,000 24,873,368
General Electric Capital Corp.
2/1/99 5.62 5,000,000 4,976,449
2/9/99 5.27 20,000,000 19,887,333
2/10/99 5.11 45,000,000 44,748,500
3/4/99 5.13 10,000,000 9,912,683
3/16/99 5.24 40,000,000 39,576,556
3/22/99 5.21 30,000,000 29,658,667
General Electric Capital
Services, Inc.
3/17/99 5.00 25,000,000 24,744,792
General Electric Co.
1/21/99 5.10 125,000,000 124,650,696
General Motors Acceptance Corp.
1/26/99 5.67 20,000,000 19,923,611
1/28/99 5.14 50,000,000 49,810,250
2/9/99 5.25 35,000,000 34,803,592
2/10/99 5.30 15,000,000 14,912,833
3/17/99 5.23 30,000,000 29,678,750
Goldman Sachs Group L.P. (The)
2/9/99 5.33 75,000,000 74,573,031
2/16/99 5.38 20,000,000 19,864,556
3/11/99 5.34 45,000,000 44,547,188
Kitty Hawk Funding Corp.
1/20/99 5.54 16,000,000 15,953,471
1/22/99 5.53 5,000,000 4,983,988
2/2/99 5.34 5,000,000 4,976,444
2/2/99 5.42 4,564,000 4,542,296
2/5/99 5.34 5,000,000 4,974,236
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
2/18/99 5.35% $ 4,000,000 $ 3,971,840
2/22/99 5.37 2,000,000 1,984,689
2/26/99 5.43 2,000,000 1,983,324
2/26/99 5.48 36,877,000 36,567,233
3/1/99 5.32 3,000,000 2,974,188
3/1/99 5.36 2,007,000 1,989,600
3/10/99 5.24 5,000,000 4,951,172
3/11/99 5.22 5,000,000 4,950,646
Morgan (JP) & Co., Inc.
3/25/99 5.12 50,000,000 49,419,000
4/12/99 5.09 10,000,000 9,859,722
Morgan Stanley, Dean Witter &
Co.
1/21/99 5.22 50,000,000 49,856,944
2/11/99 5.42 10,000,000 9,939,183
2/12/99 5.40 5,000,000 4,968,908
National Rural Utility Coop.
Finance Corp.
3/9/99 5.18 11,129,000 11,022,953
New Center Asset Trust
1/29/99 5.13 50,000,000 49,803,417
2/11/99 5.17 60,000,000 59,649,450
3/17/99 5.23 25,000,000 24,732,292
3/17/99 5.24 5,000,000 4,946,354
Norwest Financial, Inc.
3/4/99 5.31 10,000,000 9,909,928
3/22/99 5.17 10,000,000 9,886,667
Preferred Receivables Funding
Corp.
1/22/99 5.58 17,154,000 17,098,464
2/9/99 5.36 7,000,000 6,959,808
2/10/99 5.30 6,100,000 6,064,417
2/10/99 5.42 9,000,000 8,946,500
2/11/99 5.46 2,275,000 2,261,009
2/16/99 5.46 5,000,000 4,965,500
2/16/99 5.50 9,950,000 9,881,091
2/17/99 5.30 12,062,000 11,979,325
2/18/99 5.27 25,000,000 24,826,000
2/19/99 5.30 5,000,000 4,964,271
2/22/99 5.36 6,000,000 5,954,067
3/1/99 5.22 6,000,000 5,949,162
3/3/99 5.21 5,000,000 4,956,368
COMMERCIAL PAPER - CONTINUED
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
Salomon Smith Barney
Holdings, Inc.
1/25/99 5.27% $ 16,000,000 $ 15,944,533
3/1/99 5.25 8,000,000 7,932,347
3/15/99 5.26 5,000,000 4,947,481
3/22/99 5.25 5,000,000 4,942,722
Southern Co.
2/5/99 5.28 5,000,000 4,974,576
2/9/99 5.33 50,000,000 49,715,083
2/11/99 5.33 25,000,000 24,850,236
2/18/99 5.22 15,000,000 14,896,600
Transamerica Finance Corp.
1/25/99 5.60 20,000,000 19,927,067
4/6/99 5.15 20,000,000 19,731,889
Triple A One Funding Corp.
1/15/99 5.62 7,000,000 6,984,783
1/20/99 5.63 30,000,000 29,911,333
1/21/99 5.78 15,000,000 14,952,083
TOTAL COMMERCIAL PAPER 2,402,248,591
FEDERAL AGENCIES - 20.8%
FANNIE MAE - 3.9%
Discount Notes - 3.9%
2/25/99 5.30 24,575,000 24,380,516
3/3/99 5.07 50,000,000 49,576,304
3/5/99 5.07 25,000,000 24,781,250
3/15/99 4.98 25,000,000 24,751,597
123,489,667
FEDERAL HOME LOAN BANK - 1.8%
Discount Notes - 1.8%
1/13/99 4.91 34,000,000 33,945,033
2/16/99 5.04 25,000,000 24,841,875
58,786,908
FREDDIE MAC - 15.1%
Discount Notes - 15.1%
1/12/99 4.91 50,000,000 49,925,903
1/25/99 5.21 50,000,000 49,829,333
DUE DATE ANNUALIZED YIELD AT TIME OF PRINCIPAL AMOUNT VALUE (NOTE 1)
PURCHASE
1/25/99 5.23% $ 25,000,000 $ 24,914,333
2/2/99 5.27 50,000,000 49,770,222
2/22/99 5.30 25,000,000 24,812,944
2/26/99 5.04 85,000,000 84,343,517
3/9/99 5.05 50,000,000 49,535,653
3/9/99 5.06 15,000,000 14,860,556
3/12/99 5.00 50,000,000 49,521,181
3/23/99 5.06 40,000,000 39,550,000
3/29/99 5.06 40,000,000 39,516,667
476,580,309
TOTAL FEDERAL AGENCIES 658,856,884
REPURCHASE AGREEMENTS - 3.3%
MATURITY AMOUNT
In a joint trading account $ 103,553,774 103,498,000
(U.S. Treasury Obligations)
dated 12/31/98 due 1/4/99 At
4.85%
TOTAL INVESTMENT IN $ 3,164,603,475
SECURITIES - 100%
Total Cost for Income Tax Purposes $ 3,164,603,475
</TABLE>
LEGEND
(a) Cash Portfolio only purchases commercial paper with the highest
possible ratings from at least one nationally recognized rating
service. A substantial portion of Cash Portfolio's investments are in
commercial paper of banks, finance companies and companies in the
securities industry.
INCOME TAX INFORMATION
At June 30, 1998, the fund had a capital loss carryforward of
approximately $55,000 of which $49,000 and $6,000 will expire on June
30, 2002 and 2004, respectively.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST: CASH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998 (UNAUDITED)
ASSETS
Investment in securities, $ 3,164,603,475
at value (including
repurchase agreements of
$103,498,000) - See
accompanying schedule
Cash 256,463
Receivable for fund shares 728,513
sold
Interest receivable 13,949
TOTAL ASSETS 3,165,602,400
LIABILITIES
Distributions payable $ 1,890,736
Accrued management fee 819,634
Deferred trustees' 388,066
compensation
TOTAL LIABILITIES 3,098,436
NET ASSETS $ 3,162,503,964
Net Assets consist of:
Paid in capital $ 3,162,496,868
Accumulated net realized 7,096
gain (loss) on investments
NET ASSETS, for $ 3,162,503,964
3,162,470,904 shares
outstanding
NET ASSET VALUE, $1.00
offering price and
redemption price per share
($3,162,503,964 (divided by)
3,162,470,904 shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER
31, 1998 (UNAUDITED)
INTEREST INCOME $ 77,192,780
EXPENSES
Management fee $ 4,467,973
Non-interested trustees' 72,104
compensation
Total expenses before 4,540,077
reductions
Expense reductions (2,631) 4,537,446
NET INTEREST INCOME 72,655,334
NET REALIZED GAIN 61,820
(LOSS) ON INVESTMENTS
NET INCREASE IN NET $ 72,717,154
ASSETS RESULTING FROM
OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED DECEMBER 31, YEAR ENDED JUNE 30, 1998
1998 (UNAUDITED)
INCREASE (DECREASE) IN NET
ASSETS
Operations Net interest $ 72,655,334 $ 131,344,483
income
Net realized gain (loss) 61,820 3,799
NET INCREASE 72,717,154 131,348,282
(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
Distributions to (72,655,334) (131,344,483)
shareholders from net
interest income
Share transactions at net 4,529,920,869 7,892,756,579
asset value of $1.00 per
share Proceeds from sales of
shares
Reinvestment of 61,322,959 112,412,218
distributions from net
interest income
Cost of shares redeemed (3,909,227,148) (7,508,671,816)
NET INCREASE 682,016,680 496,496,981
(DECREASE) IN NET ASSETS AND
SHARES RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE 682,078,500 496,500,780
(DECREASE) IN NET ASSETS
NET ASSETS
Beginning of period 2,480,425,464 1,983,924,684
End of period $ 3,162,503,964 $ 2,480,425,464
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED DECEMBER 31, YEARS ENDED JUNE 30,
1998
(UNAUDITED) 1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
Net asset value, beginning $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
Income from Investment .026 .053 .051 .053 .052 .031
Operations Net interest
income
Less Distributions
From net interest income (.026) (.053) (.051) (.053) (.052) (.031)
Net asset value, end of $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
period
TOTAL RETURN B 2.64% 5.47% 5.25% 5.43% 5.28% 3.10%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period $ 3,163 $ 2,480 $ 1,984 $ 1,740 $ 1,589 $ 1,221
(in millions)
Ratio of expenses to .32% A .34% .35% .36% .39% .39%
average net assets
Ratio of net interest 5.17% A 5.34% 5.13% 5.27% 5.22% 3.05%
income to average net assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST: TERM PORTFOLIO
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance.
You can look at the total percentage change in value, the average
annual percentage change, or the growth of a hypothetical $10,000
investment. Total return reflects the change in the value of an
investment, assuming reinvestment of the fund's dividend income and
capital gains (the profits earned upon the sale of securities that
have grown in value). You can also look at the fund's income, as
reflected in the fund's yield, to measure performance. If Fidelity had
not reimbursed certain expenses, the past 10 years total returns would
have been lower.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CUMULATIVE TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1998 PAST 6 MONTHS PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
NCCMT - Term Portfolio 3.04% 5.80% 29.53% 80.38%
LB 1-Year US Treasury 2.94% 5.84% 31.79% 85.32%
Short US Government Funds 3.11% 5.83% 27.88% 88.79%
Average
</TABLE>
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage
terms over a set period - in this case, six months, one year, five
years or 10 years. For example, if you had invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment
would be $1,050. You can compare the fund's returns to the performance
of the Lehman Brothers 1-Year U.S. Treasury Index - a one security
index which at the beginning of each month selects the Treasury
maturing closest to but not beyond one year from that date. To measure
how the fund's performance stacked up against its peers, you can
compare it to the short U.S. government funds average, which reflects
the performance of mutual funds with similar objectives tracked by
Lipper Inc. The past six months average represents a peer group of 76
mutual funds. These benchmarks include reinvested dividends and
capital gains, if any, and exclude the effect of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARS
NCCMT - Term Portfolio 5.80% 5.31% 6.08%
LB 1-Year US Treasury 5.84% 5.68% 6.36%
Short US Government Funds 5.83% 5.03% 6.52%
Average
AVERAGE ANNUAL TOTAL RETURNS take the fund's cumulative return and
show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
NCCMT-Term Portfolio LB 1-Year Treasury Index
00620 LB068
1988/12/31 10000.00 10000.00
1989/01/31 10071.79 10077.75
1989/02/28 10119.98 10119.27
1989/03/31 10176.13 10176.70
1989/04/30 10283.42 10300.83
1989/05/31 10382.73 10405.97
1989/06/30 10502.10 10553.96
1989/07/31 10611.93 10671.91
1989/08/31 10634.47 10715.64
1989/09/30 10699.67 10731.99
1989/10/31 10811.12 10867.16
1989/11/30 10887.05 10956.40
1989/12/31 10953.46 11017.36
1990/01/31 10997.71 11060.65
1990/02/28 11056.56 11126.92
1990/03/31 11121.30 11182.58
1990/04/30 11171.97 11239.56
1990/05/31 11282.98 11355.30
1990/06/30 11357.65 11455.14
1990/07/31 11470.37 11564.25
1990/08/31 11524.71 11632.28
1990/09/30 11600.14 11716.22
1990/10/31 11701.94 11816.94
1990/11/30 11800.76 11903.08
1990/12/31 11914.90 12031.63
1991/01/31 12005.35 12125.28
1991/02/28 12088.36 12198.17
1991/03/31 12149.94 12283.43
1991/04/30 12244.39 12368.25
1991/05/31 12303.28 12420.37
1991/06/30 12360.71 12463.67
1991/07/31 12432.60 12548.48
1991/08/31 12541.25 12660.25
1991/09/30 12621.11 12753.90
1991/10/31 12701.25 12847.11
1991/11/30 12792.10 12947.39
1991/12/31 12922.67 13064.89
1992/01/31 12955.10 13094.93
1992/02/29 12994.44 13124.97
1992/03/31 12999.14 13147.50
1992/04/30 13095.28 13218.62
1992/05/31 13162.14 13274.73
1992/06/30 13208.16 13343.20
1992/07/31 13247.78 13439.50
1992/08/31 13326.87 13499.58
1992/09/30 13405.04 13587.05
1992/10/31 13312.63 13558.78
1992/11/30 13272.66 13520.78
1992/12/31 13382.48 13550.82
1993/01/31 13520.20 13618.41
1993/02/28 13571.17 13662.15
1993/03/31 13607.69 13704.55
1993/04/30 13655.35 13751.38
1993/05/31 13661.39 13751.38
1993/06/30 13707.34 13816.76
1993/07/31 13747.00 13853.43
1993/08/31 13797.28 13916.60
1993/09/30 13831.66 13956.80
1993/10/31 13868.57 13989.49
1993/11/30 13890.53 14013.78
1993/12/31 13926.40 14062.38
1994/01/31 13976.47 14121.13
1994/02/28 13953.44 14104.34
1994/03/31 13962.85 14106.99
1994/04/30 13956.81 14095.07
1994/05/31 13994.61 14125.10
1994/06/30 14045.82 14173.70
1994/07/31 14111.86 14264.26
1994/08/31 14152.24 14313.73
1994/09/30 14197.19 14334.50
1994/10/31 14244.38 14393.25
1994/11/30 14250.69 14388.83
1994/12/31 14305.90 14440.52
1995/01/31 14435.87 14582.76
1995/02/28 14513.65 14713.52
1995/03/31 14601.26 14800.55
1995/04/30 14684.86 14909.22
1995/05/31 14787.55 15040.42
1995/06/30 14870.51 15131.86
1995/07/31 14925.35 15206.08
1995/08/31 14994.26 15278.53
1995/09/30 15060.70 15347.00
1995/10/31 15144.06 15434.02
1995/11/30 15240.82 15524.58
1995/12/31 15328.03 15616.03
1996/01/31 15412.36 15716.31
1996/02/29 15432.69 15736.63
1996/03/31 15458.25 15785.66
1996/04/30 15513.24 15843.97
1996/05/31 15567.21 15906.70
1996/06/30 15651.30 15995.49
1996/07/31 15709.21 16056.46
1996/08/31 15773.60 16135.09
1996/09/30 15887.69 16243.32
1996/10/31 15988.43 16365.68
1996/11/30 16069.77 16451.38
1996/12/31 16118.53 16509.70
1997/01/31 16186.37 16588.77
1997/02/28 16259.15 16648.41
1997/03/31 16279.52 16690.82
1997/04/30 16383.61 16792.86
1997/05/31 16477.62 16896.67
1997/06/30 16572.61 16998.72
1997/07/31 16672.24 17120.20
1997/08/31 16721.20 17178.95
1997/09/30 16827.26 17271.72
1997/10/31 16908.46 17367.58
1997/11/30 16955.84 17427.66
1997/12/31 17050.24 17509.39
1998/01/31 17149.07 17624.69
1998/02/28 17191.26 17669.74
1998/03/31 17275.21 17758.54
1998/04/30 17346.14 17840.26
1998/05/31 17420.11 17918.01
1998/06/30 17506.08 18003.27
1998/07/31 17577.03 18089.85
1998/08/31 17724.05 18235.19
1998/09/30 17850.99 18370.81
1998/10/31 17951.77 18467.55
1998/11/30 17973.77 18471.09
1998/12/31 18038.34 18532.49
IMATRL PRASUN SHR__CHT 19981231 19990111 143433 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was
invested in North Carolina Capital Management Trust: Term Portfolio on
December 31, 1988. As the chart shows, by December 31, 1998, the value
of the investment would have grown to $18,038 - an 80.38% increase on
the initial investment. For comparison, look at how the Lehman
Brothers 1-Year U.S. Treasury Index did over the same period. With
dividends and capital gains, if any, reinvested, the same $10,000
investment would have grown to $18,532 - an 85.32% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. Bond prices, for
example, generally move in the opposite
direction of interest rates. In turn, the share
price, return and yield of a fund that invests in
bonds will vary. That means if you sell your
shares during a market downturn, you might
lose money. But if you can ride out the market's
ups and downs, you may have a gain.
(checkmark)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
TOTAL RETURN COMPONENTS
PAST 6 MONTHS ENDED DECEMBER YEARS ENDED JUNE 30,
31,
1998 1998 1997 1996 1995 1994
Dividend returns 3.25% 7.08% 7.62% 6.16% 5.26% 3.17%
Capital returns -0.21% -1.45% -1.73% -0.91% 0.61% -0.70%
Total returns 3.04% 5.63% 5.89% 5.25% 5.87% 2.47%
</TABLE>
TOTAL RETURN COMPONENTS include both dividend returns and capital
returns. A dividend return reflects the actual dividends paid by the
fund. A capital return reflects both the amount paid by the fund to
shareholders as capital gain distributions and changes in the fund's
share price. Both returns assume the dividends or capital gains, if
any, paid by the fund are reinvested.
DIVIDENDS AND YIELD
PERIODS ENDED DECEMBER 31, PAST 1 MONTH PAST 6 MONTHS PAST 1 YEAR
1998
Dividends per share 5.42(cents) 30.60(cents) 62.85(cents)
Annualized dividend rate 6.72% 6.38% 6.59%
30-day annualized yield 4.42% - -
DIVIDENDS per share show the income paid by the fund for a set period.
If you annualize this number, based on an average share price of $9.50
over the past one month, $9.52 over the past six months and $9.53 over
the past one year, you can compare the fund's income over these three
periods. The 30-day annualized YIELD is a standard formula for all
funds based on the yields of the bonds in the fund, averaged over the
past 30 days. This figure shows you the yield characteristics of the
fund's investments at the end of the period. It also helps you compare
funds from different companies on an equal basis.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST: TERM PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
NOTE TO SHAREHOLDERS: Robert Duby became Portfolio Manager of The
North Carolina Capital Management Trust: Term Portfolio on December 7,
1998.
Q. HOW DID THE FUND PERFORM, BOB?
A. For the six-month period that ended December 31, 1998, the fund had
a total return of 3.04%. That compared to the 3.11% return of the
short U.S. government funds average for the same period, according to
Lipper Inc. The Lehman Brothers 1-Year U.S. Treasury Index, the
make-up of which most closely resembles that of the fund, returned
2.94% over the same six-month period. For the 12 months that ended
December 31, 1998, the fund returned 5.80%, while the Lipper average
returned 5.83% and the Lehman Brothers index 5.84%.
Q. WHAT CHANGES HAVE YOU MADE SINCE TAKING OVER THE FUND?
A. Nothing beyond the fund's normal monthly sale of one security to
keep the fund's duration - or sensitivity to changes in interest rates
- - in line with its benchmark index. To that end, I continue to pursue
the same strategy employed by the previous manager. Specifically, I
use the Lehman Brothers 1-Year U.S. Treasury Index as a representation
of the overall market in which the fund invests. The index includes
most of the universe of government and government agency bonds with
maturities of one year. I manage the fund to have similar overall
interest-rate risk to its benchmark index, but, beyond that, the fund
can vary significantly from the index. With respect to sector, issuer
and structural composition, the fund's holdings reflect Fidelity's
research conclusions on the relative value of bonds.
HOW WAS THE PORTFOLIO STRUCTURED DURING THE PERIOD?
A. Over the past six months, the portfolio was invested almost
exclusively in U.S. Treasury securities with an average weighted
maturity of one year, in order to closely match the Lehman Brothers
1-Year U.S. Treasury Index. The emphasis has been on finding the
cheapest and most attractive issues maturing in the nine- to 15-month
area.
Q. WHAT'S YOUR OUTLOOK?
A. The outlook - given the strength in domestic demand and recent high
levels in the stock market at the end of the period - warrants
caution. The next move by the Federal Reserve Board could just as
easily be an interest-rate increase instead of a decrease or neutral
posture. An interest-rate cut was factored into the yield curve at the
end of the period. The thinking at the Federal Reserve at the end of
December was that the risk of a potential economic slowdown no longer
predominated and that the risk of increased economic growth and
resulting inflation deserved equal weight. As always, the portfolio
will be positioned to closely match its index.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO
MANAGER ONLY THROUGH THE END OF THE PERIOD OF THE ANNUAL REPORT AS
STATED ON THE COVER. THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY
TIME BASED ON MARKET AND OTHER CONDITIONS.
FUND FACTS
(checkmark)
GOAL: seeks to obtain a high level of current
income consistent with the preservation of
capital
START DATE: March 19, 1987
SIZE: as of December 31, 1998, more than
$88 million
MANAGER: Robert Duby, since 1998; joined
Fidelity in 1982
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST: TERM PORTFOLIO
INVESTMENTS DECEMBER 31, 1998 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AND
GOVERNMENT AGENCY
OBLIGATIONS - 97.6%
PRINCIPAL AMOUNT VALUE (NOTE 1)
U.S. TREASURY OBLIGATIONS -
97.6%
U.S. Treasury Notes:
7.125% 9/30/99 $ 47,000,000 $ 47,837,996
7.75% 1/31/00 36,000,000 37,141,920
TOTAL U.S. GOVERNMENT AND 84,979,916
GOVERNMENT AGENCY OBLIGATIONS
CASH EQUIVALENTS - 2.4%
MATURITY AMOUNT
Investments in repurchase $ 2,113,138 2,112,000
agreements (U.S. Treasury
obligations), in a joint
trading account at 4.85%,
dated 12/31/98 due 1/4/99
TOTAL INVESTMENT IN $ 87,091,916
SECURITIES - 100%
(Cost $87,447,309)
</TABLE>
INCOME TAX INFORMATION
At December 31, 1998, the aggregate cost of investment securities for
income tax purposes was $87,447,309. Net unrealized depreciation
aggregated $355,393, all of which related to depreciated investment
securities.
At June 30, 1998, the fund had a capital loss carryforward of
approximately $2,104,000 of which $244,000, $450,000 and $1,410,000
will expire on June 30, 2003, 2005 and 2006, respectively.
The fund intends to elect to defer to its fiscal year ending June 30,
1999, approximately $801,000 of losses recognized during the period
November 1, 1997 to June 30, 1998.
THE NORTH CAROLINA CAPITAL MANAGEMENT TRUST: TERM PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998 (UNAUDITED)
ASSETS
Investment in securities, $ 87,091,916
at value (including
repurchase agreements of
$2,112,000) (cost
$87,447,309) - See
accompanying schedule
Cash 594
Interest receivable 2,010,405
TOTAL ASSETS 89,102,915
LIABILITIES
Distributions payable $ 186,432
Accrued management fee 25,662
Deferred trustees' 15,827
compensation
TOTAL LIABILITIES 227,921
NET ASSETS $ 88,874,994
Net Assets consist of:
Paid in capital $ 92,084,872
Undistributed net 18,928
investment income
Accumulated undistributed (2,873,413)
net realized gain (loss) on
investments
Net unrealized (355,393)
appreciation (depreciation)
on investments
NET ASSETS, for $ 88,874,994
9,368,469 shares outstanding
NET ASSET VALUE, $9.49
offering price and
redemption price per share
($88,874,994 (divided by)
9,368,469 shares)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER
31, 1998 (UNAUDITED)
INVESTMENT INCOME $ 2,724,659
Interest
EXPENSES
Management fee $ 139,293
Non-interested trustees' 3,883
compensation
Total expenses before 143,176
reductions
Expense reductions (211) 142,965
NET INVESTMENT INCOME 2,581,694
REALIZED AND UNREALIZED 32,066
GAIN (LOSS)
Net realized gain (loss)
on investment securities
Change in net unrealized (270,119)
appreciation (depreciation)
on investment securities
NET GAIN (LOSS) (238,053)
NET INCREASE $ 2,343,641
(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED DECEMBER 31, YEAR ENDED JUNE 30, 1998
1998 (UNAUDITED)
INCREASE (DECREASE) IN
NET ASSETS
Operations Net investment $ 2,581,694 $ 4,921,448
income
Net realized gain (loss) 32,066 (1,180,156)
Change in net unrealized (270,119) 201,545
appreciation (depreciation)
NET INCREASE 2,343,641 3,942,837
(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
Distributions to (2,596,216) (4,929,033)
shareholders from net
investment income
Share transactions Net 14,166,122 8,868,073
proceeds from sales of shares
Reinvestment of 1,655,759 3,286,603
distributions
Cost of shares redeemed (2,232,487) (4,357,338)
NET INCREASE 13,589,394 7,797,338
(DECREASE) IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS
TOTAL INCREASE 13,336,819 6,811,142
(DECREASE) IN NET ASSETS
NET ASSETS
Beginning of period 75,538,175 68,727,033
End of period (including $ 88,874,994 $ 75,538,175
undistributed net investment
income of $18,928 and
$33,450, respectively)
OTHER INFORMATION
Shares
Sold 1,487,988 926,501
Issued in reinvestment 173,924 343,490
of distributions
Redeemed (234,601) (454,028)
Net increase (decrease) 1,427,311 815,963
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED DECEMBER 31, YEARS ENDED JUNE 30,
1998
(UNAUDITED) 1998 1997 1996 1995 1994
SELECTED PER-SHARE DATA
Net asset value, $ 9.510 $ 9.650 $ 9.820 $ 9.910 $ 9.850 $ 9.940
beginning of period
Income from Investment .304 C .660 C .729 C .601 .505 .288
Operations Net investment
income
Net realized and (.018) (.134) (.170) (.093) .059 (.046)
unrealized gain (loss)
Total from investment .286 .526 .559 .508 .564 .242
operations
LESS DISTRIBUTIONS
From net investment (.306) (.666) (.729) (.598) (.504) (.312)
income
From net realized gain - - - - - (.020)
Total distributions (.306) (.666) (.729) (.598) (.504) (.332)
Net asset value, end of $ 9.490 $ 9.510 $ 9.650 $ 9.820 $ 9.910 $ 9.850
period
TOTAL RETURN B 3.04% 5.63% 5.89% 5.25% 5.87% 2.47%
RATIOS AND SUPPLEMENTAL
DATA
Net assets, end of period $ 89 $ 76 $ 69 $ 64 $ 70 $ 66
(in millions)
Ratio of expenses to .35% A .36% .37% .38% .41% .41%
average net assets
Ratio of expenses to .35% A .35% D .37% .38% .41% .41%
average net assets after
expense reductions
Ratio of net investment 6.36% A 6.93% 7.48% 6.06% 5.12% 3.14%
income to average net assets
Portfolio turnover rate 259% A 433% 232% 89% 519% 494%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C NET INVESTEMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE YEAR.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES OR REDUCED A PORTION OF THE FUND'S EXPENSES.
NOTES TO FINANCIAL STATEMENTS
For the period ended December 31, 1998 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES.
Cash Portfolio and Term Portfolio (the funds) are funds of North
Carolina Capital Management Trust (the trust). The trust is registered
under the Investment Company Act of 1940, as amended (the 1940 Act),
as an open-end management investment company organized as a
Massachusetts business trust. Shares of the trust are offered
exclusively to local governments and public authorities of the State
of North Carolina. Each fund is authorized to issue an unlimited
number of shares. The financial statements have been prepared in
conformity with generally accepted accounting principles which require
management to make certain estimates and assumptions at the date of
the financial statements. The following summarizes the significant
accounting policies of the funds:
SECURITY VALUATION.
CASH PORTFOLIO. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost
and thereafter assume a constant amortization to maturity of any
discount or premium.
TERM PORTFOLIO. Securities are valued based upon a computerized
matrix system and/or appraisals by a pricing service, both of which
consider market transactions and dealer-supplied valuations.
Securities for which quotations are not readily available are valued
at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of
Trustees. Short-term securities with remaining maturities of sixty
days or less for which quotations are not readily available are valued
at amortized cost or original cost plus accrued interest, both of
which approximate current value.
INCOME TAXES. As a qualified regulated investment company under
Subchapter M of the Internal Revenue Code, each fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for the fiscal year. The schedules of investments
include information regarding income taxes under the caption "Income
Tax Information."
INVESTMENT INCOME.
CASH PORTFOLIO. Interest income, which includes amortization of
premium and accretion of discount, is accrued as earned.
TERM PORTFOLIO. Interest income, which includes accretion of original
issue discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
among the funds in the trust.
DEFERRED TRUSTEE COMPENSATION. The non-interested Trustees may elect
to defer receipt of all or a portion of their annual fees under the
Trustees' Deferred Compensation Plan ("the Plan"). Interest is accrued
on amounts deferred under the Plan based on the prevailing 90 day
Treasury Bill rate.
DISTRIBUTIONS TO SHAREHOLDERS.
CASH PORTFOLIO. Dividends are declared daily and paid monthly from
net interest income.
TERM PORTFOLIO. Distributions are declared daily and paid monthly
from net investment income. Distributions from realized gains, if any,
are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
distribution reclassifications, are primarily due to differing
treatments for market discount, capital loss carryforwards and losses
deferred due to wash sales and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
Undistributed net investment income and accumulated undistributed net
realized gain (loss) on investments may include temporary book and tax
basis differences which will reverse in a subsequent period. Any
taxable income or gain remaining at fiscal year end is distributed in
the following year.
SECURITY TRANSACTIONS. Security transactions are accounted for as of
trade date. Gains and losses on securities sold are determined on the
basis of identified cost.
2. OPERATING POLICIES.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission , the funds, along with other
affiliated entities of Fidelity Management & Research Company (FMR),
may transfer uninvested cash balances into one or more joint trading
accounts. These balances are invested in one or more repurchase
agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the funds, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the funds' investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
TERM PORTFOLIO. Purchases and sales of securities, other than
short-term securities, aggregated $106,265,112 and $93,705,469,
respectively.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR pays all
expenses, except the compensation of the non-interested Trustees and
certain exceptions such as interest, taxes, brokerage commissions and
extraordinary expenses. 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. FMR receives a fee that is based upon
a graduated series of rates ranging from .290% to .350% of each fund's
average net assets. For the period, the management fees paid to FMR
were equivalent to an annualized rate of .32% and .34% for Cash and
Term Portfolios, respectively.
SUB-ADVISER FEE. As Cash Portfolio's investment sub-adviser, Fidelity
Investments Money Management, Inc., a wholly owned subsidiary of FMR,
receives a fee from FMR of 50% of the management fee payable to FMR.
The fee is paid prior to any voluntary expense reimbursements which
may be in effect, and after reducing the fee for any payments by FMR
pursuant to Cash Portfolio's Distribution and Service Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and
Service Plans (the Plans), and in accordance with Rule 12b-1 of the
1940 Act, FMR or the funds' distributor, Fidelity Distributors
Corporation (FDC), an affiliate of FMR, pays a distribution and
service fee that is based on a graduated series of rates ranging from
.14% to .15% of each fund's average net assets. For the period, FMR
paid FDC $2,066,555 and $60,398 on behalf of the Cash and Term
Portfolios, respectively, all of which FDC paid to Sterling Capital
Distributors, Inc., a wholly-owned subsidiary of Sterling Capital
Management Company.
5. EXPENSE REDUCTIONS.
FMR has entered into arrangements on behalf of each fund with its
transfer agent whereby credits realized as a result of uninvested cash
balances were used to reduce a portion of the fund's expenses. During
the period, Cash and Term Portfolios' expenses were reduced by $2,631
and $211, respectively, under these arrangements.
TRUSTEES
William L. Byrnes
John David "J.D." Foust *
W. Olin Nisbet III
Helen A. Powers *
Bertram H. Witham *
OFFICERS
William L. Byrnes, PRESIDENT
Robert C. Pozen, SENIOR VICE PRESIDENT
W. Olin Nisbet III, VICE PRESIDENT
J. Calvin Rivers, Jr., VICE PRESIDENT
Fred L. Henning, Jr., VICE PRESIDENT
Dwight D. Churchill, VICE PRESIDENT, TERM PORTFOLIO
Boyce I. Greer, VICE PRESIDENT, CASH PORTFOLIO
Eric D. Roiter, SECRETARY
Richard A. Silver, TREASURER
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
Thomas J. Simpson, ASSISTANT TREASURER
David H. Potel, ASSISTANT SECRETARY
DISTRIBUTION AGENT
Sterling Capital Distributors, Inc.
Charlotte, NC
CUSTODIAN
First Union National Bank of North Carolina
Charlotte, NC
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
SUB-ADVISER FOR CASH PORTFOLIO
Fidelity Investments Money Management, Inc.
Merrimack, NH
TRANSFER AGENT
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
* Independent Trustees
