SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (NO. 2-78458)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No.
[ ]
Post-Effective Amendment No. 22
[x]
and
REGISTRATION STATEMENT (NO. 811-3518) UNDER THE INVESTMENT
COMPANY ACT OF 1940 [x]
Daily Tax-Exempt Money Fund
(Exact Name of Registrant as Specified in Declaration of Trust)
1201 N. Market Street - P.O. Box 1347
Wilmington, DE 19899-1347
(Address Of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, Including Area Code (617) 563-7000
Arthur Loring
82 Devonshire Street
Boston, MA 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] On (______) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] On (______) pursuant to paragraph (a)(i) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[X] On or about December 26, 1994 pursuant to paragraph (a)(ii) of Rule
485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and will file the notice required by such
Rule on or about December 20, 1994.
DAILY TAX-EXEMPT MONEY FUND:
CROSS REFERENCE SHEET
Form N-1A Item Number Prospectus Caption
1 ...................... Cover Page
2 b,c................... Summary of Fund Expenses
3 a,b................... Financial Highlights
c..................... Performance
4 a(i).................. The Fund and the Fidelity Organization
a(ii),b,c............ Investment Objective; Investment Policies, Risks,
and Limitations
5 a..................... *
b,c,d,e............... Management; Distribution and Services
f(i)(ii).............. Portfolio Transactions
6 a(i).................. The Fund and the Fidelity Organization
a(ii)................. How to Invest, Exchange and Redeem
a(iii)................ The Fund and the Fidelity Organization
b,c,d................. *
e..................... Cover Page; How to Invest, Exchange and Redeem
f,g(i,ii,iii)......... Distributions and Taxes; How to Invest, Exchange
and Redeem
7 a...................... Management, Distribution and Services
b(i,ii)............... How to Invest, Exchange and Redeem
b(iii,iv,),........... *
b(v).................. How to Invest, Exchange and Redeem
c *
d..................... How to Invest, Exchange and Redeem
e,f(i,ii)........... Management Contract, Distribution and Services
f(iii)............... *
8 a,b,c,d............ How to Invest, Exchange and Redeem
9 ...................... *
* Not Applicable
DAILY TAX-EXEMPT
MONEY FUND
82 DEVONSHIRE STREET
BOSTON, MASSACHUSETTS 02109
PROSPECTUS
Daily Tax-Exempt Money Fund (the Fund) is designed to provide investors
with as high a level of current income, exempt from federal income taxes,
as is consistent with a diversified portfolio of high-quality, short-term
municipal obligations selected on the basis of liquidity and stability of
principal. The Fund offers individual and institutional investors a
convenient and economical way to invest in a professionally managed
portfolio of short-term municipals.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL MAINTAIN A
STABLE $1.00 SHARE PRICE.
The Prospectus is designed to provide investors with information they
should know before investing. PLEASE READ AND RETAIN THIS DOCUMENT FOR
FUTURE REFERENCE. The Annual Report is attached to this Prospectus.
To learn more about the Fund and its investments, you can obtain a copy of
the Fund's most recent financial report and portfolio listing, or a copy of
the Statement of Additional Information (SAI) dated December 26, 1994. The
SAI has been filed with the Securities and Exchange Commission (SEC) and is
incorporated herein by reference. For a free copy of either document,
please call the appropriate number below.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY DEPOSITORY
INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY, AND ARE
SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
For further information, or assistance in opening a new account, please
call:
NATIONWIDE 800-843-3001
IN MASSACHUSETTS (CALL COLLECT) 617-330-0586
If you are investing through a Financial Institution, contact that
institution directly.
TABLE OF CONTENTS
Summary of Fund Expenses
Financial Highlights
Investment Objective
Investment Policies, Risks, and Limitations 4
Portfolio Transactions
Performance
Distributions and Taxes
How to Invest, Exchange and Redeem
The Fund and the Fidelity Organization
Management, Distribution and Services
Appendix
Financial Statements 14
LIKE ALL OTHER MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
December 26, 1994
SUMMARY OF FUND EXPENSES
The expense summary format below was developed for use by all mutual funds
to help you make your investment decisions. Of course, you should consider
this expense information along with other important information, including
the Fund's investment objective and its past performance. There are no
transaction expenses associated with purchases, exchanges or sales of the
Fund's shares.
A. ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees .21%(dagger)*
12b-1 Fees .27%
Other Expenses .17%
TOTAL FUND OPERATING EXPENSES .65%
(dagger) NET OF REIMBURSEMENTS.
* THE RATE FOR MANAGEMENT FEES REPRESENTS THE NET RATE RETAINED BY
FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)AFTER PAYMENTS MADE TO
FIDELITY DISTRIBUTORS CORPORATION (DISTRIBUTORS). THE MANAGEMENT FEE BEFORE
PAYMENTS MADE TO DISTRIBUTORS BY FMR IS (dagger) .48%. NO 12B-1
PAYMENTS ARE MADE DIRECTLY FROM FUND ASSETS.
ANNUAL OPERATING EXPENSES are based on historical expenses for the most
recent fiscal year. Management fees are paid by the Fund to FMR for
managing its investments and business affairs. The Distribution and Service
Plan provides that FMR may make payments from its management fee, its past
profits or any other source available for sales and service support
services. The maximum amount payable is currently at the annual rate of
.38% of the average net assets. Based on historical expenses, the payment
made by FMR was .27% and this amount is shown as the 12b-1 fee. Long-term
shareholders may be deemed to pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers, Inc. (NASD) due to 12b-1 fees. The Fund incurs other
expenses for maintaining shareholder records, furnishing shareholder
statements and reports, and for other services. Management fees and other
expenses are reflected in the fund's share price or dividends and are not
charged directly to individual shareholder accounts. FMR has voluntarily
agreed to reimburse the fund to the extent that total fund operating
expenses, including management fees (but excluding interest, taxes,
brokerage commissions and extraordinary expenes), exceed an annual rate of
.65% of average net assets. If FMR were not reimbursing the Fund,
management fees, 12b-1 payments, other expenses and total operating
expenses would have been .23%, .27%, .17%, and .67%, respectively. Please
refer to the section entitled "Management, Distribution and Services" on
page for further information.
B. EXAMPLE: You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time
period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
$7 $21 $36 $81
EXAMPLE OF EXPENSES. The hypothetical example illustrates the expenses
associated with a $1,000 investment over periods of one, three, five and
ten years, based on the expenses in the table and an assumed annual rate of
return of 5%. THE RETURN OF 5% AND EXPENSES SHOULD NOT BE CONSIDERED
INDICATIONS OF ACTUAL OR EXPECTED FUND PERFORMANCE OR EXPENSES, BOTH OF
WHICH MAY VARY.
FINANCIAL HIGHLIGHTS
The table that follows is included in the Fund's Annual Report and has been
audited by Price Waterhouse LLP, independent accountants. Their report on
the financial statements and financial highlights is included on page 26.
The financial statements and financial highlights are part of this
prospectus.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Years Ended October 31,
SELECTED PER-SHARE DAT 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
A
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
Income from .022 .021 .029 .044 .053 .056 .045 .039 .044 .049
Investment Operations
Net interest income
Less Distributions (.022) (.021) (.029) (.044) (.053) (.056) (.045) (.039) (.044) (.049)
From net interest incom
e
Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
end of period
TOTAL RETURN 2.21 2.11 2.93 4.46 5.38 5.72 4.55 3.93 4.52 5.04
% % % % % % % % % %
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of
period $ 454,259 $ 538,756 $ 484,999 $ 304,147$ 259,381 $ 203,513 $ 212,029 $ 288,279 $ 362,388 $ 229,263
(000 omitted)
Ratio of expenses
to aver .65 .61 .63 .65 .65 .64 .70 .63 .61 .57
age % % % % % % % % % %
net assets A
Ratio of
expenses to
aver .67 .61 .63 .66 .68 .76 .75 .63 .61 .57
age % % % % % % % % % %
net assets before expen
se
reductions A
Ratio of net
interest incom2.17 2.09 2.86 4.29 5.32 5.64 4.37 3.87 4.36 4.92
e to % % % % % % % % % %
average net assets
</TABLE>
A SEE NOTE 4 OF NOTES OF FINANCIAL STATEMENTS.
INVESTMENT OBJECTIVE
Daily Tax-Exempt Money Fund's investment objective is to provide investors
with as high a level of current income, exempt from federal income taxes,
as is consistent with a diversified portfolio of high-quality, short-term
municipal obligations selected on the basis of liquidity and stability of
principal. The Fund only purchases instruments that it judges to present
minimal credit risk within the quality criteria described below.
The Fund may not always achieve its objective, but it will follow the
investment style described in this section. The Fund's ability to achieve
its objective depends, to a great extent, on the ability of its various
issuers to meet their scheduled payments of principal and interest. Under
normal conditions the Fund will invest so that at least 80% of its income
distributions will be exempt from federal income tax. (This policy is
fundamental and can only be changed with shareholder approval.) It is the
current policy of the Fund that none of its income will be derived from
private activity securities. For a discussion of tax-exempt income, see
"Distributions and Taxes," on page .
INVESTMENT POLICIES, RISKS, AND
LIMITATIONS
Municipal securities are issued to raise money for various public purposes,
including general purpose financing for state and local governments as well
as financing for specific projects or public facilities. Municipal
securities may be backed by the full taxing power of a municipality or by
the revenues from a specific project or the credit of a private
organization. Some municipal securities are insured by private insurance
companies, while others may be supported by letters of credit furnished by
domestic or foreign banks. FMR monitors the financial condition of parties
(including insurance companies, banks, and corporations) whose
creditworthiness is relied upon in determining the credit quality of
securities the Fund may purchase.
The Fund invests in U.S. dollar denominated high-quality, short-term
municipal securities but also may invest in high-quality, long-term fixed,
variable-, or floating-rate instruments (including tender option bonds)
whose features give them interest rates, maturities, and prices similar to
short-term instruments. The Fund's investments in municipal securities may
include tax, revenue, or bond anticipation notes; tax-exempt commercial
paper; general obligation or revenue bonds (including municipal lease
obligations and resource recovery bonds); and zero coupon bonds. The Fund
may buy or sell securities on a when-issued or delayed-delivery basis, and
may purchase restricted securities. See the Appendix for further discussion
of the Fund's investments.
FMR normally invests the Fund's assets according to its investment strategy
and does not expect to invest in federally taxable obligations. The Fund
also reserves the right to hold a substantial amount of uninvested cash or
to invest more than normally permitted in federally taxable obligations for
temporary, defensive purposes.
QUALITY. Pursuant to procedures adopted by the Board of Trustees, the Fund
may purchase only high-quality securities that FMR believes present minimal
credit risk. To be considered high quality, a security must be rated in
accordance with applicable rules in one of the two highest categories for
short-term securities by at least two nationally recognized rating services
(or by one if only one rating service has rated the security), or, if
unrated, judged to be of equivalent quality by FMR.
MATURITY. The Fund limits its investments to securities with remaining
maturities of 397 days or less and maintains a dollar-weighted average
maturity of 90 days or less.
Yields on municipal obligations are the product of a variety of factors,
including the general conditions of the money market and of the municipal
bond and municipal note markets, the size of a particular offering, the
maturity of the obligation and the rating of the issue. The value of
municipal obligations moves inversely to interest rates. Municipal
obligations with longer maturities tend to produce higher yields and
generally are subject to potentially greater price fluctuations than
obligations with shorter maturities.
The Fund may invest up to 25% of its total assets in a single issuer's
securities. The Fund may invest any portion of its assets in industrial
revenue bonds (IRBs) backed by private issuers, and may invest up to 25% of
its total assets in IRBs related to a single industry. The Fund may also
invest 25% or more of its total assets in securities whose revenue sources
are from similar types of projects, E.G., education, electric utilities,
healthcare, housing, transportation, or water, sewer, and gas utilities.
There may be economic, business or political developments or changes that
affect all securities of a similar type. Therefore, developments affecting
a single issuer or industry or securities financing similar types of
projects could have a significant effect on the Fund's performance.
The Fund's ability to achieve its investment objective depends on the
quality and maturity of its investments. Although the Fund's policies are
designed to help maintain a stable $1.00 share price, all money market
instruments can change in value when interest rates or issuers'
creditworthiness change, or if an issuer or guarantor of a security fails
to pay interest or principal when due. If these changes in value were large
enough, the Fund's share price could fall below $1.00. In general,
securities with longer maturities are more vulnerable to price changes,
although they may provide higher yields.
The Board of Trustees monitors adherence to the rules and regulations of
the SEC, including credit quality and maturity standards.
The Fund maintains a fundamental policy requiring it to use its best
efforts to maintain a constant net asset value per share (NAV) of $1.00 and
values its portfolio securities on the basis of the amortized cost
valuation technique, pursuant to Rule 2a-7 under the Investment Company Act
of 1940 (the 1940 Act) (see "How to Invest, Exchange and Redeem" on page ).
This method values an instrument at cost and assumes a steady rate of
income from the date of purchase until maturity instead of looking at
actual changes in market value. The Trustees have established procedures
designed to stabilize, to the extent reasonably possible, the Fund's NAV,
as computed for the purpose of sales and redemptions, at a single value.
1.INVESTMENT LIMITATIONS
The Fund follows certain limitations in managing its investments that may
help to reduce risks.
1. The Fund will not purchase a security if, as a result, with respect to
75% of its total assets more than 5% of its total assets would be invested
in the securities of any single issuer.
2. (a) The Fund may borrow money for temporary or emergency purposes in an
amount not to exceed 33 1/3% of the value of its total assets; (b) the Fund
may borrow money only from a bank or a registered investment company or
portfolio for which FMR or an affiliate serves as investment adviser or
by engaging in reverse repurchase agreements ; and (c) the Fund will not
purchase securities while borrowings in excess of 5% of its total assets
are outstanding.
3. The Fund does not currently intend to make loans (but this limit shall
not apply to purchases of debt securities).
Limitation 1 does not apply to U.S. government securities and federal
agency obligations. Except for the investment limitations and policies
identified as fundamental (and Investment Limitations 1 and 2(a)), the
policies described in this Prospectus are not fundamental. Non-fundamental
policies may be changed without shareholder approval.
These limitations and the policies discussed in "Investment Objective and
Policies" are considered at the time of purchase. With the exception of
Limitation 2(a) concerning borrowings, the sale of securities is not
required in the event of a subsequent change in circumstances.
PORTFOLIO TRANSACTIONS
Municipal obligations generally are traded in the over-the-counter market
through broker-dealers. FMR chooses broker-dealers by judging professional
ability and quality of service. A broker-dealer is a securities firm which
makes a market for securities by offering to buy at one price and sell at a
slightly higher price. The difference between the prices is known as a
spread. Since FMR trades, either directly or through affiliated
sub-advisers, a large number of securities, including those of Fidelity's
other funds, broker-dealers are willing to work with the Fund on a more
favorable spread than would be possible for most individual investors.
The Fund has authorized FMR to allocate transactions to some broker-dealers
who help distribute the Fund's shares or the shares of Fidelity's other
funds, to the extent permitted by law, and on an agency basis to an
affiliate, Fidelity Brokerage Services, Inc. (FBSI). FMR will make such
allocations if commissions are comparable to those charged by
non-affiliated broker-dealers for similar services.
Higher commissions may be paid to those firms that provide research
services, to the extent permitted by law. FMR also is authorized to
allocate brokerage transactions to FBSI in order to secure from FBSI
research services produced by third-party, independent entities. FMR may
use this research information in managing the Fund's assets, as well as
assets of other clients.
PERFORMANCE
From time to time the Fund may advertise its YIELD and EFFECTIVE YIELD in
advertisements or in reports or other communications. Both yield figures
are based on historical earnings and are not intended to indicate future
performance.
The Fund's yield refers to the income generated by an investment in the
Fund over a seven-day period expressed as an annual percentage rate. The
Fund also may calculate effective yield by compounding the base period
return over a one year period. The effective yield will be slightly higher
than the yield because of the compounding effect on this assumed
reinvestment.
The Fund's yield and effective yield figures are illustrated below for the
seven-day period ended October 31, 1994:
YIELD EFFECTIVE YIELD
2.87% 2.91%
The Fund also may quote its TAX-EQUIVALENT YIELD, which shows the taxable
yield an investor would have to earn, before taxes, to equal the Fund's
tax-free yield. A tax-equivalent yield is calculated by dividing the Fund's
tax-exempt yield by the result of one minus a stated federal and/or state
tax rate.
The Fund's TOTAL RETURN is based on the overall dollar or percentage change
in value of a hypothetical investment in the Fund assuming dividend
distributions are reinvested. A CUMULATIVE TOTAL RETURN reflects the Fund's
performance over a stated period of time. An AVERAGE ANNUAL TOTAL RETURN
reflects the hypothetical annually compounded rate that would have produced
the same cumulative total return if performance had been constant over the
entire period. Because average annual returns tend to smooth out variations
in the Fund's performance, investors should recognize that they are not the
same as actual year-by-year results.
DISTRIBUTIONS AND TAXES
The Fund ordinarily declares dividends from net investment income daily and
pays such dividends monthly. The Fund intends to distribute substantially
all of its net investment income and capital gains (if any) to shareholders
within each calendar year as well as on a fiscal year basis.
FEDERAL TAXES. Dividends derived from the Fund's tax-exempt income are not
subject to federal income tax, but must be reported to the IRS by
shareholders. Exempt-interest dividends are included in income for purposes
of computing the portion of social security and railroad retirement
benefits that may be subject to federal tax. The Fund does not currently
intend to purchase obligations whose interest is subject to the federal
alternative minimum tax.
If the Fund earns taxable income or capital gains from its investments,
these amounts will be designated as taxable distributions. Dividends
derived from taxable investment income and short-term capital gains are
taxable as ordinary income. Gains from the sale of tax-free bonds results
in a taxable distribution. Short-term capital gains and a portion of the
gain on bonds purchased at a discount are taxed as dividends. Distributions
are taxable when they are paid, whether shareholders take them in cash or
reinvest them in additional shares, except that distributions declared in
December and paid in January are taxable as if paid on December 31st. The
Fund will send shareholders a tax statement showing the amount of
tax-exempt distributions for the past calendar year, and will send an IRS
Form 1099-DIV by January 31st if the Fund makes any taxable distributions.
OTHER TAX INFORMATION. The information above is only a summary of some of
the federal tax consequences generally affecting the Fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal tax, you may be subject to state or
local taxes on your investment. Investors should consult their tax advisors
to determine whether the Fund is suitable to their particular tax
situation.
HOW TO INVEST, EXCHANGE AND REDEEM
Shares of the Fund are offered continuously and may be purchased at the NAV
next determined after an order is received and accepted. The Fund does not
impose any sales charges in connection with purchases of its shares,
although institutions may charge their clients fees in connection with
purchases and sales for the accounts of their clients. The Fund may
discontinue offering its shares generally or in any particular state
without notice to shareholders.
IF YOU ARE INVESTING THROUGH A SECURITIES DEALER OR BANK (FINANCIAL
INSTITUTION), CONTACT THAT FINANCIAL INSTITUTION DIRECTLY. IT IS THE
RESPONSIBILITY OF YOUR FINANCIAL INSTITUTION TO SUBMIT YOUR PURCHASE IN
ORDER FOR YOU TO RECEIVE THE NEXT DETERMINED NAV.
If you are purchasing shares of the Fund through a program of services
offered by a Financial Institution, you should read the program materials
in conjunction with this prospectus. Certain features of the Fund may be
modified in these programs and administrative charges (in addition to
payments the Financial Institution may receive pursuant to the Distribution
and Service Plan) may be imposed for the services rendered. These features
include the minimum for subsequent investment amounts and exchanges with
certain Fidelity funds. For further information, including copies of
prospectuses, SAIs and applications, contact your Financial Institution or
the Fund directly.
SHARE PRICE. Fidelity Service Co. (Service) calculates the Fund's NAV at
12:00 noon and 4:00 p.m. Eastern time each day the Fund is open for
business (see "Holiday Schedule" on page ). The NAV of the Fund is
determined by adding the value of all securities and other assets of the
Fund, deducting its actual and accrued liabilities, and dividing by the
number of shares outstanding. Shares purchased at the 12:00 noon price earn
the income dividend declared that day. Shares purchased at the 4:00 p.m.
price (including all purchases by check) begin to earn income dividends on
the following business day. Purchases made by federal funds wire will be
processed at the 12:00 noon price if you call Fidelity Investments
Institutional Operations Company (FIIOC) before 12:00 noon Eastern time and
the Fund receives federal funds that day. If you do not call FIIOC to give
notice of your wire investment before 12:00 noon Eastern time, you will not
begin to earn dividends until the first business day following receipt of
your wire.
MINIMUM INVESTMENT AND ACCOUNT BALANCE. The minimum initial investment to
establish a new account in the Fund is $1,000. Subsequent investments must
be at least $250. If you want to keep your account open, you must leave
$500 in it. If your account balance falls below $500 due to redemption,
your account may be closed and the proceeds mailed to you at the record
address. You will be given 30 days' notice that your account will be closed
unless you make an additional investment to increase your account balance
to the $500 minimum.
2.HOW TO INVEST
An initial investment in the Fund must be preceded or accompanied by a
completed, signed application. Unless you already have a Fidelity mutual
fund account, you must complete and sign the application.
INVESTING BY CHECK. You or your Financial Institution must send a check
payable to the Fund, together with a completed application to the address
below:
Daily Tax-Exempt Money Fund
FIIOC, ZR5
P.O. Box 1182
Boston, MA 02103-1182
Checks must be drawn on a U.S. bank.
INVESTING BY MAIL. To make additional investments directly, put your
account number on the check and mail to the address above. If you make a
purchase with more than one check, each check must have a value of at least
$50, and the minimum investment requirement still applies. The Fund
reserves the right to limit the number of checks processed at one time. If
your check does not clear, your purchase will be canceled and you could be
liable for any losses or fees incurred.
INVESTING BY WIRE. You may purchase shares of the Fund by wire. For wiring
information and instructions, you should call your Financial Institution,
or Client Services at 1-800-843-3001. In order to receive same day
acceptance of the investment, you must telephone Client Services between
8:30 a.m. and 12:00 noon, Eastern time on days the Fund is open for
business, to advise them of the wire and to place the trade. You are urged
to initiate the purchase of shares as early in the day as possible and to
provide advance notice of large transactions to Client Services. If Client
Services is not advised of the order prior to 12:00 noon Eastern time, or
if clearing house funds are transferred via the Bank Wire System, your
order will be accepted on the business day following the day of transfer
and shares will begin earning dividends on that day. There is no fee
imposed by the Fund for wire purchases. However, Financial Institutions may
impose such a fee.
3.HOW TO EXCHANGE
An exchange is a convenient way to buy shares of the Fund or other Fidelity
funds. The Fidelity family of funds has a variety of investment objectives.
You may exchange shares of the Fund for shares of other Fidelity funds
(subject to the minimum initial investment requirement and the terms of the
program of services offered by your Financial Institution) that are
registered in your state. If you have purchased shares of the Fund in
connection with the Fidelity Advisor Funds program, your shares may be
exchanged only for shares of other funds in that program. Other
shareholders may exchange shares of the Fund for shares of other Fidelity
funds, but not for shares of Fidelity Advisor Funds. When making an
exchange, the registrations and tax identification numbers of the two
accounts must be identical. You should consult the prospectus of the fund
to be acquired to determine eligibility and suitability. To protect fund
performance and shareholders, Fidelity discourages frequent trading in
response to short-term market fluctuations. In particular, exchanges that
coincide with "market timing" strategies can have adverse effects on the
funds.
TO EXCHANGE BY TELEPHONE. Exchanges may be requested by calling Client
Services:
NATIONWIDE 800-843-3001
TO EXCHANGE BY MAIL. Written requests for exchanges should contain the Fund
name, account number, and number of shares to be redeemed, and the name of
the fund whose shares are being purchased. The letter must be signed by a
person authorized to act on the account. Letters should be sent to:
Daily Tax-Exempt Money Fund
FIIOC, ZR5
P.O. Box 1182
Boston, MA 02103-1182
RESTRICTIONS: Currently, there is no limit on the number of exchanges out
of the Fund, nor are there any administrative or redemption fees applicable
to exchanges out of the Fund. However, other funds may restrict or limit
exchanges, and may impose administrative fees of up to $7.50 and redemption
fees of up to 1.5% on exchanges. Check each fund's prospectus for details.
TAXES: Each exchange actually represents the sale of shares of one fund and
the purchase of shares in another, which may produce a gain or loss for tax
purposes.
An exchange involves the redemption of all or a portion of your shares of
one fund and the purchase of shares in another fund. Shares will be
redeemed at the next determined NAV following receipt of the exchange
order. Shares of the fund to be acquired will be purchased at its next
determined NAV after redemption proceeds are made available. You will earn
dividends in the acquired fund in accordance with the fund's customary
policy, normally on the day the exchange request is received. You should
note that under certain circumstances, the Fund may take up to seven days
to make redemption proceeds available for the exchange purchase of shares
of another fund.
4.HOW TO REDEEM
You may redeem all or a portion of your shares on any business day. Your
shares will be redeemed at the next NAV calculated after the Fund has
received and accepted your redemption request. If you close your account,
any accrued dividends will be paid to you at the beginning of the following
month. Remember that the Fund may hold payment until it is reasonably
satisfied that investments made by check have been collected (which can
take up to seven days). Shares redeemed at the 12:00 noon price do not
receive the dividend declared on the day of redemption. Shares redeemed at
the 4:00 p.m. price do receive the dividends declared on the day of
redemption.
REDEMPTION REQUESTS BY CHECK (minimum $500):
(medium solid bullet) You must have applied for the checkwriting feature on
your account.
(medium solid bullet) You may write as many checks as you like.
(medium solid bullet) If the amount of a check you write is greater than
the value of your account, your check will be returned to you and you may
be subject to extra charges.
REDEMPTION REQUESTS BY WIRE may be made by calling Client Services:
NATIONWIDE 800-843-3001
You must apply for the wire feature on your account application. Client
Services will then notify you that this feature is active and you may then
make wire redemptions by calling Client Services during trading hours.
If telephone instructions are received before 12:00 noon Eastern time,
proceeds of the redemption normally will be wired in federal funds on the
same day to your previously designated bank account. If your instructions
are received after 12:00 noon and before 4:00 p.m. Eastern time, redemption
of your shares will be processed at 4:00 p.m. Eastern time and proceeds
will be wired on the next business day. If you close your account, any
accrued dividends will be paid to you at the beginning of the following
month.
You may change the bank account(s) designated to receive amounts redeemed
at any time by sending a letter of instruction with a signature guarantee
to:
Fidelity Investments-Client Services
Mail Zone ZR5
P.O. Box 1182
Boston, MA 02103-1182
REDEMPTION REQUESTS BY MAIL:
Send a letter of instruction with your signature(s) guaranteed to the
address given above. The letter should specify the name of the Fund, the
number of shares to be sold, your name, your account number, and should
include the additional requirements listed below that apply to your
particular account.
TYPE OF REGISTRATION REQUIREMENTS
Individual, Joint Tenants, Letter of instruction signed by
Sole Proprietorship, all person(s) required to sign
Custodial (Uniform for the account exactly as it is
Gifts or Transfers to registered, accompanied by
Minors Act), signature guarantee(s).
General Partners
Corporations, Letter of instruction and a
Associations corporate resolution, signed by
person(s) required to sign for
the account accompanied by
signature guarantee(s).
Trusts A letter of instruction signed by
the Trustee(s) with a signature
guarantee. (If the Trustee's
name is not registered on the
account, also provide a copy of
the trust document, certified
within the last 60 days.)
If you do not fall into any of these registration categories (i.e.,
Executors, Administrators, Conservators, Guardians) please call Client
Services for further instructions.
A signature guarantee is a widely accepted way to protect you and FIIOC by
verifying the signature on your redemption request; it may not be provided
by a notary public. Signature guarantees will be accepted from banks,
brokers, dealers, municipal securities dealers, municipal securities
brokers, government securities dealers, government securities brokers,
credit unions (if authorized under state law), national securities
exchanges, registered securities associations, clearing agencies and
savings associations.
If making immediate payment of redemption proceeds could adversely affect
the Fund, it may take up to seven days to pay you. Also, when the New York
Stock Exchange (NYSE)or the Federal Reserve Bank of Kansas City (Kansas
City Fed) is closed (or when trading is restricted) for any reason other
than its customary weekend or holiday closings, or under any emergency
circumstances as determined by the SEC to merit such action, the Fund may
suspend redemption or postpone payment dates. If you are unable to execute
transactions by telephone, consider placing your order by mail to FIIOC at
the address given above. In cases of suspension of the right of redemption,
you may either withdraw your request for redemption or receive payment
based on the NAV next determined after the termination of the suspension.
5.CHOOSING A DISTRIBUTION OPTION
When filling out the application, you may choose from two distribution
options:
A. THE SHARE OPTION reinvests your dividend distributions in additional
shares. This option is assigned to you automatically if you make no choice
on the application. Option A provides for the purchase of new shares at
their NAV as of the close of business on the day your dividends are
distributed.
B. THE INCOME-EARNED OPTION means you will receive income dividends and
capital gain distributions (if any) in cash. Distribution checks will be
mailed no later than seven days after the last day of the month.
6.STATEMENTS AND REPORTS
You will receive a monthly statement which details every transaction that
affects your share balance or your account registration. A statement with
tax information will be mailed to you by January 31 of each year. At least
twice a year you will receive the Fund's financial statements. To reduce
expenses, only one copy of the Fund's reports (such as the Fund's Annual
Report) may be mailed to your household. Contact your Financial Institution
or the Fund to request additional reports each time.
ADDITIONAL INFORMATION. All account transactions (including purchase
redemptions and exchanges) by telephone through client Services will be
recorded. The Transfer Agent may only be liable for losses resulting from
unauthorized transactions if it does not follow reasonable procedures
designed to verify the identify of the caller. Fidelity will request
personalized security codes or other information. Investors should verify
the accuracy of all transactions immediately upon receipt of their
confirmation statements. Investors who do not want the ability to redeem
and exchange by telephone should call Fidelity for instructions.
In order to allow FMR to manage the Fund most effectively, investors are
strongly urged to initiate all trades (investments, exchanges and
redemptions of shares) as early in the day as possible and to notify Client
Services at least one day in advance of trades in excess of $1 million. In
making these trade requests, the name(s) of the registered shareholder(s)
and the account number (s) must be supplied. To protect the Fund's
performance and shareholders, FMR discourages frequent trading in response
to short-term market fluctuations.
7.HOLIDAY SCHEDULE
The Fund is open for business and the NAV is calculated each day that both
the Kansas City Fed and the NYSE are open for trading. The NYSE has
designated the following holiday closings for 1995: New Year's Day
(observed), Washington's Birthday (observed), Good Friday, Memorial Day
(observed), Independence Day (observed), Labor Day, Thanksgiving Day, and
Christmas Day (observed). Although FMR expects the same holiday schedule to
be observed in the future, the Kansas City Fed or the NYSE may modify its
holiday schedule at any time. The right is reserved to advance the time by
which purchase and redemption orders must be received on any day: (1) that
the principal government securities markets close early, such as on days in
advance of holidays generally observed by participants in such markets, (2)
that the Kansas City Fed or the NYSE close early, or (3) as permitted by
the SEC. To the extent that portfolio securities are traded in other
markets on days when the Kansas City Fed or the NYSE is closed, the Fund's
NAV may be affected when investors do not have access to the Fund to
purchase or redeem shares. Certain Fidelity funds may follow different
holiday closing schedules.
THE FUND AND THE FIDELITY ORGANIZATION
The Fund is a diversified series of Daily Tax-Exempt Money Fund (the
Trust), an open-end management investment company organized as a Delaware
business trust pursuant to a Trust Instrument dated June 20, 1991. The Fund
was originally organized as a series of a Massachusetts Business Trust
(named Daily Tax-Exempt Money Fund), pursuant to a Declaration of Trust
dated July 16, 1982, as amended and restated December 1, 1989 (the
Predecessor Trust). The Fund converted to a series of the Trust on December
30, 1991 and the Trust succeeded to the name and business of the
Predecessor Trust. The Fund's Board of Trustees supervises Fund activities
and reviews contractual arrangements with companies that provide the Fund
with services. The Fund is not required to hold annual shareholder
meetings, although special meetings may be called for purposes such as
electing or removing Trustees, changing fundamental policies or limitations
or approving a management contract or distribution plan. As a shareholder,
you are entitled to one vote for each share and fractional votes for
fractional shares you own.
Fidelity Investments is one of America's largest investment management
organizations and has its principal business address at 82 Devonshire
Street, Boston, MA 02109. It includes a number of different subsidiaries
and divisions which provide a variety of financial services and products.
FMR employs various Fidelity companies to perform certain activities
required to operate the Fund.
FMR, the Fund's adviser, is the original Fidelity company, founded in 1946.
FMR provides a number of mutual funds and other clients with investment
research and portfolio management services. FMR maintains a large staff of
experienced investment personnel and a full complement of related support
facilities. As of October 31, 1994, FMR advised funds having more than 21
million shareholder accounts with a total value of more than $250 billion.
Fidelity Distributors Corporation ("Distributors") distributes shares for
the Fidelity funds. FMR Corp. is the ultimate parent company of FMR and FMR
Texas, Inc. ("FMR Texas") and, through ownership of voting common stock,
members of the Edward C. Johnson 3d family form a controlling group with
respect to FMR Corp. Changes may occur in the Johnson family group, through
death or disability, which would result in changes in each individual
family members' holding of stock. Such changes could result in one or more
family members becoming holders of over 25% of the stock. FMR Corp. has
received an opinion of counsel that changes in the composition of the
Johnson family group under these circumstances would not result in the
termination of the Fund's management or distribution contracts and,
accordingly, would not require a shareholder vote to continue operation
under those contracts.
MANAGEMENT, DISTRIBUTION AND SERVICES
MANAGEMENT CONTRACT. For managing the Fund's investments and business
affairs, the Fund pays FMR a monthly management fee at the annual rate of
.50% of its average net assets for the month. FMR has voluntarily agreed to
reimburse the Fund to the extent that its aggregate operating expenses,
including management fees, exceed an annual rate of .65% of average net
assets. For the fiscal year ended October 31, 1994 management fees (before
reimbursement), amounted to $2,592,124. FMR has entered into a sub-advisory
agreement with FMR Texas, under which FMR Texas has primary responsibility
for providing portfolio investment management services, while FMR retains
responsibility for providing other management services. Under the
sub-advisory agreement, FMR pays FMR Texas a fee equal to 50% of the
management fee retained by FMR under its current management contract with
the Fund, after payments by FMR pursuant to the Fund's Distribution and
Service Plan. The fees paid to FMR Texas are not reduced by any voluntary
or mandatory expense reimbursements that may be in effect from time to
time.
DISTRIBUTION AND SERVICE PLAN. The Trustees of the Fund adopted a
Distribution and Service Plan (the Plan) 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
intended primarily to result in the sale of shares except pursuant to a
plan adopted under the Rule. The Board of Trustees has adopted the Plan to
allow the Fund and FMR to incur certain expenses that might be considered
to constitute direct or indirect payment of distribution expenses. No
separate payments are authorized to be made by the Fund under the Plan.
Rather the Plan requires FMR to make payments from its management fee or
any other sources available to Investment Professionals that provide
shareholder support services or assist in selling shares of the Fund or
perform other distribution activities. Investment Professionals currently
are compensated under the Plan at a maximum rate of .38% annually of the
average net assets of the Fund for shareholder support or distribution
services.
Distributors will, at its own expense, provide promotional incentives such
as sales contests and trips to Investment Professionals who support the
sale of shares of the Fund. In some instances, these incentives may be
offered only to certain types of Investment Professionals such as
bank-affiliated or non-bank affiliated broker-dealers, or to the Investment
Professionals whose representatives provide services in connection with the
sale or expected sale of significant amounts of shares.
SERVICE AGREEMENTS. United Missouri Bank, N.A. (United Missouri), 1010
Grand Avenue, Kansas City, Missouri, acts as the Fund's custodian and
transfer agent. United Missouri employs FIIOC to perform dividend-paying
functions and to maintain the Fund's shareholder records. FIIOC is paid
sub-transfer agent fees based on the type, size, and number of accounts in
the Fund and the number of transactions made by shareholders. For the
fiscal year ended October 31, 1994, the Fund's fees for transfer agent
services amounted to $598,557. United Missouri employs Service to calculate
the Fund's daily share price and to maintain its general accounting
records. The fees for these services are based on the Fund's average net
assets, but must fall within a range of $20,000 to $750,000 per year. For
the fiscal year ended 1994, the Fund's fees for pricing and bookkeeping
services (including out-of-pocket expenses) amounted to $102,238.
APPENDIX
The following paragraphs provide a brief description of securities in which
the Fund may invest and transactions it may make. The Fund is not limited
by this discussion, however, and may purchase other types of securities and
enter into other types of transactions if they are consistent with the
Fund's investment objective and policies. Current holdings and recent
investment strategies are described in the Fund's financial report, which
is sent to shareholders twice a year.
MUNICIPAL SECURITIES include GENERAL OBLIGATION SECURITIES, which are
backed by the full taxing power of a municipality, and REVENUE SECURITIES,
which are backed by the revenues of a specific tax, project, or facility.
INDUSTRIAL REVENUE BONDS are a type of revenue bond backed by the credit
and security of a private issuer and may involve greater risk. PRIVATE
ACTIVITY MUNICIPAL SECURITIES, which may be subject to the federal
alternative minimum tax, include securities issued to finance housing
projects, student loans, and privately owned solid waste disposal and water
and sewage treatment facilities.
TAX AND REVENUE ANTICIPATION NOTES are issued by municipalities in
expectation of future tax or other revenues, and are payable from those
specific taxes or revenues. BOND ANTICIPATION NOTES normally provide
interim financing in advance of an issue of bonds or notes, the proceeds of
which are used to repay the anticipation notes. TAX-EXEMPT COMMERCIAL PAPER
is issued by municipalities to help finance short-term capital or operating
needs.
MUNICIPAL LEASE OBLIGATIONS are issued by a state or local government or
authority to acquire land and a wide variety of equipment and facilities.
These obligations typically are not fully backed by the municipality's
credit, and their interest may become taxable if the lease is assigned. If
funds are not appropriated for the following year's lease payments, the
lease may terminate, with the possibility of significant loss to the Fund.
CERTIFICATES OF PARTICIPATION in municipal lease obligations or installment
sales contracts entitle the holder to a proportionate interest in the
lease-purchase payments made.
RESOURCE RECOVERY BONDS are a type of revenue bond issued to build
facilities such as solid waste incinerators or waste-to-energy plants.
Typically, a private corporation will be involved, at least during the
construction phase, and the revenue stream will be secured by fees or rents
paid by municipalities for use of the facilities. The viability of a
resource recovery project, environmental protection regulations, and
project operator tax incentives may affect the value and credit quality of
resource recovery bonds.
VARIABLE- OR FLOATING-RATE OBLIGATIONS provide for periodic adjustments of
the interest rates paid. Floating rate obligations have interest rates that
change whenever there is a change in a designated base rate, while variable
rate obligations provide for a specified periodic adjustment in the
interest rate. These formulas are designed to result in a market value for
the instrument that approximates its par value. When determining the
maturity of a variable or floating rate obligation, the Fund may look to
the date the demand feature can be exercised, or to the date the interest
rate is readjusted, rather than to the final maturity of the obligation.
TENDER OPTION BONDS and similarly structured obligations combine previously
issued notes or bonds with demand features and interest rate features. The
creditworthiness of the issuer of the underlying bond, third parties (such
as banks or insurance companies) that provide credit enhancement, and the
party providing the demand or tender feature may each affect the credit
quality of the obligation.
ILLIQUID INVESTMENTS. The Fund may invest in illiquid investments. Under
the supervision of the Board of Trustees, FMR determines the liquidity of
the Fund's investments. The absence of a trading market can make it
difficult to ascertain a market value for illiquid investments. It may be
difficult or impossible for the Fund to sell illiquid investments promptly
at an acceptable price.
RESTRICTED SECURITIES. The Fund may purchase securities which cannot be
sold to the public without registration under the Securities Act of 1933
(restricted securities). Unless registered for sale, these securities can
only be sold in privately negotiated transactions or pursuant to an
exemption from registration.
DELAYED-DELIVERY TRANSACTIONS. The Fund may buy and sell securities on a
when-issued or delayed-delivery basis, with payment and delivery taking
place at a future date. The market value of securities purchased in this
way may change before the delivery date, which could affect the market
value of the Fund's assets. Ordinarily, the Fund will not earn interest on
the securities purchased until they are delivered.
INTERFUND BORROWING PROGRAM. The Fund has received permission from the SEC
to lend money to and borrow money from other funds advised by FMR or its
affiliates, but it will participate in the interfund borrowing program only
as a borrower. Interfund loans normally will extend overnight, but can have
a maximum duration of seven days. The Fund will borrow through the program
only when the costs are equal to or lower than the cost of bank loans. The
Fund will not borrow through the program if, after doing so, total
outstanding borrowings would exceed 15% of total assets. Loans may be
called on one day's notice, and the Fund may have to borrow from a bank at
a higher interest rate if an interfund loan is called or not renewed.
ZERO COUPON BONDS. Zero coupon bonds do not make interest payments:
instead, they are sold at a deep discount from their face value and are
redeemed at face value when they mature. Because zero coupon bonds do not
pay current income, their prices can be very volatile when interest rates
change. In calculating its daily dividend, the Fund takes into account as
income a portion of the difference between a zero coupon bond's purchase
price and its face value.
FIDELITY DAILY TAX-EXEMPT MONEY FUND
INVESTMENTS/OCTOBER 31, 1994
(Showing Percentage of Total Value of Investments)
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MUNICIPAL SECURITIES (a) - 100%
ALABAMA - 1.3%
Guntersville Poll. Cont. Rev. Rfdg. (Monsanto Co. Proj.) Series 1994,
3.50%, VRDN $ 2,400,000 $ 2,400,000 403163AB
Port City Med. Clinic Board Rev. (Mobile Infirmary Assoc.) Series 1992 A:
3.25%, tender 11/9/94, LOC Fuji Bank, Mitsubishi Bank . 1,700,000
1,700,000 7338049Y
3.70%, tender 1/17/95, LOC Fuji Bank, Mitsubishi Bank 2,075,000
2,075,000 733995AA
6,175,000
ALASKA - 0.2%
Alaska Hsg. Fin. Corp. Gen. Mtg. Rev. Series 1991 A, 3.30%, BPA Banque
Paribas, VRDN 1,000,000 1,000,000 011831FF
ARIZONA - 2.6%
Apache County Ind. Dev. Auth. (Tucson Elec. Pwr. Co. Proj.) Series 1981 B,
3.55%, LOC Mitsubishi Bank, VRDN 3,500,000 3,500,000 037433AC
Arizona Health Facs. Auth. Rev., VRDN:
(Samcor 1986 Loan Pool-Samaritan Health Care) 3.60%, BPA Sakura Bank,
(FGIC Insured) 1,720,000 1,720,000 040507AY
(Voluntary Hosp. Federation Pooled Loan Prog.) Series 1985 A, 3.45% (FGIC
Insured) 3,925,000 3,925,000 040507AC
Maricopa County Poll. Cont. Rev. (Southern California Edison Co.) Series
1985 F, 3.45%, tender 12/12/94 2,850,000 2,850,000 566990FG
11,995,000
CALIFORNIA - 8.2%
California Cash Reserve Prog. Auth. TRAN Series 1994 A, 4.50% 7/5/95
9,000,000 9,043,795 130583AD
California Gen. Oblig. RAN Series A, 5% 6/28/95 1,500,000 1,509,116
130619F5
California Gen. Oblig. Variable Rate TRAN Series 1994-95 B, 3.51% 6/28/95
3,000,000 2,999,765 130619F6
California Poll. Cont. Fing. Auth. (Pacific Gas & Elec.) Series 1988 C,
3.60%, tender 1/18/95, LOC Credit Suisse 2,000,000 2,000,000 130995MC
California RAN Series A, 3.75% 12/21/94 1,000,000 1,000,213 130619E4
Los Angeles Commty. Redev. Agcy. Multi-Family Hsg. Rev., VRDN:
(Grand Promenade) Series 1985, 3.80%, LOC Tokai Bank 3,300,000
3,300,000 544393AD
(Promenade Towers) 3.70%, LOC Tokai Bank 7,970,000 7,970,000 544393AG
Los Angeles County TRAN 4.50% 6/30/95 3,200,000 3,209,088 544657GG
Los Angeles Reg. Arpt. Impt. Corp. Lease Rev. (Los Angeles Int'l. Air
France) 3.90%, LOC Societe Generale, VRDN 3,100,000 3,100,000 544628DP
Orange County Apt. Dev. Rev. (Hidden Hills Apts.) Issue U, Series 1985 C,
3.70%, LOC Tokai Bank, VRDN 3,820,000 3,820,000 684209JM
37,951,977
COLORADO - 1.0%
Arapahoe County Cap. Impt. Trust Fund Hwy. Rev. (E-470 Proj.) Series 86 D,
2.85%, tender 2/28/95,
LOC Union Bank of Switzerland 1,770,000 1,770,000 03866EAD
Denver City & County Multi-Family Hsg. Rev. (The Seasons Apts.) Series
1990, 3.25%,
LOC Federal Home Loan Bank, VRDN 2,700,000 2,700,000 249190CG
4,470,000
DELAWARE - 1.0%
Delaware Econ. Dev. Auth. Multi-Family Hsg. Rev. (Schoolhouse Trust Prog.)
3.90%,
LOC Marine Midland Bank, VRDN 1,350,000 1,350,000 246384BK
Delaware Econ. Dev. Auth. Rev. (Peninsula United Methodist Homes Inc.)
Series 1992 B, 3.65%,
LOC Meridian Bank, VRDN 3,250,000 3,250,000 246387DL
4,600,000
FLORIDA - 14.3%
Alachua County Health Facs. Auth. (Academic Research Bldg. Proj.) Series
1989, 3.55%, tender 12/8/94,
LOC Barnett Bank of Jacksonville 1,500,000 1,500,000 0106859T
Dade County Ind. Dev. Auth. (Dolphin Stadium Proj.), VRDN:
Series 1985 A, 3.50%, LOC Citibank, Marine Midland Bank 2,500,000
2,500,000 233905AZ
Series 1985 B, 3.50%, LOC Citibank, Marine Midland Bank 2,500,000
2,500,000 233905BA
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MUNICIPAL SECURITIES (a) - CONTINUED
FLORIDA - CONTINUED
Florida Board of Ed. Participating VRDN, BT-33, Series 1986 A, 3.60%
(Liquidity Facility Bankers Trust) (b) $ 4,008,600 $ 4,008,600 341421RJ
Florida Hsg. Fin. Auth. Multi-Family Hsg., VRDN:
(Brandon-Oxford Proj.) Series 1990 C, 3.70% (Continental Casualty
Guaranteed) 5,500,000 5,500,000 3407375T
(Hillsborough-Oxford Proj.) Series D, 3.70% (Continental Casualty
Guaranteed) 6,000,000 6,000,000 3407375V
Florida League of Cities (1st. Muni. Pooled Loan Prog.):
Series 1, 3.30%, tender 12/16/94, LOC Sumitomo Bank 4,600,000
4,600,000 321991DF
Series 2, 3.55%, tender 12/16/94, LOC Sumitomo Bank 5,000,000
5,000,000 321991DD
Indian River County Hosp. Dist. Rev. Bonds Series 1990, 3.80%, tender
2/9/95, LOC Kredietbank 3,200,000 3,200,000 45499CCA
Lee County Hosp. Board Hosp. Rev. (Lee Memorial Hosp. Proj.) Series 1992 B,
3.20%, tender 11/30/94
(Liquidity Facility Industrial Bank of Japan) 5,400,000 5,400,000
523995CY
Orange County Blood Bank Proj. Series 1988, 3.50%, LOC Sun Bank, N.A., VRDN
1,545,000 1,545,000 684901CD
Orange County School Dist. TAN 4.75% 6/30/95 3,000,000 3,014,292
684519AT
Palm Beach County Health Facs. 3.40%, tender 11/17/94 (Liquidity Facility
Credit Suisse),
(MBIA Insured) 5,400,000 5,400,000 69699AAU
Sarasota County Pub. Hosp. Dist. Rev. Bonds (Sarasota Memorial Hosp.):
Series 1991:
3.45%, tender 12/12/94 (Liquidity Facility Sun Bank, N.A.) 2,700,000
2,700,000 803996SF
3.45%, tender 12/16/94 (Liquidity Facility Sun Bank, N.A.) 5,000,000
5,000,000 803996SB
Series 1993 A:
3.60%, tender 1/27/95 (Liquidity Facility Goldman Sachs) 1,500,000
1,500,000 803996RR
3.65%, tender 1/18/95 (Liquidity Facility Goldman Sachs) 2,000,000
2,000,000 803996RM
Sunshine State Governmental Fing. Commission 3.40% 12/16/94, CP
4,825,000 4,825,000 867992DB
66,192,892
GEORGIA - 7.7%
Cherokee County Wtr. & Swr. Auth. Rev. Participating VRDN, Series 1993,
3.55%
(Liquidity Facility Merrill Lynch & Co.), (MBIA Insured) (b) 3,160,000
3,160,000 164243HW
Clayton County Hsg. Auth. Multi-Family Hsg. Rev. Rfdg., VRDN:
(Kings Arms Apts. Proj.) Series 1990 D, 3.50%, BPA Barclays Bank, (FSA
Insured) 1,100,000 1,100,000 184160FF
(Ten Oaks Apts. Proj.) Series 1990 F, 3.50%, BPA Barclays Bank, (FSA
Insured) 1,400,000 1,400,000 184160FG
Cobb County Gen. Oblig. TAN, Series 1994, 3.50% 12/30/94 3,000,000
3,002,560 190774JR
Cobb-Marietta Coliseum & Exhibition Hall Auth. Rev. Rfdg. Participating
VRDN, Series PA-65, 3.60%
(Liquidity Facility Merrill Lynch), (MBIA Insured) (b) 2,100,000
2,100,000 190760BD
Fulton County Hosp. Auth. Rev. Anticipation Ctfs. (St. Joseph's Hosp. of
Atlanta) Series 1989, 3.25%,
tender 11/17/94, LOC Fuji Bank, Mitsubishi Bank 3,900,000 3,900,000
3595979N
Fulton-DeKalb County Hosp. Auth. RAN (Grady Health Sys. Proj.) 3.85%
12/30/94, LOC Wachovia Bank 2,900,000 2,901,518 3600539A
Georgia Municipal Elec. Auth. (Proj. One):
Series 1994 C, 3.50%, tender 12/12/94 (Liquidity Facility Credit Suisse)
5,000,000 5,000,000 625997BV
Series 1994 D, 3.55%, tender 1/17/95 (Liquidity Facility Credit Suisse)
5,000,000 5,000,000 625997BT
Newton County Ind. Dev. Auth. Rfdg. Rev. (John H. Harland Co. Proj.) 3.55%,
LOC NationsBank, Georgia, VRDN 2,000,000 2,000,000 652572BQ
Rockdale County Hosp. Auth. Rev. Anticipation Ctfs. Series 1994, 3.50%,
LOC Trust Company Bank of Georgia, VRDN 4,000,000 4,000,000 773010AB
Savannah Econ. Dev. Auth. Rev. Rfdg. (La Quinta Motor Inns Inc. Proj.)
Series 1991, 3.60%,
LOC NationsBank, VRDN 1,900,000 1,900,000 80483CAB
35,464,078
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MUNICIPAL SECURITIES (a) - CONTINUED
IDAHO - 0.2%
Caribou County Poll. Cont. Rev. Rfdg. (Monsanto Co. Proj.) Series 1994 B,
3.50%, VRDN $ 1,000,000 $ 1,000,000 142076AF
ILLINOIS - 3.3%
Cook County Rev. (Catholic Charities Hosp.) Series 1988 A-1, 3.55%, LOC
Nat'l. Westminster Bank, VRDN 1,800,000 1,800,000 213247AL
East Hazel Crest Multi-Family Hsg. Rev. (I-80 & Halstead Proj.) Series 1985
A, 3.80%,
LOC Marine Midland Bank, VRDN 2,945,000 2,945,000 272891AA
Illinois Dev. Fin. Auth. Rev. (Long Term Care Medicaid Program) 3.40%
12/15/94,
LOC Canadian Imperial Bank, CP 1,000,000 999,731 4519089E
Illinois Gen. Oblig. TRAN 4.75% 4/17/95 2,000,000 2,007,586 452148PW
Lombard Ind. Dev. Proj. Rev. (B&H Partnership Proj.) 3.65%, LOC Barclays
Bank, VRDN 3,375,000 3,375,000 541575AD
Schaumberg Ind. Dev. Rev. (La Quinta Motor Inns Inc. Proj.) 3.60%, LOC
NationsBank, VRDN 2,085,000 2,085,000 806350AG
Springfield Commty. Impt. Rev. (Kent Family, Inc. Proj.) 3.50%, LOC
Pittsburgh Nat'l. Bank, VRDN 2,200,000 2,200,000 850570AM
15,412,317
INDIANA - 4.6%
Indiana Dev. Fin. Auth. Ind. Dev. Rev. Rfdg. (Hoosier Wire, Inc. Proj.)
3.50%, LOC Bank One, Indianapolis, VRDN 1,860,000 1,860,000 454907AB
Indiana Ed. Facs. Auth. Rev. (Tri-State Univ., Inc. Proj.) 3.50%, LOC Bank
One, Indianapolis, VRDN 2,860,000 2,860,000 455048KG
Jasper County Poll. Cont. Rev. (Northern Indiana Pub. Serv. Proj.) Series
1988, 3.60%, tender 1/18/95,
LOC Barclays Bank 1,700,000 1,700,000 471995KD
Noblesville Econ. Dev. Rev. Rfdg. (River's Edge Apt. Proj.) Series 1992,
3.50%, LOC Bank One, Indianapolis, VRDN 3,210,000 3,210,000 655153AD
Sullivan Poll. Cont. Rev. (Hoosier Energy Rural Utils. Coop):
Series 1985 L-2, 3.60%, tender 1/19/95 4,200,000 4,200,000 864991RB
Series 1985 L-3, 3.60%, tender 1/18/95 2,600,000 2,600,000 864991RC
Series 1985 L-4, 3.60%, tender 1/17/95 2,355,000 2,355,000 864991RE
Series 1985 L-4, 3.65%, tender 1/26/95 2,665,000 2,665,000 864991RG
21,450,000
IOWA - 1.0%
Algona Dev. Rev. (George A. Hormel & Co. Proj.) Series 1985, 3.45%, LOC
Sumitomo Bank, VRDN 3,400,000 3,400,000 015710AK
Iowa Hsg. Fin. Auth. Multi-Family Hsg. Rev. (Small Bus. Loan Prog.) Series
1985 A, 3.10%,
LOC Federal Home Loan Bank, VRDN 1,100,000 1,100,000 462462GR
4,500,000
KANSAS - 1.1%
Olathe Edl. Facs. Rev. (College Assoc. Pooled Ed. Loan Prog.) Series 1989
A, 3.45%,
LOC Marine Midland Bank, VRDN 2,600,000 2,600,000 679389AA
Wichita Ind. Rev. Rfdg. Bonds (Pepsi-Cola Bottling Co.) Series II-1987,
3.25%, tender 11/1/94 2,475,000 2,475,000
5,075,000
KENTUCKY - 2.4%
Danville Multi-City Lease Rev. (League Pooled Lease Fin. Prog.) 3.70%,
tender 11/9/94,
LOC Marine Midland Bank 1,335,000 1,335,000 23699BBA
Georgetown Ed. Inst. Rev. (Georgetown College Proj.) Series 1992, 3.50%,
LOC Citizens Fidelity Bank & Trust, VRDN 1,900,000 1,900,000 372721AA
Louisville & Jefferson County Metro. Swr. Dist. Rev., VRDN:
Series 1993 A, 3.40%, LOC PNC Bank, N.A. 1,700,000 1,700,000 546587CU
Series 1994 A, 3.40%, LOC PNC Bank, N.A. 3,000,000 3,000,000 546589AA
Trimble County Poll. Cont. Rev. Bonds Series 1992 A, 3.45%, tender 12/19/94
3,000,000 3,000,000 8962249V
10,935,000
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MUNICIPAL SECURITIES (a) - CONTINUED
MAINE - 1.2%
Baileyville Poll. Cont. Rev. (Georgia-Pacific Corp. Proj.) Series 1985,
3.525%, LOC Bank of Tokyo, VRDN $ 1,000,000 $ 1,000,000 056819AA
Biddeford Resource Recovery Rev. (Energy Recovery Co. Proj.) Series 1985,
3.45%, LOC Bank of America, VRDN 4,600,000 4,600,000 08883PAA
5,600,000
MICHIGAN - 0.6%
Michigan Strategic Fund Ind. Dev. Rev. (Michigan Sugar Co.-Croswell Proj.)
3.55%,
LOC Trust Company of Georgia, VRDN 1,500,000 1,500,000 594690AB
Michigan Strategic Fund Oblig. Rev. (Michigan Sugar Co.-Caro Proj.) Series
1991, 3.50%,
LOC Trust Company of Georgia, VRDN 1,500,000 1,500,000 594692B7
3,000,000
MINNESOTA - 1.9%
Duluth Tax Increment Rev. (Lake Superior Paper Co.) Series 1985, 3.50%, LOC
Nat'l. Australia Bank, VRDN 1,100,000 1,100,000 264532AA
Fridley Ind. Dev. Auth. Rev. (Longview Fibre Co. Proj.) Series 1988, 3.35%,
LOC Algemene Bank, VRDN 1,000,000 1,000,000 358380BH
Minneapolis Hsg. Dev. Rfdg. Rev. (One Ten Grant Proj.) Series 1989, 3.40%,
LOC First Bank Nat'l. Assoc., VRDN 1,500,000 1,500,000 603901BS
Olmsted County (COP Human Services Campus Infrastructure Proj.), 3.55%, LOC
Sanwa Bank, VRDN 2,735,000 2,735,000 681184AA
Osseo Independent School Dist. Gen. Oblig. Participating VRDN: (b)
Series 94G, 3.65% (Liquidity Facility Norwest Bank N.A.), (FGIC Insured)
1,260,000 1,260,000 688443WX
Series 94S, 3.65% (Liquidity Facility First Bank N.A.) 1,435,000
1,435,000 688443XG
9,030,000
MISSOURI - 1.1%
Kansas City Land Clearance Redev. Auth. Rev. (East-West Bryant Ltd..
Partnership Proj.) Series 1984, 3.775%,
LOC Bankers Trust, VRDN 1,000,000 1,000,000 485036DL
St Louis Planned Auth. Indust. Dev. Rfdg. Rev. (Alumax Foils Proj.) Series
1992, 3.45%,
LOC Pittsburgh Nat'l. Bank, VRDN 2,000,000 2,000,000 791662BJ
University of Missouri RAN Series 1994-95A, 4.50% 6/30/95 2,000,000
2,008,263 914480AT
5,008,263
MONTANA - 1.3%
Great Falls Ind. Dev. Rev. Rfdg. Bonds (Safeway, Inc.) 3.40%, tender
12/1/94, LOC Bankers Trust 2,405,000 2,405,000 390435PF
Montana TRAN Series 1994, 5% 6/30/95 3,500,000 3,522,515 612102RF
5,927,515
NEBRASKA - 0.7%
Omaha Pub. Pwr. Dist. Elec. Sys. Participating VRDN, Series 1993 D, 3.60%,
LOC Merrill Lynch & Co., Inc. (b) 3,170,000 3,170,000 681793G8
NEW HAMPSHIRE - 0.3%
New Hampshire Hsg. Fin. Auth. Multi-Family Hsg. Rev. (Nashua-Oxford Proj.)
Series 1990, 3.70%, VRDN 1,300,000 1,300,000 644686RM
NEW JERSEY - 0.4%
New Jersey Gen. Oblig. Participating VRDN, Series 94-3005, 3.61% (Liquidity
Facility Citibank) (b) 2,000,000 2,000,000 269896LJ
NEW MEXICO - 0.5%
Farmington Poll. Cont. Rev. Rfdg. (Arizona Pub. Svcs. Four Corners Proj.)
Series 1983 A, 3.35%,
LOC Citibank, VRDN 2,500,000 2,500,000 311450BB
NEW YORK - 6.8%
New York City Auth. Gen. Rev. BAN Series 1994, 4.19% 4/14/95 2,100,000
2,100,000 650009FE
New York City Muni. Wtr. Fin. Auth. Series 1, 3.20% 12/1/94, LOC Canadian
Imperial Bank, CP (c) 3,400,000 3,400,000 6497069B
New York City Muni. Wtr. Fin. Auth. Wtr. & Swr. Sys. BAN 3.75% 12/15/94
3,000,000 3,002,937 649706J6
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MUNICIPAL SECURITIES (a) - CONTINUED
NEW YORK - CONTINUED
New York City RAN Series A, 4.50% 4/12/95 $ 13,500,000 $ 13,535,975
6496486Q
New York City TAN 4.25% 2/15/95 9,000,000 9,013,966 6496486P
31,052,878
NORTH CAROLINA - 1.5%
North Carolina Mun. Pwr. Agency #1, CP:
3.40% 12/13/94 1,900,000 1,900,000 65799CAU
3.60% 1/17/95 5,000,000 5,000,000 65799CBB
6,900,000
OHIO - 0.6%
Cleveland City School Dist. TRAN 4.50% 12/30/94, LOC Canadian Imperial Bank
3,000,000 3,006,628 186360SJ
OKLAHOMA - 2.1%
Oklahoma City Participating VRDN, Series BT-13, 3.45%, BPA Bankers Trust
(b) 4,238,100 4,238,100 678569GP
Oklahoma Ind. Auth. Rev. Bonds (Baptist Med. Ctr.) Series 1990 B, 3.25%,
tender 12/9/94, LOC Fuji Bank 3,285,000 3,285,000 67999CBP
Tulsa Ind. Auth. Hosp. Rev. (Hillcrest Med. Ctr. Proj.) Series 1985, 3.40%,
LOC Bank of Tokyo, VRDN 1,000,000 1,000,000 899676GZ
Tulsa Ind. Dev. Auth. Rev. (Tulsa Univ. Proj.) Series 1985, 3.65%, LOC Fuji
Bank, VRDN 1,000,000 1,000,000 899530AA
9,523,100
PENNSYLVANIA - 5.8%
Allegheny County Hosp. Dev. Auth. Health Ctr. Rev. (Presb. University
Health Sys.) Series 1990 A, 3.45%,
LOC Credit Suisse, (MBIA Insured), VRDN 1,600,000 1,600,000 0172894T
Allegheny County Hosp. Dev. Auth. Rev. (St. Margaret Mem. Hosp.) Series
1992 A, 3.65%,
LOC Mellon Bank, VRDN 2,755,000 2,755,000 0172897L
Allegheny County Ind. Dev. Auth. Rev. (Eleven Prkwy. Ctr. Assoc. Proj.)
3.65%, LOC Mellon Bank, VRDN 1,800,000 1,800,000 017292RB
Allentown Multi-Family Housing (Arcadia Assoc. Proj.) Series 1990, 3.65%,
LOC Sumitomo Trust & Banking, VRDN 2,700,000 2,700,000 018469AB
Emmaus Gen. Auth. Local Gov't. Rev. (Altoona School Dist.) Series 1989 B-6,
3.55%,
LOC Marine Midland Bank, Hong Kong & Shanghai Banking, VRDN 2,000,000
2,000,000 291380BW
Montgomery County Higher Ed. & Health (Pottstown Healthcare Corp. Proj.)
Series 1992, 3.375%,
LOC Meridian Bank, VRDN 3,000,000 3,000,000 613603HY
North Lebanon Township (Grace Commty. Inc. Proj.) Series 1992 B, 3.375%,
LOC Meridian Bank, VRDN 2,000,000 2,000,000 660446AQ
Pennsylvania Gen. Oblig. TAN 4.75% 6/30/95 3,500,000 3,516,802
709138N9
Philadelphia Gen. Oblig. Series 1990, 3.15%, tender 11/10/94, LOC Fuji Bank
4,300,000 4,300,000 7178099S
Philadelphia TRAN Series 1994-95 D, 4.75% 6/15/95, LOC Morgan Guaranty
Trust Co. 3,000,000 3,016,130 717811XL
26,687,932
SOUTH CAROLINA - 0.8%
Greenville County School Dist. TRAN Series 1994, 4.50% 2/15/95 1,500,000
1,503,191 396064WF
York County Poll. Cont. Rfdg. Rev. (Duke Power Co. Proj.) 3.60%, tender
1/26/95 2,000,000 2,000,000 9864769F
3,503,191
TENNESSEE - 0.2%
Rutherford County (Cumberland-Swan Inc. Proj.) Series 1987, 3.50%, LOC
Third Nat'l Bank, VRDN 1,175,000 1,175,000 783260HD
TEXAS - 9.7%
Austin Hsg. Fin. Corp. Multi-Family Hsg. Rev. (Riverchase Proj.) Series
1985 A, 3.50%,
LOC Household Bank, VRDN 1,000,000 1,000,000 052425BS
Bexar County Health Fac. Dev. Corp. Retirement Commty. Rev. (Air Force
Village Foundation) 4.15%,
LOC Daiwa Bank, VRDN 1,000,000 1,000,000
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MUNICIPAL SECURITIES (a) - CONTINUED
TEXAS - CONTINUED
Bexar County Participating VRDN: (b)
Series BT-3, 3.45%, BPA Bankers Trust $ 985,000 $ 985,000 088275UB
Series BT-4, 3.65%, BPA Bankers Trust 985,000 985,000 088275UF
Brazos River Harbor Navigation Dist. Rev. Bonds (Dow Chemical) Series 1991,
3.40%, tender 11/18/94 2,750,000 2,750,000 10599DBE
Corpus Christi Port Auth. Rev. Rfdg. (Union Pacific Corp.) Series 1989,
2.80% 11/14/94 3,200,000 3,200,000 7339059R
El Paso Ind. Dev. Auth. Rev. Rfdg. (La Quinta Motor Inns Inc. Proj.) Series
1991, 3.60%, LOC NationsBank, VRDN 1,055,000 1,055,000 283776BE
Guadalupe-Blanco River Auth. Ind. Dev. Rev. (BOC Group Inc. Proj.) Series
1993, 3.50%,
LOC Wachovia Bank of Georgia, VRDN 1,500,000 1,500,000 400526AG
Harris County Health Facs. Dev. Corp. (YMCA Of Greater Houston) Series
1986, 3.45%, tender 11/17/94,
LOC Mitsubishi Bank 1,000,000 1,000,000 4141519W
Harris County Toll Road Unltd.. Tax & Sub. Lein Rev. Bonds Series B, 3.40%,
BPA Morgan Guaranty Trust Co., VRDN 3,000,000 3,000,000 414003Z7
La Marque Independent School Dist. Variable Rate TRAN 4.10% 8/31/95
2,900,000 2,900,000 503588RE
Lower Colorado River Auth. Rev., CP:
Series B, 3.70% 1/18/95 (Liquidity Facility Morgan Guaranty Trust Co.)
3,000,000 3,000,000 547991CU
Series C, 3.70% 1/18/95 (Liquidity Facility Morgan Guaranty Trust Co.)
2,100,000 2,100,000 547991CV
North Central Health Fac. Dev. Corp. Hosp. Rev. (Methodist Hosp. of Dallas)
3.60%, tender 1/27/95,
BPA Sumitomo Bank, (MBIA Insured) 6,000,000 6,000,000 6585469V
Pantego Ind. Dev. Corp. (Minyard Properties) Series 1984, 3.70%, LOC
Citibank, VRDN 2,600,000 2,600,000 698642AA
Southeast Hsg. Fin. Corp. Rev. (Single Family Mtg.) Series 1991 D, 3.60%,
VRDN 800,000 800,000 05944CAD
Texarkana Ind. Dev. Corp. Rev. Rfdg. (La Quinta Motor Inns Inc. Proj.)
3.60%, LOC NationsBank, VRDN 2,640,000 2,640,000 881856AB
Tyler Health Facs. Dev. Corp. Hosp. Rev. (Texas Med. Ctr. Reg. Healthcare
Prog.) Series 1993 C, 3.70%,
tender 12/16/94, LOC Banque Paribas 8,300,000 8,300,000 9022619R
44,815,000
UTAH - 1.5%
Intermountain Pwr. Agcy. Participating VRDN, Series BT-49, 3.90%, BPA
Bankers Trust (b) 6,018,000 6,018,000 4588404Y
Intermountain Pwr. Agcy. Pwr. Supply Rev. Series 1985 E, 6%, tender
3/15/95, LOC Industrial Bank of Japan 1,000,000 1,000,000 458840KA
7,018,000
VERMONT - 0.4%
Vermont Student Assistance Corp. Student Loan Rev. Series 1985, 3.60%, LOC
Sumitomo Trust & Banking, VRDN 1,800,000 1,800,000 924279AB
VIRGINIA - 4.8%
Chesapeake Ind. Dev. Auth. Poll. Cont. Rev. (Virginia Elec. Pwr. Co.)
Series 1985, 3.40%, tender 12/9/94 3,500,000 3,500,000 1653269M
Chesterfield County Ind. Dev. Auth. Poll. Cont. Rev. (Virginia Elec. Pwr.
Co.) Series B, 3.50%,
tender 11/30/94 3,585,000 3,585,000 166999CR
Louisa Ind. Dev. Auth. Poll. Cont. Rev. Bonds (Virginia Elec. Pwr. Co.
Proj.) Series 1985, 3.65%, tender 1/11/95,
BPA Bank of New York 2,000,000 2,000,000 546994BP
Suffolk Redev. and Hsg. Auth. Multi-Family Hsg. Rental. Rev. (Windsor At
Fieldstone Proj.) 3.55%,
LOC NationsBank, VRDN 7,492,000 7,492,000 864817AQ
Virginia Beach Dev Auth. Rev. Rfdg. (La Quinta Inns) Series 1993, 3.60%,
LOC NationsBank, VRDN 2,850,000 2,850,000 927743GJ
Virginia Hsg. Dev. Auth. Poll. Cont. Rev. Commonwealth Mtg. Bonds Series
1993, 4.25%, tender 7/12/95 3,000,000 3,000,000 9281295E
22,427,000
WASHINGTON - 3.8%
Washington Gen. Oblig. Participating VRDN, Series 93 C, 3.58% (Liquidity
Facility Citibank) (b) 4,000,000 4,000,000 2698969B
Washington Pub. Pwr. Supply Sys. Participating VRDN: (b)
Series 1994 B, 3.61% (Liquidity Facility Citibank) 10,600,000
10,600,000 269896EW
(Nuclear Proj. No. 3) Series BT-126, 3.65%, BPA Bankers Trust 2,774,400
2,774,400 939830RG
17,374,400
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MUNICIPAL SECURITIES (a) - CONTINUED
WISCONSIN - 2.3%
Wisconsin Gen. Oblig. Participating VRDN, Series 1993 R, 3.58% (Liquidity
Facility Citibank) (b) $ 3,000,000 $ 3,000,000 269896CA
Milwaukee Redev. Auth. Dev. Rev. (Bradley Ctr. Parking Facs. Proj.) Series
1986, 3.40%,
LOC Nat'l. Westminster Bank, VRDN 25,000 25,000 602419BN
Wisconsin Gen. Oblig. Rfdg. Bonds Series 4, 3% 11/1/94 3,640,000
3,640,000 977054MP
Wisconsin TRAN Series 1994, 4.50% 6/15/95 4,000,000 4,014,786 977054MP
10,679,786
WYOMING - 0.8%
Evanston Ind. Dev. Rev. Rfdg. (Safeway Inc. Projs.) Series 1991, 3.20%,
tender 12/1/94, LOC Bankers Trust 3,700,000 3,700,000 299326EQ
MULTIPLE STATE CERTIFICATES - 2.0%
Clipper Participating VRDN, Series 1993-1, 3.26% (Liquidity Facility State
Street Bank & Trust Co.) (b) 6,396,150 6,396,150 188857AA
Participating VRDN, Series 90 A, 3.875%, LOC NationsBank (b) 2,775,000
2,775,000 62899AAA
9,171,150
TOTAL INVESTMENTS - 100% $ 462,591,107
Total Cost for Income Tax Purposes - $462,590,790
SECURITY TYPE ABBREVIATIONS:
BAN - Bond Anticipation Notes
CP - Commercial Paper
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax & Revenue Anticipation Notes
VRDN - Variable Rate Demand Notes
LEGEND:
(a) The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
(b) Provides evidence of ownership in one or more underlying municipal
bonds.
(c) Security purchased on a delayed delivery basis.
TAX INFORMATION:
At October 31, 1994, the fund had a capital loss carryforward of
approximately $56,000 of which $25,000, $7,000, and $24,000 will expire on
October 31 1995, 1999, and 2000, respectively.
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
October 31, 1994
ASSETS
Investment in securities, at value - See accompanying schedule $ 462,591,107
Cash 2,253,726
Interest receivable 2,491,723
Receivable from investment adviser for expense 9,378
reductions
Total assets 467,345,934
LIABILITIES
Payable for investments purchased $ 9,258,765
Regular delivery
Delayed delivery 3,404,173
Dividends payable 118,660
Accrued management fee 197,162
Other payables and accrued expenses 108,164
Total liabilities 13,086,924
NET ASSETS $ 454,259,010
Net Assets consist of:
Paid in capital $ 454,314,577
Accumulated net realized gain (loss) on investments (55,884)
Unrealized gain from accretion of market discount 317
NET ASSETS, for 454,314,577 shares outstanding $ 454,259,010
NET ASSET VALUE, offering price and redemption price per share ($454,259,010 (divided by) 454,314,577 shares) $1.00
</TABLE>
Statement of Operations
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended October 31, 1994
INTEREST INCOME $ 14,607,194
EXPENSES
Management fee $ 2,592,124
Transfer agent, accounting and custodian fees and expenses 759,805
Non-interested trustees' compensation 4,857
Registration fees 90,000
Audit 27,965
Legal 6,191
Miscellaneous 6,055
Total expenses before 3,486,997
reductions
Expense reductions (117,236) 3,369,761
Net interest income 11,237,433
REALIZED AND UNREALIZED GAIN 45,516
(LOSS)
Net realized gain (loss) on investment securities
Increase (decrease) in net (2,097)
unrealized gain from accretion
of market discount
Net gain (loss) 43,419
Net increase in net assets resulting from operations $ 11,280,852
</TABLE>
Statement of Changes in Net Assets
DRAFT
<TABLE>
<CAPTION>
<S> <C> <C>
YEARS ENDED OCTOBER 31,
1994 1993
INCREASE (DECREASE) IN NET ASSETS
Operations $ 11,237,433 $ 10,541,875
Net interest income
Net realized gain (loss) 45,516 58,334
Increase (decrease) in net unrealized gain from accretion of market
discount (2,097) 1,649
Net increase (decrease) in net assets resulting from operations 11,280,852 10,601,858
Dividends to shareholders from net interest income (11,237,433) (10,541,875)
Share transactions at net asset value of $1.00 per share 1,427,541,439 1,449,653,882
Proceeds from sales of shares
Reinvestment of dividends from net interest income 9,765,655 9,145,468
Cost of shares redeemed (1,521,847,375) (1,405,102,445)
Net increase (decrease) in net assets and shares resulting from
share transactions (84,540,281) 53,696,905
Total increase (decrease) in net assets (84,496,862) 53,756,888
NET ASSETS
Beginning of period 538,755,872 484,998,984
End of period $ 454,259,010 $ 538,755,872
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD ENDED OCTOBER 31, 1994
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Daily Tax-Exempt Money Fund (the fund) is registered under the
Investment Company Act of 1940, as amended (the 1940 Act), as an open-end
management investment company organized as a Delaware business trust and is
authorized to issue an unlimited number of shares. The following summarizes
the significant accounting policies of the fund:
SECURITY VALUATION. 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.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INTEREST INCOME. Interest income, which includes amortization of premium
and accretion of original issue discount, is accrued as earned.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income.
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.
DELAYED DELIVERY TRANSACTIONS. The fund may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered
and paid for are fixed at the time the transaction is negotiated. The fund
identifies securities as segregated in its custodial records with a value
at least equal to the amount of the purchase commitment.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser,Fidelity Management &
Research Company (FMR) receives a fee that is computed daily at an annual
rate of .50% of the fund's average net assets.
SUB-ADVISER FEE. As the fund's investment sub-adviser, FMR Texas Inc., a
wholly owned subsidiary of FMR, receives a fee from FMR of 50% of the
management fee payable to FMR. The fee is paid prior to any voluntary
expense reimbursements which may be in effect, and after reducing the fee
for any payments by FMR pursuant to the fund's Distribution and Service
Plan.
DISTRIBUTION AND SERVICE PLAN. Pursuant to the Distribution and Service
Plan (the Plan), and in accordance with Rule 12b-1 of the 1940 Act, FMR or
the fund's distributor, Fidelity Distributors Corporation (FDC), an
affiliate of FMR, may use their resources to pay administrative and
promotional expenses related to the sale of the fund's shares. Subject to
the approval of the Board of Trustees, the Plan also authorizes payments to
third parties that assist in the sale of the fund's shares or render
shareholder support services. FMR or FDC has informed the fund that
payments made to third parties under the Plan amounted to $1,403,827 for
the period.
TRANSFER AGENT AND ACCOUNTING FEES. United Missouri Bank, N.A. (the Bank)
is the custodian and transfer and shareholder servicing agent for the fund.
The Bank has entered into a sub-contract with Fidelity Investments
Institutional Operations Company (FIIOC), an affiliate of FMR, under which
FIIOC performs the activities associated with the fund's transfer and
shareholder servicing agent functions. The fund pays fees based on the
type, size, number of accounts and number of transactions made by
shareholders. FIIOC pays for typesetting, printing and mailing of all
shareholder reports, except proxy statements. For the period, FIIOC
received transfer and shareholder servicing agent fees amounting to
$598,557.
The Bank also has a sub-contract with Fidelity Service Co. (FSC), an
affiliate of FMR, under which FSC maintains the fund's accounting records.
The fee is based on the level of average net assets for the month plus
out-of-pocket expenses. For the period, FSC received accounting fees
amounting to $102,238.
4. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse the fund's operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary
expenses) above an annual rate of .65% of average net assets. For the
period, the reimbursement reduced the expenses by $117,236.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK. FOR MORE
INFORMATION ON ANY FIDELITY FUND INCLUDING
CHARGES AND EXPENSES, CALL 1-800-544-0276 FOR A FREE PROSPECTUS. READ IT
CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Daily Tax-Exempt Money Fund:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
(included on page 3) present fairly, in all material respects, the
financial position of Daily Tax-Exempt Money Fund at October 31, 1994, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years then ended, and its financial highlights
for the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of Daily
Tax-Exempt Money Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities owned at October 31, 1994 by correspondence with
the custodian and brokers, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Dallas, Texas
December 16, 1994
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DAILY TAX-EXEMPT MONEY FUND:
CROSS REFERENCE SHEET
Form N-1A Item Number Statement of Additional Information Caption
10, 11 ................. Cover Page
12 ................... FMR; Description of the Fund
13 a,b,c.............. Investment Policies and Limitations
d.................. *
14 a,b................ Trustees and Officers
c.................. *
15 a.................. *
15 b.................. Description of the Fund
c.................. *
16 a(i)(ii)......... FMR; Trustees and Officers
a(iii),b,c,d... Management Contract, Interest of FMR Affiliates
e.................. Portfolio Transactions
f.................. Distribution and Service Plan
g.................. *
h.................. Description of the Fund
i.................. Interest of FMR Affiliates
17 a.................. Portfolio Transactions
b................. *
c,d............... Portfolio Transactions
e.................. *
18 a.................. Description of the Fund
b................... *
19 a.................. Distribution and Service Plan
b.................. Valuation of Portfolio Securities
c,d................ *
20 ................... Distributions and Taxes
21 a(i,ii)............ Interest of FMR Affiliates
a(iii),b,c......... *
22 ................... Performance
23 ................... Financial statements for the fiscal year ended
October 31, 1994 will be filed by subsequent amendment.
* Not Applicable
DAILY TAX-EXEMPT MONEY FUND
STATEMENT OF ADDITIONAL INFORMATION
December 26, 1994
This Statement of Additional Information (SAI) is not a prospectus but
should be read in conjunction with the Fund's current Prospectus (dated
December 26, 1994). Please retain this SAI for future reference. To obtain
additional copies of this SAI or of the Fund's Prospectus and Annual
Report, please call Fidelity at 800-843-3001. If you are investing through
a Financial Institution, contact that Institution directly.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contract
Interest of FMR Affiliates
Distribution and Service Plan
Description of the Fund
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
SUB-ADVISOR
FMR Texas, Inc. (FMR Texas)
DISTRIBUTOR
Fidelity Distributors Corporation (Distributors)
CUSTODIAN/TRANSFER AGENT
United Missouri Bank, N.A. (United Missouri)
DTETX-SAI-12-94
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 the 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 shall be
determined immediately after and as a result of the Fund's acquisition of
such security or other asset. Accordingly, any later increase or decrease
resulting from a 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.
The Fund's fundamental investment limitations may not be changed without
approval of a "majority of the outstanding shares" (as defined in the
Investment Company Act of 1940 (1940 Act) of the Fund. However, except for
the numbered investment limitations set forth below, the investment
policies and limitations described in this SAI are not fundamental and may
be changed without shareholder approval.
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. THE FUND MAY NOT:
1. with respect to 75% of the Fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government, or any of its agencies or instrumentalities), if as a result
thereof, (a) more than 5% of the Fund's total assets would be invested in
the securities of that issuer, or (b) the Fund would hold more than 10% of
the outstanding voting securities of that issuer;
2. issue senior securities, except as permitted under the Investment
Company Act of 1940;
3. make short sales of securities;
4. purchase any securities on margin, except for such short-term credits as
are necessary for the clearance of transactions;
5. borrow money, except for temporary or emergency purposes (not for
leveraging or investment) in an amount not to exceed 33 1/3% of the value
of its total assets (including the amount borrowed) less liabilities (other
than borrowings). Any borrowings that come to exceed 33 1/3% of the Fund's
assets by reason of a decline in net assets will be reduced within three
days (exclusive of Sundays and holidays) to the extent necessary to comply
with the 33 1/3% limitation;
6. underwrite any issue of securities; except to the extent that the
purchase of municipal bonds in accordance with the Fund's investment
objective, policies, and restrictions, either directly from the issuer, or
from an underwriter for an issuer, may be deemed to be underwriting;
7. purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a U.S.
territory or possession or a state or local government, or a political
subdivision of any of the foregoing) if, as a result, more than 25% of the
Fund's total assets would be invested in securities of companies whose
principal business activities are in the same industry;
8. purchase or sell real estate, but this shall not prevent the Fund from
investing in municipal bonds or other obligations secured by real estate or
interests therein;
9. purchase or sell commodities or commodity (futures) contracts;
10. lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties (but this limit
does not apply to purchases of debt securities or to repurchase
agreements); or
11. invest in oil, gas or other mineral exploration or development
programs.
12. The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objectives, policies, and limitations as the Fund.
The Fund has no current intention of implementing this policy.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
(i) The Fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of the Fund's fundamental investment limitation 5). The Fund will
not purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The Fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the Fund's total
assets.
(ii) The Fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(iii) The Fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to purchases
of debt securities.
(iv) The Fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of its total assets would be invested in the securities of business
enterprises that, including predecessors, have a record of less than three
years of continuous operation.
(v) The Fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Fund and those officers and
directors of FMR who individually own more than 1/2 of 1% of the securities
of such issuer together own more than 5% of such issuer's securities.
(vi) The Fund does not currently intend to invest in warrants, oil and gas
leases and in real estate limited partnerships.
For purposes of limitations (1) and (7), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a government
body is guaranteeing the security.
For the Fund's policies on quality and maturity, see the section entitled
"Quality and Maturity," below.
AFFILIATED BANK TRANSACTIONS. The Fund may engage in transactions with
banks that are, or may be considered to be, "affiliated persons" of the
Fund under the 1940 Act. These transactions may include repurchase
agreements with custodian banks; short-term obligations of, and repurchase
agreements with, the 50 largest U.S. banks (measured by deposits);
municipal securities; U.S. government securities with affiliated banks 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, the Board of Trustees has
established and periodically reviews procedures applicable to transactions
involving affiliated financial institutions.
DELAYED-DELIVERY TRANSACTIONS. The Fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by the Fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered.
When purchasing securities on a delayed-delivery basis, the Fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because the Fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the Fund's other investments. If the Fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the Fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When the Fund has sold a security on a
delayed-delivery basis, the Fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities,
the Fund could miss a favorable price or yield opportunity, or could suffer
a loss.
The Fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of the Fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of the Fund's investments, FMR may consider various factors
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including
any demand or tender features) and (5) the nature of the marketplace for
trades (including the ability to assign or offset the Fund's rights and
obligations relating to the investment). Investments currently considered
by the Fund to be illiquid include restricted securities and municipal
lease obligations determined by FMR to be illiquid. In the absence of
market quotations, illiquid investments are valued for purposes of
monitoring amortized cost valuation at fair value as determined in good
faith by a committee appointed by the Board of Trustees. If through a
change in values, net assets or other circumstances, the Fund were in a
position where more than 10% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the Fund may purchase only high-quality securities that FMR
believes present minimal credit risk. To be considered high-quality, a
security must be rated in accordance with applicable rules in one of the
two highest categories for short-term securities by at least two nationally
recognized rating services (or by one, if only one service has rated the
security); or, if unrated, judged to be of equivalent quality by FMR.
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 Fund may be obligated to pay all or part of
the registration expense and a considerable period may elapse between the
time it decides to seek registration and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the Fund might
obtain a less favorable price than prevailed when it decided to seek
registration of the security.
TENDER OPTION BONDS are created by coupling an intermediate- or long-term
tax-exempt bond (generally held pursuant to a custodial arrangement) with a
tender agreement that gives the holder the option to tender the bond at its
face value. As consideration for providing the tender option, the sponsor
(usually a bank, broker-dealer, or other financial institution) receives
periodic fees equal to the difference between the bond's fixed coupon rate
and the rate (determined by a remarketing or similar agent) that would
cause the bond, coupled with the tender option, to trade at par on the date
of such determination. After payment of the tender option fee, the Fund
effectively holds a demand obligation that bears interest at the prevailing
short-term tax-exempt rate. Subject to applicable regulatory requirements,
the Fund may buy tender option bonds if the agreement gives the Fund the
right to tender the bond to its sponsor no less frequently than once every
397 days. In selecting tender option bonds for the Fund, FMR will consider
the creditworthiness of the issuer of the underlying bond, the custodian,
and the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
STANDBY COMMITMENTS are puts that entitle holders to same-day settlement at
an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. The Fund may
acquire standby commitments to enhance the liquidity of portfolio
securities, but only when the issuers of the commitments present minimal
risk of default.
Ordinarily the Fund will not transfer a standby commitment to a third
party, although it could sell the underlying municipal security to a third
party at any time. The Fund may purchase standby commitments separate from
or in conjunction with the purchase of securities subject to such
commitments. In the latter case, the Fund would pay a higher price for the
securities acquired, thus reducing their yield to maturity. Standby
commitments will not affect the dollar-weighted average maturity of the
Fund, or the valuation of the securities underlying the commitments.
Issuers or financial intermediaries may obtain letters of credit or other
guarantees to support their ability to buy securities on demand. FMR may
rely upon its evaluation of a bank's credit in determining whether to
support an instrument supported by a letter of credit.
Standby commitments are subject to certain risks, including the ability of
issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by the Fund; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. The Fund may invest a portion of its assets in
municipal leases and participation interests therein. These obligations,
which may take the form of a lease, an installment purchase, or a
conditional sale contract, are issued by state and local governments and
authorities to acquire land and a wide variety of equipment and facilities.
Generally, the Fund will not hold such obligations directly as a lessor of
the property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest gives
the Fund a specified, undivided interest in the obligation in proportion to
its purchased interest in the total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
VARIABLE OR FLOATING RATE DEMAND OBLIGATIONS provide for periodic
adjustments of the interest rate paid. Floating rate obligations have
interest rates that change whenever there is a change in a designated base
rate while variable rate obligations provide for a specified periodic
adjustment in the interest rate. These formulas are designed to result in a
market value for the instrument that approximates its par value.
Some variable or floating rate obligations permit holders to demand payment
of the unpaid principal balance plus accrued interest from the issuers or
certain financial intermediaries. Issuers or financial intermediaries who
provide demand features or stand-by commitments often obtain letters of
credit (LOC's) or other guarantees from domestic or foreign banks to
support their repurchase commitments. FMR may rely upon its evaluation of a
bank's credit in determining whether to purchase an obligation supported by
an LOC. In evaluating a foreign bank's credit, FMR will consider whether
adequate public information about the bank is available and whether the
bank may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might affect the
bank's ability to honor its credit commitment.
When determining the maturity of a variable or floating rate obligation,
the Fund may look to the date the demand feature can be exercised, or to
the date the interest rate is readjusted, rather than to the final maturity
of the obligation.
ZERO COUPON BONDS do not make regular interest payments. Instead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, the Fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
FEDERALLY TAXABLE OBLIGATIONS. The Fund does not intend to invest in
securities whose interest is federally taxable; however, from time to time,
the Fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, the Fund may invest in obligations whose interest is federally
taxable pending the investment or reinvestment in municipal securities of
proceeds from the sale of its shares or sales of portfolio securities.
Should the Fund invest in federally taxable obligations, it would purchase
securities that in FMR's judgment are of high quality. These would include
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities; obligations of domestic banks; and repurchase
agreements. The Fund's standards for high-quality taxable obligations are
essentially the same as those described by Moody's Investors Service, Inc.
(Moody's) in rating corporate obligations within its two highest ratings of
Prime-1 and Prime-2, and those described by Standard and Poor's Corporation
(S&P) in rating corporate obligations within its two highest ratings of A-1
and A-2. The Fund will purchase taxable obligations only if they meet its
quality requirements as set forth in the Prospectus.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before state legislatures that
would affect the state tax treatment of the Fund's distributions. If such
proposals were enacted, the availability of municipal obligations and the
value of the Fund's holdings would be affected and the Trustees would
reevaluate the Fund's investment objectives and policies.
The Fund anticipates being as fully invested as practicable in municipal
securities; however, there may be occasions when, as a result of maturities
of portfolio securities, sales of Fund shares, or in order to meet
redemption requests, the Fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions, the Fund may be required to sell securities at a loss.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the Fund by FMR pursuant to authority contained in the Management
Contract. If FMR grants investment management authority to the sub-adviser
(see the section entitled "Management Contract"), the sub-adviser is
authorized to place orders for the purchase and sale of portfolio
securities, and will do so in accordance with the policies described below.
FMR is also responsible for the placement of transaction orders for other
investment companies and accounts for which it or its affiliates act as
investment adviser. Securities purchased and sold by the Fund generally
will be traded on a net basis (i.e., without commission). In selecting
broker-dealers, subject to applicable limitations of the federal securities
laws, FMR will consider various relevant factors, including, but not
limited to, the size and type of the transaction; the nature and character
of the markets for the security to be purchased or sold; the execution
efficiency, settlement capability, and financial condition of the
broker-dealer firm; the broker-dealer's execution services rendered on a
continuing basis; and the reasonableness of any commissions.
The Fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the Fund or other accounts over which
FMR or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of
investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of dealers who
provide such services on a regular basis. However, as many transactions on
behalf of the Fund are placed with dealers (including broker-dealers on the
list) without regard to the furnishing of such services, it is not possible
to estimate the proportion of such transactions directed to such dealers
solely because such services were provided. The selection of such
broker-dealers generally is made by FMR (to the extent possible consistent
with execution considerations) based upon the quality of such research and
execution services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the Fund may be useful to FMR in rendering investment management
services to the 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 the 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.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
Fund to pay such higher commissions, FMR must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage
and research services provided by such executing broker-dealers viewed in
terms of a particular transaction or FMR's overall responsibilities to the
Fund and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided or to determine what portion of the compensation should
be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the Fund, or shares of other Fidelity
funds, to the extent permitted by law, and may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI), a member of the New York Stock Exchange (NYSE) and subsidiary
of FMR Corp., if the commissions are fair and reasonable and comparable to
commissions charged by non-affiliated qualified brokerage firms for similar
services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, unless certain requirements
are satisfied. Pursuant to such requirements, the Board of Trustees has
authorized FBSI to effect portfolio transactions on national securities
exchanges in accordance with approved procedures and applicable SEC rules.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of 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.
From time to time the Trustees will review whether the recapture for the
benefit of the Fund of some portion of the brokerage commissions or similar
fees paid by the Fund on portfolio transactions is legally permissible and
advisable. The Fund seeks to recapture soliciting 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 the Fund to seek such recapture.
Although the Trustees and officers of the Fund are substantially the same
as those of other funds or accounts managed by FMR, investment
decisions for the Fund are made independently from those of other funds
or accounts managed by FMR affiliates. It sometimes happens that the
same security is held in the portfolio of more than one of these funds or
accounts. Simultaneous transactions are inevitable when several funds are
managed by the same investment adviser, particularly when the same security
is suitable for the investment objective of more than one fund or
account .
When two or more funds are simultaneously engaged in the purchase or sale
of the same security, the prices and amounts are allocated in accordance
with procedures believed to be appropriate and equitable for each
portfolio. considered by the officers of the funds involved to be
equitable to each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as the Fund is
concerned. In other cases, however, the ability of the Fund to participate
in volume transactions will produce better executions for the Fund. It is
the current opinion of the Trustees that the desirability of retaining FMR
as investment adviser to the funds outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
VALUATION OF PORTFOLIO SECURITIES
The Fund values its investments on the basis of amortized cost. This
technique involves valuing an instrument at its cost as adjusted for
amortization of premium or accretion of discount rather than its value
based on current market quotations or appropriate substitutes which reflect
current market conditions. The amortized cost value of an instrument may be
higher or lower than the price the Fund would receive if it sold the
instrument.
Valuing the Fund's instruments on the basis of amortized cost and use of
the term $money market fund" are permitted by Rule 2a-7 under the 1940 Act.
The Fund must adhere to certain conditions under Rule 2a-7; these
conditions are summarized in the Prospectus.
The Board of Trustees of the Fund oversees FMR's adherence to SEC rules
concerning money market funds, and has established procedures designed to
stabilize the Fund's net asset value per share ("NAV") at $1.00. At such
intervals as they deem appropriate, the Trustees consider the extent to
which NAV calculated by using market valuations would deviate from $1.00
per share. If the Trustees believe that a deviation from the Fund's
amortized cost per share may result in material dilution or other unfair
results to shareholders, the Trustees have agreed to take such corrective
action, if any, as they deem appropriate to eliminate or reduce, to the
extent reasonably practicable, the dilution or unfair results. Such
corrective action could include selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends; redeeming shares in kind; establishing NAV
by using available market quotations; and such other measures as the
Trustees may deem appropriate.
During periods of declining interest rates, the Fund's yield based on
amortized cost may be higher than the yield based on market valuations.
Under these circumstances, a shareholder in the Fund would be able to
obtain a somewhat higher yield than would result if the Fund utilized
market valuations to determine its NAV. The converse would apply in a
period of rising interest rates.
PERFORMANCE
The Fund may quote performance in various ways. All performance information
supplied by the Fund in advertising is historical and is not intended to
indicate future returns. The Fund's yield and total return fluctuate in
response to market conditions and other factors.
YIELD CALCULATIONS. To compute the Fund's yield for a period, the net
change in value of a hypothetical account containing one share reflects the
value of additional shares purchased with dividends from the one original
share and dividends declared on both the original share and any additional
shares. The net change is then divided by the value of the account at the
beginning of the period to obtain a base period return. This base period
return is annualized to obtain a current annualized yield. The Fund also
may calculate an effective yield by compounding the base period return over
a one-year period. In addition to the current yield, the fund may quote
yields in advertising based on any historical seven-day period. Yields for
the Fund are calculated on the same basis as other money market funds, as
required by applicable regulations.
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.
The Fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment after taxes to equal the Fund's tax-free
yield. Tax-equivalent yields are calculated by dividing the Fund's yield by
the result of one minus a stated federal or combined federal and state tax
rate. If only a portion of the Fund's yield is tax-exempt, only that
portion is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 1994. It shows the
approximate yield a taxable security must provide at various income
brackets to produce after-tax yields equivalent to those of hypothetical
tax-exempt obligations yielding from 2% to 8%. Of course, no assurance can
be given that the Fund will achieve any specific tax-exempt yield. While
the Fund invests principally in obligations whose interest is exempt from
federal income tax, other income received by the Fund may be taxable.
199 5 Tax Rates and Tax-Equivalent Yields
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Taxable Income* Federal 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00%
tax
$ 12,101-$53,500 $36,901-$89,150 28% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72% 11.11%
$ 53,501-$115,000 $89,151-$140,000 31% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14% 11.59%
$115,001-$250,000 $140,001-$250,00 36% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94% 12.50%
0
$250,001- + $250,001 + 39.6% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59% 13.25%
</TABLE>
* Net amount subject to federal income tax after deductions and exemptions.
Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions, limitations
on itemized deductions, and other credits, exclusions, and adjustments
which may raise a taxpayer's marginal tax rate. An increase in a
shareholder's marginal tax rate would increase that shareholder's
tax-equivalent yield.
The Fund may invest a portion of its assets in obligations that are subject
to federal income tax. When the Fund invests in these obligations, its
tax-equivalent yields will be lower. In the table above, tax-equivalent
yields are calculated assuming investments are 100% federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of the Fund's return, including the effect of reinvesting dividends
and capital gain distributions. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical historical
investment in the 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 of the investment had been
constant over that 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 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 the 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 the Fund.
In addition to average annual returns, the Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount and may be
calculated for a single investment, a series of investments or a series of
redemptions over any time period. Total returns may be broken down into
their components of income and capital (including capital gains) in order
to illustrate the relationship of these factors and their contributions to
total return. Total returns, yields, and other performance information may
be quoted numerically or in a table, graph, or similar illustration.
HISTORICAL FUND RESULTS. The following table shows the Fund's 7-day yields,
tax-equivalent yields and total returns for the period ended October 31,
1994.
The tax-equivalent yield is based on a 36 % federal income tax rate.
Note that the Fund may invest in securities whose income is subject to the
federal alternative minimum tax.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
<C>
Average Annual Total Returns Cumulative Total Returns
Seven-Day Tax-Equivalent
Yield Yield One Year Five Years Ten Years One Year Five Years Ten Years
2.87% 4.48% 2.21 3.41 4.08 2.21% 18.25% 49.13%
</TABLE>
The following chart shows the income and capital elements of the Fund's
year-by-year total returns for the period November 1, 1985 through October
31, 1994 as compared to the cost of living measured by the Consumer Price
Index over the same period.
The following table shows the income and capital elements of the Fund's
cumulative total return. The table compares the Fund's return to the record
of the Standard & Poor's Composite Index of 500 Stocks (S&P 500), the Dow
Jones Industrial Average (DJIA), and the cost of living (measured by the
Consumer Price Index, or CPI) over the same period. The CPI information is
as of the month end closest to the initial investment date. The S&P 500 and
DJIA comparisons are provided to show how the Fund's total return compared
to the record of a broad average of common stocks and a narrower set of
stocks of major industrial companies, respectively, over the same period.
Of course, since the Fund invests in short-term fixed-income securities,
common stocks represent a different type of investment from the Fund.
Common stocks generally offer greater growth potential than the Fund, but
generally experience greater price volatility, which means greater
potential for loss. In addition, common stocks generally provide lower
income than a fixed-income investment such as the Fund. Figures for the S&P
500 and DJIA are based on the prices of unmanaged groups of stocks and,
unlike the Fund's returns, do not include the effect of paying brokerage
commissions or other costs of investing.
During the period from October 31 , 1984 through October 31, 1994, a
hypothetical investment of $10,000 in the Fund would have grown to
$ 14,913 assuming all dividends were reinvested. This was a period of
fluctuating interest rates and the figures below should not be considered
representative of the dividend income or capital gain or loss that could be
realized from an investment in the Fund today.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of
Value of Value of Reinvested
Year Initial Reinvested Distributions Cost of
Ended $10,000 Distributions Capital Total S&P Living
10/31 Investment Dividends Gains Value 500 Indices DJIA
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1985 10,000 504 0 10,504 11,935 10,323 11,928
1986 10,000 979 0 10,979 15,898 10,475 16,903
1987 10,000 1,410 0 11 ,410 16,917 10,950 18,496
1988 10,000 1,929 0 11,929 19,422 11,415 20,664
1989 10,000 2,611 0 12,611 24,549 11,929 26,397
1990 10,000 3,290 0 13,290 22,710 12,678 25,333
1991 10,000 3,882 0 13,882 30,320 13,048 32,952
1992 10,000 4,289 0 14,289 33,344 13,466 35,672
1993 10,000 4,591 0 14,591 38,328 13,837 41,895
1994 10,000 4,913 0 14,913 39,811 14,198 45,710
</TABLE>
Explanatory Notes: With an initial investment of $10,000 made on November
1, 1984, the net amount invested in shares of the Fund was $10,000. The
cost of the initial investment ($10,000) together with the aggregate cost
of reinvested dividends for the period covered (that is, their cash value
at the time they were reinvested) amounted to $ 14,913 . If
distributions had not been reinvested, the amount of distributions earned
from the Fund over time would have been smaller and the cash payments
(dividends) for the period would have come to $ 4,004 . The Fund did
not distribute any capital gains during the period.
The Fund's performance may be compared to the performance of other mutual
funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared
by Lipper Analytical Services, Inc. (Lipper), an independent service
located in Summit, New Jersey that monitors the performance of mutual
funds. Lipper generally ranks funds on the basis of total return, assuming
reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to the
mutual fund rankings, the Fund's performance may be compared to stock,
bond, and money market mutual fund performance indices prepared by Lipper
or other organizations. When comparing these indices, it is important to
remember the risk and return characteristics of each type of investment.
For example, while stock mutual funds may offer higher potential returns,
they also carry the highest degree of share price volatility. Likewise,
money market funds may offer greater stability of principal, but generally
do not offer the higher potential returns from stock mutual funds.
From time to time, the Fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the 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.
The 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, the
Fund may offer greater liquidity or higher potential returns than CDs, the
Fund does not guarantee your principal or your return, and Fund shares are
not FDIC-insured.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common
stocks, small capitalization stocks, long-term corporate bonds,
intermediate-term government bonds, long-term government bonds, Treasury
bills, the U.S. rate of inflation (based on the CPI), and combinations of
various capital markets. The performance of these capital markets is based
on the returns of different indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns using the same method as the
funds. The funds may also compare performance to that of other compilations
or indices that may be developed and made available in the future.
The Fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND
AVERAGES(trademark)/Tax-Exempt, which is reported in the MONEY FUND
REPORT(registered trademark), covers over 373 tax-exempt 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; the effects of periodic
investment plans and dollar cost averaging; saving for college or other
goals; charitable giving; and the Fidelity credit card. In addition,
Fidelity may quote or reprint financial or business publications and
periodicals, including model portfolios or allocations, 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, a quarterly magazine provided free of charge
to Fidelity fund shareholders.
The Fund may reference and discuss its Fund number, Quotron(registered
trademark) number, and CUSIP number, and discuss or quote its current
portfolio manager in advertising.
ADDITIONAL PURCHASE 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 the Fund's NAV. Shareholders receiving securities or other
property on redemption may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act (the Rule), the Fund is required
to give shareholders at least 60 days' notice prior to terminating or
modifying its exchange privilege. Under the Rule, the 60-day notification
requirement may be waived if (i) the only effect of a modification would be
to reduce or eliminate an administrative fee, redemption fee, or deferred
sales charge ordinarily payable at the time of an exchange, or (ii) the
Fund suspends the redemption of the shares to be exchanged as permitted
under the 1940 Act or the rules and regulations thereunder, or the fund to
be acquired suspends the sale of its shares because it is unable to invest
amounts effectively in accordance with its investment objective and
policies.
In the prospectus, the Fund has notified shareholders that it reserves the
right at any time without prior notice to refuse exchange purchases by any
person or group if, in FMR's judgment, the Fund would be unable to invest
effectively in accordance with its investment objective and policies or
might otherwise be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS: If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS: Dividends from the Fund will not normally qualify for the
dividends-received deduction available to corporations, since the Fund's
income is primarily derived from tax-exempt interest income and short-term
capital gains. Depending upon state law, a portion of the Fund's dividends
attributable to tax-exempt interest earned on obligations issued by that
state may be exempt from state and local taxation. The Fund will provide
information on the portion of its dividends, if any, that qualify for this
exemption.
CAPITAL GAIN DISTRIBUTIONS: The Fund may distribute short-term capital
gains once a year or more often as necessary to maintain its net asset
value at $1.00 per share or to comply with distribution requirements under
federal tax law. The Fund does not anticipate earning long-term capital
gains on securities held by the portfolio.
TAX STATUS OF FUND: The Fund has qualified and intends to continue to
qualify as a "regulated investment company" under the Internal Revenue Code
of 1986 (the "Code"), as amended, so that the Fund will not be liable for
federal income or excise taxes on net investment income or capital gains to
the extent that these are distributed to shareholders in accordance with
applicable provisions of the Code. In order for the Fund to distribute its
tax-exempt interest as exempt-interest dividends, the Fund must hold at
least 50% of its total assets in tax-exempt obligations at the end of each
fiscal quarter. Because the Fund intends to invest substantially all of its
assets in tax-exempt obligations, the Fund expects to comply with the 50%
asset test.
The Fund purchases municipal obligations based on the opinions of counsel
regarding the federal income tax status of the obligations. These opinions
generally will be based upon covenants by the issuers regarding continuing
compliance with federal tax requirements. If the issuer of an obligation
fails to comply with its covenants at any time, interest on the obligation
could become federally taxable retroactive to the date the obligation was
issued.
FMR
All of the stock of FMR is owned by FMR Corp., its parent company organized
in 1972. Through ownership of voting common stock and the execution of a
shareholders' voting agreement, Edward C. Johnson, 3d, Johnson family
members, and various trusts for the benefit of the Johnson family form a
controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by three of its divisions as follows: Fidelity Service Company
(Service), which is the transfer and shareholder servicing agent for
certain of the funds advised by FMR; Fidelity Investments Institutional
Operations Company (FIIOC), which performs shareholder servicing functions
for certain institutional customers; and Fidelity Investments Retail
Marketing Company, which provides marketing services to various companies
within the Fidelity organization.
Fidelity investment personnel may invest in securities for their own
account pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions. For example, all
personal trades require pre-clearance, and participation in initial public
offerings are prohibited. In addition, restrictions on the timing of
personal investing relative to trades by Fidelity funds and on short-term
trading have been adopted. Personal investing is monitored to protect
shareholders' interests.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Fund are listed below. Except as
indicated, each individual has held the office shown or other offices in
the same company for the last five years. Trustees and officers elected or
appointed prior to the Fund's conversion to a Delaware business trust
served the Massachusetts business trust in identical capacities. All
persons named as Trustees serve in similar capacities for other funds
advised by FMR. Unless otherwise noted, the business address of each
Trustee and officer is 82 Devonshire Street, Boston, Massachusetts 02109,
which is also the address of FMR. Those Trustees who are $interested
persons" (as defined in the 1940 Act) by virtue of their affiliation with
either the Fund or FMR, are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, Trustee and President, is Chairman, Chief Executive
Officer and a Director of FMR Corp.; a director and Chairman of the Board
and of the Executive Committee of FMR; Chairman and a Director of FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc. and Fidelity Management & Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is a
consultant to Western Mining Corporation (1994). Prior to February 1994, he
was President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Until March 1990, Mr. Cox was President and Chief
Operating Officer of Union Pacific Resources Company (exploration and
production). He is a Director of Sanifill Corporation (non-hazardous waste,
1993) and CH2M Hill Companies (engineering). In addition, he served on the
Board of Directors of the Norton Company (manufacturer of industrial
devices, 1983-1990) and continues to serve on the Board of Directors of the
Texas State Chamber of Commerce, and is a member of advisory boards of
Texas A&M University and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, 340 E. 64th Street #22C, New York, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(Manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she is a member of the President's
Advisory Council of The University of Vermont School of Business
Administration.
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc. (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation, Hyster-Yale Materials Handling, Inc. (1989), and RPM,
Inc. (manufacturer of chemical products, 1990). In addition, he serves as a
Trustee of First Union Real Estate Investments; Chairman of the Board of
Trustees and a member of the Executive Committee of the Cleveland Clinic
Foundation, a Trustee and a member of the Executive Committee of University
School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the Financial
Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance), and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwich Hospital Association.
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) and
Executive Vice President of FMR (a position he held until March 31, 1991);
Vice President of Fidelity Magellan Fund and FMR Growth Group Leader; and
Managing Director of FMR Corp. Mr. Lynch was also Vice President of
Fidelity Investments Corporate Services (1991-1992). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction). In addition, he serves as a Trustee of
Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield
(1989) and Society for the Preservation of New England Antiquities, and as
an Overseer of the Museum of Fine Arts of Boston (1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial InterTech Corp. (water treatment equipment, 1992), and
Associated States Realty Corporation (a real estate investment trust,
1993). In addition, he serves as a Director for United Way Services of
Greater Cleveland, a member of the Executive Committee of the Weatherhead
School of Management, and as a Trustee of The Center for Economic
Education.
EDWARD H. MALONE, 5601 Turtle Bay Drive Apt. 2104, Naples, FL, Trustee.
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company. He
is a Director of Allegheny Power Systems, Inc. (electric utility), General
Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer). In
addition, he serves as Trustee of Corporate Property Investors, the EPS
Foundation at Trinity College, the Naples Philharmonic Center for the Arts
and Rensselaer Polytechnic Institute, and he is a member of the Advisory
Boards of Butler Capital Corporation Funds and Warburg, Pincus Partnership
Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee, is President of The Wales Group, Inc. (management and financial
advisory services). Prior to retiring in 1987, Mr. Williams served as
Chairman of the Board of First Wachovia Corporation (bank holding company),
and Chairman and Chief Executive Officer of The First National Bank of
Atlanta and First Atlanta Corporation (bank holding company). He is
currently a Director of BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software), Georgia Power Company (electric utility), Gerber Alley
& Associates, Inc. (computer software), National Life Insurance Company of
Vermont, American Software, Inc. (1989), and AppleSouth, Inc. (restaurants,
1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and Senior
Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
FRED L. HENNING, JR., Vice President (1994), is Vice President of
Fidelity's money market funds and Senior Vice President of FMR Texas Inc.
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President-Legal of FMR Corp., and Vice President and Clerk of
Distributors.
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas Inc. (1990).
SARAH ZENOBLE, Vice President (1993) of the Fund and other funds advised by
FMR and is an employee of FMR.
Under a retirement plan that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the Fund, based on their basic trustee fees and length of
service. Currently, Messrs. William R. Spaulding, Bertram H. Witham, and
David L. Yunich participate in the program. On October 31, 1994 the
Trustees and officers of the Fund owned in aggregate less than 1% of its
outstanding shares.
MANAGEMENT CONTRACT
The Fund employs FMR to furnish investment advisory and other services to
the Fund. Under its Management Contract with the Fund last approved by
shareholders at their October 23, 1991 meeting, FMR acts as investment
adviser and shall, subject to the supervision of the Board of Trustees,
direct the investments of the Fund in accordance with its investment
objective, policies, and limitations.
FMR also provides the Fund with all necessary office facilities and
personnel for servicing the Fund's investments, and compensates all
officers of the Fund, all Trustees who are $interested persons" of the Fund
and FMR, and of all personnel of the 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 the Fund. These services include providing facilities for
maintaining the Fund's organization, supervising relations with custodians,
transfer and pricing agents, accountants, underwriters and other persons
dealing with the Fund, preparing all general shareholder communications and
conducting shareholder relations, maintaining the Fund's records and the
registration of the Fund's shares under federal and state laws, developing
management and shareholder services for the Fund and furnishing reports,
evaluations and analyses on a variety of subjects to the Trustees.
For these services, the Fund pays FMR a monthly management fee at the
annual rate of . 48 % of the average net assets of the Fund throughout
the month. For the fiscal years ended October 31, 1994, 1993, and 1992, FMR
received fees amounting to $ 2,592,124 (before reimbursement) ,
$2,524,338 and $2,009,696, respectively, from the Fund.
Effective October 14, 1988, FMR voluntarily agreed to reimburse the Fund to
the extent that its aggregate operating expenses, including management
fees, were in excess of an annual rate of .65% of average net assets.
[During the year ended October 31, 1994, aggregate operating expenses did
not exceed the annual rate of .65% of the Fund's average net assets.]
In addition to the management fee payable to FMR and the fees payable to
United Missouri (see below) the Fund pays all its expenses, without
limitation, including the typesetting, printing and mailing of its proxy
material to shareholders, legal expenses and the fees of the custodian,
auditor and non-interested Trustees. Effective June 1, 1989, FIIOC has
assumed payment of expenses of typesetting, printing and mailing of
Prospectuses and SAIs and reports to existing shareholders. There is no
assurance that such an arrangement will continue beyond the terms of the
Fund's current transfer agent agreement (see "Interests of FMR Affiliates"
below). Other charges paid by the Fund include interest, taxes, brokerage
commissions, the Fund's proportionate share of insurance premiums and
Investment Company Institute dues, and the costs of registering shares
under federal and state securities laws. The Fund is also liable for such
nonrecurring expenses as may arise, including costs of litigation to which
the Fund is a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
To comply with the California Code of Regulations, FMR will reimburse the
Fund if and to the extent that the Fund's aggregate annual operating
expenses exceed specified percentages of its average net assets. The
applicable percentages are 2 1/2% of the first $30 million, 2% of the next
$70 million, and 1 1/2% of average net assets in excess of $100 million.
When calculating the Fund's expenses for purposes of this regulation, the
Fund may exclude interest, taxes, brokerage commissions, and extraordinary
expenses, as well as a portion of its distribution plan expenses.
SUB-ADVISOR. FMR has entered into a sub-advisory agreement with FMR Texas
pursuant to which FMR Texas has primary responsibility for providing
portfolio investment management services to the Fund.
Under the sub-advisory agreement, FMR pays FMR Texas fees equal to 50% of
the management fee retained by FMR under its Management Contract with the
Fund, after payments by FMR pursuant to the Fund's 12b-1 plan. The fees
paid to FMR Texas are not reduced by any voluntary or mandatory expense
reimbursements that may be in effect from time to time. For the fiscal
years ended October 31, 1994, 1993, and 1992, FMR paid FMR Texas fees that
amounted to $ 594,149 , $553,772, and $430,834, respectively.
INTEREST OF FMR AFFILIATES
United Missouri is the Fund's custodian and transfer agent. United Missouri
has entered into a sub-contract with FIIOC, an affiliate of FMR, under the
terms of which FIIOC performs the processing activities associated with
providing transfer agent and shareholder servicing functions for the Fund.
United Missouri has an additional sub-contract with Service, pursuant to
which Service performs the calculations necessary to determine the Fund's
NAV and dividends and maintains the Fund's accounting records. United
Missouri is entitled to reimbursement from FMR for fees paid to FIIOC or
Service, which must bear these costs pursuant to its management contract
with the Fund.
The Fund has a distribution agreement with Distributors, a Massachusetts
corporation organized on July 18, 1960. Distributors is a broker-dealer
registered under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. The distribution agreement
calls for Distributors 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.
United Missouri pays FIIOC per account fees and monetary transactions
charges of $65 and $14, respectively, or $60 and $12, respectively,
depending on the nature of services provided.
Prior to February 1992, State Street Bank and Trust Company (State Street)
served as the Fund's custodian and transfer agent and also sub-contracted
with FIIOC to perform the processing activities associated with providing
transfer agent and shareholder servicing functions for the Fund. FIIOC was
compensated by State Street on the same basis as it is currently
compensated by United Missouri (although FIIOC assumed payment of
out-of-pocket expenses).
Transfer agent fees, including reimbursement for out-of-pocket expenses,
paid to FIIOC for the fiscal years ended October 31, 1994, 1993, and 1992
were $ 598,557 , $280,752 and $153,873, respectively.
United Missouri has an additional sub-contract with Service, pursuant to
which Service performs the calculations necessary to determine the Fund's
NAV and dividends and maintains the Fund's accounting records. The annual
fee rates for these pricing and bookkeeping services are based on the
Fund's average net assets, specifically, .0175% for the first $500 million
of average net assets and .0075% for average net assets in excess of $500
million. The fee is limited to a minimum of $20,000 and a maximum of
$750,000 per year.
Prior to February 1992, State Street sub-contracted with Service for
pricing and bookkeeping services. Service was compensated for these
services by State Street on the same basis as it is currently compensated
by United Missouri.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to Service for the fiscal years ended 1994, 1993, and 1992
were $ 102,238 , $107,107 and $96,167, respectively.
United Missouri is entitled to reimbursement from FMR for fees paid to
FIIOC or Service, which must bear these costs pursuant to its Management
Contract with the Fund.
DISTRIBUTION AND SERVICE PLAN
The Trustees of the Fund have adopted a Distribution and Service Plan (the
Plan) under Rule 12b-1 under the 1940 Act (the Rule). As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
the implementation of the Plan prior to its approval and have determined
that there is a reasonable likelihood that the Plan will benefit the Fund
and its shareholders. In particular, the Trustees voted that payments under
the plan may provide additional incentives to promote the sale of shares of
the Fund, which may result in sales of such shares and an increase in the
assets of the Fund.
The Plan requires FMR to make payments to certain third parties (Investment
Professionals), other than Distributors, for assistance in selling shares
of the Fund or for providing shareholder support services. The Plan
authorizes FMR to make such payments from its management fees, its past
profits or any other source available to it; provided that such payments
cannot exceed the amount of the Fund's management fee. The maximum amount
payable to Investment Professionals under the Plan, as determined by the
Board of Trustees, is currently at the annual rate of .38% of the average
net asset value of the shares of the Fund to which that Investment
Professional is related. The percentage amount payable varies according to
the aggregate dollar level of assets to which an Investment Professional is
related in the Fund, in U.S. Treasury Portfolio (Initial Shares) or in
Money Market Portfolio, other funds advised by FMR.
INVESTMENT PROFESSIONALS. Investment Professionals are broker-dealers,
banks or other parties with whom Distributors has entered into written
Service Contracts and who assist or have assisted in selling shares of the
Fund or who provide shareholder support services. Under the Plan, payments
may be made to Investment Professionals with respect to shares to which the
Investment Professional is related, that is, shares owned by shareholders
for whom the Investment Professional is the dealer of record or holder of
record, the investment adviser, or a custodian; for whom the Investment
Professional was instrumental in the purchase of shares; or with whom the
investment adviser has a servicing relationship. Should a shareholder cease
to be a client of an Investment Professional, but continue to hold shares
of the Fund, the Investment Professional would no longer be entitled to
payments under the Plan.
Functions of Investment Professionals may include, among other things,
services rendered in the distribution of Fund shares, answering routine
client inquiries regarding the Fund, providing necessary facilities and
personnel to establish and maintain shareholder records, processing
purchase and redemption transactions, processing automatic investment and
redemption of client cash account balances, assisting clients in changing
dividend options, account registrations and addresses, performing
sub-accounting, arranging for bank wires, and providing such other services
as the Fund may reasonably request, to the extent the Investment
Professional is permitted to do so by applicable statute, rule or
regulation. The Plan also permits Investment Professionals to pay the costs
of advertising, implementing activities under the Plan, and printing and
distributing Prospectuses, SAIs and sales literature to prospective
investors.
The fees to be paid to Investment professionals, and the basis on which
payment is made, are determined by Distributors and/or FMR; provided,
however, that a majority of the Board of Trustees, including a majority of
those Trustees who are not "interested persons" of the Fund and have no
direct or indirect interest in the operations of the Plan or any related
agreements (the Independent Trustees) may at any time and from time to time
decrease the maximum percentage amount and/or maximum total amount payable
to Investment Professionals with respect to the shares to which they are
related, or remove any person as an Investment Professional. Amounts
payable under the Plan are payable to Distributors, which pays such amounts
to the Investment Professionals. A report of amounts expended under the
Plan must be made to the Board of Trustees at least quarterly.
The Plan, as amended, was last approved by shareholders on October 23,
1991.
The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been clearly defined, in Distributors' opinion
it should not prohibit a bank from being paid for shareholder servicing and
recordkeeping functions as an Investment Professional. Distributors will
engage banks as Investment Professionals 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 Fund might occur, including possible
termination of any automatic investment or redemption or other services
then being provided by the bank. It is not expected that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences. The Fund may execute portfolio transactions with and purchase
securities issued by depository institutions that act as Investment
Professionals. No preference will be shown for the instruments of
depository institutions acting as Investment Professionals under the Plan
in the selection of investments. In addition, state securities laws on this
issue may differ from the interpretations of federal law expressed herein,
and banks and financial institutions may be required to register as dealers
pursuant to state law.
DESCRIPTION OF THE FUND
FUND ORGANIZATION. Daily Tax-Exempt Money Fund is an open-end management
investment company organized as a Delaware business trust. Originally the
Fund was organized as a Massachusetts business trust by a Declaration of
Trust dated July 16, 1982, amended and restated November 1, 1989. The
Delaware Trust (established on June 20, 1991) acquired all of the assets of
the Massachusetts trust and succeeded to the latter's name and operations
on December 30,1991 pursuant to a plan approved by shareholders on October
23, 1991. Currently, the Fund is the only portfolio of the Delaware trust,
although the Trust Instrument permits the Trustees to create additional
portfolios. In the event that FMR ceases to be the investment adviser to
the Trust, the right of the Fund to use the identifying name "Fidelity" may
be withdrawn.
SHAREHOLDER AND TRUSTEE LIABILITY. The Fund is a business trust organized
under Delaware law. Delaware law provides that shareholders shall be
entitled to the same limitations of personal liability extended to
stockholders of private corporations for profit. The courts of some states,
however, may decline to apply Delaware law on this point. The Trust
Instrument contains an express disclaimer of shareholder liability for the
debts, liabilities, obligations, and expenses of the Fund and requires that
a disclaimer be given in each contract entered into or executed by the Fund
or the Trustees. The Trust Instrument provides for indemnification out of
the Fund's property of any shareholder or former shareholder held
personally liable for the obligations of the Fund. The Trust Instrument
also provides that the 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 Delaware law does not apply, no contractual
limitation of liability was in effect, and the Fund is unable to meet its
obligations. FMR believes that, in view of the above, the risk of personal
liability to shareholders is extremely remote.
The Trust Instrument further provides that the Trustees, if they have
exercised reasonable care, shall not be personally liable to any person
other than the Fund or its shareholders; moreover, the Trustees shall not
be liable for any conduct whatsoever, provided that Trustees are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
VOTING RIGHTS. The Fund's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion rights; the voting
and dividend rights, the right of redemption, and the privilege of exchange
are described in the Prospectus. Shares are fully paid and nonassessable,
except as set forth under the heading $Shareholder and Trustee Liability"
above. Shareholders representing 10% or more of the Fund may, as set forth
in the Trust Instrument, call meetings of the Fund for any purpose related
to the Fund, including the purpose of voting on removal of one or more
Trustees.
The Fund may be terminated upon the sale of its assets to, or merger with,
another open-end management investment company or series thereof, or upon
liquidation and distribution of its assets. Generally such terminations
must be approved by vote of the holders of a majority of the outstanding
shares of the Fund; however, the Trustees may, without prior shareholder
approval, change the form of organization of the Fund by merger,
consolidation, or incorporation. If not so terminated or reorganized, the
Fund will continue indefinitely. Under the Trust Instrument, the Trustees
may, without shareholder vote, cause the Fund to merge or consolidate into
one or more Fund partnerships or corporations or cause the Fund to be
incorporated under Delaware law, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the
Fund registration statement. The Fund may also invest all of its assets in
another investment company.
As of December 8 , 1994, the following owned of record or
beneficially 5% or more of the outstanding shares of the Fund:Texas
Commerce Bank, N.A., Houston, TX, 1 7.67 %; Barnett Bank of
Jacksonville, N.A., Jacksonville, FL, 6.54 %; First National Bank of
Commerce, New Orleans, LA, 11.60 % .
CUSTODIAN. United Missouri, 1010 Grand Avenue, Kansas City, MO, is
custodian of the Fund's assets. The Custodian is responsible for the
safekeeping of the Fund's assets and the appointment of subcustodian banks
and clearing agencies. The custodian takes no part in determining the
Fund's investment policies or in deciding which securities are purchased or
sold by the Fund. The Fund may, however, invest in obligations of the
custodian and may purchase securities from or sell securities to the
custodian.
FMR, its officers and directors, its affiliated companies, and the Trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the 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. Price Waterhouse L.L.P., 1700 Pacific Avenue, Dallas, Texas serves
as the Fund's independent accountant. The auditor examines financial
statements for the Fund and provides other audit, tax, and related
services.
APPENDIX
The descriptions that follow are examples of eligible ratings for the Fund.
The Fund may, however, consider the ratings of other types of investments
and the ratings assigned by other rating organizations when determining the
eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S COMMERCIAL PAPER RATING:
PRIME-1 - Issuers rated Prime-1 are judged to be of the highest quality.
Their short-term obligations carry the smallest degree of investment risk.
Margins of support for current indebtedness are large or stable with cash
flow and asset protection well assured. Current liquidity provides ample
coverage of near-term liabilities and unused alternative financing
arrangements generally are available. While protective elements may change
over the intermediate or long term, such changes are most unlikely to
impair the fundamentally strong position of short-term obligations.
PRIME-2 - Issuers rated Prime-2 are judged to be high quality and have a
strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics cited in the
Prime-1 rating but to a lesser degree. Earnings trends and coverage ratios,
while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternative liquidity is maintained.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF MUNICIPAL
NOTES:
Moody's ratings for state and municipal and other short-term obligations
will be designated Moody's Investment Grade (MIG, or VMIG for variable rate
obligations). This distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important in the short
run. Symbols used will be as follows:
MIG-1/VMIG-1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2 - This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S MUNICIPAL BOND RATINGS:
AAA - Bonds which are rated Aaa are judged to be of the highest quality.
They carry the smallest degree of investment risk and generally are
referred to as "gilt edge." Interest payments are protected by a large or
by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of
such issues.
AA - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S COMMERCIAL PAPER RATING:
A-1 - This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+)
sign designation.
A-2 - Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S STATE AND MUNICIPAL NOTE
RATINGS:
SP-1 - Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2 - Satisfactory capacity to pay principal and interest.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S MUNICIPAL BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard and Poor's
to a debt obligation. Capacity to pay interest and repay principal are
extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated debt issues only in a small
degree.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements for the fiscal year ended October 31, 1993 are
filed herin as part of the Prospectus.
(b) Exhibits:
(1) (a) Trust Instrument for Daily Tax-Exempt Money Fund II, dated June 20,
1991, is incorporated herein by reference to Exhibit 1 (a) to
Post-Effective Amendment No. 20..
(b) Certificate of Trust for Daily Tax-Exempt Money Fund II, dated June 20,
1991, is incorporated herein by reference to Exhibit 1(b) to Post-Effective
Amendment No. 17.
(2) (a) ByLaws of the Trust are incorporated herein by reference to exhibit
2 (a) to Post-Effective Amendment No. 20.
(3) None.
(4) Not applicable.
(5) (a) Form of Management Contract, dated December 30, 1991, between Daily
Tax-Exempt Money Fund II and Fidelity Management & Research Co. is
incorporated herein by reference to Exhibit 5(a) to Post-Effective
Amendment No. 17.
(b) Form of Sub-Advisory Agreement dated December 30, 1991, between
Fidelity Management & Research Co. and FMR Texas Inc. (with respect to
Daily Tax-Exempt Money Fund II) is incorporated herein by reference to
Exhibit 5(b) to Post-Effective Amendment No. 17.
(6) (a) Form of General Distribution Agreement dated December 30, 1991,
between Daily Tax-Exempt Money Fund II and Fidelity Distributors
Corporation is incorporated herein by reference to Exhibit 6(a) to
Post-Effective Amendment No. 17.
(7) Retirement Plan for Non-Interested Person Trustees' Retirement Plan,
Directors or General Partners, effective November 1, 1989, is incorporated
herein by reference to Exhibit 7 to Post-Effective Amendment No. 17.
(8) (a) Custodian Agreement, dated July 18, 1991, between Daily Tax-Exempt
Money Fund and United Missouri Bank, N.A. is filed herein incorporated
herein by reference to Exhibit 8(a) to Post-Effective Amendment No. 18.
(9) (a) Amended Transfer Agent Agreement dated December 30, 1991, between
Daily Tax-Exempt Money Fund II, United Missouri, and Fidelity Management &
Research Co. is incorporated herein by reference to exhibit 9 (a) to
Post-Effective Amendment No. 20.
(b) Schedule A to the Amended Transfer Agent Agreement for Daily
Tax-Exempt Money Fund II, dated January 1, 1993, is filed herein
electronically as Exhibit 9(b).
(c) Form of Appointment of Sub-Transfer Agent for Daily Tax-Exempt Money
Fund II, dated December 30, 1991, is incorporated herein by reference to
Exhibit 9(c) to Post-Effective Amendment No. 17.
(d) Form of Amended Service Agent Agreement, dated December 30, 1991,
between Daily Tax-Exempt Money Fund, United Missouri, and Fidelity
Management & Research Co. is incorporated herein by reference to Exhibit
9(d) to Post-Effective Amendment No. 17.
(e) Schedules B and C to the Amended Service Agreement for Daily
Tax-Exempt Money Fund II, dated December 30, 1991, are incorporated herein
electronically as Exhibit 9(e) to Post Effective Amendment No. 20.
(f) Form of Appointment of Sub-Servicing Agent for Daily Tax-Exempt Money
Fund II, dated December 30, 1991, is incorporated herein by reference to
Exhibit 9(f) to Post-Effective Amendment No. 17.
(10) Not applicable.
(11) The Consent of Price Waterhouse is filed herein as Exhibit 11.
Opinion of Price Waterhouse is filed herein as part of the Portfolio's
Financial Statements, reference Item 24 (a).
(12) None.
(13) None.
(14) Not applicable.
(15) (a) Form of Service Plan pursuant to Rule 12b-1 for Daily Tax-Exempt
Money Market Fund II is incorporated herein by reference to Exhibit 15(a)
to Post-Effective Amendment No. 17.
(b) Form of Agreement with Qualified Recipients is incorporated herein by
reference to Exhibit 15(b) to Post-Effective Amendment No. 1.
(16) Schedule for computation of performance quotations is incorporated
herein by reference to Exhibit
16 to Post-Effective Amendment No. 17.
Item 25. Persons Controlled by or under Common Control with Registrant
The Board of Trustees of Registrant is the same as the Board of Trustees
of other funds advised by FMR, each of which has Fidelity Management and
Research Company as its investment adviser. In addition, the officers of
these funds are substantially identical. Nonetheless, Registrant takes the
position that it is not under common control with these other funds since
the power residing in the respective boards and officers arises as the
result of an official position with the respective funds.
Item 26. Number of Holders of Securities
October 31, 1994
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Daily Tax-Exempt Money Fund 1,505
Item 27. Pursuant to Del. Code Ann. title 12 (sub-section) 3817, a Delaware
business trust may provide in its governing instrument for the
indemnification of its officers and trustees from and against any and all
claims and demands whatsoever. Article X, Section 10.02 of the Declaration
of Trust states that the Registrant shall indemnify any present 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, officer, or both, 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
Registrant 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
believe that his or her action was in the best interest of the Registrant.
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 Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against any
loss, liability, claim, damages or expense arising by reason of any person
acquiring any shares, based upon the ground that the registration
statement, Prospectus, Statement of Additional Information, shareholder
reports or other information filed or made public by the Registrant
included a materially misleading statement or omission. However, the
Registrant does not agree to indemnify the Distributor or hold it harmless
to the extent that the statement or omission was made in reliance upon, and
in conformity with, information furnished to the Registrant by or on behalf
of the Distributor. The Registrant does not agree to indemnify the parties
against the liability to which they would be subject by reason of their own
disabling conduct.
Pursuant to the agreement by which Fidelity Service Company ("Service") is
appointed sub-transfer agent, the Transfer Agent agrees to indemnify
Service for its losses, claims, damages, liabilities and expenses to the
extent the Transfer Agent is entitled to and receives indemnification from
the Registrant for the same events. Under the Transfer Agency Agreement,
the Registrant agrees to indemnify and hold the Transfer Agent harmless
against any losses, claims, damages, liabilities, or expenses resulting
from:
(1) any claim, demand, action or suit brought by any person other than the
Registrant, which names the Transfer Agent and/or the Registrant as a party
and is not based on and does not result from the Transfer Agent's willful
misfeasance, bad faith, negligence or reckless disregard of its duties, and
arises out of or in connection with the Transfer Agent's performance under
the Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent contributed to
by the Transfer Agent's willful misfeasance, bad faith, negligence or
reckless disregard of its duties) which results from the negligence of the
Registrant, or from the Transfer Agent's acting upon an 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 the Transfer
Agent's acting in reliance upon any instrument or stock certificate
reasonably believed by it to have been genuine and signed, countersigned or
executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held, during the
past two fiscal years, the following positions of a substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Executive Committee of FMR;
President and Chief Executive Officer of FMR Corp.;
Chairman of the Board and a Director of FMR, FMR
Corp., FMR Texas Inc. (1989), Fidelity Management &
Research (U.K.) Inc. and Fidelity Management &
Research (Far East) Inc.; President and Trustee of funds
advised by FMR;
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc. (1989),
Fidelity Management & Research (U.K.) Inc. and
Fidelity Management & Research (Far East) Inc.;
Senior Vice President and Trustee of funds advised by
FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Dwight Churchill Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danoff Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR (1990) and of a fund advised by
FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR (1991).
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund
advised by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR (1991) and Treasurer of the
funds advised by FMR (1991). Prior to assuming the
position as Treasurer he was Senior Vice President,
Fund Accounting - Fidelity Accounting & Custody
Services Co. (1991) (Vice President, 1990-1991); and
Senior Vice President, Chief Financial and Operations
Officer - Huntington Advisers, Inc. (1985-1990).
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Lsawsrence Greenberg Vice President FMR (1993).
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR; Equity Division Leader.
Robert Haber Vice President of FMR (1991) and of funds advised by
FMR.
Richard Haberman Senior Vice President of FMR (1993).
Daniel Harmetz Vice President of FMR (1991) and of a fund advised by
FMR.
Ellen S. Heller Vice President of FMR (1991).
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
Robert F. Hill Vice President of FMR (1989); and Director of
Technical Research.
Stephan Jonas Treasurer and Vice President of FMR (1993); Treasurer
of FMR Texas Inc. (1993) ; Fidelity Management &
Research (U.K.) Inc. (1993), and Fidelity Management
& Research (Far East) Inc. 1993.
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Division Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR (1991) and of funds advised by
FMR.
Malcom W. McNaught III Vice President of FMR (1993).
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR (1991) and of funds advised by
FMR.
Andrew Offit Vice President of FMR (1993).
Judy Pagliuca Vice President of FMR (1993).
Jacques Perold Vice President of FMR (1991).
Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.
Anne Punzak Vice President of FMR (1990) and of funds advised by
FMR.
Lee Sandwen Vice President of FMR (1993).
Patricia A. Satterthwaite Vice President of FMR (1993) and of a fund.
Thomas T. Soviero Vice President of FMR (1993).
Richard A. Spillane Vice President of FMR (1990) and of funds advised by
FMR; and Director of Equity Research (1989).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds
advised by FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and
Fixed-Income Division Head.
Gary L. Swayze Vice President of FMR and of funds advised by FMR;
and Tax-Free Fixed-Income Group Leader.
Thomas Sweeney Vice President of FMR (1993).
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds
advised by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader (1990).
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund
advised by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General
Counsel of FMR; Vice President, Legal of FMR Corp.;
and Secretary of funds advised by FMR.
</TABLE>
(2) FMR TEXAS INC. (FMR Texas)
FMR Texas provides investment advisory services to Fidelity Management &
Research Company. The directors and officers of the Sub-Adviser have held
the following positions of a substantial nature during the past two fiscal
years.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Texas; Chairman of the
Executive Committee of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of the Board
and a Director of FMR, FMR Corp., Fidelity Management
& Research (Far East) Inc. and Fidelity Management &
Research (U.K.) Inc.; President and Trustee of funds
advised by FMR.
J. Gary Burkhead President and Director of FMR Texas; President of FMR;
Managing Director of FMR Corp.; President and a
Director of Fidelity Management & Research (Far East)
Inc. and Fidelity Management & Research (U.K.) Inc.;
Senior Vice President and Trustee of funds advised by
FMR.
Frederic L. Henning Jr. Senior Vice President of FMR Texas; Money Market
Division Leader.
Leland Baron Vice President of FMR Texas (1991) and of funds advised
by FMR.
Robert Litterst Vice President of FMR Texas
Thomas D. Maher Vice President of FMR Texas.
Burnell Stehman Vice President of FMR Texas and of funds advised by
FMR.
John Todd Vice President of FMR Texas and of funds advised by
FMR.
Sarah H. Zenoble Vice President of FMR Texas and of funds advised by
FMR.
Steven Jonas Treasurer of FMR Texas Inc. (1993), Fidelity
Management & Research (U.K.) Inc. (1993), Fidelity
Management & Research (Far East) Inc. (1993); Treasurer
and Vice President of FMR (1993).
David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity Management &
Research (U.K.) Inc.; Clerk of Fidelity Management &
Research (Far East) Inc.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity Service
Co., 82 Devonshire Street, Boston, MA 02109, or the fund's custodian United
Missouri Bank, N.A., 1010 Grand Avenue, Kansas City, MO.
Item 31. Management Services
Not applicable
Item 32 Undertakings
Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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. 22 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, Massachusetts, on the 14th day of December, 1994.
DAILY TAX-EXEMPT MONEY FUND
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, 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)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee December 15, 1994
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer December 15, 1994
Gary L. French
/s/J. Gary Burkhead Trustee December 15, 1994
J. Gary Burkhead
/s/Ralph F. Cox * Trustee December 15, 1994
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee December 15, 1994
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee December 15, 1994
Richard J. Flynn
/s/E. Bradley Jones * Trustee December 15, 1994
E. Bradley Jones
/s/Donald J. Kirk * Trustee December 15, 1994
Donald J. Kirk
/s/Peter S. Lynch * Trustee December 15, 1994
Peter S. Lynch
/s/Edward H. Malone * Trustee December 15, 1994
Edward H. Malone
/s/Marvin L. Mann_____* Trustee December 15, 1994
Marvin L. Mann
/s/Gerald C. McDonough* Trustee December 15, 1994
Gerald C. McDonough
/s/Thomas R. Williams * Trustee December 15, 1994
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 and filed herewith.
I, the undersigned, Secretary of the investment companies for which
Fidelity Management & Research Company acts as investment adviser
(collectively, the "Funds"), hereby constitute and appoint each of Arthur
J. Brown, Robert C. Hacker, Richard M. Phillips, Dana L. Platt, and
Stephanie A. Djinis my true and lawful attorneys-in-fact, with full power
to sign for me and in my name in the appropriate capacity, any and all
representations with respect to the consistency of foreign language
translation prospectuses with the original prospectuses filed in connection
with the Post-Effective Amendments for the Funds 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.
I hereby ratify and confirm all that said attorneys-in-fact may do or cause
to be done by virtue hereof.
WITNESS my hand on this 9th day of December, 1994.
/s/Arthur S. Loring
Arthur S. Loring
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee or General Partner, as
the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity any
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Pre-Effective Amendments or
Post-Effective Amendments to said Registration Statements on Form N-1A 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 behalf in connection therewith as said
attorney-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. I hereby ratify and confirm all that said attorneys-in-fact or
their substitutes may do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993
Edward C. Johnson 3d
POWER OF ATTORNEY
We, the undersigned Directors, Trustees or General Partners, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Director, Trustee or General Partner (collectively,
the "Funds"), hereby severally constitute and appoint Arthur J. Brown,
Arthur C. Delibert, Robert C. Hacker, Richard M. Phillips, Dana L. Platt
and Stephanie Xupolos, each of them singly, my true and lawful
attorney-in-fact, with full power of substitution, and with full power to
each of them, to sign for me and my name in the appropriate capacities any
Registration Statements of the Funds on Form N-1A or any successor thereto,
any and all subsequent Pre-Effective Amendments or Post-Effective
Amendments to said Registration Statements on Form N-1A 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 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 attorney-in-fact
or their substitutes may do or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Donald J. Kirk
Edward C. Johnson 3d Donald J. Kirk
/s/J. Gary Burkhead /s/Peter S. Lynch
J. Gary Burkhead Peter S. Lynch
/s/Ralph F. Cox /s/Marvin L. Mann
Ralph F. Cox Marvin L. Mann
/s/Phyllis Burke Davis /s/Edward H. Malone
Phyllis Burke Davis Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/s/E. Bradley Jones /s/Thomas R. Williams
E. Bradley Jones Thomas R. Williams
POWER OF ATTORNEY
I, the undersigned Treasurer and principal financial and accounting
officer of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Daily Money Fund Fidelity Institutional Tax-Exempt Cash Portfolios
Daily Tax-Exempt Money Fund Fidelity Institutional Investors Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust II
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Court Street Trust II Fidelity New York Municipal Trust II
Fidelity Hereford Street Trust Fidelity Phillips Street Trust
Fidelity Institutional Cash Portfolios Fidelity Union Street Trust II
</TABLE>
in addition to any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as Treasurer and principal financial and accounting
officer (collectively, the "Funds"), hereby constitute and appoint John H.
Costello, 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 any Registration Statements of the Funds on Form
N-1A, Form N-8A or any successor thereto, any and all subsequent
Pre-Effective Amendments or Post-Effective Amendments to said Registration
Statements on Form N-1A 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
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.
WITNESS my hand on the date set forth below.
/s/Gary L. French October 20, 1993
Gary L. French
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. 22
to the Registration Statement on Form N-1A of Daily Tax-Exempt Money Fund,
of our report dated December ____ on the financial statements and financial
highlights included in the October 31, 1994 Annual Report to Shareholders
of Daily Tax-Exempt Money Fund.
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/PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 15, 1994
TO BE USED IN A POST-EFFECTIVE AMENDMENT WHERE THERE ARE TWO OR MORE
PROSPECTUSES COVERING FUNDS IN THE SAME TRUST (E.G., DEVONSHIRE TRUST).
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the Prospectuses
and Statements of Additional Information in Post-Effective Amendment No. [
] to the Registration Statement on Form N-1A of [TRUST NAME: FUND NAMES] of
our reports dated [DATE OF OPINION] on the financial statements and
financial highlights included in the [FISCAL YEAR END] Annual Reports to
Shareholders of [FUND NAMES].
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectuses and "Auditor" in the Statements
of Additional Information.
/s/PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
[DATE HANDING OFF 485(b) FOR FILING]
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000704207
<NAME> Daily Tax-Exempt Money Fund
<SERIES>
<NUMBER> 1
<NAME> Daily Tax-Exempt Money Fund
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> oct-31-1994
<PERIOD-END> oct-31-1994
<INVESTMENTS-AT-COST> 462,591
<INVESTMENTS-AT-VALUE> 462,591
<RECEIVABLES> 2,501
<ASSETS-OTHER> 2,254
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 467,346
<PAYABLE-FOR-SECURITIES> 12,663
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 424
<TOTAL-LIABILITIES> 13,087
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 454,315
<SHARES-COMMON-STOCK> 454,315
<SHARES-COMMON-PRIOR> 538,855
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (56)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 454,259
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14,607
<OTHER-INCOME> 0
<EXPENSES-NET> 3,370
<NET-INVESTMENT-INCOME> 11,237
<REALIZED-GAINS-CURRENT> 46
<APPREC-INCREASE-CURRENT> (2)
<NET-CHANGE-FROM-OPS> 11,281
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,237
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,427,541
<NUMBER-OF-SHARES-REDEEMED> 1,521,847
<SHARES-REINVESTED> 9,766
<NET-CHANGE-IN-ASSETS> (84,497)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (101)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,592
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,487
<AVERAGE-NET-ASSETS> 518,425
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .022
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .022
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
