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 incom
2.17 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
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
3.70%, tender 1/17/95, LOC Fuji Bank, Mitsubishi Bank 2,075,000
2,075,000
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
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
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
(Voluntary Hosp. Federation Pooled Loan Prog.) Series 1985 A, 3.45% (FGIC
Insured) 3,925,000 3,925,000
Maricopa County Poll. Cont. Rev. (Southern California Edison Co.) Series
1985 F, 3.45%, tender 12/12/94 2,850,000 2,850,000
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
California Gen. Oblig. RAN Series A, 5% 6/28/95 1,500,000 1,509,116
California Gen. Oblig. Variable Rate TRAN Series 1994-95 B, 3.51% 6/28/95
3,000,000 2,999,765
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
California RAN Series A, 3.75% 12/21/94 1,000,000 1,000,213
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
(Promenade Towers) 3.70%, LOC Tokai Bank 7,970,000 7,970,000
Los Angeles County TRAN 4.50% 6/30/95 3,200,000 3,209,088
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
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
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
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
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
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
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
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
Series 1985 B, 3.50%, LOC Citibank, Marine Midland Bank 2,500,000
2,500,000
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
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
(Hillsborough-Oxford Proj.) Series D, 3.70% (Continental Casualty
Guaranteed) 6,000,000 6,000,000
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
Series 2, 3.55%, tender 12/16/94, LOC Sumitomo Bank 5,000,000
5,000,000
Indian River County Hosp. Dist. Rev. Bonds Series 1990, 3.80%, tender
2/9/95, LOC Kredietbank 3,200,000 3,200,000
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
Orange County Blood Bank Proj. Series 1988, 3.50%, LOC Sun Bank, N.A., VRDN
1,545,000 1,545,000
Orange County School Dist. TAN 4.75% 6/30/95 3,000,000 3,014,292
Palm Beach County Health Facs. 3.40%, tender 11/17/94 (Liquidity Facility
Credit Suisse),
(MBIA Insured) 5,400,000 5,400,000
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
3.45%, tender 12/16/94 (Liquidity Facility Sun Bank, N.A.) 5,000,000
5,000,000
Series 1993 A:
3.60%, tender 1/27/95 (Liquidity Facility Goldman Sachs) 1,500,000
1,500,000
3.65%, tender 1/18/95 (Liquidity Facility Goldman Sachs) 2,000,000
2,000,000
Sunshine State Governmental Fing. Commission 3.40% 12/16/94, CP
4,825,000 4,825,000
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
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
(Ten Oaks Apts. Proj.) Series 1990 F, 3.50%, BPA Barclays Bank, (FSA
Insured) 1,400,000 1,400,000
Cobb County Gen. Oblig. TAN, Series 1994, 3.50% 12/30/94 3,000,000
3,002,560
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
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
Fulton-DeKalb County Hosp. Auth. RAN (Grady Health Sys. Proj.) 3.85%
12/30/94, LOC Wachovia Bank 2,900,000 2,901,518
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
Series 1994 D, 3.55%, tender 1/17/95 (Liquidity Facility Credit Suisse)
5,000,000 5,000,000
Newton County Ind. Dev. Auth. Rfdg. Rev. (John H. Harland Co. Proj.) 3.55%,
LOC NationsBank, Georgia, VRDN 2,000,000 2,000,000
Rockdale County Hosp. Auth. Rev. Anticipation Ctfs. Series 1994, 3.50%,
LOC Trust Company Bank of Georgia, VRDN 4,000,000 4,000,000
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
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
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
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
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
Illinois Gen. Oblig. TRAN 4.75% 4/17/95 2,000,000 2,007,586
Lombard Ind. Dev. Proj. Rev. (B&H Partnership Proj.) 3.65%, LOC Barclays
Bank, VRDN 3,375,000 3,375,000
Schaumberg Ind. Dev. Rev. (La Quinta Motor Inns Inc. Proj.) 3.60%, LOC
NationsBank, VRDN 2,085,000 2,085,000
Springfield Commty. Impt. Rev. (Kent Family, Inc. Proj.) 3.50%, LOC
Pittsburgh Nat'l. Bank, VRDN 2,200,000 2,200,000
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
Indiana Ed. Facs. Auth. Rev. (Tri-State Univ., Inc. Proj.) 3.50%, LOC Bank
One, Indianapolis, VRDN 2,860,000 2,860,000
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
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
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
Series 1985 L-3, 3.60%, tender 1/18/95 2,600,000 2,600,000
Series 1985 L-4, 3.60%, tender 1/17/95 2,355,000 2,355,000
Series 1985 L-4, 3.65%, tender 1/26/95 2,665,000 2,665,000
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
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
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
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
Georgetown Ed. Inst. Rev. (Georgetown College Proj.) Series 1992, 3.50%,
LOC Citizens Fidelity Bank & Trust, VRDN 1,900,000 1,900,000
Louisville & Jefferson County Metro. Swr. Dist. Rev., VRDN:
Series 1993 A, 3.40%, LOC PNC Bank, N.A. 1,700,000 1,700,000
Series 1994 A, 3.40%, LOC PNC Bank, N.A. 3,000,000 3,000,000
Trimble County Poll. Cont. Rev. Bonds Series 1992 A, 3.45%, tender 12/19/94
3,000,000 3,000,000
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
Biddeford Resource Recovery Rev. (Energy Recovery Co. Proj.) Series 1985,
3.45%, LOC Bank of America, VRDN 4,600,000 4,600,000
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
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
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
Fridley Ind. Dev. Auth. Rev. (Longview Fibre Co. Proj.) Series 1988, 3.35%,
LOC Algemene Bank, VRDN 1,000,000 1,000,000
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
Olmsted County (COP Human Services Campus Infrastructure Proj.), 3.55%, LOC
Sanwa Bank, VRDN 2,735,000 2,735,000
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
Series 94S, 3.65% (Liquidity Facility First Bank N.A.) 1,435,000
1,435,000
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
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
University of Missouri RAN Series 1994-95A, 4.50% 6/30/95 2,000,000
2,008,263
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
Montana TRAN Series 1994, 5% 6/30/95 3,500,000 3,522,515
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
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
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
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
NEW YORK - 6.8%
New York City Auth. Gen. Rev. BAN Series 1994, 4.19% 4/14/95 2,100,000
2,100,000
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
New York City Muni. Wtr. Fin. Auth. Wtr. & Swr. Sys. BAN 3.75% 12/15/94
3,000,000 3,002,937
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
New York City TAN 4.25% 2/15/95 9,000,000 9,013,966
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
3.60% 1/17/95 5,000,000 5,000,000
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
OKLAHOMA - 2.1%
Oklahoma City Participating VRDN, Series BT-13, 3.45%, BPA Bankers Trust
(b) 4,238,100 4,238,100
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
Tulsa Ind. Auth. Hosp. Rev. (Hillcrest Med. Ctr. Proj.) Series 1985, 3.40%,
LOC Bank of Tokyo, VRDN 1,000,000 1,000,000
Tulsa Ind. Dev. Auth. Rev. (Tulsa Univ. Proj.) Series 1985, 3.65%, LOC Fuji
Bank, VRDN 1,000,000 1,000,000
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
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
Allegheny County Ind. Dev. Auth. Rev. (Eleven Prkwy. Ctr. Assoc. Proj.)
3.65%, LOC Mellon Bank, VRDN 1,800,000 1,800,000
Allentown Multi-Family Housing (Arcadia Assoc. Proj.) Series 1990, 3.65%,
LOC Sumitomo Trust & Banking, VRDN 2,700,000 2,700,000
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
Montgomery County Higher Ed. & Health (Pottstown Healthcare Corp. Proj.)
Series 1992, 3.375%,
LOC Meridian Bank, VRDN 3,000,000 3,000,000
North Lebanon Township (Grace Commty. Inc. Proj.) Series 1992 B, 3.375%,
LOC Meridian Bank, VRDN 2,000,000 2,000,000
Pennsylvania Gen. Oblig. TAN 4.75% 6/30/95 3,500,000 3,516,802
Philadelphia Gen. Oblig. Series 1990, 3.15%, tender 11/10/94, LOC Fuji Bank
4,300,000 4,300,000
Philadelphia TRAN Series 1994-95 D, 4.75% 6/15/95, LOC Morgan Guaranty
Trust Co. 3,000,000 3,016,130
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
York County Poll. Cont. Rfdg. Rev. (Duke Power Co. Proj.) 3.60%, tender
1/26/95 2,000,000 2,000,000
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
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
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
Series BT-4, 3.65%, BPA Bankers Trust 985,000 985,000
Brazos River Harbor Navigation Dist. Rev. Bonds (Dow Chemical) Series 1991,
3.40%, tender 11/18/94 2,750,000 2,750,000
Corpus Christi Port Auth. Rev. Rfdg. (Union Pacific Corp.) Series 1989,
2.80% 11/14/94 3,200,000 3,200,000
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
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
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
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
La Marque Independent School Dist. Variable Rate TRAN 4.10% 8/31/95
2,900,000 2,900,000
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
Series C, 3.70% 1/18/95 (Liquidity Facility Morgan Guaranty Trust Co.)
2,100,000 2,100,000
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
Pantego Ind. Dev. Corp. (Minyard Properties) Series 1984, 3.70%, LOC
Citibank, VRDN 2,600,000 2,600,000
Southeast Hsg. Fin. Corp. Rev. (Single Family Mtg.) Series 1991 D, 3.60%,
VRDN 800,000 800,000
Texarkana Ind. Dev. Corp. Rev. Rfdg. (La Quinta Motor Inns Inc. Proj.)
3.60%, LOC NationsBank, VRDN 2,640,000 2,640,000
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
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
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
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
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
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
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
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
Virginia Beach Dev Auth. Rev. Rfdg. (La Quinta Inns) Series 1993, 3.60%,
LOC NationsBank, VRDN 2,850,000 2,850,000
Virginia Hsg. Dev. Auth. Poll. Cont. Rev. Commonwealth Mtg. Bonds Series
1993, 4.25%, tender 7/12/95 3,000,000 3,000,000
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
Washington Pub. Pwr. Supply Sys. Participating VRDN: (b)
Series 1994 B, 3.61% (Liquidity Facility Citibank) 10,600,000
10,600,000
(Nuclear Proj. No. 3) Series BT-126, 3.65%, BPA Bankers Trust 2,774,400
2,774,400
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
Milwaukee Redev. Auth. Dev. Rev. (Bradley Ctr. Parking Facs. Proj.) Series
1986, 3.40%,
LOC Nat'l. Westminster Bank, VRDN 25,000 25,000
Wisconsin Gen. Oblig. Rfdg. Bonds Series 4, 3% 11/1/94 3,640,000
3,640,000
Wisconsin TRAN Series 1994, 4.50% 6/15/95 4,000,000 4,014,786
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
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
Participating VRDN, Series 90 A, 3.875%, LOC NationsBank (b) 2,775,000
2,775,000
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.
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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