(2_FIDELITY_LOGOS)FIDELITY CASH MANAGEMENT
FUNDS
TREASURY FUND
PRIME FUND
TAX-EXEMPT FUND
ANNUAL REPORT
OCTOBER 31, 1997
CONTENTS
SCHEDULES OF INVESTMENTS & FINANCIAL STATEMENTS
TREASURY FUND 3
PRIME FUND 11
TAX-EXEMPT FUND 27
NOTES TO THE FINANCIAL STATEMENTS 48
REPORTS OF INDEPENDENT ACCOUNTANTS 59
PROXY VOTING RESULTS 61
EACH FUND SEEKS TO OBTAIN AS HIGH A LEVEL OF CURRENT INCOME AS IS
CONSISTENT WITH THE PRESERVATION OF CAPITAL AND LIQUIDITY BY INVESTING
IN HIGH-QUALITY, SHORT-TERM MONEY MARKET SECURITIES. PRIME FUND
INVESTS IN A BROAD RANGE OF MONEY MARKET SECURITIES. TREASURY FUND
INVESTS IN MONEY MARKET SECURITIES ISSUED BY THE U.S. TREASURY AND
BACKED BY THE FULL FAITH AND CREDIT OF THE U.S. GOVERNMENT. TAX-EXEMPT
FUND SEEKS TO OBTAIN CURRENT INCOME, EXEMPT FROM FEDERAL INCOME TAXES.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION
OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC,
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND
EXPENSES, CALL 1-800-544-8888 FOR A
FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TREASURY FUND
INVESTMENTS OCTOBER 31, 1997
SHOWING PERCENTAGE OF TOTAL VALUE OF INVESTMENTS
U.S. TREASURY OBLIGATIONS - 21.7%
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
U.S. TREASURY BILLS - 9.3%
3/5/98 5.44% $ 3,500,000 $ 3,435,653
3/5/98 5.46 2,500,000 2,453,841
3/5/98 5.64 3,000,000 2,944,846
3/5/98 5.67 10,000,000 9,815,363
4/2/98 5.79 3,000,000 2,928,370
4/2/98 5.81 2,000,000 1,952,120
4/2/98 5.83 2,000,000 1,951,951
4/2/98 5.84 1,000,000 975,954
4/2/98 6.00 15,000,000 14,641,850
4/2/98 6.03 24,000,000 23,423,202
4/30/98 5.83 1,000,000 971,675
4/30/98 5.86 1,500,000 1,457,288
4/30/98 5.87 1,000,000 971,500
4/30/98 5.89 2,000,000 1,942,796
4/30/98 6.01 7,000,000 6,801,725
4/30/98 6.04 31,000,000 30,117,825
4/30/98 6.05 6,000,000 5,829,000
4/30/98 6.07 13,000,000 12,628,171
5/28/98 5.74 5,000,000 4,839,657
5/28/98 5.88 18,000,000 17,422,766
147,505,553
U.S. TREASURY NOTES - 10.1%
11/30/97 5.24 1,000,000 999,799
11/30/97 5.50 12,000,000 11,997,588
2/15/98 5.36 7,000,000 7,030,636
2/15/98 5.45 1,000,000 1,004,377
2/28/98 5.50 3,000,000 2,993,855
2/28/98 5.67 15,000,000 14,969,273
3/31/98 5.60 9,000,000 9,010,538
3/31/98 5.62 17,000,000 17,017,942
3/31/98 5.69 6,000,000 6,003,318
3/31/98 5.73 6,000,000 6,004,580
3/31/98 5.74 2,000,000 2,002,342
3/31/98 5.77 2,000,000 2,002,111
3/31/98 5.84 1,500,000 1,501,160
3/31/98 5.85 1,000,000 1,000,553
3/31/98 5.89 4,000,000 3,990,391
3/31/98 5.93 25,000,000 24,913,976
5/15/98 5.58 3,000,000 3,005,441
5/15/98 5.67 14,000,000 14,025,391
7/31/98 5.51 5,000,000 5,021,191
7/31/98 5.57 6,000,000 6,025,429
8/15/98 5.47 2,000,000 2,003,465
8/15/98 5.51 9,000,000 9,015,335
8/15/98 5.54 4,000,000 4,005,897
9/30/98 5.52 5,000,000 5,016,855
160,561,443
U.S. TREASURY OBLIGATIONS - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
PRINCIPAL ONLY STRIPS - 2.3%
8/15/98 5.64% $ 1,000,000 $ 956,699
8/15/98 5.65 1,000,000 956,586
8/15/98 5.66 6,000,000 5,740,165
8/15/98 5.68 6,000,000 5,739,491
8/15/98 5.69 1,000,000 956,147
8/15/98 5.71 1,000,000 956,097
8/15/98 5.72 1,000,000 955,946
8/15/98 5.74 4,000,000 3,824,594
8/15/98 5.76 11,000,000 10,517,994
8/15/98 5.77 5,000,000 4,779,715
8/15/98 5.80 2,000,000 1,911,714
37,295,148
TOTAL U.S. TREASURY OBLIGATIONS 345,362,144
REPURCHASE AGREEMENTS - 78.3%
MATURITY AMOUNT
In a joint trading account
(Notes 2 and 3)
(U.S. Treasury Obligations):
dated 10/31/97 due 11/3/97:
At 5.70% $ 1,049,498,187 1,049,000,000
At 5.70% 57,142,130 57,115,000
dated 10/24/97 due 11/7/97
At 5.50% 27,057,750 27,000,000
dated 9/12/97 due 11/10/97
At 5.50% 60,540,833 60,000,000
dated 9/5/97 due 12/3/97
At 5.50% 30,407,917 30,000,000
dated 10/23/97 due 12/22/97
At 5.54% 22,203,133 22,000,000
TOTAL REPURCHASE AGREEMENTS 1,245,115,000
TOTAL INVESTMENTS - 100% $ 1,590,477,144
Total Cost for Income Tax Purposes $ 1,590,477,144
INCOME TAX INFORMATION
At October 31, 1997, the fund had a capital loss carryforward of
approximately $433,000 which will expire on October 31, 2001. Of the
carryforward expiring in 2001, $15,000 was acquired in the merger and
is available to offset future capital gains of the fund to the extent
provided by regulations (see Note 10 of Notes to Financial
Statements).
A total of 23.35% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax (unaudited).
The funds will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
TREASURY FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 1,590,477,144
AGREEMENTS OF $1,245,115,000) - SEE
ACCOMPANYING SCHEDULE
CASH 3,438,939
INTEREST RECEIVABLE 2,773,622
TOTAL ASSETS 1,596,689,705
LIABILITIES
DISTRIBUTIONS PAYABLE $ 952,520
ACCRUED MANAGEMENT FEE 253,314
OTHER PAYABLES AND ACCRUED EXPENSES 733,726
TOTAL LIABILITIES 1,939,560
NET ASSETS $ 1,594,750,145
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 1,595,189,518
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (439,373)
NET ASSETS $ 1,594,750,145
</TABLE>
DAILY MONEY CLASS: $1.00
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE ($1,284,002,549 (DIVIDED BY) 1,284,314,573 SHARES)
ADVISOR B CLASS: $1.00
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($45,967,621 (DIVIDED BY) 45,978,791 SHARES) A
CAPITAL RESERVES CLASS: $1.00
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE ($264,779,975 (DIVIDED BY) 264,844,318 SHARES)
A REDEMPTION PRICE PER SHARE IS EQUAL TO NET ASSET VALUE LESS ANY
APPLICABLE CONTINGENT DEFERRED SALES CHARGE.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1997
INTEREST INCOME $ 81,076,816
EXPENSES
MANAGEMENT FEE $ 5,998,124
TRANSFER AGENT FEES 3,137,970
DISTRIBUTION FEES 1,501,497
ACCOUNTING FEES AND EXPENSES 160,798
NON-INTERESTED TRUSTEES' COMPENSATION 2,237
CUSTODIAN FEES AND EXPENSES 1,851
REGISTRATION FEES 172,035
AUDIT 31,682
LEGAL 30,572
REPORTS TO SHAREHOLDERS 63,464
MISCELLANEOUS 11,973
TOTAL EXPENSES BEFORE REDUCTIONS 11,112,203
EXPENSE REDUCTIONS (1,414,770) 9,697,433
NET INTEREST INCOME 71,379,383
NET REALIZED GAIN (LOSS) ON INVESTMENTS 28,174
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 71,407,557
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED THREE MONTHS ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, JULY 31,
1997 1996 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 71,379,383 $ 21,636,434 $ 98,814,880
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) 28,174 17,244 37,646
NET INCREASE (DECREASE) IN NET ASSETS 71,407,557 21,653,678 98,852,526
RESULTING FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET (71,379,383) (21,636,434) (98,814,880)
INTEREST INCOME
SHARE TRANSACTIONS - NET (493,517,833) (19,697,315) 10,109,349
INCREASE (DECREASE)
NET ASSET VALUE OF CAPITAL RESERVES 266,921,847 - -
CLASS SHARES ISSUED IN EXCHANGE FOR
THE NET ASSETS OF CAPITAL RESERVES:
U.S. GOVERNMENT PORTFOLIO
TOTAL SHARE TRANSACTIONS (226,595,986) (19,697,315) 10,109,349
TOTAL INCREASE (DECREASE) IN (226,567,812) (19,680,071) 10,146,995
NET ASSETS
NET ASSETS
BEGINNING OF PERIOD 1,821,317,957 1,840,998,028 1,830,851,033
END OF PERIOD $ 1,594,750,145 $ 1,821,317,957 $ 1,840,998,028
</TABLE>
FINANCIAL HIGHLIGHTS - DAILY MONEY CLASS
YEAR ENDED THREE MONTHS YEARS ENDED JULY 31,
OCTOBER 31, ENDED
OCTOBER 31,
1997 1996 1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .049 .012 .049 .049 .029 .027
LESS DISTRIBUTIONS
FROM NET INTEREST (.049) (.012) (.049) (.049) (.029) (.027)
INCOME
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
END OF PERIOD
TOTAL RETURN B, C 4.97% 1.19% 5.06% 5.02% 2.89% 2.78%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF $ 1,284 $ 1,801 $ 1,801 $ 1,828 $ 2,025 $ 2,949
PERIOD (IN MILLIONS)
RATIO OF EXPENSES TO .65% .65% A, .65% .65% .60% .57%
AVERAGE NET ASSETS D D D D
RATIO OF NET INTEREST 4.88% 4.66% A 4.94% 4.89% 2.81% 2.73%
INCOME TO AVERAGE
NET ASSETS
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - ADVISOR B CLASS
YEAR ENDED THREE MONTHS YEARS ENDED JULY 31,
OCTOBER 31, ENDED
OCTOBER 31,
1997 1996 1996 1995 1994 E
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .041 .010 .043 .042 .002
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.041) (.010) (.043) (.042) (.002)
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
END OF PERIOD
TOTAL RETURN B, C 4.20% 1.01% 4.33% 4.28% .25%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 45,968 $ 20,411 $ 39,956 $ 3,154 $ 628
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE 1.39% D 1.35% A, 1.35% D 1.35% D 1.35% A,
NET ASSETS D D
RATIO OF NET INTEREST INCOME TO 4.24% 3.96% A 4.13% 4.22% 3.03% A
AVERAGE NET ASSETS
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE CONTINGENT DEFERRED SALES CHARGE
AND FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
E FOR THE PERIOD JULY 1, 1994 (COMMENCEMENT OF SALE OF ADVISOR CLASS B
SHARES) TO JULY 31, 1994.
FINANCIAL HIGHLIGHTS - CAPITAL RESERVES CLASS
1997 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000000
INCOME FROM INVESTMENT OPERATIONS .000134
NET INTEREST INCOME
LESS DISTRIBUTIONS (.000134)
FROM NET INTEREST INCOME
NET ASSET VALUE, END OF PERIOD $ 1.000000
TOTAL RETURN B, C .01%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 264,780
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A,
D
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.93% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES. WITHOUT
THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
E FOR OCTOBER 31, 1997 (COMMENCEMENT OF SALE OF CAPITAL RESERVES CLASS
SHARES).
PRIME FUND
INVESTMENTS OCTOBER 31, 1997
Showing Percentage of Total Value of Investments
CERTIFICATES OF DEPOSIT - 41.5%
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
DOMESTIC CERTIFICATES OF DEPOSIT - 1.7%
Bank of America National Trust & Savings Assoc.
11/24/97 5.54% $ 15,000,000 $ 15,000,000
11/24/97 5.55 23,000,000 23,000,000
Chase Manhattan Bank (USA) Delaware
2/9/98 5.68 9,000,000 9,000,000
4/7/98 5.65 18,000,000 18,000,000
CoreStates Capital Corp.
11/10/97 5.58 (a) 10,000,000 9,999,679
74,999,679
CHICAGO BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 0.3%
ABN-AMRO Bank NV
12/4/97 5.75 8,000,000 7,997,695
12/23/97 5.43 4,000,000 3,999,726
11,997,421
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 28.0%
Australia & New Zealand Banking Group
4/2/98 5.67 25,000,000 25,003,078
Bank of Montreal, Canada
11/17/97 5.53 15,000,000 15,000,000
11/17/97 5.54 20,000,000 20,000,000
11/24/97 5.54 59,000,000 59,000,343
Bank of Nova Scotia
11/12/97 5.53 8,000,000 8,000,000
11/12/97 5.60 12,000,000 12,000,000
7/21/98 5.89 2,000,000 1,997,779
7/21/98 5.97 3,000,000 2,996,668
8/31/98 5.91 10,000,000 9,994,826
Bank of Tokyo-Mitsubishi Ltd.
1/22/98 5.74 4,000,000 4,000,000
1/22/98 5.75 5,000,000 5,000,000
Banque Nationale de Paris
2/4/98 5.62 10,200,000 10,197,687
Barclays Bank, PLC
11/6/97 5.51 50,000,000 50,000,000
11/6/97 5.53 75,000,000 75,000,000
11/17/97 5.52 20,000,000 20,000,000
11/17/97 5.53 45,000,000 45,000,000
6/24/98 5.78 5,000,000 5,000,958
Bayerische Hypotheken-und Wechsel
11/13/97 5.52 40,000,000 40,000,000
11/24/97 5.53 3,000,000 3,000,000
11/24/97 5.54 5,000,000 5,000,000
CERTIFICATES OF DEPOSIT - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - CONTINUED
Caisse Nationale de Credit Agricole
11/13/97 5.70% $ 3,000,000 $ 3,000,000
11/13/97 5.86 5,000,000 5,000,000
Canadian Imperial Bank of Commerce
11/3/97 5.53 10,000,000 10,000,000
11/3/97 5.55 15,000,000 15,000,000
11/4/97 5.52 12,000,000 12,000,000
11/4/97 5.54 18,000,000 18,000,000
11/17/97 5.53 6,000,000 6,000,000
11/17/97 5.54 10,000,000 10,000,000
12/1/97 5.56 12,000,000 12,000,000
12/1/97 5.58 19,000,000 19,000,000
8/28/98 5.91 20,000,000 19,990,571
Credit Suisse First Boston (BK)
1/5/98 5.60 10,000,000 10,000,089
1/5/98 5.63 15,000,000 15,000,133
Deutsche Bank, AG
12/17/97 5.55 25,000,000 25,000,317
12/17/97 5.56 25,000,000 25,000,317
1/16/98 5.80 20,000,000 19,998,274
Dresdner Bank, AG
3/13/98 5.75 6,000,000 6,001,223
Hongkong & Shanghai Banking Corp.
12/22/97 5.57 9,000,000 9,000,000
12/22/97 5.60 14,000,000 14,000,000
National Westminster Bank, PLC
6/23/98 5.88 14,000,000 13,992,365
6/23/98 6.00 23,000,000 22,987,457
7/22/98 5.81 15,000,000 14,994,366
7/22/98 5.89 40,000,000 39,984,976
9/25/98 5.85 5,000,000 4,996,098
9/25/98 5.88 6,000,000 5,995,318
Norddeutsche Landesbank Girozentrale
12/8/97 5.55 6,000,000 5,999,973
12/8/97 5.56 9,000,000 8,999,959
Rabobank Nederland, COOP Central
3/20/98 5.78 5,000,000 4,999,454
4/10/98 6.26 10,000,000 9,997,492
Sanwa Bank Ltd. Japan
11/26/97 5.62 5,000,000 4,999,948
11/26/97 5.63 8,000,000 7,999,917
1/29/98 5.79 20,000,000 20,000,487
Societe Generale, France
11/12/97 5.74 8,000,000 8,000,000
11/12/97 5.90 12,000,000 12,000,000
11/18/97 5.58 35,000,000 35,000,000
11/24/97 5.55 6,000,000 6,000,691
4/14/98 5.73 10,000,000 10,000,000
Sumitomo Bank Ltd. Japan
11/25/97 5.65 6,000,000 6,000,000
11/25/97 5.68 10,000,000 10,000,000
CERTIFICATES OF DEPOSIT - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - CONTINUED
Swiss Bank Corp.
12/22/97 5.65% $ 4,000,000 $ 4,000,787
12/22/97 5.78 10,000,000 10,000,000
12/22/97 5.99 15,000,000 15,000,000
12/30/97 6.04 17,000,000 17,000,000
1/20/98 5.61 49,000,000 49,000,000
1/20/98 5.70 45,000,000 45,000,000
2/2/98 5.62 22,000,000 22,000,000
2/2/98 5.65 24,000,000 24,000,000
8/28/98 5.97 32,000,000 31,987,428
Westdeutsche Landesbank Girozentrale
11/3/97 5.52 37,000,000 37,000,000
11/3/97 5.54 50,000,000 50,000,000
12/22/97 5.56 7,000,000 7,000,000
12/22/97 5.62 8,000,000 8,000,000
1,243,118,979
PORTLAND BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 0.6%
Bank of Nova Scotia
4/1/98 5.98 8,000,000 7,998,106
4/1/98 6.20 12,000,000 11,997,159
National Westminster Bank, PLC
2/12/98 5.68 3,000,000 3,000,000
2/12/98 5.75 5,000,000 5,000,000
27,995,265
SAN FRANCISCO BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 0.0%
Banque Nationale de Paris
11/17/97 5.63 2,000,000 2,000,015
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 10.2%
Abbey National PLC
4/3/98 5.67 25,000,000 25,001,032
4/3/98 5.70 50,000,000 50,002,066
Abbey National, Treasury Services
12/26/97 5.57 8,000,000 8,000,000
12/26/97 5.60 12,000,000 12,000,000
3/4/98 5.65 7,000,000 7,000,000
3/4/98 5.87 12,000,000 12,000,000
ABN-AMRO Bank NV
1/14/98 5.61 6,000,000 6,000,109
Australia & New Zealand Banking Group
2/20/98 5.64 3,000,000 2,999,804
2/20/98 5.70 3,000,000 2,999,804
Banco Bilbao Vizcaya, SA
1/21/98 5.70 2,000,000 2,000,043
CERTIFICATES OF DEPOSIT - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - CONTINUED
Bank of Nova Scotia
11/12/97 5.70% $ 6,000,000 $ 6,000,000
11/12/97 5.86 8,000,000 8,000,000
Barclays Bank, PLC
4/23/98 5.79 5,000,000 5,000,000
4/23/98 5.80 10,000,000 10,000,000
Bayerische Landesbank Girozentrale
12/31/97 5.64 2,000,000 2,000,032
12/31/97 5.75 3,000,000 3,000,044
2/27/98 5.68 5,000,000 5,000,308
Bayerische Vereinsbank, AG
12/29/97 5.75 25,000,000 25,000,391
3/16/98 5.68 7,000,000 7,000,742
Credit Agricole Indosuez
2/9/98 5.64 7,000,000 6,999,377
2/9/98 5.66 11,000,000 10,999,021
Deutsche Bank, AG
12/10/97 5.54 50,000,000 50,000,000
12/10/97 5.56 50,000,000 50,000,000
Kredietbank, NV
12/8/97 5.55 5,000,000 5,000,102
Lloyds Bank, PLC
2/2/98 5.65 4,000,000 3,999,991
National Australia Bank, Ltd.
4/14/98 5.70 25,000,000 24,995,575
Norddeutsche Landesbank Girozentrale
1/16/98 5.70 10,000,000 10,000,187
3/16/98 5.69 4,000,000 4,000,146
3/16/98 5.73 8,000,000 8,000,557
Sanwa Bank Ltd. Japan
1/30/98 5.75 12,000,000 12,000,296
Westdeutsche Landesbank Girozentrale
11/12/97 5.61 50,000,000 50,000,000
11/24/97 5.53 8,000,000 8,000,050
11/24/97 5.60 12,000,000 12,000,076
454,999,753
LONDON BRANCH, EURODOLLAR, DOMESTIC BANKS - 0.7%
Bankers Trust Co.
11/20/97 5.56 1,000,000 1,000,008
11/20/97 5.60 5,000,000 5,000,100
Morgan Guaranty Trust Co., NY
12/8/97 5.53 15,000,000 15,000,140
12/8/97 5.55 10,000,000 10,000,093
31,000,341
TOTAL CERTIFICATES OF DEPOSIT 1,846,111,453
COMMERCIAL PAPER - 41.6%
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
Abbey National, North America
3/17/98 5.66% $ 15,000,000 $ 14,686,067
3/17/98 5.70 35,000,000 34,267,489
ABN-AMRO North America, Inc.
7/13/98 5.83 10,000,000 9,604,889
A.H. Robins Company, Inc.
1/29/98 5.70 10,000,000 9,861,061
American Express Credit Corp.
11/19/97 5.55 50,000,000 49,861,750
American Home Products Corp.
11/12/97 5.53 3,000,000 2,994,958
Asset Securitization Coop. Corp.
11/6/97 5.54 10,000,000 9,992,347
11/6/97 5.57 50,000,000 49,961,528
11/7/97 5.57 15,000,000 14,986,150
11/20/97 5.54 11,000,000 10,967,953
12/11/97 5.60 4,000,000 3,975,422
1/21/98 5.69 5,000,000 4,936,775
1/21/98 5.70 5,000,000 4,936,775
Associates Corp. of North America
11/18/97 5.52 4,000,000 3,989,611
11/18/97 5.53 100,000,000 99,739,806
11/18/97 5.54 6,000,000 5,984,417
Bank of Nova Scotia
11/13/97 5.53 2,000,000 1,996,320
11/13/97 5.55 2,000,000 1,996,320
12/15/97 5.56 5,000,000 4,966,267
12/15/97 5.60 8,000,000 7,946,027
Bayerische Vereinsbank, AG
11/3/97 5.55 87,000,000 86,973,320
BBL North America, Inc.
12/24/97 5.64 5,000,000 4,958,851
Bear Stearns Cos., Inc.
11/17/97 5.55 4,000,000 3,990,187
11/17/97 5.60 4,000,000 3,990,169
BMW US Capital Corp.
11/10/97 5.55 3,000,000 2,995,845
11/10/97 5.62 5,000,000 4,993,075
11/17/97 5.54 8,000,000 7,980,338
12/1/97 5.57 5,000,000 4,976,958
Caisse d'Amortissement de la Dette Sociale
11/3/97 5.56 2,000,000 1,999,382
Caisse des Depots et Consigns
11/18/97 5.54 50,000,000 49,869,667
11/19/97 5.54 50,000,000 49,862,000
11/19/97 5.55 20,000,000 19,944,700
11/20/97 5.54 25,000,000 24,927,167
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
Campbell Soup Co.
12/29/97 5.53% $ 5,000,000 $ 4,955,856
12/29/97 5.61 15,000,000 14,867,567
CIESCO, L.P.
11/24/97 5.55 10,000,000 9,964,733
Citibank Credit Card Master Trust I (Dakota Certificate Program)
11/10/97 5.62 5,482,000 5,474,407
11/13/97 5.55 1,000,000 998,153
11/13/97 5.62 2,000,000 1,996,307
12/8/97 5.57 5,000,000 4,971,531
12/8/97 5.58 10,000,000 9,943,061
12/9/97 5.55 13,161,000 13,084,315
12/9/97 5.57 10,000,000 9,941,733
12/10/97 5.55 4,000,000 3,976,080
12/10/97 5.57 6,000,000 5,964,120
12/12/97 5.60 15,000,000 14,905,359
Delaware Funding Corporation
11/26/97 5.54 3,000,000 2,988,500
11/26/97 5.58 6,000,000 5,977,000
Den Danske Corp., Inc.
11/26/97 5.57 6,000,000 5,976,875
11/26/97 5.58 10,000,000 9,961,458
12/15/97 5.63 5,000,000 4,966,083
Deutsche Bank Financial, Inc.
11/13/97 5.51 12,000,000 11,978,000
11/13/97 5.52 13,500,000 13,475,250
Dresdner U.S. Finance, Inc.
11/4/97 5.53 20,000,000 19,990,783
Eiger Capital Corp.
11/5/97 5.52 8,000,000 7,995,093
11/5/97 5.55 12,000,000 11,992,640
11/10/97 5.54 6,000,000 5,991,735
Enterprise Funding Corp.
11/3/97 5.60 1,049,000 1,048,676
11/6/97 5.53 5,089,000 5,085,098
11/7/97 5.60 8,861,000 8,852,789
11/13/97 5.52 9,000,000 8,983,470
11/13/97 5.54 14,000,000 13,974,287
11/14/97 5.54 5,000,000 4,990,015
11/19/97 5.55 11,172,000 11,141,165
11/19/97 5.55 2,000,000 1,994,470
11/20/97 5.56 5,000,000 4,985,381
11/20/97 5.56 6,354,000 6,335,422
12/1/97 5.56 4,869,000 4,846,603
12/1/97 5.57 3,000,000 2,986,175
12/3/97 5.57 4,301,000 4,279,820
12/3/97 5.60 6,093,000 6,063,022
12/4/97 5.57 4,000,000 3,979,760
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
Ford Credit Europe PLC
11/6/97 5.55% $ 5,000,000 $ 4,996,153
Ford Motor Credit Corp.
11/5/97 5.70 13,000,000 12,991,767
11/5/97 5.87 10,000,000 9,993,667
11/20/97 5.54 80,000,000 79,766,933
12/8/97 5.54 20,000,000 19,887,150
12/19/97 5.55 30,000,000 29,779,600
12/19/97 5.57 45,000,000 44,669,400
General Electric Capital Corp.
11/5/97 5.55 6,900,000 6,895,768
11/17/97 5.55 8,000,000 7,980,303
11/17/97 5.58 12,000,000 11,970,453
11/18/97 5.52 75,000,000 74,805,208
11/18/97 5.53 50,000,000 49,870,139
3/16/98 5.66 20,000,000 19,584,500
3/16/98 5.70 15,000,000 14,688,375
4/7/98 5.79 20,000,000 19,511,555
General Electric Co.
11/18/97 5.52 50,000,000 49,870,139
12/29/97 5.56 60,000,000 59,469,300
Goldman Sachs Group, L.P. (The)
11/12/97 5.71 10,000,000 9,982,583
11/12/97 5.87 20,000,000 19,965,167
11/13/97 5.57 10,000,000 9,981,567
Grand Met Capital Corp.
1/7/98 5.61 2,000,000 1,979,342
1/7/98 5.70 3,500,000 3,463,848
4/6/98 5.66 5,000,000 4,880,833
Household Finance Corp.
11/19/97 5.54 10,000,000 9,972,400
Matterhorn Capital Corp. (LOC Union Bank of Switzerland)
11/3/97 5.58 30,000,000 29,990,767
11/24/97 5.57 15,000,000 14,946,813
Merrill Lynch & Co., Inc.
11/4/97 5.52 10,000,000 9,992,333
11/6/97 5.60 10,000,000 9,995,400
1/14/98 5.61 3,000,000 2,965,775
1/14/98 5.71 4,000,000 3,954,367
3/16/98 5.69 5,000,000 4,895,563
3/16/98 5.73 8,000,000 7,832,900
3/18/98 5.66 6,000,000 5,873,503
3/18/98 5.70 25,000,000 24,472,930
Morgan Stanley, Dean Witter, Discover & Co.
2/23/98 5.59 (a) 11,000,000 11,000,000
2/23/98 5.60 (a) 18,000,000 18,000,000
Nationwide Building Society
11/4/97 5.61 5,000,000 4,997,692
11/17/97 5.55 3,000,000 2,992,613
COMMERCIAL PAPER - CONTINUED
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
New Center Asset Trust
11/19/97 5.58% $ 3,000,000 $ 2,991,705
PHH Corp.
1/30/98 5.70 18,700,000 18,437,265
Preferred Receivables Funding Corp.
11/4/97 5.54 5,000,000 4,997,700
11/17/97 5.54 5,000,000 4,987,710
11/19/97 5.55 5,000,000 4,986,175
11/19/97 5.56 2,000,000 1,994,460
11/20/97 5.56 10,175,000 10,145,249
12/2/97 5.58 15,000,000 14,928,312
12/2/97 5.63 9,000,000 8,956,600
Rabobank U.S.A. Financial Corp.
4/2/98 5.67 5,000,000 4,883,044
4/2/98 5.70 9,000,000 8,789,480
Societe Generale North America, Inc.
11/19/97 5.54 10,000,000 9,972,400
11/19/97 5.55 15,000,000 14,958,600
12/10/97 5.55 2,000,000 1,988,040
12/10/97 5.57 3,000,000 2,982,060
Southern Co.
12/8/97 5.59 35,000,000 34,799,994
Toronto Dominion Holdings USA, Inc.
12/23/97 5.75 6,000,000 5,951,553
Transamerica Corp.
12/8/97 5.63 15,000,000 14,913,667
Transamerica Financial Corp.
11/20/97 5.55 10,000,000 9,970,814
Triple A One Funding Corp.
11/13/97 5.55 4,926,000 4,916,903
11/17/97 5.54 10,000,000 9,975,422
11/17/97 5.55 6,000,000 5,985,227
11/17/97 5.57 4,000,000 3,990,151
Unifunding, Inc.
11/21/97 5.55 3,000,000 2,990,783
11/21/97 5.56 4,000,000 3,987,711
TOTAL COMMERCIAL PAPER 1,849,344,214
FEDERAL AGENCIES - 2.6%
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
FEDERAL HOME LOAN BANK - AGENCY COUPONS (A) - 0.3%
12/4/97 5.57% $ 5,000,000 $ 4,999,607
12/4/97 5.62 10,000,000 9,999,213
14,998,820
FEDERAL NATIONAL MORTGAGE ASSOC. - AGENCY COUPONS (A) - 2.3%
12/9/97 5.51 30,000,000 29,997,283
12/9/97 5.56 35,000,000 34,996,830
12/13/97 5.58 10,000,000 9,997,035
12/13/97 5.62 25,000,000 24,992,620
99,983,768
TOTAL FEDERAL AGENCIES 114,982,588
BANK NOTES - 4.0%
BankBoston NA
11/12/97 5.55 10,000,000 10,000,000
11/17/97 5.52 5,000,000 5,000,000
11/17/97 5.53 5,000,000 5,000,000
Comerica Bank, Detroit
3/27/98 5.98 5,000,000 4,996,184
First Bank NA - Minnesota
11/19/97 5.59 (a) 5,000,000 4,997,282
Huntington National Bank
12/11/97 5.62 5,000,000 4,998,634
Morgan Guaranty Trust Co., NY
11/14/97 5.70 (a) 104,000,000 103,997,300
8/31/98 5.82 5,000,000 5,001,924
8/31/98 5.85 8,000,000 8,003,078
Northern Trust Co., Chicago
11/3/97 5.61 (a) 6,000,000 5,997,292
PNC Bank, NA
11/12/97 5.58 (a) 6,000,000 5,999,587
SouthTrust Bank - Alabama
9/11/98 5.57 (a) 3,000,000 2,998,498
9/11/98 5.59 (a) 4,000,000 3,997,997
US Bank, NA
11/19/97 5.56 (a) 3,000,000 2,998,182
11/19/97 5.58 (a) 4,000,000 3,997,576
TOTAL BANK NOTES 177,983,534
MASTER NOTES - 0.3%
DUE ANNUALIZED YIELD AT PRINCIPAL VALUE
DATE TIME OF PURCHASE AMOUNT (NOTE 1)
Goldman Sachs Group, L.P. (The) (b)
12/16/97 5.68% (a) $ 15,000,000 $ 15,000,000
MEDIUM-TERM NOTES (A) - 1.7%
Beneficial Corp.
12/25/97 5.77 2,000,000 1,998,957
Exxon Shipping Co.
11/3/97 5.56 16,000,000 16,000,000
11/3/97 5.59 25,000,000 25,000,000
Merrill Lynch & Co., Inc.
11/3/97 5.64 7,000,000 6,999,366
11/3/97 5.67 11,000,000 10,999,006
11/4/97 5.63 5,000,000 4,999,504
Norwest Corp.
1/22/98 5.82 8,000,000 8,000,000
TOTAL MEDIUM-TERM NOTES 73,996,833
SHORT-TERM NOTES (A) - 0.9%
Liquid Asset Backed Securities Trust (1996-2) (c)
11/3/97 5.66 8,000,000 8,000,000
Liquid Asset Backed Securities Trust (1997-5) (c)
11/17/97 5.59 15,000,000 15,000,000
11/17/97 5.61 9,000,000 9,000,000
SMM Trust (1996-P) (c)
11/17/97 5.64 7,500,000 7,500,000
TOTAL SHORT-TERM NOTES 39,500,000
TIME DEPOSITS - 3.8%
Bank of Montreal
11/24/97 5.56 35,000,000 35,000,000
Bank of Tokyo-Mitsubishi Ltd.
11/3/97 5.60 16,000,000 16,000,000
11/3/97 5.63 25,000,000 25,000,000
11/14/97 5.60 40,000,000 40,000,000
Sumitomo Bank Ltd. Japan
11/4/97 5.66 3,000,000 3,000,000
11/4/97 5.69 5,000,000 5,000,000
11/5/97 5.63 3,000,000 3,000,000
11/5/97 5.66 5,000,000 5,000,000
11/12/97 5.63 27,000,000 27,000,000
11/24/97 5.62 4,000,000 4,000,000
11/24/97 5.63 5,000,000 5,000,000
TOTAL TIME DEPOSITS 168,000,000
REPURCHASE AGREEMENTS - 3.6%
MATURITY VALUE
AMOUNT (NOTE 1)
In a joint trading account (Notes 2 and 3):
(U.S. Treasury Obligations)
dated 10/31/97 due 11/3/97
At 5.70% $ 8,953,251 $ 8,949,000
(U.S. Government Obligations)
dated 10/31/97 due 11/3/97
At 5.73% 150,071,625 150,000,000
TOTAL REPURCHASE AGREEMENTS 158,949,000
TOTAL INVESTMENTS - 100% $ 4,443,867,622
Total Cost for Income Tax Purposes $ 4,443,867,622
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due dates on these types of
securities reflects the next interest rate reset date or, when
applicable, the final maturity date.
2. Restricted securities - Investment in securities not registered
under the Securities Act of 1933 (see Note 2 of Notes to Financial
Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Goldman Sachs
Group, L.P. (The) 6/16/97 $ 15,000,000
3. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At the
period end, the value of these securities amounted to $39,500,000 or
0.9% of net assets.
INCOME TAX INFORMATION
At October 31, 1997, the fund had a capital loss carryforward of
approximately $792,000 of which $33,000, $125,000, $584,000, $48,000,
and $2,000 will expire on October 31, 2000, 2001, 2002, 2003, and
2005, respectively. Of the loss carryforward expiring in 2000, $26,000
was acquired in the merger and is available to offset future capital
gains of the fund to the extent provided by regulations (see Note 10
of Notes to Financial Statements).
A total of 0.95% of the dividends distributed during the fiscal year
was derived from interest on U.S. Government securities which is
generally exempt from state income tax (unaudited).
The fund will notify shareholders in January 1998 of the applicable
percentage for use in preparing 1997 income tax returns.
PRIME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE (INCLUDING REPURCHASE $ 4,443,867,622
AGREEMENTS OF $158,949,000) - SEE
ACCOMPANYING SCHEDULE
CASH 1,275
INTEREST RECEIVABLE 22,517,533
TOTAL ASSETS 4,466,386,430
LIABILITIES
SHARE TRANSACTIONS IN PROCESS $ 12,074,024
DISTRIBUTIONS PAYABLE 666,141
ACCRUED MANAGEMENT FEE 737,708
OTHER PAYABLES AND ACCRUED EXPENSES 2,103,190
TOTAL LIABILITIES 15,581,063
NET ASSETS $ 4,450,805,367
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 4,451,597,091
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (791,724)
NET ASSETS $ 4,450,805,367
</TABLE>
DAILY MONEY CLASS: $1.00
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE ($2,686,661,590 (DIVIDED BY) 2,687,132,141 SHARES)
CAPITAL RESERVES CLASS: $1.00
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE ($1,764,143,777 (DIVIDED BY) 1,764,452,756 SHARES)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1997
INTEREST INCOME $ 141,882,723
EXPENSES
MANAGEMENT FEE $ 9,982,329
TRANSFER AGENT FEES 5,517,021
DISTRIBUTION FEES 2,693,821
ACCOUNTING FEES AND EXPENSES 240,888
NON-INTERESTED TRUSTEES' COMPENSATION 6,030
CUSTODIAN FEES AND EXPENSES 59,564
REGISTRATION FEES 250,096
AUDIT 24,801
LEGAL 53,079
REPORTS TO SHAREHOLDERS 240,098
MISCELLANEOUS 17,019
TOTAL EXPENSES BEFORE REDUCTIONS 19,084,746
EXPENSE REDUCTIONS (2,609,392) 16,475,354
NET INTEREST INCOME 125,407,369
NET REALIZED GAIN (LOSS) ON INVESTMENTS (1,985)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 125,405,384
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED THREE MONTHS ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, JULY 31,
1997 1996 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 125,407,369 $ 31,070,720 $ 121,708,868
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) (1,985) 57,797 (48,294)
NET INCREASE (DECREASE) IN NET ASSETS 125,405,384 31,128,517 121,660,574
RESULTING FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET (125,407,369) (31,070,720) (121,708,868)
INTEREST INCOME
SHARE TRANSACTIONS - NET 63,675,775 82,844,704 441,165,774
INCREASE (DECREASE)
NET ASSET VALUE OF CAPITAL RESERVES 1,723,722,384 - -
CLASS SHARES ISSUED IN EXCHANGE FOR
THE NET ASSETS OF CAPITAL RESERVES:
MONEY MARKET PORTFOLIO
TOTAL SHARE TRANSACTIONS 1,787,398,159 82,844,704 441,165,774
TOTAL INCREASE (DECREASE) IN 1,787,396,174 82,902,501 441,117,480
NET ASSETS
NET ASSETS
BEGINNING OF PERIOD 2,663,409,193 2,580,506,692 2,139,389,212
END OF PERIOD $ 4,450,805,367 $ 2,663,409,193 $ 2,580,506,692
</TABLE>
FINANCIAL HIGHLIGHTS - DAILY MONEY CLASS
YEAR ENDED THREE MONTHS YEARS ENDED JULY 31,
OCTOBER 31, ENDED
OCTOBER 31,
1997 1996 1996 1995 1994 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
BEGINNING OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .050 .012 .050 .050 .029 .028
LESS DISTRIBUTIONS
FROM NET INTEREST (.050) (.012) (.050) (.050) (.029) (.028)
INCOME
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
END OF PERIOD
TOTAL RETURN B, C 5.06% 1.22% 5.13% 5.16% 2.98% 2.82%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF $ 2,687 $ 2,663 $ 2,581 $ 2,139 $ 1,525 $ 1,451
PERIOD (IN MILLIONS)
RATIO OF EXPENSES TO .65% .65% A, .65% .65% .65% .61%
AVERAGE NET ASSETS D D D D D
RATIO OF NET INTEREST 4.95% 4.85% A 5.00% 5.11% 2.96% 2.76%
INCOME TO AVERAGE
NET ASSETS
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT
BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO
FINANCIAL STATEMENTS).
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CAPITAL RESERVES CLASS
1997 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000000
INCOME FROM INVESTMENT OPERATIONS .000131
NET INTEREST INCOME
LESS DISTRIBUTIONS (.000131)
FROM NET INTEREST INCOME
NET ASSET VALUE, END OF PERIOD $ 1.000000
TOTAL RETURN B, C .01%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 1,764,144
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A,
D
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 4.78% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES. WITHOUT
THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
E FOR OCTOBER 31, 1997 (COMMENCEMENT OF SALE OF CAPITAL RESERVES CLASS
SHARES).
TAX-EXEMPT FUND
INVESTMENTS OCTOBER 31, 1997
Showing Percentage of Total Value of Investment in Securities
MUNICIPAL SECURITIES (A) - 100%
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ALABAMA - 1.0%
Columbia Ind. Dev. Board Participating VRDN,
Series 97 I, 3.80% (Liquidity Facility Caisse
Des Depots et Consigns) (b) $ 480,000 $ 480,000
Jefferson County Sewer Rev. Participating VRDN,
Series PT-124, 3.80%
(Liquidity Facility Commerzbank) (b) 6,190,000 6,190,000
6,670,000
ALASKA - 1.3%
Valdez Marine Terminal Rev. Rfdg. (Atlantic Richfield Co. Proj.)
Series 1994 B, 3.75%, VRDN 8,300,000 8,300,000
ARIZONA - 2.2%
Apache County Ind. Dev. Auth. (Tucson Elec. Pwr. Co. Proj.)
Series 1981 B, 3.75%, LOC Bank of
Tokyo-Mitsubishi Ltd., VRDN 1,200,000 1,200,000
Arizona Health Facs. Auth., VRDN:
(Samcor 1986 Loan Pool-Samaritan Health Care)
3.60% (FGIC Insured) (BPA Chase Manhattan Bank) 800,000 800,000
(Blood Sys., Inc.) Series 1985,
3.70%, LOC Bank One, Arizona 500,000 500,000
Maricopa County Commty. College Dist. Bonds 6% 7/1/98 1,000,000
1,013,492
Mesa Gen. Oblig. Bonds Series 1992, 4.95% 7/1/98
(FGIC Insured) 1,605,000 1,615,325
Mesa Ind. Dev. Auth. Participating VRDN, Series 1997 B,
3.80% (BIG Insured) (Liquidity Facility
Caisse des Depots et Consigns) (b) 980,000 980,000
Pima County Ind. Dev. Auth. Multi-Family Hsg. Rev.
(La Cholla Apt. Proj.) Series 1996, 3.65%,
LOC Texas Commerce Bank, VRDN 2,000,000 2,000,000
Pima County School Dist. #1 Participating VRDN, Series 1996 D,
3.80% (Liquidity Facility Norwest Bank NA, Minnesota) (b) 1,000,000
1,000,000
Pinal County Ind. Dev. Auth. Hosp. Rev.
(Casa Grande Medical Ctr. Proj.) Series 1995,
3.75%, LOC Chase Manhattan Bank, VRDN 3,900,000 3,900,000
University of Arizona Sys. Rev. BAN
Series 1997, 3.95% 10/1/98 1,200,000 1,200,000
14,208,817
ARKANSAS - 0.7%
Arkansas Hosp. Equip. Fin. Auth. Rev.
(Baptist Health Proj.) Series 1995, 3.70%,
LOC Credit Suisse First Boston (BK), VRDN 1,575,000 1,575,000
Univ. of Arkansas Rev. (UAM Campus)
3.70%, LOC Credit Suisse First Boston (BK), VRDN 2,900,000 2,900,000
4,475,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
CALIFORNIA - 7.6%
California Higher Ed. Loan Auth. Student Loan Rev. Bonds
Series 1992 A, 4%, tender 7/1/98, LOC SLMA $ 3,000,000 $ 3,000,000
California Gen. Oblig. Participating VRDN, Series FR-23,
4% (Liquidity Facility Bank of New York) (b) 4,500,000 4,500,000
California Gen. Oblig. RAN Series 1997, 4.50% 6/30/98 13,300,000
13,356,068
California School Cash Reserves Prog. Auth. TRAN
Series 1997 A, 4.75% 7/2/98 (AMBAC Insured) 10,900,000 10,962,368
Central Valley School Fin. Auth. TRAN 1997 Pool,
4.50% 8/27/98 1,500,000 1,507,090
Los Angeles County Capital Asset Leasing
Corp. 3.80% 1/14/98, CP 3,000,000 3,000,000
Los Angeles County TRAN Series A, 4.50% 6/30/98 3,800,000 3,815,199
Los Angeles Reg'l. Arpt. Impt. Corp. Facs. Lease Rev.
(Los Angeles Int'l. Air France) 3.85%,
LOC Societe Generale France, VRDN 3,100,000 3,100,000
Los Angeles Unified School Dist. TRAN Series 1997-98,
4.50% 7/1/98 1,500,000 1,506,703
Riverside County Gen. Oblig. TRAN 4.50% 6/30/98 1,500,000 1,505,233
South Coast Local Ed. Agcy. TRAN Series A,
4.50% 6/30/98 (MBIA Insured) 3,000,000 3,012,282
49,264,943
COLORADO - 1.7%
Colorado Gen. Fund TRAN Series A, 4% 6/26/98 1,000,000 1,000,744
Colorado Health Facs. Auth. Rev. (Arapahoe Mental
Health Center) Series 1996A, 3.70%
LOC BankOne Colorado, NA, VRDN 2,000,000 2,000,000
Colorado Hsg. Fin. Auth. Multi-Family Rev. (St. Moritz Proj.)
3.65% (FNMA Guaranteed) VRDN 5,000,000 5,000,000
Colorado Springs Util. Sys. Rev.
Participating VRDN, Series SGB-28, 3.75%
(Liquidity Facility Societe Generale) (b) 1,000,000 1,000,000
Denver City & County Aviation Arpt. Sys. Rev.
Participating VRDN, Series 1997 Q, 3.70%
(Liquidity Facility CoreStates Bank) (b) 1,000,000 1,000,000
El Paso County School Dist. #20 Participating VRDN,
Series 1996 D, 3.80% (Liquidity Facility
Norwest Bank NA, Minnesota) (b) 1,250,000 1,250,000
11,250,744
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
DELAWARE - 2.7%
Delaware Econ. Dev. Auth., VRDN:
(Hosp. Billing & Collection Svc. Ltd. Proj.):
Series 1985 A, 3.65% (BIG Insured)
(BPA Morgan Stanley Group Inc.) $ 6,300,000 $ 6,300,000
Series 1985 B, 3.65% (BIG Insured)
(BPA Morgan Stanley Group, Inc.) 1,700,000 1,700,000
Series 1985 C, 3.65% (BIG Insured)
(BPA Morgan Stanley Group Inc.) 5,800,000 5,800,000
(Peninsula United Methodist Homes Inc.):
Series 1992 B, 3.65%, LOC PNC Bank 1,500,000 1,500,000
Series 1997 B, 3.65%, LOC PNC Bank 1,000,000 1,000,000
Multi-Family Rev. (Schoolhouse Trust Prog.) 3.75%,
LOC Marine Midland Bank 1,050,000 1,050,000
17,350,000
DISTRICT OF COLUMBIA - 0.6%
District of Columbia (American Assoc. of
Med. Colleges) 3.78% (AMBAC Insured)
(Liquidity Facility Chase Manhattan Bank) VRDN 3,575,000 3,575,000
FLORIDA - 7.7%
Arcadia Hosp. Rev. (Desoto Memorial Hosp. Proj.)
Series 1994, 3.65% LOC First Union Bank
of Florida, VRDN 2,205,000 2,205,000
Florida Board of Ed. Participating VRDN, Series 96C0917,
3.79% (Liquidity Facility Citibank) (b) 1,900,000 1,900,000
Florida Cap. Proj. Fin. Auth. (Cap. Proj. Loan Prog.)
Series 1997-A, 3.60% (FSA Insured)
(BPA Credit Suisse First Boston (BK)) VRDN 12,000,000 12,000,000
Florida Local Gov't. Fin. Commission Series A, 3.85%,
LOC First Union Nat'l Bank, CP 7,100,000 7,100,000
Gulf Breeze Gen. Oblig. Series 1995 A, 3.70%,
LOC Barnett Bank of Jacksonville, VRDN 3,300,000 3,300,000
Highlands County Health Facs. Auth. Rev. (Adventist
Health Sys./Sunbelt Proj.) VRDN:
3.65% (Capital Markets Assurance Corp. Insured)
(BPA First Nat'l. Bank of Chicago) 5,900,000 5,900,000
Series 1996A, 3.65%
LOC SunTrust Bank Central Florida, NA 4,600,000 4,600,000
Indian River County Hosp. Dist. Hosp. Rev. Bonds
(Indian River Mem. Hosp.) Series 1988, 3.75%
12/12/97, LOC Kredietbank NV, CP mode 2,200,000 2,200,000
Jacksonville Health Facs. Auth. Rev. Participating VRDN,
Series 1996 M, 3.80% (Liquidity Facility Caisse
des Depots et Cosigns) (b) 2,955,000 2,955,000
Jacksonville Hosp. Rev. (Univ. Med. Ctr.) Series 1988,
3.90%, LOC Sumitomo Bank Ltd., VRDN 1,000,000 1,000,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
FLORIDA - CONTINUED
Lee County Hosp. Board Rev. (Lee Mem. Hosp. Proj.)
Series 1997-B, 3.85% 1/26/98, Liquidity Facility SunTrust
Bank Central Florida, NA) CP mode $ 1,100,000 $ 1,100,000
Mount Dora Health Facs. Auth. Rev.
(Waterman Village Proj.) Series 1996 A, 3.65%,
LOC Barnett Bank, VRDN 4,000,000 4,000,000
Sunrise Util. Sys. Rev. Participating VRDN, Series SG-16,
3.75% (Liquidity Facility Societe Generale, France) (b) 1,800,000
1,800,000
50,060,000
GEORGIA - 5.9%
Atlanta Gen. Oblig. Participating VRDN, Series SG-58,
3.80% (Liquidity Facility Societe Generale, France) (b) 2,785,000
2,785,000
Burke County Dev. Auth. Poll. Cont. Rev. Bonds
(Oglethorpe Pwr. Corp. Voltage. Proj.) Series 1997 A,
3.60% 12/1/97 (AMBAC Insured) 4,500,000 4,500,000
Cherokee County Wtr. & Swr. Auth. Rev.
Participating VRDN, Series PA-166, 3.75%,
(Liquidity Facility Merrill Lynch & Co.) (b) 4,765,000 4,765,000
Columbia County Residential Care Facs. Rev.
(Augusta Residental Ctr./Brandon Wilde Lifecare Ctr.) 3.70%,
LOC SunTrust Bank, Atlanta, VRDN 3,505,000 3,505,000
Dekalb County Dev. Auth. Rev. (Oglethorpe Univ. Proj.)
3.70%, LOC SunTrust Bank Atlanta, VRDN 2,905,000 2,905,000
Fulton County Multi-Family Hsg. Rev. Rfdg.
(Champions Green Apts. Proj.) Series 1994 B, 3.75%,
LOC Southtrust Bank, VRDN 5,670,000 5,670,000
Georgia Gen. Oblig. Participating VRDN,
Series BT-79, 3.775%
(Liquidity Facility Bankers Trust Co., NY) (b) 1,000,000 1,000,000
Georgia Muni. Elec. Auth.:
Bonds (Gen. Resolution Proj.):
Series 1985-A, 3.90% 11/07/97, CP mode 1,000,000 1,000,000
Series 1985 B, 3.85% 1/15/98, CP mode 1,000,000 1,000,000
Participating VRDN, Series SG-40, 3.80%
(Liquidity Facility Societe Generale, France) (b) 3,000,000
3,000,000
Macon-Bibb County Hosp. Auth. Rev. (Med. Ctr. of
Central Georgia) Series 1997 A, 3.70%,
LOC SunTrust Bank, Atlanta, VRDN 2,000,000 2,000,000
Roswell Hsg. Auth. Multi-Family Hsg. Rev. (Azalea Park Apts.)
Series 1996, 3.65% (FNMA Guaranteed) VRDN 1,600,000 1,600,000
Savannah Econ. Dev. Auth. Rev. Rfdg. (La Quinta Motor Inns
Inc. Proj.) Series 1991, 3.70%, LOC Nations Bank, VRDN 1,600,000
1,600,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
GEORGIA - CONTINUED
Whitfield County Residential Care Facs. Auth. Rev.
(Royal Oaks Sr. Living Commty.) 3.65%,
LOC First Union Nat'l. Bank, VRDN $ 1,500,000 $ 1,500,000
Worth County Ind. Dev. Auth. Rev. (Seabrook Enterprises) Series
1996 A, 3.70%, LOC SunTrust Bank, Atlanta, VRDN 1,400,000 1,400,000
38,230,000
HAWAII - 0.4%
Hawaii Gen. Oblig. Participating VRDN, Series PA-167,
3.75% (Liquidity Facility Merrill Lynch & Co.) (b) 2,705,000
2,705,000
IDAHO - 0.2%
Caribou County Ind. Dev. Poll. Cont. Rev. Rfdg.
(Monsanto Co.) Series 1990, 3.70%, VRDN 1,500,000 1,500,000
ILLINOIS - 5.1%
Chicago School Reform Board of Trustees Participating VRDN (b):
Series 96, 3.79% (Liquidity Facility Bank of
America Nat'l. Trust & Savings) 3,400,000 3,400,000
Series 1997 E, 3.75% (Liquidity Facility CoreStates Bank) 500,000
500,000
Chicago Tax Increment Allocation Rev. (Stockyards Southeast
Quad) Series 1996 B, 3.75%, LOC Northern Trust, VRDN 2,800,000
2,800,000
Chicago Wtr. Rev. Participating VRDN (b):
Series PT-129, 3.80% (Liquidity Facility Bayerische
Hypotheken-und Wechsel) 1,905,000 1,905,000
Series 1997 V, 3.70% (Liquidity Facility
CoreStates Bank) 1,800,000 1,800,000
Decatur Wtr. Rev. Bonds Series 1985, 3.80% 1/28/98,
LOC Sumitomo Bank LTD Japan, CP mode 1,500,000 1,500,000
Illinois Dev. Fin. Auth. Multi-Family Hsg. Rev. Rfdg.
(Garden Glen Apts.) Series 1993, 3.85%
(Continental Casualty Co. Guaranteed) VRDN 1,610,000 1,610,000
Illinois Ed. Facs. Auth. Rev. Participating VRDN, Series 1997 U,
3.75% (Liquidity Facility Corestates Bank) (b) 2,000,000 2,000,000
Illinois Health Facs. Auth. Rev.:
Participating VRDN (b):
3.80% (Liquidity Facility Rabobank
Nederland, COOP Central) 645,000 645,000
Series 1991 A & 1991 B, 3.80% (Liquidity Facility
Rabobank Nederland, COOP Central) 3,350,000 3,350,000
Rfdg. (Franciscan Eldercare Commty. Svc.)
Series 1996C, 3.70%, LOC LaSalle Bank, VRDN 1,200,000 1,200,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
ILLINOIS - CONTINUED
Illinois Reg'l Trans. Auth. Participating VRDN:
Series SG-10, 3.75%
(Liquidity Facility Societe Generale, France) (b) $ 1,645,000 $
1,645,000
Series SG-19, 3.75%
(Liquidity Facility Societe Generale, France) (b) 1,000,000
1,000,000
Series SG-82, 3.80%
(Liquidity Facility Societe Generale, France) (b) 1,000,000
1,000,000
Jackson County Reg. Dist. Port Facs. Rev. Rfdg. (Enron Transp.
Svc.) 3.75%, LOC First Union Natl Bank of NC, VRDN 1,600,000
1,600,000
Lombard Ind. Proj. Rev. Rfdg. (B&H Partnership Proj.)
Series 1995, 4.03%, LOC Comerica Bank-Illinois, VRDN 3,375,000
3,375,000
Schaumberg Ind. Dev. Rev. Rfdg. (La Quinta Motor Inns Inc.
Proj.) Series 1991, 3.70%, LOC NationsBank, VRDN 1,685,000 1,685,000
Springfield Commty. Impt. (Kent Family, Inc. Proj.)
3.80%, LOC PNC Bank, VRDN 1,000,000 1,000,000
Winnebago County Rev. (Mill Proj.) Series 1996,
3.70%, LOC BankOne, Chicago, VRDN 940,000 940,000
32,955,000
INDIANA - 2.5%
Carmel Clay School Dist. TAN 4.25% 12/31/97 1,000,000 1,000,744
Indiana Ed. Facs. Auth. (Tri-State Univ., Inc. Proj.)
3.70%, LOC BankOne, Indiana, VRDN 2,475,000 2,475,000
Indiana Trans. Fin. Auth. Facs. Lease Rev.
Participating VRDN, Series BT-218,
3.75% (Liquidity Facility Bankers Trust) (b) 1,000,000 1,000,000
Indianapolis Gas Util. Sys. Ctfs. of Indebtedness
(Citizens Gas & Coke Util.):
3.80% 2/26/98, LOC NBD Bank, CP 3,000,000 3,000,000
3.80% 2/27/98, LOC NBD Bank, CP 1,000,000 1,000,000
Noblesville Econ. Dev. Rev. Rfdg. (River's Edge Apt. Proj.)
Series 1992, 3.70%, LOC Bank One, Indiana, VRDN 3,055,000 3,055,000
Portage Township School TAN 3.86% 12/31/97 650,000 650,164
Valparaiso Econ. Dev. Rev. (Indiana Retirement Commty. Proj.)
3.70%, LOC BankOne, Indiana, VRDN 4,300,000 4,300,000
16,480,908
KENTUCKY - 1.6%
Georgetown Ed. Inst. Rev. (Georgetown College Proj.)
Series 1992, 3.65%, LOC PNC Bank, VRDN 1,415,000 1,415,000
Louisville and Jefferson Met. Swr. Dist. Series 1997 A, 3.65%,
LOC PNC Bank, Kentucky, VRDN 5,000,000 5,000,000
Middletown (Christian Academy Proj.) Series 1997,
3.70%, LOC BankOne, Kentucky, NA, VRDN 4,000,000 4,000,000
10,415,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
LOUISIANA - 2.2%
Calcasieu Ind. Dev. Board Poll. Cont. Rev. Rfdg.
(PPG Industries) Series 1992, 3.70%, VRDN $ 4,450,000 $ 4,450,000
Jefferson Parish Gen. Oblig. (W. Jefferson Med.
Ctr. Dist. #1) Series 1986, 3.75%,
LOC Rabobank Nederland, N.V., VRDN 7,320,000 7,320,000
St. Charles Parish Poll. Cont. Rev. (Shell Oil Co.)
Series 1995, 4%, VRDN 1,300,000 1,300,000
West Baton Rouge Parish Industrial Dist. #3
Rev. Rfdg. Bonds (Dow Chemical Co. Proj.)
Series 1991, 3.75% 11/19/97, CP mode 1,000,000 1,000,000
14,070,000
MARYLAND - 0.9%
Baltimore County Econ. Dev. Rev. Rfdg. (Blue Circle Inc. Proj.)
Series 1992, 3.65%, LOC Den Danske Bank, VRDN 400,000 400,000
Baltimore Rev. Participating VRDN, Series SG-20, 3.75%
(Liquidity Facility Societe Generale, France) (b) 1,500,000
1,500,000
Maryland Hsg. & Commty. Dev. Participating VRDN,
Series 1997-P, 3.80% (Liquidity Facility
Caisse Depots Consigns) (b) 1,500,000 1,500,000
Montgomery County Hsg. Commty. Participating VRDN, 3.80%,
(Liquidity Facility Merrill Lynch & Co.) (b) 2,410,000 2,410,000
5,810,000
MASSACHUSETTS - 1.6%
Massachusetts Tpk. Auth. Participating VRDN (b):
Series PA-181, 3.75%
(Liquidity Facility Merrill Lynch & Co.) 1,000,000 1,000,000
Series PT-135, 3.75%
(Liquidity Facility Banco Santander, SA) 8,100,000 8,100,000
Western Tpk. Rev. Series 1997 W, 3.80% (Liquidity Facility
Caisse des Depots et Consigns) 1,500,000 1,500,000
10,600,000
MICHIGAN - 1.1%
Chelsea Ltd. Oblig. Rev. (Silver Maples of Chelsea Proj.)
Series 1996, 3.60%, LOC Comerica Bank, VRDN 1,535,000 1,535,000
Michigan Hosp. Fin. Auth.:
Participating VRDN, Series 1997 X, 3.75%
(Liquidity Facility CoreStates Bank) (b) 1,000,000 1,000,000
Rev. (Chelsea Commty. Hosp.) Series 1995,
3.60%, LOC Comerica Bank, VRDN 1,285,000 1,285,000
Michigan Muni. Bond Auth. RAN 4.50% 7/2/98 1,600,000 1,606,639
Michigan Strategic Fund Bonds (Dow Chemical Co. Proj.)
Series 1986, 3.85% 12/11/97, CP mode 1,000,000 1,000,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
MICHIGAN - CONTINUED
Michigan Strategic Fund Ind. Dev. Rev.
(Michigan Sugar Co.-Croswell Proj.) 3.70%,
LOC SunTrust Bank of Atlanta, VRDN $ 1,000,000 $ 1,000,000
7,426,639
MINNESOTA - 2.2%
Becker Poll. Cont. Rev. Bonds (Northern States Pwr. Co. -
Sherburne Co. Generator #3)
Series 1993-A, 3.80% 11/20/97, CP mode 2,000,000 2,000,000
Bloomington Port Auth. Spl. Tax Rev. Rfdg. (Mall of America
Proj.) Series 1996 B, 3.70% (FSA Insured)
(Liquidity Facility Credit Locale Defrance) VRDN 2,000,000 2,000,000
Minneapolis Convention Ctr. Rev. Series 1997B, 3.65%,
LOC Norwest Bank, VRDN 3,000,000 2,999,550
Minneapolis/St. Paul Hsg. & Redev. Auth.
Participating VRDN, Series 1996 E, 3.80% (FSA Insured)
(Liquidity Facility Norwest Bank NA, Minnesota) (b) 2,250,000
2,250,000
Minnesota Hsg. Fin. Agcy. Participating VRDN Series 1995A,
3.80%, LOC Rabobank Nederland COOP Central (b) 1,900,000 1,900,000
Minnetonka Multifamily Hsg. Rev. Rfdg.
(Cliffs at Ridgedale Proj.) Series 1995, 3.70%
(FNMA Guaranteed) VRDN 1,300,000 1,300,000
Red Wing Poll. Cont. Rev. (Northern States Pwr. Co.)
3.75%, VRDN 2,000,000 2,000,000
14,449,550
MISSISSIPPI - 1.4%
Mississippi Bus. Fin. Corp. Rev. (Mississippi Coll. Proj.)
Series 1996, 3.65%, LOC NationsBank, N.A., VRDN 9,200,000 9,200,000
MISSOURI - 0.6%
Missouri Health & Ed. Facs. Auth. (Lutheran Sr. Svcs.)
Series 1996B, 3.65%, LOC Lasalle Nat'l. Bank, VRDN 4,000,000
4,000,000
MONTANA - 0.6%
Montana TRAN Series 1997, 4.50% 6/30/98 3,650,000 3,665,480
NEVADA - 0.9%
Clark County School Dist. Participating VRDN, Series BT-192,
3.80% (Liquidity Facility Bankers Trust Co.) (b) 2,000,000 2,000,000
Nevada Gen. Oblig. Cap. Impt. Participating VRDN, 3.80%
(Liquidity Facility Bankers Trust Co.) (b) 500,000 500,000
Nevada Muni. Participating VRDN, Series 1996 A, 3.79%
(Liquidity Facility Citibank, NA) (b) 3,200,000 3,200,000
5,700,000
NEW HAMPSHIRE - 0.1%
New Hamphire Higher Ed. & Health Facs. Auth. Rev.
(Alice Peck Day Lifecare Ctr./Harvest Hill) 3.65%,
LOC Corestates Bank, VRDN 800,000 800,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
NEW JERSEY - 0.3%
New Jersey Gen. Oblig. Participating VRDN, Series 943005,
3.74% (Liquidity Facility Citibank, NA) (b) $ 2,000,000 $ 2,000,000
NEW MEXICO - 0.7%
Farmington Poll. Cont. Rev. Participating VRDN,
Series A PT-133, 3.80% (Liquidity Facility
Credit Suisse First Boston (BK)) (b) 4,300,000 4,300,000
NEW YORK - 3.3%
New York City Gen. Oblig. Participating VRDN, Series FR-26,
4% (Liquidity Facility Bank of New York, NA) (b) 5,800,000 5,800,000
New York City Muni. Wtr. Fin. Auth. Series 1, 3.85%
LOC Canadian Imperial Bank of Commerce, CP 5,000,000 5,000,000
New York City RAN Series 1988 A, 4.50% 6/30/98 7,800,000 7,831,795
New York Metropolitan Trans. Auth Commuter Facs. Rev.
Participating VRDN, 3.80% (Liquidity Facility Bayerische
Hypotheken-und Wechsel Bank) (b) 1,760,000 1,760,000
New York State and Local Gov't. Assistance Corp. Rev.
Participating VRDN, Series 1997 SG-99, 3.80%
(Liquidity Facility Societe Generale, France) (b) 1,200,000
1,200,000
21,591,795
NORTH CAROLINA - 0.7%
North Carolina Ed. Facs. Fin. Agcy. (Brevard College Corp.)
Series 1997, 3.80%, LOC Wachovia Bank NA, VRDN 2,000,000 2,000,000
North Carolina Med. Care Commission Health Care Facs. Bonds
(St. Joseph of the Pines) 3.70%, tender 12/1/97,
LOC Wachovia Bank of NC, NA 1,900,000 1,900,000
Pasquotank County Hosp. Rev. Series 1997, 3.60%,
LOC Wachovia Bank of NC, NA, VRDN 900,000 900,000
4,800,000
OHIO - 3.1%
American Muni. Pwr. - Ohio Inc. Equip. Impt. BAN
(Cleveland Pub. Pwr. Proj.) 3.99% 9/3/98 5,730,000 5,730,000
Cleveland City School Dist. Participating VRDN, Series BT-246,
3.80% (Liquidity Facility Bankers Trust Co.) (b) 600,000 600,000
Clinton County Arpt. Facs. Rev. (Wilmington Air Park Inc.)
Series 1991, 3.65%, LOC Wachovia Bank, NA, VRDN 5,000,000 5,000,000
Lima Hosp. Rev. Rfdg. (Lima Mem. Hosp.) 3.70%,
LOC BankOne, NA, VRDN 2,530,000 2,530,000
Ohio Higher Ed. Facs.:
Commty. Rev. (Mount Union College) Series 1995,
3.65%, LOC NBD Bank NA, VRDN 3,285,000 3,285,000
Rev. (Pooled Fing. Prog.) Series 1997, 3.70%
LOC Fifth Third Bank, Cincinnati, VRDN 2,680,000 2,680,000
19,825,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
OKLAHOMA - 0.5%
Cushing Muni. Auth. Correctional Facs. Rev. Series 1996,
3.70%, LOC First Union Nat'l. Bank, VRDN $ 3,000,000 $ 3,000,000
Tulsa Intl. Arpt. Gen. Rev. Participating VRDN,
Series 97B2, 3.74% (Liquidity Facility Bank of
America Nat'l. Trust & Savings Bank) (b) 500,000 500,000
3,500,000
PENNSYLVANIA - 9.2%
Allegheny County (United Jewish Federation)
Seris 1996 A, 3.65%, LOC PNC Bank, VRDN 2,420,000 2,420,000
Allegheny County Higher Ed. Bldg. Auth. (Robert Morris
College) 3.65%, LOC PNC Bank, VRDN 1,000,000 1,000,000
Allegheny County Hosp. Dev. Auth. Rev. (St. Margaret Mem.
Hosp.) Series 1992 A, 3.80%, LOC Mellon Bank, VRDN 2,490,000
2,490,000
Berks County Ind. Dev. Auth. Rev. (Construction Fasteners Proj.)
Series 1996 A, 3.85%, LOC Corestates Bank, VRDN 560,000 560,000
Dauphin County Gen. Auth. (Allhealth Pooled Fing. Prog.)
Series 1997 A, 3.75% (FSA Insured) (Liquidity
Facility Credit Suisse First Boston (BK)) VRDN 7,200,000 7,200,000
Dauphin County Gen. Auth. (Pooled Fing. Prog.)
3.80% (AMBAC Insured)
(BPA Bank of Nova Scotia, Commerzbank, AG) VRDN 11,400,000
11,400,000
Delaware Valley Reg. Fin. Auth. Local Gov't. Rev. Series 1985 D,
3.65%, LOC Credit Suisse First Boston (BK), VRDN 2,500,000 2,500,000
Lancaster Higher Ed. Auth. College Rev. (Franklin & Marshall
College) 3.69% (BPA Chase Manhattan Bank) VRDN 2,500,000 2,500,000
Montgomery County Higher Ed. & Health. Auth.
(Pottstown Healthcare Corp. Proj.) Series 1992,
3.85%, LOC Corestates Bank, VRDN 2,200,000 2,200,000
Moon Ind. Dev. Auth. Rev. (One Thorn Run Ctr. Proj.)
Series 1995-A, 3.75%, LOC Nat'l Bank Assoc., VRDN 2,200,000
2,200,000
North Lebanon Township Muni. Auth. (Grace Commty. Inc. Proj.)
Series 1992 B, 3.85%, LOC CoreStates Bank, VRDN 1,985,000 1,985,000
North Pennsylvania Wtr. Auth. Wtr. Rev.
Participating VRDN, Series SG-30, 3.75%
(Liquidity Facility Societe Generale) (b) 1,030,000 1,030,000
Northeastern Pennsylvania Hosp. & Ed. Auth.
(Allhealth Pooled Fing.) Series 1996,
3.75%, LOC Chase Manhattan Bank, VRDN 5,000,000 5,000,000
Pennsylvania Econ. Dev. Fin. Auth. Econ. Dev. Rev.
(Lutheran Youth & Family Svc.) Series 1993 A, 3.65%,
LOC PNC Bank, VRDN 600,000 600,000
Pennsylvania Hsg. Fin. Agcy. Single-Family Mtg. Rev.
Participating VRDN, Series 1997-56C, 3.80%
(Liquidity Facility Credit Suisse First Boston (BK)) (b) 4,700,000
4,700,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
PENNSYLVANIA - CONTINUED
Philadelphia Gen. Oblig. TRAN Series A 1997-98,
4.50% 6/30/98 $ 3,200,000 $ 3,210,155
Philadelphia Ind. Dev. Auth. Rev. Rfdg.
(Paper Corp. of America Proj.) 3.70%,
LOC SunTrust Bank, Atlanta, VRDN 3,565,000 3,565,000
Philadelphia School Dist. Participating VRDN, Series 1997 W,
3.75% (Liquidity Facility CoreStates Bank) (b) 1,000,000 1,000,000
Pittsburgh Wtr. & Swr. Sys. Auth. Rev.
Participating VRDN, Series BT-181,
3.80% (Liquidity Facility Bankers Trust Co.) (b) 1,000,000 1,000,000
York Gen. Auth. Rev. (Pooled Fing. Prog.) Series 1996,
3.65%, LOC First Union Nat'l. Bank of NC, VRDN 2,900,000 2,900,000
59,460,155
SOUTH CAROLINA - 3.4%
South Carolina Econ. Dev. Auth. Healthcare Facs. Rev.
(Greenville Baptist Retirement Commty. Proj.) 3.65%,
LOC Wachovia Bank NA, VRDN 3,100,000 3,100,000
South Carolina Ed. Facs. Auth. (Non-Profit Institution of
Higher Learning - Chaflin College) Series 1997, 3.80%,
LOC Nationsbank N.A., VRDN 5,780,000 5,780,000
South Carolina Hsg. Fin. & Dev. Auth. Multi-Family Hsg.
Rev. Rfdg. (Spartanburg Oxford Proj.) 3.85%,
(Continental Casualty Co. Guaranteed) VRDN 9,415,000 9,415,000
South Carolina Pub. Svc. Auth.:
3.80% 11/20/97, CP 2,000,000 2,000,000
3.85% 11/20/97, CP 1,000,000 1,000,000
Participating VRDN, Series 1996, 3.74%
(Liquidity Facility Citibank, NA) (b) 1,000,000 1,000,000
22,295,000
TENNESSEE - 2.6%
Memphis Gen. Improvement Participating VRDN, Series 1996,
3.75% (Liquidity Facility Societe Generale) (b) 1,200,000 1,200,000
Metropolitan Nashville and Davidson County Health & Ed.
Rev. Rfdg. (Mckendree Village Inc. Proj.) 3.85%,
LOC SunTrust Bank, Nashville, VRDN 7,605,000 7,605,000
Montgomery County Pub. Bldg. Auth. Rev.
(Pooled Fing. Proj.) VRDN:
3.65%, LOC NationsBank 2,000,000 2,000,000
Series 1995, 3.65%, LOC NationsBank, Tennessee 2,500,000 2,500,000
Rutherford County Ind. Dev. (Cumberland-Swan Inc. Proj.)
Series 1987, 3.70%,
LOC SunTrust Bank, Nashville, VRDN 990,000 990,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
TENNESSEE - CONTINUED
Sevier County Pub. Bldg. Auth. Series 2 D-3,
3.60% (AMBAC Insured)
(Liquidity Facility Kredietbank NV) VRDN $ 1,250,000 $ 1,250,000
Shelby County Gen. Oblig. Participating VRDN,
Series SG-21, 3.75%
(Liquidity Facility Societe Generale) (b) 1,300,000 1,300,000
16,845,000
TEXAS - 12.2%
Austin Combined Util. Sys. Participating VRDN, Series PT-127
3.80% (Liquidity Facility Bayerische
Hypotheken-und Wechsel) (b) 2,300,000 2,300,000
Austin Higher Ed. Auth. (St. Edward's Univ.) Series 1995,
3.70%, LOC NationsBank, Texas, VRDN 900,000 900,000
Austin Hsg. Fin. Corp. Multi-Family Hsg. Rev.
(Riverchase Proj.) Series 1985 A, 4.075%,
LOC Household Finance Corp., VRDN 1,000,000 1,000,000
Brazos River Harbor Navigation Dist. of Brazoria County
Rev. (Dow Chemical Co.) Series 1991,
3.85% 11/14/97, CP mode 2,000,000 2,000,000
Coastal Wtr. Auth. of Texas Wtr. Conveyance Sys.
Rev. Participating VRDN, Series 1997 J, 3.80%
(Liquidity Facility Caisse des Depots et Consigns) (b) 1,080,000
1,080,000
Colorado River Muni. Wtr. Dist. Rev. Participating VRDN, Series
PA-187, 3.80% (Liquidity Facility Merrill Lynch & Co.) (b) 2,000,000
2,000,000
Dallas Area Rapid Transit Sales Tax Rev.
Series A, 3.85% 12/17/97, LOC Credit Suisse First
Boston Bank, Swiss Bank Corp., CP 1,000,000 1,000,000
Denton Util. Sys. Rev. Participating VRDN, Series SG-32,
3.75% (Liquidity Facility Societe Generale) (b) 1,000,000 1,000,000
El Paso Ind. Dev. Auth. Rev. Rfdg. (La Quinta Motor Inns Inc. Proj.)
Series 1991, 3.70%, LOC NationsBank, VRDN 1,250,000 1,250,000
Farmers Branch Ind. Dev. Corp. Rev. Rfdg. (PPG Ind. Inc. Proj.)
Series 1992, 3.70%, VRDN 1,300,000 1,300,000
Georgetown Health Facs. Dev. Corp. (Georgetown
Healthcare Sys. Proj.) Series 1997B, 3.65%,
LOC Texas Commerce Bank, NA, Houston, VRDN 2,000,000 2,000,000
Greater East Texas Higher Ed. Auth. Student Loan Rev.
Rfdg. Bonds Series 1992 A, 3.90%,
tender 9/1/98, LOC Sallie Mae 1,000,000 1,000,000
Harris County Dev. Corp. Rev. (Johann Haltermann Ltd.)
Series 1996 A, 3.65%, LOC Texas Commerce
Bank, NA, Houston, VRDN 900,000 900,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
TEXAS - CONTINUED
Harris County Health Facs., VRDN:
Dev. Corp. (St. Lukes Hospital) Series A, 4.05% $ 4,600,000 $
4,600,000
Rev. (School Health Care Systems) Series 1997 C, 3.65%
(BPA Credit Suisse First Boston (BK)) 3,100,000 3,100,000
Houston Gen. Oblig. Series A, CP:
3.80% 12/16/97 (Liquidity Facility
Toronto-Dominion Bank) 1,000,000 1,000,000
3.80% 12/17/97 (Liquidity Facility
Toronto-Dominion Bank) 600,000 600,000
Houston Wtr. & Swr. Sys. Series A, CP:
3.85% 1/15/98 (Liquidity Facility Credit Suisse First Boston
(BK), Westdeutsche Landesbank Gironzentrale) 3,300,000 3,300,000
3.80% 2/12/98 (Liquidity Facility Credit Suisse First Boston
(BK), Westdeutsche Landesbank Gironzentrale) 1,000,000 1,000,000
Matagorda County Navigation Dist #1
Participating VRDN, Series 1989 C, 3.80%
(Liquidity Facility Caisse des Depots et Consigns) (b) 780,000
780,000
North Central Texas Health Facs. Dev. Corp.
Hosp. Rev. Bonds (Methodist Hosp. of Dallas) Series
1991 A, 3.75% 12/10/97 (MBIA Insured)
(BPA Rabobank Nederland, Coop Central) CP mode 2,600,000 2,600,000
Port Arthur Navigation Dist. Poll. Cont. Rev. Rfdg.
(Texaco Inc. Proj.) Series 1994, 4.25%, VRDN 3,000,000 3,000,000
San Antonio Elec. & Gas Sys. Rev.:
Participating VRDN (b):
Series SG-101, 3.80% (Liquidity Facility Societe Generale) 4,900,000
4,900,000
Series SG-105, 3.80% (Liquidity Facility Societe Generale)
1,000,000 1,000,000
Series A, 3.80% 11/17/97, CP 1,000,000 1,000,000
San Antonio Wtr. Rev. Participating VRDN, Series 96-4306,
3.74% (Liquidity Facility Citibank, NA) (b) 1,000,000 1,000,000
San Antonio Wtr. Sys. Series 1995, 3.85% 12/12/97
(Liquidity Facility Westdeutsche Landesbank) CP 1,000,000 1,000,000
Tarrant County Hsg. Fin. Corp. Multi-Family Hsg. Rev.
(Windcastle Proj.) 3.70%, LOC Swiss Bank Corp., VRDN 2,100,000
2,100,000
Texarkana Ind. Dev. Corp. Rev. Rfdg.
(La Quinta Motor Inns Inc. Proj.) Series 1991, 3.70%,
LOC NationsBank, Texas, VRDN 2,040,000 2,040,000
Texas Gen. Oblig. TRAN 4.75% 8/31/98 24,400,000 24,577,554
Texas Pub. Fin. Auth. Participating VRDN, Series 97C4301,
3.74% (Liquidity Facility Citibank) (b) 1,900,000 1,900,000
Univ. of Texas Sys. Bonds (Permanent Univ. Fund)
Series A, 3.80% 2/27/98, CP mode 2,045,000 2,045,000
79,272,554
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
UTAH - 0.2%
Timpanogos Spl. Svc. Dist. Participating VRDN,
Series SG-83, 3.80% (Liquidity Facility
Societe Generale) (b) $ 1,000,000 $ 1,000,000
VIRGINIA - 5.4%
Chesterfield County Ind. Dev. Auth. Poll. Cont. Rev. Bonds
(Virginia Elec. Pwr. Co. Proj.):
Series 1987 A, 3.80% 11/12/97, CP mode 1,000,000 1,000,000
Series 1987 A, 3.80% 2/12/98, CP mode 3,600,000 3,600,000
Series B, 3.80% 2/18/98, CP mode 1,000,000 1,000,000
Series B, 3.80% 2/20/98, CP mode 1,000,000 1,000,000
Series B, 3.80% 2/24/98 , CP mode 2,335,000 2,335,000
Fairfax County Public Impt. Participating VRDN, Series PA-149,
3.80% (Liquidity Facility Merrill Lynch & Co.) (b) 1,000,000
1,000,000
Louisa County Ind. Dev. Auth. Rev. (Pooled Fing. Prog.)
Series 1995, 3.65%, LOC NationsBank NA, VRDN 4,400,000 4,400,000
Louisa Ind. Dev. Auth. Poll. Cont. Rev. Bonds
(Virginia Elec. & Pwr. Co. Proj.) Series 1985:
3.85% 11/19/97 (BPA Bank of
New York, NA) CP mode 2,000,000 2,000,000
3.80% 2/24/98 (BPA Bank of
New York, NA) CP mode 2,000,000 2,000,000
Peninsula Port Auth. Port. Facs. Rev. Rfdg.:
Bonds (CSX Trans. Inc. Proj.)
Series 1992, 3.80% 12/16/1997,
LOC Bank of Nova Scotia, CP mode 2,950,000 2,950,000
(Shell Oil & Terminal Co, Proj.)
Series 1987, 4%, VRDN 4,365,000 4,365,000
Richmond Gen. Oblig. RAN Series B, 3.65%
(Liquidity Facility Nationsbank NA) VRDN 5,000,000 5,000,000
Roanoke Ind. Dev. Auth. Hosp.
(Carilion Health Sys.) Series 1997A, 4%
(Liquidity Facility Nationsbank NA) VRDN 2,000,000 2,000,000
Virginia Beach Ind. Dev. Auth. Rev. Rfdg.
(La Quinta Motor Inns Inc. Proj.) Series 1993, 3.70%,
LOC Nations Bank, VRDN 2,175,000 2,175,000
34,825,000
WASHINGTON - 4.2%
Kent Gen. Oblig. Participating VRDN, Series SGA-27, 3.75%
(Liquidity Facility Societe Generale) (b) 1,200,000 1,200,000
King County Swr. Rev. BAN Series A,
3.80% 11/18/1997, CP 2,600,000 2,600,000
MUNICIPAL SECURITIES (A) - CONTINUED
PRINCIPAL VALUE
AMOUNT (NOTE 1)
WASHINGTON - CONTINUED
Washington Gen. Oblig. Participating VRDN (b):
Series 1993 C, 3.79% (Liquidity Facility Citibank, NA) $ 4,000,000 $
4,000,000
Series SG-11, 3.75% (Liquidity Facility Societe Generale) 1,000,000
1,000,000
Series SG-35, 3.75% (Liquidity Facility Societe Generale) 1,000,000
1,000,000
Series SGA-36, 3.75%
(Liquidity Facility Societe Generale) 2,260,000 2,260,000
Series SGB-9, 3.75% (Liquidity Facility Societe Generale) 900,000
900,000
Washington Pub. Pwr. Supply Sys.:
Participating VRDN, Series 1994 B,
3.79% (Liquidity Facility Citibank) (b) 10,600,000 10,600,000
Rfdg. Elec. Rev., Series 1993 3A-2, 3.70%,
LOC Bank of America, VRDN 1,200,000 1,200,000
(Nuclear Proj. No.3) Participating VRDN, Series BT-126,
3.85% (BPA Bankers Trust Co.) (b) 2,774,400 2,774,400
27,534,400
WISCONSIN - 0.7%
Milwaukee School Dist. RAN 4.25% 8/27/98 3,000,000 3,009,721
Wausau School Dist. TRAN 4.25% 9/16/98 1,800,000 1,804,843
4,814,564
WYOMING - 0.2%
Wyoming Commty. Dev. Auth. Hsg. Rev. Participating VRDN,
Series PT 112, 3.80% (Liquidity Facility Bayerische
Hypotheken-und Wechsel Bank) (b) 500,000 500,000
Wyoming Gen. Oblig. TRAN Series 1997, 4.25% 6/26/98 1,000,000
1,002,637
1,502,637
MULTIPLE STATES - 0.5%
NCNB Tax-Exempt Trust Participating VRDN,
Series 1990 A, 4.25%, LOC NationsBank NA (b) 547,500 547,500
Stephens Equity Trust I Participating VRDN, Series 1996,
3.79%, LOC Bayerische Hypotheken-und Wechsel (b) 2,782,035 2,782,035
3,329,535
TOTAL INVESTMENTS - 100% $ 650,057,721
Total Cost for Income Tax Purposes $ 650,057,721
SECURITY TYPE ABBREVIATIONS
BAN - Bond Anticipation Notes
CP - Commercial Paper
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TRAN - Tax and Revenue Anticipation
Notes
VRDN - Variable Rate Demand Notes
LEGEND
1. The coupon rate shown on floating or adjustable rate securities
represents the rate at period end.
2. Provides evidence of ownership in one or more underlying municipal
bonds.
INCOME TAX INFORMATION
At October 31, 1997, the fund had a capital loss carryforward of
approximately $124,000 of which $2,000, $2,000, $29,000, $15,000,
$1,000, $72,000, and $3,000 will expire on October 31, 1998, 1999,
2000, 2002, 2003, 2004, and 2005, respectively. Of the loss
carryforwards expiring in 1998, 1999, 2000, 2002, and 2003, $2,000,
$2,000, $5,000, $15,000, and $1,000, respectively, were acquired in
the merger and are available to offset future capital gains of the
fund to the extent provided by regulations (see Note 10 of Notes to
Financial Statements).
TAX-EXEMPT FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
OCTOBER 31, 1997
ASSETS
INVESTMENT IN SECURITIES, AT VALUE - SEE $ 650,057,721
ACCOMPANYING SCHEDULE
CASH 161,417
INTEREST RECEIVABLE 3,811,658
TOTAL ASSETS 654,030,796
LIABILITIES
PAYABLE FOR INVESTMENTS PURCHASED $ 1,002,459
SHARE TRANSACTIONS IN PROCESS 7,130,136
DISTRIBUTIONS PAYABLE 109,346
ACCRUED MANAGEMENT FEE 63,272
DISTRIBUTION FEES PAYABLE 154,154
OTHER PAYABLES AND ACCRUED EXPENSES 337,313
TOTAL LIABILITIES 8,796,680
NET ASSETS $ 645,234,116
NET ASSETS CONSIST OF:
PAID IN CAPITAL $ 645,357,963
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (123,847)
NET ASSETS $ 645,234,116
</TABLE>
DAILY MONEY CLASS: $1.00
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE ($468,609,076 (DIVIDED BY) 468,698,801 SHARES)
CAPITAL RESERVES CLASS: $1.00
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE ($176,625,040 (DIVIDED BY) 176,658,859 SHARES)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED OCTOBER 31, 1997
INTEREST INCOME $ 17,502,639
EXPENSES
MANAGEMENT FEE $ 1,851,325
TRANSFER AGENT FEES 1,020,621
DISTRIBUTION FEES 510,713
ACCOUNTING FEES AND EXPENSES 100,283
CUSTODIAN FEES AND EXPENSES 33,228
REGISTRATION FEES 114,403
AUDIT 34,906
LEGAL 19,707
REPORTS TO SHAREHOLDERS 17,546
MISCELLANEOUS 4,285
TOTAL EXPENSES BEFORE REDUCTIONS 3,707,017
EXPENSE REDUCTIONS (638,541) 3,068,476
NET INTEREST INCOME 14,434,163
NET REALIZED GAIN (LOSS) ON INVESTMENTS (661)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 14,433,502
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS $ 14,434,163 $ 15,540,068
NET INTEREST INCOME
NET REALIZED GAIN (LOSS) (661) (74,164)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 14,433,502 15,465,904
FROM OPERATIONS
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INTEREST INCOME (14,434,163) (15,540,068)
SHARE TRANSACTIONS - NET INCREASE (DECREASE) (35,374,966) (59,004,700)
NET ASSET VALUE OF CAPITAL RESERVES CLASS SHARES 180,515,417 -
ISSUED IN EXCHANGE FOR THE NET ASSETS OF
CAPITAL RESERVES: MUNICIPAL MONEY MARKET PORTFOLIO
TOTAL SHARE TRANSACTIONS 145,140,451 (59,004,700)
TOTAL INCREASE (DECREASE) IN NET ASSETS 145,139,790 (59,078,864)
NET ASSETS
BEGINNING OF PERIOD 500,094,326 559,173,190
END OF PERIOD $ 645,234,116 $ 500,094,326
</TABLE>
FINANCIAL HIGHLIGHTS - DAILY MONEY CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED OCTOBER 31,
1997 1996 1995 1994 1993
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
OF PERIOD
INCOME FROM INVESTMENT
OPERATIONS
NET INTEREST INCOME .031 .030 .033 .022 .021
LESS DISTRIBUTIONS
FROM NET INTEREST INCOME (.031) (.030) (.033) (.022) (.021)
NET ASSET VALUE, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
END OF PERIOD
TOTAL RETURN A 3.10% 3.02% 3.36% 2.21% 2.11%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD $ 468,609 $ 500,094 $ 559,173 $ 454,259 $ 538,756
(000 OMITTED)
RATIO OF EXPENSES TO AVERAGE .65% B .65% B .65% B .65% B .61%
NET ASSETS
RATIO OF NET INTEREST INCOME TO 3.06% 2.98% 3.31% 2.17% 2.09%
AVERAGE NET ASSETS
</TABLE>
A TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 5 OF NOTES TO FINANCIAL
STATEMENTS).
B FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD
HAVE BEEN HIGHER (SEE NOTE 5 OF NOTES TO FINANCIAL STATEMENTS).
FINANCIAL HIGHLIGHTS - CAPITAL RESERVES CLASS
1997 E
SELECTED PER-SHARE DATA
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.000000
INCOME FROM INVESTMENT OPERATIONS .000078
NET INTEREST INCOME
LESS DISTRIBUTIONS (.000078)
FROM NET INTEREST INCOME
NET ASSET VALUE, END OF PERIOD $ 1.000000
TOTAL RETURN B, C .01%
RATIOS AND SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (000 OMITTED) $ 176,625
RATIO OF EXPENSES TO AVERAGE NET ASSETS .90% A,
D
RATIO OF NET INTEREST INCOME TO AVERAGE NET ASSETS 2.81% A
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED.
D FMR AGREED TO REIMBURSE A PORTION OF THE CLASS' EXPENSES. WITHOUT
THIS REIMBURSEMENT, THE CLASS' EXPENSE RATIO WOULD HAVE BEEN HIGHER.
E FOR OCTOBER 31, 1997 (COMMENCEMENT OF SALE OF CAPITAL RESERVES CLASS
SHARES).
NOTES TO FINANCIAL STATEMENTS
For the period ended October 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES.
Treasury Fund (Treasury)(formerly U.S. Treasury Portfolio), Prime Fund
(Prime)(formerly Money Market Portfolio), and Tax-Exempt Fund
(Tax-Exempt) (formerly Daily Tax-Exempt Money Fund)(collectively
referred to as "the funds") are funds of Newbury Street Trust (the
trust). The trust is registered under the Investment Company Act of
1940, as amended (the 1940 Act), as an open-end management investment
company organized as a Delaware business trust. Each fund is
authorized to issue an unlimited number of shares.
Prime and Tax-Exempt each offer two classes of shares, Daily Money
Class (formerly Initial Class) and Capital Reserves Class whereas
Treasury offers three classes of shares, Daily Money Class (formerly
Initial Class), Advisor B Class (formerly Class B), and Capital
Reserves Class, each of which has equal rights as to assets and voting
privileges. Each class of the funds has exclusive voting rights with
respect to its distribution plan. Interest income, realized and
unrealized capital gains and losses, the common expenses of the fund,
and certain fund-level expense reductions, if any, are allocated on a
pro rata basis to each class based on the relative net assets of each
class to the total net assets of the fund. Each class of shares
differs in its respective distribution, transfer agent, registration,
and certain other class-specific fees, expenses, and expense
reductions.
In June 1997, the Board of Trustees approved the creation of an
additional class of shares of Treasury Fund, Advisor C Class shares.
Offering of the new class commenced on November 3, 1997. Advisor C
Class shares are subject to an annual distribution and service fee of
1.00% (of which .75% represents a distribution fee and .25% represents
a shareholder service fee) of the class' average net assets, and a
1.00% contingent deferred sales charge levied on Advisor C Class share
redemptions made within one year of purchase.
The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to
make certain estimates and assumptions at the date of the financial
statements. 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, each fund is not subject to
income taxes to the extent that it distributes substantially all of
its taxable income for the fiscal year. The schedules of investments
include information regarding income taxes under the caption "Income
Tax Information."
INTEREST INCOME. Interest income, which includes amortization of
premium and accretion of discount, is accrued as earned. For the
Tax-Exempt fund, accretion of market discount represents unrealized
gain until realized at the time of a security disposition or maturity.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
EXPENSES. Most expenses of the trust can be directly attributed to a
fund. Expenses which cannot be directly attributed are apportioned
between the funds in the trust.
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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, Treasury and Prime, along with
other affiliated entities of Fidelity Management & Research Company
(FMR), may transfer uninvested cash balances into one or more joint
trading accounts. These balances are invested in one or more
repurchase agreements for U.S. Treasury or Federal Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
securities are transferred to an account of the funds, or to the Joint
Trading Account, at a bank custodian. The securities are
marked-to-market daily and maintained at a value at least equal to the
principal amount of the repurchase agreement (including accrued
interest). FMR, the funds' investment adviser, is responsible for
determining that the value of the underlying securities remains in
accordance with the market value requirements stated above.
RESTRICTED SECURITIES. Prime and Tax-Exempt are permitted to invest in
securities that are subject to legal or contractual restrictions on
resale. These securities generally may be resold in transactions
exempt from registration or to the public if the securities are
registered. Disposal of these securities may involve time-consuming
negotiations and expense, and prompt sale at an acceptable price may
be difficult. At the end of the period, restricted securities
(excluding 144A issues) amounted to $15,000,000 or 0.3% of net assets
for Prime Fund. At period end, Tax-Exempt had no investments in
restricted securities.
3. JOINT TRADING ACCOUNT.
At the end of the period, Treasury had 20% or more of their total
investments in repurchase agreements through a joint trading account.
These repurchase agreements were with entities whose creditworthiness
has been reviewed and found satisfactory by FMR.
3. JOINT TRADING ACCOUNT - CONTINUED
The maturity values of the joint trading account investments were
$1,049,498,187 at 5.70%, $57,142,130 at 5.70%, $27,057,750 at 5.50%,
$60,540,833 at 5.50%, $30,407,917 at 5.50%, and $22,203,133 at 5.54%.
The investments in repurchase agreements through the joint trading
account are summarized as follows:
SUMMARY OF JOINT TRADING
DATED OCTOBER 31, 1997, DUE NOVEMBER 3, 1997 AT 5.70%
Number of dealers or banks 11
Maximum amount with one dealer or bank 27.0%
Aggregate principal amount of agreements $6,961,411,000
Aggregate maturity amount of agreements $6,964,717,087
Aggregate market value of transferred assets $7,109,125,676
Coupon rates of transferred assets 0% to 15.75%
Maturity dates of transferred assets 11/6/97 to 8/15/27
DATED OCTOBER 31, 1997, DUE NOVEMBER 3, 1997 AT 5.70%
Number of dealers or banks 5
Maximum amount with one dealer or bank 28.1%
Aggregate principal amount of agreements $445,000,000
Aggregate maturity amount of agreements $445,211,375
Aggregate market value of transferred assets $454,205,983
Coupon rates of transferred assets 5.13% to 15.75%
Maturity dates of transferred assets 11/6/97 to 2/15/27
DATED OCTOBER 24, 1997, DUE NOVEMBER 7, 1997 AT 5.50%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100.0%
Aggregate principal amount of agreements $500,000,000
Aggregate maturity amount of agreements $501,069,445
Aggregate market value of transferred assets $510,643,941
Coupon rates of transferred assets 6.25% to 10.63%
Maturity dates of transferred assets 2/15/99 to 8/15/15
3. JOINT TRADING ACCOUNT - CONTINUED
SUMMARY OF JOINT TRADING - CONTINUED
DATED SEPTEMBER 12, 1997, DUE NOVEMBER 10, 1997 AT 5.50%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $1,000,000,000
Aggregate maturity amount of agreements $1,009,013,889
Aggregate market value of transferred assets $1,021,287,882
Coupon rates of transferred assets 6.25% to 10.63%
Maturity dates of transferred assets 2/15/99 to 8/15/15
DATED SEPTEMBER 5, 1997, DUE DECEMBER 3, 1997 AT 5.50%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $500,000,000
Aggregate maturity amount of agreements $506,798,611
Aggregate market value of transferred assets $516,750,368
Coupon rates of transferred assets 4.75% to 7.50%
Maturity dates of transferred assets 5/31/98 to 11/15/01
DATED OCTOBER 23, 1997, DUE DECEMBER 22, 1997 AT 5.54%
Number of dealers or banks 1
Maximum amount with one dealer or bank 100%
Aggregate principal amount of agreements $500,000,000
Aggregate maturity amount of agreements $504,616,666
Aggregate market value of transferred assets $510,357,769
Coupon rates of transferred assets 0% to 12.50%
Maturity dates of transferred assets 5/15/98 to 8/15/17
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a fee
that is computed daily at an annual rate of .25% of the fund's average
net assets. Prior to May 31, 1997, the management fee rate was .50%
for each fund.
SUB-ADVISER FEE. As each 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 fees are paid prior to any
voluntary expense reimbursements which may be in effect.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
DISTRIBUTION AND SERVICE PLAN. In accordance with Rule 12b-1 of the
1940 Act, the Trustees have adopted separate distribution plans with
respect to each fund's classes of shares (collectively referred to as
the "the Plans"). Under the Plans, FMR or the funds' distributor,
Fidelity Distributors Corporation (FDC), an affiliate of FMR, may use
its resources to pay administrative and promotional expenses related
to the sale of each class' shares. Subject to the approval of the
Board of Trustees, the Plans also authorize payments to third parties
that assist in the sale of each class' shares or render shareholder
support services. FMR or FDC has informed the funds that payments made
to third parties under the Plans amounted to $2,614,266 (Treasury -
Daily Money Class), $3,466,923 (Prime - Daily Money Class), and
$682,362 (Tax-Exempt - Daily Money Class).
Under the Treasury Advisor B Class Plan, the class pays FDC a
distribution and service fee. This fee is based on an annual rate of
1.00% (of which .75% represents a distribution fee and .25% represents
a shareholder service fee) of the average net assets of the Advisor B
Class shares. For the period, the fund paid FDC $191,842 under the
Advisor B Class Plan, of which $57,449 was paid to securities dealers,
banks, and other financial institutions for the distributions of
Advisor B Class shares and for providing shareholder support services.
Effective May 31, 1997, shareholders approved revised distribution and
service plans for the Daily Money Classes of Treasury, Prime, and
Tax-Exempt. Under the revised plans, the class pays FDC a
distribution and service fee that is based on an annual rate of .25%
of the average net assets of the Daily Money Class shares. For the
period, the funds paid FDC $1,306,014, $2,670,016, and $508,279 under
the Daily Money Class Plans of Treasury, Prime, and Tax-Exempt,
respectively, of which $1,226,657, $802,554, and $174,716 was paid to
securities dealers, banks and other financial institutions for the
distribution of Daily Money Class shares of Treasury, Prime, and
Tax-Exempt.
Under the Capital Reserve Class Plan, the class pays FDC a
distribution and service fee that is based on an annual rate of .50%
of the average net assets of the Capital Reserves Class shares. For
the period, the funds paid FDC $3,641, $23,805, and $2,434 under the
Capital Reserves Class Plans of Treasury, Prime, and Tax-Exempt,
respectively.
SALES LOAD. FDC receives the proceeds of a contingent deferred sales
charge levied on Treasury - Advisor B Class share redemptions
occurring within six years of purchase (five years prior to January 2,
1997). The Advisor B Class charge is based on declining rates which
range from 5% to 0% (4% to 0% prior to January 2, 1997) of the lesser
of the cost of shares at the initial date of purchase or the net asset
value of the redeemed shares, excluding any reinvested dividends and
capital gains. For the period, FDC received contingent deferred sales
charges of $152,671 on Advisor B Class share redemptions. When Advisor
B Class shares are sold, FDC pays commission from its own resources to
dealers through which the sales are made.
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
TRANSFER AGENT FEES. Fidelity Investments Institutional Operations
Company, Inc. (FIIOC), an affiliate of FMR, is the transfer, dividend
disbursing and shareholder servicing agent for the funds except for
Tax-Exempt. UMB Bank n.a. (UMB) is the custodian and transfer and
shareholder servicing agent for Tax-Exempt. UMB has entered into a
sub-contract with FIIOC to perform the activities associated with
Tax-Exempt's transfer and shareholder servicing agent functions. FIIOC
receives account fees and asset-based fees that vary according to
account size and type of account. FIIOC pays for typesetting, printing
and mailing of all shareholder reports, except proxy statements. For
the period, the following amounts were paid to each transfer agent:
TRANSFER AMOUNT % OF
AGENT AVERAGE
NET ASSETS
TREASURY - DAILY MONEY CLASS FIIOC $ 3,079,566 .21
TREASURY - ADVISOR B CLASS FIIOC 57,312 .25
TREASURY - CAPITAL RESERVES CLASS FIIOC 1,092 .15*
$ 3,137,970
PRIME - DAILY MONEY CLASS FIIOC $ 5,509,880 .22
PRIME - CAPITAL RESERVES CLASS FIIOC 7,141 .15 *
$ 5,517,021
TAX-EXEMPT - DAILY MONEY CLASS UMB $ 1,019,891 .22
TAX-EXEMPT - CAPITAL RESERVES CLASS UMB 730 .15 *
$ 1,020,621
* ANNUALIZED
ACCOUNTING FEES. Fidelity Service Company, Inc. (FSC), an affiliate of
FMR, maintains each fund's accounting records. The fee is based on the
level of average net assets for the month plus out-of-pocket expenses.
5. EXPENSE REDUCTIONS.
FMR voluntarily agreed to reimburse operating expenses (excluding
interest, taxes, brokerage commissions and extraordinary expenses)
above the following annual rates or range of annual rates of average
net assets for each class:
FMR EXPENSE REIMBURSEMENT
LIMITATIONS
TREASURY - DAILY MONEY CLASS 0.65% $ 1,340,816
TREASURY - ADVISOR B CLASS 1.40% 69,692
TREASURY - CAPITAL RESERVES CLASS 0.90% -
$ 1,410,508
PRIME - DAILY MONEY CLASS 0.65% $ 2,609,321
PRIME - CAPITAL RESERVES CLASS 0.90% -
$ 2,609,321
TAX-EXEMPT - DAILY MONEY CLASS 0.65% $ 636,733
TAX-EXEMPT - CAPITAL RESERVES CLASS 0.90% -
$ 636,733
Effective January 1, 1997, Treasury - Advisor B Class expense
limitation was changed from 1.35% to 1.40% of average net assets.
In addition, each fund has entered into arrangements with its
custodian and each class' transfer agent whereby credits realized as a
result of uninvested cash balances were used to reduce a portion of
expenses. During the period, the funds' custodian fees were reduced by
$4,262, $71, and $1,808, for Treasury, Prime, and Tax-Exempt,
respectively under the custodian arrangement.
6. BENEFICIAL INTEREST.
At the end of the period, one shareholder was record owner of
approximately 20% of the total outstanding shares of Treasury.
7. DISTRIBUTIONS TO SHAREHOLDERS.
Distributions to shareholders of each class of shares were as follows:
YEAR THREE MONTHS YEAR
ENDED ENDED ENDED
OCTOBER 31, 1997 A OCTOBER 31,1996 JULY 31,1996
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TREASURY - DAILY MONEY CLASS
FROM NET INTEREST INCOME $ 70,366,580 $ 21,367,372 $ 98,286,345
TREASURY - ADVISOR B CLASS
FROM NET INTEREST INCOME 976,874 269,062 528,535
TREASURY - CAPITAL RESERVES CLASS
FROM NET INTEREST INCOME 35,929 - -
TOTAL $ 71,379,383 $ 21,636,434 $ 98,814,880
PRIME - DAILY MONEY CLASS
FROM NET INTEREST INCOME $ 125,179,829 $ 31,070,720 $ 121,708,868
PRIME - CAPITAL RESERVES CLASS
FROM NET INTEREST INCOME 227,540 - -
TOTAL $ 125,407,369 $ 31,070,720 $ 121,708,868
</TABLE>
YEAR ENDED
OCTOBER 31,1996
TAX-EXEMPT - DAILY MONEY CLASS
FROM NET INTEREST INCOME $ 14,420,492 $ 15,540,068
TAX-EXEMPT - CAPITAL RESERVES CLASS
FROM NET INTEREST INCOME 13,671 -
TOTAL $ 14,434,163 $ 15,540,068
A DISTRIBUTIONS TO SHAREHOLDERS FOR CAPITAL RESERVES CLASS ARE FOR
OCTOBER 31, 1997 (COMMENCEMENT OF SALE OF SHARES).
8. SHARE TRANSACTIONS.
Share transactions for each class of shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
YEAR ENDED THREE MONTHS ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, JULY 31,
1997 A 1996 1996
TREASURY - DAILY MONEY CLASS $ 7,946,018,718 $ 2,052,601,018 $ 11,030,210,151
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS FROM NET 50,873,842 12,481,771 56,208,793
INTEREST INCOME
SHARES REDEEMED (8,513,852,139) (2,065,230,595) (11,113,118,785)
NET INCREASE (DECREASE) $ (516,959,579) $ (147,806) $ (26,699,841)
TREASURY - ADVISOR B CLASS $ 103,033,399 $ 10,395,134 $ 82,859,473
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS FROM NET 852,624 257,070 472,884
INTEREST INCOME
SHARES REDEEMED (78,321,944) (30,201,713) (46,523,167)
NET INCREASE (DECREASE) $ 25,564,079 $ (19,549,509) $ 36,809,190
TREASURY - CAPITAL RESERVES $ 14,297,304
CLASS SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS FROM NET 33,861
INTEREST INCOME
SHARES REDEEMED (16,453,498)
(2,122,333)
ISSUED IN EXCHANGE FOR THE NET ASSETS OF 266,966,651
CAPITAL RESERVES: U.S. GOVERNMENT
PORTFOLIO
NET INCREASE (DECREASE) $ 264,844,318
PRIME - DAILY MONEY CLASS $ 14,359,821,343 $ 3,213,788,949 $ 13,231,538,511
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS FROM NET 116,267,349 28,781,415 112,618,012
INTEREST INCOME
SHARES REDEEMED (14,453,129,872) (3,159,725,660) (12,902,990,749)
NET INCREASE (DECREASE) $ 22,958,820 $ 82,844,704 $ 441,165,774
PRIME - CAPITAL RESERVES CLASS $ 157,340,539
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS FROM NET 225,744
INTEREST INCOME
SHARES REDEEMED (116,849,328)
40,716,955
ISSUED IN EXCHANGE FOR THE NET ASSETS 1,723,735,801
OF CAPITAL RESERVES: MONEY
MARKET PORTFOLIO
NET INCREASE (DECREASE) $ 1,764,452,756
</TABLE>
A SHARE TRANSACTIONS FOR CAPITAL RESERVES CLASS ARE FOR OCTOBER 31,
1997 (COMMENCEMENT OF SALE OF SHARES).
8. SHARE TRANSACTIONS - CONTINUED
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1997 A 1996
TAX-EXEMPT - DAILY MONEY CLASS $ 1,868,631,417 $ 1,958,241,067
SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS FROM NET 12,904,553 13,605,676
INTEREST INCOME
SHARES REDEEMED (1,913,028,983) (2,030,851,443)
NET INCREASE (DECREASE) $ (31,493,013) $ (59,004,700)
TAX-EXEMPT - CAPITAL RESERVES $ 5,020,244
CLASS SHARES SOLD
REINVESTMENT OF DISTRIBUTIONS FROM NET 425,720
INTEREST INCOME
SHARES REDEEMED (9,327,917)
(3,881,953)
ISSUED IN EXCHANGE FOR THE NET ASSETS 180,540,812
OF CAPITAL RESERVES: MUNICIPAL MONEY
MARKET PORTFOLIO
NET INCREASE (DECREASE) $ 176,658,859
A SHARE TRANSACTIONS FOR CAPITAL RESERVES CLASS ARE FOR OCTOBER 31,
1997 (COMMENCEMENT OF SALE OF SHARES).
9. REGISTRATION FEES.
For the period, each class paid the following amounts to register its
shares for sale:
REGISTRATION
FEES
TREASURY - DAILY MONEY CLASS $ 128,284
TREASURY - ADVISOR B CLASS 43,751
TREASURY - CAPITAL RESERVES CLASS -
$ 172,035
PRIME - DAILY MONEY CLASS $ 250,096
TREASURY - CAPITAL RESERVES CLASS -
$ 250,096
TAX-EXEMPT - DAILY MONEY CLASS $ 114,403
TAX-EXEMPT - CAPITAL RESERVES CLASS -
$ 114,403
10. MERGER INFORMATION.
On October 30, 1997, Treasury Fund acquired all of the assets and
assumed all of the liabilities of Capital Reserves: U.S. Government
Portfolio (U.S. Government Portfolio). The acquisition, which was
approved by the shareholders of U.S. Government Portfolio on September
17, 1997, was accomplished by an exchange of 266,966,651 shares of
Treasury Fund for the 266,966,651 shares then outstanding (each valued
at $1.00) of U.S. Government Portfolio. Based on the opinion of fund
counsel, the reorganization qualified as a tax-free reorganization for
federal income tax purposes with no gain or loss recognized to the
funds or their shareholders. U.S. Government Portfolio's net assets
were combined with the fund for total net assets after the acquisition
of $1,586,154,631.
On October 30, 1997, Prime Fund acquired all of the assets and assumed
all of the liabilities of Capital Reserves: Money Market Portfolio
(Money Market Portfolio). The acquisition, which was approved by the
shareholders of Money Market Portfolio on September 17, 1997, was
accomplished by an exchange of 1,723,735,801 shares of Prime Fund for
the 1,723,735,801 shares then outstanding (each valued at $1.00) of
Money Market Portfolio. Based on the opinion of fund counsel, the
reorganization qualified as a tax-free reorganization for federal
income tax purposes with no gain or loss recognized to the funds or
their shareholders. Money Market Portfolio's net assets were combined
with the fund for total net assets after the acquisition of
$4,415,315,333.
On October 30, 1997, Tax-Exempt Fund acquired all of the assets and
assumed all of the liabilities of Capital Reserves: Municipal Money
Market Portfolio (Municipal Money Market Portfolio). The acquisition,
which was approved by the shareholders of Municipal Money Market
Portfolio on September 17, 1997, was accomplished by an exchange of
180,540,812 shares of Tax-Exempt Fund for the 180,540,812 shares then
outstanding (each valued at $1.00) of Municipal Money Market
Portfolio. Based on the opinion of fund counsel, the reorganization
qualified as a tax-free reorganization for federal income tax purposes
with no gain or loss recognized to the funds or their shareholders.
Municipal Money Market Portfolio's net assets were combined with the
fund for total net assets after the acquisition of $652,028,340.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Newbury Street Trust and the Shareholders of Prime
Fund and Treasury Fund:
We have audited the accompanying statements of assets and liabilities
of Newbury Street: Prime Fund and Treasury Fund (formerly the Money
Market Portfolio and the U.S. Treasury Portfolio, respectively),
including the schedules of portfolio investments, as of October 31,
1997, and the related statements of operations for the year then
ended, the statements of changes in net assets for the year ended July
31, 1996, the three months ended October 31, 1996, and for the year
ended October 31, 1997 and the financial highlights for each of the
periods indicated therein. These financial statements and financial
highlights are the responsibility of the fund's management. Our
responsibility is to express an opinion on these financial statements
and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of October 31, 1997 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of Newbury Street: Prime Fund and Treasury Fund as
of October 31, 1997, the results of their operations for the year then
ended, the changes in their net assets for the year ended July 31,
1996, the three months ended October 31, 1996, and for the year ended
October 31, 1997 and the financial highlights for each of the periods
indicated therein, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 17, 1997
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Newbury Street Trust and the Shareholders of
Tax-Exempt 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
present fairly, in all material respects, the financial position of
Tax-Exempt Fund (formerly Daily Tax-Exempt Fund), a fund of Newbury
Street Trust at October 31, 1997, the results of its operations for
the year then ended, and the changes in its net assets and the
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 the Newbury Street Trust'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 audit 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 at October 31, 1997 by correspondence with
the custodian and the application of alternative auditing procedures
where securities purchased were not yet received by the custodian,
provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
December 4, 1997
PROXY VOTING RESULTS
A special meeting of the funds' shareholders was held on May 9, 1997.
The results of votes taken among shareholders on proposals before them
are listed below.
PROPOSAL 1
To elect as Trustees the following twelve nominees of Newbury Street
Trust (formerly Daily Tax-Exempt Money Fund)
# OF % OF
SHARES VOTED SHARES VOTED
J. GARY BURKHEAD
AFFIRMATIVE 245,387,298.010 98.348
WITHHELD 4,120,713.180 1.652
TOTAL 249,508,011.190 100.000
RALPH F. COX
AFFIRMATIVE 245,396,515.040 98.352
WITHHELD 4,111,496.150 1.648
TOTAL 249,508,011.190 100.000
PHYLLIS BURKE DAVIS
AFFIRMATIVE 245,374,744.790 98.343
WITHHELD 4,133,266.400 1.657
TOTAL 249,508,011.190 100.000
ROBERT M. GATES
AFFIRMATIVE 245,387,097.010 98.348
WITHHELD 4,120,914.180 1.652
TOTAL 249,508,011.190 100.000
EDWARD C. JOHNSON 3D
AFFIRMATIVE 245,262,051.010 98.298
WITHHELD 4,245,960.180 1.702
TOTAL 249,508,011.190 100.000
E. BRADLEY JONES
AFFIRMATIVE 245,193,308.040 98.271
WITHHELD 4,314,703.150 1.729
TOTAL 249,508,011.190 100.000
# OF % OF
SHARES VOTED SHARES VOTED
DONALD J. KIRK
AFFIRMATIVE 245,396,975.040 98.352
WITHHELD 4,111,036.150 1.648
TOTAL 249,508,011.190 100.000
PETER S. LYNCH
AFFIRMATIVE 245,376,798.160 98.344
WITHHELD 4,131,213.030 1.656
TOTAL 249,508,011.190 100.000
WILLIAM O. MCCOY
AFFIRMATIVE 245,397,306.400 98.352
WITHHELD 4,110,704.790 1.648
TOTAL 249,508,011.190 100.000
GERALD C. MCDONOUGH
AFFIRMATIVE 245,320,121.040 98.322
WITHHELD 4,187,890.150 1.678
TOTAL 249,508,011.190 100.000
MARVIN L. MANN
AFFIRMATIVE 245,376,548.210 98.344
WITHHELD 4,131,462.980 1.656
TOTAL 249,508,011.190 100.000
THOMAS R. WILLIAMS
AFFIRMATIVE 245,253,040.350 98.295
WITHHELD 4,254,970.840 1.705
TOTAL 249,508,011.190 100.000
PROPOSAL 2
To ratify the selection of Price Waterhouse LLP as independent
accountants of Tax-Exempt Fund (formerly Daily Tax-Exempt Money Fund).
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 230,944,912.270 92.560
AGAINST 13,191,150.740 5.287
ABSTAIN 5,371,948.180 2.153
TOTAL 249,508,011.190 100.000
PROPOSAL 3
To amend Newbury Street Trust's Trust Instrument (formerly Daily
Tax-Exempt Money Fund) to provide dollar-based voting rights for
shareholders of the trust.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 238,887,928.750 95.949
AGAINST 3,690,807.420 1.482
ABSTAIN 6,395,184.020 2.569
TOTAL 248,973,920.190 100.000
BROKER 534,091.000
NON-VOTES
PROPOSAL 4
To approve an amended Management Contract for Treasury Fund (formerly
U.S. Treasury Portfolio) and Prime Fund (formerly Money Market
Portfolio).
Treasury Fund:
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 647,707,066.374 88.375
AGAINST 15,359,743.081 2.096
ABSTAIN 69,841,878.170 9.529
TOTAL 732,908,687.625 100.000
Prime Fund:
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 920,857,340.651 72.887
AGAINST 41,252,477.040 3.265
ABSTAIN 301,294,653.165 23.848
TOTAL 1,263,404,470.856 100.000
PROPOSAL 5
To approve a new Distribution and Service Plan for Daily Money Class
shares of Treasury Fund and Prime Fund (formerly U.S. Treasury
Portfolio - Initial Class and Money Market Portfolio - Initial Class,
respectively).
Treasury Fund:Daily Money Class
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 632,668,719.612 87.695
AGAINST 19,161,320.936 2.656
ABSTAIN 69,608,488.730 9.649
TOTAL 721,438,529.278 100.000
Prime Fund:Daily Money Class
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 921,260,529.761 72.919
AGAINST 40,261,058.740 3.187
ABSTAIN 301,882,882.355 23.894
TOTAL 1,263,404,470.856 100.000
PROPOSAL 6
To approve a new Distribution and Service Plan for Advisor B Class
shares of Treasury Fund (formerly U.S. Treasury Portfolio - Class B).
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 10,217,086.702 89.075
AGAINST 804,753.805 7.016
ABSTAIN 448,317,840 3.909
TOTAL 11,470,158.347 100.000
PROPOSAL 7
To approve an amended Management Contract for Tax-Exempt Fund
(formerly Daily Tax-Exempt Money Fund).
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 208,159,004.060 83.428
AGAINST 26,427,407.670 10.592
ABSTAIN 14,921,599.460 5.980
TOTAL 249,508,011.190 100.000
PROPOSAL 8
To approve a new Distribution and Service Plan for Daily Money Class
shares of Tax-Exempt Fund (formerly Daily Tax-Exempt Money Fund -
Initial Class).
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 208,027,296.250 83.375
AGAINST 27,049,180.100 10.841
ABSTAIN 14,431,534.840 5.784
TOTAL 249,508,011.190 100.000
# OF % OF
SHARES VOTED SHARES VOTED
OF THE FUND OF THE FUND
PROPOSAL 9
To approve an Agreement and Plan providing for the reorganization of
Treasury Fund (formerly U.S. Treasury Portfolio) and Prime Fund
(formerly Money Market Portfolio) from separate series of one Delaware
business trust to another.
Treasury Fund:
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 642,069,706.440 88.039
AGAINST 19,801,304.865 2.715
ABSTAIN 67,427,338.320 9.246
TOTAL 729,298,349.625 100.000
BROKER 3,610,338.00
NON-VOTES
Prime Fund:
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 902,887,382.361 72.374
AGAINST 38,438,696.800 3.081
ABSTAIN 306,210,390.695 24.545
TOTAL 1,247,536,469.856 100.000
BROKER 15,868,001.000
NON-VOTES
PROPOSAL 10
To amend the fundamental investment limitation concerning
diversification for Treasury Fund (formerly U.S. Treasury Portfolio)
and Prime Fund (formerly Money Market Portfolio).
Treasury Fund:
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 499,742,302.334 68.524
AGAINST 66,944,114.811 9.179
ABSTAIN 162,611,932.480 22.297
TOTAL 729,298,349.625 100.000
BROKER 3,610,338.000
NON-VOTES
Prime Fund:
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 884,916,097.686 70.933
AGAINST 59,338,759.840 4.757
ABSTAIN 303,281,612.330 24.310
TOTAL 1,247,536,469.856 100.000
BROKER 15,868,001.000
NON-VOTES
PROPOSAL 11
To amend Tax-Exempt Fund's (formerly Daily Tax-Exempt Money Fund)
fundamental investment limitation concerning diversification.
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 213,376,242.230 85.702
AGAINST 22,269,650.720 8.945
ABSTAIN 13,328,027.240 5.353
TOTAL 248,973,920.190 100.000
BROKER 534,091.000
NON-VOTES
PROPOSAL 12
To eliminate the fundamental investment limitation concerning writing
or purchasing put or call options for Treasury Fund (formerly U.S.
Treasury Portfolio) and Prime Fund (formerly Money Market Portfolio).
Treasury Fund:
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 492,014,494.274 67.464
AGAINST 73,676,863.211 10.103
ABSTAIN 163,606,992.140 22.433
TOTAL 729,298,349.625 100.000
BROKER 3,610,338.000
NON-VOTES
Prime Fund:
# OF % OF
SHARES VOTED SHARES VOTED
AFFIRMATIVE 853,085,878.388 68.382
AGAINST 87,729,250.653 7.032
ABSTAIN 306,721,340.815 24.586
TOTAL 1,247,536,469.856 100.000
BROKER 15,868,001.000
NON-VOTES
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
SUB-ADVISER
FMR Texas Inc.
Irving, TX
OFFICERS
Edward C. Johnson 3d, PRESIDENT
Robert C. Pozen, SENIOR VICE PRESIDENt
Boyce I. Greer, VICE PRESIDENT
Fred L. Henning, Jr., VICE PRESIDENT
Robert K. Duby, VICE PRESIDENT
Robert Litterst, VICE PRESIDENT
Scott A. Orr, VICE PRESIDENT
Arthur S. Loring, SECRETARY
Richard A. Silver, TREASURER
Thomas D. Maher, ASSISTANT VICE PRESIDENT
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
Thomas J. Simpson, ASSISTANT TREASURER
BOARD OF TRUSTEES
Ralph F. Cox *
Phyllis Burke Davis *
Robert M. Gates *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Marvin L. Mann *
William O. McCoy *
Gerald C. McDonough *
Robert C. Pozen
Thomas R. Williams *
ADVISORY BOARD
J. Gary Burkhead
* INDEPENDENT TRUSTEES
GENERAL DISTRIBUTOR
Fidelity Distributions Corporation (FDC)
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENTS
Fidelity Investments Institutional
Operations Company, Inc.
Boston, MA (Prime Fund &
Treasury Fund)
UMB Bank, n.a.
Kansas City, MO (Tax-Exempt Fund)
CUSTODIAN
The Bank of New York
New York, NY (Prime Fund &
Treasury Fund)
UMB Bank, n.a.
Kansas City, MO (Tax-Exempt Fund)
(registered trademark)
