SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-58774)
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 70 [X]
and
REGISTRATION STATEMENT (No. 811-2741)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 70 [X]
Fidelity Court Street Trust
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address Of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number: 617-563-7000
Eric D. Roiter, Secretary
82 Devonshire Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
( ) immediately upon filing pursuant to paragraph (b).
(X) on (January 22, 1998) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
( ) on ( ) pursuant to paragraph (a)(1) of Rule 485
( ) 75 days after filing pursuant to paragraph (a)(2).
( ) on ( ) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
( ) this post-effective amendment designates a new effective date
for a previously filed
post-effective amendment.
Spartan Florida Municipal Money Market Fund
Spartan Florida Municipal Income Fund
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b, c .............................. Contents; The Funds at a Glance; Who May Want
to Invest
3 a .............................. Financial Highlights
b .............................. *
c, d .............................. Performance
4 a i............................. Charter
ii........................... The Funds at a Glance; Investment Principles and
Risks
b .............................. Investment Principles and Risks
c .............................. Who May Want to Invest; Investment Principles
and Risks
5 a .............................. Charter
b i............................. Cover Page: The Funds at a Glance; Charter;
Doing Business with Fidelity
ii........................... Charter
iii.......................... Expenses; Breakdown of Expenses
c .............................. Charter
d .............................. Charter; Breakdown of Expenses
e .............................. Cover Page: Charter
f .............................. Expenses
g i............................. Charter
ii............................ *
.
5 A .............................. Performance
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions
iii.......................... Charter
b ............................. *
c .............................. Transaction Details; Exchange Restrictions
d .............................. *
e .............................. Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services
f, g .............................. Dividends, Capital Gains, and Taxes
h .............................. *
7 a .............................. Cover Page: Charter
b .............................. Expenses; How to Buy Shares; Transaction Details
c .............................. *
d .............................. How to Buy Shares
e .............................. *
f .............................. Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page
12 ............................ Description of the Trusts
13 a - c ............................ Investment Policies and Limitations
d ............................ Portfolio Transactions
14 a - c ............................ Trustees and Officers
15 a, b ............................ *
c ............................ Trustees and Officers
16 a i........................... FMR; Portfolio Transactions
ii.......................... Trustees and Officers
iii......................... Management Contracts
b ............................ Management Contracts
c, d ............................ Contracts with FMR Affiliates
e ............................ *
f ............................ Distribution and Service Plans
g ............................ *
h ............................ Description of the Trusts
i ............................ Contracts with FMR Affiliates
17 a - d ............................ Portfolio Transactions
e ............................ *
18 a ............................ Description of the Trusts
b ............................ *
19 a ............................ Additional Purchase and Redemption Information
b ............................ Additional Purchase and Redemption Information;
Valuation
c ............................ *
20 ............................ Distributions and Taxes
21 a, b ............................ Contracts with FMR Affiliates
c ............................ *
22 a ............................ Performance
b ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how
each fund invests and the services available to shareholders.
To learn more about each fund and its investments, you can obtain a
copy of each fund's most recent financial report and portfolio
listing, or a copy of the Statement of Additional Information (SAI)
dat ed January 22, 1998. The SAI has been filed with the
Securities and Exchange Commission (SEC) and is available along with
other related materials on the SEC's Internet Web site
(http://www.sec.gov). The SAI is incorporated herein by reference
(legally forms a part of the prospectus). For a free copy of either
document, call Fidelity at 1-800-544-8888.
Investments in the money market fund are neither insured nor
guaranteed by the U.S. Government, and there can be no assurance that
the fund will maintain a stable $1.00 share price.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET FUND MAY INVEST A SIGNIFICANT
PERCENTAGE OF ITS ASSETS IN THE SECURITIES OF A SINGLE ISSUER AND
THEREFORE MAY BE RISKIER THAN OTHER TYPES OF MONEY MARKET FUNDS.
Mutual fund shares are not deposits or obligations of, or guaranteed
by, any depository institution. Shares are not insured by the FDIC,
Federal Reserve Board, or any other agency, and are subject to
investment risks, including possible loss of principal amount
invested.
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
SFC-pro-0198
SPARTAN(registered trademark)
FLORIDA MUNICIPAL
FUNDS
Each fund seeks a high level of current income free from federal
income tax and exemption from the Florida intangible tax.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET invests in high-quality,
short-term municipal money market securities and is designed to
maintain a stable $1.00 share price.
(fund number 428, trading symbol FSFXX)
SPARTAN FLORIDA MUNICIPAL INCOME seeks to provide higher yields by
investing in a broader range of municipal securities.
(fund number 427, trading symbol FFLIX)
PROSPECTUS
JANUARY 22, 1998(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET,
BOSTON, MA 02109
CONTENTS
KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES Each fund's yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary of
each fund's financial data.
PERFORMANCE How each fund has
done over time.
THE FUNDS IN DETAIL CHARTER How each fund is organized.
INVESTMENT PRINCIPLES AND RISKS
Each fund's overall approach to
investing.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different ways to
set up your account.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money
out and closing your account.
INVESTOR SERVICES Services to help
you manage your account.
SHAREHOLDER AND DIVIDENDS, CAPITAL GAINS,
ACCOUNT POLICIES AND TAXES
TRANSACTION DETAILS Share price
calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
KEY FACTS
THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946
and is now America's largest mutual fund manager. Fidelity
Investments Money Management, Inc. (FIMM) , a subsidiary of FMR,
chooses investments for Spartan Florida Municipal Money Market.
Beginning January 1, 1999, FIMM will choose investments for Spartan
Florida Municpal Income.
As with any mutual fund, there is no assurance that a fund will
achieve its goal.
SPARTAN F L MUNI MONEY MARKET
GOAL: High current tax-free income, and exemption from the Florida
intangible tax while maintaining a stable $1.00 share price.
STRATEGY: Invests mainly in high-quality, short-term municipal money
market securities whose interest is free from federal income tax and
the Florida intangible tax.
SIZE: As o f November 30 , 1997, the fund had over $ 421
million in net assets.
SPARTAN F L MUNI INCOME
GOAL: High current tax-free income, and exemption from the Florida
intangible tax.
STRATEGY: Invests normally in investment-grade municipal securities
whose interest is free from federal income tax and the Florida
intangible tax. Managed to generally react to changes in interest
rates similarly to municipal bonds with maturities between eight and
18 years .
SIZE: As o f November 30, 1997, the fund had over $ 408
million in net assets.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors in higher
tax brackets who seek high current income that is free from federal
income tax and exempt from the Florida intangible tax.
Each fund's level of risk and potential reward depend on the quality
and maturity of its investments. The money market fund is
managed to keep its share price stable at $1.00. The bond fund ,
with its broader range of investments, has the potential for higher
yields, but also carries a higher degree of risk. You should consider
your investment objective and tolerance for risk when making an
investment decision.
The value of the funds' investments and the income they generate will
vary from day to day, and generally reflect interest rates, market
conditions, and other federal and state political and economic news.
When you sell your shares of the bond fund , they may be worth
more or less than what you paid for them. By themselves, these funds
do not constitute a balanced investment plan.
Non-diversified funds may invest a greater portion of their assets
in securities of individual issuers than diversified funds. As a
result, changes in the market value of a single issuer could cause
greater fluctuations in share value than would occur in a more
diversified fund.
THE SPECTRUM OF
FIDELITY FUNDS
BROAD CATEGORIES OF FIDELITY
FUNDS ARE PRESENTED HERE IN
ORDER OF ASCENDING RISK.
GENERALLY, INVESTORS SEEKING TO
MAXIMIZE RETURN MUST ASSUME
GREATER RISK. SPARTAN FLORIDA
MUNICIPAL MONEY MARKET FUND
IS IN THE MONEY MARKET
CATEGORY, AND SPARTAN FLORIDA
MUNICIPAL INCOME FUND IS IN THE
INCOME CATEGORY.
MONEY MARKET SEEKS
INCOME AND STABILITY BY
INVESTING IN HIGH-QUALITY,
SHORT-TERM INVESTMENTS.
INCOME SEEKS INCOME BY
INVESTING IN BONDS.
(SOLID BULLET) GROWTH AND INCOME SEEKS
LONG-TERM GROWTH AND INCOME
BY INVESTING IN STOCKS AND
BONDS.
(SOLID BULLET) GROWTH SEEKS LONG-TERM
GROWTH BY INVESTING MAINLY IN
STOCKS.
3
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you may pay when you buy,
sell, or exchange shares of a fund. In addition, you may be charged an
annual account maintenance fee if your account balance falls below
$2,500. See "Transaction Details," page , for an explanation of
how and when these charges apply.
Sales charge on purchases None
and reinvested distributions
Deferred sales charge on redemptions None
Redemption fee (Short-term trading fee)
on shares held less than 180 days
(as a % of amount redeemed)
for Spartan Florida Income (only) 0.50
%
Exchange fee
for Spartan Florida Money (only) $5.00
Wire transaction fee
for Spartan Florida Money (only) $5.00
Checkwriting fee, per check
for Spartan Florida Money (only) $2.00
Account closeout fee
for Spartan Florida Money (only) $5.00
Annual account maintenance fee $12.0
(for accounts under $2,500) 0
THE FEES FOR INDIVIDUAL TRANSACTIONS (except the redemption
fee) are waived if your account balance at the time of the
transaction is $50,000 or more.
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets.
Each fund pays a management fee to FMR. FMR is responsible for the
payment of all other expenses for each fund with certain limited
exceptions. Expenses are factored into each fund's share price or
dividends and are not charged directly to shareholder accounts (see
"Breakdown of Expenses" page ).
The following figures are based on historical expenses and are
calculated as a percentage of average net assets. FMR has entered into
arrangements on behalf of each fund with the fund's custodian and
transfer agent whereby credits realized as a result of uninvested cash
balances are used to reduce fund expenses. Including these reductions,
the total operating expenses presented in the table would have been
0.49 % for Spartan Florida Municipal Money Market.
UNDERSTANDING
EXPENSES
OPERATING A MUTUAL FUND
INVOLVES A VARIETY OF EXPENSES
FOR PORTFOLIO MANAGEMENT,
SHAREHOLDER STATEMENTS, TAX
REPORTING, AND OTHER SERVICES.
EACH FUND'S MANAGEMENT FEE IS
PAID FROM THE FUND'S ASSETS, AND
ITS EFFECT IS ALREADY FACTORED INTO
ANY QUOTED SHARE PRICE OR RETURN.
OTHER EXPENSES ARE PAID BY
FMR OUT OF THE FUND'S
MANAGEMENT FEE. ALSO, AS AN
INVESTOR, YOU MAY PAY CERTAIN
EXPENSES DIRECTLY.
3
SPARTAN FL MUNI MONEY MARKET
Management fee 0.50
%
12b-1 fee None
Other expenses 0.00
%
Total fund operating expenses 0.50
%
SPARTAN FL MUNI INCOME
Management fee 0.55
%
12b-1 fee None
Other expenses 0.00
%
Total fund operating expenses 0.55
%
EXAMPLES: Let's say, hypothetically, that each fund's annual return is
5% and that your shareholder transaction expenses and each fund's
annual operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total
expenses if you close your account after the number of years
indicated and for Spartan Florida Municipal Money Market if you
leave your account open:
SPARTAN FL MUNI MONEY MARKET
Account Account
open closed
1 year $ 5 $ 10
3 years $ 16 $ 21
5 years $ 28 $ 33
10 years $ 63 $ 68
SPARTAN FL MUNI INCOME
1 year $ 6
3 years $ 18
5 years $ 31
10 years $ 69
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected expenses or returns, all of which
may vary.
FINANCIAL HIGHLIGHTS
The financial highlights tables that follow for Spartan
Florida Municipal Money Market and Spartan Florida Municipal
Income have been audited by Coopers & Lybrand L.L.P., independent
accountants. The funds' financial highlights, financial statements,
and reports of the auditor are included in the funds' Annual
Report, and a re incorporated by reference into (are legally a part
of) the funds' SAI. Contact Fidelity for a free copy of the Annual
Report or the SAI.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1.Selected Per-Share Data and
Ratios
2.Years ended 1997 1996 1995 1994 1993 1992E
November 30
3.Net asset value, $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
beginning of period
4.Income from .032 .031 .035 .024 .025 .008
Investment Operations
Net interest income
5.Less Distributions (.032) (.031) (.035) (.024) (.025) (.00 8 )
From net interest
income
6.Net asset value, end $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
of period
7.Total returnB 3.29% 3.17% 3.57% 2.47% 2.51% .78%
8.Net assets, end of $ 421,406 $ 402,278 $ 363,396 $ 337,530 $ 306,741 $ 49,467
period
(000 omitted)
9.Ratio of expenses to .50% .50% .50% .46% .18% .00%
average net assets C C C
10.Ratio of expenses to .49% .47% .50% .46% .18% .00%
average net assets after D D
expense reductions
11.Ratio of net interest 3.21% 3.15% 3.52% 2.43% 2.48% 2.91%
income to average net A
assets
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING THE
PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE RATIO WOULD
HAVE BEEN HIGHER.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH THIRD
PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S EXPENSES.
E AUGUST 24, 1992 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30, 1992.
SPARTAN FLORIDA MUNICIPAL INCOME
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
12.Selected Per-Share Data and Ratios
13.Years ended November 1997 1996 1995 1994E 1993 1992F
30
14.Net asset value, $ 11.230 $ 11.180 $ 9.740 $ 11.290 $ 10.520 $ 10.000
beginning of period
15.Income from Investment .539 .546 .573 .587 .615 .459
Operations
Net interest income
16. Net realized and .190 .054 1.439 (1.352) .777 .514
unrealized gain (loss)
17. Total from investment .729 .600 2.012 (.765) 1.392 .973
operations
18.Less Distributions (.539) (.546) (.573) (.587) (.615) (.459)
From net interest income
19. From net realized gain -- (.005) -- (.200) (.010) --
20. Total distributions (.539) (.551) (.573) (.787) (.625) (.459)
21. Redemption fees added .000 .001 .001 .002 .003 .006
to paid
in capital
22.Net asset value, end of $ 11.420 $ 11.230 $ 11.180 $ 9.740 $ 11.290 $ 10.520
period
23.Total return B 6.69% 5.59% 21.09 (7.19) 13.52% 9.94%
% %
24.Net assets, end of period $ 408,391 $ 391,130 $ 395,991 $ 335,551 $ 428,367 $ 237,109
(000 omitted)
25.Ratio of expenses to .55% .55% .55 .54% .25% .03%
average net assets % C C A,C
26.Ratio of expenses to .55% .54% .55 .54% .25% .03%
average net assets after D % A
expense reductions
27.Ratio of net interest 4.81% 4.96% 5.37 5.49% 5.52% 6.25%
income to average net % A
assets
28.Portfolio turnover rate 25% 28% 65 49% 50% 38%
% A
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE FORMER ACCOUNT CLOSEOUT FEE AND FOR
PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL RETURNS
WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN REDUCED DURING THE
PERIODS SHOWN.
C FMR AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES
DURING THE PERIOD. WITHOUT THIS REIMBURSEMENT, THE FUND'S EXPENSE
RATIO WOULD HAVE BEEN HIGHER.
D FMR OR THE FUND HAS ENTERED INTO VARYING ARRANGEMENTS WITH
THIRD PARTIES WHO EITHER PAID OR REDUCED A PORTION OF THE FUND'S
EXPENSES.
E EFFECTIVE DECEMBER 1, 1993, THE FUND ADOPTED STATEMENT OF
POSITION 93-2, "DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT
PRESENTATION OF INCOME, CAPITAL GAIN, AND RETURN OF CAPITAL
DISTRIBUTIONS BY INVESTMENT COMPANIES." AS A RESULT, NET INTEREST
INCOME PER SHARE MAY REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK
TO TAX DIFFERENCES.
F MARCH 16, 1992 (COMMENCEMENT OF OPERATIONS) TO NOVEMBER 30,
1992.
PERFORMANCE
Mutual fund performance can be measured as TOTAL RETURN or YIELD. The
total returns that follow are based on historical fund results and do
not reflect the effect of any transaction fees you may have paid. The
figures would be lower if fees were taken into account.
Each fund's fiscal year runs from December 1 through November 30. The
tables below show each fund's performance over past fiscal years
compared to different measures, including a comparative index and a
competitive funds average for the bond fund and a measure of inflation
for the money market fund. Data for the comparative index for Spartan
Florida Municipal Income is available only from June 30, 1993 to the
present. The chart on page presents calendar year performance
for the bond fund.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past Past 5 Life
November 30, 1997 1 year s of
year fund
A
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Spartan F L Municipal Money Market 3.29 3.00 2.99
% % %
Consumer Price Index 1.83 2.61 n/a
% %
</TABLE>
Spartan F L Municipal 6.69 7.52 8.34
Income % % %
Lehman Brothers Florida Municipal Bond Index 7.10 n/a n/a
%
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lipper Florida Municipal Debt Funds Average 6.47 6.80 n/a
% %
</TABLE>
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past Past 5 Life
November 30, 1997 1 years of
year fund
A
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Spartan F L Municipal Money Market 3.29 15.93 16.84
% % %
Consumer Price Index 1.83 13.73 n/a
% %
</TABLE>
Spartan F L Municipal 6.69 43.71 57.99
Income % % %
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lehman Brothers Florida Municipal Bond Index 7.10 n/a n/a
%
Lipper Florida Municipal Debt Funds Average 6.47 39.02 n/a
% %
</TABLE>
A FROM MARCH 16, 1992 (COMMENCEMENT OF OPERATIONS)
If FMR had not reimbursed certain fund expenses during these
periods, yields and total returns would have been lower .
UNDERSTANDING
PERFORMANCE
YIELD ILLUSTRATES THE INCOME
EARNED BY A FUND OVER A RECENT
PERIOD. SEVEN-DAY YIELDS ARE THE
MOST COMMON ILLUSTRATION OF
MONEY MARKET PERFORMANCE.
30-DAY YIELDS ARE USUALLY USED
FOR BOND FUNDS. YIELDS CHANGE
DAILY, REFLECTING CHANGES IN
INTEREST RATES.
TOTAL RETURN REFLECTS BOTH THE
REINVESTMENT OF INCOME AND
CAPITAL GAIN DISTRIBUTIONS, AND
ANY CHANGE IN A FUND'S SHARE
PRICE.
3
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated
period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate
of return that, if achieved annually, would have produced the same
cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a
money market fund yield assumes that income earned is reinvested, it
is called an EFFECTIVE YIELD. A TAX-EQUIVALENT YIELD shows what an
investor would have to earn before taxes to equal a tax-free yield.
Yields for the bond fund are calculated according to a standard that
is required for all stock and bond funds. Because this differs from
other accounting methods, the quoted yield may not equal the income
actually paid to shareholders.
YEAR-BY-YEAR TOTAL RETURNS
CALENDAR YEARS 1993 1994 1995 1996
SPARTAN FLORIDA MUNICIPAL INCOME 14.87% -6.74% 18.6
3% 3.96%
LIPPER FLORIDA MUNICIPAL DEBT FUNDS AVERAGE 13.16%
- - 7.67
% 17.84 % 3.00 %
CONSUMER PRICE INDEX 2.75 % 2.67 % 2.54 %
3.32
%
PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: 0.0
ROW: 2, COL: 1, VALUE: 0.0
ROW: 3, COL: 1, VALUE: 0.0
ROW: 4, COL: 1, VALUE: 0.0
ROW: 5, COL: 1, VALUE: 0.0
ROW: 6, COL: 1, VALUE: 0.0
ROW: 7, COL: 1, VALUE: 14.87
ROW: 8, COL: 1, VALUE: -6.74
ROW: 9, COL: 1, VALUE: 18.63
ROW: 10, COL: 1, VALUE: 3.96
(LARGE SOLID BOX) SPARTAN
FLORIDA
MUNICIPAL
INCOME
LEHMAN BROTHERS FLORIDA MUNICIPAL BOND INDEX is a total return
performance benchmark for Florida investment-grade municipal bonds
with maturities of at least one year.
Unlike the fund's returns, the total returns of the comparative
index do not include the effect of any brokerage commissions,
transaction fees, or other costs of investing.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. Government.
THE COMPETITIVE FUNDS AVERAGE for Spartan Florida Municipal Income is
the Lipper Florida Municipal Debt F unds A verage. As of
November 30, 1997 , the average reflected the performance
of 63 mutual funds with similar investment objectives. This
average, published by Lipper Analytical Services, Inc., excludes the
effect of sales loads .
The funds' recent strategies, performance, and holdings are detailed
twice a year in financial reports, which are sent to all shareholders.
For current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. Spartan Florida
Municipal Money Market is a non-diversified fund of Fidelity Court
Street Trust II, and Spartan Florida Municipal Income is a
non-diversified fund of Fidelity Court Street Trust. Both trusts are
open-end management investment companies. Fidelity Court Street Trust
II was organized as a Delaware business trust on June 20, 1991.
Fidelity Court Street Trust was organized as a Massachusetts business
trust on April 21, 1977. There is a remote possibility that one fund
might become liable for a misstatement in the prospectus about another
fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet periodically throughout the year to oversee
the funds' activities, review contractual arrangements with companies
that provide services to the funds, and review the funds' performance.
The trustees serve as trustees for other Fidelity funds. The
majority of trustees are not otherwise affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL SHAREHOLDER MEETINGS AND MAIL PROXY
MATERIALS. These meetings may be called to elect or remove trustees,
change fundamental policies, approve a management contract, or for
other purposes. Shareholders not attending these meetings are
encouraged to vote by proxy. Fidelity will mail proxy materials in
advance, including a voting card and information about the proposals
to be voted on. As a shareholder of each fund, the number of votes
you are entitled to is based upon the dollar value of your
investment.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(solid bullet) Number of Fidelity mutual
funds: over 227
(solid bullet) Assets in Fidelity mutual
funds: over $ 521 billion
(solid bullet) Number of shareholder
accounts: over 34 million
(solid bullet) Number of investment
analysts and portfolio managers:
over 275
3
The funds are managed by FMR, which chooses their investments and
handles their business affairs. F IMM, located in Merrimack, New
Hampshire , has primary responsibility for providing investment
management services for Spartan Florida Municipal Money Market.
Beginning January 1, 1999, FIMM will have primary responsibility for
providing investment management services for Spartan Florida Municipal
Income.
Jonathan Short is Vice President and manager of Spartan Florida
Municipal Income, which he has managed since May 1996. He also manages
other Fidelity funds. Since joining Fidelity in 1990, Mr. Short has
worked as an analyst and manager.
Fidelity investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Fidelity Distributors Corporation (FDC) distributes and markets
Fidelity's funds and services.
UMB Bank, n.a. (UMB) is each fund's transfer agent , and is located
at 1010 Grand Avenue, Kansas City, Missouri. UMB employs Fidelity
Service Company, Inc. (FSC) to perform transfer agent servicing
functions for each fund.
FMR Corp. is the ultimate parent company of FMR and FIMM. Members of
the Edward C. Johnson 3d family are the predominant owners of a class
of shares of common stock representing approximately 49% of the voting
power of FMR Corp. Under the Investment Company Act of 1940 (the 1940
Act), control of a company is presumed where one individual or group
of individuals owns more than 25% of the voting stock of that company;
therefore, the Johnson family may be deemed under the 1940 Act to form
a controlling group with respect to FMR Corp.
FMR may use its broker-dealer affiliates and other firms that sell
fund shares to carry out a fund's transactions, provided that the fund
receives brokerage services and commission rates comparable to those
of other broker-dealers.
INVESTMENT PRINCIPLES AND RISKS
MONEY MARKET FUNDS IN GENERAL. The yield of a money market fund will
change daily based on changes in interest rates and market conditions.
Money market funds comply with industry-standard
requirements on the quality, maturity, and diversification of
their investments, which are designed to help maintain a stable $1.00
share price. Of course, there is no guarantee that a money market fund
will be able to maintain a stable $1.00 share price. It is possible
that a major change in interest rates or a default on money
market fund's investments could cause its share price (and the
value of your investment) to change.
FIDELITY'S APPROACH TO MONEY MARKET FUNDS. Money market funds earn
income at current money market rates. In managing money market funds,
FMR stresses preservation of capital, liquidity, and income. The
money market fund will purchase only high-quality securities
that FMR believes present minimal credit risks and will observe
maturity restrictions on securities it buys.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET seeks to earn high current
income that is free from federal income tax while maintaining a stable
$1.00 share price by investing in high-quality, short-term municipal
money market securities of all types , including securities
structured so that they are eligible investments for the fund. FMR
normally invests at least 65% of the fund's total assets in
securities that are free from the Florida intangible tax, and normally
invests the fund's assets s o that at least 80% of the fund's
income distributions is free from federal income tax.
BOND FUNDS IN GENERAL. The yield and share price of a bond fund change
daily based on changes in interest rates and market conditions, and in
response to other economic, political or financial events. The types
and maturities of the securities a bond fund purchases and the credit
quality of their issuers will impact a bond fund's reaction to these
events.
INTEREST RATE RISK. In general, bond prices rise when interest rates
fall and fall when interest rates rise. Longer-term bonds are usually
more sensitive to interest rate changes. In other words, the longer
the maturity of a bond, the greater the impact a change in interest
rates is likely to have on the bond's price. In addition, short-term
interest rates and long-term interest rates do not necessarily move in
the same amount or in the same direction. A short-term bond tends to
react to changes in short-term interest rates and a long-term bond
tends to react to changes in long-term interest rates.
ISSUER RISK. The price of a bond is affected by the credit quality of
its issuer. Changes in the financial condition of an issuer, changes
in general economic conditions, and changes in specific economic
conditions that affect a particular type of issuer can impact the
credit quality of an issuer. Lower quality bonds generally tend to be
more sensitive to these changes than higher quality bonds.
MUNICIPAL MARKET RISK. Municipal securities are backed by the entity
that issued them and/or other revenue streams. Municipal security
values may be significantly affected by political changes as well as
uncertainties in the municipal market related to taxation or the
rights of municipal securities holders.
FIDELITY'S APPROACH TO BOND FUNDS. The total return from a bond
includes both income and price gains or losses. In selecting
investments for a bond fund, FMR considers a bond's expected income
together with its potential for price gains or losses. While income is
the most important component of bond returns over time, a bond fund's
emphasis on income does not mean the fund invests only in the
highest-yielding bonds available, or that it can avoid losses of
principal.
FMR focuses on assembling a portfolio of income-producing bonds that
it believes will provide the best balance between risk and return
within the range of eligible investments for the fund. FMR's
evaluation of a potential investment includes an analysis of the
credit quality of the issuer, its structural features, its current
price compared to FMR's estimate of its long-term value, and any
short-term trading opportunities resulting from market inefficiencies.
In structuring a bond fund, FMR allocates assets among different
market sectors (for example, general obligation bonds of a state or
bonds financing a specific project) and different maturities based on
its view of the relative value of each sector or maturity. The
performance of the fund will depend on how successful FMR is in
pursuing this approach.
SPARTAN FLORIDA MUNICIPAL INCOME seeks high current income that is
free from federal income tax by investing in investment-grade
municipal securities under normal conditions. FMR normally
invests at least 65% of the fund's total assets in securities
that are free from the Florida intangible tax, and normally invests
the fund's assets s o that at least 80% of the fund's
income distributions is free from federal income tax.
Although the fund does not maintain an average maturity within a
specified range, FMR seeks to manage the fund so that it generally
reacts to changes in interest rates similarly to municipal bonds with
maturities between eight and 18 years. As of November 30, 1997, the
fund's dollar-weighted average maturity was approximately 12.2
years.
Each fund may invest all of its assets in municipal securities issued
to finance private activities. The interest from these securities is a
tax-preference item for purposes of the federal alternative minimum
tax.
Each fund's performance is affected by the economic and political
conditions within the state of Florida. Because of the importance of
foreign trade, agriculture, construction, and tourism in Florida, the
state's economy is sensitive to trends in these industries.
The funds differ primarily with respect to the level of income
provided and the stability of their share price s . The money
market fund seeks to provide income while maintaining a stable share
price. The bond fund seeks to provide a higher level of income by
investing in a broader range of securities. As a result, the bond fund
does not seek to maintain a stable share price. In addition, since
Spartan Florida Municipal Money Market concentrates its investments in
Florida municipal securities, an investment in the money market
fund may be riskier than an investment in other types of money
market funds.
FMR may use various techniques to hedge a portion of a bond fund's
risks, but there is no guarantee that these strategies will work as
intended. When you sell your shares of a bond fund, they may be worth
more or less than what you paid for them.
FMR normally invests each fund's assets according to its investment
strategy. The funds do not expect to invest in federally taxable
obligations . While each fund may invest in stat e taxable
obligations, each fund expect s to be exempt from the
Florida intangible tax. Each fund also reserves the right to invest
without limitation in short-term instruments, to hold a substantial
amount of uninvested cash, or to invest more than normally permitted
in taxable obligations for temporary, defensive purposes.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types
of instruments in which a fund may invest, strategies FMR may employ
in pursuit of a fund's investment objective, and a summary of related
risks. Any restrictions listed supplement those discussed earlier in
this section. A complete listing of each fund's limitations and more
detailed information about each fund's investments are contained in a
fund's SAI. Policies and limitations are considered at the time of
purchase; the sale of instruments is not required in the event of a
subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these
techniques unless it believes that they are consistent with a fund's
investment objective and policies and that doing so will help a fund
achieve its goal. Fund holdings and recent investment strategies are
detailed in each fund's financial reports, which are sent to
shareholders twice a year. For a free SAI or financial report, call
1-800-544-8888.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers
to borrow money from investors. The issuer generally pays the investor
a fixed, variable, or floating rate of interest, and must repay the
amount borrowed at maturity. Some debt securities, such as zero coupon
bonds, do not pay current interest, but are sold at a discount
from their face values.
Debt securities have varying levels of sensitivity to changes in
interest rates and varying degrees of credit quality. In general, bond
prices rise when interest rates fall, and fall when interest rates
rise. Longer-term bonds and zero coupon bonds are generally more
sensitive to interest rate changes.
In addition, bond prices are also affected by the credit quality of
the issuer. Investment-grade debt securities are medium- and
high-quality securities. Some, however, may possess speculative
characteristics, and may be more sensitive to economic changes and to
changes in the financial condition of issuers.
RESTRICTIONS: Spartan Florida Municipal Income normally invests in
investment-grade securities, but reserves the right to invest up to 5%
of its assets in below investment-grade securities (sometimes called
"junk bonds"). A security is considered to be investment-grade if it
is rated investment-grade by Moody's Investors Service, Standard &
Poor's, Duff & Phelps Credit Rating Co., or Fitch IBCA, Inc.,
or is unrated but judged by FMR to be of equivalent quality.
MONEY MARKET SECURITIES are high-quality, short-term instruments
issued by municipalities, local and state governments, and other
entities. These securities may carry fixed, variable, or
floating interest rates. M oney market securities may be
structured or may employ a trust or similar structure so that they
are eligible investments for money market funds. If the structure does
not perform as intended, adverse tax or investment consequences may
result.
CREDIT AND LIQUIDITY SUPPORT. Issuers may employ various forms of
credit and liquidity enhancement, including letters of credit,
guarantees, puts and demand features, and insurance, provided by
foreign or domestic entities such as banks and other financial
institutions. These arrangements expose a fund to the credit risk of
the entity providing the credit or liquidity support. Changes in the
credit quality of the provider could affect the value of the security
and a fund's share price. In addition, in the case of foreign
providers of credit or liquidity support, extensive public information
about the provider may not be available, and unfavorable political,
economic, or governmental developments could affect its ability to
honor its commitment.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
or private purposes, including general financing for state and local
governments, or financing for specific projects or public facilities.
They may be fully or partially backed by the local government, or by
the credit of a private issuer or the current or anticipated revenues
from specific projects or assets. Because many municipal securities
are issued to finance similar types of projects, especially those
relating to education, health care, housing, transportation, and
utilities, the municipal markets can be affected by conditions in
those sectors. In addition, all municipal securities may be affected
by uncertainties regarding their tax status, legislative changes, or
rights of municipal securities holders. A municipal security may be
owned directly or through a participation interest.
STATE MUNICIPAL SECURITIES include municipal obligations issued by the
state of Florida or its counties, municipalities, authorities, or
other subdivisions. The ability of issuers to repay their debt can be
affected by many factors that impact the economic vitality of either
the state or a region within the state.
Other state municipal securities include obligations of the U.S.
territories and possessions such as Guam, the Virgin Islands, Puerto
Rico, and their political subdivisions and public corporations. The
economy of Puerto Rico is closely linked to the U.S. economy, and will
be affected by the strength of the U.S. dollar, interest rates, the
price stability of oil imports, and the continued existence of
favorable tax incentives.
ASSET-BACKED SECURITIES include interests in pools of purchase
contracts, financing leases, or sales agreements entered into by
municipalities . The value of these securities depends on many
factors, including changes in interest rates, the availability of
information concerning the pool and its structure, the credit quality
of the underlying assets, the market's perception of the servicer of
the pool, and any credit enhancement provided. In addition, these
securities may be subject to prepayment risk.
VARIABLE AND FLOATING RATE SECURITIES have interest rates that are
periodically adjusted either at specific intervals or whenever a
benchmark rate changes. Inverse floaters have interest rates that move
in the opposite direction from a benchmark, making the security's
market value more volatile.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to
acquire land, equipment, or facilities. If the municipality
stops making payments or transfers its obligations to a private
entity, the obligation could lose value or become taxable.
PUT FEATURES entitle the holder to put (sell back) a security to the
issuer or another party. In exchange for this benefit, a fund may
accept a lower interest rate. The credit quality of the investment may
be affected by the creditworthiness of the put provider. Demand
features , standby commitments, and tender options
are types of put features.
PRIVATE ENTITIES may be involved in some municipal securities. For
example, industrial revenue bonds are backed by private entities, and
resource recovery bonds often involve private corporations. The
viability of a project or tax incentives could affect the value and
credit quality of these securities.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices,
interest rates, or other factors that affect security value s.
These techniques may involve derivative transactions such as buying
and selling options and futures contracts, or purchasing
indexed securities.
FMR can use these practices to adjust the risk and return
characteristics of a fund's portfolio of investments. If FMR judges
market conditions incorrectly or employs a strategy that does not
correlate well with a fund's investments, these techniques could
result in a loss, regardless of whether the intent was to reduce risk
or increase return. These techniques may increase the volatility of a
fund and may involve a small investment of cash relative to the
magnitude of the risk assumed. In addition, these techniques could
result in a loss if the counterparty to the transaction does not
perform as promised.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined
by FMR, under the supervision of the Board of Trustees, to be
illiquid, which means that they may be difficult to sell promptly at
an acceptable price. The sale of some illiquid securities and some
other securities may be subject to legal restrictions. Difficulty in
selling securities may result in a loss or may be costly to a fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more
than 10% of its assets would be invested in illiquid securities.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS are trading
practices in which payment and delivery for the security take place at
a later date than is customary for that type of security. The
market value of the security could change during this period.
CASH MANAGEMENT. A fund may invest in money market securities and in a
money market fund available only to funds and accounts managed by FMR
or its affiliates, whose goal is to seek a high level of current
income exempt from federal income tax while maintaining a stable $1.00
share price. A major change in interest rates or a default on the
money market fund's investments could cause its share price to change.
RESTRICTIONS: Spartan Florida Municipal Income does not currently
intend to invest in a money market fund.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry
or type of project. Economic, business, or political changes can
affect all securities of a similar type. A fund that is not
diversified may be more sensitive to changes in the market value of a
single issuer or industry.
RESTRICTIONS: Each fund is considered non-diversified. Generally, to
meet federal tax requirements at the close of each quarter, each fund
does not invest more than 25% of its total assets in any one issuer
and, with respect to 50% of total assets, does not invest more than 5%
of its total assets in any issuer. These limitations do not apply to
U.S. Government securities or to securities of other investment
companies. Each fund may invest more than 25% of its total assets in
tax-free securities that finance similar types of projects.
BORROWING. Each f und may borrow from banks or from other funds
advised by FMR, or through reverse repurchase agreements. If a
fund borrows money, its share price may be subject to greater
fluctuation until the borrowing is paid off. If a fund makes
additional investments while borrowings are outstanding, this may be
considered a form of leverage.
RESTRICTIONS: Each fund may borrow only for temporary or
emergency purposes, but not in an amount exceeding 331/3% of its total
assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages
are fundamental, that is, subject to change only by shareholder
approval. The following paragraphs restate all those that are
fundamental. All policies stated throughout this prospectus, other
than those identified in the following paragraphs, can be changed
without shareholder approval.
SPARTAN FLORIDA MUNICIPAL MONEY MARKET seeks as high a level of
current income exempt from federal income tax, as is consistent with
preservation of capital and liquidity by investing in high-quality,
short-term municipal obligations. The fund will normally invest so
that at least 80% of its income distributions are free from federal
income tax.
SPARTAN FLORIDA MUNICIPAL INCOME seeks the highest level of current
income, exempt from federal income tax, available from municipal bonds
judged by FMR to be of investment-grade quality. The fund may also
invest a portion of its assets in bonds rated below investment-grade
quality. Each fund will normally invest so that at least 80% of its
income distributions are free from federal income tax.
The fund may borrow only for temporary or emergency purposes, but not
in an amount exceeding 33% of its total assets.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its
share price or dividends; they are neither billed directly to
shareholders nor deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments
and business affairs. FMR in turn pays fees to an affiliate who
provides assistance with these services for Spartan Florida Municipal
Money Market.
FMR may, from time to time, agree to reimburse the funds for
management fees above a specified limit. FMR retains the ability to be
repaid by a fund if expenses fall below the specified limit prior to
the end of the fiscal year. Reimbursement arrangements, which may be
terminated at any time without notice, can decrease a fund's expenses
and boost its performance.
MANAGEMENT FEE
Each fund's management fee is calculated and paid to FMR every month.
FMR pays all of the other expenses of each fund with limited
exceptions. The annual management fee rates for Spartan Florida
Municipal Money Market and Spartan Florida Municipal Income are 0.50%
and 0.55% of its average net assets, respectively.
FIMM is Spartan Florida Municipal Money Market's sub-advisor and
has primary responsibility for managing its investments. FMR is
responsible for providing other management services. FMR pays
F IMM 50% of its management fee (before expense reimbursements)
for FIMM's services. FMR paid FMR Texas Inc., the
predecessor company to FIMM, a fee equal to 0.25% of Spartan Florida
Municipal Money Market's average net assets for the fiscal year ended
November 30, 1997.
Beginning January 1, 1999, FIMM will have primary responsibility
for managing Spartan Florida Municipal Income's investments. FMR will
pay FIMM 50% of its management fee (before expense reimbursements for
FIMM's services.
FSC performs many transaction and accounting functions for the funds.
These services include processing shareholder transactions and
calculating each fund's share price. FMR, and not the funds, pays for
these services.
To offset shareholder service costs, FMR or its affiliates also
collect Spartan Florida Municipal Money Market's $5.00 exchange
fee, $5.00 account closeout fee, $5.00 fee for wire purchases and
redemptions, and the $2.00 checkwriting charge.
Each fund has adopted a DISTRIBUTION AND SERVICE PLAN. Each plan
recognizes that FMR may use its management fee revenues, as well as
its past profits or its resources from any other source to pay FDC for
expenses incurred in connection with the distribution of fund shares.
FMR directly, or through FDC, may make payments to third parties, such
as banks or broker-dealers that engage in the sale of, or provide
shareholders support services for, the fund's shares. Currently, the
Board of Trustees of each fund has authorized such payments.
For the fiscal year ended November 30, 1997 , the portfolio
turnover rate for Spartan Florida Municipal Income Fund was 25%. This
rate varies from year to year.
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of
America's first mutual funds. Today, Fidelity is the largest mutual
fund company in the country, and is known as an innovative provider of
high-quality financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage
Services, Inc. (FBSI). Fidelity is also a leader in providing
tax-sheltered retirement plans for individuals investing on their own
or through their employer.
Fidelity is committed to providing investors with practical
information to make investment decisions. Based in Boston, Fidelity
provides customers with complete service 24 hours a day, 365 days a
year, through a network of telephone service centers around the
country.
To reach Fidelity for general information, call these numbers:
(small solid bullet) For mutual funds, 1-800-544-8888
(small solid bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity
has over 80 walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend
to purchase individual securities as part of your total investment
portfolio, you may consider investing in a fund through a brokerage
account.
You may purchase or sell shares of the funds through an investment
professional, including a broker, who may charge you a transaction fee
for this service. If you invest through FBSI, another financial
institution, or an investment professional, read their program
materials for any special provisions, additional service features or
fees that may apply to your investment in a fund. Certain features of
the fund, such as the minimum initial or subsequent investment
amounts, may be modified.
The different ways to set up (register) your account with Fidelity are
listed in the table that follows.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have
two or more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and
obtain tax benefits. An individual can give up to $10,000 a year per
child without paying federal gift tax. Depending on state laws, you
can set up a custodial account under the Uniform Gifts to Minors Act
(UGMA) or the Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS
Requires a special application.
HOW TO BUY SHARES
THE PRICE TO BUY ONE SHARE of each fund is the fund's net asset
value per share (NAV). The money market fund is managed to keep its
NAV stable at $1.00. Each fund's shares are sold without a sales
charge.
Your shares will be purchased at the next NAV calculated
after your investment is received in proper form . Each
fund's NAV is normally calculated each business day at 4:00
p.m. Eastern time.
Each fund reserves the right to reject any specific purchase order,
including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they
would disrupt management of a fund.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application
and mail it along with your check. You may also open your account in
person or by wire as described on page . If there is no
application accompanying this prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(small solid bullet) Mail in an application with a check, or
(small solid bullet) Open your account by exchanging from another
Fidelity fund.
If you buy shares by check or Fidelity Money Line(registered
trademark), and then sell those shares by any method other than by
exchange to another Fidelity fund, the payment may be delayed for up
to seven business days to ensure that your previous investment has
cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $10,000
For Spartan F L Municipal
Money Market $25,000
TO ADD TO AN ACCOUNT $1,000
Through regular investment plans * $500
MINIMUM BALANCE $5,000
For Spartan F L Municipal
Money Market $10,000
* FOR MORE INFORMATION ABOUT REGULAR INVESTMENT PLANS, PLEASE REFER TO
"INVESTOR SERVICES," PAGE .
These minimums may vary for investments through Fidelity Portfolio
Advisory Services. Refer to the program materials for details.
<TABLE>
<CAPTION>
<S> <C> <C>
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
PHONE 1-800-544-7777
(PHONE_GRAPHIC) (SMALL SOLID BULLET) EXCHANGE FROM ANOTHER (SMALL SOLID BULLET) EXCHANGE FROM ANOTHER
FIDELITY FUND ACCOUNT FIDELITY FUND ACCOUNT
WITH THE SAME WITH THE SAME
REGISTRATION, INCLUDING REGISTRATION, INCLUDING
NAME, ADDRESS, AND NAME, ADDRESS, AND
TAXPAYER ID NUMBER. TAXPAYER ID NUMBER.
(SMALL SOLID BULLET) USE FIDELITY MONEY LINE
TO TRANSFER FROM YOUR
BANK ACCOUNT. CALL BEFORE
YOUR FIRST USE TO VERIFY
THAT THIS SERVICE IS IN
PLACE ON YOUR ACCOUNT.
MAXIMUM MONEY LINE:
UP TO $100,000 .
MAIL (MAIL_GRAPHIC) (SMALL SOLID BULLET) COMPLETE AND SIGN THE (SMALL SOLID BULLET) MAKE YOUR CHECK PAYABLE
APPLICATION. MAKE YOUR TO THE COMPLETE NAME OF
CHECK PAYABLE TO THE THE FUND. INDICATE YOUR
COMPLETE NAME OF THE FUND ACCOUNT NUMBER ON
FUND. MAIL TO THE ADDRESS YOUR CHECK AND MAIL TO
INDICATED ON THE THE ADDRESS PRINTED ON
APPLICATION. YOUR ACCOUNT STATEMENT.
(SMALL SOLID BULLET) EXCHANGE BY MAIL: CALL
1-800-544-6666 FOR
INSTRUCTIONS.
IN PERSON (HAND_GRAPHIC) (SMALL SOLID BULLET) BRING YOUR APPLICATION (SMALL SOLID BULLET) BRING YOUR CHECK TO A
AND CHECK TO A FIDELITY FIDELITY INVESTOR CENTER.
INVESTOR CENTER. CALL CALL 1-800-544-9797 FOR
1-800-544-9797 FOR THE THE CENTER NEAREST YOU.
CENTER NEAREST YOU.
WIRE (WIRE_GRAPHIC) (SMALL SOLID BULLET) THERE MAY BE A $5.00 FEE (SMALL SOLID BULLET) THERE MAY BE A $5.00 FEE
FOR EACH WIRE PURCHASE. FOR EACH WIRE PURCHASE.
(SMALL SOLID BULLET) CALL 1-800-544-7777 TO (SMALL SOLID BULLET) WIRE TO:
SET UP YOUR ACCOUNT AND BANKERS TRUST COMPANY,
TO ARRANGE A WIRE BANK ROUTING
TRANSACTION. #021001033,
(SMALL SOLID BULLET) WIRE WITHIN 24 HOURS TO: ACCOUNT #00163053.
BANKERS TRUST COMPANY, SPECIFY THE COMPLETE
BANK ROUTING NAME OF THE FUND AND
#021001033, INCLUDE YOUR ACCOUNT
ACCOUNT #00163053. NUMBER AND YOUR NAME.
SPECIFY THE COMPLETE
NAME OF THE FUND AND
INCLUDE YOUR NEW ACCOUNT
NUMBER AND YOUR NAME.
AUTOMATICALLY
(AUTOMATIC_GRAPHIC) (SMALL SOLID BULLET) NOT AVAILABLE. (SMALL SOLID BULLET) USE FIDELITY AUTOMATIC
ACCOUNT BUILDER. SIGN UP
FOR THIS SERVICE WHEN
OPENING YOUR ACCOUNT, OR
CALL 1-800-544-6666 TO
ADD IT.
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HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares.
THE PRICE TO SELL ONE SHARE of Spartan Florida Municipal
Money Market is the fund's NAV. The PRICE TO SELL ONE SHARE of
Spartan Florida Municipal Income is the fund's NAV minus the
short-term trading fee, if applicable. If you sell shares of Spartan
Florida Municipal Income after holding them less than 180 days, the
fund will deduct a short-term trading fee equal to 0.50% of the value
of those shares.
Your shares will be sold at the next NAV calculated after your
order is received in proper form, minus the short-term trading fee, if
applicable. Each fund's NAV is normally calculated each business day
at 4:00 p.m. Eastern time.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least
$5,000 worth of shares in the account ($10,000 for Spartan Florida
Municipal Money Market) to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to
sign up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in
writing and include a signature guarantee if any of the following
situations apply:
(small solid bullet) You wish to redeem more than $100,000 worth of
shares,
(small solid bullet) Your account registration has changed within the
last 30 days,
(small solid bullet) The check is being mailed to a different address
than the one on your account (record address),
(small solid bullet) The check is being made payable to someone other
than the account owner, or
(small solid bullet) The redemption proceeds are being transferred to
a Fidelity account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if
authorized under state law), securities exchange or association,
clearing agency, or savings association. A notary public cannot
provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(small solid bullet) Your name,
(small solid bullet) The fund's name,
(small solid bullet) Your fund account number,
(small solid bullet) The dollar amount or number of shares to be
redeemed, and
(small solid bullet) Any other applicable requirements listed in the
table that follows.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it
to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account in Spartan Florida Municipal
Money Market, you may write an unlimited number of checks. Do not,
however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
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IF YOU SELL SHARES OF SPARTAN FLORIDA MUNICIPAL INCOME AFTER HOLDING THEM LESS THAN 180 DAYS,
THE FUND WILL DEDUCT A SHORT-TERM TRADING FEE EQUAL TO 0.50% OF THE VALUE OF THOSE SHARES. FOR
SPARTAN FLORIDA MUNICIPAL MONEY MARKET, IF YOUR ACCOUNT BALANCE IS LESS THAN $50,000, THERE
ARE FEES FOR INDIVIDUAL REDEMPTION TRANSACTIONS: $2.00 FOR EACH CHECK YOU WRITE AND $5.00 FOR
EACH EXCHANGE, BANK WIRE, AND ACCOUNT CLOSEOUT.
</TABLE>
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PHONE 1-800-544-777 (PHONE_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) MAXIMUM CHECK REQUEST:
$100,000.
(SMALL SOLID BULLET) FOR MONEY LINE TRANSFERS TO
YOUR BANK ACCOUNT; MINIMUM:
$10; MAXIMUM: UP TO $100,000.
(SMALL SOLID BULLET) YOU MAY EXCHANGE TO OTHER
FIDELITY FUNDS IF BOTH ACCOUNTS
ARE REGISTERED WITH THE SAME
NAME(S), ADDRESS, AND TAXPAYER
ID NUMBER.
MAIL OR IN PERSON (MAIL_GRAPHIC)(HAND_GRAPHIC) INDIVIDUAL, JOINT (SMALL SOLID BULLET) THE LETTER OF INSTRUCTION MUST
BE
TENANT, SIGNED BY ALL PERSONS REQUIRED
SOLE PROPRIETORSHIP, TO SIGN FOR TRANSACTIONS, EXACTLY
UGMA, UTMA AS THEIR NAMES APPEAR ON THE
TRUST ACCOUNT.
(SMALL SOLID BULLET) THE TRUSTEE MUST SIGN THE
LETTER
INDICATING CAPACITY AS TRUSTEE. IF
THE TRUSTEE'S NAME IS NOT IN THE
BUSINESS OR ACCOUNT REGISTRATION, PROVIDE A
ORGANIZATION COPY OF THE TRUST DOCUMENT
CERTIFIED WITHIN THE LAST 60 DAYS.
(SMALL SOLID BULLET) AT LEAST ONE PERSON AUTHORIZED
BY CORPORATE RESOLUTION TO ACT
ON THE ACCOUNT MUST SIGN THE
EXECUTOR, LETTER.
ADMINISTRATOR, (SMALL SOLID BULLET) INCLUDE A CORPORATE RESOLUTION
CONSERVATOR, WITH CORPORATE SEAL OR A
GUARDIAN SIGNATURE GUARANTEE.
(SMALL SOLID BULLET) CALL 1-800-544-6666 FOR
INSTRUCTIONS.
WIRE (WIRE_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) YOU MUST SIGN UP FOR THE WIRE
FEATURE BEFORE USING IT. TO
VERIFY THAT IT IS IN PLACE, CALL
1-800-544-6666. MINIMUM
WIRE: $5,000.
(SMALL SOLID BULLET) YOUR WIRE REDEMPTION REQUEST
MUST BE RECEIVED IN PROPER FORM
BY FIDELITY BEFORE 4:00 P.M.
EASTERN TIME FOR MONEY TO BE
WIRED ON THE NEXT BUSINESS DAY.
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CHECK (CHECK_GRAPHIC) ALL ACCOUNT TYPES (SMALL SOLID BULLET) MINIMUM CHECK: $1,000.
(SMALL SOLID BULLET) ALL ACCOUNT OWNERS MUST SIGN A
SIGNATURE CARD TO RECEIVE A
CHECKBOOK.
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(TDD_GRAPHIC) TDD - SERVICE FOR THE DEAF AND HEARING IMPAIRED: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your
account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365
days a year. Whenever you call, you can speak with someone equipped to
provide the information or service you need.
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
TOUCHTONE XPRESSSM
1-800-544-5555
AUTOMATED SERVICE
3
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after every transaction,
except reinvestments, that affects your account balance or your
account registration)
(small solid bullet) Account statements (quarterly)
(small solid bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports and
prospectuses will be mailed to your household, even if you have more
than one account in the fund. Call 1-800-544-6666 if you need copies
of financial reports, prospectuses, or historical account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of
other Fidelity funds by telephone or in writing. You may pay a
$ 5.00 fee for each exchange out of Spartan Florida Municipal Money
Market , unless you place your transaction through
Fidelity's automated exchange services.
Note that exchanges out of a fund are limited to four per calendar
year, and that they may have tax consequences for you. For details on
policies and restrictions governing exchanges, including circumstances
under which a shareholder's exchange privilege may be suspended or
revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up periodic redemptions from
your account.
FIDELITY MONEY LINE(registered trademark) enables you to transfer
money by phone between your bank account and your fund account. Most
transfers are complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money
regularly. Fidelity offers convenient services that let you transfer
money into your fund account, or between fund accounts, automatically.
While regular investment plans do not guarantee a profit and will not
protect you against loss in a declining market, they can be an
excellent way to invest for a home, educational expenses, and other
long-term financial goals.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 MONTHLY OR (SMALL SOLID BULLET) FOR A NEW ACCOUNT, COMPLETE THE APPROPRIATE
QUARTERLY SECTION ON THE FUND APPLICATION.
(SMALL SOLID BULLET) FOR EXISTING ACCOUNTS, CALL 1-800-544-6666
FOR AN APPLICATION.
(SMALL SOLID BULLET) TO CHANGE THE AMOUNT OR FREQUENCY OF YOUR
INVESTMENT, CALL 1-800-544-6666 AT LEAST
THREE BUSINESS DAYS PRIOR TO YOUR NEXT
SCHEDULED INVESTMENT DATE.
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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A
FIDELITY FUNDA
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 EVERY PAY (SMALL SOLID BULLET) CHECK THE APPROPRIATE BOX ON THE FUND
PERIOD APPLICATION, OR CALL 1-800-544-6666 FOR AN
AUTHORIZATION FORM.
(SMALL SOLID BULLET) CHANGES REQUIRE A NEW AUTHORIZATION FORM.
</TABLE>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY
FUND
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly, (small solid bullet) To establish, call 1-800-544-6666 after both
bimonthly, accounts are opened.
quarterly, or (small solid bullet) To change the amount or frequency of your
annually investment, call 1-800-544-6666.
</TABLE>
A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THAT FUND MAY NOT BE AN
APPROPRIATE CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income
and capital gains, if any, to shareholders each year. Income dividends
are declared daily and paid monthly. Capital gains earned by the bond
fund are normally distributed in January and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on
the application, call 1-800-544-6666 for instructions. The bond
fund offers four options, and the money market fund offers three
options .
1. REINVESTMENT OPTION. Your dividend and capital gain distributions,
if any, will be automatically reinvested in additional shares of the
fund. If you do not indicate a choice on your application, you will be
assigned this option.
2. INCOME-EARNED OPTION. (bond fund only) Your capital gain
distributions, if any, will be automatically reinvested, but you will
be sent a check for each dividend distribution.
3. CASH OPTION. You will be sent a check for your dividend and capital
gain distributions, if any.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividend and
capital gain distributions, if any, will be automatically invested in
another identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the
NAV as of the date the fund deducts the distribution from its NAV. The
mailing of distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
AS A FUND SHAREHOLDER, YOU ARE
ENTITLED TO YOUR SHARE OF THE
FUND'S NET INCOME AND GAINS ON
ITS INVESTMENTS. THE FUND PASSES
ITS EARNINGS ALONG TO ITS
INVESTORS AS DISTRIBUTIONS.
EACH FUND EARNS INTEREST FROM ITS
INVESTMENTS. THESE ARE PASSED
ALONG AS DIVIDEND
DISTRIBUTIONS. THE FUND MAY
REALIZE CAPITAL GAINS IF IT SELLS
SECURITIES FOR A HIGHER PRICE THAN
IT PAID FOR THEM. THESE ARE
PASSED ALONG AS CAPITAL GAIN
DISTRIBUTIONS. MONEY MARKET
FUNDS USUALLY DON'T MAKE CAPITAL
GAIN DISTRIBUTIONS.
3
TAXES
As with any investment, you should consider how an investment in a
tax-free fund could affect you. Below are some of the funds' tax
implications.
TAXES ON DISTRIBUTIONS. Interest income that a fund earns is
distributed to shareholders as income dividends. Interest that is
federally tax-free remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on
bonds purchased at a discount are taxed as dividends. Long-term
capital gain distributions are taxed as long-term capital gains. These
distributions are taxable when they are paid, whether you take them in
cash or reinvest them. However, distributions declared in December and
paid in January are taxable as if they were paid on December 31.
Fidelity will send you and the IRS a statement showing the tax status
of the distributions paid to you in the previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each fund may invest up to 100% of its assets
in these securities. Individuals who are subject to the tax must
report this interest on their tax returns.
Each fund has received a ruling from the Florida Department of Revenue
that, if on the close of business on the last business day of any
calendar year, a fund's assets consist solely of those exempt from
Florida intangible tax, shares of the fund owned by Florida residents
will be exempt from the tax. Items exempt from Florida intangible tax
include Florida municipal obligations, certain obligations of the U.S.
government or its agencies, territories, and possessions, and cash.
In the event a fund owns any asset on that day that is subject to the
Florida i ntangible tax, all or a portion of the value of a
fund's shares will be subject to the tax. In order to assure exemption
of each fund's shares from the tax, FMR would seek to sell or dispose
of any non-qualifying assets on or before the last business day of the
calendar year. As a result, a fund could potentially receive a lower
price for the securities sold or incur additional costs or taxable
capital gains.
During the fiscal year ended November 30, 1997 ,
100 % of each fund's income dividends was free from federal
income tax and the Florida intangible tax. 30.1 % of Spartan
Florida Municipal Money Market and 10.3 % of Spartan Florida
Municipal Income's income dividends were subject to the federal
alternative minimum tax.
TAXES ON TRANSACTIONS. Your bond fund redemptions - including
exchanges to other Fidelity funds - are subject to capital gains tax.
A capital gain or loss is the difference between the cost of your
shares and the price you receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a
confirmation statement showing how many shares you sold and at what
price. You will also receive a consolidated transaction statement
every January. However, it is up to you or your tax preparer to
determine whether this sale resulted in a capital gain and, if so, the
amount of tax to be paid. Be sure to keep your regular account
statements; the information they contain will be essential in
calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares when a fund has realized but
not yet distributed capital gains, you will pay the full price for the
shares and then receive a portion of the price back in the form of a
taxable distribution.
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. FSC normally calculates each fund's NAV as of
the close of business of the NYSE, normally 4:00 p.m. Eastern
time.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the
number of shares outstanding.
The money market fund's assets are valued on the basis of amortized
cost. This method minimizes the effect of changes in a security's
market value and helps the money market fund to maintain a stable
$1.00 share price.
For the bond fund, assets are valued primarily on the basis of
information furnished by a pricing service or market quotations, if
available, or by another method that the Board of Trustees believes
accurately reflects fair value.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify
that your social security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding for failing to
report income to the IRS. If you violate IRS regulations, the IRS can
require a fund to withhold 31% of your taxable distributions and
redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE OR
ELECTRONICALLY . Fidelity will not be responsible for any losses
resulting from unauthorized transactions if it follows reasonable
security procedures designed to verify the identity of the investor.
Fidelity will request personalized security codes or other
information, and may also record calls. For transactions conducted
through the Internet, Fidelity recommends the use of an Internet
browser with 128-bit encryption. You should verify the accuracy of
your confirmation statements immediately after you receive them. If
you do not want the ability to redeem and exchange by telephone, call
Fidelity for instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during
periods of unusual market activity), consider placing your order by
mail or by visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT to suspend the offering of shares
for a period of time.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your shares will be
purchased at the next NAV calculated after your
investment is received in proper form. Note the
following:
(small solid bullet) All of your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
(small solid bullet) Fidelity does not accept cash.
(small solid bullet) When making a purchase with more than one check,
each check must have a value of at least $50.
(small solid bullet) Each fund reserves the right to limit the number
of checks processed at one time.
(small solid bullet) If your check does not clear, your purchase will
be canceled and you could be liable for any losses or fees a fund or
its transfer agent has incurred.
(small solid bullet) Spartan Florida Municipal Money Market reserves
the right to limit all accounts maintained or controlled by any one
person to a maximum total balance of $ 2 million.
(small solid bullet) You begin to earn dividends as of the first
business day following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money
order, U.S. Treasury check, Federal Reserve check, or direct deposit
instead.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements
with FDC may enter confirmed purchase orders on behalf of customers by
phone, with payment to follow no later than the time when a fund is
priced on the following business day. If payment is not received by
that time, the financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at
the next NAV calculated after your order is received in
proper form, minus the short-term trading fee, if applicable. Note
the following:
(small solid bullet) Normally, redemption proceeds will be mailed to
you on the next business day, but if making immediate payment could
adversely affect a fund, it may take up to seven days to pay you.
(small solid bullet) Shares will earn dividends through the date of
redemption; however, shares redeemed on a Friday or prior to a holiday
will continue to earn dividends until the next business day.
(small solid bullet) Fidelity Money Line redemptions generally will be
credited to your bank account on the second or third business day
after your phone call.
(small solid bullet) Each fund may hold payment on redemptions until
it is reasonably satisfied that investments made by check or Fidelity
Money Line have been collected, which can take up to seven business
days.
(small solid bullet) Redemptions may be suspended or payment dates
postponed when the NYSE is closed (other than weekends or holidays),
when trading on the NYSE is restricted, or as permitted by the SEC.
(small solid bullet) If you sell shares by writing a check and the
amount of the check is greater than the value of your account, your
check will be returned to you and you may be subject to additional
charges.
A SHORT-TERM TRADING FEE of 0.50% will be deducted from the
redemption amount if you sell your shares of Spartan Florida Municipal
Income after holding them less than 180 days. This fee is paid to the
fund rather than Fidelity, and is designed to offset the brokerage
commissions, market impact, and other costs associated with
fluctuations in fund asset levels and cash flow caused by short-term
shareholder trading.
The short-term trading fee, if applicable, is charged on exchanges
out of Spartan Florida Municipal Income. If you bought shares on
different days, the shares you held longest will be redeemed first for
purposes of determining whether the short-term trading fee applies.
The short-term trading fee does not apply to shares that were acquired
through reinvestment of distributions.
THE FEES FOR INDIVIDUAL TRANSACTIONS (except the short-term trading
fee) are waived if your account balance at the time of the transaction
is $50,000 or more. Otherwise, you should note the following:
(small solid bullet) The $2.00 checkwriting charge will be deducted
from your account.
(small solid bullet) The $5.00 exchange fee will be deducted from the
amount of your exchange.
(small solid bullet) The $5.00 wire fee will be deducted from the
amount of your wire.
(small solid bullet) The $5.00 account closeout fee does not apply to
exchanges or wires, but it will apply to checkwriting.
FIDELITY RESERVES THE RIGHT TO DEDUCT AN ANNUAL MAINTENANCE FEE of
$12.00 from accounts with a value of less than $2,500, subject to an
annual maximum charge of $24.00 per shareholder. It is expected that
accounts will be valued on the second Friday in November of each year.
Accounts opened after September 30 will not be subject to the fee for
that year. The fee, which is payable to the transfer agent, is
designed to offset in part the relatively higher costs of servicing
smaller accounts. This fee will not be deducted from Fidelity
brokerage accounts, retirement accounts (except non-prototype
retirement accounts), accounts using regular investment plans, or if
total assets with Fidelity exceed $30,000. Eligibility for the
$30,000 waiver is determined by aggregating Fidelity accounts
maintained by FSC or FBSI which are registered under the same social
security number or which list the same social security number for the
custodian of a Uniform Gifts/Transfers to Minors Act account.
IF YOUR ACCOUNT BALANCE FALLS BELOW $5,000 ($10,000 for Spartan
Florida Municipal Money Market), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV, minus the
short-term trading fee, if applicable, on the day your account is
closed and, for Spartan Florida Municipal Money Market , the
$5.00 account closeout fee will be charged.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to
qualified recipients who support the sale of shares of the funds
without reimbursement from the funds. Qualified recipients are
securities dealers who have sold fund shares or others, including
banks and other financial institutions, under special arrangements in
connection with FDC's sales activities. In some instances, these
incentives may be offered only to certain institutions whose
representatives provide services in connection with the sale or
expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a
fund for shares of other Fidelity funds. However, you should note the
following:
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may only exchange between accounts that are
registered in the same name, address, and taxpayer identification
number.
(small solid bullet) Before exchanging into a fund, read its
prospectus.
(small solid bullet) If you exchange into a fund with a sales charge,
you pay the percentage-point difference between that fund's sales
charge and any sales charge you have previously paid in connection
with the shares you are exchanging. For example, if you had already
paid a sales charge of 2% on your shares and you exchange them into a
fund with a 3% sales charge, you would pay an additional 1% sales
charge.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Because excessive trading can hurt fund
performance and shareholders, each fund reserves the right to
temporarily or permanently terminate the exchange privilege of any
investor who makes more than four exchanges out of the fund per
calendar year. Accounts under common ownership or control, including
accounts with the same taxpayer identification number, will be counted
together for purposes of the four exchange limit.
(small solid bullet) Each fund reserves the right to refuse exchange
purchases by any person or group if, in FMR's judgment, the fund would
be unable to invest the money effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
(small solid bullet) Your exchanges may be restricted or refused if a
fund receives or anticipates simultaneous orders affecting significant
portions of the fund's assets. In particular, a pattern of exchanges
that coincides with a "market timing" strategy may be disruptive to a
fund.
Although the funds will attempt to give you prior notice whenever they
are reasonably able to do so, they may impose these restrictions at
any time. The funds reserve the right to terminate or modify the
exchange privilege in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to 1 . 00%, and trading fees of
up to 1.50% of the amount exchanged. Check each fund's
prospectus for details.
This prospectus is printed on recycled paper using soy-based inks.
SPARTAN(registered trademark) FLORIDA MUNICIPAL MONEY MARKET FUND
A FUND OF FIDELITY COURT STREET TRUST II
SPARTAN FLORIDA MUNICIPAL INCOME FUND
A FUND OF FIDELITY COURT STREET TRUST
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 22, 1998
This Statement of Additional Information (SAI) is not a
prospectus but should be read in conjunction with the funds' current
Prospectus (dated January 22, 1998). Please retain this
document for future reference. The funds' Annual Report is a
separate document supplied with this SAI. To obtain a free
additional copy of the Prospectus or Annual Report, please call
Fidelity at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Considerations Regarding Florida
Special Considerations Regarding Puerto Rico
Portfolio Transactions
Valuation
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans
Contracts with FMR Affiliates
Description of the Trusts
Financial Statements
Appendix
INVESTMENT ADVISER
Fidelity Management & Research Company (FMR)
INVESTMENT SUB-ADVISER
F idelity Investments Money Management, Inc. (FIMM) (money
market fund)
DISTRIBUTOR
Fidelity Distributors Corporation (FDC)
TRANSFER AGENT
UMB Bank, n.a. (UMB)
and Fidelity Service Company, Inc. ( FSC )
SFC -ptb- 0198
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in
the Prospectus. Unless otherwise noted, whenever an investment policy
or limitation states a maximum percentage of a fund's assets that may
be invested in any security or other asset, or sets forth a policy
regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the fund's
acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets, or other circumstances will
not be considered when determining whether the investment complies
with the fund's investment policies and limitations.
A fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (1940
Act )) of the fund. However, except for the fundamental investment
limitations listed below, the investment policies and limitations
described in this SAI are not fundamental and may be changed
without shareholder approval.
INVESTMENT LIMITATIONS OF SPARTAN FLORIDA MUNICIPAL MONEY MARKET FUND
(MONEY MARKET FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments; or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objectives, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not purchase any security while
borrowings representing more than 5% of its total assets are
outstanding. The fund will not borrow from other funds advised by FMR
or its affiliates if total outstanding borrowings immediately after
such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(viii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For purposes of limitations (4) and (i), FMR identifies the issuer of
a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
For the money market fund's policies on quality and maturity, see the
section entitled "Quality and Maturity" on page .
INVESTMENT LIMITATIONS OF SPARTAN FLORIDA MUNICIPAL INCOME FUND
(BOND FUND)
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(2) borrow money, except that the fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount
not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings
that come to exceed this amount will be reduced within three days (not
including Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation;
(3) underwrite securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities;
(4) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(5) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prevent the fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business);
(6) purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed
by physical commodities); or
(7) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to purchases of debt securities or to
repurchase agreements.
(8) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objective, policies, and limitations as
the fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE
CHANGED WITHOUT SHAREHOLDER APPROVAL.
(i) In order to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, the
fund currently intends to comply with certain diversification limits
imposed by Subchapter M.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in
kind and amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a
registered investment company or portfolio for which FMR or an
affiliate serves as investment adviser or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
are treated as borrowings for purposes of fundamental investment
limitation (2)). The fund will not borrow from other funds advised by
FMR or its affiliates if total outstanding borrowings immediately
after such borrowing would exceed 15% of the fund's total assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
disposed of in the ordinary course of business at approximately the
prices at which they are valued.
(vi) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to
purchases of debt securities.
(vii) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
with substantially the same fundamental investment objective,
policies, and limitations as the fund.
For purposes of limitation (i), Subchapter M generally requires the
fund to invest no more than 25% of its total assets in securities of
any one issuer and to invest at least 50% of its total assets so that
no more than 5% of the fund's total assets are invested in securities
of any one issuer. However, Subchapter M allows unlimited investments
in cash, cash items, government securities (as defined in Subchapter
M) and securities of other investment companies. These tax
requirements are generally applied at the end of each quarter of the
fund's taxable year.
For purposes of limitations (4) and (i), FMR identifies the issuer of
a security depending on its terms and conditions. In identifying the
issuer, FMR will consider the entity or entities responsible for
payment of interest and repayment of principal and the source of such
payments; the way in which assets and revenues of an issuing political
subdivision are separated from those of other political entities; and
whether a governmental body is guaranteeing the security.
For the bond fund's limitations on futures and options transactions,
see the section entitled "Limitations on Futures and Options
Transactions" on page .
The following pages contain more detailed information about the types
of instruments in which a fund may invest, strategies FMR may employ
in pursuit of a fund's investment objective, and a summary of related
risks. FMR may not buy all of these instruments or use all of these
techniques unless it believes that doing so will help the fund achieve
its goal.
AFFILIATED BANK TRANSACTIONS. A fund may engage in transactions with
financial institutions that are, or may be considered to be,
"affiliated persons" of the fund under the 1940 Act . These
transactions may include repurchase agreements with custodian banks;
short-term obligations of, and repurchase agreements with, the 50
largest U.S. banks (measured by deposits); municipal securities; U.S.
Government securities with affiliated financial institutions that are
primary dealers in these securities; short-term currency transactions;
and short-term borrowings. In accordance with exemptive orders issued
by the Securities and Exchange Commission (SEC), the Board of Trustees
has established and periodically reviews procedures applicable to
transactions involving affiliated financial institutions.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities
on a delayed-delivery or when-issued basis. These transactions involve
a commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place
after the customary settlement period for that type of security.
Typically, no interest accrues to the purchaser until the security is
delivered. The bond fund may receive fees for entering into
delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund
assumes the rights and risks of ownership, including the risk of price
and yield fluctuations. Because a fund is not required to pay for
securities until the delivery date, these risks are in addition to the
risks associated with the fund's other investments. If a fund remains
substantially fully invested at a time when delayed-delivery purchases
are outstanding, the delayed-delivery purchases may result in a form
of leverage. When delayed-delivery purchases are outstanding, the fund
will set aside appropriate liquid assets in a segregated custodial
account to cover its purchase obligations. When a fund has sold a
security on a delayed-delivery basis, the fund does not participate in
further gains or losses with respect to the security. If the other
party to a delayed-delivery transaction fails to deliver or pay for
the securities, the fund could miss a favorable price or yield
opportunity, or could suffer a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are
delivered, which may result in capital gains or losses.
FEDERALLY TAXABLE OBLIGATIONS. Under normal conditions, the funds do
not intend to invest in securities whose interest is federally
taxable. However, from time to time on a temporary basis, each fund
may invest a portion of its assets in fixed-income obligations whose
interest is subject to federal income tax.
Should a fund invest in federally taxable obligations, it would
purchase securities that in FMR's judgment are of high quality. These
would include obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities; obligations of domestic banks;
and repurchase agreements. The bond fund's standards for high-quality,
taxable obligations are essentially the same as those described by
Moody's Investors Service , Inc. (Moody's) in rating corporate
obligations within its two highest ratings of Prime-1 and Prime-2, and
those described by Standard & Poor's ( S&P ) in rating corporate
obligations within its two highest ratings of A-1 and A-2. The money
market fund will purchase taxable obligations only if they meet its
quality requirements.
Proposals to restrict or eliminate the federal income tax exemption
for interest on municipal obligations are introduced before Congress
from time to time. Proposals also may be introduced before the Florida
legislature that would affect the state tax treatment of the funds'
distributions. If such proposals were enacted, the availability of
municipal obligations and the value of the funds' holdings would be
affected and the Trustees would reevaluate the funds' investment
objectives and policies.
FUTURES AND OPTIONS. The following sections pertain to futures and
options: Asset Coverage for Futures and Options Positions, Combined
Positions, Correlation of Price Changes, Futures Contracts, Futures
Margin Payments, Limitations on Futures and Options Transactions,
Liquidity of Options and Futures Contracts, OTC Options, Purchasing
Put and Call Options, and Writing Put and Call Options.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will
comply with guidelines established by the Securities and Exchange
Commission with respect to coverage of options and futures
strategies by mutual funds, and if the guidelines so require will set
aside appropriate liquid assets in a segregated custodial account in
the amount prescribed. Securities held in a segregated account cannot
be sold while the futures or option strategy is outstanding, unless
they are replaced with other suitable assets. As a result, there is a
possibility that segregation of a large percentage of a fund's assets
could impede portfolio management or the fund's ability to meet
redemption requests or other current obligations.
COMBINED POSITIONS. A fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the
overall position. For example, a fund may purchase a put option and
write a call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics
are similar to selling a futures contract. Another possible combined
position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open
and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely
that the standardized contracts available will not match a fund's
current or anticipated investments exactly. The funds may invest in
options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which they typically invest, which involves a risk that the options or
futures position will not track the performance of a fund's other
investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a
fund's investments well. Options and futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time
remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result
from differing levels of demand in the options and futures markets and
the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price
fluctuation limits or trading halts. A fund may purchase or sell
options and futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases. If price changes in a fund's options or futures positions
are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future
date. When a fund sells a futures contract, it agrees to sell the
underlying instrument at a specified future date. The price at which
the purchase and sale will take place is fixed when the fund enters
into the contract. Some currently available futures contracts are
based on specific securities, such as U.S. Treasury bonds or notes,
and some are based on indices of securities prices, such as the Bond
Buyer Municipal Bond Index. Futures can be held until their delivery
dates, or can be closed out before then if a liquid secondary market
is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a fund's exposure
to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument
directly. When a fund sells a futures contract, by contrast, the value
of its futures position will tend to move in a direction contrary to
the market. Selling futures contracts, therefore, will tend to offset
both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the
purchaser and seller are required to deposit "initial margin" with a
futures broker, known as a futures commission merchant (FCM), when the
contract is entered into. Initial margin deposits are typically equal
to a percentage of the contract's value. If the value of either
party's position declines, that party will be required to make
additional "variation margin" payments to settle the change in value
on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments
do not constitute purchasing securities on margin for purposes of a
fund's investment limitations. In the event of the bankruptcy of an
FCM that holds margin on behalf of a fund, the fund may be entitled to
return of margin owed to it only in proportion to the amount received
by the FCM's other customers, potentially resulting in losses to the
fund.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The bond fund has
filed a notice of eligibility for exclusion from the definition of the
term "commodity pool operator" with the Commodity Futures Trading
Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. The fund intends to comply with Rule
4.5 under the Commodity Exchange Act, which limits the extent to which
the fund can commit assets to initial margin deposits and
option premiums.
In addition, the bond fund will not: (a) sell futures contracts,
purchase put options, or write call options if, as a result, more than
25% of the fund's total assets would be hedged with futures and
options under normal conditions; (b) purchase futures contracts or
write put options if, as a result, the fund's total obligations upon
settlement or exercise of purchased futures contracts and written put
options would exceed 25% of its total assets; or (c) purchase call
options if, as a result, the current value of option premiums for call
options purchased by the fund would exceed 5% of the fund's total
assets. These limitations do not apply to options attached to or
acquired or traded together with their underlying securities, and do
not apply to securities that incorporate features similar to options.
The above limitations on the funds' investments in futures contracts
and options, and the funds' policies regarding futures contracts and
options discussed elsewhere in this SAI, may be changed as regulatory
agencies permit.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or
futures contract at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close
to the underlying instrument's current price. In addition, exchanges
may establish daily price fluctuation limits for options and futures
contracts, and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days
when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for a fund to enter into new positions
or close out existing positions. If the secondary market for a
contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require a fund to continue to hold a
position until delivery or expiration regardless of changes in its
value. As a result, a fund's access to other assets held to cover its
options or futures positions could also be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract
size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through
negotiation with the other party to the option contract. While this
type of arrangement allows the funds greater flexibility to tailor an
option to its needs, OTC options generally involve greater credit risk
than exchange-traded options, which are guaranteed by the clearing
organization of the exchanges where they are traded.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund
obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this
right, the fund pays the current market price for the option (known as
the option premium). Options have various types of underlying
instruments, including specific securities, indices of securities
prices, and futures contracts. The fund may terminate its position in
a put option it has purchased by allowing it to expire or by
exercising the option. If the option is allowed to expire, the fund
will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the
strike price. A fund may also terminate a put option position by
closing it out in the secondary market at its current price, if a
liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss
(limited to the amount of the premium paid, plus related transaction
costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right
to purchase, rather than sell, the underlying instrument at the
option's strike price. A call buyer typically attempts to participate
in potential price increases of the underlying instrument with risk
limited to the cost of the option if security prices fall. At the same
time, the buyer can expect to suffer a loss if security prices do not
rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it
takes the opposite side of the transaction from the option's
purchaser. In return for receipt of the premium, the fund assumes the
obligation to pay the strike price for the option's underlying
instrument if the other party to the option chooses to exercise it.
When writing an option on a futures contract, the fund will be
required to make margin payments to an FCM as described above for
futures contracts. A fund may seek to terminate its position in a put
option it writes before exercise by closing out the option in the
secondary market at its current price. If the secondary market is not
liquid for a put option the fund has written, however, the fund must
continue to be prepared to pay the strike price while the option is
outstanding, regardless of price changes, and must continue to set
aside assets to cover its position.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it
is likely that the writer will also profit, because it should be able
to close out the option at a lower price. If security prices fall, the
put writer would expect to suffer a loss. This loss should be less
than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise
of the option. The characteristics of writing call options are similar
to those of writing put options, except that writing calls generally
is a profitable strategy if prices remain the same or fall. Through
receipt of the option premium, a call writer mitigates the effects of
a price decline. At the same time, because a call writer must be
prepared to deliver the underlying instrument in return for the strike
price, even if its current value is greater, a call writer gives up
some ability to participate in security price increases.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed
of in the ordinary course of business at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees,
FMR determines the liquidity of a fund's investments and, through
reports from FMR, the Board monitors investments in illiquid
instruments. In determining the liquidity of a fund's investments, FMR
may consider various factors, including (1) the frequency of trades
and quotations, (2) the number of dealers and prospective purchasers
in the marketplace, (3) dealer undertakings to make a market, (4) the
nature of the security (including any demand or tender features), and
(5) the nature of the marketplace for trades (including the ability to
assign or offset the fund's rights and obligations relating to the
investment).
For the money market fund, FMR may determine some restricted
securities and municipal lease obligations to be illiquid.
For the bond fund, investments currently considered to be illiquid
include over-the-counter options. Also, FMR may determine some
restricted securities and municipal lease obligations to be illiquid.
However, with respect to over-the-counter options a fund writes, all
or a portion of the value of the underlying instrument may be illiquid
depending on the assets held to cover the option and the nature and
terms of any agreement the fund may have to close out the option
before expiration.
In the absence of market quotations, illiquid investments for the
money market fund are valued for purposes of monitoring amortized cost
valuation, and for the bond fund are priced at fair value as
determined in good faith by a committee appointed by the Board of
Trustees. If through a change in values, net assets, or other
circumstances, a fund were in a position where more than 10% of its
net assets was invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
INDEXED SECURITIES. A fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, or
other financial indicators. Indexed securities typically, but not
always, are debt securities or deposits whose value at maturity or
coupon rate is determined by reference to a specific instrument or
statistic. Indexed securities may have principal payments as well as
coupon payments that depend on the performance of one or more interest
rates. Their coupon rates or principal payments may change by several
percentage points for every 1% interest rate change. One example of
indexed securities is inverse floaters.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are
indexed, and may also be influenced by interest rate changes. At the
same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may
decline substantially if the issuer's creditworthiness deteriorates.
Indexed securities may be more volatile than the underlying
instruments.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, each fund has received permission to lend
money to, and borrow money from, other funds advised by FMR or its
affiliates, but each fund currently intends to participate in this
program only as a borrower. Interfund borrowings normally extend
overnight, but can have a maximum duration of seven days. A fund will
borrow through the program only when the costs are equal to or lower
than the costs of bank loans. Loans may be called on one day's notice,
and a fund may have to borrow from a bank at a higher interest rate if
an interfund loan is called or not renewed.
INVERSE FLOATERS have variable interest rates that typically move in
the opposite direction from prevailing short-term interest rate
levels - rising when prevailing short-term interest rates fall,
and vice versa. This interest rate feature can make the prices of
inverse floaters considerably more volatile than bonds with comparable
maturities.
LOWER-QUALITY MUNICIPAL SECURITIES. The bond fund may invest a portion
of its assets in lower-quality municipal securities as described in
the Prospectus.
While the market for Florida municipals is considered to be adequate,
adverse publicity and changing investor perceptions may affect the
ability of outside pricing services used by a fund to value its
portfolio securities, and the fund's ability to dispose of
lower-quality bonds. The outside pricing services are monitored by FMR
and reported to the Board to determine whether the services are
furnishing prices that accurately reflect fair value. The impact of
changing investor perceptions may be especially pronounced in markets
where municipal securities are thinly traded.
Each fund may choose, at its expense or in conjunction with
others, to pursue litigation or otherwise exercise its rights as a
security holder to seek to protect the interests of security holders
if it determines this to be in the best interest of the fund's
shareholders.
MARKET DISRUPTION RISK. The value of municipal securities may be
affected by uncertainties in the municipal market related to
legislation or litigation involving the taxation of municipal
securities or the rights of municipal securities holders in the event
of a bankruptcy. Municipal bankruptcies are relatively rare, and
certain provisions of the U.S. Bankruptcy Code governing such
bankruptcies are unclear and remain untested. Further, the application
of state law to municipal issuers could produce varying results among
the states or among municipal securities issuers within a state. These
legal uncertainties could affect the municipal securities market
generally, certain specific segments of the market, or the relative
credit quality of particular securities. Any of these effects could
have a significant impact on the prices of some or all of the
municipal securities held by a fund, making it more difficult for the
money market fund to maintain a stable net asset value per share.
MONEY MARKET SECURITIES are high-quality, short-term obligations.
M oney market securities may be structured or may employ
a trust or other similar structure so that they may be eligible
investments for the funds . For example, put features can be used
to modify the maturity of a security or interest rate adjustment
features can be used to enhance price stability. If the structure does
not perform as intended, adverse tax or investment consequences may
result. Neither the Internal Revenue Service (IRS) nor any other
regulatory authority has ruled definitively on certain legal issues
presented by structured securities. Future tax or other regulatory
determinations could adversely affect the value, liquidity, or tax
treatment of the income received from these securities or the nature
and timing of distributions made by the fund.
MUNICIPAL LEASES and participation interests therein may take the form
of a lease, an installment purchase, or a conditional sale contract
and are issued by state and local governments and authorities to
acquire land or a wide variety of equipment and facilities. Generally,
the funds will not hold such obligations directly as a lessor of the
property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest
gives a fund a specified, undivided interest in the obligation in
proportion to its purchased interest in the total amount of the
obligation.
Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must
meet to incur debt. These may include voter referenda, interest rate
limits, or public sale requirements. Leases, installment purchases, or
conditional sale contracts (which normally provide for title to the
leased asset to pass to the governmental issuer) have evolved as a
means for governmental issuers to acquire property and equipment
without meeting their constitutional and statutory requirements for
the issuance of debt. Many leases and contracts include
"non-appropriation clauses" providing that the governmental issuer has
no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis.
Non-appropriation clauses free the issuer from debt issuance
limitations.
MUNICIPAL SECTORS:
ELECTRIC UTILITIES. The electric utilities industry has been
experiencing, and will continue to experience, increased competitive
pressures. Federal legislation in the last two years will open
transmission access to any electricity supplier, although it is not
presently known to what extent competition will evolve. Other risks
include: (a) the availability and cost of fuel, (b) the availability
and cost of capital, (c) the effects of conservation on energy demand,
(d) the effects of rapidly changing environmental, safety, and
licensing requirements, and other federal, state, and local
regulations, (e) timely and sufficient rate increases, and (f)
opposition to nuclear power.
HEALTH CARE. The health care industry is subject to regulatory action
by a number of private and governmental agencies, including federal,
state, and local governmental agencies. A major source of revenues for
the health care industry is payments from the Medicare and Medicaid
programs. As a result, the industry is sensitive to legislative
changes and reductions in governmental spending for such programs.
Numerous other factors may affect the industry, such as general and
local economic conditions; demand for services; expenses (including
malpractice insurance premiums); and competition among health care
providers. In the future, the following elements may adversely affect
health care facility operations: adoption of legislation proposing a
national health insurance program; other state or local health care
reform measures; medical and technological advances which dramatically
alter the need for health services or the way in which such services
are delivered; changes in medical coverage which alter the traditional
fee-for-service revenue stream; and efforts by employers, insurers,
and governmental agencies to reduce the costs of health insurance and
health care services.
HOUSING. Housing revenue bonds are generally issued by a state,
county, city, local housing authority, or other public agency. They
generally are secured by the revenues derived from mortgages purchased
with the proceeds of the bond issue. It is extremely difficult to
predict the supply of available mortgages to be purchased with the
proceeds of an issue or the future cash flow from the underlying
mortgages. Consequently, there are risks that proceeds will exceed
supply, resulting in early retirement of bonds, or that homeowner
repayments will create an irregular cash flow. Many factors may affect
the financing of multi-family housing projects, including acceptable
completion of construction, proper management, occupancy and rent
levels, economic conditions, and changes to current laws and
regulations.
EDUCATION. In general, there are two types of education-related bonds;
those issued to finance projects for public and private colleges and
universities, and those representing pooled interests in student
loans. Bonds issued to supply educational institutions with funds are
subject to the risk of unanticipated revenue decline, primarily the
result of decreasing student enrollment or decreasing state and
federal funding. Among the factors that may lead to declining or
insufficient revenues are restrictions on students' ability to pay
tuition, availability of state and federal funding, and general
economic conditions. Student loan revenue bonds are generally offered
by state (or substate) authorities or commissions and are backed by
pools of student loans. Underlying student loans may be guaranteed by
state guarantee agencies and may be subject to reimbursement by the
United States Department of Education through its guaranteed student
loan program. Others may be private, uninsured loans made to parents
or students which are supported by reserves or other forms of credit
enhancement. Recoveries of principal due to loan defaults may be
applied to redemption of bonds or may be used to re-lend, depending on
program latitude and demand for loans. Cash flows supporting student
loan revenue bonds are impacted by numerous factors, including the
rate of student loan defaults, seasoning of the loan portfolio, and
student repayment deferral periods of forbearance. Other risks
associated with student loan revenue bonds include potential changes
in federal legislation regarding student loan revenue bonds, state
guarantee agency reimbursement and continued federal interest and
other program subsidies currently in effect.
WATER AND SEWER. Water and sewer revenue bonds are often considered to
have relatively secure credit as a result of their issuer's
importance, monopoly status, and generally unimpeded ability to raise
rates. Despite this, lack of water supply due to insufficient rain,
run-off, or snow pack is a concern that has led to past defaults.
Further, public resistance to rate increases, costly environmental
litigation, and Federal environmental mandates are challenges faced by
issuers of water and sewer bonds.
TRANSPORTATION. Transportation debt may be issued to finance the
construction of airports, toll roads, highways, or other transit
facilities. Airport bonds are dependent on the general stability of
the airline industry and on the stability of a specific carrier who
uses the airport as a hub. Air traffic generally follows broader
economic trends and is also affected by the price and availability of
fuel. Toll road bonds are also affected by the cost and availability
of fuel as well as toll levels, the presence of competing roads and
the general economic health of an area. Fuel costs and availability
also affect other transportation-related securities, as do the
presence of alternate forms of transportation, such as public
transportation.
PUT FEATURES entitle the holder to sell a security back to the issuer
or a third party at any time or at specified intervals. They are
subject to the risk that the put provider is unable to honor the put
feature (purchase the security). Put providers often support their
ability to buy securities on demand by obtaining letters of credit or
other guarantees from other entities. Demand features, standby
commitments, and tender options are types of put features.
QUALITY AND MATURITY (MONEY MARKET FUND). Pursuant to procedures
adopted by the Board of Trustees, the fund may purchase only
high-quality securities that FMR believes present minimal credit
risks. To be considered high-quality, a security must be rated in
accordance with applicable rules in one of the two highest categories
for short-term securities by at least two nationally recognized rating
services (or by one, if only one rating service has rated the
security); or, if unrated, judged to be of equivalent quality by FMR.
High-quality securities are divided into "first tier" and "second
tier" securities. First tier securities are those deemed to be in the
highest rating category (e.g., Standard & Poor's A-1 or SP-1), and
second tier securities are those deemed to be in the second highest
rating category (e.g., Standard & Poor's A-2 or SP-2).
The fund currently intends to limit its investments to securities with
remaining maturities of 397 days or less, and to maintain a
dollar-weighted average maturity of 90 days or less. When determining
the maturity of a security, the fund may look to an interest rate
reset or demand feature.
REFUNDING CONTRACTS. A fund may purchase securities on a when-issued
basis in connection with the refinancing of an issuer's outstanding
indebtedness. Refunding contracts require the issuer to sell and the
fund to buy refunded municipal obligations at a stated price and yield
on a settlement date that may be several months or several years in
the future. A fund generally will not be obligated to pay the full
purchase price if it fails to perform under a refunding contract.
Instead, refunding contracts generally provide for payment of
liquidated damages to the issuer (currently 15-20% of the purchase
price). A fund may secure its obligations under a refunding contract
by depositing collateral or a letter of credit equal to the liquidated
damages provisions of the refunding contract. When required by SEC
guidelines, a fund will place liquid assets in a segregated custodial
account equal in amount to its obligations under refunding contracts.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to sell that security back to the
original seller at an agreed-upon price. The resale price reflects the
purchase price plus an agreed-upon incremental amount which is
unrelated to the coupon rate or maturity of the purchased security. To
protect the fund from the risk that the original seller will not
fulfill its obligation, the securities are held in an account of the
fund at a bank, marked-to-market daily, and maintained at a value at
least equal to the sale price plus the accrued incremental amount.
While it does not presently appear possible to eliminate all risks
from these transactions (particularly the possibility that the value
of the underlying security will be less than the resale price, as well
as delays and costs to a fund in connection with bankruptcy
proceedings), it is each fund's current policy to engage in repurchase
agreement transactions with parties whose creditworthiness has been
reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part
of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time it may
be permitted to sell a security under an effective registration
statement. If, during such a period, adverse market conditions were to
develop, a fund might obtain a less favorable price than prevailed
when it decided to seek registration of the security. However, in
general, the money market fund anticipates holding restricted
securities to maturity or selling them in an exempt transaction.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase
agreement is outstanding, the fund will maintain appropriate liquid
assets in a segregated custodial account to cover its obligation under
the agreement. A fund will enter into reverse repurchase agreements
only with parties whose creditworthiness has been found satisfactory
by FMR. Such transactions may increase fluctuations in the market
value of the fund's assets and may be viewed as a form of leverage.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. FMR may rely on its evaluation
of the credit of a bank or other entity in determining whether to
purchase a security supported by a letter of credit guarantee, put or
demand feature, insurance or other source of credit or liquidity.
In evaluating the credit of a foreign bank or other foreign entities,
FMR will consider whether adequate public information about the entity
is available and whether the entity may be subject to unfavorable
political or economic developments, currency controls, or other
government restrictions that might affect its ability to honor its
commitment.
STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of
exercise. Each fund may acquire standby commitments to enhance the
liquidity of portfolio securities.
Ordinarily a fund will not transfer a standby commitment to a third
party, although it could sell the underlying municipal security to a
third party at any time. A fund may purchase standby commitments
separate from or in conjunction with the purchase of securities
subject to such commitments. In the latter case, the fund would pay a
higher price for the securities acquired, thus reducing their yield to
maturity.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand.
FMR may rely upon its evaluation of a bank's credit in determining
whether to support an instrument supported by a letter of credit. In
evaluating a foreign bank's credit, FMR will consider whether adequate
public information about the bank is available and whether the bank
may be subject to unfavorable political or economic developments,
currency controls, or other governmental restrictions that might
affect the bank's ability to honor its credit commitment.
Standby commitments are subject to certain risks, including the
ability of issuers of standby commitments to pay for securities at the
time the commitments are exercised; the fact that standby commitments
are not marketable by the funds; and the possibility that the
maturities of the underlying securities may be different from those of
the commitments.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, tax-exempt bond (generally held pursuant to a
custodial arrangement) with a tender agreement that gives the holder
the option to tender the bond at its face value. As consideration for
providing the tender option, the sponsor (usually a bank,
broker-dealer, or other financial institution) receives periodic fees
equal to the difference between the bond's fixed coupon rate and the
rate (determined by a remarketing or similar agent) that would cause
the bond, coupled with the tender option, to trade at par on the date
of such determination. After payment of the tender option fee, a fund
effectively holds a demand obligation that bears interest at the
prevailing short-term tax-exempt rate. In selecting tender option
bonds for the funds, FMR will consider the creditworthiness of the
issuer of the underlying bond, the custodian, and the third party
provider of the tender option. In certain instances, a sponsor may
terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
VARIABLE AND FLOATING RATE SECURITIES provide for periodic adjustments
of the interest rate paid on the security. Variable rate securities
provide for a specified periodic adjustment in the interest rate,
while floating rate securities have interest rates that change
whenever there is a change in a designated benchmark rate. Some
variable or floating rate securities have put features.
In many instances bonds and participation interests have tender
options or demand features that permit a fund to tender (or put) the
bonds to an institution at periodic intervals and to receive the
principal amount thereof. A fund considers variable rate instruments
structured in this way (Participating VRDOs) to be essentially
equivalent to other VRDOs it purchases. The IRS has not ruled whether
the interest on Participating VRDOs is tax-exempt and, accordingly, a
fund intends to purchase these instruments based on opinions of bond
counsel. A fund may also invest in fixed-rate bonds that are subject
to third party puts and in participation interests in such bonds held
by a bank in trust or otherwise.
ZERO COUPON BONDS do not make regular interest payments. Instead, they
are sold at a deep discount from their face value and are redeemed at
face value when they mature. Because zero coupon bonds do not pay
current income, their prices can be very volatile when interest rates
change. In calculating its daily dividend, a fund takes into account
as income a portion of the difference between a zero coupon bond's
purchase price and its face value.
SPECIAL CONSIDERATIONS REGARDING FLORIDA
THE STATE BUDGET. The State operates under an annual budget. Under the
State Constitution and applicable statutes, the State budget as a
whole and each separate fund within the State budget, must be kept in
balance from currently available revenues during each State fiscal
year. (The State's fiscal year runs from July 1 through June 30.) The
Governor and the Comptroller of the State are charged with the
responsibility of ensuring that sufficient revenues are collected to
meet appropriations and that no deficit occurs in any State fund.
The financial operations of the State covering all receipts and
expenditures are maintained through the use of four types of funds;
the General Revenue Fund, Trust Funds, Working Capital Fund and Budget
Stabilization Fund. The majority of the State's tax revenues are
deposited in the General Revenue Fund and moneys for all funds are
expended pursuant to appropriations acts. In fiscal year 1995-1996,
expenditures for education, health and welfare, and public safety
represented approximately 51%, 31%, and 14% respectively, of
expenditures from the General Revenue Fund. The Trust Funds consist of
moneys received by the State which, under law or trust agreement, are
segregated for a purpose authorized by law. Revenues in the General
Revenue Fund exceeding the amount needed to meet appropriations may be
transferred to the Working Capital Fund.
REVENUES. Estimated revenues of $16,617.4 million for 1996-97
represent an increase of 6.7% over revenues for 1995-96. Estimated
revenues for 1997-98 of $17,553.9 million represent an increase of
5.6% over 1996-1997.
In fiscal year 1995-1996, the State derived approximately 66% of its
total direct revenues for deposit in the General Revenue Fund, Trust
Funds, and Working Capital Fund from State taxes and fees. Federal
grants and other special revenues account for the remaining revenues.
The greatest single source of tax receipts in the State is the 6%
sales and use tax. For the fiscal year ended June 30, 1996, receipts
from the sales and use tax totaled $11,461 million, an increase of
approximately 7.4% over fiscal year 1994-95. The second largest source
of State tax receipts is the tax on motor fuels including the tax
receipts distributed to local governments. Receipts from the taxes on
motor fuels are almost entirely dedicated to trust funds for specific
purposes and are not included in the General Revenue Fund. For the
fiscal year ended June 30, 1996, preliminary data estimate the
collections of this tax in the amount of $1,923.0 million.
The State currently does not impose a personal income tax. However,
the State does impose a corporate income tax on the net income of
corporations, organizations, associations, and other artificial
entities for the privilege of conducting business, deriving income, or
existing within the State. For the fiscal year ended June 30, 1996,
receipts from the corporate income tax totaled $1,162.7 million, an
increase of approximately 9.3% from fiscal year 1994-95. The
Documentary Stamp Tax collections totaled $775.2 million during fiscal
year 1995-96, an increase of approximately 11.5% over fiscal year
1994-95. The Alcoholic Beverage Tax, an excise tax on beer, wine, and
liquor, totaled $441.5 million in fiscal year ended June 30, 1996. The
Florida lottery produced sales of $2.07 billion of which $788.1
million was used for education in fiscal year 1995-96.
While the state does not levy ad valorem taxes on real property or
tangible personal property, counties, municipalities, and school
districts are authorized by law, and special districts may be
authorized by law, to levy ad valorem taxes. Under the State
Constitution, ad valorem taxes may not be levied by counties,
municipalities, school districts, and water management districts in
excess of the following respective millages upon the assessed value of
real estate and tangible personal property: for all county, all
municipal, and all school purposes, 10 mills; and for water management
districts, either 0.05 mill or 1.0 mill, depending upon geographic
location. These millage limitations do not apply to taxes levied for
payment of bonds and taxes levied for periods not longer than two
years when authorized by a vote of the electors. (Note: one mill
equals one-tenth of one cent.)
The State Constitution and statutes provide for the exemption of
homesteads from certain taxes. The homestead exemption is an exemption
from all taxation, except for assessments for special benefits, up to
a specific amount of the assessed valuation of the homestead. This
exemption is available to every person who has the legal or equitable
title to real estate and maintains thereon his or her permanent home.
A $25,000 homestead exemption from levies by all taxing authorities is
allowed for every person who is entitled to the foregoing exemption.
However, such exemption is subject to change upon voter approval.
On November 3, 1992, the voters of the State of Florida passed an
amendment to the Florida Constitution establishing a limitation on the
annual increase in assessed valuation of homestead property. As of
January 1, 1994, growth in the assessed value of property qualifying
for the homestead exemption will be limited to the lesser of 3% or the
increase in the Consumer Price Index during the relevant year, except
in the event of a change of ownership or homestead status thereof
during such year, and except as to improvements thereto during such
year. The amendment did not alter any of the millage rates described
above.
Since municipalities, counties, school districts, and other special
purpose units of local governments with power to issue general
obligation bonds have authority to increase the millage levy for voter
approved general obligation debt to the amount necessary to satisfy
the related debt service requirements, the amendment is not expected
to adversely affect the ability of these entities to pay the principal
of or interest on such general obligation bonds. However, in periods
of high inflation, those local government units whose operating
millage levies are approaching the constitutional cap and whose tax
base consists largely of residential real estate, may, as a result of
the above-described amendment, need to place greater reliance on
non-ad valorem revenue sources to meet their operating budget needs.
At the November 1994 general election, voters approved an amendment to
the State Constitution that limits the amount of taxes, fees,
licenses, and charges imposed by the Legislature and collected during
any fiscal year to no more than the average annual growth rate in
Florida personal income over the past five years. The revenue limit is
determined by multiplying the average annual rate of growth in Florida
personal income over the previous five years times the maximum amount
of state revenues permitted under the caps for the prior fiscal year.
The revenues allowed for any fiscal year can be increased by a
two-thirds vote of both houses of the Legislature. The limit was
effective with the start of fiscal year 1995-96. Any excess revenues
generated are deposited in the Budget Stabilization Fund. Included
among the categories of revenues which are exempt from the proposed
revenue limitation, however, are revenues pledged to State bonds.
STATE BONDS. The State Constitution does not permit the State to issue
debt obligations to fund governmental operations. Generally, the State
Constitution authorizes State bonds pledging the full faith and credit
of the State only to finance or refinance the cost of State fixed
capital outlay projects, upon approval by a vote of the electors, and
provided that the total outstanding principal amount of such bonds
does not exceed 50% of the total tax revenues of the State for the two
preceding fiscal years. Revenue bonds may be issued by the State or
its agencies without a vote of the electors only to finance or
refinance the cost of State fixed capital outlay projects which are
payable solely from funds derived directly from sources other than
State tax revenues.
Exceptions to the general provisions regarding the full faith and
credit pledge of the State are contained in specific provisions of the
State Constitution which authorize the pledge of the full faith and
credit of the State, without electorate approval, but subject to
specific coverage requirements, for certain road projects, county
education projects, State higher education projects, the State system
of public education, construction of air and water pollution control
and abatement facilities, solid waste disposal facilities, certain
other water facilities, acquisition or real property or rights thereto
for state roads and certain State bridge construction.
LOCAL BONDS. The State Constitution provides that counties, school
districts, municipalities, special districts, and local governmental
bodies with taxing powers may issue debt obligations payable from ad
valorem taxation and maturing more than 12 months after issuance, only
(i) to finance or refinance capital projects authorized by law,
provided that electorate approval is obtained; or (ii) to refund
outstanding debt obligations and interest and redemption premium
thereon at a lower net average interest cost rate.
Counties, municipalities, and special districts are authorized to
issue revenue bonds to finance a variety of self-liquidating projects
pursuant to the laws of the State. Such revenue bonds are to be
secured by and payable from the rates, fees, tolls, rentals, and other
charges for the services and facilities furnished by the financed
projects. Under State law, counties and municipalities are permitted
to issue bonds payable from special tax sources for a variety of
purposes, and municipalities and special districts may issue special
assessment bonds.
THE STATE ECONOMY. The State has grown dramatically since 1980 and
ranks fourth among the 50 states with an estimated population of 14.4
million, an increase of approximately 45% since 1980. Since the
beginning of the eighties, Florida has surpassed Ohio, Illinois, and
Pennsylvania in total population. Florida's attraction as both a
growth and retirement state, has kept net migration fairly steady with
an average of 224,240 new residents each year from 1987 through 1997.
Since 1987, the prime working age population (18-44) has grown at an
average annual rate of 2.1%. Florida's total working age population
(18-59) comprises 54% of the total state population. Non-farm
employment grew by approximately 36% since 1986. The service sector is
Florida's largest employment sector, presently accounting for 87% of
total non-farm employment. Manufacturing jobs in Florida are
concentrated in the area of high-tech and high value added sectors,
such as electrical and electronic equipment as well as printing and
publishing. Florida's manufacturing sector has kept pace with the
United States, at about 2.6% of total United States manufacturing
employment since the beginning of the nineties. Foreign Trade has
contributed significantly to Florida's employment growth. Florida's
dependence on highly cyclical construction and construction related
manufacturing has declined. Total contract construction employment as
a share of total non-farm employment has fallen from 10% in 1973 to
7.5% in 1980 to 5% in 1996. The job creation rate for the State of
Florida since 1987 is almost twice the rate for the nation as a whole.
Florida's unemployment rate throughout most of the 1980's tracked
below that of the nation's. In the nineties the trend reversed until
1995 and 1996, when State's unemployment rate again tracked below the
U.S.. The average rate of unemployment for Florida since 1987 is 6.2%,
while the national average is also 6.2%. Because Florida has a
proportionately greater retirement age population, property income
(dividends, interest, and rent) and transfer payments (social security
and pension benefits) are a relatively more important source of
income. In 1995, Florida employment income represented 60.6% of total
personal income, while nationally, employment income represented 70.8%
of total personal income.
The ability of the State and its local units of government to repay
indebtedness may be affected by numerous factors which impact on the
economic vitality of the State in general and the particular region of
the State in which the issuer of the debt is located. South Florida is
particularly susceptible to international trade and currency
imbalances and to economic dislocations in Central and South America,
due to its geographical location and its involvement with foreign
trade, tourism, and investment capital. The central and northern
portions of the State are impacted by problems in the agricultural
sector, particularly with regard to the citrus and sugar industries.
Short-term adverse economic conditions may be created in these areas,
and in the State as a whole, due to crop failures, severe weather
conditions, or other agriculture-related problems. The State economy
also has historically been somewhat dependent on the tourism and
construction industries and is sensitive to trends in those sectors.
The foregoing information regarding the State and its local units of
government constitutes only a brief summary and does not purport to be
a complete description of the matters covered. This summary is based
solely upon information drawn from official statements relating to
offerings of general obligation bonds of the State and has not been
independently verified.
SPECIAL CONSIDERATIONS REGARDING PUERTO RICO
The following highlights some of the more significant financial
trends and problems affecting the Commonwealth of Puerto Rico (the
"Commonwealth" or "Puerto Rico"), and is based on information drawn
from official statements and prospectuses relating to the securities
offerings of Puerto Rico, its agencies and instrumentalities, as
available on the date of this SAI. FMR has not independently verified
any of the information contained in such official statements,
prospectuses and other publicly available documents, but is not aware
of any fact which would render such information materially
inaccurate.
The economy of Puerto Rico is fully integrated with that of the
United States, and in fiscal 1996 trade, with the United States
accounted for approximately 88% of Puerto Rico's exports and
approximately 62% of its imports. In this regard, in fiscal 1996
Puerto Rico experienced a $3.2 billion positive adjusted merchandise
trade balance.
Since fiscal 1985 personal income, both aggregate and per capita,
has increased consistently each fiscal year. In fiscal 1996 aggregate
personal income was $29.4 billion ($27.8 billion in 1992 prices) and
personal per capita income was $7,882 ($7,459 in 1992 prices). Gross
domestic product in fiscal 1992 was $23.7 billion and gross product in
fiscal 1996 was $30.2 billion; ($26.7 billion in 1992 prices). This
represents an increase in gross product of 27.7% from fiscal 1992 to
1996 (12.9% in 1992 prices).
Puerto Rico's more than decade-long economy expansion continued
throughout the five-year period from fiscal 1992 through fiscal 1996.
Almost every sector of the economy participated and record levels of
employment were achieved. Factors behind the continued expansion
included government sponsored economic development programs, periodic
declines in the exchange value of the U.S. dollar, the level of
federal transfers and the relatively low cost of borrowing funds
during the period.
Average employment increased from 999,000 in Fiscal 1993, to
1,128,300 in fiscal 1997. Unemployment although at relatively low
historical levels remains above the average for the United States.
Average unemployment decreased from 16.8% in fiscal 1993, to 13.1% in
fiscal 1997.
Manufacturing is the largest sector in the economy accounting for
$18.9 billion or 41.4% of gross domestic product in fiscal 1996. The
manufacturing sector employed 152,489 workers as of March 1997.
Manufacturing has experienced a basic change over the years as a
result of the influx of higher wage, high technology industries such
as the pharmaceutical industry, electronics, computers,
microprocessors, scientific instruments and high technology machinery.
The service sector, which includes wholesale and retail trade and
finance, insurance, and real estate, hotels and related services and
other services, ranks second in its contribution to gross domestic
product and is the sector that employs the greatest number of people.
In fiscal 1996, the service sector generated $17.1 billion in gross
domestic product or 37.6% of the total. Employment in this sector grew
from 449,000 in fiscal 1992 to 527,000 in fiscal 1996, a cumulative
increase of 17.4%, which increase was greater than the 11.9%
cumulative growth in employment over the same period, providing 48% of
total employment. The government sector of the Commonwealth plays an
important role in the economy of the island. In fiscal year 1996 the
government accounted for $4.6 billion or 10.7% of Puerto Rico's gross
domestic product and provided 22.5% of the total employment. Tourism
also contributes significantly to the island economy, accounting for
$1.9 billion of gross domestic product in fiscal 1996.
The present administration has developed and is implementing a new
economic development program which is based on the premise that the
private sector should provide the primary impetus for economic
development and growth. This new program, which is referred to as the
New Economic Model, promotes changing the role of the government from
one of being a provider of most basic services to that of a
facilitator for private sector initiatives and encourages private
sector investment by reducing government-imposed regulatory
restraints.
The New Economic Model contemplates the development of initiatives
that will foster private investment in, and private management of,
sectors that are served more efficiently and effectively by the
private enterprise. One of these initiatives has been the adoption of
a new tax code intended to expand the tax base, reduce top personal
and corporate tax rates, and simplify the tax system. Another
initiative consists of improving and expanding Puerto Rico's
infrastructure to facilitate private sector development and growth,
such as the construction of the water pipeline and cogeneration
facilities described below and the construction of a light rail system
for the San Juan metropolitan area.
The New Economic Model also seeks to identify and promote areas in
which Puerto Rico can compete more effectively in the global markets.
Tourism has been identified as one such area because of its potential
for job creation and contribution to the gross product. In 1993, a new
Tourism Incentives Act and a Tourism Development Fund were implemented
in order to provide special tax incentives and financing for the
development of new hotel projects and the tourism industry. As a
result of these initiatives, new hotels have been constructed or are
under construction which have increased the number of hotel rooms on
the island from 8,415 in fiscal 1992 to 10,877 at the end of fiscal
1997 and to a projected 11,972 by the end of fiscal 1998.
The New Economic Model also seeks to reduce the size of the
government's direct contribution to gross domestic product. As part of
this goal the government has transferred certain governmental
operations and sold a number of its assets to private parties. Among
these are: (i) the sale of the assets of the Puerto Rico Maritime
Authority; (ii) the execution of a five-year management agreement for
the operation and management of the Aqueducts and Sewer Authority by a
private company; (iii) the execution by the Aqueducts and Sewer
Authority of a construction and operating agreement with a private
consortium for the design, construction, and operation of an
approximately 75 million gallon per day water pipeline to the San Juan
metropolitan area from the Dos Bocas reservoir in Utuado; and (iv) the
execution by the Electric Power Authority of power purchase contracts
with private power producers under which two cogeneration plants (with
a total capacity of 800 megawatts) will be constructed; (v) the
Corrections Administration entered into operating agreements with two
private companies for the operation of three new correctional
facilities; (vi) the Government entered into a definitive agreement to
sell certain assets of a pineapple juice processing business and sold
certain mango growing operations; (vii) the Government is in the
process of transferring to local sugar cane growers certain sugar
processing facilities; (viii) the Government sold two hotel properties
and is currently negotiating the sale of a complex consisting of two
hotels and a convention center; (ix) the Government has announced its
intention to sell the Puerto Rico Telephone Company and is currently
involved in the sale process.
One of the goals of the Rossello administration is to change Puerto
Rico's public health care system from one in which the government
provides free health services to low income individuals through public
health facilities owned and administered by the government to one in
which all medical services are provided by the private sector and the
government provides comprehensive health insurance coverage for
qualifying (generally low income) Puerto Rico residents. Under this
new system, the Government selects, through a bidding system, one
private health insurance company in each of several designated regions
of the island and pays such insurance company the insurance premium
for each eligible beneficiary within such region. This new health
insurance system is now covering 61 municipalities out of a total of
78 on the island. It is expected that 11 municipalities will be added
by the end of fiscal 1998 and 5 more by the end of fiscal 1999. The
total cost of this program will depend on the number of municipalities
included in the program, the number of participants receiving
coverage, and the date coverage commences. As of June 30, 1997, over
1,090,592 persons were participating in the program at an estimated
annual cost to Puerto Rico for fiscal 1997 of approximately $521
million. In conjunction with this program, the operation of certain
public health facilities has been transferred to private entities. The
Government's current privatization plan for health facilities provides
for the transfer of ownership of all health facilities to private
entities. The Government has announced that it has selected various
private companies with which it is commencing negotiations expected to
culminate in the sale of ten health facilities to such companies.
One of the factors assisting the development of the manufacturing
sector in Puerto Rico has been the federal and Commonwealth tax
incentives available, particularly those under the Puerto Rico
Industrial Incentives Program and Sections 30A and 936 of the Internal
Revenue Code, as amended (the "Code").
The Industrial Incentives Program, through the 1987 Industrial
Incentive Act (the "1987 Act"), grants corporations engaged in certain
qualified activities a fixed 90% exemption from Commonwealth income
and property taxes and a 60% exemption form municipal license taxes
during a 10, 15, 20, or 25 year period depending on location. The 1987
Act also provides a special deduction equal to 15% of the production
payroll for companies whose net income from operation is less than
$30,000 per production employee and fully exempts from income,
property and local taxes the income from certain qualified investments
in Puerto Rico ("passive income") companies which make qualified
investments for fixed periods of not less than 5 years are eligible to
reduce the withholding tax (also known as the "tollgate tax") imposed
on dividend and liquidating distributions from a maximum of 10% to a
minimum rate of 5%, depending on the amount and term of these
investments. In 1993, the 1987 Act was amended to require the
prepayment of a portion of the tollgate tax payable on distributions
in an amount equal to 5% of the company's annual income after the
payment of income taxes. Additionally, companies were granted the
option to pay an up front flat tax of 14% on annual net income and
repatriate profits free of tollgate taxes.
On August 25, 1997 a bill providing for a new industrial incentives
law was introduced in the Puerto Rico Legislature (the "1998 Tax
Incentives Bill"). The benefits provided by the 1998 Tax Incentives
Bill would be available to new companies as well as companies
currently conducting tax exempt operations in Puerto Rico which choose
to renegotiate their existing tax exemption grant. For companies
qualifying thereunder, the 1998 Tax Incentives Bill would impose
income tax rates ranging from 2% to 7%. In addition, it would grant
90% exemption from property taxes, 100% exemption form municipal
license taxes during the first eighteen months of operation and
between 80% and 60% thereafter, and 100% exemption from municipal
excise taxes. The 1998 Tax Incentives Bill also provides various
special deductions designated to stimulate employment and
productivity, research and development and capital investment in
Puerto Rico. Under the 1998 Tax Incentives Bill, companies would be
able to repatriate or distribute their profits free of tollgate taxes.
In addition, passive income derived from designated investments would
continue to be fully exempt from income and municipal license taxes.
Individual shareholders of an exempted business would be allowed a
credit against their Puerto Rico income taxes equal to 30% of their
proportionate share in the exempted business' income tax liability.
Gain from the sale or exchange of shares of an exempted business by
its shareholders during the exemption period would be subject to a 4%
income tax rate.
For many years, U.S. companies operating in Puerto Rico enjoyed a
special tax credit that was available under Section 936 of the Code.
Originally, the credit provided an effective 100% federal tax
exemption for operating and qualifying investment income from Puerto
Rico sources. Amendments to Section 936 made in 1993 (the "1993
Amendments") instituted two alternative methods for calculating the
tax credit and limited the amount of the credit that a qualifying
company could claim. These limitations are based on a percentage of
qualifying income (the "percentage of income limitation") and on
qualifying expenditures on wages and other wage related benefits (the
"economic activity limitation", also known as the "wage credit
limitation"). As a result of amendments incorporated in the Small
Business Job Protection Act of 1996 enacted by the United States
Congress and signed into law by President Clinton on August 20, 1996
(the "1996 Amendments"), as described below the tax credit is now
being phased out over a ten-year period for existing claimants and is
no longer available for corporations that establish operations in
Puerto Rico after October 13, 1995 (including existing Section 936
Corporations (as defined below) to the extent substantially new
operations are established in Puerto Rico). The 1996 Amendments also
moved the credit based on the economic activity limitation to Section
30A of the Code and phased it out over 10 years. In addition, the 1996
Amendments eliminated the credit previously available for income
derived from certain qualified investments in Puerto Rico. The Section
30A Credit and the remaining Section 936 credit are discussed
below.
SECTION 30A. The 1996 Amendments added a new Section 30A to the
Code. Section 30A permits a "qualifying domestic corporation" ("QDC")
that meets certain gross income tests (which are similar to the 80%
and 75% gross income tests of Section 936 of the Code discussed below)
to claim a credit (the "Section 30A Credit") against the federal
income tax imposed on taxable income derived from sources outside the
United States from the active conduct of a trade or business in Puerto
Rico or from the sale of substantially all the assets used in such
business ("possession income").
A QDC is a United States corporation which (i) was actively
conducting a trade or business in Puerto Rico on October 13, 1995,
(ii) had a Section 936 election in effect for its taxable year that
included October 13, 1995, (iii) does not have in effect an election
to use the percentage limitation of Section 936(a)(4)(B) of the Code,
and (iv) does not add a "substantial new line of business."
The Section 30A Credit is limited to the sum of (i) 60% of
qualified possession wages as defined in the Code, which includes
wages up to 85% of the maximum earnings subject to the OASDI portion
of Social Security taxes plus an allowance for fringe benefits of 15%
of qualified possession wages, (ii) a specified percentage of
depreciation deductions ranging between 15% and 65%, based on the
class life of tangible property, and (iii) a portion of Puerto Rico
income taxes paid by the QDC, up to a 9% effective tax rate (but only
if the QDC does not elect the profit-split method for allocating
income from intangible property).
A QDC electing Section 30A of the code may compute the amount of
its active business income, eligible for the Section 30A Credit, by
using either the cost sharing formula, the profit-split formula, or
the cost-plus formula, under the same rules and guidelines prescribed
for such formulas as provided under Section 936 (see discussion
below). To be eligible for the first two formulas, the QDC must have a
significant presence in Puerto Rico.
In the case of taxable years beginning after December 31, 2001, the
amount of possession income that would qualify for the Section 30A
Credit would be subject to a cap based on the QDC's possession income
for an average adjusted base period ending before October 14,
1995.
Section 30A applies only to taxable years beginning after December
31, 1995 and before January 1, 2006.
SECTION 936. Under Section 936 of the Code, as amended by the 1996
Amendments, and as an alternative to the Section 30A Credit, United
States corporations that meet certain requirements and elect its
application ("Section 936 Corporations") are entitled to credit
against their United States corporate income tax, the portion of such
tax attributable to income derived from the active conduct of a trade
or business within Puerto Rico ("active business income") and from the
sale or exchange of substantially all assets used in the active
conduct of such trade or business. To qualify under Section 936 in any
given taxable year, a corporation must derive for the three-year
period immediately preceding the end of such taxable year, (i) 80% or
more of its gross income from sources within Puerto Rico, and (ii) 75%
or more of its gross income from the active conduct of a trade or
business in Puerto Rico.
Under Section 936, a Section 936 Corporation may elect to compute
its active business income, eligible for the Section 936 credit, under
one of three formulas: (A) a cost-sharing formula, whereby it is
allowed to claim all profits attributable to manufacturing
intangibles, and other functions carried out in Puerto Rico, provided
it contributes to the research and development expenses of its
affiliated group or pays certain royalties; (B) a profit-split
formula, whereby it is allowed to claim 50% of the net income of its
affiliated group from the sale of products manufactured in Puerto
Rico; or (C) a cost-plus formula, whereby it is allowed to claim a
reasonable profit on the manufacturing costs incurred in Puerto Rico.
To be eligible for the first two formulas, the Section 936 Corporation
must have a significant business presence in Puerto Rico for purposes
of the Section 936 rules.
As a result of the 1993 Amendments and the 1996 Amendments, the
Section 936 credit is only available to companies that elect the
percentage of income limitation and is limited in amount to 40% of the
credit allowable prior to the 1993 Amendments, subject to a five-year
phase-in period from 1994 to 1998 during which period the percentage
of the allowable credit is reduced from 60% to 40%.
In the case of taxable years beginning on or after 1998, the
possession income subject to the 936 credit will be subject to a cap
based on the Section 936 Corporation's possession income for an
average adjusted base period ending on October 14, 1995. The 936
credit is eliminated for taxable years beginning in 2006.
PROPOSAL TO EXTEND THE PHASEOUT OF SECTION 30A. During 1997, the
Government proposed to Congress the enactment of a new permanent
federal incentive program similar to what is now provided under
Section 30A. Such program would provide U.S. companies a tax credit
based on qualifying wages paid and other wage related expenses, such
as fringe benefits, as well as depreciation expenses for certain
tangible assets and research and development expenses. Under the
Governor's proposal, the credit granted to qualifying companies would
continue in effect until Puerto Rico shows, among other things,
substantial economic improvements in terms of certain economic
parameters. The fiscal 1998 budget submitted by President Clinton to
Congress in February 1997 included a proposal to modify Section 30A to
(i) extend the availability of the Section 30A Credit indefinitely;
(ii) make it available to companies establishing operations in Puerto
Rico after October 13, 1995; and (iii) eliminate the income cap.
President Clinton's proposal, however, was not included in the fiscal
1998 federal budget. While the Government of Puerto Rico plans to
continue lobbying for this proposal, it is not possible at this time
to predict whether the Section 30A Credit will be so modified.
OUTLOOK. It is not possible at this time to determine the long-term
effect on the Puerto Rico economy of the enactment of the 1996
Amendments. The Government of Puerto Rico does not believe there will
be short-term or medium-term material adverse effects on Puerto Rico's
economy as a result of the enactment of the 1996 Amendments. The
Government of Puerto Rico further believes that during the phase-out
period sufficient time exists to implement additional incentive
programs to safeguard Puerto Rico's competitive position.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the
fund's management contract. In the case of the money market fund, FMR
has granted investment management authority to the sub-adviser (see
the section entitled "Management Contracts"), and the sub-adviser is
authorized to place orders for the purchase and sale of portfolio
securities, and will do so in accordance with the policies described
below. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its
affiliates act as investment adviser. Securities purchased and sold by
the money market fund generally will be traded on a net basis (i.e.,
without commission). In selecting broker-dealers, subject to
applicable limitations of the federal securities laws, FMR considers
various relevant factors, including, but not limited to, the size and
type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency,
settlement capability, and financial condition of the broker-dealer
firm; the broker-dealer's execution services rendered on a continuing
basis; and the reasonableness of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts
over which FMR or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities; the
advisability of investing in, purchasing, or selling securities; and
the availability of securities or the purchasers or sellers of
securities. In addition, such broker-dealers may furnish analyses and
reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; effect
securities transactions, and perform functions incidental thereto
(such as clearance and settlement). FMR maintains a listing of
broker-dealers who provide such services on a regular basis. However,
as many transactions on behalf of the money market fund are placed
with broker-dealers (including broker-dealers on the list) without
regard to the furnishing of such services, it is not possible to
estimate the proportion of such transactions directed to such
broker-dealers solely because such services were provided. The
selection of such broker-dealers generally is made by FMR (to the
extent possible consistent with execution considerations) based upon
the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions
on behalf of the funds may be useful to FMR in rendering investment
management services to the funds or its other clients, and conversely,
such research provided by broker-dealers who have executed transaction
orders on behalf of other FMR clients may be useful to FMR in carrying
out its obligations to the funds. The receipt of such research has not
reduced FMR's normal independent research activities; however, it
enables FMR to avoid the additional expenses that could be incurred if
FMR tried to develop comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that
are in excess of the amount of commissions charged by other
broker-dealers in recognition of their research and execution
services. In order to cause each fund to pay such higher commissions,
FMR must determine in good faith that such commissions are reasonable
in relation to the value of the brokerage and research services
provided by such executing broker-dealers, viewed in terms of a
particular transaction or FMR's overall responsibilities to the funds
and its other clients. In reaching this determination, FMR will not
attempt to place a specific dollar value on the brokerage and research
services provided, or to determine what portion of the compensation
should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided
assistance in the distribution of shares of the funds, or shares of
other Fidelity funds to the extent permitted by law. FMR may use
research services provided by and place agency transactions with
National Financial Services Corporation (NFSC) , an indirect
subsidiary of FMR Corp., if the commissions are fair, reasonable,
and comparable to commissions charged by non-affiliated, qualified
brokerage firms for similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for accounts which they or their affiliates manage, unless certain
requirements are satisfied. Pursuant to such requirements, the Board
of Trustees has authorized NFSC to execute portfolio
transactions on national securities exchanges in accordance with
approved procedures and applicable SEC rules.
Each fund's Trustees periodically review FMR's performance of its
responsibilities in connection with the placement of portfolio
transactions on behalf of the funds and review the commissions paid by
each fund over representative periods of time to determine if they are
reasonable in relation to the benefits to the fund.
For the fiscal years ended November 30, 1997 and 1996, the portfolio
turnover rates were 25 % and 28 % for Spartan Florida
Municipal Income.
For the fiscal years ended November 1997, 1996, and 1995, Spartan
Florida Municipal Money Market and Spartan Florida Municipal Income
paid no brokerage commission s.
From time to time the Trustees will review whether the recapture for
the benefit of the funds of some portion of the brokerage commissions
or similar fees paid by the funds on portfolio transactions is legally
permissible and advisable. Each fund seeks to recapture soliciting
broker-dealer fees on the tender of portfolio securities, but at
present no other recapture arrangements are in effect. The Trustees
intend to continue to review whether recapture opportunities are
available and are legally permissible and, if so, to determine in the
exercise of their business judgment whether it would be advisable for
each fund to seek such recapture.
Although the Trustees and officers of each fund are substantially the
same as those of other funds managed by FMR, investment decisions for
each fund are made independently from those of other funds managed by
FMR or accounts managed by FMR affiliates. It sometimes happens that
the same security is held in the portfolio of more than one of these
funds or accounts. Simultaneous transactions are inevitable when
several funds and accounts are managed by the same investment adviser,
particularly when the same security is suitable for the investment
objective of more than one fund or account.
When two or more funds are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in
accordance with procedures believed to be appropriate and equitable
for each fund. In some cases this system could have a detrimental
effect on the price or value of the security as far as each fund is
concerned. In other cases, however, the ability of the funds to
participate in volume transactions will produce better executions and
prices for the funds. It is the current opinion of the Trustees that
the desirability of retaining FMR as investment adviser to each fund
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.
VALUATION
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). The valuation of portfolio
securities is determined as of these times for the purpose of
computing each fund's NAV.
TAX-FREE BOND FUND. Portfolio securities are valued by
various methods. If quotations are not available, fixed-income
securities are usually valued on the basis of information furnished by
a pricing service that uses a valuation matrix which incorporates both
dealer-supplied valuations and electronic data processing techniques.
Use of pricing services has been approved by the Board of Trustees. A
number of pricing services are available, and the fund may use various
pricing services or discontinue the use of any pricing service.
Futures contracts and options are valued on the basis of market
quotations, if available. Securities of other open-end investment
companies are valued at their respective NAVs.
Securities and other assets for which there is no readily available
market value are valued in good faith by a committee appointed by the
Board of Trustees. The procedures set forth above need not be used to
determine the value of the securities owned by a fund if, in the
opinion of a committee appointed by the Board of Trustees, some other
method would more accurately reflect the fair market value of such
securities.
MONEY MARKET FUND. Portfolio securities and other assets are
valued on the basis of amortized cost. This technique involves
initially valuing an instrument at its cost as adjusted for
amortization of premium or accretion of discount rather than its
current marke t value . The amortized cost value of an instrument
may be higher or lower than the price the fund would receive if it
sold the instrument.
During periods of declining interest rates, the fund's yield based
on amortized cost valuation may be higher than would result if the
fund used market valuations to determine its NAV. The converse would
apply during periods of rising interest rates.
Valuing the fund's investments on the basis of amortized cost and use
of the term "money market fund" are permitted pursuant to Rule
2a-7 under the 1940 Act. Each fund must adhere to certain
conditions under Rule 2a-7, as summarized in the section entitled
"Quality and Maturity" on page .
The Board of Trustees oversees FMR's adherence to the
provisions of Rule 2a-7 and has established procedures
designed to stabilize the fund's NAV at $1.00. At such
intervals as they deem appropriate, the Trustees consider the extent
to which NAV calculated by using market valuations would deviate from
$1.00 per share. If the Trustees believe that a deviation from the
fund's amortized cost per share may result in material dilution or
other unfair results to shareholders, the Trustees have agreed to take
such corrective action, if any, as they deem appropriate to eliminate
or reduce, to the extent reasonably practicable, the dilution or
unfair results. Such corrective action could include selling portfolio
instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends; redeeming
shares in kind; establishing NAV by using available market quotations;
and such other measures as the Trustees may deem appropriate.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is
not intended to indicate future returns. A bond fund's share price,
and each fund's yield and total return fluctuate in response to market
conditions and other factors, and the value of a bond fund's shares
when redeemed may be more or less than their original cost.
YIELD CALCULATIONS. To compute the money market fund's yield for a
period, the net change in value of a hypothetical account containing
one share reflects the value of additional shares purchased with
dividends from the one original share and dividends declared on both
the original share and any additional shares. The net change is then
divided by the value of the account at the beginning of the period to
obtain a base period return. This base period return is annualized to
obtain a current annualized yield. The money market fund also may
calculate a compound effective yield by compounding the base period
return over a one-year period. In addition to the current yield, the
money market fund may quote yields in advertising based on any
historical seven-day period. Yields for the money market fund are
calculated on the same basis as other money market funds, as required
by regulation.
For the bond fund, yields are computed by dividing the fund's interest
income for a given 30-day or one-month period, net of expenses, by the
average number of shares entitled to receive dividends during the
period, dividing this figure by the fund's net asset value per share
(NAV) at the end of the period, and annualizing the result (assuming
compounding of income) in order to arrive at an annual percentage
rate. Yields do not reflect the fund's 0.50% short-term trading
fee, which applies to shares held less than 180 days. Income is
calculated for purposes of the bond fund's yield quotations in
accordance with standardized methods applicable to all stock and bond
funds. In general, interest income is reduced with respect to bonds
trading at a premium over their par value by subtracting a portion of
the premium from income on a daily basis, and is increased with
respect to bonds trading at a discount by adding a portion of the
discount to daily income. Capital gains and losses generally are
excluded from the calculation.
Income calculated for the purposes of determining the bond fund's
yield differs from income as determined for other accounting purposes.
Because of the different accounting methods used, and because of the
compounding of income assumed in yield calculations, the bond fund's
yield may not equal its distribution rate, the income paid to your
account, or the income reported in the fund's financial statements.
Yield information may be useful in reviewing a fund's performance and
in providing a basis for comparison with other investment
alternatives. However, each fund's yield fluctuates, unlike
investments that pay a fixed interest rate over a stated period of
time. When comparing investment alternatives, investors should also
note the quality and maturity of the portfolio securities of
respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates
a fund's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates the fund's yield will
tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to a fund from the continuous sale of its
shares will likely be invested in instruments producing lower yields
than the balance of the fund's holdings, thereby reducing the fund's
current yield. In periods of rising interest rates, the opposite can
be expected to occur.
A fund's tax-equivalent yield is the rate an investor would have to
earn from a fully taxable investment before taxes to equal the fund's
tax-free yield. Tax-equivalent yields are calculated by dividing a
fund's yield by the result of one minus a stated combined federal and
state tax rate. If only a portion of a fund's yield is tax-exempt,
only that portion is adjusted in the calculation.
The following table shows the effect of a shareholder's tax status on
effective yield under federal income tax laws for 1998 . It
shows the approximate yield a taxable security must provide at various
income brackets to produce after-tax yields equivalent to those of
hypothetical tax-exempt obligations yielding from 4% to 8% . Of
course, no assurance can be given that a fund will achieve any
specific tax-exempt yield. While the funds invest principally in
obligations whose interest is exempt from federal income tax, other
income received by the funds may be taxable. The tables do not take
into account local taxes, if any, payable on fund distributions.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 TAX RATES AND TAX-EQUIVALENT YIELDS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Federal If individual tax-exempt yield is:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Taxable Income* Marginal 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Single Return Joint Return Rate** Then taxable equivalent yield is:
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - $ 24,650 $ 0 - $ 41,200 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
$ 24,651 - $ 59,750 $ 41,201 - $ 99,600 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11%
$ 59,751 - $ 124,650 $ 99,601 - $ 151,750 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.82% 11.59%
$ 124,651 - $ 271,050 $ 151,751 - $ 271,050 36.00% 6.25% 7.03% 7.81% 8.59% 9.38% 10.16% 10.94% 11.72% 12.59%
$ 271,051 - + $ 271,051 - + 39.60% 6.62% 7.45% 8.28% 9.11% 9.93% 10.76% 11.59% 12.42% 13.25%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - $ 24,650 $ 0 - $ 41,200 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
$ 24,651 - $ 59,750 $ 41,201 - $ 99,600 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11%
$ 59,751 - $ 124,650 $ 99,601 - $ 151,750 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.82% 11.59%
$ 124,651 - $ 271,050 $ 151,751 - $ 271,050 36.00% 6.25% 7.03% 7.81% 8.59% 9.38% 10.16% 10.94% 11.72% 12.59%
$ 271,051 - + $ 271,051 - + 39.60% 6.62% 7.45% 8.28% 9.11% 9.93% 10.76% 11.59% 12.42% 13.25%
</TABLE>
* Net amount subject to federal income tax after deductions and
exemptions. Assumes ordinary income only.
** Excludes the impact of the phaseout of personal exemptions,
limitations on itemized deductions, and other credits, exclusions, and
adjustments which may increase a taxpayer's marginal tax rate. An
increase in a shareholder's marginal tax rate would increase that
shareholder's tax-equivalent yield.
Each fund may invest a portion of its assets in obligations that are
subject to the Florida intangible tax or federal income tax. When a
fund invests in obligations subject to the federal income tax, its
tax-equivalent yields will be lower. In the table above,
tax-equivalent yields are calculated assuming investments are 100%
federally tax-free.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of a fund's return, including the effect of reinvesting
dividends and capital gain distributions, and any change in the fund's
NAV over a stated period. Average annual total returns are calculated
by determining the growth or decline in value of a hypothetical
historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had
been constant over the period. For example, a cumulative total return
of 100% over ten years would produce an average annual total return of
7.18%, which is the steady annual rate of return that would equal 100%
growth on a compounded basis in ten years. While average annual total
returns are a convenient means of comparing investment alternatives,
investors should realize that a fund's performance is not constant
over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual
year-to-year performance of the fund.
In addition to average annual total returns, a fund may quote
unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and
cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of
investments, or a series of redemptions, over any time period. Total
returns may be broken down into their components of income and capital
(including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions
to total return. Total returns may be quoted on a before-tax or
after-tax basis and may or may not include the effect of the bond
fund's 0.50% short-term trading fee on shares held less than
180 days. Excluding the fund's short-term trading fee from a
total return calculation produces a higher total return figure. Total
returns, yields, and other performance information may be quoted
numerically or in a table, graph, or similar illustration, and may
omit or include the effect of the money market fund's $5.00
account closeout fee.
NET ASSET VALUE. Charts and graphs using a fund's net asset values,
adjusted net asset values, and benchmark indices may be used to
exhibit performance. An adjusted NAV includes any distributions paid
by a fund and reflects all elements of its return. Unless otherwise
indicated, a fund's adjusted NAVs are not adjusted for sales charges,
if any.
HISTORICAL FUND RESULTS. The following tables show the money market
fund's 7-day yields , the bond fund's 30-day yields each
fund's tax-equivalent yields, and total returns for periods ended
November 30, 1997. Total return figures for the money market
fund include the effect of the $5.00 account closeout fee based on
an average size account, but total return figures for the bond fund do
not include the effect of 0.50% short-term trading fee,
applicable to shares held less than 180 days.
The tax-equivalent yield is based on a 36% federal income tax rate.
Note that each fund may invest in securities whose income is subject
to the federal alternative minimum tax.
Average Annual
Cumulative
Total Returns Total Returns
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Seven-Day Tax- One Five Life of One Five Life of
Yield Equivalent Year Year Fund* Year Year Fund*
Yield
Spartan FL 3.47 % 5.42 % 3.29% 3 .00 % 2.99% 3.29% 15.93% 16.84%
Municipal Money
Market Fund
</TABLE>
* From August 24, 1992 (commencement of operations).
Average Annual Cumulative
Total Returns Total Returns
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thirty-Da Tax- One Five Life of One Five Life of
y Equivalent Year Year Fund* Year Year Fund*
Yield Yield
Spartan FL 4.30 % 6.72 % 6.69% 7.52 % 8.34% 6.69% 43.71% 57.99%
Municipal Income
Fund
</TABLE>
* From March 16, 1992 (commencement of operations).
Note: If FMR had not reimbursed certain fund expenses during these
periods, each fund's total returns would have been lower.
The following tables show the income and capital elements of each
fund's cumulative total return. The tables compare each fund's return
to the record of the S&P 500, the Dow Jones Industrial Average (DJIA),
and the cost of living, as measured by the Consumer Price Index (CPI),
over the same period. The CPI information is as of the month-end
closest to the initial investment date for each fund. The S&P 500 and
DJIA comparisons are provided to show how each fund's total return
compared to the record of a broad unmanaged index of common stocks and
a narrower set of stocks of major industrial companies, respectively,
over the same period. Because each fund invests in fixed-income
securities, common stocks represent a different type of investment
from the funds. Common stocks generally offer greater growth potential
than the funds, but generally experience greater price volatility,
which means greater potential for loss. In addition, common stocks
generally provide lower income than fixed-income investments such as
the funds. The S&P 500 and DJIA returns are based on the prices of
unmanaged groups of stocks and, unlike each fund's returns, do not
include the effect of brokerage commissions or other costs of
investing.
The following tables show the growth in value of a hypothetical
$10,000 investment in each fund during the life of each fund, assuming
all distributions were reinvested. The figures below reflect the
fluctuating interest rates and bond prices of the specified periods
and should not be considered representative of the dividend income or
capital gain or loss that could be realized from an investment in a
fund today. Tax consequences of different investments have not been
factored into the figures below.
During the period from August 24, 1992 (commencement of operations) to
November 30, 1997 , a hypothetical $10,000 investment in Spartan
Florida Municipal Money Market would have grown to $ 11,684 .
SPARTAN FLORIDA MUNICIPAL MONEY MARKET FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
November 30 Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1997 $ 10,000 $ 1,684 $ 0 $ 11,684 $ 26,265 $ 27,332 $ 11,495
1996 $ 10,000 $ 1,311 $ 0 $ 11,311 $ 20,437 $ 22,374 $ 11,288
1995 $ 10,000 $ 964 $ 0 $ 10,964 $ 15,984 $ 17,042 $ 10,932
1994 $ 10,000 $ 586 $ 0 $ 10,586 $ 11,669 $ 12,252 $ 10,669
1993 $ 10,000 $ 331 $ 0 $ 10,331 $ 11,548 $ 11,746 $ 10,377
1992* $ 10,000 $ 78 $ 0 $ 10,078 $ 10,489 $ 10,241 $ 10,107
</TABLE>
* From August 24, 1992 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Spartan
Florida Municipal Money Market Fund on August 24, 1992, the net amount
invested in fund shares was $10,000. The cost of the initial
investment ($10,000) together with the aggregate cost of reinvested
dividends and capital gain distributions for the period covered (their
cash value at the time they were reinvested) amounted to $ 11,684.
If distributions had not been reinvested, the amount of
distributions earned from the fund over time would have been smaller,
and cash payments for the period would have amounted to $ 1,558
for dividends. The fund did not distribute any capital gains during
the period. The figures in the table do not include the effect of the
fund's $5.00 account closeout fee.
During the period from March 16, 1992 (commencement of operations) to
November 30, 1997, a hypothetical $10,000 investment in Spartan
Florida Municipal Income Fund would have grown to $15,799 .
SPARTAN FLORIDA MUNICIPAL INCOME FUND INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Period Ended Value of Value of Value of Total S&P DJIA Cost of
November 30 Initial Reinvested Reinvested Value 500 Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions
1997 $ 11,420 $ 4,137 $ 242 $15,799 $ 27,167 $ 27,833 $ 11,594
1996 $ 11,230 $ 3,341 $ 238 $ 14,809 $ 21,1 39 $ 22,7 85 $ 11,38 5
1995 $ 11,180 $ 2,614 $ 231 $ 14,025 $ 16,5 33 $ 17,3 55 $ 11,027
1994 $ 9,740 $ 1,641 $ 201 $ 11,582 $ 12,0 69 $ 12,4 77 $ 10,761
1993 $ 11,290 $ 1,179 $ 11 $ 12,480 $ 11,9 45 $ 11,9 62 $ 10,467
1992* $ 10,520 $ 474 $ 0 $ 10,994 $ 10,8 49 $ 10,4 29 $ 10,194
</TABLE>
* From March 16, 1992 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Spartan
Florida Municipal Income on March 16, 1992 the net amount invested in
fund shares was $10,000. The cost of the initial investment ($10,000)
together with the aggregate cost of reinvested dividends and capital
gain distributions for the period covered (their cash value at the
time they were reinvested) amounted to $ 14,169 . If
distributions had not been reinvested, the amount of distributions
earned from the fund over time would have been smaller, and cash
payments for the period would have amounted to $ 3,319 for
dividends and $ 215 for capital gain distributions. The figures
in the table do not include the effect of the fund's 0.50% redemption
fee applicable to shares held less than 180 days.
PERFORMANCE COMPARISONS. A fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed
as mutual fund rankings prepared by Lipper Analytical Services, Inc.
(Lipper), an independent service located in Summit, New Jersey that
monitors the performance of mutual funds. Generally, Lipper rankings
are based on total return, assume reinvestment of distributions, do
not take sales charges or trading fees into consideration, and
are prepared without regard to tax consequences. Lipper may also rank
funds based on yield. In addition to the mutual fund rankings, a
fund's performance may be compared to stock, bond, and money market
mutual fund performance indices prepared by Lipper or other
organizations. When comparing these indices, it is important to
remember the risk and return characteristics of each type of
investment. For example, while stock mutual funds may offer higher
potential returns, they also carry the highest degree of share price
volatility. Likewise, money market funds may offer greater stability
of principal, but generally do not offer the higher potential returns
available from stock mutual funds.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and
periodicals. For example, the fund may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising.
A fund's performance may also be compared to that of a benchmark
index representing the universe of securities in which the fund may
invest. The total return of a benchmark index reflects reinvestment of
all dividends and capital gains paid by securities included in the
index. Unlike a fund's returns, however, the index returns do not
reflect brokerage commissions, transaction fees, or other costs of
investing directly in the securities included in the index.
The bond fund may compare to the Lehman Brothers Municipal Bond
Index, a total return performance benchmark for investment-grade
municipal bonds with maturities of at least one year. In addition, the
bond fund may compare its performance to that of the Lehman Brothers
Florida Municipal Bond Index, a total return performance benchmark for
Florida investment-grade municipal bonds with maturities of at least
one year. Issues included in each index have been issued after
December 31, 1990 and have an outstanding par value of at least $50
million. Subsequent to December 31, 1995, zero coupon bonds and issues
subject to the alternative minimum tax are included in each index.
A fund may be compared in advertising to Certificates of Deposit (CDs)
or other investments issued by banks or other depository institutions.
Mutual funds differ from bank investments in several respects. For
example, a fund may offer greater liquidity or higher potential
returns than CDs, a fund does not guarantee your principal or your
return, and fund shares are not FDIC insured.
Fidelity may provide information designed to help individuals
understand their investment goals and explore various financial
strategies. Such information may include information about current
economic, market, and political conditions; materials that describe
general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; questionnaires
designed to help create a personal financial profile; worksheets used
to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment
alternatives. Materials may also include discussions of Fidelity's
asset allocation funds and other Fidelity funds, products, and
services.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides
historical returns of the capital markets in the United States,
including common stocks, small capitalization stocks, long-term
corporate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the Consumer Price Index ), and combinations of various capital
markets. The performance of these capital markets is based on the
returns of different indices.
Fidelity funds may use the performance of these capital markets in
order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical
investment in any of these capital markets. The risks associated with
the security types in any capital market may or may not correspond
directly to those of the funds. Ibbotson calculates total returns in
the same method as the funds. The funds may also compare performance
to that of other compilations or indices that may be developed and
made available in the future.
A money market fund may compare its performance or the performance
of securities in which it may invest to averages published by IBC
Financial Data, Inc. of Ashland, Massachusetts. These averages assume
reinvestment of distributions. IBC's MONEY FUND REPORT
AVERAGES(trademark)/municipal, which is reported in IBC's MONEY FUND
REPORT(trademark), covers over 425 municipal money market funds.
A fund may compare and contrast in advertising the relative advantages
of investing in a mutual fund versus an individual municipal bond.
Unlike tax-free mutual funds, individual municipal bonds offer a
stated rate of interest and, if held to maturity, repayment of
principal. Although some individual municipal bonds might offer a
higher return, they do not offer the reduced risk of a mutual fund
that invests in many different securities. The initial investment
requirements and sales charges of many tax-free mutual funds are lower
than the purchase cost of individual municipal bonds, which are
generally issued in $5,000 denominations and are subject to direct
brokerage costs.
In advertising materials, Fidelity may reference or discuss its
products and services, which may include other Fidelity funds;
retirement investing; brokerage products and services; model
portfolios or allocations; saving for college or other goals; and
charitable giving . In addition, Fidelity may quote or reprint
financial or business publications and periodicals as they relate to
current economic and political conditions, fund management, portfolio
composition, investment philosophy, investment techniques, the
desirability of owning a particular mutual fund, and Fidelity services
and products. Fidelity may also reprint, and use as advertising and
sales literature, articles from Fidelity Focus(Registered trademark),
a quarterly magazine provided free of charge to Fidelity fund
shareholders.
A fund may present its fund number, Quotron(trademark) number, and
CUSIP number, and discuss or quote its current portfolio manager.
VOLATILITY. A bond fund may quote various measures of
volatility and benchmark correlation in advertising. In addition, the
fund may compare these measures to those of other funds. Measures of
volatility seek to compare the fund's historical share price
fluctuations or total returns to those of a benchmark. Measures of
benchmark correlation indicate how valid a comparative benchmark may
be. All measures of volatility and correlation are calculated using
averages of historical data. In advertising, a fund may also discuss
or illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS indicate a bond fund's price movements over
specific periods of time. Each point on the momentum indicator
represents the fund's percentage change in price movements over that
period.
A bond fund may advertise examples of the effects of periodic
investment plans, including the principle of dollar cost averaging. In
such a program, an investor invests a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does
not assure a profit or guard against loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers
of shares are purchased at the same intervals. In evaluating such a
plan, investors should consider their ability to continue purchasing
shares during periods of low price levels.
As of November 30, 1997, FMR advised over $ 29 billion in
tax-free fund assets, $ 99 billion in money market fund assets,
$ 388 billion in equity fund assets, $ 71 billion in
international fund assets, and $ 24 billion in Spartan fund
assets. The funds may reference the growth and variety of money market
mutual funds and the adviser's innovation and participation in the
industry. The equity funds under management figure represents the
largest amount of equity fund assets under management by a mutual fund
investment adviser in the United States, making FMR America's leading
equity (stock) fund manager. FMR, its subsidiaries, and affiliates
maintain a worldwide information and communications network for the
purpose of researching and managing investments abroad.
In addition to performance rankings, each fund may compare its total
expense ratio to the average total expense ratio of similar funds
tracked by Lipper. A fund's total expense ratio is a significant
factor in comparing bond and money market investments because of its
effect on yield.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share (NAV)
is calculated each day the New York Stock Exchange (NYSE) is open for
trading. The NYSE has designated the following holiday closings
for: 1998 : New Year's Day, Martin Luther King's
Birthday , Presidents' Day, Good Friday, Memorial Day, Independence
Day (observed), Labor Day, Thanksgiving Day, and Christmas Day.
Although FMR expects the same holiday schedule to be observed in the
future, the NYSE may modify its holiday schedule at any time. In
addition, the funds will not process wire purchases and redemptions on
days when the Federal Reserve Wire System is closed.
FSC normally determines each fund's NAV as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated
earlier if trading on the NYSE is restricted or as permitted by the
Securities and Exchange Commission (SEC). To the extent that portfolio
securities are traded in other markets on days when the NYSE is
closed, a fund's NAV may be affected on days when investors do not
have access to the fund to purchase or redeem shares. In addition,
trading in some of a fund's portfolio securities may not occur on days
when the fund is open for business.
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing a fund's NAV. Shareholders receiving securities or
other property on redemption may realize a gain or loss for tax
purposes, and will incur any costs of sale, as well as the associated
inconveniences.
Pursuant to Rule 11a-3 under the Investment Company Act of 1940 (the
1940 Act), each fund is required to give shareholders at least 60
days' notice prior to terminating or modifying its exchange privilege.
Under the Rule, the 60-day notification requirement may be waived if
(i) the only effect of a modification would be to reduce or eliminate
an administrative fee, redemption fee, or deferred sales charge
ordinarily payable at the time of an exchange, or (ii) the fund
suspends the redemption of the shares to be exchanged as permitted
under the 1940 Act or the rules and regulations thereunder, or the
fund to be acquired suspends the sale of its shares because it is
unable to invest amounts effectively in accordance with its investment
objective and policies.
In the Prospectus, each fund has notified shareholders that it
reserves the right at any time, without prior notice, to refuse
exchange purchases by any person or group if, in FMR's judgment, the
fund would be unable to invest effectively in accordance with its
investment objective and policies, or would otherwise potentially be
adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks
remain uncashed for six months, Fidelity may reinvest your
distributions at the then-current NAV. All subsequent distributions
will then be reinvested until you provide Fidelity with alternate
instructions.
DIVIDENDS. To the extent that each fund's income is designated as
federally tax-exempt interest, the daily dividends declared by the
fund are also federally tax-exempt. Short-term capital gains are
distributed as dividend income, but do not qualify for the
dividends-received deduction. These gains will be taxed as ordinary
income. Each fund will send each shareholder a notice in January
describing the tax status of dividend and capital gain distributions
(if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal
tax returns. Shareholders who earn other income, such as Social
Security benefits, may be subject to federal income tax on up to 85%
of such benefits to the extent that their income, including tax-exempt
income, exceeds certain base amounts.
A fund purchases municipal securities whose interest FMR believes is
free from federal income tax. Generally, issuers or other parties have
entered into covenants requiring continuing compliance with federal
tax requirements to preserve the tax-free status of interest payments
over the life of the security. If at any time the covenants are not
complied with, or if the IRS otherwise determines that the issuer did
not comply with relevant tax requirements, interest payments from a
security could become federally taxable retroactive to the date the
security was issued. For certain types of structured securities, the
tax status of the pass-through of tax-free income may also be based on
the federal and state tax treatment of the structure.
As a result of the Tax Reform Act of 1986, interest on certain
"private activity" securities is subject to the federal alternative
minimum tax (AMT), although the interest continues to be excludable
from gross income for other tax purposes. Interest from private
activity securities will be considered tax-exempt for purposes of each
fund's policies of investing so that at least 80% of its income
distributions i s free from federal income tax. Interest from
private activity securities is a tax preference item for the purposes
of determining whether a taxpayer is subject to the AMT and the amount
of AMT to be paid, if any. Private activity securities issued after
August 7, 1986 to benefit a private or industrial user or to finance a
private facility are affected by this rule.
A portion of the gain on bonds purchased with market discount after
April 30, 1993 and short-term capital gains distributed by each fund
are taxable to shareholders as dividends, not as capital gains.
Dividend distributions resulting from a recharacterization of gain
from the sale of bonds purchased with market discount after April 30,
1993 are not considered income for purposes of each fund's policy of
investing so that at least 80% of its Income distribution is free from
federal income tax. The money market fund may distribute any net
realized short-term capital gains and taxable market discount once a
year or more often, as necessary, to maintain its net asset value at
$1.00 per share.
Corporate investors should note that a tax preference item for
purposes of the corporate AMT is 75% of the amount by which adjusted
current earnings (which includes tax-exempt interest) exceeds the
alternative minimum taxable income of the corporation. If a
shareholder receives an exempt-interest dividend and sells shares at a
loss after holding them for a period of six months or less, the loss
will be disallowed to the extent of the amount of exempt-interest
dividend.
FLORIDA TAX MATTERS. The State of Florida does not currently impose an
income tax on individuals. Thus, individual shareholders of the funds
will not be subject to any Florida income tax on distributions
received from the fund. However, Florida does currently impose an
income tax on limited liability companies and certain corporations.
Consequently, distributions may be taxable to corporate and limited
liability companies and shareholders.
The State of Florida currently imposes an "intangible tax" at the
annual rate of two mills, or .20% on certain securities and other
intangible personal property owned by Florida residents. With respect
to the first mill, or first .10%, of the intangible tax, every natural
person is entitled each year to an exemption of the first $20,000 of
the value of the property subject to the tax. A husband and wife
filing jointly will have an exemption of $40,000. With respect to the
last mill, or last .10%, of the intangible tax, every natural person
is entitled each year to an exemption of the first $100,000 of the
value of the property subject to the tax. A husband and wife filing
jointly will have an exemption of $200,000. Notes, bonds, and other
obligations issued by the State of Florida or its municipalities,
counties, and other taxing districts, or by the U.S. government, its
agencies and certain U.S. territories and possessions (such as Guam,
Puerto Rico and the Virgin Islands) are exempt from this intangible
tax. If on the last business day of any year, the fund consists solely
of such exempt assets, then the fund's shares will be exempt from the
Florida intangible tax payable in the following year.
In order to take advantage of the exemption from the intangible tax in
any year, a fund must sell any non-exempt assets held in its portfolio
during the year and reinvest the proceeds in exempt assets on or
before the last business day of the calendar year. Transaction costs
involved in restructuring a fund in this fashion would likely reduce
investment return and might exceed any increased investment return the
fund achieved by investing in non-exempt assets during the year.
The foregoing is a general and abbreviated summary of certain
provisions of Florida law. You should consult your tax adviser to
determine the precise application of Florida or other state law to
your particular situation.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by each
fund on the sale of securities and distributed to shareholders are
federally taxable as long-term capital gains, regardless of the length
of time shareholders have held their shares. If a shareholder receives
a long-term capital gain distribution on shares of a fund, and such
shares are held six months or less and are sold at a loss, the portion
of the loss equal to the amount of the long-term capital gain
distribution will be considered a long-term loss for tax purposes.
Short-term capital gains distributed by each fund are taxable to
shareholders as dividends, not as capital gains. The money market fund
does not anticipate distributing long-term capital gains.
As of November 31, 1997, the money market fund had a capital
loss carryforward aggregating approximately $ 55,500 . This loss
carryforward, of which $ 100, $1,000, $22,000, $4,000, $10,000, and
$18,400 w ill expire on, November 30, 2000, 2001, 2002, 2003,
2004, and 2005 , respectively, is available to offset future
capital gains. As of November 30, 1997, Spartan Florida Municipal
Income hereby designates approximately $155,000 as a capital gain
dividend for the purpose of the dividend deduction.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be
liable for federal tax on income and capital gains distributed to
shareholders. In order to qualify as a regulated investment company
and avoid being subject to federal income or excise taxes at the fund
level, each fund intends to distribute substantially all of its net
investment income and net realized capital gains within each calendar
year as well as on a fiscal year basis and intends to comply with
other tax rules applicable to regulated investment companies .
The money market is treated as a separate entity from the other funds
of Fidelity Court Street Trust II for tax purposes. The bond fund is
treated as a separate entity from the other funds of Fidelity Court
Street Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting each fund and its
shareholders, and no attempt has been made to discuss individual tax
consequences. In addition to federal income taxes, shareholders may be
subject to state and local taxes on fund distributions, and shares may
be subject to state and local personal property taxes. Investors
should consult their tax advisers to determine whether a fund is
suitable to their particular tax situation.
FMR
All of the stock of FMR is owned by FMR Corp., its parent organized in
1972. The voting common stock of FMR Corp. is divided into two
classes. Class B is held predominantly by members of the Edward C.
Johnson 3d family and is entitled to 49% of the vote on any matter
acted upon by the voting common stock. Class A is held predominantly
by non-Johnson family member employees of FMR Corp. and its affiliates
and is entitled to 51% of the vote on any such matter. The Johnson
family group and all other Class B shareholders have entered into a
shareholders' voting agreement under which all Class B shares will be
voted in accordance with the majority vote of Class B shares. Under
the 1940 Act, control of a company is presumed where one individual or
group of individuals owns more than 25% of the voting stock of that
company. Therefore, through their ownership of voting common stock and
the execution of the shareholders' voting agreement, members of the
Johnson family may be deemed, under the 1940 Act, to form a
controlling group with respect to FMR Corp.
At present, the principal operating activities of FMR Corp. are those
conducted by its division, Fidelity Investments Retail Marketing
Company, which provides marketing services to various companies within
the Fidelity organization.
Fidelity investment personnel may invest in securities for their
own accounts pursuant to a code of ethics that sets forth all
employees' fiduciary responsibilities regarding the funds, establishes
procedures for personal investing and restricts certain transactions.
For example, all personal trades in most securities require
pre-clearance, and participation in initial public offerings is
prohibited. In addition, restrictions on the timing of personal
investing in relation to trades by Fidelity funds and on short-term
trading have been adopted.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. Except as indicated, each individual has
held the office shown or other offices in the same company for the
last five years. All persons named as Trustees and Members of the
Advisory Board also serve in similar capacities for other funds
advised by FMR. The business address of each Trustee, Member of the
Advisory Board, and officer who is an "interested person" (as defined
in the Investment Company Act of 1940) is 82 Devonshire Street,
Boston, Massachusetts 02109, which is also the address of FMR. The
business address of all the other Trustees is Fidelity Investments,
P.O. Box 9235, Boston, Massachusetts 02205-9235. Those Trustees who
are "interested persons" by virtue of their affiliation with either
the trust or FMR are indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d (67 ), Trustee and President, is Chairman,
Chief Executive Officer and a Director of FMR Corp.; a Director and
Chairman of the Board and of the Executive Committee of FMR; Chairman
and a Director of Fidelity Investments Money Management, Inc.,
Fidelity Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.
J. GARY BURKHEAD (56), Member of the Advisory Board (1997), is Vice
Chairman and a Member of the Board of Directors of FMR Corp. (1997)
and President of Fidelity Personal Investments Brokerage Group (1997).
Previously, Mr. Burkhead served as President of Fidelity Management &
Research Company.
RALPH F. COX (65), Trustee, is President of RABAR Enterprises
(management consulting-engineering industry, 1994). Prior to February
1994 , he was President of Greenhill Petroleum Corporation
(petroleum exploration and production). Until March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources
Company (exploration and production). He is a Director of USA Waste
Services, Inc. (non-hazardous waste, 1993), CH2M Hill Companies
(engineering), Rio Grande, Inc. (oil and gas production), and Daniel
Industries (petroleum measurement equipment manufacturer). In
addition, he is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS (65 ), Trustee (1992). Prior to her
retirement in September 1991, Mrs. Davis was the Senior Vice President
of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she is a member of
the President's Advisory Council of The University of Vermont School
of Business Administration.
ROBERT M. GATES (54), Trustee (1997), is a consultant, author, and
lecturer (1993). Mr. Gates was Director of the Central Intelligence
Agency (CIA) from 1991-1993. From 1989 to 1991, Mr. Gates served as
Assistant to the President of the United States and Deputy National
Security Advisor. Mr. Gates is currently a Trustee for the Forum For
International Policy, a Board Member for the Virginia Neurological
Institute, and a Senior Advisor of the Harvard Journal of World
Affairs. In addition, Mr. Gates also serves as a member of the
corporate board for LucasVarity PLC (automotive components and diesel
engines), Charles Stark Draper Laboratory (non-profit), NACCO
Industries, Inc. (mining and manufacturing), and TRW Inc. (original
equipment and replacement products).
E. BRADLEY JONES ( 69 ), Trustee. Prior to his retirement in
1984, Mr. Jones was Chairman and Chief Executive Officer of LTV Steel
Company. He is a Director of TRW Inc. (original equipment and
replacement products), Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of chemical products), and he
previously served as a Director of NACCO Industries, Inc. (mining and
manufacturing, 1985-1995), Hyster-Yale Materials Handling, Inc.
(1985-1995), and Cleveland-Cliffs Inc (mining), and as a Trustee of
First Union Real Estate Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation, where he has also been
a member of the Executive Committee as well as Chairman of
the Board and Presiden t, a Trustee and member of the Executive
Committee of University School (Cleveland), and a Trustee of Cleveland
Clinic Florida.
DONALD J. KIRK (64 ), Trustee, is Executive-in-Residence (1995)
at Columbia University Graduate School of Business and a financial
consultant. From 1987 to January 1995, Mr. Kirk was a Professor at
Columbia University Graduate School of Business. Prior to 1987, he was
Chairman of the Financial Accounting Standards Board. Mr. Kirk is a
Director of General Re Corporation (reinsurance), and he previously
served as a Director of Valuation Research Corp. (appraisals and
valuations, 1993-1995). In addition, he serves as Chairman of the
Board of Directors of the National Arts Stabilization Fund, Chairman
of the Board of Trustees of the Greenwich Hospital Association, a
Member of the Public Oversight Board of the American Institute of
Certified Public Accountants' SEC Practice Section (1995), and as a
Public Governor of the National Association of Securities Dealers,
Inc. (1996).
*PETER S. LYNCH ( 54 ), Trustee, is Vice Chairman and Director of
FMR (1992). Prior to May 31, 1990, he was a Director of FMR and
Executive Vice President of FMR (a position he held until March 31,
1991); Vice President of Fidelity Magellan Fund and FMR Growth Group
Leader; and Managing Director of FMR Corp. Mr. Lynch was also Vice
President of Fidelity Investments Corporate Services (1991-1992). In
addition, he serves as a Trustee of Boston College, Massachusetts Eye
& Ear Infirmary, Historic Deerfield (1989) and Society for the
Preservation of New England Antiquities, and as an Overseer of the
Museum of Fine Arts of Boston.
WILLIAM O. McCOY (64), Trustee (1997), is the Vice President of
Finance for the University of North Carolina (16-school system, 1995).
Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman
of the Board of BellSouth Corporation (telecommunications, 1984) and
President of BellSouth Enterprises (1986). He is currently a Director
of Liberty Corporation (holding company, 1984), Weeks Corporation of
Atlanta (real estate, 1994), Carolina Power and Light Company
(electric utility, 1996), and the Kenan Transport Co. (1996).
Previously, he was a Director of First American Corporation (bank
holding company, 1979-1996). In addition, Mr. McCoy serves as a member
of the Board of Visitors for the University of North Carolina at
Chapel Hill (1994) and for the Kenan-Flager Business School
(University of North Carolina at Chapel Hill, 1988).
GERALD C. McDONOUGH ( 68) , Trustee and Chairman of the
non-interested Trustees, is Chairman of G.M. Management Group
(strategic advisory services). Mr. McDonough is a Director of York
International Corp. (air conditioning and refrigeration), Commercial
Intertech Corp. (hydraulic systems, building systems, and metal
products, 1992), CUNO, Inc. (liquid and gas filtration products,
1996), and Associated Estates Realty Corporation (a real estate
investment trust, 1993). Mr. McDonough served as a Director of
ACME-Cleveland Corp. (metal working, telecommunications, and
electronic products) from 1987-1996 and Brush-Wellman Inc. (metal
refining) from 1983-1997.
MARVIN L. MANN ( 6 4), Trustee (1993) is Chairman of the Board,
President, and Chief Executive Officer of Lexmark International, Inc.
(office machines, 1991). Prior to 1991, he held the positions of Vice
President of International Business Machines Corporation ("IBM") and
President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993), Imation Corp. (imaging and information storage, 1997) ,
and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State
United Way (1993) and is a member of the University of Alabama
President's Cabinet.
*ROBERT C. POZEN (51), Trustee (1997) and Senior Vice President, is
also President and a Director of FMR (1997); and President and a
Director of Fidelity Investments Money Management, Inc. (1997),
Fidelity Management & Research (U.K.) Inc. (1997), and Fidelity
Management & Research (Far East) Inc. (1997). Previously, Mr. Pozen
served as General Counsel, Managing Director, and Senior Vice
President of FMR Corp.
THOMAS R. WILLIAMS ( 69 ), Trustee, is President of The Wales
Group, Inc. (management and financial advisory services). Prior to
retiring in 1987, Mr. Williams served as Chairman of the Board of
First Wachovia Corporation (bank holding company), and Chairman and
Chief Executive Officer of The First National Bank of Atlanta and
First Atlanta Corporation (bank holding company). He is currently a
Director of ConAgra, Inc. (agricultural products), Georgia Power
Company (electric utility), National Life Insurance Company of
Vermont, American Software, Inc., and AppleSouth, Inc. (restaurants,
1992).
DWIGHT D. CHURCHILL (45), is Vice President of Bond Funds, group
leader of the Bond Group, and Senior Vice President of FMR (1997). Mr.
Churchill joined Fidelity in 1993 as Vice President and Group Leader
of Taxable Fixed-Income Investments. Prior to joining Fidelity, he
spent three years as president and CEO of CSI Asset Management, Inc.
in Chicago, an investment management subsidiary of The Prudential.
BOYCE I. GREER (41), is Vice President of Money Market Funds
(1997), Group Leader of the Money Market Group (1997), and Senior Vice
President of FMR (1997). Mr. Greer served as the Leader of the
Fixed-Income Group for Fidelity Management Trust Company (1993-1995)
and was Vice President and Group Leader of Municipal Fixed-Income
Investments (1996-1997). Prior to 1993, Mr. Greer was an associate
portfolio manager.
FRED L. HENNING, JR. ( 58 ), is Vice President of Fidelity's
Fixed-Income Group (1995) and Senior Vice President of FMR (1995).
Before assuming his current responsibilities, Mr. Henning was head
of Fidelity's Money Market Division.
JONATHAN SHORT (34), is Vice President and manager of Spartan
Florida Municipal Income, which he has managed since May 1996. He also
manages other Fidelity funds. Since joining Fidelity in 1990, Mr.
Short has worked as an analyst and manager.
SCOTT A. ORR (35), is Vice President of Spartan Florida Municipal
Money Market Fund (1996), and other funds advised by FMR. Prior to his
current responsibilities, Mr. Orr has manages a variety of Fidelity
funds.
ERIC D. ROITER (49), Secretary (1998), is Vice President (1998) and
General Counsel of FMR (1998). Mr. Roiter was an Adjunct Member,
Faculty of Law, at Columbia University Law School (1996-1997). Prior
to joining Fidelity, Mr. Roiter was a partner at Debevoise & Plimpton
(1981-1997) and served as an Assistant General Counsel of the U.S.
Securities and Exchange Commission (1979-1981).
RICHARD A. SILVER (50), Treasurer (1997), is Treasurer of the
Fidelity funds and is an employee of FMR (1997). Before joining FMR,
Mr. Silver served as Executive Vice President, Fund Accounting &
Administration at First Data Investor Services Group, Inc.
(1996-1997). Prior to 1996, Mr. Silver was Senior Vice President and
Chief Financial Officer at The Colonial Group, Inc. Mr. Silver also
served as Chairman of the Accounting/Treasurer's Committee of the
Investment Company Institute (1987-1993).
THOMAS D. MAHER ( 52 ), Assistant Vice President, is Assistant
Vice President of Fidelity's municipal bond funds (1996) and of
Fidelity's money market funds and Vice President and Associate General
Counsel of Fidelity Investments Money Management, Inc.
JOHN H. COSTELLO ( 51 ), Assistant Treasurer, is an employee of
FMR.
LEONARD M. RUSH ( 51 ), Assistant Treasurer (1994), is an
employee of FMR (1994). Prior to becoming Assistant Treasurer of the
Fidelity funds, Mr. Rush was Chief Compliance Officer of FMR Corp.
(1993-1994) and Chief Financial Officer of Fidelity Brokerage
Services, Inc. (1990-1993).
THOMAS J. SIMPSON ( 39 ), Assistant Treasurer, is Assistant
Treasurer of Fidelity's municipal bond funds (1996) and of Fidelity's
money market funds (1996) and an employee of FMR (1996). Prior to
joining FMR, Mr. Simpson was Vice President and Fund Controller of
Liberty Investment Services (1987-1995).
The following table sets forth information describing the
compensation of each Trustee and Member of the Advisory Board of each
fund for his or her services for the fiscal year ended November 30,
1997, or calendar year ended December 31, 1997, as applicable.
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Trustees Aggregate Aggregate Total
and Compensation Compensation Compensation
Members of the Advisory Board from Spartan F L from Spartan F L from the
Municipal Municipal Fund Complex*A
Money MarketB IncomeB
J. Gary Burkhead** $ 0 $ 0 $ 0
Ralph F. Cox $ 184 $ 162 $ 214,500
Phyllis Burke Davis $ 179 $ 158 $ 210,000
Richard J. Flynn*** $ 10 $ 10 $ 0
Robert M. Gates**** $ 17 $ 125 $ 176,000
Edward C. Johnson 3d** $ 0 $ 0 $ 0
E. Bradley Jones $ 181 $ 160 $ 211,500
Donald J. Kirk $ 181 $ 160 $ 211,500
Peter S. Lynch** $ 0 $ 0 $ 0
William O. McCoy***** $ 74 $ 166 $ 214,500
Gerald C. McDonough $ 223 $ 196 $ 264,500
Edward H. Malone*** $ 9 $ 10 $ 0
Marvin L. Mann $ 184 $ 162 $ 214,500
Robert C. Pozen* * $ 0 $ 0 $ 0
Thomas R. Williams $ 184 $ 162 $ 214,500
</TABLE>
* Information is for the calendar year ended December 31, 199 7
for 23 0 funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are
compensated by FMR.
*** Richard J. Flynn and Edward H. Malone served on the Board of
Trustees through December 31, 19 96.
**** Mr. G ates was appointed to the Board of Trustees of
Fidelity Court Street Trust effective March 1, 1997. Mr. Gates was
also elected to the Board of Trustees of Fidelity Court Street Trust
II on December 17, 1997.
***** During the period from May 1, 1996 through December 31, 1996,
William O. McCoy served as a member of the Advisory Board of each
trust. Mr. McCoy was appointed to the Board of Trustees of Fidelity
Court Street Trust effective January 1, 1997. Mr. Gates was also
elected to the Board of Trustees of Fidelity Court Street Trust II on
December 17, 1997.
A Compensation figures include cash, amounts required to be
deferred, and may include amounts deferred at the election of
trustees. For the calendar year ended December 31, 1997, the Trustees
accrued required deferred compensation from the funds as follows:
Ralph F. Cox, $75,000, Phyllis Burke Davis, $75,000, Robert M. Gates,
$62,500, E. Bradley Jones, $75,000, Donald J. Kirk, $75,000, William
O. McCoy, $75,000, Gerald C. McDonough, $87,500, Marvin L. Mann,
$75,000, and Thomas R. Williams, $75,000. Certain of the
non-interested Trustees elected voluntarily to defer a portion of
their compensation: Ralph F. Cox, $53,699, Marvin L. Mann, $53,699,
and Thomas R. Williams, $62,462.
B Compensation figures include cash, and may include a pro rata
portion of benefits accrued under the retirement program for the
period ended December 30, 1996 and required to be deferred.
Under a retirement program adopted in July 1988 and modified in
November 1995 and November 1995, each non-interested Trustee who
retired before December 30, 1996 may receive payments from a
Fidelity fund during his or her lifetime based on his or her basic
trustee fees and length of service. The obligation of a fund to make
such payments is neither secured nor funded. A Trustee became
eligible to participate in the program at the end of the calendar
year in which he or she reached age 72, provided that, at the time
of retirement, he or she had served as a Fidelity fund Trustee for at
least five years.
Under a deferred compensation plan adopted in September 1995 and
amended in November 1995 (the Plan), non-interested Trustees must
defer receipt of a portion of, and may elect to defer receipt of an
additional portion of, their annual fees. Amounts deferred under the
Plan are treated as though equivalent dollar amounts had been invested
in shares of a cross-section of Fidelity funds including funds in each
major investment discipline and representing a majority of Fidelity's
assets under management (the Reference Funds). The amounts ultimately
received by the Trustees under the Plan will be directly linked to the
investment performance of the Reference Funds. Deferral of fees in
accordance with the Plan will have a negligible effect on a fund's
assets, liabilities, and net income per share, and will not obligate a
fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the
Reference Funds under the Plan without shareholder approval.
As of December 30, 1996, the non-interested Trustees terminated the
retirement program for Trustees who retire after such date. In
connection with the termination of the retirement program, each
then-existing non-interested Trustee received a credit to his or her
Plan account equal to the present value of the estimated benefits that
would have been payable under the retirement program. The amounts
credited to the non-interested Trustees' Plan accounts are subject to
vesting and are treated as though equivalent dollar amounts had been
invested in shares of the Reference Funds. The amounts ultimately
received by the Trustees in connection with the credits to their Plan
accounts will be directly linked to the investment performance of the
Reference Funds. The termination of the retirement program and related
crediting of estimated benefits to the Trustees' Plan accounts did not
result in a material cost to the funds.
As of November 30, 1997, the Trustees, Members of the Advisory
Board, and officers of each fund owned, in the aggregate, less than 1%
of each fund's total outstanding shares.
As of November 30, 1997, the following owned of record 5% or more
of a fund's outstanding shares:
Spartan Florida Municipal Income: National Financial Services
Corporation, Boston, MA (16.12%).
Spartan Florida Municipal Money Market: National Financial Services
Corporation, Boston, MA (39.42%).
MANAGEMENT CONTRACTS
FMR is manager of Spartan Florida Municipal Money Market Fund and
Spartan Florida Municipal Income Fund pursuant to management contracts
dated July 16, 1992 and February 20, 1992, respectively, which were
approved by FMR as the then sole shareholder on August 24, 1992 and
March 13, 1992, respectively.
MANAGEMENT SERVICES. Each fund employs FMR to furnish investment
advisory and other services. Under the terms of its management
contract with each fund, FMR acts as investment adviser and, subject
to the supervision of the Board of Trustees, directs the investments
of each fund in accordance with its investment objective, policies,
and limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing each fund's investments,
compensates all officers of each fund and all Trustees who are
"interested persons" of the trusts or of FMR, and all personnel of
each fund or FMR performing services relating to research,
statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services
necessary for the operation of each fund. These services include
providing facilities for maintaining each fund's organization;
supervising relations with custodians, transfer and pricing agents,
accountants, underwriters, and other persons dealing with each fund;
preparing all general shareholder communications and conducting
shareholder relations; maintaining each fund's records and the
registration of each fund's shares under federal securities laws and
making necessary filings under state securities laws; developing
management and shareholder services for each fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the
Trustees.
MANAGEMENT-RELATED EXPENSES. Under the terms of each fund's
management contract, FMR is responsible for payment of all operating
expenses of each fund, with certain exceptions. Specific expenses
payable by FMR include expenses for typesetting, printing, and mailing
proxy materials to shareholders, legal expenses, fees of the
custodian, auditor and interested Trustees, each fund's proportionate
share of insurance premiums and Investment Company Institute dues, and
the costs of registering shares under federal securities laws and
making necessary filings under state securities laws. Each fund's
management contract further provides that FMR will pay for
typesetting, printing, and mailing prospectuses, statements of
additional information, notices, and reports to shareholders; however,
under the terms of each fund's transfer agent agreement, the transfer
agent bears the costs of providing these services to existing
shareholders. FMR also pays all fees associated with transfer agent,
dividend disbursing, and shareholder services and pricing and
bookkeeping services
FMR pays all other expenses of each fund with the following
exceptions: fees and expenses of the non-interested Trustees,
interest, taxes, brokerage commissions (if any), and such nonrecurring
expenses as may arise, including costs of any litigation to which a
fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
MANAGEMENT FEES. For the services of FMR under each
management contract, Spartan Florida Municipal Money Market Fund and
Spartan Florida Municipal Income Fund pays FMR a monthly management
fee at the annual rate of 0.50% and 0.55%, respectively, of its
average net assets throughout the month.
The management fee paid to FMR by each fund is reduced by an amount
equal to the fees and expenses paid by the fund to the non-interested
Trustees.
The following table shows the amount of management fees paid by each
fund to FMR for the past three fiscal years and the amount of credits
r educing management fees for each fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Fiscal Years Ended Amount of Management Fees
November 30 Credits Reducing Paid to FMR
Management Fees
Spartan Florida Municipal 1997 $ 58,319 $ 2,199,562
Money Market
1996 $ 115,316 $ 1,956,849
1995 $ 0 $ 1,916,452
Spartan Florida Municipal Income 1997 $ 3,649 $ 2,160,309
1996 $ 52,507 $ 2,148,566
1995 $ 0 $ 2,019,366
</TABLE>
* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
FMR may, from time to time, voluntarily reimburse all or a portion of
a fund's operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to
be repaid for these expense reimbursements in the amount that expenses
fall below the limit prior to the end of the fiscal year.
Expense reimbursements by FMR will increase a fund's total returns
and yield, and repayment of the reimbursement by a fund will lower its
total returns and yield.
To defray shareholder service costs, FMR or its affiliates also
collect Spartan Florida Municipal Money Market Fund's $5.00
exchange fee, $5.00 account closeout fee, $5.00 fee for wire purchases
and redemptions, and $2.00 checkwriting charge. Shareholder
transaction fees and charges collected by FMR are shown i n the
table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Period Ended Exchange Fees Account Wire Fees Checkwriting
November 30 Closeout Fees Charges
Spartan Florida
Municipal 1997 $ 2,375 $ 424 $ 140 $ 1,925
Money Market
1996 $ 2,569 $ 503 $ 240 $ 1,941
1995 $ 2,450 $ 633 $ 180 $ 1,939
</TABLE>
SUB-ADVISER. On behalf of Spartan Florida Municipal Money Market Fund,
FMR has entered into a sub-advisory agreement with F IMM
pursuant to which F IMM has primary responsibility for providing
portfolio investment management services to the fund.
Under the terms of the sub-advisory agreement, FMR pays
F IMM fees equal to 50% of the management fee payable to FMR
under its management contract with the fund. The fees paid to
F IMM are not reduced by any voluntary or mandatory expense
reimbursements that may be in effect from time to time.
On behalf of Spartan Florida Municipal Money Market Fund, for the
fiscal years ended November 30, 1997, 1996, and 1995, FMR paid FMR
Texas Inc. (FMR Texas), the predecessor company to FIMM, fees of
$1,099,781, $978,425 and $958,226, respectively.
DISTRIBUTION AND SERVICE PLANS
The Trustees have approved Distribution and Service Plans on behalf of
each fund (the Plans) pursuant to Rule 12b-1 under the 1940
Act (the Rule). The Rule provides in substance that a mutual fund
may not engage directly or indirectly in financing any activity that
is primarily intended to result in the sale of shares of the fund
except pursuant to a plan approved on behalf of the fund under the
Rule. The Plans, as approved by the Trustees, allow the funds and FMR
to incur certain expenses that might be considered to constitute
indirect payment by the funds of distribution expenses.
Under each Plan, if the payment of management fees by the fund to FMR
is deemed to be indirect financing by the fund of the distribution of
its shares, such payment is authorized by the Plan. Each Plan
specifically recognizes that FMR may use its management fee
revenue, as well as its past profits or its other resources, to pay
FDC for expenses incurred in connection with the distribution of fund
shares. In addition, each Plan provides that FMR, directly or through
FDC, may make payments to third parties, such as banks or
broker-dealers, that engage in the sale of fund shares, or provide
shareholder support services. Currently, the Board of Trustees has
authorized such payments for the funds' shares.
FMR made no payments either directly or through FDC to third
parties for the fiscal year ended 1997.
Prior to approving each Plan, the Trustees carefully considered all
pertinent factors relating to the implementation of the Plan, and
determined that there is a reasonable likelihood that the Plan will
benefit the fund and its shareholders. In particular, the Trustees
noted that each Plan does n ot authorize payments by the fund
other than those made to FMR under its management contract with the
fund. To the extent that each Plan gives FMR and FDC greater
flexibility in connection with the distribution of fund shares,
additional sales of fund shares may result. Furthermore, certain
shareholder support services may be provided more effectively under
the Plans by local entities with whom shareholders have other
relationships.
The Plans were approved by FMR as then sole shareholder of the funds
on August 22, 1992 (money market) and March 13, 1992 (bond fund).
The Glass-Steagall Act generally prohibits federally and state
chartered or supervised banks from engaging in the business of
underwriting, selling, or distributing securities. Although the scope
of this prohibition under the Glass-Steagall Act has not been clearly
defined by the courts or appropriate regulatory agencies, FDC believes
that the Glass-Steagall Act should not preclude a bank from performing
shareholder support services, or servicing and recordkeeping
functions. FDC intends to engage banks only to perform such functions.
However, changes in federal or state statutes and regulations
pertaining to the permissible activities of banks and their affiliates
or subsidiaries, as well as further judicial or administrative
decisions or interpretations, could prevent a bank from continuing to
perform all or a part of the contemplated services. If a bank were
prohibited from so acting, the Trustees would consider what actions,
if any, would be necessary to continue to provide efficient and
effective shareholder services. In such event, changes in the
operation of the funds might occur, including possible termination of
any automatic investment or redemption or other services then provided
by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein, and
banks and other financial institutions may be required to
register as dealers pursuant to state law.
Each fund may execute portfolio transactions with, and purchase
securities issued by, depository institutions that receive payments
under the Plans. No preference for the instruments of such depository
institutions will be shown in the selection of investments.
CONTRACTS WITH FMR AFFILIATES
Each fund has entered into a transfer agent agreement with UMB.
Under the terms of the agreements, UMB provides transfer agency,
dividend disbursing, and shareholder services for each fund. UMB in
turn has entered into sub-transfer agent agreements with FSC ,
an affiliate of FMR. Under the terms of the sub-agreements, FSC
performs all processing activities associated with providing these
services for each fund and receives all related transfer agency fees
paid to UMB.
For providing transfer agency services, FSC receives an annual
account fee and an asset-based fee each based on account size and fund
type for each retail account and certain institutional accounts. With
respect to certain institutional retirement accounts, FSC receives an
annual account fee and an asset-based fee based on account type or
fund type. These annual account fees are subject to increase based on
postal rate changes.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
In addition, UMB receives the pro rata portion of the
transfer agency fees applicable to shareholder accounts in each
Fidelity Freedom Fund, a fund of funds managed by an FMR affiliate,
according to the percentage of the Freedom Fund's assets that is
invested in a fund.
FSC pays out-of-pocket expenses associated with providing transfer
agent services. In addition, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional
information, and all other reports, notices, and statements to
existing shareholders, with the exception of proxy statements.
Each fund has also entered into a service agent agreement with UMB.
Under the terms of the agreements, UMB provides pricing and
bookkeeping services for each fund. UMB in turn has entered into
sub-service agent agreements with FSC. Under the terms of the
sub-agreements, FSC performs all processing activities associated with
providing these services, including calculating the NAV and dividends
for each fund and maintaining each fund's portfolio and general
accounting records, and receives all related pricing and bookkeeping
fees paid to UMB.
For providing pricing and bookkeeping services, FSC receives a
monthly fee based on each fund's average daily net assets throughout
the month.
FMR bears the cost of transfer agency, dividend disbursing, and
shareholder services and pricing and bookkeeping services under the
terms of its management contract with each fund.
Each fund has entered into a distribution agreement with FDC,
an affiliate of FMR organized as a Massachusetts corporation on
July 18, 1960. FDC is a broker-dealer registered under the Securities
Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. The distribution agreements call for FDC to
use all reasonable efforts, consistent with its other business, to
secure purchasers for shares of each fund, which are continuously
offered at NAV . Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUSTS
TRUSTS' ORGANIZATION. Spartan Florida Municipal Money Market Fund is a
fund (series) of Fidelity Court Street Trust II (the Delaware trust),
an open-end management investment company organized as a Delaware
business trust on June 20, 1991. Currently, there are four funds of
the Delaware trust: Fidelity Connecticut Municipal Money Market Fund,
Fidelity New Jersey Municipal Money Market Fund, Spartan Florida
Municipal Money Market Fund, and Spartan Connecticut Municipal Money
Market Fund. The Delaware trust's Trust Instrument permits the
Trustees to create additional funds.
Spartan Florida Municipal Income Fund is a fund (series) of Fidelity
Court Street Trust (the Massachusetts trust), an open-end management
investment company organized as a Massachusetts business trust on
April 21, 1977. On August 1, 1987, the Massachusetts trust's name was
changed from Fidelity High Yield Municipals to Fidelity Court Street
Trust. Currently, there are four funds of the Massachusetts trust:
Spartan Connecticut Municipal Income Fund, Fidelity Municipal Income
Fund, Spartan New Jersey Municipal Income Fund, and Spartan Florida
Municipal Income Fund. The Massachusetts trust's Declaration of Trust
permits the Trustees to create additional funds.
In the event that FMR ceases to be investment adviser to a trust or
any of its funds, the right of the trust or the fund to use the
identifying names "Fidelity" and "Spartan" may be withdrawn. There is
a remote possibility that one fund might become liable for any
misstatement in its prospectus or statement of additional information
about another fund.
The assets of each trust received for the issue or sale of shares of
each of its funds and all income, earnings, profits, and proceeds
thereof, subject only to the rights of creditors, are especially
allocated to such fund, and constitute the underlying assets of such
fund. The underlying assets of each fund are segregated on the books
of account, and are to be charged with the liabilities with respect to
such fund and with a share of the general expenses of their respective
trusts. Expenses with respect to the trusts are to be allocated in
proportion to the asset value of their respective funds, except where
allocations of direct expense can otherwise be fairly made. The
officers of the trusts, subject to the general supervision of the
Boards of Trustees, have the power to determine which expenses are
allocable to a given fund, or which are general or allocable to all of
the funds of a certain trust. In the event of the dissolution or
liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The
Massachusetts trust is an entity of the type commonly known as
"Massachusetts business trust." Under Massachusetts law, shareholders
of such a trust may, under certain circumstances, be held personally
liable for the obligations of the trust. The Declaration of Trust
provides that the Massachusetts trust shall not have any claim against
shareholders except for the payment of the purchase price of shares
and requires that each agreement, obligation, or instrument entered
into or executed by the Massachusetts trust or its Trustees shall
include a provision limiting the obligations created thereby to the
Massachusetts trust and its assets. The Declaration of Trust provides
for indemnification out of each fund's property of any shareholders
held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any
act or obligation of the fund and satisfy any judgment thereon. Thus,
the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the fund
itself would be unable to meet its obligations. FMR believes that, in
view of the above, the risk of personal liability to shareholders is
remote.
The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees
against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their
office.
SHAREHOLDER AND TRUSTEE LIABILITY - DELAWARE TRUST. The
Delaware trust is a business trust organized under Delaware law.
Delaware law provides that shareholders shall be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. The courts of some states, however, may
decline to apply Delaware law on this point. The Trust Instrument
contains an express disclaimer of shareholder liability for the debts,
liabilities, obligations, and expenses of the Delaware trust and
requires that a disclaimer be given in each contract entered into or
executed by the Delaware trust or its Trustees. The Trust Instrument
provides for indemnification out of each fund's property of any
shareholder or former shareholder held personally liable for the
obligations of the fund. The Trust Instrument also provides that each
fund shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the fund and satisfy any
judgment thereon. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances
in which Delaware law does not apply, no contractual limitation of
liability was in effect, and the fund is unable to meet its
obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is extremely remote.
The Trust Instrument further provides that the Trustees shall not be
personally liable to any person other than the Delaware trust or its
shareholders; moreover, the Trustees shall not be liable for any
conduct whatsoever, provided that Trustees are not protected against
any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of
shares of beneficial interest. As a shareholder, you receive one vote
for each dollar value of net asset value you own. The shares have no
preemptive or conversion rights; voting and dividend rights, the right
of redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the respective "Shareholder and Trustee Liability"
headings above. Shareholders representing 10% or more of a trust or
one of its funds may, as set forth in the Declaration of Trust or
Trust Instrument, call meetings of the trust or fund for any purpose
related to the trust or fund, as the case may be, including, in the
case of a meeting of an entire trust, the purpose on voting on removal
of one or more Trustees.
A trust or any fund may be terminated upon the sale of its assets to
(or, in the case of the Delaware trust and its funds, merger with)
another open-end management investment company or series thereof, or
upon liquidation and distribution of its assets. Generally such
terminations must be approved by vote of the holders of a majority of
the trust or the fund, or as determined by the current value of each
shareholder's investment in the fund or trust; however, the Trustees
of the Delaware trust may, without prior shareholder approval, change
the form of the organization of the Delaware trust by merger,
consolidation, or incorporation. If not so terminated or reorganized,
the trusts and their funds will continue indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder
vote, cause the Delaware trust to merge or consolidate into one or
more trusts, partnerships, or corporations, so long as the surviving
entity is an open-end management investment company that will succeed
to or assume the Delaware trust registration statement, or cause the
Delaware trust to be incorporated under Delaware law. Each fund of
Fidelity Court Street Trust may also invest all of its assets in
another investment company.
CUSTODIAN. UMB Bank, n.a., 1010 Grand Avenue, Kansas City, Missouri,
is custodian of the assets of the funds. The custodian is responsible
for the safekeeping of a fund's assets and the appointment of any
subcustodian banks and clearing agencies. The custodian takes no part
in determining the investment policies of a fund or in deciding which
securities are purchased or sold by a fund. However, a fund may invest
in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the
Board of Trustees may, from time to time, conduct transactions with
various banks, including banks serving as custodians for certain funds
advised by FMR. Transactions that have occurred to date include
mortgages and personal and general business loans. In the judgment of
FMR, the terms and conditions of those transactions were not
influenced by existing or potential custodial or other fund
relationships.
AUDITOR. Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts serves as the trusts' independent accountant. The
auditor examines financial statements for the funds and provides other
audit, tax, and related services.
FINANCIAL STATEMENTS
Each fund's financial statements and financial highlights for the
fiscal year ended November 30, 1997, and report of the auditor, are
included in the funds' Annual Report, which is a separate report
supplied with this SAI. The funds' financial statements, including the
financial highlights, and report of the auditor are incorporated
herein by reference. For a free additional copy of the funds' Annual
Report, contact Fidelity at 1-800-544-8888, 82 Devonshire Street,
Boston, MA 02109.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value
of each investment by the time remaining to its maturity, adding these
calculations, and then dividing the total by the value of the fund's
portfolio. An obligation's maturity is typically determined on a
stated final maturity basis, although there are some exceptions to
this rule.
For example, if it is probable that the issuer of an instrument will
take advantage of a maturity-shortening device, such as a call,
refunding, or redemption provision, the date on which the instrument
will probably be called, refunded, or redeemed may be considered to be
its maturity date. When a municipal bond issuer has committed to call
an issue of bonds and has established an independent escrow account
that is sufficient to, and is pledged to, refund that issue, the
number of days to maturity for the prerefunded bond is considered to
be the number of days to the announced call date of the bonds.
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF MUNICIPAL
OBLIGATIONS
Moody's ratings for short-term municipal obligations will be
designated Moody's Investment Grade ("MIG"). A two-component rating is
assigned to variable rate demand obligations. The first component
represents an evaluation of the degree of risk associated with
scheduled principal repayment and interest payments and is designated
by a long-term rating, e.g., "Aaa" or "A." The second component
represents an evaluation of the degree of risk associated with the
demand feature and is designated "VMIG."
MIG 1/VMIG 1 - This designation denotes best quality. There is
present strong protection by established cash flows, superior
liquidity support, or demonstrated broad-based access to the market
for refinancing.
MIG 2/VMIG 2 - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding
group.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF MUNICIPAL NOTES
Municipal notes maturing in three years or less will likely receive
a "note" rating symbol. Notes that have a put option or demand feature
are assigned a dual rating. The first rating addresses the likelihood
of repayment of principal and payment of interest due and for
short-term obligations is designated by a note rating symbol. The
second rating addresses only the demand feature, and is designated by
a commercial paper rating symbol, e.g., "A-1" or "A-2."
SP-1 - Strong capacity to pay principal and interest. Issues
determined to possess very strong characteristics are given a plus (+)
designation.
SP-2 - Satisfactory capacity to pay principal and interest, with
some vulnerability to adverse financial and economic changes over the
term of the notes.
DESCRIPTION OF MOODY'S INVESTORS SERVICE RATINGS OF MUNICIPAL
OBLIGATIONS
Moody's ratings for long-term municipal obligations fall within
nine categories. They range from Aaa (highest quality) to C (lowest
quality). Those bonds within the Aa through B categories that Moody's
believes possess the strongest credit attributes within those
categories are designated by the symbol "1."
AAA - Bonds that are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected
by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA - Bonds that are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
BAA - Bonds that are rated Baa are considered as medium-grade
obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA - Bonds that are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
CAA - Bonds that are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with
respect to principal or interest.
CA - Bonds that are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked short-comings.
C - Bonds that are rated C are the lowest-rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
DESCRIPTION OF STANDARD & POOR'S RATINGS OF MUNICIPAL DEBT
Municipal debt issues may be designated by Standard & Poor's as
either investment grade ("AAA" through "BBB") or speculative grade
("BB" through "D"). While speculative grade debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Ratings from
AA through CCC may be modified by the addition of a plus sign (+) or
minus sign (-) to show relative standing within the major rating
categories.
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity
to pay interest and repay principal for debt in this category than in
higher-rated categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The BB rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
B - Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will
likely impair capacity or willingness to pay interest and repay
principal. The B rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BB or BB-
rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or
B- rating.
CC - Debt rated CC is typically applied to debt subordinated to
senior debt which is assigned an actual or implied CCC debt
rating.
C - The rating C is typically applied to debt subordinated to
senior debt which is assigned an actual or implied CCC- debt rating.
The C rating may be used to cover a situation where a bankruptcy
petition has been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no
interest is being paid.
D - Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on the
date due even if the applicable grace period has not expired, unless
S&P believes that such payments will be made during such grace period.
The D rating will also be used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.
FIDELITY COURT STREET TRUST
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)(1) Financial Statements for Spartan Florida Municipal Income Fund
for the fiscal year ended November 30, 1997 are incorporated herein by
reference to the fund's Statement of Additional Information and were
filed on January 13, 1998 for Fidelity Court Street Trust (File No.
2-58774) pursuant to Rule 30d-1 under the Investment Company Act of
1940 and are incorporated herein by reference.
(b) Exhibits
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1. (a) Amended and Restated Declaration of Trust, dated January 19, 1995, is incorporated herein
by reference to Exhibit 1(a) of Post-Effective Amendment No. 55.
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2. (a) Bylaws of the Trust are incorporated herein by reference to Exhibit 2(a) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
3. Not applicable.
4. Not applicable.
5. (a) Management Contract between Fidelity High Yield Tax-Free Portfolio (currently known as
Spartan Municipal Income Fund) and Fidelity Management & Research Company, dated
December 1, 1994, is incorporated herein by reference to Exhibit 5(a) of Post-Effective
Amendment No. 54.
(b) Management Contract between Spartan Florida Municipal Income Portfolio (currently known
as Spartan Florida Municipal Income Fund) and Fidelity Management & Research Company,
dated February 20, 1992, is incorporated herein by reference to Exhibit 5(b) of Post-Effective
Amendment No. 53.
(c) Management Contract between Spartan New Jersey Municipal High Yield Portfolio
(currently known as Spartan New Jersey Municipal Income Fund) and Fidelity Management
& Research Company, dated January 1, 1992, is incorporated herein by reference to Exhibit
5(c) of Post-Effective Amendment No. 54.
(d) Management Contract between Spartan Connecticut Municipal High Yield Portfolio
(currently known as Spartan Connecticut Municipal Income Fund) and Fidelity Management
& Research Company, dated January 1,1992, is incorporated herein by reference to Exhibit
5(d) of Post-Effective Amendment No. 55.
6. (a) General Distribution Agreement between Fidelity High Yield Municipals (currently known as
Spartan Municipal Income Fund) and Fidelity Distributors Corporation, dated April 1, 1987,
is incorporated herein by reference to Exhibit 6(a) of Post-Effective Amendment No. 54.
(b) General Distribution Agreement between Fidelity New Jersey Tax-Free High Yield Portfolio
(currently known as Spartan New Jersey Municipal Income Fund) and Fidelity Distributors
Corporation, dated August 10, 1987, is incorporated herein by reference to Exhibit 6(b) of
Post-Effective Amendment No. 54.
(c) General Distribution Agreement between Fidelity Connecticut Tax-Free Portfolio (currently
known as Spartan Connecticut Municipal Income Fund) and Fidelity Distributors
Corporation, dated October 15, 1987, is incorporated herein by reference to Exhibit 6(c) of
Post-Effective Amendment No. 55.
(d) Amendment to the General Distribution Agreement between Fidelity High Yield Municipals
(currently known as Spartan Municipal Income Fund) and Fidelity Distributors Corporation,
dated January 1, 1988, is incorporated herein by reference to Exhibit 6(d) of Post-Effective
Amendment No. 54.
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(e) Amendment to the General Distribution Agreement between Fidelity New Jersey Tax-Free
High Yield Portfolio (currently known as Spartan New Jersey Municipal Income Fund) and
Fidelity Distributors Corporation, dated January 1, 1988, is incorporated herein by reference
to Exhibit 6(e) of Post-Effective Amendment No. 54.
(f) Amendment to the General Distribution Agreement between Fidelity Connecticut Municipal
High Yield Portfolio (currently known as Spartan Connecticut Municipal Income Fund) and
Fidelity Distributors Corporation, dated May 10, 1994, is incorporated herein by reference to
Exhibit 6(f) of Post-Effective Amendment No. 55.
(g) General Distribution Agreement between Spartan Florida Municipal Income Portfolio
(currently known as Spartan Florida Municipal Income Fund) and Fidelity Distributors
Corporation, dated February 20, 1992, is incorporated herein by reference to Exhibit 6(g) of
Post-Effective Amendment No. 53.
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(h) Amendments to the General Distribution Agreement between Fidelity Court Street Trust on
behalf of Spartan New Jersey Municipal Income Fund and Fidelity Distributors Corporation,
dated March 14, 1996 and July 15, 1996, are incorporated herein by reference to Exhibit 6(b)
of Post-Effective Amendment No. 61.
(i) Amendments to the General Distribution Agreement between Fidelity Court Street Trust on
behalf of Spartan Municipal Income Fund, Spartan Connecticut Municipal Income Fund,
Spartan Florida Municipal Income Fund and Fidelity Distributors Corporation, dated March
14, 1996 and July 15, 1996, are incorporated herein by reference to Exhibit 6(a) of
Post-Effective Amendment No. 61.
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7. (a) Retirement Plan for Non-Interested Person Trustees, Directors or General Partners, as
amended on November 16, 1995, is incorporated herein by reference to Exhibit 7(a) of
Fidelity Select Portfolio's (File No. 2-69972) Post-Effective Amendment No. 54.
(b) The Fee Deferral Plan for Non-Interested Person Directors and Trustees of the Fidelity
Funds, effective as of September 14, 1995 and amended through November 14, 1996, is
incorporated herein by reference to Exhibit 7(b) of Fidelity Aberdeen Street Trust's (File No.
33-43529) Post-Effective Amendment No. 19.
8. (a) Custodian Agreement, Appendix B, and Appendix C, dated December 1, 1994, between
UMB Bank, n.a. and the Registrant is incorporated herein by reference to Exhibit 8 of
Fidelity California Municipal Trust's Post-Effective Amendment No. 28 (File No. 2-83367).
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(b) Appendix A, dated September 18, 1997, to the Custodian Agreement, dated December 1,
1994, between UMB Bank, n.a. and the Registrant is incorporated herein by reference to
Exhibit 8(b) of Fidelity Municipal Trust II's Post-Effective Amendment No. 17 (File No.
33-43986).
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9. Not applicable.
10. Not applicable.
11. Consent of Coopers and Lybrand L.L.P. is filed herein as Exhibit 11.
12. Not applicable.
13. Not applicable.
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14. (a) Fidelity Individual Retirement Account Custodial Agreement and Disclosure Statement, as
currently in effect, is incorporated herein by reference to Exhibit 14(a) of Fidelity Union
Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
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(b) Fidelity Institutional Individual Retirement Account Custodial Agreement and Disclosure
Statement, as currently in effect, is incorporated herein by reference to Exhibit 14(d) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(c) National Financial Services Corporation Individual Retirement Account Custodial Agreement
and Disclosure Statement, as currently in effect, is incorporated herein by reference to
Exhibit 14(h) of Fidelity Union Street Trust's (File No. 2-50318) Post-Effective Amendment
No. 87.
(d) Fidelity Portfolio Advisory Services Individual Retirement Account Custodial Agreement
and Disclosure Statement, as currently in effect, is incorporated herein by reference to
Exhibit 14(i) of Fidelity Union Street Trust's (File No. 2-50318) Post-Effective Amendment
No. 87.
(e) Fidelity 403(b)(7) Custodial Account Agreement, as currently in effect, is incorporated herein
by reference to Exhibit 14(e) of Fidelity Union Street Trust's (File No. 2-50318)
Post-Effective Amendment No. 87.
(f) National Financial Services Corporation Defined Contribution Retirement Plan and Trust
Agreement, as currently in effect, is incorporated herein by reference to Exhibit 14(k) of
Fidelity Union Street Trust's (File No. 2-50318) Post-Effective Amendment No. 87.
(g) The CORPORATEplan for Retirement Profit Sharing/401K Plan, as currently in effect, is
incorporated herein by reference to Exhibit 14(l) of Fidelity Union Street Trust's (File No.
2-50318) Post-Effective Amendment No. 87.
(h) The CORPORATEplan for Retirement Money Purchase Pension Plan, as currently in effect,
is incorporated herein by reference to Exhibit 14(m) of Fidelity Union Street Trust's (File No.
2-50318) Post-Effective Amendment No. 87.
(i) Fidelity Investments Section 403(b)(7) Individual Custodial Account Agreement and
Disclosure Statement, as currently in effect, is incorporated herein by reference to Exhibit
14(f) of Fidelity Commonwealth Trust's (File No. 2-52322) Post Effective Amendment No.
57.
(j) Plymouth Investments Defined Contribution Retirement Plan and Trust Agreement, as
currently in effect, is incorporated herein by reference to Exhibit 14(o) of Fidelity
Commonwealth Trust's (File No. 2-52322) Post Effective Amendment No. 57.
(k) The Fidelity Prototype Defined Benefit Pension Plan and Trust Basic Plan Document and
Adoption Agreement, as currently in effect, is incorporated herein by reference to Exhibit
14(d) of Fidelity Securities Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(l) The Institutional Prototype Plan Basic Plan Document, Standardized Adoption Agreement,
and Non-Standardized Adoption Agreement, as currently in effect, is incorporated herein by
reference to Exhibit 14(o) of Fidelity Securities Fund's (File No. 2-93601) Post Effective
Amendment No. 33.
(m) The CORPORATEplan for Retirement 100SM Profit Sharing/401(k) Basic Plan Document,
Standardized Adoption Agreement, and Non-Standardized Adoption Agreement, as currently
in effect, is incorporated herein by reference to Exhibit 14(f) of Fidelity Securities Fund's
(File No. 2-93601) Post Effective Amendment No. 33.
(n) The Fidelity Investments 401(a) Prototype Plan for Tax-Exempt Employers Basic Plan
Document, Standardized Profit Sharing Plan Adoption Agreement, Non-Standardized
Discretionary Contribution Plan No. 002 Adoption Agreement, and Non-Standardized
Discretionary Contribution Plan No. 003 Adoption Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(g) of Fidelity Securities Fund's (File No.
2-93601) Post Effective Amendment No. 33.
(o) Fidelity Investments 403(b) Sample Plan Basic Plan Document and Adoption Agreement, as
currently in effect, is incorporated herein by reference to Exhibit 14(p) of Fidelity Securities
Fund's (File No. 2-93601) Post Effective Amendment No. 33.
(p) Fidelity Defined Contribution Retirement Plan and Trust Agreement, as currently in effect, is
incorporated herein by reference to Exhibit 14(c) of Fidelity Securities Fund's (File No.
2-93601) Post Effective Amendment No. 33.
(q) Fidelity SIMPLE-IRAPlan Adoption Agreement, Company Profile Form, and Plan
Document, as currently in effect, is incorporated herein by reference to Exhibit 14(q) of
Fidelity Aberdeen Street Trust's (File No. 33-43529) Post-Effective Amendment No. 19.
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15. (a) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity Municipal Income Fund
(currently known as Spartan Municipal Income Fund) is incorporated herein by reference to
Exhibit 15(a) of Post-Effective Amendment No. 67.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan New Jersey Municipal
Income Fund is incorporated herein by reference to Exhibit 15(b) of Post-Effective
Amendment No. 67.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan Connecticut Municipal
Income Fund is incorporated herein by reference as Exhibit 15(c) of Post-Effective
Amendment No. 67.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan Florida Municipal Income
Fund is incorporated herein by reference as Exhibit 15(d) of Post-Effective Amendment No.
67.
16. (a) A schedule for the computation of total returns is incorporated herein by reference to Exhibit
16(a) of Post-Effective Amendment No. 55.
(b) A schedule for the computation of performance calculations (30-day yields) for Spartan New
Jersey Municipal Income Fund is incorporated herein by reference to Exhibit 16(b) of
Post-Effective Amendment No. 63.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(c) A schedule for the computation of adjusted net asset value is incorporated herein by reference
to Exhibit 16(b) of Post-Effective Amendment No. 55.
17. Financial Data Schedules are filed herein as Exhibit 27.
18. Not Applicable.
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant
The Registrant's Board of Trustees is the same as the Board of
Trustees of other funds managed by Fidelity Management & Research
Company. In addition, the officers of these funds are substantially
identical. Nonetheless, Registrant takes the position that it is not
under common control with these other funds since the power residing
in the respective boards and officers arises as the result of an
official position with the respective funds.
Item 26. Number of Holders of Securities
As of November 30, 1997
Name of Class: Shares of Beneficial Interest
Title of Series: Number of Record Holders
Spartan Municipal Income Fund 46,528
Spartan Connecticut Municipal Income Fund 5,048
Spartan New Jersey Municipal Income Fund 6,774
Spartan Florida Municipal Income Fund 5,482
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification
shall be provided to any past or present Trustee or officer. It states
that the Registrant shall indemnify any present or past Trustee or
officer to the fullest extent permitted by law against liability and
all expenses reasonably incurred by him in connection with any claim,
action, suit, or proceeding in which he is involved by virtue of his
service as a Trustee, an officer, or both. Additionally, amounts paid
or incurred in settlement of such matters are covered by this
indemnification. Indemnification will not be provided in certain
circumstances, however. These include instances of willful
misfeasance, bad faith, gross negligence, and reckless disregard of
the duties involved in the conduct of the particular office involved.
Pursuant to Section 11 of the Distribution Agreement, the Registrant
agrees to indemnify and hold harmless the Distributor and each of its
directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against
any loss, liability, claim, damages or expense arising by reason of
any person acquiring any shares, based upon the ground that the
registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made
public by the Registrant included a materially misleading statement or
omission. However, the Registrant does not agree to indemnify the
Distributor or hold it harmless to the extent that the statement or
omission was made in reliance upon, and in conformity with,
information furnished to the Registrant by or on behalf of the
Distributor. The Registrant does not agree to indemnify the parties
against any liability to which they would be subject by reason of
willful misfeasance, bad faith, gross negligence, and reckless
disregard of the obligations and duties under the Distribution
Agreement.
Pursuant to the agreement by which Fidelity Service Company, Inc.
("Service") is appointed sub-transfer agent, the Transfer Agent agrees
to indemnify Service for Service's losses, claims, damages,
liabilities and expenses (including reasonable counsel fees and
expenses) (losses) to the extent that the Transfer Agent is entitled
to and receives indemnification from the Portfolio for the same
events. Under the Transfer Agency Agreement, the Registrant agrees to
indemnify and hold the Transfer Agent harmless against any losses,
claims, damages, liabilities, or expenses (including reasonable
counsel fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any person other
than the Registrant, including by a shareholder which names the
Transfer Agent and/or the Registrant as a party and is not based on
and does not result from the Transfer Agent's willful misfeasance, bad
faith or negligence or reckless disregard of duties, and arises out of
or in connection with the Transfer Agent's performance under the
Transfer Agency Agreement; or
(2) any claim, demand, action or suit (except to the extent
contributed to by the Transfer Agent's willful misfeasance, bad faith
or negligence or reckless disregard of duties) which results from the
negligence of the Registrant, or from the Transfer Agent's acting upon
any instruction(s) reasonably believed by it to have been executed or
communicated by any person duly authorized by the Registrant, or as a
result of the Transfer Agent's acting in reliance upon advice
reasonably believed by the Transfer Agent to have been given by
counsel for the Registrant, or as a result of the Transfer Agent's
acting in reliance upon any instrument or stock certificate reasonably
believed by it to have been genuine and signed, countersigned or
executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
FMR serves as investment adviser to a number of other investment
companies. The directors and officers of the Adviser have held,
during the past two fiscal years, the following positions of a
substantial nature.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman of the Board of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of the
Board and Director of FMR, FMR Corp., FMR Texas
Inc., FMR (U.K.) Inc., and FMR (Far East) Inc.;
Chairman of the Board and Representative Director of
Fidelity Investments Japan Limited; President and
Trustee of funds advised by FMR.
Robert C. Pozen President and Director of FMR; Senior Vice President
and Trustee of funds advised by FMR; President and
Director of FMR Texas Inc., FMR (U.K.) Inc., and
FMR (Far East) Inc.; General Counsel, Managing
Director, and Senior Vice President of FMR Corp.
Peter S. Lynch Vice Chairman of the Board and Director of FMR.
Marta Amieva Vice President of FMR.
John Carlson Vice President of FMR.
Dwight D. Churchill Senior Vice President of FMR.
Barry Coffman Vice President of FMR.
Arieh Coll Vice President of FMR.
Stephen G. Manning Assistant Treasurer of FMR
William Danoff Senior Vice President of FMR and of a fund advised by
FMR.
Scott E. DeSano Vice President of FMR.
Craig P. Dinsell Vice President of FMR.
Penelope Dobkin Vice President of FMR and of a fund advised by FMR.
George C. Domolky Vice President of FMR.
Bettina Doulton Vice President of FMR and of funds advised by FMR.
Margaret L. Eagle Vice President of FMR and a fund advised by FMR.
Richard B. Fentin Senior Vice President of FMR and Vice President of a
fund advised by FMR.
Gregory Fraser Vice President of FMR and of a fund advised by FMR.
Jay Freedman Assistant Clerk of FMR; Clerk of FMR Corp., FMR
(U.K.) Inc., and FMR (Far East) Inc.; Secretary of FMR
Texas Inc.
Robert Gervis Vice President of FMR.
David L. Glancy Vice President of FMR and of a fund advised by FMR.
Kevin E. Grant Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
Boyce I. Greer Senior Vice President of FMR.
Bart A. Grenier Vice President of High-Income Funds advised by
FMR;Vice President of FMR.
Robert Haber Vice President of FMR.
Richard C. Habermann Senior Vice President of FMR; Vice President of funds
advised by FMR.
William J. Hayes Senior Vice President of FMR; Vice President of Equity
funds advised by FMR.
Richard Hazlewood Vice President of FMR and of a fund advised by FMR.
Fred L. Henning Jr. Senior Vice President of FMR; Vice President of
Fixed-Income funds advised by FMR.
Bruce Herring Vice President of FMR.
John R. Hickling Vice President of FMR and of a fund advised by FMR.
Robert F. Hill Vice President of FMR; Director of Technical Research.
Curt Hollingsworth Vice President of FMR and of funds advised by FMR.
Abigail P. Johnson Senior Vice President of FMR and of a fund advised by
FMR; Associate Director and Senior Vice President of
Equity funds advised by FMR.
David B. Jones Vice President of FMR.
Steven Kaye Vice President of FMR and of a fund advised by FMR.
Francis V. Knox Vice President of FMR; Compliance Officer of FMR
(U.K.) Inc.
David P. Kurrasch Vice President of FMR.
Robert A. Lawrence Senior Vice President of FMR and Vice President of
Fidelity Real Estate High Income and Fidelity Real
Estate High Income II funds advised by FMR;
Associate Director and Senior Vice President of Equity
funds advised by FMR; Vice President of High Income
funds advised by FMR.
Harris Leviton Vice President of FMR and of a fund advised by FMR.
Bradford E. Lewis Vice President of FMR and of funds advised by FMR.
Mark G. Lohr Vice President of FMR; Treasurer of FMR, FMR (U.K.)
Inc., FMR (Far East) Inc., and FMR Texas Inc.
Richard R. Mace Jr. Vice President of FMR and of funds advised by FMR.
Charles Mangum Vice President of FMR.
Kevin McCarey Vice President of FMR.
Diane McLaughlin Vice President of FMR.
Neal P. Miller Vice President of FMR.
Robert H. Morrison Vice President of FMR; Director of Equity Trading.
David L. Murphy Vice President of FMR and of funds advised by FMR.
Scott Orr Vice President of FMR.
Jacques Perold Vice President of FMR.
Anne Punzak Vice President of FMR.
Kenneth A. Rathgeber Vice President of FMR; Treasurer of funds advised by
FMR.
Kennedy P. Richardson Vice President of FMR.
Eric Roiter Vice President and General Counsel of FMR and
Secretary of funds advised by FMR.
Mark Rzepczynski Vice President of FMR.
Lee H. Sandwen Vice President of FMR.
Patricia A. Satterthwaite Vice President of FMR and of a fund advised by FMR.
Fergus Shiel Vice President of FMR.
Carol Smith-Fachetti Vice President of FMR.
Steven J. Snider Vice President of FMR.
Thomas T. Soviero Vice President of FMR and of a fund advised by FMR.
Richard Spillane Senior Vice President of FMR; Associate Director and
Senior Vice President of Equity funds advised by FMR;
Senior Vice President and Director of Operations and
Compliance of FMR (U.K.) Inc.
Thomas Sprague Vice President of FMR.
Robert E. Stansky Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Scott Stewart Vice President of FMR.
Cynthia Strauss Vice President of FMR.
Thomas Sweeney Vice President of FMR and of a fund advised by FMR.
Beth F. Terrana Senior Vice President of FMR; Vice President of a fund
advised by FMR.
Yoko Tilley Vice President of FMR.
Joel C. Tillinghast Vice President of FMR and of a fund advised by FMR.
Robert Tuckett Vice President of FMR.
Jennifer Uhrig Vice President of FMR and of funds advised by FMR.
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for
most funds advised by FMR.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Michael Mlinac Director None
James Curvey Director None
Martha B. Willis President None
Eric Roiter Vice President Secretary
Caron Ketchum Treasurer and Controller None
Gary Greenstein Assistant Treasurer None
Jay Freedman Assistant Clerk None
Linda Holland Compliance Officer None
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31a of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Company, Inc., 82 Devonshire Street, Boston, MA 02109, or the
funds' custodian UMB Bank, n.a., 1010 Grand Avenue, Kansas City, MO.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant, on behalf of Spartan Municipal Income Fund, Spartan
Connecticut Municipal Income Fund, Spartan New Jersey Municipal Income
Fund, and Spartan Florida Municipal Income Fund, provided the
information required by Item 5A is contained in the annual report,
undertakes to furnish to each person to whom a prospectus has been
delivered, upon their request and without charge, a copy of the
Registrant's latest annual report to shareholders.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for the effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Post-Effective Amendment No. 70 to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, and Commonwealth of
Massachusetts, on the 16th day of January, 1998.
FIDELITY COURT STREET TRUST
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d (dagger) President and Trustee January 16, 1998
Edward C. Johnson 3d (Principal Executive Officer)
/s/Richard A. Silver Treasurer January 16, 1998
Richard A. Silver
/s/Robert C. Pozen Trustee January 16, 1998
Robert C. Pozen
/s/Ralph F. Cox * Trustee January 16, 1998
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee January 16, 1998
Phyllis Burke Davis
/s/Robert M. Gates ** Trustee January 16, 1998
Robert M. Gates
/s/E. Bradley Jones * Trustee January 16, 1998
E. Bradley Jones
/s/Donald J. Kirk * Trustee January 16, 1998
Donald J. Kirk
/s/Peter S. Lynch * Trustee January 16, 1998
Peter S. Lynch
/s/Marvin L. Mann * Trustee January 16, 1998
Marvin L. Mann
/s/William O. McCoy * Trustee January 16, 1998
William O. McCoy
/s/Gerald C. McDonough * Trustee January 16, 1998
Gerald C. McDonough
/s/Thomas R. Williams * Trustee January 16, 1998
Thomas R. Williams
</TABLE>
(dagger) Signatures affixed by Robert C. Pozen pursuant to a power of
attorney dated July 17, 1997 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated December 19, 1996 and filed herewith.
** Signature affixed by Robert C. Hacker pursuant to a power of
attorney dated March 6, 1997 and filed herewith.
POWER OF ATTORNEY
I, the undersigned President and Director, Trustee, or General
Partner, as the case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Hereford Street Trust
Fidelity Advisor Series I Fidelity Income Fund
Fidelity Advisor Series II Fidelity Institutional Cash Portfolios
Fidelity Advisor Series III Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series IV Fidelity Investment Trust
Fidelity Advisor Series V Fidelity Magellan Fund
Fidelity Advisor Series VI Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series VII Fidelity Money Market Trust
Fidelity Advisor Series VIII Fidelity Mt. Vernon Street Trust
Fidelity Beacon Street Trust Fidelity Municipal Trust
Fidelity Boston Street Trust Fidelity Municipal Trust II
Fidelity California Municipal Trust Fidelity New York Municipal Trust
Fidelity California Municipal Trust II Fidelity New York Municipal Trust II
Fidelity Capital Trust Fidelity Phillips Street Trust
Fidelity Charles Street Trust Fidelity Puritan Trust
Fidelity Commonwealth Trust Fidelity Revere Street Trust
Fidelity Concord Street Trust Fidelity School Street Trust
Fidelity Congress Street Fund Fidelity Securities Fund
Fidelity Contrafund Fidelity Select Portfolios
Fidelity Corporate Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Court Street Trust Fidelity Summer Street Trust
Fidelity Court Street Trust II Fidelity Trend Fund
Fidelity Covington Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Daily Money Fund Fidelity U.S. Investments-Government Securities
Fidelity Destiny Portfolios Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity Union Street Trust II
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Newbury Street Trust
Fidelity Financial Trust Variable Insurance Products Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund II
Fidelity Government Securities Fund Variable Insurance Products Fund III
Fidelity Hastings Street Trust
</TABLE>
in addition to any other investment company for which Fidelity
Management & Research Company or an affiliate acts as investment
adviser and for which the undersigned individual serves as President
and Director, Trustee, or General Partner (collectively, the "Funds"),
hereby constitute and appoint Robert C. Pozen my true and lawful
attorney-in-fact, with full power of substitution, and with full power
to him to sign for me and in my name in the appropriate capacity, all
Registration Statements of the Funds on Form N-1A, Form N-8A, or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A, Form N-8A, or any successor thereto, any
Registration Statements on Form N-14, and any supplements or other
instruments in connection therewith, and generally to do all such
things in my name and on my behalf in connection therewith as said
attorney-in-fact deems necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company
Act of 1940, and all related requirements of the Securities and
Exchange Commission. I hereby ratify and confirm all that said
attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof. This power of attorney is effective for all documents
filed on or after August 1, 1997.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d_ July 17, 1997
Edward C. Johnson 3d
POWER OF ATTORNEY
We, the undersigned Directors, Trustees, or General Partners, as the
case may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Directors, Trustees, or
General Partners (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, our true and lawful attorneys-in-fact,
with full power of substitution, and with full power to each of them,
to sign for us and in our names in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in our names
and behalf in connection therewith as said attorneys-in-fact deems
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after January
1, 1997.
WITNESS our hands on this nineteenth day of December, 1996.
/s/Edward C. Johnson 3d___________ /s/Peter S. Lynch________________
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead_______________ /s/William O. McCoy______________
J. Gary Burkhead William O. McCoy
/s/Ralph F. Cox __________________ /s/Gerald C. McDonough___________
Ralph F. Cox Gerald C. McDonough
/s/Phyllis Burke Davis_____________ /s/Marvin L. Mann________________
Phyllis Burke Davis Marvin L. Mann
/s/E. Bradley Jones________________ /s/Thomas R. Williams ____________
E. Bradley Jones Thomas R. Williams
/s/Donald J. Kirk __________________
Donald J. Kirk
POWER OF ATTORNEY
I, the undersigned Director, Trustee, or General Partner, as the case
may be, of the following investment companies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Aberdeen Street Trust Fidelity Government Securities Fund
Fidelity Advisor Annuity Fund Fidelity Hastings Street Trust
Fidelity Advisor Series I Fidelity Hereford Street Trust
Fidelity Advisor Series II Fidelity Income Fund
Fidelity Advisor Series III Fidelity Institutional Cash Portfolios
Fidelity Advisor Series IV Fidelity Institutional Tax-Exempt Cash Portfolios
Fidelity Advisor Series V Fidelity Institutional Trust
Fidelity Advisor Series VI Fidelity Investment Trust
Fidelity Advisor Series VII Fidelity Magellan Fund
Fidelity Advisor Series VIII Fidelity Massachusetts Municipal Trust
Fidelity Beacon Street Trust Fidelity Money Market Trust
Fidelity Boston Street Trust Fidelity Mt. Vernon Street Trust
Fidelity California Municipal Trust Fidelity Municipal Trust
Fidelity California Municipal Trust II Fidelity Municipal Trust II
Fidelity Capital Trust Fidelity New York Municipal Trust
Fidelity Charles Street Trust Fidelity New York Municipal Trust II
Fidelity Commonwealth Trust Fidelity Phillips Street Trust
Fidelity Congress Street Fund Fidelity Puritan Trust
Fidelity Contrafund Fidelity Revere Street Trust
Fidelity Corporate Trust Fidelity School Street Trust
Fidelity Court Street Trust Fidelity Securities Fund
Fidelity Court Street Trust II Fidelity Select Portfolios
Fidelity Covington Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Daily Money Fund Fidelity Summer Street Trust
Fidelity Daily Tax-Exempt Fund Fidelity Trend Fund
Fidelity Destiny Portfolios Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity U.S. Investments-Government Securities
Portfolio, L.P. Fund, L.P.
Fidelity Devonshire Trust Fidelity Union Street Trust
Fidelity Exchange Fund Fidelity Union Street Trust II
Fidelity Financial Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Variable Insurance Products Fund II
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company or an affiliate acts as investment adviser and for
which the undersigned individual serves as Director, Trustee, or
General Partner (collectively, the "Funds"), hereby constitute and
appoint Arthur J. Brown, Arthur C. Delibert, Stephanie A. Djinis,
Robert C. Hacker, Thomas M. Leahey, Richard M. Phillips, and Dana L.
Platt, each of them singly, my true and lawful attorneys-in-fact, with
full power of substitution, and with full power to each of them, to
sign for me and in my name in the appropriate capacities, all
Registration Statements of the Funds on Form N-1A, Form N-8A or any
successor thereto, any and all subsequent Amendments, Pre-Effective
Amendments, or Post-Effective Amendments to said Registration
Statements on Form N-1A or any successor thereto, any Registration
Statements on Form N-14, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name
and behalf in connection therewith as said attorneys-in-fact deem
necessary or appropriate, to comply with the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940, and all
related requirements of the Securities and Exchange Commission. I
hereby ratify and confirm all that said attorneys-in-fact or their
substitutes may do or cause to be done by virtue hereof. This power
of attorney is effective for all documents filed on or after March 1,
1997.
WITNESS my hand on the date set forth below.
/s/Robert M. Gates March 6, 1997
Robert M. Gates
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, into the
Prospectus and Statement of Additional Information in Post-Effective
Amendment No. 70 to the Registration Statement on Form N-1A of
Fidelity Court Street Trust: Spartan Florida Municipal Income Fund of
our report dated January 9, 1998 on the financial statements and
financial highlights included in the November 30, 1997 Annual Report
to Shareholders of Spartan Florida Municipal Income Fund.
We further consent to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditor" in the
Statement of Additional Information.
/s/COOPERS & LYBRAND L.L.P
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 15, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000225323
<NAME> Fidelity Court Street Trust
<SERIES>
<NUMBER> 131
<NAME> Spartan Florida Municipal Income Portfolio
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 393,815
<INVESTMENTS-AT-VALUE> 414,474
<RECEIVABLES> 10,886
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 425,360
<PAYABLE-FOR-SECURITIES> 16,111
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 858
<TOTAL-LIABILITIES> 16,969
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 386,353
<SHARES-COMMON-STOCK> 35,768
<SHARES-COMMON-PRIOR> 34,823
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,352
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,686
<NET-ASSETS> 408,391
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21,090
<OTHER-INCOME> 0
<EXPENSES-NET> 2,160
<NET-INVESTMENT-INCOME> 18,930
<REALIZED-GAINS-CURRENT> 3,031
<APPREC-INCREASE-CURRENT> 3,539
<NET-CHANGE-FROM-OPS> 25,500
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 18,930
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,240
<NUMBER-OF-SHARES-REDEEMED> 5,344
<SHARES-REINVESTED> 1,048
<NET-CHANGE-IN-ASSETS> 17,261
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,680)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,160
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,164
<AVERAGE-NET-ASSETS> 393,399
<PER-SHARE-NAV-BEGIN> 11.230
<PER-SHARE-NII> .539
<PER-SHARE-GAIN-APPREC> .190
<PER-SHARE-DIVIDEND> .539
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.420
<EXPENSE-RATIO> 55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
