FIDELITY COURT STREET TRUST, 485APOS, 1998-11-16

FIDELITY COURT STREET TRUST
485APOS, 1998-11-16

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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. 73 [X]
and
REGISTRATION STATEMENT (No. 811-2741)
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 73 [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).
( ) on ( ) pursuant to paragraph (b).
( ) 60 days after filing pursuant to paragraph (a)(1).
(X) on (January 25, 1999) 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.

FIDELITY COURT STREET TRUST:
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND
SPARTAN NEW JERSEY MUNICIPAL INCOME FUND
SPARTAN FLORIDA MUNICIPAL INCOME FUND
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
1 a 1-3.. Front Cover Page
b 1-4 Back Cover Page
2 a, b Investment Summary; Investment Details
c 1 Investment Summary; Investment Details
2. Performance
3 Fee Table
4 a Investment Details
b, c Investment Summary; Investment Details
5 *
6 a 1 Front Cover Page; Fee Table; Fund Management
2 Fund Management
3 *
b *
7 a Valuing Shares; Buying and Selling Shares
b Buying and Selling Shares; Account Features and
Policies
c Buying and Selling Shares; Exchanging Shares;
Account Features and Policies
d Dividends and Capital Gains Distributions
e 1 Investment Summary; Investment Details; Tax
Consequences
2 Tax Consequences
3 *
f *
8 *
9 a **
b *
______________
* Not Applicable
** To be filed by amendment

LIKE SECURITIES OF ALL MUTUAL
FUNDS, THESE SECURITIES HAVE
NOT BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION, AND THE
SECURITIES AND EXCHANGE
COMMISSION HAS NOT
DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR
COMPLETE. ANY
REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
FIDELITY'S
CONNECTICUT MUNICIPAL
FUNDS
SPARTAN(registered trademark) CONNECTICUT MUNICIPAL MONEY MARKET FUND
(fund number 425, trading symbol SPCXX)
FIDELITY(registered trademark) CONNECTICUT MUNICIPAL MONEY MARKET FUND
(fund number 418, trading symbol FCMXX)
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND
(fund number 407, trading symbol FICNX)
PROSPECTUS
JANUARY 25, 1999
(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA 02109

CONTENTS

FUND SUMMARY 4 INVESTMENT SUMMARY

5 PERFORMANCE

6 FEE TABLE

FUND BASICS 7 INVESTMENT DETAILS

9 VALUING SHARES

SHAREHOLDER INFORMATION 9 BUYING AND SELLING SHARES

14 EXCHANGING SHARES

14 ACCOUNT FEATURES AND POLICIES

17 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

17 TAX CONSEQUENCES

FUND SERVICES 18 FUND MANAGEMENT

18 FUND DISTRIBUTION

APPENDIX 19 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY
INVESTMENT OBJECTIVE. Spartan Connecticut Municipal Money Market seeks
as high a level of current income, exempt from federal income tax and,
to the extent possible, exempt from Connecticut personal income tax,
as is consistent with preservation of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES. Fidelity Management & Research
Company (FMR)'s principal investment strategies include:
(small solid bullet) Investing normally in municipal money market
securities.
(small solid bullet) Investing at least 65% of total assets in
municipal securities whose interest is exempt from Connecticut
personal income tax.
(small solid bullet) Investing so that at least 80% of the fund's
income is exempt from federal income tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar projects.
(small solid bullet) Investing in compliance with industry-standard
requirements for money market funds for the quality, maturity and
diversification of investments.
PRINCIPAL INVESTMENTS RISKS. The fund is subject to the following
principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.
(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within Connecticut can affect the credit
quality of issuers located in that state.
(small solid bullet) ISSUER-SPECIFIC CHANGES. A decline in the credit
quality of an issuer or the provider of credit support or a
maturity-shortening structure for a security can cause the price of a
money market security to decrease.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
INVESTMENT OBJECTIVE. Connecticut Municipal Money Market Fund seeks as
high a level of current income exempt from federal income tax and, to
the extent possible, from Connecticut personal income tax, as is
consistent with preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES. Fidelity Management & Research
Company (FMR)'s principal investment strategies include:
(small solid bullet) Investing normally in municipal money market
securities.
(small solid bullet) Investing at least 65% of total assets in
municipal securities whose interest is exempt from Connecticut
personal income tax.
(small solid bullet) Investing so that at least 80% of the fund's
income distributions is exempt from federal income tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar projects.
(small solid bullet) Investing in compliance with industry-standard
requirements for money market funds for the quality, maturity, and
diversification of investments.
PRINCIPAL INVESTMENT RISKS. The fund is subject to the following
principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.
(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within Connecticut can affect the credit
quality of issuers located in that state.
(small solid bullet) ISSUER-SPECIFIC CHANGES. A decline in the credit
quality of an issuer or the provider of credit support or a
maturity-shortening structure for a security may cause the price of a
money market security to decrease.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
INVESTMENT OBJECTIVE. Spartan Connecticut Municipal Income Fund seeks
a high level of current income, exempt from federal income tax and
Connecticut personal income tax.
PRINCIPAL INVESTMENT STRATEGIES. Fidelity Management & Research
Company (FMR)'s principal investment strategies include:
(small solid bullet) Investing normally in investment-grade municipal
debt securities.
(small solid bullet) Investing so that at least 80% of the fund's
income is exempt from federal and Connecticut personal income taxes.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar projects.
(small solid bullet) Managing the fund to have similar overall
interest rate risk to the Lehman Brothers Connecticut 4 Plus Year
Enhanced Municipal Bond Index.
(small solid bullet) Allocating assets across different market sectors
and maturities.
(small solid bullet) Analyzing a security's structural features,
current pricing and trading opportunities, and the credit quality of
its issuer in selecting investments.
PRINCIPAL INVESTMENT RISKS. The fund is subject to the following
principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.
(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within Connecticut can affect the credit
quality of issuers located in that state.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in share price than would
occur in a more diversified fund.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in the funds'
performance from year to year and compares Spartan Connecticut
Municipal Income's performance to the performance of a market index
and similar funds over various periods of time. Data for the market
index for Spartan Connecticut Municipal Income is available only from
June 30, 1993 to the present. Returns are based on past results and
are not an indication of future performance.
YEAR-BY-YEAR RETURNS
The returns in the chart do not include the effect of the account
closeout fee. If the effect of the fee was reflected, returns would be
lower than those shown.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SPARTAN CT MUNI MONEY MARKET

CALENDAR YEARS 1992 1993 1994 1995 1996 1997 1998

% % % % % % %

</TABLE>

DURING THE PERIODS SHOWN IN THE CHART FOR SPARTAN CT MUNI MONEY
MARKET, THE HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER ENDING
[CALENDAR QUARTER], [YEAR]) AND THE LOWEST RETURN FOR A QUARTER WAS
__% (QUARTER ENDING [CALENDAR QUARTER], [YEAR]).

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CT MUNI MONEY MARKET

CALENDAR YEARS 1990 1991 1992 1993 1994 1995 1996 1997 1998

% % % % % % % % %

</TABLE>

DURING THE PERIODS SHOWN IN THE CHART FOR CT MUNI MONEY MARKET, THE
HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER ENDING [CALENDAR
QUARTER], [YEAR]) AND THE LOWEST RETURN FOR A QUARTER WAS __% (QUARTER
ENDING [CALENDAR QUARTER], [YEAR]).

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SPARTAN CT MUNI INCOME

CALENDAR YEARS 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

% % % % % % % % % %

</TABLE>

DURING THE PERIODS SHOWN IN THE CHART FOR SPARTAN CT MUNI INCOME, THE
HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER ENDING [CALENDAR
QUARTER], [YEAR]) AND THE LOWEST RETURN FOR A QUARTER WAS __% (QUARTER
ENDING [CALENDAR QUARTER], [YEAR]).
AVERAGE ANNUAL RETURNS
[The returns in the following table do not include the effect of the
$5 account closeout fee for Spartan Connecticut Municipal Money
Market.] [The returns in the following table include the effect of the
$5 account closeout fee based on median account size for Spartan
Connecticut Municipal Money Market.]
FOR THE PERIODS ENDED DECEMBER 31, 1998 PAST 1 PAST 5 PAST 10 YEARS/
YEAR YEARS LIFE OF FUND

SPARTAN CT MUNI MONEY MARKET % % %

CT MUNI MONEY MARKET % % %

SPARTAN CT MUNI INCOME % % %

LEHMAN BROS. CT 4+YR. ENH. MUNI BOND INDEX % % %

LIPPER CT MUNI DEBT FUNDS AVERAGE % % %

x FROM JANUARY 1, 1992 (Spartan CT Muni Money Market); January 1, 1990
(CT Muni Money Market)
If FMR had not reimbursed certain fund expenses during these periods,
each fund's total returns would have been lower.
The Lehman Brothers Connecticut 4 Plus Year Enhanced Municipal Bond
Index is a market capitalization-weighted index of Connecticut
investment-grade municipal bonds with maturities of four years or
more.
The Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold, or sell shares of the fund. [The annual fund
operating expenses provided below for the fund are based on historical
expenses, adjusted to reflect current fees./ The annual fund operating
expenses provided below for the fund are higher than the expenses
actually paid by the fund as the result of the payment or reduction of
certain expenses during the period./ The annual fund operating
expenses provided below for the fund are higher than the expenses
actually paid by the fund as the result of the payment or reduction of
certain expenses during the period./ The annual fund operating
expenses provided below for the fund are based on historical
expenses.]
SHAREHOLDER FEES
(PAID BY THE INVESTOR)
SALES CHARGE (LOAD) ON PURCHASES NONE
AND REINVESTED DISTRIBUTIONS

DEFERRED SALES CHARGE (LOAD) ON REDEMPTIONS NONE

REDEMPTION FEE (SHORT-TERM TRADING FEE)
ON SHARES HELD LESS THAN 180 DAYS
(AS A % OF AMOUNT REDEEMED)

FOR SPARTAN CT MUNI INCOME ONLY 0.50%

EXCHANGE FEE

FOR SPARTAN CT MUNI MONEY MARKET ONLYX,XX $5.00

WIRE REDEMPTION FEE

FOR SPARTAN CT MUNI MONEY MARKET ONLY $5.00

WIRE TRANSACTION FEEX

FOR SPARTAN CT MUNI MONEY MARKET ONLY $5.00

CHECKWRITING FEE, PER CHECK WRITTEN

FOR SPARTAN CT MUNI MONEY MARKET ONLYX $2.00

ACCOUNT CLOSEOUT FEE

FOR SPARTAN CT MUNI MONEY MARKET ONLYX $5.00

ANNUAL ACCOUNT MAINTENANCE FEE (FOR ACCOUNTS UNDER $2,500) $12.00

X THE FEES FOR INDIVIDUAL TRANSACTIONS ARE WAIVED IF YOUR ACCOUNT
BALANCE AT THE TIME OF THE TRANSACTION IS $50,000 OR MORE.
XX YOU WILL NOT PAY AN EXCHANGE FEE IF YOU EXCHANGE THROUGH ANY OF
FIDELITY'S AUTOMATED EXCHANGE SERVICES.
FUND OPERATING EXPENSES (PAID BY THE FUNDS)
SPARTAN CT MUNI MONEY MARKET MANAGEMENT FEE 0.50%

DISTRIBUTION AND SERVICE (12B-1) FEE NONE

OTHER EXPENSES %

TOTAL ANNUAL FUND OPERATING EXPENSES %

CT MUNI MONEY MARKET MANAGEMENT FEE %

DISTRIBUTION AND SERVICE (12B-1) FEE NONE

OTHER EXPENSES %

TOTAL ANNUAL FUND OPERATING EXPENSES %

SPARTAN CT MUNI INCOME MANAGEMENT FEE 0.55%

DISTRIBUTION AND SERVICE (12B-1) FEE NONE

OTHER EXPENSES %

TOTAL ANNUAL FUND OPERATING EXPENSES %

A portion of the brokerage commissions that certain funds pay is used
to reduce each of those fund's expenses. In addition, on behalf of
Spartan Connecticut Municipal Money Market and Spartan Connecticut
Municipal Income, FMR has entered into arrangements with each fund's
custodian and transfer agent whereby credits realized as a result of
uninvested cash balances are used to reduce fund expenses. Connecticut
Municipal Money Market has entered into arrangements with its
custodian and transfer agent whereby credits realized as a result of
uninvested cash balances are used to reduce custodian and transfer
agent expenses. Including these reductions, the total fund operating
expenses would have been __% for Spartan Connecticut Municipal Money
Market, __% for Connecticut Municipal Money Market and __% for Spartan
Connecticut Municipal Income.
This EXAMPLE helps you compare the cost of investing in the funds with
the cost of investing in other mutual funds.
Let's say, hypothetically, that each fund's annual return is 5% and
that your shareholder fees and each fund's annual operating expenses
are exactly as described in the fee table. This example illustrates
the effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 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 Connecticut Municipal Money Market, if you leave your
account open:

ACCOUNT ACCOUNT
OPEN CLOSED

SPARTAN CT MUNI MONEY MARKET 1 YEAR $ $

3 YEARS $ $

5 YEARS $ $

10 YEARS $ $

CT MUNI MONEY MARKET 1 YEAR $

3 YEARS $

5 YEARS $

10 YEARS $

SPARTAN CT MUNI INCOME 1 YEAR $

3 YEARS $

5 YEARS $

10 YEARS $

FUND BASICS

INVESTMENT DETAILS
INVESTMENT OBJECTIVE:
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET FUND seeks as high a level
of current income, exempt from federal income tax and, to the extent
possible, exempt from Connecticut personal income tax, as is
consistent with preservation of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES:
FMR normally invests the fund's assets in municipal money market
securities.
FMR normally invests at least 65% of the fund's total assets in
municipal securities whose interest is exempt from Connecticut
personal income tax and invests the fund's assets so that at least 80%
of the fund's income is exempt from federal income tax. Municipal
securities whose interest is exempt from Federal and Connecticut
income taxes include securities issued by U.S territories and
possessions, such as Guam, the Virgin Islands and Puerto Rico, and
their political subdivisions and public corporations. FMR may invest
the fund's assets in municipal securities whose interest is subject to
Connecticut personal income tax. Although FMR does not currently
intend to invest the fund's assets in municipal securities whose
interest is subject to federal income tax, FMR may invest all of the
fund's assets in municipal securities whose interest is subject to the
federal alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, transportation and utilities.
In buying and selling securities for the fund, FMR complies with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of the fund's investments. FMR
stresses maintaining a stable $1.00 share price, liquidity and income.
INVESTMENT OBJECTIVE:
CONNECTICUT MUNICIPAL MONEY MARKET FUND seeks as high a level of
current income exempt from federal income tax and, to the extent
possible, from Connecticut personal income tax, as is consistent with
preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES:
FMR normally invests the fund's assets in municipal money market
securities.
FMR normally invests at least 65% of the fund's total assets in
municipal securities whose interest is exempt from Connecticut
personal income tax and invests the fund's assets so that at least 80%
of the fund's income distributions is exempt from federal income tax.
Municipal securities whose interest is exempt from federal and
Connecticut income taxes include securities issued by U.S territories
and possessions, such as Guam, the Virgin Islands and Puerto Rico, and
their political subdivisions and public corporations. FMR may invest
the fund's assets in municipal securities whose interest is subject to
Connecticut personal income tax. Although FMR does not currently
intend to invest the fund's assets in municipal securities whose
interest is subject to federal income tax, FMR may invest all of the
fund's assets in municipal securities whose interest is subject to the
federal alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, transportation and utilities.
In buying and selling securities for the fund, FMR complies with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of the fund's investments. FMR
stresses maintaining a stable $1.00 share price, liquidity, and
income.
INVESTMENT OBJECTIVE:
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND seeks a high level of
current income, exempt from federal income tax and Connecticut
personal income tax.
PRINCIPAL INVESTMENT STRATEGIES:
FMR normally invests the fund's assets in investment-grade municipal
debt securities.
FMR normally invests the fund's assets so that at least 80% of the
fund's income is exempt from federal and Connecticut personal income
taxes. Municipal securities whose interest is exempt from federal and
Connecticut income taxes include securities issued by U.S territories
and possessions, such as Guam, the Virgin Islands and Puerto Rico, and
their political subdivisions and public corporations. Although FMR
does not currently intend to invest the fund's assets in municipal
securities whose interest is subject to federal or Connecticut
personal income tax, FMR may invest all of the fund's assets in
municipal securities whose interest is subject to the federal
alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar types of projects, such as those
relating to education, health care, transportation and utilities.
FMR uses the Lehman Brothers Connecticut 4 Plus Year Enhanced
Municipal Bond Index as a guide in structuring the fund and selecting
its investments. FMR manages the fund to have similar overall interest
rate risk to the index. As of November 30, 1998, the dollar-weighted
average maturity of the fund and the index was approximately __ and __
years, respectively.
FMR allocates the fund's 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 and maturity.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR analyzes a
security's structural features, current price compared to FMR's
estimate of its long-term value, and any short-term trading
opportunities resulting from market inefficiencies, and the credit
quality of its issuer.
FMR may use various techniques, including buying and selling futures
contracts, to increase or decrease the fund's expose to changing
security prices, interest rates or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES:
MONEY MARKET SECURITIES are high quality, short-term debt securities
that pay a fixed, variable or floating interest rate. Securities are
often specifically structured so that they are eligible investments
for a money market fund. For example, in order to satisfy the maturity
restrictions for a money market fund, some money market securities
have demand or put features which have the effect of shortening the
security's maturity. Municipal money market securities include
variable rate demand notes, commercial paper and municipal notes.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay current interest,
but are sold at a discount from their face values. Municipal debt
securities include general obligation bonds of municipalities, local
or state governments, project or revenue-specific bonds, or
pre-refunded or escrowed bonds.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
and private purposes, including general financing for state and local
governments, or financing for a specific project or public facility.
Municipal securities may be fully or partially backed by the local
government, by the credit of a private issuer, by the current or
anticipated revenues from a specific project or specific assets, or by
domestic or foreign entities providing credit support such as letters
of credit, guarantees or insurance.
PRINCIPAL INVESTMENT RISKS:
Many factors affect each fund's performance. Because FMR concentrates
each fund's investments in Connecticut, the fund's performance is
expected to be closely tied to economic and political conditions
within that state and to be more volatile than the performance of a
more geographically diversified fund.
The money market funds' yields will change daily based on changes in
interest rates and other market conditions. Although each fund is
managed to maintain a stable $1.00 share price, there is no guarantee
that the fund will be able to do so. For example, a major increase in
interest rates or a decrease in the credit quality of the issuer of
one of a fund's investments could cause the fund's share price to
decrease. While the funds will be charged premiums by a mutual
insurance company for coverage of specified types of losses related to
default or bankruptcy on certain securities, a fund may incur losses
regardless of the insurance.
The bond fund's yield and share price change daily based on changes in
interest rates and market conditions and in response to other
economic, political or financial developments. The fund's reaction to
these developments will be affected by the types and maturities of the
securities in which the fund invests, the financial condition,
industry and economic sector, and geographic location of an issuer,
and the fund's level of investment in the securities of that issuer.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
The following factors may significantly affect a fund's performance:
MUNICIPAL MARKET VOLATILITY. Municipal securities can be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation, legislative changes, or the
rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those
relating to education, health care, transportation and utilities,
conditions in those sectors can affect the overall municipal market.
In addition, changes in the financial condition of an individual
municipal insurer can affect the overall municipal market.
INTEREST RATE CHANGES. Debt and money market securities have varying
levels of sensitivity to changes in interest rates. In general, the
price of a debt or money market security can fall when interest rates
rise and can rise when interest rates fall. Securities with longer
maturities can be are more sensitive to interest rate changes. In
other words, the longer the maturity of a security, the greater the
impact a change in interest rates could have on the security's price.
In addition, short-term and long-term interest rates do not
necessarily move in the same amount or the same direction. Short-term
securities tend to react to changes in short-term interest rates, and
long-term securities tend to react to changes in long-term interest
rates.
FOREIGN EXPOSURE. Issuers located in foreign countries and entities
located in foreign countries that provide credit support or a
maturity-shortening structure can involve increased risks. Extensive
public information about the issuer or provider may not be available
and unfavorable political, economic or governmental developments could
affect the value of the security.
GEOGRAPHIC CONCENTRATION. Connecticut's economy relies in part on
activities affected by cyclical changes, and declines in defense
spending have increased unemployment levels in the state.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of issuer, and changes in general economic or
political conditions can adversely affect the credit quality or value
of an issuer's securities. Lower-quality debt securities (those of
less than investment-grade quality) tend to be more sensitive to these
changes than higher-quality debt securities. Entities providing credit
support or a maturity-shortening structure also can be affected by
these types of changes. Municipal securities backed by current or
anticipated revenues from a specific project or specific assets can be
negatively affected by the discontinuance of the taxation supporting
the project or assets or the inability to collect revenues for the
project or from the assets. If the Internal Revenue Service determines
an issuer of a municipal security has not complied with applicable tax
requirements, interest from the security could become taxable and the
security could decline significantly in value. In addition, if the
structure of a security fails to function as intended, interest from
the security could become taxable or the security could decline in
value.
In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance, and a fund may distribute income subject to federal or
Connecticut personal income tax.
FUNDAMENTAL INVESTMENT POLICIES
The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET seeks as high a level of
current income, exempt from federal income tax and, to the extent
possible, exempt from Connecticut personal income tax, as is
consistent with preservation of capital and liquidity. The fund will
normally invest so that at least 65% of its total assets are invested
in state tax-free obligations and at least 80% of its income will be
exempt from federal income tax.
CONNECTICUT MUNICIPAL MONEY MARKET seeks as high a level of current
income exempt from federal income tax and, to the extent possible,
from Connecticut personal income tax, as is consistent with
preservation of capital. Under normal conditions, at least 80% of the
fund's income distributions will be exempt from federal income tax and
at least 65% of the fund's total assets will be invested in state
tax-free obligations.
SPARTAN CONNECTICUT MUNICIPAL INCOME seeks a high level of current
income, exempt from federal income tax and Connecticut personal income
tax. The fund will normally invest so that at least 80% of its income
is exempt from both federal and Connecticut personal income taxes.
VALUING SHARES
Each fund's net asset value per share (NAV) is the value of a single
share.
The funds are OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. Fidelity normally calculates each fund's NAV as of the
close of business 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 SEC. Each fund's assets are valued
as of this time for the purpose of computing the fund's NAV.
To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.
Each money market fund's ASSETS ARE VALUED on the basis of amortized
cost.
The bond fund's ASSETS ARE VALUED primarily on the basis of
information furnished by a pricing service or market quotations. If
market quotations or information furnished by a pricing service is not
readily available for a security or if a security's value has been
materially affected by events occurring after the close of the
exchange or market on which the security is principally traded, that
security may be valued by another method that the Board of Trustees
believes accurately reflects fair value. In these circumstances, the
security's valuation may differ from the generally expected valuation.
SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES
GENERAL INFORMATION
Fidelity Investments(registered trademark) 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-advantaged retirement plans for individuals investing on their own
or through their employer.
For account, product and service information, please use the following
WEB SITE and PHONE NUMBERS:
(small solid bullet) For information over the Internet, visit
Fidelity's Web site at www.fidelity.com.
(small solid bullet) For accessing account information automatically
by phone, use TouchTone Xpress(registered trademark), 1-800-544-5555.
(small solid bullet) For exchanges and redemptions, 1-800-544-7777.
(small solid bullet) For account assistance, 1-800-544-6666.
(small solid bullet) For mutual fund and retirement information,
1-800-544-8888.
(small solid bullet) For brokerage information, 1-800-544-7272.
(small solid bullet) TDD - Service for the Deaf and Hearing-Impaired,
1-800-544-0118 (9:00 a.m. - 9:00 p.m. Eastern time).
Please use the following ADDRESSES:
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
You may buy or sell shares of the funds through an investment
professional. If you invest through an investment professional, the
procedures for buying, selling and exchanging shares of a fund and the
account features and policies may differ. Additional fees may also
apply to your investment in a fund, including a transaction fee if you
buy or sell shares of the fund through a broker or other investment
professional.
Certain methods of contacting Fidelity, such as by telephone or
electronically, may be unavailable or delayed (for example, during
periods of unusual market activity). In addition, the level and type
of service available may be restricted based on criteria established
by Fidelity.
The different ways to set up (register) your account with Fidelity are
listed in the following table.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS.
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS
BUYING SHARES
The PRICE TO BUY one share of each fund is the fund's NAV. Each fund's
shares are sold without a sales charge.
Your shares will be bought at the next NAV calculated after your
investment is received in proper form.
Short-term or excessive trading into and out of a fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, a fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
that fund. For these purposes, FMR may consider an investor's trading
history in that fund or other Fidelity Funds, and accounts under
common ownership or control.
Each fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, 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) Fidelity 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
Fidelity has incurred.
Certain financial institutions that have entered into sales agreements
with Fidelity Distributors Corporation (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 order will
be canceled and the financial institution could be held liable for
resulting fees or losses.
MINIMUMS
TO OPEN AN ACCOUNT
For Spartan CT Muni Money Market $25,000
For CT Muni Money Market $5,000
For Spartan CT Muni Income $10,000
TO ADD TO AN ACCOUNT
For Spartan CT Muni Money Market $1,000
Through regular investment plans $500
For CT Muni Money Market $500
Through regular investment plans $100
For Spartan CT Muni Income $1,000
Through regular investment plans $500
MINIMUM BALANCE
For Spartan CT Muni Money Market $10,000
For CT Muni Money Market $2,000
For Spartan CT Muni Income $5,000
There is no minimum account balance or initial or subsequent purchase
minimum for investments through Fidelity Portfolio Advisory ServicesSM
or a qualified state tuition program. In addition, each fund may waive
or lower purchase minimums in other circumstances.
KEY INFORMATION

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PHONE TO OPEN AN ACCOUNT
1-800-544-7777 (SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND.
TO ADD TO AN ACCOUNT
(SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND.
(SMALL SOLID BULLET) USE FIDELITY MONEY LINE TO TRANSFER FROM YOUR BANK ACCOUNT.

INTERNET TO OPEN AN ACCOUNT
WWW.FIDELITY.COM (SMALL SOLID BULLET) COMPLETE AND SIGN THE APPLICATION. MAKE YOUR CHECK PAYABLE
TO THE COMPLETE NAME OF THE FUND.
MAIL TO THE ADDRESS UNDER "MAIL" BELOW.
TO ADD TO AN ACCOUNT
(SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND.
(SMALL SOLID BULLET) USE FIDELITY MONEY LINE TO TRANSFER FROM YOUR BANK ACCOUNT.

MAIL TO OPEN AN ACCOUNT
FIDELITY INVESTMENTS (SMALL SOLID BULLET) COMPLETE AND SIGN THE APPLICATION. MAKE YOUR CHECK PAYABLE
TO THE COMPLETE NAME OF THE FUND.
P.O. BOX 770001 MAIL TO THE ADDRESS AT LEFT.
CINCINNATI, OH TO ADD TO AN ACCOUNT
45277-0002 (SMALL SOLID BULLET) MAKE YOUR CHECK PAYABLE TO THE COMPLETE NAME OF THE FUND.
INDICATE YOUR FUND ACCOUNT NUMBER ON
YOUR CHECK AND MAIL TO THE ADDRESS AT LEFT.
(SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND. SEND A LETTER OF
INSTRUCTION TO THE ADDRESS AT LEFT, INCLUDING
YOUR NAME, THE FUNDS' NAMES, THE FUND ACCOUNT NUMBERS, AND
THE DOLLAR AMOUNT OR NUMBER OF
SHARES TO BE EXCHANGED.

IN PERSON TO OPEN AN ACCOUNT
(SMALL SOLID BULLET) BRING YOUR APPLICATION AND CHECK TO A FIDELITY INVESTOR CENTER.
CALL 1-800-544-9797 FOR THE CENTER
NEAREST YOU.
TO ADD TO AN ACCOUNT
(SMALL SOLID BULLET) BRING YOUR CHECK TO A FIDELITY INVESTOR CENTER. CALL 1-800-544-9797
FOR THE CENTER NEAREST YOU.

WIRE TO OPEN AN ACCOUNT
(SMALL SOLID BULLET) CALL 1-800-544-7777 TO SET UP YOUR ACCOUNT AND TO ARRANGE A
WIRE TRANSACTION.
(SMALL SOLID BULLET) WIRE WITHIN 24 HOURS TO: BANKERS TRUST COMPANY,
BANK ROUTING # 021001033, ACCOUNT # 00163053.
(SMALL SOLID BULLET) SPECIFY THE COMPLETE NAME OF THE FUND AND INCLUDE YOUR NEW FUND
ACCOUNT NUMBER AND YOUR NAME.
TO ADD TO AN ACCOUNT
(SMALL SOLID BULLET) WIRE TO: BANKERS TRUST COMPANY, BANK ROUTING # 021001033,
ACCOUNT # 00163053.
(SMALL SOLID BULLET) SPECIFY THE COMPLETE NAME OF THE FUND AND INCLUDE YOUR FUND
ACCOUNT NUMBER AND YOUR NAME.

AUTOMATICALLY TO OPEN AN ACCOUNT
(SMALL SOLID BULLET) NOT AVAILABLE.
TO ADD TO AN ACCOUNT
(SMALL SOLID BULLET) USE FIDELITY AUTOMATIC ACCOUNT BUILDER OR DIRECT DEPOSIT.
(SMALL SOLID BULLET) USE FIDELITY AUTOMATIC EXCHANGE SERVICE TO EXCHANGE FROM A
FIDELITY MONEY MARKET FUND.

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SELLING SHARES
The PRICE TO SELL one share of Spartan Connecticut Municipal Money
Market or Connecticut Municipal Money Market is the fund's NAV. The
PRICE TO SELL one share of Spartan Connecticut Municipal Income is the
fund's NAV, minus the short-term trading fee, if applicable.
Spartan Connecticut Municipal Income will deduct a SHORT-TERM TRADING
FEE of 0.50% from the redemption amount if you sell your shares 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.
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.
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.
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 sell 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.
When you place an order to sell shares, note the following:
(small solid bullet) If you are selling some but not all of your
Spartan Connecticut Municipal Money Market shares, leave at least
$10,000 worth of shares in the account to keep it open, except
accounts not subject to account minimums. If you are selling some but
not all of your Connecticut Municipal Money Market shares, leave at
least $2,000 worth of shares in the account to keep it open, except
accounts not subject to account minimums. If you are selling some but
not all of your Spartan Connecticut Municipal Income shares, leave at
least $5,000 worth of shares in the account to keep it open, except
accounts not subject to account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
a fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until investments credited to your account have been received
and 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) Redemption proceeds may be paid in securities or
other assets rather than in cash if the Board of Trustees determines
it is in the best interests of a fund.
(small solid bullet) If you sell shares of Spartan Connecticut
Municipal Money Market or Connecticut Municipal Money Market 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.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.

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KEY INFORMATION
PHONE (SMALL SOLID BULLET) CALL THE PHONE NUMBER AT LEFT TO INITIATE A WIRE TRANSACTION
OR TO REQUEST A CHECK FOR YOUR
1-800-544-7777 REDEMPTION.
(SMALL SOLID BULLET) USE FIDELITY MONEY LINE TO TRANSFER TO YOUR BANK ACCOUNT.
(SMALL SOLID BULLET) EXCHANGE TO ANOTHER FIDELITY FUND. CALL THE PHONE NUMBER AT LEFT.

INTERNET (SMALL SOLID BULLET) EXCHANGE TO ANOTHER FIDELITY FUND.
WWW.FIDELITY.COM (SMALL SOLID BULLET) USE FIDELITY MONEY LINE TO TRANSFER TO YOUR BANK ACCOUNT.

MAIL INDIVIDUAL, JOINT TENANT, SOLE PROPRIETORSHIP, UGMA, UTMA
FIDELITY INVESTMENTS (SMALL SOLID BULLET) SEND A LETTER OF INSTRUCTION TO THE ADDRESS AT LEFT, INCLUDING
YOUR NAME, THE FUND'S NAME, YOUR FUND
P.O. BOX 660602 ACCOUNT NUMBER, AND THE DOLLAR AMOUNT OR NUMBER OF SHARES TO BE SOLD.
THE LETTER OF INSTRUCTION
DALLAS, TX MUST BE SIGNED BY ALL PERSONS REQUIRED TO SIGN FOR TRANSACTIONS,
EXACTLY AS THEIR NAMES APPEAR ON
75266-0602 THE ACCOUNT.
TRUST
(SMALL SOLID BULLET) SEND A LETTER OF INSTRUCTION TO THE ADDRESS AT LEFT, INCLUDING
THE TRUST'S NAME, THE FUND'S NAME, THE
TRUST'S FUND ACCOUNT NUMBER, AND THE DOLLAR AMOUNT OR NUMBER OF
SHARES TO BE SOLD. THE TRUSTEE MUST
SIGN THE LETTER OF INSTRUCTION INDICATING CAPACITY AS TRUSTEE.
IF THE TRUSTEE'S NAME IS NOT IN THE ACCOUNT
REGISTRATION, PROVIDE A COPY OF THE TRUST DOCUMENT CERTIFIED
WITHIN THE LAST 60 DAYS.
BUSINESS OR ORGANIZATION
(SMALL SOLID BULLET) SEND A LETTER OF INSTRUCTION TO THE ADDRESS AT LEFT, INCLUDING
THE FIRM'S NAME, THE FUND'S NAME, THE
FIRM'S FUND ACCOUNT NUMBER, AND THE DOLLAR AMOUNT OR NUMBER OF
SHARES TO BE SOLD. AT LEAST ONE
PERSON AUTHORIZED BY CORPORATE RESOLUTION TO ACT ON THE ACCOUNT
MUST SIGN THE LETTER OF INSTRUCTION.
(SMALL SOLID BULLET) INCLUDE A CORPORATE RESOLUTION WITH CORPORATE SEAL OR A SIGNATURE GUARANTEE.
EXECUTOR, ADMINISTRATOR, CONSERVATOR, GUARDIAN
(SMALL SOLID BULLET) CALL 1-800-544-6666 FOR INSTRUCTIONS.

IN PERSON INDIVIDUAL, JOINT TENANT, SOLE PROPRIETORSHIP, UGMA, UTMA
(SMALL SOLID BULLET) BRING A LETTER OF INSTRUCTION TO A FIDELITY INVESTOR CENTER.
CALL 1-800-544-9797 FOR THE CENTER
NEAREST YOU. THE LETTER OF INSTRUCTION MUST BE SIGNED BY ALL PERSONS
REQUIRED TO SIGN FOR TRANSACTIONS,
EXACTLY AS THEIR NAMES APPEAR ON THE ACCOUNT.
TRUST
(SMALL SOLID BULLET) BRING A LETTER OF INSTRUCTION TO A FIDELITY INVESTOR CENTER.
CALL 1-800-544-9797 FOR THE CENTER
NEAREST YOU. THE TRUSTEE MUST SIGN THE LETTER OF INSTRUCTION
INDICATING CAPACITY AS TRUSTEE. IF THE TRUSTEE'S
NAME IS NOT IN THE ACCOUNT REGISTRATION, PROVIDE A COPY OF THE TRUST
DOCUMENT CERTIFIED WITHIN THE LAST 60
DAYS.
BUSINESS OR ORGANIZATION
(SMALL SOLID BULLET) BRING A LETTER OF INSTRUCTION TO A FIDELITY INVESTOR CENTER.
CALL 1-800-544-9797 FOR THE CENTER
NEAREST YOU. AT LEAST ONE PERSON AUTHORIZED BY CORPORATE RESOLUTION
TO ACT ON THE ACCOUNT MUST SIGN
THE LETTER OF INSTRUCTION.
(SMALL SOLID BULLET) INCLUDE A CORPORATE RESOLUTION WITH CORPORATE SEAL OR A SIGNATURE GUARANTEE.
EXECUTOR, ADMINISTRATOR, CONSERVATOR, GUARDIAN
(SMALL SOLID BULLET) VISIT A FIDELITY INVESTOR CENTER FOR INSTRUCTIONS.
CALL 1-800-544-9797 FOR THE CENTER NEAREST YOU.

AUTOMATICALLY (SMALL SOLID BULLET) USE FIDELITY AUTOMATIC EXCHANGE SERVICE TO EXCHANGE FROM CONNECTICUT
MUNICIPAL MONEY MARKET TO
ANOTHER FIDELITY FUND.
(SMALL SOLID BULLET) USE PERSONAL WITHDRAWAL SERVICE TO SET UP PERIODIC REDEMPTIONS FROM
YOUR BOND FUND ACCOUNT.

CHECK (SMALL SOLID BULLET) WRITE A CHECK TO SELL SHARES FROM YOUR ACCOUNT.

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EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
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 policies and restrictions
governing exchanges:
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only 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) You may pay a $5.00 fee for each exchange out of
Spartan Connecticut Municipal Money Market unless you place your
transaction through Fidelity's automated exchange services.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Currently, there is no limit on the number of
exchanges out of Connecticut Municipal Money Market.
(small solid bullet) [Spartan Connecticut Municipal Money Market and
Spartan Connecticut Municipal Income] may temporarily or permanently
terminate the exchange privilege of any investor who makes more than
four exchanges out of the fund per calendar year.
(small solid bullet) Each fund may 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.
The funds may terminate or modify the exchange privileges 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 3.00% of
the amount exchanged. Check each fund's prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
funds.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts, or out of your account. While
automatic investment programs 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 retirement, a home, educational expenses,
and other long-term financial goals. Automatic withdrawal or exchange
programs can be a convenient way to provide a consistent income flow
or to move money between your investments.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS

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FIDELITY AUTOMATIC ACCOUNT BUILDER(registered trademark)
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM FREQUENCY PROCEDURES
$500 FOR SPARTAN MONTHLY OR QUARTERLY (SMALL SOLID BULLET) TO SET UP FOR A NEW ACCOUNT,
COMPLETE THE APPROPRIATE SECTION ON
CT MUNI MONEY THE FUND APPLICATION.
MARKET (SMALL SOLID BULLET) TO SET UP FOR EXISTING ACCOUNTS,
CALL 1-800-544-6666 OR VISIT
$100 FOR CT MUNI FIDELITY'S WEB SITE FOR AN APPLICATION.
MONEY MARKET (SMALL SOLID BULLET) TO MAKE CHANGES, CALL 1-800-544-6666 AT
LEAST THREE BUSINESS
$500 FOR SPARTAN DAYS PRIOR TO YOUR NEXT SCHEDULED INVESTMENT DATE.
CT MUNI INCOME

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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A
FIDELITY FUNDA
MINIMUM FREQUENCY PROCEDURES
$500 FOR SPARTAN EVERY PAY PERIOD (SMALL SOLID BULLET) TO SET UP FOR A NEW ACCOUNT, CHECK THE APPROPRIATE BOX ON THE
CT MUNI MONEY FUND APPLICATION.
MARKET (SMALL SOLID BULLET) TO SET UP FOR AN EXISTING ACCOUNT, CALL 1-800-544-6666 OR VISIT
$100 FOR CT MUNI FIDELITY'S WEB SITE FOR AN AUTHORIZATION FORM.
MONEY MARKET (SMALL SOLID BULLET) TO MAKE CHANGES YOU WILL NEED A NEW AUTHORIZATION FORM. CALL
$500 FOR SPARTAN 1-800-544-6666 OR VISIT FIDELITY'S WEB SITE TO OBTAIN ONE.
CT MUNI INCOME

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A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THAT FUND MAY NOT BE AN
APPROPRIATE CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.

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FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY
FUND
MINIMUM FREQUENCY PROCEDURES
$500 FOR SPARTAN MONTHLY, BIMONTHLY, (SMALL SOLID BULLET) TO SET UP, CALL 1-800-544-6666 AFTER BOTH
ACCOUNTS ARE OPENED.
CT MUNI MONEY QUARTERLY, OR ANNUALLY (SMALL SOLID BULLET) TO MAKE CHANGES, CALL 1-800-544-6666 AT
LEAST THREE BUSINESS
MARKET DAYS PRIOR TO YOUR NEXT SCHEDULED EXCHANGE DATE.
$100 FOR CT MUNI
MONEY MARKET
$500 FOR SPARTAN
CT MUNI INCOME

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PERSONAL WITHDRAWAL SERVICE
TO SET UP PERIODIC REDEMPTIONS FROM YOUR BOND FUND ACCOUNT TO YOU OR
TO YOUR BANK ACCOUNT.
FREQUENCY PROCEDURES
MONTHLY (SMALL SOLID BULLET) TO SET UP, CALL 1-800-544-6666.
(SMALL SOLID BULLET) TO MAKE CHANGES, CALL FIDELITY AT 1-800-544-6666 AT LEAST THREE BUSINESS
DAYS PRIOR TO YOUR NEXT SCHEDULED WITHDRAWAL DATE.

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OTHER FEATURES. The following other features are also available to buy
and sell shares of the funds.

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WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(SMALL SOLID BULLET) YOU MUST SIGN UP FOR THE WIRE FEATURE BEFORE USING IT. COMPLETE THE APPROPRIATE SECTION ON THE
APPLICATION WHEN OPENING YOUR ACCOUNT, OR CALL 1-800-544-7777 TO ADD THE FEATURE AFTER YOUR
ACCOUNT IS OPENED. CALL 1-800-544-7777 BEFORE YOUR FIRST USE TO VERIFY THAT THIS FEATURE IS SET UP
ON YOUR ACCOUNT.

(SMALL SOLID BULLET) TO SELL SHARES BY WIRE, YOU MUST DESIGNATE THE U.S. COMMERCIAL BANK ACCOUNT INTO WHICH YOU WISH
THE REDEMPTION PROCEEDS DEPOSITED.

(SMALL SOLID BULLET) THERE MAY BE A $5.00 FEE FOR EACH WIRE PURCHASE FOR SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET.

(SMALL SOLID BULLET) THERE MAY BE A $5.00 FEE FOR EACH WIRE REDEMPTION FOR SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET.

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FIDELITY MONEY LINE(registered trademark)
TO TRANSFER MONEY BY PHONE BETWEEN YOUR BANK ACCOUNT AND YOUR FUND
ACCOUNT.
(SMALL SOLID BULLET) YOU MUST SIGN UP FOR THE MONEY LINE FEATURE BEFORE USING IT.
COMPLETE THE APPROPRIATE SECTION ON
THE APPLICATION AND THEN CALL 1-800-544-7777 OR VISIT FIDELITY'S WEB SITE BEFORE YOUR FIRST USE TO
VERIFY THAT THIS FEATURE IS SET UP ON YOUR ACCOUNT.
(SMALL SOLID BULLET) MOST TRANSFERS ARE COMPLETE WITHIN THREE BUSINESS DAYS OF YOUR CALL.
(SMALL SOLID BULLET) MAXIMUM PURCHASE: $100,000

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FIDELITY ON-LINE XPRESS+(registered trademark)
TO MANAGE YOUR INVESTMENTS THROUGH YOUR PC.
CALL 1-800-544-7272 OR VISIT FIDELITY'S WEB SITE FOR MORE INFORMATION.
(SMALL SOLID BULLET) FOR ACCOUNT BALANCES AND HOLDINGS;
(SMALL SOLID BULLET) TO REVIEW RECENT ACCOUNT HISTORY;
(SMALL SOLID BULLET) FOR MUTUAL FUND AND BROKERAGE TRADING; AND
(SMALL SOLID BULLET) FOR ACCESS TO RESEARCH AND ANALYSIS TOOLS.

FIDELITY WEB XPRESS(registered trademark)
TO ACCESS AND MANAGE YOUR ACCOUNT OVER THE INTERNET AT FIDELITY'S WEB
SITE.

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<S> <C>
(SMALL SOLID BULLET) FOR ACCOUNT BALANCES AND HOLDINGS;
(SMALL SOLID BULLET) TO REVIEW RECENT ACCOUNT HISTORY;
(SMALL SOLID BULLET) TO OBTAIN QUOTES;
(SMALL SOLID BULLET) FOR MUTUAL FUND TRADING; AND
(SMALL SOLID BULLET) TO ACCESS THIRD-PARTY RESEARCH ON COMPANIES, STOCKS, MUTUAL FUNDS AND THE MARKET.

</TABLE>

TOUCHTONE XPRESS(registered trademark)
TO ACCESS AND MANAGE YOUR ACCOUNT AUTOMATICALLY BY PHONE.
CALL 1-800-544-5555.
(SMALL SOLID BULLET) FOR ACCOUNT BALANCES AND HOLDINGS;
(SMALL SOLID BULLET) FOR MUTUAL FUND AND BROKERAGE TRADING;
(SMALL SOLID BULLET) TO OBTAIN QUOTES;
(SMALL SOLID BULLET) TO REVIEW ORDERS AND MUTUAL FUND ACTIVITY; AND
(SMALL SOLID BULLET) TO CHANGE YOUR PERSONAL IDENTIFICATION NUMBER (PIN).

CHECKWRITING
TO REDEEM SHARES FROM YOUR SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET
ACCOUNT AND CONNECTICUT MUNICIPAL MONEY MARKET ACCOUNT.

<TABLE>
<CAPTION>
<S> <C>
(SMALL SOLID BULLET) TO SET UP, COMPLETE THE APPROPRIATE SECTION ON THE APPLICATION.
(SMALL SOLID BULLET) ALL ACCOUNT OWNERS MUST SIGN A SIGNATURE CARD TO RECEIVE A CHECKBOOK.
(SMALL SOLID BULLET) YOU MAY WRITE AN UNLIMITED NUMBER OF CHECKS.
(SMALL SOLID BULLET) MINIMUM CHECK AMOUNT: $500.
(SMALL SOLID BULLET) DO NOT TRY TO CLOSE OUT YOUR ACCOUNT BY CHECK.
(SMALL SOLID BULLET) TO OBTAIN MORE CHECKS, CALL FIDELITY AT 1-800-544-6666.

</TABLE>

POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(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 a fund. Call Fidelity if you need additional
copies of financial reports, prospectuses or historical account
information.
Electronic copies of most financial reports and prospectuses are
available at Fidelity's Web site. To participate in Fidelity's
electronic delivery program, call Fidelity or visit Fidelity's Web
site for more information.
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 sell and
exchange by telephone, call Fidelity for instructions.
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.
Fidelity may 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 Fidelity, 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
accounts with Fidelity maintained by Fidelity Service Company, Inc. 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 $10,000 for Spartan Connecticut
Municipal Money Market, $2,000 for Connecticut Municipal Money Market,
or $5,000 for Spartan Connecticut Municipal Income (except accounts
not subject to account minimums), you will be given 30 days' notice to
reestablish the minimum balance. If you do not increase your balance,
Fidelity may close your account and send the proceeds to you. Your
shares will be sold at the NAV, minus the short-term trading fee, if
applicable, on the day your account is closed and, for Spartan
Connecticut Municipal Money Market, the $5.00 account closeout fee
will be charged.
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 fee 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 transaction 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.
Fidelity may charge a FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Each fund earns interest, dividends and other income from its
investments, and distributes this income (less expenses) to
shareholders as DIVIDENDS. Each fund may also realize capital gains
from its investments, and distributes these gains (less losses), if
any, to shareholders as CAPITAL GAINS DISTRIBUTIONS.
The bond fund normally declares dividends daily and pays them monthly.
The bond fund normally pays capital gains distributions in January and
December.
Distributions you receive from each money market fund consist
primarily of dividends. Each money market fund normally declares
dividends daily and pays them monthly.
EARNING DIVIDENDS
Shares begin to earn dividends on the first business day following the
day of purchase.
Shares earn dividends until, but not including, the next business day
following the day of redemption.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
each fund's distributions:
1. REINVESTMENT OPTION. Your dividends and capital gains
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 gains
distributions will be automatically reinvested in additional shares of
the fund. Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gains distributions, if
any, will be paid in cash.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in shares of another identically
registered Fidelity fund. Your capital gains distributions, if any,
will be automatically invested in shares of another identically
registered Fidelity fund, automatically reinvested in additional
shares of the fund, or paid in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in a fund could have tax
consequences for you.
TAXES ON DISTRIBUTIONS.
Each fund seeks to earn income and pay dividends EXEMPT from federal
income tax and Connecticut personal income tax.
A portion of each fund's income, and the dividends you receive, may be
subject to federal and state income taxes. Each fund's income may be
subject to the federal alternative minimum tax. Each fund may also
realize taxable income or gains on the sale of municipal bonds and may
make taxable distributions.
For federal tax purposes, each fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ORDINARY INCOME. Each fund's
distributions of long-term capital gains, if any, are taxable to you
generally as CAPITAL GAINS at a rate based on how long the securities
were held.
If a fund's distributions exceed its income and capital gains realized
in any year, which is sometimes the result of currency-related losses,
all or a portion of those distributions may be treated as a RETURN OF
CAPITAL to shareholders for tax purposes. A return of capital will
generally not be taxable to you, but will reduce the cost basis of
your shares and result in a higher reported capital gain or a lower
reported capital loss when you sell your shares.
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "BUYING A DIVIDEND" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a taxable distribution.
Any taxable distributions you receive from a fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash or to invest
distributions automatically in shares of another Fidelity fund, you
will receive certain December distributions in January, but those
distributions will be taxable as if you received them on December 31.
TAXES ON TRANSACTIONS. Your bond fund redemptions, including
exchanges, may result in a capital gain or loss for federal tax
purposes. A capital gain or loss on your investment in the fund is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES

FUND MANAGEMENT
Each fund is a MUTUAL FUND, an investment that pools shareholders'
money and invests it toward a specified goal.
Fidelity Management & Research Company (FMR) is each fund's MANAGER.
As of __, [month] [day] [year], FMR had $__ billion in discretionary
assets under management.
As the manager, FMR is responsible for choosing the funds' investments
and handling their business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, is an affiliate of FMR and serves as sub-adviser for
Spartan Connecticut Municipal Money Market and Connecticut Municipal
Money Market. As of [month][day][year], FIMM had $____ in
discretionary assets under management. FIMM is primarily responsible
for choosing investments for the money market funds.
Beginning January 1, 1999, FIMM will serve as sub-adviser and be
primarily responsible for choosing investments for Spartan Connecticut
Municipal Income.
FMR may use broker-dealers 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.
A fund could be adversely affected if the computer systems used by FMR
and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised each fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on a fund.
George Fischer is Vice President and manager of Spartan Connecticut
Municipal Income, which he has been managing since May 1996. He also
manages several other Fidelity funds. Since joining Fidelity in 1989,
Mr. Fischer has worked as an analyst and manager.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Each fund pays a MANAGEMENT FEE to FMR.
The management fee is calculated and paid to FMR every month. FMR pays
all of the other expenses of Spartan Connecticut Municipal Money
Market and Spartan Connecticut Municipal Income with limited
exceptions.
Spartan Connecticut Municipal Money Market and Spartan Connecticut
Municipal Income's annual management fee rate is 0.50% and 0.55%,
respectively, of its average net assets.
For Connecticut Municipal Money Market the fee is calculated by adding
a GROUP FEE rate to an INDIVIDUAL FUND FEE rate, dividing by twelve,
and multiplying the result by the fund's average net assets throughout
the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.37%, and it
drops as total assets under management increase.
For [month] [year], the group fee rate was __% for Connecticut
Municipal Money Market. The individual fund fee rate is 0.25% for
Connecticut Municipal Money Market.
The total management fee for the fiscal year ended November 30, 1998,
was __% of the fund's average net assets for Connecticut Municipal
Money Market.
On [month] [day], [year], FMR reduced the [management fee/individual
fund fee] rate for the [fund/[Name(s) of Fund(s)]] from __% to __%.
On [month] [day], [year], FMR reduced the group fee rate.
FMR pays FIMM for providing assistance with investment advisory
services.
FMR may, from time to time, agree to reimburse the funds for
management fees and other expenses 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 by FMR at any time, can decrease
a fund's expenses and boost its performance.
As of ________, approximately __% and __% OF [NAME OF FUND]'s total
outstanding shares, respectively, were held by [FMR/FMR and [an] FMR
affiliate[s]/[an] FMR affiliate[s]].
FUND DISTRIBUTION
FDC distributes each fund's shares.
Each fund has adopted a Distribution and Service Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 that 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 providing services intended to result in
the sale of fund shares and/or shareholder support services. FMR,
directly or through FDC, may pay intermediaries, such as banks,
broker-dealers and other service providers, that provide those
services. Currently, the Board of Trustees of each fund has authorized
such payments.
To receive payments made pursuant to a Distribution and Service Plan,
intermediaries must sign the appropriate agreement with FDC in
advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of a fund, provided that the fund receives
brokerage services and commission rates comparable to those of other
broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related
Statement of Additional Information (SAI), in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or FDC. This Prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell or to buy
shares of the funds to any person to whom it is unlawful to make such
offer.
APPENDIX

FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
fund's financial history for the past 5 years. Certain information
reflects financial results for a single fund share. Total returns for
each period include the reinvestment of all dividends and
distributions. This information has been audited by___________,
independent accountants, whose report, along with each fund's
financial highlights and financial statements, are included in each
fund's Annual Report. A free copy of each Annual Report is available
upon request.
[Financial Highlights to be filed by subsequent amendment.]

You can obtain additional information about the funds. The funds' SAI
includes more detailed information about each fund and its
investments. The SAI is incorporated herein by reference (legally
forms a part of the prospectus). Each fund's annual and semi-annual
reports include a discussion of recent market conditions and the
fund's investment strategies, performance and holdings.
For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-800-544-8888 or visit Fidelity's Web site at www.fidelity.com.
The SAI, the funds' annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBERS, 811-2741, 811-6453
Spartan, Fidelity, Fidelity Investments and (Pyramid) Design, Fidelity
Investments, TouchTone Xpress, Fidelity Automatic Account Builder,
Fidelity Money Line, Fidelity On-Line Xpress+, Fidelity Web Xpress,
and Directed Dividends are registered trademarks of FMR Corp.
Fidelity Portfolio Advisory Services is a service mark of FMR Corp.
Insert item code number CTR/CTM-pro-0199

LIKE SECURITIES OF ALL MUTUAL
FUNDS, THESE SECURITIES HAVE
NOT BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION, AND THE
SECURITIES AND EXCHANGE
COMMISSION HAS NOT
DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR
COMPLETE. ANY
REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
FIDELITY'S
NEW JERSEY MUNICIPAL
FUNDS
SPARTAN(registered trademark)
NEW JERSEY MUNICIPAL MONEY MARKET FUND
(fund number 423, trading symbol FSJXX)
FIDELITY(registered trademark)
NEW JERSEY MUNICIPAL MONEY MARKET FUND
(fund number 417, trading symbol FNJXX)
SPARTAN
NEW JERSEY MUNICIPAL INCOME FUND
(fund number 416, trading symbol FNJHX)

PROSPECTUS
JANUARY 25, 1999
(fidelity_logo_graphic) 82 Devonshire Street, Boston, MA 02109
CONTENTS

FUND SUMMARY 3 INVESTMENT SUMMARY

3 PERFORMANCE

5 FEE TABLE

FUND BASICS 7 INVESTMENT DETAILS

9 VALUING SHARES

SHAREHOLDER INFORMATION 9 BUYING AND SELLING SHARES

13 EXCHANGING SHARES

13 ACCOUNT FEATURES AND POLICIES

16 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

16 TAX CONSEQUENCES

FUND SERVICES 17 FUND MANAGEMENT

17 FUND DISTRIBUTION

APPENDIX 17 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY
INVESTMENT OBJECTIVE. Spartan New Jersey Municipal Money Market seeks
as high a level of current income, exempt from federal income tax and,
to the extent possible, from the New Jersey Gross Income Tax, as is
consistent with the preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES. Fidelity Management & Research
Company (FMR)'s principal investment strategies include:
(small solid bullet) Investing normally in municipal money market
securities.
(small solid bullet) Investing at least 65% of total assets in
municipal securities whose interest is exempt from the New Jersey
Gross Income Tax.
(small solid bullet) Investing so that at least 80% of fund's income
is exempt from federal income tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar projects.
(small solid bullet) Investing in compliance with industry-standard
requirements for money market funds for the quality, maturity and
diversification of investments.
PRINCIPAL INVESTMENT RISKS. The fund is subject to the following
principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.
(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within New Jersey can affect the credit quality
of issuers located in that state.
(small solid bullet) ISSUER-SPECIFIC CHANGES. A decline in the credit
quality of an issuer or the provider of credit support or a
maturity-shortening structure for a security can cause the price of a
money market security to decrease.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE. New Jersey Municipal Money Market seeks as high
a level of current income, exempt from federal income tax and the New
Jersey Gross Income Tax, as is consistent with the preservation of
capital.
PRINCIPAL INVESTMENT STRATEGIES. Fidelity Management & Research
Company (FMR)'s principal investment strategies include:
(small solid bullet) Investing normally in municipal money market
securities.
(small solid bullet) Investing so that at least 80% of fund's income
is exempt from federal income tax and the New Jersey Gross Income Tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar projects.
(small solid bullet) Investing in compliance with industry-standard
requirements for money market funds for the quality, maturity and
diversification of investments.
PRINCIPAL INVESTMENT RISKS. The fund is subject to the following
principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a money market security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.
(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within New Jersey can affect the credit quality
of issuers located in that state.
(small solid bullet) ISSUER-SPECIFIC CHANGES. A decline in the credit
quality of an issuer or the provider of credit support or a
maturity-shortening structure for a security can cause the price of a
money market security to decrease.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE. Spartan New Jersey Municipal Income Fund seeks a
high a level of current income exempt from federal income tax and the
New Jersey Gross Income Tax.
PRINCIPAL INVESTMENT STRATEGIES. Fidelity Management & Research
Company (FMR)'s principal investment strategies include:
(small solid bullet) Investing normally in investment-grade municipal
debt securities.
(small solid bullet) Investing so that at least 80% of the fund's
income is exempt from federal income tax and the New Jersey Gross
Income Tax.
(small solid bullet) Potentially investing more than 25% of total
assets in municipal securities that finance similar projects.
(small solid bullet) Managing the fund to have similar overall
interest rate risk to the Lehman Brothers New Jersey Municipal Bond
Index with Port Authority of New York/New Jersey.
(small solid bullet) Allocating assets across different market sectors
and maturities.
(small solid bullet) Analyzing a security's structural features,
current pricing and trading opportunities, and the credit quality of
its issuer in selecting investments.
PRINCIPAL INVESTMENT RISKS. The fund is subject to the following
principal investment risks:
(small solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market
is volatile and can be significantly affected by adverse tax,
legislative or political changes and the financial condition of the
issuers of municipal securities.
(small solid bullet) INTEREST RATE CHANGES. Interest rate increases
can cause the price of a debt security to decrease.
(small solid bullet) FOREIGN EXPOSURE. Entities located in foreign
countries can be affected by adverse political, regulatory, market or
economic developments in those countries.
(small solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political
or economic conditions within New Jersey can affect the credit quality
of issuers located in that state.
(small solid bullet) ISSUER-SPECIFIC CHANGES. The value of an
individual security or particular type of security can be more
volatile than the market as a whole and can perform differently than
the value of the market as a whole.
In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in share price than would
occur in a more diversified fund.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in the funds'
performance from year to year and compares Spartan New Jersey
Municipal Income's performance to the performance of a market index
and similar funds over various periods of time. Data for the market
index for Spartan New Jersey Municipal Income is available only from
September 30, 1995 to the present.
Returns are based on past results and are not an indication of future
performance.
YEAR-BY-YEAR RETURNS
The returns in the chart do not include the effect of the account
closeout fee. If the effect of the fee was reflected, returns would be
lower than those shown.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET

CALENDAR YEARS 1990 1991 1992 1993 1994 1995 1996 1997 1998

% % % % % % % % %

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET

CALENDAR YEARS 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

% % % % % % % % % %

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SPARTAN NEW JERSEY MUNICIPAL INCOME

CALENDAR YEARS 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

% % % % % % % % % %

</TABLE>

PERCENTAGE (%)
ROW: 1, COL: 1, VALUE: NIL
ROW: 2, COL: 1, VALUE: NIL
ROW: 3, COL: 1, VALUE: NIL
ROW: 4, COL: 1, VALUE: NIL
ROW: 5, COL: 1, VALUE: NIL
ROW: 6, COL: 1, VALUE: NIL
ROW: 7, COL: 1, VALUE: NIL
ROW: 8, COL: 1, VALUE: NIL
ROW: 9, COL: 1, VALUE: NIL
ROW: 10, COL: 1, VALUE: NIL
DURING THE PERIODS SHOWN IN THE CHART FOR SPARTAN NJ MUNI INCOME, THE
HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER ENDING [CALENDAR
QUARTER], [YEAR]) AND THE LOWEST RETURN FOR A QUARTER WAS __% (QUARTER
ENDING [CALENDAR QUARTER], [YEAR]).
AVERAGE ANNUAL RETURNS
[The returns in the following table do not include the effect of the
$5 account closeout fee for Spartan New Jersey Municipal Money
Market.] [The returns in the following table include the effect of the
$5 account closeout fee based on median account size for Spartan New
Jersey Municipal Money Market.]

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE PERIODS ENDED DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS PAST 10 YEARSX

SPARTAN NJ MUNI MONEY MARKET % % %

% % %

FIDELITY NJ MUNI MONEY MARKET % % %

% % %

SPARTAN NJ MUNI INCOME % % %

LEHMAN BROS. NJ MUNI BOND INDEX % % %
W/PRT. AUTH. OF NY/NJ

LIPPER NJ MUNI DEBT FUNDS AVERAGE % % %

</TABLE>

X FROM JANUARY 1, 1991 (SPARTAN NJ MUNI MONEY MARKET).
If FMR had not reimbursed certain fund expenses during these periods,
each fund's total returns would have been lower.
The Lehman Brothers New Jersey Municipal Bond Index with Port
Authority of NY/NJ is a market capitalization-weighted index of New
Jersey investment-grade municipal bonds, including Port Authority of
New York and New Jersey bonds, with maturities of one year or more.
The Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold, or sell shares of the fund. [The annual fund
operating expenses provided below for the fund are based on historical
expenses, adjusted to reflect current fees. / The annual fund
operating expenses provided below for the fund are higher than the
expenses actually paid by the fund as the result of the payment or
reduction of certain expenses during the period. / The annual fund
operating expenses provided below for the fund are based on historical
expenses.]
SHAREHOLDER FEES (PAID BY THE INVESTOR)
SALES CHARGE (LOAD) ON PURCHASES NONE
AND REINVESTED DISTRIBUTIONS

DEFERRED SALES CHARGE (LOAD) ON REDEMPTIONS NONE

REDEMPTION FEE (SHORT-TERM TRADING FEE)
ON SHARES HELD LESS THAN 180 DAYS
(AS A % OF AMOUNT REDEEMED)

FOR SPARTAN NJ MUNI INCOME ONLY 0.50%

EXCHANGE FEE

FOR SPARTAN NJ MUNI MONEY MARKET ONLY $5.00

WIRE REDEMPTION FEE

FOR SPARTAN NJ MUNI MONEY MARKET ONLY $5.00

WIRE TRANSACTION FEE

FOR SPARTAN NJ MUNI MONEY MARKET ONLY $5.00

CHECKWRITING FEE, PER CHECK WRITTEN

FOR SPARTAN NJ MUNI MONEY MARKET ONLY $2.00

ACCOUNT CLOSEOUT FEE

FOR SPARTAN NJ MUNI MONEY MARKET ONLY $5.00

ANNUAL ACCOUNT MAINTENANCE FEE (FOR ACCOUNTS UNDER $2,500) $12.00

DISTRIBUTION AND SERVICE (12B-1) FEE NONE

OTHER EXPENSES %

TOTAL ANNUAL FUND OPERATING EXPENSES %

FIDELITY NJ MUNI MONEY MANAGEMENT FEE %
MARKET

DISTRIBUTION AND SERVICE (12B-1) FEE NONE

OTHER EXPENSES %

TOTAL ANNUAL FUND OPERATING EXPENSES %

SPARTAN NJ MUNI INCOME MANAGEMENT FEE %

DISTRIBUTION AND SERVICE (12B-1) FEE NONE

OTHER EXPENSES %

TOTAL ANNUAL FUND OPERATING EXPENSES %

A portion of the brokerage commissions that certain funds pay is used
to reduce each of those fund's expenses. In addition, on behalf of
Spartan New Jersey Municipal Money Market and Spartan New Jersey
Municipal Income, FMR has entered into arrangements with each fund's
custodian and transfer agent whereby credits realized as a result of
uninvested cash balances are used to reduce fund expenses. Fidelity
New Jersey Municipal Money Market has entered into arrangements with
its custodian and transfer agent whereby credits realized as a result
of uninvested cash balances are used to reduce custodian and transfer
agent expenses. Including these reductions, the total fund operating
expenses would have been __% for Spartan New Jersey Municipal Money
Market, __% for Fidelity New Jersey Municipal Money Market, and __%
for Spartan New Jersey Municipal Income.
This EXAMPLE helps you compare the cost of investing in the funds with
the cost of investing in other mutual funds.
Let's say, hypothetically, that each fund's annual return is 5% and
that your shareholder fees and each fund's annual operating expenses
are exactly as described in the fee table. This example illustrates
the effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 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 New Jersey Municipal Money Market if you leave your
account open:
ACCOUNT ACCOUNT
OPEN CLOSED

SPARTAN NJ MUNI MONEY MARKET 1 YEAR $ $

3 YEARS $ $

5 YEARS $ $

10 YEARS $ $

FIDELITY NJ MUNI MONEY MARKET 1 YEAR $

3 YEARS $

5 YEARS $

10 YEARS $

SPARTAN NJ MUNI INCOME 1 YEAR $

3 YEARS $

5 YEARS $

10 YEARS $

FUND BASICS

INVESTMENT DETAILS
INVESTMENT OBJECTIVE:
SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET FUND seeks as high a level
of current income, exempt from federal income tax and, to the extent
possible, exempt from the New Jersey Gross Income Tax, as is
consistent with the preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES:
FMR normally invests the fund's assets in municipal money market
securities.
FMR normally invests at least 65% of the fund's total assets in
municipal securities whose interest is exempt from the New Jersey
Gross Income Tax and invests the fund's assets so that at least 80% of
the fund's income is exempt from federal income tax. Municipal
securities whose interest is exempt from federal income tax and the
New Jersey Gross Income Tax include securities issued by U.S.
territories and possessions, such as Guam, the Virgin Islands and
Puerto Rico, and their political subdivisions and public corporations.
FMR may invest the fund's assets in municipal securities whose
interest is subject to the New Jersey Gross Income Tax. Although FMR
does not currently intend to invest the fund's assets in municipal
securities whose interest is subject to federal income tax, FMR may
invest all of the fund's assets in municipal securities whose interest
is subject to the federal alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, transportation and utilities.
In buying and selling securities for the fund, FMR complies with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of the fund's investments. FMR
stresses maintaining a stable $1.00 share price, liquidity and income.
INVESTMENT OBJECTIVE:
NEW JERSEY MUNICIPAL MONEY MARKET FUND seeks as high a level of
current income, exempt from federal income tax and the New Jersey
Gross Income Tax, as is consistent with preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES:
FMR normally invests the funds assets in municipal money market
securities. FMR normally invests the fund's assets so that at least
80% of the fund's income is exempt from federal income tax and the New
Jersey Gross Income Tax. Municipal securities whose interest is exempt
from federal income tax and the New Jersey Gross Income Tax include
securities issued by U.S. territories and possessions, such as Guam,
the Virgin Islands and Puerto Rico, and their political subdivisions
and public corporations. FMR may invest the fund's assets in municipal
securities whose interest is subject to the New Jersey Gross Income
Tax. Although FMR does not currently intend to invest the fund's
assets in municipal securities whose interest is subject to federal
income tax, FMR may invest all of the fund's assets in municipal
securities whose interest is subject to the federal alternative
minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, transportation and utilities.
In buying and selling securities for the fund, FMR complies with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of the fund's investments. FMR
stresses maintaining a stable $1.00 share price, liquidity and income.
INVESTMENT OBJECTIVE:
SPARTAN NEW JERSEY MUNICIPAL INCOME seeks a high a level of current
income exempt from federal income tax and the New Jersey Gross Income
Tax.
PRINCIPAL INVESTMENT STRATEGIES:
FMR normally invests the fund's assets in investment-grade municipal
debt securities.
FMR normally invests the fund's assets so that at least 80% of the
fund's income is exempt from federal income tax and the New Jersey
Gross Income Tax. Municipal securities whose interest is exempt from
federal income tax and the New Jersey Gross Income Tax include
securities issued by U.S. territories and possessions, such as Guam,
the Virgin Islands and Puerto Rico, and their political subdivisions
and public corporations. Although FMR does not currently intend to
invest the fund's assets in municipal securities whose interest is
subject to federal income tax or the New Jersey Gross Income Tax, FMR
may invest all of the fund's assets in municipal securities whose
interest is subject to the federal alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in municipal
securities that finance similar projects, such as those relating to
education, health care, transportation and utilities.
FMR uses the Lehman Brothers New Jersey Municipal Bond Index with Port
Authority of New York/New Jersey as a guide in structuring the fund
and selecting its investments. FMR manages the fund to have similar
overall interest rate risk to the index. As of November 30, 1998, the
dollar-weighted average maturity of the fund and the index was
approximately ___ and ___ years, respectively.
FMR allocates the fund's 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 and maturity.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR analyzes a
security's structural features, current price compared to FMR's
estimate of its long-term value, and any short-term trading
opportunities resulting from market inefficiencies, and the credit
quality of its issuer.
FMR may use various techniques, including buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES:
MONEY MARKET SECURITIES are high quality, short-term debt securities
that pay a fixed, variable, or floating interest rate. Securities are
often specifically structured so that they are eligible investments
for a money market fund. For example, in order to satisfy the maturity
restrictions for a money market fund, some money market securities
have demand or put features which have the effect of shortening the
security's maturity. Municipal money market securities include
variable rate demand notes, commercial paper and municipal notes.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay current interest,
but are sold at a discount from their face values. Municipal debt
securities include general obligation bonds of municipalities, local
or state governments, project or revenue-specific bonds, or
pre-refunded or escrowed bonds.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
and private purposes, including general financing for state and local
governments, or financing for a specific project or public facility.
Municipal securities may be fully or partially backed by the local
government, by the credit of a private issuer, by the current or
anticipated revenues from a specific project or specific assets, or by
domestic or foreign entities providing credit support such as letters
of credit, guarantees or insurance.
PRINCIPAL INVESTMENT RISKS:
Many factors affect each fund's performance. Because FMR concentrates
each fund's investments in New Jersey, the fund's performance is
expected to be closely tied to economic and political conditions
within that state and to be more volatile than the performance of a
more geographically diversified fund.
The money market fund's yield will change daily based on changes in
interest rates and other market conditions. Although each fund is
managed to maintain a stable $1.00 share price, there is no guarantee
that the fund will be able to do so. For example, a major increase in
interest rates or a decrease in the credit quality of the issuer of
one of a fund's investments could cause the fund's share price to
decrease. While the funds will be charged premiums by a mutual
insurance company for coverage of specified types of losses related to
default or bankruptcy on certain securities, a fund may incur losses
regardless of the insurance.
The bond fund's yield and share price change daily based on changes in
interest rates and market conditions and in response to other
economic, political or financial developments. The fund's reaction to
these developments will be affected by the types and maturities of the
securities in which the fund invests, the financial condition,
industry and economic sector, and geographic location of an issuer,
and the fund's level of investment in the securities of that issuer.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
The following factors may significantly affect a fund's performance:
MUNICIPAL MARKET VOLATILITY. Municipal securities can be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation, legislative changes, or the
rights of municipal security holders. Because many municipal
securities are issued to finance similar projects, especially those
relating to education, health care, transportation and utilities,
conditions in those sectors can affect the overall municipal market.
In addition, changes in the financial condition of an individual
municipal insurer can affect the overall municipal market.
INTEREST RATE CHANGES. Debt and money market securities have varying
levels of sensitivity to changes in interest rates. In general, the
price of a debt or money market security can fall when interest rates
rise and can rise when interest rates fall. Securities with longer
maturities can be more sensitive to interest rate changes. In other
words, the longer the maturity of a security, the greater the impact a
change in interest rates could have on the security's price. In
addition, short-term and long-term interest rates do not necessarily
move in the same amount or the same direction. Short-term securities
tend to react to changes in short-term interest rates, and long-term
securities tend to react to changes in long-term interest rates.
FOREIGN EXPOSURE. Issuers located in foreign countries and entities
located in foreign countries that provide credit support or a
maturity-shortening structure can involve increased risks. Extensive
public information about the issuer or provider may not be available
and unfavorable political, economic or governmental developments could
affect the value of the security.
GEOGRAPHIC CONCENTRATION. New Jersey has benefitted from the national
recovery. New Jersey's recovery is in its sixth year and appears to be
sustainable now that the national economy has "soft landed."
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of issuer, and changes in general economic or
political conditions can adversely affect the credit quality or value
of an issuer's securities. Lower-quality debt securities (those of
less than investment-grade quality) tend to be more sensitive to these
changes than higher-quality debt securities. Entities providing credit
support or a maturity-shortening structure also can be affected by
these types of changes. Municipal securities backed by current or
anticipated revenues from a specific project or specific assets can be
negatively affected by the discontinuance of the taxation supporting
the project or assets or the inability to collect revenues for the
project or from the assets. If the Internal Revenue Service determines
an issuer of a municipal security has not complied with applicable tax
requirements, interest from the security could become taxable and the
security could decline significantly in value. In addition, if the
structure of a security fails to function as intended, interest from
the security could become taxable or the security could decline in
value.
In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance, and a fund may distribute income subject to federal
income tax or the New Jersey Gross Income Tax.
FUNDAMENTAL INVESTMENT POLICIES
The policies discussed below are fundamental, that is, subject to
change only by shareholder approval.
SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET seeks as high a level of
current income, exempt from federal income tax and, to the extent
possible, exempt from the New Jersey Gross Income Tax, as is
consistent with the preservation of capital by investing in
high-quality short-term municipal obligations. Under normal
conditions, the fund will invest so that at least 80% of its income is
exempt from federal income tax.
FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET seeks as high a level of
current income, exempt from federal income tax and the New Jersey
Gross Income Tax, as is consistent with the preservation of capital.
Under normal conditions, at least 80% of the fund's income will be
exempt from both federal income tax and New Jersey Gross Income Tax.
SPARTAN NEW JERSEY MUNICIPAL INCOME seeks a high a level of current
income exempt from federal income tax and the New Jersey Gross Income
Tax. Under normal conditions, the fund will invest so that at least
80% of its income is exempt from federal income tax and New Jersey
Gross Income Tax.
VALUING SHARES
Each fund's net asset value per share (NAV) is the value of a single
share.
The funds are OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. Fidelity normally calculates each fund's NAV as of the
close of business 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 SEC. Each fund's assets are valued
as of this time for the purpose of computing the fund's NAV.
To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.
Each money market fund's ASSETS ARE VALUED on the basis of amortized
cost.
The bond fund's ASSETS ARE VALUED primarily on the basis of
information furnished by a pricing service or market quotations. If
market quotations or information furnished by a pricing service is not
readily available for a security or if a security's value has been
materially affected by events occurring after the close of the
exchange or market on which the security is principally traded, that
security may be valued by another method that the Board of Trustees
believes accurately reflects fair value. In these circumstances, the
security's valuation may differ from the generally expected valuation.
SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES
GENERAL INFORMATION
Fidelity Investments(registered trademark) 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-advantaged retirement plans for individuals investing on their own
or through their employer.
For account, product and service information, please use the following
WEB SITE and PHONE NUMBERS:
(small solid bullet) For information over the Internet, visit
Fidelity's Web site at www.fidelity.com
(small solid bullet) For accessing account information automatically
by phone, use TouchTone Xpress(registered trademark), 1-800-544-5555.
(small solid bullet) For exchanges and redemptions, 1-800-544-7777.
(small solid bullet) For account assistance, 1-800-544-6666.
(small solid bullet) For mutual fund and retirement information,
1-800-544-8888.
(small solid bullet) For brokerage information, 1-800-544-7272.
(small solid bullet) TDD - Service for the Deaf and Hearing-Impaired,
1-800-544-0118 (9:00 a.m. - 9:00 p.m. Eastern time)
Please use the following ADDRESSES:
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
You may buy or sell shares of the funds through an investment
professional. If you invest through an investment professional, the
procedures for buying, selling and exchanging shares of a fund and the
account features and policies may differ. Additional fees may also
apply to your investment in a fund, including a transaction fee if you
buy or sell shares of the fund through a broker or other investment
professional.
Certain methods of contacting Fidelity, such as by telephone or
electronically, may be unavailable or delayed (for example, during
periods of unusual market activity). In addition, the level and type
of service available may be restricted based on criteria established
by Fidelity.
The different ways to set up (register) your account with Fidelity are
listed in the following table.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS
BUYING SHARES
The PRICE TO BUY one share of each fund is the fund's NAV. Each fund's
shares are sold without a sales charge.
Your shares will be bought at the next NAV calculated after your
investment is received in proper form.
Short-term or excessive trading into and out of a fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, a fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
that fund. For these purposes, FMR may consider an investor's trading
history in that fund or other Fidelity Funds, and accounts under
common ownership or control.
Each fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, 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) Fidelity 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
Fidelity has incurred.
Certain financial institutions that have entered into sales agreements
with Fidelity Distributors Corporation (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 order will
be canceled and the financial institution could be held liable for
resulting fees or losses.
MINIMUMS
TO OPEN AN ACCOUNT
For Spartan NJ Municipal Money Market $25,000
For Fidelity NJ Municipal Money Market $5,000
For Spartan NJ Municipal Income $10,000
TO ADD TO AN ACCOUNT
For Spartan NJ Municipal Money Market $1,000
Through regular investment plans $500
For Fidelity NJ Municipal Money Market $250
Through regular investment plans $100
For Spartan NJ Municipal Income $1,000
Through regular investment plans $500
MINIMUM BALANCE
For Spartan NJ Municipal Money Market $10,000
For Fidelity NJ Municipal Money Market $2,000
For Spartan NJ Municipal Income $5,000
There is no minimum account balance or initial or subsequent purchase
minimum for investments through Fidelity Portfolio Advisory Services
SM or a qualified state tuition program. In addition, each fund may
waive or lower purchase minimums in other circumstances.

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KEY INFORMATION

PHONE TO OPEN AN ACCOUNT
1-800-544-7777 (SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND.
TO ADD TO AN ACCOUNT
(SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND.
(SMALL SOLID BULLET) USE FIDELITY MONEY LINE TO TRANSFER FROM YOUR BANK ACCOUNT.

MAIL TO OPEN AN ACCOUNT
FIDELITY INVESTMENTS (SMALL SOLID BULLET) COMPLETE AND SIGN THE APPLICATION. MAKE YOUR CHECK PAYABLE
TO THE COMPLETE NAME OF THE FUND.
P.O. BOX 770001 MAIL TO THE ADDRESS AT LEFT.
CINCINNATI, OH TO ADD TO AN ACCOUNT
45277-0002 (SMALL SOLID BULLET) MAKE YOUR CHECK PAYABLE TO THE COMPLETE NAME OF THE FUND.
INDICATE YOUR FUND ACCOUNT NUMBER ON
YOUR CHECK AND MAIL TO THE ADDRESS AT LEFT.
(SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND. SEND A LETTER OF
INSTRUCTION TO THE ADDRESS AT LEFT, INCLUDING
YOUR NAME, THE FUNDS' NAMES, THE FUND ACCOUNT NUMBERS,
AND THE DOLLAR AMOUNT OR NUMBER OF
SHARES TO BE EXCHANGED.

WIRE TO OPEN AN ACCOUNT
(SMALL SOLID BULLET) CALL 1-800-544-7777 TO SET UP YOUR ACCOUNT AND TO
ARRANGE A WIRE TRANSACTION.
(SMALL SOLID BULLET) WIRE WITHIN 24 HOURS TO: BANKERS TRUST COMPANY, BANK
ROUTING # 021001033, ACCOUNT # 00163053.
(SMALL SOLID BULLET) SPECIFY THE COMPLETE NAME OF THE FUND AND INCLUDE YOUR NEW
FUND ACCOUNT NUMBER AND YOUR NAME.
TO ADD TO AN ACCOUNT
(SMALL SOLID BULLET) WIRE TO: BANKERS TRUST COMPANY, BANK ROUTING # 021001033,
ACCOUNT # 00163053.
(SMALL SOLID BULLET) SPECIFY THE COMPLETE NAME OF THE FUND AND INCLUDE YOUR
FUND ACCOUNT NUMBER AND YOUR NAME.

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SELLING SHARES
The PRICE TO SELL one share of Spartan New Jersey Municipal Money
Market or Fidelity New Jersey Municipal Money Market is the fund's
NAV. The PRICE TO SELL one share of Spartan New Jersey Municipal
Income is the fund's NAV, minus the short-term trading fee, if
applicable.
Spartan New Jersey Municipal Income will deduct a SHORT-TERM TRADING
FEE of 0.50% from the redemption amount if you sell your shares 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.
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.
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.
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 sell 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.
When you place an order to sell shares, note the following:
(small solid bullet) If you are selling some but not all of your
Spartan New Jersey Municipal Money Market shares, leave at least
$10,000 worth of shares in the account to keep it open, except
accounts not subject to account minimums. If you are selling some but
not all of your Fidelity New Jersey Municipal Money Market shares,
leave at least $2,000 worth of shares in the account to keep it open,
except accounts not subject to account minimums. If you are selling
some but not all of your Spartan New Jersey Municipal Income shares,
leave at least $5,000 worth of shares in the account to keep it open,
except accounts not subject to account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
a fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until investments credited to your account have been received
and 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) Redemption proceeds may be paid in securities or
other assets rather than in cash if the Board of Trustees determines
it is in the best interests of a fund.
(small solid bullet) If you sell shares of Spartan New Jersey
Municipal Money Market or Fidelity New Jersey Municipal Money Market
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.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.

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KEY INFORMATION

PHONE (SMALL SOLID BULLET) CALL THE PHONE NUMBER AT LEFT TO INITIATE A
WIRE TRANSACTION OR TO REQUEST A CHECK FOR YOUR
1-800-544-7777 REDEMPTION.
(SMALL SOLID BULLET) USE FIDELITY MONEY LINE TO TRANSFER TO YOUR BANK ACCOUNT.
(SMALL SOLID BULLET) EXCHANGE TO ANOTHER FIDELITY FUND. CALL THE PHONE NUMBER AT LEFT.

INTERNET (SMALL SOLID BULLET) EXCHANGE TO ANOTHER FIDELITY FUND.
WWW.FIDELITY.COM (SMALL SOLID BULLET) USE FIDELITY MONEY LINE TO TRANSFER TO YOUR BANK ACCOUNT.

MAIL INDIVIDUAL, JOINT TENANT, SOLE PROPRIETORSHIP, UGMA, UTMA
FIDELITY INVESTMENTS (SMALL SOLID BULLET) SEND A LETTER OF INSTRUCTION TO THE ADDRESS AT LEFT, INCLUDING
YOUR NAME, THE FUND'S NAME, YOUR FUND
P.O. BOX 660602 ACCOUNT NUMBER, AND THE DOLLAR AMOUNT OR NUMBER OF SHARES
TO BE SOLD. THE LETTER OF INSTRUCTION
DALLAS, TX MUST BE SIGNED BY ALL PERSONS REQUIRED TO SIGN FOR TRANSACTIONS,
EXACTLY AS THEIR NAMES APPEAR ON
75266-0602 THE ACCOUNT.
TRUST
(SMALL SOLID BULLET) SEND A LETTER OF INSTRUCTION TO THE ADDRESS AT LEFT, INCLUDING
THE TRUST'S NAME, THE FUND'S NAME, THE
TRUST'S FUND ACCOUNT NUMBER, AND THE DOLLAR AMOUNT OR NUMBER OF
SHARES TO BE SOLD. THE TRUSTEE MUST
SIGN THE LETTER OF INSTRUCTION INDICATING CAPACITY AS TRUSTEE.
IF THE TRUSTEE'S NAME IS NOT IN THE ACCOUNT
REGISTRATION, PROVIDE A COPY OF THE TRUST DOCUMENT CERTIFIED
WITHIN THE LAST 60 DAYS.
BUSINESS OR ORGANIZATION
(SMALL SOLID BULLET) SEND A LETTER OF INSTRUCTION TO THE ADDRESS AT LEFT, INCLUDING
THE FIRM'S NAME, THE FUND'S NAME, THE
FIRM'S FUND ACCOUNT NUMBER, AND THE DOLLAR AMOUNT OR NUMBER OF
SHARES TO BE SOLD. AT LEAST ONE
PERSON AUTHORIZED BY CORPORATE RESOLUTION TO ACT ON THE ACCOUNT
MUST SIGN THE LETTER OF INSTRUCTION.
(SMALL SOLID BULLET) INCLUDE A CORPORATE RESOLUTION WITH CORPORATE SEAL OR A
SIGNATURE GUARANTEE.
EXECUTOR, ADMINISTRATOR, CONSERVATOR, GUARDIAN
(SMALL SOLID BULLET) CALL 1-800-544-6666 FOR INSTRUCTIONS.

IN PERSON INDIVIDUAL, JOINT TENANT, SOLE PROPRIETORSHIP, UGMA, UTMA
(SMALL SOLID BULLET) BRING A LETTER OF INSTRUCTION TO A FIDELITY INVESTOR CENTER.
CALL 1-800-544-9797 FOR THE CENTER
NEAREST YOU. THE LETTER OF INSTRUCTION MUST BE SIGNED BY ALL
PERSONS REQUIRED TO SIGN FOR TRANSACTIONS,
EXACTLY AS THEIR NAMES APPEAR ON THE ACCOUNT.
TRUST
(SMALL SOLID BULLET) BRING A LETTER OF INSTRUCTION TO A FIDELITY INVESTOR CENTER.
CALL 1-800-544-9797 FOR THE CENTER
NEAREST YOU. THE TRUSTEE MUST SIGN THE LETTER OF INSTRUCTION
INDICATING CAPACITY AS TRUSTEE. IF THE TRUSTEE'S
NAME IS NOT IN THE ACCOUNT REGISTRATION, PROVIDE A COPY OF THE
TRUST DOCUMENT CERTIFIED WITHIN THE LAST 60
DAYS.
BUSINESS OR ORGANIZATION
(SMALL SOLID BULLET) BRING A LETTER OF INSTRUCTION TO A FIDELITY INVESTOR CENTER.
CALL 1-800-544-9797 FOR THE CENTER
NEAREST YOU. AT LEAST ONE PERSON AUTHORIZED BY CORPORATE RESOLUTION
TO ACT ON THE ACCOUNT MUST SIGN
THE LETTER OF INSTRUCTION.
(SMALL SOLID BULLET) INCLUDE A CORPORATE RESOLUTION WITH CORPORATE SEAL OR A
SIGNATURE GUARANTEE.
EXECUTOR, ADMINISTRATOR, CONSERVATOR, GUARDIAN
(SMALL SOLID BULLET) VISIT A FIDELITY INVESTOR CENTER FOR INSTRUCTIONS.
CALL 1-800-544-9797 FOR THE CENTER NEAREST YOU.

AUTOMATICALLY (SMALL SOLID BULLET) USE FIDELITY AUTOMATIC EXCHANGE SERVICE TO EXCHANGE FROM
FIDELITY NEW JERSEY MUNICIPAL MONEY
MARKET TO ANOTHER FIDELITY FUND.
(SMALL SOLID BULLET) USE PERSONAL WITHDRAWAL SERVICE TO SET UP PERIODIC REDEMPTIONS
FROM YOUR BOND FUND ACCOUNT.

CHECK (SMALL SOLID BULLET) WRITE A CHECK TO SELL SHARES FROM YOUR ACCOUNT.

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EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
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 policies and restrictions
governing exchanges:
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only 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) You may pay a $5.00 fee for each exchange out of
Spartan New Jersey Municipal Money Market, unless you place your
transaction through Fidelity's automated exchange services.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Currently, there is no limit on the number of
exchanges out of Fidelity New Jersey Municipal Money Market.
(small solid bullet) [Spartan New Jersey Municipal Money Market and
Spartan New Jersey Municipal Income] may temporarily or permanently
terminate the exchange privilege of any investor who makes more than
four exchanges out of the fund per calendar year.
(small solid bullet) Each fund may 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.
The funds may terminate or modify the exchange privileges 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 3.00% of
the amount exchanged. Check each fund's prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
funds.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts, or out of your account. While
automatic investment programs 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 retirement, a home, educational expenses,
and other long-term financial goals. Automatic withdrawal or exchange
programs can be a convenient way to provide a consistent income flow
or to move money between your investments.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS

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FIDELITY AUTOMATIC ACCOUNT BUILDER(registered trademark)
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM FREQUENCY PROCEDURES
$500 MONTHLY OR QUARTERLY (BULLET)TO SET UP FOR A NEW ACCOUNT, COMPLETE THE APPROPRIATE
FOR SPARTAN NJ SECTION ON THE FUND APPLICATION.
MUNI MONEY MARKET (BULLET)TO SET UP FOR EXISTING ACCOUNTS, CALL 1-800-544-6666 OR
AND SPARTAN NJ VISIT FIDELITY'S WEB SITE FOR AN APPLICATION.
MUNI INCOME (BULLET)TO MAKE CHANGES, CALL 1-800-544-6666 AT LEAST THREE
$100 BUSINESS DAYS PRIOR TO YOUR NEXT SCHEDULED INVESTMENT DATE.
FOR FIDELITY NJ MUNI
MONEY MARKET

</TABLE>

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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A
FIDELITY FUNDA
MINIMUM FREQUENCY PROCEDURES
$500 EVERY PAY PERIOD (BULLET)TO SET UP FOR A NEW ACCOUNT, CHECK THE APPROPRIATE BOX ON
FOR SPARTAN NJ THE FUND APPLICATION.
MUNI MONEY MARKET (BULLET)TO SET UP FOR AN EXISTING ACCOUNT, CALL 1-800-544-6666 OR
AND SPARTAN NJ VISIT FIDELITY'S WEB SITE FOR AN AUTHORIZATION FORM.
MUNI INCOME (BULLET)TO MAKE CHANGES YOU WILL NEED A NEW AUTHORIZATION FORM.
$100 CALL 1-800-544-6666 OR VISIT FIDELITY'S WEB SITE TO OBTAIN ONE.
FOR FIDELITY NJ MUNI
MONEY MARKET

</TABLE>

A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THAT FUND MAY NOT BE AN
APPROPRIATE CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.

<TABLE>
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FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY
FUND
MINIMUM FREQUENCY PROCEDURES
$500 MONTHLY, BIMONTHLY, (BULLET)TO SET UP, CALL 1-800-544-6666 AFTER BOTH ACCOUNTS ARE
FOR SPARTAN NJ QUARTERLY, OR ANNUALLY OPENED.
MUNI MONEY MARKET (BULLET)TO MAKE CHANGES, CALL 1-800-544-6666 AT LEAST THREE
AND SPARTAN NJ BUSINESS DAYS PRIOR TO YOUR NEXT SCHEDULED EXCHANGE DATE.
MUNI INCOME
$100
FOR FIDELITY NJ MUNI
MONEY MARKET

</TABLE>

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PERSONAL WITHDRAWAL SERVICE
TO SET UP PERIODIC REDEMPTIONS FROM YOUR BOND FUND ACCOUNT TO YOU OR
TO YOUR BANK ACCOUNT.
FREQUENCY PROCEDURES
Monthly (bullet)To set up, call 1-800-544-6666.
(bullet)To make changes, call Fidelity at 1-800-544-6666 at least three
business days prior to your next scheduled withdrawal date.

</TABLE>

OTHER FEATURES The following other features are also available to buy
and sell shares of the funds.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(bullet)You must sign up for the Wire feature before using it.
Complete the appropriate section on the application when opening your
account, or call 1-800-544-7777 to add the feature after your account
is opened. Call 1-800-544-7777 before your first use to verify that
this feature is set up on your account.
(bullet)To sell shares by wire, you must designate the U.S. commercial
bank account(s) into which you wish the redemption proceeds deposited.
(bullet)There may be a $5.00 fee for each wire purchase for Spartan
New Jersey Municipal Money Market.
(bullet)There may be a $5.00 fee for each wire redemption for Spartan
New Jersey Municipal Money Market.
FIDELITY MONEY LINE(registered trademark)
TO TRANSFER MONEY BY PHONE BETWEEN YOUR BANK ACCOUNT AND YOUR FUND
ACCOUNT.
(bullet)You must sign up for the Money Line feature before using it.
Complete the appropriate section on the application and then call
1-800-544-7777 or visit Fidelity's Web site before your first use to
verify that this feature is set up on your account.
(bullet)Most transfers are complete within three business days of your
call.
(bullet)Maximum purchase: $100,000
FIDELITY ON-LINE XPRESS+(Registered trademark)
TO MANAGE YOUR INVESTMENTS THROUGH YOUR PC.
CALL 1-800-544-7272 OR VISIT FIDELITY'S WEB SITE FOR MORE INFORMATION.
(bullet)For account balances and holdings;
(bullet)To review recent account history;
(bullet)For mutual fund and brokerage trading; and
(bullet)For access to research and analysis tools.
FIDELITY WEB XPRESS(registered trademark)
TO ACCESS AND MANAGE YOUR ACCOUNT OVER THE INTERNET AT FIDELITY'S WEB
SITE.
(bullet)For account balances and holdings;
(bullet)To review recent account history;
(bullet)To obtain quotes;
(bullet)For mutual fund and brokerage trading; and
(bullet)To access third-party research on companies, stocks, mutual
funds and the market.
TOUCHTONE XPRESS(registered trademark)
TO ACCESS AND MANAGE YOUR ACCOUNT AUTOMATICALLY BY PHONE.
CALL 1-800-544-5555
(bullet)For account balances and holdings;
(bullet)For mutual fund and brokerage trading;
(bullet)To obtain quotes;
(bullet)To review orders and mutual fund activity; and
(bullet)To change your personal identification number (PIN).
CHECKWRITING
TO REDEEM SHARES FROM YOUR SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET
AND FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET ACCOUNT.
(bullet)To set up, complete the appropriate section on the
application.
(bullet)All account owners must sign a signature card to receive a
checkbook.
(bullet)You may write an unlimited number of checks.
(bullet)Minimum check amount: $500.
(bullet)Do not try to close out your account by check.
(bullet)To obtain more checks, call Fidelity at 1-800-544-6666.
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund or another fund and certain transactions through automatic
investment or withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(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 a fund. Call Fidelity if you need additional
copies of financial reports, prospectuses or historical account
information.
Electronic copies of most financial reports and prospectuses are
available at Fidelity's Web site. To participate in Fidelity's
electronic delivery program, call Fidelity or visit Fidelity's Web
site for more information.
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 sell and
exchange by telephone, call Fidelity for instructions.
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.
Fidelity may 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 Fidelity, 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
accounts with Fidelity maintained by Fidelity Service Company, Inc. 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 $10,000 for Spartan New Jersey
Municipal Money Market, $2,000 for Fidelity New Jersey Municipal Money
Market, and $5,000 for Spartan New Jersey Municipal Income (except
accounts not subject to account minimums), you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity may close your account and send the proceeds to you.
Your shares will be sold at the NAV, minus the short-term trading fee,
if applicable, on the day your account is closed and, for Spartan New
Jersey Municipal Money Market, the $5.00 account closeout fee will be
charged.
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 fee 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 transaction 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.
Fidelity may charge a FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Each fund earns interest, dividends and other income from its
investments, and distributes this income (less expenses) to
shareholders as DIVIDENDS. Each fund may also realize capital gains
from its investments, and distributes these gains (less losses), if
any, to shareholders as CAPITAL GAINS DISTRIBUTIONS.
The bond fund normally declares dividends daily and pays them monthly.
The bond fund normally pays capital gains distributions in January and
December.
Distributions you receive from each money market fund consist
primarily of dividends. Each money market fund normally declares
dividends daily and pays them monthly.
EARNING DIVIDENDS
Shares begin to earn dividends on the first business day following the
day of purchase.
Shares earn dividends until, but not including, the next business day
following the day of redemption.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
each fund's distributions:
1. REINVESTMENT OPTION. Your dividends and capital gains
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 gains
distributions will be automatically reinvested in additional shares of
the fund. Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gains distributions, if
any, will be paid in cash.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in shares of another identically
registered Fidelity fund. Your capital gains distributions, if any,
will be automatically invested in shares of another identically
registered Fidelity fund, automatically reinvested in additional
shares of the fund, or paid in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in a fund could have tax
consequences for you.
TAXES ON DISTRIBUTIONS.
Each fund seeks to earn income and pay dividends EXEMPT from federal
income tax and the New Jersey Gross Income Tax.
A portion of each fund's income, and the dividends you receive, may be
subject to federal and state income taxes. Each fund's income may be
subject to the federal alternative minimum tax. Each fund may also
realize taxable income or gains on the sale of municipal bonds and may
make taxable distributions.
For federal tax purposes, each fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ORDINARY INCOME. Each fund's
distributions of long-term capital gains, if any, are taxable to you
generally as CAPITAL GAINS at a rate based on how long the securities
were held.
If a fund's distributions exceed its income and capital gains realized
in any year, which is sometimes the result of currency-related losses,
all or a portion of those distributions may be treated as a RETURN OF
CAPITAL to shareholders for tax purposes. A return of capital will
generally not be taxable to you, but will reduce the cost basis of
your shares and result in a higher reported capital gain or a lower
reported capital loss when you sell your shares.
If you buy shares when a fund has realized but not yet distributed
capital gains, you will be "BUYING A DIVIDEND" by paying the full
price for the shares and then receiving a portion of the price back in
the form of a taxable distribution.
Any taxable distributions you receive from a fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash or to invest
distributions automatically in shares of another Fidelity fund, you
will receive certain December distributions in January, but those
distributions will be taxable as if you received them on December 31.
TAXES ON TRANSACTIONS. Your bond fund redemptions, including
exchanges, may result in a capital gain or loss for federal tax
purposes. A capital gain or loss on your investment in a fund is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES

FUND MANAGEMENT
Each fund is a MUTUAL FUND, an investment that pools shareholders'
money and invests it toward a specified goal.
Fidelity Management & Research Company (FMR) is each fund's MANAGER.
As of __, [month] [day] [year]], FMR had $__ billion in discretionary
assets under management.
As the manager, FMR is responsible for choosing the funds' investments
and handling their business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, is an affiliate of FMR and serves as sub-adviser for
Spartan New Jersey Municipal Money Market and Fidelity New Jersey
Municipal Money Market. As of [month][day][year]], FIMM had $____ in
discretionary assets under management. FIMM is primarily responsible
for choosing investments for the money market funds.
Beginning January 1, 1999, FIMM will serve as sub-adviser and be
primarily responsible for choosing investments for Spartan New Jersey
Municipal Income.
FMR may use broker-dealers 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
A fund could be adversely affected if the computer systems used by FMR
and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised each fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on a fund.
Norm Lind is Vice President and manager of Spartan New Jersey
Municipal Income, which he has managed since April 1997. He also
manages several other Fidelity funds. Since joining Fidelity in 1986,
Mr. Lind has worked as an analyst and manager.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Each fund pays a MANAGEMENT FEE to FMR.
The management fee is calculated and paid to FMR every month. FMR pays
all of the other expenses of Spartan New Jersey Municipal Money Market
and Spartan New Jersey Municipal Income with limited exceptions.
Spartan New Jersey Municipal Money Market and Spartan New Jersey
Municipal Income's annual management fee rate is 0.50% and 0.55%,
respectively, of its average net assets.
For Fidelity New Jersey Municipal Money Market, the fee is calculated
by adding a GROUP FEE rate to an INDIVIDUAL FUND FEE rate, dividing by
twelve, and multiplying the result by the fund's average net assets
throughout the month.
The group fee rate is based on the average net assets of all the
mutual funds advised by FMR. This rate cannot rise above 0.37%, and it
drops as total assets under management increase.
For [month] [year], the group fee rate was __% for Fidelity New Jersey
Municipal Money Market. The individual fund fee rate is 0.25% for
Fidelity New Jersey Municipal Money Market.
The total management fee for the fiscal year ended November 30, 1998
was __% of the fund's average net assets for Fidelity New Jersey
Municipal Money Market.
On [month] [day], [year], FMR reduced the group fee rate.
FMR pays FIMM for providing assistance with investment advisory
services.
FMR may, from time to time, agree to reimburse the funds for
management fees and other expenses 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 by FMR at any time , can
decrease a fund's expenses and boost its performance.
As of ___, approximately __% and __% OF [NAME OF FUND]'s total
outstanding shares, respectively, were held by [FMR/FMR and [an] FMR
affiliate[s]/[an] FMR affiliate[s]].
FUND DISTRIBUTION
FDC distributes each fund's shares.
Each fund has adopted a Distribution and Service Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 that 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 providing services intended to result in
the sale of fund shares and/or shareholder support services. FMR,
directly or through FDC, may pay intermediaries, such as banks,
broker-dealers and other service-providers, that provide those
services. Currently, the Board of Trustees of each fund has authorized
such payments.
To receive payments made pursuant to a Distribution and Service Plan,
intermediaries must sign the appropriate agreement with FDC in
advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of a fund, provided that the fund receives
brokerage services and commission rates comparable to those of other
broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related
Statement of Additional Information (SAI), in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or FDC. This Prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell or to buy
shares of the funds to any person to whom it is unlawful to make such
offer.
APPENDIX

FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
fund's financial history for the past 5 years. Certain information
reflects financial results for a single fund share. Total returns for
each period include the reinvestment of all dividends and
distributions. This information has been audited by ____________,
independent accountants, whose report, along with each fund's
financial highlights and financial statements, are included in each
fund's Annual Report. A free copy of each Annual Report is available
upon request.

[Financial Highlights to be filed by subsequent amendment.]

LIKE SECURITIES OF ALL MUTUAL
FUNDS, THESE SECURITIES HAVE
NOT BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION, AND THE
SECURITIES AND EXCHANGE
COMMISSION HAS NOT
DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR
COMPLETE. ANY
REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
SPARTAN(registered trademark)
FLORIDA MUNICIPAL
FUNDS
SPARTAN FLORIDA MUNICIPAL MONEY MARKET FUND
(fund number 428, trading symbol FSFXX)
SPARTAN FLORIDA MUNICIPAL INCOME FUND
(fund number 427, trading symbol FFLIX)

PROSPECTUS
JANUARY 25, 1999
(fidelity_logo_graphic) 82 Devonshire Street, Boston, MA 02109
CONTENTS

FUND SUMMARY 3 INVESTMENT SUMMARY

5 PERFORMANCE

6 FEE TABLE

FUND BASICS 7 INVESTMENT DETAILS

9 VALUING SHARES

SHAREHOLDER INFORMATION 9 BUYING AND SELLING SHARES

12 EXCHANGING SHARES

12 ACCOUNT FEATURES AND POLICIES

15 DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS

15 TAX CONSEQUENCES

FUND SERVICES 15 FUND MANAGEMENT

16 FUND DISTRIBUTION

APPENDIX 16 FINANCIAL HIGHLIGHTS

FUND SUMMARY

INVESTMENT SUMMARY
INVESTMENT OBJECTIVE. 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.
PRINCIPAL INVESTMENT STRATEGIES. Fidelity Management & Research
Company (FMR')s principal investment strategies include:
(solid bullet) Investing normally in municipal money market
securities.
(solid bullet) Investing at least 65% of total assets in
municipal securities whose interest is exempt from the
Florida intangible tax.
(solid bullet) Investing so that at least 80% of fund's income
distributions is exempt from federal income tax.
(solid bullet) Potentially investing more than 25% of total assets in
municipal securities that finance similar projects.
(solid bullet) Investing in compliance with industry-standard
requirements for money market funds for the quality, maturity and
diversification of investments.
PRINCIPAL INVESTMENT RISKS. The fund is subject to the following
principal investment risks:
(solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market is
volatile and can be significantly affected by adverse tax, legislative
or political changes and the financial condition of the issuers of
municipal securities.
(solid bullet) INTEREST RATE CHANGES. Interest rate increases can
cause the price of a money market security to decrease.
(solid bullet) FOREIGN EXPOSURE. Entities located in foreign countries
can be affected by adverse political, regulatory, market or economic
developments in those countries.
(solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political or
economic conditions within Florida can affect the credit quality of
issuers located in that state .
(solid bullet) ISSUER-SPECIFIC CHANGES. A decline in the credit
quality of an issuer or the provider of credit support or a
maturity-shortening structure for a security can cause the price of a
money market security to decrease.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
INVESTMENT SUMMARY
INVESTMENT OBJECTIVE. Spartan Florida Municipal Income seeks a high
level of current income, exempt from federal income tax.
PRINCIPAL INVESTMENT STRATEGIES. Fidelity Management & Research
Company (FMR')s principal investment strategies include:
(solid bullet) Investing normally in investment-grade municipal debt
securities.
(solid bullet) Investing at least 65% of total assets in
municipal securities whose interest is exempt from the
Florida intangible tax.
(solid bullet) Investing so that at least 80% of fund's income
distributions is exempt from federal income tax.
(solid bullet) Potentially investing more than 25% of total assets in
municipal securities that finance similar projects.
(solid bullet) Managing the fund to have similar overall interest rate
risk to the Lehman Brothers Florida Municipal Bond Index.
(solid bullet) Allocating assets across different market sectors and
maturities.
(solid bullet) Analyzing a security's structural features, current
pricing and trading opportunities, and the credit quality of its
issuer in selecting investments.
PRINCIPAL INVESTMENT RISKS. The fund is subject to the following
principal investment risks:
(solid bullet) MUNICIPAL MARKET VOLATILITY. The municipal market is
volatile and can be significantly affected by adverse tax, legislative
or political changes and the financial condition of the issuers of
municipal securities.
(solid bullet) INTEREST RATE CHANGES. Interest rate increases can
cause the price of a debt security to decrease.
(solid bullet) FOREIGN EXPOSURE. Entities located in foreign countries
can be affected by adverse political, regulatory, market or economic
developments in those countries.
(solid bullet) GEOGRAPHIC CONCENTRATION. Unfavorable political or
economic conditions within Florida can affect the credit quality of
issuers located in that state .
(solid bullet) ISSUER-SPECIFIC CHANGES. The value of an individual
security or particular type of security can be more volatile than the
market as a whole and can perform differently than the value of the
market as a whole.
In addition, the fund is considered non-diversified and can invest a
greater portion of assets in securities of individual issuers than a
diversified fund. As a result, changes in the market value of a single
issuer could cause greater fluctuations in share price than would
occur in a more diversified fund.
An investment in the fund is not a deposit of a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
PERFORMANCE
The following information illustrates the changes in the funds'
performance from year to year and compares Spartan Florida Municipal
Income's performance to the performance of a market index and similar
funds over various periods of time. Data for the market index for
Spartan Florida Municipal Income is available only from June 30, 1993
to the present.
Returns are based on past results and are not an indication of future
performance.
YEAR-BY-YEAR RETURNS
The returns in the chart do not include the effect of the account
closeout fee. If the effect of the fee was reflected, returns would be
lower than those shown.

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SPARTAN FLORIDA MUNICIPAL MONEY MARKET

CALENDAR YEARS 1993 1994 1995 1996 1997 1998

% % % % % %

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DURING THE PERIODS SHOWN IN THE CHART FOR SPARTAN F L MUNI MONEY
MARKET, THE HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER ENDING
[CALENDAR QUARTER], [YEAR]) AND THE LOWEST RETURN FOR A QUARTER WAS
__% (QUARTER ENDING [CALENDAR QUARTER], [YEAR]).

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SPARTAN FLORIDA MUNICIPAL INCOME

CALENDAR YEARS 1993 1994 1995 1996 1997 1998

% % % % % %

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DURING THE PERIODS SHOWN IN THE CHART FOR SPARTAN F L MUNI
INCOME, THE HIGHEST RETURN FOR A QUARTER WAS __% (QUARTER ENDING
[CALENDAR QUARTER], [YEAR]) AND THE LOWEST RETURN FOR A QUARTER WAS
__% (QUARTER ENDING [CALENDAR QUARTER], [YEAR]).
AVERAGE ANNUAL RETURNS
[The returns in the following table do not include the effect of the
$5 account closeout fee for Spartan Florida Municipal Money Market.]
[The returns in the following table include the effect of the $5
account closeout fee based on median account size for Spartan Florida
Municipal Money Market.]

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FOR THE PERIODS ENDED DECEMBER 31, 1998 PAST 1 YEAR PAST 5 YEARS LIFE OF FUNDX

SPARTAN FL MUNI MONEY MARKET % % %

SPARTAN FL MUNI INCOME % % %

LEHMAN BROTHERS FL MUNI BOND INDEX % % %

LIPPER FL MUNI DEBT FUNDS AVERAGE % % %

</TABLE>

x FROM JANUARY 1, 1993
If FMR had not reimbursed certain fund expenses during these periods,
each fund's total returns would have been lower.
The Lehman Brothers Florida Municipal Bond Index is a market
capitalization-weighted index of Florida investment-grade municipal
bonds with maturities of one year or more.
The Lipper Funds Average reflects the performance (excluding sales
charges) of mutual funds with similar objectives.
FEE TABLE
The following table describes the fees and expenses that are incurred
when you buy, hold, or sell shares of the fund. [The annual fund
operating expenses provided below for the fund are based on historical
expenses, adjusted to reflect current fees./ The annual fund operating
expenses provided below for the fund are higher than the expenses
actually paid by the fund as the result of the payment or reduction of
certain expenses during the period./ The annual fund operating
expenses provided below for the fund are based on historical
expenses.]
SHAREHOLDER FEES (PAID BY THE INVESTOR)
SALES CHARGE (LOAD) ON PURCHASES NONE
AND REINVESTED DISTRIBUTIONS

DEFERRED SALES CHARGE (LOAD) ON REDEMPTIONS NONE

REDEMPTION FEE (SHORT-TERM TRADING FEE)
ON SHARES HELD LESS THAN 180 DAYS
(AS A % OF AMOUNT REDEEMED)

FOR SPARTAN FL MUNI INCOME ONLY 0.50%

EXCHANGE FEE

FOR SPARTAN FL MUNI MONEY MARKET ONLY $5.00A,B

WIRE REDEMPTION FEE

FOR SPARTAN FL MUNI MONEY MARKET ONLY $5.00

WIRE TRANSACTION FEE

FOR SPARTAN FL MUNI MONEY MARKET ONLY $5.00A

CHECKWRITING FEE, PER CHECK WRITTEN

FOR SPARTAN FL MUNI MONEY MARKET ONLY $2.00A

ACCOUNT CLOSEOUT FEE

FOR SPARTAN FL MUNI MONEY MARKET ONLY $5.00A

ANNUAL ACCOUNT MAINTENANCE FEE $12.00
(FOR ACCOUNTS UNDER $2,500)

A THE FEES FOR INDIVIDUAL TRANSACTIONS ARE WAIVED IF YOUR
ACCOUNT BALANCE AT THE TIME OF THE TRANSACTION IS $50,000 OR MORE.
B YOU WILL NOT PAY AN EXCHANGE FEE IF YOU EXCHANGE THROUGH ANY OF
FIDELITY'S AUTOMATED EXCHANGE SERVICES.
FUND OPERATING EXPENSES (PAID BY THE FUNDS)
SPARTAN FL MUNI MONEY MANAGEMENT FEE 0.50%
MARKET

DISTRIBUTION AND SERVICE (12B-1) FEE NONE

OTHER EXPENSES %

TOTAL ANNUAL FUND OPERATING EXPENSES %

SPARTAN FL MUNI INCOME MANAGEMENT FEE 0.55%

DISTRIBUTION AND SERVICE (12B-1) FEE NONE

OTHER EXPENSES %

TOTAL ANNUAL FUND OPERATING EXPENSES %

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 fund operating expenses would
have been __% for Spartan Florida Municipal Money Market and __% for
Spartan Florida Municipal Income.
This EXAMPLE helps you compare the cost of investing in the funds with
the cost of investing in other mutual funds.
Let's say, hypothetically, that each fund's annual return is 5% and
that your shareholder fees and each fund's annual operating expenses
are exactly as described in the fee table. This example illustrates
the effect of fees and expenses, but is not meant to suggest actual or
expected fees and expenses or returns, all of which may vary. For
every $10,000 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:
ACCOUNT ACCOUNT
OPEN CLOSED

SPARTAN FL MUNI MONEY MARKET 1 YEAR $ $

3 YEARS $ $

5 YEARS $ $

10 YEARS $ $

SPARTAN FL MUNI INCOME 1 YEAR $

3 YEARS $

5 YEARS $

10 YEARS $

FUND BASICS

INVESTMENT DETAILS
INVESTMENT OBJECTIVE:
SPARTAN FLORIDA MUNICIPAL MONEY MARKET FUND seeks as high a level of
current income exempt from federal income tax, as is consistent with
preservation of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES:
FMR normally invests the fund's assets in municipal money market
securities.
FMR normally invests at least 65% of the fund's total assets in
municipal securities whose interest is exempt from the
Florida intangible tax and invests the fund's assets so that at least
80% of the fund's income distributions is exempt from federal income
tax. Municipal securities whose interest is exempt from federal
income tax and the Florida intangible tax include securities issued by
U.S. territories and possessions, such as Guam, the Virgin Islands and
Puerto Rico, and their political sub-divisions and public
corporations. FMR may invest the fund's assets in municipal
securities whose interest is subject to the Florida intangible
tax, but expects the fund to be exempt from the Florida intangible
tax. To achieve exemption, FMR would try to sell on or before the last
business day of the calendar year any assets whose interest is
not exempt from the Florida intangible tax. As a result, the fund
could receive a lower price for the assets sold or incur additional
costs or taxable capital gains. Although FMR does not currently intend
to invest the fund's assets in municipal securities whose interest is
subject to federal income tax, FMR may invest all of the fund's assets
in municipal securities whose interest is subject to the federal
alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in
municipal securities that finance similar projects, such as those
relating to education, health care, transportation and utilities.
In buying and selling securities for the fund, FMR complies with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of the fund's investments. FMR
stresses maintaining a stable $1.00 share price, liquidity and income.
INVESTMENT OBJECTIVE:
SPARTAN FLORIDA MUNICIPAL INCOME seeks a high level of current income,
exempt from federal income tax.
PRINCIPAL INVESTMENT STRATEGIES:
FMR normally invests the fund's assets in investment-grade municipal
debt securities.
FMR normally invests at least 65% of the fund's total assets in
municipal securities whose interest is exempt from the
Florida intangible tax and invests the fund's assets so that at least
80% of the fund's income distributions is exempt from federal income
tax. Municipal securities whose interest is exempt from federal
income tax and the Florida intangible tax include securities issued by
U.S. territories and possessions, such as Guam, the Virgin Islands and
Puerto Rico, and their political sub divisions and public
corporations. FMR may invest the fund's assets in municipal
securities whose interest is subject to the Florida
intangible tax, but expects the fund to be exempt from the Florida
intangible tax. To achieve exemption, FMR would try to sell on or
before the last business day of the calendar year any assets whose
interest is not exempt from the Florida intangible tax. As a
result, the fund could receive a lower price for the assets sold or
incur additional costs or taxable capital gains. Although FMR does not
currently intend to invest the fund's assets in municipal securities
whose interest is subject to federal income tax, FMR may invest all of
the fund's assets in municipal securities whose interest is subject to
the federal alternative minimum tax.
FMR may invest more than 25% of the fund's total assets in
municipal securities that finance similar projects, such as
those relating to education, health care, transportation and
utilities.
FMR uses the Lehman Brothers Florida Municipal Bond Index as a guide
in structuring the fund and selecting its investments. FMR manages the
fund to have similar overall interest rate risk to the index. As of
November 30, 1998, the dollar-weighted average maturity of the fund
and the index was approximately __ and __ years, respectively.
FMR allocates the fund's 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 and maturity.
Because the fund is considered non-diversified, FMR may invest a
significant percentage of the fund's assets in a single issuer.
In buying and selling securities for the fund, FMR analyzes a
security's structural features, current price compared to FMR's
estimate of its long-term value, and any short-term trading
opportunities resulting from market inefficiencies, and the credit
quality of its issuer.
FMR may use various techniques, including buying and selling futures
contracts, to increase or decrease the fund's exposure to changing
security prices, interest rates or other factors that affect security
values. If FMR's strategies do not work as intended, the fund may not
achieve its objective.
DESCRIPTION OF PRINCIPAL SECURITY TYPES:
MONEY MARKET SECURITIES are high quality, short-term debt securities
that pay a fixed, variable, or floating interest rate. Securities are
often specifically structured so that they are eligible investments
for a money market fund. For example, in order to satisfy the maturity
restrictions for a money market fund, some money market securities
have demand or put features which have the effect of shortening the
security's maturity. Municipal money market securities include
variable rate demand notes, commercial paper and municipal notes.
DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must
repay the amount borrowed at the maturity of the security. Some debt
securities, such as zero coupon bonds, do not pay current interest,
but are sold at a discount from their face values. Municipal debt
securities include general obligation bonds of municipalities, local
or state governments, project or revenue-specific bonds or
pre-refunded or escrowed bonds.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
and private purposes, including general financing for state and local
governments, or financing for a specific project or public facility.
Municipal securities may be fully or partially backed by the local
government, by the credit of a private issuer, by the current or
anticipated revenues from a specific project or specific assets, or by
domestic or foreign entities providing credit support such as letters
of credit, guarantees or insurance.
PRINCIPAL INVESTMENT RISKS:
Many factors affect each fund's performance. Because FMR concentrates
each fund's investments in Florida , the fund's performance is
expected to be closely tied to economic and political conditions
within that state and to be more volati le than the performance
of a more geographically diversified fund.
The money market fund's yield will change daily based on changes in
interest rates and other market conditions. Although the fund is
managed to maintain a stable $1.00 share price, there is no guarantee
that the fund will be able to do so. For example, a major increase in
interest rates or a decrease in the credit quality of the issuer of
one of the fund's investments could cause the fund's share price to go
down. While the fund will be charged premiums by a mutual insurance
company for coverage of specified types of losses related to default
or bankruptcy on certain securities, the fund may incur losses
regardless of the insurance.
The bond fund's yield and share price change daily based on changes in
interest rates and market conditions and in response to other
economic, political or financial developments. The fund's reaction to
these developments will be affected by the types and maturities of the
securities in which the fund invests, the financial condition,
industry and economic sector, and geographic location of an issuer,
and the fund's level of investment in the securities of that issuer.
When you sell your shares of the fund, they could be worth more or
less than what you paid for them.
The following factors may significantly affect a fund's performance:
MUNICIPAL MARKET VOLATILITY. Municipal securities can be significantly
affected by political changes as well as uncertainties in the
municipal market related to taxation, legislative changes, or the
rights of municipal security holders. Because many municipal
securities are issued to finance similar types of projects, especially
those relating to education, health care, transportation and
utilities, conditions in those sectors can affect the overall
municipal market. In addition, changes in the financial condition of
an individual municipal insurer can affect the overall municipal
market.
INTEREST RATE CHANGES. Debt and money market securities have varying
levels of sensitivity to changes in interest rates. In general, the
price of a debt or money market security can fall when interest rates
rise and can rise when interest rates fall. Securities with longer
maturities can be more sensitive to interest rate changes. In other
words, the longer the maturity of a security, the greater the impact a
change in interest rates could have on the security's price. In
addition, short-term and long-term interest rates do not
necessarily move in the same amount or the same direction. Short-term
securities tend to react to changes in short-term interest rates, and
long-term securities tend to react to changes in long-term interest
rates.
FOREIGN EXPOSURE. Issuers located in foreign countries and entities
located in foreign countries that provide credit support or a
maturity-shortening structure can involve increased risks. Extensive
public information about the issuer or provider may not be available
and unfavorable political, economic or governmental developments could
affect the value of the security.
GEOGRAPHIC CONCENTRATION. Because of the importance of foreign trade,
agriculture, construction, and tourism in Florida, the State's economy
is sensitive to trends in these industries.
ISSUER-SPECIFIC CHANGES. Changes in the financial condition of an
issuer, changes in specific economic or political conditions that
affect a particular type of issuer, and changes in general economic or
political conditions can adversely affect the credit quality or value
of an issuer's securities. Lower-quality debt securities (those of
less than investment-grade quality) tend to be more sensitive to these
changes than higher-quality debt securities. Entities providing
credit support or a maturity-shortening structure also can be affected
by these types of changes. Municipal securities backed by current or
anticipated revenues from a specific project or specific assets can be
negatively affected by the discontinuance of the taxation supporting
the project or assets or the inability to collect revenues for the
project or from the assets. If the Internal Revenue Service
determines an issuer of a municipal security has not complied with
applicable tax requirements, interest from the security could become
taxable and the security could decline significantly in value. In
addition, i f the structure of a security fails to function as
intended, interest from the security could become taxable or
the security could decline in value.
In response to market, economic, political or other conditions, FMR
may temporarily use a different investment strategy for defensive
purposes. If FMR does so, different factors could affect a fund's
performance, and a fund may distribute income subject to federal
income tax or be subject to the Florida intangible tax.
FUNDAMENTAL INVESTMENT POLICIES
The policies discussed below are fundamental, that is, subject to
change only by 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. The fund will normally invest so that at least 80% of its
income distributions are free from federal income tax.
VALUING SHARES
Each fund's net asset value per share (NAV) is the value of a single
share.
The funds are OPEN FOR BUSINESS each day the New York Stock Exchange
(NYSE) is open. Fidelity normally calculates each fund's NAV as of the
close of business 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 SEC. Each fund's assets are valued
as of this time for the purpose of computing the fund's NAV.
To the extent that each fund's assets are traded in other markets on
days when the NYSE is closed, the value of the fund's assets may be
affected on days when the fund is not open for business. In addition,
trading in some of a fund's assets may not occur on days when the fund
is open for business.
The money market fund's ASSETS ARE VALUED on the basis of amortized
cost.
The bond fund's ASSETS ARE VALUED primarily on the basis of
information furnished by a pricing service or market quotations. If
market quotations or information furnished by a pricing service are
not readily available for a security or if a security's value has been
materially affected by events occurring after the close of the
exchange or market on which the security is principally traded, that
security may be valued by another method that the Board of Trustees
believes accurately reflects fair value. In these circumstances, the
security's valuation may differ from the generally expected valuation.
SHAREHOLDER INFORMATION

BUYING AND SELLING SHARES
GENERAL INFORMATION
Fidelity Investments(registered trademark) 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-advantaged retirement plans for individuals investing on their own
or through their employer.
For account, product and service information, please use the following
Web site and phone numbers:
(small solid bullet) For information over the Internet, visit
Fidelity's Web site at www.fidelity.com.
(small solid bullet) For accessing account information automatically
by phone, use TouchTone Xpress(registered trademark), 1-800-544-5555.
(small solid bullet) For exchanges and redemptions, 1-800-544-7777.
(small solid bullet) For account assistance, 1-800-544-6666.
(small solid bullet) For mutual fund and retirement information,
1-800-544-8888.
(small solid bullet) For brokerage information, 1-800-544-7272.
(small solid bullet) TDD - Service for the Deaf and Hearing-Impaired,
1-800-544-0118 (9:00 a.m. - 9:00 p.m. Eastern time).
Please use the following addresses:
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
OVERNIGHT EXPRESS
Fidelity Investments
2300 Litton Lane - KH1A
Hebron, KY 41048
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
You may buy or sell shares of the funds through an investment
professional. If you invest through an investment professional, the
procedures for buying, selling and exchanging shares of a fund and the
account features and policies may differ. Additional fees may also
apply to your investment in a fund, including a transaction fee if you
buy or sell shares of the fund through a broker or other investment
professional.
Certain methods of contacting Fidelity, such as by telephone or
electronically, may be unavailable or delayed (for example, during
periods of unusual market activity). In addition, the level and type
of service available may be restricted based on criteria established
by Fidelity.
The different ways to set up (register) your account with Fidelity are
listed in the following table.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANT
FOR YOUR GENERAL INVESTMENT NEEDS
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
TRUST
FOR MONEY BEING INVESTED BY A TRUST
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR
OTHER GROUPS
BUYING SHARES
The PRICE TO BUY one share of each fund is the fund's NAV. Each fund's
shares are sold without a sales charge.
Your shares will be bought at the next NAV calculated after your
investment is received in proper form.
Short-term or excessive trading into and out of a fund may harm
performance by disrupting portfolio management strategies and by
increasing expenses. Accordingly, a fund may reject any purchase
orders, including exchanges, particularly from market timers or
investors who, in FMR's opinion, have a pattern of short-term or
excessive trading or whose trading has been or may be disruptive to
the fund. For these purposes, FMR may consider an investor's trading
history in the fund or other Fidelity Funds, and accounts under common
ownership or control.
Each fund may stop offering shares completely or may offer shares only
on a limited basis, for a period of time or permanently.
When you place an order to buy shares, 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) Fidelity 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
Fidelity has incurred.
Certain financial institutions that have entered into sales agreements
with Fidelity Distributors Corporation (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 order will
be canceled and the financial institution could be held liable for
resulting fees or losses.
MINIMUMS
TO OPEN AN ACCOUNT $10,000
For Spartan FL Muni Money Market $25,000
TO ADD TO AN ACCOUNT $1,000
Through regular investment plans $500
MINIMUM BALANCE $5,000
For Spartan FL Muni Money Market $10,000
There is no minimum account balance or initial or subsequent purchase
minimum for investments through Fidelity Portfolio Advisory Services
SM or a qualified state tuition program. In addition, each fund may
waive or lower purchase minimums in other circumstances.

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KEY INFORMATION
PHONE TO OPEN AN ACCOUNT
1-800-544-7777 (SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND.
TO ADD TO AN ACCOUNT
(SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND.
(SMALL SOLID BULLET) USE FIDELITY MONEY LINE TO TRANSFER FROM YOUR BANK ACCOUNT.

MAIL TO OPEN AN ACCOUNT
FIDELITY INVESTMENTS (SMALL SOLID BULLET) COMPLETE AND SIGN THE APPLICATION. MAKE YOUR CHECK PAYABLE
TO THE COMPLETE NAME OF THE FUND.
P.O. BOX 770001 MAIL TO THE ADDRESS AT LEFT.
CINCINNATI, OH TO ADD TO AN ACCOUNT
45277-0002 (SMALL SOLID BULLET) MAKE YOUR CHECK PAYABLE TO THE COMPLETE NAME OF THE FUND.
INDICATE YOUR FUND ACCOUNT NUMBER ON
YOUR CHECK AND MAIL TO THE ADDRESS AT LEFT.
(SMALL SOLID BULLET) EXCHANGE FROM ANOTHER FIDELITY FUND. SEND A LETTER OF
INSTRUCTION TO THE ADDRESS AT LEFT, INCLUDING
YOUR NAME, THE FUNDS' NAMES, THE FUND ACCOUNT NUMBERS,
AND THE DOLLAR AMOUNT OR NUMBER OF
SHARES TO BE EXCHANGED.

WIRE TO OPEN AN ACCOUNT
(SMALL SOLID BULLET) CALL 1-800-544-7777 TO SET UP YOUR ACCOUNT AND TO ARRANGE
A WIRE TRANSACTION.
(SMALL SOLID BULLET) WIRE WITHIN 24 HOURS TO: BANKERS TRUST COMPANY, BANK
ROUTING # 021001033, ACCOUNT # 00163053.
(SMALL SOLID BULLET) SPECIFY THE COMPLETE NAME OF THE FUND AND INCLUDE YOUR
NEW FUND ACCOUNT NUMBER AND YOUR NAME.
TO ADD TO AN ACCOUNT
(SMALL SOLID BULLET) WIRE TO: BANKERS TRUST COMPANY, BANK ROUTING # 021001033,
ACCOUNT # 00163053.
(SMALL SOLID BULLET) SPECIFY THE COMPLETE NAME OF THE FUND AND INCLUDE YOUR
FUND ACCOUNT NUMBER AND YOUR NAME.

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SELLING 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.
Spartan Florida Municipal Income will deduct a SHORT-TERM TRADING FEE
of 0.50% from the redemption amount if you sell your shares 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.
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.
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.
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 sell 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.
When you place an order to sell shares, note the following:
(small solid bullet) If you are selling some but not all of your
Spartan Florida Municipal Money Market and Spartan Florida Municipal
Income Fund shares, leave at least $10,000 and $5,000, respectively,
worth of shares in the account to keep it open, except accounts not
subject to account minimums.
(small solid bullet) Normally, Fidelity will process redemptions by
the next business day, but Fidelity may take up to seven days to
process redemptions if making immediate payment would adversely affect
a fund.
(small solid bullet) Redemption proceeds (other than exchanges) may be
delayed until investments credited to your account have been received
and 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) Redemption proceeds may be paid in securities or
other assets rather than in cash if the Board of Trustees determines
it is in the best interests of a fund.
(small solid bullet) If you sell shares of Spartan Florida Municipal
Money Market 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.
(small solid bullet) You will not receive interest on amounts
represented by uncashed redemption checks.
(small solid bullet) Unless otherwise instructed, Fidelity will send a
check to the record address.

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KEY INFORMATION
PHONE (SMALL SOLID BULLET) CALL THE PHONE NUMBER AT LEFT TO INITIATE A WIRE
TRANSACTION OR TO REQUEST A CHECK FOR YOUR
1-800-544-7777 REDEMPTION.
(SMALL SOLID BULLET) USE FIDELITY MONEY LINE TO TRANSFER TO YOUR BANK ACCOUNT.
(SMALL SOLID BULLET) EXCHANGE TO ANOTHER FIDELITY FUND. CALL THE PHONE NUMBER AT LEFT.

INTERNET (SMALL SOLID BULLET) EXCHANGE TO ANOTHER FIDELITY FUND.
WWW.FIDELITY.COM (SMALL SOLID BULLET) USE FIDELITY MONEY LINE TO TRANSFER TO YOUR BANK ACCOUNT.

MAIL INDIVIDUAL, JOINT TENANT, SOLE PROPRIETORSHIP, UGMA, UTMA
FIDELITY INVESTMENTS (SMALL SOLID BULLET) SEND A LETTER OF INSTRUCTION TO THE ADDRESS AT LEFT,
INCLUDING YOUR NAME, THE FUND'S NAME, YOUR FUND
P.O. BOX 660602 ACCOUNT NUMBER, AND THE DOLLAR AMOUNT OR NUMBER OF SHARES
TO BE SOLD. THE LETTER OF INSTRUCTION
DALLAS, TX MUST BE SIGNED BY ALL PERSONS REQUIRED TO SIGN FOR TRANSACTIONS,
EXACTLY AS THEIR NAMES APPEAR ON
75266-0602 THE ACCOUNT.
TRUST
(SMALL SOLID BULLET) SEND A LETTER OF INSTRUCTION TO THE ADDRESS AT LEFT,
INCLUDING THE TRUST'S NAME, THE FUND'S NAME, THE
TRUST'S FUND ACCOUNT NUMBER, AND THE DOLLAR AMOUNT OR NUMBER
OF SHARES TO BE SOLD. THE TRUSTEE MUST
SIGN THE LETTER OF INSTRUCTION INDICATING CAPACITY AS TRUSTEE.
IF THE TRUSTEE'S NAME IS NOT IN THE ACCOUNT
REGISTRATION, PROVIDE A COPY OF THE TRUST DOCUMENT CERTIFIED
WITHIN THE LAST 60 DAYS.
BUSINESS OR ORGANIZATION
(SMALL SOLID BULLET) SEND A LETTER OF INSTRUCTION TO THE ADDRESS AT LEFT, INCLUDING
THE FIRM'S NAME, THE FUND'S NAME, THE
FIRM'S FUND ACCOUNT NUMBER, AND THE DOLLAR AMOUNT OR NUMBER
OF SHARES TO BE SOLD. AT LEAST ONE
PERSON AUTHORIZED BY CORPORATE RESOLUTION TO ACT ON THE ACCOUNT
MUST SIGN THE LETTER OF INSTRUCTION.
(SMALL SOLID BULLET) INCLUDE A CORPORATE RESOLUTION WITH CORPORATE SEAL OR A
SIGNATURE GUARANTEE.
EXECUTOR, ADMINISTRATOR, CONSERVATOR, GUARDIAN
(SMALL SOLID BULLET) CALL 1-800-544-6666 FOR INSTRUCTIONS.

IN PERSON INDIVIDUAL, JOINT TENANT, SOLE PROPRIETORSHIP, UGMA, UTMA
(SMALL SOLID BULLET) BRING A LETTER OF INSTRUCTION TO A FIDELITY INVESTOR CENTER.
CALL 1-800-544-9797 FOR THE CENTER
NEAREST YOU. THE LETTER OF INSTRUCTION MUST BE SIGNED BY ALL
PERSONS REQUIRED TO SIGN FOR TRANSACTIONS,
EXACTLY AS THEIR NAMES APPEAR ON THE ACCOUNT.
TRUST
(SMALL SOLID BULLET) BRING A LETTER OF INSTRUCTION TO A FIDELITY INVESTOR CENTER.
CALL 1-800-544-9797 FOR THE CENTER
NEAREST YOU. THE TRUSTEE MUST SIGN THE LETTER OF INSTRUCTION
INDICATING CAPACITY AS TRUSTEE. IF THE TRUSTEE'S
NAME IS NOT IN THE ACCOUNT REGISTRATION, PROVIDE A COPY OF THE
TRUST DOCUMENT CERTIFIED WITHIN THE LAST 60 DAYS.
BUSINESS OR ORGANIZATION
(SMALL SOLID BULLET) BRING A LETTER OF INSTRUCTION TO A FIDELITY INVESTOR CENTER.
CALL 1-800-544-9797 FOR THE CENTER
NEAREST YOU. AT LEAST ONE PERSON AUTHORIZED BY CORPORATE
RESOLUTION TO ACT ON THE ACCOUNT MUST SIGN
THE LETTER OF INSTRUCTION.
(SMALL SOLID BULLET) INCLUDE A CORPORATE RESOLUTION WITH CORPORATE SEAL OR A
SIGNATURE GUARANTEE.
EXECUTOR, ADMINISTRATOR, CONSERVATOR, GUARDIAN
(SMALL SOLID BULLET) VISIT A FIDELITY INVESTOR CENTER FOR INSTRUCTIONS.
CALL 1-800-544-9797 FOR THE CENTER NEAREST YOU.

AUTOMATICALLY (SMALL SOLID BULLET) USE PERSONAL WITHDRAWAL SERVICE TO SET UP PERIODIC REDEMPTIONS
FROM YOUR BOND FUND ACCOUNT.

CHECK (SMALL SOLID BULLET) WRITE A CHECK TO SELL SHARES FROM YOUR ACCOUNT.

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EXCHANGING SHARES
An exchange involves the redemption of all or a portion of the shares
of one fund and the purchase of shares of another fund.
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 policies and restrictions
governing exchanges:
(small solid bullet) The fund you are exchanging into must be
available for sale in your state.
(small solid bullet) You may exchange only 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) 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.
(small solid bullet) Exchanges may have tax consequences for you.
(small solid bullet) Each fund may temporarily or permanently
terminate the exchange privilege of any investor who makes more than
four exchanges out of the fund per calendar year.
(small solid bullet) Each fund may 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.
The funds may terminate or modify the exchange privileges 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 3.00% of
the amount exchanged. Check each fund's prospectus for details.
ACCOUNT FEATURES AND POLICIES
FEATURES
The following features are available to buy and sell shares of the
funds.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS. Fidelity offers
convenient services that let you automatically transfer money into
your account, between accounts, or out of your account. While
automatic investment programs 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 retirement, a home, educational expenses,
and other long-term financial goals. Automatic withdrawal or exchange
programs can be a convenient way to provide a consistent income flow
or to move money between your investments.
AUTOMATIC INVESTMENT AND WITHDRAWAL PROGRAMS

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FIDELITY AUTOMATIC ACCOUNT BUILDER(registered trademark)
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM FREQUENCY PROCEDURES
$500 MONTHLY OR QUARTERLY (SMALL SOLID BULLET) TO SET UP FOR A NEW ACCOUNT, COMPLETE THE APPROPRIATE SECTION ON
THE FUND APPLICATION.
(SMALL SOLID BULLET) TO SET UP FOR EXISTING ACCOUNTS, CALL 1-800-544-6666 OR VISIT
FIDELITY'S WEB SITE FOR AN APPLICATION.
(SMALL SOLID BULLET) TO MAKE CHANGES, 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
MINIMUM FREQUENCY PROCEDURES
$500 EVERY PAY PERIOD (SMALL SOLID BULLET) TO SET UP FOR A NEW ACCOUNT, CHECK THE APPROPRIATE BOX ON THE
FUND APPLICATION.
(SMALL SOLID BULLET) TO SET UP FOR AN EXISTING ACCOUNT, CALL 1-800-544-6666 OR VISIT
FIDELITY'S WEB SITE FOR AN AUTHORIZATION FORM.
(SMALL SOLID BULLET) TO MAKE CHANGES YOU WILL NEED A NEW AUTHORIZATION FORM. CALL
1-800-544-6666 OR VISIT FIDELITY'S WEB SITE TO OBTAIN ONE.

</TABLE>

A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THAT FUND MAY NOT BE AN
APPROPRIATE CHOICE FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.

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FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY
FUND
MINIMUM FREQUENCY PROCEDURES
$500 MONTHLY, BIMONTHLY, (SMALL SOLID BULLET) TO SET UP, CALL 1-800-544-6666 AFTER BOTH ACCOUNTS ARE OPENED.
QUARTERLY, OR ANNUALLY (SMALL SOLID BULLET) TO MAKE CHANGES, CALL 1-800-544-6666 AT LEAST THREE BUSINESS
DAYS PRIOR TO YOUR NEXT SCHEDULED EXCHANGE DATE.

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OTHER FEATURES The following other features are also available to buy
and sell shares of the funds.
WIRE
TO PURCHASE AND SELL SHARES VIA THE FEDERAL RESERVE WIRE SYSTEM.
(small solid bullet) You must sign up for the Wire feature before
using it. Complete the appropriate section on the application when
opening your account, or call 1-800-544-7777 to add the feature after
your account is opened. Call 1-800-544-7777 before your first use to
verify that this feature is set up on your account.
(small solid bullet) To sell shares by wire, you must designate the
U.S. commercial bank account(s) into which you wish the redemption
proceeds deposited.
(small solid bullet) There may be a $5.00 fee for each wire purchase
for Spartan Florida Municipal Money Market.
(small solid bullet) There may be a $5.00 fee for each wire redemption
for Spartan Florida Municipal Money Market.
FIDELITY MONEY LINE(registered trademark)
TO TRANSFER MONEY BY PHONE BETWEEN YOUR BANK ACCOUNT AND YOUR FUND
ACCOUNT.
(small solid bullet) You must sign up for the Fidelity Money Line
feature before using it. Complete the appropriate section on the
application and then call 1-800-544-7777 or visit Fidelity's Web site
before your first use to verify that this feature is set up on your
account.
(small solid bullet) Most transfers are complete within three business
days of your call.
(small solid bullet) Maximum purchase: $100,000
FIDELITY ON-LINE XPRESS+(Registered trademark)
TO MANAGE YOUR INVESTMENTS THROUGH YOUR PC.
CALL 1-800-544-7272 OR VISIT FIDELITY'S WEB SITE FOR MORE INFORMATION.
(small solid bullet) For account balances and holdings;
(small solid bullet) To review recent account history;
(small solid bullet) For mutual fund and brokerage trading; and
(small solid bullet) For access to research and analysis tools.
FIDELITY WEB XPRESS(registered trademark)
TO ACCESS AND MANAGE YOUR ACCOUNT OVER THE INTERNET AT FIDELITY'S WEB
SITE.
(small solid bullet) For account balances and holdings;
(small solid bullet) To review recent account history;
(small solid bullet) To obtain quotes;
(small solid bullet) For mutual fund and brokerage trading; and
(small solid bullet) To access third-party research on companies,
stocks, mutual funds and the market.
TOUCHTONE XPRESS(registered trademark)
TO ACCESS AND MANAGE YOUR ACCOUNT AUTOMATICALLY BY PHONE.
CALL 1-800-544-5555.
(small solid bullet) For account balances and holdings;
(small solid bullet) For mutual fund and brokerage trading;
(small solid bullet) To obtain quotes;
(small solid bullet) To review orders and mutual fund activity; and
(small solid bullet) To change your personal identification number
(PIN).
CHECKWRITING
TO REDEEM SHARES FROM YOUR SPARTAN FLORIDA MUNICIPAL MONEY MARKET
ACCOUNT.
(small solid bullet) To set up, complete the appropriate section on
the application.
(small solid bullet) All account owners must sign a signature card to
receive a checkbook.
(small solid bullet) You may write an unlimited number of checks.
(small solid bullet) Minimum check amount: $500.
(small solid bullet) Do not try to close out your account by check.
(small solid bullet) To obtain more checks, call Fidelity at
1-800-544-6666.
POLICIES
The following policies apply to you as a shareholder.
STATEMENTS AND REPORTS that Fidelity sends to you include the
following:
(small solid bullet) Confirmation statements (after transactions
affecting your account balance except reinvestment of distributions in
the fund and certain transactions through automatic investment or
withdrawal programs).
(small solid bullet) Monthly or quarterly account statements
(detailing account balances and all transactions completed during the
prior month or quarter).
(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 a fund. Call Fidelity if you need additional
copies of financial reports, prospectuses or historical account
information.
Electronic copies of most financial reports and prospectuses are
available at Fidelity's Web site. To participate in Fidelity's
electronic delivery program, call Fidelity or visit Fidelity's Web
site for more information.
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 sell and
exchange by telephone, call Fidelity for instructions.
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.
Fidelity may 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 Fidelity, 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
accounts with Fidelity maintained by Fidelity Service Company, Inc. 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 $10,000 for Spartan Florida
Municipal Money Market or $5,000 for Spartan Florida Municipal Income
(except accounts not subject to account minimums), you will be given
30 days' notice to reestablish the minimum balance. If you do not
increase your balance, Fidelity may close your account and send the
proceeds to you. Your shares will be sold at the NAV, minus the
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.
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 fee 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 transaction 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.
Fidelity may charge a FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Each fund earns interest, dividends and other income from its
investments, and distributes this income (less expenses) to
shareholders as dividends. Each fund may also realize capital gains
from its investments, and distributes these gains (less losses), if
any, to shareholders as capital gains distributions.
The bond fund normally declares dividends daily and pays them monthly.
The bond fund normally pays capital gains distributions in January and
December.
Distributions you receive from the money market fund consist primarily
of dividends. The money market fund normally declares dividends daily
and pays them monthly.
EARNING DIVIDENDS
Shares begin to earn dividends on the first business day following the
day of purchase.
Shares earn dividends until, but not including, the next business day
following the day of redemption.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. The following options may be available for
each fund's distributions:
1. REINVESTMENT OPTION. Your dividends and capital gains
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 gains
distributions will be automatically reinvested in additional shares of
the fund. Your dividends will be paid in cash.
3. CASH OPTION. Your dividends and capital gains distributions, if
any, will be paid in cash.
4. DIRECTED DIVIDENDS(registered trademark) OPTION. Your dividends
will be automatically invested in shares of another identically
registered Fidelity fund. Your capital gains distributions, if any,
will be automatically invested in shares of another identically
registered Fidelity fund, automatically reinvested in additional
shares of the fund, or paid in cash.
Not all distribution options are available for every account. If the
option you prefer is not listed on your account application, or if you
want to change your current option, call Fidelity.
If you elect to receive distributions paid in cash by check and the
U.S. Postal Service does not deliver your checks, your distribution
option may be converted to the Reinvestment Option. You will not
receive interest on amounts represented by uncashed distribution
checks.
TAX CONSEQUENCES
As with any investment, your investment in a fund could have tax
consequences for you.
TAXES ON DISTRIBUTIONS.
Each fund seeks to earn income and pay dividends exempt from federal
income tax, and also seeks exemption of fund shares from the Florida
intangible tax.
Each fund has received a ruling from the Florida Department of Revenue
that, if at the close of business on the last business day of any
calendar year, the 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 the 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 intangible tax, all or a portion of the value of the
fund's shares will be subject to the tax.
A portion of each fund's income, and the dividends you receive, may be
subject to federal and state income taxes. Each fund's income may be
subject to the federal alternative minimum tax. Each fund may also
realize taxable income or gains on the sale of municipal bonds and may
make taxable distributions.
For federal tax purposes, each fund's distributions of short-term
capital gains and gains on the sale of bonds characterized as market
discount are taxable to you as ORDINARY INCOME. Each fund's
distributions of long-term capital gains, if any, are taxable to you
generally as CAPITAL GAINS at a rate based on how long the securities
were held.
If a fund's distributions exceed its income and capital gains realized
in any year, which is sometimes the result of currency-related losses,
all or a portion of those distributions may be treated as a RETURN OF
CAPITAL to shareholders for tax purposes. A return of capital will
generally not be taxable to you, but will reduce the cost basis of
your shares and result in a higher reported capital gain or a lower
reported capital loss when you sell your shares.
If you buy shares when a fund has realized but not yet distributed
income or capital gains, you will be "BUYING A DIVIDEND" by paying the
full price for the shares and then receiving a portion of the price
back in the form of a taxable distribution.
Any taxable distributions you receive from the fund will normally be
taxable to you when you receive them, regardless of your distribution
option. If you elect to receive distributions in cash or to invest
distributions automatically in shares of another Fidelity fund, you
will receive certain December distributions in January, but those
distributions will be taxable as if you received them on December 31.
TAXES ON TRANSACTIONS. Your bond fund redemptions, including
exchanges, may result in a capital gain or loss for federal tax
purposes. A capital gain or loss on your investment in the fund is the
difference between the cost of your shares and the price you receive
when you sell them.
FUND SERVICES

FUND MANAGEMENT
Each fund is a MUTUAL FUND, an investment that pools shareholders'
money and invests it toward a specified goal.
Fidelity Management & Research Company (FMR) is each fund's MANAGER.
As of __, [month] [day] [year], FMR had $__ billion in discretionary
assets under management.
As the manager, FMR is responsible for choosing the funds' investments
and handling their business affairs.
Fidelity Investments Money Management, Inc. (FIMM), in Merrimack, New
Hampshire, is an affiliate of FMR and serves as sub-adviser for the
money market fund. As of [month][day] [year], FIMM had $____ in
discretionary assets under management. FIMM is primarily responsible
for choosing investments for the money market fund.
Beginning January 1, 1999, FIMM will serve as sub-adviser and be
primarily responsible for choosing investments for the bond fund.
A fund could be adversely affected if the computer systems used by FMR
and other service providers do not properly process and calculate
date-related information from and after January 1, 2000. FMR has
advised each fund that it is actively working on necessary changes to
its computer systems and expects that its systems, and those of other
major service providers, will be modified prior to January 1, 2000.
However, there can be no assurance that there will be no adverse
impact on a fund.
Christine Thompson is Vice President and manager of Spartan Florida
Municipal Income, which she has managed since July 1998. She also
manages several other Fidelity funds. Since joining Fidelity in 1985,
Ms. Thompson has worked as a senior analyst and portfolio manager.
Fidelity investment personnel may invest in securities for their own
investment accounts pursuant to a code of ethics that establishes
procedures for personal investing and restricts certain transactions.
Each fund pays a management fee to FMR.
The management fee is calculated and paid to FMR every month.
FMR pays all of the other expenses of each fund with limited
exceptions.
Spartan Florida Municipal Money Market and Spartan Florida Municipal
Income's annual management fee rate is 0.50% and 0.55%, respectively,
of its average net assets.
FMR pays FIMM for providing assistance with investment advisory
services.
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 by FMR at any time, can decrease a fund's expenses and
boost its performance.
As of[date], approximately __% and __% OF [NAME OF FUND]'s total
outstanding shares, respectively, were held by [FMR/FMR and [an] FMR
affiliate[s]/[an] FMR affiliate[s]].
FUND DISTRIBUTION
FDC distributes each fund's shares.
Each fund has adopted a Distribution and Service Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 that 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 providing services intended to result in
the sale of fund shares and/or shareholder support services. FMR,
directly or through FDC, may pay intermediaries, such as banks,
broker-dealers and other service providers, that provide those
services. Currently, the Board of Trustees of each fund has authorized
such payments.
To receive payments made pursuant to a Distribution and Service Plan,
intermediaries must sign the appropriate agreement with FDC in
advance.
FMR may allocate brokerage transactions in a manner that takes into
account the sale of shares of a fund provided that the fund receives
brokerage services and commission rates comparable to those of other
broker-dealers.
No dealer, sales representative, or any other person has been
authorized to give any information or to make any representations,
other than those contained in this Prospectus and in the related
Statement of Additional Information (SAI), in connection with the
offer contained in this Prospectus. If given or made, such other
information or representations must not be relied upon as having been
authorized by the funds or FDC. This Prospectus and the related SAI do
not constitute an offer by the funds or by FDC to sell or to buy
shares of the funds to any person to whom it is unlawful to make such
offer.
APPENDIX

FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
fund's financial history for the past 5 years. Certain information
reflects financial results for a single fund share. Total returns for
each period include the reinvestment of all dividends and
distributions. The annual information has been audited by __________,
independent accountants, whose report, along with each fund's
financial highlights and financial statements, are included in each
fund's Annual Report. A free copy of each Annual Report is available
upon request.

You can obtain additional information about the funds. The funds' SAI
includes more detailed information about investments. The SAI is
incorporated herein by reference (legally forms a part of the
prospectus). Each fund's annual and semi-annual reports include a
discussion of recent market conditions and the fund's investment
strategies, performance and holdings.
For a free copy of any of these documents or to request other
information or ask questions about a fund, call Fidelity at
1-800-544-8888 or visit Fidelity's Web site at www.fidelity.com.
The SAI, the funds' annual and semi-annual reports and other related
materials are available on the SEC's Internet Web site
(http://www.sec.gov). You can obtain copies of this information upon
paying a duplicating fee, by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-6009. You can also review and copy
information about the funds, including the funds' SAI, at the SEC's
Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
INVESTMENT COMPANY ACT OF 1940, FILE NUMBERS, 811-2741, 811-6453
Spartan, Fidelity, Fidelity Investments and (Pyramid) Design, Fidelity
Investments, TouchTone Xpress, Fidelity Automatic Account Builder,
Fidelity Money Line, Fidelity On-Line Xpress+, Fidelity Web Xpress,
and Directed Dividends are registered trademarks of FMR Corp.
Fidelity Portfolio Advisory Services is a service mark of FMR Corp.
Insert item code number SFC-pro-0199

FIDELITY COURT STREET TRUST:
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND
SPARTAN NEW JERSEY MUNICIPAL INCOME FUND
SPARTAN FLORIDA MUNICIPAL INCOME FUND
CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FORM N 1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION

10 ............................ Front Cover Page

11 a ................................... Description of the Trust

b ................................... *

12 a ................................... Investment Policies and Limitations; Descriptions of the
Trust

b, c, d ................................... Investment Policies and Limitations

e ................................... **

13 a-d ................................... Trustees and Officers

e ................................... *

14 ................................... **

15 a 1................................. Control of Investment Adviser

2................................. Trustees and Officers

3................................. Management Contracts

b ................................... Distribution Services

c ................................... Management Contracts

d ................................... Transfer and Service Agent Agreements

e, f ................................... *

g 1,2.............................. Distribution Services

3................................. *

4-6............................. Distribution Services

h 1................................. *

2................................. Transfer and Service Agent Agreements

3................................. Description of the Trust

4................................. Transfer and Service Agent Agreements

16 a, b ................................... **

c ................................... Portfolio Transactions

d, e ................................... **

17 a ................................... Description of the Trust

b ................................... *

18 a ................................... Additional Purchase, Exchange and Redemption
Information

b ................................... *

c ................................... Valuation

d ................................... *

19 a ................................... Distributions and Taxes

b ................................... **

20 a, b ................................... Distribution Services

c ................................... **

21 a ................................... *

b ................................... Performance

22 ................................... Financial Statements

</TABLE>

___________________
* Not Applicable
**To be filed by amendment
SPARTAN(registered trademark) CONNECTICUT MUNICIPAL MONEY MARKET FUND
AND
FIDELITY CONNECTICUT MUNICIPAL MONEY MARKET FUND
FUNDS OF FIDELITY COURT STREET TRUST II
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND
A FUND OF FIDELITY COURT STREET TRUST
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 25, 1999
This Statement of Additional Information (SAI) is not a prospectus.
Portions of the funds' Annual Reports are incorporated
herein. The Annual Reports are supplied with this SAI.
To obtain a free additional copy of the Prospectus, dated
January 25, 1999 , or an Annual Report, please call
Fidelity (registered trademark) at 1-800-544-8888 or visit
Fidelity's Web site at www.fidelity.com .
TABLE OF CONTENTS PAGE

Investment Policies and Limitations 3

Special Considerations Regarding Connecticut 9

Special Considerations Regarding Puerto Rico 9

Portfolio Transactions 11

Valuation 12

Performance 12

Additional Purchase, Exchang e and Redemption Information 18

Distributions and Taxes 18

Trustees and Officers 19

Control of Investment Advisers 21

Management Contracts 21

Distribution Services 26

Transfer and Service Agent Agreements 26

Description of the Trusts 27

Financial Statements 28

Appendix 28

(fidelity_logo_graphic) 82 Devonshire Street, Boston, MA 02109
CTR/CTM-ptb-0199
[Insert item code number].
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
(the 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 CONNECTICUT MUNICIPAL MONEY MARKET
FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer, if, as a result, the
fund would not comply with any applicable diversification requirements
for a money market fund under the Investment Company Act of 1940 and
the rules thereunder, as such may be amended from time to time;
(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;
(3) sell securities short, unless it owns or has the right to
obtain securities equivalent in kind and amount to the securities sold
short;
(4) purchase securities on margin, except that the fund may
obtain such short-term credits as are necessary for the clearance of
transactions;
(5) 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;
(6) 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;
(7) purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities, or tax-exempt obligations issued or
guaranteed by a U.S. territory or possession or a state or local
government, or a political subdivision of any of the foregoing) if, as
a result, more than 25% of the fund's total assets would be invested
in the securities of companies whose principal business activities are
in the same industry;
(8) 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);
(9) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments; or
(10) lend any security or make any other loan if, as a result,
more than 33 1/3% of its total assets would be lent to other parties,
but this limitation does not apply to purchases of debt securities or
to repurchase agreements.
(11) 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) With respect to 75% of its total assets, the fund does not
currently intend to 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 securities of other money market
funds) if, as a result, more than 5% of the fund's total assets would
be invested in the securities of that issuer.
(ii) 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 (5)). 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.
(iii) 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.
(iv) 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.
(v) 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 limitations (1), (7) , 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 purposes of limitation (i), certain securities subject to
guarantees (including insurance, letters of credit and demand
features) are not considered securities of their issuer, but are
subject to separate diversification requirements, in accordance with
industry standard requirements for money market funds.
With respect to limitation (iii), if through a change in values,
net assets, or other circumstances, the fund were in a position where
more than 10% of its net assets were invested in illiquid
securities, it would consider appropriate steps to protect liquidity.
INVESTMENT LIMITATIONS OF FIDELITY CONNECTICUT MUNICIPAL MONEY MARKET
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer, if, as a result, the
fund would not comply with any applicable diversification requirements
for a money market fund under the Investment Company Act of 1940 and
the rules thereunder, as such may be amended from time to time;
(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;
(3 ) sell securities short, unless it owns, or by virtue of
ownership of other securities has the right to obtain, securities
equivalent in kind and amount to the securities sold short;
(4) purchase securities on margin, except that the fund may
obtain such short-term credits as are necessary for the clearance of
transactions;
(5) 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 the value of its total assets (less
liabilities other than borrowings). Any borrowings that come to exceed
33 1/3% of the value of the fund's total assets by reason of a decline
in total assets will be reduced within three days (exclusive of
Sundays and holidays) to the extent necessary to comply with the 33
1/3% limitation;
(6) underwrite securities issued by others (except to the
extent that the fund may be deemed to be an underwriter within the
meaning of the Securities Act of 1933 in the disposition of restricted
securities);
(7) purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities, or tax-exempt obligations issued or
guaranteed by a U.S. territory or possession or a state or local
government, or a political subdivision of any of the foregoing) if, as
a result, more than 25% of the fund's total assets would be invested
in the securities of companies whose principal business activities are
in the same industry;
(8) 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);
(9) purchase or sell physical commodities unless acquired as a
result of ownership of securities; or
(10) lend any security or make any other loan if, as a result,
more than 33 1/3% of its total assets would be lent to other parties,
but this limitation does not apply to purchases of debt securities or
to repurchase agreements.
(11) 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) With respect to 75% of its total assets, the fund does not
currently intend to 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 securities of other money market
funds) if, as a result, more than 5% of the fund's total assets would
be invested in the securities of that issuer.
(ii) 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 an 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 (5)). 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.
(iii) 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.
(iv ) 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.
(v) 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 limitations (1), (7 ), 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 purposes of limitation (i), certain securities subject to
guarantees (including insurance, letters of credit and demand
features) are not considered securities of their issuer, but are
subject to separate diversification requirements, in accordance with
industry standard requirements for money market funds.
With respect to limitation (iii), if through a change in values,
net assets, or other circumstances, the fund were in a position where
more than 10% of its net assets were invested in illiquid securities,
it would consider appropriate steps to protect liquidity.
INVESTMENT LIMITATIONS OF SPARTAN CONNECTICUT MUNICIPAL INCOME 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 deemed to be 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);
(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; or
(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
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 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.
With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets were invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions"
on page 4.
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. FMR may not buy all of these instruments or use all of these
techniques unless it believes that doing so will help a 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 involve 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.
ASSET-BACKED SECURITIES represent interests in pools of
purchase contracts, financing leases, or sales agreements entered into
by municipalities. Payment of interest and repayment of principal may
be largely dependent upon the cash flows generated by the assets
backing the securities and, in certain cases, supported by letters of
credit, surety bonds, or other credit enhancements. Asset-backed
security values may also be affected by other factors including
changes in interest rates, the availability of information concerning
the pool and its structure, the creditworthiness of the servicing
agent for the pool, the originator of the loans or receivables, or the
entities providing the credit enhancement. In addition, these
securities may be subject to prepayment risk.
BORROWING. Each fund may borrow from banks or from other
funds advised by FMR or its affiliates, 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.
CASH MANAGEMENT. A fund can hold uninvested cash or can invest it
in cash equivalents such as money market securities, repurchase
agreements or shares of money market funds. Generally, these
securities offer less potential for gains than other types of
securities.
CENTRAL CASH FUNDS are money market funds managed by FMR or its
affiliates that seek to earn a high level of current income (free from
federal income tax in the case of a municipal money market fund) while
maintaining a stable $1.00 share price. The funds comply with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of their investments.
D OLLAR-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.
FEDERALLY TAXABLE SECURITIES. Under normal conditions, a
municipal fund does not intend to invest in securities whose
interest is federally taxable. However, from time to time on a
temporary basis, a municipal fund may invest a portion of its
assets in fixed-income securities whose interest is subject to
federal income tax.
Should a municipal fund invest in federally taxable
securities , it would purchase securities that, in FMR's
judgment, are of high quality.
FUTURES AND OPTIONS. The following paragraphs pertain to
futures and options: 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.
COMBINED POSITIONS involve purchasing and writing
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,
purchasing a put option and writing a call option on the
same underlying instrument would 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, 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. A fund may invest
in options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which the fund typically invests , which involves a risk
that the options or futures position will not track the performance
of the 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. In purchasing a futures contract, the
buyer agrees to purchase a specified underlying instrument at a
specified future date. In sellin g a futures contract, the
selle r agrees to sell a specified underlying instrument at
a specified future date. The price at which the purchase and sale will
take place is fixed when the buyer and seller ente r 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 bond f und's investments in futures
contracts and options, and the fund's 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 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 purchaser or write r 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, the
purchaser 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 purchaser 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 purchase r may
terminate its position in a put option by allowing it to expire or by
exercising the option. If the option is allowed to expire, the
purchaser will lose the entire premium . If the option is
exercised, the purchaser completes the sale of the
underlying instrument at the strike price. A purchaser 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, 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. The writer of a put or call
option takes the opposite side of the transaction from the
option's purchaser. In return for receipt of the premium, the
writer 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. The writer may seek to terminate a
position in a put option 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, however, the writer must continue
to be prepared to pay the strike price while the option is
outstanding, regardless of price changes. When writing an option on a
futures contract, a fund will be required to make margin payments to
an FCM as described above for futures contracts.
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 the writer 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 SECURITIES cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they
are valued. Difficulty in selling securities may result in a loss
or may be costly to a fun d. 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
securities. In determining the liquidity of a fund's
investments, FMR may consider various factors, including (1) the
frequency and volume of trades and quotations, (2) the number
of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market and (4) the nature of the
security and the market in which it trades (including any
demand, put or tender features, the mechanics and other
requirements for transfer, any letters of credit or other credit
enhancement features, any ratings, the number of holders, the method
of soliciting offers, the time required to dispose of the security,
and the ability to assign or offset the rights and obligations of the
security).
INDEXED SECURITIES are instruments 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 inte rest rates. Their
coupon rates or principal payments may change by several percentage
points for every 1% interest rate change.
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.
Indexed securities may be more volatile than the underlying
instruments. Indexe d securities are also subject to the
credit risks associated with the issuer of the security, and their
values may decline substantially if the issuer's creditworthiness
deteriorates.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, a fund may lend money to, and
borrow money from, other funds advised by FMR or its affiliates;
however, municipal funds currently intend to participate in
this program only as borrowers. A fund will borrow through the
program only when the costs are equal to or lower than the costs of
bank loans. Interfund borrowings normally extend overnight, but can
have a maximum duration of seven days . Loans may be called on one
day's notice. 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 movements in prevailing short-term
interest rate levels - rising when prevailing short-term interest
rates fall, and vice versa. The prices of inverse floaters
can be considerably more volatile than the prices of
bonds with comparable maturities.
INVESTMENT-GRADE DEBT SECURITIES. Investment-grade debt securities
are medium and high-quality securities. Some may possess speculative
characteristics and may be sensitive to economic changes and to
changes in the financial conditions of issuers. A debt 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 considered to be of
equivalent quality by FMR.
LOWER-QUALITY DEBT SECURITIES. Lower-quality debt securities
have poor protection with respect to the payment of interest and
repayment of principal, or may be in default. These securities are
often considered to be speculative and involve greater risk of loss or
price changes due to changes in the issuer's capacity to pay. The
market prices of lower-quality debt securities may fluctuate more than
those of higher-quality debt securities and may decline significantly
in periods of general economic difficulty, which may follow periods of
rising interest rates.
The market for lower-quality debt securities may be thinner and
less active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. Adverse
publicity and changing investor perceptions may affect the liquidity
of lower-quality debt securities and the ability of outside pricing
services to value lower-quality debt securities.
A fund may choose, at its expense or in conjunction with
others, to pursue litigation or otherwise to 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.
MONEY MARKET INSURANCE. Each money market fund participates in
a mutual insurance company solely with other funds advised by FMR or
its affiliates. This company provides insurance coverage for losses on
certain money market instruments held by a participating fund
(eligible instruments), including losses from nonpayment of principal
or interest or a bankruptcy or insolvency of the issuer or credit
support provider, if any. The insurance does not cover losses
resulting from changes in interest rates or other market developments.
Each money market fund is charged an annual premium for the insurance
coverage and may be subject to a special assessment of up to
approximately two and one-half times the fund's annual gross premium
if covered losses exceed certain levels. A participating fund may
recover no more than $100 million annually, including all other claims
of insured funds, and may only recover if the amount of the loss
exceeds 0.30% of its eligible instruments. Each money market fund may
incur losses regardless of the insurance.
MONEY MARKET SECURITIES are high-quality, short-term obligations.
Money market securities may be structured to be , or may employ
a trust or other form so that they are , eligible
investments for money market 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 a
structure fails to function 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 certain
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 funds .
MUNICIPAL INSURANCE. A municipal bond may be covered by
insurance that guarantees the bond's scheduled payment of interest and
repayment of principal. This type of insurance may be obtained by
either (i) the issuer at the time the bond is issued (primary market
insurance), or (ii) another party after the bond has been issued
(secondary market insurance).
Both primary and secondary market insurance guarantee timely and
scheduled repayment of all principal and payment of all interest on a
municipal bond in the event of default by the issuer, and cover a
municipal bond to its maturity, enhancing its credit quality and
value.
Municipal bond insurance does not insure against market
fluctuations or fluctuations in a fund's share price. In addition, a
municipal bond insurance policy will not cover: i) repayment of a
municipal bond before maturity (redemption), ii) prepayment or payment
of an acceleration premium (except for a mandatory sinking fund
redemption) or any other provision of a bond indenture that advances
the maturity of the bond, or iii) nonpayment of principal or interest
caused by negligence or bankruptcy of the paying agent. A mandatory
sinking fund redemption may be a provision of a municipal bond issue
whereby part of the municipal bond issue may be retired before
maturity.
Because a significant portion of the municipal securities issued
and outstanding is insured by a small number of insurance companies,
an event involving one or more of these insurance companies could have
a significant adverse effect on the value of the securities insured by
that insurance company and on the municipal markets as a whole.
FMR may decide to retain an insured municipal bond that is in
default, or, in FMR's view, in significant risk of default. While a
fund holds a defaulted, insured municipal bond, the fund collects
interest payments from the insurer and retains the right to collect
principal from the insurer when the municipal bond matures, or in
connection with a mandatory sinking fund redemption.
PRINCIPAL MUNICIPAL BOND INSURERS. The various insurance
companies providing primary and secondary market insurance policies
for municipal bonds are described below. Ratings reflect each
respective rating agency's assessment of the creditworthiness of an
insurer and the insurer's ability to pay claims on its insurance
policies at the time of the assessment.
Ambac Assurance Corp., a wholly-owned subsidiary of Ambac Financial
Group Inc., is authorized to provide bond insurance in the 50 U.S.
states, the District of Columbia, and the Commonwealth of Puerto Rico.
Bonds insured by Ambac Assurance Corp. are rated "Aaa" by Moody's
Investor Service and "AAA" by Standard & Poor's.
Connie Lee Insurance Co. is a wholly-owned subsidiary of Connie Lee
Holdings Inc., which is a wholly-owned subsidiary of Ambac Assurance
Corp. All losses incurred by Connie Lee Insurance Co. that would cause
its statutory capital to drop below $75 million would be covered by
Ambac Assurance Corp. Connie Lee Insurance Co. is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and the Commonwealth of Puerto Rico. Bonds insured by Connie Lee
Insurance Co. are rated "AAA" by Standard & Poor's.
Financial Guaranty Insurance Co. (FGIC), a wholly-owned subsidiary
of GE Capital Services, is authorized to provide bond insurance in the
50 U.S. states and the District of Columbia. Bonds insured by FGIC are
rated "Aaa" by Moody's Investor Service and "AAA" by Standard &
Poor's.
Financial Security Assurance Inc. (FSA), a wholly-owned subsidiary
of Financial Security Assurance Holdings Ltd., is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and three U.S. territories. Bonds insured by FSA are rated "Aaa" by
Moody's Investor Service and "AAA" by Standard & Poor's.
Municipal Bond Investors Assurance Corp. (MBIA Insurance Corp.), a
wholly-owned subsidiary of MBIA Inc., a publicly-owned company, is
authorized to provide bond insurance in the 50 U.S. states, the
District of Columbia, and the Commonwealth of Puerto Rico. Bonds
insured by MBIA Insurance Corp. are rated "Aaa" by Moody's Investor
Service and "AAA" by Standard & Poor's.
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, a fund will not hold these obligations
directly as a lessor of the property, but will purchase a
participation interest in a municipal obligation from a bank or other
third party. A participation interest gives the purchaser a
specified, undivided interest in the obligation in proportion to its
purchased interest in the total amount of the issue .
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. If a municipality stops making payments or transfers
its obligations to a private entity, the obligation could lose value
or become taxable.
MUNICIPAL 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. Proposals to restrict or eliminate the
federal income tax exemption for interest on municipal securities are
introduced before Congress from time to time. Proposals also may be
introduced before the Connecticut legislature that would affect the
state tax treatment of a municipal fund's distributions. If such
proposals were enacted, the availability of municipal securities and
the value of a municipal fund's holdings would be affected and the
Trustees would reevaluate the fund's investment objectives and
policies. 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 a money market
fund to maintain a stable net asset value per share (NAV).
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.
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.
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.
PUT FEATURES entitle the holder to sell a security back to the issuer
or a third party at any time or at specified intervals. In exchange
for this benefit, a fund may accept a lower interest rate. Securities
with put features 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.
REFUNDING CONTRACTS. Securities may be purchased on a
when-issued basis in connection with the refinancing of an issuer's
outstanding indebtedness. Refunding contracts require the issuer to
sell and a purchaser 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 purchaser generally will not
be obligated to pay the full purchase price if t he issue r fails
to perform under a refunding contract. Instead, refunding contracts
generally provide for payment of liquidated damages to the
issuer . A purchaser 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 .
REPURCHASE AGREEMENTS involve an agreement to purchase a
security and 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. As protection against
the risk that the original seller will not fulfill its obligation,
the securities are held in a separate account at a bank,
marked-to-market daily, and maintained at a value at least equal to
the sale price plus the accrued incremental amount. The value of
the security purchased may be more or less than the price at which the
counterparty has agreed to purchase the security. In addition, delays
or losses could result if the other party to the agreement defaults or
becomes insolvent. The funds will engage in repurchase agreement
transactions with parties whose creditworthiness has been reviewed and
found satisfactory by FMR.
RESTRICTED SECURITIE S are subject to legal restrictions on
their sale. Difficulty in selling securities may result in a loss or
be costly to a fund. Restricted securities generally can be sold
in privately negotiated transactions, pursuant to an exemption from
registration under the Securities Act of 1933, or in a registered
public offering. Where registration is required, the holder of a
registered security 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,
the holder might obtain a less favorable price than prevailed
when it decided to seek registration of the security .
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a security to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase that
security at an agreed-upon price and time. The funds
will enter into reverse repurchase agreements with parties whose
creditworthiness has been reviewed and found satisfactory by
FMR. Such transactions may increase fluctuations in the market value
of fund assets and a fund's yield and may be viewed as a
form of leverage.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. Issuers may employ various
forms of credit and liquidity enhancements, including letters of
credit, guarantees, puts, and demand features, and insurance provided
by domestic or foreign entities such as banks and other financial
institutions. FMR may rely on its evaluation of the credit of the
credit or liquidity enhancement provider in determining whether to
purchase a security supported by such enhancement. 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. Changes in the credit quality of the entity providing
the enhancement could affect the value of the security or a fund's
share price.
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. A 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 purchase 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 generally marketable ; and the possibility that the
maturities of the underlying securities may be different from those of
the commitments .
TEMPORARY DEFENSIVE POLICIES. Each fund 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.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, municipal 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 , 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
in 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 are structured with put
features that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediarie s.
In many instances bonds and participation interests have tender
options or demand features that permit the holder to tender (or
put) the bonds to an institution at periodic intervals and to receive
the principal amount thereof. Variable rate instruments structured
in this fashion are considered to be essentially equivalent to
other variable rate securities. The IRS has not ruled whether
the interest on t hese instrument s is tax-exempt. Fixed-rate
bonds that are subject to third party puts and participation interests
in such bonds held by a bank in trust or otherwise may have similar
features.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS
involve a commitment to purchase or sell specific securities at a
predetermined price or yield in which payment and delivery take place
after the customary settlement period for that type of security.
Typically, no interest accrues to the purchaser until the security is
delivered.
When purchasing securities pursuant to one of these transactions,
the purchaser assumes the rights and risks of ownership, including the
risks of price and yield fluctuations and the risk that the security
will not be issued as anticipated. Because payment for the securities
is not required until the delivery date, these risks are in addition
to the risks associated with a fund's investments. If a fund remains
substantially fully invested at a time when a purchase is outstanding,
the purchases may result in a form of leverage. When a fund has sold a
security pursuant to one of these transactions, 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, a fund could miss a favorable price or
yield opportunity or suffer a loss.
A fund may renegotiate a when-issued or forward transaction and may
sell the underlying securities before delivery, which may result in
capital gains or losses for the fund.
ZERO COUPON BONDS do not make interest payments; instead , they
are sold at a 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 more volatile t han other types
of fixed-income securities when interest rates change. In
calculating a fund' s dividend, a portion of the difference
between a zero coupon bond's purchase price and its face value is
considered incom e.
SPECIAL CONSIDERATIONS REGARDING CONNECTICUT
The following only highlights some of the more significant financial
trends and problems, and is based on information drawn from official
statements and prospectuses relating to securities offerings of the
State of Connecticut, its agencies and instrumentalities, as available
on the date of this Statement of Additional Information. FMR has not
independently verified any of the information contained in such
official statements and other publicly available documents, but is not
aware of any fact which would render such information inaccurate.
Manufacturing has historically been of prime economic importance to
Connecticut. The State's manufacturing industry is diversified, with
transportation equipment (primarily aircraft engines, helicopters and
submarines) the dominant industry, followed by non-electrical
machinery, fabricated metal products and electrical machinery. As a
result of a rise in employment service related industries and a
decline in manufacturing employment, manufacturing accounted for only
17.39% of total non-agricultural employment in Connecticut in 1996.
Defense-related business represents a relatively high proportion of
the manufacturing sector. On a per capita basis, defense awards to
Connecticut have traditionally been among the highest in the nation,
and reductions in defense spending have had a substantial adverse
impact on Connecticut's economy.
The average unemployment rate in Connecticut increased from a low of
3.0% in 1988 to a high of 7.5% in 1992 and, after a number of
important changes in the method of calculation, was reported to be
5.7% in 1996. Average per capita personal income of Connecticut
residents increased in every year from 1987 to 1996, rising from
$21,235 to $33,189. However, pockets of significant unemployment and
poverty exist in some Connecticut cities and towns.
For each fiscal year starting with the 1991-92 fiscal year, the
General Fund has operated at a surplus with over 60% of the State's
tax revenues being generated by the income tax and the sales and use
tax. However, the State's budgeted expenditures have more than doubled
from approximately $4,300,000,000 for the 1986-87 fiscal year to
approximately $9,700,000,000 for the 1998-99 fiscal year.
At the end of the 1990-91 fiscal year, the General Fund had an
accumulated unappropriated deficit of $965,712,000. For the six fiscal
years ended June 30, 1997, the General Fund ran operating surpluses,
based on the State's budgetary method of accounting, of approximately
$110,200,000, $113,500,000, $19,700,000, $80,500,000, $250,000,000,
and $262,600,000, respectively. General Fund budgets for the biennium
ending June 30, 1999, were adopted in 1997. General Fund expenditures
and revenues are budgeted to be approximately $9,550,000,000 and
$9,700,000,000 for the 1997-98 and 1998-99 fiscal years, respectively.
During 1991 the State issued a total of $965,710,000 Economic Recovery
Notes, of which $157,055,000 were outstanding as of August 1, 1997.
The notes were to be payable no later than June 30, 1996, but as part
of the budget adopted for the biennium ending June 30, 1997, payment
of the notes scheduled to be paid during the 1995-96 fiscal year was
rescheduled to be made over the four fiscal years ending June 30,
1999.
The State's primary method for financing capital projects is through
the sale of general obligation bonds. These bonds are backed by the
full faith and credit of the State. As of August 1, 1997, the State
had authorized direct general obligation bond indebtedness totaling
$11,469,639,000 of which $9,990,468,000 had been approved for issuance
by the State Bond Commission and $8,897,072,000 had been issued. As of
August 1, 1997, State direct general obligation indebtedness
outstanding was $6,733,149,000.
In 1995, the State established the University of Connecticut as a
separate corporate entity to issue bonds and construct certain
infrastructure improvements. The University is authorized to issue
$962,000,000 bonds to finance the improvements. The University's bonds
will be secured by a State debt service commitment, the aggregate
amount of which is limited to $382,000,000 for the four fiscal years
ending June 30, 1999, and $580,000,000 for the six fiscal years ending
June 30, 2005.
In addition to the bonds described above, the State also has limited
or contingent liability on a significant amount of other bonds. As of
August 1, 1997, the amount of bonds outstanding on which the State has
limited or contingent liability totaled $4,071,400,000.
In 1984, the State established a program to plan, construct and
improve the State's transportation system (other than Bradley
International Airport). The total cost of the program through June 30,
2000, is currently estimated to be $11.2 billion, to be met from
federal, state, and local funds. The State expects to finance most of
its $4.7 billion share of such cost by issuing $4.2 billion of special
tax obligation ("STO") bonds. The STO bonds are payable solely from
specified motor fuel taxes, motor vehicle receipts, and license,
permit and fee revenues pledged therefor and credited to the Special
Transportation Fund, which was established to budget and account for
such revenues.
As of October 15, 1996, the General Assembly had authorized
$4,157,900,000 of such STO bonds, of which $3,594,700,000 new money
borrowings had been issued. It is anticipated that additional STO
bonds will be authorized annually in amounts necessary to finance and
to complete the infrastructure program. Such additional bonds may have
equal rank with the outstanding bonds provided certain pledged revenue
coverage requirements are met. The State expects to continue to offer
bonds for this program.
The State's general obligation bonds are rated AA- by Standard &
Poor's and Aa3 by Moody's. On March 17, 1995, Fitch reduced its
ratings of the State's general obligation bonds from AA+ to AA.
Regional economic difficulties, reductions in revenues and increases
in expenses could lead to further fiscal problems for the State and
its political subdivisions, authorities and agencies. Difficulties in
payment of debt service on borrowings could result in declines,
possibly severe, in the value of their outstanding obligations,
increases in their future borrowing costs, and impairment of their
ability to pay debt service on their obligations.
In recent years, certain Connecticut municipalities have experienced
severe fiscal difficulties and have reported operating and accumulated
deficits. The most notable of these is the City of Bridgeport, which
filed a bankruptcy petition on June 7, 1991. The State opposed the
petition. The United States Bankruptcy Court for the District of
Connecticut held that Bridgeport has authority to file such a petition
but that its petition should be dismissed on the grounds that
Bridgeport was not insolvent when the petition was filed. State
legislation enacted in 1993 prohibits municipal bankruptcy filings
without the prior written consent of the Governor.
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 that would render such information
materially inaccurate.
The economy of Puerto Rico is fully integrated with that of the United
States. I n fiscal 1997 , 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
1997 Puerto Rico experienced a $ 2.7 billion positive
adjusted merchandise trade balance.
Since fiscal 1985, personal income, both aggregate and per capita, has
increased consistently each fiscal year. In fiscal 1997 ,
aggregate personal income was $ 32.1 billion ($ 30.0
billion in 1992 prices) and personal per capita income was
$ 8,509 ($7,957 in 1992 prices). Gross product in fiscal 1993
was $ 25.1 billion ($ 24.5 billion in 1992
prices) and gross product in fiscal 1997 was $ 32.1
billion ($27.7 billion in 1992 prices). This represents an
increase in gross product of 27.7% from fiscal 1993 to 1997
(13.0% in 1992 prices).
Puerto Rico's economic expansion, which has lasted over ten
years , continued throughout the five-year period from fiscal
1993 through fiscal 1997 . 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, increases in
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 U.S. average .
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
$ 19.8 billion or 41. 2 % of gross domestic product in
fiscal 1997. The manufacturing sector employed 153,273 workers
as of March 1997. Manufacturing in Puerto Rico is now more
diversified than during earlier phases of industrial development. In
the last two decades industrial development has tended to be more
capital intensive and dependent on skilled labor. This gradual shift
is best exemplified by heavy investment in pharmaceuticals ,
scientific instruments, computers, microprocessors, and electrical
products over the last decade. The service sector, which includes
wholesale and retail trade and finance, insurance, 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 1997 , the service
sector generated $ 18.4 billion in gross domestic product or
38.2 % of the total. Employment in this sector grew from
467,000 in fiscal 1993 to 551,000 in fiscal
1997 , a cumulative increase of 17.8 %. This
increase was greater than the 12.9% cumulative growth in
employment over the same period providing 48% of total employment. The
G overnment sector of the Commonwealth plays an important role
in the economy of the island. In fiscal year 1997 , the
Government accounted for $ 5.2 billion of Puerto Rico's gross
domestic product and provided 10.9 % of the total employment.
The construction industry has experienced real growth since fiscal
1987. In fiscal 1997, investment in construction rose to $4.7 billion,
an increase of 14.7% as compared to $4.1 billion for fiscal 1996.
Tourism also contributes significantly to the island economy,
accounting for $ 2.0 billion of gross domestic product in fiscal
1997 .
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
G overnment 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 G overnment-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 is the improvement and expansion of 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
G overnment's direct contribution to gross domestic product. As
part of this goal, the G overnment has transferred certain
G overnmental operations and sold a number of its assets to
pri vate parties. Among these are: (i) the Government sold the
assets of the Puerto Rico Maritime Authority; (ii) the Government
executed a five-year management agreement for the operation and
management of the Aqueducts and Sewer Authority by a private company;
(iii) the Aqueducts and Sewer Authority executed 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; (iv) the Electric Power Authority
executed 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; and (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
G overnment provides free health services to low income
individuals through public health facilities owned and administered by
the G overnment to one in which all medical services are
provided by the private sector and the G overnment 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 December 31, 19 97, over 1.1
millio n persons were participating in the program at an estimated
annual cost to Puerto Rico for fiscal 1998 of approximately
$ 672 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 sold six health
facilities to private companies and is currently in
negotiations with other private companies for the sale of
thirteen 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 1986 , as amended (the "Code").
Since 1948, Puerto Rico has promulgated various industrial incentives
laws designed to stimulate industrial investment. Under these laws,
companies engaged in manufacturing and certain other designated
activities were eligible to receive full or partial exemption from
income, property, and other taxes. The most recent of these laws is
Act No. 135 of December 2, 1997 (the "1998 Tax Incentives Law").
The benefits provided by the 1998 Tax Incentives Law are available to
new companies as well as companies currently conducting tax-exempt
operations in Puerto Rico that choose to renegotiate their existing
tax exemption grant. Activities eligible for tax exemption include
manufacturing, certain services performed for markets outside Puerto
Rico, the production of energy from local renewable sources for
consumption in Puerto Rico, and laboratories for scientific and
industrial research. For companies qualifying thereunder, the 1998 Tax
Incentives Law imposes income tax rates ranging from 2% to 7%. In
addition, it grants 90% exemption from property taxes, 100% exemption
from 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 Law 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 Law , companies are able to
repatriate or distribute their profits free of tollgate taxes. In
addition, passive income derived from designated investments will
continue to be fully exempt from income and municipal license
taxes. Individual shareholders of an exempted business will 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 will
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 U.S .
Congress and signed into law by President Clinton on August 20, 1996
(the "1996 Amendments"), the tax credit , as described
below , is now being phased out over a ten-year period for
existing claimants and is no longer available for corporations that
established 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 c redit 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 c redit") 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 U.S. 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 c redit 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 C ode 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
c redit 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,
U.S. corporations that meet certain requirements and elect its
application ("Section 936 Corporations") are entitled to credit
against their U.S . 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 Section 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 Section 936 credit is eliminated for taxable years
beginning in 2006.
PROPOSAL TO EXTEND THE PHASEOUT OF SECTION 30A. During 1997, the
Government of Puerto Rico proposed to Congress the enactment of
a new permanent federal incentive program similar to that
provided under Section 30A. Such a 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. Although this proposal, was not
included in the final fiscal 1998 federal budget, President
Clinton's fiscal 1999 budget submitted to Congress again included
these modifications to Section 30A . 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
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and investment
accounts for which it or its affiliates act as investment adviser.
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; the
reasonableness of any commissions; and, if applicable, arrangements
for payment of fund expenses.
If FMR grants investment management authority to a
sub-adviser (see the section entitled "Management Contracts"),
that 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 above .
Each fund may execute portfolio transactions with
broker-dealers who provide research and execution services to the
fund or other investment 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 investment accounts; and
effect securities transactions and perform functions incidental
thereto (such as clearance and settlement).
For transactions in fixed-income securities, FMR's selection of
broker-dealers is generally based on the availability of a security
and its price and, to a lesser extent, on the overall quality of
execution and other services, including research, provided by the
broker-dealer.
The receipt of research from broker-dealers that execute transactions
on behalf of a fund may be useful to FMR in rendering
investment management services to that fund or its other
clients, and conversely, such research provided by broker-dealers who
have executed transaction orders on behalf of other FMR clients may be
useful to FMR in carrying out its obligations to a fund . The
receipt of such research has not reduced FMR's normal independent
research activities; however, it enables FMR to avoid the additional
expenses that could be incurred if FMR tried to develop comparable
information through its own efforts.
Fixed-income securities are generally purchased from an issuer or
underwriter acting as principal for the securities, on a net basis
with no brokerage commission paid. However, the dealer is compensated
by a difference between the security's original purchase price and the
selling price, the so-called "bid-asked spread." Securities may also
be purchased from underwriters at prices that include underwriting
fees.
Subject to applicable limitations of the federal securities laws, a
fund may pay a broker-dealer 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 a 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 that
fund or 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.
To the extent permitted by applicable law, FMR is authorized to
allocate portfolio transactions in a manner that takes into
account assistance received in the distribution of shares of the
funds or other Fidelity funds and to use the research services of
brokerage and other firms that have provided such assistance. 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.
FMR may allocate brokerage transactions to broker-dealers
(including affiliates of FMR) who have entered into arrangements with
FMR under which the broker-dealer allocates a portion of the
commissions paid by a fund toward the reduction of that fund's
expenses. The transaction quality must, however, be comparable to
those of other qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for investment 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.
The Trustees of each fund periodically review FMR's
performance of its responsibilities in connection with the
placement of portfolio transactions on behalf of the fund and
review the commissions paid by the fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to the fund.
For the fiscal periods ended November 30, 1998 and 1997 ,
the portfolio turnover rates were ___% and ___% ,
respectively, for Spartan Connecticut Municipal Income.
Variations in turnover rate may be due to a fluctuating volume of
shareholder purchase and redemption orders, market conditions, or
changes in FMR's investment outlook.
For the fiscal years ended November 1998, November 1997, and
November 1996, the fund paid no brokerage commissions.
The Trustees of each fund have approved procedures in conformity
with Rule 10f-3 under the 1940 Act whereby a fund may purchase
securities that are offered in underwritings in which an affiliate of
FMR participates. These procedures prohibit the funds from directly or
indirectly benefiting an FMR affiliate in connection with such
underwritings. In addition, for underwritings where an FMR affiliate
participates as a principal underwriter, certain restrictions may
apply that could, among other things, limit the amount of securities
that the funds could purchase in the underwriting.
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 or its affiliates,
investment decisions for each fund are made independently from those
of other funds managed by FMR or investment account s managed by
FMR affiliates. It sometimes happens that the same security is held in
the portfolio of more than one of these funds or investment
accounts. Simultaneous transactions are inevitable when several
funds and investment 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 investment
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
Each fund's net asset value per share ( NAV ) is
the value of a single share. The NAV of each fund is computed
by adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and dividing the result by the number of
shares outstanding.
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.
The procedures set forth above need not be used to determine the
value of the securities owned by the 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. For
example, securities and other assets for which there is no readily
available market value may be valued in good faith by a committee
appointed by the Board of Trustees. In making a good faith
determination of the value of a security, the committee may review
price movements in futures contracts and American Depositary Receipts
(ADRs), market and trading trends, the bid/ask quotes of brokers and
off-exchange institutional trading.
MONEY MARKET FUNDS. 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 market value.
The amortized cost value of an instrument may be higher or lower than
the price a fund would receive if it sold the instrument.
Securities of other open-end investment companies are valued at
their respective NAVs.
At such intervals as they deem appropriate, the Trustees consider the
extent to which NAV calculated by using market valuations would
deviate from the $1.00 per share calculated using amortized
cost valuation . If the Trustees believe that a deviation from
a 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
A fund 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. The share price of a
bond f und, the yield of a fund , 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 (MONEY MARKET FUNDS). To compute the yield for a
money market fund 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. A
money market fund also may calculate an effective
yield by compounding the base period return over a one-year period. In
addition to the current yield, a money market fund may
quote yields in advertising based on any historical seven-day period.
Yields for a money market fund are calculated on the same basis
as other money market funds, as required by applicable
regulation.
Yield information may be useful in reviewing a fund's performance
and in providing a basis for comparison with other investment
alternatives. However, a 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 a 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 a fund's
current yield. In periods of rising interest rates, the opposite can
be expected to occur.
YIELD CALCULATIONS (BOND FUND). Yields for the fund are
computed by dividing the fund's interest and income for a given
30-day or one-month period, net of expenses, by the average number of
shares entitled to receive distributions during the period,
dividing this figure by the fund's 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 short-term trading fee . Income is calculated
for purposes of 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 calculating the 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 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.
In calculating the fund's yield, the fund may from time to time use
a portfolio security's coupon rate instead of its yield to maturity in
order to reflect the risk premium on that security. This practice will
have the effect of reducing the fund's yield.
Yield information may be useful in reviewing a fund's performance and
in providing a basis for comparison with other investment
alternatives. However, a fund's yield fluctuates, unlike
investments that pay a fixed interest rate over a stated period of
time. When comparing investment alternatives, investors should also
note the quality and maturity of the portfolio securities of
respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates
the fund's yield will tend to be somewhat higher than
prevailing market rates, and in periods of rising interest rates the
fund's yield will tend to be somewhat lower. Also, when interest rates
are falling, the inflow of net new money to the fund from the
continuous sale of its shares will likely be invested in instruments
producing lower yields than the balance of the fund's holdings,
thereby reducing the fund's current yield. In periods of rising
interest rates, the opposite can be expected to occur.
The tax-equivalent yield of a municipal fund is the rate
an investor would have to earn from a fully taxable investment before
taxes to equal a fund's tax-free yield. Tax-equivalent yields are
calculated by dividing a fund's yield by the result of one minus a
specified combined federal and state income tax rate. If only a
portion of a fund's yield is tax-exempt, only that portion is adjusted
in the calculation.
The following tables show the effect of a shareholder's tax status on
effective yield under federal and state income tax laws for
1999 . The second table shows the approximate yield a taxable
security must provide at various income brackets to produce after-tax
yields equivalent to those of hypothetical tax-exempt obligations
yielding from 2% to 8%. Of course, no assurance can be given that a
fund will achieve any specific tax-exempt yield. While the funds
invest principally in obligations whose interest is exempt from
federal and state 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.
Use the first table to find your approximate effective tax bracket
taking into account federal and state taxes for 1999 .
1999 TAX RATES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Taxable Income* Connecticut State Combined
Marginal Rate Federal and State
Effective Rate**

Single Return Joint Return Federal
Marginal Rate

$ $ $ $ % % %

% % %

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
If your combined federal and state effective tax rate in 1999
is:
% % % % %
To match these

tax-free yields: Your taxable investment would have to earn the following yield:

</TABLE>

A fund may invest a portion of its assets in obligations that
are subject to state or federal income taxes. When a fund invests in
these obligations, its tax-equivalent yield will be lower. In the
table above, the tax-equivalent yields are calculated assuming
investments are 100% federally and state 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 a
fund's NAV over a stated period. A cumulative total return
reflects actual performance over a stated period of time. A verage
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 a fund.
In addition to average annual total returns, the fund may quote
unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and
cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of
investments, or a series of redemptions, over any time period. Total
returns may be broken down into their components of income and capital
(including capital gains 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. Total returns may or may not include the
effect of the account closeout fee or the small account
fee . Excluding a fund's small account fee or account closeout
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 .
NET ASSET VALUE. Charts and graphs using a fund's NAV s,
adjusted NAV s, and benchmark indexes 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.
CALC ULATING HISTORICAL MONEY MARKET FUND RESULTS. The following
tables show performance for each fund calculated including certain
fund expenses.
CALCULATING HISTORICAL BOND FUND RESULTS. The following
table shows performance for the fund calculated including certain fund
expenses.
For Spartan Connecticut Municipal Income, total returns do [not]
include the effect of the fund's 0.50% short-term trading fee,
applicable to shares held less than 180 days.
HISTORICAL MONEY MARKET FUND RESULTS. The following table
shows each fund's 7-day yield, tax-equivalent yield, and total return
for the fiscal period ended November 30, 1998. Total return figures
include the effect of the $5.00 account closeout fee based on an
average size account.
HISTORICAL BOND FUND RESULTS. The following tables show the
fund's yield, tax-equivalent yield and total return for the fiscal
period ended November 30, 1998.
The tax-equivalent yield s for Spartan Connecticut Municipal Money
Market, Connecticut Municipal Money Market and Spartan Connecticut
Municipal Income are based on a combined effective federal and
state income tax rate of __%, __% and __%, respectively and
reflects that, as of November 30, 1998 [ none/an estimated __%[
__%, and __%]] of each fund's income was subject to state
taxes. Note that each fund may invest in securities whose income is
subject to the federal alternative minimum tax.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns

Seven-Day Tax- One Five Life of One Five Life of
Yield Equivalent Year Years Fund* Year Years Fund*

Spartan CT Muni % % % % % % % %
Money Market

</TABLE>

* From March 4, 1991 (commencement of operations).
Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund 's total returns would have been lower.
Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund 's yield and tax equivalent yield would
have been ___% and __%, respectively.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns

Seven-Day Tax- One Five Life of One Five Life of
Yield Equivalent Year Years Fund* Year Years Fund*

CT Muni % % % % % % % %
Money Market

</TABLE>

* From August 29, 1989 (commencement of operations).
Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund's total returns would have been lower.
Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund's yield and tax equivalent yield would have been
___% and __%, respectively.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns

Seven-Day Tax- One Five Life of One Five Life of
Yield Equivalent Year Years Fund* Year Years Fund*

Spartan CT Muni % % % % % % % %
Income

</TABLE>

Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund's total returns would have been lower.
Note: If FMR had not reimbursed certain fund expenses during these
periods, the fund's yield and tax equivalent yield would have been
___% and __%, respectively.
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 Standard & Poor's 500 Index (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 investmen ts 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 10-year period ended
November 30, 1998 or life of fund, as applicable, assuming all
distributions were reinvested. Total returns are based on past results
and are not an indication of future performance. Tax consequences
of different investments have not been factored into the figures
below.
During the period from March 4, 1991 (commencement of
operations) to November 30, 1998 , a hypothetical $10,000
investment in Spartan Connecticut Municipal Money Market would
have grown to $______.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN CONNECTICUT MUNICIPAL MONEY MARKET FUND INDEXES

Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
Initial Reinvested Reinvested Value Living[**]
$10,000 Dividend Capital Gain
Investment Distributions Distributions

19__ $ $ $ $ $ $ $

19__* $ $ $ $ $ $ $

</TABLE>

* From March 4, 1991 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Spartan
Connecticut Municipal Money Market on March 4, 1991 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 $______.
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 $______
for dividends . The money market funds did not
distribute any capital gains during the period. The figures in the
table do not include the effect of the fund's __% sales charge
(which was in effect during th e period _____ through
_____) or its account closeout fee .
During the period from August 29, 1989 (commencement of operations)
to November 30, 1998, a hypothetical $10,000 investment in Connecticut
Municipal Money Market would have grown to $______.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY CONNECTICUT MUNICIPAL MONEY MARKET FUND INDEXES

Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
Initial Reinvested Reinvested Value Living[**]
$10,000 Dividend Capital Gain
Investment Distributions Distributions

19__ $ $ $ $ $ $ $

19__* $ $ $ $ $ $ $

</TABLE>

* From August 29, 1989 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Connecticut Municipal Money Market on August 29, 1989, 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 $______. 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 $______ for dividends.
The money market fund did not distribute any capital gains during the
period. The figures in the table do not include the effect of [the
fund's/[Name of Fund(s)] __% sales charge (which was in effect during
the period _____ through _____).
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Spartan Connecticut Municipal Income would have
grown to $____.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN CONNECTICUT MUNICIPAL INCOME FUND INDEXES

Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
Initial Reinvested Reinvested Value Living[**]
$10,000 Dividend Capital Gain
Investment Distributions Distributions

19__ $ $ $ $ $ $ $

19__* $ $ $ $ $ $ $

</TABLE>

Explanatory Notes: With an initial investment of $10,000 in Spartan
Connecticut Municipal Income on December 1, 1999 , 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
$______ . 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
$ ______ for dividends and $ _____ for capital gain
distributions. The figures in the table do not include the effect of
the fund's __% sales charge (which was in effect during the period
_____ through _____) or its 0.50% short-term trading 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 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 indexes prepared by Lipper or other
organizations. When comparing these indexes , 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, a 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 a dvertising. The bond fund may advertise risk
ratings, including symbols or numbers, prepared by independent rating
agencies.
A fund's performance may also be compared to that of the
b enchmark index representing the universe of securities in which
the fund may invest. The total return of the 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
i ndex(es) .
The municipal bond fund may compare its performance to
the Lehman Brothers Municipal Bond Index, a market
capitalization-weighted index for investment-grade municipal bonds
with maturities of one year or more . Issues included in the
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 the index.
Spartan Connecticut Municipal Income may compare its performance to
that of the Lehman Brothers Connecticut 4 Plus Year Enhanced Municipal
Bond Index, a market capitalization-weighted index of Connecticut
investment-grade municipal bonds with maturities of four years or
more. Issues included in the index have been issued as part of an
offering of at least $20 million, have an outstanding par value of at
least $2 million, and have been issued after December 31, 1990.
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 CPI ) , and combinations of various capital markets. The
performance of these capital markets is based on the returns of
different indexes .
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 indexes that may be developed
and made available in the future .
The money market funds 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)/ All Tax-Free , which is reported in IBC's
MONEY FUND REPORT(trademark), covers over ___ tax-free money
market funds .
The bond fund may compare and contrast in advertising the
relative advantages of investing in a mutual fund versus an individual
municipal bond. Unlike municipal bond 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 sales
charges of many municipal bond mutual funds are lower than the
purchase cost of individual municipal bonds, which are generally
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 bond fund may also
discuss or illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS indicate price movements over specific periods of
time for a bond fund . 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 , 1998 , FMR advised over $__ billion
in municipal fund assets, $ __ billion in taxable
fixed-income fund assets, $__ billion in money market fund assets,
$ ___ billion in equity fund assets, $ __ billion in
international fund assets, and $ ___ 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, EXCHANGE AND REDEMPTION INFORMATION
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing each 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.
DISTRIBUTIONS AND TAXES
DIVIDENDS. To the extent that each fund's income is designated as
federally tax-exempt interest, the dividends declared by the fund are
also federally tax-exempt. Short-term capital gains are taxable as
dividends, but do not qualify for the dividends-received deduction.
Each 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 .
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 Spartan Connecticut Municipal Money
Market's and Spartan Connecticut Municipal Income's policies of
investing so that at least 80% of each fund's income is free
from federal income tax and Connecticut Municipal Money Market's
policy of investing so that at least 80% of its income distributions
are 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 .
A portion of the gain on municipal bonds purchased at
market discount after April 30, 1993 is taxable to
shareholders as ordinary income , not as capital gains.
Dividends resulting from a recharacterization of gain from the
sale of bonds purchased at market discount after April 30, 1993
are not considered income for purposes of Spartan Connecticut
Municipal Money Market's and Spartan Connecticut Municipal
Income's policy of investing so that at least 80% of each
fund's income is free from federal income tax and Connecticut
Municipal Money Market's policy of investing so that at least 80% of
its income distributions are free from federal income tax .
CONNECTICUT TAXES. The Connecticut income tax is generally imposed
at the rate of 4.5% on the Connecticut taxable income of resident and
non-resident individuals, trusts, and estates, although a 3% rate
applies to the first several thousand dollars of Connecticut taxable
income depending on the taxpayer's filing status. Connecticut taxable
income is federal adjusted gross income after certain modifications
(Connecticut AGI) less a personal exemption. The amount of the
personal exemption varies depending on the taxpayer's filing status
and is phased out as the amount of Connecticut AGI increases. A credit
is also provided depending on the tax payer's filing status and
Connecticut AGI. The personal exemption and credit, where applicable,
and the initial 3% rate bracket lower the effective rate of tax
somewhat below 4.5%.
Dividends paid by a fund that qualify as exempt-interest dividends
for federal income tax purposes are not subject to the Connecticut
income tax to the extent they are derived from obligations issued by
or on behalf of the State of Connecticut, any political subdivision
thereof, or any public instrumentality, state or local authority,
district, or similar public entity created under the laws of the State
of Connecticut ("Connecticut obligations"), or derived from
obligations of U.S. possessions and territories the interest on which
federal law prohibits the states from taxing. Exempt-interest
dividends derived from other sources and any distributions by a fund
that are taxable as "dividends" for federal income tax purposes, are
includable in Connecticut AGI for purposes of the Connecticut income
tax. Amounts, if any, treated as capital gains or losses for federal
income tax purposes, such as those arising upon the sale, redemption,
and other disposition of shares of a fund by a shareholder or
dividends paid by a fund that are treated as capital gain dividends
for federal income tax purposes, are includable in Connecticut AGI for
purposes of the Connecticut income tax to the same extent as they are
includable in gross income for federal income tax purposes, except
that such capital gain dividends are not included in Connecticut AGI
to the extent they are derived from Connecticut obligations.
The net Connecticut minimum tax is imposed on taxpayers subject to
the Connecticut income tax and required to pay the federal AMT. The
net Connecticut minimum tax is based on what the taxpayer's federal
AMT tax base or tax would be if computed taking certain Connecticut
modifications into account. Included in these modifications are the
elimination of exempt-interest dividends derived from Connecticut
obligations or obligations of U.S. possessions and territories the
interest on which federal law prohibits the states from taxing and the
elimination of capital gain dividends from Connecticut
obligations.
The Connecticut corporation business tax is imposed on any
corporation or association carrying on, or having the right to carry
on, business in Connecticut. Distributions from any source, including
those treated as federally tax-exempt dividends, are includable in
gross income for purposes of the corporation business tax. However,
the corporation business tax allows a deduction for 70% (100% if the
shareholder owns at least 20% of the total voting power and value of a
fund's shares) of amounts includable in taxable income thereunder that
are treated as "dividends" and not as exempt-interest dividends or
capital gain dividends for federal income tax purposes, but disallows
deductions for expenses related to such amounts.
CAPITAL GAINS DISTRIBUTIONS. Each fund's capital gains
distributions are federally taxable to shareholders at a rate based
generally on the length of time the securities on which the gain was
realized were held, regardless of the length of time those shares on
which the distribution is received have been held. Each money market
fund may distribute any net realized capital gains once a year or more
often, as necessary.
As of November 30 , 199_, [the /each] [fund/[Name(s) of
Fund(s)]] had a capital loss carryforward aggregating approximately
$____. This loss carryforward, of which $___, $___, and $___will
expire on November 30 , 199_, ____, and ____ , respectively, is
available to offset future capital gains.
TAX STATUS OF THE FUN DS. Each fund intends to qualify each year
as a "regulated investment company" under Subchapter M of the
Internal Revenue Code 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.
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. It is up to you or your tax preparer to determine
whether the sale of shares of a fund resulted in a capital gain or
loss or other tax consequence to you. 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.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. The Board of Trustees governs each fund
and is responsible for protecting the interests of shareholders. The
Trustees are experienced executives who meet periodically throughout
the year to oversee each fund's activities, review contractual
arrangements with companies that provide services to each fund, and
review each fund's performance. 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 or its affiliates . The business
address of each Trustee, Member of the Advisory Board, and officer who
is an "interested person" (as defined in the 1940 Act) 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 ( 68 ), 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.
(1998) , Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
J. GARY BURKHEAD ( 57 ), 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 and 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 . 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 a Director of
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). Mr. Gates also is a Trustee of the Forum for
International Policy and of the Endowment Associatio n of the
College of William and Mary. In addition, he is a member of the
National Executive Board of the Boy Scouts of America.
E. BRADLEY JONES ( 71 ), 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
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK ( 65 ), 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 National Arts Stabilization Inc .,
Chairman of the Board of Trustees of the Greenwich Hospital
Association, Director of the Yale-New Haven Health Services Corp.
(1998) , 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 ( 55 ), Trustee, is Vice Chairman and Director of
FMR . 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 ( 65 ), 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 ( 69 ), 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 ( 65 ), Trustee (1993), is Chairman of the Board,
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).
*ROBERT C. POZEN ( 52 ), 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. ( 1998 ), 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 ( 44 ), is Vice President of Bond Funds,
G roup L eader of the Bond Group, Senior Vice President of
FMR (1997), and Vice President of FIMM (1998). Mr. Churchill joined
Fidelity in 1993 as Vice President and Group Leader of Taxable
Fixed-Income Investments.
BOYCE I. GREER (41), is Vice President of Money Market Funds (1997),
Group Leader of the Money Market Group (1997), Senior Vice President
of FMR (1997), and Vice President of FIMM (1998) . 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) .
FRED L. HENNING, JR. (58), is Vice President of Fidelity's
Fixed-Income Group (1995), Senior Vice President of FMR (1995) ,
and Senior Vice President of FIMM (1998) . Before assuming his
current responsibilities, Mr. Henning was head of Fidelity's Money
Market Division.
SCOTT A. ORR (36), is Vice President of Fidelity Connecticut
Municipal Money Market (1997), Spartan Connecticut Municipal Money
Market Fund (1997), and other funds advised by FMR. Prior to his
current responsibilities, Mr. Orr managed a variety of Fidelity
Funds.
GEORGE A. FISHER (37), is Vice President of Spartan Connecticut
Municipal Income Fund (1997), and other funds advised by FMR. Prior to
his current responsibilities, Mr. Fisher managed a variety of Fidelity
Funds.
ERIC D. ROITER (50), 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 ( 51 ), 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).
S TANLEY N. GRIFFITH (52), Assistant Vice President (1998), is
Assistant Vice President of Fidelity's Fixed-Income Funds (1998) and
an employee of FMR Corp.
JOHN H. COSTELLO ( 52 ), Assistant Treasurer, is an employee of
FMR.
LEONARD M. RUSH ( 52 ), 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 ( 40 ), Assistant Treasurer ( 1996 ), is
Assistant Treasurer of F idelity's Fixed-Income Funds (1998 ) 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, 1998 , or
calendar year ended December 31, 1997, as applicable.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
COMPENSATION TABLE
Trustees Aggregate Aggregate Aggregate Total
and Compensation Compensation Compensation Compensation
Members of the Advisory Board from from from from the
Sp artan CT Muni CT Muni Sp artan CT Muni Fund Complex*,A
Money MarketB,C Money M arketB,D IncomeB,E

J. Gary Burkhead** $ 0 $ 0 $ 0 $ 0

Ralph F. Cox $ $ $ $ 214,500

Phyllis Burke Davis $ $ $ $ 210,000

Robert M. Gates*** $ $ $ $ 176,000

Edward C. Johnson 3d** $ 0 $ 0 $ 0 $ 0

E. Bradley Jones $ $ $ $ 211,500

Donald J. Kirk $ $ $ $ 211,500

Peter S. Lynch** $ 0 $ 0 $ 0 $ 0

William O. McCoy**** $ $ $ $ 214,500

Gerald C. McDonough $ $ $ $ 264,500

Marvin L. Mann $ $ $ $ 214,500

Robert C. Pozen** $ 0 $ 0 $ 0 $ 0

Thomas R. Williams $ $ $ $ 214,500

</TABLE>

* Information is for the calendar year ended December 31, 1997 for 230
funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated
by FMR.
*** Mr. Gates was appointed to the Board of Trustees of
Fidelity Court Street Trust effective March 1, 1997. Mr. Gates
was elected to the Board of Trustees of Fidelity Court Street Trust
II on December 17, 1997.
**** Mr. McCoy was appointed to the Board of Trustees of
Fidelity Court Street Trust effective January 1, 1997. Mr.
McCoy was 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 as
follows: Ralph F. Cox, $53,699; Marvin L. Mann, $53,699; and Thomas R.
Williams, $62,462.
B Compensation figures include cash, and may include amounts required
to be deferred and amounts deferred at the election of
Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__; Phyllis Burke Davis, $__;
Robert M. Gates, $__; E. Bradley Jones, $__; Donald J. Kirk, $__;
William O. McCoy, $__; Gerald C. McDonough, $__; Marvin L. Mann, $__;
and Thomas R. Williams, $__.
D The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__; Phyllis Burke Davis, $__;
Robert M. Gates, $__; E. Bradley Jones, $__; Donald J. Kirk, $__;
William O. McCoy, $__; Gerald C. McDonough, $__; Marvin L. Mann, $__;
and Thomas R. Williams, $__.
E The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__; Phyllis Burke Davis, $__;
Robert M. Gates, $__; E. Bradley Jones, $__; Donald J. Kirk, $__;
William O. McCoy, $__; Gerald C. McDonough, $__; Marvin L. Mann, $__;
and Thomas R. Williams, $__.
F Certain of the non-interested Trustees' aggregate compensation
from a fund includes accrued voluntary deferred compensation as
follows: [trustee name, dollar amount of deferred compensation, fund
name]; [trustee name, dollar amount of deferred compensation, fund
name]; and [trustee name, dollar amount of deferred compensation, fund
name].
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (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 subject to vesting and ar e 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 [DATE], approximately __% of [Fund Name(s)]'s total
outstanding shares was held by FMR [[and] [an] FMR affiliate[s]]. FMR
Corp. is the ultimate parent company of FMR [[and] [this/these] FMR
affiliate[s]]. By virtue of his ownership interest in FMR Corp., as
described in the "Control of Investment Advisers" section on page ,
Mr. Edward C. Johnson 3d, President and Trustee of the fund, may be
deemed to be a beneficial owner of these shares. As of the above date,
with the exception of Mr. Johnson 3d's deemed ownership of [Fund
Name(s)]'s shares, the Trustees, Members of the Advisory Board, and
officers of the funds owned, in the aggregate, less than __% of each
fund's total outstanding shares.
As of [ DATE ], the Trustees, Members of the Advisory Board, and
officers of [the/each] fund owned, in the aggregate, less than __% of
[[each fund/[Fund Name(s)]]'s total outstanding shares.
As of [ DATE ], the following owned of record or beneficially 5%
or more ( up to and including 25%) of [[each fund/[Fund
Name(s)]]'s outstanding shares:
As of [ DATE ], approximately ____% of [ NAME OF FUND ]'s
total outstanding shares were held by [ NAME OF SHAREHOLDER ];
approximately ___% of [ NAME OF FUND ]'s total outstanding shares
were held by [ NAME OF SHAREHOLDER ]; and approximately ___% of
[ NAME OF FUND ]'s total outstanding shares were held by [ NAME
OF SHAREHOLDER] .
A shareholder owning of record or beneficially more than 25% of a
fund's outstanding shares may be considered a controlling person. That
shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other
shareholders.
CONTROL OF INVESTMENT ADVISERS
FMR Corp., organized in 1972, is the ultimate parent company of FMR
and FIMM. 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 investment 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.
MANAGEMENT CONTRACTS
Each fund has entered into a management contract with FMR, pursuant
to which FMR furnishes investment advisory and other services.
MANAGEMENT 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 the
fund in accordance with its investment objective, policies and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the 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 ( CONNECTICUT MUNICIPAL MONEY
MARKET). In addition to the management fee payable to FMR and the
fees payable to the transfer, dividend disbursing, and shareholder
servicing agent , pricing and bookkeeping agent, the fund pays
all of its expenses that are not assumed by those parties. The fund
pays for the typesetting, printing, and mailing of its proxy materials
to shareholders, legal expenses, and the fees of the custodian,
auditor and non-interested Trustees. The fund's management contract
further provides that the fund 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. Other expenses paid
by the fund include interest, taxes, brokerage commissions, the fund's
proportionate share of insurance premiums and Investment Company
Institute dues, and the costs of registering shares under federal
securities laws and making necessary filings under state securities
laws. The fund is also liable for such non-recurring expenses as may
arise, including costs of any litigation to which the fund may be a
party, and any obligation it may have to indemnify its officers and
Trustees with respect to litigation.
MANAGEMENT-RELATED EXPENSES ( SPARTAN CONNECTICUT MUNICIPAL MONEY
MARKET AND SPARTAN CONNECTICUT MUNICIPAL INCOME ). Under the terms
of its management contract with e ac h fund, FMR is
responsible for payment of all operating expenses of e ach 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, e ach 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, pricing and bookkeeping services .
FMR pays all other expenses of Spartan Connecticut Municipal Money
Market and Spartan Connecticut Municipal Income 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 Connecticut Municipal Money Market and Spartan
Connecticut Municipal Income each pays FMR a monthly management
fee at the annual rate of 0.50 % and 0.55 %, respectively,
of the fund's average net assets throughout the month.
The management fee paid to FMR by Spartan Connecticut Municipal
Money Market and Spartan Connecticut Municipal Income is reduced
by an amount equal to the fees and expenses paid by the fund to the
non-interested Trustees.
For the services of FMR under the management contract, Connecticut
Municipal Money Market pays FMR a monthly management fee which has
two components: a group fee rate and an individual fund fee rate.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES

Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets Rate

0 - $3 billion .3700% $ 0.5 billion .3700%

3 - 6 .3400 25 .2664

6 - 9 .3100 50 .2188

9 - 12 .2800 75 .1986

12 - 15 .2500 100 .1869

15 - 18 .2200 125 .1793

18 - 21 .2000 150 .1736

21 - 24 .1900 175 .1690

24 - 30 .1800 200 .1652

30 - 36 .1750 225 .1618

36 - 42 .1700 250 .1587

42 - 48 .1650 275 .1560

48 - 66 .1600 300 .1536

66 - 84 .1550 325 .1514

84 - 120 .1500 350 .1494

120 - 156 .1450 375 .1476

156 - 192 .1400 400 .1459

192 - 228 .1350 425 .1443

228 - 264 .1300 450 .1427

264 - 300 .1275 475 .1413

300 - 336 .1250 500 .1399

336 - 372 .1225 525 .1385

372 - 408 .1200 550 .1372

408 - 444 .1175

444 - 480 .1150

480 - 516 .1125

Over 516 .1100

The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $ ___ billion of group net assets - the approximate
level for November 1998 - was __ %, which is the weighted
average of the respective fee rates for each level of group net assets
up to $ __ billion.
The individual fund fee rate for Connecticut Municipal Money
Market is 0.25 %. Based on the average group net assets of
the funds advised by FMR for November 1998 , the fund's annual
management fee rate would be calculated as follows:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Management Fee Rate

CT Muni Money Market 0. ___% + 0. 25 % = 0 .___%

</TABLE>

One-twelfth of the management fee rate is applied to the fund's
average net assets for the month, giving a dollar amount which
is the fee for that month.
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 reducing management fees for Spartan Connecticut Municipal
Money Market and Spartan Connecticut Municipal Income.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Years Ended Amount of Management Fees
November 30 Credits Reducing Paid to FMR
Management Fees

Spartan CT Muni Money 1998 $ $ *
Market

1997 $ $ *

1996 $ $ *

CT Muni Money Market 1998 $ $

1997 $ $

1996 $ $

Spartan CT Muni Income 1998 $ $ *

1997 $ $ *

1996 $ $ *

</TABLE>

* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
[(dagger)] On [month] [day], 19__, FMR reduced the [management
fee/individual fund fee] rate paid by [Name(s) of Fund(s)] from __% to
__%.
During the reporting period, FMR voluntarily modified the
breakpoints in the group fee rate schedule[s] on January 1, 1996 to
provide for lower management fee rates as FMR's assets under
management increase.
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) which is subject to
revision or termination]. 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.
Effective [Date], FMR voluntarily agreed to reimburse the fund if
and to the extent that its aggregate operating expenses, including
management fees, were in excess of an annual rate of __% of its
average net assets. For the fiscal years ended November 1998, 1997,
and 1996, management fees incurred under the fund's contract prior to
reimbursement amounted to $_________, $___________, and $_________,
respectively (after reduction for compensation to the non-interested
Trustees), and management fees reimbursed by FMR amounted to
$_________, $___________, and $_________, respectively.
The reimbursement arrangement that is in effect for [[the
fund/[Name(s) of Fund(s)]] will continue through [month] [day], 19__,
after which time FMR may elect to discontinue it.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Period[s] of Aggregate Fiscal Years Management Amount of
Expense Limitation Operating Ended Fee Before Management
From To Expense November 30 Reimbursement Fee
Limitation Reimbursement

[Fund Name] Month, day, Month, day, % 199_ $ * $
year year

Month, day, Month, day, % 199_ $ * $
year year

</TABLE>

* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
SUB-ADVISER. On behalf of Spartan Connecticut Municipal Money
Market and Connecticut Municipal Money Market , FMR has entered
into a sub-advisory agreement with FIMM pursuant to which FIMM has
primary responsibility for choosing investments for the funds.
Previously, FMR Texas Inc. (FMR Texas) had primary responsibility
for providing investment management services to the funds. On January
23, 1998, FMR Texas was merged into FIMM, which succeeded to the
operations of FMR Texas .
On behalf of Spartan Connecticut Municipal Income, FMR has entered
into a sub-advisory agreement with FIMM pursuant to which FIMM has
primary responsibility for choosing investments for the fund.
Under the terms of the sub-advisory agreements, FMR pays FIMM fees
equal to 50% of the management fee payable to FMR under its management
contract with each fund. The fees paid to FIMM are not reduced by any
voluntary or mandatory expense reimbursements that may be in effect
from time to time.
Fees paid to FMR Texas by FMR on behalf of Spartan Connecticut
Municipal Money Market and Connecticut Municipal Money Market for
the past three fiscal years are shown in the table below.

<TABLE>
<CAPTION>
<S> <C> <C>
Fund Fiscal Year Ended November 30 Fees Paid to FMR Texas

Spartan CT Muni Money Market 1998 $

1997 $

1996 $

CT Muni Money Market 1998 $

1997 $

1996 $

</TABLE>

On behalf of Spartan Connecticut Municipal Money Market and
Connecticut Municipal Money Market, for the fiscal year ended November
30, 1998, FMR paid FIMM fees of $_____ and $____, respectively.
DISTRIBUTION SERVICES
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR. 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 the fund, which are
continuously offered at NAV. Promotional and administrative expenses
in connection with the offer and sale of shares are paid by FMR .
The Trustees have approved Distribution and Service Plans on behalf of
each fund (the Plan s ) 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 providing services intended to
result in the sale of fund shares and/or shareholder support services.
In addition, each Plan provides that FMR, directly or through FDC,
m ay pay intermediaries, such as banks , broker-dealers
and other service-providers, that provide those services.
Currently, the Board of Trustees has authorized such payments for
shares.
Payments made by FMR either directly or through FDC to
intermediaries for the fiscal year ended 1998 amounted to $____ [for
[Fund Name]], $____ [for [Fund Name]], and $_____ [for [Fund
Name]].
FMR made no payments either directly or through FDC to
intermediaries for the fiscal year ended 1998.
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 not 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 or stabilization of cash flows 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 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 Plan s . No preference for the instruments of such
depository institutions will be shown in the selection of investments.
TRANSFER AND SERVICE AGENT AGREEMENTS
Each fund has entered into a transfer agent agreement with UMB,
which is located at 1010 Grand Avenue, Kansas City, Missouri .
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 account fee
and an asset-based fee each paid monthly with respect to each
account in a fund. For retail accounts and certain institutional
accounts, these fees are based on account size and fund type. For
certain institutional retirement accounts, t hese fees are based
on fund type . For certain other institutional retirement
accounts, these fees are based on account type (i.e., omnibus or
non-omnibus) and, for non-omnibus accounts, fund type. The
a ccount f ees are subject to increase based on postage rate
changes.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
I n addition, FSC collects a $5.00 exchange fee for each exchange
out of Spartan Connecticut Municipal Money Market.
FSC also collects Spartan Connecticut Municipal Money Market's
$5.00 account closeout fee
FSC also collects Spartan Connecticut Municipal Money Market's
$2.00 checkwriting fee.
FSC also collects Spartan Connecticut Municipal Money Market's
$5.00 wire transaction fee.
In addition, UMB receives the pro rata portion of the transfer agency
fees applicable to shareholder accounts in a qualified state
tuition program (QSTP), as defined under the Small Business Job
Protection Act of 1996, managed by FMR or an affiliate and each
Fidelity Freedom Fund, a fund of funds managed by an FMR affiliate,
according to the percentage of the QSTP's or 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, an affiliate of FM R.
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. The annual fee rates for pricing and bookkeeping services
are .0175% for Connecticut Municipal Money Market of the first
$500 million of average net assets and .0075% of average net assets in
excess of $500 million. The fee, not including reimbursement for
out-of-pocket expenses, is limited to a minimum of $40,000 and a
maximum of $800,000 per year.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by Connecticut Municipal Money Market to
FSC for the past three fiscal years are shown in the table below.
Fund 199 8 199 7 199 6

CT Muni Money Market $ $ $

For Spartan Connecticut Municipal Money Market and Spartan
Connecticut Municipal Income , 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.
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Spartan Connecticut Municipal Income Fund
is a fund of Fidelity Court Street Trust , an open - end
management investment company organized as a Massachusetts business
trust on April 21, 1977. Currently, there are four funds in
Fidelity Court Street Trust: Spartan Connecticut Municipal Income
Fund, Spartan Municipal Income Fund, Spartan Florida Municipal
Income Fund, and Spartan New Jersey Municipal Income Fund. The
Trustees are permitted to create additional funds in the
trust .
Spartan Connecticut Municipal Money Market Fund and Fidelity
Connecticut Municipal Money Market Fund are funds of Fidelity Court
Street Trust II, an open - end management investment company
organized as a Delaware business trust on June 20, 1991.
Currently, there are five funds of Fidelity Court Street Trust
II: Fidelity Connecticut Municipal Money Market Fund, Spartan
Connecticut Municipal Money Market Fund, Spartan New Jersey
Municipal Money Market, Spartan Florida Municipal Money Market
Fund, and Fidelity New Jersey Municipal Money Market Fund.
T he Trustee s are permitted to create additional
funds in the trust .
The assets of t he Massachusetts trust received for the issue or
sale of shares of each of its funds and all income, earnings, profits,
and proceeds thereof, subject to the rights of creditors, are
allocated to such fund, and constitute the underlying assets of such
fund. The underlying assets of each fund in the Massachusetts trust
shall be charged with the liabilities and expenses attributable
to such fund. Any general expenses of the Massachusetts trust shall be
allocated between or among any one or more of its funds.
The assets of the Delaware trust received for the issue or sale of
shares of each of its funds and all income, earnings, profits, and
proceeds thereof, subject to the rights of creditors, are allocated to
such fund, and constitute the underlying assets of such fund. The
underlying assets of each fund in the Delaware trust shall be charged
with the liabilities and expenses attributable to such fund. Any
general expenses of the Delaware trust shall be allocated between or
among any one or more of its funds.
SHAREHOLDER LIABILITY - MASSACHUSETTS TRUST. The Massachusetts
trust is an entity commonly known as a "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 r elating to the trust 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 shareholder or former shareholder held
personally liable for the obligations of the fund solely by reason
of his or her being or having been a shareholder and not because of
his or her acts or omissions or for some other reason . 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 a 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.
SHAREHOLDER 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. The Trust Instrument
provides that the 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 trust or the Trustees relating to the trust or
to a fund shall include a provision limiting the obligations created
thereby to the trust or to one or more funds and its or their assets.
The Trust Instrument further provides that shareholders of a fund
shall not have a claim on or right to any assets belonging to any
other fund.
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 solely by reason of his or
her being or having been a shareholder and not because of his or her
acts or omissions or for some other reason. 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 a
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.
VOTING RIGHTS - MASSACHUSETTS TRUST. Each fund's capital
consists of shares of beneficial interest. As a shareholder, you
are entitled to one vote for each dollar of net asset value you
own. The voting rights of shareholders can be changed only by a
shareholder vote. Shares may be voted in the aggregate, by fund and by
class.
The shares have no preemptive or conversion rights. Shares are
fully paid and nonassessable, except as set forth under the heading
"Shareholder Liability" above.
The trust or any of its funds may be terminated upon the sale
of its assets to another open-end management investment company, or
upon liquidation and distribution of its assets , if approved by
a vote of shareholders of the trust or the fund. In the event of
the dissolution or liquidation of the trust, shareholders of each of
its funds are entitled to receive the underlying assets of such fund
available for distribution. In the event of the dissolution or
liquidation of a fund, shareholders of that fund are entitled to
receive the underlying assets of the fund available for
distribution.
VOTING RIGHTS - DELAWARE TRUST. Each fund's capital consists
of shares of beneficial interest. As a shareholder, you are entitled
to one vote for each dollar of net asset value you own. The voting
rights of shareholders can be changed only by a shareholder vote.
Shares may be voted in the aggregate, by fund and by class.
The shares have no preemptive or conversion rights. Shares are
fully paid and nonassessable, except as set forth under the heading
"Shareholder Liability" above.
The trust or any of its funds may be terminated upon the sale of
its assets to another open-end management investment company or series
thereof, or upon liquidation and distribution of its assets. Generally
such terminations must be approved by a vote of shareholders. In the
event of the dissolution or liquidation of the trust, shareholders of
each of its funds are entitled to receive the underlying assets of
such fund available for distribution. In the event of the dissolution
or liquidation of a fund, shareholders of that fund are entitled to
receive the underlying assets of the fund available for
distribution.
Under the Trust Instrument, the Trustees may, without shareholder
vote, i n order to change the form of organization of the trust
cause the trust to merge or consolidate with one or more trusts,
partnerships, associations, limited liability companies or
corporations, as long as the surviving entity is an open-end
management investment company, or is a fund thereo f, that will
succeed to or assume the trust's registration statement, or
cause the trust to incorporate under Delaware law.
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.
FMR, its officers and directors, its affiliated companies, and
members of 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. __________________ 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, 1998 , and report( s ) of
the auditor, are included in each fund's Annual Report and are
incorporated herein by reference .
APPENDIX
Spartan, Fidelity, Fidelity Investments & (Pyramid) Design, and
Fidelity Focus are registered trademarks of FMR Corp.
THE THIRD PARTY MARKS APPEARING ABOVE ARE THE MARKS OF THEIR
RESPECTIVE OWNERS.

SPARTAN(registered trademark) NEW JERSEY MUNICIPAL MONEY MARKET
FUND
AND
FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET FUND
FUNDS OF FIDELITY COURT STREET TRUST II
SPARTAN NEW JERSEY MUNICIPAL INCOME FUND
A FUND OF FIDELITY COURT STREET TRUST
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 25, 1999
This Statement of Additional Information (SAI) is not a prospectus.
Portions of the funds' Annual Re port are incorporated
herein. The Annual Report is supplied with this SAI.
To obtain a free additional copy of a Prospectus, dated January 25,
1999, or an Annual Report, please call Fidelity(registered
trademark) at 1-800-544-8888 or visit Fidelity's Web site at
www.fidelity.com.
TABLE OF CONTENTS PAGE

Investment Policies and Limitations 2

Special Considerations Regarding New Jerse y 9

Special Considerations Regarding Puerto Rico 11

Portfolio Transactions 12

Valuation 13

Performance 14

Additional Purchase, Exchange and Redemption Information 20

Distributions and Taxes 20

Trustees and Officers 20

Control of Investment Adviser s 24

Management Contracts 24

Distribution Services 27

Transfer and Service Agent Agreements 27

Description of the Trusts 28

Financial Statements 29

Appendix 29

(fidelity_logo_graphic) 82 Devonshire Street, Boston, MA 02109
NJT-ptb- 0199
Insert item code number
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 ( the
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 NEW JERSEY MUNICIPAL MONEY MARKET
FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer, if, as a result, the
fund would not comply with any applicable diversification requirements
for a money market fund under the Investment Company Act of 1940 and
the rules thereunder, as such may be amended from time to time;
(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;
(3) sell securities short, unless it owns, or by virtue of
ownership of other securities, has the right to obtain at no added
cost, securities equivalent in kind and amount to the securities sold
short;
(4) purchase securities on margin, except that the fund may obtain
such short-term credits as are necessary for the clearance of
transactions;
(5) 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;
(6) underwrite securities issued by others (except to the extent
that the fund may be deemed to be an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted
securities);
(7) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(8) purchase or sell real estate 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);
(9) purchase or sell physical commodities unless acquired as a
result of ownership of securities; or
(10) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties (but
this limit does not apply to purchases of debt securities or to
repurchase agreements).
(11) 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 managed by Fidelity
Management & Research Company or an affiliate or successor 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) With respect to 75% of its total assets, the fund does not
currently intend to 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 securities of other money market
funds) if, as a result, more than 5% of the fund's total assets would
be invested in the securities of that issuer.
(ii) 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.
(iii) 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 (5)). 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.
(iv) 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.
(v) 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.
(vi) The fund does not currently intend to invest all of its assets
in the securities of a single open-end management investment company
managed by Fidelity Management & Research Company or an affiliate or
successor with substantially the same fundamental investment
objective, policies, and limitations as the fund.
For purposes of limitations (1), (7), 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 purposes of limitation (i), certain securities subject to
guarantees (including insurance, letters of credit and demand
features) are not considered securities of their issuer, but are
subject to separate diversification requirements, in accordance with
industry standard requirements for money market funds.
With respect to limitation (iii), if through a change in values,
net assets, or other circumstances, the fund were in a position where
than 10% of its net assets were invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
INVESTMENT LIMITATIONS OF FIDELITY NEW JERSEY MUNICIPAL MONEY
MARKET FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET
FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) purchase the securities of any issuer, if, as a result, the
fund would not comply with any applicable diversification requirements
for a money market fund under the Investment Company Act of 1940 and
the rules thereunder, as such may be amended from time to time;
(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;
(3) sell securities short, unless it owns, or by virtue of
ownership of other securities has the right to obtain, securities
equivalent in kind and amount to the securities sold short;
(4) purchase securities on margin, except that the fund may obtain
such short-term credits as are necessary for the clearance of
transactions;
(5) 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;
(6) underwrite securities issued by others (except to the extent
that the fund may be deemed to be an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted
securities);
(7) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in the
securities of companies whose principal business activities are in the
same industry;
(8) 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);
(9) purchase or sell physical commodities unless acquired as a
result of ownership of securities (but this shall not prevent the fund
from purchasing or selling futures contracts); or
(10) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties (but
this limit does not apply to purchases of debt securities or to
repurchase agreements).
(11) 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) With respect to 75% of its total assets, the fund does not
currently intend to 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 securities of other money market
funds) if, as a result, more than 5% of the fund's total assets would
be invested in the securities of that issuer.
(ii) 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 (5)). 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.
(iii) 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.
(iv) 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.
(v) 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 limitations (1), (7), 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 purposes of limitation (i), certain securities subject to
guarantees (including insurance, letters of credit and demand
features) are not considered securities of their issuer, but are
subject to separate diversification requirements, in accordance with
industry standard requirements for money market funds.
With respect to limitation (iii), if through a change in values,
net assets, or other circumstances, the fund were in a position where
more than 10% of its net assets were invested in illiquid securities,
it would consider appropriate steps to protect liquidity.
INVESTMENT LIMITATIONS OF SPARTAN NEW JERSEY MUNICIPAL INCOME
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 deemed 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 loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties (but this
limit does not apply to purchases of debt securities or to repurchase
agreements).
(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
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 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 as least 50% of total assets so that no
more than 5% of the fund's total assets are invested in the 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.
With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets were invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the 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 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 a 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 involve 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.
ASSET-BACKED SECURITIES represent interests in pools of purchase
contracts, financing leases, or sales agreements entered into by
municipalities. Payment of interest and repayment of principal may be
largely dependent upon the cash flows generated by the assets backing
the securities and, in certain cases, supported by letters of credit,
surety bonds, or other credit enhancements. Asset-backed security
values may also be affected by other factors including changes in
interest rates, the availability of information concerning the pool
and its structure, the creditworthiness of the servicing agent for the
pool, the originator of the loans or receivables, or the entities
providing the credit enhancement. In addition, these securities may be
subject to prepayment risk.
BORROWING. Each fund may borrow from banks or from other
funds advised by FMR or its affiliates, 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.
CASH MANAGEMENT. A fund can hold uninvested cash or can
invest it in cash equivalents such as money market securities,
repurchase agreements or shares of money market funds. Generally,
these securities offer less potential for gains than other types of
securities.
CENTRAL CASH FUNDS are money market funds managed by FMR or
its affiliates that seek to earn a high level of current income (free
from federal income tax in the case of a municipal money market fund)
while maintaining a stable $1.00 share price. The funds comply with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of their investments.
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.
FEDERALLY TAXABLE SECURITIES . Under normal conditions, a
municipal fund does not intend to invest in securities
whose interest is federally taxable. However, from time to time on a
temporary basis, a municipal fund may invest a portion of its
assets in fixed-income securities whose interest is subject to
federal income tax.
Should a municipal fund invest in federally taxable
securities , it would purchase securities that, in FMR's
judgment, are of high quality.
FUTURES AND OPTIONS. The following paragraphs pertain to
futures and options : 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.
COMBINED POSITIONS involve purchasing and writing
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, purchasing
a put option and writing a call option on the same
underlying instrument would 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, 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. A fund may invest
in options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which the fund typically invests , which involves a risk
that the options or futures position will not track the performance of
the 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. In purchasing a futures contract, the
buyer agrees to purchase a specified underlying instrument at a
specified future date. In selling a futures contract, the
seller agrees to sell a specified underlying instrument at
a specified future date. The price at which the purchase and sale will
take place is fixed when the buyer and seller ente r 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 bond fund's investments in futures
contracts and options, and the fund's 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 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 purchaser or writer 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, the
purchaser 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 purchaser 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 purchaser may
terminate its position in a put option by allowing it to expire or by
exercising the option. If the option is allowed to expire, the
purchaser will lose the entire premium . If the option
is exercised , the purchaser completes the sale of the
underlying instrument at the strike price. A purchaser 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, 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. The writer of a put or call
option takes the opposite side of the transaction from the
option's purchaser. In return for receipt of the premium, the
writer 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. The writer may seek to terminate a position in
a put option 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, however, the writer must continue to
be prepared to pay the strike price while the option is outstanding,
regardless of price changes. When writing an option on a futures
contract, a fund will be required to make margin payments to an FCM as
described above for futures contracts.
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 the write r 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 SECURITIES cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they
are valued. Difficulty in selling securities may result in a loss
or may be costly to a fund. 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
securities . In determining the liquidity of a fund's
investments, FMR may consider various factors, including (1) the
frequency and volume of trades and quotations, (2) the number
of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market and (4) the nature of the
security and the market in which it trades (including any
demand, put or tender features, the mechanics and other
requirements for transfer, any letters of credit or other credit
enhancement features, any ratings, the number of holders, the method
of soliciting offers, the time required to dispose of the security,
and the ability to assign or offset the rights and obligations of the
security).
INDEXED SECURITIES are instruments 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.
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.
Indexed securities may be more volatile than the underlying
instruments. Indexed securities are also subject to the
credit risks associated with the issuer of the security, and their
values may decline substantially if the issuer's creditworthiness
deteriorates.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, a fund may lend money to, and borrow
money from, other funds advised by FMR or its affiliates ;
however, municipal funds currently intend to participate
in this program only as borrowers . A fund will borrow through
the program only when the costs are equal to or lower than the costs
of bank loans. Interfund borrowings normally extend overnight, but
can have a maximum duration of seven days . Loans may be called on
one day's notice. 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 movements in prevailing short-term
interest rate levels - rising when prevailing short-term interest
rates fall, and vice versa. The prices of inverse floaters
can be considerably more volatile than the prices of
bonds with comparable maturities.
INVESTMENT-GRADE DEBT SECURITIES. Investment-grade debt securities
are medium and high-quality securities. Some may possess speculative
characteristics and may be sensitive to economic changes and to
changes in the financial conditions of issuers. A debt 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 considered to be of
equivalent quality by FMR.
LOWER-QUALITY DEBT SECURITIES. Lower-quality debt securities
have poor protection with respect to the payment of interest and
repayment of principal, or may be in default. These securities are
often considered to be speculative and involve greater risk of loss or
price changes due to changes in the issuer's capacity to pay. The
market prices of lower-quality debt securities may fluctuate more than
those of higher-quality debt securities and may decline significantly
in periods of general economic difficulty, which may follow periods of
rising interest rates.
The market for lower-quality debt securities may be thinner and
less active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. Adverse
publicity and changing investor perceptions may affect the liquidity
of lower-quality debt securities and the ability of outside pricing
services to value lower-quality debt securities.
A fund may choose, at its expense or in conjunction with
others, to pursue litigation or otherwise to 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.
MONEY MARKET INSURANCE. Each money market fund participates in a
mutual insurance company solely with other funds advised by FMR or its
affiliates. This company provides insurance coverage for losses on
certain money market instruments held by a participating fund
(eligible instruments), including losses from nonpayment of principal
or interest or a bankruptcy or insolvency of the issuer or credit
support provider, if any. The insurance does not cover losses
resulting from changes in interest rates or other market developments.
Each money market fund is charged an annual premium for the insurance
coverage and may be subject to a special assessment of up to
approximately two and one-half times the fund's annual gross premium
if covered losses exceed certain levels. A participating fund may
recover no more than $100 million annually, including all other claims
of insured funds, and may only recover if the amount of the loss
exceeds 0.30% of its eligible instruments. Each money market fund may
incur losses regardless of the insurance.
MONEY MARKET SECURITIES are high-quality, short-term obligations.
Money market securities may be structured to be , or may employ
a trust or other form so that they are , eligible
investments for money market 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 a
structure fails to function 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 certain
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 funds.
MUNICIPAL INSURANCE. A municipal bond may be covered by
insurance that guarantees the bond's scheduled payment of interest and
repayment of principal. This type of insurance may be obtained by
either (i) the issuer at the time the bond is issued (primary market
insurance), or (ii) another party after the bond has been issued
(secondary market insurance).
Both primary and secondary market insurance guarantee timely and
scheduled repayment of all principal and payment of all interest on a
municipal bond in the event of default by the issuer, and cover a
municipal bond to its maturity, enhancing its credit quality and
value.
Municipal bond insurance does not insure against market
fluctuations or fluctuations in a fund's share price. In addition, a
municipal bond insurance policy will not cover: i) repayment of a
municipal bond before maturity (redemption), ii) prepayment or payment
of an acceleration premium (except for a mandatory sinking fund
redemption) or any other provision of a bond indenture that advances
the maturity of the bond, or iii) nonpayment of principal or interest
caused by negligence or bankruptcy of the paying agent. A mandatory
sinking fund redemption may be a provision of a municipal bond issue
whereby part of the municipal bond issue may be retired before
maturity.
Because a significant portion of the municipal securities issued
and outstanding is insured by a small number of insurance companies,
an event involving one or more of these insurance companies could have
a significant adverse effect on the value of the securities insured by
that insurance company and on the municipal markets as a whole.
FMR may decide to retain an insured municipal bond that is in
default, or, in FMR's view, in significant risk of default. While a
fund holds a defaulted, insured municipal bond, the fund collects
interest payments from the insurer and retains the right to collect
principal from the insurer when the municipal bond matures, or in
connection with a mandatory sinking fund redemption.
PRINCIPAL MUNICIPAL BOND INSURERS. The various insurance
companies providing primary and secondary market insurance policies
for municipal bonds are described below. Ratings reflect each
respective rating agency's assessment of the creditworthiness of an
insurer and the insurer's ability to pay claims on its insurance
policies at the time of the assessment.
Ambac Assurance Corp., a wholly-owned subsidiary of Ambac Financial
Group Inc., is authorized to provide bond insurance in the 50 U.S.
states, the District of Columbia, and the Commonwealth of Puerto Rico.
Bonds insured by Ambac Assurance Corp. are rated "Aaa" by Moody's
Investor Service and "AAA" by Standard & Poor's.
Connie Lee Insurance Co. is a wholly-owned subsidiary of Connie Lee
Holdings Inc., which is a wholly-owned subsidiary of Ambac Assurance
Corp. All losses incurred by Connie Lee Insurance Co. that would cause
its statutory capital to drop below $75 million would be covered by
Ambac Assurance Corp. Connie Lee Insurance Co. is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and the Commonwealth of Puerto Rico. Bonds insured by Connie Lee
Insurance Co. are rated "AAA" by Standard & Poor's.
Financial Guaranty Insurance Co. (FGIC), a wholly-owned subsidiary
of GE Capital Services, is authorized to provide bond insurance in the
50 U.S. states and the District of Columbia. Bonds insured by FGIC are
rated "Aaa" by Moody's Investor Service and "AAA" by Standard &
Poor's.
Financial Security Assurance Inc. (FSA), a wholly-owned subsidiary
of Financial Security Assurance Holdings Ltd., is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and three U.S. territories. Bonds insured by FSA are rated "Aaa" by
Moody's Investor Service and "AAA" by Standard & Poor's.
Municipal Bond Investors Assurance Corp. (MBIA Insurance Corp.), a
wholly-owned subsidiary of MBIA Inc., a publicly-owned company, is
authorized to provide bond insurance in the 50 U.S. states, the
District of Columbia, and the Commonwealth of Puerto Rico. Bonds
insured by MBIA Insurance Corp. are rated "Aaa" by Moody's Investor
Service and "AAA" by Standard & Poor's.
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,
a fund will not hold these obligations directly as a lessor of
the property, but will purchase a participation interest in a
municipal obligation from a bank or other third party. A participation
interest gives the purchaser a specified, undivided interest in
the obligation in proportion to its purchased interest in the total
amount of the issue .
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. If a municipality stops making payments or transfers
its obligations to a private entity, the obligation could lose value
or become taxable .
MUNICIPAL 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. Proposals to restrict or eliminate the
federal income tax exemption for interest on municipal securities are
introduced before Congress from time to time. Proposals also may be
introduced before the New Jersey legislature that would affect the
state tax treatment of a municipal fund's distributions. If such
proposals were enacted, the availability of municipal securities and
the value of a municipal fund's holdings would be affected and the
Trustees would reevaluate the fund's investment objectives and
policies. 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 a money market
fund to maintain a stable net asset value per share.
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.
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.
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.
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.
PUT FEATURES entitle the holder to sell a security back to the issuer
or a third party at any time or at specified intervals. In exchange
for this benefit, a fund may accept a lower interest rate. Securities
with put features 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.
REFUNDING CONTRACTS. Securities may be purchased on a
when-issued basis in connection with the refinancing of an issuer's
outstanding indebtedness. Refunding contracts require the issuer to
sell and a purchaser 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 purchaser generally will not
be obligated to pay the full purchase price if the issuer fails
to perform under a refunding contract. Instead, refunding contracts
generally provide for payment of liquidated damages to the
issuer . A purchaser 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 .
REPURCHASE AGREEMENTS involve an agreement to purchase a
security and 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. As protection
against the risk that the original seller will not fulfill its
obligation, the securities are held in a separate account at a
bank, marked-to-market daily, and maintained at a value at least equal
to the sale price plus the accrued incremental amount. The value of
the security purchased may be more or less than the price at which the
counterparty has agreed to purchase the security. In addition,
delays or losses could result if the other party to the agreement
defaults or becomes insolvent. The funds will engage in
repurchase agreement transactions with parties whose creditworthiness
has been reviewed and found satisfactory by FMR.
RESTRICTED SECURITIES are subject to legal restrictions on their
sale. Difficulty in selling securities may result in a loss or be
costly to a fund. Restricted securities generally can be sold in
privately negotiated transactions, pursuant to an exemption from
registration under the Securities Act of 1933, or in a registered
public offering. Where registration is required, the holder of
a registered security 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, the holder might obtain a less favorable price than prevailed
when it decided to seek registration of the security .
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sells a security to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase that
security at an agreed-upon price and time. The fund s will
enter into reverse repurchase agreements with parties whose
creditworthiness has been reviewed and found satisfactory by FMR. Such
transactions may increase fluctuations in the market value of
fund assets and a fund's yield and may be viewed as a form
of leverage.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. Issuers may employ various
forms of credit and liquidity enhancements, including letters of
credit, guarantees, puts, and demand features, and insurance provided
by domestic or foreign entities such as banks and other financial
institutions. FMR may rely on its evaluation of the credit of
the credit or liquidity enhancement provider in determining whether to
purchase a security supported by such enhancement. 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. Changes in the
credit quality of the entity providing the enhancement could affect
the value of the security or a fund's share price.
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. A 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 purchase 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 generally marketable ; and the possibility that the
maturities of the underlying securities may be different from those of
the commitments .
TEMPORARY DEFENSIVE POLICIES Each fund 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.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, municipal 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 , 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 in 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 are structured with put
features that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries.
In many instances bonds and participation interests have tender
options or demand features that permit the holder to tender (or
put) the bonds to an institution at periodic intervals and to
receive the principal amount thereof. Variable rate instruments
structured in this fashion are considered to be essentially
equivalent to other variable rate securities . The IRS has not
ruled whether the interest on these instruments is tax-exempt .
Fixed-rate bonds that are subject to third party puts and
participation interests in such bonds held by a bank in trust or
otherwise may have similar features .
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS
involve a commitment to purchase or sell specific securities at a
predetermined price or yield in which payment and delivery take place
after the customary settlement period for that type of security.
Typically, no interest accrues to the purchaser until the security is
delivered.
When purchasing securities pursuant to one of these transactions,
the purchaser assumes the rights and risks of ownership, including the
risks of price and yield fluctuations and the risk that the security
will not be issued as anticipated. Because payment for the securities
is not required until the delivery date, these risks are in addition
to the risks associated with a fund's investments. If a fund remains
substantially fully invested at a time when a purchase is outstanding,
the purchases may result in a form of leverage. When a fund has sold a
security pursuant to one of these transactions, 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, a fund could miss a favorable price or
yield opportunity or suffer a loss.
A fund may renegotiate a when-issued or forward transaction and may
sell the underlying securities before delivery, which may result in
capital gains or losses for the fund.
ZERO COUPON BONDS do not make interest payments; instead, they
are sold at a 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 more volatile than other types
of fixed-income securities when interest rates change. In
calculating a fund's dividend, a portion of the difference
between a zero coupon bond's purchase price and its face value is
considered income.
SPECIAL CONSIDERATIONS REGARDING NEW JERSEY
The following highlights only some of the more significant financial
trends and problems affecting New Jersey (the "State"), and is based
on information drawn from official statements and prospectuses
relating to securities offerings of the State, 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 and other publicly available documents, but is not
aware of any fact which would render such information inaccurate.
The State's personal income tax rates were reduced so that coupled
with the prior rate reductions, beginning with tax year 1996, personal
income tax rates are, depending upon a taxpayer's level of income and
filing status, 30%, 15% or 9% lower than 1993 rates.
The State's economic base is diversified, consisting of a variety of
manufacturing, construction and service industries, supplemented by
rural areas with selective commercial agriculture. After enjoying an
extraordinary boom during the mid-1980s, the State, as well as the
rest of the Northeast, slipped into a slowdown well before the onset
of the national recession which officially began in July 1990
(according to the National Bureau of Economic Research). By the
beginning of the national recession, construction activity had already
been declining in the State for nearly two years, growth had tapered
off markedly in the service sectors, and the long-term downtrend of
factory employment had accelerated partly because of a leveling off of
industrial demand nationally. The onset of recession caused an
acceleration of the State's job losses in construction and
manufacturing, as well as an employment downturn in such previously
growing sectors as wholesale trade, retail trade, finance, utilities,
trucking and warehousing. The net effect was a decline in the State's
total nonfarm wage and salary employment from a peak of 3,689,800 in
1989 to a low of 3,457,900 in 1992. This loss was followed by an
employment gain of 255,600 from May 1992 to June 1997, a recovery of
97.5% of the jobs lost during the recession.
Reflecting the downturn, the rate of unemployment in the State rose
from a low of 3.6% during the first quarter of 1989 to a recessionary
peak of 8.5% during 1992 (according to U.S. Bureau of Labor Statistics
and the New Jersey Department of Labor, Division of Labor Market and
Demographic Research). Since then, the unemployment rate fell to an
average of 6.2% in 1996 and 5.5% for the six month period from January
1997 through June 1997.
For the recovery period as a whole, May 1992 to June 1997,
service-producing employment in the State has expanded by 283,500
jobs. Hiring has been reported by food stores, wholesale distributors,
trucking and warehousing firms, security and commodity brokers,
business and engineering/management service firms,
hotels/hotel-casinos, social service agencies, and health care
providers other than hospitals. Employment growth was particularly
strong in business services and its personnel supply component with
increases of 17,300 and 7,500, respectively, in the 12-month period
ended June 1997.
In the manufacturing sector, employment losses slowed between 1992 and
1994. After an average annual job loss of 33,500 from 1989 through
1992, the State's factory job losses fell to 13,300 during 1993 and
7,300 during 1994. During 1995 and 1996, however, manufacturing job
losses increased slightly to 10,100 and 13,900, respectively,
reflecting a slowdown in national manufacturing production activity.
Conditions have slowly improved in the construction industry, where
employment has risen by 18,600 since its low in May 1992. Between 1992
and 1996, this sector's hiring rebound was driven primarily by
increased homebuilding and nonresidential projects. During 1996 and
the first five months of 1997, public works projects and homebuilding
became the growth segments while nonresidential construction lessened
but remained positive.
Nonresidential construction activity, as measured by contract awards,
grew by 19.6% in 1994, 3.0% in 1995, and 7.0% in 1996. More recently,
nonresidential building construction contracts increased by 45.8% in
the first five months of 1997 compared with the same period in 1996.
Residential construction contracts, despite monthly fluctuations,
increased by 17.1% for the first five months of 1997 as compared to
the first five months of 1996 ($989 million and $845 million,
respectively). Nonbuilding or infrastructure construction rose
robustly by 64.0% during this period. Helped by these increases, total
construction contracts rose by 41.0% when comparing the first five
months of 1996 and 1997.
The rising economic trend experienced in the State has led to higher
retail sales, which showed steady growth from 1992 through 1996,
including a 3.8% increase from 1995 to 1996. The higher retail sales,
in turn, produced steady increases in retail trade jobs (both full and
part time). Retail trade employment has risen by nearly 49,000 since a
May 1992 low point. From December 1996 to June 1997, the number of
retail jobs rose by 8,700.
Total new vehicle registrations (new passenger cars and light trucks
and vans) rose in 1994 by 5.8%, declined by 4.4% in 1995, then rose
2.6% in 1996. Through May 1997 however, total new vehicle
registrations rose by 2.8% compared to the same time period in 1996.
Unemployment in the State through June 1997 has been receding.
According to the U.S. Bureau of Labor Statistics, the jobless rate
dropped from 6.8% in 1994 to 6.4% in 1995 and to 6.2% in 1996.
Subsequently, it has dropped to 5.5% for the first six months of 1997.
The insured unemployment rate, i.e., the number of individuals
claiming benefits as a percentage of the number of workers covered by
unemployment insurance, declined from 3.9% during calendar years 1991
and 1992 to 3.3% during 1993 and then averaged 3.2% throughout 1994,
1995, and 1996. As of July 1, 1997, the State's unemployment insurance
trust fund balance stood at $2.2 billion.
The State has benefited from the national recovery. The State's
recovery is in its sixth year and appears to be sustainable now that
the national economy has "soft-landed". While the latest national
indicators show that economic growth accelerated during the first
quarter of this year, the inflation rate remained low.
Business investment expenditures and consumer spending have increased
substantially in the nation as well as in the State. Capital and
consumer spending may very well continue to rise due to the sustained
character of the recovery, although the interest-sensitive
homebuilding industry may provide only a moderate amount of stimulus
both nationally and in the State. It is expected that the employment
and income growth that has and is taking place will lead to further
growth in consumer outlays. Reasons for cautious optimism in the State
include increasing employment levels, a low jobless rate, and a
higher-than-national level of per capita personal income.
If the nation's economic growth rate slows from the robust 5.9% growth
in the first quarter of 1997, the State's economy should have enough
momentum to keep its trend line pointing upwards. Its growth potential
is not yet limited by the labor supply constraints affecting some
other parts of the country. Looking further ahead, prospects for New
Jersey appear favorable. While growth is likely to be slower than in
the nation, the locational advantages that have served New Jersey well
for many years will still be there. Structural changes that have been
going on for years can be expected to continue, with job creation
concentrated most heavily in the service sectors.
There is a Constitutional provision that requires the State to
maintain a balanced budget. The State operates on a fiscal year
beginning July 1 and ending June 30. For example, "Fiscal Year 1997"
refers to the State's fiscal year beginning July 1, 1996 and ending
June 30, 1997. Changes in economic activity in the State and the
nation, consumption of durable goods, corporate financial performance
and other factors that are difficult to predict may result in actual
collections for Fiscal Year 1997 being more or less than forecasted.
The State is bound, however, by the constitutional requirement that no
appropriations law may be enacted if the amount of money appropriated
therein, together with all other prior appropriations made for the
same Fiscal Year, exceeds the total amount of anticipated revenues
available for such Fiscal Year as certified by the Governor. The
General Fund is the fund into which all State revenues not otherwise
restricted by statute are deposited and from which appropriations are
made. The largest part of the total financial operations of the State
is accounted for in the General Fund, which includes revenues received
from taxes and unrestricted by statute, most federal revenues, and
certain miscellaneous revenue items. The appropriation act provides
the basic framework for the operation of the General Fund. The
undesignated General Fund balance at year end for Fiscal Year 1994 was
$926 million, for Fiscal Year 1995 $569 million, and for Fiscal Year
1996 $442 million. For Fiscal Year 1997, the balance at year end in
the undesignated General Fund is estimated to be $269 million.
Legislation approved by the Governor on June 5, 1997 revised funding
provisions applicable to the State retirement systems. The legislation
provides that the value of the assets of the retirement systems shall
be the full fair market value of the assets as of the valuation date
of the valuation reports applicable to Fiscal Year 1998. Additionally,
on the same date, legislation was enacted to authorize the New Jersey
Economic Development Authority (the "Authority") to issue bonds, notes
or other obligations for the purpose of financing in full or in part
the unfunded accrued pension liability for the State's seven
retirement plans. On June 30, 1997, the Authority issued bonds
pursuant to this legislation (the "Pension Bonds"). For Fiscal Year
1997, $368.7 million was provided as the State's contribution to the
State's retirement systems, which appropriation takes into account
funding from the proceeds of the Pension Bonds and the change in the
asset valuation method authorized by the recent legislation
(collectively, the "1997 Pension Transaction"). The appropriation for
the State's required contribution which would have been $664,469,510
has been revised to $250,303,611, thereby resulting in a reduction of
$414 million in the required contribution by the State for Fiscal Year
1998. Between July 1, 1995 and March 31, 1996, independent actuaries
reported that the market value of all assets of the retirement funds
was $47.3 billion compared to a $43.0 billion accumulated benefit
obligation, representing a funding level of 110.1%, determined in
accordance with the principles of the Financial Accounting Standards
Board. The present value of projected benefits, determined in
accordance with the principles of the Government Accounting Standards
Board, of the funds is $49.7 billion, representing a funding level for
projected benefits of 87.4%. As of this date, the consulting actuaries
to the State are in the process of performing the actuarial valuation
and therefore, these numbers do not reflect the impact of the 1997
Pension Transaction. However, it is anticipated that the market value
of all assets of the funds shall exceed the accumulated benefit
obligations.
Federal aid received in the General Fund and Special Transportation
fund amounted to $4.20 billion for the Fiscal Year ended June 30,
1994, $4.62 billion for the Fiscal Year ended June 30, 1995, $4.69
billion for the Fiscal Year ended June 30, 1996, and is projected to
be $5.40 billion for the Fiscal Year ending June 30, 1997 and $6.04
billion for the fiscal year ending June 30, 1998.
The State finances capital projects primarily through the sale of its
general obligation bonds. These bonds are backed by the full faith and
credit of the State. Tax revenues and certain other fees are pledged
to meet the principal and interest payments required to pay the debt
fully. No general obligation debt can be issued by the State without
prior voter approval, except that no voter approval is required for
any law authorizing the creation of a debt for the purpose of
refinancing all or a portion of outstanding debt of the State, so long
as such law requires that the refinancing provide a debt service
savings.
In addition to payment from bond proceeds, capital construction can
also be funded by appropriation of current revenues on a pay-as-you-go
basis. In Fiscal Year 1998, the amount appropriated to this purpose is
$516.0 million of which $380.3 million is for transportation projects.
The aggregate outstanding general obligation bonded indebtedness of
the State as of June 30, 1997 was $3.437 billion. For Fiscal Year
1998, $483.7 million has been appropriated for principal and interest
payments for general obligation bonds.
The State has extensive control over school districts, cities,
counties and local financing authorities. State laws impose specific
limitations on local appropriations, with exemptions subject to state
approval. The State shares the proceeds of a number of taxes, with
funds going for, among other things, local education programs,
homestead rebates, medicaid and welfare programs.
At any given time, there are various numbers of claims and cases
pending against the State, State agencies and employees, seeking
recovery of monetary damages that are primarily paid out of the fund
created pursuant to the Tort Claims Act, N.J.S.A. 59:1-1 ET. SEQ. In
addition, at any given time there are various numbers of contract and
other claims against the State and State agencies, including
environmental claims asserted against the State, among other parties,
arising from the alleged disposal of hazardous waste. The State is
unable to estimate its exposure for these claims. Moreover, the State
is involved in a number of other lawsuits in which the State has the
potential for either a significant loss of revenue or a significant
unanticipated expenditure. Such cases include challenges to its system
of educational funding, the methods by which the State Department of
Human Services shares with county governments, the maintenance
recoveries and costs for residents in State psychiatric hospitals, and
residential facilities for the developmentally disabled, a suit
challenging the constitutionality of hazardous and solid waste
licensure renewal fees collected by the Department of Environmental
Protection, a suit alleging tort and contractual claims against the
State associated with a resource recovery facility, a suit seeking
return of moneys paid by various counties for maintenance of Medicaid
or Medicare eligible residents of institutions and facilities for the
developmentally disabled, a suit challenging assessments upon property
and casualty liability insurers pursuant to the Fair Automobile
Insurance Reform Act, and suits seeking return of moneys paid by
various hospitals pursuant to the Health Care Cost Reform Act of 1992.
NEW JERSEY EDUCATION ASSOCIATION ET AL. V. STATE OF NEW JERSEY ET AL.
represents a challenge to amendments to the pension laws enacted on
June 30, 1994 (P.L. 1994, Chapter 62), which concerned the funding of
the Teachers Pension and Annuity Fund (TPAF), the Public Employee's
Retirement System (PERS), and Police and Fireman's Retirement System
(PFRS), the State Police Retirement System (SPRS) and the Judicial
Retirement System (JRS). The complaint was filed in the United States
District Court of New Jersey on October 17, 1994. The statute, as
enacted, made several changes affecting these retirement systems
including changing the actuarial funding method to projected unit
credit; continuing the prefunding of post-retirement medical benefits
but at a reduced level for TPAF and PERS; revising the employee member
contribution rate to a flat 5% for TPAF and PERS; extending the
phase-in period for the revised TPAF actuarial assumptions; changing
the phase-in period for funding of cost-of-living adjustments and
reducing the inflation assumption for the Cost of Living Adjustment
for all retirement systems; and decreasing the average salary increase
assumption for all retirement systems. Plaintiffs allege that the
changes resulted in lower employer contributions in order to reduce a
general budget deficit. The complaint further alleges that certain
provisions of Chapter 62 violate the contract, due process, and taking
clauses of the United States and New Jersey Constitutions, and further
constitute a breach of the State's fiduciary duty to participants in
TPAF and PERS. Plaintiffs seek to permanently enjoin the State from
administering, enforcing or otherwise implementing Chapter 62. An
adverse determination against the State would have a significant
impact upon the fiscal year 1997 budget. The State has filed a motion
to dismiss and a motion for summary judgment.
On October 6, 1995, the Court issued its opinion in which it dismissed
the State as a party to the action. The only defendant is Treasurer
Clymer. The claims surviving the motion are: (1) breach of trust and
fiduciary duty (against the Treasurer in both his individual and
official capacities); (2) violation of Due Process (against the
Treasurer in both his individual and official capacities); and (3) a
42. U.S.C. (sub-section)1983 claim (against the Treasurer in his
individual capacity).
The forms of relief sought related to these surviving claims are (1) a
declaration that certain provisions of Chapter 62 violate due process
of law under the Fifth and Fourteenth Amendments to the U.S.
Constitution; (2) a declaration that the enactment and implementation
of certain provisions of Chapter 62 constitute a breach of the
fiduciary obligations owed to contributing participants, vested
participants and retirees of the TPAF and PERS; (3) a declaration that
Chapter 62 contravenes the statutory and common law duties to
administer and fund the plans in an actuarially sound and fiscally
responsible manner; (4) a permanent injunction against administering,
enforcing or otherwise implementing certain provisions of Chapter 62;
and (5) directing payment of plaintiffs' attorneys' fees,
disbursements and costs pursuant to 42 U.S.C. (sub-section)1988.
The State filed a motion for reconsideration or, in the alternative,
for certification to the Third Circuit Court of Appeals, of the
remaining claims. By order dated December 19, 1995, the District Court
denied the motion in all respects. On January 29, 1996, the State, on
behalf of Treasurer Clymer, filed a Petition for a Writ of Mandamus
and a Motion for a Stay of the Proceedings below, pending
consideration and disposition of the petition, with the Third Circuit
Court of Appeals. In the petition, Treasurer Clymer asked the Court of
Appeals to direct the District Court to dismiss the complaint or enter
summary judgment in his favor. Alternatively, the Treasurer asked the
Court of Appeals to order the District Court to vacate its order
denying summary judgment and resolve that motion as a matter of law
without discovery or fact finding or to certify the issues for
interlocutory appeal. The Third Circuit Court of Appeals denied the
motion and petition on February 20, 1996. The matter is currently
stayed pending the adoption of the Appropriations Act for Fiscal Year
1998. The State intends to vigorously defend this action.
Currently, the State's general obligation bonds are rated AA+ by
Standard & Poor's, Aa1 by Moody's Investors Service, Inc. and AA+ by
Fitch IBCA, Inc.
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 that would render such information
materially inaccurate.
The economy of Puerto Rico is fully integrated with that of the
United States. In fiscal 1997, 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 1997
Puerto Rico experienced a $ 2.7 billion positive adjusted
merchandise trade balance.
Since fiscal 1985 , personal income, both aggregate and per
capita, has increased consistently each fiscal year. In fiscal
1997 , aggregate personal income was $ 32.1 b illion
($ 30.0 billion in 1992 prices) and personal per capita income
was $ 8,509 ($7,957 in 1992 prices). Gross product in fiscal
1993 was $ 25.1 billion ($24.5 billion in 1992 prices )
and gross product in fiscal 1997 was $ 32.1 billion ($27.7
billion in 1992 prices). This represents an increase in gross
product of 27.7% from fiscal 1993 to 1997 (13.0% in 1992
prices).
Puerto Rico's economic expansion, which has lasted over ten
years, continued throughout the five-year period from fiscal
1993 through fiscal 1997 . Almost every sector of the
economy participated, and record levels of employment were achieved.
Factors behind the continued expansion included
G overnment-sponsored economic development programs, periodic
declines in the exchange value of the U.S. dollar, increases in
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 U.S. average . 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
$ 19.8 billion or 41.2 % of gross domestic product in
fiscal 1997 . The manufacturing sector employed 153,273
workers as of March 1997. Manufacturing in Puerto Rico is now more
diversified than during earlier phases of industrial development. In
the last two decades industrial development has tended to be more
capital intensive and dependent on skilled labor. This gradual shift
is best exemplified by heavy investment in pharmaceuticals ,
scientific instruments, computers, microprocessors, and electrical
products over the last decade. The service sector, which includes
wholesale and retail trade and finance, insurance, 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 1997 , the service
sector generated $ 18.4 b illion in gross domestic product or
38.2% of the total. Employment in this sector grew from 467,000
in fiscal 1993 to 551,000 in fiscal 1997 , a
cumulative increase of 17.8% . This increase was greater
than the 12.9 % cumulative growth in employment over the same
period providing 48% of total employment. The G overnment sector
of the Commonwealth plays an important role in the economy of the
island. In fiscal year 1997 , the Government accounted for
$ 5.2 billion of Puerto Rico's gross domestic product and
provided 10.9 % of the total employment. The construction
industry has experienced real growth since fiscal 1987. In fiscal
1997, investment in construction rose to $4.7 billion, an increase of
14.7% as compared to $4.1 billion for fiscal 1996. Tourism also
contributes significantly to the island economy, accounting for
$2.0 billion of gross domestic product in fiscal 1997 .
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
G overnment 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 G overnment-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 is the improvement and expansion of 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
G overnment's direct contribution to gross domestic product. As
part of this g oal, the G overnment has transferred
certain Go vernmental operations and sold a number of its assets
to private parties. Among these are: (i) the G overnment
sold the assets of the Puerto Rico Maritime Authority; (ii) the
Government executed a five-year management agreement for the
operation and management of the Aqueducts and Sewer Authority by a
private company; (iii) the Aqueducts and Sewer Authority executed
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; (iv) the Electric Power
Authority executed 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; and (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
G overnment provides free health services to low income
individuals through public health facilities owned and administered by
the G overnment to one in which all medical services are
provided by the private sector and the G overnment 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 December 31, 1997, over 1.1
million persons were participating in the program at an estimated
annual cost to Puerto Rico for fiscal 1998 of approximately
$672 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 sold six health
facilities to private companies and is c urrently in
negotiations with other private companies for the sale of
thirteen 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 1986 , as amended (the "Code").
Since 1948, Puerto Rico has promulgated various industrial
incentives laws designed to stimulate industrial investment. Under
these laws, companies engaged in manufacturing and certain other
designated activities were eligible to receive full or partial
exemption from income, property, and other taxes. The most recent of
these laws is Act No. 135 of December 2, 1997 (the "1998 Tax
Incentives Law").
The benefits provided by the 1998 Tax Incentives Law ar e
available to new companies as well as companies currently conducting
tax-exempt operations in Puerto Rico that choose to renegotiate their
existing tax exemption grant. Activities eligible for tax exemption
include manufacturing, certain services performed for markets outside
Puerto Rico, the production of energy from local renewable sources for
consumption in Puerto Rico, and laboratories for scientific and
industrial research. For companies qualifying thereunder, the 1998
Tax Incentives Law imposes income tax rates ranging from 2% to
7%. In addition, it grants 90% exemption from property taxes,
100% exemption from 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
Law 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 Law , companies are able to
repatriate or distribute their profits free of tollgate taxes. In
addition, passive income derived from designated investments will
continue to be fully exempt from income and municipal license
taxes. Individual shareholders of an exempted business will 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 will 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 U.S .
Congress and signed into law by President Clinton on August 20, 1996
(the "1996 Amendments"), the tax credi t, as described
below , is now being phased out over a ten-year period for
existing claimants and is no longer available for corporations that
established 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 U.S . 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,
U.S. corporations that meet certain requirements and elect its
application ("Section 936 Corporations") are entitled to credit
against their U.S . 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 Section 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 Section 936 credit is eliminated for taxable years
beginning in 2006.
PROPOSAL TO EXTEND THE PHASEOUT OF SECTION 30A. During 1997, the
Government of Puerto Rico proposed to Congress the enactment of
a new permanent federal incentive program similar to that
provided under Section 30A. Such a 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. Although thi s proposal, was not
included in the final fiscal 1998 federal budget, President
Clinton's fiscal 1999 budget submitted to Congress again included
these modifications to Section 30A. 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
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and investment
accounts for which it or its affiliates act as investment adviser.
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; the reasonableness
of any commissions; and, if applicable, arrangements for payment of
fund expenses .
If FMR grants investment management authority to a sub-adviser (see
the section entitled "Management Contracts"), that 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
above.
Each fund may execute portfolio transactions with
broker-dealers who provide research and execution services to the
fund or other investment 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 investment accounts;
and effect securities transactions and perform functions
incidental thereto (such as clearance and settlement).
For transactions in fixed-income securities, FMR's selection of
broker-dealers is generally based on the availability of a security
and its price and, to a lesser extent, on the overall quality of
execution and other services, including research, provided by the
broker-dealer.
The receipt of research from broker-dealers that execute transactions
on behalf of a fund may be useful to FMR in rendering
investment management services to that fund or its other
clients, and conversely, such research provided by broker-dealers who
have executed transaction orders on behalf of other FMR clients may be
useful to FMR in carrying out its obligations to a fund. The
receipt of such research has not reduced FMR's normal independent
research activities; however, it enables FMR to avoid the additional
expenses that could be incurred if FMR tried to develop comparable
information through its own efforts.
Fixed-income securities are generally purchased from an issuer or
underwriter acting as principal for the securities, on a net basis
with no brokerage commission paid. However, the dealer is compensated
by a difference between the security's original purchase price and the
selling price, the so-called "bid-asked spread." Securities may also
be purchased from underwriters at prices that include underwriting
fees.
Subject to applicable limitations of the federal securities laws, a
fund may pay a broker-dealer 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 a 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 that
fund or 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.
To the extent permitted by applicable law, FMR is authorized to
allocate portfolio transactions in a manner that takes into account
assistance received in the distribution of shares of the funds or
other Fidelity funds and to use the research services of brokerage and
other firms that have provided such assistance. 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.
FMR may allocate brokerage transactions to broker-dealers
(including affiliates of FMR) who have entered into arrangements with
FMR under which the broker-dealer allocates a portion of the
commissions paid by a fund toward the reduction of that fund's
expenses. The transaction quality must, however, be comparable to
those of other qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for investment 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.
The Trustees of each fund periodically review FMR's
performance of its responsibilities in connection with the placement
of portfolio transactions on behalf of the fund and review the
commissions paid by the fund over representative periods of
time to determine if they are reasonable in relation to the benefits
to the fund.
For the fiscal periods ended November 30, 1998 and 1997, the
portfolio turnover rates were ___ % and ___ %
respectively, for Spartan New Jersey Municipal Income.
Variations in turnover rate may be due to a fluctuating volume of
shareholder purchase and redemption orders, market conditions, or
changes in FMR's investment outlook.
[For the fiscal years ended November 1998, 1997, and 1996, the
funds paid no brokerage commissions.]
The Trustees of each fund have approved procedures in conformity
with Rule 10f-3 under the 1940 Act whereby a fund may purchase
securities that are offered in underwritings in which an affiliate of
FMR participates. These procedures prohibit the funds from directly or
indirectly benefiting an FMR affiliate in connection with such
underwritings. In addition, for underwritings where an FMR affiliate
participates as a principal underwriter, certain restrictions may
apply that could, among other things, limit the amount of securities
that the funds could purchase in the underwriting.
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 or its affiliates ,
investment decisions for each fund are made independently from those
of other funds managed by FMR or investment 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 investment
accounts. Simultaneous transactions are inevitable when several
funds and investment 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 investment
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
Each fund's net asset value per share (NAV) is the value of a
single share. The NAV of each fund is computed by adding the value of
the fund's investments, cash, and other assets, subtracting its
liabilities, and dividing the result by the number of shares
outstanding.
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.
The procedures set forth above need not be used to determine the
value of the securities owned by the 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. For example, securities and other assets for which there
is no readily available market value may be valued in good faith by a
committee appointed by the Board of Trustees. In making a good faith
determination of the value of a security, the committee may review
price movements in futures contracts and American Depositary Receipts
(ADRs), market and trading trends, the bid/ask quotes of brokers and
off-exchange institutional trading.
MONEY MARKET FUNDS. 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 market value.
The amortized cost value of an instrument may be higher or lower than
the price a fund would receive if it sold the instrument.
Securities of other open-ended investment companies are valued at
their respective NAVs.
At such intervals as they deem appropriate, the Trustees consider the
extent to which NAV calculated by using market valuations would
deviate from the $1.00 per share calculated using amortized
cost valuation. If the Trustees believe that a deviation from a
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
A fund 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. The share price of a
bond fund, th e yield of a fund , and total return
fluctuate in response to market conditions and other factors, and the
value of a fund's shares when redeemed may be more or less than their
original cost.
YIELD CALCULATIONS (MONEY MARKET FUNDS).To compute the yield for
a money market fund 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. A
money market fund also may calculate an effective
yield by compounding the base period return over a one-year period. In
addition to the current yield, a money market fund may
quote yields in advertising based on any historical seven-day period.
Yields for a money market fund are calculated on the same basis
as other money market funds, as required by applicable
regulation.
Yield information may be useful in reviewing a fund's performance and
in providing a basis for comparison with other investment
alternatives. However, a 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 a 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 a fund's
current yield. In periods of rising interest rates, the opposite can
be expected to occur.
YIELD CALCULATIONS (BOND FUND). Yields for the fund are
computed by dividing the fund's interest and income for a given
30-day or one-month period, net of expenses, by the average number of
shares entitled to receive distributions during the period,
dividing this figure by the fund's 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
short-term trading fee. Income is calculated for purposes of
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 calculating a 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, a 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.
In calculating a fund's yield, a fund may from time to time use a
portfolio security's coupon rate instead of its yield to maturity in
order to reflect the risk premium on that security. This practice will
have the effect of reducing a fund's yield.
Yield information may be useful in reviewing a fund's performance
and in providing a basis for comparison with other investment
alternatives. However, a 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 a 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.
The tax-equivalent yield of a fund 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
specified combined federal and state income tax rate. If only a
portion of a fund's yield is tax-exempt, only that portion is adjusted
in the calculation.
The following tables show the effect of a shareholder's tax status on
effective yield under federal and , state income tax laws for
1999 . The second table 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 _ % to _% . Of course, no assurance can be
given that a fund will achieve any specific tax-exempt yield. While
a state municipal fund invest s principally in obligations whose
interest is exempt from federal and state income tax, other income
received by the fund may be taxable. The tables do not take
into account local taxes, if any, payable on fund distributions.
Use the first table to find your approximate effective tax bracket
taking into account federal and state taxes for 1999 .
1999 TAX RATES

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Taxable Income* New Jersey State
Marginal Rate Combined
Federal and State
Effective Rate**

Single Return Joint Return Federal
Marginal Rate

$ $ $ $ % % %

% % %

</TABLE>

<TABLE>
<CAPTION>
<S> <C>
To match these

tax-free yields: Your taxable investment would have to earn the following yield:

</TABLE>

A fund may invest a portion of its assets in obligations that
are subject to state or federal income taxes. When a fund invests in
these obligations, its tax-equivalent yield will be lower. In the
table above, the tax-equivalent yields are calculated assuming
investments are 100% federally and state 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 a fund's
NAV over a stated period. A cumulative total return reflects actual
performance over a stated period of time. A verage 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 a fund.
In addition to average annual total returns, the fund may quote
unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and
cumulative total returns may be quoted as a percentage or as a dollar
amount, and may be calculated for a single investment, a series of
investments, or a series of redemptions, over any time period. Total
returns may be broken down into their components of income and capital
(including capital gains 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. Total returns may or may not include the
effect of the account closeout fee or the small account fee.
Excluding a fund's small account fee or account closeout 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 .
NET ASSET VALUE. Charts and graphs using a fund's NAVs ,
adjusted NAVs , and benchmark indexes 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.
CALCULATING HISTORICAL MONEY MARKET FUND RESULTS. The
following tables show performance for each fund calculated including
certain fund expenses.
CALCULATING HISTORICAL BOND FUND RESULTS. The following
table shows performance for the fund calculated including certain fund
expenses.
For Spartan New Jersey Municipal Income total returns do [not]
include the effect of the fund's 0.50% short-term trading fee,
applicable to shares held less than 180 days.
HISTORICAL MONEY MARKET FUND RESULTS. The following table shows
eac h fund's 7-day yield, tax-equivalent yield , and total
return for the fiscal periods ended November 30, 1998. Total
return figures include the effect of the $5.00 account closeout fee
based on an average size account.
HISTORICAL BOND FUND RESULTS. The following tables show each
fund's yield, tax-equivalent yield and total return for the fiscal
periods ended November 30, 1998.
The tax-equivalent yields for Spartan New Jersey Municipal Money
Market are based on a combined effective federal and, state income
tax rate of __%, __% and __%, respectively] and reflects that,
as of November 30, 1998 [none/an estimated __%[ __%, and __%]]
of [the/each] fund's income was subject to state taxes. Note that
each fund may invest in securities whose income is subject to
the federal alternative minimum tax.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns

Thirty-/Sev Tax- One Five Life of One Five Life of
en-Day Equivalent Year Years Fund* Year Years Fund*
Yield Yield

Spartan NJ Muni % % % % % % % %
Money Market

</TABLE>

* From May 1, 1990 (commencement of operations).
Note: If FMR had not reimbursed certain fund expenses during these
periods, [ [the/each] fund/[Name(s) of Fund(s) in Reimbursement]]'s
total returns would have been lower.
Note: If FMR had not reimbursed certain fund expenses during these
periods, [[the/each] fund/[Name(s) of Fund(s) in Reimbursement]]'s
yield and tax equivalent yield would have been ___% and __%,
respectively.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns

Thirty-/Sev Tax- One Five Life of One Five Life of
en-Day Equivalent Year Years Fund* Year Years Fund*
Yield Yield

Fidelity NJ Muni % % % % % % % %
Money Market

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns

Thirty-/Sev Tax- One Five Life of One Five Life of
en-Day Equivalent Year Years Fund* Year Years Fund*
Yield Yield

Spartan NJ
Muni Income % % % % % % % %

</TABLE>

Note: If FMR had not reimbursed certain fund expenses during these
periods, [[ the/each] fund/[Name(s) of Fund(s) in
Reimbursement]]'s total returns would have been lower.
Note: If FMR had not reimbursed certain fund expenses during these
periods, [[the/each] fund/[Name(s) of Fund(s) in Reimbursement]]'s
yield and tax equivalent yield would have been ___% and __%,
respectively.
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 Standard & Poor's 500 Index (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 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 10 year period ended or
life of each fund , as applicable , assuming all distributions were
reinvested. Total returns are based on past results and are not an
indication of future performance . Tax consequences of different
investments have not been factored into the figures below.
During the period from May 1, 1990 (commencement of operations) to
November 30, 199 8 , a hypothetical $10,000 investment in Spartan
New Jersey Municipal Money Market would have grown to $ ______.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN NEW JERSEY MUNICIPAL MONEY MARKET INDEXES

[Y ear/Period] Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living[**]
$10,000 Dividend Capital Gain
Investment Distributions Distributions

19__ $ $ $ $ $ $ $

19__* $ $ $ $ $ $ $

</TABLE>

* From May 1, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Spartan
New Jersey Municipal Money Market on May 1, 1990, 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
$ ______ . 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
$ ______ for dividends. The money market funds did not
distribute any capital gains during the period. The figures in the
table do not include the effect of [the fund's/[Name of Fund(s)]]
__% sales charge (which was in effect during the period _____
through _____)], account closeout fee, or its [REDEMPTION
FEE AMOUNT]%: short-term trading fee applicable to shares held less
than [REDEMPTION FEE TIME] [days/years]].
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Fidelity New Jersey Municipal Money Market would
have grown to $_______.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY NEW JERSEY MUNICIPAL MONEY MARKET INDEXES

[Year/Period] Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living[**]
$10,000 Dividend Capital Gain
Investment Distributions Distributions

19__ $ $ $ $ $ $ $

19__* $ $ $ $ $ $ $

</TABLE>

* From March 17, 1988 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in
Fidelity New Jersey Municipal Money Market on December 1,
1999 , 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 $______. 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 $______ for
dividends. The money market funds did not distribute any
capital gains during the period. The figures in the table do not
include the effect of [the fund's/[Name of Fund(s)]] __% sales charge
(which was in effect during the period _____ through _____), account
closeout fee, or its [REDEMPTION FEE AMOUNT]%: short-term trading fee
applicable to shares held less than [REDEMPTION FEE TIME]
[days/years]].
During the 10-year period ended November 30, 1998, a hypothetical
$10,000 investment in Spartan New Jersey Municipal Income would have
grown to $________.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN NEW JERSEY MUNICIPAL INCOME INDEXES

[Year/Period] Value of Value of Value of Total S&P 500 DJIA Cost of
Ended Initial Reinvested Reinvested Value Living[**]
$10,000 Dividend Capital Gain
Investment Distributions Distributions

19__ $ $ $ $ $ $ $

19__* $ $ $ $ $ $ $

</TABLE>

* From January 1, 1998 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 in Spartan
New Jersey Municipal Income on December 1, 1999 , 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 $______. 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 $______ for dividends
and $_____ for capital gain distributions. The figures in the
table do not include the effect of [the fund's/[Name of Fund(s)]]
__% sales charge (which was in effect during the period _____ through
_____), account closeout fee, or its 0.50% short-term trading 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
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 indexes prepared by Lipper or other
organizations. When comparing these indexes , 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, a fund may quote Morningstar, Inc. in
its advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising. The bond fund may advertise
risk ratings, including symbols or numbers, prepared by independent
rating agencies.
A fund's performance may also be compared to that of the
benchmark index representing the universe of securities in which
the fund may invest. The total return of the index reflects
reinvestment of all dividends and capital gains paid by securities
included in the index. Unlike a fund's returns, however, the
index's returns do not reflect brokerage commissions, transaction
fees, or other costs of investing directly in the securities included
in the index.
The municipal bond fund may compare its performance to the Lehman
Brothers Municipal Bond Index, a market capitalization-weighted index
for investment-grade municipal bonds with maturities of one year or
more. In addition , Spartan New Jersey Municipal Income may compare
its performance to that of the Lehman Brothers New Jersey Municipal
Bond Index with Port Authority of NY/NJ, a market
capitalization-weighted index of New Jersey investment-grade
municipal bonds, including Port Authority of New York and New Jersey
bonds, with maturities of one year or more. 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 CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different
indexes .
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 indexes that may be developed
and made available in the future.
The money market funds 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)/ All Tax-Free , which is reported in IBC's
MONEY FUND REPORT(trademark), covers over ___ tax-free money
market funds.
The bond fund may compare and contrast in advertising the
relative advantages of investing in a mutual fund versus an individual
municipal bond. Unlike municipal bond 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 sales
charges of many municipal bond mutual funds are lower than the
purchase cost of individual municipal bonds, which are generally
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 a 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 bond fund may also
discuss or illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS indicate price movements over specific periods of
time for a bond fund . Each point on the momentum indicator
represents a 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, 1998 , FMR advised over $__ billion in
municipal fund assets, $__ billion in taxable fixed-income
fund assets, $__ billion in money market fund assets, $___ billion
in equity fund assets, $__ billion in international fund assets, and
$___ 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, EXCHANGE AND REDEMPTION INFORMATION
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing each 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.
DISTRIBUTIONS AND TAXES
DIVIDENDS. To the extent that each fund's income is designated as
federally tax-exempt interest, the dividends declared by the fund are
also federally tax-exempt. Short-term capital gains are taxable as
dividends, but do not qualify for the dividends-received
deduction.
Each 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.
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 is 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.
A portion of the gain on municipal bonds purchased at market
discount after April 30, 1993 is taxable to shareholders as ordinary
income, not as capital gains. Dividends resulting from a
recharacterization of gain from the sale of bonds purchased at 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
is free from federal income tax.
NEW JERSEY TAX CONSEQUENCES. In order to pass through tax-exempt
interest and dividends for New Jersey Gross Income Tax purposes, among
other requirements, at the close of each quarter of the tax year, the
fund must have not less than 80% of the aggregate principal amount of
the fund's investments (excluding financial options, futures, forward
contracts and similar financial instruments relating to
interest-bearing obligations) invested in obligations issued by New
Jersey or New Jersey local government entities or certain other
federal and New Jersey tax-exempt obligations of qualifying issuers
(the "80% Test"). In the event the fund does not meet the 80% Test,
distributions by the fund will be taxable to shareholders for New
Jersey Gross Income Tax purposes. Interest on indebtedness incurred or
continued to purchase or carry fund shares is not deductible either
for New Jersey Gross Income Tax purposes or Federal income tax
purposes to the extent attributable to exempt-interest dividends.
Exempt-interest dividends and gains paid to a corporate shareholder
will be subject to the New Jersey Corporation Business (Franchise) Tax
and the New Jersey Corporation Income Tax.
On February 21, 1997, the Tax Court of New Jersey ruled against the
Division of Taxation and held that distributions paid by mutual funds
are immune from taxation by New Jersey to the extent that the
distributions are attributable to interest earned on U.S. government
obligations regardless of whether the 80% Test is met. As a result of
the court decision, the State of New Jersey could be forced to pay
substantial amounts in tax refunds to state residents who are mutual
fund investors. At this time the effect of this litigation cannot be
evaluated.
CAPITAL GAINS DISTRIBUTIONS. Each fund's capital gains
distributions are federally taxable to shareholders at a
rate based generally on the length of time the securities on which the
gain was realized were held, regardless of the length of time those
shares on which the distribution is received have been held. Each
money market fund may distribute any net realized capital gains once a
year or more often, as necessary.
As of November 30, 199_, [the/each] [fund/[Name(s) of Fund(s)]]
had a capital loss carryforward aggregating approximately $____. This
loss carryforward, of which $___, $___, and $___will expire on
November 30, 199_, ____, and ____ , respectively, is available to
offset future capital gains.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code 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.
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. It is up to you or your tax preparer to determine
whether the sale of shares of a fund resulted in a capital gain or
loss or other tax consequence to you . 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.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. The Board of Trustees governs
each fund and is responsible for protecting the interests of
shareholders. The Trustees are experienced executives who meet
periodically throughout the year to oversee each fund's activities,
review contractual arrangements with companies that provide services
to each fund, and review each fund's performance. 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 or its affiliates. The business address of
each Trustee, Member of the Advisory Board, and officer who is an
"interested person" (as defined in the 1940 Act ) 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 ( 68 ), 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.
(1998) , Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc .
J. GARY BURKHEAD (57 ), 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 and 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 . 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 a Director of
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). Mr. Gates also is a Trustee of the Forum for
International Policy and of the Endowment Association of the College
of William and Mary. In addition, he is a member of the National
Executive Board of the Boy Scouts of America.
E. BRADLEY JONES ( 71 ), 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
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK ( 65 ), 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 National Arts Stabilization Inc., Chairman of
the Board of Trustees of the Greenwich Hospital Association,
Director of the Yale-New Haven Health Services Corp. (1998), 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 ( 55 ), Trustee, is Vice Chairman and Director of
FMR . 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 ( 65 ), 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 ( 69 ), 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 ( 65 ), Trustee (1993), is Chairman of the Board,
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).
*ROBERT C. POZEN ( 52 ), 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. ( 1998 ), 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 ( 44 ), is Vice President of Bond Funds,
G roup L eader of the Bond Group, Senior Vice President of
FMR (1997), and Vice President of FIMM (1998 ). Mr. Churchill
joined Fidelity in 1993 as Vice President and Group Leader of Taxable
Fixed-Income Investments.
BOYCE I. GREER ( 41 ), is Vice President of Money Market Funds
(1997), Group Leader of the Money Market Group (1997), Senior Vice
President of FMR (1997), and Vice President of FIMM (1998). 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).
FRED L. HENNING, JR. ( 5 8), is Vice President of Fidelity's
Fixed-Income Group (1995), Senior Vice President of FMR (1995),
and Senior Vice President of FIMM (1998) . Before assuming his
current responsibilities, Mr. Henning was head of Fidelity's Money
Market Division.
NORM LIND (42), is Vice President of Spartan New Jersey Municipal
Income Fund (1996) and other funds advised by FMR. Prior to his
current responsibilities, Mr. Lind managed a variety of Fidelity
funds.
SCOTT ORR (36), is Vice President of Spartan New Jersey Municipal
Money Market Fund (1996) and Fidelity New Jersey Municipal Money
Market Fund (1996) and other funds advised by FMR. Prior to his
current responsibilities, Mr. Orr has managed a variety of Fidelity
funds.
ERIC D. ROITER ( 50 ), 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 ( 51 ), 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).
STANLEY N. GRIFFITH (52), Assistant Vice President (1998), is
Assistant Vice President of Fidelity's Fixed-Income Funds (1998) and
an employee of FMR Corp.
JOHN H. COSTELLO ( 52 ), Assistant Treasurer, is an employee of
FMR.
LEONARD M. RUSH ( 52 ), 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 (40), Assistant Treasurer (1996), is Assistant
Treasurer of Fidelity's Fixed-Income Funds (1998) 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 , 1998, or
calendar year ended December 31, 1997, as applicable.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
COMPENSATION TABLE
Trustees Aggregate Aggregate Aggregate Total
and Compensation Compensation Compensation Compensation
Members of the Advisory Board from from from from the
Spartan NJ Fidelity NJ Spartan NJ Muni Fund Complex*,A
Muni Money Muni Money Income[B,]E
Market[B,]C Market[B,]C

J. Gary Burkhead** $ 0 $ 0 $ 0 $ 0

Ralph F. Cox $ $ $ $ 214,500

Phyllis Burke Davis $ $ $ $ 210,000

Robert M. Gates*** $ $ $ $176,000

Edward C. Johnson 3d** $ 0 $ 0 $ 0 $ 0

E. Bradley Jones $ $ $ $ 211,500

Donald J. Kirk $ $ $ $ 211,500

Peter S. Lynch** $ 0 $ 0 $ 0 $ 0

William O. McCoy**** $ $ $ $ 214,500

Gerald C. McDonough $ $ $ $ 264,500

Marvin L. Mann $ $ $ $ 214,500

Robert C. Pozen** $ 0 $ 0 $ 0 $ 0

Thomas R. Williams $ $ $ $ 214,500

</TABLE>

* Information is for the calendar year ended December 31, 1997 for 230
funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated
by FMR.
*** Mr. Gates was appointed to the Board of Trustees of
Fidelity Court Street Trust effective March 1, 1997. Mr. Gates
was elected to the Board of Trustees of Fidelity Court Street Trust
II on December 17, 1997 .
**** Mr. McCoy was appointed to the Board of Trustees of Fidelity
Court Street Trust effective January 1, 1997. Mr. McCoy was
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 as
follows: Ralph F. Cox, $53,699; Marvin L. Mann, $53,699; and
Thomas R. Williams, $62,462.
B Compensation figures include cash, and may include amounts
required to be deferred and amounts deferred at the election of
Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__; Phyllis Burke Davis, $__;
Robert M. Gates, $__; E. Bradley Jones, $__; Donald J. Kirk, $__;
William O. McCoy, $__; Gerald C. McDonough, $__; Marvin L. Mann, $__;
and Thomas R. Williams, $__.
D The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__; Phyllis Burke Davis, $__;
Robert M. Gates, $__; E. Bradley Jones, $__; Donald J. Kirk, $__;
William O. McCoy, $__; Gerald C. McDonough, $__; Marvin L. Mann, $__;
and Thomas R. Williams, $__.
E The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__; Phyllis Burke Davis, $__;
Robert M. Gates, $__; E. Bradley Jones, $__; Donald J. Kirk, $__;
William O. McCoy, $__; Gerald C. McDonough, $__; Marvin L. Mann, $__;
and Thomas R. Williams, $__.
F Certain of the non-interested Trustees' aggregate compensation
from [the/a] fund includes accrued voluntary deferred compensation as
follows: [trustee name, dollar amount of deferred compensation, fund
name]; [trustee name, dollar amount of deferred compensation, fund
name]; and [trustee name, dollar amount of deferred compensation, fund
name].
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (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 subject to vesting and 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, approximately __ % of [Fund Name(s)]'s total
outstanding shares was held by FMR and an FMR affiliates. FMR Corp. is
the ultimate parent company of FMR and [this/these] FMR affiliate[s]].
By virtue of his ownership interest in FMR Corp., as described in the
"Control of Investment Advisers" section on page ___, Mr. Edward C.
Johnson 3d, President and Trustee of the fund, may be deemed to be a
beneficial owner of these shares. As of the above date, with the
exception of Mr. Johnson 3d's deemed ownership of [Fund Name(s)]'s
shares, the Trustees, Members of the Advisory Board, and officers of
the funds owned, in the aggregate, less than __% of each fund's total
outstanding shares.
As of __________ , the Trustees, Members of the Advisory Board,
and officers of each fund owned, in the aggregate, less than
__ % of [[each fund/[Fund Name(s)]]'s total outstanding
shares.
As of __________, the following owned of record or beneficially 5%
or more (up to and including 25%) of [[each fund/[Fund Name(s)]]'s
outstanding shares:
As of, approximately ____% of [NAME OF FUND]'s total outstanding
shares were held by [NAME OF SHAREHOLDER]; approximately ___% of [NAME
OF FUND]'s total outstanding shares were held by [NAME OF
SHAREHOLDER]; and approximately ___% of [NAME OF FUND]'s total
outstanding shares were held by [NAME OF SHAREHOLDER].
A shareholder owning of record or beneficially more than 25% of a
fund's outstanding shares may be considered a controlling person. That
shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other
shareholders.
CONTROL OF INVESTMENT ADVISERS
FMR Corp., organized in 1972, is the ultimate parent company of FMR
and FIMM. 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 investment 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.
MANAGEMENT CONTRACTS
Each fund has entered into a management contract with FMR, pursuant
to which FMR furnishes investment advisory and other services.
MANAGEMENT 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 the
fund in accordance with its investment objective, policies and
limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing the 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 (FIDELITY NEW JERSEY MUNICIPAL MONEY
MARKE T.) In addition to the management fee payable to FMR and the
fees payable to the transfer, dividend disbursing, and shareholder
servicing agent and pricing and bookkeeping agent, the fund
pays all of its expenses that are not assumed by those parties. The
fund pays for the typesetting, printing, and mailing of its proxy
materials to shareholders, legal expenses, and the fees of the
custodian, auditor and non-interested Trustees. The fund's management
contract further provides that the fund 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.
Other expenses paid by the fund include interest, taxes, brokerage
commissions, the fund's proportionate share of insurance premiums and
Investment Company Institute dues, and the costs of registering shares
under federal securities laws and making necessary filings under state
securities laws. The fund is also liable for such non-recurring
expenses as may arise, including costs of any litigation to which the
fund may be a party, and any obligation it may have to indemnify its
officers and Trustees with respect to litigation.
MANAGEMENT-RELATED EXPENSES (SPARTAN NEW JERSEY MUNICIPAL MONEY
MARKE T AND SPARTAN NEW JERSEY MUNICIPAL INCOME .) Under the
terms of its management contract with each fund, 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 Spartan New Jersey Municipal Money
Market and Spartan New Jersey Municipal Income 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 New Jersey Municipal Money Marke t and
Spartan New Jersey Municipal Income each pays FMR a monthly
management fee at the annual rate of 0.50 % and 0.55 %,
respectively, of the fund's average net assets throughout the
month.
The management fee paid to FMR by Spartan New Jersey Municipal
Money Marke t and Spartan New Jersey Municipal Income is
reduced by an amount equal to the fees and expenses paid by the fund
to the non-interested Trustees.
For the services of FMR under the management contract, Fidelity New
Jersey Municipal Money Market pays FMR a monthly management fee
which has two components: a group fee rate and an individual fund fee
rate.
The group fee rate is based on the monthly average net assets of all
of the registered investment companies with which FMR has management
contracts.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES

Average Group Annualized Group Net Effective Annual Fee
Assets Rate Assets Rate

0 - $3 billion .3700% $ 0.5 billion .3700%

3 - 6 .3400 25 .2664

6 - 9 .3100 50 .2188

9 - 12 .2800 75 .1986

12 - 15 .2500 100 .1869

15 - 18 .2200 125 .1793

18 - 21 .2000 150 .1736

21 - 24 .1900 175 .1690

24 - 30 .1800 200 .1652

30 - 36 .1750 225 .1618

36 - 42 .1700 250 .1587

42 - 48 .1650 275 .1560

48 - 66 .1600 300 .1536

66 - 84 .1550 325 .1514

84 - 120 .1500 350 .1494

120 - 156 .1450 375 .1476

156 - 192 .1400 400 .1459

192 - 228 .1350 425 .1443

228 - 264 .1300 450 .1427

264 - 300 .1275 475 .1413

300 - 336 .1250 500 .1399

336 - 372 .1225 525 .1385

372 - 408 .1200 550 .1372

408 - 444 .1175

444 - 480 .1150

480 - 516 .1125

Over 516 .1100

The group fee rate is calculated on a cumulative basis pursuant to the
graduated fee rate schedule shown above on the left. The schedule
above on the right shows the effective annual group fee rate at
various asset levels, which is the result of cumulatively applying the
annualized rates on the left. For example, the effective annual fee
rate at $___ billion of group net assets - the approximate level for
N ovember 1998 - was __%, which is the weighted average of the
respective fee rates for each level of group net assets up to $__
billion.
The individual fund fee rate for Fidelity New Jersey Municipal
Money Market is 0.25%. Based on the average group net assets of
the funds advised by FMR for November 1998 , the fund's annual
management fee rate would be calculated as follows:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Group Fee Rate Individual Fund Fee Rate Management
Fee Rate

Fidelity NJ Muni 0.___% + 0. 25 % = 0.___%
Money Market

</TABLE>

One-twelfth of the management fee rate is applied to the fund's
average net assets for the month, giving a dollar amount
which is the fee for that month.
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
reducing management fees for Spartan New Jersey Municipal Money
Market and Spartan New Jersey Municipal Income .

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Years Ended Amount of Management Fees
November 30 Credits Reducing Paid to FMR
Management Fees

Spartan NJ Muni Money Market 1998 $ $ *

1997 $ $ *

1997** $ $ *

1996** $ $ *

Fidelity NJ Muni Money Market 1998 $ $

1997 $ $

1996 $ $

Spartan NJ Muni Income 1998 $ $ *

1997 $ $ *

1996 $ $ *

</TABLE>

* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
** Spartan New Jersey Municipal Money Market's fiscal year end
changed from October 31 to November 30 effective November 30,
1997.
(dagger) On [month] [day], 19__, FMR reduced the [management
fee/individual fund fee] rate paid by [Name(s) of Fund(s)] from __% to
__%.
During the reporting period, FMR voluntarily modified the
breakpoints in the group fee rate schedule[s] on January 1, 1996 to
provide for lower management fee rates as FMR's assets under
management increase.
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 ) which is subject to
revision or termination. 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.
During the past three fiscal years, FMR voluntarily a greed to
reimburse Spartan New Jersey Municipal Money Market if and to
the extent that the fund's aggregate operating expenses,
including management fees, were in excess of an annual rate of its
average net assets. The table below shows the periods of reimbursement
and levels of expense limitations ; the dollar amount of management
fees incurred under the fund's contract before reimbursement; and the
dollar amount of management fees reimbursed by FMR under the expense
reimbursement for each period.
The reimbursement arrangement that is in effect for [[the
fund/[Name(s) of Fund(s)]] will continue through [month] [day], 19__,
after which time FMR may elect to discontinue it.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Periods of Aggregate Fiscal Years Management Amount of
Expense Limitation Operating Ended Fee Before Management
From To Expense [ Month Day ] Reimbursement Fee
Limitation Reimbursement
Spartan NJ Muni Month, day, Month, day, -- 1998 $ * $
Money Market year year

Month, day, Month, day, % 1997 $ * $
year year

Month, day, Month, day, % 1996 $ * $
year year

</TABLE>

* After reduction of fees and expenses paid by the fund to the
non-interested Trustees.
SUB-ADVISER. On behalf of Spartan New Jersey Municipal Money Market
and Fidelity New Jersey Municipal Money Market , FMR has entered
into a sub-advisory agreement with FIMM pursuant to which FIMM has
primary responsibility for choosing investments for the funds.
Previously, FMR Texas Inc. (FMR Texas) had primary responsibility for
providing investment management services to the funds. On
January 23, 1998, FMR Texas was merged into FIMM, which succeeded to
the operations of FMR Texas.
On behalf of Spartan New Jersey Municipal Income, FMR has entered
into a sub-advisory agreement with FIMM pursuant to which FIMM has
primary responsibility for choosing investments for the fund.
Under the terms of the sub-advisory agreements, FMR pays FIMM fees
equal to 50% of the management fee payable to FMR under its management
contract with each fund. The fees paid to FIMM are not reduced by any
voluntary or mandatory expense reimbursements that may be in effect
from time to time.
Fees paid to FMR Texas by FMR on behalf of Spartan New Jersey
Municipal Money Market and Fidelity New Jersey Municipal Money
Market for the past three fiscal years are shown in the table
below.

<TABLE>
<CAPTION>
<S> <C> <C>
Fund Fiscal Year Ended November 3 0 Fees Paid to FMR Texas

Spartan NJ Muni Money Market 1998 $

1997 $

1997* $

1996* $

Fidelity NJ Muni Money Market 1998 $

1997 $

1996 $

</TABLE>

* Spartan New Jersey Municipal Money Market's fiscal year end
changed from October 31 to November 30 effective November 30, 1997.
On behalf of Spartan New Jersey Municipal Money Market and Fidelity
New Jersey Municipal Money Market, for the fiscal year ended November
30, 1998, FMR paid FIMM fees of $__ and $__, respectively.
DISTRIBUTION SERVICES
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR. 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 the fund, which are
continuously offered at NAV. Promotional and administrative expenses
in connection with the offer and sale of shares are paid by FMR.
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 providing services intended to
result in the sale of fund shares and/or shareholder
support services. In addition, each Plan provides that FMR,
directly or through FDC, may pay intermediaries , such as
banks, broker-dealers and other service-providers, that provide
those services. Currently, the Board of Trustees has
authorized such payments for shares.
Payments made by FMR either directly or through FDC to
intermediaries for the fiscal year ended 1998 amounted to $____ [for
[Fund Name]], $____ [for [Fund Name]], and $_____ [for [Fund
Name].
FMR made no payments either directly or through FDC to
intermediaries for the fiscal year ended 1988 .
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 not 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 or stabilization of cash flows 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 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.
TRANSFER AND SERVICE AGENT AGREEMENTS
Each fund has entered into a transfer agent agreement with UMB,
which is located at 1010 Grand Avenue, Kansas City, Missouri .
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 account fee
and an asset-based fee each paid monthly with respect to each
account in a fund. For retail accounts and certain institutional
accounts, these fees are based on account size and fund type. For
certain institutional retirement accounts, these fees are based on
fund type. For certain other institutional retirement accounts, these
fees are based on account type (i.e., omnibus or non-omnibus) and, for
non-omnibus accounts, fund type. The account fees are subject to
increase based on postage rate changes.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
In addition, FSC collects a $5.00 exchange fee for each exchange
out of Spartan New Jersey Municipal Money Market.
FSC also collects Spartan New Jersey Municipal Money Market $5.00
account closeout fee.
FSC also collects Spartan New Jersey Municipal Money Market $2.00
checkwriting fee.
FSC also collects Spartan New Jersey Municipal Money Market $5.00
wire transaction fee.
In addition, UMB receives the pro rata portion of the transfer agency
fees applicable to shareholder accounts in a qualified state
tuition program (QSTP), as defined under the Small Business Job
Protection Act of 1996, managed by FMR or an affiliate and each
Fidelity Freedom Fund, a fund of funds managed by an FMR affiliate,
according to the percentage of the QSTP's or 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, an affiliate of FMR.
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. The annual fee rates for pricing and bookkeeping services are
.0175% for Fidelity New Jersey Municipal Money Market of the
first $500 million of average net assets and .0075% of average net
assets in excess of $500 million. The fee, not including reimbursement
for out-of-pocket expenses, is limited to a minimum of $40,000 and a
maximum of $800,000 per year.
Pricing and bookkeeping fees, including reimbursement for
out-of-pocket expenses, paid by Fidelity New Jersey Municipal Money
Market to FSC for the past three fiscal years are shown in the
table below.
Fund 199 8 199 7 199 6

Fidelity NJ Muni Money Market $ $ $

For Spartan New Jersey Municipal Money Market and Spartan New
Jersey Municipal Income , 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.
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Spartan New Jersey Municipal Money Market and
Fidelity New Jersey Municipal Money Market are funds of Fidelity Court
Street Trust II, an open-end management investment company organized
as a Delaware business trust on June 20, 1991. Prior to January 10,
1998, Spartan New Jersey Municipal Money Market was a fund of Fidelity
Beacon Street Trust, an open-end management investment company
organized as a Delaware business trust on June 19, 1979. Fidelity New
Jersey Municipal Money Market acquired all of the assets of Fidelity
New Jersey Tax-Free Money Market Portfolio, a series of Fidelity Court
Street Trust on February 28, 1992 pursuant to an agreement approved by
shareholders on December 11, 1991. Currently, there are five funds of
Fidelity Court Street Trust II: Fidelity Connecticut Municipal Money
Market Fund, Fidelity New Jersey Municipal Money Market Fund, Spartan
Connecticut Municipal Money Market Fund, Spartan New Jersey Municipal
Money Market Fund, and Spartan Florida Municipal Money Market Fund.
The Trustees are permitted to create additional funds in the
trust.
Spartan New Jersey Municipal Income is a fund of Fidelity Court
Street Trust, an open-end management investment company organized as a
Massachusetts business trust on April 21, 1977. Currently, there are
four funds in Fidelity Court Street Trust: Spartan Municipal Income
Fund, Spartan Connecticut Municipal Income Fund, Spartan New Jersey
Municipal Income Fund, and Spartan Florida Municipal Income Fund. The
Trustees are permitted to create additional funds in the trust.
The assets of the Massachusetts trust received for the issue or
sale of shares of each of its funds and all income, earnings, profits,
and proceeds thereof, subject to the rights of creditors, are
allocated to such fund, and constitute the underlying assets of such
fund. The underlying assets of each fund in the Massachusetts trust
shall be charged with the liabilities and expenses attributable
to such fund. Any general expenses of the Massachusetts trust shall be
allocated between or among any one or more of its funds.
The assets of the Delaware trust received for the issue or sale of
shares of each of its funds and all income, earnings, profits, and
proceeds thereof, subject to the rights of creditors, are allocated to
such fund, and constitute the underlying assets of such fund. The
underlying assets of each fund in the Delaware trust shall be charged
with the liabilities and expenses attrib utable to such fund. Any
general expenses of the Delaware trust shall be allocated between or
among any one or more of its funds.
SHAREHOLDER LIABILITY - MASSACHUSETTS TRUST. The Massachusetts trust
is an entity commonly known as a "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 relating to the trust 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 shareholder or former shareholder held
personally liable for the obligations of the fund solely by reason of
his or her being or having been a shareholder and not because of his
or her acts or omissions or for some other reason. 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 a
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.
SHAREHOLDER 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. The
Trust Instrument provides that the 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 trust or the Trustees relating to the
trust or to a fund shall include a provision limiting the obligations
created thereby to the trust or to one or more funds and its or their
assets. The Trust Instrument further provides that shareholders of a
fund shall not have a claim on or right to any assets belonging to any
other fund.
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 solely by reason of his or
her being or having been a shareholder and not because of his or her
acts or omissions or for some other reason. 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 a
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.
VOTING RIGHTS - MASSACHUSETTS TRUST. Each fund's capital
consists of shares of beneficial interest. As a shareholder, you
are entitled to one vote for each dollar of net asset value you
own. T he voting rights of shareholders can be changed only by a
shareholder vote. Shares may be voted in the aggregate, by fund and by
class.
The shares have no preemptive or conversion rights. Shares are fully
paid and nonassessable, except as set forth under the heading
"Shareholder Liability" above.
The trust or any of its funds may be terminated upon the sale of its
assets to another open-end management investment company, or upon
liquidation and distribution of its assets, if approved by a vote
of shareholders of the trust or the fund. In the event of the
dissolution or liquidation of the trust, shareholders of each of its
funds are entitled to receive the underlying assets of such fund
available for distribution. In the event of the dissolution or
liquidation of a fund, shareholders of that fund are entitled to
receive the underlying assets of the fund available for
distribution.
VOTING RIGHTS - DELAWARE TRUST. Each fund's capital consists
of shares of beneficial interest. As a shareholder, you are entitled
to one vote for each dollar of net asset value you own. The voting
rights of shareholders can be changed only by a shareholder vote.
Shares may be voted in the aggregate, by fund and by class.
The shares have no preemptive or conversion rights. Shares are
fully paid and nonassessable, except as set forth under the heading
"Shareholder Liability" above.
The trust or any of its funds may be terminated upon the sale of
its assets to another open-end management investment company or series
thereof, or upon liquidation and distribution of its assets. Generally
such terminations must be approved by a vote of shareholders. In the
event of the dissolution or liquidation of the trust, shareholders of
each of its funds are entitled to receive the underlying assets of
such fund available for distribution. In the event of the dissolution
or liquidation of a fund, shareholders of that fund are entitled to
receive the underlying assets of the fund available for
distribution.
Under the Trust Instrument, the Trustees may, without shareholder
vote, in order to change the form of organization of the trust
cause the trust to merge or consolidate with one or more trusts,
partnerships, associations, limited liability companies or
corporations, as long as the surviving entity is an open-end
management investment company, or is a fund thereof , that will
succeed to or assume the trust's registration statement, or
cause the trus t to incorporate under Delaware law.
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.
FMR, its officers and directors, its affiliated companies, and members
of 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. ____________, 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 , 1998, and
report (s) of the auditor , are included in each fund's
Annual Report and are incorporated herein by reference.
APPENDIX
Spartan, Fidelity, Fidelity Investments and (Pyramid) Design, and
Fidelity Focus are registered trademarks of FMR Corp.
THE THIRD PARTY MARKS APPEARING ABOVE ARE THE MARKS OF THEIR
RESPECTIVE OWNERS.

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 25, 1999
This Statement of Additional Information (SAI) is not a prospectus.
Portions of the funds' Annual Report s are incorporated
herein. The Annual Report s are supplied with this SAI.
To obtain a free additional copy of a Prospectus, dated January
25, 1999, or an Annual Report, please call Fidelity (registered
trademark) at 1-800-544-8888 or visit Fidelity's Web site at
www.fidelity.com.
TABLE OF CONTENTS PAGE

INVESTMENT POLICIES AND LIMITATIONS 2

SPECIAL CONSIDERATIONS REGARDING FLORIDA 7

SPECIAL CONSIDERATIONS REGARDING PUERTO RICO 8

PORTFOLIO TRANSACTIONS 10

VALUATION 11

PERFORMANCE 11

ADDITIONAL PURCHASE, EXCHANGE AND REDEMPTION INFORMATION 16

DISTRIBUTIONS AND TAXES 16

TRUSTEES AND OFFICERS 16

CONTROL OF INVESTMENT ADVISERS 20

MANAGEMENT CONTRACTS 20

DISTRIBUTION SERVICES 21

TRANSFER AND SERVICE AGENT AGREEMENTS 21

DESCRIPTION OF THE TRUSTS 22

FINANCIAL STATEMENTS 22

APPENDIX 23

(fidelity_logo_graphic) 82 Devonshire Street, Boston, MA 02109
SFC-ptb-0199
Insert item code number
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
( the 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) purchase the securities of any issuer, if, as a result, the
fund would not comply with any applicable diversification requirements
for a money market fund under the Investment Company Act of 1940 and
the rules thereunder, as such may be amended from time to time;
(2) issue senior securities, except as permitted under the
Investment Company Act of 1940;
(3) 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;
(4) 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;
(5) 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;
(6) 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);
(7) purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments; or
(8) 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.
(9) 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) With respect to 75% of its total assets, the fund does not
currently intend to 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 securities of other money market
funds) if, as a result, more than 5% of the fund's total assets would
be invested in the securities of that issuer.
(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 (3)). 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 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 limitations (1), (5) 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 purposes of limitation (i) , certain securities subject
to guarantees (including insurance, letters of credit and demand
features) are not considered securities of their issuer, but are
subject to separate diversification requirements, in accordance with
industry standard requirements for money market funds.
With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
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 (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 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.
With respect to limitation (v), if through a change in values, net
assets, or other circumstances, the fund were in a position where more
than 10% of its net assets was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
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 involve 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.
ASSET-BACKED SECURITIES represent interests in pools of
purchase contracts, financing leases, or sales agreements entered into
by municipalities. Payment of interest and repayment of principal may
be largely dependent upon the cash flows generated by the assets
backing the securities and, in certain cases, supported by letters of
credit, surety bonds, or other credit enhancements. Asset-backed
security values may also be affected by other factors including
changes in interest rates, the availability of information concerning
the pool and its structure, the creditworthiness of the servicing
agent for the pool, the originator of the loans or receivables, or the
entities providing the credit enhancement. In addition, these
securities may be subject to prepayment risk.
BORROWING. Each fund may borrow from banks or from other
funds advised by FMR or its affiliates, 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.
CASH MANAGEMENT. A fund can hold uninvested cash or can invest it
in cash equivalents such as money market securities, repurchase
agreements or shares of money market funds. Generally, these
securities offer less potential for gains than other types of
securities.
CENTRAL CASH FUNDS are money market funds managed by FMR or its
affiliates that seek to earn a high level of current income (free from
federal income tax in the case of a municipal money market fund) while
maintaining a stable $1.00 share price. The funds comply with
industry-standard requirements for money market funds regarding the
quality, maturity and diversification of their investments.
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.
FEDERALLY TAXABLE SECURITIES . Under normal conditions, a
municipal fund does not intend to invest in securities whose
interest is federally taxable. However, from time to time on a
temporary basis, a municipal fund may invest a portion of its assets
in fixed-income secu rities whose interest is subject to federal
income tax.
Should a municipal fund invest in federally taxable
securities , it would purchase securities that, in FMR's
judgment, are of high quality.
FUTURES AND OPTIONS. The following paragraphs pertain to
futures and options: 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.
COMBINED POSITIONS involve purchasing and writing
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, purchasing a put option and
writing a call option on the same underlying instrument
would 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, 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. A fund may invest
in options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in
which the fund typically invests , which involves a risk
that the options or futures position will not track the performance of
the 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. In purchasing a futures contract, the
buyer agrees to purchase a specified underlying instrument at a
specified future date. In selling a futures contract, the
seller agrees to sell a specified underlying instrument at
a specified future date. The price at which the purchase and sale will
take place is fixed when the buyer and seller enter 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 or 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 bond fund's i nvestments in futures
contracts and options, and the fund ' s 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 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 purchaser or writer 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, the
purchaser 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 purchaser 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 purchaser may
terminate its position in a put option by allowing it to expire or by
exercising the option. If the option is allowed to expire, the
purchaser will lose the entire premium . If the option
is exercised , the purchaser completes the sale of the
underlying instrument at the strike price. A purchaser 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 , 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. The writer of a put or call
option takes the opposite side of the transaction from the
option's purchaser. In return for receipt of the premium, the
writer 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. The writer may seek to terminate a
position in a put option 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, however, the writer must continue
to be prepared to pay the strike price while the option is
outstanding, regardless of price changes. When writing an option on a
futures contract, a fund will be required to make margin payments to
an FCM as described above for futures contracts.
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 the writer t o 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 SECURITIES cannot be sold or disposed of in the ordinary
course of business at approximately the prices at which they are
valued. Difficulty in selling securities may result in a loss or
may be costly to a fund. 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
securities . In determining the liquidity of a fund's
investments, FMR may consider various factors, including (1) the
frequency and volume of trades and quotations, (2) the number
of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market and (4) the nature of the
security and the market in which it trades (including any
demand, put or tender features, the mechanics and other
requirements for transfer, any letters of credit or other credit
enhancement features, any ratings, the number of holders, the method
of soliciting offers, the time required to dispose of the security,
and the ability to assign or offset the rights and obligations of the
security).
INDEXED SECURITIES are instruments 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.
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.
Indexed securities may be more volatile than the underlying
instruments. Indexed securities are also subject to the
credit risks associated with the issuer of the security, and their
values may decline substantially if the issuer's creditworthiness
deteriorates.
INTERFUND BORROWING AND LENDING PROGRAM. Pursuant to an exemptive
order issued by the SEC, a fund may lend money to, and
borrow money from, other funds advised by FMR or its affiliates;
however, municipal funds currently intend to participate in
this program only as borrowers . A fund will borrow through the
program only when the costs are equal to or lower than the costs of
bank loans. Interfund borrowings normally extend overnight, but can
have a maximum duration of seven days. Loans may be called on one
day's notice. 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 movements in prevailing short-term
interest rate levels - rising when prevailing short-term interest
rates fall, and vice versa. The prices of inverse floaters
can be considerably more volatile than the prices of
bonds with comparable maturities.
INVESTMENT-GRADE DEBT SECURITIES. Investment-grade debt securities
are medium and high-quality securities. Some may possess speculative
characteristics and may be sensitive to economic changes and to
changes in the financial conditions of issuers. A debt 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 considered to be of
equivalent quality by FMR.
LOWER-QUALITY DEBT SECURITIES. Lower-quality debt securities
have poor protection with respect to the payment of interest and
repayment of principal, or may be in default. These securities are
often considered to be speculative and involve greater risk of loss or
price changes due to changes in the issuer's capacity to pay. The
market prices of lower-quality debt securities may fluctuate more than
those of higher-quality debt securities and may decline significantly
in periods of general economic difficulty, which may follow periods of
rising interest rates.
The market for lower-quality debt securities may be thinner and
less active than that for higher-quality debt securities, which can
adversely affect the prices at which the former are sold. Adverse
publicity and changing investor perceptions may affect the liquidity
of lower-quality debt securities and the ability of outside pricing
services to value lower-quality debt securities.
A fund may choose, at its expense or in conjunction with
others, to pursue litigation or otherwise to 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.
MONEY MARKET INSURANCE. The money market fund participates in a
mutual insurance company solely with other funds advised by FMR or its
affiliates. This company provides insurance coverage for losses on
certain money market instruments held by a participating fund
(eligible instruments), including losses from nonpayment of principal
or interest or a bankruptcy or insolvency of the issuer or credit
support provider, if any. The insurance does not cover losses
resulting from changes in interest rates or other market developments.
The money market fund is charged an annual premium for the insurance
coverage and may be subject to a special assessment of up to
approximately two and one-half times the fund's annual gross premium
if covered losses exceed certain levels. A participating fund may
recover no more than $100 million annually, including all other claims
of insured funds, and may only recover if the amount of the loss
exceeds 0.30% of its eligible instruments. The money market fund may
incur losses regardless of the insurance.
MONEY MARKET SECURITIES are high-quality, short-term obligations.
Money market securities may be structured to be , or may employ
a trust or other form so that they are , eligible
investments for money market 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
a structure fails to function 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 certain
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 funds.
MUNICIPAL INSURANCE. A municipal bond may be covered by
insurance that guarantees the bond's scheduled payment of interest and
repayment of principal. This type of insurance may be obtained by
either (i) the issuer at the time the bond is issued (primary market
insurance), or (ii) another party after the bond has been issued
(secondary market insurance).
Both primary and secondary market insurance guarantee timely and
scheduled repayment of all principal and payment of all interest on a
municipal bond in the event of default by the issuer, and cover a
municipal bond to its maturity, enhancing its credit quality and
value.
Municipal bond insurance does not insure against market
fluctuations or fluctuations in a fund's share price. In addition, a
municipal bond insurance policy will not cover: i) repayment of a
municipal bond before maturity (redemption), ii) prepayment or payment
of an acceleration premium (except for a mandatory sinking fund
redemption) or any other provision of a bond indenture that advances
the maturity of the bond, or iii) nonpayment of principal or interest
caused by negligence or bankruptcy of the paying agent. A mandatory
sinking fund redemption may be a provision of a municipal bond issue
whereby part of the municipal bond issue may be retired before
maturity.
Because a significant portion of the municipal securities issued
and outstanding is insured by a small number of insurance companies,
an event involving one or more of these insurance companies could have
a significant adverse effect on the value of the securities insured by
that insurance company and on the municipal markets as a whole.
FMR may decide to retain an insured municipal bond that is in
default, or, in FMR's view, in significant risk of default. While a
fund holds a defaulted, insured municipal bond, the fund collects
interest payments from the insurer and retains the right to collect
principal from the insurer when the municipal bond matures, or in
connection with a mandatory sinking fund redemption.
PRINCIPAL MUNICIPAL BOND INSURERS. The various insurance companies
providing primary and secondary market insurance policies for
municipal bonds are described below. Ratings reflect each respective
rating agency's assessment of the creditworthiness of an insurer and
the insurer's ability to pay claims on its insurance policies at the
time of the assessment.
Ambac Assurance Corp., a wholly-owned subsidiary of Ambac Financial
Group Inc., is authorized to provide bond insurance in the 50 U.S.
states, the District of Columbia, and the Commonwealth of Puerto Rico.
Bonds insured by Ambac Assurance Corp. are rated "Aaa" by Moody's
Investor Service and "AAA" by Standard & Poor's.
Connie Lee Insurance Co. is a wholly-owned subsidiary of Connie Lee
Holdings Inc., which is a wholly-owned subsidiary of Ambac Assurance
Corp. All losses incurred by Connie Lee Insurance Co. that would cause
its statutory capital to drop below $75 million would be covered by
Ambac Assurance Corp. Connie Lee Insurance Co. is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and the Commonwealth of Puerto Rico. Bonds insured by Connie Lee
Insurance Co. are rated "AAA" by Standard & Poor's.
Financial Guaranty Insurance Co. (FGIC), a wholly-owned subsidiary
of GE Capital Services, is authorized to provide bond insurance in the
50 U.S. states and the District of Columbia. Bonds insured by FGIC are
rated "Aaa" by Moody's Investor Service and "AAA" by Standard &
Poor's.
Financial Security Assurance Inc. (FSA), a wholly-owned subsidiary
of Financial Security Assurance Holdings Ltd., is authorized to
provide bond insurance in 49 U.S. states, the District of Columbia,
and three U.S. territories. Bonds insured by FSA are rated "Aaa" by
Moody's Investor Service and "AAA" by Standard & Poor's.
Municipal Bond Investors Assurance Corp. (MBIA Insurance Corp.), a
wholly-owned subsidiary of MBIA Inc., a publicly-owned company, is
authorized to provide bond insurance in the 50 U.S. states, the
District of Columbia, and the Commonwealth of Puerto Rico. Bonds
insured by MBIA Insurance Corp. are rated "Aaa" by Moody's Investor
Service and "AAA" by Standard & Poor's.
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,
a fund will not hold these obligations directly as a
lessor of the property, but will purchase a participation interest in
a municipal obligation from a bank or other third party. A
participation interest gives the purchaser a specified,
undivided interest in the obligation in proportion to its purchased
interest in the total amount of the issue.
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. If a municipality stops making payments or transfers
its obligations to a private entity, the obligation could lose value
or become taxable.
MUNICIPAL 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. Proposals to restrict or eliminate the
federal income tax exemption for interest on municipal securities 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 a municipal fund's distributions. If such proposals
were enacted, the availability of municipal securities and the value
of a municipal fund's holdings would be affected and the Trustees
would reevaluate the fund's investment objectives and policies.
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 a money market fund to
maintain a stable net asset value per share (NAV).
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.
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. In exchange
for this benefit, a fund may accept a lower interest rate. Securities
with put features 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.
REFUNDING CONTRACTS. Securities may be purchased on a
when-issued basis in connection with the refinancing of an issuer's
outstanding indebtedness. Refunding contracts require the issuer to
sell and a purchaser 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 purchaser generally will not
be obligated to pay the full purchase price if the issuer fails
to perform under a refunding contract. Instead, refunding contracts
generally provide for payment of liquidated damages to the issuer.
A purchaser 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.
REPURCHASE AGREEMENTS involve an agreement to purchase a
security and 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. As protection against
the risk that the original seller will not fulfill its obligation,
the securities are held in a separate account at a bank,
marked-to-market daily, and maintained at a value at least equal to
the sale price plus the accrued incremental amount. The value of
the security purchased may be more or less than the price at which the
counterparty has agreed to purchase the security. In addition, delays
or losses could result if the other party to the agreement defaults or
becomes insolvent. The funds will engage in repurchase agreement
transactions with parties whose creditworthiness has been reviewed and
found satisfactory by FMR.
RESTRICTED SECURITIES are subject to legal restrictions on their
sale. Difficulty in selling securities may result in a loss or be
costly to a fund. Restricted securities generally can be sold in
privately negotiated transactions, pursuant to an exemption from
registration under the Securities Act of 1933, or in a registered
public offering. Where registration is required, the holder of a
registered security 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,
the holder might obtain a less favorable price than prevailed
when it decided to seek registration of the security.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
fund sell s a security to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase that
security at an agreed-upon price and time. The funds will
enter into reverse repurchase agreements with parties whose
creditworthiness has been reviewed and found satisfactory by
FMR. Such transactions may increase fluctuations in the market value
of fund assets and a fund's yield and may be viewed as a
form of leverage.
SOURCES OF CREDIT OR LIQUIDITY SUPPORT. Issuers may employ various
forms of credit and liquidity enhancements, including letters of
credit, guarantees, puts, and demand features, and insurance provided
by domestic or foreign entities such as banks and other financial
institutions. FMR may rely on its evaluation of the credit or
liquidity enhancement provider in determining whether to purchase a
security supported by such enhancement. 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. Changes in the credit quality of the entity providing
the enhancement could affect the value of the security or a fund's
share price.
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. A 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 purchase 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 generally marketable ; and the possibility that the
maturities of the underlying securities may be different from those of
the commitments.
TEMPORARY DEFENSIVE POLICIES. Each fund reserves the right to
invest without limitation in short-term instruments, to hold a
substantial amount of uninvested cash, or to invest more that normally
permitted in taxable obligations for temporary, defensive
purposes.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, municipal 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, 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
in 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 are structured with put
features that permit holders to demand payment of the unpaid principal
balance plus accrued interest from the issuers or certain financial
intermediaries.
In many instances bonds and participation interests have tender
options or demand features that permit the holder to tender (or
put) the bonds to an institution at periodic intervals and to receive
the principal amount thereof. Variable rate instruments structured
in this fashion are considered to be essentially equivalent to
other variable rate securities. The IRS has not ruled whether
the interest on these instruments is tax-exempt. Fixed-rate
bonds that are subject to third party puts and participation interests
in such bonds held by a bank in trust or otherwise may have similar
features.
WHEN-ISSUED AND FORWARD PURCHASE OR SALE TRANSACTIONS
involve a commitment to purchase or sell specific securities at a
predetermined price or yield in which payment and delivery take place
after the customary settlement period for that type of security.
Typically, no interest accrues to the purchaser until the security is
delivered.
When purchasing securities pursuant to one of these transactions,
the purchaser assumes the rights and risks of ownership, including the
risks of price and yield fluctuations and the risk that the security
will not be issued as anticipated. Because payment for the securities
is not required until the delivery date, these risks are in addition
to the risks associated with a fund's investments. If a fund remains
substantially fully invested at a time when a purchase is outstanding,
the purchases may result in a form of leverage. When a fund has sold a
security pursuant to one of these transactions, 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, a fund could miss a favorable price or
yield opportunity or suffer a loss.
A fund may renegotiate a when-issued or forward transaction and may
sell the underlying securities before delivery, which may result in
capital gains or losses for the fund.
ZERO COUPON BONDS do not make interest payments; instead , they
are sold at a 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 more volatile than other types of
fixed-income securities when interest rates change. In
calculating a fund's dividend, a portion of the difference
between a zero coupon bond's purchase price and its face value is
considered income.
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 that would render such information
materially inaccurate.
The economy of Puerto Rico is fully integrated with that of the United
States. In fiscal 1997, 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
1997 Puerto Rico experienced a $2.7 billion positive
adjusted merchandise trade balance.
Since fiscal 1985 , personal income, both aggregate and per
capita, has increased consistently each fiscal year. In fiscal
1997 , aggregate personal income was $32.1 billion
( $30.0 billion in 1992 prices) and personal per capita income
was $8,509 ($7,957 in 1992 prices). Gross product in fiscal
1993 was $25.1 billion ($24.5 billion in 1992 prices) and
gross product in fiscal 1997 was $32.1 billion ($27.7
b illion in 1992 prices). This represents an increase in gross
product of 27.7% from fiscal 1993 to 1997 (13.0% in 1992
prices).
Puerto Rico's economic expansion, which has lasted over ten
years, continued throughout the five-year period from fiscal
1993 through fiscal 1997 . 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, increases in
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 U.S. average . 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
$19.8 billion or 41. 2 % of gross domestic product in
fiscal 1997 . The manufacturing sector employed 153,273
workers as of March 1997. Manufacturing in Puerto Rico is now more
diversified than during earlier phases of industrial development. In
the last two decades industrial development has tended to be more
capital intensive and dependent on skilled labor. This gradual shift
is best exemplified by heavy investment in pharmaceuticals, scientific
instruments, computers, microprocessors, and electrical products over
the last decade. The service sector, which includes wholesale and
retail trade and finance, insurance, 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 1997 , the service sector generated
$18.4 billion in gross domestic product or 38.2 % of the
total. Employment in this sector grew from 467,000 in fiscal
1993 to 551,000 in fiscal 1997 , a cumulative increase of
17.8%. This increase was greater than the 12.9 %
cumulative growth in employment over the same period providing 48% of
total employment. The G overnment sector of the Commonwealth
plays an important role in the economy of the island. In fiscal year
1997 , the Government accounted for $5.2 billion of
Puerto Rico's gross domestic product and provided 10.9% of the
total employment. The construction industry has experienced real
growth since fiscal 1987. In fiscal 1997, investment in construction
rose to $4.7 billion, an increase of 14.7% as compared to $4.1 billion
for fiscal 1996. Tourism also contributes significantly to the island
economy, accounting for $2.0 billion of gross domestic product in
fiscal 1997.
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
G overnment 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 G overnment-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 is the improvement and expansion of 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
G overnment's direct contribution to gross domestic product. As
part of this goal, the G overnment has transferred certain
G overnmental operations and sold a number of its assets to
private parties. Among these are: (i) the G overnment sold the
assets of the Puerto Rico Maritime Authority; (ii) the
Government executed a five-year management agreement for the
operation and management of the Aqueducts and Sewer Authority by a
private company; (iii) the Aqueducts and Sewer Authority
executed 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; (iv) the
Electric Power Authority executed 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; and (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
G overnment provides free health services to low income
individuals through public health facilities owned and administered by
the G overnment to one in which all medical services are
provided by the private sector and the G overnment 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 December 31 , 1997, over 1.1
million persons were participating in the program at an estimated
annual cost to Puerto Rico for fiscal 1998 of approximately
$672 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 sold six health
facilities to private companies and is currently in
negotiations with other private companies for the sale of
thirteen 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 1986 , as amended (the "Code").
Since 1948, Puerto Rico has promulgated various industrial
incentives laws designed to stimulate industrial investment. Under
these laws, companies engaged in manufacturing and certain other
designated activities were eligible to receive full or partial
exemption from income, property, and other taxes. The most recent of
these laws is Act No. 135 of December 2, 1997 (the "1998 Tax
Incentives Law").
The benefits provided by the 1998 Tax Incentives Law are available
to new companies as well as companies currently conducting tax-exempt
operations in Puerto Rico that choose to renegotiate their existing
tax exemption grant. Activities eligible for tax exemption include
manufacturing, certain services performed for markets outside Puerto
Rico, the production of energy from local renewable sources for
consumption in Puerto Rico, and laboratories for scientific and
industrial research. For companies qualifying thereunder, the 1998 Tax
Incentives Law imposes income tax rates ranging from 2% to 7%. In
addition, it grants 90% exemption from property taxes, 100% exemption
from 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 Law 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 Law , companies are able to
repatriate or distribute their profits free of tollgate taxes. In
addition, passive income derived from designated investments will
continue to be fully exempt from income and municipal license taxes.
Individual shareholders of an exempted business will 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 will 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 U.S.
Congress and signed into law by President Clinton on August 20, 1996
(the "1996 Amendments"), the tax credit , as described
below , is now being phased out over a ten-year period for existing
claimants and is no longer available for corporations that
established 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 U.S. 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
c redit 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,
U.S. corporations that meet certain requirements and elect its
application ("Section 936 Corporations") are entitled to credit
against their U.S. 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 Section 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 Section 936 credit is eliminated for taxable years
beginning in 2006.
PROPOSAL TO EXTEND THE PHASEOUT OF SECTION 30A. During 1997, the
Government of Puerto Rico proposed to Congress the enactment of
a new permanent federal incentive program similar to that
provided under Section 30A. Such a 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 c redit indefinitely; (ii) make it available to companies
establishing operations in Puerto Rico after October 13, 1995; and
(iii) eliminate the income cap. Although this proposal, was not
included in the final fiscal 1998 federal budget, President
Clinton's fiscal 1999 budget submitted to Congress again included
these modifications to Section 30A. 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 c redit 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
management contract. FMR is also responsible for the placement of
transaction orders for other investment companies and
investment accounts for which it or its affiliates act as
investment adviser. 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.
If FMR grants investment management authority to a sub-adviser (see
the section entitled "Management Contracts"), that 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
above.
Each fund may execute portfolio transactions with
broker-dealers who provide research and execution services to the
fund or other accounts over which FMR or its affiliates
exercise investment discretion. Such services may include advice
concerning the value of securities; the advisability of investing in,
purchasing, or selling securities; 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; and effect securities
transactions and perform functions incidental thereto (such as
clearance and settlement).
For transactions in fixed-income securities, FMR's selection of
broker-dealers is generally based on the availability of a security
and its price and, to a lesser extent, on the overall quality of
execution and other services, including research, provided by the
broker-dealer.
The receipt of research from broker-dealers that execute transactions
on behalf of a fund may be useful to FMR in rendering
investment management services to that fund or its other
clients, and conversely, such research provided by broker-dealers who
have executed transaction orders on behalf of other FMR clients may be
useful to FMR in carrying out its obligations to a fund . The
receipt of such research has not reduced FMR's normal independent
research activities; however, it enables FMR to avoid the additional
expenses that could be incurred if FMR tried to develop comparable
information through its own efforts.
Fixed-income securities are generally purchased from an issuer or
underwriter acting as principal for the securities, on a net basis
with no brokerage commission paid. However, the dealer is compensated
by a difference between the security's original purchase price and the
selling price, the so-called "bid-asked spread." Securities may also
be purchased from underwriters at prices that include underwriting
fees.
Subject to applicable limitations of the federal securities laws, a
fund may pay a broker-dealer 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 a 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 that
fund or 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.
To the extent permitted by applicable law, FMR is authorized to
allocate portfolio transactions in a manner that takes into account
assistance received in the distribution of shares of the funds or
other Fidelity funds and to use the research services of brokerage and
other firms that have provided such assistance. 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.
FMR may allocate brokerage transactions to broker-dealers
(including affiliates of FMR) who have entered into arrangements with
FMR under which the broker-dealer allocates a portion of the
commissions paid by a fund toward the reduction of that fund's
expenses. The transaction quality must, however, be comparable to
those of other qualified broker-dealers.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members
of national securities exchanges from executing exchange transactions
for investment 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.
The Trustees of each fund periodically review FMR's performance
of its responsibilities in connection with the placement of portfolio
transactions on behalf of the fund and review the commissions
paid by the fund over representative periods of time to
determine if they are reasonable in relation to the benefits to the
fund.
For the fiscal periods ended November 30 , 1998
and 1997 , the portfolio turnover rates were ___% and ___%
for Spartan Florida Municipal Income: Variations in turnover rate may
be due to a fluctuating volume of shareholder purchase and redemption
orders, market conditions, or changes in FMR's investment outlook.
[ For the fiscal years ended November 1998, 1997, and 1996,
the funds paid no brokerage commissions.]
The Trustees of each fund have approved procedures in conformity
with Rule 10f-3 under the 1940 Act whereby a fund may purchase
securities that are offered in underwritings in which an affiliate of
FMR participates. These procedures prohibit the funds from directly or
indirectly benefiting an FMR affiliate in connection with such
underwritings. In addition, for underwritings where an FMR affiliate
participates as a principal underwriter, certain restrictions may
apply that could, among other things, limit the amount of securities
that the funds could purchase in the underwriting.
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 or its affiliates,
investment decisions for each fund are made independently from those
of other funds managed by FMR or investment 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 investment
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 investment 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
Each fund's net asset value per share (NAV) is the value of a
single share. The NAV of each fund is computed by adding the value of
the fund's investments, cash, and other assets, subtracting its
liabilities, and dividing the result by the number of shares
outstanding.
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.
The procedures set forth above need not be used to determine the
value of the securities owned by the 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. For
example, securities and other assets for which there is no readily
available market value may be valued in good faith by a committee
appointed by the Board of Trustees. In making a good faith
determination of the value of a security, the committee may review
price movements in futures contracts and American Depositary Receipts
(ADRs), market and trading trends, the bid/ask quotes of brokers and
off-exchange institutional trading.
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 market 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.
Securities of other open-end investment companies are valued at
their respective NAVs.
At such intervals as they deem appropriate, the Trustees consider the
extent to which NAV calculated by using market valuations would
deviate from the $1.00 per share calculated using amortized
cost valuation . 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
A fund 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. The share price of a
bond fund, the yield of a fund, 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 (MONEY MARKET FUND).To compute the yield for
the money market fund 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 an 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 applicable regulation.
Yield information may be useful in reviewing the fund's performance
and in providing a basis for comparison with other investment
alternatives. However, the fund's yield fluctuates, unlike investments
that pay a fixed interest rate over a stated period of time. When
comparing investment alternatives, investors should also note the
quality and maturity of the portfolio securities of respective
investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest
rates the fund's yield will tend to be somewhat higher than prevailing
market rates, and in periods of rising interest rates the fund's yield
will tend to be somewhat lower. Also, when interest rates are falling,
the inflow of net new money to the fund from the continuous sale of
its shares will likely be invested in instruments producing lower
yields than the balance of the fund's holdings, thereby reducing the
fund's current yield. In periods of rising interest rates, the
opposite can be expected to occur.
YIELD CALCULATIONS (BOND FUND ). Yields for the fund
are computed by dividing the fund's interest and income for
a given 30-day or one-month period, net of expenses, by the average
number of shares entitled to receive distributions during the
period, dividing this figure by the fund's 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 short-term trading fee . Income is
calculated for purposes of 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.
Income calculated for the purposes of calculating the 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 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.
In calculating the fund's yield, the fund may from time to time use
a portfolio security's coupon rate instead of its yield to maturity in
order to reflect the risk premium on that security. This practice will
have the effect of reducing the fund's yield.
Yield information may be useful in reviewing the fund's
performance and in providing a basis for comparison with other
investment alternatives. However, the fund's yield fluctuates,
unlike investments that pay a fixed interest rate over a stated period
of time. When comparing investment alternatives, investors should also
note the quality and maturity of the portfolio securities of
respective investment companies they have chosen to consider.
Investors should recognize that in periods of declining interest rates
the fund's yield will tend to be somewhat higher than
prevailing market rates, and in periods of rising interest rates the
fund's yield will tend to be somewhat lower. Also, when interest rates
are falling, the inflow of net new money to the fund from the
continuous sale of its shares will likely be invested in instruments
producing lower yields than the balance of the fund's holdings,
thereby reducing the fund's current yield. In periods of rising
interest rates, the opposite can be expected to occur.
The tax-equivalent yield of a municipal fund i s the rate
an investor would have to earn from a fully taxable investment before
taxes to equal a fund's tax-free yield. Tax-equivalent yields
are calculated by dividing a fund's yield by the result of one minus a
specified combined federal and state income 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 [Year] . It
shows the approximate yield a taxable security must provide at various
income brackets to produce after-tax yields equivalent to those of
hypothetical federally tax -exempt obligations yielding from
_% to _% . 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.
[YEAR] TAX RATES AND TAX-EQUIVALENT YIELDS

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FEDERAL IF INDIVIDUAL TAX-EXEMPT YIELD IS:

TAXABLE INCOME* MARGINAL % % % % % % % %

SINGLE RETURN JOINT RETURN RATE** THEN TAXABLE-EQUIVALENT YIELD IS

$ $ % % % % % % % %

</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 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 a
fund's NAV over a stated period. A cumulative total return reflects
actual performance over a stated period of time. 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 a 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. Total returns may or may not include the
effect of the account closeout fee or the small account fee .
Excluding a fund's small account fee or account closeout
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.
NET ASSET VALUE. Charts and graphs using the bond fund's
NAVs , adjusted NAVs , and benchmark indexe s may be
used to exhibit performance. An adjusted NAV includes any
distributions paid by the fund and reflects all elements of its
return. Unless otherwise indicated, the fund's adjusted NAVs
are not adjusted for sales charges, if any.
CALCULATING HISTORICAL MONEY MARKET FUND RESULTS. The
following table shows performance for the fund calculated including
certain fund expenses.
CALCULATING HISTORICAL BOND FUND RESULTS. The following
table shows performance for the fund calculated including certain fund
expenses.
For Spartan Florida Municipal Income, total returns do [not]
include the effect of the fund's 0.50% short-term trading fee,
applicable to shares held less than 180 days.
HISTORICAL MONEY MARKET FUND RESULTS. The following table shows the
fund's 7-day yield, tax-equivalent yield , and total return for
the fiscal periods ended November 30, 1998 . Total return
figures include the effect of the $5.00 account closeout fee based on
an average size account.
HISTORICAL BOND FUND RESULTS. The following table show s the
fund's yield, tax-equivalent yield and total return for the
fiscal periods ended November 30, 1998 .
The tax-equivalent yields for the funds are based on a combined
effective federal and state income tax rate of __% [IF APPLICABLE: ,
__% and __%, respectively] and reflects that, as of November 30, 1998
[none/an estimated __%[ __%, and __%]] of [the/each] fund's income was
subject to state taxes. Note that each fund may invest in securities
whose income is subject to the federal alternative minimum tax.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Annual Total Returns Cumulative Total Returns

Thirty-/Sev Tax- One Five Life of One Five Life of
en-Day Equivalent Year Years Fund Year Years Fund
Yield Yield

Spartan FL Muni % % % % %* % % %*
Money Market

Spartan FL Muni % % % % %** % % %**
Income

</TABLE>

* From August 24, 1992 (commencement of operations).
** 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.
Note: If FMR had not reimbursed certain fund expenses during these
periods, each fund's yield and tax equivalent yield would have been
___% and __%, respectively.
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 Standard & Poor's 500 Index (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. Total returns are based on past
results and are not an indication of future performance. 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, 1998, a hypothetical $10,000 investment in Spartan
Florida Municipal Money Market would have grown to $______.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN FLORIDA MUNICIPAL MONEY MARKET FUND INDEXES

Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions

1998 $ $ $ $ $ $ $

1997* $ $ $ $ $ $ $

1996 $ $ $ $ $ $ $

1995 $ $ $ $ $ $ $

1994 $ $ $ $ $ $ $

1993 $ $ $ $ $ $ $

1992* $ $ $ $ $ $ $

</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 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 $______. 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 $______ 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 account
closeout fee.
During the period from March 16, 1992 (commencement of operations)
to November 30, 1998, a hypothetical $10,000 investment in Spartan
Florida Municipal Income would have grown to $_____.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
SPARTAN FLORIDA MUNICIPAL INCOME FUND INDEXES

Period Ended Value of Value of Value of Total S&P 500 DJIA Cost of
Initial Reinvested Reinvested Value Living**
$10,000 Dividend Capital Gain
Investment Distributions Distributions

1998 $ $ $ $ $ $ $

1997* $ $ $ $ $ $ $

1996 $ $ $ $ $ $ $

1995 $ $ $ $ $ $ $

1994 $ $ $ $ $ $ $

1993 $ $ $ $ $ $ $

1992* $ $ $ $ $ $ $

</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 $______. 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 $______ for dividends and $__ for capital gain
distributions. The figures in the table do not include the effect of
the fund's 0.50% short-term trading 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
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 indexes prepared by Lipper or other
organizations. When comparing these indexes , 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, a fund may quote Morningstar, Inc. in
its advertising materials. Morningstar, Inc. is a mutual fund rating
service that rates mutual funds on the basis of risk-adjusted
performance. Rankings that compare the performance of Fidelity funds
to one another in appropriate categories over specific periods of time
may also be quoted in advertising. The bond fund may advertise risk
ratings, including symbols or numbers, prepared by independent rating
agencies.
A fund's performance may also be compared to that of the
benchmark index representing the universe of securities in which the
fund may invest. The total return of the 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.
Spartan Florida Municipal Income may compare its performance to
that of the Lehman Brothers Florida Municipal Bond Index, a market
capitalization-weighted index of Florida investment-grade municipal
bonds with maturities of one year or more. Issues included in
the 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 the 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
corpo rate bonds, intermediate-term government bonds, long-term
government bonds, Treasury bills, the U.S. rate of inflation (based on
the CPI ), and combinations of various capital markets. The
performance of these capital markets is based on the returns of
different indexes.
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 indexes that may be developed
and made available in the future.
The 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
AVERAGESTM /municipal , which is reported in IBC's MONEY FUND
REPORTTM, covers over ___ money market funds.
The bond fund may compare and contrast in advertising the
relative advantages of investing in a mutual fund versus an individual
municipal bond . Unlike municipal bond 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 sales
charges of many municipal bond mutual funds are lower than the
purchase cost of individual municipal bonds, which are generally
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 bond fund may
also discuss or illustrate examples of interest rate sensitivity.
MOMENTUM INDICATORS indicate price movements over specific periods of
time for a bond fund . 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, 1998 , FMR advised over $ __ billion in
municipal fund assets, $__ billion in taxable fixed-income
fund assets, $ __ billion in money market fund assets,
$ ___ billion in equity fund assets, $ __ billion in
international fund assets, and $ ___ 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, a 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, EXCHANGE AND REDEMPTION INFORMATION
If the Trustees determine that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in
securities or other property, valued for this purpose as they are
valued in computing each 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.
DISTRIBUTIONS AND TAXES
DIVIDENDS. To the extent that each fund's income is designated as
federally tax-exempt interest, the dividends declared by the fund are
also federally tax-exempt. Short-term capital gains are taxable as
dividends, but do not qualify for the dividends-received
deduction.
Each 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.
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 is 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.
A portion of the gain on municipal bonds purchased at
market discount after April 30, 1993 is taxable to shareholders
as ordinary income , not as capital gains. Dividends resulting
from a recharacterization of gain from the sale of bonds purchased
at 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 s is free from federal
income tax.
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 GAINS DISTRIBUTIONS. Each fund's capital gains
distributions are federally taxable to shareholders at a rate based
generally on the length of time the securities on which the gain was
realized were held, regardless of the length of time those shares on
which the distribution is received have been held. The money market
fund may distribute any net realized capital gains once a year or more
often, as necessary.
As of November 30, 199 8, [the/each] [fund/[Name(s) of Fund(s)] ]
had a capital loss carryforward aggregating approximately
$ ____ . This loss carryforward, of which $___, $___, and
$___ will expire on November 30, 199 _, ____, and ____ ,
respectively, is available to offset future capital gains.
TAX STATUS OF THE FUNDS. Each fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code 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.
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. It is up to you or your tax preparer to determine
whether the sale of shares of a fund resulted in a capital gain or
loss or other tax consequence to you. 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.
TRUSTEES AND OFFICERS
The Trustees, Members of the Advisory Board, and executive officers of
the trust are listed below. The Board of Trustees governs each fund
and is responsible for protecting the interests of shareholders. The
Trustees are experienced executives who meet periodically throughout
the year to oversee each fund's activities, review contractual
arrangements with companies that provide services to each fund, and
review each fund's performance. 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 or its affiliates. The business
address of each Trustee, Member of the Advisory Board, and officer who
is an "interested person" (as defined in the 1940 Act ) 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 ( 68 ), 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.
(1998 ), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
J. GARY BURKHEAD ( 57 ), 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 and
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 . 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 a Director of 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). Mr. Gates also is a Trustee of the Forum for
International Policy and of the Endowment Association of the College
of William and Mary. In addition, he is a member of the National
Executive Board of the Boy Scouts of America.
E. BRADLEY JONES ( 71 ), 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
President, a Trustee and member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK ( 65 ), 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 National Arts Stabilization Inc., Chairman of
the Board of Trustees of the Greenwich Hospital Association,
Director of the Yale-New Haven Health Services Corp. (1998), 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 ( 55 ), Trustee, is Vice Chairman and Director of
FMR . 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 ( 65 ), 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 ( 69 ), 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 ( 65 ), Trustee (1993), is Chairman of the
Board, 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).
*ROBERT C. POZEN ( 52 ), 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. (1998) , 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 ( 44 ), is Vice President of Bond Funds,
Group Leade r of the Bond Group, Senior Vice President of FMR
(1997), and Vice President of FIMM (1998 ). Mr. Churchill joined
Fidelity in 1993 as Vice President and Group Leader of Taxable
Fixed-Income Investments.
BOYCE I. GREER ( 41 ), is Vice President of Money Market Funds
(1997), Group Leader of the Money Market Group (1997), Senior Vice
President of FMR (1997), and Vice President of FIMM (1998) . 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).
FRED L. HENNING, JR. ( 58 ), is Vice President of Fidelity's
Fixed-Income Group ( 1995), Senior Vice President of FMR (1995),
and Senior Vice President of FIMM (1998) . Before assuming his
current responsibilities, Mr. Henning was head of Fidelity's Money
Market Division.
CHRISTINE THOMPSON (_) is Vice President and manager of Spartan
Florida Municipal Income, which she has managed since July 1998. She
also manages several other Fidelity funds. Since joining Fidelity in
1985, Ms. Thompson has worked as a senior analyst and portfolio
manager.
ERIC D. ROITER ( 50 ), 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 ( 51 ), 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).
STANLEY N. GRIFFITH (52), Assistant Vice President (1998), is
Assistant Vice President of Fidelity's Fixed-Income Funds (1998) and
an employee of FMR Corp.
JOHN H. COSTELLO ( 52 ), Assistant Treasurer, is an employee of
FMR.
LEONARD M. RUSH ( 52 ), 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 ( 40 ), Assistant Treasurer
(1996), is Assistant Treasurer of Fidelity's Fixed-Income Funds
(1998) 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 ,
1998, or calendar year ended December 31, 1997, as applicable.

<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMPENSATION TABLE

Trustees Aggregate Aggregate Total
and Compensation Compensation from Compensation from the
Members of the Advisory Board from Spartan FL Muni Fund Complex*A
Spartan FL Muni Money IncomeB,D
MarketB,C

J. Gary Burkhead** $ 0 $ 0 $ 0

Ralph F. Cox $ $ $ 214,500

Phyllis Burke Davis $ $ $ 210,000

Robert M. Gates*** $ $ $176,000

Edward C. Johnson 3d** $ 0 $ 0 $ 0

E. Bradley Jones $ $ $ 211,500

Donald J. Kirk $ $ $ 211,500

Peter S. Lynch** $ 0 $ 0 $ 0

William O. McCoy**** $ $ $ 214,500

Gerald C. McDonough $ $ $ 264,500

Marvin L. Mann $ $ $ 214,500

Robert C. Pozen** $ 0 $ 0 $ 0

Thomas R. Williams $ $ $214,500

</TABLE>

* Information is for the calendar year ended December 31, 1997 for 230
funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated
by FMR.
*** Mr. Gates was appointed to the Board of Trustees of
Fidelity Court Street Trust effective March 1, 1997. Mr. Gates was
elected to the Board of Trustees of Fidelity Court Street Trust
II on December 17, 1997.
**** Mr. McCoy was appointed to the Board of Trustees of
Fidelity Court Street Trust effective January 1, 1997. Mr.
McCoy was 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 as
follows: Ralph F. Cox, $53,699; Marvin L. Mann, $53,699; and Thomas R.
Williams, $62,462.
B Compensation figures include cash, and may include amounts
required to be deferred and amounts deferred at the election of
Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__; Phyllis Burke Davis, $__;
Robert M. Gates, $__; E. Bradley Jones, $__; Donald J. Kirk, $__;
William O. McCoy, $__; Gerald C. McDonough, $__; Marvin L. Mann, $__;
and Thomas R. Williams, $__.
D The following amounts are required to be deferred by each
non-interested Trustee: Ralph F. Cox, $__; Phyllis Burke Davis, $__;
Robert M. Gates, $__; E. Bradley Jones, $__; Donald J. Kirk, $__;
William O. McCoy, $__; Gerald C. McDonough, $__; Marvin L. Mann, $__;
and Thomas R. Williams, $__.
E Certain of the non-interested Trustees' aggregate compensation
from a fund includes accrued voluntary deferred compensation as
follows: [trustee name, dollar amount of deferred compensation, fund
name]; [trustee name, dollar amount of deferred compensation, fund
name]; and [trustee name, dollar amount of deferred compensation, fund
name].
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (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 subject to vesting and 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 [DATE], approximately __% of [Fund Name(s)]'s total outstanding
shares was held by [FMR] [[and] [an] FMR affiliate[s]]. FMR Corp. is
the ultimate parent company of [FMR] [[and] [this/these] FMR
affiliate[s]]. By virtue of his ownership interest in FMR Corp., as
described in the "Control of Investment Adviser[s]" section on page
___, Mr. Edward C. Johnson 3d, President and Trustee of the fund, may
be deemed to be a beneficial owner of these shares. As of the above
date, with the exception of Mr. Johnson 3d's deemed ownership of [Fund
Name(s)]'s shares, the Trustees, Members of the Advisory Board, and
officers of the funds owned, in the aggregate, less than __% of each
fund's total outstanding shares.
As of [DATE] , the Trustees, Members of the Advisory Board, and
officers of [the/each ] fund owned, in the aggregate, less than
__% of [[each fund/[Fund Name(s)]] 's total outstanding
shares.
As of [DATE ], the following owned of record or
beneficially 5% or more (up to and including 25%) of
[[each fund/[Fund Name(s)]] 's outstanding shares:
As of [DATE] , approximately ____% of [NAME OF FUND] 's
total outstanding shares were held by [NAME OF SHAREHOLDER] ;
approximately ___% of [NAME OF FUND] 's total outstanding shares
were held by [NAME OF SHAREHOLDER] ; and approximately
___ % of [NAME OF FUND]' s total outstanding shares were
held by [NAME OF SHAREHOLDER].
A shareholder owning of record or beneficially more than 25% of a
fund's outstanding shares may be considered a controlling person. That
shareholder's vote could have a more significant effect on matters
presented at a shareholders' meeting than votes of other shareholders.
CONTROL OF INVESTMENT ADVISERS
FMR Corp., organized in 1972, is the ultimate parent company of FMR
and FIMM. 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.
MANAGEMENT CONTRACTS
Each fund has entered into a management contract with FMR, pursuant
to which FMR furnishes investment advisory and other services.
MANAGEMENT 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
the fund in accordance with its investment objective,
policies and limitations. FMR also provides each fund with all
necessary office facilities and personnel for servicing the
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 and Spartan Florida
Municipal Income each pays FMR a monthly management fee at the
annual rate of 0.50 % and 0.55 %, respectively, of the
fund's 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 reducing management fees for each fund .

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund Fiscal Years Ended Amount of Credits Reducing Management Fees
November 30, 1998 Management Fees Paid to FMR

Spartan FL Muni Money 199 8 $ $ *
Market

199 7 $ $ *

199 6 $ $ *

Spartan FL Muni Income 199 8 $ $ *

199 7 $ $ *

199 6 $ $ *

</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) which is subject to
revision or termination. 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.
SUB-ADVISER. On behalf of Spartan Florida Municipal Money
Market, FMR has entered into a sub-advisory agreement with FIMM
pursuant to which FIMM has primary responsibility for choosing
investments for the fund. Previously, FMR Texas Inc. (FMR Texas) had
primary responsibility for providing investment management services to
the fund. On January 23, 1998, FMR Texas was merged into FIMM, which
succeeded to the operations of FMR Texas.
On behalf of Spartan Florida Municipal Income , FMR has entered
into a sub-advisory agreement with FIMM pursuant to which FIMM has
primary responsibility for choosing investments fo r the fund.
Under the terms of the sub-advisory agreements, FMR pays FIMM
fees equal to 50% of the management fee payable to FMR under its
management contract with each fund. The fees paid to FIMM 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, for the fiscal
years ended November 30 , 1998, 1997, and 1996, FMR paid FMR
Texas fees of $________, $_________ and $________, respectively. On
behalf of Spartan Florida Municipal Money Market, for the fiscal year
ended November 30 , 1998, FMR paid FIMM fees of $________.
DISTRIBUTION SERVICES
Each fund has entered into a distribution agreement with FDC, an
affiliate of FMR. 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 the fund, which are
continuously offered at NAV. Promotional and administrative expenses
in connection with the offer and sale of shares are paid by FMR.
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 providing services
intended to result in the sale of fund shares and/or shareholder
support services. In addition, each Plan provides that FMR,
directly or through FDC, may pay intermediaries , such as
banks, broker-dealers and other service-providers , that provide
those services. Currently, the Board of Trustees has authorized
such payments for shares.
Payments made by FMR either directly or through FDC to
intermediaries for the fiscal year ended 1998 amounted to $____ [for
[Fund Name]], and $_____ [for [Fund Name]].
FMR made no payments either directly or through FDC to
intermediaries for the fiscal year ended 1998.
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 not 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 or stabilization of cash flows 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 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.
TRANSFER AND SERVICE AGENT AGREEMENTS
Each fund has entered into a transfer agent agreement with UMB,
which is located at 1010 Grand Avenue, Kansas City, Missouri.
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 account fee
and an asset-based fee each paid monthly with respect to each
account in a fund. For retail accounts and cer tain institutional
accounts, these fees are based on account size and fund type. For
certain institutional retirement accounts, these fees are based on
fund type. For certain other institutional retirement accounts, these
fees are based on account type (i.e., omnibus or non-omnibus) and, for
non-omnibus accounts, fund type. The account fees are subject to
increase based on postage rate changes.
FSC also collects small account fees from certain accounts with
balances of less than $2,500.
In addition, FSC collects a $ 5.00 exchange fee for each
exchange out of Spartan Florida Municipal Money Market.
FSC also collects Spartan Florida Municipal Money Market's
$ 5.00 account closeout fee.
FSC also collects Spartan Florida Municipal Money Market's
$ 2.00 checkwriting fee.
FSC also collects Spartan Florida Municipal Money Market's
$ 5.00 wire transaction fee.
In addition, UMB receives the pro rata portion of the transfer agency
fees applicable to shareholder accounts in a qualified state
tuition program (QSTP), as defined under the Small Business Job
Protection Act of 1996, managed by FMR or an affiliate and each
Fidelity Freedom Fund, a fund of funds managed by an FMR affiliate,
according to the percentage of the QSTP's or 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.
DESCRIPTION OF THE TRUSTS
TRUST ORGANIZATION. Spartan Florida Municipal Money Market Fund is
a fund of Fidelity Court Street Trust II, an open-end management
investment company organized as a Delaware business trust on June
20, 1991. Currently, there are five funds of Fidelity Court Street
Trust II: Fidelity Connecticut Municipal Money Market Fund, Fidelity
New Jersey Municipal Money Market Fund, Spartan Florida Municipal
Money Market Fund, Spartan Connecticut Municipal Money Market Fund,
and Spartan New Jersey Municipal Money Market Fund. The Trustees are
permitted to create additional funds in the trust.
Spartan Florida Municipal Income Fund is a fund of Fidelity Court
Street Trust, an open-end management investment company organized as a
Massachusetts business trust on April 21, 1977. Currently, there are
four funds of Fidelity Court Street Trust: Spartan Connecticut
Municipal Income Fund, Spartan Municipal Income Fund, Spartan New
Jersey Municipal Income Fund, and Spartan Florida Municipal Income
Fund. The Trustees are permitted to create additional funds in the
trust.
The assets of the Massachusetts trust received for the issue or
sale of shares of each of its funds and all income, earnings, profits,
and proceeds thereof, subject to the rights of creditors, are
allocated to such fund, and constitute the underlying assets of such
fund. The underlying assets of each fund in the Massachusetts trust
shall be charged with the liabilities and expenses attributable to
such fund. Any general expenses of the Massachusetts trust shall be
allocated between or among any one or more of its funds.
The assets of the Delaware trust received for the issue or sale of
shares of each of its funds and all income, earnings, profits, and
proceeds thereof, subject to the rights of creditors, are allocated to
such fund, and constitute the underlying assets of such fund. The
underlying assets of each fund in the Delaware trust shall be charged
with the liabilities and expenses attributable to such fund. Any
general expenses of the Delaware trust shall be allocated between or
among any one or more of its funds.
SHAREHOLDER LIABILITY - MASSACHUSETTS TRUST. The Massachusetts trust
is an entity commonly known as a "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 relating to the trust 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 shareholder or former shareholder held
personally liable for the obligations of the fund solely by reason of
his or her being or having been a shareholder and not because of his
or her acts or omissions or for some other reason. 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 a 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.
SHAREHOLDER 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. The Trust Instrument
provides that the 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 trust or the Trustees relating to the trust or
to a fund shall include a provision limiting the obligations created
thereby to the trust or to one or more funds and its or their assets.
The Trust Instrument further provides that shareholders of a fund
shall not have a claim on or right to any assets belonging to any
other fund.
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 solely by reason of
his or her being or having been a shareholder and not because of his
or her acts or omissions or for some other reason. 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 a 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.
VOTING RIGHTS - MASSACHUSETTS TRUST. Each fund's capital
consists of shares of beneficial interest. As a shareholder, you are
entitled to one vote for each dollar of net asset value you own.
The voting rights of shareholders can be changed only by a
shareholder vote. Shares may be voted in the aggregate, by fund and by
class.
The shares have no preemptive or conversion rights. Shares are fully
paid and nonassessable, except as set forth under the heading
"Shareholder Liability" above.
The trust or any of its funds may be terminated upon the sale
of its assets to another open-end management investment
comp any, or upon liquidation and distribution of its assets,
if approved by a vote of shareholders of the trust or
the fund. In the event of the dissolution or liquidation of the
trust, shareholders of each of its funds are entitled to receive the
underlying assets of such fund available for distribution. In the
event of the dissolution or liquidation of a fund, shareholders of
that fund are entitled to receive the underlying assets of the fund
available for distribution.
VOTING RIGHTS - DELAWARE TRUST. Each fund's capital consists
of shares of beneficial interest. As a shareholder, you are entitled
to one vote for each dollar of net asset value you own. The voting
rights of shareholders can be changed only by a shareholder vote.
Shares may be voted in the aggregate, by fund and by class.
The shares have no preemptive or conversion rights. Shares are
fully paid and nonassessable, except as set forth under the heading
"Shareholder Liability" above.
The trust or any of its funds may be terminated upon the sale of
its assets to another open-end management investment company or series
thereof, or upon liquidation and distribution of its assets. Generally
such terminations must be approved by a vote of shareholders. In the
event of the dissolution or liquidation of the trust, shareholders of
each of its funds are entitled to receive the underlying assets of
such fund available for distribution. In the event of the dissolution
or liquidation of a fund, shareholders of that fund are entitled to
receive the underlying assets of the fund available for
distribution.
Under the Trust Instrument, the Trustees may, without shareholder
vote, in order to change the form of organization of the trust
cause the trust to merge or consolidate with one or more
trusts, partnerships, associations, limited liability companies or
corporations, as long as the surviving entity is an open-end
management investment compan y, or is a fund thereof, that will
succeed to or assume the trust's registration statement, or
cause the trust to incorporate under Delaware law.
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.
FMR, its officers and directors, its affiliated companies, and
members of 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. _______________ serves as the trust's
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, 1998 , and report (s) of
the auditor, are included in the funds' Annual Report and are
incorporated herein by reference.
APPENDIX
Spartan, Fidelity, Fidelity Investments and (Pyramid) Design, and
Fidelity Focus are registered trademarks of FMR Corp.
THE THIRD PARTY MARKS APPEARING ABOVE ARE THE MARKS OF THEIR
RESPECTIVE OWNERS.

FIDELITY COURT STREET TRUST
PART C. OTHER INFORMATION
Item 23. Exhibits
(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.
(b) 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.
(c) Not applicable.
(d) (1) 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.
(2) 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.
(3) 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.
(4) 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.
(e) (1) 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
(8) 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.
(9) Amendment 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.
(f) (1) 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.
(2) 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.
(g) (1) 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).
(2) 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).
(h) Not Applicable.
(i) Not Applicable.
(j) Not Applicable.
(k) Not Applicable.
(l) Not Applicable.
(m) (1) 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.
(2) 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.
(3) 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.
(4) 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.
(n) Not Applicable.
(o) Not Applicable.
Item 24. Trusts Controlled by or under Common Control with this Trust
The Board of Trustees of the Trust is the same as the board of other
Fidelity funds, each of which has Fidelity Management & Research
Company, or an affiliate, as its investment adviser. In addition, the
officers of the Trust are substantially identical to those of the
other Fidelity funds. Nonetheless, the Trust takes the position that
it is not under common control with other Fidelity funds because the
power residing in the respective boards and officers arises as the
result of an official position with the respective trusts.
Item 25. 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 Trust 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 or her in connection with any
claim, action, suit or proceeding in which he or she is involved by
virtue of his or her service as a trustee or officer and against any
amount incurred in settlement thereof. Indemnification will not be
provided to a person adjudged by a court or other adjudicatory body to
be liable to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his
or her duties (collectively, "disabling conduct"), or not to have
acted in good faith in the reasonable belief that his or her action
was in the best interest of the Trust. In the event of a settlement,
no indemnification may be provided unless there has been a
determination, as specified in the Declaration of Trust, that the
officer or trustee did not engage in disabling conduct.
Pursuant to Section 11 of the Distribution Agreement, the Trust
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 (including the
reasonable cost of investigating or defending any alleged loss,
liability, claim, damages, or expense and reasonable counsel fees
incurred in connection therewith) 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
Trust (as from time to time amended) included an untrue statement of a
material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading
under the 1933 Act, or any other statute or the common law. However,
the Trust 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
Trust by or on behalf of the Distributor. In no case is the indemnity
of the Trust in favor of the Distributor or any person indemnified to
be deemed to protect the Distributor or any person against any
liability to the Issuer or its security holders to which the
Distributor or such person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
Pursuant to the agreement by which Fidelity Service Company, Inc.
("FSC") is appointed sub-transfer agent, the Transfer Agent agrees to
indemnify FSC for FSC'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 Fund for the same events. Under the Transfer
Agency Agreement, the Trust 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 Trust, including by a shareholder which names the Transfer
Agent and/or the Trust 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 its duties) which results from
the negligence of the Trust, 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 Trust, 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 Trust, 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 26. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY (FMR)
82 Devonshire Street, Boston, MA 02109
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 and Director of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman
of the Board and Director of FMR Corp., Fidelity
Investments Money Management, Inc. (FIMM), Fidelity
Management & Research (U.K.) Inc. (FMR U.K.), and
Fidelity Management & Research (Far East) Inc. (FMR
Far East); Chairman of the Executive Committee of
FMR; Director of Fidelity Investments Japan Limited
(FIJ); 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 FIMM, FMR U.K., and FMR Far East;
Previously, General Counsel, Managing Director, and
Senior Vice President of FMR Corp.

Peter S. Lynch Vice Chairman of the Board and Director of FMR.

John H. Carlson Vice President of FMR and of funds advised by FMR.

Dwight D. Churchill Senior Vice President of FMR and Vice President of
Bond Funds advised by FMR; Vice President of FIMM.

Brian Clancy Vice President of FMR and Treasurer of FMR, FIMM,
FMR U.K., and FMR Far East.

Barry Coffman Vice President of FMR.

Arieh Coll Vice President of FMR.

Frederic G. Corneel Tax Counsel of FMR.

Stephen G. Manning Assistant Treasurer of FMR, FIMM, FMR U.K., FMR
Far East; Vice President and Treasurer of FMR Corp.;
Treasurer of Strategic Advisers, Inc.

William Danoff Senior Vice President of FMR and Vice President of a
fund advised by FMR.

Scott E. DeSano Vice President of FMR.

Penelope Dobkin Vice President of FMR and of a fund advised by FMR.

Walter C. Donovan Vice President of FMR.

Bettina Doulton Vice President of FMR and of funds advised by FMR.

Margaret L. Eagle Vice President of FMR and of funds advised by FMR.

William R. Ebsworth Vice President of 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., FMR Far East, and Strategic Advisers, Inc.;
Secretary of FIMM; Associate General Counsel FMR
Corp.

David L. Glancy Vice President of FMR and of a fund 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 and Vice President of
Money Market Funds advised by FMR; Vice President
of FIMM.

Bart A. Grenier Senior Vice President of FMR; Vice President of
High-Income Funds advised by FMR.

Robert Haber Vice President of FMR.

Richard C. Habermann Senior Vice President of FMR; Vice President of funds
advised by FMR.

Fred L. Henning Jr. Senior Vice President of FMR and Vice President of
Fixed-Income Funds advised by FMR.

Bruce T. Herring Vice President of FMR.

Robert F. Hill Vice President of FMR; Director of Technical Research.

Abigail P. Johnson Senior Vice President of FMR and Vice President of
funds advised by FMR; Director of FMR Corp.;
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.

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.

Richard R. Mace Jr. Vice President of FMR and of funds advised by FMR.

Charles A. Mangum Vice President of FMR and of a fund advised by FMR.

Kevin McCarey Vice President of FMR and of a fund advised by FMR.

Neal P. Miller Vice President of FMR.

Jacques Perold Vice President of FMR.

Alan Radlo Vice President of FMR.

Eric D. Roiter Senior Vice President and General Counsel of FMR and
Secretary of funds advised by 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.

Richard A. Silver Vice President of FMR.

Carol A. Smith-Fachetti Vice President of FMR.

Steven J. Snider Vice President of FMR and of funds advised by 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;
Previously, Senior Vice President and Director of
Operations and Compliance of FMR U.K.

Thomas M. Sprague Vice President of FMR and of funds advised by FMR.

Robert E. Stansky Senior Vice President of FMR and Vice President of a
fund advised by FMR.

Scott D. Stewart Vice President of FMR.

Thomas Sweeney Vice President of FMR.

Beth F. Terrana Senior Vice President of FMR and 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 and Vice President of
funds advised by FMR; Director of FMR Corp.

Steven S. Wymer Vice President of FMR and of a fund advised by FMR.

</TABLE>

(2) FIDELITY INVESTMENTS MONEY MANAGEMENT, INC. (FIMM)
Contra Way, Merrimack, NH 03054
FIMM provides investment advisory services to Fidelity Management &
Research Company. The directors and officers of the Sub-Adviser have
held the following positions of a substantial nature during the past
two fiscal years.
Edward C. Johnson 3d Chairman of the Board and Director of FIMM,
FMR, FMR Corp., FMR Far East, and FMR
U.K.; Chairman of the Executive Committee of
FMR; President and Chief Executive Officer of
FMR Corp.; Director of Fidelity Investments
Japan Limited (FIJ); 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 FIMM, FMR U.K., and
FMR Far East; Previously, General Counsel,
Managing Director, and Senior Vice President of
FMR Corp.

Fred L. Henning Jr. Senior Vice President of FIMM; Senior Vice
President of FMR and Vice President of
Fixed-Income Funds advised by FMR.

Boyce I. Greer Vice President of FIMM; Senior Vice President
of FMR and Vice President of Money Market
Funds advised by FMR.

Dwight D. Churchill Vice President of FIMM; Senior Vice President
of FMR and Vice President of Bond Funds
advised by FMR.

Brian Clancy Treasurer of FIMM, FMR Far East, FMR U.K.,
and FMR and Vice President of FMR.

Jay Freedman Secretary of FIMM; Clerk of FMR U.K., FMR
Far East, FMR Corp. and Strategic Advisers,
Inc.; Assistant Clerk of FMR; Secretary of
FIMM; Associate General Counsel FMR Corp.

Stephen G. Manning Assistant Treasurer of FIMM, FMR U.K., FMR
Far East, and FMR; Vice President and Treasurer
of FMR Corp.; Treasurer of Strategic Advisers,
Inc.

Item 27. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for
all funds advised by FMR or an affiliate.
(b)

Name and Principal Positions and Offices Positions and Offices

Business Address* with Underwriter with Fund

Edward C. Johnson 3d Director Trustee and President

Michael Mlinac Director None

James Curvey Director None

Martha B. Willis President None

Eric D. Roiter Senior 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 28. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company, Fidelity Service
Company, Inc. or Fidelity Investments Institutional Operations
Company, Inc., 82 Devonshire Street, Boston, MA 02109, or the funds'
custodian, UMB Bank, n.a., 1010 Grand Avenue, Kansas City.
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.

SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 73 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 6th day
of November, 1998.

Fidelity Court Street Trust
By:/s/Edward C. Johnson 3d, President
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 President and Trustee November 6, 1998

Edward C. Johnson 3d (Principal Executive Officer)

/s/Richard A. Silver______________ Treasurer November 6, 1998

Richard A. Silver

/s/Robert C. Pozen_______________ Trustee November 6, 1998

Robert C. Pozen

/s/Ralph F. Cox * Trustee November 6, 1998

Ralph F. Cox

/s/Phyllis Burke Davis * Trustee November 6, 1998

Phyllis Burke Davis

/s/Robert M. Gates ** Trustee November 6, 1998

Robert M. Gates

/s/E. Bradley Jones * Trustee November 6, 1998

E. Bradley Jones

/s/Donald J. Kirk * Trustee November 6, 1998

Donald J. Kirk

/s/Peter S. Lynch * Trustee November 6, 1998

Peter S. Lynch

/s/Marvin L. Mann * Trustee November 6, 1998

Marvin L. Mann

/s/William O. McCoy * Trustee November 6, 1998

William O. McCoy

/s/Gerald C. McDonough * Trustee November 6, 1998

Gerald C. McDonough

/s/Thomas R. Williams * Trustee November 6, 1998

Thomas R. Williams

</TABLE>

Signature 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