SUPPLEMENT TO FIDELITY'S MICHIGAN MUNICIPAL FUNDS' FEBRUARY 26, 1998
PROSPECTUS
The following information replaces the first and fourth paragraphs,
respectively, found in the "Who May Want to Invest" section on page 4.
These funds may be appropriate for investors in higher tax brackets
who seek high current income that is free from federal and Michigan
income taxes. Each fund's level of risk and potential reward depend on
the quality and maturity of its investments. The money market fund is
managed to keep its share price stable at $1.00. The bond fund, with
its broader range of investments, has the potential for higher yields,
but also carries a higher degree of risk.
Spartan Michigan Municipal Income is a non-diversified fund.
Non-diversified funds may invest a greater portion of their assets in
securities of individual issuers than diversified funds. As a result,
changes in the market value of a single issuer could cause greater
fluctuations in share value than would occur in a more diversified
fund.
The following information replaces similar information found in the
"Charter" section on page 12.
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. Fidelity Michigan
Municipal Money Market Fund is a diversified fund of Fidelity
Municipal Trust II and Spartan Michigan Municipal Income Fund is a
non-diversified fund of Fidelity Municipal Trust. Both trusts are
open-end management investment companies. Fidelity Municipal Trust II
was organized as a Delaware business trust on June 20, 1991. Fidelity
Municipal Trust was organized as a Massachusetts business trust on
June 22, 1984. There is a remote possibility that one fund might
become liable for a misstatement in the prospectus about another fund.
The following information supplements similar information found in
the "Investment Principles and Risks" section on page 13.
FIDELITY'S APPROACH TO MONEY MARKET FUNDS. Money market
funds earn income at current money market rates. In managing money
market funds, FMR stresses preservation of capital, liquidity, and
income. The money market fund will purchase only high-quality
securities that FMR believes present minimal credit risks and will
observe maturity restrictions on securities it buys. 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 insurance.
The following information replaces similar information found in the
"Securities and Investment Practices" section on page 19.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry
or type of project. Economic, business, or political changes can
affect all securities of a similar type. A fund that is not
diversified may be more sensitive to changes in the market value of a
single issuer or industry.
RESTRICTIONS: With respect to 75% of its total assets Michigan
Municipal Money Market may not invest more than 5% in the securities
of any one issuer. This limitation does not apply to U.S. Government
securities or to securities of other money market funds.
Spartan Michigan Municipal Income is considered non-diversified.
Generally, to meet federal tax requirements at the close of each
quarter, the fund does not invest more than 25% of its total assets in
the securities of any one issuer and, with respect to 50% of total
assets, does not invest more than 5% of its total assets in the
securities of any one issuer. These limitations do not apply to U.S.
Government securities or to securities of other investment companies.
Each fund may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
The following information replaces similar information found under the
heading "Management Fee" in the "Breakdown of Expenses" section
beginning on page 20:
The total management fee for Michigan Municipal Money Market for the
fiscal year ended December 31, 1997 was 0.39% of its average net
assets.
Because of a reimbursement arrangement, the total management fee for
Spartan Michigan Municipal Income for the fiscal year ended December
31, 1997 was 0.37% of its average net assets.
SUPPLEMENT TO THE
FIDELITY MICHIGAN MUNICIPAL MONEY MARKET FUND
A FUND OF FIDELITY MUNICIPAL TRUST II
SPARTAN(registered trademark) MICHIGAN MUNICIPAL INCOME FUND
A FUND OF FIDELITY MUNICIPAL TRUST
FEBRUARY 26, 1998
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
INVESTMENT LIMITATIONS OF MICHIGAN 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
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; 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 the purchase 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-ended 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) 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 government 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 was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's policies on quality and maturity, see the section
entitled "Quality and Maturity" on page 9.
THE FOLLOWING INFORMATION SUPPLEMENTS THE FUNDAMENTAL INVESTMENT
LIMITATIONS IN THE "INVESTMENT POLICIES AND LIMITATIONS" SECTION UNDER
THE HEADING "INVESTMENT LIMITATIONS OF SPARTAN MICHIGAN MUNICIPAL
INCOME FUND" ON PAGE 3.
(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 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 INFORMATION SUPPLEMENTS THE NON-FUNDAMENTAL
INVESTMENT LIMITATIONS IN THE "INVESTMENT POLICIES AND LIMITATIONS"
SECTION UNDER THE HEADING "INVESTMENT LIMITATIONS OF SPARTAN MICHIGAN
MUNICIPAL INCOME FUND" BEGINNING ON PAGE 3.
(vii) 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.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
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
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.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE FIRST PARAGRAPH OF THE "MANAGEMENT CONTRACTS" SECTION ON PAGE 27.
Each fund has entered into a management contract with FMR, pursuant
to which FMR furnishes investment advisory and other services.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "MANAGEMENT CONTRACTS" SECTION UNDER THE HEADING "MANAGEMENT FEES"
BEGINNING ON PAGE 28.
MANAGEMENT FEES. For the services of FMR under the
management contract, each fund 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.
The following is the fee schedule for the funds.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee 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 $549 billion of group net assets - the approximate level for
December 1997 - was 0.1372%, which is the weighted average of the
respective fee rates for each level of group net assets up to $549
billion.
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH FOUND UNDER THE
HEADING "SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST" IN
THE "DESCRIPTION OF THE TRUSTS" SECTION ON PAGE 33.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The
Massachusetts trust is an entity of the type commonly known as
"Massachusetts business trust." Under Massachusetts law, shareholders
of such a trust may, under certain circumstances, be held personally
liable for the obligations of the trust. The Declaration of Trust
provides that the Massachusetts trust shall not have any claim against
shareholders except for the payment of the purchase price of shares
and requires that each agreement, obligation, or instrument entered
into or executed by the Massachusetts trust or its Trustees shall
include a provision limiting the obligations created thereby to the
Massachusetts trust or to one or more funds and its or their assets.
The Declaration of Trust provides for indemnification out of each
fund's property of any shareholders held personally liable for the
obligations of the fund. The Declaration of Trust also provides that
each fund shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the fund and
satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the
risk of personal liability to shareholders is remote.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND
UNDER THE HEADING "VOTING RIGHTS - BOTH TRUSTS" IN THE "DESCRIPTION OF
THE TRUSTS" SECTION ON PAGE 34.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. As a shareholder, you receive one vote for each
dollar value of net asset value you own. The shares have no preemptive
or conversion rights; voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the respective "Shareholder and Trustee Liability"
headings above. Shareholders representing 10% or more of a trust or
one of its funds may, as set forth in the Declaration of Trust or
Trust Instrument, call meetings of the trust or fund for any purpose
related to the trust or fund, as the case may be, including, in the
case of a meeting of an entire trust, the purpose of voting on removal
of one or more Trustees.
A trust or any fund may be terminated upon the sale of its assets
to, or merger with, another open-end management investment company or
series thereof, or upon liquidation and distribution of its assets.
Generally, the merger of a trust or a fund with another entity or the
sale of substantially all of the assets of a trust or a fund to
another entity requires the vote of a majority of the outstanding
shares of a trust or a fund, as determined by the current value of
each shareholder's investment in the fund or trust. The Trustees of
the Massachusetts trust may, however, reorganize or terminate the
trust or any fund without prior shareholder approval. The Trustees of
the Delaware trust may, without prior shareholder approval, change the
form of the organization of the Delaware trust by merger,
consolidation, or incorporation. If not so terminated or reorganized,
the trusts and their funds will continue indefinitely. Each fund of
Fidelity Municipal Trust may invest all of its assets in another
investment company.
SUPPLEMENT TO
FIDELITY'S OHIO
MUNICIPAL FUNDS
FEBRUARY 26, 1998
PROSPECTUS
The following information replaces similar information found in the
"Who May Want to Invest" section on page 4.
These funds may be appropriate for investors in higher tax brackets
who seek high current income that is free from federal and Ohio income
taxes. Each fund's level of risk and potential reward depend on the
quality and maturity of its investments. The money market fund is
managed to keep its share price stable at $1.00. The bond fund, with
its broader range of investments, has the potential for higher yields,
but also carries a higher degree of risk.
The following information supplements the information found in the
"Who May Want to Invest" section on page 4.
Spartan Ohio Municipal Income Fund is a non-diversified fund.
Non-diversified funds may invest a greater portion of their assets in
securities of individual issuers than diversified funds. As a result,
changes in the market value of a single issuer could cause greater
fluctuations in share value than would occur in a more diversified
fund.
The following information replaces similar information found in the
"Charter" section on page 13.
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. Fidelity Ohio Municipal
Money Market Fund is a diversified fund of Fidelity Municipal Trust II
and Spartan Ohio Municipal Income Fund is a non-diversified fund of
Fidelity Municipal Trust. Both trusts are open-end management
investment companies. Fidelity Municipal Trust II was organized as a
Delaware business trust on June 20, 1991. Fidelity Municipal Trust was
organized as a Massachusetts business trust on June 22, 1984. There is
a remote possibility that one fund might become liable for a
misstatement in the prospectus about another fund.
The following information replaces similar information found under
the heading "Investment Principles and Risks" on page 14.
FIDELITY'S APPROACH TO MONEY MARKET FUNDS. Money market funds earn
income at current money market rates. In managing money market funds,
FMR stresses preservation of capital, liquidity, and income. The money
market fund will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restriction on securities it buys. 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 following information replaces similar information found in the
"Securities and Investment Practices" section beginning on page 19.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry
or type of project. Economic, business, or political changes can
affect all securities of a similar type. A fund that is not
diversified may be more sensitive to changes in the market value of a
single issuer or industry.
RESTRICTIONS: With respect to 75% of its total assets, Fidelity Ohio
Municipal Money Market Fund may not invest more than 5% in the
securities of any one issuer. This limitation does not apply to U.S.
Government securities or to securities of other money market funds.
Spartan Ohio Municipal Income is considered non-diversified.
Generally, to meet federal tax requirements at the close of each
quarter, the fund does not invest more than 25% of its total assets in
the securities of any one issuer and, with respect to 50% of total
assets, does not invest more than 5% of its total assets in the
securities of any one issuer. These limitations do not apply to U.S.
Government securities or to securities of other investment companies.
Each fund may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
SUPPLEMENT TO THE
FIDELITY OHIO MUNICIPAL MONEY MARKET FUND
A FUND OF FIDELITY MUNICIPAL TRUST II
SPARTAN(registered trademark) OHIO MUNICIPAL INCOME FUND
A FUND OF FIDELITY MUNICIPAL TRUST
FEBRUARY 26, 1998
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
INVESTMENT LIMITATIONS OF FIDELITY OHIO 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(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; 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 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 may borrow money only (a) from a bank or from a
registered investment company or fund 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 government 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 was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's policies on quality and maturity, see the section
entitled "Quality and Maturity" on page 9.
THE FOLLOWING INFORMATION SUPPLEMENTS THE FUNDAMENTAL INVESTMENT
LIMITATIONS IN THE "INVESTMENT POLICIES AND LIMITATIONS" SECTION UNDER
THE HEADING "INVESTMENT LIMITATIONS OF SPARTAN OHIO MUNICIPAL INCOME
FUND" ON PAGE 3.
(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 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 INFORMATION SUPPLEMENTS THE NON-FUNDAMENTAL
INVESTMENT LIMITATIONS IN THE "INVESTMENT POLICIES AND LIMITATIONS"
SECTION UNDER THE HEADING "INVESTMENT LIMITATIONS OF SPARTAN OHIO
MUNICIPAL INCOME FUND" BEGINNING ON PAGE 3.
(vii) 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.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
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
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.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE FIRST PARAGRAPH OF THE "MANAGEMENT CONTRACTS" SECTION BEGINNING ON
PAGE 27.
Each fund has entered into a management contract with FMR, pursuant
to which FMR furnishes investment advisory and other services.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "MANAGEMENT CONTRACTS" SECTION UNDER THE HEADING "MANAGEMENT FEES"
BEGINNING ON PAGE 28.
MANAGEMENT FEES. For the services of FMR under the
management contract, each fund 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.
The following is the fee schedule for the funds.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee 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 $549 billion of group net assets - the approximate level for
December 1997 - was 0.1372%, which is the weighted average of the
respective fee rates for each level of group net assets up to $549
billion.
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH FOUND UNDER
THE HEADING "SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST"
IN THE "DESCRIPTION OF THE TRUSTS" SECTION ON PAGE 34.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The
Massachusetts trust is an entity of the type commonly known as
"Massachusetts business trust." Under Massachusetts law, shareholders
of such a trust may, under certain circumstances, be held personally
liable for the obligations of the trust. The Declaration of Trust
provides that the Massachusetts trust shall not have any claim against
shareholders except for the payment of the purchase price of shares
and requires that each agreement, obligation, or instrument entered
into or executed by the Massachusetts trust or its Trustees shall
include a provision limiting the obligations created thereby to the
Massachusetts trust or to one or more funds and its or their assets.
The Declaration of Trust provides for indemnification out of each
fund's property of any shareholders held personally liable for the
obligations of the fund. The Declaration of Trust also provides that
each fund shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the fund and
satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the
risk of personal liability to shareholders is remote.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND UNDER
THE HEADING "VOTING RIGHTS - BOTH TRUSTS" IN THE "DESCRIPTION OF THE
TRUSTS" SECTION BEGINNING ON PAGE 34.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. As a shareholder, you receive one vote for each
dollar value of net asset value you own. The shares have no preemptive
or conversion rights; voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the respective "Shareholder and Trustee Liability"
headings above. Shareholders representing 10% or more of a trust or
one of its funds may, as set forth in the Declaration of Trust or
Trust Instrument, call meetings of the trust or fund for any purpose
related to the trust or fund, as the case may be, including, in the
case of a meeting of an entire trust, the purpose of voting on removal
of one or more Trustees.
A trust or any fund may be terminated upon the sale of its assets
to, or merger with, another open-end management investment company or
series thereof, or upon liquidation and distribution of its assets.
Generally, the merger of a trust or a fund with another entity or the
sale of substantially all of the assets of a trust or a fund to
another entity requires the vote of a majority of the outstanding
shares of a trust or a fund, as determined by the current value of
each shareholder's investment in the fund or trust. The Trustees of
the Massachusetts trust may, however, reorganize or terminate the
trust or any fund without prior shareholder approval. The Trustees of
the Delaware trust may, without prior shareholder approval, change the
form of the organization of the Delaware trust by merger,
consolidation, or incorporation. If not so terminated or reorganized,
the trusts and their funds will continue indefinitely. Each fund of
Fidelity Municipal Trust may invest all of its assets in another
investment company.
SUPPLEMENT TO THE SPARTAN(registered trademark) PENNSYLVANIA MUNICIPAL
FUNDS
FEBRUARY 26, 1998
PROSPECTUS
The following information supplements similar information found in
the "Investment Principles and Risks" section on page 14.
FIDELITY'S APPROACH TO MONEY MARKET FUNDS. Money market
funds earn income at current money market rates. In managing money
market funds, FMR stresses preservation of capital, liquidity, and
income. The money market fund will purchase only high-quality
securities that FMR believes present minimal credit risks and will
observe maturity restrictions on securities it buys. 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 following information replaces the similar information found in
the "FMR and Its Affiliates" section on page 13.
Christine Thompson is Vice President and manager of Spartan
Pennsylvania 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.
The following information replaces the first and fourth paragraphs,
respectively, found in the "Who May Want to Invest" section on page 4.
These funds may be appropriate for investors in higher tax brackets
who seek high current income that is free from federal income tax and
Pennsylvania personal income tax. Each fund's level of risk and
potential reward depend on the quality and maturity of its
investments. The money market fund is managed to keep its share price
stable at $1.00. The bond fund, with its broader range of investments,
has the potential for higher yields, but also carries a higher degree
of risk.
Spartan Pennsylvania Municipal Income is a non-diversified fund.
Non-diversified funds may invest a greater portion of their assets in
securities of individual issuers than diversified funds. As a result,
changes in the market value of a single issuer could cause greater
fluctuations in share value than would occur in a more diversified
fund.
The following information replaces similar information found in the
"Charter" section on page 13.
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders'
money and invests it toward a specified goal. Spartan Pennsylvania
Municipal Money Market is a diversified fund of Fidelity Municipal
Trust II, and Spartan Pennsylvania Municipal Income is a
non-diversified fund of Fidelity Municipal Trust II. Both trusts are
open-end management investment companies. Fidelity Municipal Trust was
organized as a Delaware business trust on June 20, 1991. Fidelity
Municipal Trust II was organized as a Massachusetts business trust on
June 20, 1991. There is a remote possibility that one fund might
become liable for a misstatement in the prospectus about another fund.
The following information replaces similar information found in the
"Securities and Investment Practices" section on page 20.
DIVERSIFICATION. Diversifying a fund's investment portfolio can reduce
the risks of investing. This may include limiting the amount of money
invested in any one issuer or, on a broader scale, in any one industry
or type of project. Economic, business, or political changes can
affect all securities of a similar type. A fund that is not
diversified may be more sensitive to changes in the market value of a
single issuer or industry.
RESTRICTIONS: With respect to 75% of its total assets Spartan
Pennsylvania Municipal Money Market may not invest more than 5% in the
securities of any one issuer. This limitation does not apply to U.S.
Government securities or to securities of other money market funds.
Spartan Pennsylvania Municipal Income is considered non-diversified.
Generally, to meet federal tax requirements at the close of each
quarter, the fund does not invest more than 25% of its total assets in
the securities of any one issuer and, with respect to 50% of total
assets, does not invest more than 5% of its total assets in the
securities of any one issuer. These limitations do not apply to U.S.
Government securities or to securities of other investment companies.
Each fund may invest more than 25% of its total assets in tax-free
securities that finance similar types of projects.
The following information replaces the second paragraph under the
heading "Breakdown of Expenses" in the "Charter" section on page
21.
BREAKDOWN OF EXPENSES
Each fund pays a MANAGEMENT FEE to FMR for managing its investments
and business affairs. FMR in turn pays fees to an affiliate who
provides assistance with these services for the money market fund.
Spartan Pennsylvania Municipal Income also pays OTHER
EXPENSES, which are explained on page 22.
The following information replaces the "Management Fee" heading and
fourth paragraph in the "Breakdown of Expenses" section on page
21.
MANAGEMENT FEE AND OTHER EXPENSES
Each fund's management fee is calculated and paid to FMR every month.
FMR pays all of the other expenses of Spartan Pennsylvania
Municipal Money Market with limited exceptions. The annual management
fee rate for Spartan Pennsylvania Municipal Money Market is 0.50% of
its average net assets.
On December 16, 1998 shareholders of Spartan Pennsylvania Municipal
Income Fund approved a proposal to revise the fund's current
all-inclusive management fee structure to a group fee structure that
is standard for other comparable Fidelity municipal bond funds. The
management fee for Spartan Pennsylvania Municipal Income is calculated
by adding a group fee rate to an individual fund fee rate, multiplying
the result by the fund's monthly average net assets and dividing by
twelve.
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 December 31, 1997, the group fee rate was 0.1372%. The
individual fund fee rate is 0.25% for Spartan Pennsylvania Municipal
Income.
The total management fee for the fiscal year ended December 31,
1997, was 0.55% for Spartan Pennsylvania Municipal Income.
SUPPLEMENT TO THE
SPARTAN(registered trademark) PENNSYLVANIA MUNICIPAL MONEY MARKET FUND
A FUND OF FIDELITY MUNICIPAL TRUST II
AND
SPARTAN(registered trademark) PENNSYLVANIA MUNICIPAL INCOME FUND
A FUND OF FIDELITY MUNICIPAL TRUST
FEBRUARY 26, 1998
STATEMENT OF ADDITIONAL INFORMATION
THE FOLLOWING INFORMATION REPLACES SIMILAR INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
INVESTMENT LIMITATIONS OF SPARTAN PENNSYLVANIA
MUNICIPAL MONEY MARKET FUND
(MONEY MARKET FUND)
THE FOLLOWING ARE THE MONEY MARKET 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 in connection with the
insurance program established by the fund pursuant to an exemptive
order issued by the Securities and Exchange Commission or as otherwise
permitted under the Investment Company Act of 1940;
(3) sell securities short (except by selling futures contracts),
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;
(4) purchase securities on margin, except for such short-term credits
as are necessary for the clearance of transactions, and provided that
the fund may make initial and variation margin payments in connection
with the purchase or sale of futures contracts or of options on
futures contracts;
(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 purchase of municipal bonds in accordance with the fund's
investment objective, policies, and limitations, either directly from
the issuer, or from an underwriter for an issuer, may be deemed to be
underwriting;
(7) purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or tax-exempt obligations issued or guaranteed by a
U.S. territory or possession or a state or local government, or a
political subdivision of any of the foregoing) if, as a result, more
than 25% of the fund's total assets would be invested in securities of
companies whose principal business activities are in the same
industry;
(8) purchase or sell real estate 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;
(10) lend any security or make any other loan if, as a result, more
than 33 1/3% of its total assets would be lent to other parties (but
this limit does not apply to purchases of debt securities or to
repurchase agreements); or
(11) invest in oil, gas or other mineral exploration or development
programs.
(12) The fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the
same fundamental investment objectives, policies, and limitations as
the fund.
THE 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 was invested in illiquid securities, it
would consider appropriate steps to protect liquidity.
For the fund's policies on quality and maturity, see the section
entitled "Quality and Maturity" on page 8.
THE FOLLOWING INFORMATION SUPPLEMENTS THE FUNDAMENTAL INVESTMENT
LIMITATIONS IN THE "INVESTMENT POLICIES AND LIMITATIONS" SECTION UNDER
THE HEADING "INVESTMENT LIMITATIONS OF SPARTAN PENNSYLVANIA MUNICIPAL
INCOME FUND" ON PAGE 3.
(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 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 INFORMATION SUPPLEMENTS THE NON-FUNDAMENTAL
INVESTMENT LIMITATIONS IN THE "INVESTMENT POLICIES AND LIMITATIONS"
SECTION UNDER THE HEADING "INVESTMENT LIMITATIONS OF SPARTAN
PENNSYLVANIA MUNICIPAL INCOME FUND" BEGINNING ON PAGE 3.
(vii) 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.
THE FOLLOWING INFORMATION SUPPLEMENTS THE INFORMATION FOUND IN THE
"INVESTMENT POLICIES AND LIMITATIONS" SECTION BEGINNING ON PAGE 2.
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
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.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND IN
THE "MANAGEMENT CONTRACTS" SECTION BEGINNING ON PAGE 28.
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 (SPARTAN PENNSYLVANIA MUNICIPAL
INCOME). 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 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 the 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, 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. 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 PENNSYLVANIA MUNICIPAL
MONEY MARKET). Under the terms of its management contract with the
fund, FMR is responsible for payment of all operating expenses of the
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, 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'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 the 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 Pennsylvania Municipal Money
Market 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 the 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 the management
contract, Spartan Pennsylvania Municipal Money Market pays FMR a
monthly management fee at the annual rate of 0.50% of its average net
assets throughout the month.
The management fee paid to FMR by Spartan Pennsylvania Municipal
Money Market 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, Spartan
Pennsylvania Municipal Income 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
Assets Rate Assets Fee 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 $549 billion of group net assets - the approximate level for
December 1997 - was 0.1372%, which is the weighted average of the
respective fee rates for each level of group net assets up to $549
billion.
The individual fund fee rate for Spartan Pennsylvania Municipal
Income is 0.25%.
THE FOLLOWING INFORMATION REPLACES THE FIRST PARAGRAPH FOUND UNDER
THE HEADING "SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST"
IN THE "DESCRIPTION OF THE TRUSTS" SECTION ON PAGE 31.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The
Massachusetts trust is an entity of the type commonly known as
"Massachusetts business trust." Under Massachusetts law, shareholders
of such a trust may, under certain circumstances, be held personally
liable for the obligations of the trust. The Declaration of Trust
provides that the Massachusetts trust shall not have any claim against
shareholders except for the payment of the purchase price of shares
and requires that each agreement, obligation, or instrument entered
into or executed by the Massachusetts trust or its Trustees shall
include a provision limiting the obligations created thereby to the
Massachusetts trust or to one or more funds and its or their assets.
The Declaration of Trust provides for indemnification out of each
fund's property of any shareholders held personally liable for the
obligations of the fund. The Declaration of Trust also provides that
each fund shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the fund and
satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the
risk of personal liability to shareholders is remote.
THE FOLLOWING INFORMATION REPLACES THE SIMILAR INFORMATION FOUND
UNDER THE HEADING "VOTING RIGHTS - BOTH TRUSTS" IN THE "DESCRIPTION OF
THE TRUSTS" SECTION ON PAGE 32.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. As a shareholder, you receive one vote for each
dollar value of net asset value you own. The shares have no preemptive
or conversion rights; voting and dividend rights, the right of
redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set
forth under the respective "Shareholder and Trustee Liability"
headings above. Shareholders representing 10% or more of a trust or
one of its funds may, as set forth in the Declaration of Trust or
Trust Instrument, call meetings of the trust or fund for any purpose
related to the trust or fund, as the case may be, including, in the
case of a meeting of an entire trust, the purpose of voting on removal
of one or more Trustees.
A trust or any fund may be terminated upon the sale of its assets
to, or merger with, another open-end management investment company or
series thereof, or upon liquidation and distribution of its assets.
Generally, the merger of a trust or a fund with another entity or the
sale of substantially all of the assets of a trust or a fund to
another entity requires the vote of a majority of the outstanding
shares of a trust or a fund, as determined by the current value of
each shareholder's investment in the fund or trust. The Trustees of
the Massachusetts trust may, however, reorganize or terminate the
trust or any fund without prior shareholder approval. The Trustees of
the Delaware trust may, without prior shareholder approval, change the
form of the organization of the Delaware trust by merger,
consolidation, or incorporation. If not so terminated or reorganized,
the trusts and their funds will continue indefinitely. Each fund of
Fidelity Municipal Trust may invest all of its assets in another
investment company.
