SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT (No. 2-83295)
UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 29 [X]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
FIDELITY NEW YORK MUNICIPAL TRUST
(Exact Name of Registrant as Specified in Charter)
82 Devonshire St., Boston, MA 02109
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: 617-570-7000
Arthur S. Loring, Esq.
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)
(X) On (March 22, 1994) pursuant to paragraph (a) of Rule 485
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940 and intends to file the notice required by
such Rule before March 31, 1994.
FIDELITY NEW YORK TAX-FREE FUNDS:
FIDELITY NEW YORK TAX-FREE MONEY MARKET PORTFOLIO
FIDELITY NEW YORK TAX-FREE INSURED PORTFOLIO
FIDLEITY NEW YORK TAX-FREE HIGH YIELD PORTFOLIO
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b, c .............................. Contents; The Funds at a Glance; Who May Want
to Invest
3 a .............................. Financial History
b .............................. *
c .............................. Performance
4 a i............................. Charter
ii........................... The Funds at a Glance; Investment Principles;
Securities and Investment Practices
b .............................. Securities and Investment Practices
c .............................. Who May Want to Invest; Investment Principles;
Securities and Investment Practices
5 a .............................. Charter
b i............................. Doing Business with Fidelity; Charter
ii........................... Charter; Breakdown of Expenses
iii.......................... Expenses; Breakdown of Expenses
c, d .............................. Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates
e .............................. FMR and its Affiliates
f .............................. Expenses
g .............................. *
5 .............................. Performance
A
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions
iii.......................... *
b ............................. *
c .............................. Exchange Restrictions
d .............................. *
e .............................. Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services
f, g .............................. Dividends, Capital Gains, and Taxes
7 a .............................. Charter; Cover Page
b .............................. How to Buy Shares; Transaction Details
c .............................. *
d .............................. How to Buy Shares
e .............................. *
f .............................. Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page
12 ............................ *
13 a - c ............................ Investment Policies and Limitations
d ............................ *
14 a - c ............................ Trustees and Officers
15 a, b ............................ *
c ............................ Trustees and Officers
16 a i ............................ FMR
ii ............................ Trustees and Officers
iii ............................ Management Contracts
b ............................ Management Contracts
c, d ............................ Contracts with Companies Affiliated with FMR
e ............................ *
f ............................ Distribution and Service Plans
g ............................ *
h ............................ Description of the Trusts
i ............................ Contracts with Companies Affiliated with FMR
17 a ............................ Portfolio Transactions
b ............................ *
c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trusts
b ............................ *
19 a ............................ Additional Purchase and Redemption Information
b ............................ Additional Purchase and Redemption Information;
Valuation of Portfolio Securities
c ............................ *
20 Distributions and Taxes
21 a, b ............................ Contracts with Companies Affiliated with FMR
c ............................ *
22 ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated March 22, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Investments in the money market fund are neither insured nor guaranteed by
the U.S. government, and there can be no assurance that the fund will
maintain a stable $1.00 share price.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, nor are they federally insured or otherwise
protected by the FDIC, the Federal Reserve Board, or any other agency.
Each of these funds seeks a high level of current income free from federal
income tax and New York State and City income taxes. The funds have
different strategies, however, and carry varying degrees of risk.
FIDELITY NEW YORK
TAX-FREE FUNDS
FIDELITY NEW YORK TAX-FREE MONEY MARKET PORTFOLIO
FIDELITY NEW YORK TAX-FREE INSURED PORTFOLIO
FIDELITY NEW YORK TAX-FREE HIGH YIELD PORTFOLIO
PROSPECTUS
MARCH 22, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
NFR-pro-394
CONTENTS
KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES AND PERFORMANCE EXPENSES Each fund's yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.
PERFORMANCE How each fund has
done over time.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different
ways to set up your account.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money
out and closing your account.
INVESTOR SERVICES Services to
help you manage your account.
DIVIDENDS, CAPITAL GAINS, AND
TAXES
SHAREHOLDER AND TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
THE FUNDS IN DETAIL CHARTER How each fund is
organized.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
INVESTMENT PRINCIPLES Each
fund's overall approach to
investing.
SECURITIES AND INVESTMENT
PRACTICES
KEY FACTS
THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. FMR Texas Inc. (FTX), a
subsidiary of FMR, chooses investments for New York Tax-Free Money Market.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
NEW YORK MONEY MARKET
GOAL: High current tax-free income for New York residents while maintaining
a stable share price.
STRATEGY: Invests in high quality, short-term securities whose interest is
free from federal income tax and New York State and City income taxes.
NEW YORK INSURED
GOAL: High current tax-free income for New York residents.
STRATEGY: Invests mainly in long-term securities that are covered by
insurance guaranteeing the timely payment of principal and interest, and
whose interest is free from federal income tax and New York State and City
income taxes.
NEW YORK HIGH YIELD
GOAL: High current tax-free income for New York residents.
STRATEGY: Invests mainly in long-term investment-grade securities whose
interest is free from federal income tax and New York State and City income
taxes.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors in higher tax
brackets who seek high current income that is free from federal and New
York State and City income taxes. Each fund's level of risk, and potential
reward, depend on the quality and maturity of its investments.
Lower-quality, longer-term investments typically carry the most risk and
the highest yield potential. Insurance, which covers the timely payment of
interest and principal on municipal obligations, provides a high degree of
credit quality. However, its cost can lower the fund's yield. You should
consider your tolerance for risk when making an investment decision.
The value of the funds' investments and the income they generate will vary
from day to day, generally reflecting changes in interest rates, market
conditions, and other federal and State political and economic news. These
funds do not constitute a balanced investment plan.
New York Tax-Free Money Market is managed to keep its share price stable at
$1.00. When you sell your shares of any of the other funds, they may be
worth more or less than what you paid for them.
EXPENSES AND PERFORMANCE
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. It also incurs other expenses for
services such as maintaining shareholder records and furnishing shareholder
statements and fund reports. A fund's expenses are factored into its share
price or dividends and are not charged directly to shareholder accounts
(see page ).
The following are projections based on historical expenses, and are
calculated as a percentage of average net assets.
NEW YORK MONEY MARKET
Management fee ___%
12b-1 fee None
Other expenses %
Total fund operating expenses ___%
NEW YORK INSURED
Management fee ___%
12b-1 fee None
Other expenses %
Total fund operating expenses ___%
NEW YORK HIGH YIELD
Management fee ___%
12b-1 fee None
Other expenses %
Total fund operating expenses ___%
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses if you
close your account after the number of years indicated:
After 1 After 3 After 5 After
10
year years years years
New York
Money Market
New York
Insured
New York
High Yield
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
FINANCIAL HIGHLIGHTS
The tables that follow have been audited by ___________, independent
accountants. Their unqualified reports are included in each fund's Annual
Report. Each fund's Annual Report is incorporated by reference into (is
legally a part of) the Statement of Additional Information.
[Financial Highlights to be filed by subsequent amendment.]
PERFORMANCE
Mutual fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results.
Each fund's fiscal year runs from February 1 through January 31. The tables
below show each fund's performance over past fiscal years compared to a
measure of inflation. The charts on page __ help you compare the yields of
these funds to those of their competitors.
After 1 After 3 After 5 After
10
year years years years
New York
Money Market
New York
Insured
New York
High Yield
UNDERSTANDING
PERFORMANCE
YIELD illustrates the income
earned by a fund over a
recent period. Seven-day
yields are the most common
illustration of money market
performance. 30-day yields
are usually used for bond
funds. Yields change daily,
reflecting changes in interest
rates.
TOTAL RETURN reflects both the
reinvestment of income and
capital gain distributions, and
any change in a fund's share
price.
(checkmark)
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a money
market fund yield assumes that income earned is reinvested, it is called an
EFFECTIVE YIELD. A TAX-EQUIVALENT YIELD shows what an investor would have
to earn before taxes to equal a tax-free yield. Yields for the bond funds
are calculated according to a standard that is required for all stock and
bond funds. Because this differs from other accounting methods, the quoted
yield may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES for New York Tax-Free Money Market are the
IBC/Donoghue's MONEY FUND AVERAGES(registered trademark)/IBC/Donaghue's
Money Fund Averages: New York Tax-Free Funds category, which currently
reflects the performance of over ___ mutual funds with similar objectives.
These averages are published in the MONEY FUND REPORT(Registered trademark)
by IBC USA (Publications), Inc. The competitive funds averages for the bond
funds are published by Lipper Analytical Services, Inc. New York Insured
and New York High Yield compare their performance to the Lipper New York
Insured Municipal Debt Funds and Lipper New York Municipal Debt Funds,
respectively, which currently reflects the performance of over ___ and ___
mutual funds with similar objectives, respectively. All of these averages
assume reinvestment of distributions.
NEW YORK TAX-FREE MONEY MARKET
7-day yields
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
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Row: 7, Col: 1, Value: nil
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Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: nil
Row: 9, Col: 1, Value: nil
Row: 9, Col: 2, Value: nil
Row: 10, Col: 1, Value: nil
Row: 10, Col: 2, Value: nil
Row: 11, Col: 1, Value: nil
Row: 11, Col: 2, Value: nil
Row: 12, Col: 1, Value: nil
Row: 12, Col: 2, Value: nil
Row: 13, Col: 1, Value: nil
Row: 13, Col: 2, Value: nil
Row: 14, Col: 1, Value: nil
Row: 14, Col: 2, Value: nil
Row: 15, Col: 1, Value: nil
Row: 15, Col: 2, Value: nil
Row: 16, Col: 1, Value: nil
Row: 16, Col: 2, Value: nil
Row: 17, Col: 1, Value: nil
Row: 17, Col: 2, Value: nil
Row: 18, Col: 1, Value: nil
Row: 18, Col: 2, Value: nil
Row: 19, Col: 1, Value: nil
Row: 19, Col: 2, Value: nil
Row: 20, Col: 1, Value: nil
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Row: 21, Col: 1, Value: nil
Row: 21, Col: 2, Value: nil
Row: 22, Col: 1, Value: nil
Row: 22, Col: 2, Value: nil
Row: 23, Col: 1, Value: nil
Row: 23, Col: 2, Value: nil
Row: 24, Col: 1, Value: nil
Row: 24, Col: 2, Value: nil
Row: 25, Col: 1, Value: nil
Row: 25, Col: 2, Value: nil
Row: 26, Col: 1, Value: nil
Row: 26, Col: 2, Value: nil
Row: 27, Col: 1, Value: nil
Row: 27, Col: 2, Value: nil
Row: 28, Col: 1, Value: nil
Row: 28, Col: 2, Value: nil
Row: 29, Col: 1, Value: nil
Row: 29, Col: 2, Value: nil
Row: 30, Col: 1, Value: nil
Row: 30, Col: 2, Value: nil
Row: 31, Col: 1, Value: nil
Row: 31, Col: 2, Value: nil
Row: 32, Col: 1, Value: nil
Row: 32, Col: 2, Value: nil
New York
Tax-Free
Money Market
Competitive
funds average
1992
1993
1994
NEW YORK TAX-FREE INSUREDNEW YORK HIGH YIELD
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: nil
Row: 9, Col: 1, Value: nil
Row: 9, Col: 2, Value: nil
Row: 10, Col: 1, Value: nil
Row: 10, Col: 2, Value: nil
Row: 11, Col: 1, Value: nil
Row: 11, Col: 2, Value: nil
Row: 12, Col: 1, Value: nil
Row: 12, Col: 2, Value: nil
Row: 13, Col: 1, Value: nil
Row: 13, Col: 2, Value: nil
Row: 14, Col: 1, Value: nil
Row: 14, Col: 2, Value: nil
Row: 15, Col: 1, Value: nil
Row: 15, Col: 2, Value: nil
Row: 16, Col: 1, Value: nil
Row: 16, Col: 2, Value: nil
Row: 17, Col: 1, Value: nil
Row: 17, Col: 2, Value: nil
Row: 18, Col: 1, Value: nil
Row: 18, Col: 2, Value: nil
Row: 19, Col: 1, Value: nil
Row: 19, Col: 2, Value: nil
Row: 20, Col: 1, Value: nil
Row: 20, Col: 2, Value: nil
Row: 21, Col: 1, Value: nil
Row: 21, Col: 2, Value: nil
Row: 22, Col: 1, Value: nil
Row: 22, Col: 2, Value: nil
Row: 23, Col: 1, Value: nil
Row: 23, Col: 2, Value: nil
Row: 24, Col: 1, Value: nil
Row: 24, Col: 2, Value: nil
Row: 25, Col: 1, Value: nil
Row: 25, Col: 2, Value: nil
Row: 26, Col: 1, Value: nil
Row: 26, Col: 2, Value: nil
Row: 27, Col: 1, Value: nil
Row: 27, Col: 2, Value: nil
Row: 28, Col: 1, Value: nil
Row: 28, Col: 2, Value: nil
Row: 29, Col: 1, Value: nil
Row: 29, Col: 2, Value: nil
Row: 30, Col: 1, Value: nil
Row: 30, Col: 2, Value: nil
Row: 31, Col: 1, Value: nil
Row: 31, Col: 2, Value: nil
Row: 32, Col: 1, Value: nil
Row: 32, Col: 2, Value: nil
New York
Tax-Free
Insured
Competitive
funds average
1992
1993
NEW YORK TAX-FREE HIGH YIELD
30-day yields
Percentage (%)
Row: 1, Col: 1, Value: nil
Row: 1, Col: 2, Value: nil
Row: 2, Col: 1, Value: nil
Row: 2, Col: 2, Value: nil
Row: 3, Col: 1, Value: nil
Row: 3, Col: 2, Value: nil
Row: 4, Col: 1, Value: nil
Row: 4, Col: 2, Value: nil
Row: 5, Col: 1, Value: nil
Row: 5, Col: 2, Value: nil
Row: 6, Col: 1, Value: nil
Row: 6, Col: 2, Value: nil
Row: 7, Col: 1, Value: nil
Row: 7, Col: 2, Value: nil
Row: 8, Col: 1, Value: nil
Row: 8, Col: 2, Value: nil
Row: 9, Col: 1, Value: nil
Row: 9, Col: 2, Value: nil
Row: 10, Col: 1, Value: nil
Row: 10, Col: 2, Value: nil
Row: 11, Col: 1, Value: nil
Row: 11, Col: 2, Value: nil
Row: 12, Col: 1, Value: nil
Row: 12, Col: 2, Value: nil
Row: 13, Col: 1, Value: nil
Row: 13, Col: 2, Value: nil
Row: 14, Col: 1, Value: nil
Row: 14, Col: 2, Value: nil
Row: 15, Col: 1, Value: nil
Row: 15, Col: 2, Value: nil
Row: 16, Col: 1, Value: nil
Row: 16, Col: 2, Value: nil
Row: 17, Col: 1, Value: nil
Row: 17, Col: 2, Value: nil
Row: 18, Col: 1, Value: nil
Row: 18, Col: 2, Value: nil
Row: 19, Col: 1, Value: nil
Row: 19, Col: 2, Value: nil
Row: 20, Col: 1, Value: nil
Row: 20, Col: 2, Value: nil
Row: 21, Col: 1, Value: nil
Row: 21, Col: 2, Value: nil
Row: 22, Col: 1, Value: nil
Row: 22, Col: 2, Value: nil
Row: 23, Col: 1, Value: nil
Row: 23, Col: 2, Value: nil
Row: 24, Col: 1, Value: nil
Row: 24, Col: 2, Value: nil
Row: 25, Col: 1, Value: nil
Row: 25, Col: 2, Value: nil
Row: 26, Col: 1, Value: nil
Row: 26, Col: 2, Value: nil
Row: 27, Col: 1, Value: nil
Row: 27, Col: 2, Value: nil
Row: 28, Col: 1, Value: nil
Row: 28, Col: 2, Value: nil
Row: 29, Col: 1, Value: nil
Row: 29, Col: 2, Value: nil
Row: 30, Col: 1, Value: nil
Row: 30, Col: 2, Value: nil
Row: 31, Col: 1, Value: nil
Row: 31, Col: 2, Value: nil
Row: 32, Col: 1, Value: nil
Row: 32, Col: 2, Value: nil
New York
Tax-Free
High Yield
Competitive
funds average
1992
1993
THE TOP CHART SHOWS THE 7-DAY EFFECTIVE YIELD FOR THE FUND AND ITS
COMPETITIVE FUNDS AVERAGE AS OF THE LAST TUESDAY OF EACH MONTH FROM
JANUARY 199_ THROUGH [MONTH OF FYE] 199_ . THE BOTTOM CHART SHOWS THE
30-DAY ANNUALIZED NET YIELDS FOR THE FUND AND ITS COMPETITIVE FUNDS
AVERAGE AS OF THE LAST DAY OF EACH MONTH DURING THE SAME PERIOD.
[YIELDS FOR THE FUNDS WOULD HAVE BEEN LOWER IF FIDELITY HAD NOT
REIMBURSED CERTAIN FUND EXPENSES.]
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over __ walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account. You can
choose New York Tax-Free Money Market as your core account for your
Fidelity Ultra Service Account or FidelityPlus brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed below.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANTS
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. New York Tax-Free Money Market is managed to keep its share
price stable at $1.00. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time, and also at noon for New York Tax-Free Money Market.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $2,500
TO ADD TO AN ACCOUNT $250
Through automatic investment plans $100
MINIMUM BALANCE $1,000
<TABLE>
<CAPTION>
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund of
complete name of the your choice. Indicate
fund of your choice. your fund account
Mail to the address number on your check.
indicated on the Mail to the address
application. printed on your account
statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
In Person (hand_graphic) (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Wire (wire_graphic) (bullet) Call 1-800-544-7777 to (bullet) Wire to:
set up your account Bankers Trust
and to arrange a wire Company,
transaction. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time and also at noon
for New York Tax-Free Money Market.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $1,000
worth of shares in the account to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account, you may write an unlimited number
of checks. Do not, however, try to close out your account by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
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Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
$100,000.
(bullet) For Money Line transfers to
your bank account; minimum:
none; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Trust names appear on the
account.
(bullet) The trustee must sign the
letter indicating capacity as
Business or trustee. If the trustee's name
Organization is not in the account
registration, provide a copy of
the trust document certified
within the last 60 days.
(bullet) At least one person
Executor, authorized by corporate
Administrator, resolution to act on the
Conservator, account must sign the letter.
Guardian (bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.
Wire (wire_graphic) All account types (bullet) You must sign up for the wire
feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Check (check_graphic) All account types (bullet) Minimum check: $500.
(bullet) All account owners must sign
a signature card to receive a
checkbook.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing.
Note that exchanges out of a fund are limited to four per calendar year
(except for New York Tax-Free Money Market), and that they may have tax
consequences for you. For complete policies and restrictions governing
exchanges, including circumstances under which a shareholder's exchange
privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions
from your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for a
home, educational expenses, and other long-term financial goals.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.
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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA
</TABLE>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.
<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$100 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.
</TABLE>
A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THOSE FUNDS MAY NOT BE
APPROPRIATE CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains. if any, to shareholders each year. Income dividends are
declared daily and paid monthly. Capital gains earned by the bond funds are
normally distributed in March and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options (three for New York Tax-Free Money Market):
1. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned this
option.
2. INCOME-EARNED OPTION. Your capital gain distributions, if any, will be
automatically reinvested, but you will be sent a check for each dividend
distribution. This option is not available for New York Tax-Free Money
Market.
3. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
4. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions, if any, will be automatically invested in
another identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the NAV as
of the date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS. Money
market funds usually don't
make capital gain
distributions.
(checkmark)
TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. Interest income that a fund earns is distributed to
shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends. Long-term capital gain
distributions are taxed as long-term capital gains. These distributions are
taxable when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31. Fidelity will send you and the IRS a
statement showing the tax status of the distributions paid to you in the
previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each fund may invest up to 20% of its assets in
these securities. Individuals who are subject to the tax must report this
interest on their tax returns.
To the extent that each fund's income dividends are derived from state
tax-free investments, they will be free from New York state and city income
taxes.
During fiscal 1994, __% of each fund's income dividends was free from
federal income tax, and __%, __% and __% were free from New York state and
city income taxes for New York Tax-Free Money Market , New York Tax-Free
Insured, and New York High Yield respectively. __% of New York Tax-Free
Money Market's income dividends were subject to the federal alternative
minimum tax.
TAXES ON TRANSACTIONS. Your bond fund redemptions - including exchanges to
other Fidelity funds - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price you
receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a
distribution from its NAV, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
SHAREHOLDER AND ACCOUNT POLICIES
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's net asset value as of the
close of business of the NYSE, normally 4 p.m. Eastern time and also at
noon for New York Tax-Free Money Market.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The money market fund values the securities it owns on the basis of
amortized cost. This method minimizes the effect of changes in a security's
market value and helps the fund to maintain a stable $1.00 share price. For
the bond funds, assets are valued primarily on the basis of market
quotations, if available. Since market quotations are often unavailable,
assets are usually valued by a method that the Board of Trustees believes
accurately reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they are of
a size that would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
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 financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(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.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
IF YOUR ACCOUNT BALANCE FALLS BELOW $1,000, you will be given 30 days'
notice to reestablish the minimum balance. If you do not increase your
balance, Fidelity reserves the right to close your account and send the
proceeds to you. Your shares will be redeemed at the NAV on the day your
account is closed.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
FDC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of shares of the funds without
reimbursement from the funds. Qualified recipients are securities dealers
who have sold fund shares or others, including banks and other financial
institutions, under special arrangements in connection with FDC's sales
activities. In some instances, these incentives may be offered only to
certain institutions whose representatives provide services in connection
with the sale or expected sale of significant amounts of shares.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, New York Tax-Free Insured and New York Tax-Free High Yield
reserve the right to temporarily or permanently terminate the exchange
privilege of any investor who makes more than four exchanges out of the
fund per calendar year. Accounts under common ownership or control,
including accounts with the same taxpayer identification number, will be
counted together for purposes of the four exchange limit.
(bullet) Each fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, New York
Tax-Free Money Market is currently a non-diversified fund of Fidelity New
York Municipal Trust II, and New York Tax-Free Insured and New York
Tax-Free High Yield are currently non-diversified funds of Fidelity New
York Municipal Trust. Both trusts are open-end management investment
companies. Fidelity New York Municipal Trust II was organized as a Delaware
business trust on June 20, 1991. Fidelity New York Municipal Trust was
organized as a Massachusetts business trust on April 25, 1983. There is a
remote possibility that one fund might become liable for a misstatement in
the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. Money market fund
shareholders are entitled to one vote for each share they own. For the bond
fund shareholders, the number of votes you are entitled to is based upon
the dollar value of your investment.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over ___
(bullet) Assets in Fidelity mutual
funds: over $___ billion
(bullet) Number of shareholder
accounts: over __ million
(bullet) Number of investment
analysts and portfolio
managers: over ___
(checkmark)
The funds are managed by FMR, which chooses their investments and handles
their business affairs. FTX has primary responsibility for providing
investment management services for New York Tax-Free Money Market.
David Murphy is manager of and vice president of New York Tax-Free Insured,
which he has managed since September 1992. Mr. Murphy also manages Limited
Term Municipals, Spartan Short-Intermediate Municipal, Spartan New York
Intermediate Municipal and Spartan New Jersey Municipal High Yield. Before
joining Fidelity in 1989, he managed municipal bond funds at Scudder,
Stevens & Clark.
Norman Lind is manager of New York Tax-Free High Yield, which he has
managed since __. Hew also manages __________.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trusts), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
United Missouri Bank, N.A., is each fund's transfer agent, although it
employs FSC to perform these functions for the funds. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
Each fund pays a MANAGEMENT FEE to FMR for managing its investments and
business affairs. FMR in turn pays fees to an affiliate who provides
assistance with these services for New York Tax-Free Money Market. Each
fund also pays OTHER EXPENSES, which are explained at right.
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
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. The fee is
calculated by adding a group fee rate to an individual fund fee rate, and
multiplying the result by the fund's average net assets.
The group fee rate is based on the average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .37%, and it drops as
total assets under management increase.
For January 1994, the group fee rate was __%. Each fund's individual fund
fee rate is .25%. Each fund's total management fee rate for fiscal 1994 was
__%.
FMR HAS A SUB-ADVISORY AGREEMENT with FTX, which has primary responsibility
for providing investment management for New York Tax-Free Money Market,
while FMR retains responsibility for providing other management services.
FMR pays FTX 50% of its management fee (before expense reimbursements) for
these services.
OTHER EXPENSES
While the management fee is a significant component of the funds' annual
operating costs, the funds have other expenses as well.
FSC performs many transaction and accounting functions. These services
include processing shareholder transactions, valuing each fund's
investments, and handling securities loans. In fiscal 1994, FSC received
fees equal to __%, __%, and __%, respectively, of New York Tax-Free Money
Market's, New York Tax-Free Insured's, and New York Tax-Free High Yield's
average net assets.
The funds also pay other expenses, such as legal, audit, and custodian
fees; proxy solicitation costs; and the compensation of trustees who are
not affiliated with Fidelity.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1994, the portfolio turnover rates for New York Tax-Free Insured
and New York Tax-Free High Yield were __% and __%, respectively. These
rates vary from year to year.
INVESTMENT PRINCIPLES
NEW YORK TAX-FREE MONEY MARKET seeks high current income that is freefrom
federal income tax and New York State and City income taxes while
maintaining a stable $1.00 share price by investing in high-quality,
short-term municipal obligations of all types. As a result, when you sell
your shares, they should be worth the same amount as when you bought them.
Of course, there is no guarantee that the fund will maintain a stable $1.00
share price. FMR normally invests at least 65% of the fund's total assets
in State tax-free securities, and normally invests so that at least 80% of
the fund's income distributions are free from federal income tax.
The fund follows industry-standard guidelines on the quality and maturity
of its investments, which are designed to help maintain a stable $1.00
share price. The fund will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities it buys. It is possible that a major change in
interest rates or a default on the fund's investments could cause its share
price (and the value of your investment) to change.
NEW YORK TAX-FREE INSURED seeks high current income that is free from
federal income tax and New York State and City income taxes by investing
primarily in municipal bonds that are covered by insurance guaranteeing the
timely payment of interest and principal. It is important to note, however,
that the insurance does not guarantee the market value of a security or of
the fund's shares. The insurance coverage is either obtained by the bond's
issuer or underwriter, or purchased by the fund. FMR reviews the credit of
insurance companies. The fund pays premiums for the insurance either
directly or indirectly, which increases the credit safety of the fund's
investments, but decreases its yield potential.
The insurance feature provides high credit quality to the fund's portfolio,
but the fund may also invest in some uninsured securities that are judged
by FMR to be of investment-grade quality. The fund normally invests in
long-term bonds, generally maintaining a dollar-weighted average maturity
of 20 years or longer, although it may invest in obligations of any
maturity. FMR normally invests so that at least 80% of the fund's income
distributions are free from federal and New York State and City income
taxes.
NEW YORK TAX-FREE HIGH YIELD seeks high current income that is free from
federal income tax and New York State and City income taxes by investing
primarily in municipal securities judged by FMR to be of investment-grade
quality, although it can also invest in lower-quality securities. The fund
normally invests in long-term bonds, generally maintaining a
dollar-weighted average maturity of 15 years or longer, although it may
invest in obligations of any maturity. FMR normally invests so that at
least 80% of the fund's income distributions are free from federal and New
York State and City income taxes.
EACH FUND'S yield and each bond fund's share price change daily based on
interest rate changes and on the quality and maturity of its investments.
In general, bond prices rise when interest rates fall, and vice versa. This
effect is usually more pronounced for longer-term securities. Lower-quality
securities offer higher yields, but also carry more risk.
Each fund's performance is closely tied to the economic and political
conditions within the State of New York. Both the City and State of New
York have recently experienced significant financial difficulty, and the
state's credit standing is one of the lowest in the country.
If you are subject to the federal alternative minimum tax, you should note
that each fund may invest so that up to 20% of its income is derived from
municipal securities issued to finance private activities. The interest
from these investments is a tax-preference item for purposes of the tax.
FMR normally invests each fund's assets according to its investment
strategy. The funds do not expect to invest in federally taxable
obligations, and the bond funds also do not expect to invest in state
taxable obligations. When FMR considers it appropriate, however, it may
temporarily invest substantially in cash that is not earning interest or
short-term instruments, or may invest more than normally permitted in
taxable obligations.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the funds may invest, and strategies FMR may employ in
pursuit of the funds' investment objectives. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities may have speculative characteristics, and
involve greater risk of default or price changes due to changes in the
issuer's creditworthiness. The market prices of these securities may
fluctuate more than higher-quality securities and may decline significantly
in periods of general or regional economic difficulty.
The table below provides a summary of ratings assigned to debt holdings
(not including money market instruments) in New York Tax-Free High Yield's
portfolio. These figures are dollar-weighted averages of month-end
portfolio holdings during fiscal 1994, and are presented as a percentage of
total investments. These percentages are historical and do not necessarily
indicate the fund's current or future debt holdings.
NEW YORK TAX-FREE HIGH YIELD
Fiscal 1994 Debt Holdings, by Rating MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa % AA %
Upper-medium grade A A
Medium grade Baa % BBB %
LOWER QUALITY
Moderately speculative Ba % BB %
Speculative B % B %
Highly speculative Caa % CCC %
Poor quality Ca % CC %
Lowest quality, no interest C C
In default, in arrears -- D %
% %
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S OR
S&P AMOUNTED TO ___%. THIS MAY INCLUDE SECURITIES RATED BY OTHER
NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES.
UNRATED SECURITIES ARE NOT NECESSARILY LOWER-QUALITY SECURITIES. REFER TO
THE
FUND'S STATEMENT OF ADDITIONAL INFORMATION FOR A MORE COMPLETE DISCUSSION
OF THESE RATINGS.
RESTRICTIONS: New York Tax-Free Insured does not currently intend to invest
more than 35% of its assets in uninsured securities, and does not currently
intend to invest in uninsured securities judged by FMR to be below
investment-grade quality. New York Tax-Free High Yield does not currently
intend to invest more than one-third of its assets in bonds of equivalent
quality to Ba or lower by Moody's and BB or lower by S&P, and does not
currently intend to invest in bonds whose quality is judged by FMR to be
equivalent to bonds rated lower than B. The fund does not currently intend
to invest in bonds rated below Caa by Moody's or CCC by S&P.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. Municipal securities
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. A security's credit may be
enhanced by a bank, insurance company, or other financial institution. A
fund may own a municipal security directly or may own one through a
participation interest.
STATE TAX-FREE SECURITIES include municipal obligations issued by the State
of New York or its counties, municipalities, authorities, or other
subdivisions. The ability of issuers to repay their debt can be affected
by many factors that impact the economic vitality of either the state or a
region within the state.
Other state tax-free securities include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations. The economy
of Puerto Rico is closely linked to the U.S. economy, and will depend on
the strength of the U.S. dollar, interest rates, the price stability of oil
imports, and the continued existence of favorable tax incentives. Recent
legislation reduced these incentives, but it is impossible to predict what
impact the changes will have.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ASSET-BACKED SECURITIES may include pools of purchase contracts, financing
leases, or sales agreements entered into by municipalities. These
securities usually rely on continued payments by a municipality, and may
also be subject to prepayment risk.
VARIABLE- AND FLOATING-RATE INSTRUMENTS may have interest rates that move
in tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, a fund
may pay periodic fees or accept a lower interest rate. Demand features,
standby commitments, and tender options are types of put features.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and
futures contracts, and purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield or the market value of its assets.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to a
fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
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
these changes, and also to changes in the market value of a single issuer
or industry.
RESTRICTIONS: The funds are considered non-diversified. To meet quarterly
federal tax requirements, however, a fund generally does not invest more
than 25% of its total assets in any one issuer and, with respect to 50% of
total assets, does not invest more than 5% of its total assets in any one
issuer. These limitations do not apply to U.S. government securities. A
fund may invest more than 25% of its total assets in tax-free securities
that finance similar types of projects. New York Tax-Free Insured may
invest more than 25% of its assets in bonds insured by the same insurance
company.
BORROWING. A fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If a bond fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. If the fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
NEW YORK TAX-FREE MONEY MARKET seeks as high a level of current income
exempt from federal income tax and New York State and City income taxes as
is consistent with preservation of capital. The fund will normally invest
so that at least 80% of its income distributions are free from federal
income tax.
NEW YORK TAX-FREE INSURED seeks as high a level of current income, exempt
from federal and New York State and City income taxes, available from
investing primarily in municipal securities that are covered by insurance
guaranteeing the timely payment of principal and interest. FMR will invest
the fund's assets primarily in municipal bonds that are (1) insured under
an insurance policy obtained by the issuer or underwriter; or (2) insured
under an insurance policy purchased by the fund. Insurance will cover the
timely payment of interest and principal on municipal obligations and will
be retained from recognized insurers. The fund may invest in uninsured
municipal obligations judged to be of quality equivalent to the four
highest ratings assigned by Moody's and S&P (Baa, BBB, or better).
Under normal market conditions, such uninsured obligations may not exceed
35% of the fund's assets. The fund will normally invest so that at least
80% of its income distributions are exempt from federal and New York State
and City income taxes. During periods when FMR believes that New York
municipals that meet the fund's standards are not available, the fund may
temporarily invest more than 20% of its assets in obligations that are only
federally tax-exempt.
NEW YORK TAX-FREE HIGH YIELD seeks as high a level of current income,
exempt from federal and New York State and City income taxes, available
from investing primarily in municipal securities judged by FMR to be of
investment-grade quality. The fund may invest up to one-third of its
assets in lower-quality bonds, but may not purchase bonds that are judged
by FMR to be equivalent quality to those rated lower than B. The fund will
normally invest so that at least 80% of its income distributions are exempt
from federal and New York State and City income taxes. During periods when
FMR believes that New York municipals that meet the fund's standards are
not available, the fund may temporarily invest more than 20% of its assets
in obligations that are only federally tax-exempt.
EACH FUND may borrow only for temporary or emergency purposes, but not in
an amount exceeding 33% of its total assets.
From Filler pages
FIDELITY NEW YORK TAX-FREE MONEY MARKET PORTFOLIO
A FUND OF FIDELITY NEW YORK MUNICIPAL TRUST II
FIDELITY NEW YORK TAX-FREE INSURED PORTFOLIO
A FUND OF FIDELITY NEW YORK MUNICIPAL TRUST
FIDELITY NEW YORK TAX-FREE HIGH YIELD PORTFOLIO
A FUND OF FIDELITY NEW YORK MUNICIPAL TRUST
STATEMENT OF ADDITIONAL INFORMATION
MARCH 2 2 , 199 4
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated March 2 2 , 199 4 ). Please
retain this document for future reference. The Annual Report for the
fiscal period ended January 31, 199 4 is incorporated herein by
reference. To obtain an additional copy of the Prospectus or the Annual
Report, please call Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Factors Affecting New York
Special Factors Affecting Puerto Rico
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans
Interest of FMR Affiliates
Description of the Trusts
Financial Statements
Appendix
Investment Adviser
Fidelity Management & Research Company (FMR)
Investment Sub-Adviser (money market fund only)
FMR Texas Inc. (FMR Texas)
Distributor
Fidelity Distributors Corporation (FDC)
Transfer Agent
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co. (FSC)
NFR - ptb - 39 4
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.
Each 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 a fund. However, with respect to the money market fund, except
for the fundamental investment limitations set forth below, the investment
policies and limitations described in this Statement of Additional
Information are not fundamental and may be changed without shareholder
approval.
INVESTMENT LIMITATIONS OF NEW YORK TAX-FREE MONEY MARKET PORTFOLIO
(MONEY MARKET FUND)
THE FOLLOWING ARE THE MONEY MARKET FUND'S FUNDAMENTAL INVESTMENT
LIMITATIONS SET FORTH IN THEIR ENTIRETY. THE FUND MAY NOT:
(1) issue senior securities;
(2) make short sales of securities;
(3) purchase any securities on margin, except for such short-term credits
as are necessary for the clearance of transactions;
(4) 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 (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings that
come to exceed 33 1/3% of the fund's total assets by reason of a decline in
net assets will be reduced (within three business days) to the extent
necessary to comply with the 33 1/3% limitation;
(5) underwrite any issue of securities, 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;
(6) 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;
(7) purchase or sell real estate, but this shall not prevent the fund from
investing in municipal bonds or other obligations secured by real estate or
interests therein;
(8) purchase or sell commodities or commodity (futures) contracts;
(9) 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 repurchase agreements);
or
(10) invest in oil, gas, or other mineral exploration or development
programs.
Investment limitation (4) is construed in conformity with the 1940 Act,
and, accordingly, "three business days" means three days exclusive of
Sundays and holidays.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell 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 (4)). 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 invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(v i i) The fund does not currently intend to purchase or sell
futures contracts or call options. This limitation does not apply to
options attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(v i ii) 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.
( ix ) The fund does not currently intend to (a) purchase securities
of other investment companies, except in the open market where no
commission except the ordinary broker's commission is paid, or (b) purchase
or retain securities issued by other open-end investment companies.
Limitations (a) and (b) do not apply to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger.
(x) 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 (6) and (i), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
For the fund's limitations on quality and maturity, see the section
entitled "Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF NEW YORK TAX-FREE INSURED PORTFOLIO
(INSURED FUND)
THE FOLLOWING ARE THE INSURED 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);
(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) invest in companies for the purpose of exercising control or
management.
( 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 objective, policies, and limitations as the
fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to " G overnment securities" as defined for federal tax
purposes.
(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 agree ments are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
( vii ) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to purchases
of debt securities.
(v iii ) The fund does not currently intend to (a) purchase
securities of other investment companies, except in the open market where
no commission except the ordinary broker's commission is paid, or (b)
purchase or retain securities issued by other open - end investment
companies. Limitations (a) and (b) do not apply to securities received as
dividends, through offers of exchange, or as a result of a reorganization,
consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) 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 (4) and (i), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
For the insured fund's limitations on futures and options transactions, see
the section entitled " Limitations on Futures and Options
Transactions" beginning on page 10.
INSURANCE FEATURE. Under normal market conditions, the insured fund will
invest primarily in municipal bonds that, at the time of purchase, either
are (1) insured under an insurance policy obtained by the issuer or
underwriter of such bonds at the time of their original issuance (issuer
insurance), or (2) insured under an insurance policy purchased by the fund
(portfolio insurance). If a municipal bond is already covered by issuer
insurance when acquired by the fund, then coverage will not be duplicated
by portfolio insurance; if a municipal bond is not covered by issuer
insurance, it may be covered by portfolio insurance purchased by the fund.
The fund may also purchase municipal notes that are insured, although, in
general, municipal notes are not presently issued with issuer insurance,
and the fund generally does not expect to cover municipal notes under its
portfolio insurance. Accordingly, the fund does not presently expect that
any significant portion of the municipal notes it purchases will be covered
by insurance. Securities other than municipal bonds and notes purchased by
the fund will not be covered by insurance. Based upon the expected
composition of the fund, FMR estimates that the annual premiums for
portfolio insurance will range from .10% to .35% of the fund's average net
assets. In the 1992 fiscal year, no portfolio insurance was purchased.
Although the insurance feature reduces certain financial risks, the
premiums for portfolio insurance, which are paid from the fund's assets,
and the restrictions on investments imposed by portfolio insurance
guidelines, reduce the fund's current yield.
Insurance will cover the timely payment of interest and principal on
municipal obligations and will be obtained from recognized insurers. In
order to be considered as eligible insurance by the fund, such insurance
policies must guarantee the timely payment of all interest and principal on
the municipal bonds as they become due. However, such insurance may
provide that in the event of non - payment of interest or principal
when due, with respect to an insured municipal bond, the insurer is not
obligated to make such payment until a specified time period (which may be
30 days or more) after it has been notified by the fund that such
non - payment has occurred. For these purposes, a payment of
principal is due only at final maturity of the municipal bond and not at
the time any earlier sinking fund payment is due. The insurance does not
guarantee the market value of the municipal bonds or the value of the
shares of the fund and, except as described below and in the section
entitled " Valuation of Portfolio Securities," has no effect on the
price or redemption value of fund shares.
Municipal bonds are generally eligible to be insured under portfolio
insurance if, at the time of purchase by the fund, they are identified
separately or by category in qualitative guidelines furnished by the
portfolio insurer and are in compliance with the aggregate limitations on
amounts set forth in such guidelines. Premium variations are based in part
on the rating of the municipal bond being insured at the time the fund
purchases the bond. The insurer may prospectively withdraw particular
municipal bonds from the classifications of bonds eligible for insurance or
change the aggregate amount limitation of each issue or category of
eligible municipal bonds, but must continue to insure the full amount of
bonds previously acquired which the insurer has indicated are eligible so
long as they remain in the fund's portfolio. The qualitative guidelines
and aggregate amount limitations established by the insurer from time to
time will not necessarily be the same as those the fund or FMR would use to
govern selection of municipal bonds for the fund's investments. Therefore,
from time to time, such guidelines and limitations may affect investment
decisions.
Because coverage under portfolio insurance terminates upon sale of a
municipal bond from the fund's portfolio, the insurance does not have any
effect on the resale value of such a bond. It is the fund's intention
to retain any insured municipal bonds that are in default or, in FMR's
view, in significant risk of default, and to place a value on the
insurance coverage because it guarantees that interest and principal
will be paid . This value will ordinarily be equal to the
difference between the market value of the defaulted security (or those
in risk of default) and the market value of similar securities
that are not in default. As a result, FMR may be limited in its ability to
manage the fund's portfolio to the extent that it holds defaulted municipal
bonds, which will limit its ability in certain circumstances to purchase
other municipal bonds. While a defaulted municipal bond is held by the
fund, the fund continues to pay the insurance premium thereon but also
collects interest payments from the insurer and retains the right to
collect the full amount of principal from the insurer when the municipal
bond comes due. The fund expects that the market value of a defaulted
municipal bond covered by issuer insurance will generally be greater than
the market value of an otherwise comparable defaulted municipal bond
covered by portfolio insurance.
PRINCIPAL BOND INSURERS. AMBAC Indemnity Corporation (AMBAC Indemnity) is
a Wisconsin-domiciled stock insurance corporation regulated by the Office
of the Commissioner of Insurance of the State of Wisconsin and licensed to
do business in 50 states, the District of Columbia, and the Commonwealth of
Puerto Rico, with admitted assets of approximately __ billion (unaudited)
and statutory capital of approximately $___ million (unaudited) as of
September 30, 1993. Statuatory capital consists of AMBAC Indemnity's
policyholders' surplus and statutory contingency reserve. AMBAC Indemnity
is a wholly owned subsidiary of AMBAC Inc., a 100% publicly-held company.
Moody's and S&P have both assigned a triple-A claims-paying ability
rating to AMBAC Indemnity.
Capital Guaranty Insurance Company (Capital Guaranty) is a monoline
financial guaranty insurance company whose policies guaranty the timely
payment of principal and interest when due for payment (as defined in
Capital Guarantee coverage) on new issue and secondary market issue
municipal bond transactions. Capital Guaranty's claims-paying ability is
rated AAA by S&P. Therefore, if Capital Guaranty insures an issue with
a stand alone rating of less than "AAA," such issue would be "upgraded" to
AAA by virtue of Capital Guaranty's insurance. On December 31, 1993,
Capital Guaranty's statutory capital (unaudited, consisting of contingency
reserve and statutory policyholders' surplus) was over $___ million. As of
that date, Capital Guaranty's insured principal and interest outstanding
was over $__ billion.
FGIC Corporation, through its wholly owned subsidiary Financial Guaranty
Insurance Company, is a leading insurer of municipal bonds, including new
issues and bonds held in unit investment trusts and mutual funds.
Municipal bonds insured by Financial Guaranty are rated Aaa/AAA/AAA by
Moody's, S&P, and Fitch, respectively. In accordance with statutory
accounting principles, Financial Guaranty's capital base as of December 31,
1993 totalled $____ million, comprised of capital and surplus of $___
million and a contingency reserve of $___ million.
Municipal Bond Investors Assurance Corporation (MBIA) is the monoline
insurance company created from an unincorporated association (the Municipal
Bond Insurance Association) through which its members wrote municipal bond
insurance on a several and not joint basis through 1986. Bond Investors
Guaranty Insurance Company (BIG) issued municipal bond insurance policies
guarantying the timely payment of principal and interest on new issue,
secondary market, and unit investment trust bonds. On January 5, 1990,
MBIA acquired all of the outstanding stock of Bond Investors Group, Inc.,
the parent of BIG. Through a reinsurance agreement, BIG ceded all of its
net insured risks, as well as its related unearned premium and contingency
reserves, to MBIA. Moody's rates all bond issues insured by MBIA and BIG
"Aaa" and short-term loans "MIG-1," both designated to be of the highest
quality; S&P rates all new issues insured by MBIA and BIG "AAA"
Prime Grade. As of December 31, 1992, MBIA (consolidated) had admitted
assets of $_____ billion (unaudited), total liabilities of $____ billion
(unaudited), and total capital and surplus of $758 million (unaudited)
prepared in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities.
INVESTMENT LIMITATIONS OF NEW YORK TAX-FREE HIGH YIELD PORTFOLIO
(HIGH YIELD FUND)
THE FOLLOWING ARE THE HIGH YIELD 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 the value 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);
( 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 ) invest in companies for the purpose of exercising control or
management.
(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 objective, policies, and limitations as the
fund.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in
futures contracts and options are not deemed to constitute selling
securities short.
(iii) The fund does not currently intend to purchase securities on
margin, except that the fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on futures
contracts shall not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation ( 2 )). The fund will
not purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as
a result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(v i ) The fund does not currently intend to invest more than 25%
of its total assets in industrial revenue bonds related to a single
industry.
( vii ) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to purchases
of debt securities.
(v iii ) The fund does not currently intend to (a) purchase
securities of other investment companies, except in the open market where
no commission except the ordinary broker's commission is paid, or (b)
purchase or retain securities issued by other open - end investment
companies. Limitations (a) and (b) do not apply to securities received as
dividends, through offers of exchange, or as a result of a reorganization,
consolidation, or merger.
(ix) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
(x) 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 (4) and (i), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
For the high yield fund's limitations on futures and options transactions,
see the section entitled "Limitations on Futures and Options Transactions"
beginning on page 10.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the funds may engage in
transactions with financial institutions that are, or may be
considered to be, "affiliated persons" of the funds under the 1940 Act.
Such transactions may be entered into only pursuant to procedures
established and periodically reviewed by the Board of Trustees. These
transactions may include repurchase agreements with custodian banks;
purchases, as principal, of short-term obligations of, and repurchase
agreements with, the 50 largest U.S. banks (measured by deposits);
transactions in municipal securities; transactions in U.S. government
securities with affiliated banks that are primary dealers in these
securities ; short-term currency transactions; and short-term secured
borrowing.
QUALITY AND MATURITY (MONEY MARKET FUND ONLY). Pursuant to procedures
adopted by the Board of Trustees, the fund may purchase only high-quality
securities that FMR believes present minimal credit risks. To be
considered high-quality, a security must be rated in accordance with
applicable rules in one of the two highest categories for short-term
securities by at least two nationally recognized rating services (or by
one, if only one rating service has rated the security) or, if unrated,
judged to be of equivalent quality by FMR. The fund must limit its
investments to securities with remaining maturities of 397 days or less and
must maintain a dollar-weighted average maturity of 90 days or less.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. The insured and high yield funds may
receive fees for entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a
delayed-delivery basis, the fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities,
the fund could miss a favorable price or yield opportunity, or could suffer
a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
REFUNDING CONTRACTS. The insured and high yield funds may purchase
securities on a when-issued basis in connection with the refinancing of an
issuer's outstanding indebtedness. Refunding contracts require the issuer
to sell and a fund to buy refunded municipal obligations at a stated price
and yield on a settlement date that may be several months or several years
in the future. The funds generally will not be obligated to pay the full
purchase price if they fail to perform under a refunding contract.
Instead, refunding contracts generally provide for payment of liquidated
damages to the issuer (currently 15-20% of the purchase price). A fund may
secure its obligations under a refunding contract by depositing collateral
or a letter of credit equal to the liquidated damages provisions of the
refunding contract. When required by SEC guidelines, each fund will place
liquid assets in a segregated custodial account equal in amount to its
obligations under refunding contracts.
INVERSE FLOATERS. The insured and high yield funds may invest in
inverse floaters, which are instruments whose interest rates bear an
inverse relationship to the interest rate on another security or the value
of an index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable-rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating
interest rates and carry rights that permit holders to demand payment of
the unpaid principal balance plus accrued interest from the issuers or
certain financial intermediaries. Floating rate instruments have interest
rates that change whenever there is a change in a designated base rate
while variable rate instruments provide for a specified periodic adjustment
in the interest rate. These formulas are designed to result in a market
value for the instrument that approximates its par value.
With respect to the money market fund, a demand instrument with a
conditional demand feature must have received both a short-term and a
long-term high-quality rating or, if unrated, have been determined to be of
comparable quality pursuant to procedures adopted by the Board of Trustees.
A demand instrument with an unconditional demand feature may be acquired
solely in reliance upon a short-term high-quality rating or, if unrated,
upon a finding of comparable short-term quality pursuant to procedures
adopted by the Board of Trustees.
The funds may invest in fixed-rate bonds that are subject to third party
puts and in participation interests in such bonds held in trust or
otherwise. These bonds and participation interests have tender options or
demand features that permit a fund to tender (or put) the bonds to an
institution at periodic intervals and to receive the principal amount
thereof. A fund considers variable rate instruments structured in this way
(Participating VRDOs) to be essentially equivalent to other VRDOs it
purchases. The IRS has not ruled whether the interest on Participating
VRDOs is tax-exempt and, accordingly, a fund intends to purchase these
instruments based on opinions of bond counsel.
The money market fund may invest in variable or floating rate
instruments that ultimately mature in more than 397 days, if the fund
acquires a right to sell the instruments that meets certain requirements
set forth in Rule 2a-7. Variable rate instruments (including instruments
subject to a demand feature) that mature in 397 days or less may be deemed
to have maturities equal to the period remaining until the next
readjustment of the interest rate. Other variable rate instruments with
demand features may be deemed to have a maturity equal to the period
remaining until the next adjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand. A
floating rate instrument subject to a demand feature may be deemed to have
a maturity equal to the period remaining until the principal amount can be
recovered through demand.
TENDER OPTION BONDS are created by coupling an intermediate- or
long-term, fixed-rate, tax-exempt bond (generally held pursuant to a
custodial arrangement) with a tender agreement that gives the holder the
option to tender the bond at its face value. As consideration for providing
the tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, a fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. Subject to applicable regulatory requirements, the money market fund
may buy tender option bonds if the agreement gives the fund the right to
tender the bond to its sponsor no less frequently than once every 397 days.
In selecting tender option bonds for the funds, FMR will consider the
creditworthiness of the issuer of the underlying bond, the custodian, and
the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
ZERO COUPON BONDS do not make regular interest payments. Instead,
they are sold at a deep discount from their face value and are redeemed at
face value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
STANDBY COMMITMENTS are puts that entitle holders to same-day
settlement at an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of exercise.
Each fund may acquire standby commitments to enhance the liquidity of
portfolio securities, but, in the case of the money market funds, only when
the issuers of the commitments present minimal risk of default.
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. Standby commitments will
not affect the dollar-weighted average maturity of the money market funds
or the valuation of the securities underlying the commitments.
Issuers or financial intermediaries may obtain letters of credit or
other guarantees to support their ability to buy securities on demand. FMR
may rely upon its evaluation of a bank's credit in determining whether to
support an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
Standby commitments are subject to certain risks, including the ability
of issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by the funds; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. Each fund may invest a portion of
its assets in municipal leases and participation interests therein. These
obligations, which may take the form of a lease, an installment purchase,
or a conditional sale contract, are issued by state and local governments
and authorities to acquire land and a wide variety of equipment and
facilities. Generally, the funds will not hold such obligations directly as
a lessor of the property, but will purchase a participation interest in a
municipal obligation from a bank or other third party. A participation
interest gives a fund a specified, undivided interest in the obligation in
proportion to its purchased interest in the total amount of the
obligation.
Municipal leases frequently have risks distinct from those associated
with general obligation or revenue bonds. State constitutions and statutes
set forth requirements that states or municipalities must meet to incur
debt. These may include voter referenda, interest rate limits, or public
sale requirements. Leases, installment purchases, or conditional sale
contracts (which normally provide for title to the leased asset to pass to
the governmental issuer) have evolved as a means for governmental issuers
to acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
FEDERALLY TAXABLE OBLIGATIONS. The funds do not intend to invest in
securities whose interest is federally taxable; however, from time to time,
each fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, each fund may invest in obligations whose interest is
federally taxable pending the investment or reinvestment in municipal
securities of proceeds from the sale of its shares or sales of portfolio
securities.
Should a fund invest in federally taxable obligations, it would purchase
securities that in FMR's judgment are of high quality. These would include
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities; obligations of domestic banks; and repurchase
agreements. The insured and high yield funds' standards for high-quality
taxable obligations are essentially the same as those described by Moody's
Investors Service, Inc. (Moody's) in rating corporate obligations within
its two highest ratings of Prime-1 and Prime-2, and those described by
Standard & Poor's Corporation (S&P) in rating corporate obligations
within its two highest ratings of A-1 and A-2. The money market fund will
purchase taxable obligations only if they meet its quality requirements as
set forth in the Prospectus.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before the New York legislature
that would affect the state tax treatment of the funds' distributions. If
such proposals were enacted, the availability of municipal obligations and
the value of the funds' holdings would be affected and the Trustees would
reevaluate the funds' investment objectives and policies.
Each fund anticipates being as fully invested as practicable in municipal
securities; however, there may be occasions when, as a result of maturities
of portfolio securities, sales of fund shares, or in order to meet
redemption requests, a fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions, a fund may be required to sell securities at a loss.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. 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. A repurchase agreement is a taxable
obligation which involves the obligation of the seller to pay the
agreed-upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed-upon resale price and marked to
market daily) of the underlying security. Each fund may engage in
repurchase agreements with respect to any security in which it is
authorized to invest even if, with respect to the money market fund, the
underlying security matures in more than 397 days. While it does not
presently appear possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of the
underlying securities, as well as delays and costs to a fund in connection
with bankruptcy proceedings), it is each fund's current policy to limit
repurchase agreement transactions to those parties whose creditworthiness
has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, the fund will maintain appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement.
The fund will enter into reverse repurchase agreements only with parties
whose creditworthiness has been found satisfactory to FMR. S uch
transactions may increase fluctuations in the market value of the fund's
assets and may be viewed as a form of leverage.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of each fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of each fund's investments, FMR may consider various factors
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, and (4) the nature of the security
(including any demand or tender features), and (5) the nature of the
marketplace for trades (including the ability to assign or offset the
fund's rights and obligations relating to the investment). Investments
currently considered by the money market fund to be illiquid include
restricted securities determined by FMR to be illiquid. Investments
currently considered by the insured and high yield funds to be illiquid
include over-the-counter options. Also, FMR may determine some
restricted securities and municipal lease obligations to be illiquid.
However, with respect to over-the-counter options the insured and high
yield funds write, all or a portion of the value of the underlying
instrument may be illiquid depending on the assets held to cover the
option and the nature and terms of any agreement the fund may have to close
out the option before expiration. In the absence of market quotations,
illiquid investments are valued for purposes of monitoring amortized cost
valuation (money market fund) and priced at fair value as determined in
good faith by a committee appointed by the Board of Trustees (insured and
high yield funds). If through a change in values, net assets, or other
circumstances, a fund were in a position where more than 10% of its net
assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity. However, in general, the money
market fund anticipates holding restricted securities to maturity or
selling them in an exempt transaction.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time the fund may be permitted to
sell a security under an effective registration statement. If, during such
a period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security.
LOWER-RATED MUNICIPAL SECURITIES. The insured and high yield funds may
invest a portion of their assets in lower-rated municipal securities as
described in the Prospectus.
While the market for New York municipals is considered to be substantial,
adverse publicity and changing investor perceptions may affect the ability
of outside pricing services used by each fund to value its portfolio
securities, and the fund's ability to dispose of lower-rated bonds. The
outside pricing services are consistently monitored to assure that
securities are valued by a method that the Board believes accurately
reflects fair value. The impact of changing investor perceptions may be
especially pronounced in markets where municipal securities are thinly
traded.
Each fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as a security holder to
seek to protect the interests of security holders if it determines this to
be in the best interest of the fund's shareholders.
INTERFUND BORROWING PROGRAM. Each fund has received permission from the
SEC to lend money to and borrow money from other funds advised by FMR or
its affiliates, but will participate in the interfund borrowing program
only as a borrower. Interfund loans normally will extend overnight, but
can have a maximum duration of seven days. A fund will borrow through the
program only when the costs are equal to or lower than the costs of bank
loans. Loans may be called on one day's notice, and the fund may have to
borrow from a bank at a higher interest rate if an interfund loan is called
or not renewed.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS (INSURED AND HIGH YIELD
FUNDS). Each 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 funds intend to comply with
Section 4.5 of the regulations 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, each fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of the fund's
total assets would be hedged with futures and options under normal
conditions; (b) purchase futures contracts or write put options if, as a
result, the fund's total obligations upon settlement or exercise of
purchased futures contracts and written put options would exceed 25% of its
total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the fund would
exceed 5% of the fund's total assets. These limitations do not apply to
options attached to, or acquired or traded together with their underlying
securities, and do not apply to securities that incorporate features
similar to options.
The above limitations on the funds' investments in futures contracts and
options, and the funds' policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, are not
fundamental policies and may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date.
When a fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Bond Buyer Municipal Bond Index. Futures
can be held until their delivery dates, or can be closed out before then if
a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase a fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a fund sells a futures
contract, by contrast, the value of its futures position will tend to move
in a direction contrary to the market. Selling futures contracts,
therefore, will tend to offset both positive and negative market price
changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker known
as a futures commission merchant (FCM), when the contract is entered into.
Initial margin deposits are typically equal to a percentage of the
contract's value. If the value of either party's position declines, that
party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may
be entitled to receive all or a portion of this amount. Initial and
variation margin payments do not constitute purchasing securities on margin
for purposes of the funds' 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.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. A fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. A fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract the fund will be required to make margin payments to an FCM as
described above for futures contracts. The fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer generally would expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. A fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult
to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the funds' current or
anticipated investments exactly. Each fund may invest in options and
futures contracts based on securities with different issuers, maturities,
or other characteristics from the securities in which it typically invests,
which involves a risk that the options or futures position will not track
the performance of a fund's other investments.
Option and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the funds'
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.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for a fund to
enter into new positions or close out existing positions. If the secondary
market for a contract is not liquid because of price fluctuation limits or
otherwise, it could prevent prompt liquidation of unfavorable positions,
and potentially could require a fund to continue to hold a position until
delivery or expiration regardless of changes in its value. As a result,
the 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 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 a fund
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.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in
a segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of a
fund's assets could impede portfolio management or the fund's ability to
meet redemption requests or other current obligations.
SPECIAL FACTORS AFFECTING NEW YORK
The financial condition of the State of New York (the State), its public
authorities and public benefit corporations (the Authorities) and its local
governments, particularly The City of New York (the City), could affect the
market values and marketability of, and therefore the net asset value per
share and the interest income of, the funds, or result in the default of
existing obligations, including obligations which may be held by the funds.
The following section provides only a brief summary of the complex factors
affecting the financial situation in New York and is based on information
obtained from the State, certain of its Authorities, the City and certain
other localities, as publicly available on the date of this Statement of
Additional Information. The information contained in such publicly
available documents has not been independently verified. It should be
noted that the creditworthiness of obligations issued by local issuers may
be unrelated to the creditworthiness of the State, and that there is no
obligation on the part of the State to make payment on such local
obligations in the event of default in the absence of a specific guarantee
or pledge provided by the State.
The State and the City have been facing serious financial difficulties and
have each experienced recent declines in their credit standings. Standard
& Poor's Corporation and Moody's Investors Service Inc. have each
assigned ratings for the State's general obligation bonds that are among
the three lowest of the 50 states. The ratings of certain related debt of
other issuers for which the State has an outstanding moral obligation,
lease purchase, guarantee or other contractual obligation are generally
linked directly to the State's rating. Should the financial condition of
the State, its Authorities, or its local governments deteriorate, their
respective credit ratings could be further reduced, and the market value
and marketability of their outstanding notes and bonds could be adversely
affected, and their respective access to the public credit markets
jeopardized.
ECONOMIC FACTORS. New York is the second most populous state, and
historically has been one of the wealthiest states in the nation. However,
the State economy has grown more slowly than that of the nation as a whole,
resulting in the gradual erosion of its relative economic affluence (due to
factors such as relative costs for taxes, labor, and energy). The State's
manufacturing and maritime base have been seriously eroded, as illustrated
by the decline of the steel industry in the Buffalo area and of the apparel
and textile industries in the City. In addition, the City experienced
substantial socio-economic changes, as a large segment of its population
and a significant share of corporate headquarters and other businesses
relocated (many out-of-state).
Both the State and the City experienced substantial revenue increases in
the mid-1980s attributable directly (corporate income and financial
corporations taxes) and indirectly (personal income and a variety of other
taxes) to growth in new jobs, rising profits, and capital appreciation
derived from the finance sector of the City's economy. From 1977 to its
1988 peak, the finance, insurance, and real estate sectors rose 55%, to
account in 1988 for 23% of total earnings in the City and 14% statewide
(compared to 7% nationwide). The finance sector's growth was a catalyst
for the New York metropolitan region's related business and professional
services, retail trade and residential and commercial real estate markets.
The then rising real estate market contributed to City revenues, as higher
property values and new construction added to collections from property
taxes, mortgage recording, and transfer taxes and sales taxes on building
materials. The boom on Wall Street more than compensated for the continued
erosion of the State's (and the City's) manufacturing and maritime base,
since average wages in finance and related business and professional
services were substantially higher (thereby providing a net increase of
higher incomes, taxed at even higher marginal rates).
However, the effects of the October 1987 stock market crash and the 1990-92
national recession have had a disproportionately adverse impact on the New
York metropolitan region, as private sector job losses since 1989 have
offset all the prior employment gains of the 1980s. Declines in both
employment and earnings in the finance sector contributed to declines in
retail sales and real estate values. In addition, a number of widely
publicized bankruptcies among highly leveraged retailing, brokerage and
real estate development companies occurred. The effects of the recession
have extended to banking, insurance, business services (such as law,
accounting and advertising), publishing and communications. Factors which
may inhibit the City's economic recovery include (i) credit restraints
imposed by the weak financial condition of several major money center banks
located in the City; (ii) increases in combined State and local tax
burdens, if uncompetitive tax rates are imposed; (iii) perceived declines
in the quality of life attributable to service reductions and the
deterioration of the City's aging and dilapidated infrastructure; or (iv)
additional employment losses in the City's banking sector or corporate
headquarters complex due to further corporate relocations or
restructurings. The City's future economic condition will also likely be
affected by its competitive position as a world financial center (compared
to London, Tokyo, Frankfurt, and competing regional U.S. centers).
While the State's economy (the nation's second largest) is broader-based
than that of the City, particular industries are concentrated in and have a
disproportionate impact on certain areas, such as aerospace in Long Island,
heavy industry in Buffalo, photographic and optical equipment in Rochester,
machinery and transportation equipment in Syracuse and Utica-Rome,
computers in Binghamton and in the Mid-Hudson Valley, and electrical
equipment in Schenectedy. Of the six largest private employers in the
State outside the City, three derive a significant share of their revenues
from contracts with the Defense Department, whose budget (and contract
outlays) may be further reduced during the 1990s. In addition, State
government has a significant local economic impact on the Albany area and
on communities where state university campuses or corrections and mental
health facilities are located. Constraints on economic growth, taxpayer
resistance to proposed substantial increases in local tax rates, and
reductions in State aid in regions apart from the City have contributed to
financial difficulties for several county and other local governments.
These recent trends have had, and may continue to have, an adverse impact
on both State and local government revenue receipts. The adverse fiscal
impact on the State and its local governments (especially the City, Suffolk
County and Buffalo) of the 1990-92 national recession has been substantial,
and could worsen if the recession deepens or is protracted locally.
THE STATE. The State has been experiencing substantial financial
difficulties, with General Fund (the principal operating account) deficits
incurred in each of the past five fiscal years (ending March 31). The
State's accumulated General Fund deficit (on a GAAP-basis) grew 91% from
FY1986-87 to FY1990-91, and reached a then-record $6.265 billion (audited)
by March 31, 1991. Due largely to the accounting treatment of State aid to
local governments now paid by New York State Local Government Assistance
Corporation (as described below), the State had a General Fund surplus (on
a GAAP basis) of $1.668 billion in FY1991-92 (although the State issued
$531 million of its deficit notes at fiscal year end to avert a cash-basis
deficit). As a consequence, the accumulated General Fund deficit at March
31, 1992 was restated to be $4.616 billion. In the process of adopting the
FY1992-93 budget, the State was required to close a potential $4.8 billion
revenue and expenditure gap. While the State is expected to end FY1992-93
with a modest cash basis surplus for FY1992-93, published reports indicate
that it faces a potential $3.7 billion gap in preparing a FY1993-94 budget.
There can be no assurance that the State will not face budget gaps in
future years, resulting from a disparity between tax revenues projected
from a lower recurring-receipts base and the spending required to maintain
State programs at current levels. Furthermore, the State is a party to
numerous lawsuits in which an adverse decision could require extraordinary
expenditures. Certain major budgetary considerations affecting the State
are outlined below.
REVENUE BASE. The State's principal revenue sources are economically
sensitive, and include the personal income tax (55% of estimated FY1992-93
General Fund tax receipts), user taxes and fees (16%), and business taxes
(19%). One-fourth of the 4% State sales tax has been dedicated to pay debt
service of the New York Local Government Assistance Corporation, and has
correspondingly reduced General Fund receipts. Capital gains are a
significant component of income tax collections. Auto sales and building
materials are significant components of retail sales tax collections. Tax
rates are relatively high and may impose political and economic constraints
on the ability of the State to further increase its taxes. State
legislation enacted in 1987 phased in a reduction in the top rate of the
State's personal income tax; these tax cuts have substantially reduced the
recurring revenues of the State. The final phase-in (originally scheduled
for October 1990) has been deferred three times, and is currently scheduled
for 1993. If the additional personal income tax rate cut is implemented
as scheduled and the surcharge on business income is reduced from the
current 15% to 10% as required by current law, State receipts could fall by
approximately $1 billion. In the absence of countervailing economic growth
or expenditure cuts such actions could make the achievement of a balanced
State budget more difficult in future years.
STATE DEBT. The State has the heaviest debt burden of any state (with
nearly $5.0 billion of general obligation and $16.8 billion of
lease-purchase or other contractual debt outstanding as of June 30, 1992),
and debt service costs absorb a large share of the State's budget. The
State is also obligated with respect to nearly $8.2 billion for statutory
moral obligations for 9 of its Authorities and for guarantees of $498
million of other Authority debt. In addition, the State has one of the
largest seasonal financing requirements of any municipal issuer, and is
required each spring to borrow substantial sums from public credit markets
to finance its accumulated General Fund deficit and its scheduled payments
of aid to local governments and school districts. No assurance can be
given that the State will be able to continue to meet its financing
requirements in the public credit markets at the times or in the amounts
required. The annual Spring Borrowing is contingent on the certification
by the State Comptroller that the newly adopted State budget is balanced.
Prior delays in the Spring Borrowing in recent years owing to delayed
enactment of the State budget have resulted in delays in the scheduled
payments of State aid and have consequently caused various local
governments and school districts to experience cash flow difficulties. For
the fourth consecutive year, a growing budget gap caused the State at the
end of its fiscal year to issue $531 million of its short-term notes
(payable from the next year's tax receipts) to finance its FY1991-92
deficit. The State recently created the New York State Local Government
Assistance Corporation (LGAC) as a financing vehicle to reduce the State's
seasonal financing needs by having LGAC finance the State's local
assistance payments by issuing long-term debt, payable over 30 years from a
portion of the State sales tax. The enabling legislation for LGAC contains
a covenant restricting the amount of the State's Spring Borrowing, which
may reduce the State's fiscal flexibility.
BUDGETARY FLEXIBILITY. A major share of the State's General Fund budget is
accounted for by contractually required expenses (such as pension and debt
service costs) and by federally mandated programs (such as AFDC and
Medicaid). In addition, State aid for school districts comprises a major
share of the budget, and total appropriations and distribution of such aid
is especially contentious politically. Furthermore, the State has utilized
a substantial range of actions of a non-recurring nature in recent years to
finance its General Fund operations, including tapping excess monies in
special funds, refinancing outstanding debt to reduce reserve fund
requirements and current (but not long-term) debt service costs,
recalculating pension fund contributions, selling state assets, reimbursing
past General Fund expenditures by the issuance of Authority debt, and
deferring payment for expenditures to future fiscal years. Such actions
may have reduced the State's ability to respond to unanticipated events in
the future.
POLITICAL FACTORS. Political control of the Legislature has been divided
between the Senate and the Assembly for most of the State's recent history,
and has contributed to protracted State budget negotiations that have
delayed enactment of the State budget past the April 1 constitutional
deadline in each of the past eight years. In addition, the independently
elected State Comptroller audits state agencies, Authorities and local
governments, and issues reports from time to time that may result in
adverse publicity or conflicting fiscal projections.
LABOR COSTS. The State government workforce is mostly unionized, subject
to the Taylor Law which authorizes collective bargaining and prohibits (but
has not historically prevented) strikes and work slowdowns. Costs for
employee health benefits have increased substantially, and can be expected
to further increase. The State has a substantial unfunded liability for
future pension benefits, and has utilized changes in its pension fund
investment return assumptions to reduce current contribution requirements.
If such investment earnings assumptions are not sustained by actual
results, additional State contributions will be required in future years to
meet the State's contractual obligations.
PUBLIC ASSISTANCE. The State has the second largest number of persons
receiving public assistance (AFDC and Home Relief) of any state. AFDC
costs are shared among the federal government, the State and its counties
(including the City) by statutory formula. Caseloads tend to rise
significantly during economic downturns, but have fallen only in the later
stages of past economic recoveries.
MEDICAID. The State participates in the federal Medicaid program under a
state plan approved by the Health Care Financing Administration. The
federal government provides 50% of eligible program costs, with the
remainder shared by the State and its counties (including the City). The
Governor has proposed that the State assume local costs for Medicaid, but
enabling legislation has not yet been adopted. Basic program eligibility
and benefits are determined by federal guidelines, but the State provides a
number of optional benefits and expanded eligibility. Program costs have
increased substantially in recent years, and account for a rising share of
the State budget. Federal law requires the State adopt reimbursement rates
for hospitals and nursing homes that are reasonable and adequate to meet
the costs that must be incurred by efficiently and economically operated
facilities in providing patient care, a standard that has led to past
litigation by hospitals and nursing homes seeking higher reimbursement from
the State. Cutbacks in State spending for Medicaid may adversely affect
the financial condition of hospitals and health care institutions that are
the obligors of bonds that may be held by the funds.
ENERGY COSTS. Increases in energy costs, especially for heating oil and
gasoline, may exceed budgeted amounts. Such costs are related to the
severity of winter conditions and to international developments affecting
the petroleum market.
ENVIRONMENTAL PROTECTION. Federal legislation and Environment Protection
Agency regulations mandate compliance with various standards for air and
water pollution and hazardous wastes. Many jurisdictions within the State
(including the City) are not in compliance with such standards, and are
subject to a range of penalties. No assurance can be given that the State
or its local governments will meet such standards within the current
deadlines for compliance under such regulations or consent decrees, or that
such deadlines will be further extended. The costs of compliance are
substantial, as may be the costs of penalties that may be imposed on the
State or its local governments.
THE STATE AUTHORITIES. The State's Authorities are not subject to the
constitutional restrictions on the incurrence of debt which apply to the
State itself, and may issue bonds and notes within the amounts of, and as
otherwise restricted by, their legislative authorization. The New York
State Public Authorities Control Board approves the issuance of debt and
major contracts by ten of the Authorities. As of September 30, 1991, there
were 17 Authorities that had outstanding debt of $100 million or more, the
aggregate debt of which (including refunding bonds and moral obligation or
State-guaranteed debt) then totaled approximately $57.1 billion. In recent
years the State has provided financial assistance through appropriations,
in some cases of a recurring nature, to certain Authorities for operating
and other expenses and, (from 1976 to 1987) in fulfillment of its
commitments on moral obligation indebtedness or otherwise, for debt
service. The State has budgeted operating assistance of approximately $853
million for the Metropolitan Transportation Authority (MTA) and $20 million
for four other Authorities (including the State Housing Finance Agency and
the State Urban Development Corporation) during FY1992-93. This assistance
is expected to continue to be required (and may increase) in future years.
Failure by the State to appropriate necessary amounts or to take other
action to permit the Authorities to meet their obligations could result in
a default by one or more of the Authorities (as happened in 1975 by the
Urban Development Corporation).
The MTA, where credit standing was recently cut, oversees the operation of
the City's subway and bus lines by its affiliates, the New York City
Transit Authority and the Manhattan and Bronx Surface Transit Operating
Authority (collectively, the "TA"). MTA subsidiaries operate certain
commuter rail and bus lines in the New York metropolitan area. An
affiliated agency, the Triborough Bridge and Tunnel Authority (TBTA),
operates certain intrastate toll bridges and tunnels. To maintain its
facilities and equipment, which deteriorated significantly in the late
1970s due to deferred maintenance, the MTA prepares a four year capital
program subject to approval by the MTA Capital Program Review Board. The
proposed 1992-1996 program (rejected by the Review Board) projected total
spending requirements of $10 billion, but identified only $6 billion in
potential funding. The MTA is facing a substantial budget deficit in 1993
(not accounting for any wage increase) in TA operations due to a falloff in
ridership, reduced collections from dedicated taxes (mortgage recording and
realty transfer taxes) and reduced State and City aid. Because fares are
not sufficient to finance its mass transit operations, the MTA has depended
and will continue to depend for operating support upon a system of State,
local government and TBTA support, and, to the extent available, federal
assistance (including loans, grants and operating subsidies). A regional
business tax surcharge, which provided $59 million in revenues to the MTA
in 1991, is scheduled to expire, unless extended by the Legislature, in
November 1993. In addition, the City provides a substantial subsidy to the
TA. There can be no assurance that any such assistance will continue at
any particular level or in any fixed relationship to the operating costs
and capital needs of the MTA.
THE CITY. In the early 1970s, the City incurred substantial operating
deficits, and its financial controls, accounting practices, and disclosure
policies were widely criticized. In 1975, the City encountered severe
financial difficulties and lost access to the public credit markets. The
State Legislature responded in 1975 by creating the Municipal Assistance
Corporation For The City of New York (MAC) to provide financing assistance
for the City and the Financial Control Board to exercise certain oversight
and review functions with respect to the City's finances. The Financial
Control Board's powers over the City were suspended in June 1986, but would
be reinstated (under current law) if the City experiences certain adverse
financial circumstances. At the time of the fiscal crisis, the State
provided substantial financial assistance to the City, the federal
government provided the City with direct seasonal loans and guarantees on
the City's long-term debt, and the City's labor unions accepted deferrals
of wage increases and approved purchases of City bonds by the pension
funds. No assurance can be given that similar assistance would again be
made available if needed, particularly given the current budgetary
constraints faced by both the federal and State governments.
The City provides services usually undertaken by counties, school districts
or special districts in other large urban areas. State law requires the
City to allocate at least 40% of its General Fund to Board of Education
operations, and mandates the City to assume the local share of public
assistance and Medicaid costs. The City had GAAP operating surpluses of
$567 million in FY1987, $225 million in FY1988, $409 million in FY1989,
$253 million in FY1990, $27 million in FY1991 and $570 million in FY1992
before discretionary transfers and expenditures. The City has experienced
substantial financial difficulties in the early 1990s, primarily related to
the impact of the recession on the local economy (reducing revenues from
most major taxes and increasing public assistance and Medicaid caseloads),
rising health care costs for City employees and for Medicaid, and the
repeated deferral of the sale of the New York Coliseum site to a private
developer. In response, the City implemented gap-closing programs in FY1990
and in FY1991 which enabled the City to offset a potential $3.2 billion
deficit in FY1991 and to achieve modest GAAP surpluses in those years. The
programs initially relied primarily on actions of a non-recurring nature,
but included substantial property tax rate increases and a personal income
tax surcharge imposed in FY1991 and selected service cutbacks. Reductions
in State aid, larger than budgeted labor settlements and increased police
expenditures added to the adverse budgetary impact of the local recession,
confronting the City with a potential $3.3 billion imbalance during FY1992
budget negotiations. This initial budget gap was closed by adoption of a
budget providing for various tax increases and significant service
reductions. Aid to nonprofit cultural institutions in the City was
significantly reduced (as was State aid to such institutions), including
certain institutions that are obligors of bonds that may be held by the
funds.
The City's four year financial plan for FY1993-FY1996 (as modified by the
Mayor's preliminary budget for FY1994), while projecting a modest budget
surplus for FY1993, recommended measures to close a potential budget gap of
$2.1 billion in FY1994; the Mayor further identified potential budget gaps
in later fiscal years (rising to $3.8 billion in FY1996). ` The plan
contained numerous assumptions concerning factors which may impact the
City's budget, such as: the willingness and ability of MAC to take actions
necessary in transitional funding for FY1994 and FY1995; the willingness
and ability of the federal and State governments to provide financial
assistance and to take other actions contemplated by the City; the ultimate
disposition of the City's wage settlements (which could be determined
through binding arbitration); the performance of the City economy
(particularly to the extent tax collections and public assistance caseloads
are affected); and the extent actual earnings on pension fund assets are
consistent with the 9% return assumed in determining the currently planned
level of required City contributions. No assurance can be given that the
assumptions used by the City will be realized. Furthermore, actions taken
in recent fiscal years to avert deficits may have reduced the City's
flexibility in responding to future budgetary imbalances, and have deferred
certain expenditures to later fiscal years.
The City projects that local revenues will provide approximately 68% of
total revenues in FY1993 while Federal aid, including categorical grants,
will provide 11% and State aid, including unrestricted aid and categorical
grants, will provide 21%. As a proportion of total revenues, State aid
remained relatively constant over the period from 1980 to 1990, while
federal aid was sharply reduced (having provided nearly 20% of total FY1980
revenues). The largest source of the City's revenues is the real estate
tax (approximately 26% of total revenues for FY1993), at rates levied by
the City Council (subject to certain State constitutional limits). In the
event of a reduction in total assessments, higher tax rates would be
required to maintain the same amount of tax revenue. The City derives the
remainder of its tax revenues from a variety of other economically
sensitive local taxes (subject to authorization by the Legislature),
including: a local sales and compensating use tax (dedicated primarily to
MAC debt service) imposed in addition to the State's tax; the personal
income tax on City residents and the earnings tax on non-residents; a
general corporation tax; and a financial corporation tax. High tax burdens
in the City impose political and economic constraints on the ability of the
City to increase local tax rates.
The City is the largest municipal debt issuer in the nation, and has more
than doubled its debt load since the end of FY1986, in large measure to
rehabilitate its extensive, aging physical plant. The City's seasonal
borrowing needs increased significantly during FY1990 and FY1991, largely
due to delayed State aid payments, and totalled $2.25 billion in FY1993.
The City's current $19.1 billion capital financing program (most of which
would be used to reimburse the City's general fund for capital expenditures
the City expects to incur) reflects major reductions in the City's 1993-96
capital plan, which will reduce future debt service requirements, but may
adversely affect the condition of its deteriorating physical plant. No
assurance can be given that the credit markets will absorb the projected
amounts of City obligations, which are essential if the City is to meet its
planned operating and capital expenditures. Furthermore, the ability of
the City to obtain credit enhancement and to sell its bonds at favorable
interest rates is constrained by capacity limits established by the major
bond insurance companies and reinsurers to limit their credit exposure
risks.
A voter-approved study of secession by Staten Island (one of five
counties/boroughs, comprising 4% of the City's population and 19% of its
land area) is being undertaken, and State law provides a complex mechanism
for such secession. The State Legislature is also considering
establishment of a similar secession mechanism for Queens.
OTHER LOCALITIES. The State provides substantial financial assistance to
its political subdivisions, totalling approximately 71% of General Fund
disbursements in the State's FY1991-92, primarily for aid to elementary,
secondary and higher education (49% of local assistance) and Medicaid and
income maintenance (36%). The Legislature has enacted substantial
reductions from previously budgeted levels of State aid since December
1990. To the extent the State is constrained by its financial condition,
State assistance to localities may be further reduced, compounding the
serious fiscal constraints already experienced by many local governments.
Localities also face anticipated and potential problems resulting from
pending litigation (including challenges to local property tax
assessments), judicial decisions and socio-economic trends.
At December 31, 1991, the total indebtedness of all localities in the
State, other than New York City, was approximately $13.3 billion. A small
portion (approximately $51 million) of this indebtedness represented
borrowing to finance budgetary deficits issued pursuant to enabling State
legislation (requiring budgetary review by the State Comptroller.
Seventeen localities had outstanding indebtedness for deficit financing at
the close of their fiscal year ending 1990 (compared to 11 in 1988).
Subsequently, certain counties and other local governments have encountered
significant financial difficulties, including the counties of Suffolk
(whose long-term debt ratings were reduced below investment grade by
Standard & Poor's for several months during 1991), Nassau, Monroe, and
Westchester, and the City of Buffalo. The State has imposed financial
control on New York City from 1977 to 1986 and on the City of Yonkers since
1984 under an appointed control board in response to fiscal crises
encountered by such municipalities. The Legislature imposed certain
limited fiscal restraints on Nassau and Suffolk Counties, and authorized
their issuance of deficit bonds to finance over several years their
respective 1992 operating deficits.
SPECIAL FACTORS AFFECTING PUERTO RICO
The following only 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 Statement of Additional Information. FMR has not independently
verified any of the information contained in such official statements,
prospectuses and other publicly available documents, but is not aware of
any fact which would render such information materially inaccurate.
The economy of Puerto Rico is closely linked with that of the United
States, and in fiscal 1992 trade with the United States accounted for
approximately 88% of Puerto Rico's exports and approximately 68% of its
imports. In this regard, in fiscal 1992 Puerto Rico experienced a
$2,940,300,000 positive adjusted merchandise trade balance. Since fiscal
1987 personal income, both aggregate and per capita, have increased
consistently each fiscal year. In fiscal 1992 aggregate personal income was
$22.7 billion and personal per capita income was $6,360. Gross domestic
product in fiscal 1989, 1990, 1991 and 1992 was $19,954,000, $21,619,000,
22,857,000, and $23,620,000 respectively. For fiscal 1993, an increase in
gross domestic product of 2.9% over fiscal 1992 is forecasted. However,
actual growth in the Puerto Rico economy will depend on several factors
including the condition of the U.S. economy, the exchange rate for the U.S.
dollar, the price stability of oil imports, and interest rates. Due to
these factors there is no assurance that the economy of Puerto Rico will
continue to grow.
Puerto Rico has made marked improvements in fighting unemployment.
Unemployment is at a low level compared to that of the late 1970s, but it
still remains significantly above the United States average. Despite long
term improvements the unemployment rate rose from 15.2% to 16.5% from
fiscal 1991 to fiscal 1992. At the end of the third quarter of fiscal 1993
the unemployment rate in Puerto Rico stood at 17.3%. There is a possibility
that the unemployment rate will continue to increase.
The economy of Puerto Rico has undergone a transformation in the later
half of this century from one centered around agriculture, to one dominated
by the manufacturing and service industries. Manufacturing is the
cornerstone of Puerto Rico's economy, accounting for $13.2 billion or 38.7%
of gross domestic product in 1992. However, manufacturing has experienced a
basic change over the years as a result of the influx of higher wage, high
technology industries such as the pharmaceutical industry, electronics,
computers, micro-processors, scientific instruments and high technology
machinery. The service sector, which includes wholesale and retail trade,
finance and real estate, ranks second in its contribution to gross domestic
product and is the sector that employs the greatest number of people. In
fiscal 1992, the service sector generated $13.0 billion in gross domestic
product or 38.3% of the total and employed over 449,000 workers providing
46% of total employment. The government sector and tourism also contribute
to the island economy each accounting for $3.7 billion and $1.5 billion in
fiscal 1992, respectively.
Much of the development of the manufacturing sector of the economy of
Puerto Rico is attributable to federal and Commonwealth tax incentives,
most notably section 936 of the Internal Revenue Code of 1986, as amended
("Section 936") and the Commonwealth's Industrial Incentives Program.
Section 936 currently grants U.S. corporations that meet certain criteria
and elect its application a credit against their U.S. corporate income tax
on the portion of the tax attributable to (i) income derived from the
active conduct of a trade or business in Puerto Rico ("active income"), or
from the sale or exchange of substantially all the assets used in the
active conduct of such trade or business, and (ii) qualified possession
source investment income ("passive income"). The Industrial Incentives
Program, through the 1987 Industrial Incentives Act, grants corporations
engaged in certain qualified activities a fixed 90% exemption from
Commonwealth income and property taxes and a 60% exemption from municipal
license taxes.
On August 16, 1993, President Clinton signed a bill amending Section
936. Under the amendments, U.S. corporations with operations in Puerto Rico
can elect to receive a federal income tax credit equal to: 40% of the
credit currently available, phased in over a five year period, starting at
60% of the current credit, or a credit based on investment and wages. The
investment and wage credit would equal the sum of (i) 60% of qualified
compensation to employees, (ii) a specified percentage of depreciation
deductions with respect to tangible property located in Puerto Rico, and
(iii) a portion of income taxed paid to Puerto Rico, up to a 9% effective
tax rate, subject to certain requirements. It is not possible to determine
at this time whether the reductions in tax incentives for operations in
Puerto Rico will have a significant impact on the economy of Puerto Rico or
the time period in which such impact would arise.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by FMR (either directly or through affiliated
sub-advisers) pursuant to authority contained in each fund's
m anagement c ontract. FMR is also responsible for the placement
of transaction orders for other investment companies and accounts for which
it or its affiliates act as investment adviser. Securities purchased and
sold by the money market fund will be traded on a net basis (i.e., without
commission). In selecting broker-dealers, subject to applicable
limitations of the federal securities laws, FMR will consider various
relevant factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; and the reasonableness
of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of broker-dealers
who provide such services on a regular basis. However, as many
transactions on behalf of the money market fund are placed with
broker-dealers (including broker-dealers on the list) without regard to the
furnishing of such services, it is not possible to estimate the proportion
of such transactions directed to such broker-dealers solely because such
services were provided. The selection of such broker-dealers generally is
made by FMR (to the extent possible consistent with execution
considerations) based upon the quality of research and execution services
provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and, conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the funds to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the funds and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds, or shares of other Fidelity
funds, to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI), a member of the New York Stock Exchange and a subsidiary of
FMR Corp., if the commissions are fair and reasonable and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the SEC. Pursuant to such regulations, the Board of
Trustees has approved a written agreement that permits FBSI to effect
portfolio transactions on national securities exchanges and to retain
compensation in connection with such transactions. For the fiscal periods
May 1, 1992 to January 31, 1993, May 1, 1991 to April 30, 1992, and May 1,
1990 to April 30, 1991, the funds did not pay brokerage commissions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
funds and review the commissions paid by each fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to each fund.
For the fiscal periods ended January 31, 1994, and January 31, 1993,
the insured and high yield funds' portfolio turnover rates were __% and
__ %, respectively.
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 the funds to seek such
recapture.
Although the Trustees and officers of the funds are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
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 a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases, this system could have a
detrimental effect on the price or value of the security as far as the
funds are 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 the funds outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
VALUATION OF PORTFOLIO SECURITIES
INSURED AND HIGH YIELD FUNDS. Valuations of portfolio securities furnished
by the pricing service employed by the insured and high yield funds are
based upon a computerized matrix system or appraisals by the pricing
service, in each case in reliance upon information concerning market
transactions and quotations from recognized municipal securities dealers.
The methods used by the pricing service and the quality of valuations so
established are reviewed by officers of the funds and FSC under the general
supervision of the Trustees. There are a number of pricing services
available, and the Trustees, or officers acting on behalf of the Trustees,
on the basis of on-going evaluation of these services, may use other
pricing services or discontinue the use of any pricing service in whole or
in part.
MONEY MARKET FUND. The fund values its investments on the basis of
amortized cost. This technique involves valuing an instrument at its cost
as adjusted for amortization of premium or accretion of discount rather
than its value based on current market quotations or appropriate
substitutes which reflect current market conditions. The amortized cost
value of an instrument may be higher or lower than the price the fund would
receive if it sold the instrument.
Valuing the fund's instruments on the basis of amortized cost and use of
the term "money market fund" are permitted by Rule 2a-7 under the
Investment Company Act of 1940. The fund must adhere to certain conditions
under Rule 2a-7; these conditions are summarized in the Prospectus.
The Board of Trustees of the trust oversees FMR's adherence to SEC rules
concerning money market funds, and has established procedures designed to
stabilize the fund's NAV at $1.00. At such intervals as they deem
appropriate, the Trustees consider the extent to which NAV calculated by
using market valuations would deviate from $1.00 per share. If the
Trustees believe that a deviation from the fund's amortized cost per share
may result in material dilution or other unfair results to shareholders,
the Trustees have agreed to take such corrective action, if any, as they
deem appropriate to eliminate or reduce, to the extent reasonably
practicable, the dilution or unfair results. Such corrective action could
include selling portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; withholding
dividends; redeeming shares in kind; establishing NAV by using available
market quotations; and such other measures as the Trustees may deem
appropriate.
During periods of declining interest rates, the fund's yield based on
amortized cost may be higher than the yield based on market valuations.
Under these circumstances, a shareholder in the fund would be able to
obtain a somewhat higher yield than would result if the fund utilized
market valuations to determine its NAV. The converse would apply in a
period of rising interest rates.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. The insured and high yield funds'
share prices, and all of the funds' yields and total returns fluctuate in
response to market conditions and other factors. The value of the insured
and high yield funds' shares when redeemed may be more or less than their
original cost.
YIELD CALCULATIONS. To compute the MONEY MARKET FUND'S yield for a period,
the net change in value of a hypothetical account containing one share
reflects the value of additional shares purchased with dividends from the
one original share and dividends declared on both the original share and
any additional shares. The net change is then divided by the value of the
account at the beginning of the period to obtain a base period return.
This base period return is annualized to obtain a current annualized yield.
The money market fund also may calculate 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.
For the INSURED AND HIGH YIELD FUNDS, yields used in advertising are
computed by dividing a fund's interest income for a given 30-day or
one-month period, net of expenses, by the average number of shares entitled
to receive dividends during the period, dividing this figure by the fund's
net asset value per share at the end of the period, and annualizing the
result (assuming compounding of income) in order to arrive at an annual
percentage rate. Income is calculated for purposes of the insured and high
yield funds' 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 purposes of determining the insured and high yield
funds' yields 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, each fund's yield
may not equal its distribution rate, the income paid to your account, or
the income reported in the funds' financial statements.
A fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment after taxes to equal the fund's tax-free
yield. Tax-equivalent yields are calculated by dividing a fund's yield by
the result of one minus a stated federal or combined federal, state, and
city tax rate. (If only a portion of the fund's yield is tax-exempt, only
that portion is adjusted in the calculation.)
The tables following show the effect of a shareholder's tax status on
effective yield under federal and state income tax laws for 1994. They
show 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 2.0% to 8.0%. Of course,
no assurance can be given that a fund will achieve any specific
tax-equivalent yield. While each fund invests principally in obligations
whose interest is exempt from federal income tax, other income received by
the funds may be taxable.
Use this table to find your approximate effective tax bracket on investment
income as a New York resident with triple taxes (federal, state, and New
York City) or double taxes (federal and state) for 199 4 .
199 4 TAX RATES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Marginal Federal New York New York New York
Taxable Income Taxable Income Income Marginal City Income State Income
Single Return* Joint Return* Tax Bracket Tax Bracket Tax Bracket Tax Bracket
</TABLE>
Double Triple
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
$22,101 - $25,000 $36,901 - $45,000 28% 12.28% 7.88% 33.67% 36.83%
25,001 - 53,500 45,001 - 89,500 28% 12.28% 7.88% 33.67% 36.84%
53,501 - 60,000 89,501 -108,000 31% 12.28% 7.88% 36.43% 39.47%
60,001 - 115,000 108,001 - 140,000 31% 12.28% 7.88% 36.43% 39.51%
115,001 - 250,000 140,001 - 250,000 36% 12.28% 7.88% 41.04% 43.89%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
250,001 - + 250,001 - + 39.6% 12.28% 7.88% 44.36% 47.05%
</TABLE>
*Taxable income (gross income after all exemptions, adjustments, and
deductions) based on 1994 tax rates.
Having determined your effective tax bracket on the previous page, use the
appropriate table below to determine the tax - equivalent yield for a
given tax - free yield.
NEW YORK CITY RESIDENTS - TRIPLE TAXES - 1994
If your effective combined federal, state, and New York City personal
income tax rate in 1994 is:
36.83% 36.84% 39.47% 39.51% 43.89% 47.05%
To match these
tax-free yields: Your taxable investment would have to earn the
following yield:
2% 3.17% 3.17% 3.30% 3.31% 3.56% 3.78%
3% 4.75% 4.75% 4.96% 4.96% 5.35% 5.67%
4% 6.33% 6.33% 6.61% 6.61% 7.13% 7.55%
5% 7.92% 7.92% 8.26% 8.27% 8.91% 9.44%
6% 9.50% 9.50% 9.91% 9.92% 10.69% 11.33%
7% 11.08% 11.08% 11.56% 11.57% 12.48% 13.22%
8% 12.66% 12.66% 13.22% 13.23% 14.26% 15.11%
NEW YORK STATE RESIDENTS (OUTSIDE NYC) - DOUBLE TAXES - 1994
If your effective combined federal and state personal income tax rate in
1994 is:
33.67% 36.43% 41.04% 44.36%
To match these
tax-free yields: Your taxable investment would have to earn the
following yield:
2% 3.02% 3.15% 3.39% 3.59%
3% 4.52% 4.72% 5.09% 5.39%
4% 6.03% 6.29% 6.78% 7.19%
5% 7.54% 7.87% 8.48% 8.99%
6% 9.05% 9.44% 10.18% 10.78%
7% 10.55% 11.01% 11.87% 12.58%
8% 12.06% 12.59% 13.57% 14.38%
The money market fund may invest a portion of its assets in obligations
that are subject to state or federal income taxes. When the money market
fund invests in these obligations, its tax-equivalent yields will be lower.
In the tables above, tax-equivalent yields are calculated assuming
investments are 100% federally and state tax-free.
Yield information may be useful in reviewing the funds' performance and in
providing a basis for comparison with other investment alternatives.
However, each fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of the 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.
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 (if any), and any change in the fund's net
asset value per share (NAV) over the period. Average annual total returns
are calculated by determining the growth or decline in value of a
hypothetical historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative total return of 100%
over ten years would produce an average annual total return of 7.18%, which
is the steady annual rate of return that would equal 100% growth on a
compounded basis in ten years. While average annual total returns are a
convenient means of comparing investment alternatives, investors should
realize that a fund's performance is not constant over time, but changes
from year to year, and that average annual total returns represent averaged
figures as opposed to the actual year - to - year performance of
the fund.
In addition to average annual total returns, a fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, or a series of
redemptions, over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes
in share price) in order to illustrate the relationship of these factors
and their contributions to total return. An example of this type of
illustration is given below. 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 insured and high yield
funds' net asset values, adjusted net asset values, and benchmark indices
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, each fund's adjusted NAVs are not adjusted for
sales charges, if any.
HISTORICAL RESULTS. The following table shows the funds' total returns for
the periods ended January 31, 1994.
Average Annual Total Returns* Cumulative Total Returns*
One Five Life of One Five Life of
Year Years Fund** Year Years Fund**
Money Market Fund
Insured Fund
High Yield Fund
* If FMR had not reimbursed certain fund expenses during these periods, the
funds' total returns would have been lower.
** The funds commenced operations on July 6, 1984 (money market fund),
October 11, 1985 (insured fund), and July 10, 1984 (high yield fund).
Prior to October 1, 1985, the money market fund was designed as a
Short-Term Bond Portfolio and did not seek to maintain a stable $1.00 share
price.
The money market fund's seven - day yield as of January 31, 1994 was
____%, with a corresponding tax - equivalent yield of ____%. The
insured and high yield funds' 30 - day yields as of January 31, 1994
were ____% and ____%, respectively, with corresponding
tax - equivalent yields of ____% and ____%, respectively.
Tax - equivalent yields are based on the highest 1994 combined
federal, New York State, and New York City income tax rate of ____%.
The following tables show the income and capital elements of each fund's
total returns. During the periods quoted, interest rates and bond prices
fluctuated widely; thus, the figures should not be considered
representative of the dividend income or capital gain or loss that could be
realized from investments in the funds today. In addition, the tables
compare each fund's return to the record of the Standard & Poor's 500
Composite Stock Price Index (S&P 500), the Dow Jones Industrial Average
(DJIA), and the cost of living (measured by the Consumer Price Index, or
CPI) over the same period. The S&P 500 and DJIA comparisons are
provided to show how each fund's total return compared to the return of a
broad average of common stocks and a narrower set of stocks of major
industrial companies, respectively, over the same period. Of course, since
the funds invest in money market and fixed-income securities, common stocks
represent a different type of investment from the funds. Common stocks
generally offer greater potential growth than the funds, but generally
experience greater price volatility, which means a greater potential for
loss. In addition, common stocks generally provide lower income than a
money market or bond fund investment such as the funds. The S&P 500
and DJIA are based on the prices of unmanaged groups of stocks and, unlike
the funds' returns, their returns do not include the effect of paying
brokerage commissions or other costs of investing.
MONEY MARKET FUND. During the period July 6, 1984 (commencement of
operations) through January 31, 1994, a hypothetical $10,000 investment in
the fund would have grown to $______, assuming all distributions were
reinvested.
<TABLE>
<CAPTION>
<S> <C>
FIDELITY NEW YORK TAX - FREE MONEY MARKET PORTFOLIO INDICES
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total of
Ended Investment Distributions Distributions Value S&P DJIA Living**
500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1/31/85* $10,030 $ 334 $0 $10,364 $12,072 $11,767 $10,174
1/31/86 9,990 855 0 10,845 14,838 15,013 10,569
1/31/87 9,990 1,290 0 11,280 19,871 21,361 10,723
1/31/88 9,990 1,729 0 11,719 19,210 19,996 11,157
1/31/89 9,990 2,270 0 12,260 23,069 24,791 11,678
1/31/90 9,990 2,943 0 12,933 26,407 28,461 12,285
1/31/91 9,990 3,593 0 13,583 28,620 31,247 12,980
1/31/92 9,990 4,103 0 14,093 35,118 38,021 13,317
1/31/93 9,990 4,439 0 14,429 38,842 40,220 13,751
1/31/94
</TABLE>
* From July 6, 1984 (commencement of operations).
** From month end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on July 6,
1984, 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 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 (dividends) for the period
would have amounted to $3,681. The fund did not distribute any capital
gains during the period. If FMR had not reimbursed certain fund expenses,
the fund's total returns would have been lower.
INSURED FUND. During the period October 11, 1985 (commencement of
operations) through January 31, 1994, a hypothetical $10,000 investment in
the fund would have grown to $18,890, assuming all distributions were
reinvested.
FIDELITY NEW YORK TAX - FREE INSURED PORTFOLIO INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total of
Ended Investment Distributions Distributions Value S&P DJIA Living**
500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1/31/86*
1/31/87
1/31/88
1/31/89
1/31/90
1/31/91
1/31/92
1/31/93
1/31/94
</TABLE>
* From October 11, 1985 (commencement of operations).
** From month end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on October
11, 1985, 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
income dividends and $ __ for capital gain distributions. If FMR had
not reimbursed certain fund expenses, the fund's total returns would have
been lower.
HIGH YIELD FUND. During the period July 10, 1984 (commencement of
operations) through January 31, 199 4 , a hypothetical $10,000
investment in the fund would have grown to $______ , assuming all
distributions were reinvested.
FIDELITY NEW YORK TAX-FREE HIGH YIELD PORTFOLIO INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total of
Ended Investment Distributions Distributions Value S&P DJIA Living**
500
</TABLE>
1/31/85*
1/31/86
1/31/87
1/31/88
1/31/89
1/31/90
1/31/91
1/31/92
1/31/93
* From July 10, 1984 (commencement of operations).
** From month end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on July 10,
1984, 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
income dividends and $ ___ for capital gain distributions. If FMR
had not reimbursed certain fund expenses, the fund's total returns would
have been lower.
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. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to
the mutual fund rankings, a fund's performance may be compared to mutual
fund performance indices prepared by Lipper.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in
advertising.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
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 indices.
Fidelity funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES(registered
trademark)/All Tax-Free, which is reported in the MONEY FUND
REPORT(registered trademark), covers over ___ tax-free money market funds.
The Bond Fund Report AverageS(registered trademark)/All Tax-Free, which is
reported in the BOND FUND REPORT(registered trademark), covers over ___
tax-free bond funds. When evaluating comparisons to money market funds,
investors should consider the relevant differences in investment objectives
and policies. Specifically, money market funds invest in short-term,
high-quality instruments and seek to maintain a stable $1.00 share price.
The intermediate and high yield funds, however, invest in longer-term
instruments and their share prices change daily in response to a variety of
factors.
A fund may compare and contrast in advertising the relative advantages
of investing in a mutual fund versus an individual municipal bond. Unlike
tax-free mutual funds, individual municipal bonds offer a stated rate of
interest and, if held to maturity, repayment of principal. Although some
individual municipal bonds might offer a higher return, they do not offer
the reduced risk of a mutual fund that invests in many different
securities. The initial investment requirements and sales charges of many
tax-free mutual funds are lower than the purchase cost of individual
municipal bonds, which are generally issued in $5,000 denominations and are
subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(registered trademark)
number, and CUSIP number, and discuss or quote its current portfolio
manager.
A 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 January 31, 199 4 , FMR advised __ tax - free funds
with a total value of over $ __ billion. According to the Investment
Company Institute, over the past eight years, assets in tax - exempt
funds increased from $ __ billion in 1984 to approximately $ ___
billion at the end of 199 3 . The money market fund may reference
the growth and variety of money market mutual funds and the adviser's
innovation and participation in the industry.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 199 4 :
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day, and Christmas Da y
(observed) . Although FMR expects the same holiday schedule , with
the addition of New Year's Day, to be observed in the future, the NYSE
may modify its holiday schedule at any time. Also, the money market fund
will be closed for wire purchases and redemptions in days when the Federal
Reserve wire system is closed.
FSC normally calculates the money market fund's NAV twice each business
day, once at 12:00 noon Eastern time and once as of the close of the NYSE
(normally 4:00 p.m. Eastern time). FSC normally determines the insured and
high yield funds' NAV as of the close of the NYSE (normally 4:00 p.m.
Eastern time. However, NAV may be calculated earlier if trading on the
NYSE is restricted or as permitted by the SEC. To the extent that
portfolio securities are traded in other markets on days when the NYSE is
closed, a fund's NAV may be affected on days when investors do not have
access to the fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payment
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.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement
may be waived if (i) the only effect of a modification would be to reduce
or eliminate an administrative fee, redemption fee, or deferred sales
charge ordinarily payable at the time of exchange, or (ii) a fund suspends
the redemption of the shares to be exchanged as permitted under the 1940
Act or by the SEC, or the fund to be acquired suspends the sales of its
shares because it is unable to invest amounts effectively in accordance
with its investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, a fund would be unable to invest
effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that each fund's income is derived from federally
tax-exempt interest, the daily dividends declared by each fund also are
federally tax-exempt. The funds will send each shareholder a notice in
January describing the tax status of dividends and capital gain
distributions (if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as social security
benefits, may be subject to federal income tax on up to one half of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
The funds purchase municipal obligations based on opinions of bond counsel
regarding the federal income tax status of the obligations. These opinions
generally will be based upon covenants by the issuers regarding continuing
compliance with federal tax requirements. If the issuer of an obligation
fails to comply with its covenants at any time, interest on the obligation
could become federally taxable retroactive to the date the obligation was
issued.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) 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 the funds' policies of investing so
that at least 80% of their 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. Private activity securities issued after
August 7, 1986 to benefit a private or industrial user or to finance a
private facility are affected by this rule.
The insured and high yield funds do not currently intend to purchase
private activity municipal obligations whose interest is a tax preference
item for purposes of the AMT. Nevertheless, each fund reserves the right
to purchase such obligations in the future, subject to notice to
shareholders, if the Board of Trustees determines that it is in the best
interest of shareholders to do so. The money market fund may invest in
private activity securities. The fund currently intends to limit income
from private activity securities to 20%.
It is the current position of the S EC Staff that a fund which uses
the word "tax-free" in its name may not derive more than 20% of its income
from municipal obligations that pay interest that is a preference item for
purposes of the AMT. Under this position, at least 80% of each fund's
income distributions would have to be exempt from the AMT as well as
federal taxes.
Corporate investors should note that a tax preference item for purposes of
the corporate AMT is 75% of the amount by which adjusted current earnings
(which includes tax-exempt interest) exceeds alternative minimum taxable
income of the corporation.
If a shareholder receives an exempt-interest dividend and sells shares at a
loss after holding them for a period of six months or less, the loss will
be disallowed to the extent of the amount of exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the funds
on the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
A portion of the gain on bonds purchased at a discount after April 30, 1993
and s hort-term capital gains distributed by the fund[s] are federally
taxable to shareholders as dividends, not as capital gains. Distributions
from short-term capital gains do not qualify for the dividends-received
deduction. Dividend distributions resulting from a recharacterization
of gain from the sale of bonds purchased at a discount after April 30, 1993
are not considered income for purposes of the funds policy of investing so
that at least 80% of their income is free from federal income tax. The
money market fund may distribute any net realized short-term capital gains
once a year or more often as necessary to maintain its net asset value at
$1.00 a share .
TAX STATUS OF THE FUNDS. Each fund has qualified and intends to continue
to qualify each year as a "regulated investment company" for tax purposes
so that it will not be liable for federal tax on income and capital gains
distributed to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at the
fund level, each fund intends to distribute substantially all of its net
investment income and net realized capital gains (if any) within each
calendar year as well as on a fiscal year basis. Each fund also intends to
comply with other tax rules applicable to regulated investment companies,
including a requirement that capital gains from the sale of securities held
less than three months constitute less than 30% of the fund's gross income
for each fiscal year. Gains from some futures contracts and options are
included in this 30% calculation, which may limit the insured and high
yield funds' investments in such instruments. Fidelity New York Municipal
Trusts treats each of its portfolios (including the insured and high yield
funds) as a separate entity for tax purposes. Fidelity New York Municipal
Trust II treats each of its portfolios (including the money market fund) as
a separate entity for tax purposes.
As of January 31, 199 4 , the funds had approximate capital loss
carryovers available to offset future capital gains as follows:
AGGREGATE
CAPITAL
LOSS AMOUNT THAT EXPIRES ON JANUARY 31,
CARRYOVER 1997 1998
Money Market Fund
Insured Fund
High Yield Fund
To the extent that capital loss carryovers are used to offset any future
capital gains, it is unlikely that the gains so offset will be distributed
to shareholders since any such distributions may be taxable to shareholders
as ordinary income.
NEW YORK TAX MATTERS. As long as a fund continues to qualify as a
regulated investment company under the federal Code, it will not incur New
York income or franchise tax liability on income and capital gains
distributed to shareholders. New York personal income tax law also
provides that exempt-interest dividends paid by a regulated investment
company, or series thereof, from interest on obligations which are exempt
from tax under New York law are excludable from gross income.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the funds and their shareholders,
and no attempt has been made to discuss individual tax consequences.
Investors should consult their tax advisers to determine whether the funds
are suitable to their particular tax situations.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas, a wholly owned subsidiary of FMR
formed in 1989, supplies portfolio management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trusts are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. Trustees and officers elected or
appointed to Fidelity New York Municipal Trust prior to the money market
fund's conversion from a series of Fidelity New York Municipal Trust to a
series of Fidelity New York Municipal Trust II served Fidelity New York
Municipal Trust in identical capacities. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. Unless
otherwise noted, the business address of each Trustee and officer is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. Those Trustees who are "interested persons" (as defined in the
1940 Act) by virtue of their affiliation with either trust or FMR are
indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, 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
FMR Texas Inc. (1989), Fidelity Management & Research (U.K.) Inc., and
Fidelity Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of
FMR; and President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc., and Fidelity Management &
Research (Far East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, 340 E. 64th Street #22C, New York, NY, Trustee
(1992). Prior to her retirement in September 1991, Mrs. Davis was the
Senior Vice President of Corporate Affairs of Avon Products, Inc. She is
currently a Director of BellSouth Corporation (telecommunications), Eaton
Corporation (manufacturing, 1991), and the TJX Companies, Inc. (retail
stores, 1990), and previously served as a Director of Hallmark Cards, Inc.
(1985-1991) and Nabisco Brands, Inc. In addition, she serves as a Director
of the New York City Chapter of the National Multiple Sclerosis Society,
and is a member of the Advisory Council of the International Executive
Service Corps. and the President's Advisory Council of The University of
Vermont School of Business Administration (1988).
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he
serves as a Trustee of First Union Real Estate Investments, Chairman of the
Board of Trustees and a member of the Executive Committee of the Cleveland
Clinic Foundation, a Trustee and a member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic
Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwhich Hospital Association (1989).
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior
to his retirement on May 31, 1990, he was a Director of FMR (1989) 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). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction, 1988). 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
(1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989),
is Chairman of G.M. Management Group (strategic advisory services). Prior
to his retirement in July 1988, he was Chairman and Chief Executive Officer
of Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee
(1988). Prior to his retirement in 1985, Mr. Malone was Chairman, General
Electric Investment Corporation and a Vice President of General Electric
Company. He is a Director of Allegheny Power Systems, Inc. (electric
utility), General Re Corporation (reinsurance) and Mattel Inc. (toy
manufacturer). He is also a Trustee of Rensselaer Polytechnic Institute
and of Corporate Property Investors and a member of the Advisory Boards of
Butler Capital Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee (1988), 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 BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software, 1988), Georgia Power Company (electric utility), Gerber
Alley & Associates, Inc. (computer software), National Life Insurance
Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General
Counsel of FMR, Vice President-Legal of FMR Corp., and Vice President and
Clerk of FDC.
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas Inc. (1990).
JANICE BRADBURN, is Vice President of the money market fund (1992) and
other funds managed by FMR.
GARY LEE SWAYZE, is Vice President of the insured fund (1987) and the high
yield fund (1987) and other funds managed by FMR and a Vice President of
FMR.
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the funds based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of January 31, 199 4 , the funds' Trustees and officers, owned in
the aggregate less than 1% of the outstanding shares of each fund.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides the funds with all necessary
office facilities and personnel for servicing the funds' investments, and
compensates all officers of the Trusts, all Trustees who are "interested
persons" of the Trusts or of FMR, and all personnel of the Trust 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 the funds. 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 the funds; preparing all general shareholder
communications and conducting shareholder relations; maintaining the funds'
records and the registration of each fund's shares under federal and state
law; developing management and shareholder services for the funds; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
In addition to the management fee payable to FMR and the fees payable to
United Missouri Bank, N.A. (United Missouri), each fund pays all of its
expenses, without limitation, that are not assumed by those parties. Each
fund pays for the typesetting, printing, and mailing of proxy material to
shareholders, legal expenses, and the fees of the custodian, auditor, and
non-interested Trustees. Although each management contract provides that
the fund will pay for typesetting, printing, and mailing prospectuses,
statements of additional information, notices and reports to existing
shareholders, United Missouri has entered into a revised sub-transfer agent
agreement with FSC, pursuant to which FSC bears the cost of providing these
services to existing shareholders. Other expenses paid by each 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 and state securities laws. Each
fund is also liable for 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 each Trust's officers and Trustees with respect to
litigation.
FMR is the insured and high yield fund's manager pursuant to management
contracts dated January 1, 1989, which were approved by shareholders on
November 28, 1988. FMR is the money market fund's manager pursuant to a
management contract dated December 30, 1991. The contract was approved by
Fidelity New York Municipal Trust as sole shareholder of the trust on
December 30, 1991 in conjunction with an Agreement and Plan to convert the
fund from a series of a Massachusetts business trust to a series of a
Delaware Trust. The Agreement and Plan of Conversion was approved by
public shareholders of the fund on October 23, 1991. Besides reflecting
the fund's redomiciling, the December 30, 1991 contract is identical to the
fund's prior management contract with FMR, which was approved by
shareholders of the fund on November 28, 1988. For the services of FMR
under the contracts, each fund pays FMR a monthly management fee composed
of the sum of two elements: 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 and is calculated on a cumulative basis pursuant to the graduated
schedule shown below. Also shown below is the effective annual fee rate at
various levels of group net assets. For example, the effective annual
group fee rate at ____ billion of group net assets --
their approximate level for January 199 4 -- was ____ %,
which is the weighted average of the respective fee rates for each level of
group net assets up to __ billion .
GROUP FEE RATE SCHEDULE* EFFECTIVE ANNUAL FEE RATES
AVERAGE GROUP EFFECTIVE
GROUP ANNUALIZED NET 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 .1695
24 - 30 .1800 200 .1658
30 - 36 .1750 225 .1629
36 - 42 .1700 250 .1604
42 - 48 .1650 275 .1583
48 - 66 .1600 300 .1565
66 - 84 .1550 325 .1548
84 - 120 .1500 350 .1533
120 - 174 .1450
174 - 228 .1400
228 - 282 .1375
282 - 3 3 6 .1350
Over 3 3 6 .1325
* The rates shown for average group assets in excess of $1 74
billion were adopted by FMR on a voluntary basis on November 1, 1993
pending approval of shareholders of the money market paste of a new
management contract reflecting the extended schedule. The extended
schedule provides for lower management fees as total assets under
management increase.
Shareholders of the insured and high yield funds approved a amended
contracts and the extended fee rate schedule for the for average group
assets above $120 billion on January 19, 1994.
Each fund's individual fund fee rate is .25%. Based on the average net
assets of funds advised by FMR for January 199 4 , the annual
management fee rate would be calculated as follows:
Group Fee Rate Individual Fund Fee Rate Management Fee Rate
____ % + .25% = ____ %
One-twelfth (1/12) of this annual management fee rate is then applied to
each fund's average net assets for the current month, giving a dollar
amount which is the fee for that month.
Management fees paid to FMR are indicated in the table below for the
periods shown.
MANAGEMENT FEES
Fiscal Year Fiscal Period Fiscal Year
Ended May 1, 1992 to Ended
January 31, 1994 January 31, 1993 April 30, 1992
Money Market Fund
Insured Fund
High Yield Portfolio
SUB - ADVISER. With respect to the money market fund, FMR has entered
into a sub - advisory agreement with FMR Texas pursuant to which FMR
Texas has primary responsibility for providing portfolio investment
management services to the fund. Under the sub - advisory agreement,
FMR pays FMR Texas a fee equal to 50% of the management fee payable to FMR
under its current management contract with the fund. The fees paid to FMR
Texas are not reduced by any voluntary or mandatory expense reimbursements
that may be in effect from time to time. For the fiscal periods ending
January 31, 1994, January 31, 1993, and April 30, 1992, FMR
paid FMR Texas fees of $__________, $818,073, $1,100,724,
respectively, under the sub - advisory agreement.
DISTRIBUTION AND SERVICE PLANS
Each fund has adopted a distribution and service plan (the Plans) under
Rule 12b - 1 of 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 adopted by the fund under the
Rule. The Board of Trustees has adopted the Plans to allow the funds and
FMR to incur certain expenses that might be considered to constitute
indirect payment by the funds of distribution expenses. Under the Plans,
if the payment by a fund to FMR of management fees should be deemed to be
indirect financing by the fund of the distribution of its shares, such
payment is authorized by the fund's Plan.
The Plans specifically recognize that FMR, either directly or through FDC,
may use its management fee revenue, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the funds. In addition,
the Plans provide that FMR may use its resources, including its management
fee revenues, to make payments to third parties that provide assistance in
selling the funds' shares or to third parties, including banks, that render
shareholder support services. Payments made by FMR to third parties during
the fiscal period ended January 31, 1993 amounted to $56,922 (money market
fund), $3,036 (insured fund), and $2,237 (high yield fund).
As required by the Rule, the Trustees carefully considered all pertinent
factors relating to the implementation of the Plans prior to their
approval, and have determined that there is a reasonable likelihood that
the Plans will benefit the funds and their shareholders. In particular,
the Trustees noted that the Plans do not authorize payments by the funds
other than those made to FMR under its management contracts with the funds.
To the extent that the Plans give FMR and FDC greater flexibility in
connection with the distribution of shares of the funds, additional sales
of the funds' shares may result. Additionally, certain shareholder support
services may be provided more effectively under the Plans by local entities
with whom shareholders have other relationships. The Plans were approved
by the shareholders of the insured and high yield funds on November 28,
1986. The money market fund's Plan was approved by Fidelity New York
Municipal Trust on December 30, 1991 as the then sole shareholder of the
fund, pursuant to an Agreement and Plan of Conversion approved by public
shareholders of the fund on October 23, 1991.
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. The funds may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the Plans. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. 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.
INTEREST OF FMR AFFILIATES
United Missouri is each fund's custodian and transfer agent. United
Missouri has entered into a sub-contract with FSC, an affiliate of FMR,
under the terms of which FSC performs the processing activities associated
with providing transfer agent and shareholder servicing functions for the
funds. Under the sub-contract, FSC bears the expense of typesetting,
printing, and mailing prospectuses, statements of additional information,
and all other reports, notices, and statements to shareholders, except
proxy statements. FSC also pays all out-of-pocket expenses associated with
transfer agent services.
United Missouri pays FSC an annual fee of $13.75 (money market fund) and
$25.50 (insured and high yield funds) per regular account with a balance of
$5,000 or more, $10.00 (money market fund) and $15.00 (insured and high
yield funds) per regular account with a balance of less than $5,000, and a
supplemental activity charge of $5.61 for monetary transactions. The
account fee and monetary transaction charge for money market fund accounts
set up as Core Accounts in the Fidelity Ultra Service Account program are
$12.35 and $.74, respectively. These fees and charges are subject to
annual cost escalation based on postal rate changes and changes in wage and
price levels as measured by the National Consumer Price Index for Urban
Areas. With respect to institutional client master accounts, United
Missouri pays FSC a per account fee of $95 and monetary transactions
charges of $20 or $17.50 depending on the nature of services provided.
Prior to November 7, 1991 (insured and high yield funds) and November 14,
1991 (money market fund), Shawmut Bank, N.A. (Shawmut) served as the funds'
custodian and transfer agent and also sub-contracted with FSC to perform
the processing activities associated with providing transfer agent and
shareholder servicing functions for the funds. Beginning June 1, 1989, FSC
was compensated by Shawmut on the same basis as it is currently compensated
by United Missouri (although fee rates and charges were adjusted
periodically to reflect postal rate changes and changes in wage and price
levels as measured by the National Consumer Price Index for Urban Areas).
Transfer agent fees, including reimbursement for out-of-pocket expenses,
paid to FSC for the fiscal periods shown are indicated in the table below.
TRANSFER AGENT FEES
Fiscal Year Fiscal Period Fiscal Year
Ended May 1, 1992 to Ended
January 31, 1991 January 31, 1993 April 30, 1992
Money Market Fund $632,990 $821,733
Insured Fund 293,981 305,456
High Yield Fund 364,165 427,473
United Missouri has an additional sub-contract with FSC, pursuant to which
FSC performs the calculations necessary to determine each fund's net asset
value per share and dividends and maintains each fund's accounting records.
The annual fee rates for these pricing and bookkeeping services are based
on the funds' average net assets, and are presented in the table below.
$0-$500 Greater Than
Million $500 Million Minimum Per Year Maximum Per Year
Money Market Fund .0175% .0075% $20,000 $750,000
Insured and High Yield Fund .04% .02% $45,000 $750,000
Prior to November 7, 1991 (insured and high yield funds) and November 14,
1991 (money market fund), Shawmut sub-contracted with FSC for pricing and
bookkeeping services. Beginning July 1, 1991, FSC was compensated for
these services by Shawmut on the same basis as it is currently compensated
by United Missouri. Prior to July 1, 1991, the annual fee paid to FSC for
pricing and bookkeeping services was based on two schedules, one pertaining
to the funds' average net assets and one pertaining to the type and number
of transactions each fund made.
Pricing and bookkeeping fees, including reimbursement for out-of-pocket
expenses, paid to FSC for the fiscal periods shown, are indicated in the
table below.
PRICING AND BOOKKEEPING FEES
Fiscal Year Fiscal Period Fiscal Year
Ended May 1, 1992 to Ended
January 31, 1994 January 31, 1993 April 30, 1992
Money Market Fund $ 84,374 $126,182
Insured Fund 119,823 138,081
High Yield Fund 150,314 188,128
The transfer agent fees and charges and pricing and bookkeeping fees
previously described are paid to FSC by United Missouri, which is entitled
to reimbursement from the funds for these expenses.
FSC has entered into an agreement with Fidelity Brokerage Services, Inc.
(FBSI), a subsidiary of FMR Corp., pursuant to which FBSI performs certain
recordkeeping, communication, and other services for money market fund
shareholders participating in the Fidelity Ultra Service Account program.
FBSI directly charges each Ultra Service Account an administrative fee that
chooses the enhanced features, an administrative fee at a rate of $5.00 per
month for these services, which is in addition to the transfer agency fee
received by FSC. Administrative fees paid to FBSI by money market fund
shareholders participating in the Fidelity Ultra Service Account program
amounted to approximately $ ______ for the fiscal period ended
January 31, 199 4 .
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker - dealer
registered under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. The distribution
agreements call for FDC to use all reasonable efforts, consistent with its
other business, to secure purchasers for shares of each fund, which are
continuously offered at net asset value. Promotional and administrative
expenses in connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUSTS
TRUSTS' ORGANIZATION. Fidelity New York Municipal Trust (the Massachusetts
Trust) is an open-end, management investment company organized as a
Massachusetts business trust on April 25, 1983. On January 8, 1990, the
trust's name was changed from Fidelity New York Tax - Free Fund to
Fidelity New York Municipal Trust. Currently, there are four funds of the
Massachusetts Trust: Fidelity New York Tax - Free High Yield
Portfolio; Fidelity New York Tax - Free Insured Portfolio; Spartan New
York Intermediate Municipal Portfolio; and Spartan New York Municipal High
Yield Portfolio. The Massachusetts Trust's Declaration of Trust permits
the Trustees to create additional funds.
On November 30, 1988, assets of the Short-Term Portfolio were transferred
to the insured fund pursuant to an Agreement and Plan of Reorganization
(the Agreement). The Agreement provided for the transfer of substantially
all of the assets of the Short-Term Portfolio to the insured fund in
exchange solely for shares of beneficial interest of the insured fund and
distribution, pursuant to the Agreement, of the insured fund shares to the
shareholders of the Short-Term Portfolio in liquidation of the Short-Term
Portfolio as provided in the Agreement. Shares of the Short-Term Portfolio
are no longer available for purchase.
Fidelity New York Municipal Trust II (the Delaware Trust) is an
open - end management investment company organized as a Delaware
business trust on June 20, 1991. Currently, there are two funds of the
Delaware Trust: Fidelity New York Tax - Free Money Market Portfolio
and Spartan New York Municipal Money Market Portfolio. Fidelity New York
Tax-Free Money Market Portfolio entered into an agreement to acquire all of
the assets of Fidelity New York Tax - Free Money Market Portfolio, a
series of Fidelity New York Municipal Trust (a Massachusetts business
trust) on December 30, 1991. The Delaware Trust's Trust Instrument permits
the Trustees to create additional funds.
In the event that FMR ceases to be investment adviser to a trust or any of
its funds, the right of the trust or fund to use the identifying names
"Fidelity" and "Spartan" may be withdrawn. There is a remote possibility
that one fund might become liable for any misstatement in its
P rospectus or S tatement of A dditional
I nformation about another fund.
The assets of each trust received for the issue or sale of shares of each
of its funds and all income, earnings, profits, and proceeds thereof,
subject only to the rights of creditors, are especially allocated to such
fund, and constitute the underlying assets of such fund. The underlying
assets of each fund are segregated on the books of account, and are to be
charged with the liabilities with respect to such fund and with a share of
the general expenses of their respective trusts. Expenses with respect to
the trusts are to be allocated in proportion to the asset value of their
respective funds, except where allocations of direct expense can otherwise
be fairly made. The officers of the trusts, subject to the general
supervision of the Boards of Trustees, have the power to determine which
expenses are allocable to a given fund, or which are general or allocable
to all of the funds of a certain trust. In the event of the dissolution or
liquidation of a trust, shareholders of each fund of that trust are
entitled to receive as a class the underlying assets of such fund available
for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY - MASSACHUSETTS TRUST. The Massachusetts
Trust is an entity of the type commonly known as "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust may, under
certain circumstances, be held personally liable for the obligations of the
trust. The Declaration of Trust provides that the Massachusetts Trust
shall not have any claim against shareholders except for the payment of the
purchase price of shares and requires that each agreement, obligation, or
instrument entered into or executed by the Massachusetts Trust or its
Trustees shall include a provision limiting the obligations created thereby
to the Massachusetts Trust and its assets. The Declaration of Trust
provides for indemnification out of each fund's property of any
shareholders held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects a Trustee
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office.
SHAREHOLDER AND TRUSTEE LIABILITY - DELAWARE TRUST. The Delaware Trust is
a business trust organized under Delaware law. Delaware law provides that
shareholders shall be entitled to the same limitations of personal
liability extended to stockholders of private corporations for profit. The
courts of some states, however, may decline to apply Delaware law on this
point. The Trust Instrument contains an express disclaimer of shareholder
liability for the debts, liabilities, obligations, and expenses of the
Delaware Trust and requires that a disclaimer be given in each contract
entered into or executed by the Delaware Trust or its Trustees. The Trust
Instrument provides for indemnification out of each fund's property of any
shareholder or former shareholder held personally liable for the
obligations of the fund. The Trust Instrument also provides that each fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the fund and satisfy any judgment
thereon. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which
Delaware law does not apply, no contractual limitation of liability was in
effect, and the fund is unable to meet its obligations. FMR believes that,
in view of the above, the risk of personal liability to shareholders is
extremely remote.
The Trust Instrument further provides that the Trustees shall not be
personally liable to any person other than the Delaware Trust or its
shareholders; moreover, the Trustees shall not be liable for any conduct
whatsoever, provided that a Trustee is not protected against any liability
to which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved
in the conduct of his office.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. As a shareholder, you receive one vote for each
dollar of net asset value per share you own. The shares have no
preemptive or conversion rights; the 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 heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of the Trust or a fund may, as set forth in the
Declaration of Trust, call meetings of the Trust or a fund for any purpose
related to the Trust or fund, as the case may be, including, in the case of
a meeting of the entire Trust, the purpose of voting on removal of one or
more Trustees. The Trust or any fund 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 vote of the
holders of a majority of the outstanding shares of the Trust or the fund.
A trust or any fund may be terminated upon the sale of its assets to (or,
in the case of the Delaware Trust and its funds, merger with) another
open-end management investment company or series thereof, or upon
liquidation and distribution of its assets. Generally, such terminations
must be approved by vote of the holders of a majority of the outstanding
shares of the trust or the fund (for the Delaware Trust), or by a vote of
the holders of a majority of the fund or trust, as determined by the
current value of each shareholder's investment in the fund or trust (for
the Massachusetts Trust). If not so terminated or reorganized, the
trusts and their funds will continue indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder vote,
cause the Delaware Trust to merge or consolidate into one or more trusts,
partnerships, or corporations, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the
Delaware Trust registration statement, or cause the Delaware Trust to be
incorporated under Delaware law.
CUSTODIAN. United Missouri Bank, N.A., 1010 Grand Avenue, Kansas City,
Missouri is custodian of the assets of the fund. The custodian is
responsible for the safekeeping of the fund's assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the fund or in deciding which
securities are purchased or sold by the fund. The fund may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the trusts'
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the 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. Price Waterhouse, 160 Federal Street, Boston,
Massachusetts, serves as each trust's independent accountant. The
auditor examines financial statements for the funds and provides other
audit, tax, and related services.
FINANCIAL STATEMENTS
The funds' Annual Report for the fiscal period ended January 31,
199 4 is a separate report supplied with this Statement of Additional
Information and is incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days 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.
The descriptions that follow are examples of eligible ratings for the high
yield and insured funds. The funds may, however, consider ratings for
other types of investments and the ratings assigned by other ratings
organizations when determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF STATE AND
MUNICIPAL NOTES:
Moody's ratings for state and municipal and other short-term obligations
will be designated Moody's Investment Grade (MIG, or VMIG for variable rate
obligations). This distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important over the short
run. Symbols used will be as follows:
MIG-1/VMIG-1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2 - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
MIG-3/VMIG-3 - This designation denotes favorable quality, with all
security elements accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may
be narrow and market access for refinancing is likely to be less well
established.
MIG-4/VMIG-4 - This designation denotes adequate quality protection
commonly regarded as required of an investment security is present and,
although not distinctly or predominantly speculative, there is specific
risk.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S RATINGS OF STATE AND
MUNICIPAL NOTES:
SP-1 - Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics will
be given a plus (+) designation.
SP-2 - Satisfactory capacity to pay principal and interest.
SP-3 - Speculative capacity to pay principal and interest.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S MUNICIPAL BOND
RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
CA- Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
CAA - Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principle and interest.
Those bonds in the Aa, A, Baa, Ba, and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1, Baa1, Ba1, and B1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S MUNICIPAL BOND
RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated debt issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal
payments.
B - Debt rated B has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair
capacity or willingness to pay interest and repay principal. The B rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC- Debt rated CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior
debt debt which is assigned on actual or implied CCC-debt rating. The C
rating may be used to cover a situation where a bankruptcy petition has
been filed but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D - Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The D
rating will also be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
SPARTAN NEW YORK MUNICIPAL FUNDS:
SPARTAN NEW YORK MUNICIPAL MONEY MARKET PORTFOLIO
SPARTAN NEW YORK INTERMEDIATE MUNICIPAL PORTFOLIO
SPARTAN NEW YORK MUNICIPAL HIGH YIELD PORTFOLIO
CROSS REFERENCE SHEET
FORM N-1A
ITEM NUMBER PROSPECTUS SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 .............................. Cover Page
2 a .............................. Expenses
b, c .............................. Contents; The Funds at a Glance; Who May Want
to Invest
3 a .............................. Financial History
b .............................. *
c .............................. Performance
4 a i............................. Charter
ii........................... The Funds at a Glance; Investment Principles;
Securities and Investment Practices
b .............................. Securities and Investment Practices
c .............................. Who May Want to Invest; Investment Principles;
Securities and Investment Practices
5 a .............................. Charter
b i............................. Doing Business with Fidelity; Charter
ii........................... Charter; Breakdown of Expenses
iii.......................... Expenses; Breakdown of Expenses
c, d .............................. Charter; Breakdown of Expenses; Cover Page;
FMR and Its Affiliates
e .............................. FMR and its Affiliates
f .............................. Expenses
g .............................. *
5 .............................. Performance
A
6 a i............................. Charter
ii........................... How to Buy Shares; How to Sell Shares;
Transaction Details; Exchange Restrictions
iii.......................... *
b ............................. *
c .............................. Exchange Restrictions
d .............................. *
e .............................. Doing Business with Fidelity; How to Buy Shares;
How to Sell Shares; Investor Services
f, g .............................. Dividends, Capital Gains, and Taxes
7 a .............................. Charter; Cover Page
b .............................. How to Buy Shares; Transaction Details
c .............................. *
d .............................. How to Buy Shares
e .............................. *
f .............................. Breakdown of Expenses
8 .............................. How to Sell Shares; Investor Services; Transaction
Details; Exchange Restrictions
9 .............................. *
</TABLE>
* Not Applicable
CROSS REFERENCE SHEET
(CONTINUED)
FORM N-1A
ITEM NUMBER STATEMENT OF ADDITIONAL INFORMATION SECTION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
10, 11 ............................ Cover Page
12 ............................ *
13 a - c ............................ Investment Policies and Limitations
d ............................ *
14 a - c ............................ Trustees and Officers
15 a, b ............................ *
c ............................ Trustees and Officers
16 a i ............................ FMR
ii ............................ Trustees and Officers
iii ............................ Management Contracts
b ............................ Management Contracts
c, d ............................ Contracts with Companies Affiliated with FMR
e ............................ *
f ............................ Distribution and Service Plans
g ............................ *
h ............................ Description of the Trusts
i ............................ Contracts with Companies Affiliated with FMR
17 a ............................ Portfolio Transactions
b ............................ *
c ............................ Portfolio Transactions
d, e ............................ *
18 a ............................ Description of the Trusts
b ............................ *
19 a ............................ Additional Purchase and Redemption Information
b ............................ Additional Purchase and Redemption Information;
Valuation of Portfolio Securities
c ............................ *
20 Distributions and Taxes
21 a, b ............................ Contracts with Companies Affiliated with FMR
c ............................ *
22 ............................ Performance
23 ............................ Financial Statements
</TABLE>
* Not Applicable
Please read this prospectus before investing, and keep it on file for
future reference. It contains important information, including how each
fund invests and the services available to shareholders.
A Statement of Additional Information dated March 22, 1994 has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference (is legally considered a part of this prospectus). The Statement
of Additional Information is available free upon request by calling
Fidelity at 1-800-544-8888.
Investments in the money market fund are neither insured nor guaranteed by
the U.S. government, and there can be no assurance that the fund will
maintain a stable $1.00 share price.
Mutual fund shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, nor are they federally insured or otherwise
protected by the FDIC, the Federal Reserve Board, or any other agency.
Each of these funds seeks a high level of current income free from federal
income tax and New York State and City income taxes. The funds have
different strategies, however, and carry varying degrees of risk.
FIDELITY NEW YORK
TAX-FREE FUNDS
SPARTAN NEW YORK MUNICIPAL MONEY MARKET PORTFOLIO
SPARTAN NEW YORK INTERMEDIATE MUNCIPAL PORTFOLIO
SPARTAN NEW YORK MUNCIPAL HIGH YIELD PORTFOLIO
PROSPECTUS
MARCH 22, 1994(FIDELITY_LOGO_GRAPHIC) 82 DEVONSHIRE STREET, BOSTON, MA
02109
LIKE ALL MUTUAL
FUNDS, THESE
SECURITIES HAVE NOT
BEEN APPROVED OR
DISAPPROVED BY THE
SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION, NOR HAS
THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY
STATE SECURITIES
COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A
CRIMINAL OFFENSE.
NFR-pro-394
CONTENTS
KEY FACTS THE FUNDS AT A GLANCE
WHO MAY WANT TO INVEST
EXPENSES AND PERFORMANCE EXPENSES Each fund's yearly
operating expenses.
FINANCIAL HIGHLIGHTS A summary
of each fund's financial data.
PERFORMANCE How each fund has
done over time.
YOUR ACCOUNT DOING BUSINESS WITH FIDELITY
TYPES OF ACCOUNTS Different
ways to set up your account.
HOW TO BUY SHARES Opening an
account and making additional
investments.
HOW TO SELL SHARES Taking money
out and closing your account.
INVESTOR SERVICES Services to
help you manage your account.
DIVIDENDS, CAPITAL GAINS, AND
TAXES
SHAREHOLDER AND TRANSACTION DETAILS Share price
ACCOUNT POLICIES calculations and the timing of
purchases and redemptions.
EXCHANGE RESTRICTIONS
THE FUNDS IN DETAIL CHARTER How each fund is
organized.
BREAKDOWN OF EXPENSES How
operating costs are calculated and
what they include.
INVESTMENT PRINCIPLES Each
fund's overall approach to
investing.
SECURITIES AND INVESTMENT
PRACTICES
KEY FACTS
THE FUNDS AT A GLANCE
MANAGEMENT: Fidelity Management & Research Company (FMR) is the
management arm of Fidelity Investments, which was established in 1946 and
is now America's largest mutual fund manager. FMR Texas Inc. (FTX), a
subsidiary of FMR, chooses investments for New York Tax-Free Money Market.
As with any mutual fund, there is no assurance that a fund will achieve its
goal.
NEW YORK MONEY MARKET
GOAL: High current tax-free income for New York residents while maintaining
a stable share price.
STRATEGY: Invests in high-quality, short-term securities whose interest is
free from federal income tax and New York State and City income taxes.
NEW YORK INSURED
GOAL: High current tax-free income for New York residents.
STRATEGY: Invests mainly in investment-grade securities whose interest is
free from federal income tax and New York State and City income taxes,
while maintaining an average maturity of three to 10 years.
NEW YORK HIGH YIELD
GOAL: High current tax-free income for New York residents.
STRATEGY: Invests mainly in long-term, investment-grade securities whose
interest is free from federal income tax and New York State and City income
taxes.
WHO MAY WANT TO INVEST
These non-diversified funds may be appropriate for investors in higher tax
brackets who seek high current income that is free from federal and New
York State and City income taxes. Each fund's level of risk, and potential
reward, depend on the quality and maturity of its investments.
Lower-quality, longer-term investments typically carry the most risk and
the highest yield potential. You should consider your tolerance for risk
when making an investment decision.
The value of the funds' investments and the income they generate will vary
from day to day, generally reflecting changes in interest rates, market
conditions, and other federal and state political and economic news. These
funds do not constitute a balanced investment plan.
New York Tax-Free Money Market is managed to keep its share price stable at
$1.00. When you sell your shares of any of the other funds, they may be
worth more or less than what you paid for them.
The Spartan family of funds is designed for cost-conscious investors
looking for higher yields through lower costs. The Spartan
Approach(Registered trademark) requires investors to make high minimum
investments and, in some cases, to pay for individual transactions.
EXPENSES AND PERFORMANCE
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of a fund. See page__ for more information.
Maximum sales charge on purchases and
reinvested dividends None
Deferred sales charge on redemptions None
Redemption fee(on shares held less than 180 days)
for New York Tax-Free High Yield. .50%
for New York Tax-Free Money Market None
for New York Tax-Free Insured None
Exchange and wire transaction fees $5.00
Checkwriting fee, per check written $2.00
Account closeout fee $5.00
THESE FEES ARE WAIVED (except for the redemption fee) if your account
balance at the time of the transaction is $50,000 or more.
ANNUAL FUND OPERATING EXPENSES are paid out of each fund's assets. Each
fund pays a management fee to FMR. Expenses are factored into each fund's
share price or dividends and are not charged directly to shareholder
accounts (see page __).
NEW YORK MONEY MARKET
Management fee ___%
12b-1 fee None
Other expenses %
Total fund operating expenses ___%
NEW YORK INSURED
Management fee (after reimbursement) ___%
12b-1 fee None
Other expenses %
Total fund operating expenses ___%
NEW YORK HIGH YIELD
Management fee ___%
12b-1 fee None
Other expenses %
Total fund operating expenses ___%
EXAMPLES: Let's say, hypothetically, that each fund's annual return is 5%
and that its operating expenses are exactly as just described. For every
$1,000 you invested, here's how much you would pay in total expenses after
the number of years indicated, first assuming that you leave your account
open, and then assuming that you close your account at the end of the
period:
NEW YORK MONEY MARKET
Account open Account closed
After 1 year $ $
After 3 years $ $
After 5 years $ $
After 10 years $ $
NEW YORK INSURED
Account open Account closed
After 1 year $ $
After 3 years $ $
After 5 years $ $
After 10 years $ $
NEW YORK HIGH YIELD
Account open Account closed
After 1 year $ $
After 3 years $ $
After 5 years $ $
After 10 years $ $
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
The operating expenses on page __ are projections based on historical
expenses, except for Spartan New York Intermediate which are based on
estimated expenses, and are calculated as a percentage of average net
assets. FMR has voluntarily agreed to temporarily limit total operating
expenses of Spartan New York Intermediate to .__% of the fund's average net
assets. If this agreement were not in effect, the fund's management fee
and total operating expenses would be .__% and .__%, respectively.
Expenses eligible for reimbursement do not include interest, taxes,
brokerage commissions, or extraordinary expenses.
FINANCIAL HIGHLIGHTS
The tables that follow have been audited by ___________, independent
accountants. Their unqualified reports are included in each fund's Annual
Report. Each fund's Annual Report is incorporated by reference into (is
legally a part of) the Statement of Additional Information.
[Financial Highlights to be filed by subsequent amendment.]
PERFORMANCE
Mutual fund performance can be measured as TOTAL RETURN or YIELD. The total
returns and yields that follow are based on historical fund results.
Each fund's fiscal year runs from February 1 through January 31. The tables
below show each fund's performance over past fiscal years compared to a
measure of inflation. The charts on page __ help you compare the yields of
these funds to those of their competitors.
AVERAGE ANNUAL TOTAL RETURNS
Fiscal periods ended Past 1 Life of
January 31, 1994 year fund
Spartan NY Money Market % %A
Spartan NY Intermediate % %B
Spartan NY High Yield n/a %C
CUMULATIVE TOTAL RETURNS
Fiscal periods ended Past 1 Life of
January 31, 1994 year fund
Spartan NY Money Market % %A
Spartan NY Intermediate % %B
Spartan NY High Yield n/a %C
SPARTAN NEW YORK MUNICIPAL MONEY MARKET
7-day yields
Percentage (%)
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Row: 24, Col: 1, Value: nil
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Row: 25, Col: 1, Value: nil
Row: 25, Col: 2, Value: nil
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Row: 26, Col: 2, Value: nil
Row: 27, Col: 1, Value: nil
Row: 27, Col: 2, Value: nil
Row: 28, Col: 1, Value: nil
Row: 28, Col: 2, Value: nil
Row: 29, Col: 1, Value: nil
Row: 29, Col: 2, Value: nil
Row: 30, Col: 1, Value: nil
Row: 30, Col: 2, Value: nil
Row: 31, Col: 1, Value: nil
Row: 31, Col: 2, Value: nil
Row: 32, Col: 1, Value: nil
Row: 32, Col: 2, Value: nil
New York Tax-Free Money
Market
Competitive
funds average
1991
1992
1993
1994
A From February 3, 1990
B February 3, 1990
C From _______________, 1994
EXPLANATION OF TERMS
TOTAL RETURN is the change in value of an investment in a fund over a given
period, assuming reinvestment of any dividends and capital gains. A
CUMULATIVE TOTAL RETURN reflects actual performance over a stated period of
time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that,
if achieved annually, would have produced the same cumulative total return
if performance had been constant over the entire period. Average annual
total returns smooth out variations in performance; they are not the same
as actual year-by-year results.
SPARTAN NEW YORK INTERMEDIATE MUNICIPAL
30-day yields
Percentage (%)
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Row: 20, Col: 1, Value: nil
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Row: 21, Col: 1, Value: nil
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Row: 22, Col: 1, Value: nil
Row: 22, Col: 2, Value: nil
Row: 23, Col: 1, Value: nil
Row: 23, Col: 2, Value: nil
Row: 24, Col: 1, Value: nil
Row: 24, Col: 2, Value: nil
Row: 25, Col: 1, Value: nil
Row: 25, Col: 2, Value: nil
Row: 26, Col: 1, Value: nil
Row: 26, Col: 2, Value: nil
Row: 27, Col: 1, Value: nil
Row: 27, Col: 2, Value: nil
Row: 28, Col: 1, Value: nil
Row: 28, Col: 2, Value: nil
Row: 29, Col: 1, Value: nil
Row: 29, Col: 2, Value: nil
Row: 30, Col: 1, Value: nil
Row: 30, Col: 2, Value: nil
Row: 31, Col: 1, Value: nil
Row: 31, Col: 2, Value: nil
Row: 32, Col: 1, Value: nil
Row: 32, Col: 2, Value: nil
New York
Tax-Free
Insured
Competitive
funds average
1991
1992
1993
1994
YIELD refers to the income generated by an investment in a fund over a
given period of time, expressed as an annual percentage rate. When a money
market fund yield assumes that income earned is reinvested, it is called an
EFFECTIVE YIELD. A TAX-EQUIVALENT YIELD shows what an investor would have
to earn before taxes to equal a tax-free yield. Yields for the bond funds
are calculated according to a standard that is required for all stock and
bond funds. Because this differs from other accounting methods, the quoted
yield may not equal the income actually paid to shareholders.
THE CONSUMER PRICE INDEX is a widely recognized measure of inflation
calculated by the U.S. government.
THE COMPETITIVE FUNDS AVERAGES for New York Tax-Free Money Market are the
IBC/Donoghue's MONEY FUND AVERAGES(registered trademark)/IBC/Donaghue's
Money Fund Averages: New York Tax-Free Funds category, which currently
reflects the performance of over ___ mutual funds with similar objectives.
These averages are published in the MONEY FUND REPORT(Registered trademark)
by IBC USA (Publications), Inc. The competitive funds averages for the bond
funds are published by Lipper Analytical Services, Inc. New York Insured
and New York High Yield compare their performance to the Lipper New York
Insured Municipal Debt Funds and Lipper New York Municipal Debt Funds,
respectively, which currently reflects the performance of over ___ and ___
mutual funds with similar objectives, respectively. All of these averages
assume reinvestment of distributions.
SPARTAN NEW YORK MUNICIPAL HIGH YIELD
30-day yields
Percentage (%)
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Row: 9, Col: 1, Value: nil
Row: 9, Col: 2, Value: nil
Row: 10, Col: 1, Value: nil
Row: 10, Col: 2, Value: nil
Row: 11, Col: 1, Value: nil
Row: 11, Col: 2, Value: nil
Row: 12, Col: 1, Value: nil
Row: 12, Col: 2, Value: nil
Row: 13, Col: 1, Value: nil
Row: 13, Col: 2, Value: nil
Row: 14, Col: 1, Value: nil
Row: 14, Col: 2, Value: nil
Row: 15, Col: 1, Value: nil
Row: 15, Col: 2, Value: nil
Row: 16, Col: 1, Value: nil
Row: 16, Col: 2, Value: nil
Row: 17, Col: 1, Value: nil
Row: 17, Col: 2, Value: nil
Row: 18, Col: 1, Value: nil
Row: 18, Col: 2, Value: nil
Row: 19, Col: 1, Value: nil
Row: 19, Col: 2, Value: nil
Row: 20, Col: 1, Value: nil
Row: 20, Col: 2, Value: nil
Row: 21, Col: 1, Value: nil
Row: 21, Col: 2, Value: nil
Row: 22, Col: 1, Value: nil
Row: 22, Col: 2, Value: nil
Row: 23, Col: 1, Value: nil
Row: 23, Col: 2, Value: nil
Row: 24, Col: 1, Value: nil
Row: 24, Col: 2, Value: nil
Row: 25, Col: 1, Value: nil
Row: 25, Col: 2, Value: nil
Row: 26, Col: 1, Value: nil
Row: 26, Col: 2, Value: nil
Row: 27, Col: 1, Value: nil
Row: 27, Col: 2, Value: nil
Row: 28, Col: 1, Value: nil
Row: 28, Col: 2, Value: nil
Row: 29, Col: 1, Value: nil
Row: 29, Col: 2, Value: nil
Row: 30, Col: 1, Value: nil
Row: 30, Col: 2, Value: nil
Row: 31, Col: 1, Value: nil
Row: 31, Col: 2, Value: nil
Row: 32, Col: 1, Value: nil
Row: 32, Col: 2, Value: nil
New York Tax-Free
High Yield
Competitive
funds average
1992
1993
THE TOP CHART SHOWS THE 7-DAY EFFECTIVE YIELDS FOR
THE FUND AND ITS COMPETITIVE FUNDS AVERAGE AS OF
THE LAST TUESDAY OF EACH MONTH FROM JANUARY 1991
THROUGH JANUARY 1994. THE BOTTOM TWO CHARTS
SHOW THE 30-DAY ANNUALIZED NET YIELDS FOR THE
FUNDS AND THEIR COMPETITIVE FUNDS AVERAGES AS OF
THE LAST DAY OF EACH MONTH DURING THE SAME PERIOD.
The funds' recent strategies, performance, and holdings are detailed twice
a year in financial reports, which are sent to all shareholders. For
current performance or a free annual report, call 1-800-544-8888.
TOTAL RETURNS AND YIELDS ARE BASED ON PAST RESULTS AND ARE NOT AN
INDICATION OF FUTURE PERFORMANCE.
YOUR ACCOUNT
DOING BUSINESS WITH FIDELITY
Fidelity Investments was established in 1946 to manage one of America's
first mutual funds. Today, Fidelity is the largest mutual fund company in
the country, and is known as an innovative provider of high-quality
financial services to individuals and institutions.
In addition to its mutual fund business, the company operates one of
America's leading discount brokerage firms, Fidelity Brokerage Services,
Inc. (FBSI). Fidelity is also a leader in providing tax-sheltered
retirement plans for individuals investing on their own or through their
employer.
Fidelity is committed to providing investors with practical information to
make investment decisions. Based in Boston, Fidelity provides customers
with complete service 24 hours a day, 365 days a year, through a network of
telephone service centers around the country.
To reach Fidelity for general information, call these numbers:
(bullet) For mutual funds, 1-800-544-8888
(bullet) For brokerage, 1-800-544-7272
If you would prefer to speak with a representative in person, Fidelity has
over __ walk-in Investor Centers across the country.
TYPES OF ACCOUNTS
You may set up an account directly in a fund or, if you own or intend to
purchase individual securities as part of your total investment portfolio,
you may consider investing in a fund through a brokerage account.
If you are investing through FBSI or another financial institution or
investment professional, refer to its program materials for any special
provisions regarding your investment in the fund.
The different ways to set up (register) your account with Fidelity are
listed below.
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT TENANTS
FOR YOUR GENERAL INVESTMENT NEEDS
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA)
TO INVEST FOR A CHILD'S EDUCATION OR OTHER FUTURE NEEDS
These custodial accounts provide a way to give money to a child and obtain
tax benefits. An individual can give up to $10,000 a year per child without
paying federal gift tax. Depending on state laws, you can set up a
custodial account under the Uniform Gifts to Minors Act (UGMA) or the
Uniform Transfers to Minors Act (UTMA).
TRUST
FOR MONEY BEING INVESTED BY A TRUST
The trust must be established before an account can be opened.
BUSINESS OR ORGANIZATION
FOR INVESTMENT NEEDS OF CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, OR OTHER
GROUPS
Requires a special application.
HOW TO BUY SHARES
EACH FUND'S SHARE PRICE, called net asset value (NAV), is calculated every
business day. New York Tax-Free Money Market is managed to keep its share
price stable at $1.00. Each fund's shares are sold without a sales charge.
Shares are purchased at the next share price calculated after your
investment is received and accepted. Share price is normally calculated at
4 p.m. Eastern time and also at noon for New York Tax-Free Money Market.
IF YOU ARE NEW TO FIDELITY, complete and sign an account application and
mail it along with your check. You may also open your account in person or
by wire as described on page . If there is no application accompanying this
prospectus, call 1-800-544-8888.
IF YOU ALREADY HAVE MONEY INVESTED IN A FIDELITY FUND, you can:
(bullet) Mail in an application with a check, or
(bullet) Open your account by exchanging from another Fidelity fund.
If you buy shares by check or Fidelity Money Line(Registered trademark),
and then sell those shares by any method other than by exchange to another
Fidelity fund, the payment may be delayed for up to seven business days to
ensure that your previous investment has cleared.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $10,000
TO ADD TO AN ACCOUNT $1,000
Through automatic investment plans $500
MINIMUM BALANCE $5,000
For New York Money Market $10,000
UNDERSTANDING THE
SPARTAN
APPROACH(Registered trademark)
Fidelity's Spartan Approach is
based on the principle that
lower fund expenses can
increase returns. The Spartan
funds keep expenses low in
two ways. First, higher
investment minimums reduce
the effect of a fund's fixed
costs, many of which are paid
on a per-account basis.
Second, unlike most mutual
funds that include transaction
costs as part of overall fund
expenses, Spartan
shareholders pay directly for
the transactions they make.
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TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
Phone 1-800-544-777 (phone_graphic) (bullet) Exchange from another (bullet) Exchange from another
Fidelity fund account Fidelity fund account
with the same with the same
registration, including registration, including
name, address, and name, address, and
taxpayer ID number. taxpayer ID number.
(bullet) Use Fidelity Money
Line to transfer from
your bank account. Call
before your first use to
verify that this service
is in place on your
account. Maximum
Money Line: $50,000.
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<TABLE>
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Mail (mail_graphic) (bullet) Complete and sign the (bullet) Make your check
application. Make your payable to the complete
check payable to the name of the fund of
complete name of the your choice. Indicate
fund of your choice. your fund account
Mail to the address number on your check.
indicated on the Mail to the address
application. printed on your account
statement.
(bullet) Exchange by mail: call
1-800-544-6666 for
instructions.
</TABLE>
<TABLE>
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In Person (hand_graphic) (bullet) Bring your application (bullet) Bring your check to a
and check to a Fidelity Fidelity Investor Center.
Investor Center. Call Call 1-800-544-9797 for
1-800-544-9797 for the the center nearest you.
center nearest you.
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Wire (wire_graphic) (bullet) There may be a $5.00 (bullet) There may be a $5.00
fee for each wire fee for each wire
purchase. purchase.
(bullet) Call 1-800-544-7777 to (bullet) Wire to:
set up your account Bankers Trust
and to arrange a wire Company,
transaction. Bank Routing
(bullet) Wire within 24 hours to: #021001033,
Bankers Trust Account #00163053.
Company, Specify the complete
Bank Routing name of the fund and
#021001033, include your account
Account #00163053. number and your
Specify the complete name.
name of the fund and
include your new
account number and
your name.
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<TABLE>
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Automatically (automatic_graphic) (bullet) Not available. (bullet) Use Fidelity Automatic
Account Builder. Sign
up for this service
when opening your
account, or call
1-800-544-6666 to add
it.
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(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
HOW TO SELL SHARES
You can arrange to take money out of your fund account at any time by
selling (redeeming) some or all of your shares. Your shares will be sold at
the next share price calculated after your order is received and accepted.
Share price is normally calculated at 4 p.m. Eastern time and also at noon
for New York Tax-Free Money Market.
IF YOU ARE SELLING SOME BUT NOT ALL OF YOUR SHARES, leave at least $5,000
worth of shares in the account ($10,000 for New York Tax-Free Money Market)
to keep it open.
TO SELL SHARES BY BANK WIRE OR FIDELITY MONEY LINE, you will need to sign
up for these services in advance.
CERTAIN REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE. It is designed to
protect you and Fidelity from fraud. Your request must be made in writing
and include a signature guarantee if any of the following situations apply:
(bullet) You wish to redeem more than $100,000 worth of shares,
(bullet) Your account registration has changed within the last 30 days,
(bullet) The check is being mailed to a different address than the one on
your account (record address),
(bullet) The check is being made payable to someone other than the account
owner, or
(bullet) The redemption proceeds are being transferred to a Fidelity
account with a different registration.
You should be able to obtain a signature guarantee from a bank, broker
(including Fidelity Investor Centers), dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature guarantee.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
(bullet) Your name,
(bullet) The fund's name,
(bullet) Your fund account number,
(bullet) The dollar amount or number of shares to be redeemed, and
(bullet) Any other applicable requirements listed in the table at right.
Unless otherwise instructed, Fidelity will send a check to the record
address. Deliver your letter to a Fidelity Investor Center, or mail it to:
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
CHECKWRITING
If you have a checkbook for your account in Spartan New York Municipal
Money Market or Spartan New York Intermediate Municipal, you may write an
unlimited number of checks. Do not, however, try to close out your account
by check.
ACCOUNT TYPE SPECIAL REQUIREMENTS
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IF YOU SELL SHARES OF SPARTAN NEW YORK MUNICIPAL HIGH YIELD AFTER HOLDING THEM LESS
THAN 180 DAYS, THE FUND WILL DEDUCT A REDEMPTION FEE EQUAL TO .50% OF THE VALUE OF
THOSE SHARES. IF YOUR ACCOUNT BALANCE IS LESS THAN $50,000, THERE ARE FEES FOR
INDIVIDUAL REDEMPTION TRANSACTIONS: $2.00 FOR EACH CHECK YOU WRITE AND $5.00 FOR
EACH EXCHANGE, BANK WIRE, AND ACCOUNT CLOSEOUT.
</TABLE>
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Phone 1-800-544-777 (phone_graphic) All account types (bullet) Maximum check request:
$100,000.
(bullet) For Money Line transfers to
your bank account; minimum:
none; maximum: $100,000.
(bullet) You may exchange to other
Fidelity funds if both
accounts are registered with
the same name(s), address,
and taxpayer ID number.
Mail or in Person (mail_graphic)(hand_graphic) Individual, Joint (bullet) The letter of instruction must
Tenant, be signed by all persons
Sole Proprietorship required to sign for
, UGMA, UTMA transactions, exactly as their
Trust names appear on the
account.
(bullet) The trustee must sign the
letter indicating capacity as
Business or trustee. If the trustee's name
Organization is not in the account
registration, provide a copy of
the trust document certified
within the last 60 days.
(bullet) At least one person
Executor, authorized by corporate
Administrator, resolution to act on the
Conservator, account must sign the letter.
Guardian (bullet) Include a corporate
resolution with corporate seal
or a signature guarantee.
(bullet) Call 1-800-544-6666 for
instructions.
Wire (wire_graphic) All account types (bullet) You must sign up for the wire
feature before using it. To
verify that it is in place, call
1-800-544-6666. Minimum
wire: $5,000.
(bullet) Your wire redemption request
must be received by Fidelity
before 4 p.m. Eastern time
for money to be wired on the
next business day.
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Check (check_graphic) All account types (bullet) Minimum check: $1,000.
(bullet) All account owners must sign
a signature card to receive a
checkbook.
</TABLE>
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(tdd_graphic) TDD - Service for the Deaf and Hearing Impaired: 1-800-544-0118
</TABLE>
INVESTOR SERVICES
Fidelity provides a variety of services to help you manage your account.
INFORMATION SERVICES
FIDELITY'S TELEPHONE REPRESENTATIVES are available 24 hours a day, 365 days
a year. Whenever you call, you can speak with someone equipped to provide
the information or service you need.
24-HOUR SERVICE
ACCOUNT ASSISTANCE
1-800-544-6666
ACCOUNT BALANCES
1-800-544-7544
ACCOUNT TRANSACTIONS
1-800-544-7777
PRODUCT INFORMATION
1-800-544-8888
QUOTES
1-800-544-8544
RETIREMENT ACCOUNT
ASSISTANCE
1-800-544-4774
AUTOMATED SERVICE
(checkmark)
STATEMENTS AND REPORTS that Fidelity sends to you include the following:
(bullet) Confirmation statements (after every transaction, except
reinvestments, that affects your account balance or your account
registration)
(bullet) Account statements (quarterly)
(bullet) Financial reports (every six months)
To reduce expenses, only one copy of most financial reports will be mailed
to your household, even if you have more than one account in the fund. Call
1-800-544-6666 if you need copies of financial reports or historical
account information.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may sell your fund shares and buy shares of other
Fidelity funds by telephone or in writing. There may be a $5.00 fee for
each exchange out of the funds.
Note that exchanges out of a fund are limited to four per calendar year,
and that they may have tax consequences for you. For complete policies and
restrictions governing exchanges, including circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see page .
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly or quarterly redemptions
from your account.
FIDELITY MONEY LINE(Registered trademark) enables you to transfer money by
phone between your bank account and your fund account. Most transfers are
complete within three business days of your call.
REGULAR INVESTMENT PLANS
One easy way to pursue your financial goals is to invest money regularly.
Fidelity offers convenient services that let you transfer money into your
fund account, or between fund accounts, automatically. While regular
investment plans do not guarantee a profit and will not protect you against
loss in a declining market, they can be an excellent way to invest for a
home, educational expenses, and other long-term financial goals.
REGULAR INVESTMENT PLANS
FIDELITY AUTOMATIC ACCOUNT BUILDERSM
TO MOVE MONEY FROM YOUR BANK ACCOUNT TO A FIDELITY FUND
MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly or (bullet) For a new account, complete the
quarterly appropriate section on the fund
application.
(bullet) For existing accounts, call
1-800-544-6666 for an application.
(bullet) To change the amount or frequency of
your investment, call 1-800-544-6666 at
least three business days prior to your
next scheduled investment date.
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DIRECT DEPOSIT
TO SEND ALL OR A PORTION OF YOUR PAYCHECK OR GOVERNMENT CHECK TO A FIDELITY FUNDA
</TABLE>
MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Every pay (bullet) Check the appropriate box on the fund
period application, or call 1-800-544-6666 for an
authorization form.
(bullet) Changes require a new authorization
form.
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<S> <C> <C>
FIDELITY AUTOMATIC EXCHANGE SERVICE
TO MOVE MONEY FROM A FIDELITY MONEY MARKET FUND TO ANOTHER FIDELITY FUND
</TABLE>
<TABLE>
<CAPTION>
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MINIMUM FREQUENCY SETTING UP OR CHANGING
$500 Monthly, (bullet) To establish, call 1-800-544-6666 after
bimonthly, both accounts are opened.
quarterly, or (bullet) To change the amount or frequency of
annually your investment, call 1-800-544-6666.
</TABLE>
A BECAUSE BOND FUND SHARE PRICES FLUCTUATE, THOSE FUNDS MAY NOT BE
APPROPRIATE CHOICES FOR DIRECT DEPOSIT OF YOUR ENTIRE CHECK.
DIVIDENDS, CAPITAL GAINS, AND TAXES
Each fund distributes substantially all of its net investment income and
capital gains. if any, to shareholders each year. Income dividends are
declared daily and paid monthly. Capital gains earned by the bond funds are
normally distributed in March and December.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to
receive your distributions. If the option you prefer is not listed on the
application, call 1-800-544-6666 for instructions. Each fund offers four
options (three for New York Tax-Free Money Market):
5. REINVESTMENT OPTION. Your dividend and capital gain distributions, if
any, will be automatically reinvested in additional shares of the fund. If
you do not indicate a choice on your application, you will be assigned this
option.
6. INCOME-EARNED OPTION. Your capital gain distributions, if any, will be
automatically reinvested, but you will be sent a check for each dividend
distribution. This option is not available for New York Tax-Free Money
Market.
7. CASH OPTION. You will be sent a check for your dividend and capital gain
distributions, if any.
8. DIRECTED DIVIDENDS(Registered trademark) OPTION. Your dividend and
capital gain distributions, if any, will be automatically invested in
another identically registered Fidelity fund.
Dividends will be reinvested at the fund's NAV on the last day of the
month. Capital gain distributions, if any, will be reinvested at the NAV as
of the date the fund deducts the distribution from its NAV. The mailing of
distribution checks will begin within seven days.
UNDERSTANDING
DISTRIBUTIONS
As a fund shareholder, you
are entitled to your share of
the fund's net income and
gains on its investments. The
fund passes its earnings
along to its investors as
DISTRIBUTIONS.
Each fund earns interest from
its investments. These are
passed along as DIVIDEND
DISTRIBUTIONS. The fund may
realize capital gains if it sells
securities for a higher price
than it paid for them. These
are passed along as CAPITAL
GAIN DISTRIBUTIONS. Money
market funds usually don't
make capital gain
distributions.
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TAXES
As with any investment, you should consider how an investment in a tax-free
fund could affect you. Below are some of the funds' tax implications.
TAXES ON DISTRIBUTIONS. Interest income that a fund earns is distributed to
shareholders as income dividends. Interest that is federally tax-free
remains tax-free when it is distributed.
However, gain on the sale of tax-free bonds results in taxable
distributions. Short-term capital gains and a portion of the gain on bonds
purchased at a discount are taxed as dividends. Long-term capital gain
distributions are taxed as long-term capital gains. These distributions are
taxable when they are paid, whether you take them in cash or reinvest them.
However, distributions declared in December and paid in January are taxable
as if they were paid on December 31. Fidelity will send you and the IRS a
statement showing the tax status of the distributions paid to you in the
previous year.
The interest from some municipal securities is subject to the federal
alternative minimum tax. Each fund may invest up to 100% of its assets in
these securities. Individuals who are subject to the tax must report this
interest on their tax returns.
To the extenta fund's income dividends are derived from state tax-free
investments, they will be free from New York state and city income taxes.
TAXES ON TRANSACTIONS. Your bond fund redemptions - including exchanges to
other Fidelity funds - are subject to capital gains tax. A capital gain or
loss is the difference between the cost of your shares and the price you
receive when you sell them.
Whenever you sell shares of a fund, Fidelity will send you a confirmation
statement showing how many shares you sold and at what price. You will also
receive a consolidated transaction statement every January. However, it is
up to you or your tax preparer to determine whether this sale resulted in a
capital gain and, if so, the amount of tax to be paid. Be sure to keep your
regular account statements; the information they contain will be essential
in calculating the amount of your capital gains.
"BUYING A DIVIDEND." If you buy shares just before a fund deducts a
distribution from its NAV, you will pay the full price for the shares and
then receive a portion of the price back in the form of a taxable
distribution.
SHAREHOLDER AND ACCOUNT POLICIES
TRANSACTION DETAILS
THE FUNDS ARE OPEN FOR BUSINESS each day the New York Stock Exchange (NYSE)
is open. Fidelity normally calculates each fund's net asset value as of
the close of business of the NYSE, normally 4 p.m. Eastern time, and also
at noon for New York Tax-Free Money Market.
EACH FUND'S NAV is the value of a single share. The NAV is computed by
adding the value of the fund's investments, cash, and other assets,
subtracting its liabilities, and then dividing the result by the number of
shares outstanding.
The money market fund values the securities it owns on the basis of
amortized cost. This method minimizes the effect of changes in a security's
market value and helps the fund to maintain a stable $1.00 share price. For
the bond funds, assets are valued primarily on the basis of market
quotations, if available. Since market quotations are often unavailable,
assets are usually valued by a method that the Board of Trustees believes
accurately reflects fair value.
EACH FUND'S OFFERING PRICE (price to buy one share) and REDEMPTION PRICE
(price to sell one share) are its NAV.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that
your Social Security or taxpayer identification number is correct and that
you are not subject to 31% backup withholding for failing to report income
to the IRS. If you violate IRS regulations, the IRS can require a fund to
withhold 31% of your taxable distributions and redemptions.
YOU MAY INITIATE MANY TRANSACTIONS BY TELEPHONE. Note that Fidelity will
not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller. Fidelity will request personalized security codes or other
information, and may also record calls. You should verify the accuracy of
your confirmation statements immediately after you receive them. If you do
not want the ability to redeem and exchange by telephone, call Fidelity for
instructions.
IF YOU ARE UNABLE TO REACH FIDELITY BY PHONE (for example, during periods
of unusual market activity), consider placing your order by mail or by
visiting a Fidelity Investor Center.
EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES for a period
of time. Each fund also reserves the right to reject any specific purchase
order, including certain purchases by exchange. See "Exchange Restrictions"
on page . Purchase orders may be refused if, in FMR's opinion, they are of
a size that would disrupt management of a fund.
WHEN YOU PLACE AN ORDER TO BUY SHARES, your order will be processed at the
next offering price calculated after your order is received and accepted.
Note the following:
(bullet) All of your purchases must be made in U.S. dollars and checks
must be drawn on U.S. banks.
(bullet) Fidelity does not accept cash.
(bullet) When making a purchase with more than one check, each check must
have a value of at least $50.
(bullet) Each fund reserves the right to limit the number of checks
processed at one time.
(bullet) If your check does not clear, your purchase will be cancelled and
you could be liable for any losses or fees a fund or its transfer agent has
incurred.
(bullet) You begin to earn dividends as of the first business day
following the day of your purchase.
TO AVOID THE COLLECTION PERIOD associated with check and Money Line
purchases, consider buying shares by bank wire, U.S. Postal money order,
U.S. Treasury check, Federal Reserve check, or direct deposit instead.
YOU MAY BUY OR SELL SHARES OF THE FUNDS THROUGH A BROKER, who may charge
you a fee for this service. If you invest through a broker or other
institution, read its program materials for any additional service features
or fees that may apply.
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 financial institution could be held liable for
resulting fees or losses.
WHEN YOU PLACE AN ORDER TO SELL SHARES, your shares will be sold at the
next NAV calculated after your request is received and accepted. Note the
following:
(bullet) Normally, redemption proceeds will be mailed to you on the next
business day, but if making immediate payment could adversely affect a
fund, it may take up to seven days to pay you.
(bullet) Shares will earn dividends through the date of redemption;
however, shares redeemed on a Friday or prior to a holiday will continue to
earn dividends until the next business day.
(bullet) Fidelity Money Line redemptions generally will be credited to
your bank account on the second or third business day after your phone
call.
(bullet) Each fund may hold payment on redemptions until it is reasonably
satisfied that investments made by check or Fidelity Money Line have been
collected, which can take up to seven business days.
(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.
(bullet) If you sell shares by writing a check and the amount of the check
is greater than the value of your account, your check will be returned to
you and you may be subject to additional charges.
THE REDEMPTION FEE for New York Tax-Free High Yield will be deducted from
the amount of your redemption. This fee is paid to the fund rather than
FMR, and it does not apply to shares that were acquired through
reinvestment of distributions. If shares you are redeeming were not all
held for the same length of time, those shares you held longest will be
redeemed first for purposes of determining whether the fee applies.
THE FEES FOR INDIVIDUAL TRANSACTIONS are waived if your account balance at
the time of the transaction is $50,000 or more. Otherwise, you should note
the following:
(bullet) The $2.00 checkwriting charge will be deducted from your account.
(bullet) The $5.00 exchange fee will be deducted from the amount of your
exchange.
(bullet) The $5.00 wire fee will be deducted from the amount of your wire.
(bullet) The $5.00 account closeout fee does not apply to exchanges or
wires, but it will apply to checkwriting.
IF YOUR ACCOUNT BALANCE FALLS BELOW $5,000 ($10,000 for New York Tax-Free
Money Market), you will be given 30 days' notice to reestablish the minimum
balance. If you do not increase your balance, Fidelity reserves the right
to close your account and send the proceeds to you. Your shares will be
redeemed at the NAV on the day your account is closed and the $5.00 account
closeout fee will be charged.
FIDELITY MAY CHARGE A FEE FOR SPECIAL SERVICES, such as providing
historical account documents, that are beyond the normal scope of its
services.
EXCHANGE RESTRICTIONS
As a shareholder, you have the privilege of exchanging shares of a fund for
shares of other Fidelity funds. However, you should note the following:
(bullet) The fund you are exchanging into must be registered for sale in
your state.
(bullet) You may only exchange between accounts that are registered in the
same name, address, and taxpayer identification number.
(bullet) Before exchanging into a fund, read its prospectus.
(bullet) If you exchange into a fund with a sales charge, you pay the
percentage-point difference between that fund's sales charge and any sales
charge you have previously paid in connection with the shares you are
exchanging. For example, if you had already paid a sales charge of 2% on
your shares and you exchange them into a fund with a 3% sales charge, you
would pay an additional 1% sales charge.
(bullet) Exchanges may have tax consequences for you.
(bullet) Because excessive trading can hurt fund performance and
shareholders, each fund reserves the right to temporarily or permanently
terminate the exchange privilege of any investor who makes more than four
exchanges out of the fund per calendar year. Accounts under common
ownership or control, including accounts with the same taxpayer
identification number, will be counted together for purposes of the four
exchange limit.
(bullet) Each fund reserves the right to refuse exchange purchases by any
person or group if, in FMR's judgment, the fund would be unable to invest
the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
(bullet) Your exchanges may be restricted or refused if a fund receives or
anticipates simultaneous orders affecting significant portions of the
fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to a fund.
Although the funds will attempt to give you prior notice whenever they are
reasonably able to do so, they may impose these restrictions at any time.
The funds reserve the right to terminate or modify the exchange privilege
in the future.
OTHER FUNDS MAY HAVE DIFFERENT EXCHANGE RESTRICTIONS, and may impose
administrative fees of up to $7.50 and redemption fees of up to 1.50% on
exchanges. Check each fund's prospectus for details.
THE FUNDS IN DETAIL
CHARTER
EACH FUND IS A MUTUAL FUND: an investment that pools shareholders' money
and invests it toward a specified goal. In technical terms, New York
Tax-Free Money Market is currently a non-diversified fund of Fidelity New
York Municipal Trust II, and New York Tax-Free Insured and New York
Tax-Free High Yield are currently non-diversified funds of Fidelity New
York Municipal Trust. Both trusts are open-end management investment
companies. Fidelity New York Municipal Trust II was organized as a Delaware
business trust on June 20, 1991. Fidelity New York Municipal Trust was
organized as a Massachusetts business trust on April 25, 1983. There is a
remote possibility that one fund might become liable for a misstatement in
the prospectus about another fund.
EACH FUND IS GOVERNED BY A BOARD OF TRUSTEES, which is responsible for
protecting the interests of shareholders. The trustees are experienced
executives who meet throughout the year to oversee the funds' activities,
review contractual arrangements with companies that provide services to the
funds, and review performance. The majority of trustees are not otherwise
affiliated with Fidelity.
THE FUNDS MAY HOLD SPECIAL MEETINGS AND MAIL PROXY MATERIALS. These
meetings may be called to elect or remove trustees, change fundamental
policies, approve a management contract, or for other purposes.
Shareholders not attending these meetings are encouraged to vote by proxy.
Fidelity will mail proxy materials in advance, including a voting card and
information about the proposals to be voted on. The number of votes you are
entitled to is based upon the dollar value of your investment.
FMR AND ITS AFFILIATES
FIDELITY FACTS
Fidelity offers the broadest
selection of mutual funds
in the world.
(bullet) Number of Fidelity mutual
funds: over ___
(bullet) Assets in Fidelity mutual
funds: over $___ billion
(bullet) Number of shareholder
accounts: over __ million
(bullet) Number of investment
analysts and portfolio
managers: over ___
(checkmark)
The funds are managed by FMR, which chooses their investments and handles
their business affairs. FTX has primary responsibility for providing
investment management services for New York Tax-Free Money Market.
David Murphy is manager of Spartan New York Intermediate Municipal, which
he has managed since ___. Mr. Murphy also manages Limited Term Municipals,
New York Tax-Free Insured, Spartan California Intermediate Municipal,
Spartan Intermediate Municipal, Spartan New Jersey Municipal High Yield and
Spartan Short-Intermediate Municipal. Before joining Fidelity in 1989, he
managed municipal bond funds at Scudder, Stevens & Clark.
Norman Lind is manager of Spartan New York Municipal High Yield, which he
has managed since ___. Mr. Lind also manages New York Tax-Free High Yield
and ____________.
FDC distributes and markets Fidelity's funds and services. Fidelity Service
Co. (FSC) performs transfer agent servicing functions for the funds.
FMR Corp. is the parent company of these organizations. Through ownership
of voting common stock, Edward C. Johnson 3d (President and a trustee of
the trusts), Johnson family members, and various trusts for the benefit of
the Johnson family form a controlling group with respect to FMR Corp.
United Missouri Bank, N.A., is each fund's transfer agent, although it
employs FSC to perform these functions for the funds. It is located at 1010
Grand Avenue, Kansas City, Missouri.
To carry out the funds' transactions, FMR may use its broker-dealer
affiliates and other firms that sell fund shares, provided that a fund
receives services and commission rates comparable to those of other
broker-dealers.
BREAKDOWN OF EXPENSES
Like all mutual funds, the funds pay fees related to their daily
operations. Expenses paid out of a fund's assets are reflected in its share
price or dividends; they are neither billed directly to shareholders nor
deducted from shareholder accounts.
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
at any time without notice, can decrease a fund's expenses and boost its
performance.
MANAGEMENT FEE
The management fee is calculated and paid to FMR every month. Each fund
pays a management fee at a fixed annual rate of its average net assets:
.25% for New York Tax-Free Money Market and .55% for New York Tax-Free
Insured and New York Tax-Free High Yield. For Spartan New York Intermediate
Municipal, the total management fee for fiscal 1994, after reimbursement,
was .__%
FMR HAS SUB-ADVISORY AGREEMENTS with FTX, which has primary responsibility
for providing investment management for New York Tax-Free Money Market,
while FMR retains responsibility for providing other management services.
FMR pays FTX 50% of its management fee (before expense reimbursements) for
these services.
FSC performs many transaction and accounting functions for the funds. These
services include processing shareholder transactions and calculating each
fund's share price. FMR, and not the funds, pays for these services.
Each fund has adopted a Distribution and Service Plan. These plans
recognize that FMR may use its resources, including management fees, to pay
expenses associated with the sale of fund shares. This may include payments
to third parties, such as banks or broker-dealers, that provide shareholder
support services or engage in the sale of the fund's shares. It is
important to note, however, that the funds do not pay FMR any separate fees
for this service.
For fiscal 1994, the portfolio turnover rates for New York Tax-Free
Insured and New York Tax-Free High Yield were .__% (annualized) and . __%,
respectively. These rates vary from year to year.
INVESTMENT PRINCIPLES
SPARTAN NEW YORK MUNICIPAL MONEY MARKET seeks high current income that is
free from federal income tax and New York State and City income taxes while
maintaining a stable $1.00 share price by investing in high-quality,
short-term municipal securities of all types. As a result, when you sell
your shares, they should be worth the same amount as when you bought them.
Of course, there is no guarantee that the fund will maintain a stable $1.00
share price. FMR normally invests at least 65% of the fund's total assets
in State tax-free securities, and normally invests so that at least 80% of
the fund's income distributions are free from federal income tax.
The fund follows industry-standard guidelines on the quality and maturity
of its investments, which are designed to help maintain a stable $1.00
share price. The fund will purchase only high-quality securities that FMR
believes present minimal credit risks and will observe maturity
restrictions on securities it buys. It is possible that a major change in
interest rates or a default on the fund's investments could cause its share
price (and the value of your investment) to change.
SPARTAN NEW YORK INTERMEDIATE MUNICIPAL seeks high current income that is
free from federal income tax and New York State and City income taxes by
investing primarily in high-quality and upper-medium-grade-quality
municipal bonds, although it can also invest in lower-quality securities.
The fund normally maintains a dollar-weighted average maturity of three to
10 years. FMR normally invests at least 65% of the fund's total assets in
State tax-free securities, and normally invests at least 80% of the fund's
assets in municipal securities whose interest is free from federal income
tax.
NEW YORK TAX-FREE HIGH YIELD seeks high current income that is free from
federal income tax and New York State and City income taxes by investing
primarily in municipal securities judged by FMR to be of investment-grade
quality, although it can also invest in some lower-quality securities. The
fund normally invests in long-term bonds, generally maintaining a
dollar-weighted average maturity of 15 years or longer, although it may
invest in obligations of any maturity. FMR normally invests so that at
least 80% of the fund's income distributions are free from federal and New
York State and City income taxes.
EACH FUND'S yield and each bond fund's share price change daily based on
interest rate changes and on the quality and maturity of its investments.
In general, bond prices rise when interest rates fall, and vice versa. This
effect is usually more pronounced for longer-term securities. Lower-quality
securities offer higher yields, but also carry more risk.
Each fund's performance is closely tied to the economic and political
conditions within the State of New York. Recently, both the City and State
of New York have experienced significant financial difficulty, and the
State's credit standing is one of the lowest in the country.
If you are subject to the federal alternative minimum tax, you should note
that each fund may invest all of its assets in municipal securities issued
to finance private activities. The interest from these investments is a
tax-preference item for purposes of the tax.
FMR normally invests each fund's assets according to its investment
strategy. The funds do not expect to invest in federally taxable
obligations, and the bond funds also do not expect to invest in state
taxable obligations. When FMR considers it appropriate, however, it may
temporarily invest substantially in cash that is not earning interest or
short-term instruments, or may invest more than normally permitted in
taxable obligations.
SECURITIES AND INVESTMENT PRACTICES
The following pages contain more detailed information about types of
instruments in which the funds may invest, and strategies FMR may employ in
pursuit of the funds' investment objectives. A summary of risks and
restrictions associated with these instrument types and investment
practices is included as well. Policies and limitations are considered at
the time of purchase; the sale of instruments is not required in the event
of a subsequent change in circumstances.
FMR may not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the
funds achieve their goals. As a shareholder, you will receive financial
reports every six months detailing fund holdings and describing recent
investment activities.
DEBT SECURITIES. Bonds and other debt instruments are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or
variable rate of interest, and must repay the amount borrowed at maturity.
Some debt securities, such as zero coupon bonds, do not pay current
interest, but are purchased at a discount from their face values. Debt
securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally
more sensitive to interest rate changes than short-term bonds.
Lower-quality debt securities may have speculative characteristics, and
involve greater risk of default or price changes due to changes in the
issuer's creditworthiness. The market prices of these securities may
fluctuate more than higher-quality securities and may decline significantly
in periods of general or regional economic difficulty.
The table on page __ provides a summary of ratings assigned to debt
holdings (not including money market instruments) in New York Tax-Free High
Yield's portfolio. These figures are dollar-weighted averages of month-end
portfolio holdings during fiscal 1994, and are presented as a percentage of
total investments. These percentages are historical and do not necessarily
indicate the fund's current or future debt holdings.
SPARTAN NEW YORK MUNICIPAL HIGH YIELD
FISCAL 1994 DEBT HOLDINGS, BY RATING
MOODY'S STANDARD &
POOR'S
INVESTORS SERVICE, INC. CORPORATION
Rating Average A Rating Averag
eA
INVESTMENT GRADE
Highest quality Aaa AAA
High quality Aa % AA %
Upper-medium grade A A
Medium grade Baa % BBB %
LOWER QUALITY
Moderately speculative Ba % BB %
Speculative B % B %
Highly speculative Caa % CCC %
Poor quality Ca % CC %
Lowest quality, no interest C C
In default, in arrears -- D %
% %
A THE DOLLAR-WEIGHTED AVERAGE OF DEBT SECURITIES NOT RATED BY MOODY'S OR
S&P AMOUNTED TO ___%. THIS MAY INCLUDE SECURITIES RATED BY OTHER
NATIONALLY RECOGNIZED RATING SERVICES, AS WELL AS UNRATED SECURITIES.
UNRATED SECURITIES ARE NOT NECESSARILY LOWER-QUALITY SECURITIES. REFER TO
THE
FUND'S STATEMENT OF ADDITIONAL INFORMATION FOR A MORE COMPLETE DISCUSSION
OF THESE RATINGS.
RESTRICTIONS: New York Tax-Free Insured does not currently intend to invest
more than 40% of its total assets in securities rated below A by Moody's or
S&P, and unrated securities judged by FMR to be of equivalent quality.
The fund does not currently intend to invest more than 5% of its assets in
securities rated Ba/BB or lower, and unrated securities of equivalent
quality. New York Tax-Free High Yield does not currently intend to invest
more than one-third of its assets in bonds of equivalent quality to Ba or
lower by Moody's and BB or lower by S&P, and does not currently intend
to invest in bonds whose quality is judged by FMR to be equivalent to bonds
rated lower than B. The fund does not currently intend to invest in bonds
rated below Caa by Moody's or CCC by S&P.
MUNICIPAL SECURITIES are issued to raise money for a variety of public
purposes, including general financing for state and local governments, or
financing for specific projects or public facilities. Municipal securities
may be issued in anticipation of future revenues, and may be backed by the
full taxing power of a municipality, the revenues from a specific project,
or the credit of a private organization. A security's credit may be
enhanced by a bank, insurance company, or other financial institution. A
fund may own a municipal security directly or may own one through a
participation interest.
STATE TAX-FREE SECURITIES include obligations issued by the State of New
York or its counties, municipalities, authorities, or other subdivisions.
The ability of issuers to repay their debt can be affected by many factors
that impact the economic vitality of either the state or a region within
the state.
Other State tax-free securities include general obligations of U.S.
territories and possessions such as Guam, the Virgin Islands, and Puerto
Rico, and their political subdivisions and public corporations. The economy
of Puerto Rico is closely linked to the U.S. economy, and will depend on
the strength of the U.S. dollar, interest rates, the price stability of oil
imports, and the continued existence of favorable tax incentives. Recent
legislation reduced these incentives, but it is impossible to predict what
impact the changes will have.
MUNICIPAL LEASE OBLIGATIONS are used by municipalities to acquire land,
equipment, or facilities. If the municipality stops making payments or
transfers its obligations to a private entity, the obligation could lose
value or become taxable.
PRIVATE ENTITIES may be involved in some municipal securities. For example,
industrial revenue bonds are backed by private entities, and resource
recovery bonds often involve private corporations. The viability of a
project or tax incentives could affect the value and credit quality of
these securities.
ASSET-BACKED SECURITIES may include pools of purchase contracts, financing
leases, or sales agreements entered into by municipalities. These
securities usually rely on continued payments by a municipality, and may
also be subject to prepayment risk.
VARIABLE- AND FLOATING-RATE INSTRUMENTS may have interest rates that move
in tandem with a benchmark, helping to stabilize their prices. Inverse
floaters have interest rates that move in the opposite direction from the
benchmark, making the instrument's market value more volatile.
PUT FEATURES entitle the holder to put (sell back) an instrument to the
issuer or a financial intermediary. In exchange for this benefit, a fund
may pay periodic fees or accept a lower interest rate. Demand features,
standby commitments, and tender options are types of put features.
ADJUSTING INVESTMENT EXPOSURE. A fund can use various techniques to
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. These techniques may
involve derivative transactions such as buying and selling options and
futures contracts and purchasing indexed securities.
FMR can use these practices to adjust the risk and return characteristics
of a fund's portfolio of investments. If FMR judges market conditions
incorrectly or employs a strategy that does not correlate well with the
fund's investments, these techniques could result in a loss, regardless of
whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction
does not perform as promised.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS are trading practices in
which payment and delivery for the securities take place at a future date.
The market value of a security could change during this period, which could
affect a fund's yield or the market value of its assets.
ILLIQUID AND RESTRICTED SECURITIES. Some investments may be determined by
FMR, under the supervision of the Board of Trustees, to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price.
The sale of other securities may be subject to legal restrictions.
Difficulty in selling securities may result in a loss or may be costly to a
fund.
RESTRICTIONS: A fund may not purchase a security if, as a result, more than
10% of its assets would be invested in illiquid securities.
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
these changes, and also to changes in the market value of a single issuer
or industry.
RESTRICTIONS: The funds are considered non-diversified. To meet quarterly
federal tax requirements, however, a fund generally does not invest more
than 25% of its total assets in any one issuer and, with respect to 50% of
total assets, does not invest more than 5% of its total assets in any one
issuer. These limitations do not apply to U.S. government securities. A
fund may invest more than 25% of its total assets in tax-free securities
that finance similar types of projects.
BORROWING. A fund may borrow from banks or from other funds advised by
FMR, or through reverse repurchase agreements. If a bond fund borrows
money, its share price may be subject to greater fluctuation until the
borrowing is paid off. If the fund makes additional investments while
borrowings are outstanding, this may be considered a form of leverage.
RESTRICTIONS: A fund may borrow only for temporary or emergency purposes,
but not in an amount exceeding 33% of its total assets.
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraphs restate all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the
following paragraphs, can be changed without shareholder approval.
SPARTAN NEW YORK MUNICIPAL MONEY MARKET seeks as high a level of current
income, exempt from federal income tax and New York State and City income
taxes, as is consistent with preservation of capital by investing in
high-quality, short-term municipal obligations. The fund will normally
invest so that at least 80% of its income distributions are exempt from
federal income tax.
SPARTAN NEW YORK INTERMEDIATE MUNICIPAL seeks a high level of current
income exempt from federal income tax and New York State and City income
taxes. The fund will normally invest at least 80% of its assets in
municipal securities whose interest is free from federal income tax.
SPARTAN NEW YORK MUNICIPAL HIGH YIELD seeks the highest level of current
income, exempt from federal income tax and New York State and City income
taxes, available from municipal bonds judged by FMR to be of
investment-grade quality, although 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 exempt
from federal and New York State and City income taxes.
EACH FUND may borrow only for temporary or emergency purposes, but not in
an amount exceeding 33% of its total assets.
From Filler pages
SPARTAN(registered trademark) NEW YORK MUNICIPAL MONEY MARKET PORTFOLIO
A FUND OF FIDELITY NEW YORK MUNICIPAL TRUST II
SPARTAN(registered trademark) NEW YORK INTERMEDIATE MUNICIPAL PORTFOLIO
A FUND OF FIDELITY NEW YORK MUNICIPAL TRUST
SPARTAN(registered trademark) NEW YORK MUNICIPAL HIGH YIELD PORTFOLIO
A FUND OF FIDELITY NEW YORK MUNICIPAL TRUST
STATEMENT OF ADDITIONAL INFORMATION
MARCH 22, 1994
This Statement is not a prospectus but should be read in conjunction with
the funds' current Prospectus (dated March 22, 1994). Please retain this
document for future reference. The Annual Report for the fiscal period
ended January 31, 1994 is incorporated herein by reference. To obtain an
additional copy of the Prospectus or the Annual Report, please call
Fidelity Distributors Corporation at 1-800-544-8888.
TABLE OF CONTENTS PAGE
Investment Policies and Limitations
Special Factors Affecting New York
Special Factors Affecting Puerto Rico
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
FMR
Trustees and Officers
Management Contracts
Distribution and Service Plans
Interest of FMR Affiliates
Description of the Trusts
Financial Statements
Appendix
Investment Adviser
Fidelity Management & Research Company (FMR)
Investment Sub-Adviser (money market fund only)
FMR Texas Inc. (FMR Texas)
Distributor
Fidelity Distributors Corporation (FDC)
Custodian and Transfer Agent
United Missouri Bank, N.A. (United Missouri) and Fidelity Service Co. (FSC)
SNR-ptb-394
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.
Each 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 a fund. However, except for the fundamental investment
limitations set forth below, the investment policies and limitations
described in this Statement of Additional Information are not fundamental
and may be changed without shareholder approval.
INVESTMENT LIMITATIONS OF SPARTAN NEW YORK MUNICIPAL MONEY MARKET PORTFOLIO
(MONEY MARKET FUND)
THE FOLLOWING ARE THE MONEY MARKET 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) sell securities short, unless it owns, or by virtue of its ownership of
other securities, has the right to obtain at no added cost, securities
equivalent in kind and amount to the securities sold short;
(3) purchase securities on margin, except that the fund may obtain such
short-term credits as are necessary for the clearance of transactions;
(4) 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;
(5) 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);
(6) 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;
(7) 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);
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities; or
(9) 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.
(10) 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) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell 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.
(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 (4)). 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.
(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 invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(vi) The fund does not currently intend to purchase or sell futures
contracts or call options. This limitation does not apply to options
attached to, or acquired or traded together with, their underlying
securities, and does not apply to securities that incorporate features
similar to options or futures contracts.
(vii) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to purchases
of debt securities.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) 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 (6) and (i), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
For the fund's limitations on quality and maturity, see the section
entitled "Quality and Maturity" on page __.
INVESTMENT LIMITATIONS OF SPARTAN NEW YORK INTERMEDIATE MUNICIPAL PORTFOLIO
(INTERMEDIATE FUND)
THE FOLLOWING ARE THE INTERMEDIATE 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) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings representing more than 5% of its
total assets are outstanding. The fund will not borrow from other funds
advised by FMR or its affiliates if total outstanding borrowings
immediately after such borrowing would exceed 15% of the fund's total
assets.
(v) The fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
(vi) The fund does not currently intend to invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(vii) The fund does not currently intend to engage in repurchase agreements
or make loans, but this limitation does not apply to purchases of debt
securities.
(viii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(ix) 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 (4) and (i), FMR identifies the issuer of a
security depending on its terms and conditions. In identifying the issuer,
FMR will consider the entity or entities responsible for payment of
interest and repayment of principal and the source of such payments; the
way in which assets and revenues of an issuing political subdivision are
separated from those of other political entities; and whether a
governmental body is guaranteeing the security.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions"
beginning on page 9.
INVESTMENT LIMITATIONS OF SPARTAN NEW YORK MUNICIPAL HIGH YIELD PORTFOLIO
(HIGH YIELD FUND)
THE FOLLOWING ARE THE HIGH YIELD 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) To meet federal tax requirements for qualification as a "regulated
investment company," the fund limits its investments so that at the close
of each quarter of its taxable year: (a) with regard to at least 50% of
total assets, no more than 5% of total assets are invested in the
securities of a single issuer, and (b) no more than 25% of total assets are
invested in the securities of a single issuer. Limitations (a) and (b) do
not apply to "Government securities" as defined for federal tax purposes.
(ii) The fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount
to the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities
short.
(iii) The fund does not currently intend to purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall
not constitute purchasing securities on margin.
(iv) The fund may borrow money only (a) from a bank or from a registered
investment company or portfolio for which FMR or an affiliate serves as
investment adviser or (b) by engaging in reverse repurchase agreements with
any party (reverse repurchase agreements are treated as borrowings for
purposes of fundamental investment limitation (2)). The fund will not
purchase any security while borrowings presenting 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 invest more than 25% of its
total assets in industrial revenue bonds related to a single industry.
(vii) The fund does not currently intend to engage in repurchase
agreements or make loans, but this limitation does not apply to purchases
of debt securities.
(vii) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission
except the ordinary broker's commission is paid, or (b) purchase or retain
securities issued by other open-end investment companies. Limitations (a)
and (b) do not apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or merger.
(viii) The fund does not currently intend to invest all of its assets in
the securities of a single open-end management investment company with
substantially the same fundamental investment objective, policies, and
limitations as the fund.
For purposes of 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.
QUALITY AND MATURITY (MONEY MARKET FUND ONLY). Pursuant to procedures
adopted by the Board of Trustees, the fund may purchase only high-quality
securities that FMR believes present minimal credit risks. To be
considered high-quality, a security must be rated in accordance with
applicable rules in one of the two highest categories for short-term
securities by at least two nationally recognized rating services (or by
one, if only one rating service has rated the security) or, if unrated,
judged to be of equivalent quality by FMR. The fund must limit its
investments to securities with remaining maturities of 397 days or less and
must maintain a dollar-weighted average maturity of 90 days or less.
For the high yield fund's limitations on futures and options transactions,
see the section entitled "Limitations on Futures and Options Transactions"
beginning on page 9.
AFFILIATED BANK TRANSACTIONS. Pursuant to exemptive orders issued by the
Securities and Exchange Commission (SEC), the funds may engage in
transactions with financial institutions that are, or may be considered to
be, "affiliated persons" of the funds under the Investment Company Act of
1940. Such transactions may be entered into only pursuant to procedures
established and periodically reviewed by the Board of Trustees. These
transactions may include repurchase agreements with custodian banks;
purchases, as principal, of short-term obligations of, and repurchase
agreements with, the 50 largest U.S. banks (measured by deposits);
transactions in municipal securities; transactions in U.S. government
securities with affiliated banks that are primary dealers in these
securities; short-term currency transactions; and short-term secured
borrowing.
DELAYED-DELIVERY TRANSACTIONS. Each fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a
commitment by a fund to purchase or sell specific securities at a
predetermined price or yield, with payment and delivery taking place after
the customary settlement period for that type of security (and more than
seven days in the future). Typically, no interest accrues to the purchaser
until the security is delivered. The high yield fund may receive fees for
entering into delayed-delivery transactions.
When purchasing securities on a delayed-delivery basis, each fund assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because a fund is not required to pay for securities until
the delivery date, these risks are in addition to the risks associated with
the fund's other investments. If a fund remains substantially fully
invested at a time when delayed-delivery purchases are outstanding, the
delayed-delivery purchases may result in a form of leverage. When
delayed-delivery purchases are outstanding, the fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
purchase obligations. When a fund has sold a security on a
delayed-delivery basis, the fund does not participate in further gains or
losses with respect to the security. If the other party to a
delayed-delivery transaction fails to deliver or pay for the securities,
the fund could miss a favorable price or yield opportunity, or could suffer
a loss.
Each fund may renegotiate delayed-delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
REFUNDING CONTRACTS. The intermediate and high yield funds may purchase
securities on a when-issued basis in connection with the refinancing of an
issuer's outstanding indebtedness. Refunding contracts require the issuer
to sell and a fund to buy refunded municipal obligations at a stated price
and yield on a settlement date that may be several months or several years
in the future. The funds generally will not be obligated to pay the full
purchase price if they fail to perform under a refunding contract.
Instead, refunding contracts generally provide for payment of liquidated
damages to the issuer (currently 15-20% of the purchase price). A fund may
secure its obligations under a refunding contract by depositing collateral
or a letter of credit equal to the liquidated damages provisions of the
refunding contract. When required by SEC guidelines, each fund will place
liquid assets in a segregated custodial account equal in amount to its
obligations under refunding contracts.
INVERSE FLOATERS. The intermediate and high yield funds may invest in
inverse floaters, which are instruments whose interest rates bear an
inverse relationship to the interest rate on another security or the value
of an index. Changes in the interest rate on the other security or index
inversely affect the residual interest rate paid on the inverse floater,
with the result that the inverse floater's price will be considerably more
volatile than that of a fixed-rate bond. For example, a municipal issuer
may decide to issue two variable-rate instruments instead of a single
long-term, fixed-rate bond. The interest rate on one instrument reflects
short-term interest rates, while the interest rate on the other instrument
(the inverse floater) reflects the approximate rate the issuer would have
paid on a fixed-rate bond, multiplied by two, minus the interest rate paid
on the short-term instrument. Depending on market availability, the two
portions may be recombined to form a fixed-rate municipal bond. The market
for inverse floaters is relatively new.
VARIABLE OR FLOATING RATE OBLIGATIONS bear variable or floating interest
rates and carry rights that permit holders to demand payment of the unpaid
principal balance plus accrued interest from the issuers or certain
financial intermediaries. Floating rate instruments have interest rates
that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in
the interest rate. These formulas are designed to result in a market value
for the instrument that approximates its par value.
With respect to the money market fund, a demand instrument with a
conditional demand feature must have received both a short-term and a
long-term high-quality rating or, if unrated, have been determined to be of
comparable quality pursuant to procedures adopted by the Board of Trustees.
A demand instrument with an unconditional demand feature may be acquired
solely in reliance upon a short-term high-quality rating or, if unrated,
upon a finding of comparable short-term quality pursuant to procedures
adopted by the Board of Trustees.
The funds may invest in fixed-rate bonds that are subject to third party
puts and in participation interests in such bonds held in trust or
otherwise. These bonds and participation interests have tender options or
demand features that permit a fund to tender (or put) the bonds to an
institution at periodic intervals and to receive the principal amount
thereof. A fund considers variable rate instruments structured in this way
(Participating VRDOs) to be essentially equivalent to other VRDOs it
purchases. The IRS has not ruled whether the interest on Participating
VRDOs is tax-exempt and, accordingly, a fund intends to purchase these
instruments based on opinions of bond counsel.
The money market fund may invest in variable or floating rate instruments
that ultimately mature in more than 397 days, if the fund acquires a right
to sell the instruments that meets certain requirements set forth in Rule
2a-7. Variable rate instruments (including instruments subject to a demand
feature) that mature in 397 days or less may be deemed to have maturities
equal to the period remaining until the next readjustment of the interest
rate. Other variable rate instruments with demand features may be deemed to
have a maturity equal to the period remaining until the next adjustment of
the interest rate or the period remaining until the principal amount can be
recovered through demand. A floating rate instrument subject to a demand
feature may be deemed to have a maturity equal to the period remaining
until the principal amount can be recovered through demand.
TENDER OPTION BONDS are created by coupling an intermediate- or long-term,
fixed-rate, tax-exempt bond (generally held pursuant to a custodial
arrangement) with a tender agreement that gives the holder the option to
tender the bond at its face value. As consideration for providing the
tender option, the sponsor (usually a bank, broker-dealer, or other
financial institution) receives periodic fees equal to the difference
between the bond's fixed coupon rate and the rate (determined by a
remarketing or similar agent) that would cause the bond, coupled with the
tender option, to trade at par on the date of such determination. After
payment of the tender option fee, a fund effectively holds a demand
obligation that bears interest at the prevailing short-term tax-exempt
rate. Subject to applicable regulatory requirements, the money market fund
may buy tender option bonds if the agreement gives the fund the right to
tender the bond to its sponsor no less frequently than once every 397 days.
In selecting tender option bonds for the funds, FMR will consider the
creditworthiness of the issuer of the underlying bond, the custodian, and
the third party provider of the tender option. In certain instances, a
sponsor may terminate a tender option if, for example, the issuer of the
underlying bond defaults on interest payments.
ZERO COUPON BONDS do not make regular interest payments. Instead, they are
sold at a deep discount from their face value and are redeemed at face
value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, a fund takes into account as income a
portion of the difference between a zero coupon bond's purchase price and
its face value.
STANDBY COMMITMENTS are puts that entitle holders to same-day settlement at
an exercise price equal to the amortized cost of the underlying security
plus accrued interest, if any, at the time of exercise. Each fund may
acquire standby commitments to enhance the liquidity of portfolio
securities, but, in the case of the money market fund, only when the
issuers of the commitments present minimal risk of default.
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. Standby commitments will
not affect the dollar-weighted average maturity of the money market fund or
the valuation of the securities underlying the commitments.
Issuers or financial intermediaries may obtain letters of credit or other
guarantees to support their ability to buy securities on demand. FMR may
rely upon its evaluation of a bank's credit in determining whether to
support an instrument supported by a letter of credit. In evaluating a
foreign bank's credit, FMR will consider whether adequate public
information about the bank is available and whether the bank may be subject
to unfavorable political or economic developments, currency controls, or
other governmental restrictions that might affect the bank's ability to
honor its credit commitment.
Standby commitments are subject to certain risks, including the ability of
issuers of standby commitments to pay for securities at the time the
commitments are exercised; the fact that standby commitments are not
marketable by the funds; and the possibility that the maturities of the
underlying securities may be different from those of the commitments.
MUNICIPAL LEASE OBLIGATIONS. Each fund may invest a portion of its assets
in municipal leases and participation interests therein. These obligations,
which may take the form of a lease, an installment purchase, or a
conditional sale contract, are issued by state and local governments and
authorities to acquire land and a wide variety of equipment and facilities.
Generally, the funds will not hold such obligations directly as a lessor of
the property, but will purchase a participation interest in a municipal
obligation from a bank or other third party. A participation interest gives
a fund a specified, undivided interest in the obligation in proportion to
its purchased interest in the total amount of the obligation.
Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet to incur debt.
These may include voter referenda, interest rate limits, or public sale
requirements. Leases, installment purchases, or conditional sale contracts
(which normally provide for title to the leased asset to pass to the
governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting their constitutional and
statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer
has no obligation to make future payments under the lease or contract
unless money is appropriated for such purposes by the appropriate
legislative body on a yearly or other periodic basis. Non-appropriation
clauses free the issuer from debt issuance limitations.
FEDERALLY TAXABLE OBLIGATIONS. The funds do not intend to invest in
securities whose interest is federally taxable; however, from time to time,
each fund may invest a portion of its assets on a temporary basis in
fixed-income obligations whose interest is subject to federal income tax.
For example, each fund may invest in obligations whose interest is
federally taxable pending the investment or reinvestment in municipal
securities of proceeds from the sale of its shares or sales of portfolio
securities.
Should a fund invest in federally taxable obligations, it would purchase
securities that in FMR's judgment are of high quality. These would include
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities; obligations of domestic banks; and repurchase
agreements. The intermediate and high yield funds' standards for
high-quality taxable obligations are essentially the same as those
described by Moody's Investors Service, Inc. (Moody's) in rating corporate
obligations within its two highest ratings of Prime-1 and Prime-2, and
those described by Standard & Poor's Corporation (S&P) in rating
corporate obligations within its two highest ratings of A-1 and A-2. The
money market fund will purchase taxable obligations only if they meet its
quality requirements.
Proposals to restrict or eliminate the federal income tax exemption for
interest on municipal obligations are introduced before Congress from time
to time. Proposals also may be introduced before the New York state
legislature that would affect the state tax treatment of the funds'
distributions. If such proposals were enacted, the availability of
municipal obligations and the value of the funds' holdings would be
affected and the Trustees would reevaluate the funds' investment objectives
and policies.
Each fund anticipates being as fully invested as practicable in municipal
securities; however, there may be occasions when, as a result of maturities
of portfolio securities, sales of fund shares, or in order to meet
redemption requests, a fund may hold cash that is not earning income. In
addition, there may be occasions when, in order to raise cash to meet
redemptions, a fund may be required to sell securities at a loss.
REPURCHASE AGREEMENTS. In a repurchase agreement, a fund purchases a
security and simultaneously commits to resell that security to the seller
at an agreed-upon price on an agreed-upon date within a number of days from
the date of purchase. 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. A repurchase agreement is a taxable
obligation which involves the obligation of the seller to pay the
agreed-upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed-upon resale price and marked to
market daily) of the underlying security. Each fund may engage in
repurchase agreements with respect to any security in which it is
authorized to invest even if, with respect to the money market fund, the
underlying security matures in more than 397 days. While it does not
presently appear possible to eliminate all risks from these transactions
(particularly the possibility of a decline in the market value of the
underlying securities, as well as delays and costs to a fund in connection
with bankruptcy proceedings), it is each fund's current policy to limit
repurchase agreement transactions to those parties whose creditworthiness
has been reviewed and found satisfactory by FMR.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a fund
sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument
at a particular price and time. While a reverse repurchase agreement is
outstanding, a fund will maintain appropriate liquid assets in a segregated
custodial account to cover its obligation under the agreement. Each fund
will enter into reverse repurchase agreements only with parties whose
creditworthiness has been found satisfactory by FMR. Such transactions may
increase fluctuations in the market value of the fund's assets and may be
viewed as a form of leverage.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, FMR determines
the liquidity of each fund's investments and, through reports from FMR, the
Board monitors investments in illiquid instruments. In determining the
liquidity of each fund's investments, FMR may consider various factors
including (1) the frequency of trades and quotations, (2) the number of
dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, and (4) the nature of the security
(including any demand or tender features), and (5) the nature of the
marketplace for trades (including the ability to assign or offset a fund's
rights and obligations relating to the investment). Investments currently
considered by the money market fund to be illiquid include restricted
securities and municipal lease obligations determined by FMR to be
illiquid. Investments currently considered by the intermediate and high
yield funds to be illiquid include over-the-counter options. Also, FMR may
determine some restricted securities and municipal lease obligations to be
illiquid. However, with respect to over-the-counter options the
intermediate and high yield funds write, all or a portion of the value of
the underlying instrument may be illiquid depending on the assets held to
cover the option and the nature and terms of any agreement a fund may have
to close out the option before expiration. In the absence of market
quotations, illiquid investments are valued for purposes of monitoring
amortized cost valuation (money market fund) and priced at fair value
(intermediate and high yield funds) as determined in good faith by a
committee appointed by the Board of Trustees. If through a change in
values, net assets, or other circumstances, a fund were in a position where
more than 10% of its net assets were invested in illiquid securities, it
would seek to take appropriate steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where
registration is required, a fund may be obligated to pay all or part of the
registration expense and a considerable period may elapse between the time
it decides to seek registration and the time the fund may be permitted to
sell a security under an effective registration statement. If, during such
a period, adverse market conditions were to develop, a fund might obtain a
less favorable price than prevailed when it decided to seek registration of
the security. However, in general, the money market fund anticipates
holding restricted securities to maturity or selling them in an exempt
transaction.
LOWER-RATED MUNICIPAL SECURITIES. The intermediate and high yield funds
may invest a portion of their assets in lower-rated municipal securities as
described in the Prospectus.
While the market for New York municipals is considered to be substantial,
adverse publicity and changing investor perceptions may affect the ability
of outside pricing services used by a fund to value its portfolio
securities, and a fund's ability to dispose of lower-rated bonds. The
outside pricing services are consistently monitored by FMR and reported to
the Board to determine whether the services are furnishing prices that
accurately reflect fair value. The impact of changing investor perceptions
may be especially pronounced in markets where municipal securities are
thinly traded.
A fund may choose, at its expense or in conjunction with others, to pursue
litigation or otherwise exercise its rights as a security holder to seek to
protect the interests of security holders if it determines this to be in
the best interest of a fund's shareholders.
INTERFUND BORROWING PROGRAM. Each fund has received permission from the
SEC to lend money to and borrow money from other funds advised by FMR or
its affiliates, but will participate in the interfund borrowing program
only as a borrower. Interfund loans normally will extend overnight, but
can have a maximum duration of seven days. A fund will borrow through the
program only when the costs are equal to or lower than the costs of bank
loans. Loans may be called on one day's notice, and the fund may have to
borrow from a bank at a higher interest rate if an interfund loan is called
or not renewed.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS (INTERMEDIATE AND HIGH
YIELD FUNDS ONLY). Each 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. Each fund
intends to comply with Section 4.5 of the regulations under the Commodity
Exchange Act, which limits the extent to which a fund can commit assets to
initial margin deposits and option premiums.
In addition, a fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 25% of a 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, a 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 a fund would exceed 5% of a
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 a fund's investments in futures contracts and
options, and a fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information and may be
changed as regulatory agencies permit.
FUTURES CONTRACTS. When a fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date.
When the fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and
sale will take place is fixed when the fund enters into the contract. Some
currently available futures contracts are based on specific securities,
such as U.S. Treasury bonds or notes, and some are based on indices of
securities prices, such as the Bond Buyer Municipal Bond Index. Futures
can be held until their delivery dates, or can be closed out before then if
a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the 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 the funds' investment limitations. In the event of the
bankruptcy of an FCM that holds margin on behalf of the 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.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, a fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the fund
pays the current market price for the option (known as the option premium).
Options have various types of underlying instruments, including specific
securities, indices of securities prices, and futures contracts. The fund
may terminate its position in a put option it has purchased by allowing it
to expire or by exercising the option. If the option is allowed to expire,
the fund will lose the entire premium it paid. If the fund exercises the
option, it completes the sale of the underlying instrument at the strike
price. The fund may also terminate a put option position by closing it out
in the secondary market at its current price, if a liquid secondary market
exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price
does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium
paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's
strike price. A call buyer typically attempts to participate in potential
price increases of the underlying instrument with risk limited to the cost
of the option if security prices fall. At the same time, the buyer can
expect to suffer a loss if security prices do not rise sufficiently to
offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When a fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the fund assumes the obligation to pay
the strike price for the option's underlying instrument if the other party
to the option chooses to exercise it. When writing an option on a futures
contract the fund will be required to make margin payments to an FCM as
described above for futures contracts. The fund may seek to terminate its
position in a put option it writes before exercise by closing out the
option in the secondary market at its current price. If the secondary
market is not liquid for a put option the fund has written, however, the
fund must continue to be prepared to pay the strike price while the option
is outstanding, regardless of price changes, and must continue to set aside
assets to cover its position.
If security prices rise, a put writer generally would expect to profit,
although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that
the writer will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the put writer would
expect to suffer a loss. This loss should be less than the loss from
purchasing the underlying instrument directly, however, because the premium
received for writing the option should mitigate the effects of the decline.
Writing a call option obligates a fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security
price increases.
COMBINED POSITIONS. A fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to
adjust the risk and return characteristics of the overall position. For
example, a fund may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose
risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at
one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult
to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a fund's current or
anticipated investments exactly. A fund may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the fund's other investments.
Option and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the 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.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract
at any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily
price fluctuation limits for options and futures contracts, and may halt
trading if a contract's price moves upward or downward more than the limit
in a given day. On volatile trading days when the price fluctuation limit
is reached or a trading halt is imposed, it may be impossible for the fund
to enter into new positions or close out existing positions. If the
secondary market for a contract is not liquid because of price fluctuation
limits or otherwise, it could prevent prompt liquidation of unfavorable
positions, and potentially could require the fund to continue to hold a
position until delivery or expiration regardless of changes in its value.
As a result, the 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 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
fund 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.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The funds will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and
if the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in
a segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a
result, there is a possibility that segregation of a large percentage of
the fund's assets could impede portfolio management or the fund's ability
to meet redemption requests or other current obligations.
SPECIAL FACTORS AFFECTING NEW YORK
The financial condition of the State of New York (the State), its public
authorities and public benefit corporations (the Authorities) and its local
governments, particularly The City of New York (the City), could affect the
market values and marketability of, and therefore the net asset value per
share and the interest income of, the funds, or result in the default of
existing obligations, including obligations which may be held by the funds.
The following section provides only a brief summary of the complex factors
affecting the financial situation in New York and is based on information
obtained from the State, certain of its Authorities, the City and certain
other localities, as publicly available on the date of this Statement of
Additional Information. The information contained in such publicly
available documents has not been independently verified. It should be
noted that the creditworthiness of obligations issued by local issuers may
be unrelated to the creditworthiness of the State, and that there is no
obligation on the part of the State to make payment on such local
obligations in the event of default in the absence of a specific guarantee
or pledge provided by the State.
The State and the City have been facing serious financial difficulties and
have each experienced recent declines in their credit standings. Standard
& Poor's Corporation and Moody's Investors Service Inc. have each
assigned ratings for the State's general obligation bonds that are among
the three lowest of the 50 states. The ratings of certain related debt of
other issuers for which the State has an outstanding moral obligation,
lease purchase, guarantee or other contractual obligation are generally
linked directly to the State's rating. Should the financial condition of
the State, its Authorities, or its local governments deteriorate, their
respective credit ratings could be further reduced, and the market value
and marketability of their outstanding notes and bonds could be adversely
affected, and their respective access to the public credit markets
jeopardized.
ECONOMIC FACTORS. New York is the second most populous state, and
historically has been one of the wealthiest states in the nation. However,
the State economy has grown more slowly than that of the nation as a whole,
resulting in the gradual erosion of its relative economic affluence (due to
factors such as relative costs for taxes, labor, and energy). The State's
manufacturing and maritime base have been seriously eroded, as illustrated
by the decline of the steel industry in the Buffalo area and of the apparel
and textile industries in the City. In addition, the City experienced
substantial socio-economic changes, as a large segment of its population
and a significant share of corporate headquarters and other businesses
relocated (many out-of-state).
Both the State and the City experienced substantial revenue increases in
the mid-1980s attributable directly (corporate income and financial
corporations taxes) and indirectly (personal income and a variety of other
taxes) to growth in new jobs, rising profits, and capital appreciation
derived from the finance sector of the City's economy. From 1977 to its
1988 peak, the finance, insurance, and real estate sectors rose 55%, to
account in 1988 for 23% of total earnings in the City and 14% statewide
(compared to 7% nationwide). The finance sector's growth was a catalyst
for the New York metropolitan region's related business and professional
services, retail trade and residential and commercial real estate markets.
The then rising real estate market contributed to City revenues, as higher
property values and new construction added to collections from property
taxes, mortgage recording, and transfer taxes and sales taxes on building
materials. The boom on Wall Street more than compensated for the continued
erosion of the State's (and the City's) manufacturing and maritime base,
since average wages in finance and related business and professional
services were substantially higher (thereby providing a net increase of
higher incomes, taxed at even higher marginal rates).
However, the effects of the October 1987 stock market crash and the 1990-92
national recession have had a disproportionately adverse impact on the New
York metropolitan region, as private sector job losses since 1989 have
offset all the prior employment gains of the 1980s. Declines in both
employment and earnings in the finance sector contributed to declines in
retail sales and real estate values. In addition, a number of widely
publicized bankruptcies among highly leveraged retailing, brokerage and
real estate development companies occurred. The effects of the recession
have extended to banking, insurance, business services (such as law,
accounting and advertising), publishing and communications. Factors which
may inhibit the City's economic recovery include (i) credit restraints
imposed by the weak financial condition of several major money center banks
located in the City; (ii) increases in combined State and local tax
burdens, if uncompetitive tax rates are imposed; (iii) perceived declines
in the quality of life attributable to service reductions and the
deterioration of the City's aging and dilapidated infrastructure; or (iv)
additional employment losses in the City's banking sector or corporate
headquarters complex due to further corporate relocations or
restructurings. The City's future economic condition will also likely be
affected by its competitive position as a world financial center (compared
to London, Tokyo, Frankfurt, and competing regional U.S. centers).
While the State's economy (the nation's second largest) is broader-based
than that of the City, particular industries are concentrated in and have a
disproportionate impact on certain areas, such as aerospace in Long Island,
heavy industry in Buffalo, photographic and optical equipment in Rochester,
machinery and transportation equipment in Syracuse and Utica-Rome,
computers in Binghamton and in the Mid-Hudson Valley, and electrical
equipment in Schenectedy. Of the six largest private employers in the
State outside the City, three derive a significant share of their revenues
from contracts with the Defense Department, whose budget (and contract
outlays) may be further reduced during the 1990s. In addition, State
government has a significant local economic impact on the Albany area and
on communities where state university campuses or corrections and mental
health facilities are located. Constraints on economic growth, taxpayer
resistance to proposed substantial increases in local tax rates, and
reductions in State aid in regions apart from the City have contributed to
financial difficulties for several county and other local governments.
These recent trends have had, and may continue to have, an adverse impact
on both State and local government revenue receipts. The adverse fiscal
impact on the State and its local governments (especially the City, Suffolk
County and Buffalo) of the 1990-92 national recession has been substantial,
and could worsen if the recession deepens or is protracted locally.
THE STATE. The State has been experiencing substantial financial
difficulties, with General Fund (the principal operating account) deficits
incurred in each of the past____ fiscal years (ending _____). The State's
accumulated General Fund deficit (on a GAAP-basis) grew 91% from FY1986-87
to FY1990-91, and reached a then-record $6.265 billion (audited) by March
31, 1991. Due largely to the accounting treatment of State aid to local
governments now paid by New York State Local Government Assistance
Corporation (as described below), the State had a General Fund surplus (on
a GAAP basis) of $1.668 billion in FY1991-92 (although the State issued
$531 million of its deficit notes at fiscal year end to avert a cash-basis
deficit). As a consequence, the accumulated General Fund deficit at March
31, 1992 was restated to be $4.616 billion. In the process of adopting the
FY1992-93 budget, the State was required to close a potential $4.8 billion
revenue and expenditure gap. While the State is expected to end FY1992-93
with a modest cash basis surplus for FY1992-93, published reports indicate
that it faces a potential $3.7 billion gap in preparing a FY1993-94 budget.
There can be no assurance that the State will not face budget gaps in
future years, resulting from a disparity between tax revenues projected
from a lower recurring-receipts base and the spending required to maintain
State programs at current levels. Furthermore, the State is a party to
numerous lawsuits in which an adverse decision could require extraordinary
expenditures. Certain major budgetary considerations affecting the State
are outlined below.
REVENUE BASE. The State's principal revenue sources are economically
sensitive, and include the personal income tax (55% of estimated FY1992-93
General Fund tax receipts), user taxes and fees (16%), and business taxes
(19%). One-fourth of the 4% State sales tax has been dedicated to pay debt
service of the New York Local Government Assistance Corporation, and has
correspondingly reduced General Fund receipts. Capital gains are a
significant component of income tax collections. Auto sales and building
materials are significant components of retail sales tax collections. Tax
rates are relatively high and may impose political and economic constraints
on the ability of the State to further increase its taxes. State
legislation enacted in 1987 phased in a reduction in the top rate of the
State's personal income tax; these tax cuts have substantially reduced the
recurring revenues of the State. The final phase-in (originally scheduled
for October 1990) has been deferred three times, and is currently scheduled
for 1993. If the additional personal income tax rate cut is implemented
as scheduled and the surcharge on business income is reduced from the
current 15% to 10% as required by current law, State receipts could fall by
approximately $1 billion. In the absence of countervailing economic growth
or expenditure cuts such actions could make the achievement of a balanced
State budget more difficult in future years.
STATE DEBT. The State has the heaviest debt burden of any state (with
nearly $5.0 billion of general obligation and $16.8 billion of
lease-purchase or other contractual debt outstanding as of June 30, 199_),
and debt service costs absorb a large share of the State's budget. The
State is also obligated with respect to nearly $8.2 billion for statutory
moral obligations for 9 of its Authorities and for guarantees of $498
million of other Authority debt. In addition, the State has one of the
largest seasonal financing requirements of any municipal issuer, and is
required each spring to borrow substantial sums from public credit markets
to finance its accumulated General Fund deficit and its scheduled payments
of aid to local governments and school districts. No assurance can be
given that the State will be able to continue to meet its financing
requirements in the public credit markets at the times or in the amounts
required. The annual Spring Borrowing is contingent on the certification
by the State Comptroller that the newly adopted State budget is balanced.
Prior delays in the Spring Borrowing in recent years owing to delayed
enactment of the State budget have resulted in delays in the scheduled
payments of State aid and have consequently caused various local
governments and school districts to experience cash flow difficulties. For
the_____ consecutive year, a growing budget gap caused the State at the end
of its fiscal year to issue $___ million of its short-term notes (payable
from the next year's tax receipts) to finance its FY______ deficit. The
State recently created the New York State Local Government Assistance
Corporation (LGAC) as a financing vehicle to reduce the State's seasonal
financing needs by having LGAC finance the State's local assistance
payments by issuing long-term debt, payable over 30 years from a portion of
the State sales tax. The enabling legislation for LGAC contains a covenant
restricting the amount of the State's Spring Borrowing, which may reduce
the State's fiscal flexibility.
BUDGETARY FLEXIBILITY. A major share of the State's General Fund budget is
accounted for by contractually required expenses (such as pension and debt
service costs) and by federally mandated programs (such as AFDC and
Medicaid). In addition, State aid for school districts comprises a major
share of the budget, and total appropriations and distribution of such aid
is especially contentious politically. Furthermore, the State has utilized
a substantial range of actions of a non-recurring nature in recent years to
finance its General Fund operations, including tapping excess monies in
special funds, refinancing outstanding debt to reduce reserve fund
requirements and current (but not long-term) debt service costs,
recalculating pension fund contributions, selling state assets, reimbursing
past General Fund expenditures by the issuance of Authority debt, and
deferring payment for expenditures to future fiscal years. Such actions
may have reduced the State's ability to respond to unanticipated events in
the future.
POLITICAL FACTORS. Political control of the Legislature has been divided
between the Senate and the Assembly for most of the State's recent history,
and has contributed to protracted State budget negotiations that have
delayed enactment of the State budget past the April 1 constitutional
deadline in each of the past eight years. In addition, the independently
elected State Comptroller audits state agencies, Authorities and local
governments, and issues reports from time to time that may result in
adverse publicity or conflicting fiscal projections.
LABOR COSTS. The State government workforce is mostly unionized, subject
to the Taylor Law which authorizes collective bargaining and prohibits (but
has not historically prevented) strikes and work slowdowns. Costs for
employee health benefits have increased substantially, and can be expected
to further increase. The State has a substantial unfunded liability for
future pension benefits, and has utilized changes in its pension fund
investment return assumptions to reduce current contribution requirements.
If such investment earnings assumptions are not sustained by actual
results, additional State contributions will be required in future years to
meet the State's contractual obligations.
PUBLIC ASSISTANCE. The State has the second largest number of persons
receiving public assistance (AFDC and Home Relief) of any state. AFDC
costs are shared among the federal government, the State and its counties
(including the City) by statutory formula. Caseloads tend to rise
significantly during economic downturns, but have fallen only in the later
stages of past economic recoveries.
MEDICAID. The State participates in the federal Medicaid program under a
state plan approved by the Health Care Financing Administration. The
federal government provides 50% of eligible program costs, with the
remainder shared by the State and its counties (including the City). The
Governor has proposed that the State assume local costs for Medicaid, but
enabling legislation has not yet been adopted. Basic program eligibility
and benefits are determined by federal guidelines, but the State provides a
number of optional benefits and expanded eligibility. Program costs have
increased substantially in recent years, and account for a rising share of
the State budget. Federal law requires the State adopt reimbursement rates
for hospitals and nursing homes that are reasonable and adequate to meet
the costs that must be incurred by efficiently and economically operated
facilities in providing patient care, a standard that has led to past
litigation by hospitals and nursing homes seeking higher reimbursement from
the State. Cutbacks in State spending for Medicaid may adversely affect
the financial condition of hospitals and health care institutions that are
the obligors of bonds that may be held by the funds.
ENERGY COSTS. Increases in energy costs, especially for heating oil and
gasoline, may exceed budgeted amounts. Such costs are related to the
severity of winter conditions and to international developments affecting
the petroleum market.
ENVIRONMENTAL PROTECTION. Federal legislation and Environment Protection
Agency regulations mandate compliance with various standards for air and
water pollution and hazardous wastes. Many jurisdictions within the State
(including the City) are not in compliance with such standards, and are
subject to a range of penalties. No assurance can be given that the State
or its local governments will meet such standards within the current
deadlines for compliance under such regulations or consent decrees, or that
such deadlines will be further extended. The costs of compliance are
substantial, as may be the costs of penalties that may be imposed on the
State or its local governments.
THE STATE AUTHORITIES. The State's Authorities are not subject to the
constitutional restrictions on the incurrence of debt which apply to the
State itself, and may issue bonds and notes within the amounts of, and as
otherwise restricted by, their legislative authorization. The New York
State Public Authorities Control Board approves the issuance of debt and
major contracts by ten of the Authorities. As of September 30, 1991, there
were 17 Authorities that had outstanding debt of $100 million or more, the
aggregate debt of which (including refunding bonds and moral obligation or
State-guaranteed debt) then totaled approximately $57.1 billion. In recent
years the State has provided financial assistance through appropriations,
in some cases of a recurring nature, to certain Authorities for operating
and other expenses and, (from 1976 to 1987) in fulfillment of its
commitments on moral obligation indebtedness or otherwise, for debt
service. The State has budgeted operating assistance of approximately $___
million for the Metropolitan Transportation Authority (MTA) and $__ million
for four other Authorities (including the State Housing Finance Agency and
the State Urban Development Corporation) during FY________. This assistance
is expected to continue to be required (and may increase) in future years.
Failure by the State to appropriate necessary amounts or to take other
action to permit the Authorities to meet their obligations could result in
a default by one or more of the Authorities (as happened in 1975 by the
Urban Development Corporation).
The MTA, where credit standing was recently cut, oversees the operation of
the City's subway and bus lines by its affiliates, the New York City
Transit Authority and the Manhattan and Bronx Surface Transit Operating
Authority (collectively, the "TA"). MTA subsidiaries operate certain
commuter rail and bus lines in the New York metropolitan area. An
affiliated agency, the Triborough Bridge and Tunnel Authority (TBTA),
operates certain intrastate toll bridges and tunnels. To maintain its
facilities and equipment, which deteriorated significantly in the late
1970s due to deferred maintenance, the MTA prepares a four year capital
program subject to approval by the MTA Capital Program Review Board. The
proposed 1992-1996 program (rejected by the Review Board) projected total
spending requirements of $10 billion, but identified only $6 billion in
potential funding. The MTA is facing a substantial budget deficit in 1993
(not accounting for any wage increase) in TA operations due to a falloff in
ridership, reduced collections from dedicated taxes (mortgage recording and
realty transfer taxes) and reduced State and City aid. Because fares are
not sufficient to finance its mass transit operations, the MTA has depended
and will continue to depend for operating support upon a system of State,
local government and TBTA support, and, to the extent available, federal
assistance (including loans, grants and operating subsidies). A regional
business tax surcharge, which provided $59 million in revenues to the MTA
in 1991, is scheduled to expire, unless extended by the Legislature, in
November 1993. In addition, the City provides a substantial subsidy to the
TA. There can be no assurance that any such assistance will continue at
any particular level or in any fixed relationship to the operating costs
and capital needs of the MTA.
THE CITY. In the early 1970s, the City incurred substantial operating
deficits, and its financial controls, accounting practices, and disclosure
policies were widely criticized. In 1975, the City encountered severe
financial difficulties and lost access to the public credit markets. The
State Legislature responded in 1975 by creating the Municipal Assistance
Corporation For The City of New York (MAC) to provide financing assistance
for the City and the Financial Control Board to exercise certain oversight
and review functions with respect to the City's finances. The Financial
Control Board's powers over the City were suspended in June 1986, but would
be reinstated (under current law) if the City experiences certain adverse
financial circumstances. At the time of the fiscal crisis, the State
provided substantial financial assistance to the City, the federal
government provided the City with direct seasonal loans and guarantees on
the City's long-term debt, and the City's labor unions accepted deferrals
of wage increases and approved purchases of City bonds by the pension
funds. No assurance can be given that similar assistance would again be
made available if needed, particularly given the current budgetary
constraints faced by both the federal and State governments.
The City provides services usually undertaken by counties, school districts
or special districts in other large urban areas. State law requires the
City to allocate at least 40% of its General Fund to Board of Education
operations, and mandates the City to assume the local share of public
assistance and Medicaid costs. The City had GAAP operating surpluses of
$567 million in FY1987, $225 million in FY1988, $409 million in FY1989,
$253 million in FY1990, $27 million in FY1991 and $570 million in FY1992
before discretionary transfers and expenditures. The City has experienced
substantial financial difficulties in the early 1990s, primarily related to
the impact of the recession on the local economy (reducing revenues from
most major taxes and increasing public assistance and Medicaid caseloads),
rising health care costs for City employees and for Medicaid, and the
repeated deferral of the sale of the New York Coliseum site to a private
developer. In response, the City implemented gap-closing programs in FY1990
and in FY1991 which enabled the City to offset a potential $3.2 billion
deficit in FY1991 and to achieve modest GAAP surpluses in those years. The
programs initially relied primarily on actions of a non-recurring nature,
but included substantial property tax rate increases and a personal income
tax surcharge imposed in FY1991 and selected service cutbacks. Reductions
in State aid, larger than budgeted labor settlements and increased police
expenditures added to the adverse budgetary impact of the local recession,
confronting the City with a potential $3.3 billion imbalance during FY1992
budget negotiations. This initial budget gap was closed by adoption of a
budget providing for various tax increases and significant service
reductions. Aid to nonprofit cultural institutions in the City was
significantly reduced (as was State aid to such institutions), including
certain institutions that are obligors of bonds that may be held by the
funds.
The City's four year financial plan for FY1993-FY1996 (as modified by the
Mayor's preliminary budget for FY1994), while projecting a modest budget
surplus for FY1993, recommended measures to close a potential budget gap of
$2.1 billion in FY1994; the Mayor further identified potential budget gaps
in later fiscal years (rising to $3.8 billion in FY1996). ` The plan
contained numerous assumptions concerning factors which may impact the
City's budget, such as: the willingness and ability of MAC to take actions
necessary in transitional funding for FY1994 and FY1995; the willingness
and ability of the federal and State governments to provide financial
assistance and to take other actions contemplated by the City; the ultimate
disposition of the City's wage settlements (which could be determined
through binding arbitration); the performance of the City economy
(particularly to the extent tax collections and public assistance caseloads
are affected); and the extent actual earnings on pension fund assets are
consistent with the 9% return assumed in determining the currently planned
level of required City contributions. No assurance can be given that the
assumptions used by the City will be realized. Furthermore, actions taken
in recent fiscal years to avert deficits may have reduced the City's
flexibility in responding to future budgetary imbalances, and have deferred
certain expenditures to later fiscal years.
The City projects that local revenues will provide approximately 68% of
total revenues in FY1993 while Federal aid, including categorical grants,
will provide 11% and State aid, including unrestricted aid and categorical
grants, will provide 21%. As a proportion of total revenues, State aid
remained relatively constant over the period from 1980 to 1990, while
federal aid was sharply reduced (having provided nearly 20% of total FY1980
revenues). The largest source of the City's revenues is the real estate
tax (approximately 26% of total revenues for FY1993), at rates levied by
the City Council (subject to certain State constitutional limits). In the
event of a reduction in total assessments, higher tax rates would be
required to maintain the same amount of tax revenue. The City derives the
remainder of its tax revenues from a variety of other economically
sensitive local taxes (subject to authorization by the Legislature),
including: a local sales and compensating use tax (dedicated primarily to
MAC debt service) imposed in addition to the State's tax; the personal
income tax on City residents and the earnings tax on non-residents; a
general corporation tax; and a financial corporation tax. High tax burdens
in the City impose political and economic constraints on the ability of the
City to increase local tax rates.
The City is the largest municipal debt issuer in the nation, and has more
than doubled its debt load since the end of FY1986, in large measure to
rehabilitate its extensive, aging physical plant. The City's seasonal
borrowing needs increased significantly during FY1990 and FY1991, largely
due to delayed State aid payments, and totalled $2.25 billion in FY1993.
The City's current $19.1 billion capital financing program (most of which
would be used to reimburse the City's general fund for capital expenditures
the City expects to incur) reflects major reductions in the City's 1993-96
capital plan, which will reduce future debt service requirements, but may
adversely affect the condition of its deteriorating physical plant. No
assurance can be given that the credit markets will absorb the projected
amounts of City obligations, which are essential if the City is to meet its
planned operating and capital expenditures. Furthermore, the ability of
the City to obtain credit enhancement and to sell its bonds at favorable
interest rates is constrained by capacity limits established by the major
bond insurance companies and reinsurers to limit their credit exposure
risks.
A voter-approved study of secession by Staten Island (one of five
counties/boroughs, comprising 4% of the City's population and 19% of its
land area) is being undertaken, and State law provides a complex mechanism
for such secession. The State Legislature is also considering
establishment of a similar secession mechanism for Queens.
OTHER LOCALITIES. The State provides substantial financial assistance to
its political subdivisions, totalling approximately 71% of General Fund
disbursements in the State's FY1991-92, primarily for aid to elementary,
secondary and higher education (49% of local assistance) and Medicaid and
income maintenance (36%). The Legislature has enacted substantial
reductions from previously budgeted levels of State aid since December
1990. To the extent the State is constrained by its financial condition,
State assistance to localities may be further reduced, compounding the
serious fiscal constraints already experienced by many local governments.
Localities also face anticipated and potential problems resulting from
pending litigation (including challenges to local property tax
assessments), judicial decisions and socio-economic trends.
At December 31, 1991, the total indebtedness of all localities in the
State, other than New York City, was approximately $13.3 billion. A small
portion (approximately $51 million) of this indebtedness represented
borrowing to finance budgetary deficits issued pursuant to enabling State
legislation (requiring budgetary review by the State Comptroller.
Seventeen localities had outstanding indebtedness for deficit financing at
the close of their fiscal year ending 1990 (compared to 11 in 1988).
Subsequently, certain counties and other local governments have encountered
significant financial difficulties, including the counties of Suffolk
(whose long-term debt ratings were reduced below investment grade by
Standard & Poor's for several months during 1991), Nassau, Monroe, and
Westchester, and the City of Buffalo. The State has imposed financial
control on New York City from 1977 to 1986 and on the City of Yonkers since
1984 under an appointed control board in response to fiscal crises
encountered by such municipalities. The Legislature imposed certain
limited fiscal restraints on Nassau and Suffolk Counties, and authorized
their issuance of deficit bonds to finance over several years their
respective 1992 operating deficits.
SPECIAL FACTORS AFFECTING PUERTO RICO
The following only 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
Statement of Additional Information. FMR has not independently verified any
of the information contained in such official statements, prospectuses and
other publicly available documents, but is not aware of any fact which
would render such information materially inaccurate.
The economy of Puerto Rico is closely linked with that of the United
States, and in fiscal 1992 trade with the United States accounted for
approximately 88% of Puerto Rico's exports and approximately 68% of its
imports. In this regard, in fiscal 1992 Puerto Rico experienced a
$2,940,300,000 positive adjusted merchandise trade balance. Since fiscal
1987 personal income, both aggregate and per capita, have increased
consistently each fiscal year. In fiscal 1992 aggregate personal income was
$22.7 billion and personal per capita income was $6,360. Gross domestic
product in fiscal 1989, 1990, 1991 and 1992 was $19,954,000, $21,619,000,
22,857,000, and $23,620,000 respectively. For fiscal 1993, an increase in
gross domestic product of 2.9% over fiscal 1992 is forecasted. However,
actual growth in the Puerto Rico economy will depend on several factors
including the condition of the U.S. economy, the exchange rate for the U.S.
dollar, the price stability of oil imports, and interest rates. Due to
these factors there is no assurance that the economy of Puerto Rico will
continue to grow.
Puerto Rico has made marked improvements in fighting unemployment.
Unemployment is at a low level compared to that of the late 1970s, but it
still remains significantly above the United States average. Despite long
term improvements the unemployment rate rose from 15.2% to 16.5% from
fiscal 1991 to fiscal 1992. At the end of the third quarter of fiscal 1993
the unemployment rate in Puerto Rico stood at 17.3%. There is a possibility
that the unemployment rate will continue to increase.
The economy of Puerto Rico has undergone a transformation in the later half
of this century from one centered around agriculture, to one dominated by
the manufacturing and service industries. Manufacturing is the cornerstone
of Puerto Rico's economy, accounting for $13.2 billion or 38.7% of gross
domestic product in 1992. However, manufacturing has experienced a basic
change over the years as a result of the influx of higher wage, high
technology industries such as the pharmaceutical industry, electronics,
computers, micro-processors, scientific instruments and high technology
machinery. The service sector, which includes wholesale and retail trade,
finance and real estate, ranks second in its contribution to gross domestic
product and is the sector that employs the greatest number of people. In
fiscal 1992, the service sector generated $13.0 billion in gross domestic
product or 38.3% of the total and employed over 449,000 workers providing
46% of total employment. The government sector and tourism also contribute
to the island economy each accounting for $3.7 billion and $1.5 billion in
fiscal 1992, respectively.
Much of the development of the manufacturing sector of the economy of
Puerto Rico is attributable to federal and Commonwealth tax incentives,
most notably section 936 of the Internal Revenue Code of 1986, as amended
("Section 936") and the Commonwealth's Industrial Incentives Program.
Section 936 currently grants U.S. corporations that meet certain criteria
and elect its application a credit against their U.S. corporate income tax
on the portion of the tax attributable to (i) income derived from the
active conduct of a trade or business in Puerto Rico ("active income"), or
from the sale or exchange of substantially all the assets used in the
active conduct of such trade or business, and (ii) qualified possession
source investment income ("passive income"). The Industrial Incentives
Program, through the 1987 Industrial Incentives Act, grants corporations
engaged in certain qualified activities a fixed 90% exemption from
Commonwealth income and property taxes and a 60% exemption from municipal
license taxes.
On August 16, 1993, President Clinton signed a bill amending Section 936.
Under the amendments, U.S. corporations with operations in Puerto Rico can
elect to receive a federal income tax credit equal to: 40% of the credit
currently available, phased in over a five year period, starting at 60% of
the current credit, or a credit based on investment and wages. The
investment and wage credit would equal the sum of (i) 60% of qualified
compensation to employees, (ii) a specified percentage of depreciation
deductions with respect to tangible property located in Puerto Rico, and
(iii) a portion of income taxed paid to Puerto Rico, up to a 9% effective
tax rate, subject to certain requirements. It is not possible to determine
at this time whether the reductions in tax incentives for operations in
Puerto Rico will have a significant impact on the economy of Puerto Rico or
the time period in which such impact would arise.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed on
behalf of the funds by FMR (either directly or through affiliated
sub-advisers) pursuant to authority contained in each fund's management
contract. FMR is also responsible for the placement of transaction orders
for other investment companies and accounts for which it or its affiliates
act as investment adviser. Securities purchased and sold by the money
market fund generally will be traded on a net basis (i.e., without
commission). In selecting broker-dealers, subject to applicable
limitations of the federal securities laws, FMR will consider various
relevant factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer firm; the broker-dealer's
execution services rendered on a continuing basis; and the reasonableness
of any commissions.
The funds may execute portfolio transactions with broker-dealers who
provide research and execution services to the funds or other accounts over
which FMR or its affiliates exercise investment discretion. Such services
may include advice concerning the value of securities; the advisability of
investing in, purchasing, or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses
and reports concerning issuers, industries, securities, economic factors
and trends, portfolio strategy, and performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such
as clearance and settlement). FMR maintains a listing of broker-dealers
who provide such services on a regular basis. However, as many
transactions on behalf of the money market fund are placed with
broker-dealers (including broker-dealers on the list) without regard to the
furnishing of such services, it is not possible to estimate the proportion
of such transactions directed to such broker-dealers solely because such
services were provided. The selection of such broker-dealers generally is
made by FMR (to the extent possible consistent with execution
considerations) based upon the quality of research and execution services
provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the funds may be useful to FMR in rendering investment management
services to the funds or its other clients, and, conversely, such research
provided by broker-dealers who have executed transaction orders on behalf
of other FMR clients may be useful to FMR in carrying out its obligations
to the funds. The receipt of such research has not reduced FMR's normal
independent research activities; however, it enables FMR to avoid the
additional expenses that could be incurred if FMR tried to develop
comparable information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause
the funds to pay such higher commissions, FMR must determine in good faith
that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or FMR's overall
responsibilities to the funds and its other clients. In reaching this
determination, FMR will not attempt to place a specific dollar value on the
brokerage and research services provided, or to determine what portion of
the compensation should be related to those services.
FMR is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the funds, or shares of other Fidelity
funds, to the extent permitted by law. FMR may use research services
provided by and place agency transactions with Fidelity Brokerage Services,
Inc. (FBSI), a member of the New York Stock Exchange and subsidiary of FMR
Corp., if the commissions are fair and reasonable and comparable to
commissions charged by non-affiliated, qualified brokerage firms for
similar services.
Section 11(a) of the Securities Exchange Act of 1934 prohibits members of
national securities exchanges from executing exchange transactions for
accounts which they or their affiliates manage, except in accordance with
regulations of the SEC. Pursuant to such regulations, the Board of
Trustees has approved a written agreement that permits FBSI to effect
portfolio transactions on national securities exchanges and to retain
compensation in connection with such transactions. For the fiscal periods
February 1, 1993 to January 31, 1994, May 1, 1992 to January 31, 1993, and
May 1, 1991 to April 30, 1992, the funds paid no brokerage commissions.
The Trustees periodically review FMR's performance of its responsibilities
in connection with the placement of portfolio transactions on behalf of the
funds and review the commissions paid by each fund over representative
periods of time to determine if they are reasonable in relation to the
benefits to each fund.
For fiscal 1994 and 1993, the high yield fund's turnover rates were __% and
35%, respectively. For fiscal 1994, the intermediate fund's portfolio
turnover rate was ___%.
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 the funds are substantially the same
as those of other funds managed by FMR, investment decisions for each fund
are made independently from those of other funds managed by FMR or accounts
managed by FMR affiliates. It sometimes happens that the same security is
held in the portfolio of more than one of these funds or accounts.
Simultaneous transactions are inevitable when several funds are managed by
the same investment adviser, particularly when the same security is
suitable for the investment objective of more than one fund.
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 a formula considered by the officers of the funds involved to be
equitable to each fund. In some cases, this system could have a
detrimental effect on the price or value of the security as far as the
funds are 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 the funds outweighs
any disadvantages that may be said to exist from exposure to simultaneous
transactions.
VALUATION OF PORTFOLIO SECURITIES
INTERMEDIATE AND HIGH YIELD FUNDS. Valuations of portfolio securities
furnished by the pricing service employed by the intermediate and high
yield funds are based upon a computerized matrix system or appraisals by
the pricing service, in each case in reliance upon information concerning
market transactions and quotations from recognized municipal securities
dealers. The methods used by the pricing service and the quality of
valuations so established are reviewed by officers of the fund and FSC
under the general supervision of the Board of Trustees. There are a number
of pricing services available, and the Trustees, or officers acting on
behalf of the Trustees, on the basis of on-going evaluation of these
services, may use other pricing services or discontinue the use of any
pricing service in whole or in part.
MONEY MARKET FUND. The fund values its investments on the basis of
amortized cost. This technique involves valuing an instrument at its cost
as adjusted for amortization of premium or accretion of discount rather
than its value based on current market quotations or appropriate
substitutes which reflect current market conditions. The amortized cost
value of an instrument may be higher or lower than the price the fund would
receive if it sold the instrument.
Valuing the fund's instruments on the basis of amortized cost and use of
the term "money market fund" are permitted by Rule 2a-7 under the 1940 Act.
The fund must adhere to certain conditions under Rule 2a-7.
The Board of Trustees of the trusts oversee FMR's adherence to SEC rules
concerning money market funds, and has established procedures designed to
stabilize the fund's NAV at $1.00. At such intervals as they deem
appropriate, the Trustees consider the extent to which NAV calculated by
using market valuations would deviate from $1.00 per share. If the
Trustees believe that a deviation from the fund's amortized cost per share
may result in material dilution or other unfair results to shareholders,
the Trustees have agreed to take such corrective action, if any, as they
deem appropriate to eliminate or reduce, to the extent reasonably
practicable, the dilution or unfair results. Such corrective action could
include selling portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; withholding
dividends; redeeming shares in kind; establishing NAV by using available
market quotations; and such other measures as the Trustees may deem
appropriate.
During periods of declining interest rates, the fund's yield based on
amortized cost may be higher than the yield based on market valuations.
Under these circumstances, a shareholder in the fund would be able to
obtain a somewhat higher yield than would result if the fund utilized
market valuations to determine its NAV. The converse would apply in a
period of rising interest rates.
PERFORMANCE
The funds may quote performance in various ways. All performance
information supplied by the funds in advertising is historical and is not
intended to indicate future returns. The high yield fund's share price,
and both of the funds' yields and total returns fluctuate in response to
market conditions and other factors. The value of the high yield fund
shares when redeemed may be more or less than their original cost.
YIELD CALCULATIONS. To compute the MONEY MARKET FUND'S yield for a period,
the net change in value of a hypothetical account containing one share
reflects the value of additional shares purchased with dividends from the
one original share and dividends declared on both the original share and
any additional shares. The net change is then divided by the value of the
account at the beginning of the period to obtain a base period return.
This base period return is annualized to obtain a current annualized yield.
The money market fund may also 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.
For the INTERMEDIATE AND HIGH YIELD FUNDS, yields used in advertising are
computed by dividing a fund's interest income for a given 30-day or one
month period, net of expenses, by the average number of shares entitled to
receive dividends during the period, dividing this figure by a fund's net
asset value per share 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 high yield fund's .50% redemption fee,
which applies to shares held less than 180 days. Income is calculated for
purposes of the intermediate and high yield funds' 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 purposes of calculating the intermediate and high
yield funds' yields 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 intermediate
and high yield funds' yields may not equal their distribution rates, the
income paid to your account, or the income reported in each fund's
financial statement.
A fund's tax-equivalent yield is the rate an investor would have to earn
from a fully taxable investment after taxes to equal the fund's tax-free
yield. Tax-equivalent yields are calculated by dividing a fund's yield by
the result of one minus a stated federal or combined federal, state, and
city tax rate. (If only a portion of the 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 1994. They
show 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 2.0% to 8.0%. Of course,
no assurance can be given that a fund will achieve any specific
tax-equivalent yield. While each fund invests principally in obligations
whose interest is exempt from federal income tax, other income received by
the funds may be taxable.
Use this table to find your approximate effective tax bracket on investment
income as a New York resident with triple taxes (federal, state, and New
York City) or double taxes (federal and state) for 1994.
1994 TAX RATES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Marginal Federal New York New York New York
Taxable Income Taxable Income Income Marginal City Income State Income
Single Return* Joint Return* Tax Bracket Tax Bracket Tax Bracket Tax Bracket
</TABLE>
Double Triple
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
$22,101 -$25,000 $36,901 - $45,000 28% 12.28% 7.88% 33.67% 36.83%
25,001 - 53,500 45,001 - 89,500 28% 12.28% 7.88% 33.67% 36.84%
53,501 - 60,000 89,501 -108,000 31% 12.28% 7.88% 36.43% 39.47%
60,001 -115,000 108,001 - 140,000 31% 12.28% 7.88% 36.43% 39.51%
115,001 -250,000 140,001 - 250,000 36% 12.28% 7.88% 41.04% 43.89%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
250,001 - + 250,001 - + 39.6% 12.28% 7.88% 44.36% 47.05%
</TABLE>
*Taxable income (gross income after all exemptions, adjustments, and
deductions) based on 1993 tax rates.
Having determined your effective tax bracket, use the appropriate table
below to determine the tax-equivalent yield for a given tax-free yield.
NEW YORK CITY RESIDENTS - TRIPLE TAXES - 1994
If your effective combined federal, state, and New York City personal
income tax rate in 1994 is:
36.83% 36.84% 39.47% 39.51% 43.89 47.05
<TABLE>
<CAPTION>
<S> <C>
To match these
tax-free yields: Your taxable investment would have to earn the following yield:
</TABLE>
2% 3.17% 3.17% 3.30% 3.31% 3.56% 3.78%
3% 4.75% 4.75% 4.96% 4.96% 5.35% 5.67%
4% 6.33% 6.33% 6.61% 6.61% 7.13% 7.55%
5% 7.92% 7.92% 8.26% 8.27% 8.91% 9.44%
6% 9.50% 9.50% 9.91% 9.92% 10.69% 11.33%
7% 11.08% 11.08% 11.56% 11.57% 12.48% 13.22%
8% 12.66% 12.66% 13.22% 13.23% 14.26% 15.11%
NEW YORK STATE RESIDENTS (OUTSIDE NYC) - DOUBLE TAXES - 1994
If your effective combined federal and state personal income tax rate in
1994 is:
33.67% 36.43% 41.04% 44.36%
<TABLE>
<CAPTION>
<S> <C>
To match these
tax-free yields: Your taxable investment would have to earn the following yield:
</TABLE>
2% 3.02% 3.15% 3.39% 3.59%
3% 4.52% 4.72% 5.09% 5.39%
4% 6.03% 6.29% 6.78% 7.19%
5% 7.54% 7.87% 8.48% 8.99%
6% 9.05% 9.44% 10.18% 10.78%
7% 10.55% 11.01% 11.87% 12.58%
8% 12.06% 12.59% 13.57% 14.38%
Each 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 yields will be lower. In the tables above,
tax-equivalent yields are calculated assuming investments are 100%
federally and state tax-free.
Yield information may be useful in reviewing the funds' performance and in
providing a basis for comparison with other investment alternatives.
However, each fund's yield fluctuates, unlike investments that pay a fixed
interest rate over a stated period of time. When comparing investment
alternatives, investors should also note the quality and maturity of the
portfolio securities of the respective investment companies that 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.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of a fund's returns, including the effect of reinvesting dividends
and capital gain distributions (if any), and any change in the fund's net
asset value per share (NAV) over the period. Average annual total returns
are calculated by determining the growth or decline in value of a
hypothetical historical investment in a fund over a stated period, and then
calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative total return of 100%
over ten years would produce an average annual total return of 7.18%, which
is the steady annual rate of return that would equal 100% growth on a
compounded basis in ten years. While average annual total returns are a
convenient means of comparing investment alternatives, investors should
realize that a fund's performance is not constant over time, but changes
from year to year, and that average annual total returns represent averaged
figures as opposed to the actual year-to-year performance of the fund.
In addition to average annual 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. An example of this type of
illustration is given below. Total returns, yields, and other performance
information may be quoted numerically or in a table, graph, or similar
illustration, and may omit or include the effect of each fund's $5.00
account closeout fee and, with respect to the high yield fund, the .50%
redemption fee applicable to shares held less than 180 days, or other
charges for special transactions or services. Omitting fees and charges
will cause the funds' total return figures to be higher.
NET ASSET VALUE. Charts and graphs using a bond fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted NAV includes any distributions paid by 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.
HISTORICAL RESULTS. The following table shows the funds' total returns for
the periods ended January 31, 1994. Figures include the effect of each
fund's $5.00 account closeout fee based on an average size account.
Figures for the high yield fund do not include the effect of the fund's
.50% redemption fee, applicable to shares held less than 180 days.
Average Annual Total Returns Cumulative Total Returns
One Life of One Life of
Year Fund* Year Fund*
Money Market Fund
Intermediate Fund
High Yield Fund
*The funds commenced operations on February 3, 1990 (money market and high
yield funds), and ________, 199_ (intermediate fund).
The money market fund's seven-day yield as of January 31, 1994 was____%,
with a corresponding tax-equivalent yield of ____%. The intermediate
fund's 30-day yield as of January 31, 1994 was __% with a corresponding
tax-equivalent yield of __%. The high yield fund's 30-day yield as of
January 31, 1994 was ____%, with a corresponding tax-equivalent yield of
____%. The tax-equivalent yields are based on the highest 1994 combined
federal, New York State, and New York City income tax rate of _____%. These
figures do not reflect the funds' $5.00 account closeout fees.
The following tables show the income and capital elements of each fund's
total return from February 3, 1990 (commencement of operations for money
market and high yield fund), and December __, 1993 (commencement of
operations for intermediate fund) through January 31, 1994. The tables
compare each fund's return to the record of the Standard & Poor's 500
Composite Stock Price Index (S&P 500), the Dow Jones Industrial Average
(DJIA), and the cost of living (measured by the Consumer Price Index, or
CPI) over the same period. The S&P 500 and DJIA comparisons are
provided to show how each fund's total return compared to the return of a
broad average of common stocks and a narrower set of stocks of major
industrial companies, respectively, over the same period. Of course, since
the funds invest in money market and fixed-income securities, common stocks
represent a different type of investment from the funds. Common stocks
generally offer greater potential growth than the funds, but generally
experience greater price volatility, which means a greater potential for
loss. In addition, common stocks generally provide lower income than a
money market or bond fund investment such as the funds. The S&P 500
and DJIA are based on the prices of unmanaged groups of stocks and, unlike
the funds' returns, their returns do not include the effect of paying
brokerage commissions or other costs of investing.
MONEY MARKET FUND. During the period February 3, 1990 (commencement of
operations) through January 31, 1994, a hypothetical $10,000 investment in
the fund would have grown to $______, assuming all distributions were
reinvested. This was a period of widely fluctuating interest rates and
bond prices, and should not be considered representative of the divided
income or capital gain or loss that could be realized from an investment in
the fund today.
SPARTAN NEW YORK MUNICIPAL MONEY MARKET PORTFOLIO INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total of
Ended Investment Distributions Distributions Value S&P DJIA Living**
500
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1/31/91* $10,000
1/31/92 10,000
1/31/93 10,000
1/31/94 10,000
</TABLE>
* From February 3, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on February
3, 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 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 (dividends) for the period would
have amounted to $______. The fund did not distribute any capital gains
during the period. If FMR had not reimbursed certain fund expenses, the
fund's total returns would have been lower. The figures in the table do
not include the effect of the fund's $5.00 account closeout fee.
HIGH YIELD FUND. During the period February 3, 1990 (commencement of
operations) through January 31, 1994, a hypothetical $10,000 investment in
the fund would have grown to $_____, assuming all distributions were
reinvested. This was a period of widely fluctuating interest rates and
bond prices and should not be considered representative of the dividend
income or capital gain or loss that could be realized from an investment in
the fund today.
SPARTAN NEW YORK MUNICIPAL HIGH YIELD PORTFOLIO INDICES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Value of Value of Value of
Initial Reinvested Reinvested Cost
Period $10,000 Dividend Capital Gain Total of
Ended Investment Distributions Distributions Value S&P DJIA Living**
500
1/31/91*
1/31/92
1/31/93
1/31/94
</TABLE>
* From February 3, 1990 (commencement of operations).
** From month-end closest to initial investment date.
Explanatory Notes: With an initial investment of $10,000 made on February
3, 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 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 income dividends and $___ for capital gain
distributions. If FMR had not reimbursed certain fund expenses, the fund's
total returns would have been lower. The figures in the table do not
include the effect of the fund's $5.00 account closeout fee or the .50%
redemption fee applicable to shares held less than 180 days.
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. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and is prepared without regard to tax
consequences. Lipper may also rank funds based on yield. In addition to
the mutual fund rankings, a fund's performance may be compared to mutual
fund performance indices prepared by Lipper.
From time to time, a fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals.
For example, the fund may quote Morningstar, Inc. in its advertising
materials. Morningstar, Inc. is a mutual fund rating service that rates
mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Fidelity funds to one another in appropriate
categories over specific periods of time may also be quoted in advertising.
Fidelity may provide information designed to help individuals understand
their investment goals and explore various financial strategies. For
example, Fidelity's FundMatchsm Program includes a workbook describing
general principles of investing, such as asset allocation, diversification,
risk tolerance, and goal setting; a questionnaire designed to help create a
personal financial profile; and an action plan offering investment
alternatives. Materials may also include discussions of Fidelity's three
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 indices.
Fidelity funds may use the performance of these capital markets in order to
demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any
of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the
funds. Ibbotson calculates total returns in the same method as the funds.
The funds may also compare performance to that of other compilations or
indices that may be developed and made available in the future.
A fund may compare its performance or the performance of securities in
which it may invest to averages published by IBC USA (Publications), Inc.
of Ashland, Massachusetts. These averages assume reinvestment of
distributions. The IBC/Donoghue's MONEY FUND AVERAGES(registered
trademark)/All Tax-Free, which is reported in the MONEY FUND
REPORT(registered trademark), covers over ___ tax-free money market funds.
The Bond Fund Report AverageS(registered trademark)/All Tax-Free, which is
reported in the BOND FUND REPORT(registered trademark), covers over ___
tax-free bond funds. When evaluating comparisons to money market funds,
investors should consider the relevant differences in investment objectives
and policies. Specifically, money market funds invest in short-term,
high-quality instruments and seek to maintain a stable $1.00 share price.
The intermediate and high yield funds, however, invest in longer-term
instruments and their share prices change daily in response to a variety of
factors.
A fund may compare and contrast in advertising the relative advantages of
investing in a mutual fund versus an individual municipal bond. Unlike
tax-free mutual funds, individual municipal bonds offer a stated rate of
interest and, if held to maturity, repayment of principal. Although some
individual municipal bonds might offer a higher return, they do not offer
the reduced risk of a mutual fund that invests in many different
securities. The initial investment requirements and sales charges of many
tax-free mutual funds are lower than the purchase cost of individual
municipal bonds, which are generally issued in $5,000 denominations and are
subject to direct brokerage costs.
In advertising materials, Fidelity may reference or discuss its products
and services, which may include: other Fidelity funds; retirement
investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; charitable
giving; and the Fidelity credit card. In addition, Fidelity may quote
financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. Fidelity may also reprint, and use
as advertising and sales literature, articles from Fidelity Focus, a
quarterly magazine provided free of charge to Fidelity fund shareholders.
A fund may present its fund number, Quotron(registered trademark) number,
and CUSIP number, and discuss or quote its current portfolio manager.
The intermediate and high yield funds 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 January 31, 1994, FMR advised __ tax-free funds with a total value of
over $__ billion and __ Spartan funds with approximately $___ billion in
assets.
According to the Investment Company Institute, assets in tax-exempt funds
increased from $45 billion in 1984 to approximately $___ billion at the end
of 1993. The money market fund may reference the growth and variety of
money market mutual funds and the adviser's innovation and participation in
the industry.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Each fund is open for business and its net asset value per share (NAV) is
calculated each day the New York Stock Exchange (NYSE) is open for trading.
The NYSE has designated the following holiday closings for 1994:
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day
(observed). Although FMR expects the same holiday schedule with the
addition of New Year's Day, to be observed in the future, the NYSE may
modify its holiday schedule at any time. Also, the money market fund will
be closed for wire purchases and redemptions on days when the Federal
Reserve Wire System is closed.
FSC normally determines the high yield fund's NAV as of the close of the
NYSE (normally 4:00 p.m. Eastern time). FSC normally calculates the money
market fund's NAV twice each business day, once at 12:00 noon Eastern time
and once as of the close of the NYSE (normally 4:00 p.m. Eastern time).
However, NAV may be calculated earlier if trading on the NYSE is restricted
or as permitted by the SEC. To the extent that portfolio securities are
traded in other markets on days when the NYSE is closed, a fund's NAV may
be affected on days when investors do not have access to the fund to
purchase or redeem shares.
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.
Pursuant to Rule 11a-3 under the 1940 Act, each fund is required to give
shareholders at least 60 days' notice prior to terminating or modifying its
exchange privilege. Under the Rule, the 60-day notification requirement
may be waived if (i) the only effect of a modification would be to reduce
or eliminate an administrative fee, redemption fee, or deferred sales
charge ordinarily payable at the time of an exchange, or (ii) a fund
suspends the redemption of shares to be exchanged as permitted under the
1940 Act or by the SEC, or the fund to be acquired suspends the sale of its
shares because it is unable to invest amounts effectively in accordance
with its investment objective and policies.
In the Prospectus, each fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in FMR's judgment, a fund would be unable to invest
effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and the
U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, Fidelity may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested
until you provide Fidelity with alternate instructions.
DIVIDENDS. To the extent that each fund's income is derived from federally
tax-exempt interest, the daily dividends declared by each fund also are
federally tax-exempt. The funds will send each shareholder a notice in
January describing the tax status of dividends and capital gain
distributions (if any) for the prior year.
Shareholders are required to report tax-exempt income on their federal tax
returns. Shareholders who earn other income, such as social security
benefits, may be subject to federal income tax on up to one half of such
benefits to the extent that their income, including tax-exempt income,
exceeds certain base amounts.
The funds purchase municipal obligations based on opinions of bond counsel
regarding the federal income tax status of the obligations. These opinions
generally will be based upon covenants by the issuers regarding continuing
compliance with federal tax requirements. If the issuer of an obligation
fails to comply with its covenants at any time, interest on the obligations
could become federally taxable retroactive to the date the obligation was
issued.
As a result of the Tax Reform Act of 1986, interest on certain "private
activity" securities (referred to as "qualified bonds" in the Internal
Revenue Code) 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 the funds' policies of investing so
that at least 80% of their 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. Private activity securities issued after August 7,
1986 to benefit a private or industrial user or to finance a private
facility are affected by this rule.
Corporate investors should note that a tax preference item for purposes of
the corporate AMT is 75% of the amount by which adjusted current earnings
(which includes tax-exempt interest) exceeds alternative minimum taxable
income of the corporation.
If a shareholder receives an exempt-interest dividend and sells shares at a
loss after holding them for a period of six months or less, the loss will
be disallowed to the extent of the amount of exempt-interest dividend.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the funds on
the sale of securities and distributed to shareholders are federally
taxable as long-term capital gains, regardless of the length of time that
shareholders have held their shares. If a shareholder receives a long-term
capital gain distribution on shares of a fund and such shares are held six
months or less and are sold at a loss, the portion of the loss equal to the
amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
A portion of the gain on bonds purchased at a discount after April 30, 1993
and short-term capital gains distributed by the funds are federally taxable
to shareholders as dividends, not as capital gains. Distributions from
short-term capital gains do not qualify for the dividends-received
deduction. Dividend distributions resulting from a recharacterization of
gain from the sale of bonds purchased at a discount after April 30, 1993
are not considered income for purposes of the funds policy of investing so
that at least 80% of their income is free from federal income tax. The
money market fund may distribute any net realized short-term capital gains
once a year or more often as necessary to maintain its net asset value at
$1.00 a share.
TAX STATUS OF THE FUNDS. Each fund has qualified and intends to continue
to qualify each year as a "regulated investment company" for tax purposes
so that it will not be liable for federal tax on income and capital gains
distributed to shareholders. In order to qualify as a regulated investment
company and avoid being subject to federal income or excise taxes at the
fund level, each fund intends to distribute substantially all of its net
investment income and net realized capital gains (if any) within each
calendar year as well as on a fiscal year basis. Each fund intends to
comply with other tax rules applicable to regulated investment companies,
including a requirement that capital gains from the sale of securities held
less than three months constitute less than 30% of the fund's gross income
for each fiscal year. Gains from some futures contracts and options are
included in this 30% calculation, which may limit the high yield fund's
investments in such instruments. Each fund is treated as a separate entity
from the other funds of Fidelity New York Municipal Trust for tax purposes.
As of January 31, 1994, the funds had approximate capital loss carryovers
available to offset future capital gains as follows:
AGGREGATE
CAPITAL
LOSS AMOUNT THAT EXPIRES ON JANUARY 31,
CARRYOVER 2000 2001
Money Market Fund $ $ $
Intermediate Fund $ $ $
High Yield Fund $ $ $
To the extent that capital loss carryovers are used to offset any future
capital gains, it is unlikely that the gains so offset will be distributed
to shareholders since any such distributions may be taxable to shareholders
as ordinary income.
NEW YORK TAX MATTERS. As long as a fund continues to qualify as a
regulated investment company under the federal Code, it will not incur New
York income or franchise tax liability on income and capital gains
distributed to shareholders. New York personal income tax law also
provides that exempt-interest dividends paid by a regulated investment
company, or series thereof, from interest on obligations which are exempt
from tax under New York law are excludable from gross income.
OTHER TAX INFORMATION. The information above is only a summary of some of
the tax considerations generally affecting the funds and their
shareholders, and no attempt has been made to discuss individual tax
consequences. Investors should consult their tax advisers to determine
whether the funds are suitable to their particular tax situations.
FMR
FMR is a wholly owned subsidiary of FMR Corp., a parent company organized
in 1972. At present, the principal operating activities of FMR Corp. are
those conducted by three of its divisions as follows: FSC, which is the
transfer and shareholder servicing agent for certain of the funds advised
by FMR; Fidelity Investments Institutional Operations Company, which
performs shareholder servicing functions for certain institutional
customers; and Fidelity Investments Retail Marketing Company, which
provides marketing services to various companies within the Fidelity
organization.
Several affiliates of FMR are also engaged in the investment advisory
business. Fidelity Management Trust Company provides trustee, investment
advisory, and administrative services to retirement plans and corporate
employee benefit accounts. Fidelity Management & Research (U.K.) Inc.
(FMR U.K.) and Fidelity Management & Research (Far East) Inc. (FMR Far
East), both wholly owned subsidiaries of FMR formed in 1986, supply
investment research, and may supply portfolio management services, to FMR
in connection with certain funds advised by FMR. Analysts employed by FMR,
FMR U.K., and FMR Far East research and visit thousands of domestic and
foreign companies each year. FMR Texas, a wholly owned subsidiary of FMR
formed in 1989, supplies fund management and research services in
connection with certain money market funds advised by FMR.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the trust are listed below. Except
as indicated, each individual has held the office shown or other offices in
the same company for the last five years. All persons named as Trustees
also serve in similar capacities for other funds advised by FMR. Unless
otherwise noted, the business address of each Trustee and officer is 82
Devonshire Street, Boston, Massachusetts 02109, which is also the address
of FMR. Those Trustees who are "interested persons" (as defined in the
1940 Act) by virtue of their affiliation with either the trust or FMR are
indicated by an asterisk (*).
*EDWARD C. JOHNSON 3d, 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 FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.) Inc., and Fidelity
Management & Research (Far East) Inc.
*J. GARY BURKHEAD, Trustee and Senior Vice President, is President of FMR;
and President and a Director of FMR Texas Inc. (1989), Fidelity Management
& Research (U.K.) Inc., and Fidelity Management & Research (Far
East) Inc.
RALPH F. COX, 200 Rivercrest Drive, Fort Worth, TX, Trustee (1991), is
President of Greenhill Petroleum Corporation (petroleum exploration and
production, 1990). Prior to his retirement in March 1990, Mr. Cox was
President and Chief Operating Officer of Union Pacific Resources Company
(exploration and production). He is a Director of Bonneville Pacific
Corporation (independent power, 1989) and CH2M Hill Companies
(engineering). In addition, he served on the Board of Directors of the
Norton Company (manufacturer of industrial devices, 1983-1990) and
continues to serve on the Board of Directors of the Texas State Chamber of
Commerce, and is a member of advisory boards of Texas A&M University
and the University of Texas at Austin.
PHYLLIS BURKE DAVIS, 340 E. 64th Street #22C, New York, NY, Trustee (1992).
Prior to her retirement in September 1991, Mrs. Davis was the Senior Vice
President of Corporate Affairs of Avon Products, Inc. She is currently a
Director of BellSouth Corporation (telecommunications), Eaton Corporation
(manufacturing, 1991), and the TJX Companies, Inc. (retail stores, 1990),
and previously served as a Director of Hallmark Cards, Inc. (1985-1991) and
Nabisco Brands, Inc. In addition, she serves as a Director of the New York
City Chapter of the National Multiple Sclerosis Society, and is a member of
the Advisory Council of the International Executive Service Corps. and the
President's Advisory Council of The University of Vermont School of
Business Administration (1988).
RICHARD J. FLYNN, 77 Fiske Hill, Sturbridge, MA, Trustee, is a financial
consultant. Prior to September 1986, Mr. Flynn was Vice Chairman and a
Director of the Norton Company (manufacturer of industrial devices). He is
currently a Director of Mechanics Bank and a Trustee of College of the Holy
Cross and Old Sturbridge Village, Inc.
E. BRADLEY JONES, 3881-2 Lander Road, Chagrin Falls, OH, Trustee (1990).
Prior to his retirement in 1984, Mr. Jones was Chairman and Chief Executive
Officer of LTV Steel Company. Prior to May 1990, he was Director of
National City Corporation (a bank holding company) and National City Bank
of Cleveland. He is a Director of TRW Inc. (original equipment and
replacement products), Cleveland-Cliffs Inc (mining), NACCO Industries,
Inc. (mining and marketing), Consolidated Rail Corporation, Birmingham
Steel Corporation (1988), Hyster-Yale Materials Handling, Inc. (1989), and
RPM, Inc. (manufacturer of chemical products, 1990). In addition, he
serves as a Trustee of First Union Real Estate Investments, Chairman of the
Board of Trustees and a member of the Executive Committee of the Cleveland
Clinic Foundation, a Trustee and a member of the Executive Committee of
University School (Cleveland), and a Trustee of Cleveland Clinic Florida.
DONALD J. KIRK, 680 Steamboat Road, Apartment #1-North, Greenwich, CT,
Trustee, is a Professor at Columbia University Graduate School of Business
and a financial consultant. Prior to 1987, he was Chairman of the
Financial Accounting Standards Board. Mr. Kirk is a Director of General Re
Corporation (reinsurance) and Valuation Research Corp. (appraisals and
valuations, 1993). In addition, he serves as Vice Chairman of the Board of
Directors of the National Arts Stabilization Fund and Vice Chairman of the
Board of Trustees of the Greenwhich Hospital Association (1989).
*PETER S. LYNCH, Trustee (1990) is Vice Chairman of FMR (1992). Prior to
his retirement on May 31, 1990, he was a Director of FMR (1989) 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). He is a Director of
W.R. Grace & Co. (chemicals, 1989) and Morrison Knudsen Corporation
(engineering and construction, 1988). 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
(1990).
GERALD C. McDONOUGH, 135 Aspenwood Drive, Cleveland, OH, Trustee (1989), is
Chairman of G.M. Management Group (strategic advisory services). Prior to
his retirement in July 1988, he was Chairman and Chief Executive Officer of
Leaseway Transportation Corp. (physical distribution services). Mr.
McDonough is a Director of ACME-Cleveland Corp. (metal working,
telecommunications and electronic products), Brush-Wellman Inc. (metal
refining), York International Corp. (air conditioning and refrigeration,
1989), Commercial Intertech Corp. (water treatment equipment, 1992), and
Associated Estates Realty Corporation (a real estate investment trust,
1993).
EDWARD H. MALONE, 5601 Turtle Bay Drive #2104, Naples, FL, Trustee (1988).
Prior to his retirement in 1985, Mr. Malone was Chairman, General Electric
Investment Corporation and a Vice President of General Electric Company.
He is a Director of Allegheny Power Systems, Inc. (electric utility),
General Re Corporation (reinsurance) and Mattel Inc. (toy manufacturer).
He is also a Trustee of Rensselaer Polytechnic Institute and of Corporate
Property Investors and a member of the Advisory Boards of Butler Capital
Corporation Funds and Warburg, Pincus Partnership Funds.
MARVIN L. MANN, 55 Railroad Avenue, Greenwich, CT, Trustee (1993) is
Chairman of the Board, President, and Chief Executive Officer of Lexmark
International, Inc. (office machines, 1991). Prior to 1991, he held the
positions of Vice President of International Business Machines Corporation
("IBM") and President and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A. Hanna Company (chemicals,
1993) and Infomart (marketing services, 1991), a Trammell Crow Co. In
addition, he serves as the Campaign Vice Chairman of the Tri-State United
Way (1993) and is a member of the University of Alabama President's Cabinet
(1990).
THOMAS R. WILLIAMS, 21st Floor, 191 Peachtree Street, N.E., Atlanta, GA,
Trustee (1988), 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 BellSouth Corporation (telecommunications),
ConAgra, Inc. (agricultural products), Fisher Business Systems, Inc.
(computer software, 1988), Georgia Power Company (electric utility), Gerber
Alley & Associates, Inc. (computer software), National Life Insurance
Company of Vermont, American Software, Inc. (1989), and AppleSouth, Inc.
(restaurants, 1992).
GARY L. FRENCH, Treasurer (1991). Prior to becoming Treasurer of the
Fidelity funds, Mr. French was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991); Vice President, Fund
Accounting - Fidelity Accounting & Custody Services Co. (1990); and
Senior Vice President, Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
ARTHUR S. LORING, Secretary, is Senior Vice President and General Counsel
of FMR, Vice President-Legal of FMR Corp., and Vice President and Clerk of
FDC.
JANICE BRADBURN, is Vice President of the money market fund (1992) and
other funds managed by FMR.
GARY LEE SWAYZE, is Vice President of the insured fund (1987) and the high
yield fund (1987) and other funds managed by FMR and a Vice President of
FMR.
THOMAS D. MAHER, Assistant Vice President (1990), is Assistant Vice
President of Fidelity's money market funds and Vice President and Associate
General Counsel of FMR Texas Inc. (1990).
Under a retirement program that became effective on November 1, 1989,
Trustees, upon reaching age 72, become eligible to participate in a defined
benefit retirement program under which they receive payments during their
lifetime from the funds based on their basic trustee fees and length of
service. Currently, Messrs. Robert L. Johnson, William R. Spaulding,
Bertram H. Witham, and David L. Yunich participate in the program.
As of January 31, 1994, the funds' Trustees and officers owned in the
aggregate less than 1% of the outstanding shares of each fund.
MANAGEMENT CONTRACTS
Each fund employs FMR to furnish investment advisory and other services.
Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs
the investments of each fund in accordance with its investment objective,
policies, and limitations. FMR also provides the funds with all necessary
office facilities and personnel for servicing the funds' investments, and
compensates all officers of the Trust, all Trustees who are "interested
persons" of the Trust or of FMR, and all personnel of the trust 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 the funds. 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 the funds; preparing all general shareholder
communications and conducting shareholder relations; maintaining the funds'
records and the registration of the funds' shares under federal and state
law; developing management and shareholder services for the funds; and
furnishing reports, evaluations, and analyses on a variety of subjects to
the Board of Trustees.
FMR is responsible for the payment of all expenses of the funds with
certain exceptions. Specific expenses payable by FMR include, without
limitation, the fees and expenses of registering and qualifying the funds
and their shares for distribution under federal and state securities laws;
expenses of typesetting for printing the Prospectus and Statement of
Additional Information; custodian charges; audit and legal expenses;
insurance expense; association membership dues; and the expenses of mailing
reports to shareholders, shareholder meetings, and proxy solicitations.
FMR also provides for transfer agent and dividend disbursing services and
fund and general accounting record maintenance through FSC.
FMR pays all other expenses of the funds with the following exceptions:
fees and expenses of the Trustees who are not "interested persons" of the
Trust or FMR (the non-interested Trustees); interest on borrowings; taxes;
brokerage commissions (if any); and such nonrecurring expenses as may
arise, including costs of any litigation to which the funds may be a party,
and any obligation it may have to indemnify the officers and Trustees with
respect to litigation.
FMR is each fund's manager pursuant to management contracts dated January
18, 1990, which was approved by shareholders on September 19, 1990. For
the services of FMR under the management contracts, the funds pay FMR a
monthly management fee at the annual rate of .50% (money market fund) and
.55% (high yield fund), of average net assets throughout the month. FMR
reduces its fee by an amount equal to the fees and expenses of 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). The following tables outline
expense limitations (as a percentage of the funds' average net assets) from
commencement of operations to the date of this Statement of Additional
Information.
MONEY MARKET FUND:
From To Expense Limitation
February 3, 1990 August 31, 1990 .00%
September 1, 1990 October 31, 1990 .05%
November 1, 1990 November 30, 1990 .10%
December 1, 1990 February 28, 1991 .15%
March 1, 1991 April 30, 1991 .20%
May 1, 1991 June 30, 1991 .25%
July 1, 1991 July 31, 1991 .30%
August 1, 1991 October 31, 1991 .35%
November 1, 1991 January 31, 1992 .40%
February 1, 1992 March 31, 1992 .45%
Fiscal Management Fees Amount of
Period Ended Before Reimbursement Reimbursement
1/31/93 $1,714,772 $ 0
4/30/92 2,320,501 610,755
4/30/91 653,583 428,691
HIGH YIELD FUND:
From To Expense Limitation
February 3, 1990 July 31, 1990 .00%
August 1, 1990 September 30, 1990 .10%
October 1, 1990 January 31, 1991 .20%
February 1, 1991 February 28, 1991 .30%
March 1, 1991 October 31, 1991 .35%
November 1, 1991 April 30, 1992 .40%
May 1, 1992 August 31, 1992 .45%
September 1, 1992 February 28, 1993 .50%
Fiscal Management Fees Amount of
Period Ended Before Reimbursement Reimbursement
1/31/93 $1,380,063 $179,546
4/30/92 1,267,172 395,876
4/30/91 653,583 428,691
To defray shareholder service costs, FMR or its affiliates also collect the
funds' $5.00 exchange fees, $5.00 account closeout fees, $5.00 fee for wire
purchases and redemptions, and (money market fund only) $2.00 checkwriting
charge. Shareholder transaction fees and charges collected for the fiscal
periods ended January 31, 1994, January 31, 1993, and April 30, 1992 are as
follows:
MONEY MARKET FUND:
Exchange Fees Account Closeout Fees Wire Fees Checkwriting Charges
1994
1993 $13,210 $1,414 $3,095 $10,754
1992 19,518 1,399 4,625 17,174
HIGH YIELD FUND:
Exchange Fees Account Closeout Fees Wire Fees
1994
1993 $6,385 $740 $1,280
1992 6,045 625 1,230
SUB-ADVISER. With respect to the money market fund, FMR has entered into a
sub-advisory agreement with FMR Texas pursuant to which FMR Texas has
primary responsibility for providing fund investment management services to
the fund. Under the sub-advisory agreement, FMR pays FMR Texas a fee equal
to 50% of the management fee payable to FMR under its current management
contract with the fund. The fees paid to FMR Texas are not reduced by any
voluntary or mandatory expense reimbursements that may be in effect from
time to time. During the fiscal periods ended January 31, 1994, January
31, 1993, and April 30, 1992, FMR paid FMR Texas fees of $_______,
$857,386, and $1,160,251, respectively, under the sub-advisory agreement.
DISTRIBUTION AND SERVICE PLANS
Each fund has adopted a distribution and service plan (the Plans) under
Rule 12b-1 of 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 adopted by the fund under the Rule. The
Board of Trustees has adopted the Plans to allow the funds and FMR to incur
certain expenses that might be considered to constitute indirect payment by
the funds of distribution expenses. Under the Plans, if the payment by a
fund to FMR of management fees should be deemed to be indirect financing by
the fund of the distribution of its shares, such payment is authorized by
the Plans.
The Plans specifically recognize that FMR, either directly or through FDC,
may use its management fee revenue, past profits, or other resources,
without limitation, to pay promotional and administrative expenses in
connection with the offer and sale of shares of the funds. In addition,
the Plans provide that FMR may use its resources, including its management
fee revenues, to make payments to third parties that provide assistance in
selling the funds' shares or to third parties, including banks, that render
shareholder support services. The Trustees have not authorized third party
payments to date.
The funds' Plan has been approved by the Trustees. As required by the
Rule, the Trustees carefully considered all pertinent factors relating to
the implementation of the Plans prior to their approval, and have
determined that there is a reasonable likelihood that the Plans will
benefit the funds and their shareholders. In particular, the Trustees
noted that the Plans do not authorize payments by the funds other than
those made to FMR under its management contracts with the funds. To the
extent that the Plans give FMR and FDC greater flexibility in connection
with the distribution of shares of the funds, additional sales of the
funds' shares may result. Additionally, certain shareholder support
services may be provided more effectively under the Plans by local entities
with whom shareholders have other relationships. The Plans were approved
by the funds' shareholders on September 19, 1990.
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. The funds may execute portfolio
transactions with and purchase securities issued by depository institutions
that receive payments under the Plans. No preference will be shown in the
selection of investments for the instruments of such depository
institutions. 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.
INTEREST OF FMR AFFILIATES
United Missouri is each fund's custodian and transfer agent. United
Missouri has entered into sub-contracts with FSC, an affiliate of FMR,
under the terms of which FSC performs the processing activities associated
with providing transfer agent and shareholder servicing functions for each
fund. United Missouri has additional sub-contracts with FSC, pursuant to
which FSC performs the calculations necessary to determine each fund's net
asset value per share and dividends and maintains each fund's accounting
records. United Missouri is entitled to reimbursement for fees paid to FSC
from FMR, who bears these costs pursuant to its management contract with
each fund.
Each fund has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The distribution agreement calls
for FDC to use all reasonable efforts, consistent with its other business,
to secure purchasers for shares of each fund, which are continuously
offered at net asset value. Promotional and administrative expenses in
connection with the offer and sale of shares are paid by FMR.
DESCRIPTION OF THE TRUSTS
TRUSTS' ORGANIZATION. Fidelity New York Municipal Trust (the Massachusetts
Trust), is an open-end management investment company organized as a
Massachusetts business trust on April 25, 1983. On January 8, 1990, the
Trust's name was changed from Fidelity New York Tax-Free Fund to Fidelity
New York Municipal Trust. Currently, there are four funds of the Trust:
Fidelity New York Tax-Free Insured Portfolio, Fidelity New York Tax-Free
High Yield Portfolio, Spartan New York Intermediate Municipal Portfolio,
and Spartan New York Municipal High Yield Portfolio. The Massachusetts
Trust's Declaration of Trust permits the Trustees to create additional
funds.
Fidelity New York Municipal Trust II (the Delaware Trust) is an open-end
management investment company organized as a Delaware business trust on
June 20, 1991. Currently, there are two funds of the Delaware Trust:
Fidelity New York Tax-Free Money Market Portfolio and Spartan New York
Municipal Money Market Portfolio. Fidelity New York Tax-Free Money Market
Portfolio entered into an agreement to acquire all of the assets of
Fidelity New York Tax-Free Money Market Portfolio, a series of Fidelity New
York Municipal Trust (a Massachusetts business trust) on December 30, 1991.
The Delaware Trust's Trust Instrument permits the Trustees to create
additional funds.
In the event that FMR ceases to be the investment adviser to the Trust or a
fund, the right of the Trust or fund to use the identifying names
"Fidelity" and "Spartan" may be withdrawn. The funds' Declarations of
Trust permit the Trustees to create additional funds.
The assets of the Trust received for the issue or sale of shares of each
fund and all income, earnings, profits, and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such fund, and
constitute the underlying assets of such fund. The underlying assets of
each fund are segregated on the books of account, and are to be charged
with the liabilities with respect to such fund and with a share of the
general expenses of the Trust. Expenses with respect to the Trust are to
be allocated in proportion to the asset value of the respective funds,
except where allocations of direct expense can otherwise be fairly made.
The officers of the Trust, subject to the general supervision of the Board
of Trustees, have the power to determine which expenses are allocable to a
given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the Trust, shareholders of each
fund are entitled to receive as a class the underlying assets of such fund
available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The 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 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 shall include a provision limiting the obligations
created thereby to the Trust and its assets. The Declaration of Trust
provides for indemnification out of each fund's property of any
shareholders held personally liable for the obligations of the fund. The
Declaration of Trust also provides that each fund shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the fund and satisfy any judgment thereon. Thus, the risk of
a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which the fund itself would be unable to
meet its obligations. FMR believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects a Trustee
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office.
VOTING RIGHTS - BOTH TRUSTS. Each fund's capital consists of shares of
beneficial interest. As a shareholder, you receive one vote for each
dollar of net asset value per share you own. The shares have no preemptive
or conversion rights; the 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
heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of the Trust or a fund may, as set forth in the
Declaration of Trust, call meetings of the Trust or a fund for any purpose
related to the Trust or fund, as the case may be, including, in the case of
a meeting of the 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,
in the case of the Delaware Trust and its funds, merger with) another
open-end management investment company or series thereof, or upon
liquidation and distribution of its assets. Generally, such terminations
must be approved by vote of the holders of a majority of the outstanding
shares of the trust or the fund (for the Delaware Trust), or by a vote of
the holders of a majority of the fund or trust, as determined by the
current value of each shareholder's investment in the fund or trust (for
the Massachusetts trust). If not so terminated or reorganized, the trusts
and their funds will continue indefinitely.
Under the Trust Instrument, the Trustees may, without shareholder vote,
cause the Delaware Trust to merge or consolidate into one or more trusts,
partnerships, or corporations, so long as the surviving entity is an
open-end management investment company that will succeed to or assume the
Delaware Trust registration statement, or cause the Delaware Trust to be
incorporated under Delaware law.
CUSTODIAN. United Missouri 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 the funds' assets and the appointment of
subcustodian banks and clearing agencies. The custodian takes no part in
determining the investment policies of the funds or in deciding which
securities are purchased or sold by the funds. The funds may, however,
invest in obligations of the custodian and may purchase securities from or
sell securities to the custodian.
FMR, its officers and directors, its affiliated companies, and the trust's
Trustees may from time to time have transactions with various banks,
including banks serving as custodians for certain of the 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. Price Waterhouse, 160 Federal Street, Boston, Massachusetts,
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 Annual Report for the fiscal period ended January 31, 1994 is a
separate report supplied with this Statement of Additional Information and
is incorporated herein by reference.
APPENDIX
DOLLAR-WEIGHTED AVERAGE MATURITY is derived by multiplying the value of
each investment by the number of days 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.
The descriptions that follow are examples of eligible ratings for the
intermediate and high yield funds. A fund may, however, consider ratings
for other types of investments and the ratings assigned by other ratings
organizations when determining the eligibility of a particular investment.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF STATE AND
MUNICIPAL NOTES:
Moody's ratings for state and municipal and other short-term obligations
will be designated Moody's Investment Grade (MIG, or VMIG for variable rate
obligations). This distinction is in recognition of the difference between
short-term credit risk and long-term credit risk. Factors affecting the
liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important over the short
run. Symbols used will be as follows:
MIG-1/VMIG-1 - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG-2/VMIG-2 - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
MIG-3/VMIG-3 - This designation denotes favorable quality, with all
security elements accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may
be narrow and market access for refinancing is likely to be less well
established.
MIG-4/VMIG-4 - This designation denotes adequate quality protection
commonly regarded as required of an investment security is present and,
although not distinctly or predominantly speculative, there is specific
risk.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S RATINGS OF STATE AND
MUNICIPAL NOTES:
SP-1 - Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2 - Satisfactory capacity to pay principal and interest.
SP-3 - Speculative capacity to pay principal and interest.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S MUNICIPAL BOND RATINGS:
AAA - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
AA - Bonds rated Aa are judged to be of high quality by all standards.
Together with Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - Bonds rated A possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the
future.
BAA - Bonds rated Baa are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded
during both good and bad times in the future. Uncertainty of position
characterizes bonds in this class.
CA- Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
C - Bonds rated C are the lowest-rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
CAA - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principle and
interest.
Those bonds in the Aa, A, Baa, Ba, and B groups which Moody's believes
possess the strongest investment attributes are designated by the symbols
Aa1, A1, Baa1, Ba1, and B1.
DESCRIPTION OF STANDARD & POOR'S CORPORATION'S MUNICIPAL BOND RATINGS:
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal
is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated debt issues only in small
degree.
A - Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B - Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB or BB- rating.
CCC - Deb t rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial, or economic conditions, it is
not likely to have the capacity to pay interest and repay principal.
CC- Debt rated CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.
C - The rating C is typically applied to debt subordinated to senior debt
debt which is assigned on actual or implied CCC-debt rating. The C rating
may be used to cover a situation where a bankruptcy petition has been filed
but debt service payments are continued.
CI - The rating CI is reserved for income bonds on which no interest is
being paid.
D- Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes
that such payments will be made during such grace period. The D rating
will also be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.
The ratings from AA to CCC may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a)(1) Not applicable.
(b) Exhibits
(1) (a) Amended and Restated Declaration of Trust dated June 20, 1984 is
incorporated herein by reference to Exhibit 1(c) to the initial
Registration Statement.
(b) Supplement to Declaration of Trust dated April 10, 1985 is
incorporated herein by reference to Exhibit 1(b) to Post-Effective
Amendment No. 2.
(c) Supplement to Declaration of Trust dated December 9, 1988 is
incorporated herein by reference to Exhibit 1(c) to Post-Effective
Amendment No. 13.
(d) Supplement to the Declaration of Trust dated January 5, 1990 is
incorporated herein by reference to Exhibit 1(d) to Post-Effective
Amendment No. 18.
(e) Supplement to the Declaration of Trust dated April 9, 1990 is
incorporated herein by reference to Exhibit 1(e) to Post-Effective
Amendment No. 17.
(2) By-Laws of the Trust are incorporated herein by reference to Exhibit
2 to the initial Registration Statement.
(3) Not applicable.
(4) Not applicable.
(5) (a) Form of Management Contract between Spartan New York Intermediate
Municipal Portfolio and Fidelity Management & Research Company is
incorporated by reference to Exhibit 5(a) to Post-Effective Amendment No.
28.
(b) Management Contract between Fidelity New York Tax-Free High Yield
Portfolio and Fidelity Management & Research Company, dated January 1,
1989 is incorporated herein by reference to Exhibit 5(b) to Post-Effective
Amendment No. 13.
(c) Management Contract between Fidelity New York Tax-Free Insured
Portfolio and Fidelity Management & Research Company, dated January 1,
1989 is incorporated herein by reference to Exhibit 5(c) to Post-Effective
Amendment No. 13.
(d) Management Contract between Spartan New York Municipal Money Market
Portfolio and Fidelity Management & Research Company, dated January 18,
1990 is incorporated herein by reference to Exhibit 5(d) to Post-Effective
Amendment No. 18.
(e) Management Contract between Spartan New York Municipal High Yield
Portfolio and Fidelity Management & Research Company, dated January 18,
1990 is incorporated herein by reference to Exhibit 5(e) to Post-Effective
Amendment No. 18.
(f) Sub-Advisory Agreement between FMR Texas Inc. and Fidelity Management
& Research Company with respect to Spartan New York Municipal Money
Market Portfolio, dated January 18, 1990 is incorporated herein by
reference to Exhibit 5(f) to Post-Effective Amendment No. 18.
(6) (a) General Distribution Agreement between Fidelity New York Tax-Free
Insured Portfolio and Fidelity Distributors Corporation dated April 1, 1987
are incorporated herein by reference to Exhibit 6(a)2 to Post-Effective
Amendment No. 10.
(b) General Distribution Agreement between Fidelity New York Tax-Free
High Yield Portfolio, and Fidelity Distributors Corporation dated April 1,
1987 are incorporated herein by reference to Exhibit 6(b)3 to
Post-Effective Amendment No. 10.
(c) Amendment to General Distribution Agreements between Fidelity New
York Tax-Free Insured Portfolio and Fidelity Distributors Corporation and
Fidelity New York Tax-Free High Yield Portfolio and Fidelity Distributors
Corporation, dated January 1, 1988 are incorporated herein by reference to
Exhibit 6(c) to Post-Effective Amendment No. 11.
(d) General Distribution Agreement between Spartan New York Municipal
Money Market Portfolio and Fidelity Distributors Corporation, dated January
18, 1990 is incorporated herein by reference to Exhibit 6(d) to
Post-Effective Amendment No. 18.
(e) General Distribution Agreement between Spartan New York Municipal
High Yield Portfolio and Fidelity Distributors Corporation, dated January
18, 1990 is incorporated herein by reference to Exhibit 6(e) to
Post-Effective Amendment No. 18.
(f) Form of General Distribution Agreement between Spartan New York
Intermediate Municipal Portfolio and Fidelity Distributors Corporation is
incorporated herein by reference to Exhibit 6(f) to Post-Effective
Amendment No. 28.
(7) Retirement Plan for Non-Interested Person Trustees, Directors or
General Partners, effective November 1, 1989, is incorporated herein by
reference to Exhibit 7 to Post-Effective Amendment No. 23.
(8) (a) Custodian Agreement between Fidelity New York Municipal Trust and
United Missouri Bank, N.A., dated July 18, 1991 is incorporated herein by
reference to Exhibit 8(a) to Post-Effective Amendment No. 24.
(9) (a) Transfer Agent Agreement between Fidelity New York Municipal Trust
and United Missouri Bank, N.A., dated November 14, 1991 is incorporated
herein by reference to Exhibit 9(a) to Post-Effective Amendment No. 24.
(b) Appointment of Sub-Transfer Agent and Schedule A for Fidelity New
York Tax-Free High Yield Portfolio, dated November 7, 1991, is incorporated
herein by reference to Exhibit 9(b) to Post-Effective Amendment No. 24.
(c) Appointment of Sub-Transfer Agent and Schedule A for Fidelity New
York Tax-Free Insured Portfolio, dated November 7, 1991, is incorporated
herein by reference to Exhibit 9(c) to Post-Effective Amendment No. 24.
(d) Service Agreement between Fidelity New York Municipal Trust and
United Missouri Bank, N.A., dated November 14, 1991, is incorporated herein
by reference to Exhibit 9(d) to Post-Effective Amendment No. 24.
(e) Appointment of Sub-Servicing Agent and Schedules B and C for Fidelity
New York Tax-Free High Yield Portfolio, dated November 7, 1991, is
incorporated herein by reference to Exhibit 9(e) to Post-Effective
Amendment No. 24.
(f) Appointment of Sub-Servicing Agent and Schedules B and C for Fidelity
New York Tax-Free Insured Portfolio, dated November 7, 1991, is
incorporated herein by reference to Exhibit 9(f) to Post-Effective
Amendment No. 24.
(g) Appointment to Sub-Servicing Agent and Schedules B and C for Spartan
New York Municipal Money Market Portfolio, dated November 14, 1991, is
incorporated herein by reference to Exhibit 9(g) to Post-Effective
Amendment No. 24.
(h) Appointment of Sub-Transfer Agent and Schedule A for Spartan New York
Municipal Money Market Portfolio, dated November 14, 1991, is incorporated
herein by reference to Exhibit 9(h) to Post-Effective Amendment No. 24.
(i) Appointment of Sub-Servicing Agent and Schedules B and C for Spartan
New York Municipal High Yield Portfolio, dated November 7, 1991, is
incorporated herein by reference to Exhibit 9(i) to Post-Effective
Amendment No. 24.
(j) Appointment of Sub-Transfer Agent and Schedule A for Spartan New York
Municipal High Yield Portfolio, dated November 7, 1991, is incorporated
herein by reference to Exhibit 9(j) to Post-Effective Amendment No. 24.
(k) Form of Schedules A (transfer, dividend disbursing and shareholders'
servicing agent); B (pricing and bookkeeping); and C (securities lending
transactions) relating to Spartan New York Intermediate Municipal
Portfolio, are incorporated herein by reference to Exhibit 9(k) to
Post-Effective Amendment No. 28.
(l) Form of Appointment of Sub-Transfer Agent for Spartan New York
Intermediate Municipal Portfolio is incorporated herein by reference to
Exhibit 9(l) to Post-Effective Amendment No. 28.
(m) Form of Appointment of Sub-Servicing Agent for Spartan New York
Intermediate Municipal Portfolio is incorporated herein by reference to
Exhibit 9(m) to Post-Effective Amendment No. 28.
(10) Not applicable.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) (a) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity
New York tax-free High Yield Portfolio is incorporated herein by reference
to Exhibit 15(a) to Post-Effective Amendment No. 7.
(b) Distribution and Service Plan pursuant to Rule 12b-1 for Fidelity New
York Tax-Free Insured Portfolio is incorporated herein by reference to
Exhibit 15(b) to Post-Effective Amendment No. 7.
(c) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan New
York Municipal Money Market Portfolio is incorporated herein by reference
to Exhibit 15(c) to Post-Effective Amendment No 18.
(d) Distribution and Service Plan pursuant to Rule 12b-1 for Spartan New
York Municipal High Yield Portfolio is incorporated herein by reference to
Exhibit 15(d) to Post-Effective Amendment No. 18.
(e) Form of Distribution and Service Plan pursuant to Rule 12b-1 for
Spartan New York Intermediate Municipal Portfolio is incorporated herein by
reference to Exhibit 15(e) to Post-Effective Amendment No. 28..
(16) (a) A revised schedule for the computation of performance quotations
for Fidelity New York Tax-Free Insured Portfolio, Fidelity New York
Tax-Free High Yield Portfolio, Spartan New York Municipal Money Market
Portfolio, and Spartan New York Municipal High Yield Portfolio is
incorporated herein by reference to Exhibit 16 (a) to Post-Effective
Amendment No. 20.
(b) An additional schedule for the computation of performance quotations
for Fidelity New York Tax-Free Insured Portfolio, Fidelity New York
Tax-Free High Yield Portfolio, Spartan New York Municipal Money Market
Portfolio, and Spartan New York Municipal High Yield Portfolio was filed as
Exhibit 16(b) to Post-Effective Amendment No. 26.
(c) A schedule for the computation of performance quotations for the
Spartan New York Intermediate Municipal Portfolio is filed herein as
Exhibit 16(c).
Item 25. Persons Controlled by or under Common Control with Registrant
The Registrant's Board of Trustees is the same as the boards of other
funds advised by FMR, each of which has Fidelity Management & Research
Company as its investment adviser. In addition, the officers of these
funds are substantially identical. Nonetheless, Registrant takes the
position that it is not under common control with these other funds since
the power residing in the respective boards and officers arises as the
result of an official position with the respective funds.
Item 26. Number of Holders of Securities
November 30, 1993
Title of Class: Shares of Beneficial Interest
Name of Series Number of Record Holders
Fidelity New York Tax-Free Insured Portfolio 13,131
Fidelity New York Tax-Free High Yield Portfolio 16,165
Spartan New York Municipal Money Market Portfolio 24,020
Spartan New York Municipal High Yield Portfolio 9,064
Spartan New York Intermediate Municipal Portfolio 0
Item 27. Indemnification
Article XI, Section 2 of the Declaration of Trust sets forth the
reasonable and fair means for determining whether indemnification shall be
provided to any past or present Trustee or officer. It states that the
Registrant shall indemnify any present or past Trustee or officer to the
fullest extent permitted by law against liability and all expenses
reasonably incurred by him in connection with any claim, action, suit or
proceeding in which he is involved by virtue of his service as a trustee,
an officer, or both. Additionally, amounts paid or incurred in settlement
of such matters are covered by this indemnification. Indemnification will
not be provided in certain circumstances, however. These include instances
of willful misfeasance, bad faith, gross negligence, and reckless disregard
of the duties involved in the conduct of the particular office involved.
Item 28. Business and Other Connections of Investment Adviser
(1) FIDELITY MANAGEMENT & RESEARCH COMPANY
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 Executive Committee of FMR; President
and Chief Executive Officer of FMR Corp.; Chairman of
the Board and a Director of FMR, FMR Corp., FMR Texas
Inc. (1989), Fidelity Management & Research (U.K.)
Inc. and Fidelity Management & Research (Far East)
Inc.; President and Trustee of funds advised by FMR;
J. Gary Burkhead President of FMR; Managing Director of FMR Corp.;
President and a Director of FMR Texas Inc. (1989), Fidelity
Management & Research (U.K.) Inc. and Fidelity
Management & Research (Far East) Inc.; Senior Vice
President and Trustee of funds advised by FMR.
Peter S. Lynch Vice Chairman of FMR (1992).
David Breazzano Vice President of FMR (1993) and of a fund advised by
FMR.
Stephan Campbell Vice President of FMR (1993).
Rufus C. Cushman, Jr. Vice President of FMR and of funds advised by FMR;
Corporate Preferred Group Leader.
Will Danof Vice President of FMR (1993) and of a fund advised by
FMR.
Scott DeSano Vice President of FMR (1993).
Penelope Dobkin Vice President of FMR (1990) and of a fund advised by
FMR.
Larry Domash Vice President of FMR (1993).
George Domolky Vice President of FMR (1993) and of a fund advised by
FMR.
Charles F. Dornbush Senior Vice President of FMR (1991); Chief Financial
Officer of the Fidelity funds; Treasurer of FMR Texas Inc.
(1989), Fidelity Management & Research (U.K.) Inc.,
and Fidelity Management & Research (Far East) Inc.
Robert K. Duby Vice President of FMR.
Margaret L. Eagle Vice President of FMR and of a fund advised by FMR.
Kathryn L. Eklund Vice President of FMR (1991).
Richard B. Fentin Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Daniel R. Frank Vice President of FMR and of funds advised by FMR.
Gary L. French Vice President of FMR (1991) and Treasurer of the funds
advised by FMR (1991). Prior to assuming the position as
Treasurer he was Senior Vice President, Fund Accounting -
Fidelity Accounting & Custody Services Co. (1991)
(Vice President, 1990-1991); and Senior Vice President,
Chief Financial and Operations Officer - Huntington
Advisers, Inc. (1985-1990).
Michael S. Gray Vice President of FMR and of funds advised by FMR.
Barry A. Greenfield Vice President of FMR and of a fund advised by FMR.
William J. Hayes Senior Vice President of FMR (1989); Income/Growth
Group Leader (1990) and International Group Leader
(1990).
Robert Haber Vice President of FMR (1991) and of funds advised by
FMR.
Daniel Harmetz Vice President of FMR (1991) and of a fund advised by
FMR.
Ellen S. Heller Vice President of FMR (1991).
</TABLE>
John Hickling Vice President of FMR (1993) and of funds advised by
FMR.
<TABLE>
<CAPTION>
<S> <C>
Robert F. Hill Vice President of FMR (1989); and Director of Technical
Research.
Stephan Jonas Vice President of FMR (1993).
David B. Jones Vice President of FMR (1993).
Steven Kaye Vice President of FMR (1993) and of a fund advised by
FMR.
Frank Knox Vice President of FMR (1993).
Robert A. Lawrence Senior Vice President of FMR (1993); and High Income
Group Leader.
Alan Leifer Vice President of FMR and of a fund advised by FMR.
Harris Leviton Vice President of FMR (1993) and of a fund advised by
FMR.
Bradford E. Lewis Vice President of FMR (1991) and of funds advised by
FMR.
Robert H. Morrison Vice President of FMR and Director of Equity Trading.
David Murphy Vice President of FMR (1991) and of funds advised by
FMR.
Jacques Perold Vice President of FMR (1991).
Brian Posner Vice President of FMR (1993) and of a fund advised by
FMR.
Anne Punzak Vice President of FMR (1990) and of funds advised by
FMR.
Richard A. Spillane Vice President of FMR (1990) and of funds advised by
FMR; and Director of Equity Research (1989).
Robert E. Stansky Senior Vice President of FMR (1993) and of funds advised
by FMR.
Thomas Steffanci Senior Vice President of FMR (1993); and Fixed-Income
Division Head.
Gary L. Swayze Vice President of FMR and of funds advised by FMR; and
Tax-Free Fixed-Income Group Leader.
Donald Taylor Vice President of FMR (1993) and of funds advised by
FMR.
Beth F. Terrana Senior Vice President of FMR (1993) and of funds advised
by FMR.
Joel Tillinghast Vice President of FMR (1993) and of a fund advised by
FMR.
Robert Tucket Vice President of FMR (1993).
George A. Vanderheiden Senior Vice President of FMR; Vice President of funds
advised by FMR; and Growth Group Leader (1990).
Jeffrey Vinik Senior Vice President of FMR (1993) and of a fund advised
by FMR.
Guy E. Wickwire Vice President of FMR and of a fund advised by FMR.
Arthur S. Loring Senior Vice President (1993), Clerk and General Counsel of
FMR; Vice President, Legal of FMR Corp.; and Secretary
of funds advised by FMR.
</TABLE>
FMR TEXAS INC. (FMR Texas)
FMR Texas 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.
<TABLE>
<CAPTION>
<S> <C>
Edward C. Johnson 3d Chairman and Director of FMR Texas; Chairman of the
Executive Committee of FMR; President and Chief
Executive Officer of FMR Corp.; Chairman of the Board
and a Director of FMR, FMR Corp., Fidelity
Management & Research (Far East) Inc. and
Fidelity Management & Research (U.K.) Inc.;
President and Trustee of funds advised by FMR.
J. Gary Burkhead President and Director of FMR Texas; President of FMR;
Managing Director of FMR Corp.; President and a
Director of Fidelity Management & Research (Far
East) Inc. and Fidelity Management & Research
(U.K.) Inc.; Senior Vice President and Trustee of funds
advised by FMR.
Frederic L. Henning Jr. Senior Vice President of FMR Texas; Money Market
Group Leader.
Leland Baron Vice President of FMR Texas (1991) and of funds
advised by FMR.
Thomas D. Maher Vice President of FMR Texas.
Burnell Stehman Vice President of FMR Texas and of funds advised by
FMR.
John Todd Vice President of FMR Texas and of funds advised by
FMR.
Sarah H. Zenoble Vice President of FMR Texas and of funds advised by
FMR.
Charles F. Dornbush Treasurer of FMR Texas; Treasurer of Fidelity
Management & Research (U.K.) Inc.; Treasurer of
Fidelity Management & Research (Far East) Inc.;
Senior Vice President and Chief Financial Officer of the
Fidelity funds.
David C. Weinstein Secretary of FMR Texas; Clerk of Fidelity Management
& Research (U.K.) Inc.; Clerk of Fidelity
Management & Research (Far East) Inc.
</TABLE>
Item 29. Principal Underwriters
(a) Fidelity Distributors Corporation (FDC) acts as distributor for most
funds advised by FMR and the following other funds:
CrestFunds, Inc.
The Victory Funds
ARK Funds
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter With Registrant
Edward C. Johnson 3d Director Trustee and President
Nita B. Kincaid Director None
W. Humphrey Bogart Director None
Kurt A. Lange President and Treasurer None
William L. Adair Senior Vice President None
Thomas W. Littauer Senior Vice President None
Arthur S. Loring Vice President and Clerk Secretary
* 82 Devonshire Street, Boston, MA
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books, and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules promulgated thereunder are
maintained by Fidelity Management & Research Company or Fidelity
Service Co., 82 Devonshire St., Boston, MA, 02109, or the funds' custodian
United Missouri Bank, N.A., 1010 Grand Avenue, Kansas City, Missouri.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant on behalf of Fidelity New York Tax-Free High Yield
Portfolio, Fidelity New York Tax-Free Insured Portfolio, Spartan New York
Municipal High Yield Portfolio, and Spartan New York Intermediate Municipal
Portfolio undertakes, provided the information required by Item 5A is
contained in the annual report, to furnish each person to whom a prospectus
has been delivered, upon their request and without charge, a copy of the
Registrant's latest annual report to shareholders.
The Registrant undertakes to file a Post-Effective Amendment, using
financial statements for Spartan New York Intermediate Municipal Portfolio,
which need not be certified, within six months of the fund's effectiveness.
The registrant undertakesfor the fund: (1) to call a meeting of
shareholders for the purpose of voting upon the question of removal of a
trustee or trustees, when requested to do so by record holders of not less
than 10% of its outstanding shares; and (2) to assist in communications
with other shareholders pursuant to Section 16(c) (1) and (2), whenever
shareholders meeting the qualifications set forth in Section 16 (c) seek
the opportunity to communicate with other shareholders with a view toward
requesting a meeting.
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. 29 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 4th day of January 1994.
FIDELITY NEW YORK MUNICIPAL TRUST
By /s/Edward C. Johnson 3d (dagger)
Edward C. Johnson 3d, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
(Signature) (Title) (Date)
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Edward C. Johnson 3d(dagger) President and Trustee January 4 , 1994
Edward C. Johnson 3d (Principal Executive Officer)
</TABLE>
/s/Gary L. French Treasurer January 4 , 1994
Gary L. French
/s/J. Gary Burkhead Trustee January 4, 1994
J. Gary Burkhead
/s/Ralph F. Cox * Trustee January 4, 1994
Ralph F. Cox
/s/Phyllis Burke Davis * Trustee January 4, 1994
Phyllis Burke Davis
/s/Richard J. Flynn * Trustee January 4 , 1994
Richard J. Flynn
/s/E. Bradley Jones * Trustee January 4, 1994
E. Bradley Jones
/s/Donald J. Kirk * Trustee January 4, 1994
Donald J. Kirk
/s/Peter S. Lynch * Trustee January 4 , 1994
Peter S. Lynch
/s/Edward H. Malone * Trustee January 4 , 1994
Edward H. Malone
/s/Marvin L. Mann * Trustee January 4 , 1994
Marvin L. Mann
/s/Gerald C. McDonough* Trustee January 4, 1994
Gerald C. McDonough
/s/Thomas R. Williams * Trustee January 4, 1994
Thomas R. Williams
(dagger) Signatures affixed by J. Gary Burkhead pursuant to a power of
attorney dated October 20, 1993 and filed herewith.
* Signature affixed by Robert C. Hacker pursuant to a power of attorney
dated October 20, 1993 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 Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as President and Board Member (collectively, the
"Funds"), hereby severally constitute and appoint J. Gary Burkhead, my true
and lawful attorney-in-fact, with full power of substitution, and with full
power to sign for me and in my name in the appropriate capacity, all
Pre-Effective Amendments to any Registration Statements of the Funds, any
and all subsequent Post-Effective Amendments to said Registration
Statements, 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
attorney-in-fact deem necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and 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.
WITNESS my hand on the date set forth below.
/s/Edward C. Johnson 3d October 20, 1993
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 Advisor Series I Fidelity Institutional Trust
Fidelity Advisor Series II Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Magellan Fund
Fidelity Advisor Series IV Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series V Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VII Fidelity Municipal Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Securities Fund
Fidelity Commonwealth Trust Fidelity Select Portfolios
Fidelity Congress Street Fund Fidelity Sterling Performance Portfolio, L.P.
Fidelity Contrafund Fidelity Summer Street Trust
Fidelity Corporate Trust Fidelity Trend Fund
Fidelity Court Street Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Destiny Portfolios Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Union Street Trust
Fidelity Devonshire Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Exchange Fund Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Income Fund
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individuals serve as Board Members (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, 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 Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, 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 deem
necessary or appropriate, to comply with the provisions of the Securities
Act of 1933 and Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS our hands on this twentieth day of October, 1993.
/s/Edward C. Johnson 3d /s/Peter S. Lynch
Edward C. Johnson 3d Peter S. Lynch
/s/J. Gary Burkhead /s/Edward H. Malone
J. Gary Burkhead Edward H. Malone
/s/Richard J. Flynn /s/Gerald C. McDonough
Richard J. Flynn Gerald C. McDonough
/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 cmpanies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Magellan Fund
Fidelity Advisor Series III Fidelity Massachusetts Municipal Trust
Fidelity Advisor Series IV Fidelity Money Market Trust
Fidelity Advisor Series VI Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series VIII Fidelity New York Municipal Trust
Fidelity California Municipal Trust Fidelity Puritan Trust
Fidelity Capital Trust Fidelity School Street Trust
Fidelity Charles Street Trust Fidelity Select Portfolios
Fidelity Commonwealth Trust Fidelity Sterling Performance Portfolio, L.P.
Fidelity Congress Street Fund Fidelity Summer Street Trust
Fidelity Contrafund Fidelity Trend Fund
Fidelity Deutsche Mark Performance Fidelity Union Street Trust
Portfolio, L.P. Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Devonshire Trust Fidelity U.S. Investments-Government Securities
Fidelity Financial Trust Fund, L.P.
Fidelity Fixed-Income Trust Fidelity Yen Performance Portfolio, L.P.
Fidelity Government Securities Fund Spartan U.S. Treasury Money Market
Fidelity Hastings Street Trust Fund
Fidelity Income Fund Variable Insurance Products Fund
Fidelity Institutional Trust Variable Insurance Products Fund II
Fidelity Investment Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, 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 capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, 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 Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Ralph F. Cox October 20, 1993
Ralph F. Cox
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 Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Mt. Vernon Street Trust
Fidelity Advisor Series IV Fidelity School Street Trust
Fidelity Advisor Series VI Fidelity Select Portfolios
Fidelity Advisor Series VIII Fidelity Sterling Performance Portfolio, L.P.
Fidelity Beacon Street Trust Fidelity Trend Fund
Fidelity Capital Trust Fidelity Union Street Trust
Fidelity Commonwealth Trust Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Contrafund Fidelity U.S. Investments-Government Securities
Fidelity Deutsche Mark Performance Fund, L.P.
Portfolio, L.P. Fidelity Yen Performance Portfolio, L.P.
Fidelity Devonshire Trust Spartan U.S. Treasury Money Market
Fidelity Financial Trust Fund
Fidelity Fixed-Income Trust Variable Insurance Products Fund
Fidelity Government Securities Fund Variable Insurance Products Fund II
Fidelity Hastings Street Trust
Fidelity Institutional Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, 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 capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, 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 Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Phyllis Burke Davis October 20, 1993
Phyllis Burke Davis
POWER OF ATTORNEY
I, the undersigned Director, Trustee or General Partner, as the case may
be, of the following investment cmpanies:
<TABLE>
<CAPTION>
<S> <C>
Fidelity Advisor Series I Fidelity Investment Trust
Fidelity Advisor Series III Fidelity Special Situations Fund
Fidelity Advisor Series IV Fidelity Sterling Performance Portfolio, L.P.
Fidelity Advisor Series VI Fidelity Trend Fund
Fidelity Advisor Series VII Fidelity U.S. Investments-Bond Fund, L.P.
Fidelity Advisor Series VIII Fidelity U.S. Investments-Government Securities
Fidelity Contrafund Fund, L.P.
Fidelity Deutsche Mark Performance Fidelity Yen Performance Portfolio, L.P.
Portfolio, L.P. Spartan U.S. Treasury Money Market
Fidelity Fixed-Income Trust Fund
Fidelity Government Securities Fund Variable Insurance Products Fund
Fidelity Hastings Street Trust Variable Insurance Products Fund II
Fidelity Institutional Trust
</TABLE>
plus any other investment company for which Fidelity Management &
Research Company acts as investment adviser and for which the undersigned
individual serves as a Board Member (collectively, the "Funds"), hereby
severally constitute and appoint Arthur J. Brown, Arthur C. Delibert,
Robert C. Hacker, Richard M. Phillips, Dana L. Platt and Stephanie A.
Xupolos, 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 capacity, all Pre-Effective
Amendments to any Registration Statements of the Funds, any and all
subsequent Post-Effective Amendments to said Registration Statements, 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 Investment Company Act of 1940, and all related
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
/s/Marvin L. Mann October 20, 1993
Marvin L. Mann
